EXHIBIT 10.1
CLEVELAND HOPKINS INTERNATIONAL AIRPORT
SPECIAL FACILITIES LEASE AGREEMENT
WITH
CONTINENTAL AIRLINES, INC.
_______________________________________
$76,320,000
City of Cleveland, Ohio
Airport Special
Revenue Bonds, Series 1990
(Continental Airlines, Inc. Project)
________________________________________
Dated as of
December 1, 1989
________________________________________
Calfee, Halter & Griswold
Bond Counsel
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Section Page
1.01 Basic Rent 2
1.02 Basic Rent Reserve 2
1.03 Basic Rent Reserve Fund 2
1.04 Bond Rent 2
1.05 Bonds 2
1.06 Commencement of Occupancy 2
1.07 Construction Fund 2
1.08 Continental Special Facilities 2
1.09 Continental Special Premises 2
1.10 Cost of the Facilities 2
1.11 Defeasance Date 3
1.12 Event of Default 3
1.13 Exclusive Continental Special Premises 3
1.14 Hangar Lease 3
1.15 Hangar Site 3
1.16 Hangar Site Improvements 3
1.17 Improvements 3
1.18 Indenture 3
1.19 Non-exclusive Continental Special Premises 3
1.20 Off-Site Improvements 3
1.21 On-Site Improvements 3
1.22 Qualified Successor Lessee 3
1.23 Series 1990 Bonds 4
1.24 Termination Date 4
1.25 Trustee 4
ARTICLE II
RIGHTS, PRIVILEGES AND PREMISES
2.01 Lease and Use of Continental Special Premises 5
2.02 Space in and Adjacent to Terminal Building 6
2.03 Access 6
2.04 Use by Airline 7
2.05 Concessions 8
ARTICLE III
OCCUPANCY; TERM
3.01 Term 10
3.02 Relationship to Other Agreements 10
ARTICLE IV
QUIET ENJOYMENT 14
ARTICLE V
ISSUANCE OF BONDS; CONSTRUCTION OF IMPROVEMENTS;
PAYMENT OF COSTS OF THE IMPROVEMENTS
5.01 Issuance of Bonds; Deposit of Bond Proceeds;
Deposit of the Airline's Funds into
the Special Funds 15
5.02 Disbursements from the Construction Fund 15
5.03 Construction of Improvements 15
5.04 Subsequent Improvements by Airline 17
5.05 Agreements with Contractors 17
ARTICLE VI
MAINTENANCE AND OPERATION OF
CONTINENTAL SPECIAL FACILITIES
6.01 Operation and Maintenance of Continental
Special Facilities 18
6.02 Maintenance by City 18
6.03 Heating and Cooling 18
6.04 Lighting and Public Areas 18
6.05 Water and Sanitary Sewer 19
6.06 Limitation on Obligation 19
ARTICLE VII
BASIC RENT, CHARGES AND FEES; BOND RENT
7.01 Payment of Rentals, Charges and Fees 20
7.02 Basic Rent 20
7.03 Annual Adjustment of Basic Rent 21
7.04 Basic Rent Reserve 22
7.05 Bond Rent 23
7.06 Utilities 25
7.07 Concession for Sale of Alcoholic Beverages 25
7.08 Additional Payments by City 26
ARTICLE VIII
[LEFT BLANK INTENTIONALLY] 27
ARTICLE IX
RULES AND REGULATIONS; COMPLIANCE WITH LAWS;
ADDITIONAL COVENANTS
9.01 Rules and Regulations 27
9.02 Compliance with Laws 27
9.03 Ramp Usage and Servicing 28
9.04 Noise Abatement 29
ARTICLE X
INDEMNIFICATION; DAMAGE OR
DESTRUCTION; INSURANCE
10.01 Indemnification 30
10.02 Liability Insurance 30
10.03 Damage or Destruction 31
10.04 Waiver of Subrogation; Property Insurance 32
ARTICLE XI
EMINENT DOMAIN 33
ARTICLE XII
DEFAULTS
12.01 Events of Default 34
12.02 Remedies 35
12.03 Effect of Termination 35
12.04 Additional Rights of City 36
ARTICLE XIII
ASSIGNMENT AND SUBLETTING
13.01 Assignment 37
13.02 Requests for Assignment 37
13.03 Filing of Assignment 37
13.04 Application of Rent 38
ARTICLE XIV
AIRLINE'S RIGHT TO TERMINATE 39
ARTICLE XV
DELIVERY OF POSSESSION 40
ARTICLE XVI
HOLDING OVER 41
ARTICLE XVIII
MISCELLANEOUS PROVISIONS
17.01 No Personal Liability 42
17.02 Tax-Exempt Status of Bonds 42
17.03 Taxes 42
17.04 Interpretation of Agreement 43
17.05 Notices 43
17.06 Entire Agreement; Amendment 44
17.07 Waiver 44
17.08 Non-Discrimination 44
17.09 Force Majeure 45
17.10 Severability 45
17.11 Headings 46
17.12 Non-Exclusivity 46
17.13 Approvals 46
17.14 Binding Nature 46
17.15 Inspection 46
17.16 Incorporation of Exhibits 46
17.17 Public Contract 47
17.18 Memorandum of Lease 49
17.19 Continuation of Warranties 49
17.20 No Agency 49
SIGNATURES 50
EXHIBIT A - Original Lease
EXHIBIT B - Continental Special Premises
EXHIBIT C - On-Site Improvements
EXHIBIT D - Hangar Site Improvements
EXHIBIT E - Off-Site Improvements
EXHIBIT F - Maintenance Responsibilities
EXHIBIT G - Noise Abatement Procedures
THIS SPECIAL FACILITIES LEASE AGREEMENT (the
"Agreement"), made and entered into this 1st day of December, 1989,
by and between the CITY OF CLEVELAND, a municipal corporation and
political subdivision of the State of Ohio (the "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").
WITNESSETH:
WHEREAS, City owns and operates Cleveland Hopkins
International Airport (the "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 said Ordinance as Exhibit "A" (the "Master Agreement")
with certain airlines, which agreements and leases would set forth
the terms on which such 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 said Ordinance No. 2551-A-82, City
entered into an Agreement and Lease, dated as of May 15, 1987 (the
"Original Lease"), with Airline; and
WHEREAS, the Original Lease and 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 have City issue Special Revenue Bonds for the purpose of
financing certain of the costs thereof; and
WHEREAS, pursuant to Ordinance No. 2729-89, passed by the
Council of City on December 11, 1989 (the "Authorizing Ordinance"),
the Council of City authorized City, among other things, to execute
and deliver this Special Facilities Lease;
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:
1.01 "Basic Rent" means the rent payable by Airline
pursuant to Article VII hereof.
1.02 "Basic Rent Reserve" means: (i) during the period
preceding the first adjustment in the Basic Rent pursuant to Sec-
tion 7.03 hereof, the amount of Basic Rent which would be payable
during the first full calendar year following the Commencement of
Occupancy if the amount thereof were based upon the numbers of
square feet of space in various categories set forth in
Section 7.02 hereof and the respective rents per square foot set
forth therein; and (ii) from and after the first adjustment in the
Basic Rent pursuant to Section 7.03 hereof, the amount of Basic
Rent payable during the then current calendar year.
1.03 "Basic Rent Reserve Fund" means the Fund of that
name established pursuant to Section 7.04 hereof.
