Document:

Exhibit 4.16

 

EXECUTION COPY

 

 

 

LUIS MUÑOZ MARÍN INTERNATIONAL AIRPORT

 

LEASE AGREEMENT

 

dated as of

 

July 24, 2012

 

by and between

 

THE PUERTO RICO PORTS AUTHORITY

 

and

 

AEROSTAR AIRPORT HOLDINGS, LLC

 

 

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
 
    	
 
    	
Page
    
	
ARTICLE 1
    	
 
    	
DEFINITIONS AND INTERPRETATION
    	
 
    	
2
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 1.1
    	
 
    	
Definitions
    	
 
    	
2
    
	
Section 1.2
    	
 
    	
Number and Gender
    	
 
    	
28
    
	
Section 1.3
    	
 
    	
Headings
    	
 
    	
28
    
	
Section 1.4
    	
 
    	
References to this Agreement
    	
 
    	
28
    
	
Section 1.5
    	
 
    	
References to Agreements and Other Documents
    	
 
    	
28
    
	
Section 1.6
    	
 
    	
References to Any Person
    	
 
    	
28
    
	
Section 1.7
    	
 
    	
Meaning of Including
    	
 
    	
28
    
	
Section 1.8
    	
 
    	
Meaning of Discretion
    	
 
    	
28
    
	
Section 1.9
    	
 
    	
Meaning of Notice
    	
 
    	
28
    
	
Section 1.10
    	
 
    	
Meaning of Promptly
    	
 
    	
28
    
	
Section 1.11
    	
 
    	
Consents and Approvals
    	
 
    	
29
    
	
Section 1.12
    	
 
    	
Trade Meanings
    	
 
    	
29
    
	
Section 1.13
    	
 
    	
Laws
    	
 
    	
29
    
	
Section 1.14
    	
 
    	
Currency
    	
 
    	
29
    
	
Section 1.15
    	
 
    	
Accounting Principles
    	
 
    	
29
    
	
Section 1.16
    	
 
    	
Time
    	
 
    	
29
    
	
Section 1.17
    	
 
    	
Approvals, Consents and Performance by the Authority
    	
 
    	
29
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 2
    	
 
    	
THE TRANSACTION; CLOSING; CONDITIONS PRECEDENT;   COVENANTS
    	
 
    	
30
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 2.1
    	
 
    	
Grant of Lease; Right to Sublease; Intent of the   Parties; Allocation of the Leasehold Fee
    	
 
    	
30
    
	
Section 2.2
    	
 
    	
Closing
    	
 
    	
32
    
	
Section 2.3
    	
 
    	
Deposit
    	
 
    	
33
    
	
Section 2.4
    	
 
    	
Conditions Precedent; Termination
    	
 
    	
34
    
	
Section 2.5
    	
 
    	
Covenants
    	
 
    	
40
    
	
Section 2.6
    	
 
    	
Recordation of Lease
    	
 
    	
45
    
	
Section 2.7
    	
 
    	
Closing Deliveries
    	
 
    	
46
    
	
Section 2.8
    	
 
    	
Intended Treatment for Federal Income Tax Purposes
    	
 
    	
46
    
	
Section 2.9
    	
 
    	
Intended Treatment for Commonwealth Income Tax   Purposes
    	
 
    	
46
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 3
    	
 
    	
TERMS OF THE LEASE
    	
 
    	
46
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 3.1
    	
 
    	
Right to Operate; Present Condition
    	
 
    	
46
    
	
Section 3.2
    	
 
    	
LMM Airport Facility Operations
    	
 
    	
47
    
	
Section 3.3
    	
 
    	
Lessee Responsibility
    	
 
    	
49
    
	
Section 3.4
    	
 
    	
FAA Airport Privatization Pilot Program
    	
 
    	
49
    
	
Section 3.5
    	
 
    	
No Encumbrances
    	
 
    	
52
    
	
Section 3.6
    	
 
    	
Single Purpose Covenants
    	
 
    	
53
    
	
Section 3.7
    	
 
    	
Rights of the Authority to Access and Perform Work   at the LMM Airport Facility
    	
 
    	
54
    
	
Section 3.8
    	
 
    	
LMM Airport Facility Cash Reserves
    	
 
    	
57
    
	
Section 3.9
    	
 
    	
Coordination
    	
 
    	
58
    

 

i

 

TABLE OF CONTENTS

(continued)

 

	
Section 3.10
    	
 
    	
No Entry on Authority Property
    	
 
    	
58
    
	
Section 3.11
    	
 
    	
Payment of Taxes
    	
 
    	
58
    
	
Section 3.12
    	
 
    	
Utilities
    	
 
    	
59
    
	
Section 3.13
    	
 
    	
Negotiations with Governmental Authorities
    	
 
    	
60
    
	
Section 3.14
    	
 
    	
Notices of Defaults and Claims
    	
 
    	
60
    
	
Section 3.15
    	
 
    	
Assignment of Operating Agreements and Plans
    	
 
    	
60
    
	
Section 3.16
    	
 
    	
Name
    	
 
    	
61
    
	
Section 3.17
    	
 
    	
Police, Fire and Emergency Services; Access Rights
    	
 
    	
62
    
	
Section 3.18
    	
 
    	
Other Actions by Governmental Authorities
    	
 
    	
64
    
	
Section 3.19
    	
 
    	
Hotel Operations and Litigation Pending Resolution
    	
 
    	
64
    
	
Section 3.20
    	
 
    	
CAF Operations and Litigation Pending Resolution
    	
 
    	
65
    
	
Section 3.21
    	
 
    	
Puerto Rico Air National Guard Property Option
    	
 
    	
66
    
	
Section 3.22
    	
 
    	
Other Aviation Services
    	
 
    	
68
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 4
    	
 
    	
CAPITAL PROJECTS
    	
 
    	
68
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 4.1
    	
 
    	
Lessee Responsibility for Capital Projects
    	
 
    	
68
    
	
Section 4.2
    	
 
    	
Authorizations Related to General Accelerated   Upgrades
    	
 
    	
69
    
	
Section 4.3
    	
 
    	
Authority Responsibility for Affected Property
    	
 
    	
69
    
	
Section 4.4
    	
 
    	
Condition of the LMM Airport Facility During Work
    	
 
    	
69
    
	
Section 4.5
    	
 
    	
Airline Capital Improvement Contracts
    	
 
    	
70
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 5
    	
 
    	
MODIFICATIONS
    	
 
    	
70
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 5.1
    	
 
    	
Agreed Modifications
    	
 
    	
70
    
	
Section 5.2
    	
 
    	
Required Modifications
    	
 
    	
71
    
	
Section 5.3
    	
 
    	
Implementation of Modifications
    	
 
    	
72
    
	
Section 5.4
    	
 
    	
Acquisition or Condemnation by Authority of   Additional Lands
    	
 
    	
72
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 6
    	
 
    	
OPERATING STANDARDS
    	
 
    	
74
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 6.1
    	
 
    	
Compliance with Operating Standards
    	
 
    	
74
    
	
Section 6.2
    	
 
    	
Modified Operating Standards
    	
 
    	
75
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 7
    	
 
    	
AIRPORT FEES AND REVENUES
    	
 
    	
77
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 7.1
    	
 
    	
Generally
    	
 
    	
77
    
	
Section 7.2
    	
 
    	
Specific Authorizations
    	
 
    	
77
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 8
    	
 
    	
REPORTING; AUDITS; INSPECTIONS
    	
 
    	
78
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 8.1
    	
 
    	
Reports
    	
 
    	
78
    
	
Section 8.2
    	
 
    	
Information
    	
 
    	
79
    
	
Section 8.3
    	
 
    	
Inspection, Audit and Review Rights of the Authority
    	
 
    	
80
    
	
Section 8.4
    	
 
    	
Audits, Assistance, Inspections and Approvals
    	
 
    	
81
    
	
Section 8.5
    	
 
    	
Reimbursement of Costs
    	
 
    	
81
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 9
    	
 
    	
REPRESENTATIONS AND WARRANTIES
    	
 
    	
81
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 9.1
    	
 
    	
Representations and Warranties of the Authority
    	
 
    	
81
    

 

ii

 

TABLE OF CONTENTS

(continued)

 

	
Section 9.2
    	
 
    	
Representations and Warranties of the Lessee
    	
 
    	
86
    
	
Section 9.3
    	
 
    	
Tax Filings
    	
 
    	
88
    
	
Section 9.4
    	
 
    	
Non-Waiver
    	
 
    	
89
    
	
Section 9.5
    	
 
    	
Survival
    	
 
    	
89
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 10
    	
 
    	
FINANCE OBLIGATIONS
    	
 
    	
89
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 10.1
    	
 
    	
Lessee’s Obligations
    	
 
    	
89
    
	
Section 10.2
    	
 
    	
Authority’s Obligations
    	
 
    	
90
    
	
Section 10.3
    	
 
    	
Lessee’s Obligation for Estoppel Certificates
    	
 
    	
91
    
	
Section 10.4
    	
 
    	
Prohibited Tax Shelter Transactions
    	
 
    	
91
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 11
    	
 
    	
COMPLIANCE WITH LAWS
    	
 
    	
91
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 11.1
    	
 
    	
Compliance with Laws
    	
 
    	
91
    
	
Section 11.2
    	
 
    	
Non-Discrimination Laws
    	
 
    	
92
    
	
Section 11.3
    	
 
    	
Commonwealth Non-Discrimination/Sexual Harassment   Clause
    	
 
    	
92
    
	
Section 11.4
    	
 
    	
Non-Collusion and Acceptance
    	
 
    	
93
    
	
Section 11.5
    	
 
    	
Local Goods and Services
    	
 
    	
93
    
	
Section 11.6
    	
 
    	
Lessee Integrity
    	
 
    	
93
    
	
Section 11.7
    	
 
    	
Commonwealth Tax Liabilities
    	
 
    	
95
    
	
Section 11.8
    	
 
    	
Contractor and Supplier Contracts
    	
 
    	
95
    
	
Section 11.9
    	
 
    	
Practice of Engineering, Architecture and Other   Professions in the Commonwealth
    	
 
    	
95
    
	
Section 11.10
    	
 
    	
Governmental Contractor Code of Ethics
    	
 
    	
95
    
	
Section 11.11
    	
 
    	
Certifications Required by Commonwealth Contractor   Requirements
    	
 
    	
95
    
	
Section 11.12
    	
 
    	
Duty to Inform of Criminal Investigations
    	
 
    	
95
    
	
Section 11.13
    	
 
    	
Disadvantaged Business Enterprise Program
    	
 
    	
95
    
	
Section 11.14
    	
 
    	
Airport Concession Disadvantaged Business Enterprise   Program
    	
 
    	
96
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 12
    	
 
    	
INDEMNIFICATION
    	
 
    	
96
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 12.1
    	
 
    	
Indemnification with Regard to Third Party Claims
    	
 
    	
96
    
	
Section 12.2
    	
 
    	
Indemnification with Regard to Breaches of   Covenants, Representations or Warranties
    	
 
    	
97
    
	
Section 12.3
    	
 
    	
Losses Net of Insurance; Reductions and Subrogation
    	
 
    	
98
    
	
Section 12.4
    	
 
    	
Payment and Interest
    	
 
    	
99
    
	
Section 12.5
    	
 
    	
Offset Rights; Limitations on Certain Damages
    	
 
    	
99
    
	
Section 12.6
    	
 
    	
Survival
    	
 
    	
100
    
	
Section 12.7
    	
 
    	
Agency for Representatives
    	
 
    	
100
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 13
    	
 
    	
INSURANCE
    	
 
    	
100
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 13.1
    	
 
    	
Insurance Coverage Required
    	
 
    	
100
    
	
Section 13.2
    	
 
    	
Additional Requirements
    	
 
    	
103
    
	
Section 13.3
    	
 
    	
Damage and Destruction
    	
 
    	
106
    

 

iii

 

TABLE OF CONTENTS

(continued)

 

	
ARTICLE 14
    	
 
    	
ADVERSE ACTIONS
    	
 
    	
109
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 14.1
    	
 
    	
Adverse Action
    	
 
    	
109
    
	
Section 14.2
    	
 
    	
Termination
    	
 
    	
110
    
	
Section 14.3
    	
 
    	
Right of Authority to Remedy an Adverse Action
    	
 
    	
111
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 15
    	
 
    	
LEASEHOLD COMPENSATION; DELAY EVENTS
    	
 
    	
111
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 15.1
    	
 
    	
Payment of Leasehold Compensation
    	
 
    	
111
    
	
Section 15.2
    	
 
    	
Delay Events
    	
 
    	
114
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 16
    	
 
    	
DEFAULTS; LETTERS OF CREDIT
    	
 
    	
115
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 16.1
    	
 
    	
Default by the Lessee
    	
 
    	
115
    
	
Section 16.2
    	
 
    	
Defaults by the Authority
    	
 
    	
119
    
	
Section 16.3
    	
 
    	
Letters of Credit; Capital Costs Reserve
    	
 
    	
121
    
	
Section 16.4
    	
 
    	
Consequences of Termination or Reversion
    	
 
    	
125
    
	
Section 16.5
    	
 
    	
Termination Other Than Pursuant to Agreement
    	
 
    	
128
    
	
Section 16.6
    	
 
    	
Termination Required by Act No. 458 and Public   Integrity Crimes
    	
 
    	
128
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 17
    	
 
    	
RESTRICTIONS ON TRANSFERS
    	
 
    	
129
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 17.1
    	
 
    	
Transfers by the Lessee
    	
 
    	
129
    
	
Section 17.2
    	
 
    	
Transfers of Equity Holder Interests or Other Change   in Control Transactions
    	
 
    	
130
    
	
Section 17.3
    	
 
    	
Other Corporate Actions
    	
 
    	
131
    
	
Section 17.4
    	
 
    	
Assignment by the Authority
    	
 
    	
131
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 18
    	
 
    	
LENDER’S RIGHTS AND REMEDIES
    	
 
    	
132
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 18.1
    	
 
    	
Leasehold Mortgages
    	
 
    	
132
    
	
Section 18.2
    	
 
    	
Notices and Payments to Leasehold Mortgagees
    	
 
    	
133
    
	
Section 18.3
    	
 
    	
Leasehold Mortgagee’s Right to Cure
    	
 
    	
134
    
	
Section 18.4
    	
 
    	
Rights of the Leasehold Mortgagee
    	
 
    	
135
    
	
Section 18.5
    	
 
    	
Authority’s Termination of this Agreement; New   Agreement
    	
 
    	
136
    
	
Section 18.6
    	
 
    	
Right to Dispute Resolution
    	
 
    	
137
    
	
Section 18.7
    	
 
    	
Recognition by the Authority of Leasehold Mortgagee
    	
 
    	
137
    
	
Section 18.8
    	
 
    	
Authority’s Right to Purchase Leasehold Mortgage
    	
 
    	
138
    
	
Section 18.9
    	
 
    	
Application of PFCs to Leasehold Mortgage Debt
    	
 
    	
139
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 19
    	
 
    	
DISPUTE RESOLUTION
    	
 
    	
139
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 19.1
    	
 
    	
Scope
    	
 
    	
139
    
	
Section 19.2
    	
 
    	
Informal Dispute Resolution Procedures
    	
 
    	
139
    
	
Section 19.3
    	
 
    	
Mediation
    	
 
    	
140
    
	
Section 19.4
    	
 
    	
Arbitration
    	
 
    	
140
    
	
Section 19.5
    	
 
    	
Court Action
    	
 
    	
141
    
	
Section 19.6
    	
 
    	
Provisional Remedies
    	
 
    	
142
    
	
Section 19.7
    	
 
    	
Tolling
    	
 
    	
142
    

 

iv

 

TABLE OF CONTENTS

(continued)

 

	
Section 19.8
    	
 
    	
Submission to Jurisdiction
    	
 
    	
142
    
	
Section 19.9
    	
 
    	
Request for Documents; Subpoena Duces Tecum
    	
 
    	
142
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 20
    	
 
    	
MISCELLANEOUS
    	
 
    	
143
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 20.1
    	
 
    	
Notice
    	
 
    	
143
    
	
Section 20.2
    	
 
    	
Entire Agreement
    	
 
    	
145
    
	
Section 20.3
    	
 
    	
Amendment
    	
 
    	
145
    
	
Section 20.4
    	
 
    	
Waiver of Rights
    	
 
    	
145
    
	
Section 20.5
    	
 
    	
Severability
    	
 
    	
145
    
	
Section 20.6
    	
 
    	
Governing Law
    	
 
    	
146
    
	
Section 20.7
    	
 
    	
Further Acts
    	
 
    	
146
    
	
Section 20.8
    	
 
    	
Costs
    	
 
    	
146
    
	
Section 20.9
    	
 
    	
Interest
    	
 
    	
146
    
	
Section 20.10
    	
 
    	
Inurement and Binding Effect
    	
 
    	
146
    
	
Section 20.11
    	
 
    	
No Partnership or Third-Party Beneficiaries
    	
 
    	
146
    
	
Section 20.12
    	
 
    	
Cumulative Remedies
    	
 
    	
146
    
	
Section 20.13
    	
 
    	
Counterparts; Facsimile Execution
    	
 
    	
146
    
	
Section 20.14
    	
 
    	
Waiver of Sovereign Immunity
    	
 
    	
147
    
	
Section 20.15
    	
 
    	
Commonwealth Obligations
    	
 
    	
147
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
SCHEDULES
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Schedule 1
    	
 
    	
Legal Description of LMM Airport Facility
    	
 
    	
 
    
	
Schedule 2
    	
 
    	
Contracts
    	
 
    	
 
    
	
Schedule 3
    	
 
    	
Form of Use Agreement
    	
 
    	
 
    
	
Schedule 4
    	
 
    	
Section 9.1(g) Disclosures
    	
 
    	
 
    
	
Schedule 5
    	
 
    	
Certain LMM Airport Facility Contracts
    	
 
    	
 
    
	
Schedule 6
    	
 
    	
Form of Letter of Credit
    	
 
    	
 
    
	
Schedule 7
    	
 
    	
LMM Airport Facility Assets
    	
 
    	
 
    
	
Schedule 8
    	
 
    	
Sworn Statement for Closing
    	
 
    	
 
    
	
Schedule 9A
    	
 
    	
Form of Legal Opinion of General Counsel of the   Authority
    	
 
    	
 
    
	
Schedule 9B
    	
 
    	
Form of Legal Opinion of GDB General Counsel
    	
 
    	
 
    
	
Schedule 10
    	
 
    	
Form of Legal Opinion of Counsel to the Lessee
    	
 
    	
 
    
	
Schedule 11
    	
 
    	
Closing Agreement
    	
 
    	
 
    
	
Schedule 12
    	
 
    	
Operating Standards
    	
 
    	
 
    
	
Schedule 13
    	
 
    	
General Accelerated Upgrades
    	
 
    	
 
    
	
Schedule 14
    	
 
    	
Initial Business Plan
    	
 
    	
 
    
	
Schedule 15
    	
 
    	
Form of GDB Payment Guaranty
    	
 
    	
 
    
	
Schedule 16
    	
 
    	
Allocation of Leasehold Fee and Annual Authority   Payment
    	
 
    	
 
    
	
Schedule 17
    	
 
    	
Airline Capital Improvement Contracts
    	
 
    	
 
    

 

v

 

LUIS MUÑOZ MARÍN INTERNATIONAL AIRPORT

LEASE AGREEMENT

 

This LUIS MUÑOZ MARÍN INTERNATIONAL AIRPORT LEASE AGREEMENT (this “Agreement”) is made and entered into as of this 24th day of July, 2012 (the “Date of this Agreement”), by and between the Puerto Rico Ports Authority (the “Authority”), a public corporation and governmental instrumentality of the Commonwealth of Puerto Rico, created pursuant to Act No. 125 of the Legislative Assembly of Puerto Rico enacted on May 7, 1942, as amended, and Aerostar Airport Holdings, LLC (the “Lessee”), a limited liability company organized under the laws of the Commonwealth of Puerto Rico.

 

R E C I T A L S

 

WHEREAS, the Authority owns and operates the LMM Airport Facility (as defined herein);

 

WHEREAS, pursuant to, and under the terms and conditions contained in Act No. 29 of the Legislative Assembly of Puerto Rico enacted on June 8, 2009 (the “Act”), the Authority is authorized to execute and deliver this Agreement, perform its obligations hereunder and enter into the Transaction (as defined, along with other capitalized terms, herein);

 

WHEREAS, the Authority, the respective Signatory Airlines and the Lessee are parties to the Use Agreement with respect to the LMM Airport Facility, which agreement will become effective upon the Closing Date;

 

WHEREAS, the Authority desires to grant an exclusive lease, which is also a Partnership Contract (contrato de alianza) pursuant to the Act, to the Lessee for the primary purpose and essential consideration of operating a public use airport in a safe and secure manner; maintaining the safety and security of the LMM Airport Facility at the highest possible levels; promoting, facilitating, aiding and enhancing commerce, tourism and economic development for the Commonwealth, in recognition that the LMM Airport Facility is the primary point of access in the Commonwealth with respect to economic activity, tourism and transportation; and providing various other benefits to the Airlines, the traveling public and the Authority; and the Authority, the Lessee and the Signatory Airlines have agreed upon the terms and conditions of the Use Agreement and the Operating Standards in order to assure the fulfillment of their continuing vital interest in the safe, secure, economical and effective operation of the LMM Airport Facility; and

 

WHEREAS, the Lessee desires to receive the lease from the Authority to operate the LMM Airport Facility, as hereinafter provided;

 

NOW THEREFORE, for and in consideration of the mutual covenants, representations, warranties and agreements contained herein and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties covenant and agree as follows:

 

1

 

ARTICLE 1
 DEFINITIONS AND INTERPRETATION

 

Section 1.1               Definitions.  Unless otherwise specified or the context otherwise requires, for the purposes of this Agreement the following terms have the following meanings:

 

“AA-Compensation” has the meaning ascribed thereto in Section 14.1(b).

 

“AA-Dispute Notice” has the meaning ascribed thereto in Section 14.1(c).

 

“AA-Termination Damages” has the meaning ascribed thereto in Section 14.2(a).

 

“AA-Notice” has the meaning ascribed thereto in Section 14.1(c).

 

“AA-Preliminary Notice” has the meaning ascribed thereto in Section 14.1(c).

 

“AAA” has the meaning ascribed thereto in Section 19.3(b).

 

“AAA Commercial Rules” has the meaning ascribed thereto in Section 19.4(a).

 

“AAA Technical Arbitration Rules” has the meaning ascribed thereto in Section 19.4(b).

 

“ACDBE” has the meaning ascribed thereto in Section 11.14.

 

“Account LC” means an unconditional and irrevocable Letter of Credit in favor of the Lessee or any Leasehold Mortgagee issued by a financial institution whose long-term senior unsecured indebtedness has obtained a rating of “BBB+” or better by Standard & Poor’s Ratings Services and an equivalent credit rating by another Rating Agency (or an equivalent credit rating from at least two nationally recognized Rating Agencies if the named Rating Agency ceases to publish ratings) and which Letter of Credit is not secured by the Lessee Interest and does not impose on the Lessee any obligation to reimburse draws in respect thereof.

 

“Act” has the meaning ascribed thereto in the Recitals.

 

“Act No. 458 Crime” means any crime specified in Act No. 458 of the Legislative Assembly of Puerto Rico enacted on December 29, 2000, as amended.

 

“AD-Termination Damages” has the meaning ascribed thereto in Section 16.2(c).

 

“Additional Coverages” has the meaning ascribed thereto in Section 13.2(l).

 

“Additional Lands” means any lands required for a Modification.

 

“Adjusted for Inflation” means, with respect to the amount to be “Adjusted for Inflation,” to multiply such amount by the CPI Factor for the applicable adjustment period.

 

“Adverse Action” has the meaning ascribed thereto in Section 14.1(a).

 

2

 

“Affected Property” means any public or private property, including a highway, street, road, roadway, bridge, railroad, rail or other transit way, rights-of-way, bicycle or hiking path and any ancillary facilities related to any of the foregoing, under the jurisdiction and control of the Authority, any other Governmental Authority or any other Person (including any private road) that is located above, intersects with, crosses over or under or is adjacent to the LMM Airport Facility or any part thereof.

 

“Affiliate”, when used to indicate a relationship with a specified Person, means a Person that, directly or indirectly, through one or more intermediaries has a 10% (or in the case of “majority-owned Affiliates,” 50%) or more voting or economic interest in such specified Person or controls, is controlled by or is under common control with (which shall include, with respect to a managed fund or trust, the right to direct or cause the direction of the management and policies of such managed fund or trust as manager, advisor or trustee pursuant to relevant contractual arrangements) such specified Person, and a Person shall be deemed to be controlled by another Person, if controlled in any manner whatsoever that results in control in fact by that other Person (or that other Person and any Person or Persons with whom that other Person is acting jointly or in concert), whether directly or indirectly and whether through share ownership, a trust, a contract or otherwise (it being understood and agreed that for purposes of this definition, a managed fund or trust shall be deemed to be an Affiliate of the Person managing such fund or trust and a limited partner in a managed fund or trust shall be deemed to be an Affiliate of such fund or trust and of the Person managing such fund or trust).  For the avoidance of doubt, with respect to the Lessee, its Affiliates shall include Equity Participants and each Person controlled by the Equity Participants.

 

“Agreed Modification” has the meaning ascribed thereto in Section 5.1(d).

 

“Agreement” has the meaning ascribed thereto in the preamble to this Agreement (including all schedules referred to herein), as amended from time to time in accordance with the terms hereof.

 

“AIP Grants” means grants and any funding under the Airport Improvement Program of the FAA, which program is authorized by 49 U.S.C. ch. 471.

 

“Air Transportation Business” means the carriage by aircraft of persons or property as a common carrier for compensation or hire, or the carriage of cargo or mail by aircraft in commerce, as defined in 49 U.S.C. Subtitle VII, as amended.

 

“Airline” means any Person actively engaged in an Air Transportation Business at the LMM Airport Facility.

 

“Airline Capital Improvement Contracts” has the meaning ascribed thereto in Section 4.5.

 

“Airline Capital Improvement Projects” has the meaning ascribed thereto in Section 4.5.

 

“Airport Emergency” means any event that results in a material danger to the safety or security of LMM Airport Facility Operations or a material impairment to the LMM Airport Facility or to the continuing use of the LMM Airport Airport as a commercial service airport.

 

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“Airport Purposes” means the use of the LMM Airport Facility to provide general airport services to members of the general public, any services ancillary or complementary thereto, and for other purposes consistent with the purposes of services provided at Comparable Public Airports.

 

“Airport Revenues” means all fees, rents, tariffs, revenues and any other type of charge for use of or in connection with the LMM Airport Facility to the fullest extent permitted by Section 10(c) of the Act, but excluding any Government Grants-In-Aid and PFC revenues.

 

“Airport Security Program” means “TSA-approved Airport Security Program.”

 

“Annual Authority Payment” has the meaning ascribed thereto in Section 2.1(b).

 

“Annual Authority Revenue Share” has the meaning ascribed thereto in Section 2.1(c).

 

“Approval”, “Approved”, “Approves”, “Approved by the Authority”, consent, determination and similar expressions mean approved or consented to by the Authority, which shall be made in accordance with the provisions of Section 1.17.

 

“Assigned LMM Airport Facility Contracts” means the agreements that are set forth on Schedule 2 under the heading “Assigned LMM Airport Facility Contracts.”

 

“Assumed Liabilities” has the meaning ascribed thereto in Section 3.2(c).

 

“Atlantic Standard Time” means time as measured in Puerto Rico by subtracting four hours from Greenwich Mean Time.

 

“Audit” and similar expressions mean, with respect to any matter or thing relating to the LMM Airport Facility, the LMM Airport Facility Operations or this Agreement, including compliance with the terms of this Agreement, the performance by or on behalf of the Authority of such reviews, investigations, inspections and audits relating to such matter or thing as the Authority may determine, in its reasonable discretion, to be advisable or necessary in the circumstances, conducted in each case in accordance with applicable United States audit practices customarily accepted in the airport industry, if any, and the terms of this Agreement or as required by Law.

 

“Authority” has the meaning ascribed thereto in the preamble to this Agreement.

 

“Authority Default” has the meaning ascribed thereto in Section 16.2(a).

 

“Authority Employee” means each person employed by the Authority with respect to the LMM Airport Facility as of the Date of this Agreement.

 

“Authority Related Entity” has the meaning ascribed thereto in Section 3.7(a).

 

“Authority’s Option” has the meaning ascribed thereto in Section 18.8(a).

 

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“Authorization” means any approval, certificate of approval, authorization, consent, waiver, variance, exemption, concession, endorsement, declaratory order, exception, license, filing, registration, permit, special lease or other requirement of any Person that applies to all or any portion of the LMM Airport Facility or the LMM Airport Facility Operations.

 

“Authorized Auditor” has the meaning ascribed thereto in Section 8.2(a).

 

“Bank Rate” means the prime rate of interest announced publicly by The Wall Street Journal (or its successors) as the so-called “prime rate.”

 

“Bid Date” means July 16, 2012.

 

“Breakage Costs” means any breakage costs, financing fees, make-whole premium payments, termination payments or other prepayment amounts (including premiums) that are required to be paid by the Lessee with respect to Leasehold Mortgage Debt or Qualified Debt as a result of the early repayment of such Leasehold Mortgage Debt or Qualified Debt prior to its scheduled maturity date, including the cost of early termination of interest rate hedging arrangements.

 

“Business Day” means any day that is neither a Saturday, a Sunday nor a day observed as a holiday by either the Commonwealth or the United States government.

 

“CAF” has the meaning ascribed thereto in Section 3.20(a).

 

“Capital Costs Reserve” has the meaning ascribed thereto in Section 16.3(h)(ii).

 

“Capital Lease” means a lease under which the obligations of the lessee would, in accordance with GAAP, be included in determining total liabilities as shown on the liability side of a balance sheet of a lessee.

 

“Capital Project” means any purchase, Capital Lease, creation, improvement or renovation of a Fixed Asset.

 

“Cargo Facility” has the meaning ascribed thereto in Section 3.20(a).

 

“Cash Deposit” has the meaning ascribed thereto in Section 2.3(a)

 

“Casualty Cost” has the meaning ascribed thereto in Section 13.3(a).

 

“CE-Dispute Notice” has the meaning ascribed thereto in Section 15.1(a).

 

“CE-Notice” has the meaning ascribed thereto in Section 15.1(a).

 

“CE-Preliminary Notice” has the meaning ascribed thereto in Section 15.1(a).

 

“Change in Control” means, with respect to any Person, whether accomplished through a single transaction or a series of related transactions and whether accomplished directly or indirectly, (i) a change in ownership so that more than 50% of the direct or indirect voting or economic interests in such Person is transferred to another Person or group of Persons acting in

 

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concert, (ii) the power directly or indirectly to direct or cause the direction of management and policy of such Person, whether through ownership of voting securities, by contract, management agreement, or common directors, officers or trustees or otherwise, is transferred to another Person or group of Persons acting in concert that did not have such power immediately prior to such transaction or transactions or (iii) the merger, consolidation, amalgamation, business combination or sale of substantially all of the assets of such Person for the purpose of or with the effect contemplated in clauses (i) or (ii) above; provided, however, that notwithstanding anything to the contrary set forth in this definition, none of the following shall constitute a “Change in Control” for the purposes of this Agreement:

 

(A) Transfers of direct or indirect ownership interests in the Lessee between or among Persons that are Affiliates of each other or Persons who are under common control (a Person shall be deemed to be controlled by another Person if controlled in any manner whatsoever that results in control in fact by that other Person (or that other Person and any Person or Persons with whom that other Person is acting jointly or in concert)), whether directly or indirectly and whether through share ownership, a trust, a contract or otherwise (it being understood and agreed that for purposes of this definition, a fund or trust shall be deemed to be under common control with the Person managing or advising such fund or trust (with respect to each of the foregoing, notwithstanding the fact that an independent board or trustee makes final investment decisions with respect thereto) and a limited partner or equivalent in a fund or trust shall be deemed to be under common control with such fund or trust and of the Person managing or advising such fund or trust);

 

(B) Transfers of shares of the Lessee or the direct or indirect shareholders of the Lessee pursuant to bona fide open market transactions on the New York Stock Exchange, NASDAQ, London Stock Exchange or comparable United States or foreign securities exchange, including any such transactions involving an initial or “follow on” public offering;

 

(C) Transfers of direct or indirect ownership interests in the Lessee by any Equity Participant or its beneficial owner(s) to any Person so long as the Equity Participants or their respective beneficial owner(s) having ownership interests in the Lessee (as of the later of (1) the Date of this Agreement or (2) the date on which the Authority most recently approved a Change in Control) together retain, in the aggregate, 50% or more of the direct or indirect voting or economic interests in the Lessee or the power directly or indirectly to direct or cause the direction of management and policy of the Lessee, through ownership of voting securities or common directors, officers or trustees;

 

(D) Transfers of direct or indirect ownership interests in the Lessee by any Equity Participant or its direct or indirect beneficial owner(s) to any partners, members, shareholders, directors, officers, employees or investors who are distributees of investments held by such Equity Participant or beneficial owner(s) pursuant to any bona fide liquidation of such Equity Participant or beneficial owner(s) as a result of which securities held by such entity are distributed to such distributees;

 

(E) any change of ownership that is attributable to a lease, sublease, concession, management agreement, operating agreement or other similar arrangement that is subject and subordinate in all respects to the rights of the Authority under this Agreement so long as (1) no

 

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“Change in Control” occurs with respect to the Lessee and (2) the Lessee remains obligated under this Agreement;

 

(F) the creation of a trust or any other transaction or arrangement that is solely a transfer of all or part of the Lessee’s economic interest under this Agreement to another entity so long as (1) no “Change in Control” occurs with respect to the Lessee and (2) the Lessee remains obligated under this Agreement; and

 

(G) Transfers of direct or indirect ownership interests in the Lessee (1) between or among investment funds, including infrastructure funds, and investors therein; provided that following such Transfer, such direct or indirect ownership interests remain under common ownership, management or control or (2) from investment funds, including infrastructure funds, or investors therein, to any Person; provided that such direct or indirect ownership interests, following consummation of such Transfer, remain under common management or control, it being understood in each of (1) and (2) above that (x) ownership interests shall be deemed to be controlled by a Person if controlled in any manner whatsoever that results in control in fact, whether directly or indirectly, and whether through share ownership, a trust, a contract or otherwise and (y) ownership interests of an investment fund shall be deemed to be managed by a Person if such Person has the right to direct, recommend or propose all or substantially all of the investments of such investment fund (with respect to each of the foregoing, notwithstanding the fact that an independent board or trustee makes final investment decisions with respect thereto).

 

“Claim” means any demand, action, cause of action, suit, proceeding, arbitration, claim, judgment or settlement or compromise relating thereto which may give rise to a right to indemnification under Section 12.1 or 12.2.

 

“Closing” has the meaning ascribed thereto in Section 2.2(a).

 

“Closing Agreement” has the meaning ascribed thereto in Section 2.4(a)(xi).

 

“Closing Date” has the meaning ascribed thereto in Section 2.2(a).

 

“Closing LOC” has the meaning ascribed thereto in Section 2.3(a).

 

“Code of Ethics” has the meaning ascribed thereto in Section 9.2(j).

 

“Commonwealth” means the Commonwealth of Puerto Rico.

 

“Commonwealth Court” has the meaning ascribed thereto in Section 19.4(c).

 

“Commonwealth Registry of Property” means the First Section of the Municipality of Carolina of the Registry of Property of the Commonwealth and where the Lease Agreement must be recorded.

 

“Commonwealth Retirement System” has the meaning ascribed thereto in Section 2.5(k)(ii).

 

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“Comparable Public Airport” means an airport in the United States of America (whether publicly or privately owned) open to the general public that is reasonably comparable to the LMM Airport Facility with respect to the matter to be determined.

 

“Compensation Event” has the meaning ascribed thereto in the definition of “Leasehold Compensation” below.

 

“Consent” means any approval, consent, ratification, waiver, exemption, franchise, license, permit, novation, certificate of occupancy or other authorization of any Person, including any consent issued, granted, given or otherwise made available by or under the authority of any Governmental Authority or pursuant to any applicable Law.

 

“Contractor” means, with respect to a Person, any contractor with whom such Person contracts to perform work or supply materials or labor in relation to the LMM Airport Facility, including any subcontractor of any tier, supplier or materialman directly or indirectly employed pursuant to a subcontract with a Contractor, but excluding, for the avoidance of doubt, any financial advisor retained by the Equity Participants or the Lessee to provide advice in relation to the financing of the Lease or any Capital Projects and any legal counsel retained by the Equity Participants or the Lessee.

 

“Contratante” means “Contratante” as defined in the Spanish version of the Act.

 

“Contracts” means any contract or agreement entered into by the Lessee related to the LMM Airport Facility (or subcontracts thereunder).

 

“Covered Party” has the meaning ascribed thereto in Section 9.2(k).

 

“CPI Factor” means (i) with respect to a one-year adjustment period (e.g. where the amount is to be Adjusted for Inflation annually), the amount equal to (A) CPI Value for the calendar year immediately prior to the date of such adjustment divided by (B) the CPI Value for the calendar year two years prior to the date of such adjustment (for illustrative purposes only, if an amount is to be Adjusted for Inflation on April 1, 2010, for the one-year period of April 1, 2009 through April 1, 2010, the CPI Value for such calculating adjustment is equal to 1.017, which is the CPI Value for calendar year 2009 (which is 219.235) divided by the CPI Value for calendar year 2008 (which is 215.572)) or (ii) with respect to a multiple-year adjustment period, the amount equal to (A) the CPI Value for the calendar year immediately prior to the date of such adjustment divided by (B) the CPI Value for the calendar year immediately prior to the date of the start of such adjustment period (for illustrative purposes only, if an amount is to be Adjusted for Inflation on the fifth anniversary of April 1, 2010, for the five-year period of April 1, 2005 through April 1, 2010, the CPI Value for such calculating adjustment is equal to 1.115, which is the CPI Value for calendar year 2009 (which is 219.235) divided by the CPI Value for calendar year 2004 (which is 196.600)); provided, however, that in no case shall be the CPI Factor for any adjustment period be less than 1.000.

 

“CPI Value” means the “Annual Value” of that year obtained from “Consumer Price Index—All Urban Consumers—U.S. All Items Less Food and Energy (CUUR0000SA0L1E)” published by the Bureau of Labor Statistics of the United States Department of Labor (for illustrative purposes only, the CPI Value for the calendar year 2009 is 219.235); provided,

 

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however, that if such index is changed so that the base year thereof changes, such index shall be converted in accordance with the conversion factor published by the United States Department of Labor, Bureau of Labor Statistics; provided further that if such index is discontinued or revised during the Term, such other index or computation with which it is replaced shall be used in order to obtain substantially the same result as would be obtained if such index had not been discontinued or revised; provided further that any such revision shall not result in the retroactive adjustment of any amounts paid or payable pursuant to this Agreement prior to such revision.

 

“DACO” has the meaning ascribed thereto in Section 2.4(a)(xiii).

 

“Date of this Agreement” means the date that the Lessee signs this Agreement, at which time all Parties will have signed the Agreement.

 

“DBE” has the meaning ascribed thereto in Section 11.13.

 

“Debt Service Reserve Requirement” has the meaning ascribed thereto in Section 3.8.

 

“Defending Party” has the meaning ascribed thereto in Section 12.1(e).

 

“Deferral Notice” has the meaning ascribed thereto in Section 16.2(c).

 

“Delay Event” means any of the following events that results in or would result in a delay or interruption in the performance by the applicable performing Party of any obligation under this Agreement: (i) an event of Force Majeure, (ii) a failure to obtain, or delay in obtaining, any Authorization from a Governmental Authority (provided that such failure or delay could not have been reasonably prevented by technical and scheduling measures of the applicable performing Party in the ordinary course), (iii) the enactment of a new Law or the modification, amendment or change in enforcement or interpretation of a Law (including a change in the application or interpretation thereof by any Governmental Authority) after the Bid Date, (iv) a delay caused by the performance of works (including the activities authorized by Section 3.7) carried out by a Governmental Authority or any utility or railway operator (including the relocation of utilities) or a delay caused by the performance of works by any other Person not acting under the authority or direction of, or pursuant to a contract, sublease or any other agreement or arrangement with the Lessee, (v) a failure by the other Party to perform or observe any of its covenants or obligations under this Agreement, (vi) a delay caused by the presence in, on, under or around the LMM Airport Facility of any Hazardous Substance or other contaminant that was present in the LMM Airport Facility at any time prior to the Time of Closing, which, in each case, results in or would result in a delay or interruption in the performance by the Lessee of any obligation under this Agreement, (vii) a delay caused by the implementation of Engineering or Institutional Controls related to the LMM Airport Facility (but only if such failure or delay could not have been reasonably prevented by technical and scheduling measures of the Lessee), (viii) a delay required by Law due to the discovery of protected plant or animal species, archaeological, paleontological or cultural resources at or about a site of a construction required or permitted to be undertaken pursuant to this Agreement or (ix) a delay in the performance by the Lessee of any of the General Accelerated Upgrades due to the postponement of such works by the Authority; provided in each case that such delay or the cause thereof is neither otherwise specifically dealt with in this Agreement nor arises by reason of (A) the negligence or intentional misconduct of the Party affected by the Delay Event

 

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or such Party’s Representatives, or Contractors to or agents of such Party or its Representatives, (B) any act or omission by the Party affected by the Delay Event or its Representatives in breach of the provisions of this Agreement, (C) except in the case of funds contemplated to be provided by the Authority pursuant to Section 5.2, lack or insufficiency of funds or failure to make payment of monies or provide required security on the part of the Party affected by the Delay Event or its Representatives, or Contractors to or agents of such Party or its Representatives, (D) except to the extent such events constitute an event of Force Majeure, any strike, labor dispute or other labor protest involving any Person retained, employed or hired by the Party affected by the Delay Event or its Representatives, or Contractors to or agents of such Party or its Representatives to supply materials or services for or in connection with the LMM Airport Facility Operations or any strike, labor dispute or labor protest caused by or attributable to any act (including any pricing or other price or method of operation) or omission of such Party or its Representatives, (E) except to the extent such events constitute an event of Force Majeure, any weather conditions or (F) the development, redevelopment, construction, maintenance, modification or change in the operation of any existing mode of transportation that results in the reduction of revenues generated at the LMM Airport Facility or in the number of users using the LMM Airport Facility.

 

“Delay Event Dispute Notice” has the meaning ascribed thereto in Section 15.2(d).

 

“Delay Event Notice” has the meaning ascribed thereto in Section 15.2(d).

 

“Delay Event Remedy” has the meaning ascribed thereto in Section 15.2(c).

 

“Depositary” means a savings bank, a savings and loan association or a commercial bank or trust company that would qualify as an Institutional Lender, designated by the Lessee to serve as depositary pursuant to this Agreement and Approved by the Authority; provided, however, that so long as a Leasehold Mortgage is in effect, the Depositary contemplated under Section 13.3 shall be the institution acting as the collateral agent or depositary under the financing secured by such Leasehold Mortgage.

 

“Designated Person” means each representative of a Party or the GDB who is designated as such for the purposes of Article 19.

 

“Document” has the meaning ascribed thereto in Section 1.17(b).

 

“DOT” means the United States Department of Transportation created under 49 U.S.C. § 101, et seq., or any successor agency or department thereto.

 

“Eligible Investments” means any one or more of the following obligations or securities: (i) direct obligations of, and obligations fully guaranteed by, the United States of America or any agency or instrumentality of the United States of America, the obligations of which are backed by the full faith and credit of the United States of America; (ii) demand or time deposits, federal funds or bankers’ acceptances issued by any Institutional Lender (provided that the commercial paper or the short-term deposit rating or the long-term unsecured debt obligations or deposits of such Institutional Lender at the time of such investment or contractual commitment providing for such investment have been rated “A” or higher by a Rating Agency or any other demand or time deposit or certificate of deposit fully insured by the Federal Deposit Insurance Corporation); (iii) commercial paper (including both non-interest-bearing discount obligations and interest-

 

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bearing obligations payable on demand or on a specified date not more than one year after the date of issuance thereof) that has been rated “A” or higher by a Rating Agency at the time of such investment; (iv) any money market funds, the investments of which consist of cash and obligations fully guaranteed by the United States of America or any agency or instrumentality of the United States of America, the obligations of which are backed by the full faith and credit of the United States of America and that have been rated “A” or higher by a Rating Agency and (v) other investments then customarily accepted by the Authority in similar circumstances; provided, however, that no instrument or security shall be an Eligible Investment if such instrument or security evidences a right to receive only interest payments with respect to the obligations underlying such instrument or if such security provides for payment of both principal and interest with a yield to maturity in excess of 120% of the yield to maturity at par.

 

“Encumbrance” means any mortgage, lien, judgment, execution, pledge, charge, security interest, restriction, easement, servitude, option, reservation, lease, claim, trust, deemed trust or encumbrance of any nature whatsoever, whether arising by operation of Law, judicial process, contract, agreement or otherwise created.

 

“End Date” means the date on which this Agreement expires or is terminated.

 

“Engineering or Institutional Controls” means those engineering, environmental or institutional controls required by a Governmental Authority (other than the Authority) in relation to the remediation or avoidance of a release of a Hazardous Substance.

