GIII


AIRCRAFT LEASE AGREEMENT
dated as of December 28, 2001 ("Agreement")

        This Agreement (together with all supplements, annexes, exhibits and schedules hereto hereinafter referred to as the "Lease") is between General Electric Capital Corporation, with an office at 44 Old Ridgebury Road, Danbury, CT 06810-5105 (hereinafter called, together with its successors and assigns, if any, "Lessor") and Mandalay Resort Group, a Corporation organized and existing under the laws of the State of Nevada with its mailing address and chief place of business at 3950 Las Vegas Blvd. South, Las Vegas, NV 89119 (hereinafter called "Lessee").

1.    LEASING:

2.    TERM, RENT AND PAYMENT:


3.    TAXES AND FEES:

4.    REPORTS:    Lessee will provide Lessor with the following in writing within the time periods specified: (a) notice of any tax or other lien which attaches to the Aircraft and the full particulars of the tax or lien, within ten (10) days after Lessee becomes aware of the tax or lien, (b) Lessee's complete financial statements, certified by a recognized firm of certified public accountants, within one-hundred (100) days of the close of each fiscal year of Lessee, and any further financial information or reports, upon request; (c) notice to Lessor of the Aircraft's location, and the location of all information, logs, documents and records relating to the Aircraft and its use, maintenance and/or condition, immediately upon request; (d) notice to Lessor of the relocation of the Aircraft's primary hangar location, ten (10) days prior to any relocation; (e) notice of loss or damage to the Aircraft which would cost more than the lesser of (i) ten percent (10%) of the original Capitalized Lessor's Cost or (ii) two hundred fifty thousand and 00/100 dollars ($250,000.00) to repair or replace, within ten (10) days of such loss or damage; (f) notice of any accident involving the Aircraft causing personal injury or property damage, within ten (10) days of such accident; (g) copies of the insurance policies or other evidence of insurance required by the terms hereof, promptly upon request by Lessor; (h) copies of all information, logs, documents and records relating to the Aircraft and its use, maintenance and/or condition, within ten (10) days of such request; (i) on each annual anniversary of the Commencement Date of this Lease, a certificate of the authorized officer of Lessee stating that he has reviewed the activities of Lessee and that, to the best of his knowledge, there exists no Event of Default or event which with notice or lapse of time (or both) would become an Event of Default; (j) such information as may be required to enable Lessor to file any reports required by any governmental authority as a result

2


of Lessor's ownership of the Aircraft, promptly upon request of Lessor; (k) copies of any manufacturer's maintenance service program contract for the airframe or engines, promptly upon request by Lessor; (l) evidence of Lessee's compliance with FAA airworthiness directives and advisory circulars and of compliance with other maintenance provisions of Section 6 hereof and the return provisions of Section 10, promptly upon request of Lessor; and (m) such other reports as Lessor may reasonably request.

5.    DELIVERY, REGISTRATION, USE AND OPERATION:

3


6.    MAINTENANCE:

4


7.    LIENS, SUBLEASE AND ASSIGNMENT:

8.    LOSS, DAMAGE AND STIPULATED LOSS VALUE:    Lessee hereby assumes and shall bear the entire risk of any loss, theft, confiscation, expropriation, requisition, damage to, or destruction of, the Aircraft, any engine or part thereof from any cause whatsoever, except to the extent such events directly result from the gross negligence or willful misconduct of Lessor. If for any reason the Aircraft,

5


or any engine thereto becomes worn out, lost, stolen, confiscated, expropriated, requisitioned, destroyed, irreparably damaged, or unusable ("Casualty Occurrences") Lessee shall promptly (but in no event beyond 10 days from the date of such Casualty Occurrence) and fully notify Lessor in writing. If, in the opinion of Lessor, a Casualty Occurrence has occurred which affects only the engine(s) of the Aircraft, then Lessee, at its own cost and expense, shall replace such engine(s) with an engine(s) acceptable to Lessor and shall cause title to such engine(s) to be transferred to Lessor for lease to Lessee under this Lease. Upon transfer of title to Lessor of such engine(s), such engine(s) shall be subject to the terms and conditions of this Lease, and Lessee shall execute whatever documents or filings Lessor deems necessary and appropriate in connection with the substitution of such replacement engine(s) for the original engine(s). If, in the opinion of Lessor, a Casualty Occurrence has occurred with respect to the Aircraft in its entirety, on the next Rent Payment Date after a Casualty Occurrence (the "Payment Date"), Lessee shall pay Lessor the sum of (i) the Stipulated Loss Value as set forth in Annex F calculated as of the Rent Payment Date prior to such Casualty Occurrence; and (ii) all Rent and other amounts which are due under this Lease as of the Payment Date. Upon payment of all sums due hereunder, the Term of this Lease as to the Aircraft shall terminate.

