1
Exhibit 10.62
SUBIC BAY INTERNATIONAL AIRPORT
FACILITIES LEASE AND OPERATING AGREEMENT
This Facilities Lease and Operating Agreement, entered into this 9th
day of October, 1994, by and between:
SUBIC BAY METROPOLITAN AUTHORITY, a government agency organized and
established under Republic Act No. 7227, with office address at
Building No. 229, Waterfront Road, Subic Bay Freeport Zone,
Philippines, represented herein by its Chairman and Administrator,
Richard J. Gordon (hereinafter referred to as the "SBMA");
- and -
FEDERAL EXPRESS CORPORATION, a corporation duly organized and existing
under the laws of the State of Delaware, United States of America with
principal offices at 2005 Corporate Avenue, Memphis, TN, U.S.A.
represented herein by its Vice-President, Gilbert D. Mook (hereinafter
referred to as "FedEx");
WITNESSETH:
WHEREAS, pursuant to Republic Act No. 7227, a special economic and
freeport zone was created consisting, among others, of the lands and other
properties occupied by the former Subic Naval Base and its contiguous
extensions as covered by the 1947 Military Bases Agreement between the
Philippines and the United States of America, also known as the "Subic Bay
Freeport" (hereinafter referred to as the "SBF");
WHEREAS, pursuant to the Act, all such land and properties, including
the land and/or properties subject of this Facilities Lease and Operating
Agreement, were transferred and conveyed to the SBMA;
WHEREAS, Proclamation No. 50 was issued on 18 September 1992, adopting
the Subic Conversion Program for economic development and designating the SBMA
as the implementing agency thereof;
WHEREAS, the SBMA owns and operates Subic Bay International Airport
("Airport") and intends to construct, develop and equip the Airport in
accordance with the plans and specifications set out in Appendix A;
WHEREAS, FedEx desires to locate its primary intra-Asia transshipment
center at the Airport.
WHEREAS, in the exercise of its powers under the Act and its
Implementing Rules and Regulations, (i) the SBMA hereby leases in favor of
FedEx the Exclusive-Use Space specifically described under this Agreement and
FedEx accepts the lease subject to the terms and conditions herein set forth;,
and (ii) the parties desire to enter into this Facilities Lease and Operating
Agreement (this "Agreement"), which shall set forth the terms and conditions by
which the SBMA makes the Airport and its facilities available to FedEx for its
business, as described herein, including air transportation services, upon
completion of such construction, development and equipping.
1
2
NOW, THEREFORE, for and in consideration of the foregoing premises and
the covenants hereinafter stipulated, the parties hereby agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Primary Definitions. In addition to words and terms
elsewhere defined in this Agreement, the following words and terms as used in
this Agreement shall have the following meanings unless some other meaning is
apparent from the context in which the words and terms are used:
Airline. A business entity, including FedEx, that provides Air
Transportation services and such other transportation services as may be
carried out at the Airport.
Air Transportation. Subject to the limitations expressly set forth
herein, the carriage of property, cargo, or mail by aircraft and the other
activities, functions, and operations incidental thereto, including the
carriage of persons employed by FedEx and such other persons as FedEx shall be
authorized to carry under United States Federal Aviation Regulations, it being
understood that FedEx will not conduct a passenger air transportation business
from the Airport.
Aircraft Landing. A complete aircraft cycle (one landing and one
take-off) at the Airport of an aircraft in the Airline's revenue service.
Airport. The real property and facilities of Subic Bay International
Airport as it exists on the date of execution of this Agreement, and as
modified or expanded in the future. The existing facilities and boundaries of
the Airport are shown in Appendix A and described in the site plan.
Airport Services. The general administration and operation of the
Airport by the SBMA, including, but not limited to the following functions by
the SBMA at the Airport: Airport police, crash, rescue and fire protection, and
ground traffic control; clearing, grading and draining, the costs of which are
not charged or chargeable in specific terms to users under other agreements;
the collection and removal or treatment of sewage and other wastes; roadway
systems; perimeter fencing and utility systems; the furnishing of
communications systems, facilities and tunnels; landscaping; the construction,
equipment and maintenance of facilities on the Airport and the maintenance of
such land itself, facilities and areas or subdivisions of the Airport necessary
in the operation and maintenance thereof, including the SBMA's administration,
maintenance, police, crash, rescue, fire and operations space and facilities.
Airport System. Subic Bay International Airport, as it now exists,
and as it is to be constructed in accordance with the requirements of Appendix
A, including the Airport, air navigation facilities, and other related
facilities and related properties (real, personal, or mixed), and any rights or
interests in the Airport, air navigation facilities, and other related
facilities and related properties, now or hereafter belonging to or controlled
by the SBMA or under the administration, jurisdiction, control, and management
of the SBMA, and all equipment, improvements, extensions, or betterments
thereto constructed or acquired, belonging to or controlled by the SBMA.
Without limiting the generality of the foregoing, the term Airport System shall
include any and all of the following of or belonging or pertaining to such
Airport or air navigational facilities or such rights or interests: lands or
water areas, rights-of-way, approaches, contract rights, airport terminal
buildings, hangars and other
2
3
buildings and facilities erected on such lands, runways, taxiways, paved areas,
access roads, parking lots, airport equipment, and any other equipment and
property (real, personal or mixed) incidental to and included in such
properties.
Applicable Law. All present and future laws, orders, ordinances,
rules, regulations, international treaties and conventions of the Philippine
government, the SBMA, and other applicable government bodies, departments and
agencies, including, where appropriate, those of the United States of America.
Apron Area. As shown in Appendix B hereto the space provided to FedEx
for loading and unloading passengers, cargo and mail to and from its aircraft
and the aircraft of its vendors, providing such aircraft with fueling and
lubricate, performing ramp service operations, inspection, maintenance of
aircraft, and the parking of equipment used in connection therewith. More
specifically, the terms Apron and Apron Area include the following:
Preferential Aircraft Apron. That apron area described in
Appendix B. FedEx shall from time to time provide the SBMA, at least
thirty (30) days prior to the effective date thereof, its aircraft
schedule(s) and the schedules of its Vendor Carriers and FedEx shall
identify the parking gates within the Preferential Aircraft Apron
FedEx prefers to use to accommodate said schedule(s). All such gates
shall be made available to FedEx and the entire area comprised of
these gates shall be the Preferential Aircraft Apron Area.
Overflow Aircraft Apron. The apron areas described in
Appendix B which is intended to accommodate unscheduled needs that may
include, without limitation, extra sections (flights to supplement
regularly scheduled operations), charters or aircraft with maintenance
problems.
Common-Use Aircraft Apron. All aircraft parking positions not
designated as Preferential Aircraft Apron or Overflow Aircraft Apron.
Exclusive Ramp. The ramp area designated on Appendix B
attached hereto that includes (a) the area immediately adjacent to
buildings leased by FedEx, and (b) for the period FedEx conducts its
Air Transportation operations, the Preferential Aircraft Apron, for
use by FedEx to stage and store GSE, ULDs, equipment and its
personnel.
Certificated Maximum Gross Takeoff Weight ("MGTOW"). The maximum
takeoff weight at which each aircraft operated by FedEx is authorized by the
FAA to operate, as recited in the flight manual governing that aircraft.
Common-Use Space. All space at the Airport other than the
Exclusive-Use Space as more particularly delineated in Appendix B for use by
FedEx in common with the general public.
Exclusive-Use Space. The space as shown and marked as "Exclusive-Use
Space" on Appendix B attached hereto and leased exclusively by FedEx pursuant
to Section 5.01.
FAA. The Federal Aviation Administration of the Department of
Transportation of the United States of America or its authorized successor.
3
4
Landing Fees. Those fees levied on FedEx and its Vendor Carriers for
the use of the landing areas, taxiways and aprons of the Airport System, as
established in Section 6.02 of this Agreement.
Milestone Dates. Those dates set forth in Appendix A hereto by which
the SBMA shall complete or commence the designated task, subject to applicable
cure periods.
Operation Date. 1 May 1995, which shall be the date on which FedEx
shall occupy the Airport for the purpose of commencing its Air Transportation
services.
Plans and Specifications. Those plans and specifications set forth in
the construction and equipment purchase contracts entered into by the SBMA and
its designated contractors.
SBMA Labor Pool Inventory. A list maintained by the SBMA of persons
who are eligible for employment on the Airport by FedEx or FedEx's vendors.
Telecom Vendor. Subic Telecom, the joint venture between AT&T, PLDT
and the SBMA to provide telecommunication services to Airlines at the Airport.
Vendor Carriers. Aircraft of other carriers serving the Airport at
the request of FedEx to load or off-load freight handled by FedEx at its
transshipment facility which meet at least one of the following criteria: (i)
more than fifty percent (50%) of the cargo capacity of said aircraft has been
contracted to FedEx, (ii) the aircraft loads or unloads at least one thousand
kilograms (1000 kg) of freight under contract to FedEx, or (ii) the aircraft
loads or unloads at least two (2) pallets or containers of freight under
contract to FedEx. Vendor Carriers may be serving the Airport by way of wet
lease, dry lease, straight charter, block space or other commercial arrangement
with FedEx. Block space and commercial arrangements shall be with regularly
scheduled commercial carriers. All Vendor Carriers and their respective flight
crews shall be fully licensed, certified, authorized, and qualified to fly to
the Airport.
ARTICLE 2
CONSTRUCTION OF AIRPORT
SECTION 2.01. Construction and Completion of the Airport System. (a)
The SBMA agrees that, as a condition precedent to the obligations of FedEx
under this Agreement, the SBMA shall, at its sole cost and expense, complete
the construction of the Airport System described in Appendix A, all in
accordance with the Plans and Specifications and the Milestone Dates for
construction set out in Appendix A to this Agreement and in no event at a date
later than the Operation Date.
(b) If any Milestone Date is not met and is not cured within the time
set forth in Appendix A, FedEx shall have the right to (i) terminate this
Agreement immediately upon written notice to the SBMA and, in such event, FedEx
shall have no further rights or obligations to the SBMA under this Agreement
and the SBMA shall have no duties or obligations to FedEx under this Agreement;
or (ii) extend the completion date for the construction of the Airport System
and the Operation Date to a date mutually agreeable to FedEx and the SBMA. The
remedies in Section 2.01(b) shall be the sole remedies of FedEx if any
Milestone Date is not met and is not cured within the time set forth in
Appendix A.
4
5
(c) During the period of construction of the Airport, FedEx and its
authorized representatives shall have the full right of inspection.
Additionally, during any such period of construction that FedEx has agreed to
occupy any facilities upon the Airport, FedEx shall have the right, at all
reasonable times with notice to the SBMA, to enter such facilities for the
purpose of constructing and installing its fixtures and equipment and
performing tenant finish work, provided FedEx agrees to exercise due care and
agrees not to interfere unreasonably with the SBMA's construction of the
Airport System.
(d) The following approvals and certifications shall be acquired by
the SBMA in respect of the Airport on or before the Operation Date:
(i) The completion date of the construction of the Airport shall
be evidenced by a certificate signed by the SBMA's architects
and engineers stating that with the exception of push list
items the construction of the Airport System has been
completed substantially in accordance with the Plans and
Specifications; and
(ii) Certifications of fitness from the Air Transport Office of the
Philippines and from such other Philippine and international
organizations and agencies as shall be required to operate the
Airport as a 24-hour international airport.
SECTION 2.02. Operational Airport. The SBMA shall complete all work
on and to the Airport System and the Airport shall be operational on or before
1 April 1995 so as to provide FedEx with a minimum of thirty (30) days to
conduct tests on the Airport System and train its personnel prior to the
Operation Date. The Airport shall be deemed to be operational when the
following criteria are satisfied:
(a) The runway and apron reconstruction and overlays have been
fully completed in accordance with the Plans and
Specifications and all surfaces have fully cured in accordance
with standard industry practice;
(b) Two connectors between the runway and the taxi way/apron have
been reconstructed and overlaid in accordance with the Plans
and Specifications and all surfaces have cured in accordance
with standard industry practice;
(c) The parallel taxi way west of the tower has been reconstructed
and overlaid in accordance with the Plans and Specifications
and all surfaces have cured in accordance with standard
industry practice;
(d) The ASR has been installed and certified for operation;
(e) All airfield and navigational lighting, and navigational aids
have been installed and are fully operative;
(f) All approaches to the Airport have been finalized and approved
by the applicable government bodies; said approaches meet
FedEx requirements for flight minimums; and said approaches
have been published by Jepperson's;
(g) The aircraft control tower has been fully reconstructed and
remodeled in accordance with the Plans and Specifications and
there is
5
6
employed by the SBMA and other such applicable government
agencies a sufficient number of fully trained operators to
conduct safe, 24-hour daily flight operations at the Airport;
(h) The certifications required in Section 2.01 (d) have been
obtained without condition or limitation that would materially
impede the ability of FedEx to operate its Air Transportation
Business at the Airport;
(i) There exists at the Airport sufficient and appropriate ground
services, including access to fuel, to conduct 24-hour daily
flight operations; and
(j) The Airport has been fully fenced and has been secured in
accordance with international standards in use at
international airports in OECD countries.
The construction of the entire Airport System in accordance with the
Plans and Specifications shall be fully completed on or before 1 June 1995.
ARTICLE 3
TERM
SECTION 3.01. Term. (a) This Agreement shall become effective upon
execution and delivery by the SBMA and FedEx (the "Effective Date"), but the
rights of use and occupancy granted hereunder and obligations to pay rents and
fees shall not commence until the Operation Date.