 

“Environment” means soil, surface waters, groundwaters, land, stream sediments, surface or subsurface strata, ambient air, plants, animals, and other life forms, flora, fauna and humans.

 

“Environmental Laws” means all applicable Laws regulating or imposing liability or standards of conduct concerning or relating to the protection of human health, the Environment or the use, generation, disposal, discharge, Release, transportation, storage or management of Hazardous Substances.

 

“Equity Participant” means any Person who holds any shares of capital stock or securities of, or units, partnership interests, membership interests or other equity interests in, the Lessee.

 

“Excluded Liabilities” has the meaning ascribed thereto in Section 3.2(c).

 

“Exon-Florio Act” has the meaning ascribed thereto in Section 2.4(c)(iii)(D).

 

“FAA” means the Federal Aviation Administration established under 49 U.S.C. § 101 et seq., or any successor agency thereto, and where the context otherwise requires, DOT.

 

“Financing Costs” means any transaction costs and expenses (including legal fees), Taxes, and disbursements incurred by the Authority to finance, arrange for the financing of, or otherwise fund, the payment of any PIC-Termination Damages or any amount payable by the Authority pursuant to Section 16.6(e).

 

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“Fixed Asset” means tangible property used in the LMM Airport Facility Operations, but not expected to be converted into cash in the ordinary course of events, such as plant, machinery and equipment, furniture and fixtures, buildings, land and leasehold improvements.

 

“Force Majeure” means any event that is unforeseeable or otherwise beyond the reasonable control of the applicable performing Party that delays or interrupts the performance of such Party’s obligations hereunder, including an intervening act of God or public enemy, war (whether or not declared), invasion, armed conflict, act of foreign enemy, blockade, revolution, act of terror, sabotage, civil commotions, interference by civil or military authorities, condemnation or confiscation of property or equipment by any Governmental Authority, aircraft crash or forced landing, nuclear or other explosion, radioactive or chemical contamination or ionizing radiation, fire, tornado, hurricane, Named Windstorm, flooding, tsunami, tidal wave, earthquake or other natural disaster, riot or other public disorder, epidemic, quarantine restriction, strike, labor dispute or other labor protest, stop-work order or injunction issued by a Governmental Authority of competent jurisdiction, governmental embargo; provided that such event neither is otherwise specifically dealt with in this Agreement nor arises by reason of (i) the negligence or intentional misconduct of the applicable performing Party or its Representatives, (ii) any act or omission by the applicable performing Party or its Representatives in breach of the provisions of this Agreement, (iii)  except in the case of funds contemplated to be provided by the Authority pursuant to Section 5.2, lack or insufficiency of funds or failure to make payment of monies or provide required security on the part of the applicable performing Party, (iv) any strike, labor dispute or other labor protest involving any Person employed by the applicable performing Party or its Representatives in connection with the LMM Airport Facility Operations or any strike, labor dispute or labor protest caused by or attributable to any act (including any pricing or other practice or method of operation) or omission of the applicable performing Party or its Representatives or (v) any weather conditions that are ordinarily or customarily encountered or experienced at or in the vicinity of the LMM Airport Facility, including any Ordinary Storm, but excluding any tornado, hurricane or Named Windstorm.

 

“Foreign Corrupt Practices Act” means the Foreign Corrupt Practices Act of 1977, 15 U.S.C. §§ 78dd-1, et seq., as amended.

 

“GDB” means the Government Development Bank of the Commonwealth, or any successor agency thereto.

 

“GDB Payment Guaranty” has the meaning ascribed thereto in Section 2.4(a)(ix).

 

“General Accelerated Upgrades” has the meaning ascribed thereto in Section 4.1.

 

“Government Agreement” has the meaning ascribed thereto in Section 3.13(a).

 

“Government Grants-in-Aid” means those monies granted to the Lessee by the United States of America or any agency thereof (including AIP Grants), or the Commonwealth, or any political subdivision or agency thereof, to pay all or a portion of the cost of a Capital Project at or related to the Airport after the Closing Date.

 

“Governmental Authority” means the Commonwealth or any municipality, political subdivision, instrumentality, agency or public corporation of or in the Commonwealth and any

 

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federal, state, commonwealth, county, local (including all municipalities, municipal authorities and districts) or foreign government, department, court, commission, board, bureau, agency or instrumentality or other regulatory, judicial, administrative, governmental or quasi-governmental authority.

 

“Governor” means the Governor of the Commonwealth or another official of the Commonwealth acting under the direction and pursuant to the authority of the Governor.

 

“Grant Agreements” means the agreements, as amended, involving grants under the FAA’s Airport Improvement Program with respect to the LMM Airport Facility between the Authority and the FAA and between the Lessee and the FAA, including grant agreements and assurances, subject to any exemptions granted by the FAA pursuant to 49 U.S.C. § 47134 or otherwise.

 

“Hazardous Substance” means, but is not limited to, any solid, semi-solid, sludge, liquid, gas, odor, heat, sound, vibration, radiation or other substance or emission which is a contaminant, pollutant, dangerous substance, toxic or otherwise regulated substance, hazardous waste, subject waste, hazardous material or hazardous substance which is or becomes regulated by applicable Environmental Laws or which is classified as hazardous or toxic under applicable Environmental Laws (including lead-based paint, gasoline, diesel fuel or other petroleum hydrocarbons, polychlorinated biphenyls, asbestos and urea formaldehyde foam insulation).

 

“Hotel Operator” has the meaning ascribed thereto in Section 3.19.

 

“Hotel Property” has the meaning ascribed thereto in Section 3.19.

 

“Indemnified Party” means any Person entitled to indemnification under this Agreement.

 

“Indemnifier” means any Party obligated to provide indemnification under this Agreement.

 

“Indemnity Payment” has the meaning ascribed thereto in Section 12.3(b).

 

“Independent Engineer” means the licensed professional consulting engineering firm appointed by the Lessee pursuant to the Operating Standards that is reasonably acceptable to the Authority.

 

“Information” means any and all information of the Lessee relating to the LMM Airport Facility Operations, including (i) income statements, balance sheets, statements of cash flow and changes in financial position, details regarding revenues generated at the LMM Airport Facility (including information regarding the collection thereof), operating income, expenses, capital expenditures and budgeted operating results relating to the LMM Airport Facility Operations, (ii) all certificates, correspondence, data (including test data), documents, facts, files, information, investigations, materials, notices, plans, projections, records, reports, requests, samples, schedules, statements, studies, surveys, tests, test results, airport information and parking information (including volume counts, classification counts and vehicle jurisdiction data) analyzed, categorized, characterized, created, collected, generated, maintained, processed, produced, prepared, provided, recorded, stored or used by the LMM Airport Facility, the Lessee or any of its Representatives in connection with the LMM Airport Facility or the LMM Airport Facility Operations and (iii) books, records, accounts and documents of the Lessee relating to the LMM

 

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Airport Facility Operations, including any Information that is stored electronically or on computer-related media; provided, however, that nothing in this Agreement shall require the disclosure by any Party of Information that the Party has a reasonable basis to believe is protected by attorney-client or other legal privilege.

 

“Initial Termination Notice” has the meaning ascribed thereto in Section 16.2(b)(ii).

 

“Interim Adjustment” has the meaning ascribed thereto in Section 3.8.

 

“Institutional Lender” means (i) the United States of America, any state or commonwealth thereof or any agency or instrumentality of any of them, any municipal agency, public benefit corporation or public authority, advancing or insuring mortgage loans or making payments which, in any manner, assist in the financing, development, operation and maintenance of projects, (ii) any (A) savings bank, savings and loan association, commercial bank, trust company (whether acting individually or in a fiduciary capacity) or insurance company organized and existing under the laws of the United States of America or any state or commonwealth thereof, (B) foreign insurance company or commercial bank qualified to do business as an insurer or commercial bank as applicable under the laws of the United States (if such qualification is necessary in connection with the acquisition of Leasehold Mortgage Debt), (C) pension fund, foundation or university or college or other endowment fund or (D) real estate investment fund, infrastructure investment fund, investment bank, pension advisory firm, mutual fund, investment company or money management firm, (iii) any “qualified institutional buyer” under Rule 144(A) under the Securities Act or any other similar Law hereinafter enacted that defines a similar category of investors by substantially similar terms, (iv) a Governmental Authority acting (directly or through a trust or other single purpose vehicle controlled by it) as a conduit for the purpose of issuing private activity bonds authorized by Law for the benefit of the Lessee or (v) any other financial institution or entity designated by the Lessee and Approved by the Authority; provided, however, that each such entity or combination of such entities if the Institutional Lender shall be a combination of such entities shall have individual or combined assets, as the case may be, of not less than $1,000,000,000.

 

“Law” means any order, writ, injunction, decree, judgment, law, ordinance, decision, ruling, statute, code, rule or regulation of any Governmental Authority.

 

“Lease” has the meaning ascribed thereto in Section 2.1.

 

“Leasehold Compensation” means with respect to (i) any applicable entry into the LMM Airport Facility pursuant to Sections 3.7(a)(v) through 3.7(a)(ix), (ii) the Lessee’s compliance with or the implementation of any Required Modification or any modified or changed Operating Standard (as contemplated by Section 6.2(c)), (iii) any breach of the covenant set forth in Section 3.11(b), (iv) amounts payable as a remedy under Section 16.2(b)(i), (v) action by the Authority or any other Governmental Authority established under the Laws of the Commonwealth as contemplated by Section 3.22 or (vi) the occurrence of an Adverse Action or any other event, the occurrence of which under the terms of this Agreement requires the payment of Leasehold Compensation (each of the foregoing, a “Compensation Event”), compensation payable by the Authority to the Lessee in order to restore the Lessee to the same after-Tax economic position the Lessee would have enjoyed if such Compensation Event had not occurred, which shall be calculated in accordance with Section 15.1(d) and (e).

 

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“Leasehold Fee” has the meaning ascribed thereto in Section 2.1.

 

“Leasehold Mortgage” means any lease, indenture, pledge, mortgage, deed of trust or other security agreement or arrangement, including a securitization transaction with respect to revenues generated at the LMM Airport Facility, encumbering any or all of the Lessee Interest, in each case that satisfies all of the conditions in Section 18.1.

 

“Leasehold Mortgage Debt” means any bona fide debt secured by a Leasehold Mortgage, including (i) principal (including accreted principal under interest rate hedges or bonds); (ii) accrued interest (including capitalized interest and interest pursuant to an original issue discount); (iii) customary fees, costs, premiums, expenses and reimbursement obligations with respect thereto owed to lenders, financial insurers, agents, trustees and similar service providers; (iv) all payment obligations under interest rate hedging agreements with respect thereto (including accreting interest rate hedging agreements); (v) reimbursement obligations with respect thereto to any financial insurer and (vi) an assignment in connection with a securitization transaction, in each case, pursuant to an agreement entered into prior to the delivery by the Lessee to the Authority of an AA-Preliminary Notice or a notice under Section 16.2(b) stating that an Authority Default has occurred.  For the purposes of determining LMM Airport Facility Leasehold Value, Leasehold Mortgage Debt shall not include: (A) debt from an Affiliate of the Lessee, unless such debt is secured debt on terms consistent with terms that would reasonably be expected from a non-Affiliate lender acting in good faith; provided that the Lessee may request at any time during the Term that the Authority confirm in writing, and the Authority shall so confirm within a reasonable time following such request, whether any such debt is on terms consistent with terms that would reasonably be expected from a non-Affiliate lender acting in good faith; (B) any increase in debt to the extent such increase is the result of an agreement or other arrangement entered into after delivery by the Lessee to the Authority, with a copy to the Leasehold Mortgagee, of an AA-Preliminary Notice or a notice under Section 16.2(b) stating that an Authority Default has occurred; or (C) any debt with respect to which the Leasehold Mortgagee Notice Requirements apply and the Leasehold Mortgagee does not provide the Authority with notice in all material respects in accordance with the Leasehold Mortgagee Notice Requirements.  Notwithstanding anything herein to the contrary, except with respect to any such bona fide secured debt which was incurred or committed on or prior to the Closing Date, all of which incurred or committed debt shall be deemed to be Leasehold Mortgage Debt (except to the extent excluded from Leasehold Mortgage Debt pursuant to clauses (A) or (B) above), Leasehold Mortgage Debt shall not include any new debt incurred or committed following the Closing Date (it being understood and agreed by the Parties that any capitalization of interest or accretion of principal or other committed increases on any debt incurred or committed on or prior to the Closing Date or any refinancing of any debt that has previously qualified as Leasehold Mortgage Debt up to the original principal amount thereof, plus any premium and customary fees, costs, expenses and reimbursement obligations with respect thereto, shall not constitute such new debt) that (together with the aggregate amount of Leasehold Mortgage Debt and any Qualified Debt after giving effect to the incurrence or commitment of any such new debt) exceeds 80% of the fair market value of the Lessee Interest set forth in an appraisal; provided that, in order for such new debt to qualify as Leasehold Mortgage Debt, such appraisal shall (x) be prepared at the Lessee’s expense by an independent third party appraiser described under “LMM Airport Facility Leasehold Value” and delivered to the Authority prior to the incurrence or commitment of such new debt, (y) be a written appraisal of the fair market value of the Lessee Interest as of the time of the incurrence or

 

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commitment of such new debt and (z) identify the extent to which such new debt (together with the aggregate amount of Leasehold Mortgage Debt and any Qualified Debt after giving effect to the incurrence or commitment of any such new debt) exceeds 80% of the fair market value of the Lessee Interest set forth in such appraisal at the time of incurrence or commitment of such new debt; provided that any capitalization of interest or accretion of principal or other committed increases on any debt set forth in such appraisal shall constitute Leasehold Mortgage Debt to the extent such debt constitutes Leasehold Mortgage Debt on the date such appraisal is given; and provided further that the Parties agree that for the purposes of this definition and notwithstanding the requirements of the foregoing sub-clauses (x), (y) and (z), the amount of the Leasehold Fee paid at the Closing shall be deemed to constitute the fair market value of the Lessee Interest for a period of 12 months after the Closing Date and, as such, no appraisal shall be required within such 12-month period.  The appraisal requirement in the preceding sentence shall not apply to any protective advances made by any Leasehold Mortgagee or advances made by any Leasehold Mortgagee to cure Lessee defaults under the Leasehold Mortgage (regardless of whether entered into on or after the Closing Date) or other financing documents of such Leasehold Mortgagee.

 

“Leasehold Mortgagee” means the holder or beneficiary of a Leasehold Mortgage, including a financial insurer, or an agent, trustee or other representative or designee of such a holder or beneficiary.

 

“Leasehold Mortgagee Notice Requirements” means the delivery, by a Leasehold Mortgagee (or the Lessee on behalf of the Leasehold Mortgagee) to the Authority, the GDB, the FAA and the Airlines, after the execution and delivery of a Leasehold Mortgage by the Lessee, of a true and complete copy of the executed original of such Leasehold Mortgage, together with a notice containing the name and post office address of the holder of such Leasehold Mortgage.

 

“Leasehold Mortgagee’s Notice” has the meaning ascribed thereto in Section 18.8(a).

 

“Lessee” has the meaning ascribed thereto in the preamble to this Agreement.

 

“Lessee Default” has the meaning ascribed thereto in Section 16.1(a).

 

“Lessee Interest” means the interest of the Lessee in the LMM Airport Facility created by this Agreement and the rights, benefits and obligations of the Lessee under this Agreement (including the right to receive Leasehold Compensation and Termination Damages hereunder).

 

“Letter of Credit” means an irrevocable, unconditional, commercial letter of credit, in favor of the Authority as payee (without dual or multiple beneficiaries), in form and content reasonably acceptable to the Authority, payable immediately in United States dollars upon presentation of a sight draft and a certificate confirming that the Authority has the right to draw under such letter of credit in the amount of such sight draft, without presentation of any other document, statement or authorization (including the original letter of credit), which letter of credit (i) is issued by a commercial bank or trust company that is a member of the New York Clearing House Association and that has and maintains a current credit rating of “BBB+” or better by Standard & Poor’s Ratings Services and an equivalent credit rating by another Rating Agency (or an equivalent credit rating from at least two nationally recognized Rating Agencies if the named Rating Agency ceases to publish ratings) (or by such other commercial bank, trust company or other issuer reasonably

 

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acceptable to the Authority prior to the submission of the letter of credit), (ii) is substantially in the form of Schedule 6 (or otherwise in form and content reasonably acceptable to the Authority prior to the submission of the letter of credit) and (iii) provides for the continuance of such letter of credit for a period of at least one year or as otherwise provided in this Agreement.  The office for presentment of sight drafts specified in the Letter of Credit shall be located at a specified street address within the Commonwealth or such other location within the continental United States as is reasonably acceptable to the Authority.  For the avoidance of doubt, the obligations of the account party during the Term to reimburse the issuer for draws under the Letter of Credit may be secured by a Leasehold Mortgage.

 

“LMM Airport Facility” means that airport known as Luis Muñoz Marín International Airport (a legal description of the airport is attached hereto as Schedule 1 and by this reference made a part hereof) situated in the Municipality of Carolina, Commonwealth of Puerto Rico and all easements, licenses, privileges, rights and appurtenances related thereto, including all terminals, hangars, runways, buildings, structures (above grade and below grade), roadways, and all fixtures, and related facilities, now situated on that real property as the same may be enlarged, enhanced, improved, reconstructed, rebuilt, rehabilitated, developed or otherwise modified in accordance with this Agreement.

 

“LMM Airport Facility Assets” means (i) each of the tangible assets described on Schedule 7, and (ii) each other tangible and intangible asset (including intellectual property) of or relating solely to the LMM Airport Facility owned by the Authority.

 

“LMM Airport Facility Contracts” means the agreements to which the Authority is a party relating to the operations of the LMM Airport Facility that are set forth on Schedule 2 under the heading “LMM Airport Facility Contracts.”

 

“LMM Airport Facility Leasehold Value” means, as of any date, the fair market value of the Lessee Interest determined (without regard to the effect of the Adverse Action, Authority Default, Act No. 458 Crime or Public Integrity Crime giving rise to such determination) as of the time of the occurrence of the relevant Adverse Action or Authority Default (or as of the time of the conviction or guilty plea relating to the relevant Act No. 458 Crime or Public Integrity Crime, as the case may be) and taking into account the operations, traffic and revenues thereof, as determined pursuant to a written appraisal by an independent third party appraiser that is nationally recognized in appraising similar assets and that is reasonably acceptable to the Authority and the Lessee; provided, however, that the LMM Airport Facility Leasehold Value shall in no event be less than the amount equal to the sum of (i) any Leasehold Mortgage Debt and any Qualified Debt (except that in the case such value is determined in connection with the rescission or termination of this Agreement pursuant to Section 16.6, such Qualified Debt shall exclude any Qualified Debt provided by any Affiliate of the Lessee) and (ii) any related Breakage Costs, in each case as of the End Date and provided further that, solely in the case of a determination of the LMM Airport Facility Leasehold Value occasioned by (A) an Authority Default or an Adverse Action on or prior to the fifth anniversary of the Closing Date or (B) an Authority Default after the fifth anniversary of the Closing Date due to the failure of the Authority to make one or more monetary payments owed to the Lessee that, as of the time of such failure, in the aggregate exceed five times the amount of the immediately preceding payable Annual Authority Payment or Annual Authority Revenue Share (without regard to any offsets taken against such amount), the LMM Airport

 

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Facility Leasehold Value shall in no event be less than the greater of (1) the amount equal to the sum of (I) any Leasehold Mortgage Debt and any Qualified Debt and (II) any related Breakage Costs, and (2) the amount equal to the sum of (I) the Leasehold Fee, (II) all Annual Authority Payments actually paid by the Lessee up to the date of such determination, (III) any and all amounts actually paid by the Lessee under Section 3.19, Section 3.20 or Section 3.21, and (IV) the sum of the amounts of the reasonable, documented and unreimbursed (from PFCs, Government Grants-In-Aid, increased Airline charges to the extent permitted by the Use Agreement, or otherwise) expenditures made by the Lessee for any capital improvement projects (w) contemplated by Section 6.3 of the Use Agreement, (x) contemplated by the initial business plan referred to in Section 3.2(e), (y) required to be completed in accordance with this Agreement or the Use Agreement (including the Operating Standards) and (z) undertaken by the Lessee for which the consent of the Authority has been obtained, in each case as of the End Date.  If the Parties fail to agree upon such a single appraiser within 30 days after a Party requests the appointment thereof, then the Authority and the Lessee shall each appoint an independent third party appraiser and both such appraisers shall be instructed jointly to select a third independent third party appraiser to make the appraisal referred to above.  If either Party fails to appoint such independent third party appraiser or if the independent third party appraisers appointed by the Parties fail to select a third independent third party appraiser, in each case, within 60 days after the request of the Authority or the Lessee, then either the Authority or the Lessee may request the appointment of an independent third party appraiser (which appraiser shall be appointed by a Person agreed to by the Lessee and the Authority or if the Parties fail to agree on such Person within 30 days after a Party requests the appointment hereof, such appraiser shall be appointed by the AAA) to make the appraisal referred to above.  The Parties shall each pay 50% of the costs and expenses of any appraisal.  In the event that the Authority is authorized by the final FAA order under the Airport Privatization Pilot Program to use proceeds of the Lease for purposes other than investment in airports in the Puerto Rico airport system, then the Authority will be prohibited from using airport revenues to make payment of the LMM Airport Facility Leasehold Value to the Lessee upon termination of the Agreement pursuant to Section 14.2 or Section 16.2.  This prohibition shall only apply up to the amount of the portion of lease proceeds used for such non-airport purposes.

 

“LMM Airport Facility Operations” means (i) the operation, management or maintenance of the LMM Airport Facility, in each case in accordance with this Agreement, and (ii) all other actions relating to the operation of the LMM Airport Facility or otherwise that are to be performed by or on behalf of the Lessee pursuant to this Agreement (including the Operating Standards).

 

“Loss” or “Losses” means, with respect to any Person, any loss, liability, damage, penalty, increased financing costs, charge or out-of-pocket and documented cost or expense actually suffered or incurred by such Person, but excluding any punitive, special, indirect and consequential damages and any contingent liability until such liability becomes actual.  For avoidance of doubt, all actual payments reasonably made by any Person to third parties or reasonable out-of-pocket and documented costs or expenses actually suffered or incurred by any Person in respect of Claims made by third parties shall constitute Losses of such Person whether or not such payments or such costs and expenses relate to punitive, special, indirect and consequential damages or contingent liabilities of such third parties.

 

“Material Adverse Effect” means a material adverse effect on the business, condition (financial or otherwise) or results of operations of the LMM Airport Facility taken as a whole or

 

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the rights of the Lessee under this Agreement; provided, however, that no effect arising out of or in connection with or resulting from any of the following shall be deemed, either alone or in combination, to constitute or contribute to a Material Adverse Effect: (i) general economic conditions or changes therein; (ii) financial, banking, currency or capital markets fluctuations or conditions (either in the United States or any international market and including changes in interest rates); (iii) conditions affecting any or all of the real estate, financial services, construction or aviation industries generally; (iv) any existing event, occurrence or circumstance of which the Lessee has actual knowledge as of the Bid Date; (v) any action, omission, change, effect, circumstance or condition contemplated by this Agreement or attributable to the execution, performance or announcement of this Agreement or the transactions contemplated hereby or (vi) any negligence, intentional misconduct or bad faith of the Lessee or its Representatives.

 

“Modification” means deleting, dispensing with or changing the dimensions, character, quantity, quality, description, location or position of any part of the LMM Airport Facility or making other changes to the LMM Airport Facility; provided, however, that no Modification may require the Lessee to do or omit any act that could reasonably be expected to violate any applicable Law or cause the Lessee to fail to be in compliance with this Agreement.

 

“Named Windstorm” is a storm or weather disturbance that is named by the National Oceanic and Atmospheric Administration’s National Hurricane Center or similar body until sustained wind speeds drop below the parameter for naming storms.

 

“New Agreement” has the meaning ascribed thereto in Section 18.5(a).

 

“New P.R. Revenue Code” means the “Internal Revenue Code for a New Puerto Rico”, Act No. 1 of the Legislative Assembly of Puerto Rico, enacted on January 31, 2011, as amended.

 

“Notice Period” has the meaning ascribed thereto in Section 12.1(d).

 

“Notifying Party” has the meaning ascribed thereto in Section 3.14.

 

“Officer’s Certificate” means a certificate duly executed by an officer of the Lessee if required by the terms of this Agreement certifying to the relevant facts and circumstances as required hereunder.

 

“Offsets” has the meaning ascribed thereto in Section 12.5(a).

 

“Operating Agreement” means any material agreement, contract or commitment to which the Lessee is a party relating to the LMM Airport Facility Operations as in force from time to time (including the Assigned LMM Airport Facility Contracts and any warranties or guaranties assigned), but excluding any Leasehold Mortgage and financing documents related thereto.

 

“Operating Standards” (attached hereto as Schedule 12, and as modified from time to time in accordance with Article 6 and with Section 3.4 of the Use Agreement) means the standards, specifications, policies, procedures and processes that apply to the operation, maintenance, construction and rehabilitation of and capital improvements to, the LMM Airport Facility set forth on Schedule A to the Use Agreement, including any plans submitted by the Lessee to the Authority

 

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as required therein.  For the avoidance of doubt, the Operating Standards shall survive the termination or expiration of the Use Agreement.

 

“Opex Reserve Requirement” has the meaning ascribed thereto in Section 3.8.

 

“Ordinary Storm” means a storm that is comparable to any storm in length or severity of its effect on the LMM Airport Facility that has occurred on or around the LMM Airport Facility within 10 years prior to the Bid Date; provided that in no event shall a Named Windstorm or tornado be deemed an Ordinary Storm.

 

“Outside Closing Date” has the meaning ascribed thereto in Section 2.2(a).

 

“Part 139 Airport Certification Manual” means an airport certification manual authorized and approved by the FAA pursuant to 14 C.F.R. Part 139 with respect to the Part 139 Airport Operating Certificate.

 

“Part 139 Airport Operating Certificate” means an airport operating certificate issued by the FAA pursuant to 14 C.F.R. Part 139 authorizing the Lessee to operate the LMM Airport Facility.

 

“Party” means a party to this Agreement and “Parties” means all of the parties to this Agreement.

 

“Permitted Authority Encumbrance” means, with respect to the LMM Airport Facility: (i) the rights and interests of the Lessee under this Agreement and the Use Agreement; (ii) any Encumbrance that is being contested, or being caused to be contested, by the Authority in accordance with Section 3.5(b) (but only for so long as such contestation effectively postpones enforcement of any such Encumbrance); (iii) inchoate materialmen’s, mechanics’, workmen’s, repairmen’s, employees’, carriers’ or warehousemen’s liens or other like Encumbrances arising in the ordinary course of business of the LMM Airport Facility or the Authority’s performance of any of its rights or obligations hereunder, and in respect of obligations that are either (A) not delinquent or (B) being contested, or being caused to be contested, by the Authority in accordance with Section 3.5(b) (but only for so long as such contestation effectively postpones enforcement of any such Encumbrance); (iv) any easement, covenant, condition, right-of-way, servitude or any zoning, building, environmental, health or safety Law (including any Engineering or Institutional Control implemented thereunder) relating to the development, use or operation of the LMM Airport Facility (or other similar reservation, right or restriction) or other defects and irregularities in the title to the LMM Airport Facility that do not materially (individually or in the aggregate) interfere with the LMM Airport Facility Operations (in whole or in part) or the rights and benefits of the Lessee under this Agreement or materially impair the value of the Lessee Interest; (v) any right reserved to or vested in any Governmental Authority (other than the Authority) by any statutory provision or under common law (it being understood and agreed that nothing in this clause (v) shall limit or otherwise affect the Authority’s obligations or the Lessee’s rights hereunder); (vi) any Encumbrances created, incurred, assumed or suffered to exist by the Lessee or any Person claiming through it; (vii) any rights reserved to or vested in the Authority by any statutory and/or regulatory provision or under common law (it being understood and agreed that nothing in this clause (vii) shall limit or otherwise affect the Authority’s obligations or the Lessee’s

 

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rights hereunder) and (viii) any amendment, extension, renewal or replacement of any of the foregoing Permitted Authority Encumbrances on substantially similar terms as such Permitted Authority Encumbrances.

 

“Permitted Lessee Encumbrance” means, with respect to the LMM Airport Facility: (i) the rights and interests of the Lessee under this Agreement and the Use Agreement; (ii)  any Encumbrance that is being contested, or being caused to be contested, in accordance with Section 3.5(a) (but only for so long as such contestation effectively postpones enforcement of any such Encumbrance); (iii) any (A) lien or security interest for obligations not yet due and payable to a Contractor or other Person (including in respect of Taxes not yet due and payable), (B) any statutory lien, deposit or other non-service lien or (C) lien, deposit or pledge to secure mandatory statutory obligations or performance of bids, tenders, contracts (other than for the repayment of borrowed money) or leases, or for purposes of like general nature, any of which are incurred in the ordinary course of business of the LMM Airport Facility Operations and in respect of obligations that are either (1) not delinquent or (2) being contested, or being caused to be contested, by the Lessee in accordance with Section 3.5(a) (but only for so long as such contestation effectively postpones enforcement of any such Encumbrance); (iv) inchoate materialmen’s, mechanics’, workmen’s, repairmen’s, employees’, carriers’ or warehousemen’s liens, or other like Encumbrances arising in the ordinary course of business of the LMM Airport Facility or the Lessee’s performance of any of its rights or obligations hereunder, and in respect of obligations that are either (A) not delinquent or (B) being contested, or being caused to be contested, by the Lessee in accordance with Section 3.5(a) (but only for so long as such contestation effectively postpones enforcement of any such Encumbrance); (v) any right reserved to or vested in any Governmental Authority by any statutory and/or regulatory provision or under common law; (vi) any other Encumbrance permitted hereunder (including any Leasehold Mortgage (and financing statements relating thereto including purchase money liens) and any Encumbrance created in connection with any financing permitted hereunder) and any Encumbrance created in favor of an Airline pursuant to its respective Use Agreement; (vii) liens incurred in the ordinary course of business in connection with workers’ compensation, unemployment insurance, social security and other governmental rules and that do not in the aggregate materially impair the use, value or operation of the LMM Airport Facility; (viii) any Encumbrances for Taxes not yet due and owing or being contested in good faith; (ix) any Encumbrances created, incurred, assumed or suffered to exist by the Authority or any other Governmental Authority or any Person claiming through it except to the extent caused by an act or omission of the Lessee; (x) any (A) right to build, (B) surface rights or (C) lease, use, concession or similar rights or agreements granted by the Lessee, in each case with Approval of the Authority, in connection with the Lessee’s conduct of LMM Airport Facility Operations and (xi) any amendment, extension, renewal or replacement of any of the foregoing.  Notwithstanding anything to the contrary contained herein, no Permitted Lessee Encumbrance shall be permitted to attach to the fee simple interest in the LMM Airport Facility.

 

“Persistent Breach Month” has the meaning ascribed thereto in Section 16.1(a)(iv).

 

“Person” means any individual (including the heirs, beneficiaries, executors, legal representatives or administrators thereof), corporation, partnership, joint venture, trust, limited liability company, limited partnership, joint stock company, unincorporated association or other entity or a Governmental Authority.

 

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“PFC” means the passenger facility charge as authorized under 49 U.S.C. § 40117, or any predecessor or successor Law, and as approved by the FAA from time to time with respect to the LMM Airport Facility.

 

“PIC-Termination Damages” has the meaning ascribed thereto in Section 16.6(c).

 

“Plans” has the meaning ascribed thereto in Section 3.15.

 

“PRANG” has the meaning ascribed thereto in Section 3.21.

 

“PRANG Contract” has the meaning ascribed thereto in Section 3.21.

 

“PRANG Property” has the meaning ascribed thereto in Section 3.21.

 

“P.R. Mortgage and Property Registry Law” means Act No. 198 of the Legislative Assembly of Puerto Rico, enacted on August 8, 1979, 30 P.R. Laws Ann. § 2001 et seq., as of the date hereof.

 

“P.R. Penal Code” means the Penal Code of the Commonwealth.

 

“P.R. Revenue Code” means the Puerto Rico Internal Revenue Code of 1994, 13 P.R. Laws Ann. § 8001 et seq., as amended.

 

“President” means the President of the United States of America.

 

“Pre-Existing Hazardous Substance” has the meaning ascribed thereto in Section 3.2(c)(vii).

 

“Public Integrity Crime” means any crime described in Section 5(p) of the Code of Ethics, Section 5(ñ) of Act No. 237 of the Legislative Assembly of Puerto Rico enacted on August 31, 2004, as amended, or in other sections of such Laws.

 

“Public-Private Partnerships Authority’s Ethical Guidelines” means the “Public-Private Partnerships Authority’s Guidelines for the Evaluation of Conflicts of Interest and Unfair Advantages in the Procurement of Public-Private Partnership Contracts”, promulgated by the Public-Private Partnerships Authority and dated as of December 19, 2009.

 

“Qualified Debt” means any senior or subordinated bona fide debt not otherwise constituting Leasehold Mortgage Debt that is incurred at any time to finance or refinance, directly or indirectly, the Leasehold Fee payable hereunder or is otherwise expected to be paid exclusively from the revenues generated at the LMM Airport Facility, including: (i) principal (including accreted principal included in interest rate hedges or bonds); (ii) accrued interest (including capitalized interest and interest pursuant to an original issue discount); (iii) customary and reasonable lender or financial insurer, agent and trustee fees, costs, premiums, expenses and reimbursement obligations with respect thereto; (iv) all payment obligations under interest rate hedging agreements with respect thereto (including accreting interest rate hedging agreements); (v) reimbursement obligations with respect thereto to any financial insurer and (vi) an assignment in connection with a securitization transaction; provided that, in each case, the Lessee, promptly

 

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after the incurrence of any such debt, notifies the Authority of such debt and the material terms thereof.  For the purposes of determining LMM Airport Facility Leasehold Value, Qualified Debt shall not include (A) debt from any Equity Participant or its Affiliate or (B) debt the holders of which have the benefit of a guaranty or payment from an Affiliate of the Lessee, unless, in each case, such debt is debt on terms consistent with terms that would reasonably be expected from a non-Affiliate lender acting in good faith, provided that the Lessee may request at any time during the Term that the Authority confirm in writing, and the Authority shall so confirm within a reasonable time following such request, whether any such debt is on terms consistent with terms that would reasonably be expected from a non-Affiliate lender acting in good faith. Notwithstanding anything herein to the contrary, except with respect to any such senior or subordinated bona fide debt incurred or committed on or prior to the Closing Date, all of which incurred or committed debt shall be deemed to be Qualified Debt (except to the extent excluded from Qualified Debt pursuant to clauses (A) or (B) above), Qualified Debt shall not include any new debt incurred or committed following the Closing Date (it being understood and agreed by the Parties that any capitalization of interest or accretion of principal or other committed increases on any debt incurred or committed on or prior to the Closing Date or any refinancing of any debt that has previously qualified as Qualified Debt up to the original principal amount thereof shall not constitute such new debt) that (together with the aggregate amount of Leasehold Mortgage Debt and any Qualified Debt after giving effect to the incurrence or commitment of any such new debt) exceeds 80% of the fair market value of the Lessee Interest set forth in an appraisal; provided that, in order for such new debt to qualify as Qualified Debt, such appraisal shall (x) be prepared at the Lessee’s expense by an independent third party appraiser described under “LMM Airport Facility Leasehold Value” and delivered to the Authority prior to the incurrence or commitment of such new debt, (y) be a written appraisal of the fair market value of the Lessee Interest as of the time of the incurrence or commitment of such new debt and (z) identify the extent to which such new debt (together with the aggregate amount of Leasehold Mortgage Debt and any Qualified Debt after giving effect to the incurrence or commitment of any such new debt) exceeds 80% of the fair market value of the Lessee Interest set forth in such appraisal at the time of incurrence or commitment of such new debt; provided that any capitalization of interest or accretion of principal or other committed increases on any debt set forth in such appraisal shall constitute Qualified Debt to the extent such debt constitutes Qualified Debt on the date such appraisal is given; and provided further that the Parties agree that notwithstanding the requirements of the foregoing sub-clauses (x), (y) and (z), the amount of the Leasehold Fee paid at the Closing shall be deemed to constitute the fair market value of the Lessee Interest for a period of 12 months after the Closing Date and, as such, no appraisal shall be required within such 12-month period.  The appraisal requirement in the preceding sentence shall not apply to any protective advances made by any provider of Qualified Debt or advances made by any provider of Qualified Debt to cure Lessee defaults under the agreements evidencing such Qualified Debt (regardless of whether entered into on or after the Closing Date) or other financing documents of such Qualified Debt.

 

“Qualified Employees” has the meaning ascribed thereto in Section 2.5(k)(ii).

 

“Qualifying Account Instrument” means either (i) an Account LC or (ii) a revolving working capital or liquidity facility that is available for drawing by the Lessee at any time, and from time to time, to pay operating expenses or debt service (as applicable) as it becomes due; provided that (A) the maturity of such revolving working capital or liquidity facility shall in no event be less than 12 months from the date of determination of the Opex Reserve Requirement or

 

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Debt Service Reserve Requirement (as applicable), (B) such revolving working capital or liquidity facility shall have no conditions precedent to drawing other than (1) the non-occurrence of a payment default in respect of any Leasehold Mortgage Debt, (2) the non-acceleration of any Leasehold Mortgage Debt as a result of an event of default with respect thereto, (3) the non-occurrence of any of the events set forth in Sections 16.1(a)(v) or (vi) of this Agreement with respect to the Lessee or (4) other customary conditions precedent for a liquidity facility and (C) such revolving working capital or liquidity facility shall be provided by one or more financial institutions whose long-term senior unsecured indebtedness has obtained a rating of “BBB+” or better by Standard & Poor’s Ratings Services and an equivalent credit rating by another Rating Agency (or an equivalent credit rating from at least two nationally recognized Rating Agencies if the named Rating Agency ceases to publish ratings).

 

“Rating Agency” means any of Standard & Poor’s Rating Services, Moody’s Investors Service, Inc. or Fitch Investors Service, Inc. or any similar entity or any of their respective successors.

 

“Reasonable Efforts” means the taking of those commercially reasonable steps in the power of the relevant Person that are capable of producing the desired result, being steps which a reasonable person desiring to achieve such result would take; provided that, subject to the relevant Person’s other express obligations under this Agreement, the relevant Person shall not be required to expend any funds other than those funds (i) necessary to meet the reasonable costs reasonably incidental or ancillary to the steps to be taken by the relevant Person and (ii) the expenditure of which is not the obligation of another Person hereunder.

 

“Recitals” means the recitals of this Agreement.

 

“Release” means any unlawful spilling, leaking, emitting, discharging, disposing, depositing, leaching, escaping, dumping, pumping, emptying, injecting, pouring, or migration into or through the Environment.

 

“Replacement Letter of Credit” has the meaning ascribed thereto in Section 16.3(c).

 

“Reporting Year” means each calendar year during the Term, except that unless the Closing Date is the first day of January, the first Reporting Year shall be a partial year commencing on the Closing Date and ending on December 31st of such calendar year and the last Reporting Year shall be a partial Reporting Year commencing January 1st of such Reporting Year and ending on the End Date.

 

“Representative” means, with respect to any Person, any director, officer, employee, official, lender (or any agent or trustee acting on its behalf), partner, member, owner, agent, lawyer, accountant, auditor, professional advisor, consultant, engineer, Contractor, other Person for whom such Person is responsible at law or other representative of such Person and any professional advisor, consultant or engineer designated by such Person as its “Representative.”

 

“Required Coverages” has the meaning ascribed thereto in Section 13.1.

 

“Required Modification” has the meaning ascribed thereto in Section 5.2(a).

 

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“Restoration”, “Restore”, or “Restoring” means, with respect to any casualty loss, destruction or damage of the LMM Airport Facility, to repair or rebuild the affected portions of the LMM Airport Facility in accordance with all Laws applicable at the time of the repair or rebuilding to restore them to at least the same condition in which they were before the occurrence of such casualty loss, destruction or damage.

 

“Restoration Funds” has the meaning ascribed thereto in Section 13.3(a).

 

“Re-Tender Costs” means any costs, expenses (including legal fees), Taxes, fees, charges, disbursements and other Losses that are incurred by the Authority (or to the best of the Authority’s knowledge after due inquiry, are expected to be paid or incurred by the Authority) in connection with any Re-Tender of the LMM Airport Facility.

 

“Re-Tender of the LMM Airport Facility” means (a) any process by which the Authority (i) requests tenders from any Person interested in entering into a concession, lease or other transaction in respect of the LMM Airport Facility, (ii) evaluates any response to such request from such Person or (iii) grants or enters into such concession, lease or other transaction with such Person, or (b) any financing, bonding or similar transaction undertaken by the Authority in respect of the LMM Airport Facility.

 

“Reversion Date” means the day immediately following the End Date.

 

“Secretary” means the U.S. Secretary of Transportation.

 

“Securities Act” means the United States Securities Act of 1933, as amended.

 

“Signatory Airlines” has the meaning ascribed thereto in the Use Agreement.

 

“State” means any state in the United States of America or any possession or territory thereof.

 

“Statement of Estimated Liabilities” means a statement by the Authority setting forth (i) the relevant Lessee Default or other circumstances giving rise to its right to terminate this Agreement, (ii) all amounts that (A) are estimated to be due and payable by the Lessee to the Authority under this Agreement as of the date of such statement or (B) to the best of the Authority’s knowledge after due inquiry, are expected to become due and payable by the Lessee under this Agreement on or prior to the date that is 30 days after the date of such statement, (iii) to the extent not included in clause (ii) above, all other obligations of the Lessee under this Agreement known to the Authority that should have been, but have not been, performed as of the date of such statement and (iv) to the extent not included in clauses (ii) or (iii) above, all costs and expenses (including legal fees), Taxes, fees, charges and disbursements estimated to be paid or incurred by the Authority in connection with any Lessee Default, the termination of this Agreement, the recovery of possession from the Lessee, and the preparation, execution and delivery of the New Agreement and related agreements and the Statement of Estimated Liabilities that (A) are estimated to have been paid or incurred by the Authority as of the date of such statement or (B) to the best of the Authority’s knowledge after due inquiry, are expected to be paid or incurred by the Authority on or prior to the date that is 30 days after the date of such statement.

 

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“Sworn Statement” means the sworn statement required by Act No. 458 of the Legislative Assembly of Puerto Rico enacted on December 29, 2000, as amended.

 

“Sworn Statement for Closing” means the sworn statement in the form of Schedule 8.

 

“Tax” means any federal, Commonwealth, State, municipal, local or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, customs duties, permit fees, capital stock, franchise, profits, withholding, social security, unemployment, disability, real property, personal property, parking, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated or other tax, levy, impost, duty, fee, withholding or similar imposition of any kind payable, levied, collected, withheld or assessed at any time, including any interest, surcharge, penalty or addition thereto, whether disputed or not.

 

“Term” means the term of the Lease referred to in Section 2.1.

 

“Term Year” means (i) if the Closing Date occurs on the first day of a calendar month, the 12-month period beginning on the Closing Date or (ii) if the Closing Date does not occur on the first day of a calendar month, the period from the Closing Date through the 12-month anniversary of the end of the calendar month in which the Closing Date occurred and, in either case of clause (i) or (ii), each succeeding 12-month period and in any case ending on the End Date.

 

“Termination Damages” means AA-Termination Damages, AD-Termination Damages or PIC-Termination Damages.

 

“Third Party Claim” means any Claim asserted against an Indemnified Party by any Person who is not a Party or an Affiliate of such a Party.

 

“Time of Closing” means 10:00 a.m. on the Closing Date or such other time on such date as the Authority and the Lessee may agree to in writing.

 

“Transaction” has the meaning ascribed thereto in Section 2.1.

 

“Transfer” means to sell, convey, assign, lease, sublease, mortgage, encumber, transfer or otherwise dispose of.

 

“Transferee” has the meaning ascribed thereto in Section 17.1(a).

 

“TSA” means the Transportation Security Administration created under the Aviation and Transportation Security Act, 49 U.S.C. § 40101 et seq., or any successor agency thereto.

 

“TSA-approved Airport Security Program” means the airport security program approved by TSA under 49 C.F.R. Part 1542 with respect to the LMM Airport Facility.

