CONSTRUCTION, FINANCING AND OPERATING SPECIAL FACILITY LEASE AGREEMENT

 

 

Table of Contents

 

		Page
RECITALS		1
SECTION 1.	Definitions	2
SECTION 2.	Ownership of and Granting of Leasehold Interest in the Project Site, Garage and Surface Parking	13
SECTION 3.	Term	14
SECTION 4.	Construction of the Garage	14
(a)	Obligation to Construct	14
(b)	Change Orders	15
(c)	Insurance	15
(d)	Substantial Completion	15
(e)	State’s Certificate of Acceptance	16
(f)	Site Plans and Surveys	16
(g)	Punch List	16
(h)	Construction Representatives	16
(i)	Extension of Target Date	17
(j)	Inspection of Garage and Project Site	17
(k)	State’s Duty to Cooperate	17
(l)	Payment and Performance Bond	18
SECTION 5.	Issuance of Bonds	18
SECTION 6.	Flow of Funds and Payments	18
(a)	Deposit of Gross Receipts	18
(b)	Trustee Payments	19
SECTION 7.	Use and Operation of the Leased Premises	26
(a)	General	26
(b)	Credit Cards and Debit Cards	31
(c)	Revenue Control	31
(d)	Budget	35
(e)	Recordkeeping, Reporting and Audits	35
(f)	Airport Shuttle Bus Service	37
SECTION 8.	Unlawful Use	39
SECTION 9.	Payment of Taxes and Assessments	39
SECTION 10.	Utilities and Service Contracts	41
SECTION 11.	Insurance	41
SECTION 12.	Maintenance, Repairs and Capital Improvements	43
(a)	Garage	43
(b)	Surface Parking	44
SECTION 13.	Damage or Destruction	46
SECTION 14.	Eminent Domain	46
SECTION 15.	ABPC’s Option to Terminate	47
SECTION 16.	Assignment of Lease by the State	48
SECTION 17.	Right of the State to Perform ABPC’s Obligations	48

 

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		Page
SECTION 18.	Employment of Personnel	49
SECTION 19.	Environmental Provisions	49
SECTION 20.	Defaults, Remedies and Waivers by ABPC	52
SECTION 21.	Representations of ABPC	54
(a)	Corporate Organization and Power	54
(b)	Pending Litigation	54
(c)	Agreements Are Valid and Authorized	54
(d)	Governmental Consents	54
(e)	No Defaults	55
(f)	Compliance with Laws	55
SECTION 22.	Representations of the State	55
(a)	Pending Litigation	55
(b)	No Defaults	55
(c)	Title	55
(d)	Compliance with Laws	55
SECTION 23.	No Remedy Exclusive	55
SECTION 24.	Breach by the State	56
SECTION 25.	Indemnification	56
SECTION 26.	Severability	56
SECTION 27.	Waiver of Subrogation	56
SECTION 28.	Vacation of Garage and Surface Parking	57
SECTION 29.	Holding Over	57
SECTION 30.	Waiver	57
SECTION 31.	Concurrent Remedies	57
SECTION 32.	Mechanic’s or Other Liens	57
SECTION 33.	Assignment and Subletting	57
SECTION 34.	Broker’s Commission	58
SECTION 35.	Construction of “the State” and “ABPC”	58
SECTION 36.	Notice of Lease to be Recorded	58
SECTION 37.	Notices	58
SECTION 38.	Quiet Enjoyment	59
SECTION 39.	No Third Party Benefit	59
SECTION 40.	Estoppel Certificates	59
SECTION 41.	Governing Law	60
SECTION 42.	Disadvantaged Business Enterprise (DBE) Requirement	60
SECTION 43.	Counterparts	61
SECTION 44.	Captious	61
SECTION 45.	Complete Agreement	61
SECTION 46.	Civil Rights and Executive Orders	62
SECTION 47.	Agent for Service of Process	66
SECTION 48.	Required Federal Aviation Administration (FAA) Contract Provisions	66
SECTION 49.	Suspension or Debarment	67
SECTION 50.	Covenant as to Tax Exemption	68
SECTION 51.	Property Rights on Termination	69
SECTION 52.	Covenants with Respect To the United States of America	70
SECTION 53.	Leasehold Mortgage	70

 

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		Page
EXHIBIT A.	Description of Project Site	A-1
EXHIBIT B.	Intentionally Omitted	B-1
EXHIBIT C.	Certificate of Acceptance of the Garage	C-1
EXHIBIT D.	RESERVED
EXHIBIT E.	State Minimum Guarantee Payment Schedule	E-1
EXHIBIT F.	Parking Fee Schedule	F-1
EXHIBIT G.	Surface Parking Lots	G-1
EXHIBIT H.	Major Maintenance Fund Requirement and Capital Improvement Fund Requirements	H-1
EXHIBIT I.	Copy of License Agreement	I-1
EXHIBIT J.	Copy of Assignment Agreement	J-1
EXHIBIT K.	Development Costs	K-1
EXHIBIT L.	Construction Management Agreement	L-1
EXHIBIT M.	Guaranty Agreement	M-1

 

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CONSTRUCTION, FINANCING AND OPERATING SPECIAL FACILITY LEASE
AGREEMENT

 

THIS CONSTRUCTION, FINANCING AND OPERATING SPECIAL FACILITY LEASE AGREEMENT (the “Lease”) is made and entered into as of the — day of March, 2000, by and between THE STATE OF CONNECTICUT, DEPARTMENT OF TRANSPORTATION, James F. Sullivan, Commissioner, acting herein by Robert F. Juliano, Bureau Chief, Bureau of Aviation and Ports, duly authorized (the “State”), and APCOA BRADLEY PARKING COMPANY, LLC, a Connecticut limited liability company (“ABPC”).

 

WITNESSETH :

 

A. WHEREAS, the State of Connecticut, acting through the Department of Transportation, is the owner of certain land, buildings and improvements thereon known as Bradley International Airport (the “Airport”), which is located in part in the Town of Windsor Locks, County of Hartford, State of Connecticut;

 

B. WHEREAS, the State has determined that the need exists for an approximately 3,500 space parking garage and other improvements (the “Garage”) on a site immediately adjacent to the terminal complex at the Airport, as more particularly described in Exhibit A hereto (the “Project Site”);

 

C. WHEREAS, APCOA/Standard Parking, Inc. (“APCOA”) and Tomasso Brothers, Inc. (“TBI”) acting through ABPC, a wholly owned affiliate of APCOA, and the State desire to enter into this Construction, Financing and Operating Special Facility Lease Agreement under which ABPC agrees to construct and operate the Garage and to provide for the payment of certain amounts hereunder, and the State, pursuant to authority granted in C.G.S. Chapter 266a, Section 2.8 of the Bradley Airport Parity Bond Indenture, and a Trust Indenture, dated as of       , 2000, as supplemented by a First Supplemental Trust Indenture (as so supplemented, the “Trust Indenture”), each between the State and the trustee named therein (the “Trustee”), agrees to issue and sell one or more series of its Bradley International Airport special obligation parking revenue bonds (the “Bonds”) in a principal amount sufficient to finance the cost of developing and constructing the Garage and related costs;

 

D. WHEREAS, under this Lease, ABPC will obligate itself to deposit all Garage Gross Receipts and Surface Parking Gross Receipts, as hereinafter provided with the Trustee, as assignee of the State under the Trust Indenture or in its capacity as Custodian which deposit obligations and other non-construction obligations of ABPC under this Lease shall, prior to Substantial Completion of the Garage, be performed by APCOA, pursuant to a License Agreement (the “License Agreement”) dated as of the date hereof, between ABPC and APCOA, a copy of which is attached hereto as Exhibit I ;

 

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E. WHEREAS, APCOA pursuant to a Guaranty Agreement, a copy of which is attached hereto as Exhibit M (the “Guaranty”), has guaranteed certain Guaranteed Payments as set forth in Sections 6(b)(1) and (2), as hereinafter set forth;

 

F. WHEREAS, pursuant to a Construction Management Agreement (the “Construction Management Agreement”) dated as of the date hereof, between ABPC and TBI-BDL Company, a wholly owned subsidiary of TBI (the “Construction Manager”), a copy of which is attached hereto as Exhibit L , ABPC has engaged the Construction Manager to perform each of ABPC’s obligations under the Lease in connection with the construction of the Garage, and the Construction Manager, having experience in the design, development, construction and management of similar projects, has accepted such engagement, all in accordance with the terms and conditions set forth in the Construction Management Agreement;

