TABLE OF CONTENTS

 

		Page(s)
ARTICLE I	Premises	2
A.	Use of Airport	2
B.	Lease of Space	7
	1.              Preferential Use Premises	7
	2.              Shared Use Premises	14
C.	Public Space	14
D.	Parking Space	14
E.	Right of Ingress and Egress	15
F.	Fuel	15
ARTICLE II	Term	16
ARTICLE III	Rentals, Fees and Charges	16
A.	Cost Centers	17
B.	Allocation Methodology	17
C.	Terminal Rentals	17
	1.              South Terminal Rentals	17
	2.              North Terminal Rentals	19
D.	Terminal Use Charges for Shared Use Premises	20
E.	Activity Fees	22
F.	International Facilities Use Fees – FIS Facilities	24
G.	Continuing Rental Obligation	24
H.	Payment of Terminal Charges and Activity Fees	26
	1.              Information on Signatory Airlines’ Operations	26
	2.              Projection of Rentals and Activity Fees	28
	3.              Payment of Terminal Charges and Activity Fees	29
	4.              Adjustment of Terminal Charges and Activity Fees	30
	5.              Preliminary Annual Settlement and Final Audit	30
I.	Supplemental Capital Cost Payments	33
ARTICLE IV	Lessor Covenants; Capital Expenditures	34
ARTICLE V	Construction, Maintenance and Repair by Lessee	37
ARTICLE VI	Right of Entry by Lessor	39
ARTICLE VII	Maintenance, Operation and Repair by Lessor	40
ARTICLE VIII	Utility Services	44

 

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ARTICLE IX	Space for United States Weather Bureau, Postal Service,
	Federal Aviation Administration, and Express Agencies	44
ARTICLE X	Airline Clubs	44
ARTICLE XI	Rules and Regulations	45
ARTICLE XII	Control of Rates, Fares or Charges	45
ARTICLE XIII	Damage or Destruction of Premises	46
ARTICLE XIV	Cancellation by Lessor	47
ARTICLE XV	Cancellation by Lessee	49
ARTICLE XVI	Suspension and Abatement	51
ARTICLE XVII	Arbitration	51
ARTICLE XVIII	Indemnity	53
ARTICLE XIX	Insurance	53
	1.              Commercial General Liability Insurance	54
	2.              Aviation Public Liability Insurance	54
	3.              Workers Compensation Insurance	55
	4.              All Risk Physical Damage Insurance	55
ARTICLE XX	Quiet Enjoyment	56
ARTICLE XXI	Title to Equipment, Improvements and Facilities
	Erected by Lessee	56
ARTICLE XXII	Surrender of Possession	57
ARTICLE XXIII	Mineral Rights	57
ARTICLE XXIV	Condemnation	58
ARTICLE XXV	Assignment and Subletting	58
ARTICLE XXVI	Subsidiary Companies	59
ARTICLE XXVII	Notices	59
ARTICLE XXVIII	Definitions	59

 

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ARTICLE XXIX	Paragraph Headings	71
ARTICLE XXX	Invalid Provision	72
ARTICLE XXXI	Successors and Assigns Bound by Covenants	72
ARTICLE XXXII	Right to Lease to United States Government	72
ARTICLE XXXIII	Covenants Against Discrimination	73
A.	Covenant Pursuant to Requirements of the
	Department of Transportation	73
B.	Employment	73
C.	Affirmative Action Program	74
D.	Disadvantaged Business Enterprise	74
	1.              Policy	74
	2.              DBE Obligation	75
ARTICLE XXXIV	Conformity of Agreement	75

 

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EXHIBITS
Exhibit A	—	Airport
Exhibit B	—	[Intentionally omitted]
Exhibit C	—	Lessee’s Preferential South Terminal Space and Shared Use South Terminal Space
Exhibit D	—	Priorities for Use of International Gates
Exhibit E	—	Allocation of O&M Expenses and Bond Debt Service
Exhibit F	—	Airport Parcels to be Sold
Exhibit G	—	[Intentionally omitted]
Exhibit H	—	Required Use of PFCs
Exhibit I	—	Facilities Use Fees
Exhibit J	—	Terminal Cost Centers

 

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AIRPORT USE AND LEASE AGREEMENT

 

This AIRPORT USE AND LEASE AGREEMENT (this “Agreement”) made and entered into this        day of          , 2005, by and between the WAYNE COUNTY AIRPORT AUTHORITY , a Michigan public body corporate, with principal offices located at the Detroit Metropolitan Wayne County Airport, hereinafter referred to as “Lessor”, and NORTHWEST AIRLINES, INC. , a Minnesota corporation, with principal offices located at 2700 Lone Oak Parkway, Eagan, Minnesota 55121, hereinafter referred to as “Lessee”.  Unless defined elsewhere in this Agreement, capitalized terms shall have the meanings set forth in Article XXVIII hereof.

 

Witnesseth:

 

WHEREAS, pursuant to the provisions of the Aeronautics Code of the State of Michigan, Lessor, as successor in interest to the Charter County of Wayne, Michigan (the “County”), operates and maintains the Detroit Metropolitan Wayne County Airport (the “Airport”), said airport being more fully described in Exhibit A attached hereto and hereby made a part hereof, with the power to lease premises and facilities and to grant rights with respect thereto; and

 

WHEREAS, Lessee is engaged in the Air Transportation business; and

 

WHEREAS, Lessor, as successor in interest to the County, and Lessee are parties to an Airport Use and Lease Agreement dated as of June 21, 2002 (the “2002 Airport Agreement”), pursuant to which the County leased to Lessee certain premises, facilities, rights, licenses, services and privileges with and on the Airport; and

 

WHEREAS, Lessor and Lessee desire to amend certain provisions of the 2002 Airport Agreement by entering into this Agreement, which, upon approval by Lessor’s

 

 

Board and execution by Lessor’s Chief Executive Officer and a duly authorized officer of Lessee, shall supersede in all respects and replace the 2002 Airport Agreement;

 

NOW, THEREFORE, for and in consideration of the premises and of the mutual covenants and agreements herein contained, and other valuable considerations, as of the effectiveness of this Agreement Lessor does hereby grant, demise and let unto Lessee and Lessee does hereby hire and take from Lessor, certain premises and facilities, rights, licenses, services and privileges hereinafter described in connection with and upon the Airport.

