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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported):
APRIL 1, 1999
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AMERICAN AIRCARRIERS SUPPORT, INCORPORATED
(Exact name of registrant as specified in its charter)
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DELAWARE 0-24275 52-2081515
(State of Incorporation) (Commission File No.) (I.R.S. Employer
Identification No.)
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587 GREENWAY INDUSTRIAL DRIVE
LAKEMONT BUSINESS PARK
FORT MILL, SOUTH CAROLINA 29715
(Address of principal executive offices)
(803) 548-2160
(Registrant's telephone number, including area code)
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ITEM 5. ACQUISITION OR DISPOSITION OF ASSETS
On April 1, 1999, American Aircarriers Support, Incorporated (the
"Company") completed the acquisition of substantially all of the operating
assets of Complete Controls, Inc. ("CCI") pursuant to an Asset Purchase
Agreement (the "Agreement") dated as of April 1, 1999 among the Company,
American Aircarriers Support Acquisition IV Corp., a wholly owned subsidiary of
the Company formed for the purpose of effecting the acquisition (the
"Subsidiary"), the Company, CCI, and Micah Chapman, Glen Hiscox and Frank Zambo,
the shareholders of CCI (the "Shareholders"). Pursuant to the Agreement, the
Company acquired substantially all of the assets of CCI for a purchase price
$600,000, comprised of cash paid from working capital, issuance of a promissory
note, and assumption of certain liabilities. CCI is a FAA-certified maintenance,
repair and overhaul facility specializing in flight control surfaces such as
flaps, slats and rudders.
Simultaneously with the execution of the Agreement, the Company entered
into a three year employment agreement with Mr. Chapman and Mr. Zambo. Under
their respective agreements, Mr. Chapman is to serve as President of the
Subsidiary and Mr. Zambo is to serve as Vice President of the Subsidiary. The
Subsidiary will continue to operate the business previously operated by CCI.
These gentlemen have a combined 30 years' experience in the aircraft industry.
Prior to founding CCI in late 1996, both of these Shareholders were employed by
Lockheed Martin.
Simultaneously with the execution of the Agreement, the Company assumed
CCI's existing leases with the Tucson Airport Authority, Inc. for approximately
38,400 square feet of hangar space, 3,500 square feet of office space and
designated areas adjacent to the hangar space at the Tucson International
Airport in Tucson, Arizona. The Company recently leased an additional building
at the Tucson International Airport containing 75,600 square feet.
FORWARD LOOKING STATEMENTS
This Report on Form 8-K may contain forward-looking statements. When
used in this report, the words "may," "will," "expect," "anticipate,"
"continue," "estimate," "project," "intend," "believe" and similar expressions,
variations of these words or the negative of those words are intended to
identify forward-looking statements within the meaning of Section 27A of the Act
and Section 21E of the Securities Exchange Act of 1934 regarding events,
conditions and financial trends including, without limitation, business
conditions in the aviation services industry and the general economy, and other
risks or uncertainties detailed in other of the Company's Securities and
Exchange Commission filings. Such statements are based on management's current
expectations and are subject to risks, uncertainties and assumptions. Should one
or more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, the Company's actual plan of operations, business
strategy, operating results and financial position could differ materially from
those expressed in, or implied by, such forward-looking statements.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements relative to CCI are not required pursuant
to Item 310(c) and (d) of Regulation S-B.
(b) Pro forma financial information relative to CCI and the
Registrant are not required pursuant to Item 310(c) and (d) of Regulation S-B.
(c) The following exhibits are furnished herewith in accordance
with the provisions of Item 601 of Regulation S-B:
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Reg. S-B
Exhibit No. Description Item No.
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2.5 Asset Purchase Agreement among the Company, American Aircarriers 2
Support Acquisition IV Corp., Complete Controls, Inc., Micah Chapman
and Frank Zambo
10.1.8 Employment Agreement between the Company and Micah Chapman 10
10.1.9 Employment Agreement between the Company and Frank Zambo 10
10.5.10 Lease Agreement between Complete Controls Inc. and Tucson Airport 10
Authority, Inc.
10.5.11 Lease Agreement between Complete Controls Inc. and Tucson Airport 10
Authority, Inc.
10.5.12 Lease Agreement between AAS-Complete Controls Inc. and Tucson 10
Airport Authority, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AMERICAN AIRCARRIERS SUPPORT, INCORPORATED
Date: September 16, 1999 By: /s/ Elaine T. Rudisill
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Elaine T. Rudisill, Chief Financial Officer
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EXHIBIT INDEX
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Reg. S-B
Exhibit No. Description Item No.
- ----------- ----------- --------
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2.5 Asset Purchase Agreement among the Company, American Aircarriers 2
Support Acquisition IV Corp., Complete Controls, Inc., Micah Chapman
and Frank Zambo
10.1.8 Employment Agreement between the Company and Micah Chapman 10
10.1.9 Employment Agreement between the Company and Frank Zambo 10
10.5.10 Lease Agreement between Complete Controls Inc. and Tucson Airport 10
Authority, Inc.
10.5.11 Lease Agreement between Complete Controls Inc. and Tucson Airport 10
Authority, Inc.
10.5.12 Lease Agreement between AAS-Complete Controls Inc. and Tucson 10
Airport Authority, Inc.
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EXHIBIT 2.5
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made and entered into as of the 1st
day of April, 1999, by and among COMPLETE CONTROLS, INC., an Arizona corporation
("Seller"), MICAH CHAPMAN, GLEN HISCOX and FRANK ZAMBO (collectively referred to
as "Shareholders") and AMERICAN AIRCARRIERS SUPPORT ACQUISITION IV CORP. (the
"Purchaser"), a Arizona subsidiary of AMERICAN AIRCARRIERS SUPPORT,
INCORPORATED, a Delaware corporation ("AASI").
W I T N E S S E T H:
WHEREAS, the Seller is engaged in the business of maintaining,
overhauling, supplying and redistributing aircraft flight controls and
associated parts to commercial and cargo airlines.
WHEREAS, the Shareholders own one hundred percent (100%) of the
outstanding shares of Seller.
WHEREAS, the Seller desires to sell and the Purchaser desires to
purchase substantially all the operating assets and properties used in the
business operations of Seller under the terms set forth herein.
NOW, THEREFORE, the parties hereto agree that the purpose of this
Agreement is to set forth the terms and conditions upon which the Seller has
agreed to sell to the Purchaser certain of its business and assets; and the
Purchaser has agreed to purchase and pay for such business and assets; and
furthermore, the Seller and the Purchaser in consideration of the premises and
the mutual agreements contained herein, do hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
Section 1.1 Assets to be Purchased and Sold.
(a) Description of Assets. At the Closing (as defined in Section 1.2),
the Seller shall sell and convey to the Purchaser, and the Purchaser shall
purchase and acquire from the Seller, substantially all the business and assets
of the Seller existing and owned by the Seller or used by the Seller in Seller's
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business on the Closing Date (as defined in Section 1.2) relating to Seller's
business, other than the Excluded Assets (as defined in Section 1.1(b)). The
assets of the Seller to be purchased hereunder (which shall not include the
Excluded Assets) are referred to herein as the "Subject Assets," and shall
include without limitation:
(i) all the Seller's inventory described on Exhibit 1.1(a)(i);
(ii) all the Seller's rights to prepaid license fees,
deposits, prepaid lease expenses and other rights acquired under any
leases, other than Excluded Assets (the "Prepaid Expenses"). The Seller
shall prepare a detailed listing of such Prepaid Expenses as of the
Closing Date which shall be included as Exhibit 1.1(a)(ii) hereto;
(iii) all furniture, fixtures, furnishings, tools, equipment,
supplies, parts, accessories, inventories, machinery, shelving,
computer equipment, signage, and other tangible personal property of
the Seller other than Excluded Assets (the "Tangible Property"),
including without limitation the items of Equipment and other Tangible
Property described on Exhibit 1.1(a)(iii) hereto and any additions or
accessions thereto or substitutions therefor or proceeds thereof;
(iv) to the extent Purchaser desires to acquire the same, all
rights of the Seller under all contracts, service agreements,
advertising agreements, sales contracts, customer orders, leases,
licenses, and agreements other than Excluded Assets (the "Contracts"),
including without limitation the Seller's rights existing on the
Closing Date under the Contracts described or referred to in Exhibit
1.1(a)(iv) hereto;
(v) (A) all rights of the Seller in the name "Complete
Controls, Inc." and any trademarks, tradenames or service marks, and
all registrations thereof and pending applications therefor, in
connection therewith (the "Name"), and (B) all other tradenames,
trademarks, service marks, copyrights, licenses, proprietary rights and
technology,
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patents and registrations thereof or applications therefor, and trade
secrets, secret processes (whether or not patentable), supplies and
vendor lists, customer lists, software, inventions (whether or not
patentable), formulae and other property belonging to, used in or
appertaining to the Seller's Subject Assets, all as described on
Exhibit 1.1(a)(v) hereto (collectively, with the Name, the
"Intellectual Property");
(vi) books, records, ledgers, files, documents,
correspondence, lists, prints, plans, drawings, and specifications,
creative materials, advertising and promotional materials, studies,
reports, and other printed or written materials directly related to
Seller's business other than Excluded Records (as defined in subsection
1.1(b)(ii) (the "Records");
(vii) all the Seller's federal, state and local governmental
permits, licenses, and approvals required for the conduct of its
business (or held with respect to the assets and operations of the
business of the Seller) to the extent assignment thereof to the
Purchaser is permitted by applicable law (the "Licenses"), all as
described on Exhibit 1.1(a)(vii) hereto; and
(viii) all the Seller's work-in-process as described on
Exhibit 1.1(a)(viii); and
(ix) all accounts receivables owned by Seller at Closing and
listed on Exhibit 1.1(a)(ix).
(b) Excluded Assets. The assets to be purchased and sold hereunder, and
the term "Subject Assets" as used herein, shall not include the following assets
of the Seller existing on the Closing Date (the "Excluded Assets"):
(i) The Seller's cash balances as of Closing and any passive
investments of Seller as identified on Exhibit 1.1(b)(i).
(ii) The Seller's corporate minute books, stock records and
income tax records, and other records of the Seller
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relating exclusively to Excluded Assets (the "Excluded Records"),
however with regard to tax return and financial statement information,
Purchaser shall have access to such information, including all
accounting work papers, for the last three (3) years to the extent the
same are related to the Seller's business being acquired hereunder as
may be periodically requested;
(iii) The Seller's tax prepayments.
(iv) The personal property listed on Exhibit 1.1(b)(iv).
Section 1.2 Closing Date. The closing date (the "Closing Date") shall
be April 1, 1999, or such other date as may be mutually agreed to by the
parties. The closing of this transaction (the "Closing") shall be held at the
offices of David M. Furr, Gray, Layton, Kersh, Solomon, Sigmon, Furr & Smith,
P.A., Gastonia, North Carolina, or such other place as the parties may mutually
agree. At the Closing, subject to the fulfillment or waiver of the conditions
set forth in Article V, the Seller shall convey the Subject Assets to the
Purchaser by appropriate instruments of transfer and the Purchaser shall pay to
the Seller the Purchase Price as provided in Sections 1.3 and 1.4.
Section 1.3 Purchase Price. The final purchase price, subject to any
working capital adjustments, to be paid to the Seller for the Subject Assets
(the "Purchase Price") shall be an amount equal to Six Hundred Thousand Dollars
($600,000.00). The Purchase Price shall be subject to a minimum working capital
adjustment based on the financials of the Seller dated December 31, 1998.
Accounts receivable, inventory, accounts payable and accrued liabilities, credit
card payables, shareholder loans payables, accrued benefits and payroll, sales
tax liability and work-in-process are to be included in this calculation of a
working capital adjustment.
Section 1.4 Payment of Purchase Price. The Purchase Price
shall be payable by the Purchaser over two (2) years in the
amounts set forth on Exhibit 1.4. At Closing, Purchaser shall
give to Seller a down payment of One Hundred Fifty Thousand
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Dollars ($150,000.00) and a Promissory Note in the amount and form set forth on
Exhibit 1.4.
Section 1.5 No Liabilities Assumed; Liabilities of the Purchaser After
Closing. The Purchaser is not assuming any of the Seller's liabilities or
obligations, whether known or unknown, contingent or realized, except as
provided on Exhibit 1.5; provided, however, all liabilities incurred after the
Closing in connection with the Purchaser's operations after the Closing shall be
liabilities of the Purchaser.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER AND SHAREHOLDERS
To induce the Purchaser and AASI to enter into this Agreement and to
purchase the Subject Assets, the Seller and Shareholders (excluding Glen Hiscox)
jointly and severally, represent and warrant that the statements contained in
this Article II are correct and complete as of the Closing Date, except as set
forth in the disclosure schedule accompanying this Agreement and initialed by
the Parties (the "Disclosure Schedule").
Section 2.1 Organization of the Seller. The Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of Arizona.
Section 2.2 Subsidiaries and Foreign Qualification.
(a) Subsidiary. The Seller has no subsidiaries and no other equity
investments in any other corporation, partnership, joint ventures or other
business entity.
(b) Foreign Qualification. The Seller has qualified to transact
business as a foreign corporation in the following jurisdictions as indicated on
Exhibit 2.2, and the nature and location of the Seller's business and assets is
such that no further qualification is required.
Section 2.3 Authorization of Transaction. The Seller has full power
and authority (including full corporate power and
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authority) to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of the Seller and Shareholders, enforceable in accordance with its terms and
conditions.
Section 2.4 Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
will (i) violate any statute, regulation, rule, judgment, order, decree,
stipulation, injunction, charge, or other restriction of any government,
governmental agency, or court to which the Seller is subject or any provision of
the charter or bylaws of the Seller or (ii) conflict with, result in a breach
of, constitute a default under, result in the acceleration of, create in any
party the right to accelerate, terminate, modify, or cancel, require any notice
under any contract, lease, sublease, license, sublicense, franchise, permit,
indenture, agreement or mortgage for borrowed money, instrument of indebtedness,
security interest, or other arrangements to which the Seller is a party or by
which it is bound or to which any of its assets is subject, except with respect
to the required third party consents identified on Section 2.4 of the Disclosure
Schedule. Seller does not need to give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any governmental or
governmental agency in order for the parties to consummate the transactions
contemplated by this Agreement, except notice required to be given to the
Federal Aviation Administration.
Section 2.5 Financial Statements; Books and Records. Seller has
delivered to Purchaser and AASI financial statements of Seller for the year
ended December 31, 1997 and December 31, 1998 (together the "Financial
Statements") attached herein as Exhibit 2.5(a). The Financial Statements present
fairly the financial position of Seller as at such dates and the results of
operations for the periods then ended, except that the Financial Statements are
subject to normal year-end adjustments. The Financial Statements are correct and
complete and are consistent with the books and records of the Seller.
Except for Exhibit 2.5(b), none of the records, systems, data or
information of the Seller is recorded, stored, maintained, operated or
otherwise, wholly or partly, dependent on
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or held or accessible by any means (including, but not limited to, an
electronic, mechanical or photographic process, computerized or not) which are
not under the exclusive ownership and direct control of the Seller.
The books of account, minute books and other material business records
of the Seller are complete and correct and have been maintained in accordance
with sound business practices. The Seller has:
(a) made and kept its books, records and accounts, which, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of its
assets, and
(b) devised and maintained a system of internal accounting control
sufficient to provide reasonable assurances that:
(i) transactions are executed in accordance with management's
general or specific authorization;
(ii) transactions are recorded as necessary (A) to permit
preparation of financial statements in conformity with GAAP or any
other criteria applicable to such statements, and (B) to maintain
accountability for assets;
(iii) access to assets is permitted only in accordance with
management's general or specific authorization;
(iv) the recorded accountability for assets as compared with
the existing assets at reasonable intervals and appropriate action is
taken with respect to any differences; and
(v) the accounts/trade payables set forth on Exhibit 2.5(b)(v)
were incurred in the ordinary course of business and no disputes exist
thereto.
Section 2.6 Absence of Certain Changes or Events. Since December 31,
1998, there has not been any adverse change in the assets, liabilities,
business, financial condition, operations, results of operations, or future
prospects of the Seller's
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business. Without limiting the generality of the foregoing, since that date:
(a) the Seller has not sold, leased, transferred, or assigned any of
its assets, tangible or intangible, used in the business other than for a fair
consideration in the ordinary course of business;
(b) with respect to Seller's business, the Seller has not entered into
any contract, lease, sublease, license, or sublicense (or series of related
contracts, leases, subleases, licenses, and sublicenses) either involving more
than $5,000 or outside the ordinary course of business;
(c) with respect to Seller's business, no party (including the Seller)
has accelerated, terminated, modified, or canceled any contract, lease,
sublease, license, or sublicense (or series of related contracts, leases,
subleases, licenses, and sublicenses) involving more than $5,000 to which the
Seller is a party or by which it is bound;
(d) the Seller has not imposed any security interest upon any of its
assets, tangible or intangible;
(e) with respect to Seller's business, the Seller has not made any
capital expenditure (or series of related capital expenditures) either involving
more than $5,000 or outside the ordinary course of business;
(f) with respect to Seller's business, the Seller has not made any
capital investment in, any loan to, or any acquisition of the securities or
assets of any other person (or series of related capital investments, loans, and
acquisitions) either involving more than $5,000 or outside the ordinary course
of business;
(g) with respect to Seller's business, the Seller has not created,
incurred, assumed, or guaranteed any indebtedness (including capitalized lease
obligations) either involving more than $5,000 or outside the ordinary course of
business;
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(h) with respect to Seller's business, the Seller has not delayed or
postponed (beyond its normal practice) the payment of accounts payable and other
Liabilities, except as noted in Exhibit 1.5 (item 3);
(i) with respect to Seller's business, the Seller has not canceled,
compromised, waived, or released any right or claim (or series or related rights
and claims) either involving more than $5,000 or outside the ordinary course of
business;
(j) with respect to Seller's business, the Seller has not granted any
license or sublicense of any rights under or with respect to any Intellectual
Property;
(k) there has been no change made or authorized in the charter or
bylaws of the Seller other than those contemplated herein;
(l) with respect to Seller's business, the Seller has not experienced
any damage, destruction, or loss (whether or not covered by insurance) to its
property;
(m) with respect to Seller's business, the Seller has not made any loan
to, or entered into any other transaction with, any of its directors, officers,
and employees outside the ordinary course of business giving rise to any claim
or right on its part against the person or on the part of the person against it;
(n) with respect to Seller's business, the Seller has not entered into
any employment contract or collective bargaining agreement, written or oral, or
modified the terms of any existing such contract or agreement;
(o) with respect to Seller's business, the Seller has not granted any
increase outside the ordinary course of business in the base compensation of any
of its directors, officers, and employees;
(p) with respect to Seller's business, the Seller has not adopted any
(i) bonus, (ii) profit-sharing, (iii) incentive compensation, (iv) pension, (v)
retirement, (vi) medical, hospitalization, life, or other insurance, (vii)
severance, or
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(viii) other plan, contract, or commitment for any of its directors, officers,
and employees, or modified or terminated any existing such plan, contract, or
commitment;
(q) with respect to Seller's business, the Seller has not made or
pledged to make any charitable or other capital contribution outside the
ordinary course of business;
(r) with respect to Seller's business, the Seller has not delayed
payment of any amount to any third party with respect to any Liability or
obligation (including any costs and expenses the Seller has incurred or may
incur in connection with this Agreement or any of the transitions contemplated
hereby); and
(s) with respect to Seller's business, there has not been any other
occurrence, event, incident, action, failure to act, or transaction outside the
ordinary course of business involving the Seller.
(t) With respect to Seller's business, there has not been any inquiry,
notice or other communication from the Federal Aviation Administration ("FAA")
relating to any event, incident, action, failure to act or other transaction
involving the Seller.
Section 2.7 Undisclosed Liabilities. With respect to the Seller's
business, the Seller has no Liability (and there is no basis for any present or
future charge, complaint, action, suit, proceeding, hearing, investigation,
claim or demand against any of them giving rise to any Liability), except for
(i) Liabilities set forth on the face of the December 31, 1998 Balance Sheet and
(ii) Liabilities which have arisen after December 31, 1998 in the ordinary
course of business (none of which relates to any breach of contract, breach of
warranty, tort, infringement, or violation of law or arose out any charge,
complaint, action, suit, proceeding, hearing, investigation, claim, or demand).
Section 2.8 Tax Matters.
(a) The Seller has filed or will file all tax returns that it was
required to file. All taxes owed by the Seller (whether or not shown on any tax
return) have been paid or will be paid. The Seller currently is not the
beneficiary of any extension of
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time within which to file any tax return. No claim has ever been made by an
authority in a jurisdiction where the Seller does not file tax returns that it
is or may be subject to taxation by that jurisdiction. There are no security
interests on any of the assets of any of the Seller that arose in connection
with any failure (or alleged failure) to pay any tax. All tax returns disclosed
herein have been accurately prepared and reflect all known tax liabilities of
the Seller.
(b) Except as is disclosed in Section 2.8(b) and Exhibit 1.5 (item iii)
of the Disclosure Schedule, the Seller has withheld and paid all taxes required
to have been withheld and paid in connection with amounts paid or owing to any
employee, creditor, independent contractor, or other third party.
(c) No officer (or employee responsible for tax matters) of the Seller
expects any authority to assess any additional taxes for any period for which
tax returns have been filed. There is no dispute or claim concerning any tax
liability of the Seller either (i) claimed or raised by any authority in writing
or (ii) as to which any of officers (and employees responsible for tax matters)
of the Seller has knowledge based upon personal contact with any agent of such
authority.
(d) All ad valorem property taxes for 1998 and all years prior to 1998
imposed on the Seller with respect to, or which may become a lien on, the
Subject Assets have been paid in full.
Section 2.9 Furniture, Equipment, Etc. The Seller has good and
marketable title to the Tangible Property, free and clear of all liens, charges,
security interests, easements, reservations, restrictions, encumbrances and
other defects in title (collectively, "Encumbrances"), has the right to convey
such Tangible Property to the Purchaser, at the Closing shall have conveyed to
the Purchaser good and marketable title to such Tangible Property free and clear
of all Encumbrances, and will warrant and defend the title to such Tangible
Property in the Purchaser against the lawful claims of all persons whomsoever.
Except as set forth in Section 2.9 of the Disclosure Schedule, none of
the Tangible Property is leased by the Seller from any other party. There is no
default under the leases
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described on Section 2.9 of the Disclosure Schedule and such leases are valid
and enforceable in accordance with their terms.
All Tangible Property is in good operating condition and repair,
ordinary wear and tear excepted.
Section 2.10 Inventory. The Seller has good and marketable title to the
Inventory described on the December 31, 1998 Balance Sheet and listed on Exhibit
1.1(a)(i), free and clear of all Encumbrances, has the right to convey such
Inventory to the Purchaser, at the Closing shall have conveyed to the Purchaser
good and marketable title to such Inventory free and clear of all Encumbrances
and will warrant and defend the title to such Inventory in Purchaser against the
lawful claims of all persons whomsoever.
The level of Inventory at Closing will not vary materially from that
shown on December 31, 1998 Balance Sheet and will not exceed normal inventory
levels necessary to conduct the Seller's business in the ordinary course of the
Seller's business.
Section 2.11 Intellectual Property. The Seller has exclusive rights to
use the Intellectual Property described on Exhibit 1.1(a)(v) in connection with
its business as and where now conducted and the use of the Intellectual Property
by the Seller in its business as and where now conducted does not violate or
infringe the rights of any other person, nor is the Seller a party to any
agreement with any other person or entity with respect to the use of the
Intellectual Property.
Section 2.12 Contracts. With respect to Seller's business, Exhibit
1.1(a)(iv) lists all contracts, including the following contracts, agreements,
and other written arrangements to which the Seller is a party:
(a) any written arrangement for the lease of personal property from or
to third parties providing for lease payments;
(b) any written on-going arrangement for the purchase or sale of raw
materials, commodities, supplies, products, or other personal property or for
the furnishing or receipt of services
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(including any agent or representation agreements with third parties);
(c) any written arrangement concerning a partnership or joint venture;
(d) any written arrangement under which it has created, incurred,
assumed, or guaranteed (or may create, incur, assume, or guarantee) indebtedness
(including capitalized lease obligations) or under which it has imposed (or may
impose) a security interest on any of its assets, tangible or intangible;
(e) any written arrangement concerning confidentiality or competition;
(f) any written arrangement involving any of the Seller's stockholders
and its affiliates;
(g) any written arrangement with any of its directors, officers, and
employees in the nature of a collective bargaining agreement, employment
agreement, or severance agreement;
(h) any written arrangement under which the consequences of a default
or termination could have an adverse effect on the assets, liabilities,
business, financial condition, operations, results of operations, or future
prospects of Seller's business; or
(i) any other written arrangement either involving more than $5,000 or
not entered into in the ordinary course of business.
The Seller has delivered to the Purchaser and AASI a correct and
complete copy of each written arrangement listed in Exhibit 1.1(a)(iv). With
respect to each Contract: (i) the written arrangement is legal, valid, binding,
enforceable, and in full force and effect; (ii) the written arrangement will
continue to be legal, valid, binding, and enforceable and in full force and
effect on identical terms following the Closing; (iii) no party is in breach or
default, and no event has occurred which with notice or lapse of time would
constitute a breach or default or permit termination, modification, or
acceleration, under the
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written arrangement; and (iv) no party has repudiated any provision of the
written arrangement. The Seller is not a party to any verbal contract,
agreement, or other arrangement, which, if reduced to written form, would be
required to be listed in Exhibit 1.1(a)(iv) under terms of this Section 2.12.
The contracts and arrangements on Exhibit 1.1(a)(iv) constitute all of the
agreements, contracts, arrangements and rights necessary to conduct the Seller's
business as it is presently conducted and presently proposed to be conducted.
To Seller's knowledge, no filled customer order or commitment of the
Seller's business obligating the Seller to process, manufacture, or deliver
products or perform services will result in a loss to the Seller upon completion
of performance. No purchase order or commitment of the Seller with respect to
Seller's business is in excess of normal requirements, nor are prices provided
therein in excess of current market prices for the products or services to be
provided thereunder. To Seller's knowledge, no supplier of the Seller has
indicated within the past year that, with respect to Seller's business, it will
stop, or decrease the rate of, supplying materials, products, or services to
them and no customer of the Seller has indicated within the past year that it
will stop, or decrease the rate of, buying materials, products, or services from
it.
Section 2.13 Software and Information Systems.
(a) Section 2.13 of the Disclosure Schedule sets forth an accurate and
complete list and summary description of all the software used in and related to
Seller's business ("Software"). The Software identified on Section 2.13 of the
Disclosure Schedule is all the software necessary for the operation of Seller's
business as it is presently conducted and as presently proposed to be conducted.
Section 2.13 of the Disclosure Schedule identifies or describes (i) Software
which is owned by the Seller and (ii) Software which is licensed to the Seller
by third parties. Each person who participated in the development of Software
owned by Seller has either so participated as an employee of Seller or entered
into a written agreement assigning the copyright in such Software (including the
related documentation) to Seller. In each instance in which Seller is using or
has used Software, or a copy thereof, that it purchased
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or licensed from a third party (other than word processing, accounting,
communications and similar business software that is commercially available to
any third party at a cumulative cost not in excess of $5,000): (i) Seller has
the perpetual, irrevocable, transferable, worldwide right to use, copy, modify,
prepare, derivatives of, sublicense, distribute and modify, prepare derivatives
of, sublicense, distribute and otherwise market each Software; and (ii) Seller
has possession of and the right to use the most current, fully documented source
code version of such Software.
(b) Seller does not sell, license, sublicense or otherwise market
Software to third parties and has not entered into any Contract that grants any
third party a license or sublicense in Software. Seller has not entered into any
Contract, other than those Contracts listed on Section 2.13(b) of the Disclosure
Schedule, that restricts Seller's use of Software or that obligates Seller to
maintain, enhance, protect or otherwise take any action with respect to
Software.
