Document:

Exhibit 10.2

ENTERPRISE
BANCORP, INC.

 

Nonqualified Stock
Option Agreement

 

This Agreement is entered
into as of March 17, 2009 by and between Enterprise Bancorp, Inc., a
Massachusetts corporation (the “Company”), and
                                                            
(the “Optionee”).

 

WITNESSETH THAT:

 

WHEREAS, the Company has
instituted a program entitled “Enterprise Bancorp, Inc. 2003 Stock
Incentive Plan” (the “Plan”); and

 

WHEREAS, the Compensation
Committee of the Board of Directors, or the full Board of Directors, as the
case may be, of the Company has authorized the grant of stock options upon the
terms and conditions set forth below; and

 

WHEREAS, the Compensation
Committee or the full Board of Directors, as the case may be, has authorized
the grant of this stock option pursuant and subject to the terms of the Plan, a
copy of which is attached hereto and incorporated herein; and

 

WHEREAS, the Compensation
Committee or the full Board of Directors, as the case may be, has designated
this stock option a nonqualified stock option in accordance with Section 5
of the Plan;

 

NOW, THEREFORE, in
consideration of the premises and the mutual covenants and agreements herein
contained, the Company and the Optionee agree as follows.

 

1.             Grant.  Subject to
the terms of the Plan and this Agreement, the Company hereby grants to the
Optionee a stock option (the “Option”) to purchase from the Company
                
shares of its common stock, $0.01 par value per share (“Stock”). This Option is
not intended to be an incentive stock option or to qualify for special federal
income tax treatment under Section 422 of the Code.

 

2.             Exercise Price.  This Option
may be exercised at the exercise price of $8.75 per share of Stock, subject to
adjustment as provided herein and in the Plan.

 

3.             Term and Exercisability of Option. 
This Option shall expire on the earlier of March 16, 2016 or the
last day of the exercise period determined pursuant to subsection (c) of
this Section 3. At any time before its expiration, this Option may be
exercised to the extent set forth in the schedule attached to this Agreement as
Exhibit 1, which is incorporated herein and made a part hereof by this
reference, provided that:

 

(a)           at the time of exercise the Optionee is not in
violation of any employee confidentiality, noncompetition or other agreement
with the Company or a Subsidiary;

 

 

(b)           the Optionee must maintain the employment, contractual
or other service relationship with the Company or a Subsidiary that was in
effect at the time of the initial grant of this Option (the “Relationship”)
without change on the relevant date set forth in Exhibit 1 in order for
any scheduled increment in the exercisable portion of the Option to become
effective;

 

(c)           this Option may not be exercised if three months or
more have elapsed following the date of termination, or any change in the
nature, of the Relationship between the Optionee and the Company or a
Subsidiary; provided, however, that if the Relationship terminates as a result
of the Optionee’s retirement at age 62 or older, “thirty-six months” shall be
substituted for “three months” in this sentence; and provided, further, that if
the Relationship terminates by reason of the Optionee’s permanent and total
disability (as determined by the Compensation Committee or the full Board of
Directors, as the case may be, on the basis of medical advice satisfactory to
it) or death, the Option must be exercised within twelve months of the Optionee’s
death or disability; and

 

(d)           For purposes of subsections (b) and (c) of
this Section 3, the nature of the Relationship between the Optionee and
the Company shall not be deemed to have changed if the fundamental nature of
the Relationship, meaning the Optionee serving as an employee or as a
non-employee director or as a third-party consultant, advisor or other vendor,
as the case may be, does not change, regardless of any changes in the Optionee’s
title, compensation or other terms of employment or service, as the case may
be, which do not change the fundamental nature of the Relationship.  A fundamental change in the nature of the
Relationship would include, for example, a change from the Optionee serving as
an employee of the Company to serving as a third-party consultant to the
Company or a change from the Optionee serving as an employee director of the
Company to serving as a non-employee director of the Company.

 

4.             Method of Exercise.  Prior to its
expiration and to the extent that the right to purchase shares of Stock has
vested hereunder, this Option may be exercised from time to time by written
notice to the Company, substantially in the form attached hereto as Exhibit 2,
stating the number of shares with respect to which this Option is being
exercised and accompanied by either (a) payment in full of the exercise
price for the number of shares to be delivered, by means of payment acceptable
to the Company in accordance with Section 5(c) of the Plan, or (b) a
description of a “cashless exercise” procedure and such other documents and
undertakings as are necessary to satisfy that procedure. As soon as practicable
after its receipt of such notice, the Company shall, without transfer or issue
tax to the Optionee (or other person entitled to exercise this Option),
deliver, or cause to be delivered, to the Optionee (or other person entitled to
exercise this Option), at the principal executive offices of the Company or
such other place as shall be mutually acceptable, a stock certificate or
certificates for such shares out of theretofore authorized but unissued shares or
reacquired shares of its Stock as the Company may elect; provided, however,
that the time of such delivery may be postponed by the Company for such period
as may be required for it with reasonable diligence to comply with any
applicable requirements of law.  If and
to the extent that the Company also provides to its shareholders generally a
means to hold title to shares on a noncertificated basis, then any shares to be
issued to the Optionee upon the exercise of this Option may be issued on such a
noncertificated basis if 

 

2

 

mutually agreed upon by
the Company and the Optionee and otherwise permissible under applicable law and
the rules of any applicable stock exchange. Payment of the exercise price
may be made in cash or cash equivalents or, in accordance with the terms and
conditions of Section 5(c) of the Plan, in whole or in part in shares
of Common Stock of the Company; provided, however, that the Compensation
Committee or the full Board of Directors, as the case may be, reserves the
right upon receipt of any written notice of exercise from the Optionee to
require payment in cash with respect to the shares contemplated in such notice;
and provided, further, that the Optionee may not make payment in shares of
Stock that he acquired upon the earlier exercise of any incentive stock option,
unless he has held the shares until at least two years after the date the
incentive stock option was granted and at least one year after the date the
incentive stock option was exercised. If the Optionee (or other person entitled
to exercise this Option) fails to pay for and accept delivery of all of the
shares specified in such notice upon tender of delivery thereof, his right to
exercise this Option with respect to such shares not paid for may be terminated
by the Company.

 

Notwithstanding any of
the foregoing to the contrary, if the Company has established, for itself or
using the services of a third party, an automated system for the exercise of
stock options that may be granted under the Plan, such as a system using an
internet website or interactive voice response system, then the Optionee shall
be permitted to exercise this Option on a paperless basis through the use of
such an automated system.

 

5.             Withholding Taxes.  The Optionee
hereby agrees, as a condition to any exercise of this Option, to provide to the
Company an amount sufficient to satisfy the Company’s obligation to withhold
certain federal, state and local taxes arising by reason of such exercise (the “Withholding
Amount”), if any, by (a) authorizing the Company and/or a Subsidiary to
withhold the Withholding Amount from his cash compensation or (b) remitting
the Withholding Amount to the Company in cash; provided, however, that to the
extent that the Withholding Amount is not provided by one or a combination of
such methods, the Company may at its election withhold from the Stock that
would otherwise be delivered upon exercise of this Option that number of shares
having a Fair Market Value, on the date of exercise, sufficient to eliminate
any deficiency in the Withholding Amount.

 

6.             Nonassignability of Option. 
This Option shall not be assignable or transferable by the Optionee
except by will or by the laws of descent and distribution.  During the life of the Optionee, this Option
shall be exercisable only by him, by a conservator or guardian duly appointed
for him by reason of his incapacity or by the person appointed by the Optionee
in a durable power of attorney acceptable to the Company’s counsel.

 

7.             Compliance with Securities Act; Lock-Up Agreement. 
The Company shall not be obligated to sell or issue any shares of Stock
or other securities pursuant to the exercise of this Option unless the shares
of Stock or other securities with respect to which this Option is being
exercised are at that time effectively registered or exempt from registration
under the Securities Act and applicable state securities laws. In the event
shares or other securities shall be issued that shall not be so registered, the
Optionee hereby represents, warrants and agrees that he will receive such
shares or other securities for investment and not with a view to their resale
or distribution, and will execute an appropriate investment letter satisfactory
to the Company and its counsel. The Optionee further hereby agrees that as a
condition to the purchase of shares upon 

 

3

 

exercise of this Option,
he will execute an agreement in a form acceptable to the Company to the effect
that the shares shall be subject to any underwriter’s lock-up agreement in
connection with a public offering of any securities of the Company that may
from time to time apply to shares held by officers and employees of the
Company, and such agreement or a successor agreement must be in full force and
effect.

 

8.             Legends.  The Optionee
hereby acknowledges that the stock certificate or certificates evidencing
shares of Stock or other securities issued pursuant to any exercise of this
Option may bear a legend setting forth the restrictions on their
transferability described in Section 7 hereof, if such restrictions are
then in effect. If any such shares or other securities are issued on a
noncertificated basis in accordance with Section 4 hereof, then the
Company shall adopt alternative measures to ensure that any such restrictions
are properly observed.

 

9.             Rights as Stockholder.  The Optionee
shall have no rights as a stockholder with respect to any shares covered by
this Option until the date of issuance of a stock certificate to him for such
shares or such shares are otherwise issued on a noncertificated basis in
accordance with Section 4 hereof. No adjustment shall be made for
dividends or other rights for which the record date is prior to the date on
which any such shares are so issued.

 

10.           Termination or Amendment of Plan. 
The Board may terminate or amend the Plan at any time. No such
termination or amendment will affect rights and obligations under this Option
to the extent it is then in effect and unexercised.

 

11.           Effect Upon Employment and Performance of Services. 
Nothing in this Option or the Plan shall be construed to impose any
obligation upon the Company or any Subsidiary to employ the Optionee or to
retain the Optionee in its employ or to engage or retain the services of the
Optionee.

 

12.           [Intentionally Omitted]

 

13.           [Intentionally Omitted]

 

14.           General Provisions.

 

(a)           Amendment; Waivers.  This
Agreement, including the Plan, contains the full and complete understanding and
agreement of the parties hereto as to the subject matter hereof and, except as
otherwise permitted by the express terms of the Plan and this Agreement, it may
not be modified or amended nor may any provision hereof be waived, except by a
further written  agreement duly signed by each of
the parties; provided, however, that a modification or amendment that does not
materially diminish the rights of the Optionee hereunder, as they may exist
immediately before the effective date of the modification or amendment, shall
be effective upon written notice of its provisions to the Optionee. The waiver
by either of the parties hereto of any provision hereof in any instance shall
not operate as a waiver of any other provision hereof or in any other instance.

 

(b)           Binding Effect.  This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective heirs, executors, administrators, representatives,
successors and assigns.

 

4

 

(c)           Governing Law.  This
Agreement has been executed in Massachusetts and shall be governed by and
construed in accordance with the laws of The Commonwealth of Massachusetts.

 

(d)           Construction.  This
Agreement is to be construed in accordance with the terms of the Plan. In case
of any conflict between the Plan and this Agreement, the Plan shall control.
The titles of the sections of this Agreement and of the Plan are included for
convenience only and shall not be construed as modifying or affecting their
provisions. The masculine gender shall include both sexes; the singular shall
include the plural and the plural the singular unless the context otherwise
requires. Capitalized terms not defined herein shall have the meanings given to
them in the Plan.

 

(e)           Notices.  Any notice in
connection with this Agreement shall be deemed to have been properly delivered
if it is in writing and is delivered by hand or facsimile or sent by registered
mail, postage prepaid, to the party addressed as follows, unless another
address has been substituted by notice so given:

 

	
   

  	
  To the Optionee:

  	
  To his address as set
  forth on the signature page hereof.

  
	
   

  	
   

  	
   

  
	
   

  	
  To the Company:

  	
  Enterprise
  Bancorp, Inc.

  
	
   

  	
   

  	
  222 Merrimack Street

  
	
   

  	
   

  	
  Lowell, Massachusetts
  01852

  
	
   

  	
   

  	
  Attn: Mr. James A.
  Marcotte

  

 

IN WITNESS WHEREOF, the
Company has caused this Agreement to be executed as a sealed instrument by its
officer thereunto duly authorized as of the date set forth below.

 

Date of
grant:  March 17, 2009

 

	
   

  	
  ENTERPRISE BANCORP,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  
					

5

 

ACCEPTANCE

 

I hereby accept, as of
the date of grant, the foregoing Option, a nonqualified stock option, in
accordance with its terms and conditions and in accordance with the terms and
conditions of the Enterprise Bancorp, Inc. 2003 Stock Incentive Plan.

 

	
   

  	
   

  
	
   

  	
  (Signature of Optionee)

  

 

 

	
  Notice Address:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

 

Exhibit 1 to

Nonqualified Stock

Option Agreement

 

	
  Employee name
  (“Optionee”):

  	
   

  
	
   

  	
   

  
	
  Date of grant:

  	
  March 17, 2009

  
	
   

  	
   

  
	
  Number of shares
  granted:

  	
   

  
	
   

  	
   

  
	
  Exercise price:

  	
  $8.75 per share (subject
  to adjustment as provided in this Agreement and in the Plan)

  
	
   

  	
   

  
	
  Vesting schedule:

  	
   

  

 

	
   

  	
   

  	
  Incremental Amount

  	
   

  	
  Cumulative Amount

  	
   

  
	
  Date:

  	
   

  	
  % of shares

  	
   

  	
  # of shares

  	
   

  	
  % of shares

  	
   

  	
  # of shares

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  On or after
  March 17, 2010

  	
   

  	
  25

  	
  %

  	
   

  	
   

  	
  25

  	
  %

  	
   

  	
   

  
	
  On or after
  March 17, 2011

  	
   

  	
  25

  	
  %

  	
   

  	
   

  	
  50

  	
  %

  	
   

  	
   

  
	
  On or after
  March 17, 2012

  	
   

  	
  25

  	
  %

  	
   

  	
   

  	
  75

  	
  %

  	
   

  	
   

  
	
  On or after
  March 17, 2013

  	
   

  	
  25

  	
  %

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  

 

Notwithstanding
the foregoing vesting schedule, this Option shall become fully exercisable upon
the Optionee’s reaching age 62 while continuing to be employed by the Company
or a Subsidiary as of such date.

 

 

	
   

  	
   

  
	
   

  	
  [Name and title of
  authorized officer]

  

 

 

Exhibit 2 to

Nonqualified Stock

Option Agreement

 

[FORM FOR
EXERCISE OF NONQUALIFIED STOCK OPTION]

[SAMPLE ONLY]

 

Enterprise Bancorp, Inc.

222 Merrimack Street

Lowell, Massachusetts
01852

 

RE:                              Exercise
of Nonqualified Stock Option under Enterprise Bancorp, Inc. 2003 Stock
Incentive Plan

 

Gentlemen:

 

I hereby elect to
exercise the stock option granted to me on March __, 2009 by and to the
extent of purchasing ______________ shares of the Common Stock of Enterprise
Bancorp, Inc. for the exercise price of $______________ per share, subject
to the terms and conditions of the Nonqualified Stock Option Agreement between
myself and Enterprise Bancorp, Inc. dated as of ____________, 200__ (the “Agreement”).

 

Enclosed please find
payment, in cash or in such other property as is permitted under the Enterprise
Bancorp, Inc. 2003 Stock Incentive Plan (the “Plan”), of the purchase
price for the shares.

 

I hereby confirm that I
have investigated and considered the possible income tax consequences of my
exercising the option, of any sale or other disposition by me of any shares
acquired upon the exercise of the option and, if I am making payment of any
part of the purchase price by delivery of shares of stock of Enterprise Bancorp, Inc.,
of my making such payment in that form.

 

I hereby agree to provide
to Enterprise Bancorp, Inc. an amount sufficient to satisfy its obligation
to withhold certain taxes, in accordance with the Agreement.

 

I further agree to any
securities lock-up agreement between one or more underwriters and shareholders
of the Company who are officers or employees of the Company or a Subsidiary,
and any successor to that agreement, with regard to the shares acquired upon
this exercise of my stock option.

 

I hereby specifically
confirm to Enterprise Bancorp, Inc. that I am acquiring the shares for
investment and not with a view to their sale or distribution, and that the
shares shall be held subject to all of the terms and conditions of the Plan and
the Agreement.

 

	
   

  	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date

  	
   

  	
  (Signed by ______________
  or other party duly

  
	
   

  	
   

  	
  exercising option)Exhibit 10.2

 

	
   

  	
  RECORDED

  
	
   

  	
  Federal Aviation Administration

  
	
   

  	
  Date 5-11-06

  	
  Time 11:37 a.m.

  
	
   

  	
  Conveyance Number

  	
  44038820

  
	
   

  	
  By

  	
  /s/ V. Dodson

  
					

 

 

AIRCRAFT LEASE AGREEMENT

(N742AR)

 

between

 

KEY EQUIPMENT FINANCE INC.,

as Lessor

 

and

 

AHERN RENTALS, INC.

and

DON F. AHERN

as Lessee

 

Dated as of April 20, 2006

 

THIS
ORIGINAL DOES NOT CONSTITUTE CHATTEL PAPER AS CONTEMPLATED BY THE UNIFORM COMMERCIAL
CODE

 

	
  FAA
  Authorization Code

  	
  IRN20060420110250

  
	
   

  
	
  International
  Registration File Number(s):

  	
  Airframe

  	
  8421

  
	
   

  	
   

  
	
  141155

  	
   

  	
  Engine
  #1

  	
  8423

  
	
   

  	
   

  
	
  141156

  	
   

  	
  Engine
  #2

  	
  8427

  
					

 

 

TABLE OF CONTENTS

 

	
  Section 1

  	
   

  	
  Purchase
  and Lease of Aircraft

  	
   

  
	
  Section 2

  	
   

  	
  Conditions
  to Closing; Closing Covenants

  	
   

  
	
  Section 3

  	
   

  	
  Term,
  Rent and Payment

  	
   

  
	
  Section 4

  	
   

  	
  Limited
  Appointment of Agent

  	
   

  
	
  Section 5

  	
   

  	
  Covenants
  and Warranties

  	
   

  
	
  Section 6

  	
   

  	
  Representations,
  Warranties and Agreements of Lessee

  	
   

  
	
  Section 7

  	
   

  	
  Net
  Lease

  	
   

  
	
  Section 8

  	
   

  	
  Return
  of Aircraft

  	
   

  
	
  Section 9

  	
   

  	
  Liens

  	
   

  
	
  Section 10

  	
   

  	
  Taxes

  	
   

  
	
  Section 11
  

  	
   

  	
  Registration,
  Maintenance and Operation; Compliance and Use; Replacement Parts; Additions;
  Aircraft Marking 

  	
   

  
	
  Section 12

  	
   

  	
  Inspection

  	
   

  
	
  Section 13

  	
   

  	
  Loss
  or Destruction

  	
   

  
	
  Section 14

  	
   

  	
  Insurance

  	
   

  
	
  Section 15

  	
   

  	
  Indemnification

  	
   

  
	
  Section 16

  	
   

  	
  Assignment
  and Sublease

  	
   

  
	
  Section 17

  	
   

  	
  [RESERVED]

  	
   

  
	
  Section 18

  	
   

  	
  Events
  of Default

  	
   

  
	
  Section 19

  	
   

  	
  Remedies

  	
   

  
	
  Section 20

  	
   

  	
  Performance
  of Obligations of Lessee by Lessor

  	
   

  
	
  Section 21

  	
   

  	
  Intent

  	
   

  
	
  Section 22

  	
   

  	
  Notices

  	
   

  
	
  Section 23

  	
   

  	
  Purchase
  and Renewal Options

  	
   

  
	
  Section 24

  	
   

  	
  Transaction
  Expenses

  	
   

  
	
  Section 25

  	
   

  	
  Miscellaneous

  	
   

  
	
  Section 26

  	
   

  	
  Amendments

  	
   

  
	
  Section 27

  	
   

  	
  Jury
  Trial Waiver

  	
   

  
	
  Section 28

  	
   

  	
  Truth
  in Leasing

  	
   

  

 

TABLE OF ATTACHMENTS

 

	
  EXHIBIT A

  	
   

  	
  Definitions

  	
   

  
	
  EXHIBIT B

  	
   

  	
  Warranty
  Bill  of Sale

  	
   

  
	
  Lease Supplement 1

  	
   

  	
  Schedule 1 to Lease Supplement 1

  	
   

  
	
   

  	
   

  	
  Schedule 2 to Lease Supplement 1

  	
   

  
	
   

  	
   

  	
  Schedule 2-A to Lease Supplement 1

  	
   

  
	
  Lease Supplement 2

  	
   

  	
  Purchase
  Documentation; Aircraft Markings

  	
   

  

 

 

C#:  27645

L#:  27642

Ls#:  8800531987

 

	
  

  	
  Aircraft Lease Agreement (Tax Lease)

  

 

THIS AIRCRAFT LEASE AGREEMENT (together with all supplements, exhibits and certificates attached
hereto, the “Lease”) is made and entered into as of April 20,
2006 by and between KEY EQUIPMENT FINANCE INC., a Michigan corporation, as
lessor (“Lessor”), with a place of business at 1000 South McCaslin Boulevard,
Superior, CO 80027, and AHERN RENTALS, INC., a Nevada corporation (sometimes
referred to as “Ahern”), and Don F. Ahern, an individual, as joint lessees (Ahern
and Don F. Ahern each a “Lessee” and collectively “Lessees”), with its
principal place of business at 4241 S. Arville St, Las Vegas, NV 89103-3713.
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 —
Purchase and Lease of Aircraft.

