SUBLEASE
between
DALFORT AVIATION SERVICES,
a Division of Dalfort Corporation,
a Nevada Corporation
("Landlord")
and
K-C AVIATION INC.
a Delaware Corporation
("Tenant")
TABLE OF CONTENTS
-----------------
Page
1. Premises..............................................................1
1.1 Premises.......................................................1
1.2 Square Footage.................................................2
2. Term..................................................................2
2.1 Initial Term...................................................2
2.2 Extension Options..............................................2
3. Base Rent; Additional Charges.........................................5
3.1 Base Rent......................................................5
3.2 City of Dallas Adjustments.....................................6
3.3 Rent Adjustments...............................................7
3.4 Additional Charges.............................................7
3.5 Late Payments..................................................7
4. Taxes.................................................................8
4.1 Definitions....................................................8
4.2 Payment of Taxes...............................................9
4.3 Commencement Date..............................................9
4.4 Tax Reduction Proceedings.....................................10
4.5 No Forfeiture.................................................10
5. Use of Premises; Conduct of Business; Insurance Requirements;
Restrictive Covenant.................................................11
5.1 Use of Premises...............................................11
5.2 Conduct of Business...........................................11
5.3 Insurance Requirements........................................11
5.4 Restrictive Covenant..........................................11
6. Utilities............................................................12
7. Construction of Tenant's Building....................................12
7.1 Construction..................................................12
7.2 Plans and Specifications......................................12
7.3 Approval of Plans and Specifications..........................13
7.4 Completion of Construction....................................14
7.5 Payment Bond and Performance Bond.............................14
7.6 Licenses, Permits.............................................14
7.7 Personal Property.............................................14
7.8 Removal of Personal Property..................................15
7.9 Ownership.....................................................15
7.10 Removal of Signs..............................................15
7.11 Tenant Changes................................................16
8. Maintenance and Repairs..............................................16
8.1 Repairs.......................................................16
8.2 Maintenance...................................................16
8.3 Repair Requirements...........................................17
9. Liens................................................................17
10. Compliance with Laws.................................................16
11. Subordination........................................................17
11.1 Subordination to Ground Lease.................................17
11.2 Compliance with Ground Lease..................................17
11.3 Ground Lessor Approval........................................18
11.4 Expiration of Sublease Agreement..............................19
11.5 Subordination to Mortgages....................................19
11.6 Self-Operating Provisions.....................................20
12. Assignment and Subletting...........................................20
12.1 Consent Required..............................................20
12.2 Notice of Proposed Transfer...................................20
12.3 Landlord's Electives..........................................21
12.4 Takeback Space................................................21
12.5 Landlord's Rights.............................................21
12.6 Conditions of Assignment or Sublease..........................21
12.7 No Release of Tenant; No Waiver...............................22
12.8 Direct or Indirect Sales......................................23
12.9 Assumption of Obligations by Transferee.......................23
12.10 Approval by Ground Lessor....................................24
13. Destruction..........................................................24
13.1 Restoration...................................................24
13.2 Insurance Proceeds............................................25
13.3 Application of Insurance Proceeds Upon Termination............26
13.4 Waiver of Subrogation.........................................26
14. Eminent Domain.......................................................27
14.1 Taking........................................................27
14.2 Restoration...................................................28
14.3 Application of Proceeds Upon Termination......................29
14.4 Condemnation Award............................................29
14.5 Rental Abatement..............................................30
14.6 Temporary Taking..............................................30
15. Expansion Option.....................................................30
15.1 Option........................................................30
15.2 Exercise......................................................30
15.3 Covenant to Build Expansion Facility..........................30
15.4 Rental and Terms..............................................31
15.5 "As Is".......................................................31
15.6 Amendment.....................................................31
16. Common Areas.........................................................32
16.1 Landlord Common Area..........................................32
16.2 Tenant Common Area............................................32
16.3 Tenant Option Common Area.....................................32
16.4 Taxiways......................................................32
16.5 Rules and Regulations.........................................32
16.6 Additional Common Area Rent...................................33
17. Default..............................................................33
17.1 Events of Default by Tenant...................................33
17.2 Rights and Remedies of Landlord...............................33
17.3 Events of Default by Landlord.................................35
17.4 Indemnities...................................................35
18. Insolvency or Bankruptcy.............................................36
19. Fees and Expenses; Indemnity; Insurance..............................36
19.1 Fees and Expenses.............................................36
19.2 Indemnification...............................................36
19.3 Additional Indemnification....................................37
19.4 Insurance.....................................................37
19.5 Landlord Not Responsible......................................38
20. Access to Premises; Security.........................................38
20.1 Access to Premises............................................38
20.2 Security......................................................39
21. Notices..............................................................39
22. Mutual Waivers.......................................................41
22.1 No Waiver.....................................................41
22.2 Written Instrument............................................42
23. Tenant's Certificates................................................42
24. Guaranty.............................................................43
25. Authority............................................................43
25.1 Authority of Tenant...........................................43
25.2 Authority of Landlord.........................................43
26. Arbitration..........................................................43
27. Termination of Sublease by Tenant....................................44
28. Affirmative Covenants................................................44
28.1 Affirmative Covenants.........................................44
28.2 No Exclusion..................................................45
28.3 Review of Federal Regulations.................................45
30. Landlord's Increased Leasehold Area..................................45
31. Miscellaneous........................................................45
31.1 Landlord and Tenant...........................................45
31.2 Successors and Assigns........................................46
31.3 Validity of Provisions........................................46
31.4 Applicable Laws...............................................46
31.5 Execution and Delivery........................................46
31.6 No Representations or Warranties..............................47
31.7 Review of Documents...........................................47
31.8 Legal Expenses................................................47
31.9 Surrender of Premises.........................................47
31.10 Quiet Enjoyment...............................................48
31.11 Holding Over..................................................48
31.12 Brokers.......................................................48
31.13 Cumulative Remedies; Survival of Indemnities..................48
31.14 Time is of Essence............................................49
31.15 Approval of Ground Lessor.....................................49
31.16 Third Party Beneficiary.......................................49
31.17 Headings......................................................49
Exhibits
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A. Description of Land
B. Description of Premises
C. First Additional Agreement
SUBLEASE
--------
THIS SUBLEASE (the "Sublease"), made and entered into as of the
17th day of January, 1989, by and between DALFORT AVIATION SERVICES, a
division of Dalfort Corporation, a Nevada corporation having offices at
7701 Lemmon Avenue, Dallas, Texas 75209 ("Landlord") and K-C AVIATION INC.,
a Delaware corporation having offices at 7530 Cedar Springs, Dallas, Texas
75234-0145 ("Tenant"),
WITNESSETH: THAT
WHEREAS, Landlord is the lessee under that certain Love Field
Terminal and Air Cargo Facility Lease and Agreement dated May 1, 1967,
covering the parcels of land located within the boundaries of Love Field
Airport and shown on Exhibit A attached hereto (the "Land") between The
City of Dallas as landlord ("Ground Lessor") and Landlord (formerly known
as Braniff Realty Company) as tenant, as amended (such ground lease, as now
or hereafter from time to time amended, is referred to herein as the
"Ground Lease");
WHEREAS, Tenant desires to lease from Landlord and Landlord
desires to lease to Tenant a certain portion of the Land in order to
construct a facility thereon subject to and upon the terms, covenants and
conditions set forth herein;
WHEREAS, Landlord and Tenant are entering into that certain Fuel
Sales Agreement of even date hereof (the "Fuel Sales Agreement")
concurrently with and in consideration of the execution of this Sublease;
NOW, THEREFORE, Landlord and Tenant hereby covenant and agree as
follows:
1. Premises.
1.1 Premises. Upon and subject to the terms, covenants and
conditions hereafter set forth, Landlord hereby exclusively leases to
Tenant and Tenant hereby leases from Landlord those premises (the
"Premises") consisting of a portion of the Land which is identified as the
"Lease Area" on Exhibit B attached hereto. Tenant shall, at its sole cost
and expense, construct or cause to be constructed, a facility on the Land
(the "Building") in accordance with the terms and provisions of this
Sublease. (The Building and any and all other buildings, structures or
other improvements on the Land shall be collectively referred to as the
"Improvements" ). The purpose of Exhibit B is to show the approximate
location of Tenant's Building only, and is not meant to constitute an
agreement as to the construction of Tenant's Building, the rentable area
thereof or the specific location of the common areas or elements thereof.
1.2 Square Footage. Landlord and Tenant agree that the rentable
area of the Premises is approximately 85,000 square feet, and further agree
that following the completion of Tenant's Building as provided in Article 7
hereof, the actual square footage of the Premises shall be calculated and
agreed upon in writing by the Landlord and Tenant.
2. Term.
2.1 Initial Term. The Premises are leased for a term of ten (10)
years (the "Initial Term"), commencing as of the date this Sublease is
fully executed by both parties and consented to by the City of Dallas (the
"Commencement Date") and expiring at 11:59 p.m. on the day immediately
preceding the tenth (10th) anniversary of the date of execution hereof by
both parties, subject to the rights of Tenant to extend the term hereof as
provided herein, or such earlier date on which this Sublease terminates
pursuant to the terms hereof (the "Expiration Date"). Tenant's obligation
to pay Rent (as defined in Article 3) pursuant to Article 3 hereof shall
begin on a date which is six months after the Commencement Date.
2.2 Extension Options. Tenant shall have the option to extend the
term of this Sublease for up to five (5) consecutive renewal terms (the
"Extension Terms"). The first four (4) Extension Terms shall consist of
five (5) years each and the fifth (5th) consecutive Extension Term shall
consist of four (4) years. Tenant may exercise the Extension Options on the
following terms and conditions:
(a) Provided that Tenant is not in default of any of
the terms, covenants or conditions of this Sublease or of the
Fuel Sales Agreement, Tenant may elect, upon written notice given
to Landlord on or before the date which is seven (7) months prior
to the Expiration Date, to extend the Term hereof for an
additional period of five (5) years (the "First Extension Term"),
commencing upon the first (lst) day immediately following the
Expiration Date. If Tenant fails to timely elect to extend the
Term hereof as provided in this Section 2.2(a), Tenant
conclusively shall be deemed to have waived its right to extend
the Term hereof for the First Extension Term. After the election
by Tenant to extend the Term hereof pursuant to this Section
2.2(a), each reference to the "Term" hereof shall mean the term
of this Sublease as it has been extended by the First Extension
Term, and each reference to the "Expiration Date" hereof shall
mean the day immediately preceding the fifteenth (15th)
anniversary date of the Commencement Date (unless the
Commencement Date is a day other than the first day of a calendar
month, in which event the Expiration Date shall be the date
fifteen (15) years after the last day of the calendar month
following the calendar month in which the Commencement Date
occurs), or such earlier date on which this Sublease terminates
pursuant to the terms hereof. The precise agreements, terms and
conditions hereof shall remain in effect and be applicable
throughout the First Extension Term.
(b) Provided that Tenant (i) has timely exercised its
option to extend this Sublease for the First Extension Term, and
(ii) is not in default of any of the terms, covenants or
conditions of this Sublease or of the Fuel Sales Agreement,
Tenant may elect, upon written notice given to Landlord on or
before the date which is seven (7) months prior to the Expiration
Date (as extended by the First Extension Term), to extend the
Term hereof for an additional period of five (5) years (the
"Second Extension Term"), commencing upon the first (1st) day
immediately following the Expiration Date (as extended by the
First Extension Term). If Tenant fails to timely exercise its
option to extend this Sublease for the First Extension Term, or
to timely elect to extend the Term hereof for the Second
Extension Term as provided in this Section 2.2(b), Tenant
conclusively shall be deemed to have waived its right to extend
the Term hereof for the Second Extension Term. After the election
by Tenant to extend the Term hereof pursuant to this Section
2.2(b), each reference to the "Term" hereof shall mean the term
of this Sublease as it has been extended by the First Extension
Term and the Second Extension Term, and each reference to the
"Expiration Date" hereof shall mean the day immediately preceding
the twentieth (20th) anniversary date of the Commencement Date
(unless the Commencement Date is a day other than the first day
of a calendar month, in which event the Expiration Date shall be
the date twenty (20) years after the last day of the calendar
month following the calendar month in which the Commencement Date
occurs), or such earlier date on which this Sublease terminates
pursuant to the terms hereof. The precise agreements, terms and
conditions hereof shall remain in effect and be applicable
throughout the Second Extension Term.
(c) Provided that Tenant (i) has timely exercised its
option to extend this Sublease for the First and Second Extension
Terms, and (ii) is not in default of any of the terms, covenants
or conditions of this Sublease or of the Fuel Sales Agreement,
Tenant may elect, upon written notice given to Landlord on or
before the date which is seven (7) months prior to the Expiration
Date (as extended by the First and Second Extension Terms), to
extend the Term hereof for an additional period of five (5) years
(the "Third Extension Term"), commencing upon the first (1st) day
immediately following the Expiration Date (as extended by the
First and Second Extension Terms). If Tenant fails to timely
exercise its option to extend this Sublease for the First or
Second Extension Terms, or to timely elect to extend the Term
hereof for the Third Extension Term as provided in this Section
2.2(c), Tenant conclusively shall be deemed to have waived its
right to extend the Term hereof for the Third Extension Term.
After the election by Tenant to extend the Term hereof pursuant
to this Section 2.2(c), each reference to the "Term" hereof shall
mean the term of this Sublease as it has been extended by the
First, Second and Third Extension Terms, and each reference to
the "Expiration Date" hereof shall mean the day immediately
preceding the twenty-fifth (25th) anniversary date of the
Commencement Date (unless the Commencement Date is a day other
than the first day of a calendar month, in which event the
Expiration Date shall be the date twenty-five (25) years after
the last day of the calendar month following the calendar month
in which the Commencement Date occurs), or such earlier date on
which this Sublease terminates pursuant to the terms hereof. The
precise agreements, terms and conditions hereof shall remain in
effect and be applicable throughout the Third Extension Term.