(b) This Agreement will have a seven (7) year term, commencing with
the Operation Date, with two (2) successive renewal terms of three (3) years
each. Provided no event of termination has occurred under Section 11.05 and
FedEx is not in material default under the terms of this Agreement at the time
of exercise of any renewal term or at the commencement of any renewal term, the
renewal terms shall be exercised by FedEx upon written notice to the SBMA not
less than one hundred and twenty (120) days prior to the expiration of the term
or any renewal term, as applicable. Except for Landing Fees and rental for the
Exclusive-Use Space, which are subject to renegotiation on any renewal,
renewals shall be on the same terms and conditions as stated herein unless
otherwise agreed to in writing.
ARTICLE 4
USE OF THE AIRPORT AND ITS FACILITIES
SECTION 4.01. Uses of the Airport. FedEx is granted the right to use
the Airport, in common with others, for the sole purpose of conducting FedEx's
business, including an Air Transportation business. In addition to all rights
granted elsewhere in this Agreement, FedEx's use of the Airport for the conduct
of its business includes the right to:
(i) Land, takeoff, fly, taxi, push, tow, load, or unload aircraft;
(ii) Repair, maintain, condition, service, test, park, or store aircraft or
other equipment belonging to or operated by FedEx;
6
7
(iii) Perform or cause to be performed by contract, customary aircraft
fueling, servicing, and line maintenance, of aircraft and other
equipment operated by FedEx, or by any Vendor Carrier, at aircraft
parking positions adjacent to the Exclusive Ramp or on aprons, before
loading and takeoff or as soon as practical following landing and
unloading;
(iv) Handle, bill and manifest shipments, and sell transportation of cargo,
mail, and personal property by air, and perform, or cause to be
performed by contract, the customary handling of passengers, baggage,
cargo, and mail;
(v) Install, maintain, or operate, by FedEx alone or in conjunction with
any other Airline, air-to-ground and other communication,
meteorological, and aerial navigation systems between locations on the
Airport, provided such equipment and facilities do not interfere with
other Airport communication, meteorological, or aerial navigation
systems. Specifically, FedEx shall have the right to develop,
construct and operate, at its own expense and for a nominal access
fee, a back-up communication system, operated by FedEx, at its
discretion, in conjunction with Telecom Vendor. The back-up system is
to be used in the event of a failure of Telecom Vendor's primary
system;
(vi) Hire, train and supervise ground personnel on the Airport necessary
for the conduct of FedEx's Air Transportation business;
(vii) Transport by air or land, load, and unload persons, property, cargo,
and mail at the Airport;
(viii) Operate motor vehicles or other ground transportation equipment
required for the conduct of FedEx's business. This shall include the
right to operate a ground transportation business to or from the
Airport for the carriage of cargo and FedEx personnel only;
(ix) Install, maintain, and operate lounges, cafeterias, break rooms and
rest areas in FedEx's Exclusive-Use Space and to sell refreshments and
food, directly or through vendors of its choice, in such areas solely
to FedEx employees or to FedEx vendors and their employees;
(x) Install and maintain FedEx's identification signs, advertising, or
similar matter on FedEx's Exclusive-Use Space;
(xi) Purchase FedEx's requirements of personal property or services,
including fuel, oil, lubricants, in-flight food or beverages, and
other equipment, materials or supplies. FedEx may purchase goods and
services from any person or company of FedEx's choice; provided,
however, FedEx agrees that, wherever possible, and assuming such
vendors meet FedEx's requirements for quality, service and price,
FedEx shall select those vendors that are recommended by the SBMA.
(xii) Sell, lease, transfer, dispose, or exchange FedEx's aircraft, engines,
accessories, equipment, materials or supplies to and from other
Airlines, as necessary or incidental to the operation of its Air
Transportation business.
(xiii) Establish and maintain business and operations offices in the
Exclusive-Use Space in connection with its services, including an Air
Transportation business, which may include customer service
operations, accounting and billing functions and other matters related
to the business of FedEx;
7
8
(xiv) Provide administrative offices for FedEx employees in the
Exclusive-Use Space; and
(xv) Conduct any other operation or activity that is reasonably necessary
or incidental to the conduct by FedEx of its Air Transportation
business and its logistical services business as conducted by Federal
Express Logistics, a division of FedEx; provided that FedEx shall not
conduct any business listed in Part 5 of the Aeronautical Fees and
Charges, the SBMA Administrative Order No. 1, 15 December 1992. All
such business shall be solely for the account of FedEx.
Notwithstanding the foregoing, FedEx may provide aircraft handling
services to entities other than Vendor Carriers upon receipt of a
concession to provide such services from the SBMA. The SBMA shall
grant such a concession to FedEx in a timely fashion upon payment of
non-discriminatory concession fee by FedEx to the SBMA from time to
time at rates to be mutually agreed upon between FedEx and the SBMA.
SECTION 4.02. Limitation on Use. In connection with the exercise of
its rights under this Agreement, FedEx:
(i) Shall not do or permit to be done anything at or about the Airport
that may interfere unreasonably with the effectiveness or
accessibility of any of the Airport System or Airport Services or any
system serving the Exclusive-Use Space, including the water system,
drainage and sewage system, fire protection system, traffic
circulation, sprinkler system, alarm system, fire hydrants and hoses,
heating or ventilation system, air conditioning system, electrical
system, natural gas, or other Airport systems installed or located on
or within the Airport;
(ii) Shall not do or permit to be done any act or thing upon the Airport
that will invalidate or conflict with any fire or other casualty
insurance policies covering the Airport or any part thereof; provided,
however, said policies must be similar in form and content to policies
held by other international airports offering twenty-four (24) hour
flight operations;
(iii) Shall not dispose of or permit any employee, agent or contractor to
dispose of any waste material taken from, or products used with
respect to, its aircraft, except in accordance with all applicable
regulations of appropriate governmental or administrative bodies
having jurisdiction over activities at the Airport;
(iv) Shall not commit or permit any activity upon the Exclusive-Use Space
that shall be inconsistent with or materially disrupt the operation of
the Airport on a twenty-four (24) hour basis; and
(v) Shall comply and make all reasonable efforts to cause its Vendor
Carriers to comply with all Applicable Laws.
ARTICLE 5
PREMISES
SECTION 5.01. Exclusive- and Common-Use Space. Commencing at the
Operation Date, and pursuant to the terms of this Agreement, the SBMA will
lease to FedEx and FedEx shall lease from the SBMA, on an exclusive basis, the
Exclusive-Use Space. In connection with said lease, FedEx shall have the right
to use the Common-Use Space also listed in Appendix B, in common with others.
Prior to the Operation Date FedEx shall have the right of access to the
Exclusive-Use Space at no charge for the purpose of conducting non-revenue
8
9
generating activities related to its Air Transportation business which shall
include training, fit-out of the Exclusive-Use Space with FedEx leasehold
improvements, and to support testing and training flight operations.
SECTION 5.02. Apron Area. FedEx is granted the use of the Apron
Areas designated for FedEx's use from time to time, all subject to the
following:
(a) Preferential Aircraft Apron.
(i) FedEx shall be permitted to stage Ground Support Equipment
("GSE"), Unit Load Devices ("ULDs"), static racks and other
equipment in the Preferential Apron Area at no cost in
addition to that which FedEx shall pay in rental for the
Exclusive-Use Space under Section 6.01 hereof. FedEx shall
only use such space in such a manner as not to impede the use
of an adjacent taxi lane or parking position. Aircraft
belonging to Vendor Carriers shall be permitted to use parking
gates within the Preferential Aircraft Apron.
(ii) SBMA may permit any other Airline to park aircraft at parking
gates within the Preferential Aircraft Apron subject to the
following:
(1) There are no other parking gates available on the
Airport;
(2) The operator of the subject aircraft moves the aircraft
out of the Preferential Aircraft Apron at least two (2)
hours prior to the scheduled arrival of FedEx (or a
Vendor Carrier) aircraft which are designated to use the
subject parking gate;
(3) In the event an operator fails to timely do so, the SBMA
shall move those subject aircraft that are capable of
being moved and shall make reasonable efforts to move
all other subject aircraft;
(4) The parking of an aircraft in the Preferential Aircraft
Apron shall not require FedEx to move any FedEx GSE,
ULDs, static racks or other equipment staged by FedEx in
the Apron; and
(5) SBMA will make reasonable efforts to cause the operator
of the other aircraft to take responsibility for any and
all damages done to FedEx GSE, ULDs, static racks and
other equipment staged in said Apron.
(b) Overflow Aircraft Apron. FedEx and the SBMA acknowledge and agree
that there may be competing uses for the Overflow Aircraft Apron and
that use of same shall be on a first come first served basis in common
with others; provided, however, that the SBMA shall cooperate with
FedEx to meet the reasonable requirements of FedEx with regard to the
Overflow Aircraft Apron. Specifically, during FedEx scheduled and
properly noticed Air Transportation operations, the SBMA shall not
permit the use of the Overflow Aircraft Apron on a scheduled basis and
shall endeavor to move aircraft parked on said Apron to other
locations. FedEx shall only use such space in such a manner as not to
impede the use of an adjacent taxi lane or parking position.
(c) Common-Use Aircraft Apron. The SBMA may assign said gates in the
Common-Use Aircraft Apron in the manner it deems appropriate.
(d) Exclusive Ramp. The Exclusive Ramp shall be provided to FedEx for its
exclusive use at no charge in addition to that which FedEx shall pay
in rental for the Exclusive-Use Space under Section 6.01 hereof.
9
10
(e) Notice of Release. FedEx shall provide the SBMA reasonable notice of
its intention not to further expand its parking requirements and those
gates identified by the parties as not required for FedEx needs shall
be released to the SBMA and shall no longer be designated or be
capable of designation as Preferential or Overflow Aircraft Apron.
SECTION 5.03. Expansion Space. (a) On or after 1 April 1996, the
SBMA shall have the right to offer, in writing, to FedEx the lease on those
facilities on the southwest ramp as shown on Appendix B attached hereto (the
"Expansion Space") on rates and terms agreed to by the parties but consistent
with the rates and terms of this Agreement (the "Offer to Lease"). FedEx shall
have the right to lease all or part of the Expansion Space on the giving to the
SBMA of written confirmation of its intent to lease within thirty (30) days of
the date of the SBMA's offer.
(b) Until the SBMA makes the Offer to Lease, the SBMA will grant an
option to FedEx to lease all or a portion of the Expansion Space on rates and
terms agreed to by the parties but consistent with the rates and terms of this
Agreement, and FedEx shall have the right to occupy such space not earlier than
six months following the date of FedEx's exercise of its option rights. FedEx's
option rights hereunder shall expire on the date of the Offer to Lease.
(c) FedEx shall exercise its option to lease the Option Space, or any
portion thereof, from time to time by providing the SBMA with not less that six
(6) months prior written notice for each building or piece of land in the
Option Space that FedEx desires to lease. The SBMA shall make such building or
land available to FedEx on or before the date of expiration of said notice
period.
(d) Until such time as FedEx exercises its options with regards to
the Option Space, the SBMA may lease all or parts of the Option Space to third
parties; provided that (i) all such leases shall be subject to termination upon
six (6) months notice, (ii) the SBMA shall issue notice of termination to
existing tenants immediately after receiving notice from FedEx of intention to
exercise its option rights herein, and (iii) the SBMA shall not permit tenants
to remain after the expiration of said notice of termination and shall take all
steps available to it under law and equity to remove any tenants attempting to
holdover. Once the SBMA has made the Offer to Lease and FedEx has elected not
lease all or a portion of the Expansion Space, the SBMA shall be free to lease
any such Space not taken by FedEx to any party without restriction.
SECTION 5.04. Family Housing Units. (a) FedEx shall have the
option, until 31 August 1995, to lease two additional duplex housing units in
the Cubic Housing Area under the same rental and terms and conditions contained
in Lease Agreements between FedEx and the SBMA for Building 8220 (units A and
B). FedEx shall exercise its options under this Section 5.04 by giving thirty
(30)-days' prior written notice to the SBMA. Until such time as FedEx exercises
its options hereunder, the SBMA shall have the right to lease all or a part of
said housing units to third parties.
(b) Housing Units shall be leased to FedEx full or partly furnished
at the request of FedEx from furniture and appliances held by the SBMA in its
inventories; provided, however, if FedEx decides to renovate any housing unit
or to replace any the SBMA owned fixture, furniture or appliances, any salvaged
fixtures, furniture or appliances shall be returned to the SBMA.
SECTION 5.05. SBMA's Improvements. On or before the dates set forth
in Appendix C, or such later date agreed to by the parties, the SBMA shall
cause the leasehold
10
11
improvements specified in Appendix C ("Improvements") to be completed for the
Exclusive-Use Space and Housing Units leased to FedEx under this Agreement. The
cost for the Improvements shall be for the account of the SBMA. Leasehold
improvements required by FedEx in addition to the Improvements shall be deemed
alterations subject to the provisions of Section 5.06 of this Agreement.
SECTION 5.06. Alterations, Improvements and Repairs. (a) Subject to
the provisions of Section 12.04, FedEx shall have the right to employ such
architects, contractors or builders as FedEx shall deem necessary or desirable
in connection with the authorized construction, installation, alteration,
modification, repair or maintenance of any building, structure or improvement
upon any of the Exclusive-Use Space. Before beginning construction of any
alteration, improvement or repair, FedEx will submit to the SBMA for the SBMA's
approval detailed drawings of the proposed construction and specifications of
the proposed repair. All such alterations, improvements and repairs shall be
completed in accordance with such drawings or specifications.