 

Subject
to the satisfaction of each condition set forth below, 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. This Lease provides an
International Interest in the Aircraft in favor of the Lessor. The parties
hereto agree that the obligations of the Lessees are joint and several. Each
reference to the term “Lessee” shall be deemed to refer to each of the Lessees;
each representation and warranty made by Lessee shall be deemed to have been
made by each such party; each covenant and undertaking on the part of Lessee
shall be deemed individually applicable with respect to each such party; and
each Event of Default shall be determined with respect to each such party.
Separate action or actions may be brought and prosecuted against any Lessee
whether an action is brought against any other Lessee or whether any other
Lessee is joined in any such action or actions. Each Lessee waives any right to
require Lessor to: (a) proceed against any other party; (b) proceed
against or exhaust any security held from any other party; or (c) pursue
any other remedy in Lessor’s power whatsoever. Notices hereunder required to be
provided to Lessee shall be effective if provided to any Lessee. Any consent on
the part of Lessee hereunder shall be effective when provided by any Lessee and
Lessor shall be entitled to rely upon any notice or consent given by any Lessee
as being notice or consent given by Lessee hereunder.

 

Section 2 — Conditions to Closing; Closing Covenants.

 

(a)                                  Lessor’s obligations to purchase the Aircraft
from the Supplier and to lease the Aircraft to Lessee are both subject to and
conditioned upon (i) the representations and warranties of the Lessee
contained herein being true and accurate as of the Acceptance Date and (ii) the
Lessor receiving on or prior to the Acceptance Date, all of the following in
form and substance satisfactory to it:

 

(i)                                     the Purchase Documents duly executed and
accompanied by evidence of authenticity and authority;

 

(ii)                                  evidence of reservation of an “N” number for
the Aircraft, together with an assignment of Lessee’s rights in such “N” number
to Lessor unless an “N” number has already been assigned and will be retained;

 

(iii)                               evidence that the Aircraft has been duly
certified as to type and airworthiness by the FAA in the form of a Standard
Airworthiness Certificate (FAA AC Form 8100-2) issued by the FAA;

 

(iv)                              four (4) duly executed originals of the
Lease, including, Lease Supplement 1, Lease Supplement 2 and all schedules and
exhibits thereto, all in proper form for filing with the FAA;

 

(v)                                 (A) such organizational documents for
Lessee as requested by Lessor, (B) a certificate or certificates executed
by an authorized representative of the Lessee certifying that the execution,
delivery and performance of this Lease, the Purchase Documents, the applicable
FAA documents and the transactions contemplated hereby and thereby have been
authorized by all necessary action on the part of the Lessee, and (C) an
incumbency certificate of the Lessee containing the name(s), title(s) and
specimen signatures of the person(s) authorized to execute and deliver
such documents on behalf of Lessee;

 

(vi)                              certificate(s) of insurance as to the
coverage required under Section 14 hereof, accompanied, if requested by
Lessor, by the applicable policies and report(s) of insurance broker(s) or
underwriter(s) as to the conformity of such coverage with such
requirements;

 

1

 

(vii)                           evidence that each of the Lessee and the
Supplier is a registered user entity and has appointed an administer with the
International Registry, that all such parties have been approved as such by the
registrar of the International Registry and that each such administer, if
requested by Lessor, has consented to FAA Counsel as its professional user
entity to act on such parties behalf for purposes of consenting to the
registration of the International Interest provided for in the Aircraft by this
Lease and the Warranty Bill of Sale with the International Registry, as
applicable, and that FAA Counsel has received in escrow the executed FAA AC Form 8050-2
Aircraft Bill of Sale (the “Bill of Sale”) by Supplier in the name of Lessor,AC
Form 8050-1 Aircraft Registration Application in the name of Lessor (the “Registration
Application”) (except for the pink copy which will be available to be placed on
the Aircraft upon acceptance thereof), and FAA AC Form 8050-135 FAA Entry
Point Filing International Registry, releases, consents and discharges in form
and substance satisfactory to Lessor, FAA Counsel and/or Lessor’s counsel of
any Liens, such other bills of sale, in the form of FAA AC Form 8050-2,
the Warranty Bill of Sale, filing forms, or otherwise, as are necessary, in the
opinion of Lessor’s counsel and/or FAA Counsel to vest good and marketable
title to the Aircraft in the name of Lessor, and three (3) executed
originals of the Lease and Lease Supplements 1 and 2, all the foregoing (except
for the Warranty Bill of Sale) being in proper form for filing with the FAA;

 

(viii)                        certificate(s) of good
standing for Lessee from the state of its organization and the state in which
Lessee’s chief executive offices and principal place of business are located if
requested by the Lessor;

 

(ix)                                an opinion of counsel for Lessee in form and
substance satisfactory to Lessor and its counsel if requested by Lessor;

 

(x)                                   an opinion of FAA counsel in form and substance satisfactory to Lessor
and its counsel;

 

(xi)                                evidence of filing of such UCC financing statements and registration with the
International Registry of Lessor’s International Interest and of the Warranty
Bill of Sale in the Aircraft (including the Airframe and each Engine) as deemed
appropriate by Lessor’s counsel;

 

(xii)                             Evidence of the payment of a documentation fee
to Lessor;

 

(xiii)                          Payment of all fees and disbursements
(including attorneys’ fees) incurred by Lessor in the negotiation and filing of
documentation; and

 

(xiv)                         collateral assignment(s) to Lessor of any
and all subleases, management agreements, interchange agreements, charter
agreements, purchase agreements and any other present and future agreements of
any kind whatsoever relating to the Aircraft or any part thereof (which
assignments shall include Lessee’s International Interest and associated rights
therein relating to the Aircraft but shall not include any obligations,
liabilities and/or duties of any kind whatsoever of Lessee or any other party,
person or entity of any kind whatsoever in connection therewith or related
thereto) and, if requested by Lessor, evidence of the registration with the
International Registry of the assignment of the International Interest and
associated rights of Lessee in such agreements; and

 

(xv)                            Such other documents as Lessor may reasonably
request.

 

Section 3 — Term, Rent and Payment.

 

(a)                                  Term. This Lease will commence on the Acceptance
Date and will continue, unless earlier terminated pursuant to the provisions
hereof, until and including the Expiration Date stated in Schedule 2 or, if
extended in accordance with the terms hereof, until the end of any Renewal
Term.

 

(b)                                 Rent. Rent payable for the Basic Term (“Basic Rent”)
will commence on the Acceptance Date. Lessee will pay Basic Rent to Lessor at
its address stated below its signature, except as otherwise directed by Lessor,
and in the amounts and at such intervals as set forth in Schedule 2-A to Lease
Supplement 1.

 

(c)                                  Supplemental Rent. Lessee will pay to Lessor when due all amounts
other than Basic Rent that are payable hereunder (all such amounts being
referred to herein as “Supplemental Rent”). Basic Rent and Supplemental Rent
are referred to herein together as “Rent.” The expiration or other termination
of Lessee’s obligation to pay Basic Rent hereunder will not terminate, limit or
modify the obligations of Lessee with respect to Supplemental Rent, which will
survive such expiration or other termination.

 

(d)                                 Holdover. Lessee’s obligation to pay Rent will continue
until the Aircraft is returned to the Lessor in accordance with and in the
condition required by Sections 8 and 11 hereof.

 

2

 

(e)                                  Late Payments. All amounts payable to Lessor hereunder that
are not paid when due will accrue interest at the

Late
Payment Rate for the number of days actually elapsed from the due date until
paid in full. In addition, if Lessee fails to remit any Basic Rent on the date
such amount is due, Lessee will pay Lessor a late charge equal to the lesser of
five percent of such delinquent amount or the maximum amount permitted by law.
Lessee acknowledges and agrees that the late charge is an estimate of the costs
Lessor will incur as a result of the late payment and is reasonable in amount.

 

(f)                                    Payments. All amounts required to be paid to Lessor
hereunder will be made in immediately available United States funds.

 

Section 4 — Limited Appointment of
Agent.

 

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 1 will evidence that the Aircraft is leased under, and is
subject to all of the terms, provisions and conditions of, this Lease and will
constitute Lessee’s unconditional and irrevocable acceptance of the Aircraft
for all purposes of this Lease.

 

Section 5 — Covenants and Warranties.

 

(a)                                  Quiet Enjoyment. So long as no Default or Event of Default has
occurred and is continuing, Lessee will peaceably hold and quietly enjoy the
Aircraft without interruption by Lessor or any person or entity claiming
through Lessor.

 

(b)                                 Disclaimer of Warranties.
LESSOR MAKES
NO
WARRANTIES, EXPRESS OR IMPLIED, AS TO ANY MATTER WHATSOEVER, INCLUDING TITLE
TO, DESIGN, OPERATION, CONDITION, OR QUALITY OF THE MATERIAL OR WORKMANSHIP IN,
THE AIRCRAFT OR ANY PART THEREOF, ITS MERCHANTABILITY OR ITS FITNESS FOR
ANY PARTICULAR PURPOSE, THE ABSENCE OF LATENT OR OTHER DEFECTS (WHETHER OR NOT
DISCOVERABLE), LACK OF INFRINGEMENT ON ANY PATENT, TRADEMARK OR COPYRIGHT, AND
LESSOR HEREBY DISCLAIMS ALL SUCH WARRANTIES; IT BEING UNDERSTOOD THAT THE
AIRCRAFT IS LEASED TO LESSEE “AS IS, WHERE IS.” LESSEE HAS MADE THE SELECTION
OF THE AIRCRAFT FROM THE SUPPLIER BASED ON ITS OWN JUDGMENT AND EXPRESSLY
DISCLAIMS ANY RELIANCE ON ANY STATEMENTS OR REPRESENTATIONS MADE BY LESSOR. IN
NO EVENT WILL LESSOR BE LIABLE FOR ANY INDIRECT, SPECIAL OR CONSEQUENTIAL
DAMAGES.

 

(c)                                  Vendor Warranties. So long as an Event of Default or Default
hereunder shall not have occurred and be continuing, and so long as the
Aircraft is subject to this Lease and Lessee is entitled to possession of the
Aircraft hereunder, Lessor appoints Lessee as Lessor’s agent and authorizes
Lessee, at Lessee’s expense, for sole purpose of asserting 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 any warranty
of Manufacturer or Supplier). Notwithstanding the foregoing, Lessee will not
attempt to enforce any such performance by legal proceeding without Lessor’s
prior written approval.

 

Section 6 — Representations, Warranties
and Agreements of Lessee.

 

(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 its state of organization and is duly qualified
to do business wherever necessary to carry on its present business and
operations, including the Primary Hangar Location and to own its property.

 

(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 or foreign governmental authority (including the Department
of Transportation and/or the FAA) and does not contravene any law or violate
any judgment or order binding on Lessee or contravene any provision of or
constitute a default or result in the creation of any Lien, charge, security
interest or other encumbrance (other than a Permitted Lien) under any
certificate or articles of incorporation or organization or bylaws or
partnership certificate or limited liability company agreement, as applicable,
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 officers or partners or members or managers, as
applicable, of Lessee and constitutes the legal, valid and binding obligation
of Lessee enforceable in accordance with its terms.

 

3

 

(d)                                 Financial Statements. Lessee
agrees to furnish Lessor:

 

(i)                                     as soon as available, and in any event within
ninety (90) days after the last day of each fiscal year of Lessee, a copy of
the balance sheet of Ahern as of the end of such fiscal year, and related
statements of income and retained earnings of Ahern for such fiscal year, all in reasonable detail prepared in accordance with generally accepted
accounting principles consistently applied and audited 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;

 

(ii)                                  within forty-five (45) days after the last day of each fiscal quarter of Ahern (except the last fiscal quarter
for any fiscal year), a copy of the balance sheet of Ahern as of the end of
each such quarter, and statement of income and retained earnings covering the
fiscal year to date of Ahern, 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 Ahern; and

 

(iii)                               within thirty (30) days after the date on
which they are filed, all reports, forms and other filings, if any, required to
be made by Ahern to the Securities and Exchange Commission (“SEC”) or (in
respect of the Aircraft or the Lease) the FAA, including any SEC Forms 10-K and
10-Q  and related reports or documents. All credit, financial and other
information provided by Ahern or at Ahern’s direction is, and all such
information hereafter furnished will be, true, correct and complete in all
material respects.

 

(iv)                              (a) as soon as available, and in any
event within ninety (90) days after December 31st of each calendar year, a
signed personal financial statement of Don F. Ahern (which shall include, among
other things, a disclosure of all assets, liabilities and contingent
liabilities of Don F. Ahern),
which personal financial
statement shall be in form and substance satisfactory in all respects to
Lessor; and (b) within thirty (30) days after the filing by Don F. Ahern
of his federal income tax returns for a given year, true and accurate signed
copies of any such federal income tax returns, including all schedules thereto,
and, in addition, provided that Don F. Ahern has filed for an individual income
tax filing extension, within thirty (30) days after the filing by Don F. Ahern a true and accurate signed copy of IRS Form 4868 ‘Application
for Automatic Extension of Time to File U.S. Individual Income Tax Return; and

 

(v)                                 promptly, such additional financial and other information as Lessor may from time
to time reasonably request.

 

(e)                                  Furnishing of Information. Lessee agrees that it will furnish Lessor from
time to time with such information relating to Lessee, its subsidiaries and
affiliates, financial or otherwise, as Lessor reasonably requests.

 

(f)                                    Location of Chief Executive
Office; Lessee Name. The
chief executive office and principal place of business of Lessee is located at the
address set forth in Schedule 2, Lessee’s full and accurate legal name is as
stated in the first paragraph of this Lease, and the organizational number of
Lessee is as set forth in the signature block below. Lessee agrees to give
Lessor thirty (30) days’ prior written notice of any relocation of its chief
executive office and of any
change in its name, identity or
state of organization. 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 a copy of this Lease and the Lease
Supplements, will be kept on board the Aircraft at all times during the Term.

 

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

 

(i)                                     No Adverse Mortgages. Lessor’s right, title and interest in and to
the Aircraft and the Rent will not be adversely affected or impaired by, and no
lien will attach to the Aircraft as a result of, the terms of any existing
mortgage, loan agreement or indenture or any other contract,
agreement or instrument to which
Lessee is a party, or under which
Lessee or any of its property is or may become bound.

 

(j)                                     Taxes. Lessee
has filed or caused to be filed and (except as otherwise provided herein) will
continue to file all required federal, state and local tax returns, and has
paid or caused to be paid and will continue to pay all taxes that are due and
payable with respect to its business and assets (except if being contested in
good faith and if adequate reserves for the payment thereof have been
established).

 

4

 

(k)                                  Filing. Except for (i) registration of
the Aircraft with the FAA, (ii) filing and recording of the Lease and
related documents pursuant to the Act, including the filing with the FAA of an
AC Form 8050-135 with respect to the International Interest provided for
in the Aircraft (including the Airframe and each Engine) by this Lease and with
respect to the Warranty Bill of Sale and effecting the registration of such
International Interest and the Warranty Bill of Sale with the International
Registry and (iii) filing of a financing statement under the UCC, no
further action, including any filing, registration or recording of any
document, is necessary or advisable in order to establish and perfect Lessor’s
title to and interest in, the Aircraft, as against Lessee and/or any other
Person.

 

(l)                                     Good Title. Lessor is or, as of the Acceptance Date, will be  the
owner of the Aircraft and has or, as of the Acceptance Date, will have good and
marketable title to the Aircraft free and clear of all Liens other than
Permitted Liens.

 

(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 will maintain all such Records
during the Term in accordance with the requirements of the FAA, any
Manufacturer’s maintenance programs or requirements, and Sections 8 and 11 of
this Lease.

 

(n)                                 Claims. Lessee has no pending claims and Lessee has no
knowledge of any facts upon which a future claim may be based, in each case for
breach of warranty or otherwise, against any prior owner, any Manufacturer, or
any Supplier of the Airframe, any Engine, any Propeller or any Parts.

 

(o)                                 U.S. Citizen. The Lessee is now and at all times during the
Term will continue to be a “citizen
of the United States” within the
meaning of 49 USC § 40102(a)(15) of the Act.

 

(p)                                 Engines. Each of the Engines has 550HP or greater rated  takeoff
horsepower or the  equivalent of such horsepower and,
if a jet propulsion engine, has at least 1750 lbs of thrust or its equivalent.

 

(q)                                 Charges. All sales, use, documentation or similar
taxes, fees or other charges due and payable on or prior to the date hereof
with respect to the sale to and purchase by the Lessor of the Aircraft and/or
the leasing of the Aircraft by Lessor to Lessee have been paid in full.

 

(r)                                    Aircraft. The Lessee has selected the Aircraft,
Manufacturer, Supplier, and all maintenance facilities to be used in connection
with the Aircraft. Lessee hereby assigns to Lessor any and all rights relating
to the Aircraft which Lessee has acquired or hereafter acquires from the
Manufacturer or any other entity; provided, Lessor will have no right to
exercise such right except upon the occurrence, and during the continuation of,
a Default or an Event of Default.