9.    INSURANCE:    Lessee shall secure and maintain in effect at its own expense throughout the Term of the Lease insurance against such hazards and for such risks as Lessor may require. All such insurance shall be with companies satisfactory to Lessor. Without limiting the generality of the foregoing, Lessee shall maintain: (i) liability insurance covering public liability and property, cargo and sudden accidental pollution coverage, in amounts not less than fifty million (50,000,000) United States dollars for any single occurrence; (ii) all-risk aircraft hull and engine insurance (including, without limitation, with respect to engine or part thereof while removed from the aircraft and foreign object damage insurance) in an amount which is not less than the then Stipulated Loss Value; and (iii) confiscation, expropriation and war risk and allied perils (including, without limitation, terrorism) insurance and hijacking insurance in an amount which is (x) for physical damage, not less than the Stipulated Loss Value and (y) for liability coverage, not less than fifty million (50,000,000) United States dollars for any single occurrence.    All insurance shall: (1) name Lessor as owner of the Aircraft and as loss payee and additional insured (without responsibility for premiums), (2) provide that any cancellation or substantial change in coverage shall not be effective as to the Lessor for thirty (30) days after receipt by Lessor of written notice from the insurer of such cancellation or change, (3) insure Lessor's interest regardless of any breach of warranty or other act or omission of Lessee, (4) include a severability of interest clause providing that such policy shall operate in the same manner as if there were a separate policy covering each insured, (5) waive any right of set-off against Lessee or Lessor, and any rights of subrogation against Lessor, and (6) be primary and not be subject to any offset by any other insurance carried by Lessor or Lessee. Lessee hereby appoints Lessor as Lessee's attorney-in-fact to make proof of loss and claim for and to receive payment of and to execute or endorse all documents, checks or drafts in connection with all policies of insurance in respect of the Aircraft. Lessor shall not act as Lessees attorney-in-fact unless Lessee is in default. Lessee shall pay any reasonable expenses of Lessor in adjusting or collecting insurance proceeds. Lessor may, at its option, apply proceeds of insurance, in whole or in part, to (A) repair the Aircraft, or repair or replace any part thereof, or (B) satisfy any obligation of Lessee to Lessor under this Lease. The foregoing notwithstanding, to the extent no Event of Default has occurred and is continuing, upon written notice from Lessee, Lessor shall follow Lessee's written direction regarding application of the proceeds of insurance, in whole or in part, to (A) repair the Aircraft, or repair or replace any part thereof, or (B) satisfy any obligation of Lessee to Lessor under this Lease; provided, however, that Lessor shall have no obligation to apply such insurance proceeds towards repair or replacement of the Aircraft or any part thereof, if Lessor determines, in its sole discretion, that any such repair or replacement is not capable of being completed before the expiration of the term of the Lease. If an Event of Default has occurred and is continuing hereunder, Lessee shall have no right to direct the application of any such

6



insurance proceeds. Any surplus of such insurance proceeds, shall, to the extent no Event of Default has occurred and is continuing, be paid by Lessor to Lessee.

