Document:

ex105.htm

    May 20,
2010

    

    Tactical
Air Support, Inc.

    Attn: Mr.
Rolland C. Thompson, President

    14505
Mount Anderson

    Reno, NV
89506

    

    

    Re:          Letter of Intent Re: Merger
of Tactical Air Support, Inc.

    

    

    Dear Mr.
Thompson:

    

    This
letter of intent (the “LOI”) sets forth the
understanding of the mutual intentions of the below parties regarding the
proposed transaction between: (i) Tactical Air Defense Services, Inc., a Nevada
corporation (“TADF”) and (ii)
Tactical Air Support, Inc., a Nevada corporation, and all of its subsidiaries
(“TAS”) (TADF
and TAS may be referred to hereinafter individually as a “Party” and
collectively as the “Parties”). Each Party
understands and acknowledges that this LOI will be subject to more definitive
agreements as further described below.

    

    1.           Transaction
Architecture.    TAS shall transfer to TADF all
shares of TAS’s common stock and preferred stock, which shall represent 100% of
the equity interest of TAS (the “TAS Equity”), such
that TAS shall become a wholly owned subsidiary of TADF. In exchange, the
existing shareholders of TAS (the “TAS Shareholders”)
shall be issued shares of TADF’s common stock such that the TAS Shareholders
shall own approximately 45.75% of the issued and outstanding shares of TADF’s
common stock as of the moment the transaction closes (the “TAS Shares”). (The
above exchange shall be referred to herein as the “Transaction”).
Following the closing of the Transaction, the post-Transaction entity shall
assume the name “Tactical Air Support, Inc.” The Transaction may be structured
as a tax-free share exchange agreement or other similar agreement.

    

    2.           Transaction
Closing.  The Parties shall use their commercially best efforts
to close the Transaction (the “Closing”) within 120
days of execution by both Parties of this LOI, although the Closing may take
place prior to 120 days from execution of this LOI upon written agreement by
both Parties, and may be extended beyond 120 days from execution of this LOI
upon written agreement by both Parties.

    

    3.           Appointment of
Management.   Following the Closing of the Transaction,
TADF’s management and Board of Directors shall be as follows:

    

    Rolland C.
Thompson                                                      Chief
Executive Officer and Director

    Alexis
Korybut                                           Chief
Financial Officer and Director

    Gen. Ronald R.
Fogleman                                           Director

    

    Such
appointments shall be subject to further employment agreements between TADF and
the above named parties, with such final agreements to be included in the
Definitive Agreements described below.

    

    4.           Existing TAS
Liabilities.   As of the date of this LOI, TAS currently
maintains a convertible promissory note in the principal amount of approximately
$1,750,000 (the “Note”) and additional
other outstanding short-term debts, accrued salaries and other liabilities. Such
liabilities shall be assumed by TADF following Closing of the Transaction. Upon
Closing of the Transaction, TADF shall pay down and fully extinguish all
principal and interest remaining under the Note as of such Closing date. In the
event any shares are issued in connection with the above described purchase of
the Note, such shares shall be deemed to have been issued following Closing of
the Transaction and the issuance of such shares shall not be included in nor
accounted for when calculating the 45.75% of the issued and outstanding shares
of TADF’s common stock due and payable to the TAS Shareholders.

    

    5.           Existing TADF
Liabilities. TADF agrees that the existing holders of TADF convertible
debentures shall, upon Closing of the Transaction:

    

    
      	
              -  

            	
              amend
      the annual interest rate of all existing convertible debentures to eight
      (8%) percent; and

            

    

    
      	
              -  

            	
              agree
      to forbear such holder’s rights in connection with enforcing cash payment
      of any interest and/or principle in connection with any convertible
      debenture at the sole discretion of a majority of the Board of Directors
      of the TADF.

            

    

    

    6.           Existing Legal
Liabilities.   During the Due Diligence Period (as defined
below) each Party shall have disclosed all legal claims and liabilities to the
other Party and prior to the Closing of the Transaction, such legal claims and
liabilities shall have been resolved to the satisfaction of the opposing Party.
Upon completion of the Due Diligence Period and prior to Closing, TADF shall
issue into escrow a number of shares of TADF common stock and/or an amount of
cash as reasonably mutually agreed between the Parties prior to Closing, as a
contingency for any unknown and unresolved litigation, judgments, claims and
actual or reasonably potential claims against TADF. Upon Closing, TAS shall
place into escrow a number of the TAS Shares and/or an amount of cash, as
reasonably mutually agreed between the Parties prior to Closing, as a
contingency for any unknown and unresolved litigation, judgments, claims and
actual or reasonably potential claims against TAS.