 

(s)                                  Insolvency, Fair
Consideration. Lessee is not insolvent within the meaning of any
applicable state or federal law.

 

Section 7 — Net Lease.

 

THE LEASE IS A NET LEASE. LESSEE’S OBLIGATIONS TO PAY RENT
AND PERFORM ITS OBLIGATIONS HEREUNDER ARE ABSOLUTE, IRREVOCABLE AND UNCONDITIONAL
AND WILL NOT BE SUBJECT TO ANY RIGHT OF SETOFF, COUNTERCLAIM, DEDUCTION,
DEFENSE OR ANY RIGHT LESSEE MAY HAVE AGAINST THE SUPPLIER, MANUFACTURER,
LESSOR OR ANY OTHER PERSON; PROVIDED, HOWEVER, THAT NOTHING HEREIN WILL
PRECLUDE LESSEE FROM ASSERTING ANY SUCH CLAIMS IN A SEPARATE CAUSE OF ACTION.
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, THIS LEASE WILL NOT TERMINATE,
NOR WILL 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 WILL BE, AND CONTINUE TO BE, PAYABLE IN ALL
EVENTS UNLESS AND UNTIL THE OBLIGATION TO PAY THE SAME ARE FULLY SATISFIED
PURSUANT TO THE EXPRESS PROVISIONS HEREOF. LESSEE UNDERSTANDS AND AGREES THAT
NEITHER THE SUPPLIER OR THE MANUFACTURER, NOR ANY SALES REPRESENTATIVE OR OTHER
AGENT OF EITHER OF THEM, IS AN AGENT OF LESSOR OR IS AUTHORIZED TO WAIVE OR
ALTER ANY TERM OR CONDITION OF THIS LEASE, AND NO SUCH WAIVER OR ALTERATION
WILL VARY THE TERMS HEREOF. LESSOR IS NEITHER A SUPPLIER NOR A MANUFACTURER,
AND LESSOR IS NOT RESPONSIBLE FOR REPAIRS, SERVICE OR DEFECTS IN THE AIRCRAFT OR
ANY PART

 

5

 

THEREOF. LESSEE AGREES NOT TO ASSERT AGAINST LESSOR ANY
CLAIMS OR DEFENSES LESSEE MAY HAVE WITH RESPECT TO THE AIRCRAFT OR ANY PART THEREOF,
AND UNDERSTANDS THAT IT MAY ASSERT SUCH CLAIMS AGAINST THE SUPPLIER OR
MANUFACTURER.

 

Section 8 — Return of Aircraft.

 

(a)                                  Condition Upon Return. Upon the expiration or other termination of
this Lease (whether following an Event of Default or otherwise), unless Lessee
shall have purchased the Aircraft in accordance with the terms hereof, Lessee,
at its own expense, will return the Aircraft (including the Engines) to Lessor
at a location specified by the Lessor within the continental United States with
no deferred maintenance items outstanding and in the condition in which the
Aircraft is required to be maintained pursuant to the terms of this Lease.
Without limiting the generality of the foregoing, upon return the Aircraft
will:

 

(i)                                     be duly certified by the FAA as airworthy;

 

(ii)                                  be free and clear of all Liens other than
Permitted Liens;

 

(iii)                               be in the same configuration, in the same
operating and physical condition, with all systems operating normally, and in
good appearance (in each case, ordinary wear and tear excepted) as when
delivered to Lessee hereunder;

 

(iv)                              be in compliance with all so-called “mandatory,”
“alert” and (to the extent applicable to Lessee, or its operations) “highly
recommended” service bulletins, service letters, modification kits, and similar
notices and components issued, supplied, or available by or through the
Manufacturer, and with all “airworthiness alerts” and airworthiness or other
directives, circulars, operator bulletins and instructions and all other
applicable service, maintenance, repair and overhaul regulations issued by the
FAA or similar regulatory agency having authority; and

 

(v)                                 otherwise be in the condition required under
this Lease.

 

(b)                                 Overhaul-General. At the time of return:

 

(i)                                     the Airframe (including the landing gear) will
not have been operated more than one-half of the allowable time between major
airframe overhauls or major block maintenance before the next major airframe
overhaul or major block maintenance, whichever then applies, in accordance with
Lessee’s then approved overhaul and/or maintenance program authorized by and
performed to FAA requirements applicable to Lessee or the Airframe, and will
have no less than half life (as measured by reference to calendar, phase,
periodic maintenance, and/or inspection standards) remaining on any life
limited Airframe Part or component (including the landing gear) before
overhaul or replacement; and

 

(ii)                                  each Engine will not have been operated more
than one-half of the allowable time remaining before overhaul (both hot and
cold sections as measured by reference to calendar, phase, periodic
maintenance, and/or inspection standards) and all cycle limited Parts or time
controlled components of each Engine will not have been operated more than
one-half the allowable cycles or time remaining before replacement; said Engine
overhaul and Engine Parts and components replacement to be performed in
accordance with Lessee’s then approved engine overhaul and parts and components
replacement program authorized by and performed to FAA requirements applicable
to Lessee; and

 

(iii)                               Lessee will have performed all inspections and
scheduled maintenance required to be performed on the Airframe, Propeller(s),
Engines and all life limited Parts and components within one hundred eighty
(180) days after the date of return and one hundred fifty (150) hours of
additional operation after the hour of return.

 

(c)                                  Overhaul-Airframe.

 

(i)                                     If the conditions set forth in Sections 8(b)(i) and
(iii) hereof are not met, Lessee will pay Lessor a dollar

amount
computed by multiplying (A) Lessor’s then current cost for such major
overhaul or major block maintenance as the case may be (such cost being the
then current rates charged by an airframe overhaul facility approved by the
Manufacturer and acceptable to Lessor, together with all costs associated with
such overhaul), times (B) a fraction of which (x) the numerator is
the excess of the number of hours since the last such major overhaul or major
block maintenance, as the case may be, over fifty percent (50%) of the number
of hours of allowable time between major overhauls or major block maintenance
and (y) the denominator is the total number of hours of such allowable
time.

 

6

 

(ii)                                  If the life limited Parts or components
requirement contained in Section 8(b) hereof are not met, Lessee will
pay to Lessor with respect to each Part or component for which said requirement is not met the dollar amount
obtained by multiplying (A) the ratio that the life expended in excess of
half-life bears to the total allowable life for such Part or component by (B) Lessor’s cost of replacement of such Part or
component. Lessor’s cost of replacement of such Part or component will
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.

 

(d)                                 Overhaul-Engine.

 

(i)                                     If the conditions specified in clause (ii) and/or
(iii) of Section 8(b) hereof are not met with respect to the
Engines, Lessee will pay to the Lessor with respect to each Engine for which
said conditions are not met the dollar amount per Engine obtained by
multiplying (A) the ratio that the time accumulated since half time bears
to the time allowable between overhauls by (B) Lessor’s cost for overhaul
of such Engine (such Lessor’s cost being the then current rates charged by an
engine overhaul facility approved by the Manufacturer and acceptable to Lessor,
together with all costs associated with such overhaul).

 

(ii)                                  If the conditions specified in clause (ii) and/or
(iii) of Section 8(b) hereof are not met with respect to Engine
cycle limited Parts and time controlled components, Lessee will pay to Lessor
with respect to each Engine for which said requirement is not met the dollar
amount per Part or per component, as applicable, obtained by multiplying (A) the
ratio that the time (or cycles) accumulated since half time (or one-half the
allowable cycles) bears to the time (or cycles) allowable between replacements
by (B) Lessor’s cost of replacement of the part (or component). Lessor’s
cost of replacement of a part or component will 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.

 

(e)                                  Fuel; Records. Upon the return of
the Aircraft:

 

(i)                                     each fuel tank will contain the same quantity
of fuel as was contained in such tank when the Aircraft was delivered to Lessee
on the Acceptance Date, which will be
presumed to be fifty percent (50%) of full capacity unless otherwise specified
in the Purchase Documents. If the fuel tank(s) contain less than such
amount, Lessee will pay to Lessor the cost, at the then current market price of
fuel, of the amount of fuel necessary to bring the fuel level to the required
amount; and

 

(ii)                                  Lessee will deliver all Records to Lessor. If
any Records are missing or incomplete, Lessor will have the right to cause any
such Records to be reconstructed at the sole expense of Lessee.

 

(f)                                    Storage. Upon the expiration or other termination of
the Lease and for two (2) months thereafter, Lessee will, if requested by
Lessor, permit Lessor to store the Aircraft at the Primary Hangar Location as
described in Schedule 2. During such storage period Lessor will, at Lessor’s
cost and expense unless a Default or Event of Default has occurred and is
continuing, keep the Aircraft properly hangared, and Lessee will permit Lessor
or any person designated by Lessor, including the authorized representative or
representatives of any prospective purchaser, lessee or user of the Aircraft to
inspect the same. Lessee will not be liable, except in the case of the
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. Unless a Default or Event of Default has occurred and is
continuing, Lessor will bear the risk of loss and will pay any and all expenses
connected with insuring and maintaining the Aircraft during such storage
period. The cost of storage, hangaring, insuring and maintaining the Aircraft,
and the risk of loss to the Aircraft, under this section will be for Lessee’s
account if a Default or Event of
Default has occurred and is continuing. Notwithstanding the foregoing, upon the
cancellation or termination of the Lease in connection with an Event of
Default, the storage period provided for in this paragraph and the obligations
of Lessee regarding risk of loss, maintenance and its obligations to hangar and
insure the Aircraft shall continue so long as Lessor is pursuing its rights and
remedies as a result of such Event of Default.

 

(g)                                 Return of Engines. If, notwithstanding the requirement set forth
in Section 8(a) that Lessee return the Engines to Lessor, Lessee
wishes to return the Aircraft with an engine other than an Engine installed on
the Airframe and if Lessor is willing in its sole reasonable discretion to
accept such engine, then concurrently with such return Lessee will, at  its sole expense, furnish Lessor with (i) a full warranty bill of
sale, in form and substance satisfactory to Lessor, with respect to each such
engine,(ii) a written opinion of FAA Counsel to the effect that such
engine is free and clear of all Liens other than Lessor’s Liens. Lessee shall
and take all such other steps as are necessary to effect the registration of  such sale with the International Registry. Upon receipt of the bill of
sale and opinion, unless a Default or Event of Default has occurred and is
continuing, Lessor will transfer to Lessee on an “AS-IS, WHERE-IS” BASIS
WITHOUT ANY

 

7

 

REPRESENTATION
OR WARRANTY BY LESSOR (OTHER THAN AS TO LESSOR’S LIENS), all of Lessors right,
title and interest in and to the Engine that was replaced by the engine.

 

(h)                                 Inspection Prior to Return. Not more than ninety (90) days prior to the
Expiration Date, upon the written request of Lessor, Lessee will, at its sole
expense, (i) review the maintenance records of the Aircraft to determine
if the Aircraft is in the condition required by the Lease, and (ii) deliver
to Lessor a written certificate (x) certifying that the Aircraft is in the
condition required by the Lease according to the maintenance records for such
Aircraft, or (y) if the maintenance records so indicate, certifying that
maintenance or repairs are required and specifying what maintenance or repair
is required in order to bring the Aircraft to the required condition.

 

(i)                                     Survival. The provisions of this Section 8 will
survive the expiration or other termination of this Lease and the return of the
Aircraft for any reason whatsoever.

 

(j)                                     Injunctive Relief. Without limiting any other terms or conditions
of this Lease, the provisions of this Section 8 are of the essence in this
Lease, and upon application to any court of equity having jurisdiction, Lessor
will be entitled to a decree against Lessee requiring specific performance of
the covenants of Lessee set forth in this Section 8.

 

(k)                                  Excess Use. Upon the return of the Aircraft to the Lessor,
Lessor and Lessee shall consult for the purpose of determining the Excess Use
Amount (as defined below), if any, and an amount so agreed upon in writing
between Lessor and Lessee shall be binding on both parties. The “Excess Use
Amount” shall mean the amount, if any, by which (i) the fair market sales
value of the Aircraft (determined pursuant to Section 23 (c) without
Excess Hours, exceeds (ii) the fair market sales value of the Aircraft
(determined pursuant to Section 23 (c)) with Excess Hours (and as to this Section 8
(k) (ii), without making the assumption in Section 23 (c) (iii).
If Lessor and Lessee fail to agree within ten (10) days after the return
of the Aircraft to Lessor, then Lessor shall appoint an independent appraiser
(reasonably acceptable to Lessee) to determine the Excess Use Amount. Lessee
agrees to pay the costs and expenses of any such determination and appraisal.
The independent appraiser shall be required to complete such determination as
promptly as practical, but in any event, not later than thirty (30) days after
the date on which it is appointed. A final determination by the independent
appraiser regarding the extent of the Excess Use Amount, if any, shall be
binding on Lessor and Lessee. Lessee shall pay to Lessor within ten (10) days
of determination an amount equal to the Excess Use Amount.

 

Section 9 — Liens.

 

Lessee
will not directly or indirectly, voluntarily or involuntarily, create, incur,
assume or suffer to exist any Liens other than Permitted Liens on or with
respect to the Aircraft or any part thereof, 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. If 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 will reimburse Lessor on demand for any costs
incurred by Lessor in connection with such action. Lessor’s rights hereunder
are in addition to, and not in derogation of, any other rights Lessor may have
hereunder, at law, or in equity.

 

Section 10 — Taxes.

 

Lessor
will be responsible for reporting and paying to the applicable jurisdiction,
and Lessee will pay to Lessor when due and will defend and indemnify Lessor
against liability for, all sales and use taxes and all taxes that are the
equivalent of sales or use taxes (including any related interest or penalties)
now or hereafter imposed by any governmental body or agency upon the Aircraft
or the leasing thereof or otherwise with respect to the transactions
contemplated hereby. Except to the extent such impositions are included in the
preceding sentence, Lessee will (i) report, (ii) pay when due, and (iii) defend
and indemnify Lessor against liability for all license and registration fees,
assessments, and property, excise, documentary, 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 or gross income of Lessor or taxes on gross receipts
in lieu of taxes on net income (but not including sales, use, rental or
property taxes or taxes of a similar nature)) (together with sales, use and
equivalent taxes, “Impositions”). Any fees, taxes or other lawful charges paid
by Lessor upon failure of Lessee to make such payments will immediately become
due from and payable by Lessee to Lessor. Notwithstanding the foregoing, Lessee
will pay and will indemnify, defend, and hold harmless Lessor, 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 Lessor would not
have incurred such Impositions but for the operation or presence of the
Aircraft in the jurisdiction asserting an Imposition.

 

8

 

Section 11— Registration, Maintenance
and Operation; Compliance and Use;

Replacement Parts; Additions; Aircraft Marking.

 

(a)                                  Registration, Maintenance and
Operation. During the Term,
Lessee, at its sole cost and expense, will (i) cause the Aircraft to be
duly registered in the name of the Lessor under the Act at all times; (ii) maintain,
inspect, service, repair, overhaul and test the Airframe, any Propellers and
each Engine in accordance with FAA approved and Manufacturer’s recommended
maintenance programs and in accordance with (A) all maintenance manuals
furnished with the Aircraft, including all subsequent amendments or supplements
to such manuals issued by the Manufacturer from time to time, (B) all
mandatory “Service Bulletins” issued, supplied, or available by or through any
Manufacturer and/or any other manufacturer of any Engine or Part having a
compliance date during the Term of this Agreement and up to twelve (12) months
after the Expiration Date or the last day of any Renewal Term, and (C) all
airworthiness directives or circulars issued by the FAA or similar regulatory
agency having jurisdictional authority, and causing compliance with such
directives or circulars to be completed through corrective modification or
operating manual restrictions, having a compliance date during the Term and up
to twelve (12) months after the Expiration Date or the last day of any Renewal
Term; (iii) maintain (in English) all Records and (iv) 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 required by Section 11,
subparagraph (a)(ii) or any other provision of this Lease will be
performed in accordance with all FAA and Manufacturer’s standards and
procedures by properly trained, licensed, and certified maintenance sources and
maintenance personnel using replacement parts approved by the FAA and the
Manufacturer, so as to keep the Airframe, any Propellers and each Engine in as
good operating condition as when delivered to the Lessee hereunder, ordinary
wear and tear alone excepted, and to enable the airworthiness certificate for
the Aircraft to be continually maintained in good standing at all times under
the regulations of the FAA.

 

(b)                                 Compliance and Use. (i) Except as permitted in Section 16,
Lessee will operate the Aircraft solely in the conduct of its business and/or
for commercial purposes (and not for consumer, home or family purposes) and in
such configuration as authorized by the FAA. Lessee will not operate the
Aircraft or permit the Aircraft to be operated (A) at any time or in any
geographic area when or where insurance required by the provisions of Section 14
hereof is not in effect, (B) in a manner or for any time period such that
Lessor or a Person other than Lessee will be deemed to have “operational
control” of the Aircraft without the prior written consent of Lessor, or (C) for
the carriage of persons or property for hire or the transport of mail or
contraband. Throughout the Term, possession, use and maintenance of the
Aircraft will be at the sole risk and expense of Lessee and the Aircraft will
be based at the Primary Hangar Location set forth in Schedule 2. Lessee will deliver to Lessor a written waiver of any Lien
or claim of Lien against the Aircraft that is or could be held by any landlord
(other than a governmental entity) or mortgagee of any hangar or storage
facility where the Aircraft is or will be located. Lessee will not remove the
Aircraft, or permit the Aircraft to be removed, from its designated Primary
Hangar Location for a period in excess of thirty (30) days without Lessor’s
prior written consent. Lessee will cause the Aircraft to be operated at all
times by duly qualified pilots who (x) are supplied by Lessee, (y) hold
at least a valid commercial airman certificate and instrument rating and any
other certificate, rating, type rating or endorsement appropriate to the
Aircraft, purpose of flight, condition of flight or as otherwise required by
the FARS or other applicable law or regulation, and (z) meet the
requirements established and specified by the insurance policies required
hereunder and the FAA. (ii) The Aircraft shall not be operated, used or
located outside the continental United States except that it may be flown
temporarily to any country in North America, Central America or South America
for any purpose expressly permitted under this Lease. Notwithstanding the
foregoing, the Aircraft shall not be flown, operated, used or located in, to or
over any such country or area (temporarily or otherwise), (A) which is
excluded from the required insurance coverages, or would otherwise cause Lessee
to be in breach of the insurance requirements or other provisions, of this
Lease (provided, further, prior to any operation in Mexico, Lessee shall (x) provide
prior written notice to Lessor, and (y) furnish Lessor with evidence of insurance coverage for such use),
(B) with which the U.S. does not maintain
favorable diplomatic relations, (C) in any area of recognized or
threatened hostilities, (D) in violation of any applicable law, including
any U.S. law or United Nations Security Council Directive, (E) which is
subject to any sanction program of the Office of Foreign Assets Control or (F) in
a manner that causes it to be deemed to have been used or operated
“predominantly” outside of the United States, as that phrase is used in Section 168(g)(1)(A) of
the Code.

