GROUND LEASE
BETWEEN
KENTON COUNTY AIRPORT BOARD
AND
MESABA AVIATION, INC.
FOR
HANGAR AND RELATED MAINTENANCE FACILITY
* * * * * * *
THIS AGREEMENT made and entered into in Boone County, Kentucky, as of
the first day of September, 1999, by and between KENTON COUNTY AIRPORT
BOARD, a local air board and a body corporate and politic created pursuant
to the provisions of Chapter 183 of the Kentucky Revised Statutes,
hereinafter referred to as the "Board" and MESABA AVIATION, INC., d/b/a
Mesaba Airlines, a Minnesota corporation, authorized to do business in the
Commonwealth of Kentucky, hereinafter referred to as the "Company".
WHEREAS, the Board operates an airport located in Boone County,
Kentucky, known as the Cincinnati/Northern Kentucky International Airport;
WHEREAS, the Company is engaged in the business of transporting
passengers and cargo by air and other related activities and desires to
construct an aircraft hangar and maintenance facility on the Airport in
connection with the Company's business;
WHEREAS, the Company has requested the Board to provide assistance to
the Company in leasing to the Company of an acceptable tract of land at the
Airport and issuing its special facilities revenue Bonds for the financing
of the Project Facilities, herein defined; and the Board desires to induce
the Company to enter into this Ground Lease for the terms and pursuant to
conditions, provisions and covenants hereinafter set forth.
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements herein contained, the parties agree as follows:
SECTION I
DEFINITIONS
-1-
<PAGE>
Unless the context clearly indicates some other meaning, the following
words and terms shall, for all purposes of this Ground Lease, have the
following meanings:
"Airport" means the Cincinnati/Northern Kentucky International Airport
located in Boone County, Kentucky, together with any improvements thereto
or enlargements thereof and all functionally related and subordinate
facilities related thereto.
AApplicable Laws@ means all laws, ordinances, orders, rules and
regulations of all Federal, state and municipal governments and the
appropriate departments, commissions, boards and offices thereof, including
the Board, having jurisdiction over the Airport and the Leased Premises,
legally applicable to the Company's activities hereunder.
"Board" means the Kenton County Airport Board, a public and
governmental body corporate and politic created pursuant to the provisions
of Chapter 183 of the Kentucky Revised Statutes, or, if such entity shall
be abolished, the board, body, commission or agency succeeding to the
principal functions thereof or to which the powers and duties thereof shall
be given by law.
"Bond" or "Bonds" means the bonds authorized to be issued by the Board
at the request of the Company pursuant to this Ground Lease and Indenture.
ACode@ means the Internal Revenue Code of 1986, as amended to date,
and all applicable Treasury Regulations promulgated thereunder.
"Company" means Mesaba Aviation, Inc., d/b/a Mesaba Airlines, a
corporation duly incorporated and existing under the laws of the State of
Minnesota and qualified to do business in the Commonwealth of Kentucky or,
if such corporation shall merge, consolidate or shall sell substantially
all of its assets, the corporation or other entity succeeding to the
principal functions thereof.
"Director of Aviation" or ADirector@ means the Director of Aviation
of the Board, or his/her designee.
AGround Lease@ means this agreement, dated as of September 1, 1999,
entered into by and between the Board and the Company, together with all
amendments and supplements hereto hereafter made in accordance with the
provisions hereof.
AIndenture @ means the Indenture of Trust dated as of July 1, 1999,
between the Board and Norwest Bank, Minnesota, N.A., a national banking
association, as Trustee, pursuant to which the Bonds shall be issued.
ALease Agreement@ means that agreement dated as of July 1, 1999,
between the Board and the Company pertaining to the financing of the costs
of installation, construction and equipping of the Project Facilities, and
any and all modifications, alterations, amendments and supplements to said
Lease Agreement.
-2-
<PAGE>
ALeased Premises@ means that parcel of land containing approximately
515,307.2 square feet leased to the Company hereunder and specifically
identified on Exhibit AA@ attached hereto and incorporated herein by
reference.
APersonal Property@ means all furniture and other portable property
furnished or used by the Company in its operations hereunder.
AProject Facilities@ means all improvements acquired, installed or
constructed on the Leased Premises by or on behalf of the Company as set
forth and identified on Exhibit AB@.
ARental Commencement Date@ means the first day of the first month next
following the earlier of the date the Company commences its business on the
Leased Premises or the date twelve (12) months after the date of this
Ground Lease.
ARestricted Use Area@ means that part of the Leased Premises
specifically identified on Exhibit AA@ attached hereto and incorporated
herein by reference. The Restricted Use Area of the Leased Premises
contains approximately 17,982.7 square feet.
"Term or Term of this Ground Lease" means the term as set forth in
Section V hereof.
ATrade Fixtures@ means all appliances, signs and other major equipment
or improvements commonly regarded as trade fixtures with a useful life in
excess of three (3) years, installed by the Company on the Leased Premises.
The term Trade Fixtures shall not include carpeting, floor covering,
attached shelving, lighting fixtures other than free standing lamps, or
wall coverings. Any item normally defined as a Trade Fixture which is
affixed to the Leased Premises in such a manner as to cause structural
damage to the Leased Premises upon such item's removal shall be deemed a
Fixed Improvement.
SECTION II
LEASED PREMISES
A. The Board does hereby devise and exclusively lease unto the
Company, and the Company does hereby take from the Board, that parcel of
land located on the Airport containing approximately 515,307.2 square feet
of land, and including the Restricted Use Area, all as set forth and
identified on Exhibit AA@ attached hereto and hereafter referred to as the
ALeased Premises@.
B. The Company shall have the option to enlarge the area of the
Leased Premises by adding thereto on or before the expiration of ten (10)
years after the commencement of the Rental Commencement Date that parcel
of land containing approximately 202,248.2 square feet (the AOption
Parcel@), all as set forth and identified on Exhibit AA@ attached hereto
and incorporated herein by reference. The Company may exercise the option
to add such Option Parcel to the area of the Leased Premises by giving
-3-
<PAGE>
written notice to the Board within such ten (10) year period of the
exercise of such option and said parcel shall become a part of the Leased
Premises on the first day of the month next following receipt by the Board
of Company's written notice of exercise of this option. This option shall
expire ten (10) years after the Rental Commencement Date. The rental to be
paid by the Company to the Board for such Option Parcel shall be at the
same per square foot rental then being paid for the initial parcel being
leased hereunder as set forth and described in Section VI hereof, and such
parcel as a part of the Leased Premises shall be otherwise subject to the
terms and conditions of this Ground Lease. The rental to be paid by the
Company for such Option Parcel shall commence on the earlier of (a) the
first day of the first month next following the date the Company commences
its business on the Option Parcel or (b) the first day of the first month
next following the later of the date twelve (12) months after the date of
the exercise of such option or the date the Board gives written notice to
the Company that the stream referenced in Section III. C. below has been
redirected off of the Option Parcel.
The consideration to be paid by the Company to the Board for this
option is as set forth in Section VI B. The Company may upon the giving of
not less than thirty (30) days prior written notice to the Board terminate
the option herein granted to it to lease the Option Parcel, and the
consideration to be paid by the Company to the Board for the terminated
option for the period after the date of termination likewise shall
terminate.
3. The Board represents and warrants that it is the owner
of the Leased Premises and of the Option Parcel and has the full right and
lawful authority to enter into this Ground Lease.
SECTION III
DEVELOPMENT OF THE LEASED PREMISES BY THE BOARD
A. The Board shall commence and complete the clearing, grading,
draining and improving of the Leased Premises in accordance with
documentation entitled AProposal, Contract Documents and Specifications for
Mesaba Hangar Site Preparation@ dated January 1999 (the AContract
Documents@) which Contract Documents form the basis for a contract to
perform such work awarded by the Board to Baker Concrete.
Changes in the Contract Documents may be made by the Board without
the approval of the Company provided that such changes are consistent and
in harmony with the development of the Project Facilities on the Leased
Premises. All other changes in the Contract Documents shall be made only
after approval by the Company, which approval shall not be unreasonably
withheld or delayed. The Company shall designate a representative
authorized to give approvals on behalf of the Company under the provisions
of this Section III which representative shall at all reasonable times be
available on the Airport to representatives of the Board.
B. In consideration of the performance of the construction work on
the Leased Premises by the Board as hereinabove set forth, the Company
-4-
<PAGE>
shall at the time of the execution of this Ground Lease pay to the Board
the sum of $200,000.
C. The Board shall, at its sole cost and expense,(1) no later than
November 1, 2000, complete the redirection of the stream running through
the Leased Premises off of the Leased Premises and,(2) no later than twelve
months after receipt of notice by the Board from the Company of the
exercise of the Company's option to add the Option Parcel to the Leased
Premises, complete the redirection of the stream running through the Option
Parcel off of the Option Parcel.
SECTION IV
CONSTRUCTION OF IMPROVEMENTS BY COMPANY
A. The Company shall, at its own expense and without cost to the
Board, commence and complete construction of the Project Facilities,
including directly related vehicular parking and other support facilities,
fixtures and landscaping, all as set out in Exhibit A
B@ as it may be
modified from time to time. The Project Facilities shall be of good
material, sound construction, attractive in design and in accordance with
the Guidelines For Design and Review of Tenant Facilities established by
the Board which are attached hereto as Exhibit AC@ and made a part hereof.
B. Prior to commencement of construction by the Company on the
Leased Premises, the Company shall submit to the Board for written
approval, preliminary plans and specifications for the Project Facilities,
including the identification of facilities and methods for the handling
of Hazardous wastes on the Leased Premises, as well as a schedule for their
construction. The Company's plans and specifications shall be subject to
approval by the Board, which reserves the right to withhold approval for
any and all provisions or portions thereof. Said Board approval shall not
be unreasonably withheld.
C. After approval by the Board of the preliminary plans and
specifications for the Project Facilities, the Company shall submit all
construction plans as they are developed by the Company and/or its
architects, engineers and other professionals for review and written
approval by the Director of Aviation of the Board or his designee, which
approval shall not be unreasonably withheld. Such plans shall designate
the location and boundaries of the various areas in the Project Facilities
and the proposed uses thereof. The Company shall not commence construction
of any phase of the Project Facilities until the plans applicable to such
phase or portion of construction have been approved as set out above.
After completion of construction on the Leased Premises by the Company, but
in no event later than three months after the Company commences use of the
Project Facilities on the Leased Premises, the Company shall at its cost
furnish to the Board a reproducible set of as-built drawings of the Project
Facilities for use by the Board for its purposes in accordance with the
guidelines set forth in Exhibit AC@.
-5-
<PAGE>
D. All construction work, workmanship, materials and installations
shall be in substantial compliance with the approved plans and
specifications. No changes in the plans or specifications shall be made
without the prior written consent of the Director of Aviation or his
designee, other than minor and insignificant changes which do not affect
the designed use or the structural integrity of the improvements or their
appearance.
E. The Board agrees to cooperate with the Company in regard to the
construction and installation of the Project Facilities and any approval
required by the Board or any of its members, officers, employees or agents
shall be given in a timely fashion so as not to delay or interfere with the
progress of the construction work by the Company. Furthermore, all such
approvals shall not be unreasonably withheld.
F. During the period of construction, the Board, at its expense,
shall have the right to inspect any or all construction work, workmanship,
material and installation involved in or incidental to the construction of
the Project Facilities.
