**Exhibit 10.7**

 

Execution Draft

 

SPECIAL FACILITIES LEASE

 

between

 

CHARTER COUNTY OF WAYNE,

STATE OF MICHIGAN

 

and

 

MESABA AVIATION, INC.

 

pertaining to facilities at

DETROIT METROPOLITAN WAYNE COUNTY AIRPORT

 

 

Dated as of June 1, 1990

 

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TABLE OF CONTENTS

 
| ARTICLE I DEFINITIONS AND EXHIBITS                                   |                                                                          |
|----------------------------------------------------------------------|-------------------------------------------------------------------------------|
| 1.1                                                                  | Definitions                                                                   |   |
| 1.2                                                                  | Exhibits                                                                      |   |
|                                                                 |                                                                          |   |
| ARTICLE II THE LEASE AND SPECIAL FACILITIES  CHARGES                 |                                                                          |
| 2.1                                                                  | Description                                                                   |   |
| 2.2                                                                  | Term                                                                          |   |
| 2.3                                                                  | Permitted Uses and Purposes                                                   |   |
| 2.4                                                                  | Special Facilities Charges                                                    |   |
| 2.5                                                                  | Manner of Payment and Amount of Special Facilities Charges                    |   |
| 2.6                                                                  | Notice of Current Expenses                                                    |   |
| 2.7                                                                  | Prepayment                                                                    |   |
|                                                                 |                                                                          |   |
| ARTICLE III FINANCING THE FACILITIES                                 |                                                                          |
| 3.1                                                                  | Issuance of Series 1990 Bonds                                                 |   |
| 3.2                                                                  | Series 1990 Bond Details                                                      |   |
| 3.3                                                                  | Insufficiency of Series 1990 Bond Proceeds                                    |   |
| 3.4                                                                  | Additional  Bonds                                                             |   |
| 3.5                                                                  | Use of Surplus Bond Proceeds                                                  |   |
|                                                                 |                                                                          |   |
| ARTICLE IV CONSTRUCTION OF FACILITIES;  APPLICATION OF BOND PROCEEDS |                                                                          |
| 4.1                                                                  | Mesaba Obligation to Construct Facilities                                     |   |
| 4.2                                                                  | Consulting Engineer; Duties                                                   |   |
| 4.3                                                                  | Mesaba Contracting and Construction Responsibilities                          |   |
| 4.4                                                                  | Design and Construction Procedures; Construction Contracts and  Sub-Contracts |   |
| 4.5                                                                  | Submission and Approval of Plans and Contracts; Construction  Inspection      |   |
| 4.6                                                                  | Disbursements from Construction Fund                                          |   |
| 4.7                                                                  | County Rights to Stop or Alter Construction                                   |   |
| 4.8                                                                  | Completion of Construction                                                    |   |
| 4.9                                                                  | Building Permits and Performance Bond                                         |   |
|                                                                 |                                                                          |   |
| ARTICLE V MAINTENANCE, REPAIR AND OPERATION                          |                                                                          |
| 5.1                                                                  | Maintenance                                                                   |   |
| 5.2                                                                  | Common  Access Avenues                                                        |   |
| 5.3                                                                  | Utility  Services                                                             |   |
| 5.4                                                                  | Insurance                                                                     |   |
| 5.5                                                                  | Taxes                                                                         |   |
| 5.6                                                                  | Right of Ingress and Egress                                                   |   |
| 5.7                                                                  | County Access to Facilities                                                   |   |
| 5.8                                                                  | Conduct of Operations of the Facilities                                       |   |

 

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| ARTICLE VI DAMAGE OR CONDEMNATION OF  FACILITIES              |                                                                                  |
|---------------------------------------------------------------|---------------------------------------------------------------------------------------|
| 6.1                                                           | Repair and Replacement after Damage or Destruction                                    |   |
| 6.2                                                           | Election to Prepay Special Facilities Charges                                         |   |
| 6.3                                                           | Condemnation                                                                          |   |
|                                                          |                                                                                  |   |
| ARTICLE VII MESABA REPRESENTATIONS,  WARRANTIES AND COVENANTS |                                                                                  |
| 7.1                                                           | Mesaba’s Representations                                                         |   |
| 7.2                                                           | Compliance  with Laws                                                                 |   |
| 7.3                                                           | Mesaba Maintenance of Existence                                                       |   |
| 7.4                                                           | General Limitations with Respect to Non-Impairment of Tax-Exempt  Status of the Bonds |   |
| 7.5                                                           | County Fees and Expenses                                                              |   |
| 7.6                                                           | Trustee Fees and Expenses                                                             |   |
| 7.7                                                           | Mesaba’s Obligations Unconditional                                               |   |
| 7.8                                                           | Mesaba Bound by Ordinance                                                             |   |
| 7.9                                                           | Investments; Arbitrage Covenant                                                       |   |
| 7.10                                                          | Non-Discrimination                                                                    |   |
| 7.11                                                          | Letter of Credit; Alternate Letter of Credit                                          |   |
|                                                          |                                                                                  |   |
| ARTICLE VIII COUNTY FINDINGS AND  REPRESENTATIONS             |                                                                                  |
| 8.1                                                           | County Findings and Representations                                                   |   |
| 8.2                                                           | County Authority to Issue Bonds                                                       |   |
|                                                          |                                                                                  |   |
| ARTICLE IX DEFAULT                                            |                                                                                  |
| 9.1                                                           | Events  of Default                                                                    |   |
| 9.2                                                           | Waiver  of Default                                                                    |   |
| 9.3                                                           | County Performance of Mesaba’s Obligations                                       |   |
| 9.4                                                           | Remedies upon Event of Default                                                        |   |
| 9.5                                                           | Payment of Attorneys’ Fees and Other Expenses                                    |   |
| 9.6                                                           | No  Remedy Exclusive                                                                  |   |
| 9.7                                                           | Limitation  on Waivers                                                                |   |
|                                                          |                                                                                  |   |
| ARTICLE X INDEMNIFICATION                                     |                                                                                  |
| 10.1                                                          | Indemnification of Trustee                                                            |   |
| 10.2                                                          | Indemnification of County                                                             |   |
|                                                          |                                                                                  |   |
| ARTICLE XI ACTIONS AFFECTING TITLE AND  POSSESSION            |                                                                                  |
| 11.1                                                          | Quiet  Enjoyment                                                                      |   |
| 11.2                                                          | Title to Equipment and Improvements                                                   |   |
| 11.3                                                          | Surrender of Possession                                                               |   |
| 11.4                                                          | Mineral Rights                                                                        |   |

 

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| ARTICLE XII ASSIGNMENT AND SUBLETTING; RIGHTS  OF LEASEHOLD MORTGAGEE |                                                                 |
|-----------------------------------------------------------------------|----------------------------------------------------------------------|
| 12.1                                                                  | Sale Assignment Transfer, or Sublease                                |   |
| 12.2                                                                  | Rights  of Mortgagee                                                 |   |
| 12.3                                                                  | Simultaneous Assignment and Subletting of Related Airport Facilities |   |
| 12.4                                                                  | Sublessee, Etc., Bound by Ordinance                                  |   |
|                                                                  |                                                                 |   |
| ARTICLE XIII GROUND LEASE                                             |                                                                 |
| 13.1                                                                  | Relationship of the Lease to Ground Lease                            |   |
|                                                                  |                                                                 |   |
| ARTICLE XIV MISCELLANEOUS PROVISIONS                                  |                                                                 |
| 14.1                                                                  | Notices                                                              |   |
| 14.2                                                                  | Paragraph  Headings                                                  |   |
| 14.3                                                                  | Severability                                                         |   |
| 14.4                                                                  | Binding Effect                                                       |   |
| 14.5                                                                  | Lease to United States of America                                    |   |
| 14.6                                                                  | Amendment                                                            |   |
| 14.7                                                                  | Governing Law                                                        |   |
| 14.8                                                                  | Cancellation by Mesaba                                               |   |
| 14.9                                                                  | Cancellation by County                                               |   |
| 14.10                                                                 | Rights After Bonds Paid                                              |   |

 
| EXHIBITS  |                           |
|-----------|--------------------------------|
| Exhibit A | Description  of the Facilities |
| Exhibit B | Requisition  Certificate       |
| Exhibit C | Completion  Certificate        |

 

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MESABA AVIATION, INC.

SPECIAL FACILITIES LEASE

 

THIS LEASE,made and entered into as of June 1, 1990, by and between the CHARTER COUNTY OFWAYNE, MICHIGAN, a public body corporate, with principal offices at 600Randolph Street, Detroit, Michigan 48226 and MESABA AVIATION, INC., acorporation organized and existing under the laws of the State of Minnesotawith principal offices located at 7501 26th Avenue South, Minneapolis,Minnesota 55450.

 

WITNESSETH:

 

WHEREAS, theCounty owns and operates the Detroit Metropolitan Wayne County Airport, locatedin the City of Romulus, County of Wayne, State of Michigan and has the power tolease premises and facilities and to grant rights and privileges with respectthereto, pursuant to the provisions of Act 327, Public Acts of Michigan, 1945,as amended; and

 

WHEREAS,Mesaba is engaged in the business of transporting persons, property, cargo andmail by aircraft; and

 

WHEREAS,Mesaba desires to lease and to obtain rights and privileges with respect tocertain facilities at the Airport (as defined herein, the “Facilities”) uponthe terms and conditions hereinafter provided; and

 

WHEREAS,because of the necessity that the Facilities be designed, acquired, constructedand installed in a manner which will suit Mesaba’s needs, Mesaba will undertakethe design, acquisition, construction and installation of the Facilities onbehalf of the County; and

 

WHEREAS, theCounty proposes to finance the acquisition, construction and installation ofthe Facilities by the issuance of bonds to be paid solely from the NetRevenues, as defined in the Ordinance (hereinafter defined), to be derived bythe County under the Lease (hereinafter defined) or from any successor,amendatory or replacement contracts to the Lease; and

 

WHEREAS, theCounty and Mesaba have entered or will simultaneously enter into a separateground lease for the use of Airport ground space for the location of theFacilities;

 

NOW,THEREFORE, for and in consideration of the premises and of the mutual covenantsand agreements herein contained, the parties agree as follows:

 

ARTICLE I

DEFINITIONS AND EXHIBITS

 

1.1           Definitions.

 

Whenever usedin the Lease, except when otherwise indicated by the context, the followingterms shall have the following meanings:

 

“Act 94” meansAct 94, Public Acts of Michigan, 1933, as amended.

 

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“Act 327” or “AeronauticsCode” means Act 327, Public Acts of Michigan, 1945, as amended.

 

“Act ofBankruptcy” means the filing of a petition in bankruptcy under the UnitedStates Bankruptcy Code or the commencement of a proceeding under any otherapplicable law now or hereafter in effect by or against Mesaba or any successorto or assignee of the Lease.

 

“AdditionalBonds” means any bonds of equal standing issued under the authority of theOrdinance in addition to the Series 1990 Bonds.

 

“Airport”means the Detroit Metropolitan Wayne County Airport and all aeronauticalfacilities owned and operated by the County in connection therewith, includingall real property now or hereafter owned by the County, the terminal buildings,airport facilities and all other improvements and equipment now or hereafterlocated, constructed, installed or situated thereon.

