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Exhibit 10.7
Execution Draft
SPECIAL FACILITIES LEASE
between
CHARTER COUNTY OF WAYNE, STATE OF MICHIGAN
and
MESABA AVIATION, INC.
pertaining to facilities at DETROIT METROPOLITAN WAYNE COUNTY AIRPORT
Dated as of June 1, 1990
TABLE OF CONTENTS
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MESABA AVIATION, INC. SPECIAL FACILITIES LEASE
THIS LEASE, made and entered into as of June 1, 1990, by and between the CHARTER COUNTY OF WAYNE, MICHIGAN, a public body corporate, with principal offices at 600 Randolph Street, Detroit, Michigan 48226 and MESABA AVIATION, INC., a corporation organized and existing under the laws of the State of Minnesota with principal offices located at 7501 26th Avenue South, Minneapolis, Minnesota 55450.
WITNESSETH:
WHEREAS, the County owns and operates the Detroit Metropolitan Wayne County Airport, located in the City of Romulus, County of Wayne, State of Michigan and has the power to lease premises and facilities and to grant rights and privileges with respect thereto, pursuant to the provisions of Act 327, Public Acts of Michigan, 1945, as amended; and
WHEREAS, Mesaba is engaged in the business of transporting persons, property, cargo and mail by aircraft; and
WHEREAS, Mesaba desires to lease and to obtain rights and privileges with respect to certain facilities at the Airport (as defined herein, the “Facilities”) upon the terms and conditions hereinafter provided; and
WHEREAS, because of the necessity that the Facilities be designed, acquired, constructed and installed in a manner which will suit Mesaba’s needs, Mesaba will undertake the design, acquisition, construction and installation of the Facilities on behalf of the County; and
WHEREAS, the County proposes to finance the acquisition, construction and installation of the Facilities by the issuance of bonds to be paid solely from the Net Revenues, as defined in the Ordinance (hereinafter defined), to be derived by the County under the Lease (hereinafter defined) or from any successor, amendatory or replacement contracts to the Lease; and
WHEREAS, the County and Mesaba have entered or will simultaneously enter into a separate ground lease for the use of Airport ground space for the location of the Facilities;
NOW, THEREFORE, for and in consideration of the premises and of the mutual covenants and agreements herein contained, the parties agree as follows:
DEFINITIONS AND EXHIBITS
Whenever used in the Lease, except when otherwise indicated by the context, the following terms shall have the following meanings:
“Act 94” means Act 94, Public Acts of Michigan, 1933, as amended.
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“Act 327” or “Aeronautics Code” means Act 327, Public Acts of Michigan, 1945, as amended.
“Act of Bankruptcy” means the filing of a petition in bankruptcy under the United States Bankruptcy Code or the commencement of a proceeding under any other applicable law now or hereafter in effect by or against Mesaba or any successor to or assignee of the Lease.
“Additional Bonds” means any bonds of equal standing issued under the authority of the Ordinance in addition to the Series 1990 Bonds.
“Airport” means the Detroit Metropolitan Wayne County Airport and all aeronautical facilities owned and operated by the County in connection therewith, including all real property now or hereafter owned by the County, the terminal buildings, airport facilities and all other improvements and equipment now or hereafter located, constructed, installed or situated thereon.