G. If to the extent it is required by Applicable Law, not less
than the prevailing hourly rate of wages as determined by the Commissioner
of Labor of the Commonwealth of Kentucky shall be paid to all laborers,
workers, and mechanics performing work in the Construction of the Project
Facilities. Subject to the provisions hereof, in connection with the
construction of the Project Facilities and in the exercise of the Company's
rights and obligations hereunder, the Company shall not permit a mechanics
lien for any labor or materials nor any claim for labor or wages, or
penalties in relation thereto, including, but not limited to, claims
arising under or by reason of the provisions of Kentucky Revised Statutes
337.505 through 337.994, inclusive, to attach to or against the Leased
Premises or the leasehold interest granted hereunder, or the Board
(including within the definition thereof for purposes of this Subsection
G, the Board's members, officers, agents, servants or employees,
individually) and, if any such lien or claim is filed against the Leased
Premise or the leasehold interest granted hereunder or made against the
Board, the Company shall protect and save the Board harmless against any
loss, liability or expense whatsoever by reason thereof and shall proceed
with or defend, at its own expense, such action or proceeding as may be
necessary to remove the lien or satisfy the claim, notwithstanding any
other provision contained in this agreement.
H. Title to all improvements made to and upon the Leased Premises
by the Company will vest in the Board at the expiration of the Term set
forth herein or such time as this Ground Lease, including options if
exercised, is terminated.
Notwithstanding the foregoing, in the event Bonds are issued by
the Board, at the request of the Company for the financing of the Project
Facilities, title to the Project Facilities shall vest in the Board,
pursuant to Section 142 of the Code.
-6-
<PAGE>
SECTION V
TERM
A. Initial Term. This Ground Lease shall become effective as of
the date hereof, and shall continue in full force and effect for an Initial
Term expiring September 1,2029, unless terminated prior thereto as
hereinafter provided.
B. Extended Term. Upon expiration of the Initial Term of this
Ground Lease, and provided that the Company is in compliance with all of
the terms and conditions hereof to be performed by the Company, the Company
may extend the Term of this Ground Lease for two(2) additional periods of
five years each exercisable in the case of each such option by the giving
of written notice by the Company to the Board not more than eighteen (18)
months nor less than twelve (12) months prior to the expiration of either
the initial Term or the applicable renewal term. There shall be no further
privilege of renewal of this Ground Lease beyond that specified herein. If
the Company fails to renew this Ground Lease for the first renewal term,
then the option to renew for the additional renewal term shall terminate.
C. Modification of Terms. Notwithstanding the foregoing, if Bonds
are issued by the Board for financing of the Project Facilities, the
initial term and extended terms of this Ground Lease are and shall be
automatically modified for a term or terms as set forth in the Lease
Agreement; provided that in no event shall the total length of the initial
term together with all extended terms extend beyond forty (40) years after
the commencement of the Initial Term of this Ground Lease.
SECTION VI
RENTAL PAYMENTS TO BOARD
A. Ground Rental for Leased Premises. Commencing on the Rental
Commencement Date and continuing on the same day of each and every month
thereafter, the Company shall pay to the Board for the use and occupancy
of the Leased Premises through the initial term and extended terms of this
Ground Lease an annual Ground Rental, payable in monthly installments,
based upon the total square footage of the Leased Premises less the square
footage of the Restricted Use Area, calculated as hereinafter set forth:
ANNUAL RENTAL PER
RENTAL YEAR SQ. FT. OF LAND AREA ANNUAL RENTAL
Year 1 through 10, $0.25 $124,331.125
inclusive
Year 11 through 20,
inclusive $0.32 $159,143.840
Year 21 through 30,
inclusive $0.41 $203,903.045
-7-
<PAGE>
Year 31 through 35,
inclusive $0.49 $243,689.005
Year 36 through
termination $0.56 $278,501.720
B. Fee for Option. In consideration for the option to add an
additional parcel to the Leased Premises as set forth under the provisions
of paragraph B of Section II above, the Company shall pay to the Board an
annual charge, payable in monthly installments, commencing on the Rental
Commencement Date based upon the total square footage of the Option Parcel
less the square footage of the Restricted Use Area, calculated as
hereinafter set forth:
ANNUAL FEE PER
RENTAL YEAR SQ. FT. OF LAND AREA ANNUAL FEE
Year 1 through 3, $0.000 $00.00
inclusive
Year 4 through 5, $0.075 $15,168.62
inclusive
Year 6 through 10, $0.125
inclusive
Said annual charge payable for the option shall be paid to and
until the date that the Company commences paying the annual Ground Rental
for the Option Parcel under the provisions of paragraph A above of this
Section VI.
As used in this Section VI, and elsewhere in this Ground Lease, the
term "Rental Year" means a consecutive twelve (12) month period commencing
on the Rental Commencement Date and terminating twelve (12) months
thereafter, and each consecutive twelve (12) month period thereafter.
C. In addition to the Ground Rental provided herein to be paid by
Company to the Board, the Company shall pay to the Board such rentals and
charges as are set forth in the Lease Agreement applicable to the lease
of the Project Facilities.
D. Delinquency Charges. If the Company shall fail to pay, when the
same is due and payable, any rent, or amounts or charges as contained in
this Ground Lease to be paid by the Company to the Board, such unpaid sums
shall bear interest from the due date thereof to the date of payment at the
rate which is the lesser of twelve percent (12%) per annum or the maximum
interest rate permitted by law.
SECTION VII
RIGHT OF ACCESS TO THE LEASED PREMISES
-8-
<PAGE>
A. The Company, its directors, officers, employees, customers,
agents, representatives, guests, contractors, suppliers of materials,
furnishers of services and invitees, shall have the non-exclusive right of
ingress to and egress from the Leased Premises and such other portions of
the Airport to or from which said persons shall reasonably require ingress
and egress; provided, however, that such right of ingress and egress shall
be subject to the reasonable rules, regulations and requirements of general
applicability of the Board as the same may be in effect from time to time.
B. The Board shall at all times furnish the Company the
non-exclusive use of and means of access (suitable to the nature of
Company's business and operations) from the Leased Premises to and from the
public streets and thoroughfares and to the Airport roadways, ramps,
taxiways and runways. The access road, or roads, and taxiways need not be
the same throughout the Term of this Ground Lease so long as the Company
is provided at all times with a suitable access road or roads and taxiways.
C. The Board shall manage, maintain and operate the Airport in a
prudent manner and shall maintain and operate with adequate and efficient
personnel and keep in good repair the Airport and the existing runways,
taxiways, common use aprons and roadways and any additions thereto during
the term hereof; provided that the Board may, at any time, temporarily or
permanently, close or consent to or request (to the extent required by
Applicable Laws) the closing of any roadway, taxiway or runway and any
other area at the Airport presently or hereafter used as such, so long as
a reasonable alternative means of ingress and egress remains available to
the Company, its employees, customers, guests, contractors, suppliers of
materials, furnishers of services and invitees.
D. The Board or its designee shall have the right of entry upon the
Leased Premises: (i) to examine and inspect the same, (ii) for any purpose
connected with the Board's rights or obligations or the Company's
obligations hereunder, (iii) to service or post or keep posted thereon
notices provided by any law or rules or regulations of the Commonwealth of
Kentucky or the United States which the Board deems to be necessary for the
protection of the Board or the Leased Premises; and (iv) for all other
lawful purposes; provided that in exercising the right of entry pursuant
hereto the Board or its designees as the case may be shall not unreasonably
interfere with the Company's use, occupancy or operation of the Leased
Premises or the Project Facilities.
E. Without limiting the generality of the foregoing, the Board, by
its officers, employees, agents, representatives, contractors and
furnishers of utilities and other services, shall have the right for its
own benefit, for the benefit of the Company or for the benefit of parties
other than the Company at the Airport, to maintain existing and future
utility, mechanical, electrical and other systems on the Leased Premises
and to enter upon the Leased Premises at all reasonable times to make such
repairs, replacements or alterations thereto as required in the
determination of the Board and, from time to time, to construct or install
such systems over, in or under the Leased Premises for access to other
-9-
<PAGE>
parts of the Airport, provided that the maintenance, construction and
installation of such systems does not unreasonably interfere with the
Company's operation of the Project Facilities or the Leased Premises.
F. Nothing in this Section VII shall, or shall be construed to,
impose upon the Board any obligations so to maintain, construct or install
such systems or to make repairs, replacements, alterations or additions to
the Leased Premises or the Project Facilities, or shall create any
liability for any failure to do so.
SECTION VIII
USE OF LEASED PREMISES
A. The Company shall use the Leased Premises specifically for
the construction, installation and operation of the Project Facilities to be
operated at the Airport as aircraft hangar facilities and functionally
related and subordinate aircraft parking ramps and aircraft maintenance and
repair facilities in connection with the Company's air transportation
business at the Airport and consistent with the provisions of this
Agreement. The Project Facility shall be utilized for the maintenance,
servicing and storage of Company's aircraft, including companies which are
wholly owned subsidiaries of or which have a Acode-share@ arrangement with
the Company, and such other purposes and uses as may be approved by the
Board in writing, which approval shall not be unreasonably withheld.
The Company shall comply with the following and shall be permitted to
conduct AEngine Run-ups@ as hereafter defined only under the following
conditions:
1. If the required safety measures are taken by the Company to
avoid damage from jet blast by constructing and installing appropriate
blast fences and/or blast deflectors and on/or a hush house.
2. Between the hours of 6:00 a.m. and 11:00 p.m. without any
acoustical treatment. Between the hours of 11:00 p.m. and 6:00 a.m.,
unless otherwise approved in writing by the Director of Aviation,
acoustical treatment acceptable to the Director of Aviation must be
provided if Engine Run-ups other than emergency Engine Run-ups are to be
conducted.
3. The term, AEngine Run-up@ shall mean any operation of an
aircraft engine on the Leased Premises for the purpose of determining air
worthiness as part of a required maintenance or inspection program and any
other operation of an aircraft engine on the Leased Premises above idle
power for any purpose, other than taxing of aircraft directly related to
flight activities.
The Leased Premises shall not be used as a Fixed Base Operator
or as a general aviation aircraft service facility nor for the providing
of services or sales of any type or nature to the general public or to any
third parties; provided that nothing herein shall prohibit the Company from
providing maintenance and repair sales and services to it's wholly owned
-10-
<PAGE>
subsidiary companies or airline companies with which it has a Acode share@
arrangement. The Leased Premises shall not be used for providing by sale
or otherwise of foods or beverages or for the operation of sales, services
or concession stands of any kind or for the furnishing or selling of
insurance, banking, car rental, money exchanging, advertising or other
commercial service. Nothing contained herein shall prohibit the Company
from installing and operating either or both food and beverage service
facilities and vending machines for the use of the Company's employees and
other persons employed by the Company as independent contractors or the
installation and operation of one or more automatic teller machines for the
use of Company's employees and other persons employed by the Company as
independent contractors; provided that such facilities and machines shall
be located in areas that are not visible or accessible to the general
public. It is understood and agreed that the operation, leasing and
subletting of space and facilities anywhere on the Airport for concession
purposes of any type including service or goods to the members of the
general public is reserved to the Board.