(d) Provided that Tenant (i) has timely exercised its
option to extend this Sublease for the First, Second and Third
Extension Terms, and (ii) is not in default of any of the terms,
covenants or conditions of this Sublease or of the Fuel Sales
Agreement, Tenant may elect, upon written notice given to
Landlord on or before the date which is seven (7) months prior to
the Expiration Date (as extended by the First, Second and Third
Extension Terms), to extend the Term hereof for an additional
period of five (5) years (the "Fourth Extension Term"),
commencing upon the first (1st) day immediately following the
Expiration Date (as extended by the First, Second and Third
Extension Terms). If Tenant fails to timely exercise its option
to extend this Sublease for the First, Second or Third Extension
Term, or to timely elect to extend the Term hereof for the Fourth
Extension Term as provided in this Section 2.02(d), Tenant
conclusively shall be deemed to have waived its right to extend
the Term hereof for the Fourth Extension Term. After the election
by Tenant to extend the Term hereof pursuant to this Section
2.02(d), each reference to the "Term" hereof shall mean the term
of this Sublease as it has been extended by the First, Second,
Third and Fourth Extension Terms, and each reference to the
"Expiration Date" hereof shall mean the day immediately preceding
the thirtieth (30th) anniversary date of the Commencement Date
(unless the Commencement Date is a day other than the first day
of a calendar month, in which event the Expiration Date shall be
the date thirty (30) years after the last day of the calendar
month following the calendar month in which the Commencement Date
occurs), or such earlier date on which this Sublease terminates
pursuant to the terms hereof. The precise agreements, terms and
conditions hereof shall remain in effect and be applicable
throughout the Fourth Extension Term.
(e) Provided that Tenant (i) has timely exercised its
option to extend this Sublease for the First, Second, Third and
Fourth Extension Terms, and (ii) is not in default of any of the
terms, covenants or conditions of this Sublease or of the Fuel
Sales Agreement, Tenant may elect, upon written notice given to
Landlord on or before the date which is seven (7) months prior to
the Expiration Date (as extended by the First, Second, Third and
Fourth Extension Terms), to extend the Term hereof for an
additional period of four (4) years (the "Fifth Extension Term"),
commencing upon the first (1st) day immediately following the
Expiration Date (as extended by the First, Second, Third and
Fourth Extension Terms). If Tenant fails to timely exercise its
option to extend this Sublease for the First, Second, Third or
Fourth Extension Term, or to timely elect to extend the Term
hereof pursuant to this Section 2.02(e), Tenant conclusively
shall be deemed to have waived its right to extend the Term
hereof for the Fifth Extension Term. After the election by Tenant
to extend the Term hereof pursuant to this Section 2.02(e), each
reference to the "Term" hereof shall mean the term of this
Sublease as it has been extended by the First, Second, Third,
Fourth and Fifth Extension Terms and each reference to the
"Expiration Date" hereof shall mean the day immediately preceding
the thirtieth (30th) anniversary date of the Commencement Date
(unless the Commencement Date is a day other than the first day
of a calendar month, in which event the Expiration Date shall be
the date thirty-four (34) years after the last day of the
calendar month in which the Commencement Date occurs), or such
earlier date on which this Sublease terminates pursuant to the
terms hereof. The precise agreements, terms and conditions hereof
shall remain in effect and be applicable throughout the Fifth
Extension Term.
3. Base Rent; Additional Charges.
3.1 Base Rent. Tenant shall pay to Landlord during the Initial
Term annual base rental in the amount of fifty-five cents ($0.55) per
square foot, for a total annual base ground rental of approximately
Forty-Six Thousand Seven Hundred Fifty Dollars ($46,750.00) subject to
adjustment as provided in Section 1.2 (the "Base Rent"), which sum shall be
adjusted as hereinafter provided, and shall be payable by Tenant in equal
consecutive monthly installments of Three Thousand Eight Hundred
Ninety-Five ($3,895.83) Dollars and Eighty-Three Cents (or such other
amount as is equal to one-twelfth (1/12th) of the then prevailing Base Rent
hereunder) on or before the first day of each month, in advance, at the
address specified for Landlord in Article 21 or such other place as
Landlord shall designate, without any prior demand therefor and without any
abatement, deductions or setoff whatsoever. If the Commencement Date should
occur on a day other than the first day of a calendar month, or the
Expiration Date should occur on a day other than the last day of a calendar
month, then the rental for such fractional month shall be prorated upon a
daily basis based upon a thirty (30) day calendar month. Notwithstanding
the foregoing, no Base Rent shall be owed by Tenant for the first six (6)
months of the Initial Term. Landlord and Tenant acknowledge that Base Rent
stated herein is calculated based on an area of the Premises of 85,000
square feet. Promptly following completion of the Building, Landlord and
Tenant shall determine the actual rentable square footage of the Premises
whereupon the Base Rent payable hereunder shall be adjusted accordingly,
and Landlord and Tenant shall execute a written instrument setting forth
the adjusted Base Rent, if applicable, for the Premises.
3.2 City of Dallas Adjustments. Under the Ground Lease, the
Ground Lessor has the right, from time to time, to increase the Landlord's
stated rental rate by redetermining the rental to be paid by the Landlord
as the sum of the following:
(A) An amount of rent that is determined by the prevailing rent
then being charged by the Ground Lessor, subject to certain
limitations, with certain additional triennial adjustments
(the "Prevailing Rental Increment"); and
(B) Forty Cents ($.40) per annum per square foot of land
contained within the premises (the "Additional Fixed
Increment").
It is understood and agreed by the Landlord and the Tenant that
the Base Rent in effect hereunder shall be increased by each Prevailing
Rental Increment (less the Base Rent then in effect hereunder) that is
imposed as rent upon the Landlord by the Ground Lessor under the Ground
Lease, which increases hereunder shall be effective each and every time and
as and when each Prevailing Rental Increment is imposed as rent upon the
Landlord by the Ground Lessor under the Ground Lease.
It is further understood and agreed by the Landlord and the
Tenant that the Base Rent in effect hereunder shall not be increased by any
Additional Fixed Increment that is imposed as rent upon the Landlord by the
Ground Lessor under the Ground Lease.
3.3 Rent Adjustments. Commencing January 1, 1993 and on January
1st of each year thereafter, subject to a maximum adjustment of no more
than seven percent (7%) per annum, the Base Rent shall be adjusted as
follows:
PPI Adjustment. On January 1st of each year, the Base Rent
payable hereunder shall be adjusted such that the Base Rent shall be equal
to the greater of (i) the Base Rent in effect as of such January 1st, or
(ii) the product of the sum of the initial Base Rent payable hereunder plus
all adjustments thereto on account of increases announced by the City of
Dallas as provided in Section 3.2, multiplied by a fraction, the numerator
of which is the PPI for the July immediately preceding such January 1st,
and the denominator of which is the PPI for July of 1992. For purposes of
this Sublease, "PPI" shall mean the Dallas-Fort Worth, Texas Standard
Metropolitan Statistical Area Producers Price Index relative to aviation,
or equivalent index, as published from time to time by the Bureau of Labor
Statistics, United States Department of Labor, or the generally accepted
replacement or successor index.
3.4 Additional Charges. Tenant shall pay to Landlord all charges
and other amounts whatsoever payable by Tenant to Landlord as provided in
this Sublease including the Exhibits hereto (collectively "Additional
Charges" or "Additional Rent"), including, without limitation, the charges
for Real Estate Taxes provided for in Article 4 and Apron Space Rent
provided for in Article 16, at the place where the Base Rent is payable.
Landlord shall have the same remedies for a default in the payment of
Additional Charges or Additional Rent as for a default in the payment of
Base Rent. As used herein, the term "Rent" shall mean the Base Rent and all
Additional Charges or Additional Rent.
3.5 Late Payments. If Tenant shall fail to pay any Rent within
ten (10) days after the date the same is due and payable, such unpaid
amounts shall be subject to a late payment charge equal to one and one-half
percent (1-1/2%) of such unpaid amounts in each instance. Such late payment
charge has been agreed upon by Landlord and Tenant, after negotiation, as a
reasonable estimate of the additional administrative costs and detriment to
Landlord's ability to meet its own obligations relating to the Building in
a timely manner that will be incurred by Landlord as a result of any such
failure by Tenant, the actual costs thereof in each instance being
extremely difficult if not impossible to determine. Such late payment
charge shall constitute liquidated damages to compensate Landlord for its
damages resulting from such failure to pay and shall be paid to Landlord
together with such unpaid amounts.
4. Taxes.
4.1 Definitions. For purposes of this Article 4, the following
terms shall have the meanings hereinafter set forth:
(a) "Tenant's Share" shall mean _______ percent
(____%). Tenant's Share will be computed (and filled in) by
dividing the actual total area of the Premises by the total area
of the Land and, in the event that either the area of the
Premises or the total area of the Land is changed, Tenant's Share
will be appropriately adjusted as of the effective date of such
change; and as to the Tax Year or Expense Year (as said terms are
hereinafter defined) in which such change occurs, Tenant's Share
shall be determined on the basis of the number of days during
such Tax Year and Expense Year at each such percentage.
(b) "Tax Year" shall mean each twelve (12) consecutive
month period commencing January 1st of each year, provided that
Landlord, upon notice to Tenant, may change the Tax Year from
time to time to any other twelve (12) consecutive month period
and, in the event of any such change, Tenant's Share of Taxes (as
hereinafter defined) shall be equitably adjusted for the Tax
Years involved in any such change.
(c) "Real Estate Taxes" shall mean all taxes,
assessments, fees, impositions and charges levied upon or with
respect to all or any part of the Land, Building and any other
Improvements located thereon. The "Land", "Building" and
"Improvements" are collectively referred to as the "Real
Property", which term shall also include any personal property of
Tenant used in connection therewith. Real Estate Taxes shall
include, without limitation, and whether now existing or
hereafter enacted or imposed, all general real property taxes and
general and special assessments (regardless of the method of
valuation utilized by the taxing authority in determining the
amount of any such tax or assessment), all charges, fees or
assessments, whenever arising or paid or payable, for or with
respect to transit, housing, police, fire or other governmental
services or purported benefits to or burdens attributable to all
or any part of the Real Property or any personal property of
Tenant used in connection therewith, all service payments in lieu
of taxes, and any tax, fee, imposition or excise on the act of
entering into this Sublease or any other lease of space in the
Building, or on the use or occupancy of all or any part of the
Real Property, or on the rent payable under any lease or in
connection with the business of renting space in the Building,
that are now or hereafter levied or assessed against Landlord or
Tenant or any part of the Real Property, by the United States of
America, the State of Texas, the County of Dallas, the City of
Dallas, or any political subdivision, public corporation,
district or other political or public entity, and shall also
include any other tax, fee or other excise, however described,
that may now or hereafter be levied or assessed as a substitute
for, or as an addition to, in whole or in part, any other Real
Estate Taxes, whether or not now customary or in the
contemplation of the parties on the date of this Sublease. Real
Estate Taxes shall not include franchise, transfer, inheritance
or capital stock taxes or income taxes measured by the net income
of Landlord or Tenant from all sources, unless, due to a change
in the method of taxation, any of such taxes is levied or
assessed against Landlord or Tenant as a substitute for, or as an
addition to, in whole or in part, any other tax that would
otherwise constitute a Real Estate Tax. Real Estate Taxes shall
also include a prorated portion (based on Tenant's Share) of the
reasonable legal fees and other costs and disbursements incurred
by Landlord in connection with proceedings to contest, determine
or reduce Real Estate Taxes, provided, Landlord has given Tenant
prior notice of incurring such fees, costs and disbursements and
Tenant has provided Landlord with written approval.
4.2 Payment of Taxes.
(a) Prior to Construction of Improvements. Tenant shall
be obligated to promptly pay Tenant's Share of the Real Estate
Taxes, if any, for such Tax Year, or portion thereof, during the
Term of this Lease on or before the due date. Tenant will use its
best efforts to obtain a separate tax bill for Tenant's Share of
the Real Estate Taxes. Tenant will send Landlord duplicate copies
of all paid tax receipts.
(b) After Completion of Improvements. Upon completion
of the construction of the Improvements in accordance with the
terms of this Lease, title to the Improvements shall immediately
vest in the City of Dallas. It is the understanding of the
parties hereto that the City will be exempt from the payment of
any Real Estate Taxes relating to the Improvements. Tenant shall
be obligated to promptly pay Tenant's Share of Real Estate Taxes,
if any, after the completion of the Improvements and conveyance
to the City of Dallas on or before the due date, including, but
not limited to, any taxes for Tenant's personal property. Tenant
will send Landlord duplicate copies of all paid tax receipts.
4.3 Commencement Date. If the Commencement Date shall occur on a
date other than the first day of a Tax Year, Tenant's Share of Real Estate
Taxes for the Tax Year in which the Commencement Date occurs shall be in
the proportion that the number of days from and including the Commencement
Date to and including the last day of the Tax Year in which the
Commencement Date occurs bears to 365.
4.4 Tax Reduction Proceedings.
(a) Landlord shall have the right to institute tax
reduction or other proceedings to reduce the assessed valuation
of the Land, Building or other Improvements, unless such Land,
Building or other Improvements are separately assessed. Should
Landlord be successful in any such reduction proceedings and
obtain a rebate for periods during which Tenant has paid Tenant's
Share of Real Estate Taxes, Landlord shall, after deducting its
expenses prorated based on Tenant's Share, including without
limitation reasonable attorneys' fees and disbursements, pay
Tenant's Share of such rebate to Tenant (prorated for any partial
year if appropriate).
(b) Tenant shall also have the right to institute tax
reduction or other proceedings to contest the legality or
validity of any tax assessment or other imposition that it is
directly or indirectly required to pay under this Article 4.
Landlord agrees to execute and deliver such documents evidencing
Tenant's right under this Article 4 which may be necessary or
helpful in any such context. Tenant agrees to indemnify and hold
Landlord harmless from any and all liability, cost, expense,
penalty or interest which may be assessed as a result of Tenant's
actions hereunder, and Tenant agrees to promptly pay any amounts
which become due as a result of a final determination of its
contest.
4.5 No Forfeiture. Landlord's failure to prepare and deliver any
tax bill, notice or statement provided for in this Article 4, or Landlord's
or Tenant's failure to make a demand, shall not cause Landlord or Tenant,
as the case may be, to forfeit or surrender its right to collect any amount
which may become due to it under this Article 4. Notwithstanding the
foregoing, Landlord agrees to use reasonable efforts to: (i) notify Tenant
before filing a property tax return or responding to any inquiry from a
taxing authority concerning the property leased hereunder; or (ii)
immediately upon receipt, forward to Tenant a copy of any tax assessment or
other tax related notification relating to the property leased.
5. Use of Premises; Conduct of Business; Insurance Requirements;
Restrictive Covenant.