 

ARTICLE I

PREMISES

 

A.             USE OF AIRPORT: In common with others so authorized, Lessee shall have the use of the common areas of the Airport and its appurtenances, together with all facilities, equipment, improvements and services which have been, or may hereafter be, provided at or in connection with the Airport from time to time, including, without limiting the generality hereof and subject to the rules and regulations of Lessor promulgated in accordance with Article XI hereof, the landing field and any extensions thereof or additions thereto, passenger and cargo ramp areas and facilities, aircraft parking areas and facilities, roadways, runways, aprons, taxiways, sewage and water facilities, floodlights, landing lights, beacons, control tower, signals, radio aids, and all other conveniences for flying, landings and take-offs of aircraft of Lessee, which use, without limiting the generality hereof, shall include:

 

1.              The right to operate thereat and therefrom a transportation system by aircraft for the carriage of persons, property, cargo and mail;

 

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2.              The right to repair, maintain, condition, service, test, park or store aircraft or other equipment of Lessee, or of any other scheduled air transportation company, or aircraft of the U.S. Armed Forces or the FAA within such areas as are designated by Lessor; provided, that such right shall not be construed as authorizing the conduct of a separate business by Lessee, but shall permit Lessee to perform such functions as an incident to its conduct of Air Transportation;

 

3.              The right to train, subject to rules and regulations as promulgated under Article XI hereof, on the Airport, personnel in the employ of or to be employed by Lessee or any scheduled air transportation company, or of the U.S. Armed Forces, or of the FAA, provided, that such right shall not be construed as authorizing the conduct of a separate business by Lessee, but shall permit Lessee to perform such functions as an incident to its conduct of Air Transportation;

 

4.              The right to sell, dispose of or exchange Lessee’s aircraft, engines, accessories, supplies or other personal property; provided, that such right shall not be construed as authorizing the conduct of a separate business by Lessee, but shall permit such sales as an incident to its conduct of Air Transportation or accommodation to others engaged therein;

 

5.              The right, subject to the terms and conditions hereof, to purchase or otherwise obtain personal property of any nature (including aircraft, engines, accessories, gasoline, oil, greases, lubricants, other fuel or propellant, food,

 

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beverages, other equipment and supplies and any articles or goods) reasonably necessary or convenient for its operations, from any supplier of its choice;

 

6.              The right to service, by Lessee or others selected by Lessee, Lessee’s aircraft or other equipment by truck or otherwise, with gasoline, oil, greases, lubricants, or any other fuel or propellant or other supplies, required by Lessee; such right to include, without limiting the generality thereof, the right to install and maintain on the Airport, separately or in common with others, appropriate pipes (including a pipeline or lines between Lessee’s sources of supply and its storage facilities for gasoline, oil, greases, lubricants or other fuel or propellant and from such storage facilities to the point or points of servicing), pumps, motors, filters and other appurtenances incidental to the use thereof, either through construction and maintenance by Lessee or by a nominee of Lessee in accordance with plans and specifications therefor approved by Lessor; provided, however, that Lessor shall not be responsible for the cost of excavation, construction, installation and maintenance of any such storage facilities, pipes or pipelines, pumps, motors, filters or other appurtenances;

 

7.              The right to land, take-off, fly, taxi, tow, park, load, and unload Lessee’s aircraft and other equipment used in the operation of schedule, shuttle, courtesy, test, training, inspection, emergency, special, charter, sightseeing and other flights;

 

8.              The right to transfer, load and unload persons, cargo, property and mail to, from and at the Airport by such loading and unloading devices, motor cars, buses, trucks or other means of conveyance as Lessee may choose or require in

 

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the operation of its Air Transportation system; with the non-exclusive right to designate and enter into arrangements with any carrier or carriers of its choice to transport to and from the Airport, passengers and their baggage, cargo, property and mail carried or to be carried by air by Lessee provided that with respect to passengers, Lessee shall not enter into arrangements with a carrier for transportation to or from the Airport except for such period or periods during which there is no satisfactory ground transportation service provided by bus or limousine operator selected by the Lessor;

 

9.              The right to install, maintain and operate, without cost to Lessor, by Lessee alone, or in conjunction with any other air transportation companies who are lessees at the Airport, or through a nominee, communication systems between suitable locations in the aircraft loading areas and suitable locations in or about Lessee’s hangar, and between any or all of said locations and Lessee’s offices;

 

10.            The right to install, maintain and operate, without cost to Lessor, by Lessee alone, or in conjunction with any other air transportation companies that are lessees at the Airport, or through a nominee, suitable Lessee-owned aircraft air-conditioning equipment, including, but not limited to, trucks, or a suitable airplane air-conditioning system in the loading area.

 

11.            The right to provide in any hangar or other non-public space leased by Lessee without cost to Lessor, by Lessee alone, a subsidiary of Lessee or by contract with a supplier or caterer, foods and beverages for consumption by employees and occasional invitees of Lessee on such premises for business

 

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purposes.  Without limiting the generality of the foregoing, said right shall include the right to install, maintain, and operate, or cause to be installed, maintained and operated without cost to Lessor, in any hangar on premises leased to Lessee at the Airport, vending machines, a cafeteria, restaurant or other plant for the purpose of preparing, cooking, and dispensing of foods and beverages for consumption as aforesaid;

 

12.            The right to provide, without cost to Lessor, by Lessee alone, a subsidiary of Lessee, or by contract with a supplier or caterer of its choice, food and beverages for consumption on aircraft of Lessee; provided, however, that if Lessee shall purchase such foods and beverages by contract with a supplier or caterer other than an Airport food concessionaire, Lessee shall require such supplier or caterer, other than its wholly-owned subsidiary, to pay to Lessor the same percentage commission as would be paid to Lessor by an Airport food concessionaire;

 

13.            The right to install and operate, at Lessee’s expense, a reasonable number and type of company identification signs, subject to the right of Lessor to approve the same as to type and location;

 

14.            The right to install, maintain and operate, at Lessee’s expense, by Lessee alone, or in conjunction with any other air transportation companies who are lessees at the Airport, or through a nominee, such radio communications, meteorological and aerial navigation equipment and facilities in or on premises preferentially leased to Lessee, and, subject to the approval of Lessor’s Chief Executive Officer with respect to location of installation, elsewhere on the Airport

 

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as may be necessary or convenient in the opinion of Lessee for its operations; provided, however, that such approval shall not be withheld unless such installation, maintenance and operation at the location selected by Lessee shall interfere with the reasonable use of the Airport by other authorized persons;

 

15.            The right to conduct operations or activities other than those enumerated in Subparagraphs (1) to (14), inclusive, of this paragraph, reasonably related to the landing, taking off, flying, moving, loading, unloading, or servicing of aircraft which are reasonably necessary or convenient to the conduct by it of Air Transportation; provided, however, that all such other operations and activities shall be subject to the approval of Lessor.

 

B.             LEASE OF SPACE:

 

1.              PREFERENTIAL USE PREMISES.

 

(a)            Lessor hereby grants to Lessee, its employees, agents, guests, patrons and invitees, the preferential use of space, improvements and facilities in the South Terminal consisting of the Preferential South Terminal Space identified on Exhibit C attached hereto (hereinafter referred to as “Lessee’s Preferential South Terminal Space”).  Lessee shall have the right to permit its code share partners and commuter carriers to have access to Lessee’s Preferential South Terminal Space.  Exhibit C shall be amended, effective as of the Date of Beneficial Occupancy of all of Lessee’s Preferential South Terminal Space resulting from the McNamara Terminal Phase II Project, to include all of such space not then reflected on Exhibit C , which amendment may be entered into by

 

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the Chief Executive Officer of Lessor without further approvals of Lessor’s Board.