B. The Company shall not install or operate any signs on or in the
Leased Premises or Project Facilities except such signs as shall have been
approved as a part of the plans and specifications approved by the Director
of Aviation for the construction of the Project Facilities and such
additional signs as may thereafter be approved by the Director of Aviation
in writing. This requirement for approval shall not apply to signs located
within any building or other structure on the Leased Premises which signs
are not visible from the exterior of such building or structure. No
antenna, aerial, or satellite dish shall be erected or maintained on the
roof or exterior walls of any structure on the Leased Premises or ground
of the Leased Premises or on the Airport without in each instance first
obtaining the prior written consent of the Director of Aviation.
C. The Company shall not:
1. Store or allow to be placed any non-functional mobile
equipment such as carts, tugs, tractors, tractor trailers, box vans and
automobiles or any other vehicle or mobile equipment other than in a
completely enclosed building; or,
2. Store any equipment, vehicle or other thing which is not
actively or continuously utilized as part of the Company's operation under
this Ground Lease other than in a completely enclosed building.
In place of storage and placement in completely enclosed
buildings as required under the provisions of Item 1 and Item 2 above, the
Company, with the written approval of the Board, may utilize screening for
such storage or placement provided that said screening is located in areas
and so constructed that the equipment and other items stored or placed in
accordance with Item 1 and Item 2 are not visible from outside of the
Leased Premises and appropriate arrangements, approved by the Board, are
provided by the Company to prevent the seepage or passage of toxic or
hazardous waste or materials off of the Leased Premises or into the
sanitary or storm sewer facilities serving the Leased Premises.
-11-
<PAGE>
D. Except for the taxiway connector located on the Restricted Use
Area, the Company shall use the Restricted Use Area only as a green space
and maintain the Restricted Use Area with grass and landscaping. No
buildings, paving or other structures shall be located on the Restricted
Use Area and no vehicles or other equipment shall be located or stored,
permanently or temporarily, on the Restricted Use Area.
E. The Leased Premises and the Project Facilities located on the
Leased Premises shall be used only for the purposes specified in this
Ground Lease. The Company shall, at all times, during the Term of this
Ground Lease, use the Leased Premises and the Project Facilities located
thereon for those purposes.
SECTION IX
GENERAL OBLIGATIONS OF COMPANY
A. Except for the construction being performed by the Board in
accordance with Section III hereof, and subject to the provisions of said
Section III, and to the provisions of Section IX C below, the operation,
maintenance and repair of the Leased Premises, including the Project
Facilities and all other improvements thereon, shall be the obligation and
responsibility of the Company. The Company shall pay, as the same shall
become due, all costs and expenses incurred by it in the operation,
maintenance and repair of the Leased Premises, including the Project
Facilities and all other improvements thereon, and any machinery, equipment
or related property substituted for any equipment therein. The Company
agrees it will, at its own expense, maintain or cause to be maintained, and
will keep or cause to be kept, the Leased Premises, including the Project
Facilities and all other improvements and landscaping thereon, in good
condition (ordinary wear and tear excepted) and in a reasonably safe
condition as its operations permit.
B. The Company shall at all times keep or cause to be kept the Leased
Premises, including the Project Facilities and all other improvements
thereon, together with all property of the Company located in or on the
Leased Premises, in a clean, neat, orderly, sanitary and presentable
condition and appearance and will perform mowing and snow removal on the
Leased Premises during the appropriate periods of the year. The Company
will not permit any waste or destruction of the runways, taxiways, common
use aprons and roadways of the Airport during the term hereof (ordinary
wear and tear excepted).
C. At no cost to the Board, the Company agrees to maintain in a good
state of repair and functionality, and make all necessary repairs to the
Leased Premises, including the Project Facilities and all other
improvements located thereon, including, by way of example, without
limitation, the interior and exterior windows, doors and entrances, utility
systems (electrical, data, telephone, HVAC), signs, floor coverings,
interior walls and ceiling, interior columns, structural improvements,
-12-
<PAGE>
partitions, interior and exterior lighting (including bulbs), electrical
equipment and plumbing fixtures. Beginning with the commencement of the
Term of this Ground Lease, the Company shall provide each Lease Year, upon
request of the Board, written documentation and report to the Board of any
preventative maintenance or repair completed by the Company since the time
of the furnishing of the prior annual documentation and report. The Company
shall keep and maintain the Leased Premises, including appropriate
landscaping, in a sanitary and sightly condition. In the event the Company
fails to perform any obligation required by this section, within Thirty
(30) days after written notice from the Board so to do, the Board may enter
upon the Leased Premises and perform such obligation, and charge Company
the reasonable cost and expense thereof plus twenty (20) percent thereof
for administrative overhead. Company shall pay the Board such charge in
addition to any other amounts payable by Company pursuant to this Ground
Lease. Notwithstanding the provisions of this paragraph C above, the
taxiway connector located on the Restricted Use Area shall be maintained
and repaired by and at the expense of the Board.
All repairs done by the Company or on its behalf shall be of first
class quality in both materials and workmanship. All repairs will be made
in conformity with the Board's specifications and guidelines and with the
rules and regulations prescribed from time to time by the Board or any
Federal, state, or local authority having jurisdiction over the work on the
Leased Premises.
The Company shall keep and maintain, at its sole expense, such
interior maintenance, custodial, and cleaning services as may be necessary
to ensure that the interior portions of the Leased Premises are maintained
in a clean, neat and orderly fashion.
D. The Company will pay during the Term of this Ground Lease, as the
same respectively become due, all taxes and governmental charges and
assessments of any kind whatsoever that may at any time be lawfully
assessed or levied against or with respect to the Leased Premises and all
improvements thereon or any machinery, equipment or other property
installed by the Company therein or thereon.
The Company may, at its expense and in its own name and behalf
or in the name and on behalf of the Board, but only after written notice
to the Board, in good faith contest any assessed valuation or the amount
or legality of said taxes, assessments and other charges, and in the event
that any such contest, may permit the taxes, assessments or other charges
so contested to remain unpaid during the period of such contest and any
appeal therefrom unless the enforcement of any such contested items is so
stayed and such stay thereafter expires or unless, by non-payment of any
such contested items, any part of the Project Facilities or the Leased
Premises will be subject to loss or forfeiture, in which event such taxes,
assessments or charges shall be paid promptly or secured by posting a bond,
in form satisfactory to the Board, with the Board. The Board will
cooperate fully with the Company in any such contest. The Board shall
cooperate with the Company in connection with any administrative or
judicial proceedings for determining the validity or amount of any such
-13-
<PAGE>
taxes, assessments or other charges or any payments in lieu of taxes and
appoints the company to take any action which the Board may lawfully take
in respect of such payments and all matters relating thereto and the
Company shall bear and pay all costs and expenses of the Board thereby
incurred at the request of the Company or by reason of any such action
taken by the Company on behalf of the Board.
E. The Company shall provide a complete and proper arrangement for
the adequate sanitary handling and disposal, away from the Airport, of all
trash, garbage and other refuse caused as a result of the operation of the
Leased Premises.
F. The Company shall provide and use suitable covered metal
receptacles for all garbage, trash and other refuse in or in connection
with the Leased Premises. Piling of boxes, cartons, barrels or other
similar items, in an unsightly or unsafe manner, on or about the Leased
Premises, is forbidden.
G. The Company shall acquire and pay for all licenses, permits and
other similar authorizations as required under federal, state or local laws
and regulations insofar as they are necessary to comply with the
requirements of this Ground Lease and the rights and privileges extended
hereunder. The Company also agrees to repair or pay for all damage to the
Board and its property caused by the wrongful or negligent acts or
omissions of the Company, its agents, servants, employees or contractors,
arising out of the Company's use or occupancy of the Leased Premises.
H. The Company shall not do anything or permit anything to be done
on the Leased Premises, including, but not limited to, the release or
disposal of any Hazardous Wastes, which may interfere with the
effectiveness or accessibility of the drainage and sewage system,
including, but not limited to, the sewage facilities of the Sanitation
District No. One with which the Airport sewage system connects, the fire
protection system, the alarm system and any existing facilities for the
protection of the Airport and the public.
I. The Company agrees to accept from the Board water for use on the
Leased Premises. Such water shall be metered by meters furnished by the
Company and the Company shall purchase and take from the Board all of its
supply of water used by the Company on the said premises. Unless otherwise
agreed, the Company shall pay the Board for such water at the same rates
no higher than that permitted to be charged by the Board by the Public
Service Commission of the Commonwealth of Kentucky. The Board shall bill
Company for the water so consumed on a regular quarter-annual basis and
within ten (10) days following the end of each such quarter, and each bill
shall be payable within fifteen (15) days after the date of the mailing of
such statement.
J. The Company shall accept from the Board a sanitary disposal
connection for sanitary sewage from the Leased Premises and, unless
otherwise agreed, the Company shall pay for such sanitary sewage disposal
charges made by the Board on a like or similar basis as shall be charged
-14-
<PAGE>
to other users of the same on the Airport property. Said charges shall be
billed and paid as set out above in Subsection I above.
K. The Board may, but shall not be required to, furnish a fiber
optics network available at or on the Leased Premises and may, but shall
not be required to, permit the Company to make use of such fiber optics
network. In the event that the Board provides such fiber optics network
and the Company is permitted to make use thereof, the Company shall pay to
the Board for such use at the same rates and charges made by the Board on
a like or similar basis to other users of the fiber optics network.
L. Except as set forth above in Subsections I and J, the Company
shall obtain all utility services and supplies, such as gas, electricity,
telephone, etc. for use on the Leased Premises from the public utilities
furnishing same and shall pay directly therefor to such public utilities.
M. After completion of construction of the Project Facilities
contemplated hereunder, the Company shall make no other improvements,
additions or alterations upon or about the Leased Premises or the
improvements constructed thereon without the prior written consent of the
Director of Aviation, which consent shall not be unreasonably withheld.
Prior to the construction of such improvements, additions or alterations,
the Company shall submit to said Director of Aviation for his approval the
preliminary plans and specifications therefor which shall conform to the
general architectural scheme and overall plans adopted by the Board for the
Airport. All such improvements, additions or alterations constructed by
the Company on the Leased Premises, including the plans and specifications
therefor, shall conform in all respects to the applicable statutes,
ordinances, building code, rules and regulations of such governmental
authority as may have jurisdiction. The Director of Aviation's approval
given as provided above shall not constitute a representation or warranty
as to such conformity, which shall remain the Company's responsibility. The
Company, at its own cost and expense, shall procure all permits necessary
for such construction. After completion of construction by the Company
under the provisions of this Section IX L, but in no event later than three
months after commencement by the Company of use of such improvements,
additions or alterations, the Company shall at its cost furnish to the
Board a reproducible set of as-built drawings of such improvements,
additions or alterations for use by the Board for its purposes in
accordance with the guidelines set forth on Exhibit AC@ as the same may be
from time to time amended by the Board.
N. The Company shall maintain and keep in a good state of repair all
fuel lines, fuel tanks, fuel systems, and related facilities installed by
or for the Company on the Leased Premises. The Company shall, during the
Term of this Ground Lease, have a sufficient number of trained personnel
and procedures for safely storing, dispensing and otherwise handling fuel,
lubricants and oxygen used or located on the Leased Premises or used or
handled by or for the Company on the Airport including: (1) grounding and
fire protection; (2) public protection; (3) control of access to storage
areas; and (4) marking and labeling storage tanks and tank trucks,
including identification of specific types and fuel octane designations.