(c) Except as is set forth in Section 2.13(c) of the Disclosure
Schedule, all Software that Seller uses includes four digit format for the
indication of the relevant year and, at no additional costs to Purchaser, and
without human intervention, will correctly recognize and correctly process data
and formulas relating to the year 2000 and beyond and provide all such
date-related data and formulas used by other applications in a format that will
permit the correct recognition and processing of data by the other applications.
Seller, except as disclosed in this Section 2.13 is not aware of any year 2000
(Y2K) issues with any major customers and suppliers.
(d) To Seller's knowledge, except as set forth in Section 2.13(d) of
the Disclosure Schedule, there are no defects or errors in the Software, which
defects or errors could materially and adversely affect Purchaser's or any
licensee's use of the Software or the functioning of the Software in accordance
with the specifications for the Software.
Section 2.14 Real Property Leases. With respect to Seller's business,
Section 2.14 of the Disclosure Schedule lists and describes briefly all real
property leased or subleased to
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the Seller. The Seller has delivered to the Purchaser correct and complete
copies of the leases and subleases listed in Section 2.14 of the Disclosure
Schedule. With respect to each lease and sublease listed in Section 2.14 of the
Disclosure Schedule:
(a) the lease or sublease is legal, valid, binding, enforceable, and in
full force and effect;
(b) the lease or sublease will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms following the
Closing.
(c) no party to the lease or sublease is in breach or default, and no
event has occurred which, with notice or lapse of time, would constitute a
breach or default or permit termination, modification, or acceleration
thereunder;
(d) no party to the lease or sublease has repudiated any provision
thereof;
(e) there are no disputes, oral agreements, or forbearance programs in
effect as to the lease or sublease;
(f) with respect to each sublease, the representations and warranties
set forth in subsections (a) through (e) above are true and correct with respect
to the underlying lease;
(g) the Seller has not assigned, transferred, conveyed, mortgaged,
deeded in trust, or encumbered any interest in the leasehold or subleasehold;
(h) all facilities leased or subleased thereunder have received all
approvals of governmental authorities (including licenses and permits) required
in connection with the operation thereof and have been operated and maintained
in accordance with applicable laws, rules, and regulations; and
(i) all facilities leased or subleased thereunder have received all
approvals of governmental authorities (including licenses and permits) required
in connection with the operation thereof and have been operated and maintained
in accordance with applicable laws, rules, and regulations.
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Section 2.15 Accounts Receivable. All accounts receivable of the Seller
with respect to Seller's business are reflected properly on its books and
records, are valid receivables subject to no setoffs or counterclaims, are
presently current and collectible, and will be collected in accordance with
their terms at their recorded amounts, subject only to the reserve for bad debts
set forth on the face of the December 31, 1998 Balance Sheet as adjusted for the
passage of time in accordance with the past custom and practice of the Seller.
Section 2.16 Licenses. The rights of the Seller under the Licenses
described or referred to in Exhibit 1.1(a)(viii) are valid and enforceable by
the Seller in accordance with their respective terms. Neither the Seller nor the
other parties thereto are in default in any material respects (nor does any
circumstance exist which, with notice or the passage of time or both, would
result in such a default) under the Licenses. The parties further acknowledge
that subsequent to the closing of the instant agreement, Purchaser will be
required, pursuant to 14 C.F.R. Section 145.15 to apply for an amended
certificate pursuant to 14 C.F.R. Section 145.11. Prior to the grant of the
amended certificate, Seller and Purchaser shall act under the Seller's old
certificate as may be legally permissible to continue without interruption the
operation of the Seller.
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Section 2.17 Litigation. Section 2.17 of the Disclosure Schedule sets
forth each instance in which the Seller or the Shareholders (i) are subject to
any unsatisfied judgment, order, decree, stipulation, injunction, or charge or
(ii) are a party to the knowledge of any officers (and employees with
responsibility for litigation matters) of the Seller or is threatened to be made
a party to any charge, complaint, action, suit, proceeding, hearing, or
investigation of or in any court or quasi-judicial or administrative agency of
any federal, state, local, or foreign jurisdiction or before any arbitrator.
None of the charges, complaints, actions, suits, proceedings, hearings, and
investigations set forth in Section 2.17 of the Disclosure Schedule could result
in any adverse change in the assets, liabilities, business, financial condition,
operations, results of operations, or future prospects of Seller's business.
None of the officers or shareholders (and employees with responsibility for
litigation matters) of the Seller have any reason to believe that any such
charge, complaint, action, suit, proceeding, hearing, or investigation may be
brought or threatened against the Seller.
Section 2.18 Employees.
(a) Employee Census. Seller has furnished an accurate employee census,
detailing the Employee's date of hire, salary, benefits and other pertinent
information in Section 2.18 of the Disclosure Schedule. There shall have been no
material increase in any compensation paid or payable to the employees of Seller
unless otherwise disclosed and agreed to by Purchaser.
(b) No Contracts or Future Contracts. Seller has no employment
contracts that cannot be terminated without liability and further, Seller will
not contact any employees to work for Seller after closing without first
obtaining Purchaser's written permission.
(c) Restrictions on Employees. No officer or employee of the Seller is
subject to any agreement with any other person or entity which requires such
officer or employee to assign any interest in inventions or other intellectual
property or keep confidential any trade secrets, proprietary data, customer
lists or other business information or which restricts such officer or
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employee from engaging in competitive activities or solicitation of customers.
(d) Retention of Employees. Seller has no employment contracts, written
or oral, with any employee of Seller that is not terminable at Seller's
discretion and with no commitment or obligation of severance pay or benefits
except as described in Section 2.18 of the Disclosure Schedule. Seller shall be
responsible for any severance or wrongful termination claims each of these
employees may have and agree to indemnify Purchaser from the same occurring
prior to the Closing. Seller shall terminate all employees effective as of the
date of Closing. Purchaser will hire the employees on the same terms and
conditions as currently exist, including that there will be no lapse in benefits
and credit will be given for years of actual service.
(e) Employee Benefits. Section 2.18 of the Disclosure Schedule lists
all employee benefit plans that the Seller maintains or to which the Seller
contributes for the benefit of any current or former employee of the Seller
("Employee Benefit Plan").
(f) ERISA Matters.
(i) Except as set forth on Section 2.18 of the Disclosure
Schedule, the Seller (or any person or entity under "common control"
with it ("ERISA Affiliates"), as "common control" is defined under the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")
does not maintain or contribute to, or has not maintained or
contributed to, any bonus, pension, profit sharing, deferred
compensation, retirement, hospitalization, medical or dental
reimbursement, severance pay, vacation pay, disability, death benefit,
insurance, and other similar plans, programs, or arrangements providing
benefits to the employees of the Seller (including but not limited to
"employee pension benefit plans" and "employee welfare benefit plans"
within the meaning of Section 3(1) and 3(2) of ERISA ("Pension Benefit
Plans") and Welfare Benefit Plans" respectively)). The Seller has
delivered to Purchaser true copies of all plans set forth in Section
2.18 of the Disclosure Schedule.
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(ii) Neither the Seller nor its ERISA Affiliates have or have
ever had an obligation to contribute to a "multiemployer plan" within
the meaning of Section 4001(a)(3) of ERISA.
(iii) Each Welfare Benefit Plan has been funded and will
continue to be funded in accordance with its terms through the Closing
Date, including the payment of applicable premiums, for coverage
through Closing Date, on any insurance contract funding a Welfare
Benefit Plan.
(iv) Each Welfare Benefit Plan which is a "group health plan,"
as defined in Section 607(1) of ERISA has been operated in material
compliance with the provisions of Part 6 of Title I of ERISA and
Section 4980B of the Code at all times. Section 2.18 of the Disclosure
Schedule has a complete and accurate list of all present and former
employees of the Seller and their respective beneficiaries who, as of
the date hereof, are receiving or who are eligible to elect to receive
benefits pursuant to such group health plans and the provisions of
ERISA and the Code as well as the current hourly pay or yearly salary.
Section 2.19 Environmental Matters.
(a) Except as set forth in Section 2.19(a) of the Disclosure Schedule,
the Seller and the property owned or used in its business are, and at all times
have been, in compliance with all applicable Federal, state and local statutes,
laws, ordinances, regulations and codes related in any way to Hazardous
Materials (as hereinafter defined) and underground storage tanks. As used
herein, Hazardous Materials shall mean solid waste (as that term is defined in
the Resource Conservation and Recovery Act, 42 U.S.C.A. Section 6901, et seq,
and the regulations adopted pursuant thereto), hazardous substances (as that
term is defined in the Comprehensive Environmental Response Compensation and
Liability Act, 42 U.S.C.A. Section 9601, et seq, and the regulations adopted
pursuant thereto), and other pollutants, including, without limitation, any
solid, liquid, gaseous or thermal irritant or contaminant, such as smoke, vapor,
soot, fumes, acids, alkaloids or chemicals.
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(b) Except as set forth in Section 2.19(b) of the Disclosure Schedule,
during Seller's occupancy of the property used in its business, no Hazardous
Materials have been generated, treated, stored or disposed of at, or transported
to or form, the Seller or the property owned or used in the Seller's business at
any time.
(c) Except as set forth in Section 2.19(c) of the Disclosure Schedule,
to Seller's knowledge no asbestos or materials containing asbestos have been
installed, used, treated, stored or disposed of by the Seller in or on property
owned or used by the Seller at any time.
(d) To Seller's knowledge, except as set forth in Section 2.19(d) of
the Disclosure Schedule, during Seller's occupancy of the property used in its
business, no polychlorinated biphenyls are located on or in the facilities of
the Seller or any property owned or used by the Seller at any time.
(e) Except as set forth in Section 2.19(e) of the Disclosure Schedule,
the Seller holds all necessary permits or licenses to enable it to comply with
all statutes, laws, ordinances, regulations and codes related in any way to
Hazardous Materials or underground storage tanks.
(f) Except as set forth in Section 2.19(f) of the Disclosure Schedule,
no notice has been served on the Seller or any of its directors, officers or
shareholders from any entity, governmental body or individual claiming violation
of any statute, law, ordinance, regulation or code related in any way to
Hazardous Materials or underground storage tanks, requiring compliance with any
statute, law, ordinance, regulation or code related in any way to Hazardous
Materials or underground storage tanks, or demanding payment of or contributions
for damage regarding the Seller or property owned or used by the Seller related
in any way to Hazardous Materials or underground storage tanks, including
without limitation, damages to the environment or natural resources.
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Section 2.20 Legal Compliance.
(a) With respect to Seller's business, the Seller has complied with all
laws (including rules and regulations thereunder) of federal, state, local, and
foreign governments (and all agencies thereof), and no charge, complaint,
action, suit, proceeding, hearing, investigation, claim, demand, or notice has
been filed or commenced against the Seller alleging any failure to comply with
any such law or regulation, except as disclosed on Exhibit 1.5 (item iii).
(b) With respect to Seller's business, the Seller has complied with all
applicable laws (including rules and regulations thereunder) relating to the
employment of labor, employee civil rights, and equal employment opportunities.
(c) With respect to Seller's business, the Seller has not violated in
any respect or received a notice or charge asserting any violation of the
Sherman Act, the Clayton Act, The Robinson-Patman Act, or the Federal Trade
Commission Act, each as amended.
(d) With respect to Seller's business, the Seller has not:
(i) made or agreed to make any contribution, payment, or gift
of funds or property to any governmental official, employee, or agent
where either the contribution, payment, or gift or the purpose thereof
was illegal under the laws of any federal, state, local, or foreign
jurisdiction;
(ii) established or maintained any unrecorded operating asset
for any purpose; or
(iii) made or agreed to make any contribution, or reimbursed
any political gift or contribution made by any other person, to any
candidate for federal, state, local, or foreign public office.
(e) With respect to Seller's business, the Seller has filed in a timely
manner all reports, documents, and other materials it was required to file (and
the information contained therein was correct and complete in all respects)
under all applicable laws (including rules and regulations thereunder).
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(f) With respect to Seller's business, the Seller has possession of all
records and documents it was required to retain under all applicable laws
(including rules and regulations thereunder).
Section 2.21 Product Warranty. With respect to Seller's business, each
service provided, overhauled parts and other parts and products manufactured,
sold, leased, or delivered by the Seller has been in conformity with all
applicable contractual commitments and all express and implied warranties, and,
with respect to Seller's business, the Seller has no liability (and to Seller's
knowledge there is no present or future charge, complaint, action, suit,
proceeding, hearing, investigation, claim, or demand against any service,
overhauled parts or other parts and products giving rise to any liability) for
replacement or repair thereof or other damages in connection therewith, except
as is disclosed in Section 2.21 of the Disclosure Schedule. With respect to
Seller's business, no service, overhauled parts or other parts and products
manufactured, sold, leased, or delivered by the Seller is subject to any
guaranty, warranty, or other indemnity beyond the applicable standard terms and
conditions of sale or lease. With respect to Seller's business, Section 2.21 of
the Disclosure Schedule includes copies of the standard invoices (containing
terms and conditions of services provided, terms and conditions of sale or
lease, applicable guaranty, warranty, and indemnity provisions).
Section 2.22 Product Liability; Product Safety. Except as set forth on
Section 2.22 of the Disclosure Schedule, the Seller has no liability (and to
Seller's knowledge there is no present of future charge, complaint, action,
suit, proceeding, hearing, investigation, claim, or demand against Seller giving
rise to any liability) arising out of any injury to persons or property as a
result of a service performed by Seller or as a result of the ownership,
possession, or use of any overhauled part or other parts and products
manufactured, sold, leased, or delivered by the Seller.
Except as set forth on Section 2.22 of the Disclosure Schedule, the
Seller has not been required to file any notification or other report with or to
provide information to any product safety agency, commission, board or other
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governmental authority of any jurisdiction concerning actual or potential
hazards with respect to any service Seller has provided or with respect to any
flight controls, overhauled parts or other parts and products manufactured or
sold by Seller. Each service performed by Seller, overhauled part and other
parts and products manufactured, distributed or sold by Seller complies in all
material respects of all product safety standards or each applicable product
safety agency, commission, board or other governmental authority. The Seller has
not made any misrepresentation or furnished any information containing any
material omission to any products safety testing laboratory or a similar
organization. The Seller has not failed to obtain approval of any product,
component or process which is used, manufactured or licensed by the Seller in
the conduct of its business which is legally required to be approved by any
independent or government-sponsored testing laboratory, industry, trade
association or similar body agency or association.
Section 2.23 Insurance. Seller maintains in full force and effect
insurance coverage on its assets, properties, premises, operations and personnel
in such amounts and against such risks and losses as are adequate and customary
for the business engaged in by Seller. Section 2.23 of the Disclosure Schedule
lists all policies of insurance owned by the Seller and now in effect insuring
all its business, assets and personnel, and sets forth for such policy the name
of the insurer, the type of coverage, the amount of coverage, the term thereof
and the annual premium.
Section 2.24 Disclosure. None of the representations or warranties of
Seller contained herein, none of the information contained in the Disclosure
Schedule referred to in this Article II and none of the other information or
documents furnished to the Purchaser pursuant to the terms of this Agreement is
or will be false or misleading in any material respect, or omits or will omit to
state a fact herein or therein necessary to make the statements herein or
therein not misleading in any material respect. To Seller's knowledge, there is
no fact which adversely affects or in the future is likely to affect adversely
the Subject Assets or the Seller's business in any material respect which has
not been set forth or referred to in this Agreement, Exhibits or the Schedules
hereto.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND AASI
To induce the Seller to enter into this Agreement and to sell the
Subject Assets, the Purchaser and AASI hereby represent and warrant that the
statements contained in this Article III are correct and complete as of the
Closing Date, except as set forth in the Disclosure Schedule.
Section 3.1 Corporate Organization and Authority. The Purchaser and
AASI are corporations duly organized and validly existing and in good standing
under the laws of the jurisdiction of their incorporation, with full corporate
power and authority to conduct its business as now conducted and to enter into
and perform its obligations under this Agreement. The Purchaser's and AASI's
execution, delivery and performance of this Agreement and its acquisition of and
payment for the Subject Assets have been duly authorized by all requisite
corporate action on the part of the Purchaser and AASI, and this Agreement
constitutes, and all agreements and other instruments and documents to be
executed and delivered by the Purchaser and AASI hereunder will constitute, the
Purchaser's and AASI's legal, valid and binding obligations, enforceable against
the Purchaser and AASI in accordance with their terms.
Section 3.2 Absence of Conflicts and Consent Requirements. The
Purchaser's and AASI's execution and delivery of this Agreement and performance
of its obligations hereunder, including the purchase of and payment for the
Subject Assets hereunder, do not and will not conflict with, violate or result
in any default under the Purchaser's or AASI's Articles of Incorporation or
Bylaws or any mortgage, indenture, agreement, instrument or other contract to
which the Purchaser or AASI is a party or by any judgment, order, decree, law,
statute, regulation or other judicial or governmental restriction to which the
Purchaser and AASI are subject. The Purchaser's and AASI's execution and
delivery of this Agreement and performance of its obligations hereunder,
including the purchase of and payment for the Subject Assets, do not and will
not require the consent of, or any prior
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filing with or notice to, any governmental authority or other third party.
Section 3.3 No Material Misstatements or Omissions. The representations
and warranties of the Purchaser and AASI in this Agreement do not contain any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements made therein not misleading.
ARTICLE IV
CERTAIN COVENANTS AND AGREEMENTS
Section 4.1 Change of the Seller's Name. Promptly after the Closing,
the Seller will take all action necessary to discontinue use of the Name and to
enable the Purchaser exclusively to use the Name, and at the Closing shall
deliver to the Purchaser all documents necessary to accomplish the foregoing.
Shareholders shall not operate under any corporate entity in any type of
aviation or aviation parts business.
Section 4.2 Maintenance of Records. Inasmuch as certain of the Seller's
books, records and documents are to be included as Subject Assets and sold to
the Purchaser hereunder, and certain other of the Seller's books, records and
documents are Excluded Assets to be retained by the Seller hereunder, and the
Purchaser or the Seller may have need to have access to the books, records and
documents held by the other after the Closing, the Purchaser and the Seller
agree that they shall each maintain for at least three years after the Closing
Date (or for such longer period as may be required by applicable law) the
respective books, records and documents sold or retained hereunder. During such
period, representatives of the Purchaser shall be permitted to inspect and make
copies of such books, records, accounting work papers and other documents
retained by the Seller during normal business hours and upon reasonable notice
for purposes related to the continuation by the Purchaser of the Seller's
business; and representatives of the Seller shall be permitted to inspect and
make copies of the books, records and documents sold to the Purchaser during
normal
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business hours and upon reasonable notice for purposes related to winding up its
affairs.
Section 4.3 Further Assurances. The Seller, the Shareholders and the
Purchaser each hereby covenants and agrees with the other that at any time and
from time to time each will promptly execute and deliver to the other such
further assurances, instruments and documents and take such further action as
the other may reasonably request in order to carry out the full intent and
purpose of this Agreement.
Section 4.4 Fees and Expenses. The Seller, the Shareholders and the
Purchaser shall each bear their own expenses in connection with the negotiation
and preparation of this Agreement and their consummation of the transactions
contemplated hereby, including without limitation the fees and expenses of their
respective counsel, accountants and consultants.
Section 4.5 No Brokers. The Seller and the Purchaser each represent and
warrant to the other that no broker or finder has been involved or engaged by it
in connection with the transactions contemplated hereby, and each hereby agrees
to indemnify and save harmless the other from and against any and all broker's
or finder's fees, commissions or similar charges incurred or alleged to have
been incurred by the indemnifying party in connection with the transactions
contemplated hereby and any and all loss, liability, cost or expense (including
reasonable attorneys' fees) arising out of any claim that the indemnifying party
incurred any such fees, commissions or charges.
Section 4.6 Bulk Transfer Compliance. Inasmuch as the Seller has agreed
to duly pay, perform and discharge the Excluded Liabilities and Obligations, the
Purchaser and the Seller hereby mutually agree to waive compliance with the
provisions of the Arizona Bulk Sales laws and of the corresponding laws of any
other jurisdiction, to the extent applicable to the transactions contemplated
hereby. The Seller covenants and agrees to indemnify and save harmless the
Purchaser from and against any and all loss, liability, cost and expense
(including reasonable attorneys' fees) arising out of noncompliance with said
Bulk Transfers.
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ARTICLE V
CONDITIONS TO CLOSING
Section 5.1 Conditions to the Purchaser's Obligations. The obligations
of the Purchaser and AASI to complete the Closing are contingent upon the
fulfillment of each of the following conditions on or before the Closing Date,
except to the extent that the Purchaser may, in its absolute discretion, waive
any one or more thereof in whole or in part:
(a) Instruments of Transfer. The Seller shall have delivered to the
Purchaser such assignments, bills of sale, deeds, certificates of title and
other instruments of transfer, all in form reasonably satisfactory to the
Purchaser, as are necessary to fully and effectively convey to the Purchaser all
of the Subject Assets in accordance with the terms hereof and shall have
executed the Consignment Agreement.
(b) Consents. The consents, if any, described in the Exhibits hereto,
and all other consents, if any, required for the Seller to perform its
obligations hereunder, shall have been obtained in form reasonably satisfactory
to the Purchaser.
(c) No Material Adverse Change. On the date of Closing, there shall not
have occurred any event or condition materially and adversely affecting the
financial condition, results of operations or business prospects of the Seller
except for matters resulting from adverse changes in economic conditions
affecting businesses generally.
(d) No Adverse Proceedings. No action, suit or proceeding before any
court or any governmental or regulatory authority shall have been commenced, no
investigation by any governmental or regulatory authority shall have been
commenced, and no action, suit or proceeding by any governmental or regulatory
authority shall have been threatened against any of the parties to this
Agreement, or any of the principals, officers or directors of any of them, or
any of the Subject Assets seeking to restrain, prevent or change the
transactions contemplated hereby or questioning the validity or legality of any
of such transactions or seeking damages in connection with any of such
transactions.
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(e) Other Assurances. The Seller shall have delivered to the Purchaser
such other and further certificates, assurances and documents as the Purchaser
or AASI may reasonably request in order to evidence the accuracy of the Seller's
representations and warranties, the performance of its covenants and agreements
to be performed at or prior to the Closing, and the fulfillment of the
conditions to the Purchaser's obligations.
(f) Lease of Facilities. Purchaser and Seller shall enter into leases
for the facilities in which Seller's business is presently located (the
"Leases").
(g) Director and Shareholder Approval. All necessary director and
shareholder approval shall be given by Seller. A legal opinion shall be given by
counsel to the Seller as to this provision.
(h) Employee Payroll Matters. Purchaser and Seller shall have resolved,
to Purchaser's and Seller's mutual satisfaction, the employee-related payroll
matters. Fulfillment of this obligation shall include, but not be limited to,
the filing of all outstanding returns for Arizona withholding liability and
federal employer/employee liability, FUTA and Medicare liability and payment of
all outstanding principal amounts due thereunder.
(i) Opinion of Seller's Counsel. The Purchaser shall have received from
counsel for the Seller an opinion dated as of the date of Closing in form and
substance satisfactory to the Purchaser and its counsel, to the effect that:
(i) Seller is a corporation duly organized, validly existing
and in good standing under the laws of Arizona.
(ii) All corporate or other proceedings required by law, the
Articles of Incorporation and the bylaws of the Seller in connection
with the authorization, execution and delivery of this Agreement and
the consummation of the transaction contemplated have been duly and
validly taken.
(iii) The Seller has the legal power and authority to
consummate this transaction.
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(iii) Except as disclosed in this Agreement, the Disclosure
Schedule or the Exhibits hereto, such counsel is not aware of any
pending or threatened action, suit, proceeding or investigation before
any court or any public, regulatory, or governmental agency, authority
or body, involving Seller or any of its existing officers or directors
and such counsel do not know of any legal matter or government
proceedings regarding Seller.
In rendering such an opinion, counsel for Seller may rely (i) as to
matters of fact, to the extent they deem proper, on certificates of responsible
officers of Seller; and (ii) to the extent they deem proper, upon written
statements or certificates of officers of departments of various jurisdictions
having custody of documents respecting the corporate existence or good standing
of Seller, provided that copies of any such statements or certificates shall be
delivered to counsel for the Purchaser.
(j) Articles of Incorporation, Bylaws, and Minutes. The Seller shall
have delivered to the Purchaser the Articles of Incorporation, the Bylaws, and
the corporate minutes of the Seller, along with a certificate, dated as of the
Closing Date, certifying as to the accuracy and completeness of such corporate
documents.
(k) Corporate Documents. The Seller shall deliver to the Purchaser at
the Closing the following:
(i) a good standing certificate issued by the Secretary of the
State of Arizona with respect to the Seller;
(ii) certified copies of resolutions of the shareholders and
board of directors of the Seller authorizing the execution, delivery
and performance by the Seller of this Agreement, the conveyance of the
Subject Assets and the transactions contemplated hereby; and
(iii) a certificate of the Seller certifying that each of the
obligations of the Seller to be performed on or before the Closing
pursuant to this Agreement shall have been duly performed as of the
Closing.
30
<PAGE> 31
Section 5.2 Conditions to the Seller's Obligations. The obligations of
the Seller to complete the Closing are contingent upon the fulfillment of each
of the following conditions on or before the Closing Date, except to the extent
that the Seller may, in its absolute discretion, waive any one or more thereof
in whole or in part:
(a) Payment of Purchase Price. The Purchaser shall have paid to the
Seller the Purchase Price or delivered promissory notes to the Seller.
(b) Employment Agreement. Purchaser shall enter into employment
agreements with Micah Chapman and Frank Zambo substantially in the form of
Exhibit 5.2(b) hereto.
(c) No Adverse Proceedings. No action, suit or proceeding before any
court or any governmental or regulatory authority shall have been commenced, no
investigation by any governmental or regulatory authority shall have been
commenced, and no action, suit or proceeding by any governmental or regulatory
authority shall have been threatened, against any of the parties to this
Agreement, or any of the principals, officers or directors of any of them, or
any of the Subject Assets, seeking to restrain, prevent or change the
transactions contemplated hereunder or questioning the validity or legality of
any of such transactions or seeking damages in connection with any of such
transactions.
(d) Other Assurances. The Purchaser shall have delivered to the Seller
such other and further certificates, assurances and documents as the Seller may
reasonably request in order to evidence the accuracy of the Purchaser's
representations and warranties, the performance of its covenants and agreements
to be performed at or prior to the Closing, and the fulfillment of the
conditions to the Seller's obligations.
(e) Opinion of the Purchaser's Counsel. The Purchaser shall have
furnished the Seller with an opinion, dated the date of Closing, of Gray,
Layton, Kersh, Solomon, Sigmon, Furr & Smith, P.A., counsel for the Purchaser
and AASI, in form and substance satisfactory to the Seller and its counsel, to
the effect that: (i) the Purchaser and AASI are corporations duly organized,
validly existing and in good standing under the laws of Arizona and
31
<PAGE> 32
Delaware respectively and has all requisite power and authority to execute and
deliver this Agreement and to perform their obligations under this Agreement;
(ii) all corporate or other proceedings required by law, the Articles of
Incorporation and By-laws of Purchaser and AASI or by the provisions of this
Agreement to be taken by the Purchaser and AASI on or before the date of
Closing, in connection with the authorization, execution and delivery of this
Agreement and the consummation of the transaction contemplated by this
Agreement, have been duly and validly taken; and (iii) the Purchaser and AASI
have the legal power and authority to consummate this transaction.