(b) The SBMA will review and approve or disapprove the proposed
alterations, improvements or repairs in writing within twenty (20) days after
receipt of the construction drawings; provided, however, that with respect to
repairs that are urgently required in the reasonable opinion of FedEx for FedEx
to carry on its business, FedEx may effect such repairs without the prior
approval of the SBMA and may deliver repair specifications to the SBMA after
repairs have commenced or have been completed. Unless disapproval is given
within said twenty (20)-day period, approval shall be deemed to have been
given. The SBMA shall assist FedEx at FedEx's expense in obtaining all required
permits, certificates and other approvals required from appropriate government
agencies for the construction of FedEx's leasehold improvements. Upon
compliance with the permit requirements, the SBMA shall provide official
building permits to FedEx for all qualifying projects under this Section 5.06.
(c) Any construction by FedEx must be performed in a safe, neat
manner and meet the following criteria:
(i) Not unreasonably interfere with the activities of the SBMA or
its tenants;
(ii) Be compatible with the architecture of the building as
determined by the SBMA;
(iii) Be performed at no cost to the SBMA; and
(iv) Comply with all Applicable Laws.
(d) FedEx shall pay or cause to be paid all uncontested claims
lawfully made by its contractors, subcontractors, materialmen and workmen
arising out of or in connection with the construction work; provided, however,
that nothing herein contained shall be construed to limit the right of FedEx to
contest any claim of a contractor, subcontractor, materialman or workman and no
such contested claim shall be considered to be an obligation of FedEx within
the meaning of this Agreement unless and until the same shall be fully
adjudicated. Notwithstanding the foregoing, FedEx shall promptly remove or bond
any lien or charge filed against the Airport or any interest therein by any
such contractor, subcontractor, materialman or workman directly attributable to
FedEx's construction work.
(e) Within thirty (30) days after completion of the construction of
any alteration or improvement, FedEx will deliver to the SBMA detailed copies
of as-built drawings showing
11
12
the location and dimensions of the alteration or improvement constructed,
including structural, mechanical, and electrical systems.
(f) FedEx hereby assumes the risk of loss or damage to all of the
construction work it conducts prior to the completion thereof and the risk of
loss or damage to all property of the SBMA arising out of or in connection with
the performance of such construction work so long as the SBMA has taken all
steps reasonably prudent of a landlord to avoid contributing to any such loss
or damage. FedEx shall procure and maintain such insurance as is standard in
the Philippines for the type of construction work FedEx intends to conduct.
Such insurance shall be in compliance with and subject to the applicable
provisions of Article 9 hereof and shall name the SBMA as additional assureds
and such policy shall provide that the loss shall be adjusted with and payable
to FedEx. Such proceeds shall be used by FedEx to repair, replace or rebuild
any the SBMA property for which FedEx may be liable hereunder with any excess
to be used by FedEx at FedEx's sole discretion.
SECTION 5.07. Ownership of Improvements. The ownership of
improvements, furnishings, equipment, and fixtures that are constructed or
installed on the Exclusive-Use Space by FedEx is as follows:
(i) Title to all removable furniture, furnishings, fixtures, or equipment
installed by FedEx remains vested in FedEx at all times during the
term of this Agreement; provided that FedEx shall be liable for the
cost of removal and repair. If not removed within thirty (30) days
after the expiration or termination of this Agreement, all removable
furniture, furnishings, fixtures, and equipment will become the
property of the SBMA.
(ii) Title to any structure or other improvement that cannot be removed
without damage to the Exclusive-Use Space, vests in the SBMA unless
otherwise provided by a successor agreement. These improvements
include interior walls, ceilings, carpeting, finished flooring,
electrical wiring, air conditioning ducts and equipment, furnishings,
interior decoration, or finishing. The SBMA shall use its best efforts
to use the Exclusive-Use Space with all such improvements intact. If
removal or repair of structure and improvements is required by the
SBMA to use said Space immediately after vacation of same by FedEx,
the reasonable cost of such repairs or removal shall be for the
account of FedEx.
(iii) Except as set forth in this Section 5.07, upon expiration, termination
or cancellation of this Agreement, FedEx shall surrender all the SBMA
property, buildings and non-movable improvements located in the
Exclusive-Use Space in the same order and condition as they were on
the Operation Date, ordinary wear and tear and casualty damage to the
extent covered by insurance excepted.
SECTION 5.08. Ingress and Egress. The SBMA grants the right of
adequate ingress to and egress from the Airport and the Exclusive-Use Space to
FedEx and its officers, employees, customers, agents or the contractors,
invitees, suppliers, and furnishers of services of any of them (the "Priority
Users"). FedEx's rights shall be subject to: (i) nondiscriminatory easements,
restrictions, covenants and agreements to which the premises may be subject and
rights of the public to the Common-Use Space, (ii) rights of any enterprise
which is furnishing, heating, lighting, power, telegraph, telephone, steam, or
transportation services, and (iii) permits, licenses, regulations and
restrictions, if any, the Philippines government, the SBMA or other agency.
Specifically, the SBMA shall:
(a) Immediately develop and implement an expedited procedure for the
issuance of gate passes and documentation or authority required to
permit such persons going to and
12
13
coming from the customs territory, to and from the SBF as well as the
Airport and the Exclusive-Use Space, within a reasonable and
acceptable time frame for FedEx operations, but in no case more than
three (3) days. The SBMA shall use its best efforts to issue
immediately gate passes and such other authorizations on an emergency
basis. In the case of FedEx and Priority Users' vehicles, the SBMA
shall likewise afford immediate access to and from the SBF. On or
before the Operation Date, the SBMA shall establish and identify such
gate(s) where FedEx and Priority Users' vehicles may be granted easy
and unimpeded access on a 24-hour basis in accordance with these
expedited procedures.
(b) The SBMA shall construct, improve and maintain all surface roads
within the SBF to a standard necessary to meet the reasonable
requirements of its tenants. The SBMA shall ensure that the road
system of the SBF is adequate to permit the vehicles of FedEx and the
Priority Users to travel to and from an SBF checkpoint at the
boundaries of the SBF to the FedEx gate at the Airport, during peak
traffic times, without unreasonable delay.
(c) The SBMA may, upon the giving of seventy-two (72)-hour notice to
FedEx, or without notice in the event of an emergency only,
temporarily close, or consent to or request the closing of, any
roadway so long as FedEx and the Priority Users have a means of
ingress and egress to the SBF and the Airport that is sufficient to
meet the needs of FedEx and does not cause delay of ingress or egress
of any vehicle or person connected with a Priority User.
SECTION 5.09. SBMA Entry. The SBMA, its directors, officers,
employees, agents and representatives shall have the right of entry to the
Exclusive-Use Space from time to time to (i) perform its obligations under this
Agreement, (ii) ensure compliance by FedEx of its obligations under this
Agreement, and (iii) respond to any emergency applicable to the Exclusive-Use
Space, subject to the limitations on and requirements for entry set forth in
this Agreement. The SBMA shall not enter the Exclusive-Use Space, nor shall the
SBMA cause or permit any person, except someone acting under the authority of
law, to enter the Exclusive-Use Space for any reason other than those stated
immediately above. Except for emergencies, entry shall be conducted in the
following manner only: (x) the SBMA shall provide notice to FedEx during normal
business hours at least twenty-four (24) hours prior to the intended date of
entry, (y) at the time of entry, the SBMA representatives shall present
themselves, with such identification and authorizations as FedEx shall
reasonably require, to FedEx security personnel at the main entry to the
Exclusive-Use Space, and (z) the SBMA representatives shall be accompanied by
FedEx personnel at all times when in the Exclusive-Use Space. The SBMA shall
use its best efforts to ensure that any entry by the SBMA, for any purpose,
does not disturb, interrupt or impede the business of FedEx at the Airport.
ARTICLE 6
RENTS AND FEES
SECTION 6.01. Rents and Fees. (a) FedEx will pay monthly to the
SBMA as rent for the Exclusive-Use Space the rates per square meter described
in Appendix D, as amended from time to time by the inclusion of additional
facilities pursuant to the Option granted FedEx herein. All rent for the
Exclusive-Use Space is due on the first day of each month, commencing on the
Operation Date. In the event the Operation Date or the date of termination or
expiration of the term this Agreement or any renewals hereof shall be on a day
other than the first or last day of a calendar month, amounts owing under this
Section 6.01 shall be pro rated on the basis of thirty (30) days in a month.
Except as otherwise
13
14
provided in this Agreement, there shall be no additional rent or other charges
imposed on FedEx for it use of Common-Use Space or Apron Areas.
(b) Except as otherwise provided in this Agreement: (i) rents and
fees for the use of all other facilities, rights, and privileges granted to
FedEx in this Agreement, are combined in and represented by the Landing Fees
and Parking Charges set out in Appendix E; and (ii) no other fee, assessment or
charge of any nature may be imposed on FedEx for its use or exercise of the
facilities, rights and privileges granted under this Agreement.
SECTION 6.02. Calculation and Payment of Landing Fees. (a) The
Landing Fees will be payable monthly by FedEx based on an activity report to be
prepared and certified by FedEx as accurate. FedEx shall self-invoice using
said activity report. The activity report, invoice and payment thereon shall be
provided and paid over to the SBMA within twenty-five (25) days of the last day
of each calendar month. The Landing Fees for each Aircraft Landing will be
calculated in the manner provided in Appendix E and will be based on the
Certified Maximum Gross Takeoff Weight (MGTOW) for each Aircraft and each
individual landing up to a monthly cumulative MGTOW of 28,000,000 kilograms for
all FedEx aircraft and Vendor Carriers. Once the 28,000,000 kilograms
cumulative weight is reached, the calculation method for Landing Fees shall be
adjusted as set forth in Appendix E.
(b) If FedEx fails to furnish the SBMA with the certified activity
report, invoice and payment required by Section 6.02(a) within twenty-five (25)
days of the last day of each calendar month, the SBMA may determine FedEx's
Landing Fee by assuming that the total takeoff weight for FedEx during the
subject month was one hundred percent (100%) of the total takeoff weight of
FedEx set forth in the last certified activity report. After delivery of a late
certified activity report, invoice and payment by FedEx, the SBMA will
recalculate the Landing Fee and will invoice FedEx for the actual amount. If
there is an overpayment or underpayment, a credit or charge shall be applied to
the appropriate invoices in the next succeeding month. FedEx remains
responsible for submitting a certified activity report for each month
regardless of any estimate made by the SBMA.
(c) Commencing on the fifth (5th) anniversary of this Agreement,
Landing Fees shall be increased by five percent (5%) and the new Landing Fees
shall remain in place for the balance of the term of this Agreement.
SECTION 6.03. Fuel Flowage Fee. The SBMA shall not impose fuel
flowage charges on FedEx during the term of this Agreement or any renewals. The
SBMA may impose fuel flowage fees on fuel vendors at the Airport at its
discretion, provided, however, that any such fees charged to a vendor used by
FedEx shall not be greater than fuel flowage fees charged by the SBMA to
Coastal Subic, Incorporated as of 29 January 1994 and shall remain constant
during the term of this Agreement and may be revised only on the renewal of
this Agreement.
SECTION 6.04. Aircraft Parking Charges. (a) For aircraft comprising
the first fifty million pounds (based on MGTOW) of landed weight in a calendar
month, the first four (4) hours of parking shall be free. The parking charge
per thirty (30) minutes after the first four hours shall be as set forth at
Section 2.00 of Appendix E and shall be determined on the MGTOW of each
individual aircraft.
(b) Once an aggregate of fifty million kilograms (based on MGTOW)
have landed in a given calendar month, parking for each aircraft landing
thereafter shall be charged for parking (i) the first six (6) hours in
accordance with Section 2.01 of Appendix E, and (ii) for each 30 minutes after
six hours in accordance with Section 2.02 of Appendix E and shall be determined
on the MGTOW of each individual aircraft.
14
15
(c) The invoicing and payment procedures for Parking Charges shall be
the same as those used for Landing Fees as set forth in Section 6.02 hereof.
SECTION 6.05. Commitment. (a) Subject to Section 6.05(d) FedEx shall
be unconditionally obligated to pay to the SBMA the cumulative payment of
eleven million five-hundred-and-fifty thousand dollars (USD$11,550,000) over
the initial seven (7) year term of this Agreement for rentals applicable to the
Exclusive-Use Space as of the date of this Agreement, Landing Fees and Parking
Charges. The first anniversary date of this Commitment shall be 30 June 1996.
(b) FedEx shall pay to the SBMA on or before 1 August 1996 and August
1st of each year thereafter during the term of this Agreement the difference
between one million six-hundred-and-fifty thousand dollars (USD$1,650,000) and
the actual amount paid during said preceding twelve-month period (fourteen
months in the case of the first year) by FedEx to the SBMA for rentals on the
Exclusive-Use Space as of the date of this Agreement, Landing Fees and Parking
Charges under this Section 6.05. If the amount paid by FedEx in rentals on the
Exclusive-Use Space as of the date of this Agreement, Landing Fees and Parking
Charges during said period exceeds USD$1,650,000, no payment under this Section
6.05 shall be owing for said period.
(c) Once FedEx has paid to the SBMA a cumulative amount equal to or
exceeding USD$11,550,000 in rentals on the Exclusive-Use Space as of the date
of this Agreement, Landing Fees and Parking Charges under this Section 6.05,
the obligations of FedEx hereunder shall expire.
(d) If an event of termination set forth in Section 11.03 hereof
shall occur, FedEx's obligations under this Section 6.05 shall expire.
SECTION 6.06. Payment Provisions; Interest on Overdue Payments. (a)
Landing Fees and Parking Charges shall be due and payable as stated in Sections
6.02 and 6.04 hereof and rental payments and other charges shall be due and
payable on invoice on the first day of each month unless otherwise agreed.
Acceptance by the SBMA of any payment does not preclude the SBMA from verifying
the accuracy of FedEx's calculations and from refunding or recovering any
difference established by the SBMA.