“Alternate Letter of Credit” means an irrevocable letter of credit delivered to, and accepted by, the Trustee pursuant to the Ordinance. An Alternate Letter of Credit shall be issued by a commercial bank organized and doing business in the United States or a branch or agency of a foreign commercial bank located in the United States and subject to regulation by state or federal banking regulatory authorities the senior debt of which is rated by a national rating agency in the same or better category as the senior debt of the issuer of the then effective Letter of Credit, or, in the alternative, of the outstanding obligations then rated on the basis of a letter of credit issued by such issuer, and shall be in substantially the form of the original Letter of Credit. On or before the date of the delivery of any Alternate Letter of Credit to the Trustee, as a condition to the acceptance of such Alternate Letter of Credit by the Trustee, the Obligor shall furnish to the Trustee (i) written evidence that the issuer of such Alternate Letter of Credit is a commercial bank organized and doing business in the United States or a branch or agency of a foreign commercial bank located and doing business in the United States and subject to regulation by state or federal banking regulatory authorities, (ii) an opinion of Bond Counsel stating that the delivery of such Alternate Letter of Credit to the Trustee is authorized under this Lease and complies with the terms hereof and that the delivery of such Alternate Letter of Credit does not adversely affect the exclusion from gross income for Federal income tax purposes for the interest on the Bonds, and (iii) an opinion of counsel satisfactory to the Trustee in form satisfactory to the Trustee to the effect that the Alternate Letter of Credit is the valid and binding obligation of the bank (or, in the case of a branch or agency of a foreign commercial bank, the branch or agency) issuing the same, enforceable in accordance with its terms. In the case of an Alternate Letter of Credit issued by a branch or agency of a foreign commercial bank there shall also be delivered an opinion of counsel satisfactory to the Trustee and licensed to practice law in the jurisdiction in which the head office of such bank is located in form satisfactory to the Trustee, to the effect (i) that the Alternate Letter of Credit is the valid and binding obligation of such bank enforceable in accordance with its terms in the courts of the jurisdiction in which the head office of such bank is located, (ii) that such bank has consented to jurisdiction in the United States, (iii) that such branch or agency is subject to banking regulations of the United States or any state thereof, and (iv) that a judgment upon the Alternate Letter of Credit obtained in the United States against such branch or agency would be enforceable against such bank in the courts of the jurisdiction in which the head office of such bank is located without relitigation of the merits.
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“Authorized Representative” means the representative of Mesaba, duly authorized by proper action of Mesaba, as evidenced by a signed certificate of its Secretary, to act on behalf of Mesaba.
“Bank” means Norwest Bank Minnesota, National Association, or any provider of an Alternate Letter of Credit.
“Best Efforts” means that the County shall use all commercially reasonable efforts, calculated to reach any potential user of any vacated portion of the Facilities, which is willing to relet such Facilities and become a party to and assume the Mesaba obligations under the Lease, the Airport Agreement and/or Ground Lease with respect to such Facilities.
“Bond Counsel” means Miller, Canfield, Paddock and Stone, attorneys of Detroit, Michigan, Lewis, White & Clay, A Professional Corporation, attorneys of Detroit, Michigan, or any nationally recognized bond counsel acceptable to the Trustee and the County.
“Bond Fund” refers to the Bond and Interest Redemption Fund created pursuant to Section 5.2B of the Ordinance.
“Bond Payment Date” means any of the dates specified in the Ordinance for payment of interest, or interest and principal, on the Bonds, which dates occur semiannually on June 1 and December 1 of each year, commencing December 1, 1990.
“Bonds” means the Series 1990 Bonds and any Additional Bonds issued pursuant to the Ordinance.
“Code” means the Internal Revenue Code of 1986, as amended, and the regulations, rulings and court decisions thereunder.
“Completion Certificate” means the certificate referred to in Section 4.8 hereof, substantially in the form attached hereto as Exhibit C.
“Completion Date” means the date upon which the Completion Certificate is delivered to the Trustee.
“Construction Fund” shall have the meaning assigned to such term in the Ordinance.
“Consulting Engineer” means Albert Kahn Associates, Inc., Architects & Engineers, Detroit, Michigan.
“County” means the Charter County of Wayne, State of Michigan.
“County Approval” means approval by the Assistant County Executive for Airports and Major County Construction or his designee.
“Current Expenses” shall have the meaning assigned to such term in Section 2.6.
“Default” and “Event of Default” means those defaults and events of default, respectively, specified and defined in Article IX.
“Disbursing Agreement” means the Disbursing Agreement dated as of June 1, 1990, among Mesaba, the Bank, the Trustee and Commonwealth Land Title Insurance Company or an agent thereof.
“Effective Date” means the date of delivery of the Series 1990 Bonds at which time the Lease term begins, if not earlier begun.
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“Facilities” means the design, acquisition, construction and installation of the airport facilities described in Exhibit A.