10.  RETURN OF AIRCRAFT:

11.  EVENTS OF DEFAULT AND REMEDIES:

7


12.  NET LEASE:

8


13.  INDEMNIFICATION:

14.  DISCLAIMER:

9


15.  REPRESENTATIONS AND WARRANTIES OF LESSEE:

        Lessee hereby represents, warrants and covenants to Lessor that on the date of this Lease and at all times during the Term of this Lease:

10


Period

  Ratio
At all times from the date hereof through 1/31/03 2.25 to 1.0

At all times thereafter through 1/31/04

 

2.50 to 1.0

At all times thereafter through 1/31/05

 

2.75 to 1.0

At all times thereafter

 

3.00 to 1.0; and
Period

  Ratio
At all times from the date hereof through 4/30/02 5.25 to 1.0

At all times thereafter through 1/31/03

 

5.50 to 1.0

At all times thereafter through 4/30/03

 

5.00 to 1.0

At all times thereafter through 7/31/03

 

4.75 to 1.0

At all times thereafter through 7/31/04

 

4.50 to 1.0

At all times thereafter

 

4.25 to 1.0

11


16.  OWNERSHIP FOR TAX PURPOSES; GRANT OF SECURITY INTEREST; USURY SAVINGS:

12


17.  EARLY TERMINATION:

18.  EARLY PURCHASE OPTION:

19.  END OF LEASE OPTIONS AND OBLIGATIONS:

13


14


20.  EXCHANGE OPTION.

21.  MISCELLANEOUS:

15


22    TRUTH-IN-LEASING:

16


[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

17


        IN WITNESS WHEREOF, Lessee and Lessor have caused this Lease to be executed by their duly authorized representatives as of the date first above written.

LESSOR: LESSEE:

General Electric Capital Corporation

 

MANDALAY RESORT GROUP

By:

 

STEPHEN B. PETERSON

 

By:

 

GLENN SCHAEFFER
Title: Sr. Risk Analyst Title: President

18



ANNEX A
Description of Aircraft, Lessor's Cost, and Aircraft Markings

I.

  Description

  Cost:

  Gulfstream American Corp, Model G-1159A Aircraft which consists of the following components: $12,475,000.00

 

 

(a) Airframe bearing FAA Registration Mark N123MR and Manufacturer's Serial No. 455;

 

 

 

 

 

(b) Two (2) Rolls Royce 511-8 engines bearing Manufacturer's Serial Nos. 11332 and 11333 respectively (each of which has 750 or more rated takeoff horsepower or the equivalent of such horsepower);

 

 

 

 

 

(c) N/A propellers bearing, respectively bearing, Manufacturer's Serial Nos.             and            , each being rated as follows:                         

 

 

 

 

 

(d) Standard accessories and optional equipment and such other items fitted or installed on the Aircraft and set forth hereinafter:

 

 

 

 

 

(e) Those items of Lessee Furnished Equipment described in a bill of sale or bills of sale therefor (copies of which are appended hereto), delivered by Lessee to Lessor which constitute appliances and equipment which will be installed on the Aircraft;

 

 

 

 

 

(f) Sales Tax

 

$

0.00

 

 

(g) Other

 

$

0.00

 

 

Capitalized Lessor's Cost

 

$

12,475,000.00

II.    Aircraft Markings (referenced in the MAINTENANCE Section of Lease)

Initials:    

Lessee:    GLENN SCHAEFFER

 

Lessor:    STEPHEN B. PETERSON

 

 

19



ANNEX B
DATED THIS                         
TO AIRCRAFT LEASE AGREEMENT
DATED AS OF                         

Lessor & Mailing Address: Lessee & Mailing Address:
General Electric Capital Corporation
44 Old Ridgebury Road
Danbury, CT 06810-5105
 Mandalay Resort Group
3950 Las Vegas Blvd. South,
Las Vegas, NV 89119

Capitalized terms not defined herein shall have the meanings assigned to them in the Aircraft Lease Agreement identified above.

A.    Aircraft.

        Pursuant to the terms of the Lease, Lessor agrees to acquire and lease to Lessee the Aircraft described on Annex A to the Lease.