 

(c)                                  Replacement Parts. Except as otherwise provided in the
succeeding paragraph (d) of this section, Lessee, at its sole cost and
expense, will promptly replace all Parts that 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 with a replacement part of at least the same manufacture,
value, remaining useful life and utility as the replaced Part immediately
preceding the replacement (assuming that such replaced Part is in the
condition required by  this Lease). Such replacement part
will be free and clear of all Liens. Upon installation, attachment or
incorporation in, on or into the Aircraft, immediately and without further act
such replacement part will be fully subject to the Lease and title thereto will
vest in Lessor.

 

9

 

(d)                                 Additions. Lessee will be entitled from time to time
during the Term to acquire and install on the Aircraft at Lessee’s sole cost
and expense (and Lessor hereby appoints Lessee to be Lessor’s agent for such
purpose so long as no Default or Event of Default has occurred and is
continuing), any additional accessory, device or equipment as may be available
at such time (“Additions”) but only if (i) such Additions are ancillary to
the Aircraft, (ii) such Additions are not required to render the Aircraft
complete for its intended use by Lessee, (iii) such Additions will not
impair the originally intended function or use of the Aircraft or diminish the
value of same, (iv) such Additions can be readily removed without causing
material damage to the Aircraft, and (v) the incorporation of such
Additions into the Aircraft will not result in a violation of the provisions of
any FARS or other applicable law, rule or regulation. Lessee will be
entitled to remove all Additions from the Aircraft, except for any Addition
that constitutes an Alteration (as defined below). Any Addition that is
permitted to be removed will be released from the terms of this Lease upon the
removal thereof. Title to Additions that are not removed by Lessee prior to the
return of the Aircraft to Lessor will vest in Lessor upon such return. Lessee
will repair all damage to the Aircraft resulting from such installation or
removal of Additions so as to restore the Aircraft to its condition prior to
installation.

 

(e)                                  Alterations. Lessee will, at its expense, make any and all
alterations and modifications (each an “Alteration”) with respect to the
Aircraft that may at any time during the Term be required to comply with any
applicable law or any government rule or regulation. All Alterations and
all nonseverable repairs made by Lessee to or upon the Aircraft, including any
Engine or replacement Parts installed thereon, in the course of repairing or
maintaining the Aircraft will be deemed an accession, and title thereto will immediately vest in Lessor without
cost or expense to Lessor.

 

(f)                                    Aircraft Marking. Lessee agrees, at its sole cost and expense,
to (i) cause the Airframe, any Propellers and the Engines to be kept
numbered with the identification or serial number therefor as specified in
Schedule 1; (ii) prominently display on the Aircraft that “N” number, and only that “N” number specified in
Schedule 1, or such other “N” number as has been approved in writing by the
Lessor and duly recorded with the FAA; (iii) (A) notify Lessor in
writing not less than thirty (30) days prior to making any change in the
configuration, appearance or coloring of the Aircraft (other than changes
mandated by the FAA or that are reasonably consistent with the configuration,
appearance and coloring on the Acceptance Date), and (B) at Lessor’s request, either (x) restore
the Aircraft to the configuration, appearance and coloring as of the Acceptance
Date (other than changes that were mandated by the FAA) or (y) pay 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 metal nameplate bearing the Aircraft Marking specified in Lease
Supplement 2 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
Lessor’s title to the Aircraft and Lessor’s rights hereunder. Lessee will not
operate the Aircraft until such Aircraft Markings have been placed thereon.
Lessee will promptly replace or repair, as applicable, any such Aircraft
Marking that may be removed, defaced or destroyed.

 

Section 12 — Inspection.

 

Lessor
will have the right, but not the duty, to inspect the Aircraft, any component
thereof, and the Records at any reasonable time and from time to time, wherever
the same may be located, upon reasonable prior written notice to Lessee unless
a Default or Event of Default has occurred and is continuing, in which case no
prior notice will be required. At Lessor’s request, Lessee will confirm to
Lessor the location of the Aircraft and will, at any reasonable time and from
time to time, make the Aircraft and/or the Records available to Lessor for
inspection.

 

Section 13 — Loss or Destruction.

 

(a)                                  Event of Loss with Respect to
the Aircraft. (i) Lessee
will deliver to Lessor written notice of the occurrence of any Event of Loss
with respect to the Aircraft within ten (10) days after the occurrence thereof.
On the next Basic Rent Date following such Event of Loss (or, if the Event of
Loss occurs after the Last Basic Rent Date, within thirty (30) days after the
Event of Loss), Lessee will pay to Lessor an amount equal to the sum of (A) all
Rent then due hereunder, plus (B) the Casualty Value of the Aircraft
determined as of such next Basic Rent Date or the Last Basic Rent Date, as applicable.
Upon Lessor’s receipt of such amounts, Lessee’s obligation to pay further Basic
Rent for the Aircraft will cease, but Lessee’s obligation to pay Supplemental
Rent and any other amounts due under this Lease, if any, will remain in full
force and effect, Except in the case of total destruction, permanent
disappearance, Requisition of Use, or Return to Manufacturer, Lessor will be
entitled to possession of the Aircraft, unless possession by an insurance
carrier is required in order to settle an insurance claim. Lessor will 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 sole 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.

 

(ii)                                  Following
payment to Lessor of the Casualty Value, Lessee will dispose of the Aircraft as
Lessor’s agent as soon as it is able for the best price obtainable Any such
disposition will be on as “AS-IS, WHERE-IS” BASIS

 

10

 

WITHOUT
ANY REPRESENTATION OR WARRANTY BY LESSOR (OTHER THAN AS TO LESSOR’S LIENS) of
any kind whatsoever. Lessee may retain all amounts received from such
disposition up to an amount equal to the sum of the Casualty Value actually
paid by Lessee plus Lessee’s reasonable costs and expenses of disposition. Any
excess will be paid over to, and retained by, Lessor. In the event of a Return
to Manufacturer, Lessee will be entitled to all amounts payable to Lessor by
the Manufacturer up to the amount, if any, of the Casualty Value actually paid
by Lessee to Lessor, and any excess will be retained by Lessor. With respect to
a Requisition of Use, Lessee will be entitled to all amounts paid by any
governmental authority up to the Casualty Value actually paid by Lessee, and
any excess will be paid over to, and retained by, 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 will give
Lessor prompt written notice thereof and will, within thirty (30) days after
the occurrence of such Event of Loss, convey to Lessor title to an engine that
is (i) the same make and model number as the Engine suffering the Event of
Loss, (ii) free and clear of all Liens, (iii) of 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 sole
cost and expense, will furnish Lessor with such documents to evidence the
conveyance as Lessor requests. 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. SUCH TRANSFER WILL BE ON AN “AS-IS, WHERE-IS”
BASIS WITHOUT ANY REPRESENTATION OR WARRANTY BY LESSOR (OTHER THAN AS TO
LESSOR’S LIENS) AS TO THE ENGINE
SO TRANSFERRED TO LESSEE. Each replacement engine will, after such conveyance,
be deemed an “Engine” as defined herein and will be deemed part of the same
Aircraft as was the replaced Engine. In connection with any replacement of an
Engine pursuant to this Section 13(b) Lessee will enter into a supplement
to this Lease identifying the replacement engine, subjecting such engine to
this Lease and providing for an International Interest in favor of the Lessor
and Lessee shall effect the registration of such International Interest and the
bill of sale transferring title in such replacement engine to Lessor with the International
Registry, and take such other action and make such filings as reasonably
requested by Lessor to register, protect, preserve and perfect its interests in
and relating to such replacement engine. No Event of Loss with respect to an
Engine will 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, No Release of
Obligations. Lessee will bear
the entire risk of loss, theft, confiscation, expropriation, requisition,
damage to or destruction of the Aircraft and will 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, until such time as all
obligations hereunder have been performed in full.

Section 14 — Insurance.

 

(a)                                  Insurance. Lessee, at its sole cost and expense, will
maintain or cause to be maintained:

 

(i)                                     aircraft liability insurance covering claims
arising from the use or operation of the Aircraft in or over any area (including
contractual liability and bodily injury and property damage liability) in an
amount not less than the greater of (a) $50,000,000 per occurrence, or
such higher amounts as are required by law in the geographic location or
country in or over which the Aircraft is flown, operated or located and (b) the
amounts of aircraft liability insurance from time to time applicable to
aircraft operated by Lessee (whether owned or leased) of the type of the
Aircraft;

 

(ii)                                  cargo liability insurance sufficient to cover
the maximum value of cargo on the Aircraft
at any one time if Lessee is engaged in transporting property of others;

 

(iii)                               all-risk aircraft physical damage insurance
covering the Aircraft in motion and not in motion, in flight and on the ground,
and the Engine and all Parts while attached to or removed from the Airframe, in
an amount not less than the lesser of the full insurable value of the Aircraft
or the then Casualty Value;

 

(iv)                              for all locations which the Aircraft travels
to and through: war and allied perils insurance to cover the perils of (A) war, invasion, acts of
foreign enemies, hostilities (whether war be declared or not), civil war,
rebellion, revolution, insurrection, martial law, military or usurped power or
attempts at usurpation of power, (B) strikes, riots, civil commotions of
labor disturbances, (C) any act of one or more persons, whether or not
agents of a sovereign power, for political or terrorist purposes and whether
the loss or damage resulting therefrom is accidental or intentional, (D) any
vandalism, malicious act or act of sabotage, (E) confiscation,
naturalization, seizure, restraint, detention, diversion, appropriation,

 

11

 

requisition
for title or use by or under the order of any government (whether civil,
military or de facto) or public or local authority and (F) hijacking, or
any unlawful seizure or wrongful exercise of control of the crew in flight; and

 

(v)                            such other insurance against such other risks
as is usually carried by similar companies owning or leasing and operating
aircraft similar to the Aircraft. All such insurance will be maintained with
insurers of recognized reputation and responsibility (reasonably satisfactory
to Lessor) having a rating not less than A- from A.M. Best, or other
rating approved by Lessor. All insurance policies will be in a form acceptable
to Lessor.

 

If
Lessee fails to maintain insurance as herein provided, Lessor may, at its
option, provide such insurance, and Lessee will, upon demand, reimburse Lessor
for the cost thereof.

 

(b)                                 Requirements. All insurance policies required hereunder
will: (i) require 30 days’ prior written notice to Lessor of cancellation,
non-renewal or material change in coverage (any such cancellation, non-renewal
or change, as applicable, not being effective until the thirtieth (30th) day
after the giving of such notice) except, in the case of cancellation for
nonpayment of premium, only 10 days’
prior written notice shall be required and in the case of cancellation of the
coverages described under Section 14.a.(iv), notice as established under
the applicable endorsements; (ii) name the Additional Insureds (as
hereinafter defined) as an additional insured under the liability coverage and
name Additional Insureds as sole loss payee under the physical damage insurance
coverage; (iii) not require contributions from other policies held by the
Additional Insureds; (iv) waive any right of subrogation against the
Additional Insureds; (v) in respect of any liability of any of the Additional
Insureds, except for the insurers’ salvage rights in the event of a loss or
damage, waive the right of such insurers to setoff, to counterclaim or to any
other deduction, whether by attachment or otherwise, to the extent of any
monies due the Additional Insureds under such policies; (vi) permit but
not require that any of the Additional Insureds pay or be liable for any premiums with respect to such insurance
covered thereby; (vii) provide for coverage in all areas in which the
Aircraft is permitted to fly under the terms hereof; (viii) provide that all of the provisions thereof, except
the limits of liability, will operate in the same manner as if there were a
separate policy covering each Additional Insured; and (ix) contain breach
of warranty provisions providing that, in respect of the interests of the
Additional Insureds in such policies, the insurance will not be invalidated by
any action or inaction of Lessee or any other person (other than an Additional
Insured, as to itself only) and will insure the Additional Insureds regardless
of any breach or violation of any warranty, declaration or condition contained
in such policies by Lessee or by any other person (other than an Additional
Insured, as to itself only). As used herein, the term “Additional Insureds” means “KeyCorp and its subsidiaries and
affiliated companies including KeyEquipment Finance Inc., and their respective
successors and/or assigns.”

 

(c)                                  No Right to Self-insure. Lessee will 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 and approved by
Lessor.

 

(d)                                 Notice of Loss or Damage;
Application of Proceeds. Lessee
will give Lessor prompt notice of any damage to or loss of, the Aircraft, or
any part thereof. So long as no Default or Event of Default shall have occurred
and be continuing under this Lease, insurance proceeds for partial loss or
damage to the Aircraft or any part thereof for which the cost of repair is less
than $250,000.00 will be applied solely for payment of the costs actually
incurred with respect to repairs made to the Aircraft so as to restore it to
the operating condition required hereby. If a Default or Event or Default has
occurred and is continuing or such insurance proceeds for partial loss or
damage to the Aircraft or any part thereof for which the cost of repair is
greater than $250,000.00, such insurance proceeds will be applied as Lessor in
its sole discretion determines.

 

(e)                                  Reports, Policies,
Certificates. Not less than
fifteen (15) days prior to the expiration dates of the policies obtained by
Lessee pursuant to this section, Lessee will deliver to the Additional Insureds
certificate(s) of insurance evidencing that the coverage required
hereunder has been obtained beyond such expiration date, together with a
certificate certifying that such insurance complies with the terms hereof,
accompanied, if requested by Lessor, by the applicable policies and report(s) of
insurance broker(s) or underwriter(s) as to the conformity of such
coverage with such requirements; provided, however, that the Additional Insureds will be under no duty either to ascertain
the existence of or to examine any certificates or reports or to advise Lessee
if such insurance does not comply with the requirements of this section.

 

(f)                                    Attorney-in Fact. Lessee irrevocably appoints Lessor (and any
assignee, mortgagee and/or lender of the Lessor) its attorney-in-fact to file,
settle, or adjust, and receive payment of, claims under any insurance policy
required hereby and to endorse Lessee’s name on any checks, drafts or other instruments
in payment of such claims, and to otherwise act in Lessee’s name and on its
behalf to make, execute, deliver and file any instruments or documents
necessary in connection therewith, and to take any action as Lessor (and any
such assignee, mortgagee and/or lender)

 

12

 

deems
necessary or appropriate to obtain the benefits intended to inure to Lessor
under this Section 14. To the extent appropriate or permissible under
applicable law, such appointment is coupled with an interest, is irrevocable,
and will terminate only upon payment in full of the obligations set forth in
this Lease and/or any agreements, documents or instruments related thereto.
Notwithstanding the foregoing, unless a Default or Event of Default has
occurred and is continuing hereunder, Lessor agrees that it will not exercise
its powers as attorney in fact with respect to claims for damages in amounts
which are less than the lesser of (i) $250,000.00, or (2) ten percent
(10%) of the Lessor’s Cost if the Lessor’s Cost is under one million dollars
($1,000,000.00).

 

Section 15 — Indemnification.

 

(a)                                  General Indemnity. Lessee will indemnify and hold harmless Lessor
and each Lessor Assignee, on an after tax basis, from and against any and all
liabilities, causes of action, claims, suits, penalties, damages, losses, costs
or expenses (including attorneys’ fees), obligations, demands and judgments
(collectively, a “Liability”) arising out of or in any way related to: (i) Lessee’s
failure to perform any covenant under any of the Lease Documents, (ii) the
untruth of any representation or warranty made by Lessee under the Lease
Documents, (iii) the order, manufacture, purchase, ownership, selection,
acceptance, rejection, possession, rental, sublease, operation, use,
maintenance, control, loss, damage, destruction, removal, storage, surrender,
sale, condition, delivery, return or other disposition of or any other matter
relating to the Aircraft, or (iv) injury to persons, property or the
environment including any Liability based on strict liability in tort,
negligence, breach of warranties or Lessee’s failure to comply fully with
applicable law or regulatory requirements; provided,  that the foregoing indemnity will not extend
to any Liability to the extent resulting solely from the gross negligence or
willful misconduct of Lessor.

 

(b)                                 Tax Indemnity.  Lessor and Lessee intend that the Lease be treated as a true lease in
which Lessor is entitled to all federal and state tax benefits, including the
ability to take MACRS depreciation and, if applicable, bonus depreciation (the
“Tax Benefits”) available to the owner of the Aircraft. If Lessor is not
entitled to claim the Tax Benefits or the Tax Benefits are adjusted, deferred
or recaptured (in each case, a “Tax Loss”) as a result of any act, omission or
misrepresentation of Lessee, then Lessee will pay to Lessor, as indemnity and
as additional rent, the amount, on an after tax basis, necessary to provide
Lessor the same net economic return under the Lease that Lessor would have
realized had there not been a Tax Loss; provided, that Lessor shall provide
Lessee a reasonably detailed statement as to the cause and calculation of the
Tax Loss and, if (i) the amount of the Tax Loss involves more than
$50,000, (ii) Lessee has provided a written opinion of its tax counsel
that it is more likely than not that Lessor could prevail with the Internal
Revenue Service with respect to such Tax Loss, (iii) Lessee agrees in
writing to be responsible for the costs of the contest (including (x) reasonable
attorney and accountant fees of Lessor, and (y) the Tax Loss, if the
contest is unsuccessful, or shall have paid such Tax Loss, if required to
pursue the contest), and (iv) no Event of Default has occurred and is
continuing, then Lessor shall contest such Tax Loss; provided, further, that
Lessor shall not be responsible to contest this further than Tax Court or
District Court, as the case may be. Unless otherwise agreed, Lessor shall
control the contest; provided, that Lessor agrees to reasonably consider
suggestions of Lessee and its counsel and to promptly provide Lessee and its
counsel with all information relating to such Tax Loss and the contest (other
than copies of tax returns and confidential pricing information). This indemnity
will be computed assuming that Lessor is taxed at the highest corporate rate
then in effect and otherwise applying the same assumptions used by Lessor in
originating the Lease, and will include all penalties and interest that are
assessed with respect to the Tax Loss. The indemnity due hereunder will be
payable in full within thirty days of a demand by Lessor accompanied by the
supporting computation of the Tax Loss. In the absence of manifest error,
Lessor’s computation will be binding. For purposes of this Section, the term
“Lessor” includes any entities with which Lessor consolidates tax returns. All
rights arising from this indemnity will survive the expiration or termination
of the Lease.

 

Section 16 — Assignment and Sublease.

 

(a)                                  By Lessee. LESSEE WILL NOT SELL, TRANSFER, ASSIGN,
CHARTER, SUBLEASE, CONVEY, PLEDGE, MORTGAGE OR OTHERWISE ENCUMBER ITS INTEREST
IN, UNDER, OR 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 WILL BE
NULL AND VOID IN ADDITION, LESSEE WILL NOT ENTER INTO ANY INTERCHANGE AGREEMENT
WITH RESPECT TO THE AIRCRAFT OR RELINQUISH POSSESSION OF THE AIRCRAFT 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 OR CONSENT TO, CREATE OR PROVIDE FOR
AN INTERNATIONAL INTEREST,
PROSPECTIVE INTERNATIONAL INTEREST OR PROSPECTIVE SALE IN OR RELATING TO THE AIRCRAFT OR ANY CHARTER OR SUBLEASE THEREOF
WITHOUT THE PRIOR WRITTEN CONSENT OF THE LESSOR. No

 

13

 

acceptance,
assignment, subletting, relinquishment or installation will in any event
relieve Lessee of primary, absolute and unconditional liability for its duties
and obligations under this Lease.