“Facilities Costs” shall be deemed to include all costs for the design, acquisition, construction, installation and financing of the Facilities, including, but not limited to obligations of the County or Mesaba on behalf of the County incurred for: (a) materials, machinery, furnishings and equipment and for labor and contractors, builders and materialmen in connection with the design, acquisition, construction and installation of the Facilities or any portion thereof; (b) the cost of contract bonds and of insurance of all kinds that may be required or necessary during the course of construction of the Facilities or any portion thereof which is not paid by the contractor or contractors or otherwise provided for; (c) architectural and engineering expenses for test borings, surveys, estimates, plans and specifications and preliminary investigations therefor, and for supervising construction, as well as for the performance of all other duties required for the proper construction of the Facilities or any portion thereof; (d) legal, accounting, financial and printing expenses and fees, compensation and expenses of the County, the Bank, the Trustee and the Placement Agent, and all other expenses incurred in connection with the acquisition of the Facilities or any portion thereof and the issuance of the Bonds; (e) all other costs which the County or Mesaba shall be required to pay, under the terms of any contract or contracts approved by the County, for the design, acquisition, construction and installation of the Facilities or any portion thereof; (f) fees and expenses incurred in connection with the issuance of the Letter of Credit; (g) the cost of a Title Insurance Policy and survey of the site of the Facilities; and (h) any sums required to reimburse the County or Mesaba for advances made by either of them for any of the above items, or for any other costs incurred and for work done by either of them which are properly chargeable to the Facilities.
“Facilities Purposes” means the use of the Facilities set forth in Section 2.3 of the Lease.
“Ground Lease” means the agreement dated as of June 1, 1990, as amended or extended, between the County and Mesaba by which Mesaba obtains the use of real property upon which the Facilities shall be constructed at the Airport.
“Improvements to the Facilities” means such additions (including real property), equipment, improvements, modifications or relocations as the County may approve and which Mesaba may deem necessary or desirable in, on, or to the Facilities, all of which shall be included in the Plans and Specifications and shall become part of the Facilities.
“Investment Income” shall have the meaning assigned to such term in the Ordinance.
“Lease” means this Special Facilities Lease, as amended from time to time.
“Letter of Credit” means a Letter of Credit providing for payment of the Series 1990 Bonds which Mesaba is obligated to deliver simultaneously with the delivery of Series 1990 Bonds substantially in the form attached to the Reimbursement Agreement.
“Mesaba” means Mesaba Aviation, Inc., a Minnesota corporation, and its successors and assigns.
“Net Revenues” means all revenues of the Facilities, including Special Facilities Charges and Investment Income, derived from the Facilities under the Lease, or under any successor contract or agreement, or the Letter of Credit, or from the Bond proceeds, after payment of Current Expenses.
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“Notice of Intent Resolution” means the resolution adopted by the County Commission on January 18, 1990, which, inter alia, stated the intent of the County to issue the Series 1990 Bonds to finance the Facilities.
“Operating Year” means the operating year of the County; i.e., December 1 of each year to and including December 30 of the following calendar year.
“Operation and Maintenance Fund” shall have the meaning assigned to such term in Section 5.2A of the Ordinance.
“Ordinance” means Ordinance No. 322 adopted by the County Commission, authorizing issuance of the Bonds and supplemented in accordance with its terms.
“Outstanding Bonds” or “Bonds outstanding” shall mean all Bonds which have been authenticated and delivered by the Trustee under the ordinance, except:
(a) Bonds canceled after purchase in the open market or because of payment at or redemption prior to maturity;
(b) Bonds deemed paid under the Ordinance; or
(c) Bonds in lieu of which other Bonds have been authenticated under this Ordinance.
“Placement Agent” shall have the meaning assigned to such term in the Ordinance.
“Plans and Specifications” means the drawings, plans and technical specifications relating to the design, installation and construction of the Facilities, as amended from time to time and prepared in sufficient detail to permit the County to approve the character, placement and appearance of the Facilities.
“Rebate Account” shall have the meaning assigned to such term in the Ordinance.
“Receiving Fund” shall have the meaning assigned to such term in the Ordinance.
“Redemption Price” means with respect to the Bonds, the principal amount of the Bonds to be redeemed, plus the applicable premium, if any, payable upon redemption (but excluding any Conditional Supplemental Premium) as set forth in the BOND FORM APPENDIX to the Ordinance.
“Reimbursement Agreement” means the Letter of Credit and Reimbursement Agreement dated as of June 1, 1990, between Mesaba and the Bank.