 

G. WHEREAS, pursuant to an Assignment Agreement, a copy of which is attached hereto as Exhibit J (the “Assignment”), dated as of the date hereof, between ABPC, and Bradley Airport Parking Limited Partnership, a Delaware limited partnership (“BAP”), of which APCOA will be the general partner and TBI-BDL Garage, LLC, an affiliate of TBI, will be the sole limited partner, ABPC has assigned, effective as of the earlier of the date the Garage is Substantially Completed or the expiration or termination of the License Agreement, all of ABPC’s non-construction rights and obligations under the Lease, including, without limitation, the deposit of all Garage Gross Receipts and Surface Parking Gross Receipts, as hereinafter provided to BAP, and BAP has agreed to exercise all of such non-construction rights and perform all of such non-construction obligations under this Lease, including, without limitation, the requisite deposits thereunder; and

 

H. WHEREAS, pursuant to C.G.S. Section 13b-42(b), the State has authority to enter into this Lease with the approval of the Secretary of the Office of Policy and Management, the State Properties Review Board, and the Attorney General;

 

NOW, THEREFORE, for and in consideration of the premises and other good and valuable consideration and of the mutual covenants, benefits, and agreements contained herein, the receipt and sufficiency of which are hereby acknowledged, the State and ABPC hereby agree as follows:

 

SECTION 1. Definitions . Unless the context otherwise requires, the terms defined in this Section 1 shall, for all purposes of this Lease and of any amendment hereof or supplement hereto, have the meanings herein specified, with the following definitions to be equally applicable to both the singular and plural forms of any of the terms herein defined:

 

“ ABPC ” is defined in the preamble of this Lease. In addition, as used hereinbelow, “ABPC” shall include the successors, licensees and assignees of ABPC, including, without imitation, the licensee and assignee of ABPC under the License Agreement and the Assignment. In the event that ABPC should cease to exist at any time after Substantial “Completion, any reference herein to ABPC shall be construed as a reference to BAP.

 

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“ ABPC’s Gross Award ” means the amount awarded to or received by ABPC as damages, compensation or otherwise by reason of the taking of all or any part of ABPC’s leasehold interest under this Lease, including, without limitation, its leasehold interest in either or both of the Garage and the Surface Parking or ABPC’s own property which is not affixed to the Garage, as a result of or in anticipation of the exercise of the right of expropriation, condemnation or eminent domain.

 

“ Additional Payments ” is defined in Section 6(c) of this Lease.

 

“ Airport ” is defined in paragraph A of the recitals of this Lease.

 

“ Airport Administrator ” means the administrator of the Airport appointed by the State.

 

“ Airport Facilities ” means “airports” and “functionally related and subordinate facilities” within the meaning of and qualifying under Section 142 of the Code that consist solely of (A) items of property that are directly related and essential to servicing aircraft, enabling aircraft to take off and land, or transferring passengers or cargo to or from aircraft, or (B) property located at the Airport that is functionally related and subordinate to such facilities and that is of a character and size commensurate with the character and size of the Airport, and all of which property is of a character subject to the allowance for depreciation under Sections 167 and 168 of the Code. All Airport Facilities constitute part of the Airport and are, or will be upon completion of acquisition or construction, available to and will serve the general public on a regular basis, including serving private companies operating as common carriers that serve the general public on a regular basis. The term “Airport Facilities” excludes (i) working capital expenditures; (ii) hotels or other lodging facilities; (iii) retail facilities (including food and beverage facilities) in excess of the size necessary to serve passengers (and persons who meet or accompany them) and employees at the Airport; (iv) any retail facility (other than parking) for passengers or the general public located outside the Airport terminals; (v) office buildings for individuals who are not employees of a governmental unit or the State; (vi) industrial parks or manufacturing facilities; (vii) any office space that is not located on the premises of the Airport or in which more than a de   minimis amount of the functions to be performed will not be directly related to the day-to-day operations at the Airport; or (viii) any office building or office space within a building or a computer facility, either of which serves a system-wide or regional function of an airline or other private person. All Airport Facilities are, or upon completion of acquisition or construction will be, owned by the State or another governmental unit, within the meaning of Section 142 (b)(1) of the Code.

 

“ APCOA ” is defined in paragraph C of the recitals of this Lease.

 

“ Assignment ” is defined in paragraph G of the recitals of this Lease.

 

“ BAP ” is defined in paragraph G of the recitals of this Lease.

 

“ Bond Issuance Date ” means the date on which the original Bonds are issued and delivered and payment therefor is received from the purchasers thereof.

 

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“ Bonds ” is defined in paragraph C of the recitals of this Lease. The term “Bonds” shall include any Special Obligation Refunding Bonds. The Bonds are issued pursuant to authority contained in C.G.S. Chapter 266a et seq. and Section 2.8 of the Bradley Airport Parity Bond Indenture and are not secured by the Gross Operating Revenues of the Airport.

 

“ Bradley Airport Parity Bond Indenture ” means that certain Indenture of Trust dated as of October 1, 1982, as amended, between the State and the trustee named therein, which provides for the issuance of the State’s Bradley Airport Parity Bonds which are secured by the Gross Operating Revenues of the Airport. In the event that the State shall subsequently issue bonds to refund or replace the Bradley Airport Parity Bonds, the indenture or other similar document securing those bonds shall be deemed to be the “Bradley Airport Parity Bond Indenture,” to the extent applicable, for purposes of this Lease.

 

“ Bradley Airport Parity Bonds ” means the bonds (not including the Bonds issued to finance the Garage or any Special Obligation Refunding Bonds) which are issued and secured on a parity basis by the Gross Operating Revenues of the Airport under the general provisions of the Bradley Airport Parity Bond Indenture. In the event that the State shall subsequently issue bonds to refund or replace the Bradley Airport Parity Bonds, those bonds shall be deemed to be the “Bradley Airport Parity Bonds,” to the extent applicable, for purposes of this Lease.

 

“ Budgets ” means the Garage Budget and the Surface Parking Budget as defined in Section 7(c) of this Lease.

 

“ Business Day ” means any day of the year, other than a Saturday or Sunday, or a day on which banks located in the cities in which the principal offices of the Trustee and any Paying Agent are located and in Hartford, Connecticut are legally authorized to be closed, and on which the Trustee and the Paying Agent are open.

 

“ Capitalized Interest Account ” means the fund or account into which is deposited an amount of Bond proceeds which is adequate, with earnings thereon, to provide funds to pay debt service (equal to capitalized interest) on the Bonds from the Bond Issuance Date to the date or dates that the Garage is expected to be placed in service.

 

“ Certificate of Acceptance ” is defined in Section 4(e) of this Lease.

 

“ Change Orders ” is defined in Section 4(b) of this Lease.

 

“ Charge ” and “ Charges ” are defined in Section 9(a) of this Lease.

 

“ Code ” means the Internal Revenue Code of 1986, as amended, and the applicable Treasury Regulations (as defined in the Tax Compliance Certificate) thereunder.

 

“ Completion Date ” means the date that the Garage has been Substantially Completed.

 

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“ Concession Agreement ” means that certain Public Parking Facility and Shuttle Bus Service Operation Concession Agreement dated January 3, 1994, as amended to date, between the State and APCOA — R & G Parking, a joint venture organization.

 

“ Construction Fund ” means the Construction Fund established under the Trust Indenture which contains certain proceeds of the Bonds deposited therein plus interest earnings thereon, for the purpose of paying the Development Costs, the Fixed Construction Price, State Construction Oversight Costs and the Issuance Costs.

 

“ Construction Documents ” is defined in Section 4(a) of this Lease.

 

“ Construction Management Agreement ” is defined in paragraph F of the recitals of this Lease.

 

“ Construction Manager ” is defined in paragraph F of the recitals of this Lease.

 

“ Construction Representative ” is defined in Section 4(h) of this Lease.

 

“ Custodian ” means the Trustee acting in its capacity as Custodian under the Custody Agreement.

 

“ Custody Agreement ” means the Custody Agreement between the State and the Custodian relating to the deposit and application of Surface Parking Gross Receipts.

 

“ Debt Service ” is defined in Section 6(b)(1)(ii) of this Lease.

