Exhibit 10.19
LEASE AGREEMENT
by and between
INDIANAPOLIS AIRPORT AUTHORITY
and
AAR AIRCRAFT SERVICES, INC.
Dated as of June 14, 2004
Index to IMC Lease
Agreement
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LEASE AGREEMENT
THIS LEASE AGREEMENT (hereinafter
called this “Lease Agreement” or this
“Lease”) is made and entered into as of the 14 day of
June, 2004 (the “Effective Date”), by and between the
INDIANAPOLIS AIRPORT AUTHORITY, a municipal corporation existing
under and by virtue of the laws of the State of Indiana (the
“Authority”), and AAR AIRCRAFT SERVICES, INC., a
corporation incorporated in the State of Illinois and authorized to
do business in the State of Indiana, with its principal office at
1100 North Wood Dale Road, Wood Dale, Illinois 60191
(“Tenant”).
WITNESSETH THAT:
WHEREAS, the Authority owns and
operates the Airport; and
WHEREAS, the Authority owns and
holds a leasehold interest in the Land and the Facilities that have
been developed on the Land; and
WHEREAS, the Authority shall lease
to Tenant pursuant to this Lease Agreement the leasehold interests
of the Authority in the Leased Premises, which constitute a portion
of the Land and Facilities; and
WHEREAS, Tenant is engaged in the
aviation and aerospace business, including the business of
providing aircraft maintenance, repair and overhaul services to
commercial airlines and other operators of aircraft, and related
services; and
WHEREAS, Tenant desires to lease the
Leased Premises upon the terms and conditions hereinafter
stated:
NOW, THEREFORE, in consideration of
the mutual covenants and payments herein contained, the Authority
and Tenant hereby agree as follows:
ARTICLE I.
DEFINITIONS
Section 101.
Definitions
below:
“145 Certificate” has
the meaning set forth in Section 302(G) of this
Lease.
“Act” means Indiana Code
8-22-3.
“Activate” or
“Activation” has the meaning set forth in
Section 205(A) of this Lease.
“Activation Notice” has
the meaning set forth in Section 205(A) of this
Lease.
“Actual Facilities Costs and
Expenses” has the meaning set forth in
Section 601(B)(2) of this Lease.
“Additional Rent” has
the meaning set forth in Section 601(B)(1) of this
Lease.
“Additional Rental Per Square
Foot Per Annum” has the meaning set forth in
Section 601(B)(2) of this Lease.
“Affiliate” means any
entity, directly or indirectly, controlled by, controlling, or
under common control with Tenant.
“Air Operations Area”
means any portion of the Airport designed and used for landing,
taking off, or surface maneuvering of airplanes.
“Airport” means the
Indianapolis International Airport.
“Airport Director” means
the Airport Director of the Airport.
“Apron” means that area
shown on Exhibit I to this Lease, as the same may be
amended by the Authority from time to time.
“Authority” means the
Indianapolis Airport Authority, a municipal corporation duly
organized and operating under the laws of the State, including the
Act, or any successor thereto or assignee thereof.
“Authority Permits” has
the meaning set forth in Section 704 of this Lease.
“Authority’s
Non-Compliance Notice” has the meaning set forth in
Section 705(D) of this Lease.
“Authority’s Notice of
Proposed Agreement” has the meaning set forth in
Section 2105(A)(3) of this Lease.
“Authority Termination
Event” has the meaning set forth in
Section 504(A) of this Lease.
“Available Equipment”
means those items of Equipment on the Master List of Equipment that
have not already been provided to Tenant for its then currently
Occupied space at the Leased Premises.
“Available Space” has
the meaning set forth in Section 2105(A) of this
Lease.
“BAA” means BAA
Indianapolis LLC, an Indiana limited liability company.
“BAA USA” means BAA USA
(Holdings), Inc., a Delaware corporation.
“Baseline Environmental
Audit” has the meaning set forth in
Section 705(C) of this Lease.
“Base Rent” has the
meaning set forth in Section 601(A)(1) of this
Lease.
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“Bay” means that
separate area, within a Hangar, which comprises approximately
one-half (1/2) of the Hangar. A “Bay” includes
all of the office, storage, and employee support space associated
with that particular Bay.
“Bond Issues” means the
City Bonds, the State Bonds, and the Special Facility
Bonds.
“Casualty” has the
meaning set forth in Section 1601(A)(1) of this
Lease.
“City Bonds” means one
or more series of tax-exempt revenue bonds, including refunding
bonds, issued by the Redevelopment Authority payable solely from
lease rentals from legally available funds of the
Commission.
“Commission” means the
Metropolitan Development Commission of Marion County, Indiana,
acting as the Redevelopment Commission of the City of Indianapolis,
Indiana.
“Commission Lease
Agreement” means the Commission Lease Agreement dated as of
December 1, 1991 between the Commission and the Authority, as
the same has been or may hereafter be amended or supplemented from
time to time.
“Common Area” has the
meaning set forth in Section 1401 of this Lease.
“Condemnation” has the
meaning set forth in Section 1602(A) of this
Lease.
“Condition” has the
meaning set forth in Section 2105(A)(2) of this
Lease.
“Corporate Overhead” has
the meaning set forth in Section 601(C)(3)(c) of this
Lease.
“Corporate Overhead Allocation
Guidelines” has the meaning set forth in
Section 601(C)(3)(c) of this Lease.
“Credits” has the
meaning set forth in Section 605(B)(1) below.
“Credit Thresholds” has
the meaning set forth in
Section 605(B)(1) below.
“Deficit” has the
meaning set forth in Section 501(B)(3) of this
Lease.
“Effective Date” has the
meaning set forth in the Preamble to this Lease.
“Employees” means, as to
Tenant or its subtenants, respectively, Persons who are either
employed directly or indirectly by Tenant or a subtenant,
respectively, or are contracted by Tenant or a subtenant,
respectively, to perform day-to-day work that would otherwise be
performed by employees of Tenant or a subtenant,
respectively.
“Entity” means any
corporation, partnership, limited partnership, limited liability
partnership, joint venture, association, limited liability company,
joint-stock company, trust, or other entity or unincorporated
association, or any Governmental Entity.
“Environmental Audits”
has the meaning set forth in Section 705(D) of this
Lease.
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“Environmental Laws”
means all Federal, State and local laws, including without
limitation all statutes, regulations, ordinances, codes, rules,
policies, orders, decrees, guidance, guidelines, conditions,
permits issued to the Authority, and other governmental
restrictions and requirements, relating to the environment or
Hazardous Materials, and shall include, without limitation, the
Federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980 as amended by the Superfund Amendments and
Reauthorization Act of 1986, the Federal Solid Waste Disposal Act,
the Occupational Safety and Health Act, the Federal Water Pollution
Control Act, the Federal Clean Air Act, the Federal Clean Water
Act, the Resource Conservation and Recovery Act of 1976, the Safe
Drinking Water Act, the Toxic Substances Control Act, the Refuse
Act, the Hazardous Materials Transportation Act, the Emergency
Planning and Community Right-to-Know Act, the Federal Insecticide,
Fungicide and Rodenticide Act, the Endangered Species Act, the
National Environmental Policy Act, regulations of the Environmental
Protection Agency, regulations of the Nuclear Regulatory Agency,
the Indiana Air and Water Pollution Control Law, the Indiana
Groundwater Protection Act, the Indiana Hazardous Waste Law, the
Indiana Underground Storage Tanks Act, the Indiana Wastewater
Management Law, the Indiana Fish and Wildlife Act, the Indiana
Flood Control Act, the Indiana Environmental Policy Act, the
Indiana Environmental Management Act, regulations of any State
Department of Natural Resources or State Environmental Protection
Agency, Environment, Health and Safety Requirements, and any
amendments or supplements thereto and any rules or regulations
promulgated pursuant thereto or in connection therewith, as now or
anytime hereafter in effect. The term “Environmental
Laws” shall include regulations, ordinances, codes, rules,
policies, guidance, guidelines, conditions, restrictions and
requirements relating to the environment or Hazardous Materials
that are issued, passed or imposed by the Authority, whether now or
hereafter in effect, to the extent those regulations, ordinances,
codes, rules, policies, guidance, guidelines, restrictions or
requirements are or would be generally applicable to any tenant or
other Person who is operating or conducting business at the Airport
or to the extent generally applicable to the public.
“Environment, Health and
Safety Requirements” means all of the terms and conditions of
all permits, licenses, and other authorizations which are required
under, and all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules, and
timetables which are contained in, any and all Laws relating to
public health and safety, worker health and safety, or pollution or
protection of the environment, including without limitation
Environmental Laws relating to emissions, discharges, releases, or
threatened releases of Hazardous Materials into ambient air,
surface water, ground water, or lands, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of Hazardous Materials.
“Equipment” means the
equipment, fixtures, permanent inventory, tangible personal
property, tooling (including general tooling and aircraft
maintenance tooling), or other items of property made available by
the Authority to Tenant whether now owned or hereafter acquired, as
the same shall be substituted or replaced from time to time in
accordance with Article X, all as identified on the
Authority’s Master List of Equipment from time to time, and
all products and proceeds thereof.
“Estimated Completion
Date” has the meaning set forth in
Section 1601(C) of this Lease.
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“Estimated Facilities Costs
and Expenses” has the meaning set forth in
Section 601(B)(2) of this Lease.
“Event of Default”
means, with respect to Tenant, any of the Events of Default set
forth in Section 1901 hereof and, with respect to the
Authority, any of the Events of Default set forth in
Section 1801 hereof.
“Excluded Property”
means the equipment, permanent inventory or tangible personal
property of Tenant located at the Leased Premises, as identified on
Tenant’s Master List of Excluded Property from time to time;
provided, however, that aircraft parts inventory, shop supplies,
and office supplies shall always be Excluded Property and need not
be identified on the Master List of Excluded Property.
“Excluded Systems” means
those utilities and/or building systems at the Facilities that the
Authority and Tenant mutually determine that the Authority will not
be obligated to make operational or to furnish to Tenant under this
Lease. Among other utilities and/or building systems that may
be Excluded Systems, the fueling system at the Facilities shall be
deemed to be an “Excluded System”. Once the
Authority and Tenant have mutually determined that a particular
utility or building system is an “Excluded System”,
that utility or building system shall thereafter remain an
“Excluded System” unless the Authority and Tenant
mutually agree otherwise.
“Expansion Area” has the
meaning set forth in Section 401 of this Lease.
“Expansion Option” has
the meaning set forth in Section 401 of this Lease.
“Expansion Space” has
the meaning set forth in Section 401 of this Lease.
“Extension Notice” has
the meaning set forth in Section 501(B) of this
Lease.
“Extension Option” has
the meaning set forth in Section 501(B) of this
Lease.
“Extension Term” has the
meaning set forth in Section 501(B) of this
Lease.
“FAA” means the Federal
Aviation Administration.
“Facility” or
“Facilities” means (a) the buildings, structures,
improvements and facilities located on the Land, whether now or
hereafter existing and wherever located; and (b) any
extensions, improvements, replacements, and additions to and
personal property (including, without limitation, equipment,
fixtures and permanent inventory) for such buildings, structures,
improvements and facilities, whether now or hereafter existing,
that are located on the Land.
“Facilities Manager”
means the Person designated by the Authority, from time to time, to
be located “on-site” and to serve as the
“facilities manager” for the Facilities.
“Facilities Security
Rules and Regulations” has the meaning set forth in
Section 902 of this Lease.
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“Facilities Systems”
means those Utilities and building systems, other than Excluded
Systems, that are applicable to a particular area within the Leased
Premises, which exist and shall be operable as of the Activation
Date for that particular area of the Leased Premises.
“Final Audit” had the
meaning set forth in Section 1005(B)(2) of this
Lease.
“Full-Time Equivalent”
means, with respect to an Indiana Resident Employee, that the
Indiana Resident Employee is hired to perform, and with rare
exception has performed, no fewer than eight (8) hours of a
work day, five (5) days per week, in ninety percent (90%) of
the weeks during the period in question. In determining the
number of “Full-Time Equivalent” Indiana Resident
Employees for a particular period, the total number of hours per
week worked during that period by Indiana Resident Employees who do
not, individually, qualify as “full time” pursuant to
the preceding sentence will be added and divided by forty
(40). The quotient shall be rounded to the nearest whole
number and shall be included toward the number of “Full-Time
Equivalent” Indiana Resident Employees that Tenant is to be
credited with having employed during the period in
question.
“GAAP” has the meaning
set forth in Section 601(C)(3) of this Lease.
“Governmental Entity”
means any court, government agency, department, commission, board,
bureau, office, officer or instrumentality of the United States,
any local, county, state, federal or political subdivision thereof,
or any foreign governmental entity of any kind, including but not
limited to the Authority.
“Grant Proceeds” has the
meaning set forth in Section 605(A)(1) of this
Lease.
“Grant-Related
Expenditures” has the meaning set forth in
Section 605(A)(1) of this Lease.
“Grants” has the meaning
set forth in Section 605(A)(1) of this Lease.
“Grant Thresholds” has
the meaning set forth in Section 605(A)(1) of this
Lease.
“Gross Sales” has the
meaning set forth in Section 601(C)(3) of this
Lease.
“Group” has the meaning
set forth in Section 601(C)(3) of this Lease.
“Group Expenses” has the
meaning set forth in Section 601(C)(3) of this
Lease.
“Group Overhead” has the
meaning set forth in Section 601(C)(3)(b) of this
Lease.
“Hangar” means those
areas at the Facilities that are described as “hangars”
in Exhibit B . Each Hangar (with the
exception of Hangar 4) consists of two (2) Bays.
“Hazardous Materials”
means any hazardous or toxic substance and any pollutant or
contaminant, material or waste which is or becomes regulated by any
local Governmental Entity, the State of Indiana or the United
States Government, including, without limitation, any
material
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or substance which is (a) petroleum,
batteries, or liquid solvents or similar chemicals,
(b) asbestos, (c) radioactive material or waste,
(d) polychlorinated biphenyls (“PCBs”),
(e) designated as a “hazardous substance” pursuant
to Section 311 of the Federal Water Pollution Control Act (33
U.S.C. § 1317), (f) defined as a “hazardous
waste” pursuant to Section 1004 of the Federal Resource
Conservation and Recovery Act, 42 U.S.C. § 6901 et seq.
