EXHIBIT 10.31(a)
CLEVELAND HOPKINS INTERNATIONAL AIRPORT
SPECIAL FACILITIES LEASE AGREEMENT
WITH
CONTINENTAL AIRLINES, INC.
__________________________________________________
1997 Concourse Expansion
__________________________________________________
Dated as of
October 24, 1997
__________________________________________________
TABLE OF CONTENTS
ARTICLE I - DEFINITIONS. . . . . . . . . . . . . . . . . . . . .2
ARTICLE II - RIGHTS, PRIVILEGES AND PREMISES . . . . . . . . . .9
2.01 Lease and Use of Continental Special Facilities. . .9
2.02 Space in and Adjacent to Terminal Building . . . . 10
2.03 Access . . . . . . . . . . . . . . . . . . . . . . 11
2.04 Use by Airline . . . . . . . . . . . . . . . . . . 12
2.05 Environmental Compliance . . . . . . . . . . . . . 12
ARTICLE III - OCCUPANCY; TERM. . . . . . . . . . . . . . . . . 16
3.01 Term . . . . . . . . . . . . . . . . . . . . . . . 16
3.02 Relationship to Other Agreements . . . . . . . . . 18
ARTICLE IV - QUIET ENJOYMENT . . . . . . . . . . . . . . . . . 20
ARTICLE V - ISSUANCE OF BONDS AND GARBS; CONSTRUCTION
OF 1997 CONCOURSE EXPANSION; PAYMENT OF
COSTS OF THE 1997 CONCOURSE EXPANSION. . . . . . . 21
5.01 Issuance of the Bonds; Deposit of Bond Proceeds;
Deposit of Airline's Funds . . . . . . . . . . . 21
5.02 Issuance of GARBs. . . . . . . . . . . . . . . . . 23
5.03 Allocation of Costs of Facilities. . . . . . . . . 24
5.04 Reimbursements and Disbursements Generally . . . . 24
5.05 Specific Reimbursement and Disbursement Matters. . 25
5.06 Airline's Obligation to Complete Construction of the
1997 Concourse Expansion . . . . . . . . . . . . 27
5.07 Construction of 1997 Concourse Expansion . . . . . 28
5.08 Subsequent Improvements by Airline . . . . . . . . 32
5.09 Environmental Compliance, Remediation and Liability
During the Construction Phase. . . . . . . . . . 32
5.10 FAA Coordination . . . . . . . . . . . . . . . . . 34
5.11 ODOT Coordination. . . . . . . . . . . . . . . . . 34
5.12 Regulatory Delays. . . . . . . . . . . . . . . . . 34
5.13 Permanent Rental Car Facilities. . . . . . . . . . 35
5.14 Default, Notice and Termination During the
Construction Period. . . . . . . . . . . . . . . 36
ARTICLE VI - OPERATION AND MAINTENANCE OF CONTINENTAL SPECIAL
FACILITIES; UTILITIES . . . . . . . . . . . . . . 39
6.01 Operation and Maintenance of Continental
Special Facilities . . . . . . . . . . . . . . . 39
6.02 Efficient Use of Space . . . . . . . . . . . . . . 40
6.03 Hydrant Fueling System . . . . . . . . . . . . . . 40
6.04 Loading Bridges. . . . . . . . . . . . . . . . . . 41
6.05 Ramp Areas . . . . . . . . . . . . . . . . . . . . 41
6.06 Construction, Installation and Maintenance
of Utilities . . . . . . . . . . . . . . . . . . 41
6.07 Relocation of Underground Utilities. . . . . . . . 41
6.08 Security . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE VII - BASIC RENT, CHARGES AND FEES; BOND RENT. . . . . 43
7.01 Payment of Rentals, Charges and Fees . . . . . . . 43
7.02 Basic Rent . . . . . . . . . . . . . . . . . . . . 43
7.03 Determination and Annual Adjustment of Basic Rent. 43
7.04 Basic Rent Reserve . . . . . . . . . . . . . . . . 45
7.05 Bond Rent. . . . . . . . . . . . . . . . . . . . . 46
7.06 Utilities. . . . . . . . . . . . . . . . . . . . . 47
7.07 Concession for Sale of Alcoholic Beverages . . . . 47
7.08 Additional Payments by City. . . . . . . . . . . . 47
ARTICLE VIII - RELATED INDENTURE PROVISIONS & UNDERSTANDINGS . 48
8.01 Trust Indenture and Financial Structure. . . . . . 48
8.02 Airline to Maintain Its Legal Existence. . . . . . 48
8.03 Financial Reports. . . . . . . . . . . . . . . . . 48
8.04 Tax Matters. . . . . . . . . . . . . . . . . . . . 48
8.05 Continuing Disclosure. . . . . . . . . . . . . . . 50
ARTICLE IX - RULES AND REGULATIONS; COMPLIANCE WITH LAWS;
ADDITIONAL COVENANTS. . . . . . . . . . . . . . . 51
9.01 Rules and Regulations. . . . . . . . . . . . . . . 51
9.02 Compliance with Laws . . . . . . . . . . . . . . . 51
9.03 Ramp Usage and Servicing . . . . . . . . . . . . . 52
9.04 New Employee Parking Lot . . . . . . . . . . . . . 52
9.05 Noise Abatement. . . . . . . . . . . . . . . . . . 53
ARTICLE X - RELEASE AND INDEMNIFICATION; DAMAGE
OR DESTRUCTION; INSURANCE. . . . . . . . . . . . . 54
10.01 Release and Indemnification. . . . . . . . . . . . 54
10.02 Insurance. . . . . . . . . . . . . . . . . . . . . 54
10.03 Damage or Destruction. . . . . . . . . . . . . . . 55
10.04 Waiver of Subrogation; Property Damage Insurance . 57
ARTICLE XI - CERTAIN RIGHTS OF CITY. . . . . . . . . . . . . . 58
11.01 Eminent Domain . . . . . . . . . . . . . . . . . . 58
11.02 Right to Enter, Inspect and Repair . . . . . . . . 59
11.03 Accommodation of Airport Construction. . . . . . . 60
ARTICLE XII - DEFAULTS . . . . . . . . . . . . . . . . . . . . 63
12.01 Events of Default. . . . . . . . . . . . . . . . . 63
12.02 Remedies . . . . . . . . . . . . . . . . . . . . . 64
12.03 Effect of Termination. . . . . . . . . . . . . . . 65
12.04 Additional Rights . . . . . . . . . . . . . . . . 65
ARTICLE XIII - ASSIGNMENT AND SUBLETTING . . . . . . . . . . . 66
13.01 Assignment or Sublease . . . . . . . . . . . . . . 66
13.02 Requests for Assignment or Sublease. . . . . . . . 67
13.03 Filing of Assignment or Sublease . . . . . . . . . 67
13.04 Application of Rent. . . . . . . . . . . . . . . . 67
13.05 Insufficient Utilization of Concourse D Gates
by Assignee. . . . . . . . . . . . . . . . . . . 67
13.06 Assignments by City. . . . . . . . . . . . . . . . 68
ARTICLE XIV - AIRLINE'S RIGHT TO TERMINATE . . . . . . . . . . 69
14.01 Airline's Right to Terminate . . . . . . . . . . . 69
ARTICLE XV - DELIVERY OF POSSESSION. . . . . . . . . . . . . . 70
ARTICLE XVI - HOLDING OVER . . . . . . . . . . . . . . . . . . 71
ARTICLE XVII - MISCELLANEOUS PROVISIONS. . . . . . . . . . . . 72
17.01 Employment Opportunities . . . . . . . . . . . . . 72
17.02 No Personal Liability. . . . . . . . . . . . . . . 72
17.03 Taxes. . . . . . . . . . . . . . . . . . . . . . . 72
17.04 Interpretation of Agreement. . . . . . . . . . . . 73
17.05 Notices, Requests and Other Communications . . . . 73
17.06 Entire Agreement; Amendment. . . . . . . . . . . . 75
17.07 Waiver . . . . . . . . . . . . . . . . . . . . . . 76
17.08 Non-Discrimination . . . . . . . . . . . . . . . . 76
17.09 Force Majeure. . . . . . . . . . . . . . . . . . . 76
17.10 Severability . . . . . . . . . . . . . . . . . . . 77
17.11 Headings . . . . . . . . . . . . . . . . . . . . . 77
17.12 Non-Exclusivity. . . . . . . . . . . . . . . . . . 77
17.13 Approvals. . . . . . . . . . . . . . . . . . . . . 77
17.14 Binding Nature . . . . . . . . . . . . . . . . . . 77
17.15 Incorporation of Exhibits. . . . . . . . . . . . . 77
17.16 Memorandum of Lease. . . . . . . . . . . . . . . . 77
17.17 No Agency. . . . . . . . . . . . . . . . . . . . . 77
17.18 Counterparts . . . . . . . . . . . . . . . . . . . 78
17.19 Rights and Obligations as to Rates and Charges . . 78
17.20 Accommodation of 1997 Concourse Expansion. . . . . 78
17.21 Letter Agreement . . . . . . . . . . . . . . . . . 78
17.22 Special Obligation of City; Subject to Laws. . . . 78
SIGNATURES
NOTARIZATION
EXHIBIT A - Original Lease
EXHIBIT B - Continental Special Facilities
B-1 - Concourse D
B-2 - Concourse C
B-3 - Deicing Pad
B-4 - Hydrant Fueling System
EXHIBIT C - Cost Allocation Policy
EXHIBIT D - Disbursement Request Forms
D-1 - Disbursements from Bond Proceeds
D-2 - Disbursements from GARB Proceeds
EXHIBIT E - Competitive Bidding Procedures for Public and Non-
Public Areas
EXHIBIT F - Maintenance and Repair Responsibilities
DEFINITIONS AND REFERENCES
EXHIBIT G - Equal Opportunity Clause
EXHIBIT H - Blacklined MOU
EXHIBIT I - 1997 Concourse Expansion Budget
EXHIBIT J - GARB Improvements
J-1 Concourses C & D Public Areas and
Concourse D Concession Areas
J-2 Certain Utilities
J-3 Aircraft Ramp & Other Aircraft Paving
J-4 Permanent Rental Car Facilities
J-5 New Employee Parking Lot
J-6 Triturator
J-7 Outbound Bag Room, Bag Claim & Security Check
Point Expansion in the Terminal Building
EXHIBIT K - Letter Agreement
THIS SPECIAL FACILITIES LEASE AGREEMENT ("Agreement") is made
and entered into as of the 24th day of October, 1997, by and
between the CITY OF CLEVELAND, a municipal corporation and
political subdivision of the State of Ohio ("City"), and
CONTINENTAL AIRLINES, INC., a corporation organized and existing
under the laws of the State of Delaware and authorized to do
business in the State of Ohio ("Airline"). Capitalized words and
terms in these preambles, unless stated otherwise or unless the
context dictates otherwise, shall have the meanings given to them
in Article I hereof.
WITNESSETH:
WHEREAS, City owns and operates Cleveland Hopkins
International Airport ("Airport"); and
WHEREAS, the Council of City, pursuant to Ordinance No.
1585-A-76, passed by the Council on August 16, 1976, authorized
City to enter into agreements and leases substantially in the form
attached to that Ordinance as Exhibit A setting forth the terms on
which certain airlines would lease portions of the Airport from
City and be permitted to use the Airport's facilities; and
WHEREAS, the Council of City, pursuant to Ordinance No.
2551-A-82, passed by the Council of City on June 15, 1983,
authorized City to enter into additional such agreements and leases
with additional Scheduled Airlines (as defined therein); and
WHEREAS, pursuant to Ordinance No. 2551-A-82, City entered
into an Agreement and Lease with Airline, dated as of May 15, 1987;
and
WHEREAS, Section 20.20 of the Original Lease and Section 3(e)
of Ordinance No. 1773-A-76, passed by the Council of City on August
16, 1976 and incorporated into the Indenture (as defined in the
Original Lease) permit City to issue Special Revenue Bonds to
finance the construction of any Special Facilities (both as defined
in the Original Lease); and
WHEREAS, Airline desires to construct Special Facilities and
to fund the costs thereof from Special Revenue Bonds of City
payable solely from the Bond Rent to be paid by Airline under this
Agreement and other amounts derived by City or the Trustee under
this Agreement; and
WHEREAS, Airline estimates that its City-based work force will
increase by the equivalent of approximately 524 full-time jobs over
the next five years as Airline adds employees to support the
increased flights that will be accommodated in large part by those
Special Facilities and related improvements;
WHEREAS, pursuant to Ordinance No. 561-97, passed by the
Council of City on June 2, 1997 ("Authorizing Ordinance"), the
Council of City authorized City, among other things, to execute and
deliver this Agreement; and
WHEREAS, pursuant to Ordinance No. 923-97, passed by the
Council of City on June 9, 1997, the Council of City authorized
City, among other things, to issue Series 1997 Project Bonds (as
defined therein) for the purpose of funding a portion of the costs
of City's Airport System Capital Improvement Program 1997-2001,
which includes the 1997 Concourse Expansion;
WHEREAS, the Authorizing Ordinance requires that this
Agreement be signed and delivered before those Series 1997 Project
Bonds to be issued for such related improvements may be issued; and
NOW, THEREFORE, for and in consideration of the premises and
the mutual covenants, agreements and conditions contained herein,
the parties hereto agree as follows:
ARTICLE I - DEFINITIONS
Unless otherwise defined herein and except as otherwise stated
herein, all capitalized words and terms defined in the Original
Lease and used herein are used herein with the definition assigned
to them in the Original Lease as in effect on the date hereof and
as attached hereto as Exhibit A. The following words and terms are
used herein with the following definitions:
"1989 Special Facilities Lease" means the Special Facilities
Lease Agreement dated as of December 1, 1989, by and between City
and Airline relating to certain improvements constructed from the
proceeds of City's $76,320,000 Airport Special Revenue Bonds,
Series 1990 (Continental Airlines, Inc. Project).
"1997 Concourse Expansion" means the Continental Special
Facilities and the improvements specifically described in Section
5.02(a) of this Agreement. However, whenever "1997 Concourse
Expansion" is used with reference to any obligation of Airline, it
shall not include the permanent rental car facilities being
constructed by City.
"Additional Bond Rent" means: (i) such amounts as shall be
required to satisfy any requirement under the Code to pay to the
United States any excess investment income on certain investments
acquired from the proceeds of the Bonds as provided in Section 148
of the Code, applicable Treasury regulations and the Indenture; and
(ii) to the extent not paid out of the proceeds of the Bonds, (a)
the reasonable fees and other costs incurred for services of the
Trustee and any other entity serving as paying agent,
authenticating agent and registrar of the Bonds, (b) all reasonable
fees and other costs incurred by or on behalf of the Trustee or
City in connection with the issuance of the Bonds or the purchase
or redemption by Airline of any Bonds or making any examinations or
reports or giving any opinions required by the Indenture or
otherwise satisfying any requirement of the Indenture, and (c)
except as otherwise specifically provided in the Indenture, the
reasonable fees and other costs incurred by or on behalf of the
Trustee or City in defense of any action or proceeding with respect
to the Bonds or in enforcing any obligation of Airline with respect
to the Bonds.
"Additional Rent" means all forms of "additional rent"
referred to in this Agreement except Additional Bond Rent.
"Assumed Amortization" means the debt service on the Bonds
that would be payable as of the date of calculation assuming that
(i) the principal of the Bonds had been retired based on annual
level debt service payments, and (ii) the Bonds bear interest at an
interest rate equal to the weighted average of the actual interest
rates at which the Bonds were sold.
"Basic Rent" means the rent payable by Airline pursuant to
Article VII hereof.
"Basic Rent Reserve" means: (i) during the period preceding
the first determination of the Basic Rent pursuant to Article VII
hereof, the estimate of the Basic Rent which would be payable
during the first full calendar year following the Commencement of
Occupancy (as certified to Airline by the Director of Port Control
of City); and (ii) from and after the determination of Basic Rent
pursuant to Article VII hereof, the amount of Basic Rent payable
during the then current calendar year.
"Basic Rent Reserve Fund" means the Fund of that name
established pursuant to Section 7.04 hereof.
"Best Efforts", when describing an obligation of City, shall
not include the obligation to invoke City's police powers or any
other power or authority derived solely from City's status as a
municipal corporation or public utility that is different from the
power or authority of a private commercial landlord.
"Bond Fund" means the Fund of that name to be established
under the Indenture in the custody of the Trustee for the deposit
of Bond Rent to be paid by Airline or other monies to pay Bond
Service Charges on the Bonds.
"Bond Ordinance" means the ordinance to be passed by the
Council of City authorizing the issuance and sale of the Bonds.
"Bond Rent" means the rent payable by Airline pursuant to
Section 7.05 hereof.
"Bond Service Charges" means, for any applicable time period
or payment date, the principal (including any mandatory sinking
fund installments), interest, and redemption premium, if any,
required to be paid by City on the Bonds during such period or on
such payment date.
"Bonds" means the Airport Special Revenue Bonds to be issued
by City at the request of Airline to pay the Costs of the
Facilities of the Continental Special Facilities and the Related
Facilities.
"City Project Manager" means the appropriately qualified,
full-time individual dedicated to managing the implementation of
the 1997 Concourse Expansion, including without limitation: (a)
coordinating the review of and response to plans and specifications
submitted by Airline; (b) communicating City's written approvals of
and written objections to such plans and specifications, upon which
written communications (or written communications of City Project
Manager's designee) Airline may rely, for purposes of this
Agreement, without independent verifications thereof with respect
to matters described in Section 5.07(a)(2) hereof and matters
within City's jurisdiction; and (c) receiving requests from Airline
for any consents, approvals or disbursements of funds relating to
the construction of the GARB Improvements.
"Code" means the Internal Revenue Code of 1986, as amended,
including, where appropriate, the statutory predecessor of the Code
and all applicable Treasury regulations.
"Commencement of Occupancy": (a) for purposes of determining
the Term of the lease of each element of the Continental Special
Facilities pursuant to Section 3.01 of this Agreement, means the
date on which the construction of the applicable Continental
Special Facilities (the Concourse C Expansion Special Premises, the
Concourse D Special Premises, the Deicing Pad Special Premises or
the Hydrant Fueling System Special Premises, as the case may be),
together in each case with any associated GARB Improvements, has
been substantially completed and such element is usable for its
intended purposes; and (b) for purposes of the payment of Basic
Rent for the Concourse D Special Premises and the Concourse C
Expansion Special Premises, means the earlier of (i) the end of the
capitalized interest period for the GARBs or (ii) the date on which
construction of the Concourse D Special Premises or the Concourse
C Expansion Special Premises, respectively, and, as to each, any
associated GARB Improvements, has been substantially completed and
the Concourse D Special Premises or the Concourse C Expansion
Special Premises, respectively, is usable by Airline for its
intended purposes.
"Concourse C" means generally the existing concourse at the
Airport that is referred to at Section 1.19 of the Original Lease
as the South Concourse, as the same may be changed, expanded or
modified.
"Concourse C Expansion Special Premises" means that portion
of the Continental Special Facilities located on or in Concourse C,
as more specifically described in Exhibit B-2 to this Agreement.
"Concourse C Expansion Term" means the term of this Agreement
pertaining to the Concourse C Expansion Special Premises.
"Concourse D" means generally the concourse at the Airport
that is to be constructed by Airline pursuant to the terms of this
Agreement, as the same may be changed, expanded or modified.
"Concourse D Special Premises" means that portion of the
Continental Special Facilities located on or in Concourse D, as
more specifically described in Exhibit B-1 to this Agreement.
"Concourse D Term" means the term of this Agreement pertaining
to the Concourse D Special Premises.
"Concourse Improvements" means the Concourse C Expansion
Special Premises and the Concourse D Special Premises, as more
specifically described in Exhibits B-2 and B-1, respectively.
"Construction Fund" means the construction fund to be held by
the Trustee under the Indenture for the deposit of proceeds of the
Bonds to be used to pay Costs of the Facilities with respect to
improvements to be financed with the proceeds of the Bonds.
"Construction Period" means the period of time between the
Effective Date and the date on which the construction of the 1997
Concourse Expansion has been substantially completed and those
aspects of the 1997 Concourse Expansion to be used by Airline
hereunder are useable by Airline for their intended purposes.
"Continental Special Facilities" means the Concourse D Special
Premises, the Concourse C Expansion Special Premises, the Deicing
Pad Special Premises, and the Hydrant Fueling System Special
Premises, as more specifically described in Exhibits B-1, B-2, B-3,
and B-4 to this Agreement, respectively, which premises shall be
reserved for the exclusive use and control of Airline to service
its passengers, customers and operations and shall not be open to,
available for, or used by the general public and/or by the
passengers, customers or operations of other airlines or persons.
"Costs of the Facilities" means the cost of the installation,
construction, acquisition and development of the improvements in
the 1997 Concourse Expansion and Related Facilities, and shall
include, without limitation:
(a) with respect to improvements financed with the proceeds
of either the Bonds or the GARBs, or both, (i) the cost of
engineering, architectural, construction management and other
services relating to the design and construction of those
improvements, plans, specifications and surveys and estimates
of costs, (ii) the cost of preparation of the existing real
estate that is the site of those improvements, (iii) the cost
of any indemnity and surety bonds or other insurance coverage
with respect to those improvements during construction, (iv)
fees and expenses of the trustee in connection with the
preparation, issuance and delivery of the Bonds or GARBs, as
the case may be, including, without limitation, initial fees
and expenses of the trustee and of its counsel, (v) interest
that is due and payable on the Bonds or GARBs, as applicable,
during construction of the improvements financed thereby and,
in the case of the GARBs, any amounts necessary to fund any
debt service reserve or other reserves as may be required by
the agreements securing GARBs, (vi) the cost of issuance of
the Bonds or GARBs, as the case may be, including, without
limitation, discounts, commissions, financing charges and fees
and expenses of underwriters, bond counsel and other
attorneys, accountants, financial advisors and consultants,
the cost of audits, the costs of any registration of the Bonds
or GARBs, as the case may be, or of registration of the
obligation of Airline to pay Bond Rent under federal and state
securities laws and any qualifications of the Indenture under
the Trust Indenture Act of 1939, (vii) reimbursement of monies
advanced or applied by City or Airline from whatever source
provided for the payment of any item of cost of the
improvements in the 1997 Concourse Expansion, (viii) costs of
compliance with environmental requirements (other than any
remediation or clean-up costs), (ix) the cost of all utility
services consumed during the construction and until
substantial completion of the various elements of the 1997
Concourse Expansion, and (x) such other costs of the 1997
Concourse Expansion improvements, whether or not specified
herein, necessary or incidental to the acquisition,
construction, reconstruction, installation, equipping,
furnishing or other improvement of the 1997 Concourse
Expansion improvements, the financing thereof and the placing
thereof in condition for use and operation and all like or
related costs and expansions; provided that such costs are
permitted by applicable laws to be funded by the Bonds or
GARBs, including the Code in the case of an issue of Bonds or
GARBs that are to be qualified under the Code as obligations
the interest on which is excluded from gross income for
federal income tax purposes;
(b) with respect to improvements financed with the
proceeds of the Bonds: (i) the actual, reasonable out-of-
pocket expenses of City and Airline to the extent related to
the issuance of the Bonds and the implementation of the 1997
Concourse Expansion (which does not include the permanent
rental car facilities), with such implementation expenses to
be allocated to the Bonds pursuant to Section 5.03(a) hereof,
including legal, construction inspection and other consultant
fees; and (ii) the direct labor costs of City and Airline
employees dedicated to the 1997 Concourse Expansion (which
does not include the permanent rental car facilities), with
such labor costs to be allocated to the Bonds pursuant to
Section 5.03(a) hereof, provided that the direct labor costs
of City shall not exceed those for the equivalent of 10 full-
time City employees; and
(c) with respect to improvements financed with the
proceeds of the GARBs: (i) the actual, reasonable out-of-
pocket expenses of City and Airline to the extent related to
the issuance of the GARBs and the implementation of the 1997
Concourse Expansion (with such implementation expenses to be
allocated to the GARBs pursuant to Section 5.03(a) hereof),
including legal, construction inspection and other consultant
fees; and (ii) the direct labor costs of City and Airline
employees dedicated to the 1997 Concourse Expansion (with such
labor costs to be allocated to the GARBs pursuant to Section
5.03(a) hereof), provided that the direct labor costs of
Airline shall not exceed those for the equivalent of 10 full-
time Airline employees.
"Defeasance Date" means the date on which all Bonds shall have
been paid and discharged, or shall be deemed paid and discharged,
and the Indenture shall have been defeased in accordance with its
terms.
"Deicing Pad Special Premises" means that portion of the
Continental Special Facilities more specifically described in
Exhibit B-3 to this Agreement.
"Deicing Pad Term" means the term of this Agreement pertaining
to the Deicing Pad Special Premises.
"Effective Date" means the date of issuance of the GARBs.
"Environmental Laws" means, collectively, any federal, state,
or local law, rule, regulation or standard (whether now existing or
hereafter enacted or promulgated, as they may be amended from time
to time) pertaining to protection of health, safety or the
environment, and any judicial or administrative interpretation
thereof, including any judicial or administrative orders or
judgments, including, without limitation: the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. Paragraph 9601 et seq. ("CERCLA"); the Resource Conservation
and Recovery Act, 42 U.S.C. Paragraph 6901 et seq. ("RCRA"), the
Clean Water Act, 33 U.S.C. Paragraph 1251 et seq.; the Clean Air
Act, 42 U.S.C. Paragraph 7401 et seq., the Toxic Substances Control
Act, 15 U.S.C. Paragraph 2601 et seq. ("TSCA"); the Hazardous
Materials Transportation Act, 49 U.S.C. Appx. Paragraph 1801 et
seq., Ohio Revised Code Chapters 3704, 3710, 3714, 3734, 3737,
3742, 3745, 3751, 3752 and 3767; or any other applicable state
statute or city or county ordinance regulating the generation,
storage, containment or disposal of any Hazardous Material or
providing for the protection, preservation or enhancement of the
environment.
"Event of Default" means any of the circumstances designated
as such in Section 12.01 hereof.
"Existing Contamination" means any and all pollution or
contamination caused by any Hazardous Material, and not caused by
Airline, its officers, employees, agents, contractors,
subcontractors, successors, assigns, and any other person or entity
acting for or through Airline, that previously existed or exists
in, on, or under the soil or groundwater at or beneath the
Continental Special Facilities on or before the Effective Date of
this Agreement.
"Expiration Date" means the scheduled expiration date of the
latest-to-expire Term of the Continental Special Facilities as
provided in Section 3.01 hereof.
"Fiscal Officer" means the Director of Finance of City.
"Force Majeure" means Force Majeure as described at Section
17.09 hereof.
"GARB Improvements" means that portion of the 1997 Concourse
Expansion contemplated hereunder to be funded with the proceeds of
the GARBs as described in Section 5.02 and Exhibit J hereof.
"GARB Indenture" means the Trust Indenture dated as of
November 1, 1976, as supplemented and amended by the First
Supplemental Trust Indenture dated as of April 1, 1990 and the
Second Supplemental Trust Indenture dated as of August 1, 1994,
each between City and the GARB Trustee, as to be supplemented and
amended by the Third Supplemental Trust Indenture between City and
the GARB Trustee to be executed in connection with the issuance of
the GARBs.
"GARB Trustee" means Mellon Bank, F.S.B., Cleveland, Ohio, and
any bank or trust company succeeding to the duties of the trustee
under the GARB Indenture.
"GARBs" means that portion of the general airport revenue
bonds of City which is issued to pay the Costs of the Facilities of
the GARB Improvements specifically described in Section 5.02 of
this Agreement.
"Hazardous Materials" means, but shall not be limited to, any
oil or petroleum product, any hazardous or toxic waste or
substance, and any substance which, because of its concentration or
characteristics, constitutes or may reasonably be expected to
constitute or contribute to a danger or hazard to public health,
safety or welfare or to the environment, including without
limitation any asbestos (whether or not friable) and any asbestos-
containing materials, lead paint, petroleum or petroleum products,
solvents, polychlorinated biphenyls (PCBs), toxic metals,
explosives, reactive materials, pesticides, herbicides, radon gas,
and chemical, biological and radioactive wastes, or any other
materials or conditions which are or may in the future be included
under or regulated by any Environmental Law.
"Hydrant Fueling System Special Premises" means that portion
of the Continental Special Facilities more specifically described
in Exhibit B-4 to this Agreement.
"Hydrant Fueling System Term" means the term of this Agreement
pertaining to the Hydrant Fueling System Special Premises.
"Indenture" means the trust indenture to be entered into by
City and a bank or trust company serving as Trustee to provide for
the terms of the Bonds, as same may be amended from time to time in
accordance with its terms.
"Interest Account" means the account of the Bond Fund to be
established under the Indenture for the deposit of money to pay
interest on the Bonds.
"Interest Payment Date" means the dates to be set forth in the
Indenture as the dates on which interest on the Bonds is payable to
the holders of the Bonds.
"Jet Gate" means an aperture in the wall of a Concourse
specifically designed to accommodate a jet loading bridge;
provided, however, that a single such aperture to which a dual-
loading capable jet bridge is connected shall constitute only one
Jet Gate for such purposes.
"Original Lease" means the Agreement and Lease by and between
City and Airline, dated as of May 15, 1987, as the same may be
modified or amended from time to time.
"Permanent Site Availability" means that (a) City has caused
permanent rental car facilities to be made available in operational
condition, (b) City has caused to vacate their premises all of the
rental car company tenants which were not relocated to interim
rental car facilities, (c) City has caused those rental car company
tenants which were relocated to those interim rental car facilities
to vacate those premises, and (d) City has delivered to Airline
full possession of the premises described in (b) and (c) above,
with all improvements (including, without limitation, all above-
ground and underground storage tanks) in, on, or under the premises
described in (b) above demolished and/or removed in accordance with
applicable laws.
"Principal Account" means the account of the Bond Fund to be
established under the Indenture for the deposit of money to pay
principal of the Bonds.
"Redemption Account" means the account of the Bond Fund to be
established under the Indenture for the deposit by Airline of money
to pay Bonds upon call for redemption.
"Related Facilities" means (i) fixtures, furnishings and
equipment (including telecommunications equipment and regional jet-
capable jetbridges) associated with the holdrooms, passenger and
related space at three gates on Concourse A (currently identified
as Gates A-9, A-9A, and A-11) to be occupied or used by Airline on
an interim basis until the Commencement Date of the Concourse D
Special Premises, (ii) fixtures, furnishings and equipment
(including telecommunications equipment and regional jet-capable
dual jetbridges) associated with the conversion of an existing
airline lounge on Concourse C to holdrooms, passenger and related
space, and (iii) fixtures, furnishings and equipment (including
telecommunications equipment and narrow body-capable jetbridges)
associated with other holdrooms, passenger and related space on
Concourse C.
"Support Facilities" means the Deicing Pad Special Facilities
and the Hydrant Fueling System Special Facilities.
"Term" means, with respect to each element of the Continental
Special Facilities, the term of the lease of those facilities
pursuant to this Agreement, as more specifically set forth in
Section 3.01.
"Termination Date" means, with respect to this Agreement, the
earlier of: (a) the Expiration Date; or (b) the date of the
termination of this Agreement pursuant to any applicable provision
hereof.
"Trustee" means the bank or trust company designated in the
Bond Ordinance to be the trustee under the Indenture and such
entity's successors under the Indenture.
(End of Article I)
ARTICLE II - RIGHTS, PRIVILEGES
AND PREMISES
2.01 Lease and Use of Continental Special Facilities
In addition to such rights as Airline has under the Original
Lease, any agreement which may succeed or supersede the Original
Lease, the 1989 Special Facilities Lease and any other agreements
Airline may have with City until the respective terminations
thereof in accordance with their respective terms, for the rent,
upon the agreements, and subject to the terms and conditions
hereinafter set forth and subject to the rules and regulations
prescribed by City, City hereby agrees to lease the Continental
Special Facilities to Airline, and Airline agrees to lease the
Continental Special Facilities from City, and City agrees that
Airline shall have the right to conduct from and at the Continental
Special Facilities its air transportation activities for the
carriage of persons, property and mail, the operation of an airline
lounge, and activities incidental thereto.
Specifically and without limitation, the following rights are
included among the rights hereby conferred:
a. The use, in common with other duly authorized users, of
the public areas of the Terminal Complex.
b. The right of ticketing passengers, and of loading and
unloading persons, property and mail at the Continental Special
Facilities by such motor vehicles or other means of conveyance as
Airline may require as is consistent with normal airport practice
and the Original Lease. Notwithstanding the preceding sentence,
the Concourse D Special Premises will be used primarily in
connection with Airline's passenger operations. Any material
deviations to such primary use must first be mutually agreed upon
by Airline and City.
c. The right to install at Airline's expense identifying
signs on the Concourse Improvements, the number, type, size, design
and location of which shall all be consistent with such reasonable
graphic standards as City may from time to time adopt. Outside the
leaselines of the Concourse Improvements, Airline's ability to
advertise shall be subject to City's right to lease space for
advertising signs throughout the Terminal Complex. Inside the
leaselines of the Concourse Improvements, Airline shall not display
advertising for persons or entities other than Airline, its
subsidiaries, or entities providing commuter services for Airline,
and such advertising shall be limited to that for air
transportation services or related transportation services offered
by Airline, its subsidiaries, or entities providing commuter
services for Airline, which air or related transportation services
are available (either directly, or indirectly through connecting
flights) to Airport passengers. Airline shall make no such
installation of identifying signs or display of advertising without
the prior written approval of the Director of Port Control of City,
which approval shall not be unreasonably withheld, conditioned or
delayed.
d. The right to install, maintain and operate such radio,
communication, meteorological, security screening and aerial
navigation equipment and facilities as may be necessary in the
opinion of Airline for its operation; provided, however, that the
location of such equipment and facilities must be first approved by
City, which approval shall not be unreasonably withheld,
conditioned or delayed, and which location shall not interfere with
the full and proper use of the Airport System.
e. Airline shall retain exclusive rights to the Concourse
D Jet Gates (excluding Ramp Areas) and to the Concourse C Jet Gates
(excluding Ramp Areas) that are constructed or modified using the
proceeds of the Bonds, and shall not be obligated to make such
gates available to any other carriers during the Concourse D Term
or the Concourse C Expansion Term, respectively.
f. Airline shall not install or operate pay telephones,
coin-operated or credit-card operated machines and devices, or
similar machines and devices, in the Continental Special
Facilities, but may have such installed by companies having
agreements with City for such installations, if such shall be for
the use of Airline's employees and located in the Continental
Special Facilities; provided, however, that if such company or
companies choose not to install such devices, Airline may make
arrangements for the installation of same, subject to City's
standard fees and charges, and provided that Airline shall have the
right to charge for the cost of electric power used in the
operation of such machines; and provided also that Airline may
install or operate such or similar devices on the Continental
Special Facilities for the sale or issuance of Airline's tickets,
subject to City's approval, which approval shall not be
unreasonably withheld, conditioned or delayed.
g. The right of landing, taking off, taxiing, pushing,
towing, loading, unloading, repairing, maintaining, conditioning,
servicing, testing or parking its aircraft of its choice or other
equipment owned or operated by Airline, including the right to
provide or handle all or part of the operations or services of
another air transportation company.
h. The right of purchase, sale, disposal and exchange of
Airline's aircraft, engines, accessories, fuel, oil, lubricants and
other equipment, and materials or supplies.
i. The right of servicing of aircraft and other equipment
owned, or operated, by Airline or other Scheduled Airlines, by
truck or otherwise, with fuel, oil, lubricants, parts, or aircraft
supplies, at aircraft loading and unloading aprons and other
locations designated by City for such servicing; provided, however,
that any entity providing such service at the Airport for profit
may be required to first secure and thereafter hold a valid lease,
license or other agreement with City for the right to operate at
the Airport, and shall pay City such reasonable rentals, fees
and/or percentages of the charges for such services as City and
such entity may agree upon for such right.
j. Any uses not permitted herein shall be negotiated in
good faith by City and Airline to be consistent with Airline's
planned hub growth and City's reasonable need to plan and manage
the Airport in a prudent manner.
2.02 Space in and Adjacent to Terminal Building
a. From and after its commencing to occupy the Concourse
Improvements, Airline shall lease the following Concourse
Improvements for the respective purposes shown:
Concourse C
(1) Airline lounge. . . . . . . 10,548 square feet
Concourse D
(2) Holdroom, passenger
and related space . . . . . 52,482 square feet
(3) Concourse office and
Operations space. . . . . . 50,654 square feet
(4) Ramp control tower. . . . . . .324 square feet
b. The dimensions of the areas to be occupied by Airline
as set forth in Section 2.02(a) above are approximate only, and
upon completion of the construction of the Concourse Improvements,
actual dimensions thereof shall be taken by City and Airline
representatives, measuring from the center line of walls for
interior space and to the inside space of exterior walls. The
actual square foot dimensions shall thereupon be incorporated in a
writing signed by City and Airline representatives within six
months after the Commencement of Occupancy for all elements of the
Concourse Improvements, and shall be the basis for determining the
amount of the Basic Rent pertaining thereto; provided, however,
that until such actual dimensions shall have been taken, Airline's
rental payments shall be based upon the approximations in Section
2.02(a) hereof. If the actual square foot dimensions prove to be
different than the approximate dimensions, the total amount of
overpayment or underpayment of Basic Rent shall be corrected by
City granting rent credits or requiring additional rent, as the
case may be, in six equal installments (which together shall equal
the total amount of overpayment or underpayment) over the six-month
period beginning the month after the writing containing the actual
square foot dimensions is signed by City and Airline
representatives.
2.03 Access
a. Subject to the provisions hereof, such restrictions as
Airline may impose with respect to the Continental Special
Facilities and the rules and regulations prescribed by City with
respect to the Airport System, City hereby grants to Airline, its
agents, suppliers, employees, contractors, passengers, guests and
invitees the right and privilege of ingress and egress to the
Continental Special Facilities and to public areas and public
facilities of the Terminal Complex. City agrees that, subject to
the provisions of this Agreement, there shall be no unreasonable
interference with Airline's access to or use of the GARB
Improvements or in connection with Airline's access to or use of
the Continental Special Facilities.
b. The ingress and egress provided for above: (i) shall
not be used, enjoyed or extended to any person engaging in any
activity or performing any act or furnishing any service for or on
behalf of Airline that Airline is not authorized to engage in or
perform under the provisions hereof unless expressly authorized by
City; and (ii) shall be used and exercised in accordance with and
subject to any security measures required by federal, state or
local law or otherwise reasonably deemed necessary by City.
c. All means of access up to the leaselines of the
Continental Special Facilities provided by City pursuant to this
Section 2.03 shall be in common with such other persons as City may
authorize or permit, and all of such rights of access shall be
exercised subject to and in accordance with all applicable laws and
ordinances whether federal, state, or local.
d. City shall have the right at any time or times to
close, relocate, reconstruct, change, alter or modify any such
means of access provided for Airline's use pursuant to this
Agreement or otherwise, either temporarily or permanently; provided
that reasonable notice to Airline and a reasonably convenient and
adequate means of access for ingress and egress shall exist or be
provided in lieu thereof. City shall suffer no liability by reason
thereof and such action shall in no way alter or affect any of
Airline's obligations under this Agreement.