 

(b)            Lessee’s Preferential South Terminal Space shall be available to Lessee in accordance with the following preferential use provisions:

 

(i)             Lessee shall have priority in using such space, subject to the provisions of subsection (iii) below.  In addition, Lessor hereby grants to Lessee, and Lessee hereby accepts from Lessor, for so long as Lessee leases such space, the preferential right to use the aircraft parking positions adjacent to such space, as shown on Exhibit C , for the parking of aircraft and support vehicles and the loading and unloading of passengers and cargo.

 

(ii)            Lessor intends to maintain a policy of providing open access to the Airport and achieving a balanced utilization of Airport facilities.  To achieve that goal, Lessor reserves the right to require shared use of Preferential Use Premises as described in subsection (iii) below.

 

(iii)           (A)           If an airline, including any airline seeking to expand its service or an airline seeking entry into the Airport, is in need of space or facilities at the Airport, which need cannot be met by use of then unleased premises, if any, in the South Terminal or the North Terminal, Lessor shall direct such airline to request the use of leased space or facilities of all Signatory Airlines on a voluntary basis.  Lessee and the other Signatory Airlines shall make

 

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reasonable efforts to accommodate such requests in a timely manner from any Preferential Use Premises leased to them.

 

(B)            In the event (I) Lessor receives a written request from an airline requesting space or facilities of a type granted to Signatory Airlines on a preferential use basis, (II) the requesting airline demonstrates to Lessor that it has contacted all Signatory Airlines and has exhausted all reasonable efforts to find reasonable accommodation for its proposed operations and the space or facilities it needs, and (III) Lessor determines that (x) such requesting airline needs the requested space or facilities to accommodate passengers or aircraft and (y) Lessor cannot provide such space or facilities to such airline on a timely basis, then Lessor may grant such requesting airline the right of temporary or shared use of a designated portion of Lessee’s Preferential South Terminal Space, including, but not limited to, the use of passenger loading bridges and other appurtenant equipment which are reasonably necessary for the effective use of such space, whether owned by Lessee or Lessor, as well as the aircraft parking positions adjacent to such space, but excluding Lessee’s member-only airline clubs within Lessee’s Preferential South Terminal Space.

 

(C)            In the event Lessor determines that a requesting airline’s needs require granting such requesting airline the right to share or temporarily use Preferential Use Premises, Lessor shall

 

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serve written notice to all Signatory Airlines of that determination and notice of Lessor’s intention to make a further determination, in not less than 15 calendar days, as to how the requesting airline will be accommodated.

 

(D)           In accordance with the rules and priorities set forth in subparagraph (F) below, Lessor may grant the requesting airline the right of shared or temporary use of a designated portion of Lessee’s Preferential South Terminal Space (excluding Lessee’s member-only airline clubs), as well as rights of ingress and egress, the right to use the aircraft parking positions adjacent thereto and the right to use passenger loading bridges and other appurtenant equipment which are reasonably necessary for the effective use of such space, provided, that:

 

(I)             such proposed user provides Lessee with indemnification and proof of insurance satisfactory to Lessee; provided, however, that Lessee may not require any indemnification more favorable to it than that which Lessee provides to Lessor hereunder;

 

(II)            such proposed user agrees to pay Lessee the sum of the following:

 

(x)             an amount equal to a pro rata share of the sum of the terminal rentals and any other applicable payments, fees or taxes payable by

 

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Lessee hereunder with respect to such areas during such shared or temporary use period as calculated herein; and

 

(y)            additional amounts sufficient to recover Lessee’s direct costs and operation and maintenance expenses, if any, of such shared or temporary use, including a reasonable allocation of any capital and equipment costs for property and equipment owned by Lessee;

 

(III)          such proposed user enters into a written agreement with Lessee therefor, which agreement shall not be inconsistent with the terms and conditions stated herein and shall be submitted to Lessor for written approval prior to the effective date thereof.

 

(E)            Lessee agrees to make reasonable efforts to facilitate the temporary or shared accommodation of the requesting airline’s scheduled operations, including the use of passenger loading bridges used or owned by Lessee and other portions of Lessee’s Preferential South Terminal Space (excluding Lessee’s member-only airline clubs) as may be reasonably necessary to accommodate the requesting airline in the event Lessor requires such use.  In the event that the requesting airline and Lessee are not able to agree to a form of written agreement pursuant to

 

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subparagraph (D)(III) above after reasonable efforts by both parties, Lessor shall have the right, after consultation with both parties, to set the final terms of such written agreement, which shall provide no less protection of Lessee’s interests than Lessee provides for Lessor’s interest hereunder, and be binding on both the requesting airline and Lessee.

 

(F)            In the event that, pursuant to subparagraph (B) above, Lessor determines that a requesting airline is in need of facilities to accommodate passengers or aircraft and such facilities should be made available from Preferential Use Premises, Lessor will follow the following rules and priorities in designating the specific premises for temporary or shared use by the requesting airline:

 

(I)             Preferential Use Premises shall be designated for temporary or shared use in the reverse order of the magnitude of the then present utilization by Signatory Airlines.

 

(II)            In assessing the degree of such utilization by Signatory Airlines, Lessor will consider all factors deemed relevant, which may include:  (u) the average number of flight arrivals and departures per aircraft parking position per day; (v) flight scheduling considerations; (w) potential labor conflicts; (x) the number, availability and type (e.g.

 

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wide-body or narrow body) of aircraft parking position locations; (y) the preferences of the Signatory Airlines as to which of their specific premises are designated for temporary or shared use by the requesting airline and (z) other operational considerations.

 

(III)          In the event Lessee is required to share Lessee’s Preferential South Terminal Space, Lessee shall have priority in all aspects of usage of such shared premises over all other airlines; provided that Lessee shall not change its scheduling or ordinary course usage of such premises for the purpose of interfering with the usage of such premises by a requesting airline sharing such premises.

 

(G)            The foregoing provisions of this Article IB.1.(b)(iii) notwithstanding, Lessor may grant a requesting airline the right to temporarily use a designated portion of Lessee’s Preferential South Terminal Space (excluding Lessee’s member-only airline clubs) in non-recurring emergency or safety-related circumstances, so long as such use will not unreasonably adversely affect Lessee’s Air Transportation operations at the Airport.

 

(H)           During the use of Lessee’s Preferential South Terminal Space or other related facilities by other airlines scheduled by Lessor pursuant to this Article IB.1., Lessee shall not be held liable by Lessor with regard to any claim for damages or

 

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personal injury arising out of or in connection with such requesting airline’s use of Lessee’s Preferential South Terminal Space or other related facilities, unless caused by the negligence of Lessee, its employees or agents.