(42 U.S.C. § 6903), or pursuant to
Section 13-11-2-99 of the Indiana Code, or determined to be a
“hazardous waste” under
Section 13-22-2-3(b) of the Indiana Code,
(g) defined as a “hazardous substance” pursuant to
Section 101 of the Comprehensive Environmental Response,
Compensation and Liability Act, of 1980, as amended by the
Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C.
§ 9601 et seq. (42 U.S.C. § 9601), or pursuant
to Section 13-11-2-98 of the Indiana Code, (h) regulated
under the Toxic Substances Control Act (15 U.S.C. § 2601
et seq.) or defined as a PCB pursuant to Section 13-11-2-155
of the Indiana Code, (i) defined as a
“contaminant” pursuant to Section 13-11-2-42 of
the Indiana Code, or (j) any other substance or material similarly
classified by any other federal, state or local Law or by any
rule or regulation promulgated or adopted pursuant thereto,
whether now existing or hereinafter enacted.
“IDP” has the meaning
set forth in Section 706(A) of this Lease.
“Improvement-Related
Permits” has the meaning set forth in
Section 605(A)(2)(c)(iii) of this Lease.
“Improvement Rent
Credits” has the meaning set forth in
Section 605(C)(1) of this Lease.
“Indiana Resident
Employees” means individuals (i) who are Indiana
residents, and (ii) who are either (a) employed by Tenant
or its subtenants, respectively, at the Leased Premises, or
(b) contracted by Tenant or its subtenants, respectively, to
perform day-to-day work at the Leased Premises that would otherwise
be performed by Persons employed directly or indirectly by Tenant
or its subtenants, respectively.
“Initial Term” has the
meaning set forth in Section 501(A) of this
Lease.
“Invitees” shall mean,
as to Tenant or any of its subtenants, (i) any individual who
enters the Leased Premises by means of the main lobby
entrance to the Facilities, has been cleared by and issued a
visitor identification badge by Facilities security personnel at
the security checkpoint located at the main lobby entrance to the
Facilities, and an individual who bears an Authority-issued Tenant
(or subtenant of Tenant) employee badge acknowledges, in person at
the security checkpoint, that such individual is their guest and
thereafter accompanies such individual from the security checkpoint
(even if that individual who bears the Authority-issued Tenant (or
subtenant of Tenant) employee badge fails to continue to accompany
the individual in violation of FAA/TSA security requirements),
or (ii) any individual who is otherwise accompanied into
or onto the Leased Premises by an individual who bears an
Authority-issued Tenant (or subtenant of Tenant) employee badge
(even if that individual who bears the Authority-issued Tenant (or
subtenant of Tenant) employee badge thereafter fails to continue to
accompany the individual in violation of FAA/TSA security
requirements). For purposes of
subsection (i) above, Facilities security personnel at
the security checkpoint will not issue a visitor identification
badge to an individual unless an individual who bears an
Authority-issued
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Tenant (or subtenant of Tenant) employee
badge acknowledges, in person at the security checkpoint, that
such individual is their guest and thereafter accompanies such
individual from the security checkpoint (even if that individual
who bears the Authority-issued Tenant (or subtenant of Tenant)
employee badge, fails to continue to accompany the individual in
violation of FAA/TSA security requirements).
“ITFA” means the Indiana
Transportation Finance Authority created under IC 8-9.5-8 and
acting pursuant to IC 8-21-12.
“ITFA Lease Agreement”
means the Lease Agreement between ITFA and the Authority dated as
of December 1, 1991, as the same has been or may hereafter be
amended or supplemented from time to time.
“Land” means the real
estate located at the Airport, as shown on the attached
Exhibit A , consisting of approximately two hundred
seventeen (217) acres. The Leased Premises is located on, and
consists of, a portion of the Land.
“Landlord Indemnified
Parties” has the meaning set forth in
Section 705(E) of this Lease.
“Laws” means any and all
applicable local, county, state, federal, foreign or other laws,
statutes, codes, regulations, ordinances, conditions, requirements,
rules, orders, decrees, consent decrees, judgments, writs,
settlement agreements, stipulations, injunctions, guidelines,
demand letters, or other governmental requirements enacted,
promulgated, entered into, agreed or imposed by any Governmental
Entity from time to time, including without limitation
Environmental Laws. The term “Laws” shall include
all regulations, ordinances, codes, rules, conditions, guidelines,
guidance, policies, restrictions and requirements that are issued,
passed or imposed by the Authority, whether now or hereafter in
effect, to the extent those regulations, ordinances, codes, rules,
conditions, guidelines, guidance, policies, restrictions or
requirements are or would be generally applicable to any tenant or
other Person who is operating or conducting business at the Airport
or to the extent generally applicable to the public. “Lease
Agreement” or “Lease” means this Lease Agreement,
as the same may be amended and supplemented.
“Leased Premises” means
(a) that portion of the Facilities described in
Exhibit B and shown on Exhibit B-1 attached
hereto together with the Land on which that portion of the
Facilities is located; (b) that Equipment on the Master List
of Equipment (as hereafter defined) which is provided from time to
time by the Authority to Tenant pursuant to this Lease; and
(c) any applicable Expansion Area as to which Tenant properly
exercises its Expansion Option pursuant to this Lease.
“Leased Premises
Improvements” has the meaning set forth in
Section 605(A)(2)(c) of this Lease.
“Letter of Credit” means
the irrevocable Letter of Credit to be obtained and maintained by
Tenant pursuant to Section 1201 of this Lease.
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“Liabilities” means any
and all claims, demands, suits, proceedings, judgments, costs,
expenses, penalties, fees, fines, damages, losses, and liabilities
and includes, without limitation, reasonable attorneys’
fees.
“Lien” has the meaning
set forth in Section 716(A) of this Lease.
“Master List of
Equipment” has the meaning set forth in
Section 203(A) of this Lease.
“Master List of Excluded
Property” has the meaning set forth in
Section 203(B) of this Lease.
“Minimum Additional
Rent” has the meaning set forth in
Section 601(B)(8) of this Lease.
“Minimum Base Rent” has
the meaning set forth in Section 601(A)(3) of this
Lease.
“Minimum Monthly Rent”
has the meaning set forth in Section 601(B)(8) of this
Lease.
“Mobilization Expenses”
has the meaning set forth in Section 605(A)(1) of this
Lease.
“Net Proceeds” means the
gross proceeds derived from insurance or any eminent domain or
condemnation award, or from any agreement in lieu of an eminent
domain or condemnation award, less payment of attorneys’ fees
and expenses properly incurred in the collection of those gross
proceeds.
“Notice of Exercise of Right
of First Refusal” has the meaning set forth in
Section 2105(A)(3) of this Lease.
“Occupied” means, with
respect to any portion of the Leased Premises that Tenant has
requested be Activated and for which the Authority has completed
its Activation obligations with respect thereto; provided, however,
that if the Authority completes the Activation prior to the
Requested Activation Date (as hereinafter defined) for that portion
of the Leased Premises, “Occupancy” of that portion of
the Leased Premises shall be deemed to commence when Tenant takes
possession of or begins to conduct Tenant’s Business from
that portion of the Leased Premises pursuant to Section 205 of
this Lease which shall in no case be later than the Requested
Activation Date. After a portion of the Leased Premises is
deemed to be Occupied, it shall remain Occupied unless and until
Tenant has subsequently de-Occupied that Activated portion of the
Leased Premises in accordance with Section 205(D) below
regardless of whether Tenant is actually using such space in
connection with Tenant’s Business.
“Operating Profit” has
the meaning set forth in Section 601(C)(3) of this
Lease.
“Operating Rules” has
the meaning set forth in Section 705(A)(1) of this
Lease.
“Paint Booths” has the
meaning set forth in Section 1001 of this Lease.
“Parent” has the meaning
set forth in Section 1202 of this Lease.
“Part 70 Permit”
has the meaning set forth in Section 706(B) of this
Lease.
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“Part 70 Permit
Agreement” has the meaning set forth in
Section 706(B) of this Lease.
“Part 70 Permit
Amendment” has the meaning set forth in
Section 706(B) of this Lease.
“Percentage Rent” has
the meaning set forth in Section 601(C)(1) of this
Lease.
“Percentage Rent
Certificate” has the meaning set forth in
Section 601(C)(2) of this Lease.
“Period” has the meaning
set forth in Section 601(C)(2) of this Lease.
“Permitted Encumbrances”
means those matters listed in the attached Exhibit C
.
“Person” means any
individual or Entity.
“Plans” has the meaning
set forth in Section 605(A)(2)(c)(i) below.
“POTW” has the meaning
set forth in Section 706(A) of this Lease.
“Proposed Agreement” has
the meaning set forth in Section 2105(A)(3) of this
Lease.
“Redevelopment
Authority” means the Marion County Convention and
Recreational Facilities Authority created under IC 36-10-9.1 and
acting pursuant to IC 36-7-15.3.
“Redevelopment Lease
Agreement” means the Lease Agreement between the
Redevelopment Authority and the Commission, dated as of
December 1, 1991, as the same has been or may hereafter be
amended or supplemented from time to time.
“Rental” means the Base
Rent, Additional Rent, and Percentage Rent assessed against Tenant
pursuant to Article VI.
“Requested Activation
Date” has the meaning set forth in
Section 205(B) of this Lease.
“Right of First Refusal”
has the meaning set forth in Section 2105(A)(3) of this
Lease.
“Site and Facilities Lease
Agreement” means the Site and Facilities Lease Agreement
dated as of December 1, 1991 by and among the Authority and
the Redevelopment Authority, ITFA and the Authority, or any
successors, as tenants in common under the Tenancy in Common
Agreement, as the same has been or may hereafter be amended or
supplemented from time to time.
“Special Facility Bonds”
means one or more series of bonds, including refunding bonds,
issued by the Authority payable in part from Rental payments under
this Lease Agreement.
“State” means the State
of Indiana.
“State Bonds” means one
or more series of tax-exempt revenue bonds, including refunding
bonds, issued by ITFA, payable solely from lease rentals payable by
the Authority
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under the ITFA Lease Agreement from any State
appropriations which may be made by the Indiana General Assembly
for such purpose.
“Success Payment” has
the meaning set forth in Section 605(D) of this
Lease.
“Tax Restrictions” means
(1) covenants made by the Authority in the Settlement
Agreement entered into, effective as of February 13, 2004,
between the Authority and The Bank of New York Trust Company, N.A.,
and (2) all rules and restrictions of the Internal
Revenue Code of 1986, as amended, as such rules and
restrictions apply to the use of the Facilities due to its
financing with tax-exempt bonds.
“Tenancy in Common
Agreement” means the Agreement Among Tenants of Leasehold
Estate in Airport Development Project by and among the
Redevelopment Authority, ITFA, and the Authority, as tenants in
common, dated as of December 1, 1991, as the same has been or
may hereafter be supplemented or amended from time to
time.
“Tenant” means AAR
Aircraft Services, Inc., an Illinois corporation doing
business as AAR Aircraft Services - Indianapolis.
“Tenant Fiscal Year”
means the period from June 1 of any year through May 31
of the following year.
“Tenant Reimbursement
Parties” has the meaning set forth in
Section 1702(A) of this Lease.
“Tenant’s
Business” has the meaning set forth in
Section 206(A) of this Lease.
“Tenant’s
Controller” means the Person designated by Tenant as the
controller for Tenant’s Business at the Leased Premises (and
Tenant shall provide written notice from time to time to the
Authority as to the name of the person who is serving from time to
time as Tenant’s Controller).
“Tenant Termination
Event” has the meaning set forth in
Section 504(B) of this Lease.
“Term” and “Term
of this Lease Agreement” means, collectively, the Initial
Term and, if Tenant has properly exercised its Extension Option,
the Extension Term, unless sooner terminated as provided in this
Lease.
“TSA” means
Transportation Security Administration.
“Wastewater Treatment
Facility” has the meaning set forth in
Section 706(A) of this Lease.
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ARTICLE II.
LEASE OF LEASED PREMISES;
OWNERSHIP OF IMPROVEMENTS
AND EQUIPMENT; USE OF LEASED PREMISES
Section 201.
Lease of Leased
Premises . Subject
to and upon the terms, covenants, conditions and provisions
hereinafter set forth, and each in consideration of the duties,
covenants and obligations of the other hereunder, the Authority
hereby leases, demises and lets to Tenant, and Tenant hereby leases
from the Authority, the Leased Premises. The square footage
of the Leased Premises shall be as calculated by the Authority and
confirmed by Tenant.
Section 202.
Ownership of Improvements and
Equipment . The
Leased Premises, including without limitation any buildings,
fixtures, facilities, structures, additions, Equipment or
improvements in, on or to the Leased Premises, are and shall remain
the property of the Authority, subject to Tenant’s rights
hereunder to use the same during the Term of, and in accordance
with, this Lease Agreement. Tenant shall not remove, or
permit the removal, of any of the Equipment from the Leased
Premises without the prior written consent of the Authority.
The Excluded Property is and shall remain the property of
Tenant.
Section 203.
Master Lists of Equipment and
Excluded Property .
(A)
The Authority
shall generate and maintain a comprehensive list of Equipment that
it agrees to furnish to Tenant for Tenant’s use in connection
with this Lease (the “Master List of Equipment”), as
follows:
(1)
The Authority
shall provide Tenant, on or before the Effective Date of this
Lease, with a written list of all items of Equipment that are or
will be, as of the Effective Date, available for Tenant’s use
at the Leased Premises;
(2)
Tenant shall be
provided access to such Equipment after the Effective Date of this
Lease and prior to Activation of a portion of the Leased Premises
only for testing and certification purposes, and Tenant shall not
be permitted to use such Equipment to operate Tenant’s
Business prior to Tenant Occupying such space;
(3)
At the time
Tenant provides an Activation Notice pursuant to Section 205
below, the Tenant shall indicate which items of Available Equipment
that Tenant requires in connection with the Activation of that
portion of the Leased Premises that is identified in Tenant’s
Activation Notice. As space in the Leased Premises is
Activated pursuant to Section 205 of this Lease, the Authority
shall indicate on the Master List of Equipment which items of
Equipment have been provided to the Tenant for its use and which
items of Equipment are Available Equipment for the future
Activation of areas of the Leased Premises; and
(4)
To the extent
that, pursuant to the Authority’s obligations under
Section 1002, the Authority removes and/or replaces an item of
Equipment from the Leased Premises, the Authority shall provide
Tenant with written notice thereof in order to
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update the Master
List of Equipment, and the list of Equipment furnished to Tenant
from the Master List of Equipment, in order to reflect that removal
and/or replacement.