 

(b)                                 By Lessor. Lessor, at any time with or without notice to
Lessee, may sell, transfer, assign and/or grant a security interest in all or
any part of Lessor’s interest in this Lease or the Aircraft or any part thereof
(each, a “Lessor Transfer”) and Lessee hereby expressly consents in advance to
any such assignment by Lessor of this Lease, including Lessor’s International
Interest and any associated rights in the Aircraft. Any purchaser, transferee,
assignee or secured party of Lessor (each a “Lessor Assignee”) will have and
may exercise all of Lessor’s rights hereunder with respect to the items to which
any such Lessor Transfer relates, and Lessee will not assert against any Lessor
Assignee any claim Lessee may have against Lessor, provided Lessee may assert
any such claim in a separate action against Lessor. Upon receipt of written
notice of a Lessor Transfer, Lessee will promptly acknowledge in writing its
obligations under the Lease, will comply with the written directions or demands
of any Lessor Assignee and will make all payments due under the assigned Lease
as directed in writing by the Lessor Assignee. Following such Lessor Transfer,
the term “Lessor” will be deemed to include or refer to each Lessor Assignee.
Lessee will provide reasonable assistance to Lessor to complete any transaction
contemplated by this subsection (b).

 

(c)                                  Successors. Subject to the restriction on assignment
contained in subsection (a), the Lease will inure to the benefit of, and is
binding upon, the successors and assigns of the parties hereto.

 

Section 17 — [RESERVED].

 

 

Section 18 — Events of Default.

 

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

 

(i)                                          Lessee fails to pay any Rent or any other
amount due hereunder within ten (10) days after the same has become due;

 

(ii)                                       Lessee fails to keep in full force and effect any of the insurance required under this Lease, or operates the Aircraft
at a time when, or at a place in which, such insurance is not in effect;

 

(iii)                                    Lessee fails to perform or observe any other
covenant, condition or agreement required to be performed or observed by it
hereunder or under any agreement, document or certificate related hereto,
provided if such failure is capable of cure within twenty (20) days of Lessee’s
knowledge of such failure, Lessee shall have a period of twenty (20) days to
cure such failure (but not beyond the expiration of the Term) after the earlier
of (i) actual knowledge thereof by Lessee, or (ii) written notice by
Lessor thereof;

 

(iv)                                   Lessee defaults in the (x) payment of any
other obligation to Lessor or any affiliated Person controlling, controlled by
or under common control with Lessor or (y) performance of any other
obligation to Lessor or any affiliated Person controlling, controlled by or
under common control with Lessor under any agreement or instrument having an
original amount or amount then in controversy greater than $500,000.00;

 

(v)                                      any representation or warranty now or
hereafter made or information now or hereafter provided by Lessee, including
any financial information, proves to be or to have been false, inaccurate, or
misleading in any material respect;

 

(vi)                                   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, or the making by Lessee of a general assignment or deed of trust
for the benefit of creditors;

 

(vii)                                Lessee defaults in any obligation to a third
party involving debt in excess of $500,000.00 and such default shall continue
for more than the period of grace, if any, therein specified, if the effect
thereof (with or without the giving of notice or further lapse of time or both)
is to accelerate or to permit the holders of any such debt to accelerate, the
maturity

 

14

 

of
any such debt, or any such debt shall be declared due and payable or be
required to be prepaid (other than by a regularly scheduled required
prepayment) prior to the stated maturity thereof, or any such debt shall not be
paid on the stated maturity date thereof;

 

(viii)                             the occurrence of a Change of Control;

 

(ix)                                     Lessee becomes insolvent or generally fails to
pay its debts as they became due or Lessee admits in writing its inability to
pay its debts or obligations generally as they become due;

 

(x)                                        the occurrence of any event or events that,
individually or in the aggregate, results in a Material Adverse Effect;

 

(xi)                                     any event or condition set forth in
subsections iv through xiii of this Section 18 occurs with respect to any
Guarantor or other Person responsible, in whole or in part, for payment or
performance of Lessee’s obligations under this Lease;

 

(xii)                                  any event or condition set forth in
subsections iv through xiii of this Section 18 occurs with respect to DFA LLC.

 

(b)                                 Lessee will promptly notify Lessor of the
occurrence of any Default or Event of Default.

 

Section 19 — Remedies.

 

(a)                                  Upon the occurrence and during the continuance
of any Event of Default, Lessor may exercise any one or more of the following
remedies, as Lessor in its sole discretion elects:

 

(i)                                          Proceed by appropriate court action, either at
law or in equity, to enforce performance by Lessee of this Lease or to recover
damages, including incidental and consequential damages, for the breach hereof.

 

(ii)                                       By notice to Lessee, terminate this Lease,
whereupon all rights of Lessee to the use of the Aircraft or any part thereof
will absolutely cease and terminate but Lessee will remain liable as
hereinafter provided.

 

(iii)                                    Cause Lessee, at its expense, promptly
to return the Aircraft to Lessor at such place as Lessor designates.

 

(iv)                                   Enter upon any premises where the Aircraft is
located and, without notice to Lessee, 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
without such action constituting a cancellation or termination of the Lease unless
Lessor notifies Lessee in writing to such effect.

 

(v)                                      By written notice to Lessee specifying a payment date (the “Remedy
Date”), demand that Lessee pay to Lessor, and Lessee will forthwith pay to
Lessor on the Remedy Date, an amount equal to the sum of (i) any unpaid
Rent due and payable for all periods up to and including the Remedy Date, plus,
(ii) 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 Remedy
Date, plus (iii) all costs, charges and expenses including reasonable
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.

 

(vi)                                   Sell or otherwise dispose of the Aircraft by
public or private sale, with or without notice to the Lessee, and without
having the Aircraft present at the place of sale and in such manner as it deems
appropriate. Lessor may elect to 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 of its rights under laws governing such sale to the extent
permitted by law. Lessee hereby agrees that ten working days’ prior notice to
Lessee of any public sale or of the time after which a private sale may be
negotiated will be conclusively deemed commercially reasonable notice.

 

(vii)                                Hold, keep idle, lease, or use or operate all
or part of the Aircraft without any liability whatsoever and store the Aircraft
on Lessee’s premises pending lease or sale or hold a sale on such premises
without liability for rent or costs whatsoever.

 

15

 

(viii)                             Exercise any other right or remedy available
to Lessor under applicable law, including any applicable rights and remedies
specified under the Cape Town Treaty available to Lessor. In addition, Lessee
will be liable for all reasonable costs, expenses, and legal fees incurred in
enforcing Lessor’s rights under the Lease, before or in connection with
litigation and for any deficiency in the disposition of the Aircraft.

 

(b)                                 If Lessor has exercised its remedies as set
forth in Section 19(a)(v) hereof and has irrevocable and indefeasibly
received all amounts contemplated in Section 19(a)(v), Lessor shall be
required to sell the Aircraft or cause the Aircraft to be sold. In the event of
any sale of the Aircraft under this Section 19, the net proceeds of any
sale or lease as provided above will be applied by Lessor (i) first, to
pay all costs, charges and expenses incurred in enforcing its rights hereunder,
including the cost of discharging all Liens on the Aircraft (other than Lessor
Liens) and all reasonable 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, (ii) 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 (iii) third,
to reimburse Lessee for the Casualty Value to the extent paid by Lessee as
liquidated damages. Any surplus remaining thereafter will be retained by
Lessor.

 

(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 this Lease by any bankruptcy trustee or
debtor-in-possession will entitle Lessor to the immediate return of the
Aircraft and to liquidated damages calculated in the manner provided for in Section 19(v) above.

 

(d)                                 No right or remedy referred to herein is
intended to be exclusive, but each will 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 such rights and/or remedies as are provided for in the
UCC and the Cape Town Treaty. No express or implied waiver by Lessor of any
Default or Event of Default hereunder will in any way be, or be construed as, 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 will 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 will not exhaust the same or constitute a waiver
of any other right provided for or otherwise referred to herein.

 

(e)                                  With respect to any exercise by Lessor of its
right to recover and/or dispose of the Aircraft, Lessee acknowledges and agrees
that Lessor may dispose of the Aircraft on an “AS-IS, WHERE-IS” basis, in
compliance with applicable law and with such preparation (if any) as Lessor
determines to be commercially reasonable. Lessee will remain liable for any
deficiency in the disposition of the Aircraft.

 

(f)                                    Except as specified in this Lease, to the
extent permitted by applicable law, Lessee hereby waives any rights now or
hereafter conferred by statute, treaty 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 19 or which may otherwise limit or modify any of
Lessor’s rights or remedies under this Section 19. 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 any
rights of Lessee (i) to cancel or repudiate this Lease or any supplement
or any document relating thereto, (ii) to reject or revoke acceptance of
the Aircraft or any component thereof and (iii) to recover from Lessor any
general or consequential damages, for any reason whatsoever.

 

Section 20 — Performance of Obligations of Lessee
by Lessor.

 

If
Lessee fails to perform or comply with any of its obligations contained herein,
Lessor will have the right, but will not be obligated, to effect such
performance or compliance and Lessee will remit to Lessor promptly upon demand
therefor the amount expended by Lessor in effecting such performance or
compliance plus any out-of-pocket expenses incurred by Lessor in connection
therewith. Any such action by Lessor will not be deemed a cure or waiver of any
of Lessee’s obligations hereunder or of any Default or Event of Default.

 

Section 21 — Nature of Transaction.

 

(a)                                  General. This Lease is intended
to be a true lease and not a sale of the Aircraft. Title to the Aircraft will
at all times remain in Lessor, and the parties agree that this Lease is a
“Finance Lease” as defined in the UCC. Lessee represents that Lessee: (i) has
selected the Supplier and directed Lessor to purchase the Aircraft from the
Supplier in connection with this Lease, (ii) has been informed in writing
in this Lease, before Lessee’s execution of this Lease, that Lessee is entitled

 

16

 

under
UCC Article 2A to the promises and warranties provided to Lessor by the
Supplier in connection with or as part of the Purchase Agreement, including
those of any third party, and (iii) understands that it may communicate
with the Supplier and receive an accurate and complete statement of those
promises and warranties, including any disclaimers and limitations of them or
of remedies.

 

(b)                                 Lien. Should a court of competent jurisdiction determine that this agreement
is not a true lease, but rather one intended as security, then solely in that
event and for the expressly limited purposes thereof, Lessee will be deemed to
have hereby granted Lessor a security interest (and created an International
Interest in favor of the Lessor) in the Aircraft and all accessions,
substitutions and replacements thereto and therefor, and proceeds thereof, to
secure the prompt payment and performance as and when due of all obligations of
Lessee to Lessor pursuant to this Lease or otherwise, now existing or hereafter
created.

 

Section 22 — Notices.

 

All
notices and other communications hereunder will be in writing and will be
transmitted by hand, overnight courier or certified mail (return receipt
requested), US postage prepaid. Such notices and other communications will be
addressed, if to Lessor, to Key Equipment Finance, 66 South Pearl Street - 7th Floor, Albany, NY 12207 Attn: Customer Service, and if to
Lessee, to the address set forth in the introductory paragraph of this Lease or
at such other address as any party may, from time to time, designate by notice
duly given in accordance with this section. Such notices and other communications
will be effective upon the earlier of receipt or three days after mailing if
mailed in accordance with the terms of this section.

 

Section 23 — Purchase and Renewal Options.

 

(a)                                  Purchase Option. So long as (i) no Default or Event of
Default shall have occurred and be continuing under this Lease and (ii) this
Lease has not been earlier terminated, Lessee will be entitled, at its option,
upon written notice to Lessor at least ninety (90) but not more than one
hundred eighty (180) days prior to the expiration of the Basic Term, to
purchase all but not less than all of 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 Section 23(c) hereof, plus any applicable sales,
excise or other taxes imposed as a result of such sale (other than gross or net
income taxes on Lessor’s income attributable to such sale) and together with
all Rent and all other amounts then due and owing hereunder. Lessor’s sale of
the Aircraft will be on an “AS-IS, WHERE-IS” BASIS WITHOUT ANY REPRESENTATION
OR WARRANTY BY LESSOR (OTHER THAN AS TO LESSOR’S LIENS).

 

(b)                                 Renewal Option. So long as (i) no Default or Event of
Default shall have occurred and be continuing under this Lease, (ii) Lessee has not exercised its purchase option pursuant to Section 23(a) hereof
and (iii) this Lease has not been earlier terminated, Lessee will be
entitled, at its option, to extend the Term of this Lease with respect to the
Aircraft at the expiration of the Basic Term for an additional period. The
length of such additional period will be as set forth on Schedule 2 (such
additional period being hereinafter referred to as the “Renewal Term”). A Renewal
Term will commence at the expiration of the Basic Term. Lessee’s option to
renew this Lease for a Renewal Term will be exercisable by giving written
notice to Lessor at least ninety (90) but not more than one hundred eighty
(180) days prior to the expiration of the Basic Term. All provisions of this
Lease will be applicable during the Renewal Term, except that, during the
Renewal Term, the Basic Rent will be an amount equal to the Aircraft’s fair
rental value, which will be determined in accordance with Section 23(c) hereof.
Such Basic Rent will be payable monthly, in advance or arrears, and on the same
day of each month during the Renewal Term as, in each case, was applicable
during the Basic Term. Such payment dates will be “Basic Rent Dates.”

 

(c)                                  Determination of Fair Market
Sales and Rental Values. If Lessee
has elected to exercise its purchase or renewal options, as provided in Section 23(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 will 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
will constitute such fair market sales value or fair market rental value, as
the case may be, of the Aircraft for the purposes of this Section 23. If
Lessor and Lessee fail to agree upon such value before the expiration of
the Basic Term, Lessor will appoint an independent appraiser (reasonably
acceptable to Lessee) to determine fair market sales value or fair market
rental value, as the case may be, and that determination will be final, binding
and conclusive. Lessee agrees to pay the costs and expenses of any such
appraisal. For the purposes of this Section 23, “fair market sales value”
and ‘‘fair market rental value” will be determined on the basis of, and will
equal in value, the amount that 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 will not be a deduction from such fair

 

17

 

market
sales value or fair market rental value, as the case may be, and it will be
assumed (whether or not the same be true) that (i) the Aircraft has been
maintained in accordance with the provisions of this Lease (ii) the
Aircraft would have been returned to Lessor in compliance with the requirements
of Section 8 hereof or any other applicable section, and (iii) that
the total number of Airframe hours (including any component with hourly
overhaul schedules) accumulated from the Acceptance Date to the Expiration Date
or other date of termination or cancellation do not exceed the product of
Estimated Annual Hours times the number of twelve month periods and any portion
thereof, from the Acceptance Date to the such expiration, termination, or
cancellation date (any such excess, the “Excess Hours”).

 

(d)                                 Time to Exercise Option. Lessee will be deemed to have waived the
purchase option under Section 23(a) and the renewal option under Section 23(b) and
the early buyout option under Section 23(e)(ii) and the early
termination option under Section 23(e)(i) unless, in each case,
Lessee provides Lessor with written notice of its irrevocable election to
exercise the applicable option within the time period specified in each such
section.

 

(e)                                  Early Buyout Option and Early
Termination Option.

 

(i)                                          Early Termination Option. If Lessee determines in good faith that the
Aircraft has become economically obsolete or surplus to Lessee in its business,
then Lessee may, at its option, elect to terminate the Lease with respect to
all but not less than all such Aircraft by delivering to Lessor written notice
of its election not less than ninety (90) days prior to the anticipated
termination date. Such notice shall (A) specify the date of such
termination (the “Termination Date”), which shall be any Rent Payment Date on
or after the Rent Payment Date that is thirty-six (36) months after the Rent
Commencement Date, and (B) include written certification from an
authorized officer of Lessee that the Aircraft has become economically obsolete
or surplus to Lessee in its business. During the period from the date of
delivery to Lessor of such notice to the Termination Date, Lessee, as exclusive
agent for Lessor and at Lessee’s sole risk, cost and expense, shall use
reasonable efforts to obtain bids from persons other than Lessee or any
affiliated Person controlling, controlled by or under common control with
Lessee (“Lessee Affiliate”) for the cash purchase of the Aircraft. Unless an
Event of Default shall have occurred and be continuing or Lessor shall have
elected to retain the Aircraft as provided below, on the Termination Date (A) Lessee
shall sell the Aircraft to the highest bidder, which shall not be a Lessee
Affiliate, and (B) regardless of whether Lessee has complied with its
obligation to sell the Aircraft as required in the foregoing subsection, Lessee
shall pay Lessor the sum of (I) all amounts accrued but unpaid under the
Lease, plus (II) the greater of (a) the net sales price actually
received by Lessee from the sale of the Aircraft, or (b) the amount of the
highest bid if Lessee has not sold the Aircraft or (c) the amount
specified as the “Termination Value” for the corresponding Rent Payment Date on
Schedule 4 to Lease Supplement 1 attached hereto, plus (III) applicable
sales taxes that are or would be attributable to the sale of the Aircraft. Any
sale by Lessee shall be on an as-is, where-is basis, without any representation
or warranty (other than as to the absence of Lessor Liens) by or recourse to
Lessor. Lessee shall be liable for all costs and expenses incurred by Lessor in
connection with Lessee’s election to terminate this Lease, including, without
limitation, any breakage charges incurred by Lessor. Notwithstanding the
foregoing, Lessor may irrevocably elect by written notice to Lessee, no later
than thirty (30) days after receipt of Lessee’s notice of termination, to
retain the Aircraft. If Lessor elects to retain the Aircraft, Lessee shall (i) deliver
the Aircraft to Lessor on the Termination Date in the same manner and condition
required under the Lease as if delivery were made to Lessor pursuant to Section 8
and (ii) pay to Lessor all amounts accrued but unpaid hereunder. Upon
delivery of the Aircraft to Lessor and Lessor’s receipt of all such amounts,
the Lease shall terminate except with respect to indemnities and other
provisions herein expressly stated to survive termination of the Lease.

 

(ii)                                       Early Buyout Option. So long as no Default shall have occurred
and be continuing, Lessee shall have the option to purchase all, but not less
than all, of the Equipment on the dates which are 36 and 108 months after the
Rent Commencement Date (the “EBO Dates”) respectively at a price (the “EBO
Price”) equal to 92.43% of the
Total Cost of the Equipment for the first date and 65.97% of the Total Cost of
the Equipment for the second date, plus, in each case, any applicable sales
taxes (the “Early Purchase Option”).

 

(iii)                                    Fair Market Value. The amounts set forth in Schedule 4 to Lease Supplement 1 and the EBO
Prices set forth in Schedule 2A to Lease Supplement 1 represent the parties’
present best estimate of the fair market value of the Aircraft on the
applicable EBO Date determined by using commercially reasonable methods which
are standard in the industry.