-15-
<PAGE>
O. The Company shall use its best efforts to prevent unauthorized
persons from gaining access to restricted flight and aircraft operational
areas through its facilities. In the event that security guards or other
similar personnel are required under any federal regulation or otherwise
in order to prevent trespass and unauthorized access to flight and aircraft
operational areas from the Leased Premises, the costs of such personnel
and/or equipment and all expenses related thereto shall be paid by the
Company.
P. All personnel employed by the Company shall prominently display
Airport identification badges on their person while on duty or while in
areas of the Airport where display of an Airport identification badge is
required by Applicable Laws.
Q. Upon the termination of the Ground Lease, whether by expiration
of the Term of this Ground Lease or otherwise, the Company shall surrender
the Leased Premises to the Board, including all improvements constructed
on the Leased Premises, and the Board may remove all persons and property
from the Leased Premises. All non-Bond financed Trade Fixtures and
Personal Property of the Company shall remain the property of the Company
and shall be removed from the Leased Premises by the Company. If the
Company fails to remove such Trade Fixtures and Personal Property from the
Leased Premises, at the sole option of the Board, (i) said Trade Fixtures
and Personal Property may be stored at a public warehouse or elsewhere at
the Company's sole cost and expense; or (ii) title to said Trade Fixtures
and Personal Property shall vest in the Board at no cost to the Board.
SECTION X
ENVIRONMENTAL MATTERS
A. Board responsibilities:
1. The Board shall be responsible for the removal or mitigation
of any contamination on the Leased Premises which violates Federal or state
environmental law and for the removal or mitigation of any other
environmental condition, i.e. burial grounds, exotic plants, wildlife
conditions, etc. on the Leased Premises, which contamination or
environmental condition, existed prior to the date of this Ground Lease,
and which substantially interfere with the use of the Leased Premises by
the Company for the purposes contemplated hereunder, except for such
contamination for which the Company is responsible under the provisions of
paragraph B of this Section below. The Board shall notify the Company in
the event that the Board shall become knowledgeable of any contamination
or environmental condition existing on the Leased Premises which may impede
the construction of the Project Facilities by the Company.
2. Upon completion of the work to be performed by the Board in
accordance with paragraph A of Section III above and prior to the
commencement of the installation of the paving by the Company on the Leased
Premises, a Phase One Environmental Audit and related studies as determined
-16-
<PAGE>
necessary by the Board shall be performed on the Leased Premises and on the
Option Parcel by an engineering firm retained by the Board and the report
thereof shall be available to the Board and Company. Unless otherwise
agreed between the Board and the Company, any contamination found to exist
on the Leased Premises or the Option Parcel shall be handled subject to the
provisions of paragraph A.1 of this Section above and after removal or
remedying of the contamination by the Board a supplemental study and report
shall be prepared by the engineers to show the removal or remeding by the
Board of the contamination. All costs of the Environmental Audit(s) and
related studies and reports shall be borne by the Board. Such report(s) by
the engineering firm shall be conclusive evidence of the condition of the
Leased Premises and of the Option Parcel for purposes of determining the
Board's obligations under paragraph A of this Section X and Company's
obligations under the provisions of paragraph B below of this Section X.
B. Company responsibilities:
1. The Company covenants and agrees that it will not use,
store, maintain, discharge or operate, whether intentionally or
unintentionally, on the Leased Premises, in violation of any applicable
federal, state, county or local statutes, laws, regulations, rules,
ordinances, codes, standards, orders, licenses or permits of any
governmental authorities, relating to environmental matters (being
hereafter collectively referred to as the Environmental Laws), including
by way of illustration and not be way of limitation; the Clean Air Act, the
Federal Water Pollution Control Act of 1972, the Resource Conservation and
Recovery Act of 1976, the Comprehensive Environmental Response, the
Compensation and Liability Act of 1980 and the Toxic Substances Control Act
(including any amendments or extensions thereof and any rules, regulations,
standards, or guidelines issued pursuant to any Environmental Laws).
Except in compliance with all Environmental Laws, the Company, its
subsidiaries, subcontractors or suppliers, or anyone on the Leased Premises
with the consent of the Company shall not discharge "Hazardous Substances"
(as defined hereinafter) into the sewer and/or storm water drainage systems
serving the Airport, or cause any Hazardous Substances to be placed, held,
stored, processed, treated, released or disposed of on or at the Leased
Premises. Upon termination of this Ground Lease the Company will, at its
sole cost and expense, immediately remove from the Leased Premises all
Hazardous Substances and all tanks or other containers which are being used
or were used by the Company, its subsidiaries, subcontractors or suppliers,
or anyone on the Leased Premises with the consent of the Company, to hold
Hazardous Substances, discharged or occasioned from the Company's
operations or the operations of any of its subsidiaries, subcontractors or
suppliers, or anyone on the Leased Premises with the consent of the
Company. "Hazardous Substances" shall mean any material that, because of
its quantity, concentration or physical or chemical characteristics is
deemed by any federal, state or local governmental authority to pose a
present or potential hazard to human health safety or to the environment.
Hazardous Substances include, by way of illustration and not by way of
limitation, any substance defined as a Ahazardous substance@ or Apollutant@
or Acontaminant@ pursuant to any Environmental Law; any asbestos containing
-17-
<PAGE>
materials; petroleum, including crude oil or any fraction thereof, natural
gas liquids; and any other toxic, dangerous or hazardous chemicals,
materials or substance of waste(s).
2. Neither the Company, its members, officers, agents,
servants, employees and customers shall cause any Hazardous Substance to
be brought upon, kept, used, stored, generated or disposed of in, on, or
about the Leased Premises or the Airport, or transported to or from the
Leased Premises or the Airport unless such action is in compliance with all
applicable Environmental Laws and the Airport's Guidelines and Rules and
Regulations. The Company shall be required to keep, at the Leased Premises
in an orderly and easily accessible manner, all records evidencing its
compliance with all applicable Environmental Laws and the Airport's
Guidelines and Rules and Regulations for all Hazardous Substances brought
upon, kept, used, stored, generated or disposed of in, on or about the
Leased Premises or the Airport, or transported to or from the Leased
Premises. The Company shall maintain such records from the date of this
Ground Lease until the expiration or termination of this Ground Lease.
3. The Company shall indemnify, defend, and hold harmless the
Board from and against any and all losses arising during or after the date
of this Ground Lease and any renewal date as a result of or arising from:
(a) a breach by the Company of its obligations contained in the preceding
Paragraphs B(1) or (2), or (b) any release of Hazardous Substance from, in,
on or about the Leased Premises or the Airport caused by any act or
omission of the Company, its members, officers, agents, servants, employees
and customers, or, (c) the existence of any Hazardous Substance on the
Leased Premises.
4. Upon reasonable notice, the Director shall have the right
but not the obligation to conduct or cause to be conducted an environmental
audit or any other appropriate investigation of the Leased Premises for
possible environmental contamination or violation of any applicable
Environmental Laws or violation of the Airport's Guidelines and Rules and
Regulations. The Company shall pay all costs associated with said
investigation in the event such investigation shall disclose any Hazardous
Substance contamination or violation of Environmental Law or violation of
the Airport's Guidelines and Rules and Regulations as to which the Company
is liable hereunder unless determined to be caused by any act or omission
of the Board, its members, officers, agents, servants or employees.
.
5. Prior to the expiration or the earlier termination of this
Ground Lease, the Company shall be required to provide documentation,
prepared by a firm acceptable to the Director, that the Leased Premises is
free of Hazardous Substance Contamination and that the removal of any
Hazardous Substance has been done in compliance with the Airport's
Guidelines, Rules and Regulations and all applicable laws. Such
documentation may require an immediate remediation plan and/or long-term
care and surveillance of any contamination identified and an acknowledgment
of responsibility and indemnification for any and all losses associated
with such contamination.
-18-
<PAGE>
SECTION XI
DISCRIMINATION
The Company, for itself, its successors in interest, and assigns, as
a part of the consideration hereof, does hereby covenant and agree as a
covenant running with the land that in the event facilities are
constructed, maintained, or otherwise operated on the said property
described in this Ground Lease for a purpose for which a Department of
Transportation program or activity is extended or for another purpose
involving the provision of similar services or benefits, the Company shall
maintain and operate such facilities and services in compliance with all
other requirements imposed pursuant to 49 CFR Part 21, Nondiscrimination
in Federally Assisted Programs of the Department of Transportation, and as
said Regulations may be amended.
The Company for itself, its successors in interest, and assigns, as
a part of the consideration hereof, does hereby covenant and agree, as a
covenant running with the land, (1) that no person on the grounds of race,
color, or national origin shall be excluded from participation in, denied
the benefits of, or be otherwise subjected to discrimination in the use of
said facilities, (2) that 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 benefits of, or otherwise be subjected to
discrimination, and (3) that the Company shall use the premises in
compliance with all other requirements imposed by or pursuant to Title 49
Code of Federal Regulation (CFR), Part 21, Nondiscrimination in Federally
Assisted Programs of the Department of Transportation, and as said
Regulations may be amended.
In the event of breach of any of the above nondiscrimination
covenants, the Board shall have the right to terminate this agreement and
re-enter and repossess said land and the facilities thereon, and hold the
same as if said Agreement had never been made or issued. This provision
shall not be effective until the procedures of 49 CFR, Part 21, are
followed and completed including exercise or expiration of all appeal
rights.
The Company shall furnish its service permitted hereunder on a fair,
equal and not unjustly discriminatory basis to all users thereof, and shall
charge fair, reasonable, and not unjustly discriminatory prices for each
unit of service, provided that the Company may make reasonable and
nondiscriminatory discounts, rebates and other similar types of price
reduction to volume purchasers.
The Company assures that it will undertake an affirmative action
program if 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. If required, the Company assures that no person
shall be excluded on these grounds from participating in or receiving the
-19-
<PAGE>
services or benefits of any program or activity covered by this Subpart.
If required, the Company assures that it will require that its covered
suborganizations provide assurances to the Company that they similarly will
undertake affirmative action programs and that they will require assurances
from their suborganizations, as required by 14 CFR, Part 152, Subpart E,
to the same effect.
The Company assures that when applicable during the term of this
Ground Lease, it will comply with pertinent statutes, Executive Orders, and
such rules as are promulgated to assure that no person shall, on the
grounds of race, creed, color, national origin, sex, age, or handicap be
excluded from participating in any activity conducted with or benefiting
from Federal assistance. This provision obligates Company for the period
during which Federal assistance is extended to the Airport program, except
where federal assistance is to provide, or is in the form of personal
property or real property or interest therein or structures or improvements
thereon. In these cases, when applicable during the term of this Ground
Lease, this provision obligates the Company or its transferee for the
longer of the following periods:
(a) the period during which the property is used by the Board or any
transferee for a purpose for which Federal assistance is extended or for
another purpose involving the provision of similar services or benefits;
or
(b) the period during which the Board or any transferee retains
ownership or possession of the property.
The Company hereby assures that it will include the above provisions
in all subleases and cause sublessees to similarly include clauses in
further subleases.
As used herein, the term "Department of Transportation" means the
United States Department of Transportation.