(B)
Tenant shall
generate and maintain a comprehensive list of Excluded Property
(the “Master List of Excluded Property”) as
follows:
(1)
To the extent
that, from and after the Effective Date, Tenant brings items of
Excluded Property onto the Leased Premises, or subsequently removes
or replaces an item of Excluded Property on such list, Tenant shall
at the time the Authority conducts its annual audit of Equipment
provide the Authority with an updated, comprehensive list of
Excluded Property.
Section 204.
Condition of Leased
Premises . Subject
to performance by the Authority of its obligations with respect to
the Activation of Bays and other portions of the Leased Premises as
provided in this Lease, including in Section 205 below, and
subject to Sections 705 and 1702, Tenant accepts the Leased
Premises in its “AS-IS” condition, and acknowledges and
agrees that except as otherwise expressly provided in this Lease
Agreement, the Authority shall have no obligation to perform or
complete any alterations, improvements or modifications to the
Leased Premises.
Section 205.
Possession of Leased Premises;
Activation .
(A)
For purposes of
this Lease, an “Activation Notice” means written notice
from Tenant as to which Bay or Bays, or other areas of the Leased
Premises, that Tenant wishes for the Authority to Activate,
together with a specific, detailed list of which pieces of
Available Equipment and which Facilities Systems (other than
Excluded Systems) Tenant will need for the Authority to furnish to
Tenant in connection with Tenant’s use of that Bay or other
area of the Leased Premises, and the Tenant’s Requested
Activation Date. “Activation” by the Authority of
a Bay or other area of the Leased Premises, or the
Authority’s “Activating” of a Bay or other area
of the Leased Premises, means that the Authority furnishes to
Tenant not earlier than the Requested Activation Date (except as
otherwise provided in subsection (C) below), in good
working order and condition, all Facilities Systems (other than
Excluded Systems) and Available Equipment that are reasonably
requested by Tenant in its Activation Notice. Tenant hereby
acknowledges and agrees that Facilities Systems means only those
Facilities Systems which are installed in and/or otherwise located
at the Leased Premises as of the Effective Date of this Lease (and
in their current locations as of the Effective Date of this Lease),
and does not include Excluded Systems. Tenant hereby further
acknowledges and agrees that unless the Authority otherwise
expressly agrees in writing, the Authority shall not have any
obligation, in connection with Activating any portion of the Leased
Premises or otherwise, to install new or additional Facilities
Systems within any portion of the Leased Premises, to extend to any
portion of the Leased Premises any Facilities Systems which have
not, as of the Effective Date, already been extended to that
portion of the Leased Premises, or to make operational any Excluded
Systems. Tenant hereby further agrees that in connection with
Activating a portion of the Leased Premises, the Authority will
only be obligated to furnish the Available Equipment requested by
Tenant in its Activation Notice (i.e., the Authority will not be
obligated to purchase new
13
equipment, tooling, or other
personal property in order to Activate any portion of the Leased
Premises).
(B)
Not later ninety
(90) days after the Effective Date of this Lease, Tenant shall send
the Authority an Activation Notice indicating which of the Bays
and/or other areas of the Leased Premises that Tenant desires for
the Authority to first Activate. Thereafter, during the Term of
this Lease, as Tenant desires for additional Bays and/or other
areas of the Leased Premises to be Activated by the Authority,
Tenant shall provide an Activation Notice to the Authority, with
respect to those Bays and/or other areas of the Leased Premises,
with each such Activation Notice to specify the date by which
Tenant needs that portion of the Leased Premises to be Activated
(the “Requested Activation Date”); provided, however,
that the Requested Activation Date may not be fewer than thirty
(30) days from the date that Tenant delivers its Activation Notice
to the Authority. However, the Authority acknowledges that,
at the time Tenant provides its Activation Notice to the Authority
with respect to a particular portion of the Leased Premises, Tenant
may not know what Available Equipment it will need for the
Authority to furnish with respect to that portion of the Leased
Premises. Consequently, the Authority hereby agrees that
Tenant may defer providing the Authority with Tenant’s
written list of requested Available Equipment for the Activation of
that portion of the Leased Premises until after the date on which
Tenant delivers its Activation Notice for that portion of the
Leased Premises; provided, however, that the Authority shall not be
obligated to provide that Available Equipment by the Requested
Activation Date unless Tenant provides the Authority with the list
of Tenant’s requested Available Equipment for that portion of
the Leased Premises at least ten (10) business days prior to
the Requested Activation Date for that portion of the Leased
Premises.
(C)
Subject to
Section 705(G)(3) below, the Authority shall use
commercially reasonable efforts to Activate, by the Requested
Activation Date, those Bays and/or other areas of the Leased
Premises that are identified in Tenant’s Activation Notice.
At such time as the Authority has Activated a Bay or other portion
of the Leased Premises pursuant to an Activation Notice from
Tenant, the Authority shall deliver to Tenant a written notice that
the Activated Bay or other such portion of the Leased Premises is
Activated as per Tenant’s Activation Notice. Tenant
shall have the right to inspect, within seven (7) days after
receipt of the Authority’s written notice, the Activated
Bay(s) or other such portion of the Leased Premises that has been
Activated to confirm that such areas have been Activated as per
Tenant’s Activation Notice. To the extent that
Authority has the areas of the Leased Premises identified in the
Activation Notice ready for activation prior to the Requested
Activation Date, Tenant shall have the option to take possession of
such areas prior to the Requested Activation Date and if Tenant
does so, Tenant shall be deemed to Occupy such space on such
earlier date. If Tenant discovers any material deficiencies upon
said inspection, Tenant shall give the Authority a written list of
those material deficiencies. For purposes of this
subsection (C), a “material deficiency” means that
the Activated space fails to comply, in a material manner, with the
Tenant’s requests for Facilities Systems and Equipment as set
forth in Tenant’s Activation Notice for that space. If
Tenant does not notify the Authority within the seven (7) day
period that there are any material deficiencies, Tenant shall be
deemed to have accepted the condition of the Activated space. The
Authority shall correct any material deficiencies noted by Tenant
in accordance with the prior sentences prior to Tenant’s
being obligated to take possession of that Activated Bay and/or
other portion of the Leased Premises. However, Tenant may elect to
take possession of said space prior to the
14
correction of the material
deficiencies, and Authority shall correct said material
deficiencies within fifteen (15) days of Tenant taking possession
of said space. If Tenant chooses not to take possession due
to such noted material deficiencies, Tenant must take possession of
that space once the Authority corrects the material deficiencies,
provided that the Requested Activation Date has passed. Upon Tenant
taking possession of said space, Tenant shall be deemed to Occupy
such space until de-Occupying such space pursuant to
paragraph (D) below. Once the Bay or other portion
of the Leased Premises has been Activated, the Authority shall have
no further obligations with respect to that Activated Bay or other
portion of the Leased Premises except as otherwise expressly
provided in this Lease.
(D)
Tenant shall have
the right at any time, upon not fewer than sixty (60) days’
prior written notice to the Authority, to de-Occupy a particular
portion of the Leased Premises. Tenant shall specifically identify
in its written notice which portions of the Leased Premises that
Tenant is de-Occupying, and what the date of de-Occupation will
be. However, the date specified in Tenant’s written
notice as the date of de-Occupation may not be fewer than sixty
(60) days after the date Tenant delivers the written notice of
de-Occupation to the Authority, and Tenant may not deliver a notice
of de-Occupation to the Authority with respect to a particular
portion of the Leased Premises until Tenant has Occupied that
portion of the Leased Premises (and paid Base Rent and Additional
Rent to the Authority therefor) for at least one full calendar
month. Tenant shall always Occupy at least the minimum amount of
Leased Premises to enable Tenant to satisfy the Minimum Monthly
Rent requirements set forth in Sections 601(A) and (B) of
this Lease. With respect to Tenant’s de-Occupation of
Activated space, Tenant may not de-Occupy less than all of a Bay
and its related space. With respect to any Expansion Area as to
which Tenant has exercised its Expansion Option pursuant to
Section 401 below, Tenant may not de-Occupy that Expansion
Area. If Tenant exercises its Right of First Refusal as to any
Available Space pursuant to Section 2105 below, Tenant must
Occupy that Available Space for at least twelve (12) consecutive
calendar months and may not de-Occupy that Available Space until it
has Occupied it for at least twelve (12) consecutive calendar
months. Upon the effective date of the de-Occupation, Tenant shall
return possession of the de-Occupied space to the Authority,
together with all Equipment that the Authority provided to Tenant
in connection with the Authority’s Activation of that space
(or that was otherwise furnished by the Authority to Tenant for
Tenant’s use in connection with that de-Occupied space). Upon
the date of de-Occupation, the Authority shall have the right, at
the Authority’s option, to restrict Tenant from accessing and
entering into that portion of the Leased Premises that has been
de-Occupied and to cease providing the Facilities Systems to that
portion of the Leased Premises (provided, however, that the
Authority will continue providing some or all of the Facilities
Systems to that portion of the Leased Premises if the Authority
wishes or as is necessary to provide the Facilities Systems to
those areas of the Leased Premises that Tenant is Occupying).
Tenant and the Authority will mutually agree on what personal
property of Tenant or its agents, representatives, or customers
will be removed from the de-Occupied space; provided, however, that
Tenant hereby acknowledges and agrees that the Authority shall have
no liability or obligation for any loss, damage, or liability with
respect to (and no obligation to insure) any such personal property
that remains in the de-Occupied space. Base Rent and
Additional Rent shall continue to accrue for space on which a
de-Occupation notice has been sent until the effective date of the
de-Occupation; Base Rent and Additional Rent shall not accrue for a
particular portion of the Leased Premises if such portion of the
Leased Premises is de-Occupied. If Tenant thereafter
15
wishes for the Authority to
re-Activate that portion of the Leased Premises, Tenant shall
provide an Activation Notice to the Authority pursuant to the
procedure described in subsections (A), (B) and
(C) above.
(E)
Tenant hereby
acknowledges and agrees that, notwithstanding anything in this
Section 205 to the contrary, commencing on the earlier of
(i) December 1, 2004, or (ii) the first date that
any aircraft of Tenant’s customer(s) is located at the Leased
Premises, and continuing thereafter through the Term hereof, Tenant
shall be obligated to pay at least the Minimum Monthly Rent
pursuant to Section 601 below, regardless of which (if any)
portions of the Leased Premises that Tenant elects to Activate and
regardless of which (if any) portions of the Leased Premises that
Tenant is Occupying from time to time.
(F)
The Authority
hereby acknowledges that Tenant desires to be able to enter upon
the Leased Premises, prior to the Activation of the first portion
of the Leased Premises, solely for purposes of preliminary
operational planning and for purposes of obtaining FAA
certifications to enable Tenant to conduct Tenant’s Business
at the Leased Premises, and the Authority hereby agrees that Tenant
may enter onto the Leased Premises for those purposes, provided
that the activities of Tenant and its Employees, agents,
contractors and Invitees do not interfere in any material manner
with the activities of the Authority in connection with the Leased
Premises. Tenant hereby agrees that it will not be conducting
Tenant’s Business from the Leased Premises during this period
of preparation and hereby acknowledges and agrees that the
provisions of this Lease (including, without limitation those set
forth in Sections 705, 1502 and 1701), other than those provisions
pertaining to payment of Rental, will be applicable during this
period.
(G)
In addition to
the other obligations of the Authority under this Lease, the
Authority shall be liable for all costs, expenses, fees and
disbursements related to remedying, curing or remediating any
condition existing at or on the Leased Premises on or prior to date
Tenant first Occupies that portion of the Leased Premises,
necessary to comply with Environmental, Health and Safety
Requirements.
Section 206.
Use of Leased Premises;
Prohibited Uses .
(A)
Tenant may only
use the Leased Premises for operation of an aircraft, airframe,
engine and component maintenance, repair and overhaul
(“MRO”) facility for the commercial airlines and other
owners, operators or service/maintenance providers of aircraft
(including without limitation military and governmental operators
of aircraft), including the operation and use of aircraft bays,
aircraft engine and component overhaul and repair shops, test
cells, aircraft wash and enclosed paint areas, component, part and
tooling production, reproduction, or construction (i.e., make from
raw materials or piece parts) for MRO, component maintenance, and
modification activities. In addition, Tenant may use the
Leased Premises for activities functionally related and subordinate
to the uses permitted above, including warehouse and storage areas,
common areas, facilities maintenance shops, administrative and
support areas, truck docks and aprons, special materials storage
areas, aircraft taxiways and parking areas, fire protection
facilities and employee and visitor parking so long as such
activities are of a size commensurate with such
operation.
16
(B)
Tenant shall not
use the Leased Premises for any purposes other than, or in addition
to, those identified in subsection (A) above without the
Authority’s prior written consent, which consent will not be
unreasonably withheld, and shall not use the Leased Premises in a
manner that would result in a violation of any Tax Restrictions or
applicable Law, as now or hereafter in effect, with respect to the
Authority, the Land, the Facilities and/or other portions of the
Airport. Without limiting the generality of this restriction,
the following conditions shall apply to the use and operation of
the Leased Premises:
(1)
Tenant shall not
store aviation fuel, except in connection with the defueling and
refueling of maintained aircraft and only in those areas that have
been expressly designated for such purposes by the Authority and in
accordance with Airport ordinances; shall not block any common use
taxiway; and shall not park any aircraft upon that portion of the
Leased Premises described in Exhibit D hereto in a manner that would
constitute a violation of any Laws or regulations concerning
Airport operations. Passenger loading and unloading of
general aviation aircraft is permitted, but only to the extent such
any such loading or unloading of passengers is not subject to any
rules or regulations of the TSA (including without limitation
rules and regulations regarding passenger screening) as now or
hereafter in effect; otherwise, any passenger loading and unloading
is prohibited except in an emergency or with the prior written
approval of the Authority. Subject to
Section 703(B) of this Lease, aircraft ramp and service
equipment may be stored only within the Leased Premises. All
refueling trucks moving to and from the Leased Premises, including
their routing and parking, must be approved by the Authority.
Except in designated areas with prior written approval of the
Authority, Tenant shall not store any Class-A explosives (as
defined by the United States Department of Transportation) at, on
or in the Leased Premises. All vehicles used in Air
Operations Areas shall be equipped and operated in accordance with
applicable Laws and the regulations of the Authority, the FAA, the
TSA, and all other applicable Governmental Entities.