 

(iv)                                   Notice and Payment. If Lessee desires to exercise either the
Early Buyout Option or the Early Termination Option, Lessee shall notify Lessor
in writing of such election at least one hundred and eighty (180) days prior to
the applicable EBO Date. Such notice shall be irrevocable. Payment of the EBO Price, applicable sales taxes,
together with all other amounts due and owing by Lessee under the Lease
(including, without limitation, Rent) on or before the EBO Date, shall be made
on the EBO Date in immediately available funds. Thereafter, upon Lessee’s
written request, Lessor shall deliver to Lessee a bill of sale transferring to
Lessee all right, title and interest of Lessor in and to the Aircraft

 

18

 

ON
AN “AS IS, WHERE IS” BASIS, WITHOUT ANY WARRANTIES, EXPRESS OR IMPLIED, AS TO
ANY MATTER WHATSOEVER EXCEPT AS TO LESSOR’S LIENS. If Lessee fails to pay all
amounts required to be paid under the Lease on the EBO Date, the Lease shall
continue in full force and effect and Lessee shall reimburse Lessor for all
reasonable costs, expenses and liabilities incurred in connection with such
failure.

 

Section 24 — Transaction Expenses.

 

Lessee  will 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 appraisal fees,
Lessor’s counsel fees and expenses and FAA Counsel fees and expenses, and FAA,
International Registry and UCC title and lien searches, reports, filing,
discharge, registration 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, register, discharge and record any and
all documents and instruments as required by Lessor, the Cape Town Treaty, the
International Registry or the FAA during and after the Term of this Lease.

 

Section 25 — Miscellaneous.

 

(a)                                       All agreements, indemnities, representations,
covenants and warranties contained in this Lease or any agreement, document or
certificate delivered pursuant hereto or thereto or in connection herewith or
therewith will survive the execution and delivery of this Lease and the expiration
or other termination of this Lease for any reason whatsoever.

 

(b)                                      Any provision of a Lease that is prohibited or
unenforceable will be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions thereof.

 

(c)                                       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 and cancel and supersede any and all prior or
contemporaneous oral or written understandings, memoranda, negotiations,
communications and agreements with respect thereto including any proposal
letter, commitment letter and/or term sheet delivered to the Lessee by Lessor.

 

(d)                                      This Lease may be executed in several
counterparts and by different parties hereto on separate counterparts, each of
which when so executed or otherwise authenticated and delivered will be an
original, but all such counterparts will together consist of one and the same
instrument; except, to the extent that the Lease constitutes chattel paper
under the UCC, no security interest therein may be created other than through
the transfer or possession of the original counterpart, which will be
identified by Lessor. If this Lease is executed by more than one person or
entity as Lessee, the obligations of all such signers hereunder will be joint
and several and all references to “Lessee” will apply both jointly and
severally. The Lease will be binding upon Lessor only if executed by a duly
authorized officer or representative of Lessor at Lessor’s address set forth
above. An authorized signer of Lessee will execute the Lease Documents on Lessee’s
behalf.

 

(e)                                       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 will not affect the construction or
interpretation of this Lease.

 

(f)                                         LESSEE HEREBY AUTHORIZES
LESSOR TO AUTHENTICATE AND/OR FILE ALL UCC FINANCING STATEMENTS AND AMENDMENTS
THAT IN LESSOR’S SOLE DISCRETION ARE DEEMED NECESSARY OR PROPER TO SECURE OR
PROTECT LESSOR’S INTEREST IN
THE
AIRCRAFT OR ANY PART THEREOF IN ALL APPLICABLE JURISDICTIONS.

 

(g)                                      Lessee hereby consents to the registration of
the International Interests in the Airframe and Engines provided for by this
Lease (including under Section 13(b) hereof) with the International
Registry, Lessee hereby ratifies, to the extent permitted by law, all that
Lessor lawfully and in good faith does or causes to be done by reason of and in
compliance with this section. Lessee will provide written notice to Lessor at
least thirty days prior to any contemplated change in Lessee’s name, jurisdiction
of organization or chief executive office address. Lessee will promptly
execute, consent to or otherwise authenticate and deliver to Lessor or such
other Person, including the International Registry, such further documents,
instruments, registrations, assurances and other records and take such further
action as Lessor may reasonably request in order to carry out the intent and
purpose of this Lease and to establish and protect the rights and remedies
created or intended to be created in favor of Lessor hereunder. 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 and to take any action as
Lessor (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

 

19

 

thereto.
To the extent appropriate or permissible under applicable law, such appointment
is coupled with an interest, will be irrevocable and will terminate only upon
payment in full of the obligations set forth in this Lease and/or any
agreements, documents or instruments related thereto.

 

(h)                                        Time is of the essence in the payment and
performance of all of Lessee’s obligations under this Lease.

 

(i)                                            THIS LEASE IS BEING DELIVERED
IN, AND WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF, THE
STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAWS. Lessor and Lessee agree that the court of the
State of New York have non-exclusive jurisdiction in respect of any claim
brought under the Cape Town Treaty relating to the Aircraft.

 

Section 26 — Amendments.

 

This
Lease may not be amended except by a writing signed by Lessor and Lessee.
Delivery of an executed copy of this Lease by facsimile or any other reliable
means will be deemed as effective for all purposes as delivery of a manually
executed copy. Lessee will provide to Lessor the manually executed original of
any document delivered by facsimile within five days.

 

Section 27 — Jury Trial Waiver.

 

LESSOR AND LESSEE HEREBY EACH WAIVE THEIR RESPECTIVE RIGHTS
TO TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF
OR RELATED TO THE AIRCRAFT OR THIS LEASE. THIS WAIVER IS MADE KNOWINGLY,
WILLINGLY AND VOLUNTARILY BY LESSOR AND LESSEE WHO EACH ACKNOWLEDGE THAT NO
REPRESENTATIONS HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE THIS WAIVER OF TRIAL
BY JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT. THIS WAIVER APPLIES TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS HERETO.

 

20

 

Section 28 — Truth in Leasing.

 

THE
AIRCRAFT 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 THE
CAPACITY SET FORTH BELOW THE SIGNATORY’S SIGNATURE, CERTIFIES THAT THE LESSEE
WILL BE RESPONSIBLE FOR THE OPERATIONAL CONTROL OF THE AIRCRAFT UNDER THE
LEASE, UNLESS,
THE AIRCRAFT IS SUBLEASED TO AN AIR CARRIER OR AIR TAXI OPERATOR CERTIFICATED
UNDER PART 121 OR PART 135, RESPECTIVELY, OF THE FARS. THE NAME,
ADDRESS AND SIGNATURE OF THE PERSON RESPONSIBLE FOR OPERATIONAL CONTROL OF THE
AIRCRAFT UNDER THIS LEASE ARE SET FORTH IN THIS SECTION 28 AND SUCH
PERSON’S EXECUTION HEREOF CONSTITUTES A CERTIFICATION BY SUCH PERSON THAT SUCH
PERSON UNDERSTANDS HIS OR HER RESPONSIBILITY FOR COMPLIANCE WITH APPLICABLE
FARS.

 

	
  a)

  	
   

  	
  Name:

  	
   

  	
  DON
  F. AHERN

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature:

  	
   

  	
  /s/
  Don F. Ahern

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  	
   

  	
  4241
  S. ARVILLE, LAS VEGAS, NV 89103

  	
   

  

 

THE
LESSEE FURTHER CERTIFIES THAT IT UNDERSTANDS ITS RESPONSIBILITIES FOR
COMPLIANCE WITH APPLICABLE FARS. 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.

 

	
  Lessee’s
  Initials:

  	
  /s/ DA

  	
   

  
	
   

  	
   

  	
   

  
	
  Lessee’s
  Initials:

  	
  /s/ DA

  	
   

  

 

(Signature Page follows)

 

21

 

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

 

	
  LESSOR:

  	
   

  	
  LESSEE:

  
	
  KEY EQUIPMENT FINANCE INC.

  	
   

  	
  AHERN RENTALS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature:

  	
  /s/
  Donald C. Davis

  	
   

  	
  Signature:

  	
   

  
	
  Print
  Name: 

  	
  Donald
  C. Davis

  	
   

  	
  Print
  Name: 

  	
   

  
	
  Title:
  

  	
  Vice
  President

  	
   

  	
  Title:

  	
   

  
	
  Date:

  	
         April 20,
  2006

  	
   

  	
  Date:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
  Address:

  
	
   

  	
   

  	
   

  
	
  1000
  South McCaslin Blvd

  	
   

  	
  4241
  Arville St

  
	
  Superior,
  CO 80027

  	
   

  	
  Las
  Vegas, NV 89103-3713

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LESSEE:

  
	
   

  	
   

  	
  DON. F. AHERN

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature:

  	
   

  
	
   

  	
   

  	
  Print
  Name: 

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4241 Arville St

  
	
   

  	
   

  	
  Las
  Vegas, NV 89103-3713

  
							

 

22

 

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

 

	
  LESSOR:

  	
   

  	
  LESSEE:

  
	
  KEY EQUIPMENT FINANCE INC.

  	
   

  	
  AHERN RENTALS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature:

  	
   

  	
   

  	
  Signature:
  

  	
  /s/ Don F. Ahern

  
	
  Print
  Name: 

  	
  Donald
  C. Davis

  	
   

  	
  Print
  Name: 

  	
  DON F. AHERN

  
	
  Title:
  

  	
  Vice
  President

  	
   

  	
  Title:

  	
  PRESIDENT

  
	
  Date:
  

  	
   

  	
   

  	
  Date:
  

  	
  4/20/06

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
  Address:

  
	
   

  	
   

  	
   

  
	
  1000
  South McCaslin Blvd

  	
   

  	
  4241
  Arville St

  
	
  Superior,
  CO 80027

  	
   

  	
  Las
  Vegas, NV 89103-3713

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LESSEE:

  
	
   

  	
   

  	
  DON. F. AHERN

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature:
  

  	
  /s/ Don F. Ahern

  
	
   

  	
   

  	
  Print
  Name: 

  	
  DON F. AHERN

  
	
   

  	
   

  	
  Date:

  	
  4/20/06

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4241 Arville St

  
	
   

  	
   

  	
  Las
  Vegas, NV 89103-3713

  
							

 

	
  STATE
  OF NEVADA

  	
  )

  	
   

  
	
   

  	
   

  	
  )SS#

  	
   

  
	
  COUNTY
  OF CLARK

  	
  )

  	
   

  
				

 

On
this 17 day of APRIL, 2006, before me the subscriber personally appeared  DON F. AHERN who being by me duly sworn, did depose and say; that he resides at 4241 S. ARVILLE, LAS VEGAS, NV, that
he is the person described in and who executed the foregoing instrument; and
that he signed his name thereto freely and of his own volition.

 

	
  /s/ Lois
  Petruzzo

  	
   

  

 

	
  NOTARY
  PUBLIC

  	
   

   

                               [SEAL]

  
	
   

  
	
  My
  Commission Expires:

  
	
  1/10/08

  
	
   

  

 

23

 

EXHIBIT
A TO

AIRCRAFT
LEASE AGREEMENT

DEFINITIONS

 

1.     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” “hereunder”
and other words of similar import refer to the Lease as whole and not to any particular
section or other subdivision.

 

2.     Except as otherwise indicated, all the
agreements and instruments defined herein or in the Lease means 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.

 

3.     The terms defined in the Lease will, for
purposes of the Lease and all Lease Supplements, schedules and exhibits
thereto, have the meanings assigned to them and will include the plural as well
as the singular as the context requires.

 

4.     The terms “including,” “includes” and
“include” will be deemed to be followed by the words “without limitation.”

 

5.     The following terms have the following
meanings for all purposes of the Lease:

 

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

 

Act means
Subtitle VII of Title 49 of the United States Code, as amended and re-codified.

 

Additions has
the meaning set forth in Section 11 of the Lease.

 

Additional Insureds has the meaning set forth in Section 14(b) of the Lease.

 

Aircraft means (i) the
Airframe, (ii) the Engines, and (iii) where the context permits, the
Records. 

 

Aircraft Marking
means the marking described on Lease Supplement 2.

 

Airframe means (i) the
Airframe described in Schedule 1 and, unless the context requires otherwise,
will not include the Engines, and (ii) any and all Parts from time to time
incorporated in, installed on or attached to such Airframe and any and all
Parts removed therefrom so long as title thereto will remain vested in Lessor
in accordance with the applicable terms of this Lease after removal from the
Airframe.

 

Alterations has
the meaning set forth in Section 11 of the Lease. 

 

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

 

Basic Rent Date
has the meaning set forth in Schedule 2.

 

Basic Term
means the number of months set forth on Schedule 2. 

 

Bill of Sale
has the meaning set forth in Section 2 of the Lease.

 

Business Day
means any day other than a Saturday, Sunday or other day on which banks located
in New York are required or permitted to be closed.

 

Cape Town Treaty
has the meaning provided in 49 U.S.C. § 44113(1).

 

Casualty Value
will be the amount set forth on such Schedule 3 for the applicable Basic Rent
Date except that, in the case of an Event of Loss covered by the insurance
required to be maintained by Lessee pursuant to Section 14(b) of the
Lease (or which would have been covered by such insurance, had such insurance
been maintained as required), Casualty Value means the higher of fair market
sales value (as determined in accordance with the provisions of Section 23
hereof) or the amount set forth on Schedule 3 to Lease Supplement 1.

 

1

 

Change
of Control means the
occurrence of any of the following: (a) the adoption of a plan relating to
the liquidation or dissolution of Lessee; (b) (i) Don F. Ahern shall
cease to own, directly or indirectly, at least 51% of the outstanding voting
capital stock of Ahern, (ii) Don F. Ahern, any member of his immediate
family and any trust established for the benefit of Don F. Ahern and/or any
member of his immediate family shall cease to own, directly or indirectly, at
least 75.0% of the outstanding voting capital stock of Ahern, (iii) Don F.
Ahern shall, by agreement or otherwise, cease to have the right to exercise
voting control of Ahern or (iv) Don F. Ahern shall die or shall become
incapacitated or disabled such that Don F. Ahern is unable to properly perform
the duties for Ahern that he performs for Ahern on the date hereof; provided,
that if Don F. Ahern shall die or become so incapacitated or disabled, a
“Change of Control” under this clause (b) shall not occur as a
result of such death, incapacitation or disability if, within 90 days after the
occurrence of his death or such incapacity or disability and at all times
thereafter, (x) Ahern shall have employed one or more Persons with
requisite experience that are reasonably satisfactory to Lessor to perform
those duties for Ahern that Don F. Ahern performs for Ahern as of the date
hereof and (y) Don F. Ahern’s obligations under this Lease are assumed by
a Person acceptable to Lessor in its sole discretion; or (c) there shall
occur a “Change of Control” or a “Change in Control” as defined in any other
document or agreement governing material debt of Lessee.

 

Claims has the meaning set forth in Section 15
of the Lease.

 

Code means the Internal Revenue Code of 1986, as
amended.

 

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

 

Estimated
Annual Hours means the
anticipated number of average annual flight hours as shown on Schedule No. 2-A.

 

Event
of Default has the
meaning set forth in Section 18 of the Lease.

 

Event
of Loss with respect
to the Aircraft, the Airframe, any Propellers or any Engine means 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 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 the FAA or any similar
foreign governmental body) having jurisdiction, the use of such property has
been prohibited, or such property has been declared unfit for use, for a period
of six (6) consecutive months, unless Lessee, prior to the expiration of
such six-month period, will have undertaken and, in the opinion of the Lessor,
will be diligently carrying forward all steps necessary or desirable to permit
the normal use thereof by Lessee or, in any event, if use has been prohibited,
or such property has 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) months or longer, whether or not
such Engine is operational or (vi) such property will be returned to the
Manufacturer, other than for modification required as a result of patent
infringement or for repair or replacement (any such return being herein
referred to as a “Return to Manufacturer”). The date of any Event of
Loss will 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 will be deemed to have occurred if any Event of Loss
occurs with respect to the Airframe. An Event of Loss with respect to any
Engine will not, without loss of the Airframe, be deemed an Event of Loss with
respect to the Aircraft.

 

Excess Hours
has the meaning set forth in Section 23(c) of the Lease.

 

Expiration Date
means the date set forth in Schedule 2.

 

FAA means the
United States Federal Aviation Administration and any successor agency or
agencies thereto.

 

FAA Counsel
means Crowe & Dunlevy, Oklahoma City, Oklahoma 73102, or such other
counsel as Lessor may designate.

 

FARS has the
meaning set forth in Section 28 of the Lease. 

 

First Basic Rent Date has the meaning set forth in Schedule 2.

 

2

 

Guarantor means any guarantor of Lessee’s obligations
hereunder.

 

Guaranty means individually and collectively, any
agreement under which any Guarantor guarantees Lessee’s obligations owed to
Lessor

 

Impositions,
has the meaning set forth in Section 10 of the Lease.

 

International
Interest has the
meaning provided thereto in the Cape Town Treaty.

 

International
Registry has the
meaning provided in 49 U.S.C. § 44113(3).

 

Last
Basic Rent Date has
the meaning set forth in Schedule 2.

 

Late
Payment Rate means the
lesser of 1.5% per month or the highest rate permitted by applicable law,
computed on the basis of a 360 day year and 30 day month.

 

Lease
Documents means this Lease,
the Purchase Documents and the Guaranty and all amendments, restatements,
modifications and supplements thereto.

 

Lease
Supplement means a
supplement to the Lease to be entered into as of the Acceptance Date by Lessor
and Lessee, which supplement will be substantially in the form as attached to
the Lease and identified as either Lease Supplement 1 or Lease Supplement 2,
both of which are attached to the Lease and made a part thereof.

 

Lessor
Transfer has the
meaning specified in Section 16(b) of the Lease. 

 

Lessor
Assignee has the
meaning specified in Section 16(b) of the Lease. 

 

Lessor’s
Cost has meaning set
forth in Schedule 2.

 

Lessor’s
Liens means any Liens
created or granted by Lessor, or any Liens resulting from claims against Lessor
not related to Lessor’s ownership of the Aircraft.

 

Liability has the meaning specified in Section 29
of the Lease.

 

Liens means all liens, charges, security interests,
and encumbrances of every nature and description whatsoever, including liens,
charges, security interests and encumbrances with respect to Impositions,
International Interests, Prospective International Interests and Prospective
Sales and rights of third parties under management, pooling, interchange,
overhaul, repair or other similar agreements or arrangements.

 

MACRS means modified accelerated cost recovery
system, as defined in the Code.

 

Manufacturer means the manufacturers identified on Lease
Supplement 2 and their respective successors and

assigns.

 

Material Adverse Effect means: (a) a material adverse change in, or a material adverse
effect upon, (i) the Aircraft or (ii) the operations, business,
properties, prospects or condition (financial or otherwise) of Ahern and its
subsidiaries, taken as a whole; (b) a material impairment of the ability of
Lessee to perform under any Lease Document to which it is a party; or (c) a
material adverse effect upon the legality, validity, binding effect, or
enforceability against Lessee or any affiliate of Lessee of any Lease Document
to which it is a party.

 

Parts means all
appliances, parts, instruments, appurtenances, accessories, furnishings and
other equipment of whatever nature (other than complete Engines or engines),
which are from time to time incorporated or installed in or attached to an
Airframe or any Engine and all such items which are subsequently removed
therefrom so long as Lessor has title thereto pursuant to the terms hereof.