 

“Unamortized Leasehold Fee” means, as of the End Date, the amount equal to:

 

(i) the product of (A) the Leasehold Fee, multiplied by (B) the difference of (1) one less (2) the quotient of (I) the number of days elapsed from the Closing Date through and including the

 

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End Date, divided by (II) 14,610 (plus such number of days as may be added to the Term in the event of an extension of the Term); plus

 

(ii) for each Annual Authority Payment actually paid by the Lessee, the product of (A) each such Annual Authority Payment actually paid by the Lessee, multiplied by (B) the difference of (1) one less (2) the quotient of (I) the number of days elapsed from the date that each such Annual Authority Payment was paid by the Lessee through and including the End Date, divided by (II) the difference of (x) 14,610 (plus such number of days as may be added to the Term in the event of an extension of the Term) less (y) the number of days that elapsed between the Closing Date through and including the date that each such Annual Authority Payment was paid by the Lessee; plus

 

(iii) if the Lessee paid the Authority compensation in connection with the Hotel Property pursuant to Section 3.19, the product of (A) such compensation paid by the Lessee to the Authority in accordance with Section 3.19 upon consummation of such transaction, multiplied by (B) the difference of (1) one less (2) the quotient of (I) the number of days elapsed from the date on which the notice of resolution of litigation was given by the Authority to the Lessee in accordance with Section 3.19(c) through and including the End Date, divided by (II) the number of days that would elapse from the date on which such notice was given through and including the 40th anniversary of the Closing Date (plus such number of days as may be added to the Term in the event of an extension of the Term); plus

 

(iv) if the Lessee paid the Authority compensation in connection with the Cargo Facility pursuant to Section 3.20, the product of (A) such compensation paid by the Lessee to the Authority in accordance with Section 3.20 upon consummation of such transaction, multiplied by (B) the difference of (1) one less (2) the quotient of (I) the number of days elapsed from the date on which the notice of resolution of litigation was given by the Authority to the Lessee in accordance with Section 3.20(c) through and including the End Date, divided by (II) the number of days that would elapse from the date on which such notice was given through and including the 40th anniversary of the Closing Date (plus such number of days as may be added to the Term in the event of an extension of the Term); plus

 

(v) if the Lessee paid the Authority compensation for the inclusion of the PRANG Property pursuant to Section 3.21, the product of (A) such compensation paid by the Lessee to the Authority for the inclusion of the PRANG Property upon consummation of such transaction (excluding any payments made periodically to the Authority after the consummation of the transaction with respect to the PRANG Property), multiplied by (B) the difference of (1) one less (2) the quotient of (I) the number of days elapsed from the date on which the transaction for the inclusion of the PRANG Property was consummated through and including the End Date, divided by (II) the number of days that would elapse from the date on which the transaction for the inclusion of the PRANG Property was consummated through and including the 40th anniversary of the Closing Date (plus such number of days as may be added to the Term in the event of an extension of the Term).

 

“U.S. Revenue Code” means the United States Internal Revenue Code of 1986, as amended.

 

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“Use Agreement” means the airport use agreement substantially in the form attached hereto as Schedule 3 (the “Use Agreement”) and any successor airport use agreement.

 

“Utility Systems” means gas, electricity, light, heat, power, telephone, water and other utilities and services used in the LMM Airport Facility Operations or supplied to the LMM Airport Facility during the Term.

 

Section 1.2                                             Number and Gender.  In this Agreement, terms defined in the singular have the corresponding plural meaning when used in the plural and vice versa and words in one gender include all genders.

 

Section 1.3                                             Headings.  The division of this Agreement into articles, sections and other subdivisions is for convenience of reference only and shall not affect the construction or interpretation of this Agreement.  The headings in this Agreement are not intended to be full or precise descriptions of the text to which they refer and shall not be considered part of this Agreement.

 

Section 1.4                                             References to this Agreement.  The words “herein”, “hereby”, “hereof”, “hereto” and “hereunder” and words of similar import refer to this Agreement as a whole and not to any particular portion of it.  The words “Article”, “Section”, “paragraph”, “sentence”, “clause” and “Schedule” mean and refer to the specified article, section, paragraph, sentence, clause or schedule of, or to, this Agreement.

 

Section 1.5                                             References to Agreements and Other Documents.  Unless specified otherwise, a reference to an agreement or other document is considered to be a reference to such agreement or other document (including any schedules or exhibits thereto) as it may be amended, modified or supplemented from time to time.

 

Section 1.6                                             References to Any Person.  A reference in this Agreement to any Person at any time refers to such Person’s permitted successors and assigns.

 

Section 1.7                                             Meaning of Including.  In this Agreement, the words “include”, “includes” or “including” mean “include without limitation”, “includes without limitation”, “including without limitation” and “including but not limited to”, respectively, and the words following “include”, “includes” or “including” shall not be considered to set forth an exhaustive list.

 

Section 1.8                                             Meaning of Discretion.  In this Agreement, unless otherwise qualified or limited, the word “discretion” with respect to any Person means the sole and absolute discretion of such Person.

 

Section 1.9                                             Meaning of Notice.  In this Agreement, the word “notice” means “written notice” unless specified otherwise.

 

Section 1.10                                      Meaning of Promptly.  In this Agreement, the word “promptly” means as soon as reasonably practicable in light of then-prevailing circumstances.

 

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Section 1.11                                      Consents and Approvals.  Wherever the provisions of this Agreement require or provide for or permit an approval or consent by either Party, such approval or consent, and any request therefor, must be in writing (unless waived in writing by the other Party).

 

Section 1.12                                      Trade Meanings.  Unless otherwise defined herein, words or abbreviations that have well-known trade meanings are used herein in accordance with those meanings.

 

Section 1.13                                      Laws.  Unless specified otherwise, a reference to a Law is considered to be a reference to (a) such Law as it may be amended, modified or supplemented from time to time, (b) all regulations and rules pertaining to or promulgated pursuant to such Law, (c) the successor to the Law resulting from recodification or similar reorganizing of Laws and (d) all future Laws pertaining to the same or similar subject matter.  Nothing in this Agreement shall fetter or otherwise interfere with the right and authority of any Governmental Authority to enact, administer, apply and enforce any Law.  Except for Adverse Actions or if compensation or other relief is otherwise available or provided for pursuant to applicable Law or this Agreement, the Lessee shall not be entitled to claim or receive any compensation or other relief whatsoever as a result of the enactment, administration, application or enforcement of any Law by any Governmental Authority.

 

Section 1.14                                      Currency.  Unless specified otherwise, all statements of or references to dollar amounts or money in this Agreement are to the lawful currency of the United States of America.

 

Section 1.15                                      Accounting Principles.  All accounting and financial terms used herein, unless specifically provided to the contrary, shall be interpreted and applied in accordance with then generally accepted accounting principles in the United States of America, consistently applied.

 

Section 1.16                                      Time.

 

(a)                                 References to Specific Time.  Unless specified otherwise, all statements of or references to a specific time in this Agreement are to Atlantic Standard Time.

 

(b)                                 Period of Days.  For purposes of this Agreement, a period of days shall be deemed to begin on the first day after the event that began the period and to end at 5:00 p.m. on the last day of the period.  If, however, the last day of the period does not fall on a Business Day, the period shall be deemed to end at 5:00 p.m. on the next Business Day.

 

Section 1.17                                      Approvals, Consents and Performance by the Authority.

 

(a)                                 Procedures.  Wherever the provisions of this Agreement require or provide for or permit an approval or consent by the Authority of or to any action, Person, Document or other matter contemplated by this Agreement, the following provisions shall apply, as applicable: (i) such request for approval or consent must (A) contain or be accompanied by any documentation or information required for such approval or consent in reasonably sufficient detail, (B) clearly set forth the matter in respect of which such approval or consent is being sought, (C) form the sole subject matter of the correspondence containing such request for approval or consent and (D) state

 

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clearly that such approval or consent is being sought; (ii) such approval or consent shall not be unreasonably or arbitrarily withheld, conditioned or delayed (unless such provision provides that such approval or consent may be unreasonably or arbitrarily withheld, conditioned or delayed or that it may be given or provided at the discretion of the Authority); (iii) the Authority shall, within such time period set forth herein (or (A) if no time period is provided, within 45 days, subject to the Authority’s right to extend such period once for an additional 15 days or (B) in the event of an Airport Emergency, as promptly and reasonably practicable under the circumstances) after the giving of a notice by the Lessee requesting an approval or consent, advise the Lessee by notice either that it consents or approves or that it withholds its consent or approval, in which latter case it shall (unless such provision provides that such approval or consent may be unreasonably or arbitrarily withheld, conditioned or delayed or is subject to the discretion of the Authority) set forth, in reasonable detail, its reasons for withholding its consent or approval, which reasons may include the insufficiency, as determined by the Authority acting reasonably, of the information or documentation provided; (iv) if the responding notice mentioned in clause (iii) of this Section 1.17(a) indicates that the Authority does not approve or consent, the Lessee may take whatever steps may be necessary to satisfy the objections of the Authority set out in the responding notice and, thereupon, may submit a revised request for approval or consent from time to time and the provisions of this Section 1.17 shall again apply until such time as the approval or consent of the Authority is finally obtained; (v) if the disapproval or withholding of consent mentioned in clause (iv) of this Section 1.17(a) is subsequently determined pursuant to Article 19 to have been improperly withheld, conditioned or delayed by the Authority, such approval or consent shall, unless otherwise determined pursuant to Article 19, be deemed to have been given on the date on which such approval or consent was originally required; and (vi) for the avoidance of doubt, any dispute as to whether or not a consent or approval has been unreasonably withheld, conditioned or delayed shall be resolved in accordance with the provisions of Article 19.

 

(b)                                 Approved Documents.  Subject to the other provisions hereof, wherever in this Agreement an approval or consent is required with respect to any document, proposal, certificate, plan, drawing, specification, contract, agreement, budget, schedule, report or other written instrument whatsoever (a “Document”), following such Approval such Document shall not be amended, supplemented, replaced, revised, modified, altered or changed in any material respect without first obtaining a further Approval in accordance with the provisions of this Section 1.17.

 

ARTICLE 2
 THE TRANSACTION; CLOSING; CONDITIONS PRECEDENT; COVENANTS

 

Section 2.1                                             Grant of Lease; Right to Sublease; Intent of the Parties; Allocation of the Leasehold Fee.

 

(a)                                 Upon the terms and subject to the conditions of this Agreement, effective at the Time of Closing, (i) the Lessee (A) shall pay the Authority the exact amount of $615,000,000 in cash (the “Leasehold Fee”), (B) agrees to pay the Annual Authority Payment described in Section 2.1(b) and (C) agrees to pay the Annual Authority Revenue Share described in Section 2.1(c) and (ii) the Authority shall and does hereby (A) grant the Lessee a lease free and clear of Encumbrances other than Permitted Authority Encumbrances, for and during the term (the “Term”) commencing as of the Time of Closing and expiring at 11:59 p.m. on the 40th anniversary of the Closing Date, unless terminated earlier or extended in accordance with the terms of this

 

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Agreement, to operate, manage, maintain, improve, enhance, develop and rehabilitate the LMM Airport Facility for Airport Purposes and otherwise in accordance with and pursuant to this Agreement and (B) grant the Lessee the right to collect and retain all fees, charges and revenues in respect of the LMM Airport Facility, the LMM Airport Facility Assets and the LMM Airport Facility Contracts, including PFCs and Government Grants-in-Aid (the “Lease”).  In addition to the Lease granted hereby to the Lessee, the Authority hereby assigns, transfers and otherwise conveys to the Lessee each (and all) of the LMM Airport Facility Assets (provided that no cash received prior to the Time of Closing shall be assigned, transferred or otherwise conveyed to the Lessee, except for cash tendered as security deposits under the Assigned LMM Airport Facility Contracts and cash or cash equivalents on deposit or required to be deposited in the accounts holding the PFCs collected prior to the Closing Date in respect of PFC eligible projects) and the Assigned LMM Airport Facility Contracts (including any security deposits tendered to the Authority by the counterparties thereto), and the Lessee shall accept each such grant, assignment, transfer and conveyance (collectively, including the Lease, the “Transaction”).

 

(b)                                 On or before the last day of each of the first five full Reporting Years, the Lessee shall pay to the Authority, in cash, the exact amount of $2,500,000 (the “Annual Authority Payment”).  In the event that this Agreement is terminated prior to the end of the fifth full Reporting Year, the Annual Authority Payment in respect of the Reporting Year in which such termination occurs shall be pro-rated for the number of days elapsed in such Reporting Year prior to such termination and shall be due and shall be paid by the Lessee on the Reversion Date.  The payment of the Annual Authority Payment shall be senior and prior to the payment of any debt of the Lessee.

 

(c)                                  The Lessee shall pay to the Authority, in cash, an amount (the “Annual Authority Revenue Share”) equal to (i) for the sixth full Reporting Year through and including the thirtieth full Reporting Year, 5% of the gross Airport Revenues earned by the Lessee in such Reporting Year or (ii) for the thirty-first full Reporting Year and each succeeding Reporting Year, 10% of the gross Airport Revenues earned by the Lessee in such Reporting Year.  The Annual Authority Revenue Share for each Reporting Year is due and shall be paid by the Lessee within 30 days after the delivery of the audited annual financial report for such Reporting Year as required by Section 8.1(c)(ii).  Any Annual Authority Revenue Share in respect of the final Reporting Year shall be due and shall be paid by the Lessee within 90 days after the Reversion Date.  The payment of the Annual Authority Revenue Share shall be senior and prior to the payment of any debt of the Lessee.

 

(d)                                 As part of the Lease, the Authority grants the Lessee the right to sublease the non-aeronautical areas of the LMM Airport Facility as provided in this Agreement and collect and retain all fees, charges, payments and revenues in respect of such subleased facilities.  Pursuant to this right to sublease, the Authority, by the Time of Closing, shall cause all those LMM Airport Facility Contracts that are lease or concession agreements to include the Lessee as a party thereof or shall assign such LMM Airport Facility Contracts to the Lessee in order for the Lessee to have the right to collect and retain all fees, charges, payments and revenues in respect of such LMM Airport Facility Contracts.

 

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(e)                                  It is the intent of the Parties that the Lessee shall have the right to use the LMM Airport Facility as provided in this Agreement as lessee and that the Authority in no way is assigning, transferring or otherwise conveying title of the LMM Airport Facility to the Lessee.

 

(f)                                   Prior to the Closing, the Leasehold Fee as allocated among the rights and interests described in Section 2.1(a), shall be set forth on an agreed Schedule to this Agreement.  For the avoidance of doubt, to the extent that an Assigned LMM Airport Facility Contract includes services to be provided to the Authority in connection with other facilities or assets of the Authority not being conveyed to the Lessee as part of the Lease, the Authority may partially assign such Assigned LMM Airport Facility Contract to the Lessee, and the Lessee shall accept such partial assignment, in accordance with the foregoing.

 

Section 2.2                                             Closing.

 

(a)                                 The closing of the Transaction (the “Closing”) shall take place on a Business Day not later than 180 days after the Bid Date (unless otherwise agreed in writing by the Authority and the Lessee with notice to the Signatory Airlines) (the “Outside Closing Date”) that is specified by the Lessee in a notice to the Authority and the Signatory Airlines not less than 10 Business Days prior to such Business Day; provided that the Closing shall not take place prior to the later of (i) the first Business Day that is 90 days after the Date of this Agreement and (ii) the date on which all Closing conditions shall have been satisfied or waived by the Party or Parties for the benefit of which such conditions are applicable (the “Closing Date”).  The Closing shall be held at the offices of Mayer Brown LLP, 71 South Wacker Drive, Chicago, Illinois 60606, or such other place agreed to in writing by the Authority and the Lessee, with notice to the Signatory Airlines.  At the Time of Closing, the Lessee shall deliver or cause to be delivered to the Authority same-day funds by wire transfer in the amount of the Leasehold Fee (less the amount of any Cash Deposit and any interest thereon withdrawn by the Authority pursuant to Section 2.3(c)) in full payment for the Lessee Interest, and upon receipt of such payment the Transaction shall be effective.  Upon receipt of the funds described in the preceding sentence, the Authority shall immediately cancel and return the Closing LOC in accordance with the Lessee’s instructions.

 

(b)                                 The Authority shall be entitled to all revenues with respect to the LMM Airport Facility and shall be responsible for all charges, costs and expenses with respect to Assumed Liabilities that shall have accrued as of 11:59 p.m. on the day immediately preceding the Closing Date.  If the Authority and the Lessee are unable to determine if any revenues or charges, costs and expenses with respect to the Assumed Liabilities actually accrued as of 11:59 p.m. on the day immediately preceding the Closing Date, such revenues, charges, costs and expenses shall be prorated between the Authority and the Lessee as of 11:59 p.m. on the day immediately preceding the Closing Date based upon the actual number of days in the month and a 365-day year.  Any amounts payable to or owed by the Authority pursuant to this Section 2.2(b) shall be added to or subtracted from the Leasehold Fee accordingly.  If final amounts cannot be determined at the Closing for any items contemplated by this Section 2.2(b), then the Authority and the Lessee shall allocate such items on a fair and equitable basis as soon as revenue statements, invoices or bills are available, with final adjustment to be made as soon as reasonably possible after the Closing Date.  The Authority and the Lessee shall have reasonable access to, and the right to inspect and audit, the other’s books to confirm such final determinations, subject to the terms and conditions set forth in Article 8 and Article 19.  Payment of any amount due under the final adjustment will

 

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be paid by the Lessee to the Authority or by the Authority to the Lessee (as applicable) within 30 days of agreement by the Authority and the Lessee of the final adjustment.  It is understood and agreed that the Authority shall, up to and including 11:59 p.m. on the day immediately preceding the Closing Date, be entitled to all of the cash or cash equivalents in or generated by the LMM Airport Facility (other than cash or cash equivalents on deposit or required to be deposited in the accounts holding the PFCs collected prior to the Closing Date in respect of PFC eligible projects and any security deposit under any Assigned LMM Airport Facility Contract).

 

Section 2.3                                             Deposit.

 

(a)                                 The Authority acknowledges receipt from the Lessee of cash (a “Cash Deposit”) or one or more Letters of Credit with a term of at least 180 days from the Date of this Agreement (the Closing LOC”), or a combination of the foregoing, in an aggregate amount equal to 5% of the Leasehold Fee as of the date hereof, to be held by the Authority for the sole purpose described in Section 2.3(b).  The Authority shall deposit any Cash Deposit with a Depositary, which shall invest such amount in Eligible Investments pending Closing. The Lessee may provide a combination of a Cash Deposit and Closing LOC to comply with the requirements of this Section 2.3(a), in which case the relevant provisions of this Agreement related to a Cash Deposit and to a Closing LOC, including the rights of the Parties related thereto, shall be construed to apply to both forms of security.

 

(b)                                 If the Authority terminates this Agreement pursuant to Section 2.4(d)(iv) because a condition set forth in Section 2.4(b) remains unsatisfied (unless such Section 2.4(b) condition remains unsatisfied solely because a condition set forth in Section 2.4(a) or Section 2.4(c) remains unsatisfied), then the Authority shall be entitled to (i) retain any Cash Deposit and all interest earned thereon and/or (ii) draw immediately without notice to the Lessee, the full amount of the Closing LOC upon presentation of a sight draft and a certificate confirming that the Authority has the right to draw under the Closing LOC in the amount of such sight draft, and the Authority shall be entitled to retain all of the proceeds of the Closing LOC, in either case, as the sole and exclusive remedy or right of the Authority against the Lessee hereunder for any cause of action arising under or relating to this Agreement or any document executed in connection herewith.  If this Agreement is terminated for any other reason, the Authority shall, within five days, return any Cash Deposit and all interest earned thereon and return the Closing LOC, if any, to the Lessee marked cancelled.  The right of the Authority to retain any Cash Deposit and all interest earned thereon or to draw the Closing LOC is intended to be, and shall constitute, liquidated damages and the exclusive remedy to compensate the Authority for the cost of foregoing alternative opportunities and for other costs incurred by the Authority in reliance on the Lessee’s agreement to enter into the transaction contemplated hereunder, and full retention of any Cash Deposit and all interest earned thereon and full payment of the entire draw on the Closing LOC to the Authority shall terminate all other rights and remedies of the Authority with respect to the Lessee.  The Parties acknowledge that the damages suffered by the Authority as a result of such termination would be impossible to ascertain and that the combined amount of any Cash Deposit and all interest earned thereon and the Closing LOC is a reasonable estimate thereof and is not intended as a penalty.

 

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(c)                                  At Closing, upon satisfaction of the conditions set forth in Sections 2.4(a), (b) and (c), the Authority shall withdraw the Cash Deposit and all interest earned thereon as a credit against the Leasehold Fee.

 

Section 2.4                                             Conditions Precedent; Termination.

 

(a)                                 Conditions for the Benefit of the Lessee. The Lessee shall be obligated to consummate the Closing in accordance with the terms hereof only if each of the following conditions has been satisfied in full at or before the Time of Closing, unless waived in writing by the Lessee:

 

(i)                                     the representations and warranties of the Authority set forth in Section 9.1 shall be true and correct on and as of the Date of this Agreement and at and as of the Time of Closing with the same force and effect as if made at and as of such time and date except for (A) such representations and warranties made as of a specified date, in which case such representations and warranties shall be true and correct as of such specified date, and (B) failures of representations and warranties (other than the representation and warranty set forth in Section 9.1(o)) to be true or correct that, individually or in the aggregate, have not had and are not reasonably likely to have a Material Adverse Effect (it being understood that, for purposes of determining whether such failures have not had and are not reasonably likely to have a Material Adverse Effect, all materiality qualifications and references to a Material Adverse Effect contained in such representations and warranties shall be disregarded);

 

(ii)                                  the Authority shall not be in material breach of any covenant on its part contained in this Agreement that is to be performed or complied with by the Authority at or prior to the Time of Closing, and the GDB shall not be in material breach of any covenant on its part contained in the GDB Payment Guaranty that is to be performed or complied with by the GDB at or prior to the Time of Closing; provided that the Authority or the GDB, as the case may be, shall have been given prompt notice of such breach and given a reasonable opportunity to cure such breach prior to the Closing Date (it being understood that the opportunity to cure such breach prior to the Closing Date may not extend beyond the Outside Closing Date);

 

(iii)                               the Authority shall have arranged for the deposit of funds from the Leasehold Fee or from other sources sufficient to provide for the payment, in full, of all obligations of the Authority payable from and secured in whole or in part by the LMM Airport Facility, the LMM Airport Facility Operations, the LMM Airport Facility Assets or the revenues generated at the LMM Airport Facility and outstanding at the Time of Closing in such a manner that such obligations shall be legally retired as of the Closing Date and no longer treated as outstanding under the documents under which such obligations were issued and are secured, and at the Closing, the Authority shall deliver to the Lessee a certificate executed by the Executive Director of the Authority certifying that any and all security interests and collateral securing any such obligations will be released in full as of the Time of Closing; and concurrently with such deposit, all such security interests and collateral shall have been released;

 

(iv)                              the Authority shall have delivered to the Lessee a legal opinion of (A) the Authority’s General Counsel, substantially in the form attached hereto as Schedule 9A and

 

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(B) the GDB’s General Counsel, substantially in the form attached hereto as Schedule 9B, together with all factual certificates delivered with respect thereto;

 

(v)                                 the Authority shall have executed and delivered to the Lessee (A) the estoppel certificate contemplated by Section 10.2(b) and (B) the consent agreement contemplated by Section 18.1(l);

 

(vi)                              neither the Authority nor the Commonwealth nor any other Governmental Authority established under the Laws of the Commonwealth shall have enacted any legislation or ordinance or promulgated any rule or regulation or taken any action that would constitute an Adverse Action hereunder were such action to take place during the Term or that has resulted or (in the case of any pending review or proceeding, if adversely determined) could reasonably be expected to result in such Governmental Authority conditioning, restricting or prohibiting the consummation of the Transaction in a manner that would impose a material impairment on the Transaction or the rights of the Lessee hereunder or make the consummation of the Transaction illegal;

 

(vii)                           the Authority shall have duly filed this Agreement with the Office of the Comptroller of the Commonwealth pursuant to Act No. 18 of the Legislative Assembly of Puerto Rico enacted on October 30, 1975, as amended;

 

(viii)                        the Authority shall have duly filed the Partnership Committee Report with respect to this Agreement pursuant to Article 9(g)(ii) and (iii) of the Act;

 

(ix)                              the GDB shall have delivered on the Date of this Agreement the GDB Payment Guaranty in substantially the form attached hereto as Schedule 15 (the “GDB Payment Guaranty”);

 

(x)                                 all necessary Authorization, approvals and certifications with respect to the execution, delivery and performance by the Authority of the Agreement or the consummation of the Transaction shall have been obtained from the Board of Directors of the Authority and the Puerto Rico Public-Private Partnerships Authority and the Governor of the Commonwealth;

 

(xi)                              the Department of Treasury of the Commonwealth shall have delivered the closing agreement (the “Closing Agreement”) in substantially the form attached hereto as Schedule 11;

 

(xii)                           the Authority shall have disclosed to the Lessee any Excluded Liabilities arising under Environmental Laws (as described in Section 3.2(c)(vii)) of which the Authority has become aware since delivering the Phase I Environmental Site Assessment of the Airport to the Lessee;

 

(xiii)                        the Lessee shall have obtained: (A) a license to operate the parking facilities at the LMM Airport Facility from the Department of Consumer Affairs of Puerto Rico (“DACO”) and (B) an exemption for the duration of the Term from the application of DACO Regulation 6753 with respect to the maximum fees chargeable at the LMM Airport Facility’s parking facilities, pursuant to Section 8(E) of DACO Regulation 6753; and

 

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(xiv)                       the Authority shall have delivered to the Lessee a certificate confirming that each of the conditions set forth in Sections 2.4(a)(i) through (xiii) has been satisfied in full by the Authority or the GDB, as the case may be, (except for any such condition that has been waived in writing by the Lessee) at or before the Time of Closing.

 

(b)                                 Conditions for the Benefit of the Authority. The Authority shall be obligated to consummate the Closing in accordance with the terms hereof only if each of the following conditions precedent has been satisfied in full at or before the Time of Closing, unless waived by the Authority:

 

(i)                                     the representations and warranties of the Lessee in Section 9.2 shall be true and correct on and as of the Date of this Agreement at and as of the Time of Closing with the same force and effect as if made at and as of such time and date except for (A) such representations and warranties made as of a specified date, in which case such representations and warranties shall be true and correct as of such specified date, and (B) failures of representations and warranties to be true or correct that, individually or in the aggregate, have not had and are not reasonably likely to have a material adverse effect on the ability of the Lessee to consummate the transactions contemplated hereby or perform its obligations hereunder (it being understood that, for purposes of determining whether such failures have not had and are not reasonably likely to have a material adverse effect on the ability of the Lessee to consummate the transactions contemplated hereby or perform its obligations hereunder, all materiality qualifications and references to a material adverse effect contained in such representations and warranties shall be disregarded);

 

(ii)                                  the Lessee shall not be in material breach of any covenant on its part contained in this Agreement that is to be performed or complied with by the Lessee at or prior to the Time of Closing; provided that the Lessee shall have been given prompt notice of such breach and given a reasonable opportunity to cure such breach prior to the Closing Date (it being understood that the opportunity to cure such breach prior to the Closing Date may not extend beyond the Outside Closing Date);

 

(iii)                               the Lessee shall have delivered to the Authority a legal opinion of counsel to the Lessee, substantially in the form attached hereto as Schedule 10;

 

(iv)                              the Lessee shall have delivered to the Authority (A) the evidence of insurance policies (which may be in the form of certificates of insurance) required to be delivered by the last sentence of Section 2.5(e), (B) an Officer’s Certificate certifying that the Lessee has a capitalization as of the Closing Date that includes equity that is equal to at least 20% of the Leasehold Fee and (C) Sworn Statement for Closing (duly notarized as of the Closing Date); and

 

(v)                                 the Lessee shall have delivered to the Authority a certificate confirming that each of the conditions set forth in Section 2.4(b)(i) through (iv) has been satisfied in full by the Lessee (except for any such condition that has been waived in writing by the Authority) at or before the Time of the Closing.

 

(c)                                  Conditions for the Benefit of Each of the Parties. The Authority and the Lessee shall each be obligated to consummate the Closing in accordance with the terms hereof

 

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only if each of the following conditions precedent has been satisfied in full at or before the Time of Closing, unless waived by each of the Authority and the Lessee, or otherwise required by Law:

 

(i)                                     there shall be no preliminary or permanent injunction or temporary restraining order or other order issued by a Governmental Authority of competent jurisdiction (provided that the Authority may not claim the benefit of this condition if such injunction or restraining order has been issued by the Authority or any agency thereof) or other legal restraint or prohibition enjoining or preventing the Transaction or preventing Airlines from serving the LMM Airport Facility;

 

(ii)                                  there shall be no action taken (including the pendency of any review or proceeding), or any Law enacted, entered, enforced or deemed applicable to the Transaction by any Governmental Authority of competent jurisdiction (provided that the Authority may not claim the benefit of this condition if such injunction or restraining order has been issued by the Authority or any Governmental Authority under the direction of the Authority) that, in any such case, has resulted or (in the case of any pending review or proceeding, if adversely determined) could reasonably be expected to result in such Governmental Authority conditioning or restricting the consummation of the Transaction in a manner that would impose a material impairment on the Transaction or make the consummation of the Transaction illegal;

 

(iii)                               all necessary material Authorizations, approvals and certifications with respect to this Agreement and the Transaction and the operation by the Lessee of the LMM Airport Facility in the manner contemplated hereby shall have been obtained from all relevant Governmental Authorities (other than as described in Section 2.4(a)(x)), including:

 

(A)                               all necessary approvals and exemptions by the FAA (which may be subject to or contingent upon the transfer of the leasehold interest to the Lessee and the deposit of operating funds by the Lessee) under the airport privatization pilot program pursuant to 49 U.S.C. § 47134 for the Lessee to receive all fees and revenues generated at the LMM Airport Facility, to charge fees as set forth in the Use Agreement, to receive and apply PFCs and Government Grants-In-Aid (including approvals of any amendments filed by the Authority with respect to existing FAA approvals necessary to permit the Lessee to charge and collect PFCs previously approved by the FAA (and not representing new PFC authority) in amounts sufficient to pay debt service on approximately $90,000,000 of indebtedness to be incurred by the Lessee to finance a portion of the Leasehold Fee contemplated to be applied by the Authority to retire an equivalent principal amount of previously approved PFC-supported debt issued to fund approved PFC-eligible projects), to transfer and assign all existing Government Grants-In-Aid and PFC approvals to the Lessee and for the Authority’s receipt and use for general Authority purposes of the Leasehold Fee, the Annual Authority Payment and the Annual Authority Revenue Share; and no objections shall have been raised in writing or at the public hearing held by the FAA that, in the judgment of either party, create a material possibility of a non-frivolous appeal from the final FAA order under 49 U.S.C. § 47134;

 

(B)                               the receipt by the Lessee from the FAA of a Part 139 Airport Operating Certificate and a Part 139 Airport Certification Manual;

 

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(C)                               the approval by TSA of an Airport Security Program reflecting the Lessee as the airport operator having such TSA-approved Airport Security Program; and

 

(D)                               if the Authority has determined that the Transaction may result in control of LMM Airport Facility by foreign interests, the Lessee and the Authority shall have submitted a “Voluntary Notice of Transaction” under Section 721 of Title VII of the Defense Production Act of 1950, as amended (the “Exon-Florio Act”) and any of the following shall have occurred: (1) the Authority shall have received notice that a review has been completed and that either the Transaction is not a covered transaction under the Exon-Florio Act or there are no unresolved national security concerns; (2) the President or his designee shall have commenced an investigation and the Authority shall have received notice that such investigation has been completed and that either the Transaction is not a covered transaction under the Exon-Florio Act or there are no unresolved national security concerns; (3) the President shall have announced a decision not to take any action to suspend, prohibit or place any limitations on the Transaction; or (4) the President or his designee shall have indicated that a mitigation agreement shall be required in order to resolve national security concerns and the Lessee and the Authority, after good faith efforts (including as required by Section 2.5(a)), are able to reach agreement with the President or his designee on the terms of a mitigation agreement acceptable to the Lessee and the Authority;

 

(iv)                              the prescription period specified in the Act for the commencement of any action challenging the validity of this Agreement shall have expired and no such action shall be pending;

 

(v)                                 the Parties shall have executed such documents as are necessary to enable the Lessee to record this Agreement in the Commonwealth Registry of Property;

 

(vi)                              the Use Agreement between the Authority, the Lessee and any Airline that is a subsidiary of AMR Corporation shall have been authorized to be executed and delivered by such Airline in accordance with all applicable Law and with the approval of the appropriate U.S. federal court having jurisdiction over such bankruptcy matters;

 

(vii)                           the Use Agreements (which, prior to the Bid Date, shall have been delivered into escrow by those Airlines that have previously executed a Use Agreement) shall have been duly executed and delivered by the Authority and the Lessee, and shall have become effective as of the Closing Date, and such agreements shall be sufficient in number to satisfy the condition set forth in Section 2.4(c)(iii)(A); and

 

(viii)                        those certain Transaction Implementation Agreements shall have been duly executed and delivered by, and shall remain in effect up to the Closing Date among the Authority and Signatory Airlines.

 

(d)                                 Termination. This Agreement may be terminated at any time prior to the Closing:

 

(i)                                     by the consent of both the Authority and the Lessee in a written instrument;

 

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(ii)                                  by either the Authority or the Lessee, upon notice to the other Party, if (A) any Governmental Authority of competent jurisdiction (other than, with respect to the Authority, the Authority or any Governmental Authority under the direction of the Authority) shall have issued an order, decree or ruling or taken any other action permanently restraining, enjoining or otherwise prohibiting the Transaction or which would materially impair the Transaction or make the consummation of the Transaction illegal, and such order, decree, ruling or other action has become final and nonappealable; provided, however, that the right to terminate this Agreement under this Section 2.4(d)(ii)(A) shall not be available to any Party whose failure to comply with any provision of this Agreement has been the cause of, or resulted in, any order, decree, ruling or other action being imposed or becoming final and nonappealable, (B) any condition set forth in Section 2.4(c)(iii) remains unsatisfied as of the Time of Closing; provided, however, that the right to terminate this Agreement under this Section 2.4(d)(ii) shall not be available to any Party whose failure to comply with any provision of this Agreement has been the cause of, or resulted in, the failure of such condition or conditions to be satisfied or (C) the Closing shall not have occurred as of 11:59 p.m. on the Outside Closing Date, unless such date is extended by mutual written agreement of the Lessee and the Authority (provided that the right to terminate this Agreement under this Section 2.4(d)(ii)(C) shall not be available to any Party whose actions or failure to act caused the Closing not to occur);

 

(iii)                               by the Lessee, upon notice to the Authority, if any condition set forth in Section 2.4(a) or Section 2.4(c) remains unsatisfied as of the Outside Closing Date; provided, however, that the Lessee shall not have the right to terminate this Agreement under this Section 2.4(d)(iii) if the Lessee’s failure to comply with any provision of this Agreement has been the cause of, or resulted in, the failure of such condition or conditions to be satisfied;

 

(iv)                              by the Authority, upon notice to the Lessee, if any condition set forth in Section 2.4(b) or Section 2.4(c) remains unsatisfied as of the Outside Closing Date; provided, however, that the Authority shall not have the right to terminate this Agreement under this Section 2.4(d)(iv) if the Authority’s failure to comply with any provision of this Agreement has been the cause of, or resulted in, the failure of such condition or conditions to be satisfied; or

 

(v)                                 by the Authority, upon notice to the Lessee, if any material casualty loss, destruction of or damage to any part of the LMM Airport Facility has occurred and such casualty loss, destruction or damage would permit the Lessee, before giving effect to Section 2.5(i)(iii)(A), to reduce the Leasehold Fee to an amount that is less than 85% of the Leasehold Fee specified in Section 2.1(a)(i)(A).

 

(e)                                  Effect of Termination.

 

(i)                                     In the event of termination of this Agreement by either the Authority or the Lessee as provided in Section 2.4(d), this Agreement shall forthwith become void and there shall be no liability or obligation on the part of the Authority or the Lessee or their respective Representatives, except as set forth in Section 2.3(b), this Section 2.4(e) and Article 12 and subject to and in accordance with Article 19 and Article 20 and except that no Party shall be relieved or released from any liabilities or damages arising out of its breach of this Agreement (subject to Section 2.3(b) in connection with the Authority’s termination of this Agreement pursuant to Section 2.4(d)(iv)).

 

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(ii)                                  In the event that the Lessee terminates this Agreement pursuant to Section 2.4(d)(iii) because a condition set forth in Section 2.4(a) remains unsatisfied or pursuant to Section 2.4(d)(v), the Authority will compensate the Lessee for up to $8,000,000 of the actual documented and reasonable out-of-pocket costs and expenses incurred by the Lessee (or any Affiliate thereof) in connection with the transactions contemplated by this Agreement after the date on which the Authority publicly announced the selection of the Lessee as the winning bidder with respect to such transactions and in connection with its due diligence and preparation of a proposal to act as the Lessee under this Agreement but excluding the costs associated with the unwinding of any hedging arrangement entered into in connection with the prospective financing of the Leasehold Fee.

 

(iii)                               Any Cash Deposit and all interest earned thereon shall be retained or returned, and the Closing LOC shall be drawn upon or returned cancelled under the circumstances described in and in accordance with Section 2.3. In the event of termination other than by the Authority as described in Section 2.3, the Authority shall promptly return to the Lessee any Closing LOC marked “canceled” and any Cash Deposit and any interest earned thereon.

 

(f)                                   Change in Interest Rate. Using the 10-year, mid-market LIBOR swap rate in the “Money & Investing, Borrowing Benchmarks” section of The Wall Street Journal, from the close of business on the Business Day immediately prior to the Bid Date (as published on the Bid Date) through the close of business two Business Days prior to the Closing Date (as published on the Business Day immediately prior to the Closing Date), the amount of the Leasehold Fee will either be (i) decreased by 1/20 of 1% for every one basis point increase (above the first 25 basis points increase) in the 10-year, mid-market LIBOR swap rate or (ii) increased by 1/20 of 1% for every one basis point decrease (below the first 25 basis points decrease) in the 10-year, mid-market LIBOR swap rate.

 

Section 2.5                                             Covenants.

 

(a)                                 Cooperation. The Parties shall cooperate with each other in good faith in order to permit the Closing to be consummated on the Closing Date as described in this Section 2.5.

 

(b)                                 Reasonable Efforts. Each Party shall use all Reasonable Efforts (i) to take, or cause to be taken, all actions necessary to comply promptly with all requirements of Law that may be imposed on such Party to consummate the Transaction promptly and (ii) to obtain or transfer (and to cooperate with the other Party to obtain or transfer) any Consent or Authorization of any Governmental Authority or any other public or private third-party that is required to be obtained or made by such Party in connection with the consummation of the Transaction, including all Consents and Authorizations from the FAA and TSA with respect to the airport privatization process of the LMM Airport Facility pursuant to 49 U.S.C. § 47134 (including (y) the execution of all necessary approvals and exemptions for the Lessee to receive all revenues generated at the LMM Airport Facility and charge fees as set forth in the Use Agreement and for the Authority’s receipt and use for general Authority purposes of the Leasehold Fee, the Annual Authority Payments and the Annual Authority Revenue Share and (z) the receipt by the Lessee of a Part 139 Airport Operating Certificate and a TSA-approved Airport Security Program). The Parties shall promptly cooperate with and furnish information to the other Party at such other Party’s reasonable

 

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request in connection with any such efforts by, or requirement imposed upon, any of them in connection with the foregoing.

 

(c)                                  Injunctions. If any Governmental Authority of competent jurisdiction (other than the Authority) issues a preliminary or permanent injunction or temporary restraining order or other order before the Time of Closing that would prohibit or materially restrict, hinder or adversely affect the Closing, each Party shall use all Reasonable Efforts (unless the Authority or the Lessee terminates this Agreement pursuant to Section 2.4(d)(ii)) to have such injunction, decree or restraining order or other order dissolved or otherwise eliminated or to eliminate the condition that formed the basis for such injunction or order, in each case promptly and, in any event, prior to the Time of Closing. Subject to Section 2.4(e), any and all costs incurred by any Party pursuant to any action taken in accordance with this Section 2.5(c) shall be borne by the Party against whom such injunction, restraining order or other order has been entered or whose alleged action or inaction in violation of applicable Law is the basis for issuance of such injunction, restraining order or other order (except to the extent that such injunction or other order resulting from, in whole or in part, the actions, direction or instrument of the other Party, in which case such costs shall be borne by such other Party).

 

(d)                                 Operation of the LMM Airport Facility. From the Date of this Agreement up to the Time of Closing, the Authority shall (i) cause the LMM Airport Facility to be operated in the ordinary course in a manner consistent with past practice, (ii) use all Reasonable Efforts to preserve the goodwill of the LMM Airport Facility and to maintain good business relationships with the Airlines and others having business dealings with the Authority in connection with the LMM Airport Facility, (iii) maintain the LMM Airport Facility Assets in normal operating condition and repair in accordance with past practice (ordinary wear and tear excepted) and not dispose of or acquire the LMM Airport Facility Assets other than in the ordinary course of business, (iv) perform (or cause to be performed) in all material respects all of the Authority’s obligations under the LMM Airport Facility Contracts, (v) not enter into any material contracts relating to the LMM Airport Facility or the LMM Airport Facility Operations unless such contracts are terminable by the Lessee on the Closing Date (at no cost to the Lessee) or are approved or consented to in writing by the Lessee prior to the execution thereof, (vi) not incur any Encumbrances on the LMM Airport Facility (other than Permitted Authority Encumbrances) that are not satisfied by the Closing Date or retained by the Authority as an Excluded Liability after the Closing Date and (vii) cause the LMM Airport Facility to be operated in all material respects in accordance with all applicable Laws (except to the extent any non-compliance is being contested in good faith by appropriate proceedings), all with the purpose that the LMM Airport Facility as a going concern shall be unimpaired and leased to the Lessee at the Closing in a condition substantially similar to the condition as of the Date of this Agreement. Without limiting the foregoing, the Authority shall not terminate, assign, amend, modify or agree to a waiver of the terms of any material Assigned LMM Airport Facility Contract or any material Authorization related to the LMM Airport Facility after the Date of this Agreement and before the Time of Closing (or in the case of any material Assigned LMM Airport Facility Contract that has not been assigned or transferred to the Lessee as contemplated herein, before such assignment or transfer is completed) and shall not enter into any new contracts of a similar nature, in each case without the Lessee’s consent.

 

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(e)                                  Policies of Insurance. The Authority shall cause all applicable policies of insurance maintained in respect of the LMM Airport Facility to be continued in full force and effect from the Date of this Agreement up to the Time of Closing. During the Term, the Lessee shall be responsible for maintaining insurance for the LMM Airport Facility in accordance with the terms of this Agreement.

 

(f)                                   Disclosure of Changes.

 

(i)                                     From the Date of this Agreement up to the Time of Closing, each Party shall promptly disclose to the other Party any matter which becomes known to it which is inconsistent in any material respect with any of such Party’s representations or warranties contained in Article 9. From the Date of this Agreement up to the Time of Closing, each Party shall use good faith efforts to promptly disclose to the other Party any matter which becomes known to it which is inconsistent in any material respect with the representations or warranties of the other Party contained in Article 9; provided that the failure of a Party to so notify the other Party shall not operate to foreclose any remedy otherwise available to the Party in accordance with this Agreement with respect to such inconsistency. No such disclosure shall be deemed to change any representation or warranty or cure any breach thereof or affect any inability to make such a representation or warranty for purposes of Section 2.4(a) or for any other purpose.

 

(ii)                                  From the Date of this Agreement up to the Time of Closing, the Authority may supplement or amend any schedule hereto, including one or more supplements or amendments to correct any matter that would constitute a breach of any representation or warranty contained herein. No such supplement or amendment shall be deemed to change any representation and warranty, cure any breach thereof or affect any inability to make such a representation and warranty for purposes of Section 2.4(a) or for any other purpose.

 

(g)                                  Access to Information. From the Date of this Agreement up to the Time of Closing, the Authority shall (i) give the Lessee and its Representatives reasonable access during normal business hours and on reasonable notice to (A) the LMM Airport Facility, subject to the Authority’s policies and regulations regarding safety and security and any other reasonable conditions imposed by the Authority and (B) employees and management personnel of the LMM Airport Facility, (ii) permit the Lessee and its Representatives to make such inspections of the LMM Airport Facility and such related documents and information as they may reasonably request and (iii) furnish the Lessee and its Representatives with such financial and operating data and other information (including, subject to satisfying the requirements of TSA in 49 C.F.R. Part 1520 and other applicable Governmental Authorities, sensitive security information) that is available with respect to the LMM Airport Facility as they may from time to time reasonably request. The Authority’s obligations in the preceding sentence are subject to all confidentiality obligations binding on the Authority with respect to any Person; provided that the Authority has disclosed to the Lessee the applicable agreement or other document in which such confidentiality obligations are set out in order to enable the Lessee to evaluate the materiality and significance of not disclosing the information that is subject to such confidentiality obligations. From the Date of this Agreement until the Closing Date, the Lessee shall hold and will cause its Representatives to hold in strict confidence all documents and information concerning the LMM Airport Facility to the extent and in accordance with the terms and conditions of the confidentiality agreement entered into prior to the Date of this Agreement governing the Authority and the Lessee as if such terms

 

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and conditions were fully restated herein; provided that to the extent that the terms and conditions of such confidentiality agreement conflict with the terms of this Agreement, the terms of this Agreement shall prevail (with terms and conditions of such confidentiality agreement becoming null and void at any time following the Closing Date). From the Closing Date and until the End Date, the Authority shall hold and will cause its Representatives to hold in strict confidence all documents and information concerning the LMM Airport Facility to the extent and in accordance with Section 8.2(b). After the Closing Date, the Lessee shall, at the request of the Authority, provide reasonable assistance with respect to claims or actions brought by third parties against the Authority or by the Authority against third parties based upon events or circumstances concerning the LMM Airport Facility and in that regard the Lessee shall (A) provide reasonable assistance in the collection of information or documents and (B) make the Lessee’s employees available when reasonably requested by the Authority.