(C)
Except as
otherwise expressly provided in this Lease, the rights granted in
this Lease Agreement shall not be construed as permitting any
Person to conduct any business at the Airport (including without
limitation at, on or in the Leased Premises) except after first
securing from the Authority a license and/or other form of
permission to conduct that business and paying applicable fees and
charges therefor.
ARTICLE III.
REPRESENTATIONS, WARRANTIES
AND COVENANTS
Section 301.
Representations, Warranties and
Covenants by Authority . The Authority makes the following
representations, warranties and covenants to Tenant as the basis
for the Authority’s undertakings herein:
17
(A)
The Authority is
duly organized as a municipal corporation pursuant to the laws of
the State and has the power to execute, deliver and enter into this
Lease Agreement and to carry out its obligations hereunder.
By proper action of its board, the Authority has been duly
authorized to execute, deliver and perform its obligations under
this Lease Agreement.
(B)
This Lease
Agreement constitutes the valid and binding obligation of the
Authority, enforceable against the Authority in accordance with its
terms, subject to (i) bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors’ rights
generally heretofore or hereafter enacted; and (ii) the
exercise of judicial discretion in accordance with the general
principles of equity.
(C)
No approvals or
consents, other than those that have been obtained, are necessary
in order for the Authority to adopt, execute and deliver this Lease
Agreement.
(D)
The Authority has
a leasehold interest in the Facilities, subject to Permitted
Encumbrances.
(E)
The Authority has
full right and authority to lease the Leased Premises to Tenant as
set forth herein.
(F)
This Lease
Agreement has been duly executed and delivered by duly authorized
officers of the Authority.
(G)
Neither the
execution and delivery of this Lease Agreement, the consummation of
the transactions contemplated hereby, nor the fulfillment of or
compliance with the terms and conditions of this Lease Agreement,
will conflict with or result in a material breach of any of the
terms, conditions or provisions of any restriction, ordinance,
agreement or instrument to which the Authority is now a party or by
which it is bound, or constitute a material default under any of
the foregoing, or result in the creation or imposition of any
material lien, charge or encumbrance of any nature whatsoever upon
any of the property or assets of the Authority under the terms of
any instrument or agreement.
(H)
There is no
litigation now pending or, to the knowledge of the Authority,
threatened that challenges or would challenge the execution of this
Lease Agreement or that could reasonably be expected to have a
material adverse effect on the Authority’s ability to perform
hereunder.
(I)
The Authority
shall use its best efforts to protect all of Tenant’s
financial information (including but not limited to information
regarding Tenant’s costs, prices, pricing methods, revenues,
sales and Operating Profit) provided to the Authority as
“Confidential financial information obtained upon request
from a person” pursuant to the provisions of IC 5-14-3-4 or
to protect it from public disclosure under any other allowable
exception. The Authority shall promptly notify the Tenant in
writing of any inadvertent disclosure of Tenant’s financial
information, if and when the Authority becomes aware of any such
disclosure.
18
(J)
The Authority
shall execute such collateral access agreements in favor of
Tenant’s secured lenders as Tenant’s secured lenders
may reasonably request, provided that the terms of those collateral
access agreements are reasonably acceptable to the
Authority.
(K)
The Authority
acknowledges that its presence on the Leased Premises will place it
in a position that it may have access to confidential and/or
proprietary information concerning the business of the Tenant
and/or its Affiliates, including but not limited to trade secrets,
secret processes, know-how, products, maintenance procedures,
recent and proposed developments, sources of supply and customer
names and relationships (“Proprietary Information”) and
that such Proprietary Information is among the most valuable of the
Tenant’s and/or its Affiliates assets and the value of such
information may be destroyed by unauthorized disclosure.
Information imparted to or learned by the Authority with respect to
the Tenant and/or its Affiliates (whether acquired before or after
the date hereof) will be deemed to be confidential Proprietary
Information. The Authority hereby covenants that the Authority will
use commercially reasonable efforts not to disclose the Proprietary
Information and will use commercially reasonable efforts to treat
all Proprietary Information with the same degree of care that the
Authority accords to its own confidential or proprietary
information (and the Authority hereby represents to Tenant that the
Authority exercises reasonable care to protect its own confidential
or proprietary information), unless (1) such Proprietary
Information is or has been made generally available to the public,
(2) express prior written authorization to use or disclose
such Proprietary Information has been received from Tenant, or
(3) the Authority is obligated to disclose such Proprietary
Information pursuant to the Indiana Access to Public Records Law
(IC 5-14-3-1 et seq.) as the same may amended or supplemented from
time to time (the “Access to Public Records
Law”). By way of example only, Tenant hereby
acknowledges that the Authority may be obligated, under the Access
to Public Records Law, to disclose the following, among other
things: this Lease, official action by the Authority or its manager
pursuant to the terms of this Lease, and the amount of the Rental
payments and invoices pertaining thereto.
(1)
As part of its
commercially reasonable efforts described in the preceding
sentences, the Authority shall, with respect to those Persons who,
from time to time, serve as the Authority’s
“on-site” staff at the Facilities and with respect to
contractors hired by the Authority to provide services at the
Leased Premises, either (a) require those Persons or
contractors to sign confidentiality agreements with the Authority
which impose obligations of confidentiality upon those Persons or
contractors that are consistent with the covenants of the Authority
under this Subsection (K), or (b) impose in the service
or employment contracts (if applicable), between those Persons or
contractors and the Authority, obligations of confidentiality upon
those Persons or contractors which are consistent with the
covenants of the Authority under this
Subsection (K).
(2)
Tenant hereby
acknowledges and agrees that, notwithstanding the foregoing, the
Authority may be required (by depositions, interrogatories,
requests for information or documents in legal proceedings,
subpoenas, civil investigative demand or similar process,
including, without limitation, requests to disclose pursuant to the
Access to Public Records Law) to disclose Proprietary
Information. However, the Authority will, to the extent
reasonably possible, give Tenant prompt written notice of such
request or requirement so that Tenant may seek an appropriate
protective order or other remedy
19
and/or waive
compliance with the provisions of this Subsection (K), and the
Authority will cooperate as reasonably necessary with Tenant to
obtain such protective order.
(3)
Except as
required by the Access to Public Records Law and/or any other
applicable Law, upon termination of this Lease Agreement for any
reason, the Authority will, within a reasonable period of time,
destroy any documents or other tangible property containing or
reflecting Proprietary Information.
(4)
The Authority
shall promptly notify the Tenant in writing of any inadvertent
disclosure of Proprietary Information, if and when the Authority
becomes aware of any such disclosure. The covenant of the Authority
set forth in this Subsection (K) will survive any termination
of this Agreement.
(L)
The Authority
shall deliver to Tenant, for Tenant’s benefit and reliance,
on the Effective Date, an opinion, concerning such matters in this
Section 301 as are reasonably satisfactory to Tenant, from Ice
Miller, in form reasonably acceptable to Tenant.
Section 302.
Representations, Warranties and
Covenants by Tenant . Tenant makes the following
representations, warranties and covenants to the Authority as the
basis for Tenant’s undertakings herein:
(A)
Tenant is a
corporation duly organized under the laws of the State of Illinois
and duly qualified to do business in the State, is in good standing
in the State of Illinois and the State, and has power to execute,
deliver and enter into this Lease Agreement and to carry out its
obligations hereunder. By proper organizational action,
Tenant has been duly authorized to execute, deliver and perform its
obligations under this Lease Agreement.
(B)
This Lease
Agreement constitutes the valid and binding obligation of Tenant,
enforceable against Tenant in accordance with its terms, subject to
(i) bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors’ rights generally heretofore
or hereafter enacted, and (ii) the exercise of judicial
discretion in accordance with the general principles of
equity.
(C)
No approvals or
consents, other than those that have been obtained, are necessary
for Tenant to execute and deliver this Lease Agreement.
(D)
This Lease
Agreement has been duly executed and delivered by the duly
authorized officers of Tenant.
(E)
There is no
litigation now pending or, to Tenant’s knowledge, threatened
that challenges or would challenge the execution of this Lease
Agreement, or that could reasonably be expected to have a material
adverse effect on the Tenant’s ability to perform
hereunder.
(F)
Neither the
execution and delivery of this Lease Agreement, the consummation of
the transactions contemplated hereby, nor the fulfillment of or
compliance with the terms and conditions of this Lease Agreement,
will conflict with the Tenant’s articles of incorporation or
by-laws or conflict with or result in a material breach of any of
the terms, conditions or
20
provisions of any agreement
or other instrument to which Tenant is now a party or by which it
is bound, or constitute a material default under any of the
foregoing, or result in the creation or imposition of any material
lien, charge or encumbrance of any nature whatsoever upon any of
the property or assets of Tenant under the terms of any instrument
or agreement.
(G)
Except for those
Authority Permits to be obtained and maintained by the Authority,
Tenant has duly and validly obtained (or shall hereafter duly and
validly obtain as and when necessary), and shall maintain in full
force and effect during the Term, all such certificates, licenses
and permits from all Governmental Entities, required or appropriate
to enable Tenant to carry on Tenant’s Business as it is now
conducted and subsequently conducted and/or to enable Tenant to
enter into this Lease Agreement, including without limitation a
“repair station certificate” as required under 14 CFR
Part 145 (the “145 Certificate”).
(H)
Tenant shall
deliver to the Authority, for the Authority’s benefit and
reliance, on the Effective Date, an opinion, concerning such
matters in this Section 302 as are reasonably satisfactory to
the Authority, signed by an authorized person at Tenant’s
inside counsel, in form reasonably acceptable to the
Authority.
ARTICLE IV.
OPTION TO EXPAND LEASED
PREMISES
Section 401.
Tenant’s
Option to Expand Leased Premises . The term
“Expansion Space” means that portion of the Land and
Facilities that is shown on Exhibit E attached hereto, which
consists of the following areas (each, an “Expansion
Area”): (a) the machine shop area, consisting of
approximately Forty-Two Thousand Three Hundred Forty-Six (42,346)
square feet; (b) the interior shop area, consisting of
approximately Fifty-Six Thousand Nine Hundred Eighty-Eight (56,988)
square feet; (c) the composite shop area #1, consisting of
approximately Seventy-Eight Thousand Five Hundred Forty-Nine
(78,549) square feet; and (d) the composite shop area #2,
consisting of approximately Seventy-Eight Thousand Five Hundred
Forty-Nine (78,549) square feet. Tenant, at its option, may expand
the Leased Premises to include one or more of the Expansion Areas,
subject to the following terms and conditions (the “Expansion
Option”):
(A)
Tenant must
provide the Authority with at least ninety (90) days’ prior
written notice of Tenant’s desire to exercise its Expansion
Option as to any Expansion Area. Tenant’s written
notice must specify which of the Expansion Area(s) that Tenant
desires to lease pursuant to its Expansion Option. Tenant may
not exercise its Expansion Option as to less than all of a
particular Expansion Area.
(B)
At the time
Tenant provides the Authority with Tenant’s written notice of
Tenant’s desire to exercise its Expansion Option as to any
Expansion Area and on the date Tenant’s lease of that
Expansion Area is to commence, there shall not be an Event of
Default by Tenant under this Lease (or, if a default by Tenant
under any term or condition of this Lease then exists which would,
with the giving of notice, the passage of time or both, constitute
an Event of Default under this Lease, Tenant shall cure that
default within the applicable grace or cure period provided under
this Lease prior to exercising its Expansion Option).
21
(C)
This Lease
Agreement shall be in effect at the time Tenant provides the
Authority with Tenant’s written notice of Tenant’s
desire to exercise its Expansion Option as to any Expansion Area
and on the date Tenant’s lease of that Expansion Area is to
commence.
(D)
Subject to
Sections 705 and 1702, Tenant shall accept any Expansion Area as to
which it has exercised its Expansion Option on an
“AS-IS” basis, and the Authority shall not be required
to make any alterations, improvements, modifications, repairs or
replacements thereto unless the Authority specifically agrees with
Tenant, in writing, to do so. To the extent Tenant wishes to
make any improvements or alterations to that portion of the
Expansion Area as to which it has exercised its Expansion Option
(including without limitation any subdivision of the Expansion
Space which must be made in order to separate that portion of the
Expansion Area as to which Tenant has exercised its Expansion
Option from the other Expansion Areas), Tenant shall be
responsible, at its cost and expense, for performing those
improvements and alterations in accordance with the terms of this
Lease (including without limitation
Section 702(H) below), subject to Sections
605(A) and 605(C) below. Tenant’s notice to
Authority of its decision to exercise its Expansion Option shall
serve as an Activation Notice for such space pursuant to
Section 205 above. In no event whatsoever shall the
Tenant’s Occupation date begin prior to the Requested
Activation Date.
(E)
The duration of
Tenant’s lease of the Expansion Area(s) as to which Tenant
exercises its Expansion Option shall be co-terminous with the Term
of this Lease Agreement.
(F)
Except as
otherwise provided in this Lease Agreement, the terms, covenants,
and conditions of this Lease Agreement shall apply in all respects
to the Tenant’s lease of any Expansion Space.
(G)
Tenant hereby
acknowledges and agrees that at the time Tenant first exercises its
Expansion Option as to any portion of the Expansion Space,
Tenant’s Minimum Monthly Rent shall increase such that, for
the remainder of the Lease Term, Tenant (1) shall be obligated
to pay Minimum Base Rent on at least four (4) Bays, plus the
Hangar 4 Office Space, plus that portion of the Expansion Space as
to which Tenant first exercises its Expansion Option and
(2) shall be obligated to pay Minimum Additional Rent on at
least four (4) Bays plus that portion of the Expansion
Space as to which Tenant first exercises its Expansion Option; and
thereafter, Tenant’s obligation to pay Minimum Monthly Rent
shall further increase to include any additional Expansion Areas as
to which Tenant thereafter exercises its Expansion
Option.
ARTICLE V.
TERM; EXTENSION
PERIODS
Section 501.
Term;
Extension Option .
(A)
Initial
Term . The term of this
Lease Agreement shall begin on the Effective Date and shall end on
the earlier of (1) December 1, 2014 or (2) the tenth
(10th) anniversary of the first date that any aircraft of
Tenant’s customer(s) is located at the Leased Premises,
unless sooner terminated as provided for under this Lease (the
“Initial Term”).
22
(B)
Extended
Terms .