Notwithstanding the foregoing or any other provision of this
Agreement, City's right to close, relocate, reconstruct, change,
alter or modify the connector tunnel listed at Section 5.02(a)(i)
shall be subject to Airline's approval. Prior to taking such
actions, City must submit plans sufficient to disclose the nature
and extent of the work to be performed to Airline, and City shall
not commence such proposed action until Airline approves such plans
or any disagreements are resolved in the manner set forth in this
paragraph. If Airline objects to such plans of City, it must give
City specific written notice of its objections within 30 days,
otherwise City's plans shall be deemed approved. In the event
Airline timely objects to such plans of City, the parties hereby
agree to work cooperatively in an attempt to reach a mutually
satisfactory resolution of any such differences. If such
resolution is not achieved within seven days after City's receipt
of Airline's written notice of objections, the parties hereby agree
to have the dispute resolved by an arbitration process to be agreed
upon by the parties at the time, but which process, in any event,
shall take no longer than 30 days; provided, however, that if such
arbitration process is not agreed upon within three days after said
seven-day period, the dispute will be referred to the American
Arbitration Association, which will establish the process by which
to resolve it, but which process the parties at the time shall
exercise all reasonable efforts to complete within 30 days.
Notwithstanding the foregoing in this paragraph, City may commence
emergency maintenance or repairs of, or initiate emergency security
procedures or measures involving, the connector tunnel upon such
prior written notice to Airline as is reasonable under the
circumstances.
2.04 Use by Airline
In connection with the exercise of its rights under this
Agreement, and as may be supplemented by Section 2.05 of this
Agreement, Airline:
a. Shall not cause or create nor permit to be caused or
created (except by City, its officers, employees, agents,
contractors, subcontractors, successors, assigns, and any other
person or entity acting for or through City -- collectively, and
for purposes of this Section 2.04, "City Actors," which term shall
not include Airline) within the Continental Special Facilities any
noxious odors or smokes, or noxious gases or vapors. Neither the
creation of exhaust fumes by the operation of aircraft engines,
when operated in a manner approved by the Federal Aviation
Administration, nor the existence of gasoline or other fumes
resulting from the proper fueling of aircraft or motor vehicles,
nor the existence of paint fumes or odors, provided the same occur
during lawful use of the Continental Special Facilities and lawful
operation by Airline therefrom in accordance with the other
provisions of this Agreement, shall constitute a violation of this
subsection.
b. Shall not do or permit to be done (except by City Actors)
anything at or on the Continental Special Facilities which may
interfere with the effectiveness or accessibility of the drainage
and sewage system, fire protection system, sprinkler system, alarm
system, fire hydrants and hoses, water system, ventilation, air-
conditioning and heating systems, communications systems, and key-
card access systems, if any, installed or located on or within the
Continental Special Facilities or the Airport.
c. Shall not do or permit to be done (except by City Actors)
any act or thing at or on the Continental Special Facilities which
will by itself invalidate or conflict with any fire or other
casualty insurance policies (copies of which, together with premium
schedules, shall be furnished to Airline upon request) covering the
Airport or any part thereof.
d. Shall not dispose of or permit any other person (except
City Actors) to dispose of any waste material (whether liquid or
solid) taken from or products used with respect to its aircraft
into the sanitary or storm sewers at the Airport unless such waste
material or products shall first have been properly treated by
equipment installed with the approval of City for that purpose.
e. Shall not keep or store flammable liquids within the
enclosed portion of the Continental Special Facilities in excess of
Airline's working requirements during any 24-hour period except in
facilities complying with applicable law and the rules, regulations
and policies of City and City's Department of Port Control.
2.05 Environmental Compliance
a. Throughout the term of this Agreement, Airline shall
observe and obey all applicable Environmental Laws and comply with
Airline's obligations under this Section 2.05 and shall cause its
employees, agents, contractors, subcontractors, and licensees to
observe and obey all applicable Environmental Laws and comply with
Airline's obligations under this Section 2.05.
b. Except as may be permitted by and only in accordance with
applicable Environmental Laws, Airline shall not cause, directly or
indirectly, any Hazardous Materials to exist or be stored, located,
possessed, managed, processed, or otherwise handled on, or
discharged or released into the environment about, the Continental
Special Facilities, and shall comply with all Environmental Laws
affecting the use or operation of the Continental Special
Facilities. Airline shall not use, or allow others within
Airline's control to use, Hazardous Materials on or about the
Continental Special Facilities, except for those Hazardous
Materials customarily used in the industry for operations of the
type conducted by Airline. No activity shall be undertaken by
Airline on the Continental Special Facilities which would cause (i)
the Continental Special Facilities to be considered on the date of
the activity a hazardous waste treatment, storage or disposal
facility under any applicable Environmental Laws, or (ii) an
unpermitted or unlawful release of any Hazardous Materials into the
environment, excluding Existing Contamination, the release of which
Airline agrees to exercise commercially reasonable efforts to
minimize.
c. Airline shall, with all due diligence, and at its own
cost and expense, take all actions as may be required by applicable
Environmental Laws for the remediation of all releases of Hazardous
Materials at or from the Continental Special Facilities (other than
Existing Contamination, and/or contamination of the 1997 Concourse
Expansion caused by Hazardous Materials to the extent such
contamination results from the acts or omissions of persons or
entities other than Airline, its employees, agents, contractors,
subcontractors, and licensees), which actions shall be taken in
accordance with all applicable Environmental Laws. In connection
with any remedial work under this Agreement, Airline will only be
required to meet the least stringent standards of applicable
Environmental Laws, provided such least stringent standards do not
materially interfere with City's Airport operations and City's
intended use of the facilities, and City will cooperate with
Airline in Airline's design and performance of cost-effective
remedies. Airline shall further pay or cause to be paid at no
expense to City all clean-up, administrative, and enforcement costs
of applicable government agencies or the parties protected by such
Environmental Laws which may be asserted against the Continental
Special Facilities as a result of any such release by Airline but
only to the extent that such costs are incurred in causing the
resulting contamination to be remediated as required by the least
stringent standards of applicable Environmental Laws. City and
Airline acknowledge and agree that the foregoing sentence shall in
no way modify or affect the rights and claims of the parties with
respect to the Existing Contamination. If, under Section 10.01 of
this Agreement City is entitled to indemnification by Airline of
costs incurred by City in connection with Airline's obligations,
warranties, representations or other matters addressed in this
Section 2.05, Airline shall be obligated to pay all amounts owing
under such indemnification obligation upon 30 days written notice
by City, with interest thereon at the rate of 1% per month from the
expiration of the 30-day notice period.
d. In designing or performing any environmental remedial
work under this Agreement, the party planning or performing such
work shall give reasonable advance notice of, and an opportunity to
comment on, any such proposed remedial work. City shall have the
right, but not the obligation, to approve any work plan proposed by
Airline to the extent that the manner in which the remedial work is
to be performed reasonably is expected to impact Airport operations
(other than those of Airline), which approval shall not be
unreasonably withheld, conditioned or delayed; provided, however,
that if any superior governmental authority with jurisdiction over
the Continental Special Facilities approves a remediation plan or
schedule for the Continental Special Facilities, such plan or
schedule shall prevail; and further provided that City may modify
the work plan proposed by Airline to include costs or elements
beyond those required by the least stringent standards of
applicable Environmental Laws ("Extra Remedial Costs") only if City
provides funding for such Extra Remedial Costs. Any work done by
City shall be designed and performed, to the extent practicable, in
a way that minimizes interference with Airline's operations at the
Airport.
e. Airline and City shall promptly notify each other in
writing should either become aware of any: (i) release or
threatened release of Hazardous Materials or other occurrence with
respect to the Continental Special Facilities which reasonably is
expected to give rise to claims or liabilities or to any
restriction in ownership, occupancy, transferability or use of the
Continental Special Facilities under any Environmental Laws; (ii)
lien filed, action taken or notice given of any liabilities under
Environmental Laws with respect to the Continental Special
Facilities or conditions which, with any applicable notice, lapse
of time, or failure to take certain curative or remedial actions,
is reasonably expected to result in liabilities under Environmental
Laws; or (iii) notice given from any subtenant or other occupant of
the Continental Special Facilities or the Airport or any notice
from any governmental authority with respect to any potential
liabilities under any Environmental Laws in connection with the
Continental Special Facilities.
f. Airline and City shall, promptly upon receipt or
issuance, as the case may be, provide each other with copies of any
permits or any notices of releases of Hazardous Materials, studies
or correspondence which are given by or on behalf of Airline or
City, respectively, to, or which are received from, any federal,
state or local agencies or authorities regarding the 1997 Concourse
Expansion. In addition, in connection with any environmental
litigation or threat of environmental litigation affecting the 1997
Concourse Expansion, Airline and City shall deliver to each other
any non-privileged, non-proprietary, relevant documentation or
records (or copies thereof) as City or Airline, respectively, may
reasonably request and which are susceptible of being obtained by
Airline or City, respectively, without undue cost or expense, and
shall give written notice to each other of any subsequent
developments. Such documentation, records or copies shall be
provided as soon as practicable.
g. City shall have the right, but not the obligation, to
conduct environmental audits of the Continental Special Facilities
and Airline's operations, equipment, facilities and fixtures
thereon, which right shall be exercised in such a manner as not to
unreasonably interfere with Airline's operations. If the resulting
audit report reveals material non-compliance (considering the
significance of the non-compliance) by Airline with any of its
environmental obligations under this Agreement, City shall submit
the audit report to Airline. Airline may in good faith contest
such report and/or required remedial actions within 30 days of
receipt of such report. Airline shall not be deemed in default
under this Agreement for failure to complete the required remedial
actions while diligently and in good faith contesting such report
or the required remedial actions. Absent such contest or following
resolution of such contest resulting in a final determination of
non-compliance by Airline pursuant to this paragraph: (i) Airline
shall promptly reimburse City for the reasonable costs of such
audit; and (ii) if Airline does not complete the required remedial
actions within a reasonable time, City shall have the right, but
not the obligation, to enter upon the Continental Special
Facilities without abatement of any rent and implement any
remediation actions which it reasonably deems necessary or prudent
to address such requirements. If City implements any remediation
action pursuant to the foregoing sentence, Airline shall pay as
additional rent City's reasonable direct cost of performing any
remediation as is required by Airline hereunder. If such
additional rent is not paid within 30 days of City's written demand
therefor from Airline, Airline shall pay interest thereon at the
rate of 1% per month from the expiration of such 30-day period.
City's right to conduct environmental audits under this Section
2.05(g) shall be limited in frequency to once per year unless there
is a pattern of material non-compliance by Airline warranting more
frequent audits.
h. The Hydrant Fueling System Special Premises
shall be designed and maintained under good engineering practices
for the industry. Airline shall, at its own expense, install and
maintain in proper working condition spill detection instruments
and alarms as well as spill containment devices if and to the
extent required by the good engineering practices in the industry.
Airline shall for all purposes be considered the owner and operator
of the Hydrant Fueling System Special Premises, and, as owner and
operator of the Hydrant Fueling System Special Premises, shall
comply with all provisions of all laws, rules and regulations
applicable to the "owner" or "operator" of the Hydrant Fueling
System Special Premises. Nothing contained herein shall diminish
any of the obligations of Airline to remove the Hydrant Fueling
System Special Premises as may be required by applicable
Environmental Laws nor any of the obligations of Airline to remove
the Hydrant Fueling System Special Premises at the expiration of
the Hydrant Fueling System Term, unless City purchases the Hydrant
Fueling System Special Premises as provided for in Section 6.03
hereof. If Airline fails at the expiration of the Hydrant Fueling
System Term to remove the Hydrant Fueling System Special Premises
upon reasonable request of City or any other appropriate government
entity, City may remove the same, all at Airline's expense, and
take such other measures as it reasonably deems necessary for the
protection of people, property and the environment and any
reasonable expenses of City related thereto shall be paid by
Airline as additional rent. Airline agrees to cooperate with City
or any other governmental entity in furnishing such information
related to the Hydrant Fueling System Special Premises as is
reasonably required by City or by any other government entity.
i. City covenants that, to the extent required by any
governmental authority or by any court of competent jurisdiction,
or if it is reasonably expected that remediation is necessary to
avoid a remediation order or material liability arising from a
third party claim, City will remediate: (a) Existing Contamination;
and (b) environmental contamination of the 1997 Concourse Expansion
caused by Hazardous Materials to the extent such contamination
results from the acts or omissions of persons or entities other
than Airline. In connection with any remedial work under this
Agreement, unless otherwise directed by any governmental authority
or court of competent jurisdiction, City will only be required to
meet the least stringent standards of applicable Environmental
Laws, provided such least stringent standards do not materially
interfere with Airline's operations or Airline's proposed
construction and intended use of the facilities, and Airline will
cooperate with City in City's design and performance of cost-
effective remedies. City shall exercise promptly and in good
faith, diligent efforts to recover such costs of remediation from
the party or parties responsible for such contamination and restore
the same to the appropriate cost center, or in the absence of
recovery from the responsible parties to charge such costs to the
appropriate cost center.
If City does not, upon reasonable written notice from Airline,
and upon reasonable opportunity to City to cure, commence such
remediation, or fails to diligently continue to complete such
remediation pursuant to this Section 2.05, then Airline, in
addition to any other remedy which may be available to it, shall
have the right, but not the obligation, following reasonable
written notice, to enter the affected areas and perform such
remediation. Airline shall be entitled to reimbursement from City
within 30 days of written demand to City from Airline for payment
for any and all reasonable direct costs incurred in completing such
remediation.
(End of Article II)
ARTICLE III - OCCUPANCY; TERM
3.01 Term
a. This Agreement shall be effective as of the Effective
Date and shall terminate with respect to each element of the
Continental Special Facilities at the end of the applicable Term
for that element, as set forth in this Section, subject to earlier
termination as provided for in this Agreement.
b. Unless earlier terminated pursuant to any of the
provisions of this Agreement, the Terms of the respective elements
of the Continental Special Facilities shall be as follows:
1. The Concourse C Expansion Term shall begin upon the
Commencement of Occupancy of the Concourse C Expansion Special
Premises and shall end on the earlier to occur of the following:
(i) that date which is 80 percent of the weighted average
reasonably expected economic life of the Continental Special
Facilities and Related Facilities; or (ii) December 31, 2019.
2. The Hydrant Fueling System Term shall begin upon the
Commencement of Occupancy of the Hydrant Fueling System Special
Premises and shall terminate on the earlier to occur of the
following: (i) that date which is 80 percent of the weighted
average reasonably expected economic life of the Continental
Special Facilities and Related Facilities; or (ii) 30 years from
the Commencement of Occupancy of the Hydrant Fueling System Special
Premises.
3. The Deicing Pad Term shall begin upon the Commencement
of Occupancy of the Deicing Pad Special Premises and shall
terminate on the earlier to occur of the following: (i) that date
which is 80 percent of the weighted average reasonably expected
economic life of the Continental Special Facilities and Related
Facilities; or (ii) 30 years from the Commencement of Occupancy of
the Deicing Pad Special Premises.
4. The Concourse D Term shall begin upon the Commencement
of Occupancy of the Concourse D Special Premises and shall
terminate on the earlier to occur of the following: (i) that date
which is 80 percent of the weighted average reasonably expected
economic life of the Continental Special Facilities and Related
Facilities; or (ii) 30 years from the Commencement of Occupancy of
the Concourse D Special Premises, but in no event later than 30
years from April 22, 2000, unless the Commencement of Occupancy has
been delayed beyond April 22, 2000 due to Force Majeure or
regulatory delays. For purposes of making the foregoing
determination with respect to the Concourse D Term, April 22, 2000
shall be extended by one day for each day after November 22, 1997
that City fails to deliver Permanent Site Availability.
The determination of 80 percent of the weighted average
reasonably expected economic life of the Continental Special
Facilities and Related Facilities will be made by City based on the
certification by Airline to City prior to issuance of the Bonds,
and in any event on or prior to December 31, 1997, of the
reasonably expected economic life of each of the facilities
comprising the Continental Special Facilities and Related
Facilities and the date such facilities are expected to be placed
in service.
c. Upon 90 days prior written notice to City, Airline may
terminate this Agreement by: (i) making payment or provision for
payment, in accordance with the Indenture, of the Bonds issued to
fund the Continental Special Facilities and by making payment or
provision for payment of all other amounts then due and owing to
City or the Trustee with respect to the Bonds; and (ii) depositing
(notwithstanding any provision in this Agreement to the contrary)
in the Basic Rent Reserve Fund an amount sufficient to cause the
balance in that Fund to be not less than two times the amount of
Basic Rent payable during the then current calendar year (the
"Two-Year Reserve Requirement").
Airline's obligation to deposit the Two-Year Reserve
Requirement may be satisfied by delivery to City for deposit in the
Basic Rent Reserve Fund of cash or a credit facility in the form of
an irrevocable, direct-pay letter of credit in a stated amount not
less than the Two-Year Reserve Requirement payable to City,
provided that City has received evidence satisfactory to it that
(i) the provider of the credit facility has a credit rating in one
of the two highest credit rating categories by two nationally
recognized rating agencies, (ii) the term of the credit facility is
at least 36 months, unless such term cannot be obtained on
commercially reasonable terms, in which case the term of the credit
facility is at least 12 months and the provider agrees to notify
City of the renewal of the credit facility, and (iii) the provider
of the credit facility shall be obligated to notify City (A)
immediately in the event of any nonreinstatement of the letter of
credit following a draw to a stated amount not less than the Two-
Year Reserve Requirement, or in the event of termination of the
credit facility and (B) at least three months prior to expiration
of the credit facility. If (i) City receives notice of
nonreinstatement or expiration, (ii) City receives notice of the
termination of the credit facility, or (iii) the credit rating of
the provider of such credit facility is no longer in the two
highest credit rating categories by two nationally recognized
rating agencies, Airline shall (A) provide a substitute credit
facility that meets the requirements set forth in the foregoing
sentence, or (B) deposit cash equal to the Two-Year Reserve
Requirement to the Basic Rent Reserve Fund. In the event that
Airline fails to take either action, City may draw on such credit
facility in the amount of the Two-Year Reserve Requirement and
deposit the proceeds from such drawing in the Basic Rent Reserve
Account (1) prior to expiration of the credit facility in the case
of receipt of an expiration notice, (2) prior to the termination
date in the case of receipt of a termination notice, or (3)
immediately in the case of such reduction in credit rating or
nonreinstatement to the required stated amount. The terms of the
credit facility referenced in this paragraph may be amended,
deleted, or otherwise modified upon written agreement of the
parties to this Agreement.
Upon such termination, Airline shall be obligated to make
monthly payments on the first business day of each month until the
scheduled expiration of the Concourse D Term and the Concourse C
Expansion Term, as the case may be, of such approximately equal
monthly amounts which, when multiplied by 12, will be sufficient to
pay: (A) the debt service requirements with respect to the GARBs
during the succeeding twelve-month period, less any amounts (net of
operating and maintenance expenses attributable to the Continental
Special Facilities not paid by third parties or Airline) to which
City is contractually entitled from third parties for such period
as a result of reletting any of the Continental Special Facilities;
and (B) the operation and maintenance costs associated with the
Continental Special Facilities, provided that City shall be
obligated to minimize such operation and maintenance costs to the
extent practicable under the circumstances. In the event that at
any time or times during such succeeding 12-month period City
becomes contractually entitled to receive from third parties any
amounts attributable to the Continental Special Facilities which
were not taken into account in calculating the amount of the
monthly payments owed by Airline as described above, or if for any
other reason such monthly payments prove to be inaccurate for their
intended purpose, City and Airline shall make appropriate
adjustments to future monthly payments owed by Airline to reflect
the amounts which City has become so entitled to receive from third
parties or to correct such inaccuracy. If Airline terminates this
Agreement pursuant to this Section 3.01(c), City shall use Best
Efforts to fill the vacancy thereby created in the Continental
Special Facilities that are subject to this Agreement for the
balance of the applicable Term at the maximum rental rate
reasonably attainable; provided, however, that if the Concourse D
Special Premises, the Concourse C Expansion Special Premises, the
Deicing Pad Special Premises, or the Hydrant Fueling System Special
Premises cannot be relet at a rental rate sufficient to fully cover
the incremental operation and maintenance costs in excess of those
minimized costs described in subsection (B) of this paragraph upon
such reletting of the Concourse D Special Premises, the Concourse
C Expansion Special Premises, the Deicing Pad Special Premises, or
the Hydrant Fueling System Special Premises, respectively, City
shall not undertake such reletting. Amounts paid to City under
leases or other agreements pertaining to such reletting will be
paid, to the extent applicable, first, to the Basic Rent Reserve
Fund to cover any deficiency therein; second, to the payment of
those amounts Airline is obligated to pay pursuant to subsections
(A) and (B) of this paragraph; third, to the payment of any
Additional Rent required to be paid pursuant to this Agreement;
fourth, to the payment of any Additional Bond Rent; and fifth, to
the payment to Airline of an amount equal to the principal of the
Bonds which would have been outstanding on the date of termination
of this Agreement if the Bonds had not been paid (or provision made
for their payment pursuant to the Indenture) and if the Bonds had
been issued payable on the Assumed Amortization terms. Except as
otherwise provided in this Section 3.01(c) or elsewhere in this
Agreement, and excepting accrued liabilities to City, Airline shall
be released from its obligations and responsibilities hereunder
upon termination of this Agreement pursuant to this Section
3.01(c).
d. In the event that Airline does not exercise its option
to terminate this Agreement prior to the Expiration Date upon
defeasance of any Bonds, Airline shall continue to pay Basic Rent
and all other amounts payable hereunder except the Bond Rent and
Additional Bond Rent for which payment or provision for payment has
been made.
3.02 Relationship to Other Agreements
a. The execution and delivery of this Agreement shall in
no way affect the validity and binding effect of the Original Lease
or 1989 Special Facilities Lease. No reference to the Original
Lease or the 1989 Special Facilities Lease herein shall be deemed
an agreement of the parties hereto to cause the Original Lease or
the 1989 Special Facilities Lease to extend beyond its terms in
accordance with its terms.
On or after January 1, 2004, and in a manner consistent with
City's obligations to other airlines, City may request that the
parties to the Original Lease commence to negotiate in good faith
the master use agreement that shall govern upon expiration of the
Original Lease. Upon such request, Airline agrees to participate
in such good faith negotiations.
b. The provisions of the Memorandum of Understanding for
Proposed Expansion of Continental Airlines Facilities at Cleveland
Hopkins International Airport, dated March 26, 1997, by and between
City and Airline ("MOU") relating to matters that are specifically
provided for in this Agreement are hereby superseded by this
Agreement. Provisions of the MOU relating to matters not
specifically addressed in this Agreement shall remain in full force
and effect unless and until superseded by definitive agreements
with respect to those matters or terminated in accordance with the
terms of the MOU. A blacklined MOU is attached as Exhibit H and,
notwithstanding anything in this Agreement to the contrary, is
specifically not incorporated herein by reference. It is attached
for purposes of demonstrating the agreement of the parties as to
which MOU provisions have been superseded (i.e., those stricken)
and which MOU provisions remain in effect despite the execution of
this Agreement (i.e., those provisions not stricken).
c. City acknowledges that Airline intends to occupy and
use the Concourse Improvements as part of a comprehensive operation
with passenger departure lounges and with ticket counters, offices,
and other support facilities that it occupies and uses in the
Terminal Complex under the Original Lease and the 1989 Special
Facilities Lease. City and Airline each acknowledge that no
portion of the Continental Special Facilities is or shall be
encumbered by the Original Lease or the 1989 Special Facilities
Lease. Nothing herein shall be construed to negate or diminish the
provisions of the Original Lease incorporated herein by reference.
d. City further acknowledges that the value of the
leasehold interest in the Concourse D Special Premises acquired
hereunder by Airline will be enhanced if Airline also acquires
hereunder the right to continue to occupy and use such facilities
in the Terminal Complex and Airfield Area as are necessary for
Airline to continue to conduct its operations in the Concourse D
Special Premises after its rights to do so under the Original Lease
have terminated. Accordingly, City agrees that, from and after the
termination of the Original Lease and until the earlier of (i) the
date on which Airline and City shall have entered into a subsequent
lease or other agreement providing for Airline's occupancy and use
of such facilities in the Terminal Complex and Airfield Area, or
(ii) the date on which this Agreement terminates, Airline shall be
entitled to occupy or use such facilities in the Terminal Complex
(including, without limitation, ticket counters, operational areas,
and offices, but excluding gates, holdrooms and passenger departure
lounges) and the Airfield Area as City, in consultation with
Airline, reasonably determines are necessary for Airline to utilize
the Concourse D Special Premises fully. Airline understands,
acknowledges, and agrees that its right hereunder does not apply to
any particular facilities and that City reserves the right and
discretion (subject to the following sentence) to fulfill its
obligations hereunder by permitting Airline to use and occupy
facilities other than those actually used and occupied by Airline
prior to the termination of the Original Lease and to change the
facilities Airline is permitted to use and occupy hereunder from
time to time. The terms on which Airline shall be entitled to such
occupancy and use of the facilities inside the Terminal Complex
shall be those agreed upon by Airline and City at the time,
provided that, in the absence of such agreement, the terms shall be
no less favorable than those which City shall have offered to any
passenger airline for such occupancy and use of the facilities
inside the Terminal Complex at the time, including, without
limitation, terms that will not impose unreasonable costs upon
Airline to refit any such other facilities to make them comparable
to facilities occupied and used by Airline prior to the termination
of the Original Lease; the terms on which Airline shall be entitled
to such use of the facilities in the Airfield Area shall be those
agreed upon by Airline and City at the time, provided that, in the
absence of such agreement, the terms shall be no less favorable
than those which City shall have offered to any similarly situated
passenger airline at the Airport for such use of the Airfield Area
at the time.
(End of Article III)
ARTICLE IV - QUIET ENJOYMENT
As long as Airline shall have paid all rents required to be
paid hereunder, made all other payments required to be made
hereunder, and shall not have permitted any default hereunder on
its part to occur and be continuing beyond applicable notice and
cure periods, then City, so long as it is the owner and operator of
the Airport, and thereafter its successors and assigns, shall take
no act or action and shall not permit any action to be taken,
except as otherwise provided by this Agreement, that will prevent
Airline from peaceably having and enjoying the Continental Special
Facilities, together with the appurtenances, facilities, rights,
licenses and privileges granted herein. Notwithstanding the
foregoing, City shall not be obligated to invoke its police powers
or any other power or authority derived solely from City's status
as a municipal corporation or public utility that is greater than
the power or authority of a private commercial landlord.
(End of Article IV)
ARTICLE V - ISSUANCE OF BONDS AND GARBS;
CONSTRUCTION OF 1997 CONCOURSE EXPANSION;
PAYMENT OF COSTS OF THE 1997 CONCOURSE EXPANSION
5.01 Issuance of the Bonds; Deposit of Bond Proceeds;
Deposit of Airline's Funds.
a. In order to provide funds for payment of the Costs of
the Facilities comprising the Continental Special Facilities and
Related Facilities incurred under or in connection with this
Agreement that are eligible for funding under applicable federal
and State laws, City agrees to work cooperatively with Airline to
authorize, issue, sell and deliver an original issue of Bonds in
accordance with Airline's scheduling needs and in an amount not to
exceed $225 million, provided that Airline has taken all actions
necessary on its part in connection with the issuance of the Bonds
and Airline is not in default under this Agreement. The maximum
maturity of the Bonds shall be the earlier of (a) the maximum
maturity permitted by federal tax law requirements or (b) the
Expiration Date. City agrees to deposit the proceeds from the sale
of the Bonds with the Trustee for application as follows: (i) to
the Interest Account to be held by the Trustee under the Indenture,
such amount from the proceeds as may be designated by the Fiscal
Officer as accrued interest on the Bonds; (ii) to the Construction
Fund to be held by the Trustee under the Indenture, such amount
from the proceeds as may be designated by the Fiscal Officer as
available to pay interest on the Bonds during construction of the
Continental Special Facilities; and (iii) to the Construction Fund,
the balance of the proceeds of the Bonds.
b. In the event that City shall fail to take any action
reasonably necessary to cause an original issue of Bonds in an
amount specified by Airline (but not to exceed $225 million) to be
issued by that date which is six months following Airline's written
request for such Bonds to be issued, despite Airline having taken,
reasonably in advance of such date, all actions necessary on its
part in connection with such issuance, and provided that Airline
shall not be in default under this Agreement remaining uncured
beyond any applicable notice and cure periods, Airline shall have
the right to terminate this Agreement, the MOU, and any subsequent
agreements relating to the 1997 Concourse Expansion or implementing
the MOU, and City shall reimburse Airline for all of the costs
(including all out-of-pocket expenses and direct dedicated labor
costs) incurred by Airline in connection with the GARB Improvements
and the Continental Special Facilities. Upon any such termination,
and in the event Airline has not been so reimbursed, City shall
grant to Airline exclusive use rights with respect to the GARB
Improvements (other than the interim and permanent rental car
facilities, with respect to which Airline shall, to the extent that
Airline has not been reimbursed for costs of the permanent rental
car facilities, or for one-half of the costs incurred by Airline
with respect to the interim rental car facilities (but not
exceeding $1,000,000), and to the fullest extent allowed by law,
receive a security interest, subject only to any security interest
required to be created pursuant to the GARB Indenture, in the
income stream therefrom evidenced by such documentation as Airline
may reasonably request) and to the Continental Special Facilities
for the useful economic life (as determined in accordance with
applicable tax law) of the GARB Improvements and the Continental
Special Facilities, as applicable. At any time during such
exclusive use period, City may repurchase such rights from Airline
at a cash price equal to the original amount of such unreimbursed
costs to Airline. City shall not be entitled to repurchase from
Airline such exclusive rights with respect to any portion of the
GARB Improvements or the Continental Special Facilities without at
the same time also repurchasing from Airline such exclusive use
rights with respect to the remainder of the Continental Special
Facilities and the GARB Improvements. City shall to the fullest
extent legally possible reimburse Airline for such costs of the
GARB Improvements and the Continental Special Facilities from the
proceeds of the GARBs. Until such time as City shall have fully
reimbursed Airline, reimbursement payments with respect to the GARB
Improvements and the Continental Special Facilities shall be made
by City to Airline from the Airport Improvement Fund, which shall
be dedicated exclusively to reimburse Airline (as evidenced by
documentation acceptable to Airline in its reasonable discretion)
until such time as full reimbursement of Airline shall have been
made. In the event that the Airport Improvement Fund shall cease
to exist or cannot be used consistent with applicable Majority In
Interest procedures of Section 8.07 of the Original Lease prior to
Airline being fully reimbursed with respect to the GARB
Improvements and the Continental Special Facilities, City shall so
dedicate other sources of Airport funds from which City shall
continue to make to Airline reimbursement payments at a level not
less than the level of payments which previously had been made to
Airline from the Airport Improvement Fund.
c. Airline at its discretion may, but shall not be
obligated to, deposit its own funds into the Construction Fund at
any time for use for the purposes of that Construction Fund in
accordance with the provisions of this Agreement.
d. In the event the cost to complete the Continental
Special Facilities exceeds that portion of the net proceeds of the
Bonds available therefor:
(i) at Airline's request, Airline and City shall work
cooperatively and reasonably to issue additional Bonds (to the
extent legally permissible) to complete the Continental Special
Facilities;
(ii) failing (i), Airline may propose a reduction in the
scope of the Continental Special Facilities (the plans and
specifications for which scope reduction shall be prepared and
submitted by Airline for City's approval in accordance with Section
5.07 below) so that the Continental Special Facilities may be
completed at a cost within the net proceeds of the Bonds (provided
that the scope of improvements shall not be reduced in a manner or
to an extent that would render the improvements comprising the 1997
Concourse Expansion unusable for the purposes which the
improvements are intended);
(iii) failing (i) and (ii), Airline and City shall work
cooperatively to reach another mutually acceptable course of
action; or
(iv) failing (i), (ii) and (iii), Airline shall
substantially complete the construction of the Continental Special
Facilities in accordance with Section 5.06 and pay all costs
therefor in excess of the money available in the Construction Fund.
e. The Bonds are to be issued under, secured by, and
payable in accordance with the Indenture. The principal of,
interest on, and any premiums associated with the Bonds shall not
be payable from any funds of City (other than the Bond Rent which
City will assign to the Trustee under the Indenture), and the Bonds
shall not be secured by any assets of City. No amount of the Costs
of the Facilities shall be paid or provided for by the use of tax
abatements or monies in City's general fund.
f. The proceeds of the Bonds may be used to pay Costs of
the Facilities of the Related Facilities provided that Airline's
right to use and occupy the Related Facilities shall terminate on
the earlier to occur of: (i) that date which is 80 percent of the
weighted average reasonably expected economic life of the
Continental Special Facilities and the Related Facilities; or (ii)
that date which is the later of (A) the end of the lease term under
the applicable existing agreement governing Airline's occupancy of
the Related Facilities or the site thereof, being the Assignment
and Novation from US Airways, Inc. to Continental Airlines, Inc.
(City Contract No. 28672, dated October 16, 1997) (the "Assignment
and Novation") in the case of those Related Facilities associated
with Concourse A, and the 1989 Special Facilities Lease in the case
of those Related Facilities associated with Concourse C, as either
of the same may be replaced, amended, restated, supplemented,
renewed or extended, or (B) the expiration date of the agreement
governing any of the premises at the Airport to which any of the
moveable Related Facilities are relocated by Airline. There shall
be no extension of the terms of the Original Lease, the Assignment
and Novation, or the 1989 Special Facilities Lease implied by the
use of the proceeds of the Bonds to acquire or improve the Related
Facilities.
5.02 Issuance of GARBs
a. In order to provide funds for payment of the costs of
constructing permanent improvements to the Airport related to the
1997 Concourse Expansion, the Council of City has authorized,
subject to the signing and delivery by Airline of this Agreement,
and City hereby agrees, subject to the signing and delivery by
Airline of this Agreement, to issue, sell and deliver GARBs. The
GARBs will fund the construction of the following improvements,
described more particularly in Exhibit J:
(i) Concourses C and D public areas (including connector
tunnel between such areas), and Concourse D concession areas;
(ii) Utilities to a line running five feet from the
outermost exterior walls with respect to the Concourse D Special
Premises;
(iii) Aircraft ramp and other aircraft paving;
(iv) Permanent rental car facilities;
(v) New employee parking lot;
(vi) Triturator; and
(vii) Outbound bag room, bag claim expansion, and security
check point expansion in the Terminal Building.
b. The proceeds of the GARBs shall be deposited and disbursed
as provided in the GARB Indenture, subject to and consistent with
the 1997 Concourse Expansion Budget set forth in Exhibit I, as the
same may be supplemented or amended by subsequent written agreement
of the parties. The allocation of the Costs of the Facilities
contained in the 1997 Concourse Expansion Budget in Exhibit I was
prepared by Airline for preliminary planning and budgeting by the
parties. That allocation is not the agreement of the parties as to
the actual allocation of the Costs of the Facilities, which shall
be governed by the Cost Allocation Policy set forth in Exhibit C.
c. In the event that the cost to complete the GARB
Improvements exceeds the portion of the net proceeds of the GARBs
which is available to be utilized for such improvements, Airline
and City shall work cooperatively and reasonably to agree upon a
supplemental financing plan (based upon a mutually agreed revised
budget) involving issuance of additional general airport revenue
bonds (to the extent legally permissible) or other funding sources
(other than the Bonds or Airline credit) to complete such
improvements. If no such supplemental financing plan can be
implemented, Airline shall propose a reduction in the scope of such
improvements (the plans and specifications for which scope
reduction shall be prepared and submitted by Airline for City's
approval in accordance with Section 5.07 below) so that the same
may be completed within the net proceeds of the GARBs available to
be utilized for such improvements; provided, however, that the
scope of the improvements shall not be reduced in a manner or to an
extent that would render the improvements comprising the 1997
Concourse Expansion unusable for the intended purposes. If no such
supplemental financing plan can be implemented and if such scope
reduction cannot be effectuated, Airline and City shall work
cooperatively to reach another mutually acceptable course of
action. If and to the extent the 1997 Concourse Expansion Budget
set forth in Exhibit I changes pursuant to this Section 5.02(c), an
amended or supplemented 1997 Concourse Expansion Budget, approved
by the Fiscal Officer and the Director of Port Control of City,
shall be attached to this Agreement and submitted to the GARB
Trustee and shall thereupon be deemed incorporated herein.
d. In the event that the cost to complete the GARB
Improvements is less than the portion of the net proceeds of the
GARBs available to be utilized for such improvements, Airline and
City agree that any such excess GARB proceeds may be used to pay
costs of other Airport capital projects, consistent with applicable
Majority In Interest ("MII") procedures under the Original Lease,
provided that such use shall not adversely affect the exclusion
from gross income under the Code of the interest on the GARBs, and
provided further that the debt service associated with such excess
GARB proceeds shall be charged to the appropriate Airport cost
center. In the event that City reasonably determines, based on an
established construction budget for all 1997 MII-approved projects
intended to be funded by the GARBS, that the costs of other Airport
capital projects funded with proceeds of an issue of general
airport revenue bonds (of which the GARBs are a portion) are less
than the net proceeds of those bonds available to be utilized for
such projects, City shall apply such excess bond proceeds to pay
costs of the GARB Improvements to the extent those costs exceed the
net proceeds of the GARBs.
5.03 Allocation of Costs of the Facilities
a. City and Airline acknowledge that the Costs of the
Facilities to be incurred under construction and other contracts to
be entered into by Airline in connection with certain of the
Concourse Improvements will be funded by both the Bonds and the
GARBs. City and Airline agree that such costs shall be allocated
to the GARBs and the Bonds in accordance with the methodology set
forth in Exhibit C attached to this Agreement (the "Cost Allocation
Policy"), as may be subsequently supplemented or amended. Any
supplemented or amended Cost Allocation Policy must be approved by
Airline and by the Fiscal Officer and Director of Port Control of
City and shall be attached to this Agreement and submitted to the
GARB Trustee and shall thereupon be deemed incorporated herein.
Upon completion of the 1997 Concourse Expansion, Airline shall
perform an accounting with respect to all such allocation matters.
b. In the event that a cost allocation methodology is
adopted at the Airport which calls for allocating the construction
costs of building support systems (e.g., HVAC, MEP Systems, etc.)
to any cost center other than the Concourse in which such systems
are located, the City will pay to Airline the Building Support
Adjustment Payment so that Airline is not discriminated against
with respect to the responsibility for these costs. The Building
Support Adjustment Payment shall be an amount equal to the
principal that would be outstanding as of the date such cost
allocation methodology is adopted if the Bonds had been issued
payable on the Assumed Amortization terms, on that portion of the
Bonds allocable to payment of costs of construction of such systems
in Concourse D, plus interest on that principal amount at the
Assumed Amortization terms to the earliest date that such amount of
the Bonds may be paid at stated maturity or by redemption without
penalty or premium.
5.04 Reimbursements and Disbursements Generally
a. City shall, in the Indenture, authorize and direct the
Trustee to use the monies in the Construction Fund for payment of
the Costs of the Facilities for the improvements to be funded by
the Bonds. Disbursements from the Construction Fund shall be made
by the Trustee to Airline, in reimbursement for Costs of the
Facilities paid or incurred by Airline (subject to applicable
restrictions under the Code), or to the persons designated by
Airline upon submission by Airline to Trustee of the Disbursement
Request in substantially the form attached hereto as Exhibit D-1.