 

“ Debt Service Fund ” means the fund or account into which Debt Service payments are deposited pursuant to the Trust Indenture.

 

“ Debt Service Reserve Fund ” means the fund or account into which is deposited any Bond proceeds issued to fund a debt service reserve fund or other reserve deposits required under the Trust Indenture.

 

“ Developer Payments ” is defined in Section 6(c)(i) of this Lease.

 

“ Development Costs ” means the sum as defined and set forth in Exhibit K .

 

“ Environmental Laws ” is defined in Section 19A of this Lease.

 

“ Fixed Construction Price ” means the fixed price of $36,900,000 to be paid from the Construction Fund to the Construction Manager for the construction of the Garage, in accordance with the Construction Management Agreement.

 

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“ Garage ” is defined in paragraph B of the recitals of this Lease and includes other facilities and improvements as set forth in the Construction Documents as defined in Section 4(a) of this Lease.

 

“ Garage Budget ” is defined in Section 7(c) of this Lease.

 

“ Garage Coverage Ratio ” is defined in the Trust Indenture.

 

“ Garage Gross Receipts ” means, for any period with respect to the operation of the Garage, all sums collected by ABPC (including, but not limited to, gross cash, gross debit card and gross credit card transactions) from the parking of motor vehicles, whether on an hourly, daily, weekly or monthly basis, plus all rents, revenues, interest, license fees and any other income fees or charges received with respect to ABPC’s lease, use, possession and operation of the Garage, including interest earnings on the Garage Operating Expenses Account required to be transferred to the Trustee pursuant to Section 6(a)(4) hereof, less all State approved refunds, promotional discounts and allowances made by ABPC to its customers, and less any sales tax, use tax, excise tax, occupancy tax, gross receipts tax, parking tax or any other tax or charge collected by ABPC on behalf of and payable to any governmental or quasi-governmental entity.

 

“ Garage Gross Receipts Fund ” is defined in Section 6(b)(1) of this Lease.

 

“ Garage Guaranteed Payments ” is defined in Section 6(b)(1) of this Lease.

 

“ Garage Major Maintenance and Capital Improvement Fund ” is defined in Section 6(b)(1) of this Lease.

 

“ Garage Operating Expenses ” means, for any period, all expenses paid in the ordinary course of business in connection with the operation of the Garage which are reasonable and directly attributable thereto, including, without limitation:

 

(i)         Payment or deposit of Charges with respect to the Garage as provided under Section 9(a) of this Lease;

 

(ii)        Payroll expenses and applicable payroll taxes for employees directly performing services for the Garage, and including provision for vacation pay, pension, health and welfare programs and other benefit obligations;

 

(iii)       The costs of insurance with respect to the Garage as herein provided;

 

(iv)                 The costs of supplies for the Garage;

 

(v)                    Laundry and uniforms for the Garage;

 

(vi)                 Postage for the Garage;

 

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(vii)     The costs of printing parking tickets and related forms for use exclusively at the Garage;

 

(viii)    The payment uninsured damage claims with respect to the Garage;

 

(ix)       The costs of routine repairs and maintenance with respect to the Garage;

 

(x)        Legal fees for processing and defending claims relating to the Garage;

 

(xi)       The costs of bookkeeping, accounting, internal audit of parking tickets and preparation of monthly reports with respect to the Garage;

 

(xii)      License and permit fees with respect to the Garage;

 

(xiii)     Telephone, gas, electric, water and any other utility charges with respect to the Garage;

 

(xiv)     Data processing costs incurred to outside third parties for accounts receivable invoicing and for the preparation of payroll and payroll-related reports with respect to the Garage;

 

(xv)      Debit/credit card discounts and service charges with respect to the Garage;

 

(xvi)     Security costs pursuant to Section 7(a)(16) with respect to the Garage; and

 

(xvii)    Reasonable and appropriate cost recovery allocation of APCOA home office overhead and direct costs related to the operation of the Garage by ABPC, which is consistent with APCOA’s general practices and in accordance with accepted allocation standards. The above charges should be made based on actual costs as calculated and allocated among all of APCOA’s locations and shall not include profit to APCOA, nor profit sharing to its officers, directors or employees.

 

“ Garage Operating Expenses Account ” is defined in Section 6(a)(2) of this Lease.

 

“ Garage Operating Expenses Budget ” is defined in Section 6(a)(2) of this Lease.

 

“ Garage Trustee Expenses ” is defined in Section 6(b)(1)(v) of this Lease.

 

“ Government Obligations ” means (a) direct and general obligations of, or obligations unconditionally guaranteed by, the United States of America, (b) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America for the timely payment thereof, (c) municipal obligations the payment of principal (either to the maturity thereof or an earlier stated redemption date), redemption price, if any and interest on which is irrevocably secured by obligations described in clauses (a) or (b) above which have been deposited in an escrow arrangement which is irrevocably pledged to the credit of such municipal obligations and which municipal obligations are rated at the time of

 

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“ Indemnified Parties ” is defined in Section 19A of this Lease.

 

“ Issuance Costs ” means (i) payment of, or reimbursement to the State for, all reasonable costs incurred in connection with, and properly allocable to, the issuance of the Bonds including, but not limited to, legal and accounting fees and expenses, financial consultants’ fees, financing charges (including underwriting fees and discounts), printing and engraving costs, the fees and expenses of Bond Counsel and the fees and expenses of rating agencies, and (ii) any other cost incurred in connection with the issuance of the Bonds that constitutes an “issuance cost” within the meaning of Section 147(g) of the Code.

 

“ Lease Execution Date ” means March       , 2000, which is the date on which this Lease was fully executed by ABPC and the State.

 

“ Lease Term ” is defined in Section 3 of this Lease.

 

“ Lease Year ” means each one-year period beginning on July 1 st  and ending on June 30th of the next year during the Lease Term; provided that the initial Lease Year runs from the Lease Execution Date to June 30, 2000 and the final Lease Year shall end on March       , 2025, subject to extension as provided herein.

 

“ Leased Premises ” means, collectively, the premises constituting the Project Site, the Garage and the Surface Parking, as presented in Exhibit N , which may be amended from time to time by mutual agreement of the parties.

 

“ License Agreement ” is defined in paragraph D of the recitals of this Lease.

 

“ Major Maintenance and Capital Improvement Fund Deposits ” is defined in Sections 6(b)(1)(vi) and 6(b)(2)(iii) of this Lease.

 

“ Net Bond Proceeds ” means the “net proceeds” of the Bonds as such term is used in Section 142(a) of the Code and applicable Treasury Regulations, all as defined in the Tax Compliance Certificate.

 

“ Net Proceeds ” means the gross proceeds from the insurance with respect to which that term is used remaining after payment of all expenses (including attorneys’ fees) incurred in the collection of such gross proceeds.

 

“ Nonqualified Costs ” means the costs of the Garage paid in accordance with the terms of the Trust Indenture which are not Qualified Costs; Nonqualified Costs include, among other things, Issuance Costs.

 

“ Post-Completion Inspection ” is defined in Section 4(g) of this Lease.

 

“ Project Site ” is defined in paragraph B of the recitals of this Lease.

 

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“ Punch List ” is defined in Section 4(g) of this Lease.

 

“ Qualified Costs ” mean the costs of providing Airport Facilities.

 

“ Regulated Materials ” is defined in Section 19A of this Lease.

 

“ Remediation ” is defined in Section 19A of this Lease.

 

“ Special Obligation Refunding Bonds ” means any bond or notes issued pursuant to the authority contained in Section 2.8 of the Bradley Airport Parity Bond Indenture and C.G.S. Chapter 266a whose proceeds are used to refund any prior Bonds.

 

“ State ” is defined in the preamble of this Lease.

 

“ State Construction Oversight Costs ” is defined as the amount to be paid from the Construction Fund to the State to monitor the construction of the Garage, and said amount shall be $400,000.

 

“ State Minimum Guarantee ” is defined in Sections 6(b)(1)(vii) and 6(b)(2)(iv) of this Lease, which aggregate amount shall constitute “ground rental” for purposes of Section 2.8 of the Bradley Airport Parity Bond Indenture.

 

“ State’s Gross Award ” means the amount awarded to or received by the State as damages, compensation, or otherwise, by reason of the taking of the Garage or any part thereof as a result of or in anticipation of the exercise of the right of expropriation, condemnation or eminent domain.

