EXHIBIT 10.80
GROUND LEASE AGREEMENT
BETWEEN
THE
METROPOLITAN WASHINGTON AIRPORTS AUTHORITY
AND
ATLANTIC COAST AIRLINES
TO
DESIGN, CONSTRUCT, OPERATE AND MAINTAIN
AN AIRCRAFT MAINTENANCE FACILITY
AT
WASHINGTON DULLES INTERNATIONAL AIRPORT
INDEX
ATLANTIC COAST AIRLINES
AIRCRAFT MAINTENANCE FACILITY
ARTICLE SUBJECT PAGE
I Airport Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
II Rights and Obligations of the Lessee . . . . . . . . . . . . . . . . . . . . . . . 2
III Term of Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10
IV Rental Fees and Other Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
V Establishment of Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
25
VI Schedule for Submitting Plans and Specifications . . . . . . . . . . . . . 29
VII Title to the Facility, Fixed Improvements,
and Operating Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
31
VIII Certified Cost of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
33
IX Maintenance of the Aircraft Maintenance Premises. . . . . . . . . . . . . 35
X Leasehold Mortgages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
39
XI Assignment and Subletting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
64
XII Termination by the Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
68
XIII Termination by the Lessee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
71
XIV Destruction and Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
XV Insurance and Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
XVI Performance Guarantee and Bonds . . . . . . . . . . . . . . . . . . . . . . . . 79
XVII Late Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
81
Page 2
ARTICLE SUBJECT PAGE
XVIII Airport Rules and Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
XIX Copartnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
82
XX Participation in Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
82
XXI Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . 83
XXII Signs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . 83
XXIII Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
83
XXIV Right of Inspection of Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
XXV Saving Provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
84
XXVI Waiver of Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
84
XXVII Certification of the Lessee's Status . . . . . . . . . . . . . . . . . . . . . . . 85
XXVIII Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
85
XXIX Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .86
XXX Federal Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .93
Lease No. MWAA-LD-97-04
Page 1 of 97 Pages
This Ground Lease Agreement (hereinafter referred to as the "Lease"),
entered into by and between the Metropolitan Washington Airports Authority
(hereinafter referred to as the "Authority") and Atlantic Coast Airlines, a
California corporation qualified to transact business in the Commonwealth of
Virginia d.b.a United Express (hereinafter referred to as the "Lessee"). The
Authority and the Lessee together are referred to as the "Parties."
W I T N E S S E T H
WHEREAS, pursuant to the lease agreement, dated March 2, 1987, between
the United States of America, acting through the Secretary of Transportation,
and the Authority, the Authority controls certain real property known as
Washington Dulles International Airport (hereinafter referred to as the
"Airport") and, subject to the lease, has full power and dominion over, and
discretion in the operation and development of the Airport; and
WHEREAS, the Lessee desires to construct, operate and maintain an
aircraft maintenance facility for the purpose of performing routine and special
maintenance on its fleet of aircraft and aircraft operated by other scheduled
air carriers; and
WHEREAS, the Authority has an aircraft maintenance site available for
development on the Airport; and WHEREAS, the Lessee has submitted a
proposal to design, construct, operate, and maintain such an
aircraft maintenance facility, and the Authority has accepted the Lessee's proposal to do so on the terms and
conditions expressed herein; and
WHEREAS, the Lessee intends to utilize the proceeds of bonds issued by
the Industrial Development Authority of Loudoun County, Virginia, to finance the
development of the aircraft maintenance facility.
NOW, THEREFORE, in consideration of the charges, fees, mutual
covenants, conditions, and agreements contained herein, the Parties hereto agree
as follows:
ARTICLE I - AIRPORT PREMISES
For the purpose of designing, constructing, financing, operating,
maintaining, repairing, replacing, renovating, and restoring, an aircraft
maintenance facility that includes an aircraft maintenance hangar with office,
shops, and parts warehouse storage, a concrete aircraft parking apron, and
automobile parking area, the Authority hereby demises and leases to the Lessee
and the Lessee hereby accepts and leases from the Authority, subject to all of
the terms and conditions expressed herein, the plot of land on the Airport
containing 5.64 acres and the aircraft maintenance facility and related
improvements to be constructed thereon (hereinafter referred to as the "Aircraft
Maintenance Premises") as shown on Drawing No. 2231-001, attached hereto and
made a part hereof as Exhibit A, together with rights of ingress, egress, and
access from the North Service Road to the Aircraft Maintenance Premises.
ARTICLE II - RIGHTS AND OBLIGATIONS OF THE LESSEE
A. The Authority does hereby grant unto the Lessee the
nonexclusive right and privilege to design, construct,
finance, operate, maintain, repair, replace, renovate, and
restore, an aircraft maintenance facility on the Airport on
behalf of the Authority, but not as the agent, representative,
or partner of the Authority. The Authority may, at its
discretion, either construct and operate itself, or permit
others to construct and operate, other aircraft maintenance
facilities on the Airport.
B. The Authority does hereby grant unto Lessee the exclusive lease of the Aircraft Maintenance
Premises and the nonexclusive right to provide routine and special maintenance from the
Aircraft Maintenance Premises for the servicing of aircraft operated by the Lessee, aircraft
of other companies providing commercial air transportation of persons, property, and/or mail
pursuant to published schedules to and from the Airport and holding the necessary authority
from the appropriate Federal or state agencies to provide such air transportation services
(hereinafter referred to as "Scheduled Air Carriers") or Scheduled Air Carriers who have
executed an Airport Use Agreement and Premises Lease with the Authority (hereinafter referred
to as "Airlines"). The Lessee shall not have the right to perform maintenance services on
---
private or corporate aircraft not used in the common carriage of passengers, cargo, or
freight, or aircraft used as a non-scheduled charter operation or air taxi (hereinafter
referred to as "General Aviation aircraft").
C. The routine and special maintenance service (hereinafter referred to as "Aircraft Maintenance
Services") to be performed from the Aircraft Maintenance Premises shall include, but not be
limited to, the maintenance, servicing, testing, and modification of aircraft, including
without limitation the finishing, refitting, repairing, inspecting, installing, painting,
stripping, cleaning, rewiring, reprogramming, and replacing of components (including without
limitation, avionics, power plants, interiors, mechanical systems, navigation systems, and
communication systems); retrofitting, upgrading, refurbishing, reconfiguring, re-engining and
conversion of aircraft; the maintenance of such hanger, office and shop space and related
facilities necessary for, or related to, such activities; maintenance and repair of ground
support equipment including without limitation vehicles, tugs, baggage carts, special-purpose
vehicles and other airfield equipment; and undertaking of ground activity necessary for the
support of such activities. Aircraft Maintenance Services shall also include the obtaining,
installing, storing, and operating of all necessary material, machinery, and equipment to
maintain, repair, store, and park vehicles and equipment used and necessary to support the
services permitted herein. No other use may be made of the Aircraft Maintenance Premises
without the advanced written approval of the Authority.
D. The Authority shall have the continuing right to approve the
kind and scope of any additional activities proposed to be
conducted on or from the Aircraft Maintenance Premises in
addition to those specifically referred to herein.
E. No other commercial business or concession shall be operated on or from the Aircraft
Maintenance Premises unless authorized in advance by this Lease, or approved in writing by the
Authority. The Lessee shall not use, or suffer or permit any person or party to use, the
Aircraft Maintenance Premises for any purpose not authorized under this Lease or by separate
written approval of the Authority. All restrictions or requirements imposed by this Lease on
the Lessee shall be deemed to extend to the Lessee's agents, customers, tenants, employees,
contractors, subcontractors, and guarantors. It shall be the Lessee's obligation to cause
these persons and parties to comply with the restrictions or requirements of this Lease.
F. The Lessee shall provide, at its own cost and expense, the
necessary skilled management and labor to ensure, on a
continuing basis throughout the term of this Lease, that the
Aircraft Maintenance Premises is operated and maintained
efficiently, and in a manner reasonably satisfactory to the
Authority.
G. The Lessee shall, at its own cost and expense, comply with all mandatory Federal, state, or
local laws, ordinances, rules or regulations including directives and regulations of the
Authority, now or hereafter in force, governing the establishment, maintenance, and operation
of the Aircraft Maintenance Premises. All such ordinances, rules, or regulations shall be
applied in a nondiscriminatory manner, provided, provisions of future Authority directives and
rules and regulations, as applied to Lessee, shall not adversely affect Lessee's use of the
Aircraft Maintenance Premises as provided for by this Lease. The Lessee shall obtain and pay
for all licenses and permits necessary for the establishment, maintenance, and operation of
the Aircraft Maintenance Premises by the Lessee, and shall pay all fees and charges applicable
to the Lessee and assessed under state, local, or Federal statutes or ordinances.
H. For the purposes described in Article II hereof, and elsewhere herein, the Authority grants to
the Lessee, and the employees, customers, contractors, suppliers, service personnel,
licensees, guests, patrons, tenants, and invitees of the Lessee, without charge therefor, the
right of ingress to and egress from the Aircraft Maintenance Premises over the Airport roadway
system; PROVIDED, that such rights of ingress and egress shall at all times be exercised in
compliance with any and all regulations promulgated by lawful authority for the care,
operation, maintenance, and protection of the Airport and applicable to all users of the
Airport; AND PROVIDED FURTHER, that such rights of ingress and egress shall not be construed
to prohibit the Authority from establishing and assessing a reasonable fee or charge for the
privilege of entry upon the Airport when such a fee or charge is levied upon all users of the
Airport, nor to prohibit the Authority from assessing a fee or charge on persons conducting a
commercial business on the Airport; AND PROVIDED FURTHER, that in no event shall the Authority
prevent or impede access to the Aircraft Maintenance Premises.
I. The Lessee, and the customers, tenants, and invitees of the
Lessee may make use of the runways and taxiways of the Airport
to gain access to the Aircraft Maintenance Premises as is
permitted by the Authority's rules and regulations and subject
to the fees and charges assessed aircraft for the use of the
Airport.
J. The Lessee shall abide by all airfield and other security related requirements established by
the Authority, which apply to the Lessee and employees, service personnel, guests, visitors,
contractors, patrons, and invitees of the Lessee. The Authority is required by Federal
Aviation Regulations (FAR), Part 107, to, "adopt and put into use facilities and procedures
designed to prevent and deter persons and vehicles from unauthorized access to the "Air
Operations Area." The Lessee understands that the Authority has met said requirements by
developing a security plan for the Airport, and the operations of the Lessee shall not
conflict with the security standards set forth in said plan. The Lessee shall prepare and
submit for the Authority's approval, which approval shall not be unreasonably withheld, its
own plans to provide facilities and procedures designed to prevent and deter persons and
vehicles from unauthorized access to the Air Operations Area from and through any premises
controlled or used by the Lessee in accordance with the provisions of FAR, Part 107, and the
security plan for the Airport. To meet the requirements of Part 107, the Lessee's security
procedures and facilities on the Aircraft Maintenance Premises shall insure positive control
which shall prevent the entrance of unauthorized persons and vehicles onto the Air Operations
Area of the Airport and shall include but not be limited to:
1. Fencing and locked gates,
2. Visible identification materials for persons
authorized to enter the Air Operations Areas,
3. An electronic entry control system where gates or
doorways cannot reasonably be controlled by locks,
and
4. Other facilities and procedures as may be reasonably
required by the Authority.
K. Prohibited Uses. Lessee shall not use the Aircraft Maintenance Premises nor permit the same
---------------
to be used by its customers, tenants, invitees, contractors, service personnel or employees to
provide services, facilities, commodities, or supplies made available through concessionaires
or other contractors under contract with the Authority to provide such services, facilities,
commodities, or supplies on the Airport ("Prohibited Uses"); provided, however, that Aircraft
-------- -------
Maintenance Services, as defined in Article II.C. above, shall not be prohibited hereunder.
Prohibited Uses include, but are not limited to: the providing of services, facilities,
commodities, or supplies now or hereafter made available through other concessionaires and
contractors on the Airport (other than Aircraft Maintenance Services), and the operation of
automobile or vehicle rental businesses, airline inflight kitchens, air cargo facilities, or
commercial vehicle parking for the general public. Lessee shall not use the Aircraft
Maintenance Premises for the storage, transportation, disposal, discharge, or handling of any
hazardous substances, except for the storage, transportation, disposal, discharge, or handling
of such substances reasonably necessary for the conduct of Aircraft Maintenance Services.
Under no circumstances shall any use be made of, or conduct occur on, the Aircraft Maintenance
Premises, which use would cause the Aircraft Maintenance Premises or any part thereof to be
deemed a hazardous waste treatment, storage, or disposal facility requiring a permit, interim
status, or any other special authorization under any Environmental Laws. Lessee agrees that
storage of aircraft fuel upon or within the Aircraft Maintenance Premises (except for fuel
brought on the same in fuel tanks of aircraft) is prohibited and that purchases of aircraft
fuel for delivery at the Airport shall be made only from service contractors authorized by the
Authority to deliver or sell such fuel. All subleases involving any portion of the Aircraft
Maintenance Premises shall incorporate in substance the terms of this Lease.
ARTICLE III - TERM OF LEASE
A. The term of this Lease shall commence upon the date of execution by the Authority and shall
expire at the end of the Operating Period of the Lease. The Operating Period of the Lease
shall extend for a period not to exceed twenty-six (26) years ten (10) months and twenty-one
(21) days from the date on which the Authority issues its occupancy permit or equivalent
stating that the Aircraft Maintenance Premises is ready for occupancy and use by the Lessee.
The Parties hereto shall establish this date in writing, and that date, when established,
shall begin the Operating Period. There shall be no occupancy or use of the Aircraft
Maintenance Premises by Lessee for the conduct of Aircraft Maintenance Services prior to the
beginning of the Operating Period.