ARTICLE VI
INDEMNIFICATION
Section 6.1 Indemnification by the Seller and Shareholders. Subject to
the procedures and limitations set forth in this Article VI, the Seller and
Shareholders (except for Glen Hiscox), jointly and severally, hereby agree to
indemnify and save harmless the Purchaser from and against any and all
liabilities, losses, claims, judgments, damages, expenses and costs (including,
without limitation reasonable counsel fees and costs and expenses incurred in
connection therewith) (a "Loss") incurred by the Purchaser arising after the
Closing out of any of the following:
(a) Breach of Warranty. The falsity or incorrectness of any
representation or warranty made by the Seller or Shareholders in this Agreement
or in any instrument or document delivered by the Seller or Shareholders to the
Purchaser pursuant to this Agreement;
(b) Breach of Covenants. The Seller's failure to duly perform any
covenant or agreement to be performed by it under this Agreement or under any
instrument or document delivered by the Seller to the Purchaser pursuant to this
Agreement;
(c) Claims Against Subject Assets. Any levy or other claim by any third
party against or with respect to the Subject Assets, or
32
<PAGE> 33
any other claim by any third party against the Purchaser, arising out of any act
or omission or alleged act or omission of the Seller or Shareholders prior to
the Closing.
The Purchaser shall have the right to be put in the same financial
position as it would have been in had each of the representations and warranties
of the Seller and Shareholders been true and correct or had the Seller or
Shareholders not breached any representations, warranties, covenants or
agreements, whether by payment by Seller or shareholders or by offset against
any future monies owed to the same.
Section 6.2 Survival of the Seller's and Shareholders' Warranties. The
representations and warranties of the Seller and Shareholders made in this
Agreement or in any instrument or document delivered by the Seller or
Shareholders to the Purchaser pursuant to this Agreement shall survive the
Closing.
Section 6.3 Indemnification by the Purchaser. After the Closing, the
Purchaser agrees that it will indemnify and save harmless the Seller from and
against any and all loss, liability, damages, cost or expense (including
reasonable attorneys' fees) incurred by the Seller (net of any benefits to the
Seller) arising out of the Purchaser's breach of any of its representations,
warranties, covenants and agreements in this Agreement or in any document
delivered by the Purchaser to the Seller hereunder.
Section 6.4 Matters Involving Third Parties. If any third party shall
notify any Party (the "Indemnified Party") with respect to any matter which may
give rise to a claim for indemnification against any other Party (the
"Indemnifying Party") under this Article, then the Indemnified Party shall
notify each Indemnifying Party thereof promptly; provided, however, that no
delay on the part of the Indemnified Party in notifying any Indemnifying Party
shall relieve the Indemnifying Party from any liability or obligation hereunder
unless (and then solely to the extent) the Indemnifying Party thereby is
damaged. Within 15 days after the Indemnified Party has given notice of the
matter the Indemnifying Party may notify the Indemnified Party that the
Indemnifying Party is going to cure the matter and release the Indemnified Party
from any and all liability with respect thereto. In the event any Indemnifying
Party notifies the Indemnified Party within 15 days
33
<PAGE> 34
after the Indemnified Party has given notice of the matter that the Indemnifying
Party is assuming the defense thereof, (A) the Indemnifying Party will defend
the Indemnified Party against the matter with counsel of its choice reasonably
satisfactory to the Indemnified Party, (B) the Indemnified Party may retain
separate co-counsel (at its cost), (C) the Indemnified Party will not consent to
the entry of any judgment or enter into any settlement with respect to the
matter without the written consent of the Indemnifying Party (not to be withheld
unreasonably), and (D) the Indemnifying Party will not consent to the entry of
any judgment with respect to the matter, or enter into any settlement which does
not include a provision whereby the plaintiff or claimant in the matter releases
the Indemnified Party from all Liability with respect thereto, without the
written consent of the Indemnified Party (not to be withheld unreasonably). In
the event no Indemnifying Party notifies the Indemnified Party with 15 days
after the Indemnified Party has given notice of the matter, the Indemnified
Party may defend against, or enter into any settlement with respect to, the
matter in any manner it reasonably may deem appropriate.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Merger Clause. This Agreement contains the final, complete
and exclusive statement of the agreement between the parties with respect to the
transactions contemplated herein and all prior or contemporaneous written or
oral agreements with respect to the subject matter hereof are merged herein.
Section 7.2 Amendments. No change, amendment, qualification or
cancellation hereof shall be effective unless in writing and executed by each of
the parties hereto by their duly authorized officers.
Section 7.3 Press Releases and Announcements. No party shall issue any
press release or announcement relating to the subject matter of this Agreement
prior to the Closing without the prior written approval of the other party;
provided, however, that any party may make any public disclosure it believes in
good faith is
34
<PAGE> 35
required by law or regulation (in which case the disclosing party will advise
the other party prior to making the disclosure).
Section 7.4 Benefits and Binding Effect. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, personal representatives, successors, transferees and assigns.
Section 7.5 Notices. All notices, requests and demands and other
communications hereunder must be in writing and shall be deemed to have been
duly given when (i) personally delivered, (ii) when forwarded by Federal
Express, Airborne or another private carrier which maintains records showing
delivery information, (iii) when sent via facsimile transmission but only if a
written or facsimile acknowledge of receipt is received by the sending party, or
(iv) when placed in the United States Mails and forwarded by Registered or
Certified Mail, return receipt requested, postage prepaid, addressed to the
party to whom such notice is being given at the following addresses:
<TABLE>
<S> <C>
AS TO THE SELLER: Complete Controls, Inc.
850 E. Teton Rd, Suite 8
Tucson, AZ 85706
WITH COPY TO: Mark J. Valentine
Monroe & Associates
6280 E. Pima, Suite 106
Tucson, AZ 85712
AS TO THE PURCHASER: American Aircarriers Support,
Incorporated
Attn: Joseph E. Civiletto
P. O. Box 7566
Charlotte, NC 28241
WITH COPY TO: David M. Furr
Gray, Layton, Kersh, Solomon,
Sigmon, Furr & Smith, P.A.
P. O. Box 2636
Gastonia, NC 28053-2636
</TABLE>
35
<PAGE> 36
Any party may change the address(es) to which notices to it are to be sent by
giving notice of such change to the other parties in accordance with this
Section.
Section 7.6 Captions. The captions are for convenience of reference
only and shall not be construed as a part of this Agreement.
Section 7.7 Governing Law. This Agreement shall be construed,
interpreted, enforced and governed by and under the laws of the State of South
Carolina.
Section 7.8 Submission to Jurisdiction. Each of the parties submits to
the jurisdiction of any state or federal court sitting in South Carolina in any
action or proceeding arising out of or relating to this Agreement, agrees that
all claims in respect of the action or proceeding may be heard and determined in
any such court, and agrees not to bring any action or proceeding arising out of
or relating to this Agreement in any other court. Each of the parties waives any
defense of inconvenient forum to the maintenance of any action or proceeding so
brought and waives any bond, surety, or other security that might be required of
any other party with respect thereto by suit on the judgment or in any other
manner provided by law.
Section 7.9 No Third-Party Beneficiaries. This Agreement is not
intended to be for the benefit of and shall not be enforceable by any person who
or which is not a party hereto (or a permitted assign or successor to such
party).
Section 7.10 Exhibits. All of the Exhibits hereto referred to in this
Agreement are hereby incorporated herein by reference and shall be deemed and
construed to be a part of this Agreement for all purposes.
Section 7.11 Severability. The invalidity or unenforceability of any
one or more phrases, sentences, clauses or provisions of this Agreement shall
not affect the validity or enforceability of the remaining portions of this
Agreement or any part thereof.
36
<PAGE> 37
Section 7.12 Counterparts. This Agreement may be executed in
any number of counterparts, all of which shall constitute one and
the same instrument.
IN WITNESS WHEREOF, the Seller and the Purchaser have each caused this
Agreement to be executed by their respective duly authorized officers under
seal, all as of the day and year first above written.
<TABLE>
<S> <C>
SELLER:
ATTEST: COMPLETE CONTROLS, INC.
/s/ Frank Zambo /s/ Micah Chapman
- -------------------------------- ------------------------------------ (SEAL)
Secretary President
/s/ Micah Chapman
------------------------------------ (SEAL)
Micah Chapman
/s/ Glen Hiscox
------------------------------------ (SEAL)
Glen Hiscox
/s/ Frank Zambo
------------------------------------ (SEAL)
Frank Zambo
PURCHASER:
AMERICAN AIRCARRIERS SUPPORT
ATTEST: ACQUISITION IV CORP.
/s/ Elaine T. Rudisill By /s/ Joseph E. Civiletto
- -------------------------------- ------------------------------------
Asst. Secretary President
AMERICAN AIRCARRIERS SUPPORT,
ATTEST: INCORPORATED
/s/ Elaine T. Rudisill By /s/ Joseph E. Civiletto
- -------------------------------- ------------------------------------
Asst. Secretary President
</TABLE>
37
<PAGE> 1
EXHIBIT 10.1.8
EXECUTIVE EMPLOYMENT AGREEMENT
EXECUTIVE EMPLOYMENT AGREEMENT effective April 1, 1999 (the
"Agreement") by and between AMERICAN AIRCARRIERS SUPPORT, INCORPORATED (the
"Company") with principal offices at Fort Mill, South Carolina and MICAH CHAPMAN
(the "Employee").
NOW THEREFORE, in consideration of the foregoing premises and mutual
covenants herein contained, the parties hereto agree as follows:
1. Employment. The Company agrees to employ the Employee and the
Employee agrees to serve the Company as the President of a newly formed
subsidiary that acquired the assets of Complete Controls, Inc. ("CCI").
2. Position and Responsibilities. The Employee shall exert his best
efforts and devote full time and attention to the affairs of the Company.
Employee shall have no ownership in or operate any other active closely-held
corporation or business entity in the aviation or aviation parts or overhaul
business. The Employee shall have the authority and responsibility given by the
general direction, approval and control of the Board of Directors, Chief
Executive Officer, and President/Chief Operating Officer of the Company, to the
restrictions, limitations and guidelines set forth by the Board of Directors in
resolutions adopted in the minutes of the Board of Directors meetings, copies of
which will be provided to the Employee from time to time and will be
incorporated herein by reference.
3. Term of Employment. The term of the Employee's employment under this
Agreement shall be deemed to have commenced on April 1, 1999 and shall continue
until April 1, 2002, (the "Initial Term"), subject to extension as hereinafter
provided or termination pursuant to the provisions set forth hereafter. Provided
that Employee is in compliance with all of his obligations hereunder, the term
of Employee's employment shall be automatically extended for two (2) additional
one-year terms upon expiration of the Initial Term unless either party hereto
receives 30 days' prior written notice from the other electing not to extend the
Employee's employment. Compensation during the term shall be that set forth in
Section 5 hereof, unless one of the termination provisions overrides.
<PAGE> 2
4. Duties. During the period of his employment hereunder and except for
illness, specified vacation periods and reasonable leaves of absence, the
Employee shall devote his best efforts and full attention and skill to the
business and affairs of the Company and its affiliated companies, as such
business and affairs now exist and as they may be hereinafter changed or added
to, under and pursuant to the general direction of the Board of Directors of the
Company.
5. Compensation. Commencing on April 1, 1999, the Company shall pay to
the Employee as compensation for his services the sum of $150,000.00 per year,
payable semi-monthly. Base compensation shall be reviewed annually by the
Compensation Committee of the Company. Employee shall also be eligible to
periodic stock option grants subject to the discretion of the Compensation
Committee of the Board of Directors. Concurrently with Employee's hire, Employee
shall be granted options to purchase 5,000 shares of Company's common stock at
the exercise price equal to the closing price of Company's common stock on the
date of the grant with vesting as set forth in the Plan.
6. Employee's Incentive Pay. In addition to the compensation set forth
in Section 5 hereof, an EBITDA incentive compensation bonus shall be available
to Employee for each of the years of Employee's employment and shall be computed
from the following formula based on CCI's financial performance. The bonus
payments ("Payments") shall be calculated on a cumulative basis with respect to
each calendar year period as described below, beginning April 1, 1999, and shall
be paid, subject to the restrictions of such payment contained in this Agreement
and subject to applicable federal and local income tax and other payroll
withholding requirements, as follows: eighty percent (80%) of the amount payable
with respect to Employee shall be paid on or before January 31st of the
following year, and the balance shall be paid on the earlier of May 31st or the
date on which the audited financial statements for the Company which includes
the results for CCI for the applicable calendar year are issued by Company's
independent auditors. All amounts payable shall be paid directly to the
Employee, provided Employee is employed by the Company.
The Payments with respect to each calendar year (the "Period Payment")
shall be a percentage (the "Allocable Percentage") of Employee's base salary as
set forth in Section 5 of this Agreement for such year determined in accordance
with the level
<PAGE> 3
(the "Applicable Earnings Level") of earnings (taking into account Payments made
hereunder) before interest, taxes, depreciation and amortization ("EBITDA") of
CCI for such Period. The Applicable Earnings Level shall be a percentage of the
management case level of EBITDA during any Period (the "Management Case
EBITDA"), as listed on Schedule 6 attached hereto, and the corresponding
Allocable Percentage for each Applicable Earnings Level shall be as listed on
Schedule 6. Actual EBITDA with respect to any Period shall be determined by the
Company based on the financial statements of CCI, included in the audited
financial statements of the Company.
7. Expense Reimbursement. The Company will reimburse the Employee, at
least semi-monthly, for all reasonable and necessary expenses, including without
limitation, travel expenses, and reasonable entertainment expenses, incurred by
him in carrying out his duties under this Agreement. The Employee shall present
to the Company each month an account of such expenses in such form as is
reasonably required by the Board of Directors.
8. Medical and Dental Coverage. Commencing with employment, the
Employee will be entitled to participate in the Company's employee group medical
and other group insurance programs on the same basis as other employees of the
Company.
9. Medical Examination. The Employee agrees to submit himself for
physical examination on one occasion per year as requested by the Company for
the purpose of the Company's obtaining life insurance on the life of the
Employee for the benefit of the Company as may be required; provided, however,
that the Company shall bear the entire cost of such examinations and shall pay
all premiums on any key man life insurance obtained for the benefit of the
Company as beneficiary or with respect to any other designated beneficiary.
10. Vacation Time. The Employee shall be entitled each year to a
reasonable vacation in accordance with the established practices of the Company,
now or hereafter in effect for the executive personnel, during which time the
Employee's compensation shall be paid in full.
11. Benefits Payable on Disability. If the Employee becomes disabled
such that he is unable to properly perform services hereunder by reason of
illness or other physical or mental incapacity, the Company shall continue to
pay the Employee
<PAGE> 4
his then current salary hereunder for the first three (3) months of such
continuous disability commencing with the first date of such disability.
12. Obligations of Employee During and After Employment.
(a) The Employee agrees that during the terms of his
employment under this Agreement, he will engage in no other business
activities directly or indirectly, which are competitive with or which
might place him in a competing position to that of the Company, or any
affiliated company.
(b) The Employee realizes that during the course of his
employment, Employee will have produced and/or have access to
confidential business plans, information, business opportunity records,
notebooks, data, formula, specifications, trade secrets, customer
lists, account lists and secret inventions and processes of the Company
and its affiliated companies. Therefore, during or subsequent to his
employment by the Company, or by an affiliated company, the Employee
agrees to hold in confidence and not to directly or indirectly disclose
or use or copy or make lists of any such information, except to the
extent authorized by the Company in writing. All records, files,
business plans, documents, equipment and the like, or copies thereof,
relating to Company's business, or the business of an affiliated
company, which Employee shall prepare, or use, or come into contact
with, shall remain the sole property of the Company, or of an
affiliated company, and shall not be removed from the Company's or the
affiliated company's premises without its written consent, and shall be
promptly returned to the Company upon termination of employment with
the Company and its affiliated companies. The restrictions and
obligations of Employee set forth in this Section 12(b) shall not apply
to (i) information that is or becomes generally available and known to
the industry (other than as a result of a disclosure directly or
indirectly by Employee); or (ii) information that was known to Employee
prior to Employee's employment by the Company or its predecessor.
(c) Because of his employment by the Company, Employee shall
have access to trade secrets and confidential information about the
Company, its business plans, its business accounts, its business
opportunities, its expansion
<PAGE> 5
plans into other geographical areas and its methods of doing business.
Employee agrees that for a period of two (2) years after termination or
expiration of his employment, he will not, directly or indirectly,
compete with the Company in its then present business or anticipated
lines in the aviation business. Further, for the same two (2) year
period, Employee shall not hire or entice to hire any employees of
Company to any other business Employee may pursue following termination
or expiration of employment.
(d) In the event a court of competent jurisdiction finds any
provision of this Section 12 to be so overbroad as to be unenforceable,
then such provision shall be reduced in scope by the court, but only to
the extent deemed necessary by the court to render the provision
reasonable and enforceable, it being the Employee's intention to
provide the Company with the broadest protection possible against
harmful competition.
13. Termination for Cause by the Company. The Company may, without
liability, terminate the Employee's employment hereunder for cause at any time
upon written notice from the Board of Directors specifying such cause, and
thereafter the Company's obligations hereunder shall cease and terminate;
provided, however, that such written notice shall not be delivered until after
the Board of Directors shall have given the Employee written notice specifying
the conduct alleged to have constituted such cause and the Employee has failed
to cure such conduct, if curable, within fifteen (15) days following receipt of
such notice.
Grounds for termination "for cause" are one or more of the following:
(a) A willful breach of a material duty by the
Employee during the course of his employment;
(b) Habitual neglect of a material duty by the
Employee;
(c) Action or inaction by the Employee which places the
Company in circumstances of financial peril;
(d) Fraud on the Company or conviction of a felony involving
or against the Company; and
<PAGE> 6
(e) Ownership or operation of any other closely-held
corporation or business entity actively engaged in the aviation or
aviation parts business.
14. Termination by the Employee or the Company Without Cause.
(a) The Employee, without cause, may terminate this Agreement
upon 90 days prior written notice to the Company. In such event, the
Employee shall be required to render the services required under this
Agreement during such 90-day period unless otherwise directed by the
Board of Directors. Compensation for vacation time not taken by
Employee shall be paid to the Employee at the date of termination.
Employee shall be paid for only the ninety (90) day period pursuant to
normal pay practices and then all obligations hereunder regarding
compensation in any form shall cease.
(b) The Company, without cause, may terminate this Agreement.
In such event, the Company shall pay a severance allowance equal to the
balance of the contract payable over the term of the contract at
regular monthly installments unless the parties negotiate a mutually
acceptable discounted lump sum. No other benefits will be provided once
this Agreement is terminated and all other obligations hereunder
regarding compensation in any form shall cease.
15. Termination upon Death of Employee. In addition to any other
provision relating to the termination, this Agreement shall terminate upon the
Employee's death. In such event, the Company shall pay a severance allowance
equal to one hundred eighty (180) days' salary to the Employee's estate, which
may be covered by an insurance policy.
16. Arbitration. Any controversy, dispute or claim arising out of, or
relating to, this Agreement and/or its interpretation shall, unless resolved by
agreement of the parties, be settled by binding arbitration in Charlotte, North
Carolina in accordance with the Rules of the American Arbitration Association
then existing. This Agreement to arbitrate shall be specifically enforceable
under the prevailing arbitration law of the State of South Carolina. The award
rendered by the arbitrators shall be final and judgment may be entered upon the
award in any court of the State of South Carolina having jurisdiction of the
matter.
<PAGE> 7
17. General Provisions.
(a) The Employee's rights and obligations under this Agreement
shall not be transferrable by assignment or otherwise, nor shall
Employee's rights be subject to encumbrance or to the claims of the
Company's creditors. Nothing in this Agreement shall prevent the
consolidation of the Company with, or its merger into, any other
corporation, or the sale by the Company of all or substantially all of
its property or assets.
(b) This Agreement and the rights of Employee with respect to
the benefits of employment referred to herein constitute the entire
Agreement between the parties hereto in respect of the employment of
the Employee by the Company and supersede any and all other agreements
either oral or in writing between the parties hereto with respect to
the employment of the Employee. The parties however acknowledge a
separate Confidentiality and Noncompetition Agreement which shall stand
on its own separate and apart from this Agreement.
(c) The provisions of this Agreement shall be regarded as
divisible, and if any of said provisions or any part thereof are
declared invalid or unenforceable by a court of competent jurisdiction
or in an arbitration proceeding, the validity and enforceability of the
remainder of such provisions or parts thereof and the applicability
thereof shall not be affected thereby.
(d) This Agreement may not be amended or modified except by a
written instrument executed by Company and Employee.
(e) This Agreement and the rights and obligations hereunder
shall be governed by and construed in accordance with the laws of the
State of South Carolina.
18. Construction. Throughout this Agreement the singular shall include
the plural, and the plural shall include the singular, and the masculine and
neuter shall include the feminine, wherever the context so requires.
19. Text to Control. The headings of paragraphs and sections are
included solely for convenience of reference. If any conflict between any
heading and the text of this Agreement exists, the text shall control.
<PAGE> 8
20. Authority. The officer executing this agreement on behalf of the
Company has been empowered and directed to do so by the Board of Directors of
the Company.
21. Effective Date. This Agreement shall be effective on as of the date
cited above.
FOR THE COMPANY: AMERICAN AIRCARRIERS SUPPORT,
INCORPORATED
Dated April 1. 1999 By: /s/ JOSEPH E. CIVILETTO
-------------------- -----------------------------
Title: President
-----------------------------
FOR THE EMPLOYEE:
Dated April 1, 1999 /s/ MICAH CHAPMAN (SEAL)
-------------------- -----------------------------
MICAH CHAPMAN
<PAGE> 1
EXHIBIT 10.1.9
EXECUTIVE EMPLOYMENT AGREEMENT
EXECUTIVE EMPLOYMENT AGREEMENT effective April 1, 1999 (the
"Agreement") by and between AMERICAN AIRCARRIERS SUPPORT, INCORPORATED (the
"Company") with principal offices at Fort Mill, South Carolina and FRANK ZAMBO
(the "Employee").
NOW THEREFORE, in consideration of the foregoing premises and mutual
covenants herein contained, the parties hereto agree as follows:
1. Employment. The Company agrees to employ the Employee and the
Employee agrees to serve the Company as the Vice President of a newly formed
subsidiary that acquired the assets of Complete Controls, Inc. ("CCI").
2. Position and Responsibilities. The Employee shall exert his best
efforts and devote full time and attention to the affairs of the Company.
Employee shall have no ownership in or operate any other active closely-held
corporation or business entity in the aviation or aviation parts or overhaul
business. The Employee shall have the authority and responsibility given by the
general direction, approval and control of the Board of Directors, Chief
Executive Officer, and President/Chief Operating Officer of the Company, to the
restrictions, limitations and guidelines set forth by the Board of Directors in
resolutions adopted in the minutes of the Board of Directors meetings, copies of
which will be provided to the Employee from time to time and will be
incorporated herein by reference.
3. Term of Employment. The term of the Employee's employment under this
Agreement shall be deemed to have commenced on April 1, 1999 and shall continue
until April 1, 2002, (the "Initial Term"), subject to extension as hereinafter
provided or termination pursuant to the provisions set forth hereafter. Provided
that Employee is in compliance with all of his obligations hereunder, the term
of Employee's employment shall be automatically extended for two (2) additional
one-year terms upon expiration of the Initial Term unless either party hereto
receives 30 days' prior written notice from the other electing not to extend the
Employee's employment. Compensation during the term shall be that set forth in
Section 5 hereof, unless one of the termination provisions overrides.
<PAGE> 2
4. Duties. During the period of his employment hereunder and except for
illness, specified vacation periods and reasonable leaves of absence, the
Employee shall devote his best efforts and full attention and skill to the
business and affairs of the Company and its affiliated companies, as such
business and affairs now exist and as they may be hereinafter changed or added
to, under and pursuant to the general direction of the Board of Directors of the
Company.
5. Compensation. Commencing on April 1, 1999, the Company shall pay to
the Employee as compensation for his services the sum of $125,000.00 per year,
payable semi-monthly. Base compensation shall be reviewed annually by the
Compensation Committee of the Company. Employee shall also be eligible to
periodic stock option grants subject to the discretion of the Compensation
Committee of the Board of Directors. Concurrently with Employee's hire, Employee
shall be granted options to purchase 2,500 shares of Company's common stock at
the exercise price equal to the closing price of Company's common stock on the
date of the grant with vesting as set forth in the Plan.
6. Employee's Incentive Pay. In addition to the compensation set forth
in Section 5 hereof, an EBITDA incentive compensation bonus shall be available
to Employee for each of the years of Employee's employment and shall be computed
from the following formula based on CCI's financial performance. The bonus
payments ("Payments") shall be calculated on a cumulative basis with respect to
each calendar year period as described below, beginning April 1, 1999, and shall
be paid, subject to the restrictions of such payment contained in this Agreement
and subject to applicable federal and local income tax and other payroll
withholding requirements, as follows: eighty percent (80%) of the amount payable
with respect to Employee shall be paid on or before January 31st of the
following year, and the balance shall be paid on the earlier of May 31st or the
date on which the audited financial statements for the Company which includes
the results for CCI for the applicable calendar year are issued by Company's
independent auditors. All amounts payable shall be paid directly to the
Employee, provided Employee is employed by the Company.
The Payments with respect to each calendar year (the "Period Payment")
shall be a percentage (the "Allocable Percentage") of Employee's base salary as
set forth in Section 5 of this Agreement for such year determined in accordance
with the level
<PAGE> 3
(the "Applicable Earnings Level") of earnings (taking into account Payments made
hereunder) before interest, taxes, depreciation and amortization ("EBITDA") of
CCI for such Period. The Applicable Earnings Level shall be a percentage of the
management case level of EBITDA during any Period (the "Management Case
EBITDA"), as listed on Schedule 6 attached hereto, and the corresponding
Allocable Percentage for each Applicable Earnings Level shall be as listed on
Schedule 6. Actual EBITDA with respect to any Period shall be determined by the
Company based on the financial statements of CCI, included in the audited
financial statements of the Company.
7. Expense Reimbursement. The Company will reimburse the Employee, at
least semi-monthly, for all reasonable and necessary expenses, including without
limitation, travel expenses, and reasonable entertainment expenses, incurred by
him in carrying out his duties under this Agreement. The Employee shall present
to the Company each month an account of such expenses in such form as is
reasonably required by the Board of Directors.
8. Medical and Dental Coverage. Commencing with employment, the
Employee will be entitled to participate in the Company's employee group medical
and other group insurance programs on the same basis as other employees of the
Company.
9. Medical Examination. The Employee agrees to submit himself for
physical examination on one occasion per year as requested by the Company for
the purpose of the Company's obtaining life insurance on the life of the
Employee for the benefit of the Company as may be required; provided, however,
that the Company shall bear the entire cost of such examinations and shall pay
all premiums on any key man life insurance obtained for the benefit of the
Company as beneficiary or with respect to any other designated beneficiary.
10. Vacation Time. The Employee shall be entitled each year to a
reasonable vacation in accordance with the established practices of the Company,
now or hereafter in effect for the executive personnel, during which time the
Employee's compensation shall be paid in full.
11. Benefits Payable on Disability. If the Employee becomes disabled
such that he is unable to properly perform services hereunder by reason of
illness or other physical or mental incapacity, the Company shall continue to
pay the Employee
<PAGE> 4
his then current salary hereunder for the first three (3) months of such
continuous disability commencing with the first date of such disability.
12. Obligations of Employee During and After Employment.
(a) The Employee agrees that during the terms of his employment
under this Agreement, he will engage in no other business activities
directly or indirectly, which are competitive with or which might
place him in a competing position to that of the Company, or any
affiliated company.
