<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
Commission File Number 0-23642
NORTHWEST AIRLINES CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 95-4205287
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2700 LONE OAK PARKWAY, EAGAN, MINNESOTA 55121
(Address of principal executive offices)
( Zip Code)
(612) 726-2111
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
At October 31, 1996, there were 93,470,256 shares of the registrant's Class A
Common Stock and 3,914,295 shares of the registrant's Class B Common Stock
outstanding.
<PAGE>
NORTHWEST AIRLINES CORPORATION
PART I. FINANCIAL INFORMATION PAGE NO.
Item 1. Financial Statements
Condensed Consolidated Statements of Operations -
Three months and nine months ended September 30, 1996
and 1995. 3
Condensed Consolidated Balance Sheets - September 30,
1996, December 31, 1995 and September 30, 1995. 4
Condensed Consolidated Statements of Cash Flows - Nine
months ended September 30, 1996 and 1995. 5
Notes to Condensed Consolidated Financial Statements 6
The Computations of Primary and Fully Diluted Earnings Per Common
Share, attached hereto and filed as Exhibits 11.1 and 11.2, and
the Computations of Ratio of Earnings to Fixed Charges and Ratio of
Earnings to Fixed Charges and Preferred Stock Requirements,
attached hereto and filed as Exhibits 12.1 and 12.2, are
incorporated herein by reference.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 6. Exhibits 13
SIGNATURE 14
EXHIBIT INDEX 14
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NORTHWEST AIRLINES CORPORATION
- -------------------------------------------------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
(UNAUDITED, IN MILLIONS EXCEPT SHARE AND PER SHARE AMOUNTS) 1996 1995 1996 1995
- --------------------------------------------------------------------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
OPERATING REVENUES
Passenger $ 2,421.1 $ 2,237.3 $ 6,585.0 $ 5,884.5
Cargo 187.2 190.1 543.5 558.1
Other 126.9 133.6 411.9 440.8
----------- ----------- ----------- -----------
2,735.2 2,561.0 7,540.4 6,883.4
OPERATING EXPENSES
Salaries, wages and benefits 660.9 612.5 1,953.0 1,790.2
Stock-based employee compensation 59.2 133.0 244.3 298.8
Aircraft fuel, oil and taxes 370.9 281.3 1,007.0 792.4
Commissions 242.9 239.6 668.4 643.2
Aircraft maintenance materials and repairs 146.0 111.1 391.2 312.3
Aircraft rentals 86.4 85.5 258.0 256.2
Landing fees and other rentals 117.1 123.4 337.8 357.0
Depreciation and amortization 95.7 89.7 278.7 269.8
Other 486.7 459.7 1,423.5 1,341.3
----------- ----------- ----------- -----------
2,265.8 2,135.8 6,561.9 6,061.2
----------- ----------- ----------- -----------
OPERATING INCOME 469.4 425.2 978.5 822.2
OTHER INCOME (EXPENSE)
Interest expense, net (66.0) (98.6) (200.2) (301.9)
Interest of mandatorily redeemable preferred security holder (6.7) -- (20.6) --
Investment income 17.4 19.2 50.6 49.7
Foreign currency gain (loss) 1.0 27.8 12.3 (36.8)
Other (4.5) (6.5) 8.9 4.5
----------- ----------- ----------- -----------
(58.8) (58.1) (149.0) (284.5)
----------- ----------- ----------- -----------
INCOME BEFORE INCOME TAXES 410.6 367.1 829.5 537.7
Income tax expense 156.7 136.0 319.4 199.2
----------- ----------- ----------- -----------
NET INCOME 253.9 231.1 510.1 338.5
Preferred stock requirements (6.2) (14.8) (32.4) (43.9)
Preferred stock transactions 74.5 -- 74.5 59.2
----------- ----------- ----------- -----------
NET INCOME APPLICABLE TO COMMON STOCKHOLDERS $ 322.2 $ 216.3 $ 552.2 $ 353.8
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Earnings per common share:
PRIMARY
Before effects of preferred stock transactions $ 2.42 $ 2.27 $ 4.75 $ 3.15
Preferred stock transactions .73 -- .74 .64
----------- ----------- ----------- -----------
Earnings per common share $ 3.15 $ 2.27 $ 5.49 $ 3.79
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
FULLY DILUTED
Before effects of preferred stock transactions $ 2.20 $ 2.11 $ 4.33 $ 2.98
Preferred stock transactions .66 -- .67 .59
----------- ----------- ----------- -----------
Earnings per common share $ 2.86 $ 2.11 $ 5.00 $ 3.57
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Average shares used in computation:
PRIMARY 102,190,976 95,325,059 100,629,199 93,415,995
FULLY DILUTED 112,611,458 103,344,176 110,474,048 100,853,323
</TABLE>
SEE ACCOMPANYING NOTES.
3
<PAGE>
NORTHWEST AIRLINES CORPORATION
- -------------------------------------------------------------------------------
CONDENSED CONSOLIDATED BALANCE SHEETS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31 SEPTEMBER 30
(UNAUDITED, IN MILLIONS) 1996 1995 1995
- --------------------------------------- ------------ ------------ ------------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 727.8 $ 850.9 $ 1,161.3
Short-term investments 345.3 260.7 297.8
Accounts receivable, net 739.2 700.3 808.3
Flight equipment spare parts, net 255.3 268.0 247.1
Prepaid expenses and other 338.3 258.3 281.0
------------ ------------ ------------
2,405.9 2,338.2 2,795.5
PROPERTY AND EQUIPMENT
Flight equipment, net 3,549.8 3,097.2 3,056.0
Other property and equipment, net 941.6 982.2 999.8
------------ ------------ ------------
4,491.4 4,079.4 4,055.8
FLIGHT EQUIPMENT UNDER CAPITAL LEASES,
NET 681.9 710.1 719.4
OTHER ASSETS
International routes, net 757.4 775.7 781.7
Investments in affiliated companies
and other 505.0 508.9 428.3
------------ ------------ ------------
1,262.4 1,284.6 1,210.0
------------ ------------ ------------
$8,841.6 $ 8,412.3 $ 8,780.7
------------ ------------ ------------
------------ ------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Air traffic liability $1,088.8 $ 888.4 $ 984.5
Accounts payable and other
liabilities 1,532.6 1,540.3 1,523.1
Current maturities of long-term debt
and capital lease obligations 124.9 391.8 479.8
Short-term notes payable 385.9 20.1 35.2
------------ ------------ ------------
3,132.2 2,840.6 3,022.6
LONG-TERM DEBT 1,830.7 2,137.4 3,294.9
LONG-TERM OBLIGATIONS UNDER CAPITAL
LEASES 732.0 779.1 794.2
DEFERRED CREDITS AND OTHER LIABILITIES
Deferred income taxes 944.1 772.5 865.1
Pension and postretirement benefits 786.4 831.1 408.5
Other 340.8 306.5 329.4
------------ ------------ ------------
2,071.3 1,910.1 1,603.0
MANDATORILY REDEEMABLE PREFERRED
SECURITY OF SUBSIDIARY WHICH HOLDS
SOLELY NON-RECOURSE OBLIGATION OF
COMPANY 567.2 618.4 --
REDEEMABLE PREFERRED STOCK 596.7 945.5 864.0
COMMON STOCKHOLDERS' EQUITY (DEFICIT)
Common stock 1.0 .9 .9
Additional paid-in capital 1,145.5 970.7 854.2
Accumulated deficit (965.9) (1,517.8) (1,557.1)
Other (269.1) (272.6) (96.0)
------------ ------------ ------------
(88.5) (818.8) (798.0)
------------ ------------ ------------
$8,841.6 $ 8,412.3 $ 8,780.7
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
SEE ACCOMPANYING NOTES.
4
<PAGE>
NORTHWEST AIRLINES CORPORATION
- -------------------------------------------------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30
(UNAUDITED, IN MILLIONS) 1996 1995
- -------------------------------------------------------- --------- --------
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 1,205.4 $1,102.1
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (1,063.4) (348.1)
Net (increase) decrease in short-term investments (82.2) 300.4
Other, net 7.1 (0.2)
--------- --------
Net cash used in investing activities (1,138.5) (47.9)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale and leaseback transactions 350.0 --
Payments of long-term debt and capital lease
obligations (521.1) (364.4)
Other, net (18.9) 3.5
--------- --------
Net cash used in financing activities (190.0) (360.9)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (123.1) 693.3
Cash and cash equivalents at beginning of period 850.9 468.0
--------- --------
Cash and cash equivalents at end of period $ 727.8 $1,161.3
--------- --------
--------- --------
Cash and cash equivalents and unrestricted short-term
investments at end of period $ 961.8 $1,356.1
--------- --------
--------- --------
Borrowing capacity under revolving credit facility $ 237.2 $ 276.2
--------- --------
--------- --------
</TABLE>
SEE ACCOMPANYING NOTES.
5
<PAGE>
NORTHWEST AIRLINES CORPORATION
- -------------------------------------------------------------------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
1. The condensed consolidated financial statements of Northwest Airlines
Corporation ("NWA Corp." or the "Company") included herein have been
prepared pursuant to the rules and regulations of the Securities and
Exchange Commission ("SEC"). Certain information and footnote disclosures
normally included in annual financial statements prepared in accordance
with generally accepted accounting principles have been condensed or
omitted as permitted by such rules and regulations. These financial
statements and related notes should be read in conjunction with the
financial statements and notes thereto included in the Company's audited
consolidated financial statements for the year ended December 31, 1995
contained in the Company's Annual Report on Form 10-K for 1995 (the "Annual
Report").
In the opinion of management, the interim financial statements reflect
adjustments, consisting of normal recurring accruals, which are necessary
to present fairly the Company's financial position, results of operations
and cash flows for the periods indicated.
2. The Company's accounting and reporting policies are summarized in Note A of
the Notes to Consolidated Financial Statements in the Annual Report.
Effective with the first quarter 1996 financial reporting, the Company
reports gains (losses) relating to the disposition of assets as operating
expenses instead of in other income (expense) in accordance with Statement
of Financial Accounting Standards No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." This
change had no impact on net income, and gains (losses) on the disposition
of assets are excluded from unit cost calculations.
3. The income tax expense is based on estimated annual effective tax rates
which differ from the federal statutory rate of 35% primarily due to state
income taxes and certain nondeductible expenses.
4. As discussed under "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources", in
February 1996 the Company entered into agreements providing for the
purchase and financing of 20 Airbus A320 aircraft as well as the
rescheduling of certain Airbus A330 aircraft deliveries. The Company has
substitution rights with respect to the A330 aircraft. This transaction
also included the rescheduling of existing debt to beyond 2000 at lower
interest rates.
5. At September 30, 1996, the Company had no revolving credit facility
borrowings outstanding under its unsecured Credit Agreement. The $237.2
million in borrowing capacity under such facility along with $961.8 million
of cash, cash equivalents and unrestricted short-term investments provided
the Company with $1.20 billion of available liquidity at September 30,
1996. In May 1996, the Company used $50 million of existing funds to
prepay a portion of its floating rate term loan under the Credit Agreement
and increased the revolving credit facility by the same amount. In July
1996, the Company used $125 million of existing funds to prepay an
additional portion of this floating rate term loan.
In October 1996, the Credit Agreement was amended (i) to increase the
floating rate term loan thereunder from $125 million to $150 million and
extend its final maturity to 2002 and (ii) to increase the revolving credit
facility from $250 million to $500 million and extend the expiration date
of the facility to October 2001. Scheduled maturities of long-term debt
subsequent to September 30, 1996, adjusted to give effect to the amended
Credit Agreement and excluding short-term notes payable, are $14.1 million
in 1996, $68.7 million in 1997, $89.0 million in 1998, $220.2 million in
1999 and $110.5 million in 2000.
6
<PAGE>
6. In June 1996, $524.5 million of equipment trust pass through certificates
were issued in connection with the refinancing of the lessors' bridge
indebtedness associated with 11 leveraged operating leases relating to two
B747 aircraft and nine B757 aircraft leased to the Company. The proceeds
related to the issuance of the equipment trust pass through certificates
were used to repay such indebtedness of the lessors.
7. In June 1996, the Company and KLM Royal Dutch Airlines ("KLM") entered into
an agreement pursuant to which the Company agreed to acquire 3,691.2 shares
of its Series A Preferred Stock and 2,962.8 shares of its Series B
Preferred Stock held by KLM. On July 1, 1996, the Series A shares were
acquired by the Company in exchange for a $227 million unsecured promissory
note payable December 30, 1996. On July 26, 1996, the Series B shares were
acquired by the Company in exchange for a $152 million unsecured promissory
note payable June 13, 1997. The Company reported a one-time increase to
net income applicable to common stockholders of $74.5 million in the third
quarter of 1996 and annual earnings-per-share will benefit by approximately
$0.12 until the date on which the stock would have become subject to
mandatory redemption.
8. In accordance with Rule 1-02 (bb) of Regulation S-X, the following summary
data is presented for Northwest Airlines, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
------------------ ------------------
(UNAUDITED, IN MILLIONS) 1996 1995 1996 1995
----------------------------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Operating revenues $2,688.2 $2,499.3 $7,354.9 $6,654.5
Operating expenses 2,227.5 2,084.1 6,411.6 5,866.3
-------- -------- -------- --------
Operating income 460.7 415.2 943.3 788.2
Other income (expense) (56.2) (48.2) (145.3) (254.5)
-------- -------- -------- --------
Income before income taxes 404.5 367.0 798.0 533.7
Income tax expense 149.6 137.0 297.7 209.4
-------- -------- -------- --------
Net income $ 254.9 $ 230.0 $ 500.3 $ 324.3
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
CONDENSED CONSOLIDATED BALANCE SHEET DATA
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31 SEPTEMBER 30
(UNAUDITED, IN MILLIONS) 1996 1995 1995
----------------------------------- ------------ ------------ ------------
<S> <C> <C> <C>
Current assets $1,864.8 $1,861.1 $2,303.2
Noncurrent assets 5,829.8 5,460.9 5,344.4
Current liabilities 2,681.5 2,535.6 2,695.7
Long-term debt and obligations
under capital leases 2,040.0 2,351.8 3,524.3
Deferred credits and other
liabilities 1,256.3 1,277.3 881.3
Mandatorily redeemable preferred
security of subsidiary 567.2 618.4 --
</TABLE>
See also Note P to Consolidated Financial Statements in the Annual Report.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Substantially all of the Company's results of operations are attributable to
Northwest Airlines, Inc. ("Northwest") and the following discussion pertains
primarily to Northwest. The Company's results of operations for interim periods
are not necessarily indicative of such results for an entire year due to
seasonal factors as well as competitive and general economic conditions.
For the quarter ended September 30, 1996, the Company reported unaudited net
income of $253.9 million and operating income of $469.4 million. Primary
earnings per common share were $3.15 ($2.86 fully diluted), an improvement of
$.88 ($.75 fully diluted). The earnings per share improvement includes the
effect of a $74.5 million ($.66 per share for fully diluted earnings per share)
increase in net income applicable to common stockholders resulting from the July
1996 acquisition of the Company's preferred stock previously held by KLM. Cash,
cash equivalents and unrestricted short-term investments were $961.8 million at
September 30, 1996. Additionally, at September 30, 1996, the Company had
available $237.2 million in borrowing capacity under its revolving credit
facility providing total available liquidity of $1.20 billion. During the nine
months ended September 30, 1996, the Company reduced its long-term debt by
$306.7 million, including $205 million of payments prior to maturity.
Information with respect to the Company's operating statistics follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
------------------ % ------------------ %
1996 1995 CHG. 1996 1995 CHG.
-------- -------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Scheduled service:
Available seat miles (ASM) (millions) 25,142.0 23,170.5 8.5 70,787.6 65,441.7 8.2
Revenue passenger miles (millions) 19,311.1 17,773.0 8.7 52,449.1 47,444.0 10.5
Passenger load factor (percent) 76.8 76.7 0.1 pts. 74.1 72.5 1.6 pts.
Revenue passengers (thousands) 14,368 13,486 6.5 39,959 37,200 7.4
Revenue yield per passenger mile (cents) 12.54 12.59 (0.4) 12.55 12.40 1.2
Passenger revenue per scheduled ASM (cents) 9.63 9.66 (0.3) 9.30 8.99 3.4
Operating revenue per total ASM (cents)(1) 10.30 10.31 (0.1) 9.99 9.69 3.1
Operating expense per total ASM (cents)(1) 8.47 8.58 (1.3) 8.66 8.55 1.3
Operating expense excluding stock-based
compensation per total ASM (cents) (1) 8.24 8.01 2.9 8.31 8.10 2.6
Cargo ton miles (millions) 581.8 565.4 2.9 1,624.1 1,644.4 (1.2)
Fuel gallons consumed (millions) 519.5 488.3 6.4 1,463.4 1,379.6 6.1
Average fuel cost per gallon (cents) 67.30 55.17 22.0 64.28 54.96 17.0
Number of operating aircraft at end of period 399 375 6.4
Full-time equivalent employees at end of period 46,942 44,860 4.6
</TABLE>
- ------------------------
(1) Excludes the estimated revenues or expenses related to the operation of
Northwest's fleet of eight 747 freighter aircraft and MLT Inc.
RESULTS OF OPERATIONS--THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
Operating income increased $44.2 million to $469.4 million. The improvement was
largely due to a $183.8 million increase in passenger revenues and a $73.8
million decrease in stock-based employee compensation which were offset by an
increase in aircraft fuel and related taxes of $89.6 million, an increase in
salaries, wages and benefits of $48.4 million, and an increase in aircraft
maintenance of $34.9 million. Operating margin increased 0.6 points from 16.6%
to 17.2%.
OPERATING REVENUES. Operating revenues were $2.74 billion, an improvement of
$174.2 million (6.8%). System passenger revenues (which represented 88.5% of
total operating revenues) increased $183.8 million (8.2%). The increase was
primarily attributable to an 8.5% increase in scheduled service ASMs.
8
<PAGE>
Domestic passenger revenue increased $148.3 million (10.8%) to $1.52 billion.
The 7.3% increase in scheduled service ASMs resulting primarily from the
addition of DC9-30, DC10-30 and B757 aircraft, which allowed the Company to
increase frequencies to 23 cities and enter eight new markets, and a 3.9%
increase in yield were the primary causes of the improved performance.
Passenger revenues were favorably impacted by the lapsed federal taxes on
airline tickets and international departures. See "Other Information - U.S.
TRANSPORTATION TAX". Pacific passenger revenue decreased by $11.5 million
(1.6%) to $687.2 million despite an 8.7% increase in scheduled service ASMs
resulting primarily from new service to Beijing, China and additional trans-
Pacific frequencies due to higher utilization of existing aircraft. The impact
of the increase in scheduled service ASMs was offset by a 9.9% decrease in
yield. The Pacific yield decrease is attributable to a weaker Japanese yen.
The average yen per U.S. dollar exchange rate for the three months ended
September 30, 1996 and 1995 was 109 and 90, respectively. Transatlantic
passenger revenue increased $46.9 million (27.6%) to $217.1 million due to an
8.6% increase in yield and a 16.3% increase in scheduled service ASMs primarily
as a result of the addition of Amsterdam service from Detroit, Washington D.C.
and New York City.
OPERATING EXPENSES. Operating expenses increased $130.0 million. While
operating capacity increased 8.5% to 25.2 billion total service ASMs, operating
expense per total service ASM decreased 1.3%. Excluding stock-based
compensation in both periods, operating expense per ASM increased 2.9% to 8.24
cents largely related to higher fuel prices and increased maintenance costs.
Salaries, wages and benefits expense increased $48.4 million (7.9%) due in part
to an increase in average full-time equivalent employees of 4.7% which was
attributable to the increased flying of 8.5% and increased traffic of 6.5%.
Additionally, included in the increased salaries, wages and benefits expense is
a $12.9 million unfavorable impact of pension expense due to a lower pension
discount rate. Non-cash stock-based employee compensation expense is a function
of shares earned by employees and the period-ending common stock price. The
stock-based compensation expense decreased to $59.2 million from $133.0 million
for the third quarter of 1995. The period-ending common stock prices were
$35.375 per share at September 30, 1996 and $42.50 at September 30, 1995. The
expense for the third quarter includes the revaluation of the value of stock
earned by employees in the first and second quarters. Aircraft fuel and related
taxes increased $89.6 million (31.9%). A 22.0% increase in average fuel cost
per gallon and an excise tax increase which was effective October 1995 caused
$73.8 million of the increase with the balance attributable to increased flying.
Aircraft maintenance materials and repairs increased $34.9 million (31.4%) due
to a number of factors including the timing of maintenance activities, increased
flying and higher engine overhaul costs. Other expenses grew $27.0 million
(5.9%) largely due to timing of advertising and promotional expenses, increased
selling and marketing fees, communication expenses and claims, somewhat offset
by decreased passenger charter expenses.
OTHER INCOME AND EXPENSE. Interest expense-net decreased $32.6 million (33.1%)
primarily due to the retirement of debt prior to scheduled maturity and the
restructuring of the Company's financing arrangement related to certain property
in Japan described in Notes C and E to Consolidated Financial Statements in the
Annual Report. The foreign currency gain for the three months ended September
30, 1996 was attributable to balance sheet remeasurement of foreign currency-
denominated assets and liabilities. The foreign currency gain for the three
months ended September 30, 1995 was attributable to a $8.7 million gain on
remeasurement of foreign currency-denominated assets and liabilities and a $19.1
million gain on Japanese yen collar option contracts. Other expense for the
three months ended September 30, 1996 includes a payment of $10.9 million made
pursuant to the proposed travel agency settlement agreement - see "LEGAL
PROCEEDINGS".
RESULTS OF OPERATIONS--NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
Operating income increased $156.3 million (19.0%) to $978.5 million. The
improvement was largely due to a $700.5 million increase in passenger revenues
offset by an increase in operating expenses of $500.7 million. Operating
revenue per total ASM increased 3.1% from 9.69 cents to 9.99 cents. Operating
margin increased 1.1 points from 11.9% to 13.0%.
OPERATING REVENUES. Operating revenues were $7.54 billion, an improvement of
$657.0 million (9.5%). System passenger revenues (which represented 87.3% of
total operating revenues) increased $700.5 million (11.9%). The increase was
attributable to an 8.2% increase in scheduled service ASMs, a 2.2% increase (1.6
points) in passenger load factor and a 1.2% increase in system yield.
9
<PAGE>
Domestic passenger revenue increased $500.0 million (13.0%) to $4.33 billion.
The increase was due to a 6.6% increase in scheduled service ASMs and a 5.3%
increase in yield. Revenues were also favorably impacted by the lapsed federal
taxes. See "Other Information - U.S. TRANSPORTATION TAX". Pacific passenger
revenue increased by $84.3 million (5.1%) to $1.75 billion due to a 9.1%
increase in scheduled service ASMs and a 4.5% increase (3.4 points) in passenger
load factor, offset somewhat by a 7.7% decrease in yield. The Pacific yield
decrease is attributable to a weaker Japanese yen. Transatlantic passenger
revenue increased $116.2 million (29.9%) to $505.2 million due primarily to a
16.1% increase in scheduled service ASMs and a 9.1% increase in yield.
OPERATING EXPENSES. Operating expenses increased $500.7 million. While
operating capacity increased 8.2% to 70.8 billion total service ASMs, operating
expense per total service ASM increased 1.3%. Operating expense per total ASM
excluding stock-based compensation increased 2.6% to 8.31 cents largely related
to higher fuel prices and increased maintenance costs. Salaries, wages and
benefits expense increased $162.8 million (9.1%) due in part to an increase in
average full-time equivalent employees of 4.7% which was attributable to the
increased flying of 8.2% and increased traffic of 7.4%. Additionally, included
in the increased salaries, wages and benefits expense was a $53.6 million
unfavorable impact of pension expense due to a lower pension discount rate.
Non-cash stock-based employee compensation expense was $244.3 million, compared
to $298.8 million, a decrease of $54.5 million (18.2%). Aircraft fuel and
related taxes increased 27.1% from $792.4 million to $1.01 billion. A 17.0%
increase in average fuel cost per gallon and an excise tax increase which was
effective October 1995 caused $168.8 million of the increase with the balance
attributable to increased flying. Aircraft maintenance materials and repairs
increased $78.9 million (25.3%) due to a number of factors including the timing
of maintenance activities, increased flying activity, higher engine overhaul
costs and the impact of a favorable vendor settlement in 1995. Other expenses
grew $82.2 million (6.1%) largely due to increased costs for outside services,
advertising and promotional expenses, communication expense, selling and
marketing fees, personnel expense and supplies expense.
OTHER INCOME AND EXPENSE. Interest expense-net decreased $101.7 million (33.7%)
primarily due to the retirement of debt prior to scheduled maturity and the
restructuring of the Company's financing arrangement related to certain property
in Japan. The foreign currency gain for the nine months ended September 30,
1996 was attributable to balance sheet remeasurement of foreign currency-
denominated assets and liabilities. Foreign currency loss for the nine months
ended September 30, 1995 was attributable to a $26.4 million loss on balance
sheet remeasurement of foreign currency-denominated assets and liabilities and a
$10.4 million charge related to Japanese yen collar option contracts.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities for the nine months ended September
30, 1996 was $1.21 billion, a $103.3 million increase compared with the nine
months ended September 30, 1995. Investing activities in 1996 pertain primarily
to property and equipment additions. The acquisition of 17 DC-9 aircraft, 13
B757 aircraft, seven B727 aircraft, three DC-10 aircraft, two B747 aircraft, one
MD-80 aircraft and the refurbishment of DC-9 aircraft account for the majority
of the $1.06 billion of property additions in 1996. Investing activities in
1995 include primarily aircraft capital expenditures and net proceeds from
short-term investment transactions. Financing activities in 1996 pertain
primarily to the sale and leaseback of seven of the thirteen B757-200 aircraft
and the payment of debt and capital lease obligations including the prepayments
of $175 million of the floating rate term loan and $30 million of floating rate
term certificates. Financing activities in 1995 pertain primarily to the
payments of long-term debt and capital lease obligations.
In February 1996, the Company entered into agreements providing for the purchase
and financing of 20 Airbus A320 aircraft (thirteen in 1998 and seven in 1999) as
well as the rescheduling of 16 Airbus A330 aircraft deliveries to eight in each
of 2004 and 2005. The Company has substitution rights with respect to the A330
aircraft. Additionally, this transaction included the rescheduling of $456.9
million of existing debt to beyond 2000 at lower interest rates. In September
1996, the Company exercised its right to delay delivery from 1998 to 2002 of two
Boeing 747-400 aircraft and is scheduled to take delivery of two 747-400
aircraft in 1999 with an option to defer delivery until 2003.
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In October 1996, the Company amended an existing credit facility pursuant to
which the lenders have agreed to provide up to $240 million of interim debt
financing for up to six B757 aircraft delivered in 1996 and/or the Airbus A320
aircraft to be delivered in 1998 and 1999. This amended facility expires in
October 1999 and loans thereunder have a final maturity not later than October
2016.
See also Note 7 of Notes to Condensed Consolidated Financial Statements for a
discussion of the purchase by the Company of certain shares of the Company's
Series A and Series B Preferred Stock held by KLM.
OTHER INFORMATION
LABOR AGREEMENTS. Pursuant to amended labor agreements which provide for wage
and other cost reductions aggregating approximately $886 million over a 39 month
period (the "Wage Savings Period") which commenced August 1993, the Company has
agreed to issue common and preferred stock to employees. Management's
Discussion and Analysis of Financial Condition and Results of Operations and
Note C of the Notes to Consolidated Financial Statements in the Annual Report
contain additional discussion of the labor cost savings agreements, stock to be
issued to employees and the related accounting treatment. The fifth installment
of shares issuable to the employee trusts, consisting of 2,555,757 shares of
Series C Preferred Stock, 4,215,409 shares of Class A Common Stock and 536,880
shares of Class B Common Stock, was made on March 1, 1996.
The Wage Savings Period ended on July 31, 1996 for flight attendants, September
30, 1996 for mechanics, ground personnel and management and October 30, 1996 for
pilots. At the end of the Wage Savings Period, salaries and wages, which are
subject to amendable contracts, are estimated to increase by approximately $280
million on an annualized basis and the financial reporting recognition of stock-
based employee compensation expense will cease.
FOREIGN CURRENCY. The Company's yen-denominated revenues exceed its yen-
denominated expenses by approximately 60 billion yen per year and its yen-
denominated liabilities exceed its yen-denominated assets. In general, as the
Japanese yen strengthens (weakens), the Company's operating income is favorably
(unfavorably) impacted and a nonoperating foreign currency loss (gain) is
recognized due to the remeasurement of net yen liabilities. In recent periods
the yen has weakened as the yen exchange rate has changed from 100 yen to $1 at
September 30, 1995 to 103 yen to $1 at December 31, 1995 to 111 yen to $1 at
September 30, 1996.
U.S. TRANSPORTATION TAX. The U.S. 10% passenger ticket tax applicable to
domestic travel, the 6.25% domestic cargo waybill tax and the $6 per passenger
international departure tax expired on December 31, 1995. Consequently, the
Company ceased collecting these taxes on January 1, 1996. Legislation
reauthorizing these taxes for travel through December 31, 1996 went into effect
for tickets sold subsequent to August 27, 1996. The impact on future operating
income of such reinstatement is uncertain.
USE OF FINANCIAL INSTRUMENTS. In order to mitigate its exposure to foreign
exchange rate fluctuations, from time to time the Company uses a collar option
strategy to hedge its anticipated yen-denominated net cash flows. At September
30, 1996, the Company had hedged, using collar options approximately 80% of its
remaining 1996 anticipated yen-denominated net cash inflows (14.4 billion yen)
and has no material unrealized gains or losses. In the ordinary course of
business, the Company manages the price risk of fuel costs utilizing both
regulated exchange traded futures contracts and fuel swap agreements. Gains or
losses on hedge contracts are deferred until the related fuel inventory is
expensed. As of September 30, 1996, the Company had no material hedges for
future fuel requirements.
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FULLY DISTRIBUTED EARNINGS PER SHARE. The effect of the accounting for stock-
based compensation on the Company's operating results and earnings per share may
make it difficult to compare its earnings with other companies. Accordingly,
management believes that a "fully distributed" earnings per share calculation,
which excludes stock-based compensation and the unfavorable proforma impact of
the expiration of the labor cost savings and includes all the shares to be
issued to its employees, provides an appropriate supplemental measurement of the
Company's performance. On a fully distributed basis, the Company's net earnings
applicable to common stockholders would have been $359.8 million ($3.15 per
share) and $706.2 million ($6.19 per share) for the three and nine months ended
September 30, 1996, respectively, an improvement of $58.1 million ($0.51 per
share) and $158.8 million ($1.39 per share) over the corresponding periods in
1995. The fully distributed earnings per share for the three and nine months
ended September 30, 1996 includes the effect of a $.65 per share one-time
increase resulting from the July 1996 acquisition of the Company's preferred
stock previously held by KLM. The fully distributed earnings per share for the
nine months ended September 30, 1995 includes the effect of a $.52 per share
increase resulting from the January 1995 exchange of the Company's preferred
stock for common stock.
MESABA REGIONAL JET AGREEMENT. In October 1996, the Company entered into an
agreement with Mesaba Aviation, Inc. ("Mesaba"), under which Mesaba will operate
12 Avro Regional Jet aircraft as a new Northwest regional jet service. The
Company will acquire or lease the regional jets from Aero International
(Regional) or an affiliate for sublease to Mesaba. The new aircraft are
scheduled for delivery beginning in April 1997 at the rate of one per month.
DETROIT MIDFIELD TERMINAL. In October 1996, the Company and Wayne County,
Michigan (the "County") entered into an agreement pursuant to which, subject to
the satisfaction of certain conditions set forth in the agreement, the Company
will manage and supervise the design and construction of a $700 million midfield
terminal at Detroit Metropolitan Wayne County Airport. The new midfield
terminal is scheduled to be completed in 2001 (subject to extensions of such
date under certain circumstances) and will be funded from federal and State of
Michigan grants and existing passenger facility charges and through the County's
issuance of airport bonds payable primarily from future passenger facility
charges. The Company and the County have entered into agreements pursuant to
which the Company will lease space in the new terminal for a term of 30 years
from the date the terminal opens.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to Item 3, "Legal Proceedings" included in the Annual Report
and Part II, Item 1, "Legal Proceedings" included in the Company's Form 10-Q for
the quarter ended June 30, 1996.
IN RE: TRAVEL AGENCY COMMISSION ANTITRUST LITIGATION (U.S.D.C. District of
Minnesota, Multi-District Litigation Docket No. 1058). On September 3, 1996, an
agreement in principle to settle the antitrust class litigation between a class
of travel agency plaintiffs and American Airlines, Inc., Delta Airlines, Inc.,
United Airlines, Inc. and the Company was reached. Under the settlement
agreement, the Company agreed to pay $10.9 million of the $72 million aggregate
settlement payment to be made by the four airlines. (Separate settlement
agreements were reached by the plaintiffs with Continental Airlines, Inc., USAir
Inc. and Trans World Airlines, Inc. The aggregate amount of all settlement
payments is approximately $86 million.) In agreeing to settle the case, the
Company vigorously denied any wrongdoing and agreed to settle the litigation
solely to avoid the uncertainty and expense and diversion of management time and
effort associated with a protracted trial. On September 9, 1996, the Court
preliminarily approved the settlement agreement and scheduled a hearing on final
approval of the settlement for November 15, 1996.
In the ordinary course of its business the Company is party to various other
legal actions which the Company believes are incidental to the operation of its
business. Although the ultimate outcome of these other matters (including those
described in the Annual Report) cannot be predicted with certainty and could
have a material adverse effect on the Company's consolidated financial
condition, liquidity and operating results if resolved unfavorably, the Company
believes that the outcome of these actions will not have any such material
adverse effect.
ITEM 6. EXHIBITS
(a) EXHIBITS:
Exhibit 10.1 - Amendatory Agreement between The Charter County of
Wayne, Michigan and Northwest Airlines, Inc. dated
as of October 8, 1996
Exhibit 10.2 - First Amended and Restated Airport Agreement between
The Charter County of Wayne, Michigan and Northwest
Airlines, Inc. dated as of October 10, 1996
Exhibit 10.3 - Second Amended and Restated Airport Agreement between
The Charter County of Wayne, Michigan and Northwest
Airlines, Inc. dated as of October 10, 1996
Exhibit 10.4 - Amendment No. 5 to A330 Purchase Agreement among AVSA,
S.A.R.L. and Northwest Aircraft Inc. (The Company has
applied to the Commission for confidential treatment of
certain portions of this exhibit.)
Exhibit 10.5 - 1994 Northwest Airlines Corporation Stock Incentive
Plan, as amended
Exhibit 11.1 - Computation of Primary Earnings per Common Share.
Exhibit 11.2 - Computation of Fully Diluted Earnings per Common Share.
Exhibit 12.1 - Computation of Ratio of Earnings to Fixed Charges.
Exhibit 12.2 - Computation of Ratio of Earnings to Fixed Charges and
Preferred Stock Requirements.
Exhibit 27.1 - Financial Data Schedule.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Northwest Airlines Corporation
Dated: November 12, 1996 By: /s/ Mark W. Osterberg
------------------------------
Mark W. Osterberg
Vice President and
Chief Accounting Officer
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
10.1 Amendatory Agreement between The Charter County of Wayne,
Michigan and Northwest Airlines, Inc. dated as of
October 8, 1996.
10.2 First Amended and Restated Airport Agreement between The
Charter County of Wayne, Michigan and Northwest Airlines,
Inc. dated as of October 10, 1996.
10.3 Second Amended and Restated Airport Agreement between The
Charter County of Wayne, Michigan and Northwest Airlines,
Inc. dated as of October 10, 1996.
10.4 Amendment No. 5 to A330 Purchase Agreement among AVSA,
S.A.R.L. and Northwest Aircraft Inc. (The Company has
applied to the Commission for confidential treatment of
certain portions of this exhibit.)
10.5 1994 Northwest Airlines Corporation Stock Incentive Plan, as
amended.
11.1 Computation of Primary Earnings Per Common Share.
11.2 Computation of Fully Diluted Earnings per Common Share.
12.1 Computation of Ratio of Earnings to Fixed Charges.
12.2 Computation of Ratio of Earnings to Fixed Charges and
Preferred Stock Requirements.
27.1 Financial Data Schedule.
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NORTHWEST AIRLINES, INC.
AMENDATORY AGREEMENT
THIS AGREEMENT, made and entered into this 8th day of October, 1996 by
and between the County of Wayne, a Michigan Charter County, by and through
its Chief Executive Officer, with principal offices located at 600 Randolph
Street, Detroit, Michigan 48226, hereinafter referred to as "LESSOR", and
Northwest Airlines, Inc., a Minnesota corporation, with principal offices
located at 5101 Northwest Drive, St. Paul, Minnesota 55111-3034, hereinafter
referred to as "LESSEE".
WITNESSETH:
WHEREAS, the parties hereto have entered into an Airport Agreement dated
February 26, 1959, as amended, hereinafter referred to as the "Basic Agreement",
whereby LESSOR granted unto LESSEE certain rights, licenses, and privileges at
the Detroit Metropolitan Wayne County Airport, located in the City of Romulus,
County of Wayne, Michigan, hereinafter referred to as the "Airport"; and
WHEREAS, it is necessary to amend the Basic agreement to reflect changes in
LESSEE'S exclusive and non-exclusive use and occupancy of certain space as a
result of expansion and reductions in rental areas, to establish the applicable
rental rates and effective dates to the foregoing and to replace exhibits to
delineate the present occupied space.
<PAGE>
NOW, THEREFORE, in consideration of the mutual undertakings of the parties
hereto, the Basic Agreement is amended as follows:
1. Article IB, entitled "PREMISES IN AND ADJACENT TO L. C. SMITH TERMINAL
(BUILDING 603), JAMES M. DAVEY TERMINAL (BUILDING 601), AND CONCOURSES A, C, D,
E, F AND G is hereby deleted in its entirety and the following is substituted in
lieu thereof:
B. PREMISES IN AND ADJACENT TO L. C. SMITH TERMINAL(BUILDING 603), JAMES
M. DAVEY TERMINAL (BUILDING 601), MICHAEL BERRY INTERNATIONAL TERMINAL
(BUILDING 520) AND CONCOURSES A, B, C, D, E, F and G: From and after
the applicable effective dates set forth in Article IIIA entitled
RENTAL WITH RESPECT TO PREMISES IN L. C. SMITH TERMINAL (BUILDING
603), JAMES M. DAVEY TERMINAL (BUILDING 601), MICHAEL BERRY
INTERNATIONAL TERMINAL (BUILDING 520) AND CONCOURSES A, B, C, D, E, F
and G, LESSOR grants to LESSEE the exclusive use of the space
identified as Exclusive Areas in Subparagraph (1) of the said Article
III A, the preferential use of areas identified as Preferential Use in
Subparagraph (2) of the said Article IIIA and the use in common with
others so authorized identified as Common Areas in Subparagraph (3) of
said Article IIIA, in and adjacent to the L. C. Smith Terminal
(Building 603), James M. Davey Terminal (Building 601), Michael Berry
International Terminal (Building 520) and Concourses A, B, C, D, E, F,
and G all such Exclusive Areas, Preferential Areas and Common Areas
being shown and
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delineated on Exhibits 1 through 29 all dated January 1, 1996 and
Exhibits 30 and 31 (dated July 1, 1996), attached hereto and made part
hereof.
LESSEE shall have the right to use of all such space in the L. C.
Smith Terminal (Building 603), James M. Davey Terminal (Building 601),
Michael Berry International Terminal (Building 520) and Concourses A,
B, C, D, E, and F and G, with respect to which it is granted the
exclusive use hereunder, and all space and facilities with respect to
which it is granted the non-exclusive use hereunder for any and all
purposes in connection with or incidental to its business including,
without limiting the generality hereof, the handling, ticketing,
billing and manifesting of passengers, baggage, cargo, property and
mail, and the installation, maintenance and operation of radio and
other communications equipment and facilities and meteorological and
navigational equipment and facilities.
LESSEE shall have the right, in common with others so authorized,
to use Waste Disposal Buildings 606 and 527 for the purposes of
disposal of sanitary waste from LESSEE's aircraft.
The foregoing amendment to Article I B is without prejudice to the
substitute space rights initially granted to LESSEE under the said Article I B
as previously amended.
2. Exhibits 7 (dated 10-1-93), 8 (dated 6-1-89), 9 dated (6-1-89), 10
(dated 6-1-92), 16 (dated 6-1-92), 19 (dated 6-1-89), 21 (dated 6-1-89), 30
(dated 6-1-89), 32 (dated 6-1-89), 34 (dated 6-1-89), 38 (dated 6-1-92), 40
(dated 10-1-93), 56 (dated 6-1-89), 58 (dated 6-1-89), 59 (dated 6-1-89, 60
(dated 6-1-89), 61 (dated 6-1-89), 62 (dated 6-1-89), 64 (dated 6-1-89), 65
3
<PAGE>
(dated 6-1-89), 66 (dated 6-1-89), 68 (dated 6-1-89), and 70 (dated 6-1-89)
attached hereto and made a part hereof are deleted in their entireties from the
Basic Agreement, and Exhibits 1 through 29 all dated January 1, 1996 and
Exhibits 30 and 31, each dated July 1, 1996, attached hereto and made a part
thereof are substituted in lieu thereof.
3. Article III A. entitled "RENTAL WITH RESPECT TO SPACE IN L. C. SMITH
TERMINAL (BUILDING 603), JAMES M. DAVEY TERMINAL (BUILDING 601) AND CONCOURSES
A, C, D, E, F and G" as amended, of the Agreement is hereby deleted in its
entirety and the following is substituted in lieu thereof:
A. RENTAL WITH RESPECT TO PREMISES IN L. C. SMITH TERMINAL (BUILDING
603), JAMES M. DAVEY TERMINAL (BUILDING 60l), MICHAEL BERRY
INTERNATIONAL TERMINAL (BUILDING 520), AND CONCOURSES A, B, C, D, E, F
and G: From and after the effective dates hereinafter set forth,
rental of the Premises In And Adjacent To L. C. Smith Terminal
(Building 603), James M. Davey Terminal (Building 60l), Michael Berry
International Terminal (Building 520) and Concourses A, B, C, D, E, F
and G assigned exclusively to LESSEE in accordance with Article IB
hereof, or designated as Common Areas, shall be at the following rates
per square foot per year. Said rental rates shall be subject to
adjustment as provided in Paragraph C of this Article III.
Except as otherwise provided herein, LESSEE shall pay a pro rata
share of the rental applicable to common areas occupied jointly with
other tenants. Rental rates for the Base Premises shall be at the
following rates per square foot per year and subject to adjustment as
provided in Paragraph C of this Article III.
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A-1 PRIOR AND ADDITIONAL PREMISES - EXCLUSIVE USE
(a) Ticket Counter and Office Area at Main Level, Building 601,
comprising a total area of 1,746 square feet (Exhibit 1 dated
1-1-96): 1,117 square feet occupied as of June 18, 1968 at a
current substitute space rental rate of $10.14 per square foot
per year and 629 square feet occupied as of September 1, 1975 at
a current rental rate of $16.29 per square foot per year, being a
total annual rental of $21,572.79.
(b) Ticket Counter and Office Area at Main Level, Building 601
(Exhibit 1 dated 1-1-96): 1,117 square feet occupied as of
October 1, 1987 at a current adjusted rental rate of $.61 per
square foot per year, being a total annual rental of $681.37.
(c) Ticket Counter and Baggage Conveyor at Main Level, Building 601
(Exhibit 1 dated 1-1-96): 1360 square feet occupied as of June
15, 1984 at a current rental rate of $16.29 per square foot per
year, being a total annual rental of $22,154.40.
(d) Additional Ticketing Area at Main Level, Building 601 (Exhibit 1
dated 1-1-96): 101 square feet at no rental rate.
(e) Ticket Counter and Office Area at Main Level, Building 601
(Exhibit 1 dated 1-1-96): 3,044 square feet occupied as of
October 1, 1986 at a current rental rate of $10.14 per square
foot per year, being a current annual rental of $30,866.16.
5
<PAGE>
(f) Additional Ticket Counter and Office Area at Main Level, Building
601 (Exhibit 1 dated 1-1-96): 977 square feet occupied as of
October 1, 1987,at a current substitute space rental of $10.14
per square foot per year, being a current annual rental of
$9,906.78.
(g) Baggage Make-Up Area at Apron Level, Building 601, (Exhibit 2
dated 1-1-96): 4,164 square feet occupied as of October 1, 1987
at a current substitute space rental of $10.14 per square foot
per year, being a total annual rental rate of $42,222.96.
(h) Baggage Make-up and Baggage Claim Areas at Apron Level, Building
601 (Exhibit 2 dated 1-1-96): 13,463 square feet occupied as of
October 1, 1987, at a rental rate of $10.14 per square foot per
year, being a total annual rental of $136,514.82.
(i) Addition to Baggage Make-up and Baggage Claim Areas at Apron
Level, Building 601 (Exhibit 2 dated 1-1-96): 3,881 square feet
occupied as of October 1, 1987, at a rental rate of $16.29 per
square foot per year, being a total annual rental of $63,221.49.
(j) Baggage make-up Area at Apron Level, Building 601 (Exhibit 2
dated 1-1-96): 3,917 square feet occupied as of October 1,
1987,at a current adjusted rental rate of $.61 per square foot
per year, being a total annual rental of $2,389.37.
6
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(k) Baggage Make-up Area at Apron Level, Building 60l (Exhibit 2
dated 1-1-96): 1,044 square feet occupied as of June 3, 1986 at
a current adjusted rental rate of $.61 per square foot per year,
being a total annual rental of $636.84.
(l) Baggage Claim at Apron Level, Building 601 (Exhibit 2 dated 1-1-
96): 1,190 square feet occupied as of June 3, 1986 at a current
adjusted rental rate of $8.763 per square foot per year, being a
total annual rental of $10,427.97.
(m) Baggage Claim Area at Apron Level, Building 601 (Exhibit 2 dated
1-1-96): 631 square feet occupied as of October 1, 1987 at a
rental rate of $16.29 per square foot per year, being a total
annual rental of $10,278.99.
(n) Baggage Claim and Baggage Claim Office at Apron Level, Building
601, comprising a total area of 2,962 square feet occupied as of
October 1, 1987, (Exhibit 2 dated 1-1-96): 408 square feet at a
current substitute space rental of $10.14 per square foot per
year; 252 square feet at a current substitute space rental of
$14.81 per square foot per year; and 2,302 square feet at a
current rental rate of $16.29 per square foot per year, being a
total annual rental of $45,368.82.
(o) Additional Baggage Make-up Area at Apron Level, Building 601
(Exhibit 2 dated 1-1-96): 1,231 square feet occupied as of
October 1, 1987, at a rental rate of $10.14 per square foot per
year, being a total annual rental of $12,482.34.
7
<PAGE>
(p) Baggage Service Area at Apron Level, Building 601 (Exhibit 2
dated 1-1-96): 410 square feet occupied as of October 1, 1987 at
a current rental rate of $1.77 per square foot per year, being a
total annual rental of $725.70.
(q) Exterior Baggage Conveyor Area at Apron Level, Building 601
(Exhibit 2 dated 1-1-96): 1,370 square feet occupied as of
January 1, 1983, at a current rental rate of $1.77 per square
foot per year being a total annual rental of $2,424.90.
(r) Addition to Baggage Claim Area at Apron Level, Building 601
(Exhibit 2 dated 1-1-96): 1121 square feet occupied as of October
1, 1987 at a current rental rate of $1.77 per square foot per
year, being a total annual rental of $1,984.17.
(s) Additional Baggage Make-up Area at Apron Level, Building 601
(Exhibit 3 dated 1-1-96): 27,811 square feet occupied as of
October 1, 1987 at a current rental rate of $2.50 per square foot
per year, being a total annual rental of $69,527.50.
(t) VIP Office area at Apron Level, Building 601 (Exhibit 3 dated
1-1-96): 482 square feet occupied as of October 1, 1987 at a
current rental rate of $3.38 per square foot per year, being a
total annual rental of $1,629.16.
(u) Parking Areas at Apron Level, Building 601 (Exhibit 3 dated
1-1-96): 26,101 square feet occupied as of October 1, 1987 at a
current rental rate of $1.61 per square foot per year, being a
total annual rental of $42,022.61.
8
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(v) Office Area at Mezzanine Level (North Side), Building 601
(Exhibit 4 dated 1-1-96): 1,290 square feet occupied as of
October 1, 1987, at a current rental rate of $16.29 per square
foot per year, being a total annual rental of $21,014.10.
(w) Office Area at Mezzanine Level Building 601 (Exhibit 4 dated
1-1-96) 2,267 square feet occupied as of June 16, 1983 at a
current rental rate of $16.29 per square foot per year, being a
total annual rental of $36,929.43.
(x) Employee Credit Union Office at Mezzanine Level, Building 601
(Exhibit 4 dated 1-1-96): 1,368 square feet occupied as of April
16, 1983 at a current rental rate of $16.29 per square foot per
year, being a total annual rental of $22,284.72.