In no event shall the Operating Period exceed 80% of the
confirmed or adjusted expected useful economic life of the
Aircraft Maintenance Premises. In this regard, the Lessee has
provided the Authority with a written appraisal, acceptable to
the Authority, establishing the expected useful economic life
of the Aircraft Maintenance Premises at thirty-three and
six-tenths (33.6) years. Eighty percent (80%) of the 33.6 year
expected useful economic life of the Aircraft Maintenance
Premises is the term of the Operating Period stated in this
paragraph A.
B. In the event that Lessee does not comply with the schedule set forth in Article VI.C. hereof,
but subject to the conditions and extensions of time provided for herein, the Authority shall
have the option to terminate this Lease and all of Lessee's rights hereunder after such date
by giving sixty (60) days prior written notice of the termination to Lessee and by designating
any improvements on the Aircraft Maintenance Premises to be removed by Lessee. Lessee shall
then, at its own expense, demolish and remove all Authority-designated improvements, including
the aircraft maintenance hangar building and any related improvements on the Aircraft
Maintenance Premises. Upon such termination becoming effective, the Authority shall be hereby
relieved of its obligations hereunder and shall be free to lease the land to other parties.
C. Upon the termination or expiration of this Lease, the Lessee
shall deliver the Aircraft Maintenance Premises to the
Authority in good condition, reasonable wear and tear
excepted. Lessee shall pay to the Authority the costs, if any,
incurred by the Authority to bring the Aircraft Maintenance
Premises up to such condition.
D. Lessee understands that there is no renewal or purchase option
contained herein or otherwise agreed to and that there is no
expectation of any such renewal or purchase option.
ARTICLE IV - RENTAL FEES AND OTHER CHARGES
In consideration of the rights and privileges granted herein, the
Lessee agrees to pay to the Authority an annual ground rental; a service cost
fee; utility payments; and, if applicable, a percentage and sublease rental fee
from the gross receipts realized by the Lessee by virtue of providing Aircraft
Maintenance Services and/or the sublease of space on the Aircraft Maintenance
Premises to its customers as permitted by this Lease. Except for the percentage
and sublease rental fee that is paid quarterly, all other payments shall be made
monthly, commencing at the beginning of the Operating Period and continuing
monthly until the expiration of the term of this Lease, as follows:
A. Annual Ground Rental - An annual ground rental shall be
prorated monthly and paid monthly in advance beginning on the
first day of each calendar month of the Operating Period and
continuing until the expiration of this Lease. If the
Operating Period begins or this Lease terminates on a day
other than the first day of the month, rental shall be
prorated on a daily basis for that portion of the first and
last month.
1. The annual ground rental shall be calculated as the
appraised market value of the land leased under this
Lease times a seven percent (7%) capitalization
ratio; PROVIDED, HOWEVER, that no annual ground
rental shall be charged for the land comprising the
aircraft parking apron on the Aircraft Maintenance
Premises.
2. For the initial five (5) years of the Operating Period, the Lessee shall pay an
annual ground rental of Sixty-Six Thousand Nine Hundred and Twelve Dollars
($66,912.00) payable in monthly payments of Five Thousand Five Hundred and
Seventy-Six Dollars ($5,576.00) This is calculated as (1) the initial appraised
market value of the land leased under this Lease at $4.85 per square foot, multiplied
by (2) the portion of the Aircraft Maintenance Premises to which the annual ground
rental applies (197,090 sq. ft.), multiplied by (3) the capitalization ratio of seven
percent (7%).
3. For the second and each of the subsequent five (5) year terms of the Operating
Period, the annual ground rental shall be adjusted to reflect any change in the
appraised market value of land leased under this Lease. In this regard, land shall
be reappraised during the fifth, tenth, fifteenth, twentieth and twenty-fifth year of
the Operating Period to facilitate the rental adjustment. Once the new appraised
market value of the land has been determined, the new annual ground rental shall be
calculated by multiplying 7% times the new appraised market value of the land leased
under this Lease to which the ground rental applies (i.e. the Aircraft Maintenance
Premises less the land area comprising the aircraft apron on the Aircraft Maintenance
Premises). The new annual rental shall become effective and due on the first day of
the sixth year of the Operating Period and shall continue each and every month until
it is again adjusted on the first day of the eleventh, sixteenth, twenty-first and
twenty-sixth year of the Operating Period. Notwithstanding the foregoing, however,
in no event shall the adjusted annual ground rental for any of the subsequent five
(5) year terms of the Operating Period be increased by more than thirty percent (30%)
above the annual ground rental for the immediately preceding five (5) year term of
the Operating Period.
4. The adjustments of the annual rental shall be determined by the Authority on the
basis of appraisals made by two (2) commercial real estate appraisers who are members
of the Master Appraisers Institute. The Authority shall select one such appraiser
and the Lessee shall select the other, with the understanding that the fee due and
payable to the appraisers shall be made by the Authority and the Lessee respectively
to their selected appraiser. The Aircraft Maintenance Premises shall be considered
as unimproved land for purpose of these appraisals. Unimproved land shall mean land
with adjacent Airport infrastructure improvements, but without any leasehold
improvements, structures, or paving. The appraised value shall be set at the
arithmetic average of the two (2) appraisals; PROVIDED, HOWEVER, that in the event
that such appraisals differ by more than twenty percent (20%), the appraisers
selected by the Authority and Lessee shall select a third appraiser who shall
thereupon complete his appraisal of the Aircraft Maintenance Premises considering
such as unimproved land. In the latter situation, the fair market value of the
Aircraft Maintenance Premises shall be computed by selecting the two (2) appraisals
which are closest in value, be they the two (2) highest or two (2) lowest appraisals,
discarding the third, and thereafter taking the arithmetic average of such appraised
values as in the situation where only two (2) appraisals were made. The fee of the
third appraiser shall be borne equally by the Authority and the Lessee.
B. Service Cost Fee - An annual service fee to recover the
allocated costs of services provided to the Lessee by the
Authority for each year of the Operating Period. 1. The
service costs for the Airport shall consist of that portion of
the Airport's
annual maintenance and operating costs for police,
fire/crash rescue, maintenance of roads and grounds,
and maintenance of the access highway allocated to
the commercially leased land areas of the Airport,
other than the passenger
terminals and airfield buildings and areas. See
Exhibit B for the service cost fees for the
commercially leased areas on the Airport for FY 1997.
2. The service costs shall be established by the Authority annually to reflect the
latest fiscal year costs experienced by the Authority in providing these services to
the commercially leased areas of the Airport. An Airport service cost per square
foot shall be calculated annually by dividing the total service costs experienced by
the Authority by the total commercially leased areas of the Airport subject to a
service cost fee. The annual service cost fee for the Lessee shall then be
calculated as the product of the land area leased under this Lease and the service
cost per square foot for the commercially leased areas of the Airport.
3. The annual service cost fee shall be prorated on a monthly basis and paid monthly in
advance beginning on the first day of each calendar month of the Operating Period and
continuing on the first of each month until written notice is received from the
Authority establishing the new annual service fee. The initial annual service fee
shall be Sixty-Two Thousand Six Hundred and Fifty-One Dollars ($62,651.00) payable in
monthly payments of Five Thousand Two Hundred and Twenty-One Dollars ($5,221)
beginning on the first day of the Operating Period. If the Operating Period becomes
effective or terminates on a day other than the first day of the month, service costs
shall be prorated on a daily basis for that portion of the first and last month of
the Operating Period.
C. Percentage and Sublease Rent
1. Lessee shall pay to the Authority percentage rent on the gross receipts received from
performing Aircraft Maintenance Services on aircraft of other Airlines and the
aircraft of Scheduled Air Carriers serving the Airport from the Aircraft Maintenance
Premises, except that percentage rent shall not be due for any Aircraft Maintenance
Services performed on behalf of United Airlines or any other code sharing partner,
any affiliate or subsidiary thereof or any successor thereto, nor for any affiliate,
subsidiary or successor to Lessee. The percentage rent shall consist of eight
percent (8%) of the adjusted gross receipts derived by the Lessee from providing
Aircraft Maintenance Services. Gross receipts shall be adjusted to first deduct the
acquisition cost for equipment acquired by the Lessee on behalf of its customer and
installed on the aircraft of its customer prior to applying the 8% fee (i.e., total
gross receipts received from a customer minus the cost of any equipment acquired on
behalf of the customer and included in gross receipts times 8% shall be the
percentage rent due the Authority).
2. The Lessee shall pay to the Authority percentage rent
on the gross receipts derived from performing Ground
Support Equipment Maintenance Services related to the
maintenance and repair of ground support equipment
such as vehicles, tugs, baggage carts,
special-purpose vehicles, and other airfield
equipment of other Airlines. The percentage rent
shall consist of eight percent (8%) of the gross
receipts received for Ground Support Equipment
Maintenance Services.
3. Subject to the provisions of Article X herein, the Lessee shall pay sublease rent for
approved subleases on the Aircraft Maintenance Premises to parties other than the
Lessee or its affiliates. For the initial five (5) years of the Operating Period,
the sublease rent shall be initially established at $2.25 per square foot per year
times the amount of approved subleased space on the Aircraft Maintenance Premises
times the actual time, on a daily basis, that such sublease is in effect (i.e.,
sublease right is only for 3 hours per day, etc.) or eight percent (8%) of the
sublease rental paid to Lessee, whichever is the greater amount. The sublease rent
based on percentage shall remain at 8% for the term of this Lease. The sublease rent
based on a dollar rental per square foot shall be adjusted for each five (5) year
term of the Operating Period in accordance with the Index now known as the United
States Bureau of Labor Statistics, Consumer Price Index, all Urban Consumers,"
1982-1984 = 100 Base, All Items, U.S. City Average (hereinafter referred to as the
"Index"). Such adjustment shall be calculated by multiplying the sublease rent in
effect by the percentage increase in the Index from the Index most recently published
prior to the commencement of the five (5) year term of the Operating Period to the
Index most recently published prior to the date on which the adjustment becomes
effective. Any resulting positive number shall be added to the applicable sublease
rent per square foot to determine the adjusted sublease rent. In no event shall the
increase of the sublease rent be greater than thirty percent (30%) above the sublease
rent for the preceding five year term of the Operating Period.
If such Index shall be discontinued with no successor
or comparable successor Index, or if a substantial
change is made in the term or number of items
contained in this Index, or if the Index ceases to
use 1982-1984 = 100 as the basis for calculation, the
Parties shall attempt to agree upon a substitute
formula, but if the Parties are unable to agree upon
a substitute formula, then the matter shall be
determined by arbitration in accordance with the
rules of the American Arbitration Association then
prevailing.
The percentage and sublease rent for each quarter
shall be due and payable on or before the 15th
calendar day following the close of each quarter for
the previous quarter's activity. The Lessee shall
submit a statement on or before the 15th calendar day
following the close of each quarter, certified to be
true by the signature of an authorized official of
the Lessee, that details the Lessee's total gross
receipts and the calculation of the percentage and
sublease rent due the Authority. Certified statements
shall be required each quarter, regardless of whether
the Lessee has any gross receipts to report.
D. Utility Service Payments - The Authority shall furnish to the Lessee all utilities (including,
------------------------
without
limitation,
electricity,
gas,
water,
and
sanitary
sewer)
required
for
the
use
and
operation
of the
Aircraft
Maintenance
Premises
as
contemplated
by
this
Lease.
In
addition
to the
annual
ground
rental,
service
cost
fee,
and
percentage
and
sublease
rent
stated
above,
the
Lessee
shall
pay
the
Authority
as
additional
rent
an
amount
necessary
to pay
for
all
utilities
(electricity,
gas,
water,
and
sanitary
sewage)
furnished
by the
Authority
to the
Aircraft
Maintenance
Premises.
Charges
for
utilities
consumed
by the
Lessee
shall
be
reasonably
established
by the
Authority
and be
consistent
with
like
charges
assessed
other
users
of the
utilities
on the
Airport.
Utility costs for the Airport consist of system costs and
invoice costs. System costs are those derived from the
maintenance and operation of the utility distribution system
and invoice costs are the Authority's cost of acquiring
utilities from the utility providers. The system and invoice
costs are combined and divided by the previous year's utility
consumption to derive the utility rate for each utility. The
utility rates are applied to Lessee's metered consumption to
derive the utility charges due the Authority.
Payment for utilities shall be made by the Lessee within
thirty (30) calendar days from receipt of billing by the
Authority. The utility rates may be changed periodically
during the term of this Lease. The Authority agrees to notify
the Lessee in writing of changes in utility rates prior to the
effective date of such changes.
E. Project Rental - With respect to the financing of the Aircraft Maintenance Premises, the Lessee
--------------
shall also pay Project Rental (i) in the amount of the principal and interest on the bonds
("Bonds") or the portion of the purchase price corresponding thereto, to be issued by the
Industrial Development Authority of Loudoun County, Virginia ("the IDA") or (ii) if the Bonds are
secured by a letter of credit or similar credit enhancement (the "Credit Facility") that will be
drawn upon to pay principal and interest and the purchase price of the Bonds, in an amount equal
to the amount necessary to reimburse the issuer of the Credit Facility (the "Credit Facility
Provider"), or any guarantor of such obligations of the Lessee (the "Guarantor"), for draws under
the Credit Facility to pay principal and interest and the purchase price of the Bonds. A pro rata
portion of the Project Rental that corresponds to the principal of the Bonds, or the portion of a
drawing under the Credit Facility that corresponds to principal on the Bonds, shall be allocable
to, and shall accrue in, for tax purposes, each year of the Operating Period during which Project
Rental is paid. Such Project Rental shall be payable in the amounts and at the times necessary to
make all payments due to the IDA and the Credit Facility Provider and the Guarantor. The
Authority hereby assigns the Project Rental to the IDA and the Credit Facility Provider and the
Guarantor and the Lessee is hereby directed to pay such Project Rental to or at the direction of
the IDA; provided, however, that as long as the Credit Facility remains outstanding or any amounts
are owed the Credit Facility Provider or the Guarantor (and the Credit Facility Provider has not
failed to pay a drawing in strict compliance therewith) the Lessee is directed to pay such amount
to, or as directed by, the Credit Facility Provider and Guarantor. Except for the above
direction, the Authority shall not have any liability for the payment of any principal of,
interest on, or other costs due on the Bonds or amounts due the Credit Facility Provider or
Guarantor. Notwithstanding any other provision contained herein to the contrary, any requirement
for the payment of Project Rental shall terminate upon the repayment in full of the Bonds, or
other satisfaction of the indebtedness thereunder, including, without limitation, pursuant to any
foreclosure or other remedial action by or on behalf of the holders of such Bonds; provided that
such obligation shall not terminate without the written consent of the Guarantor and the Credit
Facility Provider unless the Credit Facility has terminated and all amounts owed to the Guarantor
and the Credit Facility Provider have been paid in full.