 

“AlternateLetter of Credit” means an irrevocable letter of credit delivered to, andaccepted by, the Trustee pursuant to the Ordinance. An Alternate Letter ofCredit shall be issued by a commercial bank organized and doing business in theUnited States or a branch or agency of a foreign commercial bank located in theUnited States and subject to regulation by state or federal banking regulatoryauthorities the senior debt of which is rated by a national rating agency inthe same or better category as the senior debt of the issuer of the theneffective Letter of Credit, or, in the alternative, of the outstandingobligations then rated on the basis of a letter of credit issued by suchissuer, and shall be in substantially the form of the original Letter ofCredit. On or before the date of the delivery of any Alternate Letter of Creditto the Trustee, as a condition to the acceptance of such Alternate Letter ofCredit by the Trustee, the Obligor shall furnish to the Trustee (i) writtenevidence that the issuer of such Alternate Letter of Credit is a commercialbank organized and doing business in the United States or a branch or agency ofa foreign commercial bank located and doing business in the United States andsubject to regulation by state or federal banking regulatory authorities, (ii)an opinion of Bond Counsel stating that the delivery of such Alternate Letterof Credit to the Trustee is authorized under this Lease and complies with theterms hereof and that the delivery of such Alternate Letter of Credit does notadversely affect the exclusion from gross income for Federal income taxpurposes for the interest on the Bonds, and (iii) an opinion of counselsatisfactory to the Trustee in form satisfactory to the Trustee to the effectthat the Alternate Letter of Credit is the valid and binding obligation of thebank (or, in the case of a branch or agency of a foreign commercial bank, the branchor agency) issuing the same, enforceable in accordance with its terms. In thecase of an Alternate Letter of Credit issued by a branch or agency of a foreigncommercial bank there shall also be delivered an opinion of counselsatisfactory to the Trustee and licensed to practice law in the jurisdiction inwhich the head office of such bank is located in form satisfactory to theTrustee, to the effect (i) that the Alternate Letter of Credit is the valid andbinding obligation of such bank enforceable in accordance with its terms in thecourts of the jurisdiction in which the head office of such bank is located,(ii) that such bank has consented to jurisdiction in the United States, (iii)that such branch or agency is subject to banking regulations of the UnitedStates or any state thereof, and (iv) that a judgment upon the Alternate Letterof Credit obtained in the United States against such branch or agency would beenforceable against such bank in the courts of the jurisdiction in which thehead office of such bank is located without relitigation of the merits.

 

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“AuthorizedRepresentative” means the representative of Mesaba, duly authorized by properaction of Mesaba, as evidenced by a signed certificate of its Secretary, to acton behalf of Mesaba.

 

“Bank” meansNorwest Bank Minnesota, National Association, or any provider of an AlternateLetter of Credit.

 

“Best Efforts”means that the County shall use all commercially reasonable efforts, calculatedto reach any potential user of any vacated portion of the Facilities, which iswilling to relet such Facilities and become a party to and assume the Mesabaobligations under the Lease, the Airport Agreement and/or Ground Lease withrespect to such Facilities.

 

“Bond Counsel”means Miller, Canfield, Paddock and Stone, attorneys of Detroit, Michigan,Lewis, White & Clay, A Professional Corporation, attorneys of Detroit,Michigan, or any nationally recognized bond counsel acceptable to the Trusteeand the County.

 

“Bond Fund”refers to the Bond and Interest Redemption Fund created pursuant to Section5.2B of the Ordinance.

 

“Bond PaymentDate” means any of the dates specified in the Ordinance for payment ofinterest, or interest and principal, on the Bonds, which dates occursemiannually on June 1 and December 1 of each year, commencing December 1,1990.

 

“Bonds” meansthe Series 1990 Bonds and any Additional Bonds issued pursuant to theOrdinance.

 

“Code” meansthe Internal Revenue Code of 1986, as amended, and the regulations, rulings andcourt decisions thereunder.

 

“CompletionCertificate” means the certificate referred to in Section 4.8 hereof,substantially in the form attached hereto as Exhibit C.

 

“CompletionDate” means the date upon which the Completion Certificate is delivered to theTrustee.

 

“ConstructionFund” shall have the meaning assigned to such term in the Ordinance.

 

“ConsultingEngineer” means Albert Kahn Associates, Inc., Architects & Engineers,Detroit, Michigan.

 

“County” meansthe Charter County of Wayne, State of Michigan.

 

“CountyApproval” means approval by the Assistant County Executive for Airports andMajor County Construction or his designee.

 

“CurrentExpenses” shall have the meaning assigned to such term in Section 2.6.

 

“Default” and “Eventof Default” means those defaults and events of default, respectively, specifiedand defined in Article IX.

 

“DisbursingAgreement” means the Disbursing Agreement dated as of June 1, 1990, amongMesaba, the Bank, the Trustee and Commonwealth Land Title Insurance Company oran agent thereof.

 

“EffectiveDate” means the date of delivery of the Series 1990 Bonds at which time theLease term begins, if not earlier begun.

 

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“Facilities”means the design, acquisition, construction and installation of the airportfacilities described in Exhibit A.

 

“FacilitiesCosts” shall be deemed to include all costs for the design, acquisition,construction, installation and financing of the Facilities, including, but notlimited to obligations of the County or Mesaba on behalf of the County incurredfor: (a) materials, machinery, furnishings and equipment and for labor andcontractors, builders and materialmen in connection with the design,acquisition, construction and installation of the Facilities or any portionthereof; (b) the cost of contract bonds and of insurance of all kinds that maybe required or necessary during the course of construction of the Facilities orany portion thereof which is not paid by the contractor or contractors orotherwise provided for; (c) architectural and engineering expenses for testborings, surveys, estimates, plans and specifications and preliminaryinvestigations therefor, and for supervising construction, as well as for theperformance of all other duties required for the proper construction of theFacilities or any portion thereof; (d) legal, accounting, financial andprinting expenses and fees, compensation and expenses of the County, the Bank,the Trustee and the Placement Agent, and all other expenses incurred inconnection with the acquisition of the Facilities or any portion thereof andthe issuance of the Bonds; (e) all other costs which the County or Mesaba shallbe required to pay, under the terms of any contract or contracts approved bythe County, for the design, acquisition, construction and installation of theFacilities or any portion thereof; (f) fees and expenses incurred in connectionwith the issuance of the Letter of Credit; (g) the cost of a Title InsurancePolicy and survey of the site of the Facilities; and (h) any sums required toreimburse the County or Mesaba for advances made by either of them for any ofthe above items, or for any other costs incurred and for work done by either ofthem which are properly chargeable to the Facilities.

 

“FacilitiesPurposes” means the use of the Facilities set forth in Section 2.3 of theLease.

 

“Ground Lease”means the agreement dated as of June 1, 1990, as amended or extended, betweenthe County and Mesaba by which Mesaba obtains the use of real property uponwhich the Facilities shall be constructed at the Airport.

 

“Improvementsto the Facilities” means such additions (including real property), equipment,improvements, modifications or relocations as the County may approve and whichMesaba may deem necessary or desirable in, on, or to the Facilities, all ofwhich shall be included in the Plans and Specifications and shall become partof the Facilities.

 

“InvestmentIncome” shall have the meaning assigned to such term in the Ordinance.

 

“Lease” meansthis Special Facilities Lease, as amended from time to time.

 

“Letter ofCredit” means a Letter of Credit providing for payment of the Series 1990 Bondswhich Mesaba is obligated to deliver simultaneously with the delivery of Series1990 Bonds substantially in the form attached to the Reimbursement Agreement.

 

“Mesaba” meansMesaba Aviation, Inc., a Minnesota corporation, and its successors and assigns.

 

“Net Revenues”means all revenues of the Facilities, including Special Facilities Charges andInvestment Income, derived from the Facilities under the Lease, or under anysuccessor contract or agreement, or the Letter of Credit, or from the Bondproceeds, after payment of Current Expenses.

 

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“Notice ofIntent Resolution” means the resolution adopted by the County Commission onJanuary 18, 1990, which, inter alia, stated the intent of the County to issuethe Series 1990 Bonds to finance the Facilities.

 

“OperatingYear” means the operating year of the County; i.e., December 1 of each year toand including December 30 of the following calendar year.

 

“Operation andMaintenance Fund” shall have the meaning assigned to such term in Section 5.2Aof the Ordinance.

 

“Ordinance”means Ordinance No. 322 adopted by the County Commission, authorizing issuanceof the Bonds and supplemented in accordance with its terms.

 

“OutstandingBonds” or “Bonds outstanding” shall mean all Bonds which have beenauthenticated and delivered by the Trustee under the ordinance, except:

 

(a)           Bonds canceled afterpurchase in the open market or because of payment at or redemption prior tomaturity;

 

(b)           Bonds deemed paid underthe Ordinance; or

 

(c)           Bonds in lieu of whichother Bonds have been authenticated under this Ordinance.

 

“PlacementAgent” shall have the meaning assigned to such term in the Ordinance.

 

“Plans andSpecifications” means the drawings, plans and technical specifications relatingto the design, installation and construction of the Facilities, as amended fromtime to time and prepared in sufficient detail to permit the County to approvethe character, placement and appearance of the Facilities.

 

“RebateAccount” shall have the meaning assigned to such term in the Ordinance.

 

“ReceivingFund” shall have the meaning assigned to such term in the Ordinance.

 

“RedemptionPrice” means with respect to the Bonds, the principal amount of the Bonds to beredeemed, plus the applicable premium, if any, payable upon redemption (butexcluding any Conditional Supplemental Premium) as set forth in the BOND FORMAPPENDIX to the Ordinance.

 

“ReimbursementAgreement” means the Letter of Credit and Reimbursement Agreement dated as ofJune 1, 1990, between Mesaba and the Bank.

 

“RequisitionCertificate” means the certificate referred to in Section 4.6, a form of whichis attached as Exhibit B.

 

“Series 1990Bonds” means the Charter County of Wayne (Michigan) Special Airport FacilitiesRevenue Bonds (Mesaba Aviation, Inc. Facilities), Series 1990.

 

“SpecialFacilities Charges” means the rental payments to be remitted directly to theTrustee and to the County pursuant to the Lease which shall be in an amountsufficient to pay Current Expenses and to ensure sufficient Net Revenues fortimely payment of the principal or Redemption Price and interest on the Bonds,whether at maturity or redemption as the same become due, and any requireddeposits to make up deficiencies in the Reserve Account.

 

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“TitleInsurance Policy” shall be the Title Insurance Policy described in theDisbursing Agreement.

 

“Trustee”means the Trustee under the Ordinance, or any successor at any later timeserving under the Ordinance.

 

1.2           Exhibits.Exhibits to the Lease consist of:

 

A             Descriptionof the Facilities.

B             RequisitionCertificate.

C             CompletionCertificate.

 

ARTICLE II

THE LEASE AND SPECIAL FACILITIES CHARGES

 

2.1           Description.The County hereby leases to Mesaba, and Mesaba hereby leases from the County,the Facilities described in Exhibit A.

 

2.2           Term.  Mesaba shall have use of the Facilities for aterm commencing upon the earliest of: (1) the date Mesaba enters upon, with permission of the County, the siteof the Facilities or any portion of them, for the use or construction thereofor for the installation of any equipment, facilities or improvements thereon orfor any other purpose, or (2) the date the County or any of its agents entersupon the Facilities or the site of the Facilities, for the purpose ofconstructing or installing any part of the Facilities in accordance with arequest from Mesaba, or (3) the Effective Date.

 

The Leaseshall terminate June 1, 2010, unless cancelled earlier in accordance with itsterms; provided, however, that Mesaba shall have the option to renew the Leasefor a term of five (5) years at fair market value determined at the time ofrenewal; and provided further that in the event the Ground Lease shall for anyreason terminate before the Bonds have been paid, (i) the Lease shall terminatesimultaneously with the termination of the Ground Lease, (ii) the Bonds shallbe subject to mandatory redemption as provided in the Ordinance, (iii) allSpecial Facilities Charges hereunder shall be accelerated and (iv) Mesaba shallforthwith pay all Special Facilities Charges due. The County shall give 60 daysprior written notice to Mesaba of the termination date of the Lease and of theSpecial Facilities Charges for the renewal term. Mesaba shall notify the Countyin writing not less than 30 days prior to the termination date of Mesaba’s electionto renew the Lease. In the event Mesaba shall fail to give such notice, therenewal option shall lapse.

 

2.3           Permitted Uses andPurposes. The Facilities may be used by Mesaba, subject to the rules andregulations of the County, in the conduct of its air transportation businessgenerally, and specifically for aircraft maintenance, storage and employeetraining purposes and related activities reasonably necessary to the foregoing;provided, however, that the foregoing rights and uses granted Mesaba shall notbe construed as authorizing the conduct of a separate business by Mesaba otherthan its air transportation business.

 

2.4           Special FacilitiesCharges. Mesaba shall pay Special Facilities Charges as rent andconsideration for its lease rights to the Facilities, separate from and inaddition to amounts paid under the Ground Lease. Special Facilities Chargesshall be in an amount sufficient to pay Current Expenses, the principal of,Redemption Price and interest on the Bonds.