(1)
Tenant shall have
the option (an “Extension Option”) to extend the
Initial Term for one (1) period of ten (10) consecutive
years (the “Extension Term”) upon fulfillment of all
the following terms and conditions:
(a)
Tenant shall provide written
notice to the Authority, not earlier than twenty-four (24) months,
and not later than twelve (12) months, prior to the expiration of
the Initial Term, that Tenant elects to exercise such Extension
Option (the “Extension Notice”);
(b)
On the date Tenant delivers
Tenant’s Extension Notice to the Authority or on the date the
Extension Term is to commence, there shall not be an Event of
Default by Tenant under this Lease (or, if a default by Tenant
under any term or condition of this Lease then exists which would,
with the giving of notice, the passage of time or both, constitute
an Event of Default under this Lease, Tenant shall cure that
default within the applicable grace or cure period provided under
this Lease); and
(c)
This Lease Agreement shall not
have been terminated during the Initial Term.
(2)
All terms,
covenants, conditions and provisions hereof applicable to the
Initial Term (including, without limitation, Tenant’s
obligations to pay Base Rent, Additional Rent, Minimum Monthly
Rent, and Percentage Rent), shall apply with like force and effect
to the Extension Term, except where specifically inapplicable or
where the context otherwise indicates, and except that the amount
of the Additional Rent to be assessed by the Authority with respect
to the Leased Premises during the Extension Term shall be increased
to a rate based on the Actual Facilities Costs and Expenses
incurred during the twelve (12) consecutive month period
immediately preceding the date that Tenant delivers its Extension
Notice to the Authority. Not later than ninety (90) days after the
Authority receives Tenant’s Extension Notice, the Authority
shall provide Tenant with a written statement that sets forth the
annual and monthly amounts that the Authority proposes for the
Additional Rent to be for the Extension Term, including evidence of
the Actual Facilities Costs and Expenses for the twelve (12)
consecutive month period immediately preceding the date that Tenant
delivers its Extension Notice to the Authority. If Tenant is
dissatisfied with that increased Additional Rent amount for any
reason, Tenant may elect not to proceed further with exercising the
Extension Option, by providing written notice to the Authority of
Tenant’s intention not to proceed with the Extension Option
(which written notice must be delivered to the Authority not later
than thirty (30) days after Tenant receives the Authority’s
written statement of the amount of the increase in the Additional
Rent for the Extension Term).
(3)
If the Authority
demonstrates that Rentals and other revenues derived from the Land
and Facilities during the twelve (12) consecutive month period
immediately preceding the Authority’s receipt of
Tenant’s Extension Notice to exercise
23
the Extension
Option were not sufficient to cover the Actual Facilities Costs and
Expenses of the Land and Facilities incurred with respect to that
twelve (12) month period (the “Deficit”), then the
Authority shall have the right to prohibit Tenant from exercising
the Extension Option; provided, however, that if the Deficit is
caused by the negative impact on the Actual Facilities Costs and
Expenses from the costs and expenses of ownership and operation of
other Authority-funded facilities which are constructed on the Land
after the Effective Date of this Lease, the Authority may not
exercise this right. If the Authority desires to exercise
this right, then the Authority shall notify Tenant in writing, not
later than ninety (90) days after the Authority receives
Tenant’s Extension Notice, that the Authority is exercising
this right.
(4)
Subject to
Tenant’s right to elect not to proceed with the Extension
Option as described in subsection (2) above, and subject
to the Authority’s right to elect not to permit Tenant to
proceed with the Extension Option as described in
subsection (3) above, Tenant must (if Tenant provides an
Extension Notice to the Authority) enter into a written amendment
to this Lease not later than ninety (90) days after the Authority
notifies Tenant of the amount of the increase in the Additional
Rent for the Extension Term, which amendment shall confirm the
increased Additional Rent and other terms consistent with the
foregoing provisions of this subsection (B), and shall
otherwise be in a form reasonably acceptable to the
Authority.
Section 502.
Right to
Terminate Upon Certain Events .
(A)
In addition to
any other provisions of this Lease that expressly grant Tenant the
right to terminate this Lease prior to the expiration of the Term,
Tenant shall have the right, upon written notice to the Authority,
to terminate this Lease upon the occurrence of either of the
following events or circumstances:
(1)
The assumption by
the United States Government or any authorized agency thereof of
the operation, control, or use of the Airport and facilities, or
any substantial part or parts thereof, in a manner that
substantially and adversely affects Tenant’s use of that
portion of the Leased Premises which Tenant is then Occupying or
Tenant’s ability to Occupy additional space at the Leased
Premises or expand into Expansion Space for a period of at least
ninety (90) consecutive days.
(2)
The issuance by
any court of competent jurisdiction of an injunction in any way
preventing or restraining the use of the Airport, so as to
substantially and adversely affect Tenant’s use of that
portion of the Leased Premises which Tenant is then Occupying or
Tenant’s ability to Occupy additional space at the Leased
Premises or expand into Expansion Space, for a period of at least
ninety (90) consecutive days; provided, that the injunction is not
due to Tenant’s operations at the Airport.
(B)
In addition to
any other provisions of this Lease that expressly grant the
Authority the right to terminate this Lease prior to the expiration
of the Term, the Authority shall have the right, upon written
notice to Tenant, to terminate this Lease, if Tenant takes any
action, or operates all or any portion of Tenant’s business
at the Leased Premises in a manner that would
24
result in a violation of the
Tax Restrictions and jeopardize the tax-exempt status of the Bond
Issues. The Authority may inspect Tenant’s actions or
operations at the Leased Premises to determine if such actions or
operations violate the Tax Restrictions and jeopardizes the
tax-exempt status of the Bond Issues. Prior to the Authority
exercising its right to terminate under this subsection (B),
the Authority shall give Tenant written notice of such violation
and describe the basis for such violation. If the violation is
curable under the Tax Restrictions by curative action within thirty
(30) days, Tenant shall have thirty (30) days from the date of
receipt of said written notice from the Authority to alter
Tenant’s operations or actions so as to cure any such
violation; and, if Tenant cures such violation within the thirty
(30) day period, then the Authority shall not have the right to
terminate this Lease. In the event that this Lease is
terminated under this Section 502(B), Tenant shall remain
liable for all Rental that has accrued for periods prior to the
effective date of termination of this Lease, and for other
liabilities and obligations of Tenant under this Lease Agreement
(including without limitation Section 705 and
Section 1701 of this Lease) that have accrued for periods
prior to the effective date of termination of this Lease, but shall
not be liable for any Rentals that would otherwise have accrued for
periods after the effective date of the termination of this Lease
and shall not be obligated to repay the Grants, the Credits, or the
Improvement Rent Credits. The sole remedy available under
this Lease Agreement to the Authority for Tenant’s failure to
adhere to the Tax Restrictions applicable to it shall be to so
terminate this Lease Agreement.
Section 503.
Rights at
Expiration/Termination .
(A)
In no event shall
Tenant or any of its subtenants continue to possess, occupy or use
the Leased Premises beyond the expiration or sooner termination of
the Term without the Authority’s written consent, which
consent may be withheld in the Authority’s sole and absolute
discretion.
(B)
Tenant further
agrees that upon the expiration or earlier termination of the Term,
the Leased Premises shall be delivered to the Authority in at least
as good condition as originally delivered to Tenant, reasonable
wear and tear and matters covered by insurance excepted, and
subject to performance by the Authority of the Authority’s
maintenance, repair and replacement obligations under this Lease,
including but not limited to its maintenance, repair and
replacement obligations pursuant to Sections 1001 and 1002 below,
and the Authority’s obligations under Article VII and
Section 1702 of this Lease.
Section 504.
Early
Termination Rights .
(A)
Authority
Early Termination Rights . Notwithstanding the
Term of this Lease Agreement, the Authority shall have the right to
terminate this Lease Agreement prior to the expiration of the Term
if any of the following events occur (each, an “Authority
Termination Event”):
(1)
If, on or before
October 1, 2008, Tenant has not Occupied (and been assessed
Base Rent and Additional Rent on), simultaneously, for at least one
full thirty (30) consecutive day period, at least five
(5) Bays; or if, on or before October 1, 2008, the
Authority has not otherwise leased and collected rent, for at least
one full thirty (30)
25
consecutive day
period, for at least five (5) Bays, simultaneously (including
any Bays Occupied by Tenant (and for which Tenant was assessed Base
Rent and Additional Rent) during that thirty (30) consecutive day
period);
(2)
If, on or before
October 1, 2009, Tenant has not Occupied (and been assessed
Base Rent and Additional Rent on), simultaneously, for at least one
full thirty (30) consecutive day period, at least seven
(7) Bays; or if, on or before October 1, 2009, the
Authority has not otherwise leased and collected rent, for at least
one full thirty (30) consecutive day period, for at least seven
(7) Bays, simultaneously (including any Bays Occupied by
Tenant (and for which Tenant was assessed Base Rent and Additional
Rent) during that thirty (30) consecutive day period);
(3)
If on or prior to
December 31, 2005, Tenant and its subtenants have not
employed, on each day, during at least one full thirty (30)
consecutive day period, a total of at least 250 Full-Time
Equivalent Indiana Resident Employees at the Leased
Premises;
(4)
If on or prior to
December 31, 2007, Tenant and its subtenants have not
employed, on each day, during at least one full thirty (30)
consecutive day period, a total of at least 500 Full-Time
Equivalent Indiana Resident Employees at the Leased
Premises;
(5)
If on or prior to
December 31, 2009, Tenant and its subtenants have not
employed, on each day during at least one full thirty (30)
consecutive day period, a total of at least 800 Full-Time
Equivalent Indiana Resident Employees at the Leased Premises;
or
(6)
(a) If the
Authority has not received, during any rolling two
(2) consecutive Tenant Fiscal Years starting with the Tenant
Fiscal Year beginning on June 1, 2007, at least fifty percent
(50%) of the projected annual Percentage Rent as set forth
on Exhibit F
attached hereto
for each of those two (2) Tenant Fiscal Years, and
(b) if, within ninety (90) days after the last day of the
second such Tenant Fiscal Year, Tenant does not make a payment to
the Authority in an amount that equals the difference between the
actual Percentage Rent received by the Authority for that second
such Tenant Fiscal Year and fifty percent (50%) of the projected
annual Percentage Rent which the Authority was projected to receive
for that second such Tenant Fiscal Year as set forth on
Exhibit F , provided, however, Tenant
shall not be obligated to make such payment.
Within thirty (30) days
after the date Tenant has satisfied the Full-Time Equivalent
employment thresholds as described in subsections (3), (4) and
(5) above, respectively, Tenant shall provide written notice
to the Authority that Tenant has satisfied the applicable
“Full-Time Equivalent” employment threshold.
Tenant’s written notice shall be accompanied by a list, with
respect to each day of the thirty (30) consecutive day period
during which the “Full-Time Equivalent” employment
thresholds were satisfied, of the names of the Full-Time Equivalent
Indiana Resident Employees who were employed by Tenant (and/or its
subtenants at the Leased Premises) on each such day during that
thirty (30) day period, the hours such Full-Time Equivalent Indiana
Resident Employees worked during such time period and such
other
26
information as the Authority
shall reasonably request. The Authority shall thereafter have
a period of ninety (90) days from the Authority’s receipt of
Tenant’s written notice to verify that the applicable
Full-Time Equivalent employment thresholds have in fact been
achieved by Tenant. If the Authority does not, within that
ninety (90) day period, deliver written notice to Tenant that the
Authority disputes that Tenant has achieved the applicable
Full-Time Equivalent employment threshold, the Authority shall be
deemed to have agreed that Tenant achieved the applicable Full-Time
Equivalent employment threshold.
If the Authority is entitled to and desires to
terminate this Lease pursuant to subsections (A)(1), (2), (3), (4),
(5) or (6) above, the Authority shall provide written
notice to Tenant, not later than six (6) months after the
Authority becomes eligible under subsections (1), (2), (3), (4),
(5) or (6) above to elect to terminate this Lease, that
the Authority intends to terminate this Lease pursuant to
subsection (A)(1), (2), (3), (4), (5) or (6), as
applicable; provided, however, that with respect to
subsection (A)(6) above, the six (6) month period
may be extended, day for day, if the Authority exercises its right
to conduct an audit, pursuant to Section 601(C)(3) below,
regarding Tenant’s Operating Profit and Gross Sales with
respect to one or both of the applicable two (2) Tenant Fiscal
Years (and/or with respect to any Period therein). If the Authority
terminates this Lease pursuant to this Section 504(A), the
termination shall be effective upon the earlier of (a) the
first anniversary of the date of delivery to Tenant of the
Authority’s termination notice, and (b) the expiration
date of the term (not including unexercised renewal or extension
options or periods) of Tenant’s then-longest third party
maintenance agreement with its customers. For purposes of
this subsection (A), Tenant’s “third party
maintenance agreements with its customers” shall mean only
those of Tenant’s third party maintenance agreements with its
customers that are in effect on the date when the Authority
provides Tenant with the Authority’s written notice of
termination pursuant to a particular Authority Termination Event.
Within thirty (30) days after the Authority provides Tenant with
the Authority’s written notice of intent to terminate
pursuant to this Section 504(A), Tenant shall provide a
written, sworn certification to the Authority from Tenant’s
Controller which states the expiration dates of Tenant’s
third party maintenance agreements with its customers, and the
Authority shall have the right to verify the information set forth
in Tenant’s sworn certification (including, without
limitation, the right to review copies of Tenant’s third
party maintenance agreements). If the Authority elects to
terminate this Lease pursuant to this Section 504(A), Tenant
shall remain liable for all Rental that has accrued for periods
prior to the effective date of the termination of this Lease, and
for other liabilities and obligations of Tenant (including without
limitation Tenant’s obligations and liabilities under
Section 705 and Section 1701 of this Lease) that have
accrued for periods prior to the effective date of the termination
of this Lease, but shall not be liable for any Rentals that would
otherwise have accrued for periods after the effective date of the
termination of this Lease and shall not be obligated to repay the
Grants, the Credits, or the Improvement Rent Credits. If the
Authority does not provide Tenant with a written notice of
termination pursuant to a particular Authority Termination Event
within six (6) months after the date the Authority becomes
eligible to terminate for that particular Authority Termination
Event, then the Authority will be deemed to have waived its right
to terminate this Lease for that particular event based on those
particular circumstances which triggered that Authority Termination
Event; provided, however, that this shall not be deemed to
restrict, prohibit or limit the Authority from thereafter
exercising its right to terminate based on that particular
Authority Termination Event if a different set of circumstances or
events thereafter triggers that Authority Termination
Event.