 

2.              SHARED USE PREMISES. Lessor hereby grants to Lessee, its employees, agents, guests, patrons and invitees, the shared use, along with all other air carriers operating Air Transportation businesses in the South Terminal to whom Lessor grants such shared use, of space, improvements and facilities in the South Terminal consisting of the Shared Use South Terminal Space identified on Exhibit C attached hereto.  That portion of the Shared Use South Terminal Space consisting of the international gates in the South Terminal, together with related holdrooms, jet bridges, ramp access and baggage facilities, shall be allocated for use by the users thereof in accordance with the priorities described in Exhibit D attached hereto.

 

C.             PUBLIC SPACE:  Lessee, its employees, passengers, guests, patrons and invitees, in common with others, shall have the use of all public space in the terminals at the Airport, and all additional public space which may thereafter be made available therein and in any additions thereto, including, without limiting the generality thereof, common areas for passenger movement, concessions areas, entrances, exits, lobbies, public waiting areas, public restrooms, hallways and other premises for other public and passenger convenience.

 

D.             PARKING SPACE:   Vehicular parking spaces shall be provided near the terminal from which Lessee is operating (adequate in Lessor’s judgment, considering

 

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the number of vehicles and traffic to be accommodated) for the use of Lessee, its employees, passengers and limousine operators, in common with any other scheduled air transportation companies, their employees, passengers and limousine operators.  Lessor or its concessionaires may make a reasonable charge to passengers for the use of the parking space provided for them, but no charges shall be made for use of such adequate parking spaces as are designated by Lessor for the respective use of Lessee’s employees or limousine operators.

 

E.              RIGHT OF INGRESS AND EGRESS:   Subject to the reasonable rules and regulations promulgated by Lessor in accordance with Article XI hereof, Lessee shall have the right and privilege over the Airport of ingress to and egress from the premises and facilities described in this Article I for its employees, agents, passengers, guests, patrons and invitees, its or their suppliers of materials and furnishers of service, its or their aircraft, equipment, vehicles, machinery and other property, and, except as herein otherwise specifically provided, no charges, fees or tolls of any nature, direct or indirect, shall be imposed by Lessor upon Lessee, its employees, agents, passengers, guests, patrons and invitees, its or their suppliers of materials and furnishers of service for such right of ingress and egress, or for the privilege of purchasing, selling or using any materials, or services purchased or otherwise obtained by Lessee, or for transporting, loading, unloading or handling persons, property, cargo or mail in connection with Lessee’s business or exercising any right or privilege granted by Lessor hereunder.  Nothing in this Article I shall limit Lessor’s right to impose, collect and use PFCs.

 

F.              FUEL:  Lessee shall have the right during the term of this Agreement to lease land in the common fuel storage area as shown in the Airport Master Plan, at a rental

 

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rate of not to exceed five cents ($.05) per square foot per year, together with the right to install thereon underground fuel storage tanks, pumps, piping, and appurtenances for the storage of aviation fuel; the location and amount of such land to be determined by written agreement of the parties hereto, a copy of which agreement, if entered into prior to the effective date of this Agreement, will be attached to this Agreement as an exhibit.

 

ARTICLE II

TERM

 

Lessee shall have full authority to use the premises and facilities and to exercise the rights, licenses and privileges set forth in Article I hereof for a term that began on February 26, 2002, and will end on September 30, 2032.

 

ARTICLE III

 

RENTALS, FEES AND CHARGES

 

Lessee agrees to pay to Lessor for the use of the premises, facilities, rights, licenses, services and privileges granted hereunder, the following rentals, fees and charges, all payable in monthly installments in accordance with paragraph H. below.  In the event that the commencement or termination of the term with respect to any of the particular premises, facilities, rights, licenses, services or privileges as herein provided falls on any date other than the first or last day of a calendar month, the applicable rentals, fees and charges for that month shall be paid for said month pro rata according to the number of days in that month during which the particular premises, facilities, rights, licenses, services or privileges were enjoyed.  No rentals, fees, charges or tolls imposed by Lessor other than those specifically provided in this Agreement are payable by Lessee for the use of or access to the Airport, provided that the foregoing shall not be construed to prohibit Lessor from imposing and collecting charges and fees from

 

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passengers for the use of the public auto parking areas on the Airport, from operators of ground transportation to, from and on the Airport or from any concessionaire at the Airport in accordance with the terms of a contract with Lessor for the operation of such concession; and provided, further, that Lessor reserves the right to impose and use PFCs; and provided, further, that the foregoing shall not preclude Lessor from imposing or levying any permit or license fee not inconsistent with the rights and privileges granted to Lessee hereunder.

 

A.             COST CENTERS:

 

Lessor will create the following cost centers at the beginning of Fiscal Year 2009, for the purpose of allocating the cost of operating, maintaining and developing the Airport among the users thereof:

 

1.              South Terminal Cost Center;

 

2.              North Terminal Cost Center; and

 

3.              Airport Cost Center.

 

B.             ALLOCATION METHODOLOGY:

 

Commencing in Fiscal Year 2009, Lessor shall maintain accurate records identifying O&M Expenses for each Fiscal Year and allocating O&M Expenses, Bond Debt Service and Other Available Moneys for each Fiscal Year between (i) the South Terminal Cost Center, (ii) the North Terminal Cost Center, and (iii) the Airport Cost Center.  Lessor will allocate O&M Expenses, Bond Debt Service and Other Available Moneys in accordance with Exhibit E attached hereto.

 

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C.             TERMINAL RENTALS:

 

1.              SOUTH TERMINAL RENTALS.

 

(a)            Lessee’s Terminal Rentals for each Fiscal Year (or portion thereof on a pro rated basis) for its Preferential South Terminal Space shall be an aggregate amount equal to the product of the number of square feet of Lessee’s Preferential South Terminal Space, multiplied by the South Terminal Rental Rate for such Fiscal Year.

 

(b)            Until the Rental Rate Change Date, the South Terminal Rental Rate is as follows for the following Fiscal Years:

 

2005		$	19.71
2006		19.71
2007		19.71
2008 and thereafter		20.04

 

(c)            Commencing with the Rental Rate Change Date, the South Terminal Rental Rate for each Fiscal Year shall be determined by dividing the Cost of the South Terminal for such Fiscal Year, calculated pursuant to subparagraph (d) below, by the sum of (i) the total number of square feet of Preferential South Terminal Space leased to all Signatory Airlines, and (ii) the total number of square feet of Shared Use South Terminal Space.