 

(h)                                 Transition. From the Date of this Agreement up to the Time of Closing, the Parties shall cooperate with each other and with the Airlines to ensure the orderly transition of control, custody, operation, management, maintenance, improvement, enhancement, development and rehabilitation of the LMM Airport Facility at the Time of Closing. The Authority shall cooperate with and provide the Lessee with reasonable assistance in carrying out the Transition Plan (as defined in the Use Agreement). At the request of the Lessee, the Authority shall provide the Lessee, for up to six months following the Closing Date (which six-month period can be extended by the Lessee for up to an additional six months upon reasonable notice to the Authority), the services of the Authority Employees who do not become employees of the Lessee and remain employed by the Authority and the services of employees of the Authority who are assigned for such purpose. The Authority shall also provide, for up to 18 months following the Closing Date (which 18-month period may be extended by the Lessee for up to an additional six months upon reasonable notice to the Authority), administrative or operational informational technology systems and services (including relevant hardware, software, personnel and all operating manuals, guidelines and instructions) related to the operation of the LMM Airport Facility that were provided prior to the Closing Date by the Authority employees who were not LMM Airport Facility employees. The Lessee shall compensate the Authority for the provision of all such services in an amount equal to the Authority’s reasonable cost therefor, including pro rata employment costs and related reasonable expenses allocable to such employees, for the relevant period of time for services being rendered to the Lessee, which amount shall be billed to the Lessee as soon as reasonably practicable following the end of each month and shall be payable by the Lessee within 30 days of receipt of any such billing statement. Such services shall be provided upon such other reasonable terms and conditions as the Authority and the Lessee shall agree.

 

(i)                                     Casualty Loss Prior to Closing.

 

(i)                                     Restoration. If, following the Bid Date and prior to the Time of Closing, there has occurred any material casualty loss, destruction or damage to any part of the LMM Airport Facility and this Agreement has not been terminated under Section 2.4(d), then the Authority shall promptly and diligently Restore the affected portion of the LMM Airport Facility; provided that if the affected portion of the LMM Airport Facility cannot be Restored prior to the Closing Date, then the Authority shall make or cause to be made such Restoration as can reasonably be completed prior to the Closing Date (in a good and workmanlike manner, in accordance with any applicable Operating Standards and using Reasonable Efforts to minimize

 

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interference with the LMM Airport Facility Operations and further damage to the LMM Airport Facility) and assign all warranties and guarantees in respect of such Restoration to the Lessee on the Closing Date and, at the option of the Lessee, either (A) the Authority, prior to the Closing Date, shall provide to the Lessee a plan for the completion of such Restoration efforts by the Authority or its agents following the Time of Closing at the Authority’s sole expense and subject to the Lessee’s reasonable approval and shall then complete such Restoration in substantial accordance with such plan; provided that the Lessee may choose in its discretion to undertake such Restoration pursuant to such approved plan at the Authority’s sole cost and expense or (B) the Lessee shall Restore the remaining affected portion of the LMM Airport Facility in accordance with its own plan for the completion of such Restoration. Notwithstanding whether the Authority is required to complete the Restoration or the Lessee shall have elected to complete the Restoration as contemplated above, the Authority shall provide Leasehold Compensation to the Lessee during the period from the Closing Date until the Restoration is complete (which Leasehold Compensation, for the avoidance of doubt, may be provided by extending the Term in accordance with Section 15.1(c)(i)).

 

(ii)                                  Compensation. If the Lessee exercises its option to Restore the remaining affected portion of the LMM Airport Facility as described in Section 2.5(i)(i)(B), then (A) the Authority shall assign to the Lessee all available insurance and other proceeds payable by third-party insurers or other third parties to the Authority in respect of such casualty loss, destruction or damage and enforce (with the cooperation of the Lessee) all of its rights, remedies and privileges under any applicable insurance policies with third-party insurers any rights to recovery it may have against other third parties, whether at law, pursuant to contract or otherwise and (B) the Lessee shall have the right to reduce the Leasehold Fee to be paid at Closing by any expected deficiency between the amount of such insurance and the cost to the Lessee of Restoring the affected portion of the LMM Airport Facility, in each case as estimated by the Lessee.

 

(iii)                               Adjustments.

 

(A)                               In no event shall the Leasehold Fee be reduced in accordance with Section 2.5(i)(ii)(B) to an amount that is less than 85% of the Leasehold Fee specified in Section 2.1(a)(i)(A).

 

(B)                               In the event that the cost of Restoring the affected portion of the LMM Airport Facility pursuant to Section 2.5(i)(i)(B) is greater than the net amount of insurance proceeds received by the Lessee from the Authority therefor plus the amount deducted from the Leasehold Fee in accordance with Section 2.5(i)(ii), such event shall be a Compensation Event, and the Authority shall pay Leasehold Compensation to the Lessee in accordance with Section 15.1(b) with respect to any Restoration required to be undertaken pursuant to this Section 2.5(i).

 

(C)                               In the event that the cost of Restoring the affected portion of the LMM Airport Facility pursuant to Section 2.5(i)(i)(B) is less than the net amount of insurance proceeds received by the Lessee from the Authority therefor plus the amount deducted from the Leasehold Fee in accordance with Section 2.5(i)(ii), such excess shall be the property of the Authority and shall be paid by the Lessee to the Authority upon the Restoration of the affected portion of the LMM Airport Facility.

 

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(j)                                    Airport Security Program.  The Lessee acknowledges and agrees that it is obligated under 49 C.F.R. Part 1542 to develop and have in effect the TSA-approved Airport Security Program as of the Closing Date.  The Lessee understands and agrees that the implementation, maintenance and operation of the LMM Airport Facility pursuant to the requirements of a TSA-approved Airport Security Program that complies with TSA’s security regulations is essential to the operation of the LMM Airport Facility.  The Authority shall cooperate with the Lessee and TSA (including by making relevant Authority personnel available) in connection with the preparation and approval process relating to the TSA-approved Airport Security Program.

 

(k)                                 Airport Employees.

 

(i)                                     Within 20 days after the Date of this Agreement, the Authority shall provide the Lessee with a list of the Authority Employees.  Prior to the Time of Closing, the Lessee shall use its Reasonable Efforts to interview all Authority Employees who apply to the Lessee for employment and to offer, on terms and conditions designated by the Lessee taking into account applicable Law, employment to commence following the Closing Date to such Authority Employees who, as determined by the Lessee, meet the Lessee’s stated requirements for employment; provided, however, that the Lessee shall have no obligation to offer employment to any such Authority Employee.  On the Closing Date, the Lessee shall deliver to the Authority a list of all Authority Employees hired by the Lessee or its affiliates as of the Time of Closing.

 

(ii)                                  With respect to any Authority Employee hired by the Lessee who, on the Closing Date, has 10 years or more of accumulated service under the Commonwealth Employee Retirement System (the “Commonwealth Retirement System”) and elects to continue participating in the Commonwealth Retirement System (each such Authority Employee, a “Qualified Employee”), the Lessee agrees to make the employer contributions that government employers are required to make pursuant to Sections 2-116, 3-105 and 4-113 of Act No. 447, approved by the Legislative Assembly of Puerto Rico on May 15, 1951, as amended, that would become due and payable after the Closing Date for all Qualified Employees hired by the Lessee.

 

(l)                                     Noticed Required by the Act.  The Authority shall have sent all notices required under the Act in sufficient time to have allowed the prescription period specified in the Act for the commencement of any action challenging the validity of this Agreement to have expired by the Time of Closing.

 

Section 2.6                                             Recordation of Lease.  At the Time of Closing, the Parties shall execute such documents as are necessary to enable the Lessee, at its expense, to record this Agreement in the appropriate Commonwealth Registry of Property (including a deed of elevation of this Agreement).  To the extent that changes are made to this Agreement with respect to the Term or other material matters, the Parties shall execute, deliver and record, at the Lessee’s expense, an amendment to the recorded Agreement reflecting such changes.  For the sole purposes of determining the fee payable in connection with the deed of elevation and the recordation of the Agreement pursuant to Article 2 of the P.R. Mortgage and Property Registry Law, the Parties agree that the Leasehold Fee, the Annual Authority Payments and the Annual Authority Revenue Share will be allocated to each year of the Term in the manner set forth in Schedule 16.

 

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Section 2.7                                             Closing Deliveries.  At the Time of Closing, each Party shall execute and deliver all assets, agreements, bills of sale, assignments, endorsements, instruments, affidavits and documents as are reasonably necessary in the opinion of the other Party to effect the Transaction (and in form and substance that are reasonably satisfactory to such other Party).

 

Section 2.8                                             Intended Treatment for Federal Income Tax Purposes.  This Agreement is intended for United States federal income Tax purposes to be (a) with respect to the transfer of the LMM Airport Facility and the LMM Airport Facility Assets, (i) a sale to the Lessee of those portions of the LMM Airport Facility and the LMM Airport Facility Assets that are tangible property having useful lives of 40 years or less and (ii) a lease to the Lessee of the portions of the LMM Airport Facility and those LMM Airport Facility Assets that are tangible property having useful lives materially greater than 40 years and (b) with respect to the Lease, the acquisition by the Lessee of one or more Section 197 intangibles within the meaning of Section 197(d) of the U.S. Revenue Code.  The Parties agree, in the absence of a change of Law or final adverse determination by the Internal Revenue Service, to report the transactions contemplated herein consistently with the intentions expressed in this Section 2.8 for U.S. federal income tax purposes, to treat the Agreement consistently with such intentions and not to take any positions inconsistent with such treatment.

 

Section 2.9                                             Intended Treatment for Commonwealth Income Tax Purposes.  This Agreement is intended for Commonwealth income tax purposes to be considered an intangible asset acquired by purchase by the Lessee consisting of an exclusive lease and a contrato de alianza granting the right to administer and operate the LMM Airport Facility during the Term pursuant to the Act and amortizable under the provisions of Section 1033.07(a)(1)(D) of the New P.R. Revenue Code.  It is the intention that the Lessee shall be subject to the provisions of Article 12 of the Act and the Closing Agreement.

 

ARTICLE 3
 TERMS OF THE LEASE

 

Section 3.1                                             Right to Operate; Present Condition.

 

(a)                                 Right to Operate.  The Authority agrees that, so long as no Lessee Default has occurred and is continuing hereunder, the Lessee shall, at all times during the Term, be entitled to and shall have the exclusive right to conduct LMM Airport Facility Operations and the rights and privileges granted to the Lessee hereunder, subject to the provisions contained in this Agreement.  The Authority and the Lessee acknowledge that the Lessee’s rights to use and operate the LMM Airport Facility as a public airport are subject to the right of the Authority, in accordance with the terms of this Agreement, to monitor compliance with this Agreement to ensure that the LMM Airport Facility is used and operated as required by this Agreement and Law.  The Authority shall, at its sole cost and expense and at all times during the Term, defend its title to the LMM Airport Facility and the rights granted to the Lessee hereunder, or any portion thereof, against any Person claiming any interest adverse to the Authority or the Lessee in the LMM Airport Facility, or any portion thereof, except where such adverse interest arises as a result of the act, omission, negligence, willful misconduct or violation of Law of the Lessee, its Affiliates or their respective Representatives.

 

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(b)                                 Present Condition.  Subject to Section 2.5(i) and Section 3.2(c) and except as specifically set forth in Section 9.1, the Lessee understands, agrees and acknowledges that the Lessee (i) by the execution of this Agreement, agrees to accept the LMM Airport Facility “AS IS” at the Time of Closing (subject to the “Excluded Liabilities” and subject to the Authority’s obligation for Restoration under Section 2.5(i)) and (ii) has inspected the LMM Airport Facility and is aware of its condition and acknowledges that the Authority neither has made nor is making any representation or warranty, express or implied, regarding the condition of the LMM Airport Facility (or any part thereof) or its suitability for the Lessee’s proposed use.

 

Section 3.2                                             LMM Airport Facility Operations.

 

(a)                                 Use.  The Lessee and the Authority agree that a primary purpose and essential consideration of this Agreement is for the Authority to operate a public use airport in a safe and secure manner.  Except as otherwise specifically provided herein, the Lessee shall, at all times during the Term, (i) be responsible for all aspects of the LMM Airport Facility Operations and (ii) cause the LMM Airport Facility Operations to be performed in accordance with the provisions of this Agreement (including the Operating Standards), the Use Agreement and applicable Law (including maintaining compliance with 14 C.F.R. Part 139, 49 C.F.R. Parts 1520, 1540 and 1542 and 49 U.S.C. § 47134).  The LMM Airport Facility Operations will not be interrupted in the event that the Lessee becomes insolvent or seeks or becomes subject to any federal, Commonwealth or State bankruptcy, reorganization, insolvency, liquidation, or dissolution proceeding or any petition or similar law seeking the dissolution or reorganization of the Lessee or the appointment of a receiver, trustee, custodian, or liquidator for the Lessee or a substantial part of the Lessee’s property, assets, or business.

 

(b)                                 Costs and Expenses.  Except as otherwise specifically provided herein, the Lessee shall, at all times during the Term, pay or cause to be paid all costs and expenses relating to the LMM Airport Facility Operations as and when the same are due and payable; provided, however, that the Lessee shall not be responsible, and shall not be required to reimburse the Authority, for costs and expenses incurred by the Authority in connection with LMM Airport Facility Operations following the Closing, except as otherwise specifically provided herein.

 

(c)                                  Assumed Liabilities.  The Lessee agrees to assume and discharge or perform when due, all debts, liabilities and obligations whatsoever relating to the LMM Airport Facility or the LMM Airport Facility Operations to the extent arising out of or relating to, or based on actions occurring during the Term, but only to the extent such debts, liabilities or obligations do not arise from or relate to any breach by the Authority of any covenant, representation or warranty set forth in this Agreement (collectively, the “Assumed Liabilities”); provided, however, that the Assumed Liabilities shall not include, and the Authority shall perform or cause to be performed and discharge or cause to be discharged as and when due, any debts, liabilities and obligations, whether such debts, liabilities or obligations are initially charged to the Authority, the Lessee or any other Person, (i) with respect to the Authority’s obligations under this Agreement; (ii) arising out of the satisfaction of the conditions precedent set forth in Section 2.4(a) of this Agreement; (iii) arising out of LMM Airport Facility Operations prior to the Time of Closing (including any debts, liabilities or obligations in existence at the Time of Closing that are required to be paid or performed upon the consummation of the transactions contemplated hereby to occur at the Time of Closing); (iv) with respect to the employment of any Authority Employee hired by the Lessee

 

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if such debts, liabilities and obligations arise under employment or labor Law or under any contracts or arrangements with or regarding such Employee and relate to, or were otherwise incurred or accrued during, the time period prior to or at the Time of Closing (including obligations in respect of benefits that had accrued but had not vested in favor of such Employee prior to the Time of Closing), including any unfunded compensation or other benefits or any pension or retirement fund liabilities at the Time of Closing; (v) with respect to any claim made by any Authority Employee not hired by the Lessee arising under employment or labor Law (except if such claim arises from the act or omission of the Lessee); (vi) with respect to any LMM Airport Facility Contracts that are not assigned to the Lessee; (vii) under any Environmental Law arising out of or relating to (A) any Additional Lands required by any Required Modifications, (B) any Additional Lands required by any Agreed Modifications in accordance with the terms thereof or (C) the ownership, operation or condition of the LMM Airport Facility (including the LMM Airport Facility Assets) at any time prior to the Time of Closing, including any noncompliance with Environmental Law that existed at or prior to the Time of Closing and continued after the Time of Closing, or (D) any Hazardous Substance or other contaminant that was present or Released on or migrated or escaped from or was Released from the LMM Airport Facility (including the LMM Airport Facility Assets) or otherwise existed at any time prior to the Time of Closing (a “Pre-Existing Hazardous Substance”), to the extent the Release or condition is not exacerbated as a result of the Lessee’s negligent, unlawful or willful acts or omissions, including and subject to the preceding conditions:  (1) the full extent of any Release that began prior to the Time of Closing and continued after the Time of Closing, (2) any Release that occurs after the Time of Closing as a result of any Capital Project undertaken by the Lessee and (3) the proper disposal of any such Pre-Existing Hazardous Substances required as a result of any Capital Project undertaken by the Lessee, and including any environmental conditions existing prior to the Time of Closing, whether or not the manifestation of which occurs at or following the Time of Closing, in each case whether or not known by the Authority or the Lessee at the Time of Closing (including the conditions identified as recognized environmental conditions in the Phase I ESA Report of URS Caribe, LLP dated April 2012); (viii) arising out of the PRANG Property until such time, if ever, as the PRANG Property is included in the LMM Airport Facility in accordance with Section 3.21; (ix) arising out of the Hotel Property until such time, if ever, as the payment in respect of the Hotel Property is made by the Lessee as described in Section 3.19; (x) arising out of the Cargo Facility until such time, if ever, as the payment in respect of the Cargo Facility is made by the Lessee as described in Section 3.20; and (xi) arising prior to the Time of Closing out of (A) work in connection with any Airline Capital Improvement Project and (B) any contract assigned to the Lessee pursuant to Section 4.5 (collectively, the “Excluded Liabilities”).  Notwithstanding the foregoing, the Assumed Liabilities shall include any liabilities and obligations arising due to the Lessee’s failure to comply with established Engineering or Institutional Controls for such environmental conditions on the LMM Airport Facility; provided that, prior to having any obligation to comply therewith, the Lessee shall have (i) received written notice of such Engineering or Institutional Controls from the Authority and (ii) a reasonable period of time in which to implement such controls (which period shall not exceed 60 days unless such implementation reasonably requires a longer period, and the Lessee has demonstrated to the satisfaction of the Authority, acting reasonably, that it is proceeding with all due diligence during such period to implement such compliance); and provided further that the Lessee may submit any dispute with respect to such obligation to dispute resolution in accordance with Article 19.

 

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(d)                                 Operating Agreements.  The Lessee may not enter into any Operating Agreement that extends beyond the Term unless (i) such agreement is assignable to the Authority and subject to a right by the Authority to terminate such agreement without penalty within three Business Days’ notice or (ii) the Authority consents to such Operating Agreement.

 

(e)                                  Business Plan.  The Lessee shall endeavor in good faith to implement its initial business plan, a copy of which is attached hereto as Schedule 14, subject to alterations thereto in light of changing conditions and the ongoing business judgment of the Lessee.  To the extent that the implementation of any part of the Lessee’s initial business plan (including as modified to reflect the alterations contemplated above) constitutes a Modification, the Authority and the Lessee shall be considered to have agreed to and approved such Modification, as if in accordance with Section 5.1, without further action (it being understood, however, that (x) the implementation of such Modification shall be subject to approval by the Airlines as required under and in accordance with Section 8.8 of the Use Agreement and (y) to the extent that any alterations to the initial business plan constitute Modifications, any such Modifications that are not consistent with the types of Modifications originally contemplated in the initial business plan and that are material shall be subject to Section 5.1.

 

Section 3.3                                             Lessee Responsibility.

 

(a)                                 The Lessee shall, at all times during the Term, (i) remain solely responsible for compliance with the Part 139 Airport Operating Certificate and (ii) be the sole holder of the Part 139 Airport Certification Manual.

 

(b)                                 The Lessee shall, at all times during the Term, be responsible for the LMM Airport Facility Operations in a manner consistent with the Operating Standards, the Use Agreement and all applicable requirements of Law, including the Part 139 Airport Operating Certificate, Part 139 Airport Certification Manual and the TSA-approved Airport Security Program.  The Lessee may, consistent with the operations plan under the Operating Standards and the provisions of the Part 139 Airport Operating Certificate and the TSA-approved Airport Security Program, enter into contracts or agreements with other parties (which may include Affiliates of the Lessee) to provide services in connection with the LMM Airport Facility Operations.  No contract or agreement of any kind between the Lessee and any other Person shall relieve the Lessee of its responsibility and liability for the performance of all of its obligations under this Agreement, the Part 139 Airport Operating Certificate and the TSA-approved Airport Security Program.  Further, no agreement or contract of any kind between the Lessee and any other Person shall affect the right of the Authority to exercise any remedies provided hereunder, including any right of access to the LMM Airport Facility in connection therewith, for the failure by the Lessee to carry out any of its obligations under this Agreement.

 

Section 3.4                                             FAA Airport Privatization Pilot Program.

 

(a)                                 FAA Airport Privatization Pilot Program.  The Lessee shall, at all times during the Term and (except as otherwise set forth herein or in the Use Agreement) at its sole cost and expense, observe and comply with, in all material respects, and cause the LMM Airport Facility Operations to comply with, in all material respects, all applicable Laws now existing or later in effect that are applicable to it or the LMM Airport Facility Operations with respect to the

 

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FAA’s Airport Privatization Pilot Program pursuant to 49 U.S.C. § 47134, including by ensuring that:

 

(i)                                     the LMM Airport Facility will continue to be available for public use on reasonable terms and conditions and without unjust discrimination;

 

(ii)                                  the LMM Airport Facility Operations will not be interrupted in the event that the Lessee becomes insolvent or seeks or becomes subject to any federal, Commonwealth or State bankruptcy, reorganization, insolvency, liquidation, or dissolution proceeding or any petition or similar Law seeking the dissolution or reorganization of the Lessee or the appointment of a receiver, trustee, custodian, or liquidator for the Lessee or a substantial part of the Lessee’s property, assets, or business;

 

(iii)                               the Lessee will maintain, improve, and modernize the LMM Airport Facility through capital investments and will submit to the Secretary a plan for carrying out such maintenance, improvements, and modernization;

 

(iv)                              every fee of the LMM Airport Facility imposed on an air carrier on the day before the Closing will not increase faster than the rate of inflation unless a higher amount is approved by at least 65% of the Airlines serving the LMM Airport Facility and by Airlines whose aircraft landing at the LMM Airport Facility during the preceding calendar year had a total landed weight during the preceding calendar year of at least 65% of the total landed weight of all aircraft landing at the LMM Airport Facility during such year;

 

(v)                                 the percentage increase in fees imposed on general aviation aircraft at the LMM Airport Facility will not exceed the percentage increase in fees imposed on air carriers at the airport;

 

(vi)                              safety and security at the LMM Airport Facility will be maintained at the highest possible levels;

 

(vii)                           the adverse effects of noise from LMM Airport Facility Operations will be mitigated to the same extent as at a public airport;

 

(viii)                        any adverse effects on the Environment from LMM Airport Facility Operations will be mitigated to the same extent as at a public airport; and

 

(ix)                              any collective bargaining agreement that covers employees of the LMM Airport Facility and is in effect on the Date of this Agreement will not be abrogated by this Agreement.

 

The Lessee shall promptly notify the FAA, the Authority and the Airlines after receiving notice from a Governmental Authority that the Lessee may have violated any of the above. The Lessee shall promptly notify TSA after receiving notice from a Governmental Authority that the Lessee may have violated any Law relating to safety and security at the LMM Airport Facility. This Section 3.4(a) shall not be construed to allow the imposition of new or increased fees in excess of those provided under the Use Agreement.

 

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(b)                                 Grant Agreements.  The Lessee hereby confirms its acceptance of all Grant Agreements, including the assurances contained therein.  The Lessee and the Authority agree that the Grant Agreements and the assurances required for the granting by the FAA of exemptions under 49 U.S.C. § 47134 create third-party beneficiary rights of the Secretary and the FAA and the Secretary of Homeland Security and TSA in this Agreement with respect to the LMM Airport Facility enforceable by the Secretary and the FAA in administrative or judicial legal proceedings.  Notwithstanding any other provision of this Agreement, and in accordance with the statutory objectives of 49 U.S.C. § 47134 and the regulations promulgated thereunder, the Secretary and the FAA are hereby granted all right, title and interest in, to and under this Agreement as third-party beneficiaries of the Lessee’s obligations with respect to those items set forth in Section 3.4(a) and the Grant Agreements in order to ensure that the statutory objectives of 49 U.S.C. § 47134 are satisfied.  The Authority agrees that it will carry out the terms of all Grant Agreements relating to property or activities that are not part of the LMM Airport Facility.

 

(c)                                  Authorizations.  The Lessee shall obtain, comply with, promptly renew and maintain in good standing all Authorizations necessary to perform its obligations hereunder; provided, however, that if (i) the Lessee is, at any time during the Term, required to obtain any Authorization from a Governmental Authority that the Authority was not required to obtain in connection with its operation of the LMM Airport Facility prior to the Time of Closing or (ii) any such Authorization can be obtained only by the Authority or some other Governmental Authority, then the Authority shall (x) use its Reasonable Efforts to assist the Lessee in obtaining such Authorization and (y) subject to Law, promptly deliver to the Lessee a copy of any notice, summons, letter or other communication in respect of any Authorization obtained, renewed or maintained in the Authority’s name following the Authority’s receipt thereof.  Nothing in this Agreement, including Section 2.1, shall be deemed to waive or modify any Authorization required to be obtained by the Lessee or any other Person in connection with the LMM Airport Facility, the LMM Airport Facility Operations or any activities generating revenues at the LMM Airport Facility.

 

(d)                                 Prohibition Against Exclusive Rights.  Nothing in this Agreement shall be construed to authorize the Lessee to grant an Airline the exclusive right to conduct an Air Transportation Business, and the Lessee shall have the right to grant to airlines other than the Signatory Airlines the privileges and right of conducting any or all activities of an aeronautical nature.

 

(e)                                  Subordination.  The Parties covenant and agree that this Agreement and any Leasehold Mortgage shall be subordinated to the provisions of any existing or future agreement or assurances between the Lessee and the United States federal government (including any such agreement or assurance between the Authority and the United States federal government that are assumed by the Lessee), the execution of which has been or will be required as a condition precedent to the granting of federal funds or the approval to impose or use PFCs for the development of the LMM Airport Facility.  The Authority further agrees that it shall not cause the Lessee to violate any assurances made by the Lessee to the federal government in connection with the granting of such federal funds or approvals.

 

(f)                                   Qualifications.  The Lessee shall, at all times during the Term, maintain in full force and effect its existence and all qualifications necessary to carry on its business pertaining

 

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to the LMM Airport Facility (including the Part 139 Airport Operating Certificate and TSA-approved Airport Security Program), the LMM Airport Facility Operations or any activities generating revenues at the LMM Airport Facility, including all rights, franchises, licenses, privileges and qualifications required in connection with the LMM Airport Facility Operations.  Nothing contained in the foregoing shall be deemed to prohibit or limit the Lessee from changing its organizational form or status (for example, a change from a limited liability company to a corporation or a limited partnership), subject to the terms of Section 17.1(a).

 

Section 3.5                                             No Encumbrances.

 

(a)                                 By the Lessee.  The Lessee shall not do any act or thing that will create any Encumbrance (other than a Permitted Lessee Encumbrance) against the LMM Airport Facility and shall promptly remove any such Encumbrance (other than a Permitted Lessee Encumbrance) against the LMM Airport Facility unless any such Encumbrance comes into existence as a result of an act or omission by the Authority, any other Governmental Authority or any Person claiming through the Authority or any other Governmental Authority, which in turn was not caused by an act or omission of the Lessee.  The Lessee shall not be deemed to be in default hereunder if the Lessee continuously, diligently and in good faith contests any such Encumbrance, or the validity thereof (or causes such contest), by appropriate legal proceedings that shall operate to prevent the foreclosure of any such Encumbrance; provided that the Lessee (i) has given advance notification to the Authority that it is the intent of the Lessee to contest the validity or collection thereof or cause such contest and (ii) has given a reasonably satisfactory indemnity to the Authority or has deposited with the Authority a Letter of Credit, surety bond consistent (as to form and credit quality of issuer) with the requirements set forth herein for Letters of Credit, cash or Eligible Investment reasonably satisfactory to the Authority in an amount equal to the amount of the claim or Encumbrance, plus such interest and penalties, court costs or other charges as the Authority may reasonably estimate to be payable by the Lessee at the conclusion of such contest or as is required to provide insurance over any potential Encumbrance; provided, however, that in the event such Letter of Credit, surety bond, cash or Eligible Investment shall be so deposited, the same shall be held until such claim or other Encumbrance shall have been released and discharged and shall thereupon be returned to the Lessee, less any amounts expended by the Authority, if any, to procure such release or discharge, or any loss, cost, damage, reasonable attorneys’ fees or expense incurred by the Authority, if any, by virtue of the contest of such Encumbrance.

 

(b)                                 By the Authority.  Neither the Authority nor any Governmental Authority of or in the Commonwealth shall do any act or thing that will create or permit to exist any Encumbrance (other than a Permitted Authority Encumbrance) against the LMM Airport Facility and shall promptly remove any Encumbrance (other than a Permitted Authority Encumbrance) against the LMM Airport Facility that came into existence as a result of an act of or omission by the Authority or a Person claiming through the Authority.  The Authority shall not be deemed to be in default hereunder if the Authority continuously, diligently and in good faith contests any such Encumbrance, or the validity thereof (or causes such contest), by appropriate legal proceedings that shall operate to prevent the foreclosure of any such Encumbrance; provided that the Authority (i) has given advance notification to the Lessee that it is the intent of the Authority to contest the validity or collection thereof or cause such contest and (ii) has given a reasonably satisfactory indemnity to the Lessee or has deposited with the Lessee a Letter of Credit, surety bond consistent (as to form and credit quality of issuer) with the requirements set forth herein for

 

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Letters of Credit, cash or Eligible Investment reasonably satisfactory to the Lessee in an amount equal to the amount of the claim or Encumbrance, plus such interest and penalties, court costs or other charges as the Lessee may reasonably estimate to be payable by the Authority at the conclusion of such contest or as is required to provide insurance over any potential Encumbrance; provided, however, that in the event such Letter of Credit, surety bond, cash or Eligible Investment shall be so deposited, the same shall be held until such claim or other Encumbrance shall have been released and discharged and shall thereupon be returned to the Authority, less any amounts expended by the Lessee, if any, to procure such release or discharge, or any loss, cost, damage, reasonable attorneys’ fees or expense incurred by the Lessee, if any, by virtue of the contest of such Encumbrance.

 

(c)                                  Removal.  Each Party, at the reasonable request of the other Party, shall use its Reasonable Efforts to assist such other Party in attempting to remove any Encumbrance that has come into existence as a result of an act of or omission by such other Party (excluding Encumbrances permitted by Section 3.5(a) or (b)); provided that nothing herein shall obligate the Authority to waive, modify or otherwise limit or affect the enforcement by the Authority of any applicable Law with respect to the LMM Airport Facility or any activities generating revenues at the LMM Airport Facility and provided further that the costs and expenses incurred by any Party in connection with such efforts shall be borne by the Party whose act or omission has given rise to such Encumbrance.

 

Section 3.6                                             Single Purpose Covenants.  The Lessee shall, at all times during the Term, (a) be formed and organized solely for the purpose of owning the Lessee Interest and using, possessing, leasing, operating and otherwise dealing with the LMM Airport Facility (and carrying out any activities permitted pursuant to this Agreement (and any activities reasonably incidental thereto, including the financing thereof and of the Transaction)), (b) not engage in any business unrelated to clause (a) above, (c) not have any assets other than those related to its activities in accordance with clauses (a) and (b) above, (d) maintain its own separate books and records and its own accounts, in each case that are separate and apart from the books and records and accounts of any other Person; provided, however, that the Lessee’s assets may be included in a consolidated financial statement of a direct or indirect shareholder or other owner of a beneficial interest of the Lessee if inclusion on such consolidated financial statement is required to comply with the requirement of generally accepted accounting principles of the relevant jurisdiction, but only if (i) such consolidated financial statement shall be appropriately footnoted to the effect that the Lessee’s assets are owned by the Lessee and that they are being included on the consolidated financial statement of such shareholder or other owner of a beneficial interest only to comply with the requirements of generally accepted accounting principles of the relevant jurisdiction and (ii) such assets shall be listed on the Lessee’s own separate balance sheet, (e) hold itself out as being a Person, separate and apart from any other Person, (f) not commingle its funds or assets with those of any other Person, (g) conduct its own business in its own name independently and through its own authorized officers and agents, (h) except as noted in clause (d) above, maintain separate financial statements and file its own Tax returns (to the extent required by applicable Law), (i) pay its own debts and liabilities when they become due out of its own funds, (j) observe all corporate, limited partnership or limited liability company, as applicable, formalities and do all things necessary to preserve its existence, (k) have sufficient officers and personnel to run its business operations and to supervise its Contractors pursuant to one or more contractual arrangements, (l) pay the salaries of its own employees, if any, and maintain a sufficient number of employees in

 

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light of its contemplated business operations, (m) not guarantee or otherwise obligate itself with respect to the debts or obligations of any other Person, or hold out its credit as being available to satisfy the debts or obligations of any other Person, (n) not acquire obligations of or securities issued by its shareholders, partners or members, as applicable, (o) use separate stationery, invoices and checks bearing its own name, (p) except as expressly permitted hereby or by any Leasehold Mortgage or in connection with the ordinary course of business of the LMM Airport Facility, not pledge its assets for the benefit of any other Person or make any loans or advances to any other Person, (q) correct any known misunderstanding regarding its separate identity, (r) maintain adequate capital in light of its contemplated business operations, (s) observe all customary organizational and operational formalities, including taking and maintaining of complete minutes of all member, manager, shareholder, board or similar meetings, (t)  maintain an arm’s length relationship with its Affiliates and enter into transactions with Affiliates only on a commercially reasonable basis and pursuant to enforceable agreements and (u) have organizational documents which do not conflict with the requirements set forth in this Section 3.6.

 

Section 3.7                                             Rights of the Authority to Access and Perform Work at the LMM Airport Facility.

 

(a)                                 Reservation of Rights. The Authority (for itself and any of its Representatives and any other Governmental Authority of competent jurisdiction, as well as grantees, tenants, mortgagees, licensees and others claiming or acting by, through or under the Authority (each, an “Authority Related Entity”)) reserves the right and shall, at all times during the Term, have the right to enter the LMM Airport Facility and each and every part thereof in response to any event, circumstance or purpose described in this Section 3.7(a), subject to applicable Law and the Airport Security Program:

 

(i)                                     to inspect the LMM Airport Facility or determine whether or not the Lessee is in compliance with its obligations under this Agreement pursuant to Section 8.3;

 

(ii)                                  if a Lessee Default then exists, to make any necessary repairs to the LMM Airport Facility and perform any work therein and take any reasonable actions in connection therewith pursuant to Section 16.1(b)(v);

 

(iii)                               in the event of an actual or reported emergency, danger, threat, circumstance or event that is reasonably believed by the Authority or its designee (including relevant police, fire, emergency services, armed forces and any other security or emergency personnel in accordance with Section 3.17) to have caused (or to present the imminent potential to cause) injury to individuals, damage to property, or harm to the Environment or to public safety, to take, at such times as the Authority determines necessary in its discretion (or as directed by the FAA, TSA or other affected federal agency) and with notice to the Lessee if practicable under the circumstances, such actions as the Authority or such designee reasonably determines necessary (or as directed by the FAA, TSA or other affected federal agency) to respond to or to rectify such emergency, danger, threat, circumstance or event;

 

(iv)                              in the event of any circumstance or event that is reasonably believed by the Authority to have caused a material impairment to the continuous operation of the LMM Airport Facility as a public airport (and the Authority shall provide written notice to the Lessee of

 

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such event or circumstance as soon as is reasonably practicable after first becoming aware of such event or circumstance), and if the Authority in its discretion (or as directed by the FAA, TSA or other affected federal agency) reasonably determines that the Lessee is not then taking all necessary steps to respond to or to rectify such circumstance or event, to take, at such times as the Authority determines necessary in its discretion (or as directed by the FAA, TSA or other affected federal agency) and with notice to the Lessee if practicable under the circumstances, such actions as the Authority determines may be reasonably necessary (or as directed by the FAA, TSA or other affected federal agency) to respond to or to rectify such circumstance or event or to restore the operation of the LMM Airport Facility;

 

(v)                                 at its own cost and expense, to design, construct, operate, service, manage, maintain, repair, rehabilitate or replace any Affected Property;

 

(vi)                              at its own cost and expense, to use the LMM Airport Facility for all purposes not inconsistent with the rights granted to the Lessee in this Agreement;

 

(vii)                           at its own cost and expense, to (A) install, design, manage, maintain, inspect, repair and rehabilitate any existing or future utilities or similar services or safety measures related to such utilities or services (whether provided by the Authority or third parties) in, on, under, across, over or through the LMM Airport Facility (including water and sewer lines, power transmission lines, fiber optic cable, surveillance equipment and other communications and other equipment) (provided that the Authority shall not be required to compensate the Lessee with respect to the use of the LMM Airport Facility for such utilities, services or measurers unless they materially impair the Lessee’s use of the LMM Airport Facility for the LMM Airport Facility Operations and such impairment results in Losses or reduced revenues), (B) grant easements and rights on, over, under or within the LMM Airport Facility for the benefit of suppliers or owners of any such utilities, services or measures and (C) use the LMM Airport Facility in connection with any such installation, design, management, maintenance, repair or rehabilitation (provided that notwithstanding the foregoing clauses (A), (B) and (C), the Lessee shall have the right, but not the obligation, at all times during the Term, and subject to applicable Law, to install, design, manage, maintain, repair and rehabilitate utilities or other services for its own account (and, except as contemplated by the Use Agreement, not for lease, resale or service to third parties) to the extent that the said utilities or services are necessary or desirable for the LMM Airport Facility Operations);

 

(viii)                        at its own cost and expense, for the purposes described in Section 14 of Act No. 83 of the Legislative Assembly of Puerto Rico, enacted on May 2, 1941, as amended; and

 

(ix)                              at its own cost and expense (except as otherwise expressly set out in this Agreement) and solely in accordance with the terms hereof, to do any other act or thing that the Authority or any Authority Related Entity may be obligated to do or have a right to do under this Agreement and/or the Use Agreement.

 

In connection with any entry made pursuant to (x) Section 3.7(a)(i) and (ii), such right to be exercised at all reasonable times upon reasonable prior notice to the Lessee; (y) Section 3.7(a)(iii) and (iv), such right to be exercised at all reasonable time with notice to be provided as set forth in

 

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such subclauses (iii) and (iv), respectively; and (z) Section 3.7(a)(v) through (vii) and Section 3.7(a)(ix), such right to be exercised at all reasonable times with the Authority to request, with reasonable prior written notice, the Lessee’s consent to the exercise of such right.

 

In connection with any entry made pursuant to this Section 3.7(a), (aa) such right to enter the LMM Airport Facility shall not include any of the private business offices of the Lessee that may be located at the LMM Airport Facility; (bb) notwithstanding Sections 3.7(a)(v) through (ix), any cost or expense related to any exercise by the Authority of its rights under Section 3.7(a)(ii) shall be borne by the Parties according to Section 16.1(b)(v); (cc) the Authority (A) shall conduct all activities in connection therewith consistent with the TSA-approved Airport Security Program, (B) shall consult with TSA, as appropriate, if such entry is reasonably expected to adversely impact transportation security at the LMM Airport Facility (provided that if the Authority deems in its reasonable discretion that the emergency nature of the situation requiring such entry precludes it from consulting with TSA in advance, it will notify TSA as soon as reasonably practicable following such entry), (C) shall, and shall use its Reasonable Efforts to cause any Authority Related Entity effecting such entry or action to, use Reasonable Efforts to minimize interference with the LMM Airport Facility Operations (including security) and damage to the LMM Airport Facility in connection with any entry on the LMM Airport Facility and (D) pay to the Lessee the Leasehold Compensation, upon demand by the Lessee, resulting from any entry or action on the LMM Airport Facility that qualifies as a Compensation Event pursuant to the definition thereof or as a result of any liability or obligation of or to the Lessee under any Environmental Law directly caused by an entry or action with respect to the LMM Airport Facility or LMM Airport Facility Operations pursuant to this Section 3.7(a).

 

(b)                                 Access Rights.  The Authority, its Representatives and any Governmental Authority of or in the Commonwealth, during the progress of any work referred to in this Section 3.7, at no additional cost to the Authority, its Representatives or any Governmental Authority of or in the Commonwealth, shall have all necessary or appropriate access rights and may keep and store at the LMM Airport Facility all necessary or appropriate materials, tools, supplies, equipment, shed, mobile trailers and other vehicles, in a reasonably neat and orderly fashion, in material compliance with all Laws (including Environmental Laws) and the Operating Standards; provided that such access and storage shall not unreasonably interfere with the Lessee’s conduct of the LMM Airport Facility Operations.  The Lessee shall not have any liability for theft of or damage to such material and other items or with respect to any acts or omissions of the Authority, its Representatives or any Governmental Authority of or in the Commonwealth or any Person acting on behalf of any of them.  To the extent that the Authority or any Governmental Authority of or in the Commonwealth of any other Person on the Authority’s behalf undertakes works or repairs under this Section 3.7 or any other provision of this Agreement, such work or repairs shall be commenced and diligently completed in a good and workmanlike manner, in accordance with any applicable Operating Standards and in such a manner as not to materially interfere with the Lessee’s conduct of business in or use of such space to the extent reasonably possible without incurring any additional cost.

 

(c)                                  Effect of Reservation.  Any exercise or reservation of a right by the Authority and any of its Representatives to enter the LMM Airport Facility and to make or perform any repairs, alterations, Restoration or other work in, to or about the LMM Airport Facility that is the Lessee’s obligation pursuant to this Agreement, shall not be deemed to (i) impose any

 

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obligation on the Authority to do so, (ii) render the Authority liable to the Lessee or any other Person for the failure to do so or (iii) relieve the Lessee from any obligation to indemnify the Authority as otherwise provided in this Agreement.  Nothing in this Agreement shall impose any duty upon the part of the Authority to do any work required to be performed by the Lessee hereunder and performance of any such work by the Authority and any of its Representatives shall not constitute a waiver of the Lessee’s default in failing to perform the same.

 

Section 3.8                                             LMM Airport Facility Cash Reserves.  In accordance with and subject to any Leasehold Mortgage, the Lessee shall (subject to the penultimate sentence of this Section 3.8) at all times during the Term maintain reserves in an amount equal to at least (on any date of determination) (a) the total amount of debt payable (other than any principal amount of any debt payable within 12 months of the final maturity date of such debt) with respect to the LMM Airport Facility in the then-current Term Year (the “Debt Service Reserve Requirement”) and (b) 25% of the projected operating expenses for the LMM Airport Facility (excluding, for the avoidance of doubt, Annual Authority Revenue Share payments) for the then-current Term Year, as determined as of the commencement of such current Term Year (the “Opex Reserve Requirement”); provided that, if, at any time during the Term Year, changes to the Lessee’s projected operating expenses result in the Lessee maintaining an Opex Reserve Requirement that is 10% more than the amount of the Opex Reserve Requirement that would be required taking into account such changes, then the Lessee may adjust (the “Interim Adjustment”) the amount in reserve to conform to the Lessee’s then-current forecast; provided, further, that in no event will the Lessee be entitled to make more than two Interim Adjustments during any Term Year.  Such cash reserves may not be satisfied with accounts consisting of PFC collection.  The Debt Service Reserve Requirement and the Opex Reserve Requirement may be satisfied by cash (or cash equivalents or Eligible Investments) held by the Lessee for such purpose or by the undrawn available amount of any Qualifying Account Instrument.  The Lessee shall be entitled to use funds on deposit or available in respect of the cash reserves contemplated in this Section 3.8 for the purpose of funding any shortfalls in operating expenses or debt service, as applicable. Following the use of any such funds in the cash reserve for operating expenses, the Lessee shall be obligated to replenish the amount so utilized by the later of (i) the date on which it is required to deliver the compliance certificate noted in the immediately succeeding sentence and (ii) 60 days following any such utilization; and following the use of any such funds in the cash reserve for debt service, the Lessee shall be obligated to replenish the amount so utilized by the date that is six months following any such utilization.  To the extent that the Leasehold Mortgagee requires account reserves substantially similar to the Debt Service Reserve Requirement and Opex Reserve Requirement, such that the Debt Service Reserve Requirement and Opex Reserve Requirement are satisfied in all material respects by compliance with such Leasehold Mortgagee account reserve requirements, the Lessee shall be in compliance with the requirements of this Section 3.8 for so long as the Lessee continues to satisfy such Leasehold Mortgagee account reserve requirements.  The Lessee shall deliver to the Authority on the first Business Day of each quarter of each Term Year (or at such times as may be required by the Leasehold Mortgagee; provided that such Leasehold Mortgagee’s requirement is a quarterly requirement), and as otherwise requested by the Authority from time to time, an Officer’s Certificate in which the Lessee represents and warrants that it is in compliance with the requirements contemplated in this Section 3.8.

 

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Section 3.9                                             Coordination.

 

(a)                                 Utility Coordination.  Subject to Section 3.7(a)(vii) and Section 3.9(c), the Lessee shall be responsible for coordinating or ensuring the coordination of all LMM Airport Facility Operations with utilities and Persons having service lines, pipelines, transmission lines and other equipment, cables, systems and other apparatus in, on, under, over or adjacent to the LMM Airport Facility.  The Lessee shall cause provision to be made for the removal or temporary or permanent relocation and restoration of utilities and other services and any lines, equipment, cables, systems and other apparatus that intersect, interfere with, interface with or otherwise affect the LMM Airport Facility Operations and shall arrange for temporary rights of entry and access to utilities and other services to be made available that are necessary in connection with the LMM Airport Facility Operations or as may exist under this Agreement or applicable Law, in each case at the sole cost and expense of such utilities or other Persons or the Lessee.  The Authority shall cooperate with the Lessee with respect to its obligations under this Section 3.9.