 

Permitted Liens
means (a) the rights of Persons under agreements or arrangements expressly
permitted by the terms of Section 16 of the Lease, (b) Lessor’s
Liens, (c) the rights of the Lessor as set forth in the Lease, and (d) 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

 

3

 

delinquent
or being contested in good faith (and, in each case, which do not involve any
material risk of the sale, forfeiture or loss of the Aircraft or any interest
therein) with due diligence and by appropriate proceedings.

 

Person means
any individual, partnership, corporation, 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.

 

Propeller(s) means the propellers described and listed by
manufacturer’s serial numbers listed in Schedule 1.

 

Primary Hangar Location means the hangar location identified on Schedule 2.

 

Prospective International Interest has the meaning provided thereto in the Cape
Town Treaty 

 

Prospective Sale
has the meaning provided thereto in the Cape Town Treaty.

 

Purchase Documents means the documents identified on Lease Supplement 2 and such other
documents as Lessor considers necessary or advisable in order to convey to
Lessor title to the Aircraft as contemplated under the Lease, which documents
will be in form and substance satisfactory to Lessor.

 

Records means any
and all logs, manuals, certificates, 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 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 will be at all times the property of the Lessor after the Acceptance
Date.

 

Recovery Period
has the meaning set forth in Schedule 2.

 

Remedy Date has
the meaning set forth in Section 30 of the Lease. 

 

Renewal Term
has the meaning set forth in Section 23(b) of the Lease.

 

Rent has the
meaning set forth in Section 3 of the Lease.

 

Rent Commencement Date has the meaning set forth in Schedule 2.

 

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

 

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

 

Schedule 1
means Schedule 1 to Lease Supplement 1. 

 

Schedule 2
means Schedule 2 to Lease Supplement 1. 

 

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

 

Supplier means
the “Supplier” or “Suppliers,” as the case may be, identified as such on Lease
Supplement 2 and their respective successors and assigns.

 

Tax Benefits
has the meaning set forth in Section 15(b) of the Lease.

 

Tax Loss has the meaning set forth in Section 15(b) of the
Lease.

 

Term means 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 entered into pursuant to Section 23(b) of the Lease.

 

UCC means the
Uniform Commercial Code as in effect in the applicable jurisdiction.

 

4

 

Warranty Bill of Sale means a warranty bill of sale in the form of Exhibit B to
the Lease.

 

5

 

EXHIBIT B

TO AIRCRAFT LEASE AGREEMENT

(FORM OF WARRANTY BILL OF SALE)

 

WARRANTY BILL OF SALE

 

Cessna
Aircraft Company (the “Seller”), in consideration of the sum of $6,580,325.00
paid by Key Equipment Finance Inc. (the “Buyer”), receipt and sufficiency of
which are hereby 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 supplier to execute an Acknowledgment in form and
substance satisfactory to Buyer in its sole discretion.

 

DESCRIPTION
OF AIRCRAFT

 

Cessna Aircraft Company model Citation            
525B aircraft hearing FAA Registration Mark N742AR and manufacturer’s serial
number* 0074 and (2) Williams model FJ44-3A                
engines, respectively, bearing manufacturer’s serial numbers 141155 &
141156. (See also Schedule A attached hereto and made a part hereof for further
description of the Aircraft.)

 

Seller
hereby represents, warrants and agrees that (1) Seller is the lawful owner
of the full title to the Aircraft and that Buyer will acquire by the terms of
this 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 will defend title to the
Aircraft and defend and indemnify Buyer against any claims by any person,
party, firm, corporation or entity of any kind whatsoever relating to the
Aircraft; and (4) the Aircraft had been delivered to Seller, and has been
delivered to Buyer, in good order and condition and conforms to the
specifications and the requirements and standards applicable thereto under FAA rules and
regulations, the Lease, and any other applicable rule, regulation or contract.

 

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 but not limited to 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
but not limited to 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 Bill of Sale,
including but not limited to all representations, warranties and agreements for
the benefit of Buyer, will survive the delivery of the Aircraft and the
delivery, execution and recording of this or any Federal Aviation
Administration Bill of Sale.

 

Seller
consents to the registration of this Warranty Bill of Sale with the
“International Registry” as such term is defined in 49 U.S.C. § 44113(3) and
agrees to take such steps reasonably requested by Buyer to effect such
registration.

 

IN WITNESS WHEREOF, Seller has executed this Warranty Bill of Sale this         day
of                             ,
20    .

 

	
   

  	
  SELLER:
  Cessna Aircraft Company

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  
				

 

*    525B

 

1

 

SCHEDULE A

TO WARRANTY BILL OF SALE

 

AIRCRAFT DESCRIPTION

 

	
  Airframe
  Make and Model:

  	
   

  	
  CESSNA
  AIRCRAFT COMPANY MODEL CJ3-525B

  
	
   

  	
   

  	
   

  
	
  United
  States Registration Number:

  	
   

  	
  N742AR

  
	
   

  	
   

  	
   

  
	
  Airframe
  Manufacturer’s Serial Number:

  	
   

  	
  525B-0074

  
	
   

  	
   

  	
   

  
	
  Engine
  Make and Model:

  	
   

  	
  WILLIAMS
  MODEL FJ44-3A/9912614-1

  
	
   

  	
   

  	
   

  
	
  Engine
  Manufacturer’s Serial Numbers:

  	
   

  	
  141155 &
  141156

  
	
   

  	
   

  	
   

  
	
  Avionics:

  	
   

  	
  WX-1000E
  LIGHTNING DETECTION — L3 COMMUNICATIONS

  
	
   

  	
   

  	
  630D
  BROADCAST GRAPHICAL WEATHER DISPLAY (XM) — COLLINS

  
	
   

  	
   

  	
  HF-9000
  HIGH FREQUENCY COMMUNICATIONS — COLLINS

  
	
   

  	
   

  	
  TTR-4000
  TCAS II — COLLINS

  
	
   

  	
   

  	
  ELETRONIC
  CHARTS — JEPPESEN

  
	
   

  	
   

  	
  AIRCELL
  ST-3100 - IRIDIUM

  
	
   

  	
   

  	
  GPS-500
  GARMIN

  
	
   

  	
   

  	
  MARK
  VIII EGPWS — HONEYWELL

  
	
   

  	
   

  	
  VHF-4000
  VHF COMMS

  
	
   

  	
   

  	
  CVR
  LOCATOR BEACON

  
	
   

  	
   

  	
  ADC-3000
  AIR DATA COMPUTER 1 & 2

  
	
   

  	
   

  	
  ALT-4000
  RADIO ALTIMETER

  
	
   

  	
   

  	
  AHC-3000
  AHRS COMPUTER

  
	
   

  	
   

  	
  FDU-3000
  UNIT-FLUX DETECTOR

  
	
   

  	
   

  	
  GH-3000
  SECONDARY FLIGHT DISPLAY

  
	
   

  	
   

  	
  DCU-3001
  DATA CONCENTRATOR UNIT

  
	
   

  	
   

  	
  DCP-3030
  AFD DISPLAY CONTROL PANEL

  
	
   

  	
   

  	
  CCP-3000
  AFD-CRSR CONTROL PANEL

  
	
   

  	
   

  	
  AFD-3010
  ADAPTIVE FLIGHT DISPLAY

  
	
   

  	
   

  	
  AFD-3010E
  ADAPTIVE FLIGHT DISPLAY CENTER POSITION

  
	
   

  	
   

  	
  RTA-800
  WEATHER RADAR

  
	
   

  	
   

  	
  XMA-1000
  SATELLITE DATALINK WITH ANTENNA

  
	
   

  	
   

  	
  XMWR-1000
  SATELLITE DATALINK WITH RECEIVER

  
	
   

  	
   

  	
  DME-4000
  DME 1 & 2 TRANCIEVER

  
	
   

  	
   

  	
  TDR-94D
  TRANSPONDER 1 & 2

  
	
   

  	
   

  	
  FMC-3000
  FMS 1 COMPUTER

  
	
   

  	
   

  	
  CDU-3000
  FMS CONTROL DISPLAY UNIT

  
	
   

  	
   

  	
  GPS-500
  FMS GPS DISPLAY

  
	
   

  	
   

  	
  GPS-4000A
  GPS RECEIVER

  
	
   

  	
   

  	
  NAV-4500
  NAV REC/VOR/ADF/MRK BECON/ILS

  
	
   

  	
   

  	
  RTU-4200
  RADIO TUNING UNIT

  
	
   

  	
   

  	
  TCAS
  PROCESSOR

  
	
   

  	
   

  	
  TRE-920
  TCAS II ANTENNA

  
	
   

  	
   

  	
   

  
	
  Interior:

  	
   

  	
  TOWNSEND
  LEATHER SEATING

  
	
   

  	
   

  	
  CARL
  BOOTH HIGH CLOSS WOOD VENEER SIDELEGES / TABLES

  
	
   

  	
   

  	
  AFT
  CABIN LH LAVATORY CLOSURE

  
	
   

  	
   

  	
  CENTER
  AFT COAT ROD

  
	
   

  	
   

  	
   

  
	
  Exterior:

  	
   

  	
  WHITE
  WITH BURGUNDY MIST EFFECT AND SILVER PLATINUM METALLIC AND PAISLEY METALLIC
  STRIPES

  

 

1

 

Lease Supplement 1

To Aircraft Lease Agreement

(Form of Certificate of Acceptance)

 

CERTIFICATE OF ACCEPTANCE

 

THIS IS A CERTIFICATE ACKNOWLEDGING

ACCEPTANCE OF THE AIRCRAFT FOR

PURPOSES OF THE BELOW-REFERENCED LEASE.

 

THIS IS NOT A DELIVERY RECEIPT.

 

This is Lease Supplement 1 to
the AIRCRAFT LEASE AGREEMENT dated as of April 20, 2006, (the “Lease”) by and
between Key Equipment Finance Inc., as lessor (“Lessor”) and AHERN RENTALS,
INC., as lessee (“Lessee”).

 

1)             The Aircraft. Lessee hereby acknowledges,
agrees and certifies that the Aircraft as set forth and described in Schedule 1 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 representations, warranties, covenants and
acknowledgments in the Lease and agrees that the Lease provides in favor of the
Lessor an International Interest in the Aircraft. All capitalized terms used
herein that are not otherwise defined herein has the meanings given to such
terms in the Lease.

 

2)             Lessee Representations. Lessee represents
and warrants to Lessor that on the date hereof:

 

a)     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.

 

b)    Lessee has satisfied or
complied with all conditions precedent and requirements set forth in the Lease
and Lease Supplements that are required to have been satisfied or complied with
on or prior to the date hereof.

 

c)     No Default or Event of
Default under the Lease has occurred and is continuing.

 

d)    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.

 

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

 

f)     The facts, terms, information,
description and costs set forth in the attached Schedules 1, 2 and 2-A hereto
are true, complete, accurate and correct.

 

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

 

Date of unconditional, irrevocable and final acceptance by Lessee: April
20, 2006.

 

IN
WITNESS WHEREOF, Lessee has caused this Lease Supplement 1 to be duly executed
by its officer thereunto duly authorized.

 

 

	
  AHERN RENTALS, INC.

  	
  DON F. AHERN

  
	
   

  	
   

  	
   

  	
   

  
	
  Signature:

  	
   

  	
  /s/ Don F. Ahern

  	
   

  	
  Signature:

  	
   

  	
  /s/ Don F. Ahern

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Print
  Name:

  	
   

  	
  DON
  F. AHERN

  	
   

  	
  Print
  Name:

  	
   

  	
  DON
  F. AHERN

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
  PRESIDENT

  	
   

  	
  Date:

  	
   

  	
  4/20/06

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
  4/20/06

  	
   

  	
   

  	
   

  	
   

  

 

1

 

Schedule 1

to Lease Supplement 1

 

Description
of Aircraft

 

Cessna
Aircraft Company model 525B (Citation CJ3-525B) aircraft which consists of the
following components:

 

a)                        Airframe manufactured by Cessna Aircraft Company bearing FAA
Registration Mark N742AR, having a model number of 525B (Citation CJ3-525B) and
manufacturer’s serial number of 525B0074*

 

b)                       (2) Williams model FJ44-3A                    engines
bearing manufacturer’s serial numbers 141155 & 141156 each of which
has 550HP or greater 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 on
Schedule A that 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 that constitute appliances and equipment that are or will be
installed on the Aircraft.

 

	
  Initials:

  
	
   

  
	
  Lessee:

  	
  /s/ DA

  	
   

  
	
   

  
	
  Lessee:

  	
  /s/ DA

  	
   

  
	
   

  
	
  Lessor:

  	
  /s/ Donald
  C. Davis

  	
   

  
					

 

	
  *

  	
   

  	
  described on
  the International Registry as “Cessna” model “525B” with manufacturer’s serial number “525B-0074”

  
	
   

  	
   

  	
   

  
	
  **

  	
   

  	
  described on
  the International Registry as “Willams International Co LLC” model “FJ44-3A” with manufacturer’s serial numbers “141155” and
  “141156”

  

 

1

 

SCHEDULE A TO

SCHEDULE 1

 

Standard
accessories and optional equipment:

 

	
  Avionics:

  	
   

  	
  WX-1000E
  LIGHTNING DETECTION — L3 COMMUNICATIONS

  
	
   

  	
   

  	
  630D
  BROADCAST GRAPHICAL WEATHER DISPLAY (XM) — COLLINS

  
	
   

  	
   

  	
  HF-9000
  HIGH FREQUENCY COMMUNICATIONS — COLLINS

  
	
   

  	
   

  	
  TTR-4000
  TCAS II — COLLINS

  
	
   

  	
   

  	
  ELETRONIC
  CHARTS — JEPPESEN

  
	
   

  	
   

  	
  AIRCELL
  ST-3100 - IRIDIUM

  
	
   

  	
   

  	
  GPS-500
  GARMIN

  
	
   

  	
   

  	
  MARK
  VIII EGPWS — HONEYWELL

  
	
   

  	
   

  	
  VHF-4000
  VHF COMMS

  
	
   

  	
   

  	
  CVR
  LOCATOR BEACON

  
	
   

  	
   

  	
  ADC-3000
  AIR DATA COMPUTER 1 & 2

  
	
   

  	
   

  	
  ALT-4000
  RADIO ALTIMETER

  
	
   

  	
   

  	
  AHC-3000
  AHRS COMPUTER

  
	
   

  	
   

  	
  FDU-3000
  UNIT-FLUX DETECTOR

  
	
   

  	
   

  	
  GH-3000
  SECONDARY FLIGHT DISPLAY

  
	
   

  	
   

  	
  DCU-3001
  DATA CONCENTRATOR UNIT

  
	
   

  	
   

  	
  DCP-3030
  AFD DISPLAY CONTROL PANEL

  
	
   

  	
   

  	
  CCP-3000
  AFD-CRSR CONTROL PANEL

  
	
   

  	
   

  	
  AFD-3010
  ADAPTIVE FLIGHT DISPLAY

  
	
   

  	
   

  	
  AFD-3010E
  ADAPTIVE FLIGHT DISPLAY CENTER POSITION

  
	
   

  	
   

  	
  RTA-800
  WEATHER RADAR

  
	
   

  	
   

  	
  XMA-1000
  SATELLITE DATALINK WITH ANTENNA

  
	
   

  	
   

  	
  XMWR-1000
  SATELLITE DATALINK WITH RECEIVER

  
	
   

  	
   

  	
  DME-4000
  DME 1 & 2 TRANCIEVER

  
	
   

  	
   

  	
  TDR-94D
  TRANSPONDER 1 & 2

  
	
   

  	
   

  	
  FMC-3000
  FMS 1 COMPUTER

  
	
   

  	
   

  	
  CDU-3000
  FMS CONTROL DISPLAY UNIT

  
	
   

  	
   

  	
  GPS-500
  FMS GPS DISPLAY

  
	
   

  	
   

  	
  GPS-4000A
  GPS RECEIVER

  
	
   

  	
   

  	
  NAV-4500
  NAV REC/VOR/ADF/MRK BECON/ILS

  
	
   

  	
   

  	
  RTU-4200
  RADIO TUNING UNIT

  
	
   

  	
   

  	
  TCAS
  PROCESSOR

  
	
   

  	
   

  	
  TRE-920
  TCAS II ANTENNA

  
	
   

  	
   

  	
   

  
	
  Interior:

  	
   

  	
  TOWNSEND
  LEATHER SEATING

  
	
   

  	
   

  	
  CARL
  BOOTH HIGH CLOSS WOOD VENEER SIDELEGES / TABLES

  
	
   

  	
   

  	
  AFT
  CABIN LH LAVATORY CLOSURE

  
	
   

  	
   

  	
  CENTER
  AFT COAT ROD

  
	
   

  	
   

  	
   

  
	
  Exterior:

  	
   

  	
  WHITE
  WITH BURGUNDY MIST EFFECT AND SILVER PLATINUM

  
	
   

  	
   

  	
  METALLIC
  AND PAISLEY METALLIC STRIPES

  

 

1

 

SCHEDULE 2 TO

LEASE SUPPLEMENT 1

 

Financial Terms

 

	
  Rent
  Commencement Date:

  	
   

  	
  April 20, 2006.

  
	
   

  	
   

  	
   

  
	
  Basic
  Term:

  	
   

  	
  120
  months commencing on the Rent Commencement Date and continuing through and including
  the Expiration Date.

  
	
   

  	
   

  	
   

  
	
  Basic
  Rent Date:

  	
   

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

  
	
   

  	
   

  	
   

  
	
  First
  Basic Rent Date:

  	
   

  	
  April
  20, 2006.

  
	
   

  	
   

  	
   

  
	
  Last
  Basic Rent Date:

  	
   

  	
  March
  20, 2016.

  
	
   

  	
   

  	
   

  
	
  Expiration
  Date:

  	
   

  	
  March
  20, 2016.

  
	
   

  	
   

  	
   

  
	
  Renewal
  Date:

  	
   

  	
  March
  20, 2016.

  
	
   

  	
   

  	
   

  
	
  Renewal
  Term:

  	
   

  	
  (12)
  Months.

  
	
   

  	
   

  	
   

  
	
  Primary
  Hangar Location:

  	
   

  	
  145
  E. RENO AVE., SUITE El

  
	
   

  	
   

  	
  LAS
  VEGAS, NV 89119

  
	
   

  	
   

  	
   

  
	
  Lessee’s
  Chief Executive Offices and Principal Place of Business:

  	
   

  	
  4241
  ARVILLE ST, LAS VEGAS, NV 891033713

  
	
   

  	
   

  	
   

  
	
  Acceptance
  Date:

  	
   

  	
  April
  20, 2006.

  
	
   

  	
   

  	
   

  
	
  Last
  Acceptance Date:

  	
   

  	
  April
  20, 2006.

  
	
   

  	
   

  	
   

  
	
  Recovery
  Period:

  	
   

  	
  5
  Years.

  
	
   

  	
   

  	
   

  
	
  Date
  of Last Financing:

  	
   

  	
  April
  20, 2006.