(b) The Employee realizes that during the course of his
employment, Employee will have produced and/or have access to
confidential business plans, information, business opportunity
records, notebooks, data, formula, specifications, trade secrets,
customer lists, account lists and secret inventions and processes of
the Company and its affiliated companies. Therefore, during or
subsequent to his employment by the Company, or by an affiliated
company, the Employee agrees to hold in confidence and not to directly
or indirectly disclose or use or copy or make lists of any such
information, except to the extent authorized by the Company in
writing. All records, files, business plans, documents, equipment and
the like, or copies thereof, relating to Company's business, or the
business of an affiliated company, which Employee shall prepare, or
use, or come into contact with, shall remain the sole property of the
Company, or of an affiliated company, and shall not be removed from
the Company's or the affiliated company's premises without its written
consent, and shall be promptly returned to the Company upon
termination of employment with the Company and its affiliated
companies. The restrictions and obligations of Employee set forth in
this Section 12(b) shall not apply to (i) information that is or
becomes generally available and known to the industry (other than as a
result of a disclosure directly or indirectly by Employee); or (ii)
information that was known to Employee prior to Employee's employment
by the Company or its predecessor.
(c) Because of his employment by the Company, Employee shall have
access to trade secrets and confidential information about the
Company, its business plans, its business accounts, its business
opportunities, its expansion
<PAGE> 5
plans into other geographical areas and its methods of doing business.
Employee agrees that for a period of two (2) years after termination
or expiration of his employment, he will not, directly or indirectly,
compete with the Company in its then present business or anticipated
lines in the aviation business. Further, for the same two (2) year
period, Employee shall not hire or entice to hire any employees of
Company to any other business Employee may pursue following
termination or expiration of employment.
(d) In the event a court of competent jurisdiction finds any
provision of this Section 12 to be so overbroad as to be
unenforceable, then such provision shall be reduced in scope by the
court, but only to the extent deemed necessary by the court to render
the provision reasonable and enforceable, it being the Employee's
intention to provide the Company with the broadest protection possible
against harmful competition.
13. Termination for Cause by the Company. The Company may, without
liability, terminate the Employee's employment hereunder for cause at any time
upon written notice from the Board of Directors specifying such cause, and
thereafter the Company's obligations hereunder shall cease and terminate;
provided, however, that such written notice shall not be delivered until after
the Board of Directors shall have given the Employee written notice specifying
the conduct alleged to have constituted such cause and the Employee has failed
to cure such conduct, if curable, within fifteen (15) days following receipt of
such notice.
Grounds for termination "for cause" are one or more of the following:
(a) A willful breach of a material duty by the Employee during
the course of his employment;
(b) Habitual neglect of a material duty by the Employee;
(c) Action or inaction by the Employee which places the Company
in circumstances of financial peril;
(d) Fraud on the Company or conviction of a felony involving or
against the Company; and
<PAGE> 6
(e) Ownership or operation of any other closely-held corporation
or business entity actively engaged in the aviation or aviation parts
business.
14. Termination by the Employee or the Company Without Cause.
(a) The Employee, without cause, may terminate this Agreement
upon 90 days prior written notice to the Company. In such event, the
Employee shall be required to render the services required under this
Agreement during such 90-day period unless otherwise directed by the
Board of Directors. Compensation for vacation time not taken by
Employee shall be paid to the Employee at the date of termination.
Employee shall be paid for only the ninety (90) day period pursuant to
normal pay practices and then all obligations hereunder regarding
compensation in any form shall cease.
(b) The Company, without cause, may terminate this Agreement. In
such event, the Company shall pay a severance allowance equal to the
balance of the contract payable over the term of the contract at
regular monthly installments unless the parties negotiate a mutually
acceptable discounted lump sum. No other benefits will be provided
once this Agreement is terminated and all other obligations hereunder
regarding compensation in any form shall cease.
15. Termination upon Death of Employee. In addition to any other
provision relating to the termination, this Agreement shall terminate upon the
Employee's death. In such event, the Company shall pay a severance allowance
equal to one hundred eighty (180) days' salary to the Employee's estate, which
may be covered by an insurance policy.
16. Arbitration. Any controversy, dispute or claim arising out of, or
relating to, this Agreement and/or its interpretation shall, unless resolved by
agreement of the parties, be settled by binding arbitration in Charlotte, North
Carolina in accordance with the Rules of the American Arbitration Association
then existing. This Agreement to arbitrate shall be specifically enforceable
under the prevailing arbitration law of the State of South Carolina. The award
rendered by the arbitrators shall be final and judgment may be entered upon the
award in any court of the State of South Carolina having jurisdiction of the
matter.
<PAGE> 7
17. General Provisions.
(a) The Employee's rights and obligations under this Agreement
shall not be transferrable by assignment or otherwise, nor shall
Employee's rights be subject to encumbrance or to the claims of the
Company's creditors. Nothing in this Agreement shall prevent the
consolidation of the Company with, or its merger into, any other
corporation, or the sale by the Company of all or substantially all of
its property or assets.
(b) This Agreement and the rights of Employee with respect to the
benefits of employment referred to herein constitute the entire
Agreement between the parties hereto in respect of the employment of
the Employee by the Company and supersede any and all other agreements
either oral or in writing between the parties hereto with respect to
the employment of the Employee. The parties however acknowledge a
separate Confidentiality and Noncompetition Agreement which shall
stand on its own separate and apart from this Agreement.
(c) The provisions of this Agreement shall be regarded as
divisible, and if any of said provisions or any part thereof are
declared invalid or unenforceable by a court of competent jurisdiction
or in an arbitration proceeding, the validity and enforceability of
the remainder of such provisions or parts thereof and the
applicability thereof shall not be affected thereby.
(d) This Agreement may not be amended or modified except by a
written instrument executed by Company and Employee.
(e) This Agreement and the rights and obligations hereunder shall
be governed by and construed in accordance with the laws of the State
of South Carolina.
18. Construction. Throughout this Agreement the singular shall include
the plural, and the plural shall include the singular, and the masculine and
neuter shall include the feminine, wherever the context so requires.
19. Text to Control. The headings of paragraphs and sections are
included solely for convenience of reference. If any conflict between any
heading and the text of this Agreement exists, the text shall control.
<PAGE> 8
20. Authority. The officer executing this agreement on behalf of the
Company has been empowered and directed to do so by the Board of Directors of
the Company.
21. Effective Date. This Agreement shall be effective on as of the date
cited above.
FOR THE COMPANY: AMERICAN AIRCARRIERS SUPPORT,
INCORPORATED
Dated April 1, 1999 By /s/ Joseph E. Civiletto
---------------------- -----------------------------
Title: President
--------------------------
FOR THE EMPLOYEE:
Dated April 1, 1999 /s/ Frank Zambo (SEAL)
--------------------- -----------------------------
FRANK ZAMBO
<PAGE> 1
EXHIBIT 10.5.10
850 E. TETON
INDUSTRIAL SUBLEASE
EFFECTIVE DATE: JANUARY 1, 1998
PARTIES AND ADDRESSES:
"AUTHORITY": TUCSON AIRPORT AUTHORITY, INC.,
an Arizona nonprofit corporation
7005 S. Plumer Avenue
Tucson, Arizona 85706
"TENANT": COMPLETE CONTROLS INC.
AN ARIZONA CORPORATION
850 E. TETON RD. SUITE 8
TUCSON, ARIZONA 85706
EXHIBITS: Exhibits lettered A and B are annexed to this Sublease
and incorporated herein by this reference.
<PAGE> 2
RECITALS
A. Authority has leased from the City of Tucson, a municipal corporation,
the airport known as Tucson International Airport located in Pima
County, State of Arizona (the "Airport").
B. Tenant desires to sublease from Authority a portion of the Airport and
to have certain rights, licenses, services and privileges in connection
with the Airport.
COVENANTS AND CONDITIONS
ARTICLE I - PREMISES
1.1 PREMISES
Authority does hereby demise and let unto Tenant, for its exclusive use
and occupancy, and Tenant does hereby lease from Authority, the portion
of the Airport that is illustrated on the attached Exhibit A, of the
Building (the "Building"), located at 850 E. TETON RD on the Airport
(the "Premises"), THIRTY EIGHT THOUSAND FOUR HUNDRED (38,400) SQUARE
FEET IN THE NORTH END OF HANGAR ONE AND THREE THOUSAND FIVE HUNDRED
(3,500) SQUARE FEET OF OFFICE SPACE DIRECTLY EAST OF HANGAR ONE subject
to all utility easements and rights of way that encumber the Premises
and subject to the terms hereof..
1.2 ACCESS
Tenant is granted the right of reasonable access to the Premises over
such other portions of the Airport and the Building as are necessary to
provide reasonable access to and from the Premises. Authority reserves
the right to designate the location of such access and to change its
location from time to time, as Authority deems reasonably necessary and
appropriate.
1.3 SECURITY
By signing this Sublease, Tenant is deemed to acknowledge and is hereby
advised that the Building houses a number of rental spaces and diverse
tenants. Tenant is responsible for securing Tenant's Premises, and
neither the Authority nor its agents or employees will be responsible
for any loss of or damage to Tenant's possessions while stored on the
Premises.
1.4 PARKING
Tenant shall be entitled to utilize the parking areas associated with
the Building in common with other Tenants. The Authority reserves the
right, but shall not be obligated, to assign specific parking spaces to
tenants.
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<PAGE> 3
1.5 ENTRY UPON PREMISES
Authority may enter upon the Premises subleased exclusively to Tenant
hereunder at any reasonable time, for any purpose necessary, incidental
to or connected with the exercise of its governmental functions, or to
inspect the Premises for compliance with all applicable laws and rules
and regulations or to prevent waste, loss or destruction. Authority
shall, in addition, have the right to enter upon the Premises and
perform any actions necessary or appropriate in connection with any
environmental investigation or remediation, including but not limited
to the trenching, drilling and installation, monitoring, repair,
replacement and operation of pipes, wells, and related equipment. The
rent due hereunder shall equitably abate with respect any portion of
the Premises rendered unusable as a result of the Authority's exercise
of its rights under this Section.
ARTICLE II - TERM
2.1 TERM
The term of this Sublease shall be for a period of TWO YEARS beginning
on the Effective Date of this Sublease as indicated on page one (1)
hereof, and continuing through DECEMBER 31, 1999.
ARTICLE III - RENT AND DEPOSITS
3.1 BASE RENT
Tenant covenants and agrees to pay Authority rent from the Effective
Date until the expiration of the term of this Sublease in an amount
equal to $8,695.00 per month (38,400sq @ .20 and 3,500sf @ .29) due and
payable to Authority in advance. Rent payments shall be delivered to
Authority's Property Manager who is currently Tucson Industrial
Centers, Inc., located at 850 E. Teton, Suite 1, Tucson, AZ 85706, or
such other person as directed by Authority in writing.
3.2 COMMENCEMENT OF RENTAL OBLIGATION
The first monthly payment, prorated to reflect the partial month for
which it is paid, shall be due on the Effective Date hereof and
subsequent installments shall be due on the first day of each
succeeding calendar month thereafter during the term of this Sublease.
3.3 LATE FEES
If any rent or any other sum due from the Tenant shall not be received
within FIVE (5) DAYS after such amount shall be due, Tenant shall pay a
late fee equal to TEN PERCENT (10%) of such overdue amount. Acceptance
of such late fees shall in no event constitute a waiver of Tenant's
default with respect to such overdue amount nor prevent Authority from
exercising any of the other right and remedies granted hereunder.
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<PAGE> 4
3.4 SECURITY DEPOSIT
Simultaneously with the entry into this Sublease by the parties hereto,
the Tenant shall deposit with Authority $5,000.00, which shall be
retained by Authority as security for the Tenant's payment of the Rent
and performance of all of its other obligations under the provisions of
this Lease, and shall not be deemed to represent payment of any rent.
On the occurrence of an Event of Default (as defined in Section XI.1
hereinbelow), Authority shall be entitled, at its sole discretion, (a)
to apply any or all of such sum in payment of (i) any Rent due and
unpaid, (ii) any expense incurred by Authority in curing any such
default, and/or (iii) any damages incurred by Authority by reason of
such default (including, by way of example rather than by limitation,
reasonable attorney's fees), in which event the Tenant shall,
immediately on its receipt of a written demand there for from
Authority, pay to Authority a sum equaling the amount so applied, so as
to restore the security deposit to its original amount; and /or (b) at
Authority's election, to retain any or all of such sum not otherwise
applied pursuant to the provisions of clause (a) of this sentence in
liquidation of any or all damages suffered by Authority by reason of
such default. On the termination of this Sublease, any of such sum
which is not so applied or retained shall be returned to Tenant. Such
sum shall not bear interest while being held by Authority.
ARTICLE IV - USE OF PREMISES
4.1 PURPOSES
The Premises shall not, without prior written consent of Authority, be
used for any purpose other than or in addition to that set forth on
Exhibit B attached hereto.
4.2 INDEMNITY
Tenant agrees to fully indemnify and save and hold harmless Authority
and the City of Tucson from and against all claims, fines, damages,
penalties, actions and all expenses, including reasonable attorneys'
fees incidental to the investigation and defense thereof, related to or
arising out of the fault or negligence of or violation of law by
Tenant, its agents, employees or subtenants in the use, occupancy, or
maintenance of the Premises by any of them.
4.3 DANGEROUS CONDITIONS
Tenant agrees to exercise reasonable care when using the Premises and
all improvements thereon to discover and promptly remedy any conditions
that may pose an unreasonable risk of harm to members of the general
public or that may constitute a violation of law. If an unsafe,
defective or dangerous condition, or violation of the law is
discovered, Tenant warrants that no one other than Tenant and Authority
employees, agents and representatives will be admitted to the Premises
and no property belonging to any party other than Tenant and Authority
will be transported to, collected at or stored upon the Premises until
the unsafe, defective or dangerous condition, or violation of law is
corrected.
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<PAGE> 5
4.4 ALTERATIONS
Tenant shall not construct or substantially alter or modify any
buildings, structures, or other improvements on the Premises without
the Authority's prior written approval of its plans and specifications,
which approval may be withheld in the Authority's sole discretion.
Without limiting the generality of the above consent requirement, no
alterations may be made that are of such an extent or nature that they
would subject the Premises or the Building or any part thereof to
current building codes as they pertain to electrical, building, safety
or fire (except to the extent that the Premises or Building are already
subject to such codes) or would conflict with any restrictions on the
alteration of the Building that might exist as a result of any
registration or eligibility for registration on any historic register.
4.5 UTILITIES
A. Tenant's Responsibilities:
Tenant shall pay for all utility services supplied to it or
its subtenants on the Airport.
B. Authority's Rights and Responsibilities:
Notwithstanding the execution of this Sublease, Authority
retains the right to the continued use of such utility lines
and services as are presently on the Premises and the right to
repair the same when necessary. Authority shall conduct such
repairs in such manner and at such times as to not
unreasonably interfere with Tenant's operations.
4.6 MAINTENANCE AND REPAIR
A. Tenant:
(1) Tenant shall, at no expense to Authority, maintain
the Premises in a neat, clean, safe condition and in
a manner that is compatible with the rest of the
Building, and in compliance with all applicable laws,
rules, regulations and orders.
(2) General combustible storage shall not exceed 12 feet
in height.
(3) Aisle separation shall be between 4 feet to 8 feet
wide. (Width to be determined by Fire Department and
classification of commodities being stored).
(4) Must have stable storage piles (No leaning stacks).
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<PAGE> 6
B. Authority:
Subject to Section 5.9 the Authority shall be responsible for
all structural repairs in the Premises and the Building unless
necessitated by any negligence or willful misconduct of Tenant
or Tenant's subtenants, employees, agents, invitees or guests.
ARTICLE V - INSURANCE AND CASUALTY
5.1 INSURANCE REQUIRED
Tenant shall obtain and maintain in full force, with a company or
companies authorized to transact the business of insurance in the State
of Arizona and of sound and adequate financial responsibility, selected
by Tenant and acceptable to Authority, comprehensive insurance policy
(either as part of any other policy or policies carried by Tenant, or
separately) providing for the protection of the Authority and the City
of Tucson and officers, directors, agents and employees of either of
them, against:
(1) general liability, including all direct or contingent
loss or liability for damages for bodily injury,
personal injury, death or damage to property,
including loss of use thereof, occurring on or in any
way related to the Premises or occasioned by reason
of occupancy by and the operations of Tenant upon, in
and around the Premises, with limits of $1,000,000
per occurrence for personal injury or death or damage
to property, with coverage at least as broad as that
provided by INSURANCE SERVICES OFFICE COMMERCIAL
GENERAL LIABILITY COVERAGE form CG0001 (Occurrence
Form), and such policy or policies shall cover all of
Tenant's operations on the entire Premises, including
but not limited to any elevators and escalators
therein and any sidewalks, streets or other public
ways adjoining the Premises; and
(2) automobile liability covering owned, non-owned,
leased and hired vehicles with combined single limits
of no less than $250,000 per occurrence.
5.2 DEDUCTIBLE
The deductible for any policy required hereunder shall not exceed
$1,000.
5.3 MODIFICATION OF REQUIREMENTS
Authority may adjust or increase liability insurance amounts and
requirements as Authority deems reasonably necessary, or as may be
required because of changes in the insurance requirements imposed by
Authority's insurer or by applicable law. Tenant shall comply with such
adjustments or increases within such reasonable time period as is
requested by Authority.
Page 5
<PAGE> 7
5.4 CERTIFICATES
Upon or prior to the commencement of the term of this Sublease and at
least annually thereafter Tenant shall furnish to Authority
certificates of insurance showing the amount and type of the insurance
then in effect that is required to be procured and maintained by it
hereunder and stating the date and term of the policies evidencing such
insurance. Tenant shall, upon request, supply Authority with certified
copies of all applicable insurance policies, riders, endorsements and
declaration pages. Certificates evidencing any renewal, replacement or
extension of any or all of the insurance required hereunder, or of
renewals, replacements or extensions of such renewals, replacements or
extensions, shall be delivered by Tenant to Authority not less than
thirty (30) days prior to the expiration of any policy of insurance
renewed, replaced or extended by the insurance represented by any such
certificate. Each policy of insurance required hereunder shall provide
for not less than thirty (30) days notice to Authority and Tenant
before such policy may be canceled.
5.5 ADDITIONAL INSURANCE
The provisions of this Sublease as to insurance required to be procured
and maintained shall not limit or prohibit, or be construed as limiting
or prohibiting, Authority or Tenant from obtaining any other or greater
insurance with respect to the Premises or improvements thereon or the
use and occupancy thereof that either or both of them may wish to
carry, but in the event Authority or Tenant, as the case may be, shall
procure or maintain any such insurance not required by this Sublease,
the cost thereof shall be at the expense of the party procuring or
maintaining the same.
5.6 ADDITIONAL INSUREDS
All insurance required by this Article shall be procured and maintained
in the name of Tenant and shall add Authority and the City of Tucson as
additional insureds as their interests appear.
5.7 WAIVER OF SUBROGATION
Each party hereto waives all claims for recovery from the other party
for any loss or damage to any of its property on the Premises insured
under valid and collectible insurance policies to the extent of any
recovery collected from such policies. The parties agree that all
material insurance policies shall be endorsed with a clause which
waives subrogation against the other party.
5.8 INSURANCE BY AUTHORITY
Authority may, upon written notice to Tenant, in the event that Tenant
fails to timely provide proof of insurance as required by Section 5.4
above, procure and maintain any or all of the insurance required of
Tenant under this Article. In such event, all costs of such insurance
procured and maintained by Authority on behalf of Tenant shall be the
responsibility of
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<PAGE> 8
Tenant and shall be fully reimbursed to Authority within ten (10)
business days after Authority advises Tenant of the cost thereof.
5.9 CASUALTY TO PREMISES
Authority may, but shall not be required to, maintain insurance against
loss or damage to the Building and the Premises, but shall have no
obligation to repair the Building or the Premises in the event of
casualty or damage thereto. In the event that any such casualty renders
the Premises unsafe or untenantable, this Sublease shall terminate
immediately.
ARTICLE VI - TAXES
6.1 TENANT'S RESPONSIBILITY
Tenant shall pay before delinquency any and all taxes levied or
assessed against the Premises, any levied or assessed against or by
reason of personal property located in, on or about the Premises, any
levied or assessed because of Tenant's right to possession of the
Premises and improvements thereon, all applicable taxes levied or
assessed by any government body as the result of Tenant's operations
and all taxes which may be levied or assessed as the result of rentals
payable under this Sublease. All such taxes and assessments for partial
years shall be apportioned and adjusted on a time basis.
6.2 PROTEST
Tenant shall have the right at its own cost and expense to contest the
amount or validity of any such tax or assessment and to bring or defend
any actions involving the amount or validity of any such tax or
assessment in its own name or in the name of Authority; provided that,
if unsuccessful, Tenant shall pay and discharge any such tax or
assessment so contested, together with any penalties, fines, interest,
costs and expenses, including reasonable attorneys' fees, that may
result from any such action by Tenant.
ARTICLE VII - RULES, REGULATIONS AND LAWS
7.1 COMPLIANCE WITH ALL APPLICABLE LAWS
Tenant and all persons operating under the rights granted hereby shall
observe and obey all reasonable and lawful rules and regulations with
respect to the use of the Airport which have been or may in the future
be adopted by Authority and shall further abide by all applicable laws,
statutes, ordinances, rules, orders, and regulations of all governing
bodies which are now in effect or which may hereafter be put into
effect.
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<PAGE> 9
7.2 NON-DISCRIMINATION
A. NON-DISCRIMINATION COVENANTS
(1) The Tenant for himself, his heirs, personal
representatives, subtenants, successors in interest,
and assigns, as a part of the consideration hereof,
does hereby covenant and agree, as a covenant running
with the land, that in the event improvements are
constructed, maintained, or otherwise operated on the
Premises for a purpose for which a Department of
Transportation ("DOT") program or activity is
extended or for another purpose involving the
provision of similar services or benefits, Tenant
shall maintain and operate such improvements and
services in compliance with all other requirements
imposed pursuant to Title 49, Code of Federal
Regulations, DOT, Subtitle A, Office of the
Secretary, Part 21, Nondiscrimination in
Federally-Assisted Programs of the Department of
Transportation-Effectuation of Title VI of the Civil
Rights Act of 1964, and as said Regulations may be
amended.
(2) The Tenant for himself, his personal representatives,
successors in interest, and assigns, as a part of the
consideration hereof, does hereby covenant and agree,
as a covenant running with the land that: (1) no
person on the grounds of race, color, or national
origin shall be excluded from participation in,
denied the benefits of, or be otherwise subjected to
discrimination in the use of said improvements, (2)
that in the construction of any improvements on,
over, or under such land and the furnishing of
services thereon, no person on the grounds of race,
color, or national origin shall be excluded from
participation in, denied the benefits of, or
otherwise be subject to discrimination, (3) that
Tenant shall use the Premises in compliance with all
other requirements imposed by or pursuant to Title
49, Code of Federal Regulations, Department of
Transportation, Subtitle A, Office of the Secretary,
Part 21, Non-discrimination in Federally-Assisted
Programs of the Department of
Transportation-Effectuation of Title VI of the Civil
Rights Act of 1964, and as said Regulations may be
amended.
(3) Tenant shall furnish its accommodations and/or
services on a fair, equal and not unjustly
discriminatory basis to all users thereof and it
shall charge fair, reasonable and not unjustly
discriminatory prices for each unit or service,
PROVIDED THAT Tenant may be allowed to make
reasonable and nondiscriminatory discounts, rebates
or other similar type of price reductions to volume
purchasers.
(4) Tenant assures that it will undertake an affirmative
action program as required by 14 CFR Part 152,
Subpart E, to insure that no person shall on the
grounds of race, creed, color, national origin, or
sex be excluded from participating in any employment
activities covered in 14 CFR Part 152, Subpart E.
Tenant assures that it will require that its covered
sub organizations provide assurances from their sub
organizations, as required by 14 CFR Part 152,
Subpart E, to the same effort.
Page 8
<PAGE> 10
B. NON-COMPLIANCE
Non-compliance with an provision of this Section shall
constitute a material breach hereof and in the event of such
non-compliance Authority shall have the right to terminate
this Sublease and the estate hereby created without liability
therefore or at the election of Authority or the United
States, either or both shall have the right to judicially
enforce these provisions.
C. SUBLEASES
Tenant agrees that it shall insert the provisions of this
Section in any sublease by which Authority grants a right or
privilege to any person, firm or corporation to render
accommodations and/or services to the public on the Premises
herein subleased.
7.3 COMPLIANCE WITH FAR PART 77
Tenant shall comply with the notification and review requirements
covered in Part 77 of the Federal Aviation Regulations in connection
with any improvements or modification or alteration of improvements on
the Premises.
7.4 FAR PART 107; AIRPORT ACCESS
Tenant and all persons operating under the rights granted hereunder
shall comply with Part 107 of the Federal Aviation Regulations with
respect to aircraft operations and airport security at the Airport.
Tenant shall at all times take all reasonable steps to control, police
and regulate the use of the Premises and of the Airport premises to
prevent unauthorized persons and the general public from obtaining
access to the Airport. Such steps by Tenant shall include, but not be
limited to, steps requested by Authority and those required under
Federal Regulations. Tenant must secure the Premises so that there is
no inadvertent or purposeful unauthorized entry in or upon the Airport
by people, vehicles, or animals.
7.5 STATE AND FEDERAL AVIATION REGULATIONS
Tenant will conduct its operations and activities on the Airport so as
to conform to all applicable regulations of the Federal Aviation
Administration and the Aeronautics Division of the Arizona Department
of Transportation.
7.6 EXCLUSIVE RIGHTS PROHIBITED
It is understood and agreed that nothing herein contained shall be
construed to grant or authorize the granting of an exclusive right
within the meaning of Section 49 U.S.C.
40103(e).
7.7 ENVIRONMENTAL LAWS
Tenant, at its own expense, shall ensure that Tenant and Tenant's
agents, employees, invitees, and sublessee comply with all present and
hereafter enacted Environmental Laws, and any amendments thereto,
affecting Tenant's operation on the Premises.
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A. DEFINITIONS
(1) "Environmental Laws" means any laws, regulations and
ordinances (whether enacted by the local, state,
federal government, or by the Authority) now in
effect or hereafter enacted that deal with the
regulation or protection of the environment
(including the ambient air, ground water, surface
water, and land use, including sub-strata land), or
with the generation, storage, disposal or use of
chemicals or substances that could be detrimental to
human health or the environment.
(2) "Extremely Hazardous Substances" means any substance
or material designated by the United States
Environmental Protection Agency as an "extremely
hazardous substance" under Section 302(a)(2) of the
Superfund Amendment and Reauthorization Act ("SARA")
(42 U.S.C. Section 11002(a)(2)).
(3) "Hazardous Material" means all substances, materials
and wastes that are, or that become, regulated under,
or that are classified as hazardous or toxic under
any environmental law (including, but not limited to,
Extremely Hazardous Substances and Toxic Chemicals).
(4) "Release" means any releasing, spilling, leaking,
pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, disposing, or dumping.
B. COMPLIANCE
(1) Compliance with Environmental Laws Generally. Tenant
shall not cause or permit any Hazardous Material to
be used, generated, manufactured, produced, stored,
brought upon, or released, on, under or about the
Premises, or transported to and from the Premises, by
Tenant, its agents, employees, contractors, invitees,
sublessees or any third party in violation of any
Environmental Law, provided that, in no circumstances
shall Tenant cause or permit any Extremely Hazardous
Substance or Toxic Chemical to be used, generated,
manufactured, produced, stored, brought upon, or
Released, on, under or about the Premises, or
transported to and from the Premises.