(y) Training Room at Mezzanine Level, Building 601 (Exhibit 4 dated
1-1-96): 435 square feet occupied as of February 2, 1984 at a
current rental rate of $16.29 per square foot per year, being a
total annual rental of $7,086.15.
(z) Club Area at Mezzanine Level, Building 601 (Exhibit 4 dated
1-1-96): 2,151 square feet occupied as of October 1, 1986 at a
current rental rate of $10.14 per square foot per year, being a
total annual rental of $21,811.14.
(aa) World Club at Main Level, Building 601 (Exhibit 5 dated 1-1-96):
6,240 square feet occupied as of October 1, 1987 at a current
rental rate of $1.77 per square foot per year, being a total
annual rental of $11,044.80.
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(bb) Additional Exterior Baggage Conveyor Area at Apron Level,
Building 601 (Exhibit 6 dated 1-1-96): 8,871 square feet occupied
as of October 1, 1987 at a current rental rate of $1.61 per
square foot per year, being a total annual rental of $14,282.31.
(cc) Parking Areas at Apron Level, Building 601 (Exhibit 6 dated
1-1-96): 27,734 square feet occupied as of October 1, 1987 at a
current rental rate of $1.61 per square foot per year, being a
total annual rental of $44,651.74.
(dd) Parking Areas at Apron Level, Building 601 (Exhibit 6 dated
1-1-96): 5,676 square feet occupied as of October 1, 1987 at a
current rental rate of $1.61 per square foot per year, being a
total annual rental of $9,138.36.
(ee) Hold Rooms, Main Level, Concourse A Satellite Building (Exhibit 7
dated 1-1-96): 5,028 square feet occupied as of July 5, 1966 at
an adjusted rental rate of $.019 per square foot per year, being
a total annual total rental of $95.53.
(ff) Main Floor, Concourse A, Satellite Building (Exhibit 7 dated
1-1-96): 1,107 square feet occupied as of November 1, 1984 at a
current rental rate of $.24 per square foot per year, being a
total annual rental of $265.68.
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(gg) Hold Room and Office Area at Main Level Concourse B (Exhibit 8
dated 1-1-96): 1193 square feet occupied as of 4-1-95 at a
current rental rate of $16.29 per square foot per year, being a
total annual rental rate of $19,433.97.
(hh) Operations and Storage Area at Apron Level Concourse B (Exhibit 9
dated 1-1-96): 505 square feet occupied as of 4-1-95 at a current
rental rate of $16.29 per square foot per year, being a total
annual rental rate of $8,226.45.
(ii) Hold Rooms at Main Level, Concourse C extension (Exhibit 10 dated
1-1-96): 9639 square feet occupied as of June 1, 1989 at no
rental charge (Lessee is paying the debt service on construction
costs) terminating May 31, 1994, after which date the lease shall
be on a month to month basis and may be terminated by Lessor upon
30 days advance written notice to Lessee.
(jj) Office Room at Main Level, Concourse C Extension (Exhibit 10
dated 1-1-96): 390 square feet occupied as of June 1, 1989 at no
rental charge (Lessee is paying the debt service on construction
costs) terminating May 31, 1994, after which date the lease shall
be on a month to month basis and may be terminated by Lessor upon
30 days advance written notice to Lessee.
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<PAGE>
(kk) Hold Room and Office Areas at Main Level Concourse C (Exhibit 12,
dated 1-1-96): 6,584 square feet occupied as of April 18, 1995 at
a current rental rate of $11.75 per square foot per year, being a
total annual rental rate of $77,362.00.
(ll) Additional Hold Room Area at Main Level, Concourse C (Exhibit 12
dated 1-1-96): 946 square feet occupied as of April 18, 1995 at a
current rental rate of $11.75 per square foot per year, being a
total annual rental rate of $11,115.50.
(mm) Additional Special Waiting Room at Main Level Concourse C
(Exhibit 12, dated 1-1-96): 394 square feet occupied as of April
18, 1995 at a current rental rate of $16.29 per square foot per
year, being a total annual rental rate of $6,418.26.
(nn) Unimproved Area at Apron Level, Concourse C (Exhibit 13 dated
1-1-96): 4,216 square feet occupied as of July 1, 1995 at a
current rental rate of $11.49 per square foot per year, being a
total annual rental of $48,441.84.
(oo) Additional Operations and Office Area at Apron Level Concourse C
(Exhibit 13 dated 1-1-96): 5,194 square feet occupied as of July
1, 1995 at a current rental rate of $11.49 per square foot per
year, being a total annual rental of $59,679.06.
12
<PAGE>
(pp) Operation Area Apron Level, Concourse C, (Exhibit 13 dated 1-1-
96): comprising 4,060 total square feet occupied as of 10-1-93
at an adjusted rental rate of $11.19 per square foot per year,
being a total annual rental of $45,431.40.
(qq) Operation Area Apron Level, Concourse C, (Exhibit 13 dated 1-1-
96): 1756 square feet occupied as of August 1, 1996 at a current
rental rate of $16.29 per square foot per year, being a total
annual rental of $28,605.24.
(rr) Additional Operations Area at Apron Level Concourse C (Exhibit 13
dated 1-1-96) 1,106 square feet occupied as of July 1, 1995 at a
current rental rate of $16.29 per square foot per year, being a
total annual rental of $18,016.74.
(ss) Additional Operations Area at Apron Level Concourse C (Exhibit 13
dated 1-1-96): 1,471 square feet occupied as of July 1, 1995 at a
current rental rate of $16.29 per square foot per year, being a
total annual rental of $23,962.59.
(tt) South World Club at Main Level, Building 603 (Exhibit 14 dated 1-
1-96): 9,515 square feet occupied as of July 1, 1995 at a current
rental rate of $1.77 per square foot per year, for maintenance
and operations costs, being a total annual rental of $16,841.55.
13
<PAGE>
(uu) Hold Areas at Gates 1, 3 and 5, Main Level, Concourse C (Exhibit
16 dated 1-1-96): 4,559 square feet occupied as of July 1, 1995
at a current rental rate of $8.98 per square foot per year, being
a total annual rental of $40,939.82.
(vv) Operations and Office Area, Apron Level, Concourse C (Exhibit 17
dated 1-1-96): 2775 square feet occupied as of July 1, 1995 at a
current rental rate of $8.98 per square foot per year, being a
total annual rental of $24,919.50.
(ww) Hold Areas at Main Level Concourse C (Exhibit 16 dated 1-1-96):
7,681 square feet occupied as of July 1, 1995 at a current rental
rate of $11.49 per square foot per year, being a total annual
rental of $88,254.69.
(xx) Additional Hold Area at Main Level Concourse C (Exhibit 16 dated
1-1-96): 1,860 square feet occupied as of July 1, 1995 at a
current rental rate of $11.49 per square foot per year, being a
total annual rental of $21,371.40.
(yy) Hold Room at Main Level Concourse C (Exhibit 16 dated 1-1-96):
1,576 square feet occupied as of July 1, 1995 at a current rental
rate of $11.49 per square foot per year, being a total annual
rental of $18,108.24.
(zz) Additional Hold Area at Main Level Concourse C (Exhibit 16 dated
1-1-96): 1,095 square feet occupied as of July 1, 1995 at a
current rental rate of $11.49 per square foot per year, being a
total annual rental of $12,581.55.
14
<PAGE>
(aaa) Operations and Office Area at Apron Level Concourse C
(Exhibit 17 dated 1-1-96): 11,924 square feet occupied as of
July 1, 1995 at a current rental rate of $11.49 per square
foot per year, being a total annual rental of $137,006.76.
(bbb) Unimproved Operations Area at Apron Level Concourse C
(Exhibit 17 dated 1-1-96): 2,426 square feet occupied as of
July 1, 1995 at a current rental rate of $16.29 per square
foot per year, being a total annual rental of $39,519.54.
(ccc) Additional Operations and Office Area at Apron Level,
Concourse C (Exhibit 17 dated 1-1-96): 5,240 square feet
occupied as of July 1, 1995 at a current rental rate of
$11.49 per square foot per year, being a total annual rental
of $60,207.60.
(ddd) Breakroom, Apron Level, Concourse C (Exhibit 17 dated 1-1-
96): 285 square feet occupied as of July 1, 1995 at a
current rental rate of $16.29 per square foot per year,
being a total annual rental rate of $4,642.65.
(eee) Hold Areas and Office Area at Main Level, Concourse D
(Exhibit 18 dated 1-1-96): 6,220 square feet occupied as of
April 17, 1985 at a current rental rate of $10.14 per square
foot per year, being a total annual rental of $63,070.80.
15
<PAGE>
(fff) Passenger Hold Room at Main Level, Concourse D (Exhibit 18
dated 1-1-96): 3,653 square feet occupied as of April 1,
1976 and May 1, 1981 at a current rental rate of $16.29 per
square foot per year, being a total annual rental of
$59,507.37.
(ggg) Operations, Office, Commissary Areas at Apron Level,
Concourse D (Exhibit 19 dated 1-1-96): 10,070 square feet
occupied as of April 17, 1985 at a current adjusted rental
rate of $1.4764 per square foot per year, being a total
annual rental of $14,867.35.
(hhh) Additional Gates and Hold Rooms at Main Level, Concourse D
(Exhibit 18 dated 1-1-96): 8,016 square feet, occupied as of
May 1, 1988 the rent credit offsetting the rental charge.
(iii) Additional Operations Area at Apron Level, Concourse D
(Exhibit 19 dated 1-1-96): 9,896 square feet, occupied as of
August 1, 1985 the rent credit offsetting the rental charge.
(jjj) Operations, Storage and Stairwell Area at Apron Level,
Concourse D (Exhibit 19 dated 1-1-96): 1,226 square feet
occupied as of April 1, 1976 at a current rental rate of
$16.29 per square foot per year, being a total annual rental
of $19,971.54.
(kkk) Additional Space at Apron Level, Concourse D (Exhibit 19
dated 1-1-96): 1,140 square feet occupied as of April 17,
1985 at a current rental rate of $16.29 per square foot per
year, being a total annual rental of $18,570.60.
16
<PAGE>
(lll) Enclosed Space at Apron Level, Concourse D (Exhibit 19 dated
1-1-96): 640 square feet occupied as of April 1, 1985 at a
current rental rate of $1.77 per square foot per year, being
a total annual rental of $1,132.80.
(mmm) Hold Room and Office Areas at Main Level, Concourse E
(Exhibit 20 dated 1-1-96): 12,246 square feet occupied as of
April 1, 1976 at a current rental rate of $16.29 per square
foot per year, being a total annual rental of $199,487.34.
(nnn) Additional Hold Room and Office Area at Main Level Concourse
E (Exhibit 20, dated 1-1-96): 5,455 square feet occupied as
of October 29, 1984 at a current adjusted rental rate of
$0.9505 per square foot per year being a total annual rental
of $5,184.98 effective January 1, 1986.
(ooo) Operations Areas at Apron Level, Concourse E, comprising a
total of 9,213 square feet occupied as of April 1, 1976
(Exhibit 21 dated 1-1-96): 6,842 square feet at a current
substitute space rental of $10.14 per square foot per year;
1,445 square feet at a substitute space rental rate of
$14.81 per square foot per year; 97 square feet at a current
rental rate of $16.29 per square foot per year; and 829
square feet at a current rental rate of $16.29 per square
foot per year, being a total annual rental of $105,862.87.
17
<PAGE>
(ppp) Additional Flight Crew Lounge at Apron Level, Concourse E
(Exhibit 21 dated 1-1-96): 1,065 square feet occupied as of
August 1, 1978 at a current rental rate of $16.29 per square
foot per year, being a total annual rental of $17,348.85.
(qqq) Flight Crew Lounge at Apron Level, Concourse E (Exhibit 21
dated 1-1-96): 704 square feet occupied as of September 1,
1977 at a current rental rate of $16.29 per square foot per
year, being a total annual rental of $11,468.16.
(rrr) Additional Operations Areas at Apron Level, Concourse E
(Exhibit 21 dated 1-1-96): 5,758 square feet occupied as of
October 29, 1984 at a current adjusted rental rate of $0.61
per square foot per year, being a total annual rental of
$3,512.38.
(sss) Rest Rooms and Computer Service Room at Apron Level,
Concourse E (Exhibit 21 dated 1-1-96): 784 square feet
occupied as of October 29, 1984 at a current adjusted rental
rate of $4.6380 per square foot per year, being a total
annual rental per year, being a current annual rental of
$3,636.19.
(ttt) Additional Operations Areas at Apron Level, Concourse E
(Exhibit 21 dated 1-1-96): 5,775 square feet occupied as of
November 1, 1984 at a current adjusted rental rate of $.61
per square foot per year, being a total annual rental of
$3,522.75.
18
<PAGE>
(uuu) Tower on North Side of Concourse E (Exhibit 20 dated 1-1-
96): 1,589 square feet, occupied as of August 1, 1985 the
rent credit offsetting the rental charge; 1,730 square feet
occupied as of December 1, 1990, the rent credit offsetting
the rental charge.
(vvv) Additional Unimproved Ramp Space Adjacent to Concourse E
(Exhibit 21 dated 1-1-96): 1,006 square feet occupied as of
October 29, 1984 at a current adjusted rental rate of $0.61
per square foot per year, being a total annual rental of
$613.66.
(www) Unimproved Ramp Space Adjacent to Concourse E (Exhibit 21
dated 1-1-96): 1,140 square feet occupied as of September
1, 1977 at a current rental rate of $1.77 per square foot
per year, being a total annual rental of $2,017.80.
(xxx) Hold Room and Office Area at Main Level, Concourse F
(Exhibit 22 dated 1-1-96): 6,270 square feet occupied as of
June 3, 1986 at a current adjusted rental rate of $.9484 per
square foot per year, being a current annual rental of
$5,946.47.
(yyy) Hold Rooms, Office Areas and Lounge at Main Level, Concourse
F (Exhibit 22 dated 1-1-96): 10,795 square feet occupied as
of October 1, 1986 at a current rental rate of $10.14 per
square foot per year, being a total annual rental of
$109,461.30.
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(zzz) Addition to Hold Rooms, Concourse F, at Main Level (Exhibit
22 dated 1-1-96): 1,395 square feet occupied as of October
1, 1986 at a current rental of $16.29 per square foot per
year, being a total annual rental of $22,724.55.
(aaaa) Addition to Hold Rooms at Concourse F at Main Level (Exhibit
22 dated 1-1-96): 1,778 square feet occupied as of October
1, 1986 at a current rental rate of $16.29 per square foot
per year, being a total annual rental of $28,963.62.
(bbbb) Offices, Class Rooms, Stairways and Pilots Lounge at Apron
Level, Concourse F (Exhibit 23 dated 1-1-96): 10,016 square
feet occupied as of October 1, 1986 at a current rental rate
of $10.14 per square foot per year, being an annual rental
of $101,562.24.
(cccc) Addition to Room No. 102 at Apron Level, Concourse F
(Exhibit 23 dated 1-1-96): 275 square feet occupied as of
October 1, 1986 at a current rental rate of $16.29 per
square foot per year, being a total annual rental of
$4,479.75.
(dddd) Option Area at Apron Level, Concourse F (Exhibit 23 dated
1-1-96): 13,740 square feet occupied as of October 1, 1986,
at a current rental rate of $1.61 per square foot per year,
being a total annual rental of $22,121.40.
20
<PAGE>
(eeee) Electrical Room Pneumatic Tube Equipment Space at Tunnel
Level, Concourse F (Exhibit 24 dated 1-1-96): 1,014 square
feet occupied as of October 1, 1986 at a current rental rate
of $10.14 per square foot per year, being a total annual
rental of $10,281.96.
(ffff) Operations Area at Apron Level, Concourse F, comprising a
total area of 5,942 square feet occupied as of June 3, 1986
(Exhibit 23 dated 1-1-96): 4,290 square feet at a current
rental rate of $10.14 per square foot per year and 1,652
square feet at a current rental rate of $16.29 per square
foot per year, being a total annual rental of $70,411.68.
(gggg) Additional Unimproved Area at Apron Level, Concourse F
(Exhibit 23 dated 1-1-96): 1,006 square feet occupied as of
June 3, 1986 at a current rental rate of $1.61 per square
foot per year being a total annual rental of $1,619.66.
(hhhh) Unimproved Area at Apron Level, Concourse F (Exhibit 23
dated 1-1-96): 1,101 square feet occupied as of June 3, 1986
at a current rental rate of $1.61 per square foot per year,
being a total annual rental of $1772.61.
(iiii) New Holdroom Area at Main Level, Concourse F (Exhibit 22
dated 1-1-96): 739 square feet occupied as of June 1, 1989
at a current rental rate of $16.29 per square foot per year,
being a total annual rental of $12,038.31.
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<PAGE>
(jjjj) Additional Holdroom Area at Main Level, Concourse F (Exhibit
22 dated 1-1-96): 1,534 square feet occupied as of June 1,
1989 at a current rental rate of $16.29 per square foot per
year, being a total annual rental of $24,988.86.
(kkkk) World Club at Main Level, Central Services Building (Exhibit
26 dated 1-1-96): 2,335 square feet occupied as of June 1,
1985 at a current rental rate of $16.29 per square foot per
year, being a total annual rental of $38,037.15.
(llll) Parking and Storage at Apron Level, Central Services
Building (Exhibit 27 dated 1-1-96): 4,845 square feet
occupied as of October 1, 1987 at a current rental rate of
$1.61 per square foot per year, being a total annual rental
rate of $7,800.45.
(mmmm) Office at Apron Level, Building 520 (Exhibit 28, dated 1-1-
96): 488 square feet occupied as of July 1, 1995 at a
current rental rate of $16.29 per square foot per year;
being a total annual rental of $7,949.52.
(nnnn) Baggage Re-check Area at Apron Level, Building 520 (Exhibit
28 dated 1-1-96): 1525 square feet occupied as of August 1,
1994 at a current rental rate of $16.29 per square foot per
year, being a total annual rental of $24,842.25.
22
<PAGE>
(oooo) Breakroom Area in Center Pod at Apron Level, Building 520
(Exhibit 28 dated 1-1-96): 921 square feet occupied as of
August 1, 1996 at a current rental rate of $16.29 per square
foot per year, being a total annual rental of $15,003.09.
(pppp) Office space and hallway mezzanine level Building 520,
(Exhibit 29 dated 1-1-96): 800 square feet occupied as of
June 1, 1996 at a current annual rental rate of $16.29 per
square foot per year, being a total annual rental of
$13,032.00.
(qqqq) Bus Stop Lobby at Main Level, Building 603 (Exhibit 30 dated
7-1-96): 5,433 square feet occupied as of July 1, 1996 at
no rental charge.
(rrrr) Bus Stop at Apron Level, Building 603 (Exhibit 31 dated 7-1-
96): 8,150 square feet occupied as of July 1, 1996 at a
current rental rate of $1.77 per square foot per year, being
a total annual rental rate of $14,425.50.
(ssss) Bus Stop Roadway at Apron Level, Building 603 (Exhibit
31 dated 7-1-96): 9,100 square feet occupied as of July
1, 1996 at a current rental rate of $0.375 per square foot
per year being a total annual rental rate of $3,412.50.
A-2 PREFERENTIAL USE PREMISES
(a) Concourse G (Exhibit 25, dated 1-1-96): 54,588 square feet occupied as
of April 1, 1995, at no rental charge (Lessee is paying debt service
on construction costs). Concourse G is preferential use space which
may be made available by LESSOR to other air carriers when and if
LESSEE's and/or Mesaba's use of the facility
23
<PAGE>
is less than 75 flights per day. The lease of this space shall
terminate on date of beneficial occupancy of the new midfield
terminal.
(b) Baggage Hold Area (Tugs) at Concourse G (Exhibit 25, dated 1-1-96):
43,890 square feet occupied as of April 1, 1995, at a current rental
rate of $0.375 per square foot per year being a total annual rental
rate of $16,458.75
A-3 PRIOR PREMISES - COMMON USE
Republic Airlines, Inc. after acquiring the interest of Eastern Air
Lines, Inc. in certain space in the L. C. Smith Terminal, transferred
said interest to U. S. Air, Inc. LESSEE has taken over all space
formerly leased to U. S. Air, Inc. in the James M. Davey Terminal.
LESSEE has agreed to pay for all charges for U. S. Air, Inc.'s Common
Use Baggage related areas that exceed eighteen thousand four hundred
sixty nine dollars and eight cents ($18,469.08) per year, the amount
that U. S. Air, Inc. was paying for similar space in the James M.
Davey Terminal prior to its relocation. This amount shall be subject
to adjustment as provided in Paragraph C of this Article III.
A-4 BASE PREMISES - EXCLUSIVE AND PUBLIC USE
(a) Ticket Counter and Public Area at Main Level, Building 603
(Exhibit 14 dated 1-1-96): 4,530 square feet occupied as of June
3, 1986 at a current rental rate of $1.77 per square foot per
year, being a total annual rental of $8,018.10.
24
<PAGE>
(b) Baggage Make-up and Conveyor at Apron Level (North Side) Building
603 (Exhibit 15 dated 1-1-96): 5,749 square feet occupied as of
June 3, 1986 at a current rental rate of $1.77 per square foot
per year, being a current annual rental of $10,175.73.
(c) Operations Area at Apron Level, Concourse C (Exhibit 17 dated 6-
1-89): 5,240 square feet occupied as of June 3, 1986 at a current
rental rate of $1.77 per square foot per year, being a current
annual rental of $9,274.80.
(d) Additional Operations Area at Apron Level, Concourse C (Exhibit
12 dated 1-1-96): 1740 square feet occupied and June 3, 1986 at
a current rental rate of $1.77 per square foot per year being a
current annual rental of $3,079.80.
(e) Operations Areas at Apron Level, Concourse F (Exhibit 23 dated 1-
1-96): 5,942 square feet occupied as of August 1, 1985 at a
rental rate of $1.77 per square foot per year, being a current
annual rental of $10,517.34.
(f) Covered Area at Apron Level, Concourse C Extension (Exhibit 11
dated 1-1-96): 22,720 square feet occupied as of June 1, 1989 at
a current rental rate of $1.77 per square foot per year, being a
current annual rental of $40,214.40 terminating May 31, 1994,
after which date the lease shall be on a month-to-month basis and
may be terminated by Lessor upon 30 days advance written notice
to Lessee.
25
<PAGE>
(g) Walkway at Main Level, Concourse C Extension (Exhibit 10 dated 1-
1-96): 2,011 square feet, occupied as of June 1, 1989 at a
current rental rate of $1.77 per square foot per year, being a
current annual rental of $3,559.47 terminating May 31, 1994,
after which date the lease shall be on a month-to-month basis and
may be terminated by Lessor upon 30 days advance written notice
to Lessee.
(h) Operations Areas at Apron Level, Concourse D (Exhibit 19 dated 1-
1-96): 10,040 square feet occupied as of August 1, 1985 at a
current rental rate of $1.77 per square foot per year, being a
current annual rental of $17,770.80.
(i) Unimproved Space at Apron Level, Concourse D (Exhibit 19 dated 1-
1-96): 529 square feet occupied as of April 1, 1976 at a current
rental rate of $1.77 per square foot per year, being a total
annual rental of $936.33.
(j) Unenclosed Undercover Area at Apron Level, Concourse D (Exhibit
19 dated 1-1-96): 1,704 square feet occupied as of April 1, 1985
at a current rental rate of $1.77 per square foot per year, being
a total annual rental of $3,016.08.
(k) Tower Area at Lower Level, Concourse E (Exhibit 21 dated 1-1-96):
720 square feet occupied as of August 1, 1985 at a current rental
rate of $1.77 per square foot per year, being a total annual
rental of $1,274.40.
26
<PAGE>
(l) Addition at Tower Area and Concourse E (Exhibit 21, dated 1-1-
96): 865 square feet occupied as of 12-1-90 at a current rental
rate of $1.77 per square foot per year, being a total annual
rental of $1,531.05.
(m) Operations Area at Apron Level, Concourse C Extension (Exhibit 11
dated 1-1-96): 6,687 square feet, occupied as of June 1, 1989 at
a current rental rate of $1.77 per square foot per year, being a
current annual rental of $11,835.99 terminating May 31, 1994,
after which date the lease shall be on a month-to-month basis and
may be terminated by Lessor upon 30 days advance written notice
to Lessee.
(n) Concourse G (Exhibit 25 dated 1-1-96): 54,588 square feet
occupied as of 4-1-95 at a current rental rate of $1.77 per
square foot per year, being a total annual rental of $96,620.76.
(o) Bus Stop at Main Level, Building 603 (Exhibit 30 dated 7-1-96):
5,433 square feet occupied July 1, 1996 at a current rental rate
of $1.77 per square foot per year, being a current annual rental
of $9,616.41.
Effective December 1, 1986 LESSEE shall pay an annual debt service charge
of $753,317.26, which includes 25% coverage, for the United Airlines relocation
project which shall be billed on a monthly basis of $62,776.44 in advance each
month.
Effective November 18, 1988 LESSEE shall pay an annual debt service charge
of $19,507.27, which includes 25% coverage, for the Concourse "G" elevator
project which shall be billed on a monthly basis of $1,625.61 in advance each
month.
27
<PAGE>
Effective June 1, 1989 LESSEE will pay an annual debt service charge of
$412,648.00, which includes 25% coverage, for the extension to Concourse "C"
project which shall be billed on a monthly basis of $34,387.33 in advance each
month.
Effective April 1, 1995 LESSEE will pay an annual debt service charge of
$1,958,194.00, which includes 25% coverage for the new Concourse "G" and other
related projects which shall be billed on a monthly basis of $163,182.83 in
advance each month.
LESSEE will pay the above annual debt service on that portion of the 1986
and 1990 General Airport Revenue Bonds even though the term of such debt service
obligation extends beyond the term of the lease of such temporary facilities.
If, as a result of construction by the LESSOR of a north-south roadway and
midfield expansion program on the Airport, any space on Concourse A leased to
LESSEE shall be rendered unusable, LESSEE covenants and agrees to relocate all
of its operations at the Airport to comparable space at the L. C. Smith Terminal
or the Davey Terminal if space is not available in the L. C. Smith Terminal. In
any event LESSEE shall vacate the leasehold space on Concourse A when the
roadway construction commences at the Concourse A location.
Further, if as a result of construction by the County of a north-south
roadway on the Airport, any gates at Concourse A leased to USAir as a result of
the assignment and the consequent amendment to the USAir Lease are rendered
unusable, USAir has covenanted and agreed to relocate all its operations at the
Airport to its existing gates on Concourse B. In the event that, and for so
long as, the USAir gates on Concourse B are not available or cannot accommodate
USAir's gate use requirements during such period and in the event that, and for
so long as, no other gates at the Airport are reasonably available to USAir,
Lessee will make
28
<PAGE>
necessary and reasonable arrangements to accommodate USAir at gates which it has
under lease with the County so long as USAir agrees to reasonably cooperate with
Lessee in the use of such gates.
Rentals for space vacated by LESSEE on Concourse A will terminate upon the
date the space is vacated. LESSEE shall not be responsible for lost Airport
revenues or Airport expenses due to the relocation. LESSOR shall be responsible
for any and all reasonable out-of-pocket direct relocation costs incurred by
LESSEE as a result of the relocation.
IN WITNESS WHEREOF, the parties hereto have caused this Amendatory
Agreement to be executed on their behalf by their respective duly authorized
officers, their corporate seals to be hereunto affixed and attested by their
proper corporate officers all as of the day and year first above written.
COUNTY OF WAYNE
Attest: CHIEF EXECUTIVE OFFICER
/s/ ROBERT E. MURPHY /s/ EDWARD H. MCNAMARA
- ------------------------- -------------------------------------
Edward H. McNamara
NORTHWEST AIRLINES, INC.
Attest:
By /s/ JAMES M. GREENWALD
--------------------------------
JAMES M. GREENWALD, VP
/s/ AL JOHNSON Its FACILITIES AND AIRPORT AFFAIRS
- ------------------------- --------------------------------
29
<PAGE>
[FLOOR PLAN]
DAVEY TERMINAL
MAIN LEVEL - NORTH PORTION
SCALE: 1" EQUALS 30'
EXHIBIT NWA-1
DATE 1-1-1996
<PAGE>
[FLOOR PLAN]
DAVEY TERMINAL
APRON LEVEL - CENTRAL PORTION
SCALE: 1" EQUALS 50'
EXHIBIT NWA-2
DATE 1-1-1996
<PAGE>
[FLOOR PLAN]
DAVEY TERMINAL
APRON LEVEL - NORTH PORTION
SCALE: 1" EQUALS 50'
EXHIBIT NWA-3
DATE 1-1-1996
<PAGE>
[FLOOR PLAN]
DAVEY TERMINAL
MEZZANINE LEVEL
SCALE: 1" EQUALS 40'
EXHIBIT NWA-4
DATE 1-1-1996
<PAGE>
[FLOOR PLAN]
DAVEY TERMINAL
MAIN LEVEL - NORTH PORTION
SCALE: 1" EQUALS 30'
EXHIBIT NWA-5
DATE 1-1-1996
<PAGE>
[FLOOR PLAN]
DAVEY TERMINAL
APRON LEVEL - SOUTH PORTION
SCALE: 1" EQUALS 50'
EXHIBIT NWA-6
DATE 1-1-1996
<PAGE>
[FLOOR PLAN]
CONCOURSE A - MAIN LEVEL
SCALE: 1" EQUALS 50'
EXHIBIT NWA-7
DATE 1-1-1996
<PAGE>
[FLOOR PLAN]
CONCOURSE B - MAIN LEVEL
SCALE: 1" EQUALS 50'
EXHIBIT NWA-8
DATE 1-1-1996
<PAGE>
[FLOOR PLAN]
CONCOURSE B - APRON LEVEL
SCALE: 1" EQUALS 50'
EXHIBIT NWA-9
DATE 1-1-1996
<PAGE>
[FLOOR PLAN]
CONCOURSE "C" MAIN LEVEL - SOUTH EXPANSION
SCALE: 1" EQUALS 60'
EXHIBIT NWA-10
DATE 1-1-1996
<PAGE>
[FLOOR PLAN]
CONCOURSE C
APRON LEVEL - SOUTH EXPANSION PORTION
SCALE: 1" EQUALS 30'
EXHIBIT NWA-11
DATE 1-1-1996
<PAGE>
[FLOOR PLAN]
CONCOURSE C
MAIN LEVEL - SOUTHWEST PORTION
SCALE: 1" EQUALS 50'
EXHIBIT NWA-12
DATE 1-1-1996
<PAGE>
[FLOOR PLAN]
CONCOURSE C
APRON LEVEL - SOUTHWEST PORTION
SCALE: 1" EQUALS 30'
EXHIBIT NWA-13
DATE 1-1-1996
<PAGE>
[FLOOR PLAN]
L.C. SMITH TERMINAL
MAIN LEVEL - CENTRAL PORTION
SCALE: 1" EQUALS 40'
EXHIBIT NWA-14
DATE 1-1-1996
<PAGE>
[FLOOR PLAN]
L.C. SMITH TERMINAL
APRON LEVEL - NORTHWEST PORTION
SCALE: 1" EQUALS 40'
EXHIBIT NWA-15
DATE 1-1-1996
<PAGE>
[FLOOR PLAN]
CONCOURSE C MAIN LEVEL
SCALE: 1" EQUALS 80'
EXHIBIT NWA-16
DATE 1-1-1996
<PAGE>
[FLOOR PLAN]
CONCOURSE C
APRON LEVEL - SOUTHWEST PORTION
SCALE: 1" EQUALS 60'
EXHIBIT NWA-17
DATE 1-1-1996
<PAGE>
[FLOOR PLAN]
CONCOURSE : D- MAIN LEVEL
SCALE: 1" EQUALS 50'
EXHIBIT NWA-18
DATE 1-1-1996
<PAGE>
[FLOOR PLAN]
CONCOURSE D - APRON LEVEL
SCALE: 1" EQUALS 50'
EXHIBIT NWA-19
DATE 1-1-1996
<PAGE>
[FLOOR PLAN]
CONCOURSE : E - MAIN LEVEL
SCALE: 1" EQUALS 50'
EXHIBIT NWA-20
DATE 1-1-1996
<PAGE>
[FLOOR PLAN]
CONCOURSE E - APRON LEVEL
SCALE: 1" EQUALS 50'
EXHIBIT NWA-21
DATE 1-1-1996
<PAGE>
[FLOOR PLAN]
CONCOURSE: F - MAIN LEVEL
SCALE: 1" EQUALS 50'
EXHIBIT NWA-22
DATE 1-1-1996
<PAGE>
[FLOOR PLAN]
CONCOURSE F - APRON LEVEL
SCALE: 1" EQUALS 50'
EXHIBIT NWA-23
DATE 1-1-1996
<PAGE>
[FLOOR PLAN]
CONCOURSE F - TUNNEL LEVEL
SCALE: 1" EQUALS 50'
EXHIBIT NWA-24
DATE 1-1-1996
<PAGE>
[FLOOR PLAN]
CONCOURSE -G-
APRON LEVEL - NORTH PORTION
SCALE: 1" EQUALS 60'
EXHIBIT NWA-25
DATE 1-1-1996
<PAGE>
[FLOOR PLAN]
CENTRAL SERVICES - MAIN LEVEL
SCALE: 1" EQUALS 40'
EXHIBIT NWA-26
DATE 1-1-1996
<PAGE>
[FLOOR PLAN]
CENTRAL SERVICES - APRON LEVEL (SOUTH)
SCALE: 1" EQUALS 50'
EXHIBIT NWA-27
DATE 1-1-1996
<PAGE>
[FLOOR PLAN]
INTERNATIONAL TERMINAL
APRON LEVEL - SOUTH PORTION
SCALE: 1" EQUALS 50'
EXHIBIT NWA-28
DATE 1-1-1996
<PAGE>
[FLOOR PLAN]
INTERNATIONAL TERMINAL
MEZZANINE LEVEL
SCALE: 1" EQUALS 20'
EXHIBIT NWA-29
DATE 1-1-1996
<PAGE>
[SITE PLAN]
MAIN LEVEL - BUS STOP (NWA)
SCALE: 1" EQUALS 20'
EXHIBIT NWA-30
DATE 7-1-1996
<PAGE>
[SITE PLAN]
APRON LEVEL BUS STOP (NWA)
SCALE: 1" EQUALS 20'
EXHIBIT NWA-31
DATE 7-1-1996
<PAGE>
Exhibit 10.2
FIRST AMENDED AND RESTATED AIRPORT AGREEMENT
BETWEEN
THE CHARTER COUNTY OF WAYNE, MICHIGAN
AND
NORTHWEST AIRLINES, INC.
DATED AS OF OCTOBER 10, 1996
<PAGE>
TABLE OF CONTENTS
PAGE(S)
ARTICLE I PREMISES . . . . . . . . . . . . . . . . . . . . . . . . . 2
A. Use of Airport . . . . . . . . . . . . . . . . . . . . . . . . . 2
B. Premises in and Adjacent to L. C. Smith Terminal
(Building 603), James M. Davey Terminal
(Building 601), Michael Berry International
(Building 520) and Concourses A, B, C, D, E, F and G . . . . . . 8
C. Public Space in Terminal Buildings . . . . . . . . . . . . . . . 10
D. Parking Space. . . . . . . . . . . . . . . . . . . . . . . . . . 10
E. Right of Ingress and Egress. . . . . . . . . . . . . . . . . . . 10
F. Fuel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE II TERM. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE III RENTALS AND FEES. . . . . . . . . . . . . . . . . . . . . . 12
A. Rentals with Respect to Premises in L. C. Smith
Terminal (Building 603), James M. Davey Terminal
(Building 601), Michael Berry International
Terminal (Building 520) and Concourses A, B, C, D,
E, F and G . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
B. Activity Fees and Capital Expenditures . . . . . . . . . . . . . 35
1. Activity Fees . . . . . . . . . . . . . . . . . . . . . . . 35
2. Lessor Covenants; Capital Expenditures. . . . . . . . . . . 37
C. Adjustment of Rental Fees. . . . . . . . . . . . . . . . . . . . 43
D. Charges for Electrical Current . . . . . . . . . . . . . . . . . 44
E. Charges for Water and Sewerage Facilities. . . . . . . . . . . . 45
F. Continuing Rental Obligation . . . . . . . . . . . . . . . . . . 45
G. Facilities Use Fees - International Terminal Bldg. #520. . . . . 47
-i-
<PAGE>
TABLE OF CONTENTS (cont'd)
PAGE(S)
H. Payment of Rentals and Activity Fees . . . . . . . . . . . . . . 49
1. Information on Lessee Operations. . . . . . . . . . . . . . 49
2. Projection of Rentals and Activity Fees . . . . . . . . . . 49
3. Payment of Rentals and Activity Fees. . . . . . . . . . . . 50
4. Adjustment of Rentals and Activity Fees . . . . . . . . . . 50
5. Preliminary Annual Settlement and Final Audit . . . . . . . 51
ARTICLE IV CONSTRUCTION BY LESSOR . . . . . . . . . . . . . . . . . . 53
ARTICLE V CONSTRUCTION, MAINTENANCE, REPAIR AND
OPERATION BY LESSEE . . . . . . . . . . . . . . . . . . . . 53
ARTICLE VI RIGHT OF ENTRY BY LESSOR . . . . . . . . . . . . . . . . . 55
ARTICLE VII MAINTENANCE, OPERATION AND
REPAIR BY LESSOR . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE VIII UTILITY SERVICES. . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE IX SPACE FOR UNITED STATES WEATHER BUREAU, POSTAL
SERVICE, FEDERAL AVIATION ADMINISTRATION, AND
EXPRESS AGENCIES . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE X RESTAURANT. . . . . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE XI RULES AND REGULATIONS . . . . . . . . . . . . . . . . . . . 61
ARTICLE XII CONTROL OF RATES, FARES OR CHARGES . . . . . . . . . . . . 61
ARTICLE XIII DAMAGE OR DESTRUCTION OF PREMISES . . . . . . . . . . . . . 62
ARTICLE XIV CANCELLATION BY LESSOR . . . . . . . . . . . . . . . . . . 63
ARTICLE XV CANCELLATION BY LESSEE . . . . . . . . . . . . . . . . . . 65
ARTICLE XVI SUSPENSION AND ABATEMENT . . . . . . . . . . . . . . . . . 66
-ii-
<PAGE>
TABLE OF CONTENTS (cont'd)
PAGE(S)
ARTICLE XVII ARBITRATION . . . . . . . . . . . . . . . . . . . . . . . . 67
ARTICLE XVIII INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . . . . 69
ARTICLE XIX INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . 70
ARTICLE XX QUIET ENJOYMENT . . . . . . . . . . . . . . . . . . . . . . . 71
ARTICLE XXI TITLE TO EQUIPMENT, IMPROVEMENTS AND
FACILITIES ERECTED BY LESSEE . . . . . . . . . . . . . . . . . 71
ARTICLE XXII SURRENDER OF POSSESSION . . . . . . . . . . . . . . . . . . . 72
ARTICLE XXIII MINERAL RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . 72
ARTICLE XXIV CONDEMNATION . . . . . . . . . . . . . . . . . . . . . . . . . 73
ARTICLE XXV ASSIGNMENT AND SUBLETTING . . . . . . . . . . . . . . . . . . 73
ARTICLE XXVI SUBSIDIARY COMPANIES . . . . . . . . . . . . . . . . . . . . . 74
ARTICLE XXVII NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
ARTICLE XXVIII DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 74
ARTICLE XXIX PARAGRAPH HEADINGS . . . . . . . . . . . . . . . . . . . . . . 80
ARTICLE XXX INVALID PROVISION . . . . . . . . . . . . . . . . . . . . . . 80
ARTICLE XXXI SUCCESSORS AND ASSIGNS BOUND
BY COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . 80
ARTICLE XXXII RIGHT TO LEASE TO UNITED STATES
GOVERNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . 80
ARTICLE XXXIII COVENANTS AGAINS/T DISCRIMINATION . . . . . . . . . . . . . . 81
A. Covenant Pursuant to Requirements of the
Department of Transportation . . . . . . . . . . . . . . . . . 81
B. Employment . . . . . . . . . . . . . . . . . . . . . . . . . . 82
-iii-
<PAGE>
TABLE OF CONTENTS (cont'd)
PAGE(S)
C. Affirmative Action Program . . . . . . . . . . . . . . . . . 82
D. Disadvantaged Business Enterprise . . . . . . . . . . . . . . 82
ARTICLE XXXIV CONFORMITY OF AGREEMENT . . . . . . . . . . . . . . . . . . . 84
EXHIBITS
Exhibit A Airport
1-31 Exclusive Areas, Preferential Areas and Common Areas
B Certain Airport Positions and Remuneration
-iv-
<PAGE>
NORTHWEST AIRLINES, INC.
FIRST AMENDED AND RESTATED
AIRPORT AGREEMENT
This First Amended and Restated Airport Agreement (the "Agreement") made
and entered into this 10th day of October, 1996, by and between the County of
Wayne, a Michigan Charter County, by and through its Chief Executive Officer,
with principal offices located at 600 Randolph Street, Detroit, Michigan 48226,
hereinafter referred to as "Lessor", and Northwest Airlines, Inc., a Minnesota
corporation, with principal offices located at 2700 Lone Oak Parkway, Eagan,
Minnesota 55121, hereinafter referred to as "Lessee".
Witnesseth:
Whereas, Lessor owns and operates an airport known as the Detroit
Metropolitan Wayne County Airport located in Romulus township, in the County of
Wayne, State of Michigan (hereinafter called the "Airport"), said airport being
more fully described in EXHIBIT A attached hereto and hereby made a part hereof,
with the power to lease premises and facilities and to grant rights and
privileges with respect thereto pursuant to the provisions of the Aeronautics
Code of the State of Michigan; and
Whereas, Lessee is engaged in the business of transporting persons,
property, cargo and mail by aircraft (hereinafter referred to as "Air
Transportation"); and
Whereas, Lessor and Lessee are parties to the Basic Agreement, pursuant to
which Lessee leases certain premises, facilities, rights, licenses, services and
privileges with and on the Airport; and
<PAGE>
Whereas, Lessor and Lessee are entering into a Project Development
Agreement simultaneously with the execution of this Agreement, under which
certain new midfield terminal facilities at the Airport which are described on
EXHIBIT B attached hereto (the "Midfield Terminal") are to be designed and
constructed;
Whereas, it is necessary and desirable to amend and restate, and supersede
in all respects, the Basic Agreement;
Whereas, simultaneously with the execution of this Agreement, Lessor and
Lessee are executing a Second Amended and Restated Airport Agreement, which
agreement will become effective on the date of beneficial occupancy of the
Midfield Terminal, and on such effective date will amend and restate, and
supersede in all respects, this Agreement;
Now, therefore, for and in consideration of the premises and of the mutual
covenants and agreements herein contained, and other valuable considerations, as
of the effectiveness of this Agreement Lessor does hereby grant, demise and let
unto Lessee and Lessee does hereby hire and take from Lessor, certain premises
and facilities, rights, licenses, services and privileges hereinafter described
in connection with and upon the Airport.
ARTICLE I
PREMISES
A. USE OF AIRPORT: In common with others so authorized, Lessee shall have the
use of the common areas of the Airport and its appurtenances, together with
all facilities, equipment, improvements and services which have been, or
may hereafter be, provided at or in connection with the Airport from time
to time, including, without limiting the generality hereof and subject to
the rules and
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<PAGE>
regulations of Lessor promulgated in accordance with Article
XI hereof, the landing field and any extensions thereof or additions
thereto, passenger and cargo ramp areas, and facilities, aircraft parking
areas and facilities, roadways, runways, aprons, taxiways, sewage and water
facilities, floodlights, landing lights, beacons, control tower, signals,
radio aids, and all other conveniences for flying, landings and take-offs
of aircraft of Lessee, which use, without limiting the generality hereof,
shall include:
1. The right to operate thereat and therefrom a transportation system by
aircraft for the carriage of persons, property, cargo and mail;
2. The right to repair, maintain, condition, service, test, park or store
aircraft or other equipment of Lessee, or of any other scheduled air
transportation company, or aircraft of the U.S. Armed Forces or the
FAA within such areas as are designated by Lessor; provided, that such
right shall not be construed as authorizing the conduct of a separate
business by Lessee, but shall permit Lessee to perform such functions
as an incident to its conduct of Air Transportation;
3. The right to train, subject to rules and regulations as promulgated
under Article XI hereof, on the Airport, personnel in the employ of or
to be employed by Lessee or any scheduled air transportation company,
or of the U.S. Armed Forces, or of the FAA, provided, that such right
shall not be construed as authorizing the conduct of a separate
business by Lessee, but shall permit Lessee to perform such functions
as an incident to its conduct of Air Transportation;
- 3 -
<PAGE>
4. The right to sell, dispose of or exchange Lessee's aircraft, engines,
accessories, supplies or other personal property; provided, that such
right shall not be construed as authorizing the conduct of a separate
business by Lessee, but shall permit such sales as an incident to its
conduct of Air Transportation or accommodation to others engaged
therein;
5. The right, subject to the terms and conditions hereof, to purchase or
otherwise obtain personal property of any nature (including aircraft,
engines, accessories, gasoline, oil, greases, lubricants, other fuel
or propellant, food, beverages, other equipment and supplies and any
articles or goods) reasonably necessary or convenient for its
operations, from any supplier of its choice;
6. The right to service, by Lessee or others selected by Lessee, Lessee's
aircraft or other equipment by truck or otherwise, with gasoline, oil,
greases, lubricants, or any other fuel or propellant or other
supplies, required by Lessee; such right to include, without limiting
the generality thereof, the right to install and maintain on the
Airport, separately or in common with others, appropriate pipes
(including a pipeline or lines between Lessee's sources of supply and
its storage facilities for gasoline, oil, greases, lubricants or other
fuel or propellant and from such storage facilities to the point or
points of servicing), pumps, motors, filters and other appurtenances
incidental to the use thereof, either through construction and
maintenance by Lessee or by a nominee of Lessee in accordance with
plans and specifications therefor approved by Lessor; provided,
however, that Lessor shall not be responsible for the cost of
- 4 -
<PAGE>
excavation, construction, installation and maintenance of any such
storage facilities, pipes or pipelines, pumps, motors, filters or
other appurtenances;
7. The right to land, take-off, fly, taxi, tow, park, load, and unload
Lessee's aircraft and other equipment used in the operation of
schedule, shuttle, courtesy, test, training, inspection, emergency,
special, charter, sightseeing and other flights, including without
limiting the generality hereof, the right to load, and unload Lessee's
aircraft at the gates leased to Lessee pursuant to Article IB;
8. The right to transfer, load and unload persons, cargo, property and
mail to, from and at the Airport by such loading and unloading
devices, motor cars, buses, trucks or other means of conveyance as
Lessee may choose or require in the operation of its Air
Transportation system; with the non-exclusive right to designate and
enter into arrangements with any carrier or carriers of its choice to
transport to and from the Airport, passengers and their baggage,
cargo, property and mail carried or to be carried by air by Lessee
provided that with respect to passengers, Lessee shall not enter into
arrangements with a carrier for transportation to or from the Airport
except for such period or periods during which there is no
satisfactory ground transportation service provided by bus or
limousine operator selected by the Lessor;
9. The right to install, maintain and operate, without cost to Lessor, by
Lessee alone, or in conjunction with any other air transportation
companies who are lessees at the Airport, or through a nominee, a
- 5 -
<PAGE>
message tube system and other communication systems between suitable
locations in the aircraft loading areas and suitable locations in or
about Lessee's hangar, and between any or all of said locations and
Lessee's offices;
10. The right to install, maintain and operate, without cost to Lessor, by
Lessee alone, or in conjunction with any other air transportation
companies that are lessees at the Airport, or through a nominee,
suitable aircraft air-conditioning equipment, including, but not
limited to, trucks, or a suitable airplane air-conditioning system in
the loading area. Lessor agrees to make available without charge, for
the individual or joint use of all air transportation companies who
are lessees at the Airport, an adequate and convenient site under the
loading area and adjacent to the Terminal Buildings for the placing of
machinery, equipment, conduits and duct constituting such system;
provided, however, that Lessor shall not be responsible for the cost
of excavation, construction, installation and operation thereof and
shall have the right to approve plans and specifications therefor;
11. The right to provide in any hangar or other non-public space
exclusively or preferentially leased by Lessee without cost to Lessor,
by Lessee alone, a subsidiary of Lessee or by contract with a supplier
or caterer, foods and beverages for consumption by employees and
occasional invitees of Lessee on such premises for business purposes.