 

“ Substantial Completion ”, with respect to the Garage, is defined in Section 4(d) of this Lease.

 

“ Substantially Completed ” means that the Substantial Completion of the Garage has occurred.

 

“ Surface Parking ” means the surface parking lots at the Airport for which ABPC has responsibility during the Lease Term, which as of the date hereof, shall be lots A, B, 1, 2, 3, 4, 5A, 5B and 6 and the Employee lot, all as shown on Exhibit G hereto, which Exhibit G may be amended from time to time by agreement of the State and ABPC; provided, however, that ABPC shall be deemed to have agreed to any change or modification to the Surface Parking lots location, size or configuration, which change is reasonably forecasted by the State to result in no decrease in the amount of Additional Payments received by the Developer after such change. Based upon demand, Lots 5A and 5B may be operated as overflow lots, which ABPC shall open and close depending upon the overall volume of use of the other Surface Parking lots.

 

“ Surface Parking Budget ” is defined in Section 7(c) of this Lease.

 

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“ Surface Parking Gross Receipts ” means, for any period with respect to the operation of the Surface Parking, all sums collected by ABPC (including, but not limited to, gross cash, gross debit card and gross credit card transactions) from the parking of motor vehicles, whether on an hourly, daily, weekly or monthly basis, plus all rent revenues, interest, license fees and any and all other income fees or charges received with respect to ABPC’s lease, use possession, and operation of the Surface Parking, including interest earnings on the Surface Parking Operating Expenses Account required to be transferred to the Custodian pursuant to Section 6(a)(4) hereof, less all State approved refunds and promotional discounts and allowances made by ABPC to its customers, and less any sales tax, use tax, excise tax, occupancy tax, gross receipts tax, parking tax or any other tax or charge collected by ABPC on behalf of and payable to any governmental or quasi-governmental entity.

 

“ Surface Parking Gross Receipts Fund ” is defined in Section 6(b)(2) of this Lease.

 

“ Surface Parking Guaranteed Payments ” is defined in Section 6(b)(2) of this Lease.

 

“ Surface Parking Major Maintenance and Capital Improvement Fund ” is defined in Section 6(b)(2) of this Lease.

 

“ Surface Parking Operating Expenses ” means, for any period, all expenses paid in the ordinary course of business in connection with the operation of the Surface Parking which are reasonable and directly attributable thereto including, without limitation:

 

(i)		Payment or deposit of Charges with respect to the Surface Parking as provided under Section 9(a) of this Lease;
(ii)		Payroll expenses and applicable payroll taxes for employees directly performing services for the Surface Parking, and including provision for vacation pay, pension, health and welfare programs and other benefit obligations;
(iii)		The costs of insurance with respect to the Surface Parking as herein provided;
(iv)		The costs of supplies for the Surface Parking;
(v)		Laundry and uniforms for the Surface Parking;
(vi)		Postage for the Surface Parking;
(vii)		The costs of printing parking tickets and related forms for use exclusively at the Surface Parking;
(viii)		The payment of uninsured damage claims with respect to the Surface Parking;
(ix)		The costs of routine repairs and maintenance with respect to the Surface Parking;

 

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(x)		Legal fees for processing and defending claims relating to the Surface Parking;
(xi)		The costs of bookkeeping, accounting, internal auditing of parking tickets and preparation of monthly reports with respect to the Surface Parking;
(xii)		License and permit fees with respect to the Surface Parking;
(xiii)		Telephone, gas, electric, water and any other utility charges with respect to the Surface Parking;
(xiv)		Data processing costs incurred to outside third parties for accounts receivable invoicing and for the preparation of payroll and payroll-related reports with respect to the Surface Parking;
(xv)		Debit/credit card discounts and service charges with respect to the Surface Parking;
(xvi)		Security costs pursuant to Section 7(a)(l6) with respect to the Surface Parking;
(xvii)		All costs of shuttle bus service as described in Section 7(e) hereof with respect to the Surface Parking;
(xviii)		Reasonable and appropriate cost recovery allocation of APCOA home office overhead and direct costs related to the operation of the Surface Parking by ABPC, which is consistent with APCOA’s general practices and in accordance with accepted allocation standards. The above changes should be made based on actual costs as calculated and allocated among all of APCOA’s locations and shall not include profit to APCOA, nor profit sharing to its officers, directors or employees; and
(xviii)		Costs as defined in Section 12(b)(3) hereof.

 

“ Surface Parking Operating Expenses Account ” is defined in Section 6(a)(3) of this Lease.

 

“ Surface Parking Operating Expenses Budget ” is defined in Section 6(a)(3) of this Lease.

 

“ Surface Parking Custodian Expenses ” is defined in Section 6(b)(2)(ii) of this Lease.

 

“ Surplus Account ” is defined in section 6(b)(3) of this Lease.

 

“ Surplus Moneys ” is defined in Section 6(c) of this Lease.

 

“ Target Date ” means May 31, 2002, subject to extension as set form in Section 4(i) hereof.

 

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“ Tax Compliance Certificate ” means that certificate executed by the State in connection with the initial issuance of the Bonds and relating to those matters necessary for the interest on the Bonds to be excluded from federal gross income.

 

“ TBI ” is defined in paragraph C of the recitals of this Lease.

 

“ Trustee Payment ” means, collectively, Guaranteed Payments, Reimbursement of Guarantor Payments and Additional Payments.

 

“ Trust Indenture ” is defined in paragraph C of the recitals of this Lease.

 

“ Uncontrollable Circumstance ” means any act, event or condition that has had, or may reasonably be expected to have, an adverse effect on the Substantial Completion of the Garage by the Target Date as then currently defined, if such act, event or condition is beyond the reasonable control of ABPC and the Construction Manager. To the extent beyond the reasonable control of ABPC and the Construction Manager, Uncontrollable Circumstances may include, but shall not be limited to, the following:

 

a.	an act of God, landslide, lightning, earthquake, fire, explosion, unusually severe weather conditions such as floods, hurricanes, dangerous icing, blizzards or tornadoes, natural disaster, acts of a public enemy, war, blockade, insurrection, riot, or civil disturbance or any similar occurrence, but not including reasonably anticipated weather conditions, for the geographic area of the Garage;
b.	a strike, walkout, work stoppage, or similar industrial or labor action affecting the construction of the Garage;
c.	the presence of any Regulated Material on the Project Site not caused by ABPC, the Construction Manager or any of their servants, agents, employees, contractors or subcontractors;
d.	any subsurface condition at the Project Site which requires a redesign or change in the construction or operation of the Garage; and
e.	an event of casualty or condemnation of the Project Site or the Garage.

 

“ Work ” shall have the meaning given to such term in the Construction Management Agreement.

 

SECTION 2. Ownership of and Granting of Leasehold Interest in the Project Site, Garage and Surface Parking . The State owns the Airport, including, without limitation, the Project Site and the Surface Parking and shall own the Garage and its component parts as the same are assembled, constructed or installed on the Project Site. On the terms and subject to the conditions set forth in this Lease, as of the Lease Execution Date, the State hereby leases

 

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the Project Site, the Garage and the Surface Parking to ABPC, and ABPC hereby leases the Project Site, the Garage and the Surface Parking from the State. ABPC and its successors and assigns hereby agree that, for federal income tax purposes, they will not claim any depreciation expense deductions or investment tax credits which would impact the tax-exempt status of the Bonds. Title to all materials purchased for the construction of the Garage shall vest in the State simultaneously with the passage of title from the sellers of such material. On January 31, 2000, the Concession Agreement shall terminate and be of no further force and effect, and as of the Lease Execution Date this Lease shall constitute the sole and complete agreement of the parties hereto.

 

As the owner of the Airport, the State shall have the obligation, by itself or by others, without limitation, to maintain the Airport for aircraft operations pursuant to federal and State regulations and to provide, or cause to be provided, all services reasonably necessary to the daily operation of the Airport.