F. Priority of Payment
1. After the payment of those costs necessary for
maintaining and operating the Aircraft Maintenance
Premises in accordance with Article IX hereof, Lessee
shall pay the rental fees and other charges in
accordance with this Article IV in the following
order or priority:
First - Utility Service Payments
Second - Project Rental
Third - Annual Ground Rental and Service Cost Fee
Fourth - Percentage and Sublease Rent
2. In the event that insufficient funds are available
during any quarter to pay all of the rental fees and
other charges required under this Article IV, Lessee
shall provide the Authority, within thirty (30)
calendar days following the close of the quarter, a
detailed statement of cash flow for the previous
month setting forth in detail all income and expenses
for the prior quarter, the allocation of the funds in
accordance with the priority set forth herein, and
the amount accrued and due the Authority, including
any late charges.
3. The Authority may, at its option, exercise its right
to claim the annual performance guarantee, provided
for under Article XVI herein, should the Lessee fail
to pay utility payments and/or rental fees and other
charges due the Authority and that are greater than
thirty (30) calendar days past due. The annual
renewal of the performance guarantee shall be
considered as a cost necessary for the maintenance
and operation of the Aircraft Maintenance Premises as
outlined in paragraph F.1. above.
4. The priority of payments set forth in this Paragraph
F. shall apply only during the period that the
initial financing is in place, as the same may be
modified or amended (with Authority approval) from
time to time.
G. All remittances due the Authority by the terms and conditions
of this Lease shall be made payable to the "Metropolitan
Washington Airports Authority" and forwarded to: Metropolitan
Washington Airports Authority, P.O. Box 2143, Merrifield,
Virginia 22116-2143. The certified statements shall also be
forwarded to the above address. Each payment submitted to the
Authority shall include a statement that identifies the
specific type of payment being made (i.e., ground rental
payment, service cost fee, percentage and sublease rent, or
utility payment), the period of time the payment covers, and
the number of this Lease.
ARTICLE V - ESTABLISHMENT OF FACILITY
The Lessee agrees to design, construct, finance, operate, maintain,
repair, restore, renovate, and replace, an aircraft maintenance facility and
related improvements comprising the Aircraft Maintenance Premises on behalf of
the Authority, but not as the agent, representative, or partner of the
Authority, which will reasonably conform with the scope and quality of the
aircraft maintenance facility and related improvements as described herein and
presented by the Lessee to the Authority. The Lessee's total investment in
Aircraft Maintenance Premises is estimated to be approximately Ten Million
Dollars ($10,000,000.00). The Authority shall construct a taxiway connector to
connect the airfield (Taxiway W-2) with the Aircraft Maintenance Premises. The
Lessee agrees that the taxiway connector is to be used in common by such
lessee(s) and aircraft operators authorized by the Authority. The Authority
shall cut and remove the trees from the Aircraft Maintenance Premises. The
Aircraft Maintenance Premises may undergo design changes during the
pre-development and development periods, and, to the extent such changes are not
within the scope of the work as described herein, they shall be subject to the
separate written approval of the Authority, as provided for under Article VII
herein. The Lessee's obligations shall include, but not be limited to the
following:
A. The construction of an aircraft maintenance hangar building
with approximately 65,000 square feet of gross interior hangar
space and approximately 25,000 square feet of office, shops,
and warehouse storage space.
B. The construction of a concrete aircraft parking apron adjacent
to the aircraft maintenance hangar of approximately 48,600
square feet in size.
C. The construction of suitable open equipment storage areas and
an automobile parking area adjacent to the aircraft
maintenance hangar for the employees, customers, tenants,
contractors, service personnel, and invitees of the Lessee.
D. The construction of on-site concrete curbing and gutters,
on-site concrete sidewalks, the connection of gutters to the
Airport storm drainage system, exterior lighting, security
fencing and gates, and landscaping, all as considered
necessary for the development and use of the Aircraft
Maintenance Premises.
E. Connection to the dual electrical feeder system located along
the North Service Road at an existing manhole in order to
ensure a continuous supply of power in the event of failure of
the existing feeder or in the event the feeder must be shut
down for maintenance or repairs.
F. The landscaping of the approximately forty (40) foot wide
setback between the eastern border of the Aircraft Maintenance
Premises and the western edge of North Service Road, in
accordance with the Authority's Design Manual.
G. A fire suppression system to comply with fire code
requirements for the maintenance activity conducted within the
hangar.
H. The installation of a Best lock keying system on all primary
building entrances and mechanical room entrances for police,
security, fire protection, and maintenance access.
I. The plans and specifications applicable to the construction of
the aircraft maintenance facility must show the following
items and shall be subject to the specific approval of the
Authority, which will not be unreasonably withheld, prior to
commencement of any work: 1. The design and construction
detail of the mass and facade of the aircraft maintenance
hangar building, including the roof, exterior
lighting, windows, the foundation, the steel
structure, and exterior finish material. A listing of
the specifications and capacity of the electrical,
plumbing, water, sewage, heating, ventilating, and
air conditioning systems.
2. The pavement section details and specifications for the concrete aircraft parking apron.
3. The pavement section details and specifications of the automobile parking area and the
access roadway connection to the Airport roadway system.
4. Architectural and landscaping plans and the exterior sign plans.
5. A storm water management plan, including runoff calculations.
6. The fire suppression system design and specifications for the hangar.
J. The latest edition of the following codes and regulations shall apply to the construction of the
aircraft maintenance facility:
1. The 1987 Uniform Building Code of Virginia which shall have priority in the event of a
conflict with any other applicable code.
2. 1987 Building Officials and Code Administration:
(a) Basic Building Code
(b) Basic Mechanical Code
(c) Basic Plumbing Code
3. National Electrical Code.
4. National Fire Protection Association's National Fire Codes.
5. Uniform Federal Accessibility Standards as published
in the Federal Register on August 7, 1984.
6. Applicable Federal Aviation Administration Regulations
(FAR) and Advisory Circulars (AC).
7. Metropolitan Washington Airports O&I No. 6-3-1B, Construction and Alterations to
Buildings.
To the extent of any inconsistency between the above codes and
regulations and the plans and specifications as approved by
the Authority, the approved plans (and any waivers or
modifications contained in the plans, as approved) will
control.
ARTICLE VI - SCHEDULE FOR SUBMITTING PLANS AND SPECIFICATIONS
The Lessee shall obtain the Authority's written approval, which shall
not be unreasonably withheld, of final plans and specifications, prior to
commencement of construction work on the Aircraft Maintenance Premises. The
Lessee agrees to diligently pursue the design and construction of the facility.
A. The Lessee has submitted preliminary plans and specifications for the facility that are acceptable
to the Authority.
B. Lessee intends to submit major design components for approval
in phases. Such components may include, but are not limited
to, the pre-engineered building, site work and mechanical,
electrical and plumbing systems. Review of any of the plans
for any major design component submitted to the Authority
shall be completed and approved or disapproved by the
Authority within 45 calendar days. Any revision or
resubmission of disapproved plans
or components shall be made within 30 days, and the Authority
shall have 14 days to review such resubmitted plans or
components. Each plan or component, when approved, shall
entitle Lessee to proceed with ordering the materials and
parts and commencing that portion of the work. Lessee shall
submit final plans and specifications for the entire facility
to the Airport Manager for approval within 120 days after
execution of this Lease.
C. Subject to the ability of Lessee to obtain necessary permits and other governmental approvals and
subject to other circumstances beyond Lessee's reasonable control, the Lessee agrees to commence
construction of the aircraft maintenance facility and to totally erect and have the facility ready
for occupancy within fifteen (15) months after the date of commencement of the construction;
PROVIDED, that the total elapsed time from the commencement of the Lease Term to completion and
occupancy of the facility shall be no more than two (2) years unless the construction is
temporarily stopped, interrupted, or otherwise handicapped or prevented for reasons beyond the
control and without the fault or negligence of the Lessee including, but not limited to, acts of
God, fire, floods, windstorms, or tornadoes. In such a case, the applicable period of time
required to complete construction shall be suspended for such time as may be deemed reasonable by
the Authority.
D. The construction work to be performed by or for the Lessee shall be accomplished in substantial
accordance with plans and specifications approved by the Authority and shall be subject to the
Authority's inspection and approval, both during the work and after its completion. The Authority
will not unreasonably delay or interfere with Lessee's construction schedule, and to that end, the
Authority and its inspectors will coordinate its inspection activities with the Lessee and its
construction manager and/or contractor. Whenever possible, the Authority will conduct its
inspections at the same time as the architect's inspection of the construction progress so that
any issues that may arise can be handled jointly. The Lessee shall redo or replace, at its own
expense, any work not in substantial accordance with plans and specifications approved by the
Authority.
ARTICLE VII - TITLE TO THE FACILITY, FIXED IMPROVEMENTS,
AND OPERATING FACILITIES
A. Title to the aircraft maintenance facility and all fixed improvements on the Aircraft Maintenance
Premises constructed by the Lessee under this Lease, and to any and all subsequent alterations,
modifications, and enlargements completed during the term of this Lease, as approved by the
Authority, shall, subject to the requirements of the Bonds, vest in the Authority as they are
constructed. The Lessee shall have the contractual obligation to construct the improvements, in
accordance with the plans and specifications approved by the Authority, to a quality level which
is commercially reasonable, conforms to industry standards for such facilities and therefore is
acceptable to the Authority and shall make such corrections to the work as the Authority
reasonably requests.
B. The Lessee shall have no right during the term of this Lease
to demolish, in whole or in part, any building, structure, or
fixed improvement constructed under the terms and conditions
of this Lease except with the written consent of the Authority
and any leasehold mortgagee(s) with an interest in the
building, structure, or fixed improvement to be demolished,
which may at the discretion of the Authority be conditioned on
the obligation of the Lessee to replace the same by a
building, structure, or fixed improvement acceptable to the
Authority.
C. The Lessee and its subtenants shall have the right to lease, encumber, or own and use such trade
equipment, furniture, operating facilities, and trade fixtures directly related to the operation
at the aircraft maintenance facility, and other trade personalty as may be deemed desirable in the
use of the aircraft maintenance facility. The Lessee and any subtenant or secured party, to the
extent of their respective interests in such personalty, shall have the right at any time to
remove or replace any and all thereof; PROVIDED, that any damage caused to real property by such
removal or replacement shall be repaired to the satisfaction of the Authority by and at the
expense of the Lessee.
ARTICLE VIII - CERTIFIED COST OF CONSTRUCTION
A. Certified Statement
The Lessee shall, within 180 calendar days following
commencement of the Operating Period, submit a certified
statement for the total cost of construction of the aircraft
maintenance facility and all fixed improvements constructed on
the Aircraft Maintenance Premises to the Authority for
approval and in sufficient itemized detail to clearly identify
the actual sums expended. The certified statement shall
identify which costs of the aircraft maintenance facility have
been paid from proceeds of the Bonds.
B. Allowable Costs of Construction to Determine Certified Costs
Allowable costs of construction to determine the certified
costs reported under paragraph A. above shall include all
costs, fees, and expenses paid, incurred or to be incurred by
the Lessee on behalf of the Authority, but not as the agent,
representative, or partner of the Authority, in connection
with the design, development, financing, and construction of
the aircraft maintenance facility. The costs of construction
shall specifically include:
1. Amounts paid for all construction, equipment, and
material costs for the aircraft maintenance facility
including the hangar, offices, shops, and storage
warehouse and all equipment attached to and made a
permanent part of the facility, the aircraft parking
apron, and all other fixed improvements made on the
Aircraft Maintenance Premises.
2. Amounts paid by Lessee to connect the Aircraft
Maintenance Premises to the Airport roadway system
and to extend utility lines servicing the Aircraft
Maintenance Premises to the Authority-owned utility
service lines.
3. Amounts paid architects, engineers, attorneys,
accountants, consultants, and others for the design,
development, financing, and construction of the
aircraft maintenance facility.
4. Premiums paid for all insurance and payment bonds
required during the construction period; and
5. All costs, fees, and expenses, excluding Lessee's
overhead, incurred in obtaining and settling for
construction money financing and permanent financing,
as well as the interest carry applicable thereto.
C. Neither the Lessee nor any successor in interest to the Lessee under this Lease may claim, for
income tax purposes, depreciation or investment credit with respect to the aircraft
maintenance facility or any part thereof, and the Parties acknowledge that the Authority will
be the owner of the entire aircraft maintenance facility and the Aircraft Maintenance
Premises. An election under Section 142(b)(1)(B) of the Internal Revenue Code of 1986, as
amended, shall be made at the time of execution of this Lease and a copy of the election shall
be delivered to the Authority and the IDA. The Authority and the Lessee shall retain copies
of the election in their respective records for the Operating Period. The Lessee shall cause
the IDA to retain copies of the election in its records for the Operating Period. Any
publicly recorded document recorded in lieu of this Lease will state in effect that neither
Atlantic Coast Airlines (the "Lessee") nor any successor in interest to the Lessee under this
Lease, between the Authority and the Lessee may claim, for income tax purposes, depreciation
or investment credit with respect to the aircraft maintenance facility, or any part thereof.