Without limiting the generality of the foregoing, said right shall
include the right to install, maintain, and operate, or cause to be
installed, maintained and operated without cost to
- 6 -
<PAGE>
Lessor, in any hangar on premises leased to Lessee for its exclusive
use at the Airport, a cafeteria, restaurant or other plant for the
purpose of preparing, cooking, and dispensing of foods and beverages
for consumption as aforesaid;
12. The right to provide, without cost to Lessor, by Lessee alone, a
subsidiary of Lessee, or by contract with a supplier or caterer of its
choice, food and beverages for consumption on aircraft of Lessee;
provided, however, that if Lessee shall purchase such foods and
beverages by contract with a supplier or caterer other than the
Airport food concessionaire, Lessee shall require such supplier or
caterer, other than its wholly-owned subsidiary, to pay to Lessor the
same percentage commission as would be paid to Lessor by the Airport
food concessionaire;
13. The right to install and operate, at Lessee's expense, a reasonable
number and type of company identification signs, subject to the right
of Lessor to approve the same as to type and location;
14. The right to install, maintain and operate, at Lessee's expense, by
Lessee alone, or in conjunction with any other air transportation
companies who are lessees at the Airport, or through a nominee, such
radio communications, meteorological and aerial navigation equipment
and facilities in or on premises leased exclusively to Lessee, and,
subject to the approval of Lessor's Airport manager with respect to
location of installation, elsewhere on the Airport as may be necessary
or convenient in the opinion of Lessee for its operations, provided,
however, that such approval shall not be withheld unless such
installation, maintenance and
- 7 -
<PAGE>
operation at the location selected by Lessee shall interfere with the
reasonable use of the Airport by other authorized persons;
15. The right to conduct operations or activities other than those
enumerated in Subparagraphs (1) to (14), inclusive, of this paragraph,
reasonably related to the landing, taking off, flying, moving,
loading, unloading, or servicing of aircraft which are reasonably
necessary or convenient to the conduct by it of Air Transportation;
provided, however, that all such other operations and activities shall
be subject to the approval of the Lessor.
16. The right to the use, in common with others so authorized, of
International Terminal Building 520 and its common facilities,
equipment, conveniences and services; provided such use shall be
limited to Lessee's inbound international passenger flights requiring
federal inspection services; and provided, further, that the exercise
of such right by Lessee shall be subject to reasonable rules and
regulations of Lessor promulgated in accordance with Article XI hereof
and to the payment by Lessee of the fees specified in Article III G.
hereof.
B. PREMISES IN AND ADJACENT TO L. C. SMITH TERMINAL (BUILDING 603), JAMES M.
DAVEY TERMINAL (BUILDING 601), MICHAEL BERRY INTERNATIONAL TERMINAL
(BUILDING 520) AND CONCOURSES A, B, C, D, E, F AND G: From and after the
applicable effective dates set forth in Article III.A. entitled RENTAL WITH
RESPECT TO PREMISES IN L. C. SMITH TERMINAL (BUILDING 603), JAMES M. DAVEY
TERMINAL (BUILDING 601), MICHAEL BERRY INTERNATIONAL TERMINAL (BUILDING
520) AND CONCOURSES A, B, C, D, E, F AND G, Lessor grants to Lessee the
exclusive use
- 8 -
<PAGE>
of the space identified as Exclusive Areas in Subparagraph (1) of the said
Article III A, the preferential use of areas identified as Preferential Use
in Subparagraph (2) of the said Article III A and the use in common with
others so authorized of the Common Areas in Subparagraph (3) of said
Article III A, in and adjacent to the L. C. Smith Terminal (Building 603),
James M. Davey Terminal (Building 601), Michael Berry International
Terminal (Building 520) and Concourses A, B, C, D, E. F and G, all such
Exclusive Areas, Preferential Areas and Common Areas being shown and
delineated on Exhibits 1 through 29 all dated January 1, 1996 and Exhibits
30 and 31 (dated July 1, 1996), attached hereto and made a part hereof.
Lessee shall have the right to use of all such space in the L. C.
Smith Terminal (Building 603), James M. Davey Terminal (Building 601),
Michael Berry International Terminal (Building 520) and Concourses A, B, C,
D, E, F and G, with respect to which it is granted the exclusive use
hereunder, and all space and facilities with respect to which it is granted
the non-exclusive use hereunder for any and all purposes in connection with
or incidental to its business including, without limiting the generality
hereof, the handling, ticketing, billing and manifesting of passengers,
baggage, cargo, property and mail, and the installation, maintenance and
operation of radio and other communications equipment and facilities and
meteorological and navigational equipment and facilities.
Lessee shall have the right, in common with others so authorized, to
use Waste Disposal Buildings 606 and 527 for the purposes of disposal of
sanitary waste from Lessee's aircraft.
- 9 -
<PAGE>
The foregoing is without prejudice to the substitute space rights
initially granted to Lessee under the said Article IB as previously
amended.
C. PUBLIC SPACE IN TERMINAL BUILDINGS: Lessee, its employees, passengers,
guests, patrons and invitees, in common with others, shall have the use of
all public space in the Terminal Buildings, and all additional public space
which may hereafter be made available therein and in any additions thereto
including, without limiting the generality hereof, the lobby, passenger
lounges, waiting rooms, hallways, restrooms and rooms for other public and
passenger convenience.
D. PARKING SPACE: Vehicular parking spaces shall be provided near the
Terminal Buildings (adequate in Lessor's judgment, considering the number
of vehicles and traffic to be accommodated) for the use of Lessee, its
employees, passengers and limousine operators in common with any other
scheduled air transportation companies, their employees passengers and
limousine operators. Lessor or its concessionaires may make a reasonable
charge to passengers for the use of the parking space provided for them,
but no charges shall be made for use of such adequate parking spaces as are
designated by Lessor for the respective use of Lessee's employees or
limousine operators.
E. RIGHT OF INGRESS AND EGRESS: Subject to the reasonable rules and
regulations promulgated by Lessor in accordance with Article XI hereof,
Lessee shall have the right and privilege over the Airport of ingress to
and egress from the premises and facilities described in this Article I for
its employees, agents, passengers, guests, patrons and invitees, its or
their suppliers of materials and furnishers of service, its or their
aircraft, equipment, vehicles, machinery and
- 10 -
<PAGE>
other property, and, except as herein otherwise specifically provided,
no charges, fees or tolls of any nature, direct or indirect, shall be
imposed by Lessor upon Lessee, its employees, agents, passengers,
guests, patrons and invitees, its or their suppliers of materials and
furnishers of service for such right of ingress and egress, or for the
privilege of purchasing, selling or using any materials, or services
purchased or otherwise obtained by Lessee, or for transporting, loading,
unloading or handling persons, property, cargo or mail in connection
with Lessee's business or exercising any right or privilege granted by
Lessor hereunder. Nothing in this Article I shall limit Lessor's right
to impose, collect and use PFCs.
F. FUEL: Lessee shall have the right during the term of this Agreement to
lease land in the common fuel storage area as shown in the Airport Master
Plan, at a rental rate of not to exceed five cents ($.05) per square foot
per year, together with the right to install thereon underground fuel
storage tanks, pumps, piping, and appurtenances for the storage of aviation
fuel; the location and amount of such land to be determined by written
agreement of the parties hereto, a copy of which agreement, if entered into
prior to the effective date of this Agreement, will be attached to this
Agreement as an exhibit.
ARTICLE II
TERM
This Agreement shall become effective on the effective date of the Project
Development Agreement. Lessee shall have the full authority to use the premises
and facilities and to exercise the rights, licenses and privileges set forth in
Article I hereof
- 11 -
<PAGE>
for a term beginning on the effective date of the Project Development
Agreement and expiring on the earlier of January 1, 2009 and the effective
date of the Second Amended and Restated Airport Agreement.
ARTICLE III
RENTALS AND FEES
Lessee agrees to pay to Lessor for the use of the premises, facilities,
rights, licenses, services and privileges granted hereunder, the following
rentals, fees and charges (there being no other rentals, fees or charges and no
tolls payable by Lessee unless otherwise specifically provided herein), all
payable in monthly installments in accordance with Article III H.3. below. In
the event that the commencement or termination of the term with respect to any
of the particular premises, facilities, rights, licenses, services or privileges
as herein provided falls on any date other than the first or last day of a
calendar month, the applicable rentals, fees and charges for that month shall be
paid for said month pro rata according to the number of days in that month
during which the particular premises, facilities, rights, licenses, services or
privileges were enjoyed.
A. RENTAL WITH RESPECT TO PREMISES IN L. C. SMITH TERMINAL (BUILDING 603),
JAMES M. DAVEY TERMINAL (BUILDING 601), MICHAEL BERRY INTERNATIONAL
TERMINAL (BUILDING 520) AND CONCOURSES A, B, C, D, E, F AND G: From and
after the effective dates hereinafter set forth, rental of the Premises In
And Adjacent To L. C. Smith Terminal (Building 603), James M. Davey
Terminal (Building 601), Michael Berry International Terminal (Building
520) and Concourses A, B, C, D, E, F and G assigned exclusively to Lessee
in accordance with Article IB hereof, or designated as Common Areas, shall
be at
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the following rates per square foot per year. Said rental rates shall be
subject to adjustment as provided in Paragraph C of this Article III.
Except as otherwise provided herein, Lessee shall pay a pro rata share
of the rental applicable to common areas occupied jointly with other
tenants. Rental rates for the Base Premises shall be at the following
rates per square foot per year and subject to adjustment as provided in
Paragraph C of this Article III.
A-1 PRIOR AND ADDITIONAL PREMISES - EXCLUSIVE USE
(a) Ticket Counter and Office Area at Main Level, Building 601,
comprising a total area of 1,746 square feet (Exhibit 1 dated 1-
1-96): 1,117 square feet occupied as of June 18, 1968 at a
current substitute space rental rate of $10.14 per square foot
per year and 629 square feet occupied as of September 1, 1975 at
a current rental rate of $16.29 per square foot per year, being a
total annual rental of $21,572.79.
(b) Ticket Counter and Office Area at Main Level, Building 601
(Exhibit 1 dated 1-1-96): 1,117 square feet occupied as of
October 1, 1987 at a current adjusted rental rate of $.61 per
square foot per year, being a total annual rental of $681.37.
(c) Ticket Counter and Baggage Conveyor at Main Level, Building 601
(Exhibit 1 dated 1-1-96): 1360 square feet occupied as of June
15, 1984 at a current rental rate of $16.29 per square foot per
year, being a total annual rental of $22,154.40.
(d) Additional Ticketing Area at Main Level, Building 601 (Exhibit 1
dated 1-1-96): 101 square feet at no rental rate.
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(e) Ticket Counter and Office Area at Main Level, Building 601
(Exhibit 1 dated 1-1-96): 3,044 square feet occupied as of
October 1, 1986 at a current rental rate of $10.14 per square
foot per year, being a current annual rental of $30,866.16.
(f) Additional Ticket Counter and Office Area at Main Level, Building
601 (Exhibit 1 dated 1-1-96): 977 square feet occupied as of
October 1, 1987, at a current substitute space rental of $10.14
per square foot per year, being a current annual rental of
$9,906.78.
(g) Baggage Make-Up Area at Apron Level, Building 601 (Exhibit 2
dated 1-1-96): 4,164 square feet occupied as of October 1, 1987
at a current substitute space rental of $10.14 per square foot
per year, being a total annual rental rate of $42,222.96.
(h) Baggage Make-up and Baggage Claim Areas at Apron Level, Building
601 (Exhibit 2 dated 1-1-96): 13,463 square feet occupied as of
October 1, 1987, at a rental rate of $10.14 per square foot per
year, being a total annual rental of $136,514.82.
(i) Addition to Baggage Make-up and Baggage Claim Areas at Apron
Level, Building 601 (Exhibit 2 dated 1-1-96): 3,881 square feet
occupied as of October 1, 1987, at a rental rate of $16.29 per
square foot per year, being a total annual rental of $63,221.49.
(j) Baggage make-up Area at Apron Level, Building 601 (Exhibit 2
dated 1-1-96): 3,917 square feet occupied as of October 1, 1987,
at a current adjusted rental rate of $.61 per square foot per
year, being a total annual rental of $2,389.37.
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(k) Baggage Make-up Area at Apron Level, Building 601 (Exhibit 2
dated 1-1-96): 1,044 square feet occupied as of June 3, 1986 at a
current adjusted rental rate of $.61 per square foot per year,
being a total annual rental of $636.84.
(l) Baggage Claim at Apron Level, Building 601 (Exhibit 2 dated 1-1-
96): 1,190 square feet occupied as of June 3, 1986 at a current
adjusted rental rate of $8.763 per square foot per year, being a
total annual rental of $10,427.97.
(m) Baggage Claim Area at Apron Level, Building 601 (Exhibit 2 dated
1-1-96): 631 square feet occupied as of October 1, 1987 at a
rental rate of $16.29 per square foot per year, being a total
annual rental of $10,278.99.
(n) Baggage Claim and Baggage Claim Office at Apron Level, Building
601, comprising a total area of 2,962 square feet occupied as of
October 1, 1987, (Exhibit 2 dated 1-1-96): 408 square feet at a
current substitute space rental of 10.14 per square foot per
year; 252 square feet at a current substitute space rental of
$14.81 per square foot per year; and 2,302 square feet at a
current rental rate of $16.29 per square foot per year, being a
total annual rental of $45,368.82.
(o) Additional Baggage Made-up Area at Apron Level, Building 601
(Exhibit 2 dated 1-1-96): 1,231 square feet occupied as of
October 1, 1987, at a rental rate of $10.14 per square foot per
year, being a total annual rental of $12,482.34.
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(p) Baggage Service Area at Apron Level, Building 601 (Exhibit 2
dated 1-1-96): 410 square feet occupied as of October 1, 1987 at
a current rental rate of $1.77 per square foot per year, being a
total annual rental of $725.70.
(q) Exterior Baggage Conveyor Area at Apron Level, Building 601
(Exhibit 2 dated 1-1-96): 1,370 square feet occupied as of
January 1, 1983, at a current rental rate of $1.77 per square
foot per year being a total annual rental of $2,424.90.
(r) Addition to Baggage Claim Area at Apron Level, Building 601
(Exhibit 2 dated 1-1-96): 1121 square feet occupied as of October
1, 1987 at a current rental rate of $1.77 per square foot per
year, being a total annual rental of $1,984.17.
(s) Additional Baggage Make-up Area at Apron Level, Building 601
(Exhibit 3 dated 1-1-96): 27,811 square feet occupied as of
October 1, 1987 at a current rental rate of $2.50 per square foot
per year, being a total annual rental of $69,527.50.
(t) VIP Office area at Apron Level, Building 601 (Exhibit 3 dated 1-
1-96): 482 square feet occupied as of October 1, 1987 at a
current rental rate of $3.38 per square foot per year, being a
total annual rental of $1,629.16.
(u) Parking Areas at Apron Level, Building 601 (Exhibit 3 dated 1-1-
96): 26,101 square feet occupied as of October 1, 1987 at a
current rental rate of $1.61 per square foot per year, being a
total annual rental of $42,022.61.
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(v) Office Area at Mezzanine Level (North Side), Building 601
(Exhibit 4 dated 1-1-96): 1,290 square feet occupied as of
October 1, 1987, at a current rental rate of $16.29 per square
foot per year, being a total annual rental of $21,014.10.
(w) Office Area at Mezzanine Level Building 601 (Exhibit 4 dated 1-1-
96): 2,267 square feet occupied as of June 16, 1983 at a current
rental rate of $16.29 per square foot per year, being a total
annual rental of $36,929.43.
(x) Employee Credit Union Office at Mezzanine Level, Building 601
(Exhibit 4 dated 1-1-96): 1,368 square feet occupied as of April
16, 1983 at a current rental rate of $16.29 per square foot per
year, being a total annual rental of $22,284.72.
(y) Training Room at Mezzanine Level, Building 601 (Exhibit 4 dated
1-1-96): 435 square feet occupied as of February 2, 1984 at a
current rental rate of $16.29 per square foot per year, being a
total annual rental of $7,086.15.
(z) Club Area at Mezzanine Level, Building 601 (Exhibit 4 dated 1-1-
96): 2,151 square feet occupied as of October 1, 1986 at a
current rental rate of $10.14 per square foot per year, being a
total annual rental of $21,811.14.
(aa) World Club at Main Level, Building 601 (Exhibit 5 dated 1-1-96):
6,240 square feet occupied as of October 1, 1987 at a current
rental rate of $1.77 per square foot per year, being a total
annual rental of $11,044.80.
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(ab) Additional Exterior Baggage Conveyor Area at Apron Level,
Building 601 (Exhibit 6 dated 1-1-96): 8,871 square feet occupied
as of October 1, 1987 at a current rental rate of $1.61 per
square foot per year, being a total annual rental of $14,282.31.
(ac) Parking Areas at Apron Level, Building 601 (Exhibit 6 dated 1-1-
96): 27,734 square feet occupied as of October 1, 1987 at a
current rental rate of $1.61 per square foot per year, being a
total annual rental of $44,651.74.
(ad) Parking Areas at Apron Level, Building 601 (Exhibit 6 dated 1-1-
96): 5,676 square feet occupied as of October 1, 1987 at a
current rental rate of $1.61 per square foot per year, being a
total annual rental of $9,138.36.
(ae) Hold Rooms, Main Level, Concourse A Satellite Building (Exhibit 7
dated 1-1-96): 5,028 square feet occupied as of July 5, 1966 at
an adjusted rental rate of $.019 per square foot per year, being
a total annual total rental of $95.53.
(af) Main Floor, Concourse A, Satellite Building (Exhibit 7 dated 1-1-
96): 1,107 square feet occupied as of November 1, 1984 at a
current rental rate of $.24 per square foot per year, being a
total annual rental of $265.68.
(ag) Hold Room and Office Area at Main Level Concourse B (Exhibit 8
dated 1-1-96): 1193 square feet occupied as of 4-1-95 at a
current rental rate of $16.29 per square foot per year, being a
total annual rental rate of $19,433.97.
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(ah) Operations and Storage Area at Apron Level Concourse B (Exhibit 9
dated 1-1-96): 505 square feet occupied as of 4-1-95 at a current
rental rate of $16.29 per square foot per year, being a total
annual rental rate of $8,226.45.
(ai) Hold Rooms at Main Level, Concourse C Extension (Exhibit 10 dated
1-1-96): 9639 square feet occupied as of June 1, 1989 at no
rental charge (Lessee is paying the debt service on construction
costs).
(aj) Office Room at Main Level, Concourse C Extension (Exhibit 10
dated 1-1-96): 390 square feet occupied as of June 1, 1989 at no
rental charge (Lessee is paying the debt service on construction
costs).
(ak) Hold Room and Office Areas at Main Level Concourse C (Exhibit 12
dated 1-1-96): 6,584 square feet occupied as of April 18, 1995 at
a current rental rate of $11.75 per square foot per year, being a
total annual rental rate of $77,362.00.
(al) Additional Hold Room Area at Main Level, Concourse C (Exhibit 12
dated 1-1-96): 946 square feet occupied as of April 18, 1995 at a
current rental rate of $11.75 per square foot per year, being a
total annual rental rate of $11,115.50.
(am) Additional Special Waiting Room at Main Level Concourse C
(Exhibit 12, dated 1-1-96): 394 square feet occupied as of April
18, 1995 at a current rental rate of $16.29 per square foot per
year, being a total annual rental rate of $6,418.26.
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(an) Unimproved Area at Apron Level, Concourse C (Exhibit 13 dated 1-
1-96): 4,216 square feet occupied as of July 1, 1995 at a current
rental rate of $11.49 per square foot per year, being a total
annual rental of $48,441.84.
(ao) Additional Operations and Office Area at Apron Level Concourse C
(Exhibit 13 dated 1-1-96): 5,194 square feet occupied as of July
1, 1995 at a current rental rate of $11.49 per square foot per
year, being a total annual rental of $59,679.06.
(ap) Operation Area Apron Level, Concourse C (Exhibit 13 dated 1-1-
96): comprising 4,060 total square feet occupied as of 10-1-93 at
an adjusted rental rate of $11.19 per square foot per year, being
a total annual rental of $45,431.40.
(aq) Operation Area Apron Level, Concourse C (Exhibit 13 dated 1-1-
96): 1756 square feet occupied as of August 1, 1996 at a current
rental rate of $16.29 per square foot per year, being a total
annual rental of $28,605.24.
(ar) Additional Operations Area at Apron Level Concourse C (Exhibit 13
dated 1-1-96) 1,106 square feet occupied as of July 1, 1995 at a
current rental rate of $16.29 per square foot per year, being a
total annual rental of $18,016.74.
(as) Additional Operations Area at Apron Level Concourse C (Exhibit 13
dated 1-1-96): 1,471 square feet occupied as of July 1, 1995 at a
current rental rate of $16.29 per square foot per year, being a
total annual rental of $23,962.59.
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(at) South World Club at Main Level, Building 603 (Exhibit 14 dated 1-
1-96): 9,515 square feet occupied as of July 1, 1995 at a current
rental rate of $1.77 per square foot per year, for maintenance
and operations costs, being a total annual rental of $16,841.55.
(au) Hold Areas at Gates 1, 3 and 5, Main Level, Concourse C (Exhibit
16 dated 1-1-96): 4,559 square feet occupied as of July 1, 1995
at a current rental rate of $8.98 per square foot per year, being
a total annual rental of $40,939.82.
(av) Operations and Office Area, Apron Level, Concourse C (Exhibit 17
dated 1-1-96): 2775 square feet occupied as of July 1, 1995 at a
current rental rate of $8.98 per square foot per year, being a
total annual rental of $24,919.50.
(aw) Hold Areas at Main Level Concourse C (Exhibit 16 dated 1-1-96):
7,681 square feet occupied as of July 1, 1995 at a current rental
rate of $11.49 per square foot per year, being a total annual
rental of $88,254.69.
(ax) Additional Hold Area at Main Level Concourse C (Exhibit 16 dated
1-1-96): 1,860 square feet occupied as of July 1, 1995 at a
current rental rate of $11.49 per square foot per year, being a
total rental of $21,371.40.
(ay) Hold room at Main Level Concourse C (Exhibit 16 dated 1-1-96):
1,576 square feet occupied as of July 1, 1995 at a current rental
rate of $11.49 per square foot per year, being a total annual
rental of $18,108.24.
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(az) Additional Hold Area at Main Level Concourse C (Exhibit 16 dated
1-1-96): 1,095 square feet occupied as of July 1, 1995 at a
current rental rate of $11.49 per square foot per year, being a
total annual rental of $12,581.55.
(ba) Operations and Office Area at Apron Level Concourse C (Exhibit 17
dated 1-1-96): 11,924 square feet occupied as of July 1, 1995 at
a current rental rate of $11.49 per square foot per year, being a
total annual rental of $137,006.76.
(bb) Unimproved Operations Area at Apron Level Concourse C (Exhibit 17
dated 1-1-96): 2,426 square feet occupied as of July 1, 1995 at a
current rental rate of $16.29 per square foot per year, being a
total annual rental of $39,519.54.
(bc) Additional Operations and Office Area at Apron Level, Concourse C
(Exhibit 17 dated 1-1-96): 5,240 square feet occupied as of July
1, 1995 at a current rental rate of $11.49 per square foot per
year, being a total annual rental of $60,207.60.
(bd) Breakroom, Apron Level, Concourse C (Exhibit 17 dated 1-1-96):
285 square feet occupied as of July 1, 1995 at a current rental
rate of $16.29 per square foot per year, being a total annual
rental rate of $4,642.65.
(be) Hold Areas and Office Area at Main Level, Concourse D (Exhibit 18
dated 1-1-96): 6,220 square feet occupied as of April 17, 1985 at
a current rental rate of $10.44 per square foot per year, being a
total annual rental of $63,070.80.
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(bf) Passenger Hold Room at Main Level, Concourse D (Exhibit 18 dated
1-1-96): 3,653 square feet occupied as of April 1, 1976 and May
1, 1981 at a current rental rate of $16.29 per square foot per
year, being a total annual rental of $59,507.37.
(bg) Operations, Office, Commissary Areas at Apron Level, Concourse D
(Exhibit 19 dated 1-1-96): 10,070 square feet occupied as of
April 17, 1985 at a current adjusted rental rate of $1.4764 per
square foot per year, being a total annual rental of $14,867.35.
(bh) Additional Gates and Hold Rooms at Main Level, Concourse D
(Exhibit 18 dated 1-1-96): 8,016 square feet, occupied as of May
1, 1988 the rent credit offsetting the rental charge.
(bi) Additional Operations Area at Apron Level, Concourse D (Exhibit
19 dated 1-1-96): 9,896 square feet, occupied as of August 1,
1985 the rent credit offsetting the rental charge.
(bj) Operations, Storage and Stairwell Area at Apron Level, Concourse
D (Exhibit 19 dated 1-1-96): 1,226 square feet occupied as of
April 1, 1976 at a current rental rate of $16.29 per square foot
per year, being a total annual rental of $19,971.54.
(bk) Additional Space at Apron Level, Concourse D (Exhibit 19 dated 1-
1-96): 1,140 square feet occupied as of April 17, 1985 at a
current rental rate of $16.29 per square foot per year, being a
total annual rental of $18,570.60.
(bl) Enclosed Space at Apron Level, Concourse D (Exhibit 19 dated 1-1-
96): 640 square feet occupied as of April 1, 1985 at a current
rental
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rate of $1.77 per square foot per year, being a total annual
rental of $1,132.80.
(bm) Hold Room and Office Areas at Main Level, Concourse E (Exhibit 20
dated 1-1-96): 12,246 square feet occupied as of April 1, 1976 at
a current rental rate of $16.29 per square foot per year, being a
current annual rental of $199,487.34.
(bn) Additional Hold Room and Office Area at Main Level Concourse E
(Exhibit 20 dated 1-1-96): 5,455 square feet occupied as of
October 29, 1984 at a current adjusted rental rate of $0.9505 per
square foot per year being a total annual rental of $5,184.98
effective January 1, 1986.
(bo) Operations Areas at Apron Level, Concourse E, comprising a total
of 9,213 square feet occupied as of April 1, 1976 (Exhibit 21
dated 1-1-96): 6,842 square feet at a current substitute space
rental of $10.14 per square foot per year; 1,445 square feet at a
substitute space rental rate of $14.81 per square foot per year;
97 square feet at a current rental rate of $16.29 per square foot
per year; and 829 square feet at a current rental rate of $16.29
per square foot per year, being a total annual rental of
$105,862.87.
(bp) Additional Flight Crew Lounge at Apron Level, Concourse E
(Exhibit 21 dated 1-1-96): 1,065 square feet occupied as of
August 1, 1978 at a current rental rate of $16.29 per square foot
per year, being a total annual rental of $l7,348.85.
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(bq) Flight Crew Lounge at Apron Level, Concourse E (Exhibit 21 dated
1-1-96): 704 square feet occupied as of September 1, 1977 at a
current rental rate of $16.29 per square foot per year, being a
total annual rental of $11,468.16.
(br) Additional Operations Areas at Apron Level, Concourse E (Exhibit
21 dated 1-1-96): 5,758 square feet occupied as of October 29,
1984 at a current adjusted rental rate of $0.61 per square foot
per year, being a total annual rental of $3,512.38.
(bs) Rest Rooms and Computer Service Room at Apron Level, Concourse E
(Exhibit 21 dated 1-1-96): 784 square feet occupied as of October
29, 1984 at a current adjusted rental rate of $4.6380 per square
foot per year, being a total annual rental per year of $3,636.19.
(bt) Additional Operations Areas at Apron Level, Concourse E (Exhibit
21 dated 1-1-96): 5,775 square feet occupied as of November 1,
1984 at a current adjusted rental rate of $.61 per square foot
per year, being a total annual rental of $3,522.75.
(bu) Tower on North Side of Concourse E (Exhibit 20 dated 1-1-96):
1,589 square feet, occupied as of August 1, 1985 the rent credit
offsetting the rental charge; 1,730 square feet occupied as of
December 1, 1990, the rent credit offsetting the rental charge.
(bv) Additional Unimproved Ramp Space Adjacent to Concourse E (Exhibit
21 dated 1-1-96): 1,006 square feet occupied as of October
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29, 1984 at a current adjusted rental rate of $.0.61 per square
foot per year, being an annual rental of $613.66.
(bw) Unimproved Ramp Space Adjacent to Concourse E (Exhibit 21 dated
1-1-96): 1,140 square feet occupied as of September 1, 1977 at a
current rental rate of $1.77 per square foot per year, being a
total annual rental of $2,017.80.
(bx) Hold Room and Office Area at Main Level, Concourse F (Exhibit 22
dated 1-1-96): 6,270 square feet occupied as of June 3, 1986 at a
current adjusted rental rate of $.9484 per square foot per year,
being a current annual rental of $5,946.47.
(by) Hold Rooms, Office Areas and Lounge at Main Level, Concourse F
(Exhibit 22 dated 1-1-96): 10,795 square feet occupied as of
October 1, 1986 at a current rental rate of $10.14 per square
foot per year, being a total annual rental of $109,461.30.
(bz) Addition to Hold Rooms Concourse F, at Main Level (Exhibit 22
dated 1-1-96): 1,395 square feet occupied as of October 1, 1986
at a current rental of $16.29 per square foot per year, being a
total annual rental of $22,724.55.
(ca) Addition to Hold Rooms at Concourse F at Main Level (Exhibit 22
dated 1-1-96): 1,778 square feet occupied as of October 1, 1986
at a current rental rate of $16.29 per square foot per year,
being a total annual rental of $28,963.62.
(cb) Offices, Class Rooms, Stairways and Pilots Lounge at Apron Level,
Concourse F (Exhibit 23 dated 1-1-96): 10,016 square feet
occupied
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as of October 1, 1986 at a current rental rate of $10.14 per
square foot per year, being an annual rental of $101,562.24.
(cc) Addition to Room No. 102 at Apron Level, Concourse F (Exhibit 23
dated 1-1-96): 275 square feet occupied as of October 1, 1986 at
a current rental rate of $16.29 per square foot per year, being a
total annual rental of $4,479.75.
(cd) Option Area at Apron Level, Concourse F (Exhibit 23 dated 1-1-
96): 13,740 square feet occupied as of October 1, 1986, at a
current rental rate of $1.61 per square foot per year, being a
total annual rental of $22,121.40.
(ce) Electrical Room Pneumatic Tube Equipment Space at Tunnel Level,
Concourse F (Exhibit 24 dated 1-1-96): 1,014 square feet occupied
as of October 1, 1986 at a current rental rate of $10.14 per
square foot per year, being a total annual rental of $10,281.96.
(cf) Operations Area at Apron Level, Concourse F, comprising a total
area of 5,942 square feet occupied as of June 3, 1986 (Exhibit 23
dated 1-1-96): 4,290 square feet at a current rental rate of
$10.14 per square foot per year and 1,652 square feet at a
current rental rate of $16.29 per square foot per year, being a
total annual rental of $70,411.68.
(cg) Additional Unimproved Area at Apron Level, Concourse F (Exhibit
23 dated 1-1-96): 1,006 square feet occupied as of June 3, 1986
at a current rental rate of $1.61 per square foot per year being
a total annual rental of $1,619.66.
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(ch) Unimproved Area at Apron Level, Concourse F (Exhibit 23 dated 1-
1-96): 1,101 square feet occupied as of June 3, 1986 at a current
rental rate of $1.61 per square foot per year, being a total
annual rental of $l,772.61.
(ci) New Holdroom Area at Main Level, Concourse F (Exhibit 22 dated 1-
1-96): 739 square feet occupied as of June 1, 1989 at a current
rental rate of $16.29 per square foot per year, being a total
annual rental of $12,038.31.
(cj) Additional Holdroom Area at Main Level, Concourse F (Exhibit 22
dated 1-1-96): 1,534 square feet occupied as of June 1, 1989 at a
current rental rate of $16.29 per square foot per year, being a
total annual rental of $24,988.86.
(ck) World Club at Main Level, Central Services Building (Exhibit 26
dated 1-1-96): 2,335 square feet occupied as of June 1, 1985 at a
current rental rate of $16.29 per square foot per year, being a
total annual rental of $38,037.15.
(cl) Parking and Storage at Apron Level, Central Services Building
(Exhibit 27 dated 1-1-96) 4,845 square feet occupied as of
October 1, 1987 at a current rental rate of $1.61 per square foot
per year being a total annual rental rate of $7,800.45.
(cm) Office at Apron Level, Building 520 (Exhibit 28 dated 1-1-96):
488 square feet occupied as of July 1, 1995 at a current rental
rate of $16.29 per square foot per year, being a total annual
rental of $7,949.52.
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(cn) Baggage Re-check Area at Apron Level, Building 520 (Exhibit 28
dated 1-1-96): 1525 square feet occupied as of August 1, 1994 at
a current rental rate of $16.29 per square foot per year, being a
total annual rental of $24,842.25.
(co) Breakroom Area in Center Pod at Apron Level, Building 520
(Exhibit 28 dated 1-1-96): 921 square feet occupied as of August
1, 1996 at a current rental rate of $16.29 per square foot per
year, being a total annual rental of $15,003.09.
(cp) Office space and hallway mezzanine level Building 520 (Exhibit 29
dated 1-1-96): 800 square feet occupied as of June 1, 1996 at a
current annual rental rate of $16.29 per square foot per year,
being a total annual rental of $13,032.00.
(cq) Bus Stop Lobby at Main Level, Building 603 (Exhibit 30 dated 7-1-
96): 5,433 square feet occupied as of July 1, 1996 at no rental
charge.
(cr) Bus Stop at Apron Level, Building 603 (Exhibit 31 dated 7-1-96):
8,150 square feet occupied as of July 1, 1996 at a current rental
rate of $1.77 per square foot per year, being a total annual
rental rate of $14,425.50.
(cs) Bus Stop Roadway at Apron Level, Building 603 (Exhibit 31 dated
7-1-96): 9,100 square feet occupied as of July 1, 1996 at a
current rental rate of $0.375 per square foot per year being a
total annual rental rate of $3,412.50.
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A-2 PREFERENTIAL USE PREMISES
(a) Concourse G (Exhibit 25, dated 1-1-96): 54,588 square feet occupied as
of April 1, 1995, at no rental charge (Lessee is paying debt service
on construction costs). Concourse G is preferential use space which
may be made available by Lessor to other air carriers when and if
Lessee's and/or Mesaba's use of the facility is less than 75 flights
per day. The lease of this space shall terminate on the date of
beneficial occupancy of the Midfield Terminal.
(b) Baggage Hold Area (Tugs) at Concourse G (Exhibit 25, dated 1-1-96):
43,890 square feet occupied as of April 1, 1995, at a current rental
rate of $0.375 per square foot per year being a total annual rental
rate of $16,458.75.
A-3 PRIOR PREMISES - COMMON USE
Republic Airlines, Inc. after acquiring the interest of Eastern Air
Lines, Inc. in certain space in the L. C. Smith Terminal, transferred
said interest to U.S. Air, Inc. Lessee has taken over all space
formerly leased to U.S. Air, Inc. in the James M. Davey Terminal.
Lessee has agreed to pay for all charges for U.S. Air, Inc.'s Common
Use Baggage related areas that exceed eighteen thousand four hundred
sixty nine dollars and eight cents ($18,469.08) per year, the amount
that U.S. Air, Inc. was paying for similar space in the James M. Davey
Terminal prior to its relocation. This amount shall be subject to
adjustment as provided in Paragraph C of this Article III.
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A-4 BASE PREMISES - EXCLUSIVE AND PUBLIC USE
(a) Ticket Counter and Public Area at Main Level, Building 603
(Exhibit 14 dated 1-1-96): 4,530 square feet occupied as of June
3, 1986 at a current rental rate of $1.77 per square foot per
year, being a total annual rental of $8,018.10.
(b) Baggage Make-up and Conveyor at Apron Level (North Side) Building
603 (Exhibit 15 dated 1-1-96): 5,749 square feet occupied as of
June 3,1986 at a current rental rate of $1.77 per square foot per
year, being a current annual rental of $10,175.73.
(c) Operations Area at Apron Level, Concourse C (Exhibit 17 dated 6-
1-89): 5,240 square feet occupied as of June 3, 1986 at a current
rental rate of $1.77 per square foot per year, being a current
annual rental of $9,274.80.
(d) Additional Operations Area at Apron Level, Concourse C (Exhibit
12 dated 1-1-96): 1,740 square feet occupied as of June 3, 1986
at a current rental rate of $1.77 per square foot per year, being
a current annual rental of $3,079.80.
(e) Operations Areas at Apron Level, Concourse F (Exhibit 23 dated 1-
1-96): 5,942 square feet occupied as of August 1, 1985 at a
rental rate of $1.77 per square foot per year, being a current
annual rental of $10,517.34.
(f) Covered Area at Apron Level, Concourse C Extension (Exhibit 11
dated 1-1-96): 22,720 square feet occupied as of June 1, 1989 at
a
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current rental rate of $1.77 per square foot per year, being a
current annual rental of $40,214.40.
(g) Walkway at Main Level, Concourse C Extension (Exhibit 10 dated 1-
1-96): 2,011 square feet, occupied as of June 1, 1989 at a
current rental rate of $1.77 per square foot per year, being a
current annual rental of $3,559.47.
(h) Operations Areas at Apron Level, Concourse D (Exhibit 19 dated 1-
1-96): 10,040 square feet occupied as of August 1, 1985 at a
current rental rate of $1.77 per square foot per year, being a
current annual rental of $17,770.80
(i) Unimproved Space at Apron Level, Concourse D (Exhibit 19 dated 1-
1-96): 529 square feet occupied as of April 1, 1976 at a current
rental rate of $1.77 per square foot per year, being a total
annual rental of $936.33.
(j) Unenclosed Undercover Area at Apron Level, Concourse D (Exhibit
19 dated 1-1-96): 1,704 square feet occupied as of April 1, 1985
at a current rental rate of $1.77 per square foot per year, being
a total annual rental of $3,016.08.
(k) Tower Area at Lower Level, Concourse E (Exhibit 21 dated 1-1-96):
720 square feet occupied as of August 1, 1985 at a current rental
rate of $1.77 per square foot per year, being a total annual
rental of $1,274.40.
(l) Addition at Tower Area and Concourse E (Exhibit 21 dated 1-1-96):
865 square feet occupied as of 12-1-90 at a current rental rate
of
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$1.77 per square foot per year, being a total annual rental of
$1,531.05.
(m) Operations Area at Apron Level, Concourse C Extension (Exhibit 11
dated 1-1-96): 6,687 square feet occupied as of June 1, 1989 at a
current rental rate of $1.77 per square foot per year, being a
current annual rental of $11,835.99.
(n) Concourse G (Exhibit 25 dated 1-1-96): 54,588 square feet
occupied as of 4-1-95 at a current rental rate of $1.77 per
square foot per year, being a total annual rental of $96,620.76.
(o) Bus Stop at Main Level, Building 603 (Exhibit 30 dated 7-1-96):
5,433 square feet occupied July 1, 1996 at a current rental rate
of $1.77 per square foot per year, being a current annual rental
of $9,616.41.
Effective December 1, 1986 Lessee shall pay an annual debt service
charge of $753,317.26, which includes 25% coverage, for the United Airlines
relocation project which shall be billed on a monthly basis of $62,776.44
in advance each month.
Effective November 18, 1988 Lessee shall pay an annual debt service
charge of $19,507.27, which includes 25% coverage, for the Concourse "G"
elevator project which shall be billed on a monthly basis of $1,625.61 in
advance each month.
Effective June 1, 1989, Lessee will pay an annual debt service charge
of $412,648.00, which includes 25% coverage, for the extension to Concourse
"C"
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project which shall be billed on a monthly basis of $34,387.33 in advance
each month.
Effective April 1, 1995 Lessee will pay an annual debt service charge
of $1,958,194.00, which includes 25% coverage, for the new Concourse "G"
and related projects which shall be billed on a monthly basis of
$163,182.83 in advance each month.
Lessee will pay the above annual debt service on that portion of the 1986
and 1990 General Airport Revenue Bonds even though the term of such debt service
obligation extends beyond the term of the lease of such temporary facilities.
The foregoing notwithstanding, the parties acknowledge that (a) the aforesaid
amounts represent annual debt service charges in effect on the execution date of
this Agreement and include amounts for 25% coverage, and (b) such amounts will
be adjusted if and when coverage requirements change and/or the bonds to which
such debt service charges relate are refinanced or refunded.
If, as a result of construction by the Lessor of a north-south roadway and
midfield expansion program on the Airport, any space on Concourse A leased to
Lessee shall be rendered unusable, Lessee covenants and agrees to relocate all
of its operations at the Airport to comparable space at the L.C. Smith Terminal
or the Davey Terminal if space is not available in the L.C. Smith Terminal. In
any event Lessee shall vacate the leasehold space on Concourse A when the
roadway construction commences at the Concourse A location.
Further, if as a result of construction by Lessor of a north-south roadway
on the Airport, any gates at Concourse A leased to USAir as a result of the
assignment and the consequent amendment to the USAir Lease are rendered
unusable, USAir has
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covenanted and agreed to relocate all its operations at the Airport to its
existing gates on Concourse B. In the event that, and for so long as, the
USAir gates on Concourse B are not available or cannot accommodate USAir's
gate use requirements during such period and in the event that, and for so
long as, no other gates at the Airport are reasonably available to USAir,
Lessee will make necessary and reasonable arrangements to accommodate USAir
at gates which it has under lease with Lessor so long as USAir agrees to
reasonably cooperate with Lessee in the use of such gates.
Rentals for space vacated by Lessee on Concourse A will terminate upon
the date the space is vacated. Lessee shall not be responsible for lost
Airport revenues or Airport expenses due to the relocation. Lessor shall be
responsible for any and all reasonable out-of-pocket direct relocation costs
incurred by Lessee as a result of the relocation.
B. ACTIVITY FEES AND CAPITAL EXPENDITURES:
1. ACTIVITY FEES: All rentals, fees and charges for the use of the
premises, facilities, rights, licenses, services and privileges
granted hereunder, except those for which rentals, fees or charges are
otherwise specifically provided herein, shall be combined in and
represented by an "Activity Fee" calculated for each Fiscal Year, and
which shall be an amount equal to the product of the number of
thousand pounds of Approved Maximum Landing Weight of aircraft landed
at the Airport in such Fiscal Year, multiplied by the Activity Fee
rate for such Fiscal Year. The Activity Fee rate for any Fiscal Year
shall be the quotient arrived at by dividing:
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(a) the Revenue Requirement, as below defined, for such Fiscal Year,
by
(b) the aggregate amount of Approved Maximum Landing Weight of
aircraft, in units of one thousand pounds, of all Signatory
Airlines, for such Fiscal Year.
The "Revenue Requirement" for any Fiscal Year as used herein shall
mean that amount of revenue required to produce total net Airport revenue
equal to the following amount:
(1) direct and indirect expenses of airport maintenance, operation
and administration for such fiscal year; plus
(2) (a) one hundred twenty-five percent (125%) of the amount of
principal and interest due (net of any capitalized interest) for
such Fiscal Year on all then outstanding Airport Revenue Bonds,
less (b) any amounts on deposit in the Revenue Fund at the
beginning of such Fiscal Year representing so-called "coverage"
funds collected for so-called "rolling coverage" pursuant to any
bond ordinance under which Bonds were issued that requires such
rolling coverage; plus
(3) deposits into the Bond Reserve Account, the Operation and
Maintenance Reserve Fund and the Renewal and Replacement Fund
required for such fiscal year pursuant to the provisions of the
Bond Ordinance; plus
(4) commencing in Fiscal Year 2001, an amount equal to $5 million
(which amount shall be escalated each Fiscal Year beginning in
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Fiscal Year 2002 to reflect percentage increases in the Producer
Price Index during the most recently ended 12-month period for
which such index is available) minus the amount, if any,
deposited for such Fiscal Year into the ACE Account; plus
(5) commencing in the Fiscal Year in which no Airport Revenue Bonds
are subject to Paid-in Coverage (as defined below), $350,000;
minus
(6) all other Airport revenues (including Exclusive Area and Common
Area rentals and all concession and parking revenues) received
[or receivable if the Lessor is on an accrual accounting basis]
during such Fiscal Year (excepting Special Facility Bond
Revenues).
The unit thus arrived at shall be the Activity Fee rate per thousand
pounds of Approved Maximum Landing Weight payable by Lessee to Lessor for
such of Lessee's aircraft, or aircraft of its subsidiary, as have landed at
the Airport during the Fiscal Year for which such calculation is made.
The Activity Fee as herein established shall not be subject to further
adjustment except by agreement of the parties hereto or as provided in
Article III F.
2. LESSOR COVENANTS; CAPITAL EXPENDITURES:
(a) Lessor covenants:
(i) that it will provide efficient management and operation of
the Airport on the basis of sound business principles and that it will
not incur expense for Airport operation, maintenance and
administration in excess of the amounts reasonably and necessarily
required therefor.
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(ii) that it shall operate the Airport in a manner so as to
produce revenues from concessionaires, tenants, and users of a nature
and amount which would be produced by a reasonably prudent operator of
an airport.
(iii) That it will comply in all respects with the revenue
retention requirement in Section 511(a)(12) of the Airport and Airway
Improvement Act of 1982, as amended, now codified at 49 U.S.C. Section
47107(b). Commencing in Fiscal Year 1997, Lessor may include in O&M
Expenses for each Fiscal Year administrative charges not in excess of
$5 million, provided that the foregoing cap amount shall be escalated
each Fiscal Year, commencing in Fiscal Year 1998, by multiplying the
prior year's cap amount by a factor of one (1) plus the percentage
increase, if any, in the index of average hourly earnings for
production workers for manufacturing industries in the United States,
as published by the United States Department of Labor, Bureau of Labor
Statistics (or if this index is discontinued or otherwise becomes
unavailable to the public, the most nearly comparable index of such
average hourly earnings published by a recognized financial
institution, financial publication or university) during the most
recently ended 12-month period for which such index is available. The
annual administrative charges of $5 million shall pay for all services
provided directly or indirectly by any department, division or agency
of Lessor other than the Airport, or Central Communications to the
extent operated by the Airport, in the nature of administration and
legislative oversight, finance, budget, accounting, legal, payroll,
purchasing, personnel, information processing, imaging, planning and
development.
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Administrative charges shall not include (A) optional contracted
services by the Airport, such as landscaping, mowing, engineering
(design, construction, inspection and project management) and
mechanical, electrical and plumbing trade services to be performed
on Airport property, or (B) the payroll and fringe benefit costs for
the employee positions described in Exhibit B; provided that any
increase in such costs or the number of such positions above those
shown on Exhibit B must be approved by a majority in number of the
Signatory Airlines.
(iv) That it will utilize competitive bidding procedures for the
award of all maintenance and operation contracts and construction
contracts for the Airport.
(v) That all senior appointed Airport officials shall have
professional qualifications commensurate with the responsibilities of
the jobs to be performed by such officials.
(vi) That it will take all necessary actions to assure that the
personnel of Lessor, whose wages and benefits are included in
O&M Expenses, are actually performing work for the Airport as
represented by such inclusion.
(vii) That it will operate Willow Run Airport only as a
reliever airport for the Airport with no scheduled air carrier or
public charter passenger service.
Lessor and Lessee recognize that payment of the Activity Fee, as
herein provided, together with other funds, will result in an annual
surplus, because, among other things Ordinance 319 currently requires the
collection by Lessor
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of rates and charges necessary to produce in each Fiscal Year revenues
that include 125% of the principal and interest due in such year on
Airport Revenue Bonds (exclusive of capitalized interest thereon) (the
excess 25% required to be collected is herein referred to as "Paid-in
Coverage"). Lessor covenants to utilize such surplus only for the
retirement of Airport Revenue Bonds or as follows:
(1) Fifty percent (50%) of the amount attributable to the Paid-in
Coverage, if any, on the Airport Revenue Bonds shall be deposited
into the Airline Equity Account and allocated among the Airline
Equity Subaccounts in accordance with the respective landed
weights of each Signatory Airline for the applicable period;
(2) Three Hundred Fifty Thousand Dollars ($350,000) shall be
deposited annually into the County Discretionary Fund;
(3) Fifty percent (50%) of the amount attributable to the Paid-in
Coverage, if any, on the Airport Revenue Bonds (less $350,000
annually) shall be deposited into the ACE Account;
(4) Deposits shall be made into the Subordinate Bond Reserve Account,
the Operation and Maintenance Reserve Fund and the Renewal and
Replacement Fund pursuant to the provisions of the Ordinance 319,
and into any other funds for similar purposes established
pursuant to other ordinances under which Bonds are issued;
(5) Amounts includible each Fiscal Year in the Revenue Requirement
pursuant to item (4) of the definition thereof in Article III
B.1. shall be deposited into the Airport Development Fund, to be
established
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and held by Lessor for the purposes described in Article III
B.2.(c)(4) below; and
(b) Lessor may issue Bonds to finance the costs (including all reasonable
costs incidental to the issuance and sale of such bonds) of capital
projects and may include the debt service (including, among other things,
coverage requirements) on such Bonds in Lessee's fees hereunder only after
first receiving approval of a Weighted Majority.
Lessor may assign, in accordance with the Bond Ordinance and the terms
of this Agreement, certain of its interests in and pledge certain revenues
and receipts of the Airport as security for payment of the principal of,
premium, if any, and interest on Bonds. Except as set forth in the
preceding sentence and except for residential property acquired by the
Airport pursuant to the Airport's noise mitigation program, Lessor shall
not pledge, sell, convey, mortgage, encumber, assign or otherwise transfer
the Airport or any portion thereof during the term of this Agreement.
(c) The following limitations shall apply to expenditures from the below-
described funds and accounts:
(1) EXPENDITURES TO BE MADE FROM THE COUNTY DISCRETIONARY FUND.
Lessor may make expenditures from the County Discretionary Fund
without approval by the air carriers for any lawful Airport-system
purpose, except that expenditures for Willow Run Airport shall only be
made if Lessor is in compliance with its covenant in Article III
B.2.(a)(vii).