“Requisition Certificate” means the certificate referred to in Section 4.6, a form of which is attached as Exhibit B.
“Series 1990 Bonds” means the Charter County of Wayne (Michigan) Special Airport Facilities Revenue Bonds (Mesaba Aviation, Inc. Facilities), Series 1990.
“Special Facilities Charges” means the rental payments to be remitted directly to the Trustee and to the County pursuant to the Lease which shall be in an amount sufficient to pay Current Expenses and to ensure sufficient Net Revenues for timely payment of the principal or Redemption Price and interest on the Bonds, whether at maturity or redemption as the same become due, and any required deposits to make up deficiencies in the Reserve Account.
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“Title Insurance Policy” shall be the Title Insurance Policy described in the Disbursing Agreement.
“Trustee” means the Trustee under the Ordinance, or any successor at any later time serving under the Ordinance.
1.2 Exhibits . Exhibits to the Lease consist of:
A Description of the Facilities. B Requisition Certificate. C Completion Certificate.
THE LEASE AND SPECIAL FACILITIES CHARGES
2.1 Description . The County hereby leases to Mesaba, and Mesaba hereby leases from the County, the Facilities described in Exhibit A.
2.2 Term . Mesaba shall have use of the Facilities for a term commencing upon the earliest of: (1) the date Mesaba enters upon, with permission of the County, the site of the Facilities or any portion of them, for the use or construction thereof or for the installation of any equipment, facilities or improvements thereon or for any other purpose, or (2) the date the County or any of its agents enters upon the Facilities or the site of the Facilities, for the purpose of constructing or installing any part of the Facilities in accordance with a request from Mesaba, or (3) the Effective Date.
The Lease shall terminate June 1, 2010, unless cancelled earlier in accordance with its terms; provided, however, that Mesaba shall have the option to renew the Lease for a term of five (5) years at fair market value determined at the time of renewal; and provided further that in the event the Ground Lease shall for any reason terminate before the Bonds have been paid, (i) the Lease shall terminate simultaneously with the termination of the Ground Lease, (ii) the Bonds shall be subject to mandatory redemption as provided in the Ordinance, (iii) all Special Facilities Charges hereunder shall be accelerated and (iv) Mesaba shall forthwith pay all Special Facilities Charges due. The County shall give 60 days prior written notice to Mesaba of the termination date of the Lease and of the Special Facilities Charges for the renewal term. Mesaba shall notify the County in writing not less than 30 days prior to the termination date of Mesaba’s election to renew the Lease. In the event Mesaba shall fail to give such notice, the renewal option shall lapse.
2.3 Permitted Uses and Purposes . The Facilities may be used by Mesaba, subject to the rules and regulations of the County, in the conduct of its air transportation business generally, and specifically for aircraft maintenance, storage and employee training purposes and related activities reasonably necessary to the foregoing; provided, however, that the foregoing rights and uses granted Mesaba shall not be construed as authorizing the conduct of a separate business by Mesaba other than its air transportation business.
2.4 Special Facilities Charges . Mesaba shall pay Special Facilities Charges as rent and consideration for its lease rights to the Facilities, separate from and in addition to amounts paid under the Ground Lease. Special Facilities Charges shall be in an amount sufficient to pay Current Expenses, the principal of, Redemption Price and interest on the Bonds.
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2.5 Manner of Payment and Amount of Special Facilities Charges . Special Facilities Charges shall be paid on the 1st day of each month (or the first Business Day thereafter if the 1st day of the month shall not be a Business Day) commencing July 1, 1990, by Mesaba in immediately available funds directly to the Trustee for deposit into the Receiving Fund or, in the case of Current Expenses, directly to the County. The Trustee shall disburse the Special Facilities Charges from the Receiving Fund as provided in the Ordinance. Monthly Special Facilities Charges shall be the total of:
(a) Current Expenses for such month as scheduled in the County’s notice of Current Expenses pursuant to Section 2.6;
(b) 1/5 of the total amount of interest on the Bonds coming due on December 1, 1990, with credit for accrued interest received upon delivery of the Bonds, and any investment earnings on deposit in the Bond Fund, and, commencing December 1, 1990, 1/6 of the total amount of interest on the Bonds next coming due, with credit for any investment earnings on deposit in the Bond Fund;
(c) 1/35 of the principal due by maturity on the Bonds on June 1, 1993, and, commencing June 1, 1993, 1/12 of any principal due by maturity on the Bonds on the next succeeding June 1;
(d) 1/6 of any principal due by Mandatory Sinking Fund Redemption on the Bonds on the next succeeding June 1 or December 1; and
(e) Less or with credit against such monthly Special Facilities Charges for moneys then in the Receiving Fund and creditable for the foregoing purposes, if any.