1.04 "Bond Rent" means the rent payable by Airline
pursuant to Section 7.05 hereof.
1.05 "Bonds" means City of Cleveland, Ohio, Airport
Special Revenue Bonds, Series 1990 (Continental Airlines, Inc.
Project), dated December 1, 1989.
1.06 "Commencement of Occupancy" means with respect to
each of the various categories of Continental Special Premises set
forth in Section 7.02 hereof, the date, following the completion
date of the On-Site Improvements located in the applicable
category, on which the Airline commences to occupy said category of
the Continental Special Premises.
1.07 "Construction Fund" means the "Construction Fund" as
defined in the Indenture.
1.08 "Continental Special Facilities" means the
Continental Special Premises and the Off-Site Improvements.
1.09 "Continental Special Premises" means the real
property described in Exhibit B hereto and the On-Site
Improvements, exclusive of any concession space the construction
cost of which was paid to Airline by City pursuant to Section 2.05
hereof.
1.10 "Cost of the Facilities" means "Cost of the
Facilities" as defined in the Indenture.
1.11 "Defeasance Date" means the date on which all the
Bonds shall have been paid and discharged or shall be deemed paid
and discharged for purposes of and in accordance with the
Indenture, and the Indenture shall have be with its terms.
1.12 "Event of Default" means any of the circumstances
designated as such in Section 12.01 hereof.
1.13 "Exclusive Continental Special Premises" means the
areas of the Continental Special Premises described in Section
2.02(b) hereof, being generally those premises which are used and
controlled exclusively by Airline to service its passengers,
customers and operations and not open to, available for, or used by
the general public and/or by the passengers, customers or
operations of other airlines or persons.
1.14 "Hangar Lease" means the Lease, dated as of the date
of original issuance and delivery between City and Airline with
respect to the real property on which the Hangar Improvements are
to be located.
1.15 "Hangar Site" means the real property comprising the
leased premises under the Hangar Lease.
1.16 "Hangar Site Improvements" means the Improvements to
the Hangar described in Exhibit D hereto.
1.17 "Improvements" means the On-Site Improvements and
the Off-Site Improvements.
1.18 "Indenture" means the Trust Indenture, dated as of
December 1, 1989, between City and the Trustee.
1.19 "Non-exclusive Continental Special Premises" means
those areas of the Continental Special Premises not described in
Section 2.02(b) hereof, being generally those premises which are
not used and controlled exclusively by Airline to service its
passengers, customers and operations and which are open to,
available for, and used by the general public and/or by the
passengers, customers or operations of other airlines or persons.
1.20 "Off-Site Improvements" means the Hangar Site
Improvements and the other improvements described in Exhibit E
hereto, to be made at the Airport, but not on or at the Continental
Special Premises.
1.21 "On-Site Improvements" means the improvements
described in Exhibit C hereto, to be made on or at the Continental
Special Premises.
1.22 "Qualified Successor Lessee" means Qualified
Successor Lessee, as defined in the Indenture.
1.23 "Series 1990 Bonds" means the "Series 1990 Bonds" as
defined in the Indenture.
1.24 "Termination Date" means the earlier of the final
scheduled maturity of the Bonds or the date on which the
termination of this Lease occurs pursuant to Section 12.02 hereof.
1.25 "Trustee" means the "Trustee" as defined in the
Indenture.
(End of Article I)
ARTICLE II - RIGHTS, PRIVILEGES
AND PREMISES
2.01 Lease and Use of Continental Special Premises
In addition to such rights as Airline has under the
Original Lease, any agreement which may succeed or supersede the
Original 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 Premises to Airline, and Airline
agrees to lease the Continental Special Premises from City, and
City agrees that Airline shall have the right to conduct from and
at the Continental Special Premises its air transportation
activities for the carriage of persons, property and mail and to
operate an airline lounge. 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
Premises by such motor vehicles or other means of conveyance as
Airline may require as is consistent with normal airport practice.
c. The right to install at Airline's expense
identifying signs on the Exclusive Continental Special Premises,
the number, type, size, design and location of which shall all be
consistent with such graphic standards as City may from time to
time adopt. Airline shall make no such installation without the
prior written approval of City, and such right shall be subject to
City's right to lease space for advertising signs throughout the
Non-exclusive Continental Special Premises.
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 and shall not interfere with the full and proper use of the
Airport System.
e. Airline shall not install or operate pay telephones,
coin vending machines or coin-operated amusement machines and
devices in the Continental Special Premises 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 Exclusive Continental Special Premises;
provided, however, that if such company or companies choose not to
install such devices, Airline may make arrangements for installa-
tion of such devices, subject to City's standard fees and charges,
and provided Airline shall have the right to charge for the cost of
electric power used in the operation of such machines.
2.02 Space in and Adjacent to Terminal Building
a. Prior to its commencing to occupy the Continental
Special Premises, Airline shall lease the Continental Special
Premises for the purpose of constructing the On-Site Improvements
thereon.
b. From and after its commencing to occupy the
Continental Special Premises, Airline shall lease the following
Exclusive Continental Special Premises for the respective purposes
shown:
(1) Holdroom, passenger
and related space 31,500 square feet
(2) Concourse Office
and Operations 20,000 square feet
(3) Bag make up and claim 24,000 square feet
(4) Airline Lounge 6,500 square feet
The foregoing areas are more particularly delineated on
Exhibit B, attached hereto.
c. The dimensions of the areas to be occupied by
Airline are approximate only, and upon completion of the
construction of the On-Site 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 Exclusive Continental Special
Premises, and shall be the basis for determining the amount of the
Basic Rent; 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(b) hereof.
2.03 Access
a. Subject to the provisions hereof, such restrictions
as Airline may impose with respect to the Exclusive Continental
Special Premises 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 Premises and to public areas and public
facilities of the Terminal Complex.
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 deemed necessary by City.
c. All means of access provided by City pursuant to
this Section 2.03 shall, without exception, 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.
2.04 Use by Airline
In connection with the exercise of its rights under this
Agreement, Airline:
a. Shall not cause or create nor permit to be caused or
created within the Continental Special Premises 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 Premises and lawful operation by Airline
therefrom in accordance with the other provisions of this Agree-
ment, shall constitute a violation of this subsection.
b. Shall not do or permit to be done anything at or on
the Continental Special Premises 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, if any, installed or located on or within the
Continental Special Premises or the Airport.
c. Shall not do or permit to be done any act or thing
at or on the Continental Special Premises 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 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, during any twenty-four hour
period, flammable liquids within the enclosed portion of the
Continental Special Premises in excess of Airline's working
requirements during said twenty-four hour period, except in rooms
or underground tanks especially constructed for such purposes in
accordance with standards established by the National Board of Fire
Underwriters, and approved by City from the standpoint of safety.
Any such liquids having a flash point of less than 101 F. shall be
kept and stored in safety containers of a type approved by the
Underwriters Laboratories.