ARTICLE IX - MAINTENANCE OF THE AIRCRAFT MAINTENANCE PREMISES
A. The Lessee, at its sole cost and expense, shall be responsible
to the Authority throughout the term of this Lease for the
maintenance of the aircraft maintenance facility and all fixed
improvements located on the Aircraft Maintenance Premises,
except to the extent of any damage caused by the Authority, or
its agents, employees, contractors, and licensees, and in
particular:
1. Lessee shall perform, on a continuous basis, all general and structural maintenance
upon the aircraft maintenance hangar building and all other improvements constructed
on the Aircraft Maintenance Premises, including exterior and interior building
structure, installed and operating equipment, landscaping of the Aircraft Maintenance
Premises and the frontage on North Service Road described in Article V.F., pavement,
exterior and interior lighting, fencing, and connections to the Authority-owned
utility service lines and to the Authority roadway. In addition, the Lessee shall
perform, on a continuous basis, complete recurring maintenance services, including
all necessary snow removal services, janitorial and custodial services, trash removal
services, and any and all other related services necessary to maintain the Aircraft
Maintenance Premises in good condition and appearance, normal wear and tear
excepted. All such maintenance shall be subject to the general monitoring by the
Authority to ensure a continued high quality of appearance and structural condition.
2. Lessee shall, subject to the provisions of Article
XIV herein, take timely action to repair, replace,
rebuild, and paint all or any part of the fixed
improvements constructed upon the Aircraft
Maintenance Premises which may be worn, damaged, or
destroyed. All repairs or replacements made by the
Lessee shall be of materials, specifications, and
workmanship at least equal to the original
improvement, equipment, or material.
3. Lessee shall take such care as would be reasonably prudent with respect to all fixed
improvements constructed upon the Aircraft Maintenance Premises, including, but not
limited to: the building exteriors and interiors, the operating mechanism of
windows, screens, roofs, foundations, steelwork, columns, doors, partitions, floors,
ceilings, inside and outside paved and unpaved areas, the aircraft parking apron,
pavement markings, glass of every kind, fences, landscaping, and the utility,
mechanical, electrical, and other systems so that at the expiration of this Lease,
the foregoing shall be in good condition, except for reasonable wear and tear which
does not materially adversely affect the efficient or proper use of any part of the
premises or the improvements thereon.
4. Lessee shall provide complete, proper, and adequate
sanitary handling and disposal, off the Airport, of
all trash, garbage, and other refuse caused as a
result of the operation and use of the aircraft
maintenance facility and provide suitable covered
receptacles for all trash, garbage, and other refuse
on the Aircraft Maintenance Premises.
5. Lessee shall comply with the Authority's storm water detention requirements as well
as any and all Federal and state regulations addressing storm water and ensure,
through proper controls, that the Authority's sewerage and drainage control systems
are protected from contamination from toxic or hazardous waste products abandoned or
disposed of on the Aircraft Maintenance Premises by the Lessee or its tenants.
Lessee shall perform routine maintenance service on the storm water detention pond
located adjacent to but outside of the Aircraft Maintenance Premises until such time
as it may be relocated by the Authority or another party under contract to the
Authority. Such routine maintenance service shall include the periodic cleaning and
cutting of vegetation to permit the continued operation of the storm water detention
pond.
Contractors authorized by the Authority under
contract to provide fueling, defueling, handling,
and/or servicing of aircraft on the Airport shall be
liable to the Authority for the containment,
handling, and cleanup, if necessary, of any toxic or
hazardous waste brought on to the Aircraft
Maintenance Premises. The Lessee shall not be liable
to the Authority for the actions of the Authority
contractors on the Aircraft Maintenance Premises.
6. Lessee shall not materially alter, modify, remove, or
improve the Aircraft Maintenance Premises without the
prior written approval of the Authority, which
approval shall not be unreasonably withheld. In the
event that an alteration, modification, removal, or
improvement is required to be made to the Aircraft
Maintenance Premises in order to conform with state
or Federal regulations, the Lessee shall make such
alteration, modification, removal, or improvement at
its sole expense.
B. The Authority shall provide all maintenance service for the
taxiway connector to the Aircraft Maintenance Premises. The
Lessee shall maintain and repair all utility service line
extensions and connections to the Authority-owned utility
service lines, and the roadway connecting the Aircraft
Maintenance Premises to the Authority's roadway system.
ARTICLE X - LEASEHOLD MORTGAGES
A. The Lessee shall have the unrestricted right, from time to time, to encumber, hypothecate, or
mortgage its interest in this Lease and the leasehold estate created hereby under one or more
"Leasehold Mortgage(s)" (as hereinafter defined) to a "Leasehold Mortgagee" (as hereinafter
defined) without the prior consent of the Authority upon the condition, however, that all
rights acquired under a Leasehold Mortgage shall be subject to all the covenants, conditions,
and restrictions set forth in this Lease that the Lessee is required to observe, pay, and
perform. The right of the Lessee to grant a Leasehold Mortgage without having to obtain the
consent of the Authority shall also include the refinancing of such Leasehold Mortgage and all
renewals, modifications, consolidations, replacements, and extensions thereof upon the
condition, however, that all rights acquired under such Leasehold Mortgage shall be subject to
the covenants, conditions, and restrictions set forth in this Lease that the Lessee is
required to observe, pay, and perform. In the event a Leasehold Mortgagee or any other party
succeeding to the rights of the Lessee under this Lease, whether through foreclosure,
acceptance of an assignment or deed in lieu of foreclosure, or any possession, surrender,
assignment, judicial action, or any other action taken by or on behalf of a Leasehold
Mortgagee, the Authority agrees that this Lease shall not terminate as a result of such
transfer, surrender, assignment, judicial or other action and the Authority shall recognize
such Leasehold Mortgagee or such other party as the Lessee under this Lease in accordance with
the terms and provisions hereof. As used herein, the term "Leasehold Mortgagee" shall mean:
(i) any life insurance company, trust company, bank, national banking association, federal or
state savings and loan association, state licensed branch or agency office of a foreign bank,
pension plan, real estate investment trust (as defined in Section 856 of the Internal Revenue
Code
of 1986 as amended), or other institutional lender or any
subsidiary or affiliate of any of the foregoing, including
specifically, without limitation, the Credit Facility Provider
and its subsidiaries and affiliates who are institutional
lenders, or (ii) any noninstitutional lender approved by the
Authority which holds a Leasehold Mortgage. As used herein,
the term "Leasehold Mortgage" shall mean any mortgage, deed of
trust, or any other real property security instrument by which
the Lessee may encumber, hypothecate, or mortgage all or part
of the Lessee's interest in this Lease and in the leasehold
estate created hereby.
B. Should the Lessee give a Leasehold Mortgage encumbering its
leasehold estate to a Leasehold Mortgagee, and if there shall
be delivered to the Authority a conformed original or
certified copy of the recorded Leasehold Mortgage containing
the name and address of the Leasehold Mortgagee, it is agreed
by and between the Authority and the Lessee as follows:
(1) The Authority agrees to provide the Leasehold
Mortgagee with a copy of any notice of default or
similar kind of notice served upon Lessee
simultaneously with the giving of such notice to the
Lessee. No default or event of default or termination
of this Lease or of the Lessee's right to possession
of the Aircraft Maintenance Premises or any reletting
of the Aircraft Maintenance Premises by the Authority
predicated on the giving of any notice to the Lessee
shall be complete unless like notice in writing shall
have been given to the Leasehold Mortgagee and
Leasehold Mortgagee has been given the cure period as
provided in subsection B(2) below. Upon the
expiration of any applicable cure period for the
Lessee, the Authority will notify the Leasehold
Mortgagee of the Lessee's failure to effectuate a
cure within said cure period.
(2) In the event of any default by the Lessee under any
of the provisions of this Lease, the Leasehold
Mortgagee will have a period to cure the default
beginning on the same day as the cure period given
Lessee for remedying such default or causing it to be
remedied, plus, in each case, the Leasehold Mortgagee
will have an additional period of thirty (30) days
after the expiration of the Lessee's cure period
(such additional period being herein called the
"Extended Grace Period").
(3) In the event the Lessee defaults under any of the
provisions of this Lease, regardless of whether such
default consists of a failure to pay rent or a
failure to do any other thing which the Lessee is
required to do hereunder, the Leasehold Mortgagee,
without prejudice to any of its rights against the
Lessee, shall have the right (but not the obligation)
to make good such default hereunder within the
Extended Grace Period, and the Authority shall accept
such performance on the part of the Leasehold
Mortgagee as though the same had been performed by
the Lessee; and for such purpose, the Authority and
the Lessee hereby authorize the Leasehold Mortgagee
to enter upon the Airport and the Aircraft
Maintenance Premises and to exercise any of the
Lessee's rights and powers under this Lease.
(4) The term "Incurable Default" as used herein means a
default which cannot be reasonably cured by a
Leasehold Mortgagee such as, by way of example, a
default arising out of the causes set forth in
Article XII, A.3., 4., 5., and 6. hereof. The term
"Curable Default," as used herein, means any default
which is not an Incurable Default. In the event of
any Curable Default by the Lessee under any of the
provisions of this Lease and prior to the expiration
of the Extended Grace Period, the Leasehold Mortgagee
may, at its option, (a) give the Authority written
notice that it intends to undertake the curing of
such Curable Default or cause the same to be cured,
or to exercise its rights to acquire the interest of
the Lessee in this Lease by foreclosure or otherwise,
and (b) tender payment of all rental fees and other
charges (except Project Rental) then due and owing to
the Authority prior to the expiration of the Extended
Grace Period. In the event the Leasehold Mortgagee
does not give such notice to the Authority and tender
such payments to the Authority, the Authority may
proceed to exercise the remedies available to it
under Article XII, B. of this Lease, subject
nevertheless to the provisions of subsection B(5)
below. Upon the giving of such notice by the
Leasehold Mortgagee, the Authority will not terminate
or take any action to effectuate a termination of
this Lease nor reenter, take possession or relet the
Aircraft Maintenance Premises or otherwise enforce
performance of this Lease for so long as (a) the
Leasehold Mortgagee is with reasonable due diligence
and in good faith engaged in effecting a foreclosure
of the Leasehold Mortgage or the curing of such
Curable Default and (b) all rental fees and other
charges (with the exception of Project Rental) due
and owing to the Authority are paid; provided that
the Leasehold Mortgagee shall not be required to
continue such foreclosure proceedings or cause such
rental fees and other charges to be paid after such
Curable Default is cured. In the event the nature of
any such Curable Default is such that the Leasehold
Mortgagee must take possession of the Aircraft
Maintenance Premises in order to cure such Curable
Default, or there is an official restraint, such as
judicial order or administrative order applicable to
the Leasehold Mortgagee, including without
limitation, an automatic stay, the running of all
applicable cure periods (including the Extended Grace
Period) shall be tolled so long as rental fees and
other charges (with the exception of Project Rental)
due and owing the Authority are paid and the
Leasehold Mortgagee is diligently attempting to
obtain relief from such judicial restraint to
exercise its remedies under the Leasehold Mortgage.
Nothing herein shall preclude the Authority from
terminating this Lease with respect to any additional
default which may occur during the aforesaid period
of forbearance which is not remedied within the
period of cure, if any, applicable to any such
additional default, except that the Leasehold
Mortgagee shall have the same rights specified in
this Section with respect to any additional defaults.
(5) In the event of termination of this Lease for any
reason, or in the event the Lessee's interest in this
Lease shall be sold, assigned, or transferred
pursuant to the exercise of any remedy under the
Leasehold Mortgage, or pursuant to judicial
proceedings or an assignment or deed in lieu of
foreclosure, and in the event that within thirty (30)
days thereafter the Leasehold Mortgagee (or its
nominee or the purchaser, assignee, or transferee
from the Leasehold Mortgagee or the trustee under the
Leasehold Mortgage) shall have paid or arranged to
the reasonable satisfaction of the Authority for the
payment of, all rental fees and other charges (with
the exception of Project Rental) which but for such
termination would have become so due and payable from
the date of such termination through the sixtieth
(60th) day thereafter, and shall have arranged to the
reasonable satisfaction of the Authority for the
curing of any Curable Default on the part of the
Lessee, then the Authority, within thirty (30) days
after receiving a written request therefor given any
time prior to such sixtieth (60th) day and upon
payment of all reasonable expenses incurred by the
Authority in connection with the enforcement of its
rights under this Lease (including reasonable
attorneys' fees), will execute and deliver to the
Leasehold Mortgagee or its nominee or to the
purchaser, assignee, or transferee, as the case may
be, a new lease of the Aircraft Maintenance Premises.
Such new lease shall be for a term equal to the
remainder of the term of this Lease before giving
effect to such termination, shall be subject only to
encumbrances and other matters existing as of the
date hereof, and shall contain the identical
covenants, agreements, conditions and limitations as
this Lease, with the exception that (a) the
provisions of Article XI, E. of this Lease shall not
apply, (b) the provisions of Article IV, C.3. shall
be modified as set forth in subsection B(10) below,
and (c) if the lessee under the new lease is a
Leasehold Mortgagee or a Leasehold Mortgagee
Affiliate (as hereinafter defined), the new lease
shall be subject to the provisions of subsection B(8)
below. Upon the execution and delivery of such new
lease, the new tenant may take all appropriate steps
as may be necessary to remove the Lessee from the
Aircraft Maintenance Premises, but the Authority
shall not be subjected to any liability for the
payment of any reasonable fees (including reasonable
attorney's fees), costs or expenses in connection
therewith. The new lessee shall pay all such fees,
costs and expenses or, on demand, make reimbursement
therefor to the Authority.