5.1 Use of Premises. Tenant shall use and continuously occupy the
Premises during the Term of this Sublease solely for the operation of a
facility furnishing aviation management services, general aviation
maintenance services, aviation repair services, aircraft completion and
modification services, aircraft charter, storage of equipment and supplies
and for office and aircraft hangar use ancillary or incidental thereto.
Tenant shall not use the Premises for any other use without the prior
written consent of Landlord and Ground Lessor.
5.2 Conduct of Business. Tenant shall not use or occupy, or
permit the use or occupancy of, the Premises or any part thereof for any
use other than the use specifically set forth in Section 5.1, or in a
manner that would conflict with any other provisions of this Sublease, or
that would conflict with or violate any permit, special restriction or
certificate of occupancy or completion required, recorded or issued for the
Premises or the Building.
5.3 Insurance Requirements. Tenant shall not do anything or
permit anything to be done or to exist in or about the Premises which shall
subject Landlord or Ground Lessor to any liability or responsibility for
injury to any person or property by reason of any business operation or
other activity being conducted in the Premises. Tenant, at Tenant's
expense, shall comply with all rules, orders, regulations and requirements
of the American Insurance Association (formerly the National Board of Fire
Underwriters) and with any similar body that shall hereafter perform the
function of such Association.
5.4 Restrictive Covenant.
(a) Restrictive Covenant. Tenant agrees that, neither it nor any
of its subsidiaries or affiliates, or any of them, shall as partner, joint
venturer, shareholder, agent, employee, trustee, beneficiary, or in any
capacity whatever, directly or indirectly, or in any way participate in the
ownership, management, operation or profits of any operation involved in
the sale of aviation fuels or recovery and dispatching of general aviation
aircraft ("FBO") at Dallas Love Field (the "Restrictive Covenant"),
provided that this Restrictive Covenant shall expire on the earliest to
occur of (i) 15 years from the Commencement Date, (ii) such time as
Landlord permanently discontinues acting as a supplier of aviation fuels at
Dallas Love Field Airport, or (iii) the occurrence of a material default
under the Fuel Sales Agreement resulting in a termination thereof.
(b) Validity. In the event the Restrictive Covenant contained in
subparagraph (a) above shall be adjudicated by any court of competent
jurisdiction to be partially or totally invalid or unenforceable for any
reason, such covenant shall be deemed modified to the extent necessary to
render it valid and enforceable under the laws of such jurisdiction, or
shall be excised from this Sublease, as circumstances may require, and said
subparagraph (a), subject to such modification or deletion, shall be
enforced to the maximum extent and scope permitted by the laws of such
jurisdiction.
(c) Remedies. Landlord, in addition to all other remedies to
which it may be entitled, at law or in equity, in the event of a breach of
the Restrictive Covenant, shall also be entitled, as a matter of right, to
injunctive relief in any court of competent jurisdiction.
6. Utilities.
Tenant shall, at its sole cost and expense, furnish to the
Premises all water, sewage, gas, fire sprinkler, telephone or other
communication services and electrical systems (the "Utility Services").
Tenant shall be solely responsible for the maintenance and repair of such
Utility Services and shall comply with all applicable governmental laws,
codes and regulations relating to such Utility Services. Tenant shall
indemnify and hold Landlord harmless against any liability relating to such
Utility Services.
7. Construction of Tenant's Building.
7.1 Construction. Tenant shall, at its sole cost and expense,
construct or cause to be constructed, an aircraft hangar facility
containing approximately 85,000 square feet of net floor area. This
Building shall be constructed in accordance with the Plans and
Specifications (as defined in Section 7.2). Upon completion of the Building
and other Improvements, title to such Building and other Improvements shall
immediately vest in the City of Dallas in accordance with the terms and
conditions of the Ground Lease.
7.2 Plans and Specifications. Tenant shall prepare (and shall
consult with Landlord in the course of preparing) the following documents
(all of which are hereinafter referred to as the "Plans and
Specifications").
(a) A site plan (the "Site Plan") showing the locations
of the proposed Improvements (including, by way of example,
rather than of limitation, the locations of the Buildings, ramps,
roadways, sidewalks, any other improvements for vehicular or
pedestrian ingress and egress, any utility lines or facilities
and storage areas) as they are to be constructed on the Premises,
which Site Plan shall be satisfactory for submission to the
Ground Lessor and any other applicable governmental agencies who
are required to review and approve the same;
(b) Schematic, elevation and final architectural plans
for such improvements (the "Architectural Plans");
(c) A signage program for the Premises (the "Signage
Plans"). All exterior signs located upon the Premises or the
building interior signs which are visible from the interior of
the Building must comply with all applicable local, municipal and
city ordinances and must be approved by Landlord and Ground
Lessor;
(d) Gardening and landscaping plan for the Premises
(the "Landscaping Plan");
(e) A schedule of exterior colors and building
materials to be utilized by Tenant for the Building (the
"Building Materials Schedule");
(f) A lighting plan for the Premises (the "Lighting
Plan").
7.3 Approval of Plans and Specifications. Tenant shall submit the
Plans and Specifications to Landlord for approval by Landlord within one
hundred and twenty (120) days after the execution date of this Sublease.
Tenant shall take no action to effectuate the Plans and Specifications
unless Landlord has approved them, which approval shall not be unreasonably
withheld or delayed (and in no event beyond thirty (30) days from the date
provided to Landlord by Tenant). If Landlord disapproves any of such Plans
and Specifications, it shall promptly notify the Tenant thereof and shall
indicate in detail to the Tenant the nature of such revisions as must be
made for them to be approved. Tenant shall not be required to seek
additional approval from Landlord for minor or non-material revisions to
the Plan and Specifications, so long as Tenant complies with the terms and
conditions of the Ground Lease. Upon approval of the Plans and
Specifications by Landlord, both parties shall sign the Plans and
Specifications and it shall be submitted to the Ground Lessor for approval.
Upon approval of the Plans and Specifications by the Ground Lessor, the
Plans and Specifications shall be submitted to any other applicable
governmental agencies, including the Federal Aviation Administration
("FAA"), for requisite review and approval. Tenant agrees to use its best
efforts to obtain approval of the Plans and Specifications by Landlord, the
Ground Lessor and any other applicable governmental agencies and shall make
any necessary revisions to the Plans and Specifications in a timely manner.
Landlord agrees to reasonably assist Tenant in obtaining approval of the
Ground Lessor of Tenant's Plans and Specifications hereunder. If such Plans
and Specifications are not reasonably approved by any of the applicable
parties, Tenant shall have the right to terminate this Sublease upon thirty
(30) days written notice and all obligations and liabilities shall
terminate and Rent shall be prorated accordingly. Tenant agrees to send
Landlord copies of all correspondence to Ground Lessor relating to this
Sublease.
7.4 Completion of Construction. Tenant shall, within twelve (12)
months after the date Tenant receives all requisite approvals of the Plans
and Specifications (a) construct upon the Premises all of the proposed
Improvements in accordance with the Plans and Specifications and in a good
and workmanlike manner utilizing quality materials (and shall complete all
of them to the extent required for the Tenant to be issued a permanent,
unconditional Certificate of Occupancy therefor by the applicable
governmental authorities) and (b) open the Building for the use set forth
in Section 5.1; provided, however, that such twelve (12) month period may
be extended as necessary for delays due to labor disputes, Acts of God or
the public enemy, casualty or other conditions or causes beyond Tenant's
control, so long as Tenant notifies Landlord of the delay and the reasons
for such delay and so long as Tenant thereafter re-commences construction
as soon after the delay as possible.
7.5 Payment Bond and Performance Bond. Prior to the commencement
of the construction of the Improvements, Tenant shall furnish to Landlord a
true, correct and complete copy of a general construction contract with a
reputable and bondable contractor. The Landlord reserves the right to
reject the contractor. Tenant shall also provide Landlord with a payment
bond and a performance bond for the full amount of such construction
contract that are issued by a surety that is acceptable to the Landlord and
that are in both form and substance that are acceptable to the Landlord,
all in its sole judgement and discretion.
7.6 Licenses, Permits. Tenant shall keep in full force and
effect, at its sole cost and expense, during construction and throughout
the Term of this Sublease, all licenses, consents and permits necessary for
the construction of the Improvements on the Premises and the lawful use of
the Premises, and in connection therewith, Landlord agrees to join with
Tenant in the application for such licenses, consents and permits, provided
that such application is at no cost or expense to Landlord and further
provided that Tenant indemnifies and holds Landlord harmless as set forth
in Section 19.2 and Section 19.3.
7.7 Personal Property. All furniture, furnishings and other
articles of movable personal property installed in the Premises by or for
the account of Tenant, without expense to Landlord, and which can be
removed without structural or other material damage to the Building or the
Premises (all of which are herein called "Tenant's Property") shall be and
remain the property of Tenant and may be removed by it at any time during
the Term; provided that if any of Tenant's Property is removed, Tenant or
any party or person entitled to remove it shall repair or pay the cost of
repairing any damage to the Premises or to the Building resulting from such
removal, which obligation to perform or pay for such repairs shall survive
the termination of this Sublease.
7.8 Removal of Personal Property. At or before the Expiration
Date of this Sublease, Tenant shall remove from the Premises all of
Tenant's Property except such items as the parties shall have agreed are to
remain and to become the property of Landlord, and if Landlord so requests,
Tenant shall also remove any additional work or alterations installed by
Tenant. In each instance, Tenant at its sole cost and expense shall repair
any damage to the Premises or Building resulting from such removal.
Tenant's obligations under this Section 7.8 shall survive the termination
of this Sublease. Any other items of Tenant's Property which shall remain
in the Premises after the Expiration Date or termination of this Sublease,
may, at the option of Landlord, be deemed abandoned and in such case may
either be retained by Landlord as its property or be disposed of, without
accountability, at Tenant's expense in such manner as Landlord may see fit.
7.9 Ownership. Subject to the terms and provisions of the Ground
Lease, ownership of and title to the Building and all other Improvements
located on the Premises shall be conveyed to the Ground Lessor in
accordance with Section 7.1. Upon the expiration or earlier termination of
this Sublease, Tenant shall remove Tenant's Property in accordance with
Section 7.7 and Section 7.8. The Landlord shall become entitled to
possession of the Building and all appurtenances, fixtures, machinery or
equipment attached to or used in connection with the Building in the event
this Sublease terminates or expires prior to the termination or expiration
of the Ground Lease. Tenant shall not remove any appurtenances, fixtures,
machinery or equipment (other than Tenant's Property) from the Building or
Premises which is required for the operation of the Building for the use
set forth in Section 5.1.
7.10 Removal of Signs. Upon the termination of this Sublease,
Tenant shall remove, obliterate or paint out, as required by the Director
of Aviation of the City of Dallas, any and all such signs and advertising,
and shall restore the Premises and the Building to the same condition as
prior to the placement thereon of any signs or advertising. In the event
that the Tenant fails to remove, obliterate or paint out each and every
sign or advertisement of Tenant the Landlord may have the necessary work
performed at the expense of the Tenant, and the charge therefor shall be
paid by the Tenant to the Landlord within five (5) days after demand
therefor, and a copy of the invoice is provided to Tenant.
7.11 Tenant Changes. Subject to the terms and conditions of the
Ground Lease, Tenant shall make no alterations, installations, additions or
improvements (collectively "Tenant's Changes") in or to the Premises
without Landlord's prior written consent, which Landlord may not
unreasonably withhold. No Tenant's Changes shall require Landlord to do any
work or expend any sums, whether pursuant to any applicable law, code or
regulation or otherwise, for or with respect to the Premises or any other
part of the Real Property. All Tenant's Changes shall be done at Tenant's
expense, at such times and in such manner so as not to interfere with the
operations of Landlord or its other Tenants, in accordance with plans and
specifications approved by Landlord, only by such contractors or mechanics
as are approved by Landlord, in conformity with the requirements of this
Sublease, and subject to all other conditions which Landlord may reasonably
impose. Any proposed Tenant's Changes to or affecting any of the Utility
Services must be approved by Landlord, so long as such approval is not
unreasonably withheld. Tenant shall reimburse Landlord for Landlord's
reasonable costs and expenses incurred in connection with any proposed
Tenant's Changes, including without limitation any fees charged by
Landlord's architect or engineer in connection with the preparation or
review of any plans and specifications for any proposed Tenant's Changes,
within five (5) days after demand therefor by Landlord.
8. Maintenance and Repairs.
8.1 Repairs. Tenant shall, throughout the Term of this Sublease,
and at Tenant's sole cost and expense, take good care of the Building, the
Utility Service Equipment, the Premises, and any other Improvements located
thereon, and keep them in good order and condition to the extent necessary
to maintain them in a first-class condition as defined in the Ground Lease;
and
8.2 Maintenance. Tenant shall keep and maintain the Premises in a
clean and orderly condition, free of accumulation of dirt, rubbish, snow
and ice, except as may be necessary for construction work.
8.3 Repair Requirements. All repairs and replacements made by or
on behalf of Tenant or any person or entity claiming through or under
Tenant shall be made and performed (a) at Tenant's cost and expense in a
good and workmanlike manner by licensed and reputable contractors and
mechanics so that such repairs and replacements shall be at least equal in
quality, value and utility to the original work or installation; and (b) in
accordance with any applicable Rules and Regulations and with all Legal
Requirements (as defined in Article 10).
9. Liens.
Tenant shall keep the Premises free from any liens arising out of
the construction of the Improvements in accordance with the Plans and
specifications or Tenant's Changes and any other work performed, material
furnished or obligations incurred by or for Tenant or any person or entity
claiming through or under Tenant. In the event that Tenant shall not,
within twenty (20) days after written notice from Landlord or the Ground
Lessor of the imposition of any such lien, cause same to be released of
record by payment or posting of a proper bond, Landlord shall, in addition
to all other remedies provided herein and by law, cause same to be released
by such means as it shall deem proper, including payment of the claim
giving rise to such lien. All such sums paid by Landlord and all expenses
incurred by Landlord in connection therewith (including without limitation
reasonable attorneys' fees) shall be payable to Landlord by Tenant on
demand.
10. Compliance with Laws.
Tenant shall not use or occupy, or permit the use or occupancy
of, the Premises in a manner that would violate any Legal Requirements, as
defined below. Tenant, at Tenant's cost and expense, shall comply with all
Legal Requirements (as defined below) that shall impose any duty upon
Landlord or Tenant with respect to the Premises or the use or occupancy
thereof. The term "Legal Requirements" shall mean all laws, statutes,
codes, acts, ordinances, orders, judgements, decrees, injunctions, rules,
regulations, permits, licenses, authorizations, restrictions and
requirements of and agreements with all courts and governmental authorities
now or hereafter in effect and applicable to the Real Property or any part
thereof, or any of the adjoining sidewalks, streets or ways. Landlord shall
promptly furnish Tenant with copies of any notices Landlord receives
regarding the violation of any Legal Requirements relating to the Premises.