B.    Financial Terms.

 1. Advance Rent (if any): (a) Amount:    $0.00
     (b) Due Date:    N/A.
 2. Capitalized Lessor's Cost: $12,475,000.00
 3. Basic Term Commencement Date: December 28, 2001.
 4. Basic Term: Thirty Six (36) months plus one day.
 5. First Basic Term Rent Date: February 01, 2002.
 6. Basic Term Rent Dates: First (1st) day of each month.
 7. First Termination Date: One (1) month after the Basic Term Commencement Date.
 8. Last Basic Term Rent Date: February 01, 2005.
 9. Last Delivery Date: December 31, 2001
 10. Primary Hangar Location:                                                  .
 11. Supplier: Mandalay Resort Group.
 12. Lessee Federal Tax ID No.:                         .
 13. Early Purchase Option: Option Date:    N/A.
     Option Price    $N/A.
 14. Expiration Date: N/A.
 15. Estimated Residual Value: See Schedule 2 to this Annex B.
 16. Lessor's Residual Risk Amount: See Schedule 2 to this Annex B.
 17. Daily Lease Rate Factor: 0.014861%.
 18. [INTENTIONALLY LEFT BLANK]  
 19. [INTENTIONALLY LEFT BLANK].  
 20. Extension Term Interest Rate: A per annum rate equal to four hundred twenty five (425) basis points over the then current yield to maturity of U.S. Treasury Notes having a one year maturity

C.    Term and Rent.

        1.    Interim Rent.    For the period from and including the Commencement Date to the Basic Term Commencement Date ("Interim Period"), Lessee shall pay as Rent ("Interim Rent") for each unit of

20



Aircraft, the product of the Daily Lease Rate Factor times the Capitalized Lessor's Cost of such unit times the number of days in the Interim Period. Interim Rent shall be due on February 01, 2002.

        2.    Basic Term and Renewal Term Rent.    Commencing on February 01, 2002, and on the same day of each month thereafter (each, a "Rent Payment Date") during the Basic Term ("Basic Term Rent") and each of the First and Second Renewal Terms, as applicable ("Renewal Term Rent"), Lessee shall pay as Rent monthly installments of principal in arrears, each installment in the principal amount specified on the Amortization Table attached to this Annex B as Schedule 1, together with interest on the Unamortized Principal Balance as of the immediately preceding Rent Payment Date (after application of the Rent paid on such date) at the Interest Rate for the Interest Period following such immediately preceding Rent Payment Date. Interest shall be calculated on the basis of a 360 day year for the actual number of days elapsed. Said Rent consists of principal and interest components, such principal components being as provided in the Amortization Table attached to this Annex B as Schedule 1.

        As used herein, the following terms shall have the following meanings:

        "Interest Period" shall mean the period beginning on the Lease Commencement Date to and including the last day of the month immediately preceding the first Rent Payment Date; and thereafter from the first day of the month that includes the most recent Rent Payment Date to and including the last day of the month immediately preceding the subsequent Rent Payment Date.

        "Interest Rate" shall mean that percentage per annum calculated as the sum of (a) the LIBOR Rate redetermined monthly, plus (b) three hundred twenty-five (325) basis points.

        "LIBOR Rate" shall mean, with respect to any Interest Period occurring during the term of the Lease, an interest rate per annum equal at all times during such Interest Period to the quotient of (1) the rate per annum as determined by Lessor at which deposits of U.S. Dollars in immediately available and freely transferable funds are offered at 11:00 a.m. (London, England time) two (2) Business Days before the commencement of such Interest Period to major banks in the London interbank market for a period of ninety (90) days and in an amount equal or comparable to the Unamortized Principal Balance, divided by (2) a number equal to 1.00 minus the aggregate (without duplication) of the rates (expressed as a decimal fraction) of the LIBOR Reserve Requirements current on the date three (3) Business Days prior to the first day of the Interest Period.

        "LIBOR Reserve Requirements" shall mean the daily average for the applicable Interest Period of the maximum rate applicable to Lessor or its participants or assignees, if any, at which reserves (including, without limitation, any supplemental, marginal and emergency reserves) are imposed during such Interest Period by the Board of Governors of the Federal Reserve System (or any successor) on "Eurocurrency liabilities", as defined in such Board's Regulation D (or in respect of any other category of liabilities that include deposits by reference to which the interest rates on Eurodollar loans is determined or any category of extensions of credit or other assets that include loans by non-United States offices of any lender to United States residents), having a term equal to such Interest Period, subject to any amendments of such reserve requirement by such Board or its successor, taking into account any transitional adjustments thereto.