27
(B)
Tenant Early
Termination Rights . Notwithstanding the
Term of this Lease Agreement, Tenant shall have the right to
terminate this Lease Agreement at any time prior to expiration of
the Term if any of the following events occur (each, a
“Tenant Termination Event”):
(1)
If, at any time,
(a) Tenant is able to demonstrate to the Authority that,
despite using good faith, reasonable efforts to attract, solicit,
employ and retain a sufficient number of qualified personnel,
Tenant is unable to employ or retain a sufficient number of
qualified personnel at the Leased Premises which, in Tenant’s
determination (in Tenant’s sole discretion) (i) meet
Tenant’s hiring qualifications, or (ii) can be employed
or retained at a cost that would allow Tenant to operate
Tenant’s Business at the Leased Premises within
Tenant’s projected profit margins for the Leased Premises;
provided, however, that before Tenant exercises its termination
right as a result of this Tenant Termination Event, Tenant shall
first provide the Authority (if the Authority so desires) with a
period of at least ninety (90) days after Tenant satisfies
subsection (a) above, in which to assist Tenant with
attracting, employing and retaining a sufficient number of
qualified personnel which (in Tenant’s sole discretion)
satisfy the requirements of subsections (a)(i) and
(ii) above, and if, during that ninety (90) day period, Tenant
is able to employ and retain a sufficient number of qualified
personnel at the Leased Premises who satisfy the requirements under
(a)(i) and (ii) above, Tenant may not proceed with
exercising its termination right under this
subsection (1) in that instance.
(2)
Unless Tenant has
consented thereto pursuant to Section 2105 of this Lease, if
at any time the Authority leases any space at the Facilities to
another Person who is a direct competitor of Tenant in the business
of providing maintenance, repair, or overhaul for aircraft
(provided, however, that Tenant hereby acknowledges that a
commercial airline or a Governmental Entity will not be deemed to
be a “direct competitor” of Tenant even if the airline
or the Governmental Entity engages in maintenance, repair, and/or
overhaul activities).
(3)
If at any time,
starting in the Tenant Fiscal Year beginning June 1, 2005,
Tenant’s annual Operating Profit with respect to the Leased
Premises is negative for any two (2) consecutive Tenant Fiscal
Years.
(4)
If, at any time,
Tenant’s average Employee costs for Tenant’s Business
at the Leased Premises increase in any quarter of a Tenant Fiscal
Year in excess of three percent (3%) of the average Employee costs
for the same Employees for the immediately prior quarter, or Tenant
experiences workplace disruptions which result in suspension of or
a material reduction in Employee productivity as demonstrated to
the Authority by Tenant.
If any of the foregoing Tenant
Termination Events occurs, the Tenant may notify the Authority in
writing that Tenant elects to terminate this Lease Agreement.
With respect to the Tenant Termination Events described in
subsections (B)(2) and (B)(3) above, if Tenant desires to
exercise its right to terminate this Lease pursuant to the
circumstances described in either
28
subsection (B)(2) or
subsection (B)(3), respectively, Tenant must provide the
Authority with Tenant’s written notice of intent to terminate
within the following timeframes: (a) if termination is
pursuant to subsection (B)(2) above, Tenant must provide
the Authority with Tenant’s written notice of intent to
terminate this Lease not later than six (6) months after the
Authority enters into the lease with the other Person; and
(b) if termination is pursuant to
subsection (B)(3) above, Tenant must provide the
Authority with Tenant’s written notice of intent to terminate
this Lease not later than six (6) months after the second of
the two (2) such consecutive Tenant Fiscal Years for which
Tenant’s annual Operating Profit was negative. With respect
to the Tenant Termination Event described in
subsection (B)(3) above, Tenant hereby acknowledges and
agrees that the Authority shall be entitled to verify, by process
of audit pursuant to Section 601(C)(3) below,
Tenant’s Operating Profit and Gross Sales in order to verify
that this Tenant Termination Event has in fact been
satisfied. The termination shall be effective on the earlier
of (y) the first anniversary of the date of delivery to the
Authority of Tenant’s termination notice, and (z) the
expiration date of the term (not including unexercised renewal or
extension options or periods) of Tenant’s then-longest third
party maintenance agreement with its customers. For purposes
of this subsection (B), Tenant’s “third party
maintenance agreements with its customers” mean only those of
Tenant’s third party maintenance agreements with its
customers that are in effect on the date when the Tenant provides
the Authority with Tenant’s written notice of termination
pursuant to this Section 504(B). At the time Tenant
provides the Authority with Tenant’s written notice of
Tenant’s intent to terminate pursuant to this
Section 504(B), Tenant will provide a written, sworn
certification to the Authority from Tenant’s Controller which
states the expiration dates of Tenant’s third party
maintenance agreements with its customers and the Authority shall
have the right to verify the information set forth in
Tenant’s sworn certification (including, without limitation,
the right to review copies of the Tenant’s third party
maintenance agreements). If Tenant elects to terminate this
Lease pursuant to this Section 504(B), Tenant shall remain
liable for all Rental that has accrued for periods prior to the
effective date of the termination of this Lease, and for other
liabilities and obligations of Tenant (including without limitation
Tenant’s obligations and liabilities under Section 705
and Section 1701 of this Lease) that have accrued for periods
prior to the effective date of the termination of this Lease, but
shall not be liable for any Rentals that would otherwise have
accrued for periods after the effective date of the termination of
this Lease and shall not be obligated to repay the Grants, the
Credits, or the Improvement Rent Credits.
ARTICLE VI.
RENTALS, FEES AND
RECORDS
Section 601.
Rental
.
(A)
Base
Rent .
(1)
Subject to
Sections 605(B) and 605(C) below, Tenant will pay the
Authority, in arrears, on or before the fifteenth (15th) day of
each calendar month, base rent (“Base Rent”) with
respect to the Leased Premises for the preceding calendar
month. Subject to Section 601(A)(3) below, the Base
Rent that is assessed by the Authority for a particular calendar
month will be calculated solely on basis of the square footage of
the
29
Leased Premises
that Tenant Occupied during that calendar month. The annual
Base Rent rate for the Leased Premises during the Term will be Two
Dollars and NO/100 ($2.00) per square foot.
By way of example only, if Tenant
Occupies 100,000 square feet of the Leased Premises during a
particular calendar month, Tenant will (subject to Sections
605(B) and (C) below) pay the Authority Base Rent for
that calendar month in the amount of $16,666.67 (i.e., 100,000
square feet x $2.00 per square foot per annum /12
months).
(2)
As it relates to
Occupancy and subsequent de-Occupancy of Leased Premises, if Tenant
Occupies a particular portion of the Leased Premises during less
than all of a calendar month, Tenant shall pay a prorated portion
of the Base Rent for that calendar month based on the number of
days Tenant Occupies that portion of the Leased
Premises.
(3)
Notwithstanding
anything in this Lease to the contrary, however, and regardless of
which (if any) portions of the Leased Premises that Tenant elects
to Activate and regardless of which (if any) portions of the Leased
Premises that Tenant is Occupying or using from time to time,
Tenant hereby agrees that commencing on the earlier of
(a) December 1, 2004 or (b) the first date that any
aircraft of Tenant’s customer(s) is located at the Leased
Premises, and continuing thereafter during the Term of this Lease,
Tenant shall be obligated to pay monthly Base Rent on at least two
(2) Bays plus the Hangar 4 Office Space (the “Minimum
Base Rent”). Minimum Base Rent is subject to increase
as provided in Section 401(G) and
Section 2105(A)(3) of this Lease.
(B)
Additional
Rent .
(1)
Subject to the
other provisions of this Section 601(B) and Sections
605(B) and (C) of this Lease, in consideration for the
Authority’s operations and maintenance obligations under this
Lease with respect to the Facilities, including providing
Utilities and performance of those obligations set forth in
Articles X and XI of this Lease, Tenant will pay the Authority
monthly additional rent (“Additional Rent”), in
arrears, on or before the fifteenth (15th) day of each calendar
month for the prior calendar month. Subject to
Section 601(B)(8) below, the Additional Rent that is
assessed by the Authority for a particular calendar month will be
calculated solely on basis of the square footage of the Leased
Premises that was Occupied by Tenant during that calendar
month.
(2)
During the
Initial Term, Tenant’s monthly payments of Additional Rent
shall be paid based upon an annual Additional Rent, per calendar
year, of Six Dollars and 20/100 ($6.20) per square foot (the
“Additional Rental Per Square Foot Per Annum”).
Within one hundred twenty (120) days after the end of each calendar
year during the Term, the Authority shall provide Tenant with a
statement showing the actual costs and expenses incurred by the
Authority in owning, operating, insuring, maintaining, repairing,
and replacing the Land, the Facilities, the Facilities Systems, the
Equipment, and all other aspects and components of the Land and the
Facilities (the “Actual Facilities Costs and
Expenses”), and, to the extent reasonably requested by
Tenant, will provide
30
Tenant with
supporting data therefor. In the event that the Actual
Facilities Costs and Expenses per square foot of the total
Facilities, for that calendar year, are less than $6.20 per square
foot of the Facilities (the “Estimated Facilities Costs and
Expenses”), Tenant shall be entitled to a credit from the
Authority against future Additional Rent that would otherwise be
payable by Tenant under this Lease, which credit shall be in an
amount that is equal to the amount of Additional Rent that was
actually assessed against Tenant for that calendar year (based on
the Estimated Facilities Costs and Expenses) less the amount of
Additional Rent that should have been assessed against Tenant for
that calendar year (based on the Actual Facilities Costs and
Expenses). If there are any overpayment credits against
Additional Rent remaining under this Section as of the
expiration or sooner termination of the Term of this Lease, those
overpayment credits will be applied toward any unpaid Additional
Rent assessed for periods prior to the expiration or sooner
termination of the Term; and any remaining overpayment credits that
are not applied toward any unpaid Additional Rent assessed for
periods prior to the expiration or sooner termination of the Term
will be paid to the Tenant in cash.
(3)
The Additional
Rent shall be increased during the Extension Term as provided in
Section 501(B) above.
(4)
Notwithstanding
subsection (B)(1) above, Tenant will not be charged any
Additional Rent with respect to the Hangar 4 Office Space (as
defined in Exhibit B ) at any time during the
Term.
(5)
As it relates to
Occupancy and subsequent de-Occupancy of Leased Premises, if Tenant
Occupies a particular portion of the Leased Premises during less
than all of a calendar month, Tenant shall be assessed a prorata
portion of the Additional Rent based on the number of days Tenant
Occupies that portion of the Leased Premises during that calendar
month. Notwithstanding the preceding sentence, however, prior to
the third (3rd) anniversary of the Effective Date, Additional Rent
will not be assessed with respect to any particular Bay at the
Leased Premises for any seven (7) consecutive day period
during the months of July and August, during which Tenant does
not conduct Tenant’s Business in that Bay. For purposes
of the preceding sentence, Tenant shall be deemed to have conducted
Tenant’s Business in a particular Bay during a particular
seven (7) day period if Tenant Occupied and had at least one
(1) aircraft in that Bay on at least one (1) day during
that seven (7) day period.
(6)
If, at any time,
Tenant adequately demonstrates to Authority that Tenant’s
operations are specifically and directly responsible for a material
reduction in operating costs at the Facilities, the entire
demonstrated cost savings shall be applied as a reduction to
Tenant’s Additional Rent over the remaining Term of the
Lease; however, going forward Tenant must continue to demonstrate
its direct responsibility for the reduction in operating
costs.
(7)
By way of
example, if on July 1, 2005, Tenant is Occupying 300,000
square feet of Leased Premises, of which 25,000 square feet is
Hangar 4 Office Space and another 100,000 square feet constitutes
empty Bay space for one seven (7)
31
consecutive day
period during the month, the Additional Rent that would be assessed
by the Authority for that calendar month would be an amount equal
to $130,416.66 (i.e., ((300,000 square feet – 25,000 square
feet) x $6.20 per square foot per annum) /12 months) – ((7
days/31 days) x (100,000 square feet x $6.20 per square foot per
annum/12 months)).
(8)
Notwithstanding
anything in this Lease to the contrary, however, and regardless of
which (if any) portions of the Leased Premises that Tenant elects
to Activate and regardless of which (if any) portions of the Leased
Premises that Tenant is Occupying or using from time to time,
Tenant hereby agrees that commencing on the earlier of
(a) December 1, 2004 or (b) the first date that any
aircraft of Tenant’s customer(s) is located at the Leased
Premises, and continuing thereafter during the Term of this Lease,
Tenant shall be obligated to pay monthly Additional Rent on at
least two (2) Bays (the “Minimum Additional Rent”
and, together with the Minimum Base Rent, the “Minimum
Monthly Rent”). Minimum Additional Rent is subject to
increase, in the same manner and at the same time as the Minimum
Base Rent, as provided in Section 401(G) above and
Section 2105(A)(3) below.
(C)
Percentage
Rent .
(1)
If during the
Term, Tenant’s annual Operating Profit (expressed as a
percentage of Gross Sales) is greater than nine and 25/100 percent
(9.25%) of Gross Sales at the end of a Tenant Fiscal Year, then
Tenant will pay the Authority a percentage rent (“Percentage
Rent”) for that Tenant Fiscal Year in an amount that is equal
to thirty-three percent (33%) of the amount by which Tenant’s
annual Operating Profit for that Tenant Fiscal Year exceeds nine
and 25/100 percent (9.25%) of Tenant’s Gross Sales for that
Tenant Fiscal Year. By way of example, if at the end of a
Tenant Fiscal Year, Tenant had Gross Sales of $99,000,000 and an
annual Operating Profit of $11,880,000, then Tenant’s annual
Operating Profit would equal twelve percent (12%) of its Gross
Sales (i.e., $11,880,000 / $99,000,000). 9.25% of $99,000,000
equals $9,157,500. Therefore, for this Tenant Fiscal Year, Tenant
would pay the Authority $898,425 (i.e., .33 x ($11,880,000 —
$9,157,500)). If Tenant had Gross Sales of $100,000,000 for a
Tenant Fiscal Year and an annual Operating Profit of $9,000,000 for
that Tenant Fiscal Year, then Tenant’s annual Operating
Profit for that Tenant Fiscal Year would equal nine percent (9%) of
its Gross Sales (i.e., $9,000,000 / $100,000,000) and as a result,
no Percentage Rent would be due the Authority for that Tenant
Fiscal Year.