(2) Cleanup. Without limiting the foregoing, if the
presence of any Hazardous Material on, under or about
the Premises caused or permitted by Tenant results in
any contamination of the Premises, Tenant shall
promptly take all actions at its sole cost and
expense as are necessary to return the Premises to
the condition existing prior to the introduction of
any such Hazardous Material to the Premises; provided
that Authority's approval of such actions shall first
be obtained, which approval shall not be unreasonably
withheld so long as such actions would not
potentially have any material adverse effect on the
Premises. In the event Tenant shall fail timely to
commence or cause to be commenced or fail diligently
to prosecute to completion such actions as are
necessary to return the Premises to the conditions
existing prior to the introduction of any Hazardous
Material to the Premises, Authority may, but shall
not be obligated to, cause such action to be
performed, and all costs and expenses (including,
without limitation, attorneys' fees) thereof or
incurred by Authority in connection therewith shall
be paid by Tenant.
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(3) Governmental Submittals. Tenant shall, at Tenant's
own cost and expense, make all submissions to,
provide all information to, and comply with all
requirements of any governmental authority having
jurisdiction (the "Government") under the
Environmental Laws. Should the Government determine
that a site characterization, site assessment and/or
a cleanup plan be prepared or that a cleanup should
be undertaken because of any release of hazardous
materials at the Premises which occur during the term
of this Sublease, then Tenant shall, at Tenant's own
cost and expense, prepare and submit the required
plans and financial assurances, and carry out the
approved plans in accordance with all requirements of
the Government.
(4) Information Sharing. Tenant shall provide to Tucson
Airport Authority a copy of any and all information,
reports, and applications submitted to the Government
as described in Paragraph X.6B.(4), whether such
submittal is routine or in response to a release or
threatened release of any Hazardous Material, and
whether the impetus for such submittal is generated
by Tenant, or by an inquiry or action by the
Government or another third party. At no cost or
expense to Authority, Tenant shall promptly provide
all information requested by Authority to determine
the applicability of the Environmental Laws to the
Premises, or to respond to any governmental
investigation or to respond to any claim of liability
by third parties which is related to environmental
contamination. Tenant shall immediately notify
Authority of any correspondence or communication from
any governmental entity regarding the application of
Environmental Laws to the Premises or Tenant's
operation of the Premises.
(5) Change in Use of Premises. Tenant shall immediately
notify Authority of any changes in Tenant's operation
on the Premises that will change or has the potential
to change Tenant's or Authority's obligations or
liabilities under the Environmental Laws.
C. INDEMNITY
Tenant shall indemnity, defend and hold harmless Authority,
its successors and assigns, its employees, agents and
attorneys from and against any and all liability, loss,
damage, expense, penalties and costs (including legal and
investigation fees or costs) arising from or related to any
claim or action for injury, liability, breach or warranty or
representation, or damage to persons or property and any and
all claims or actions brought by any party or governmental
body, alleging or arising in connection with (i) contamination
of, or adverse effects on, the environment (whether known,
alleged, potential, or threatened), or (ii) alleged or
potential violation of any Environmental Law or other statute,
ordinance, rule, regulation, judgment or order of any
government or judicial entity which are brought as a result
(whether in part or in whole) of any activity or operation on
or Release from the Premises (caused by
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any person or entity other than Authority) during the term of
this Sublease or any previous sublease of the Premises by
Tenant or its owners or related entities. This obligation
includes but is not limited to all costs and expenses related
to investigation and/or cleaning up the Premises and all land,
soil, and underground or surface water as required under the
law. Tenant's obligations and liabilities under this paragraph
shall continue so long as Authority bears any liability or
responsibility under the Environmental Laws for any action
that occurred on the Premises during the term of the Sublease.
This indemnification of Authority by Tenant includes, without
limitation, costs incurred in connection with any
investigation of site conditions or any cleanup, remedial,
removal or restoration work required by any federal, state, or
local governmental agency or political subdivision because of
Hazardous Material located on the Premises or present in the
soil or ground water on, under or about the Premises. The
parties agree that Authority's right to enforce Tenant's
Promise to indemnify is not an adequate remedy at law for
Tenant's violation of any provision of this paragraph;
Authority shall have all the rights and remedies set forth in
this Sublease as well as all other rights and remedies
provided by law.
D. SUBTENANTS
Tenant shall insert the provisions of this section in any
lease agreement or contract by which it grants a right or
privilege to any person, firm or corporation under this
Sublease.
ARTICLE VIII - SUPERIOR RIGHTS
8.1 AGREEMENTS WITH UNITED STATES
This Sublease shall be subordinate to the provisions and requirements
of any existing or future agreement between Authority and the United
States, relative to the development, operation or maintenance of the
Airport.
8.2 RIGHTS OF GOVERNMENT DURING WAR OR NATIONAL EMERGENCY
This Sublease and all the provisions hereof shall be subject to
whatever right the United States Government now has or in the future
may have or acquire, affecting the control, operation, regulation and
taking over of the Airport or the exclusive or non-exclusive use of the
Airport by the United States during the time of war or national
emergency.
Tenant and Authority recognize that during the time of war or national
emergency the City of Tucson, owner of the Airport, has the right to
enter into agreements with the United States government for military or
naval use of part or all of the Airport. If any such agreement is
executed by the City of Tucson, the provisions of this Sublease,
insofar as they are inconsistent with the provisions of any agreement
so made by the City of Tucson with the United States government, shall
be subject to the terms of such agreement and Tenant shall have no
claim against Authority or the City of Tucson for any loss or damage
sustained by
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Tenant because of the making of such agreement by the City of Tucson.
In such event, however, the amounts, if any, payable from the City of
Tucson or the United States for improvements placed on the Premises by
Tenant shall be paid to Tenant if this Sublease is in effect at the
time of such taking.
8.3 RIGHTS OF AUTHORITY
Authority reserves the right to further develop or improve the landing
area of the Airport as it sees fit, regardless of the desires or view
of Tenant and without interference or hindrance. Authority reserves the
right, but shall not be obligated to Tenant, to maintain and keep in
repair the landing area of the Airport and all publicly-owned
facilities of the Airport, together with the right to direct and
control all activities of Tenant in this regard.
8.4 AGREEMENTS WITH CITY OF TUCSON
This Sublease is subject to the existing lease between Authority and
the City of Tucson and to the provisions of any existing or future
agreement between the City of Tucson and Authority.
8.5 ABATEMENT OF OBLIGATION TO CONSTRUCT OR REBUILD
Inasmuch as this Sublease contains certain provisions concerning
repairs, replacement and rebuilding of damaged or destroyed buildings,
construction of buildings, quiet enjoyment and other related causes
applicable to the parties to this Sublease, and inasmuch as the
Premises constitute a portion of a public Airport, it is agreed that
the parties hereto shall not be required to repair, replace, rebuild or
construct any building or portion of any building so long as the
obligated party is prevented from so doing by action of the United
States government or any agency or department thereof.
ARTICLE IX - RESERVATION OF NAVIGATION EASEMENT
9.1 EASEMENT
There is hereby reserved to Authority for the use and benefit of
aircraft using the Airport a right of flight for the passage of
aircraft in the airspace above the uppermost surface of the Premises,
together with the right to cause such noise as may be inherent in the
operation of any aircraft now known or hereafter used for navigation of
or flight in said airspace, or landing at, or taking off from, or
operating on the Airport.
9.2 STRUCTURES; ELEVATION LIMIT
Tenant, by accepting this Sublease, expressly agrees for itself, its
successors and assigns that it will not erect nor permit the erection
of any structure or object, nor permit the growth of any tree on the
Premises above the mean sea level elevation of 2460 feet. In the event
the aforesaid covenants are breached, Authority reserves the right to
enter upon the Premises and to remove the offending structure or object
and cut the offending tree, all of which shall be at the expense of
Tenant.
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9.3 PURPOSES
Tenant, by accepting this Sublease agrees for itself, its successors
and assigns that it will not make use of the Premises in any manner
which might interfere with the landing and taking off of aircraft from
the Airport or otherwise constitute a hazard. In the event the
aforesaid covenant is breached, Authority reserves the right to enter
upon the Premises and cause the abatement of such interference at the
expense of Tenant.
ARTICLE X - ASSIGNMENT AND SUBLEASE
10.1 CONSENT OF AUTHORITY
Tenant shall not sublease, assign or sell this Sublease or any interest
therein, or any portion of the Premises, without first obtaining
written consent from Authority. For this purpose, any change in
ownership or control of Tenant shall be considered an assignment of
rights hereunder. Tenant shall furnish the Authority with a copy of any
sublease or assignment entered into with respect to this Sublease or
the Premises or any portion thereof.
10.2 CONTINUING RESPONSIBILITY OF TENANT
If it is a complete assignment or sublease of the entire Premises it
shall be in writing and provide that the subtenant or assignee assumes
and agrees to perform all of the terms, covenants and agreements which
Tenant has agreed to perform under this Sublease, and that Tenant's
subtenant or assignee shall become jointly and severally liable with
Tenant, or any successor in interest of Tenant, for the performance of
the terms and covenants of this Sublease. A sublease for less than the
entire Premises shall be in writing and shall recite that it is subject
and subordinate to all the terms and provisions of this Sublease.
Neither the execution of such sublease or assignment, the Authority's
consent to the same, nor the acceptance of rent by Authority from
Tenant's subtenant or assignee shall release or in any manner affect
Tenant's liability to Authority hereunder.
10.3 SUBJECT TO THIS SUBLEASE
Any sublease between Tenant and a subtenant shall be in writing and
shall provide that said sublease is subject to all the provisions of
this Sublease.
ARTICLE XI - DEFAULTS AND REMEDIES
11.1 DEFAULT BY TENANT
Tenant shall be in default under this Sublease upon the occurrence of
any of the following "Events of Default":
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A. Tenant shall fail to pay when due any installment of rent
payable pursuant to this Sublease and such failure shall
continue unremedied for a period of ten (10) days; provided
that Tenant shall not be entitled to the benefit of more than
one (1) grace period of ten (10) days under this paragraph
A(1) within any calendar year.
B. Tenant or any of Tenant's agents, employees, guests, invitees,
or subtenants, shall use Premises for any unlawful or illegal
purpose or for any purpose other than those set forth on
Exhibit B.
C. Tenant shall fail to observe or perform any other covenant,
agreement or obligation hereunder and such failure shall not
be remedied within thirty (30) days (or such additional time
as is reasonably required in the opinion of Authority to
correct any such failure, if Tenant has instituted corrective
action and is diligently pursuing the same) after Authority
shall have given Tenant written notice specifying which
covenant, agreement or obligation Tenant has failed to observe
or perform; provided that Tenant shall not be entitled to the
benefit of more than two (2) grace periods of thirty (30) days
(or more if permitted) under this paragraph within any
calendar year.
D. There is commenced by or against Tenant any case under the
Bankruptcy Code (Title XI of the United States Code) or any
other bankruptcy, arrangement, reorganization, receivership,
custodianship or similar proceeding under any federal, state
or foreign law, and with respect to any such case or
proceeding that is involuntary, such case or proceeding is not
dismissed with prejudice within sixty (60) days of such
filing.
E. Tenant makes a general assignment for the benefit of creditors
or applies for, consents to, or acquiesces in the appointment
of a trustee, receiver, or other custodian for Tenant or the
property of Tenant or any part thereof, or in the absence of
such application, consent, or acquiescence, a trustee,
receiver or other custodian is appointed for Tenant or the
property of Tenant or any part thereof, and such appointment
is not discharged within sixty (60) days
F. Any action is commenced against Tenant to foreclose any lien
or mortgage or other rights of Tenant in or to the Premises.
G. Tenant abandons, deserts or vacates the Premises for seven (7)
consecutive days or more.
11.2 REMEDIES OF AUTHORITY
If Tenant shall be in default hereunder as set forth above, the
Authority may exercise any of the following remedies.
A. TERMINATION
Authority may, at its election, give Tenant written notice of
its intention to terminate this Sublease on a date which shall
not be earlier than ten (10) days after such notice
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is given. If all defaults have not been cured on or before the
date specified in the notice, Tenant's rights to possession of
the Premises shall cease, and with or without re-entry by
Authority, this Sublease and the term hereof shall terminate,
and Authority may then re-enter and take possession of the
Premises as provided below with respect to reentry without
termination. Any such termination must be express, and neither
notice to pay rent or to deliver up possession of the Premises
given pursuant to law, nor any proceeding instituted by
Authority, nor the failure by Tenant for any period of time to
pay any of the rent herein reserved, shall of itself operate
to terminate this Sublease.
(1) Damages. Notwithstanding the termination of this
Sublease or any re-entry by Authority upon such
termination, Tenant shall continue to be liable for
and Authority shall be entitled to recover as
damages:
(a) the sum of all rent that is due and owing as
of the date of termination and all other
sums then owing by Tenant hereunder;
(b) all rent that would otherwise continue to
accrue during the remaining term hereof or,
at the election of Authority, the discounted
present value of the sum of all rentals
remaining to be paid for the remaining term
of this Sublease, calculated by the
Authority in its reasonable discretion; and
(c) the reasonable costs incurred by Authority
in re-letting the Premises and the
reasonable costs to Authority necessary to
place the Premises in condition for
re-letting.
(2) Credit. Any rent, income, receipts, profits or other
monies received or derived by Authority from any
re-letting or other use of the Premises after the
termination of this Sublease shall, so long as Tenant
shall continue to be liable for the payment of rent
hereunder, be credited against such rent as received
and collected.
B. REENTRY WITHOUT TERMINATION
As an alternative remedy, Authority may, without terminating
this Sublease, and after giving Tenant ten (10) days written
notice, re-enter the Premises and take possession thereof
pursuant to any legal proceedings or notice required by law,
in which event Tenant shall remain liable for the payment of
all rent and the performance of all conditions contained in
this Sublease.
(1) Reentry. Upon any such re-entry of the Premises by
Authority, Authority may expel Tenant and those
claiming through or under Tenant and remove their
property and effects (forcibly, if necessary) without
being guilty in any manner of trespass and without
any liability therefor and without prejudice to any
remedies of Authority in the event of default by
Tenant, and without liability for any interruption of
the conduct of the affairs of Tenant or those
claiming through or under Tenant which may result
from such entry. Tenant hereby irrevocably appoints
Authority as the agent and attorney-in-fact of Tenant
to remove all of Tenant's property whatsoever
situated upon the
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Premises and to place such property in storage in any
warehouse or other suitable place in Tucson, Arizona,
for the account of and at the expense of Tenant and
Tenant hereby exempts and agrees to save harmless
Authority from any costs, loss or damage whatsoever
arising or occasioned by any such removal and storage
of such property by Authority or its duly authorized
agents in accordance with the provisions herein
contained.
(2) Reletting. After such re-entry, Authority shall use
reasonable diligence to re-let the Premises, or any
part or parts thereof, for such period or periods and
upon such term or terms and at such reasonable rental
or rentals and upon such other conditions as
Authority may deem advisable, with the right to make
alterations and repairs to the Premises. Tenant
hereby irrevocably appoints Authority as the agent
and attorney-in-fact of Tenant to enter upon and
re-let the Premises and to incur any necessary
expenses in doing so, all to be reimbursed by Tenant.
Tenant agrees that no acts of Authority in effecting
such re-letting shall constitute a termination of
this Sublease, irrespective of the period for which
such re-letting is made or the terms and conditions
of such re-letting or otherwise.
(3) Credit. Tenant shall receive a credit against such
rental in the amount of the proceeds, if any, of such
re-letting. Tenant's obligations, in addition to
rent, for which it shall remain liable include, but
shall not be limited to, all repossession costs,
brokerage commissions, legal expenses, attorneys'
fees, expenses of employees, removal costs,
alteration costs and expenses of preparation for
re-letting, and any other amounts expended pursuant
to action taken under this paragraph.
11.3 REMEDIES CUMULATIVE
All rights, options and remedies of Authority contained in this
Sublease shall be construed and held to be cumulative, and no one of
them shall be exclusive of the other, and Authority shall have the
right to pursue any one or all of such remedies or any other remedy or
relief which may be provided by law, whether or not stated in this
Sublease (including but not limited to any right of "self help" or
similar remedy in order to minimize any damages, expenses, penalties
and related fees or costs).
11.4 NO WAIVER
No waiver of any Event of Default of Tenant hereunder shall be implied
from any acceptance by Authority of any rent or other payments due
hereunder or any omission by Authority to take any action on account of
such default if such default persists or is repeated, and no express
waiver shall affect an Event of Default in a manner other than as
specified in said waiver. The consent or approval by Authority to or of
any act by Tenant requiring Authority's consent or approval shall not
be deemed to waive or render unnecessary Authority's consent or
approval to or of any subsequent similar acts by Tenant.
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11.5 NOTICE
Any default notice tendered to Tenant hereunder shall be deemed to be
sufficient if it is reasonably calculated to put Tenant on inquiry as
to the nature and extent of such default.
11.6 INTEREST
All amounts due the Authority hereunder shall accumulate interest at a
rate of 12% per annum or the maximum amount allowed by law, whichever
is less.
ARTICLE XII - TERMINATION BY TENANT
12.1 TERMINATION EVENTS
Tenant may terminate this Sublease at any time upon thirty (30) days
written notice to Authority upon or after the happening or continuation
of any of the following events:
A. The inability of Tenant to use, for a period of
thirty (30) consecutive days, any portion of the
rights, licenses, services or privileges of Tenant
hereunder because of any law, rule, regulation or
other action or failure to act on the part of any
United States governmental authority having
jurisdiction thereof.
B. The default by Authority in the performance of any
covenant or agreement herein required to be performed
by Authority and the failure of Authority to remedy
such default for a period of thirty (30) days after
receipt of written request or demand from Tenant to
remedy the same.
C. The assumption by the United States government or any
authorized agency thereof of the operation or control
of the Airport or any part thereof, in such manner as
to substantially restrict Tenant for a period of at
least thirty (30) consecutive days from conducting
any of its operation on the Premises.
12.2 CURE
If any of the foregoing reasons for termination by Tenant cease to
exist prior to a termination, then the right to terminate for such
reason shall cease.
12.3 NO WAIVER
No waiver by Tenant of Authority's default of any of its obligations
hereunder shall be construed to be or act as a waiver by Tenant of any
subsequent default by Authority.
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ARTICLE XIII - SURRENDER OF POSSESSION, CONDITION OF PREMISES
13.1 SURRENDER
Upon the expiration or earlier termination of this Sublease or any
extensions thereof, all rights herein granted to Tenant shall cease and
terminate and Tenant shall forthwith surrender the Premises to
Authority.
13.2 GOOD CONDITION
The Premises shall be returned to Authority in as good condition as at
the time of occupancy by Tenant, except as otherwise provided in this
Sublease, ordinary wear and tear excepted.
13.3 REMOVAL OF PROPERTY
Tenant, and Tenant's subtenants, may remove any and all personal
property, including portable buildings, signs, trade fixtures,
machinery and equipment from the Premises prior to expiration of this
Sublease; provided, however, that Tenant shall repair any damage caused
by such removal. Title to any property remaining in the Premises after
expiration or termination of this Sublease shall vest in Authority and
Authority shall have the right and option to remove the same, restore
the Premises and recover from Tenant the costs and expenses of doing
so.
ARTICLE XIV - MISCELLANEOUS
14.1 NOTIFICATION OF CHANGES
Tenant shall promptly notify Authority of any change in Tenant's name
or address or a change in ownership.
14.2 SUCCESSORS AND ASSIGNS BOUND
All the terms, covenants and conditions of this Sublease shall extend
to and bind the successors and assigns of the respective parties
hereto.
14.3 ARTICLE HEADINGS
The article headings contained herein are for convenience and reference
and are not intended to define or limit the scope of any provisions of
this Sublease.
14.4 SEVERABILITY
If any term or condition of this Sublease shall be deemed to be invalid
or unenforceable, all other terms and conditions shall remain in full
force and effect.
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14.5 APPLICABLE LAW
The terms and conditions of this sublease shall be interpreted in
accordance with the laws of the State of Arizona.
14.6 CONSTRUCTION OF SUBLEASE
Authority and Tenant agree that each party and its counsel have
reviewed and revised this Sublease and that any rule of construction to
the effect that ambiguities are to be resolved against the drafting
party shall not apply in the interpretation of this Sublease. No remedy
or election given by any provisions of this Sublease shall be deemed
exclusive unless so indicated, but each shall, whenever possible, be
cumulative with all other remedies in law or equity. Each provision
hereof shall be deemed both a covenant and a condition and shall run
with the land for the duration of the leasehold term or any extensions
thereof. Whenever the content of any provision shall require it, the
singular number shall be held to include the plural number and vice
versa. The form of this Sublease contemplates that Tenant will be an
entity and not one or more natural persons. If Tenant is one or more
natural persons, then all pronouns referring to Tenant shall be deemed
to be appropriately changed to fit those circumstances.
14.7 COSTS AND ATTORNEYS' FEES
A. AUTHORITY'S REVIEW
Tenant shall pay the expenses (including reasonable attorneys'
fees and the fees of other consultants) incurred by Authority
in reviewing any of the documents (including subleases, plans
and specifications of any improvements to be constructed by
Tenant, and documents created pursuant to Section ) for which
Authority's approval is required by the terms hereof.
B. ENFORCEMENT OF RIGHTS
The non-prevailing party shall promptly pay to the prevailing
party, upon demand, all costs and other expenses paid or
incurred by the prevailing party (including, without
limitation, reasonable attorney's fees) in enforcing or
exercising its rights or remedies created by, connected with
or provided for in this Sublease, whether or not any action or
proceeding is brought (including, without limitation, all such
costs, expenses and fees incurred in connection with any
bankruptcy, receivership, or other court proceedings [whether
at the trial or the appellate level]).
14.8 NOTICES
A. TO AUTHORITY
Notices to Authority in connection with this Sublease shall be
sufficiently served if physically delivered or sent by
certified mail, postage prepaid, addressed to Authority at the
address shown for it above.
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B. TO TENANT
Notices to Tenant in connection with this Sublease shall be
sufficiently served if physically delivered or sent by regular
mail, postage prepaid, addressed to Tenant at the address
shown for it above, provided that notice of utility
interference shall be sufficiently served if Authority gives
said notice to the current supervisor of Tenant's operations
on the Premises.
C. TIMING
Service of any notice or demand by physical delivery shall be
deemed complete upon the date of delivery. Service of any
notice or demand by certified mail shall be deemed complete at
the expiration of three (3) days after the date of the
certified mailing if mailed within the continental United
States.
D. CHANGE IN ADDRESS
Each party may change its address to such other addresses as
such party may designate to the other in writing from time to
time.
14.9 AUTHORITY TO EXECUTE
Each party represents and warrants to the other that it has the right
and authority to enter into this Sublease.
IN WITNESS WHEREOF the parties have executed this Sublease as of the
day and year first above written.
TUCSON AIRPORT AUTHORITY, INC.,
an Arizona nonprofit corporation
By: /s/ Signature Illegible
-------------------------
Its: CEO
-------------------------
"AUTHORITY"
COMPLETE CONTROLS,
an Arizona Corporation
By: /s/ Micah Chapman
-------------------------
Its: President
-------------------------
"TENANT"
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EXHIBIT 10.5.11
850 E. TETON
INDUSTRIAL SUBLEASE
EFFECTIVE DATE: JANUARY 1, 1999
PARTIES AND ADDRESSES:
"AUTHORITY": TUCSON AIRPORT AUTHORITY, INC.,
an Arizona nonprofit corporation
7005 S. Plumer Avenue
Tucson, Arizona 85706
"TENANT": COMPLETE CONTROLS INC.
AN ARIZONA CORPORATION
850 E. TETON RD. SUITE 8
TUCSON, ARIZONA 85706
EXHIBITS: Exhibits lettered A and B are annexed to
this Sublease and incorporated herein by
this reference.
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RECITALS
A. Authority has leased from the City of Tucson, a municipal corporation,
the airport known as Tucson International Airport located in Pima
County, State of Arizona (the "Airport").
B. Tenant desires to sublease from Authority a portion of the Airport and
to have certain rights, licenses, services and privileges in
connection with the Airport.
COVENANTS AND CONDITIONS
ARTICLE I - PREMISES
1.1 PREMISES
Authority does hereby demise and let unto Tenant, for its exclusive
use and occupancy, and Tenant does hereby lease from Authority, the
portion of the Airport that is illustrated on the attached Exhibit A,
of the Building (the "Building"), located at 850 E. TETON RD on the
Airport (the "Premises"), THE OUTSIDE FENCED AREA NORTH OF HANGAR ONE
AND APPROXIMATELY TWO THOUSAND SQUARE FEET ON THE EAST SIDE OF THE
BUILDING subject to all utility easements and rights of way that
encumber the Premises and subject to the terms hereof.
1.2 ACCESS
Tenant is granted the right of reasonable access to the Premises over
such other portions of the Airport and the Building as are necessary
to provide reasonable access to and from the Premises. Authority
reserves the right to designate the location of such access and to
change its location from time to time, as Authority deems reasonably
necessary and appropriate.
1.3 SECURITY
By signing this Sublease, Tenant is deemed to acknowledge and is
hereby advised that the Building houses a number of rental spaces and
diverse tenants. Tenant is responsible for securing Tenant's Premises,
and neither the Authority nor its agents or employees will be
responsible for any loss of or damage to Tenant's possessions while
stored on the Premises.
1.4 PARKING
Tenant shall be entitled to utilize the parking areas associated with
the Building in common with other Tenants. The Authority reserves the
right, but shall not be obligated, to assign specific parking spaces
to tenants.
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1.5 ENTRY UPON PREMISES
Authority may enter upon the Premises subleased exclusively to Tenant
hereunder at any reasonable time, for any purpose necessary, incidental
to or connected with the exercise of its governmental functions, or to
inspect the Premises for compliance with all applicable laws and rules
and regulations or to prevent waste, loss or destruction. Authority
shall, in addition, have the right to enter upon the Premises and
perform any actions necessary or appropriate in connection with any
environmental investigation or remediation, including but not limited
to the trenching, drilling and installation, monitoring, repair,
replacement and operation of pipes, wells, and related equipment. The
rent due hereunder shall equitably abate with respect any portion of
the Premises rendered unusable as a result of the Authority's exercise
of its rights under this Section.
ARTICLE II - TERM
2.1 TERM
This Sublease shall be a month-to-month tenancy beginning on the
Effective Date hereof and continuing until terminated by either party
with thirty (30) days' written notice to the other.
ARTICLE III - RENT AND DEPOSITS
3.1 BASE RENT
Tenant covenants and agrees to pay Authority rent from the Effective
Date until the expiration of the term of this Sublease in an amount
equal to NINE HUNDRED DOLLARS AND NO CENTS ($900.00) per month ($500.00
for fenced yard, $400.00 for 2,000 sq. ft.) due and payable to
Authority in advance. Rent payments shall be delivered to Authority's
Property Manager who is currently Tucson Industrial Centers, Inc.,
located at 850 E. Teton, Suite 1, Tucson, AZ 85706, or such other
person as directed by Authority in writing.
3.2 COMMENCEMENT OF RENTAL OBLIGATION
The first monthly payment, prorated to reflect the partial month for
which it is paid, shall be due on the Effective Date hereof and
subsequent installments shall be due on the first day of each
succeeding calendar month thereafter during the term of this Sublease.
3.3 LATE FEES
If any rent or any other sum due from the Tenant shall not be received
within FIVE (5) DAYS after such amount shall be due, Tenant shall pay a
late fee equal to TEN PERCENT (10%) of such overdue amount. Acceptance
of such late fees shall in no event constitute a waiver of Tenant's
default with respect to such overdue amount nor prevent Authority from
exercising any of the other right and remedies granted hereunder.