 

(b)                                 Affected Property Coordination.  The Lessee shall be responsible for coordinating or ensuring the coordination of all LMM Airport Facility Operations with Affected Property, but shall have no responsibility for such Affected Property.  The Authority shall cooperate with the Lessee with respect to its obligations under this Section 3.9(b).

 

(c)                                  No Interference.  The Parties understand and agree that (i) nothing in the foregoing Sections 3.9(a) and (b) is in any way intended to interfere with LMM Airport Facility Operations and (ii) the Authority shall cooperate with the Lessee in minimizing any effect that the obligations of the Lessee under this Section 3.9 may have on the LMM Airport Facility Operations and the revenues of the LMM Airport Facility.

 

Section 3.10                                      No Entry on Authority Property.  Except in the case of an emergency (and then only to the extent necessary to avoid injury or death to individuals or damage to property) and except for limited access necessary for the Lessee’s performance of its obligations hereunder or its compliance with applicable Laws that does not interfere with the Authority’s use or operation of such other properties in any material respect or otherwise except to the extent available for public use, the Lessee shall not enter upon any property of the Authority adjacent to, above, under or within the boundaries of the LMM Airport Facility, in connection with the LMM Airport Facility Operations without the prior Approval of the Authority.

 

Section 3.11                                      Payment of Taxes.

 

(a)                                 Payment of Taxes.  Except as otherwise provided herein, the Lessee shall pay when due all Taxes that are or become payable by the Lessee or that are required to be collected by the Lessee from other Persons in respect of periods during the Term in respect of the operations at, occupancy of or conduct of business, in each case of (or by) the Lessee, in or from the LMM Airport Facility and fixtures or personal property included in the LMM Airport Facility, other than as set forth below.  The Authority reserves the right, without being obligated to do so, to pay the amount of any such Taxes not timely paid by the Lessee, and the amount so paid by the Authority shall be due and payable by the Lessee promptly upon demand by the Authority.  The Lessee shall have the right to contest in good faith the validity or amount of any Taxes which it is responsible to pay under this Section 3.11; provided that (i) the Lessee has given prior notice to the Authority

 

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of each such contest, (ii) no contest by the Lessee may involve a reasonable possibility of forfeiture or sale of the LMM Airport Facility and (iii) upon the final determination of any contest by the Lessee, if the Lessee has not already done so, the Lessee shall pay the amount found to be due, if any, together with any costs, penalties and interest applicable thereto (if any).  If the Lessee is contesting in good faith the validity or amount of any Taxes in accordance with the immediately preceding sentence, the Authority shall not have the right to pay the amount of such Taxes until there is a final determination of such contest.

 

(b)                                 Exemption from Taxes.  The Authority covenants that during the Term the Lessee shall not be responsible for, and the Lessee and the LMM Airport Facility shall not be subject to, (i) any real property Tax imposed on or measured by the value of the LMM Airport Facility (including any LMM Airport Facility Assets deemed to be real property constituting part of the LMM Airport Facility) that is imposed by the Authority or any other Governmental Authority of the Commonwealth or that is imposed on the “owner” of the LMM Airport Facility (including relating to future expenditures for real property) or, (ii) sales and use tax imposed by the Commonwealth on the Leasehold Fee or any passenger charges (it being recognized that such a tax is not permitted by federal Law as of the Date of this Agreement), (iii) any personal property tax on personal property owned by the Authority and used by the Lessee exclusively in the LMM Airport Facility or in the operations conducted therein that is imposed by the Authority or any Governmental Authority of the Commonwealth. The Authority shall provide Leasehold Compensation to the Lessee resulting from any breach of the covenant set forth in this Section 3.11(b).

 

Section 3.12                                      Utilities.  The Lessee shall pay, or cause to be paid, when due all charges (including all applicable Taxes and fees) for the Utility Systems; provided that, in the event that the Lessee is unable to source utilities from third-party providers at a rate classification that is at least as favorable as that enjoyed by the Authority at other airports operated by the Authority in the Commonwealth, the Lessee shall have the right to receive Leasehold Compensation from the Authority in respect thereof.  Upon the reasonable request of the Authority, the Lessee shall forward to the Authority, within 30 days following the respective due dates, official receipts, photocopies thereof, or other evidence satisfactory to the Authority, acting reasonably, of the payment required to be made by the Lessee in accordance with this Section 3.12.  The Authority does not warrant that any utility services will be free from interruptions caused by war, insurrection, civil commotion, riots, acts of God, government action, terrorism, repairs, renewals, improvements, alterations, strikes, lockouts, picketing, whether legal or illegal, accidents, inability to obtain fuel or supplies or any other causes, and any such interruption of utility services shall never be deemed an Adverse Action or an eviction or disturbance of the Lessee’s use and possession of the LMM Airport Facility or any part thereof unless in such case caused by the Authority, or render the Authority liable to the Lessee for damages or, unless the same constitutes a Delay Event, relieve the Lessee from performance of the Lessee’s obligations under this Agreement.  The Authority shall maintain and preserve, for the length of the Term, all legal rights and easements in its possession related to utility services to the extent necessary for the Lessee to operate the LMM Airport Facility.

 

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Section 3.13                                      Negotiations with Governmental Authorities.

 

(a)                                 Prior to entering into any agreement with any Governmental Authority in connection with the LMM Airport Facility Operations (a “Government Agreement”), the Lessee shall submit such Government Agreement for Approval by the Authority, which Approval may be withheld, delayed or otherwise conditioned in the discretion of the Authority in the case of Government Agreements that extend or could extend beyond the Term (unless such agreement is assignable and subject to a right by the Authority to terminate such agreement without penalty upon three Business Days’ notice or less, effective upon such extension) or pursuant to which the Authority may incur any liability whatsoever.  Notwithstanding the foregoing, if the absence of such Government Agreement may cause the Lessee or LMM Airport Facility Operations to fail to be in compliance with applicable Law or the terms of this Agreement, the Lessee may enter into such Government Agreement upon notice to the Authority; provided that the Lessee indemnifies the Authority for any Losses relating thereto.  If the Lessee wishes the Authority to be a party to a Government Agreement, in the place and stead of, or in addition to, the Lessee, then the Lessee must provide notice of the proposed terms of such Government Agreement to the Authority for the Authority’s Approval, which Approval will be in the Authority’s discretion, and all costs and expenses incurred by the Authority in connection with or related to such Government Agreement shall be borne by the Lessee.

 

(b)                                 The Authority shall use its Reasonable Efforts to cooperate with the Lessee in any negotiations with any Governmental Authority regarding any Government Agreements.  All reasonable out-of-pocket costs and expenses incurred by the Authority in connection with or related to such negotiations shall be borne by the Lessee.

 

Section 3.14                                      Notices of Defaults and Claims.  The Lessee or the Authority (the “Notifying Party”) shall promptly give notice to the other Party (a) if the Notifying Party becomes aware that it is in default of its obligations under this Agreement (including the Operating Standards), the Use Agreement, any material Assigned LMM Airport Facility Contract or any other Operating Agreement and (b) of all material claims, proceedings, disputes (including labor disputes) or litigation pertaining to the LMM Airport Facility, the LMM Airport Facility Operations or the Notifying Party (whether or not such claim, proceeding or litigation is covered by insurance) of which the Notifying Party has actual knowledge.  The Notifying Party’s notice shall provide all reasonable information requested by the Authority or the Lessee, as applicable, from time to time concerning the status of such default, claims, proceedings or litigation.  A copy of the notices provided pursuant to this Section 3.14 shall be given to each of the Leasehold Mortgagee, FAA Associate Administrator of Airports and TSA.

 

Section 3.15                                      Assignment of Operating Agreements and Plans.  At the request of the Authority, the Lessee shall collaterally assign, to the extent reasonably practicable, to the Authority, in form and substance satisfactory to the Authority, acting reasonably, all of the right, title and interest of the Lessee in, to and under all or any of the Operating Agreements and all present and future specifications, plans, software (including source code) to the extent that such software is subject to a non-exclusive license permitting collateral assignment, drawings, information and documentation in relation to the LMM Airport Facility Operations except to the extent that any of the foregoing involve proprietary information (the “Plans”) as collateral security to the Authority for the observance and performance by the Lessee of its covenants and obligations

 

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under this Agreement, to the extent so requested by the Authority and subject to the rights of the Leasehold Mortgagee.  The Lessee covenants that it shall use all Reasonable Efforts to cause all of the right, title and interest of the Lessee in, to and under all Operating Agreements and the Plans entered into or created after the Time of Closing to be collaterally assignable to the Authority for the purposes of this Section 3.15.  The Authority acknowledges that the Operating Agreements and the Plans may also be assigned as security to a Leasehold Mortgagee and that each of the Authority and such Leasehold Mortgagee shall be entitled to use the Operating Agreements or the Plans in enforcing their respective security as hereinafter provided.  The Authority agrees that it shall exercise any amendments or take any other actions necessary for the Lessee to exercise all of the Authority’s rights under the Operating Agreements, and the Authority shall transfer to the Lessee all security under any such Operating Agreements.  Without limiting the generality of the foregoing, but subject to the Authority’s assumption of liabilities under the Operating Agreements accruing after such time as the Authority exercises its rights under this Section 3.15 subject to Article 18, the Authority shall be entitled to use the Operating Agreements and the Plans in each of the following events: (a) if the Authority terminates this Agreement without a lease agreement being granted to the Leasehold Mortgagee or nominee thereof pursuant to the provisions of Article 18 and (b) if the Authority elects to use the Operating Agreements or the Plans to remedy a Lessee Default under this Agreement.  Notwithstanding the foregoing, in the event that the Leasehold Mortgagee has entered into possession or is diligently enforcing and continues to diligently enforce its security, whether by way of exercising the Lessee’s rights under this Agreement, the appointment of a receiver or receiver and manager, foreclosure or power of sale in accordance with Article 18, or otherwise, and is using or reasonably expects to be using the Operating Agreements or the Plans in respect of the LMM Airport Facility Operations, the Authority shall not be entitled to use the Operating Agreements or the Plans in enforcing its security, it being acknowledged that any assignment of the Operating Agreement or the Plans to a Leasehold Mortgagee shall have priority over any assignment of the Operating Agreements or the Plans to the Authority and the Authority shall cooperate with the Lessee and the Leasehold Mortgagee in connection with ensuring such priority, including that the Authority shall execute and deliver to the Leasehold Mortgagee an intercreditor and subordination agreement in form and substance satisfactory to such Leasehold Mortgagee, acting reasonably, acknowledging such priority.  The Lessee shall promptly deliver to the Authority, at the sole cost and expense of the Lessee, forthwith after completion or execution and delivery, a copy of each item of the Operating Agreements and the Plans.

 

Section 3.16                                      Name.

 

(a)                                 The name designated for the LMM Airport Facility is “Luis Muñoz Marín International Airport.”  The Lessee shall not have the right to (i) sell or lease any naming rights for the LMM Airport Facility, or any portion of the LMM Airport Facility, to any third-party or (ii) change the name of the LMM Airport Facility or to sell or lease naming rights for the LMM Airport Facility or any portion thereof without the prior Approval of the Authority, which Approval may be withheld, delayed or otherwise conditioned in the discretion of the Authority.

 

(b)                                 The Authority, in its discretion, shall have the right to change the name of the LMM Airport Facility, or any portion of the LMM Airport Facility (and to cause the Lessee to change, at the Authority’s expense, any signage on or at the LMM Airport Facility in connection therewith), at any time during the Term upon 90 days’ prior notice to the Lessee; provided, however, that the Authority shall grant a license of the name together with all related logos and

 

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marks to the Lessee upon terms substantially similar to those contained in Section 3.16(c); provided further that any change in the name of the LMM Airport Facility by the Authority in accordance with this Section 3.16 shall not result in a name of the LMM Airport Facility, or any portion of the LMM Airport Facility, being odious or offensive or otherwise likely to result in a negative association by the public.  The exercise of such right by the Authority shall not constitute an Adverse Action.  The Authority shall have the right to all proceeds and other consideration received in connection with any such name change and shall reimburse the Lessee for all out-of-pocket and documented costs and expenses reasonably incurred by the Lessee in connection with any such name change.

 

(c)                                  The Authority grants to the Lessee a non-exclusive, non-transferable (except pursuant to a Transfer permitted under Section 17.1), royalty-free license during the Term to use the name “Luis Muñoz Marín International Airport” together with all existing and future developed logos and marks (not including the Authority seal) used in connection with the LMM Airport Facility Operations, solely in connection with the performance of the Lessee’s obligations and exercise of rights under this Agreement.  The Lessee may grant sublicenses of the same to Contractors.

 

Section 3.17                                      Police, Fire and Emergency Services; Access Rights.

 

(a)                                 At all times during the Term, the Authority shall cause the LMM Airport Facility to be serviced by adequate police, perimeter security and firefighting, including law enforcement officer (LEO) support as required by federal security requirements (including increases required by the TSA or other federal agencies) and armed perimeter security and other law enforcement services, in each case at a level that satisfies the TSA-approved Airport Security Program.  The Lessee shall be obligated to utilize all such services and shall not take any actions that would in any way inhibit or restrict the Authority’s ability to provide such services.  Without limiting the generality of the foregoing, at all times during the Term, the Lessee shall be responsible for providing (or causing the provision of) all remaining security and emergency functions at the LMM Airport Facility in compliance with the TSA-approved Airport Security Program, including interior auxiliary security and access control functions.  For the avoidance of doubt, services of the type that are, as of the Bid Date, provided to the Authority by (i) St. James Security Services, Inc. pursuant to that certain Agreement, AP-09-10-5-041, dated as of August 14, 2009, and (ii) Kristal Ambulance Corp. pursuant to that certain Agreement, AP-11-12-5-029, dated as of September 1, 2011, are functions for which the Lessee has responsibility during the Term.  The Lessee acknowledges that the Authority’s personnel that provide police, perimeter security and/or firefighting to the LMM Airport Facility may provide other police, perimeter security and/or firefighting in the general vicinity of the LMM Airport Facility; provided that such other services do not unreasonably interfere with the level of police, perimeter security and/or fire fighting to be provided at the LMM Airport Facility.  Notwithstanding any other provision of this Agreement, and subject to all applicable FAA, TSA and other Governmental Authority requirements, the Lessee shall have the right to contract with the Commonwealth Police Department and private security and emergency service providers for enhanced levels of service.

 

(b)                                 Subject to Section 3.17(c), the Lessee shall reimburse the Authority for all costs and expenses reasonably incurred by the Authority during the Term related to the provision of all such police, perimeter security and firefighting (including employment costs and related

 

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overhead expenses allocable thereto, as reasonably determined by the Authority based on the time expended by the employees who render such services to the extent that such costs and expenses are not reimbursed to the Authority from a source other than the Lessee; provided that any such allocation of costs (direct and indirect) and related overhead expenses shall be in compliance with DOT/FAA “Policy and Procedures Concerning the Use of Airport Revenue”), including in the event of a fundamental change to the security conditions related to the LMM Airport Facility that requires the Authority in its reasonable discretion to increase the levels of such services at the LMM Airport Facility on an ongoing basis.  All expenses directly related to the provision of services by the Authority pursuant to Section 3.17(a) shall be the responsibility of the Lessee in accordance with the Use Agreement and subject to Section 3.17(c).  The Authority shall use its Reasonable Efforts to seek reimbursement for the costs and expenses of providing of such police, firefighting and perimeter security services that may be available from the TSA or another Governmental Authority.  The Lessee shall provide the Authority with all reasonable assistance as may be requested by the Authority in connection with the application for and administration of any reimbursement program referred to in the previous sentence.

 

(c)                                  Not less than 60 days prior to the beginning of each Term Year, the Lessee and the Authority shall agree on an annual budget for the police, perimeter security and/or firefighting to be provided with respect to the LMM Airport Facility for that upcoming Term Year, which will specify the level of services to be provided and the cost of such services (and any additional services that may be requested by the Lessee as contemplated herein).  The Authority’s costs and expenses for such services for the first Term Year, which shall be reimbursed by the Lessee, shall be $2,800,000.  If by the first day of any Term Year the Authority and the Lessee have been unable to reach agreement concerning such annual budget, then the annual budget in effect for the immediately prior Term Year, Adjusted for Inflation, shall continue to be in effect until such time as the Authority and the Lessee reach such agreement.  For the avoidance of doubt, if the Lessee pays any provider of such services (which are caused to be provided by the Authority in accordance with the Authority’s obligations hereunder) directly on behalf of the Authority, such amount shall be considered to have been reimbursed to the Authority for the purpose of this Section 3.17(c).

 

(d)                                 Notwithstanding any other provision of this Agreement, at all times during the Term and without notice or compensation to the Lessee (i) any police, perimeter security and fire and any other security or emergency personnel retained by or on behalf of the Authority (including the Commonwealth Police Department and Authority’s fire/rescue personnel) shall have access, as required by such services or personnel, to the LMM Airport Facility for the performance of their duties; (ii) the Authority shall have access to the LMM Airport Facility as necessary for the protection of public safety; and (iii) any Governmental Authority (including the TSA and the armed forces) with jurisdiction over the LMM Airport Facility shall have access to the LMM Airport Facility as necessary for emergency management and homeland security purposes, including the prevention of, practice drills for, or response to, a public safety emergency.  The Lessee shall cooperate with police, fire and emergency services and any other security or emergency personnel, including the armed forces, in respect of such emergency management and homeland security purposes.

 

(e)                                  Consistent with its responsibility to satisfy all applicable FAA and TSA requirements (including maintaining compliance with 14 C.F.R. Part 139 and the TSA-approved

 

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Airport Security Program), the Lessee shall, at all times during the Term, on a 24-hour basis at the LMM Airport Facility maintain sufficient personnel who shall be qualified to respond to emergencies.  If, at any time during the Term, the Authority, in its discretion, determines that the Lessee is not satisfying its obligations under this Section 3.17(e), then the Authority may, at the cost of the Lessee, provide sufficient personnel at the LMM Airport Facility, in addition to those otherwise provided by the Authority and other Governmental Authorities hereunder, to respond to emergencies.  The Lessee shall be responsible for, and shall pay the costs of, any additional security measures implemented at the LMM Airport Facility at the request of any Governmental Authority pursuant to any adopted rule, regulation, standard, recommended practice or procedure.

 

Section 3.18                                      Other Actions by Governmental Authorities.  In the event that any Governmental Authority (other than the Authority or the Commonwealth (or any subdivision or agency of any of the foregoing)) proposes to take any action at any time during the Term (including or enacting any Law) and the effect of such action is reasonably expected (i) to be principally borne by the Lessee or private operators of Comparable Public Airports or Contratantes and (ii) to have a material adverse effect on the fair market value of the Lessee Interest, except where such action is in response to any act or omission on the part of the Lessee that is illegal (other than an act or omission rendered illegal by virtue of an Adverse Action or such action by any such other Governmental Authority), then at the request of the Lessee, the Authority shall use its Reasonable Efforts to oppose and challenge such action by any such other Governmental Authority; provided, however, that all reasonable out-of-pocket costs and expenses incurred by the Authority in connection with such opposition or challenge shall be borne by the Lessee and provided further that, except as expressly provided in Article 14, the Authority shall have no liability to the Lessee on account of the taking of any action by a Governmental Authority described in this Section 3.18.

 

Section 3.19                                      Hotel Operations and Litigation Pending Resolution.

 

(a)                                 From and after the Closing Date, the Authority shall retain responsibility for the litigation, ongoing as of the Closing Date, between the Authority and Hotel Airport, Inc. (the “Hotel Operator”) in connection with that certain Contract for Lease, dated as of March 27, 2003, as amended, by and between them for that certain property (the “Hotel Property”).

 

(b)                                 Until the final, unappealable resolution of such litigation and the making of the additional up-front payment by the Lessee in accordance with this Section 3.19, the Authority shall be responsible for costs and obligations of the Hotel Property and such Contract for Lease, shall retain the right to use or operate the Hotel Property (without paying compensation to the Lessee) and shall retain all revenues under such Contract for Lease or otherwise derived from the use of the Hotel Property.

 

(c)                                  Upon the final, unappealable resolution of the litigation between the Authority and the Hotel Operator, the result of which permits use of the Hotel Property by the Lessee, the Authority shall provide the Lessee with notice of the final, unappealable resolution of such litigation.  Within 60 days after receiving such notice, at the option of the Lessee, either (i) the Lessee shall make an additional up-front payment to the Authority, the amount of which shall be equal to the value of the availability of the Hotel Property for use by the Lessee for the then-remaining Term (as determined by mutual agreement of the Parties or, absent such agreement, in accordance with Section 3.19(d) or, if the Lessee elects, Article 19) or (ii) the Authority shall retain

 

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the right to use the Hotel Property, pursuant to which right the Authority shall pay no compensation to the Lessee, shall assume the costs and obligations of the Hotel Property, shall be entitled to retain all revenues from operations at and use of the Hotel Property and may contract with a third party to operate and use the Hotel Property; provided that use of the Hotel Property by the Authority or a third-party operator shall not materially interfere with the LMM Airport Facility Operations.  Any failure by the Authority to comply with its obligations under this Section 3.19(c) shall constitute a Compensation Event.

 

(d)                                 If the Parties are unable to agree upon the amount of additional up-front payment for the purposes described in Section 3.19(c), and the Lessee does not elect to determine the value in accordance with Article 19, the Lessee may (within the 60-day period described in Section 3.19(c)) offer to the Authority an amount of additional up-front payment for use of the Hotel Property by the Lessee for the then-remaining Term.

 

(i)                                     If the Lessee does not make such an offer, the Authority shall retain responsibility for the Hotel Property in accordance with Section 3.19(b) and may solicit bona fide offers from third parties for the use or operation of the Hotel Property, which the Authority may freely accept (and upon consummation of the transaction with such third party, the Authority and the third party, acting as agent of the Authority, shall retain responsibility for the Hotel Property in accordance with Section 3.19(b)).

 

(ii)                                  If the Lessee makes such an offer, the Authority shall either accept or reject such offer within 30 days of receipt thereof.  If the Authority rejects the Lessee’s offer, the Authority may solicit bona fide offers from third parties for the use or operation of the Hotel Property, which the Authority may accept (and upon consummation of the transaction with such third party, the Authority and the third party, acting as agent of the Authority, shall retain responsibility for the Hotel Property in accordance with Section 3.19(b)); provided that the Authority, before accepting such third-party offer, shall notify the Lessee of the third-party offer and provide the Lessee with an opportunity to match the third-party offer within 15 days of providing notice thereof, and the Authority shall accept the Lessee’s offer, if made, on the same terms as the third-party offer.  If the Authority does not receive a bona fide offer from a third party within 120 days after rejecting the Lessee’s offer, the Lessee shall renew its rejected offer, which the Authority shall accept.

 

Section 3.20                                      CAF Operations and Litigation Pending Resolution.

 

(a)                                 From and after the Closing Date, the Authority shall retain responsibility for the litigation, ongoing as of the Closing Date, between the Authority and Caribbean Airport Facilities, Inc. (“CAF”) in connection with that certain agreement, dated as of October 24, 1988, as amended, by and between them for that certain property (the “Cargo Facility”).

 

(b)                                 Until the final, unappealable resolution of such litigation or the receipt of unencumbered title to the Cargo Facility by the Authority and the making of the additional up-front payment by the Lessee in accordance with this Section 3.20, the Authority shall be responsible for costs and obligations of the Cargo Facility and such Contract for Lease, shall retain the right to use or operate the Cargo Facility (without paying compensation to the Lessee) and

 

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shall retain all revenues under such Contract for Lease or otherwise derived from the use of the Cargo Facility.

 

(c)                                  Upon the final, unappealable resolution of the litigation between the Authority and CAF or the receipt of unencumbered title to the Cargo Facility by the Authority, the result of which permits use of the Cargo Facility by the Lessee, the Authority shall provide the Lessee with notice of the final, unappealable resolution of such litigation.  Within 60 days after receiving such notice, at the option of the Lessee, either (i) the Lessee shall make an additional up-front payment to the Authority, the amount of which shall be equal to the value of the availability of the Cargo Facility for use by the Lessee for the then-remaining Term (as determined by mutual agreement of the Parties or, absent such agreement, in accordance with Section 3.20(d) or, if the Lessee elects, Article 19) or (ii) the Authority shall retain the right to use the Cargo Facility, pursuant to which right the Authority shall pay no compensation to the Lessee, shall assume the costs and obligations of the Cargo Facility, shall be entitled to retain all revenues from operations at and use of the Cargo Facility and may contract with a third party to operate and use the Cargo Facility; provided that use of the Cargo Facility by the Authority or a third-party operator shall not materially interfere with the LMM Airport Facility Operations.  Any failure by the Authority to comply with its obligations under this Section 3.20(c) shall constitute a Compensation Event.

 

(d)                                 If the Parties are unable to agree upon the amount of additional up-front payment for the purposes described in Section 3.20(c), and the Lessee does not elect to determine the value in accordance with Article 19, the Lessee may (within the 60-day period described in Section 3.20(c)) offer to the Authority an amount of additional up-front payment for use of the Cargo Facility by the Lessee for the then-remaining Term.

 

(i)                                     If the Lessee does not make such an offer, the Authority shall retain responsibility for the Cargo Facility in accordance with Section 3.20(b) and may solicit bona fide offers from third parties for the use or operation of the Cargo Facility, which the Authority may freely accept (and upon consummation of the transaction with such third party, the Authority and the third party, acting as agent of the Authority, shall retain responsibility for the Cargo Facility in accordance with Section 3.20(b)).

 

(ii)                                  If the Lessee makes such an offer, the Authority shall either accept or reject such offer within 30 days of receipt thereof.  If the Authority rejects the Lessee’s offer, the Authority may solicit bona fide offers from third parties for the use or operation of the Cargo Facility, which the Authority may accept (and upon consummation of the transaction with such third party, the Authority and the third party, acting as agent of the Authority, shall retain responsibility for the Cargo Facility in accordance with Section 3.20(b)); provided that the Authority, before accepting such third-party offer, shall notify the Lessee of the third-party offer and provide the Lessee with an opportunity to match the third-party offer within 15 days of providing notice thereof, and the Authority shall accept the Lessee’s offer, if made, on the same terms as the third-party offer.  If the Authority does not receive a bona fide offer from a third party within 120 days after rejecting the Lessee’s offer, the Lessee shall renew its rejected offer, which the Authority shall accept.

 

Section 3.21                                      Puerto Rico Air National Guard Property Option.  As of the Closing Date, the property (the “PRANG Property”) utilized by the Puerto Rico Air National Guard

 

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(“PRANG”) pursuant to that certain Joint Use Agreement by and between the Authority and PRANG, dated as of December 11, 2002, as amended (the “PRANG Contract”), is excluded from the LMM Airport Facility.  At any time during the Term, the Authority may elect to enter into to negotiations with PRANG with respect to the relocation of PRANG to alternate facilities; it being understood that any relocation of PRANG to alternate facilities shall be subject to the consent of PRANG in accordance with the PRANG Contract.  The Authority shall give notice to the Lessee of such election, and the Lessee, at its option, may participate in such negotiations with the Authority and PRANG.  To the extent that PRANG is relocated to alternate facilities, the Lessee shall have the right to include the PRANG Property in the LMM Airport Facility in accordance with the terms of this Section 3.21.

 

(a)                                 The Authority shall provide the Lessee with notice of any agreement between PRANG and the Authority to relocate PRANG to alternate facilities.

 

(b)                                 The Lessee may, within 90 days following the Lessee’s receipt of notice from the Authority with respect to the PRANG Property, provide an offer to the Authority to include the PRANG Property in the LMM Airport Facility.  Such offer from the Lessee to the Authority shall include the amount of any compensation that the Lessee is prepared to pay to the Authority in respect of the inclusion of the PRANG Property and any other material terms and conditions related thereto.

 

(c)                                  Within 30 days after the Authority’s receipt of the offer from the Lessee pursuant to Section 3.21(b), the Authority shall either accept or reject the offer.

 

(i)                                     If the Authority accepts the Lessee’s offer, the parties shall cooperate with each other to consummate the transaction (and take all actions reasonably necessary to effect the same) within 30 days of such acceptance (or such other time period as the parties shall agree).

 

(ii)                                  If the Authority rejects the Lessee’s offer, the Authority may solicit other offers for a lease or concession for the PRANG Property from third parties.  If the Authority receives such a bona fide offer from a third party that the Authority is prepared to accept, and if such offer would provide less compensation to the Authority than the offer of the Lessee that was rejected by the Authority, then prior to the Authority accepting such offer, (i) the Authority shall notify the Lessee of the terms and conditions of such bona fide offer and (ii) the Lessee may, within 15 days following the Lessee receipt of such notice, elect to include the PRANG Property in the LMM Airport Facility (by notice to the Authority) at the same price and on the same terms and conditions as such bona fide offer.  If the Lessee so elects in accordance with the foregoing, the parties shall cooperate with each other to consummate the transaction (and take all actions reasonably necessary to effect the same) within 30 days of such election (or such other time period as the parties shall agree).

 

(d)                                 If the Lessee does not make an offer pursuant to Section 3.21(b) within the time allowed, the Authority may thereafter freely negotiate a lease or concession for the PRANG Property with third parties.

 

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(e)                                  For the avoidance of doubt, (i) at the time the transaction for the inclusion of the PRANG Property in the LMM Airport Facility is consummated, the PRANG Property will be so included free and clear of all Encumbrances except for Permitted Authority Encumbrances and (ii) in the event that a transaction by which the PRANG Property is included in the LMM Airport Facility is not consummated in accordance with the foregoing, the Authority shall have the right to use the PRANG Property as the Authority may determine in its discretion; provided that such use (including as a result of a new third-party operator) shall not materially interfere with the LMM Airport Facility Operations.  Any failure by the Authority to comply with its obligations under this Section 3.21(e) shall constitute a Compensation Event.

 

Section 3.22                                      Other Aviation Services.  The Authority shall be required to provide Leasehold Compensation to the Lessee in accordance with Section 15.1 to the extent that the Authority or any other Governmental Authority established under the Laws of the Commonwealth or any other Person that is authorized by the Authority or any other Governmental Authority established under the Laws of the Commonwealth (including under any concession, lease or other similar arrangement) obtains an airport operating certificate under 14 C.F.R. Part 139 (or any successor regulation) that would authorize scheduled passenger commercial service at any airport located within the Commonwealth that did not as of the Date of this Agreement have such a 14 C.F.R. Part 139 Certificate (whether or not such airport existed as of the Date of this Agreement) (a) prior to the 20th anniversary of the Date of this Agreement at any airport located within the jurisdiction of the municipality of Ceiba or (b) prior to the 15th anniversary of the Date of this Agreement at any airport located in the Commonwealth outside the jurisdiction of the municipality of Ceiba.  Any such Leasehold Compensation shall be provided only to the extent that the Lessee reasonably demonstrates a decrease in net income as a result of such commercial scheduled passenger service subsequent to the issuance of the Part 139 operating certificate.  Scheduled passenger commercial service shall be defined to include services offered or operated by a U.S. or foreign air carrier that constitute a “scheduled operation” or a “public charter” as such terms are defined by 14 C.F.R. Sections 110.2 and 380.2 or in the relevant foreign equivalent regulations.  For the avoidance of doubt, no Leasehold Compensation shall be required under this Section 3.22 in respect of commercial aviation services to the extent that such services (i) represent an expansion of scheduled operations as defined by 14 C.F.R.  Section 110.2 at an airport that has a Part 139 certificate as of the date of this Agreement or (ii) consist of cargo aviation services.  Any Leasehold Compensation required under this Section 3.22 shall be paid by the Authority from revenues that do not include revenues from any airport other than the LMM Airport Facility.

 

ARTICLE 4
 CAPITAL PROJECTS

 

Section 4.1                                             Lessee Responsibility for Capital Projects.  The Lessee’s capital improvement obligations shall comprise the capital improvement projects set forth on Schedule 13 (the “General Accelerated Upgrades”), the capital improvement projects required to be completed by the Lessee during the Term in accordance with the terms of this Agreement (including the Operating Standards) and the capital improvement projects required to be completed by the Lessee in accordance with the Use Agreement (including Section 6.1 of the Use Agreement).  The Lessee, with reasonable diligence, and at its sole cost and expense (except as other provided herein or in the Use Agreement), shall complete or cause the completion of all such capital improvement projects in a good and workmanlike manner in accordance with the terms of this Agreement and

 

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the Use Agreement.  Each General Accelerated Upgrade set forth on Schedule 13 shall be substantially completed by the Lessee on or before the deadline for completion set forth on Schedule 13.  The Authority at its option may cancel or postpone the commencement of any General Accelerated Upgrade by giving prior notice to the Lessee; provided that (i) to the extent that any notice of cancellation shall have been provided to the Lessee following the date on which the Lessee shall have incurred any liabilities or commitments with respect to such project, the Authority shall be required to provide Leasehold Compensation to the Lessee upon demand, the calculation of which shall, for the avoidance of doubt, take into account the Lessee’s out-of-pocket costs in connection therewith and any cost savings to the Lessee as a result of the cancellation of such project and (ii) the Authority shall provide Leasehold Compensation to the Lessee in connection with the cancellation or postponement of any such project.  The Authority shall consult with the Lessee prior to the postponement of any such projects concerning revised timing and scheduling for implementation and shall use its Reasonable Efforts to ensure that the revised schedule does not unduly interfere with the LMM Airport Facility Operations.  The Lessee shall not be in breach of this Section 4.1 for failure to substantially complete any General Accelerated Upgrade by the deadline for completion thereof as set forth on Schedule 13 if such failure is caused directly by (i) the postponement or cancellation of such project by the Authority in accordance with this Section 4.1 (unless such postponement, cancellation or failure is the result of a Lessee Default), (ii) the discovery of protected plant or animal species, human remains, archaeological, paleontological or cultural resources at or about the site of the lands required by any General Accelerated Upgrade or (iii) any action or omission of the Authority or the Commonwealth or any agency or instrumentality thereof.

 

Section 4.2                                             Authorizations Related to General Accelerated Upgrades.  The Lessee’s obligation to perform the General Accelerated Upgrades shall be subject to the terms and conditions of this Agreement and the Use Agreement and the timely issuance by the Authority or any other applicable Governmental Authority of any and all Authorizations with respect thereto without extraordinary expenses or conditions, and the Authority agrees not to withhold, condition or delay unreasonably the issuance of any such Authorizations issued by the Authority.  The Authority shall use its Reasonable Efforts to assist the Lessee in obtaining Authorizations from other applicable Governmental Authorities.  For the avoidance of doubt, the Authority hereby acknowledges that all Authorizations of the Authority otherwise required of the Authority for the Initial Capital Projects (as defined in the Use Agreement) and the General Accelerated Upgrades have been given by the Authority.

 

Section 4.3                                             Authority Responsibility for Affected Property.  The Authority shall maintain, repair and rehabilitate any existing or future roads, streets, sidewalks or bridges constituting any Affected Property under the jurisdiction of the Authority that provide direct access to or from the LMM Airport Facility in such a manner as to maintain reasonable public access to and from the LMM Airport Facility, in each case in a good and workmanlike manner, in accordance with any applicable Operating Standards and in such a manner as could not reasonably be expected to interfere with the LMM Airport Facility Operations.

 

Section 4.4                                             Condition of the LMM Airport Facility During Work.  The Authority acknowledges that the Lessee shall not be in default under the terms of this Agreement, including for failure to comply with the Operating Standards, in relation to the condition of portions of the LMM Airport Facility that are subject to the General Accelerated Upgrades or other capital

 

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improvement projects required to be completed by the Lessee in accordance with the terms of this Agreement and the Use Agreement, at any time during which work on any such project and the planning for such project is being undertaken by the Lessee; provided that (a) with respect to the General Accelerated Upgrades, the Lessee shall comply with the requirements of Schedule 13, (b) with respect to all projects, the Lessee shall comply with all obligations under the Operating Standards related to such projects, including the scope of work and construction documents Approved by the Authority for such projects and (c) the Lessee shall comply with all other terms of this Agreement and the Use Agreement, including the Lessee’s general maintenance obligations under the Operating Standards, related to the portions of the LMM Airport Facility subject to a General Accelerated Upgrade or other capital improvement project prior to the commencement of work on any such portion of the LMM Airport Facility.

 

Section 4.5                                             Airline Capital Improvement Contracts.  The Authority has entered into certain contracts with Airlines identified on Schedule 17 (the “Airline Capital Improvement Contracts”), which contracts obligate the Authority to undertake capital improvements as described therein (the “Airline Capital Improvement Projects”).  To the extent that the Authority has not completed any Airline Capital Improvement Project as the Time of Closing, the Lessee shall complete, as soon as practicable following the Closing Date, such uncompleted Airline Capital Improvement Projects.  To the extent that, as of the Time of Closing, the Authority has entered into any third-party contracts in respect of any uncompleted Airline Capital Improvement Projects, the Authority shall assign such third-party contracts to the Lessee.  As between the Parties, the Authority shall be responsible for any and all costs incurred by the Lessee in connection with the completion of any such uncompleted Airline Capital Improvement Projects (notwithstanding any agreements or terms set forth in the underlying applicable Airline Capital Improvement Contract).

 

ARTICLE 5
 MODIFICATIONS

 

Section 5.1                                             Agreed Modifications.

 

(a)                                 Either the Authority or the Lessee may propose a Modification.  Promptly after any proposal of a Modification by the Authority or the Lessee, the Lessee shall prepare and deliver to the Authority a written statement setting forth (i) a description of the Modification and any services, obligations, rights or work related to the Modification, (ii) if applicable, a schedule for the implementation of the Modification, (iii) if applicable, a firm price for implementing the Modification and (iv) the impact the Modification would have on (A) LMM Airport Facility Operations, (B) related changes to the Operating Standards, if any, and increases or decreases to the forecasted cost of operation and maintenance of the LMM Airport Facility following completion of the Modification, (C) any requirement to acquire Additional Lands and (D) any other obligations of either Party under this Agreement related to the proposed Modification.  The costs of preparing such written statement shall be borne by the Party proposing the Modification.

 

(b)                                 If the Lessee proposes a Modification (i) for which the Lessee will bear the cost, (ii) that does not require (A) Additional Lands, (B) any contribution from the Authority or any other Governmental Authority established under the Laws of the Commonwealth or (C) any related changes to the Authority’s obligations under this Agreement and (iii) that does not produce

 

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revenue not otherwise permitted under applicable Law as of the Date of this Agreement, then, upon receipt by the Authority of the Lessee’s written statement of the Modification, the Lessee shall be entitled to implement the Modification, subject to the rights of the Airlines under the Use Agreement.

 

(c)                                  For all Modifications proposed by the Lessee not subject to Section 5.1(b), upon receipt by the Authority of the Lessee’s written statement of the Modification, and for all Modifications proposed by the Authority, the Authority and the Lessee will negotiate in good faith to determine the following, while having no obligation to agree with respect thereto: (i) the final scope of the Modification and any work related to the Modification, (ii) if applicable, the contribution to the cost of implementing the Modification to be made by each of the Authority and the Lessee, (iii) if applicable, the schedule for implementing the Modification, (iv) if applicable with respect to Modifications proposed by the Authority, the compensation for any decrease in fees, charges or revenues from the LMM Airport Facility projected to be incurred during the implementation of the Modification to be paid to the Lessee by the Authority, (v) any additional consideration or share of additional revenues (to the extent the Modification relates to revenues not otherwise permitted under applicable Law as of the Date of this Agreement) to be paid to the Authority following implementation of the Modification, (vi) related changes to the Operating Standards, if any, (vii) any requirement for the Authority to acquire Additional Lands and (viii) any other related changes in the Parties’ obligations under this Agreement (including any obligation to pay monies with respect to such Modification or any of the matters contemplated in this Section 5.1).

 

(d)                                 If the Parties agree on the terms of the Modification in accordance with Section 5.1(c), they shall memorialize their agreements in a written document (an “Agreed Modification”) that shall take effect when executed by the Parties or as otherwise agreed to by the Parties.  To the extent applicable, an Agreed Modification shall provide for the receipt of all necessary Authorizations by the Lessee and the acquisition of Additional Lands by the Authority as a condition precedent to the commencement of any such Modification.

 

Section 5.2                                             Required Modifications.

 

(a)                                 If the Authority and the Lessee cannot agree on the terms of a Modification proposed pursuant to Section 5.1, then the Authority shall have the right to require the Lessee to implement the Modification under terms set forth by the Authority, and the Authority shall provide the Lessee with Leasehold Compensation related thereto pursuant to Section 15.1(b) (a “Required Modification”); provided that the Lessee shall not be required to commence any work related to the Required Modification, until (i) the Authority has obtained the GDB’s consent to such Required Modification, (ii) the Authority has provided to the Lessee evidence reasonably satisfactory to the Lessee of the Authority’s ability to finance such Required Modification and, if the Lessee has requested the Authority to advance funds necessary to implement the Required Modification, the Lessee has received such funds from the Authority, (iii) the Lessee has obtained all Authorizations and the Authority has acquired all Additional Lands required to begin work on the Required Modification and the Lessee has no reason to believe that other required Authorizations that cannot be obtained until a later date will not be obtained when needed and (iii) the Lessee and the Authority have agreed to the terms of the Required Modification (including, as applicable, the amount of Leasehold Compensation payable pursuant to this Section 5.2(a) and any

 

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additional consideration or share of additional revenues to be paid to the Authority following implementation of such Required Modification), or if not, the terms of the Required Modification and the amount of such Leasehold Compensation payable pursuant to this Section 5.2(a) (or additional Leasehold Fee, Annual Authority Revenue Share or other share of additional revenues to be paid to the Authority) have been resolved pursuant to Article 19.  Any Leasehold Compensation provided pursuant to this Section 5.2 shall include any costs incurred by the Lessee in connection with the preparation of the written statement described in Section 5.1 and shall be payable pursuant to Section 15.1(b).

 

(b)                                 If a Compensation Event necessitates a Modification, the Parties shall first proceed under this Article 5 to attempt in good faith to negotiate an Agreed Modification that resolves the effects of the Compensation Event.  If the Parties are unable to agree on an Agreed Modification within 60 days (or such longer period of time as the Parties may agree) the Lessee shall be entitled to complete the necessary Modification and receive Leasehold Compensation and shall not be required to pay additional consideration or to provide any other compensation related thereto.

 

(c)                                  The Parties acknowledge that no Required Modification shall in any way interfere or prevent the Lessee from performing its duties and responsibilities as FAA sponsor at the LMM Airport Facility and from complying with the Part 139 Airport Operating Certificate.

 

Section 5.3                                             Implementation of Modifications.  The Lessee shall (a) ensure that any work or construction performed in connection with a Modification is performed in a good and workmanlike manner, (b) ensure the terms of an Agreed Modification or a Required Modification are diligently complied with and implemented in such manner that the costs and delays relating to a Modification are minimized and (c) conduct a competitive process, which shall be determined by the Lessee in its discretion, for the services of any Contractor to be engaged in connection with a Modification based on commercially reasonable criteria for contract award (including such Contractor’s technical qualifications, bid price and relevant experience).  Without limiting the generality of the foregoing, the Lessee shall comply with applicable Law, applicable codes, good industry practice and, to the extent not superseded by the terms of the relevant Agreed Modification or Required Modification, the provisions of the Operating Standards with respect to the manner in which Modifications are implemented.

 

Section 5.4                                             Acquisition or Condemnation by Authority of Additional Lands.

 

(a)                                 Pursuant to an Agreed Modification.  In the case of an Agreed Modification requiring acquisition of Additional Lands, the Authority shall take such actions as may be reasonably necessary to initiate and diligently pursue to completion the proceedings necessary for the acquisition or condemnation of such Additional Lands.  In such event, the costs and expenses, including all judgments and settlements in condemnation, all awards of compensation, costs and litigation expenses, all awards of damages, all costs incurred in prosecuting the condemnation action, including the cost of all legal and support services and the fees of all witnesses, shall be borne as provided in the related Agreed Modification; provided, however, that any payment by the Lessee of any of the costs or expenses in relation to such acquisition shall not, by itself, entitle the Lessee to any real property interest in the Additional Lands so acquired except as provided in Section 5.1(c).

 

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(b)                                 Pursuant to a Required Modification.  In the case of a Required Modification pursuant to Section 5.2, the Authority shall take such actions as may be reasonably necessary to initiate and diligently pursue to completion the proceedings necessary for the acquisition or condemnation of Additional Lands for such Required Modification.  The Lessee’s obligation to implement any such Required Modification shall be subject to the prior completion of the proceedings described in the preceding sentence.  In such event, all costs and expenses in respect of such acquisition or condemnation of Additional Lands for such Required Modification, including all judgments and settlements in condemnation, all awards of compensation, costs and litigation expenses, all awards of damages, all costs incurred in prosecuting the condemnation action, including the cost of all legal and support services and the fees of all witnesses, shall be borne by the Authority.

 

(c)                                  Transfer.  Any lands acquired pursuant to this Section 5.4 shall be deemed to be part of the LMM Airport Facility subject to this Agreement.  In connection with the foregoing, the Lessee shall, and shall cause any Leasehold Mortgagee to, execute such instruments as may be reasonably requested or required by the Authority to give effect to the foregoing.  The applicable costs and expenses with respect to Additional Lands contemplated in this Section 5.4 shall be borne as provided in the related Agreed Modification and the applicable costs and expenses with respect to Additional Lands contemplated by Section 5.4(b) shall be borne by the Authority.