(2)
Tenant will
calculate its Operating Profit on a cumulative basis at the end of
each fiscal quarter (August 31, November 30,
February 28/29, and May 31) (each, a
“Period”) for the applicable Tenant Fiscal Year, and
will make interim Percentage Rent payments, if any are due, within
sixty (60) days after the end of the applicable fiscal
Period. Not later than ninety (90) days after the end of each
of the Tenant Fiscal Years (i.e., not later than August 31 of
each year), Tenant will calculate the cumulative Operating Profit
of Tenant for each such Tenant Fiscal Year, and likewise calculate
the Percentage Rent that should have been paid to the Authority for
each such Tenant Fiscal Year, and reconcile it to the interim
Percentage Rent payments actually made to the
32
Authority during
that Tenant Fiscal Year with respect to each of the Periods during
that Tenant Fiscal Year. If the Percentage Rent that should
have been assessed against Tenant for the Tenant Fiscal Year
exceeds what Tenant has actually paid to the Authority for that
Tenant Fiscal Year, then Tenant shall pay the Authority the
difference within ninety (90) days after the end of that Tenant
Fiscal Year. If the Percentage Rent that should have been
assessed against Tenant for that Tenant Fiscal Year is less than
what Tenant has actually paid to the Authority for that Tenant
Fiscal Year, then the Authority shall credit the difference against
Tenant’s obligations to pay Rental under this Lease with
respect to the Tenant Fiscal Year(s) following the Tenant Fiscal
Year for which Tenant overpaid Percentage Rent. The Authority shall
refund in cash to Tenant any unused credits that have accrued, but
have not been applied to Rental, under this
subsection (C)(2) at the expiration or earlier
termination of this Lease. Each such payment that is due and
payable by Tenant shall be accompanied by a certificate signed and
sworn by the Tenant’s Controller, setting forth the Operating
Profit and Gross Sales during such Period (the “Percentage
Rent Certificate”). In the event of a partial Period at
the beginning or end of the Term, the Percentage Rent payable for
that partial Period shall be based upon the Gross Sales and
Operating Profit during that partial Period.
(3)
Tenant shall keep
in the Leased Premises full, accurate, true and complete records of
all Gross Sales and Operating Profit with respect to the Leased
Premises. Such records shall be retained by the Tenant for
not fewer than five (5) years after the expiration of the
Tenant Fiscal Year to which they relate, and such records shall be
kept in accordance with generally accepted accounting principles
(“GAAP”) that are applied consistently with respect to
the Leased Premises from Period to Period. For purposes of
permitting verification by the Authority of the Gross Sales and
Operating Profit reported by the Tenant with respect to the Leased
Premises, the Authority or its agent shall have the right for a
period of up to five (5) years after the end of each Tenant
Fiscal Year, upon not fewer than thirty (30) days’ prior
written notice to Tenant, to inspect, audit or cause to be audited
Tenant’s books and records relating to Gross Sales and
Operating Profit for the Tenant Fiscal Year in question. If
such inspection or audit discloses that Tenant has underpaid any
Percentage Rent due under this Lease, and if Tenant does not in
good faith dispute the findings of the audit or inspection, Tenant
shall within thirty (30) days of the findings remit the amount of
the underpayment to the Authority, together with interest thereon
from the date such amount was originally due and owing to the
Authority hereunder, at the rate specified in Section 604
below. If such inspection or audit discloses that Tenant has
overpaid any Percentage Rent due hereunder, and if the Authority
does not in good faith dispute the findings of the audit or
inspection, the Authority shall within thirty (30) days of the
findings remit the amount of the overpayment to Tenant. If
the inspection or audit discloses that Tenant underpaid any
Percentage Rent, Tenant shall also reimburse the Authority, a
reasonable hourly rate, for the time incurred by the
Authority’s personnel in conducting the audit or inspection,
plus their actual expenses in conducting the audit or inspection;
provided, however, that the total amount for which Tenant would be
obligated to reimburse the Authority under this sentence shall not,
itself, exceed an amount that is equal to the amount of the
underpayment.
33
“Gross Sales” shall
mean, for a particular Period, the aggregate amount, expressed in
U.S. Dollars, of all goods and services sold or otherwise provided
by Tenant at, from or with respect to the Leased Premises during
that Period and recorded on the books of Tenant in accordance with
GAAP. “Gross Sales” shall also include all goods
and services sold from or provided at other locations of Tenant
and/or its Affiliates with respect to customer orders and/or
contracts generated or invoiced at, from or with respect to the
Leased Premises; and “Gross Sales” shall also include
goods and services intentionally diverted away from the Leased
Premises to other locations of Tenant and/or its Affiliates to
avoid including those sales in Gross Sales. However, Gross Sales
shall not include goods and services diverted to other locations of
Tenant and/or its Affiliates if such diversion was done for a
legitimate, good faith business reason and which diversion would
have occurred even in the absence of a Percentage Rent obligation
and not to avoid including those sales in Gross Sales, including,
but not limited to the sale of goods and services performed at
another location due to a customer request, workplace disruptions,
aircraft scheduling conflicts, aircraft emergencies, or weather.
Discounts, price reductions, rebates and other similar arrangements
by Tenants or its Affiliates shall not be granted in a manner that
would serve to intentionally deflect revenues to another facility
of Tenant or any of its Affiliates so as to artificially reduce
Gross Sales. In the event any goods or services are provided by
Tenant to any Affiliate of Tenant on any basis that is less than
the fair market value thereof, the fair market value thereof shall
be deemed to have been received by Tenant for those goods or
services for purposes of calculating Gross Sales. To the extent any
charges imposed by Tenant or any Affiliate for goods and services
that are to be included in “Gross Sales” shall be in
amounts less than what is required by the preceding sentences,
Gross Sales shall be increased so as to equal the amount that
Tenant or its Affiliate would have received had it imposed charges
in accordance with the preceding sentences. “Gross
Sales” shall not include goods and services sold from or
provided at other locations including those of Tenant and/or its
Affiliates with respect to customer orders and/or contracts
generated at, from, or with respect to the Leased Premises when
such goods and services are provided at such locations as a result
of a Casualty at the Leased Premises (other than a Casualty that
results from the fault or negligence of Tenant, its subtenants, or
any of their respective Employees, agents, contractors or Invitees)
that prevents them from being provided at the Leased Premises, the
occurrence of any of the events described in Section 502(A),
or an interruption under Section 1102 which is caused by the
Authority and which prevents those goods and services from being
provided at the Leased Premises.
“Operating
Profit” for a particular Period shall be expressed as a
percentage of Gross Sales and shall mean, for a particular Period,
Gross Sales for that Period less expenses directly related to
Tenant’s operations at the Leased Premises for that Period,
as calculated in accordance with GAAP. Group/Corporate
Expenses allocated to Tenant shall also be deducted from Gross
Sales for purposes of Operating Profit. No intercompany fees
relative to any members of the Group, to Tenant’s Parent (as
hereinafter defined), or to any Affiliate of Tenant or its Parent,
shall be included as expenses of Tenant’s operations at the
Leased Premises except as contemplated by the definition of
“Group/Corporate Expenses” set forth below. The
expenses for the Leased Premises shall be reduced by the amount of
any grants, if applicable, Success Payments
34
or credits
provided to Tenant by any Governmental Entity with respect to the
Leased Premises during that particular Period, and shall also be
reduced by the amount of any and all Rental credits that are
provided to Tenant under this Lease during that particular Period.
For purposes of this provision, “Group” means the
subset of organizational companies, within the Parent company
organization, in which Tenant belongs. “Group/Corporate
Expenses” means the following, all of which must be
verifiable by the Authority (a particular item of Group/Corporate
Expense may only be deducted pursuant to one of the following
categories (i.e., a particular item of Group/Corporate Expense may
not be deducted more than once for purposes of calculating
Operating Profit)):
(a)
Production Materials and Labor
from Sister Companies: The actual cost and expenses incurred by
Tenant in procuring production materials and labor from a
“sister company” (i.e., an Entity that is directly or
indirectly owned, in whole or in part, by Tenant’s Parent)
for purposes of Tenant’s providing goods and services to
Tenant’s customers at, from or with respect to the Leased
Premises. The price charged by Tenant’s sister
companies to Tenant shall be at not more than normal and customary
market rates consistent with an arm’s length
transaction.
(b)
Group Overhead Allocation:
Allocation of general Group overhead costs and expenses, which
shall consist of Tenant’s proportionate share of all costs
and expenses (including, without limitation, salaries, benefits,
travel and living expenses, supplies, and educational costs)
reasonably incurred that are associated with the operation of the
Group, in general, and are not specifically allocable to any
particular division or Entity within the Group (the “Group
Overhead”). Such costs and expenses may include, by way
of example, costs and expenses generally incurred by the Group, as
a whole, for the following: business development, operations,
finance, and sales. Tenant’s proportionate share of Group
Overhead, for a particular period, shall be a percentage equal to
Tenant’s Gross Sales for that period divided by the gross
sales of the entire Group. Tenant’s proportionate share
of Group Overhead shall not exceed for any Tenant Fiscal Year, the
amount of Four Hundred Thousand Dollars ($400,000) per Tenant
Fiscal Year, for purposes of calculating Operating Profit for that
Tenant Fiscal Year.
(c)
Corporate Overhead Allocation:
Allocation to Tenant, as described in this subsection (c), of
Tenant’s proportionate share of the corporate overhead costs
and expenses of Tenant’s Parent, reasonably incurred in
connection with the operation of the Parent and those subsidiaries
which Parent (directly or indirectly) wholly owns, including those
for insurance premiums, banking services, routine financial
statement audits, tax preparation services, benefits
administration, pension administration, payroll administration,
accounts payable administration, routine compliance procedures
under the Sarbanes-Oxley Act of 2002, 15 U.S.C. ¶7201
et seq ., and routine treasury-related administrative
activities with respect to the receipt, custody and disbursement of
funds (the “Corporate Overhead”). Tenant’s
proportionate share of Corporate Overhead, for a particular Period,
shall be as allocated pursuant to the Parent’s “General
Guidelines for Corporate
35
Expense Allocation” (as
Parent may amend from time to time), provided that the
Parent’s “General Guidelines for Corporate Expense
Allocation” are applicable on a consistent basis to all of
Parent’s operating units and subsidiaries (the
“Corporate Overhead Allocation Guidelines”). The amount
of Tenant’s share of Corporate Overhead which may be deducted
for purposes of calculating Operating Profit for a particular
Period shall be no greater than an amount that is proportionate to
the ratio that Tenant’s Gross Sales for that Period bear to
Parent’s entire gross sales from all of Parent’s
operations (whether at the Leased Premises of at other Parent
locations) for that Period. Tenant’s Percentage Rent
Certificate for each Period shall include a certificate, signed and
sworn to by the Parent’s Chief Financial Officer, certifying
to the Authority that the Corporate Overhead Allocation Guidelines
are applied on a consistent basis with respect to all of
Parent’s operating units and subsidiaries and that the
allocation to Tenant of its share of the Corporate Overhead for
that Period has been made in accordance with the then-applicable
Corporate Overhead Allocation Guidelines. The Authority shall
have the right, as part of any audit performed by the Authority as
described above in this subsection (C)(3), to audit the
Parent’s books and records relevant to the Corporate Overhead
Allocation in order to verify (i) that the Corporate
Overhead Allocation Guidelines that were used to calculate
Tenant’s share of Corporate Overhead were in fact applied on
a consistent basis to all of the Parent’s operating units and
subsidiaries and (ii) that the calculation of Tenant’s
share of Corporate Overhead pursuant to the Corporate Overhead
Allocation Guidelines was correctly calculated. The Parent
shall retain its books and records pertaining to Corporate Overhead
and allocations thereof for not fewer than five (5) years
after the expiration of each Tenant Fiscal Year for which Tenant is
allocated any portion of Corporate Overhead.
(d)
Corporate Direct Charges: Charges
reasonably assessed to Tenant, for time and actual materials costs
incurred by employees at the Parent’s headquarters in
providing support services (including, without limitation, legal
support, systems programming or direct support hardware,
environmental support, and human resources support) directly to and
for the benefit of Tenant with respect to Tenant’s operations
at the Leased Premises. Such charges shall not include
any “profit” component, and shall be in amounts and at
rates that are commercially reasonable and not in excess of what
would reasonably be charged to Tenant if Tenant were to obtain such
services from a service provider unaffiliated with
Tenant.
(e)
Systems Allocation: Actual,
reasonable costs and expenses for the Parent’s maintaining
systems that are shared generally by members of the Group, such as
a corporate email system, security systems, and similar types of
systems. These costs and expenses are to be allocated
equally, by division, across the Parent company organization (the
Group constituting one of those divisions), with each division
being charged an amount equal to the amount charged to each other
division in the Parent company organization. Tenant’s
share of those costs and
36
expenses shall be equal to the
share of those costs and expenses that are borne by other member
companies in the Group.
Capital charges and income taxes are not to be
deducted from Gross Sales in determining Operating Profit.
The cost of goods and services received by Tenant from its
Affiliates and from other Persons must not exceed what Tenant would
reasonably be required to pay in an arm’s-length transaction.
Allocation to Tenant by its vendors, suppliers, and contractors of
costs, expenses, fees, charges, rebates, credits, allowances, price
reductions and other such items must be done in a manner that will
not (a) allocate to Tenant more than Tenant’s rightful
share of the costs, expenses, fees, charges and other such items,
and (b) allocate to parties other than Tenant more than their
rightful share of any rebates, credits, allowances, price
reductions and other such items.
Attached hereto as
Exhibit J is an illustrative model indicating how
Tenant may calculate Gross Sales and Operating Profit, which model
may be subject to modification in accordance with GAAP.
Section 602.
Field Use
Charge . This Lease Agreement
does not and shall not be deemed to grant Tenant the right to use
any aircraft parking apron (except as may be designated from time
to time by the Facilities Manager to Tenant or except as
contemplated by Section 703(B) below) or taxiway not on
the Leased Premises. Any use of aircraft operational areas
outside of the Leased Premises, or other Airport property not
included in the Leased Premises, by Tenant, its Employees or its
agents shall be by separate agreement and only upon payments of
appropriate fees. Nothing in this Section, however, shall
prohibit Tenant, its Employees or its agents from the joint use
with others at the Airport of interior and exterior roadways
serving the Leased Premises as granted herein and in accordance
with Airport rules, regulations and/or restrictions.