(b) Any payment due and not received by the due date accrues interest
at the rate of twelve percent (12%) per annum, which shall be compounded
monthly until full payment is remitted. Interest on disputed amounts will not
be charged to FedEx if the dispute is resolved in FedEx's favor in whole or in
part.
SECTION 6.07. Vendor Carriers. Aircraft of Vendor Carriers shall pay
Landing Fees and Parking Fees equal to those set forth in Appendix E. The MGTOW
of all aircraft of Vendor Carriers shall be counted in determining the landed
weight for the purpose of calculating Landing Fees for FedEx aircraft. FedEx
shall pay the Landing Fees and Parking Charges of Vendor Carriers and all such
payments shall be applied to any amounts committed by FedEx to the SBMA under
Section 6.05.
SECTION 6.08. Exempt Operations. Non-revenue flight operations
conducted by FedEx shall not be subject to Landing Fees. Non-revenue flight
operations shall include only flights that (i) immediately return to the
Airport because of mechanical, meteorological, or other precautionary reasons,
or (ii) sightseeing, test, ferry, courtesy, inspection or training flights;
provided, however, all such flights designated in (i) and (ii) above that
exceed ten (10) in any calendar month shall not be considered non-revenue
flights.
15
16
SECTION 6.09. Domestic Flight. Any aircraft operation at the Airport
by FedEx or a Vendor Carrier where the location of departure before arriving at
the Airport is another location in the Philippines shall be considered a
domestic operation, according to international standards, and Landing Fees and
Parking Charges for domestic flights shall apply.
ARTICLE 7
FEDEX'S ADDITIONAL RESPONSIBILITIES
SECTION 7.01. Reporting. FedEx will file with the SBMA information
describing its operations at the Airport not later than 30 days after the
Operation Date. FedEx will update this information within 60 days after the
beginning of each fiscal year of FedEx. The report will be limited to the
following:
(i) Names, addresses and telephone numbers of FedEx officials responsible
for various major FedEx functions at the Airport including station
operations, flight operations, scheduling, properties, facilities, and
similar information;
(ii) A general description of FedEx's operations, including number of
employees and employee parking requirements; and
(iii) Such other information as the SBMA shall reasonably request.
SECTION 7.02. Maintenance. FedEx has the following maintenance,
repair, and alteration responsibilities. FedEx will at its sole expense and in
a manner acceptable to the SBMA:
(i) Maintain the Apron Area in a neat, clean, and orderly condition free
from litter, debris, refuse, petroleum products, or grease that may
result from the activities of FedEx's employees, licensees, invitees,
agents, or suppliers. All oil and grease spills attributable to
FedEx's or Vendor Carriers' aircraft or equipment will be removed
promptly. The SBMA shall undertake all other general maintenance of
the Apron Area.
(ii) Assume the entire responsibility and shall relieve the SBMA from all
responsibility for all repair, rebuilding and maintenance whatsoever
of the Exclusive-Use Space and all personal property, equipment and
fixtures associated therewith, whether such repair, rebuilding or
maintenance be ordinary or extraordinary, partial or entire, inside or
outside, foreseen or unforeseen, structural or otherwise, including,
without limitation:
1. Repair of all personal property and equipment, including
fixtures, doors, interior windows, package conveyors and
belts, floor coverings, and counters; and
2. Maintenance and repair of all electrical, plumbing, heating,
ventilating, and air conditioning appliances and fixtures.
16
17
Any amounts expended by FedEx for the repair of the Exclusive-Use
Space shall reduce the amount of the Commitment set forth in Section
6.05 for the year in which such repair are made; provided (i) such
reduction in the committed amount shall not limit, affect, or alter
FedEx's obligations to make payments hereunder (other than payments
under the Commitment) and such payments for repair shall not be
credited against Landing Fees, Parking Charges, rent or other sums due
hereunder; (ii) FedEx shall not commence making such repairs without
first giving the SBMA at least twenty (20)-days' notice, or such
shorter notice as time and circumstances permit in the case of
emergency repairs, and the opportunity to make such repairs at the
expense of the SBMA in which case FedEx shall receive no credit
against the committed amount hereunder, and (iii) the term 'repairs
as used in this subparagraph shall encompass expenditures reasonably
necessary to repair damages to the Exclusive-Use Space which must be
repaired to make the space functional for the use intended by FedEx;
and the term shall not include capital improvements undertaken by
FedEx.
(iii) Immediately repair any damage in any other space at the Airport caused
by the fault or negligence of FedEx, its servants, contractors,
agents, licensees, or employees;
(iv) Provide and maintain all fire protection and safety equipment of every
kind and nature required in the Exclusive-Use Space by any Applicable
Law; and
(v) Ensure that the SBMA has emergency access to FedEx's Exclusive-Use
Space either by delivering keys to the SBMA's representative or by
providing emergency telephone numbers by which FedEx or its agent can
be reached on a 24-hour basis.
SECTION 7.03. Security. (a) FedEx will comply with all Applicable
Laws relating to Airport security imposed from time to time by the SBMA and
cooperate in controlling the Exclusive-Use Space so as to prevent or deter
unauthorized access to the restricted areas of the Airport. FedEx will provide
its own internal security for its Exclusive-Use Space and, subject to the
provisions of Section 12.04 of this Agreement, shall have the ability to hire
its own employees to provide said service or contract with an outside party,
including the SBMA, to provide such security.
(b) FedEx agrees that neither its employees nor its contractors may
carry firearms on the Exclusive-Use Space without the consent of the SBMA. The
SBMA shall not unreasonably withhold consent to a request by FedEx that FedEx-
employed security personnel be permitted to carry firearms.
(c) To assist FedEx in its security obligations under this Agreement,
the SBMA agrees, to the extent permitted by Applicable Law, to provide FedEx
access to Navy employment records (where existing) and current NBI clearances
for each applicant that FedEx interviews that is on the SBMA Labor Pool
Inventory.
SECTION 7.04. Abandonment. During the term of this Agreement, FedEx
shall maintain and occupy the Exclusive-Use Space and maintain its Air
Transportation business and shall not abandon or vacate the same.
SECTION 7.05. Additional Obligations of FedEx. (a) FedEx shall
conduct its business and operations at the Airport in an orderly, proper, safe
and careful manner consistent with international industry practice and use its
best efforts so as to not annoy, disturb or be offensive to others at the
Airport and to minimize jet- or prop- blast interference to aircraft operations
or buildings or structures at the Airport.
17
18
(b) FedEx agrees that it will not erect, construct or maintain or
otherwise create or continue any obstacle or park or store any aircraft or
other object on the Apron Area so as to create any obstacle that will hamper or
interfere with the free, orderly, unobstructed and uninterrupted passage of
vehicles, aircraft or of the wings or other integral part of aircraft of any
type, nature or description, while such vehicle is operating or aircraft is
taxiing or being transported or towed along runways, taxiways and roads outside
of and adjacent to the Apron Areas; provided, however, that enforcement of this
provision is subject to the priority rights of FedEx to the Preferential
Aircraft Apron and with the full knowledge of the SBMA that certain ICAO
airport standards cannot be met at the Airport due to space limitations and
FedEx shall not be held to same.
(c) FedEx shall not do or permit to be done anything which may
interfere with the effectiveness or accessibility of the drainage and sewerage
system, water system, communication systems, electrical system, fire protection
system, sprinkler system, if any, installed or located on, under or in the
Exclusive-Use Space or Apron Areas save and except for actions which are normal
and acceptable in the conduct by FedEx of its business.
(d) Recognizing the physical limitations and constraints of the
Airport, FedEx shall not do or permit to be done any act or thing outside of
its standard operating procedures or industry standards as applied in similar
locations which will invalidate or conflict with any fire insurance, extended
coverage or rental insurance policies covering the Airport System, or any part
thereof.
(e) FedEx shall not use or permit the use of the Exclusive-Use Space
for the sale of tickets to the general public for passenger air transportation.
Nothing herein shall in any manner be considered a limitation on the ability of
FedEx to sell cargo transportation services in the SBF, the Philippines or any
other location.
(f) FedEx shall comply with the rules and regulations of any
government body having jurisdiction over the Airport as to the lighting,
physical description and location of all exterior advertising and signs on the
Airport. So long as FedEx complies with said rules and regulations, FedEx may
install advertising and signs at its discretion on the exterior of the
Exclusive-Use Space and in the Exclusive Ramp. FedEx shall have the right to
install advertising and signs elsewhere on the Airport and at other locations
in the SBF with the prior approval of the SBMA or other applicable government
body. Approval shall be deemed given if the SBMA or such applicable government
body fails to approve or disapprove a request for advertising or signage within
seven (7) calendar days of such request. Upon the termination of this Agreement
or any approval for advertising or signage, FedEx shall remove, obliterate or
paint out any and all signs and advertising on the Airport or the SBF and shall
restore the location of such advertising or signage to good condition. The SBMA
shall consult with its tenants prior to enacting any rule or regulation
governing advertising or signage and shall give due consideration to the
comments of said tenants. All advertising or signage that violates any rule or
regulation promulgated by the SBMA after the same has been erected shall be
permitted to remain in place.
(g) FedEx shall use its best efforts to avoid committing any unlawful
nuisance, waste or injury on the premises and shall operate the premises in
accordance with the highest standards and in such manner that there will be at
all times a minimum of air pollution, water pollution or any other type of
pollution and a minimum of noise emanating from, arising out of or resulting
from the operation, use or maintenance of the premises.
(h) FedEx shall use its best efforts to cause its Vendor Carriers to
comply with this Section 7.05.
18
19
ARTICLE 8
THE SBMA'S RESPONSIBILITIES
SECTION 8.01. Airport Operations. (a) During the term of this
Agreement, the SBMA will:
(i) Obtain and maintain all certification required by the
Philippine government, the FAA and applicable international
organizations to operate the Airport, all in accordance with
international standards for the operation of airports;
(ii) Operate and maintain the Airport in good condition and repair
including the runways, taxiways, aprons, roadways, vehicle
parking areas, public areas of the terminal buildings, and all
appurtenances, facilities, and services, and shall keep the
Airport and its aerial approach free from obstruction and
interference for the safe and proper use thereof;
(iii) Use all rents and fees collected in respect of the Airport
only for Airport operating expenses, debt obligations and
other financial obligations of the SBMA in connection with the
Airport;
(iv) Keep the public areas of the Airport adequately equipped,
furnished, and decorated, as well as clean and presentable. In
the public areas of the Airport, the SBMA will provide and
supply directional and informational signs, electricity,
light, power, air conditioning, wastewater disposal, water,
and janitorial services, including rubbish removal.
(v) Excluding the Exclusive-Use Space, maintain existing and
future utility systems on the Airport in reasonable condition
and repair, including, electricity, fire alarm, fire
protection, sprinkler, air conditioning, telephone, telegraph,
and other telecommunication services, and any lines, pipes,
mains, wires, conduits and equipment connected with or
appurtenant to all those systems.
(vi) Maintain, operate and annually test emergency systems and
procedures to ensure safe, uninterrupted operation of the
Airport.
(b) The SBMA will use its best efforts to restore service as soon as
practical after any interruption in the services described in this Section
8.01.
(c) In the event the SBMA determines to make capital improvements at
the Airport, the SBMA agrees that it will not increase the rents and fees
charged to FedEx under this Agreement in respect of said capital improvements
without the consent of FedEx.
SECTION 8.02. Fuel Supply. The SBMA will make reasonable efforts to
enter into appropriate agreements with vendors to ensure that adequate fuel,
fuel storage and pipeline access will be available to Airlines operating at the
Airport at market rates. In the event that the fuel supply is interrupted for
any reason, FedEx and the SBMA shall each endeavor to obtain a new fuel supply
at similar rates of service and cost as the old supply, and failing to
19
20
obtain such new supply of fuel within fifteen (15) days, FedEx's sole remedy
shall be to terminate this Agreement immediately on notice to the SBMA.
SECTION 8.03. Telecommunications. (a) The SBMA will make reasonable
efforts to cause Telecom Vendor to provide telecommunication services to FedEx
at the Airport. Charges to FedEx for use of the local exchange (and
international calls) provided by Telecom Vendor, which FedEx hereby agrees to
use, shall be as agreed between the SBMA and Telecom Vendor in that certain
Agreement between them dated 29 June 1994, subject to such reasonable annual
increases as the SBMA may grant to Telecom Vendor. The SBMA will make
reasonable efforts to cause Telecom Vendor to: (i) provide cable connections
that meet FedEx's specifications at Exclusive-Use Space leased by FedEx; (ii)
redo trunk routing where required to satisfy FedEx's requirements; and (iii)
provide FedEx at the Exclusive-Use Space on the Operation Date a minimum number
of 100 telephone lines, and on demand such additional number of lines required
by FedEx in the future. All telephone lines will be connected to a public
exchange with IDD access. FedEx shall have the ability to operate a back-up
communication system through Telecom Vendor in accordance with Section 4.01
hereof; or, when Applicable Law permits, the SBMA shall authorize FedEx to
operate its own international gateway telecommunications systems, for FedEx's
private use and not for resale to the public.
(b) The SBMA will make reasonable efforts to ensure that FedEx can
obtain, by no later than 1 February 1994, licenses to operate (i) ground-to-air
radio communications, and (ii) a portable radio system at the Airport and the
environs of the Subic Bay Freeport Zone.
(c) In the event that (i) there are outages with telecommunication
services provided by Telecom Vendor or such services are not adequate for any
reason, or (ii) the radio license in Section 8.03(b) is revoked or otherwise
not usable, FedEx and the SBMA shall each endeavor to obtain a new provider of
telecommunication services at similar or better rates of service and cost as
Telecom Vendor, and failing to obtain such new provider within fifteen (15)
days, FedEx's sole remedy shall be to terminate this Agreement immediately on
notice to the SBMA.