In addition to the monthly payment of Special Facilities Charges described above, Mesaba shall pay, as additional Special Facilities Charges and within 30 days from notification from the Trustee of any call for redemption of Bonds other than a Mandatory Sinking Fund Redemption, an amount equal to the Redemption Price, plus Conditional Supplemental Premium, if any, of all Bonds to be called. If on any Bond Payment Date the balance in the Letter of Credit Account of the Bond Fund is insufficient to make the required payments of principal, or Redemption Price and interest on the Bonds, Mesaba shall forthwith pay in immediately available funds any such deficiency to the Trustee for deposit into the Bond Fund. Any moneys on deposit (A) in the Bond Fund on any Bond Payment Date in excess of the amount required (i) for payment of amounts owing the Bank pursuant to the Reimbursement Agreement, (ii) for payment of principal of, Redemption Price (if any), plus Conditional Supplemental Premium, if any, and interest on Bonds matured or called for redemption or (iii) for past-due interest, or (B) in the Operation and Maintenance Fund for payment of Current Expenses, shall be held for credit to Mesaba’s Special Facilities Charges next due.
2.6 Notice of Current Expenses . At the commencement of the Lease and for the remainder of any Operating Year already commenced and 30 days prior to the commencement of each subsequent operating Year, the County shall notify Mesaba of estimated Current Expenses for each month of such remainder of the Operating Year or subsequent Operating Year. Current Expenses shall include the following and items of a similar nature:
(i) Expenses of the County and its accountants in keeping proper books of record and account for all dealings, transactions, income and disbursements, with respect to the Facilities and the Bonds; and
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(ii) Maintenance, utilities and insurance costs incurred by the County respecting the Facilities.
During an Operating Year the County may notify Mesaba that the projected Current Expenses payments are or were insufficient to meet actual Current Expenses. Within 30 days of receipt of such notice Mesaba shall pay any deficit of Current Expenses accrued, and subsequent monthly payments of Special Facilities Charges shall be increased by the amount necessary to meet revised estimated Current Expenses.
Within 60 days following the end of each Operating Year, the County shall submit a statement of actual Current Expenses incurred during the preceding Operating Year. To the extent that actual Current Expenses were less than amounts paid as Current Expenses, the next following monthly payments of Current Expenses shall be reduced. Mesaba may request details of such estimated or actual Current Expenses, and in the event of disagreement as to the basis for, or the amounts of such estimated or actual Current Expenses, such disagreement may be submitted for arbitration; provided, however, the County’s good faith determinations (i) that it is responsible for maintenance, insurance, or utilities, respectively, and (ii) that the cost of such maintenance, insurance, or utilities, respectively, is not otherwise reimbursed to it and is owing to it as part of Current Expenses shall be conclusive.
2.7 Prepayment . Mesaba may at any time prepay all or any part of the Special Facilities Charges. Prepayment of such Special Facilities Charges shall not in any way alter or suspend any obligations of Mesaba under the Lease except to the extent the same results in a credit against Special Facilities Charges because of prepayment and retirement of Bonds in accordance with the Ordinance.
FINANCING THE FACILITIES
3.1 Issuance of Series 1990 Bonds . The County agrees to use its best efforts to procure or cause to be procured financing to cover the cost of the design, acquisition, construction and installation of the Facilities, by the issuance of the Series 1990 Bonds, secured by the Net Revenues. Mesaba unconditionally agrees to pay the Special Facilities Charges at the times and in the manner set forth in Article II, and agrees further at all times to cause to be maintained the Letter of Credit in support of Mesaba’s payment obligations with respect to the Series 1990 Bonds. It is understood that payment of the Bonds will in no event be an obligation of the County, and will in no event involve the credit or general funds of the County or the Airport or the taxing power of the County. If for any reason the Ground Lease is not executed and delivered by the County or the Series 1990 Bonds are not authorized and issued by the County, then this Lease shall be void and of no effect.