A copy of each Disbursement Request submitted to the Trustee shall
be delivered at the same time to the City Project Manager and to
the Fiscal Officer.
b. In the case of Costs of the Facilities for the GARB
Improvements, Airline shall submit to the City Project Manager,
Director of Port Control, Fiscal Officer, and Project Counsel a
completed Disbursement Request in substantially the form attached
hereto as Exhibit D-2, accompanied by all supporting documentation
required by that Disbursement Request form, for review by City
(including any consultants retained by City for the purpose) and
approval by the Director of Port Control. Upon approval of the
Disbursement Request by the Director of Port Control, the Fiscal
Officer shall direct the GARB Trustee to disburse money from the
GARB construction fund held by the GARB Trustee as provided in the
GARB Indenture to pay, or to reimburse Airline for its payment of,
costs of those improvements (subject to applicable restrictions
under the Code).
c. In the case of Costs of the Facilities of the 1997
Concourse Expansion to be paid from the proceeds of both Bonds and
GARBs, Airline shall, consistent with the Cost Allocation Policy
set forth in Exhibit C to this Agreement, allocate such Costs of
the Facilities among those to be paid from the proceeds of Bonds
and those to be paid from the proceeds of GARBs. Airline shall
require contractors to provide, and Airline shall include in its
Disbursement Requests, sufficient information to enable City to
verify that the costs have been allocated consistent with the Cost
Allocation Policy.
d. Disbursements for Costs of the Facilities of the 1997
Concourse Expansion shall be solely for the payment of expenses
properly incurred in connection with the 1997 Concourse Expansion,
including construction in accordance with the plans and
specifications delivered to and approved or deemed approved by City
as required by this Agreement. In submitting any request for
payment or reimbursement for advances for Costs of the Facilities
to the Trustee or to City, Airline shall complete the applicable
Disbursement Request form attached hereto, including the attachment
of such invoices (or copies thereof) and other information required
thereby. Airline hereby agrees to submit such other information
not required by the applicable Disbursement Request form as the
Trustee or GARB Trustee may reasonably require, promptly after
request therefor.
e. City and Airline shall have the right to reasonably
review the books and records of the other party relating to the
various costs to be reimbursed or paid from the proceeds of the
Bonds or the GARBs, provided that no such review shall delay the
construction schedule or unreasonably delay the receipt by Airline
of reimbursement payments from the proceeds of the Bonds or GARBs.
City and Airline each shall be entitled to conduct reasonable
audits of the other party's costs and expenses for which payments
are requested from the proceeds of the Bonds or the GARBs. City
and Airline shall have the right of access to those books and
records of the other party that are necessary to respond to an
audit by a governmental entity, which right shall survive the
termination of this Agreement.
5.05 Specific Reimbursement and Disbursement Matters
a. Subject to applicable restrictions under the Code,
reimbursement for those Costs of the Facilities to be financed by
GARBs incurred by Airline prior to issuance of the GARBs will be
made within the later of (i) 5 business days of the issuance of the
GARBs or (ii) 30 days after Airline's submission of a Disbursement
Request form and all supporting documentation required thereon as
shown at Exhibit D-2 hereto, which form pertains to such Costs of
the Facilities. Airline shall be reimbursed from the proceeds of
the Bonds for those Costs of the Facilities to be financed by the
Bonds incurred by Airline prior to issuance of the Bonds according
to the procedures set forth herein.
City acknowledges receipt from Airline of a Certificate of
Expenditures, dated October 20, 1997 and delivered to City prior to
execution and delivery of this Agreement, setting forth all
expenditures (other than preparation of plans and specifications,
other preliminary engineering work, and other preliminary
expenditures (within the meaning of Treasury Regulations Paragraph
1.150-2(f)(2)), not in excess of 20 percent of the issue price of
the general airport revenue bonds of which the GARBs are a part) by
Airline for Costs of the Facilities paid by Airline before February
13, 1997, for which Airline seeks reimbursement from the proceeds
of the GARBs. City agrees to reimburse Airline for those
expenditures from the proceeds of the GARBs. Airline agrees that
no reimbursement will be made to Airline by City for any costs of
the GARB Improvements to be funded by the GARBs for which payment
was made by Airline prior to February 13, 1997, except for (i)
preparation of plans and specifications, other preliminary
engineering work, and other preliminary expenditures (within the
meaning of Treasury Regulations Paragraph 1.150-2(f)(2)), not in
excess of 20 percent of the issue price of the general airport
revenue bonds of which the GARBs are a part and (ii) the payments
described in the Certificate of Expenditures referenced in this
Section 5.05(a).
b. Regardless of the actual date of issuance of the GARBs
or submission of the Disbursement Request form and supporting
documentation, Airline and City shall cooperate and work diligently
and in good faith (including identifying and correcting any
deficiencies in documentation) to ensure reimbursement prior to
December 31, 1997 of Airline's upfront expenditures on those
portions of the 1997 Concourse Expansion funded by GARBs. If
Airline is not reimbursed for its upfront GARB-related expenditures
in accordance with the time period prescribed in the first sentence
of Section 5.05(a) hereof, and provided that Airline is not then in
default under this Agreement remaining uncured beyond any
applicable notice and cure periods, Airline shall have the right to
terminate this Agreement, the MOU, and any subsequent agreements
relating to the 1997 Concourse Expansion or implementing the MOU.
In the event of such termination, City shall reimburse Airline for
all of the costs (including all out-of-pocket expenses and direct
dedicated labor costs) incurred by Airline in connection with the
GARB Improvements and the Continental Special Facilities. Upon any
such termination, and in the event Airline has not been so
reimbursed, City shall grant to Airline exclusive use rights with
respect to the GARB Improvements (other than the interim and
permanent rental car facilities, with respect to which Airline
shall, to the extent that Airline has not been reimbursed for costs
of the permanent rental car facilities, or for one-half of the
costs incurred by Airline with respect to the interim rental car
facilities (but not exceeding $1,000,000), and to the fullest
extent allowed by law, receive a security interest, subject only to
any security interest required to be created pursuant to the GARB
Indenture, in the income stream therefrom evidenced by such
documentation as Airline may reasonably request) and to the
Continental Special Facilities for the useful economic life (as
determined in accordance with applicable tax law) of the GARB
Improvements and the Continental Special Facilities, as applicable.
At any time during such exclusive use period, City may repurchase
such rights from Airline at a cash price equal to the original
amount of such unreimbursed costs to Airline. City shall not be
entitled to repurchase from Airline such exclusive rights with
respect to any portion of the GARB Improvements or the Continental
Special Facilities without at the same time also repurchasing from
Airline such exclusive use rights with respect to the remainder of
the Continental Special Facilities and the GARB Improvements. City
shall to the fullest extent legally possible reimburse Airline for
such costs of the GARB Improvements and the Continental Special
Facilities from the proceeds of the GARBs. Until such time as City
shall have fully reimbursed Airline, reimbursement payments with
respect to the GARB Improvements and the Continental Special
Facilities shall be made by City to Airline from the Airport
Improvement Fund, which shall be dedicated exclusively to reimburse
Airline (as evidenced by documentation acceptable to Airline in its
reasonable discretion) until such time as full reimbursement of
Airline shall have been made. In the event that the Airport
Improvement Fund shall cease to exist or cannot be used consistent
with applicable Majority In Interest procedures of Section 8.07 of
the Original Lease prior to Airline being fully reimbursed with
respect to the GARB Improvements and the Continental Special
Facilities, City shall so dedicate other sources of Airport funds
from which City shall continue to make to Airline reimbursement
payments at a level not less than the level of payments which
previously had been made to Airline from the Airport Improvement
Fund.
c. City shall complete all City reviews and take all
necessary City actions to authorize the GARB Trustee to reimburse
Airline for Costs of the Facilities that qualify under the Code,
the Cost Allocation Policy and the 1997 Concourse Expansion Budget
(attached as Exhibits C and I, respectively) as costs and expenses
eligible to be funded by the GARBs, consistent with approved plans
and specifications submitted by Airline pursuant to Section 5.07
hereof, within 30 days of Airline's submission to the City Project
Manager, Fiscal Officer, Director of Port Control, and Project
Counsel, of the Disbursement Request form and all supporting
documentation required thereon as shown at Exhibit D-2. In the
event City does not approve the Disbursement Request submitted by
Airline, City shall within such 30-day period notify Airline in
writing, specifying the reasons for disapproval, and such 30-day
period shall be suspended from the date of notification to Airline
of such disapproval through the date Airline submits such
information as may be required by this Agreement to evidence that
the Costs of the Facilities for which Airline is requesting
reimbursement qualify for payment from proceeds of the GARBs,
consistent with the approved plans and specifications, the
requirements of the Code, the Cost Allocation Policy, and the 1997
Concourse Expansion Budget. Following Airline's submission of such
information to the City Project Manager, Director of Port Control,
and Project Counsel, City shall have the remaining balance of the
30-day period (taking into account any applicable suspension
pursuant to the second sentence of this paragraph) to reconsider
Airline's Disbursement Request, as supplemented and amended, and
proceed to take all necessary actions to authorize the GARB Trustee
to reimburse Airline.
d. Notwithstanding any provision of this Agreement to the
contrary, City shall be entitled to be reimbursed or paid from the
proceeds of the Bonds for Costs of the Facilities that qualify
under the Code, the Cost Allocation Policy and the 1997 Concourse
Expansion Budget (attached as Exhibits C and I, respectively) as
costs and expenses eligible to be funded by the Bonds. To obtain
such reimbursement or payment, City shall submit to Airline an
invoice (or copy thereof) and supporting documentation, which
Airline shall, in turn, submit to the Trustee in Airline's next
monthly requisition cycle (but in no event later than two months
from the date of City's submission to Airline) in accordance with
the applicable disbursement request procedures described in Section
5.04(a) hereof. If the Trustee then delivers payment or
reimbursement for City's Costs of the Facilities directly to
Airline, Airline shall, in turn, promptly deliver such payment or
reimbursement to City. Airline shall be entitled to conduct
reasonable audits of City's costs and expenses described in this
Section 5.05(d).
5.06 Airline's Obligation to Complete Construction of the
1997 Concourse Expansion
a. Airline shall use Best Efforts to proceed diligently to
cause the 1997 Concourse Expansion to be completed in material
compliance with applicable law and regulations. In any event,
Airline shall undertake such efforts as will result in the
substantial completion of Concourse D on or before April 22, 2001,
subject to Force Majeure and/or regulatory delays, which April 22,
2001 deadline shall be extended by one day for each day after
November 22, 1997, that City fails to deliver Permanent Site
Availability.
b. Promptly following the substantial completion of each
element of the 1997 Concourse Expansion, as hereinafter described,
Airline shall evidence such substantial completion by furnishing to
City and the Trustee a completion certificate ("Completion
Certificate") signed by the authorized representative of Airline
(i) stating that such element of the 1997 Concourse Expansion has
been completed substantially in accordance with the final plans and
all costs then due and payable in connection therewith have been
paid, and that substantial completion has been accomplished in such
a manner as to conform with all applicable zoning, planning,
building, environmental and other regulations of all governmental
authorities having jurisdiction, as the same may be amended by
variance, except for such noncompliances which, singly or in the
aggregate, could not have a materially adverse effect on the 1997
Concourse Expansion or their operations, (ii) specifying the actual
date of substantial completion of such element of the 1997
Concourse Expansion, and (iii) stating that it is given without
prejudice to any rights against third parties which then exist or
may subsequently come into being. Reference to an element of the
1997 Concourse Expansion means, in the case of the Continental
Special Facilities, the Concourse D Special Premises, the Concourse
C Expansion Special Premises, the Deicing Pad Special Premises and
the Hydrant Fueling Special Premises, and in the case of the GARB
Improvements, means each of the improvements listed in
subparagraphs (i) through (iii), and (v) through (vii), of Section
5.02(a).
c. Airline acknowledges and agrees that the damages
incurred by City as a result of any breach of obligations under
this Section 5.06 are not readily ascertainable, that money damages
or other legal relief will not adequately compensate City for any
such breach, and that City is entitled to injunctive relief
compelling the specific performance of the obligations under this
Section 5.06.
5.07 Design and Construction of 1997 Concourse Expansion
a. Airline shall be responsible for the design and
construction of the 1997 Concourse Expansion. To the extent that
construction of the 1997 Concourse Expansion has not already
commenced as of the Effective Date, Airline, at its expense
(subject to the applicable reimbursement provisions of this
Agreement) and upon receipt of notification from City that such
work may be commenced with respect to an element of the 1997
Concourse Expansion, shall proceed diligently to commence the
construction of each such element of the 1997 Concourse Expansion.
Airline's construction of the 1997 Concourse Expansion shall be
subject to the following conditions:
1. Before the commencement of any such work following the
Effective Date, Airline shall submit two blueline sets and one
electronic copy (in Autocad 12 Windows format on computer diskette)
of all detailed plans and specifications for each material element
of the 1997 Concourse Expansion to City's Director of Port Control
and the City Project Manager. Airline shall submit such other
number of blueline sets and electronic copies of such plans and
specifications as the parties may agree upon to any other persons
or City departments reasonably designated by the City Project
Manager to receive such submissions, including, without limitation,
the Properties Division of the Department of Port Control and
City's Department of Community Development. All such work shall be
done subject to and in accordance with the requirements of law and
applicable regulations of all such governmental departments or
authorities, the Director of Port Control and, where required, each
affected public utility company. Each such submission by Airline
shall include information reasonably sufficient to permit City to
evaluate the impact of each proposed element on the 1997 Concourse
Expansion as a whole. Airline shall include on the design team for
the Concourse Improvements a design consultant designated by City
to ensure the consistency of design with the other Concourses at
the Airport.
2. The City Project Manager or the City Project Manager's
designee shall communicate to Airline's Director of Corporate Real
Estate (Design and Construction) or such other person as Airline
may designate, either (i) City's written approval (which may be by
issuance of a permit or permits) of such plans and specifications,
or (ii) City's specific written objections thereto, in either case
within 30 days following submission of such plans and
specifications by Airline. In the event City determines that a
submission does not satisfy the requirements set forth in Section
5.07(a)(1) hereof, the City Project Manager shall notify Airline in
writing of the specific deficiencies and the 30-day deadline for
approval or objection shall be suspended from the date of
notification to Airline of such deficiencies through the date
Airline cures such deficiencies through resubmission of
satisfactory plans and specifications pursuant to Section
5.07(a)(1) hereof. If the City Project Manager shall fail to
communicate the written approval or specific written objections
described in the first sentence of this paragraph within the 30-day
time period there stated (taking into account any applicable
suspension pursuant to the second sentence of this paragraph),
then, in addition to any other remedies which may be available to
Airline, all aspects of such plans and specifications which are not
specifically subject to the Ohio Basic Building Code shall be
deemed to have been approved by City. If City does object to a
submission by Airline, City and Airline shall negotiate in good
faith to reach a mutually acceptable resolution within no more than
60 days of the original submission (taking into account any
applicable suspension pursuant to the second sentence of this
paragraph). City shall not unreasonably withhold, condition or
delay approval of plans and specifications. Airline shall be
entitled to rely, without independent verification, on the written
information provided by the City Project Manager or his or her
designee with respect to the matters described in this Section
5.07(a)(2) and within City's jurisdiction.
3. Any material revision(s) to plans and specifications
which have been approved or deemed to have been approved by City
shall require further City approval, which approval shall be
delivered on a timely basis (consistent with the construction
schedule and the process in this Section 5.07) and shall not be
unreasonably withheld, conditioned or delayed.
4. Subject to the provisions of this Agreement, City shall
grant Airline continuous access for construction purposes to the
sites necessary to construct the 1997 Concourse Expansion. City
and Airline agree to work cooperatively and in good faith to
promptly: (i) identify and cause to vacate their premises any
tenants occupying space necessary for the construction of the 1997
Concourse Expansion; and (ii) identify and cause to be removed any
improvements hindering such construction.
5. Such work shall be performed in a first-class,
workmanlike manner and substantially in accordance with the plans
and specifications approved for the same. Airline shall redo or
replace, at its sole cost and expense, any work which is not done
substantially in accordance with such plans and specifications, as
approved or deemed approved by City prior to or after completion of
such work; however, any request to redo or replace any such work
shall be made by City within 60 days after its receipt of notice of
completion from Airline. The quality of the interior elements of
the Concourse Improvements shall be at least comparable with that
of the existing interior Concourse C improvements. The exterior
finish of the new Concourse D shall be of a quality at least
comparable to that of existing Concourses A, B and C. City and
Airline will mutually agree upon the standards of any modifications
to facilities or building maintenance systems on Concourse C needed
to accommodate Concourse D and the connector tunnel.
6. City shall hire a representative/construction
inspector, and an accounting/audit consultant, both of whom shall
be involved throughout the construction of the 1997 Concourse
Expansion and shall be permitted reasonable access to plans,
specifications and other project information by Airline. The
salaries or fees and expenses of such City employees or
consultants, as the case may be, shall be allocated to the Bonds
and the GARBs in accordance with the Cost Allocation Policy
attached hereto as Exhibit C. Continental Special Facility
progress meetings involving City's representative/construction
inspector shall be held on a regular basis.
7. Airline's construction activities shall not
unreasonably interfere with the business operations of other
tenants at the Airport without City's prior consent, the parties
acknowledging that relocation of rental car facilities, as referred
to elsewhere in this Agreement, will, by its nature, necessarily
result in some interference with certain tenants' business
operations.
8. Airline shall provide City with copies of all
Disbursement Request forms submitted to the Trustee together with
all required attachments, and all documents required to be
submitted by Airline pursuant to Section 5.04(b) hereof. Within 12
months after the end of the Construction Period, the parties shall
request from each other such other books and records and all other
documents and papers relating to the construction of the 1997
Concourse Expansion as shall be necessary to determine and verify
all costs and expenditures of funds pertaining thereto. The party
from whom such books, records, documents and papers are requested
shall provide such books, records, documents and papers, or copies
thereof, to the requesting party within a reasonable period of time
after said request or, with respect to requests for periodic
information, within a reasonable period of time after coming into
possession of requested documents.
b. The 1997 Concourse Expansion, and all other
alterations, additions or improvements at any time placed on, in or
upon the 1997 Concourse Expansion, including movable furniture,
movable personal property, and other removable trade fixtures, the
cost of which is financed with the proceeds of Bonds or GARBs,
shall be deemed to be and become part of the realty and the sole
and absolute property of City upon completion thereof, subject to
Airline's rights hereunder. Any alterations, additions,
improvements, or property in or upon the Continental Special
Facilities installed at the expense of Airline and not funded by
the Bonds or GARBs, or at the expense of third parties (other than
City) leasing to or from Airline, shall not be deemed to become
property of City at or before the termination of this Agreement,
and Airline shall have the right to remove that property from the
Continental Special Facilities on or before the time of termination
of this Agreement, subject to any valid lien which City may have
thereon; but any damage to the Continental Special Facilities
caused by such removal shall be repaired at Airline's expense.
Airline hereby makes an irrevocable election, binding on itself and
all successors in interest, not to claim any depreciation
deductions or investment credits (within the meaning of Section
142(b)(1)(B) of the Code) with respect to any elements of the 1997
Concourse Expansion funded with the Bonds or GARBs.
c. Airline shall promptly pay all lawful claims and
discharge all liens made against it or against City by Airline's
contractors, subcontractors, materialmen and workmen, and all such
claims and liens made against Airline or City by other third
parties arising out of or in connection with, whether directly or
indirectly, any work done by Airline, its contractors,
subcontractors or materialmen; provided, however, that Airline
shall have the right to contest the amount or validity of any such
claim or lien without being in default of this Agreement upon
furnishing security satisfactory to the Director of Law of City
guaranteeing that such claim or lien will be properly and fully
discharged forthwith in the event that such contest is finally
determined against Airline or City.
d. Airline shall: (i) procure and maintain effective
during construction of the 1997 Concourse Expansion and all other
improvements by Airline pursuant to this Article V comprehensive
public liability insurance for claims arising out of bodily injury
or property damage, or, if the work is to be done by an independent
contractor, Airline shall procure and maintain or require such
contractor to procure and maintain such insurance in Airline's
name, in either case, in limits and meeting the requirements
otherwise specified in Article X of this Agreement, including the
naming of City as additional insured to the extent of Airline's
indemnification and defense obligations under Section 5.07(d)(iii)
hereof; (ii) procure and maintain effective during construction of
the 1997 Concourse Expansion and all other improvements by Airline
pursuant to this Article V builder's all-risk insurance, including
explosion hazard, underground property hazard, and collapse hazard
insurance, or, if the work is to be done by an independent
contractor, Airline shall procure and maintain or require such
contractor to procure and maintain such insurance in Airline's
name, in either case, naming City as additional insured to the
extent of Airline's indemnification and defense obligations under
Section 5.07(d)(iii) hereof; and (iii) without limiting the time
period over which the indemnification and defense obligations set
forth in Section 10.01 hereunder apply, the indemnification and
defense obligations set forth in Section 10.01 hereunder shall
apply to the construction activities of Airline, its employees,
agents, and contractors during the Construction Period.
e. In all prime contracts Airline enters into for building
and materials for the construction of the 1997 Concourse Expansion,
Airline shall require the contractor to warrant all materials and
workmanship for a period of one year following final acceptance of
the work performed, and Airline will take all steps reasonably
necessary to enforce full and faithful performance of such
warranties. Airline agrees that it will not compromise or settle
any resulting claim or litigation without the concurrence of City,
which concurrence shall not be unreasonably withheld, conditioned,
or delayed.
f. Airline shall ensure that City is either furnished with
or is a named beneficiary with respect to a bond or bonds in an
amount equal to: (i) at least 50% of the total estimated cost of
construction and installation of the entire 1997 Concourse
Expansion to secure Airline's obligation to construct and install
the 1997 Concourse Expansion; and (ii) 100% of the total estimated
cost of each construction contract, but in no event shall any
element of the construction project be required to be bonded
greater than 100%.
g. As soon as practicable, but in no event later than 180
days after the completion of construction or installation of all
the 1997 Concourse Expansion improvements, Airline shall, at its
expense, furnish the Director of Port Control with three sets of
"as built" drawings on Autocad 12 Windows format on computer
diskette of those improvements, which drawings shall be deemed
incorporated in this Agreement by reference.
h. Airline shall obtain all required building and other
permits relating to the Continental Special Facilities (and City
will assist in obtaining such permits on an expedited basis) and
Airline shall comply with all of the following: (i) the State of
Ohio prevailing wage requirements; (ii) City's Minority Business
Enterprise ("MBE")/Female Business Enterprise ("FBE") goals of 30%
MBE participation and 10% FBE participation for design and
construction services, provided, however, that contracts for goods
and services for which there is no qualified MBE/FBE provider, as
determined in consultation with City's Director of the Office of
Equal Opportunity, shall not be subject to such goals (based upon
Airline's experience, Airline believes that contracts which will be
so excluded from such goals will include, by way of example and not
limitation, those for passenger loading bridges and baggage
conveyor systems); (iii) the Competitive Bidding Procedures for
Public and Non-Public Areas set forth in Exhibit E attached hereto,
including the additional requirements that Airline provide the City
Project Manager with at least 72 hours advance written notice of
the time and place of bid openings and, if the City Project Manager
or his or her designee appears at such time and place, that Airline
permit such individual to be physically present when such bids are
opened; (iv) City residency goal of 35% for construction new hires;
and (v) City's Equal Opportunity Clause, which is Section 187.11(B)
of City's Codified Ordinances (wherein Airline is referred to as
the "contractor"), attached hereto as Exhibit G.
5.08 Subsequent Improvements by Airline
Subsequent to constructing the 1997 Concourse Expansion as
expressly provided herein, Airline shall make no alterations,
additions or improvements to the 1997 Concourse Expansion or other
installation on the 1997 Concourse Expansion without the prior
written approval of City, which approval shall not be unreasonably
withheld, conditioned or delayed. All subsequent improvements,
alterations or construction work done by Airline during the term of
this Agreement shall be performed in accordance with the
requirements of this Article V.
5.09 Environmental Compliance, Remediation and Liability
During the Construction Phase
a. City and Airline shall coordinate to obtain any legally
necessary environmental approvals for construction of the 1997
Concourse Expansion. The costs of obtaining such approvals: (i)
with respect to the Continental Special Facilities, will be
reimbursed from the proceeds of the Bonds; (ii) with respect to
those portions of the 1997 Concourse Expansion funded with the
proceeds of the GARBS, will be reimbursed from the proceeds of the
GARBs; and (iii) with respect to those portions of the 1997
Concourse Expansion funded with a combination of Bonds and GARBs,
will be reimbursed according to the Cost Allocation Policy attached
hereto as Exhibit C. City and Airline shall provide to each other
copies of all environmental and engineering studies, inspection
reports and correspondence with state and federal governmental
agencies relating to environmental matters in connection with the
1997 Concourse Expansion.
b. Notwithstanding anything in this Agreement to the
contrary, Airline shall not be responsible for any environmental
contamination discovered in connection with the 1997 Concourse
Expansion to the extent that the presence of the material resulting
in the environmental contamination was not caused by Airline's acts
or failures to act where Airline had a duty to act. During the
Construction Period, City's obligations to remediate to the extent
and in the manner set forth in Section 2.05(i) hereof shall apply.
c. If, during the Construction Period, Airline plans to
encounter or disturb that area commonly known as the "Five Points
Burn Pit" underlying a portion of the construction site of certain
of the 1997 Concourse Expansion improvements, Airline shall provide
City with written notice of same as soon as practicable, along with
any proposed plan of remediation or avoidance which Airline may,
but is not required, to submit. City shall notify Airline as soon
as practicable, but in any event within 21 days following the
foregoing notice from Airline, of City's approval and authorization
to proceed with any plan of remediation or avoidance offered by
Airline and accepted by City, or of City's intention to develop an
alternative plan of remediation or avoidance. In the latter case,
City will then proceed to develop and implement any such plan of
remediation or avoidance as soon as practicable under the
circumstances.
During the Construction Period, upon request by Airline, City
will, as soon as practicable under the circumstances, take all
actions necessary to remediate Existing Contamination (other than
the Five Points Burn Pit) and/or contamination of the 1997
Concourse Expansion caused by Hazardous Materials to the extent
such contamination results from the acts or omissions of persons or
entities other than Airline, its employees, agents, contractors,
subcontractors, and licensees, to the extent required under
applicable Environmental Laws in order to permit Airline's proposed
construction and intended use of the facilities. In connection
with such remedial work, City will only be required to meet the
least stringent standards of applicable Environmental Laws,
provided such least stringent standards are consistent with
Airline's proposed construction and intended use of the facilities.
Airline will cooperate with City in City's design and performance
of cost-effective remedies, provided that such remedies do not
unreasonably interfere with the construction or use of the
facilities.
If City does not, upon reasonable written notice from Airline,
and upon reasonable opportunity to City to cure, commence or
diligently continue to complete any remediation to be performed
pursuant to this Section 5.09, then Airline, in addition to any
other remedy which may be available to it, may, following
reasonable written notice, perform such remediation. Airline shall
be entitled to reimbursement from City within 30 days of written
demand to City from Airline for payment for any and all reasonable
direct costs incurred in completing such remediation.
In the event Existing Contamination unexpectedly encountered
during the construction of the 1997 Concourse Expansion poses an
immediate threat to the public health or safety, Airline shall
provide notice of such situation to City as soon as reasonably
practicable under the circumstances ("Emergency Notice"). In the
event City fails, within 48 hours of receipt of such Emergency
Notice, to notify Airline of its intention to respond immediately
to such emergency situation or if City provides such notice but the
City fails immediately so to respond, Airline is authorized to
undertake steps reasonably calculated to eliminate the immediate
threat to the public health or safety. Any authorized remediation
undertaken by Airline pursuant to this Section 5.09(c) shall be
reimbursed by City to the extent of Airline's reasonable direct
expenditures.
d. City shall exercise promptly and in good faith,
diligent efforts to recover costs associated with the provisions of
Section 5.09 hereof from the party or parties responsible for such
contamination and restore the same to the affected cost center, or
in the absence of recovery from the responsible parties, to charge
such costs to the appropriate cost center.
e. At Airline's request, City promptly shall enforce to
the fullest extent all rights which City has against rental car
companies with respect to the removal of storage tanks from, and
the remediation of any environmental contamination associated with,
such companies' sites.
f. In the event that an environmental study reveals
materially adverse conditions, or if any other environmental
circumstances outside of Airline's reasonable control relating to
the Airport property or construction of the 1997 Concourse
Expansion thereon are discovered which would substantially and
materially impact the cost of, or delay the scheduled completion by
more than 18 months of, the 1997 Concourse Expansion, Airline shall
have the right to terminate this Agreement, the MOU, and any
subsequent agreements relating to the 1997 Concourse Expansion or
implementing the MOU. In the event of such termination, Airline
shall be reimbursed by City for the costs to Airline (including all
out-of-pocket expenses and direct dedicated labor costs) of all
improvements constituting a portion of the GARB Improvements, but
Airline shall not be entitled to reimbursement for the costs to
Airline of those improvements constituting a portion of the
Continental Special Facilities. City shall to the fullest extent
legally possible reimburse Airline for such costs of the GARB
Improvements from the proceeds of the GARBs. Until such time as
full reimbursement shall have been made to Airline with respect to
the GARB Improvements, City shall grant to Airline the right to
exclusive use of the GARB Improvements (other than the interim and
permanent rental car facilities, with respect to which Airline
shall, to the extent that Airline has not been reimbursed for costs
of the permanent rental car facilities, or for one-half of the
costs incurred by Airline with respect to the interim rental car
facilities (but not exceeding $1,000,000), and to the fullest
extent allowed by law receive a security interest, subject only to
any security interest required to be created pursuant to the
existing GARB Indenture, in the income stream therefrom evidenced
by such documentation as Airline reasonably may request). Upon
such termination, City also shall grant Airline exclusive use
rights with respect to the Continental Special Facilities for the
useful economic life (as determined in accordance with applicable
tax law) of those Continental Special Facilities. At any time
during such exclusive use period, City may repurchase such
exclusive use rights from Airline at a cash price equal to the
original amount of such unreimbursed costs to Airline. City shall
not be entitled to repurchase from Airline such exclusive use
rights with respect to any portion of the Continental Special
Facilities without at the same time also repurchasing from Airline
such exclusive use rights with respect to the remainder of the
Continental Special Facilities (other than the Hydrant Fueling
System Special Premises).
5.10 FAA Coordination
In connection with the construction of the 1997 Concourse
Expansion: (a) Airline shall prepare Forms 7460-1 (Notice of
Proposed Construction or Alteration) and City shall submit that
Form to the FAA; (b) Airline shall prepare the FAA safety phasing
plans and City shall submit that plan to the FAA; and (c) City
shall request an update to the Airport Layout Plan when and as
appropriate, and which shall be consistent with the plan for
constructing the 1997 Concourse Expansion. Airline shall contract
for (and coordinate with City on) any required air quality studies,
and City shall submit the same to the appropriate governmental
agencies.
5.11 ODOT Coordination
In connection with the construction of the 1997 Concourse
Expansion, City shall be responsible for coordinating all highway
signage and other matters with the Ohio Department of
Transportation (ODOT).
5.12 Regulatory Delays
a. If any non-City regulatory delay substantially and
materially impacts the cost of, or delays (or is jointly
anticipated by City and Airline in the exercise of each party's
reasonable discretion to delay) the scheduled completion by more
than one year (or 18 months in the case of any required
environmental impact statement) of, the 1997 Concourse Expansion,
then City and Airline each shall have the right to terminate this
Agreement, the MOU, and any subsequent agreements relating to the
1997 Concourse Expansion or implementing the MOU. In the event of
such termination, Airline shall be reimbursed by City for the costs
to Airline (including all out-of-pocket expenses and direct
dedicated labor costs) of all improvements constituting a portion
of the GARB Improvements, but Airline shall not be entitled to
reimbursement for the costs to Airline of those improvements
constituting a portion of the Continental Special Facilities. City
shall to the fullest extent legally possible reimburse Airline for
such costs of the GARB Improvements from the proceeds of the GARBs.
Until such time as full reimbursement shall have been made to
Airline with respect to the GARB Improvements, City shall grant to
Airline the right to exclusive use of the GARB Improvements (other
than the interim and permanent rental car facilities, with respect
to which Airline shall, to the extent that Airline has not been
reimbursed for costs of the permanent rental car facilities, or for
one-half of the costs incurred by Airline with respect to the
interim rental car facilities (but not exceeding $1,000,000), and
to the fullest extent allowed by law receive a security interest,
subject only to any security interest required to be created
pursuant to the existing GARB Indenture, in the income stream
therefrom evidenced by such documentation as Airline reasonably may
request). Upon such termination, City also shall grant Airline
exclusive use rights with respect to the Continental Special
Facilities for the useful economic life (as determined in
accordance with applicable tax law) of those Continental Special
Facilities. At any time during such exclusive use period, City may
repurchase such exclusive use rights from Airline at a cash price
equal to the original amount of such unreimbursed costs to Airline.
City shall not be entitled to repurchase from Airline such
exclusive use rights with respect to any portion of the Continental
Special Facilities without at the same time also repurchasing from
Airline such exclusive use rights with respect to the remainder of
the Continental Special Facilities (other than the Hydrant Fueling
System Special Premises).
b. If any City regulatory delay (not resulting from
Airline's failure to comply with this Agreement and the MOU)
substantially and materially (which, for purposes of this sentence,
shall mean by 12% or more) impacts the cost of, or delays (or is
anticipated by Airline in the exercise of its reasonable discretion
to delay) the scheduled completion by more than one year of, the
1997 Concourse Expansion, then Airline shall have the right to
terminate this Agreement, the MOU, and any subsequent agreements
relating to the 1997 Concourse Expansion or implementing the MOU.
In the event of such termination, City shall reimburse Airline for
all of the costs (including all out-of-pocket expenses and direct
dedicated labor costs) incurred by Airline in connection with the
GARB Improvements and the Continental Special Facilities. Upon any
such termination, in the event Airline has not been so reimbursed,
City shall grant to Airline exclusive use rights with respect to
the GARB Improvements (other than the interim and permanent rental
car facilities, with respect to which Airline shall, to the extent
that Airline has not been reimbursed for costs of the permanent
rental car facilities, or for one-half of the costs incurred by
Airline with respect to the interim rental car facilities (but not
exceeding $1,000,000), and to the fullest extent allowed by law
receive a security interest, subject only to any security interest
required to be created pursuant to the GARB Indenture, in the
income stream therefrom evidenced by such documentation as Airline
may reasonably request) and the Continental Special Facilities for
the useful economic life (as determined in accordance with
applicable tax law) of the GARB Improvements and the Continental
Special Facilities, as applicable. At any time during such
exclusive use period, City may repurchase such rights from Airline
at a cash price equal to the original amount of such unreimbursed
costs to Airline. City shall not be entitled to repurchase from
Airline such exclusive rights with respect to any portion of the
GARB Improvements or the Continental Special Facilities without at
the same time also repurchasing from Airline such exclusive use
rights with respect to the remainder of the Continental Special
Facilities and the GARB Improvements. City shall to the fullest
extent legally possible reimburse Airline for such costs of the
GARB Improvements and the Continental Special Facilities from the
proceeds of the GARBs. Until such time as City shall have fully
reimbursed Airline, reimbursement payments with respect to the GARB
Improvements and the Continental Special Facilities shall be made
by City to Airline from the Airport Improvement Fund, which shall
be dedicated exclusively to reimburse Airline (as evidenced by
documentation acceptable to Airline in its reasonable discretion)
until such time as full reimbursement of Airline shall have been
made. In the event that the Airport Improvement Fund shall cease
to exist or cannot be used consistent with applicable Majority In
Interest procedures of Section 8.07 of the Original Lease prior to
Airline being fully reimbursed with respect to the GARB
Improvements and the Continental Special Facilities, City shall so
dedicate other sources of Airport funds from which City shall
continue to make to Airline reimbursement payments at a level not
less than the level of payments which previously had been made to
Airline from the Airport Improvement Fund.
5.13 Permanent Rental Car Facilities
a. Airline has contracted for the design of permanent
rental car facilities, which contracts were assigned to City at no
additional cost to City. City shall construct the permanent rental
car facilities, and shall cause them to be made available in
operational condition by April 15, 1998. City shall cause all of
the rental car company tenants which were not relocated to interim
rental car facilities to vacate their premises ("Premises A") by
May 8, 1998. City shall also cause those rental car company
tenants which were relocated to said interim rental car facilities
to vacate such interim facilities ("Premises B") by May 31, 1998.
City shall then deliver full possession of both Premises A and
Premises B to Airline by June 1, 1998, with all improvements
(including, without limitation, all above-ground and underground
storage tanks) in, on, and under Premises A demolished and/or
removed in accordance with all applicable laws. Thereafter,
Airline shall have continuous access to Premises A and Premises B
for construction purposes, provided that Airline shall not
unreasonably interfere with the business operations of other
tenants at the Airport without City's prior consent, acknowledging
that relocation of rental car company tenants will, by its nature,
necessarily result in some interference with such tenants' business
operations. Upon obtaining access to Premises B from City for
construction purposes, Airline shall demolish and/or remove, in
accordance with all applicable laws, all improvements (including,
without limitation, all above-ground and underground storage tanks)
in, on, and under Premises B; Airline shall be reimbursed from the
proceeds of the GARBs for such demolition and/or removal, and such
destruction and/or removal shall be charged to the appropriate
general cost center as may be specified by and to the extent
permitted under the Original Lease.
b. In the event that Permanent Site Availability does not
occur by June 1, 1998, subject to (a) Force Majeure, (b) non-City
regulatory delays, and (c) any binding court order precluding
delivery of such site to Airline, Airline shall have the right to
terminate this Agreement, the MOU, and any subsequent agreements
relating to the 1997 Concourse Expansion or implementing the MOU.
In the event of such termination, City shall reimburse Airline for
all of the costs (including all out-of-pocket expenses and direct
dedicated labor costs) incurred by Airline in connection with the
GARB Improvements and the Continental Special Facilities. Upon any
such termination, in the event Airline has not been so reimbursed,
City shall grant to Airline exclusive use rights with respect to
the GARB Improvements (other than the interim and permanent rental
car facilities, with respect to which Airline shall, to the extent
that Airline has not been reimbursed for costs of the permanent
rental car facilities, or for one-half of the costs incurred by
Airline with respect to the interim rental car facilities (but not
exceeding $1,000,000), and to the fullest extent allowed by law
receive a security interest, subject only to any security interest
required to be created pursuant to the GARB Indenture, in the
income stream therefrom evidenced by such documentation as Airline
may reasonably request) and the Continental Special Facilities for
the useful economic life (as determined in accordance with
applicable tax law) of the GARB Improvements and the Continental
Special Facilities, as applicable. At any time during such
exclusive use period, City may repurchase such rights from Airline
at a cash price equal to the original amount of such unreimbursed
costs. City shall not be entitled to repurchase from Airline such
exclusive rights with respect to any portion of the GARB
Improvements or the Continental Special Facilities without at the
same time also repurchasing from Airline such exclusive use rights
with respect to the remainder of the Continental Special Facilities
and the GARB Improvements. City shall to the fullest extent
legally possible reimburse Airline for such costs of the GARB
Improvements and the Continental Special Facilities from the
proceeds of the GARBs. Until such time as City shall have fully
reimbursed Airline, reimbursement payments with respect to the GARB
Improvements and the Continental Special Facilities shall be made
by City to Airline from the Airport Improvement Fund, which shall
be dedicated exclusively to reimburse Airline (as evidenced by
documentation acceptable to Airline in its reasonable discretion)
until such time as full reimbursement of Airline shall have been
made. In the event that the Airport Improvement Fund shall cease
to exist or cannot be used consistent with applicable Majority In
Interest procedures of Section 8.07 of the Original Lease prior to
Airline being fully reimbursed with respect to the GARB
Improvements and the Continental Special Facilities, City shall so
dedicate other sources of Airport funds from which City shall
continue to make to Airline reimbursement payments at a level not
less than the level of payments which previously had been made to
Airline from the Airport Improvement Fund.