SECTION 8.04. Vendor Selection, Licensing and Permitting. (a) FedEx
shall have the right to contract with those vendors of its choosing. FedEx
shall attempt to contract with vendors suggested by the SBMA, but where such
vendors do not, in the sole opinion of FedEx, meet FedEx standards, FedEx shall
contract with any vendor of its choosing.
(b) Subject to applicable the SBMA rules and regulations the SBMA
will provide vendors and employees of vendors selected by FedEx with licenses
and other credentials required by the SBMA, including gate passes and other
documentation required to access the Airport, within one week of notification
by FedEx to the SBMA of such selection. In the event a vendor is to supply
FedEx with fifty (50) or more personnel, FedEx shall notify the SBMA and
together the parties shall agree on the length of time required by the SBMA to
provide the required licenses and credentials, time being of the essence.
SECTION 8.05. Aircraft Recovery Plan. (a) The SBMA shall maintain,
update annually (or more frequently as required) and implement an aircraft
recovery plan that will detail, among other things, the manner in which the
SBMA will cause appropriate size cranes to be present at the Airport in the
event the recovery of an aircraft is required. The SBMA shall acquire or make
arrangements for on-call access to all equipment required to comply with such
aircraft recovery plan and conduct such training as to ensure that its
employees have the skill levels necessary to execute the plan.
20
21
(b) If any aircraft owned or operated by FedEx, through accident or
any other reason, is disabled or abandoned in any area on the Airport which
could interfere with the continuous, normal operations or any landing and field
facilities, the SBMA will:
(i) Make reasonable efforts to immediately remove the aircraft to
a location designated by the SBMA, unless the aircraft is
required to remain in place pending investigation by the
appropriate regulatory agencies of the Philippine government;
and
(ii) In the event of any accident where governmental investigation
in place is required, immediately, upon receiving clearance to
do so from the governmental agency investigating such
accident, make reasonable efforts to remove the aircraft and
any resulting wreckage or debris to the area designated by the
governmental agency authorizing the removal; otherwise the
aircraft wreckage and debris will be immediately removed from
the Airport and stored at a location approved by the SBMA.
(c) FedEx will reimburse the SBMA for all reasonable costs and
expenses (including storage costs) incurred in the removal.
(d) FedEx shall have no liability to the SBMA arising out of the
SBMA's failure to remove an aircraft covered by this Section 8.05 if the SBMA
shall have failed to make available for the SBMA's use sufficient and adequate
removal equipment.
SECTION 8.06. Power. (a) On or before the Operation Date, the SBMA
will cause sufficient power to be delivered to the Airport to ensure that,
despite a loss of power, (i) power needs required to operate at the Airport
electronic equipment vital for continued flight operations, including
navigational aids, are met; and (ii) electronic equipment required by FedEx to
operate its Air Transportation business will continue to operate. The SBMA
shall meet its commitment hereunder by rebuilding and upgrading the primary
link from the nearest substation to the Airport and locating a back-up
generator of sufficient power at or near the Airport. The SBMA shall also use
its reasonable efforts to deliver to the Airport, as soon as is reasonably
practical, a second independent routing of power from the nearest substation to
the Airport as a back-up.
(b) The SBMA shall deliver to FedEx a grid layout of the power system
for the Airport and major power lines serving the Airport, and will provide to
FedEx, at no cost to FedEx, from the SBMA's equipment inventory operational
back-up generators at FedEx's Exclusive-Use Space to meet FedEx's emergency
power requirements. FedEx shall install, operate and maintain the generators at
FedEx's sole cost and expense.
(c) The SBMA shall ensure that there is sufficient power at the
Exclusive-Use Space for FedEx to conduct the construction work it needs to
complete prior to the Operation Date. FedEx shall provide the SBMA with FedEx's
power requirements for such construction along with a timetable for same.
SECTION 8.07. Electricity. The SBMA shall, directly or by arrangement
with appropriate utility companies or suppliers, supply FedEx with electrical
current in such quantities, voltages, and phases as FedEx shall reasonably
require. FedEx shall pay the SBMA for all such utility services that FedEx uses
at rates that shall not exceed the then current rates charged from time to time
to corporate customers by Metro Manila power authorities subject to government
rate review.
21
22
SECTION 8.08. Airport Parking. The SBMA shall construct, operate and
maintain during the term of this Agreement parking facilities for Airline
employees working on the Airport, and will provide a reasonable amount of
parking at the Airport for FedEx employees, at no charge to FedEx. The SBMA and
FedEx shall mutually agree on the issue of how much parking can be made
available from time to time. FedEx agrees that it will be responsible for
installing and maintaining fencing to secure the parking area designated by the
SBMA for FedEx employees.
SECTION 8.09. Airport Security. (a) The SBMA shall develop,
maintain, update annually (or more frequently as required) and implement a
security plan for the Airport operations area. The SBMA shall continuously
operate and provide security at the Airport under and in strict accordance with
said plan and shall advise FedEx in advance and consult with FedEx on any
changes in same.
(b) The SBMA shall have the sole obligation to provide all necessary
personnel to provide adequate security protection on the Airport (excluding
FedEx's Exclusive-Use Space) and will adequately secure the Airport operations
area before and after the Operation Date, including, without limitation the
installation and maintenance of fencing and gates on the perimeter of the
Airport Operations Area which shall be completed on or before 1 April 1995. All
gates to the Airport shall be manned by the SBMA security personnel. The SBMA
will cause gates convenient to FedEx to be manned on a 24-hour basis.
SECTION 8.10. Customs Operations. The SBMA acknowledges that the
implementation of a customs operations on the Airport is critical to the
successful operation of FedEx's Air Transportation business at the Airport.
Therefore, the SBMA and FedEx agree to cooperate with appropriate customs
officials of the Philippine government to (i) establish, on or before the
Operation Date, a customs operation on the Airport that meets FedEx's
operational needs at the Airport and, (ii) ensure that customs clearance
procedures at the Airport, the SBF checkpoints and the Exclusive-Use Space are
continually improved and updated. It is the intent of the parties to work
toward implementing at the SBF and the Airport the most accurate and fast
clearance procedures at the least amount of cost.
SECTION 8.11. Training. The SBMA will assist FedEx in meeting its
initial and continuing training requirements for current and future employees.
The SBMA will provide, where possible, access to the SBMA facilities, at no
cost to FedEx, for employee training classes. The SBMA will work with FedEx to
develop personnel development programs for Olongapo residents to better prepare
said residents for jobs FedEx offers, or may offer in the future.
SECTION 8.12. Transportation. Subject to the provisions of Section
12.04 of this Agreement, FedEx shall have the ability to provide transportation
services on the Airport to its employees, either directly or through vendors.
In the event that the SBMA operates or licenses a common carrier to operate a
transportation service, the SBMA will require that carrier to provide services
to the Airport area at non-discriminatory rates.
SECTION 8.13. Permit to Operate. The SBMA shall issue to FedEx on or
before the Operation Date, a permit to operate or such other certifications,
permits or authorizations the SBMA requires of enterprises before they can
commence business in the SBF.
SECTION 8.14. Registration. To the extent registration is possible,
immediately following the execution and delivery of this Agreement, the SBMA
shall cause this Agreement to be registered with the relevant Registry of Deeds
at SBMA's cost and shall provide FedEx with proof that such registration has
been completed.
22
23
SECTION 8.15. Laydown Area. In the event FedEx shall require a
laydown area in the conduct of its construction work on the Exclusive-Use Space
or any other facility, including the facilities covered under the option
granted herein to FedEx, the SBMA shall provide an area sufficient to meet
FedEx requirements without charge to FedEx for the duration of FedEx's
construction; provided that Airport operations are not interfered with thereby.
SECTION 8.16. The SBMA Programs. From time to time the SBMA may
develop plans and programs to benefit the SBF, the surrounding communities and
the people residing or employed therein. FedEx recognizes that the SBMA is
developing a reasonable and sustainable Provident Fund program for the benefit
of all employees within the SBF and agrees to subscribe thereto provided that
substantially all employers within the SBF are required on a non-discriminatory
basis to participate therein. FedEx agrees to carefully consider its voluntary
participation in any other such plans or programs.
ARTICLE 9
INDEMNIFICATION, INSURANCE, AND SUBROGATION
SECTION 9.01. General Indemnification. FedEx will indemnify, hold
harmless, and defend the SBMA, its officers, agents, and employees from claims,
actions, and liabilities of any nature or kind, including costs and expenses,
for or on account of any and all legal actions or claims of any character
whatsoever based upon or arising out of FedEx's use and occupancy of the
premises and exercise of rights under this Agreement. All liability or costs
for legal actions or claims including defense costs resulting from death or
injury to any person(s) or damage to property which are caused by the joint
negligence of the SBMA and FedEx arising out of this Agreement will be
apportioned on a comparative fault basis. FedEx s obligations to indemnify,
hold harmless and defend under this Section 9.01 shall apply to claims, actions
and liabilities of any nature or kind arising out of the use and occupancy of
the premises by Vendor Carriers operating by way of wet lease, dry lease or
straight charter.
SECTION 9.02. Environmental Indemnification. (a) The SBMA shall
not be liable for and FedEx agrees to hold harmless, indemnify, and defend the
SBMA from any and all claims, fees, costs, penalties and charges assessed
against or imposed upon the SBMA, including attorneys' fees and costs, as a
result of FedEx's or Vendor Carriers' use, dispensing, handling, storage,
transpiration, generation, sale, disposal, release or discharge of hazardous
materials, including but not limited to, costs and expenses incurred in
connection with any investigation, cleanup, or remedial, removal or restoration
work in or about the Airport or other place required by any Applicable Law or
standard because of hazardous materials that came or otherwise emanated from
FedEx's or Vendor Carriers' use of the Exclusive-Use Space, Apron Areas or the
Airport, or environmental damages to the Airport and its environs resulting
therefrom.
(b) The SBMA will indemnify, defend and hold harmless FedEx, its
officers, directors, employees and agents from any and all claims, fees, costs,
penalties and charges assessed against or imposed upon FedEx, including
attorneys' fees and costs, as a result of all other environmental damages to
the Exclusive-Use Space, the Apron Areas, the Airport and its environs, whether
or not known as of the Effective Date of this Agreement.
(c) A Phase I and Phase II environmental impact study on the
Exclusive-Use Space and Apron Areas to be used by FedEx has been conducted by
Dames and Moore who have issued a report thereon, the receipt of which both the
SBMA and FedEx acknowledge. Said report will provide the baseline for
determining liability under this Section 9.02.
23
24
SECTION 9.03. Insurance. (a) The SBMA will, during the term of this
Agreement, procure and maintain comprehensive general liability and fire and
extended coverage insurance for the Airport, terminal buildings, and other the
SBMA facilities at the Airport, in such amounts and for such insured coverages
as may be required to obtain the certifications required under Section 2.01(d)
hereof.
(b) FedEx will, during the term of this Agreement, procure and
maintain liability insurance for public liability, aviation liability,
premises, property damage, bodily injury and death, with contractual liability
endorsements insuring all of FedEx's operations under this Agreement, including
its obligations under the indemnity clause in Section 9.01 of this Agreement.
These policies will be with limits not less than those set forth below. These
policies and minimum limits will be consistently applied to all Airlines with
similar operations and will be consistent with prudent airport industry
practices and this Agreement.
Insurance Coverages Minimum Limits
Airline/Aircraft/Airport $50,000,000
Public Liability Insurance or Equivalent
Insurance $10,000,000 Combined Single Limit
(c) Each policy must provide that it may not be canceled or
materially changed during its term without at least 30-days' advance written
notice to the SBMA or FedEx, as appropriate.
(d) A certificate certifying coverage of required insurance must be
delivered to the other party within 30 days of the Operation Date of this
Agreement.
(e) Where any such policy has a normal expiration during the term of
this Agreement, each party will provide to the other a certificate or
satisfactory written evidence of continued coverage prior to such expiration.
Prior to the effective date of any cancellation or reduction in the amount or
extent of insurance coverage, each party will deliver to the other a
certificate or satisfactory written evidence certifying coverage that
reinstates or otherwise provides at least the required insurance coverage.
(f) The failure by either party at any time to enforce the provisions
in this Section will not be construed as a waiver of these provisions and will
not reduce the other party's obligations under this Agreement.
SECTION 9.04. Waiver of Subrogation. FedEx and the SBMA agree to
waive their respective rights of recovery or claim against the other for any
loss or damage to the Exclusive-Use Space, or their contents (excluding
aircraft) resulting from fire or other "all-risk" insurable property hazards
caused by the other. Notwithstanding Section 9.01, any fire or "all-risk"
property insurance policies carried by either party will include a waiver of
subrogation clause waiving any rights of subrogation against the other party to
this Agreement.
SECTION 9.05. Additional Insured. FedEx agrees that every insurance
policy required under Section 9.03(b) will include an endorsement naming the
SBMA as an additional insured.
SECTION 9.06. Notice of Claim. Each party will give the other party
prompt and reasonable notice of any claim or action involving this Agreement.
24
25
SECTION 9.07. Survival. The provisions of this Article shall survive
the expiration, termination or early cancellation of this Agreement.