3.2 Series 1990 Bond Details . The principal amount of the Series 1990 Bonds shall be $3,630,000 which amount, together with additional moneys contributed by Mesaba, Mesaba and its architects and engineers estimate to be sufficient to pay the cost of the Facilities, including bond issuance costs, debt service reserves, and other incidental costs permitted by law. The Bonds will mature over a period of 15 years with serial and term maturities within the limitations specified in Act 94, the first of which shall become due by maturity or Mandatory Sinking Fund
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Redemption not later than June 1, 1993, and shall bear interest at such rate or rates as shall be specified in the Ordinance.
3.3 Insufficiency of Series 1990 Bond Proceeds . The County makes no warranty, either express or implied, and offers no assurances that the proceeds derived from the sale of the Series 1990 Bonds will be sufficient to pay the entire Facilities Costs, and the County shall not be liable to Mesaba if for any reason the Facilities are not completed. In the event moneys in the Construction Fund are insufficient to pay the entire Facilities Costs, Mesaba shall complete the Facilities and pay Facilities Costs in excess of the amount available in the Construction Fund. Mesaba shall not, by reason of the payment of any portion of Facilities Costs, be entitled to any reimbursement from the County, the Trustee or any holders of the Bonds in respect thereof or to any diminution or abatement of Special Facilities Charges. If the Facilities are not completed, Mesaba shall nevertheless be unconditionally obligated to pay the total Special Facilities Charges required to be paid pursuant to Article II of the Lease and shall be responsible for all other obligations imposed by the terms hereof upon Mesaba, it being the intention that all risk of failure to complete the Facilities or any of them shall be assumed by Mesaba and not by the County or by the Bondholders.
3.4 Additional Bonds . Notwithstanding anything contained in this Section or elsewhere in the Lease the County may but shall not be obligated to issue such Additional Bonds or series of Bonds as may be necessary to pay any one or more of the following costs: (a) for completing the Facilities; (b) for constructing or acquiring Improvements to the Facilities; (c) for funding reserves; (d) for refunding of all or any part of the Series 1990 Bonds; and (e) for payment of the costs of issuance and sale of the Additional Bonds and capitalized interest for such period and other costs reasonably related to the financing as shall be agreed upon by Mesaba and the County; provided, however, that the County and the Trustee shall be furnished with an opinion of Bond Counsel that the issuance of Additional Bonds and the expenditure of proceeds from the sale thereof is permitted by Act No. 94 and the Ordinance and will not impair the exclusion of interest on the Series 1990 Bonds from gross income for federal income tax purposes. Prior to the issuance of any Additional Bonds, their terms, the purchase price to be paid therefor and the manner in which the proceeds are to be disbursed, shall be approved in writing by the Bank (if the Letter of Credit or Alternate Letter of Credit is then in effect), the County and Mesaba, and Mesaba and the County shall have entered into an amendment to the Lease, if necessary, to provide for Special Facilities Charges in an amount at least sufficient to pay Current Expenses and the principal of, redemption price (if any) and interest on the Additional Bonds when due.
Nothing contained in this Article or the Lease shall be construed in such way as to prevent similar financing of additional capital improvements and facilities which may be constructed in the future at the Airport for lease to and use by Mesaba, but the Special Facilities Charges shall not be pledged as security for any bonds or obligations (other than Additional Bonds) issued for such purpose.
3.5 Use of Surplus Bond Proceeds . As soon as practicable and in any event within 60 days from the date of delivery of the Completion Certificate, any balance remaining in the Construction Fund described in the Ordinance (other than the amounts retained by the Trustee for payment of any Facilities Costs not then due and payable, any amounts deemed necessary by the Trustee to pay costs of any litigation arising from construction of the Facilities, or amounts being contested by Mesaba), herein called “Surplus Bond Proceeds,” shall be deposited in the
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Bond Fund, or applied as set forth below for Improvements to the Facilities, as Mesaba shall in writing direct the Trustee with the written consent of the Bank, and Mesaba shall simultaneously advise the County of such direction to the Trustee.