 

SECTION 3. Term . The term of this Lease (the “Lease Term”) and the effectiveness of the rights and obligations of the parties hereunder shall commence on the Lease Execution Date and continue until midnight on March       , 2025, subject to extension and to earlier termination pursuant to the provisions of this Lease. The parties agree that this Lease shall not be effective until it has been approved by the Secretary, Office of Policy and Management, the State Properties Review Board and the Attorney General, all being of the State of Connecticut. ABPC shall have an option (the “Option”) to make an offer to the State to extend the Lease Term with respect to the Garage and the Surface Parking for up to two five-year terms upon terms and conditions acceptable to the State and ABPC. The State shall have complete discretion to accept, reject and/or negotiate the terms and conditions of any such extension, including, without limitation, the period covered by any such extended Lease Term. In order to exercise its Option hereunder, ABPC shall be required to offer in writing the terms and conditions with respect to the extended Lease Term at least 18 months prior to the end of the current Lease Term, as the same may have been previously extended.

 

SECTION 4. Construction of the Garage .

 

(a)  Obligation to Construct . ABPC shall cause the construction of the Garage on the Project Site to be Substantially Completed on or before the Target Date (subject to extension as provided in Section 4(i) below), in accordance with the provisions of this Lease and the construction documents, which heretofore have been approved by ABPC and the State, and such additional construction drawings, plans and specifications as are necessary for the timely construction of the Garage and which are hereafter submitted by ABPC to and approved by the State from time to time (which approval shall not be unreasonably withheld or delayed), as the same may be changed by Change Orders (collectively, the “Construction Documents”).

 

In order to satisfy its obligations hereunder to construct the Garage, ABPC shall enter into the Construction Management Agreement with the Construction Manager, pursuant to which the Construction Manager shall agree to cause the Garage to be constructed on the Project Site in accordance with the Construction Documents and the provisions of this Lease, for the Fixed Construction Price of $36,900,000 to be paid from the Construction Fund.

 

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Disbursement requests for amounts on deposit in the Construction Fund shall be made in accordance with the requirements of Section 5.2 of the Trust Indenture. The State agrees to accept the satisfactory performance by the Construction Manager of all obligations of ABPC relating to the construction of the Garage including the making of disbursement requests on behalf of ABPC; provided that the entering by ABPC into the Construction Management Agreement and the performance by the Construction Manager thereunder shall not limit the right of the State to enforce ABPC’s obligations hereunder. The State agrees to perform at the reasonable request of the Construction Manager all obligations relating to the construction of the Garage that it would have to perform at the request of ABPC pursuant to this Lease. The warranty provisions of Section 4.7 of the Construction Management Agreement are hereby incorporated in this Lease, and the State agrees to accept the satisfactory performance by the Construction Manager of its obligations thereunder as satisfaction of any such obligations of ABPC hereunder with respect to such matters. The State and the Trustee shall be intended third-party beneficiaries of the Construction Management Agreement.

 

The State and ABPC shall cooperate to obtain a certificate of occupancy for each portion of the Garage project (or other evidence reasonably acceptable to the State which permits the occupancy and operation of each portion of the Garage) at the earliest practical date, and thereafter ABPC shall operate such portion of the Garage in accordance with the terms of this Lease.

 

(b)  Change Orders . Changes in the Construction Documents may be made solely by issuing change orders (“Change Orders”) in accordance with Section 4.2 of the Construction Management Agreement. Any Change Order shall be submitted to the State for its prior approval. The State shall use its best efforts to respond to any proposed Change Order within 72 hours of its submission to the State; provided, however, that in all cases, such response shall be communicated to ABPC and the Construction Manager within three business days of the submission of the proposed Change Order to the State. Any increased cost or delay resulting from any Change Order not initiated by the State shall be ABPC’s sole risk and shall not increase the Fixed Construction Price to be paid from the Construction Fund.

 

(c)  Insurance . See Section 11 of this Lease and Articles IV and VIII of the Construction Management Agreement for the insurance requirements.

 

(d)  Substantial Completion . “Substantial Completion” of the Garage shall be deemed to have occurred at such time that (1) ABPC or the Construction Manager shall have delivered all of the following to the State and the Trustee:

 

(A)            A certificate of occupancy for the Garage (or other evidence reasonably acceptable to the State which permits the occupancy and operation of the Garage); and

 

(B)              A Certificate of Substantial Completion for the Garage from an Independent Licensed Architect or Independent Licensed Professional Engineer substantially in the form of AIA Document G704;

 

(C)              A Punch List prepared by ABPC and the State; and

 

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(2) the State shall have delivered to ABPC and the Trustee a written acknowledgement that items (A), (B) and (C) above have been delivered to and accepted by State; provided, however, that any period of time from the State’s actual receipt of all of items (A), (B) and (C) to the time of the State’s written acknowledgement (i) that such items have been delivered and are accepted by the State and that Substantial Completion has occurred or (ii) that the State does not believe the conditions for Substantial Completion have occurred, shall not be counted in determining whether the Garage has been Substantially Completed by the Target Date.

 

(e)  State’s Certificate of Acceptance . Upon satisfactory completion of all work listed on the Punch List, ABPC or the Construction Manager shall deliver to the State a Certificate of Punch List Completion stating that all punch list items have been satisfactorily completed. The State agrees to deliver to ABPC and the Trustee, upon receipt, review and acceptance of said Certificate of Punch List Completion, a certificate of acceptance of the Garage, substantially in the form attached hereto as Exhibit C stating that (i) the Garage was Substantially Completed on the date that the provisions of Section 4(d) were satisfied and the (ii) Punch List is completed (the “Certificate of Acceptance”).

 

(f)  Site Plans and Surveys . Within 120 days after the Completion Date of the Garage, ABPC shall deliver to the State original copies (or photocopies if original copies are unavailable to ABPC) of all current site plans and surveys, including (i) three complete sets of “as built” architectural and engineering drawings, one of which is reproducible, showing the Garage and all site improvements as constructed, in all material respects in accordance with the Construction Documents, and (ii) other plans or studies that materially relate to all or any part of the Project Site.

 

(g)  Punch List . Prior to the Completion Date of the Garage, the Construction Representatives of the State and ABPC shall inspect the Garage for the purpose of arriving at a punch list of minor items to complete but which will not otherwise delay the Completion Date of the Garage (the “Punch List”). ABPC and the State together shall agree on the Punch List, provided that either party shall be required to complete its participation in constructing the Punch List within seven days of the date the other party completes its participation. In addition, within 45 days after such Completion Date, the Construction Representatives of the State and ABPC shall make another joint physical inspection of the Garage (the “Post-Completion Inspection”) to list any items of work which were not visible or were not noticed during the initial inspection. Any such items shall be added to the Punch List. Any items on the Punch List shall be promptly and diligently completed without interference with the use and occupancy of the Garage, and in any event within 30 days after the Post-Completion Inspection (or if the State and ABPC agree that any item cannot reasonably be completed in such 30 days, ABPC shall cause such work to be begun within such 30-day period and diligently pursued to completion).

 

(h)  Construction Representatives . ABPC and the State shall each name a “Construction Representative” who shall have full power and authority to act on behalf of each party with respect to all construction and related matters. ABPC’s Construction Representative shall initially be William A. Tomasso , and the State’s Construction Representative shall

 

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initially be Richard Jaworski. The State and ABPC may change at any time their respective Construction Representative upon notice thereof to the other party.

 

(i)  Extension of Target Date . The Target Date of May 31, 2002 may be extended for up to two years, but in no event later than May 30, 2004, upon the State’s approval as set forth in Section 4(i)(3) below of the satisfaction of all of the following conditions for each such extension:

 

(1) The sole and direct cause for such extension shall be an Uncontrollable Circumstance;

 

(2) There shall be delivered to the State and to the Trustee on a date at least 45 days prior to the then existing Target Date written notice from ABPC requesting State approval to extend the Target Date pursuant to this Section 4(i) and (i) stating the type of Uncontrollable Circumstance which has occurred and the reason therefor; (ii) the impact of such Uncontrollable Circumstance upon the construction of the Garage; (iii) the proposed remedy; and (iv) specifying the proposed extended Target Date; and

 

(3) The State approves in writing such requested extension or such modified extension as the State deems appropriate, provided, however, that the State’s approval, modification or denial of such requested extension shall be made in good faith, without undue delay and shall be based upon the State’s review of (i) the Uncontrollable Circumstance which has occurred and the reason therefor; (ii) the impact of such Uncontrollable Circumstance upon the construction of the Garage; (iii) the proposed remedy; and (iv) the proposed extended Target Date in light of the information provided by ABPC, following the State’s review and analysis of the circumstance surrounding the Uncontrollable Circumstance. Should the State deny or modify the requested extension, it shall state its reasons in writing.