SECTION XII
INDEMNIFICATION OF BOARD
Each party hereto shall give to the other prompt and timely written
notice of any claim made or suit instituted coming to its knowledge which
in any way directly or indirectly, contingently or otherwise, affects or
might affect either, and each shall have the right to participate in the
defense of the same to the extent of its own interests.
A. The Company shall keep, hold and defend the Board, including all
directors, members, officers, agents, servants and employees thereof,
harmless from any and all liabilities, losses, suits, judgments, fines,
penalties, costs, damages, expense (including cost of suit and reasonable
expenses of legal services), claims, demands and causes of actions
whatsoever claimed by anyone by reason of injury to or death of any persons
or property sustained in, on, or about the Airport, as a result of acts or
omissions of the Company, its agents, servants, employees, contractors,
-20-
<PAGE>
suppliers or invitees, or arising out of any operations of the Company upon
or about the Airport, excepting such liability as may be the result from
the sole negligence of the Board provided, however, that upon the filing
of any claim with the Board for damages arising out of incidents for which
the Company herein agrees to hold Board harmless, then and in that event,
the Board, with which party the claim has been filed, shall notify the
Company of such claim and the Company shall have the right to settle,
compromise, or defend the same. The Board shall have the right to defend
against any such claim, and if the Board elects to do so, the Company shall
be responsible, as and to the extent provided in Section XII.C. below, for
the Board's reasonable legal fees, costs and expenses in addition to any
resulting liability. Any final judgment rendered against Board for any
cause for which the Company is liable hereunder shall be conclusive against
the Company as to liability and amount, where the time for appeal therefrom
has expired. The indemnity provisions set forth herein shall survive the
expiration or cancellation of this Ground Lease.
B. In the event that the Company shall utilize any deicing pad or
deicing facility (ADeicing Facility@), located on any ramp or other
premises on the Airport owned by or exclusively leased to any person,
corporation or entity (AOther Entity@), the Company shall indemnify, defend
and hold harmless the Other Entity and against any and all claims,
liabilities or damages to persons or property (including, but not limited
to, any portion of the ramp facility, deicing facility, or property of such
Other Entity) in any manner arising out of or related to said Company's
acts or omissions in connection with its use of the ramp facility or the
deicing facility. Under no circumstances shall the Other Entity be
responsible with respect to claims, liabilities or damages related to or
arising out of any deicing or failure to de-ice by the Company's aircraft.
The Company does hereby release any existing or future claim with respect
to such matters. The provisions of this Paragraph shall inure to the
benefit of such Other Entity as a third party beneficiary under this Ground
Lease.
C. The Company and the Board, at the special instance and request
of the Company, intends to enter into a Service and Technology Agreement
with the Kentucky Economic Development Finance Authority (the AAuthority@),
a public body corporate and politic created under Section 154.20-010 of the
Kentucky Revised Statutes in which Agreement the Board has is required,
under certain circumstances, to indemnify the Authority against any and all
losses, liabilities, claims, etc. asserted against the Authority in certain
circumstances, all as specifically set forth in the Service and Technology
Agreement. The Company agrees that it will indemnify and save harmless the
Board against any and all losses, liabilities, claims, actions,
proceedings, cost and expenses which the Board may incur by reason of the
provisions and agreements contained in the Service and Technology Agreement
excepting such liability as may be the result from the sole negligence of
the Board.
D. The Board shall promptly notify the Company in writing of any
claim or action brought against the Board in respect of which indemnity may
be sought against the Company, setting forth the particulars of such claim
-21-
<PAGE>
or action, and the Company will assume the defense thereof, including the
employment of counsel, and the payment of all expenses. The Board may
employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall not be payable by
the Company unless such employment has been specifically authorized by the
Company. The Company shall not be liable for any settlements of any action
effected without its consent.
E. The obligation of the Company under this Section XII shall survive
the termination of this Ground Lease until such time, unless legal action
be sooner filed, as the Kentucky Statute of Limitations period applicable
to written contracts shall have expired.
SECTION XIII
INSURANCE
A. Insurance - During Construction.
1. In connection with the construction and installation of the
Project Facilities, the Company shall cause to be obtained and maintained,
in a company or companies authorized to write insurance in Kentucky, such
insurance as will protect the Board, the Company and the Company's
contractors performing any portion of the Construction of the Project
Facilities from claims set forth below which may arise out of or result
from said contractor's operations under any construction or installation
contract, whether such operations be by the contractor or by any of its
subcontractors or by anyone directly or indirectly employed by any of them,
or by anyone for whose acts any of them may be liable:
a. Claims under workers' or workmen's compensation,
disability benefit and other similar employee benefit acts. Further,
contractor shall relieve the Board and the Company from any costs due to
accidents or other liabilities mentioned in workers' or workmen's
compensation act. Contractor or subcontractors with either an insufficient
number of employees or in certain excluded occupational classifications are
required to maintain workers' or workmen's compensation coverage on a
voluntary basis regardless of the statutory regulations. If a contractor
is from a state other than Kentucky, before it begins work on the Project
Facilities it shall take whatever measures as are necessary to eliminate
conflicts regarding which state's laws shall govern workers' or workmen's
compensation claims.
b. Claims for damages because of bodily injury,
occupational sickness or disease, or death of his employees.
c. Claims for damages because of bodily injury,
occupational sickness or disease or death of any person other than his
employees.
d. Claims for damages insured by usual personal
injury liability coverage.
-22-
<PAGE>
e. Claims for damages, other than to the Project
Facilities themselves, because of injury to or destruction of tangible
property, including loss of use resulting therefrom.
f. Claims for damages because of bodily injury or death
of any person or property damage arising out of the ownership, maintenance
or use of any motor vehicle.
2. The insurance required by subsection 1 above, shall be
written for not less than the following amounts, or greater if required by
law:
a. Workmen's Compensation:
State - Kentucky Statutory
Employer's Liability - $500,000 each accident
b. Comprehensive General: coverage limits of not less
than $10,000,000 shall be provided. Commercial general liability (CGL)
shall be written on ISO Occurrence Form CG 00 01 10 96 (or a substitute
form providing comparable coverage) and shall include all major divisions
of coverage and be on a comprehensive basis including:
Premises, operations
Independent Contractors;
Products and Completed Operations;
Contractual Liability;
Owned, non-owned and hired mobile equipment;
There shall be no endorsement or modification of the policy limiting the
scope of coverage for liability arising from explosion, collapse or
underground property damage. Products and Completed Operations insurance
shall be maintained for three years after issuance of the final certificate
for payment.
3. Business Auto shall cover the liability arising out of any
auto (including owned, hired and non-owned). Automotive liability shall
be written on ISO Form CA-00-11 (or a substitute form providing comparable
coverage) and provide limits not less than $10,000,000 each accident.
4. Umbrella Excess Liability: The limits of liability
outlined in Items b and c may be satisfied by a combination of primary and
umbrella liability coverages.
5. The insurance required by this Subparagraph A shall
include contractual liability insurance applicable to the contractor's
obligations.
-23-
<PAGE>
6. The contractor or the Company shall purchase and maintain
property insurance (including boiler and machinery insurance) upon the
entire work constituting the Project Facilities at the site in the limits
of the Afull insurable value@ of the work. If the insurance obtained in
compliance with this is builder's risk, coverage shall be written on a
completed value form.
Such insurance shall be with a company or companies against
which the Board has no reasonable objection. This insurance shall include
the interest of the Board, the company, the contractor and
subcontractors/sub-subcontractors in the work constituting the Project
Facilities and shall insure against the perils of fire and extended
coverage and shall include Aall-risk@ insurance for physical loss or damage
including, without duplication of coverage, theft, vandalism and malicious
mischief. If the Board is damaged by the failure of the contractor to
maintain such insurance and to so notify the Board, then the contractor
shall bear all reasonable costs properly attributable thereto, and if he
fails so to do, the Company, as between the Board and the Company, shall
bear such costs. If not covered under the Aall-risk@ insurance or
otherwise provided in the contract documents applicable to construction of
the Project Facilities, the contractor or the Company shall effect and
maintain similar property insurance on the work stored off the site or in
transit when such portions of the work are to be included in an application
for payment under the contract. The Board and the Company shall be named
as Aloss payees@ as their interest may appear on all policies and
certificates.
The Company and its contractors and subcontractors are also
responsible for its construction tools and equipment, whether owned,
leased, rented, borrowed or used at the project site. The Company and the
Company's contractors (of any tier) shall waive any right of claim for any
loss or damage to its tools and equipment.
7. In order to protect the Board and the Company against any
claims which may arise from operations under the construction contract(s),
the Board and the Company shall be included as additional insureds on all
policies of insurance along with a waiver of Subrogation in favor of the
additional insureds. All policies shall provide coverage on a primary
basis without right of contribution of any insurance carried by the
additional insureds. These changes shall be endorsed to the policies and
shall be stated on the certificate of insurance.
8. Certificates of Insurance acceptable to the Board
evidencing existence of valid policies of insurance with coverages
specified shall be filed with the Board prior to commencement of work on
the Project Facilities. These Certificates shall contain a provision that
coverages afforded under the policies will not be cancelled until at least
thirty (30) days' prior written notice has been given to the Board.
9. Each policy shall contain a clause to the effect that no
material, adverse modification or change in the policy will be made, nor
-24-
<PAGE>
will such policy be cancelled, non-renewed, or expired without thirty (30)
days' prior written notice to the Board and the Company, as evidenced by
receipt of registered or certified mail. When any certified insurance (due
to the attainment of a normal expiration date or renewal date) shall
expire, it is the responsibility of the contractor to supply to the Board
and the Company updated replacement Certificates of Insurance that clearly
evidence the continuation and scope of coverage as was supplied by the
Certificates originally submitted. The contractor shall furnish to the
Board and the Company copies of any endorsements that are subsequently
issued amending coverage or limits of any policies.
B. Property Insurance after Completion of Construction.
The Company, at all times during the Term of this Ground Lease
after Construction is completed on the Project Facilities, at the cost of
the Company, shall maintain all risk coverage insurance on all buildings,
premises and personal property (other than personal property owned or
leased by the Company) located on or constituting the Project Facilities
to the extent insurable in an insurance company or companies qualified and
authorized under the laws of Kentucky in an amount equal to the full
replacement value thereof. All insurance policies shall contain loss
payable endorsements in favor of the Board as its interest may appear
hereunder. The Company shall furnish to the Board Certificates of
Insurance evidencing such coverages issued by the insurance Company(s)
providing such policy(s) and further shall notify the Board in the event
of cancellation of and/or change of insurance carriers providing such
policy(s).
C. Liability Insurance - Company.
1. The Company shall, at its own expense, maintain with
insurance underwriters satisfactory to the Board commercial general
liability (CGL) insurance covering the Company and the Board, as their
interests may appear, against claims for bodily injury, personal injury,
death and property damage occurring on, in or about the Leased Premises or
the Airport in the amount of the greater of (a) Ten Million Dollars
($10,000,000) or such amount as the Board may from time to time otherwise
reasonably require) or (b) the amount of the maximum policy limits for the
various liability coverages provided thereunder maintained by the Company
from time to time in its discretion.
2. Such insurance shall provide coverages comparable to
commercial general liability (CGL) insurance written on standard ISO
occurrence form CG 00 01 10 96 (or a substitute form providing equivalent
coverage) and shall cover liability arising from premises, operations,
independent contractors, products-completed operations, personal injury and
advertising injury and liability assumed under an insured contract.