(6) No surrender (except a surrender upon the expiration
of the term of this Lease or upon termination by the
Authority pursuant and subject to the provisions of
this Lease) by the Lessee to the Authority of this
Lease, or any part thereof, or of any of the
improvements thereon, or of any interest therein, and
no termination or rejection of this Lease by the
Lessee shall be valid or effective without the prior
written consent of the Leasehold Mortgagee, which may
be withheld in the Leasehold Mortgagee's absolute and
sole discretion. The Authority agrees that, without
the prior written consent of the Leasehold Mortgagee,
which will not be unreasonably withheld, it will not
enter into any amendment, modification, or alteration
of this Lease with the Lessee which is either (a) not
contemplated by or provided for in this Lease (it
being agreed that amendments to change a notice
address or to reflect the new Annual Ground Rental as
recalculated and set pursuant to Article IV every
fifth year during the term of this Lease are
contemplated by or provided for in this Lease and
therefore permitted without the prior written consent
of the Leasehold Mortgagee) or (b) which may
materially and adversely affect the Leasehold
Mortgagee's interest in this Lease (it being agreed
that amendments to change this Article X, or to
change the term of this Lease, or to introduce new
categories of rental fees and other charges due the
Authority and not contemplated by this Lease or
required by Federal, State, or local laws, or to
change the use provisions of this Lease may
materially and adversely affect the Leasehold
Mortgagee and therefore require the prior written
consent of the Leasehold Mortgagee). Furthermore, any
cancellation, surrender, amendment, modification, or
alteration of this Lease requiring the Leasehold
Mortgagee's prior consent, but made without the
Leasehold Mortgagee's prior written consent, shall be
null and void and of no force or effect. Provided,
however, the Leasehold Mortgagee shall give written
notice to the Authority within thirty (30) days after
receiving a proposed amendment ("Proposed Amendment")
to this Lease from the Authority of its decision to
grant or withhold its consent to the Proposed
Amendment. If the Leasehold Mortgagee withholds its
consent to the Proposed Amendment, it shall also
specify in such notice its reasons therefor in
detail. If the Leasehold Mortgagee does not give
notice of the granting or withholding of its consent
to the Proposed Amendment within such thirty (30) day
period, then the Leasehold Mortgagee shall be deemed
to have granted its consent and the Authority and
Lessee may execute such amendment to this Lease.
In the event the Authority disagrees with the
Leasehold Mortgagee's decision to withhold its
consent to the Proposed Amendment on the basis that
such consent was unreasonably withheld (hereinafter a
"Dispute"), the Authority may elect, within thirty
(30) days after its receipt of the Leasehold
Mortgagee's denial of the Proposed Amendment, to
submit the Dispute to the same binding arbitration
procedure afforded the Leasehold Mortgagee under
subsections B(8)(b)(iii), (iv), (v), (vi), (vii), and
(viii) of this Article X.
(7) The Authority hereby consents to the inclusion of a
provision in the Leasehold Mortgage for the
assignment of rents from subleases of the Aircraft
Maintenance Premises to the Leasehold
Mortgagee, effective upon any default under the Leasehold Mortgage.
(8) (a) If the Lessee is in default under a Leasehold Mortgage, this Lease may be
assigned (i) to a Leasehold Mortgagee (or
any subsidiary or affiliate of a Leasehold
Mortgagee or of the parent company of a
Leasehold Mortgage ("Leasehold Mortgagee
Affiliate") by a deed or assignment in lieu
of foreclosure of a Leasehold Mortgage or
(ii) to a Leasehold Mortgagee, or a
Leasehold Mortgagee Affiliate, in each case
without the consent of the Authority, but
otherwise subject to all of the other
covenants, conditions, and restrictions set
forth in this Lease. In addition, this Lease
may be assigned (i) by a Leasehold Mortgagee
or a Leasehold Mortgagee Affiliate to a
third party assignee or (ii) to any
purchaser pursuant to a foreclosure sale or
sale pursuant to power of sale under a
Leasehold Mortgage (such assignee under
clause (i) or (ii) being herein called a
"Proposed Assignee"), in each case with the
prior written consent of the Authority,
which consent shall not be unreasonably
withheld, but otherwise subject to all of
the other covenants, conditions, and
restrictions set forth in this Lease.
(b) (i) With regard to a proposed assignment ("Proposed
Assignment") of this Lease by a Leasehold Mortgagee or
Leasehold Mortgagee Affiliate to a Proposed Assignee, such
Leasehold Mortgagee or Leasehold Mortgagee Affiliate shall
provide or cause to be provided to the Authority, in
writing by registered or certified mail:
(A) the name and address of the Proposed Assignee;
(B) a detailed description of the Proposed Assignee's
business and the specific business it will conduct
on the Aircraft Maintenance Premises; and
(C) such reasonable financial information required by
the Authority so
that the Authority
can evaluate the
Proposed Assignee
under this
subsection B(8).
(ii) The Authority shall give written notice to the Leasehold
Mortgagee and to the Proposed Assignee within thirty (30)
days after receiving all of the information required in
subsection B(8)(b)(i) above of its decision whether to
grant or withhold its consent to the Proposed Assignment.
If the Authority withholds its consent to the Proposed
Assignment, it shall also specify in such notice its
reasons therefor in detail. If the Authority does not give
notice of the granting or withholding of its consent to the
Proposed Assignment within such thirty (30) day period,
then the Authority shall be deemed to have granted its
consent to the Proposed Assignment and this Lease may be
assigned to the Proposed Assignee.
(iii) In the event the Leasehold Mortgagee disagrees with the
Authority's decision to withhold its consent to the
Proposed Assignment on the basis that such consent was
unreasonably withheld (hereinafter a "Dispute"), the
Leasehold Mortgagee may elect, within thirty (30) days
after its receipt of the Authority's denial of the Proposed
Assignment to submit the Dispute to binding arbitration as
provided herein. Such arbitration shall be initiated by
either the Authority or the Leasehold Mortgagee within ten
(10) days after the Leasehold Mortgagee shall have sent
written notice (an "Arbitration Notice") of a demand to
arbitrate by registered or certified mail to the Authority
and to Judicial Arbitration and Mediation Services, Inc.
("JAMS"). The dispute shall be determined by binding
arbitration before a retired judge from the highest court
of general jurisdiction of the Commonwealth of Virginia
(the "Arbitrator") under the auspices of JAMS. The
Authority and the Leasehold Mortgagee shall, within ten
(10) days after the initiation of the arbitration, attempt
to agree on a retired judge from the JAMS panel to serve as
the Arbitrator. If they are unable to so agree, JAMS will
provide a list of three (3) available judges, and each
party may strike one. The remaining judge (or if there is
more than one judge remaining, one of the remaining judges
as selected by JAMS) will serve as the Arbitrator. If JAMS
shall no longer exist or if JAMS fails or refuses to accept
submission of the Dispute, the Dispute shall be resolved by
binding arbitration before the American Arbitration
Association ("AAA") under the AAA's commercial arbitration
rules then in effect.
(iv) The Arbitrator shall schedule a pre-hearing conference to
resolve procedural matters, arrange, for the exchange of
information, obtain stipulations, and narrow the issues.
The parties will submit proposed discoveries and schedules
to the Arbitrator at the pre-hearing conference. The scope
and duration of discovery shall be within the sole
discretion of the Arbitrator. The Arbitrator shall have
the discretion to order a pre-hearing exchange of
information by the parties, including, without limitation
production of requested documents, exchange of summaries of
testimonies of proposed witnesses, and examination by
depositions of parties and third-party witnesses. This
discretion shall be exercised to limit the scope of
discovery to the amount of discovery which the Arbitrator
determines to be reasonable under the circumstances.
(v) The Arbitration shall be
conducted in Loudoun
County, Virginia. Any party
may be represented by
counsel or other authorized
representative. The parties
may offer such evidence as
is relevant and material to
the Dispute. The Arbitrator
shall be the judge of
relevance and materiality.
(vi) In rendering a decision,
the Arbitrator shall
determine the rights and
obligations of the parties
according to the
substantive and procedural
laws of the Commonwealth of
Virginia and the terms and
provisions of this Lease.
(vii) The Arbitrator shall issue the award as soon as reasonably
possible following the conclusion of the arbitration
hearing, but in no event, any later than thirty (30) days
after the conclusion of the arbitration hearing. The
Arbitrator's award shall be based on the evidence at the
hearing, including all logical and reasonable inferences
therefrom. The Arbitrator may make any determination
and/or grant any remedy or relief that is just and
equitable. The award must be based on, and accompanied by,
a written decision explaining the factual and legal basis
for the award. The award shall be conclusive and binding,
and it may thereafter be confirmed as a judgment in any
court having jurisdiction.
(viii) The Arbitrator may award
costs, including, without
limitation, attorney's
fees, and expert and
witness costs to the
prevailing party, if any is
determined by the
Arbitrator in the
Arbitrator's discretion.
The Arbitrator's fees and
costs shall be paid by the
non-prevailing party as
determined by the
Arbitrator in his or her
discretion.
(ix) Commencing on the date that the Arbitration Notice shall
have been given, and continuing through and including the
date on which the Arbitrator shall issue the award with
respect to the Dispute (the "Award Date"), the obligation
to pay all rental fees and other changes due and owing
under this Lease for such period shall be suspended (the
"Suspended Rent"). If the decision of the Arbitrator shall
be that the Authority shall not have unreasonably withheld
its consent to the Proposed Assignment, then the Leasehold
Mortgagee shall pay the Suspended Rent to the Authority
within ten (10) days after the Award Date, together with
interest at the rate of eight percent (8%) per annum from
and after the date each portion of the Suspended Rent would
have otherwise been due and payable under this Lease. In
the event the Arbitrator's award shall determine that the
Authority unreasonably withheld its consent to the Proposed
Assignment, then (A) this Lease may be assigned to the
Proposed Assignee that was the subject of the Dispute and
(B) no rental fees or other charges shall be due or owing
under the Lease for the period commencing on the date the
Arbitration Notice shall have been given and continuing
through and including (1) the date on which the Proposed
Assignee that was the subject of the Dispute shall become
the Lessee under this Lease pursuant to an assignment
hereof or 30 days after the date of the Arbitrator's award,
whichever comes first, or (2) if this Lease is not
assigned because the Authority unreasonably withheld its
consent to the Proposed Assignment to such Proposed
Assignee and through no fault of the Leasehold Mortgagee or
the Leasehold Mortgagee Affiliate, the date on which this
Lease is assigned with the consent of the Authority to a
subsequent Proposed Assignee. All rental fees and other
charges payable hereunder shall once again commence to
accrue from and after the effective date of such assignment
(whether to the Proposed Assignee that was the subject of
the Dispute or a subsequent Proposed Assignee).
(x) Unless the Authority and a Leasehold Mortgagee otherwise
agree in writing, the Authority and a Leasehold Mortgagee
shall have no right to resolve a Dispute in a manner which
is contrary to the provisions of this subsection B(8)(b).
The parties shall at all times conduct themselves in
accordance with the terms of this subsection B(8)(b), and
all attempts to circumvent the terms of this subsection
B(8)(b) shall be absolutely null and void and of no force
or effect whatsoever.
(c) The ultimate assignee of this Lease shall assume the Lessee's
obligations under this Lease, including, without limitation, the
payment of all rental fees and other charges (with the exception of
Project Rental) as they become due, and an executed counterpart of
such assumption shall be delivered to the Authority. If the
Leasehold Mortgagee (or a Leasehold Mortgagee Affiliate) shall be
the assignee of this Lease, its liability under such assumption
agreement shall be limited to the period of ownership of this
Lease, provided that the party to whom this Lease is assigned by
the Leasehold Mortgagee (or a Leasehold Mortgagee Affiliate) shall
deliver to the Authority at the time of such assignment a like
assumption agreement, but without limitation as to duration of
liability. Furthermore, the Authority expressly agrees that it
shall look solely to the estate and property of a Leasehold
Mortgagee (or a Leasehold Mortgagee Affiliate) created under this
Lease for the collection or enforcement of any judgment (or other
judicial process), requiring the payment of money or the
performance of any obligation by a Leasehold Mortgagee (or such
Leasehold Mortgagee Affiliate) as the lessee of the Aircraft
Maintenance Premises in the event of any default or breach by a
Leasehold Mortgagee (or such Leasehold Mortgagee Affiliate) as the
lessee of the Aircraft Maintenance Premises with respect to any of
the terms and provisions of this Lease to be observed or performed
by it; and no other assets of the Leasehold Mortgagee (or a
Leasehold Mortgagee Affiliate) shall be subject to levy, execution,
or other judicial process for the satisfaction of the Authority's
claim.
(9) Notwithstanding anything contained in this Lease to
the contrary, during such period of time as a
Leasehold Mortgagee (or a Leasehold Mortgagee
Affiliate) shall be the Lessee under this Lease, the
Leasehold Mortgagee (or a Leasehold Mortgagee
Affiliate) shall not be required to operate and keep
open for business any portion of the Aircraft
Maintenance Premises, provided that the Leasehold
Mortgagee (or the Leasehold Mortgagee Affiliate) is
using reasonable efforts in cooperation with the
Authority to find a replacement lessee to operate the
Aircraft Maintenance Premises.