 

(d)                                 Pre-existing Environmental Conditions.  If a Party proposes a Modification that requires the acquisition of Additional Lands, that Party (or in the case of Required Modifications, the Authority) shall assume and discharge any liabilities and obligations whatsoever arising under any Environmental Law relating to the ownership, operation or condition of the Additional Lands and shall be responsible for any environmental conditions existing prior to the time of acquisition, whether or not the manifestation of which occurs following acquisition (including any Hazardous Substance or contaminant that was present or Released or migrated or escaped from or was Released from Additional Lands or otherwise existed at any time prior to the time of acquisition).  Notwithstanding the foregoing, in all circumstances, the Lessee shall comply with Engineering or Institutional Controls associated with such Additional Lands; provided that, prior to having any obligation to comply therewith, the Lessee shall have (i) received written notice of such Engineering or Institutional Controls from the Authority and (ii) a reasonable period of time in which to implement such controls (which period shall not exceed 60 days unless such implementation reasonably requires a longer period and the Lessee has demonstrated to the satisfaction of the Authority, acting reasonably, that it is proceeding with all due diligence during such period to implement such compliance); provided further that in the case of environmental conditions for which the Authority is responsible pursuant to the preceding sentence, prior to having any obligation to comply therewith, the Lessee shall have received notice of such Engineering or Institutional Controls from the Authority; and provided further that the Lessee may submit any dispute with respect to such obligation to dispute resolution in accordance with Article 19.  Notwithstanding any obligation to assume and discharge any liabilities arising under any Environmental Laws contained in this Section 5.4(d), to the extent the Lessee is obligated to assume such liabilities, the Lessee shall not acquire or be entitled to any real property interest in the Additional Lands associated with such liabilities, except as provided in Section 5.4(c).

 

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(e)                                  NEPA and FAA Review.  It is acknowledged and agreed that the acquisition or condemnation of Additional Lands and the inclusion of Additional Lands in the LMM Airport Facility may be subject to review or approval in accordance with applicable Law, including the National Environmental Policy Act (42 U.S.C. § 4321 et seq.) and the policies and regulations of the FAA with respect to the Airport’s airport layout plan, and that the Parties’ obligations under this Section 5.4 are subject to such review and approval process.

 

ARTICLE 6
 OPERATING STANDARDS

 

Section 6.1                                             Compliance with Operating Standards.  The Lessee shall, and shall cause the LMM Airport Facility Operations to, comply with and implement the Operating Standards in all material respects at all times during the Term (including any changes or modifications to the Operating Standards made pursuant to the terms of this Agreement or the Use Agreement); provided that the Lessee shall have a reasonable period of time (a) following the Closing Date to carry out changes to the operations of the LMM Airport Facility in order to cause the LMM Airport Facility to comply with the Operating Standards in effect as of the Closing Date, to the extent the LMM Airport Facility is not in compliance therewith as of the Closing Date (which period of time shall not exceed 180 days; provided that such 180-day period will be extended for a reasonable period of time for the Lessee to cure such noncompliance (i) if such noncompliance cannot be cured within 180 days, (ii) if such noncompliance is susceptible to a cure and (iii) for long as the Lessee is proceeding with diligence and in good faith to cure such noncompliance), and (b) from time to time to comply with the introduction of changes or modifications to the Operating Standards that are made in accordance with the terms of this Agreement and the Use Agreement (which period of time shall not exceed 90 days, except as otherwise may be provided in the revised Operating Standards; provided that such 90-day period will be extended for a reasonable period of time for the Lessee to cure such noncompliance (i) if such noncompliance cannot be cured within 90 days, (ii) if such noncompliance is susceptible to a cure and (iii) for long as the Lessee is proceeding with diligence and in good faith to cure such noncompliance).  The Authority and the Lessee acknowledge and agree that the Operating Standards shall be construed flexibly in light of their objectives.  The Lessee shall have in place procedures that are reasonably designed to achieve compliance with the Operating Standards.  The Operating Standards shall not be deemed to be violated by occasional, isolated acts or omissions, including any occasional, isolated failure to comply with specific requirements set forth therein.  Without limiting the generality of the foregoing, any non-recurring failure to meet specific time limits, durations or frequencies set forth in the Operating Standards shall not constitute a violation; provided that the Lessee is not deliberately violating or failing to comply with such requirements; and provided further that any such violation or failure is not inconsistent with procedures and immediate affirmative corrective steps that are reasonably designed to achieve, through the Lessee’s best efforts, compliance with the requirements set forth in the Operating Standards.  Except as specifically set forth in this Agreement or the Use Agreement (including the Operating Standards), the Lessee shall perform all work required to comply with and implement the Operating Standards (including the capital improvements described therein) as part of the LMM Airport Facility Operations and at its sole cost and expense.  To the extent that any term or provision of the Operating Standards conflicts with any term or provision otherwise specified in this Agreement, then such term or provision of this Agreement shall govern and shall supersede any such conflicting term or provision in the Operating Standards.  To the extent that any term or

 

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provision of the Operating Standards conflicts with any term or provision otherwise specified in either the Part 139 Airport Certification Manual (including any subsequently-issued amendments thereto as issued by the FAA) or the TSA-approved Airport Security Program (including any subsequently-issued requirements thereunder as issued by TSA), then such term or provision of the Part 139 Airport Certification Manual or the TSA-approved Airport Security Program, as applicable, shall govern and shall supersede any such conflicting term or provision in the Operating Standards.

 

Section 6.2                                             Modified Operating Standards.

 

(a)                                 The Authority shall have the right, at any time during the Term, to modify or change the Operating Standards upon reasonable notice to the Lessee to comply with any new Law or FAA or TSA directive or requirement applicable to the LMM Airport Facility, so long as such Law does not constitute an Adverse Action and such modification or change is permitted under the Use Agreement.  In the event that the Authority modifies or changes the Operating Standards in accordance with the immediately preceding sentence, the Lessee, at its cost and expense, shall perform all work required to implement such modification or changes and shall comply with all such modifications or changes and in no event shall the Lessee be excused from compliance with any such modification or change.  For the avoidance of doubt, the Lessee will have the right to challenge any modified Operating Standard pursuant to Article 19 on the basis that it does not meet the requirement set forth above.

 

(b)                                 The Authority shall have the right, at any time during the Term, to propose a change to the Operating Standards upon reasonable notice to the Lessee to conform the Operating Standards to standards or practices generally adopted at Comparable Public Airports.  Promptly upon receipt of such proposed change, the Lessee shall in good faith engage the Authority to determine whether such proposed change is necessary to satisfy the requirement set forth above.  If the Lessee does not agree that such proposed change is necessary to satisfy the requirement set forth above, the Lessee shall provide prompt written notice of such disagreement to the Authority.  Following the receipt by the Authority of such notice from the Lessee, the parties shall work together in good faith to resolve such disagreement, including by discussing alternative changes to the Operating Standards and examining the standards or practices generally adopted at Comparable Public Airports.  If the Lessee and the Authority are unable to resolve such disagreement, the matter may be submitted to dispute resolution under the provisions of Article 19.

 

(c)                                  If, during the Term, the Authority is of the opinion that a modification or change to the Operating Standards is necessary or desirable but such modification or change is not subject to Sections 6.2(a) or 6.2(b), the Authority may upon reasonable notice to the Lessee modify or change the Operating Standards, subject to obtaining prior authorization from the GDB; provided, however, that the Authority shall pay the Leasehold Compensation, if any, to the Lessee with respect thereto at the time such modification or change is implemented.  The Lessee shall perform all work required to implement and shall comply with all such modifications and changes, and in no event shall the Lessee be excused from compliance with any such modification or change.  The Authority shall have the right to undertake the work necessary to ensure implementation of and compliance with any modification or change to the Operating Standards if the Lessee fails to do so within a reasonable period of time; provided, however, that to the extent

 

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that such work is undertaken by the Authority, the Lessee shall pay to the Authority within 10 Business Days following demand therefor, or the Authority may offset from amounts owing to the Lessee in connection with such modification or change, the costs of the portion of the work performed in order to comply with the Operating Standards existing immediately prior to such modification or change, and the Authority shall be responsible only for the incremental costs of the additional work required in order to implement such proposed modification or change to the Operating Standards and, without duplication with the foregoing, the Leasehold Compensation with respect to such modification or change.

 

(d)                                 If the Lessee, at its cost and expense, wishes to modify the Operating Standards, the Lessee must obtain the Approval of the Authority and the approval of the Signatory Airlines in accordance with Section 3.4(d) of the Use Agreement (or the equivalent provision in any successor use agreement) in accordance with the following:

 

(i)                                     The Lessee shall submit the proposed modifications to the Authority for Approval and to the Signatory Airlines for approval in accordance with Section 3.4(d) of the Use Agreement (or the equivalent provision in any successor use agreement), together with an explanation of the Lessee’s rationale for making its proposal and all relevant supporting information, certificates, reports, studies, investigations and other materials as are necessary to demonstrate that the Lessee’s proposed modifications are reasonably designed to achieve the objectives of the applicable Operating Standards.  The Authority or a Signatory Airline may request any additional supporting information, certificates, reports, studies, investigations and other materials as are reasonably required to determine if the Lessee’s proposed modifications are reasonably designed to achieve the objectives of the applicable Operating Standards.

 

(ii)                                  Approval of the Lessee’s proposed modifications may be withheld, delayed or conditioned only if there is a reasonable basis to determine that the Lessee’s proposed operating standards are not reasonably designed to achieve the objectives of the applicable Operating Standards.  Until the modifications are approved by the Authority and the requisite number of Signatory Airlines in accordance with Section 3.4(d) of the Use Agreement (or the equivalent provision in any successor use agreement), the Lessee shall not implement the proposed modifications.  The Lessee’s proposed modifications shall be deemed incorporated into the Operating Standards upon approval by the Authority and the Signatory Airlines in accordance with the terms hereof.  If the Authority or the requisite number of Signatory Airlines refuses to approve any proposed modifications and the Lessee disagrees with such refusal, the Lessee may submit the matter to dispute resolution under the provisions of Article 11 of the Use Agreement (or the equivalent provision in any successor use agreement).

 

(iii)                               Notwithstanding anything to the contrary, neither the Authority nor a Signatory Airline may withhold, delay or condition the approval of any proposed modification to the Operating Standards if the Lessee reasonably believes that such proposed modification is necessary to comply with the Part 139 Airport Operating Certificate, the TSA-approved Airport Security Program or any other requirements of Law or FAA or TSA directive or requirement; provided that the Authority and the Signatory Airlines each reserves the right to contest any such proposed modification, including by seeking FAA or TSA guidance or interpretation to the extent that the Authority or Signatory Airline reasonably believes that such proposed modification is not reasonably designed to achieve the objective of compliance with either the Part 139 Airport

 

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Operating Certificate, the TSA-approved Airport Security Program or other requirement of Law.  Any such contest shall be asserted by the Authority or the Signatory Airline, as appropriate, by giving the Lessee prompt notice thereof in accordance with Section 3.4(d) of the Use Agreement (or the equivalent provision in any successor use agreement).  Following the receipt by the Lessee of such notice, the Lessee and the Authority or Signatory Airline, as appropriate, shall work together in good faith to resolve such contest, including by working with the FAA or the TSA, as appropriate.  If the Lessee and the Authority or Signatory Airline, as appropriate, are unable to resolve such contest, the matter may be submitted to dispute resolution under the provisions of Article 11 of the Use Agreement (or the equivalent provision in any successor use agreement).  The Lessee may implement (and continue to implement) any proposed modification to the Operating Standards that it reasonably believes is necessary to comply with the Part 139 Airport Operating Certificate, the TSA-approved Airport Security Program or other requirement of Law while it works in good faith with the Authority or Signatory Airline, as appropriate, to resolve any contest regarding the implementation of such modification.

 

ARTICLE 7
 AIRPORT FEES AND REVENUES

 

Section 7.1                                             Generally.  The Lessee shall, at all times during the Term, have the right to establish, collect, retain and enforce payment of all fees, rents, tariffs, revenues and any other type of charge for use of or in connection with the LMM Airport Facility to the fullest extent permitted by Section 10(c) of the Act, subject to all applicable requirements of Law and the terms and conditions of any applicable use agreement or Assigned LMM Airport Facility Contract.

 

Section 7.2                                             Specific Authorizations.                                               Without limiting Section 7.1, the Lessee shall have the sole and specific right to charge, assess, collect, seek and apply the following fees, charges, revenues and grants:

 

(a)                                 PFCs.               The Lessee shall have the right to charge, assess, collect, seek, and apply such PFCs that may have in the past or in the future been authorized under 49 U.S.C. § 40117, or any predecessor or successor Law, and as approved by the FAA from time to time with respect to the LMM Airport Facility.  PFCs collected for the LMM Airport Facility may not be used to finance projects at any other airport facility.

 

(b)                                 Government Grants-in-Aid.                                             The Lessee shall have the right to apply for and receive Government Grants-in-Aid, including grants authorized under 49 U.S.C § 47101, et seq., and 49 U.S.C § 44923, or any predecessor or successor Law, and as approved by the appropriate Governmental Authority from time to time with respect to the LMM Airport Facility.

 

(c)                                  For the avoidance of doubt, during the Term, the Authority shall not apply for any PFCs or Government Grants-in-Aid with respect to the LMM Airport Facility.

 

(d)                                 Ground Transportation Private Access and Use Fees.  The Lessee shall have the right, subject to applicable Law, to collect any private access and/or use fees for ground transportation at the LMM Airport Facility.

 

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ARTICLE 8
 REPORTING; AUDITS; INSPECTIONS

 

Section 8.1                                             Reports.

 

(a)                                 Incident Management and Notifications.  The Lessee shall promptly notify the Authority of all material emergencies upon receiving knowledge thereof, promptly notify the Authority of all material accidents and airfield incidents occurring on or at the LMM Airport Facility within 24 hours of receiving knowledge of the occurrence of such material accident or incident and promptly notify the Authority of all material claims made by or against the Lessee of which the Lessee has knowledge, or potential material claims that the Lessee reasonably expects to make against, or to be made against it by, third parties.

 

(b)                                 Environmental Incident Management and Notifications.  Upon receiving knowledge thereof, the Lessee shall promptly report to the Authority, on a per occurrence basis, the discharge, dumping, spilling (accidental or otherwise) of any reportable quantity, as defined under applicable Environmental Law, of Hazardous Substances and the location at which the incident has occurred, the time, the agencies involved, the damage that has occurred and the remedial action taken or to be taken.  Notice of any such incident, if initially delivered orally, shall be delivered in writing promptly following the Lessee’s knowledge of such incident.  This reporting obligation shall be in addition to any other reporting obligation under Environmental Laws.

 

(c)                                  Financial Reports.  Until the End Date, the Lessee, at its sole cost and expense, shall deliver to the Authority (i) within 60 days after the end of each six-month period following the first day of each Reporting Year, a copy of the unaudited balance sheets of the Lessee at the end of each such six-month period and the related unaudited statements of income, changes in equity and cash flows for such six-month period, in a manner and containing information consistent with the Lessee’s current practices and (ii) within 120 days after the end of each Reporting Year a copy of the audited balance sheets of the Lessee at the end of each such Reporting Year, and the related audited statements of income, changes in equity and cash flows for such Reporting Year, including in each case the notes thereto, in each case prepared in accordance with generally accepted accounting principles consistently applied in the United States and certified by the Lessee’s chief financial officer that such financial statements fairly present, in all material respects, the financial condition and the results of operations, changes in equity and cash flows of the Lessee as at the respective dates of and for the periods referred to in such financial statements, all in accordance with generally accepted accounting principles in the United States consistently applied; provided that any interim financial statements shall be subject to year-end adjustments.  Such financial statements shall reflect the consistent application of such accounting principles throughout the periods involved, except as disclosed in the notes to such financial statements.  In addition to the foregoing, together with the financial statements identified in clause (ii) of this Section 8.1(c), the Lessee shall provide an opinion thereon of an independent public accountant of national stature in the United States of America engaged by the Lessee.  In lieu of the foregoing, the Lessee may comply with this Section 8.1(c) by providing to the Authority a copy of the financial statements pertaining to the LMM Airport Facility that the Lessee files with the FAA on an annual basis as part of its compliance with its Part 139 Airport Operating Certificate.

 

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(d)                                 Reports Required By Use Agreement.  Promptly upon receipt thereof, and in any event within five Business Days of the receipt thereof, the Lessee shall provide the Authority with copies of all reports required to be delivered to the Lessee by the Airlines in accordance with the Use Agreement, including traffic forecasts, traffic results and environmental reports.

 

Section 8.2                                             Information.

 

(a)                                 Information; Inspection.  At the request of the Authority or any other Governmental Authority of competent jurisdiction (each, an “Authorized Auditor”), the Lessee shall (at the sole cost and expense of the Lessee and at all reasonable times during the Term) (i) make available or cause to be made available (and, if requested by such Authorized Auditor, furnish or cause to be furnished) to such Authorized Auditor all Information related to this Agreement or the LMM Airport Facility as may be specified in such request and as shall be in the possession or control of the Lessee or its Representatives and (ii) permit such Authorized Auditor, after having provided 10 Business Days’ prior notice to the Lessee (which notice shall identify the persons such Authorized Auditor requests to be present for an interview and describe with reasonable specificity the subject matter to be raised in the interview) (except in the case of investigations of possible criminal conduct, violations of regulations promulgated by the Authority or violations of the general aviation regulations promulgated by a Governmental Authority, in which case no prior notice shall be required by such Authorized Auditor), to discuss the obligations of the Lessee under this Agreement with any of the directors, chief executive officer and chief financial officer of the Lessee and its Representatives, for the purpose of enabling such Authorized Auditor to determine whether the Lessee is in compliance with this Agreement and applicable Law.

 

(b)                                 Confidentiality.  Unless disclosure is required by applicable Law, the Authority shall keep confidential any Information obtained from the Lessee or its Representatives that (i) constitutes trade secrets or commercial or financial information (A) where the trade secret or commercial or financial information are proprietary, privileged or confidential or (B) where the disclosure of the trade secrets or commercial or financial information may cause competitive harm and (ii) is designated as confidential by the Lessee in writing to the Authority.  In the event that the Lessee requests the Authority to defend an action seeking the disclosure of Information that the Authority determines to be confidential pursuant to this Section 8.2(b), the Lessee shall reimburse the Authority for the reasonable costs and expenses incurred by the Authority in defending such action.  This Section 8.2(b) shall not apply to any Information that (w) is already in the possession of the Authority; provided that such information is not known by the Authority to be subject to another confidentiality agreement with or other obligation of secrecy to the Lessee or another party; (x) becomes generally available to the public other than as a result of a disclosure by the Authority or their Representatives in violation of the terms of this Section 8.2(b); (y) becomes available to the Authority on a non-confidential basis from a source other than the Lessee or its advisors, provided that such source is not known by the Authority to be bound by a confidentiality agreement with or other obligation of secrecy to the Lessee or another party or (z) is independently developed by the Authority or its Representatives.

 

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Section 8.3                                             Inspection, Audit and Review Rights of the Authority.

 

(a)                                 Audit Right.  In addition to the rights set out in Section 8.2, any Authorized Auditor may, at all reasonable times, upon 48 hours’ prior notice, or may cause a Representative designated by it to, carry out subject to Section 8.2(b) (i) an Audit of the Information required to be maintained or delivered by the Lessee under this Agreement in connection with the performance of the LMM Airport Facility Operations for the purpose of verifying the information contained therein; and (ii) any Audit required by the Act.  The Lessee, at the cost and expense of the Lessee, shall, at reasonable times, make available or cause to be made available to such Authorized Auditor or its designated Representative such reasonable information and material as may reasonably be required by such Authorized Auditor or its designated Representative for purposes of such Audit and otherwise provide such cooperation as may reasonably be required by such Authorized Auditor in connection with the same.  Such Authorized Auditor shall be entitled to make copies of the Information related to the conduct of such Audit and to take extracts therefrom at such Authorized Auditor’s expense.

 

(b)                                 Inspection Right.  Each Authorized Auditor and its Representatives shall, at all times, have access to the LMM Airport Facility and every part thereof and the Lessee, at the reasonable cost and expense of the Lessee, shall, and shall cause its Representatives to, furnish each Authorized Auditor with every reasonable assistance for inspecting the LMM Airport Facility and the LMM Airport Facility Operations for the purpose of Auditing the Information or ascertaining compliance with this Agreement.

 

(c)                                  Tests.  Any Authorized Auditor and its Representatives shall, with the prior consent of the Lessee be entitled, at the sole cost and expense of such Authorized Auditor, and at any time and from time to time, to perform or cause to be performed any test, study or investigation in connection with the LMM Airport Facility or the LMM Airport Facility Operations as such Authorized Auditor may determine to be reasonably necessary in the circumstances; and the Lessee, at the cost and expense of the Lessee, shall, and shall cause its Representatives to, furnish such Authorized Auditor or its Representatives with every reasonable assistance in connection with the carrying out of such tests, procedures, studies and investigations.  In connection with the foregoing, such Authorized Auditor and its Representatives shall, with the prior consent of the Lessee, be entitled to install machines, equipment, systems, monitors, counters and other devices in, on, under, over or adjacent to the LMM Airport Facility to permit and facilitate any test, study, monitor, review or investigation of or relating to the LMM Airport Facility Operations to the extent that the same foes not materially interfere with the LMM Airport Facility Operations or damage the LMM Airport Facility.

 

(d)                                 No Waiver.  Failure by any Authorized Auditor or any of its Representatives to inspect, review or Audit the Lessee’s responsibilities under this Agreement or any part thereof or the Information, shall not constitute a waiver of any of the rights of any Authorized Auditor hereunder or any of the obligations or liabilities of the Lessee hereunder.  Inspection, review or Audit not followed by a notice of Lessee Default shall not constitute a waiver of any Lessee Default or constitute an acknowledgement that there has been or will be compliance with this Agreement and applicable Law.

 

(e)                                  No Undue Interference.  In the course of performing its inspections, reviews and Audits hereunder, each Authorized Auditor shall use its Reasonable Efforts, except as necessary in the case of the Authority when performing investigations of possible criminal

 

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conduct, to avoid (and to cause any auditor appointed pursuant to Sections 8.2(a) or 8.3(a) to avoid) any disruption to the LMM Airport Facility Operations or the Lessee’s rights or responsibilities under this Agreement, having regard to the nature of the inspections, reviews and Audits being performed.

 

Section 8.4                                             Audits, Assistance, Inspections and Approvals.  Wherever in this Agreement reference is made to any Authorized Auditor or its Representatives providing assistance, services, Approvals or Consents to or on behalf of the Lessee or its Representatives or to any Authorized Auditor or its Representatives performing an Audit or inspecting, reviewing or examining the LMM Airport Facility, the LMM Airport Facility Operations or any part thereof or the books, records, documents, budgets, proposals, requests, procedures, certificates, plans, drawings, specifications, contracts, agreements, schedules, reports, lists or other instruments of the Lessee or its Representatives, such undertaking by such Authorized Auditor or its Representatives shall not relieve or exempt the Lessee from, or represent a waiver of, any requirement, liability, Lessee Default, covenant, agreement or obligation under this Agreement or at law or in equity and shall not create or impose any requirement, liability, covenant, agreement or obligation (including an obligation to provide other assistance, services or Approvals) on any Authorized Auditor or its Representatives not otherwise created or imposed pursuant to the express provisions of this Agreement.

 

Section 8.5                                             Reimbursement of Costs.  Except as otherwise provided herein, the Lessee shall reimburse each Authorized Auditor for all documented costs and expenses reasonably incurred by such Authorized Auditor during the Term (including employment costs and related overhead expenses allocable thereto, as reasonably determined by such Authorized Auditor based on the time expensed by the employees who tender such services to the Authorized Auditor) in monitoring the LMM Airport Facility Operations and the Lessee’s compliance with its obligations and duties hereunder (including any Audits, tests, reviews or exams of the LMM Airport Facility, the LMM Airport Facility Operations (or any part thereof), any information or the proposals, requests, procedures, certificates, plans, drawings, specifications, contracts, agreements, schedules, reports, lists or other instruments of the Lessee or its Representatives required or permitted to be provided or undertaken hereunder); provided, however, that the aggregate amount payable by the Lessee pursuant to this Section 8.5 and any other provision set forth in this Agreement that requires the Lessee to reimburse such Authorized Auditor for costs and expenses incurred in connection with the matters set forth in this Agreement (including Section 8.3(b), but excluding payments described in Section 3.7(a)(ii) and (iii), Section 3.17, and Section 8.2(b)) shall not exceed $250,000 per calendar year, Adjusted for Inflation.

 

ARTICLE 9
 REPRESENTATIONS AND WARRANTIES

 

Section 9.1                                             Representations and Warranties of the Authority.  The Authority makes the following representations and warranties to the Lessee, and the Authority acknowledges that the Lessee and its Representatives are relying upon such representations and warranties in entering into this Agreement:

 

(a)                                 Organization.  The Authority is an instrumentality of the Commonwealth.

 

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(b)                                 Power and Authority.  The Authority has the power and authority to enter into this Agreement and to do all acts and things and execute and deliver all other documents as are required hereunder to be done, observed or performed by it in accordance with the terms hereof.

 

(c)                                  Enforceability.  This Agreement has been duly authorized, executed and delivered by the Authority and constitutes a valid and legally binding obligation of the Authority, enforceable against the Authority in accordance with the terms hereof, subject only to (i) the effect of bankruptcy, insolvency, reorganization, moratorium or other similar requirements of Law and judicial decisions now or hereafter in effect generally affecting the enforcement of creditors’ rights and remedies and (ii) the effect of requirements of Law governing equitable remedies and defenses and the discretion of any court of competent jurisdiction in awarding equitable remedies.

 

(d)                                 Title.  The Authority has good and sufficient title to and/or sufficient rights to grant to the Lessee the rights described in Section 2.1 with respect to the LMM Airport Facility and the LMM Airport Facility Assets, subject only to Permitted Authority Encumbrances, Permitted Lessee Encumbrances created, incurred, assumed or suffered to exist by the Lessee or any Person claiming through it (other than the Permitted Lessee Encumbrances specified in clause (ix) of the definition of the term “Permitted Lessee Encumbrances”) and any recorded or unrecorded restrictions, exceptions, easements, rights-of-way, reservations, limitations and interests that do not have a material adverse effect on the Lessee’s ability to operate the LMM Airport Facility.  Subject to any and all Permitted Authority Encumbrances, Permitted Lessee Encumbrances created, incurred, assumed or suffered to exist by the Lessee or any Person claiming through it (other than the Permitted Lessee Encumbrances specified in clause (ix) of the definition of the term “Permitted Lessee Encumbrances”) and any recorded or unrecorded restrictions, exceptions, easements, rights-of-way, reservations, limitations and interests that do not have a material adverse effect on the Lessee’s ability to operate the LMM Airport Facility existing at the Time of Closing, there is no recorded or unrecorded agreement, contract, option, commitment, right, privilege or other right of another binding upon, or which at any time in the future may become binding upon, the Authority to sell, transfer, convey, subject to lien, charge, grant a security interest in, or in any other way dispose of or materially encumber the LMM Airport Facility or the LMM Airport Facility Assets or any material portion thereof.  The recorded or unrecorded restrictions, exceptions, easements, rights-of-way, reservations, limitations, interests and other matters that affect title to the LMM Airport Facility and the LMM Airport Facility Assets (or any portion thereof) do not materially adversely affect the Lessee’s ability to operate the LMM Airport Facility in accordance with the terms hereof.  Following the Authority’s satisfaction of the condition set forth in Section 2.4(a)(iii), no obligation of the Authority or other Governmental Authority of the Commonwealth will be secured by any interest in the LMM Airport Facility (or any revenues generated therefrom) or the LMM Airport Facility Assets and no Person will have any claim or right to, or interest in, any income, profits, grants, rents or revenue derived from or generated with respect to the LMM Airport Facility (other than the Lessee under this Agreement and any claims, rights or interests granted by or otherwise relating to the Lessee).

 

(e)                                  No Conflicts.  The execution and delivery of this Agreement by the Authority, the consummation of the transactions contemplated hereby (including the operation of the LMM Airport Facility in accordance with the terms of this Agreement) and the performance by the Authority of the terms, conditions and provisions hereof do not and/or will not contravene or violate or result in a breach of (with or without the giving of notice or lapse of time, or both) or

 

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acceleration of any material obligations of the Authority or give rise to a right of termination, cancellation or augmentation of any obligation or loss of a material benefit under or result in the creation of any material Encumbrance (other than a Permitted Authority Encumbrance) under (i) any applicable Law or (ii) any agreement, instrument or document to which the Authority is a party or by which the Authority is bound.

 

(f)                                   Consents.  No Consent is required to be obtained by the Authority from, and no notice (other than the prescription period notice required to be delivered pursuant to Section 2.5(l)) or filing (other than the filing required pursuant to Section 2.4(a)(vii)) is required to be given by the Authority to or made by the Authority with, any Person (including any Governmental Authority) in connection with the execution, delivery and performance by the Authority of this Agreement or the consummation of the transactions contemplated hereby.

 

(g)                                  Compliance with Law; Litigation.  The Authority has operated and is operating the LMM Airport Facility in compliance, in all material respects, with all applicable Laws and the Authority is not in material breach of any applicable Law.  Except for those matters referred to in Section 3.19 and Section 3.20 or disclosed on Schedule 4, there is no action, suit or proceeding, at law or in equity, or before or by any Governmental Authority, pending nor, to the best of the Authority’s knowledge, threatened against the LMM Airport Facility, the LMM Airport Facility Assets or the Authority or any agency thereof in respect of the LMM Airport Facility prior to or at the Time of Closing, which (i) would reasonably be expected to have a Material Adverse Effect on the operations of the LMM Airport Facility or (ii) would affect the power of the Authority to enter into this Agreement or the validity or enforceability of this Agreement or the transactions contemplated hereby.  The Authority has complied with all applicable Laws related to the negotiation, authorization and execution of this Agreement.

 

(h)                                 Environmental Matters.  The Authority has made available to the Lessee true, correct and complete copies of all environmental assessments, audits, investigations, studies or other reports performed at the Authority’s direction since 2000 and all notices of violations, administrative orders and enforcement actions received by the Authority since 2000 and in its possession or control relating to the LMM Airport Facility (“Environmental Reports”), and to the best of the Authority’s knowledge, except as disclosed in the Environmental Reports, there have been no material Releases of Hazardous Substances in, on, under, about or emanating from the LMM Airport Facility.

 

(i)                                     LMM Airport Facility Contracts.

 

(i)                                     Each LMM Airport Facility Contract has been made available for review by the Lessee and, to the extent not constituting an Assigned LMM Airport Facility Contract, has been terminated on or prior to the Closing Date.  As of the Date of this Agreement, each LMM Airport Facility Contract is valid and is in full force and effect, and as of the Closing Date, each Assigned LMM Airport Facility Contract is valid and in full force and effect, and any consent required to assign such Assigned LMM Airport Facility contract has been obtained.  The Authority is not, and as a result of the transactions contemplated by this Agreement will not be, in material breach of any of its obligations under any LMM Airport Facility Contract, and no act or event has occurred which, with notice or lapse of time, or both, would constitute a material breach thereof, and, except as disclosed on Schedule 4, to the knowledge of the Authority no other party

 

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to any LMM Airport Facility Contract will be, nor as a result of the transactions contemplated by this Agreement will be, in material breach of its obligations under any LMM Airport Facility Contract, and no act or event has occurred with respect to any such party, which with notice or lapse of time, or both, would constitute a material breach thereof.  The LMM Airport Facility Contracts are all of the material contracts and agreements (A) to which the Authority is a party that relate to the LMM Airport Facility Operations, (B) that bind the LMM Airport Facility in any material respect or (C) that are necessary for provision of utilities or other third-party services for the continued operation of the LMM Airport Facility by the Lessee immediately following the Time of Closing, except that the LMM Airport Facility Contracts do not include those contracts referenced in Section 3.19, Section 3.20, Section 3.21 or Section 4.5 as well as those immaterial contracts and agreements which do not constitute Assumed Liabilities and to which the Authority is a party involving the provision of goods and services in the ordinary course of business that are used in connection with the LMM Airport Facility as well as by various other Authority departments, none of which will be applicable or binding on the Lessee, and all of which will be terminated at or prior to the Closing Date (at least as they relate to the LMM Airport Facility).  Notwithstanding the foregoing, none of the representations and warranties set forth in this Section 9.1(i)(i) shall apply to those LMM Airport Facility Contracts listed in Part A of Schedule 5, except that the Authority represents and warrants that the LMM Airport Facility Contracts listed in Part B of Schedule 5 are, as of the Date of this Agreement and as of the Closing Date, valid and in full force and effect.

 

(ii)                                  The Authority has provided true and complete copies of each of the LMM Airport Facility Contracts listed on Part A of Schedule 5, each of which shall be an Assigned LMM Airport Facility Contract.  As of the Date of this Agreement, there are no contracts pursuant to which a counterparty to such contract is claiming exclusivity rights with respect to Terminal A, except for those contracts set forth in Part A of Schedule 5.  From and after the Bid Date, unless otherwise agreed to or consented by the Lessee, the Authority has not entered into any amendments, supplements, side agreements or other understandings with the counterparties to those LMM Airport Facility Contracts listed on Part A of Schedule 5.

 

(j)                                    Insurance Policies.  All insurance policies in effect as of the Bid Date are in full force and effect and shall continue in full force and effect until the Time of Closing.

 

(k)                                 Brokers.  Except for Credit Suisse Securities (USA) LLC, whose fees will be paid by the Authority, there is no investment banker, broker, finder or other intermediary which has been retained by or is authorized to act on behalf of the Authority who might be entitled to any fee or commission from the Authority in connection with the transactions contemplated by this Agreement.

 

(l)                                     Accuracy of Information.  To the knowledge of the Authority, the factual and past historical information regarding the LMM Airport Facility, the LMM Airport Facility Operations and the LMM Airport Facility Assets that the Authority provided to the Lessee in the virtual data room for this transaction at https://www.imprimarooms.net was complete and accurate in all material respects at the time such information was provided.  As of the Time of Closing, the Authority does not have actual knowledge of any material misstatement in respect of any such information as of the time such information was provided.  The Authority makes no additional representation or warranty with respect to such information.

 

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(m)                             Operation of the LMM Airport Facility.  Since the Bid Date, the Authority (i) has caused the LMM Airport Facility to be operated in the ordinary course in a manner consistent with past practice, (ii) has used all Reasonable Efforts to preserve the goodwill of the LMM Airport Facility and to maintain good business relationships with the Airlines and others having business dealings with the Authority in connection with the LMM Airport Facility, (iii) has maintained the LMM Airport Facility Assets in normal operating condition and repair in accordance with past practice (ordinary wear and tear excepted) and has not disposed of the LMM Airport Facility Assets other than in the ordinary course of business, (iv) has performed (or caused to be performed) in all material respects all of the Authority’s obligations under the LMM Airport Facility Contracts, (v) has not entered into any material contracts relating to the LMM Airport Facility or the LMM Airport Facility Operations unless such contracts are terminable by the Lessee on the Closing Date (at no cost to the Lessee) or have been approved or consented to in writing by the Lessee prior to the execution thereof and (vi) has caused the LMM Airport Facility to be operated in all material respects in accordance with all applicable Laws (except to the extent any non-compliance is being contested in good faith by appropriate proceedings), all with the purpose that the LMM Airport Facility as a going concern shall be unimpaired at the Closing in a condition substantially similar to the condition as of the Bid Date.

 

(n)                                 Public Private Partnerships Act.  The Legislative Assembly of Puerto Rico has duly enacted into law the Act, which remains in full force and effect.  The Act (i) authorizes the Authority to enter into this Agreement and grant the Lease, (ii) authorizes the exemption from Taxes contemplated by Section 3.11(b)(i) and (ii) and (iii) provides that the Lessee shall have the authority to establish charges and fees in connection with the LMM Airport Facility, pursuant to this Agreement.  This Agreement is a “Partnership Contract” under the Act and a recordable lease under the P.R. Mortgage and Property Registry Law.

 

(o)                                 Material Adverse Effect.  Since June 30, 2011, through and including the Closing Date, no transaction or occurrence has taken place that has resulted or is reasonably likely to result in a Material Adverse Effect.

 

(p)                                 Financial Statements.  The audited financial statements of the Authority, dated as of June 30, 2011, 2010 and 2009, fairly present in all material respects the financial position and results of operations of the Authority as of the date and for the periods stated in such financial statements in accordance with generally accepted accounting principles, as applied to governmental units.

 

(q)                                 PFC Commitments.  As of the Date of this Agreement, the information shown on Schedule K to the Use Agreement regarding PFC commitments is complete and accurate in all material respects.

 

(r)                                    Airport Security Program.  The revisions to the Airport Security Program with respect to the Authority’s operation of the LMM Airport Facility, which are expected to become effective following the Bid Date and prior to the Closing Date, will not cause a material increase in security-related operational costs for the LMM Airport Facility as compared to the security-related operational costs associated with the Airport Security Program for the LMM Airport Facility in effect as of the Bid Date.

 

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Section 9.2                                             Representations and Warranties of the Lessee.  The Lessee makes the following representations and warranties to the Authority, and the Lessee acknowledges that the Authority and its Representatives are relying upon such representations and warranties in entering into this Agreement:

 

(a)                                 Organization.  The Lessee is duly organized, validly existing and in good standing under the laws of the state of its organization and is duly qualified to conduct business in the Commonwealth. Except as disclosed in the written certification that the Lessee delivered to the Authority prior to the Bid Date (or, to the extent changes in ownership of the Lessee are made prior to Closing that would be permitted under the definition of “Change in Control”, the Closing Date), no Person owns, directly or indirectly, 10% or more of the capital stock, units, partnership or membership interests and other equity interests or securities of the Lessee (including options, warrants and other rights to acquire any such equity interests).

 

(b)                                 Power and Authority.  The Lessee has the power and authority to enter into this Agreement and to do all acts and things and execute and deliver all other documents as are required hereunder to be done, observed or performed by it in accordance with the terms hereof.

 

(c)                                  Enforceability.  This Agreement has been duly authorized, executed and delivered by the Lessee and constitutes a valid and legally binding obligation of the Lessee, enforceable against it in accordance with the terms hereof, subject only to (i) the effect of bankruptcy, reorganization, moratorium or other similar requirements of Law and judicial decisions now or hereafter in effect generally affecting the enforcement of creditors’ rights and remedies and (ii) the effect of requirements of Law governing equitable remedies and defenses and the discretion of any court of competent jurisdiction in awarding equitable remedies.

 

(d)                                 No Conflicts.  The execution and delivery of this Agreement by the Lessee, the consummation of the transactions contemplated hereby and the performance by the Lessee of the terms, conditions and provisions hereof has not and will not contravene or violate or result in a material breach of (with or without the giving of notice or lapse of time, or both) or acceleration of any material obligations of the Lessee under (i) any applicable Law, (ii) any material agreement, instrument or document to which the Lessee or any Equity Participant is a party or by which it is bound or (iii) the articles, bylaws or governing documents of the Lessee and each of the Equity Participants.

 

(e)                                  Consents; Authorizations.  Except as set forth in Section 2.4(c), no Consent or Authorization is required to be obtained by the Lessee or any Equity Participant from, and no notice or filing is required to be given by the Lessee or any Equity Participant to or made by the Lessee or any Equity Participant with, any Person (including any Governmental Authority) in connection with the execution and delivery by the Lessee of this Agreement or the consummation of the transactions contemplated hereby, except for such consents that have been obtained and notices of filings that have been given as of the Date of this Agreement or such other Consents that are not required to be obtained as at the Date of this Agreement and are expected to be obtainable following the Date of this Agreement.

 

(f)                                   Compliance with Law; Litigation.  The Lessee is not in breach of any applicable Law that could have a material adverse effect on the ability of the Lessee to comply

 

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with its obligations under this Agreement.  Neither the Lessee nor any other Affiliate of the Lessee is listed on any of the following lists maintained by the Office of Foreign Assets Control of the United States Department of the Treasury, the Bureau of Industry and Security of the United States Department of Commerce or their successors: the Specially Designated Nationals List, the Denied Persons List, the Unverified List, the Entity List or the Debarred List, or any other list of Persons with which the Authority may not do business under applicable Law.  There is no action, suit or proceeding, at law or in equity, or before or by any Governmental Authority, pending nor, to the best of the Lessee’s knowledge, threatened against the Lessee or any Equity Participant that (i) would have a material adverse effect on the transactions contemplated by this Agreement or the Lessee’s ability to operate the LMM Airport Facility or (ii) would affect the validity or enforceability of this Agreement.

 

(g)                                  Accuracy of Information.  All of the information relating to the Lessee or any Equity Participant delivered by or on behalf of the Lessee to the Authority in connection with the execution of this Agreement was true, accurate and correct in all material respects when delivered.

 

(h)                                 Brokers.  Except for any broker or advisor whose fees will be paid by the Lessee, any Equity Participant or any of their respective Affiliates, there is no investment banker, broker, finder or other intermediary which has been retained by or is authorized to act on behalf of the Lessee, any Equity Participant or any of their respective Affiliates who might be entitled to any fee or commission in connection with the transactions contemplated by this Agreement.

 

(i)                                     Foreign Corrupt Practices Act.  To the Lessee’s knowledge, (i) no Governmental Authority in the United States has notified the Lessee in writing of any actual or alleged violation or breach by the Lessee of the Foreign Corrupt Practices Act, (ii) the Lessee has not undergone nor is undergoing any audit, review, inspection, investigation, survey or examination of records relating to compliance with the Foreign Corrupt Practices Act, (iii) the Lessee has not been and is not now under any administrative, civil or criminal investigation or indictment and is not party to any litigation involving alleged false statements, false claims or other improprieties relating to the Lessee’s compliance with the Foreign Corrupt Practices Act, nor is there any basis for such an investigation or indictment and (iv) there are no situations with respect to the business of the Lessee that involved or involves (w) the illegal use of any corporate funds or unlawful contributions, gifts, entertainment or other unlawful expenses related to political activity, (x) the making of any direct or indirect unlawful payments to government officials or others from corporate funds or the establishment or maintenance of any unlawful unrecorded funds to be used for such purposes, (y) the violation of any of the provisions of the Foreign Corrupt Practices Act (or any rules or regulations promulgated thereunder) that apply to the Lessee or (z) the receipt of any illegal discounts or rebates or any other violation of United States antitrust laws.

 

(j)                                    Code of Ethics. The Lessee acknowledges, represents and warrants that no official or employee of the Authority has a direct or indirect economic interest in the Lessee’s rights under this Agreement in accordance with the provisions of Act No. 84 of the Legislative Assembly of Puerto Rico enacted on June 18, 2002, as amended, also known as the Code of Ethics for Contractors (the “Code of Ethics”), which Code of Ethics the Lessee herein certifies it has received a copy of, read, understood and complied with at all times previous to the execution of this Agreement and will subsequently comply with it in its entirety.

 

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(k)                                 Criminal Proceedings.

 

(i)                                     The Lessee warrants and certifies that as of the Date of this Agreement and for the preceding 20 years, (i) neither it, nor any of its president, vice presidents, executive director, directors, members of its board of directors (or any person that holds a position with the Lessee functionally equivalent to any of the foregoing), nor any of its subsidiaries (each a “Covered Party”), nor any of its Equity Participants, has been convicted, has entered a plea of guilty or nolo contendere or has been indicted in any criminal procedure in any State, Commonwealth or federal court or in any foreign country for criminal charges related to acts of corruption, the public treasury, the public trust, a public function, or charges involving public funds or property, or for the felonies or misdemeanors mentioned in Act No. 458 of the Legislative Assembly of Puerto Rico, enacted on December 29, 2000, as amended, and (ii) each Covered Party is complying and shall continue to comply at all times with laws that prohibit corruption and regulate criminal acts involving public functions or public funds applicable to the Lessee under State, Commonwealth or federal Law, including the Foreign Corrupt Practices Act.  If a Covered Party after the Date of this Agreement becomes indicted or convicted in a criminal procedure for any type of offense described in this Section 9.2(k), the Lessee shall immediately notify the Authority thereof in writing as required by Act No. 458 of the Legislative Assembly of Puerto Rico, enacted on December 29, 2000, as amended.

 

(ii)                                  Neither the Lessee nor, to the knowledge of the Lessee, any of its officers, directors or Equity Participants has been convicted of offenses against public integrity, as defined in the P.R. Penal Code, or of embezzlement of public funds, and neither the Lessee nor any of its officers, directors or Equity Participants has been found guilty of any such type of offense in the Courts of the Commonwealth of Puerto Rico, the federal courts or any court of any jurisdiction of the United States of America.

 

Section 9.3                                             Tax Filings.

 

(a)                                 The Lessee for itself and each of its Equity Participants (if the Lessee is a partnership under the New P.R. Revenue Code) represents that as of the Date of this Agreement (i) neither it nor any of its Equity Participants has any outstanding debts for unemployment insurance, temporary disability (workmen’s compensation), chauffeur’s social security with the Department of Labor and Human Resources of the Commonwealth, income taxes with the Department of Treasury of the Commonwealth or real or personal property taxes with the Municipal Revenues Collection Center or (ii) it or its Equity Participants have a payment plan in place with respect to any outstanding debt for the foregoing items and have complied therewith.