ARTICLE 10
ASSIGNMENT OR SUBLEASE
SECTION 10.01. Assignment or Sublease. (a) Assignment. Except as
permitted herein, FedEx shall not sell, convey, transfer, mortgage, pledge or
assign this Agreement without the advance written approval of the SBMA. The
SBMA will approve an assignment or sublease of FedEx's Exclusive-Use Space or
this Agreement in whole or in part, if:
(i) It is made to an entity controlled by FedEx which entity shall
carry on FedEx's Air Transportation business without any
interruption or decrease in operations or, in the case of a
sublease of partial space, it is to an entity whose presence
within the Exclusive-Use Space is required to support FedEx's
Air Transportation business;
(ii) In the SBMA's reasonable opinion, the proposed assignment does
not make a negative impact on the level or quality of
operations at the Airport; and
(iii) In the SBMA's opinion the proposed assignee or sublessee is
qualified and capable to execute the Agreement and perform all
obligations thereunder; provided, however, no such assignment
or sublease shall be effective until an agreement in form and
substance reasonably satisfactory to the SBMA has been entered
into between FedEx, the proposed assignee or sublessee, and
the SBMA which agreement shall contain provisions obligating
the proposed assignee or sublessee to assume all the
obligations of FedEx under this Agreement and warranting and
confirming to the SBMA that FedEx shall not be relieved of
liability under the Agreement and shall continue to be bound
by all obligations under the Agreement.
SECTION 10.02. Merger. This Article does not prevent the assignment
of this Agreement to any corporation or business entity that merges or
consolidates with FedEx so long as FedEx is the surviving entity, this
Agreement remains in full force and effect and is binding on FedEx, and written
documentation of the merger or consolidation is given to the SBMA within thirty
(30) days after the merger or consolidation.
SECTION 10.03. Assignment by the SBMA. (a) The SBMA reserves the
right to pledge, assign, transfer or encumber any of its rights and interests
under this Agreement to any entity with written notice to FedEx provided the
SBMA shall continue to remain liable hereunder.
(b) FedEx's consent to any such pledge, assignment, transfer or
encumbrance shall not be required to effect same; provided, however, that no
such pledge, assignment, transfer or encumbrance shall be effective with
respect to FedEx until FedEx shall have received notice of same.
(c) Certain of the obligations of the SBMA hereunder are not
assignable as same are not capable of being performed by any entity other than
the SBMA or the government of the Republic of the Philippines. The parties
agree that any pledge, assignment, or transfer by the SBMA of any of its
interest in an to this Agreement does not and cannot include those
25
26
obligations of the SBMA that only it can perform and that despite any such
pledge, assignment or transfer, the SBMA shall remain primarily obligated in
respect of same and FedEx shall look to the SBMA in any event for performance.
ARTICLE 11
DEFAULT AND TERMINATION
SECTION 11.01. Reentry and Reletting After Default. Upon the
occurrence of any event specified in Section 11.05:
(a) Without terminating this Agreement, the SBMA may immediately reenter,
renovate, and relet all or part of the Exclusive-Use Space to others
and reassign preferential aircraft parking positions to others for the
account of FedEx.
(b) At any time before or after a reentry and reletting as provided in
this Section, the SBMA may terminate FedEx's rights under this
Agreement, reenter and take possession of the Exclusive-Use Space, and
cancel all rights and privileges granted to FedEx without any
restriction on recovery by the SBMA for rents, fees and damages owed
by FedEx.
(c) In addition to the rights provided in this Agreement, the SBMA shall
have any and all additional rights and remedies as provided by law.
SECTION 11.02. Termination Due to Damage or Destruction. (a) If all
or any portion of the Exclusive-Use Space is damaged by fire or other casualty,
the SBMA will notify FedEx within thirty (30) days of the damage whether the
damaged Exclusive-Use Space is to be repaired. If the damaged Exclusive-Use
Space is to be repaired, the SBMA will repair the damage with due diligence and
will abate the rent allocated to the particular building, room, or other
portion of the Exclusive-Use Space rendered untenantable for the period from
the occurrence of the damage to the completion of the repairs. The SBMA shall
provide FedEx suitable temporary substitute space at a rental deemed reasonable
by FedEx and the SBMA until the repairs are completed.
(b) If the SBMA fails to notify FedEx within thirty (30) days after
destruction that the SBMA will repair the damaged Exclusive-Use Space, FedEx
may elect within one-hundred-and-twenty (120) days after destruction to:
(i) Terminate this Agreement, in whole or as to the portion of the
Exclusive-Use Space damaged or destroyed, effective on the
date of the damage; or
(ii) Continue this Agreement and repair such damage. During any
such repair, rental shall be abated pro rata using the ratio
of the area in need of repair to the total area in the
Exclusive-Use Space. FedEx may abate Landing Fees, rental, and
any other fees or charges due to the SBMA in respect of
FedEx's cost of repair.
(c) The remedies of FedEx, as set forth in Section 11.02(b), shall be
its sole remedies for failure by the SBMA to give the notice specified in
section 11.02(a); and FedEx shall have no claim against the SBMA as a result of
the SBMA's election not to repair the damage.
SECTION 11.03. Events Permitting Termination by FedEx. FedEx may
terminate this Agreement only if:
26
27
(i) FedEx is prohibited by lawful authority from using the Airport because
of any deficiency or unsafe operating condition at the Airport for a
period exceeding fifteen (15) consecutive days unless the same shall
result from any action or omission by FedEx. FedEx may terminate this
Agreement immediately after said 15-day period by giving the SBMA
written notice of such termination;
(ii) FedEx is unable to fly aircraft to the Airport from major markets in
Asia for any reason and such inability substantially impairs its
ability to operate a hub operation at the Airport; or
(iii) Rights granted to FedEx in the Philippines either by way of bilateral
air treaty or otherwise are withdrawn, amended or otherwise limited so
as to prevent it from operating its Asian Hub at the Airport through
the use of Fifth Freedom change of gauge rights.
(iv) The SBMA, its successor or any governmental entity of the Philippines
passes a law, ordinance, regulation or other directive that, in the
sole reasonable judgment of FedEx, makes it impossible for FedEx to
conduct its business at the Airport.
(v) Commencing after 1 October 1996, if, in the consecutive twelve (12)-
month periods thereafter, FedEx or Vendor Carriers shall be required
to divert more than four percent (4%) of their scheduled flights from
SFS because of (i) weather conditions or (ii) operational deficiencies
at the Airport which could have been remedied by the SBMA, not
including acts or conditions caused by or constituting force majeure;
provided, however, FedEx must exercise this right of termination on or
before 1 November of each year or FedEx shall lose the right of
termination for the immediately preceding 12-month period.
(vi) The occurrence of such other right of termination expressly provided
for in this Agreement.
With respect to this Section 11.03 (ii), (iii) and (iv), termination
may be effected by FedEx by giving the SBMA thirty (30)-days written notice of
the date of such termination provided this Agreement shall continue in full
force and effect if prior to the expiration of such 30-day period the event
giving rise to the right of termination shall cease to exist. FedEx shall have
no other rights or remedies against the SBMA other than the termination of this
Agreement.
SECTION 11.04. Default by the SBMA and Remedies Upon Default. (a)
The SBMA shall be in default under this Agreement if it shall fail to perform
any material covenant in this Agreement for a period of thirty (30) days after
written notice from FedEx specifying such failure and declaring the SBMA to be
in default. The SBMA will be deemed to have cured the default if the SBMA
commences to cure the default within such 30-day period and diligently
continues the cure to completion.
(b) If a default by the SBMA shall have occurred and be continuing,
FedEx shall have no right to terminate this Agreement but may, in its sole
discretion:
(i) Seek judicial relief against the SBMA for all damages incurred
by FedEx as a result of such default, together with all other
amounts and penalties that FedEx is entitled to recover under
this Agreement, by law or in equity, together with all court
costs, attorneys' fees and expenses incurred by FedEx.
27
28
(ii) Cure the default and the expense of FedEx's cure together with
interest thereon at the rate equal to the lesser of two
percent (2%) per month or the maximum rate permitted by law,
shall be paid by the SBMA to FedEx.
(iii) Seek injunctive relief against the SBMA.
(iv) Require the SBMA to submit to binding arbitration in
accordance with this Agreement.
SECTION 11.05. Events Permitting Termination by the SBMA and Remedies
of the SBMA. (a) Time being of the essence, the SBMA may terminate this
Agreement immediately and exercise all rights of entry and reentry upon the
Exclusive-Use Space after the occurrence of any of the following events:
(i) FedEx fails to provide regularly scheduled Air Transportation
to and from the Airport.
(ii) FedEx fails to pay any rent, Landing Fee, Parking Charge or
other fee due, including interest, within ten (10) days after
FedEx's receipt of written notice of default from the SBMA.
(iii) FedEx shall become insolvent or shall take the benefit of any
present or future insolvency statute, or shall make a general
assignment for the benefit of creditors, or file a voluntary
petition in bankruptcy or a petition or answer seeking an
arrangement or its reorganization or the readjustment of its
indebtedness under the federal bankruptcy laws or under any
other law or statute of the United States or any of any state
thereof or the Republic of the Philippines, or consent to the
appointment of a receiver, trustee, or liquidator of all or
substantially all of its property.
(iv) By order or decree of a court FedEx shall be adjudged bankrupt
or an order shall be made approving a petition filed by any of
its creditors or by any of the stockholders of FedEx, seeking
its reorganization or the readjustment of its indebtedness
under the federal bankruptcy laws or under any law or statute
of the United States or of any state thereof, provided that if
any such judgment or order is stayed or vacated within sixty
(60) days after the entry thereof, any notice of cancellation
shall be and become null, void and of no effect.
(v) By or pursuant to, or under authority of any legislative act,
resolution or rule, or any order or decree of any court or
governmental board, agency or officer having jurisdiction, a
receiver, trustee, or liquidator shall take possession or
control of all or substantially all of the property of FedEx,
and such possession or control shall continue in effect for a
period of thirty (30) days.
(vi) FedEx shall breach any of the covenants contained in Sections
4.02, 10.01, or 10.02 of this Agreement.
(b) If a FedEx Event of Termination shall have occurred and be
continuing, the SBMA may, in its sole discretion:
28
29
(i) Seek judicial relief against FedEx for all damages incurred by
the SBMA as a result of such event of termination, together
with all other amounts and penalties the SBMA is entitled to
recover under this Agreement, by law, or in equity together
with all court costs, attorneys' fees and expenses incurred by
the SBMA.
(ii) In the event that the letting or this Agreement shall have
been terminated or in the event that the SBMA has re-entered,
regained or resumed possession of the premises, all the
obligations of FedEx under this Agreement shall survive such
termination or cancellation, or re-entry, regaining or
resumption of possession and shall remain in full force and
effect for the full term of this Agreement, and the amount or
amounts of damages or deficiency shall become due and payable
to the SBMA to the same extent, at the same time or times and
in the same manner as if no termination, cancellation,
re-entry, regaining or resumption of possession had taken
place. The SBMA may maintain separate actions each month to
recover the damage or deficiency then due or at its option and
at any time may declare all rent, Landing Fees, Parking
Charges and other amounts payable under this Agreement during
the remaining term of this Agreement immediately due and
payable and sue to recover the full damages or deficiency less
the proper discount, for the entire unexpired term. For the
purposes of determining the amount in Landing Fees and other
variable amounts payable under this Agreement, the average
usage and traffic during the previous twelve (12) calendar
months of operations shall be assumed to have continued for
the remainder of this Agreement.
(iii) By five (5)-days' written notice to FedEx, terminate this
Agreement and retain all rent and other amounts previously
paid by FedEx, such right of termination and the exercise
thereof to operate as a conditional limitation.
(iv) Cure the default and the expense of the SBMA's cure together
with interest thereon at the rate equal to the lesser of two
percent (2%) per month or the maximum rate permitted by law,
shall be paid by FedEx to the SBMA as additional rent.
(v) Seek injunctive relief against FedEx.
(vi) Require FedEx to submit to binding arbitration in accordance
with this Agreement.
(vii) Whether or not the SBMA elects to terminate this Agreement,
the SBMA may enter upon and repossess the premises and all
other property leased or utilized by FedEx (said repossession
being hereinafter referred to as "Repossession") by force,
summary proceedings, ejectment or otherwise and may remove
FedEx and all other persons and property therefrom. From time
to time after Repossession, whether or not this Agreement has
been terminated, the SBMA may, but shall not be obligated to,
alter the premises or attempt to relet the Exclusive-Use Space
and other property leased or utilized by FedEx in the name of
the SBMA or otherwise, for such
29
30
term or terms (which may be greater or lesser that the period
which would otherwise have constituted the balance of the term
of this Agreement) and for such other uses as the SBMA, in its
sole discretion, may determine, and may collect and receive
rent therefor. Any rent received (net of expenses) shall be
applied against FedEx's obligations hereunder, but the SBMA
shall not be responsible or liable for any failure to collect
any rent due upon such reletting.
(c) No acceptance by the SBMA of rentals, Landing Fees or other
payments, in whole or in part, for any period or periods after a default of any
of the terms, covenants and conditions hereof to be performed, kept or observed
by FedEx shall be deemed a waiver of any right on the part of the SBMA to
terminate the letting, except that no claim of default for non-payment shall be
asserted with respect any installment of rental, Landing Fee, Parking Charge or
other payment to the extent the same has been accepted by the SBMA.
(d) The rights upon termination described above shall be cumulative
and shall be in addition to any other rights of termination provided in this
Agreement and in addition to any rights and remedies that the SBMA would have
at law or in equity consequent upon any breach of this Agreement by FedEx, and
the exercise by the SBMA of any right of termination shall be without prejudice
to such other rights and remedies.
(e) The SBMA may not exercise any right to terminate this Agreement
based upon a breach by FedEx of the covenants contained in Section 4.02 unless
notice of the breach is given by the SBMA to FedEx and FedEx shall not have
cured the breach within thirty (30) days of such notice.
SECTION 11.06. Default by FedEx and Remedies Upon Default. (a) FedEx
shall be in default under this Agreement, if it shall fail to perform any
covenant in this Agreement, other than the covenants encompassed in Section
11.05, for a period of thirty (30) days after written notice from the SBMA
specifying such failure and declaring FedEx to be in default. FedEx will be
deemed to have cured the default if FedEx commences to cure the default within
such 30-day period and diligently continues the cure to completion.