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3.4 SECURITY DEPOSIT
Simultaneously with the entry into this Sublease by the parties
hereto, the Tenant shall deposit with Authority $0.00, which shall be
retained by Authority as security for the Tenant's payment of the Rent
and performance of all of its other obligations under the provisions
of this Lease, and shall not be deemed to represent payment of any
rent. On the occurrence of an Event of Default (as defined in Section
XI.1 hereinbelow), Authority shall be entitled, at its sole
discretion, (a) to apply any or all of such sum in payment of (i) any
Rent due and unpaid, (ii) any expense incurred by Authority in curing
any such default, and/or (iii) any damages incurred by Authority by
reason of such default (including, by way of example rather than by
limitation, reasonable attorney's fees), in which event the Tenant
shall, immediately on its receipt of a written demand there for from
Authority, pay to Authority a sum equaling the amount so applied, so
as to restore the security deposit to its original amount; and /or (b)
at Authority's election, to retain any or all of such sum not
otherwise applied pursuant to the provisions of clause (a) of this
sentence in liquidation of any or all damages suffered by Authority by
reason of such default. On the termination of this Sublease, any of
such sum which is not so applied or retained shall be returned to
Tenant. Such sum shall not bear interest while being held by
Authority.
ARTICLE IV - USE OF PREMISES
4.1 PURPOSES
The Premises shall not, without prior written consent of Authority, be
used for any purpose other than or in addition to that set forth on
Exhibit B attached hereto.
4.2 INDEMNITY
Tenant agrees to fully indemnify and save and hold harmless Authority
and the City of Tucson from and against all claims, fines, damages,
penalties, actions and all expenses, including reasonable attorneys'
fees incidental to the investigation and defense thereof, related to
or arising out of the fault or negligence of or violation of law by
Tenant, its agents, employees or subtenants in the use, occupancy, or
maintenance of the Premises by any of them.
4.3 DANGEROUS CONDITIONS
Tenant agrees to exercise reasonable care when using the Premises and
all improvements thereon to discover and promptly remedy any
conditions that may pose an unreasonable risk of harm to members of
the general public or that may constitute a violation of law. If an
unsafe, defective or dangerous condition, or violation of the law is
discovered, Tenant warrants that no one other than Tenant and
Authority employees, agents and representatives will be admitted to
the Premises and no property belonging to any party other than Tenant
and Authority will be transported to, collected at or stored upon the
Premises until the
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unsafe, defective or dangerous condition, or violation of law is
corrected.
4.4 ALTERATIONS
Tenant shall not construct or substantially alter or modify any
buildings, structures, or other improvements on the Premises without
the Authority's prior written approval of its plans and
specifications, which approval may be withheld in the Authority's sole
discretion. Without limiting the generality of the above consent
requirement, no alterations may be made that are of such an extent or
nature that they would subject the Premises or the Building or any
part thereof to current building codes as they pertain to electrical,
building, safety or fire (except to the extent that the Premises or
Building are already subject to such codes) or would conflict with any
restrictions on the alteration of the Building that might exist as a
result of any registration or eligibility for registration on any
historic register.
4.5 UTILITIES
A. Tenant's Responsibilities:
Tenant shall pay for all utility services supplied to it or
its subtenants on the Airport.
B. Authority's Rights and Responsibilities:
Notwithstanding the execution of this Sublease, Authority
retains the right to the continued use of such utility lines
and services as are presently on the Premises and the right
to repair the same when necessary. Authority shall conduct
such repairs in such manner and at such times as to not
unreasonably interfere with Tenant's operations.
4.6 MAINTENANCE AND REPAIR
A. Tenant:
(1) Tenant shall, at no expense to Authority, maintain
the Premises in a neat, clean, safe condition and in
a manner that is compatible with the rest of the
Building, and in compliance with all applicable laws,
rules, regulations and orders.
(2) General combustible storage shall not exceed 12 feet
in height.
(3) Aisle separation shall be between 4 feet to 8 feet
wide. (Width to be determined by Fire Department and
classification of commodities being stored).
(4) Must have stable storage piles (No leaning stacks).
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B. Authority:
Subject to Section 5.9 the Authority shall be responsible for
all structural repairs in the Premises and the Building
unless necessitated by any negligence or willful misconduct
of Tenant or Tenant's subtenants, employees, agents, invitees
or guests.
ARTICLE V - INSURANCE AND CASUALTY
5.1 INSURANCE REQUIRED
Tenant shall obtain and maintain in full force, with a company or
companies authorized to transact the business of insurance in the
State of Arizona and of sound and adequate financial responsibility,
selected by Tenant and acceptable to Authority, comprehensive
insurance policy (either as part of any other policy or policies
carried by Tenant, or separately) providing for the protection of the
Authority and the City of Tucson and officers, directors, agents and
employees of either of them, against:
(1) general liability, including all direct or
contingent loss or liability for damages for bodily
injury, personal injury, death or damage to
property, including loss of use thereof, occurring
on or in any way related to the Premises or
occasioned by reason of occupancy by and the
operations of Tenant upon, in and around the
Premises, with limits of $1,000,000 per occurrence
for personal injury or death or damage to property,
with coverage at least as broad as that provided by
INSURANCE SERVICES OFFICE COMMERCIAL GENERAL
LIABILITY COVERAGE form CG0001 (Occurrence Form),
and such policy or policies shall cover all of
Tenant's operations on the entire Premises,
including but not limited to any elevators and
escalators therein and any sidewalks, streets or
other public ways adjoining the Premises; and
(2) automobile liability covering owned, non-owned,
leased and hired vehicles with combined single
limits of no less than $250,000 per occurrence.
5.2 DEDUCTIBLE
The deductible for any policy required hereunder shall not exceed
$1,000.
5.3 MODIFICATION OF REQUIREMENTS
Authority may adjust or increase liability insurance amounts and
requirements as Authority deems reasonably necessary, or as may be
required because of changes in the insurance requirements imposed by
Authority's insurer or by applicable law. Tenant shall comply with
such adjustments or increases within such reasonable time period as is
requested by Authority.
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5.4 CERTIFICATES
Upon or prior to the commencement of the term of this Sublease and at
least annually thereafter Tenant shall furnish to Authority
certificates of insurance showing the amount and type of the insurance
then in effect that is required to be procured and maintained by it
hereunder and stating the date and term of the policies evidencing
such insurance. Tenant shall, upon request, supply Authority with
certified copies of all applicable insurance policies, riders,
endorsements and declaration pages. Certificates evidencing any
renewal, replacement or extension of any or all of the insurance
required hereunder, or of renewals, replacements or extensions of such
renewals, replacements or extensions, shall be delivered by Tenant to
Authority not less than thirty (30) days prior to the expiration of
any policy of insurance renewed, replaced or extended by the insurance
represented by any such certificate. Each policy of insurance required
hereunder shall provide for not less than thirty (30) days notice to
Authority and Tenant before such policy may be canceled.
5.5 ADDITIONAL INSURANCE
The provisions of this Sublease as to insurance required to be
procured and maintained shall not limit or prohibit, or be construed
as limiting or prohibiting, Authority or Tenant from obtaining any
other or greater insurance with respect to the Premises or
improvements thereon or the use and occupancy thereof that either or
both of them may wish to carry, but in the event Authority or Tenant,
as the case may be, shall procure or maintain any such insurance not
required by this Sublease, the cost thereof shall be at the expense of
the party procuring or maintaining the same.
5.6 ADDITIONAL INSUREDS
All insurance required by this Article shall be procured and
maintained in the name of Tenant and shall add Authority and the City
of Tucson as additional insureds as their interests appear.
5.7 WAIVER OF SUBROGATION
Each party hereto waives all claims for recovery from the other party
for any loss or damage to any of its property on the Premises insured
under valid and collectible insurance policies to the extent of any
recovery collected from such policies. The parties agree that all
material insurance policies shall be endorsed with a clause which
waives subrogation against the other party.
5.8 INSURANCE BY AUTHORITY
Authority may, upon written notice to Tenant, in the event that Tenant
fails to timely provide proof of insurance as required by Section 5.4
above, procure and maintain any or all of the insurance required of
Tenant under this Article. In such event, all costs of such insurance
procured and maintained by Authority on behalf of Tenant shall be the
responsibility of
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Tenant and shall be fully reimbursed to Authority within ten (10)
business days after Authority advises Tenant of the cost thereof.
5.9 CASUALTY TO PREMISES
Authority may, but shall not be required to, maintain insurance
against loss or damage to the Building and the Premises, but shall
have no obligation to repair the Building or the Premises in the event
of casualty or damage thereto. In the event that any such casualty
renders the Premises unsafe or untenantable, this Sublease shall
terminate immediately.
ARTICLE VI - TAXES
6.1 TENANT'S RESPONSIBILITY
Tenant shall pay before delinquency any and all taxes levied or
assessed against the Premises, any levied or assessed against or by
reason of personal property located in, on or about the Premises, any
levied or assessed because of Tenant's right to possession of the
Premises and improvements thereon, all applicable taxes levied or
assessed by any government body as the result of Tenant's operations
and all taxes which may be levied or assessed as the result of rentals
payable under this Sublease. All such taxes and assessments for
partial years shall be apportioned and adjusted on a time basis.
6.2 PROTEST
Tenant shall have the right at its own cost and expense to contest the
amount or validity of any such tax or assessment and to bring or
defend any actions involving the amount or validity of any such tax or
assessment in its own name or in the name of Authority; provided that,
if unsuccessful, Tenant shall pay and discharge any such tax or
assessment so contested, together with any penalties, fines, interest,
costs and expenses, including reasonable attorneys' fees, that may
result from any such action by Tenant.
ARTICLE VII - RULES, REGULATIONS AND LAWS
7.1 COMPLIANCE WITH ALL APPLICABLE LAWS
Tenant and all persons operating under the rights granted hereby shall
observe and obey all reasonable and lawful rules and regulations with
respect to the use of the Airport which have been or may in the future
be adopted by Authority and shall further abide by all applicable
laws, statutes, ordinances, rules, orders, and regulations of all
governing bodies which are now in effect or which may hereafter be put
into effect.
7.2 NON-DISCRIMINATION
A. NON-DISCRIMINATION COVENANTS
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(1) The Tenant for himself, his heirs, personal
representatives, subtenants, successors in interest,
and assigns, as a part of the consideration hereof,
does hereby covenant and agree, as a covenant
running with the land, that in the event
improvements are constructed, maintained, or
otherwise operated on the Premises for a purpose for
which a Department of Transportation ("DOT") program
or activity is extended or for another purpose
involving the provision of similar services or
benefits, Tenant shall maintain and operate such
improvements and services in compliance with all
other requirements imposed pursuant to Title 49,
Code of Federal Regulations, DOT, Subtitle A, Office
of the Secretary, Part 21, Nondiscrimination in
Federally-Assisted Programs of the Department of
Transportation-Effectuation of Title VI of the Civil
Rights Act of 1964, and as said Regulations may be
amended.
(2) The Tenant for himself, his personal
representatives, successors in interest, and
assigns, as a part of the consideration hereof, does
hereby covenant and agree, as a covenant running
with the land that: (1) no person on the grounds of
race, color, or national origin shall be excluded
from participation in, denied the benefits of, or be
otherwise subjected to discrimination in the use of
said improvements, (2) that in the construction of
any improvements on, over, or under such land and
the furnishing of services thereon, no person on the
grounds of race, color, or national origin shall be
excluded from participation in, denied the benefits
of, or otherwise be subject to discrimination, (3)
that Tenant shall use the Premises in compliance
with all other requirements imposed by or pursuant
to Title 49, Code of Federal Regulations, Department
of Transportation, Subtitle A, Office of the
Secretary, Part 21, Non-discrimination in
Federally-Assisted Programs of the Department of
Transportation-Effectuation of Title VI of the Civil
Rights Act of 1964, and as said Regulations may be
amended.
(3) Tenant shall furnish its accommodations and/or
services on a fair, equal and not unjustly
discriminatory basis to all users thereof and it
shall charge fair, reasonable and not unjustly
discriminatory prices for each unit or service,
PROVIDED THAT Tenant may be allowed to make
reasonable and nondiscriminatory discounts, rebates
or other similar type of price reductions to volume
purchasers.
(4) Tenant assures that it will undertake an affirmative
action program as required by 14 CFR Part 152,
Subpart E, to insure that no person shall on the
grounds of race, creed, color, national origin, or
sex be excluded from participating in any employment
activities covered in 14 CFR Part 152, Subpart E.
Tenant assures that it will require that its covered
sub organizations provide assurances from their sub
organizations, as required by 14 CFR Part 152,
Subpart E, to the same effort.
B. NON-COMPLIANCE
Non-compliance with an provision of this Section shall
constitute a material breach
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hereof and in the event of such non-compliance Authority
shall have the right to terminate this Sublease and the
estate hereby created without liability therefore or at the
election of Authority or the United States, either or both
shall have the right to judicially enforce these provisions.
C. SUBLEASES
Tenant agrees that it shall insert the provisions of this
Section in any sublease by which Authority grants a right or
privilege to any person, firm or corporation to render
accommodations and/or services to the public on the Premises
herein subleased.
7.3 COMPLIANCE WITH FAR PART 77
Tenant shall comply with the notification and review requirements
covered in Part 77 of the Federal Aviation Regulations in connection
with any improvements or modification or alteration of improvements on
the Premises.
7.4 FAR PART 107; AIRPORT ACCESS
Tenant and all persons operating under the rights granted hereunder
shall comply with Part 107 of the Federal Aviation Regulations with
respect to aircraft operations and airport security at the Airport.
Tenant shall at all times take all reasonable steps to control, police
and regulate the use of the Premises and of the Airport premises to
prevent unauthorized persons and the general public from obtaining
access to the Airport. Such steps by Tenant shall include, but not be
limited to, steps requested by Authority and those required under
Federal Regulations. Tenant must secure the Premises so that there is
no inadvertent or purposeful unauthorized entry in or upon the Airport
by people, vehicles, or animals.
7.5 STATE AND FEDERAL AVIATION REGULATIONS
Tenant will conduct its operations and activities on the Airport so as
to conform to all applicable regulations of the Federal Aviation
Administration and the Aeronautics Division of the Arizona Department
of Transportation.
7.6 EXCLUSIVE RIGHTS PROHIBITED
It is understood and agreed that nothing herein contained shall be
construed to grant or authorize the granting of an exclusive right
within the meaning of Section 49 U.S.C. 40103(e).
7.7 ENVIRONMENTAL LAWS
Tenant, at its own expense, shall ensure that Tenant and Tenant's
agents, employees, invitees, and sublessee comply with all present and
hereafter enacted Environmental Laws, and any amendments thereto,
affecting Tenant's operation on the Premises.
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A. DEFINITIONS
(1) "Environmental Laws" means any laws, regulations
and ordinances (whether enacted by the local, state,
federal government, or by the Authority) now in
effect or hereafter enacted that deal with the
regulation or protection of the environment
(including the ambient air, ground water, surface
water, and land use, including sub-strata land), or
with the generation, storage, disposal or use of
chemicals or substances that could be detrimental to
human health or the environment.
(2) "Extremely Hazardous Substances" means any substance
or material designated by the United States
Environmental Protection Agency as an "extremely
hazardous substance" under Section 302(a)(2) of the
Superfund Amendment and Reauthorization Act ("SARA")
(42 U.S.C. Section 11002(a)(2)).
(3) "Hazardous Material" means all substances, materials
and wastes that are, or that become, regulated under,
or that are classified as hazardous or toxic under
any environmental law (including, but not limited to,
Extremely Hazardous Substances and Toxic Chemicals).
(4) "Release" means any releasing, spilling, leaking,
pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, disposing, or dumping.
B. COMPLIANCE
(1) Compliance with Environmental Laws Generally. Tenant
shall not cause or permit any Hazardous Material to
be used, generated, manufactured, produced, stored,
brought upon, or released, on, under or about the
Premises, or transported to and from the Premises,
by Tenant, its agents, employees, contractors,
invitees, sublessees or any third party in violation
of any Environmental Law, provided that, in no
circumstances shall Tenant cause or permit any
Extremely Hazardous Substance or Toxic Chemical to
be used, generated, manufactured, produced, stored,
brought upon, or Released, on, under or about the
Premises, or transported to and from the Premises.
(2) Cleanup. Without limiting the foregoing, if the
presence of any Hazardous Material on, under or
about the Premises caused or permitted by Tenant
results in any contamination of the Premises, Tenant
shall promptly take all actions at its sole cost and
expense as are necessary to return the Premises to
the condition existing prior to the introduction of
any such Hazardous Material to the Premises;
provided that Authority's approval of such actions
shall first be obtained, which approval shall not be
unreasonably withheld so long as such actions would
not potentially have any material adverse effect on
the Premises. In the event Tenant shall fail timely
to commence or cause to be commenced or fail
diligently to prosecute to completion such actions
as are necessary to return the Premises to the
conditions existing prior to the introduction of any
Hazardous Material to the Premises, Authority may,
but shall not be obligated to, cause such action to
be performed, and all costs and
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expenses (including, without limitation, attorneys'
fees) thereof or incurred by Authority in connection
therewith shall be paid by Tenant.
(3) Governmental Submittals. Tenant shall, at Tenant's
own cost and expense, make all submissions to,
provide all information to, and comply with all
requirements of any governmental authority having
jurisdiction (the "Government") under the
Environmental Laws. Should the Government determine
that a site characterization, site assessment and/or
a cleanup plan be prepared or that a cleanup should
be undertaken because of any release of hazardous
materials at the Premises which occur during the
term of this Sublease, then Tenant shall, at
Tenant's own cost and expense, prepare and submit
the required plans and financial assurances, and
carry out the approved plans in accordance with all
requirements of the Government.
(4) Information Sharing. Tenant shall provide to Tucson
Airport Authority a copy of any and all information,
reports, and applications submitted to the
Government as described in Paragraph X.6B.(4),
whether such submittal is routine or in response to
a release or threatened release of any Hazardous
Material, and whether the impetus for such submittal
is generated by Tenant, or by an inquiry or action
by the Government or another third party. At no cost
or expense to Authority, Tenant shall promptly
provide all information requested by Authority to
determine the applicability of the Environmental
Laws to the Premises, or to respond to any
governmental investigation or to respond to any
claim of liability by third parties which is related
to environmental contamination. Tenant shall
immediately notify Authority of any correspondence
or communication from any governmental entity
regarding the application of Environmental Laws to
the Premises or Tenant's operation of the Premises.
(5) Change in Use of Premises. Tenant shall immediately
notify Authority of any changes in Tenant's
operation on the Premises that will change or has
the potential to change Tenant's or Authority's
obligations or liabilities under the Environmental
Laws.
C. INDEMNITY
Tenant shall indemnity, defend and hold harmless Authority,
its successors and assigns, its employees, agents and
attorneys from and against any and all liability, loss,
damage, expense, penalties and costs (including legal and
investigation fees or costs) arising from or related to any
claim or action for injury, liability, breach or warranty or
representation, or damage to persons or property and any and
all claims or actions brought by any party or governmental
body, alleging or arising in connection with (i)
contamination of, or adverse effects on, the environment
(whether known, alleged, potential, or threatened), or (ii)
alleged or potential violation of any Environmental Law or
other statute, ordinance, rule, regulation, judgment or order
of any government or judicial entity which are brought as a
result (whether in part or in whole) of any activity or
operation on or Release from the Premises (caused by
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any person or entity other than Authority) during the term of
this Sublease or any previous sublease of the Premises by
Tenant or its owners or related entities. This obligation
includes but is not limited to all costs and expenses related
to investigation and/or cleaning up the Premises and all
land, soil, and underground or surface water as required
under the law. Tenant's obligations and liabilities under
this paragraph shall continue so long as Authority bears any
liability or responsibility under the Environmental Laws for
any action that occurred on the Premises during the term of
the Sublease. This indemnification of Authority by Tenant
includes, without limitation, costs incurred in connection
with any investigation of site conditions or any cleanup,
remedial, removal or restoration work required by any
federal, state, or local governmental agency or political
subdivision because of Hazardous Material located on the
Premises or present in the soil or ground water on, under or
about the Premises. The parties agree that Authority's right
to enforce Tenant's Promise to indemnify is not an adequate
remedy at law for Tenant's violation of any provision of this
paragraph; Authority shall have all the rights and remedies
set forth in this Sublease as well as all other rights and
remedies provided by law.
D. SUBTENANTS
Tenant shall insert the provisions of this section in any
lease agreement or contract by which it grants a right or
privilege to any person, firm or corporation under this
Sublease.
ARTICLE VIII - SUPERIOR RIGHTS
8.1 AGREEMENTS WITH UNITED STATES
This Sublease shall be subordinate to the provisions and requirements
of any existing or future agreement between Authority and the United
States, relative to the development, operation or maintenance of the
Airport.
8.2 RIGHTS OF GOVERNMENT DURING WAR OR NATIONAL EMERGENCY
This Sublease and all the provisions hereof shall be subject to
whatever right the United States Government now has or in the future
may have or acquire, affecting the control, operation, regulation and
taking over of the Airport or the exclusive or non-exclusive use of
the Airport by the United States during the time of war or national
emergency.
Tenant and Authority recognize that during the time of war or national
emergency the City of Tucson, owner of the Airport, has the right to
enter into agreements with the United States government for military or
naval use of part or all of the Airport. If any such agreement is
executed by the City of Tucson, the provisions of this Sublease,
insofar as they are inconsistent with the provisions of any agreement
so made by the City of Tucson with the United States government, shall
be subject to the terms of such agreement and Tenant shall have no
claim against Authority or the City of Tucson for any loss or damage
sustained by
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Tenant because of the making of such agreement by the City of Tucson.
In such event, however, the amounts, if any, payable from the City of
Tucson or the United States for improvements placed on the Premises by
Tenant shall be paid to Tenant if this Sublease is in effect at the
time of such taking.
8.3 RIGHTS OF AUTHORITY
Authority reserves the right to further develop or improve the landing
area of the Airport as it sees fit, regardless of the desires or view
of Tenant and without interference or hindrance.
Authority reserves the right, but shall not be obligated to Tenant, to
maintain and keep in repair the landing area of the Airport and all
publicly-owned facilities of the Airport, together with the right to
direct and control all activities of Tenant in this regard.
8.4 AGREEMENTS WITH CITY OF TUCSON
This Sublease is subject to the existing lease between Authority and
the City of Tucson and to the provisions of any existing or future
agreement between the City of Tucson and Authority.
8.5 ABATEMENT OF OBLIGATION TO CONSTRUCT OR REBUILD
Inasmuch as this Sublease contains certain provisions concerning
repairs, replacement and rebuilding of damaged or destroyed buildings,
construction of buildings, quiet enjoyment and other related causes
applicable to the parties to this Sublease, and inasmuch as the
Premises constitute a portion of a public Airport, it is agreed that
the parties hereto shall not be required to repair, replace, rebuild
or construct any building or portion of any building so long as the
obligated party is prevented from so doing by action of the United
States government or any agency or department thereof.
ARTICLE IX - RESERVATION OF NAVIGATION EASEMENT
9.1 EASEMENT
There is hereby reserved to Authority for the use and benefit of
aircraft using the Airport a right of flight for the passage of
aircraft in the airspace above the uppermost surface of the Premises,
together with the right to cause such noise as may be inherent in the
operation of any aircraft now known or hereafter used for navigation
of or flight in said airspace, or landing at, or taking off from, or
operating on the Airport.
9.2 STRUCTURES; ELEVATION LIMIT
Tenant, by accepting this Sublease, expressly agrees for itself, its
successors and assigns that it will not erect nor permit the erection
of any structure or object, nor permit the growth of any tree on the
Premises above the mean sea level elevation of 2460 feet. In the event
the aforesaid covenants are breached, Authority reserves the right to
enter upon the Premises and
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to remove the offending structure or object and cut the offending
tree, all of which shall be at the expense of Tenant.
9.3 PURPOSES
Tenant, by accepting this Sublease agrees for itself, its successors
and assigns that it will not make use of the Premises in any manner
which might interfere with the landing and taking off of aircraft from
the Airport or otherwise constitute a hazard. In the event the
aforesaid covenant is breached, Authority reserves the right to enter
upon the Premises and cause the abatement of such interference at the
expense of Tenant.
ARTICLE X - ASSIGNMENT AND SUBLEASE
10.1 CONSENT OF AUTHORITY
Tenant shall not sublease, assign or sell this Sublease or any
interest therein, or any portion of the Premises, without first
obtaining written consent from Authority. For this purpose, any change
in ownership or control of Tenant shall be considered an assignment of
rights hereunder. Tenant shall furnish the Authority with a copy of
any sublease or assignment entered into with respect to this Sublease
or the Premises or any portion thereof.
10.2 CONTINUING RESPONSIBILITY OF TENANT
If it is a complete assignment or sublease of the entire Premises it
shall be in writing and provide that the subtenant or assignee assumes
and agrees to perform all of the terms, covenants and agreements which
Tenant has agreed to perform under this Sublease, and that Tenant's
subtenant or assignee shall become jointly and severally liable with
Tenant, or any successor in interest of Tenant, for the performance of
the terms and covenants of this Sublease. A sublease for less than the
entire Premises shall be in writing and shall recite that it is
subject and subordinate to all the terms and provisions of this
Sublease. Neither the execution of such sublease or assignment, the
Authority's consent to the same, nor the acceptance of rent by
Authority from Tenant's subtenant or assignee shall release or in any
manner affect Tenant's liability to Authority hereunder.
10.3 SUBJECT TO THIS SUBLEASE
Any sublease between Tenant and a subtenant shall be in writing and
shall provide that said sublease is subject to all the provisions of
this Sublease.
ARTICLE XI - DEFAULTS AND REMEDIES
11.1 DEFAULT BY TENANT
Tenant shall be in default under this Sublease upon the occurrence of
any of the following "Events of Default":
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A. Tenant shall fail to pay when due any installment of rent
payable pursuant to this Sublease and such failure shall
continue unremedied for a period of ten (10) days; provided
that Tenant shall not be entitled to the benefit of more than
one (1) grace period of ten (10) days under this paragraph
A(1) within any calendar year.
B. Tenant or any of Tenant's agents, employees, guests,
invitees, or subtenants, shall use Premises for any unlawful
or illegal purpose or for any purpose other than those set
forth on Exhibit B.
C. Tenant shall fail to observe or perform any other covenant,
agreement or obligation hereunder and such failure shall not
be remedied within thirty (30) days (or such additional time
as is reasonably required in the opinion of Authority to
correct any such failure, if Tenant has instituted corrective
action and is diligently pursuing the same) after Authority
shall have given Tenant written notice specifying which
covenant, agreement or obligation Tenant has failed to
observe or perform; provided that Tenant shall not be
entitled to the benefit of more than two (2) grace periods of
thirty (30) days (or more if permitted) under this paragraph
within any calendar year.
D. There is commenced by or against Tenant any case under the
Bankruptcy Code (Title XI of the United States Code) or any
other bankruptcy, arrangement, reorganization, receivership,
custodianship or similar proceeding under any federal, state
or foreign law, and with respect to any such case or
proceeding that is involuntary, such case or proceeding is
not dismissed with prejudice within sixty (60) days of such
filing.
E. Tenant makes a general assignment for the benefit of
creditors or applies for, consents to, or acquiesces in the
appointment of a trustee, receiver, or other custodian for
Tenant or the property of Tenant or any part thereof, or in
the absence of such application, consent, or acquiescence, a
trustee, receiver or other custodian is appointed for Tenant
or the property of Tenant or any part thereof, and such
appointment is not discharged within sixty (60) days.
F. Any action is commenced against Tenant to foreclose any lien
or mortgage or other rights of Tenant in or to the Premises.
G. Tenant abandons, deserts or vacates the Premises for seven
(7) consecutive days or more.
11.2 REMEDIES OF AUTHORITY
If Tenant shall be in default hereunder as set forth above, the
Authority may exercise any of the following remedies.
A. TERMINATION
Authority may, at its election, give Tenant written notice of
its intention to terminate this Sublease on a date which
shall not be earlier than ten (10) days after such notice
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is given. If all defaults have not been cured on or before
the date specified in the notice, Tenant's rights to
possession of the Premises shall cease, and with or without
re-entry by Authority, this Sublease and the term hereof
shall terminate, and Authority may then re-enter and take
possession of the Premises as provided below with respect to
reentry without termination. Any such termination must be
express, and neither notice to pay rent or to deliver up
possession of the Premises given pursuant to law, nor any
proceeding instituted by Authority, nor the failure by Tenant
for any period of time to pay any of the rent herein
reserved, shall of itself operate to terminate this Sublease.