3. If the Company in its operations uses motor vehicles or
mobile equipment on the ramps, taxiways or runways of the Airport, the
amount of the motor vehicle and mobile equipment liability insurance to be
furnished by the Company shall contain the same policy limits as set forth
-25-
<PAGE>
above for CGL. Motor vehicle insurance shall cover liability arising out
of an auto (including owned, non-owned or hired autos) while on Airport
premises. Motor vehicle insurance shall provide coverage comparable to
automobile liability insurance written on ISO form CA 00 01 (or a
substitute form providing equivalent coverage).
4. Worker's Compensation and Employer's Liability: The Company
shall, at its own expense, procure its own worker's compensation and
employer's liability insurance or be a qualified self-insurer as provided
under the rules and regulations of the Commonwealth of Kentucky.
5. Unemployment Insurance: The Company shall, at its own
expense, maintain statutory unemployment insurance protection for all of
its employees.
6. Additional Insureds: All liability policies (except
worker's compensation and unemployment insurance) shall include the Board
and all of its respective officers, employees and agents as additional
insureds. The Board shall have no liability for any premiums charged for
such coverage, and the inclusion of the Board as additional insured is not
intended to, and shall not, make the Board a partner or joint venturer with
the Company in the Company's operations at the Airport.
7. Evidence of Insurance: The Company shall furnish the Board
with certificates evidencing existence of valid policies of insurance with
the coverage specified, which certificates shall state that the coverage
shall not be amended so as to decrease the protection below the limits
specified herein or be subject to cancellation without at least thirty (30)
calendar days' advance written notice to the Board. A renewal policy or
renewal certificate shall be delivered to the Director at least thirty (30)
calendar days prior to a policy's expiration date, except for any policy
expiring on the expiration date of this Agreement or thereafter.
8. General Insurance Provisions: The Company's insurance shall
be primary and non-contributory with respect to any other insurance
available to or for the benefit of the Board. The Company's insurance
provisions shall contain a severability of interest clause. Any
deductibles or retentions shall be noted on the Certificate(s) of Insurance
evidencing such coverage.
D. Waiver of Subrogation.
Each of the Board and the Company hereby releases the other from
any and all liability or responsibility for any loss or damage to property
caused by an insured fire or any other insured peril to the extent of any
insurance proceeds received by the releaser, even if such fire or other
casualty shall have been caused by the fault or negligence of the other
party or anyone for whom such party may be responsible; provided, however,
that the Board's and the Company's policies contain a clause or endorsement
or policy wording to the effect that any such release shall not adversely
affect or impair said policy or prejudice the right of the releaser to
recover thereunder; provided further that each of the Board and the Company
-26-
<PAGE>
shall promptly notify the other party in the event of either cancellation
or material change in such endorsement or policy wording.
SECTION XIV
DAMAGE AND DESTRUCTION, CONDEMNATION
A. In the event that all or any part of a discrete portion of the
Project Facilities is destroyed in whole or in part or damaged by fire or
other casualty, or title, or the temporary use thereof, shall be taken as
a result or in anticipation of the exercise of the power of eminent domain,
this Ground Lease shall not terminate.
If the Company shall elect that the Project Facilities, or discrete
portion thereof so damaged, destroyed or taken, not be reconstructed or
reequipped, the Company shall at its expense:
1. Except as to the Project Facilities, or discrete portion
thereof taken by eminent domain, remove the debris and level the site as
directed by the Board, and
2. To the extent practical and possible, replace and restore
as directed by the Board any walls, doors or other connecting points of any
facility or premise to which the Project Facilities or discrete portion
thereof not reconstructed and re-equipped was attached or physically
connected to their condition existing as of the effective date of this
agreement, reasonable wear and tear excepted.
B. If the whole of the Leased Premises shall be taken by any public
authority under the power of eminent domain, or if so much of the Leased
Premises shall be taken by any such authority under the power of eminent
domain so that the Company cannot continue to operate its business on the
Leased Premises, then this Ground Lease shall cease and terminate as of the
day possession shall be taken by such public authority and the rent shall
be paid up to that day. In the event of a partial taking of the Leased
Premises by any public authority that does not cause the termination of
this Ground Lease, the ground rental shall be adjusted based on the rate
set forth in Article VI(A) and the remaining square feet of the Leased
Premises.
SECTION XV
EVENTS OF DEFAULT AND REMEDIES
A. Events of Default Defined. The following shall be "events of
default" under this Ground Lease and the term "event of default" shall
mean, whenever it is used in this Ground Lease, any one or more of the
following events:
1. The Company shall fail to pay when due and owing any
installment of rent, or any part thereof provided for in this Ground Lease,
and such failure shall continue unremedied for a period of thirty (30)
days; or
-27-
<PAGE>
2. The Company shall fail to observe or perform any other of
the Company's covenants, agreements or obligations hereunder (including,
without limitation, the Company's obligation under Section XI hereof) other
than those referred to in clause (1) set out above in this Section XV, and
such failure shall continue unremedied for a period of sixty (60) days
after the Board shall have given to the Company written notice specifying
wherein the Company has failed to observe or perform any such covenant,
agreement or obligation, plus such additional time as is reasonably
required to correct any such failure if the Company has instituted
corrective action within such sixty (60) day period and is diligently
pursuing the same to completion; or
3. There shall occur the dissolution or liquidation of the
Company, except that the Company may, without constituting an event of
default, consolidate with or merge into another corporation or other entity
or permit one or more other corporations or other entities to consolidate
with or merge into it, or transfer or convey all or substantially all of
its property, assets and licenses to another corporation or other entity
but only on condition that the corporation or other entity resulting from
or surviving such merger (if other than the Company) or consolidation or
the corporation or other entity to which such transfer or conveyance is
made shall (a) expressly assume in writing and agree to perform all of the
Company's obligations hereunder, (b) be qualified to do business in the
Commonwealth of Kentucky, and (c) if such corporation or other entity shall
not be organized and existing under the laws of the United States of
America or any state or territory thereof or the District of Columbia,
deliver to the Board an irrevocable consent to service of process in and
to the jurisdiction of the Courts of the Commonwealth of Kentucky with
respect to any action or suit, in law or in equity, brought by the Board
to enforce this agreement. If the Company is the surviving corporation in
such a merger, the express assumption referred to in the preceding sentence
shall not be required; or
4. The Company shall file a voluntary petition or institute
any proceeding under the United States Bankruptcy Code, either as such code
now exists or under any amendment thereof which may hereafter be enacted,
or under any act or acts, state or federal, dealing with or relating to the
subject or subjects of bankruptcy or insolvency, or under any amendment to
such act or acts either as bankrupt, or as an insolvent, or as a debtor,
or in any similar capacity, wherein or whereby the Company asks, seeks or
prays to be adjudicated a bankrupt, or to be discharged from the Company's
debts or obligations, or offers to the Company's creditors to effect a
composition or extension of time to pay the Company's debts, or asks, seeks
or prays for a reorganization or to effect a plan of reorganization or for
a readjustment of the Company's debts, or for any other similar relief; or
any involuntary petition in bankruptcy or any other proceedings of the
foregoing or similar kind or character shall be filed or be instituted or
taken against the Company and shall not be dismissed for a period or ninety
(90) days; or a custodian or receiver of the Company or of a substantial
portion of the property or assets of the Company shall be appointed by any
court and shall not be dismissed for a period of ninety (90) days; or the
Company shall make a general assignment for the benefit of the Company's
-28-
<PAGE>
creditors or the Company shall enter into an agreement of composition with
the Company's creditors; or the Company shall admit in writing its
inability to pay its debts generally as they become due; or
5. The Company shall abandon or vacate all or
substantially all of the Leased Premises for a period of ninety (90) days,
other than pursuant to and as permitted by Section XVI hereof.
6. The termination of the Lease Agreement for any reason.
The provisions of clauses (2) and (5) of this Section XV
are subject to the following limitations: if by reason of force majeure
the Company is unable in whole or in part to carry out any of its
agreements contained herein (other than its payment obligations contained
in Section V hereof), the Company shall not be deemed in default during the
continuance of such inability. The term "force majeure" as used herein
shall mean, without limitation, the following: acts of God; strikes,
lockouts or other industrial disturbances; acts of public enemies; orders
or restraints of any kind of the government of the United States of America
or of the Commonwealth of Kentucky or of any of their departments, agencies
or officials, or of any civil or military authority; insurrections; riots;
landslides; earthquakes; fires; storms; droughts; floods; explosions;
breakage or accident to machinery, transmission pipes or canals; and any
other cause or event not reasonably within the control of the Company. The
Company agrees, however, if practicable, at reasonable cost (in the
Company's judgment) and subject to the remaining terms hereof to remedy
with all reasonable dispatch the cause or causes preventing the Company
from carrying out its agreements, provided that the settlement of strikes,
lockouts and other industrial disturbances shall be entirely within the
discretion of the Company.
B. Remedies on Default by the Company. Upon the occurrence of any
event of default referred to above in Subsection A and at any time
thereafter so long as the same shall be continuing the Board may, at its
election, give the Company written notice of intention to terminate this
agreement on a date specified in said notice, which date shall not be
earlier than thirty (30) days after such notice is given, and if all events
of default have not been cured on the date so specified and if curative
action has not been commenced in accordance with clause (2) or (4) of
Subsection A hereof, the Board may forthwith terminate this Ground Lease,
but the Company shall be, and shall remain, liable for all sums then owing
by the Company and for all Ground Lease rentals hereunder from such date
of termination until the end of the then term of this Ground Lease, and the
Board may then reenter and take possession of the Leased Premises as the
Board's former estate, and the Company shall forthwith surrender possession
of the Leased Premises.
No waiver, expressed or implied, of default by the Board of any
of the terms, covenants or conditions hereof to be performed, kept and
observed by the Company shall be construed to be or act as a waiver of any
subsequent default of any of the terms, covenants and conditions herein
-29-
<PAGE>
contained to be performed, kept and observed by the Company. The acceptance
of rental or the performance of all or any part of this agreement by the
Board for or during any periods after default of any of the terms,
covenants or conditions herein contained to be performed, kept and observed
by the Company shall not be deemed a waiver of any right on the part of the
Board to cancel this agreement for failure by the Company to so perform,
keep or observe any of the terms, covenants or conditions hereof to be
performed, kept and observed.
C. Notice to Trustee; Right to Cure. Any notice permitted or
required to be given under this Section XV by the Board to the Company
likewise shall be given by the Board to the Trustee then serving under the
Indenture. The Trustee may cure any default of the Company hereunder and
a curing by the Trustee of an event of default by the Company shall be
deemed a curing by the Company for purposes of this Ground Lease.
SECTION XVI
TERMINATION BY COMPANY
The Company may terminate this Ground Lease in the event that the
Board shall fail to observe or perform any of the Board's covenants,
agreements or obligations hereunder and such failure shall continue
unremedied for a period of sixty (60) days after the Company shall have
given to the Board written notice specifying wherein the Board has failed
to observe or perform any such covenant, agreement or obligation, plus such
additional time as is reasonably required to correct any such failure if
the Board has instituted corrective action within such sixty (60) day
period and is diligently pursuing the same to completion. Notwithstanding
the foregoing, in the event Bonds have been issued by the Board at the
request of the Company for the financing of the Project Facilities, prior
to termination of this Ground Lease and as a condition thereto, the
Company, at its sole expense, must have made arrangements suitable to the
Trustee for the redemption of all outstanding Bonds and payment of all
costs in connection therewith.