 

(j)  Inspection of Garage and Project Site . The State (including the State’s representatives, employees, agents and consultants) shall have reasonable access to the Garage and the Project Site at all times for the purpose of determining that construction is proceeding in accordance with the Construction Documents.

 

(k)  State’s Duty to Cooperate . The State shall cooperate fully with and use reasonable efforts to assist ABPC in connection with its efforts to obtain all permits, easements, agreements, licenses and other governmental and quasi-governmental approvals and consents necessary or desirable in connection with the construction of the Garage and ABPC’s fulfillment of its other obligations hereunder, except that the State shall have no obligation itself to apply for or obtain the same, nor shall the State share in the costs thereof; provided further, that the State’s obligations under this paragraph shall not be deemed to waive any legal power or authority of the State (or any agencies or officials thereof) in connection with the issuance of any such permits, easements, agreements, licenses, approvals or consents. During the construction of the Garage and during the construction of any subsequent changes thereto pursuant to the provisions of this Lease, the State shall provide ABPC with suitable and

 

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annual Garage Operating Expenses Budget (the “Garage Operating Expenses Budget”) shall be released to ABPC. For the balance of the month, all Garage Gross Receipts collected shall be applied by the Trustee, as set forth in Section 6(b)(1) below. For each succeeding month throughout the term of the Lease, the Trustee shall release to ABPC for deposit into its Garage Operating Expenses Account from the Garage Gross Receipts, on the fifteenth of each month, an amount equal to one month of the current approved annual Garage Operating Expenses Budget.

 

(3) For the first month of the first Lease Year, as the Surface Parking Gross Receipts are collected, the Custodian shall release to ABPC for deposit into its Surface Parking Operating Expenses Account (the “Surface Parking Operating Expenses Account”) from the daily Surface Parking Gross Receipts, all amounts collected, less amounts required for any Surface Parking Guaranteed Payment, until such time as two and one-half months of the current approved annual Surface Parking Operating Expenses Budget (the “Surface Parking Operating Expenses Budget”) shall be released to ABPC. For the balance of the month all Surface Parking Gross Receipts collected shall be applied by the Custodian as set forth in Section 6(b)(2) below. For each succeeding month, throughout the term of the Lease, the Custodian shall release to ABPC for deposit into its Surface Parking Operating Expenses Account from the Surface Parking Gross Receipts, on the fifteenth of each month, an amount equal to one month of the current approved annual Surface Parking Operating Expenses Budget.

 

(4) Interest earnings on the ABPC Garage Operating Expenses Account and the Surface Parking Operating Expenses Account shall be treated as Garage Gross Receipts and Surface Parking Gross Receipts, respectively from operations and shall be transferred by ABPC to the Trustee or the Custodian, as applicable upon the first business day of the month succeeding the posting of such interest earnings in such Accounts.

 

(5) If at any time during the Lease Year ABPC encounters an unanticipated, unbudgeted, extraordinary Garage Operating Expense or Surface Parking Operating Expense, and the State approves the expense in writing, the Trustee and/or the Custodian shall transfer in the manner defined by the State, from the appropriate Gross Receipts Fund and/or Surplus Fund the funds required to cover the approved costs.

 

(6) Upon State receipt and acceptance of an independent auditor’s annual report, as required pursuant to Section 7(d) hereof, any necessary adjustments in payments to the Trustee and/or the Custodian or reimbursements due ABPC shall be executed prior to making any Additional Payments, in accordance with Section 6(c).

 

(b) Trustee Payments :

 

(1) Garage Guaranteed Payments. Garage Gross Receipts on deposit with the Trustee in the Garage Gross Receipts Fund established therefor under the Trust Indenture (the “Garage Gross Receipts Fund”), or secondly in the Garage Surplus Fund, shall be applied by the Trustee to make the following payments (the “Garage Guaranteed Payments”) in the following order, on the fifteenth day of each month (or, if

 

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not a Business Day, on the next succeeding Business Day) from funds available at the end of the previous month:

 

(i) Garage Operating Expenses: For each month following the first month of Garage operation, an amount equal to one month of the current approved annual Garage Operating Expenses Budget.

 

(ii) Debt Service:

 

(A) Beginning             , 1/6 th  of the amount due as interest on the Bonds on the next Interest Payment Date for the Bonds provided that the deposit immediately preceding such Interest Payment Date shall be the balance necessary to make such payment, and

 

(B) Beginning             , 1/12 th  of the amount due as principal of the Bonds, whether at maturity or pursuant to mandatory sinking fund redemption, on the next Principal Payment Date for the Bonds.

 

(iii) Debt Service Reserve Fund: the amount necessary to restore any deficiency in the Debt Service Reserve Fund (each a “Debt Service Reserve Fund Deficiency”).

 

(iv) Rebate Fund: all required deposits into the Rebate Fund established under the Trust Indenture (each a “Rebate Fund Deposit”).

 

(v) Garage Trustee Expenses: Pay all State approved fees and expenses of the Trustee related to the Garage and any and all reasonable costs and expenses (including, without limitation, reasonable attorneys, fees and disbursements) incurred by the Trustee, in enforcing its rights under the Guaranty (the “Garage Trustee Expenses”), then due and payable.

 

(vi) Garage Major Maintenance and Capital Improvement Fund: In accordance with the annual amount required for the Garage Major Maintenance and Capital Improvement Fund (the “Garage Major Maintenance and Capital Improvement Fund”), as stated in Exhibit H, as such Exhibit may be amended from time to time by mutual agreement of the parties, the monthly amount for the current Lease Year into the Garage Major Maintenance and Capital Improvement Fund. This account shall be an unrestricted interest bearing account. All interest earnings shall be deposited into the account, remain in the account, and be available for payment of eligible project costs. In accordance with the project schedule in Exhibit H, as amended by mutual agreement of the parties, and upon approval of the State, the Trustee shall pay ABPC for the project activities. Such payments may be upon completion of the activity or partial payments for the portion of the activity completed prior to the payment date. Final project cost must be supported by detailed actual expenditure records in accordance with State requirements.

 

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(vii) State Minimum Guarantee: In accordance with Exhibit E, pay to the State any portion of the monthly State Minimum Guarantee payment not paid from the Surface Parking Gross Receipts Fund as provided in Section 6(b)(2)(iv) below.

 

(2) Surface Parking Guaranteed Payments. Surface Parking Gross Receipts on deposit with the Custodian in the Surface Parking Gross Receipts Fund established therefor under the Custody Agreement (the “Surface Parking Gross Receipts Fund”) or secondly in the Surface Parking Surplus Fund, shall be applied by the Custodian to make the following payments (the “Surface Parking Guaranteed Payments”) in the following order on the fifteenth day of each month (or, if not a Business Day, on the next succeeding Business Day) from funds available at the end of the previous month:

 

(i) Surface Parking Operating Expenses: For each month following the first month of the first Lease Year, an amount equal to one month of the current approved annual Surface Parking Operating Expenses Budget.

 

(ii) Surface Parking Custodian Expenses: Pay all State approved fees and expenses of the Custodian, related to Surface Parking and any and all reasonable costs and expenses (including, without limitation, reasonable attorneys, fees and disbursements) incurred by the Custodian, in enforcing its rights under the Guaranty (the “Surface Parking Custodian Expenses”) then due and payable.

 

(iii) Surface Parking Major Maintenance and Capital Improvement Fund: In accordance with the annual amount required for the Surface Parking Major Maintenance and Capital Improvement Fund (the “Surface Parking Major Maintenance and Capital Improvement Fund”), as stated in Exhibit H, as such Exhibit may be amended from time to time by mutual agreement of the parties, the monthly amount for the current Lease Year into the Surface Parking Major Maintenance and Capital Improvement Fund. This account shall be an unrestricted interest bearing account. All interest earnings shall be deposited into the account, remain in the account and be available for payment of eligible project costs. In accordance with the project schedule in Exhibit H, as amended by mutual agreement of the parties, and upon approval of the State, the Custodian shall pay ABPC for the project activities. Such payments may be upon completion of the activity or partial payments for the portion of the activity completed prior to the payment date. Final project cost must be supported by detailed actual expenditure records in accordance with State requirements.

 

(iv) State Minimum Guarantee: In accordance with Exhibit E, attached hereto, pay to the State the monthly amount of the annual State Minimum Guarantee for the current Lease Year.