(2) CAPITAL EXPENDITURES TO BE MADE FROM THE ACE ACCOUNT.
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If Lessor proposes to make a capital expenditure from the ACE Account
it shall be subject to the approval of the air carriers if such
capital expenditure is greater than Fifty Thousand dollars ($50,000).
Such approval shall be deemed given unless within thirty (30) days
after receipt of Lessor's proposal to make such expenditure Lessor is
notified by a Majority-in-Interest of the air carriers, as hereinafter
defined, that such expenditure is disapproved, such notification to
contain specific reasons and grounds therefor.
(3) EXPENDITURES TO BE MADE FROM THE AIRLINE EQUITY SUBACCOUNTS.
Each Signatory Airline may choose to use any amounts deposited into
its Airline Equity Subaccount for any of the following purposes:
(i) as a direct credit against Activity Fees payable by it;
(ii) for capital expenditures at the Airport; or
(iii) to service Special Facility Revenue Bond debt for
capital improvements at the Airport.
(4) EXPENDITURES TO BE MADE FROM AIRPORT DEVELOPMENT FUND.
Lessor may make capital expenditures from the Airport Development Fund
without approval by the air carriers for any lawful Airport-system
related purpose, provided that Lessor shall not pledge the Airport
Development Fund as security for any Bond or other debt of Lessor
without approval of a Majority-in-Interest of the air carriers; and
provided, further, that capital expenditures for Willow Run Airport
shall only be made if Lessor is in compliance with its covenant in
Article III B.2.(a)(vii).
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(d) In order to permit Lessor to issue Bonds in compliance with applicable
securities laws, Lessee agrees that upon the request of Lessor, Lessee
shall provide to Lessor such information with respect to Lessee as Lessor
deems reasonably necessary in order for Lessor to issue Bonds in compliance
with the requirements of rule 15c-2(12) of the Securities and Exchange
Commission.
C. ADJUSTMENT OF RENTAL FEES: For the purposes of this Agreement, and in
order to compute any adjustment of rentals or fees due after the effective
date hereof, the five-year period ending August 31, 1998, shall be regarded
as the "first five-year period".
The Rental Fees shall be subject to adjustment effective September 1,
1998, and on September 1 of each successive five year period thereafter as
follows:
In fixing the Rental Fees for the second five-year period, if the
average hourly earnings for production workers for manufacturing industries
in the United States, as published by the Bureau of Labor Statistics of the
United States Department of Labor (or if this index is no longer published,
then the most nearly comparable published index of such average hourly
earnings) on the first day of the month in which the second five-year
period commences is greater than or less than such average hourly wage rate
as published by the said Bureau of Statistics on September 1, 1993, then
the percentage of increase over or decrease under the average hourly wage
rate so published on the first day of September, 1993, shall be determined,
and the Rental Fees adjusted by increasing or decreasing the same, as the
case may be, by the percentage so determined, and such adjusted Rental Fees
shall apply during the said second
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five-year period, provided only that no such adjustment shall increase or
decrease such Rental Fees more than ten percent (10%) for the second
five-year period compared with the Rental Fees applicable during the first
five-year period.
Each subsequent five-year adjustment at the beginning of each
succeeding five-year period shall be computed in the same manner (and shall
be subject to the same ten percent (10%) limitation of adjustment) except
that the average hourly wage rates used upon such subsequent adjustments
shall be those so published on the first day of the month in which such
current five-year period commenced and first day of the month in which the
next ensuing five-year period commences, which adjustments shall be based
upon and applied to the Rental Fees for the preceding five year period.
D. CHARGES FOR ELECTRICAL CURRENT: Lessee shall pay to Lessor for Lessee's
use and occupancy of Exclusive Areas and Common Areas under this agreement,
a charge for electrical current furnished by Lessor to each such area, said
charge to be computed as follows:
(1) In metered areas at a rate not exceeding that which Lessee would
have to pay if it established the same demand and took the same
quantity directly from the public utility supplying electrical
current to the Airport, and
(2) In unmetered areas at a rate per square foot of occupied space as
established by an electrical consultant appointed by Lessor. In
the event the parties hereto shall be unable to agree on the
aforementioned charges, the controversy shall be subject to
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arbitration in the manner provided in Article XVII of this
Agreement.
(3) In Common Areas the electrical current charge shall be shared
with the other common users, 20% equally and 80% to be allocated
on the basis of enplaned passengers.
E. CHARGES FOR WATER AND SEWERAGE FACILITIES: Lessor shall charge Lessee for
water and sewerage facilities supplied Lessee's Exclusive Areas and the
amount of such charge shall be subject to future agreement of the parties
hereto. In the event the parties hereto shall be unable to agree on such
amount, the controversy shall be subject to arbitration in the manner
provided in Article XVII of this Agreement.
F. CONTINUING RENTAL OBLIGATION
1. Should any scheduled air carrier, including Lessee, having an
agreement with Lessor substantially similar to the Basic Agreement or
this Agreement, terminate its operations at the Airport by reason of
the loss of its operating authority to serve the Detroit Metropolitan
Area and exercise the right of cancellation provided for in such case
in Article XV of the Basic Agreement or this Agreement, its continued
obligation to pay to Lessor charges thereafter due under the Basic
Agreement or this Agreement, including space rentals and Activity
Fees, shall, subject to the provisions of the paragraph next
following, thereupon terminate. Payment of Rentals and Activity Fees
thereafter required shall be the responsibility of such of the other
aforesaid scheduled air carriers which
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continue to provide air transportation service to the Detroit
Metropolitan Area.
Should (a) all such aforesaid air carriers lose their operating
authority to serve the Detroit Metropolitan Area, or (b) should Lessor
fail to maintain the necessary certifications required to permit
scheduled air carrier operations at the Airport, and ALL of such air
carriers exercise the right of cancellation provided for in either
event in said Article XV, the obligation to pay such aforesaid charges
shall terminate subject, however, to the following condition. Upon
such termination all such aforesaid carriers then operating at the
Airport (including Lessee if such be the case) shall be obligated, to
the extent hereinafter required, to pay annually, or in such
installments as Lessor may require, an amount not in excess of three
hundred percent (300%) of their respective annual rentals (calculated
in the manner set forth in paragraph 2 below) payable at that time for
terminal building space at the Airport (whether leased under the Basic
Agreement, this Agreement or otherwise) for the purpose of providing
funds to be applied to debt service (exclusive of any additional
coverage) on the then outstanding issues of Bonds. Payments required
of such carriers shall be assessed against each of them in a uniform
manner per square foot leased and shall be diminished pro rata to the
extent that Airport revenues or capital funds are realized from other
sources and are available for application to the debt service on the
said bonds as provided for in Subparagraph 3 below.
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2. For the purpose of calculating payments which such carriers may be
obligated to make, Lessor shall first determine the average annual
rental rate per square foot paid for such terminal building space by
all such carriers by dividing their total annual rentals for such
space by the total square footage of the space. The square footage
leased by each carrier shall then be multiplied by such average rate
in order to obtain an annual rental of each such carrier for the
purpose of establishing the three hundred percent (300%) maximum
annual limitation.
3. In the event Lessor fails to maintain the necessary certifications
required to permit scheduled air carrier operations at the Airport and
thereafter operates the Airport for other purposes, any revenues
earned as a result shall, after providing for necessary operating and
maintenance expenses, be first applied each year to such debt service
requirements before requiring payments by the carriers pursuant to
paragraph (1) above. In the foregoing circumstances and as long as
any of the aforesaid Bonds are outstanding, Lessor shall use its best
efforts to operate or lease the Airport properties so as to produce
sufficient revenues to satisfy the requirements of the aforesaid
Bonds. If under such circumstances the Airport properties or portion
thereof are sold by Lessor, the proceeds of such sale(s) shall first
be used (or set aside) and be applied to current and future debt
service requirements or to retire the aforesaid Bonds before requiring
payments by the carriers pursuant to subparagraph 1 above.
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G. FACILITIES USE FEES - INTERNATIONAL TERMINAL BLDG. #520:
For each use by Lessee of International Terminal Building 520, Lessee
shall pay to Lessor a facilities use fee in accordance with the then
current fee schedule adopted and promulgated by Lessor. The amount of such
facilities use fee shall be computed by Lessor in accordance with criteria
established by the Detroit Airline Airport Affairs Committee, formerly
known as the Detroit Airline Properties Committee, and approved by Lessor.
Lessor covenants to use its best efforts to charge users of revenue
producing improvements constructed with the proceeds of the above-described
bonds an adequate and sufficient amount of rental and/or other charges to
make such improvements self-sustaining and to cover a pro rata share of
debt service, maintenance and operation and other such improvement
expenses, it being the intent of the parties hereto to provide that those
who benefit from the use of such improvements should bear the cost thereof
to the extent possible.
Lessor agrees to establish and maintain a schedule of rates and
charges for all users of the Airport other than Lessee, except where
precluded by contracts in effect on the date hereof, whereby the Activity
Fee Schedule shall be at least equal for equivalent landed weight to those
fees payable by Lessee hereunder. Lessor also pledges its best efforts to
attempt to secure the maximum amounts of grants-in-aid available under any
federal, state or local program.
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H. PAYMENT OF RENTALS AND ACTIVITY FEES
1. INFORMATION ON LESSEE OPERATIONS:
(a) Not earlier than 120 days nor later than 90 days prior to the
last day of each Fiscal Year, Lessee shall furnish Lessor with an
estimate for the next ensuing Fiscal Year of (i) the total Approved
Maximum Landing Weight of all aircraft to be landed at the Airport by
Lessee, (ii) the total number of enplaned domestic and international
passengers and deplaned domestic and international passengers of
Lessee, and (iii) the total number of arriving and departing domestic
and international flights of Lessee.
(b) Lessee shall, no later than the 20th day of each calendar month,
transmit to Lessor a report, certified by Lessee, setting forth (i)
the actual number of Lessee's enplaned passengers and deplaned
passengers for the preceding calendar month, (ii) the actual aggregate
Approved Maximum Landing Weight for all aircraft operated by Lessee
and landed at the Airport during the preceding calendar month, and
(iii) the actual number of Lessee's arriving and departing domestic
and international flights for the preceding month.
2. PROJECTION OF RENTALS AND ACTIVITY FEES: Not later than 60 days prior
to the end of each Fiscal Year, Lessor shall furnish Lessee with a projection
for the next ensuing Fiscal Year (the "Projection") of the rentals to be paid
hereunder, and the Activity Fee rate per thousand pounds of Approved Maximum
Landing Weight. Such Projection will include Lessor's proposed Airport budget,
and shall set forth a calculation of the Activity Fee (including all sources of
revenue and all expenses) for the next ensuing Fiscal Year, together with other
information relevant thereto reasonably
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requested by Lessee. Lessor shall give due consideration to any suggestions
and comments made by Lessee with respect to the Projection. The Projection,
as revised by Lessor after considering Lessee's suggestions and comments,
shall be the basis for computing Lessee's rentals and Activity Fees for the
next ensuing Fiscal Year unless and until otherwise revised pursuant to
paragraph 4 below.
3. PAYMENT OF RENTALS AND ACTIVITY FEES:
(a) Lessor shall, following the end of each calendar month, transmit
to Lessee a statement of the rentals, fees and charges, other than the
Activity Fees, incurred by Lessee during said month, and the same
shall be paid by Lessee within fifteen days after receipt of such
statement.
(b) Not later than the 20th day of each calendar month of each Fiscal
Year, Lessee shall pay Lessor, without demand or invoice, an amount
equal to Lessee's aggregate Activity Fees for the preceding calendar
month, calculated by multiplying the total Approved Maximum Landing
Weight for aircraft landed by Lessee at the Airport during the
preceding calendar month by the Activity Fee rate for such Fiscal
Year, computed in accordance with Article III.B.1., and based on the
Projection, as such projection may have been revised pursuant to
paragraph 4 below.
4. ADJUSTMENT OF RENTALS AND ACTIVITY FEES: Not later than the 150th day
of each Fiscal Year, Lessor shall furnish Lessee with a revised Projection (the
"Mid-Year Projection"), which shall reflect the most recently available
information with regard to the amounts actually incurred or realized during such
Fiscal Year for Bond Debt Service, O&M Expenses, and the Revenue Requirement,
together with the most recently available information with regard to rentals and
Activity Fees actually received
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by Lessor. Lessor shall give due consideration to any suggestions and
comments made by Lessee with respect to the Mid-Year Projection. If the
Mid-Year Projection, as revised by Lessor after considering Lessor's
suggestions and comments, indicates that aggregate payments of rentals and
Activity Fees, at the then-existing rates would result in an overpayment or
underpayment of the aggregate amount required to be generated by Lessor
through rentals and Activity Fees, Lessor shall revise the Projection and
adjust the rates set forth therein for such Fiscal Year to conform to the
Mid-Year Projection.
5. PRELIMINARY ANNUAL SETTLEMENT AND FINAL AUDIT:
(a) Within 60 days after the end of each Fiscal Year, Lessor will
furnish Lessee with a preliminary report, containing a preliminary
calculation, based on actual data, in accordance with this Agreement,
of Rentals and Activity Fees estimated to be chargeable to Lessee for
the preceding Fiscal Year, and setting forth the amounts actually paid
by Lessee for such period. If such report indicates that the
aggregate of such fees and charges actually paid by Lessee were
greater than the aggregate amounts chargeable to Lessee, then within
90 days after the end of such Fiscal Year Lessor shall refund 80% of
any such estimated excess to Lessee. If such report indicates that
the aggregate of such fees and charges paid by Lessee were less than
the amounts chargeable to Lessee, then within 90 days after the end of
such Fiscal Year Lessee shall pay to Lessor 80% of the amount of any
such estimated deficiency. Interest shall accrue at
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a rate of 7% per annum, and be payable by Lessee in cash, on any
portion of any deficiency not paid by Lessee when due. Interest
shall accrue at a rate of 7% per annum, and be payable by Lessor,
through a reduction in the amount of Lessor's administrative costs
includible in O&M Expenses for the then Fiscal Year pursuant to
Article III.B.2.(a)(iii), on any portion of any excess not refunded
to Lessee when due.
(b) By the 180th day of each Fiscal Year, Lessor shall furnish to
Lessee a copy of an annual audit report prepared by a nationally
recognized accounting firm, covering the operation of the Airport for
the preceding Fiscal Year (the "Final Audit"). Lessor shall prepare a
calculation, based on the Final Audit, in accordance with this
Agreement, of all rentals and Activity Fees chargeable to Lessee for
the preceding Fiscal Year, and setting forth the amounts actually paid
by Lessee for such period, taking into account all payments and
refunds pursuant to paragraph 5.(a) above. If aggregate rentals and
Activity Fees actually paid by Lessee were greater than the aggregate
amount chargeable, then within 30 days after delivery of the Final
Audit Lessor shall refund the amount of such overpayment to Lessee.
If aggregate rentals and Activity Fees actually paid by Lessee were
less than the aggregate amount chargeable to Lessee, then within 30
days after receipt of the Final Audit Lessee shall pay to Lessor the
amount of any such deficiency. The amount of Lessor's administrative
costs includible in O&M Expenses for the then Fiscal Year shall be
reduced by $50,000 for each month that delivery of the Final Audit to
Lessee is delayed beyond the 180th day of such Fiscal Year.
(c) The payment by Lessee of any fees and charges hereunder and the
acceptance by Lessor thereof for any Fiscal Year, shall not preclude
either
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Lessee or Lessor from questioning, within a period of one (1)
year from the date of receipt by Lessee of the Final Audit for such
Fiscal Year, the accuracy of any report or statement on the basis of
which such payment was made, or preclude Lessor from making any claim
against Lessee for any additional amount payable by Lessee, or
preclude Lessee from making any claim against Lessor for the return of
any excess amount paid by Lessee.
ARTICLE IV
CONSTRUCTION BY LESSOR
[Intentionally Omitted]
ARTICLE V
CONSTRUCTION, MAINTENANCE, REPAIR
AND OPERATION BY LESSEE
Lessee may construct or install at its own expense any equipment,
improvements and facilities, and any additions thereto, upon all or any part of
the premises hereunder leased to Lessee for its exclusive use or preferential
use and may construct or install at its own expense, any equipment, improvements
and facilities authorized under Article I hereof upon any Airport property not
leased to Lessee for its exclusive use or preferential use at such locations as
may be approved by Lessor. Plans and specifications of any proposed
construction or installation of improvements and facilities (including any
substantial alteration or addition thereto) shall be submitted to and receive
the prior approval of Lessor. Lessor shall have the right to refuse approval of
such plans and specifications if the external appearance of such improvements
and
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facilities does not meet Lessor's reasonable requirements for substantial
uniformity of appearance of improvements and facilities on the Airport, or, if
the type or time of construction or installation, or the location thereof does
not meet Lessor's reasonable requirements for safe use of the Airport and
appurtenances by other authorized persons. Lessor may, at its own cost, inspect
any such construction or installation.
Lessee shall keep and maintain all premises hereunder leased to Lessee for
its exclusive use or preferential use and all such improvements and facilities
and additions thereto, whether constructed or installed by it upon premises
hereunder leased to it for its exclusive use or preferential use or upon Airport
property not leased to it for its exclusive use or preferential use, in good
condition and repair, reasonable wear and tear excepted, and damage by fire or
other casualty excepted. Lessee shall not be liable for the repair or
restoration of damage to premises hereunder leased where such damage results
from fire, structural defect, or other casualty for which Lessor has obtained
and there is in effect adequate insurance protection covering such fire or other
casualty. No restriction shall be placed upon Lessee as to the architects,
builders or contractors who may be employed by it in connection with any
construction, installation, alteration, repair or maintenance or any such
equipment, improvements, facilities and additions.
Lessee shall keep such premises leased to Lessee for its exclusive use or
preferential use in a sanitary and sightly condition, and shall provide all
necessary janitor services with respect thereto.
In the event that Lessee fails to perform for a period of thirty days after
written notice from Lessor so to do, any obligation required by this Article V
to be performed by Lessee at Lessee's cost, or fails to correct any construction
or installation by it of any equipment, improvements or facilities not completed
in accordance with the plans and
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specifications approved by Lessor within thirty days of Lessor's notice to
Lessee of a deviation from such plans and specifications and request for
appropriate changes in such construction and installation, Lessor, upon the
expiration of such thirty day period, may, but shall not be obligated to,
enter upon the premises involved and perform such obligation of Lessee,
charging Lessee the reasonable cost and expense thereof, and Lessee agrees to
pay Lessor such charge in addition to any other amounts payable by Lessee
hereunder; provided, however, that if Lessee's failure to perform any such
obligation adversely affects or endangers the health or safety of the public
or of employees of Lessor, and if Lessor so states in its aforesaid notice to
Lessee, Lessor may but shall not be obligated to perform such obligation of
Lessee at any time after the giving of such notice and without awaiting the
expiration of said thirty day period, and charge to Lessee, and Lessee shall
pay, as aforesaid, the reasonable cost and expense of such performance. If
Lessor shall perform any of Lessee's obligations in accordance with the
provisions of this section, Lessor shall not be liable to Lessee for any loss
of revenues to Lessee resulting from such performance.
ARTICLE VI
RIGHT OF ENTRY BY LESSOR
Lessor may enter upon the premises now or hereafter leased exclusively or
preferentially to Lessee hereunder at any reasonable time for any purpose
necessary, incidental to, or connected with the performance of its obligations
hereunder, in the exercise of its governmental functions, or in the event of any
emergency.
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ARTICLE VII
MAINTENANCE, OPERATION AND REPAIR BY LESSOR
Lessor shall operate, maintain and keep in good repair the areas and
facilities described in Article I hereof. Lessor shall keep the Airport free
from obstruction, including, without limitation, the clearing and removal of
snow, vegetation, stones and other foreign matter from the runways, taxiways,
and loading areas and areas immediately adjacent to such runways, taxiways and
loading areas, as may be reasonably necessary for the safe, convenient and
proper use of the Airport by Lessee, and shall maintain and operate the Airport
in all respects in a manner at least equal to the highest standards or ratings
issued by the FAA for airports of similar size and character and in accordance
with all rules and regulations of the FAA.
Lessor shall operate and maintain, and keep in good, sanitary and sightly
condition and repair, the Terminal Buildings (except for the premises therein
leased to Lessee or others for its or their exclusive use) and all additions,
improvements, facilities and equipment now or hereafter provided by Lessor at or
in connection with the [new Terminal Building], excepting any improvements,
facilities and equipment constructed or installed by Lessee, either individually
or jointly with others; provided, however, that Lessor shall be responsible for
all structural and roof repairs to all areas of the Terminal Buildings and any
additions thereto.
Lessor, at its cost, shall keep the Common Areas in the Terminal Buildings
adequately and attractively supplied, equipped, furnished and decorated and
shall operate and maintain adequate directional signs in said Common Areas,
including without limitation, signs, indicating the location of all public
restaurants, rest rooms, newsstand, post offices, telegraph offices, baggage
counters and check rooms, and all
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other facilities for passenger or public use in the Terminal Buildings or
elsewhere on the Airport.
Lessor, at its cost, shall provide and supply adequate heat to and air
conditioning for the premises hereunder leased to Lessee for its exclusive use
or for its use in common with others, and shall provide reasonable illumination
and drinking water in the public and passenger space in the Terminal Buildings
and, except as otherwise provided herein, for the areas and facilities adjacent
thereto respecting which Lessee is given a non-exclusive use hereunder. Lessor,
at its cost, shall also provide adequate lighting for the vehicular parking
spaces and adequate field lighting on and for the Airport, including, without
limiting the generality hereof, boundary lights, landing lights, flood lights
and beacons. Lessor, at its cost, shall also provide all janitor services and
other cleaners necessary to keep the Common Areas of the Terminal Buildings, and
areas adjacent thereto, the vehicular parking spaces and the landing field of
the Airport at all times clean, neat, orderly, sanitary and presentable.
Lessor, at its expense, shall take such measures, as are required by the
circumstances, to avoid and eliminate any unreasonable congestion and
obstruction which may from time to time occur with respect to passengers use of
and access to ticket counter areas, the lobby, passenger lounges, waiting rooms,
hallways, entrances and exits and other public and passenger conveniences in or
appurtenant to the Terminal Buildings. In furtherance thereof, Lessor, in
authorizing or permitting the use of space in the aforesaid areas of the
Terminal Buildings by concessionaires, shall at all times retain or provide
sufficient space in said areas for reasonably uncontested and unobstructed use
thereof by passengers.
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Lessor shall provide adequate guards, at such times as may be required by
the circumstances, at all parts of the Airport which Lessee is entitled to use
in common with others.
In the event that Lessor fails to perform for a period of thirty days after
written notice from Lessee so to do, any obligation required by this Article VII
to be performed by Lessor at Lessor's cost, Lessee, upon the expiration of such
thirty day period, may but shall not be obligated to perform such obligation of
Lessor and deduct the reasonable cost to Lessee of performing such obligation
from any rentals, fees or charges subsequently becoming due from Lessee to
Lessor under this Agreement; provided, however, that if Lessor's failure to
perform any such obligation adversely affects or endangers the health or safety
of Lessee or of any of any of its employees, agents, passengers, guests,
patrons, invitees, or its or their suppliers of materials or furnishers of
service or any of its or their property, and if Lessee so states in its
aforesaid notice to Lessor, Lessee may but shall not be obligated to perform
such obligation of Lessor at any time after the giving of said notice and
without awaiting the expiration of said thirty day period, and Lessee may deduct
its reasonable costs of performance thereof from any rentals, fees or charges as
aforesaid.
Lessor shall have the right to relocate at its own cost any equipment,
improvements and facilities constructed or installed by Lessee upon the Airport
property not leased hereunder to Lessee for its exclusive use pursuant to
authorization therefor under Article I hereof; provided, however, that such
relocation shall be performed in such a manner and at such times as are
calculated to reduce to the minimum possible under the circumstances any
interference with Lessee's operations at the Airport, and that the relocated
equipment, improvements and facilities shall,
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when completed, be commensurate with the equipment, improvements and
facilities existing prior to such relocation.
ARTICLE VIII
UTILITY SERVICES
Lessor shall, directly or by arrangement with appropriate utility companies
or suppliers, supply Lessee with electrical current, gas, water and sewerage
facilities, and shall charge Lessee for such utility services at rates not
exceeding those which Lessee would have to pay if it established the same demand
and took the same quantity directly from such utility companies or suppliers.
Lessor shall also supply electrical current to the ramp areas to be used by
Lessee in common with others and shall charge Lessee its appropriate share of
such electrical current at the rates hereinabove specified, which share shall be
prorated in accordance with Lessee's preferential use of gate positions.
Lessor, without expense to Lessee, shall bring or cause to be brought to
the take-off points upon the premises hereunder leased to Lessee for its use,
either exclusively or in common with others, adequate electricity, gas, water,
sewerage and telephone facilities for Lessee's use and shall be responsible for
all necessary excavation, construction, materials, operation and maintenance of
and for all mains, pipes, conduits, cables, wiring, sewers and other equipment
required to so provide such services in a manner adequate to supply Lessee's
needs therefor under conditions from time to time prevailing, and Lessee,
without expense to Lessor, shall have the right to make connections thereto and
therewith. Without limiting the generality of the foregoing, Lessor in
providing water facilities shall, without expense to Lessee, provide pipes,
mains and other equipment adequate in size and quality to supply water in
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sufficient quantity and of sufficient pressure for such sprinkler systems as
have been or may from time to time be installed in the Terminal Buildings,
additions or improvements thereto.
ARTICLE IX
SPACE FOR UNITED STATES WEATHER BUREAU, POSTAL SERVICE,
FEDERAL AVIATION ADMINISTRATION, AND EXPRESS AGENCIES
Lessor shall, upon request of such persons or governmental or express
agencies make available reasonable and convenient space and facilities at the
Airport for the use of the United States Postal Service, or any person required
to use such space by regulations thereof, and for the use of an express agency
or agencies at a reasonable rental charge to such persons, governmental agency
and express agencies; and Lessor shall in like manner make available reasonable
and convenient space and facilities at the Airport for the use of the United
States Weather Bureau and Federal Aviation Administration.
ARTICLE X
RESTAURANT
Lessor agrees to provide space in the Terminal Buildings for a restaurant
to be maintained and operated in a first-class manner by the Airport food
concessionaire.
Irrespective of whether Lessor shall have made provision for such
facilities in accordance with this Article, and any other provision of this
Agreement to the contrary notwithstanding, Lessee shall have the right to
operate directly or through a designee, assignee or sub-lessee, private club
facilities within such appropriate space leased to it in the Terminal Buildings
for such purposes, which club facilities shall be authorized to serve food and
beverages; provided, however, food and beverages served in such
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private club facilities, will be obtained by Lessee from the Airport food
concessionaire to the extent that same are available for purchase from said
Airport food concessionaire.
ARTICLE XI
RULES AND REGULATIONS
Lessor shall adopt and enforce reasonable rules and regulations and any
reasonable amendments thereto, with respect to the use of the Airport, which
shall provide for the safety of those using the Airport and Lessee agrees to
observe and obey the same; provided, that such rules and regulations shall be
consistent with safety and with rules, regulations and orders of the FAA with
respect to aircraft operations at the Airport; and provided further, that such
rules and regulations shall not be inconsistent with the procedures prescribed
or approved from time to time by the FAA with respect to the operation of
Lessee's aircraft at the Airport. Lessee shall be given notice of all
amendments to rules and regulations as are from time to time adopted by Lessor
and no such amendment shall be effective as to Lessee until thirty (30) days
after the date of such notice unless Lessor states in said notice that the
amendment is of an emergency nature, in which case the amendment shall be
immediately effective.
ARTICLE XII
CONTROL OF RATES, FARES OR CHARGES
Lessor shall have no control whatsoever over the rates or charges that
Lessee may prescribe for any of its services to, from, through or at the
Airport, or between the Airport and Lessee's ticket offices or other stopping
places in the City of Detroit or the County of Wayne, or elsewhere, nor shall
Lessor, except to the extent reasonably necessary to prevent physical damage or
injuries to persons or property at the Airport, in any manner whatsoever,
control the type, design, style, figuration, weight, allowable
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loads, specifications or means of propulsion of, or use of space on, the
aircraft Lessee may operate to and from said Airport, or the point of origin
or destination of flights operated by Lessee to or from the Airport.
ARTICLE XIII
DAMAGE OR DESTRUCTION OF PREMISES
Notwithstanding the provisions of Article V as to maintenance and repair of
premises by Lessee, if the Terminal Buildings shall be partially damaged by
fire, the elements, the public enemy or other casualty but not rendered
untenantable, the same shall be repaired with due diligence by Lessor at its own
cost and expense. In case the Terminal Buildings are so damaged or destroyed by
fire, the elements, the public enemy or other casualty, that it will or does
become untenantable, the said buildings shall be repaired, reconstructed or
restored as the case may be, with due diligence by Lessor at its own cost and
expense, and the rent payable hereunder with respect to Lessee's exclusive space
or preferential space in said buildings shall be paid up to the time of such
damage or destruction and shall thenceforth abate until such time as the said
buildings shall be made tenantable.
In the event that the Airport or any other premises herein leased are
rendered untenantable or unusable because of the condition thereof, there shall
be a reasonable and proportionate abatement of the rentals, fees and charges
provided for herein during the period that the same are so untenantable or
unusable.
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ARTICLE XIV
CANCELLATION BY LESSOR
Lessor may cancel this Agreement by giving Lessee sixty (60) days advance
written notice to be served as hereinafter provided, upon or after the happening
of any one of the following events:
(a) The filing by Lessee of a voluntary petition in bankruptcy;
(b) The institution of proceedings in bankruptcy against Lessee and the
adjudication of Lessee as a bankrupt pursuant to such proceedings if such
adjudication shall remain unvacated or unstayed for a period of at least sixty
(60) days;
(c) The taking by a court of competent jurisdiction of Lessee and its
assets pursuant to proceedings brought under the provisions of any Federal
reorganization act if the judgment of such court shall remain unvacated or
unstayed for a period of at least sixty (60) days;
(d) The appointment of a receiver of Lessee's assets if such appointment
by a court of competent jurisdiction shall remain unvacated or unstayed for a
period of at least sixty (60) days;
(e) The divestiture of Lessee's estate herein by other operation of law;
(f) The abandonment by Lessee of its conduct of Air Transportation at the
Airport;
(g) If the Lessee shall be prevented for a period of sixty (60) days
(after exhausting or abandoning all appeals) by any action of any governmental
authority, board, agency or officer having jurisdiction thereof from conducting
Air Transportation at the Airport unless it is so prevented from conducting Air
Transportation, either (1) by reason of the United States or any agency thereof
acting directly or indirectly, taking
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possession of and operating, in whole or in substantial part, the premises
and space leased or operated by the Lessee, or premises required for the
actual operation of Lessee's aircraft to and from the Airport, or (2) if all
or a substantial part of the premises and space leased by the Lessee shall be
acquired in the manner described in Article XXIV hereof;
(h) The default by Lessee in the performance of any covenant or agreement
herein required to be performed by Lessee and the failure of Lessee to remedy
such default for a period of sixty (60) days after receipt from Lessor of
written notice to remedy the same; provided, however, that no notice of
cancellation, as above provided, shall be of any force or effect if Lessee shall
have remedied the default prior to receipt of Lessor's notice of cancellation;
Notwithstanding anything to the contrary herein contained, Lessor shall not
have the right to cancel, or give notice of cancellation of, this Agreement
solely by reason of Lessee's failure or refusal to pay any part of the rentals,
fees or charges provided for in this Agreement if, within sixty (60) days after
such failure or refusal, Lessee shall have given to Lessor a written notice
stating that Lessee in good faith predicates such failure or refusal upon either
or both of the following: (a) Any provision of this Agreement granting to Lessee
in specified events a reduction in or abatement of any rentals, fees or charges
payable by Lessee to Lessor hereunder, or (b) Any provision of this Agreement
authorizing Lessee in specified events to deduct from any such rentals, fees or
charges, the reasonable cost to Lessee of performing any obligation or
obligations required by this Agreement to be performed by Lessor.
No waiver or default by Lessor of any of the terms, covenants or conditions
hereof to be performed, kept and observed by Lessee shall be construed to be or
act as
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a waiver of any subsequent default of any of the terms, covenants and
conditions herein contained to be performed, kept and observed by Lessee.
The acceptance of rental by Lessor for any period or periods after a default
of any of the terms, covenants and conditions herein contained to be
performed, kept and observed by Lessee, shall not be deemed a waiver of any
right on the part of Lessor to cancel this Agreement for failure by Lessee to
so perform, keep or observe any of the terms, covenants or conditions of this
Agreement.
ARTICLE XV
CANCELLATION BY LESSEE
Lessee, in addition to any other right of cancellation herein given to
Lessee or any other rights to which Lessee may be entitled by law or otherwise,
may, so long as Lessee is not in default in any payments to Lessor hereunder,
cancel this Agreement by giving Lessor sixty (60) days advance written notice to
be served as hereinafter provided, upon or after the happening of any one of the
following events:
(a) The failure or refusal, for reasons beyond the control of Lessee, of
the FAA, at any time during the term of this Agreement or any renewal thereof,
to permit Lessee to operate into or from the Airport with any type of aircraft
which Lessee may be licensed to operate into or from other airports of like size
and character, and which Lessee may reasonably desire to operate into or from
the Airport;
(b) Issuance by any court of competent jurisdiction of an injunction in
any way substantially preventing or restraining the use of the Airport or any
part thereof necessary for Lessee's operations, and the remaining in force of
such injunction for a period of at least sixty (60) days at least after Lessor
has exhausted or abandoned all appeals;
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(c) The inability of Lessee due to circumstances beyond its control to
use, for a period in excess of ninety (90) days, the Airport or to exercise any
rights and privileges granted to Lessee hereunder and necessary to its
operations because of any law or ordinance, or because of any order, rule,
regulation or other action or any non-action of the FAA or any other
governmental authority, or, because of earthquake, other casualty (excepting
fire) or because of Acts of God or the public enemy;
(d) The default by Lessor in the performance of any covenant or agreement
herein required to be performed by Lessor and the failure of Lessor to remedy
such default for a period of ninety (90) days after receipt from Lessee of
written notice to remedy the same; provided, however, that no notice of
cancellation, as above provided, shall be of any force or effect if Lessor shall
have remedied the default prior to receipt of Lessee's notice of cancellation.
Lessee's performance of all or any part of this Agreement for or during any
period or periods after a default of any of the terms, covenants and conditions
herein contained to be performed, kept and observed by Lessor, shall not be
deemed a waiver of any right on the part of Lessee to cancel this Agreement for
failure by Lessor so to perform, keep or otherwise observe any of the terms,
covenants, or conditions hereof to be performed, kept and observed by Lessor, or
be construed to be or act as a waiver by Lessee of any subsequent default of any
of the terms, covenants and conditions herein contained to be performed, kept
and observed by Lessor.
ARTICLE XVI
SUSPENSION AND ABATEMENT
In the event that Lessor's operation of the Airport or Lessee's operation
at the Airport should be restricted substantially by action of any court of
competent
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jurisdiction or by action of the federal government or any agency thereof, or
by action of the State of Michigan or any agency thereof, then either party
hereto shall have the right, upon written notice to the other, to a
suspension of this Agreement and an abatement of a just proportion of the
services and facilities to be afforded hereunder, or a just proportion of the
payments to become due hereunder, from the time of such notice until such
restriction shall have been remedied and normal operations restored.
Ascertainment of all matters under this Article shall be determined by
agreement or by arbitration as provided in Article XVII hereof.
ARTICLE XVII
ARBITRATION
If any controversy or claim should arise out of, under, or relating to, the
provisions of Articles III or XVI of this Agreement, then either party may by
notice in writing to the other, submit the controversy or claim to arbitration.
The party desiring such arbitration shall give written notice to that effect to
the other party, specifying in said notice the name and address of the person
designated to act as arbitrator on its behalf. Within fifteen (15) days after
the service of such notice, the other party shall give written notice to the
first party specifying the name and address of the person designated to act as
arbitrator on its behalf. The arbitrators thus appointed shall appoint a third
disinterested person of recognized competence in such field, and such three
arbitrators shall as promptly as possible determine the controversy or claim.
If the two arbitrators appointed by the parties shall be unable to agree
upon the appointment of a third arbitrator within fifteen (15) days after the
appointment of the second arbitrator, then within fifteen (15) days thereafter
either of the parties upon written notice to the other party, on behalf of both,
may request the appointment of a
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disinterested person of recognized competence in the field involved as the
third arbitrator by the then chief judge of the United States District Court
for the Eastern District of Michigan, Southern Division, or upon his failure,
refusal or inability to act, may request such appointment by the then
miscellaneous presiding judge of the Circuit Court (Third Judicial Circuit)
of the State of Michigan, County of Wayne, or, upon his failure, refusal or
inability to act, may apply to the Circuit Court (Third Judicial Circuit) of
the State of Michigan, County of Wayne for the appointment of such third
arbitrator, and the other party shall not raise any question as to the
court's full power and jurisdiction to entertain the application and make the
appointment. If none of the parties shall so request such appointment of a
third arbitrator within fifteen (15) days after the expiration of the period
within which the two arbitrators are to appoint a third arbitrator as
hereinabove provided, the rights of each party to arbitrate the matter shall
be deemed to have been waived and either of the parties may proceed to
enforce whatever remedies, legal or otherwise, it may otherwise have.
The decision in which any two of the three arbitrators so appointed and
acting hereunder concur shall in all cases be binding and conclusive upon the
parties. Each party shall pay the fees and expense of the arbitrator appointed
by such party and one-half of the other expense of the arbitration properly
incurred hereunder.
Each of the parties hereto agree that if, in the opinion of the other
party, any separate agreement is required by law in order to effectuate or
enforce the arbitration provisions hereinabove contained, it will execute such
separate agreement provided that the same is not inconsistent with the terms and
provisions of this Agreement.
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ARTICLE XVIII
INDEMNITY
Lessee agrees to indemnify and hold Lessor harmless from and against all
liability for injuries to persons or damage to property caused by Lessee's use
and occupancy of or operations at the Airport; provided, however, that Lessee
shall not be liable for any injury, damage or loss caused by Lessor's sole
negligence or by the joint negligence of Lessor and any person other than
Lessee; and provided further that Lessor shall give to the Lessee prompt and
timely notice of any claim made or suit instituted which in any way, directly or
indirectly, contingently or otherwise, affects or might affect Lessee, and
Lessee shall have the right to compromise and defend the same to the extent of
its own interest.
In addition to the foregoing, Lessee shall indemnify, defend and save
harmless Lessor, its commissioners, officers, agents, representatives and
employees and the County of Wayne from and against any and all lawsuits, claims,
loss and damages of any nature whatsoever, including damage to property of
Lessor and injury to or death of employees or agents of Lessor, arising either
directly or indirectly out of Lessee's use or operation of the passenger loading
bridges, conveyors or any other mechanical or electronic equipment (hereinafter
referred to individually and collectively as the "Equipment") provided by Lessor
for Lessee's use, in common with other airlines, in or adjacent to International
Terminal Building 520 at the Airport; provided, however, that Lessee shall not
be liable for any injury or damage or loss caused by Lessor's sole negligence or
by the joint negligence of Lessor and any person other than Lessee or a
maintenance and repair contractor approved in writing by Lessee. Lessor shall
give to Lessee prompt and timely notice of any claim made or suit instituted
which in any way
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directly or indirectly, contingently or otherwise, affects or might affect
Lessee and Lessee shall have the right to compromise or defend the same.
It is expressly understood and agreed by and between the parties hereto
that Lessor makes no warranty, either expressed or implied, with respect to the
condition, fitness, or safety of the Equipment.
ARTICLE XIX
INSURANCE
Lessee shall, at all times during the term of this Agreement maintain in
effect policies of insurance issued by a company or companies of sound and
adequate financial responsibility, insuring Lessee against all liabilities to
the public for loss resulting from injury to persons or damage to property
arising out of or caused by Lessee's operations, acts or omissions or those of
Lessee's employees, agents or contractors. Such policies shall name the Lessor
as additional assured thereunder, subject to the limitations set forth in
Article XVIII hereof in respect of Lessor's negligence, and shall be in at least
the following amounts:
Aircraft Public Liability Insurance - $ 5,000,000 per person
50,000,000 per accident
Aircraft Property Damage Insurance - $10,000,000 per accident
Comprehensive Public Liability Ins. - $ 5,000,000 per person
10,000,000 per accident
Comprehensive Property Damage Ins. - $ 5,000,000 per accident
Lessee shall furnish to Lessor certificates evidencing such insurance.
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<PAGE>
ARTICLE XX
QUIET ENJOYMENT
Lessor agrees that on payment of the rentals, fees and charges as herein
provided and performance of the covenants and agreements on the part of Lessee
to be performed hereunder, Lessee shall peaceably have and enjoy the leased
premises and all the rights and privileges of the Airport, its appurtenances and
facilities granted herein.
ARTICLE XXI
TITLE TO EQUIPMENT, IMPROVEMENTS
AND FACILITIES ERECTED BY LESSEE
It is agreed that title to any equipment, improvements, and facilities, and
any additions thereto, irrespective of whether the same would otherwise become a
fixture under Michigan law (including without limitation all buildings, hangars,
structures, storage tanks, pipes, pumps, wires, poles, machinery and air-
conditioning equipment), constructed or installed by Lessee upon the premises
leased hereunder to Lessee for its exclusive or preferential use or upon other
Airport property (other than equipment, improvements and facilities financed by
Lessor, whether with the proceeds of Bonds, federal funds or otherwise), shall
remain the property of Lessee, unless it has at any time during the term of this
Agreement by written notice and election, vested title to all or any part
thereof in Lessor. Lessee shall have the right at any time during the term of
this agreement, or any renewal or extension hereof, to remove any or all of such
equipment, improvements and facilities, provided Lessee is not at any such time
in default in its payments to Lessor hereunder and subject further to Lessee's
obligation to repair all damage, if any, reasonable wear and tear excepted,
resulting from such
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<PAGE>
removal. If at any time during this Agreement, Lessee has exercised its
right to vest title to such equipment, improvements and facilities in Lessor,
it shall no longer have the right to remove such property. Lessee agrees to
remove said equipment, improvements and facilities at the expiration or other
termination of this Agreement irrespective of whether it has exercised its
right of election to vest title to the same in Lessor, if so requested by
Lessor, and, upon failure so to do, Lessor shall have the right to remove the
same and charge to Lessee the actual cost of such removal and restoration of
the site to its original condition, ordinary wear and tear excepted. Any
such equipment, improvements or facilities not removed by Lessee prior to the
expiration or other termination of this Agreement shall thereupon become the
property of Lessor.
ARTICLE XXII
SURRENDER OF POSSESSION
Upon the expiration or earlier termination of this Agreement or any renewal
hereof, Lessee shall forthwith surrender possession of the premises in as good
condition as when received, reasonable wear and tear, damage by flood, fire,
earthquake, other casualty, Acts of God or the public enemy, excepted.
ARTICLE XXIII
MINERAL RIGHTS
It is agreed and understood that all water, gas, oil and mineral rights in
and under the soil are expressly reserved to Lessor.
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<PAGE>
ARTICLE XXIV
CONDEMNATION
Upon the acquisition by condemnation or the exercise of the power of
eminent domain under any Federal or state statute by the Federal Government, the
State of Michigan, or any Federal or state agency or any other person vested
with such power, of a temporary or permanent interest in all or any part of the
Airport, including without limitation, the Terminal Buildings leased hereunder,
the Lessor and the Lessee each shall have the right to appear and file claims
for damages, to the extent of their respective interests, in the condemnation or
eminent domain proceedings, to participate in any and all hearings, trials and
appeals therein, and to receive and retain such amount as they may lawfully be
entitled to receive as damages or payment as a result of such acquisition.
ARTICLE XXV
ASSIGNMENT AND SUBLETTING
A. Lessee shall not at any time assign this Agreement or any part hereof,
or sublet any premises now or hereafter leased to Lessee, without the consent in
writing of Lessor, which consent will not be unreasonably withheld; provided,
that the foregoing shall not prevent the assignment of this Agreement to any
corporation with which Lessee may merge or consolidate, or which may succeed to
the business of Lessee. No such subletting, however, shall release Lessee from
its obligations to pay any and all of the rentals, charges, and fees provided or
from any other obligation under this Agreement.
B. Except as provided in Sub-section (2(b)) of Section B of Article III,
Lessor shall not at any time assign this Agreement or any part hereof, or
pledge, sell, convey,
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<PAGE>
mortgage, encumber, assign or otherwise transfer the Airport or any portion
thereof during the term of this Agreement.
ARTICLE XXVI
SUBSIDIARY COMPANIES
The right to use the premises and facilities leased to Lessee under Article
I hereof, or which it may subsequently be entitled to use in accordance with the
exercise of options pursuant to this Agreement, in the manner specified in such
Article and any other Articles of this Agreement, shall be extended to all of
Lessee's subsidiary companies at no additional cost.
ARTICLE XXVII
NOTICES
Notices to Lessor provided for herein shall be sufficient if sent by
registered mail, postage prepaid, addressed to the Director of Airports, Detroit
Metropolitan Wayne County Airport, Detroit, Michigan 48242; and notices to
Lessee, if sent by registered mail, postage prepaid, addressed to Northwest
Airlines, Inc., 5101 Northwest Drive, St. Paul, Minnesota 55511, Attention:
General Counsel, or to such other respective addresses as the parties may
designate to each other in writing from time to time.
ARTICLE XXVIII
DEFINITIONS
"ACE ACCOUNT" shall mean the Airline Capital Expenditure (Subordinate Lien)
Account of the Subordinate Lien Coverage Fund as established pursuant to
Ordinance 319.
"ACTIVITY FEE" shall have the meaning set forth in Article III B.1.
"AGREEMENT" shall mean this First Amended and Restated Airport Agreement.
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<PAGE>
"AIRCRAFT OR OTHER EQUIPMENT OF LESSEE" and "LESSEE'S AIRCRAFT AND OTHER
EQUIPMENT" shall be construed as including airplanes, helicopters and every
other conveyance now or hereafter used for the navigation of or flights in air
and other equipment owned, operated or used by Lessee.
"AIRLINE EQUITY ACCOUNT" shall mean that account as established pursuant to
Ordinance 319.
"AIRLINE EQUITY SUBACCOUNTS" shall mean those subaccounts of the Airline
Equity Accounts as established pursuant to Ordinance 319.
"AIRPORT" shall have the meaning set forth in the first "Whereas" clause of
this Agreement.
"AIRPORT DEVELOPMENT FUND" shall mean that fund created by Lessor pursuant
to Article IIIB.2.(a)(5).
"AIRPORT FOOD CONCESSIONAIRE" shall mean Lessor or a concessionaire of
Lessor authorized to operate a restaurant on the Airport for the purpose of
selling food and beverages to the general public.
"AIRPORT REVENUE BONDS" shall mean Bonds issued pursuant to Ordinance 319.
"AIRPORT-SYSTEM" shall mean the Airport and Willow Run Airport.
"AIR TRANSPORTATION" shall mean the business of transporting natural
persons, property, cargo and mail by aircraft.
"APPROVED MAXIMUM LANDING WEIGHT" for any aircraft shall mean the maximum
landing weight approved by the FAA for landing such aircraft at the Airport.
"BASIC AGREEMENT" shall mean that certain Airport Agreement dated February
26, 1959, as amended, to which Lessor and Lessee were parties as of the
execution of this Agreement.
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<PAGE>
"BONDS" shall mean bonds issued by the Lessor pursuant to the Bond
Ordinance or any other ordinance of the Lessor pursuant to which airport revenue
bonds secured by a pledge of Airport revenue, on a senior or subordinate lien
basis, are issued.
"BOND DEBT SERVICE" shall mean, for any fiscal year, all amounts of any
nature whatsoever payable during such fiscal year under Ordinance 319 into the
Bond Fund (including, but not limited to, the Bond Reserve Account), the
Operation and Maintenance Reserve Fund and the Renewal and Replacement Fund, any
other payment required by Section 604 of Ordinance 319 (including, but not
limited to, amounts required to satisfy Lessor's rate covenant) and all amounts
of any nature whatsoever payable during such fiscal year under any other
ordinance of Lessor pursuant to which Bonds are issued into funds with purposes
similar to the aforementioned Ordinance 319 funds, including coverage payments,
reduced in all cases by an amount equal to any interest payable on Bonds during
such fiscal year from Bond proceeds.
"BOND ORDINANCE" shall mean Ordinance 319 and such other ordinances enacted
and amended from time to time under which Lessor is authorized to issue Bonds.
"BOND RESERVE ACCOUNT" shall mean the fund of such name as established
pursuant to Ordinance 319.
"COMMON AREAS" shall mean those areas of the Airport and the Terminal
Buildings which may be used jointly by the Lessee with other lessees at the
Airport, passengers, patrons, guests, employees, agents, and the general public.
"COUNTY DISCRETIONARY FUND" shall mean the fund of such name as established
pursuant to Ordinance 319.
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<PAGE>
"DATE OF BENEFICIAL OCCUPANCY" shall mean, with regard to any terminal
facility, the date on which an air transportation company occupies such facility
for the operation of its Air Transportation business.