5.14 Default, Notice and Termination During Construction
Period
a. If a substantial and material default by either party
occurs with respect to a substantial and material obligation under
this Agreement during the Construction Period, and the defaulting
party fails to cure the default within 60 days following receipt of
written notice from the non-defaulting party specifically
describing the default, the non-defaulting party shall be entitled
as its sole remedy to terminate this Agreement, the MOU, and any
subsequent agreements relating to the 1997 Concourse Expansion or
implementing the MOU and exercise the remedies set forth in (i)
Section 5.14(b) of this Agreement if City is the non-defaulting
party, or (ii) Section 5.14(c) of this Agreement if Airline is the
non-defaulting party; provided, however, that if the non-defaulting
party elects to so terminate any one of the agreements referenced
in this sentence, it shall be obligated to terminate them all.
This same obligation shall apply generally to the right to
terminate the aforementioned agreements specifically referenced in
Sections 5.01(b), 5.05(b), 5.09(f), 5.12(a), 5.12(b), and 5.13(b).
Any provision of this Agreement to the contrary notwithstanding,
notice of default given under this Article V by Airline to City
shall be sent by U.S. registered or certified mail, postage
prepaid, return receipt requested and, in addition to the addresses
for City set forth in Section 17.05 below, any such notice also
shall be sent to the Mayor of City and City Council at the
addresses also set forth at Section 17.05 below.
b. In the event of a termination by City pursuant to
Section 5.14(a), Airline shall not be entitled to reimbursement for
the costs of the GARB Improvements or the Continental Special
Facilities and, to the extent that Airline shall have been
reimbursed from the proceeds of the GARBs prior to the date of
City's termination, Airline shall pay when due the principal of and
interest on the GARBs, the proceeds of which shall have been
disbursed to Airline, and shall pay or cause to be paid on a date
selected by City, which date shall be on or before December 31,
2005 but not before June 1, 2004, the then unpaid principal of, and
any premium and interest to the date of redemption on, those GARBs
the proceeds of which shall have been so disbursed to Airline.
Upon such termination, provided Airline is not in breach of its
obligations with respect to payment of the GARBs, City shall grant
to Airline exclusive use rights with respect to the GARB
Improvements (other than the interim and permanent rental car
facilities, with respect to which Airline shall, to the extent that
Airline has not been reimbursed for costs of the permanent rental
car facilities, or for one-half of the costs incurred by Airline
with respect to the interim rental car facilities (but not
exceeding $1,000,000), and to the fullest extent allowed by law
receive a security interest, subject only to any security interest
required to be created pursuant to the GARB Indenture, in the
income stream therefrom evidenced by such documentation as Airline
reasonably may request) and the Continental Special Facilities for
the useful economic life (as determined in accordance with
applicable tax law) of the GARB Improvements and the Continental
Special Facilities, as applicable. At any time during such Airline
exclusive use period, City may repurchase such rights from Airline
at a cash price equal to the original amount of such unreimbursed
costs to Airline. City shall not be entitled to repurchase from
Airline such exclusive use rights with respect to any portion of
the Continental Special Facilities or the GARB Improvements without
at the same time also repurchasing from Airline such exclusive use
rights with respect to the remainder of the Continental Special
Facilities (other than the Hydrant Fueling System Special Premises)
and the GARB Improvements.
c. In the event of a termination by Airline pursuant to
Section 5.14(a), City shall reimburse Airline for all of the costs
(including all out-of-pocket expenses and direct dedicated labor
costs) incurred by Airline in connection with the GARB Improvements
and the Continental Special Facilities. Upon any such termination,
in the event Airline has not been so reimbursed, City shall grant
to Airline exclusive use rights with respect to the GARB
Improvements (other than the interim and permanent rental car
facilities, with respect to which Airline shall, to the extent that
Airline has not been reimbursed for costs of the permanent rental
car facilities, or for one-half of the costs incurred by Airline
with respect to the interim rental car facilities (but not
exceeding $1,000,000), and to the fullest extent allowed by law
receive a security interest, subject only to any security interest
required to be created pursuant to the GARB Indenture, in the
income stream therefrom evidenced by such documentation as Airline
may reasonably request) and the Continental Special Facilities for
the useful economic life (as determined in accordance with
applicable tax law) of the GARB Improvements and the Continental
Special Facilities, as applicable. At any time during such
exclusive use period, City may repurchase such rights from Airline
at a cash price equal to the original amount of such unreimbursed
costs to Airline. City shall not be entitled to repurchase from
Airline such exclusive rights with respect to any portion of the
GARB Improvements or the Continental Special Facilities without at
the same time also repurchasing from Airline such exclusive use
rights with respect to the remainder of the Continental Special
Facilities and the GARB Improvements. City shall to the fullest
extent legally possible reimburse Airline for such costs of the
GARB Improvements and the Continental Special Facilities from the
proceeds of the GARBs. Until such time as City shall have fully
reimbursed Airline, reimbursement payments with respect to the GARB
Improvements and the Continental Special Facilities shall be made
by City to Airline from the Airport Improvement Fund, which shall
be dedicated exclusively to reimburse Airline (as evidenced by
documentation acceptable to Airline in its reasonable discretion)
until such time as full reimbursement of Airline shall have been
made. In the event that the Airport Improvement Fund shall cease
to exist or cannot be used consistent with applicable Majority In
Interest procedures of Section 8.07 of the Original Lease prior to
Airline being fully reimbursed with respect to the GARB
Improvements and the Continental Special Facilities, City shall so
dedicate other sources of Airport funds from which City shall
continue to make to Airline reimbursement payments at a level not
less than the level of payments which previously had been made to
Airline from the Airport Improvement Fund.
d. At the end of the Construction Period, all default and
termination provisions contained in this Section 5.14 and elsewhere
in this Article V shall cease, leaving only those default and
termination rights and remedies described in other provisions of
this Agreement.
(End of Article V)
ARTICLE VI - OPERATION AND
MAINTENANCE OF CONTINENTAL SPECIAL FACILITIES;
UTILITIES
6.01 Operation and Maintenance of Continental Special
Facilities
a. Airline agrees that it will, with reasonable diligence,
prudently operate the Continental Special Facilities, improve them
and keep them in good repair, employing at all times adequate and
qualified personnel for the purpose of doing so. Without limiting
the generality of the foregoing, except if and to the extent that
City is responsible for the maintenance and repair of any of the
Continental Special Facilities as specified on Exhibit F hereto,
Airline shall: (i) at all times keep the Continental Special
Facilities appropriately neat, orderly, sanitary and presentable
and perform certain maintenance, repair and cleaning; (ii) make
such repairs and replacements to the Continental Special Facilities
as City may from time to time reasonably direct Airline to make in
order to keep the Continental Special Facilities in good repair;
(iii) furnish its own janitor service for the Continental Special
Facilities; (iv) provide and maintain toilet facilities for the
Continental Special Facilities; and (v) cause to be removed, at
Airline's own expense, from the Continental Special Facilities, all
waste, garbage and rubbish, and not deposit the same on any part of
the Airport, except that Airline may deposit the same temporarily
in the Terminal Complex at such spaces, if any, designated by City
in connection with collection for removal, all as further described
in Exhibit F hereto.
b. Except if and to the extent that Airline is responsible
for the maintenance and repair of any of the GARB Improvements as
specified on Exhibit F hereto, City shall keep the GARB
Improvements appropriately neat, orderly, sanitary and presentable,
and in doing so shall provide, with respect to the GARB
Improvements, such maintenance and cleaning services as are
specified on Exhibit F hereto.
c. If Airline does not, upon reasonable written notice and
reasonable opportunity to Airline to cure, considering the nature
of the maintenance or repair, commence such maintenance and repairs
as Airline is required to perform pursuant to Section 6.01(a)
hereof or fails to diligently continue to complete such maintenance
or repairs, then City, in addition to any other remedy which may be
available to it, may, following reasonable written notice, enter
the Continental Special Facilities and perform such maintenance or
repair as City determines, in its reasonable discretion, is
required. Airline shall indemnify and save harmless City from all
injury, loss or damage to any person or property occasioned by
City's completion of such maintenance or repair, except to the
extent such loss or damage is the result of negligence or willful
misconduct (whether act or failure to act where City has the duty
to act) of City, its employees, agents or contractors. Airline
shall reimburse City for any and all reasonable direct costs
incurred in completing such maintenance or repair within 30 days of
receiving written demand therefor from City.
d. If City does not, upon reasonable written notice to
City's Director of Port Control from Airline's Hub Vice President
or Station Manager or equivalent, as applicable, and upon
reasonable opportunity to City to cure, considering the nature of
the maintenance or repair, commence such maintenance and repairs as
City is required to perform pursuant to Section 6.01(b) hereof or
fails to diligently continue to complete such maintenance or
repairs, then Airline, in addition to any other remedy which may be
available to it, may, following reasonable written notice, enter
the affected areas and perform such maintenance or repair as
Airline determines, in its reasonable discretion, is required.
Airline shall be entitled to reimbursement from City within 30 days
of written demand to City from Airline for payment for any and all
reasonable direct costs incurred in completing such maintenance or
repair.
e. In no event shall total collections from all Airport
tenants (including Airline) for the costs of maintenance and repair
at any time exceed actual Airport maintenance and repair costs.
f. If maintenance and repair responsibilities arise out of
the 1997 Concourse Expansion which are not covered by this
Agreement or other existing agreements between the parties, those
responsibilities will be negotiated in good faith by Airline and
City for the purpose of allocating appropriately those maintenance
and repair costs among the various parties engaged in operations at
the Airport.
6.02 Efficient Use of Space
Airline acknowledges that a portion of the Continental Special
Facilities is to be used by the traveling public. Airline shall
make available such space to its passengers and to the traveling
public on a nondiscriminatory basis. Airline shall not use its
Continental Special Facilities so as to unreasonably interfere with
the operations of abutting tenants or the utilization of the public
spaces in the Airport, including concession areas.
6.03 Hydrant Fueling System
a. Airline shall be responsible for the operation,
maintenance and repair of its Hydrant Fueling System Special
Premises; provided, however, that if City, pursuant to this Section
6.03, elects to purchase from Airline the rights to Airline's
Hydrant Fueling System Special Premises in order to incorporate
said system into a larger fuel distribution system at the Airport,
Airline shall no longer be solely responsible for the costs of
ongoing maintenance and repair of the Hydrant Fueling System
Special Premises, but will rather share responsibility for such
costs associated with the larger fuel distribution system in
accordance with a formula to be agreed upon by City and the users
of such system.
b. In addition to the requirements listed in Article V and
elsewhere in this Agreement for the construction of the Continental
Special Facilities generally, upon request of City, Airline will
provide to City an estimate of the associated cost to make the
Hydrant Fueling System Special Premises capable of being expanded
beyond Concourse C and Concourse D (as in a multi-user system).
City will provide to Airline its decision whether to allocate funds
to make the Hydrant Fueling System Special Premises capable of
being expanded prior to Airline beginning the construction thereof.
City shall have the right, on terms acceptable to City and Airline
in their respective reasonable discretions, to purchase from
Airline the rights to the Hydrant Fueling System Special Premises
if City incorporates said system into a larger fuel distribution
system for the Airport, in which event the Hydrant Fueling System
Term shall terminate and Airline shall pay for its fair share of
such larger system based upon system cost and use. Airline shall
not be obligated to participate in any manner in the cost of a
hydrant fueling system for Concourses other than Concourse C and
Concourse D unless City shall so purchase Airline's Hydrant Fueling
System Special Premises and incorporate it into such a larger
system.
c. If City has not purchased from Airline Airline's
leasehold rights to the Hydrant Fueling System Special Premises
pursuant to this Section 6.03 during the Hydrant Fueling System
Term, City and Airline shall cooperate in an effort to reach an
agreement as to the disposition of the Hydrant Fueling System
Special Premises at the scheduled expiration of the Hydrant Fueling
System Term or upon such damage or destruction or such taking by
eminent domain which results in Airline's termination of its
rights, obligations and responsibilities under this Agreement with
respect to the Hydrant Fueling System Special Premises under
Section 10.03 or Section 11.01 hereof, respectively. In the event
that no such agreement can be reached, Airline agrees that, at the
end of the Hydrant Fueling System Term, Airline shall remove the
Hydrant Fueling System Special Premises, fill any resulting
tunnels, holes and depressions, and return the site affected by
such removal to grade, including restoration of surface areas to
their states immediately before such removal.
6.04 Loading Bridges
Airline shall, at Airline's sole cost and expense, install,
keep, and maintain and, within a reasonable time period, repair any
damage to the loading bridges serving the gates at Concourse D
(including any connecting equipment, joints and the like, required
to connect the loading bridges to the concourses); provided,
however, that if Airline determines that its operations do not
require such loading bridges serving such gates, it may relocate
them on the Airport premises, unless such relocation would
adversely affect the tax-exempt status of the Bonds.
6.05 Ramp Areas
City shall perform structural maintenance and repairs and non-
structural surface maintenance to the Ramp Areas adjacent to
Concourse D in accordance with Exhibit F. Ordinary maintenance
will be Airline's responsibility, including but not limited to
cleaning and removal of snow, debris, spillage and other foreign
matter.
6.06 Construction, Installation and Maintenance of Utilities
Airline shall construct and install (but only on Airport
property) all utilities required for the 1997 Concourse Expansion
(including bringing such utilities to the 1997 Concourse Expansion,
which encompasses concession areas), including, without limitation,
heating, cooling and ventilation facilities, electrical
connections, water facilities and sanitary sewer facilities.
Airline shall be financially responsible (subject to reimbursement
from the Bonds) for the costs of constructing and installing all
utilities within its leasehold. City shall be financially
responsible for the costs to bring the utilities to the leaseline
of each of the Continental Special Facilities and to the perimeter
of each of the GARB Improvements; and Airline acknowledges that
such costs shall be funded from the proceeds of the GARBs,
consistent with the 1997 Concourse Expansion Budget attached as
Exhibit I. The 1997 Concourse Expansion shall be maintained in
accordance with the division of responsibilities listed at Exhibit
F hereto.
6.07 Relocation of Underground Utilities
Airline shall be responsible for relocating all underground
utilities affected by construction and installation of the 1997
Concourse Expansion; these costs will be paid for 100% by GARBs for
any such relocation in public areas or preferential use areas
(i.e., used by Airline on a priority basis over all other users in
connection with all of Airline's airline-wide scheduled and
associated irregular operations) and will be paid for 50% by GARBs
and 50% by Bonds for any such relocation within exclusive leased
areas.
6.08 Security
Airline shall, at Airline's sole cost and expense, provide all
personnel and equipment necessary in accordance with all applicable
laws and regulations for passenger screening and other security
services for passengers using the gates at Concourse D using
contractors reasonably acceptable to City. Airline will make all
necessary arrangements with City and pay for all services for law
enforcement or security officers required under this Section 6.08.
Airline shall take such security precautions, with respect to
the Continental Special Facilities and Ramp Areas adjacent to
Concourse D, and Airline's operations and service personnel related
thereto, as City in its sole discretion may, from time to time,
require, consistent with Federal Aviation Administration rules and
regulations, as promulgated from time to time; provided, however,
that Airline shall be afforded a reasonable opportunity to discuss
such required security precautions with City. Airline further
stipulates that it shall be solely responsible for providing
security to and within the Continental Special Facilities and Ramp
Areas adjacent to Concourse D, with no right of reimbursement from
City.
(End of Article VI)
ARTICLE VII - BASIC RENT, CHARGES AND FEES; BOND RENT
7.01 Payment of Rentals, Charges and Fees
Airline agrees to pay City, without notice or demand and
without deduction or setoff, for the use of the Continental Special
Facilities, for the rights, licenses and privileges granted
hereunder, and for the undertakings of City hereunder, the Basic
Rent, the Bond Rent, the Additional Bond Rent, and all additional
rentals, charges, and fees payable hereunder during the Terms
contained within this Agreement. Without limiting the generality
of the foregoing, Airline agrees that it shall not have the right
of setoff or deduction respecting Basic Rent or other rental
payments due and owing to City hereunder upon the assertion of an
exercise of a self-help right hereunder, claim of breach hereunder,
or claim to reimbursement hereunder.
On or before December 15 of each year, City shall transmit to
Airline a statement of the Basic Rent payable for each month during
the next year and on or before the 10th day of each month a
statement of all additional rentals (other than Bond Rent and
Additional Bond Rent and other amounts relating to the Bonds),
charges and fees then payable. Airline shall pay the Basic Rent on
or before the first day of each month and shall pay the additional
rentals within 30 days of receipt of such statement by check made
payable to City at the place and in the manner specified by the
Director of Port Control in such statement. Any payment not
received by such dates, as applicable, shall thereafter bear
interest at the rate of 1% per month until paid in full.
The Bond Rent and Additional Bond Rent and other amounts
relating to the Bonds shall be payable at the times and in the
manner set forth in Section 7.05 hereof. City and Airline
acknowledge that City will irrevocably pledge all of its right,
title and interest in and to the Bond Rent, including its right to
receive the same from Airline, to the Trustee under the Indenture
as security for the Bonds.
7.02 Basic Rent
From and after Airline's Commencement of Occupancy of the
Concourse Improvements, Airline shall pay to City Basic Rent for
each category of space in the Concourse Improvements. The amount
of Basic Rent to be paid each calendar year shall be determined
pursuant to Section 7.03.
7.03 Determination and Annual Adjustment of Basic Rent
a. As long as the Original Lease remains in effect, the
Basic Rent payable by Airline pursuant to Section 7.02 hereof shall
be determined and readjusted annually as though such Basic Rent
were "Rentals" for purposes of Article VIII of the Original Lease.
For purposes of making such adjustments, the parties hereto
acknowledge and agree that:
(i) The Concourse Improvements shall constitute part
of the "Concourses" and shall further constitute "Terminal
Concourse space or Terminal Building Space leased to a
Scheduled Airline" for the purpose of allocating the rent due
under the Original Agreement, provided however that the
Concourse Improvement Factor, referred to in Section
8.04(a)(iii) of the Original Agreement, allocable to the
Concourse C Expansion Special Premises shall exclude any debt
incurred prior to the Effective Date.
(ii) Debt service requirements of the GARBs allocable
to the connector tunnel described herein at Section 5.02(a)(i)
shall be allocated solely to Concourse D Special Premises for
purposes of calculating the Concourse Improvement Factor
referred to in Section 8.04(a)(iii) of the Original Agreement.
Costs allocable to a subsequent connector to Concourse D shall
be allocated solely to the Terminal Complex cost center
excluding the Concourse D cost center.
b. From and after the termination of the Original Lease,
Airline shall continue to pay the Basic Rent payable pursuant to
Section 7.02 hereof, as the same shall have been readjusted prior
to such termination pursuant to paragraph (a) of this Section 7.03,
and such Basic Rent shall be subject to further readjustment as
follows:
(i) If City then permits the Scheduled Airlines to
continue to use the Airport on the same terms as would apply
if the Original Lease and the other, substantially similar
agreements with the other Scheduled Airlines were still in
effect, then the Basic Rent shall continue to be readjusted
pursuant to paragraph (a) of this Section 7.03 on those terms.
(ii) If City shall have entered into substantially
similar agreements with each of the airlines then leasing
space in the Terminal Complex directly from City to succeed
or supersede the Original Lease and the other, substantially
similar agreements with the other Scheduled Airlines, then
Airline shall pay Basic Rent for the Concourse Improvements
on the same basis and terms on which the airlines which are
party to such agreements pay for space of the same categories
under such agreements; provided, however, that if such other
agreements require other airlines to lease certain areas
classified as public areas under the Original Lease, then
Airline shall also be required to pay for the cost of such
space adjoining its leased premises to obtain such rate. For
the purposes of this subparagraph (ii), City shall be deemed
to have entered into an agreement with an airline
notwithstanding the absence of any written agreement between
City and such airline if the terms on which such airline is
in fact leasing space in the Terminal Complex directly from
City are substantially the same as those in the substantially
similar agreements then in effect between City and the other
airlines then leasing space in the Terminal Complex directly
from City.
(iii) If City shall have entered into one or more
agreements with any of the airlines then leasing space in the
Terminal Complex directly from City, pursuant to which such
airlines pay rental for space of the same categories as are
included in the Concourse Improvements, then Airline shall pay
Basic Rent for the Concourse Improvements at the most
favorable (from the perspective of the airlines) rates then
payable for such space by any such airline; provided, however,
that if such other agreements require other airlines to lease
certain areas classified as public areas under the Original
Lease, then Airline shall also be required to pay for the cost
of such space adjoining its leased premises to obtain such
rate.
(iv) If none of the circumstances described in
subparagraphs (i), (ii) or (iii) above applies, then Airline
shall continue to pay Basic Rent for the Concourse
Improvements on the same basis and terms on which it paid
Basic Rent during the last Additional Term prior to the
termination of the Original Lease.
7.04 Basic Rent Reserve
There is hereby created by and with City a trust fund which
shall be designated the "City of Cleveland, Ohio, 1997 Concourse
Expansion Basic Rent Reserve Fund - Continental 1997 Expansion
Program" (the "Basic Rent Reserve Fund"). Simultaneously with the
issuance of the GARBs, and as a prepayment of the last year's Basic
Rent due hereunder, Airline shall cause to be deposited in the
Basic Rent Reserve Fund an amount equal to the Basic Rent Reserve.
Within 30 days of the effective date of any determination or
adjustment in the Basic Rent pursuant to Section 7.03 hereof,
Airline shall deposit in the Basic Rent Reserve Fund the additional
amount, if any, then necessary to cause the amount on deposit
therein to equal the Basic Rent Reserve.
Airline's obligation to deposit the Basic Rent Reserve may be
satisfied by delivery to City for deposit in the Basic Rent Reserve
Fund of cash or a credit facility in the form of an irrevocable,
direct-pay letter of credit in a stated amount not less than the
Basic Rent Reserve payable to City, provided that City has received
evidence satisfactory to it that (i) the provider of the credit
facility has a credit rating in one of the two highest credit
rating categories by two nationally recognized rating agencies,
(ii) the term of the credit facility is at least 36 months, unless
such term cannot be obtained on commercially reasonable terms, in
which case the term of the credit facility is at least 12 months
and the provider agrees to notify City of the renewal of the credit
facility, and (iii) the provider of the credit facility shall be
obligated to notify City (A) immediately in the event of any
nonreinstatement of the letter of credit following a draw to a
stated amount not less than the Basic Rent Reserve, or in the event
of termination of the credit facility and (B) at least three months
prior to expiration of the credit facility. If (i) City receives
notice of nonreinstatement or expiration, (ii) City receives notice
of the termination of the credit facility, or (iii) the credit
rating of the provider of such credit facility is no longer in the
two highest credit rating categories by two nationally recognized
rating agencies, Airline shall (A) provide a substitute credit
facility that meets the requirements set forth in the foregoing
sentence, or (B) deposit cash equal to the Basic Rent Reserve to
the Basic Rent Reserve Fund. In the event that Airline fails to
take either action, City may draw on such credit facility in the
amount of the Basic Rent Reserve and deposit the proceeds from such
drawing in the Basic Rent Reserve Account (1) prior to expiration
of the credit facility in the case of receipt of an expiration
notice, (2) prior to the termination date in the case of receipt of
a termination notice, or (3) immediately in the case of such
reduction in credit rating or nonreinstatement to the required
stated amount. The terms of the credit facility referenced in this
paragraph may be amended, deleted, or otherwise modified upon
written agreement of the parties to this Agreement.
In the event of any failure by Airline to make any payment of
Basic Rent (or portion thereof) as and when due, City may withdraw
from the Basic Rent Reserve Fund an amount equal to the amount of
Basic Rent Airline has failed to pay. The disbursement of monies
to City from the Basic Rent Reserve Fund shall not be deemed a
payment of the Basic Rent Airline had failed to pay, nor shall such
disbursement be deemed a cure of the default hereunder occasioned
by such failure to pay Basic Rent, unless and until Airline shall
have fully restored the balance in the Basic Rent Reserve Fund to
the Basic Rent Reserve. Airline may direct that any amount in the
Basic Rent Reserve Fund at any time in excess of the Basic Rent
Reserve (including any excess arising from earnings on amounts in
the Basic Rent Reserve Fund) be withdrawn from the Basic Rent
Reserve Fund and credited against the next payable payment for
Basic Rent. Monies in the Basic Rent Reserve Fund shall be
invested with other funds of the Airport unless otherwise directed
by Airline in writing to the Director of Port Control and the
earnings on amounts in that Fund shall be credited to said Fund and
held therein pending their application in accordance with this
paragraph. Except as otherwise provided herein, Airline may direct
that any monies on deposit in the Basic Rent Reserve Fund during
the year preceding the Termination Date be withdrawn therefrom for
and applied to the payment of Basic Rent.
7.05 Bond Rent
a. Airline shall pay Bond Rent by making payments to the
Trustee for the account of City on the following dates and in the
following amounts:
(i) On or before each Interest Payment Date and each
other date on which Bonds are to be paid upon redemption or
acceleration, Airline shall pay an amount which, together with
other amounts on deposit in the Interest Account, will be
sufficient to pay the interest on Bonds due on that date.
(ii) On or before each date on which principal of
Bonds is due and payable, whether at the stated maturity,
mandatory redemption or acceleration of such Bonds by the
Trustee in accordance with the Indenture, Airline shall pay
an amount which, together with other amounts on deposit in the
Principal Account, will be sufficient to pay the principal of
Bonds due on that date.
(iii) On or before each optional redemption date,
Airline shall pay an amount which, together with other amounts
on deposit in the Redemption Account, will be sufficient to
pay the principal of and premium, if any, on Bonds to be
redeemed by optional redemption on that date.
b. In addition to the Bond Rent, and in the manner
hereinafter provided, Airline shall pay Additional Bond Rent.
c. All Bond Rent and Additional Bond Rent shall be paid by
Airline in lawful money of the United States of America in
immediately available funds, provided that Airline may offset
(notwithstanding any provision of this Agreement to the contrary),
against amounts payable as Bond Rent under subdivision (a)(ii) of
this Section 7.05 for the retirement or the redemption pursuant to
mandatory sinking fund redemption of Bonds of a given maturity, the
principal amount of any Bonds of that maturity delivered in lieu of
such Bond Rent by Airline to the Trustee. Bonds delivered in lieu
of Bond Rent due on or before a redemption date for the redemption
of Bonds must be delivered to the Trustee before the Trustee
selects the Bonds to be redeemed on that date. All such rental
payments and delivery of Bonds in lieu thereof shall be made to the
Trustee, at its designated corporate trust office, and the Trustee
shall hold and apply the same in accordance with the provisions of
the Indenture.
d. Airline shall have the right to prepay all or any part
of the Bond Rent in order to cause Bonds to be redeemed or to be
deemed paid and discharged in accordance with the terms and
provisions of the Indenture. City agrees that it will give notice
to the Trustee to redeem Bonds as may be provided in the Indenture
in such principal amounts and at such times as Airline shall
request in writing.
e. Airline's obligation to pay Bond Rent and Additional
Bond Rent at the times and in the amounts specified in this Section
7.05 shall be absolute and unconditional and shall continue in any
event, including without limitation, whether or not (1) any of the
respective Terms provided for herein shall have commenced or been
terminated or Airline shall remain in possession of the Continental
Special Facilities or be able to use the same, or (2) the Original
Lease, the 1989 Special Facilities Lease or this Agreement shall
have terminated or been canceled, or (3) the Continental Special
Facilities or any interest therein are taken for any period by
condemnation or other means by any governmental authority, or (4)
the Continental Special Facilities deteriorate or become obsolete
or are damaged or destroyed for any cause whatsoever, or become
unusable by Airline, or (5) City fails to perform and observe any
agreement, express or implied, or any duty, liability or obligation
arising out of or connected with this Agreement. All Bond Rent and
Additional Bond Rent shall be made absolutely net, free from all
claims, demands, defenses or offsets against City of any kind or
nature whatsoever other than payment. Nothing contained in this
subsection shall be construed to release City from the performance
of any of the agreements on its part herein contained, and in the
event City shall fail to perform any such agreement on its part,
Airline may institute such action against City as Airline may deem
necessary to compel performance, provided that no such action shall
(1) violate the agreements on the part of Airline contained in the
first two sentences of this paragraph or (2) diminish the payments
and other amounts required to be paid by Airline pursuant to this
Section 7.05. Airline may, however, at its own cost and expense
and in its own name or in the name of City (provided City is a
necessary party) prosecute or defend any action or proceeding or
take any other action involving third persons which Airline deems
reasonably necessary in order to secure or protect its rights
hereunder, and in such event City hereby agrees to cooperate fully
with Airline and to take all action necessary to effect the
substitution of Airline for City in any such action or proceeding
if Airline shall so request.
f. In the event Airline shall fail to make any of the Bond
Rent or Additional Bond Rent payments required in this Section
7.05, each payment so in default shall continue as an obligation of
Airline until the amount in default shall have been fully paid, and
Airline will pay interest on each overdue Bond Rent payment at the
rates specified in the Indenture or, if not so specified, the
average rate borne by the Bonds on the date each such payment
became due.
7.06 Utilities
Airline shall pay for its usage of all utilities to be
furnished to or for the Continental Special Facilities. Airline
shall pay City for all electricity used at or on the Continental
Special Facilities at the metered rates which would be charged by
the public utility electric company serving the area to like users
in the vicinity of the Airport. Charges shall be paid by Airline
when billed, and the quantity consumed shall be measured by a meter
or meters installed by Airline for such purpose; provided, however,
that if for any reason any such meter or meters shall become
inoperative for any period of time, the consumption during the
period such meter or meters are out of service will be considered
to be the same as the consumption for a like period either
immediately before or after the period during which said meter or
meters are inoperative, as elected by City.
7.07 Concession for Sale of Alcoholic Beverages
Airline shall make concession payments to City in an amount
equal to the percentage, established by City ordinance (currently
19%), of gross sales of alcoholic beverages in the airline lounge
operated by Airline, unless Airline furnishes such beverages
through City's primary concessionaire, in which case such gross
sales shall be included in the amount on which that concessionaire
makes concession payments to City, and in which case Airline shall
not be required to make any payment to City in respect thereto.
7.08 Additional Payments by City
City may, but is not obligated to, cure any default on
Airline's part in fulfilling Airline's covenants and obligations
under this Agreement upon reasonable notice to Airline. Any
amounts paid by City to cure any such default are hereby agreed and
declared to be additional rent. Unless otherwise provided herein,
all additional rent shall be due and payable with the next
installment of Basic Rent due thereafter under this Agreement.
(End of Article VII)
ARTICLE VIII - RELATED INDENTURE PROVISIONS AND UNDERSTANDINGS
8.01 Trust Indenture and Financial Structure
City and Airline will work cooperatively to enter into the
Indenture. City and Airline will negotiate in each such party's
reasonable discretion mutually agreeable terms regarding the
financial structure of the Bonds. Without limiting the foregoing,
City and Airline will work cooperatively to structure the Bonds so
as to minimize the bond interest rates and provide for provisions
that are consistent with current market practices and City's
operating needs.
8.02 Airline to Maintain Its Legal Existence
During any such time that Airline is using any of the
Continental Special Facilities, Airline will maintain its status as
a federally certificated air carrier and its qualification to do
business in Ohio.
8.03 Financial Reports
Airline shall provide to City and the Trustee the following
financial reports:
a. Annual Reports. As soon as available to Airline, but
in any event within 120 calendar days after the end of each of
Airline's fiscal years during which this Agreement, or any portion
of it, is in force and effect, plus any period of extension for
filing Airline's 10-K Report permitted by Securities and Exchange
Commission ("SEC") regulations, copies of Airline's 10-K Report, as
filed with the SEC (or if Airline is not required to file such 10-K
Report, then financial statements prepared in accordance with
generally accepted accounting principles, audited and certified by
the unqualified opinion of a Certified Public Accountant);
b. Quarterly Reports. As soon as available to Airline,
but in any event within 60 calendar days after the end of each of
Airline's fiscal quarters during which this Agreement, or any
portion of it, is in force and effect, plus any period of extension
for filing Airline's 10-Q Report permitted by SEC regulations,
copies of Airline's 10-Q Report, as filed with the SEC (or if
Airline is not required to file such 10-Q Report, then quarterly
financial statements, including a statement of income and cash flow
for Airline with respect to the period then ended, certified by
Airline's chief financial officer or president); and
c. Current Reports. Simultaneously with the filing by
Airline with the SEC, copies of any Form 8-K Current Reports.
8.04 Tax Matters. Airline covenants as follows:
a. Airline has taken and caused to be taken and shall take
and cause to be taken all actions that may be required of it alone
or in conjunction with City for the interest on the Bonds to be and
to remain excluded from gross income of the owners of Bonds for
federal income tax purposes (other than a "substantial user" of the
Continental Special Facilities or Related Facilities or a "related
person"), and that it has not taken or permitted to be taken on its
behalf, any action that, if taken, would adversely affect such
exclusion under the provisions of the Code. Airline's failure to
comply with such covenant shall not give rise to or constitute an
Event of Default hereunder to the extent that any affected Bonds
are redeemed in accordance with the Indenture.
b. No acquisition or construction of the Continental
Special Facilities or Related Facilities to be funded by the Bonds
was commenced prior to the 60th day preceding the Declaration of
Official Intent made by the Fiscal Officer on April 14, 1997,
pursuant to Resolution No. 1945-96, adopted by the Council of City
on April 14, 1997, except for (i) preparation of plans and
specifications, other preliminary engineering work, and other
preliminary expenditures (within the meaning of Treasury
Regulations Paragraph 1.150-2(f)(2)), not in excess of 20 percent
of the issue price of the Bonds, and (ii) the construction
described in a certificate to be delivered by Airline to City prior
to the issuance of the Bonds.
c. At least 95% of the net proceeds of the Bonds (as
defined in Section 150 of the Code) will be used to provide an
airport within the meaning of Section 142(a)(1) of the Code. As
used herein and in Section 142(a)(1) of the Code, the term airport
means (1) items of property which are directly related and
essential to servicing aircraft, enabling aircraft to take off and
land, or transferring passengers or cargo to or from aircraft, and
(2) property located at or adjacent to an airport that is
functionally related and subordinate to such facilities and which
is of a character and size commensurate with the character and size
of the airport and in either case is a capital expenditure that
constitutes land or is of a character subject to the allowance for
depreciation under Sections 167 and 168. All of such property will
be available to and will serve the general public on a regular
basis, including serving private companies operating as common
carriers that serve the general public on a regular basis. All of
such property is, or upon completion of acquisition or construction
will be, situated at or immediately contiguous and adjacent to an
airport and must be so located in order to perform their functions.
The term airport does not include the costs of any office building
or office space within a building or a computer facility, either of
which serves a system-wide or regional function of Airline. All of
such property financed by the net proceeds of the Bonds are, or
upon completion will be, owned by City or another governmental unit
within the meaning of Section 142(b)(1) of the Code. Airline will
not request or authorize any disbursement pursuant to Section 5.04
hereof, or otherwise that, if paid, would result in less than 95%
of the net proceeds of the Bonds being so used. The costs of
issuance financed by the Bonds will not exceed 2% of the proceeds
of the Bonds (within the meaning of Section 147(g) of the Code),
and Airline will not request or authorize any disbursement pursuant
to Section 5.04 hereof or otherwise, that, if paid, would result in
more than 2% of the proceeds of the Bonds being so used. None of
the proceeds of the Bonds will be used to pay for working capital
expenditures (within the meaning of Treasury Regulations Paragraph
1.150-1(b)).
d. In accordance with Section 147(b) of the Code, the
weighted average maturity of the Bonds does not exceed 120% of the
weighted average reasonably expected economic life of the property
financed by the Bonds.
e. None of the proceeds of the Bonds will be used to
provide any airplane, skybox or other private luxury box, or health
club facility; any facility primarily used for gambling; any store
the principal business of which is the sale of alcoholic beverages
for consumption off premises; any hotels or other lodging
facilities; any retail facilities (including food and beverage
facilities) in excess of the size necessary to serve passengers
(and persons who meet or accompany them) and employees at the
Airport; any retail facility including, but not limited to, rental
car lots (other than parking for the general public that is no more
than a size necessary to serve passengers and employees at the
Airport) for passengers or the general public located outside the
Airport terminals; office buildings for individuals who are not
employees of a governmental unit or of City; industrial parks or
manufacturing facilities or; any office space that is not located
on the premises of the Airport, or in which more than a de minimis
amount of the functions to be performed will not be directly
related to the day-to-day operations at the Airport.
f. Except for land acquired by City in connection with an
airport for noise abatement or wetland preservation or for future
use as an airport and as to which there is not other significant
use of such land, less than 25% of the net proceeds of the Bonds
will be used directly or indirectly to acquire land or any interest
therein, and none of such land is being or will be used for farming
purposes; no portion of the net proceeds of the Bonds will be used
to acquire existing property or any interest therein unless the
first use of such property or interest therein is pursuant to such
acquisition or the rehabilitation requirements of Section 147(d)(3)
of the Code are satisfied with respect to such property.
g. Except for proceeds of the Bonds invested during the
applicable temporary periods under Section 148(d)(3) of the Code,
at no time during any bond year will the aggregate amount of gross
proceeds of the Bonds invested in higher yielding investments
(within the meaning of Section 148(b) of the Code and Treasury
Regulations Paragraph 1.148-2(f)(2)(iv)) exceed 150% of the debt
service on the Bonds for such bond year, and the aggregate amount
of gross proceeds of the Bonds invested in higher yielding
investments, if any, will be promptly and appropriately reduced as
the amount of outstanding Bonds are reduced, provided, however,
that the foregoing shall not require the sale or disposition of any
investments in higher yielding investments if such sale or
disposition would result in a loss which exceeds the amount which
would be paid to the United States pursuant to Section 148(f) of
the Code (but for such sale or disposition) at the time of such
sale or disposition if a payment under Section 148(f) of the Code
were due at such time.
The terms "bond year", "gross proceeds", "higher yielding
investments", "yield", and "debt service" have the meanings
assigned to them for purposes of Section 148 of the Code.
h. The Bonds are not "federally guaranteed" within the
meaning of Section 149(b) of the Code.
i. At no time will any funds constituting gross proceeds
of the Bonds be used in a manner as would constitute failure of
compliance with Section 148 of the Code. Airline shall restrict
the use of Bond proceeds in such manner and to such extent
necessary to assure that the Bonds will not constitute arbitrage
bonds under Section 148 of the Code.
j. Airline will comply fully with its representations,
warranties and covenants set forth in this Agreement.
8.05 Continuing Disclosure
Airline shall enter into continuing disclosure agreements with
City or the GARB Trustee (with respect to the GARBs) and with the
Trustee (with respect to the Bonds) with respect to the continuing
disclosure required by Rule 15c2-12 promulgated by the SEC under
the Securities and Exchange Act of 1934, as amended, 14 C.F.R.
Paragraph 240.15c2-12 (the "SEC Rule"). Airline shall comply with
and carry out all of its continuing disclosure obligations under
those agreements. However, any failure by Airline to comply with
any requirements under such agreements shall not give rise to or
constitute an Event of Default hereunder.