2.05 Concessions
If any portion of the Continental Special Premises is
approved pursuant to Section 5.03 or Section 5.04 hereof for use as
concession space (other than for an Airline Lounge), then City
shall pay or shall reimburse Airline for the cost of construction
of said concession space, and City shall make such payment or
reimbursement no later than such time as Airline is required to pay
or has paid such cost of construction. Prior to the commencement
of construction of any such space, and as a condition to Airline's
commencement of such construction hereunder, Airline shall obtain
and provide to City an estimate of the cost of construction of such
space, based upon a contractor's estimate, or such other reasonable
basis as is agreed to by Airline and City. Upon payment by City to
Airline of the cost of construction for such space, which payment
may be in the form of a credit or credits against the Basic Rent
payable by Airline hereunder or amounts due to City from Airline
under the Original Lease, such concession space shall cease to be
part of the Continental Special Facilities, and any revenues
derived therefrom shall not constitute Pledged Revenues or be
otherwise pledged as security for the payment of the Bonds except
as set forth in Section 2.01(e) hereof, the City shall have the
exclusive right to operate or grant the right to operate
concessions in such concession space and Airline shall have no
right to the revenue derived therefrom unless such right is
otherwise conferred on Airline by other agreement with City. Any
amounts from the Construction Fund applied to the costs of
construction of such space shall, to the extent paid or reimbursed
by City pursuant hereto, be paid by Airline to the Trustee for
deposit in the Construction Fund.
(End of Article II)
ARTICLE III - OCCUPANCY; TERM
3.01 Term
This Agreement shall commence upon the execution hereof
and shall terminate on the Termination Date; provided, however,
that if the Defeasance Date occurs more than one year before the
Termination Date, then on and after the Defeasance Date Airline
shall have the option to terminate this Agreement upon one (1)
year's written notice to City; and provided further, that if the
Airline vacates the Continental Special Premises subsequent to its
exercise of such option but prior to the expiration of such one-
year notice period, then City shall use its best efforts, but shall
be under no obligation, to fill the vacancy thereby created in the
Continental Special Premises for the balance of such one-year
period.
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 the Hangar Lease. No reference to the Original Lease or
the Hangar Lease herein shall be deemed an agreement of the parties
hereto to cause the Original Lease or the Hangar Lease to extend
beyond its terms in accordance with its terms.
b. The City acknowledges that Airline intends to occupy
and use the Continental Special Premises 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.
c. The City further acknowledges that the value of the
leasehold interest in the Continental 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 as are necessary for Airline to continue to
conduct its operations at the Continental Special Premises after
its rights to do so under the Original Lease have terminated.
Accordingly, the City agrees that, from and after the termination
of the Original Lease and until the earlier of (i) the date on
which Airline and the City shall have entered into a subsequent
lease or other agreement providing for Airline's occupancy and use
of such facilities, 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 and offices, but excluding holdrooms and passenger
departure lounges) as the City reasonably determines are necessary
for Airline to utilize the Continental Special Premises fully.
Airline understands, acknowledges, and agrees that its right
hereunder does not apply to any particular facilities and that the
City reserves the right and discretion 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 shall be those agreed upon by Airline and the City at the time,
provided that, in the absence of such agreement, the terms shall be
no less favorable than those which the City shall have offered to
any other scheduled airline for such occupancy and use at the time.
d. The City further acknowledges that the value of the
leasehold interest in the Continental Special Facilities acquired
hereunder by Airline will be further enhanced if Airline also
acquires hereunder the right to continue to occupy and use such
other facilities in the Terminal Complex (i.e., other than those
necessary for Airline to utilize the Continental Special Premises
fully) as it has under the Original Lease after its rights to do so
under the Original Lease have terminated. Accordingly, the City
agrees that, from and after the termination of the Original Lease
and until the earlier of (i) the date on which Airline and the City
shall have entered into a subsequent lease or other agreement
providing for Airline's occupancy and use of such other facilities,
or (ii) the date on which this Agreement terminates, Airline shall
be entitled, subject to the conditions hereinafter set forth, to
occupy or use facilities in the Terminal Complex comparable to
those used and occupied therein by Airline immediately prior to the
termination of the Original Lease. Airline understands,
acknowledges, and agrees that its right hereunder does not apply to
any particular facilities and that the City reserves the right and
discretion 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, and the City agrees that, in
exercising such right and discretion, it will not unnecessarily or
unreasonably cause the facilities made available to Airline
hereunder not to be as proximate to the Continental Special
Premises and to one another as the other facilities in the Terminal
Complex occupied by Airline under the Original Lease prior to its
termination. The terms on which Airline shall be entitled to such
occupancy and use shall be those agreed upon by Airline and the
City at the time, provided that, in the asence of such agreement,
the terms shall be no less favorable than those which the City
shall have offered to any other scheduled airline for such
occupancy and use at the time.
e. Airline's right to occupy and use facilities in the
Terminal Complex pursuant to Section 3.02.d. above shall be subject
to the condition that, at the time of such exercise, Airline shall
have met the then applicable Basic Schedule Requirement, determined
as set forth in Section 3.02.f. below.
f. (i) As used in paragraph (f)(iii) below, the
Commencement Basic Schedule Requirement shall be 12,000, being the
revenue seats daily average mutually determined by the Airline and
the City as of the date hereof.
(ii) Commencing with the calendar year
immediately preceding the year in which the Original Lease expires
(the "Expiration Year") and each and every calendar year thereafter
until the date on which Airline and City shall have entered into a
subsequent lease or other agreement in place of the Original Lease,
the Director of Port Control may ascertain the revenue seats daily
average of Airline for the Airport in accordance with paragraph
(f)(v) below, which revenue seats daily average shall be the "Basic
Schedule Requirement for the preceding calendar year", for purposes
of paragraph (f)(iii) below and shall be referred to as such.
(iii) As of January 1 of the first calendar year
following the Expiration Year, and as of January 1 of each
succeeding calendar year until Airline and City enter into a
subsequent lease or other agreement in place of the Original Lease
(A) in the event that Airline's Basic Schedule Requirement for the
immediately preceding calendar year for the Airport is less than
sixty percent (60%) of Airline's Commencement Basic Schedule
Requirement or (ii) in the event that because of reasons beyond the
control of Airline, Airline's Basic Schedule Requirements for the
immediately preceding two calendar years are less than sixty
percent (60%) of Airline's Commencement Basic Schedule Requirement,
then in either of such events and without limiting each and every
other right of termination of the City under this Agreement or
otherwise, City shall have the right, upon six (6) months' written
notice to Airline, to terminate the use by Airline of any portion
of the Airport provided to Airline pursuant to Section 3.02(d)
hereof that the Director of Port Control determines to be
underutilized by Airline. Such termination shall be effective on
the date set forth in said notice of termination. This Agreement
and the letting of all other portions of the Terminal Complex shall
continue in full force and effect.
The Director of Port Control shall give
thirty (30) days' prior notice of its intention to give the
termination notice set forth above, and it is expressly agreed that
the Director of Port Control shall not exercise the aforesaid right
of termination with respect to any portion or portions of the
Terminal Complex occupied by Airline pursuant to 3.02(d) hereof if
and for which Airline has submitted to the Director of Port Control
definite plans for the utilization of said portion or portions of
the Terminal Complex occupied by Airline pursuant to 3.02(d)
hereof; provided Airline in fact commences such use of said portion
or portions of the Terminal Complex within ninety (90) days after
the submission of the said plans.
(iv) The failure of City to exercise its right
of termination under this Section 3.02(f) during any year in which
it may have such a right shall not affect, waive or limit its right
to exercise said right of termination in any subsequent year.