"EXCLUSIVE USE PREMISES" shall mean space, improvements and facilities at
the Airport leased for the exclusive use of an air carrier.
"FAA" shall mean the Federal Aviation Administration, or any successor
agency.
"FINAL AUDIT" shall have the meaning set forth in Article IIIF.5.(b).
"FISCAL YEAR" shall mean December 1 of any year through November 30 of the
following year, or such other fiscal year as Lessor may adopt for the Airport.
"LIMOUSINE OPERATOR", "LIMOUSINE COMPANY" and the plurals thereof, shall
mean persons maintaining a regular ground transportation service for the
transportation of airline passengers to and from the Airport.
"MAJORITY-IN-INTEREST OF THE AIR CARRIERS" shall mean either (i) seventy-
five percent (75%) of the Signatory Airlines who together have landed fifty-one
percent (51%) of the total landed weight of all such Signatory Airlines during
the immediately preceding calendar year (as such weight is reflected by official
Airport records), or (ii) fifty-one percent (51%) of the Signatory Airlines who
have together landed seventy-five percent (75%) of the total landed weight of
all such Signatory Airlines during the immediately preceding calendar year (as
such weight is reflected by official Airport records).
"MIDFIELD TERMINAL" shall have the meaning set forth in the fourth
"Whereas" clause of this Agreement.
"MID-YEAR PROJECTION" shall have the meaning set forth in Article IIIH.4.
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<PAGE>
"O&M EXPENSES" shall mean, for any Fiscal Year, expenses of maintenance,
operation and administration of the Airport for such Fiscal Year.
"OPERATION AND MAINTENANCE RESERVE FUND" shall mean the fund of such name
as established pursuant to Ordinance 319.
"ORDINANCE 319" shall mean that ordinance of Lessor dated July 24, 1986
entitled "Charter County of Wayne Ordinance Number 319," as such ordinance has
been amended or supplemented from time to time.
"PERSONS" shall mean natural persons, firms, corporations, partnerships,
limited liability companies and other legal entities.
"PAID-IN COVERAGE" shall have the meaning set forth in Article IIB.2.(a).
"PFCS" shall mean passenger facility charges imposed by Lessor pursuant to
the Aviation and Safety Capacity Expansion Act of 1990, Pub. L. 101-508, Title
IX, Subtitle B, Sections 9110 and 911, recodified as 49 U.S.C. 40117, as amended
from time to time, and Part 158 of the Federal Aviation Regulations (14 CFR Part
158), as amended from time to time.
"PRODUCER PRICE INDEX" shall mean the Producer Price Index/All Commodities
published by The United States Department of Labor, Bureau of Labor Statistics
(January, 1996 = 100), or if such index is discontinued or otherwise becomes
unavailable to the public, the most nearly comparable index published by a
recognized financial institution, financial publication or university.
"PROJECT DEVELOPMENT AGREEMENT" shall mean the Project Development
Agreement of even date herewith, between Lessor and Lessee.
"PROJECTION" shall have the meaning set forth in Article IIIH.2.
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<PAGE>
"RENEWAL AND REPLACEMENT FUND" shall mean the fund of such name as
established pursuant to Ordinance 319.
"RESERVE FUND" shall mean the fund of such name as established pursuant to
Ordinance 319.
"REVENUE FUND" shall mean the fund of such name as established pursuant to
Ordinance 319.
"REVENUE REQUIREMENT" shall have the meaning set forth in Article IIIB.1.
"SIGNATORY AIRLINES" shall mean Lessee and those air carriers who have
executed an agreement substantially similar to the Basic Agreement.
"SPECIAL FACILITY REVENUES" shall have the meaning for such term set forth
in Ordinance 319.
"SPECIAL FACILITY REVENUE BOND" shall mean a bond of Lessor secured solely
by Special Facility Revenues.
"SUBORDINATE BOND RESERVE ACCOUNT" shall mean the account of such name as
established pursuant to Ordinance 319.
"SUBSIDIARY" shall mean any corporation of which the Lessee at the time
owns or controls, directly or indirectly, more than fifty (50) per cent of the
shares of stock having general voting power under ordinary circumstances to
elect a majority of the board of directors, managers or trustees of such
corporation.
"TERMINAL BUILDINGS" shall mean the terminal buildings at the Airport as of
the effectiveness of this Agreement.
"WEIGHTED MAJORITY" shall mean either (a) Signatory Airlines which, in the
aggregate, landed eighty-five percent (85%) or more of the landed weight of all
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<PAGE>
Signatory Airlines for the preceding twelve-month period for which records are
available, or (b) all but one of the Signatory Airlines regardless of landed
weight.
ARTICLE XXIX
PARAGRAPH HEADINGS
The paragraph headings contained herein are for convenience in reference
and are not intended to define or limit the scope of any provision of this
Agreement.
ARTICLE XXX
INVALID PROVISION
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 shall in no way affect any other covenant,
condition or provision herein contained; provided that the invalidity of any
such covenant, condition of provision does not materially prejudice either
Lessor or Lessee in its respective rights and obligations contained in the valid
covenants, conditions or provisions of this Agreement.
ARTICLE XXXI
SUCCESSORS AND ASSIGNS BOUND BY COVENANTS
All the covenants, stipulations and agreements in this Agreement shall
extend to and bind the legal representatives, successors and assigns of the
respective parties hereto.
ARTICLE XXXII
RIGHT TO LEASE TO UNITED STATES GOVERNMENT
It is agreed that during time of war or national emergency the Lessor shall
have the right to lease the landing area or any part thereof to the United
States Government
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<PAGE>
for military or naval use, and, if any such lease is executed, the provisions
of this instrument insofar as they are inconsistent with the provisions of
the lease to the Government shall be suspended.
It is agreed that this lease shall be subordinate to the provisions of any
existing or future agreement between the Lessor and the United States, relative
to the operation or maintenance of the Airport, the execution of which has been
or may be required as a condition precedent to the expenditure of Federal funds
for the development of the Airport.
ARTICLE XXXIII
COVENANTS AGAINST DISCRIMINATION
A. COVENANT PURSUANT TO REQUIREMENTS OF THE DEPARTMENT OF TRANSPORTATION:
Lessee, for itself, its personal representatives, successors in interest, and
assigns, as a part of the consideration hereof, does hereby covenant and agree
as a covenant running with the land, that (1) no person on the grounds of race,
color, national origin or gender shall be excluded from participation in, denied
the benefits of, or be otherwise subjected to discrimination in the use of
facilities at the Airport, (2) that in the construction of any improvements on,
over, or under land at the Airport and the furnishing of services thereon, no
person on the grounds of race, color, national origin or gender shall be
excluded from participation in, denied the benefits of, or otherwise be
subjected to discrimination, (3) that Lessee shall use the premises in
compliance with all other requirements imposed by or pursuant to Title 49, Code
of Federal Regulations, Department of Transportation, Subtitle A, Office of the
Secretary, Part 21, Nondiscrimination in Federally-assisted Programs of the
Department of
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<PAGE>
Transportation -Effectuation of Title VI of the Civil Rights Act of 1964, and
as said Regulations may be amended.
In the event of a breach of any of the above non-discrimination covenants,
Lessor shall have the right to terminate this agreement and to reenter and
repossess said land and the facilities thereon, and hold the same as if said
agreement had never been made or issued.
B. EMPLOYMENT: The parties hereto hereby covenant not to discriminate
against an employee or applicant for employment with respect to his or her hire,
tenure, terms, conditions or privileges of employment, or any matter directly or
indirectly related to employment, because of his or her age or sex, except where
based on a bona fide occupational qualification, or because of his or her race,
color, religion, national origin or ancestry, and to require a similar covenant
on the part of any sublessee hereunder and any subcontractor employed as a
result, or in connection with the exercise of rights granted and/or the
performance of obligations assumed under this Agreement.
C. AFFIRMATIVE ACTION PROGRAM: In addition to the foregoing, the parties
hereto agree to carry out and be subject to the provisions of Addendum 1,
entitled "NON-DISCRIMINATION, AFFIRMATIVE ACTION AND SET ASIDE PROGRAMS FOR
WAYNE COUNTY" attached hereto and made a part hereof.
D. DISADVANTAGED BUSINESS ENTERPRISE: Lessee agrees to comply with the
following policy and requirements of the Department of Transportation:
1. POLICY. It is the policy of the Department of Transportation
that disadvantaged business enterprises as defined in 49 CFR Part 23
shall have the maximum opportunity to participate in the performance
of
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<PAGE>
contracts financed in whole or in part with Federal funds under
this Agreement. Consequently the disadvantaged business enterprise
requirements of 49 CFR Part 23 apply to this Agreement.
2. DBE OBLIGATION. (i) The recipient or its contractor agrees to
ensure that disadvantaged business enterprises as defined in 49 CFR
Part 23 have the maximum opportunity to participate in the performance
of contracts and subcontracts financed in whole or in part with
Federal funds provided under this Agreement. In this regard all
recipients or contractors shall take all necessary and reasonable
steps in accordance with 49 CFR Part 23 to ensure that disadvantaged
business enterprises have the maximum opportunity to compete for and
perform contracts. Recipients and their contractors shall not
discriminate on the basis of race, color, national origin, or sex in
the award and performance of Department of Transportation-assisted
contracts.
Failure of a contractor or subcontractor to carry out the
requirements set forth in paragraph 23.43(a) of 49 CFR Part 23 shall
constitute a breach of contract and, after notification of the
Department of Transportation, may result in termination of the
Agreement or contract by the recipient or such remedy as the recipient
deems appropriate.
The definitions set forth in paragraph 23.5 of 49 CFR Part 23
shall apply to the foregoing statements concerning disadvantaged
business enterprises.
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<PAGE>
ARTICLE XXXIV
CONFORMITY OF AGREEMENT
In the event that Lessor shall hereafter enter into any lease, contract or
agreement with any other scheduled air transport operator, with respect to the
use of the Airport or terminal facilities, containing more favorable terms than
this Agreement, or shall hereafter grant to any other scheduled air transport
operator, rights or privileges with respect thereto which are not accorded to
Lessee hereunder, then the same rights, privileges and more favorable terms
shall be concurrently and automatically made available to Lessee.
COUNTY OF WAYNE
CHIEF EXECUTIVE OFFICER
/s/ Edward H. McNamara
-------------------------------------
Edward H. McNamara
NORTHWEST AIRLINES, INC.
By /s/ James M. Greenwald, VP
-----------------------------------
JAMES M. GREENWALD, VP
Its FACILITIES AND AIRPORT AFFAIRS
-----------------------------------
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<PAGE>
EXHIBIT A
EXISTING AIRPORT LAYOUT PLAN
[Site Plan]
<PAGE>
DAVEY TERMINAL
MAIN LEVEL - NORTH PORTION
[Site Plan]
EXHIBIT # NWA-1
DATE 1-1-1996
<PAGE>
DAVEY TERMINAL
APRON LEVEL - CENTRAL PORTION
[Site Plan]
EXHIBIT # NWA-2
DATE 1-1-1996
<PAGE>
DAVEY TERMINAL
APRON LEVEL - NORTH PORTION
[Site Plan]
EXHIBIT # NWA-3
DATE 1-1-1996
<PAGE>
DAVEY TERMINAL
MEZZANINE LEVEL
[Site Plan]
EXHIBIT # NWA-4
DATE 1-1-1996
<PAGE>
DAVEY TERMINAL
MAIN LEVEL - NORTH PORTION
[Site Plan]
EXHIBIT # NWA-5
DATE 1-1-1996
<PAGE>
DAVEY TERMINAL
APRON LEVEL - SOUTH PORTION
[Site Plan]
EXHIBIT # NWA-6
DATE 1-1-1996
<PAGE>
CONCOURSE A - MAIN LEVEL
[Site Plan]
EXHIBIT # NWA-7
DATE 1-1-1996
<PAGE>
CONCOURSE B - MAIN LEVEL
[Site Plan]
EXHIBIT # NWA-8
DATE 1-1-1996
<PAGE>
CONCOURSE B - APRON LEVEL
[Site Plan]
EXHIBIT # NWA-9
DATE 1-1-1996
<PAGE>
CONCOURSE 'C'
MAIN LEVEL - SOUTH EXPANSION
[Site Plan]
EXHIBIT # NWA-10
DATE 1-1-1996
<PAGE>
CONCOURSE C
APRON LEVEL - SOUTH EXPANSION PORTION
[Site Plan]
EXHIBIT # NWA-11
DATE 1-1-1996
<PAGE>
CONCOURSE C
MAIN LEVEL - SOUTHWEST PORTION
[Site Plan]
EXHIBIT # NWA-12
DATE 1-1-1996
<PAGE>
CONCOURSE C
APRON LEVEL - SOUTHWEST PORTION
[Site Plan]
EXHIBIT # NWA-13
DATE 1-1-1996
<PAGE>
L.C. SMITH TERMINAL
MAIN LEVEL - CENTRAL PORTION
[Site Plan]
EXHIBIT # NWA-14
DATE 1-1-1996
<PAGE>
L.C. SMITH TERMINAL
APRON LEVEL - NORTHWEST PORTION
[Site Plan]
EXHIBIT # NWA-15
DATE 1-1-1996
<PAGE>
CONCOURSE C - MAIN LEVEL
[Site Plan]
EXHIBIT # NWA-16
DATE 1-1-1996
<PAGE>
CONCOURSE C
APRON LEVEL - SOUTHWEST PORTION
[Site Plan]
EXHIBIT # NWA-17
DATE 1-1-1996
<PAGE>
CONCOURSE D - MAIN LEVEL
[Site Plan]
EXHIBIT # NWA-18
DATE 1-1-1996
<PAGE>
CONCOURSE D - APRON LEVEL
[Site Plan]
EXHIBIT # NWA-19
DATE 1-1-1996
<PAGE>
CONCOURSE: E - MAIN LEVEL
[Site Plan]
EXHIBIT # NWA-20
DATE 1-1-1996
<PAGE>
CONCOURSE E - APRON LEVEL
[Site Plan]
EXHIBIT # NWA-21
DATE 1-1-1996
<PAGE>
CONCOURSE F - MAIN LEVEL
[Site Plan]
EXHIBIT # NWA-22
DATE 1-1-1996
<PAGE>
CONCOURSE F - APRON LEVEL
[Site Plan]
EXHIBIT # NWA-23
DATE 1-1-1996
<PAGE>
CONCOURSE F - TUNNEL LEVEL
[Site Plan]
EXHIBIT # NWA-24
DATE 1-1-1996
<PAGE>
CONCOURSE G
APRON LEVEL - NORTH PORTION
[Site Plan]
EXHIBIT # NWA-25
DATE 1-1-1996
<PAGE>
CENTRAL SERVICES - MAIN LEVEL
[Site Plan]
EXHIBIT # NWA-26
DATE 1-1-1996
<PAGE>
CENTRAL SERVICES - APRON LEVEL (SOUTH)
[Site Plan]
EXHIBIT # NWA-27
DATE 1-1-1996
<PAGE>
INTERNATIONAL TERMINAL
APRON LEVEL - SOUTH PORTION
[Site Plan]
EXHIBIT # NWA-28
DATE 1-1-1996
<PAGE>
INTERNATIONAL TERMINAL
MEZZANINE LEVEL
[Site Plan]
EXHIBIT # NWA-29
DATE 1-1-1996
<PAGE>
MAIN LEVEL - BUS STOP (NWA)
[Site Plan]
EXHIBIT # NWA-30
DATE 7-1-1996
<PAGE>
APRON LEVEL BUS STOP
[Site Plan]
EXHIBIT # NWA-31
DATE 7-1-1996
<PAGE>
EXHIBIT B
Corporation Counsel Staff Assigned To
Detroit Metropolitan Airport
Position Description Salary
- -------- ----------- ------
9979 Principal Attorney $ 89,355
9976 Asst. Corp. Counsel $ 70,836
Attorney IV
9913 Asst. Corp. Counsel $ 58,909
Attorney III
Total Salaries $ 219,100
Fringe Benefits @ 59.47% $ 130,299
---------
Total Salaries & Fringe Benefits $ 349,399
The above positions are assigned to the Airport on a full-time basis.
<PAGE>
AIRPORT FINANCE OFFICE
996 SALARIES AND FRINGE INFORMATION
POSITION # CLASSIFICATION SALARY
---------- -------------- ------
66900 Dept Mgr 7 $ 57,967
66901 Dept Exec 6 67,244
66903 Buyer 2 32,249
66904 Dept Mgr 1 35,967
66905 Account Clerk 2 29,308
66907 Dept Mgr 3 39,555
66908 Clerical Leader 25,736
66909 Accountant 3 34,304
66910 Typist 3 20,303
66912 Clerical Leader 28,716
---------
TOTAL $ 371,349
FRINGES $ 220,841
The above positions are assigned to the Airport on a full-time basis.
<PAGE>
SECOND AMENDED AND RESTATED AIRPORT AGREEMENT
BETWEEN
THE CHARTER COUNTY OF WAYNE, MICHIGAN
AND
NORTHWEST AIRLINES, INC.
DATED AS OF OCTOBER 10, 1996
<PAGE>
TABLE OF CONTENTS
PAGE(S)
ARTICLE I PREMISES. . . . . . . . . . . . . . . . . . . . . . . . . 2
A. Use of Airport . . . . . . . . . . . . . . . . . . . . . . . . 2
B. Lease of Space . . . . . . . . . . . . . . . . . . . . . . . . 7
1. Exclusive Existing Terminal Space . . . . . . . . . . . . 7
2. Exclusive Midfield Terminal Space . . . . . . . . . . . . 8
3. Preferential Midfield Terminal Space. . . . . . . . . . . 9
4. Joint Use Midfield Space. . . . . . . . . . . . . . . . . 16
5. Common Use Midfield Terminal Space. . . . . . . . . . . . 16
C. Public Space . . . . . . . . . . . . . . . . . . . . . . . . . 17
D. Parking Space. . . . . . . . . . . . . . . . . . . . . . . . . 17
E. Right of Ingress and Egress. . . . . . . . . . . . . . . . . . 17
F. Fuel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE II TERM. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE III RENTALS AND FEES. . . . . . . . . . . . . . . . . . . . . 19
A. Rentals with Respect to Terminal Facilities. . . . . . . . . . 19
1. Exclusive Existing Terminal Space . . . . . . . . . . . . 20
2. Lessee's Exclusive Midfield Terminal Space and
Lessee's Preferential Midfield Terminal Space . . . . . . 20
3. Lessee's Joint Use Midfield Terminal Space. . . . . . . . 24
4. Common Use Midfield Terminal Space. . . . . . . . . . . . 26
B. Activity Fees and Capital Expenditures . . . . . . . . . . . . 29
1. Activity Fees . . . . . . . . . . . . . . . . . . . . . . 29
-i-
<PAGE>
TABLE OF CONTENTS (CONT'D)
PAGE(S)
2. Lessor Covenants; Capital Expenditures. . . . . . . . . . 32
C. Charges for Electrical Current . . . . . . . . . . . . . . . . 37
D. Charges for Water and Sewerage Facilities. . . . . . . . . . . 38
E. Continuing Rental Obligation . . . . . . . . . . . . . . . . . 39
F. Payment of Rentals and Activity Fees . . . . . . . . . . . . . 41
1. Information on Lessee Operations. . . . . . . . . . . . . 41
2. Projection of Rentals and Activity Fees . . . . . . . . . 41
3. Payment of Rentals and Activity Fees. . . . . . . . . . . 42
4. Adjustment of Rentals and Activity Fees . . . . . . . . . 43
5. Preliminary Annual Settlement and Final Audit . . . . . . 44
G. Supplemental Capital Cost Payments . . . . . . . . . . . . . . 46
ARTICLE IV [Intentionally Omitted] . . . . . . . . . . . . . . . . . 46
ARTICLE V CONSTRUCTION, MAINTENANCE, REPAIR AND
OPERATION BY LESSEE . . . . . . . . . . . . . . . . . . . 47
ARTICLE VI RIGHT OF ENTRY BY LESSOR. . . . . . . . . . . . . . . . . 49
ARTICLE VII MAINTENANCE, OPERATION AND REPAIR
BY LESSOR . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE VIII UTILITY SERVICES. . . . . . . . . . . . . . . . . . . . . 53
ARTICLE IX SPACE FOR UNITED STATES WEATHER BUREAU, POSTAL
SERVICE, FEDERAL AVIATION ADMINISTRATION, AND
EXPRESS AGENCIES. . . . . . . . . . . . . . . . . . . . . 53
ARTICLE X RESTAURANT. . . . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE XI RULES AND REGULATIONS . . . . . . . . . . . . . . . . . . 54
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TABLE OF CONTENTS (CONT'D)
PAGE(S)
ARTICLE XII CONTROL OF RATES, FARES OR CHARGES. . . . . . . . . . . . 55
ARTICLE XIII DAMAGE OR DESTRUCTION OF PREMISES . . . . . . . . . . . . 55
ARTICLE XIV CANCELLATION BY LESSOR. . . . . . . . . . . . . . . . . . 56
ARTICLE XV CANCELLATION BY LESSEE. . . . . . . . . . . . . . . . . . 58
ARTICLE XVI SUSPENSION AND ABATEMENT. . . . . . . . . . . . . . . . . 60
ARTICLE XVII ARBITRATION . . . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE XVIII INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE XIX INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE XX QUIET ENJOYMENT . . . . . . . . . . . . . . . . . . . . . 63
ARTICLE XXI TITLE TO EQUIPMENT, IMPROVEMENTS AND
FACILITIES ERECTED BY LESSEE. . . . . . . . . . . . . . . 63
ARTICLE XXII SURRENDER OF POSSESSION . . . . . . . . . . . . . . . . . 65
ARTICLE XXIII MINERAL RIGHTS. . . . . . . . . . . . . . . . . . . . . . 65
ARTICLE XXIV CONDEMNATION. . . . . . . . . . . . . . . . . . . . . . . 65
ARTICLE XXV ASSIGNMENT AND SUBLETTING . . . . . . . . . . . . . . . . 66
ARTICLE XXVI SUBSIDIARY COMPANIES. . . . . . . . . . . . . . . . . . . 66
ARTICLE XXVII NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . 67
ARTICLE XXVIII DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . 67
ARTICLE XXIX PARAGRAPH HEADINGS. . . . . . . . . . . . . . . . . . . . 75
ARTICLE XXX INVALID PROVISION . . . . . . . . . . . . . . . . . . . . 75
ARTICLE XXXI SUCCESSORS AND ASSIGNS BOUND
BY COVENANTS. . . . . . . . . . . . . . . . . . . . . . . 76
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TABLE OF CONTENTS (CONT'D)
PAGE(S)
ARTICLE XXXII RIGHT TO LEASE TO UNITED STATES
GOVERNMENT. . . . . . . . . . . . . . . . . . . . . . . . 76
ARTICLE XXXIII COVENANTS AGAINST DISCRIMINATION. . . . . . . . . . . . . 76
A. Covenant Pursuant to Requirements of the
Department of Transportation . . . . . . . . . . . . . . . . . 76
B. Employment . . . . . . . . . . . . . . . . . . . . . . . . . . 77
C. Affirmative Action Program . . . . . . . . . . . . . . . . . . 78
D. Disadvantaged Business Enterprise. . . . . . . . . . . . . . . 78
ARTICLE XXXIV CONFORMITY OF AGREEMENT . . . . . . . . . . . . . . . . . 79
EXHIBITS
Exhibit A Airport
Exhibit B [Intentionally Omitted]
Exhibit C Lessee's Exclusive Existing Terminal Space
Exhibit D Lessee's Midfield Terminal Space
Exhibit E Allocation of Bond Debt Service
Exhibit F O & M Expense Allocation
Exhibit G Capital Improvement Program
Exhibit H Certain Airport Positions and Renumeration
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NORTHWEST AIRLINES, INC.
SECOND AMENDED AND RESTATED
AIRPORT AGREEMENT
This Second Amended and Restated Airport Agreement (this "Agreement") made
and entered into this 10th day of October, 1996, by and between the County of
Wayne, a Michigan Charter County, by and through its Chief Executive Officer,
with principal offices located at 600 Randolph Street, Detroit, Michigan 48226,
hereinafter referred to as "Lessor", and Northwest Airlines, Inc., a Minnesota
corporation, with principal offices located at 2700 Lone Oak Parkway, Eagan,
Minnesota 55121 hereinafter referred to as "Lessee". Capitalized terms shall
have the meanings set forth in Article XXVIII hereof.
Witnesseth:
WHEREAS, Lessor owns and operates Detroit Metropolitan Wayne County Airport
(the "Airport"), said airport being more fully described in EXHIBIT A attached
hereto and hereby made a part hereof, with the power to lease premises and
facilities and to grant rights and privileges with respect thereto pursuant to
the provisions of the Aeronautics Code of the State of Michigan; and
WHEREAS, Lessee is engaged in the Air Transportation business; and
WHEREAS, Lessor and Lessee are parties to the Basic Agreement, pursuant to
which Lessee leases certain premises, facilities, rights, licenses, services and
privileges with and on the Airport; and
<PAGE>
WHEREAS, Lessor and Lessee are parties to the Project Development
Agreement, under which certain new midfield terminal facilities at the Airport
which are described (the "Midfield Terminal") are to be designed and
constructed; and
WHEREAS, simultaneously with the execution of this Agreement, Lessor and
Lessee are entering into a First Amended and Restated Airport Agreement (the
"First Amended and Restated Airport Agreement"), which amends and restates the
Basic Agreement and which shall be effective until the Date of Beneficial
Occupancy of the Midfield Terminal;
WHEREAS, this Agreement shall become effective upon the Date of Beneficial
Occupancy of the Midfield Terminal, and at such time shall amend and restate,
and supersede in all respects, the First Amended and Restated Airport Agreement;
NOW, THEREFORE, for and in consideration of the premises and of the mutual
covenants and agreements herein contained, and other valuable considerations, as
of the effectiveness of this Agreement Lessor does hereby grant, demise and let
unto Lessee and Lessee does hereby hire and take from Lessor, certain premises
and facilities, rights, licenses, services and privileges hereinafter described
in connection with and upon the Airport.
ARTICLE I
PREMISES
A. USE OF AIRPORT: In common with others so authorized, Lessee shall have the
use of the common areas of the Airport and its appurtenances, together with all
facilities, equipment, improvements and services which have been, or may
hereafter be, provided at or in connection with the Airport from time to time,
including, without limiting the generality hereof and subject to the rules and
regulations of Lessor
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promulgated in accordance with Article XI hereof, the landing field and any
extensions thereof or additions thereto, passenger and cargo ramp areas and
facilities, aircraft parking areas and facilities, roadways, runways, aprons,
taxiways, sewage and water facilities, floodlights, landing lights, beacons,
control tower, signals, radio aids, and all other conveniences for flying,
landings and take-offs of aircraft of Lessee, which use, without limiting the
generality hereof, shall include:
1. The right to operate thereat and therefrom a transportation system by
aircraft for the carriage of persons, property, cargo and mail;
2. The right to repair, maintain, condition, service, test, park or store
aircraft or other equipment of Lessee, or of any other scheduled air
transportation company, or aircraft of the U.S. Armed Forces or the FAA
within such areas as are designated by Lessor; provided, that such right
shall not be construed as authorizing the conduct of a separate business by
Lessee, but shall permit Lessee to perform such functions as an incident to
its conduct of Air Transportation;
3. The right to train, subject to rules and regulations as promulgated
under Article XI hereof, on the Airport, personnel in the employ of or to
be employed by Lessee or any scheduled air transportation company, or of
the U.S. Armed Forces, or of the FAA, provided, that such right shall not
be construed as authorizing the conduct of a separate business by Lessee,
but shall permit Lessee to perform such functions as an incident to its
conduct of Air Transportation;
4. The right to sell, dispose of or exchange Lessee's aircraft, engines,
accessories, supplies or other personal property; provided, that such right
shall not be construed as authorizing the conduct of a separate business by
Lessee,
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but shall permit such sales as an incident to its conduct of Air
Transportation or accommodation to others engaged therein;
5. The right, subject to the terms and conditions hereof, to purchase or
otherwise obtain personal property of any nature (including aircraft,
engines, accessories, gasoline, oil, greases, lubricants, other fuel or
propellant, food, beverages, other equipment and supplies and any articles
or goods) reasonably necessary or convenient for its operations, from any
supplier of its choice;
6. The right to service, by Lessee or others selected by Lessee, Lessee's
aircraft or other equipment by truck or otherwise, with gasoline, oil,
greases, lubricants, or any other fuel or propellant or other supplies,
required by Lessee; such right to include, without limiting the generality
thereof, the right to install and maintain on the Airport, separately or in
common with others, appropriate pipes (including a pipeline or lines
between Lessee's sources of supply and its storage facilities for gasoline,
oil, greases, lubricants or other fuel or propellant and from such storage
facilities to the point or points of servicing), pumps, motors, filters and
other appurtenances incidental to the use thereof, either through
construction and maintenance by Lessee or by a nominee of Lessee in
accordance with plans and specifications therefor approved by Lessor;
provided, however, that Lessor shall not be responsible for the cost of
excavation, construction, installation and maintenance of any such storage
facilities, pipes or pipelines, pumps, motors, filters or other
appurtenances;
7. The right to land, take-off, fly, taxi, tow, park, load, and unload
Lessee's aircraft and other equipment used in the operation of schedule,
shuttle, courtesy,
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<PAGE>
test, training, inspection, emergency, special, charter, sightseeing and
other flights;
8. The right to transfer, load and unload persons, cargo, property and
mail to, from and at the Airport by such loading and unloading devices,
motor cars, buses, trucks or other means of conveyance as Lessee may choose
or require in the operation of its Air Transportation system; with the non-
exclusive right to designate and enter into arrangements with any carrier
or carriers of its choice to transport to and from the Airport, passengers
and their baggage, cargo, property and mail carried or to be carried by air
by Lessee provided that with respect to passengers, Lessee shall not enter
into arrangements with a carrier for transportation to or from the Airport
except for such period or periods during which there is no satisfactory
ground transportation service provided by bus or limousine operator
selected by the Lessor;
9. The right to install, maintain and operate, without cost to Lessor, by
Lessee alone, or in conjunction with any other air transportation companies
who are lessees at the Airport, or through a nominee, a message tube system
and other communication systems between suitable locations in the aircraft
loading areas and suitable locations in or about Lessee's hangar, and
between any or all of said locations and Lessee's offices;
10. The right to install, maintain and operate, without cost to Lessor, by
Lessee alone, or in conjunction with any other air transportation companies
that are lessees at the Airport, or through a nominee, suitable aircraft
air-conditioning equipment, including, but not limited to, trucks, or a
suitable airplane air-conditioning system in the loading area.
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<PAGE>
11. The right to provide in any hangar or other non-public space
exclusively or preferentially leased by Lessee without cost to Lessor, by
Lessee alone, a subsidiary of Lessee or by contract with a supplier or
caterer, foods and beverages for consumption by employees and occasional
invitees of Lessee on such premises for business purposes. Without
limiting the generality of the foregoing, said right shall include the
right to install, maintain, and operate, or cause to be installed,
maintained and operated without cost to Lessor, in any hangar on premises
leased to Lessee for its exclusive use at the Airport, a cafeteria,
restaurant or other plant for the purpose of preparing, cooking, and
dispensing of foods and beverages for consumption as aforesaid;
12. The right to provide, without cost to Lessor, by Lessee alone, a
subsidiary of Lessee, or by contract with a supplier or caterer of its
choice, food and beverages for consumption on aircraft of Lessee; provided,
however, that if Lessee shall purchase such foods and beverages by contract
with a supplier or caterer other than the Airport food concessionaire,
Lessee shall require such supplier or caterer, other than its wholly-owned
subsidiary, to pay to Lessor the same percentage commission as would be
paid to Lessor by the Airport food concessionaire;
13. The right to install and operate, at Lessee's expense, a reasonable
number and type of company identification signs, subject to the right of
Lessor to approve the same as to type and location;
14. The right to install, maintain and operate, at Lessee's expense, by
Lessee alone, or in conjunction with any other air transportation companies
who are lessees at the Airport, or through a nominee, such radio
communications,
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<PAGE>
meteorological and aerial navigation equipment and facilities in or on
premises leased exclusively to Lessee, and, subject to the approval of
Lessor's Airport manager with respect to location of installation,
elsewhere on the Airport as may be necessary or convenient in the opinion
of Lessee for its operations; provided, however, that such approval shall
not be withheld unless such installation, maintenance and operation at the
location selected by Lessee shall interfere with the reasonable use of the
Airport by other authorized persons;
15. The right to conduct operations or activities other than those
enumerated in Subparagraphs (1) to (14), inclusive, of this paragraph,
reasonably related to the landing, taking off, flying, moving, loading,
unloading, or servicing of aircraft which are reasonably necessary or
convenient to the conduct by it of Air Transportation; provided, however,
that all such other operations and activities shall be subject to the
approval of the Lessor.
B. LEASE OF SPACE:
1. EXCLUSIVE EXISTING TERMINAL SPACE. As of the effectiveness of this
Agreement, Lessor leases to Lessee, and grants to Lessee, its employees,
agents, guests, patrons and invitees, the exclusive use of the Exclusive
Existing Terminal Space identified on EXHIBIT C attached hereto
(hereinafter referred to as "Lessee's Exclusive Existing Terminal Space");
provided that, as of the effectiveness of this Agreement, EXHIBIT C shall
be amended, if necessary, to delete any space which is reflected on EXHIBIT
C but which is not then leased to Lessee in the Existing Terminal
Facilities for its Air Transportation business and to add any space that is
then leased to Lessee in the Existing Terminal Facilities for its Air
Transportation business that is not then included on EXHIBIT C. As
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<PAGE>
promptly as possible after the commencement of Lessee's Air Transportation
business in the Midfield Terminal, but in any event not more than 60 days
after such commencement, Lessee shall vacate Lessee's Exclusive Existing
Terminal Space, and the lease hereunder of Lessee's Exclusive Existing
Terminal Space shall terminate upon the later of (x) the earlier of the
date Lessee vacates such space, and the date 60 days after such
commencement and (y) the date on which the Northwest Demolition Project (as
defined in the Project Development Agreement) shall have been completed.
Lessee and Lessor shall cooperate with one another in the transfer of
Lessee's Air Transportation activities to the Midfield Terminal so as to
(a) minimize the cost to Lessee and the inconvenience to Lessee and its
passengers, (b) facilitate the relocation of other air carriers within the
Existing Terminal Facilities and the renovation of space within the
Existing Terminal Facilities, and (c) facilitate the demolition of the
space in the Existing Terminal Facilities scheduled for demolition in
accordance with the Project Development Agreement (hereinafter referred to
as "Lessee's Existing Terminal Space To Be Demolished").
2. EXCLUSIVE MIDFIELD TERMINAL SPACE. At such time as such space is
available for beneficial occupancy, as evidenced by written notice thereof
from Lessor to Lessee, Lessor leases to Lessee, and grants to Lessee, its
employees, agents, guests, patrons and invitees, the exclusive use of the
Exclusive Midfield Terminal Space generally identified on EXHIBIT D
attached hereto (hereinafter referred to as "Lessee's Exclusive Midfield
Terminal Space"). Prior to commencement of Lessee's Air Transportation
business in the Midfield
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<PAGE>
Terminal, an updated and revised EXHIBIT D agreed to by both
parties shall be attached to this Agreement.
3. PREFERENTIAL MIDFIELD TERMINAL SPACE.
(a) At such time as such space is available for beneficial
occupancy, Lessor grants to Lessee, its employees, agents, guests,
patrons and invitees, the preferential use of space, improvements and
facilities in the Midfield Terminal consisting of the Preferential
Midfield Terminal Space generally identified on EXHIBIT D attached
hereto (hereinafter referred to as "Lessee's Preferential Midfield
Terminal Space"). Prior to commencement of Lessee's Air
Transportation business in the Midfield Terminal, an updated and
revised EXHIBIT D agreed to by both parties shall be attached to this
Agreement. Lessee shall have the right to permit its code share
partners and commuter carriers to have access to Lessee's Preferential
Midfield Terminal Space.
(b) Preferential Midfield Terminal Space shall be available to Lessee
in accordance with the following preferential use provisions:
(i) Lessee shall have priority in using such space, subject to
the provisions of subsection (iii) below. In addition, Lessor hereby
grants to Lessee, and Lessee hereby accepts from Lessor, for so long
as Lessee leases the premises preferentially leased pursuant to
Article IB.3.(a), the preferential right to use the aircraft parking
positions adjacent to such preferentially leased premises, as shown on
EXHIBIT D, for the parking of aircraft and support vehicles and the
loading and unloading of passengers and cargo.
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(ii) Lessor intends to maintain a policy of providing open
access to the Airport and achieving a balanced utilization of Airport
facilities. To achieve that goal, Lessor reserves the right to
require shared use of Preferential Use Premises as described in
subsection (iii) below.
(iii) (A) If an airline, including any airline seeking to
expand its service or an airline seeking entry into the Airport, is
in need of space or facilities at the Airport after the Date of
Beneficial Occupancy of the Midfield Terminal, which need cannot be
met by use of then unleased premises, if any, in the Existing Terminal
Facilities or expansions thereto, Lessor shall direct such airline to
request the use of leased space or facilities of all Signatory
Airlines on a voluntary basis. Lessee and the other Signatory Airlines
shall make reasonable efforts to accommodate such requests in a timely
manner from any Preferential Use Premises leased to them.
(B) In the event (I) Lessor receives a written request
from an airline requesting space or facilities of a type granted to
Signatory Airlines on a preferential use basis, (II) the requesting
airline demonstrates to Lessor that it has contacted all Signatory
Airlines and has exhausted all reasonable efforts to find reasonable
accommodation for its proposed operations and the space or facilities
it needs, and (III) Lessor determines that (x) such requesting airline
needs the requested space or facilities to accommodate passengers or
aircraft and (y) Lessor cannot provide such space or facilities to
such airline on a timely basis, then Lessor may grant such requesting
airline the right of temporary or shared use of a
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<PAGE>
designated portion of Lessee's Preferential Midfield Terminal Space,
including, but not limited to, the use of passenger loading bridges
and other appurtenant equipment which are reasonably necessary for the
effective use of such space, whether owned by the Lessee or the
Lessor, as well as the aircraft parking positions adjacent to such
space.
(C) In the event Lessor determines that a requesting
airline's needs require granting such requesting airline the right to
share or temporarily use Preferential Use Premises, Lessor shall serve
written notice to all Signatory Airlines of that determination and
notice of Lessor's intention to make a further determination, in not
less than 15 calendar days, as to how the requesting airline will be
accommodated.
(D) In accordance with the rules and priorities set forth
in subparagraph (F) below, Lessor may grant the requesting airline the
right of shared or temporary use of a designated portion of Lessee's
Preferential Midfield Terminal Space, as well as rights of ingress and
egress, the right to use the aircraft parking positions adjacent
thereto and the right to use passenger loading bridges and other
appurtenant equipment are reasonably necessary for the effective use
of such space, provided, that:
(I) such proposed user provides Lessee with
indemnification and proof of insurance satisfactory to Lessee;
provided, however, that Lessee may not require any
indemnification more favorable to it than that which Lessee
provides to Lessor hereunder;
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(II) such proposed user agrees to pay Lessee the sum
of the following:
(x) an amount equal to a pro rata share of the
sum of the terminal rentals and any other applicable
payments, fees or taxes payable by Lessee hereunder with
respect to such areas during such shared or temporary use
period as calculated herein; and
(y) additional amounts sufficient to recover
Lessee's direct costs and operation and maintenance
expenses, if any, of such shared or temporary use,
including a reasonable allocation of any capital and
equipment costs for property and equipment owned by
Lessee;
(III) such proposed user enters into a written
agreement with Lessee therefor, which agreement shall not be
inconsistent with the terms and conditions stated herein and
shall be submitted to Lessor for written approval prior to the
effective date thereof.
(E) Lessee agrees to make reasonable efforts to
facilitate the temporary or shared accommodation of the requesting
airline's scheduled operations, including the use of Lessee's
passenger loading bridges and other portions of the Lessee's
Preferential Midfield Terminal Space as may be reasonably necessary
to accommodate the requesting airline in the event Lessor requires
such use. In the event that the requesting airline and Lessee are not
able to agree to a form of written
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agreement pursuant to subparagraph (D)(III) above after reasonable
efforts by both parties, Lessor shall have the right, after
consultation with both parties, to set the final terms of such written
agreement, which shall provide no less protection of Lessee's
interests than Lessee provides for Lessor's interest hereunder, and be
binding on both the requesting airline and Lessee.
(F) In the event that, pursuant to subparagraph (B)
above, Lessor determines that a requesting airline is in need of
facilities to accommodate passengers or aircraft and such facilities
should be made available from Preferential Use Premises, Lessor will
follow the following rules and priorities in designating the specific
premises for temporary or shared use by the requesting airline:
(I) Preferential Use Premises shall be designated
for temporary or shared use in the reverse order of the magnitude
of the then present utilization by Signatory Airlines.
(II) In assessing the degree of such utilization by
Signatory Airlines, Lessor will consider all factors deemed
relevant, which may include: (u) the average number of flight
arrivals and departures per aircraft parking position per day;
(v) flight scheduling considerations; (w) potential labor
conflicts; (x) the number, availability and type (e.g. wide-body
or narrow body) of aircraft parking position locations; (y) the
preferences of the Signatory Airlines as to which of their
specific premises are
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designated for temporary or shared use by the requesting airline
and (z) other operational considerations.
(III) In the event Lessee is required to share
Lessee's Preferential Midfield Terminal Space, Lessee shall have
priority in all aspects of usage of such shared premises over all
other airlines; provided that Lessee shall not change its
scheduling or ordinary course usage of such premises for the
purpose of interfering with the usage of such premises by a
requesting airline sharing such premises.
(IV) Notwithstanding the foregoing, Lessee shall not
be required to make any of Lessee's Preferential Midfield
Terminal Space available during any consecutive two calendar
quarters in the event that, for the six months preceding such
consecutive two calendar quarter period, Lessee shall have
maintained an average level of 200 flights per day departing from
the Midfield Terminal. For purposes of calculating the number of
flights per day of Lessee departing from the Midfield Terminal,
Lessee's flights shall be deemed to include the jet flights of
Lessee and KLM and shall not include Lessee's code share partners
other than KLM, commuter carriers, or any other air carriers
whose Air Transportation operations are handled by Lessee at the
Airport. If Lessee does not meet the foregoing utilization
standard in any six month period, Lessor may require Lessee to
make available during the following two consecutive calendar
quarters, pursuant to and in accordance
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with the provisions of this Article IB.3.(b)(iii), not more than
the minimum number of gates which, if not under lease to Lessee
in such prior six month period, would have resulted in an average
of not less than three departing flights of Lessee (calculated as
aforesaid) per gate per day for such prior six month period with
respect to Lessee's remaining gates.
(G) The foregoing provisions of this Article IB.3.(b)(iii)
notwithstanding, Lessor may grant a requesting airline the right to
temporarily use a designated portion of Lessee's Preferential Midfield
Terminal Space in non-recurring emergency or safety-related
circumstances, so long as such use will not unreasonably adversely
affect Lessee's Air Transportation operations at the Airport.
(H) During the use of Lessee's Preferential Midfield
Terminal Space or other related facilities by other airlines scheduled
by Lessor pursuant to this Article IB.3., Lessee shall not be held
liable by Lessor with regard to any claim for damages or personal
injury arising out of or in connection with such requesting airline's
use of Lessee's Preferential Midfield Terminal Space or other related
facilities, unless caused by the negligence of Lessee, its employees
or agents.
(I) In the event that Lessee shall be required to share
its Preferential Midfield Terminal Space pursuant hereto, until such
time as alternative facilities at the Airport are provided to airlines
being accommodated in Lessee's Preferential Midfield Terminal Space,
Lessee must continue to share such space with the accommodated
airlines, even
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<PAGE>
if Lessee thereafter meets the utilization standards set forth in
subsection (F)(IV) above. Lessor agrees that, under such
circumstances, upon an affirmative vote of a Weighted Majority for
necessary capital improvements, Lessor shall take all practical steps
to construct and provide additional terminal facilities at the site of
the Existing Terminal Facilities to provide permanent space for the
airline being accommodated by Lessee.
4. JOINT USE MIDFIELD SPACE. At such time as such space is available for
beneficial occupancy, Lessor grants to Lessee, its employees, agents,
guests, patrons and invitees, the joint use, along with all other air
carriers operating Air Transportation businesses in the Midfield Terminal
to whom such joint use has been granted, of space, improvements and
facilities in the Midfield Terminal consisting of the Joint Use Midfield
Terminal Space identified on EXHIBIT D attached hereto (hereinafter
referred to as "Lessee's Joint Use Midfield Terminal Space").
5. COMMON USE MIDFIELD TERMINAL SPACE. At such time as such space is
available for beneficial occupancy, Lessor grants to Lessee, its employees,
agents, guests, patrons and invitees, the common use, along with all other
air carriers operating Air Transportation businesses in the Midfield
Terminal, of space, improvements and facilities in the Midfield Terminal
consisting of the Common Use Midfield Terminal Space identified on EXHIBIT
D attached hereto (hereinafter referred to as "Lessee's Common Use Midfield
Terminal Space"). The Common Use Midfield Terminal Space shall be allocated
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for use by the users thereof in accordance with the priorities
described in Exhibit D-1 attached hereto.
C. PUBLIC SPACE: Lessee, its employees, passengers, guests, patrons and
invitees, in common with others, shall have the use of all public space in the
Existing Terminal Facilities and the Midfield Terminal, and all additional
public space which may thereafter be made available therein and in any additions
thereto, including, without limiting the generality thereof, lobbies, passenger
lounges and waiting rooms, hallways, rest rooms and rooms for other public and
passenger convenience.
D. PARKING SPACE: Vehicular parking spaces shall be provided near the
Existing Terminal Facilities (adequate in Lessor's judgment, considering the
number of vehicles and traffic to be accommodated) and the Midfield Terminal for
the use of Lessee, its employees, passengers and limousine operators, in common
with any other scheduled air transportation companies, their employees,
passengers and limousine operators. Lessor or its concessionaires may make a
reasonable charge to passengers for the use of the parking space provided for
them, but no charges shall be made for use of such adequate parking spaces as
are designated by Lessor for the respective use of Lessee's employees or
limousine operators.
E. RIGHT OF INGRESS AND EGRESS: Subject to the reasonable rules and
regulations promulgated by Lessor in accordance with Article XI hereof, Lessee
shall have the right and privilege over the Airport of ingress to and egress
from the premises and facilities described in this Article I for its employees,
agents, passengers, guests, patrons and invitees, its or their suppliers of
materials and furnishers of service, its or their aircraft, equipment, vehicles,
machinery and other property, and, except as herein otherwise specifically
provided, no charges, fees or tolls of any nature, direct or indirect,
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shall be imposed by Lessor upon Lessee, its employees, agents, passengers,
guests, patrons and invitees, its or their suppliers of materials and
furnishers of service for such right of ingress and egress, or for the
privilege of purchasing, selling or using any materials, or services
purchased or otherwise obtained by Lessee, or for transporting, loading,
unloading or handling persons, property, cargo or mail in connection with
Lessee's business or exercising any right or privilege granted by Lessor
hereunder. Nothing in this Article I shall limit Lessor's right to impose,
collect and use PFCs.
F. FUEL: Lessee shall have the right during the term of this Agreement to
lease land in the common fuel storage area as shown in the Airport Master Plan,
at a rental rate of not to exceed five cents ($.05) per square foot per year,
together with the right to install thereon underground fuel storage tanks,
pumps, piping, and appurtenances for the storage of aviation fuel; the location
and amount of such land to be determined by written agreement of the parties
hereto, a copy of which agreement, if entered into prior to the effective date
of this Agreement, will be attached to this Agreement as an exhibit.
ARTICLE II
TERM
Except as expressly provided otherwise in Article IB.1., Lessee shall have
full authority to use the premises and facilities and to exercise the rights,
licenses and privileges set forth in Article I hereof for a term beginning on
the Date of Beneficial Occupancy of the Midfield Terminal and ending on the last
day of the Fiscal Year that is 30 years after the Fiscal Year in which the Date
of Beneficial Occupancy of the Midfield Terminal occurs.
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ARTICLE III
RENTALS AND FEES
Lessee agrees to pay to Lessor for the use of the premises, facilities,
rights, licenses, services and privileges granted hereunder, the following
rentals, fees and charges, all payable in monthly installments in accordance
with paragraph F. below. In the event that the commencement or termination of
the term with respect to any of the particular premises, facilities, rights,
licenses, services or privileges as herein provided falls on any date other than
the first or last day of a calendar month, the applicable rentals, fees and
charges for that month shall be paid for said month pro rata according to the
number of days in that month during which the particular premises, facilities,
rights, licenses, services or privileges were enjoyed. No rentals, fees,
charges or tolls imposed by Lessor other than those specifically provided in
this Agreement are payable by Lessee for the use of or access to the Airport,
provided that the foregoing shall not be construed to prohibit Lessor from
imposing and collecting charges and fees from passengers for the use of the
public auto parking areas on the Airport, from operators of ground
transportation to, from and on the Airport or from any concessionaire at the
Airport in accordance with the terms of a contract with Lessor for the operation
of such concession; and provided, further, that Lessor reserves the right to
impose and use PFCs; and provided, further, that the foregoing shall not
preclude Lessor from imposing or levying any permit or license fee not
inconsistent with the rights and privileges granted to Lessee hereunder.