The provisions of this Section XVI are subject to the following
limitations: if by reason of force majeure the Board is unable in whole
or part to carry out any of its agreements contained herein, the Board
shall not be deemed in default during the continuance of such inability.
The term " force majeure" as used herein shall mean, without limitation, the
following disturbances: acts of public enemies; orders or restraints of
any kind of the government of the United States of America or of the
Commonwealth of Kentucky or of any of their departments, agencies or
officials (other than the Board) or of any civil or military authority;
insurrections; riots; landslides; earthquakes; fires; storms; droughts;
floods; explosions; breakage or accident to machinery, transmission pipes
or canals; and any other cause or event not reasonably within the control
of the Board. The Board agrees, however, if practicable, at reasonable
cost (in the Board's judgment) and subject to the remaining terms hereof,
to remedy with all reasonable dispatch the cause or causes preventing the
Board from carrying out its agreements, provided that the settlement of
-30-
<PAGE>
strikes, lockouts and other industrial disturbances shall be entirely
within the discretion of the Board.
No waiver, expressed or implied, of default by the Company of
any of the terms, covenants or conditions hereof to be performed, kept and
observed by the Board shall be construed to be or act as a waiver of any
subsequent default of any of the terms, covenants and conditions herein
contained to be performed, kept and observed by the Board. The payment of
rentals, charges or fees or the performance of all or any part of this
Ground Lease by the Company for or during any periods after default of any
of the terms, covenants or conditions herein contained to be performed,
kept, or observed by the Board shall not be deemed a waiver of any right
on the part of the Company to cancel this Ground Lease as aforesaid for
failure by the Board to so perform, keep or observe any of the terms,
covenants or conditions hereof to be performed, kept and observed.
SECTION XVII
ASSIGNMENT AND SUBLETTING
The Company shall not at any time assign this Ground Lease or any part
thereof without the consent in writing of the Board, provided that the
foregoing consent shall not be required as to the assignment of this Ground
Lease or any rights hereunder to any corporation or entity with which the
Company may merge or consolidate or which may succeed to the business or
assets of the Company or a substantial part thereof, subject to compliance
with Clauses (a) through (c) inclusive of Section XV, subsection A.,
paragraph 3 above. The Company shall not at any time sublet or underlet
the Leased Premises or any part thereof without the written consent in
writing of the Board, which consent shall not be unreasonably withheld.
Any consent of the Board to an assignment of this Ground Lease or any
rights hereunder or to any subletting or underletting of the Leased
Premises shall further be given only subject to the following conditions:
1. The assignment or sublease shall not relieve the Company from
liability of any of its obligations under this Ground Lease;
2. The Assignee or Sublessee, as applicable, shall assume in writing
the obligations of the Company hereunder to the extent of the
interest assigned or sublet;
3. The Company shall, at least thirty (30) days prior to any such
assignment or sublease, provide the Board with written notice
thereof and promptly, but in no event later than thirty (30)
days after any such event, furnish or cause to be furnished to
the Board a true and complete copy of the assignment or
sublease; and
4. So long as any 1999 Series A bonds are outstanding, as such term
is defined in the Indenture, the Board shall receive a Favorable
Opinion of Bond Counsel (as said terms are defined in the
Indenture) in respect to the proposed transaction.
-31-
<PAGE>
SECTION XVIII
HOLDING OVER
In the event the Company shall hold over and remain in possession of
the Leased Premises after expiration of this agreement without any
renewal thereof, such holding over shall not be deemed to operate as a renewal
or extension of this agreement but shall only create a tenancy from month to
month which may be terminated at any time by the Board.
SECTION XIX
RULES AND REGULATIONS
The Board shall have the right to and may adopt and enforce reasonable
rules and regulations with respect to the use of the Airport and facilities
thereon which the Company agrees to observe and obey. Specifically, the
Board shall have the right to and may adopt and enforce reasonable rules
and regulations with respect to the use of the Leased Premises and the
exercise by the Company of its rights hereunder in respect to the handling
and storing of hazardous articles and materials, as the Board may determine
is necessary under the provisions of Federal Aviation Regulations, Part
139, or other regulations which from time to time may be enacted or become
required by ruling or other enactment.
SECTION XX
NO PERSONAL LIABILITY
A. No covenant, obligation or agreement of the Board shall be deemed
to be a covenant, obligation or agreement of any present or future member,
officer, agent or employee of the Board in other than his official
capacity, and neither the members of the Board, any official nor any
officer, agent or employee of the Board shall be subject to any personal
liability or accountability by reason of the covenants, obligations or
agreements of the Board contained in this Ground Lease.
B. No covenant, obligation or agreement of the Company shall be
deemed to be a covenant, obligation or agreement of any present or future
director, officer, agent or employee of the Company in other than his
official capacity, and neither the directors of the Company nor any
officer, agent or employee of the Company shall be subject to any personal
liability or accountability by reason of the covenants, obligations or
agreements of the Company contained herein.
SECTION XXI
LEASEHOLD FINANCING AND RELATED PROVISIONS
Leasehold Mortgage. The Company shall not mortgage or otherwise
encumber this Ground Lease except pursuant to a Leasehold Mortgage as
-32-
<PAGE>
defined in and meeting the terms and conditions set forth in this Section
XXI.
1. Definitions. For purposes of this Ground Lease, the term
ALeasehold Mortgage@ shall mean a first mortgage lien to an Eligible
Mortgagee with a term not longer than the term of this Lease, on all of the
Company's right, title and interest under this Ground Lease, which mortgage
has been approved by the Board pursuant to this Section XXI, and which does
not exceed the greater of (i) undepreciated amount of improvements
encumbered by such mortgage at the time such mortgage is entered into,
calculated on a straight line basis and assuming a useful life of 37.9
years or, if Bonds are issued to finance the Project Facilities, (ii) the
final maturity date of principal of any Bonds issued, with the consent of
the Board, to finance the Project Facilities. The term AEligible
Mortgagee@ shall mean the holder of any such Leasehold Mortgage, provided
that such holder is either (A) an independent third party, an institutional
lender, another lender unrelated to the Company or any related person of
the Company or is a lender having a relationship with the Company apart
from the loan but only to the extent that the Company demonstrates by a
writing contemporaneous with the loan that such lender advanced funds for
the purpose of constructing leasehold improvements and then only to the
extent of such improvements or (B) in the case of the issuance of Bonds,
a duly authorized financial institution having trust powers which is acting
in a fiduciary capacity as Trustee for the Board and owners of an issue of
Bonds approved by the Board, the proceeds of which will finance the Project
Facilities, and in either case (i) has been approved by the Board in the
Board's reasonable discretion, and (ii) has provided to the Board a
statement of its name and address.
2. Consent to Leasehold Mortgage. Any Leasehold Mortgage approved
by the Board must be in favor of an Eligible Mortgagee, and shall be
subject to the terms and conditions of this Ground Lease, including, but
not limited to, the terms and conditions of this Section XXI. The Board
shall not, by virtue of any consent to a Leasehold Mortgage or otherwise,
be deemed bound by any provision of the Leasehold Mortgage, anything herein
or in the Leasehold Mortgage to the contrary notwithstanding. In no event
shall the Leasehold Mortgage be deemed to encumber the fee interest of the
Board in the Leased Premises, but shall only involve the leasehold estate
of the Company therein. The terms and conditions of this Ground Lease
shall control and supersede any provision of the Leasehold Mortgage that
is inconsistent herewith.
3. Foreclosure. Except as provided in clauses (3), (4) and (5) of
this Section XXI, an Eligible Mortgagee shall have absolutely no right,
whether pursuant to a foreclosure proceeding or otherwise, (i) to enforce
by foreclosure or otherwise the Leasehold Mortgage, (ii) to convert or to
require the Board to convert the Leased Premises or the Project Facilities
to any use other than the qualified airport uses as expressly permitted by
this Ground Lease, or (iii) to sell, assign or transfer or cause or permit
to be sold, assigned and/or transferred at judicial foreclosure sale or
otherwise, the right, title and/or interest of the Company in and under
this Ground Lease to any person, firm or entity which has not been approved
-33-
<PAGE>
in writing by the Board in advance of any such sale, assignment and/or
transfer. Any such purported sale, assignment and/or transfer of this
Ground Lease and/or the Company's right, title and/or interest herein and
hereunder, whether pursuant to a judicial foreclosure proceeding or
otherwise, in contravention of this Section XXI(3) shall be void and of no
force and effect and shall give the Board the right to declare a default
under this Ground Lease and to terminate this Ground Lease. It shall be
the obligation of the Eligible Mortgagee in any such judicial foreclosure
sale to be the successful bidder. Notwithstanding the foregoing, any
Eligible Mortgagee acting as a Bond Trustee shall have the authority,
obligation, duty and power to use its best efforts to relet and rerent the
Project Facilities for the benefit of the owners of the Bonds and for the
benefit of the Board, and to cure defaults, as may be provided in the
applicable Leasehold Mortgage, which provisions shall and must include that
any reletting be subject to (a) approval by the Board, which will not be
unreasonably withheld, (b) receipt of an approving opinion of bond counsel
as to no adverse effect on the tax exemption of the outstanding Bonds, and
(c) qualification of any substitute and successor tenancy as an airport
facility, under Section 142(A) of the Internal Revenue Code.
4. Leasehold Mortgage Default. The Eligible Mortgagee shall,
contemporaneously with the delivery of same to the Company, deliver notice
to the Board of any declaration of the Company's default under the terms
and conditions of the Leasehold Mortgage, and thereafter (except in the
case of a Bond Trustee which is an Eligible Mortgagee), in the event the
Company's rights, titles and interests under this Ground Lease shall be
transferred to the Eligible Mortgagee pursuant to the terms of the
Leasehold Mortgage, the loan secured thereby, or otherwise, it is expressly
agreed that the Eligible Mortgagee shall be deemed to have assumed, and
shall be primarily obligated to the Board with respect to performance of,
all obligations of the Company under this Ground Lease.
5. Right to Deal with Eligible Mortgagee. Except as provided in
clauses (3), (4), and (5) of this Section XXI, following receipt by the
Board of written notice from the Eligible Mortgagee that (i) the Company
has defaulted under the terms and conditions of the Leasehold Mortgage, and
(ii) that the Eligible Mortgagee has exercised one or more of its remedies
and succeeded to the interest of the Company under this Ground Lease, the
Board shall thereafter be authorized to deal directly with the Eligible
Mortgagee with respect to all right, title and interest of the Company
under this Ground Lease. The Company waives any and all rights it may have
against the Board with respect to any and all dealings between the Board
and Eligible Mortgagee relative to this Lease and pursuant to this clause
5.
6. Additional Provisions. Except as provided in clauses (3), (4),
and (5) of this Section XXI, hereof,
(i) The Eligible Mortgagee may not sell, negotiate, assign or
transfer the obligations secured by the Leasehold Mortgage to any other
person or entity without first releasing its interest in the Leasehold
Mortgage. Any such actions shall be void and of no legal force and effect.