(b) If a default by FedEx shall have occurred and be continuing, the
SBMA shall have no right to terminate this Agreement, but may, in its
discretion, exercise any other right provided for in Section 11.05.
SECTION 11.07. Surrender of the Exclusive-Use Space. The SBMA is not
required to give FedEx notice to quit possession of the Exclusive-Use Space at
the expiration of this Agreement. Upon the expiration or termination of this
Agreement, the SBMA has the right to take possession of the Exclusive-Use
Space. FedEx agrees to surrender the Exclusive-Use Space peaceably and in good
condition, except for reasonable wear and tear.
SECTION 11.08. Holdover. If FedEx holds over without a written
renewal after the expiration of this Agreement, the holding over does not
operate as a renewal or extension of the term of this Agreement but only
creates a month to month extension of this Agreement regardless of any rent or
fee payment accepted by the SBMA. The obligations of the SBMA and FedEx to
perform under this Agreement continue until the month to month holdover is
terminated. Either party may terminate the holdover at any time by giving the
other party at least thirty (30)-days' advance written notice.
30
31
ARTICLE 12
COMPLIANCE WITH LAWS, TAXES, AND POLICIES
SECTION 12.01. Compliance With Laws. The SBMA will comply with all
Applicable Laws.
SECTION 12.02. Taxes. (a) FedEx will pay all taxes (including any
possessory interest tax, assessment, or similar charge) that at any time during
this Agreement are levied or liened against FedEx, it being understood and
agreed that there shall at no time be taxes, duties or other imposts levied
against the Airport facilities made available for FedEx's exclusive use, or
against FedEx's personal property except in accordance with Republic of the
Philippines Act No. 7227.
(b) Except as shall be permitted in sub-paragraph (a) above, in the
event the SBMA shall obtain taxing authority, the SBMA shall levy no
discriminatory taxes, charges or imposts of any nature against FedEx or any
subsidiary or affiliate of FedEx other than those it may lawfully levy on
SBF-Registered Enterprises.
(c) FedEx will indemnify and defend the SBMA from all costs that
result directly or indirectly from tax or assessment that FedEx is liable for
including taxes, penalties, expenses, and reasonable attorneys' fees incurred
by the SBMA.
(d) At its own expense, FedEx may contest the amount or validity of
any tax or assessment or similar charge, or contest the inclusion of the space
leased under this Agreement as taxable or assessable property directly with the
taxing or assessing authority. FedEx will indemnify the SBMA for all taxes,
penalties, costs, expenses, and reasonable attorneys' fees incurred by the SBMA
resulting directly or indirectly from any tax contest.
(e) Upon termination of this Agreement, FedEx will promptly pay in
full all due and payable taxes and liens.
SECTION 12.03. Policies. (a) FedEx will comply with all Applicable
Laws governing the use of Airport facilities. The SBMA shall consult with FedEx
prior to promulgating any law, regulation, directive, policy or procedure that
could make a material and adverse impact on FedEx and its operations at the
SBF, and the SBMA shall give due consideration to the comments of FedEx in
respect of same.
(b) The SBMA agrees not to promulgate any regulations governing use
of the Airport Facilities, the SBMA Policies and Procedures, or local Airport
directives as set forth by the SBMA contradictory to: (i) this Agreement; (ii)
any regulation of the FAA; (iii) any U.S. government agency regulation that is
binding upon FedEx.
SECTION 12.04. Labor. (a) Where vendors selected by FedEx are from
outside the Olongapo area, FedEx shall include in purchase contracts with such
vendors an obligation on the part of each vendor to hire persons listed in the
SBMA Labor Pool Inventory in accordance with the limitations and procedures set
forth in Section 12.04(b) below.
(b) FedEx shall hire and shall make reasonable efforts to cause its
vendors to hire employees at the Airport and in the area controlled by the SBMA
in accordance with FedEx's and such vendors specifications and requirements.
FedEx will endeavor, and make reasonable efforts to cause its vendors to
endeavor, to first hire its requirements from the SBMA Labor Pool Inventory.
Where qualified or acceptable applicants do not exist in the SBMA Labor Pool
Inventory, FedEx and its vendors may hire their personnel requirements from any
source they deem appropriate.
31
32
(c) The SBMA will assist FedEx in obtaining exemptions or waivers to
current labor regulations that: (i) restrict women from working night hours,
and (ii) require understudies for foreign employees.
ARTICLE 13
AGREEMENT NOT TO GRANT MORE FAVORABLE TERMS
SECTION 13.01. Agreement Not to Grant More Favorable Terms. If the
SBMA enters into any lease or agreement with any other international cargo
carrier prior to the termination date of this Agreement which provides for (i)
rent per square meter for space substantially similar to the Exclusive-Use
Space, (ii) landing fees, or (iii) telecommunications services to be provided
by Telecom Vendor, any of which are less than the comparable amounts charged
hereunder, then the SBMA shall notify FedEx to such effect and offer to amend
the applicable terms of this Agreement to reduce the applicable rate, fee or
charge to the level provided in said other lease or agreement, effective the
date on which such rate, fee or charge becomes payable under said other lease
or agreement.
ARTICLE 14
GENERAL PROVISIONS
SECTION 14.01. Delivery of Notices. Required notices must be hand
delivered, or sent by registered or certified mail, or by Federal Express
service to the addresses below:
If to the SBMA: Subic Bay Metropolitan Authority
Attention: Chairman and Administrator
SBMA Centre, Bldg. 229
Waterfront Road
Subic Bay Freeport Zone
Philippines
with copy to: Subic Bay Metropolitan Authority
Attention: Head - Legal Department
SBMA Centre, Bldg. 229
Waterfront Road
Subic Bay Freeport Zone
Philippines
If to FedEx: Federal Express Corporation
Attention: Vice President -
Properties and Facilities
2003 Corporate Avenue
Memphis, Tennessee 38132
with copy to: Federal Express Corporation
Attention: Vice President - Legal
Two Pacific Place, 34F
88 Queensway Road
Central, Hong Kong
32
33
(b) If notice is given in any other manner or at any other place,
notice must also be given in writing at the place and in the manner specified
in this Section in order to be effective under this Agreement. All notice
periods begin on the date of delivery of written notice at the address listed
in Section 14.01(a) except as provided elsewhere in this Agreement.
(c) Either party may change the address in this Section by written
notice to the other party.
SECTION 14.02. Quiet Enjoyment. Upon payment of the required rents
and fees, and subject to its performance of this Agreement, FedEx may peaceably
use the Exclusive-Use Space and the Airport during the term of this Agreement
and any renewal thereof.
SECTION 14.03. Officers, Agents, and Employees. No commissioner,
politician, director, officer, agent, employee, or other representative of
either party may be charged personally nor held contractually liable by the
other party for the enforcement, attempted enforcement, or breach of this
Agreement. The SBMA and FedEx remain liable for the acts of these persons that
are within the scope of their duties.
SECTION 14.04. Subordination to Agreements with the Philippine and
U.S. Government. This Agreement is subject to any present or future agreement
between the SBMA and the Government of the Republic of the Philippines or the
United States of America concerning the operation or maintenance of the Airport
System. FedEx may not hold the SBMA liable for any failure to perform any part
of this Agreement as a result of any national emergency declared by the U.S. or
Philippine government.
SECTION 14.05. Incorporation of Required Provisions. The parties
agree to incorporate into this Agreement any provision required by any
governmental agency, including the SBMA acting in its non-proprietary capacity,
now or in the future.
SECTION 14.06. Non-Waiver of Rights. No waiver of default of any
part of this Agreement by either party may operate as a waiver of any
subsequent default of any part of this Agreement that is to be performed by the
other party. Consent or notice by either party may not be construed as consent
or notice in the future.
SECTION 14.07. Force Majeure. Neither the SBMA nor FedEx will be in
violation of this Agreement if it is prevented from performance, nor shall
FedEx be entitled to any abatement, diminution or reduction of the rental,
Landing Fees, Parking Charges or other charges hereunder or otherwise expressly
set forth herein, nor entitled to exercise any right of termination herein
provided, by reason of strike, boycott, labor dispute, embargo, shortage of
energy or materials, act of God, act of public enemy, act of superior
governmental authority, weather condition, riot, rebellion, sabotage, or any
other circumstance for which it is not responsible and which is beyond its
control, whether foreseen or unforeseen.
SECTION 14.08. Contract Interpretation. The headings of articles and
sections are used only for convenience and reference, and may not be used to
define or interpret the scope or intent of this Agreement. The language in all
parts of this Agreement must be construed according to its fair meaning and not
strictly for or against either the SBMA or FedEx.
SECTION 14.09. Philippine Aviation Laws. This Agreement shall not be
construed to grant FedEx any exclusive right or privilege within the meaning of
the aviation laws of the Philippines, as amended, except that FedEx has the
right to exclusive possession of its Exclusive-Use Space.
33
34
SECTION 14.10. Radio Interference. At SBMA's request, FedEx will
stop using any machine or device that interferes with any government operated
transmitter, receiver, or navigation aid until the cause of the interference is
eliminated.
SECTION 14.11. Management Audits. The SBMA will conduct periodic
management and operation audits of the Airport and will take these audits into
consideration in managing the Airport.
SECTION 14.12. Governing Law. This Agreement is governed by the laws
of the Philippines.
SECTION 14.13. Arbitration. (a) Any dispute arising out of or in
connection with this Agreement shall be referred to arbitration under the
Arbitration Rules of the United Nations Commission on International Trade Law.
(b) The venue for the arbitration shall be Hong Kong or such other
location as the parties shall mutually agree.
(c) There shall be three arbitrators, each party selecting one
arbitrator and the two designees shall select a third.
(d) The parties agree to submit to written and oral interrogatories.
The parties may submit such written evidence as they deem appropriate, but
discovery of written materials shall not be permitted.
(e) Arbitration hearings shall commence within ninety (90) days of a
written request for same and a final arbitral award must be passed down in
writing no later than eighteen (18) months from the date of such request. If
the arbitrators deem that failure to meet these deadlines is due substantially
to the fault of one party, the arbitrators shall award to the other party its
costs, including arbitration expenses and reasonable legal fees, but not travel
costs.
(f) Proceedings shall be in the English language and where required
the procedural laws of Hong Kong or such other location as shall be mutually
agreed shall apply.
(g) Each party shall bear its own costs. The expense of arbitration,
including fees paid to arbitrators, shall be split between the parties equally.
(h) The parties expressly agree and acknowledge that a judgment of
any court with jurisdiction over the relevant party may be entered upon the
arbitral award and each of the parties hereby waives all rights to appeal
awards of the arbitral tribunal, with the sole exceptions being for grounds of
appeal as stated in the New York Convention on the Recognition and Enforcement
of Foreign Arbitral Awards.
SECTION 14.14. Inspection of Books and Records. At its own expense
and upon reasonable notice, each party has the right from time to time to
inspect the books, records, or other data of the other party relating to this
Agreement. Inspections must be conducted during regular business hours;
provided, however, the right to inspect books shall be limited to only those
books (i) that are required to be kept by Philippines law in respect of
operations in the Philippines and then with respect only to operations and
business at the Airport, or (ii) have been used by FedEx in the calculation by
it of amounts owing to the SBMA hereunder.
SECTION 14.15. Modification Necessary for Grant of Government Funds.
If the Philippine government or any public or institutional lender requires
that this Agreement be
34
35
amended as a condition to the granting of funds for the improvement of the
Airport, FedEx shall agree to, and enter into, any such amendment provided that
the terms of such amendment do not (i) increase FedEx's financial obligations
hereunder, (ii) materially increase its other obligations, (iii) materially
decrease its rights hereunder, (iv) cause FedEx to limit or alter its aircraft
and ground transportation schedules, or (v) limit the ability of FedEx to
efficiently conduct its business at the Airport.
SECTION 14.16. Consent Not to be Unreasonably Withheld. Neither the
SBMA nor FedEx will unreasonably withhold any consent or approval required by
this Agreement.
SECTION 14.17. Prudent Operations. The SBMA will manage the Airport
and FedEx will manage its business at the Airport in a prudent and reasonable
manner.
SECTION 14.18. Independent Contractor. FedEx is neither an agent nor
an employee of the SBMA but is an independent contractor with respect to all
FedEx's activities on the Airport, including any installation, construction, or
service provided.
SECTION 14.19. Condemnation. In the event a substantial portion of
the premises are condemned by any proper authority and material rights and
privileges are impaired such that FedEx becomes unable to conduct its business
at the Airport, this Agreement may be terminated automatically on the date
FedEx is required to surrender possession of the property. The SBMA is entitled
to all the condemnation proceeds provided that FedEx shall be paid the portion
of the proceeds attributable to the fair market value of any improvements
placed on the property by an independent assessor and not any compensation for
consequential or severance damages including business damages, lost profits, or
leasehold advantage.
SECTION 14.20. Incorporation of Appendices. All Appendices described
in this Agreement shall be deemed to be incorporated in and made a part of this
Agreement, except that if there is any inconsistency between this Agreement and
the provisions of any Appendix the provisions of this Agreement shall control.
Terms used in an Appendix and also used in this Agreement shall have the same
meaning in the Appendix as in this Agreement.
SECTION 14.21. Representations and Warranties. (a) FedEx represents
and warrants to the SBMA that:
i. it is a corporation in good standing under the laws of the
State of Delaware, U.S.A.;
ii. has all right, power and authority to enter into this
Agreement; and
iii. as of the date of this Agreement holds all certifications,
licenses and approvals from the Governments of the United
States of America and the republic of the Philippines to
operate aircraft on routes to and from the Philippines.