  
	
   

  	
   

  	
   

  
	
  Lessor’s
  Cost:

  	
   

  	
  $6,580,325.00

  
	
   

  	
   

  	
   

  
	
  Initials:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Lessee:

  	
  /s/ DA

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Lessee:

  	
  /s/ DA

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Lessor:

  	
  /s/
  Donald C. Davis

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

1

 

Lease Supplement 2

to Aircraft Lease Agreement

 

This is Lease Supplement 2 under the AIRCRAFT LEASE AGREEMENT dated as
of April 20, 2006 (the “Lease”)
by and between Key Equipment Finance Inc., as lessor (“Lessor”) and Ahern
Rentals, Inc. as lessee (“Lessee”). All capitalized terms used herein that
are not otherwise defined herein has the meanings given to such terms in the Lease.

 

	
  Manufacturer
  of Airframe:

  	
   

  	
  Cessna

  
	
  Manufacturer
  of Engines:

  	
   

  	
  Williams
  International Co, LLC

  
	
  Supplier:

  	
   

  	
  Cessna
  Aircraft Company

  

 

1)     Purchase Documents:

 

a)     Order or Aircraft Purchase Agreement between
Supplier and Ahern Rentals, Inc. dated September 10, 2002.

 

b)    Warranty Bill of Sale to Lessor dated April
20, 2006 relating to the Aircraft in the form of Exhibit B
hereto.

 

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

 

d)    FAA Bill of Sale.

 

e)     Invoices
for the Aircraft, including the Engines, from the Supplier thereof showing
Ahern Rentals, Inc as the purchaser thereof, and, if applicable, the duly
executed and authorized assignments of same to Lessor in form and substance
satisfactory to Lessor, and evidence that such invoices have been and are paid
in full.

 

2)     Aircraft
marking (Referenced in
Section 11 of the Lease):

 

a)     Two-inch by
four-inch plaque to be maintained in cockpit and affixed in a conspicuous
position stating:

 

“This property is owned by and leased from Key Equipment Finance Inc.,
1000 South McCaslin Boulevard, Superior, CO 80027. Any removal, alteration,
disposal or other change in the condition or location of this property must be
approved by Key Equipment Finance Inc.”

 

b)    Similar
markings to be permanently
affixed to each Engine.

 

3)     Additional Maintenance Provisions and Other
Purchase Documents:

 

a)     None.

 

IN WITNESS WHEREOF, effective as of  April
20, 2006, the parties hereto have each caused this Lease Supplement 2 to be
duly executed by their respective officers, thereunto duly authorized.

 

	
  LESSOR:

  	
  LESSEE:

  
	
   

  	
   

  
	
  KEY EQUIPMENT FINANCE INC.

  	
  AHERN RENTALS, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Signature:

  	
   

  	
  /s/ Donald C. Davis

  	
   

  	
  Signature:

  	
   

  	
  /s/ Don F. Ahern

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Print
  Name:

  	
   

  	
  Donald
  C. Davis

  	
   

  	
  Print
  Name:

  	
   

  	
  DON F. AHERN

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
  Vice
  President

  	
   

  	
  Title:

  	
   

  	
  PRESIDENT

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  LESSEE:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  DON F. AHERN

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Signature:

  	
   

  	
  /s/ Don F. Ahern

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Print
  Name:

  	
   

  	
  DON F. AHERN

  
								

 

1

 

AMENDMENT NO. 1 TO LEASE SUPPLEMENT 1

 

This AMENDMENT NO. 1 TO LEASE SUPPLEMENT 1 dated as of
                         , 2006 (“Amendment”), by and between KEY EQUIPMENT FINANCE INC., a
Michigan corporation (“Lessor”), and AHERN RENTALS, INC., a Nevada corporation
and Don F. Ahern (“Lessee”), is made to that certain Lease Supplement 1
dated as of April 20, 2006, (“Lease
Supplement 1”)* to that certain Aircraft Lease Agreement
dated as of April 20, 2006, (the “Lease”)* In each case between Lessor
and Lessee. Capitalized terms used herein but not otherwise defined herein
shall have the meaning set forth therefor in the Lease. In the case of any
conflict between the provisions of this Amendment and the provisions of the
Lease or Lease Supplement 1, the provisions of this Amendment shall control
construction of the terms.

 

* as further
described in Schedule No. 1

 

W  I  T
N  E  S  S  E  T  H:

 

WHEREAS,
Lessor and Lessee wish to amend Lease Supplement 1 in certain respects pursuant
to the terms hereof. 

 

A  G  R
E  E  M  E  N  T

 

NOW,
THEREFORE, for mutual promises herein and for other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, Lessee
and Lessor do hereby agree to amend Lease Supplement 1 as follows:

 

SECTION 1.         AMENDMENTS TO LEASE SUPPLEMENT 1

 

1.1           Schedule 2. Schedule 2 to Lease Supplement 1 is hereby deleted and replaced in its
entirety with Schedule 2 to Lease Supplement 1 attached hereto.

 

1.2           Schedule 2-A. Schedule 2-A to Lease Supplement 1 is hereby
deleted and replaced in its entirety with Schedule 2-A to Lease Supplement 1
attached hereto.

 

1.3           Schedule 4. Lease Supplement 1 is
hereby amended by adding Schedule 4 to Lease Supplement 1 attached hereto as
Schedule 4 to Lease Supplement 1 thereto.

 

SECTION 2          MISCELLANEOUS

 

2.1           Full Force and Effect.
Lessor and Lessee each agree that nothing contained in this Amendment shall be construed
to in any manner affect, impair, lessen, release, cancel, terminate or
extinguish the indebtedness, liabilities or obligations of Lessee under the
Lease or any of the other Lease Documents. Lessee shall continue to pay Rent in
the amount, in  the manner and at the times
specified in the Lease, as amended hereby, and to otherwise perform its
obligations under the Lease, as amended hereby, and the other Lease Documents.
In no event shall this Amendment be deemed a waiver, discharge, novation,
substitution or replacement of the Lease or any of the other Lease Documents.
Lessee hereby ratifies and confirms in all respects all of its indebtedness,
liabilities and obligations under the Lease and the other Lease Documents and
agrees that, except as expressly modified by this Amendment, the Lease and the
other Lease Documents continue in full force and effect as if set forth
specifically herein.

 

2.2           Representations and Warranties. Lessee hereby
represents, warrants and agrees that: (a) each and every representation
and warranty set forth in the Lease (as amended hereby) and the other Lease
Documents continues to remain true, accurate and complete in all respects; (b) this
Amendment, the Lease (as amended hereby) and the other Lease Documents are its
valid and legally binding obligations, fully enforceable against it in
accordance with their respective terms; (c) its execution and delivery of this
Amendment and any other documents, agreements and instruments executed or
delivered in connection herewith have been, or will be, duly authorized on its
part, (d) the terms of the Lease and the other Lease Documents have not
heretofore been amended or modified by any action or omission or course of
conduct on the part of Lessor nor has Lessor waived or relinquished any of its
rights, powers or remedies under the Lease or any of the Lease Documents; (e) no
default or Event of Default presently exists; and (f) the Rent is and
continues to be secured by the Aircraft and the other Collateral, and Lender
has and shall continue to have a perfected first priority security interest and
lien with respect thereto.

 

2.3           No Further Amendments.
Except as amended hereby, the Lease Supplement 1 shall remain in full force and
effect.

 

2.4           Effective Date.
This Amendment is effective as of the date set forth above.

 

2.5           Applicable Law.
This Amendment shall be governed by and construed in accordance with the laws
of the State of New York.

 

2.6           Counterparts. This Amendment may be
executed in any number of counterparts, each of which, when so executed and
delivered, shall constitute an original fully enforceable counterpart for all
purposes.

 

[The remainder of this page is intentionally left blank.]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date as set forth above.

 

	
  LESSOR:

  	
  LESSEE:

  
	
   

  	
   

  
	
  KEY EQUIPMENT FINANCE INC.

  	
  AHERN RENTALS, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Signature:

  	
   

  	
  /s/ Donald C. Davis

  	
   

  	
  Signature:

  	
   

  	
  /s/ Don F. Ahern

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Print
  Name:

  	
   

  	
  Donald
  C. Davis

  	
   

  	
  Print
  Name:

  	
   

  	
  DON
  F. AHERN

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
  Vice
  President

  	
   

  	
  Title:

  	
   

  	
  PRESIDENT

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
  June   ,
  2006

  	
   

  	
  Date:

  	
   

  	
  JUNE   , 2006

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1000
  South McCaslin Blvd

  	
   

  	
  4241
  S. Arville St

  
	
  Superior,
  CO 80027

  	
   

  	
  Las
  Vegas, NV 89103-3713

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  LESSEE:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  DON F. AHERN

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Signature:

  	
   

  	
  /s/ Don F. Ahern

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Print
  Name:

  	
   

  	
  DON
  F. AHERN

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Date:

  	
   

  	
  JUNE   , 2006

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  4241
  S. Arville St

  
	
   

  	
   

  	
   

  	
   

  	
  Las
  Vegas, NV 89103-3713

  
											

 

 

SCHEDULE 2 TO

LEASE SUPPLEMENT 1

 

Financial Terms

 

	
  Rent
  Commencement Date:

  	
   

  	
  May 1st, 2006.

  
	
   

  	
   

  	
   

  
	
  Basic
  Term:

  	
   

  	
  120
  months commencing on the Rent Commencement Date and continuing through and
  including the Expiration Date.

  
	
   

  	
   

  	
   

  
	
  Basic
  Rent Date:

  	
   

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

  
	
   

  	
   

  	
   

  
	
  First
  Basic Rent Date:

  	
   

  	
  May
  1st, 2006.

  
	
   

  	
   

  	
   

  
	
  Last
  Basic Rent Date:

  	
   

  	
  April
  1st, 2016.

  
	
   

  	
   

  	
   

  
	
  Expiration
  Date:

  	
   

  	
  May
  1st, 2016.

  
	
   

  	
   

  	
   

  
	
  Renewal
  Date:

  	
   

  	
  May
  1st, 2016.

  
	
   

  	
   

  	
   

  
	
  Renewal
  Term:

  	
   

  	
  Twelve
  (12) Months.

  
	
   

  	
   

  	
   

  
	
  Primary
  Hangar Location:

  	
   

  	
  145
  E. RENO AVE., SUITE El

  
	
   

  	
   

  	
  LAS
  VEGAS. NV 89119

  
	
  Lessee’s
  Chief Executive Offices and Principal Place of Business:

  	
   

  	
  4241
  S. ARVILLE ST. LAS VEGAS, NV 891033713

  
	
   

  	
   

  	
   

  
	
  Acceptance
  Date:

  	
   

  	
  April 20th, 2006.

  
	
   

  	
   

  	
   

  
	
  Last
  Acceptance Date:

  	
   

  	
  April 20th, 2006.

  
	
   

  	
   

  	
   

  
	
  Recovery
  Period:

  	
   

  	
  5
  Years.

  
	
   

  	
   

  	
   

  
	
  Date
  of Last Financing:

  	
   

  	
  April 20th, 2006.

  
	
   

  	
   

  	
   

  
	
  Lessor’s
  Cost:

  	
   

  	
  $6,580,325.00

  
	
   

  	
   

  	
   

  
	
  Initials:

  
	
   

  
	
  Lessee:

  	
  /s/ DA

  	
   

  
	
   

  
	
  Lessee:

  	
  /s/ DA

  	
   

  
	
   

  	
   

  	
   

  
	
  Lessor:

  	
  /s/
  Donald C. Davis

  	
   

  
					

 

 

AMENDMENT NO. 1 TO LEASE SUPPLEMENT 1

 

This AMENDMENT NO. 1 TO LEASE SUPPLEMENT 1 dated as of          ,
2006 (“Amendment”), by and
between KEY EQUIPMENT FINANCE INC., a Michigan corporation (“Lessor”)
and AHERN RENTALS, INC., a Nevada corporation (“Lessee”), is made to
that certain Lease Supplement 1 dated as of April 20, 2006, (“Lease
Supplement 1”) to that certain Aircraft Lease Agreement dated as of April 20,
2006, (the “Lease”) in each case between Lessor and Lessee.
Capitalized terms used herein but not otherwise defined herein shall have the
meaning set forth therefor in the Lease. In the case of any conflict between
the provisions of this Amendment and the provisions of the Lease or Lease
Supplement 1, the provisions of this Amendment shall control construction of
the terms.

 

W  I  T  N
E  S  S  E  T  H:

 

WHEREAS, Lessor
and Lessee wish to amend Lease Supplement 1 in certain respects pursuant to the
terms hereof.  

 

A  G  R  E
E  M  E  N  T

 

NOW, THEREFORE, for
mutual promises herein and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, Lessee and Lessor do
hereby agree to amend Lease Supplement 1 as follows:

 

SECTION 1.         AMENDMENTS TO LEASE
SUPPLEMENT 1

 

1.1           Schedule
2. Schedule 2 to Lease
Supplement 1 is hereby deleted and replaced in its entirety with Schedule 2 to Lease Supplement 1 attached hereto.

 

1.2           Schedule
2-A. Schedule 2-A to Lease
Supplement 1 is hereby deleted and replaced in its entirety with Schedule 2-A
to Lease Supplement 1 attached hereto.

 

1.3           Schedule
4. Lease Supplement 1 is
hereby amended by adding Schedule 4 to Lease Supplement 1 attached hereto as
Schedule 4 to Lease Supplement 1 thereto.

 

SECTION 2          MISCELLANEOUS

 

2.1           Full Force and Effect. Lessor and Lessee each agree that nothing
contained in this Amendment shall be construed to in any manner affect, impair,
lessen, release, cancel, terminate or extinguish the indebtedness, liabilities
or obligations of Lessee under the Lease or any of the other Lease Documents.
Lessee shall continue to pay Rent in the amount, in the manner and at the times
specified in the Lease, as amended hereby, and to otherwise perform its
obligations under the Lease, as amended hereby, and the other Lease Documents.
In no event shall this Amendment be deemed a waiver, discharge, novation,
substitution or replacement of the Lease or any of the other Lease Documents.
Lessee hereby ratifies and confirms in all respects all of its indebtedness,
liabilities and obligations under the Lease and the other Lease Documents and
agrees that, except as expressly modified by this Amendment, the Lease and the
other Lease Documents continue in full force and effect as if set forth
specifically herein.

 

2.2           Representations
and Warranties. Lessee hereby
represents, warrants and agrees that: (a) each and every representation
and warranty set forth in the Lease (as amended hereby) and the other Lease
Documents continues to remain true, accurate and complete in all respects; (b) this
Amendment, the Lease (as amended hereby) and the other Lease Documents are its
valid and legally binding obligations, fully enforceable against it in
accordance with their respective terms; (c) its execution and delivery of
this Amendment and any other documents, agreements and instruments executed or
delivered in connection herewith have been, or will be, duly authorized on its
part; (d) the terms of the Lease and the other Lease Documents have not
heretofore been amended or modified by any action or omission or course of
conduct on the part of Lessor nor has Lessor waived or relinquished any of its
rights, powers or remedies under the Lease or any of the Lease Documents; (e) no
default or Event of Default presently exists; and (f) the Rent is and
continues to be secured by the Aircraft and the other Collateral, and Lender
has and shall continue to have a perfected first priority security interest and
lien with respect thereto.

 

2.3           No
Further Amendments. Except as
amended hereby, the Lease Supplement 1 shall remain in full force and effect.

 

2.4           Effective Date. This Amendment is effective as of the date
set forth above.

 

2.5           Applicable Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York.

 

2.6           Counterparts. This Amendment may be executed in any number of counterparts, each of
which, when so executed and
delivered, shall constitute an original fully enforceable counterpart for all
purposes.

 

[The remainder of this page is intentionally left blank.]

 

 

IN
WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date
as set forth above.

 

	
  LESSOR:

  	
   

  	
   

  	
  LESSEE:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  KEY
  EQUIPMENT FINANCE INC.

  	
   

  	
  AHERN
  RENTALS, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Signature:

  	
   

  	
   

  	
  Signature:
  

  	
  /s/ Don F. Ahern

  
	
  Print
  Name:

  	
  Donald C. Davis

  	
   

  	
  Print
  Name:

  	
  DON F. AHERN

  
	
  Title:

  	
  Vice President

  	
   

  	
  Title:

  	
  PRESIDENT

  
	
  Date:

  	
   

  	
   

  	
  Date:

  	
  JUNE 14, 2006

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
	
  1000
  South McCaslin Blvd

  	
   

  	
  4241
  S. Arville St

  
	
  Superior,
  CO 80027

  	
   

  	
  Las
  Vegas, NV 89103-3713

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  LESSEE:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  DON F.
  AHERN

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Signature:
  

  	
  /s/ Don F. Ahern

  
	
   

  	
   

  	
   

  	
  Print
  Name:

  	
  DON F. AHERN

  
	
   

  	
   

  	
   

  	
  Date:

  	
  JUNE 14, 2006

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  4241
  S. Arville St

  
	
   

  	
   

  	
   

  	
  Las
  Vegas, NV 89103-3713

  
							

 

 

SCHEDULE 2 TO 

LEASE SUPPLEMENT 1

 

Financial Terms

 

	
  Rent
  Commencement Date:

  	
   

  	
  May 1st, 2006.

  
	
   

  	
   

  	
   

  
	
  Basic
  Term:

  	
   

  	
  120
  months commencing on the Rent Commencement Date and  continuing through and including the
  Expiration Date.

  
	
   

  	
   

  	
   

  
	
  Basic
  Rent Date:

  	
   

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

  
	
   

  	
   

  	
   

  
	
  First
  Basic Rent Date:

  	
   

  	
  May 1st, 2006.

  
	
   

  	
   

  	
   

  
	
  Last
  Basic Rent Date:

  	
   

  	
  April 1st, 2016.

  
	
   

  	
   

  	
   

  
	
  Expiration
  Date:

  	
   

  	
  May 1st, 2016.

  
	
   

  	
   

  	
   

  
	
  Renewal
  Date:

  	
   

  	
  May 1st, 2016.

  
	
   

  	
   

  	
   

  
	
  Renewal
  Term:

  	
   

  	
  Twelve
  (12) Months.

  
	
   

  	
   

  	
   

  
	
  Primary
  Hangar Location:

  	
   

  	
  145
  E. RENO AVE., SUITE El

  
	
   

  	
   

  	
  LAS
  VEGAS, NV 89119

  
	
   

  	
   

  	
   

  
	
  Lessee’s
  Chief Executive Offices

  	
   

  	
   

  
	
  and
  Principal Place of Business:

  	
   

  	
  4241
  S. ARVILLE ST, LAS VEGAS, NV 891033713

  
	
   

  	
   

  	
   

  
	
  Acceptance
  Date:

  	
   

  	
  April 20th, 2006.

  
	
   

  	
   

  	
   

  
	
  Last
  Acceptance Date:

  	
   

  	
  April 20th, 2006.

  
	
   

  	
   

  	
   

  
	
  Recovery
  Period:

  	
   

  	
  5
  Years.

  
	
   

  	
   

  	
   

  
	
  Date
  of Last Financing:

  	
   

  	
  April 20th, 2006.

  
	
   

  	
   

  	
   

  
	
  Lessor’s
  Cost:

  	
   

  	
  $6,580,325.00

  
	
   

  	
   

  	
   

  
	
  Initials:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Lessee:

  	
  /s/ DA

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Lessee:

  	
  /s/ DA

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Lessor:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00156-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00156-of-00352.parquet"}]]