        If at any time Lessor (or any participant or assignee of Lessor, if any), determines that either adequate and reasonable means do not exist for ascertaining the LIBOR Rate, or it becomes impractical for Lessor or any such participant or assignee of Lessor, to obtain funds to make or maintain the financing hereunder with interest at the LIBOR Rate, or Lessor or any such participant or assignee of Lessor shall have determined that the LIBOR Rate will not adequately and fairly reflect the cost to Lessor or any such participant or assignee of Lessor,of making, maintaining, or funding the transaction hereunder at the LIBOR Rate, or Lessor or any such participant or assignee of Lessor reasonably determines that, as a result of changes to applicable law after the date of execution of the

21



Agreement, or the adoption or making after such date of any interpretations, directives or regulations (whether or not having the force of law) by any court, governmental authority or reserve bank charged with the interpretation or administration thereof, it shall be or become unlawful or impossible to make, maintain, or fund the transaction hereunder at the LIBOR Rate, then Lessor promptly shall give notice to Lessee of such determination, and Lessor and Lessee shall negotiate in good faith a mutually acceptable alternative method of calculating the Interest Rate and shall execute and deliver such documents as reasonably may be required to incorporate such alternative method of calculating the Interest Rate in this Schedule, within thirty (30) days after the date of Lessor's notice to Lessee. If the parties are unable mutually to agree to such alternative method of calculating the Interest Rate in a timely fashion, on the Rent Payment Date next succeeding the expiration of such thirty (30) day period Lessee shall purchase all (but not less than all) of the Aircraft and shall pay to Lessor, in cash, the purchase price for the Aircraft so purchased, determined as hereinafter provided. The purchase price of the Aircraft shall be an amount equal to the Stipulated Loss Value of such Aircraft calculated in accordance with Annex F as of the date of payment, together with all rent and other sums then due on such date, plus all taxes and charges upon sale and all other reasonable and documented expenses incurred by Lessor in connection with such sale. Upon satisfaction of the conditions specified in this paragraph, Lessor will transfer, on an AS IS BASIS, all of Lessor's interest in and to the Aircraft. Lessor shall not be required to make and may specifically disclaim any representation or warranty as to the condition of the Aircraft and other matters. Upon satisfaction of the conditions specified in this paragraph, Lessor shall execute and deliver to Lessee such Uniform Commercial Code statements of termination as reasonably may be required in order to terminate any interest of Lessor in and to the Aircraft.

        3.    If the Interim Rent Payment Date or any Rent Payment Date is not a Business Day, the Rent otherwise due on such date shall be payable on the immediately preceding Business Day. As used herein, "Business Day" shall mean any day other than Saturday, Sunday, and any day on which banking institutions located in the State of Connecticut are authorized by law or other governmental action to close.

D.    [INTENTIONALLY LEFT BLANK]

E.    Insurance.

F.    Additional Maintenance Requirements.

G.    Amendments to Lease.

        Except as expressly modified hereby, all terms and provisions of the Lease shall remain in full force and effect. This Annex B is not binding or effective with respect to the Lease or Aircraft until executed on behalf of Lessor and Lessee by authorized representatives of Lessor and Lessee, respectively.

22



        IN WITNESS WHEREOF, Lessee and Lessor have caused this Annex B to be executed by their duly authorized representatives as of the date first above written.

LESSOR: LESSEE:

General Electric Capital Corporation

 

Mandalay Resort Group

By:

 

STEPHEN B. PETERSON

 

By:

 

GLENN SCHAEFFER
Name: Stephen B. Peterson Name: Glenn Schaeffer
Title: Sr. Risk Analyst Title: President