 

(d)            The Cost of the South Terminal for each Fiscal Year will be an amount equal to the sum of, for such Fiscal Year:

 

(i)             O&M Expenses allocated to the South Terminal Cost Center; and

 

(ii)            Bond Debt Service allocated to the South Terminal Cost Center;

 

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minus, for such Fiscal Year:

 

(iii)           Other Available Moneys allocated to the South Terminal Cost Center and used by Lessor in such Fiscal Year to pay Bond Debt Service allocated to the South Terminal Cost Center;

 

(iv)           the total amount of South Terminal International Facilities Use Fees collected by Lessor for such Fiscal Year; and

 

(v)            the total amount of South Terminal Authority-Controlled Airline Space Revenue and South Terminal Rental Revenue for such Fiscal Year.

 

2.              NORTH TERMINAL RENTALS.

 

(a)            Commencing with the Rental Rate Change Date, Lessor shall charge each Signatory Airline leasing Preferential North Terminal Space, Terminal Rentals for each Fiscal Year (or portion thereof on a pro rated basis) for such space in an aggregate amount equal to the product of the number of square feet of such Signatory Airline’s Preferential North Terminal Space, multiplied by the North Terminal Rental Rate for such Fiscal Year.

 

(b)            Commencing with the Rental Rate Change Date, the North Terminal Rental Rate for each Fiscal Year shall be determined by dividing the Cost of the North Terminal for such Fiscal Year, calculated pursuant to subparagraph (c) below, by the sum of (i) the total number of square feet of Preferential North Terminal Space leased to all Signatory Airlines, and (ii) the total number of square feet of Shared Use North Terminal Space.

 

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(c)            The Cost of the North Terminal for each Fiscal Year will be an amount equal to the sum of, for such Fiscal Year:

 

(i)             O&M Expenses allocated to the North Terminal Cost Center; and

 

(ii)            Bond Debt Service allocated to the North Terminal Cost Center;

 

minus, for such Fiscal Year:

 

(iii)           Other Available Moneys allocated to the North Terminal Cost Center and used by Lessor in such Fiscal Year to pay Bond Debt Service allocated to the North Terminal Cost Center;

 

(iv)           the total amount of North Terminal International Facilities Use Fees collected by Lessor for such Fiscal Year; and

 

(v)            the total amount of North Terminal Authority-Controlled Airline Space Revenues for such Fiscal Year and North Terminal Rental Revenue.

 

D.             TERMINAL USE CHARGES FOR SHARED USE PREMISES:

 

Lessee’s Terminal Use Charges for each Fiscal Year (or portion thereof on a pro rated basis) for the use of the Shared Use South Terminal Space shall be an aggregate amount equal to the sum of:

 

1.      (a)    the product of (i) the total number of square feet of Shared Use Domestic South Terminal Space multiplied by (ii) the South Terminal Rental Rate for such Fiscal Year (as set forth in Article III.C.1.(b) or as established pursuant to Article III.C.1.(c), as the case may be) times (b) a fraction the numerator of

 

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which is the number of Lessee’s domestic deplaned passengers that used the Shared Use Domestic South Terminal Space during such Fiscal Year, and the denominator of which is the total number of all Signatory Airlines’ domestic deplaned passengers that used the Shared Use Domestic South Terminal Space during such Fiscal Year; plus

 

2.      (a)    the product of (i) the total number of square feet of Shared Use International South Terminal Space multiplied by (ii) the South Terminal Rental Rate for such Fiscal Year (as set forth in Article III.C.1.(b) or as established pursuant to Article III.C.1.(c), as the case may be) times (b) a fraction the numerator of which is the number of Lessee’s international deplaned passengers that used the Shared Use International South Terminal Space during such Fiscal Year, and the denominator of which is the total number of all Signatory Airlines’ international deplaned passengers that used the Shared Use International South Terminal Space during such Fiscal Year; plus

 

3.      (a)    the product of (i) the total number of square feet of Shared Use Swing South Terminal Space multiplied by (ii) the South Terminal Rental Rate for such Fiscal Year (as set forth in Article III.C.1.(b) or as established pursuant to Article III.C.1.(c), as the case may be) times (b) a fraction the numerator of which is the number of Lessee’s deplaned passengers that used the Shared Use Swing South Terminal Space during such Fiscal Year, and the denominator of which is the total number of all Signatory Airlines’ deplaned

 

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passengers that used the Shared Use Swing South Terminal Space during such Fiscal Year.

 

E.              ACTIVITY FEES:

 

1.              For each Fiscal Year, Lessee’s Activity Fee for the landing of aircraft operated by Lessee shall be an amount equal to the product of the number of thousand pounds of Approved Maximum Landing Weight of aircraft landed by Lessee at the Airport in such Fiscal Year, multiplied by the Activity Fee Rate for such Fiscal Year.

 

2.              The Activity Fee Rate for each Fiscal Year shall be the quotient arrived at by dividing (a) the Revenue Requirement, as below defined, for such Fiscal Year by (b) the aggregate amount of Approved Maximum Landing Weight of aircraft, in units of one thousand pounds, of all Signatory Airlines, for such Fiscal Year.  The unit thus arrived at shall be the Activity Fee Rate per thousand pounds of Approved Maximum Landing Weight payable by Lessee to Lessor for such of Lessee’s aircraft, as have landed at the Airport during the Fiscal Year for which such calculation is made.  The Activity Fee as herein established shall not be subject to further adjustment except by agreement of the parties hereto, or as provided in Article III.H.

 

3.              The “Revenue Requirement” for any Fiscal Year as used herein shall mean that amount of Revenue required to produce total net Revenue equal to the sum of:

 

(a)            O&M Expenses for such Fiscal Year; plus

 

(b)            (i) one hundred twenty-five percent (125%) of the amount of principal and interest due (net of any capitalized interest) for such Fiscal Year on all then outstanding Bonds, less (ii) any unencumbered amounts

 

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on deposit in the Revenue Fund on the last day of the Fiscal Year preceding such Fiscal Year that are useable to satisfy the rate covenant requirements of any Bond Ordinance under which Bonds have been issued, and less (iii) Other Available Moneys used in such Fiscal Year to pay Bond Debt Service; plus

 

(c)            deposits into the Bond Reserve Account, the Junior Lien Bond Reserve Account, the Operation and Maintenance Reserve Fund and the Renewal and Replacement Fund required for such Fiscal Year pursuant to the provisions of all applicable Bond Ordinances; plus

 

(d)            an amount equal to $5 million (which amount has been and shall be escalated each Fiscal Year beginning in Fiscal Year 2002 to reflect percentage increases in the Producer Price Index during the most recently ended 12-month period for which such index is available); plus

 

(e)            $350,000;

 

minus

 

(f)             an amount equal to the sum of (i) all Terminal Charges collected by Lessor for such Fiscal Year (taking into account all end-of-year payments by the Signatory Airlines or end-of-year refunds by Lessor, as the case may be, pursuant to Article III.H.4. and Article III.H.5. below of Terminal Charges for such Fiscal Year), (ii) all International Facilities Use Fees collected by Lessor during such Fiscal Year, (iii) all Authority-Controlled Airline Space Revenue, North Terminal Rental Revenue and South Terminal Rental Revenue, (iv) all concession and parking revenue, and (v) 

 

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all other Revenue received (or receivable if Lessor is on an accrual accounting basis) during such Fiscal Year, except (A) up to but not exceeding $2.5 million of Revenue attributable to an automated vehicle identification program for the entire Airport, and (B) all proceeds received by Lessor from the sale of certain parcels of Airport property located on the West side of the airfield and shown on Exhibit F .