If Mesaba shall elect to use Surplus Bond Proceeds to acquire Improvements to the Facilities, such Surplus Bond Proceeds shall remain in the Construction Fund and be disbursed to pay the cost of acquiring, constructing and installing such Improvements to the Facilities in the same manner as payments from the Construction Fund; provided that (i) the use of Surplus Bond Proceeds for the Improvements to the Facility shall be approved by the County, the Michigan Department of Treasury to the extent such approval may be required, and Bond Counsel; (ii) such Surplus Bond Improvements to the Facilities shall consist of airport facilities as permitted by the Code and the Aeronautics Code; and (iii) Mesaba shall diligently proceed to acquire, construct and install such Improvements to the Facilities and expend therefor all Surplus Bond Proceeds within three years from the date of issuance of the Bonds from which such Surplus Bond Proceeds are derived. To the extent that the Surplus Bond Proceeds exceed the cost of acquiring, installing and constructing such Improvements to the Facilities, or in the event Mesaba elects not to, or is unable to, use the Surplus Bond Proceeds to acquire such Improvements to the Facilities, the Surplus Bond Proceeds and the investment income thereon shall be applied, to the extent thereof, (i) to the principal payments next coming due on the Bonds or, (ii) at Mesaba s option, exercised by direction given to the Trustee in writing, and if otherwise permitted under the terms of the Bonds, to redeem in accordance with the optional redemption provisions set forth in the BOND FORM APPENDIX attached to the Ordinance at the earliest possible time such portion of the Bonds which, together with the applicable redemption premium, equals the amount of the Surplus Bond Proceeds and the investment income thereon.
In no event shall Surplus Bond Proceeds or the investment income thereon be used to pay interest on the Bonds.
CONSTRUCTION OF FACILITIES; APPLICATION OF BOND PROCEEDS
4.1 Mesaba Obligation to Construct Facilities . Mesaba shall construct or cause to be constructed the Facilities, using to the extent sufficient therefor the net proceeds derived from the issuance and sale of the Bonds, other moneys in the Construction Fund and additional funds provided by Mesaba. Mesaba shall promptly complete the Facilities substantially in accordance with the Plans and Specifications.
4.2 Consulting Engineer; Duties . The Consulting Engineer shall develop the Plans and Specifications, obtain County Approval thereof, and supervise the construction of the Facilities in accordance with the Plans and Specifications and the design and contracting procedures specified in Section 4.4. The Consulting Engineer shall approve all Requisition Certificates submitted to the Trustee and shall, by such approval, certify that the representations made therein are accurate.
4.3 Mesaba Contracting and Construction Responsibilities . Mesaba shall promptly undertake, at its sole cost and expense but on behalf of the County, the acquisition, construction and installation of the Facilities in accordance with the Plans and Specifications and the design
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and construction procedures set forth in Section 4.4. Mesaba shall negotiate and award construction contracts subject to County approval, and shall supervise, manage and be responsible for the acquisition, construction and installation of the Facilities through completion.
4.4 Design and Construction Procedures; Construction Contracts and Sub-Contracts . The design and construction of the Facilities will be in accordance with procedures and standards established or approved by the County for projects of similar scope at the Airport. Each contract package shall be completed or caused to be completed by Mesaba to a level of detail satisfactory to the County. Construction contracts and sub-contracts shall include provisions (i) requiring the contractor or sub-contractor to observe the same non-discriminatory policy and affirmative action practices agreed upon by Mesaba under Section 7.10 of the Lease, (ii) providing that the contractor agrees to have no right to place a lien upon any property, real or personal, of the County or the Airport and covenants to place no such lien, and further agrees that nothing in any such contract could impose any obligation, liability or duty upon the County or the Airport, and (iii) requiring that each contractor include in its subcontract provisions such as those required under subparagraphs (i) and (ii).
4.5 Submission and Approval of Plans and Contracts; Construction Inspection . Mesaba shall not enter into any construction contracts until Plans and Specifications therefor have been submitted and received County Approval and shall not proceed with construction until contracts and sub-contracts therefor have been submitted and received County Approval and until a construction permit is issued by the County and until any other required building or construction permit has been issued. The County shall approve or disapprove Plans and Specification or construction contracts within 21 days of submission by Mesaba.