23



Schedule 1
To Annex B

AMORTIZATION TABLE

Payment
Number

  Beginning
Balance

  Takedowns
  Debt
Service

  Interest
At
5.35000%

  Principal
  Ending
Balance

01 12,475,000.00 0.00 200,004.29 55,617.71 144,386.58 12,330,613.42
02 12,330,613.42 0.00 199,360.56 54,973.99 144,386.58 12,186,226.84
03 12,186,226.84 0.00 198,716.84 54,330.26 144,386.58 12,041,840.26
04 12,041,840.26 0.00 198,073.12 53,686.54 144,386.58 11,897,453.68
05 11,897,453.68 0.00 197,429.39 53,042.82 144,386.58 11,753,067.10
06 11,753,067.10 0.00 196,785.67 52,399.09 144,386.58 11,608,680.53
07 11,608,680.53 0.00 196,141.95 51,755.37 144,386.58 11,464,293.95
08 11,464,293.95 0.00 195,498.22 51,111.64 144,386.58 11,319,907.37
09 11,319,907.37 0.00 194,854.50 50,467.92 144,386.58 11,175,520.79
10 11,175,520.79 0.00 194,210.78 49,824.20 144,386.58 11,031,134.21
11 11,031,134.21 0.00 193,567.05 49,180.47 144,386.58 10,886,747.63
12 10,886,747.63 0.00 192,923.33 48,536.75 144,386.58 10,742,361.05
13 10,742,361.05 0.00 192,279.61 47,893.03 144,386.58 10,597,974.47
14 10,597,974.47 0.00 191,635.88 47,249.30 144,386.58 10,453,587.89
15 10,453,587.89 0.00 190,992.16 46,605.58 144,386.58 10,309,201.31
16 10,309,201.31 0.00 190,348.44 45,961.86 144,386.58 10,164,814.73
17 10,164,814.73 0.00 189,704.71 45,318.13 144,386.58 10,020,428.15
18 10,020,428.15 0.00 189,060.99 44,674.41 144,386.58 9,876,041.58
19 9,876,041.58 0.00 130,662.63 44,030.69 86,631.94 9,789,409.63
20 9,789,409.63 0.00 130,276.39 43,644.45 86,631.94 9,702,777.69
21 9,702,777.69 0.00 129,890.16 43,258.22 86,631.94 9,616,145.75
22 9,616,145.75 0.00 129,503.93 42,871.98 86,631.94 9,529,513.81
23 9,529,513.81 0.00 129,117.69 42,485.75 86,631.94 9,442,881.86
24 9,442,881.86 0.00 128,731.46 42,099.52 86,631.94 9,356,249.92
25 9,356,249.92 0.00 128,345.22 41,713.28 86,631.94 9,269,617.98
26 9,269,617.98 0.00 127,958.99 41,327.05 86,631.94 9,182,986.04
27 9,182,986.04 0.00 127,572.76 40,940.81 86,631.94 9,096,354.10
28 9,096,354.10 0.00 127,186.52 40,554.58 86,631.94 9,009,722.15
29 9,009,722.15 0.00 126,800.29 40,168.35 86,631.94 8,923,090.21
30 8,923,090.21 0.00 126,414.05 39,782.11 86,631.94 8,836,458.27
31 8,836,458.27 0.00 126,027.82 39,395.88 86,631.94 8,749,826.33
32 8,749,826.33 0.00 125,641.59 39,009.64 86,631.94 8,663,194.38
33 8,663,194.38 0.00 125,255.35 38,623.41 86,631.94 8,576,562.44
34 8,576,562.44 0.00 124,869.12 38,237.17 86,631.94 8,489,930.50
35 8,489,930.50 0.00 124,482.88 37,850.94 86,631.94 8,403,298.56
36 8,403,298.56 0.00 124,096.65 37,464.71 86,631.94 8,316,666.62
37 8,316,666.62 0.00 123,710.41 37,078.47 86,631.94 8,230,034.67
38 8,230,034.67 0.00 123,324.18 36,692.24 86,631.94 8,143,402.73
39 8,143,402.73 0.00 122,937.95 36,306.00 86,631.94 8,056,770.79
40 8,056,770.79 0.00 122,551.71 35,919.77 86,631.94 7,970,138.85
41 7,970,138.85 0.00 122,165.48 35,533.54 86,631.94 7,883,506.90
42 7,883,506.90 0.00 121,779.24 35,147.30 86,631.94 7,796,874.96
43 7,796,874.96 0.00 121,393.01 34,761.07 86,631.94 7,710,243.02
44 7,710,243.02 0.00 121,006.78 34,374.83 86,631.94 7,623,611.08