(End of Article VIII)
ARTICLE IX - RULES AND REGULATIONS;
COMPLIANCE WITH LAWS; ADDITIONAL COVENANTS
9.01 Rules and Regulations
Airline covenants and agrees to observe and obey all
reasonable and lawful rules and regulations (not in conflict with
this Agreement and the rules, regulations, and orders of the
Federal Aviation Administration) which are now in effect or as may
from time to time during the term hereof be promulgated by City,
the Director of Port Control or the Commissioner of Cleveland
Hopkins International Airport regarding the operation of the
Airport, including such rules as apply to Airline's use of the 1997
Concourse Expansion.
9.02 Compliance with Laws
a. In connection with its operations in and on the
Continental Special Facilities, Airline:
1. Shall comply with and conform to all present and future
laws and ordinances of City, federal, state and other governmental
bodies of competent jurisdiction and the rules and regulations
promulgated thereunder, applicable to or affecting, directly or
indirectly, Airline, the 1997 Concourse Expansion, or Airline's
operations and activities under this Agreement.
2. Shall, at its expense, make all non-structural
improvements, repairs, and alterations to the Continental Special
Facilities and its equipment and personal property required to
comply with or conform to any of such laws, ordinances, rules and
regulations referred to in subsection (a) above, to which this
Agreement is expressly subject.
3. Shall at all times during the term of this Agreement
comply with the Workers' Compensation Laws of the State of Ohio and
pay such premiums, if any, as may be required thereunder and save
City harmless from any and all liability arising from or under said
laws. Airline shall also furnish, upon commencing operations under
this Agreement and at such other times as may be requested, a copy
of the official certificate or receipt showing the payments
hereinbefore referred to or a copy of an official certificate from
the State of Ohio evidencing permission for Airline to self-insure
Workers' Compensation liability.
4. Shall be and remain an independent contractor with
respect to all installations, construction and services performed
hereunder and agrees to and does hereby accept full and exclusive
liability for the payment of any and all contributions or taxes for
social security, unemployment insurance, or old age retirement
benefits, pensions, or annuities now or hereafter imposed under any
state or federal law which are measured by the wages, salaries, or
other remuneration paid to persons employed by Airline on work
performed under the terms of this Agreement and further agrees to
obey all rules and regulations which are now or hereafter may be
issued or promulgated under said respective laws by any duly
authorized state or federal officials; and Airline shall indemnify
and save harmless City from any such contributions or taxes or
liability therefor.
5. Shall be responsible for compliance with the Americans
with Disabilities Act of 1990 ("ADA," 42 U.S.C. Paragraph 12101 et
seq.) and the regulations and Accessibility Guidelines for
Buildings and Facilities issued pursuant thereto. Airline
recognizes that City is a public entity subject to Title II of the
ADA. To the extent permitted by law, Airline shall assume and be
obligated to comply with any obligations to which City may be
subject under Title II of the ADA with respect to any programs,
services, activities, alterations or construction conducted or
undertaken by Airline in the 1997 Concourse Expansion. Airline
shall also be responsible for compliance with any other applicable
handicap accessibility laws including, but not limited to, the Air
Carriers Access Act ("ACAA," 49 U.S.C. Paragraph 41705), and
regulations implementing the ACAA. It is acknowledged by the
parties that such compliance with federal regulations may require
the provision of handicap access lifts at or near gate areas for
commuter aircraft, which provision will be the subject of a
separate agreement between City and Airline.
b. Notwithstanding the foregoing or any other provision of
this Agreement, Airline may contest any laws, ordinances, rules or
regulations (including, without limitation, Environmental Laws) by
appropriate proceedings duly instituted in good faith and
diligently prosecuted at Airline's expense. Airline shall not be
deemed in default under this Agreement for failure to comply with
such laws, ordinances, rules or regulations while Airline is
contesting them diligently and in good faith if the Continental
Special Facilities are not thereby subjected to imminent loss or
forfeiture; provided, however, that if such contest is ultimately
resolved against Airline, Airline shall hold City harmless for any
consequence of Airline's failure to comply with such contested
laws, ordinances, rules or regulations.
9.03 Ramp Usage and Servicing
a. Notwithstanding any provision of this Agreement,
Airline shall have an appurtenant right to preferential use of the
Ramp Area adjacent to the Concourse D Special Premises throughout
the Concourse D Term. Airline's use of that Ramp Area is subject
to all applicable rules and regulations adopted from time to time
by City as referenced in Section 9.01 hereof, as the same may be
amended, including any ramp area use policy of general application
to the airlines operating at the Airport.
b. Airline may perform, while its aircraft are parked upon
the Ramp Area adjacent to the Concourse D Special Premises,
customary fueling and servicing of aircraft preparatory to loading
and takeoff or immediately following landing and unloading. Except
to the extent consistent with Airline's preferential use rights and
any ramp area use policy of general application to the airlines
operating at the Airport, Airline shall not do or perform any major
repair or maintenance work upon aircraft while parked upon aprons
or at gate positions nor shall there be any storage of aircraft
upon the Ramp Area adjacent to the Concourse D Special Premises in
a manner to restrict the parking, and/or loading or unloading of
passengers by other airlines on such Ramp Area. As used here,
"major" is defined to be work that normally requires more than four
hours to complete; provided, however, that in exceptional
circumstances, Airline may request advance permission from the
Director of Port Control to park aircraft upon the Ramp Area for
longer than four hours, which permission shall be granted or
withheld at the Director of Port Control's reasonable discretion.
9.04 New Employee Parking Lot
Airline shall have an appurtenant right to preferential use
of the new employee parking lot listed at Section 5.02(a)(v) hereto
for so long as Airline shall continue to use it for such purpose.
9.05 Noise Abatement
Airline shall comply with any and all federal and other laws
and regulations pertaining to noise abatement, including without
limitation, FAR Part 91.
(End of Article IX)
ARTICLE X - RELEASE AND INDEMNIFICATION; DAMAGE
OR DESTRUCTION; INSURANCE
10.01 Release and Indemnification
City, its officers and employees, shall not be liable to
Airline, or to any other parties, for claims arising out of any
injury, including death, to any persons, or for loss of or damage
to any property, regardless of how such injury or damage may be
caused, sustained or alleged to have been caused or sustained, as
a result of any condition (including existing or future defects) or
act or omission whatsoever in, on or about the Continental Special
Facilities unless such claim shall arise from the sole negligence
of City, its officers and employees. In addition, City, its
officers and employees, shall not be liable to Airline or to any
other parties for claims or liability arising out of injury to
persons, loss of or damage to property, or breach of Airline's
obligations under Section 2.05, caused or sustained as a result of
any fault, negligence, act or omission of Airline, or any of its
officers, employees, agents, or contractors, and Airline shall
indemnify and save harmless City with respect to and shall assume
the defense of any and all liabilities, obligations, damages,
penalties, fines, assessments, claims, costs, charges and expenses,
including reasonable attorneys' fees which may be imposed upon or
incurred by City by reason of any such occurrences.
10.02 Insurance
In addition to any liability insurance required to be
maintained by Airline pursuant to the Original Lease, Airline, at
its sole cost and expense, shall purchase and maintain, from an
insurance company acceptable to City in its reasonable discretion,
public liability insurance for claims arising out of bodily injury
or property damage occurring in, on or about the Continental
Special Facilities and claims made in connection with operations of
Airline in or about the 1997 Concourse Expansion, in an amount of
at least $10,000,000 single limit (or equivalent split limits).
City shall be named as an additional insured with respect to
Airline's operation, maintenance and use of the Continental Special
Facilities to the extent of Airline's indemnification and defense
obligations under Section 10.01 hereof. Airline shall provide City
with a certificate of insurance, which indicates that the insurance
company will provide City and the Trustee with at least 30 days
advance notice of cancellation or material restriction in coverage
thereof. Airline shall purchase and maintain additional limits of
liability insurance in such amounts as are considered customary in
connection with the operation of the business of Airline but in no
event less than $50,000,000 single limit (or equivalent split
limit). Airline shall also maintain throughout the term of this
Agreement, at its own expense: (1) host liquor insurance, during
such times that Airline serves liquor at the Airport, in the amount
of not less than $1,000,000 combined single limit for loss or
injury to one or more persons; (2) for motorized equipment, vehicle
and automobile liability coverage for owned, non-owned and hired
vehicles, insuring Airline and City as an additional insured (to
the extent of Airline's indemnification and defense obligations
under Section 10.01 hereof) against liability from loss of life or
damage or injury to persons or property at the Airport or arising
from Airline's operations, with limits for each occurrence of not
less than a combined single limit of $10,000,000; (3) environmental
impairment liability insurance (unless City, pursuant to Section
6.03(b), elects to purchase the Hydrant Fueling System Special
Premises) against risks arising from the operation of the Hydrant
Fueling System Special Premises when such insurance becomes
available at commercially reasonable rates, with limits for each
occurrence of not less than a combined single limit of $10,000,000;
and (4) any insurance or other form or evidence of financial
responsibility required by the Ohio EPA and/or U.S. EPA for above-
ground and/or underground storage tanks owned or used by Airline.
Each policy of property insurance whether or not specifically
referred to herein shall not, as a condition of coverage, prohibit
any insured from waiving, prior to the loss, said insured's right
of recovery against any party. The failure of City, at any time,
to enforce the provisions of this paragraph concerning insurance
coverage shall not constitute a waiver of those provisions nor in
any respect reduce the obligation of Airline to defend and hold and
save City harmless with respect to any injury or damage covered by
this Article X. Upon the execution of this Agreement, Airline
shall provide the Director of Law of City with a valid certificate
or certificates evidencing the insurance policy or policies
required hereunder. Such certificate or certificates shall as to
form, coverage and carrier be subject to the reasonable approval by
the Director of Law of City. If at any time during the term of
this Agreement the form, coverage or carrier on any policy shall
become unsatisfactory to the Director of Law of City, Airline
shall, forthwith, obtain and supply City with a certificate
evidencing a new policy meeting the requirements of the Director of
Law of City provided that such requirements are in conformance with
the conditions hereof, and are in keeping with policy conditions
usual and customary to such types of policies. At least 30 days
prior to the expiration or termination of any policy provided
hereunder, Airline shall deliver to the Director of Law or Port
Control of City and the Trustee verified certificates evidencing
the renewal or replacement policies.
City, for the mutual benefit of City and Airline, shall
purchase and maintain public liability insurance for claims arising
out of bodily injury or property damage occurring in, on or about
the Airport System in an amount agreed upon from time to time by
both City and Airline which shall not be less than $150,000,000.
Any such insurance maintained by City may be counted toward the
fulfillment of the requirements of this Section 10.02 as well as
any requirements of the Original Lease that City maintain such
insurance in any amount specified therein.
10.03 Damage or Destruction
a. If, prior to the Defeasance Date, the Continental
Special Facilities shall be damaged or partially or totally
destroyed by fire, flood, windstorm, or other casualty: (i) there
shall be no abatement or reduction in the Bond Rent payable by
Airline; (ii) respecting that area of the Continental Special
Facilities which remains usable, there shall be no abatement or
reduction in the Basic Rent payable by Airline; and (iii)
respecting that area of the Continental Special Facilities which is
rendered unusable due to such damage or destruction, Airline shall
pay, in lieu of Basic Rent during the period of time that said area
remains unusable, an amount equal to the GARB debt service
component of such Basic Rent, provided, however, that Airline's
obligation to make such payment described in this subsection (iii)
shall be offset (notwithstanding any other provision hereof) by any
proceeds from business interruption insurance that City may receive
as a consequence of such damage or destruction. Upon such damage
or destruction, Airline shall restore and replace to the extent
physically possible that damaged or destroyed portion of the 1997
Concourse Expansion; provided, however, that Airline's obligation
to restore and replace shall be limited to applicable insurance
proceeds received as a consequence of the damage or destruction.
To accomplish such restoration and replacement: (A) Airline agrees
to use therefor the applicable insurance proceeds (as supplemented
by any other funds which may be secured by City) it may receive as
a consequence of such damage or destruction; (B) City agrees to
assign to Airline all its rights to applicable insurance proceeds
it may receive as a consequence of such damage or destruction
within 30 days of receipt thereof; and (C) Airline agrees to apply
such assigned insurance proceeds to such restoration and
replacement; provided, however, that if all insurance proceeds (as
supplemented by any other funds which may be secured by City)
available for such restoration and replacement are insufficient or
restoration and replacement are otherwise not feasible: (x) that
portion of the insurance proceeds allocable to the Continental
Special Facilities shall be applied to the payment of Bond Service
Charges by depositing such net proceeds with the Trustee for
deposit in the Bond Fund and application in accordance with the
Indenture; and (y) that portion of the insurance proceeds allocable
to the GARB Improvements shall be applied to the payment of debt
service charges on the GARBs by depositing such proceeds with the
GARB Trustee for application in accordance with the GARB Indenture.
To the extent that the insurance proceeds exceed the costs of
restoration and replacement, that portion allocable to the
Continental Special Facilities shall be applied to the payment of
Bond Service Charges as described above, and that portion allocable
to the GARB Improvements shall be applied to the payment of debt
service charges on the GARBs as described above. If the applicable
insurance proceeds received as a consequence of the above-described
damage or destruction are insufficient to accomplish the
restoration and replacement of the damaged or destroyed property,
but such proceeds together with the amount of any deductibles under
applicable insurance policies would be sufficient for the purpose,
that party to this Agreement which is then carrying the applicable
insurance (or both parties if both are then carrying such
insurance) shall be obligated to contribute to the restoration or
replacement an amount equal to the applicable policy's deductible;
and such contributions shall be treated as insurance proceeds for
purposes of this Section 10.03.
b. If there is damage, destruction or loss of any portion
of the Continental Special Facilities or the GARB Improvements
listed at Section 5.02(a)(i) hereof by a risk required to be
insured against under Section 10.04, and such damage, destruction
or loss is not capable of being repaired within:
1. 12 months, if the damage, destruction or loss is
related to the Concourse D Special Premises, then Airline shall
have the option, exercisable by written notice given to City within
60 days after the occurrence of such event, to terminate this
Agreement forthwith; or
2. 9 months, if the damage, destruction or loss is related
to the Concourse C Expansion Special Premises, then Airline shall
have the option, exercisable by written notice given to City within
60 days after the occurrence of such event, to terminate its
rights, obligations, and responsibilities under this Agreement with
respect to the Concourse C Expansion Special Premises forthwith; or
3. 9 months, if the damage, destruction or loss is related
to the Hydrant Fueling System Special Premises, then Airline shall
have the option, exercisable by written notice given to City within
60 days after the occurrence of such event, to terminate its
rights, obligations, and responsibilities under this Agreement with
respect to the Hydrant Fueling System Special Premises forthwith;
or
4. 90 days, if the damage, destruction or loss is related
to the Deicing Pad Special Premises, then Airline shall have the
option, exercisable by written notice given to City within 60 days
after the occurrence of such event, to terminate its rights,
obligations, and responsibilities under this Agreement with respect
to the Deicing Pad Special Premises forthwith;
provided, however, that precalculations of such time periods shall
exclude consideration of reasonably anticipated acts of superior
governmental authorities and weather conditions; and provided
further, that, if (i) Airline proceeds in good faith with the
diligent repair of the damaged or destroyed premises and (ii) the
actual time period of such repair exceeds the applicable time
period specifically set forth above in subsections (1) through (4)
of this sentence (not adjusted for reasonably anticipated acts of
superior governmental authorities and weather conditions), then
Airline shall be entitled to an abatement of the GARB debt service
component of Basic Rent described in Section 10.03(a)(iii) hereof
for that time period representing the difference between the actual
time period of such repair and such applicable time period. If
this Agreement, or any of Airline's rights, obligations, and
responsibilities hereunder with respect to a portion of the
Continental Special Facilities, as the case may be, is or are thus
terminated: (i) City shall have all rights to any insurance
proceeds it receives as a consequence of the damage or destruction
to the GARB Improvements; (ii) Airline shall have all rights to any
insurance proceeds it receives as a consequence of the damage or
destruction to the Continental Special Facilities, which, to the
extent Bonds are outstanding, Airline agrees to apply to the
payment of Bond Service Charges by depositing such net proceeds
with the Trustee for application in accordance with the Indenture;
and (iii) if any Bonds are outstanding, there shall be no abatement
in the Bond Rent payable by Airline. If this Agreement, or any of
Airline's rights, obligations, and responsibilities hereunder with
respect to a portion of the Continental Special Facilities, as the
case may be, is not or are not terminated as aforesaid, or if such
damage, destruction or loss is capable of being repaired within the
pertinent time period described in the first sentence of this
Section 10.03(b), the provisions of Section 10.03(a) hereof shall
apply; provided, however, that if such damage, destruction or loss
occurs within six months of the Expiration Date, or the scheduled
expiration of the Term of the applicable portion of the Continental
Special Facilities (i.e., Concourse C Expansion Term, Concourse D
Term, Deicing Pad Term, and Hydrant Fueling System Term), as the
case may be, then Airline shall have the option either to effect
such repair, replacement, restoration or rebuilding or, in lieu
thereof, to terminate forthwith this Agreement or its rights,
obligations, and responsibilities hereunder with respect to the
applicable portion of the Continental Special Facilities, as the
case may be, and make payment to City of all insurance proceeds
received by reason of such damage, destruction or loss, less an
amount equal to the Bond debt service that would remain as of the
date of termination based on the Assumed Amortization, which
withheld amount, to the extent Bonds are outstanding, Airline
agrees to apply to the payment of Bond Service Charges by
depositing such net proceeds with the Trustee.
10.04 Waiver of Subrogation; Property Damage Insurance
City agrees to purchase property damage insurance covering the
GARB Improvements and Airline agrees to purchase property damage
insurance covering the Continental Special Facilities, both subject
to such deductibles as are reasonable, at replacement cost on
buildings, contents, equipment (mobile and fixed) and improvements
and betterments owned or for which each may be responsible, to
cover damage caused by fire and perils normally covered by extended
coverage insurance, and such other perils as are customarily
included in the term "all risk" available in Cleveland, Ohio. Upon
request of either party, the other party shall provide to the
requesting party a certificate of insurance which indicates the
insurance company will provide City and the Trustee with at least
30 days advance notice of cancellation or material restriction in
coverage thereunder. Each insurance policy, whether or not
specifically referred to herein, shall not, as a condition of
coverage, prohibit any insured from waiving, prior to the loss,
said insured's right of recovery against any party for loss or
damage to the insured property. City and Airline each hereby waive
all claims and right of recovery against the other for damage to
real or personal property to the extent that such loss or damage is
required to be covered by the insurance policies required to be
carried under this Section 10.04, less any deductibles applicable
to any policy.
(End of Article X)
ARTICLE XI - CERTAIN RIGHTS OF CITY
11.01 Eminent Domain
a. If, prior to the Defeasance Date, title to or the
temporary use of the 1997 Concourse Expansion (which, for purposes
of this Section 11.01, shall exclude the permanent rental car
facilities listed at Section 5.02(a)(iv) hereof), or any part
thereof, or improvement thereon, shall be taken under the exercise
of the power of eminent domain by any governmental body or by any
person or entity acting under governmental authority: (i) there
shall be no abatement in the Bond Rent payable by Airline, except
to the extent Net Proceeds are applied to the payment of such rent
pursuant to this Section; (ii) respecting that area of the
Continental Special Facilities which remains usable by Airline
after the taking, there shall be no abatement or reduction in the
Basic Rent payable by Airline; and (iii) respecting that area of
the Continental Special Facilities which is rendered unusable after
the taking, Airline shall pay, in lieu of Basic Rent during the
period of time that said area remains unusable, an amount equal to
the GARB debt service component of such Basic Rent, except to the
extent Net Proceeds are applied to the payment of such rent
pursuant to this Section. ("Net Proceeds" shall mean, for purposes
of this Section 11.01, the gross proceeds of the award minus the
reasonable costs and expenses (which costs and expenses shall not
include administrative costs) of defending the condemnation
action.) In the event of condemnation by City, City agrees to pay
Airline just compensation for the property taken according to law,
taking into account, to the extent permitted by law, the Bond debt
service that would remain based on the Assumed Amortization and any
Basic Rent allocable to debt service on GARBs outstanding. Upon
condemnation by eminent domain, Airline shall restore any
impairment to the remaining 1997 Concourse Expansion, and shall
replace to the extent physically possible that condemned portion of
the 1997 Concourse Expansion; provided, however, that Airline's
obligation to restore and replace shall be limited to the Net
Proceeds (as supplemented by any other funds which may be secured
by City) of any associated award. To accomplish such restoration
and replacement: (i) Airline agrees to use therefor the Net
Proceeds it may receive upon such condemnation; (ii) City agrees to
assign to Airline all its rights to the Net Proceeds it may receive
upon such condemnation within 30 days of receipt; and (iii) Airline
agrees to apply such assigned Net Proceeds (as supplemented by any
other funds which may be secured by City) to such restoration and
replacement; provided, however, that if all Net Proceeds available
for such restoration and replacement are insufficient or
restoration and replacement are otherwise not physically feasible:
(i) that portion of the Net Proceeds allocable to the Continental
Special Facilities shall be applied to the payment of Bond Service
Charges by depositing such net proceeds with the Trustee for
deposit in the Bond Fund and application in accordance with the
Indenture; and (ii) that portion of the Net Proceeds allocable to
the GARB Improvements shall be applied to the payment of debt
service charges on the GARBs by depositing such Net Proceeds with
the GARB Trustee for deposit in the GARB bond fund and application
in accordance with the GARB Indenture. To the extent that the Net
Proceeds exceed the costs of restoration and replacement, that
portion allocable to the Continental Special Facilities shall be
applied to the payment of Bond Service Charges as described above,
and that portion allocable to the GARB Improvements shall be
applied to the payment of debt service charges on the GARBs as
described above.
b. If, following the Defeasance Date, title to or
temporary use of the 1997 Concourse Expansion (which, for purposes
of this Section 11.01, shall exclude the permanent rental car
facilities listed at Section 5.02(a)(iv) hereof), or any part
thereof, or improvement thereon, shall be taken under the exercise
of the power of eminent domain by any governmental body or by any
person or entity acting under governmental authority and such
taking substantially and materially (considering both the extent
and the duration of the taking) impairs use of all or a part of an
element of the Continental Special Facilities (i.e., Concourse C
Expansion Special Facilities, Concourse D Special Facilities,
Deicing Pad Special Facilities, and Hydrant Fueling System Special
Facilities), then Airline shall have the option to terminate its
rights, obligations, and responsibilities hereunder with respect to
such element of the Continental Special Facilities. If, pursuant
to the foregoing sentence, Airline obtains the option to terminate
its rights, obligations, and responsibilities hereunder with
respect to all elements of the Continental Special Facilities,
Airline shall have the option, exercisable by written notice from
Airline to City within 60 days after the applicable taking, to
terminate this Agreement. If this Agreement or any of Airline's
rights, obligations, and responsibilities hereunder with respect to
a portion of the Continental Special Facilities, as the case may
be, is or are so terminated: (i) Airline shall make payment to City
of any eminent domain awards received pertaining to the premises
vacated by Airline upon such termination; and (ii) Airline shall
not be responsible for payment of any remaining debt service on
GARBs pertaining to the premises vacated by Airline upon such
termination. If this Agreement, or any of Airline's rights,
obligations, and responsibilities hereunder with respect to a
portion of the Continental Special Facilities, as the case may be,
is not or are not terminated as aforesaid, the provisions of
Section 11.01(a) shall apply; provided, however, that if such
taking occurs within six months of the Expiration Date, or the
scheduled expiration of the Term of the applicable portion of the
Continental Special Facilities (i.e., Concourse C Expansion Term,
Concourse D Term, Deicing Pad Term, and Hydrant Fueling System
Term), as the case may be, then Airline shall have the option
either to effect the restoration and replacement of the taken
property as set forth in Section 11.01(a) or, in lieu thereof, to
terminate forthwith this Agreement or its rights, obligations, and
responsibilities hereunder with respect to the applicable portion
of the Continental Special Facilities, as the case may be, and make
payment to City of any eminent domain awards received pertaining to
the premises vacated by Airline upon such termination. Upon any
such termination under the immediately preceding sentence, Airline
shall not be responsible for payment of any remaining debt service
on GARBs pertaining to the premises vacated by Airline upon such
termination.
11.02 Right to Enter, Inspect and Repair
City reserves the right to enter upon the Continental Special
Facilities, without abatement of any Basic Rent, Bond Rent,
Additional Bond Rent or Additional Rent, at any and all reasonable
times throughout the term of this Agreement, provided that it shall
not interfere unduly with Airline's operations and that it gives
Airline reasonable advance notice, for the following purposes:
a. To inspect the Continental Special Facilities during
regular business hours upon reasonable advance notice (or at any
time in the case of emergency, in which case no notice shall be
required) to ascertain the condition of the Continental Special
Facilities and to determine Airline's compliance with the terms of
this Agreement. The right of inspection shall impose on City no
duty to inspect and shall impart no liability upon City for failure
to inspect.
b. To perform maintenance and make repairs and
replacements in any event where Airline is obligated to do so under
this Agreement and has failed to initiate such repairs and
maintenance within the time periods provided for in the Agreement,
if applicable, or, if no time period is provided, within 30 days
after written notice from City, and thereafter to expeditiously
complete such repairs or replacements. In the event that City, in
its sole discretion, deems it necessary or prudent to perform such
maintenance or make such repairs or replacements within 30 days in
order to preserve all or any part of the Airport from damage or to
correct any condition likely to lead to injury or damage, then City
shall provide Airline with as much written notice as is reasonable
under the circumstances.
c. To perform any obligation of City under this Agreement
and to make additions, alterations, maintenance and repairs to the
Airport, subject to the limitations set forth herein.
11.03 Accommodation of Airport Construction
a. Airline acknowledges that from time to time City may
undertake construction, repair or other activities related to the
operation, maintenance and repair of the Terminal Complex or the
Airport which will require temporary accommodation by Airline.
City agrees to use reasonable efforts to minimize disruption in
Airline's business operations during such period of construction.
b. Without limiting the generality of the foregoing, City
may temporarily or permanently close, alter, change, modify and/or
relocate any entrances, passageways, doors and doorways, corridors,
elevators, escalators or other parts of the Terminal Complex; and
City may at any time and from time to time make such changes,
alterations, additions, improvements, repairs or replacements in or
to the Terminal Complex, as well as in or to the entrances,
passages, elevators, escalators, and stairways thereof, as it may
deem necessary or desirable, and to change the arrangement and/or
location of entrances, passageways, doors and doorways, and
corridors, elevators, stairs, toilets, or other public parts of the
Terminal Complex, and may stop or interrupt any service or utility
system, when necessary by reason of accident or emergency or
construction work until the necessity for the interruption or
stoppage has ended. City will give Airline 30 days advance notice
of such work; or, if 30 days advance notice is impracticable, City
shall give Airline such notice as is reasonable under the
circumstances.
Notwithstanding the foregoing or any other provision of this
Agreement, City's right to close, relocate, alter, change, or
modify the connector tunnel listed at Section 5.02(a)(i) shall be
subject to Airline's approval. Prior to taking such actions, City
must submit plans sufficient to disclose the nature and extent of
the work performed to Airline, and City shall not commence such
proposed action until Airline approves such plans or any
disagreements are resolved in the manner set forth in this
paragraph. If Airline objects to such plans of City, it must give
City specific written notice of its objections within 30 days,
otherwise City's plans shall be deemed approved. In the event
Airline timely objects to such plans of City, the parties hereby
agree to work cooperatively in an attempt to reach a mutually
satisfactory resolution of differences. If such resolution is not
achieved within seven days after City's receipt of Airline's
written notice of objections, the parties hereby agree to have the
dispute resolved by an arbitration process to be agreed upon by the
parties at the time, but which process, in any event, shall take no
longer than 30 days; provided, however, that if such arbitration
process is not agreed upon within three days after said seven-day
period, the dispute will be referred to the American Arbitration
Association, which will establish the process by which to resolve
it, but which process the parties at the time shall exercise all
reasonable efforts to complete within 30 days. Notwithstanding the
foregoing in this paragraph, City may commence emergency
maintenance or repairs of, or initiate emergency security
procedures or measures involving, the connector tunnel upon such
prior written notice to Airline as is reasonable under the
circumstances.
c. Airline further acknowledges that such improvements may
require substantial construction work in the Terminal Complex
during normal business hours, which may disrupt Airline's business
operations and create noise, dust and other concomitants of
construction work. City agrees that it will use commercially
reasonable efforts (taking into account the degree of the
disruption) to minimize these disturbances. Airline agrees that it
shall have no right, except as expressly provided herewith, to any
abatement of Basic Rent, Bond Rent, Additional Bond Rent or
Additional Rent under this Agreement or of Rentals under the
Original Lease or other compensation or to any claim of breach of
City's covenant of quiet enjoyment (express or implied) or an
actual or constructive eviction or for loss of business or
inconvenience, or in any event for consequential damages on account
of any such construction work, and without incurring any liability
to Airline or otherwise affecting Airline's obligations under this
Agreement. Airline agrees to accommodate City in such activities
even though Airline's own operations may be inconvenienced or
partially impaired.
d. In the event City elects to exercise its rights under
this Section 11.03 to close any portion of the Terminal Complex
directly affecting the Continental Special Facilities, it shall use
Best Efforts to give Airline not less than 60 days notice (except
in the case of an emergency in which case City shall provide
Airline with such prior written notice as is reasonable under the
circumstances) of City's intent to temporarily close any such
portion of the Terminal Complex, which portion shall be described
in such notice (hereinafter the "Affected Space"). Airline may
request alternative space to accommodate Airline's operations by
giving City written notice of its election within 10 days of
receipt of City's notice. If Airline's operations at the Airport
would be substantially and materially impaired without the
provision of adequate alternative space, City agrees to use Best
Efforts to provide such alternative space during the period of
interruption.
If adequate alternative space is not provided as described in
the immediately preceding paragraph, and if the Affected Space
encompasses a Jet Gate, and:
(i) if the period of interruption is more than 14 days and
no more than two years, Bond Rent shall not abate and Airline shall
pay, in lieu of any Basic Rent for such Affected Space, an amount
equal to debt service on the GARBs allocable to such Affected Space
for such period of interruption; or
(ii) if the period of interruption exceeds two years, (1)
City shall pay Airline during such period of interruption such
semiannual amounts, payable prior to each Interest Payment Date for
the Bonds, equal to the principal and interest that would be
payable during such period on the portion of the Bonds allocable to
such Affected Space, calculated based on the Bonds having been
issued payable on the Assumed Amortization terms, and (2) Airline
shall be entitled to an abatement of the portion of the Basic Rent
allocable to such Affected Space for such period of interruption;
or
(iii) if Airline has consented to the permanent closure of a
Jet Gate so encompassed, (1) City shall pay Airline the Demolition
Payment described in Section 11.03(f), provided that all references
therein to demolished facilities shall instead refer to the
Affected Space, (2) Airline shall be entitled to an abatement of
the portion of the Basic Rent allocable to such Affected Space for
the period of time after such permanent closure, and (3) City shall
reimburse Airline for the unamortized costs incurred by Airline to
construct the Affected Space, to the extent the applicable
improvements were approved by City and the costs thereof were not
paid from proceeds of the Bonds, as of the date upon which Airline
is deprived of use of such Affected Space, accounting for the
period of time after Airline is deprived of use of such Affected
Space.
e. Notwithstanding any provision of this Agreement to the
contrary, at any time after the first 20 years of the term of this
Agreement, City shall have the right to alter or reconfigure the
Concourse D Special Premises and the Concourse C Expansion Special
Premises to accommodate future Airport expansion; provided,
however, that no such alteration or reconfiguration shall
materially interfere with Airline's operations or Airline's rights
under this Agreement, and under no circumstances will any costs for
such alteration or reconfiguration be paid for with any of
Airline's rates and charges without Airline's express written
consent.
f. Notwithstanding any provision of this Agreement to the
contrary, if, at any time after the first 20 years of the Concourse
D Term, Airline shall fail to utilize the Concourse D Jet Gates at
an average rate of at least two jet turns per Jet Gate per day
during the preceding 12-month period, except due to events of Force
Majeure or regulatory interruptions, City shall have the right to
demolish Concourse D to accommodate future Airport expansion plans.
In such event, (a) City shall pay Airline the Demolition Payment
described below (along with any other costs arising by reason of
the occupancy of such areas), and (b) Airline shall have no
responsibility with respect to ongoing costs associated with the
areas so demolished. However, prior to any demolition, City must
facilitate the relocation of Airline to replacement facilities at
locations and on cost terms reasonably acceptable to Airline.
Under no circumstances will the costs of demolition be paid for by
any of Airline's rates and charges without Airline's express
written consent.
The Demolition Payment shall be, at the City's election,
either (i) an amount equal to the principal that would be
outstanding as of the demolition date if the Bonds had been issued
payable on the Assumed Amortization terms, on that portion of the
Bonds allocable to payment of costs of construction of the
facilities to be demolished, plus interest on that principal amount
at the Assumed Amortization terms to the earliest date that such
amount of the Bonds may be paid at stated maturity or by redemption
without penalty or premium, or (ii) to the extent that the Bonds
allocable to the facilities may remain outstanding without
adversely affecting the exclusion under the Code of the interest on
the Bonds from gross income of the holders of the Bonds, such
semiannual amounts, payable prior to each Interest Payment Date for
the Bonds occurring on or after the demolition date, equal to the
principal and interest that would be payable on the portion of the
Bonds allocable to payment of costs of construction of the
facilities to be demolished, calculated based on the Bonds having
been issued payable on the Assumed Amortization terms.
(End of Article XI)
ARTICLE XII - DEFAULTS
12.01 Events of Default
Time is of the essence in this Agreement.
a. From the Effective Date of this Agreement to the end of
the Construction Period any substantial and material breach of a
substantial and material obligation under this Agreement which
occurs during such period of time and remains uncured following the
60-day notice and cure period described in Section 5.14(a) hereof
shall constitute a "Construction Period Event of Default." Before
the issuance date of the Bonds, the Construction Period Events of
Default constitute the only events of default under this Agreement;
provided that if the Bonds are not issued before the end of the
Construction Period, no Construction Period Events of Default shall
be deemed to arise after the expiration of the Construction Period.
On and after the issuance date of the Bonds, those Events of
Default described in Section 12.01(b)(1), (3), (4), (5), and (8)
hereof shall also constitute events of default under this
Agreement; provided that if the Bonds are not issued before the end
of the Construction Period, said Events of Default shall constitute
events of default under this Agreement after the end of the
Construction Period.
b. Airline agrees that, after the end of the Construction
Period, each of the following circumstances or conditions shall
constitute an "Event of Default" under this Agreement and, taken
together, such Events of Default shall constitute the only events
of default hereunder arising during such time period:
1. if (i) Airline shall be in default in the payment of
Bond Rent (which shall mean failure to pay Bond Rent to the Trustee
within two business days after it is due and payable), or (ii)
Airline shall be in default in the payment of Basic Rent,
Additional Rent, or Additional Bond Rent or any other rentals or
other payments to be made by it to City pursuant to this Agreement
for 10 days after specific notice of such default shall have been
made therefor by City or the Trustee; or
2. if Airline shall neglect, violate, be in default under,
or fail to perform or observe any of the other covenants,
agreements, terms or conditions contained in this Agreement on its
part to be performed and shall not have remedied, or commenced
action which will promptly remedy same which action is thereafter
diligently pursued, within 15 business days after specific written
notice thereof given by City; or
3. if any material execution or attachment shall be issued
against Airline in connection with its operation at the Continental
Special Facilities and such execution or attachment shall not be
discharged or stayed within 90 days after levy or seizure
thereunder; or
4. if the Continental Special Facilities shall be occupied
by someone other than Airline, its subsidiaries, or entities
providing commuter services for Airline, other than as permitted
under Article XIII hereof, and same is not remedied within ten days
of specific written notice thereof given by City to Airline (except
where same has occurred twice within the previous 12 months, in
which case an Event of Default shall arise immediately upon said
occurrence, without the necessity of notice); or
5. if the Continental Special Facilities shall be deserted
or vacated (which terms shall not mean mere failure to use so long
as no other Construction Period Event of Default or Event of
Default then exists hereunder); or
6. if Airline shall violate any provision of any of the
insurance policies referred to herein so that such policy shall be
void or unenforceable in whole or in part and Airline shall not,
within ten days after being specifically required in writing by
City so to do, either cure such violation and cause such policy to
be reinstated or procure other insurance of the same amount, which
shall conform to the provisions for insurance referred to herein,
and shall be enforceable; or
7. if Airline shall in any way fail to perform and satisfy
the requirements of any insurance policy referred to herein, and
shall continue in such failure for ten days after being required in
writing by City to conform to such requirements; or
8. if any of the following events shall have occurred:
(i) the filing by Airline of a voluntary petition in
bankruptcy or for an arrangement or any assignment for benefit of
creditors of all or any part of Airline's assets; or
(ii) the adjudication of Airline as a bankrupt pursuant to
any involuntary bankruptcy proceedings; or
(iii) the taking of jurisdiction by a court of competent
jurisdiction of Airline or its assets pursuant to proceedings
brought under the provisions of any federal reorganization act; or
(iv) the appointment of a receiver or trustee of Airline's
assets by a court of competent jurisdiction or a voluntary
agreement with Airline's creditors.
12.02 Remedies
a. Whenever a Construction Period Event of Default shall
have occurred and be continuing, the non-breaching party is
entitled only to the applicable termination rights and other
default remedies described in Article V of this Agreement.
b. Notwithstanding any provision of this Agreement to the
contrary, (i) whenever an Event of Default described in Section
12.01(b)(1), (3), (4), (5), or (8) shall have occurred on or after
the issuance date of the Bonds, and be continuing, or (ii) whenever
any Event of Default described in Section 12.01(b) shall have
occurred after the end of the Construction Period and before the
Termination Date, and be continuing, City may, in either case, take
any one or more of the following remedial steps:
1. City shall have the right, with or without terminating
this Agreement, to re-enter the Continental Special Facilities and
take possession of the same by summary proceedings, re-entry or
otherwise, and remove all persons and/or property from the
Continental Special Facilities (which property may be removed and
stored in a public warehouse or elsewhere at the cost and for the
account of Airline), without being liable to indictment,
prosecution or damages therefor, and without prejudice to any other
rights which City may have by reason of such Event of Default.
2. City shall have the right to terminate this Agreement
and all rights of Airline hereunder by 60 days written notice of
such termination to Airline and the Trustee, subject to the
limitations set forth in this Section 12.02, and provided that the
Event of Default is not cured within such 60-day period.
Upon exercise of any one or more of such remedial steps, City shall
exercise Best Efforts to relet the Continental Special Facilities
and to maximize rentals, charges and fees collected from any such
reletting; provided, however, that if the Concourse D Special
Premises, the Concourse C Expansion Special Premises, the Deicing
Pad Special Premises, or the Hydrant Fueling System Special
Premises cannot be relet at a rental rate sufficient to fully cover
the incremental operation and maintenance costs in excess of
minimum operation and maintenance costs upon such reletting of the
Concourse D Special Premises, the Concourse C Expansion Special
Premises, the Deicing Pad Special Premises, or the Hydrant Fueling
System Special Premises, respectively, City shall not undertake
such reletting. Amounts paid to City under leases or other
agreements regarding the reletting or use of the Continental
Special Facilities will be paid, first, to the Basic Rent Reserve
Fund to cover any deficiency therein; second, to the payment of
Basic Rent that would have been payable under this Agreement by
Airline; third, to the payment of any Additional Rent required to
be paid pursuant to this Agreement; fourth, to the payment of any
Additional Bond Rent; fifth, so long as the Bonds are outstanding
under the Indenture, to the payment of Bond Rent; and sixth, in the
event that the Bonds have been paid (or provision made for their
payment in accordance with the Indenture), to the payment to
Airline of an amount equal to the principal of the Bonds which
would have been outstanding on the date of termination of this
Agreement if the Bonds had been issued payable on the Assumed
Amortization terms.