Notwithstanding the foregoing, the Authority covenants and agrees
that Tenant and its customers will not be charged any landing fees
by any Governmental Entity with respect to aircraft landing at the
Land for maintenance, repair, or overhaul at the Leased Premises,
and that Tenant’s customers (when and to the extent they are
taking off from and landing at the Airport in connection with the
maintenance, repair and overhaul services they are receiving at the
Leased Premises) will be entitled to use and access to the Airport
on terms no less favorable than the Authority gives to other users
of the Airport.
Section 603.
Time and Place
of Payments . The Rental due under
Section 601 hereof shall be payable to the Authority, at the
office of the Airport Director at the address set forth in
Section 2208 hereof.
Section 604.
Delinquent
Rentals . If Tenant does not
pay the Rental described in Section 601 hereof on the due date
thereof, Tenant shall pay to the Authority, as additional rental,
an interest charge of eighteen percent (18%) per annum, applied
against the delinquent amount due for each full calendar month of
delinquency, computed as simple interest. Such interest shall
be computed from the due date until the delinquent payment,
together with accrued interest, is paid in full.
37
Section 605.
Authority
Incentives .
(A)
Grants
.
(1)
Tenant shall be
entitled to receive grants from the Authority, in accordance with
the schedule set forth on Exhibit G hereto (the
“Grants”, and the funds to be paid by the Authority to
Tenant pursuant to the Grants being referred to herein as the
“Grant Proceeds”). The purpose of the Grants is
to pay or reimburse Tenant, as the case may be, solely for
(a) Tenant’s actual costs and expenses in purchasing
materials and equipment for Authority-approved additions to and/or
improvements to the Leased Premises, (b) Tenant’s actual
costs and expenses in purchasing computer related hardware for use
by Tenant at the Leased Premises; and (c) Tenant’s
mobilization and start-up costs (the costs and expenses described
in subsection (c) being referred to in this
Section 605(A) as “Mobilization Expenses”;
and the costs and expenses described in subsections (a) and
(b) being referred to, collectively, as “Grant-Related
Expenditures”); however, Tenant shall only be entitled to use
for Mobilization Expenses those Grant Proceeds that are payable by
the Authority to Tenant on the thirtieth (30th) day after the
Effective Date and on the one hundred fifth (105th) day after the
Effective Date. As described on Exhibit G , Tenant shall be deemed to
have earned certain portions of the Grant Proceeds (i.e., those
portions payable for “Mobilization Expenses”) on the
thirtieth (30th) day after the Effective Date (the first two
(2) installments of Grant Proceeds for Mobilization Expenses
being payable on the thirtieth (30th) day after the Effective Date)
and on the one hundred fifth (105th) day after the Effective Date.
Thereafter, as indicated on Exhibit G , Tenant shall be deemed to
have earned certain additional portions of the Grant Proceeds at
such times as Tenant has sent the Authority an Activation Notice
with respect to a certain number of Bays in the Leased Premises as
set forth on Exhibit G hereto (except for those
portions of the Grant Proceeds which are, as shown on
Exhibit G , payable at the commencement
of the 1st year of the Extension Term and at the commencement of
the 2nd year of the Extension Term). Those Bay or date thresholds
that Tenant must satisfy, as set forth on Exhibit G , in order to be deemed to
have earned a particular portion of the Grant Proceeds, are
referred to herein as the “Grant Thresholds”. After
such time as the applicable dates on Exhibit G occur with respect to which
Tenant would be entitled to receive the Grant Proceeds for
Mobilization Expenses, the Authority shall pay Tenant the
applicable Grant Proceeds corresponding to those dates, provided
that Tenant first delivers to the Authority a list of
Tenant’s anticipated Mobilization Expenses. However, Tenant
hereby acknowledges that the Authority shall only be required to
actually disburse the remainder of the Grant Proceeds (i.e., the
portion of the Grant Proceeds that may be used for Grant-Related
Expenditures) to Tenant when Tenant has satisfied the procedure for
disbursement that is set forth in
subsection (A)(2) below. Tenant may not use the Grant
Proceeds for Mobilization Expenses for any Leased Premises
Improvements (as defined below), unless Tenant complies with the
procedures described in subsection (A)(2) below. Tenant
hereby acknowledges and agrees that it may not receive both
reimbursement from Grant Proceeds and Improvement Rent Credits for
a particular Leased Premises Improvement. Tenant hereby
further acknowledges and agrees that it may not be reimbursed using
Grant Proceeds for any Grant-Related Expenditure for which Tenant
has received Grant Proceeds for Mobilization Expenses.
38
(2)
In order for
Tenant to obtain the Grant Proceeds for Grant-Related Expenditures
corresponding to those Grant Thresholds that are satisfied by
Tenant from time to time, the following must occur:
(a)
Prior to commencing any purchasing
or other activities for which Tenant will seek reimbursement from
Grant Proceeds, Tenant must obtain the Authority’s prior
written approval of the proposed Grant-Related
Expenditures.
(b)
If the Grant-Related Expenditures
have been approved by the Authority as described in
subsection (a) above, and are not Leased Premises
Improvements (as defined below), Tenant shall submit to the
Authority a written request for reimbursement, which request shall
contain a certification by Tenant that the amounts for which Tenant
seeks reimbursement have actually been spent and paid for by
Tenant, and which request shall contain a detailed breakdown
(together with such supporting data as the Authority shall request)
regarding the amounts for which Tenant seeks reimbursement.
Provided that Tenant has satisfied the foregoing provisions of
subsection (a) above and this subsection (b), the
Authority shall, not later than thirty (30) days after it receives
Tenant’s written request and all supporting data that the
Authority has requested with respect thereto, reimburse Tenant for
the amounts so requested by Tenant. However, the Authority
shall only be obligated to reimburse Tenant to the extent of Grant
Proceeds which Tenant has then earned as described in
subsection (1) above and which have not theretofore been
applied toward Grant-Related Expenditures.
(c)
If the Grant-Related Expenditures
have been approved by the Authority as described in
subsection (a) above, and consist of improvements,
alterations or other modifications to that portion of the Leased
Premises that is not Equipment (“Leased Premises
Improvements”), the following terms and conditions must be
satisfied in order for the Authority to disburse Grant Proceeds to
reimburse Tenant for the cost and expense of those Leased Premises
Improvements:
(i)
Tenant must
submit to the Authority, prior to commencing the Leased Premises
Improvements, a complete and detailed set of plans and
specifications, prepared by an architect or engineer reasonably
acceptable to the Authority, detailing those proposed Leased
Premises Improvements, which plans and specifications must be
reasonably acceptable to the Authority (the plans and
specifications approved by the Authority being referred to herein
as the “Plans”). Tenant shall perform and complete the
Leased Premises Improvements in strict accordance with Plans.
Tenant shall be responsible for ensuring that the Plans satisfy and
comply with all applicable federal, state, county or other
governmental Laws and the Authority shall have no responsibility or
liability therefor.
(ii)
Tenant shall be
responsible, at its cost and expense, for constructing the Leased
Premises Improvements and performing all work
39
relating thereto
including, without limitation, paying fees, space planning,
construction drawing services, obtaining all Improvement-Related
Permits (as defined below), and furnishing all labor and materials
necessary or appropriate to complete the Leased Premises
Improvements, and the Authority shall have no responsibility or
liability therefor. The contractors and subcontractors used
by Tenant shall be reasonably acceptable to the Authority, and
Tenant shall furnish a list of their names and copies of the
applicable contracts and subcontracts upon request by the
Authority.
(iii)
Prior to
performing the Leased Premises Improvements, Tenant shall, at its
sole cost and expense, obtain all permits, authorizations,
consents, licenses, and approvals, if any, necessary or appropriate
to perform the Leased Premises Improvements, including, without
limitation, the permit(s) required by the City of Indianapolis, if
any, with respect to the Leased Premises Improvements (the
“Improvement-Related Permits”). Prior to
performing the Leased Premises Improvements, Tenant shall deliver
to the Authority: (A) copies of the Improvement-Related
Permits; and (B) evidence reasonably satisfactory to the
Authority that Tenant has procured or has caused others to procure
workers’ compensation, general liability, builder’s
risk, and personal and property damage insurance in amounts
reasonably satisfactory to the Authority, and naming the Authority
as additional insured and loss payee.
(iv)
Tenant shall, and
shall cause its contractors and subcontractors to, perform the
Leased Premises Improvements: (A) in accordance with the
Plans and Permits; and (B) in a good and workmanlike manner
and in compliance with all applicable federal, state, county or
other governmental Laws, including, without limitation, zoning
ordinances and The American With Disabilities Act, as amended, and
the rules, regulations, guidelines, and orders promulgated or
entered thereunder. Tenant also shall, and shall cause its
contractors and subcontractors to, observe, perform and comply with
all Laws promulgated from time to time by any applicable
Governmental Entity, and complete Leased Premises Improvements free
of all mechanics’ and materialmens’ liens. Tenant
shall keep the Authority advised of the status of construction and
completion of the Leased Premises Improvements and of the
anticipated completion dates for the Leased Premises
Improvements.
(v)
Upon completion
of the Leased Premises Improvements, Tenant shall deliver to the
Authority final, unconditional lien waivers from all contractors,
subcontractors, and materialmen performing labor or supplying
materials or services in connection with the Leased Premises
Improvements; a Certificate of Substantial Completion issued by
Tenant’s project architect on the appropriate AIA form (or in
any other form as
40
reasonably
required by the Authority), certifying to the Authority that the
Leased Premises Improvements have been completed in accordance with
the Plans and Permits and all applicable Laws; and an
“as-built” set of drawings of the Leased Premises
Improvements. The Authority must be reasonably satisfied that
the Leased Premises Improvements have been fully completed, and
have been completed in a good and workmanlike manner in accordance
with the Plans, Permits and applicable Law.
(vi)
Tenant shall
submit to the Authority a written request for reimbursement, which
request shall contain a certification by Tenant that the amounts
for which Tenant seeks reimbursement have actually been spent and
paid for by Tenant, and which request shall contain a detailed
breakdown (together with such supporting data as the Authority
shall request) regarding the amounts for which Tenant seeks
reimbursement. Provided that the foregoing provisions of
subsection (a) above and this
subsection (c) have been satisfied, the Authority shall,
not later than thirty (30) days after it receives Tenant’s
written request and all supporting data that the Authority has
requested with respect thereto, reimburse Tenant for the amounts so
requested by Tenant. However, the Authority shall only be
obligated to reimburse Tenant to the extent of Grant Proceeds which
Tenant has then earned as described in
subsection (1) above and which have not theretofore been
applied toward Grant-Related Expenditures.
(3)
All equipment,
tooling, and other personal property for which Tenant has received
payment or reimbursement from the Authority from the Grant Proceeds
(including, without limitation, Grant Proceeds for Mobilization
Expenses) shall become the property of the Authority; provided,
however, such personal property will be part of the Leased Premises
for Tenant’s use under the terms of this Lease. If
Tenant receives reimbursement in whole or in part from the Grant
Proceeds for the costs and expenses of any Leased Premises
Improvement project, Tenant acknowledges and agrees that all of the
Leased Premises Improvement project, in its entirety, will become
the property of the Authority; provided, however, such Leased
Premises Improvement project will be part of the Leased Premises
for Tenant’s use under the terms of this Lease.
(4)
Tenant shall have
no right to any Grant Proceeds that remain unapplied as of the
expiration or sooner termination of the Term of this Lease.
Tenant shall not be obligated to repay any Grant Proceeds to the
Authority upon the expiration or sooner termination of the Term of
this Lease.
(B)
Credits
.
(1)
Tenant shall be
eligible to receive credits to apply against Base Rent, Additional
Rent or Percentage Rent assessed against the Tenant (the
“Credits”) in accordance with the Schedule set
forth in Exhibit G hereto. The Credits
will be earned by Tenant once Tenant has provided the Authority
with an Activation Notice with respect to the applicable number of
Bays in the Leased Premises as set forth on Exhibit G hereto
41
(those thresholds
that Tenant must satisfy, as set forth on Exhibit G , in order to be deemed to
have earned a particular amount of the Credits, are referred to
herein as the “Credit Thresholds”). Once Tenant
has earned Credits, such Credits may be applied against
Tenant’s Rental obligations which accrue from and after the
time such Credits are earned in the manner described in
paragraph (2) below, but only so long as Tenant remains
“Eligible” to apply the Credits by continuing to
satisfy the Credit Threshold that is applicable to that particular
level of Credits.
(2)
Any Credits
earned by Tenant shall be applied one twelfth (1/12) per month over
the next twelve (12) months (whether consecutive or not) during
which Tenant (a) remains Eligible to apply such Credits and
(b) owes Rental to the Authority. Tenant may
“bank” any earned but unapplied Credits toward future
Rental obligations, subject to the preceding sentences.
(3)
Tenant shall have
no right to any Credits that remain unapplied as of the expiration
or sooner termination of the Term of this Lease. Tenant shall
not be obligated to repay any Credits to the Authority upon the
expiration or sooner termination of the Term of this
Lease.
(C)
Leasehold
Improvement Credits .
(1)
In addition to
the Credits described in Subsection (B) above, the
Authority will provide Tenant with credits to be applied against
Tenant’s Rental in an amount equal to fifty percent (50%) of
the cost and expense paid by Tenant for any Leased Premises
Improvements that Tenant makes to the Leased Premises (to the
extent Tenant has not received Grant Proceeds therefor) (the
“Improvement Rent Credits”), provided that Tenant
satisfies the procedure for disbursement set forth in
subsection (2) below. Improvement Rent Credits
earned hereunder will be applied dollar for dollar as and when the
Rentals become due and payable by Tenant under the Lease, subject
to subsection (4) below.
(2)
In order for
Tenant to obtain from the Authority the Improvement Rent Credits,
the following must occur:
(a)
Prior to commencing any purchasing
or other activities related to the Leased Premises Improvements,
Tenant must obtain the Authority’s prior written approval of
the proposed Leased Premises Improvements.
(b)
Tenant must submit to the
Authority, prior to commencing the Leased Premises Improvements, a
complete and detailed set of plans and specifications, prepared by
an architect or engineer reasonably acceptable to the Authority,
detailing those proposed Leased Premises Improvements, which plans
and specifi
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