    

    7.           Lock Up and Leak Out
Agreements.   Upon Closing of the Transaction, all TAS and
TADF post-Transaction shareholders owning shares of common stock of the
post-Transaction entity in excess of three percent (3%) of the then issued and
outstanding shares of common stock shall execute lock up and leak out
agreements, with such final agreements to be negotiated and included in the
Definitive Agreements described below.

    

    8.           Transaction Closing
Financing.   Prior to Closing of the Transaction and as a
condition precedent, the Parties shall negotiate third party post-Transaction
financing of a minimum of US$500,000, which amount shall be held in an escrow
account and released to the post-Transaction entity upon closing of the
Transaction. In the event any shares are issued in connection with the above
described financing, such shares shall be issued following Closing of the
Transaction and the issuance of such shares shall not be included in nor
accounted for when calculating the 45.75% of the issued and outstanding shares
of TADF’s common stock due and payable to the TAS Shareholders.

    

    9.           Definitive
Agreements.    Following further negotiations, the
Parties shall commence preparation of definitive legal agreements that will
affect the Transaction and other commitments contemplated herein (the “Definitive
Agreements”). The Definitive Agreements will contain the general
provisions outlined herein in addition to the usual and customary
representations and warranties, covenants, conditions, and indemnifications for
transaction of this kind, including, without limitations: environmental, tax and
securities filings, and corporate filings and the accuracies of all of the
same.

    

    10.           Due
Diligence.      For a period of sixty (60)
days following execution of this LOI (the “Due Diligence
Period”), the Parties must comply with all reasonable requests to review
relevant information concerning themselves and business entities they are
affiliated with, insofar as such requests are reasonably related to the
completion of the Transaction. Upon the execution of this LOI by all Parties and
subsequent request to or by a Party, the Parties shall mutually exchange the
following:

    

    
      	
              -  

            	
              All
      Financial Statements;

            

    

    
      	
              -  

            	
              History
      of financings and related
documents;

            

    

    
      	
              -  

            	
              All
      employment contracts and consulting
agreements;

            

    

    
      	
              -  

            	
              A
      list of all officers, key employees, directors, and advisors, with related
      bios;

            

    

    
      	
              -  

            	
              A
      list and description of all assets;

            

    

    
      	
              -  

            	
              A
      list of all known liabilities and
claims;

            

    

    
      	
              -  

            	
              A
      list, description, and status of all client contracts, past and
      current;

            

    

    
      	
              -  

            	
              A
      list of all licenses and
certifications;

            

    

    
      	
              -  

            	
              Certificate
      of Incorporation (with any amendments
thereto);

            

    

    
      	
              -  

            	
              All
      board minutes;

            

    

    
      	
              -  

            	
              Bylaws
      (with any amendments thereto); and

            

    

    
      	
              -  

            	
              Current
      shareholder list.

            

    

    

    11.           Transaction Document
Expenses.  Each Party shall be solely responsible for all fees
and expenses of the Parties agents, advisors, attorneys and accountants with
respect to the negotiation of this LOI, the negotiation and drafting of the
Definitive Agreements and, if Definitive Agreements are executed, the Closing of
the Transaction.

    

    12.           No
Shop.      Until the Closing of the
Transaction or termination of negotiations related to such Transaction, TAS may
not enter into any transaction or agreement related to the sale or transfer of
the TAS Equity or any of its assets or otherwise encumber or enter into an
agreement that would encumber any of the foregoing or enter into any agreement
outside of the ordinary course of business or that would otherwise hinder the
Parties rights or intentions under this LOI.

    

    13.           Confidentiality,
Non-Disclosure and Subsequent Public
Announcement.    The Parties agree to not release any
public information regarding or in connection with this LOI and the Transaction
in order to protect each Party’s confidential and proprietary information
related to each company and the Transaction. Following the execution of the LOI,
TADF shall release a Form 8-K with the SEC and related press release regarding
the Transaction providing and disclosing the terms of this LOI. With the
exception of the Form 8-K and press release described in this section, the
Parties agree not to issue any further press releases or make any further public
announcement regarding the Transaction without prior written mutual consent of
all Parties, except where a public announcement is otherwise required by
law.

    

    14.           Acknowledgments and
Assent.  The Parties acknowledge that they were advised to
consult with an independent attorney prior to signing this LOI and that they
have in fact consulted with counsel of their own choosing prior to executing
this LOI. The Parties agree that they have read this LOI and understand the
content herein, and freely and voluntarily assent to all of the terms
herein.

    

    We trust
that these terms accurately reflect our understanding. If there are any
questions or comments regarding the same, please feel to contact me at your
convenience. Otherwise kindly execute this LOI acknowledging your agreement to
the terms outlined above.