11. Subordination
11.1 Subordination to Ground Lease. This Sublease is subject and
subordinate to the Ground Lease, the rights of the Ground Lessor thereunder
and any modifications, extensions and renewals of the Ground Lease, and
also to all existing mortgages and deeds of trust encumbering Landlord's
leasehold interest. If the Ground Lease shall terminate for any reason, or
if Landlord shall default under any such mortgage or deed of trust and the
mortgagee or beneficiary shall foreclose its lien or accept conveyance in
lieu of foreclosure, and provided that immediately prior to the time of
such termination or such foreclosure or conveyance in lieu thereof, this
Sublease shall be in effect, this Sublease shall, at the election of Ground
Lessor or such mortgagee or beneficiary, which election shall be subject in
any case to the terms of the Ground Lease or the mortgage or deed of trust,
as applicable, become a lease of the Premises between Ground Lessor and
Tenant upon all of the terms and conditions set forth in this Sublease;
provided that neither Ground Lessor nor such mortgagee or beneficiary shall
be liable to Tenant for any default of Landlord under this Sublease
occurring prior to such termination, foreclosure or conveyance in lieu of
foreclosure, or be subject to any offsets, counterclaims or defenses which
Tenant may be entitled to assert against Landlord or be bound by payments
by Tenant of Base Rent for more than one month in advance of the due date
thereof or payments of security deposits or Additional Charges, unless
Landlord delivers such amounts to Ground Lessor or such mortgagee or
beneficiary. Tenant hereby acknowledges receipt of a copy of the Ground
Lease from Landlord.
11.2 Compliance with Ground Lease. In addition to all of the
terms and provisions contained herein, Tenant shall comply with all of the
provisions of the Ground Lease which are to be observed and performed by
Landlord (as Tenant thereunder) save and except those provisions of the,
Sublease regarding the payment of rent. The Ground Lease is incorporated in
this Sublease for all purposes as if fully set forth herein and Landlord
shall notify Tenant of any change or amendments to such Ground Lease prior
to the effective date thereof, or if that is not possible, as soon as
reasonably possible. Tenant agrees to indemnify, defend and hold Landlord
and its directors, officers, agents and employees harmless from any claim
or liability arising from Tenant's failure to comply with the provisions of
the Ground Lease. Tenant hereby acknowledges receipt of a copy of the
Ground Lease. Notwithstanding anything herein to the contrary, in the event
of a conflict between the terms and conditions of the Ground Lease, as
amended, and the terms and conditions of this Sublease, the Ground Lease
shall control.
11.3 Ground Lessor Approval. Landlord and Tenant hereby
acknowledge that this Sublease is subject to the approval of Ground Lessor,
and it is further acknowledged that nothing herein contained shall enlarge
or extend the liabilities and obligations of the Ground Lessor.
Notwithstanding anything contained herein to the contrary, the parties
hereto shall be bound by all terms and conditions of this Sublease,
including, without limitation, Tenant's obligation to pay rental hereunder,
pending receipt of approval by the Ground Lessor; provided, however, that
Landlord shall not be liable or have any further obligations to Tenant in
the event the Ground Lessor does not approve this Sublease.
11.4 Expiration of Sublease Agreement. In the event of
cancellation or termination of the Ground Lease prior to the expiration of
the Term hereof, or in the event of the surrender thereof, whether
voluntary, involuntary, or by operation of law, or should Landlord fail to
exercise any of its extension options under the Ground Lease, the Tenant
shall make full and complete attornment to the Ground Lessor for the
balance of the term of this Sublease, upon the same covenants and
conditions as are contained herein, so as to establish direct privity of
estate and contract between the Ground Lessor and the Tenant, with the same
force and effect as though this Agreement was originally made directly from
the Ground Lessor to the Tenant. The Tenant shall make all Rental payments
thereafter directly to the Ground Lessor.
11.5 Subordination to Mortgages. In addition to being subject and
subordinate to the Ground Lease, this Sublease shall be subject and
subordinate at all times to: (a) the lien of any mortgages or deeds of
trust that may now exist or hereafter be executed in any amount for which
the ground leases or underlying leases, Building rentals, or Landlord's
interest or estate in any of said items is specified as security. Landlord
shall use its best efforts to secure in any such mortgages or deeds of
trust and in any such other ground leases or underlying leases a covenant
on the part of the mortgagees, beneficiaries or ground or underlying
lessors thereunder to recognize the interest of Tenant under this Sublease
in the event of any foreclosure or conveyance in lieu of foreclosure, or
any termination of any such ground or underlying lease, if at the time of
any such event Tenant is not then in default hereunder. Notwithstanding any
recognition of this Sublease by any such mortgagees, beneficiaries, or by
Ground Lessor or any existing mortgagee or beneficiary, (i) Tenant's
interest under this Sublease shall nevertheless be subject to the rights of
such mortgagees or beneficiaries or Ground Lessor to insurance and
condemnation proceeds with respect to the Real Property, (ii) any such
recognition of Tenant's interest under this Sublease shall not result in
any liability or responsibility on the part of any such mortgagees,
beneficiaries or Ground Lessor, for any past defaults of Landlord, the
prepayment of any Rent by Tenant, any claim or setoff that Tenant may have
against Landlord, or any obligations of Landlord with respect to the
construction of the Building or the Premises, or any part thereof, and
(iii) no amendment of this Sublease shall be binding on any such mortgagees
or beneficiaries or ground or underlying lessors or Ground Lessor without
such party's written consent. Notwithstanding the foregoing, so long as
Tenant shall pay its Rent and perform all of its obligations hereunder, no
such mortgagee or beneficiary shall interfere with Tenant's use and
occupancy of the Premises in accordance with the terms hereof.
11.6 Self-Operating Provisions. The provisions of this Article 11
shall be self-operative and no further instrument shall be required. Tenant
covenants and agrees, however, to execute and deliver, promptly upon demand
by Landlord and in the form requested by Landlord, any additional documents
evidencing the subordination of this Sublease with respect to the Ground
Lease or the lien of any such mortgages or deeds of trust.
12. Assignment and Subletting.
12.1 Consent Required. Neither Tenant, nor any other person or
entity which at any time uses or occupies, or holds any interest in this
Sublease with respect to, all or any part of the Premises, whether acquired
directly or indirectly from Tenant, including without limitation any
subtenant or subassignee and any person or entity acquiring any interest of
Tenant or any such other person or entity under this Sublease pursuant to
any foreclosure sale or conveyance in lieu thereof (collectively
"Transferor"), shall directly or indirectly, voluntarily or by operation of
law, sell, assign, encumber, pledge or otherwise transfer or hypothecate
all or any part of its interest in or rights with respect to the Premises
or its leasehold or subleasehold estate (collectively, "Assignment") or
permit all or any portion of the Premises to be occupied by anyone other
than itself or sublet all or any portion of the Premises (collectively,
"Sublease"), without Landlord's and Ground Lessor's prior written consent
in each instance as provided hereinbelow, and each Transferor's leasehold
estate shall consist only of the right to use and occupy the Premises (or
the portion thereof covered by a Sublease) for its own purposes during the
term of its leasehold estate.
12.2 Notice of Proposed Transfer. If Tenant or any other
Transferor desires at any time to enter into an Assignment or a Sublease,
it shall first give written notice to Landlord of its intention to do so
(the "Notice of Proposed Transfer"), which notice shall contain (a) the
name of the proposed assignee, subtenant or occupant (collectively
"Transferee"), (b) the nature of the proposed Transferee's business to be
carried on in the Premises, (c) the terms and provisions of the proposed
Assignment or Sublease, and (d) the most recent financial statement or
other equivalent financial information concerning the proposed Transferee.
In addition, Tenant shall provide to Landlord such other financial
information as Landlord may request concerning the proposed Transferee.
Once given, any such Notice of Proposed Transfer shall be irrevocable for
such period of time as is permitted under Section 12.3 for Landlord to make
an election and for such election to become final.
12.3 Landlord's Electives. At any time within twenty (20) days
after Landlord's receipt of any Notice of Proposed Transfer, Landlord may
by written notice to Tenant or other Transferor elect to (a) Sublease
itself from Tenant the portion of the Premises covered by the Sublease
specified in the Notice of Proposed Transfer, or any portion thereof, on
the terms and conditions set forth in the Notice of Proposed Transfer,
except as otherwise provided in Section 12.4 and Section 12.5, (b) consent
to the Sublease or Assignment, or (c) disapprove the Sublease or
Assignment. Landlord may elect the option in clause (a) above in its sole
and absolute discretion; provided that if Landlord does not elect the
option in clause (a), then Landlord agrees not to unreasonably withhold its
consent to the Sublease or Assignment, but in any event such Sublease or
Assignment shall be subject to the provisions of Section 12.6.
12.4 Takeback Space. In the event Landlord elects the options set
forth in Section 12.3(a) with respect to all or any portion of the Premises
(the "Takeback Space"), Tenant or other Transferor shall (a) at all times
provide without charge reasonable and appropriate access to the Takeback
Space (if less than the entire Premises) and use of any common facilities.
12.5 Landlord's Rights. If Landlord elects to Sublease from
Tenant or other Transferor as described in Section 12.3(a), (a) Landlord
shall have the right to use the Takeback Space for any legal purpose
consistent with the Ground Lease, as amended, or this Sublease, (b) the
rent and any other charges payable by Landlord to Tenant or other
Transferor thereunder shall be that set forth in the Notice of Proposed
Transfer, (c) Landlord may make alterations and improvements to the
Takeback Space as it shall elect and any such alterations or improvements
may be removed, in whole or in part, prior to or upon the expiration of the
Sublease, provided that any damage or injury to the Takeback Space caused
by such removal shall be repaired, and (d) Landlord shall have the right to
further assign or sublease the Takeback Space to any party without the
consent of Tenant or other Transferor, provided, that Landlord shall be and
remain liable to Tenant for the payment of the rent and other charges
payable by Landlord hereunder and for the performance of all of the terms,
covenants, conditions and agreements relating to the Takeback Space to be
performed by Landlord.
12.6 Conditions of Assignment or Sublease. If Landlord consents
to any Sublease or Assignment as set forth in Section 12.3(b):
(a) Tenant or other Transferor may thereafter within
ninety (90) days after Landlord's consent enter into such
Assignment or Sublease, but only with the party and upon the
specific terms and conditions set forth in the Notice of Proposed
Transfer;
(b) In the case of a Sublease, Tenant shall pay to
Landlord monthly, together with the monthly installments of Rent
hereunder, fifty percent (50%) of the excess, if any, of any and
all sums actually paid to or on behalf of Tenant under or in
connection with such Sublease over (i) the Rent payable by Tenant
under this Sublease for the space covered by such Sublease (which
shall be a pro rata portion of the Rent payable hereunder in the
case of a Sublease of a portion of the Premises), (ii) costs of
any additional leasehold improvements made to the space sublet in
excess of the cost to Landlord of any Landlord's Work which is
not billed to and paid for by Tenant, allocated to the space
sublet (on a per rentable square foot basis), and provided that
such leasehold improvement costs shall be amortized over the
shorter of the useful life of such leasehold improvements or the
remaining term of this Sublease as of the date of installation of
such leasehold improvements, and (iii) Tenant's reasonable costs
incurred in subleasing the space, including reasonable
commissions and reasonable legal fees and expenses, or incurred
in enforcing the terms of the Sublease or pursuing any remedies
against the subtenant, including reasonable legal fees and
expenses, provided that Tenant shall furnish Landlord with copies
of bills or other similar documentation substantiating such
costs; and
(c) Such Sublease or Assignment shall be subject to and
in full compliance with all of the terms and provisions of this
Sublease; and Landlord's consent to such Sublease or Assignment
shall not be construed as a consent to any terms thereof which
are inconsistent or in conflict with any of the provisions of
this Sublease unless and only to the extent that Landlord in such
consent specifically agrees in writing to be bound by such
inconsistent or conflicting terms.
12.7 No Release of Tenant; No Waiver. No consent by Landlord to
any Assignment or Sublease by Tenant or other Transferor shall relieve
Tenant or other Transferor of any obligation to be performed by Tenant or
such Transferor under this Sublease, arising before the Assignment or
Sublease, nor shall it relieve Tenant or other Transferor from the
obligation to obtain Landlord's express written consent to any other
Assignment or Sublease. Any Assignment or Sublease that is not in
compliance with this Article 12 shall be void and, at the option of
Landlord, shall constitute a material default by Tenant under this
Sublease. The acceptance of any Rent by Landlord from a proposed Transferee
shall not constitute consent to such Assignment or Sublease by Landlord or
a recognition of any Transferee or a waiver by Landlord of any failure of
Tenant or other Transferor to comply with this Article 12.
12.8 Direct or Indirect Sales. Subject to the provisions of
Section 12.3, any direct or indirect sale or other transfer of a majority
of the voting stock of Tenant or other Transferor, if Tenant or such
Transferor is a corporation, or any direct or indirect sale or other
transfer of a majority of the general partnership interests in Tenant or
other Transferor, if Tenant or other Transferor is a partnership, whether
any such sale or transfer shall occur as the result of any single
transaction or event or any series of transactions or events, shall be an
Assignment for purposes of this Article 12 if this Sublease constitutes all
or substantially all of the real estate assets of Tenant or other
Transferor. In addition, any direct or indirect sale or other transfer,
including by merger or consolidation, of all or a substantial part of the
assets of Tenant or other Transferor to another person or entity, shall
constitute an Assignment for purposes of this Article 12. As used in this
Section 12.8, the term "Transferor" shall also mean any entity which has
guaranteed Tenant's or other Transferor's obligations under this Sublease,
and the prohibitions hereof shall be applicable to any direct or indirect
sales or transfers of the stock, partnership interests or assets of said
guarantor to the same extent as if such guarantor were the Tenant
hereunder.