 

F.              INTERNATIONAL FACILITIES USE FEES – FIS FACILITIES:

 

Lessor will charge each air carrier operating at the Airport an International Facilities Use Fee per deplaned international passenger of such air carrier for the use of the FIS Facilities at the Airport.  The Facilities Use Fees will be charged in accordance with the schedule attached as Exhibit I .

 

G.             CONTINUING RENTAL OBLIGATION:

 

1.              Should any scheduled air carrier, including Lessee, having an agreement with Lessor (or with Lessor in its capacity as successor of the County) substantially similar to this Agreement, terminate its operations at the Airport by reason of the loss of its operating authority to serve the Detroit Metropolitan Area and exercise the right of cancellation provided for in such case in Article XV of such agreement, its continued obligation to pay to Lessor charges thereafter due under such agreement, including space rentals and Activity Fees, shall, subject to the provisions of the paragraph next following, thereupon terminate.  Payment of rentals and Activity Fees thereafter required shall be the responsibility of such of the other aforesaid scheduled air carriers which continue to provide air transportation service to the Detroit Metropolitan Area.

 

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2.              Should (a) all such aforesaid air carriers lose their operating authority to serve the Detroit Metropolitan Area, or (b) should Lessor fail to maintain the necessary certifications required to permit scheduled air carrier operations at the Airport, and all of such air carriers exercise the right of cancellation provided for in either event in said Article XV, the obligation to pay such aforesaid charges shall terminate subject, however, to the following condition.  Until Fiscal Year 2009, upon such termination all such aforesaid carriers then operating at the Airport (including Lessee if such be the case) shall be obligated, to the extent hereinafter required, to pay annually, or in such installments as Lessor may require, an amount not in excess of three hundred percent (300%) of their respective annual rentals (calculated in the manner set forth in paragraph 2 immediately below) payable at that time for terminal building space at the Airport (whether leased under an Airport Agreement, or otherwise) for the purpose of providing funds to be applied to Bond Debt Service (exclusive of any additional coverage) on the then outstanding issues of Bonds.  Payments required of such carriers shall be assessed against each of them in a uniform manner per square foot leased and shall be diminished pro rata to the extent that Airport revenues or capital funds are realized from other sources and are available for application to the debt service on the said Bonds as provided for in Subparagraph 3 below.

 

3.              For the purpose of calculating payments which such carriers may be obligated to make, Lessor shall first determine the average annual rental rate per square foot paid for such terminal building space by all such carriers by dividing their total annual rentals for such space by the total square footage of the space.  The square footage leased by each carrier shall then be multiplied by such average rate in order to

 

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obtain an annual rental of each such carrier for the purpose of establishing the three hundred percent (300%) maximum annual limitation.

 

4.              In the event Lessor fails to maintain the necessary certifications required to permit scheduled air carrier operations at the Airport and thereafter operates at the Airport for other purposes, any revenues earned as a result shall, after providing for necessary operating and maintenance expenses, be first applied each year to such debt service requirements before requiring payments by the carriers pursuant to paragraph 1 above.  In the foregoing circumstances and as long as any of the aforesaid Bonds are outstanding, Lessor shall use its best efforts to operate or lease the Airport properties so as to produce sufficient revenues to satisfy the requirements of the aforesaid Bonds.  If under such circumstances the Airport properties or portion thereof are sold by Lessor, the proceeds of such sale(s) shall first be used (or set aside) and be applied to current and future debt service requirements or to retire the aforesaid Bonds before requiring payments by the carriers pursuant to subparagraph 1 above.

 

H.             PAYMENT OF TERMINAL CHARGES AND ACTIVITY FEES:

 

1.              INFORMATION ON SIGNATORY AIRLINES’ OPERATIONS.

 

(a)            Not earlier than 120 days nor later than 90 days prior to the last day of each Fiscal Year, each Signatory Airline shall furnish Lessor with an estimate for the next ensuing Fiscal Year of (i) the total Approved Maximum Landing Weight of all aircraft to be landed at the Airport by such Signatory Airline, (ii) the total number of such Signatory Airline’s domestic and international enplaned passengers, (iii) the number of domestic and the number of international deplaned passengers of such Signatory Airline

 

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that are estimated to use each of the Shared Use Domestic South Terminal Space, the Shared Use International South Terminal Space, the Shared Use Swing South Terminal Space, the Shared Use Domestic North Terminal Space, the Shared Use International North Terminal Space and the Shared Use Swing North Terminal Space, as the case may be, (iv) the total number of arriving and departing domestic and international flights of such Signatory Airline, and (v) in the case of Lessee only, the South Terminal O&M Expenses to be reimbursed to Lessee pursuant to Article VII.B.

 

(b)            No later than the 20th day of each calendar month, each Signatory Airline shall transmit to Lessor a report, certified by such Signatory Airline, setting forth (i) the actual number of such Signatory Airline’s enplaned passengers and the actual number of such Signatory Airline’s deplaned passengers for the preceding calendar month that used each of the Shared Use Domestic South Terminal Space, the Shared Use International South Terminal Space, the Shared Use Swing South Terminal Space, the Shared Use Domestic North Terminal Space, the Shared Use International North Terminal Space and the Shared Use Swing North Terminal Space, as the case may be, (ii) the actual aggregate Approved Maximum Landing Weight for all aircraft operated by such Signatory Airline and landed at the Airport during the preceding calendar month, (iii) the actual number of such Signatory Airline’s arriving and departing domestic and international flights for the preceding month,

 

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and (iv) in the case of Lessee only, the South Terminal O&M Expenses actually paid by Lessee pursuant to Article VII.B. for the preceding calendar month.

 

2.              PROJECTION OF RENTALS AND ACTIVITY FEES.

 

(a)            Not later than 60 days prior to the end of each Fiscal Year, Lessor shall furnish each Signatory Airline with a projection and estimated calculation for the next ensuing Fiscal Year pursuant to Article III.C., D. and E. (the “Projection”) of the South Terminal Rental Rate, the North Terminal Rental Rate, such Signatory Airline’s Terminal Charges, the Activity Fee Rate per thousand pounds of Approved Maximum Landing Weight and such Signatory Airline’s Activity Fees.  The Projection shall be based on Lessor’s estimates of O&M Expenses, Bond Debt Service, Other Available Moneys and Revenues for such Fiscal Year.  Such Projection will include Lessor’s proposed Airport budget (including all sources of revenue and all expenses) for the next ensuing Fiscal Year, together with other information relevant thereto reasonably requested by Lessee.