24


45 7,623,611.08 0.00 120,620.54 33,988.60 86,631.94 7,536,979.13
46 7,536,979.13 0.00 120,234.31 33,602.37 86,631.94 7,450,347.19
47 7,450,347.19 0.00 119,848.07 33,216.13 86,631.94 7,363,715.25
48 7,363,715.25 0.00 119,461.84 32,829.90 86,631.94 7,277,083.31
49 7,277,083.31 0.00 119,075.61 32,443.66 86,631.94 7,190,451.37
50 7,190,451.37 0.00 118,689.37 32,057.43 86,631.94 7,103,819.42
51 7,103,819.42 0.00 118,303.14 31,671.20 86,631.94 7,017,187.48
52 7,017,187.48 0.00 117,916.90 31,284.96 86,631.94 6,930,555.54
53 6,930,555.54 0.00 117,530.67 30,898.73 86,631.94 6,843,923.60
54 6,843,923.60 0.00 117,144.44 30,512.49 86,631.94 6,757,291.65
55 6,757,291.65 0.00 116,758.20 30,126.26 86,631.94 6,670,659.71
56 6,670,659.71 0.00 116,371.97 29,740.03 86,631.94 6,584,027.77
57 6,584,027.77 0.00 115,985.73 29,353.79 86,631.94 6,497,395.83
58 6,497,395.83 0.00 115,599.50 28,967.56 86,631.94 6,410,763.88
59 6,410,763.88 0.00 115,213.27 28,581.32 86,631.94 6,324,131.94
60 6,324,131.94 0.00 6,352,327.03 28,195.09 6,324,131.94 0.00



 

 

 

 

 

 



 

 

 

 

 

 



 

 

 

 

 

 
Initials:      
  
 
  
Lessor   Lessee  




(1)
*The Principal, Interest and Unamortized Principal Balance as of any Rent Payment Date shall be equal to the Capitalized Lessor's Cost of such unit multiplied by the appropriate percentage derived from the above table

25



SCHEDULE 2
TO ANNEX B

OPTION DATE

  ESTIMATED RESIDUAL VALUE
(as % of Capitalized Lessor's Cost)

  LESSOR'S RESIDUAL RISK AMOUNT
(as % of Capitalized Lessor's Cost)

End of Basic Term 67.33 11.73
End of First Renewal Term 58.89 7.10
End of Second Renewal Term 50.00 6.21

26



ANNEX C

BILL OF SALE

        Mandalay Resort Group (the "Seller"), in consideration of the sum of Twelve Million Four Hundred Seventy Five Thousand and 00/100 Dollars ($12,475,000.00) paid by General Electric Capital Corporation (the "Buyer"), receipt of which is acknowledged, hereby grants, sells, assigns, transfers and delivers to Buyer all of Seller's right, title and interest in the Aircraft and related equipment (collectively, the "Aircraft") more particularly described on Annex A hereto, in an AS-IS, WHERE-IS condition, with no warranties, express or implied, of any kind or nature, except that Seller warrants to Buyer that (i) Seller has the right to, and does hereby, sell and convey all of its interest in the Aircraft to Buyer, and (ii) the Aircraft is free and clear of all liens, claims and encumbrances, other than the security interest granted to Buyer pursuant to that certain Aircraft Lease Agreement, dated                        (the "Lease Agreement").

        Buyer and Seller agree and acknowledge that the sale and conveyance contemplated hereby is solely for the purpose of granting to Buyer a security interest in the Aircraft. Seller shall retain legal title to the Aircraft, and Seller shall remain in possession of the Aircraft subject to the terms and conditions of the Lease Agreement.

        IN WITNESS WHEREOF, Seller has executed this Bill of Sale this                        day of                        , 2001.

SELLER: BUYER:

Mandalay Resort Group

 

General Electric Capital Corporation

By:

 

GLENN SCHAEFFER

 

By:

 

STEPHEN B. PETERSON
Title: President Title: Sr. Rick Analyst

27


[for used aircraft]


ANNEX E

CERTIFICATE OF ACCEPTANCE

        AIRCRAFT LEASE AGREEMENT dated as of                        (the "Lease"), between General Electric Capital Corporation, as lessor (the "Lessor"), and Mandalay Resort Group, as lessee (the "Lessee").

A.
The Aircraft:    Lessee hereby certifies that the Aircraft as set forth and described in Annex A hereto has been delivered to Lessee, inspected by Lessee, found to be in good order and fully equipped to operate as required under applicable law for its intended purpose, and is, on the date set forth below, preowned and used and fully and finally accepted under the Lease.