A. RENTALS WITH RESPECT TO TERMINAL FACILITIES: During the term hereof,
Lessee shall pay to Lessor the following Terminal Charges:
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1. EXCLUSIVE EXISTING TERMINAL SPACE: For so long as Lessee shall retain
any Lessee's Exclusive Existing Terminal Space pursuant to Article IB.1.,
Lessee shall be obligated to pay rental charges for such premises equal to
that which would have been applicable for such space under the Basic
Agreement, as in effect immediately prior to the effectiveness of this
Agreement.
2. LESSEE'S EXCLUSIVE MIDFIELD TERMINAL SPACE AND LESSEE'S PREFERENTIAL
MIDFIELD TERMINAL SPACE:
(a) Lessee shall pay the following Midfield Exclusive and
Preferential Rental Charges:
(i) commencing on the date on which the first facilities in the
Midfield Terminal become available for beneficial occupancy by Lessee,
as evidenced by written notice thereof from Lessor to Lessee, for each
Fiscal Year or portion thereof (on a pro rated basis), through Fiscal
Year 2008, Lessee shall pay an amount equal to the product of the
total number of square feet of Lessee's Exclusive Midfield Terminal
Space and Lessee's Preferential Midfield Terminal Space multiplied by
the following rental rates per square foot for the following Fiscal
Years:
2001 $17.92 2005 $19.71
2002 17.92 2006 19.71
2003 18.22 2007 19.71
2004 19.71 2008 20.04
(ii) commencing on the first day of Fiscal Year 2009, for Fiscal
Year 2009 and each Fiscal Year thereafter or portion thereof (on a pro
rated basis), Lessee shall pay an amount equal to (x) the product of
(I) the total number of square feet, if any, of Lessee's Exclusive
Midfield Terminal
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Space and Lessee's Preferential Midfield Terminal Space in each case
in the Domestic Area of the Midfield Terminal multiplied by (II) the
Midfield Domestic Exclusive and Preferential Rental Rate for such
Fiscal Year, plus (y) the product of (I) the total number of square
feet, if any, of Lessee's Exclusive Midfield Terminal Space and
Lessee's Preferential Midfield Terminal Space in each case in the
International Area of the Midfield Terminal multiplied by (II) the
Midfield International Exclusive and Preferential Rental Rate for such
Fiscal Year.
(b) The Midfield Domestic Exclusive and Preferential Rental Rate for
any Fiscal Year shall be the sum of the Midfield Domestic O&M Rate for
such Fiscal Year and the Midfield Domestic Bond Debt Service Rate for
such Fiscal Year. The Midfield Domestic O&M Rate for any Fiscal Year
shall be determined by dividing (i) Midfield O&M Expenses for such
Fiscal Year allocated to the Domestic Area of the Midfield Terminal by
(ii) the total number of Useable Square Feet in the Domestic Area of
the Midfield Terminal. The Midfield Domestic Bond Debt Service Rate
for any Fiscal Year shall be determined by dividing (i) Bond Debt
Service allocated to the Domestic Area of the Midfield Terminal for
such Fiscal Year by (ii) the total number of Useable Square Feet in
the Domestic Area of the Midfield Terminal.
(c) The Midfield International Exclusive and Preferential Rental Rate
for any Fiscal Year shall be the sum of the Midfield International O&M
Rate for such Fiscal Year and the Midfield International Bond Debt
Service Rate for such Fiscal Year. The Midfield International O&M
Rate for any
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Fiscal Year shall be determined by dividing (i) Midfield O&M Expenses
for such Fiscal Year allocated to the International Area of the
Midfield Terminal by (ii) the total number of Useable Square Feet in
the International Area of the Midfield Terminal. The Midfield
International Bond Debt Service Rate for any Fiscal Year shall be
determined by dividing (i) Bond Debt Service allocated to the
International Area of the Midfield Terminal for such Fiscal Year by
(ii) the total number of Useable Square Feet in the International Area
of the Midfield Terminal.
(d) Lessor shall maintain accurate records allocating Bond Debt
Service for each Fiscal Year between (i) the Midfield Terminal, (ii)
the Existing Terminal Facilities and (iii) the rest of the Airport,
and within the Midfield Terminal, between (A) the Domestic Area of the
Midfield Terminal and (B) the International Area of the Midfield
Terminal. The allocation of Bond Debt Service to the Midfield
Terminal, the Existing Terminal Facilities and the rest of the Airport
shall be based on capital expenditures made out of the proceeds of
Bonds. Bond Debt Service shall be allocated within the Midfield
Terminal to the Domestic Area of the Midfield Terminal and the
International Area of the Midfield Terminal as set forth on EXHIBIT E
attached hereto.
(e) Commencing with the Fiscal Year in which the Date of Beneficial
Occupancy of the Midfield Terminal occurs, for each Fiscal Year an
amount of PFC revenues equal to the lesser of (i) the PFC revenues
received by Lessor in such Fiscal Year that are attributable to a PFC
of $3, and (ii) the PFC revenues received by Lessor in Fiscal Year
2001 that are
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attributable to a PFC of $3, shall be allocated by Lessor to the
Midfield Terminal and the Existing Terminal Facilities on a pro rata
basis in accordance with the capital expenditures for the Midfield
Terminal and the Existing Terminal Facilities made out of the proceeds
of Bonds that are approved for PFC funding, and, for purposes of
calculating Terminal Charges payable by Lessee, such PFC revenues
allocated to the Midfield Terminal and the Existing Terminal
Facilities shall be netted, on the same pro rata basis, against the
Bond Debt Service allocated to the Midfield Terminal and the Existing
Terminal Facilities, as the case may be, for such Fiscal Year. The
foregoing notwithstanding, for the Fiscal Year in which the Date of
Beneficial Occupancy of the Midfield Terminal occurs, the amount of
PFC revenues otherwise allocable to the Midfield Terminal and the
Existing Terminal pursuant to the immediately preceding sentence shall
be reduced by a fraction the numerator of which is the number of
calendar months in such Fiscal Year preceding the month in which the
Date of Beneficial Occupancy of the Midfield Terminal occurs, and the
denominator of which is 12.
(f) Lessor shall maintain accurate records identifying O&M Expenses
for each Fiscal Year and allocating such expenses among (i) the
Midfield Terminal, (ii) the Existing Terminal Facilities and (iii) the
rest of the Airport, and within the Midfield Terminal, among (A) the
Domestic Area of the Midfield Terminal and (B) the International Area
of the Midfield Terminal, in conformity with the methodologies set
forth in EXHIBIT F attached hereto.
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3. LESSEE'S JOINT USE MIDFIELD TERMINAL SPACE:
(a) Lessee shall pay the following Midfield Joint Use Rental
Charges:
(i) commencing on the date on which the first facilities in the
Midfield Terminal become available for beneficial occupancy by Lessee,
as evidenced by written notice thereof from Lessor to Lessee, for each
Fiscal Year or portion thereof (on a pro rated basis), through Fiscal
Year 2008, Lessee shall pay an amount equal to (x) the product of the
total number of square feet of Lessee's Joint Use Midfield Terminal
Space multiplied by the following rental rates per square foot for the
following Fiscal Years:
2001 $17.92 2005 $19.71
2002 17.92 2006 19.71
2003 18.22 2007 19.71
2004 19.71 2008 20.04
times (y) a fraction the numerator of which is the number of Lessee's
domestic deplaned passengers accommodated in such Joint Use Midfield
Terminal Space during the prior Fiscal Year in the event that the
Joint Use Midfield Terminal Space is in the Domestic Area of the
Midfield Terminal or the number of Lessee's international deplaned
passengers accommodated in such Joint Use Midfield Terminal Space
during the prior Fiscal Year in the event that the Joint Use Midfield
Terminal Space is in the International Area of the Midfield Terminal,
and the denominator of which is the total number of domestic deplaned
passengers of all Signatory Airlines having use of such Joint Use
Midfield Terminal Space which passengers are accommodated in such
Joint Use Midfield Terminal
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Space in the event that Joint Use Midfield Terminal Space is in the
Domestic Area of the Midfield Terminal and the total number of
international deplaned passengers of all Signatory Airlines having
use of such Joint Use Midfield Terminal Space which passengers are
accommodated in such Joint Use Midfield Terminal Space in the event
that the Joint Use Midfield Terminal Space is in the International
Area of the Midfield Terminal; and
(ii) commencing on the first day of Fiscal Year 2009, for Fiscal
Year 2009 and for each Fiscal Year thereafter or portion thereof (on a
pro rated basis), Lessee shall pay an amount equal to (x) the product
of the total number of square feet of Lessee's Joint Use Midfield
Terminal Space in the Domestic Area of the Midfield Terminal
multiplied by the Midfield Domestic Joint Use Rental Rate for such
Fiscal Year, plus (y) the product of the total number of square feet
of Lessee's Joint Use Midfield Terminal Space in the International
Area of the Midfield Terminal multiplied by the Midfield International
Terminal Joint Use Rental Rate for such fiscal year.
(b) The Midfield Domestic Joint Use Rental Rate for any fiscal year
shall be (x) the sum of the Midfield Domestic O&M Rate for such fiscal
year and the Midfield Domestic Bond Debt Service Rate for such fiscal
year, multiplied by (y) a fraction the numerator of which is the
number of Lessee's domestic deplaned passengers accommodated in such
Joint Use Midfield Terminal Space during such Fiscal Year and the
denominator of which is the number of domestic deplaned passengers of
all Signatory Airlines having use of such Joint Use Midfield Terminal
Space which
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passengers are accommodated in such Joint Use Midfield Terminal
Space during such Fiscal Year.
(c) The Midfield International Joint Use Rental Rate for any Fiscal
Year shall be (x) the sum of the Midfield International O&M Rate for
such Fiscal Year and the Midfield International Bond Debt Service Rate
for such Fiscal Year, multiplied by (y) a fraction the numerator of
which is the number of Lessee's international deplaned passengers
accommodated in such Joint Use Midfield Terminal Space during such
Fiscal Year and the denominator of which is the total number of
international deplaned passengers of all Signatory Airlines having use
of such Joint Use Midfield Terminal Space which passengers are
accommodated in such Joint Use Midfield Terminal Space during such
Fiscal Year.
4. COMMON USE MIDFIELD TERMINAL SPACE:
(a) Lessee shall pay the following Midfield Common Use Rental Charges:
(i) commencing on the date on which the first facilities in the
Midfield Terminal become available for beneficial occupancy by Lessee,
as evidenced by written notice thereof from Lessor to Lessee, for each
Fiscal Year or portion thereof (on a pro rated basis), through Fiscal
Year 2008, Lessee shall pay an amount equal to (x) the product of the
total number of square feet of Common Use Midfield Terminal Space
multiplied by the following rental rates per square foot for the
following Fiscal Years:
2001 $17.92 2005 $19.71
2002 17.92 2006 19.71
2003 18.22 2007 19.71
2004 19.71 2008 20.04
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times (y) a fraction the numerator of which is the number of domestic
deplaned passengers of Lessee accommodated in such Common Use Midfield
Terminal Space during such Fiscal Year in the event that the Common
Use Midfield Terminal Space is in the Domestic Area of the Midfield
Terminal or the number of international deplaned passengers of Lessee
accommodated in such Common Use Midfield Terminal Space during such
Fiscal Year in the event that the Common Use Midfield Terminal Space
is in the International Area of the Midfield Terminal, and the
denominator of which is the total number of domestic deplaned
passengers of all Signatory Airlines accommodated in such Common Use
Midfield Terminal Space during such Fiscal Year in the event that the
Common Use Midfield Terminal Space is in the Domestic Area of the
Midfield Terminal or the total number of international deplaned
passengers of all Signatory Airlines accommodated in such Common Use
Midfield Terminal Space during such Fiscal Year in the event such
Common Use Midfield Terminal Space is in the International Area of the
Midfield Terminal; provided that, for Common Use Midfield Terminal
Space in the International Area of the Midfield Terminal that is used
for both domestic and international operations (e.g., ramp access
facilities, holdrooms and jet bridges), Lessee shall pay for each
Fiscal Year an amount equal to (A) the product of the number of square
feet of such space multiplied by the rental rate set forth above for
the applicable Fiscal Year, times (B) a fraction the numerator of
which is the total number of domestic and international deplaned
passengers of Lessee accommodated
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in such Common Midfield Terminal Space during such Fiscal Year and the
denominator of which is the total number of domestic and international
deplaned passengers of all Signatory Airlines accommodated in such
Common Midfield Terminal Space during such Fiscal Year; and
(ii) commencing on the first day of Fiscal Year 2009, for Fiscal
Year 2009 and for each Fiscal Year thereafter or portion thereof (on a
pro-rated basis), Lessee shall pay an amount equal to (x) the product
of (A) the total number of Useable Square Feet of Common Use Midfield
Terminal Space in the Domestic Area of the Midfield Terminal
multiplied by the sum of the Midfield Domestic O&M Rate and the
Midfield Domestic Bond Debt Service Rate for such Fiscal Year, times
(B) a fraction the numerator of which is the total number of domestic
deplaned passengers of Lessee accommodated in Common Use Midfield
Terminal Space in the Domestic Area of the Midfield Terminal in such
Fiscal Year and the denominator of which is the total number of
domestic deplaned passengers of all Signatory Airlines accommodated in
Common Use Midfield Terminal Space in the Domestic Area of the
Midfield Terminal in such Fiscal Year, plus (y) the product of (A) the
total number of Useable Square Feet of Common Use Midfield Terminal
Space in the International Area of the Midfield Terminal multiplied by
the sum of the Midfield International O&M Rate and the Midfield
International Bond Debt Service Rate for such Fiscal Year, times (B) a
fraction the numerator of which is the total number of international
deplaned passengers of Lessee accommodated in Common Use Midfield
Terminal Space in the International Area of the Midfield
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Terminal in such Fiscal Year and the denominator of which is the total
number of international deplaned passengers of all Signatory Airlines
accommodated in Common Use Midfield Terminal Space in the
International Area of the Midfield Terminal in such Fiscal Year;
provided, that, for Common Use Midfield Terminal Space in the
International Area of the Midfield Terminal that is used for both
domestic and international operations (e.g., ramp access facilities,
holdrooms and jet bridges), Lessee shall pay for each Fiscal Year an
amount equal to (x) the product of the total number of Useable Square
Feet of such space times the sum of the Midfield International O&M
Rate and the Midfield International Bond Debt Service Rate, for such
Fiscal Year, multiplied by (y) a fraction the numerator of which is
the total number of domestic and international deplaned passengers of
Lessee accommodated in such space during such Fiscal Year and the
denominator of which is the total number of domestic and international
deplaned passengers of all Signatory Airlines accommodated in such
space during such Fiscal Year.
B. ACTIVITY FEES AND CAPITAL EXPENDITURES:
1. ACTIVITY FEES: All rentals, fees and charges for the use of the
premises, facilities, rights, licenses, services and privileges granted
hereunder, except those for which rentals, fees or charges are otherwise
specifically provided herein, shall be combined in and represented by an
"Activity Fee" calculated for each Fiscal Year, and which shall be an amount
equal to the product of the number of thousand pounds of Approved Maximum
Landing Weight of aircraft landed at the Airport in such Fiscal
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Year, multiplied by the Activity Fee rate for such Fiscal Year. The Activity
Fee rate for any Fiscal Year shall be the quotient arrived at by dividing:
(a) the Revenue Requirement, as below defined, for such Fiscal Year,
by
(b) the aggregate amount of Approved Maximum Landing Weight of
aircraft, in units of one thousand pounds, of all Signatory Airlines,
for such Fiscal Year.
The "Revenue Requirement" for any Fiscal Year as used herein shall mean that
amount of revenue required to produce total net Airport revenue equal to the
following amount:
(1) O&M Expenses for such Fiscal Year; plus
(2) (a) one hundred twenty-five percent (125%) of the amount of
principal and interest due (net of any capitalized interest) for such
Fiscal Year on all then outstanding Bonds, less (b) any amounts on
deposit in the Revenue Fund at the beginning of such Fiscal Year
representing so-called "coverage" funds collected for so-called
"rolling coverage" pursuant to any bond ordinance under which Bonds
were issued that requires such rolling coverage, less (c) any PFC
revenues received by Lessor during such Fiscal Year and allocated by
Lessor to pay principal and interest on outstanding Bonds in such
Fiscal Year; plus
(3) deposits into the Bond Reserve Account, the Operation and
Maintenance Reserve Fund and the Renewal and Replacement Fund required
for such Fiscal Year pursuant to the provisions of the Bond Ordinance;
plus
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(4) commencing in Fiscal Year 2001, an amount equal to $5 million
(which amount shall be escalated each Fiscal Year beginning in Fiscal
Year 2002 to reflect percentage increases in the Producer Price Index
during the most recently ended 12-month period for which such index is
available) minus the amount, if any, deposited for such Fiscal Year
into the ACE Account; plus
(5) commencing in the Fiscal Year in which no Airport Revenue Bonds
are subject to Paid-in Coverage (as defined in Article IIB.2.(a)
below), $350,000; minus
(6) all other Airport revenues (including, but not limited to, all
rental charges for Existing Terminal Facilities, Terminal Charges and
all concession and parking revenue) received [or receivable if the
Lessor is on an accrual accounting basis] during such Fiscal Year
(excepting Special Facility Revenues).
The unit thus arrived at shall be the Activity Fee rate per thousand pounds
of Approved Maximum Landing Weight payable by Lessee to Lessor for such of
Lessee's aircraft, or aircraft of its subsidiary, as have landed at the Airport
during the Fiscal Year for which such calculation is made.
The Activity Fee as herein established shall not be subject to further
adjustment except by agreement of the parties hereto, or as provided in Article
IIIF.
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2. LESSOR COVENANTS; CAPITAL EXPENDITURES:
(a) Lessor covenants:
(i) That it will provide efficient management and operation of
the Airport on the basis of sound business principles and that it will
not incur expense for Airport operation, maintenance and
administration in excess of the amounts reasonably and necessarily
required therefor.
(ii) That it shall operate the Airport in a manner so as to
produce revenues from concessionaires, tenants, and users of a nature
and amount which would be produced by a reasonably prudent operator of
an airport.
(iii) That it will comply in all respects with the revenue
retention requirement in Section 511(a)(12) of the Airport and Airway
Improvement Act of 1982, as amended, now codified at 49 U.S.C. Section
47107(b). Commencing in Fiscal Year 1997, Lessor may include in O&M
Expenses for each Fiscal Year administrative charges not in excess of
$5 million, provided that the foregoing cap amount shall be escalated
each Fiscal Year, commencing in Fiscal Year 1998, by multiplying the
prior year's cap amount by a factor of one (1) plus the percentage
increase, if any, in the index of average hourly earnings for
production workers for manufacturing industries in the United States,
as published by the United States Department of Labor, Bureau of Labor
Statistics (or if this index is discontinued or otherwise becomes
unavailable to the public, the most nearly comparable index of such
average hourly earnings published by a recognized financial
institution, financial publication or university) during the most
recently ended 12-month period for which such index is available.
The annual
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administrative charges of $5 million shall pay for all services
provided directly or indirectly by any department, division or agency
of Lessor other than the Airport, or Central Communications to the
extent operated by the Airport, in the nature of administration and
legislative oversight, finance, budget, accounting, legal, payroll,
purchasing, personnel, information processing, imaging, planning and
development. Administrative charges shall not include (A) optional
contracted services by the Airport, such as landscaping, mowing,
engineering (design, construction, inspection and project management)
and mechanical, electrical and plumbing trade services to be performed
on Airport property, or (B) payroll and fringe benefit costs for the
employee positions described in Exhibit H; provided that any increase
in such costs or the number of such positions above those shown on
Exhibit H must be approved by a majority in number of the Signatory
Airlines.
(iv) That it will utilize competitive bidding procedures for the
award of all maintenance and operation contracts and construction
contracts for the Airport.
(v) That all senior appointed Airport officials shall have
professional qualifications commensurate with the responsibilities of
the jobs to be performed by such officials.
(vi) That it will take all necessary actions to assure that the
personnel of Lessor, whose wages and benefits are included in O&M
Expenses, are actually performing work for the Airport as represented
by such inclusion.
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(vii) That it will operate Willow Run Airport only as a reliever
airport for the Airport with no scheduled air carrier or public
charter passenger service.
(viii) That PFC revenues received by Lessor in each of Fiscal
Years 2002, 2003, 2004, 2005, 2006, 2007 and 2008 that exceed in such
year, by reason of increases in passenger activity levels at the
Airport, the amount of PFC revenues received by Lessor in Fiscal Year
2001 that is attributable to a PFC of $3 shall be used by Lessor to
pay for capital projects in the Capital Improvement Program attached
hereto as EXHIBIT G that are approved by a Weighted Majority and by
the FAA for PFC funding, whether on a pay-as-you-go basis or to pay
Bond Debt Service on Bonds issued to fund such projects.
(ix) That PFC revenues received by Lessor through Fiscal Year
2008 that are attributable to increases in the PFC from $3 per
enplaned passenger shall be applied (A) as required by FAA Letter of
Intent No. AGL-90-01, Amendment No. 7, dated August 21, 1996, and then
(B) to capital projects at the Airport for safety or security, or to
FAA required capital projects, so long as such projects are approved
by the FAA for PFC funding, and then (C) to capital projects in the
Capital Improvement Program attached hereto as EXHIBIT G that are
approved by the FAA for PFC funding.
Lessor and Lessee recognize that payment of the Activity Fee, as
herein provided, together with other funds, will result in an annual
surplus, because, among other things, Ordinance 319 currently requires the
collection by Lessor
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of rates and charges necessary to produce in each Fiscal Year revenues that
include 125% of the principal and interest due in such year on Airport
Revenue Bonds (exclusive of capitalized interest thereon) (the excess 25%
required to be collected is herein referred to as "Paid-in Coverage").
Lessor covenants to utilize such surplus only for the retirement of Bonds
or as follows:
(1) Fifty percent (50%) of the amount attributable to the Paid-in
Coverage, if any, on the Airport Revenue Bonds shall be deposited into
the Airline Equity Account and allocated among the Airline Equity
Subaccounts in accordance with the respective landed weights of each
Signatory Airline for the applicable period;
(2) Three Hundred Fifty Thousand Dollars ($350,000) shall be
deposited annually into the County Discretionary Fund;
(3) Fifty percent (50%) of the amount attributable to the Paid-in
Coverage, if any, on the Airport Revenue Bonds (less $350,000
annually) shall be deposited into the ACE Account;
(4) Deposits shall be made into the Subordinate Bond Reserve Account,
the Operation and Maintenance Reserve Fund and the Renewal and
Replacement Fund pursuant to the provisions of Ordinance 319, and into
any other funds for similar purposes established pursuant to other
ordinances under which Bonds are issued; and
(5) Amounts includible each Fiscal Year in the Revenue Requirement
pursuant to item (4) of the definition thereof in Article IIIB.1.
shall be deposited into the Airport Development Fund, to be
established and held by Lessor for the purposes described in Article
IIIB.2.(c)(4) below.
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(b) Lessor may issue Bonds to finance the costs (including all reasonable
costs incidental to the issuance and sale of such bonds) of capital
projects and may include the Bond Debt Service (including, among other
things, coverage requirements) on such Bonds in Lessee's fees hereunder
only after first receiving approval of a Weighted Majority for such capital
projects.
Lessor may assign, in accordance with the Bond Ordinance and the terms
of this Agreement, certain of its interests in and pledge certain revenues
and receipts of the Airport as security for payment of the principal of,
premium, if any, and interest on Bonds. Except as set forth in the
preceding sentence and except for residential property acquired by the
Airport pursuant to the Airport's noise mitigation program, Lessor shall
not pledge, sell, convey, mortgage, encumber, assign or otherwise transfer
the Airport or any portion thereof during the term of this Agreement.
(c) The following limitations shall apply to expenditures from the below-
described funds and accounts:
(1) EXPENDITURES TO BE MADE FROM THE COUNTY DISCRETIONARY FUND.
Lessor may make expenditures from the County Discretionary Fund
without approval by the air carriers for any lawful Airport-system
purpose, except that expenditures for Willow Run Airport shall only be
made if Lessor is in compliance with its covenant in Article III
B.2.(a)(vii).
(2) CAPITAL EXPENDITURES TO BE MADE FROM THE ACE ACCOUNT. If Lessor
proposes to make a capital expenditure from the ACE Account it shall
be subject to the approval of the air carriers if such capital
expenditure greater than Fifty Thousand dollars ($50,000). Such
approval shall be
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deemed given unless within thirty (30) days after receipt of Lessor's
proposal to make such expenditure Lessor is notified by a
Majority-in-Interest of the air carriers that such expenditure is
disapproved, such notification to contain specific reasons and grounds
therefor.
(3) EXPENDITURES TO BE MADE FROM THE AIRLINE EQUITY SUBACCOUNTS.
Each Signatory Airline may choose to use any amounts deposited into
its Airline Equity Subaccount for any of the following purposes:
(i) as a direct credit against Activity Fees payable by it;
(ii) for capital expenditures at the Airport; or
(iii) to service Special Facility Revenue Bond debt for capital
improvements at the Airport.
(4) EXPENDITURES TO BE MADE FROM AIRPORT DEVELOPMENT FUND.
Lessor may make capital expenditures from the Airport Development Fund
without approval by the air carriers for any lawful Airport-system
related purpose, provided that Lessor shall not pledge the Airport
Development Fund as security for any Bond or other debt of Lessor
without approval of a Majority-in-Interest of the air carriers, and
provided, further, that capital expenditures for Willow Run Airport
shall only be made if Lessor is in compliance with its covenant in
Article III B.2.(a)(vii).
(d) In order to permit Lessor to issue Bonds in compliance with applicable
securities laws, Lessee agrees that, upon the request of Lessor, Lessee
shall provide to Lessor such information with respect to Lessee as Lessor
deems reasonably necessary in order for Lessor to issue Bonds in compliance
with the requirements of Rule 15c-2(12) of the Securities and Exchange
Commission.
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C. CHARGES FOR ELECTRICAL CURRENT: Lessee shall pay to Lessor for Lessee's
use and occupancy of Exclusive Use Premises, Preferential Use Premises, Joint
Use Premises and Common Use Premises under this Agreement, a charge for
electrical current furnished by Lessor to each such area, said charge to be
computed as follows:
(1) In metered areas at a rate not exceeding that which Lessee would have
to pay if it established the same demand and took the same quantity
directly from the public utility (or other third party provider)
supplying electrical current to the Midfield Terminal.
(2) In unmetered areas at a rate per square foot of occupied space as
established by an electrical consultant appointed by Lessor. In the
event the parties hereto shall be unable to agree on the
aforementioned charges, the controversy shall be subject to
arbitration in the manner provided in Article XVII of this Agreement.
(3) In Common Use Premises the electrical current charge shall be shared
with the other common users, 20% equally and 80% to be allocated on
the basis of enplaned passengers.
(4) In Joint Use Premises the electrical current charge shall be shared by
the users of such premises based on the number of passengers of each
such user.
D. CHARGES FOR WATER AND SEWERAGE FACILITIES: Lessor shall charge Lessee for
water and sewerage facilities supplied to Lessee's Exclusive Use Premises and
Preferential Use Premises and the amount of such charge shall be subject to
future agreement of the parties hereto. In the event the parties hereto shall
be unable to agree
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on such amount, the controversy shall be subject to arbitration in the manner
provided in Article XVII of this Agreement.
E. CONTINUING RENTAL OBLIGATION
1. Should any scheduled air carrier, including Lessee, having an
agreement with Lessor substantially similar to the Basic Agreement or this
Agreement, terminate its operations at the Airport by reason of the loss of its
operating authority to serve the Detroit Metropolitan Area and exercise the
right of cancellation provided for in such case in Article XV of the Basic
Agreement or in this Agreement, its continued obligation to pay to Lessor
charges thereafter due under the Basic Agreement or this Agreement, including
space rentals and Activity Fees, shall, subject to the provisions of the
paragraph next following, thereupon terminate. Payment of rentals and Activity
Fees thereafter required shall be the responsibility of such of the other
aforesaid scheduled air carriers which continue to provide air transportation
service to the Detroit Metropolitan Area.
Should (a) all such aforesaid air carriers lose their operating authority
to serve the Detroit Metropolitan Area, or (b) should Lessor fail to maintain
the necessary certifications required to permit scheduled air carrier operations
at the Airport, and ALL of such air carriers exercise the right of cancellation
provided for in either event in said Article XV, the obligation to pay such
aforesaid charges shall terminate subject, however, to the following condition.
Until Fiscal Year 2009, upon such termination all such aforesaid carriers then
operating at the Airport (including Lessee if such be the case) shall be
obligated, to the extent hereinafter required, to pay annually, or in such
installments as Lessor may require, an amount not in excess of three hundred
percent (300%) of their respective annual rentals (calculated in the manner set
forth in
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paragraph 2 immediately below) payable at that time for terminal building
space at the Airport (whether leased under the Basic Agreement, this
Agreement or otherwise) for the purpose of providing funds to be applied to
Bond Debt Service (exclusive of any additional coverage) on the then
outstanding issues of Bonds. Payments required of such carriers shall be
assessed against each of them in a uniform manner per square foot leased and
shall be diminished pro rata to the extent that Airport revenues or capital
funds are realized from other sources and are available for application to
the debt service on the said Bonds as provided for in Subparagraph 3 below.
2. For the purpose of calculating payments which such carriers may be
obligated to make, Lessor shall first determine the average annual rental rate
per square foot paid for such terminal building space by all such carriers by
dividing their total annual rentals for such space by the total square footage
of the space. The square footage leased by each carrier shall then be
multiplied by such average rate in order to obtain an annual rental of each such
carrier for the purpose of establishing the three hundred percent (300%) maximum
annual limitation.
3. In the event Lessor fails to maintain the necessary certifications
required to permit scheduled air carrier operations at the Airport and
thereafter operates at the Airport for other purposes, any revenues earned as a
result shall, after providing for necessary operating and maintenance expenses,
be first applied each year to such debt service requirements before requiring
payments by the carriers pursuant to paragraph 1 above. In the foregoing
circumstances and as long as any of the aforesaid Bonds are outstanding, Lessor
shall use its best efforts to operate or lease the Airport properties so as to
produce sufficient revenues to satisfy the requirements of the aforesaid Bonds.
If under such circumstances the Airport properties or portion thereof are sold
by Lessor,
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the proceeds of such sale(s) shall first be used (or set aside) and be
applied to current and future debt service requirements or to retire the
aforesaid Bonds before requiring payments by the carriers pursuant to
subparagraph 1 above.
F. PAYMENT OF RENTALS AND ACTIVITY FEES
1. INFORMATION ON LESSEE OPERATIONS:
(a) Not earlier than 120 days nor later than 90 days prior to the
last day of each Fiscal Year, Lessee shall furnish Lessor with an
estimate for the next ensuing Fiscal Year of (i) the total Approved
Maximum Landing Weight of all aircraft to be landed at the Airport by
Lessee, (ii) the total number of enplaned domestic and international
passengers and deplaned domestic and international passengers of
Lessee, (iii) the total number of arriving and departing domestic and
international flights of Lessee, and (iv) the Midfield O&M Expenses to
be reimbursed to Lessee pursuant to Article VII.B.
(b) Lessee shall, no later than the 20th day of each calendar month,
transmit to Lessor a report, certified by Lessee, setting forth (i)
the actual number of Lessee's enplaned passengers and deplaned
passengers for the preceding calendar month, (ii) the actual aggregate
Approved Maximum Landing Weight for all aircraft operated by Lessee
and landed at the Airport during the preceding calendar month,
(iii) the actual number of Lessee's arriving and departing domestic
and international flights for the preceding month, and (iv) the
Midfield O&M Expenses actually paid by Lessee pursuant to Article
VII.B. for the preceding calendar month.
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2. PROJECTION OF RENTALS AND ACTIVITY FEES: Not later than 60 days prior
to the end of each Fiscal Year, Lessor shall furnish Lessee with a projection
for the next ensuing Fiscal Year (the "Projection") of the Terminal Charges to
be paid hereunder, and the Activity Fee rate per thousand pounds of Approved
Maximum Landing Weight. Such Projection will include Lessor's proposed Airport
budget, and shall set forth a calculation of the Activity Fee (including all
sources of revenue and all expenses) for the next ensuing Fiscal Year, together
with other information relevant thereto reasonably requested by Lessee. Lessor
shall give due consideration to any suggestions and comments made by Lessee with
respect to the Projection. The Projection, as revised by Lessor after
considering Lessee's suggestions and comments, shall be the basis for computing
Lessee's Terminal Charges and Activity Fees for the next ensuing Fiscal Year
unless and until otherwise revised pursuant to paragraph 4 below.
3. PAYMENT OF RENTALS AND ACTIVITY FEES:
(a) Not later than the 20th day of each calendar month of each Fiscal
Year, Lessee shall pay Lessor, without demand or invoice, an amount
equal to 1/12 of Lessee's aggregate Terminal Charges for such Fiscal
Year, computed in accordance with Article IIIA, and based on the
Projection, as such projection may have been revised pursuant to
paragraph 4 below.
(b) Not later than the 20th day of each calendar month of each Fiscal
Year, Lessee shall pay Lessor, without demand or invoice, an amount
equal to Lessee's aggregate Activity Fees for the preceding calendar
month, calculated by multiplying the total Approved Maximum Landing
Weight for aircraft landed by Lessee at the Airport during the
preceding
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calendar month by the Activity Fee rate for such Fiscal Year, computed
in accordance with Article IIIB.1., and based on the Projection, as
such projection may have been revised pursuant to paragraph 4 below.
(c) Lessee may net from the payments to be made to Lessor pursuant to
paragraphs (a) and (b) above the amount of Midfield O&M Expenses
actually paid by Lessee pursuant to Article VII.B. for the preceding
calendar month.
4. ADJUSTMENT OF RENTALS AND ACTIVITY FEES: Not later than the 150th day
of each Fiscal Year, Lessor shall furnish Lessee with a revised Projection (the
"Mid-Year Projection"), which shall reflect the most recently available
information with regard to the amounts actually incurred or realized during such
Fiscal Year for Bond Debt Service, O&M Expenses, and the Revenue Requirement, as
well as any changes in the number of useable square feet in the Midfield
Terminal and the Existing Terminal Facilities, together with the most recently
available information with regard to Terminal Charges and Activity Fees actually
received by Lessor. Lessor shall give due consideration to any suggestions and
comments made by Lessee with respect to the Mid-Year Projection. If the Mid-
Year Projection, as revised by Lessor after considering Lessor's suggestions and
comments, indicates that aggregate payments of Terminal Charges and Activity
Fees, at the then-existing rates would result in an overpayment or underpayment
of the aggregate amount required to be generated by Lessor through Terminal
Charges and Activity Fees, Lessor shall revise the Projection and adjust the
rates set forth therein for such Fiscal Year to conform to the Mid-Year
Projection.
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5. PRELIMINARY ANNUAL SETTLEMENT AND FINAL AUDIT:
(a) Within 60 days after the end of each Fiscal Year, Lessor will
furnish Lessee with a preliminary report, containing a preliminary
calculation, based on actual data, in accordance with this Agreement,
of Terminal Charges and Activity Fees estimated to be chargeable to
Lessee for the preceding Fiscal Year, and setting forth the amounts
actually paid by Lessee for such period. If such report indicates
that the aggregate of such fees and charges actually paid by Lessee
were greater than the aggregate amounts chargeable to Lessee, then
within 90 days after the end of such Fiscal Year Lessor shall refund
80% of any such estimated excess to Lessee. If such report indicates
that the aggregate of such fees and charges paid by Lessee were less
than the amounts chargeable to Lessee, then within 90 days after the
end of such Fiscal Year Lessee shall pay to Lessor 80% of the amount
of any such estimated deficiency. Interest shall accrue at a rate of
7% per annum, and be payable by Lessee in cash, on any portion of any
deficiency not paid by Lessee when due. Interest shall accrue at a
rate of 7% per annum, and be payable by Lessor, through a reduction in
the amount of Lessor's administrative costs includible in O&M Expenses
for the then Fiscal Year pursuant to Article IIIB.2.(a)(iii), on any
portion of any excess not refunded to Lessee when due.
(b) By the 180th day of each Fiscal Year, Lessor shall furnish to
Lessee a copy of an annual audit report prepared by a nationally
recognized accounting firm, covering the operation of the Airport for
the preceding Fiscal Year (the "Final Audit"). Lessor shall prepare a
calculation, based
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on the Final Audit, in accordance with this Agreement, of all Terminal
Charges and Activity Fees chargeable to Lessee for the preceding
Fiscal Year, and setting forth the amounts actually paid by Lessee for
such period, taking into account all payments and refunds pursuant to
paragraph 5.(a) above. If aggregate fees and charges actually paid by
Lessee were greater than the aggregate amount chargeable, then within
30 days after delivery of the Final Audit Lessor shall refund the
amount of such overpayment to Lessee. If aggregate fees or charges
actually paid by Lessee were less than the aggregate amount chargeable
to Lessee, then within 30 days after receipt of the Final Audit Lessee
shall pay to Lessor the amount of any such deficiency. The amount of
Lessor's administrative costs includible in O&M Expenses for the then
Fiscal Year shall be reduced by $50,000 for each month that delivery
of the Final Audit to Lessee is delayed beyond the 180th day of such
Fiscal Year.
(c) The payment by Lessee of any fees and charges hereunder and the
acceptance by Lessor thereof for any Fiscal Year, shall not preclude
either Lessee or Lessor from questioning, within a period of one (1)
year from the date of receipt by Lessee of the Final Audit for such
Fiscal Year, the accuracy of any report or statement on the basis of
which such payment was made, or preclude Lessor from making any claim
against Lessee for any additional amount payable by Lessee, or
preclude Lessee from making any claim against Lessor for the return of
any excess amount paid by Lessee.
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G. SUPPLEMENTAL CAPITAL COST PAYMENTS: In addition to all other rentals and
charges payable hereunder by Lessee, Lessee shall pay the following annual Bond
Debt Service charges, which shall be billed on a monthly basis in advance each
month, in respect of certain projects that were constructed for the benefit of
Lessee in the Existing Terminal Facilities pursuant to the Basic Agreement:
1. $753,317.26 for the United Airlines relocation project;
2. $19,507.27 for the Concourse G elevator project;
3. $412,648.00 for the extension to Concourse C; and
4. $1,958,194.00 for the new Concourse G and related projects.
Lessee will pay the above annual Bond Debt Service on that portion of the 1986
and 1993 General Airport Revenue Bonds even though the term of such debt service
obligation extends beyond the term of the lease of such temporary facilities.
The foregoing notwithstanding, the parties acknowledge that (a) the aforesaid
amounts represent annual Bond Debt Service charges in effect on the execution
date of this Agreement and include amounts for 25% Paid in Coverage, and (b)
such amounts will be adjusted if and when coverage requirements change and/or
the Bonds to which such debt service charges relate are refinanced or refunded.
ARTICLE IV
[INTENTIONALLY OMITTED]
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ARTICLE V
CONSTRUCTION, MAINTENANCE, REPAIR
AND OPERATION BY LESSEE
-----------------------
Lessee may construct or install at its own expense any equipment,
improvements and facilities, and any additions thereto, upon all or any part of
the premises hereunder leased to Lessee for its exclusive use or preferential
use and may construct or install at its own expense, any equipment, improvements
and facilities authorized under Article I hereof upon any Airport property not
leased to Lessee for its exclusive use or preferential use at such locations as
may be approved by Lessor. Plans and specifications of any proposed
construction or installation of improvements and facilities (including any
substantial alteration or addition thereto) shall be submitted to and receive
the prior approval of Lessor. Lessor shall have the right to refuse approval of
such plans and specifications if the external appearance of such improvements
and facilities does not meet Lessor's reasonable requirements for substantial
uniformity of appearance of improvements and facilities on the Airport, or, if
the type or time of construction or installation, or the location thereof does
not meet Lessor's reasonable requirements for safe use of the Airport and
appurtenances by other authorized persons. Lessor may, at its own cost, inspect
any such construction or installation.
Lessee shall keep and maintain all premises hereunder leased to Lessee for
its exclusive use or preferential use and all such improvements and facilities
and additions thereto, whether constructed or installed by it upon premises
hereunder leased to it for its exclusive use or preferential use or upon Airport
property not leased to it for its exclusive use or preferential use, in good
condition and repair, reasonable wear and tear excepted, and damage by fire or
other casualty excepted. Lessee shall not be liable for
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the repair or restoration of damage to premises hereunder leased where such
damage results from fire, structural defect, or other casualty for which
Lessor has obtained and there is in effect adequate insurance protection
covering such fire or other casualty. No restriction shall be placed upon
Lessee as to the architects, builders or contractors who may be employed by
it in connection with any construction, installation, alteration, repair or
maintenance of any such equipment, improvements, facilities and additions.
Lessee shall keep such premises leased to Lessee for its exclusive use or
preferential use in a sanitary and sightly condition, and shall provide all
necessary janitor services with respect thereto.
In the event that Lessee fails to perform for a period of thirty days after
written notice from Lessor so to do, any obligation required by this Article V
to be performed by Lessee at Lessee's cost, or fails to correct any construction
or installation by it of any equipment, improvements or facilities not completed
in accordance with the plans and specifications approved by Lessor within thirty
days of Lessor's notice to Lessee of a deviation from such plans and
specifications and request for appropriate changes in such construction and
installation, Lessor, upon the expiration of such thirty day period, may, but
shall not be obligated to, enter upon the premises involved and perform such
obligation of Lessee, charging Lessee the reasonable cost and expense thereof,
and Lessee agrees to pay Lessor such charge in addition to any other amounts
payable by Lessee hereunder; provided, however, that if Lessee's failure to
perform any such obligation adversely affects or endangers the health or safety
of the public or of employees of Lessor, and if Lessor so states in its
aforesaid notice to Lessee, Lessor may but shall not be obligated to perform
such obligation of Lessee at any time after the giving of such notice and
without awaiting the expiration of said thirty day period, and
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charge to Lessee, and Lessee shall pay, as aforesaid, the reasonable cost and
expense of such performance. If Lessor shall perform any of Lessee's
obligations in accordance with the provisions of this section, Lessor shall
not be liable to Lessee for any loss of revenues to Lessee resulting from
such performance.
ARTICLE VI
RIGHT OF ENTRY BY LESSOR
Lessor may enter upon the premises now or hereafter leased exclusively or
preferentially to Lessee hereunder at any reasonable time for any purpose
necessary, incidental to, or connected with the performance of its obligations
hereunder, in the exercise of its governmental functions, or in the event of any
emergency.
ARTICLE VII
MAINTENANCE, OPERATION AND REPAIR BY LESSOR
A. Lessor shall operate, maintain and keep in good repair the areas and
facilities described in Article I hereof. Lessor shall keep the Airport free
from obstruction, including, without limitation, the clearing and removal of
snow, vegetation, stones and other foreign matter from the runways, taxiways,
and loading areas and areas immediately adjacent to such runways, taxiways and
loading areas, as may be reasonably necessary for the safe, convenient and
proper use of the Airport by Lessee, and shall maintain and operate the Airport
in all respects in a manner at least equal to the highest standards or ratings
issued by the FAA for airports of similar size and character and in accordance
with all rules and regulations of the FAA.
Lessor, at its cost, shall provide and supply adequate heat to and air
conditioning for the premises hereunder leased to Lessee for its exclusive use
or preferential use or for its use jointly or in common with others, and shall
provide reasonable illumination
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and drinking water in the public and passenger space in the Midfield Terminal
and the Existing Terminal Facilities and, except as otherwise provided
herein, for the areas and facilities adjacent thereto respecting which Lessee
is given a non-exclusive use hereunder. Lessor, at its cost, shall also
provide adequate lighting for the vehicular parking spaces and adequate field
lighting on and for the Airport, including, without limiting the generality
hereof, boundary lights, landing lights, flood lights and beacons. Lessor, at
its cost, shall also provide all janitor services and other cleaners
necessary to keep the vehicular parking spaces and the landing field of the
Airport at all times clean, neat, orderly, sanitary and presentable.
Lessor shall provide adequate guards, at such times as may be required by
the circumstances, at all parts of the Airport which Lessee is entitled to use
jointly and in common with others.
In the event that Lessor fails to perform for a period of thirty days after
written notice from Lessee so to do, any obligation required by this Article VII
to be performed by Lessor at Lessor's cost, Lessee, upon the expiration of such
thirty day period, may but shall not be obligated to perform such obligation of
Lessor and deduct the reasonable cost to Lessee of performing such obligation
from any rentals, fees or charges subsequently becoming due from Lessee to
Lessor under this Agreement; provided, however, that if Lessor's failure to
perform any such obligation adversely affects or endangers the health or safety
of Lessee or of any of any of its employees, agents, passengers, guests,
patrons, invitees, or its or their suppliers of materials or furnishers of
service or any of its or their property, and if Lessee so states in its
aforesaid notice to Lessor, Lessee may but shall not be obligated to perform
such obligation of Lessor at any time after the giving of said notice and
without awaiting the
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expiration of said thirty day period, and Lessee may deduct its reasonable
costs of performance thereof from any rentals, fees or charges as aforesaid.
Lessor shall have the right to relocate at its own cost any equipment,
improvements and facilities constructed or installed by Lessee upon the Airport
property not leased hereunder to Lessee for its exclusive use or preferential
use pursuant to authorization therefor under Article I hereof; provided,
however, that such relocation shall be performed in such a manner and at such
times as are calculated to reduce to the minimum possible under the
circumstances any interference with Lessee's operations at the Airport, and that
the relocated equipment, improvements and facilities shall, when completed, be
commensurate with the equipment, improvements and facilities existing prior to
such relocation.
B. Notwithstanding the foregoing, Lessor hereby appoints Lessee as its
agent for the performance of, and Lessee agrees to and undertakes to perform,
the Assigned Operations and Maintenance Functions to be performed by Lessor
pursuant to this Article VII in, on and under the Midfield Terminal, pursuant to
the following agreements:
1. Lessee agrees to perform the Assigned Operations and Maintenance
Functions in a manner and to standards as are established for Lessor in this
Article VII.
2. In the event that Lessee fails to perform, for a period of 30
days after written notice from Lessor so to do, any obligation required by this
Article VII to be performed by Lessee at Lessee's cost, Lessor, upon the
expiration of such 30 day period, may, but shall not be obligated to, enter upon
the premises involved and perform such obligation of Lessee, provided, however,
that if Lessee's failure to perform any such obligation adversely affects, or
endangers the health or safety of the public or of
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employees of Lessor, and if Lessor so states in its aforesaid notice to
Lessee, Lessor may, but shall not be obligated to, perform such obligation of
Lessee, at any time after the giving of such notice and without awaiting the
expiration of said 30 day period.
3. As required by Article IIIF.1.(b)(vii) above, Lessee shall render
a detailed statement for reimbursement of the out of pocket costs incurred by
Lessee in connection with the Assigned Operations and Maintenance Functions
undertaken by Lessee under this Article VII within 20 days after the end of each
month, and Lessee shall be entitled to net such amounts against payments due
Lessor pursuant to Article IIIF.3. above. Lessor shall be entitled to audit any
monthly statement of costs rendered by Lessee and Lessee will make available to
Lessor all of the records supporting such statements. With respect to employees
of Lessee, Lessee shall be entitled to reimbursement for any out-of-pocket costs
incurred by it for salaries and benefits of Lessee's employees exclusively
assigned to the Assigned Operations and Maintenance Functions and who are based
at, and spend substantially all of their work time at, the Airport. The payments
made by Lessor to Lessee pursuant to this subsection shall be deemed to be
Midfield O&M Expenses.
4. In the performance of the functions undertaken pursuant to this
Article VII by contractor or third party forces engaged by Lessee, Lessee shall
require payment of wage rates and provision of benefits comparable to the wage
rates and benefits paid and provided to workers engaged in similar skilled
trades work for building maintenance projects in the Detroit Metropolitan Area.
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ARTICLE VIII
UTILITY SERVICES
Lessor shall, directly or by arrangement with appropriate utility companies
or suppliers, supply Lessee with electrical current, gas, water, telephone and
sewerage facilities, and shall charge Lessee for such utility services at rates
not exceeding those which Lessee would have to pay if it established the same
demand and took the same quantity directly from such utility companies or
suppliers. Lessor shall also supply electrical current to the ramp areas to be
used by Lessee in common with others and shall charge Lessee its appropriate
share of such electrical current at the rates hereinabove specified.
ARTICLE IX
SPACE FOR UNITED STATES WEATHER BUREAU, POSTAL SERVICE,
FEDERAL AVIATION ADMINISTRATION, AND EXPRESS AGENCIES
Lessor shall, upon request of such persons or governmental or express
agencies make available reasonable and convenient space and facilities at the
Airport for the use of the United States Postal Service, or any person required
to use such space by regulations thereof, and for the use of an express agency
or agencies at a reasonable rental charge to such persons, governmental agency
and express agencies; and Lessor shall in like manner make available reasonable
and convenient space and facilities at the Airport for the use of the United
States Weather Bureau and FAA.