(v) In the event the Director of Port Control
decides to ascertain the revenue seats daily average, it shall do
so as follows: based upon the Official Airline Guide (herein
called "the Guide"), the Director of Port Control shall ascertain
the total number of revenue seats that can be accommodated on the
aircraft equipment scheduled to be used by Airline on its published
aircraft arrivals at the Airport as set forth in the Guide during
two specified calendar weeks (Sunday through Saturday), the first
of which weeks is the one during which falls the fifteenth (15th)
day of April of the prior calendar year and the second is the one
during which falls the fifteenth (15th) day of October of the said
prior calendar year, and shall total the said number of revenue
seats which are hereinafter called "the total revenue seats" of
Airline. In determining the total revenue seats of Airline, the
total revenue seats as defined above of those Handled Airlines
(hereinafter defined), if any, of Airline who are Handled Airlines
as of the date of such determination shall be included. For
purposes of this paragraph (v), "Handled Airlines" means other
airlines for which Airline provides services from the Continental
Special Premises or the Terminal Complex.
In making said determination, the Director
of Port Control shall use the most recent configuration as supplied
by Airline with respect to the number of revenue seats that can be
accommodated on the particular aircraft equipment scheduled to be
used by Airline at the Airport. The total revenue seats of Airline
shall then be divided by fourteen, the resulting quotient being
herein called "the revenue seats daily average" of Airline.
g. The rights of Airline under Section 3.02(d) above
shall be exercisable by and for the benefit of Airline only.
Airline shall not have the right or power to assign such right or
sublet any facilities it occupies or uses pursuant to the exercise
of such right.
(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, 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, except as
otherwise provided by this Agreement, that will prevent Airline
from peaceably having and enjoying the Continental Special
Premises, together with the appurtenances, facilities, rights, li
censes and privileges granted herein.
(End of Article IV)
ARTICLE V - ISSUANCE OF BONDS; CONSTRUCTION OF IMPROVEMENTS;
PAYMENT OF COSTS OF THE IMPROVEMENTS
5.01 Issuance of Bonds; Deposit of Bond Proceeds; Deposit
of the Airline's Funds into the Special Funds
In order to provide funds for payment of the Cost of the
Facilities incurred under or in connection with this Agreement,
City agrees to authorize, issue, sell and deliver the Series 1990
Bonds, and City agrees to deposit the proceeds of the Series 1990
Bonds as provided in the Indenture.
Airline at its discretion may deposit its own funds into
the Construction Fund at any time for use for the purposes of that
Fund in accordance with the provisions of this Lease. In any
event, Airline covenants pursuant to Section 5.04 hereof to provide
to the Trustee moneys to pay that portion of the Cost of the
Facilities as may be in excess of the moneys otherwise available
therefor in the Construction Fund.
The Series 1990 Bonds are to be issued under, secured by,
and payable in accordance with the Indenture.
5.02 Disbursements from the Construction Fund
City has, in the Indenture, authorized and directed the
Trustee to use the moneys in the Construction Fund for payment of
the Cost of the Facilities.
5.03 Construction of Improvements
a. Airline covenants and agrees that it will undertake
such construction, remodeling, improvement, enlargement, furnishing
and equipping as will result in the completion of the Improvements
on or before December 31, 1992, and shall pay the cost thereof from
the proceeds of the Bonds which are available therefor and
otherwise as provided herein and in the Indenture, including
payments or reimbursement made by City to Airline for the costs of
construction of concession space pursuant to Section 2.05 hereof.
Failure by Airline to fulfill the foregoing covenant shall
constitute a default of Airline under Section 12.01 hereof and
shall give rise to all remedies of City upon a default, including,
without limitation, the right of City to terminate this Agreement.
Airline shall, at its expense and upon receipt of notification from
City that such work may be commenced, promptly commence the con-
struction of the Improvements, which improvements shall be promptly
completed, subject to the following conditions:
(1) Before the commencement of any such work,
the detailed plans and specifications shall be filed with and
approved by the Director of Port Control of City and all govern-
mental departments or authorities having jurisdiction thereover,
including, without limitation, (i) the Federal Aviation
Administration, and (ii) City Planning Commission and its Fine Arts
Committee. 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. The Director of Port Control shall approve such plans and
specifications only if the Director of Port Control determines that
the Improvements located in the Terminal Complex as planned and
specified will be consistent and compatible with the design and
decor of the Terminal Complex.
(2) Such work shall be performed in a first-
class, workmanlike manner and 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
in accordance with such plans and specifications, as 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 ninety days after its receipt of notice of completion from
Airline.
b. The Improvements, and all other alterations
additions or improvements at any time placed on, in or upon the
Continental Special Facilities, including moveable furniture,
movable personal property, and other removable trade fixtures, the
cost of which is financed in whole or in part with the proceeds of
Bonds, shall be deemed to be and become part of the realty and the
sole and absolute property of City upon completion thereof. Any
other alterations, additions improvements, or property in or upon
the Continental Special Facilities installed at the expense of
Airline, or at the expense of third parties (other than City)
leasing to Airline, shall not be deemed to become property of City
at the termination of this Agreement, and Airline shall have the
right to remove said 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 or investment credit
(within the meaning of Section 142(b)(1)(B) of the Code) with
respect to the Continental Special Facilities.
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 de
termined against Airline or City.
d. Airline shall procure and maintain effective during
construction of the Improvements and all other improvements by
Airline pursuant to this Article V, comprehensive public liability
insurance, or, if the work is to be done by an independent con-
tractor, 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, and Airline
shall defend, indemnify and hold harmless City, its officers,
agents and employees for all loss, cost, damage or expense arising
out of or relating in any way to such construction unless the same
arises out of the negligence of City, its officers and employees.
e. Prior to commencing construction or installation of
any Improvement hereunder, the Airline shall furnish or cause to be
furnished to City a bond in an amount equal to 100% of the total
cost of such construction or installation to secure its obligation
to construct and install said Improvement hereunder.
f. Upon completion of construction or installation of
all the Improvements, Airline shall, at its expense, furnish the
Director of Port Control with "as built" drawings of the
Continental Special Facilities, which drawings shall be included as
part of Exhibit B hereto.
5.04 Subsequent Improvements by Airline
Subsequent to making the Improvements as expressly
provided herein, Airline shall make no alterations, additions or
improvements to the Continental Special Facilities or other
installation on the Continental Special Facilities without the
prior written approval of City. 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 Section 5.01 hereof.
5.05 Agreements with Contractors
Unless such requirement is prohibited by law, Airline
agrees that all contractors working on the Project (as defined in
the Authorizing Ordinance) must be party to the usual and ordinary
agreement with the appropriate member union of the Cleveland
Building and Construction Trades Council.
(End of Article V)
ARTICLE VI - MAINTENANCE AND
OPERATION OF CONTINENTAL SPECIAL FACILITIES
6.01 Operation and Maintenance of Continental Special
Facilities
Airline agrees that, except to the extent that City
is required to do so pursuant to Section 6.02 hereof, Airline 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 fore
going, Airline shall: (i) at all times keep the Exclusive
Continental Special Premises 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 Exclusive
Continental Special Premises; (iv) provide and maintain toilet
facilities for the Continental Special Premises; 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.
6.02 Maintenance by City
City shall keep the Non-Exclusive Continental Special
Premises neat, orderly, sanitary and presentable, and in doing so
shall provide, with respect to the Non-Exclusive Continental
Special Premises, such maintenance and cleaning services as are
specified on Exhibit F hereto.