(1) Damages. Notwithstanding the termination of this
Sublease or any re-entry by Authority upon such
termination, Tenant shall continue to be liable for
and Authority shall be entitled to recover as
damages:
(a) the sum of all rent that is due and owing
as of the date of termination and all other
sums then owing by Tenant hereunder;
(b) all rent that would otherwise continue to
accrue during the remaining term hereof or,
at the election of Authority, the
discounted present value of the sum of all
rentals remaining to be paid for the
remaining term of this Sublease, calculated
by the Authority in its reasonable
discretion; and
(c) the reasonable costs incurred by Authority
in re-letting the Premises and the
reasonable costs to Authority necessary to
place the Premises in condition for
re-letting.
(2) Credit. Any rent, income, receipts, profits or other
monies received or derived by Authority from any
re-letting or other use of the Premises after the
termination of this Sublease shall, so long as
Tenant shall continue to be liable for the payment
of rent hereunder, be credited against such rent as
received and collected.
B. REENTRY WITHOUT TERMINATION
As an alternative remedy, Authority may, without terminating
this Sublease, and after giving Tenant ten (10) days written
notice, re-enter the Premises and take possession thereof
pursuant to any legal proceedings or notice required by law,
in which event Tenant shall remain liable for the payment of
all rent and the performance of all conditions contained in
this Sublease.
(1) Reentry. Upon any such re-entry of the Premises
by Authority, Authority may expel Tenant and those
claiming through or under Tenant and remove their
property and effects (forcibly, if necessary)
without being guilty in any manner of trespass and
without any liability therefor and without prejudice
to any remedies of Authority in the event of default
by Tenant, and without liability for any
interruption of the conduct of the affairs of Tenant
or those claiming through or under Tenant which may
result from such entry. Tenant hereby irrevocably
appoints Authority as the agent and attorney-in-fact
of Tenant to remove all of Tenant's property
whatsoever situated upon the
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Premises and to place such property in storage in any
warehouse or other suitable place in Tucson, Arizona, for the
account of and at the expense of Tenant and Tenant hereby
exempts and agrees to save harmless Authority from any costs,
loss or damage whatsoever arising or occasioned by any such
removal and storage of such property by Authority or its duly
authorized agents in accordance with the provisions herein
contained.
(2) Reletting. After such re-entry, Authority shall use reasonable
diligence to re-let the Premises, or any part or parts
thereof, for such period or periods and upon such term or
terms and at such reasonable rental or rentals and upon such
other conditions as Authority may deem advisable, with the
right to make alterations and repairs to the Premises. Tenant
hereby irrevocably appoints Authority as the agent and
attorney-in-fact of Tenant to enter upon and re-let the
Premises and to incur any necessary expenses in doing so, all
to be reimbursed by Tenant. Tenant agrees that no acts of
Authority in effecting such re-letting shall constitute a
termination of this Sublease, irrespective of the period for
which such re-letting is made or the terms and conditions of
such re-letting or otherwise.
(3) Credit. Tenant shall receive a credit against such rental in
the amount of the proceeds, if any, of such re-letting.
Tenant's obligations, in addition to rent, for which it shall
remain liable include, but shall not be limited to, all
repossession costs, brokerage commissions, legal expenses,
attorneys' fees, expenses of employees, removal costs,
alteration costs and expenses of preparation for re-letting,
and any other amounts expended pursuant to action taken under
this paragraph.
11.3 REMEDIES CUMULATIVE
All rights, options and remedies of Authority contained in this
Sublease shall be construed and held to be cumulative, and no one of
them shall be exclusive of the other, and Authority shall have the
right to pursue any one or all of such remedies or any other remedy or
relief which may be provided by law, whether or not stated in this
Sublease (including but not limited to any right of "self help" or
similar remedy in order to minimize any damages, expenses, penalties
and related fees or costs).
11.4 NO WAIVER
No waiver of any Event of Default of Tenant hereunder shall be implied
from any acceptance by Authority of any rent or other payments due
hereunder or any omission by Authority to take any action on account
of such default if such default persists or is repeated, and no
express waiver shall affect an Event of Default in a manner other than
as specified in said waiver. The consent or approval by Authority to
or of any act by Tenant requiring Authority's consent or approval
shall not be deemed to waive or render unnecessary Authority's consent
or approval to or of any subsequent similar acts by Tenant.
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11.5 NOTICE
Any default notice tendered to Tenant hereunder shall be deemed to be
sufficient if it is reasonably calculated to put Tenant on inquiry as
to the nature and extent of such default.
11.6 INTEREST
All amounts due the Authority hereunder shall accumulate interest at a
rate of 12% per annum or the maximum amount allowed by law, whichever
is less.
ARTICLE XII - TERMINATION BY TENANT
12.1 TERMINATION EVENTS
Tenant may terminate this Sublease at any time upon thirty (30) days
written notice to Authority upon or after the happening or
continuation of any of the following events:
A. The inability of Tenant to use, for a period of
thirty (30) consecutive days, any portion of the
rights, licenses, services or privileges of Tenant
hereunder because of any law, rule, regulation or
other action or failure to act on the part of any
United States governmental authority having
jurisdiction thereof.
B. The default by Authority in the performance of any
covenant or agreement herein required to be
performed by Authority and the failure of Authority
to remedy such default for a period of thirty (30)
days after receipt of written request or demand from
Tenant to remedy the same.
C. The assumption by the United States government or
any authorized agency thereof of the operation or
control of the Airport or any part thereof, in such
manner as to substantially restrict Tenant for a
period of at least thirty (30) consecutive days from
conducting any of its operation on the Premises.
12.2 CURE
If any of the foregoing reasons for termination by Tenant cease to
exist prior to a termination, then the right to terminate for such
reason shall cease.
12.3 NO WAIVER
No waiver by Tenant of Authority's default of any of its obligations
hereunder shall be construed to be or act as a waiver by Tenant of any
subsequent default by Authority.
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ARTICLE XIII - SURRENDER OF POSSESSION, CONDITION OF
PREMISES
13.1 SURRENDER
Upon the expiration or earlier termination of this Sublease or any
extensions thereof, all rights herein granted to Tenant shall cease
and terminate and Tenant shall forthwith surrender the Premises to
Authority.
13.2 GOOD CONDITION
The Premises shall be returned to Authority in as good condition as at
the time of occupancy by Tenant, except as otherwise provided in this
Sublease, ordinary wear and tear excepted.
13.3 REMOVAL OF PROPERTY
Tenant, and Tenant's subtenants, may remove any and all personal
property, including portable buildings, signs, trade fixtures,
machinery and equipment from the Premises prior to expiration of this
Sublease; provided, however, that Tenant shall repair any damage
caused by such removal. Title to any property remaining in the
Premises after expiration or termination of this Sublease shall vest
in Authority and Authority shall have the right and option to remove
the same, restore the Premises and recover from Tenant the costs and
expenses of doing so.
ARTICLE XIV - MISCELLANEOUS
14.1 NOTIFICATION OF CHANGES
Tenant shall promptly notify Authority of any change in Tenant's name
or address or a change in ownership.
14.2 SUCCESSORS AND ASSIGNS BOUND
All the terms, covenants and conditions of this Sublease shall extend
to and bind the successors and assigns of the respective parties
hereto.
14.3 ARTICLE HEADINGS
The article headings contained herein are for convenience and
reference and are not intended to define or limit the scope of any
provisions of this Sublease.
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14.4 SEVERABILITY
If any term or condition of this Sublease shall be deemed to be
invalid or unenforceable, all other terms and conditions shall remain
in full force and effect.
14.5 APPLICABLE LAW
The terms and conditions of this sublease shall be interpreted in
accordance with the laws of the State of Arizona.
14.6 CONSTRUCTION OF SUBLEASE
Authority and Tenant agree that each party and its counsel have
reviewed and revised this Sublease and that any rule of construction
to the effect that ambiguities are to be resolved against the drafting
party shall not apply in the interpretation of this Sublease. No
remedy or election given by any provisions of this Sublease shall be
deemed exclusive unless so indicated, but each shall, whenever
possible, be cumulative with all other remedies in law or equity. Each
provision hereof shall be deemed both a covenant and a condition and
shall run with the land for the duration of the leasehold term or any
extensions thereof. Whenever the content of any provision shall
require it, the singular number shall be held to include the plural
number and vice versa. The form of this Sublease contemplates that
Tenant will be an entity and not one or more natural persons. If
Tenant is one or more natural persons, then all pronouns referring to
Tenant shall be deemed to be appropriately changed to fit those
circumstances.
14.7 COSTS AND ATTORNEYS' FEES
A. AUTHORITY'S REVIEW
Tenant shall pay the expenses (including reasonable
attorneys' fees and the fees of other consultants) incurred
by Authority in reviewing any of the documents (including
subleases, plans and specifications of any improvements to be
constructed by Tenant, and documents created pursuant to
Section ) for which Authority's approval is required by the
terms hereof.
B. ENFORCEMENT OF RIGHTS
The non-prevailing party shall promptly pay to the prevailing
party, upon demand, all costs and other expenses paid or
incurred by the prevailing party (including, without
limitation, reasonable attorney's fees) in enforcing or
exercising its rights or remedies created by, connected with
or provided for in this Sublease, whether or not any action
or proceeding is brought (including, without limitation, all
such costs, expenses and fees incurred in connection with any
bankruptcy, receivership, or other court proceedings [whether
at the trial or the appellate level]).
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14.8 NOTICES
A. TO AUTHORITY
Notices to Authority in connection with this Sublease shall
be sufficiently served if physically delivered or sent by
certified mail, postage prepaid, addressed to Authority at
the address shown for it above.
B. TO TENANT
Notices to Tenant in connection with this Sublease shall be
sufficiently served if physically delivered or sent by
regular mail, postage prepaid, addressed to Tenant at the
address shown for it above, provided that notice of utility
interference shall be sufficiently served if Authority gives
said notice to the current supervisor of Tenant's operations
on the Premises.
C. TIMING
Service of any notice or demand by physical delivery shall be
deemed complete upon the date of delivery. Service of any
notice or demand by certified mail shall be deemed complete
at the expiration of three (3) days after the date of the
certified mailing if mailed within the continental United
States.
D. CHANGE IN ADDRESS
Each party may change its address to such other addresses as
such party may designate to the other in writing from time to
time.
14.9 AUTHORITY TO EXECUTE
Each party represents and warrants to the other that it has the right
and authority to enter into this Sublease.
IN WITNESS WHEREOF the parties have executed this Sublease as of the
day and year first above written.
TUCSON AIRPORT AUTHORITY, INC.,
an Arizona nonprofit corporation
By: /s/ Signature Illegible
-------------------------------
Its: CEO
-------------------------------
"AUTHORITY"
COMPLETE CONTROLS, INC.
By: Micah Chapman
-------------------------------
Its: President
-------------------------------
"TENANT"
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<PAGE> 1
EXHIBIT 10.5.12
850 E. TETON
INDUSTRIAL SUBLEASE
EFFECTIVE DATE: AUGUST 1, 1999
PARTIES AND ADDRESSES:
"AUTHORITY": TUCSON AIRPORT AUTHORITY, INC.,
an Arizona nonprofit corporation
7005 S. Plumer Avenue
Tucson, Arizona 85706
"TENANT": AAS- COMPLETE CONTROLS INC.
AN ARIZONA CORPORATION
MICAH CHAPMAN, PRESIDENT AND
JOE CIVILETTO, CHIEF OPERATING OFFICER
850 E. TETON RD. SUITE 8
TUCSON, ARIZONA 85706
EXHIBITS: Exhibits lettered A, B and C are annexed
to this Sublease and incorporated herein
by this reference.
<PAGE> 2
RECITALS
A. Authority has leased from the City of Tucson, a municipal
corporation, the airport known as Tucson International Airport
located in Pima County, State of Arizona (the "Airport").
B. Tenant desires to sublease from Authority a portion of the
Airport and to have certain rights, licenses, services and
privileges in connection with the Airport.
COVENANTS AND CONDITIONS
ARTICLE I - PREMISES
1.1 PREMISES
Authority does hereby demise and let unto Tenant, for its exclusive use
and occupancy, and Tenant does hereby lease from Authority, the
building located on the Airport at 7001 S. PARK AVE (the "Premises"),
APPROXIMATELY SEVENTY FIVE THOUSAND SIX HUNDRED (75,600) SQUARE FEET,
AS SHOWN ON EXHIBIT A, subject to all utility easements and rights of
way that encumber the Premises and subject to the terms hereof.
1.2 ACCESS
Tenant is granted the right of reasonable access to the Premises over
such other portions of the Airport as is necessary to provide
reasonable access to and from the Premises. Authority reserves the
right to designate the location of such access and to change its
location from time to time, as Authority deems reasonably necessary and
appropriate.
1.3 SECURITY
Tenant is responsible for securing Tenant's Premises, and neither the
Authority nor its agents or employees will be responsible for any loss
of or damage to Tenant's possessions while stored on the Premises.
1.4 PARKING
Tenant shall be entitled to utilize the parking areas associated with
the Premises in common with other tenants of adjacent facilities. The
Authority reserves the right, but shall not be obligated, to assign
specific parking spaces to tenants.
1.5 ENTRY UPON PREMISES
Authority may enter upon the Premises subleased exclusively to Tenant
hereunder at any
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reasonable time, for any purpose necessary, incidental to or connected
with the exercise of its governmental functions, or to inspect the
Premises for compliance with all applicable laws and rules and
regulations or to prevent waste, loss or destruction. Authority shall,
in addition, have the right to enter upon the Premises and perform any
actions necessary or appropriate in connection with any environmental
investigation or remediation, including but not limited to the
trenching, drilling and installation, monitoring, repair, replacement
and operation of pipes, wells, and related equipment. The rent due
hereunder shall equitably abate with respect any portion of the
Premises rendered unusable as a result of the Authority's exercise of
its rights under this Section.
ARTICLE II - TERM
2.1 INITIAL TERM
The initial term of the Sublease shall be for a period of five (5)
years beginning on the Effective Date hereof (the "Initial Term")
2.2 EXTENSIONS
The term hereof shall be deemed to be automatically extended on each of
the first five anniversaries of the Effective Date hereof, for an
additional one-year period, unless the Authority, at lease ninety (90)
days prior to such date, notifies Tenant that the Authority does not
elect to so extend the term. The intent of this provision is to
automatically extend the term of this Sublease each year (unless
otherwise elected by Authority) so that a remaining term of
approximately 5 years is maintained, for a possible maximum total term
of (10) years.
ARTICLE III - RENT AND DEPOSITS
3.1 BASE RENT
Tenant covenants and agrees to pay Authority rent from the Effective
Date of this Sublease in an amount equal to SEVENTEEN THOUSAND THREE
HUNDRED EIGHTY EIGHT DOLLARS AND NO CENTS ($17,388.00) per month with
FOUR PERCENT INCREASES ANNUALLY BEGINNING WITH THE START OF YEAR THREE
as set forth on the rent schedule attached as Exhibit C. Monthly rent
is due and payable to Authority in advance. Rent payments shall be
delivered to Authority's Property Manager who is currently Tucson
Industrial Centers, Inc., located at 850 E. Teton, Suite 1, Tucson, AZ
85706, or such other person as directed by Authority in writing.
3.2 COMMENCEMENT OF RENTAL OBLIGATION
The first monthly payment, prorated to reflect the partial month for
which it is paid, shall be
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due on the Effective Date hereof and subsequent installments shall be
due on the first day of each succeeding calendar month thereafter
during the term of this Sublease.
3.3 LATE FEES
If any rent or any other sum due from the Tenant shall not be received
within FIVE (5) DAYS after such amount shall be due, Tenant shall pay a
late fee equal to TEN PERCENT (10%) of such overdue amount. Acceptance
of such late fees shall in no event constitute a waiver of Tenant's
default with respect to such overdue amount nor prevent Authority from
exercising any of the other right and remedies granted hereunder.
3.4 SECURITY DEPOSIT
Simultaneously with the entry into this Sublease by the parties hereto,
the Tenant shall deposit with Authority, $17,388.00 which shall be
retained by Authority as security for the Tenant's payment of the Rent
and performance of all of its other obligations under the provisions of
this Lease, and shall not be deemed to represent payment of any rent.
On the occurrence of an Event of Default (as defined in Section 11.1
hereinbelow), Authority shall be entitled, at its sole discretion, (a)
to apply any or all of such sum in payment of (i) any Rent due and
unpaid, (ii) any expense incurred by Authority in curing any such
default, and/or (iii) any damages incurred by Authority by reason of
such default (including, by way of example rather than by limitation,
reasonable attorney's fees), in which event the Tenant shall,
immediately on its receipt of a written demand there for from
Authority, pay to Authority a sum equaling the amount so applied, so as
to restore the security deposit to its original amount; and /or (b) at
Authority's election, to retain any or all of such sum not otherwise
applied pursuant to the provisions of clause (a) of this sentence in
liquidation of any or all damages suffered by Authority by reason of
such default. On the termination of this Sublease, any of such sum
which is not so applied or retained shall be returned to Tenant. Such
sum shall not bear interest while being held by Authority.
ARTICLE IV - USE OF PREMISES
4.1 PURPOSES
The Premises shall not, without prior written consent of Authority, be
used for any purpose other than or in addition to that set forth on
Exhibit B attached hereto.
4.2 INDEMNITY
Tenant agrees to fully indemnify and save and hold harmless Authority
and the City of Tucson from and against all claims, fines, damages,
penalties, actions and all expenses, including reasonable attorneys'
fees incidental to the investigation and defense thereof, related to or
arising out of the fault or negligence of or violation of law by
Tenant, its agents,
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employees or subtenants in the use, occupancy, or maintenance of the
Premises by any of them.
4.3 DANGEROUS CONDITIONS
Tenant agrees to exercise reasonable care when using the Premises and
all improvements thereon to discover and promptly remedy any conditions
that may pose an unreasonable risk of harm to members of the general
public or that may constitute a violation of law. If an unsafe,
defective or dangerous condition, or violation of the law is
discovered, Tenant warrants that no one other than Tenant and Authority
employees, agents and representatives will be admitted to the Premises
and no property belonging to any party other than Tenant and Authority
will be transported to, collected at or stored upon the Premises until
the unsafe, defective or dangerous condition, or violation of law is
corrected.
4.4 ALTERATIONS
The Authority will complete the electrical service entrance upgrade at
the southwest corner of the building (cost to be determined but not to
exceed $17,388). Tenant shall not construct or substantially alter or
modify any buildings, structures, or other improvements on the Premises
without the Authority's prior written approval of its plans and
specifications, which approval may not be unreasonably withheld.
4.5 UTILITIES
A. Tenant's Responsibilities:
Tenant shall pay for all utility services supplied to it or
its subtenants on the Airport.
B. Authority's Rights and Responsibilities:
Notwithstanding the execution of this Sublease, Authority
retains the right to the continued use of such utility lines
and services as are presently on the Premises and the right to
repair the same when necessary. Authority shall conduct such
repairs in such manner and at such times as to not
unreasonably interfere with Tenant's operations.
4.6 MAINTENANCE AND REPAIR
A. Tenant:
(1) Tenant shall, at no expense to Authority, maintain
the Premises in a neat, clean, safe condition and in
a manner that is compatible with the adjacent
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facilities, and in compliance with all applicable
laws, rules, regulations and orders. Tenant shall be
responsible for all minor repairs and maintenance.
(2) General combustible storage shall not exceed 12 feet
in height.
(3) Aisle separation shall be between 4 feet to 8 feet
wide. (Width to be determined by Fire Department and
classification of commodities being stored).
(4) Must have stable storage piles (No leaning stacks).
B. Authority:
Subject to Section 5.9 the Authority shall be responsible for
all structural repairs in the Premises unless necessitated by
any negligence or willful misconduct of Tenant or Tenant's
subtenants, employees, agents, invitees or guests.
ARTICLE V - INSURANCE AND CASUALTY
5.1 INSURANCE REQUIRED
Tenant shall obtain and maintain in full force, with a company or
companies authorized to transact the business of insurance in the State
of Arizona and of sound and adequate financial responsibility, selected
by Tenant and acceptable to Authority, comprehensive insurance policy
(either as part of any other policy or policies carried by Tenant, or
separately) providing for the protection of the Authority and the City
of Tucson and officers, directors, agents and employees of either of
them, against:
(1) general liability, including all direct or contingent
loss or liability for damages for bodily injury,
personal injury, death or damage to property,
including loss of use thereof, occurring on or in any
way related to the Premises or occasioned by reason
of occupancy by and the operations of Tenant upon, in
and around the Premises, with limits of $1,000,000
per occurrence for personal injury or death or damage
to property, with coverage at least as broad as that
provided by INSURANCE SERVICES OFFICE COMMERCIAL
GENERAL LIABILITY COVERAGE form CG0001 (Occurrence
Form), and such policy or policies shall cover all of
Tenant's operations on the entire Premises, including
but not limited to any elevators and escalators
therein and any sidewalks, streets or other public
ways adjoining the Premises; and
(2) automobile liability covering owned, non-owned,
leased and hired vehicles with combined single limits
of no less than $250,000 per occurrence.
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5.2 DEDUCTIBLE
The deductible for any policy required hereunder shall not exceed
$1,000.
5.3 MODIFICATION OF REQUIREMENTS
Authority may adjust or increase liability insurance amounts and
requirements as Authority deems reasonably necessary, or as may be
required because of changes in the insurance requirements imposed by
Authority's insurer or by applicable law. Tenant shall comply with such
adjustments or increases within such reasonable time period as is
requested by Authority.
5.4 CERTIFICATES
Upon or prior to the commencement of the term of this Sublease and at
least annually thereafter Tenant shall furnish to Authority
certificates of insurance showing the amount and type of the insurance
then in effect that is required to be procured and maintained by it
hereunder and stating the date and term of the policies evidencing such
insurance. Tenant shall, upon request, supply Authority with certified
copies of all applicable insurance policies, riders, endorsements and
declaration pages. Certificates evidencing any renewal, replacement or
extension of any or all of the insurance required hereunder, or of
renewals, replacements or extensions of such renewals, replacements or
extensions, shall be delivered by Tenant to Authority not less than
thirty (30) days prior to the expiration of any policy of insurance
renewed, replaced or extended by the insurance represented by any such
certificate. Each policy of insurance required hereunder shall provide
for not less than thirty (30) days notice to Authority and Tenant
before such policy may be canceled.
5.5 ADDITIONAL INSURANCE
The provisions of this Sublease as to insurance required to be procured
and maintained shall not limit or prohibit, or be construed as limiting
or prohibiting, Authority or Tenant from obtaining any other or greater
insurance with respect to the Premises or improvements thereon or the
use and occupancy thereof that either or both of them may wish to
carry, but in the event Authority or Tenant, as the case may be, shall
procure or maintain any such insurance not required by this Sublease,
the cost thereof shall be at the expense of the party procuring or
maintaining the same.
5.6 ADDITIONAL INSUREDS
All insurance required by this Article shall be procured and maintained
in the name of Tenant and shall add Authority and the City of Tucson as
additional insureds as their interests appear.
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5.7 WAIVER OF SUBROGATION
Each party hereto waives all claims for recovery from the other party
for any loss or damage to any of its property on the Premises insured
under valid and collectible insurance policies to the extent of any
recovery collected from such policies. The parties agree that all
material insurance policies shall be endorsed with a clause which
waives subrogation against the other party.
5.8 INSURANCE BY AUTHORITY
Authority may, upon written notice to Tenant, in the event that Tenant
fails to timely provide proof of insurance as required by Section 5.4
above, procure and maintain any or all of the insurance required of
Tenant under this Article. In such event, all costs of such insurance
procured and maintained by Authority on behalf of Tenant shall be the
responsibility of Tenant and shall be fully reimbursed to Authority
within ten (10) business days after Authority advises Tenant of the
cost thereof.
5.9 CASUALTY TO PREMISES
Authority may, but shall not be required to, maintain insurance against
loss or damage to the Premises, but shall have no obligation to repair
the Premises in the event of casualty or damage thereto. In the event
that any such casualty renders the Premises unsafe or untenantable,
this Sublease shall terminate unless Authority notifies Tenant, within
45 days of the date of the casualty, that Authority intends to repair
the Premises, in which event this Sublease shall remain in full force
and effect, although rent shall abate while the Premises are unusable.
ARTICLE VI - TAXES
6.1 TENANT'S RESPONSIBILITY
Tenant shall pay before delinquency any and all taxes levied or
assessed against the Premises, any levied or assessed against or by
reason of personal property located in, on or about the Premises, any
levied or assessed because of Tenant's right to possession of the
Premises and improvements thereon, all applicable taxes levied or
assessed by any government body as the result of Tenant's operations
and all taxes which may be levied or assessed as the result of rentals
payable under this Sublease. All such taxes and assessments for partial
years shall be apportioned and adjusted on a time basis.
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6.2 PROTEST
Tenant shall have the right at its own cost and expense to contest the
amount or validity of any such tax or assessment and to bring or defend
any actions involving the amount or validity of any such tax or
assessment in its own name or in the name of Authority; provided that,
if unsuccessful, Tenant shall pay and discharge any such tax or
assessment so contested, together with any penalties, fines, interest,
costs and expenses, including reasonable attorneys' fees, that may
result from any such action by Tenant.
ARTICLE VII - RULES, REGULATIONS AND LAWS
7.1 COMPLIANCE WITH ALL APPLICABLE LAWS
Tenant and all persons operating under the rights granted hereby shall
observe and obey all reasonable and lawful rules and regulations with
respect to the use of the Airport which have been or may in the future
be adopted by Authority and shall further abide by all applicable laws,
statutes, ordinances, rules, orders, and regulations of all governing
bodies which are now in effect or which may hereafter be put into
effect.
7.2 NON-DISCRIMINATION
A. NON-DISCRIMINATION COVENANTS
(1) The Tenant for himself, his heirs, personal
representatives, subtenants, successors in interest,
and assigns, as a part of the consideration hereof,
does hereby covenant and agree, as a covenant running
with the land, that in the event improvements are
constructed, maintained, or otherwise operated on the
Premises for a purpose for which a Department of
Transportation ("DOT") program or activity is
extended or for another purpose involving the
provision of similar services or benefits, Tenant
shall maintain and operate such improvements and
services in compliance with all other requirements
imposed pursuant to Title 49, Code of Federal
Regulations, DOT, Subtitle A, Office of the
Secretary, Part 21, Nondiscrimination in
Federally-Assisted Programs of the Department of
Transportation-Effectuation of Title VI of the Civil
Rights Act of 1964, and as said Regulations may be
amended.
(2) The Tenant for himself, his personal representatives,
successors in interest, and assigns, as a part of the
consideration hereof, does hereby covenant and agree,
as a covenant running with the land that: (1) no
person on the grounds of race, color, or national
origin shall be excluded from participation in,
denied the benefits of, or be otherwise subjected to
discrimination in the use of said improvements, (2)
that in the construction of any improvements on,
over, or under such land and the furnishing of
services thereon, no person on the grounds of race,
color, or national origin shall be excluded from
participation in, denied the benefits of, or
otherwise be subject to
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discrimination, (3) that Tenant shall use the
Premises in compliance with all other requirements
imposed by or pursuant to Title 49, Code of Federal
Regulations, Department of Transportation, Subtitle
A, Office of the Secretary, Part 21,
Non-discrimination in Federally-Assisted Programs of
the Department of Transportation-Effectuation of
Title VI of the Civil Rights Act of 1964, and as said
Regulations may be amended.