    

    Dated May
20, 2010

    

    Agreed
and accepted by:

    

    
      	
              Tactical
      Air Defense Services, Inc.

              a
      Nevada corporation

               

               

               

              _________________________________

              By:
      Alexis Korybut

              Its:
      Chief Executive Officer

            	
              Tactical
      Air Support, Inc.

              a
      Nevada corporation

               

               

               

              _________________________________

              By:
      Rolland C. Thompson

              Its:
      Presidentex106.htm

     

     

    AIRCRAFT
LEASE OPTION AGREEMENT

     

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

     

     

    RECITALS

     

    WHEREAS;

     

     

    
      	
              1.  

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

            

    

     

     

    
      	
              2.  

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

            

    

     

     

    
      	
              3.  

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

            

    

     

     

    
      	
              4.  

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

            

    

     

     

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

     

     

    AGREEMENT

     

     

    
      	
              1.  

            	
              Definitions

            

    

     

     

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

     

     

    
      	
              a.  

            	
              “FAA”
      refers to the Federal Aviation
Administration.

            

    

     

     

    
      	
              b.  

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

            

    

     

     

    
      	
              c.  

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

            

    

     

     

    
      	
              d.  

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

            

    

     

     

    
      	
              e.  

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

            

    

     

     

    
      	
               
      

            	
              2.

            	
              Parties’
      Obligations and Responsibilities

            

    

     

     

    Upon
exercise of the Option, TADS shall provide:

     

     

    
      	
              a.  

            	
              Contracts
      for utilization of the ILyushin
Aircraft.

            

    

     

     

    
      	
              b.  

            	
              Pilots
      for execution of Contract Missions.

            

    

     

     

    
      	
              c.  

            	
              Ground
      support equipment as required for Contract
  operations.

            

    

     

     

    
      	
              d.  

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

            

    

     

     

    
      	
              e.  

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

            

    

     

     

    
      	
              f.  

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

            

    

     

     

    
      	
              g.  

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

            

    

     

     

    ASS
Shall Provide:

     

     

    
      	
              a.  

            	
              The
      ILyushin Aircraft in certified airworthy
  condition.

            

    

     

     

    
      	
              b.  

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

            

    

     

     

    
      	
               
      

            	
              3.

            	
              Term
      of Option and Lease and Terms of
Use:

            

    

     

     

    
      	
              a.  

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

            

    

     

     

    
      	
              b.  

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

            

    

     

     

    
      	
              c.  

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

            

    

     

     

    
      	
              d.  

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

            

    

     

     

    
      	
              e.  

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

            

    

     

     

    
      	
               
      

            	
              d.

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

            

    

     

     

    
      	
               
      

            	
              4.

            	
              Fees

            

    

     

     

    
      	
               
      

            	
              a.

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

            

    

     

     

    
      	
               
      

            	
              b.

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

            

    

     

     

    
      	
               
      

            	
              (i)

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

            

    

     

     

    
      	
               
      

            	
              (ii)

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

            

    

     

     

    
      	
               
      

            	
              (iii)

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

            

    

     

     

    
      	
               
      

            	
              5.

            	
              Method
      and Schedule of Payment

            

    

     

     

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

     

     

    
      	
               
      

            	
              6.

            	
              Representations
      and Covenants

            

    

     

     

    
      	
              a.  

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

            

    

     

     

    
      	
              b.  

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

            

    

     

     

    
      	
              c.  

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

            

    

     

     

    
      	
               
      

            	
              7.

            	
              Limitation
      of Liability

            

    

     

     

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

     

     

    
      	
               
      

            	
              8.

            	
              Entire
      Agreement

            

    

     

     

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

     

     

    
      	
               
      

            	
              9.

            	
              Amendment

            

    

     

     

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

     

     

    
      	
               
      

            	
              10.

            	
              Notice

            

    

     

     

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

     

     

    
      	
               
      

            	
              11.

            	
              Waiver

            

    

     

     

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

     

     

    
      	
               
      

            	
              12.

            	
              Severability

            

    

     

     

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

     

     

    
      	
               
      

            	
              13.

            	
              Force
      Majeure

            

    

     

     

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

     

     

    
      	
               
      

            	
              14.

            	
              Headings

            

    

     

     

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

     

     

    
      	
               
      

            	
              15.

            	
              Governing
      Law

            

    

     

     

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

     

     

    
      	
               
      

            	
              16.

            	
              Binding
      Affect

            

    

     

     

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

     

     

    

     

     

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

    
 

     

     

    By:
Tactical Air Defense Services, Inc.

     

     

     

    Alexis C.
Korybut, President &
CEO                                                                                                                     

     

     

     

     

    By: Air
Support Systems, LLC.

     

     

    

     

     

    Gary
Fears, Managing Member

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