6.03 Heating and Cooling
Airline shall construct, install and maintain any and all
heating, cooling, and ventilation facilities necessary for
operation of the Continental Special Premises, provided that City
shall provide Airline with any chilled water needed for operation
of such heating, cooling and ventilation facilities as further
specified in Exhibit F hereto.
6.04 Lighting and Public Areas
City shall provide electricity for illumination and
shall replace lamps where appropriate in the Non-Exclusive
Continental Special Premises as further specified on Exhibit F
hereto.
6.05 Water and Sanitary Sewer
Airline shall construct and install any and all water and
sanitary sewer facilities required for operation of the Continental
Special Premises, provided that City shall be responsible for
maintaining such facilities upon their completion and as further
specified in Exhibit F hereto.
6.06 Limitation on Obligation
City shall not be obligated to perform or furnish
any other utility services whatsoever at or to the Continental
Special Premises, nor shall it be obligated to provide any utility
services hereunder if it is prevented from doing so by acts or
events beyond its control or if Airline is in default of any
payment for such services.
(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, and all additional rentals, charges, and fees
payable hereunder during the term of this Agreement. 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), 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
fifteen 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 shall be payable at
the times and in the manner set forth in Section 7.05 hereof.
7.02 Basic Rent
From and after Airline's Commencement of Occupancy of the
Continental Special Facilities, as to each of the following
categories of space in the Continental Special Premises, and
subject to annual adjustment pursuant to Section 7.03 hereof,
Airline shall pay to City as Basic Rent for each such category of
space the following sums as to the space so occupied:
(a) For 31,500 square feet of holdroom, passenger and
related space, a monthly sum computed at the rate of $2.49 per
square foot per year;
(b) For 20,000 square feet of concourse office and
operations space, a monthly sum computed at the rate of $1.87 per
square foot per year;
(c) For 24,000 square feet of bag make up, claim and
storage space, a monthly sum computed at the rate of $2.49 per
square foot per year.
(d) For 6,500 square feet of Airline Lounge, a monthly
sum computed at the rate of $1.87 per square foot per year.
All such space is more fully delineated on Exhibit A
hereto.
7.03 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 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 Exclusive Continental Special Premises shall
constitute part of a Concourse or the Terminal Building
and shall further constitute "Terminal Concourse space or
Terminal Building Space leased to a Scheduled Airline"
for the purpose only of allocating the rent due under the
Original Lease with respect to non-exclusive space and
not the costs allocable to such space.
(ii) As defined in Section 1.19 of the Original Lease,
"Concourse" shall not include the Continental Special
Premises for purposes of the Concourse Improvement Factor
referred to in Section 8.04(a)(iii) of the Original
Lease, in that the Continental Special Premises
constitute an "expansion of a Concourse built at the sole
cost and expense of a Scheduled Airline" and "Terminal
Building" shall not include the Continental Special
Premises for purposes of the Terminal Improvement Factor
referred to in Section 8.04(a)(iii) of the Original
Lease, in that the Continental Special Premises
constitute an "expansion of the Terminal Building built
at the sole cost and expense of a Scheduled Airline".
b. From and after the termination of the Original
Lease, 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, shall be subject to
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
Continental Special Premises 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. 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 agree-
ments 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 Continental Special Premises, then
Airline shall pay Basic Rent for the Continental Special
Premises at the most favorable (from the perspective of
the airlines) rates then payable for such space by any
such airline.
(iv) If none of the circumstances described in subpara-
graphs (i), (ii) or (iii) above applies, then Airline
shall continue to pay Basic Rent for the Continental
Special Premises 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 Continental
Airlines, Inc. Basic Rent Reserve Fund" (the "Basic Rent Reserve
Fund"). Simultaneously with the issuance of the Series 1990 Bonds,
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 thirty (30) days
of the effective date of any 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. 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 moneys 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. Moneys 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. Notwithstanding anything herein to the contrary,
Airline may direct that any moneys 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.
On the Defeasance Date any moneys remaining in the Basic Rent
Reserve Fund (including any earnings on amounts therein) shall be
released to Airline.
7.05 Bond Rent
All capitalized words and terms used in this Section 7.05
but not otherwise defined in this Agreement shall have the meanings
assigned to them in the Indenture.
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 redeemed, 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.
(iv) Not later than the close of business on the fifth
Business Day following any date on which the Trustee
notifies Airline of a deficiency in the Reserve Account,
Airline shall pay an amount equal to the amount of that
deficiency; provided that if the deficiency arose as a
result of a withdrawal from the Reserve Account to cover
a shortfall in the Interest Account, the Principal
Account or the Redemption Account, not later than on the
last day of each of the twelve months following receipt
of the deficiency notice, Airline shall pay an amount
equal to one-twelfth of such deficiency.
b. In addition to the Bond Rent, and in the manner
hereinafter provided, Airline shall pay as "additional rent" (i) to
the Trustee for the account of City, such amounts as shall be
required to satisfy any requirement to pay the Rebate Amount to the
United States as provided in Section 4.03 of the Indenture,
(ii) all amounts due under the Indenture to the Trustee, Paying
Agent, and Authenticating Agent (each as defined in the Indenture)
and (iii) all other amounts payable by the City under the terms of
the Indenture (other than Bond Service Charges, as defined
therein).
c. All Bond Rent and all additional rent payable
pursuant to subsection (b) of this Section 7.05 shall be paid by
Airline in lawful money of the United States of America in
immediately available funds, provided that Airline may offset,
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 principal 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 provided in Section 3.02 of 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
rent payments 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) Airline shall remain in possession of the Continental Special
Facilities or be able to use the same, or (2) the Original Lease
shall have terminated or been cancelled, 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
rental payments payable pursuant to this Section 7.05 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 (a) violate the agreements on
the part of Airline contained in the first two sentences of this
paragraph or (b) diminish the payments and other amounts required
to be paid by the 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 the Airline shall fail to make any of
the Bond Rent or additional 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 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 Premises. Airline
shall pay City for all electricity used at or on the Continental
Special Premises 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 City 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, of
gross sales of alcoholic beverages in the Airline Lounge, 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. 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 - [LEFT BLANK INTENTIONALLY]
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
Continental Special Facilities.
9.02 Compliance with Laws
In connection with its operations in and on the
Continental Special Facilities, Airline:
(a) 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, the
Airline, the Continental Special Facilities, or Airline's
operations and activities under this Agreement.
(b) 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.
(c) 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.
(d) 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, unemploy-
ment 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.
9.03 Ramp Usage and Servicing
a. Use of the Ramp Area adjacent to the Continental
Special Premises by aircraft and passengers other than those of
Airline may be requested at times by the Director of Port Control
or the Commissioner of Cleveland Hopkins International Airport, and
such use may necessitate access to Airline-rented holdrooms
adjacent to such Ramp Area and the use of the airplane loading
devises. Airline agrees to make such areas, facilities and
equipment available to accommodate such aircraft at the request of
the Director of Port Control or the Commissioner of Cleveland
Hopkins International Airport, provided that the use thereof will
not unreasonably interfere with Airline's operations hereunder and
that Airline is reasonably compensated for the use thereof by such
user. Airline is authorized to obtain from such user an agreement
regarding such use.
b. Airline may perform, while its aircraft are parked
upon the Ramp Area, customary fueling and servicing of aircraft
preparatory to loading and takeoff or immediately following landing
and unloading. Airline shall not do or perform any major repair or
maintenance work upon aircraft while parked upon the apron or at
the gate position nor shall there be any storage of aircraft upon
the Ramp Area in a manner to restrict the loading or unloading of
passengers at such gate positions. As used here, "major" is
defined to be work that normally requires more than one hour to
complete.
c. Airline agrees to reimburse the FAA (or City, if
City shall have reimbursed the FAA) for any FAA funding of Airport
improvements which were eliminated as a result of construction of
the Improvements, but only if the FAA requires reimbursement
thereof.