 

(3) Surplus Funds: Any amounts remaining in the Garage Gross Receipts Fund shall be deposited by the Trustee into the Garage Surplus Fund under the Trust Indenture and any

 

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amounts remaining in the Surface Parking Gross Receipts Fund shall be deposited by the Custodian into the Surface Parking Surplus Fund under the Custody Agreement (collectively, the “Surplus Funds”).

 

(4) Reimbursement of Guarantor Payments: To the extent sufficient funds are available therefor in the appropriate Surplus Fund, after all Guaranteed Payments have been deposited or paid for any month, the Trustee and the Custodian shall notify the State of the amount of such funds and the State shall direct the Trustee and the Custodian to reimburse APCOA in such amount, to the extent possible, for any Guarantor Payments made by APCOA and not previously reimbursed, in accordance with Section 5.07 of the Trust Indenture or Section       of  the Custody Agreement. Notwithstanding the foregoing, APCOA shall not be reimbursed for any Guarantor Payments made during an extension of the Target Date pursuant to Section 4(i) of this Lease. APCOA shall be entitled to be reimbursed for the principal of such Guarantor Payments, plus (a) the actual interest cost, if APCOA borrowed funds to make such payment as certified by APCOA, or (b) an amount based upon the prime lending rate, as published in the Wall Street Journal, on the date of such Guarantor Payment to the Trustee or the Custodian, and adjusted throughout the term of the reimbursement as the prime lending rate changes, if APCOA utilized cash to make such payment, plus a premium of 10/12 th  of one percent per month on the principal, up to a maximum of ten percent (10%). To the extent in accordance with the provisions above, there are not sufficient moneys in the Surface Parking Surplus Fund to reimburse Guarantor Payments made with respect to Surface Parking Guaranteed Payments, such Guarantor Payments shall be reimbursed from moneys on deposit in the Garage Surplus Fund to the extent that there are sufficient funds therein.

 

(c) Additional Payments : To the extent that funds are available for such purpose in the Garage Surplus Fund in accordance with the Trust Indenture on the date of payment of the Additional Payments described below, after payment in full of all Garage Guaranteed Payments for the completed Lease Year, such funds shall be transferred by the Trustee from the Garage Surplus Fund to the Custodian for deposit into the Surface Parking Surplus Fund under the Custody Agreement. To the extent that funds are available in the Surface Parking Surplus Fund under the Custody Agreement on the date of payment of the Additional Payments described below (the “Surplus Moneys”), Additional Payments in the order as described below (the “Additional Payments”), shall be paid promptly by the Custodian, after payment in full of all Surface Parking Guaranteed Payments for the completed Lease Year, and after receipt and acceptance of the independent auditor’s annual report, as required pursuant to Section 7(d) hereof with respect to such completed Lease Year:

 

(i) Developer Payment: The first $1,000,000 of Surplus Moneys (the “Developer Payment”) shall be paid to ABPC, provided, however, that during the first and last Lease Years, such Developer Payment amount shall be prorated for the actual number of months in said years.

 

(ii) Reimbursement of Unpaid Developer Payments: To the extent any Developer Payment is not paid to ABPC when due for any reason, Surplus Moneys not needed to pay the currently due Developer Payment in full shall

 

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next be used to pay accrued but unpaid Developer Payments in the order accrued.

 

(iii) State and Developer Additional Payments: The State and ABPC shall share equally in Surplus Moneys up to the next $2,000,000 from the balance remaining after payment and reimbursement in full of the Developer Payments as provided in Section 6(c)(i)-(ii) above. There will be no accumulation and reimbursement of annual shortfalls of such State and Developer Additional Payments.

 

(iv) State and Developer Percentage Payments: The State shall receive 85 percent and ABPC shall receive 15 percent of the balance of Surplus Moneys remaining after payment and reimbursement of the maximum Developer Payments and the maximum State and Developer Additional Payment as provided in Section 6(c)(i)-(iii) above.

 

(d)  APCOA Guaranty : Pursuant to the Guaranty, APCOA guarantees to pay the Trustee and the Custodian, as applicable, funds sufficient to make any Guaranteed Payment for which the Trustee or the Custodian has insufficient funds on deposit in the appropriate funds to make the required payment on the scheduled payment date after application thereto of amounts available therefor from all prior sources as provided in Section 6(e) below, Article V of the Trust Indenture and Section        of the Custody Agreement, as applicable.

 

Notification and Payment: If the Trustee or the Custodian determines that it does not have sufficient funds on deposit in the applicable fund or account, at the end of any month to make any Guaranteed Payment for that month, after application thereto of amounts available therefor from all prior sources as provided in Section 6(e) below, Article V of the Trust Indenture and Section       of the Custody Agreement, as applicable, the Trust Indenture and Custody Agreement shall provide that the Trustee and Custodian respectively shall notify the State and APCOA by the fifth Business Day of the following month by telephone and telecopier transmission, promptly confirmed by overnight express, of the amount of the required payment (each, a “Guarantor Payment”). Within three Business Days of such telephone and telecopier notice, APCOA shall wire funds in the amount of the Guarantor Payment to the Trustee or the Custodian, as applicable. Failure by APCOA to make any Guarantor Payment when due will be a default under the Guaranty. Notwithstanding anything herein to the contrary, APCOA shall not be obligated to make a Guarantor Payment or any portion thereof to the extent such Guarantor Payment or portion thereof is solely caused by the failure of the State to perform its obligations under the first sentence only of Section 7(a)(4)(b) hereof.

 

(e)  Order of Sources to Pay Guaranteed Payments and Additional Payments :

 

(1) The Garage Guaranteed Payments shall be paid from the following sources, in each case to the extent available, in the following order:

 

(i)          Garage Operating Expenses :

 

1.           Garage Gross Receipts Fund;

 

2.           Garage Surplus Fund;

 

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3.          The Guaranty.

 

(ii)      Debt Service :

 

1.           Capitalized Interest Account, during the capitalized interest period;

 

2.           Garage Gross Receipts Fund;

 

3.           Garage Surplus Fund;

 

4.           The Guaranty;

 

5.           Debt Service Reserve Fund;

 

6.           Trustee funds available therefor as provided in the Trust Indenture, including, without limitation, the application of the Debt Service Reserve Fund to the final maturity or maturities of the Bonds as provided therein; and

 

7.           Bond Insurance.

 

(iii)     Debt Service Reserve Fund Deficiency :

 

1.           Garage Gross Receipts Fund;

 

2.           Garage Surplus Fund;

 

3.           The Guaranty.

 

(iv)     Rebate Fund Deposit :

 

1.           Garage Gross Receipts Fund;

 

2.           Garage Surplus Fund; and

 

3.           The Guaranty.

 

(v)      Garage Trustee Expenses :

 

1.           Garage Gross Receipts Fund;

 

2.           Garage Surplus Fund;

 

3.           The Guaranty.

 

(vi)     Garage Major Maintenance and Capital Improvement Fund Deposits :

 

1.           Garage Gross Receipts Fund;

 

2.           Garage Surplus Fund;

 

3.           The Guaranty.

 

(vii)    State Minimum Guarantee Payments, to the extent not paid by Surface Parking :

 

1.           Garage Gross Receipts Fund;

 

2.           Garage Surplus Fund;

 

3.           The Guaranty.

 

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(2)      The Surface Parking Guaranteed Payments shall be paid from the following sources, in each case to the extent available, in the following order:

 

(i)       Surface Parking Operating Expenses:

 

1.           Surface Parking Gross Receipts Fund;

 

2.           Surface Parking Surplus Fund;

 

3.           The Guaranty.

 

(ii)      Surface Parking Custodian Expenses:

 

1.           Surface Parking Gross Receipts Fund;

 

2.           Surface Parking Surplus Fund;

 

3.           The Guaranty.

 

(iii)     Surface Parking Major Maintenance and Capital Improvement Fund Deposits:

 

1.           Surface Parking Gross Receipts Fund;

 

2.           Surface Parking Surplus Fund;

 

3.           The Guaranty.

 

(iv)     State Minimum Guarantee Payments:

 

1.           Surface Parking Gross Receipts Fund;

 

2.           Surface Parking Surplus Fund;

 

3.           The Guaranty.

 

(3)      All Additional Payments shall be paid from Surplus Moneys only.