(b) The SBMA represents and warrants to FedEx that:
i. it has title to the properties it leases to FedEx under this
Agreement and holds all right, power and authority to lease
the same to FedEx; and
ii. it has all right, power and authority to enter into this
Agreement.
35
36
SECTION 14.22. No Representations. FedEx acknowledges that it has
not relied upon any representation or statement of the SBMA or its
Commissioners, officers, employees or agents as to the condition of the
premises or the suitability thereof for the operations permitted on the
premises by this Agreement.
SECTION 14.23. Place of Payments. All payments required of FedEx by
this Agreement shall be made at the office of the Subic Bay Metropolitan
Authority, or to such other office or address as may be substituted therefor.
SECTION 14.24. Estoppel Certificates. At any time and from time to
time upon not less than ten (10)-days' prior notice by the SBMA to FedEx, FedEx
shall, without charge, execute, acknowledge and deliver to the SBMA a statement
prepared by the SBMA certifying (i) that this Agreement is unmodified and in
full force and effect (or if there have been modifications, that the same is in
full force and effect as modified and stating the modifications), (ii) whether
the term has commenced and rent, Landing Fees, Parking Charges, and other
charges have become payable hereunder and, if so, the dates to which they have
been paid, (iii) whether or not, to the best knowledge of the signer of such
certificate, the SBMA is in default in performance of any of the terms of this
Agreement and, if so, specifying each such default of which the signer may have
knowledge, (iv) whether FedEx has made any claim against the SBMA under this
Agreement and, if so, the nature thereof and the dollar amount, if any, of such
claim, (v) whether there exist any offsets or defenses performed, and, if so,
specifying the same, and (vi) such further information with respect to this
Agreement as the SBMA may reasonably request, it being intended that any such
statement delivered pursuant hereto may be relied upon by any prospective
purchaser of, or lender against, SBMA's interest hereunder. The failure of
FedEx to execute, acknowledge and deliver to the SBMA a statement in accordance
with the provisions of this Section shall constitute an acknowledgment by
FedEx, which may be relied on by any person who would be entitled to rely upon
any such statement, that such statement is submitted by the SBMA is true and
correct.
SECTION 14.25. Successors and Assigns. The terms and conditions of
this Agreement shall be binding upon and inure to the benefit of the successors
and assigns of the SBMA and FedEx and shall be construed as covenants running
with the real property leased hereunder.
SECTION 14.26. Severability. If any part of this Agreement is
declared to be invalid by a court of competent jurisdiction, so long as that
part is not material, the other parts of this Agreement remain in full force.
SECTION 14.27. Entire Agreement. This Agreement with all attached
appendices constitutes the entire agreement between the SBMA and FedEx at the
Airport. Statements previously made, verbal or written, are merged in this
Agreement. Until signed by the representatives of the SBMA and FedEx, this
Agreement is of no effect. This Agreement may only be amended in a writing that
is signed by the authorized representatives of both parties.
36
37
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed on the date first above written.
SUBIC BAY METROPOLITAN AUTHORITY FEDERAL EXPRESS CORPORATION
/S/ FERDINAND M. ARISTORENS /S/ GILBERT D. MOOK
- ---------------------------------- ----------------------------------
FERDINAND M. ARISTORENS GILBERT D. MOOK
HEAD - LEGAL DEPARTMENT VICE PRESIDENT
PROPERTIES AND FACILITIES
37
38
APPENDIX A
MILESTONES
EVENT DATE
----- ----
1. Runway paving starts Nov. 15, 1994
2. SFS designated by Government of Philippines Dec. 15, 1995
as co-terminal point with MNL
3. Asphalt paving starts Dec. 15, 1995
4. Alternate airport to SFS at MNL fully approved. Dec. 15, 1994
Fully approved means that sufficient apron space
is available to park all FedEx and Vendor Carrier
scheduled operations in the event of a diversion;
FedEx has access to a covered facility to do some
sorting/transloading; and 24-hour operations are
acceptable to regulatory authorities.
5. Telecommunication lines are installed and operational Jan. 1, 1995
at the Exclusive Use Space.
6. VOR/DME and ASR are installed, flight tested and Feb. 1, 1995
certified and operational.
7. VOR/DME approaches and missed approaches are Feb. 1, 1995
approved, flight tested, certified and published.
8. ATO staff required to conduct flight operations at Feb. 15, 1995
SFS are hired, trained and on site. Other staff
required to operate the airport (Crash, Fire and
Rescue, Air Control Tower, and Airport
Management) are hired and on site.
9. Labor certification for FedEx crew members and Feb. 15, 1995
waiver of understudy program for crew obtained.
10. Operational Airport as defined in Section 2.02 April 1, 1995
Cure periods for Milestone Dates 1 through 9 shall be thirty (30) days. Cure
period for Milestone Date 10 shall be ninety (90) days.
A-1
39
Blueprint
Subic Bay International Airport Site Plan
A-2
40
APPENDIX B
EXCLUSIVE-USE SPACE
Section 1.00. Exclusive-Use Space. FedEx shall lease under this
Agreement Buildings #8045 and #8306.
Section 2.00. Exclusive Ramp and Apron. The Exclusive Ramp to FedEx
and the Apron Areas to be used by FedEx, including the Preferential Aircraft
Apron, Overflow Aircraft Apron and Common-Use Apron along with the
Exclusive-Use Space and the buildings for which the option of Section 5.03 of
this Agreement shall apply are marked and identified in Appendix B-1.
B-1
41
Appendix B-1.2
Blueprint
Designation of Airport Apron
B-2
42
APPENDIX C
IMPROVEMENTS TO BE MADE BY SBMA
Section 1.00. Improvements to Exclusive-Use Space. On or before the
Operation Date or such other dates stated below, SBMA will deliver to FedEx each
Exclusive-Use Space after having performed the following work:
(a) Connection of each existing building in the Exclusive-Use
Space to power for electrical requirements;
(b) Connection of each existing building in the Exclusive-Use
Space to telephone lines;
(c) Connection of each existing building in the Exclusive-Use
Space to water supply;
(d) All sewer, waste water and storm drains will be inspected and
prepared for use;
(e) All air-conditioning units, central and window units, will be
inspected and put in working order;
(f) Fire sprinkler systems will be inspected, tested and made
operable;
(g) All windows and doors will be inspected and replaced as
required;
(h) All doors and locks will be inspected and put in working
order; all doors will be labeled and keys supplied;
(i) Hangar doors on Bldg. 8045 will be capable of being opened and
closed by a means that is not detrimental to the doors, the
building or the equipment used to effect same;
(j) Toilets, sinks and showers will be inspected and repaired to
usable condition;
(k) By December 1, 1995, all electrical panels will be checked for
proper load distribution. Loads will be redistributed as
required;
(l) By December 1, 1995, all electrical wiring, outlets and
fixtures will be inspected; repairs and upgrade will be
completed to put said wiring, outlets and fixtures in working
order to the extent required for the power requirements of
FedEx;
(m) By December 1, 1995, all panels and breakers will be labeled;
(n) SBMA will ensure that as much electricity as FedEx shall
require, initially or at any other time, will be brought to
FedEx facilities as required;
(o) Inspect for corrosion;
(p) Inspect and repair all gates and fences; and
C-1
43
(q) As built plans will be provided for each building the extent
same are within the possession or control of SBMA.
Section 2.00. Improvements to Housing Units. All items detailed at
Section 1.00 of this Appendix C where applicable to Housing Units shall be
performed on each Housing Unit to be occupied by FedEx on or before the lease
start date; provided, that in addition to the foregoing SBMA will paint
interiors and exteriors and do basic landscaping work for each Housing Unit.
C-2
44
APPENDIX D
BUILDING LEASE RATES
(in USD$ per square meter per month)
Section 1.00. Lease Rates for Exclusive-Use Space. (a) The lease
rates for the two buildings making up the Exclusive-Use Space as of the
Operation Date shall be as follows (rates are in USD$):
Bldg# 8045 8306
Std Lease 4.00 1.50
Rate
Credit for 1.50 0
FedEx LI-II
Agreed Lease 2.50 1.50
Rate
(b) FedEx shall make improvements of at least $863,000.00 for the
entire amount of credit to apply.
(c) Approximate areas for each building are as follows (subject to
later survey, if required): 8045 - 9,597 sq.m; 8306 - 1,067 sq.m.
(d) Exclusive Ramp is approximately 21,730 sq.m. (subject to later
survey, if required) and the rental therefor has been blended into the lease
rates for the Exclusive-Use Space.
Section 2.00. Lease Rates of Other Buildings. The buildings set
forth below are included among those reserved for FedEx under the option
granted under Section 5.03 of the Agreement. Should FedEx exercise its option
to lease any of the following buildings, the lease rate it shall pay shall be
as set forth below. The following does not include all buildings that are
subject to the option of Section 5.03. For those other buildings not listed
below, should FedEx exercise its option on same, the lease rate shall be
negotiated separately in accordance with Section 5.03. The Agreed Lease Rate
shall be determined by subtracting from the Standard Lease Rate an amount equal
to FedEx' estimated leasehold improvements on each such facility.
Bldg# 8048 8066 8331 8301
Std Lease 3.00 1.50 1.50 1.50
Rate
D-1
45
APPENDIX E
AERONAUTICAL FEES AND CHARGES
ARTICLE 1
INTERNATIONAL FEES AND CHARGES
Aircraft arriving at the Airport whose last point of departure is from a
location outside of the Philippines will be levied the following charges for
the use of runways, taxiways, apron parking areas, and lighting facilities.
All rates are in US Dollars.
These rates cover Federal Express aircraft and the aircraft of Vendor Carriers.
Section 1.00. Landing Fees.
Basis: Fees are computed on the maximum take off weight in each aircraft's
certification and are applied to a complete aircraft cycle (one landing and one
take-off).
Section 1.01. First 28,000,000 kilograms. Landing Fees for the first
28,000,000 kilograms cumulative weight for FedEx aircraft landing at the
Airport on an international flight during any calendar month shall be as set
forth below:
Aircraft Weight Rate Per 1,000 kg
- --------------- -----------------
First 50,000 kg. $3.35
Second 50,000 kg. $3.90
Third 50,000 kg. $4.50
Above 150,000 kg. $4.80
Landing Fees are to be calculated from a zero base for each individual aircraft
cycle.
Section 1.02. Above 28,000,000 kilograms. Landing fees for any FedEx
aircraft landing at the Airport on an international flight during any calendar
month after the 28,000,000 kilogram cumulative weight break has been reached
shall be USD$2.50 per 1,000 kilograms irrespective of the MGTOW of the
aircraft.
Section 2.00. Parking Fees. Basis: Fees are computed based on the
maximum take-off weight in each aircraft's certification.
Section 2.01. First 50,000,000 kg. per month. Parking Fees for all
aircraft prior to reaching of a cumulative weight, based on MGTOW of each FedEx
aircraft, of 50,000,000 kilograms in any calendar month shall have the first
four hours parking at the Airport free of charge. The rate for each aircraft
after four hours shall be charged based on the MGTOW of that aircraft in
accordance with the following schedule:
Aircraft Weight Rate after the First Four Hours
- --------------- -------------------------------
50,000 kg and below $3.00 per half-hour
50,0001 to 100,000 kg $6.00 per half hour
E-1
46
100,001 to 150,000 kg $9.00 per half hour
Above 150,000 kg $13.00 per half hour
Section 2.02. After first 50,000,000 kilograms. For all FedEx
aircraft parking at the Airport in any calendar month once the threshold of
50,000,000 kilograms of cumulative weight (based on MGTOW) has been reached,
the following parking charges shall apply:
Aircraft Weight Rate for First Four Hours
- --------------- -------------------------
50,000 kg and below $50
50,001 to 100,000 kg $60
100,001 to 150,000 kg $80
Above 150,000 kg $100
Aircraft Weight Rate after the First Four Hours
- --------------- -------------------------------
50,000 kg and below $3.00 per half hour
50,0001 to 100,000 kg $6.00 per half hour
100,001 to 150,000 kg $9.00 per half hour
Above 150,000 kg $13.00 per half hour
Section 3.00. Lighting Fees
Exempted
ARTICLE II
DOMESTIC FEES AND CHARGES
Aircraft arriving at the Airport whose last point of departure is from a
location inside of the Philippines will be levied the following charges for the
use of runways, taxiways, apron parking areas, and lighting facilities. All
rates are in US Dollars. These rates cover Federal Express aircraft and the
aircraft of Vendor Carriers.
Section 1.01. Landing Fees.
Basis: Fees are computed on the maximum take off weight in each aircraft's
certification and are applied to a complete aircraft cycle (one landing and one
take-off).
Aircraft Weight Rate Per 1,000 kg
- --------------- -----------------
First 50,000 kg. $0.90
Second 50,000 kg. $1.05
Third 50,000 kg. $1.20
Above 150,000 kg. $1.30
Landing Fees are to be calculated from a zero base for each individual aircraft
cycle.
2.00 Parking Fees
Basis: Fees are computed on the maximum take off weight in each aircraft's
certification
E-2
47
Aircraft Weight First Four Hours
- --------------- ----------------
First 50,000 kg. $25
Second 50,000 kg. $32
Third 50,000 kg. $42
Above 150,000 kg. $53
Aircraft Weight Rates after the First Four Hours
- --------------- --------------------------------
First 50,000 kg. $1.50 per half hour
Second 50,000 kg. $3.20 per half hour
Third 50,000 kg. $5.00 per half hour
Above 150,000 kg. $6.70 per half hour
Landing Fees are to be calculated from a zero base for each individual aircraft
cycle.
3.00 Lighting Fees
$20.00 per landing and $20.00 per take-off during the hours of 6:00 PM and 6:00
AM.
E-3