-34-
<PAGE>
(ii) The Eligible Mortgagee shall not in any event seek or
obtain the appointment of a receiver for the Company and/or the Leased
Premises or the Project Facilities, notwithstanding that the right to
appointment of a receiver may be authorized under the terms of the
Leasehold Mortgage, by statute or common law. Any such actions shall be
void and of no legal force and effect.
(iii) The Company shall provide the Board with a copy of any
and each document executed in connection with the obligations secured by
the Leasehold Mortgage.
(iv) The Board and the Company may, without the consent or
further joinder of Eligible Mortgagee, enter into any amendment(s) to this
Ground Lease which in the sole opinion of the Board are necessary for safe
and/or efficient Airport operations.
SECTION XXII
CERTAIN COVENANTS WITH RESPECT TO BOND FINANCING
The Company acknowledges that the Project Facilities may be financed
by the Board at the request of the Company through the issuance of exempt
facilities tax-exempt revenue bonds. In order to comply with the
requirements of Section 142 and other applicable provisions of the Code
with respect to such Bonds, and to enable the Board to properly comply
with the Code, the Company acknowledges, agrees and covenants as follows:
A. The Company cannot claim depreciation or an investment credit
with respect to the Project Facilities and by the execution hereof makes
an irrevocable election (binding on the Company and all successors in
interest under this Agreement) not to claim depreciation or any investment
credit with respect to the Project Facilities, which shall be binding on
the Company and any assignee or sublessee of the Company. The Company
shall reaffirm such waivers in the Bond documentation.
B. The lease term (as defined in Section 168(i)(3) of the Code) of
this Agreement is not more than 80 percent of the reasonably expected
economic life of the Project Facilities (as defined under Section 147(b)
of the Code.
C. The Company will have no option to purchase the Project
Facilities.
D. In order to enable the Bonds to be issued, the Company, upon
request by the Board, will provide to the Board, in such detail as is
requested by or on behalf of the Board, information regarding the nature,
identification, character, function and use of Project Facilities to be
financed by the Bonds, the estimated or actual costs of the Project
Facilities, the weighted average useful lives of the Project Facilities,
and other related data, together with such certificates and legal opinions
of the Company as may be so requested.
-35-
<PAGE>
SECTION XXIII
GENERAL PROVISIONS
A. Rights Cumulative. Each right of the parties hereto is
cumulative and in addition to each of the other legal rights that a party
may have in the event of a default of the other.
B. Captions. The captions in this Ground Lease are for convenience
or reference only and shall in no way define, limit or describe any of the
provisions of this Ground Lease.
C. Nonwaiver of Rights. No waiver of breach by either party of any
of the terms, covenants, and conditions hereof to be performed, kept, and
observed by the other party shall be construed as, or shall operate as, a
waiver of any subsequent breach of any of the terms, covenants, or
conditions herein contained, to be performed, kept, and observed by the
other party. No notice shall be required to restore time of the essence.
D. Notices. Notices required herein may be given by registered or
certified mail, return receipt requested, by depositing the same in the
United States mail in the continental United States, postage prepaid.
Either party shall have the right by giving written notice to the other,
to change the address at which its notices are to be received. Notices to
the Board shall be addressed as follows:
Director of Aviation
Cincinnati/Northern Kentucky International Airport
P. O. Box 752000
Cincinnati, Ohio 45275-2000
Notices to Company shall be addressed as follows:
Mesaba Aviation, Inc.
7501 26th Avenue South
Minneapolis, Minnesota 55450
Attention: Vice President - Administration
If notice is given in any other manner or at any other place, it will also
be given at the place and in the manner specified above.
E. Severability. In the event any covenant, condition or provision
herein contained is held to be invalid by any court of competent
jurisdiction, the invalidity of any such covenant, condition or provision
herein contained will not affect the validity of any other covenant,
condition or provision; provided that the validity of any such covenant,
condition, or provision does not materially prejudice either the Board or
Company in its respective rights and obligations contained in the valid
covenants, conditions or provisions of this Ground Lease.
-36-
<PAGE>
F. Agent for Service of Process. It is expressly understood and
agreed that if Company is not a resident of the Commonwealth of Kentucky,
or is an association or partnership without a member or partner resident
of said Commonwealth, or is a foreign corporation, Company will appoint
an agent for service of process in the Commonwealth of Kentucky. Due to
any failure on the part of said agent, or the inability of said agent to
perform, or the Company's failure to appoint an agent when required,
Company does hereby designate the Secretary of State, Commonwealth of
Kentucky, its agent for the purpose of service of process in any court
action between it and the Board arising out of or based upon this
Agreement, and the service shall be made as provided by the laws of the
Commonwealth of Kentucky for service upon a non-resident. It is further
expressly agreed, covenanted, and stipulated that, if for any reason,
service of such process is not possible, and as an alternative method of
service of process, Company may be personally served with such process out
of this State by the registered mailing of such complaint and process to
Company at the address set forth herein. Any such service out of this
State shall constitute valid service upon Company as of the date of
mailing. It is further expressly agreed that Company is amenable to and
hereby agrees to the process so served, submits to the jurisdiction, and
waives any and all objections and protests thereto, any laws to the
contrary notwithstanding.
G. Waiver of Claims. Company hereby waives any claim against the
Board and its officers, agents, or employees caused by any suit or
proceedings directly or indirectly attacking the validity of this Ground
Lease or any part thereof, or by any judgment or award in any suit or
proceeding declaring this Ground Lease null, void or voidable, or delaying
the same or any part thereof from being carried out.
H. Right to Develop Airport. It is further covenanted and agreed that
the Board reserves the right to further develop or improve the Airport and
all landing areas and taxiways as it may see fit, regardless of the desires
or views of Company and without interference or hindrance of same. Nothing
contained within this subparagraph H shall be construed, to limit and/or
affect, Company's rights in and to the Leased Premises demised hereunder
or elsewhere to Company by the Board except as limited by the terms of the
lease applicable to said premises.
I. Incorporation of Exhibits. All exhibits referred to in this Ground
Lease are intended to be and hereby are specifically made a part of this
Ground Lease.
J. Incorporation of Required Provisions. The parties incorporate
herein by this reference all provisions lawfully required to be contained
herein by any governmental body or agency.
K. Relationship of Parties. Nothing contained herein shall be deemed
or construed by the parties hereto, or by any third party, as creating the
relationship of principal and agent, partners, joint venturers, or any
other similar such relationship. The parties shall understand and agree
that neither the method of payment provided for hereunder, nor any other
-37-
<PAGE>
provision contained herein, nor any acts of the parties hereto creates a
relationship other than the relationship of Company as permittee of the
Board.
L. Liability of Agents or Employees. No officer, agent, or employee
of the Board or Company shall be charged personally or held contractually
liable by or to the other party under the provisions of this Ground Lease
or because of any breach thereof or because of its or their execution or
attempted execution.
M. Successors and Assigns Bound. This Ground Lease shall be binding
upon and inure to the benefit of the successors and assigns of the parties
hereto, where permitted by this Ground Lease.
N. Right to Amend. In the event that the Federal Aviation
Administration or its successors requires modifications or changes in this
Ground Lease as a condition precedent to the granting of funds for the
improvement of the Airport, or otherwise, Company agrees to consent to such
amendments, modifications, revisions, supplements, or deletions of any of
the terms, conditions, or requirements of this Ground Lease as may be
reasonably required.
O. Representative of the Board. The Director of Aviation shall be
designated as the official representative of the Board in all matters
pertaining to this Ground Lease and shall have the right and authority to
act on behalf of the Board with respect to all action required of the Board
in this Ground Lease.
P. Governing Law. This Ground Lease is governed by the laws of the
Commonwealth of Kentucky. Any disputes relating to this Ground Lease must
be resolved in accordance with the laws of Kentucky.
Q. Writing Required. Neither this Ground Lease nor any term or
provision hereof may be changed, waived, discharged, or terminated orally
but only by an instrument in writing signed by both parties.
R. Federal Aviation Act. Nothing herein contained shall be deemed
to grant the Company any exclusive right or privilege within the meaning
of Section 308 of the Federal Aviation Act.
S. Subordination. This Ground Lease is subject and subordinate to
the provisions of any agreement heretofore or hereafter made between the
Board and the United States Government relative to the financing,
operation, or maintenance of the Airport, the execution of which has been
required as a condition precedent to the transfer of rights, money or
property to the Board for Airport purposes, or the acquisition or
expenditure of funds for the improvement or development of the Airport,
including the expenditure of federal funds for the development of the
Airport.
T. The Company represents that it has carefully reviewed the terms
and conditions of this Ground Lease, is familiar with such terms and
-38-
<PAGE>
conditions and agrees faithfully to comply with the same to the extent to
which said terms and conditions apply to its activities as authorized and
required by this Ground Lease.
SECTION XXIV
ENTIRE AGREEMENT
The parties hereto understand and agree that this instrument contains
the entire Ground Lease between the parties. The parties further understand
and agree that neither party nor its agents have made representations or
promises with respect to this Ground Lease except as expressly set forth
herein and that no claim or liability shall arise for any representations
or promises not expressly stated in this Ground Lease. Any other writing
or parol agreement with the other party being expressly waived.
SECTION XXV
SUCCESSORS AND ASSIGNS BOUND BY COVENANTS
All covenants, stipulations and agreements in this agreement shall
extend to and bind the legal representatives, successors and assigns to the
respective parties hereto.
SECTION XXVI
MEMORANDUM OF AGREEMENT
The Company or the Board may have this agreement placed of record.
In addition, the parties shall at any time hereafter at the request of the
Company promptly execute duplicate originals of an instrument, in
recordable form, which shall constitute a short form of this agreement,
setting forth a description of the Leased Premises, the Term of this Ground
Lease and any portion thereof that the Company may request.
SECTION XXVII
COUNTERPARTS
This agreement may be executed in any number of counterparts each of
which shall be an original with the same effect as if the signatures
thereto and hereto were upon the same instrument.
-39-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this agreement to be
executed by their duly authorized officers and their respective seals to
be hereunto affixed the day and year first written above.
KENTON COUNTY AIRPORT BOARD
By:_____________________________
ATTEST: Gary R. Bockelman, Chairman
_______________________
Sheila R. Hammons
Secretary-Treasurer
COMMONWEALTH OF KENTUCKY
COUNTY OF BOONE
On this 20 day of September, in the year 1999, before me, Wilbert L.
Ziegler, a Notary Public in and for the County and State aforesaid,
personally appeared Gary R. Bockelman known to me to be the Chairman of the
Kenton County Airport Board, one of the corporations that executed the
within instrument; and he acknowledged to me that such corporation executed
the same.
_____________________________
NOTARY PUBLIC
My commission expires: 10/8/2002
My jurisdiction is: Kentucky
-40-
<PAGE>
MESABA AVIATION, INC.
By:________________________
Its: Chief Executive Officer
ATTEST:
_______________________
STATE OF Minnesota
COUNTY OF Hennepen
On this 15th day of September, in the year 1999, before me, a Notary
Public of such State, duly commissioned and sworn, personally appeared John
S. Fredericksen, known to me to be the Chief Executive Officer of MESABA
AVIATION, INC. and he/she acknowledged to me that such corporation executed
the within instrument pursuant to its by-laws or a resolution of its board
of directors.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal the
day and year in this Certificate first above written.
______________________________
NOTARY PUBLIC
My commission expires:1-31-2000
My jurisdiction is: Minnesota
-41-