(10) Notwithstanding anything contained in this Lease to
the contrary, upon and after the foreclosure of a
Leasehold Mortgage or the conveyance or assignment of
this Lease and the leasehold estate created hereby to
the Leasehold Mortgagee or Leasehold Mortgagee
Affiliate in lieu of foreclosure: (a) the provisions
of Article XI, E., appearing on page 66 of this
Lease, which limits the total space within the
aircraft maintenance hangar which shall be under
sublease at any one time, shall terminate and be of
no further force or effect, and (b) the provisions of
Article IV.C.3. pertaining to the payment of
percentage and sublease rent shall apply only if any
lessee, sublessee, or occupant of the Aircraft
Maintenance Premises or any part thereof is providing
aircraft maintenance services to third parties or
subleasing space to third parties and not for its own
account. Any airline utilizing all or a portion of
the Aircraft Maintenance Premises for the maintenance
and servicing of its own fleet shall not be liable
for percentage and sublease rent under this Lease.
Any firm providing maintenance services to third
parties, including warranty work performed by
manufacturers, shall be subject to and liable to pay
percentage rent and sublease rent if it subleases
space to third parties in accordance with Article
IV.C.3.
(11) There shall be no merger of the Lessee's leasehold
estate with the leasehold estate or fee estate in the
land upon which the Aircraft Maintenance Premises is
located by reason of the fact that the Lessee's
leasehold estate may be held directly or indirectly
by or for the account of any person who shall also
hold directly or indirectly the greater estate, or
any interest in such greater estate, nor shall there
by any such merger by reason of the fact that all or
any part of the Lessee's leasehold estate may be
conveyed or mortgaged to a Leasehold Mortgagee who
shall also hold directly or indirectly such greater
estate, or any part thereof, in the land upon which
the Aircraft Maintenance Premises are located or any
interest of the Authority under this Lease.
(12) The provisions of Article X, Sections A and B are for
the benefit of, and are to be enforceable by, a
Leasehold Mortgagee.
(13) In the event that there is more than one Leasehold
Mortgage encumbering the leasehold estate created
hereby, the most senior Leasehold Mortgagee shall
have priority in terms of exercising the rights of a
Leasehold Mortgagee pursuant to the provisions of
this Section.
(14) The Authority and the Lessee hereby agree to
cooperate in including in this Lease, by suitable
amendment from time to time, any provision which may
reasonably be requested by any proposed Leasehold
Mortgagee for the purpose of implementing the
Leasehold Mortgagee protection provisions contained
in this Lease and allowing such Leasehold Mortgagee
reasonable means to protect and to preserve the lien
of the Leasehold Mortgage on the occurrence of an
event of default under this Lease. The Authority and
the Lessee each agrees to execute and deliver (and to
acknowledge, if necessary, for recording purposes)
any agreement necessary to effectuate any such
amendments; provided, however, any such amendment,
shall not in any way affect the term or rental fees
and other charges due the Authority or grant to the
Lessee rights prohibited ("Prohibited Uses") under
this Lease, nor otherwise in any material respect
adversely affect any rights of the Authority under
this Lease, or the rights heretofore granted other
lessees on the Airport by the Authority.
ARTICLE XI - ASSIGNMENT AND SUBLETTING
A. Assignment and Sublease by Lessee. Except as otherwise provided in this Lease, Lessee
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covenants that it shall not assign, transfer, convey, sell, mortgage, pledge or encumber
(hereinafter collectively referred to as an "assignment") or sublet the Aircraft Maintenance
Premises or any part thereof, or any rights of the Lessee hereunder or allow the use of the
Aircraft Maintenance Premises by any other person without the prior written consent of the
Authority. Such consent shall not be unreasonably withheld. Provided, however, that without
such consent Lessee may assign its rights under this Lease to any corporation with which
Lessee may merge or consolidate or to any corporation with which there is common ownership.
Consent by the Authority to any type of transfer described in this Article or elsewhere in
this Lease shall not in any way be construed to relieve Lessee from obtaining further
authorization from the Authority for any subsequent transfer of any nature whatsoever. If
Lessee fails to obtain prior written approval of any such assignment or sublease, the
Authority shall have the right to refuse to recognize the assignment or sublease and the
assignee or sublessee shall acquire no interest in this Lease or any rights to use the
Aircraft Maintenance Premises;
B. Notwithstanding any assignment, sublease or any other transfer
of the Aircraft Maintenance Premises or any rights under this
Lease, Lessee shall remain fully and primarily liable for the
payment of all rental fees and other charges due hereunder and
fully responsible for the performance of all of its other
obligations hereunder until expressly released in writing by
the Authority, subject to the provisions of Article X herein.
C. Lessee, when requesting an approval of an assignment or
sublease agreement under Paragraph A., shall include with its
request a copy of the proposed agreement, if prepared, or a
detailed summary of the material terms and conditions to be
contained in such agreement. Any proposed agreement or
detailed summary thereof shall provide the following
information:
1. The Premises to be assigned, sublet or used;
2. The terms;
3. If a sublease, the rentals and fees to be charged;
4. If a sublease, a provision that the subtenant shall
use its subleased premises for only the permitted
usage herein unless otherwise authorized in writing
by the Authority, that the term shall not exceed the
unexpired term of this Lease, and that the sublease
shall be subject to and subordinate to this Lease;
5. All other material terms and conditions of the
assignment or sublease agreement that the Authority
may reasonably require.
D. The Authority shall provide written notice to the Lessee
within thirty (30) calendar days of its approval or
disapproval of the proposed assignment or sublease. If
approved, Lessee shall submit a fully executed copy of such
agreement to the Authority within thirty (30) days prior to
the commencement of the assignment or sublease.
E. Notwithstanding the Authority's approval of subleases, no more
than forty-nine percent (49%) of the total space within the
aircraft maintenance hangar shall be under sublease at any one
time, subject to the provisions of Article X herein.
F. If any transfer of Lessee's interest hereunder shall occur, whether or not prohibited by this
Article XI, the Authority may elect to collect the rental fees and other charges due pursuant
to Article IV hereof from any assignee, sublessee or other transferee of Lessee and in such
event shall apply the net amount collected to the rental fees and other charges payable by
Lessee hereunder, PROVIDED, HOWEVER, such action by the Authority shall not release Lessee
from this Lease or any of its obligations hereunder. If any transfer of interest prohibited
by this Article XI shall occur without authorization of the Authority and the Authority
collects rental fees and other charges from any assignee, sublessee or transferee of Lessee
and applies the net amount collected in the manner described in the preceding sentence, such
actions by the Authority shall not be deemed to be a waiver of the covenant contained in this
Article or constitute acceptance of such assignee, sublessee or other transferee by the
Authority.
G. The Authority may elect in an assignment or transfer of this
Lease to permit the release of the Lessee from any and all of
its obligations hereunder and thereafter look solely to the
assignee to perform all obligations of this Lease. Such a
release of the Lessee by the Authority shall only be
considered if the Authority is satisfied with the financial
suitability of the assignee, the capability of the assignee to
perform all obligations of Lessee under the Lease, and the
absence of conflict with any other rights granted the assignee
or other parties on the Airport by the Authority.
ARTICLE XII - TERMINATION BY THE AUTHORITY
A. The Lessee shall be deemed to be in default hereunder upon the
happening of any of the following events and subsequent failure
of the Lessee to cure, or commence and diligently continue
thereafter reasonable efforts to cure, the default, condition or
event within thirty (30) calendar days after written notice by
the Authority to the Lessee and any Leasehold Mortgagee or other
financing party identified under this Lease: 1. The material
failure of the Lessee to perform, keep, or observe any of the
material
terms, requirements, and conditions which it is
obligated to perform, keep, or observe under this
Lease, including the payment of rental fees and other
charges due the Authority (excluding Project Rental)
and the Lessee's failure to enforce provisions of
tenant sublease agreements.
2. The conduct by the Lessee of business activities on the
Aircraft Maintenance Premises not authorized by this
Lease or approved in writing by the Authority.
3. The occurrence of any act by the Lessee or persons
acting through the Lessee which operates to deprive the
Lessee permanently of the rights, powers, and
privileges necessary for the proper conduct of its
rights and obligations under this Lease.
4. The abandonment of the Aircraft Maintenance Premises
by the Lessee or Lessee's failure to pursue
completion of the aircraft maintenance facility
within the time requirements set forth in Article
VI.C.
5. Any event of insolvency of the Lessee, including, but
not limited to, an assignment for the benefit of
creditors, or the filing of a bankruptcy petition by
Lessee.
6. Termination by the Authority of the Lessee's Airport Use
Agreement and Premises Lease. B. If the Lessee is in default under
paragraph A. above, subject to the applicable provisions under
Article X, the Authority may exercise any of the following remedies that it, in its sole
discretion, shall elect:
1. The Authority may terminate this Lease in its entirety or as to any portion of the
rights and premises covered hereby. Upon termination
hereunder in its entirety by the Authority, all
rights, powers, and privileges of the Lessee under
this Lease shall cease, and the Lessee shall
immediately vacate any and all space occupied by it
under this Lease. A partial termination, if elected,
shall be reasonably limited to the part of this Lease
affected by the default.
2. If the Lease is terminated under paragraph A.4.
above, Lessee shall, at the option of the Authority,
and at Lessee's expense, demolish and remove any or
all improvements on the Aircraft Maintenance
Premises, including the aircraft maintenance hangar
building and other related improvements.
3. Upon termination as provided in paragraph B. 1.
above, the Authority may by use of reasonable means
reenter and take possession of the Aircraft
Maintenance Premises occupied by the Lessee, by legal
process, and expel, oust, and remove any and all
parties who occupy any portion of the premises on the
Airport covered by this Lease, and any and all other
parties that may be found in or upon the Aircraft
Maintenance Premises.
4. The Authority may, contemporaneously with termination
hereunder, designate a replacement lessee to
purchase, and the Lessee shall sell, its leasehold
interest in the Aircraft Maintenance Premises at a
cash price (the "Leasehold Purchase Price") not to
exceed the amount outstanding under any Leasehold
Mortgages.
The portion of the Leasehold Purchase Price attributable to
costs that have been financed out of the proceeds of the Bonds
shall be paid to or at the direction of the IDA. If the
Aircraft Maintenance Premises will be leased to another entity
that assumes the Lessee's obligation to pay the amount
outstanding on the Bonds, the Leasehold Purchase Price
attributable to costs that have been financed out of the
proceeds of the Bonds shall be zero. If the Authority does not
initially designate a replacement lessee to purchase the
Lessee's interest, the Lessee shall have the right, provided
that the Lessee maintains in good condition the Aircraft
Maintenance Premises for such period, within six (6) months
thereafter to sell or otherwise transfer its interest to a
third party ("Buyer") acceptable to the Authority on terms and
conditions which require that the Buyer assume all of the
obligations of the Lessee under this Lease, commencing on the
date of transfer of the Lessee's interest to the Buyer. The
Authority's approval of the Buyer, which shall not be
unreasonably withheld, shall be conditioned on the Lessee
first meeting all payment obligations to the Authority under
the terms of the Lease from the date of termination to the
date of transfer of the Lessee's interest to the Buyer. In the
event the Lessee is unable to sell or otherwise transfer its
interest within such period, the Authority shall use its best
efforts to find a purchaser and the Lessee shall be obligated
to sell its interest to any purchaser identified by the
Authority at the Leasehold Purchase Price.
C. Any action or forbearance of action taken by the Authority
hereunder shall not be deemed a waiver of any claim for
damages that the Authority may have against the Lessee or the
Lessee's assignees. The Authority shall also be entitled to
maintain an action at law or in equity against the Lessee or
Lessee's assignees for damages, specific performance, or other
remedies available under applicable law.
ARTICLE XIII - TERMINATION BY THE LESSEE
This Lease shall be subject to termination, in its entirety, by the
Lessee, upon the happening of any one or more of the following events and the
subsequent failure of the Authority to remove or correct the condition within
the sixty (60) calendar days after written notice to the Authority:
A. Any act on the part of the Authority, the lessor of the
Authority, or any party claiming by, through, or under the
Authority, which prevents or substantially and directly
restricts the use of the Aircraft Maintenance Premises for a
period of at least 120 consecutive days.
B. Any acts of God, civil commotion, acts of the military power,
damage to runways, or other similar causes which operate to
prevent or substantially restrain use of the Airport for a
period of at least 120 consecutive days.
In no event shall the Lessee terminate this Lease without the prior
written consent of the leasehold mortgagee for so long as a leasehold mortgage
remains outstanding with respect to the Aircraft Maintenance Premises. In the
event this Lease is terminated for reasons set forth in this Article, the Lessee
shall have the same rights with respect to buyout of its leasehold interest in
the Aircraft Maintenance Premises granted in Article XII herein, and shall also
be entitled to maintain an action at law or in equity against the Authority for
damages, specific performance, or other remedies available under applicable law.
ARTICLE XIV - DESTRUCTION AND IMPROVEMENTS
A. In the event that the Aircraft Maintenance Premises is damaged or destroyed, in whole or in part,
by fire, explosion, acts of God, or any other cause, the Lessee agrees, with due diligence, to
restore, repair, and rehabilitate any and all damage to the Aircraft Maintenance Premises as
nearly as possible to the value and character of the facilities existing immediately prior to
such damage or destruction. If the Aircraft Maintenance Premises is not tenantable or usable by
the Lessee for fifty percent (50%) or more of the building space within the Aircraft Maintenance
Premises, the term of this Lease shall be extended for the time required to repair or restore the
Aircraft Maintenance Premises to a condition existing prior to the occurrence of the damage. The
time of extension, if any, shall be computed from the date of destruction, fire, or damage to the
date that a certificate of occupancy is issued certifying that the damage involved has been
repaired and the facilities are ready for the use by the Lessee; PROVIDED, HOWEVER, any such
extension of the term of this Lease to repair damaged facilities on the Aircraft Maintenance
Premises shall not extend beyond June 6, 2037. If all or a portion of the Aircraft Maintenance
Premises is not tenantable during a period of restoration, the Authority shall make an equitable
adjustment to the ground rental and service cost fee due the Authority in proportion to the
percentage of the building space within the Aircraft Maintenance Premises that remains fit for
occupancy or use.