 

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2.5           Manner of Paymentand Amount of Special Facilities Charges. Special Facilities Charges shallbe paid on the 1st day of each month (or the first Business Day thereafter ifthe 1st day of the month shall not be a Business Day) commencing July 1, 1990,by Mesaba in immediately available funds directly to the Trustee for depositinto the Receiving Fund or, in the case of Current Expenses, directly to theCounty. The Trustee shall disburse the Special Facilities Charges from the ReceivingFund as provided in the Ordinance. Monthly Special Facilities Charges shall bethe total of:

 

(a)           Current Expenses forsuch month as scheduled in the County’s notice of Current Expenses pursuant toSection 2.6;

 

(b)           1/5 of the total amountof interest on the Bonds coming due on December 1, 1990, with credit foraccrued interest received upon delivery of the Bonds, and any investmentearnings on deposit in the Bond Fund, and, commencing December 1, 1990, 1/6 ofthe total amount of interest on the Bonds next coming due, with credit for anyinvestment earnings on deposit in the Bond Fund;

 

(c)            1/35 of the principaldue by maturity on the Bonds on June 1, 1993, and, commencing June 1, 1993,1/12 of any principal due by maturity on the Bonds on the next succeeding June1;

 

(d)           1/6 of any principaldue by Mandatory Sinking Fund Redemption on the Bonds on the next succeedingJune 1 or December 1; and

 

(e)           Less or with creditagainst such monthly Special Facilities Charges for moneys then in theReceiving Fund and creditable for the foregoing purposes, if any.

 

In addition tothe monthly payment of Special Facilities Charges described above, Mesaba shallpay, as additional Special Facilities Charges and within 30 days fromnotification from the Trustee of any call for redemption of Bonds other than aMandatory Sinking Fund Redemption, an amount equal to the Redemption Price,plus Conditional Supplemental Premium, if any, of all Bonds to be called. If onany Bond Payment Date the balance in the Letter of Credit Account of the BondFund is insufficient to make the required payments of principal, or RedemptionPrice and interest on the Bonds, Mesaba shall forthwith pay in immediatelyavailable funds any such deficiency to the Trustee for deposit into the BondFund. Any moneys on deposit (A) in the Bond Fund on any Bond Payment Date inexcess of the amount required (i) for payment of amounts owing the Bankpursuant to the Reimbursement Agreement, (ii) for payment of principal of,Redemption Price (if any), plus Conditional Supplemental Premium, if any, andinterest on Bonds matured or called for redemption or (iii) for past-dueinterest, or (B) in the Operation and Maintenance Fund for payment of CurrentExpenses, shall be held for credit to Mesaba’s Special Facilities Charges nextdue.

 

2.6           Notice of CurrentExpenses. At the commencement of the Lease and for the remainder of anyOperating Year already commenced and 30 days prior to the commencement of eachsubsequent operating Year, the County shall notify Mesaba of estimated CurrentExpenses for each month of such remainder of the Operating Year or subsequentOperating Year. Current Expenses shall include the following and items of asimilar nature:

 

(i)            Expenses of the Countyand its accountants in keeping proper books of record and account for alldealings, transactions, income and disbursements, with respect to theFacilities and the Bonds; and

 

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(ii)           Maintenance, utilitiesand insurance costs incurred by the County respecting the Facilities.

 

During anOperating Year the County may notify Mesaba that the projected Current Expensespayments are or were insufficient to meet actual Current Expenses. Within 30days of receipt of such notice Mesaba shall pay any deficit of Current Expensesaccrued, and subsequent monthly payments of Special Facilities Charges shall beincreased by the amount necessary to meet revised estimated Current Expenses.

 

Within 60 daysfollowing the end of each Operating Year, the County shall submit a statementof actual Current Expenses incurred during the preceding Operating Year. To theextent that actual Current Expenses were less than amounts paid as CurrentExpenses, the next following monthly payments of Current Expenses shall bereduced. Mesaba may request details of such estimated or actual CurrentExpenses, and in the event of disagreement as to the basis for, or the amountsof such estimated or actual Current Expenses, such disagreement may besubmitted for arbitration; provided, however, the County’s good faithdeterminations (i) that it is responsible for maintenance, insurance, orutilities, respectively, and (ii) that the cost of such maintenance, insurance,or utilities, respectively, is not otherwise reimbursed to it and is owing toit as part of Current Expenses shall be conclusive.

 

2.7           Prepayment.Mesaba may at any time prepay all or any part of the Special FacilitiesCharges. Prepayment of such Special Facilities Charges shall not in any wayalter or suspend any obligations of Mesaba under the Lease except to the extentthe same results in a credit against Special Facilities Charges because ofprepayment and retirement of Bonds in accordance with the Ordinance.

 

ARTICLE III

FINANCING THE FACILITIES

 

3.1           Issuance of Series1990 Bonds. The County agrees to use its best efforts to procure or causeto be procured financing to cover the cost of the design, acquisition,construction and installation of the Facilities, by the issuance of the Series1990 Bonds, secured by the Net Revenues. Mesaba unconditionally agrees to paythe Special Facilities Charges at the times and in the manner set forth inArticle II, and agrees further at all times to cause to be maintained theLetter of Credit in support of Mesaba’s payment obligations with respect to theSeries 1990 Bonds. It is understood that payment of the Bonds will in no eventbe an obligation of the County, and will in no event involve the credit orgeneral funds of the County or the Airport or the taxing power of the County.If for any reason the Ground Lease is not executed and delivered by the Countyor the Series 1990 Bonds are not authorized and issued by the County, then thisLease shall be void and of no effect.

 

3.2           Series1990 Bond Details. The principal amount of the Series 1990 Bonds shall be$3,630,000 which amount, together with additional moneys contributed by Mesaba,Mesaba and its architects and engineers estimate to be sufficient to pay thecost of the Facilities, including bond issuance costs, debt service reserves,and other incidental costs permitted by law. The Bonds will mature over aperiod of 15 years with serial and term maturities within the limitationsspecified in Act 94, the first of which shall become due by maturity orMandatory Sinking Fund

 

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Redemption not later than June 1, 1993, and shall bear interest at suchrate or rates as shall be specified in the Ordinance.

 

3.3           Insufficiency ofSeries 1990 Bond Proceeds. The County makes no warranty, either express orimplied, and offers no assurances that the proceeds derived from the sale ofthe Series 1990 Bonds will be sufficient to pay the entire Facilities Costs,and the County shall not be liable to Mesaba if for any reason the Facilitiesare not completed. In the event moneys in the Construction Fund areinsufficient to pay the entire Facilities Costs, Mesaba shall complete theFacilities and pay Facilities Costs in excess of the amount available in theConstruction Fund. Mesaba shall not, by reason of the payment of any portion ofFacilities Costs, be entitled to any reimbursement from the County, the Trusteeor any holders of the Bonds in respect thereof or to any diminution orabatement of Special Facilities Charges. If the Facilities are not completed,Mesaba shall nevertheless be unconditionally obligated to pay the total SpecialFacilities Charges required to be paid pursuant to Article II of the Lease andshall be responsible for all other obligations imposed by the terms hereof uponMesaba, it being the intention that all risk of failure to complete theFacilities or any of them shall be assumed by Mesaba and not by the County orby the Bondholders.

 

3.4           AdditionalBonds.  Notwithstanding anythingcontained in this Section or elsewhere in the Lease the County may but shallnot be obligated to issue such Additional Bonds or series of Bonds as may benecessary to pay any one or more of the following costs: (a) for completing theFacilities; (b) for constructing or acquiring Improvements to the Facilities;(c) for funding reserves; (d) for refunding of all or any part of the Series1990 Bonds; and (e) for payment of the costs of issuance and sale of theAdditional Bonds and capitalized interest for such period and other costsreasonably related to the financing as shall be agreed upon by Mesaba and theCounty; provided, however, that the County and the Trustee shall be furnishedwith an opinion of Bond Counsel that the issuance of Additional Bonds and theexpenditure of proceeds from the sale thereof is permitted by Act No. 94 andthe Ordinance and will not impair the exclusion of interest on the Series 1990Bonds from gross income for federal income tax purposes. Prior to the issuanceof any Additional Bonds, their terms, the purchase price to be paid thereforand the manner in which the proceeds are to be disbursed, shall be approved inwriting by the Bank (if the Letter of Credit or Alternate Letter of Credit isthen in effect), the County and Mesaba, and Mesaba and the County shall haveentered into an amendment to the Lease, if necessary, to provide for SpecialFacilities Charges in an amount at least sufficient to pay Current Expenses andthe principal of, redemption price (if any) and interest on the AdditionalBonds when due.

 

Nothingcontained in this Article or the Lease shall be construed in such way as toprevent similar financing of additional capital improvements and facilitieswhich may be constructed in the future at the Airport for lease to and use byMesaba, but the Special Facilities Charges shall not be pledged as security forany bonds or obligations (other than Additional Bonds) issued for such purpose.

 

3.5           Use of Surplus BondProceeds. As soon as practicable and in any event within 60 days from thedate of delivery of the Completion Certificate, any balance remaining in theConstruction Fund described in the Ordinance (other than the amounts retainedby the Trustee for payment of any Facilities Costs not then due and payable,any amounts deemed necessary by the Trustee to pay costs of any litigation arisingfrom construction of the Facilities, or amounts being contested by Mesaba),herein called “Surplus Bond Proceeds,” shall be deposited in the

 

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Bond Fund, or applied as set forth below for Improvements to theFacilities, as Mesaba shall in writing direct the Trustee with the writtenconsent of the Bank, and Mesaba shall simultaneously advise the County of suchdirection to the Trustee.

 

If Mesabashall elect to use Surplus Bond Proceeds to acquire Improvements to theFacilities, such Surplus Bond Proceeds shall remain in the Construction Fundand be disbursed to pay the cost of acquiring, constructing and installing suchImprovements to the Facilities in the same manner as payments from theConstruction Fund; provided that (i) the use of Surplus Bond Proceeds for theImprovements to the Facility shall be approved by the County, the MichiganDepartment of Treasury to the extent such approval may be required, and BondCounsel; (ii) such Surplus Bond Improvements to the Facilities shall consist ofairport facilities as permitted by the Code and the Aeronautics Code; and (iii)Mesaba shall diligently proceed to acquire, construct and install suchImprovements to the Facilities and expend therefor all Surplus Bond Proceedswithin three years from the date of issuance of the Bonds from which suchSurplus Bond Proceeds are derived. To the extent that the Surplus Bond Proceedsexceed the cost of acquiring, installing and constructing such Improvements tothe Facilities, or in the event Mesaba elects not to, or is unable to, use theSurplus Bond Proceeds to acquire such Improvements to the Facilities, theSurplus Bond Proceeds and the investment income thereon shall be applied, tothe extent thereof, (i) to the principal payments next coming due on the Bondsor, (ii) at Mesaba s option, exercised by direction given to the Trustee inwriting, and if otherwise permitted under the terms of the Bonds, to redeem inaccordance with the optional redemption provisions set forth in the BOND FORMAPPENDIX attached to the Ordinance at the earliest possible time such portionof the Bonds which, together with the applicable redemption premium, equals theamount of the Surplus Bond Proceeds and the investment income thereon.

 

In no eventshall Surplus Bond Proceeds or the investment income thereon be used to payinterest on the Bonds.

 

ARTICLE IV

CONSTRUCTION OF FACILITIES;

APPLICATION OF BOND PROCEEDS

 

4.1           Mesaba Obligation toConstruct Facilities. Mesaba shall construct or cause to be constructed theFacilities, using to the extent sufficient therefor the net proceeds derivedfrom the issuance and sale of the Bonds, other moneys in the Construction Fundand additional funds provided by Mesaba. Mesaba shall promptly complete the Facilitiessubstantially in accordance with the Plans and Specifications.

 

4.2           Consulting Engineer;Duties. The Consulting Engineer shall develop the Plans and Specifications,obtain County Approval thereof, and supervise the construction of theFacilities in accordance with the Plans and Specifications and the design andcontracting procedures specified in Section 4.4. The Consulting Engineer shallapprove all Requisition Certificates submitted to the Trustee and shall, bysuch approval, certify that the representations made therein are accurate.