12.03 Effect of Termination
Notwithstanding any provision of this Agreement to the
contrary: In case of termination of this Agreement pursuant to
Section 12.02 hereof, and subject to any right of the Trustee under
the Indenture to declare all Bond Rent to be immediately due and
payable in connection with a declaration of acceleration of the
Bonds (a) all payments to be made by Airline to City (other than
Bond Rent and Additional Bond Rent) pursuant to this Agreement
shall be prorated for the portion of the current calendar year
prior to the time of such termination and shall become due and
payable forthwith, and (b) Airline shall also pay to City any
deficiencies between (i) the Basic Rent which would have been
payable by Airline to City through the Expiration Date, and (ii)
the Basic Rent collected from any subsequent users of the
Continental Special Facilities. Any such payments shall be made in
monthly installments by Airline as determined upon statements
rendered by City to Airline, and any lawsuit brought to collect the
amount of deficiency for any month shall not prejudice in any way
the rights of City to collect the deficiency for any subsequent
month by a similar proceeding. Airline shall also remain liable
for any loss, cost, damage or expense, including reasonable
attorneys' fees, which City may sustain by reason of the happening
of any such event, except that in no event shall Airline be liable
to City for: (a) any special, incidental, indirect, punitive,
reliance or consequential damages (including without limitation
lost profits, revenues, or economic or business development
opportunities), whether foreseeable or not, as a result of any
breach of any of the provisions of this Agreement; (b) any of
City's internal administrative expenses incurred, or any interest
on any funds expended, in connection herewith; or (c) any amounts
other than actual out-of-pocket expenses incurred by City as a
direct result of the breach and such termination resulting
therefrom.
12.04 Additional Rights
In the event of a Construction Period Event of Default or
Event of Default by Airline or City of any of the covenants or
provisions hereof, City or Airline, respectively, shall have the
right to injunction and the right to invoke any remedy allowed at
law or in equity as if re-entry, summary proceedings and other
remedies were not herein provided for. A party's choice of any
particular remedy shall not preclude it from any other remedy, in
law or in equity.
(End of Article XII)
ARTICLE XIII - ASSIGNMENT AND SUBLETTING
13.01 Assignment or Sublease
a. Airline covenants that it will not assign, transfer,
convey, sublet, sell, mortgage, pledge or encumber this Agreement,
the Continental Special Facilities or any part thereof, or any
rights of Airline hereunder, or allow the use of the Continental
Special Facilities hereunder by any other person or entity, except
to the Trustee in accordance with the Indenture or as otherwise
provided in this Agreement, without in each instance having first
obtained written consent from the Board of Control of City;
provided, however, that, without such consent:
1. Airline may assign its rights under this Agreement to
any corporation with which Airline may merge or consolidate or
which may succeed to all or substantially all of the business of
Airline;
2. Airline may assign its rights under this Agreement to,
sublease the Continental Special Facilities or any part thereof to,
or allow the use of the Continental Special Facilities hereunder
by, Continental Express, Inc., or any corporation with which
Continental Express, Inc., may merge or consolidate or which may
succeed to all or substantially all of the business of Continental
Express, Inc., provided that Airline remains responsible for all
obligations, covenants and liabilities under this Agreement and the
provisions of Section 13.05 below shall be fully applicable to such
merged, consolidated or successor entity; and
3. Subject to any applicable provisions of the Indenture,
Airline may grant a security interest in its leasehold interest in
the Continental Special Facilities by means of mortgage, pledge or
assignment, in order to secure Airline's future financing(s);
provided, however, that (a) such security interest shall be
subordinate to Airline's obligations hereunder to City and any
party claiming by or through City, (b) the secured party shall not
be an entity engaged in the business of providing air
transportation services, (c) the foreclosure of such security
interest shall not entitle the secured party to occupy or use any
of the premises leased hereunder or to direct or restrict City or
any other party as to the use, lease, or other disposition of the
Continental Special Facilities, and (d) the documentation creating
such security interest shall be subject to the prior written
approval of the Director of Law of City, which approval shall not
be unreasonably withheld, conditioned or delayed.
With respect to any assignment, transfer, subletting, mortgage,
pledge or encumbrance which does not require the consent of City's
Board of Control or the Director of Law of City, Airline shall
provide City with notice thereof not later than contemporaneously
with any public announcement thereof. With respect to any
assignment, transfer, conveyance, subletting, sale, mortgage,
pledge or encumbrance which does require the consent of City's
Board of Control, City's administration shall exercise Best Efforts
to ensure that such consent shall not be unreasonably withheld,
conditioned or delayed. Consent by the Board of Control to any
type of transfer described in this paragraph or elsewhere in this
Agreement shall not in any way be construed to relieve Airline from
obtaining authorization from the Board of Control for any
subsequent transfer otherwise requiring consent as provided above.
b. In the event of any assignment or sublease pursuant
hereto of all or any portion of the Continental Special Facilities,
the rental (i.e., Basic Rent equivalent) reserved in the assignment
or sublease may not exceed the rental or pro rata portion of the
Basic Rent, as the case may be, for such space reserved in this
Agreement, plus an excess amount representing Airline's associated
costs (e.g., the Bond Rent allocable to such rented space for the
applicable time period, an amount equal to the principal amount of
the Bonds allocable to such rented space that would be retired
during the applicable time period if level debt service payments
from the date of issuance of the Bonds to the scheduled Defeasance
Date were assumed, operation and maintenance costs of Airline that
are not encompassed by Basic Rent and that are allocable to such
rented space for the applicable time period, an amount equal to the
pro rata share (taking into account the duration of the rental
period in proportion to the useful life of the applicable
facilities) of Airline's costs of improvements to the applicable
facilities not paid by the proceeds of the Bonds or the GARBs, and
reasonable, associated administrative costs of Airline), which
excess amount Airline may retain.
13.02 Requests for Assignment or Sublease
Any and all requests by Airline for authorization to make any
transfer described in Section 13.01 shall be made in writing by
certified mail to the Director of Port Control and shall include
copies of the proposed documents of transfer.
13.03 Filing of Assignment or Sublease
If and when the Board of Control of City authorizes any
transfer as described in Section 13.01, the instrument or document
of authorization together with the instrument or document of
transfer shall be filed with the Director of Port Control and
attached to this Agreement. The instruments and documents shall
not be effective without the prior approval of the Director of Law
of City endorsed thereon. Airline shall remain primarily liable
for the payment of rentals hereunder and the performance of all
terms, conditions, covenants and conditions hereof, notwithstanding
the authorization of any transfer, assignment, conveyance,
subletting, sale, mortgage, pledge or encumbrance hereunder by the
Board of Control of City.
13.04 Application of Rent
If this Agreement be assigned or if the Continental Special
Facilities be sublet or occupied by any party other than by
Airline, or should any other transfer of interest or rights of any
nature prohibited by Section 13.01 occur other than to the Trustee
in accordance with the Indenture without authorization of the Board
of Control of City, City may collect rent from any assignee,
sublessee or transferee and in such event shall apply the net
amount collected to the rents payable by Airline hereunder, but
such action by City shall not constitute a waiver of the covenant
contained in Section 13.01, or acceptance of such assignee,
sublessee, or transferee by City, or a release of Airline from this
Agreement or any of its obligations hereunder.
13.05 Insufficient Utilization of Concourse D Gates
by Assignee
If, following any assignment by Airline of its interest in
Concourse D without the consent of City's Board of Control to any
corporation into which Airline may merge or consolidate, or which
may succeed to all or substantially all of the business of Airline,
such assignee shall fail to utilize the Concourse D Jet Gates so
assigned at an average rate of at least two jet turns per day
during any consecutive 12-month period, except due to events of
Force Majeure or regulatory interruptions, City shall have the
right (notwithstanding any other provision hereof), but only within
12 months following the end of such 12-month period, to permanently
recapture such number of Jet Gates (each of which shall include a
pro rata share of all associated holdrooms, loading bridges,
operational support areas, and associated administrative support
areas in the Terminal Complex, including but not limited to
applicable ticket counter space) in Concourse D as will reduce the
remaining number of Concourse D Jet Gates which are subject to this
Agreement to a level such that there shall have been an average
rate of at least two jet turns per such remaining Jet Gate per day
during such 12-month period. In such event, the particular
Concourse D Jet Gates to be recaptured shall be mutually agreed
upon by City and such assignee based upon the legitimate
operational needs of both such parties, and such assignee shall
have no responsibility with respect to ongoing costs associated
with the areas so recaptured. As a condition to any such Concourse
D Jet Gate recapture, City shall pay to such assignee a cash price
equal to the original amount of the actual costs previously
incurred by Airline or such assignee in connection with the
construction and/or renovation of such recaptured areas less the
amount of depreciation of such costs through the date of recapture
based upon a straight-line depreciation method utilizing as the
depreciation period the useful economic life (as determined in
accordance with applicable tax law) of the applicable improvements.
To the extent that Bonds are outstanding, such assignee shall
promptly remit such amounts to the Trustee, which amounts shall be
used to redeem Bonds in accordance with the terms of the Indenture.
Under no circumstances will the costs of any such Concourse D Jet
Gate recapture or any renovation or reutilization of such areas be
paid for by any of such assignee's rates and charges without such
assignee's express written consent. At no time shall the number of
Concourse D Jet Gates be deemed to be less than 12, regardless of
the actual configuration of Concourse D. Recaptured facilities
shall no longer be deemed part of the Continental Special
Facilities leased hereunder.
13.06 Assignments by City
City shall not assign its rights hereunder (other than to the
Trustee as may be provided in the Indenture) to the extent that any
such assignment would cause interest on the Bonds to be taxable for
federal income tax purposes.
(End of Article XIII)
ARTICLE XIV - AIRLINE'S RIGHT TO TERMINATE; REMEDIES
14.01 Airline's Right to Terminate and Remedies upon Breach
a. Airline may terminate this Agreement only at the time,
under the conditions and in the manner permitted in this Agreement.
b. From and after the Effective Date of this Agreement,
City shall not participate in the planning, development, funding,
financing or operations of any commercial service passenger airport
(other than Burke Lakefront Airport in substantially its current
configuration) within a 50-mile radius of the Airport, the
construction of which would commence within 15 years following the
commencement date of the Concourse D Term. In the event that a new
commercial passenger airport (except any such airport with respect
to which City shall not have participated in the planning -- which,
for this purpose, shall not include merely coordinating with a
third party developing a competing airport and not acting on behalf
of City -- development, funding, financing or operations) within
such radius of the Airport shall be opened for operations during
the Concourse D Term, Airline shall have the right to terminate
this Agreement, the MOU, and any subsequent agreements relating to
the 1997 Concourse Expansion or implementing the MOU, upon 45 days
notice to City, the Mayor of City, and City Council. If City
participates in such planning, development, funding, financing or
operations of such commercial service passenger airport, it shall
provide Airline with notice within 30 days thereof. City
acknowledges and agrees that the damages incurred by Airline as a
result of any breach of obligations under this paragraph are not
readily ascertainable, that money damages or other legal relief
will not adequately compensate Airline for any such breach, and
that Airline is entitled to injunctive relief compelling the
specific performance of the obligations under this Section
14.01(b).
c. With respect to matters arising after the end of the
Construction Period, and subject to the restrictions in this
Agreement and Airline's obligations to pay rentals, fees and
charges under this Agreement, Airline shall be entitled to make use
of any remedy that might be available to it under this Agreement,
at law or in equity in the event City shall neglect, violate, be in
default under, or fail to perform or observe any of the covenants,
agreements, terms or conditions contained in this Agreement on its
part to be performed and shall not have remedied, or commenced
action which will promptly remedy same which action is thereafter
diligently pursued within 15 business days after specific written
notice thereof given by Airline to City and the Mayor of City.
Notwithstanding the foregoing, in no event shall City be liable to
Airline for: (a) any special, incidental, indirect, punitive,
reliance or consequential damages (including without limitation
lost profits, revenues, or economic or business development
opportunities), whether foreseeable or not, as a result of any
breach of any of the provisions of this Agreement; (b) any of
Airline's internal administrative expenses incurred, or any
interest on any funds expended, in connection herewith; or (c) any
amounts other than actual out-of-pocket expenses incurred by
Airline as a direct result of the breach and such termination
resulting therefrom.
(End of Article XIV)
ARTICLE XV - DELIVERY OF POSSESSION
Except as otherwise may be required under Section 6.03(c) of
this Agreement with respect to the Hydrant Fueling System Special
Premises only, Airline agrees to yield and deliver to City
possession of each particular element of the Continental Special
Facilities (i.e., the Concourse D Special Premises, the Concourse
C Expansion Special Premises, the Deicing Pad Special Premises, and
the Hydrant Fueling System Special Premises) at the termination of
the applicable Term herein, by expiration or otherwise, or of any
applicable renewal or extension, in good condition in accordance
with its express obligations hereunder, except for damage or loss
due to reasonable wear and tear or fire or other casualty.
(End of Article XV)
ARTICLE XVI - HOLDING OVER
If Airline shall, with the consent of City, hold over after
the expiration or earlier termination of any Term contained in this
Agreement as applicable to any element of the Continental Special
Facilities (i.e., the Concourse D Special Premises, the Concourse
C Expansion Special Premises, the Deicing Pad Special Premises, and
the Hydrant Fueling System Special Premises), the resulting tenancy
shall, unless otherwise mutually agreed, be for an indefinite
period of time on a month-to-month basis. During such
month-to-month tenancy, Airline shall pay to City the same rate of
Basic Rent as in effect at the expiration of the final Additional
Term and thereafter as subsequently adjusted as herein provided,
unless a different rate shall be agreed upon, and shall be bound by
all of the additional provisions of this Agreement insofar as they
may be pertinent.
(End of Article XVI)
ARTICLE XVII - MISCELLANEOUS PROVISIONS
17.01 Employment Opportunities
With respect to Airline jobs created by the operation of the
1997 Concourse Expansion, Airline shall use Best Efforts to adopt
and pursue a City residency hiring goal of 50%, a minority hiring
goal of 30%, and a female hiring goal of 35%, taking into account
appropriate qualifications and reasonable nondiscriminatory hiring
and recruiting practices. These goals shall not apply to Airline's
flight crews.
17.02 No Personal Liability
No elected official, director, officer, agent or employee of
either party shall be charged personally or held contractually
liable by or to the other party under any term or provision of this
Agreement or because of any breach thereof or because of its or
their execution or attempted execution.
17.03 Taxes
Airline shall pay, but such payment shall not be considered
part of Basic Rent, Bond Rent or any other rent payable hereunder,
all taxes, assessments and charges of a like nature, if any,
imposed upon or with respect to the Continental Special Facilities
which at any time during the term of this Agreement may be levied
or become a lien by virtue of any levy, assessment or charge by the
federal government, the State of Ohio, any municipal corporation,
any governmental successor in authority to the foregoing, or any
other tax or assessment levying bodies, in whole or in part, upon
or in respect to the Continental Special Facilities or in respect
to or upon any personal property belonging to Airline situated on
the Continental Special Facilities. Payment of such taxes,
assessments and charges, when and if levied or assessed, shall be
made by Airline directly to the taxing or assessing authority
charged with collection thereof in accordance with applicable law,
and Airline shall be responsible for obtaining bills for all of
said taxes, assessments and charges and promptly providing City
with evidence of payment therefor. If any tax, assessment or like
levy in the nature of a real estate tax chargeable to the
Continental Special Facilities is not separately stated and billed
by the taxing authority, but is included in a larger area billing
or assessment, upon receipt of such billing or assessment by City,
City shall bill Airline for and Airline shall pay to City its share
of said larger area tax billing. Airline's share shall be
determined by multiplying the amount of such larger area tax
billing by a fraction the numerator of which is the Basic Rent
realized from the Continental Special Facilities, and the
denominator of which is the income realized from all property
comprising the tax billing, such determination to be made by City
after consultation with the parties involved in such billing.
Airline may, at its expense, contest the amount or validity
of any tax or assessment against the Airport System, or the
inclusion of the Continental Special Facilities as taxable or
assessable property, directly against the taxing or assessing
authority, after providing such security to City as the Director of
Law of City reasonably deems adequate to cover any delinquency,
penalty and interest charges that may arise from such contest.
Airline shall indemnify City from all taxes, penalties, cost,
expense and attorneys' fees incurred by City resulting directly or
indirectly from all such tax contests.
Upon any termination of this Agreement, all taxes then levied
or a lien upon any of such property or taxable interest therein for
which Airline is responsible pursuant to this Section 17.03 shall
be paid in full without proration by Airline forthwith, or as soon
as a statement thereof has been issued by the tax collector if
termination occurs during the interval between the attachment of
the lien and issuance of the statement.
17.04 Interpretation of Agreement
This Agreement shall be deemed to have been made in, and be
construed in accordance with the laws of, the State of Ohio.
17.05 Notices, Requests and Other Communications
Except as herein otherwise expressly provided, all notices,
requests and other communications under this Agreement shall be in
writing and shall be deemed given (a) when made by personal
delivery, (b) one day after being sent by a nationally recognized
overnight courier for next-day delivery, or (c) three days after
being sent by U.S. registered or certified mail, postage prepaid,
return receipt requested, in any such case addressed as follows:
If to Airline:
Continental Airlines, Inc.
Suite 1401
2929 Allen Parkway
Houston, TX 77019
Attn: Vice President
Corporate Real Estate
with a copy to:
Continental Airlines, Inc.
Suite 2010
2929 Allen Parkway
Houston, TX 77019
Attn: Chief Financial Officer
General Counsel
If to City:
City of Cleveland
Department of Port Control
Cleveland Hopkins International Airport
5300 Riverside Drive
Cleveland, Ohio 44135-3193
Attn: Director
with a copy to:
City of Cleveland
Department of Law
Cleveland City Hall
Room 106
601 Lakeside Avenue
Cleveland, Ohio 44114
Attn: Director
and a copy (until the end of the Construction Period) to:
City of Cleveland
Department of Port Control
Cleveland Hopkins International Airport
5300 Riverside Drive
Cleveland, Ohio 44135-3193
Attn: Project Manager of CAL CLE Program
If to Director of Port Control:
City of Cleveland
Department of Port Control
Cleveland Hopkins International Airport
5300 Riverside Drive
Cleveland, Ohio 44135-3193
Attn: Director
If to City Project Manager:
City of Cleveland
Department of Port Control
Cleveland Hopkins International Airport
5300 Riverside Drive
Cleveland, Ohio 44135-3193
Attn: Project Manager of CAL CLE Program
If to Fiscal Officer:
City of Cleveland
Department of Finance
Cleveland City Hall
601 Lakeside Avenue
Cleveland, Ohio 44114
Attn: Director
If to the Properties Division of the Department of Port
Control:
City of Cleveland
Department of Port Control
Cleveland Hopkins International Airport
5300 Riverside Drive
Cleveland, Ohio 44135-3193
Attn: Properties
If to City's Department of Community Development:
City of Cleveland
Department of Community Development
Cleveland City Hall
601 Lakeside Avenue
Cleveland, Ohio 44114
If to the Mayor of City:
City of Cleveland
Cleveland City Hall
601 Lakeside Avenue
Cleveland, Ohio 44114
Attn: Mayor
If to City Council:
City of Cleveland
Cleveland City Hall
601 Lakeside Avenue
Cleveland, Ohio 44114
Attn: Clerk of Council
If to Project Counsel:
Squire, Sanders & Dempsey L.L.P.
4900 Key Tower, 127 Public Square
Cleveland, Ohio 44114-1304
Attn: Frederick R. Nance, Esq.
If to Airline's Director of Corporate Real Estate (Design and
Construction):
Continental Airlines, Inc.
Suite 1401
2929 Allen Parkway
Houston, TX 77019
Attn: Director of Corporate Real Estate (Design
and Construction)
If to the Trustee, at the address set forth in the Indenture.
The parties to this Agreement, or either of them, may
designate in writing from time to time any changes in addresses or
any addresses of substitute or supplementary persons in connection
with said notices. The effective date of service of any such
notice shall be the date such notice is received by Airline or by
City. Except as otherwise expressly provided herein, any provision
herein that one party shall notify the other of some matter is to
be construed as a requirement that notice is to be given in
accordance with the provisions of this Section 17.05.
Where notice of payment due is to be given by City to Airline
under this Agreement, such notice shall be accompanied by, or given
in the form of, an invoice.
17.06 Entire Agreement; Amendment
This Agreement constitutes the entire agreement between the
parties hereto with respect to the 1997 Concourse Expansion and
supersedes all other representations or statements heretofore made,
oral or written, except as otherwise herein provided; provided,
however, that certain agreements of the parties relating to the
1997 Concourse Expansion as expressed in the MOU may remain in
force as described in Section 3.02(b) of this Agreement. This
Agreement may be amended only in writing, and executed by duly
authorized representatives of the parties hereto in connection with
the issuance of the Bonds and, thereafter, only in accordance with
the terms as may be set forth in the Indenture (so long as it
remains in effect), provided that the description of the 1997
Concourse Expansion facilities set forth herein may be revised from
time to time on the written request of Airline approved in writing
by the Director of Port Control on behalf of City, provided that no
such revision materially alters the 1997 Concourse Expansion
facilities as initially contemplated hereunder.
17.07 Waiver
No waiver of default by either party of any of the terms,
covenants and conditions hereof to be performed, kept and observed
by the other party shall be construed as, or operate as, a waiver
of any subsequent default of any of the terms, covenants or
conditions herein contained, to be performed, kept and observed by
the other party.
17.08 Non-Discrimination
Airline for itself, its heirs, personal representatives,
successors in interest, and assigns, as a part of the consideration
hereof, does hereby covenant and agree "as a covenant running with
the land" that in the event facilities are constructed, maintained,
or otherwise operated on the said property described in this
Agreement for a purpose for which a U.S. Department of
Transportation program or activity is extended or for another
purpose involving the provision of similar services or benefits,
Airline shall maintain and operate such facilities and services in
compliance with all other requirements imposed pursuant to Title
49, Code of Federal Regulations, Part 21, Nondiscrimination in
Federally Assisted Programs of the Department of Transportation,
and as said Regulations may be amended.
Airline for itself, its personal representatives, successors
in interest, and assigns, as a part of the consideration hereof,
does hereby covenant and agree "as a covenant running with the
land" (1) that no person on the grounds of race, color, gender,
sexual orientation, or national origin shall be excluded from
participation in, denied the benefits of, or be otherwise subjected
to discrimination in the use of said facilities, (2) that no person
on the grounds of race, color, or national origin shall be excluded
from participation in, denied the benefits of, or otherwise be
subjected to discrimination in the construction of any improvements
on, over, or under such land and the furnishing of services
thereon, and (3) that Airline shall use the premises in compliance
with all other requirements imposed by or pursuant to Title 49,
Code of Federal Regulations, Part 21, Nondiscrimination in
Federally Assisted Programs of the Department of Transportation,
and as said Regulations may be amended.
If Airline shall breach any of the above non-discrimination
covenants and shall not have remedied, or commenced action which
will promptly remedy same which action is thereafter diligently
pursued, within 15 business days after specific written notice
thereof given by City, City shall have the right to terminate this
Agreement and to re-enter and repossess said land and the
facilities thereon in accordance with Article XII hereof.
17.09 Force Majeure
Neither City nor Airline shall be deemed in violation of this
Agreement if it is prevented from performing any of the obligations
hereunder by reason of strikes, boycotts, labor disputes,
embargoes, shortage of material, acts of God, acts of the public
enemy, acts of superior governmental authority, weather conditions,
riots, rebellion, sabotage, or any other circumstances for which it
is not responsible or which is not within its reasonable control;
provided, however, that these provisions shall not excuse Airline
from its obligation to pay the rentals specified in Sections 7.02,
7.03 and 7.05 promptly when due or to procure insurance. City
agrees to use its Best Efforts to restore as soon as practicable
any interrupted utilities or services which it is obligated to
furnish or provide under this Agreement but Airline shall not be
entitled to any abatement of rental payments or discharge of rental
obligations in the event of any interruption or cessation of any
utilities or services.
17.10 Severability
In the event any covenant, condition or provision herein
contained is held to be invalid by a court of competent
jurisdiction, the invalidity of any such covenant, condition or
provision shall in no way affect any other covenant, condition or
provision herein contained, provided the invalidity of any such
covenant, condition or provision does not materially prejudice
either City, Trustee, owners of Bonds, or Airline in their
respective rights and obligations contained in the valid covenants,
conditions and provisions of this Agreement.
17.11 Headings
The headings of the several Articles and Sections of this
Agreement are inserted only as a matter of convenience and for
reference, in no way define, limit or describe the scope or intent
of any provisions of this Agreement and shall not be construed to
affect in any manner the terms and provisions hereof or the
interpretation or construction thereof.
17.12 Non-Exclusivity
Nothing herein contained shall be deemed to grant to Airline
any exclusive right or privilege within the meaning of Section 30
of the Federal Aviation Act for the conduct of any activity on the
Airport, except that, subject to the terms and provisions hereof,
Airline shall have the right to exclusive possession of the
Continental Special Facilities and any other exclusive use rights
expressly provided for hereunder.
17.13 Approvals
Whenever the approval of City or of Airline is required
herein, no such approval shall be unreasonably withheld,
conditioned or delayed. Unless otherwise specified herein all
approval shall be in writing.
17.14 Binding Nature
All of the terms, provisions, covenants, stipulations,
conditions and considerations in this Agreement shall extend to,
inure to the benefit of, and bind the legal representatives,
successors, sublessees and assigns of the respective parties
hereto.
17.15 Incorporation of Exhibits
All exhibits referred to herein (except Exhibit H) and any
appendices, exhibits or schedules which may, from time to time, be
referred to in any duly executed amendment hereto are (and with
respect to future amendments, shall be) by such reference
incorporated herein and shall be deemed a part of this Agreement as
fully as if set forth herein.
17.16 Memorandum of Lease
In the event that either party so requests, the other party
shall execute, attest, acknowledge and deliver for recording with
the Recorder of Cuyahoga County a short form Memorandum of Lease of
this Agreement and Lease, to be executed pursuant hereto in the
form and content prescribed by Section 5301.251 of the Ohio Revised
Code.
17.17 No Agency
Notwithstanding any provisions hereof, this Agreement does not
constitute an appointment of Airline as an agent or representative
of City for any purpose whatsoever, and neither a partnership nor
a joint venture is created hereby.
17.18 Counterparts
This Agreement may be executed in multiple counterparts, each
of which shall be deemed an original, but all of which together
shall constitute the same instrument.
17.19 Rights and Obligations as to Rates and Charges
The parties agree that the provisions of this Agreement shall
not modify or limit the parties' rights and obligations as to the
rates and charges procedures in any other agreements, which
agreements remain in full force and effect in accordance with their
terms.
17.20 Accommodation of 1997 Concourse Expansion
On the basis of the description of the 1997 Concourse
Expansion elements in Exhibits B and J hereto, such elements
described therein have been coordinated with City to ensure that
they can be accommodated within City's overall, long-term
development plan for the Airport, and City acknowledges that,
subject to any required federal or state governmental approvals,
they can be so accommodated.
17.21 Letter Agreement
Certain agreements of City and Airline with respect to the
method of funding the GARB Improvements and other capital
improvements at the Airport and with respect to certain other
matters relating to the 1997 Concourse Expansion are set forth in
the Letter Agreement attached as Exhibit K hereto.
17.22 Special Obligation of City; Subject to Laws
This Agreement constitutes a special obligation of City. The
obligations of City under this Agreement shall be payable solely
from revenues derived by City from its ownership and operation of
the Airport. This Agreement shall not constitute a general
obligation or pledge of the full faith and credit of City, and
Airline shall have no right to have taxes levied by City for the
payment of City's obligations under this Agreement.
The performance by City under this Agreement is subject to the
Charter of City and all applicable laws of the State of Ohio.
(End of Article XVII)
IN WITNESS WHEREOF, the parties hereto have caused these
presents to be duly executed as of the day and year first above
written.
WITNESSES as to those signing on CITY OF CLEVELAND
behalf of the City of Cleveland:
________________________________ By: _______________________
Michael R. White, Mayor
Print Name: ____________________
________________________________
Print Name: ____________________
________________________________ By: ________________________
Martin Carmody, Director
of Finance
Print Name: ____________________
________________________________
Print Name: ____________________
________________________________ By: _______________________
William F. Cunningham, Jr.,
Director of Port Control
Print Name: ____________________
________________________________
Print Name: ____________________
The within instrument is hereby approved as
to legal form and correctness _____________, 1997
Director of Law
By __________________________
Assistant Director of Law
WITNESSES as to those signing CONTINENTAL AIRLINES, INC.
on behalf of Continental
Airlines, Inc.:
_____________________________ By: ______________________
Holden Shannon,
Print Name: _________________ Vice President,
Corporate Real Estate
STATE OF OHIO )
)SS:
COUNTY OF CUYAHOGA )
Before me ___________________________________________, a
Notary Public in and for said County, personally appeared Michael
R. White, known to me to be the person who, as Mayor of the City of
Cleveland, executed the above and foregoing Agreement and
acknowledged that, being duly authorized by Ordinance of the
Council of the City of Cleveland, he signed said Agreement for and
on behalf of the said City as its free and voluntary act, and as
his own free and voluntary act.
IN WITNESS WHEREOF, I have hereunto set my hand and notarial
seal this _______ day of __________________, 19__.
____________________________
Notary Public
My commission expires:
STATE OF OHIO )
)SS:
COUNTY OF CUYAHOGA )
Before me ___________________________________________, a
Notary Public in and for said County, personally appeared Martin
Carmody, known to me to be the person who, as Director of Finance
of the City of Cleveland, executed the above and foregoing
Agreement and acknowledged that, being duly authorized by Ordinance
of the Council of the City of Cleveland, he signed said Agreement
for and on behalf of the said City as its free and voluntary act,
and as his own free and voluntary act.
IN WITNESS WHEREOF, I have hereunto set my hand and notarial
seal this _______ day of __________________, 19__.
____________________________
Notary Public
My commission expires:
STATE OF OHIO )
)SS:
COUNTY OF CUYAHOGA )
Before me ___________________________________________, a
Notary Public in and for said County, personally appeared William
F. Cunningham, Jr., known to me to be the person who, as Director
of Port Control of the City of Cleveland, executed the above and
foregoing Agreement and acknowledged that, being duly authorized by
Ordinance of the Council of the City of Cleveland, he signed said
Agreement for and on behalf of the said City as its free and
voluntary act, and as his own free and voluntary act.
IN WITNESS WHEREOF, I have hereunto set my hand and notarial
seal this _______ day of __________________, 19__.
_____________________________
Notary Public
My commission expires:
STATE OF ________ )
)SS:
COUNTY OF _________ )
Before me __________________________, a Notary Public in and
for said County, personally appeared Holden Shannon, known to me to
be the person who, as Vice President, Corporate Real Estate, of
Continental Airlines, Inc., executed the above and foregoing
Agreement and Lease and acknowledged that, being duly authorized by
Resolution of the Board of Directors of said Corporation, he signed
said Agreement for and on behalf of the said Corporation as its
free and voluntary act and as his own free and voluntary act.
IN WITNESS WHEREOF, I have hereunto set my hand and notarial
seal this ______ day of ________________________, 1997.
____________________________
Notary Public
My commission expires:
Exhibit A
Original Lease
Exhibit B
Continental Special Facilities
(The following general descriptions of the Continental Special
Facilities, as well as the attached diagrams, are subject to change
through the normal course of submission and approval of plans and
specifications pursuant to this Agreement.)
Exhibit B-1
Concourse D Special Premises
(Concourse D Generally. A proposed Concourse D (of
approximately 170,000 gross square feet) is to be constructed
parallel to Concourse C and to accommodate up to 12 EMB 145
regional jets and up to 24 turbo-prop aircraft for the
Continental Express, Inc., operation. The new Concourse D
will include passenger facilities, airline operation support,
building support, and concessions, including all necessary
furniture, equipment, and utilities. Concourse D is to be
configured with a central two-story component providing
concourse-level jetbridge loading of the regional jets. The
ramp level of this component will house Airline operations and
building support.)
Concourse D Special Premises. The Concourse D Special
Premises consist of the following exclusive use areas and
facilities of Concourse D: holdroom, passenger and related
space, concourse office and operations space, a ramp control
tower, and furniture, equipment, and other moveable personal
property necessary or appropriate for the use of Concourse D.
In addition, the Concourse D facilities leased to Airline will
include nonexclusive use rights with respect to the building
support facilities funded in part with the proceeds of the
Bonds. The diagrams on following two pages depict the
approximate dimensions and proposed locations of the various
elements of the Concourse D Special Premises.
Exhibit B-2
Concourse C Expansion Special Premises
(Concourse C Expansion Generally. Improvements to the
existing Concourse C are to include a new approximately 10,548
square-foot Presidents Club (an airline lounge) on the
concourse level, removal of the existing Presidents Club (to
allow for holdroom expansion), jetbridge reconfiguration for
revised aircraft layout, improvements of operations areas at
the ramp level, and construction, installation or relocation
of all necessary utilities.)
Concourse C Expansion Special Premises. The exclusive use
areas comprising the Concourse C Expansion Special Premises
will include the new Presidents Club as well as all necessary
or appropriate furniture, equipment, and other moveable
personal property. The diagram on the following page is
attached for the purpose of generally depicting the proposed
location of the new Presidents Club.
Exhibit B-3
Deicing Pad Special Premises
One new pad (of approximately 3.7 acres) is to be constructed
for remote parking of seven turbo-prop aircraft and winter
deicing. This pad, also known as "Pad 2," is to be
specifically constructed for conversion to a deicing facility
where effluent can be collected for treatment and disposal
when tied into an Airport-wide deicing master plan. The
diagram on the following page is attached for the purpose of
generally depicting the proposed location of Pad 2.
Exhibit B-4
Hydrant Fueling System Special Premises
A new in-ground hydrant fueling system is to be constructed
for use by aircraft on both the existing Concourse C and the
new Concourse D. This system will be fed from tank farm
facilities to the south of the Taxilane J extension. The
diagram on the following page is attached for the purpose of
generally depicting the proposed location of the Hydrant
Fueling System Special Premises.
Exhibit C
Cost Allocation Policy
GARB-Related Costs
- All costs associated with the connector tunnel between
Concourses C & D, including its vertical transportation
components, moving sidewalks, structure, mechanical,
electrical, and plumbing systems, and architectural fit-up
- All site and ramp costs for the area five feet outside of
the Concourse D building perimeter (concourse-level floor
plate projected downward) and beyond
- Costs of constructing and installing utilities in that area
which is five feet outside of the Concourse D building
perimeter (concourse-level floor plate projected downward)
and beyond
- Costs of relocating underground utilities in public areas
or preferential use areas
- Within the footprint of Concourse D, all costs associated
with non-exclusive spaces, such as:
- All retail and concession areas
- Certain building support areas/systems
- Public toilet rooms
- Public circulation
- Drive-through lanes (2)
- Drive-through triturator
- All costs associated with the permanent rental car
relocation
- All costs associated with the outbound bag room, bag claim
and security check point expansion in the Terminal Building
Bond-Related Costs
- All site and ramp costs of the area extending from the face
of the Concourse D building at ramp level (note five-foot
overhang of concourse level) to a point 10 feet outward
- Costs of constructing and installing utilities in Airline's
Concourse D leasehold, including costs of constructing and
installing utilities in the area extending from the face of
the Concourse D building at ramp level to a point 10 feet
outward
- All costs associated with the Hydrant Fueling System
Special Premises and the Deicing Pad Special Premises ("Pad
2")
- All costs associated with the airline lounge ("Presidents
Club") on Concourse C
- Within the footprint of Concourse D, all costs associated
with exclusive use spaces, such as:
- Airline operations areas:
- Ramp control tower
- Dedicated communications rooms
- Jetbridges and other equipment
- Cart staging
- GSE parking
- Airline passenger facilities:
- Holdrooms
- Ticketing areas
- Service centers
- Site preparation costs associated with the interim
relocation of rental car facilities for which Airline shall
not receive reimbursement from other sources of funds
GARB-Related/Bond-Related Mixed Costs
- - All Costs of the Facilities not directly allocable to GARB-
related costs or Bond-related costs in accordance with the
foregoing provisions of this Cost Allocation Policy shall be
allocated as follows:
- Concourse D
64.58% to Bonds
35.42% to GARBs
(based on the ratio of exclusive use square footage
(103,460 square feet) to non-exclusive use/non-"shared"
square footage (56,753 square feet, representing 75,779
square feet of non-exclusive use space minus 19,026
square feet of "shared" building support systems space -
- see below))
- Ground Service Equipment Paving
09.23% to Bonds
90.77% to GARBs
(based on the ratio of square footage under the
Concourse D building and within five feet outside of the
Concourse D building perimeter (concourse-level floor
plate projected downward) (10,860 square feet) to the
square footage more than five feet outside of the
Concourse D building perimeter (106,740 square feet))
- Site Paving
00.91% to Bonds
99.09% to GARBs
(based on the ratio of square yardage within five feet
outside of the Concourse D building perimeter
(concourse-level floor plate projected downward) (1,200
square yards) to the square yardage more than five feet
outside of the Concourse D building perimeter (131,100
square yards))
- Direct Costs
38.59% to Bonds
61.41% to GARBs
(based on the ratio of the Bond-related portions of the
1997 Concourse Expansion Budget ($52,812,093) to the
GARB-related portions of said Budget ($84,034,642); the
parties agree that these percentages are subject to
change to reflect Bond-funded items not listed on the
1997 Concourse Expansion Budget (Exhibit I))
- Building Support Systems for Concourse D
Costs of certain elevators, fire stairs and dedicated
egress, MEP systems distribution, and dumpster locations
shall be allocated according to the percentages
specified under "Concourse D" above. The diagrams on
the following two pages depict the location of the
19,026 square feet of "shared" building support systems
space subject to such allocation.