Mesaba shall be permitted to alter, modify or expand the Facilities in such manner and to such degree as necessary to satisfy Mesaba’s requirements provided such work does not interfere with the County’s proposed Airport expansion plans and provided that prior to commencement of any such work, Mesaba shall submit plans and specifications and contracts for County Approval and permits in the same fashion as prescribed for the initial construction.
Mesaba shall submit to the County periodically upon request updated construction contracts and sub-contracts, together with the anticipated dates of completion of each such contract or sub-contract, in such detail as the County may reasonably require.
The County shall have the right to inspect the construction of the Facilities to insure that the elements which comprise the Facilities are constructed and installed in conformity with approved Plans and Specifications and all amendments thereto. Mesaba agrees that, subject to reasonable security and safety regulations and reasonable notice, the County and the Trustee, or their agents, shall have the right to enter the Facilities and to examine all records and reports prepared with respect to the Facilities.
4.6 Disbursements from Construction Fund . The Trustee is authorized under the Ordinance to make disbursements from the Construction Fund to pay Facilities Costs in accordance with the terms and provisions of the Disbursing Agreement upon receipt of a Requisition Certificate signed by an Authorized Representative of Mesaba, approved by the Consulting Engineer and the Bank, with a copy to the County, substantially similar to the form appended as Exhibit B.
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Upon a Mandatory Redemption of the Bonds by reason of failure of Mesaba to provide and cause to remain in effect the Letter of Credit, the County shall require that funds in the Construction Fund be transferred to the Bond Fund to be used as provided in the Ordinance.
4.7 County Rights to Stop or Alter Construction . If construction or installation of the Facilities is not proceeding or has not been completed in substantial accordance with the Plans and Specifications as approved by the County, or if any variations adversely affect the County’s operation of the Airport, or materially fail to conform to the County’s requirements for Airport facilities, the County may suspend construction and, by written notice to Mesaba with a copy to the Bank, demand that Mesaba make appropriate changes in the construction or installation, and Mesaba shall forthwith undertake the changes requested; provided, however, that if Mesaba shall have failed to commence and make material progress in implementing the changes requested within 60 days of the date of such demand, the County shall have the right to enter upon the premises involved and effect such changes, charging Mesaba the costs and expenses thereof. Mesaba agrees hereby to pay all such charges upon demand.
4.8 Completion of Construction . When the Facilities, or any portion of them subject to the same construction contract package, have been substantially completed and are ready for occupancy by Mesaba, Mesaba shall deliver to the County a complete set of as-built construction drawings. When all Facilities have been substantially completed and are ready for occupancy by Mesaba, Mesaba shall deliver the Completion Certificate executed by an Authorized Representative of Mesaba and approved by the Consulting Engineer, together with any other certificate or permit which may be required by the County or any federal, state or local government or agency as a condition to the occupancy of the Facilities. Title to all components of the Facilities, including all alterations, modifications and enlargements thereto, acquired, constructed or installed by Mesaba shall vest in the County.
4.9 Building Permits and Performance Bond . Mesaba shall, at its sole cost and expense, procure or cause to be procured, prior to and subsequent to construction as applicable, any and all necessary building permits, other permits, licenses and other authorizations required for the lawful and proper construction, use, occupancy, operation and management of the Facilities.
Prior to construction of any portion of the Facilities, Mesaba shall obtain or cause to be obtained one of the following alternatives: (i) a performance bond and a labor and material payment bond, naming the County and the Bank as co-payees, issued by a surety company acceptable to the County, each of which shall be in a penal sum equal to the amount of any general contract or of any subcontract greater than $5,000 or (ii) a letter of credit or similar performance guaranty satisfactory to the County.
MAINTENANCE, REPAIR AND OPERATION
Section 5.1 Maintenance . Mesaba shall keep and maintain the Facilities in good condition and repair, reasonable wear and tear excepted. Mesaba further shall keep the Facilities in a sanitary and sightly condition, and shall provide all necessary janitor services and maintenance with respect thereto. In the event | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
AGREEMENTS / CONTRACTS
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