 

4.3           Mesaba Contractingand Construction Responsibilities. Mesaba shall promptly undertake, at itssole cost and expense but on behalf of the County, the acquisition,construction and installation of the Facilities in accordance with the Plansand Specifications and the design

 

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and construction procedures set forth in Section 4.4. Mesaba shallnegotiate and award construction contracts subject to County approval, andshall supervise, manage and be responsible for the acquisition, constructionand installation of the Facilities through completion.

 

4.4           Design andConstruction Procedures; Construction Contracts and Sub-Contracts. Thedesign and construction of the Facilities will be in accordance with proceduresand standards established or approved by the County for projects of similarscope at the Airport. Each contract package shall be completed or caused to becompleted by Mesaba to a level of detail satisfactory to the County.Construction contracts and sub-contracts shall include provisions (i) requiringthe contractor or sub-contractor to observe the same non-discriminatory policyand affirmative action practices agreed upon by Mesaba under Section 7.10 ofthe Lease, (ii) providing that the contractor agrees to have no right to placea lien upon any property, real or personal, of the County or the Airport andcovenants to place no such lien, and further agrees that nothing in any suchcontract could impose any obligation, liability or duty upon the County or theAirport, and (iii) requiring that each contractor include in its subcontractprovisions such as those required under subparagraphs (i) and (ii).

 

4.5           Submission andApproval of Plans and Contracts; Construction Inspection. Mesaba shall notenter into any construction contracts until Plans and Specifications thereforhave been submitted and received County Approval and shall not proceed withconstruction until contracts and sub-contracts therefor have been submitted andreceived County Approval and until a construction permit is issued by theCounty and until any other required building or construction permit has beenissued. The County shall approve or disapprove Plans and Specification orconstruction contracts within 21 days of submission by Mesaba.

 

Mesaba shallbe permitted to alter, modify or expand the Facilities in such manner and tosuch degree as necessary to satisfy Mesaba’s requirements provided such workdoes not interfere with the County’s proposed Airport expansion plans andprovided that prior to commencement of any such work, Mesaba shall submit plansand specifications and contracts for County Approval and permits in the samefashion as prescribed for the initial construction.

 

Mesaba shallsubmit to the County periodically upon request updated construction contractsand sub-contracts, together with the anticipated dates of completion of eachsuch contract or sub-contract, in such detail as the County may reasonablyrequire.

 

The Countyshall have the right to inspect the construction of the Facilities to insurethat the elements which comprise the Facilities are constructed and installedin conformity with approved Plans and Specifications and all amendmentsthereto. Mesaba agrees that, subject to reasonable security and safetyregulations and reasonable notice, the County and the Trustee, or their agents,shall have the right to enter the Facilities and to examine all records andreports prepared with respect to the Facilities.

 

4.6           Disbursements fromConstruction Fund. The Trustee is authorized under the Ordinance to makedisbursements from the Construction Fund to pay Facilities Costs in accordancewith the terms and provisions of the Disbursing Agreement upon receipt of aRequisition Certificate signed by an Authorized Representative of Mesaba,approved by the Consulting Engineer and the Bank, with a copy to the County,substantially similar to the form appended as Exhibit B.

 

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Upon aMandatory Redemption of the Bonds by reason of failure of Mesaba to provide andcause to remain in effect the Letter of Credit, the County shall require thatfunds in the Construction Fund be transferred to the Bond Fund to be used asprovided in the Ordinance.

 

4.7           County Rights toStop or Alter Construction. If construction or installation of theFacilities is not proceeding or has not been completed in substantialaccordance with the Plans and Specifications as approved by the County, or ifany variations adversely affect the County’s operation of the Airport, ormaterially fail to conform to the County’s requirements for Airport facilities,the County may suspend construction and, by written notice to Mesaba with acopy to the Bank, demand that Mesaba make appropriate changes in theconstruction or installation, and Mesaba shall forthwith undertake the changesrequested; provided, however, that if Mesaba shall have failed to commence andmake material progress in implementing the changes requested within 60 days of thedate of such demand, the County shall have the right to enter upon the premisesinvolved and effect such changes, charging Mesaba the costs and expensesthereof. Mesaba agrees hereby to pay all such charges upon demand.

 

4.8           Completion ofConstruction. When the Facilities, or any portion of them subject to thesame construction contract package, have been substantially completed and areready for occupancy by Mesaba, Mesaba shall deliver to the County a completeset of as-built construction drawings. When all Facilities have beensubstantially completed and are ready for occupancy by Mesaba, Mesaba shalldeliver the Completion Certificate executed by an Authorized Representative ofMesaba and approved by the Consulting Engineer, together with any other certificateor permit which may be required by the County or any federal, state or localgovernment or agency as a condition to the occupancy of the Facilities. Titleto all components of the Facilities, including all alterations, modificationsand enlargements thereto, acquired, constructed or installed by Mesaba shallvest in the County.

 

4.9           Building Permits andPerformance Bond. Mesaba shall, at its sole cost and expense, procure orcause to be procured, prior to and subsequent to construction as applicable,any and all necessary building permits, other permits, licenses and otherauthorizations required for the lawful and proper construction, use, occupancy,operation and management of the Facilities.

 

Prior toconstruction of any portion of the Facilities, Mesaba shall obtain or cause tobe obtained one of the following alternatives: (i) a performance bond and alabor and material payment bond, naming the County and the Bank as co-payees,issued by a surety company acceptable to the County, each of which shall be ina penal sum equal to the amount of any general contract or of any subcontractgreater than $5,000 or (ii) a letter of credit or similar performance guarantysatisfactory to the County.

 

ARTICLE V

MAINTENANCE, REPAIR AND OPERATION

 

Section 5.1             Maintenance.Mesaba shall keep and maintain the Facilities in good condition and repair,reasonable wear and tear excepted. Mesaba further shall keep the Facilities ina sanitary and sightly condition, and shall provide all necessary janitorservices and maintenance with respect thereto. In the event Mesaba, in theCounty’s judgment, fails to so maintain the Facilities, the County mayundertake such maintenance, and any County expenses and costs for providingmaintenance to the Facilities shall be reimbursed as part of the Special

 

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Facilities Charges paid by Mesaba. Such expenses or costs shall bedetermined by the County and paid by Mesaba in the manner set forth in Section2.6.

 

5.2           CommonAccess Avenues. The County shall keep the avenues of ingress and egress toand from the Facilities, including common taxiways, roadways, walkways andloading areas as free from obstruction as may be reasonably necessary for thesafe, convenient and proper use of the Facilities by Mesaba; provided, however,that the County may from time to time close, temporarily or permanently, one ormore such avenues of ingress and egress for purposes of repair, reconstructionor to permit new construction and, so long as the County shall have providedreasonably equivalent alternate means of ingress and egress, Mesaba shall haveno claim as a result of such closure.

 

5.3           UtilityServices. Mesaba shall bring or cause to be brought to the Facilities byarrangement with appropriate utility companies or suppliers, adequateelectricity, gas, water, sewerage and telephone facilities for Mesaba’s use andshall be responsible for all necessary evacuation, construction, and all mains,pipes, conduits, cables, wiring, sewers and other equipment required to soprovide such services in a manner adequate to supply Mesaba’s reasonable needstherefor under conditions from time to time prevailing, and Mesaba, withoutexpense to the County, shall have the right to make connections thereto andtherewith. Without limiting the generality of the foregoing, in providing waterfacilities Mesaba shall provide pipes and mains adequate in size and quality tosupply water in sufficient quantity for such sprinkler systems as have been ormay be required to be installed in the Facilities.

 

5.4           Insurance.(a) Hazard Insurance. Mesaba will continuously insure the Facilities againstsuch risks as are customarily insured against by airports or airlines forproperty of similar size and character, including, but not limited to loss ordamage by fire, with standard extended coverage, vandalism and maliciousmischief endorsements. Such insurance for loss or damage to the Facilitiesshall be at all times in an amount equal to the full insurable value of theFacilities. Such insurance policies shall name Mesaba and the Bank so long asthe Bank has an interest in the Facilities, and thereafter the County and theTrustee, as insureds as their interests may appear; provided, however, that allclaims on such insurance may be adjusted by Mesaba only with the insurers,subject to approval of the County, and all insurance proceeds for loss ordamage to the Facilities shall be payable to the Bank, so long as the Bank hasan interest in the Facilities, and thereafter to the Trustee.

 

(b)           PublicLiability Insurance. During the term of the Lease, Mesaba will continuouslycarry public liability insurance with reference to the Facilities, in theminimum amount of $2,000,000 for bodily injury or death per occurrence and inthe minimum amount of $2,000,000 for property damage per occurrence. The Countyand Trustee shall be named additional insureds under such public liabilityinsurance policies.

 

(c)           Builder’sRisk Insurance. During the term of construction of the Facilities, Mesaba willcontinuously carry or cause to be carried builder’s risk insurance to theextent of the full insurable value of the Facilities (including items of laborand materials connected therewith whether in or adjacent to the structuresinsured; materials in place, or to be used as part of the permanentconstruction, including surplus materials, shanties, protective fences, bridgesor temporary structures; miscellaneous materials and supplies incident to thework; and such scaffolding, stages, towers, forms and equipment as are notowned or rented by the contractor,

 

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the cost of which is includedin the Facilities Cost) against loss or damage by fire, with standard extendedcoverage, vandalism and malicious mischief endorsements.

 

(d)           CountyReimbursement. Any expenses or costs incurred by the County in providinginsurance to the Facilities, which expenses or costs are not otherwisereimbursed to the County by Mesaba shall be reimbursed as part of SpecialFacilities Charges paid by Mesaba. Such expenses or costs shall be determinedby the County and paid by Mesaba in the manner set forth in Section 2.6 hereof.

 

(e)           Certificatesof Insurance. All insurance policies required under this Section shall be withinsurance companies qualified under the laws of the State of Michigan to assumethe risks undertaken and may be written with deductible amounts, co-insurancefeatures and exceptions and exclusions comparable to those in similar policiescarried by other airport operators or airlines engaged in activities similar insize, character and other respects to those in which Mesaba and the County areengaged, provided that public liability insurance policies shall be writtenwith a deductible clause not in excess of $100,000. Mesaba and the County shalldeposit with the Trustee, and Mesaba shall deposit with the County, acertificate or certificates of the respective insurers in form satisfactory tothe Trustee attesting the fact that the required insurance is in force andeffect. Mesaba shall, upon request of the County, the Bank or the Trustee,furnish copies to the County, the Bank and the Trustee of binders evidencingthe insurance required hereunder. Such insurance policies shall contain aprovision that they are noncancelable by the insurer except upon 30 days priorwritten notice to Mesaba, the Trustee and the County. At least 30 days prior tothe expiration or cancellation of any such policy, Mesaba will furnish or causeto be furnished to the Trustee and the County, as applicable, satisfactoryevidence that such policy has been renewed or replaced by another policy of atype generally available by other airports or that such insurance is notcommercially available. In lieu of the separate insurance policies aboveprovided, such insurance may be in the form of a blanket insurance policy orpolicies which cover not only the Facilities, but other properties owned orleased by Mesaba, which policies may contain other named insureds andcomparable deductible amounts, co-insurance features and exceptions andexclusions, to those outlined above.

 

5.5           Taxes.During the term of the Lease, Mesaba agrees to pay:

 

(a)           All personal propertytaxes and assessments and all license fees applicable to its activities, orother charges which are legally levied or assessed on personal property whichis part of or situated on the Facilities;

 

(b)           Any tax or assessmentdetermined to be properly payable by Mesaba under Act 189 of the Public Acts of1953, as amended (or similar or successor statute), for the lease or use of theFacilities; and

 

(c)           All sales or use taxesand assessments, license fees or other charges of any nature, withoutexception, legally levied or assessed arising out of the activities conductedon or the occupancy of the Facilities.

 

Mesaba shall pursue, at itsexpense and with due diligence, any exception taken by it to any of theaforementioned taxes or assessments, and the County shall in no event bearresponsibility for such taxes or assessments.