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ARTICLE X
RESTAURANT
Any other provision of this Agreement to the contrary notwithstanding,
Lessee shall have the right to operate directly or through a designee, assignee
or sub-lessee, private club facilities within such appropriate space leased to
it in the Midfield Terminal for such purposes, which club facilities shall be
authorized to serve food and beverages; provided, however, food and beverages
served in such private club facilities will be obtained by Lessee from the
Airport food concessionaire to the extent that same are available for purchase
from said Airport food concessionaire.
ARTICLE XI
RULES AND REGULATIONS
Lessor shall adopt and enforce reasonable rules and regulations and any
reasonable amendments thereto, with respect to the use of the Airport, which
shall provide for the safety of those using the Airport, and Lessee agrees to
observe and obey the same; provided, that such rules and regulations shall be
consistent with safety and with rules, regulations and orders of the FAA with
respect to aircraft operations at the Airport; and provided further, that such
rules and regulations shall not be inconsistent with the procedures prescribed
or approved from time to time by the FAA with respect to the operation of
Lessee's aircraft at the Airport. Lessee shall be given notice of all
amendments to rules and regulations as are from time to time adopted by Lessor
and no such amendment shall be effective as to Lessee until thirty (30) days
after the date of such notice unless Lessor states in said notice that the
amendment is of an emergency nature, in which case the amendment shall be
immediately effective.
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ARTICLE XII
CONTROL OF RATES, FARES OR CHARGES
Lessor shall have no control whatsoever over the rates or charges that
Lessee may prescribe for any of its services to, from, through or at the
Airport, or between the Airport and Lessee's ticket offices or other stopping
places in the City of Detroit or the County of Wayne, or elsewhere, nor shall
Lessor, except to the extent reasonably necessary to prevent physical damage or
injuries to persons or property at the Airport, in any manner whatsoever,
control the type, design, style, figuration, weight, allowable loads,
specifications or means of propulsion of, or use of space on, the aircraft
Lessee may operate to and from said Airport, or the point of origin or
destination of flights operated by Lessee to or from the Airport.
ARTICLE XIII
DAMAGE OR DESTRUCTION OF PREMISES
Notwithstanding the provisions of Article V as to maintenance and repair of
premises by Lessee, if any terminal at the Airport shall be partially damaged by
fire, the elements, the public enemy or other casualty but not rendered
untenantable, the same shall be repaired with due diligence by Lessor at its own
cost and expense. In case any such terminal is so damaged or destroyed by fire,
the elements, the public enemy or other casualty, that it will or does become
untenantable, the said building shall be repaired, reconstructed or restored as
the case may be, with due diligence by Lessor at its own cost and expense, and
the rent payable hereunder with respect to said building shall be paid up to the
time of such damage or destruction and shall thenceforth abate until such time
as the said building shall be made tenantable. Lessor shall maintain insurance
sufficient to enable it to fulfill its obligations under this Article.
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In the event that the Airport or any other premises herein leased are
rendered untenantable or unusable because of the condition thereof, there shall
be a reasonable and proportionate abatement of the rentals, fees and charges
provided for herein during the period that the same are so untenantable or
unusable.
ARTICLE XIV
CANCELLATION BY LESSOR
Lessor may cancel this Agreement by giving Lessee sixty (60) days advance
written notice to be served as hereinafter provided, upon or after the happening
of any one of the following events:
(a) The filing by Lessee of a voluntary petition in bankruptcy;
(b) The institution of proceedings in bankruptcy against Lessee and the
adjudication of Lessee as a bankrupt pursuant to such proceedings if such
adjudication shall remain unvacated or unstayed for a period of at least sixty
(60) days;
(c) The taking by a court of competent jurisdiction of Lessee and its
assets pursuant to proceedings brought under the provisions of any Federal
reorganization act if the judgment of such court shall remain unvacated or
unstayed for a period of at least sixty (60) days;
(d) The appointment of a receiver of Lessee's assets if such appointment
by a court of competent jurisdiction shall remain unvacated or unstayed for a
period of at least sixty (60) days;
(e) The divestiture of Lessee's estate herein by other operation of law;
(f) The abandonment by Lessee of its conduct of Air Transportation at the
Airport;
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(g) If the Lessee shall be prevented for a period of sixty (60) days
(after exhausting or abandoning all appeals) by any action of any governmental
authority, board, agency or officer having jurisdiction thereof from conducting
Air Transportation at the Airport unless it is so prevented from conducting Air
Transportation, either (1) by reason of the United States or any agency thereof
acting directly or indirectly, taking possession of and operating, in whole or
in substantial part, the premises and space leased or operated by the Lessee, or
premises required for the actual operation of Lessee's aircraft to and from the
Airport, or (2) if all or a substantial part of the premises and space leased by
the Lessee shall be acquired in the manner described in Article XXIV hereof;
(h) The default by Lessee in the performance of any covenant or agreement
herein required to be performed by Lessee and the failure of Lessee to remedy
such default for a period of sixty (60) days after receipt from Lessor of
written notice to remedy the same; provided, however, that no notice of
cancellation, as above provided, shall be of any force or effect if Lessee shall
have remedied the default prior to receipt of Lessor's notice of cancellation;
Notwithstanding anything to the contrary herein contained, Lessor shall not
have the right to cancel, or give notice of cancellation of, this Agreement
solely by reason of Lessee's failure or refusal to pay any part of the rentals,
fees or charges provided for in this Agreement if, within sixty (60) days after
such failure or refusal, Lessee shall have given to Lessor a written notice
stating that Lessee in good faith predicates such failure or refusal upon either
or both of the following: (1) Any provision of this Agreement granting to Lessee
in specified events a reduction in or abatement of any rentals, fees or charges
payable by Lessee to Lessor hereunder, or (2) Any provision of this
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Agreement authorizing Lessee in specified events to deduct from any such
rentals, fees or charges, the reasonable cost to Lessee of performing any
obligation or obligations required by this Agreement to be performed by
Lessor.
No waiver or default by Lessor of any of the terms, covenants or conditions
hereof to be performed, kept and observed by Lessee 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 Lessee. The
acceptance of rental by Lessor for any period or periods after a default of any
of the terms, covenants and conditions herein contained to be performed, kept
and observed by Lessee, shall not be deemed a waiver of any right on the part of
Lessor to cancel this Agreement for failure by Lessee to so perform, keep or
observe any of the terms, covenants or conditions of this Agreement.
ARTICLE XV
CANCELLATION BY LESSEE
Lessee, in addition to any other right of cancellation herein given to
Lessee or any other rights to which Lessee may be entitled by law or otherwise,
may, so long as Lessee is not in default in any payments to Lessor hereunder,
cancel this Agreement by giving Lessor sixty (60) days advance written notice to
be served as hereinafter provided, upon or after the happening of any one of the
following events:
(a) The failure or refusal, for reasons beyond the control of Lessee, of
the FAA, at any time during the term of this Agreement or any renewal thereof,
to permit Lessee to operate into or from the Airport with any type of aircraft
which Lessee may be licensed to operate into or from other airports of like size
and character and which Lessee may reasonably desire to operate into or from the
Airport;
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(b) Issuance by any court of competent jurisdiction of an injunction in
any way substantially preventing or restraining the use of the Airport or any
part thereof necessary for Lessee's operations, and the remaining in force of
such injunction for a period of at least sixty (60) days at least after Lessor
has exhausted or abandoned all appeals;
(c) The inability of Lessee due to circumstances beyond its control to
use, for a period in excess of ninety (90) days, the Airport or to exercise any
rights and privileges granted to Lessee hereunder and necessary to its
operations because of any law or ordinance, or because of any order, rule,
regulation or other action or any non-action of the FAA or any other
governmental authority, or, because of earthquake, other casualty (excepting
fire) or because of Acts of God or the public enemy;
(d) The default by Lessor in the performance of any covenant or agreement
herein required to be performed by Lessor and the failure of Lessor to remedy
such default for a period of ninety (90) days after receipt from Lessee of
written notice to remedy the same; provided, however, that no notice of
cancellation, as above provided, shall be of any force or effect if Lessor shall
have remedied the default prior to receipt of Lessee's notice of cancellation.
Lessee's performance of all or any part of this Agreement for or during any
period or periods after a default of any of the terms, covenants and conditions
herein contained to be performed, kept and observed by Lessor, shall not be
deemed a waiver of any right on the part of Lessee to cancel this Agreement for
failure by Lessor so to perform, keep or otherwise observe any of the terms,
covenants, or conditions hereof to be performed, kept and observed by Lessor, or
be construed to be or act as a waiver by Lessee of any
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subsequent default of any of the terms, covenants and conditions herein
contained to be performed, kept and observed by Lessor.
ARTICLE XVI
SUSPENSION AND ABATEMENT
In the event that Lessor's operation of the Airport or Lessee's operation
at the Airport should be restricted substantially by action of any court of
competent jurisdiction or by action of the federal government or any agency
thereof, or by action of the State of Michigan or any agency thereof, then
either party hereto shall have the right, upon written notice to the other, to a
suspension of this Agreement and an abatement of a just proportion of the
services and facilities to be afforded hereunder, or a just proportion of the
payments to become due hereunder, from the time of such notice until such
restriction shall have been remedied and normal operations restored.
Ascertainment of all matters under this Article shall be determined by agreement
or by arbitration as provided in Article XVII hereof.
ARTICLE XVII
ARBITRATION
If any controversy or claim should arise out of, under, or relating to, the
provisions of Articles III or XVI of this Agreement, then either party may by
notice in writing to the other, submit the controversy or claim to arbitration.
The party desiring such arbitration shall give written notice to that effect to
the other party, specifying in said notice the name and address of the person
designated to act as arbitrator on its behalf. Within fifteen (15) days after
the service of such notice, the other party shall give written notice to the
first party specifying the name and address of the person designated to act as
arbitrator on its behalf. The arbitrators thus appointed shall
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appoint a third disinterested person of recognized competence in such field,
and such three arbitrators shall as promptly as possible determine the
controversy or claim.
If the two arbitrators appointed by the parties shall be unable to agree
upon the appointment of a third arbitrator within fifteen (15) days after the
appointment of the second arbitrator, then within fifteen (15) days thereafter
either of the parties upon written notice to the other party, on behalf of both,
may request the appointment of a disinterested person of recognized competence
in the field involved as the third arbitrator by the then chief judge of the
United States District Court for the Eastern District of Michigan, Southern
Division, or upon his failure, refusal or inability to act, may request such
appointment by the then miscellaneous presiding judge of the Circuit Court
(Third Judicial Circuit) of the State of Michigan, County of Wayne, or, upon his
failure, refusal or inability to act, may apply to the Circuit Court (Third
Judicial Circuit) of the State of Michigan, County of Wayne for the appointment
of such third arbitrator, and the other party shall not raise any question as to
the court's full power and jurisdiction to entertain the application and make
the appointment. If none of the parties shall so request such appointment of a
third arbitrator within fifteen (15) days after the expiration of the period
within which the two arbitrators are to appoint a third arbitrator as
hereinabove provided, the rights of each party to arbitrate the matter shall be
deemed to have been waived and either of the parties may proceed to enforce
whatever remedies, legal or otherwise, it may otherwise have.
The decision in which any two of the three arbitrators so appointed and
acting hereunder concur shall in all cases be binding and conclusive upon the
parties. Each party shall pay the fees and expense of the arbitrator appointed
by such party and one-half of the other expense of the arbitration properly
incurred hereunder.
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Each of the parties hereto agree that if, in the opinion of the other
party, any separate agreement is required by law in order to effectuate or
enforce the arbitration provisions hereinabove contained, it will execute such
separate agreement provided that the same is not inconsistent with the terms and
provisions of this Agreement.
ARTICLE XVIII
INDEMNITY
Lessee agrees to indemnify and hold Lessor harmless from and against all
liability for injuries to persons or damage to property caused by Lessee's use
and occupancy of or operations at the Airport; provided, however, that Lessee
shall not be liable for any injury, damage or loss caused by Lessor's sole
negligence or by the joint negligence of Lessor and any person other than
Lessee; and provided further that Lessor shall give to the Lessee prompt and
timely notice of any claim made or suit instituted which in any way, directly or
indirectly, contingently or otherwise, affects or might affect Lessee, and
Lessee shall have the right to compromise and defend the same to the extent of
its own interest.
ARTICLE XIX
INSURANCE
Lessee shall, at all times during the term of this Agreement maintain in
effect policies of insurance issued by a company or companies of sound and
adequate financial responsibility, insuring Lessee against all liabilities to
the public for loss resulting from injury to persons or damage to property
arising out of or caused by Lessee's operations, acts or omissions or those of
Lessee's employees, agents or contractors. Such policies shall name the Lessor
as additional assured thereunder,
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subject to the limitations set forth in Article XVIII hereof in respect of
Lessor's negligence, and shall be in at least the following amounts:
Aircraft Public Liability Insurance - $ 5,000,000 per person
50,000,000 per accident
Aircraft Property Damage Insurance - $10,000,000 per accident
Comprehensive Public Liability Ins. - $ 5,000,000 per person
10,000,000 per accident
Comprehensive Property Damage Ins. - $ 5,000,000 per accident
Lessee shall furnish to Lessor certificates evidencing such insurance.
ARTICLE XX
QUIET ENJOYMENT
Lessor agrees that on payment of the rentals, fees and charges as herein
provided and performance of the covenants and agreements on the part of Lessee
to be performed hereunder, Lessee shall peaceably have and enjoy the leased
premises and all the rights and privileges of the Airport, its appurtenances and
facilities granted herein.
ARTICLE XXI
TITLE TO EQUIPMENT, IMPROVEMENTS
AND FACILITIES ERECTED BY LESSEE
It is agreed that title to any equipment, improvements, and facilities, and
any additions thereto, irrespective of whether the same would otherwise become a
fixture under Michigan law (including without limitation all buildings, hangars,
structures, storage tanks, pipes, pumps, wires, poles, machinery and air-
conditioning equipment), constructed or installed by Lessee upon the premises
leased hereunder to Lessee for its exclusive or preferential use or upon other
Airport property (other than equipment,
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improvements and facilities financed by Lessor, whether with the proceeds of
Bonds, PFCs, Federal funds or otherwise), shall remain the property of
Lessee, unless it has at any time during the term of this Agreement by
written notice and election, vested title to all or any part thereof in
Lessor. Lessee shall have the right at any time during the term of this
agreement, or any renewal or extension hereof, to remove any or all of such
equipment, improvements and facilities, provided Lessee is not at any such
time in default in its payments to Lessor hereunder and subject further to
Lessee's obligation to repair all damage, if any, reasonable wear and tear
excepted, resulting from such removal. If at any time during this Agreement,
Lessee has exercised its right to vest title to such equipment, improvements
and facilities in Lessor, it shall no longer have the right to remove such
property. Lessee agrees to remove said equipment, improvements and facilities
at the expiration or other termination of this Agreement irrespective of
whether it has exercised its right of election to vest title to the same in
Lessor, if so requested by Lessor, and, upon failure so to do, Lessor shall
have the right to remove the same and charge to Lessee the actual cost of
such removal and restoration of the site to its original condition, ordinary
wear and tear excepted. Any such equipment, improvements or facilities not
removed by Lessee prior to the expiration or other termination of this
Agreement shall thereupon become the property of Lessor.
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ARTICLE XXII
SURRENDER OF POSSESSION
Upon the expiration or earlier termination of this Agreement or any renewal
hereof, Lessee shall forthwith surrender possession of the premises in as good
condition as when received, reasonable wear and tear, damage by flood, fire,
earthquake, other casualty, Acts of God or the public enemy, excepted.
ARTICLE XXIII
MINERAL RIGHTS
It is agreed and understood that all water, gas, oil and mineral rights in
and under the soil are expressly reserved to Lessor.
ARTICLE XXIV
CONDEMNATION
Upon the acquisition by condemnation or the exercise of the power of
eminent domain under any Federal or state statute by the Federal Government, the
State of Michigan, or any Federal or state agency or any other person vested
with such power, of a temporary or permanent interest in all or any part of the
Airport, the Lessor and the Lessee each shall have the right to appear and file
claims for damages, to the extent of their respective interests, in the
condemnation or eminent domain proceedings, to participate in any and all
hearings, trials and appeals therein, and to receive and retain such amount as
they may lawfully be entitled to receive as damages or payment as a result of
such acquisition.
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ARTICLE XXV
ASSIGNMENT AND SUBLETTING
A. Lessee shall not at any time assign this Agreement or any part hereof,
or sublet any premises now or hereafter leased to Lessee, without the consent in
writing of Lessor, which consent will not be unreasonably withheld; provided,
that the foregoing shall not prevent the assignment of this Agreement to any
corporation with which Lessee may merge or consolidate, or which may succeed to
the business of Lessee. No such subletting, however, shall release Lessee from
its obligations to pay any and all of the rentals, charges, and fees provided or
from any other obligation under this Agreement.
B. Except as provided in Article IIIB.2.(b), Lessor shall not at any time
assign this Agreement or any part hereof, or pledge, sell, convey, mortgage,
encumber, assign or otherwise transfer the Airport or any portion thereof during
the term of this Agreement.
ARTICLE XXVI
SUBSIDIARY COMPANIES
The right to use the premises and facilities leased to Lessee under Article
I hereof, or which it may subsequently be entitled to use in accordance with the
exercise of options pursuant to this Agreement, in the manner specified in such
Article and any other Articles of this Agreement, shall be extended to all of
Lessee's subsidiary companies at no additional cost.
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ARTICLE XXVII
NOTICES
Notices to Lessor provided for herein shall be sufficient if sent by
registered mail, postage prepaid, addressed to Director of Airports, Detroit
Metropolitan Wayne County Airport, Detroit, Michigan 48242; and notices to
Lessee, if sent by registered mail, postage prepaid, addressed to Northwest
Airlines, Inc., 5101 Northwest Drive, St. Paul, Minnesota 55111, Attention:
General Counsel, or to such other respective addresses as the parties may
designate to each other in writing from time to time.
ARTICLE XXVIII
DEFINITIONS
1. "ACE ACCOUNT" shall mean the AIRLINE CAPITAL EXPENDITURE (SUBORDINATE LIEN)
ACCOUNT OF THE SUBORDINATE LIEN COVERAGE FUND as established pursuant to
Ordinance 319.
2. "ACTIVITY FEE" shall have the meaning set forth in Article IIIB.1.
3. "AGREEMENT" shall mean this Second Amended and Restated Airport Agreement.
4. "AIRLINE EQUITY ACCOUNT" shall mean that account as established pursuant to
Ordinance 319.
5. "AIRLINE EQUITY SUBACCOUNTS" shall mean those subaccounts of the Airline
Equity Accounts as established pursuant to Ordinance 319.
6. "AIRPORT" shall have the meaning set forth in the first "Whereas" clause of
this Agreement.
7. "AIRPORT DEVELOPMENT FUND" shall mean that fund created by Lessor pursuant
to Article IIIB.2.(a)(5).
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8. "AIRPORT REVENUE BONDS" shall mean Bonds issued pursuant to Ordinance 319.
9. "AIRPORT-SYSTEM" shall mean the Airport and Willow Run Airport.
10. "AIR TRANSPORTATION" shall mean the business of transporting natural
persons, property, cargo and mail by aircraft.
11. "APPROVED MAXIMUM LANDING WEIGHT" for any aircraft shall mean the maximum
landing weight approved by the FAA for landing such aircraft at the
Airport.
12. "ASSIGNED OPERATIONS AND MAINTENANCE FUNCTIONS" shall mean: (a) operations
and maintenance for all of Lessee's Exclusive Midfield Terminal Space,
Lessee's Preferential Midfield Terminal Space and Lessee's Joint Use
Midfield Terminal Space, (b) operation and maintenance (including
janitorial services, cleaning and minor repairs) of all of the Common Use
Midfield Terminal Space and public space in the Midfield Terminal and the
mechanical equipment therein, (c) the operation and maintenance of all
building-wide services, such as heating, cooling, lighting, and electrical
services and (d) the maintenance and repairs of the interior and exterior
floors, walls, ceilings and roof of the Midfield Terminal. The foregoing
notwithstanding, Assigned Operations and Maintenance Functions shall not
include: (i) operation of the Common Use Midfield Terminal Space in the
Midfield Terminal (including gate allocation and utilization, and federal
inspection services facilities), (ii) the selection of concessionaires in
the Midfield Terminal and operations and maintenance functions to be
performed by such concessionaires in the Midfield Terminal, and (iii)
police and building security functions in the Midfield Terminal.
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13. "BASIC AGREEMENT" shall mean that certain Airport Agreement dated February
26, 1959, as amended, to which Lessor and Lessee were parties as of the
execution of this Agreement.
14. "BONDS" shall mean bonds issued by the Lessor pursuant to the Bond
Ordinance or any other ordinance of the Lessor pursuant to which airport
revenue bonds secured by a pledge of Airport revenue, on a senior or
subordinate lien basis, are issued.
15. "BOND DEBT SERVICE" shall mean, for any fiscal year, all amounts of any
nature whatsoever payable during such fiscal year under Ordinance 319 into
the Bond Fund (including, but not limited to, the Bond Reserve Account),
the Operation and Maintenance Reserve Fund and the Renewal and Replacement
Fund, any other payment required by Section 604 of Ordinance 319
(including, but not limited to, amounts required to satisfy Lessor's rate
covenant) and all amounts of any nature whatsoever payable during such
fiscal year under any other ordinance of Lessor pursuant to which Bonds are
issued into funds with purposes similar to the aforementioned Ordinance 319
funds, including coverage payments, reduced in all cases by an amount equal
to any interest payable on Bonds during such fiscal year from Bond
proceeds.
16. "BOND ORDINANCE" shall mean Ordinance 319 and such other ordinances enacted
and amended from time to time under which Lessor is authorized to issue
Bonds.
17. "BOND RESERVE ACCOUNT" shall mean the fund of such name as established
pursuant to Ordinance 319.
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18. "COMMON USE MIDFIELD TERMINAL SPACE" shall mean Common Use Premises in the
Midfield Terminal.
19. "COMMON USE PREMISES" shall mean space, improvements and facilities at the
Airport to be used in common by air carriers.
20. "COUNTY DISCRETIONARY FUND" shall mean the fund of such name as established
pursuant to Ordinance 319.
21. "DATE OF BENEFICIAL OCCUPANCY" shall mean, with regard to any terminal
facility, the date on which an air transportation company occupies such
facility for the operation of its Air Transportation business.
22. "DOMESTIC AREA OF THE MIDFIELD TERMINAL" shall mean that portion of the
Midfield Terminal identified on EXHIBIT B as Domestic Area.
23. "EXCLUSIVE EXISTING TERMINAL SPACE" shall mean Exclusive Use Premises in
the Existing Terminal Facilities.
24. "EXCLUSIVE MIDFIELD TERMINAL SPACE" shall mean Exclusive Use Premises in
the Midfield Terminal.
25. "EXCLUSIVE USE PREMISES" shall mean space, improvements and facilities at
the Airport leased for the exclusive use of an air carrier.
26. "EXISTING TERMINAL FACILITIES" shall mean space, improvements and
facilities in the terminals in operation at the Airport immediately prior
to the Date of Beneficial Occupancy of any space in the Midfield Terminal.
27. "FAA" shall mean the Federal Aviation Administration, or any successor
agency.
28. "FINAL AUDIT" shall have the meaning set forth in Article IIIF.5.(b).
29. "FISCAL YEAR" shall mean December 1 of any year through November 30 of the
following year, or such other fiscal year as Lessor may adopt for the
Airport.
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30. "INTERNATIONAL AREA OF MIDFIELD TERMINAL" shall mean that portion of the
Midfield Terminal identified on EXHIBIT B as International Area.
31. "JOINT USE MIDFIELD TERMINAL SPACE" shall mean Joint Use Premises in the
Midfield Terminal.
32. "JOINT USE PREMISES" shall mean space, improvements and facilities at the
Airport leased for the joint use of two or more (but not all) air carriers.
33. "LESSEE'S COMMON USE MIDFIELD TERMINAL SPACE" shall have the meaning set
forth in Article IB.5.
34. "LESSEE'S EXCLUSIVE EXISTING TERMINAL SPACE" shall have the meaning set
forth in Article IB.1.
35. "LESSEE'S EXCLUSIVE MIDFIELD TERMINAL SPACE" shall have the meaning set
forth in Article IB.2.
36. "LESSEE'S EXISTING TERMINAL SPACE TO BE DEMOLISHED" shall have the meaning
set forth in Article IB.1.
37. "LESSEE'S JOINT USE MIDFIELD TERMINAL SPACE" shall have the meaning set
forth in Article IB.4.
38. "LESSEE'S PREFERENTIAL MIDFIELD TERMINAL SPACE" shall have the meaning set
forth in Article IB.3.(a).
39. "MAJORITY-IN-INTEREST OF THE AIR CARRIERS" shall mean either (i) seventy-
five percent (75%) of the Signatory Airlines who together have landed
fifty-one percent (51%) of the total landed weight of all such Signatory
Airlines during the immediately preceding calendar year (as such weight is
reflected by official Airport records), or (ii) fifty-one percent (51%) of
the Signatory Airlines who have together landed seventy-five percent (75%)
of the total landed weight of all such
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Signatory Airlines during the immediately preceding calendar year (as such
weight is reflected by official Airport records).
40. "MIDFIELD COMMON USE RENTAL CHARGES" shall mean the charges established in
Article IIIA.4.(a).
41. "MIDFIELD DOMESTIC BOND DEBT SERVICE RATE" shall mean the rate established
as such pursuant to Article IIIA.2.(b).
42. "MIDFIELD DOMESTIC EXCLUSIVE AND PREFERENTIAL RENTAL RATE" shall mean the
rate established as such pursuant to Article IIIA.2.(b).
43. "MIDFIELD DOMESTIC JOINT USE RENTAL RATE" shall mean the rate established
as such pursuant to Article IIIA.3.(b).
44. "MIDFIELD DOMESTIC O&M RATE" shall mean the rate established as such
pursuant to Article IIIA.2.(b).
45. "MIDFIELD EXCLUSIVE AND PREFERENTIAL RENTAL CHARGES" shall mean the charges
established in Article IIIA.2.(a).
46. "MIDFIELD INTERNATIONAL BOND DEBT SERVICE RATE" shall mean the rate
established as such pursuant to Article IIIA.2.(c).
47. "MIDFIELD INTERNATIONAL EXCLUSIVE AND PREFERENTIAL RENTAL RATE" shall mean
the rate established as such pursuant to Article IIIA.2.(c).
48. "MIDFIELD INTERNATIONAL JOINT USE RENTAL RATE" shall mean the rate
established as such pursuant to Article IIIA.3.(c).
49. "MIDFIELD INTERNATIONAL O&M RATE" shall mean the rate established as such
pursuant to Article IIIA.2(c).
50. "MIDFIELD JOINT USE RENTAL CHARGES" shall mean the charges established in
Article IIIA.3.(a).
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51. "MIDFIELD O&M EXPENSES" shall mean direct O&M Expenses of the Midfield
Terminal (but excluding all administrative charges by Lessor and other
indirect O&M expenses).
52. "MIDFIELD TERMINAL" shall have the meaning set forth in the fourth
"Whereas" clause of this Agreement.
53. "MID-YEAR PROJECTION" shall have the meaning set forth in Article IIIF.4.
54. "O&M EXPENSES" shall mean, for any Fiscal Year, expenses of maintenance,
operation and administration of the Airport (including, but not limited to,
the Midfield Terminal) for such Fiscal Year.
55. "OPERATION AND MAINTENANCE RESERVE FUND" shall mean the fund of such name
as established pursuant to Ordinance 319.
56. "ORDINANCE 319" shall mean that ordinance of Lessor dated July 24, 1986
entitled "Charter County of Wayne Ordinance Number 319," as such ordinance
has been amended or supplemented from time to time.
57. "PERSONS" shall mean natural persons, firms, corporations, partnerships,
limited liability companies and other legal entities.
58. "PAID-IN COVERAGE" shall have the meaning set forth in Article IIB.2.(a).
59. "PFCS" shall mean passenger facility charges imposed by Lessor pursuant to
the Aviation and Safety Capacity Expansion Act of 1990, Pub. L. 101-508,
Title IX, Subtitle B, Sections 9110 and 911, recodified as 49 U.S.C. 40117,
as amended from time to time, and Part 158 of the Federal Aviation
Regulations (14 CFR Part 158), as amended from time to time.
60. "PREFERENTIAL MIDFIELD TERMINAL SPACE" shall mean Preferential Use Premises
in the Midfield Terminal.
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61. "PREFERENTIAL USE PREMISES" shall mean space, improvements and facilities
at the Airport provided to an air carrier on a preferential, non-exclusive
manner, e.g, in the manner provided in Article IB.3.(b).
62. "PRODUCER PRICE INDEX" shall mean the Producer Price Index/All Commodities
published by the United States Department of Labor, Bureau of Labor
Statistics (January, 1996 = 100), or if such index is discontinued or
otherwise becomes unavailable to the public, the most nearly comparable
index published by a recognized financial institution, financial
publication or university.
63. "PROJECT DEVELOPMENT AGREEMENT" shall mean the Project Development
Agreement dated as of October 10, 1996, between Lessor and Lessee.
64. "PROJECTION" shall have the meaning set forth in Article IIIF.2.
65. "RENEWAL AND REPLACEMENT FUND" shall mean the fund of such name as
established pursuant to Ordinance 319.
66. "RESERVE FUND" shall mean the fund of such name as established pursuant to
Ordinance 319.
67. "REVENUE FUND" shall mean the fund of such name as established pursuant to
Ordinance 319.
68. "REVENUE REQUIREMENT" shall have the meaning set forth in Article IIIB.1.
69. "SIGNATORY AIRLINES" shall mean Lessee and those air carriers who have
executed an agreement substantially similar to the Basic Agreement. After
December 1, 2008, in order to be a Signatory Airline, an air carrier shall
also have executed an agreement substantially similar to this Agreement
(except for the premises leased thereunder).
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70. "SPECIAL FACILITY REVENUES" shall have the meaning for such term set forth
in Ordinance 319.
71. "SPECIAL FACILITY REVENUE BOND" shall mean a bond of Lessor secured solely
by Special Facility Revenues.
72. "SUBORDINATE BOND RESERVE ACCOUNT" shall mean the account of such name as
established pursuant to Ordinance 319.
73. "TERMINAL CHARGES" shall mean the charges established pursuant to Article
IIIA.
74. "USEABLE SQUARE FEET" shall mean square feet of space available for public
and tenant use exclusive of nonpublic mechanical, service and support
areas.
75. "WEIGHTED MAJORITY" shall mean either (a) Signatory Airlines which, in the
aggregate, landed eighty-five percent (85%) or more of the landed weight of
all Signatory Airlines for the preceding twelve-month period for which
records are available, or (b) all but one of the Signatory Airlines
regardless of landed weight.
ARTICLE XXIX
PARAGRAPH HEADINGS
The paragraph headings contained herein are for convenience in reference
and are not intended to define or limit the scope of any provision of this
Agreement.
ARTICLE XXX
INVALID PROVISION
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 shall in no way affect any other covenant,
condition or provision herein contained; provided that the invalidity of any
such covenant, condition or
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provision does not materially prejudice either Lessor or Lessee in its
respective rights and obligations contained in the valid covenants,
conditions or provisions of this Agreement.
ARTICLE XXXI
SUCCESSORS AND ASSIGNS BOUND BY COVENANTS
All the covenants, stipulations and agreements in this Agreement shall
extend to and bind the legal representatives, successors and assigns of the
respective parties hereto.
ARTICLE XXXII
RIGHT TO LEASE TO UNITED STATES GOVERNMENT
It is agreed that during time of war or national emergency the Lessor shall
have the right to lease the landing area or any part thereof to the United
States Government for military or naval use, and, if any such lease is executed,
the provisions of this instrument insofar as they are inconsistent with the
provisions of the lease to the Government shall be suspended.
It is agreed that this lease shall be subordinate to the provisions of any
existing or future agreement between the Lessor and the United States, relative
to the operation or maintenance of the Airport, the execution of which has been
or may be required as a condition precedent to the expenditure of Federal funds
for the development of the Airport.
ARTICLE XXXIII
COVENANTS AGAINST DISCRIMINATION
A. COVENANT PURSUANT TO REQUIREMENTS OF THE DEPARTMENT OF TRANSPORTATION:
Lessee, for itself, its personal representatives, successors in
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<PAGE>
interest, and assigns, as a part of the consideration hereof, does hereby
covenant and agree as a covenant running with the land, that (1) no person on
the grounds of race, color, national origin or gender shall be excluded from
participation in, denied the benefits of, or be otherwise subjected to
discrimination in the use of facilities at the Airport, (2) that in the
construction of any improvements on, over, or under land at the Airport and
the furnishing of services thereon, no person on the grounds of race, color,
national origin or gender shall be excluded from participation in, denied the
benefits of, or otherwise be subjected to discrimination, (3) that Lessee
shall use the premises in compliance with all other requirements imposed by
or pursuant to Title 49, Code of Federal Regulations, Department of
Transportation, Subtitle A, Office of the Secretary, Part 21,
Nondiscrimination in Federally-assisted Programs of the Department of
Transportation - Effectuation of Title VI of the Civil Rights Act of 1964,
and as said Regulations may be amended.
In the event of a breach of any of the above non-discrimination covenants,
Lessor shall have the right to terminate this agreement and to reenter and
repossess said land and the facilities thereon, and hold the same as if said
agreement had never been made or issued.
B. EMPLOYMENT: The parties hereto hereby covenant not to discriminate
against an employee or applicant for employment with respect to his or her hire,
tenure, terms, conditions or privileges of employment, or any matter directly or
indirectly related to employment because of his or her age or sex, except where
based on a bona fide occupational qualification, or because of his or her race,
color, religion, national origin or ancestry, and to require a similar covenant
on the part of any sublessee hereunder and any subcontractor employed as a
result, or in connection with the
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<PAGE>
exercise of rights granted and/or the performance of obligations assumed
under this Agreement.
C. AFFIRMATIVE ACTION PROGRAM: In addition to the foregoing, the parties
hereto agree to carry out and be subject to the provisions of Addendum 1,
entitled "NON-DISCRIMINATION AFFIRMATIVE ACTION AND SET ASIDE PROGRAMS FOR WAYNE
COUNTY" attached hereto and made a part hereof.
D. DISADVANTAGED BUSINESS ENTERPRISE: Lessee agrees to comply with the
following policy and requirements of the Department of Transportation:
1. POLICY. It is the policy of the Department of Transportation
that disadvantaged business enterprises as defined in 49 CFR Part 23
shall have the maximum opportunity to participate in the performance
of contracts financed in whole or in part with Federal funds under
this Agreement. Consequently the disadvantaged business enterprise
requirements of 49 CFR Part 23 apply to this Agreement.
2. DBE OBLIGATION. (i) The recipient or its contractor agrees to
ensure that disadvantaged business enterprises as defined in 49 CFR
Part 23 have the maximum opportunity to participate in the performance
of contracts and subcontracts financed in whole or in part with
Federal funds provided under this Agreement. In this regard all
recipients or contractors shall take all necessary and reasonable
steps in accordance with 49 CFR Part 23 to ensure that disadvantaged
business enterprises have the maximum opportunity to compete for and
perform contracts. Recipients and their contractors shall not
discriminate on the basis of
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<PAGE>
race, color, national origin, or sex in the award and performance of
Department of Transportation-assisted contracts.
Failure of a contractor or subcontractor to carry out the
requirements set forth in paragraph 23.43(a) of 49 CFR Part 23 shall
constitute a breach of contract and, after notification of the
Department of Transportation, may result in termination of the
Agreement or contract by the recipient or such remedy as the recipient
deems appropriate.
The definitions set forth in paragraph 23.5 of 49 CFR Part 23
shall apply to the foregoing statements concerning disadvantaged
business enterprises.
ARTICLE XXXIV
CONFORMITY OF AGREEMENT
In the event that Lessor shall hereafter enter into any lease, contract or
agreement with any other scheduled air transport operator, with respect to the
use of the Airport or terminal facilities, containing more favorable terms than
this Agreement, or shall hereafter grant to any other scheduled air transport
operator, rights or privileges with respect thereto which are not accorded to
Lessee hereunder, then the same rights, privileges and more favorable terms
shall be concurrently and automatically made available to Lessee.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
COUNTY OF WAYNE
CHIEF EXECUTIVE OFFICER
/s/ Edward H. McNamara
----------------------------------------
Edward H. McNamara
NORTHWEST AIRLINES, INC.
By JAMES M. GREENWALD
-----------------------------------
Its VP FACILITIES AND AIRPORT AFFAIRS
-----------------------------------
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<PAGE>
EXHIBIT A
EXISTING AIRPORT LAYOUT PLAN
[Site Plan]
<PAGE>
DAVEY TERMINAL
MAIN LEVEL - NORTH PORTION
[Site Plan]
EXHIBIT # NWA-1
DATE 1-1-1996
<PAGE>
DAVEY TERMINAL
APRON LEVEL - CENTRAL PORTION
[Site Plan]
EXHIBIT # NWA-2
DATE 1-1-1996
<PAGE>
DAVEY TERMINAL
APRON LEVEL - NORTH PORTION
[Site Plan]
EXHIBIT # NWA-3
DATE 1-1-1996
<PAGE>
DAVEY TERMINAL
MEZZANINE LEVEL
[Site Plan]
EXHIBIT # NWA-4
DATE 1-1-1996
<PAGE>
DAVEY TERMINAL
MAIN LEVEL - NORTH PORTION
[Site Plan]
EXHIBIT # NWA-5
DATE 1-1-1996
<PAGE>
DAVEY TERMINAL
APRON LEVEL - SOUTH PORTION
[Site Plan]
EXHIBIT # NWA-6
DATE 1-1-1996
<PAGE>
CONCOURSE A - MAIN LEVEL
[Site Plan]
EXHIBIT # NWA-7
DATE 1-1-1996
<PAGE>
CONCOURSE B - MAIN LEVEL
[Site Plan]
EXHIBIT # NWA-8
DATE 1-1-1996
<PAGE>
CONCOURSE B - APRON LEVEL
[Site Plan]
EXHIBIT # NWA-9
DATE 1-1-1996
<PAGE>
CONCOURSE 'C'
MAIN LEVEL - SOUTH EXPANSION
[Site Plan]
EXHIBIT # NWA-10
DATE 1-1-1996
<PAGE>
CONCOURSE C
APRON LEVEL - SOUTH EXPANSION PORTION
[Site Plan]
EXHIBIT # NWA-11
DATE 1-1-1996
<PAGE>
CONCOURSE C
MAIN LEVEL - SOUTHWEST PORTION
[Site Plan]
EXHIBIT # NWA-12
DATE 1-1-1996
<PAGE>
CONCOURSE C
APRON LEVEL - SOUTHWEST PORTION
[Site Plan]
EXHIBIT # NWA-13
DATE 1-1-1996
<PAGE>
L.C. SMITH TERMINAL
MAIN LEVEL - CENTRAL PORTION
[Site Plan]
EXHIBIT # NWA-14
DATE 1-1-1996
<PAGE>
L.C. SMITH TERMINAL
APRON LEVEL - NORTHWEST PORTION
[Site Plan]
EXHIBIT # NWA-15
DATE 1-1-1996
<PAGE>
CONCOURSE C - MAIN LEVEL
[Site Plan]
EXHIBIT # NWA-16
DATE 1-1-1996
<PAGE>
CONCOURSE C
APRON LEVEL - SOUTHWEST PORTION
[Site Plan]
EXHIBIT # NWA-17
DATE 1-1-1996
<PAGE>
CONCOURSE D - MAIN LEVEL
[Site Plan]
EXHIBIT # NWA-18
DATE 1-1-1996
<PAGE>
CONCOURSE D - APRON LEVEL
[Site Plan]
EXHIBIT # NWA-19
DATE 1-1-1996
<PAGE>
CONCOURSE E: - MAIN LEVEL
[Site Plan]
EXHIBIT # NWA-20
DATE 1-1-1996
<PAGE>
CONCOURSE E - APRON LEVEL
[Site Plan]
EXHIBIT # NWA-21
DATE 1-1-1996
<PAGE>
CONCOURSE F - MAIN LEVEL
[Site Plan]
EXHIBIT # NWA-22
DATE 1-1-1996
<PAGE>
CONCOURSE F - APRON LEVEL
[Site Plan]
EXHIBIT # NWA-23
DATE 1-1-1996
<PAGE>
CONCOURSE F - TUNNEL LEVEL
[Site Plan]
EXHIBIT # NWA-24
DATE 1-1-1996
<PAGE>
CONCOURSE G
APRON LEVEL - NORTH PORTION
[Site Plan]
EXHIBIT # NWA-25
DATE 1-1-1996
<PAGE>
CENTRAL SERVICES - MAIN LEVEL
[Site Plan]
EXHIBIT # NWA-26
DATE 1-1-1996
<PAGE>
CENTRAL SERVICES - APRON LEVEL (SOUTH)
[Site Plan]
EXHIBIT # NWA-27
DATE 1-1-1996
<PAGE>
INTERNATIONAL TERMINAL
APRON LEVEL - SOUTH PORTION
[Site Plan]
EXHIBIT # NWA-28
DATE 1-1-1996
<PAGE>
INTERNATIONAL TERMINAL
MEZZANINE LEVEL
[Site Plan]
EXHIBIT # NWA-29
DATE 1-1-1996
<PAGE>
MAIN LEVEL - BUS STOP (NWA)
[Site Plan]
EXHIBIT # NWA-30
DATE 7-1-1996
<PAGE>
APRON LEVEL BUS STOP
[Site Plan]
EXHIBIT # NWA-31
DATE 7-1-1996
<PAGE>
EXHIBIT D
TERMINAL AND EAST CONCOURSES
INTERNATIONAL ARRIVAL LEVEL
[Site Plan]
<PAGE>
EXHIBIT D
EAST CONCOURSE - SOUTH
APRON LEVEL
[Site Plan]
<PAGE>
EXHIBIT D
EAST CONCOURSE - SOUTH
APRON LEVEL
[Site Plan]
<PAGE>
EXHIBIT D
TEMINAL AND EAST CONCOURSE - CENTER
DOMESTIC ARRIVAL / APRON LEVEL
[Site Plan]
<PAGE>
EXHIBIT D
EAST CONCOURSE - NORTH
APRON LEVEL
[Site Plan]
<PAGE>
EXHIBIT D
EAST CONCOURSE - SOUTH
CONCOURSE LEVEL
[Site Plan]
<PAGE>
EXHIBIT D
TERMINAL AND EAST CONCOURSE - CENTER
DEPARTURE / CONCOURSE LEVEL
[Site Plan]
<PAGE>
EXHIBIT D
EAST CONCOURSE - NORTH
CONCOURSE LEVEL
[Site Plan]
<PAGE>
EXHIBIT D
EAST CONCOURSE
MEZZANINE LEVEL
[Site Plan]
<PAGE>
EXHIBIT D
WEST CONCOURSE ALL LEVELS
[Site Plan]
CONCOURSE LEVEL
[Site Plan]
APRON LEVEL
[Site Plan]
BASEMENT LEVEL
<PAGE>
EXHIBIT D-1
Protocol for Use of International Gates
Midfield Terminal
The international gates, together with related holdrooms, jetbridges, ramp
access and baggage facilities, will be made available in accordance with the
following priority of use:
1. Regularly scheduled international airline service, with existing service
having precedence over new service;
2. International charter arrivals, if and for so long as the Federal government
prohibits FIS operations at the Berry International Terminal;
3. Regularly scheduled Northwest domestic service;
4. Delayed international charter arrivals when the expected delay for the
flight to use the Berry International Terminal will exceed 90 minutes and
use of a Midfield Terminal FIS gate will not interfere with the scheduled
international or domestic use of the gate.
5. Non-scheduled or irregular charter arrivals and the use of a Midfield
Terminal FIS gate will not interfere with the scheduled international or
domestic use of that gate.
In making the determination of whether an international non-stop passenger
flight to the Airport is a regularly scheduled flight or a charter operation for
purposes of this protocol, the Airport will apply the following criteria:
1. Does the international operation generally have passengers connecting at the
Airport on-line, inter-line, or via code share, and the operational need for
connecting facilities?
2. Is the carrier operating the flight a signatory under the airport agreement
for the Airport?
3. Does the carrier operating the flight hold all necessary government
approvals to operate international regularly scheduled service?
4. Is the carrier's international service primarily scheduled on a year-round
basis or does it primarily offer seasonal services to different locations?
<PAGE>
5. Are the carrier's schedules published each month in the Official Airline
Guide and displayed in computer reservation systems? Are the fares regularly
published by the Airline Tariff Publishing Company?
6. Does the carrier providing the service provide reservation services and
create PNR (passenger name records) for the flights with its own employees?
International operations that meet these criteria overall shall be considered
international regularly scheduled flights for purposes of this protocol.
However, the failure to meet any one or more criteria shall not necessarily
preclude the operation from being considered an international regularly
scheduled flight. The Airport's goal of optimizing overall airport operating
efficiency shall be an important consideration.
-2-
<PAGE>
Exhibit E
ALLOCATION OF BOND DEBT SERVICE
Detroit Metropolitan Wayne County Airport
(All figures in thousands, except where noted)
This exhibit details the methodology for allocating Bond Debt Service to
various components of the Airport. This is required when terminal rental rates
transition to a compensatory-based approach in FY2009. These steps should be
followed for each bond series and issuance. An example is provided to illustrate
the allocation methodology.
STEP 1: IDENTIFY NET FINANCEABLE COSTS FROM EACH BOND ISSUANCE
The first step is determine the net financeable project costs which
constitute each bond issuance. Net financeable costs should be grouped into one
of the following categories: Midfield Domestic Terminal, Midfield International
Terminal, Midfield Overhead, Existing Terminals, and all Airfield projects. The
following projects, related to the construction of the Midfield Terminal
Complex, are considered Midfield Overhead; tunnels and walkways, terminal
arrival and departure roadways, powerplant and utilities, and relocated
facilities.
EXAMPLE: 1998 BONDS
1998 BONDS
Bond Debt Service $11,400
NET FINANCEABLE COSTS
Midfield-Domestic $73,400
Midfield-International 7,600
Midfield-Overhead 10,700
Existing Terminals 1,000
Airfield 3,400
-------
Total Costs $96,100
STEP 2: ALLOCATE MIDFIELD OVERHEAD CAPITAL COSTS
The next step is to allocate the Midfield Overhead capital costs to either
the Midfield Domestic Terminal or the Midfield International Terminal. The
allocation of Midfield Overhead capital costs will be based on each terminal
(Midfield Domestic and International) share of net financeable costs in the bond
issuance.
EXAMPLE: 1998 BONDS
NET FINANCEABLE COSTS $ Share % Share
------- -------
Midfield-Domestic $73,400 90.6%
Midfield-International 7,600 9.4%
ALLOCATION OF MIDFIELD OVERHEAD COSTS
Midfield-Overhead $10,700
TO:
Midfield-Domestic $9,696
Midfield-International $1,004
-1-
<PAGE>
Exhibit E-continued
ALLOCATION OF BOND DEBT SERVICE
Detroit Metropolitan Wayne County Airport
(All figures in thousands, except where noted)
STEP 3: DETERMINE PERCENTAGE SHARE OF NET FINANCEABLE COSTS
The third step is to determine the percentage share of net financeable costs
for each category. This share will be used to allocate Bond Debt Service. After
Step 2, allocation of Midfield Overhead costs, there will be four remaining
categories--Midfield Domestic terminal, Midfield International terminal,
Existing Terminals, and all Airport projects.
EXAMPLE: 1998 BONDS
NET FINANCEABLE COSTS
Midfield-Domestic $73,400
From Midfield-Overhead 9,696
-------
Total Midfield-Domestic $83,096 86.47%
Midfield-International $ 7,600
From Midfield-Overhead 1,004
-------
Total Midfield-International $ 8,604 8.95%
Existing Terminals $ 1,000 1.04%
Airfield $ 3,400 3.54%
------- -------
Total Costs $96,100 100.00%
STEP 4: ALLOCATE BOND DEBT SERVICE
The last step is to allocate Bond Debt Service to one of the four
categories. The allocation of Bond Debt Service is based on the percentage
share of net financeable costs calculated in Step 3. The allocated Bond Debt
Service will be incorporated into the compensatory-based terminal rental
rates.
EXAMPLE: 1998 BONDS
1998 BONDS $ Share % Share
------- -------
Bond Debt Service $11,400
BOND DEBT SERVICE ALLOCATION
Midfield-Domestic $9,858 86.47%
Midfield-International 1,020 8.95%
Existing Terminals 119 1.04%
Airfield 403 3.54%
------- -------
Total Bond Debt Service $11,400 100.00%
Exhibit E
-2-
<PAGE>
Exhibit F
O&M EXPENSE ALLOCATION
Detroit Metropolitan Wayne County Airport
<TABLE>
<CAPTION>
O&M EXPENSES ARE ALLOCATED TO MIDFIELD THEN DIVIDED BY ...GENERATING O&M
AND EXISTING TERMINAL COMPLEXES... TOTAL USEABLE EXPENSES PER SQ FT
SPACE... RENTAL RATES
<S> <C> <C>
Midfield-Domestic Midfield-Domestic Midfield-Domestic O&M
1) Midfield Complete Expense/ Sq Ft
Midfield-International Midfield-International Midfield-International
O&M Expenses/ Sq Ft
2) Existing Complex Existing Terminal Existing Terminal Complex
Complex O&M Expense/ Sq Ft
3) Other Airport Expenses Flow to
(Airfield, indirect Activity Fee
O&M, etc.)