B. The Lessee shall have the right to cancel and terminate this Lease during the last five (5) years
of the Operating Period, if the Aircraft Maintenance Premises is damaged or destroyed by fire,
explosion, acts of God, or any other cause beyond the control of the Lessee, to an extent in
excess of fifty percent (50%) as determined by an independent adjuster, of the then fully
insurable replacement value thereof, or to a lesser extent should the Parties hereto agree that
continued use and operation of the Aircraft Maintenance Premises is not feasible. In the event
this Lease is canceled or terminated as provided for under this paragraph B., the Lessee shall
pay all fees and other charges due the Authority, as provided for under Article IV herein, to the
date of cancellation or termination of this Lease and shall cause the distribution of insurance
proceeds in the following order: (i) first, to pay amounts outstanding for any Bonds and/or
leasehold mortgages, (ii) second, to remove debris and restore the grounds on the Aircraft
Maintenance Premises, (iii) third, to pay, in cash, the Authority an amount equal to the
Authority's interest in the replacement value of the Aircraft Maintenance Premises, and (iv) the
balance, if any, to the Lessee. The method of determining the Authority's interest in the
replacement value of the Aircraft Maintenance Premises shall be calculated as the expired or
amortized percentage of the Operating Period on the date the Lease is canceled or terminated
times the total amount of replacement insurance proceeds available prior to distribution. (e.g.,
The Lease is canceled or terminated on the first day of the twenty-sixth year of the Operating
Period and the replacement insurance proceeds total $15,000,000. Therefore the amount due the
Authority under this example, assuming a thirty (30) year Operating Period, would be
.833 x $15,000,000 = $12,500,000 assuming the sum under (i) and (ii) above is $2,500,000 or less).
C. The insurance proceeds from the policies of insurance provided
by the Lessee shall be held in trust by the Leasehold
Mortgagee and used for the sole purpose of repairing or
replacing the damaged or destroyed Aircraft Maintenance
Premises, or distributed as provided in paragraph B. above
should the Lease be canceled or terminated and the Aircraft
Maintenance Premises not restored.
ARTICLE XV - INSURANCE AND INDEMNIFICATION
A. The Lessee shall continuously provide, maintain in force and
effect, and pay all premiums for the following insurance
coverage from an insurance company(s) possessing a rating of
B+10 or higher from the A.M. Best Company or an equivalent
rating. The Metropolitan Washington Airports Authority shall
be named as an additional insured on all policies, except
Worker's Compensation and, if required, Professional
Liability: 1. Property Insurance for the Aircraft Maintenance
Premises
Insurance against loss or damage to all improvements
constructed on the Aircraft Maintenance Premises
(including all subsequent alterations, rebuilding,
replacements, changes and additions thereto made by
Lessee) by reason of fire, wind, smoke, vandalism,
malicious mischief, riot, civil commotion and hazards
and risks included with so-called "extended coverage
endorsements" or "all risk." Such policies shall name
the Lessee as the insured and each shall contain an
endorsement in favor of the Authority and the
Lessee's Leasehold Mortgagee(s) as additional
insureds in a form satisfactory to the Authority and
such Leasehold Mortgagee(s). The insurance shall be
issued in an aggregate amount which shall not be less
than the full replacement value (exclusive of paved
surfaces, excavation, basements, and foundations) of
all improvements erected on the Aircraft Maintenance
Premises. Each insurance policy shall be in such form
and content as is reasonably acceptable to the
Authority and to the Lessee's Leasehold Mortgagee(s).
Such policies may be in the form of blanket coverage.
The policy or policies of insurance shall provide
that all proceeds of such insurance shall be payable
to the Lessee or Leasehold Mortgagee, in trust, to be
used for the sole purpose of repairing or replacing
the damaged or destroyed improvements constructed and
installed on the Aircraft Maintenance Premises or
distributed as provided for under Article XIV herein.
2. Commercial General Liability Insurance
Insurance identifying the Authority as an additional
insured, and protecting the Authority and the Lessee
against public liability in an amount of not less
than Ten Million Dollars ($10,000,000) combined
single limit (which shall include umbrella
coverages). Such policy or policies of general
liability shall include Premises-Operations
Liability, Contractual Liability, Personal Injury,
and Broad Form Property Damage to cover the entire
Aircraft Maintenance Premises and all activities of
the Lessee, its tenants, and all other parties
authorized by the Lessee to use or operate on the
Aircraft Maintenance Premises.
3. Comprehensive Automobile Liability Insurance
Insurance with a combined single limit of Ten Million
Dollars ($10,000,000) for bodily injury and property
damage for each accident (including garage liability,
all automotive equipment owned, operated, leased,
hired, and non-owned).
4. Worker's Compensation and Employer's Liability Insurance
Insurance required for the selected proponent to
comply with the laws of the State of Virginia with
All States Endorsement Employer's Liability of
$1,000,000 for each accident/disease.
B. The insurance protection required under this Lease shall be
written with insurance companies licensed and qualified to do
business in the State of Virginia. If in the Authority's
opinion the minimum levels of insurance herein required have
become inadequate during the term of this Lease, the Lessee
agrees to increase such minimum levels of insurance to the
reasonable amount requested by the Authority.
C. Each policy or certificate issued by the insurer shall contain
an agreement by the insurer that the policy will not be
canceled without at least thirty (30) days advance written
notice of cancellation to the Authority and to the Lessee's
Leasehold Mortgagee(s) and in no event shall such policies be
canceled by the Lessee without the Authority's prior written
consent unless proper replacement policies are then issued and
available.
D. All insurance required to be provided and maintained may be
placed under the Lessee's so-called "blanket policies";
PROVIDED, HOWEVER, the insurer named in the blanket policies
must certify to the Authority and to the Lessee's Leasehold
Mortgagee(s) that the coverage required is separately
identified and is provided within the terms of the blanket
policy for the Aircraft Maintenance Premises.
E. At least ten (10) days before the expiration date of each
policy of insurance required by this Lease, the Lessee shall
pay the premiums for the renewal of each of such policy or
policies and within such period the Lessee shall deliver to
the Authority the renewal certificates of the fire and
extended risk endorsement policies, the general comprehensive
general liability policies, and comprehensive automobile
liability policies with an endorsement thereon marked "paid"
and/or a duplicate receipt evidencing advanced payment.
Certificates of insurance shall be sent to the Airport
Manager, Washington Dulles International Airport, P.O. Box
17045, Washington, DC 20041.
F. Indemnification. Except as provided in Article XXIX herein, the Lessee shall assume all risks
---------------
incident to, or in connection with, the occupancy and use of the Aircraft Maintenance Premises
under this Lease, and Lessee shall be solely responsible for all accidents or injuries to persons
or property caused by the occupancy and use of the Aircraft Maintenance Premises. The Lessee shall
indemnify, defend, and save harmless the Authority, its authorized officers, employees, agents,
and representatives from any and all claims, suits, civil, criminal or administrative proceedings,
losses, damages, or attorney fees, of whatsoever kind or nature, arising directly or indirectly
out of or incident to the use and occupancy of the Aircraft Maintenance Premises and improvements
constructed thereon or resulting from the act or omission of the Lessee, its agents, contractors,
subcontractors, tenants, and employees, guests, and contractors of tenants, except to the extent
caused by acts or failures to act by the Authority or its agents, employees, contractors, or
licensees.
G. The Authority shall be responsible for performing any
mitigating measures required by law or regulation, if any,
because of the existence of possible wetlands within and/or
adjacent to the Aircraft Maintenance Premises and requiring
mitigation because of the construction of the aircraft
maintenance facility.
ARTICLE XVI - PERFORMANCE GUARANTEE AND BONDS
The Lessee shall furnish to the Authority performance and payment
bonds. The bonds, at the option of the Lessee, may be in the form of a surety
bond, letter of credit, postal money order, certified cashier's check payable to
the Authority, or an irrevocable letter of credit. The bonds shall be sent to
the Airport Manager, Washington Dulles International Airport, P.O. Box 17045,
Washington, DC 20041. These bonds shall be in the amount indicated below and
conditioned on the Lessee's performance as follows:
A. Performance Guarantee
A performance guarantee in a penal sum of One Hundred
Seventy-Nine Thousand Five Hundred Sixty-Three Dollars
($179,563) conditioned on the full and faithful performance by
the Lessee of each and all of the covenants, agreements, and
understandings as set forth in this Lease. The performance
guarantee may be an annual guarantee but must be renewed
annually at least thirty (30) calendar days in advance of its
date of expiration. The performance guarantee amount shall be
adjusted annually so that it is in the amount equal to one
hundred percent (100%) of the annual ground rental and service
cost fee and fifty percent (50%) of the estimated utility
costs payable to the Authority. This guarantee shall be
submitted to the Authority within thirty (30) calendar days of
the commencement of the Operating Period.
B. Payment Bonds
Payment bonds in the amount of one hundred percent (100%) of
the contract price, including the value of materials to be
incorporated in the work, for the aircraft maintenance
facility. The payment bonds shall be incurred by all major
trade subcontractors and the Lessee shall ensure that such
payment bonds collectively total one hundred percent (100%) of
the contract price of the aircraft maintenance facility. These
payment bonds are to assure payment to the construction
contractors supplying labor and materials. The Lessee shall be
required to promptly clear all liens filed against the
aircraft maintenance facility, its contractors,
subcontractors, material men, and workmen arising out of the
performance of the construction work, and shall indemnify the
Authority against all claims arising out of the performance of
all such construction work. These payment bonds shall be in
effect until the completion of construction and the beginning
of the Operating Period.
ARTICLE XVII - LATE CHARGES
A. Without waiving any other right of action available to the
Authority in the event of late payment of rental fees and
other charges due hereunder, late charges will be assessed for
all rental fees and charges for which payment is received by
the Authority after the due date. Late charges may consist of
interest, penalties, and administrative charges as indicated
in paragraphs B., C., and D. below.
B. The interest charge for late payment shall be calculated as
the product of the charges that are late and an interest rate
per annum which is four percent (4%) higher than the "prime
rate" as published in The Wall Street Journal, commencing on
the date that such charges were past due, provided the Lessee
shall have had at least thirty (30) days advance notice of any
rental fee or other charges due the Authority under this
Lease.
C. The monthly penalty charges for late payment shall be
calculated as the product of the unpaid portion of accounts
more than ninety (90) calendar days past due and an interest
rate of six percent (6%) per annum (or as established
periodically).
D. The administrative charge of $12 (or as established
periodically) will be assessed for each month for every
account past due more than thirty (30) calendar days.
ARTICLE XVIII - AIRPORT RULES AND REGULATIONS
The Lessee, while exercising the rights granted under this Lease, shall
observe and obey all lawful rules and regulations of the Metropolitan Washington
Airports Authority not inconsistent with the rights granted the Lessee by this
Lease and applied in a nondiscriminatory manner to other lessees of comparable
Airport property.
ARTICLE XIX - COPARTNERSHIP
It is mutually understood and agreed that nothing in this Lease is
intended or shall be construed as in any way creating or establishing the
relationship of copartners between the Parties hereto, or as making the Lessee
an agent or representative of the Authority for any purpose or in any manner
whatsoever.
ARTICLE XX - PARTICIPATION IN LEASE
The Lessee agrees that no member of the Authority Board of Directors or
employees of the Authority shall be admitted to any share or part of this Lease
or to any benefit that may arise therefrom.
ARTICLE XXI - TAXES
Lessee shall comply with all applicable taxation laws, rules, rulings,
and regulations imposed by any jurisdiction with authority to tax the Lessee's
income, receipts, sales, purchases, property and leasehold interest or other
interests arising from this Lease. Nothing herein shall be construed to deny or
limit the Lessee's right to contest in good faith the amount or validity of any
tax or assessment by appropriate means.
ARTICLE XXII - SIGNS
The Lessee shall not, without the prior written approval of the
Authority, not to be unreasonably withheld, erect, maintain, or display any
advertising, signs, posters, or similar devices at or on the Aircraft
Maintenance Premises; PROVIDED, HOWEVER, that on those interior portions of the
aircraft maintenance facility which are not visible from the outside, the Lessee
may install directional and identification signs necessary for the facility and
all such signs shall be exempt from the prior approval of the Authority.
ARTICLE XXIII - QUIET ENJOYMENT
The Authority agrees that the Lessee and its subtenants shall peaceably
have and enjoy the Aircraft Maintenance Premises and all rights and privileges
granted under this Lease without any interruption or disturbance from the
Authority as long as the Lessee pays all amounts due the Authority and performs
all other obligations required under this Lease.
ARTICLE XXIV - RIGHT OF INSPECTION OF PREMISES
The Authority, its authorized representatives and agents, shall have
the right to view any and all of the Aircraft Maintenance Premises, at any
reasonable time during normal business hours for the purpose of inspecting or
performing any other act therein which may be necessary for the proper operation
of the Airport; PROVIDED, HOWEVER, that the Authority will exercise its best
efforts to not interfere with the Lessee's use of the Aircraft Maintenance
Premises.
ARTICLE XXV - SAVING PROVISION
If any provision of this Lease or the application of any provision of
this Lease to any person or circumstance shall be invalid or unenforceable to
any extent, the remainder of this Lease or the application of such provision to
persons or circumstances other than those to which it is invalid or
unenforceable, shall not be affected thereby and each provision of this Lease
shall be valid and be enforced to the fullest extent of the law.