 

(b)                                 The Lessee acknowledges and agrees that it shall obtain and deliver to the Authority, in each case dated not earlier than 60 days prior to the Closing Date, the following:

 

(i)                                     A certification of filing of income tax returns, issued by the Internal Revenue Division of the Department of Treasury of the Commonwealth or a certification by the Lessee and each of its Equity Participants (if the Lessee is a partnership under the New P.R. Revenue Code) that as of the Date of this Agreement it does not have and has not had to submit income tax returns and pay taxes in the Commonwealth during the past five years.

 

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(ii)                                  A “no taxes debt due” certificate, or payment plan and compliance therewith, issued by the Internal Revenue Division of the Department of Treasury of the Commonwealth.

 

(iii)                               A certificate of no debt, or payment plan and compliance therewith, with respect to real and personal property taxes issued by the Municipal Revenues Collection Center.

 

(iv)                              A certificate of no debt, or payment plan and compliance therewith, for unemployment insurance, temporary disability (workmen’s compensation) and chauffeur’s social security issued by the Department of Labor and Human Resources of the Commonwealth.

 

Section 9.4                                             Non-Waiver.  No investigations made by or on behalf of any Party at any time shall have the effect of waiving, diminishing the scope of or otherwise affecting any representation or warranty made by the other Party in this Agreement or pursuant to this Agreement.  No waiver by a Party of any condition, in whole or in part, shall operate as a waiver of any other condition.

 

Section 9.5                                             Survival.

 

(a)                                 Authority’s Representations and Warranties.  The representations and warranties of the Authority contained in Section 9.1 shall survive and continue in full force and effect for the benefit of the Lessee as follows: (i) as to the representations and warranties contained in Sections 9.1(a) through 9.1(h), inclusive, and Section 9.1(n) without time limit and (ii) as to all other matters, for a period of 24 months following the Closing Date unless a bona fide notice of a Claim under Section 12.2 shall have been given, in writing in accordance with Section 20.1, prior to the expiry of such period, in which case the representation and warranty to which such notice applies shall survive in respect of that Claim until the final determination or settlement of that Claim; provided such determination or settlement is being pursued diligently and in good faith by the applicable Party.

 

(b)                                 Lessee’s Representations and Warranties.  The representations and warranties of the Lessee contained in Section 9.2 shall survive and continue in full force and effect for the benefit of the Authority as follows: (i) as to the representations and warranties contained in Sections 9.2(a) through 9.2(f), inclusive, without time limit and (ii) as to all other matters, for a period of 24 months following the Closing Date unless a bona fide notice of a Claim under Section 12.2 shall have been given, in writing in accordance with Section 20.1, prior to the expiry of such period, in which case the representation and warranty to which such notice applies shall survive in respect of that Claim until the final determination or settlement of that Claim; provided such determination or settlement is being pursued diligently and in good faith by the applicable Party.

 

ARTICLE 10
 FINANCE OBLIGATIONS

 

Section 10.1                                      Lessee’s Obligations.  Except in those instances in which the Authority is required to provide the funding of costs and expenses under Section 2.5(i) or related to Required Modifications as contemplated by Sections 5.2, the Lessee shall be responsible for obtaining any

 

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financing for the performance of its obligations under this Agreement, which financing shall comply with all requirements of this Agreement.

 

Section 10.2                                      Authority’s Obligations.

 

(a)                                 The Authority shall, to the extent consistent with applicable Law and at the sole cost and expense of the Lessee, cooperate with the Lessee with respect to documentation reasonably necessary to obtain, maintain, syndicate and replace financing (including refinancings) for the performance of the obligations of the Lessee hereunder.  The Authority’s cooperation may include reviewing, approving and executing documents which substantiate the terms of this Agreement (including any consents and agreements necessary to confirm that the debt evidenced by the relevant financing constitutes Leasehold Mortgage Debt) and responding to reasonable requests for available information and material to furnish to any proposed Leasehold Mortgagee to facilitate financing to the extent permitted by applicable Law and contractual obligations with third-parties; provided, however, that nothing herein shall obligate the Authority to consent to service of process, to become subject to any legal process in any jurisdiction other than in the Commonwealth, or to enter into any agreement not governed by the Laws of the Commonwealth.  Any agreement entered into under this Section 10.2(a) shall be subject to review for form and legality by the General Counsel of the Authority.  If requested to do so by the Lessee, the Authority shall, at the sole cost and expense of the Lessee, use its Reasonable Efforts to cause the Authority’s independent public accountants to consent to the use and inclusion of certain financial information regarding the LMM Airport Facility in connection with the Lessee’s public or private offering of securities, as the case may be.

 

(b)                                 The Authority shall, promptly upon the request of the Lessee or any Leasehold Mortgagee, execute, acknowledge and deliver to the Lessee, or any of the parties specified by the Lessee, standard consents and estoppel certificates with respect to this Agreement (including consents with respect to Operating Agreements and Plans assigned to any Leasehold Mortgagee) that may be qualified to the best of the knowledge and belief of a designated representative of the Authority.  Nothing herein shall require the Authority to incur any additional obligations or liabilities (unless the Authority shall have received indemnification, as determined in the Authority’s discretion, with respect thereto) or to take any action, give any consent or enter into any document inconsistent with or in violation of any applicable Law or the provisions of this Agreement.

 

(c)                                  The Authority, upon the request of the Lessee, shall use Reasonable Efforts to cooperate in the Lessee’s efforts to obtain debt financing assistance through the issuance of bonds or from other financing programs for which the Lessee may be eligible; provided that the Lessee shall reimburse the Authority for all costs and expenses incurred by the Authority in connection therewith.  Nothing in this Section 10.2(c) shall obligate the Authority (i) to advocate or recommend the enactment or adoption of any federal or Commonwealth legislation or regulations, (ii) to make or recommend an allocation of the Authority’s private activity bond authorization under Section 146 of the U.S. Revenue Code or any similar provision, including authorizations related to other forms of private activity bonds or of tax credit bonds or (iii) to cooperate with the Lessee in connection with obtaining any such debt financing if the Authority (A) has, or reasonably expects to have, a competing application for such financing, (B) is required

 

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to commit to the expenditure or allocation of Authority funds in connection with such request or (C) such finance would have a material adverse effect on the credit rating of the Authority.

 

(d)                                 The Authority, upon the request of the Lessee, shall also use Reasonable Efforts to cooperate in any other respects in the Lessee’s efforts to obtain debt financing; provided that the Lessee shall reimburse the Authority for all costs and expenses incurred by the Authority in connection therewith.

 

Section 10.3                                      Lessee’s Obligation for Estoppel Certificates.  The Lessee shall, promptly upon the request of the Authority, execute and deliver to the Authority, or any of the parties specified by the Authority, standard consents and estoppel certificates with respect to this Agreement which may be qualified to the best of the knowledge and belief of a designated representative of the Lessee.  Nothing herein shall require the Lessee to incur any additional obligations or liabilities or to take any action, give any consent or enter into any document inconsistent with applicable Law and the provisions of this Agreement.

 

Section 10.4                                      Prohibited Tax Shelter Transactions.  The Lessee covenants and agrees that it shall not enter into any lease, sublease, concession, management agreement, operating agreement or other similar arrangement or other transaction that would cause the Authority to become a party to a “prohibited tax shelter transaction” within the meaning of section 4965 of the U.S. Revenue Code (it being agreed that, for purposes of this Section 10.4, the Authority shall not be treated as having become a party to such transaction solely by virtue of the execution of this Agreement or any future or ancillary agreements between the Authority and the Lessee relating to this Agreement).  A violation of this Section 10.4 by the Lessee shall entitle the Authority to (a) recover from the Lessee, to the extent permitted by applicable Law, the amount of any Tax liability to which the Authority and/or any Authority official is subject as a result of any agreement contemplated by this Section 10.4 and (b) require the Lessee, at the Lessee’s expense, to prepare timely all statements and returns, and to maintain all lists and similar information that the Authority becomes obligated to disclose, file or maintain with any taxing authority or participant or otherwise as a result of such transaction.

 

ARTICLE 11
 COMPLIANCE WITH LAWS

 

Section 11.1                                      Compliance with Laws.  The Lessee shall, at all times and at its own cost and expense, observe and comply with, in all material respects, and cause the LMM Airport Facility Operations to observe and comply with, in all material respects, all applicable Laws now existing or later in effect that are applicable to it or such LMM Airport Facility Operations, including those Laws expressly enumerated in this Article 11, and those that may in any manner apply with respect to the performance of the Lessee’s obligations under this Agreement; provided that nothing in this Section 11.1 shall be interpreted to limit the rights of the Lessee under Article 14.  It is expressly acknowledged and agreed that the obligations of the Lessee to comply with the provisions of this Article 11 shall be subject to applicable Law, for so long as such Law remains in effect and only to the extent required thereunder as the same may be amended from time to time.  The Lessee shall notify the Authority within seven days after receiving notice from a Governmental Authority that the Lessee may have violated any of the above.

 

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Section 11.2                                      Non-Discrimination Laws.

 

(a)                                 The Lessee shall comply with all applicable Commonwealth and federal Laws regarding non-discrimination, including: (i) the Civil Rights Act of 1964, 42 U.S.C. § 2000 et seq. (1981); (ii) the Civil Rights Act of 1991, P.L. 102-166; (iii) Executive Order Number 11246, 30 Fed. Reg. 12,319 (1965), reprinted in 42 U.S.C. § 2000(e) note, as amended by Executive Order Number 11375, 32 Fed. Reg. 14,303 (1967) and by Executive Order Number 12086, 43 Fed. Reg. 46,501 (1978); (iv) the Age Discrimination Act, 42 U.S.C. §§ 6101-6106 (1981); (v) the Age Discrimination in Employment Act, 29 U.S.C. §§ 621-34 (1967); (vi) the Rehabilitation Act of 1973, 29 U.S.C. §§ 793-794 (1981); (vii) the Americans with Disabilities Act, 42 U.S.C. § 12101 et seq. (1990); (viii) Act No. 100 of the Legislative Assembly of Puerto Rico, enacted on June 30, 1959, 29 P.R. Laws Ann. § 146 et seq., as amended; (ix) Act No. 17 of the Legislative Assembly of Puerto Rico, enacted on April 22, 1988, 29 P.R. Laws Ann. § 155 et seq., as amended; and (x) Act No. 69 of the Legislative Assembly of Puerto Rico, enacted on June 6, 1985, 29 P.R. Laws Ann. § 1321 et seq., as amended.

 

(b)                                 Pursuant to federal regulations promulgated under the authority of The Americans With Disabilities Act, 28 C.F.R. § 35.101 et seq., the Lessee understands and agrees that it shall not cause any individual with a disability to be excluded from participation in this Agreement or from activities provided for under this Agreement on the basis of the disability.  The Lessee agrees to comply with the “General Prohibitions Against Discrimination,” 28 C.F.R. § 35.130, and all other regulations promulgated under Title II of the Americans With Disabilities Act which are applicable to all benefits, services, programs, and activities provided by the Authority through contracts with outside contractors.  The Lessee shall be responsible for and agrees to indemnify and hold harmless the Authority from all losses, damages, expenses, claims, demands, suits, and actions brought by any party against the Authority as a result of the Lessee’s failure to comply with the provisions of this Section 11.2(b).

 

Section 11.3                                      Commonwealth Non-Discrimination/Sexual Harassment Clause.  Pursuant to Act No. 100 of the Legislative Assembly of Puerto Rico, enacted on June 30, 1959, 29 P.R. Laws Ann. § 146 et seq., as amended (Non-Discrimination Act), Act No. 17 of the Legislative Assembly of Puerto Rico, enacted on April 22, 1988, 29 P.R. Laws Ann. § 155 et seq., as amended (Sexual Harassment Act), and Act No. 69 of the Legislative Assembly of Puerto Rico, enacted on June 6, 1985, 29 P.R. Laws Ann. § 1321 et seq., as amended (Sexual Discrimination Act), the Lessee agrees as follows during the Term:

 

(a)                                 In the hiring of any employees for the manufacture of supplies, performance of work, or any other activity required under this Agreement or any subcontract, the Lessee, any Contractor or any Person acting on behalf of the Lessee or a Contractor shall not by reason of gender, race, creed, or color discriminate against any person who is qualified and available to perform the work to which the employment relates.

 

(b)                                 Neither the Lessee nor any Contractor nor any Person on their behalf shall in any manner discriminate against or intimidate any employee involved in the manufacture of supplies, the performance of work or any other activity required under this Agreement on account of gender, race, creed, or color.

 

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(c)                                  The Lessee and all Contractors shall establish and maintain a written sexual harassment policy and shall inform their employees of the policy.  The policy must contain a notice that sexual harassment will not be tolerated and employees who practice it will be disciplined.

 

(d)                                 The Lessee shall not discriminate by reason of gender, race, creed, or color against any Contractor or supplier who is qualified to perform the work to which the contract relates.

 

(e)                                  The Lessee shall include the provisions of this Section 11.3 in every subcontract so that such provisions will be binding upon each Contractor.

 

(f)                                   In the event that any Lessee Default results from a violation of the terms and conditions of this Section 11.3, the Authority may cancel or terminate this Agreement in accordance with Section 16.1(b)(iii) (for the avoidance of doubt, subject to the cure periods set forth in Section 16.1(a)(i) and Section 16.1(b)(iii)).  In addition, the Authority may proceed with debarment or suspension and may place the Lessee in any contractor responsibility file maintained by the Authority in accordance with the Authority’s normal practice in matters of suspension and debarment.

 

Section 11.4                                      Non-Collusion and Acceptance.  The Lessee attests, subject to the penalties for perjury, that no Representative of the Lessee, directly or indirectly, to the best of the Lessee’s knowledge, entered into or offered to enter into any combination, conspiracy, collusion or agreement to receive or pay any sum of money or other consideration for the execution of this Agreement other than that which is expressly set forth in this Agreement.

 

Section 11.5         Local Goods and Services.  As required by Article 10 of Act No. 14 of the Legislative Assembly of Puerto Rico, enacted on January 8, 2004, 3 P.R. Laws Ann. § 930 et seq., the Lessee shall use, to the extent available and applicable to the services provided hereunder, and to the extent permitted by applicable Law, goods extracted, produced, assembled, packaged, bottled or distributed in the Commonwealth by businesses operating in the Commonwealth or distributed by agents established in the Commonwealth.

 

Section 11.6                                      Lessee Integrity.

 

(a)                                 The Lessee shall maintain the highest standards of integrity in the performance of this Agreement and shall take no action in violation of Commonwealth or federal Laws, regulations, or other requirements that govern contracting with the Authority. The Lessee certifies that it does not represent particular interests in cases or matters that would imply a conflict of interest or public policy between the Authority and the interests it represents.

 

(b)                                 The Lessee shall not disclose to others any confidential information gained by virtue of this Agreement in violation of the confidentiality agreement described in Section 2.5(g).

 

(c)                                  The Lessee shall not, in connection with this Agreement or any other agreement with the Authority, directly, or indirectly, offer, confer or agree to confer any pecuniary benefit on anyone as consideration for the decision, opinion, recommendation, vote, other exercise of discretion or violation of a known legal duty by any officer or employee of the Authority.

 

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(d)           The Lessee shall not, in connection with this Agreement or any other agreement with the Authority, directly or indirectly, offer, give or agree or promise to give to anyone any gratuity for the benefit of or at the direction or request of any officer or employee of the Authority.

 

(e)           The Lessee shall not accept or agree to accept from, or give or agree to give to, any Representative of the Authority, any gratuity from any person in connection with this Agreement that is intended by the provider thereof to be a material inducement to enter into this Agreement or any other agreement.

 

(f)            The Lessee, upon being informed that any violation of the provisions of this Section 11.6 has occurred or may occur, shall immediately notify the Authority in writing.

 

(g)           The Lessee, by execution of this Agreement and any request for compensation pursuant hereto, certifies and represents that it has not violated any of the provisions of this Section 11.6.

 

(h)           The Lessee, upon the inquiry or request of the Comptroller of the Commonwealth or any of that official’s agents or representatives, shall provide, or if appropriate, make promptly available for inspection or copying, any information of any type or form deemed relevant by the Comptroller of the Commonwealth.  Such information may include the Lessee’s business or financial records, documents or files of any type or form that refers to or concerns this Agreement.  Such information shall be retained by the Lessee for a period of five years unless otherwise provided by Law.

 

(i)            In the event that any Lessee Default results from a violation of any of the provisions of this Section 11.6, the Authority may terminate this Agreement in accordance with Section 16.1(b)(iii) (for avoidance of doubt, subject to the cure periods set forth in Section 16.1(a)(i) and Section 16.1(b)(iii)) and any other agreement with the Lessee, and debar and suspend the Lessee from doing business with the Authority.  These rights and remedies are cumulative, and the use or nonuse of any one shall not preclude the use of all or any other.  These rights and remedies are in addition to those the Authority may have under Law, statute, regulation, or otherwise.

 

(j)            For purposes of this Section 11.6 only, the words “confidential information,” “consent,” “Lessee” and “gratuity” shall have the following definitions:

 

(i)            “confidential information” means information that is not public knowledge, or available to the public on request, disclosure of which would give an unfair, unethical, or illegal advantage to another desiring to contract with the Authority;

 

(ii)           “consent” means written permission signed by a duly authorized officer or employee of the Authority; provided that where the material facts have been disclosed, in writing, by prequalification, bid, proposal or contractual terms, the Authority shall be deemed to have consented by virtue of execution of this Agreement;

 

(iii)          “Lessee” means the entity that has entered into this Agreement with the Authority; and

 

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(iv)          “gratuity” means any payment of more than nominal monetary value in the form of cash, travel, entertainment, gifts, meals, lodging, loans, subscriptions, advances, deposits of money, services, employment or contracts of any kind.

 

Section 11.7             Commonwealth Tax Liabilities.  The Lessee shall inform the Authority if, at any time during the Term, it becomes delinquent in the payment of Taxes imposed by any Governmental Authority of the Commonwealth (other than Commonwealth Tax liabilities for which the Lessee is not responsible under Section 3.11(b)).

 

Section 11.8             Contractor and Supplier Contracts.  To the extent permitted by applicable law, the Lessee shall include the provisions of this Article 11 and Section 9.3 in every subcontract and supply contract so that they shall be binding on each Contractor.

 

Section 11.9             Practice of Engineering, Architecture and Other Professions in the Commonwealth.  To the extent that performance of the LMM Airport Facility Operations involves performance of architectural, engineering, land surveying, and landscape architecture services governed by Act No. 173 of the Legislative Assembly of Puerto Rico, enacted on August 12, 1988, 20 P.R. Laws Ann. § 711 et seq., as amended, then (a) the Lessee shall comply (and shall require its subcontractors or agents, if any, to comply) with such Act No. 173 and (b) the Lessee shall monitor compliance by its subcontractors and agents with such Act No. 173.

 

Section 11.10          Governmental Contractor Code of Ethics.  Lessee shall comply with the requirements of the Code of Ethics.

 

Section 11.11          Certifications Required by Commonwealth Contractor Requirements.  The Lessee has (i) certified that it has complied and is in compliance with the provisions of the Public-Private Partnerships Authority’s Ethical Guidelines and (ii) delivered the Sworn Statement herewith.

 

Section 11.12          Duty to Inform of Criminal Investigations.  The Lessee shall inform the Authority if, at any time during the Term, it becomes subject to investigation in connection with criminal charges related to acts of corruption, the public treasury, the public trust, a public function, or charges involving public funds or property.

 

Section 11.13          Disadvantaged Business Enterprise Program.  To the extent the Lessee receives federal financial assistance from the DOT with respect to the LMM Airport Facility pursuant to 49 U.S.C. § 47101 et seq., the Lessee shall establish a Disadvantaged Business Enterprise (“DBE”) program in accordance with regulations of the DOT, 49 C.F.R. Part 26.

 

(a)           General Requirements.  The Lessee shall provide for the participation of DBEs, as defined in 49 C.F.R. Part 26, in its LMM Airport Facility Operations.  To this end, the Lessee shall establish a policy for the utilization of DBEs, goals for the annual utilization of DBEs, and a reporting procedure agreeable to the Lessee and the Authority.

 

(b)           Policy.  The following statement shall represent the Lessee’s policy regarding a DBE program:  The Lessee is committed to ensuring that DBEs, as defined in 49 C.F.R. Part 26, have an equal opportunity to receive and participate in DOT-assisted contracts.

 

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(c)           Liaison.  To ensure compliance and the successful management of the Lessee’s DBE program, the Lessee shall establish a DBE liaison for the LMM Airport Facility with the DOT.

 

Section 11.14          Airport Concession Disadvantaged Business Enterprise Program.  To the extent the Lessee receives federal financial assistance from the DOT with respect to the LMM Airport Facility, the Lessee shall establish an Airport Concession Disadvantaged Business Enterprise (“ACDBE”) program in accordance with regulations of the DOT, 49 C.F.R. Part 23.  The Lessee shall provide for the participation of ACDBEs, as defined in 49 C.F.R. Part 23, with respect to all concession services provided at the LMM Airport Facility.

 

ARTICLE 12
 INDEMNIFICATION

 

Section 12.1             Indemnification with Regard to Third Party Claims.

 

(a)           Indemnification by the Lessee.  To the fullest extent permitted by Law, the Lessee shall indemnify and hold harmless the Authority and each of its Representatives from and against any Losses actually suffered or incurred by the Authority or any such Representative as a result of any Third Party Claims arising from (i) any Assumed Liabilities or (ii) any tax or mortgage recording charge attributable to any Transfer of the Lessee Interest or any part thereof; provided, however, that such Third Party Claims are made in writing within a period of three years from the expiration of the Term or earlier termination of this Agreement or within such shorter period as may be prescribed by the applicable statute of limitations.

 

(b)           Indemnification by the Authority.  To the fullest extent permitted by Law, the Authority shall indemnify and hold harmless the Lessee and each of its Representatives from and against any Losses actually suffered or incurred by the Lessee or any such Representative as a result of any Third Party Claims arising from (i) any Excluded Liabilities or (ii) pre-existing environmental conditions on Additional Lands described in Section 5.4 to the extent that the Authority requires the acquisition of Additional Lands under Section 5.2; provided, however, that such Third Party Claims are made in writing within a period of three years following the expiration of the Term or earlier termination of this Agreement or within such shorter period as may be prescribed by the applicable statute of limitations.

 

(c)           Notice of Third Party Claim.  If an Indemnified Party receives notice of the commencement or assertion of any Third Party Claim, the Indemnified Party shall give the Indemnifier reasonably prompt notice thereof, but in any event no later than 30 days after receipt of such notice of such Third Party Claim.  Such notice to the Indemnifier shall describe the Third Party Claim in reasonable detail (and include a copy of any complaint or related documents) and shall indicate, if reasonably practicable, the estimated amount of the Loss that has been or may be sustained by the Indemnified Party.

 

(d)           Defense of Third Party Claim.  The Indemnifier may participate in or assume the defense of any Third Party Claim by giving notice to that effect to the Indemnified Party not later than 30 days after receiving notice of that Third Party Claim (the “Notice Period”); provided, however, that the Indemnifier shall not be permitted to assume the defense of such Third

 

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Party Claim to the extent such assumption would adversely impact any defense asserted by the Indemnified Party.  The Indemnifier’s right to do so shall be subject to the rights of any insurer or other Party who has potential responsibility with respect of that Third Party Claim.  The Indemnifier agrees to pay all of its own expenses of participating in or assuming each defense.  The Indemnified Party shall cooperate in good faith in the defense of each Third Party Claim, even if the defense has been assumed by the Indemnifier and may participate in such defense assisted by counsel of its own choice at its own expense.  If the Indemnified Party has not received notice within the Notice Period that the Indemnifier has elected to assume the defense of such Third Party Claim, the Indemnified Party may assume such defense, assisted by counsel of its own choosing and the Indemnifier shall be responsible for all reasonable costs and expenses paid or incurred in connection therewith and any Loss suffered or incurred by the Indemnified Party with respect to such Third Party Claim.

 

(e)           Assistance for Third Party Claims.  The Indemnifier and the Indemnified Party will use all Reasonable Efforts to make available to the Party which is undertaking and controlling the defense of any Third Party Claim (the “Defending Party”) (i) those employees whose assistance, testimony and presence is necessary to assist the Defending Party in evaluating and in defending any Third Party Claim and (ii) to the extent permitted by Law, all documents, records and other materials in the possession of such Party reasonably required by the Defending Party for its use in defending any Third Party Claim, and shall otherwise cooperate with the Defending Party.  The Indemnifier shall be responsible for all reasonable expenses associated with making such documents, records and materials available and for all expenses of any employees made available by the Indemnified Party to the Indemnifier hereunder, which expense shall not exceed the actual cost to the Indemnified Party associated with such employees.

 

(f)            Settlement of Third Party Claims.  If an Indemnifier elects to assume the defense of any Third Party Claim in accordance with Section 12.1(d), the Indemnifier shall not be responsible for any legal expenses subsequently incurred by the Indemnified Party in connection with the defense of such Third Party Claim.  However, if the Indemnifier fails to take reasonable steps necessary to defend diligently such Third Party Claim within 30 days after receiving notice from the Indemnified Party that the Indemnified Party believes on reasonable grounds that the Indemnifier has failed to take such steps, the Indemnified Party may, at its option, elect to assume the defense of and to compromise or settle the Third Party Claim assisted by counsel of its own choosing and the Indemnifier shall be responsible for all reasonable costs and expenses paid or incurred in connection therewith.  The Indemnified Party shall not settle or compromise any Third Party Claim without obtaining the prior written consent of the Indemnifier unless such settlement or compromise is made without any responsibility to, and does not require any action on the part of, the Indemnifier and does not in any way adversely affect the Indemnifier.

 

Section 12.2             Indemnification with Regard to Breaches of Covenants, Representations or Warranties.

 

(a)           Indemnification by the Lessee.  The Lessee shall indemnify and hold harmless the Authority and each of its Representatives from and against any Losses actually suffered or incurred by the Authority or any such Representative arising from (i) any failure by the Lessee, its Affiliates or their respective Representatives to comply with, observe or perform any of the covenants, obligations, agreements, terms or conditions in this Agreement or (ii) any breach

 

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by the Lessee of its representations or warranties set forth in Section 9.2; provided, however, that such representations and warranties continue to survive at such time as provided in Section 9.5(b) and a notice of a Claim shall have been given, in writing in accordance with Article 20, prior to the expiry of such survival period as provided in Section 9.5(b).

 

(b)           Indemnification by the Authority.

 

(i)            The Authority shall indemnify and hold harmless the Lessee and each of its Representatives from and against any Losses actually suffered or incurred by the Lessee or any such Representative arising from (A) any failure by the Authority or its Representatives to comply with, observe or perform any of the covenants, obligations, agreements, terms or conditions in this Agreement or (B) any breach by the Authority of its representations or warranties set forth in Article 9; provided, however, that such representations and warranties continue to survive at such time as provided in Section 9.5(a) and a notice of a Claim shall have been given, in writing in accordance with Article 20, prior to the expiry of such survival period as provided in Section 9.5(a).

 

(ii)           No Claim may be made by the Lessee or the Lessee’s Representatives against the Authority under Section 12.2(b)(i) for the breach of any representation or warranty made or given by the Authority in Article 9 unless (A) the Loss suffered or incurred by the Lessee or its Representatives in connection with such breach is in excess of $250,000 and (B) the aggregate of all Losses suffered or incurred by the Lessee or its Representatives exceeds $5,000,000, in which event the amount of all such Losses in excess of such amount may be recovered by the Lessee or its Representatives; provided, however, that the maximum aggregate liability of the Authority to the Lessee or its Representatives in respect of such Losses in connection with breaches of the Authority’s representations and warranties in Article 9 shall not exceed 30% of the Leasehold Fee; and provided further that this Section 12.2(b)(ii) shall not apply to Claims for a breach of representation or warranties in Sections 9.1(a), (b), (c), (d), (e), (f), (g) or (n) or to claims for fraud, intentional misrepresentation or intentional breach of the representations or warranties in Article 9.

 

(iii)          In addition to any other right of the Lessee contemplated in this Section 12.2(b) and elsewhere in this Agreement, and without prejudice to (or diminishment of) any of the Lessee’s other rights and entitlements under this Agreement, the Authority shall indemnify and hold harmless the Lessee and each of its Representatives from and against any Losses actually suffered or incurred by the Lessee or any such Representative arising from any of the litigation, administrative proceedings, disputes, matters or other processes related to or contemplated by clause 4 of Schedule 4 hereto.  It is agreed and understood by the Parties that the Authority’s indemnity obligations pursuant to this Section 12.2(b)(iii) shall not be subject to any of the monetary thresholds or maximum limitations set forth in Section 12.2(b)(ii) above.

 

Section 12.3             Losses Net of Insurance; Reductions and Subrogation.

 

(a)           For purposes of this Article 12, the amount of any Losses for which indemnification is provided hereunder shall be reduced by any amounts actually recovered by the Indemnified Party under insurance policies with respect to such Losses, it being understood that the obligations of the Indemnifier hereunder shall not be so reduced to the extent that any such

 

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recovery results in an increase in the Indemnified Party’s insurance premiums, or results in any other additional cost or expense to any such Indemnified Party.

 

(b)           If the amount of any Loss incurred by an Indemnified Party at any time subsequent to the making of a payment required under this Article 12 on account of such Losses (an “Indemnity Payment”) is reduced by any subsequent recovery, settlement or otherwise under or pursuant to any insurance coverage, or pursuant to any claim, recovery, settlement or payment by or against any other Person, the amount of such reduction (less any costs, expenses (including Taxes) or premiums incurred or increased in connection therewith), together with interest thereon from the date of such recovery, settlement or reduction at the Bank Rate, shall promptly be repaid by the Indemnified Party to the Indemnifier.

 

(c)           Upon making a full Indemnity Payment, the Indemnifier shall, to the extent of such Indemnity Payment, be subrogated to all rights of the Indemnified Party against any third party in respect of the Loss to which the Indemnity Payment relates.  Until the Indemnified Party recovers full payment of its Loss, any and all claims of the Indemnifier against any such third party on account of such Indemnity Payment shall be postponed and subordinated in right of payment to the Indemnified Party’s rights against such third party.

 

Section 12.4             Payment and Interest.  All amounts to be paid by an Indemnifier hereunder shall bear interest at a rate per annum equal to the Bank Rate, calculated annually and payable monthly, both before and after judgment, from the date that the Indemnified Party disbursed funds, suffered damages or losses or incurred a loss or expense in respect of a Loss for which the Indemnifier is responsible to make payment pursuant to this Article 12, to the date of payment by the Indemnifier to the Indemnified Party.

 

Section 12.5             Offset Rights; Limitations on Certain Damages.

 

(a)           Any other provision herein notwithstanding, each Party’s obligations under this Agreement are subject to, and each Party shall have the benefit of, all defenses, counterclaims, rights of offset or recoupment or other claims and rights, including the right to deduct payments due to the other Party hereunder (collectively, “Offsets”) which such Party may have at any time against such other Party (or any of their respective successors and assigns) or any transferee or assignee of any such other Party’s rights hereunder (to the extent permitted hereunder) as against such Party or any part thereof or interest therein, whether the claim or right of such Party relied upon for such purpose is matured or unmatured, contingent or otherwise, and no transfer or assignment of this Agreement or any other obligation of such other Party, or of any rights in respect thereof, pursuant to any plan of reorganization or liquidation or otherwise shall affect or impair the availability to each Party of the Offsets; provided that in no event shall any Party’s right to Offsets permit such Party to exercise such right in a manner that would reduce the LMM Airport Facility Leasehold Value to an amount that is less than the Leasehold Mortgage Debt.

 

(b)           In no event shall any Party be responsible to the other Party under this Agreement for consequential, indirect, exemplary or punitive damages (except for claims by the Authority against the Lessee for fraud or for intentional misrepresentation or intentional breach), nor shall a Party be obligated to indemnify any other Party or any other Person with respect to any Losses or damages caused by the fraud of such other Party or Person.  The Parties agree that (i)

 

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payment for lost revenues generated at the LMM Airport Facility as part of Leasehold Compensation or the LMM Airport Facility Leasehold Value shall not constitute consequential, indirect, exemplary or punitive damages under the Act or otherwise and (ii) payments made by a Party to any third party shall always constitute indemnifiable losses hereunder notwithstanding whether such amounts represent consequential, indirect, exemplary or punitive damages for such third party.

 

(c)           Except (i) in the event of a termination of this Agreement pursuant to Section 2.4(d), Section 14.2 or Section 16.2, (ii) in cases involving fraud or intentional misrepresentation subject to all of the terms and conditions hereof or (iii) with respect to any Compensation Event, the provisions of this Article 12 shall constitute the sole and exclusive right and remedy available to any Party hereto for any Third Party Claim or for any actual or threatened breach of any representation, warranty, covenant or agreement contained herein.

 

Section 12.6             Survival.  This Article 12 shall remain in full force and effect in accordance with its terms and shall not be terminated by any breach (fundamental, negligent or otherwise) by any Party of its representations, warranties or covenants hereunder or by any termination or rescission of this Agreement by any Party.

 

Section 12.7             Agency for Representatives.  Each of the Authority and the Lessee agrees that it accepts each indemnity under the terms of this Agreement in favor of any of its Representatives, as applicable, as agent and trustee of such Representative, as applicable, and agrees that each of the Authority and the Lessee may enforce any such indemnity in favor of its Representatives, as applicable, on behalf of such Representative.

 

ARTICLE 13
 INSURANCE

 

Section 13.1             Insurance Coverage Required.  The Lessee shall provide and maintain at the Lessee’s own expense, or cause to be maintained, during the Term and during any time period following expiration during which the Lessee is required to return and perform any additional work, the insurance coverages and requirements specified below, insuring the LMM Airport Facility and all LMM Airport Facility Operations (the “Required Coverages”).

 

(a)           Employment Practices Liability.  The Lessee shall maintain employment practices liability in a limit of not less than $5,000,000 per occurrence.  Any retroactive date on the policy shall be on or before the Effective Date.  Policies written on a claims-made basis shall remain in force for at least three years beyond the date this Agreement terminates, through extended coverage, purchase of a tail or otherwise.

 

(b)           Workers Compensation Insurance.  The Lessee shall maintain the required workers compensation insurance with the Corporación del Fondo del Seguro del Estado.

 

(c)           Commercial General Liability (Primary and Excess).  The Lessee shall provide commercial general liability insurance or equivalent with limits of not less than $200,000,000 per occurrence and $400,000,000 aggregate for bodily injury (including death) and property damage liability.  Coverage shall include the following:  all premises and operations, products liability, host liquor liability, completed operations, explosion, collapse, underground,

 

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separation of insureds, defense, independent contractors, terrorism war liability, excess auto liability, hanger keepers liability, contingent control tower liability, baggage liability, cargo liability, non-owned aircraft liability, mobile equipment, contractual liability, personal injury and advertising injury with limits of not less that $1,000,000 per occurrence and aggregate, incidental medical malpractice with limits of not less that $1,000,000 per occurrence and aggregate and excess employers liability with limits of not less than $1,000,000 per occurrence and aggregate.  The Authority is to be named as an additional insured on a primary, non-contributory basis for any liability arising directly or indirectly under or in connection with this Agreement.

 

(d)           Automobile Liability (Primary and Excess).  The Lessee shall provide or cause to be provided automobile liability insurance with limits of not less than $1,000,000 per occurrence and $5,000,000 aggregate for bodily injury and property damage for any owned, non-owned or hired autos/motor vehicles.  The Authority is to be named as an additional insured on a primary, non-contributory basis.

 

(e)           Builder’s Risk.  When the Lessee undertakes any construction, maintenance or repairs to the LMM Airport Facility, including improvements and betterments pursuant to this Agreement, the Lessee shall provide or cause to be provided, all risk builder’s risk insurance at replacement cost for materials, supplies, equipment, machinery and fixtures that are or will be part of the LMM Airport Facility.  Customary sublimits and aggregated sublimits for perils including flood and earthquake are permitted in amounts consistent with market practice at Comparable Public Airports.  Coverage shall include the following: right to partial occupancy, boiler and machinery, earth movement, flood, water (including overflow), leakage, sewer backup, utility services, debris removal, testing, mechanical-electrical breakdown, resulting damage arising out of faulty or defective workmanship or material, business income (where an exposure exists and where the Authority has an insurable interest in such exposure), valuable papers and other consequential loss, when applicable.  The Authority is to be named as an additional insured and, subject to the claims of any Leasehold Mortgagee, as a loss payee with respect to the property proceeds.

 

(f)            Professional Liability.  When any architects, engineers, project managers, construction managers or other professional consultants perform work in connection with this Agreement, professional liability insurance covering acts, errors or omissions shall be maintained with limits of not less than $5,000,000 per occurrence and $5,000,000 aggregate; provided, however, that design and construction architects and engineers performing work with respect to any construction project undertaken by the Lessee pursuant to this Agreement must maintain limits of not less than the completion cost of the construction project undertaken.  When policies are renewed or replaced, the policy retroactive date shall coincide with, or precede, start of work in connection with this Agreement.  A claims-made policy that is not renewed or replaced shall have an extended reporting period of two years.

 

(g)           Property.  The Lessee shall obtain all risk property insurance coverage cost on a full replacement basis (no margin clause is to be included), covering all loss, damage or destruction to the LMM Airport Facility, including improvements and betterments.  Occurrence limit of liability endorsement or equivalent, if included on property policy, must be amended to delete any limitation to stated property values.  Coverage may not be limited to the statement of values provided to the insurance company.  Coverage shall include the following: (i) such risks as

 

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may now or in the future be included under an all risk policy form of real property insurance (subject to standard policy terms, conditions and exclusions) as may now or in the future be prescribed by the Commonwealth as of the effective date of the policy under which such insurance is provided and (ii) fire, smoke, windstorm, cyclone, tornado, hail, explosion, riot, civil commotion, equipment breakdown, flood, earth movement, collapse, water including overflow, leakage, sewer backup or seepage, utility interruption, debris removal, business ordinance or law for increased cost of construction, extra expense, boiler and machinery, valuable papers ingress and egress, civil and military authority and, if available, terrorism.  Customary sublimits and aggregated sublimits for perils including flood and earthquake are permitted in amounts consistent with market practice at Comparable Public Airports.  Coverage shall also include blanket business income coverage.  In addition, the Lessee shall, during the Term, procure at its own expense comprehensive fire, theft and property damage all risk insurance for, and keep insured to the extent of the full replacement value thereof (if replaceable; otherwise, the value thereof), all personal property of the Authority in the care, custody and control of the Lessee, including materials, fixtures/contents, equipment, tools, supplies and art work.  The Lessee shall be responsible for all loss or damage to personal property (including materials, fixtures/contents, equipment, tools, supplies and art work) of the Lessee unless caused by the Authority or its Representatives.  The Authority is to be named as an additional insured on all property insurance policies.  Subject to the claims of any Leasehold Mortgagee, the Authority and the Depositary are to be named as loss payees.  The Lessee shall be responsible for any loss or damage to Authority property at full replacement cost.

 

(h)           Pollution Legal Liability.  Pollution legal liability insurance shall be provided covering third-party bodily injury, property damage and other losses caused by pollution occurrences during the Term with limits of not less than $5,000,000 per occurrence and $25,000,000 aggregate.  Coverage shall include environmental cleanup, remediation, transportation and disposal.  When policies are renewed or replaced, the policy retroactive date shall, if practicable, coincide with or precede, start of work in connection with this Agreement.  A claims-made policy which is not renewed or replaced shall have an extended reporting period of two years.  The Authority is to be named as an additional insured.

 

(i)            Business Interruption Insurance.  The Lessee shall obtain business insurance against interruption or loss of projected Revenues for at least six months from the occurrence of the risk, resulting from physical damage to the Airport; provided, that the limits of such coverage may be based on a maximum foreseeable loss analysis, subject to the Authority’s approval of such maximum foreseeable loss analysis by an independent third party that is reasonably acceptable to the Authority, with such approval of the Authority not to be unreasonably withheld; and provided further, that the Authority and each Dependent Business shall be named as additional insureds thereunder.

 

(j)            Owners’ Contractors Protective Liability Insurance.  The Lessee shall obtain owners’ contractors protective liability insurance or equivalent coverage with a limit of not less than $2,000,000 per occurrence.  Such insurance shall include coverage against any negligent acts or omissions of independent contractors or subcontractors of the Concessionaire, whether resulting in bodily injury or injury to property of third parties.

 

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(k)                                 Boiler & Machinery Insurance.  The Lessee shall maintain comprehensive boiler and machinery coverage or equipment breakdown coverage for completed structures housing pressure vessels, machinery, equipment and electrical systems with a total replacement value of $25,000 or more.  Such insurance shall (i) include a limit at least equal to the total replacement cost of the equipment, plus 10%; (ii) include business interruption insurance in an amount reasonably acceptable to the Authority; (iii) include the Authority as an insured and (iv) include law and ordinance coverage.

 

(l)                                     Fiduciary Liability.  The Concessionaire shall maintain fiduciary liability in a limit of not less than $3,000,000 per occurrence.  Any retroactive date on the policy shall be on or before the Effective Date.  Policies written on a claims-made basis shall remain in force for at least three years beyond the date this Agreement terminates, through extended coverage, purchase of a tail or otherwise.

 

Section 13.2                                      Additional Requirements.

 

(a)                                 Evidence of Insurance.  The Lessee shall deliver or cause to be delivered to the Authority original certificates of insurance on the Authority’s insurance certificate form or equivalent evidencing the Required Coverages on or before the Closing Date, and shall provide or cause to be provided, renewal certificates of insurance, or such similar evidence, if such coverages have an expiration or renewal date occurring during the Term.  The receipt of any certificate does not constitute agreement by the Authority that the insurance requirements in this Agreement have been fully met or that the insurance policies indicated on the certificate are in compliance with all requirements of this Agreement.  The failure of the Authority to obtain certificates or other insurance evidence from the Lessee shall not be deemed to be a waiver by the Authority.  Non-conforming insurance shall not relieve the Lessee of the obligation to provide insurance as specified herein.  Except as otherwise expressly set forth herein, each Required Coverage may be reviewed by the Authority for compliance with the terms of this Agreement.  Each Required Coverage shall be signed by the insurer responsible for the risks insured against or by the insurer’s authorized representative.  All Required Coverages shall be placed with insurers that, at a minimum, have a rating of A(VII) or better by A.M. Best Company or an equivalent rating by another Rating Agency (unless the Authority consents to waive this requirement, which consent shall be subject to Section 13.2(o)).

 

(b)                                 Notice of Cancellation, Material Change or Violation.  All Required Coverages shall provide for 30 days’ (or in the case of cancellation for non-payment of premiums, 10 days’) prior notice to be given to the Authority by the insurer in the event coverage is substantially changed, canceled or non-renewed.  The Authority shall be permitted (but not obligated) to pay any delinquent premiums before the cancellation date specified by the insurer in any notice of cancellation for non-payment of premium in order to maintain such coverage in full force and effect and the Lessee shall reimburse the Authority for any delinquent premiums paid by the Authority on demand without any days of grace and without prejudice to any other rights and remedies of the Authority hereunder.  The Lessee shall not cancel, terminate, materially change to the detriment of the Authority or replace any Required Coverage.

 

(c)                                  Deductibles.  All Required Coverages may contain deductibles or self-insured retentions not to exceed amounts consistent with market practice at Comparable Public

 

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Airports.  Any and all deductibles or self-insured retentions on Required Coverages shall be borne by the Lessee or its Contractors.

 

(d)                                 Inflation Adjustment.  The amounts of coverage required by Section 13.1 shall be Adjusted for Inflation each succeeding fifth anniversary of the Closing Date.

 

(e)                                  Waiver of Subrogation by Insurers.  Each of the Required Coverages shall include a waiver by the insurer of its rights of subrogation against the Authority, its employees, elected officials, agents or representatives.

 

(f)                                   Authority’s Right to Insure.  If the Lessee fails to obtain and maintain or cause to be obtained and maintained the insurance required by this Article 13, the Authority shall have the right (without any obligation to do so), upon two Business Days’ notice to the Lessee in a non-emergency situation or forthwith in an emergency situation and without assuming any obligation in connection therewith, to effect such insurance and all costs and expenses of the Authority in connection therewith shall be payable by the Lessee to the Authority on demand without any days of grace and without prejudice to any other rights and remedies of the Authority hereunder.  Such insurance taken out by the Authority shall not relieve the Lessee of its obligations to insure hereunder and the Authority shall not be liable for any loss or damage suffered by the Lessee in connection therewith.

 

(g)                                  No Limitation as to Lessee Liabilities.  The Lessee expressly understands and agrees that any coverages and limits furnished by the Lessee shall in no way limit the Lessee’s liabilities and responsibilities specified within this Agreement or by Law.

 

(h)                                 No Contribution by Authority.  The Lessee expressly understands and agrees that any insurance or self-insurance programs maintained by the Authority shall not contribute with insurance provided by the Lessee under this Agreement.

 

(i)                                     Insurance Not Limited by Indemnification.  The required insurance shall not be limited by any limitations expressed in the indemnification language herein or any limitation placed on the indemnity therein given as a matter of Law.