12.9 Assumption of Obligations by Transferee. Each Transferee,
other than Landlord, shall assume all obligations of Tenant under this
Sublease and shall be and remain liable for the payment of Rent, and for
the performance of all of the terms, covenants, conditions and agreements
herein contained on Tenant's part to be performed for the Term; provided,
however, that without limiting the obligations of Tenant under this
Sublease the Transferee shall be liable to Landlord for Rent only in the
amount set forth in the Assignment or Sublease unless otherwise agreed by
the parties thereto. No Assignment shall be binding on Landlord unless
Tenant or other Transferor or Transferee shall deliver to Landlord a
counterpart of the Assignment and an instrument in recordable form that
contains a covenant or assumption by such Transferee satisfactory in
substance and form to Landlord and consistent with the requirements of this
Section 12.9, but the failure or refusal of such Transferee to execute such
instrument of assumption shall not release or discharge such Transferee
from its liability as set forth above. Tenant or other Transferor shall
reimburse Landlord on demand for any reasonable costs that may be incurred
by Landlord in connection with any proposed Assignment or Sublease,
including without limitation the costs of making investigations as to the
acceptability of the proposed Transferee and reasonable legal costs
incurred in connection with the granting of any requested consent.
Notwithstanding the foregoing, Tenant shall not be required to pay any of
the foregoing costs in connection with the granting of a requested consent
which exceed seven hundred fifty dollars ($750.00). If Landlord shall
exercise any of its options under Section 12.3 (a) or (c), Transferor shall
indemnify, defend and hold harmless Landlord and Ground Lessor against and
from any and all loss, liability, damage, cost and expense (including
without limitation reasonable attorneys' fees and disbursements) resulting
from any claims that may be made against Landlord by the proposed
Transferee or by any party engaged or retained by Tenant or other
Transferor or the proposed Transferee in connection with any proposed
Assignment or Sublease, including without limitation any real estate
brokers, agents or sales personnel.
12.10 Approval by Ground Lessor. The parties hereby acknowledge
that any Assignment or Sublease of the Premises must be approved and
consented to by the Ground Lessor. Landlord shall not be liable to Tenant
for Ground Lessor's failure to approve any such Assignment or Sublease.
13. Destruction.
13.1 Restoration. If a substantial portion of the Building or the
other Improvements on the Premises shall be damaged or destroyed during the
Term of this Sublease, the Tenant shall: immediately notify the Landlord
and the Ground Lessor and may elect to promptly commence and complete the
restoration of the Building and other Improvements (the "Restoration")
within eighteen (18) months after such damage occurs at Tenant's sole cost
and expense (even if such cost and expense exceeds the amount of insurance
proceeds that is available therefor) as nearly as possible to the value,
condition and character of the Improvements immediately before such damage
or destruction, all in accordance with Plans and Specifications therefor
which have been approved by Landlord, Ground Lessor and any other
applicable parties. Tenant shall complete the Restoration of the Premises
in accordance with the requirements set forth in Article 7 of this
Sublease. If the Restoration is not completed within said eighteen (18)
month period, Landlord, in addition to all other rights and remedies
available at law or in equity shall be entitled to terminate this Sublease
upon fifteen (15) days written notice to Tenant. In the event of any damage
or destruction of the Premises, this Sublease shall remain in full force
and effect and rent shall not abate during this period. Notwithstanding the
foregoing, in the event a substantial portion of the Building is destroyed
or damaged during the Term, Tenant shall not be obligated to complete the
Restoration and shall notify Landlord of its election not to complete the
Restoration within forty-five (45) days after the date the damage or
destruction has occurred. In the event Tenant elects not to complete the
Restoration or fails to make such election within the forty-five (45) day
period, Landlord shall be entitled to terminate this Lease upon thirty (30)
days written notice to Tenant and Tenant shall have thirty (30) days
thereafter to remove the remaining structure, including all debris and
rubbish, so as to surrender the Premises to Landlord in the same condition
as on the date hereof.
13.2 Insurance Proceeds. All insurance proceeds payable as a
result of such casualty under policies of insurance against the same and
received by Tenant shall be deposited with an escrow agent mutually agreed
upon by both parties (the "Depository") and shall be applied as follows:
(a) in the event that Tenant elects not to complete the
Restoration or fails to make such election as provided above, the
insurance proceeds shall be applied by the Depository as follows:
(i) First, to be paid to Tenant for removal of the
remaining structure, including all debris and rubbish, so as to
restore the Premises to the same condition as of the Commencement
Date hereof;
(ii) Second, to be paid to Tenant to satisfy any
indebtedness incurred by Tenant solely for the construction,
replacement or repair of the Building and other Improvements on
the Premises;
(iii) Third, to be paid to Tenant for the amount
expended by Tenant in connection with the construction of the
ramp and the hook-up and related costs for electrical and water
utilities on the Premises; and
(iv) Fourth, the balance, if any, of such proceeds
shall be divided between Tenant and the Ground Lessor in such a
way that Ground Lessor receives the amount equal to such balance
multiplied by the ratio of which the numerator is the number of
months that Tenant has subleased the Premises hereunder and the
denominator is 408, which is the total number of months of the
maximum term under this Sublease, as determined by the sum of
months in the Initial Term and all five (5) Extensions Terms, and
the Tenant receives the remainder, if any, of such balance.
(b) in the event that the Tenant elects to complete the
Restoration, the insurance proceeds shall be applied by the
Depository to the Tenant or as the Tenant may direct from time to
time as the Restoration progresses, to pay or reimburse the
Tenant for the cost of the Restoration, upon Tenant's written
request accompanied by evidence satisfactory to the Landlord that
an amount equaling the amount requested is then due and payable
or has been paid, and is properly a part of such cost, and that
the net insurance proceeds not yet advanced will be sufficient to
complete the Restoration. Before such construction commences and
at any time thereafter upon notice to it from the Landlord, the
Tenant shall deposit with the Depository such sums as are
required to complete the Restoration. Upon receipt by the
Landlord and Ground Lessor of evidence satisfactory to them that
such Restoration has been completed and the cost thereof paid in
full, and that no mechanics', materialmen' or similar lien for
labor or materials supplied in connection therewith may attach to
the Premises, the balance, if any, of such proceeds shall be paid
to Tenant or as it may direct.
13.3 Application of Insurance Proceeds Upon Termination. Anything
contained in the provisions of this Sublease to the contrary
notwithstanding, if the Tenant elects to commence Restoration under Section
13.1, then upon the expiration or earlier termination of this Sublease
before such Restoration is completed free and clear of any liens, any
insurance proceeds not theretofore applied to the cost of such Restoration
shall be paid directly to Landlord and Landlord shall utilize such proceeds
to complete, or cause to be completed, the Restoration to the extent
possible with the insurance proceeds; provided, however, that Landlord
shall not be required to pay for any restoration work beyond the amount of
insurance proceeds that is available therefor, or, if Landlord elects, such
proceeds shall be paid to the Ground Lessor and the Landlord shall have no
obligation to complete the Restoration.
13.4 Waiver of Subrogation. Landlord and Tenant shall each obtain
and maintain, throughout the Term, in any casualty insurance policies
carried by such party covering any part of the Real Property, the Premises,
or the contents therein, including Tenant's Property, a waiver of all
rights of subrogation which the insurer of one party might have against the
other party, which waiver shall be effective so long as a corresponding
waiver is carried by the other party in its policies. In further
implementation of the foregoing, each party hereby waives (a) any
obligation on the part of the other party to make repairs necessitated or
occasioned by fire or other casualty that is an insured risk under such
policies, and (b) any right of recovery against the other party, any other
permitted occupant of the Premises, and any of their servants, employees,
agents or contractors, for any loss occasioned by fire or other casualty
that is an insured risk under such policies. If such waiver of subrogation
can be obtained under any such policy of insurance only upon payment of an
additional premium and the party benefiting from such waiver shall not pay
such additional premium on demand, or if such waiver cannot be obtained
upon other conditions acceptable to the party benefiting from such waiver,
then the party benefiting from such waiver shall be deemed to have agreed
that the other party shall be released from all of its foregoing
obligations and waivers under this Section 13.4. Except to the extent
expressly provided in this Section 13.4, nothing contained in this Sublease
shall relieve Tenant of any liability to Landlord or to its insurance
carriers which Tenant may have under law or under the provisions of this
Sublease in connection with any damage to the Premises or the Building by
fire or other casualty.
14. Eminent Domain.
14.1 Taking. As used herein, the term "Taking" shall mean a
permanent or temporary condemnation or taking of all or any portion of the
Premises or the Building, in any manner for public or quasi-public use,
including but not limited to a conveyance or assignment in lieu of a
condemnation or taking. Except as otherwise provided in Section 14.6:
(a) Entire Premises. If a Taking covers the entire
Premises, this Sublease shall automatically terminate as of the
earlier of the date of the vesting of title or the date of
dispossession of Tenant as a result of such Taking and the Annual
Base Rent, any Additional Rent and all other sums and charges
required to be paid by the Tenant hereunder shall be apportioned
and paid to the date of termination.
(b) Part of Premises. If a Taking covers only a part of
the Premises, this Sublease shall automatically terminate as to
the portion of the Premises so taken as of the earlier of the
date of the vesting of title or the date of dispossession of
Tenant as a result of such condemnation or Taking.
(c) Substantial Part of Premises. If a portion of the
Premises is taken so as to render the remaining portion
untenantable and unusable by Tenant, this Sublease may be
terminated by Tenant as of the earlier of the date of the vesting
of title or the date of dispossession of Tenant as a result of
such Taking, by written notice to Landlord within sixty (60) days
following notice to Tenant of the date on which said vesting or
dispossession will occur; and if Tenant fails to give such
written notice to Landlord within said 60-day period, Tenant's
right to so terminate this Sublease shall be deemed to have been
waived by Tenant. Upon termination, the Annual Base Rent, any
Additional Rent and all other sums and charges required to be
paid by the Tenant hereunder shall be apportioned and paid to the
date of termination.
14.2 Restoration. If a Taking occurs and it covers less than the
entire Premises and less than a substantial part of the Premises (under
which circumstances the Tenant would not have a right to terminate this
Sublease) then:
(a) this Sublease shall continue in full force and
effect;
(b) the Tenant shall promptly give written notice to
Landlord whether Tenant elects to complete Restoration of the
Premises in accordance with the terms of this Article 14;
(c) whether or not the condemnation proceeds are
available or adequate for such purposes and regardless of the
cost of Restoration, the Tenant may elect, promptly after the
date of Taking, to commence and complete Restoration of the
Premises with reasonable diligence at the Tenant's expense, as
nearly as possible to its value, condition and character
immediately before such Taking, all in accordance with Plans and
Specifications therefor which shall have been approved in writing
by the Landlord and Ground Lessor and in accordance with the
requirements set forth in Article 7 of this Sublease; and
(d) in the event the Tenant elects to complete the
Restoration, the condemnation proceeds shall be paid to an escrow
agent mutually approved by the parties (the "Depository"), and
shall be paid by the Depository in the following order:
(i) First, the Depository shall reimburse the
Tenant for the cost of restoring the Premises, upon the Tenant's
written request accompanied by evidence satisfactory to the
Landlord that an amount equalling the amount requested is then
due and payable or has been paid, and is properly a part of such
cost, and that the condemnation proceeds not yet advanced will be
sufficient to complete such Restoration. Before such construction
commences and at any time thereafter upon notice to it from the
Landlord or the Ground Lessor, the Tenant shall deposit with the
Depository such sums as are required (in addition to any amount
then held by the Depository for such purpose) to complete such
Restoration; and
(ii) Second, the Depository shall pay the
remaining condemnation proceeds, if any, to the Tenant or as it
may direct.
(e) In the event Tenant elects not to commence
Restoration or fails to make such election within sixty (60) days
of the Taking, Landlord shall be entitled to terminate this
Sublease upon thirty (30) days written notice to Tenant and the
condemnation proceeds shall be applied as follows:
(i) First, to be paid to Tenant for removal of the
remaining structure, including all debris and rubbish, so as to
restore the Premises to the same condition as of the Commencement
Date hereof;
(ii) Second, to be paid to Tenant to satisfy any
indebtedness incurred by Tenant solely for the construction,
replacement or repair of the Building and other Improvements on
the Premises;
(iii) Third, to be paid to Tenant for the amount
expended by Tenant in connection with the construction of the
ramp and the hook-up and related costs for electrical and water
utilities on the Premises; and
(iv) Fourth, the balance, if any, of such proceeds
shall be divided between Tenant and the Ground Lessor in such a
way that Ground Lessor receives the amount equal to such balance
multiplied by the ratio of which the numerator is the number of
months that Tenant has subleased the Premises hereunder and the
denominator is 408, which is the total number of months of the
maximum term under this Sublease, as determined by the sum of
months in the Initial Term and all five (5) Extensions Terms, and
the Tenant receives the remainder, if any, of such balance.
14.3 Application of Proceeds Upon Termination. Anything contained
in the provisions of this Sublease to the contrary notwithstanding, if the
Tenant elects to commence Restoration under Section 14.2(b), then upon the
expiration or earlier termination of this Sublease before such Restoration
is completed free and clear of any such liens, any of the condemnation
proceeds not theretofore applied to the cost of such Restoration shall be
paid to the Landlord and Landlord shall utilize such proceeds to complete,
or cause to be completed, the Restoration to the extent possible with
condemnation proceeds; provided, however, that the Landlord shall not be
required to pay for any restoration work beyond the amount of condemnation
proceeds that is available therefor, or, if Landlord elects, such proceeds
shall be paid to the Ground Lessor and the Landlord shall have no
obligation to complete the Restoration.
14.4 Condemnation Award. In the event of a Taking, Landlord and
Tenant shall each be entitled to seek separate condemnation awards for
their respective interests hereunder.
14.5 Rental Abatement. In the event of a Taking that does not
result in a termination of this Sublease as to the entire Premises, then
except as otherwise provided in Section 14.4 the Rent shall abate in
proportion to the portion of the Premises covered by such Taking, but only
to the extent that such Taking materially interferes with the conduct of
Tenant's business on the remaining portion of the Premises.
14.6 Temporary Taking. Notwithstanding any other provision of
this Article 14 and subject to the provisions of Article 27 hereafter, if a
Taking occurs with respect to all or any portion of the Premises for a
limited period of time, but in no event more than thirty (30) consecutive
days during the Term of this Sublease, this Sublease shall remain
unaffected thereby and Tenant shall continue to pay in full all Rent. Rent
shall abate if the temporary Taking occurs for longer than the thirty (30)
day period. In the event of any such temporary Taking, Landlord and Tenant
shall be entitled to seek separate condemnation awards for their interests
in the Premises hereunder.