 

5.6           Right of Ingress andEgress. Subject to the reasonable rules and regulations promulgated by theCounty, Mesaba shall have the right and privilege of ingress to and egress

 

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from the Facilities for its employees, agents, passengers, guests,patrons and invitees, its or their suppliers of materials and furnishers ofservice, its or their aircraft, equipment, vehicles, machinery and otherproperty, and except as herein otherwise specifically provided, no charges,fees or tolls of any nature, direct or indirect, shall be imposed by the Countyupon Mesaba, its employees, agents, passengers, guests, patrons and invitees,its or their suppliers of materials and furnishers of service, for such rightof ingress and egress, or for the privilege of purchasing, selling or using anymaterials or services purchased or otherwise obtained by Mesaba, ortransporting, loading, unloading or handling persons, property, cargo, or mailin connection with Mesaba’s business or exercising any right or privilege grantedby the County hereunder. The provisions of this Section 5.6 are not intended tochange any of the charges, landing fees, fees and tolls presently assessed bythe County for such rights of ingress and egress, if any.

 

5.7           County Access toFacilities. The County may enter upon the Facilities, or any portion ofthem, although leased exclusively to Mesaba hereunder, at any time for anypurpose necessary, incidental to or connected with the performance in theCounty’s reasonable discretion of its obligations hereunder, in the exercise ofits governmental functions, or in the event of any emergency.

 

5.8           Conduct ofOperations of the Facilities. In its use of the Facilities, Mesaba herebyobligates itself to the following requirements and regulations:

 

(a)           Mesaba shall notconsent to any unlawful use of the Facilities, nor permit any such unlawful usethereof.

 

(b)           All Mesaba employeesshall have, as required, proper and effective federal and state certificates orlicenses covering their individual and particular functions.

 

(c)           All local, federal andstate ordinances and laws will be observed, including the rules and regulationsof the federal and state aeronautical authorities and all local governingauthorities, including those of the County.

 

(d)           The operations ofMesaba, its employees, invitees and those doing business with it, and themanner in which the goods, services and facilities are supplied to theFacilities, shall be conducted in an orderly and proper manner and according tothe standards established by the County and so as not to annoy, disturb or beoffensive to others at the Airport. The County shall have the right to complainto Mesaba as to the demeanor, conduct and appearance of Mesaba’s employees,invitees, and those doing business with it, whereupon Mesaba will take allsteps necessary to remove the cause of the complaint and bring its operationsand services into compliance with such standards.

 

(e)           All rules andregulations of the State Fire Marshall shall be complied with by Mesaba in theconduct of its operations at the Airport.

 

(f)            Unless there shall beCounty approval, Mesaba shall not use or permit to be used all or any part ofthe Facilities for the sale to its employees or to the public of any beverages,food, candy, gum, ice cream or ice products, tobacco or tobacco products,periodicals, books, drugs, toys, games, souvenirs, jewelry, novelties,clothing, flowers, sporting or photographic goods or toilet articles, or otherlike merchandise, or for furnishing for a consideration, theatre tickets, shoeshines, pressing and cleaning (except of its employees’ uniforms), developingand printing of photographs and films, checked baggage services, or for thedisplay of advertising of third parties, or for the installation

 

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of anycoin-operated machines or devices; except sales to employees on a non-profitbasis in areas from which the general public is barred, which shall bepermitted.

 

(g)           In the event thatMesaba fails to perform, for a period of 30 days after written notice from theCounty to do so, any obligation required by this Article to be performed byMesaba at Mesaba’s cost, the County may, but shall not be obligated to, enterupon the premises involved and perform such obligation of Mesaba, chargingMesaba the reasonable cost and expense thereof, and Mesaba agrees to pay theCounty such charge in addition to the Special Facilities Charges; provided,however, that if Mesaba’s failure to perform any such obligation adverselyaffects, or endangers the health or safety of the public or of employees of theCounty, and if the County so states in its notice to Mesaba, the County may,but shall not be obligated to, perform such obligation of Mesaba at any timeafter giving such notice and without awaiting the expiration of 30 days, andcharge to Mesaba, and Mesaba shall pay, as aforesaid, the reasonable cost andexpense of such performance. If the County shall perform any of Mesaba’sobligations under the Lease in accordance with the provisions of this section,the County shall not be liable to Mesaba for any loss of revenue to Mesabaresulting from such performance.

 

ARTICLE VI

DAMAGE OR CONDEMNATION OF FACILITIES

 

6.1           Repair andReplacement after Damage or Destruction. Notwithstanding the provisions asto maintenance, repair and operation of the Facilities by Mesaba, if theFacilities shall be partially damaged or totally destroyed by fire, theelements, the public enemy or other casualty covered by fire and extendedcoverage insurance, the Facilities damaged or destroyed shall be repaired orreplaced with due diligence by Mesaba; provided, however, that in making suchrepair or replacement, Mesaba may make changes in the Plans and Specificationsof the portion of the Facilities to be repaired or replaced, so long as thecondition, character and value of the Facilities after such repair orreplacement has been made is the same or greater than the value of theFacilities as they existed immediately prior to the damage and, provided,further, that any change from the original Plans and Specifications shall besubject to County approval, in the same manner in which the original Plans andSpecifications were submitted and considered for approval.

 

In the makingof the repair and replacement herein contemplated, the proceeds of insurancecovering the Facilities shall be paid to the Bank, so long as the Bank has aninterest in the Facilities, and thereafter to the Trustee, and made availableto Mesaba; however, Mesaba’s obligation to repair or restore shall not belimited to the amount of such proceeds made available to it, and if theproceeds of such insurance are insufficient to repair or replace theFacilities, Mesaba shall nevertheless make such repair or replacement and shallpay any deficiency in insurance proceeds. If the proceeds of insurance are inexcess of the amount necessary to repair or replace the damaged Facilities, theexcess shall be applied to the redemption of Bonds.

 

Following anydamage or destruction to the Facilities or any portion of them and before anypermitted redemption of the Bonds, Mesaba’s obligation to pay SpecialFacilities Charges shall continue unabated.

 

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6.2           Election to PrepaySpecial Facilities Charges. As an alternative to repairing or replacing theFacilities damaged or destroyed and required to be repaired or replaced byMesaba, Mesaba may, within 90 days of any damage or destruction, notify theTrustee and the County in writing of its election to prepay the Special FacilitiesCharges as provided in the BOND FORM APPENDIX attached to the Ordinance underthe heading Extraordinary Optional Redemption. Such election to prepay all orany part of the Special Facilities Charges is subject to County approval, whichshall not be unreasonably withheld, releasing Mesaba from its obligation torepair or replace the Facilities.

 

6.3           Condemnation.Upon the acquisition by condemnation or the exercise of the power of eminentdomain under any federal or state statute by the United States, the State ofMichigan, or any federal or state agency or any other person vested with suchpower, of a temporary or permanent interest in all or any part of the Airport,including without limitation, the Facilities, there shall be no diminution orpostponement of the Special Facilities Charges; however any net proceedsreceived from the settlement of, or award made in, any condemnation or eminentdomain proceedings shall be paid to the Bank, so long as the Bank has aninterest in the Facilities, and thereafter to the Trustee, (i) to be appliedfor partial redemption of the Bonds and thereby may result in a reduction ofSpecial Facilities Charges or (ii) if there has been a draw on the Letter ofCredit or Alternate Letter of Credit to fund an Extraordinary OptionalRedemption of the Series 1990 Bonds, to the Bank to the extent of such draw.

 

The County andMesaba each shall have the right to appear and file a claim for damages, to theextent of each’s respective interest, in the condemnation or eminent domainproceeding, to participate in any and all hearings, trials and appeals therein;provided, however that all costs and expenses for such proceedings shall bepaid by Mesaba. The County and Mesaba shall cooperate with the other in theconduct and defense of any condemnation or eminent domain proceeding, andneither the County nor Mesaba shall settle any such proceeding without theconsent of the other. This section shall not be construed to limit the County’spower of eminent domain.

 

ARTICLE VII

MESABA REPRESENTATIONS, WARRANTIES ANDCOVENANTS

 

7.1           Mesaba’sRepresentations. Mesaba makes the following representations and warrantiesas of the effective date hereof for the benefit and reliance of the County andthe Trustee:

 

(a)           Mesaba is a corporationduly organized, existing and in good standing under the laws of the State ofMinnesota and is duly qualified to do business and is in good standing in theState of Michigan and in every state in which its business requiresqualification in such state.

 

(b)           The execution anddelivery of the Lease, the Ground Lease, the consummation of the transactionscontemplated thereby and the fulfillment of and compliance with the terms andconditions of the Lease and the Ground Lease are within its corporate powers,have been duly authorized and are not in contravention of law or the terms ofits Articles of Incorporation or Bylaws and will not violate any provision oflaw, any order of any court or other agency of government, or any court order,indenture, agreement or other instrument or restriction to which Mesaba is nowa party or by which it or any of its properties or assets is bound, or be inconflict with, result in a breach of or

 

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constitute adefault (with due notice or the passage of time or both) under any suchindenture, agreement, or other instrument or restriction.

 

(c)           The Lease and theGround Lease are valid and binding obligations of Mesaba enforceable inaccordance with their terms.

 

(d)           No binding contracts orcommitments payable from the Construction Fund were entered into by Mesabarelative to the acquisition, design, construction, furnishing and equipping ofthe Facilities prior to the date of the Notice of Intent Resolution.

 

(e)           Mesaba intends tooccupy the Facilities or cause the Facilities to be occupied and to operatethem or cause them to be operated at all times during the term of the Lease forFacilities Purposes and does not know of any reason why the Facilities will notbe so used by it in the absence of supervening circumstances not nowanticipated by it or beyond its control.

 

(f)            The Facilities will beconstructed in such manner as to conform with all applicable zoning, planning,building and other regulations of governmental authorities having jurisdictionof the Facilities, all necessary utilities are or will be available to theFacilities, and Mesaba has obtained or will obtain all requisite zoning,planning, building, environmental and other permits necessary for the operationof the Facilities for Facilities Purposes, and additional permits necessary forthe use of the Facilities are expected to be obtained upon application at theappropriate times.

 

(g)           The Facilities arelocated entirely within the jurisdictional. or territorial boundaries of theCounty.

 

(h)           No litigation orgovernmental proceeding is pending or, to the knowledge of Mesaba, threatenedagainst Mesaba which could have a material adverse effect on its financialcondition or business, or its power to borrow money or pay the SpecialFacilities Charges.

 

(i)            All of Mesaba’srepresentations, covenants and warranties contained in Mesaba’s Non-Arbitrageand Tax Compliance Certificate dated the date of delivery of the Series 1990Bonds, are true, accurate and complete, and said Non-Arbitrage and TaxCompliance Certificate is incorporated herein by reference as if its provisionswere set forth in full. Mesaba covenants to take no action (or refrain fromtaking any action) which would cause a breach of any of the provisions of saidNon-Arbitrage and Tax Compliance Certificate.

 

7.2           Compliancewith Laws. Mesaba shall, at no expense to the County, promptly comply orcause compliance with all legal requirements of duly constituted publicauthorities which may be applicable to the Facilities or to the repair andalteration thereof, or to the use or manner of use of the Facilities.Notwithstanding the foregoing, Mesaba may exercise its rights to contest thelegality of any such legal requirement as applied to the Facilities. Theforegoing shall not constitute a waiver by the County of any civil or criminalremedies otherwise available to the County against Mesaba.

 

7.3           Mesaba Maintenanceof Existence. Mesaba agrees that throughout the term of this Lease it shallmaintain its corporate existence and shall not merge or consolidate with anyother corporation and shall not transfer or convey all or substantially all ofits property, assets and licenses, except as otherwise provided in theReimbursement Agreement.

 

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Mesabawarrants (i) that it is and throughout the term hereof it will continue to bequalified to do business in the State of Michigan, and (ii) that if it electsto consolidate with, merge into or transfer all or substantially all of its assetsto another corporation in accordance with this Section, and such othercorporation is not organized under the laws of the State of Michigan, Mesaba,as a condition of such consolidation, merger or transfer of assets, shall causesuch other corporation to qualify to do business as a foreign corporation inthe State of Michigan and to remain so qualified continuously during the termhereof.