9.04 Noise Abatement
a. Airline shall certify in writing to the
Director of Port Control on or before January 15 of each year the
total number of aircraft in its operational fleet as of the
preceding December 31 and the number and percentage thereof that
were Stage Three aircraft as of that date. During each year,
Airline will make a reasonable effort in the scheduling of its
fleet operations at the Airport so that the percentage of Airline's
operations at the Airport using Stage Three aircraft shall be
reasonable in relation to Airline's then current level of Stage
Three operations at the Airport.
b. In its operations at the Airport, Airline shall,
subject to established FAA air traffic control and flight
procedures, apply its best effort to operate consistent with the
noise abatement procedures set forth in Exhibit G hereto.
c. The requirements of this Section 9.04 shall apply
only to the extent they do not violate or conflict with the
provisions of any applicable laws and regulations or any existing
agreements of the City with Airline or the Scheduled Airlines (as
defined in the Original Lease).
(End of Article IX)
ARTICLE X - INDEMNIFICATION; DAMAGE
OR DESTRUCTION; INSURANCE
10.01 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 or loss of or damage to property 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 Liability 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, for the mutual benefit of Airline and
City, shall purchase and maintain, from an insurance company
acceptable to City, public liability insurance for claims arising
out of bodily injury or property damage occurring in, on or about
the Continental Special Facilities, claims made in connection with
operations of Airline in or about the Continental Special
Facilities, and claims arising out of, and during the period of,
the construction of the Improvements, in an amount of at least
$5,000,000 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, subject to the limitations set forth in Section 13.01
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 thirty 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). Each
policy of insurance whether or not specifically referred to herein
shall not, as a condition of coverage, prohibit any insured from
waiving his 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 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, provide a new policy meeting the
requirements of the Director of Law of City provided that such
requirements are in conformance to the conditions hereof, and are
in keeping with policy conditions usual and customary to such types
of policies. At least thirty days prior to the expiration or
termination of any policy provided hereunder, Airline shall deliver
to the Director of Law 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 $75,000,000.
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
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, there shall be no
abatement or reduction in the Basic Rent or Bond Rent payable by
Airline. Continental assigns to City all its rights to the
proceeds of any property insurance for the damage or destruction of
the Continental Special Premises, and City agrees to apply such
proceeds and any other moneys Airline or any other party may
provide for that purpose (i) to the repair or reconstruction of the
Continental Special Premises to the fullest extent that such
proceeds and other moneys suffice for that purpose and such repair
or reconstruction is feasible, but without assuming any obligation
to use or apply any other moneys or revenues for that purpose and
(ii) to the payment of Bond Service Charges on the Bonds by
depositing said proceeds with the Trustee for deposit in the Bond
Fund to be applied in accordance with the Indenture, if and to the
extent that such repair or reconstruction is not feasible. City
shall give prompt written notice to the Trustee of any damage or
destruction of the Continental Special Premises. In the event that
any insurance proceeds are net of a deductible, Airline shall pay
to City the amount of such deductible. City shall also be required
to so apply the proceeds of any insurance policies of City received
by City as a result of such damage or destruction.
In the event of damage, destruction or loss of any
portion of the Continental Special Premises by an insured risk
after the Defeasance Date, which damage, destruction or loss is not
capable of being repaired within ninety (90) days, Airline shall
have the option, exercisable by written notice given to City within
sixty (60) days after the occurrence of such event, to terminate
this Agreement forthwith. If this Agreement is so terminated, City
shall receive from the insurance proceeds an amount equal to the
full insurable value minus the net book value, with Airline
receiving the balance. If this Agreement is not terminated as
aforesaid, or if such damage, destruction or loss is capable of
being repaired within said ninety (90) day period, the provisions
of the immediately preceding paragraph shall apply; provided,
however, that if such damage, destruction or loss occurs within six
(6) months of the expiration of this Agreement, than Airline shall
have the option either to effect such repair, replacement,
restoration or rebuilding or in lieu thereof, to terminate
forthwith the Agreement and make payment of the insurance proceeds
received by reason of such damage, destruction or loss to City in
accordance with the provisions of the immediately preceding
paragraph.
10.04 Waiver of Subrogation; Property Insurance
Airline and City, each for its own account, agree to
purchase property insurance, 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, at the
option of either party, such other perils as are customarily
included in the term "all risk", available in Cleveland, Ohio.
Airline shall provide City, and the Trustee with a certificate of
insurance which indicates the insurance company will provide City,
and the Trustee with at least thirty (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 his right of recovery against any party for loss or damage
to the insured property. Subject to the foregoing, City and
Airline each hereby waive all claims and right of recovery against
the other for damage to personal property to the extent that
recovery is obtained or could be obtained from the insurance
company. Extent of recovery shall include that amount actually
paid by an insurance company less any deductibles or coinsurance
penalties applicable.
(End of Article X)
ARTICLE XI - EMINENT DOMAIN
If, prior to the Defeasance Date, title to or the
temporary use of the Continental Special Facilities, 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, firm or corporation acting under governmental authority,
there shall be no abatement or reduction in the Basic Rent or Bond
Rent payable by Airline. Continental assigns to City all its
rights to the proceeds of any award received by Airline upon any
such taking, and City agrees to apply such proceeds any other
moneys Airline or any other party may provide for that purpose
(i) to the extent feasible, to the replacement of the Continental
Special Facilities to the fullest extent that such proceeds and
other moneys suffice for that purpose, but without assuming any
obligation to use or apply any other moneys or revenues for that
purpose and (ii) if, and to the extent such replacement is not
feasible, to the payment of Bond Service Charges by depositing such
proceeds with the Trustee for deposit in the Bond Fund and
application in accordance with the Indenture.
If, following the Defeasance Date, title to or temporary
use of the Continental Special Facilities, 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, firm
or corporation acting under governmental authority, Airline shall
have the option, exercisable by written notice from Airline to City
within 60 days after the occurrence of such event, to terminate
this Agreement. If this Agreement is so terminated, City shall
receive from the proceeds of any award received by Airline an
amount equal to the full insurable value minus the net book value,
with Airline receiving the balance. If this Agreement is not
terminated as aforesaid, the provisions of the immediately
preceding paragraph shall apply; provided, however, that if such
event occurs within six (6) months of the expiration of this
Agreement, then Airline shall have the option either to effect such
replacement or, in lieu thereof, to terminate forthwith the
Agreement and make payment of the award proceeds received by reason
of the taking in accordance with the provisions of the immediately
preceding paragraph.