B.
Representations by Lessee:    Lessee hereby represents and warrants to Lessor that on the date hereof:

(1)
The representations and warranties of Lessee set forth in the Lease and all certificates and opinions delivered in connection therewith were true and correct in all respects when made and are true and correct as of the date hereof.

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

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

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

(5)
Lessee has furnished no equipment for the Aircraft other than as sold to Lessor and as stated on Annex A hereto or permitted as an addition thereto pursuant to the Lease.

(6)
The Lessee has undertaken, at Lessee's expense, a survey of the Aircraft completed by a consultant named by Lessor, which survey includes (i) a complete inventory of the Aircraft, including, without limitation, engines, spare parts and avionics, (ii) review of all operating and maintenance logs (including any computerized program under which the Aircraft has been maintained); (iii) physical inspection of the Aircraft (including a demonstration of flight); and (iv) an analysis of the cost of the Aircraft as compared to similarly equipped Aircraft of same model and approximately the same age, airframe, engine hours and over all condition. Such survey and its availability to Lessee shall not constitute any representation or warranty by Lessor to Lessee of any kind with respect to the Aircraft, its condition or otherwise.

(7)
A report of the results of the survey required by paragraph 6 above, has been delivered to Lessor and since the date thereof, there has not occurred any material change in the configuration or condition of the Aircraft (except such modifications or repairs specified in such survey as being necessary to undertake) and neither engine has accrued more than fifty (50) operating hours since the date of such survey.

(8)
The Lessee has inspected the Aircraft and all pertinent records therefor and the Aircraft has no damage history.

(9)
The nameplates required to be affixed to the Aircraft and to each engine pursuant to the MAINTENANCE Section of the Lease have been duly affixed.

28


        IN WITNESS WHEREOF, Lessee has caused this Certificate of Acceptance to be duly executed by its officers thereunto duly authorized.

  Lessee:

 

 

Mandalay Resort Group

 

 

By:

 

GLENN SCHAEFFER
  Title: President
  Date:  
    

29



Annex F

Stipulated Loss and Termination Values

        The Stipulated Loss and Termination Value of the Aircraft shall be the percentage of Capitalized Lessor's Cost of the aircraft set forth opposite the applicable rent payment.

Capitalized Lessor's Cost    $12,475,000.00

Basic Rent Payment No.
  Termination Value
  Stipulated Loss Value
  1 101.843 105.744
  2 100.685 104.538
  3 99.528 103.331
  4 98.370 102.124
  5 97.213 100.918
  6 96.056 99.711
  7 94.898 98.505
  8 93.741 97.298
  9 92.583 96.092
10 91.426 94.885
11 90.269 93.678
12 89.111 92.472
13 87.954 91.265
14 86.796 90.059
15 85.639 88.852
16 84.481 87.645
17 83.324 86.439
18 82.167 85.232
19 81.472 84.489
20 80.778 83.745
21 80.083 83.001
22 79.389 82.258
23 78.694 81.514
24 78.000 80.770
25 77.306 80.027
26 76.611 79.283
27 75.917 78.540
28 75.222 77.796
29 74.528 77.052
30 73.833 76.309
31 73.139 75.565
32 72.444 74.821
33 71.750 74.078
34 71.056 73.334
35 70.361 72.591
36 69.667 71.847
37 68.972 71.103
38 68.278 70.360
39 67.583 69.616
40 66.889 68.872
41 66.194 68.129
42 65.500 67.385

30


43 64.806 66.642
44 64.111 65.898
45 63.417 65.154
46 62.722 64.411
47 62.028 63.667
48 61.333 62.923
49 60.639 62.180
50 59.944 61.436
51 59.250 60.693
52 58.556 59.949
53 57.861 59.205
54 57.167 58.462
55 56.472 57.718
56 55.778 56.974
57 55.083 56.231
58 54.389 55.487
59 53.694 54.744
60 53.000 54.000



 

 

 

 

 

 



 

 

 

 

 

 



 

 

 

 

 

 
Initials: STEPHEN B. PETERSON
Lessor
 GLENN SCHAEFFER
Lessee
  

31

Source: OneCLE Business Contracts.