 

7.4           General Limitationswith Respect to Non-Impairment of Tax-Exempt Status of the Bonds.Notwithstanding any other provisions of this Lease or any rights of Mesabaunder the Ground Lease, Mesaba shall not take or permit to be taken by itsagents or assigns any action which, or fail to take any reasonable action theomission of which, would

 

(i)                                     impairthe exclusion of interest on the Bonds from gross income for Federal income taxpurposes; or

 

(ii)           affect the validity ofthe Bonds under Act 94 or Act 327; or

 

(iii)          materiallyalter the scope, character, value, operation or utility of the Facilities.

 

The County or the Trustee, uponnotification of action to be taken by Mesaba or prior to taking any actionrequested by Mesaba under the Lease, may require, at the expense of Mesaba, anopinion of Bond Counsel or the Consulting Engineer in writing with respect tocompliance with the foregoing general limitations.

 

7.5           CountyFees and Expenses. Mesaba shall pay all issuance costs and otherout-of-pocket costs and expenses of the County incidental to the performance ofits obligations under the Ordinance and the Lease and with respect to itsauthorization, sale and delivery of the Bonds, including bond counsel fees, orother fees and expenses incurred by the County in enforcing the provisions ofthe Lease or the Ordinance.

 

7.6           TrusteeFees and Expenses. Mesaba shall pay reasonable compensation to the Trusteefor its services as Trustee in connection with the Bonds, the duties andservices of the Trustee being set out in the Ordinance, and Mesaba will pay theTrustee, in addition, all reasonable counsel fees, taxes and other expensesnecessarily incurred in performing its duties. Mesaba shall also pay reasonablecompensation to any alternate paying agent or agents for the Bonds. All suchpayments shall be made as statements are rendered by the Trustee and shall bepaid directly by Mesaba, except to the extent expenses of the Trustee incurredin connection with the issuance of the Bonds are paid from proceeds of sale ofthe Bonds.

 

7.7           Mesaba’s ObligationsUnconditional. The obligation of Mesaba to pay Special Facilities Charges andto perform its other agreements and obligations hereunder shall be absolute andunconditional and shall not be subject to any diminution by right of set-off,counterclaim, recoupment or otherwise. During the term hereof, Mesaba (i) shallnot suspend or discontinue its payment of Special Facilities Charges, (ii)shall perform and observe all of its other obligations contained herein, in theGround Lease and (iii) except as explicitly permitted herein, shall notterminate the Lease or the Ground Lease, respectively, for any cause including,without limiting the generality of the foregoing, defect in title to all or anypart of the Facilities, failure to complete all or any part of the Facilities,any acts or circumstances that may constitute failure of consideration,eviction or constructive eviction, destruction or damage to or condemnation ofall or any part of the Facilities, commercial frustration of purpose, anychange

 

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in the tax or other law by the United States of America or the State ofMichigan or any political subdivision of either, or any failure of the Countyto perform and observe any obligation or condition arising out of or connectedwith the Lease.

 

7.8           MesabaBound by Ordinance. The Ordinance has been submitted to Mesaba forexamination, and Mesaba, by execution of the Lease, acknowledges that theSpecial Facilities Charges are intended to produce Net Revenues sufficient topay principal of, Redemption Price and interest on the Bonds. Mesaba consentsto the pledge by the County to the Trustee of the Net Revenues and certainfunds and accounts specified in the Ordinance as security for the Bonds. Mesabaacknowledges and agrees that it has participated in the drafting of theOrdinance, that it has approved the Ordinance, that it is bound by and shallhave the rights set forth by the terms and conditions thereof and covenants andagrees to perform all obligations required of it pursuant to the terms of theOrdinance. The County acknowledges and agrees to follow Mesaba’s directionswith respect to Bond redemptions and other matters as provided in, and inaccordance with the terms and conditions of, the Ordinance.

 

7.9           Investments;Arbitrage Covenant. Moneys held as part of the Bond Fund or the ConstructionFund shall be invested, reinvested or applied by the Trustee in accordance withand subject to the conditions in the Ordinance. To the extent the County orMesaba have control of such funds, Mesaba and the County shall make no use offunds deemed to be proceeds of the Bonds (“Bond proceeds”), or any funds whichmay be deemed to be Bond proceeds pursuant to Section 148 of the Code and theapplicable regulations thereunder, which could cause the Bonds to be “arbitragebonds” within the meaning of such Section and such regulations, and the Countyand Mesaba shall comply with the requirements of such Section and suchregulations throughout the term of the Bonds. Mesaba shall execute and be boundby the terms of a Non-Arbitrage and Tax Compliance Certificate in form andsubstance satisfactory to Bond Counsel to be delivered as a condition of theclosing on the Bonds.

 

7.10         Non-Discrimination.Mesaba, for itself, its personal representatives, successors in interest, andassigns, covenants that (1) no person, on the grounds of race, creed, color,national origin, or sex, shall be excluded from participation in, denied thebenefits of, or be otherwise subjected to discrimination in the use of theFacilities; (2) that in the construction of the Facilities and the furnishingof services on the Facilities, no person, on the grounds of race, creed, color,national origin, or sex, shall be excluded from participation in, denied thebenefits of, or otherwise be subjected to discrimination; (3) that Mesaba shalluse the Facilities in compliance with all other requirements imposed by orpursuant to Title 49, Code of Federal Regulations, Department ofTransportation, Subtitle A, Office of the Secretary, Part 21,Non-Discrimination in Federally-Assisted Programs of the Department ofTransportation-Effectuation of Title VI of the Civil Rights Act of 1964, and assaid Regulations may be amended.

 

Mesabacovenants that it will undertake and maintain an affirmative action program, asrequired by 14 CFR, Part 152, Subpart E, to insure that no person shall, on thegrounds of race, creed, color, sex or national origin, be excluded fromparticipating in any employment activities covered in 14 CFR, Part 152, SubpartE. Mesaba assures that no person shall be excluded on these grounds fromparticipating in, or receiving the services or benefits of any such program oractivity.

 

Mesabacovenants that it will require, as part of any contract for construction orinstallation of the Facilities, whether as a prime contract or a subcontract,and as part of any lease

 

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or agreement for any rights,privileges, services or materials with respect to the Facilities, entered byMesaba, that any other party to such contract, lease or agreement undertakesaffirmative action programs, as required by 14 CFR, Part 152, Subpart E.

 

In accordancewith 1976 Public Act of Michigan No. 453, the parties hereto covenant not todiscriminate against an employee or applicant for employment with respect tohire, tenure, terms, conditions, or privileges of employment, or a matterdirectly or indirectly related to employment because of race, color, religion,national origin, age, sex, height, weight, or marital status, and to require asimilar covenant on the part of any sublessee hereunder and any subcontractoremployed in the performance of the lease.

 

The partieshereto also agree to carry out and be subject to the provisions the County’snon-discrimination and affirmative action programs for Wayne County contracts,a copy of which has been provided to Mesaba and which is made a part hereof.

 

7.11         Letter of Credit;Alternate Letter of Credit. Mesaba shall cause the Letter of Credit to bedelivered to the Trustee on or before the Effective Date. The Letter of Creditshall (a) be in an amount not less than the principal amount of the Bondsoutstanding from time to time, plus an amount equal to any premium (excludingthe Conditional Supplemental Premium) which may be payable upon priorredemption of the Bonds, plus 195 days’ interest on such outstanding Bonds; (b)provide for payment within one (1) Business Day in immediately available fundsto the Trustee upon receipt of the Trustee’s request, in accordance with theterms of the Letter of Credit, for payment of principal, premium, if any(excluding the Conditional Supplemental Premium), and interest on the Bondsthen coming due and payable pursuant to the Ordinance; (c) provide for multipledrawings and (d) provide an expiration date no earlier than the earliest of (i)the date on which the Bank honors the last drawing available to be madethereunder, (ii) payment of all amounts available for drawing under the Letterof Credit, (iii) the date on which the Bonds are discharged, redeemed or paidin full; (iv) the date on which the Bank is notified in writing by the Trusteethat an Alternate Letter of Credit has been substituted for the Letter ofCredit and has become effective; (v) the 30th day following the earlier of (A)the date on which any Interest Drawing (as defined in the Letter of Credit) isdeemed not reinstated, or (B) the Trustee’s actual receipt of notice from theBank that an Event of Default has occurred under the Reimbursement Agreementand directing the Trustee to redeem the Bonds; and (vi) June 1, 1995, or if nota Business Day, the first Business Day thereafter. Mesaba may, at any time,provide an Alternate Letter of Credit. The Trustee shall be required to givewritten notice of acceptance of the Alternate Letter of Credit to all holdersof Bonds and to the Bank within thirty (30) days following the acceptance ofthe Alternate Letter of Credit. After acceptance of the Alternate Letter ofCredit the original Letter of Credit shall be returned to its issuer.

 

ARTICLE VIII

COUNTY FINDINGS AND REPRESENTATIONS

 

8.1           County Findings andRepresentations. The County has found that the Facilities and the financingthereof through issuance of the Bonds will promote the public purposes of Act327 and Act 94.

 

8.2           County Authority toIssue Bonds. Based upon the advice of Bond Counsel, the County has thenecessary power under Act 327 and Act 94, and has duly taken all action on itspart required to authorize, execute and deliver the Lease, and the Ground Leaseand to issue the

 

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Bonds and that the execution and performance by the County of theLease, and the Ground Lease will not violate or conflict with any instrument bywhich the County or its properties are bound.

 

ARTICLE IX

DEFAULT

 

9.1           Eventsof Default. The term “Event of Default” shall mean, whenever used in theLease, any one or more of the following events:

 

(a)           Failure by Mesaba topay any Special Facilities Charges in the amounts and at the times provided inthe Lease, but, with respect to that portion representing payments of principalof or premium (excluding Conditional Supplemental Premium) on the Series 1990Bonds, whether by maturity or prior redemption, or interest on the Series 1990Bonds, if and only if the Bank has, after demand under the Letter of Credit,failed to pay the amount of such Special Facilities Charges as and when due;

 

(b)           Failure by Mesaba toobserve and perform any other obligations in this Lease on its part to beobserved or performed for a period of 30 days after written notice specifyingsuch failure and requesting that it be remedied, given to Mesaba by the County,the Bank or the Trustee; provided, however, that if such Default shall be suchthat it cannot be corrected within such period, it shall not constitute anEvent of Default if the Default is correctable without material adverse effecton the Facilities and if corrective action is instituted by Mesaba within suchperiod and is diligently pursued until the Default is corrected.

 

(c)           Any representation orwarranty made by Mesaba in any document delivered by Mesaba to the initialpurchasers, the Trustee, the Bank or the County in connection with theissuance, sale and delivery of the Bonds is untrue in any material adverserespect.

 

(d)           The occurrence of anEvent of Default under the Ordinance.

 

(e)           The occurrence of anAct of Bankruptcy;

 

(f)            If Mesaba shall beprevented for a period of 30 days (after exhausting or abandoning all appeals)by any action of any governmental authority, board, agency or officer havingjurisdiction from conducting air transportation at the Airport unless it is soprevented from conducting air transportation by reason of the United States orany agency thereof acting directly or indirectly, taking possession of andoperating, in whole or in substantial part, the Facilities, or the operation ofMesaba’s aircraft to and from the Airport; or

 

(g)           The occurrence of anEvent of Default under the Ground Lease between Mesaba and the County.

 

9.2           Waiverof Default. No waiver of default by the County of any of the terms,covenants or conditions hereof to be performed, kept and observed by Mesabashall be construed to be or act as a waiver of any subsequent default of any ofthe terms, covenants and conditions herein contained to be performed, kept andobserved by Mesaba. The acceptance of Special Facilities Charges by the Trusteefor the account of County for any period or periods after a default of any ofthe terms, covenants and conditions herein contained to be performed, kept and

 

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observed by Mesaba, shall not be deemed a waiver of any right on thepart of the County to exercise any remedy available to it after the occurrenceof an Event of Default.