- Relocation of Utilities within Exclusive Leased Areas
50.00% to Bonds
50.00% to GARBs
Exhibit F
Maintenance and Repair Responsibilities
Responsibility Definition or Responsible
Center Reference Item Party
Air Conditioning/Heating: 1 a to h City
Central System 1 i City
Air Distribution 2 a to g to lease line City
2 a & b within City
leasehold
2 c to g within Airline
leasehold
Domestic Hot Water; 3 a & b to lease line City
Circulating Hot 3 a & b within Airline
Water Heat; Chilled Water leasehold
Distribution System
Temperature Controls which 4 a to e to lease line City
includes: 4 a to e within Airline
leasehold
Water & Sewerage:
Main & Rough-In Lines to lease line City
within leasehold City
Fixtures to lease line City
within leasehold Airline
Rough-In Stoppages (which
may include use of diagnostic
cameras to identify
such stoppages) City
Fixture Stoppages Airline
Storm Drains to lease line City
within leasehold City
Power Supply:
Line side City
Main Feed City
Circuit Panels to lease line City
within leasehold Airline
Fire Protection System 5 a, c, e City
5 b, d Airline
Building Structure
Interior 6 a to g to leasehold City
Interior 6 a to g within
leasehold Airline
Exterior 6 a, e, f Airline
Exterior 6 b, c, d, g, h City
Cleaning 7 a to j within
leasehold Airline
Extermination within leasehold Airline
Window Washing
Interior within leasehold Airline
Interior to lease line City
Exterior within leasehold
(ramp level) Airline
Exterior within leasehold
(boarding level) City
Exterior to lease line City
Loading Bridges/Mech Systems 8 a & b Airline
Electrical
Interior 9 a to g within
leasehold Airline
Interior 9 a to g to lease
line City
Exterior 9 a, d, f City
Exterior 9 b to lease line City
Exterior 9 b, c, e within
leasehold Airline
Exterior 9 g Airline
Plumbing & Fixtures
Within leasehold 10 a to f Airline
Public Area 10 a to f City
Preferential Ramp & Apron 11 a to e, g, h Airline
11 f, i City
Security Access Points and
Associated Controls 12 a within leasehold Airline
12 b City
Environmental 13 a to d Airline
Miscellaneous
Public Address System 14 a City
F.I.D.S. 14 b Airline
Airline Finishes
& Improvements 14 c Airline
Elevators/Escalators 14 d City
Speedwalks 14 e City
Stairwells 14 f Airline
14 g City
Triturator 14 h City
DEFINITIONS AND REFERENCES
1. Air Conditioning/Heating
Central Systems within apron-level mechanical rooms which
serve public areas and Airline leasehold within the terminal
which includes:
a. Air Handlers
b. Heating and Ventilating Units
c. Exhaust Fans
d. Perimeter/Reheat Convertor Systems
e. Pneumatic Compressors and Filtration Systems
f. High/Low Pressure Reducing Stations
g. Circulating Hot Water Heat and Condensate Distribution
System from Valve Room II to Penthouse Mechanical Rooms
h. Chilled Water Supply and Return from Valve Room II to
Penthouse Mechanical Rooms
i. Heating and ventilating units, unit heaters, exhaust
fans and associated controls, both electric and
pneumatic, which serve exclusive use premises
2. Central Systems Air Distribution which includes:
a. Supply, return and exhaust duct work in ceiling space
of tenant areas
b. Associated hardware with duct work such as: Volume
dampers and diverting vanes
c. Repair and cleaning of all ceiling diffusers for
supply, return and exhaust air
d. Balancing of system
e. Air distribution as listed above on zones off existing
systems back to the main supply air duct and return air
duct
f. Cleaning of coil face annually
g. Associated dampers, linkage filters and motors (Mixed
Boxes)
3. Domestic Hot Water, High Pressure Steam, Chilled Water
Distribution Systems:
a. Associated piping, valves and strainers back to the
main supply and return connection
b. All pipe covering in ceiling back to the main supply
and return connections
4. Temperature Controls which include:
a. All thermostats pneumatic or electric maintenance and
calibration
b. All wiring and pneumatic control tubing from
thermostats to operating device to ceiling
c. Pneumatic control and electric control valves,
including diaphragms, valve stem and seat
d. Thermostats and maintenance and repair of other unit
heaters
e. All temperature controls and associated systems listed
above connecting to existing systems back to the main
connections
5. Fire Protection System
a. Sprinklers
b. Fire Hoses
c. Fire Alarms
d. Fire Extinguishers
e. Hydrants
6. Building Structure
Interior
a. Maintenance and repair of walls and columns such as
painting, plastering, wall papering and cove base
b. Maintenance and repair of metal and wooden doors and
associated hardware such as hinges, door knob
assemblies, locks and latch assemblies
c. Maintenance and repair of any glass panels or door
glass
d. Maintenance and repair to plaster, dropped or metal
ceilings and associated framework
e. Maintenance and repairs to ceramic tile, wooden and
carpeted floors
f. Maintenance, repairs and cleaning of signs
g. Maintenance and repair of ticket counters and holdroom
furniture/fixtures
Exterior:
a. Painting, maintenance and repair of exclusive area such
as overhead doors, window and door frame work
b. Caulking of walls, windows, panels and framework
c. Masonry and carpentry repairs to architectural facades
or building skin
d. Roof drains to remain free of debris
e. All attached enclosures such as canopies and conveyor
housing
f. Maintenance, repairs and cleaning of tenant signs
g. Cleaning and repairs to glass
h. Roof maintenance
7. Cleaning
Cleaning of demised premises which includes:
a. Walls
b. Ceilings
c. Floors
d. Windows
e. Fixtures
f. Furniture
g. Ceiling Diffusers
h. Trash Removal including dumpsters in accordance with
City specifications
i. Equipment storage areas
j. Holdroom areas
8. Loading Bridges/Mechanical Systems
a. Daily maintenance and repair of loading bridges.
Maintenance and repair of mechanical support equipment,
including inbound and outbound baggage conveyor
systems, scales, etc., by acceptable contractor or by
Airline's maintenance personnel.
b. ADA-required lift for jetways/commuter walkways
9. Electrical
Interior:
a. Cleaning of fixtures and shades
b. Replacement of burnt bulbs
c. Replacement of burnt ballasts and starters
d. Repairs to wall outlets and wall switches
e. All associated wiring within Airline's space
f. Replacement of burnt bulbs and ballast for signs
g. Airline installed panels
Exterior:
a. Maintenance, repairs and cleaning of perimeter flood,
apron and obstruction lighting and associated wiring
and conduit
b. Maintenance and repairs to weatherproof outlets,
electrical panels, transformers, local disconnects and
associated wiring and conduit
c. Maintenance and repairs to luminated tenant signs
d. Fixed pole ramp lighting
e. Ground power system
f. Electrical panels and transformers for public areas and
fixed pole ramp lighting
g. Tenant-installed lighting
10. Plumbing
a. All water closets, lavs, urinal and associated piping
and hardware such as flushometers, faucets and soap
dispensers
b. Sanitary napkin dispensers
c. Towel dispensers and trash containers
d. Partitions and hardware such as hinges, door latch
assembly and coat hooks
e. Water fountains piping and refrigeration compressors
and controls
f. Floor drains are to have proper catch basin with
strainer to keep drain free of debris
11. Preferential Ramp and Apron
a. Daily FOD inspection and removal of debris, grease,
oil, fuel or other foreign material on ramp or apron
areas
b. Cleaning with degreasing solvent on a routine basis
consistent with usage
c. Maintenance and repairs to bumpers, rails or other
guides
d. Striping for parking of aircraft and ground equipment
in accordance with approved City procedures
e. Ramp and apron drains to be cleaned of debris on a
scheduled basis
f. Minor pavement repairs
g. Sweeping
h. Snow removal, ice removal, and sanding
i. Operation and maintenance of snow melters; structural
pavement repairs and rehabilitation
12. Security Access
a. Door hardware, i.e.: latches, locksets, hinges,
closures, door frames, thresholds and panic hardware
b. All electronic components i.e.: card reader, keypad,
push buttons, audio visual units, door strikes and
magnetic locks
13. Environmental Health and Safety
a. Storage Tank Systems (if applicable)
1. Maintenance, testing, management, removal and
remediation, (if required), compliance with
regulations and associated documentation for any
storage tanks located on leased premises including
responsibility for releases and remedial actions
2. Compliance with all applicable Federal, State, and
City Rules and Regulations
b. Oil, gas, grease, sand, and any other similar
interceptors and or separators (if applicable)
1. Required maintenance and associated documentation
to ensure efficient operation and proper disposal
of any residual per applicable regulations
c. Spill Prevention and Control Countermeasures (SPCC) (if
applicable)
1. Maintenance of and compliance with a current
certified SPCC Plan, which is reviewed annually
and updated and re-certified by a professional
engineer every 3 years
2. Reporting of releases which exceed Reportable
Quantities to appropriate Federal and State
Agencies and City personnel
d. Environmental Health and Safety
1. Compliance with all applicable Federal, State and
City Regulations including LSP Services pertaining
to all environmental health and safety issues
14. Miscellaneous
a. Maintenance of existing public address system
b. Maintenance of tenant's flight information display
systems (F.I.D.S.)
c. Airline installed finishes and improvements
d. Maintenance of elevators/escalators
e. Speedwalks
f. Stairwells leading to exclusive use premises (4)
g. Stairwells leading to mechanical room used by City or
freight elevator used by City and Airline (2 -- col.
lines 7.1 and 8, and 21 and 21.9)
h. Triturator
Exhibit G
Equal Opportunity Clause
(Section 187.11(B) C.O.)
During the performance of this contract, the contractor agrees
as follows:
1. The contractor shall not discriminate against any employee
or applicant for employment because of race, religion, color, sex,
sexual orientation, national origin, age, disability, ethnic group
or Vietnam-era or disabled veteran status. The contractor shall
take affirmative action to insure that applicants are employed and
that employees are treated during employment without regard to
race, religion, color, sex, sexual orientation, national origin,
age, disability, ethnic group, or Vietnam-era or disabled veteran
status. As used herein, "treated" means and includes without
limitation the following: recruited, whether by advertising or
other means; compensated, whether in the form of rates of pay or
other forms of compensation; selected for training, including
apprenticeship, promoted, upgraded, demoted, downgraded,
transferred, laid off and terminated. The contractor agrees to and
shall post in conspicuous places, available to employees and
applicants for employment, notices to be provided by the hiring
representatives of the contractor setting forth the provisions of
this nondiscrimination clause.
2. The contractor will, in all solicitations or advertisements
for employees placed by or on behalf of the contractor, state that
the contractor is an equal opportunity employer.
3. The contractor shall send to each labor union or
representative of workers with which he has a collective bargaining
agreement or other contract, or understanding, a notice advising
the labor union or worker's representative of the contractor's
commitments under the equal opportunity clause, and shall post
copies of the notice in conspicuous places available to employees
and applicants for employment.
4. It is the policy of the City that business concerns owned
and operated by minority persons and/or women shall have every
practicable opportunity to participate in the performance of
contracts awarded by the City.
5. The contractor shall permit access by the Director or his
designated representative to any relevant and pertinent reports and
documents to verify compliance with the Business Enterprise Code,
and with the regulations of the Office of Equal Opportunity. All
such materials provided to the Director or his designated
representative by the contractor shall be considered confidential.
6. The contractor will not obstruct or hinder the Director or
his designated representative in the fulfillment of the duties and
responsibilities imposed by the Business Enterprise Code.
7. The contractor agrees that each subcontract will include
this Equal Opportunity Clause, and the contractor will notify each
subcontractor, materialman and supplier that the subcontractor must
agree to comply with and be subject to all applicable provisions of
the Business Enterprise Code. The contractor shall take any
appropriate action with respect to any subcontractor as a means of
enforcing the provisions of the Code.
Exhibit H
Blacklined MOU
MEMORANDUM OF UNDERSTANDING FOR PROPOSED EXPANSION OF
CONTINENTAL AIRLINES FACILITIES AT CLEVELAND HOPKINS
INTERNATIONAL AIRPORT
March 26, 1997
The City of Cleveland ("City") and Continental Airlines, Inc.
("CAL") propose the following business terms as a framework for the
preparation of definitive agreements covering the design,
financing, construction, and operation of the proposed program for
the expansion of CAL's facilities ("CAL's CLE Program") at
Cleveland Hopkins International Airport ("Airport"). This
Memorandum of Understanding shall be binding upon the parties after
approval by Cleveland City Council and by CAL's Board of Directors.
It is the intention of the parties to engage in good faith
negotiations leading to the execution of such definitive agreements
consistent with this Memorandum of Understanding.
No tax abatement or General Fund monies of City shall be utilized
to provide funding for CAL's CLE Program. However, the parties
acknowledge that CAL has obtained commitments for, and expects to
receive, incentives for CAL's CLE Program from various state and
local programs as described in Attachment A attached hereto.
I. DESCRIPTION OF PROPOSED EXPANSION OF CAL FACILITIES
A. CAL'S CLE PROGRAM
1. "CAL's CLE Program" shall consist of the following project
elements:
a. Construction of a new regional jet concourse, currently
denominated as Concourse D (including a connector tunnel with
moving walkways between existing Concourse C and Concourse D);
b. Aircraft ramp expansion;
c. Improvements to existing Concourse C, including President's
Club, holdroom expansion, jetbridge reconfiguration,
reconfigurations and improvements of ramp level operations areas,
vertical access to the connector tunnel to Concourse D, utility
work and any other improvements to Concourse C mutually agreed upon
by CAL and City (collectively, the "Expansion Premises");
d. Rental car facilities relocation (interim and permanent);
e. New employee parking lot;
f. Deicing pads;
g. Hydrant fuel system and pits for Concourses C and D; and
h. Construction of such other improvements as mutually may be
agreed upon by CAL and City.
A more detailed description of CAL's CLE Program is provided
in Attachment B attached hereto and incorporated herein by this
reference.
B. REGIONAL JET LINE MAINTENANCE BASE
1. In addition to the elements of CAL's CLE Program described
above, City and CAL agree that CAL shall locate a regional jet
line maintenance base at the Airport based upon (and subject
to CAL's actually receiving the satisfactory approvals for and
funding of the various incentive programs as described in) the
agreements and representations set forth in the two letters
between Kenneth G. Silliman, Executive Assistant, Development,
Office of the Mayor of the City, and Holden Shannon, Staff
Vice President, Corporate Real Estate and Environmental
Affairs of CAL, dated March 25, 1997 and March 26, 1997, which
are attached hereto as Attachment C and incorporated herein by
this reference. Provided that the conditions set forth in
this Section I.B. are satisfied and CAL and City enter into
appropriate definitive agreements in a timely manner (a) such
regional jet line maintenance base shall be established no
later than December 31, 2000, subject to force majeure and/or
regulatory delays, and (b) City shall have the right to obtain
specific performance of CAL's obligation so to establish such
regional jet line maintenance base at the Airport, CAL hereby
acknowledging that in the event CAL breaches this obligation
City shall have no adequate remedy at law.
2. Notwithstanding the foregoing, CAL and City agree that the
establishing by CAL of such regional jet line maintenance base
at the Airport also is subject to the mutual agreement of CAL
and the City as to the location thereof, whether within the
existing United Hangar or within a new facility to be
constructed on another mutually agreeable site located on
Airport property east of the Airport runways. The
availability of the existing United Hangar for such purpose,
and the duration of any such availability, shall be determined
by the joint ingress/egress study described in Section
II.A.2.c. below. Any such new facility shall be designed and
constructed by CAL, which activities shall be subject to
reasonable City approvals.
3. In the event that the existing United Hangar is to be utilized
for the regional jet line maintenance base, a long-term
exclusive use lease for such facility shall be negotiated in
good faith by City and CAL; provided, however, that such lease
shall be subject to cancellation if during the term thereof
City demonstrates a need to utilize the site of the United
Hangar for improvements required for efficient Airport
operations and provides to CAL on mutually agreeable terms a
mutually agreeable site located east of the Airport runways
for construction of a new facility for the regional jet line
maintenance base. The costs associated with converting the
United Hangar for use as the regional jet line maintenance
base shall be financed in a manner mutually agreed upon by CAL
and City.
4. In the event that a new facility is constructed for the
regional jet line maintenance base, a long-term exclusive use
lease for such facility shall be negotiated in good faith by
the City and CAL, and the costs associated with such facility
(other than typical landlord costs, including without
limitation utilities, which shall be financed with GARBs (as
hereinafter defined)) shall be financed with SRBs (as
hereinafter defined).
C. JOB CREATION
1. CAL estimates that its City-based work force will increase by
the equivalent of approximately 524 full-time jobs over the
next five years as CAL adds employees to support the increased
flights which will be accommodated by the new regional jet
concourse and staffs the regional jet line maintenance base.
The foregoing estimate is based upon the following approximate
numbers of new employees being required: 240 in flight
operations, 100 in in-flight, 100 in customer service, 50 in
aircraft maintenance, 25 in catering, 5 in facilities
maintenance, 2 in management and 2 in clerical services. In
the event that the foregoing estimated numbers of jobs are not
actually achieved, there shall be a commensurate reduction, in
the manner set forth in the letter from Kenneth Silliman to
Holden Shannon attached hereto as Attachment C, in the
incentives provided to CAL, but the same shall not constitute
a default by CAL hereunder or entitle City to exercise any
other remedy.
II. AIRPORT LAYOUT PLAN ("ALP") AND 5-YEAR CAPITAL IMPROVEMENT
PROGRAM ("CIP")
A. CAL SUPPORT
1. CAL is in support of the ALP which the City submitted to the
FAA in 1996, with the exception of any improvements to support
expansion of commercial air service at Burke Lakefront
Airport. However, it is understood that CAL's support for the
ALP extends only to FAA coordination. CAL does not at this
time commit to majority-in-interest ("MII") support for the
ALP except for those items outlined below.
2. The CIP is appended hereto as Attachment D-1. CAL commits its
MII endorsement for the implementation and financing of the
following projects comprising a portion of the CIP, which
endorsed projects are described in Attachment D-2 appended
hereto:
a. New 6,450' runway and associated environmental and site
development construction related to the runway project.
b. After completion of the foregoing 6,450' runway, a runway
extension mutually agreed upon by CAL and City sufficient
to provide nonstop commercial service between the Airport
and the Pacific Rim, and associated environmental and site
development construction related to the runway extension.
The parties will mutually agree upon which runway shall be
so extended and the exact length of such extension.
c. Vehicle ingress and egress for the terminal building as
mutually agreed upon by City and CAL, subject to CAL's
approval of the project costs (which approval shall not be
unreasonably withheld) and the results of a joint
ingress/egress study which currently is underway.
d. CAL's CLE Program (as described in Section I.A. above).
e. Permanent rental car facilities relocation, provided that
the City intends to obligate the rental car companies or
the third-party tenant or other users of such facilities to
pay for all reasonably assignable project costs in
connection therewith; all such project costs which are not
reasonably assignable to such parties shall be assigned to
the Airport's parking and roadway cost center. However, CAL
shall actively participate and provide input in the
discussions regarding the rental car facilities relocation
project.
f. Those other CIP projects which are listed on Attachment
D-2.
Such MII endorsement by CAL is conditioned upon (i) the costs
of the foregoing projects not exceeding one hundred ten
percent (110%) of the costs thereof set forth in the CIP, and
(ii) City exercising in good faith its best efforts to
maximize the level of Airport Improvement Project ("AIP")
funds available to fund those projects which are eligible for
AIP funding (which AIP funds City currently contemplates will
be in an amount equal to the lesser of fifty percent (50%) of
the costs of such projects or the maximum level of funding for
which the particular project element is eligible); provided,
however, that (A) CAL shall support City's applications to
obtain such AIP funding, and (B) if City exercises in good
faith such best efforts but is unable to achieve such levels
of AIP funding, CAL's MII endorsement set forth above shall
not be affected, the same shall not constitute a default by
City hereunder and CAL shall not be entitled to exercise any
other remedy.
3. In addition to AIP funds, City shall reasonably maximize the
level of Passenger Facility Charges available to fund a
portion of the costs of the projects included in the CIP,
subject to the reasonable operational and capital needs of the
Airport.
B. COORDINATION WITH CITY ON CAL'S CLE PROGRAM
1. On the basis of the description of CAL's CLE Program contained
in Attachment B hereto, the elements of CAL's CLE Program
described therein have been coordinated with the City to
ensure that they can be accommodated within the City's overall
long-term development plan for the Airport, and the City
acknowledges that, subject to any required federal or state
governmental approvals, they can be so accommodated.
2. Any material revision(s) to such project elements of CAL's CLE
Program shall require City approval, which approval shall be
delivered on a timely basis (consistent with the construction
schedule and the approval process for plans and specifications
outlined in Section IV.E. below) and shall not be unreasonably
withheld, conditioned or delayed.
C. GENERAL
1. CAL agrees to work cooperatively and reasonably with City to
evaluate the other projects in the CIP, including but not
limited to wastewater treatment as part of the Airport-wide
deicing, glycol collection and treatment project (subject to
CAL's approval of the project costs and scope).
2. CAL shall support the City's proposed Settlement Agreement
with the City of Brook Park once final costs are determined
and deemed acceptable to CAL in its reasonable discretion as
they affect Airport rates and charges; provided, however, that
such pledge of support by CAL is conditioned upon (a) the
Settlement Agreement which is the subject of Ordinance No.
203-97 pending before City Council receiving final approval
prior to November 1, 1997, or (b) a settlement agreement
substantially similar to the above-described Settlement
Agreement subsequently being entered into and finalized.
III. FINANCING ARRANGEMENTS FOR CAL'S CLE PROGRAM
A. UPFRONT FUNDING OF PROGRAM COSTS
1. Because CAL's CLE Program is proceeding on an expedited basis,
CAL will be responsible, subject to being reimbursed in the
manner set forth in this Memorandum of Understanding, to
provide the upfront funding for the implementation of CAL's
CLE Program.
B. PERMANENT FINANCING OF PROGRAM COSTS
1. Notwithstanding the fact that CAL is providing the upfront
funding therefor as described above, CAL and City agree that
the costs of CAL's CLE Program (including all costs of
compliance with environmental requirements, other than any
remediation or clean-up costs, allocable to each project
element) ultimately are to be financed with a combination of
tax-exempt Special Revenue Bonds ("SRBs"), General Airport
Revenue Bonds ("GARBs"), and City/third-party tenant funds, as
follows:
Project Element CAL GARBs City, Third-
SRBs Party Tenant
or Other
Concourse D exclusive CAL leased
premises X
Concourses C and D concession and
public areas (including connector
tunnel) X
Utilities to leaseline for CAL's
CLE Program X
Aircraft ramp construction X
Concourse C Expansion Premises X
Interim rental car facilities
relocation X
Permanent rental car facilities
relocation X X
New employee parking lot X
Deicing pads X
Hydrant fueling system and pits X
2. City has introduced an inducement resolution to City Council
to provide for the reimbursement to CAL for its eligible
upfront financing costs from the proceeds of SRBs and GARBs.
City and CAL currently contemplate passage of such resolution
by April 7, 1997. In any event, City agrees to take all
reasonable steps necessary to protect for reimbursement out of
the tax-exempt GARB or SRB proceeds, as applicable, all
eligible funds expended by CAL with respect to CAL's CLE
Program. If such inducement resolution is not passed by June
2, 1997, or if such eligible funds expended are not so
protected, CAL shall have the right to terminate this
Memorandum of Understanding, in which event the provisions of
Section VII.B.3. below shall apply.
3. City shall work cooperatively with CAL to issue SRBs in
accordance with CAL's scheduling needs to finance and
reimburse CAL's upfront and other project expenditures in
connection with those elements of CAL's CLE Program which are
intended to be funded by SRBs as set forth in this Section
III.B. CAL shall have the financial responsibility to pay
debt service on such SRBs.
4. In the event that City shall fail to take any action
reasonably necessary to cause the SRBs to be issued by the
date which is six (6) months following CAL's written request
for such bonds to be issued, despite CAL having taken
reasonably in advance of such date all actions necessary on
its part in connection with such bond issuance, and provided
that CAL shall not then be in default under this Memorandum of
Understanding as described in Section VII.A.1. below, CAL
shall have the right to terminate this Memorandum of
Understanding, in which event the provisions of Section
VII.B.3. below shall apply.
5. The SRBs will not be secured by any assets of City, and the
SRB issuance shall be subject to the following constraints:
Bond Amount: An amount sufficient to cover all eligible costs
associated with those elements of CAL's CLE Program which are
intended to be funded by SRBs as set forth in this Section
III.B., but not to exceed $225 million.
Term: The maximum maturity permitted by federal tax law
requirements and the length of the terms of the applicable
leases set forth in Section V below.
6. In the event the cost to complete those improvements
constituting a portion of CAL's CLE Program which are intended
to be financed with SRBs hereunder exceeds that portion of the
net proceeds of the SRBs which is available to be utilized for
such improvements, at CAL's request CAL and City shall work
cooperatively and reasonably to issue additional SRBs (to the
extent legally permissible) to complete those portions of
CAL's CLE Program. If additional SRBs cannot be issued, CAL
and City shall work cooperatively to reduce the scope of those
elements of CAL's CLE Program which are to be funded by SRBs
(the plans and specifications for which scope reduction shall
be prepared and submitted by CAL for City's approval in
accordance with Section IV.E. below) so that the same may be
completed within the net proceeds of the SRBs or to reach
another mutually acceptable course of action.
7. In the event the cost to complete those improvements
constituting a portion of CAL's CLE Program which are intended
to be financed with GARBs hereunder exceeds that portion of
the net proceeds of the GARBs which is available to be
utilized for such improvements, CAL and City shall work
cooperatively and reasonably to agree upon a supplemental
financing plan (based upon a mutually agreed revised budget)
involving issuance of additional GARBs (to the extent legally
permissible) or other funding sources (other than SRBs or CAL
credit) to complete those portions of CAL's CLE Program. If
no such supplemental financing plan can be implemented, CAL
and City shall work cooperatively to reduce the scope of those
elements of CAL's CLE Program which are to be funded by GARBs
(the plans and specifications for which scope reduction shall
be prepared and submitted by CAL for City's approval in
accordance with Section IV.E. below) so that the same may be
completed within the available net proceeds of the GARBs or to
reach another mutually acceptable course of action.
8. The principal of, interest on, and any premiums associated
with the SRBs shall not be payable from any funds of City.
9. City and CAL will negotiate in each such party's reasonable
discretion mutually agreeable terms regarding the financial
structure of the SRBs. Without limiting the foregoing, City
and CAL will work cooperatively to structure the SRB financing
so as to minimize the bond interest rates and provide for
reletting and other provisions that are consistent with
current market practices and City's operating needs.
10. City will be reimbursed from the proceeds of the SRBs for its
actual, reasonable out-of-pocket and direct dedicated labor
costs (for up to 10 full-time dedicated employees) to the
extent related to the issuance of the SRBs and the
implementation of those portions of CAL's CLE Program which
are to be funded by SRBs hereunder, including legal,
construction inspection and other consultant fees, all as
documented by City and provided to CAL; provided that City
will request such reimbursement from the SRB proceeds only to
the extent that such costs are directly associated with such
portions of CAL's CLE Program. CAL will be reimbursed from
the proceeds of the SRBs for all costs and expenses of
whatever nature which legally may be financed by tax-exempt
SRBs relating to those portions of CAL's CLE Program which are
to be funded by SRBs hereunder.
CAL will be reimbursed from the proceeds of the GARBs for its
actual out-of-pocket expenses and direct dedicated labor costs
(for up to 10 full-time dedicated employees) to the extent
related to those portions of CAL's CLE Program which are to be
funded by GARBs hereunder.
City and CAL each shall be entitled to conduct reasonable
audits of the other party's costs and expenses described in
this Section III.B.10.
11. Continuing disclosure obligations on SRBs with respect to CAL
and its operations will be CAL's responsibility. CAL shall
pay arbitrage rebate amounts with respect to the SRBs to the
extent required by law.
12. City shall authorize the GARBs contemplated hereby to be
offered for sale no later than October 31, 1997, subject to
timely MII approval and execution by CAL and City of any
applicable special facilities leases, and shall take all steps
reasonably necessary to cause the timely issuance thereof to
occur. CAL shall provide such information with respect to the
cost of CAL's CLE Program as reasonably shall be required in
order for City to issue the GARBs, including a budget to be
submitted by CAL and approved by City, which approval shall
not be unreasonably withheld, conditioned or delayed.
13. CAL will select an underwriter for the issuance of SRBs with
such selection being coordinated with (but not expressly
subject to the approval of) City. City will select an
underwriter for the issuance of GARBs with such selection
being coordinated with (but not expressly subject to the
approval of) CAL.
14. City will select bond counsel for the issuance of SRBs with
such selection being coordinated with (but not expressly
subject to the approval of) CAL. CAL shall retain its own
company counsel for the issuance of the SRBs.
15. All improvements financed with GARBs and SRBs will be the
property of City upon completion of construction, but CAL
shall have the use rights thereto set forth in this Memorandum
of Understanding. CAL will not take depreciation deductions
on such improvements financed with tax-exempt debt.
16. City shall have the right, on terms acceptable to City and CAL
in their respective reasonable discretions, to purchase from
CAL the rights to CAL's hydrant fueling system if City
incorporates the same into a larger fuel distribution system
for the Airport, in which event CAL shall pay for its fair
share of such larger system based upon system cost and use.
CAL shall not be obligated to participate in any manner in the
cost of a hydrant fueling system for Concourse A and/or
Concourse B unless City shall so purchase CAL's hydrant
fueling system and incorporate it into such a larger system.
C. REIMBURSEMENT OF CAL
1. City will reimburse CAL for CAL's upfront expenditures, in
accordance with Section III.B. above, within 60 days of the
applicable bond issuance.
2. With respect to those portions of CAL's CLE Program which are
to be funded by GARBs, such reimbursement of CAL's upfront
expenditures shall, regardless of the actual date of issuance
of the GARBs, occur no later than December 31, 1997. If such
reimbursement of CAL is not made by December 31, 1997, and
provided that CAL is not then in default under this Memorandum
of Understanding as described in Section VII.A.1. below, CAL
shall have the right to terminate this Memorandum of
Understanding, in which event the provisions of Section
VII.B.3. below shall apply. Nothing in this paragraph shall
diminish City's obligation to issue GARBs or SRBs for CAL's
CLE Program.
3. After the issuance of the GARBs, CAL shall be reimbursed for
its ongoing costs and expenses relating to those portions of
CAL's CLE Program which are to be funded by GARBs hereunder,
consistent with approved plans and specifications submitted by
CAL pursuant to Section IV.E. below and any budgets agreed
upon by City and CAL from time to time, within 30 days of
submission of invoices to City's Director, Department of Port
Control and to Project Counsel at the addresses set forth in
Section VIII below. Each such invoice shall be accompanied by
documentation reasonably sufficient to support the applicable
expenditures(s) and the allocation thereof to the GARB
proceeds.
4. After the issuance of the SRBs, CAL shall be reimbursed for
its ongoing costs and expenses relating to those portions of
CAL's CLE Program which are to be funded by SRBs hereunder
upon submission of invoices to the Trustee.
5. For all contracts related to CAL's CLE Program which are to be
funded through a combination of SRB's and GARB's, the City and
CAL shall mutually agree upon an appropriate allocation of
costs. This methodology shall reflect the respective costs of
construction for each particular area. Upon completion of
CAL's CLE Program, CAL shall perform an accounting with
respect to all such allocation matters.
6. CAL and City each shall have the right to reasonably review
the books and records of the other party relating to the
various costs described in this Section III which are to be
reimbursed from GARB proceeds (including the allocations
described in Section III.C.5. above), provided that no such
review shall delay the construction schedule or unreasonably
delay the receipt by CAL of reimbursement payments from the
proceeds of the GARBs or the SRBs.
IV. COORDINATION, DESIGN AND CONSTRUCTION OF CAL'S CLE PROGRAM
A. ENVIRONMENTAL COMPLIANCE
1. City and CAL will coordinate to obtain any legally necessary
environmental approvals, which may include the following (the
financial responsibility for these costs to be allocated in
accordance with Section III.B. above):
a. An employee parking lot relocation air quality study shall
be contracted for by CAL but coordinated closely with and
submitted to the appropriate governmental agencies by City;
b. A permanent rental car facilities relocation air quality
study shall be contracted for by CAL but coordinated
closely with and submitted to the appropriate governmental
agencies by City;
c. A Concourse D air quality study (along with any other
legally required environmental studies) and an
environmental assessment, if required, shall be contracted
for by CAL but coordinated closely with and submitted to
the appropriate governmental agencies by City; and
d. An ALP update will be contracted by City (but closely
coordinated with CAL) and submitted to the FAA by City.
2. Upon mutual agreement on scope and cost, CAL will participate
in the Airport-wide glycol collection and treatment program.
City is currently working on, and is responsible for
coordinating with Ohio EPA to define, an acceptable program
within the consent decree imposed on the Airport by Ohio EPA.
City will work cooperatively and reasonably with CAL to define
a solution to CAL's operating plans as soon as practicable
within the context of the Airport-wide glycol collection and
treatment program.
3. Notwithstanding anything herein to the contrary, CAL shall not
be responsible for any environmental contamination discovered
in connection with CAL's CLE Program to the extent that the
presence of the material resulting in the environmental
contamination was not caused by CAL's acts. City shall as
soon as reasonably practicable remediate any such
environmental contamination and charge the costs thereof to
the appropriate Airport cost center (e.g., to the cost center
for the rental car companies if the contamination relates to
a rental car site). In such event City shall exercise,
promptly and in good faith, diligent efforts to recover such
costs from the party or parties responsible for such
contamination and restore the same to the affected cost
center.
4. City promptly shall enforce to their fullest extent all rights
which City has against the rental car companies with respect
to the removal of storage tanks from, and the remediation of
any environmental contamination associated with, such
companies' sites.
5. Notwithstanding any provision of this Memorandum of
Understanding to the contrary, in the event that any of the
environmental studies reveals materially adverse conditions,
or if any other circumstances outside of CAL's reasonable
control relating to the Airport property or the construction
thereon of CAL's CLE Program are discovered, which would
substantially and materially impact the cost of, or delay the
scheduled completion by more than 18 months of, CAL's CLE
Program, CAL shall have the right to terminate this Memorandum
of Understanding and any subsequent agreements relating to
CAL's CLE Program, in which event the provisions of Section
VII.B.1. below shall apply.
6. Each party shall provide to the other party copies of all
environmental and engineering studies, inspection reports and
correspondence with state and federal governmental agencies
relating to environmental matters in connection with CAL's CLE
Program.
B. FAA COORDINATION
1. CAL shall prepare Form 7460-1 (Notice of Proposed Construction
or Alteration) and City shall submit the same to the FAA.
2. CAL shall prepare the FAA safety phasing plan and City shall
submit the same to the FAA.
3. Upon receipt of the FAA's response to the version of the ALP
which currently is under review, City shall request an update
to the ALP (which update shall be consistent with CAL's CLE
Program).
4. CAL shall contract for (and coordinate with City on) any
required air quality studies, and City shall submit the same
to the appropriate governmental agencies.
C. OHIO DOT COORDINATION
1. City shall be responsible for coordinating all highway signage
matters (including those relating to the rental car
facilities) with Ohio DOT.
2. City or a third-party tenant, as appropriate, shall be
responsible for the rental car traffic impact study.
3. City shall be responsible for all other issues involving Ohio
DOT.
D. REGULATORY DELAYS
1. If any non-City regulatory delay substantially and materially
impacts the cost of, or delays (or is jointly anticipated by
CAL and City in the exercise of each such party's reasonable
discretion to delay) the scheduled completion by more than one
year (18 months in the case of any required environmental
impact statement) of, CAL's CLE Program, CAL and City each
shall have the right to terminate this Memorandum of
Understanding and any subsequent agreements relating to CAL's
CLE Program, in which event the provisions of Section VII.B.1.
below shall apply.
2. Without limiting any other rights which CAL may have under
this Memorandum of Understanding, if any City regulatory delay
not resulting from CAL's failure to comply with this
Memorandum of Understanding substantially and materially
(which, for purposes of this Section IV.D.2., shall mean by
12% or more) impacts the cost of, or delays (or is anticipated
by CAL in the exercise of its reasonable discretion to delay)
the scheduled completion by more than one year of, CAL's CLE
Program, CAL shall have the right to terminate this Memorandum
of Understanding and any subsequent agreements relating to
CAL's CLE Program, in which event the provisions of Section
VII.B.3. below shall apply.
E. APPROVAL OF PLANS AND SPECIFICATIONS
1. Two blueline sets and one electronic copy (in Autocad 12
Windows format) of all detailed plans and specifications for
each material element of CAL's CLE Program must be submitted
to City's Department of Port Control and approved by City
prior to beginning construction, which approval shall not be
unreasonably withheld, conditioned or delayed. City shall
either approve such plans and specifications or provide
specific written objections thereto within 30 days following
submission. If the City shall fail so to respond within such
30 day period then, in addition to any other remedies which
may be available to CAL, all aspects of such plans and
specifications which are not specifically subject to the Ohio
Basic Building Code shall be deemed to have been approved by
City.
2. Each such submission shall include information reasonably
sufficient to permit City to evaluate the impact of the
proposed element on CAL's CLE Program as a whole.
3. If City does so object to such a submission by CAL, the
parties shall negotiate in good faith to reach a mutually
acceptable resolution within no more than 60 days of the
original submission.
4. Any material revision(s) to plans and specifications which
have been approved or deemed to have been approved by City
shall require further City approval, which approval shall be
delivered on a timely basis (consistent with the construction
schedule and the process outlined in this Section IV.E.) and
shall not be unreasonably withheld, conditioned or delayed.
5. City shall hire an appropriately qualified full-time
individual who shall be dedicated exclusively to managing the
implementation by City of CAL's CLE Program, including without
limitation the City process of reviewing and responding to
plans and specifications submitted by CAL. The entire salary
paid by City to such individual shall be reimbursed to City
out of the proceeds of the SRBs in accordance with Section
III.B.10. above.
F. AVAILABILITY OF CONSTRUCTION SITE TO CAL
1. City and CAL expect to adhere to the following schedule for
the delivery to CAL of the site necessary for the construction
of CAL's CLE Program:
a. With respect to those areas which are not occupied by
rental car company tenants, CAL shall have continuous
access for construction purposes, subject to Section
IV.G.3. below.
b. With respect to those areas which presently are occupied by
rental car company tenants:
CAL shall make available the interim rental car
facilities in operational condition by April 15, 1997;
City shall cause those rental car company tenants which
are to be relocated to the interim rental car
facilities to vacate their existing premises by April
15, 1997;
City shall deliver full possession of such existing
premises to CAL by May 6, 1997, with all improvements
(including without limitation all aboveground and
underground storage tanks) demolished and/or removed in
accordance with all applicable laws (the foregoing
being referred to herein as "Interim Site
Availability"), and thereafter CAL shall have
continuous access to those areas for construction
purposes, subject to Section IV.G.3. below;
City shall cause the permanent rental car facilities to
be made available in operational condition by November
1, 1997;
City shall cause all of the rental car company tenants
which were not relocated to the interim rental car
facilities to vacate their existing premises by
November 1, 1997; and
City shall deliver full possession of such existing
premises to CAL by November 22, 1997, with all
improvements (including without limitation all
aboveground and underground storage tanks) demolished
and/or removed in accordance with all applicable laws
(the foregoing being referred to herein as "Permanent
Site Availability"), and thereafter CAL shall have
continuous access to those areas for construction
purposes, subject to Section IV.G.3. below.
2. In the event that Interim Site Availability or Permanent Site
Availability does not occur by the applicable date set forth
in Section IV.E.1.b. above, the dates set forth in Sections
IV.G.5.c. and V.E.1. below shall be extended by the number of
days beyond such applicable date that it takes for such event
actually to occur.
3. In the event that Interim Site Availability does not occur by
the date which is 5 months following the date on which CAL
makes available the interim rental car facilities in
operational condition, CAL shall have the right to terminate
this Memorandum of Understanding, in which event the
provisions of Section VII.B.1. below shall apply. In the
event that Permanent Site Availability shall not occur by June
1, 1998 (subject to (a) CAL having performed all actions
required of it under this Memorandum of Understanding in
connection with the permanent rental car facility, (b) force
majeure, (c) non-City regulatory delays, and (d) any binding
court order precluding the delivery of such site to CAL), CAL
shall have the right to terminate this Memorandum of
Understanding, in which event the provisions of Section
VII.B.3. below shall apply.
G. CONSTRUCTION ACTIVITIES
1. CAL will be responsible for the design and, other than the
permanent rental car facilities, the construction of CAL's CLE
Program, including utilities to the site and concession space.