 

(b)            The projected South Terminal Rental Rate shall be calculated in accordance with the provisions of Article III.C.3., and shall be an amount equal to the result of such calculation, rounded up to the nearest dollar.

 

(c)            The projected North Terminal Rental Rate shall be calculated in accordance with the provisions of Article III.C.6., and shall be an amount equal to the result of such calculation, rounded up to the nearest dollar.

 

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(d)            Lessor shall give due consideration to any suggestions and comments made by Lessee with respect to the Projection.  The Projection, as revised by Lessor after considering Lessee’s suggestions and comments, shall be the basis for computing the Signatory Airlines’ Terminal Charges and Activity Fees for the next ensuing Fiscal Year unless and until otherwise revised pursuant to paragraph 4 below.

 

3.              PAYMENT OF TERMINAL CHARGES AND ACTIVITY FEES.

 

(a)            Not later than the 20th day of each calendar month of each Fiscal Year, Lessee shall pay Lessor, without demand or invoice, an amount equal to (i) 1/12 of Lessee’s aggregate Terminal Charges for such Fiscal Year, computed in accordance with Article III.C and Article III.D, and based on the Projection, as such projection may have been revised pursuant to paragraph 4 below, plus (ii) Lessee’s aggregate Activity Fees for the preceding calendar month, calculated by multiplying the total Approved Maximum Landing Weight for aircraft landed by Lessee at the Airport during the preceding calendar month by the Activity Fee Rate for such Fiscal Year, computed in accordance with Article III.E., and based on the Projection, as such projection may have been revised pursuant to paragraph 4 below.

 

(b)            Lessee may net from the payments to be made to Lessor pursuant to paragraph (a) above the amount of South Terminal O&M Expenses actually paid by Lessee pursuant to Article VII.B. for the preceding calendar month.

 

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4.              ADJUSTMENT OF TERMINAL CHARGES AND ACTIVITY FEES.  Not later than the 150th day of each Fiscal Year, Lessor shall furnish each Signatory Airline with a revised Projection (the “Mid-Year Projection”), which shall reflect the most recently available information with regard to the amounts actually incurred or realized during such Fiscal Year for Bond Debt Service, O&M Expenses and the Revenue Requirement, together with the most recently available information with regard to Terminal Charges, Activity Fees, Facilities Use Fees, Authority-Controlled Airline Space Revenues, North Terminal Rental Revenue and South Terminal Rental Revenue actually received by Lessor.  Lessor shall give due consideration to any suggestions and comments made by Lessee with respect to the Mid-Year Projection.  If the Mid-Year Projection, as revised by Lessor after considering Lessor’s suggestions and comments, indicates that aggregate payments of Terminal Charges and Activity Fees at the then-existing rates would result in an overpayment or underpayment of the aggregate amount required to be generated by Lessor through Activity Fees, Lessor shall revise the Projection and adjust the rates set forth therein for such Fiscal Year to conform to the Mid-Year Projection.

 

5.              PRELIMINARY ANNUAL SETTLEMENT AND FINAL AUDIT.

 

(a)            Within 60 days after the end of each Fiscal Year, Lessor will furnish each Signatory Airline with a preliminary report, containing a preliminary calculation, based on actual data, in accordance with this Agreement, of the South Terminal Rental Rate, the North Terminal Rental Rate and the Activity Fee Rate, and the Terminal Charges and Activity Fees estimated

 

30

 

to be chargeable to such Signatory Airline for the preceding Fiscal Year, and setting forth the amount of Terminal Charges and Activity Fees actually paid by such Signatory Airline for such period.

 

(b)            If such report indicates that the aggregate of such rentals, fees and charges actually paid by Lessee were greater than the aggregate amounts chargeable to Lessee, then within 90 days after the end of such Fiscal Year Lessor shall refund, in cash, 80% of any such estimated excess to Lessee.  If such report indicates that the aggregate of such fees and charges paid by Lessee was less than the amounts chargeable to Lessee, then within 90 days after the end of such Fiscal Year Lessee shall pay to Lessor 80% of the amount of any such estimated deficiency.  Interest shall accrue at a rate of 7% per annum, and be payable by Lessee in cash, on any portion of any deficiency not paid by Lessee when due.  Interest shall accrue at a rate of 7% per annum, and be payable by Lessor in cash, on any portion of any excess not refunded to Lessee when due.

 

(c)            By the 180th day of each Fiscal Year, Lessor shall furnish to each Signatory Airline a copy of an annual audit report prepared by a nationally recognized accounting firm, covering the operation of the Airport for the preceding Fiscal Year (the “Final Audit”).  Lessor shall prepare a calculation, based on the Final Audit, in accordance with this Agreement, of all Terminal Charges and Activity Fees chargeable to Lessee for the preceding Fiscal Year, and setting forth the amounts actually paid by Lessee for such period, taking into account all payments and refunds

 

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pursuant to paragraph 5.(b) above.  If aggregate fees and charges actually paid by Lessee were greater than the aggregate amount chargeable to Lessee, then within 30 days after delivery of the Final Audit Lessor shall refund the amount of such overpayment to Lessee.  If aggregate fees or charges actually paid by Lessee were less than the aggregate amount chargeable to Lessee, then within 30 days after receipt of the Final Audit Lessee shall pay to Lessor the amount of any such deficiency.

 

(d)           The foregoing provisions of paragraphs 5.(b) and 5.(c) notwithstanding, for purposes of calculating the amount of end-of-year refunds by Lessor or end-of-year payments by the Signatory Airlines, as the case may be, for each Fiscal Year, (i) if the calculation of the South Terminal Rental Rate for such Fiscal Year would result in an increase or decrease to the projected South Terminal Rental Rate for such Fiscal Year of $1.00 or less, the South Terminal Rental Rate used for purposes of determination of such refunds or payments, as the case may be, shall be the projected South Terminal Rental Rate, and (ii) if the calculation of the North Terminal Rental Rate for such Fiscal Year would result in an increase or decrease to the projected North Terminal Rental Rate for such Fiscal Year of $1.00 or less, the North Terminal Rental Rate used for purposes of such refunds or payments, as the case may be, shall be the projected North Terminal Rental Rate.

 

(e)           The payment by Lessee of any fees and charges hereunder and the acceptance by Lessor thereof for any Fiscal Year shall not preclude

 

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either Lessee or Lessor from questioning, within a period of one (1) year from the date of receipt by Lessee of the Final Audit for such Fiscal Year, the accuracy of any report or statement on the basis of which such payment was made, or preclude Lessor from making any claim against Lessee for any additional amount payable by Lessee, or preclude Lessee from making any claim against Lessor for the return of any excess amount paid by Lessee.