ARTICLE XXVI - WAIVER OF PERFORMANCE
The failure of either the Authority or the Lessee to insist, in any one
or more instances, upon a strict performance by the other of any of the
provisions, terms, covenants, reservations, conditions, or stipulations
contained in this Lease, shall not be considered a waiver or relinquishment
thereof, but the same shall continue and remain in full force and effect, and no
waiver by either Party of any provision, term, covenant, reservation, condition,
or stipulation hereunder shall be deemed to have been made in any instance
unless expressed in writing and agreed to by the Parties hereto.
ARTICLE XXVII - CERTIFICATION OF THE LESSEE'S STATUS
The Authority agrees to execute and deliver to the Lessee and/or any
other person or entity designated by the Lessee, from time to time, upon
reasonable written notice by the Lessee, which notice shall state that the
Lessee requires same in connection with a financing or other undertaking, a
statement in writing:
(i) certifying that this Lease is unmodified and in full
force and effect (or if there have been material
modifications, that the Lease is in full force and
effect as modified);
(ii) stating whether the Lessee is in default in the
performance of any of the terms, requirements, or
conditions contained in this Lease and if so,
specifying the nature of such default; and
(iii) addressing such other reasonable matters as Lessee or
any lender of Lessee may request.
ARTICLE XXVIII - NOTICES
Notice to the Authority, Lessee, and any other parties designated by
the Lessee provided for herein shall be sufficient if sent by certified mail,
postage prepaid, and
addressed to the addresses set out below or to such other address as may be
designated by the party involved to the other parties in writing from time to
time:
If to the Authority, as follows:
Airport Manager
Washington Dulles International Airport
P.O. Box 17045
Washington, DC 20041
If to the Lessee, as follows:
Atlantic Coast Airlines
Corporate Counsel
515A Shaw Road
Sterling, VA 20164
With copies to:
If to any Leasehold Mortgagee(s), to such address as such mortgagee(s) may
notify the Authority in writing from time to time.
ARTICLE XXIX - ENVIRONMENTAL MATTERS
A. Hazardous Substances, Spills, and Releases.
1. Lessee shall immediately notify the Authority upon becoming aware of: (1) any leak,
spill, release, discharge, or disposal at a reportable level or a level that could
reasonably be expected to pose a threat to human health or the environment
(collectively, a "Material Level") of a Hazardous Substance on, under, or adjacent to
the Aircraft Maintenance Premises or threat of or reasonable suspicion of any of the
same; and/or (2) any notice or communication from a governmental agency or any other
person, directed to Lessee or any other person (of which Lessee has knowledge),
relating to such Hazardous Substances thereon, thereunder, or adjacent thereto or any
violation of any federal, state, or local Environmental Laws, with respect to the
Aircraft Maintenance Premises or activities thereon; and (3) any other event relating
to Hazardous Substances or Environmental Laws, which event could reasonably be
expected to injure the Aircraft Maintenance Premises, reduce the value of the
Aircraft Maintenance Premises, or impair the Lessee's ability to comply with any of
its obligations under this Lease.
2. In the event of a leak, spill, or release at a Material Level of a Hazardous
Substances on the Aircraft Maintenance Premises by the Lessee or the threat of or
reasonable suspicion of the same, Lessee shall (to the extent that the Lessee or the
Authority is so required under applicable law, including Environmental Laws)
immediately undertake all emergency response necessary to contain, clean-up, and
remove the Hazardous Substance and shall undertake within a reasonable time all
investigatory, remedial, and/or removal action necessary or appropriate to ensure
that any contamination by the Hazardous Substance is eliminated; provided, however,
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that the Authority shall choose the waste disposal site and assume complete
responsibility for arranging for the disposal of any Hazardous Substance arising from
any Authority Environmental Responsibilities. The Authority shall have the right to
approve all investigatory, remedial, and removal procedures and the company(ies)
and/or individuals conducting said procedures; provided, however, that in the case of
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an emergency, no such prior approval shall be required. In all other cases the
Authority's approval shall be deemed given three business days after the receipt of
the Lessee's proposed investigatory, remedial, or removal procedures. Within thirty
days following completion of such investigatory, remedial, and/or removal action,
Lessee shall provide the Authority with a certificate acceptable to the Authority,
stating that all such contamination has been eliminated as required by applicable
Environmental Laws. The Lessee shall be responsible for any costs incurred under
this Article XXIX, except that the Authority shall be responsible for any costs
incurred by the Lessee under this Article, which costs arise from: (i) a condition
on the Aircraft Maintenance Premises, existing on the date the Lessee took possession
thereof, whether or not such condition was uncovered in an environmental audit or
assessment and which condition is not caused by the Lessee or its employees,
contractors, or agents; or (ii) any contamination caused by the migration of
Hazardous Substances from any other property (not caused by the Lessee or any of its
tenants, or their employees or agents); or (iii) a leak, spill or release of a
Hazardous Substance on the Aircraft Maintenance Premises caused by any action or
inaction of the Authority, its employees, contractors, or agent (collectively, the
"Authority Environmental Responsibilities").
B. Environmental Indemnification - Lessee
Lessee agrees to indemnify, save, and hold harmless the
Authority from and against all removal, remediation,
containment, and other costs (whenever incurred) caused by,
arising out of, or in connection with the handling, storage,
discharge, transportation, or disposal of Hazardous
Substances, which Hazardous Substances are on the Aircraft
Maintenance Premises and which handling, storage, discharge,
transportation or disposal occurs after the date of legal
possession of the Aircraft Maintenance Premises by the Lessee
and prior to the vacation of the Aircraft Maintenance Premises
by the Lessee; provided, however, this indemnity shall also
cover any costs (whenever incurred) caused by, arising out of,
or in connection with, the handling, storage, discharge,
transportation, or disposal of Hazardous Substances, which
Hazardous Substances are on the Aircraft Maintenance Premises,
resulting from the acts or omissions of Lessee, or any of its
tenants thereof, or their employees, representatives or
agents; provided, further, this indemnity shall not cover any
costs resulting from the Authority Environmental
Responsibilities. Costs shall include, but not be limited to:
(a) claims of third parties, including governmental agencies,
for damages, response costs, injunctions, or other relief; (b)
the cost, expense, or loss to the Authority of any injunctive
relief, including preliminary or temporary injunctive relief,
applicable to the Authority or the Aircraft Maintenance
Premises; (c) the expense, including fees of attorneys,
engineers, consultants, paralegals and experts, of reporting
to any agency of the State of Virginia or the United States as
required by applicable Environmental Laws and responding to
the existence of said Hazardous Substances; (d) any and all
expenses or obligations, including fees of attorneys'
engineers, consultants, and paralegals, incurred at, before,
and after any trial or appeal therefrom, or any administrative
proceeding or appeal therefrom whether or not taxable as
costs, including, without limitation, attorneys' and paralegal
fees, witness fees (expert and otherwise), deposition costs,
copying and telephone charges, and other expenses, all of
which shall be paid by Lessee promptly after the Authority
incurs the obligation to pay such amounts. Such damages,
costs, liabilities, and expenses shall include those claimed
to be owed by any regulating and administering agency. As
applied to this Article the Aircraft Maintenance Premises
shall be deemed to include the soil and water table thereof.
C. Environmental Indemnification - Authority
The Authority agrees to indemnify, save, and hold harmless the
Lessee from and against all removal, remediation, containment,
and other costs arising in connection with the Authority
Environmental Responsibilities caused by, arising out of, or
in connection with the handling, storage, discharge,
transportation, or disposal of Hazardous Substances. Such
costs shall include but not be limited to: (a) claims of third
parties, including governmental agencies, for damage, response
costs, injunctions, or other relief; (b) the cost, expense, or
loss to the Lessee of the Aircraft Maintenance Premises; (c)
the expense, including fees of attorneys, engineers,
consultants, paralegals, and experts, of reporting to any
agency of the State of Virginia or the United States as
required by applicable Environmental Laws and responding to
the existence of said Hazardous Substances; (d) any and all
expenses or obligations, including fees of attorneys'
engineers, consultants, and paralegals, incurred at, before,
and after any trial or appeal therefrom or any administrative
proceeding or appeal therefrom, whether or not taxable as
costs, including, without limitation, attorneys' and paralegal
fees, witness fees (expert and otherwise), deposition costs,
copying and telephone charges, and other expenses, all of
which shall be paid by the Authority promptly after the Lessee
incurs the obligation to pay such amounts. Such damages,
costs, liabilities, and expenses shall include those claimed
to be owed by any regulating and administering agency. As used
in this Article, the Aircraft Maintenance Premises shall be
deemed to include the soil and water table thereof.
D. Definitions. For purposes of this Article XXIX the following
words and phrases shall have the following meanings:
"Environmental Law" shall mean any Federal, state, or local
law, rule, regulation, code, order, ordinance, statute, or
decision related to Hazardous Substances.
"Hazardous Substances" shall mean (i) any substances defined
as hazardous materials, pollutants, contaminants, toxic
substances or related materials as now or hereinafter defined
in any applicable Federal, state, or local law, regulation,
ordinance, or directive, including, but not limited to, the
Resource Conservation and Recovery Act of 1976 (42 U.S.C.
Sections 6901 et. seq.); the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended
by SARA (42 U.S.C. Section 9601, et. seq.); the Hazardous
Materials Transportation Act (49 U.S.C. Section 1801, et.
seq.); the Toxic Substances Control Act (15 U.S.C. Section
2601, et. seq.); the Resource Conservation and Recovery Act,
as amended (42 U.S.C. Sections 9601, et. seq.); the Clean
Water Act (33 U.S.C. Section 7412 et. seq.); as any such acts
may be amended, modified, or supplemented; (ii) those
substances listed or otherwise identified in the regulations
adopted and publications issued, as may be amended, modified,
or supplemented, pursuant to any of the above-referenced
statutes; (iii) any friable asbestos, airborne asbestos, or
any substance the presence of which on the Aircraft
Maintenance Premises is prohibited by any Environmental Law of
any governmental authority or which may give rise to an
assessment of a governmental authority; and (v) any other
substance which by any Environmental Law of any governmental
authority requires special handling in its collection,
storage, treatment, or disposal.
ARTICLE XXX - FEDERAL REQUIREMENTS
A. Relationship to Federal Lease
This Lease shall be and remain subordinate to the provisions
of the lease between the United States Department of
Transportation and the Authority (the "Federal Lease"). The
Authority agrees to provide Lessee and any Leasehold Mortgagee
written advance notice of any amendments to the Federal Lease
that materially affect the terms of this Lease. At any time
after execution of this Lease, the United States Department of
Transportation, or its successor, shall have the right to
declare this Lease to be superior to the Federal Lease.
B. Other Government Agreements
This Lease shall be and remain subordinate to the provisions
of any existing or future agreements between the Authority and
the United States government or other governmental authority,
relative to the operation or maintenance of the Airport, the
execution of which has been or will be required as a condition
to the granting of federal or other governmental funds for the
development of the Airport, to the extent that the provisions
of any such existing or future agreements are generally
required by the Untied States or other governmental authority
of other civil airports receiving such funds. The Authority
agrees to use its best efforts to notify Lessee and Leasehold
Mortgagee of any provision of which the Authority becomes
aware which would materially and adversely modify the material
terms of this Lease.
C. Federal Government's Emergency Clause
All provisions of this Lease shall be subordinate to the
rights of the United States of America to operate the Airport
or any portion thereof during time of war or declared national
emergency in accordance with established lawful procedures.
Such rights shall supersede any provision of this Lease that
is inconsistent with the operation of the Airport by the
United States of America during a time or war or national
emergency.
D. Nondiscrimination
Lessee for itself, its personal representatives, successors in
interest, and assigns, as part of the consideration hereof,
does hereby agree as a covenant running with the land that (i)
no person on the grounds of race, color or national origin
shall be excluded from participation in, denied the benefits
of, or be otherwise subjected to discrimination in the use of
the Aircraft Maintenance Premises; (ii) in the construction of
any improvements on, over, or under the Aircraft Maintenance
Premises and the furnishing of services thereon, no person on
the grounds of race, color or national origin shall be
excluded from participation in, denied the benefits of, or be
otherwise subjected to discrimination.
E. Airport Certification
Lessee shall not operate the Aircraft Maintenance Premises in
a manner that prevents or impairs the Authority's ability to
be in, and maintain, compliance with FAA regulation 14 CFR
Part 139, "Certification and Operations: Land Airports Serving
Certain Air Carriers," and other requirements for obtaining
and maintaining, an Airport Operating Certificate from the
FAA.
IN WITNESS WHEREOF, the Parties hereto have executed this Lease as of
the day and year shown below.
METROPOLITAN WASHINGTON AIRPORTS AUTHORITY
By
James A. Wilding
General Manager and
Chief Executive Officer
Date
ATLANTIC COAST AIRLINES
By
Title
Date
SECRETARY'S CERTIFICATE
I, , certify that I am the Secretary of the corporation named as the
Lessee herein; that who signed this Lease on behalf of the corporation, was then
of said corporation; that said Lease was duly signed for and on behalf of said
corporation by authority of its governing body and is within the scope of its
corporate powers.
(Corporate Seal)
(Secretary's Signature)
COMMONWEALTH OF VIRGINIA)
) ss.:
COUNTY OF LOUDOUN )
I, , a notary public in and for the State and
---------------------------------------------------
County aforesaid, do certify that , whose name, as
------------------------------------------------------
of , is signed
to the writing above, bearing date on the day of , has
acknowledged the same before me in my County aforesaid.
Given under my hand and official seal this day of .
Notary Public
COMMONWEALTH OF VIRGINIA)
) ss.:
COUNTY OF LOUDOUN )
I, , a notary public in and for the Commonwealth and
County aforesaid, do certify that , whose name, as
, of METROPOLITAN WASHINGTON AIRPORTS AUTHORITY, is signed to
the writing above, bearing date on the day of
, has acknowledged the same before me in my County aforesaid.
Given under my hand and official seal this day of .
My term of office expires on the of .
Notary Public