(3) Tenant shall furnish its accommodations and/or
services on a fair, equal and not unjustly
discriminatory basis to all users thereof and it
shall charge fair, reasonable and not unjustly
discriminatory prices for each unit or service,
PROVIDED THAT Tenant may be allowed to make
reasonable and nondiscriminatory discounts, rebates
or other similar type of price reductions to volume
purchasers.
(4) Tenant assures that it will undertake an affirmative
action program as required by 14 CFR Part 152,
Subpart E, to insure that no person shall on the
grounds of race, creed, color, national origin, or
sex be excluded from participating in any employment
activities covered in 14 CFR Part 152, Subpart E.
Tenant assures that it will require that its covered
sub organizations provide assurances from their sub
organizations, as required by 14 CFR Part 152,
Subpart E, to the same effort.
B. NON-COMPLIANCE
Non-compliance with an provision of this Section shall
constitute a material breach hereof and in the event of such
non-compliance Authority shall have the right to terminate
this Sublease and the estate hereby created without liability
therefore or at the election of Authority or the United
States, either or both shall have the right to judicially
enforce these provisions.
C. SUBLEASES
Tenant agrees that it shall insert the provisions of this
Section in any sublease by which Authority grants a right or
privilege to any person, firm or corporation to render
accommodations and/or services to the public on the Premises
herein subleased.
7.3 COMPLIANCE WITH FAR PART 77
Tenant shall comply with the notification and review requirements
covered in Part 77 of the Federal Aviation Regulations in connection
with any improvements or modification or alteration of improvements on
the Premises.
7.4 FAR PART 107; AIRPORT ACCESS
Tenant and all persons operating under the rights granted hereunder
shall comply with Part 107 of the Federal Aviation Regulations with
respect to aircraft operations and airport
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security at the Airport. Tenant shall at all times take all reasonable
steps to control, police and regulate the use of the Premises and of
the Airport premises to prevent unauthorized persons and the general
public from obtaining access to the Airport. Such steps by Tenant shall
include, but not be limited to, steps requested by Authority and those
required under Federal Regulations. Tenant must secure the Premises so
that there is no inadvertent or purposeful unauthorized entry in or
upon the Airport by people, vehicles, or animals.
7.5 STATE AND FEDERAL AVIATION REGULATIONS
Tenant will conduct its operations and activities on the Airport so as
to conform to all applicable regulations of the Federal Aviation
Administration and the Aeronautics Division of the Arizona Department
of Transportation.
7.6 EXCLUSIVE RIGHTS PROHIBITED
It is understood and agreed that nothing herein contained shall be
construed to grant or authorize the granting of an exclusive right
within the meaning of Section 49 U.S.C. 40103(e).
7.7 ENVIRONMENTAL LAWS
Tenant, at its own expense, shall ensure that Tenant and Tenant's
agents, employees, invitees, and sublessee comply with all present and
hereafter enacted Environmental Laws, and any amendments thereto,
affecting Tenant's operation on the Premises.
A. DEFINITIONS
(1) "Environmental Laws" means any laws, regulations and
ordinances (whether enacted by the local, state,
federal government, or by the Authority) now in
effect or hereafter enacted that deal with the
regulation or protection of the environment
(including the ambient air, ground water, surface
water, and land use, including sub-strata land), or
with the generation, storage, disposal or use of
chemicals or substances that could be detrimental to
human health or the environment.
(2) "Extremely Hazardous Substances" means any substance
or material designated by the United States
Environmental Protection Agency as an "extremely
hazardous substance" under Section 302(a)(2) of the
Superfund Amendment and Reauthorization Act ("SARA")
(42 U.S.C. Section 11002(a)(2)).
(3) "Hazardous Material" means all substances, materials
and wastes that are, or that become, regulated under,
or that are classified as hazardous or toxic under
any environmental law (including, but not limited to,
Extremely Hazardous Substances and Toxic Chemicals).
(4) "Release" means any releasing, spilling, leaking,
pumping, pouring, emitting,
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emptying, discharging, injecting, escaping, leaching,
disposing, or dumping.
B. COMPLIANCE
(1) Compliance with Environmental Laws Generally. Tenant
shall not cause or permit any Hazardous Material to
be used, generated, manufactured, produced, stored,
brought upon, or released, on, under or about the
Premises, or transported to and from the Premises, by
Tenant, its agents, employees, contractors, invitees,
sublessees or any third party in violation of any
Environmental Law, provided that, in no circumstances
shall Tenant cause or permit any Extremely Hazardous
Substance or Toxic Chemical to be used, generated,
manufactured, produced, stored, brought upon, or
Released, on, under or about the Premises, or
transported to and from the Premises.
(2) Cleanup. Without limiting the foregoing, if the
presence of any Hazardous Material on, under or about
the Premises caused or permitted by Tenant results in
any contamination of the Premises, Tenant shall
promptly take all actions at its sole cost and
expense as are necessary to return the Premises to
the condition existing prior to the introduction of
any such Hazardous Material to the Premises; provided
that Authority's approval of such actions shall first
be obtained, which approval shall not be unreasonably
withheld so long as such actions would not
potentially have any material adverse effect on the
Premises. In the event Tenant shall fail timely to
commence or cause to be commenced or fail diligently
to prosecute to completion such actions as are
necessary to return the Premises to the conditions
existing prior to the introduction of any Hazardous
Material to the Premises, Authority may, but shall
not be obligated to, cause such action to be
performed, and all costs and expenses (including,
without limitation, attorneys' fees) thereof or
incurred by Authority in connection therewith shall
be paid by Tenant.
(3) Governmental Submittals. Tenant shall, at Tenant's
own cost and expense, make all submissions to,
provide all information to, and comply with all
requirements of any governmental authority having
jurisdiction (the "Government") under the
Environmental Laws. Should the Government determine
that a site characterization, site assessment and/or
a cleanup plan be prepared or that a cleanup should
be undertaken because of any release of hazardous
materials at the Premises which occur during the term
of this Sublease, then Tenant shall, at Tenant's own
cost and expense, prepare and submit the required
plans and financial assurances, and carry out the
approved plans in accordance with all requirements of
the Government.
(4) Information Sharing. Tenant shall provide to Tucson
Airport Authority a copy of any and all information,
reports, and applications submitted to the Government
as described in Paragraph X.6B.(4), whether such
submittal is routine or in response to a release or
threatened release of any Hazardous
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Material, and whether the impetus for such submittal
is generated by Tenant, or by an inquiry or action by
the Government or another third party. At no cost or
expense to Authority, Tenant shall promptly provide
all information requested by Authority to determine
the applicability of the Environmental Laws to the
Premises, or to respond to any governmental
investigation or to respond to any claim of liability
by third parties which is related to environmental
contamination. Tenant shall immediately notify
Authority of any correspondence or communication from
any governmental entity regarding the application of
Environmental Laws to the Premises or Tenant's
operation of the Premises.
(5) Change in Use of Premises. Tenant shall immediately
notify Authority of any changes in Tenant's operation
on the Premises that will change or has the potential
to change Tenant's or Authority's obligations or
liabilities under the Environmental Laws.
C. INDEMNITY
Tenant shall indemnity, defend and hold harmless Authority,
its successors and assigns, its employees, agents and
attorneys from and against any and all liability, loss,
damage, expense, penalties and costs (including legal and
investigation fees or costs) arising from or related to any
claim or action for injury, liability, breach or warranty or
representation, or damage to persons or property and any and
all claims or actions brought by any party or governmental
body, alleging or arising in connection with (i) contamination
of, or adverse effects on, the environment (whether known,
alleged, potential, or threatened), or (ii) alleged or
potential violation of any Environmental Law or other statute,
ordinance, rule, regulation, judgment or order of any
government or judicial entity which are brought as a result
(whether in part or in whole) of any activity or operation on
or Release from the Premises (caused by any person or entity
other than Authority) during the term of this Sublease or any
previous sublease of the Premises by Tenant or its owners or
related entities. This obligation includes but is not limited
to all costs and expenses related to investigation and/or
cleaning up the Premises and all land, soil, and underground
or surface water as required under the law. Tenant's
obligations and liabilities under this paragraph shall
continue so long as Authority bears any liability or
responsibility under the Environmental Laws for any action
that occurred on the Premises during the term of the Sublease.
This indemnification of Authority by Tenant includes, without
limitation, costs incurred in connection with any
investigation of site conditions or any cleanup, remedial,
removal or restoration work required by any federal, state, or
local governmental agency or political subdivision because of
Hazardous Material located on the Premises or present in the
soil or ground water on, under or about the Premises. The
parties agree that Authority's right to enforce Tenant's
Promise to indemnify is not an adequate remedy at law for
Tenant's violation of any provision of this paragraph;
Authority shall have all the rights and remedies set forth in
this
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Sublease as well as all other rights and remedies provided by
law.
D. SUBTENANTS
Tenant shall insert the provisions of this section in any
lease agreement or contract by which it grants a right or
privilege to any person, firm or corporation under this
Sublease.
ARTICLE VIII - SUPERIOR RIGHTS
8.1 AGREEMENTS WITH UNITED STATES
This Sublease shall be subordinate to the provisions and requirements
of any existing or future agreement between Authority and the United
States, relative to the development, operation or maintenance of the
Airport.
8.2 RIGHTS OF GOVERNMENT DURING WAR OR NATIONAL EMERGENCY
This Sublease and all the provisions hereof shall be subject to
whatever right the United States Government now has or in the future
may have or acquire, affecting the control, operation, regulation and
taking over of the Airport or the exclusive or non-exclusive use of the
Airport by the United States during the time of war or national
emergency.
Tenant and Authority recognize that during the time of war or national
emergency the City of Tucson, owner of the Airport, has the right to
enter into agreements with the United States government for military or
naval use of part or all of the Airport. If any such agreement is
executed by the City of Tucson, the provisions of this Sublease,
insofar as they are inconsistent with the provisions of any agreement
so made by the City of Tucson with the United States government, shall
be subject to the terms of such agreement and Tenant shall have no
claim against Authority or the City of Tucson for any loss or damage
sustained by Tenant because of the making of such agreement by the City
of Tucson. In such event, however, the amounts, if any, payable from
the City of Tucson or the United States for improvements placed on the
Premises by Tenant shall be paid to Tenant if this Sublease is in
effect at the time of such taking.
8.3 RIGHTS OF AUTHORITY
Authority reserves the right to further develop or improve the landing
area of the Airport as it sees fit, regardless of the desires or view
of Tenant and without interference or hindrance. Authority reserves the
right, but shall not be obligated to Tenant, to maintain and keep in
repair the landing area of the Airport and all publicly-owned
facilities of the Airport, together with the right to direct and
control all activities of Tenant in this regard.
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8.4 AGREEMENTS WITH CITY OF TUCSON
This Sublease is subject to the existing lease between Authority and
the City of Tucson and to the provisions of any existing or future
agreement between the City of Tucson and Authority.
8.5 ABATEMENT OF OBLIGATION TO CONSTRUCT OR REBUILD
Inasmuch as this Sublease contains certain provisions concerning
repairs, replacement and rebuilding of damaged or destroyed buildings,
construction of buildings, quiet enjoyment and other related causes
applicable to the parties to this Sublease, and inasmuch as the
Premises constitute a portion of a public Airport, it is agreed that
the parties hereto shall not be required to repair, replace, rebuild or
construct any building or portion of any building so long as the
obligated party is prevented from so doing by action of the United
States government or any agency or department thereof.
ARTICLE IX - RESERVATION OF NAVIGATION EASEMENT
9.1 EASEMENT
There is hereby reserved to Authority for the use and benefit of
aircraft using the Airport a right of flight for the passage of
aircraft in the airspace above the uppermost surface of the Premises,
together with the right to cause such noise as may be inherent in the
operation of any aircraft now known or hereafter used for navigation of
or flight in said airspace, or landing at, or taking off from, or
operating on the Airport.
9.2 STRUCTURES; ELEVATION LIMIT
Tenant, by accepting this Sublease, expressly agrees for itself, its
successors and assigns that it will not erect nor permit the erection
of any structure or object, nor permit the growth of any tree on the
Premises above the mean sea level elevation of 2460 feet. In the event
the aforesaid covenants are breached, Authority reserves the right to
enter upon the Premises and to remove the offending structure or object
and cut the offending tree, all of which shall be at the expense of
Tenant.
9.3 PURPOSES
Tenant, by accepting this Sublease agrees for itself, its successors
and assigns that it will not make use of the Premises in any manner
which might interfere with the landing and taking off of aircraft from
the Airport or otherwise constitute a hazard. In the event the
aforesaid covenant is breached, Authority reserves the right to enter
upon the Premises and cause the abatement of such interference at the
expense of Tenant.
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ARTICLE X - ASSIGNMENT AND SUBLEASE
10.1 CONSENT OF AUTHORITY
Tenant shall not sublease, assign or sell this Sublease or any interest
therein, or any portion of the Premises, without first obtaining
written consent from Authority. For this purpose, any change in
ownership or control of Tenant shall be considered an assignment of
rights hereunder. Tenant shall furnish the Authority with a copy of any
sublease or assignment entered into with respect to this Sublease or
the Premises or any portion thereof.
10.2 CONTINUING RESPONSIBILITY OF TENANT
If it is a complete assignment or sublease of the entire Premises it
shall be in writing and provide that the subtenant or assignee assumes
and agrees to perform all of the terms, covenants and agreements which
Tenant has agreed to perform under this Sublease, and that Tenant's
subtenant or assignee shall become jointly and severally liable with
Tenant, or any successor in interest of Tenant, for the performance of
the terms and covenants of this Sublease. A sublease for less than the
entire Premises shall be in writing and shall recite that it is subject
and subordinate to all the terms and provisions of this Sublease.
Neither the execution of such sublease or assignment, the Authority's
consent to the same, nor the acceptance of rent by Authority from
Tenant's subtenant or assignee shall release or in any manner affect
Tenant's liability to Authority hereunder.
10.3 SUBJECT TO THIS SUBLEASE
Any sublease between Tenant and a subtenant shall be in writing and
shall provide that said sublease is subject to all the provisions of
this Sublease.
ARTICLE XI - DEFAULTS AND REMEDIES
11.1 DEFAULT BY TENANT
Tenant shall be in default under this Sublease upon the occurrence of
any of the following "Events of Default":
A. Tenant shall fail to pay when due any installment of rent
payable pursuant to this Sublease and such failure shall
continue unremedied for a period of ten (10) days; provided
that Tenant shall not be entitled to the benefit of more than
one (1) grace period of ten (10) days under this paragraph
A(1) within any calendar year.
B. Tenant or any of Tenant's agents, employees, guests, invitees,
or subtenants, shall use Premises for any unlawful or illegal
purpose or for any purpose other than those set forth on
Exhibit B.
C. Tenant shall fail to observe or perform any other covenant,
agreement or
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obligation hereunder and such failure shall not be remedied
within thirty (30) days (or such additional time as is
reasonably required in the opinion of Authority to correct any
such failure, if Tenant has instituted corrective action and
is diligently pursuing the same) after Authority shall have
given Tenant written notice specifying which covenant,
agreement or obligation Tenant has failed to observe or
perform; provided that Tenant shall not be entitled to the
benefit of more than two (2) grace periods of thirty (30) days
(or more if permitted) under this paragraph within any
calendar year.
D. There is commenced by or against Tenant any case under the
Bankruptcy Code (Title XI of the United States Code) or any
other bankruptcy, arrangement, reorganization, receivership,
custodianship or similar proceeding under any federal, state
or foreign law, and with respect to any such case or
proceeding that is involuntary, such case or proceeding is not
dismissed with prejudice within sixty (60) days of such
filing.
E. Tenant makes a general assignment for the benefit of creditors
or applies for, consents to, or acquiesces in the appointment
of a trustee, receiver, or other custodian for Tenant or the
property of Tenant or any part thereof, or in the absence of
such application, consent, or acquiescence, a trustee,
receiver or other custodian is appointed for Tenant or the
property of Tenant or any part thereof, and such appointment
is not discharged within sixty (60) days
F. Any action is commenced against Tenant to foreclose any lien
or mortgage or other rights of Tenant in or to the Premises.
G. Tenant abandons, deserts or vacates the Premises for seven (7)
consecutive days or more.
11.2 REMEDIES OF AUTHORITY
If Tenant shall be in default hereunder as set forth above, the
Authority may exercise any of the following remedies.
A. TERMINATION
Authority may, at its election, give Tenant written notice of
its intention to terminate this Sublease on a date which shall
not be earlier than ten (10) days after such notice is given.
If all defaults have not been cured on or before the date
specified in the notice, Tenant's rights to possession of the
Premises shall cease, and with or without re-entry by
Authority, this Sublease and the term hereof shall terminate,
and Authority may then re-enter and take possession of the
Premises as provided below with respect to reentry without
termination. Any such termination must be express, and neither
notice to pay rent or to deliver up possession of the Premises
given pursuant to law, nor any proceeding instituted by
Authority, nor the failure by Tenant for any period of time to
pay any of the rent herein reserved, shall of itself operate
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to terminate this Sublease.
(1) Damages. Notwithstanding the termination of this
Sublease or any re-entry by Authority upon such
termination, Tenant shall continue to be liable for
and Authority shall be entitled to recover as
damages:
(a) the sum of all rent that is due and owing as
of the date of termination and all other
sums then owing by Tenant hereunder;
(b) all rent that would otherwise continue to
accrue during the remaining term hereof or,
at the election of Authority, the discounted
present value of the sum of all rentals
remaining to be paid for the remaining term
of this Sublease, calculated by the
Authority in its reasonable discretion; and
(c) the reasonable costs incurred by Authority
in re-letting the Premises and the
reasonable costs to Authority necessary to
place the Premises in condition for
re-letting.
(2) Credit. Any rent, income, receipts, profits or other
monies received or derived by Authority from any
re-letting or other use of the Premises after the
termination of this Sublease shall, so long as Tenant
shall continue to be liable for the payment of rent
hereunder, be credited against such rent as received
and collected.
B. REENTRY WITHOUT TERMINATION
As an alternative remedy, Authority may, without terminating
this Sublease, and after giving Tenant ten (10) days written
notice, re-enter the Premises and take possession thereof
pursuant to any legal proceedings or notice required by law,
in which event Tenant shall remain liable for the payment of
all rent and the performance of all conditions contained in
this Sublease.
(1) Reentry. Upon any such re-entry of the Premises
by Authority, Authority may expel Tenant and those
claiming through or under Tenant and remove their
property and effects (forcibly, if necessary) without
being guilty in any manner of trespass and without
any liability therefor and without prejudice to any
remedies of Authority in the event of default by
Tenant, and without liability for any interruption of
the conduct of the affairs of Tenant or those
claiming through or under Tenant which may result
from such entry. Tenant hereby irrevocably appoints
Authority as the agent and attorney-in-fact of Tenant
to remove all of Tenant's property whatsoever
situated upon the Premises and to place such property
in storage in any warehouse or other suitable place
in Tucson, Arizona, for the account of and at the
expense of Tenant and Tenant hereby exempts and
agrees to save harmless Authority from any costs,
loss or damage whatsoever arising or occasioned by
any such removal and storage of such property by
Authority or its duly authorized agents in accordance
with the provisions herein contained.
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(2) Reletting. After such re-entry, Authority shall use
reasonable diligence to re-let the Premises, or any
part or parts thereof, for such period or periods and
upon such term or terms and at such reasonable rental
or rentals and upon such other conditions as
Authority may deem advisable, with the right to make
alterations and repairs to the Premises. Tenant
hereby irrevocably appoints Authority as the agent
and attorney-in-fact of Tenant to enter upon and
re-let the Premises and to incur any necessary
expenses in doing so, all to be reimbursed by Tenant.
Tenant agrees that no acts of Authority in effecting
such re-letting shall constitute a termination of
this Sublease, irrespective of the period for which
such re-letting is made or the terms and conditions
of such re-letting or otherwise.
(3) Credit. Tenant shall receive a credit against such
rental in the amount of the proceeds, if any, of such
re-letting. Tenant's obligations, in addition to
rent, for which it shall remain liable include, but
shall not be limited to, all repossession costs,
brokerage commissions, legal expenses, attorneys'
fees, expenses of employees, removal costs,
alteration costs and expenses of preparation for
re-letting, and any other amounts expended pursuant
to action taken under this paragraph.
11.3 REMEDIES CUMULATIVE
All rights, options and remedies of Authority contained in this
Sublease shall be construed and held to be cumulative, and no one of
them shall be exclusive of the other, and Authority shall have the
right to pursue any one or all of such remedies or any other remedy or
relief which may be provided by law, whether or not stated in this
Sublease (including but not limited to any right of "self help" or
similar remedy in order to minimize any damages, expenses, penalties
and related fees or costs).
11.4 NO WAIVER
No waiver of any Event of Default of Tenant hereunder shall be implied
from any acceptance by Authority of any rent or other payments due
hereunder or any omission by Authority to take any action on account of
such default if such default persists or is repeated, and no express
waiver shall affect an Event of Default in a manner other than as
specified in said waiver. The consent or approval by Authority to or of
any act by Tenant requiring Authority's consent or approval shall not
be deemed to waive or render unnecessary Authority's consent or
approval to or of any subsequent similar acts by Tenant.
11.5 NOTICE
Any default notice tendered to Tenant hereunder shall be deemed to be
sufficient if it is reasonably calculated to put Tenant on inquiry as
to the nature and extent of such default.
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11.6 INTEREST
All amounts due the Authority hereunder shall accumulate interest at a
rate of 12% per annum or the maximum amount allowed by law, whichever
is less.
ARTICLE XII - TERMINATION BY TENANT
12.1 TERMINATION EVENTS
Tenant may terminate this Sublease at any time upon thirty (30) days
written notice to Authority upon or after the happening or continuation
of any of the following events:
A. The inability of Tenant to use, for a period of
thirty (30) consecutive days, any portion of the
rights, licenses, services or privileges of Tenant
hereunder because of any law, rule, regulation or
other action or failure to act on the part of any
United States governmental authority having
jurisdiction thereof.
B. The default by Authority in the performance of any
covenant or agreement herein required to be performed
by Authority and the failure of Authority to remedy
such default for a period of thirty (30) days after
receipt of written request or demand from Tenant to
remedy the same.
C. The assumption by the United States government or any
authorized agency thereof of the operation or control
of the Airport or any part thereof, in such manner as
to substantially restrict Tenant for a period of at
least thirty (30) consecutive days from conducting
any of its operation on the Premises.
12.2 CURE
If any of the foregoing reasons for termination by Tenant cease to
exist prior to a termination, then the right to terminate for such
reason shall cease.
12.3 NO WAIVER
No waiver by Tenant of Authority's default of any of its obligations
hereunder shall be construed to be or act as a waiver by Tenant of any
subsequent default by Authority.
ARTICLE XIII - SURRENDER OF POSSESSION, CONDITION OF
PREMISES
13.1 SURRENDER
Upon the expiration or earlier termination of this Sublease or any
extensions thereof, all rights herein granted to Tenant shall cease and
terminate and Tenant shall forthwith surrender
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the Premises to Authority.
13.2 GOOD CONDITION
The Premises shall be returned to Authority in as good condition as at
the time of occupancy by Tenant, except as otherwise provided in this
Sublease, ordinary wear and tear excepted.
13.3 REMOVAL OF PROPERTY
Tenant, and Tenant's subtenants, may remove any and all personal
property, including portable buildings, signs, trade fixtures,
machinery and equipment from the Premises prior to expiration of this
Sublease; provided, however, that Tenant shall repair any damage caused
by such removal. Title to any property remaining in the Premises after
expiration or termination of this Sublease shall vest in Authority and
Authority shall have the right and option to remove the same, restore
the Premises and recover from Tenant the costs and expenses of doing
so.
ARTICLE XIV - MISCELLANEOUS
14.1 NOTIFICATION OF CHANGES
Tenant shall promptly notify Authority of any change in Tenant's name
or address or a change in ownership.
14.2 SUCCESSORS AND ASSIGNS BOUND
All the terms, covenants and conditions of this Sublease shall extend
to and bind the successors and assigns of the respective parties
hereto.
14.3 ARTICLE HEADINGS
The article headings contained herein are for convenience and reference
and are not intended to define or limit the scope of any provisions of
this Sublease.
14.4 SEVERABILITY
If any term or condition of this Sublease shall be deemed to be invalid
or unenforceable, all other terms and conditions shall remain in full
force and effect.
14.5 APPLICABLE LAW
The terms and conditions of this sublease shall be interpreted in
accordance with the laws
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of the State of Arizona.
14.6 CONSTRUCTION OF SUBLEASE
Authority and Tenant agree that each party and its counsel have
reviewed and revised this Sublease and that any rule of construction to
the effect that ambiguities are to be resolved against the drafting
party shall not apply in the interpretation of this Sublease. No remedy
or election given by any provisions of this Sublease shall be deemed
exclusive unless so indicated, but each shall, whenever possible, be
cumulative with all other remedies in law or equity. Each provision
hereof shall be deemed both a covenant and a condition and shall run
with the land for the duration of the leasehold term or any extensions
thereof. Whenever the content of any provision shall require it, the
singular number shall be held to include the plural number and vice
versa. The form of this Sublease contemplates that Tenant will be an
entity and not one or more natural persons. If Tenant is one or more
natural persons, then all pronouns referring to Tenant shall be deemed
to be appropriately changed to fit those circumstances.
14.7 COSTS AND ATTORNEYS' FEES
A. AUTHORITY'S REVIEW
Tenant shall pay the expenses (including reasonable attorneys'
fees and the fees of other consultants) incurred by Authority
in reviewing any of the documents (including subleases, plans
and specifications of any improvements to be constructed by
Tenant, and documents created pursuant to Section ) for which
Authority's approval is required by the terms hereof.
B. ENFORCEMENT OF RIGHTS
The non-prevailing party shall promptly pay to the prevailing
party, upon demand, all costs and other expenses paid or
incurred by the prevailing party (including, without
limitation, reasonable attorney's fees) in enforcing or
exercising its rights or remedies created by, connected with
or provided for in this Sublease, whether or not any action or
proceeding is brought (including, without limitation, all such
costs, expenses and fees incurred in connection with any
bankruptcy, receivership, or other court proceedings [whether
at the trial or the appellate level]).
14.8 NOTICES
A. TO AUTHORITY
Notices to Authority in connection with this Sublease shall be
sufficiently served if physically delivered or sent by
certified mail, postage prepaid, addressed to Authority at the
address shown for it above.
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B. TO TENANT
Notices to Tenant in connection with this Sublease shall be
sufficiently served if physically delivered or sent by regular
mail, postage prepaid, addressed to Tenant at the address
shown for it above, provided that notice of utility
interference shall be sufficiently served if Authority gives
said notice to the current supervisor of Tenant's operations
on the Premises.
C. TIMING
Service of any notice or demand by physical delivery shall be
deemed complete upon the date of delivery. Service of any
notice or demand by certified mail shall be deemed complete at
the expiration of three (3) days after the date of the
certified mailing if mailed within the continental United
States.
D. CHANGE IN ADDRESS
Each party may change its address to such other addresses as
such party may designate to the other in writing from time to
time.
14.9 AUTHORITY TO EXECUTE
Each party represents and warrants to the other that it has the right
and authority to enter into this Sublease.
IN WITNESS WHEREOF the parties have executed this Sublease as of the day and
year first above written.
TUCSON AIRPORT AUTHORITY, INC.,
an Arizona nonprofit corporation
By: /s/ Signature Illegible
------------------------------------
Its:
------------------------------------
"AUTHORITY"
AAS-COMPLETE CONTROLS, INC.
an Arizona Corporation
By: /s/ Micah Chapman
------------------------------------
Micah Chapman
Its: President
------------------------------------
"TENANT"
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By: /s/ Joe Civiletto
------------------------------------
Joe Civiletto
Its: Chief Operating Officer
------------------------------------
"TENANT"
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