 

I.              SUPPLEMENTAL CAPITAL COST PAYMENTS:  In addition to all other rentals and charges payable hereunder by Lessee, Lessee shall pay the following annual Bond Debt Service charges, which shall be billed on a monthly basis in advance each month, in respect of certain projects that were constructed for the benefit of Lessee in the Existing Terminal Facilities pursuant to that certain Airport Agreement dated February 26, 1959, as amended, to which Lessor and the County were at one time parties:

 

1.             $463,984.20 for the United Airlines relocation project;

 

2.             $12,015.00 for the Concourse G elevator project;

 

3.             $254,158.68 for the extension to Concourse C;

 

4.             $1,206,095.64 for the new Concourse G and related projects.

 

Lessee will pay the above annual Bond Debt Service on that portion of the Bonds issued by the County in 1996 and Bonds issued by Lessor in 2003 (which refunded Bonds issued by the County in 1993) even though the term of such debt service obligation extends beyond the term of the lease of such temporary facilities.  The foregoing notwithstanding, the parties acknowledge that the aforesaid amounts will be

 

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adjusted if and when the coverage requirements change and/or the Bonds to which such Bond Debt Service charges relate are refinanced or refunded.

 

ARTICLE IV

LESSOR COVENANTS; CAPITAL EXPENDITURES

 

A.            Lessor covenants:

 

1.             That it will provide efficient management and operation of the Airport on the basis of sound business principles and that it will not incur expense for Airport operation, maintenance and administration in excess of the amounts reasonably and necessarily required therefor.

 

2.             That it shall operate the Airport in a manner so as to produce revenues from concessionaires, tenants, and users of a nature and amount which would be produced by a reasonably prudent operator of an airport.

 

3.             That it will comply in all respects with the revenue retention requirement in § 511(a)(12) of the Airport and Airway Improvement Act of 1982, as amended, now codified at 49 U.S.C. § 47107(b).

 

4.             That it will utilize competitive bidding procedures for the award of all maintenance and operation contracts and construction contracts for the Airport.

 

5.             That all senior appointed Airport officials shall have professional qualifications commensurate with the responsibilities of the jobs to be performed by such officials.

 

6.             That it will take all necessary actions to assure that the personnel of Lessor, whose wages and benefits are included in O&M Expenses, are actually performing work for the Airport as represented by such inclusion.

 

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7.             That it will operate Willow Run Airport only as a reliever airport for the Airport with no scheduled air carrier or public charter passenger service.

 

8.             That in each Fiscal Year it will use PFCs to pay PFC-eligible Bond Debt Service due during such Fiscal Year in accordance with the provisions of Exhibit H .

 

9.             That in each Fiscal Year it will make the following deposits into the following funds and accounts in addition to or in furtherance of those fund deposits required by any Bond Ordinance:

 

(a)               Three Hundred Fifty Thousand Dollars ($350,000) shall be deposited annually into the Authority Discretionary Fund;

 

(b)              Deposits shall be made into the Bond Reserve Account, the Junior Lien Bond Reserve Account, the Operation and Maintenance Reserve Fund and the Renewal and Replacement Fund pursuant to the provisions of applicable Bond Ordinances; and

 

(c)               (i) Amounts includible each Fiscal Year in the Revenue Requirement pursuant to item (d) of the definition thereof in Article IIIE.3, (ii) up to $2.5 million of revenue received by Lessor each Fiscal Year that is attributable to an automated vehicle identification program for the entire Airport, and (iii) any proceeds received by Lessor during such Fiscal Year from the sale of the Airport property shown on Exhibit F , shall be deposited into the Airport Development Fund, to be established and held by Lessor for the purposes described in Article IVD.2 below.

 

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10.           That it will subject all sales by it of the Airport property shown on Exhibit F to noise easements in the form customarily used by Lessor as part of its noise mitigation program.

 

B.            Lessor may issue Bonds to finance the costs (including all reasonable costs incidental to the issuance and sale of such bonds) of capital projects and may include the Bond Debt Service (including, among other things, coverage requirements) on such Bonds in Lessee’s fees hereunder only after first receiving approval of a Weighted Majority for such capital projects.

 

C.            Lessor may assign, in accordance with any Bond Ordinance and the terms of this Agreement, certain of its interests in and pledge certain revenues and receipts of the Airport as security for payment of the principal of, premium, if any, and interest on Bonds.  Except as set forth in the preceding sentence and except for residential property acquired by the Airport pursuant to the Airport’s noise mitigation program, Lessor shall not pledge, sell, convey, mortgage, encumber, assign or otherwise transfer the Airport or any portion thereof during the term of this Agreement.

 

D.            The following limitations shall apply to expenditures from the below-described funds and accounts:

 

1.                                        Expenditures to be made from the Authority Discretionary Fund .  Lessor may make expenditures from the Authority Discretionary Fund without approval by the air carriers for any lawful Airport-system purpose, except that expenditures for Willow Run Airport shall only be made if Lessor is in compliance with its covenant in Article IV.A.7.

 

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2.                                        Expenditures to be made from Airport Development Fund .  Lessor may make capital expenditures from the Airport Development Fund without approval by the air carriers for any lawful Airport-system related purpose, provided that Lessor shall not pledge the Airport Development Fund as security for any Bond or other debt of Lessor without approval of a Majority-in-Interest of the air carriers, and provided, further, that capital expenditures for Willow Run Airport shall only be made if Lessor is in compliance with its covenant in Article IV.A.7.

 

E.             In order to permit Lessor to issue Bonds in compliance with applicable securities laws, Lessee agrees that, upon the request of Lessor, Lessee shall provide to Lessor such information with respect to Lessee as Lessor deems reasonably necessary in order for Lessor to issue Bonds in compliance with the requirements of Rule 15c-2(12) of the Securities and Exchange Commission.

 

ARTICLE V

CONSTRUCTION, MAINTENANCE AND REPAIR BY LESSEE

 

Lessee may construct or install at its own expense any equipment, improvements and facilities, and any additions thereto, upon all or any part of the premises hereunder leased to Lessee for its preferential use and may construct or install at its own expense, any equipment, improvements and facilities authorized under Article I hereof upon any Airport property not leased to Lessee for its preferential use at such locations as may be approved by Lessor.  Plans and specifications of any proposed construction or installation of improvements and facilities (including any substantial alteration or addition thereto) shall be submitted to and receive the prior approval of Lessor.  Lessor shall have the right to refuse approval of such plans and specifications if the external appearance of such improvements and facilities does not meet Lessor’s reasonable

 

37

 

requirements for substantial uniformity of appearance of improvements and facilities on the Airport, or, if the type or time of construction or installation, or the location thereof does not meet Lessor’s reasonable requirements for safe use of the Airport and appurtenances by other authorized persons.  Lessor may, at its own cost, inspect any such construction or installation.

 

Lessee shall keep and maintain all premises here