 

9.3           County Performanceof Mesaba’s Obligations. In the event that Mesaba fails to perform, for aperiod of 30 days after written notice from County to do so, any of itsnonpecuniary obligations or covenants required under this Lease, the Countymay, but shall not be obligated to, enter upon the premises involved and performsuch obligation of Mesaba, charging Mesaba the reasonable cost and expensethereof and Mesaba agrees to pay the County such charge in addition to anyother amounts payable to the County hereunder; provided, however, that ifMesaba’s failure to perform any such obligation adversely affects, or endangersthe health or safety of the public or of employees of the County, and if theCounty so states in its notice to Mesaba, the County may, but shall not beobligated to, perform such obligation of Mesaba at any time after the giving ofsuch notice and without awaiting the expiration of said 30 day period, andcharge to Mesaba, and Mesaba shall pay, the reasonable cost and expense of suchperformance. If the County shall perform any of Mesaba’s obligations in accordancewith the provisions of this section, the County shall not be liable to Mesabafor any loss or damage to or claim against Mesaba resulting from suchperformance.

 

9.4           Remedies upon Eventof Default. Whenever any Event of Default shall have occurred and becontinuing, and subject to the Bank’s right to cure as Mortgagee under Section12.2(a) of this Lease the County may take any one or more of the followingremedial steps:

 

(a)           To the extent of anyinsufficiency of any drawings under the Letter of Credit or in the event theBank shall have wrongfully dishonored a draft on the Letter of Credit or in theevent the Letter of Credit is for any reason unavailable, to institute anyactions or proceedings at law or in equity for the collection of Special FacilitiesCharges or other sums due and unpaid under the Lease, to prosecute any suchaction or proceeding to judgment or final decree, and to enforce any suchjudgment or final decree and collect in the manner provided by law any moneysadjudged or decreed to be payable;

 

(b)           Re-enter and takepossession of all or any part of the Facilities without terminating the Leaseand use its Best Efforts to sublease the Facilities or any part of theFacilities for the account of Mesaba, holding Mesaba liable for the differencebetween the amounts payable by such sublessee and the Special FacilitiesCharges and other amounts payable by Mesaba hereunder including, but notlimited to, all costs and expenses incurred by the County in re-entering,taking possession, maintaining and subleasing the Facilities or any portion ofthem;

 

(c)           Terminate the Lease,exclude Mesaba from possession of the Facilities or any portion of them and useits Beat Efforts to lease or assign the Facilities or any portion of them toanother for the account of Mesaba, holding Mesaba liable for all SpecialFacilities Charges due up to the effective date of such termination;

 

(d)           Have access to andinspect, examine and make copies of the books and records and any and allaccounts, data and income tax and other tax returns of Mesaba only, however,insofar as they relate to the Facilities or the Event of Default and theremedying thereof;

 

(e)           As the County deemsnecessary from time to time, (but shall not be required to) remodel, improveand repair the Facilities in order to better sublease or relet

 

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the Facilitiesor any portion of them, and all costs and expenses thereof shall become a debtdue by Mesaba to the County.

 

The County mayemploy attorneys, consultants and agents, including the Trustee, in exercisingits Best Efforts. In exercising its Best Efforts, the County shall endeavor tokeep the Facilities fully leased and to provide Net Revenues sufficient forpayment of the Bonds.

 

In exercisingany of its remedies hereunder, the County shall make every reasonable attemptto cooperate with the Trustee.

 

9.5           Payment of Attorneys’Fees and Other Expenses.  In theevent Mesaba should default under any of the provisions of the Lease and theCounty or the Trustee or both should employ attorneys, consultants or agents orincur other expenses for the collection of Special Facilities Charges or forthe enforcement of performance or observance of any obligation or agreementunder the Lease, Mesaba shall upon demand therefor, pay to the County or theTrustee or both, as the case may be, the reasonable fees of such attorneys,consultants and agents and such other reasonable expenses so incurred.

 

9.6           NoRemedy Exclusive. No remedy conferred upon or reserved to the County underthe Lease is intended to be exclusive of any other available remedy orremedies, but each and every such remedy shall be cumulative and shall be inaddition to every other remedy given under the Lease or now or hereafterexisting at law or in equity or by statute.

 

9.7           Limitationon Waivers. No delay or omission to exercise any right or power occurringupon any default or Event of Default shall impair any such right or power orshall be construed to be a waiver thereof, but any such right and power may beexercised from time to time and as often as may be deemed expedient. In orderto entitle the County to exercise any remedy reserved to it in this Article IX,it shall not be necessary to give any notice other than such notice as may be hereinexpressly required under the Lease.

 

The Countyshall have no power to waive or release Mesaba from any Event of Default or theperformance or observance of any obligation or condition of Mesaba under theLease without prior written consent of the Trustee and the Bank, but shall doso if requested by the Trustee, provided that such action will not, in theopinion of Bond Counsel, result in any financial liability of the County or ofthe Airport.

 

ARTICLE X

INDEMNIFICATION

 

10.1         Indemnification ofTrustee. Mesaba shall indemnify and hold harmless the Trustee against anyloss, liability or expense incurred without negligence or bad faith on the partof the Trustee, its employees, agents or representatives, arising out of or inconnection with the acceptance and performance of its duties as Trustee underthe Ordinance, including the costs and expenses of defense against any suchclaim of liability.

 

10.2         Indemnification ofCounty. Mesaba shall indemnify and hold the County, its officials,employees, agents or representatives, harmless of, from and against, any andall claims, damages, demands, expenses, liabilities and taxes (of any characteror nature whatsoever regardless of by whom imposed), and losses of everyconceivable kind, character and nature whatsoever (including, but not limitedto, claims for loss or damage to any property or injury to or death of anyperson) asserted by or on behalf of any person, firm, corporation orgovernmental

 

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authority arising out of, resulting from, or in any way connected with(i) the Facilities, or the condition, occupancy, use, possession, conduct ormanagement of, or any work done in or about, the Facilities, or from theplanning, design, acquisition or construction of the Facilities or any partthereof, or from the leasing or subletting of any part thereof, (ii) any act orfailure to act, other than willful misconduct, by any other person, firm,corporation or governmental authority in connection with the offering, sale ordelivery of the Bonds and (iii) any act or failure to act, other than willfulmisconduct, or any covenant, undertaking, warranty or representation, by theCounty in connection with, or in the performance of, any obligation related tothe issuance, sale and delivery of the Bonds or under the Lease or theOrdinance. Mesaba also covenants and agrees, at its expense to pay and toindemnify and save the County, its officials, employees, agents orrepresentatives, harmless of, from and against, all costs, reasonable counselfees, expenses and liabilities incurred in any action or proceeding brought byreason of any such claim or demand. In the event that any action or proceedingis brought against the County by reason of any such claim or demand, Mesaba uponnotice from the County, covenants to resist and defend such action orproceeding on behalf of the County.

 

Mesaba alsocovenants and agrees, at its expense, to pay, and to indemnify the County andthe Trustee from and against, all costs, expenses and charges, includingreasonable fees of attorneys, consultants and agents, lawfully incurred inobtaining possession of the Facilities upon an Event of Default by Mesaba, orin enforcing any covenant or agreement of Mesaba contained in the Lease.

 

ARTICLE XI

ACTIONS AFFECTING TITLE AND POSSESSION

 

11.1         QuietEnjoyment. The County agrees that, on payment of the Special FacilitiesCharges and performance of the covenants and agreements under the Lease, Mesabashall peaceably have and enjoy the Facilities, subject to public use of thepublic area and use by parties authorized by the County of common area.

 

11.2         Title to Equipment andImprovements. Except as provided below, title to any equipment,improvements, and facilities, and any additions thereto, irrespective ofwhether the same would otherwise become a fixture under Michigan law (includingwithout limitation all buildings, hangars, structures, storage tanks, pipes,pumps, wires, poles, machinery and air conditioning equipment,) constructed orinstalled by Mesaba upon or as a part of the Facilities or upon other Airportproperty, shall become and remain the property of the County.

 

Mesaba mayfrom time to time and in its sole discretion and at its own expense installadditional equipment in the Facilities. All equipment so installed (other thanthat which is a substitution or replacement of the personal property encumberedby the Ordinance) by Mesaba shall remain the sole property of Mesaba (or anythird party from whom it may be leased or who shall have provided suchequipment under agreement with Mesaba reserving title to such third party) andneither the County nor the Trustee shall have an interest in such equipment.Such equipment may be removed or modified at any time. In the event suchremoval or modification causes damage to the Facilities, Mesaba shall restoreor repair such damage at its sole expense. If equipment is ever installed inthe Facilities by Mesaba or a third party which cannot be readily distinguishedfrom equipment then comprising part of the Facilities by reference to Exhibit Ahereto and the Plans and Specifications then in such event such items ofequipment shall be and remain identified as such by tags or other symbolsaffixed thereto or otherwise clearly associated

 

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therewith, and any such itemsof equipment not so identified shall be presumed to be part of the Facilities,but such presumption shall not be conclusive.

 

11.3         Surrender ofPossession. Upon the expiration or earlier termination of the Lease or anyrenewal hereof, Mesaba shall forthwith surrender possession of the Facilitiesin as good condition as when acquired or constructed, reasonable wear and tear,damage by flood, fire, earthquake, other casualty, acts of God or the publicenemy, excepted.

 

11.4         MineralRights. All water, gas, oil and mineral rights in and under the soil areexpressly reserved to the County.

 

ARTICLE XII

ASSIGNMENT AND SUBLETTING;

RIGHTS OF LEASEHOLD MORTGAGEE

 

12.1         Sale AssignmentTransfer, or Sublease. Mesaba shall not sell, assign, or transfer thisLease, or sublet the Facilities or any part thereof without the prior writtenconsent of the County; provided, however, such consent shall not be withheldfor any assignee of Mesaba under the Ground Lease and consent will not bewithheld if the purchaser, assignee, transferee or sublessee be the parent or asubsidiary of Mesaba or closely allied to Mesaba by merger, consolidation oramalgamation. Mesaba shall have the right, without County approval, to mortgageand assign all of its rights under this Lease to a lending institution (the “Mortgagee”)as security for the financing necessary to carry out the construction of theFacilities (herein the “Leasehold Mortgage”) and provided further, that in suchcase Mesaba, as seller, assignor, transferor or sublessor, shall continue to beguarantor for the good and faithful performance of all terms, conditions andcovenants contained herein; and the Mortgagee shall have the right to sellMesaba’s leasehold interest in, to and under this Lease to a purchaser at aforeclosure sale of Mesaba’s interest under this Lease pursuant to theLeasehold Mortgage; and Mesaba shall have the right to assign Mesaba’s rightsunder this Lease to the Mortgagee in lieu of such foreclosure; and Mesaba orthe Mortgagee shall have the right to assign Mesaba’s rights under this Leaseto a third party in connection with or in lieu of a foreclosure. Uponacquisition by the Mortgagee of Mesaba’s interests under this Lease byforeclosure or deed in lieu of foreclosure, and upon acquisition by a purchaserfrom the Mortgagee of Mesaba’s interests in this Lease, the County agrees torecognize the Mortgagee or such purchaser, as the case may be, as the lesseeunder this Lease. Mortgagee and/or such purchaser, as successor to Mesaba’sinterest in this Lease, shall not be personally liable for any of theobligations of Mesaba under this Lease accruing prior to the date of such partybecoming the lessee hereunder. In any event, the Mortgagee or any such purchasershall use the Facilities solely for airport transportation purposes.