 

(f)     Section 2.8 Bradley Airport Parity Bond Indenture:

 

(1)      The parties hereto agree that the Debt Service payments made pursuant to Section 6(b)(1)(ii) above shall constitute the “fixed rentals” for purposes of Section 2.8(2)(i) of the Bradley Airport Parity Bond Indenture.

 

(2)      The parties hereto agree that the Debt Service Reserve Fund, Rebate Fund and Garage Trustee Expenses payments made pursuant to Sections 6(b)(1)(iii)-(vi) above shall constitute the “further rentals” for purposes of Section 2.8(2)(ii) of the Bradley Airport Parity Bond Indenture.

 

(3)      The parties hereto agree that the State Minimum Guarantee payments made pursuant to Section 6(b)(1)(vii) above shall constitute “ground rental” for purposes of Section 2.8(3) of the Bradley Airport Parity Bond Indenture.

 

(4)      The parties hereto agree that the Surface Parking Custodian Expenses payments made pursuant to Section 6(b)(2)(ii)-(iii) above shall constitute

 

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the “further rentals” for purposes of Section 2.8(2)(ii) of the Bradley Airport Parity Bond Indenture.

 

(5)      The parties hereto agree that the State Minimum Guarantee payments made pursuant to Section 6(b)(2)(iv) above shall constitute “ground rental” for purposes of Section 2.8(3) of the Bradley Airport Parity Bonds Indenture.

 

(6)      The parties hereto agree that the State’s share, if any, of the State and Developer Additional Payments and the State and Developer Percentage Payments made pursuant to Section 6(c)(iii) and 6(c)(iv) above, respectively, shall constitute “ground rental” for purposes of Section 2.8(3) of the Bradley Airport Parity Bonds Indenture.

 

(7)      Notwithstanding anything else to the contrary herein, all “fixed rentals and further rentals” which are not required to make the deposits or payments set forth above shall be paid to the State for its own use and purposes in accordance with the Bradley Airport Parity Bond Indenture.

 

SECTION 7. Use and Operation of the Leased Premises .

 

(a)  General.

 

(1) The Leased Premises shall be used by ABPC as parking facilities for motor vehicles and for any other purpose necessary to the parking of motor vehicles (including administrative functions), or as otherwise approved by the State. ABPC agrees to operate the Leased Premises as parking facilities in accordance with good business practices. The parking of any vehicle on a complimentary or validated basis in the Garage or the Surface Parking shall not be allowed unless previously authorized by the State.

 

(2) ABPC shall have the right and obligation to manage and operate the Leased Premises as parking facilities 24 hours a day, seven days a week, 52 weeks a year, in an efficient and professional manner with sufficient personnel to minimize shuttle bus delays and exit booth processing times, who shall be proficient in customer service communication and shall be courteous, clean and neat at all times and uniformed with proper identification. ABPC may operate Lots 5A and 5B as an overflow lot, depending upon the overall volume of use of the other Surface Parking lots. ABPC shall screen and train personnel, and further, shall make the best effort to minimize staff turnover.

 

(3) ABPC shall provide, the following services for the Leased Premises throughout the Lease Term:

 

(i) An on-site supervisor, 24 hours per day, 365 days per year.

 

(ii) Positive control of traffic on and in the immediate vicinity of the Leased Premises to direct patrons to available parking, prevent unreasonable traffic

 

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delays and direct patrons away from parking areas that are full. Such direction must be accomplished by the use of proper signage and/or supervision to the satisfaction of the Airport Administrator;

 

(iii) Removal of all abandoned and illegally parked vehicles. Such removal will be coordinated with the State/Airport Police. Vehicles shall be relocated to an impound area as authorized by the State;

 

(iv) Daily inspections of the Leased Premises with inspection reports submitted to the Airport Administrator on a weekly basis. Reports shall include any and all normal and abnormal conditions of pavement, equipment, lighting, staffing levels, etc.;

 

(v) Upon notice, respond to all customer telephone complaints within 24 hours and written complaints within seven days. The Airport Administrator shall be advised of the outcome of each complaint. Complaints received which pertain to matters outside the scope of ABPC’s authority shall be forwarded to the Airport Administrator for review and reply; and

 

(vi) The establishment and maintenance of procedures to ensure that only authorized personnel park in the Employee Lot, which may include the existing automated vehicle identification system installed by the State. Said system will be operated, maintained and replaced when necessary by ABPC.

 

(4) Gross Revenue Pledge.

 

(a)       The State and ABPC hereby covenant that they shall maintain at all times rates for parking at the Garage and the Surface Parking sufficient to result in each year in Garage Gross Receipts in such amount to permit compliance with the Garage Coverage Ratio, as defined in the Trust Indenture. If for any Lease Year, as shown in the audited financial statements prepared for such Lease Year, the Garage Coverage Ratio has not been met, the State and ABPC shall promptly adjust rates for parking at the Garage and/or the Surface Parking such that the Garage Coverage Ratio is projected to be met for the then-current Lease Year.

 

(b)       The State and ABPC hereby approve and establish, and the State shall implement, during each Lease Year of the Lease Term, the parking rates for the Surface Parking and the Garage, respectively, which are attached hereto as Exhibit F, which parking rates shall take effect automatically under the provisions of this Lease; provided, however, that if at the end of any Lease Year, the combined Surface Parking Gross Receipts and Garage Gross Receipts received in that Lease Year exceed the target therefor set forth in the table below, any scheduled parking rate increases for the succeeding Lease Year as set forth in Exhibit F hereto shall not occur during such succeeding Lease Year unless the State and ABPC mutually agree at such time that such rate increases

 

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Lease Year		Combined Year-End Total: Surface Parking Gross Receipts and Garage Gross Receipts
20 th		35,344,022
21 st		35,612,076
22 nd		35,884,151
23 rd		36,160,307
24 th		38,305,919
25 th		38,602,961
26 th		24,689,898

 

(5) As of the Lease Execution Date, ABPC has: (1) pursuant to the Construction Management Agreement, engaged the Construction Manager to perform each of ABPC’s obligations under this Lease in connection with the construction of the Garage, and (2) pursuant to the License Agreement, engaged APCOA to exercise ABPC’s non-construction rights and perform ABPC’s non-construction obligations under this Lease prior to the date that the Garage is Substantially Completed. Effective as of the earlier of the date of Substantial Completion of the Garage, or the expiration or termination of the License Agreement, pursuant to the Assignment, ABPC has assigned all of its non-construction rights and non-construction obligations under this Lease, to BAP, and BAP has agreed to exercise all of ABPC’s non-construction rights and perform all of ABPC’s non-construction obligations under this Lease, but specifically excluding, however, any remaining construction obligations under this Lease as of such date of Substantial Completion (including, without limitation, punchlist and warranty work), which shall remain the responsibility of the Construction Manager under the Construction Management Agreement. The State and the Trustee shall be third party beneficiaries of APCOA’s obligations under the License Agreement and BAP’s obligations under the Assignment with the ability to exercise ABPC’s remedies thereunder in the event of a default by APCOA or BAP, respectively, under such agreements. The License Agreement and the Assignment shall not be amended, modified or terminated without the consent of the State and the Trustee. In no event shall payment of the State Minimum Guarantee under this Lease be deemed in any way to be a construction obligation.

 

(6) The State, its officers, agents and employees shall not be responsible or liable for any loss of, or damage to, the property of ABPC or of its patrons, guests or invitees while on the Leased Premises.

 

(7) The State shall have the right at any time during emergency or crisis situations and at other reasonable times after due notice to ABPC to enter the Leased Premises for the purpose of examining the state of repair and condition of the Leased Premises and the equipment, and for the purpose of determining whether the terms, covenants and conditions contained in this Lease are being fully and faithfully observed and performed.

 

(8) With respect to the Leased Premises, ABPC shall provide for the removal of snow and ice, the seeding, planting and cutting of grass and shrubs, the prevention of erosion and the routine maintenance of all storm drains and sewer lines within the Leased Premises which serve the Leased Premises. ABPC shall in addition be responsible for the reconstruction, if necessary, of any storm drains and sewer lines within the Leased Premises which (i) ABPC,

 

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its agents or subcontractors, installed, or (ii) which, through ABPC’s actions, negligence or lack of maintenance, require reconstruction.

 

(9) ABPC shall have the right to acquire, install operate and maintain on the Leased Premises such improvements, equipment and supplies required or appropriate for the opera