(End of Article XI)
ARTICLE XII - DEFAULTS
12.01 Events of Default
Time is of the essence in this Agreement. Airline agrees
that each of the following circumstances or conditions shall
constitute an "Event of Default" hereunder: (a) if (i) Airline
shall be in default in the payment of Bond Rent, or (ii) Airline
shall be in default in the payment of Basic Rent, additional rent
pursuant to Section 7.05(b) or any other rentals or other payments
to be made by it to City pursuant to this Agreement for ten days
after written demand shall have been made therefor by City; or (b)
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
(except Section 17.02 hereof, which shall be governed by Section
7(e)(i) of the Bond Legislation) and shall not have remedied, or
commenced action which will promptly remedy same which action is
thereafter diligently pursued, within ten days after written notice
thereof given by City; or (c) if any 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 within ninety days after levy or seizure
thereunder, or the Continental Special Facilities shall be occupied
by someone other than Airline and other than as permitted under
Article XIII hereof; or (d) if the Continental Special Facilities
shall be deserted or vacated, of which fact City shall be the sole
judge; or (e) 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 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 (f) 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
(g) if any of the following events shall have occurred:
(i) The filing by Airline of a voluntary petition in bank-
ruptcy or for an arrangement or any assignment for
benefit of creditors of all or any part of Airline's
assets;
(ii) The adjudication of Airline as a bankrupt pursuant to any
involuntary bankruptcy proceedings;
(iii) The taking of jurisdiction by a court of competent
jurisdiction of Airline or its assets pursuant to pro-
ceedings 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 volun-
tary agreement with Airline's creditors.
12.02 Remedies
Whenever an Event of Default shall have occurred and be
continuing, City may take any one or more of the following remedial
steps:
a. City shall have the right, with or without
terminating this Agreement, to re-enter the Continental Special
Premises and take possession of the same by summary proceedings,
re-entry or otherwise, and remove all persons and/or property from
the Continental Special Premises (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.
b. City shall have the right to relet the Continental
Special Facilities, subject to the limitations on its doing so set
forth in the Indenture.
c. City shall have the right to terminate this
Agreement and all rights of Airline hereunder by giving 60 days'
written notice of such termination to Airline and the Trustee,
subject to the limitations on its doing so set forth in the
Indenture.
12.03 Effect of Termination
In case of termination of this Agreement pursuant to Sec-
tion 12.02 hereof, (a) all payments to be made by Airline to City
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, as liquidated damages for the failure of Airline to
observe and perform Airline's covenants to pay Basic Rent herein
contained, any deficiencies between (i) the rentals, charges and
fees which would have been payable by Airline to City through the
Termination Date other than Bond Rent, and (ii) the rentals,
charges and fees other than Bond Rent collected from any subsequent
users of the Continental Special Facilities. Any such liquidated
damages shall be paid in monthly installments by Airline as
determined upon statements rendered by City to Airline, and any
suit 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.
12.04 Additional Rights of City
In the event of an Event of Default or threatened breach
or default by Airline of any of the covenants or provisions hereof,
City 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.
Mention in this Agreement of any particular remedy shall not
preclude City from any other remedy, in law or in equity.
(End of Article XII)
ARTICLE XIII - ASSIGNMENT AND SUBLETTING
13.01 Assignment or Sublease
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, except to the
Trustee in accordance with the Indenture or as otherwise provided
in this Agreement, without in each instance having first obtained
written approval from the Board of Control of City; provided,
however, that without such consent Airline may assign its rights
under this Agreement to any corporation with which Airline may
merge or consolidate or which may succeed to the business of Air-
line. 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
of any nature whatsoever.
In the event of any assignment or sublease pursuant
hereto of all or any portion of the Continental Special Facilities
under which the rental reserved in the assignment or sublease
exceeds the rental or pro rata portion of the rental, as the case
may be, for such space reserved in this Lease, Airline shall pay
the City monthly, as additional rent, with the monthly installments
of Basic Rent due hereunder, the excess of the rental reserved in
the assignment or sublease over the rental reserved in this Lease
applicable to the assigned or subleased space.
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.
(End of Article XIII)
ARTICLE XIV - AIRLINE'S RIGHT TO TERMINATE
a. Airline may terminate this Agreement only at the
time, under the conditions and in the manner permitted in Section
3.01 hereof.
b. Subject to the restrictions in Section 3.01 and this
Section 14.01 on Airline's termination of this Agreement and Air-
line'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 in the event City shall fail to perform,
keep and observe any of the terms, covenants or conditions herein
contained on the part of City to be performed, kept or observed,
provided that such terms, covenants or conditions are within the
power and ability of City to perform, keep or observe.
(End of Article XIV)
ARTICLE XV - DELIVERY OF POSSESSION
Airline agrees to yield and deliver to City possession of
the Continental Special Facilities at the termination of this
Agreement, by expiration or otherwise, or of any renewal or
extension hereof, 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 the term of this
Agreement, 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 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 Agree-
ment insofar as they may be pertinent.
(End of Article XVI)
ARTICLE XVII - MISCELLANEOUS PROVISIONS
17.01 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.
17.02 Tax-Exempt Status of Bonds
Airline will not take, or cause to be taken, any action
which would result in the loss of the exclusion from gross income
for federal income tax purposes of interest on the Bonds to owners
of Bonds other than any owner who is a "substantial user" of the
Continental Special Facilities or a "related person" within the
meaning of Section 147(a) of the Code.
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 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
Except as herein otherwise expressly provided, all
notices required to be given to City hereunder shall be in writing
and shall be sent by United States Certified Mail, return receipt
requested, addressed to:
Director of Port Control
Second Floor, Terminal Building
Cleveland Hopkins International Airport
5300 Riverside Drive
Cleveland, Ohio 44135-3193
and
Director of Law
City of Cleveland
601 Lakeside Avenue
Cleveland, Ohio 44114;
all notices by City to Airline shall be in writing and shall be
sent by United States Certified Mail, return receipt requested,
addressed to:
Continental Airlines, Inc.
2929 Allen Parkway
Houston, Texas 77019
Attention: Chief Financial Officer
with a copy to:
General Counsel and Corporate Secretary
and all notices to the Trustee shall be in writing and shall be
sent by United States Certified Mail, return receipt requested
addressed to:
The Huntington National Bank
Corporate Trust Department
Huntington National Bank Building
917 Euclid Avenue
Cleveland, Ohio 44115
The parties, 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. 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.
17.06 Entire Agreement; Amendment
This Agreement constitutes the entire agreement between
the parties hereto with respect to the Continental Special
Facilities and supersedes all other representations or statements
heretofore made, oral or written, except as otherwise herein
provided. This Agreement may be amended only in writing, and
executed by duly authorized representatives of the parties hereto
in accordance with the terms of the Indenture, provided that the
description of the Improvements 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 Continental Special
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. Depart-
ment 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, Department of
Transportation, Subtitle A, Office of the Secretary, Part 21, Non-
discrimination in Federally-assisted programs of the Department of
Transportation-Effectuation of Title VI of the Civil Rights Act of
1964, 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, 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, Department of Transportation, Subtitle A, Office of
the Secretary, Part 21, Non-discrimination in Federally-assisted
programs of the Department of Transportation-Effectuation of Title
VI of the Civil Rights Act of 1964, and as said Regulations may be
amended.
In the event of breach of any of the above non-discrimi
nation covenants, City shall have the right to terminate this
Agreement and to re-enter and repossess said land and the
facilities thereon, and hold the same as if said Agreement had
never been made or issued.