</TABLE>
STEP 1
O&M Expenses are allocated to Midfield and Existing Complexes. The
allocated O&M Expenses will be directly related to the operation and
maintenance of either the Domestic Midfield Terminal, the International
Midfield Terminal, or the Existing Complex (Smith, Davey, and Berry)
Terminals. Other Airport O&M Expenses, like airfield and other indirect
operating costs will flow to the activity fee.
STEP 2
Allocated O&M Expenses for each terminal (Midfield Domestic, Midfield
International and Existing Terminals) are then divided by the total
useable space of each respective terminal. This generates an O&M Expense
per square foot which air carriers will begin paying in FY2009.
STEP 3
Indirect O&M Expenses will flow to the activity fee. Signatory Airlines
will pay these indirect O&M Expenses in proportion to their landed weight
at the Airport.
<PAGE>
Exhibit G
CAPITAL IMPROVEMENT PROGRAM
Detroit Metropolitan Wayne County Airport
(In thousands of dollars, except as noted)
<TABLE>
-------------------------------------------------------------
1995 $
-------------------------------------------------------------
Construction A&E/Other Total Project
Cost(2) Fees(3) Contingency(3) Cost
-------------------------------------------------------------
<S> <C> <C> <C> <C>
AIRFIELD
1. Apron Replacement (Phase III-VII) $ 14,696 $ 7$5 $ 1,470 $ 16,900
2. Permanent Secondary De-icing $ 609 $ 30 $ 61 $ 700
3. Extend Taxiway "PP": between Taxiway Fox & Arc $ 3,306 $ 165 $ 330 $ 3,800
4. Runway 4/22 and Taxiways & Related Projects $ 92,348 $ 4,617 $ 9,235 $ 106,200
5. Extend Taxiway "S" from Fox to Runway 9R/27L $ 3,043 $ 152 $ 304 $ 3,500
6. Construct Taxiway Parallel to Taxiway "T" $ 8,000 $ 400 $ 800 $ 9,200
7. Parallel Frank & Poet Pump Station 6B $ 18,609 $ 930 $ 1,861 $ 21,400
8. Rehab Runway 3l and 3C $ 5,565 $ 278 $ 557 $ 6,400
9. Hold Apron East of Runway 21C $ 2,522 $ 126 $ 252 $ 2,900
10. Replace 3C Keel Section $ 3,913 $ 196 $ 391 $ 4,500
11. Balance of SCAN Systems $ 609 $ 30 $ 61 $ 700
-------------------------------------------------------------
SUB=TOTAL AIRFIELD PROJECTS $ 153,217 $ 7,661 $ 15,322 $ 176,200
-------------------------------------------------------------
OTHER
12. Renovate/Replace Waste Disposal Building $ 2,609 $ 130 $ 261 $ 3,000
13. Sanitary Lift Station #1 $ 2,174 $ 109 $ 217 $ 2,500
14. Replace/REnovate Electric Secondary $ 5,652 $ 283 $ 565 $ 6,500
15. Revise Powerhouse Monitoring $ 1,130 $ 57 $ 113 $ 1,300
16. Chiller, Air Handling Unit, DDC Controls/Hotel $ 14,435 $ 722 $ 1,443 $ 16,600
17. Replace 4 Old Switchhouse on Goddard $ 1,739 $ 87 $ 174 $ 2,000
18. Burn Pit $ 2,483 $ 124 $ 248 $ 2,855
19. 12" Water Loop Connection (N-S and E-W) $ 4,435 $ 222 $ 443 $ 5,100
20. Expand Green Lot $ 348 $ 17 $ 35 $ 400
21. Noise Mitigation Program(1) $ 100,000 $ 5,000 $ 10,000 $ 115,000
22. Airport Equipment/Vehicles $ 17,391 $ 870 $ 1,739 $ 20,000
23. Roadway (Inner Perimeter Security Road) $ 8,696 $ 435 $ 870 $ 10,000
24. Concession Expansion (Miscellaneous) $ 1,739 $ 87 $ 174 $ 2,000
25. Re-roof Powerhouse $ 174 $ 9 $ 17 $ 200
26. South Access Road (Phases 2,3 & 4) $ 61,130 $ 3,057 $ 6,113 $ 70,300
27. Willow Run Project $ 12,174 $ 609 $ 1,217 $ 14,000
-------------------------------------------------------------
SUB=TOTAL OTHER PROJECTS $ 236,309 $ 11,815 $ 23,631 $ 271,755
-------------------------------------------------------------
-------------------------------------------------------------
TOTAL -- ALL PROJECTS $ 389,526 $ 19,476 $ 38,953 $ 447,955
-------------------------------------------------------------
-------------------------------------------------------------
</TABLE>
(1) MII-approved portion of the Noise Mitigation Program approximately
$55.05 million.
(2) Construction costs per Northwest Memorandum of Understanding (MOU) of
11/28/95 and or County and Northwest negotiations.
(3) Calculated based on rates in Northwest MOU (A&E/Other Fees @ 5%,
Contingency @ 10%).
<PAGE>
EXHIBIT H
Corporation Counsel Staff Assigned to
Detroit Metropolitan Airport
Position Description Salary
- -------- ----------- ------
9979 Principal Attorney $ 89,355
9976 Asst. Corp. Counsel $ 70,836
Attorney IV
9913 Asst. Corp. Counsel $ 58,909
Attorney III
Total Salaries $219,100
Fringe Benefits @ 59.47% $130,299
Total Salaries & Fringe Benefits $349,399
The above positions are assigned to the Airport on a full-time basis.
<PAGE>
AIRPORT FINANCE OFFICE
996 SALARIES AND FRINGE INFORMATION
POSITION # CLASSIFICATION SALARY
- ---------- --------------- --------
66900 Dept Mgr 7 $ 57,967
66901 Dept Exec 6 67,244
66903 Buyer 2 32,249
66904 Dept Mgr 1 35,967
66905 Account Clerk 2 29,308
66907 Dept Mgr 3 39,555
66908 Clerical Leader 25,736
66909 Accountant 3 34,304
66910 Typist 3 20,303
66912 Clerical Leader 28,716
--------
TOTAL $371,349
FRINGES $220,841
The above positions are assigned to the Airport on a full-time basis.
<PAGE>
EXPURGATED Confidential Treatment
Requested By Northwest
Airlines Corporation
EXHIBIT 10.4
Amendment No. 5
to the A330 Purchase Agreement
dated as of February 10, 1989
between
AVSA, S.A.R.L.
and
NORTHWEST AIRCRAFT INC.
This Amendment No. 5 (hereinafter referred to as the "Amendment") is entered
into as of March 29, 1996, between AVSA, S.A.R.L., a societe a responsabilite
limitee organized and existing under the laws of the Republic of France, having
its registered office located at 2, Rond-Point Maurice Bellonte, 31700 Blagnac,
France (hereinafter referred to as the "Seller"), and NORTHWEST AIRCRAFT INC., a
corporation organized and existing under the laws of the State of Delaware,
United States of America, having its principal corporate offices located at 2700
Lone Oak Parkway, Eagan, Minnesota 55121, USA (hereinafter referred to as the
"Buyer").
All capitalized terms not otherwise defined herein shall have the meanings
provided for in the Agreement (as defined hereinbelow). The terms "herein,"
"hereof" and "hereunder" and words of similar import refer to this Amendment.
Both parties agree that this Amendment shall constitute an integral,
nonseverable part of the Agreement and be governed by its provisions, except
that if the Agreement and this Amendment have specific provisions that are
inconsistent, the specific provisions contained in this Amendment shall govern.
WITNESSETH
WHEREAS, the Buyer and the Seller entered into an A330 Purchase Agreement, dated
as of February 10, 1989, relating to the sale by the Seller and the purchase by
the Buyer of certain Airbus Industrie A330 aircraft (the "Aircraft"), which
agreement, as previously amended and supplemented by Amendment No. 1, dated May
31, 1989, Amendment No. 2, dated June 5, 1992, Amendment No. 3, dated December
7, 1992, and Amendment No. 4, dated August 5, 1993, together with all Exhibits,
Appendices and Letter Agreements attached thereto, is hereinafter called the
"Agreement";
NWA-A330
<PAGE>
WHEREAS, the Buyer and the Seller have agreed to provide for revisions to the
Agreement, by way of this Amendment;
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
1. DELIVERY SCHEDULE
The delivery schedule in Subclause 9.1.1 of the Agreement, as amended by
Amendment No. 1, Amendment No. 2 and Amendment No. 4 to the Agreement, is
superseded and replaced by the following schedule for Aircraft Nos. 1
through 16:
QUOTE
Aircraft No. Month of Delivery
------------ -----------------
Aircraft No. 1 {CONFIDENTIAL
Aircraft No. 2 MATERIAL
Aircraft No. 3 OMITTED
Aircraft No. 4 AND FILED
Aircraft No. 5 SEPARATELY
Aircraft No. 6 WITH THE
Aircraft No. 7 SECURITIES
Aircraft No. 8 AND
Aircraft No. 9 EXCHANGE
Aircraft No. 10 COMMISSION
Aircraft No. 11 PURSUANT
Aircraft No. 12 TO A
Aircraft No. 13 REQUEST
Aircraft No. 14 FOR
Aircraft No. 15 CONFIDENTIAL
Aircraft No. 16 TREATMENT}
UNQUOTE
2. CONVERSION RIGHTS
2.1 In consideration of the A320 Purchase Agreement dated as of March 29,
1996, between the Seller and Northwest Airlines, Inc. ("Northwest") (the
"A320 Agreement") for the sale and purchase of twenty (20) Airbus A320
aircraft (the "A320 Aircraft"), the Seller grants the Buyer and Northwest
the right to convert any or all of the Aircraft into any Airbus aircraft
model manufactured by the Manufacturer (the "Converted Aircraft") upon
the terms and conditions of this Paragraph 2 (the "Conversion Right").
The Conversion Right shall:
NWA-A330 Amd. 5-2
<PAGE>
(i) be made on a dollar-for-dollar gross airframe price basis;
(ii) be subject to {CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT}. AVSA agrees (a) {CONFIDENTIAL
MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT} and (b) {CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
A REQUEST FOR CONFIDENTIAL TREATMENT}.
It is further agreed that {CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT}.
2.2 CONVERSION PROCEDURE AND DELIVERY DATES
2.2.1 The Buyer may indicate its choice of type of Converted Aircraft and
applicable propulsion systems upon written notice (the "Conversion
Election Notice") delivered to the Seller on or prior to the first day of
the month that is (i) {CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT} prior to the month of scheduled delivery of the
{CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT}
Aircraft included in such conversion, {CONFIDENTIAL MATERIAL OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
A REQUEST FOR CONFIDENTIAL TREATMENT}, or (ii) {CONFIDENTIAL MATERIAL
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT} prior to the month of
scheduled delivery of the {CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT} Aircraft included in such conversion,
{CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT}.
On or prior to the date that is {CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT} after receipt by the Seller of the
Conversion Election Notice (the "Expiration Date"), the Buyer and the
NWA-A330 Amd. 5-3
<PAGE>
Seller shall enter into an amendment (the "Conversion Amendment") to the
Agreement relating to the Converted Aircraft and its delivery date and
make any other modification and supplementation to the Agreement in
accordance with the terms and conditions hereunder.
2.2.2 Within {CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT} after receipt by the Seller of the Conversion Election Notice,
a delivery date for a Converted Aircraft will be indicated by the Seller
to the Buyer. {CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT}. Further, each such date will be subject to
prior sale or disposition until the Buyer notifies the Seller in writing
of its acceptance of such delivery date and makes any additional
predelivery payment required under Subclause 6.2 of the Agreement.
2.2.3 Conversion of an Aircraft into a Converted Aircraft shall be effective
upon execution and delivery of the Conversion Amendment by the Buyer and
the Seller and payment by the Buyer of any amounts specified under such
Conversion Amendment to be due and payable upon execution thereof. If
the Buyer and the Seller do not enter into the Conversion Amendment on or
prior to the Expiration Date, the Buyer's right to convert such Aircraft
shall terminate and neither the Buyer nor the Seller shall have any
further rights or obligations with respect to conversion of such
Aircraft. The Buyer and the Seller agree that in such case, no later than
{CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT}.
2.3 CONVERSION IRREVOCABLE
It is further understood that any conversion that shall have been made
hereunder and agreed to by the Buyer and the Seller in the Conversion
Amendment shall be irrevocable and that thereafter there shall be no
further conversion of a Converted Aircraft.
3. {CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT}.
4. AIRCRAFT DEPOSITS
The Buyer has previously paid to the Seller US $125,000 (US dollars --
one hundred twenty-five thousand) per Aircraft pursuant to Paragraph 3 of
Amendment No. 3 to the Agreement. {CONFIDENTIAL MATERIAL OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO A
NWA-A330 Amd. 5-4
<PAGE>
REQUEST FOR CONFIDENTIAL TREATMENT}, the Seller agrees to provide the
Buyer with {CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT} upon delivery of all of the A320 Aircraft (excluding any A320
Aircraft with respect to which the Seller has breached its obligation to
deliver such A320 Aircraft in accordance with the A320 Agreement, or any
document or agreement executed in connection therewith or pursuant
thereto, and any A320 Aircraft which the Seller does not deliver to
Northwest in accordance with the A320 Agreement for any reason other than
the breach by Northwest of any of its obligations under the A320
Agreement). {CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT}.
5. EFFECT OF AMENDMENT ON PREDELIVERY PAYMENTS
5.1 The Buyer and the Seller hereby agree to adjust payment dates for the
predelivery payments related to each of the Aircraft to correspond to the
revised delivery schedule agreed in Paragraph 1 of this Amendment. The
new payment dates will be determined in accordance with and will be
subject to all existing terms and conditions of the Agreement that relate
to predelivery payments. The adjusted payment dates shall be effective
as of the date of this Amendment.
5.2 The schedule of predelivery payments as set forth in Subclause 6.2.2 of
the Agreement, as amended by Amendment No. 3 to the Agreement, is deleted
in its entirety and replaced by the following:
NWA-A330 Amd. 5-5
<PAGE>
QUOTE
Percentage of the
Predelivery New Predelivery
Payment Payment Reference
Number Payment Date Price
- ----------- ------------ -----------------
Already paid by the Buyer to the Seller US$ 125,000 (the
"Deposit")
1. On the first day of the {CONFIDENTIAL {CONFIDENTIAL MATERIAL
MATERIAL OMITTED AND FILED SEPARATELY OMITTED AND FILED
WITH THE SECURITIES AND EXCHANGE SEPARATELY WITH THE
COMMISSION PURSUANT TO A REQUEST FOR SECURITIES AND EXCHANGE
CONFIDENTIAL TREATMENT} prior to the COMMISSION PURSUANT TO
scheduled month of delivery set forth A REQUEST FOR
above in Paragraph 1. CONFIDENTIAL TREATMENT}
2. On the first day of the {CONFIDENTIAL {CONFIDENTIAL MATERIAL
MATERIAL OMITTED AND FILED SEPARATELY OMITTED AND FILED
WITH THE SECURITIES AND EXCHANGE SEPARATELY WITH THE
COMMISSION PURSUANT TO A REQUEST FOR SECURITIES AND EXCHANGE
CONFIDENTIAL TREATMENT} prior to the COMMISSION PURSUANT TO
scheduled month of delivery set forth A REQUEST FOR
above in Paragraph 1. CONFIDENTIAL TREATMENT}
_______________________
NWA-A330 Amd. 5-6
<PAGE>
TOTAL PAYMENT PRIOR TO DELIVERY {CONFIDENTIAL MATERIAL
OMITTED AND FILED
SEPARATELY WITH THE
SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL
TREATMENT}
UNQUOTE
6. {CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT}.
6.1 In consideration of the Seller's agreement to reschedule the delivery
dates of Aircraft Nos. 1 through 16 as set forth above, {CONFIDENTIAL
MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT}, prior to
the delivery of all of the A320 Aircraft (excluding any A320 Aircraft
with respect to which the Seller has breached its obligation to deliver
such A320 Aircraft in accordance with the A320 Agreement or any document
or agreement executed in connection therewith or pursuant thereto and any
A320 Aircraft which the Seller does not deliver to Northwest in
accordance with the A320 Agreement, or any document or agreement executed
in connection therewith or pursuant thereto, for any reason (including
without limitation, pursuant to Clause 10 and Clause 11 of the A320
Agreement) other than the breach by Northwest of any of its obligations
under the A320 Agreement) {CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT}. Notwithstanding the foregoing, the
{CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT}, with respect to {CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT}.
NWA-A330 Amd. 5-7
<PAGE>
6.2 In the event that the {CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT}:
(i) {CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT}. By its execution of this Amendment,
{CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT} hereby agrees to the provisions of this
Subparagraph 6.2.
(ii) as a result of such action, no longer be {CONFIDENTIAL MATERIAL
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT};
(iii) with respect to the {CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
A REQUEST FOR CONFIDENTIAL TREATMENT}, and
(iv) lose the benefit of the {CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
A REQUEST FOR CONFIDENTIAL TREATMENT}.
7. REMARKETING
The Buyer hereby acknowledges for the benefit of the Seller that the
Seller shall have, as of the date hereof, the absolute, unconditional and
unfettered right, at the Seller's option, to remarket to any other
existing or future customer the delivery positions formerly assigned to
the Buyer under the Agreement and rescheduled hereby.
8. APPLICABILITY OF AMENDMENT
The Agreement shall be deemed amended to the extent herein provided and,
except as specifically amended hereby, shall continue in full force and
effect in accordance with its original terms.
NWA-A330 Amd. 5-8
<PAGE>
9. GOVERNING LAW
THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK. THE PERFORMANCE OF THIS AMENDMENT SHALL
BE DETERMINED ALSO IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
10. ASSIGNMENT
Notwithstanding any other provision of this Amendment or of the
Agreement, this Amendment and the rights and obligations of the Buyer
hereunder shall not be assigned or transferred in any manner
independently of the Agreement without the prior written consent of the
Seller, and any attempted assignment or transfer in contravention of the
provisions of this Paragraph 10 shall be void and of no force or effect.
11. CONFIDENTIALITY
Subject to any legal or governmental requirements of disclosure, the
parties (which for this purpose shall include their employees, agents and
advisors) shall maintain the terms and conditions of this Amendment and
any reports or other data furnished hereunder strictly confidential.
Without limiting the generality of the foregoing, the Buyer and Northwest
shall use their reasonable efforts to limit the disclosure of the
contents of this Amendment to the extent legally permissible in any
filing required to be made by the Buyer or Northwest with any
governmental agency and shall make such applications as shall be
necessary to implement the foregoing. The Buyer, Northwest and the Seller
shall consult with each other prior to the making of any public
disclosure, otherwise permitted hereunder, of this Amendment or the terms
and conditions thereof. The provisions of this Paragraph 11 shall survive
any termination of this Amendment.
NWA-A330 Amd. 5-9
<PAGE>
If the foregoing correctly sets forth our understanding, please execute
the original and one (1) copy hereof in the space provided below and return a
copy to the Seller.
AVSA, S.A.R.L.
By: /s/ Christophe Mourey
-----------------------------
Its: Chief Executive Officer
-----------------------------
Accepted and Agreed
NORTHWEST AIRCRAFT INC.
By: /s/ Joseph E. Francht, Jr.
-------------------------------
Its: Vice President-Finance and Treasurer
---------------------------------------
Consented to:
NORTHWEST AIRLINES, INC.
By: /s/ Joseph E. Francht, Jr.
-------------------------------
Its: Senior Vice President-Finance and Treasurer
------------------------------------------------
NWA-A330 Amd. 5-10
<PAGE>
1994 NORTHWEST AIRLINES CORPORATION STOCK INCENTIVE PLAN
AS AMENDED APRIL 1996
ARTICLE 1. PURPOSE AND DURATION
1.1 PURPOSE. The purpose of the 1994 Northwest Airlines Corporation
Stock and Incentive Plan (the "Plan") is to motivate, attract and retain key
employees and to further the growth, development and financial success of
Northwest Airlines Corporation (the "Company") and its Subsidiaries by
aligning the personal interests of key employees, through the ownership of
shares of the Company's Common Stock and through other incentives, with those
of the Company and the Company's shareholders. The Plan permits the granting
of Stock Options, Stock Appreciation Rights, Restricted Stock and Other Stock
Based Awards.
1.2 DURATION. Upon approval by the Board, the Plan shall become
effective March 1, 1994 (the "Effective Date"), and shall remain in effect
until the earlier of the date the Plan is terminated pursuant to Article 7
hereof, or February 29, 2004 (the "Termination Date"). No Award may be
granted under the Plan on or after the Termination Date, but Awards made
prior to the Termination Date may be exercised, vested or otherwise
effectuated beyond that date unless otherwise limited. If the Plan is not
approved by shareholders of the Company prior to the first anniversary of the
adoption of the Plan by the Board, the Plan and all Awards thereunder shall
terminate on such anniversary date. The required shareholder approval shall
be the vote of the holders of a majority of the capital stock of the
<PAGE>
Company voting thereon, provided that the total vote cast constitutes a
majority of the outstanding shares of the Company entitled to vote thereon.
ARTICLE 2. DEFINITIONS
2.1 DEFINITIONS. Whenever used in the Plan, the following terms shall have
the meanings set forth below:
(a) "AWARD" means a grant under this Plan of Stock Options,
Restricted Stock, Stock Appreciation Rights or Other Stock Based Awards.
(b) "AWARD AGREEMENT" means the document which evidences an Award and
which sets forth the terms, conditions and limitations relating to such Award.
(c) "BOARD" means the Board of Directors of the Company.
(d) "CODE" means the Internal Revenue Code of 1986, as amended from
time to time.
(e) "COMMITTEE" means the group of individuals administering the
Plan, which shall be the Compensation Committee of the Board or any other
committee of the Board performing similar functions as appointed from time to
time by the Board and constituted so as to permit the Plan to comply with Rule
16b-3 under the Exchange Act, or any successor rule thereto. From and after the
first meeting of shareholders at which directors are to be elected that occurs
after July 1, 1994, the Committee shall contain at least two "Outside Directors"
as that term is defined under Section 162(m) of the Code.
2
<PAGE>
(f) "COMPANY" means Northwest Airlines Corporation, a Delaware
corporation.
(g) "DISABILITY" means disability within the meaning of Section
22(e)(3) of the Code, as determined by the Committee.
(h) "EFFECTIVE DATE" means March 1, 1994.
(i) "ELIGIBLE EMPLOYEE" means any executive or other employee of the
Company or any Subsidiary.
(j) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time.
(k) "FAIR MARKET VALUE" means, with respect to any particular date,
the average of the highest and lowest price of a Share as reported on the
consolidated tape of New York Stock Exchange listed securities (or other
principal reporting system, as determined by the Committee).
(l) "INCENTIVE STOCK OPTION" or "ISO" means an option to purchase
Shares, granted pursuant to Section 6.1, which is designated as an Incentive
Stock Option and is intended to meet the requirements of Section 422 of the
Code.
(m) "INSIDER" means an officer of the Company as the term "officer"
is defined under Rule 16a-1(f) under the Exchange Act.
(n) "NONQUALIFIED STOCK OPTION" or "NQSO" means an option to purchase
Shares, granted pursuant to Section 6.1, which is not designated as an Incentive
Stock Option.
3
<PAGE>
(o) "OTHER STOCK BASED AWARD" means an Award, granted pursuant to
Section 6.4, other than a Stock Option, Restricted Stock or SAR, that is paid
with, valued in whole or in part by reference to, or is otherwise based on
Shares.
(p) "PARTICIPANT" means an Eligible Employee selected by the
Committee to receive an Award under the Plan.
(q) "PERSON" means any person, firm, partnership, corporation or
other entity.
(r) "PLAN" means the 1994 Northwest Airlines Corporation Stock
Incentive Plan.
(s) "RESTRICTED STOCK" means an Award granted to a Participant
pursuant to Section 6.3.
(t) "RETIREMENT" means separation from service with the Company or a
Subsidiary on or after attainment of age 65 or, with the advance written consent
by the Committee that such separation will be treated as a Retirement hereunder,
separation from service with the Company or a Subsidiary prior to age 65.
(u) "SHARES" means the issued or unissued shares of the Class A
Common Stock, par value $.01 per share, of Northwest Airlines Corporation.
(v) "STOCK APPRECIATION RIGHT" or "SAR" means the grant, pursuant to
Section 6.2, of a right to receive a payment from the Company, in the form of
stock, cash or a combination of both, equal to the excess of the Fair Market
Value of one or more Shares over the exercise price of such Shares under the
terms of such Stock Appreciation Right.
4
<PAGE>
(w) "STOCK OPTION" means the grant, pursuant to Section 6.1, of a
right to purchase a specified number of Shares during a specified period at a
designated price, which may be an Incentive Stock Option or a Nonqualified Stock
Option.
(x) "SUBSIDIARY" means a subsidiary of the Company, as defined in
Section 424(f) of the Code.
ARTICLE 3. ADMINISTRATION
3.1 AUTHORITY. The Plan shall be administered by the Committee, which
shall have full and exclusive power, subject to the provisions hereof, to make
all determinations which may be necessary or advisable for the administration of
the Plan, including:
(a) select Eligible Employees to whom Awards are granted;
(b) determine the size and types of Awards;
(c) determine the terms and conditions of such Awards in a manner
consistent with the Plan;
(d) determine whether, to what extent and under what circumstances,
Awards may be settled, paid or exercised in cash, shares, or other Awards, or
other property or canceled, forfeited or suspended;
(e) construe and interpret the Plan and any agreement or instrument
entered into under the Plan;
(f) establish, amend or waive rules and regulations for the Plan's
administration; and
5
<PAGE>
(g) amend (subject to the provisions of Section 4.4 and Article 7)
the terms and conditions of any outstanding Award to the extent such terms and
conditions are within its discretion.
3.2 DECISIONS BINDING. All determinations made by the Committee arising
out of or in connection with the interpretation and administration of the Plan
and all related orders or resolutions of the Board of Directors shall be final,
conclusive and binding on all persons, including the Company, its Subsidiaries,
its shareholders, Participants, and their estates and beneficiaries.
ARTICLE 4. SHARES SUBJECT TO THE PLAN
4.1 NUMBER OF SHARES. Subject to adjustment as provided in Section 4.4,
no more than 5,000,000 Shares may be issued under the Plan. The number of
Shares subject to Awards granted under the Plan to any one individual in any
fiscal year of the Company shall not be more than 250,000 Shares. These Shares
may consist in whole or in part of authorized and unissued Shares, or of
treasury Shares. No fractional Shares shall be issued under the Plan; however,
cash may be paid in lieu of any fractional Shares in settlements of Awards under
the Plan. For purposes of determining the number of Shares remaining available
for issuance under the Plan:
(a) The grant of an Award shall reduce the authorized pool of Shares
by the number of Shares subject to such Award while such Award is outstanding,
except to the extent that such
<PAGE>
an Award is in tandem with another Award covering the same or fewer Shares
which has already been taken into account in determining the authorized pool
of Shares.
(b) Shares covered by SARs that are not issued upon the exercise of
such SAR shall increase the authorized pool of Shares.
(c) To the extent that an Award (other than an SAR) is settled in
cash or any form other than in Shares, the authorized pool of Shares shall be
increased by the appropriate number of Shares represented by such settlement of
the Award, as determined at the sole discretion of the Committee (subject to the
limitation set forth in Section 4.2).
4.2 LAPSED AWARDS. If any Award (other than an Award of Shares) granted
under the Plan is canceled, terminates, expires or lapses for any reason, any
Shares subject to such Award shall increase the authorized pool of Shares;
provided, however, that to the extent that such Award was granted in tandem with
another Award, any Shares issued pursuant to the exercise or settlement of such
other Award shall not increase the authorized pool of Shares.
4.3 EFFECT OF ACQUISITION. Any Awards granted by the Company in
substitution for awards or rights issued by a company whose shares or assets are
acquired by the Company or a Subsidiary shall not reduce the number of Shares
available for grant under the Plan.
6
<PAGE>
4.4 ADJUSTMENTS IN AUTHORIZED SHARES. Subject to Article 7, in the event
of any merger, reorganization, consolidation, recapitalization, separation,
spin-off, liquidation, stock dividend, split-up, Share combination or other
change in the corporate or capital structure of the Company affecting the
Shares, the Committee shall adjust the number and class of Shares which may be
delivered under the Plan, and the number and class of and/or price of Shares
subject to outstanding Awards granted under the Plan, in the manner determined
by the Committee in its sole discretion to prevent dilution or enlargement of
rights; provided that the number of Shares subject to any Award shall always be
a whole number.
4.5 COMMITTEE DETERMINATION. In determining the number of Shares
available for issuance under the Plan as contemplated by this Article 4, the
Committee shall interpret and apply the provisions of this Article so as to
permit the Plan to comply with Rule 16b-3 under the Exchange Act, or any
successor rule thereto.
ARTICLE 5. PARTICIPATION
5.1 SELECTION OF PARTICIPANTS. Subject to the provisions of the Plan, the
Committee may from time to time select, from all Eligible Employees, those to
whom Awards shall be granted and shall determine the nature and amount of each
Award. No Eligible Employee shall have the right to receive an Award under the
Plan, or, if selected to receive an Award, the right to continue to receive
Awards. Further, no Participant shall have any rights,
7
<PAGE>
by reason of the grant of any Award under the Plan to continued employment by
the Company or any Subsidiary. There is no obligation for uniformity of
treatment of Participants under the Plan.
5.2 AWARD AGREEMENT. Each Award granted under the Plan shall be evidenced
by an Award Agreement that shall specify the terms, conditions, limitations and
such other provisions applicable to the Award as the Committee shall determine.
ARTICLE 6. AWARDS
Awards may be granted by the Committee to Eligible Employees at any time,
and from time to time prior to the Termination Date, as the Committee shall
determine. The Committee shall have complete discretion in determining the
number of Awards to grant (subject to the Share limitations set forth in Section
4.1) and, consistent with the provisions of the Plan, the terms, conditions and
limitations pertaining to such Awards.
8
<PAGE>
6.1 STOCK OPTIONS.
a. OPTION PRICE
The option price for a Stock Option shall be determined by the
Committee; provided that Incentive Stock Options may not be granted at a
price less than one hundred percent (100%) of the Fair Market Value of a
Share on the date the Incentive Stock Option is granted.
b. PERIOD OF EXERCISE
A Stock Option may be exercised at such times as may be specified in
an Award Agreement, in whole or in installments, which may be cumulative
and shall expire at such time as the Committee shall determine at the time
of grant; provided that no Stock Option shall be exercisable later than ten
(10) years after the date granted. The Committee may make provision for
exercisability in the event of death, Disability, Retirement or other
termination of employment. The Committee may also amend any Stock Option
to accelerate the dates after which the Option may be exercised in whole or
in part.
c. ADDITIONAL PROVISIONS FOR ISOS
No ISO shall be granted to any employee who, at the time the Stock
Option is granted, owns (directly, or within the meaning of section 424(d)
of the Code) more than ten percent of the total combined voting power of
all classes of stock of the Company or of any Subsidiary, unless (a) the
option price under such Stock Option is at least 110 percent of the Fair
Market Value of a share of Stock on the date the
9
<PAGE>
Stock Option is granted and (b) the expiration date of such Stock Option
is a date not later than the day preceding the fifth anniversary of the
date on which the Stock Option is granted.
d. METHOD OF EXERCISE
A Stock Option, or portion thereof, shall be exercised by delivery of
a written notice of exercise to the Company and payment of the full price
of the Shares being purchased pursuant to the Option. An optionee may
exercise a Stock Option with respect to less than the full number of shares
for which the Option may then be exercised, but an optionee must exercise
the Stock Option in full shares of Stock. The price of Stock purchased
pursuant to a Stock Option, or portion thereof, may be paid:
(i) in United States dollars in cash or by check, bank draft or money
order payable to the order of the Company,
(ii) through the delivery of shares of Stock with an aggregate Fair
Market Value on the date of exercise equal to the option price,
(iii) to the extent authorized by the Committee, by delivery of
irrevocable instructions to a financial institution to deliver promptly to
the Company the portion of sale or loan proceeds sufficient to pay the
option price,
(iv) to the extent authorized by the Committee, by the withholding of
Shares otherwise issuable on exercise with an aggregate Fair Market Value
on the date of exercise equal to the Option Price.
10
<PAGE>
(v) by any combination of the above methods of payment or by any
other means which the Committee determines to be consistent with the Plan's
purpose and applicable law.
6.2 STOCK APPRECIATION RIGHTS. (a) SARs may be granted at a price
determined by the Committee, and may be granted in tandem with a Stock Option,
such that the exercise of the SAR or related Stock Option will result in a
forfeiture of the right to exercise the related Stock Option for an equivalent
number of shares, or independently of any Stock Option.
(b) An SAR may be exercised at such times as may be specified in an
Award Agreement, in whole or in installments, which may be cumulative and shall
expire at such time as the Committee shall determine at the time of grant;
provided that no SAR shall be exercisable later than ten (10) years after the
date granted. The Committee may amend any SAR to accelerate the dates after
which the SAR may be executed in whole or in part.
(c) SARs shall be exercised by the delivery of a written notice of
exercise to the Company setting forth the number of Shares with respect to which
the SAR is to be exercised.
6.3 RESTRICTED STOCK. Restricted stock may be granted alone or in
conjunction with other Awards under the Plan and may be conditioned upon
continued employment for a specified period, the attainment of specific
performance goals or such other factors as the Committee may determine. In
making an Award of
11
<PAGE>
Restricted Stock, the Committee will determine the restrictions that
will apply, the period during which the Stock is subject to such
restrictions, and the price, if any, payable by a recipient. The
Committee may amend any Award of Restricted Stock to accelerate the
dates after which such Award may be executed in whole or in part.
6.4 OTHER STOCK BASED AWARDS. (a) The Committee shall have complete
discretion in determining the number of Shares subject to Other Stock Based
Awards the consideration for such Awards and the terms, conditions and
limitations pertaining to same including, without limitation, restrictions based
upon the achievement of specific business objectives, tenure, and other
measurements of individual or business performance, and/or restrictions under
applicable federal or state securities laws, and conditions under which such
Awards will lapse.
(b) Payment of Other Stock Based Awards may be in the form of cash,
shares, other Awards, or in such combinations thereof as the Committee shall
determine at the time of grant, and with such restrictions as it may impose.
Payment may be made in a lump sum or in installments as prescribed by the
Committee. The Committee may also require or permit Participants to elect to
defer the issuance of Shares or the settlement of Awards in cash under such
rules and procedures as it may establish under the Plan. The Committee may also
provide that deferred settlements include the payment or crediting of interest
on the deferred
12
<PAGE>
amounts or the payment or crediting of dividend equivalents on deferred
amounts denominated in Shares.
(c) The Committee may, at its sole discretion, direct the Company to
issue Shares subject to such restrictive legends and/or stop transfer
instructions as the Committee deems appropriate.
ARTICLE 7. AMENDMENT, MODIFICATION AND TERMINATION.
7.1 The Board may at any time, or from time to time, suspend or terminate
the Plan in whole or in part or amend it in such respects as the Board may deem
appropriate, provided, however, that no such amendment shall be made, which
would, without approval of the shareholders (except as provided in Section 7.4);
a. materially modify the eligibility requirements for receiving
Awards;
b. increase the total number of shares of Common Stock which may be
issued pursuant to Awards, except as is provided for in accordance with Article
4 of the Plan;
c. extend the period during which Awards may be granted; or
d. materially increase in any other way the benefits accruing to
Participants.
13
<PAGE>
7.2 No amendment, suspension or termination of this Plan or any Award
shall, without the Participant's consent, alter or impair any of the rights or
obligations under any Award theretofore granted to an Participant under the
Plan.
7.3 The Board may amend this Plan, subject to the limitations cited above,
in such manner as it deems necessary to permit the granting of Awards meeting
the requirements of future amendments to the Code or regulations promulgated
thereunder.
7.4 If and to the extent the provisions of Rule 16b-3 (as in effect on the
date of adoption of the Plan by the Board) under the Exchange Act permit the
amendment of stock incentive plans without compliance with one or more of the
stockholder approval requirements presently set forth in Section 7.1, then and
to that extent the restrictions on the ability of the Board to amend the Plan
set forth in Section 7.1 hereof shall terminate and the Board shall thereafter
be empowered to amend the Plan without regard to such restrictions.
ARTICLE 8. WITHHOLDING
8.1 TAX WITHHOLDING. The Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, an amount
in cash sufficient to satisfy federal, state and local taxes required by law to
be withheld in connection with a grant, exercise or payment made under or as a
result of the Plan.
14
<PAGE>
8.2 SHARE WITHHOLDING. The Committee may require one or more classes of
Participants to satisfy the withholding requirement, in whole or in part, by
having the Company withhold Shares having a Fair Market Value, on the date the
tax is to be determined, equal to the amount of withholding which is required by
law. Alternatively, the Committee may allow a Participant to elect Share
withholding for tax purposes subject to such terms and conditions as the
Committee shall establish.
ARTICLE 9. TRANSFERABILITY
No Award granted under the Plan may be sold, transferred, pledged, assigned
or otherwise alienated or hypothecated, other than by will or by the laws of
descent and distribution. Further, all Awards granted to a Participant under
the Plan shall be exercisable during the Participant's lifetime only by the
Participant. Notwithstanding the foregoing, the designation of a beneficiary by
a Participant does not constitute a transfer.
ARTICLE 10. UNFUNDED PLAN
10.1 UNFUNDED PLAN. The Plan shall be unfunded and the Company shall not
be required to segregate any assets that may at any time be represented by
Awards under the Plan. Any liability of the Company to any person with respect
to any Award under the Plan shall be based solely upon any contractual
obligations that may be effected pursuant to the Plan. No such obligation of
the Company shall be deemed to be secured by any pledge of, or other encumbrance
on, any property or assets of the Company.
16
<PAGE>
ARTICLE 11. SUCCESSORS.
11.1 SUCCESSORS. All obligations of the Company under the Plan with
respect to Awards granted hereunder shall be binding on any successor to the
Company, whether the existence of such successor is the result of a direct or
indirect purchase, merger, consolidation or otherwise, of all or substantially
all of the substantially all of the business and/or assets of the Company.
ARTICLE 12. SECURITIES LAW COMPLIANCE
12.1 SECURITIES LAW COMPLIANCE. The Plan is intended to comply with all
applicable conditions of Rule 16b-3 or any successor rule thereto under the
Exchange Act. To the extent any provision of the Plan or action by the
Committee fails to so comply, it shall be deemed null and void, to the extent
permitted by law and deemed advisable by the Committee. Further, each Award
shall be subject to the requirement that, if at any time the Committee shall
determine, in its sole discretion, that the listing, registration or
qualification of any Award under the Plan upon any securities exchange or under
any state or federal law, or the consent or approval of any government
regulatory body, is necessary or desirable as a condition of, or in connection
with, the granting of such Award or the grant or settlement thereof, such Award
may not be exercised or settled in whole or in part unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Committee.
17
<PAGE>
ARTICLE 13. REQUIREMENTS OF LAW
13.1 REQUIREMENTS OF LAW. The granting of Awards and the issuance of
Shares under the Plan shall be subject to all applicable laws, rules and
regulations and to such approvals by any governmental agencies or national
securities exchanges as may be required.
13.2 SEVERABILITY. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
13.3 GOVERNING LAW. To the extent not preempted by federal law, the Plan
and all Award Agreements shall be construed in accordance with and governed by
the laws of the State of Minnesota.
ARTICLE 14. MISCELLANEOUS PROVISIONS
14.1 PLAN DOES NOT CONFER EMPLOYMENT OR STOCKHOLDER RIGHTS. The right of
the Company to terminate (whether by dismissal, discharge, retirement or
otherwise) the Optionee's employment with it at any time at will, or as
otherwise provided by any agreement between the Company and the Optionee, is
specifically reserved. Neither the Optionee nor any person entitled to exercise
the Optionee's rights in the event of the Optionee's death shall have any of the
rights of a stockholder with respect to the shares subject to each Option,
except to the extent that,
18
<PAGE>
and until, such shares shall have been issued upon the exercise of each
Option.
14.2 PLAN EXPENSES. Any expenses of administering this Plan shall be borne
by the Company.
14.3 USE OF EXERCISE PROCEEDS. Payments received from Optionees upon the
exercise of Options shall be used for the general corporate purposes of the
Company, except that any stock received or withheld in payment may be retired,
or retained in the Company's treasury and reissued.
19
<PAGE>
EXHIBIT 11.1
NORTHWEST AIRLINES CORPORATION
COMPUTATION OF PRIMARY EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
(IN MILLIONS, EXCEPT SHARE AND PER SHARE AMOUNTS) Three months ended September 30 Nine months ended September 30
------------------------------- -------------------------------
1996 1995 1996 1995
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Reconciliation of net income applicable to common
stockholders:
Net income before preferred stock requirements $ 253.9 $ 231.1 $ 510.1 $ 338.5
Preferred stock requirements (6.2) (14.8) (32.4) (43.9)
-------------- -------------- -------------- --------------
Income applicable to common stockholders
before preferred stock transactions 247.7 216.3 477.7 294.6
Preferred stock transactions 74.5 -- 74.5 59.2
-------------- -------------- -------------- --------------
Net income applicable to common stockholders $ 322.2 $ 216.3 $ 552.2 $ 353.8
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
Reconciliation of weighted average number of shares
outstanding to amount used in primary earnings
per share computation:
Weighted average number of common shares
outstanding, excluding shares issued to
employee trusts 81,998,633 81,027,538 81,894,464 80,682,700
Weighted average number of common shares earned by
employees since August 1, 1993 due to the exercise
of the Series C Preferred Stock special conversion
option in February 1994 16,705,395 11,213,667 15,342,075 9,853,319
Weighted average number of common shares
outstanding due to the exercise of the Series C
Preferred Stock conversion option 1,327,608 -- 986,906 --
Stock options issued reduced by the number of
shares which could have been purchased with
the proceeds from exercise of such options 2,159,340 3,083,854 2,405,754 2,879,976
-------------- -------------- -------------- --------------
Weighted average number of common shares
outstanding, as adjusted 102,190,976 95,325,059 100,629,199 93,415,995
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
Earnings per common share - primary:
Before preferred stock transactions $ 2.42 $ 2.27 $ 4.75 $ 3.15
Preferred stock transactions .73 -- .74 .64
-------------- -------------- -------------- --------------
Earnings per common share $ 3.15 $ 2.27 $ 5.49 $ 3.79
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
</TABLE>
<PAGE>
EXHIBIT 11.2
NORTHWEST AIRLINES CORPORATION
COMPUTATION OF FULLY DILUTED EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
(IN MILLIONS, EXCEPT SHARE AND PER SHARE AMOUNTS) Three months ended September 30 Nine months ended September 30
------------------------------- -------------------------------
1996 1995 1996 1995
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Reconciliation of net income applicable to common
stockholders:
Net income before preferred stock requirements $ 253.9 $ 231.1 $ 510.1 $ 338.5
Preferred stock requirements (6.2) (14.8) (32.4) (43.9)
Addback: Series C Preferred Stock requirements 0.4 2.1 0.4 6.6
-------------- -------------- -------------- --------------
Income applicable to common stockholders
before preferred stock transactions 248.1 218.4 478.1 301.2
Preferred stock transactions 74.5 -- 74.5 59.2
-------------- -------------- -------------- --------------
Net income applicable to common stockholders, as adjusted $ 322.6 $ 218.4 $ 552.6 $ 360.4
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
Reconciliation of weighted average number of shares
outstanding to amount used in fully diluted earnings
per share computation:
Weighted average number of common shares
outstanding, excluding shares issued to
employee trusts 81,998,633 81,027,538 81,894,464 80,682,700
Weighted average number of common shares earned by
employees since August 1, 1993 due to the exercise
of the Series C Preferred Stock special conversion
option in February 1994 16,705,395 11,213,667 15,342,075 9,853,319
Weighted average number of shares of Series C
Preferred Stock earned by employees since August 1,
1993 for which the special conversion option was not
elected and assumed to be converted to common stock 11,748,090 7,914,066 10,813,671 6,953,998
Stock options issued reduced by the number of
shares which could have been purchased with
the proceeds from exercise of such options 2,159,340 3,188,905 2,423,838 3,363,306
-------------- -------------- -------------- --------------
Weighted average number of common shares
outstanding, as adjusted 112,611,458 103,344,176 110,474,048 100,853,323
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
Earnings per common share assuming full dilution:
Before exchange of preferred stock $ 2.20 $ 2.11 $ 4.33 $ 2.98
Exchange of preferred stock .66 -- .67 .59
-------------- -------------- -------------- --------------
Earnings per common share $ 2.86 $ 2.11 $ 5.00 $ 3.57
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
</TABLE>
<PAGE>
EXHIBIT 12.1
NORTHWEST AIRLINES CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
------------------------- -------------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
EARNINGS:
Income before income taxes $ 410.6 $ 367.1 $ 829.5 $ 537.7
Less: Income from less than 50%
owned investees 4.5 1.8 15.1 3.7
Add:
Rent expense representative of interest (1) 48.7 49.5 142.4 145.5
Interest expense net of capitalized interest 62.8 95.2 190.5 292.0
Interest of mandatorily redeemable
preferred security holder 6.7 -- 20.6 --
Amortization of debt discount and expense 3.2 3.3 9.7 9.8
Amortization of interest capitalized 0.7 0.8 2.0 3.0
---------- ---------- ---------- ----------
ADJUSTED EARNINGS $ 528.2 $ 514.1 $ 1,179.6 $ 984.3
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
FIXED CHARGES:
Rent expense representative of interest (1) $ 48.7 $ 49.5 $ 142.4 $ 145.5
Interest expense net of capitalized interest 62.8 95.2 190.5 292.0
Interest of mandatorily redeemable
preferred security holder 6.7 -- 20.6 --
Amortization of debt discount and expense 3.2 3.3 9.7 9.8
Capitalized interest 1.5 4.1 5.1 10.2
---------- ---------- ---------- ----------
FIXED CHARGES $ 122.9 $ 152.1 $ 368.3 $ 457.5
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
RATIO OF EARNINGS TO FIXED CHARGES 4.30 3.38 3.20 2.15
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
(1) Calculated as one-third of rentals, which is considered representative of
the interest factor.
<PAGE>
EXHIBIT 12.2
NORTHWEST AIRLINES CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
AND PREFERRED STOCK REQUIREMENTS
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
------------------------- -------------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
EARNINGS:
Income before income taxes $ 410.6 $ 367.1 $ 829.5 $ 537.7
Less: Income from less than 50%
owned investees 4.5 1.8 15.1 3.7
Add:
Rent expense representative of interest (1) 48.7 49.5 142.4 145.5
Interest expense net of capitalized interest 62.8 95.2 190.5 292.0
Interest of mandatorily redeemable
preferred security holder 6.7 -- 20.6 --
Amortization of debt discount and expense 3.2 3.3 9.7 9.8
Amortization of interest capitalized 0.7 0.8 2.0 3.0
---------- ---------- ---------- ----------
ADJUSTED EARNINGS $ 528.2 $ 514.1 $ 1,179.6 $ 984.3
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
FIXED CHARGES:
Rent expense representative of interest (1) $ 48.7 $ 49.5 $ 142.4 $ 145.5
Interest expense net of capitalized interest 62.8 95.2 190.5 292.0
Interest of mandatorily redeemable
preferred security holder 6.7 -- 20.6 --
Preferred stock requirements 10.0 23.5 52.7 69.7
Amortization of debt discount and expense 3.2 3.3 9.7 9.8
Capitalized interest 1.5 4.1 5.1 10.2
---------- ---------- ---------- ----------
FIXED CHARGES $ 132.9 $ 175.6 $ 421.0 $ 527.2
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
RATIO OF EARNINGS TO FIXED CHARGES AND
PREFERRED STOCK REQUIREMENTS 3.97 2.93 2.80 1.87
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
(1) Calculated as one-third of rentals, which is considered representative of
the interest factor.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 728
<SECURITIES> 345
<RECEIVABLES> 764
<ALLOWANCES> 25
<INVENTORY> 255
<CURRENT-ASSETS> 2,406
<PP&E> 6,098
<DEPRECIATION> 1,607
<TOTAL-ASSETS> 8,842
<CURRENT-LIABILITIES> 3,132
<BONDS> 0
1
597
<COMMON> 0
<OTHER-SE> (89)
<TOTAL-LIABILITY-AND-EQUITY> 8,842
<SALES> 2,735
<TOTAL-REVENUES> 2,735
<CGS> 0
<TOTAL-COSTS> 2,266
<OTHER-EXPENSES> (59)
<LOSS-PROVISION> 3
<INTEREST-EXPENSE> (66)
<INCOME-PRETAX> 411
<INCOME-TAX> 157
<INCOME-CONTINUING> 254
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 254
<EPS-PRIMARY> 3.15
<EPS-DILUTED> 2.86
</TABLE>