The contract which CAL enters into for the design of the
permanent rental car facilities shall be assignable to City at
no additional cost to City. CAL shall include in the design
team for any concourse improvements which constitute a portion
of CAL's CLE Program a design consultant designated by City to
ensure the consistency of design with the other Airport
concourses.
2. City will be responsible for the construction of the permanent
rental car facilities.
3. CAL's construction activities shall not unreasonably interfere
with the business operations of other tenants at the Airport
without City's prior consent. Notwithstanding the foregoing,
City and CAL acknowledge that the interim and permanent
relocation of the rental car company tenants will by their
nature necessarily result in some interference with such
tenants' business operations.
4. The quality of the interior elements of CAL's CLE Program
shall be at least comparable with that of the existing
interior Concourse C improvements. The exterior finish of new
Concourse D shall be of a quality at least comparable to that
of existing Concourses A, B and C.
5. CAL will enter into construction contracts subject to the
provisions of this Memorandum of Understanding and the
following conditions:
a. All construction plans and specifications will be subject
to the review and approval of City in accordance with
Section IV.E. above, which approval must be received prior
to the start of construction;
b. CAL's contractors will post such payment and performance
bonds and provide such insurance coverages as shall be
reasonably specified by CAL or required by applicable law;
and
c. All construction of Concourse D will be in accordance with
a schedule established by CAL and coordinated with City,
which schedule currently is contemplated to be consistent
with the schedule set forth in Attachment E, but in no
event shall Concourse D be completed later than December
31, 2000, subject to force majeure and/or regulatory
delays.
6. City will assist CAL in obtaining all required building and
other permits on an expedited basis.
7. City shall hire a representative/construction inspector and an
accounting/audit consultant to work on CAL's CLE Program.
Such parties shall be involved throughout construction and
shall be permitted reasonable access to plans, specifications
and other project information. Project progress meetings
involving City's representative/construction inspector will be
held on a regular basis. The cost of such parties' services
shall be allocated between the proceeds of the SRBs and the
GARBs in a manner consistent with this Memorandum of
Understanding.
8. All construction in connection with CAL's CLE Program shall be
subject to:
a. State of Ohio prevailing wage requirements;
b. City's MBE/FBE goals of 30% MBE and 10% FBE for design and
construction contracts; provided, however, that contracts
for goods and services for which there is no qualified
MBE/FBE provider, as determined in consultation with City's
Director of Office of Equal Opportunity, shall not be
subject to such goals (based upon CAL's experience, CAL
believes that contracts which will be so excluded from such
goals will include, by way of example and not limitation,
those for passenger loading bridges and baggage conveyor
systems);
c. The Competitive Bidding Procedures for Public and Nonpublic
Areas set forth in Attachment F attached hereto and made a
part hereof by this reference;
d. City's Equal Opportunity Clause (Section 187.11 of the
Codified Ordinances); and
e. A City residency goal of 35% for construction new hires.
9. With respect to utilities:
a. CAL will construct and install all utilities required on
Airport property for CAL's CLE Program, including HVAC,
electrical connections, water facilities and sanitary sewer
facilities;
b. CAL will be financially responsible (subject to
reimbursement from SRBs) for the costs for all utilities
within its leasehold and City will be responsible for the
costs to bring the utilities to the leasehold site; and
c. CAL will be responsible for relocating all underground
utilities affected by CAL's CLE Program; these costs will
be paid for 100% by GARBs for any such relocation in
preferential leased areas and will be paid for 50% by GARBs
and 50% by SRBs for any such relocation within exclusive
leased areas.
10. The cost of any modifications to facilities or building
maintenance systems on Concourse C needed to accommodate
Concourse D shall be funded through a combination of SRBs and
GARBs and shall be allocated in accordance with Section
III.C.5. above. City and CAL will mutually agree upon the
standards of such improvements.
11. CAL shall indemnify and hold harmless City for all loss, cost,
damage, or expense, including reasonable attorneys fees,
arising out of claims for personal injury or property damage
arising out of or relating in any way to the construction of
CAL's CLE Program by CAL or CAL's employees, agents or
contractors, except to the extent caused by the acts or
omissions of City or its agents or contractors.
V. CAL/CITY LEASE MATTERS
A. CAL LEASED PREMISES
1. CAL's leased premises at the Airport relating to CAL's CLE
Program shall consist of:
a. Existing Premises: CAL's existing Agreement and Lease
(City Contract No. 38171) dated as of May 15, 1987 (as the
same has been amended, the "Original Agreement") covering
certain portions of the Airport (the "Existing Premises")
shall remain in full force and effect and is not modified
or extended by implication by this transaction.
b. Existing Special Facilities Premises: The Special
Facilities Lease covering certain portions of the Airport
(the "Existing Special Facilities") shall remain in full
force and effect and is not modified or extended by
implication by this transaction.
c. Expansion Premises: The Expansion Premises to be financed
by SRBs shall be leased to CAL on an exclusive basis on a
term coterminous with the existing Special Facilities Lease
Agreement dated as of December 1, 1989 governing certain
facilities financed with Special Revenue Bonds, Series 1990
(the "Special Facilities Lease") or such shorter period as
may be mandated by federal tax law.
d. Concourse D Premises: A satellite Concourse D which will
be constructed by CAL and leased to CAL on an exclusive
basis (with the exception of any public areas or concession
facilities), as more fully described in Section V.E. below.
e. Other Premises: All other elements of CAL's CLE Program
which are contemplated hereunder to be financed with SRBs
shall be leased to CAL on an exclusive basis for the
maximum lease term permitted by federal tax law.
B. USE OF CAL'S CLE PROGRAM IMPROVEMENTS
1. Any uses permitted within the Original Agreement will be
allowed under the same terms and conditions.
2. Any uses not permitted under the Original Agreement will be
negotiated in good faith by CAL and City to be consistent with
CAL's planned hub growth and City's reasonable need to plan
and manage the Airport in a prudent manner.
3. It is understood that Concourse D will be used primarily in
connection with passenger operations. Any material deviations
to such primary use must first be mutually agreed upon by CAL
and City.
4. Subject to the terms of this Memorandum of Understanding, City
will control use of all facilities financed by GARBs;
provided, however, that there shall be no unreasonable
interference with CAL's access to or use of such facilities or
in connection with CAL's access to and use of its exclusive
leased areas.
C. RENT FOR CAL'S CLE PROGRAM IMPROVEMENTS
1. Rent payable by CAL for CAL's CLE Program improvements shall
consist of:
a. "Bond Rent" for the new exclusive use facilities sufficient
to pay debt service and related costs on the SRBs;
b. with respect to Concourse D and the Expansion Premises,
"Basic Rent" consistent with the rate making methodology
contained in the Original Agreement; and
c. also with respect to Concourse D and the Expansion
Premises, commencing with the commencement of the term of
the Concourse D lease (as described in Section V.E.1.
below) a rates and charges reserve fund deposit in a manner
consistent with the Special Facilities Lease (e.g., not
including any SRB rent).
D. MAINTENANCE AND REPAIR OF CAL'S CLE PROGRAM IMPROVEMENTS:
1. The division of responsibilities for maintenance and repair of
the improvements resulting from CAL's CLE Program will be
consistent with Airport cost allocation methods as set forth
in the Original Agreement; provided, however, that in no event
shall total collections from all Airport tenants (including
CAL) for the costs thereof at any time exceed actual Airport
maintenance and repair costs.
2. If maintenance and repair responsibilities arise out of CAL's
CLE Program which are not covered by the Original Agreement,
those responsibilities will be negotiated in good faith by CAL
and City for the purpose of allocating appropriately those
maintenance and repair costs among the various parties engaged
in operations at the Airport.
3. CAL will be responsible for the maintenance and repair of its
hydrant fueling system; provided, however, that if City elects
to purchase from CAL the rights to CAL's hydrant fuel system
in accordance with Section III.B.16. above CAL no longer shall
be solely responsible for the ongoing maintenance and repair
of such system.
E. SPECIFIC CONCOURSE D LEASE TERMS
1. The term of the special facilities lease for Concourse D shall
be 30 years from date of beneficial occupancy (in no event
later than December 31, 1999, subject to force majeure,
regulatory delays and the provisions of Section IV.F.2. above)
or such shorter period as may be mandated by federal tax law.
2. The Concourse D lease shall provide to CAL (a) access to the
aircraft apron adjacent to Concourse D on a preferential basis
throughout the term of the Concourse D lease and in a manner
consistent with the Original Agreement, and (b) preferential
use of the new employee parking lot for so long as CAL shall
continue to use it for such purpose. It is understood that
CAL shall retain exclusive rights to the Concourse D gates
(excluding aircraft apron) and exclusive lease areas and, so
long as CAL is not in default under the Concourse D lease
remaining uncured following the giving of required notices and
the expiration of applicable cure periods, CAL shall not be
obligated to make such gates available to any other carriers
during the term of the Concourse D lease. This provision
shall not include aircraft apron, with respect to which CAL
shall retain preferential rights.
3. After the first 20 years of the term of the Concourse D lease,
City shall have the right to alter or reconfigure Concourse D
and the Expansion Premises to accommodate future Airport
expansion; provided, however, that no such alteration or
reconfiguration shall materially interfere with CAL's
operations or CAL's rights under the Concourse D lease. Under
no circumstances will any costs for such alteration or
reconfiguration be paid for with any of CAL's rates and
charges without CAL's express written consent.
4. If at any point after the first 20 years of the term of the
Concourse D lease CAL shall fail to utilize the Concourse D
jet gates at an average rate of at least 2 jet turns per jet
gate per day during the preceding 12 month period, except due
to events of force majeure or regulatory interruptions, City
shall have the right to demolish Concourse D to accommodate
future Airport expansion plans. In such event, (a) City shall
assume (and fully release CAL with respect to) the obligation
to pay at its sole cost the outstanding bond principal and
interest on the portion of the areas to be demolished (along
with any other costs arising by reason of the occupancy of
such areas), and (b) CAL shall have no responsibility with
respect to ongoing costs associated with the areas so
demolished. However, prior to any demolition City must
facilitate the relocation of CAL to replacement facilities at
locations and on cost terms reasonably acceptable to CAL.
Under no circumstances will the costs of the demolition be
paid for by any of CAL's rates and charges without CAL's
express written consent.
5. No assignment or subleasing of all or any portion of Concourse
D will be permitted without the consent of City's Board of
Control; provided, however, that without such consent CAL may
assign its rights to any corporation into which CAL may merge
or consolidate or which may succeed to all or substantially
all of the business of CAL; provided further, however, that
following any such permitted assignment made without the
consent of City's Board of Control, the provisions of Section
V.E.6. below shall become applicable. With respect to any
assignment or subletting which does require consent of City's
Board of Control, City's administration shall exercise its
best efforts to ensure that such consent shall not be
unreasonably withheld, conditioned or delayed. Consent by
City's Board of Control to any assignment or subletting shall
not in any way be construed to relieve CAL from obtaining such
consent to any subsequent assignment or subletting otherwise
requiring consent as described above.
6. If, following any assignment by CAL of Concourse D without the
consent of City's Board of Control to any corporation into
which CAL may merge or consolidate or which may succeed to all
or substantially all of the business of CAL, such assignee
shall fail to utilize the Concourse D jet gates at an average
rate of at least 2 jet turns per jet gate per day during any
consecutive 12 month period, except due to events of force
majeure or regulatory interruptions, City shall have the
right, but only within 12 months following the end of such 12
month period, to recapture such number of jet gates (each of
which shall include its pro rata share of all holdrooms,
loading bridges, operational support areas, and associated
administrative support areas in the terminal and concourse
areas, including but not limited to applicable ticket counter
space) in Concourse D as will reduce the remaining number of
jet gates which are subject to the Concourse D lease to a
level such that there shall have been an average rate of at
least 2 jet turns per such remaining jet gate per day during
such 12 month period. In such event, the particular jet gates
to be recaptured shall be mutually agreed upon by City and
such assignee based upon the legitimate operational needs of
both such parties, and such assignee shall have no
responsibility with respect to ongoing costs associated with
the areas so recaptured. As a condition to any such gate
recapture, City shall pay to such assignee a cash price equal
to the original amount of the actual costs previously incurred
by CAL or such assignee in connection with construction and/or
renovation of such recaptured areas less the amount of
depreciation of such costs through the date of recapture based
upon a straight-line depreciation method utilizing as the
depreciation period the useful economic life (as determined in
accordance with applicable tax law) of the applicable
improvements. Under no circumstances will the costs of any
such gate recapture or any renovation or reutilization of such
areas be paid for by any of such assignee's rates and charges
without such assignee's express written consent. For purposes
of this Section V.E.6. and Section V.E.4. above (a) the term
"jet gate" shall mean an aperture in the wall of Concourse D
specifically designed to accommodate a jet loading bridge
(provided, however, that a single such aperture to which a
dual-loading capable jet bridge is connected shall constitute
only 1 jet gate for such purposes), and (b) at no time shall
the number of jet gates in Concourse D be deemed to be less
than 12, regardless of the actual configuration of Concourse
D.
7. City shall not participate in the planning, development,
funding, financing or operations of any commercial service
passenger airport (other than Burke Lakefront Airport in
substantially its current configuration) within a 50 mile
radius of the Airport the construction of which would commence
within 15 years following the commencement date of the term of
the special facilities lease for Concourse D. In the event
that a new commercial passenger airport (except any such
airport with respect to which the City shall not have
participated in the planning (which for this purpose shall not
include merely coordinating with a third party developing a
competing airport and not acting on behalf of the City),
development, funding, financing or operations) within such
radius of the Airport shall be opened for operations during
the term of the Concourse D lease, CAL shall have the
immediate right to terminate the Concourse D lease.
8. Upon termination of the Original Agreement on December 31,
2005, CAL may continue to occupy and use such facilities in
the Airport's terminal building as are necessary for CAL to
continue to conduct its operations on Concourse D, as follows:
from and after the termination of the Original Agreement and
until the earlier of (i) the date on which CAL and City shall
have entered into a subsequent lease or other agreement
providing for CAL's occupancy and use of such facilities in
the terminal building, or (ii) the date on which the special
facilities lease for Concourse D terminates, CAL will be
entitled to occupy such facilities in the Airport's terminal
building (including, without limitation, ticket counters,
operational areas and offices, but excluding holdrooms and
passenger departure lounges) as City reasonably determines are
necessary for CAL to utilize Concourse D fully. CAL agrees
that such right does not apply to any particular facilities
and that City reserves the right and discretion (subject to
the following sentence) to fulfill this obligation by
permitting CAL to use and occupy facilities other than those
actually used and occupied by CAL prior to the termination of
the Original Agreement and to change the facilities which CAL
is permitted to so use and occupy from time to time. The
terms on which CAL shall be entitled to such occupancy and use
shall be those agreed upon by CAL and City at the time,
provided that, in the absence of such agreement, the terms
shall be no less favorable than those which City has offered
to any other scheduled airline for such occupancy and use at
the time, including without limitation terms that will not
impose unreasonable costs upon CAL to refit any such other
facilities to make the same comparable to the facilities
occupied and used by CAL prior to the termination of the
Original Agreement. This Section V.E.6. shall not modify by
implication the Special Facilities Lease.
F. EMPLOYMENT OPPORTUNITIES
1. CAL shall adopt and pursue a City residency hiring goal of
50%, a minority hiring goal of 30% and a female hiring goal of
10% for the incremental jobs (currently estimated to be the
equivalent of approximately 524 full-time jobs) created by
CAL's CLE Program. These goals shall be pursued in good
faith, but shall not apply to CAL flight crews.
G. GENERAL
1. City and CAL agree to cooperate reasonably to incorporate
other provisions in the leases associated with CAL's CLE
Program to the extent such other provisions (i) relate to the
financing terms set forth in the bond documents, (ii) are not
inconsistent with the express provisions hereof, and (iii) are
customary in similar transactions or are otherwise reasonably
requested by either party.
VI. CONCOURSE A GATES
City shall approve (a) the assignment of Gates A-2, A-4, A-6,
A-9 and A-11 from US Air to CAL, and (b) immediately
thereafter (subject to the terms of this Section VI), the
assignment of Gates A-2, A-4 and A-6 from CAL to TWA. The use
rights assigned to TWA with respect to such gates shall extend
through the duration of the term of, and generally shall be
consistent with the provisions contained in, the US Air lease
agreement which currently covers such gates. The assignment
to TWA may be subject to the satisfaction of such conditions
and requirements as may be imposed by City. CAL shall not
have any continuing interest in or rights with respect to the
gates so assigned to TWA.
VII. DEFAULT; TERMINATION OF MEMORANDUM OF UNDERSTANDING; REMEDIES
A. DEFAULT
1. If a substantial and material default by either party occurs
with respect to a substantial and material obligation under
this Memorandum of Understanding and the defaulting party
fails to cure the default within 60 days following receipt of
written notice from the non-defaulting party specifically
describing the default, the non-defaulting party shall as its
sole remedy be entitled to terminate this Memorandum of
Understanding and exercise the remedies set forth in (a)
Section VII.B.2. below if City is the non-defaulting party,
and (b) Section VII.B.3. below if CAL is the non-defaulting
party. Notwithstanding the provisions of Section VIII below,
any notice of default given by CAL to City pursuant hereto
shall be sent by U.S. registered or certified mail, postage
prepaid, return receipt requested and, in addition to the
addresses set forth in Section VIII below, any such notice
also shall be sent to:
Mayor Michael R. White
City of Cleveland
Cleveland City Hall
601 Lakeside Avenue
Cleveland, OH 44114
2. In the event of a termination of this Memorandum of
Understanding by CAL, CAL shall not withhold MII approval to
the extent required for City to be able to reimburse CAL in
the manner set forth in Section VII.B.1. or Section VII.B.3.
below, as applicable.
B. TERMINATION OF MEMORANDUM OF UNDERSTANDING
1. In the event that this Memorandum of Understanding is
terminated for any reason other than a default by CAL or City
hereunder, CAL shall be reimbursed by City for the costs to
CAL (including all out-of-pocket expenses and direct dedicated
labor costs) of all improvements constituting a portion of
CAL's CLE Program which are contemplated to be funded by GARBs
hereunder (the "GARB Improvements"), but CAL shall not be
entitled to reimbursement for the costs to CAL of those
improvements constituting a portion of CAL's CLE Program which
are contemplated to be funded by SRBs hereunder (the "SRB
Improvements").
If GARBs shall have been issued at the time of such
termination, City shall to the fullest extent legally possible
reimburse CAL for such costs of the GARB Improvements from the
proceeds of the GARBs. If GARBs shall not yet have been
issued at the time of such termination, such reimbursement of
CAL by City with respect to the GARB Improvements shall be
made from the Airport Improvement Fund, which shall be
dedicated exclusively to that purpose (as evidenced by
documentation acceptable to CAL in its reasonable discretion)
until such time as full reimbursement of CAL shall have been
made. In the event that the Airport Improvement Fund shall
cease to exist prior to CAL being fully reimbursed with
respect to the GARB Improvements, City shall so dedicate
another source of Airport funds from which City shall continue
to make to CAL reimbursement payments at a level not less than
the level of payments which previously had been made to CAL
from the Airport Improvement Fund. Until such time as full
reimbursement shall have been made to CAL with respect to the
GARB Improvements, City shall grant to CAL the right to
exclusive use of the GARB Improvements (other than the interim
and permanent rental car facilities, with respect to which CAL
shall to the fullest extent allowed by law receive a first
priority security interest, subject to any security interest
required to be created pursuant to the existing Trust
Indenture governing City's GARB issuances, in the income
stream therefrom evidenced by such documentation as CAL
reasonably may request).
Upon any such termination, City also shall grant to CAL
exclusive use rights with respect to the SRB Improvements for
the useful economic life (as determined in accordance with
applicable tax law) of the SRB Improvements. At any time
during such CAL exclusive use period, City may repurchase such
exclusive use rights from CAL at a cash price equal to the
original amount of such costs to CAL less the amount of
depreciation of such costs through the date of repurchase
based upon a straight-line depreciation method utilizing as
the depreciation period the useful economic life (as
determined in accordance with applicable tax law) of the SRB
Improvements. City shall not be entitled to repurchase from
CAL such exclusive use rights with respect to any portion of
the SRB Improvements without at the same time also
repurchasing from CAL such exclusive use rights with respect
to the remainder of the SRB Improvements (other than CAL's
hydrant fueling system).
2. In the event that this Memorandum of Understanding is
terminated by City as the result of a default by CAL
hereunder, CAL shall not be entitled to reimbursement for the
costs of the GARB Improvements or the SRB Improvements. To
the extent that CAL shall have been reimbursed from GARB
proceeds prior to the date of such termination, CAL shall pay
or cause to be paid on or before December 31, 2005 the
allocable portion of the GARBs the proceeds of which shall
have been so disbursed to CAL. Upon any such termination,
City shall grant to CAL exclusive use rights with respect to
the GARB Improvements (other than the interim and permanent
rental car facilities, with respect to which CAL shall to the
fullest extent allowed by law receive a first priority
security interest, subject to any security interest required
to be created pursuant to the existing Trust Indenture
governing City's GARB issuances, in the income stream
therefrom evidenced by such documentation as CAL reasonably
may request) and the SRB Improvements for the useful economic
life (as determined in accordance with applicable tax law) of
the GARB Improvements and the SRB Improvements, as applicable.
At any time during such CAL exclusive use period, City may
repurchase such rights from CAL at a cash price equal to the
original amount of such costs to CAL less the amount of
depreciation of such costs through the date of repurchase
based upon a straight-line depreciation method utilizing as
the depreciation period the useful economic life (as
determined in accordance with applicable tax law) of the
applicable improvements. City shall not be entitled to
repurchase from CAL such exclusive use rights with respect to
any portion of the SRB Improvements or the GARB Improvements
without at the same time also repurchasing from CAL such
exclusive use rights with respect to the remainder of the SRB
Improvements (other than CAL's hydrant fueling system) and the
GARB Improvements.
3. In the event that this Memorandum of Understanding is
terminated by CAL as the result of a default by City
hereunder, City shall reimburse CAL for all of the costs
(including all out-of-pocket expenses and direct dedicated
labor costs) incurred by CAL in connection with the GARB
Improvements and the SRB Improvements. Upon any such
termination, City shall grant to CAL exclusive use rights with
respect to the GARB Improvements (other than the interim and
permanent rental car facilities, with respect to which CAL
shall to the fullest extent allowed by law receive a first
priority security interest, subject to any security interest
required to be created pursuant to the existing Trust
Indenture governing City's GARB issuances, in the income
stream therefrom evidenced by such documentation as CAL
reasonably may request) and the SRB Improvements for the
useful economic life (as determined in accordance with
applicable tax law) of the GARB Improvements and the SRB
Improvements, as applicable. At any time during such CAL
exclusive use period, City may repurchase such rights from CAL
at a cash price equal to the original amount of such costs to
CAL less the amount of depreciation of such costs through the
date of repurchase based upon a straight-line depreciation
method utilizing as the depreciation period the useful
economic life (as determined in accordance with applicable tax
law) of the applicable improvements. City shall not be
entitled to repurchase from CAL such exclusive use rights with
respect to any portion of the SRB Improvements or the GARB
Improvements without at the same time also repurchasing from
CAL such exclusive use rights with respect to the remainder of
the SRB Improvements and the GARB Improvements.
If GARBs shall have been issued at the time of such
termination by CAL, City shall to the fullest extent legally
possible reimburse CAL for such costs of the GARB Improvements
and the SRB Improvements from the proceeds of the GARBs.
If GARBs shall not yet have been issued at the time of such
termination by CAL, City shall to the fullest extent legally
possible proceed promptly to issue GARBs and reimburse CAL for
such costs of the GARB Improvements and the SRB Improvements
from the proceeds thereof. Until such time as City shall have
fully reimbursed CAL, reimbursement payments with respect to
the GARB Improvements and the SRB Improvements shall be made
by City to CAL from the Airport Improvement Fund, which shall
be dedicated exclusively to reimburse CAL (as evidenced by
documentation acceptable to CAL in its reasonable discretion)
until such time as full reimbursement of CAL shall have been
made. In the event that the Airport Improvement Fund shall
cease to exist prior to CAL being fully reimbursed with
respect to the GARB Improvements and the SRB Improvements,
City shall so dedicate other sources of Airport funds from
which City shall continue to make to CAL reimbursement
payments at a level not less than the level of payments which
previously had been made to CAL from the Airport Improvement
Fund.
C. LIMITATION OF DAMAGES
1. In no event shall either party be liable to the other party
for any special, incidental, indirect, punitive, reliance or
consequential damage (including without limitation lost
profits, revenues, or economic or business development
opportunities), whether foreseeable or not, as a result of any
breach of any of the provisions of this Memorandum of
Understanding.
2. In the event of a termination of this Memorandum of
Understanding, neither party shall be liable to the other
party for (a) any of the other party's internal administrative
expenses incurred, or any interest on any funds expended, in
connection herewith, or (b) any amounts other than actual
out-of-pocket expenses incurred by the non-defaulting party as
a direct result of the breach and such termination resulting
therefrom.
D. GENERAL
1. The foregoing provisions of this Section VII shall survive the
termination of this Memorandum of Understanding, unless
definitive agreements are executed as contemplated hereby, in
which event the terms thereof shall control.
2. For purposes of this Memorandum of Understanding, the term
"preferential use" shall mean use by CAL on a priority basis
over all other users in connection with all of CAL's airline-
wide scheduled and associated irregular operations.
VIII. NOTICES
All notices, requests and other communications under this
Memorandum of Understanding shall be in writing and shall be
deemed given (a) when made by personal delivery, (b) one day
after being sent by a nationally recognized overnight courier
for next day delivery, or (c) three days after being sent by
U.S. registered or certified mail, postage prepaid, return
receipt requested, in any such case addressed as follows:
If to CAL: Continental Airlines, Inc.
Suite 1401
2929 Allen Parkway
Houston, TX 77019
Attn: Holden Shannon
Staff Vice President
Corporate Real Estate
with a copy to: Continental Airlines, Inc.
2929 Allen Parkway, Suite 2010
Houston, TX 77019
Attn: Chief Financial Officer
General Counsel
If to City: William F. Cunningham, Jr.
Director, Department of Port Control
Cleveland Hopkins International Airport
5300 Riverside Drive
Cleveland, OH 44135
with a copy to: Sharon Sobol Jordan, Esq.
Director, Department of Law
Cleveland City Hall
Room 106
601 Lakeside Avenue
Cleveland, OH 44114
and a copy to: Frederick R. Nance, Esq.
Project Counsel
Squire, Sanders & Dempsey
Society Center
127 Public Square
Suite 4900
Cleveland, OH 44114
IX. NO THIRD PARTY BENEFICIARIES
1. This Memorandum of Understanding is for the sole benefit of
CAL and City and their respective permitted successors and
assigns, and shall not be construed as granting rights to any
person or entity other than those parties or as imposing upon
either such party any obligation to any person or entity other
than the other party hereto.
X. COUNTERPARTS
1. This Memorandum of Understanding may be executed in multiple
counterparts, each of which shall be deemed an original, but
all of which together shall constitute the same instrument.
Exhibit I
1997 Concourse Expansion Budget
Exhibit J
GARB Improvements
(The following general descriptions of the GARB Improvements, as
well as the attached diagrams, are subject to change through the
normal course of submission and approval of plans and
specifications pursuant to this Agreement.)
Exhibit J-1
Concourses C & D Public Areas
and
Concourse D Concession Areas
The proposed Concourse D will include certain space for concessions
(currently estimated to be approximately 3,739 square feet), public
circulation, public toilet rooms, drive-through lanes, and certain
building support systems. (See Exhibit C for the allocation of the
costs of certain building support systems as between Bonds and
GARBs.)
The proposed public tunnel, currently estimated to be approximately
27,450 square feet and to include moving sidewalks, will be
constructed between the existing Concourse C and the proposed
Concourse D.
The following three pages are attached for the purpose of generally
depicting the dimensions and locations of the above-described
improvements.
Exhibit J-2
Certain Utilities
New underground utility feeds will be required for Concourse D and
the tunnel between Concourses C & D. Certain utility lines will be
relocated to accommodate construction. Plans for utility
construction and relocation are currently contemplated to include
the following:
- - Water - A 12' water line and a 6' water line will be relocated
to accommodate the construction of the tunnel. The 12' line
will provide service for the new concourse. The water systems
will take adequate account of fire protection.
- - Gas - An existing 4' gas service line will be disturbed during
construction and will be replaced. An 8' gas line on S.R. 237
will provide gas service for the new Concourse D.
- - Sanitary Sewer - A 6' sanitary force main will be relocated to
accommodate the construction of the tunnel. The sanitary
outlet for Concourse D will be connected to this relocated
main.
- - Storm Sewer - A 56' to 72' storm sewer will be relocated for
the construction of the tunnel. The relocated pipe will be
installed and constructed to meet FAA requirements and
applicable drainage, spillage and storage requirements.
- - Electrical - New feeders and necessary duct work will be
provided for the new Concourse D. Electrical capacity (in
number of feeders) will be a minimum of twice the connected
load so that a redundant feed is in operation.
The following two pages are attached for the purpose of generally
depicting the dimensions and locations of the utilities
improvements.
Exhibit J-3
Aircraft Ramp & Other Aircraft Paving
The existing taxilane and apron areas adjacent to Concourse C will
be expanded north to the exit road, east to S.R. 237 and south to
Five Points Road. The C Concourse Ramp Taxilane will be widened to
incorporate what is currently known as "Pad 3" (which pad is also
part of this GARB Improvement) and a single taxilane for regional
jets will be constructed to the south and east of Concourse D. The
following page is attached for the purpose of generally depicting
the location of Pad 3 and the relevant ramp areas and taxilanes.
Exhibit J-4
Permanent Rental Car Facilities
Consolidated rental car facilities will be constructed on the
"North Properties" area of the Airport and will be designed to
accommodate those rental car companies offering rental car services
at the Airport. The following three pages are attached to depict
the general design of the proposed consolidated rental car
facilities.
Exhibit J-5
New Employee Parking Lot
An approximately 1200-space paved parking area will be built on the
west side of the airfield known as the "Sundorph" site. The
facility will be equipped with asphalt paving, fencing, lighting,
access control, and bus shelters. The following two pages are
attached to depict the general design and approximate location of
the proposed lot.
Exhibit J-6
Triturator
A triturator, sized comparably in capacity to that on Concourse C,
will be built on the apron level of Concourse D, with appropriate
access, connections, accessories, and vehicle door openings.
Access will be from the west side, between Concourses C & D. The
following page is attached to depict the proposed location of the
triturator.
Exhibit J-7
Outbound Bag Room, Bag Claim & Security Check Point Expansion
in the Terminal Building
As depicted on the following two pages, improvements located in the
Terminal Building are proposed to include an outbound bag room (of
approximately 9,600 square feet), additional expansion above the
bag room (of approximately 2,800 square feet), bag claim expansion
(of approximately 6,000 square feet), and security check point
expansion (of approximately 3,600 square feet).
Exhibit K
Letter Agreement
October 28, 1997
VIA TELECOPIER
Holden Shannon, Vice President
Corporate Real Estate
Continental Airlines, Inc.
2929 Allen Parkway
P.O. Box 4607
Houston, Texas 77210-4607
Re: CAL MII Approvals in Consideration of City AIP
and PFC Funding Commitments, Cleveland Hopkins
International Airport
Dear Holden:
This letter is to memorialize the agreements between the City of
Cleveland and Continental Airlines, Inc. (CAL) with respect to
capital projects to be undertaken by the City, the funding of
those projects, and related matters.
PFC Funding
The City has agreed that it will apply 40% of the revenues from
passenger facility charges (PFCs) collected at Cleveland Hopkins
International Airport ("Hopkins") from the year 2000 through the
year 2019 to the payment of debt service on the City's general
airport revenue bonds (GARBs) issued for the capital projects
identified in the attached Exhibit A and Exhibit B. The City
will allocate those PFC revenues to eligible airfield project
costs identified in Exhibit A and Exhibit B. Those collections
will be accumulated during each year and deposited in the
subsequent year to offset the expense that would otherwise be
payable from airline landing fees.
On the basis of passenger forecasts provided by CAL, we currently
project the 40% PFC collections over twenty years to amount to
approximately $197 million, assuming a $3 PFC and subject to the
City electing to apply for such funds, the FAA actually approving
their collection, and the eligibility of projects for PFC
funding. The actual amount of PFC collections may be higher or
lower than the projected $197 million; the commitment is for 40%
of actual collections from the amount of PFCs actually imposed,
regardless of the PFC level per passenger that is actually
charged.
In the event the Special Facilities Lease Agreement is
terminated, the City's agreement to apply PFC revenues to the
payment of debt service, as described above, shall cease.
MII Support
In consideration of this PFC commitment by the City, CAL has
agreed to unconditionally provide MII approval for the following
projects (collectively, the "Capital Projects"), subject to the
110% cap on the Phase II projects (as described below): (i) the
capital projects listed in Exhibit A under the caption "1997 MII
Request" and approved by Continental on August 11, 1997 in
response to the June 27, 1997 MII submission to CAL and the other
signatory airlines presented at the July 31, 1997 meeting (the
"1997 MII Request"), then estimated to cost approximately
$266,188,000; (ii) two projects identified subsequent to the 1997
MII Request that the City seeks to include in the 1997 GARB
financing, consisting of the runway lighting improvements and CAL
outbound baggage expansion described in Exhibit B (the "1997
Supplemental MII Request"), estimated to cost $8,726,000; (iii)
the additional capital projects listed in Exhibit A under the
caption "Phase 2 CIP (partial list)", estimated to cost
approximately $132,446,000, (the "Phase II projects"); (iv)
expenditures from the Airport Improvement Fund of up to $20
million beginning in 1998 for new infrastructure improvements
(the "Infrastructure Improvements") and (v) 22% for construction
management and contingency for the Phase II projects and
Infrastructure Improvements. CAL agrees that it will take such
actions as may be requested by the City to implement CAL's
support of the 1997 Supplemental MII Request projects, the Phase
II projects, and the Infrastructure Improvements under the
procedures required by Section 8.07 of the Agreement and Lease
between the City and Airline dated as of May 15, 1987 (the
"Original Agreement"), including the timely delivery of its vote
in support of those projects.
The City acknowledges that CAL's support for the Phase II
projects is subject to an aggregate cap of 110% for all the Phase
II projects. In the event the cost to complete these projects
exceed such 10% cap, the City will advise CAL and seek CAL's
input on its plans to reduce the costs of the Phase II projects.
AIP Funding
The City will exercise in good faith its best efforts to maximize
the Airport Improvement Program (AIP) funds available to support
projects eligible for AIP funding to a level equal to the lesser
of (i) 50% of the aggregate costs of the projects eligible for
AIP funding, or (ii) the maximum level of AIP funding for which
the projects are eligible. Such AIP eligibility shall be
determined in accordance with the Airport Improvement Program
Handbook promulgated by the FAA or as otherwise determined by the
FAA. To implement these efforts, the City has agreed to reduce
the principal amount of GARBs issued in 1997 by an amount
approximating the amount of AIP grants that CAL believes the City
might obtain ($44,876,000) for the 1997 MII Request projects.
Specifically, the City will defer the issuance of GARBs from 1997
to early 1999 for the following projects: new runway construction
($28,653,000); ROW/CEI powerline ($11,907,000); and design of
Pacific Rim runway ($4,330,000). The City also will defer a
major portion of the new roadway construction.
While the City remains committed to aggressively seeking AIP
funding for eligible projects and has already initiated
discussions with the FAA regarding a Letter of Intent, we do not
expect to be entirely successful in obtaining this level of AIP
grants in the context of the current federal funding environment.
Therefore, in the event the City does not receive this projected
level of AIP funding (approximately $45 million for the 1997 MII
Request projects), it will be necessary to issue additional bonds
(probably in early 1999) to complete the financing. This
subsequent bond issue will not require additional MII approval
because Continental provided its approval to proceed with all
projects in the 1997 MII Request on August 11, 1997. The City
will endeavor to finance such subsequent project costs in a
consolidated bond issue, currently anticipated for 1999, rather
than with a special, separate financing.
As you know, the City must certify that it has no deposit funds
sufficient to pay amounts owed under a contract before the City
can enter into a contract. It typically takes a minimum of three
months for the City to complete a general airport revenue bond
issue. Consequently, in order that construction of the approved
projects not be delayed, it may be necessary for the City to
undertake issuing another series of bonds before a final
notification of AIP funding has been received.
As noted earlier, the City has already initiated the AIP lobbying
process and has received the following guidance and feedback from
the FAA's Detroit Airport District Office and Great Lakes Region:
1. The FAA suggested that instead of submitting
multiple applications at 50% AIP participation for each eligible
project, the City should instead apply for 75% AIP funding (the
maximum permitted for Hopkins) for "big ticket" projects and, in
essence, get to the same level of AIP funding. The FAA
discouraged the City from processing numerous applications for
"extraneous" eligible projects, many of which would have low
ranking under AIP criteria and therefore a low probability for
funding.
2. The FAA wants the City to apply for a Letter of
Intent (LOI) for the three runway projects - the new 6,450-foot
runway, the extension of the 6,450-foot runway, and the Pacific
Rim runway - and bundle together the various elements of each
project. These bundled projects will receive the highest
priority for AIP funding based on the FAA's ranking criteria.
The City left open the possibility of adding more big ticket
projects to the LOI request, including the new roadway project.
3. The FAA is considering an LOI with a minimum term
of ten years whereby the City would obligate all of its
entitlement grants over this period (estimated to be about $25
million if the AIP program continues in its current form) with
the balance coming from discretionary grants.
In light of AIP eligibility restrictions and the AIP ranking
criteria which favor runway projects, we believe that the City's
changes of securing AIP funding for the 1997 MII Request would be
maximized under the FAA's preferred approach to request 75%
funding for high priority projects as illustrated below for just
the three runway project elements under the 1997 MII Request.
Project/Element Total Cost AIP @ 75%
1. New 6,450-foot runway $51,374,000 $38,531,000
2. Extension of 6,450-foot
runway (Phase I) 13,365,000 10,024,000
3. Pacific Rim Runway design 4,330,000 3,248,000
Total - 1997 MII
Request elements $69,069,000 $51,803,000
CAL AIP goal $44,876,000
Excess over CAL AIP goal $ 6,927,000
CAL agrees to support the City's application to obtain such AIP
funding.
Location of Concourse D
The location proposed by CAL for the new Concourse D, as depicted
on the informational drawing A2SI1 last revised September 2, 1997
and attached as Exhibit C is acceptable to the City, subject to
confirmation of the scale and location shown in that drawing by a
licensed surveyor retained by the City.
Once again, I wish to thank you and your team for the hard work
you have performed in reaching these agreements. We certainly
appreciate the investment in Cleveland that these agreements
represent.
Please indicate CAL's acceptance and agreement as to the matters
herein by signing on behalf of CAL in the space provided below
and returning this letter to me.
Sincerely,
_____________________________ _________________________
William F. Cunningham, Jr., A.A.E. Holden Shannon,
Director of Port Control Vice President
Continental Airlines, Inc.
cc: Mayor Michael R. White (w/enc.)
Kenneth G. Silliman, Esq. (w/enc.)
Eric N. Waldron, A.A.E. (w/enc.)
Rachel Nigro Scalish, Esq. (w/enc.)
Frederick Nance, Squire, Sanders & Dempsey (w/enc.)
Wayne Herndon, Continental Airlines, Inc. (w/enc.)