15. Expansion Option.
15.1 Option. Tenant shall have the exclusive option (the
"Expansion Option") to sublease approximately 45,000 square feet of
additional improved apron space, designated as the "Option Lease Area" on
Exhibit B attached hereto (the "Option Premises"), which Expansion Option
shall commence on the Commencement Date of this Sublease and shall expire
on the third (3rd) year anniversary of the Commencement Date of this
Sublease (the "Option Period").
15.2 Exercise. Provided Tenant is not in default under this
Sublease or the Fuel Sales Agreement, Tenant may exercise the Expansion
Option by giving notice of such exercise to Landlord six (6) months prior
to the date Tenant desires to occupy the Option Premises, but in no event
later than the date which is six (6) months prior to the expiration of the
Option Period. If Tenant fails to timely exercise the Expansion Option, the
Expansion Option shall be null and void and of no further force and effect.
15.3 Covenant to Build Expansion Facility. In the event Tenant
exercises the Expansion Option, Tenant shall be obligated to build an
expansion facility (the "Expansion Facility") for the purpose set forth in
Section 5.1 of this Sublease. Such Expansion Facility shall be completed in
accordance with Article 7 of this Sublease. In the event Tenant fails to
complete the Expansion Facility within two (2) years after the date the
Expansion Option is exercised, Landlord shall have the right, in addition
to all other rights and remedies, to terminate this Sublease; provided,
however, that such two (2) year period may be extended as necessary for
delays due to labor disputes, Acts of God or the public enemy, casualty or
other conditions or causes beyond Tenant's control, so long as Tenant
notifies Landlord of the delay and the reasons for such delay and so long
as Tenant thereafter recommences construction as soon as possible. In the
event that the Landlord terminates this Sublease, the Landlord shall
complete the Expansion Facility only to the extent that the Tenant, the
Tenant's lenders, or the payment bond and the performance bond that the
Tenant has obtained supply funds for the payment thereof; provided,
however, that the Landlord shall not be required to pay for any completion
work with its own funds.
15.4 Rental and Terms. In the event Tenant exercises the
Expansion Option, the Option Premises shall be deemed included in the
Premises, and Tenant will lease the Option Premises on the same terms and
conditions as this Sublease, including, but not limited to the prevailing
Base Rent (on a per-square-foot basis) then in effect at the time the
Expansion Option is exercised. The Base Rent then in effect hereunder shall
thereupon be increased accordingly, and any future Rental Adjustments
relating to the Premises shall be based on the area of the Premises
including the Option Premises.
15.5 "As Is". In the event Tenant exercises this Expansion
Option, Landlord shall demise the Option Premises to Tenant "as is" in the
same physical state and condition existing as of the date the Expansion
Option is exercised.
15.6 Amendment. If Tenant sends to Landlord the Expansion Notice,
then Landlord should prepare an Amendment to this Sublease to reflect
changes in the size of the Premises, Annual Base rent and Tenant's
Percentage Share, all of which shall be increased by each rentable square
foot by which the Premises are increased by the addition of the Option
Premises, which Amendment shall be subject to the approval of the Ground
Lessor. Tenant shall have twenty (20) days from the date of receipt of such
Amendment to enter into the same.
16. Common Areas.
16.1 Landlord Common Area. Tenant, its employees, agents,
servants, licensees, subtenants, contractors, customers or invitees shall
have the right to use the area designated on Exhibit B attached hereto as
the "Landlord Common Area" on a non-exclusive basis for the purpose of
taxiing planes, vehicles and other equipment and machinery to and from the
Premises so long as such use does not interfere with Landlord's use of the
Landlord Common Area. Tenant shall not be permitted to park any planes,
vehicles and other machinery or equipment on the Landlord Common Area.
16.2 Tenant Common Area. Tenant, its employees, agents, servants,
licensees, subtenants, contractors, customers or invitees shall have the
right to use the area designated on Exhibit B attached hereto as the
"Tenant Common Area" on a non-exclusive basis for the purpose of taxiing
planes, vehicles and other equipment and machinery to and from the
Premises, and the parking of planes, vehicles and other machinery or
equipment; provided that Tenant's use of the Tenant Common Area shall not
interfere with the non-exclusive use of the Tenant Common Area by Landlord
for taxiing planes, vehicles and other machinery.
16.3 Tenant Option Common Area. In the event Tenant exercises the
Expansion Option, Landlord and Tenant agree that the portion of the
Landlord Common Area designated on Exhibit B as the "Tenant Option Common
Area" shall thereafter be included in the Tenant Common Area and excluded
from the Landlord Common Area, and Tenant, its employees, agents, servants,
licensees, subtenants, contractors, customers or invitees shall have the
right to use the Tenant Option Common Area on the same basis as the Tenant
Common Area. (The Landlord Common Area, the Tenant Common Area and Tenant
Option Common Area are hereinafter collectively referred to as the "Common
Areas".)
16.4 Taxiways. Landlord and Tenant shall have the right to
utilize the taxiways (the "Taxiways") identified in Exhibit B. Neither
Tenant nor Landlord are permitted to park vehicles, planes, machinery or
other equipment on the Taxiways.
16.5 Rules and Regulations. Landlord may promulgate reasonable
rules and regulations relating to the use of the Common Areas by Landlord
and Tenant.
16.6 Additional Common Area Rent. Landlord and Tenant hereby
acknowledge that the Common Areas are located on a portion of the Land
designated as improved apron space by the Ground Lessor, and Landlord is
obligated to pay Ground Lessor rental for such improved apron space ("Apron
Space Rental") commencing September 1, 1998. Tenant shall be responsible
for its pro rata share of Apron Space Rental as and when such Apron Space
Rental is payable by Landlord. Tenant's share of such Apron Space Rental
shall be Additional Rent hereunder, and shall be payable on or before the
date such Apron Space Rental is payable to Ground Lessor by Landlord.
17. Default.
17.1 Events of Default by Tenant. Any vacation or abandonment of
the Premises for a continuous period in excess of five (5) business days or
any failure to pay any Rent as and when due, or any failure to perform or
comply strictly with any material covenant or condition of or
representation made under this Sublease (including any Exhibits hereto), or
any default under the terms of the Fuel Sales Agreement of even date
hereof, shall constitute a default hereunder by Tenant, subject in the
specific instances set forth below to the expiration of the appropriate
grace period hereinafter provided. Tenant shall have a period of five (5)
days from the date of receipt of written notice from Landlord within which
to cure any default in the payment of Rent. Tenant shall have a period of
fifteen (15) days from the date of receipt of written notice from Landlord
within which to cure any other default under this Sublease; provided,
however, that with respect to any default other than the payment of Rent
that cannot reasonably be cured within fifteen (15) days, the default shall
not be deemed uncured if Tenant commences to cure such default within
fifteen (15) days from Landlord's notice and continues to prosecute
diligently the curing thereof to completion within a reasonable time.
17.2 Rights and Remedies of Landlord. Upon the occurrence of a
default by Tenant which is not cured by Tenant within the applicable grace
period specified in Section 17.1, Landlord shall have the following rights
and remedies in addition to all other rights or remedies available to
Landlord at law or in equity:
(a) The right to terminate Tenant's right to possession
of the Premises and to recover the worth at the time of award of
the amount by which the unpaid Rent for the balance of the Term
after the time of award exceeds the fair and reasonable rental
value of the Premises for the same period. In the computation of
such amount the difference between any installment of Rent
becoming due hereunder and after the date of termination of this
Sublease and the reasonable rental value of the Premises for the
period for which such installment was payable shall be discounted
to its present value as of the date of termination of this
Sublease at the rate of six percent (6%) per annum.
(b) The right to continue this Sublease in effect and
to enforce all of its rights and remedies under this Sublease,
including the right to recover Rent as it becomes due, for so
long as Landlord does not terminate Tenant's right to possession.
Acts of maintenance or preservation, efforts to relet the
Premises or the appointment of a receiver upon Landlord's
initiative to protect its interest under this Sublease shall not
constitute a termination of Tenant's right to possession. If
Landlord exercises its rights under this subsection (b),
Landlord, as attorney-in-fact for Tenant, may from time to time
sublet the Premises or any part thereof for such term or terms
(which may extend beyond the Term) and at such rent and upon such
other terms as Landlord in its sole and absolute discretion may
deem advisable, with the right to make alterations and repairs to
the Premises. Upon each such subletting, (i) Tenant shall be
immediately liable for payment to Landlord of, in addition to
Rent due hereunder, the cost of such subletting and such
alterations and repairs incurred by Landlord and the amount, if
any, by which the Rent owing hereunder for the period of such
subletting (to the extent such period does not exceed the Term)
exceeds the amount to be paid as Rent for the Premises for such
period pursuant to such subletting, or (ii) at the option of
Landlord, rents received from such subletting shall be applied,
first, to payment of any indebtedness other than Rent due
hereunder from Tenant to Landlord; second, to the payment of any
costs of such subletting and of such alterations and repairs;
third, to payment of Rent due and unpaid hereunder; and the
residue, if any, shall be held by Landlord and applied in payment
of future Rent as the same becomes due hereunder. If Tenant has
been credited with any rent to be received from such subletting
under clause (i) and such rent shall not be promptly paid to
Landlord by the subtenant(s), or if such rentals received from
such subletting under clause (ii) during any month are less than
those required to be paid during that month by Tenant hereunder,
Tenant shall pay any such deficiency to Landlord. Such deficiency
shall be calculated and paid monthly within five (5) days
following written notice from Landlord. For all purposes set
forth in this Section 17.2(b) and in Section 17.2(d), Landlord is
hereby irrevocably appointed attorney-in-fact for Tenant, with
power of substitution. No taking of possession of the Premises by
Landlord, as attorney-in-fact for Tenant, shall be construed as
an election on its part to terminate this Sublease or Tenant's
right to possession unless a written notice of such intention is
given to Tenant. No action taken by Landlord pursuant to this
paragraph shall be deemed a waiver of any default by Tenant, and
notwithstanding any such subletting without termination, Landlord
may at any time thereafter elect to terminate this Sublease for
such previous default. Notwithstanding the foregoing, Landlord
shall use reasonable efforts to mitigate the damages hereunder.
(c) The right to terminate this Sublease and dispossess
Tenant by giving notice to Tenant in accordance with applicable
Texas law.
(d) The right and power, as attorney-in-fact for
Tenant, to enter the Premises and remove therefrom all persons
and property, to store such property in a public warehouse or
elsewhere at the cost of and for the account of Tenant, and to
sell such property and apply the proceeds therefrom pursuant to
applicable Texas law.
(e) The right to have a receiver appointed for Tenant,
upon application by Landlord, to take possession of the Premises
and to apply any rental collected from the Premises and to
exercise all other rights and remedies granted to Landlord as
attorney-in-fact for Tenant pursuant to Section 17.2(b) and
Section 17.2(d).
17.3 Events of Default by Landlord. In the event Landlord fails
to perform any covenant or condition or breaches any representation made
under this Sublease (including any Exhibits thereto), this shall constitute
an event of default by Landlord. Landlord shall have a period of fifteen
(15) days from receipt of written notice from Tenant within which to cure
any default under this Sublease; provided, however, that with respect to
any default which cannot be cured within fifteen (15) days, the default
shall not be deemed to be uncured so long as Landlord commences to cure
such default within fifteen (15) days from Tenant's notice and continues to
prosecute diligently the curing thereof to completion within a reasonable
time. In the event of a default by Landlord, Tenant shall be entitled to
all rights and remedies at equity or at law.
17.4 Indemnities. Termination of this Sublease under this Article
17 and exercise of any remedies of Landlord as provided herein shall not
affect or terminate the right of Landlord and Ground Lessor to enforce any
and all indemnities given Landlord or Ground Lessor by Tenant under the
terms of this Sublease, which indemnities shall survive any termination of
this Sublease.
18. Insolvency or Bankruptcy.
The appointment of a receiver to take possession of all or
substantially all of the assets of Tenant, or an assignment by Tenant for
the benefit of creditors, or the commencement of a case or proceeding by or
against Tenant or any other action taken or suffered by Tenant under any
insolvency, bankruptcy, reorganization, moratorium or other debtor relief
act or statute, whether now existing or hereafter amended or enacted, shall
constitute a breach of this Sublease by Tenant. Upon the happening of any
such event, this Sublease shall automatically terminate without further
notice of termination from Landlord to Tenant, provided that Landlord may
enforce any of its remedies under Section 17.2, except subsection (b)
thereof, and provided further that neither such termination nor exercise of
remedies shall affect or terminate the right of Landlord to enforce any and
all indemnities given Landlord by Tenant under the terms of this Sublease.
In no event shall this Sublease be assigned or assignable by operation of
law or by virtue of or in any voluntary or involuntary bankruptcy,
reorganization or insolvency case or proceeding or otherwise, and in no
event shall this Sublease or any rights or privileges hereunder be an asset
of Tenant under any bankruptcy, reorganization, insolvency or other debtor
relief proceeding.
19. Fees and Expenses; Indemnity; Insurance.
19.1 Fees and Expenses. If Tenant shall default in the
performance of any of its obligations under this Sublease, Landlord, at any
time thereafter and with reasonable notice (unless in the case of an
emergency), may remedy such default for Tenant's account and at Tenant's
expense, without thereby waiving such default or any rights or remedies of
Landlord on account of such default. Except as specifically provided to the
contrary in this Sublease, Tenant shall pay to Landlord, within five (5)
days after delivery by Landlord to Tenant of bills or statements therefor:
(a) sums equal to all expenditures made and monetary obligations incurred
by Landlord including, without limitation, expenditures made and
obligations incurred for reasonable counsel fees and disbursements, in
connection with any remedying by Landlord for Tenant's account pursuant to
the immediately preceding sentence; (b) sums equal to all losses, costs,
liabilities, damages and expenses referred to in Section 19.2; (c) sums
equal to all expenditures made and monetary obligations incurred by
Landlord, including, without limitation, expenditures made and obligations
incurred for reasonable counsel fees and disbursements, in collecting or
attempting to collect any Rent or in enforcing or attempting to enforce any
rights of Landlord under this Sublease or pursuant to law. Tenant's
obligations under this Section 19.1 shall survive the expiration or other
termination of this Sublease.