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. City agrees to use its best
efforts to restore 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, Bondholders, 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 re
ference, 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 Exclusive Continental Special Premises.
17.13 Approvals
Whenever the approval of City or of Airline is required
herein, no such approval shall be unreasonably requested, withheld
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 and
bind the legal representatives, successors, sublessees and assigns
of the respective parties hereto.
17.15 Inspection
City reserves the right to inspect the Continental
Special Facilities 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. The right of inspection reserved to City hereunder
shall impose no obligation on City to make inspections to ascertain
the condition of the premises and shall impose no liability upon
City for failure to make such inspections.
17.16 Incorporation of Exhibits
All exhibits referred to herein 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.
17.17 Public Contract
This Agreement is a "public contract" within the meaning
of the provisions of Sections 665.01 through 665.08 inclusive of
the Codified Ordinances of Cleveland, Ohio 1976, and Airline is a
"public contractor" as such term is defined therein. Pursuant to
the requirements of aforementioned Sections of the Codified
Ordinances of City, the following Equal Employment Opportunity
Clause is included in this Agreement and made part hereof. At all
times during the term of this Agreement, Airline (referred to in
the following provisions as the "contractor") shall abide by and
comply with each and every term, condition and requirement set
forth in the following Equal Employment Opportunity Clause.
a. The contractor shall not discriminate against any
employee or applicant for employment because of race, religion,
color, sex, national origin, age or handicap. The contractor shall
take affirmative action to insure that applicants are employed and
that employees are treated during employment, without regard to
their race, religion, color, sex, national origin, age or handicap.
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 contracting officers setting forth
the provisions of this non-discrimination clause.
b. The contractor shall in all solicitations or
advertisements for employees placed by or on behalf of the
contractor, state that all qualified applicants will receive
consideration for employment without regard to race, religion,
color, sex, national origin, age or handicap.
c. 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 Employment Opportunity Clause of City
and shall post copies of the notice in conspicuous places available
to employees and applicants for employment.
d. The contractor shall furnish all information and
reports required by the Contract Compliance Officer of City
pursuant to Sections 665.01 to 665.08, inclusive, and shall permit
access to his books, records and accounts by the contracting agency
and by the Contract Compliance Office for purposes of investigation
to ascertain compliance with the program.
e. The contractor shall take such action with respect
to any subcontractor as City may direct as a means of enforcing the
provisions of paragraphs a. through h. herein, including penalties
and sanctions for noncompliance, provided however, that in the
event the contractor becomes involved in or is threatened with
litigation as the result of such direction by City, City will enter
into such litigation as is necessary to protect the interests of
City and to effectuate City's Equal Employment Opportunity program
and in the case of contracts receiving federal assistance, the
contractor or City may request the United States to enter into such
litigation to protect the interest of the United States.
f. The contractor shall file and shall cause his
subcontractors, if any, to file compliance reports with City in the
form and to the extent prescribed by the Contract Compliance
Officer of City. Compliance reports filed at such times as
directed shall contain information as to the employment practices,
policies, programs and statistics of the contractor and his
subcontractors.
g. The contractor shall include the provisions of
paragraphs (a) through (h) of this Equal Employment Opportunity
Clause in every subcontract or purchase order so that such
provisions will be binding upon each subcontractor or vendor.
h. Refusal by the contractor or subcontractor to comply
with any portion of this program as herein stated and described
will subject the offending party to any or all of the following
penalties:
(1) Withholding of all future payments under the in-
volved public contract to the contractor in violation
until it is determined that the contractor or subcon-
tractor is in compliance with the provisions of the con
tract;
(2) Refusal of all future bids for any public contract
with City or any of its departments or divisions until
such time as the contractor or subcontractor demonstrates
that he has established and shall carry out the policies
of the program as herein outlined;
(3) Cancellation of the public contract and declaration
of forfeiture of the performance bond;
(4) In cases in which there is substantial or material
violation or the threat of substantial or material
violation of the compliance procedure or as may be
provided for by contract, appropriate proceedings may be
brought to enforce those provisions, including the
enjoining, within applicable laws, of contractors,
subcontractors, or other organizations, individuals or
groups who prevent directly, indirectly, or seek to
prevent directly or indirectly, compliance with the
policy, as herein outlined.
17.18 Memorandum of Lease
In the event that City so requests, Airline 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.
17.19 Continuation of Warranties
All warranties, express or implied, by contractors,
materialmen and suppliers given to Airline in connection with the
Continental Special Facilities shall run in favor of City as well
as Airline, 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.
17.20 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.
(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.
ATTEST as to those signing on THE CITY OF CLEVELAND
behalf of City of Cleveland:
_______________________________ By:__________________________
Director of Finance
________________________________ By: _________________________
Director of Port Control
ATTEST as to those signing on CONTINENTAL AIRLINES, INC.
behalf of Continental Airlines,
Inc.
________________________________ By: ________________________
Title: ______________________
The within instrument is hereby
approved as to legal form and
correctness ____________, 19____
________________________________
Director of Law
By _____________________________
Assistant Director of Law
STATE OF OHIO ) SS:
)
COUNTY OF CUYAHOGA )
Before me ________________________________, a Notary
public in and for said County, personally appeared Edward H.
Richard, 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 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 Charles E.
Brown, known to me to be the persons 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 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 ____________
___________________________ known to me to be the person who as
_________________________________ 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/she signed said Agreement for
and on behalf of the said Corporation as its free and voluntary act
and as his/her 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:
EXHIBIT A
[Original Lease to be inserted]
EXHIBIT B
CONTINENTAL SPECIAL PREMISES
EXHIBIT C
ON-SITE IMPROVEMENTS
Remodel the ticket counter to accommodate new electronic
state-of-the-art customer ticketing and processing equipment.
Construct approximately 24,000 square feet of new baggage
claim and baggage make-up area adjacent to the Terminal Building,
including baggage conveying and delivery equipment and construct a
passenger walkway connecting this new area to the existing
concourse.
Construct approximately 38,000 square feet of addition to
the South Concourse to create new passenger departure lounges,
operations offices and related space, Airline Lounge, concession
and public circulation areas.
Remodel existing departure lounges and operational
offices to conform to new space including carpeting, millwork,
public seating and furnishing and painting and finishing.
Provide new moving walkways, passenger loading bridges,
ground power and preconditioned air for aircraft and modifications
to underground fueling system.
EXHIBIT D
HANGAR SITE IMPROVEMENTS
Remodel the hangar to include new roofing, expansion of
electrical systems and additional lighting, plumbing for pneumatic
air system, reconfigure hangar doors, new heating system, fire
protection systems and interior and exterior painting.
EXHIBIT E
OFF-SITE IMPROVEMENTS
OTHER THAN HANGAR SITE IMPROVEMENTS
Remodel existing administration building to provide
warehousing for aircraft parts and equipment and general
administrative office functions.
Repair and expand concrete aprons and taxiways to
accommodate aircraft access to the hangar and provide additional
aircraft parking space.
Construct and equip a 40,000 square foot kitchen and meal
preparation facility for inflight service of airline passengers.
Reconfigure existing parking lot and establish new entrances and
access automotive access and circulation.
EXHIBIT G
NOISE ABATEMENT PROCEDURES
[To be added]