 

12.2         Rightsof Mortgagee. Mesaba may encumber as collateral or security its leaseholdestate in, to and under this Lease by mortgage or conditional assignment ofthis Lease as security, providing the same shall provide for payment of theindebtedness thereby secured not later than the date of expiration of theprimary term of this Lease. In such event, the Mortgagee may deliver to theCounty written notice showing the amount of the obligation secured by suchLeasehold Mortgage, the date of the maturity of the indebtedness therebysecured, and the name and post office address of such Mortgagee. The Bank shallnot be required to give the County notice as the County hereby approves the Bankas Mortgagee and the terms and conditions of the mortgage and assignment ofrents executed by Mesaba to the Bank to secure Mesaba’s reimbursementobligations with respect to the Letter of Credit. In the event notice shall begiven,

 

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then and thereafter, the County shall serve on such Mortgagee bycertified mail, at the address given or any address thereafter given, a copy ofevery notice served by the County upon Mesaba in the event or nonperformance ordefault of any term, condition or covenant hereof. During the existence of suchLeasehold Mortgage, the following rights and benefits under this Lease shallinure to, and be enforceable by, any such Mortgagee, provided, however, thefollowing rights shall not be enforceable in the event of wrongful dishonor bythe Bank of a draw upon the Letter of Credit or Alternate Letter of Credit:

 

(a)                                  Rightto Cure. In the event of nonperformance or default of any term, conditionor covenant of this Lease to be kept and performed by Mesaba during theexistence of any such Leasehold Mortgage, the Mortgagee shall have the right,within thirty (30) days after the expiration of the time limit prescribed inthe County’s nonperformance or default notice to Mesaba, to perform and complywith all the terms, conditions and covenants of this Lease to be kept andperformed by Mesaba, and to make all payments required of Mesaba by this Leaseand by so doing to cure and remove any such nonperformance or default as if thesame had been done and performed by Mesaba. If the nature of the nonperformanceor default is such that it cannot be cured within thirty (30) days after theexpiration of the time limit prescribed in the nonperformance or default noticeto Mesaba, the Mortgagee shall be deemed to have cured such nonperformance ordefault if the Mortgagee has commenced performance and thereafter diligentlyprosecutes same to completion, or diligently pursues foreclosure proceedings orthe obtaining of a deed in lieu of foreclosure with respect to Mesaba’sinterest in the Facilities. The County will permit the Mortgagee to enter uponthe Facilities and will accept performance by the Mortgagee of any covenant,agreement or obligation of Mesaba with the same effect as though performed byMesaba in order to permit any specific default to be cured by the Mortgagee andwill not exercise any remedies specified in Section 9.4 of this Lease until theperiod for cure made available by the County to the Mortgagee hereunder shallhave expired without cure having been effected by the Mortgagee.

 

(b)                                 Rightson Termination of Mesaba’s Interest. If Mesaba’s interests under this Leaseshall be terminated as a result of the rejection or disaffirmance of this Leasepursuant to bankruptcy law or other law affecting creditor’s rights, or if thisLease shall be terminated on account of a default which is not capable of beingcured by the Mortgagee, the County hereby irrevocably agrees to permit theassumption by the Mortgagee, or any party designated by the Mortgagee, ofMesaba’s interest under this Lease, for the remainder of the term of thisLease, effective as of the date of such rejection, disaffirmance, ortermination, with the same force and effect and as if Mesaba’s interests underthis Lease had not been terminated, provided that the Mortgagee or suchdesignee shall provide for use of the Facilities solely for airporttransportation purposes. In order for such an assumption to be effective, theMortgagee must so indicate in writing to the County within 60 days after theeffective date of such rejection, disaffirmance, or termination, as the casemay be, and the Mortgagee shall

 

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have cured alldefaults under this Lease which can be cured by the payment of money and shallhave paid to the County all rent, fees and other charges which would, at thetime of such assumption, be due and payable by Mesaba under this Lease but forsuch rejection, disaffirmance or termination. If the Mortgagee (or itsdesignee) elects to assume this Lease under this paragraph (b) then, as of thedate of such assumption, the lien of the Leasehold Mortgage shall attach to theinterests of the lessee under this Lease if the lessee is someone other thanthe Mortgagee. The attaching of the lien of the Leasehold Mortgage to theinterests of the lessee under this Lease shall be without loss of priority, sothat the Mortgagee at all times has a first lien on the interests in question.The provisions of this paragraph (b) shall survive the rejection, disaffirmanceor termination of the Ground Lease or this Lease and shall continue in fulleffect thereafter inasmuch as this provision is entered into for the benefit ofthe Mortgagee, may be relied upon by the Mortgagee and constitutes a separateand independent contract made by the County for the benefit of the Mortgagee asthird party beneficiary. From the effective date of such rejection,disaffirmance, or termination of this Lease to the date of the assumption ofthis Lease, the Mortgagee may use and enjoy the benefits of this Lease withouthindrance by the County so long as the Mortgagee shall continue to make allpayments due and owing under this Lease.

 

(c)                                Consentof Mortgagee. No amendment, voluntary surrender or termination or modificationof this Lease shall be valid or binding unless consented to in writing by theMortgagee. The Mortgagee shall be a third party beneficiary of all provisionsof this Lease providing rights to the Mortgagee and such provisions shall bedeemed to have been entered into for the benefit of the Mortgagee and shall beenforceable by the Mortgagee.

 

12.3         SimultaneousAssignment and Subletting of Related Airport Facilities. Mesaba may notsublet or assign any rights under the Lease, unless all related rights andfacilities which are leased to Mesaba under the Lease, or any Ground Lease, andwhich comprise elements of the same Facility or portion thereof or arenecessary to the efficient and economic use of the rights or facilities beingsublet or assigned are sublet or assigned simultaneously to the same sublesseeor assignee, and unless such sublessee or assignee assumes in writing allobligations of Mesaba under the Lease or under the Ground Lease, asappropriate, relating to such rights and facilities.

 

12.4         Sublessee, Etc., Boundby Ordinance.,. Any purchaser, assignee, transferee or sublessee of Mesaba’srights and obligations hereunder shall be subject to and bound by theOrdinance.

 

ARTICLE XIII

GROUND LEASE

 

13.1         Relationship of theLease to Ground Lease. The County and Mesaba agree, between themselves andfor the benefit of the holders of the Bonds, that Ground Lease shall contain orrecognize the following terms and conditions:

 

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(a)           The ground space coveredby such Ground Lease shall be adequate for the needs of Mesaba in operating theFacilities located on such ground space, and shall also take account of theneeds of any successor lessee.

 

(b)           The essential purposeof the Ground Lease shall be to define the ground space for the Facilities andthe ground rents therefor. The terms and conditions of any Ground Lease shallnot duplicate the terms and provisions of the Lease, but in event of suchduplication, the terms and provisions of the Lease shall control and supersedeany conflicting provisions of the Ground Lease.

 

(c)           Under the Ground LeaseMesaba shall pay the customary ground rents and related administration,operation and maintenance costs customarily assumed by a lessee of a specialfacility, and shall receive no credit therefor which would subsidize thecapital or operating or maintenance costs of any Facilities.

 

ARTICLE XIV

MISCELLANEOUS PROVISIONS

 

14.1         Notices.Notices shall be sufficient if sent by registered or certified mail, postageprepaid, to the County addressed to the Wayne County Director of the Airport,Detroit Metropolitan Wayne County Airport, L.C. Smith Terminal, MezzanineLevel, Romulus, Michigan 48242; to Mesaba addressed to Mesaba Aviation, Inc.,7501 26th Avenue South, Minneapolis, Minnesota 55450, Attention! President, andto the Bank addressed to Norwest Bank Minnesota, National Association, NorwestCenter, Sixth and Marquette Avenue, Minneapolis, Minnesota 55479-0134,Attention: Vice President, Industrial Products Division, or to such otherrespective addressees as the parties may designate to each other in writing.The Bank and the Trustee shall receive copies of all notices given by any partyto any other party.

 

14.2         ParagraphHeadings. The paragraph headings contained herein are for convenience inreference and are not intended to define or limit the scope of any provision ofthe Lease.

 

14.3         Severability.In the event any covenant, condition or provision under the Lease is held to beinvalid by any court of competent jurisdiction, the invalidity of any suchcovenant, condition or provision shall in no way affect any other covenant,condition or provision herein contained; provided that the invalidity of anysuch covenant, condition or provision does not materially prejudice either theCounty or Mesaba in its respective rights and obligations contained in thevalid covenants, conditions or provisions of the Lease.

 

14.4         BindingEffect. All the covenants, stipulations and agreements in the Lease shallextend to and bind the legal representatives, successors and assigns of therespective parties hereto.

 

14.5         Lease to United Statesof America. During time of war or national emergency the County shall havethe right to lease the landing area or any part thereof to the United Statesfor military or naval use, and, if any such lease is executed, the provisionsof this instrument insofar as they are inconsistent with the provisions of thelease to the United States, shall be suspended.

 

It is agreedthat the Lease shall be subordinate to the provisions of any existing or futureagreement between the County and the United States, relative to the operationor maintenance of

 

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the Airport, the execution ofwhich has been or may be required as a condition precedent to the expenditureof Federal funds for the development of the Airport.

 

14.6         Amendment.The Assistant County Executive for Airports and Major County Construction isauthorized to approve and execute such amendments to this Lease which, on theadvice of counsel, are necessary or advisable and not materially adverse to theCounty, provided the Lease may not be amended without the written consent ofthe Trustee, and no amendment to the Lease shall be binding upon either partyhereto until such amendment is reduced to writing and executed by both partieshereto.

 

14.7         GoverningLaw. The Lease shall be governed in all respects, whether as to validity,construction, performance or otherwise, by the laws of the State of Michigan.

 

14.8         Cancellationby Mesaba. Mesaba may, so long as it is not in default in any payments tothe County hereunder, cancel the Lease by giving the County 30 days’ advancewritten notice, upon or after the happening of any one of the following events:

 

(a)           Issuance by any courtof competent jurisdiction of an injunction in any way substantially preventingor restraining the use of the Airport or any part thereof necessary for Mesaba’soperations, and the remaining in force of such injunction for a period of atleast 30 days after Mesaba has exhausted or abandoned all appeals;

 

(b)           The inability ofMesaba, due to circumstances beyond its control, to use, for a period in excessof 90 days, the Airport or to exercise any rights and privileges granted toMesaba hereunder and necessary to its operations because of any law orordinance, or because of any order, rule, regulation or other action or anynon-action of the United States Department of Transportation or any othergovernmental authority, or, because of earthquake, other casualty (exceptingfire) or because of acts of God or the public enemy;

 

and provided that no suchcancellation shall be effective until payment by Mesaba of Special FacilitiesCharges in an amount sufficient to pay the County the remaining principal of,Redemption Price and interest on the Bonds through maturity or redemption ofthe Bonds together with all fees and expenses reasonably necessary toaccomplish any such redemption.

 

14.9         Cancellationby County. Solely at the discretion and option of the County, under theconditions listed herein, the County may cancel the Lease upon six months’written notice to Mesaba, provided that; (i) the cancellation is part of theclosing of the entire Airport; to air traffic and (ii) no airline may operateat the Airport after the closing;( and (iii) the County shall deposit with theTrustee sums obtained from Mesaba sufficient to pay remaining principal of,Redemption Price and interest on the Bonds to and including the next date forwhich the Bonds are subject to optional redemption or until maturity. Theforegoing shall not be construed as a County covenant to continue operation ofthe Airport or preclude the County from closing the Airport in more or lessthan six months in the exercise of any governmental powers without making anysuch payment.

 

14.10       RightsAfter Bonds Paid. When the Series 1990 Bonds have been fully paid andMesaba has satisfied the reimbursement obligations to the Bank or anysubsequent Mortgagee, then the Bank or subsequent Mortgagee shall, upon demandof the County, execute and file such documents as may be necessary in theCounty’s discretion to evidence the extinguishment of the Bank’s or theMortgagee’s rights or interests in the Facilities, and thereafter allrequirements

 

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respecting notice to or consent from the Bank, subsequent Mortgagee orTrustee shall be of no force and effect and the Special Facilities Chargesshall be paid directly to the County.

 

 

IN WITNESSWHEREOF, the parties have caused this Lease to be executed as of the day andyear first above written.

 

 
|   |   |   |   | CHARTER  COUNTY OF WAYNE |
|--------|--------|--------|--------|--------------------------|
|   |   |   |   |                     |
|   |   |   |   |                     |
|   |   |   |   | /s/ Edward  H. McNamara  |   |
|   |   |   |   |                     |
|   |   |   |   |                     |
|   |   |   |   | MESABA  AVIATION, INC.   |
|   |   |   |   |                     |
|   |   |   |   |                     |
|   |   |   |   | /s/ Robert  D. Swenson   |   |
|   |   |   |   | Its  President           |
|        |        |        |        |                          |  |  |

 

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