19.2 Indemnification. Tenant agrees to indemnify Landlord and
Ground Lessor against and save Landlord and Ground Lessor harmless from any
and all loss, cost, liability, damage and expense including, without
limitation, any reasonable counsel fees incurred in attempting to collect
any Rent or in enforcing or attempting to enforce any rights of Landlord or
Ground Lessor under this Sublease or pursuant to law. Tenant's obligations
under this Section 19.2 shall survive the expiration or other termination
of this Sublease.
19.3 Additional Indemnification. Tenant agrees to indemnify
Landlord and Ground Lessor against and save Landlord and Ground Lessor
harmless from any and all loss, cost, liability, damage and expense
including, without limitation, penalties, fines and reasonable counsel fees
and disbursements, incurred in connection with or arising from any cause
whatsoever in, on or about the Premises, including, without limiting the
generality of the foregoing (a) any default by Tenant in the observance or
performance of any of the terms, covenants or conditions of this Sublease
or the Ground Lease on Tenant's part to be observed or performed, or (b)
the use or occupancy or manner of use or occupancy of the Premises by
Tenant or any person or entity claiming through or under Tenant, or (c) the
condition of the Premises or any occurrence or happening on the Premises
from any cause whatsoever, or (d) any acts, omissions or negligence of
Tenant or any person or entity claiming through or under Tenant, or of the
contractors, agents, servants, employees, customers, visitors or licensees
of Tenant or any such person or entity, in, on or about the Premises, or
all or any part of the Real Property, either prior to, during, or after the
expiration of, the Term including, without limitation, any acts, omissions
or negligence in the making or performing of any Tenant Changes. Tenant
further agrees to indemnify and save harmless Landlord and Landlord's
agents, and the lessor or lessors under the Ground Lease and under all
other ground or underlying leases, from and against any and all loss, cost,
liability, damage and expense including, without limitation, reasonable
counsel fees and disbursements, incurred in connection with or arising from
any claims by reason of injury to persons or damage to property occasioned
by any default, use, occupancy, condition, occurrence, happening, act,
omission or negligence referred to in the preceding sentence. In the event
any action or proceeding is brought against Landlord or Ground Lessor for
any claim against which Tenant is obligated to indemnify Landlord or Ground
Lessor hereunder, Tenant upon notice from Landlord shall defend such action
or proceeding at Tenant's sole expense by counsel selected by Tenant and
reasonably approved by Landlord. Tenant's obligations under this Section
19.3 shall survive the expiration or other termination of this Sublease.
19.4 Insurance. Tenant shall procure at its cost and expense and
keep in effect during the Term (a) comprehensive general liability
insurance, including without limitation contractual liability and specific
coverage of risks arising out of any activities of Tenant pursuant to
Article 7, with a minimum combined single limit of liability of Three (3)
million dollars ($3,000,000.00), which limit of liability Landlord may
increase from time to time in its reasonable discretion to a level then
generally maintained by prudent Fixed Base Operations ("FBOs") for the
coverage of comparable risks by giving written notice to Tenant of such
adjustment in the required limit of liability of Tenant's insurance, and
which insurance shall specifically include all liability (subject to
standard policy exclusions) assumed hereunder by Tenant (provided that the
amount of such insurance shall not be construed to limit the liability of
Tenant hereunder); (b) insurance against damage or destruction by fire,
lightning and other risks from time to time included under generally
available extended coverage endorsements in an amount adequate to cover the
cost of replacement of all Improvements, Tenant Changes and Tenant's
Property and within the Premises; (c) workmen's compensation insurance
having such limits, and under such terms and conditions, as are required by
applicable law; and (d) Builders Risk insurance during the period of
construction, in an amount determined by Landlord in its reasonable
discretion. To the extent that either of Landlord or Ground Lessor, or both
of them, have an insurable interest hereunder, such insurance shall name
Landlord and Ground Lessor as an additional insured, shall provide that it
is primary insurance, and not excess over or contributory with any other
valid, existing and applicable insurance in force for or on behalf of
Landlord, and shall provide that Landlord and Ground Lessor shall receive
thirty (30) days' written notice from the insurer prior to any cancellation
or change of coverage. Tenant shall deliver policies of such insurance or
certificates thereof to Landlord and Ground Lessor on or before the
Commencement Date, and thereafter at least thirty (30) days before the
expiration dates of expiring policies; and, in the event Tenant shall fail
to procure such insurance, or to deliver such policies or certificates,
Landlord may, at its option, upon three (3) days prior written notice to
Tenant, procure same for the account of Tenant, and the cost thereof shall
be paid to Landlord within five (5) days after delivery to Tenant of a
statement therefor. Tenant's compliance with the provisions of this Section
19.4 shall in no way limit Tenant's liability under any of the other
provisions of this Article 19.
19.5 Landlord Not Responsible. Landlord shall not be responsible
for or liable to Tenant for any loss or damage that may be occasioned by or
through the acts or omissions of persons occupying or using any part of the
Real Property, or for any loss or damage resulting to Tenant or its
property from burst, damaged, stopped or leaking water, gas, sewer, steam,
air or heat pipes or ducts or from any electrical equipment accidents or
malfunctions, or for any damage or loss of property within the Premises
from any causes whatsoever, including theft.
20. Access to Premises; Security.
20.1 Access to Premises. Landlord reserves and at all times
during the Term shall have the right to enter the Premises at all
reasonable times upon prior notice to Tenant (except in the case of
emergencies) to inspect same, to show the Premises to prospective
purchasers, mortgagees and tenants, to post notices of non-responsibility,
and to alter, improve or repair the Premises and any portion of the
Building. Landlord may for any of the above purposes erect, use and
maintain scaffolding, pipes, conduits and other necessary structures in and
through the Premises where reasonably required by the character of the work
to be performed, the business of Tenant shall not be interfered with
unreasonably. For each of the aforesaid purposes, Landlord shall at all
times have and retain a key with which to unlock all of the doors in, upon
and about the Premises, excluding Tenant's vaults and safes, or special
security areas (designated in advance in writing by Tenant), and Landlord
shall have the right to use any and all means that Landlord may deem
necessary or proper to open said doors in an emergency in order to obtain
entry to any portion of the Premises, and any entry to the Premises or
portions thereof obtained by Landlord by any of said means, or otherwise,
shall not under any circumstances be construed or deemed to be a forcible
or unlawful entry into, or a detainer of, the Premises, or an eviction,
actual or constructive, of Tenant from the Premises or any portion thereof.
Landlord shall have the right to enter and inspect any special security
areas referred to in the immediately preceding sentence upon notice to
Tenant, provided that Tenant may require Landlord to be accompanied by a
representative of Tenant during such inspection. Tenant shall be liable to
Landlord for all of Landlord's damages, including consequential damages, to
the extent Landlord is unable to protect all or any part of the Real
Property during an emergency because of Landlord's lack of access to a
special security area. Landlord acknowledges that in gaining access to the
Premises it may be exposed to certain confidential information. Landlord
and its agents and employees shall use reasonable measures not to disclose
such confidences to third parties.
20.2 Security. Landlord shall have no obligation to furnish
guards, watchmen, patrols or similar security personnel for the Building
and the Premises at any time during the Term, and Tenant hereby expressly
assumes (i) the obligation to furnish such security personnel, at such
hours and at such stations, as Tenant deems necessary or desirable for the
safety of Tenant's employees and invitees, and (ii) any and all risk of
injury, damage or loss sustained to or by persons or property arising out
of the absence of security personnel at the Building and the Premises and
abrogation of any responsibility on the part of Landlord to furnish
security personnel for the Building or the Premises pursuant to this
Sublease.
21. Notices.
Except as otherwise expressly provided in this Sublease, any
bills, statements, notices, demands, requests or other communications given
or required to be given under this Sublease shall be effective only if
rendered or given in writing, sent by certified mail or delivered
personally, as follows:
If to Tenant:
K-C Aviation Inc.
7350 Cedar Springs
Dallas, Texas 75234-0145
Attention: Richard Emery
With a copy to:
Bradford Bates
K-C Aviation Inc.
1201 Pennsylvania Avenue, N.W.
Suite 730
Washington, D.C. 20004
If to Landlord:
Dalfort Aviation
7701 Lemmon Avenue
Dallas, Texas 75209
Attention: Vice President/Controller
With a copy to:
Cyril David Kasmir
Kasmir & Krage
2001 Bryan Tower
Suite 2700
Dallas, Texas 75201-3059
or to such other address as either Landlord or Tenant may designate as its
new address for such purpose by notice given to the other in accordance
with the provisions of this Section 21. Any such bill, statement, notice,
demand, request or other communication shall be deemed to have been
rendered or given upon the earlier of receipt or five (5) days after the
date when it shall have been mailed as provided in this Section 21. If sent
by certified mail, or upon the date personal delivery is made, provided,
however, that any refusal to accept personal delivery or delivery by mail
shall be deemed to constitute receipt thereof. If Tenant is notified of the
identity and address of any ground or underlying lessors of the Land or any
part thereof, or any mortgagees or deed of trust beneficiaries of Landlord,
at Landlord's request Tenant shall give to such ground or underlying
lessors, or such mortgagees or beneficiaries, as applicable, notice of any
default by Landlord under the terms of this Sublease, which notice shall be
in writing sent by certified mail, and such ground or underlying lessors,
or such mortgagees or beneficiaries, as applicable, shall be given a
reasonable opportunity, but shall have no obligation, to cure such default
prior to Tenant exercising any remedy available to it.
22. Mutual Waivers.
22.1 No Waiver. No failure by either party to insist upon the
strict performance of any obligation of the other party under this Sublease
or to exercise any right, power or remedy consequent upon a breach thereof
shall constitute a waiver of any such breach or of such term, covenant or
condition. No acceptance of full or partial Rent during the continuance of
any such breach, and no acceptance of the keys to or possession of the
Premises by any employee of Landlord prior to the termination of the Term,
shall constitute a waiver of any such breach or of such term, covenant or
condition or operate as a surrender of this Sublease. No payment by Tenant
or receipt by Landlord of a lesser amount than the aggregate of all Rent
then due under this Sublease shall be deemed to be other than on account of
the first items of such Rent then accruing or becoming due, unless Landlord
elects otherwise; and no endorsement or statement on any check and no
letter or other writing accompanying any check or other payment of Rent in
any such lesser amount and no acceptance of any such check or other such
payment by Landlord shall constitute an accord and satisfaction, and
Landlord may accept such check or payment without prejudice to Landlord's
right to recover the balance of such Rent or to pursue any other legal
remedy.
22.2 Written Instrument. Neither this Sublease nor any term or
provision hereof may be changed, waived, discharged or terminated orally,
and no breach thereof shall be waived, altered or modified, except by a
written instrument signed by the party against which the enforcement of the
change, waiver, discharge or termination is sought, and subject in any
event to the provisions of Section 11.1. No waiver of any breach shall
affect or alter this Sublease, but each and every term, covenant and
condition of this Sublease shall continue in full force and effect with
respect to any other then existing or subsequent breach thereof. The
consent of Landlord given in any instance under the terms of this Sublease
shall not relieve Tenant of any obligation to secure the consent of
Landlord in any other or future instance under the terms of this Sublease.
23. Tenant's Certificates.
Tenant at any time and from time to time upon not less than ten
(10) days' prior written notice from Landlord or Ground Lessor will
execute, acknowledge and deliver to Landlord and, at Landlord's request, to
any prospective purchaser or any then current or prospective ground or
underlying lessor or mortgagee of any part of the Real Property, a
certificate of Tenant stating: (a) that Tenant has accepted the Premises
(or, if Tenant has not done so, that Tenant has not accepted the Premises
and specifying the reasons therefor), (b) the Commencement and Expiration
Dates of this Sublease, (c) that this Sublease is unmodified and in full
force and effect (or, if there have been modifications, that same is in
full force and effect as modified and stating the modifications), (d)
whether or not there are then existing any defenses against the enforcement
of any of the obligations of Tenant under this Sublease (and, if so,
specifying same), (e) whether or not there are then existing any defaults
by Landlord in the performance of its obligations under this Sublease (and,
if so, specifying same), (f) the dates, if any, to which the Rent has been
paid, and (g) any other information, including, without limitation, any
public financial information of Tenant or its parent or affiliate
corporations, that may reasonably be required by any of such persons. It is
intended that any such certificate of Tenant delivered pursuant to this
Section 23 may be relied upon by Landlord and any prospective purchaser or
any then current or prospective ground or underlying lessor or mortgagee of
all or any part of the Real Property.
24. Guaranty.
[INTENTIONALLY DELETED]
25. Authority.
25.1 Authority of Tenant. Each of the persons executing this
Sublease on behalf of Tenant does hereby covenant and warrant that Tenant
is a duly authorized and existing Delaware corporation, Tenant has full
right and authority to enter into and perform this Sublease, and that each
and all of the persons signing on behalf of Tenant are authorized to do so.
Upon Landlord's request, Tenant shall provide Landlord with evidence
reasonably satisfactory to Landlord confirming the foregoing covenants and
warranties.
25.2 Authority of Landlord. Each of the persons executing this
Sublease on the part of Landlord does hereby covenant and warrant that
Landlord is a duly authorized and existing Nevada corporation, Landlord has
full right and authority to enter into and perform this Sublease, and that
each and all of the persons behalf of Landlord are authorized to do so.
Upon Tenant's request, Landlord shall provide Tenant with evidence
reasonably satisfactory to Tenant confirming the foregoing covenants and
warranties.
26. Arbitration.
Any dispute, controversy or claim which this Sublease expressly
requires or permits to be submitted to arbitration, or the determination of
the amount of any abatement of Rent provided for in this Sublease which is
not agreed to by the parties within a reasonable time following the event
or condition giving rise to such abatement, shall be settled by arbitration
in the City of Dallas by three arbitrators, one of whom shall be selected
by Landlord, one of whom shall be selected by Tenant and the other of whom
shall be selected by the mutual agreement of the arbitrators so selected by
Landlord and Tenant. Such arbitration shall be conducted in accordance with
the Rules of Commercial Arbitration of the American Arbitration
Association, or its successor. The arbitrators shall have no power to
modify any of the provisions of this Sublease and their jurisdiction is
limited accordingly. The expenses of arbitration shall be borne equally by
the parties, provided that each party shall be responsible for the fees and
expenses of its own experts, evidence and attorneys, and of the arbitrator
appointed by such party. The decision of the arbitrators shall be
conclusive, nonappealable and binding upon the parties hereto, and judgment
upon the award rendered by the arbitrators may be entered in any court
having jurisdiction thereof. It is understood and agreed by the Landlord
and Tenant that the Ground Lessor shall not be subject to or bound by
arbitration.
27. Termination of Sublease by Tenant.
Tenant may terminate this Sublease and its obligations hereunder
so long as Tenant is not in default in the payment of any amount due the
Landlord, by giving Landlord thirty (30) days written notice upon or after
the happening of any one of the following events:
(a) The issuance by any court of competent jurisdiction
of any injunction preventing or restraining the use of Love Field
Airport for the purposes described herein, the same to remain in
force and effect for a period of ninety (90) consecutive days or
more. Landlord shall not be liable to Tenant if the latter is so
dispossessed; but any time that such takes place, the rental
required of Tenant shall be abated and that period of time shall
be added as an extension to the term of the Sublease; provided,
however, that in no event shall the term of this Sublease be
extended beyond the term of the Ground Lease; and
(b) The assumption by the United States Government or
any agency or instrumentality thereof of the operation, control
or use of Love Field Airport for national defense in such a
manner as to preclude Tenant, for a period of ninety (90)
consecutive days or more, from using the Premises in the conduct
of its business. Landlord shall not be liable to Tenant if the
latter is so dispossessed; however, for any time that such takes
place, the rental required of Tenant shall be abated, and that
period of time shall be added as an extension of the Term of the
Sublease.
28. Affirmative Covenants.
28.1 Affirmative Covenants. In consideration for the improvements
to the Love Field Airport to be undertaken by the City with the assistance
of Federal funds to be provided to the City subject to certain assurances
being made by tenants and subtenants doing business at the Airport, Tenant
assures that it will undertake an affirmative action program as required by
14 CFR Part 152, Subpart E, to ensure that no person shall on the grounds
of race, creed, color, national origin, or sex be excluded from
participating in any employment activities covered in 14 CFR Part 152,
Subpart E. Tenant assures that no person shall be excluded on these grounds
from participating in or receiving the services or benefits of any program
or activity covered by this subpart. Tenant assures that it will require
that its covered suborganizations provide assurances to Landlord and Ground
Lessor that such suborganizations similarly will undertake affirmative
action programs and that they will require assurances from their
suborganizations, as required by 14 CFR Part 152, Subpart E, to the same
effect.
28.2 No Exclusion. Tenant assures that no person shall be
excluded from participation in, denied the benefits of, or otherwise
discriminated against in connection with the performance of the Sublease on
the grounds of race, color, national origin or sex.
28.3 Review of Federal Regulations. Tenant acknowledges that it
has read the applicable Federal Regulations, 14 CFR Part 152, Subpart E,
and 49 CFR Part 23.
30. Landlord's Increased Leasehold Area.
30.1 The parties hereby acknowledge that a portion of the
Building and Improvements which Tenant proposes to construct in accordance
with the Plans and Specifications will be situated on property which is
currently being leased to Tenant by the Ground Lessor pursuant to that
certain Lease dated January 25, 1978, by and between Tenant, as tenant, and
the Ground Lessor, as landlord (the "K-C Lease"). Concurrently with the
execution of this Sublease and effective as of the date hereof, the Ground
Lessor will enter into a Second Amendment to Lease (the "K-C Amendment")
with respect to the K-C Lease to delete the property that is designated as
"Parcel E" on Exhibit B attached hereto (the "K-C Land"). The Ground Lessor
will further amend the Ground Lease by entering into a 1989 Amendment to
Love Field Terminal and Air Cargo Facility Lease and Agreement (the "1989
Amendment") with Landlord to provide that the Ground Lease will include the
K-C Land.
30.2 The 1989 Amendment will provide that Landlord will be
obligated to pay the same rental rate for the K-C Land that Tenant was
required to pay under the K-C Lease at the time of the K-C Amendment.
Landlord and Tenant hereby agree that the rent payable by Landlord for the
K-C Land pursuant to the 1989 Amendment, as well as any additional payments
or adjustments relating to the K-C Land which are due and owing during the
Term of this Sublease, shall be paid by Tenant as Additional Rent
hereunder. Tenant shall make such payments to Landlord concurrently with
the payment by Tenant of the monthly installments of Base Rent payable
hereunder.
31. Miscellaneous.
31.1 Landlord and Tenant. The words "Landlord" and "Tenant" as
used herein shall include the permitted successors and assigns of each. The
plural number shall include the singular, and vice-versa. Words used in the
neuter gender include the masculine and feminine. If there is more than one
Tenant, the obligations under this Sublease imposed on Tenant shall be
joint and several. The captions preceding the articles of this Sublease
have been inserted solely as a matter of convenience and such captions in
no way define or limit the scope or intent of any provision of this
Sublease. As used herein, the term "including," when following any general
statement, term or matter, shall not be construed to limit such statement,
term or matter to the specific items or matters set forth immediately
following such word or to similar items or matters, whether or not
non-limiting language (such as "without limitation," or "but not limited
to," or words of similar import) is used with reference thereto, but rather
shall be deemed to refer to all other items or matters that could
reasonably fall within the broadest possible scope of such general
statement, term or matter.
31.2 Successors and Assigns. The terms, covenants and conditions
contained in this Sublease shall bind and inure to the benefit of Landlord
and Tenant and, except as otherwise provided herein, their respective
personal representatives and successors and assigns; provided, however,
upon the sale, assignment or transfer by the Landlord named herein (or by
any subsequent landlord) of its interest in the Real Property as owner or
ground lessee, including any transfer by operation of law, the Landlord (or
subsequent landlord) shall be relieved from all subsequent obligations or
liabilities under this Sublease, and all obligations subsequent to such
sale, assignment or transfer (but not any obligations or liabilities that
have accrued prior to the date of such sale, assignment or transfer) shall
be binding upon the grantee, assignee or other transferee of such interest,
and any such grantee, assignee or transferee, by accepting such interest,
shall be deemed to have assumed such subsequent obligations and
liabilities, and Landlord shall also be relieved of all responsibility or
liability for any security deposit of Tenant held by Landlord upon the
transfer thereof to any grantee, assignee or transferee in connection with
such sale assignment or transfer.
31.3 Validity of Provisions. If any provision of this Sublease or
the application thereof to any person or circumstance shall, to any extent,
be invalid or unenforceable, the remainder of this Sublease, or the
application of such provision to persons or circumstances other than those
as to which it is invalid or unenforceable, shall not be affected thereby,
and each provision of this Sublease shall be valid and be enforced to the
full extent permitted by law.
31.4 Applicable Laws. This Sublease shall be construed and
enforced in accordance with the laws of the State of Texas.
31.5 Execution and Delivery. Submission of this instrument for
examination or signature by Tenant does not constitute a reservation of or
an option for lease, and it is not effective as a lease or otherwise until
execution and delivery by both Landlord and Tenant and approval by Ground
Lessor. Tenant shall not be authorized to record this Sublease or any
memorandum thereof without Landlord's prior written consent.
31.6 No Representations or Warranties. This instrument, including
the Exhibits hereto, which are hereby made a part of this Sublease,
contains the entire agreement between the parties and all prior
negotiations and agreements are merged herein. Neither Landlord nor
Landlord's agents have made any representations or warranties with respect
to the Premises, the Building, the Real Property or this Sublease except as
may be expressly set forth herein, and no rights, easements or licenses are
or shall be acquired by Tenant by implication or otherwise unless expressly
set forth herein.
31.7 Review of Documents. The review, approval, inspection or
examination by Landlord or Ground Lessor, of any plans, specifications or
any other item to be reviewed, approved, inspected or examined by Landlord
or Ground Lessor under the terms of this Sublease (including any of the
Exhibits attached hereto) shall not constitute the assumption of any
responsibility for or any representation by Landlord or Ground Lessor as to
the accuracy or sufficiency of such plans, specifications or other item, or
the quality or suitability of such plans, specifications or other item for
its or their intended use. Any such review, approval, inspection or
examination by Landlord or Ground Lessor is for the sole purpose of
protecting Landlord's and Ground Lessor's interests under this Sublease,
and neither Tenant nor any person or entity claiming through or under
Tenant nor any third party, including, without limitation, the contractors,
agents, servants, employees, visitors or licensees of Tenant or any such
person or entity shall. have any rights hereunder or claim against Landlord
or Ground Lessor on account of any such review, approval, inspection or
examination by Landlord.
31.8 Legal Expenses. In the event that either Landlord or Tenant
fails to perform any of its obligations under this Sublease or in the event
a dispute arises concerning the meaning or interpretation of any provision
of this Sublease, the defaulting party or the party not prevailing in such
dispute, as the case may be, shall pay any and all costs and expenses
incurred by the other party in enforcing or establishing its rights
hereunder, including, without limitation, court costs and reasonable
counsel fees.
31.9 Surrender of Premises. Upon the expiration or sooner
termination of the Term, Tenant will quietly and peacefully surrender to
Landlord the Premises in the condition which existed upon final completion
and acceptance of the Building or other Improvements on the Premises,
ordinary wear and tear and the provisions of Article 13 excepted.
31.10 Quiet Enjoyment. Upon Tenant paying the Rent and performing
all of Tenant's obligations under this Sublease, Tenant may peacefully and
quietly enjoy the Premises during the Term as against all persons or
entities lawfully claiming by or through Landlord; subject, however, to the
provisions of this Sublease and to any mortgages and deeds of trust and the
Ground Lease referred to in Article 11.
31.11 Holding Over. Any holding over after the expiration of the
Term with the express written consent of Landlord shall be construed to be
a tenancy from month to month at double the Base Rent herein specified
(prorated on a monthly basis), and shall otherwise be on the terms and
conditions herein specified so far as applicable. Any holding over without
Landlord's express written consent shall constitute a continuing default by
Tenant and entitle Landlord to exercise any or all of its remedies as
provided in Article 17, notwithstanding that Landlord may elect to accept
one or more payments of Rent from Tenant. At the option of Landlord
exercised by written notice to Tenant, and not otherwise, such holding over
shall constitute a renewal of this Sublease for a period of one (1) year at
the Basic Rent specified in this Section 31.11. Any holding over after the
expiration or termination of the Ground Lease shall be subject to the
approval of the Ground Lessor.
31.12 Brokers. Each party hereto represents to the other that it
has dealt with no broker in connection with the execution and delivery of
this Sublease. Each party agrees to indemnify and defend the other party
against and hold the other party harmless from any and all losses, costs,
damages, liabilities and expenses (including without limitation court costs
and reasonable counsel fees) resulting from a breach by the indemnifying
party of the foregoing representation.
31.13 Cumulative Remedies; Survival of Indemnities. All rights
and remedies of either party set forth herein shall be cumulative, unless
specifically provided to the contrary herein. All provisions of this
Sublease requiring one party to indemnify the other with respect to any
matter, occurrence, condition, event, claim or liability shall survive the
expiration or other termination of this Sublease.
31.14 Time is of Essence. Time is of the essence with respect to
the performance of the obligations of the parties hereto as set forth in
this Sublease and all Exhibits hereto.
31.15 Approval of Ground Lessor. Notwithstanding anything to the
contrary contained herein, this Sublease shall not become effective, and
the parties shall not have any obligations or liabilities under or in
connection with this Sublease, unless and until this Sublease shall have
received the written approval of the Ground Lessor and all mortgagees or
trust deed beneficiaries presently holding any lien on or security interest
in all or any part of the Real Property. Landlord shall use its best
efforts to secure such approval, provided that Landlord shall not be deemed
to have agreed to pay any consideration for such approval to any such
mortgagee or beneficiary. Upon receipt of such written approval, Landlord
shall promptly send Tenant written notice thereof. If this Sublease is
disapproved by the Ground Lessor or any such mortgagee or beneficiary, or
if written notice of approval is not received from such mortgagee or
beneficiary within sixty (60) days from the date of execution of this
Sublease, this Sublease shall be deemed cancelled and of no further force
or effect, and neither party shall have any further liability to the other
hereunder.
31.16 Third Party Beneficiary. The parties hereto intend that the
City of Dallas be a third party beneficiary with respect to this Sublease
and the provisions, covenants and indemnities set forth herein.
31.17 Headings. The titles and headings contained in this
Sublease are used for convenience of reference only and shall not be
construed as part of this Sublease.
IN WITNESS WHEREOF, Landlord and Tenant have executed this
Sublease the day and year first above written.
LANDLORD: DALFORT AVIATION SERVICES, a
Division of Dalfort Corporation
By: /s/ Ronald G. Kiripolsky
------------------------------
RONALD G. KIRIPOLSKY
PRESIDENT AND CHIEF
EXECUTIVE OFFICER
TENANT: K-C AVIATION INC., a Delaware
corporation
By: /s/ [Illegible]
------------------------------
Name:[Illegible]
Title: President
CONSENT: CITY OF DALLAS
RICHARD KNIGHT, JR., City Manager
By: /s/ Richard Knight, Jr.
--------------------------
Assistant City Manager
Date: June 1, 1989
FIRST ADDITIONAL AGREEMENT
In connection with that certain Sublease that was entered into
effective as of January 17, 1989 (the "Sublease"), by and between Dalfort
Aviation Services (the "Landlord") and K-C Aviation Inc. (the "Tenant"),
for good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Landlord and the Tenant hereby additionally
agree as follows:
(1) As used in this First Additional Agreement, each term having
its initial letter capitalized shall have the same meaning that was given
to such term in the Sublease unless it is otherwise defined herein.
(2) In the event that the Tenant exercises the Expansion Option
that is set forth in Article 15 of the Sublease, the Landlord agrees that
it will provide, without additional charge and to the extent then available
at no cost or expense to the Landlord, a reasonable number of parking
spaces on the southwesterly side of the Option Premises in the area that is
designated as "Tenant Option Common Area" on Exhibit B for use by the
Tenant during the term of the Sublease.
(3) Except as amended hereby, the Sublease shall remain in full
force and effect. In the event of any conflict between the Sublease and
this First Additional Agreement, the provisions of this First Additional
Agreement shall control.
IN WITNESS WHEREOF, Dalfort Aviation Services, the Landlord, and
K-C Aviation Inc., the Tenant, have executed this First Additional
Agreement effective as of the 17th day of January, 1989.
Dalfort Aviation Services
Landlord
By: /s/ Ronald G. Kiripolsky
----------------------------
Ronald G. Kiripolsky
President and Chief
Executive Officer
K-C Aviation Inc.
Tenant
By: /s/ R.W. Emery
----------------------------
Name: /s/ R.W. Emery
-----------------------
Title: /s/ President
-----------------------