 

(j)                                    Insurance Requirements of Contractors and Subtenants.  The Lessee shall require in each contract with any Contractor or subtenant (where such Contractor or subtenant is not covered by the Required Coverages) that such Contractor or subtenant obtain coverages reasonably comparable to the Required Coverages that are reasonably appropriate in their limits and other terms and conditions to the nature of the contract with the Contractor or subtenant.  Such coverages shall insure the interests of the Authority, its employees, elected officials, agents and representatives, the Lessee and any other Contractors or subtenants in respect of the applicable work being performed and shall be subject to the same (or comparable) coverage and administrative requirements as are imposed on the Lessee pursuant to this Agreement.  When requested to do so by the Authority, the Lessee shall provide or cause to be provided to the Authority certificates of insurance with respect to such insurance coverages or such other evidence of insurance, reasonably acceptable in form and content to the Authority.  The provisions of this Section 13.2(j) shall not apply to any Airline that is a party to the Use Agreement (or any subsequent use agreement with respect to the LMM Airport Facility), the obligations of which to

 

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obtain and maintain insurance shall be governed solely by the Use Agreement, or such subsequent amendment, modification or replacement thereof.

 

(k)                                 Joint Venture and Limited Liability Company Policies.  If the Lessee or any Contractor required to obtain an insurance policy hereunder is a joint venture or limited liability company, all insurance policies required to be obtained by the Lessee or such Contractor shall specifically name the joint venture or limited liability company as a named insured.

 

(l)                                     Other Insurance Obtained by Lessee.  If the Lessee or its Contractors or subtenants desire coverages in addition to the Required Coverages, the Lessee and each Contractor or subtenant shall be responsible for the acquisition and cost of such additional coverages.  If the Lessee or its Contractors or subtenants obtain any property, liability or other insurance coverages in addition to the Required Coverages (“Additional Coverages”), then the Lessee or its Contractors shall (i) notify the Authority as to such Additional Coverages, (ii) provide the Authority with any documentation relating to the Additional Coverages, including certificates of insurance, that the Authority reasonably requests and (iii) at the Authority’s election, cause the Authority elected or appointed officials, agents and representatives to be named as additional insureds under such Additional Coverages.

 

(m)                             Cooperation.  The Authority and the Lessee shall do all acts, matters and things as may be reasonably necessary or required to expedite the adjustment of any loss or damage covered by insurance hereunder so as to expedite the release and dedication of proceeds of such insurance in the manner and for the purposes herein contemplated.

 

(n)                                 Authority’s Right to Modify.  The Authority shall have the right to modify, delete, alter or change insurance coverage requirements set forth in Section 13.1 and this Section 13.2 to reflect known material changes in insurance coverages for Comparable Public Airports or known material changes in insurance exposures associated with the LMM Airport Facility and the Lessee shall promptly comply therewith and shall not have any obligation to procure or maintain at its cost any additional insurance unless an independent insurance consultant shall have delivered to the Lessee its opinion to the effect that the additional coverages are required pursuant to the above-stated criteria and such additional coverages are commercially available at reasonable rates.

 

(o)                                 Commercial Availability.  Notwithstanding anything to the contrary herein, if any insurance (including the limits or deductibles thereof) required to be maintained under this Agreement shall not be available at commercially reasonable rates, the Lessee shall have the right to request that the Authority consent to waive such requirement. Any such waiver shall be effective only so long as such insurance shall not be available at commercially reasonable rates; provided that during the period of such waiver, the Lessee maintains the maximum amount of such insurance otherwise available at commercially reasonable rates.  The Authority shall reasonably consider a request by the Lessee for a waiver under this Section 13.2(o) if the request is supported by a determination by an internationally recognized independent insurance consultant (i) that such insurance is not available at commercially reasonable rates and (ii) of the amount of such insurance which is available at commercially reasonable rates.  The Authority shall consult with the Signatory Airlines prior to granting any such waiver.

 

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Section 13.3                                      Damage and Destruction.

 

(a)                                 Obligations of Lessee.  If all or any part of the LMM Airport Facility shall be destroyed or damaged during the Term in whole or in part by fire or other casualty of any kind or nature (including any casualty for which insurance was not obtained or obtainable), ordinary or extraordinary, foreseen or unforeseen, the Lessee shall: (i) give the Authority notice thereof promptly after the Lessee receives actual notice of such casualty; (ii) at its sole cost and expense, whether or not insurance proceeds, if any, shall be equal to the estimated cost of repairs, alterations, restorations, replacement and rebuilding (the “Casualty Cost”), proceed diligently to Restore the same and (iii) deposit all insurance proceeds received by the Lessee in connection with any Restoration with a Depositary; provided, however, that if at any time the Casualty Cost exceeds the net insurance proceeds deposited with the Depository or reasonably anticipated to be actually deposited with the Depositary, then the Lessee shall also deposit with the Depository such cash as is sufficient to cover the difference between the Casualty Cost and the net insurance proceeds (such net insurance proceeds and such additional cash, together with any interest earned thereon, the “Restoration Funds”); provided further that the procedures of this clause (iii) of this Section 13.3(a) shall only apply to casualty events in which the cost of Restoration exceeds $5,000,000, as Adjusted for Inflation.

 

(b)                                 Rights of Authority.  If (i) the Lessee shall fail or neglect to commence the diligent Restoration of the LMM Airport Facility or the portion thereof so damaged or destroyed, (ii) having so commenced such Restoration, the Lessee shall fail to diligently complete the same in accordance with the terms of this Agreement or (iii) prior to the completion of any such Restoration by the Lessee, this Agreement shall expire or be terminated in accordance with the terms of this Agreement, the Authority may, but shall not be required to, complete such Restoration at the Lessee’s expense and shall be entitled to be paid out of the Restoration Funds for the relevant Restoration costs incurred by the Authority.  In any case where this Agreement shall expire or be terminated prior to the completion of the Restoration, the Lessee shall (A) account to the Authority for all amounts spent in connection with any Restoration which was undertaken, (B) immediately pay over or cause the Depositary to pay over to the Authority the remainder, if any, of the Restoration Funds received by the Lessee prior to such termination or cancellation and (C) pay over or cause the Depositary to pay over to the Authority, within 30 days after receipt thereof, any Restoration Funds received by the Lessee or the Depositary subsequent to such termination or cancellation.  The Lessee’s obligations under this Section 13.3(b) shall survive the expiration or termination of this Agreement.  To the extent the Authority is a loss payee with respect to any such insurance proceeds or otherwise receives insurance proceeds with respect to the destroyed or damaged portions of the LMM Airport Facility, the Authority shall deposit (or cause to be deposited) all such insurance proceeds with the Depositary for application pursuant to this Agreement.

 

(c)                                  Payment of Restoration Funds to Lessee.  Subject to the satisfaction by the Lessee of all of the terms and conditions of this Section 13.3 and the requirements of the Leasehold Mortgagee, the Depositary shall pay to the Lessee from time to time any Restoration Funds, but not more than the amount actually collected by the Depositary upon the loss, together with any interest earned thereon, after reimbursing itself therefrom, as well as the Authority, to the extent, if any, of the reasonable expenses paid or incurred by the Depositary and the Authority in the

 

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collection of such monies, to be utilized by the Lessee solely for the Restoration, such payments to be made as follows:

 

(i)                                     prior to commencing any Restoration, the Lessee shall furnish to the Authority for its Approval the estimated cost, estimated schedule and detailed plan for the completion of the Restoration, each prepared by an architect or engineer;

 

(ii)                                  the Restoration Funds shall be paid to the Lessee in installments as the Restoration progresses, subject to Section 13.3(c)(iii), based upon requisitions to be submitted by the Lessee to the Depositary and the Authority in compliance with Section 13.3(d), showing the cost of labor and materials purchased for incorporation in the Restoration, or incorporated therein since the previous requisition, and due and payable or paid by the Lessee; provided, however, that if any lien, other than any Permitted Lessee Encumbrance, is filed against the LMM Airport Facility or any part thereof in connection with the Restoration, the Lessee shall not be entitled to receive any further installment until such lien is satisfied or discharged (by bonding or otherwise); provided further that notwithstanding the foregoing, but subject to the provisions of Section 13.3(c)(iii), the existence of any such lien shall not preclude the Lessee from receiving any installment of Restoration Funds so long as such lien will be discharged with funds from such installment and at the time the Lessee receives such installment the Lessee delivers to the Authority and the Depositary a release of such lien executed by the lienor and in recordable form;

 

(iii)                               the amount of each installment to be paid to the Lessee shall be the aggregate amount of Casualty Costs theretofor incurred by the Lessee minus the aggregate amount of Restoration Funds theretofor paid to the Lessee in connection therewith, less 10% of such amount as a retainage (which 10% retainage shall be released to the Lessee upon completion of the Restoration work), except that such retainage shall not include any amounts for architects’ or engineers’ fees or permitting or other governmental fees in connection with the Restoration or with respect to each Contractor upon the final completion of each such Contractor’s respective work, provided that the unapplied portion of the funds held by the Depositary is sufficient to complete the Restoration; provided, however, that all disbursements to the Lessee shall be made based upon an architect’s or engineer’s certificate for payment in accordance with industry standards, and disbursements may be made for advance deposits for material and Contractors to the extent that such disbursements are customary in the industry and provided that the unapplied portion of the funds held by the Depositary is sufficient to complete the Restoration; and

 

(iv)                              except as provided in Section 13.3(b), upon completion of and payment for the Restoration by the Lessee, subject to the rights of any Leasehold Mortgagee, the Depositary shall pay the balance of the Restoration Funds, if any, to the Lessee; provided, however, that if the insurance proceeds are insufficient to pay for the Restoration (or if there shall be no insurance proceeds), the Lessee shall nevertheless be required to make the Restoration and provide the deficiency in funds necessary to complete the Restoration as provided in Section 13.3(a)(iii).

 

(d)                                 Conditions of Payment.  The following shall be conditions precedent to each payment made to the Lessee as provided in Section 13.3(c):

 

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(i)                                     the Lessee shall have furnished the Authority with estimates of costs and schedule and a detailed plan for the completion of the Restoration, as provided for in Section 13.3(c)(i);

 

(ii)                                  at the time of making such payment, no Lessee Default exists;

 

(iii)                               the Restoration shall be carried out under the supervision of the relevant architect or engineer (which has been Approved by the Authority), and there shall be submitted to the Depositary and the Authority the certificate of such architect or engineer stating that (A) the materials and other items which are the subject of the requisition have been delivered to the LMM Airport Facility (except with respect to requisitions for advance deposits permitted under Section 13.3(c)(iii)), free and clear of all Encumbrances, other than Permitted Lessee Encumbrances, and no unsatisfied or unbonded mechanic’s or other liens have been claimed, except for any mechanic’s lien for claims that will be discharged, by bonding or otherwise, with funds to be received pursuant to such requisition (provided that a release of such lien is delivered to the Depositary in accordance with Section 13.3(c)(ii)), (B) the sum then requested to be withdrawn either has been paid by the Lessee or is due and payable to Contractors, engineers, architects or other Persons (whose names and addresses shall be stated), who have rendered or furnished services or materials for the work and giving a brief description of such services and materials and the principal subdivisions or categories thereof and the several amounts so paid or due to each of such Persons in respect thereof, and stating in reasonable detail the progress of the work up to the date of such certificate, (C) no part of such expenditures has been made the basis, in any previous requisition (whether paid or pending), for the withdrawal of Restoration Funds or has been made out of the Restoration Funds received by the Lessee, (D) the sum then requested does not exceed the value of the services and materials described in the certificate, (E) the work relating to such requisition has been performed in accordance with this Agreement, (F) the balance of the Restoration Funds held by the Depositary or available from other sources will be sufficient upon completion of the Restoration to pay for the same in full, and stating in reasonable detail an estimate of the cost of such completion and (G) in the case of the final payment to the Lessee, the Restoration has been completed in accordance with this Agreement.

 

(e)                                  Payment and Performance Bonds.  If the Lessee obtains payment or performance bonds related to a Restoration (which the Lessee may or may not obtain in its discretion), the Lessee shall name the Authority and the Lessee and the Leasehold Mortgagee, as their interests may appear, as additional obligees, and shall deliver copies of any such bonds to the Authority promptly upon obtaining them.

 

(f)                                   Benefit of Authority.  The requirements of this Section 13.3 are for the benefit only of the Authority, and no Contractor or other Person shall have or acquire any claim against the Authority as a result of any failure of the Authority actually to undertake or complete any Restoration as provided in this Section 13.3 or to obtain the evidence, certifications and other documentation provided for herein.

 

(g)                                  Investment of Restoration Funds.  Restoration Funds deposited with a Depositary shall be invested and reinvested in Eligible Investments at the direction of the Lessee, and all interest earned on such investments shall be added to the Restoration Funds.

 

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(h)                                 Rights of Leasehold Mortgagee.  The provisions of Section 13.3 are subject to the rights of any Leasehold Mortgagee under the documents relating to any Leasehold Mortgage Debt.  The Authority acknowledges and agrees that any Restoration Funds prior to the applicable to a Restoration or not applied to a Restoration as provided in this Section 13.3 shall be subject to the lien or liens of any Leasehold Mortgage and the rights and requirements of the Leasehold Mortgagee.

 

ARTICLE 14
 ADVERSE ACTIONS

 

Section 14.1                                      Adverse Action.

 

(a)                                 An “Adverse Action” shall occur if the Authority or any other Governmental Authority established under the Laws of the Commonwealth takes action or actions at any time during the Term (including enacting any Law) and the effect of such action or actions, individually or in the aggregate, is reasonably expected (i) to be principally borne by the Lessee or private operators of Comparable Public Airports or Contratantes and (ii) to have a material adverse effect on the fair market value of the Lessee Interest, except where (A) such action is in response to any act or omission on the part of the Lessee that (1) is illegal (before taking into account the applicable government action) or (2) constitutes nonperformance by the Lessee or (B) such action is otherwise permitted under this Agreement; provided, however, that none of the following shall be an Adverse Action: (x) the exercise of law enforcement, subpoena or investigatory powers of the Authority or any Governmental Authority as permitted under this Agreement or applicable Law; (y) the imposition of a Tax or an increase in Taxes of general application, including parking Taxes of general application imposed on users or operators of parking facilities or Contratantes or (z) the development, redevelopment, construction, maintenance, modification or change in the operation of any existing mode of transportation that results in the reduction of any revenues generated at the LMM Airport Facility or in the number of users using the LMM Airport Facility.

 

(b)                                 If an Adverse Action occurs, the Lessee shall have the right to receive Leasehold Compensation from the Authority with respect thereto (such Leasehold Compensation, the “AA-Compensation”); provided, however, that if the Adverse Action constitutes an expropriation, sequestration or requisition of all or a material part of the LMM Airport Facility, the LMM Airport Facility Assets, the Use Agreement, and the Lessee Interest (or any of them) or materially impedes, substantially frustrates or renders impossible the Lessee’s ability to perform its obligations hereunder continuously for 90 days, then the Lessee shall have the right either (i) to be paid the AA-Compensation with respect thereto or (ii) to terminate this Agreement and be paid by the Authority any AA-Termination Damages, in each case by giving notice in the manner described in Section 14.1(c).

 

(c)                                  Within 90 days following the date on which the Lessee first became aware of the Adverse Action, the Lessee shall give notice (the “AA-Preliminary Notice”) to the Authority stating that an Adverse Action has occurred.  Within 180 days following the date of delivery of the AA-Preliminary Notice, the Lessee shall give the Authority another notice (the “AA-Notice”) setting forth (i) details of such Adverse Action, (ii) details of the material adverse effect of such Adverse Action on the fair market value of the Lessee Interest, (iii) a statement as to which right

 

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referred to in Section 14.1(b) the Lessee elects to exercise, and (iv) if the Lessee elects to exercise the right to Leasehold Compensation under Section 14.1(b), the amount claimed as AA-Compensation and details of the calculation thereof.  The Authority shall, after receipt of the AA-Notice, be entitled by notice to require the Lessee to provide such further supporting particulars as the Authority may reasonably consider necessary.  If the Authority or the GDB, as the case may be, wishes to dispute the occurrence of an Adverse Action or the amount of AA-Compensation, if any, claimed in the AA-Notice, it shall give notice of dispute (the “AA-Dispute Notice”) to the Lessee within 30 days following the date of receipt by it of the AA-Notice stating in reasonable detail the grounds for such dispute.  If neither the AA-Notice nor the AA-Dispute Notice has been withdrawn within 30 days following the date of receipt of the AA-Dispute Notice by the Lessee, the matter shall be submitted to the dispute resolution procedure in Article 19.

 

(d)                                 If the Lessee has elected to exercise its right to AA-Compensation, the Authority shall pay the amount of Leasehold Compensation claimed by the Lessee within 60 days following the date of receipt of the AA-Notice, or if a AA-Dispute Notice has been given, then not later than 60 days following the date of determination of the AA-Compensation (together with interest at the rate set forth in Section 20.9 from the date of receipt of the AA-Dispute Notice to the date on which payment is made); provided that the Authority shall provide the AA-Compensation in accordance with Section 15.1(b) as if the related AA-Notice were a CE-Notice; and provided further that, subject to the right of the Lessee to receive interest at the rate set forth in Section 20.9 on the payment owed by the Authority from the date of receipt of the AA-Dispute Notice to the date on which payment is made, the Authority may defer any such payment for an additional 120 days if the Authority determines, in its discretion, that such additional period is necessary in order to obtain financing or otherwise to obtain the necessary funds to make such a payment.

 

Section 14.2                                      Termination.

 

(a)                                 If the Lessee has the right to terminate this Agreement in connection with an Adverse Action pursuant to Section 14.1, and the Lessee has exercised such right, this Agreement, subject to Section 14.3, shall terminate 120 days following the date of receipt of the AA-Notice by the Authority, and on the Reversion Date the Authority shall pay an amount (which amount shall be paid from general Authority funds and not from LMM Airport Facility revenues) equal to the aggregate, without duplication, of (i) the LMM Airport Facility Leasehold Value as of the date of termination (which shall be determined as if no Adverse Action has occurred), plus (ii)  the reasonable out-of-pocket and documented costs and expenses incurred by the Lessee as a direct result of such termination, plus (iii)  the Leasehold Compensation calculated for the period between the date of the Adverse Action and the Reversion Date, less (iv) any insurance or condemnation proceeds payable to the Lessee (or that should have been payable to the Lessee but for (x) the insurer’s inability to pay, (y) the breach by the Lessee of an obligation to take out or maintain insurance under this Agreement or (z) the invalidity or breach of any insurance policy caused by the Lessee under which such policy proceeds would have been paid) with respect to all or any portion of the LMM Airport Facility as a result of the occurrence of such Adverse Action (collectively, the “AA-Termination Damages”) to the Lessee on the Reversion Date or, if the AA-Termination Damages are determined on a date subsequent to the Reversion Date, then not later than 60 days following the date of determination of the AA-Termination Damages (together with interest at the rate set forth in Section 20.9 from the Reversion Date to the date on which payment

 

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is made); provided that, subject to the right of the Lessee to receive interest at the rate set forth in Section 20.9  on the payment owed by the Authority from the Reversion Date to the date on which payment is made, the Authority may defer any such payment for an additional 120 days if the Authority reasonably determines that such additional period is necessary to obtain financing or required approvals to make such a payment; provided, however, that any amounts received by the Lessee or any Leasehold Mortgagee from any insurance policies payable as a result of damage or destruction to the LMM Airport Facility that has not been remedied prior to the Reversion Date, shall, to the extent not used to remedy such effects, be deducted from the amount payable by the Authority to the Lessee so long as the Authority has not received any such amounts pursuant to Article 13.

 

(b)                                 Any dispute arising out of the determination of the AA-Termination Damages shall be submitted to the dispute resolution procedure in Article 19.

 

(c)                                  No AA-Notice given by the Lessee to the Authority in which the Lessee states that it elects to exercise its right of termination of this Agreement shall be valid for any purpose unless, if any Leasehold Mortgage Debt remains outstanding and if and to the extent required by the terms of any Leasehold Mortgage, the Lessee has first obtained and delivered to the Authority the written consent of the Leasehold Mortgagee to such AA-Notice.

 

(d)                                 Payment of the entire sum of AA-Termination Damages or the AA-Compensation, as the case may be, by the Authority to the Lessee, shall constitute full and final satisfaction of all amounts that may be claimed by the Lessee for and with respect to the occurrence of the Adverse Action and, upon such payment, the Authority shall be released and forever discharged by the Lessee from any and all liability with respect to such Adverse Action.

 

Section 14.3                                      Right of Authority to Remedy an Adverse Action.  If the Authority wishes to remedy the occurrence of an Adverse Action, the Authority shall give notice thereof to the Lessee within 30 days following the date of receipt of the AA-Notice.  If the Authority gives such notice, it must remedy the Adverse Action within 180 days following the date of receipt of the AA-Notice or, if a AA-Dispute Notice has been given, within 180 days following the final award pursuant to Article 19 to the effect that an Adverse Action occurred or, in either case, within such longer period as may be agreed to by the Lessee.  If the Authority remedies the occurrence of an Adverse Action within the applicable period of time, the right of the Lessee shall be limited to a claim for AA-Compensation with respect to such Adverse Action.

 

ARTICLE 15
 LEASEHOLD COMPENSATION; DELAY EVENTS

 

Section 15.1                                      Payment of Leasehold Compensation.

 

(a)                                 Notice.  Except as otherwise provided herein, if a Compensation Event occurs, the Lessee shall give notice (the “CE-Preliminary Notice”) to the Authority within 90 days following the date on which the Lessee first became aware of the Compensation Event stating that a Compensation Event has occurred.  Within 30 days following the date of delivery of the CE-Preliminary Notice, the Lessee shall give the Authority another notice (the “CE-Notice”) setting forth (i) details of the Compensation Event, including a specific explanation of the reasons that the

 

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event constitutes a Compensation Event under the terms of this Agreement and (ii) the amount claimed as Leasehold Compensation and details of the calculation thereof.  If the Authority or the GDB, as the case may be, wishes to dispute the occurrence of a Compensation Event or the amount of the Leasehold Compensation claimed in the CE-Notice, it shall give notice of dispute (the “CE-Dispute Notice”) to the Lessee within 60 days following the date of receipt by it of the CE-Notice stating the grounds for such dispute.  If neither the CE-Notice nor the CE-Dispute Notice has been withdrawn within 30 days following the date of receipt of the CE-Dispute Notice by the Lessee, the matter shall be submitted to the dispute resolution procedure in Article 19.

 

(b)                                 Payment.  Within 60 days following the date of receipt of a CE-Notice, or if a CE-Dispute Notice has been given as provided in Section 15.1(a) and not withdrawn (and the CE-Notice is not otherwise withdrawn by the Lessee), then not later than 60 days following the date of determination of the related Leasehold Compensation (the later of such dates being referred to herein as a “Compensation Date”), the Authority (except to the extent the Authority elects to provide the related Leasehold Compensation in accordance with Section 15.1(c)), shall pay the related Leasehold Compensation in cash, which Leasehold Compensation shall be then due and payable to the Lessee (except as otherwise provided in Section 15.1(e) and together with interest at the rate set forth in Section 20.9 from the date of receipt of the CE-Dispute Notice to the date on which payment is made); provided that, subject to the right of the Lessee to receive interest at the rate set forth in Section 20.9 on the Leasehold Compensation owed by the Authority from the date of receipt of the CE-Dispute Notice to the date on which payment is made, the Authority may defer the provision of any such Leasehold Compensation for an additional 120 days if the Authority reasonably determines that such additional period is necessary to obtain financing or required approvals to provide such Leasehold Compensation to the Lessee.  Notwithstanding the foregoing and except as provided in Section 15.1(e), in the event of a dispute regarding the amount of Leasehold Compensation, the Authority shall pay to the Lessee any undisputed portion of such Leasehold Compensation and any portion of such Leasehold Compensation that is subsequently agreed between the Parties, in each case not later than 60 days following the date that the Parties have agreed to such portion (together with interest at the rate set forth in Section 20.9 from the date of receipt of the CE-Dispute Notice to the date on which payment is made) (even if a dispute regarding a portion of the amount claimed by the Lessee is still pending); provided that the Authority shall have the right to defer providing such Leasehold Compensation for an additional 120 days under the terms set forth in the preceding sentence.

 

(c)                                  Term Option.

 

(i)                                     Notwithstanding anything to the contrary in this Agreement, and to the extent such Leasehold Compensation is not payable as part of Termination Damages and is not otherwise paid pursuant to Section 15.1(b), the Authority may elect (subject to Section 15.1(c)(ii) and (iii) and to the extent permitted by applicable Law) to provide any Leasehold Compensation due to the Lessee hereunder by extending the Term for a period of time that would be sufficient to restore the Lessee to the same economic position in which it would have been had such Compensation Event not occurred (subject to the prior receipt of any approval or Authorization necessary to extend the Term under the Act and otherwise in compliance with applicable Law). The Authority shall make such election by notice delivered to the Lessee not later than the related Compensation Date, which notice shall specify the amount of Leasehold Compensation to be provided pursuant to this Section 15.1(c).

 

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(ii)                                  Notwithstanding Section 15.1(c)(i), the Authority may not provide Lessee Compensation pursuant to Section 15.1(c)(i) in an amount that (A) cumulatively with all other amounts of Leasehold Compensation previously provided pursuant to Section 15.1(c)(i) would exceed $25,000,000 during the Term, (B) cumulatively with all other amounts of Leasehold Compensation previously provided pursuant to Section 15.1(c)(i) would exceed $10,000,000 prior to the fifth anniversary of the Closing or (C) in any year after the fifth anniversary of the Closing, cumulatively with all other amounts of Leasehold Compensation previously provided in such year pursuant to Section 15.1(c)(i) would exceed $1,000,000 in such year; provided that each of the foregoing dollar amounts shall be Adjusted for Inflation on each anniversary of the Closing during the Term; provided further that this Section 15.1(c)(ii) and its limitations do not apply to Leasehold Compensation due pursuant to a Delay Event Remedy.

 

(iii)                               Notwithstanding Section 15.1(c)(i), the Authority may not provide Leasehold Compensation pursuant to Section 15.1(c)(i) in respect of the Compensation Events contemplated by Section 2.5(i)(iii)(B) or Section 5.2(a).

 

(d)                                 Calculation.  Leasehold Compensation shall be sufficient to compensate the Lessee for (i) all documented Losses (including increased operating, financing and capital and maintenance costs, but excluding any costs and expenses that the Lessee would otherwise expend or incur in order to comply with this Agreement or in the ordinary course of the performance of the LMM Airport Facility Operations or the carrying on of business in the ordinary course) that are reasonably attributable to such Compensation Event and (ii) any documented Losses of the Lessee’s present and future revenues generated at the LMM Airport Facility that are reasonably attributable to such Compensation Event, after taking into account any insurance proceeds payable to the Lessee (or that should have been payable but for (A) the insurer’s inability to pay, (B) the breach of an obligation by the Lessee to take out or maintain insurance under this Agreement or (C) the invalidity or breach of any insurance policy caused by the Lessee under which policy such proceeds would have been paid) in connection with the Compensation Event, if applicable; provided, however, that unless otherwise specified in this Agreement, notice of any claim for Leasehold Compensation shall be made in writing to the Authority within 120 days of the date that the Lessee first became aware of such Compensation Event.  If the Lessee is required to expend its own funds (whether from operating cash flows or the proceeds of any debt or equity financing or otherwise) with respect to any Compensation Event prior to receipt or financing of the corresponding Leasehold Compensation or if the payment of Leasehold Compensation is deferred under Section 15.1(b), then the determination of Leasehold Compensation shall, in addition to the components described above, include such additional amounts as may be necessary to permit the Lessee to earn an after-Tax rate of return thereon at the then-applicable market-based rate of return to be agreed by the Lessee and the Authority.

 

(e)                                  Future Losses.  Any Leasehold Compensation payable pursuant to Section 15.1(b) with respect to Losses or lost revenues generated at the LMM Airport Facility or documented Losses (including increased operation, financing and capital and maintenance costs) that will not occur until the future shall be due solely when such losses would otherwise become due or are actually incurred or suffered or promptly thereafter.  If the Authority elects, notwithstanding the foregoing, to pay Leasehold Compensation with respect to Losses or lost revenues generated at the LMM Airport Facility that will occur in the future as a lump sum payment, the amount of such lump sum payment shall be based on a determination of the net

 

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present value of the impact of such Compensation Event over the remainder of the Term utilizing a discount factor that is reasonably determined by the Lessee (subject to the confirmation as to its reasonableness by the Authority).

 

(f)                                   Minimum Claim.  Notwithstanding the foregoing provisions of this Section 15.1, the Lessee may not make a claim for Leasehold Compensation unless the amount of such claim exceeds $25,000.

 

Section 15.2                                      Delay Events.

 

(a)                                 Notice.  If a Party is affected by a Delay Event, it shall give notice as soon as practicable and in no event later than 10 Business Days following the date on which it first obtains knowledge of such Delay Event to the other Party (provided that in the case of the same Delay Event being a continuing cause of delay, only one notice shall be necessary), which notice shall include (i) a statement of which Delay Event the claim is based upon, (ii) details of the circumstances from which the delay arises and (iii) an estimate of the delay in the performance of obligations under this Agreement attributable to such Delay Event and information in support thereof, if known at that time.  The Party receiving notice of a Delay Event shall, after receipt of such notice, be entitled by notice to require the Party affected by the Delay Event to provide such further supporting information or details as the Party receiving notice of the Delay Event may reasonably consider necessary.  The Party affected by the Delay Event shall notify the other Party as soon as practicable and in no event later than 10 Business Days following the date on which the Party affected by the Delay Event first became aware that a Delay Event has ceased.

 

(b)                                 Excused.  Subject to the Party affected by the Delay Event giving the notice required in Section 15.2(a), a Delay Event shall excuse the Party affected by the Delay Event from whatever performance is prevented by the Delay Event referred to in such notice for such appropriate number of days as the Authority and the Lessee jointly determine, each acting reasonably.  If the Authority and the Lessee cannot agree upon the period of delay, then either Party shall be entitled to refer the matter to the dispute resolution procedure in Article 19.  This Section 15.2(b) shall neither (i) excuse the Lessee from the performance and observance under this Agreement of any obligations and covenants not affected by the Delay Event nor (ii) prevent any of the Authority or its Representatives (or their respective designee) from exercising its rights under Section 3.7.  Notwithstanding the occurrence of a Delay Event, the Party affected by the Delay Event shall continue its performance and observance under this Agreement of all of its obligations and covenants to the extent that it is reasonably able to do so and shall use its Reasonable Efforts to minimize the effect and duration of the Delay Event.  Except as contemplated in the definition of Delay Event, nothing herein shall permit or excuse noncompliance with a change to applicable Laws.

 

(c)                                  Compensation.  If a Delay Event occurs that has the effect of causing physical damage or destruction to the LMM Airport Facility that results in the LMM Airport Facility being substantially unavailable for Airport Purposes or suspending airport fee collection at the LMM Airport Facility and such effect continues for a period in excess of 120 consecutive days and has a material adverse effect on the fair market value of the Lessee Interest, and insurance proceeds payable (or that should have been payable but for the breach of an obligation to take out and maintain such insurance policy by the Lessee) or condemnation or other similar proceeds are

 

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insufficient to restore the Lessee to the same economic position as it would have been in the absence of such event, then the Delay Event shall be a Compensation Event for which the Lessee (without in any way limiting its obligations pursuant to Section 13.3) shall be entitled to Leasehold Compensation (a “Delay Event Remedy”).

 

(d)                                 Delay Event Notice.  If the Lessee elects to exercise the right to the Delay Event Remedy, the Lessee shall give notice (“Delay Event Notice”) to the Authority within 30 days following the date on which the Lessee first became aware of its right to the Delay Event Remedy setting forth (i) the details of the Delay Event and its effect on either causing physical damage or destruction to the LMM Airport Facility that results in the LMM Airport Facility being substantially unavailable for Airport Purposes or suspending airport fee collection at the LMM Airport Facility and (ii) the amount claimed as compensation to restore the Lessee to the same economic position in which it would have been had such Delay Event not occurred (including the details of the calculation thereof).  The Authority shall, after receipt of the Delay Event Notice, be entitled by notice to require the Lessee to provide such further supporting information as the Authority may reasonably consider necessary.  If the Authority wishes to dispute the occurrence of a Delay Event or the Delay Event Remedy claimed in the Delay Event Notice, the Authority shall give notice of dispute (the “Delay Event Dispute Notice”) to the Lessee within 30 days following the date of receipt of the Delay Event Notice stating the grounds for such dispute, and if neither the Delay Event Notice nor the Delay Event Dispute Notice has been withdrawn within 30 days following the date of receipt of the Delay Event Dispute Notice by the Lessee, the matter shall be submitted to the dispute resolution procedure in Article 19.

 

ARTICLE 16
 DEFAULTS; LETTERS OF CREDIT

 

Section 16.1                                      Default by the Lessee.

 

(a)                                 Events of Default.  The occurrence of any one or more of the following events during the Term shall constitute a “Lessee Default” under this Agreement:

 

(i)                                     other than as described in Section 16.1(a)(ii), (iii), (iv) or (v), if the Lessee fails to comply with, perform or observe (A) any material obligation, covenant, agreement, term or condition in this Agreement (including, for the avoidance of doubt, the Operating Standards (with the exception of any requirement pursuant to the Operating Standards to undertake a capital improvement that is not otherwise required by Law and is not approved by the Airlines pursuant to Section 6.3 of the Use Agreement (or the equivalent provision in any successor use agreement))) or (B) the requirements or directives of a final award in a matter submitted to dispute resolution in accordance with Article 19, and such failure continues unremedied for a period of 90 days following notice thereof (giving particulars of the failure in reasonable detail) from the Authority to the Lessee; provided, however, that such failure shall not constitute a Lessee Default if the Lessee (x) within 90 days following such initial notice, has demonstrated to the satisfaction of the Authority, acting reasonably, that (1) the Lessee is proceeding, and will proceed, with all due diligence to cure or cause to be cured such failure and (2) the Lessee’s actions can be reasonably expected to cure or cause to be cured such failure within a reasonable period of time acceptable to the Authority, acting reasonably, and (y) such failure is in fact cured within such period of time;

 

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(ii)                                  if the Lessee fails to comply with, perform or observe any material obligation, covenant, agreement, term or condition in this Agreement (including, for the avoidance of doubt, the Operating Standards (with the exception of any requirement pursuant to the Operating Standards to undertake a capital improvement that is not otherwise required by Law and is not approved by the Airlines pursuant to Section 6.3 of the Use Agreement (or the equivalent provision in any successor use agreement))) or the requirements or directives of a final award in a matter submitted to dispute resolution in accordance with Article 19, which failure creates a material danger to the safety of LMM Airport Facility Operations or a material impairment to the LMM Airport Facility or to the continuing use of the LMM Airport Facility for Airport Purposes, or fails to pay amounts owed to the Authority when due (including the Annual Authority Payment or the Annual Authority Revenue Share) and, in either case, such failure remains unremedied for a period of 10 Business Days following initial notice thereof (giving particulars of the failure in reasonable detail) from the Authority to the Lessee;

 

(iii)                               if the Lessee fails to comply in any material respect with a work plan approved by the Authority in accordance with Section 16.1(b)(iii);

 

(iv)                              if (A) the Lessee fails to comply with any specified performance requirements set forth in the Operating Standards (with the exception of any requirement pursuant to the Operating Standards to undertake a capital improvement that is not otherwise required by Law and is not approved by the Airlines pursuant to Section 6.3 of the Use Agreement (or the equivalent provision in any successor use agreement)) three or more times within any calendar month, (B) notwithstanding the cure periods provided in Section 16.1(a)(i), any three such failures continue unremedied for a period of 30 days (or such longer period as may be reasonably necessary to cure such failure to the extent that the Lessee is diligently pursuing such cure) following notice thereof (giving particulars of the failure in reasonable detail) from the Authority to the Lessee and the Lessee has not provided to the Authority a remediation plan therefor reasonably acceptable to the Authority (each calendar month during which such three failures shall have continued unremedied or unaddressed by a remediation plan, as aforesaid, a “Persistent Breach Month”), and (C) 12 Persistent Breach Months shall have occurred during any period of 24 calendar months; provided that no Persistent Breach Month shall result from the failure by the Lessee to comply with such specified performance requirements if such failure occurs prior to the first anniversary of the Closing and provided further that, for the avoidance of doubt, any cure of any Lessee Default under this Section 16.1(a)(iv) shall require the cure of each failure that has occurred during any Persistent Breach Month;

 

(v)                                 if this Agreement or all or any portion of the Lessee Interest is Transferred in contravention of Article 17;

 

(vi)                              if the Lessee (A) admits, in writing, that it is unable to pay its debts as such become due, (B) makes an assignment for the benefit of creditors, (C) files a voluntary petition under Title 11 of the United States Code, or if the Lessee files any petition or answer seeking, consenting to or acquiescing in any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under the present or any future United States bankruptcy code or any other present or future applicable Law, or shall seek or consent to or acquiesce in or suffer the appointment of any trustee, receiver, custodian, assignee, sequestrator, liquidator or other similar official of the Lessee, or of all or any substantial part of its properties or

 

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of the LMM Airport Facility or any material interest therein, or (D) takes any corporate action in furtherance of any action described in this Section 16.1(a)(v);

 

(vii)                           if within 90 days after the commencement of any proceeding against the Lessee seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under the present or any future United States bankruptcy code or any other present or future applicable Law, such proceeding has not been dismissed, or if, within 90 days after the appointment, without the consent or acquiescence of the Lessee, of any trustee, receiver, custodian, assignee, sequestrator, liquidator or other similar official of the Lessee or of all or any substantial part of its properties or of the LMM Airport Facility or any material interest therein, such appointment has not been vacated or stayed on appeal or otherwise, or if, within 90 days after the expiration of any such stay, such appointment has not been vacated; or

 

(viii)                        if a levy under execution or attachment has been made against all or any material portion of the LMM Airport Facility or any material interest therein as a result of any Encumbrance (other than a Permitted Lessee Encumbrance) created, incurred, assumed or suffered to exist by the Lessee or any Person claiming through it, and such execution or attachment has not been vacated, removed or stayed by court order, bonding or otherwise within 60 days after the Lessee becomes aware of such levy or attachment, unless such levy or attachment resulted from actions or omissions of the Authority, its Representatives or any Governmental Authority established under the Laws of the Commonwealth.

 

(b)                                 Remedies of the Authority Upon Lessee Default.  Upon the occurrence of and during the continuance of a Lessee Default, the Authority may, by notice to the Lessee with a copy to the Signatory Airlines, the FAA Associate Administrator of Airports, the TSA Federal Security Director for the LMM Airport Facility and the Leasehold Mortgagee in accordance with the terms hereof, declare the Lessee to be in default and may, subject to the rights of the Leasehold Mortgagee pursuant to Sections 18.3, 18.4 and 18.5 and the provisions set forth in Articles 18, 19 and 20, do any or all of the following as the Authority, in its discretion, shall determine:

 

(i)                                     upon the occurrence of a Lessee Default described in Section 16.1(a)(ii), the Authority is entitled to terminate this Agreement (without the need for any other action on behalf of the Authority) upon notice to the Lessee, which may be given immediately upon the expiration of the 10-Business-Day period described in Section 16.1(a)(ii) (for the avoidance of doubt, the entitlement of the Lessee to cure such Lessee Default by the delivery of an approved work plan, as described in Section 16.1(b)(iii), shall not apply thereto);

 

(ii)                                  upon the occurrence of a Lessee Default described in Section 16.1(a)(iii), the Authority is entitled to terminate this Agreement (without the need for any other action on behalf of the Authority) by giving 90 days’ prior notice to the Lessee (for the avoidance of doubt, the entitlement of the Lessee to cure such Lessee Default by the delivery of an approved work plan, as described in Section 16.1(b)(iii), shall not apply thereto);

 

(iii)                               upon the occurrence of a Lessee Default other than one described in Section 16.1(a)(ii) or 16.1(a)(iii), the Authority is entitled to terminate this Agreement (without the need for any other action on behalf of the Authority) by giving 90 days’ prior notice to the Lessee; provided, however, that the Lessee shall be entitled to cure such a curable Lessee Default

 

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by providing the Authority with a written work plan within such 90-day period, which work plan shall be Approved by the Authority, outlining the actions by which the Lessee will ensure future compliance with either the obligation, covenant, agreement, term or condition in this Agreement or the requirements or directives of the issued final award in accordance with Article 19 that the Lessee failed to perform or observe; provided further that the Authority shall not exercise the remedy provided in this Section 16.1(b)(iii) if the Lessee Default consists solely of a violation of any of the provisions of Article 11 unless such violation is systematic or persistent or the exercise of such remedy is required by Law (but any violation of such Article 11 shall nonetheless subject the Lessee to such fines or penalties otherwise applicable to such violation as they be imposed by the appropriate Governmental Authority or to the imposition of a requirement on the Lessee to demonstrate to the Authority that the Lessee has or will implement all actions considered necessary by the Authority (which may include a remedial plan) to ensure that such violations do not become systematic or persistent); provided further that the remedies for rescission or termination of this Agreement required by Act No. 458 of the Legislative Assembly of Puerto Rico enacted on December 29, 2000, as amended, Act No. 237 of the Legislative Assembly of Puerto Rico enacted on August 31, 2004, as amended, and Act No. 84 of the Legislative Assembly of Puerto Rico enacted on June 18, 2002, as amended, shall be exclusively as provided in Section 16.6.

 

(iv)                              if the Lessee Default is by reason of the failure to pay any monies, the Authority is entitled to (without obligation to do so) make payment on behalf of the Lessee of such monies, and any amount so paid by the Authority shall be payable by the Lessee to the Authority within three Business Days after written demand therefor;

 

(v)                                 subject to the cure rights of the Leasehold Mortgagee set forth in Section 18.3, the Authority is entitled to cure the Lessee Default (but this shall not obligate the Authority to cure or attempt to cure a Lessee Default or, after having commenced to cure or attempted to cure a Lessee Default, to continue to do so), and all costs and expenses reasonably incurred by the Authority in curing or attempting to cure the Lessee Default, together with an administrative fee equal to 15% of such costs and expenses, shall be payable by the Lessee to the Authority within three Business Days following written demand therefor; provided, however, that (A) the Authority shall not incur any liability to the Lessee for any act or omission of the Authority or any other Person in the course of remedying or attempting to remedy any Lessee Default (other than as a result of gross negligence or willful misconduct) and (B) the Authority’s cure of any Lessee Default shall not affect the Authority’s rights against the Lessee by reason of the Lessee Default;

 

(vi)                              the Authority is entitled to seek specific performance, injunction or other equitable remedies, it being acknowledged that damages are an inadequate remedy for a Lessee Default;

 

(vii)                           the Authority is entitled to seek to recover its Losses arising from such Lessee Default and any amounts due and payable under this Agreement and, in connection therewith, exercise any recourse available to any Person who is owed damages or a debt under applicable Law;

 

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(viii)                        the Authority is entitled to, subject to applicable Law, distrain against any of the Lessee’s goods situated at the LMM Airport Facility and the Lessee waives any statutory protections and exemptions in connection therewith;

 

(ix)                              the Lessee may be debarred or suspended for 10 years in accordance with Section 10(a)(xv)(C) of the Act; and

 

(x)                                 the Authority is entitled to exercise any of its other rights and remedies provided for hereunder or at law or in equity.

 

Section 16.2                                      Defaults by the Authority.

 

(a)                                 Events of Default.  The occurrence of any one or more of the following events during the Term shall constitute a “Authority Default” under this Agreement:

 

(i)                                     other than as described in Section 16.2(a)(ii) or (v), if the Authority fails to comply with, perform or observe any material obligation, covenant, agreement, term or condition in this Agreement (other than an Adverse Action) or the requirements or directives of a final award in a matter submitted to dispute resolution in accordance with Article 19, and such failure or breach continues unremedied for a period of 90 days following notice thereof (giving particulars of the failure in reasonable detail) from the Lessee to the Authority; provided, however, that such failure shall not constitute an Authority Default if the Authority (A) within 90 days following such initial notice, has demonstrated to the satisfaction of the Lessee, acting reasonably, that (1) the Authority is proceeding, and will proceed, with all due diligence to cure or cause to be cured such failure and (2) the Authority’s actions can be reasonably expected to cure or cause to be cured such failure within a reasonable period of time acceptable to the Lessee, acting reasonably, and (B) such failure is in fact cured within such period of time;

 

(ii)                                  if the Authority fails to comply in any material respect with a work plan approved by the Lessee in accordance with Section 16.2(b)(iii);

 

(iii)                               if a levy under execution or attachment has been made against all or any material portion of the LMM Airport Facility or the Lessee Interest as a result of any Encumbrance (other than a Permitted Authority Encumbrance) created, incurred, assumed or suffered to exist by the Authority or any Person claiming through it, and such execution or attachment has not been vacated, removed or stayed by court order, bonding or otherwise within 60 days after the Authority becomes aware of such levy or attachment, unless such levy or attachment resulted from actions or omissions of the Lessee or its Representatives or if all or any material portion of the LMM Airport Facility shall be subject to a condemnation or similar taking by the Authority or any Governmental Authority; or

 

(iv)                              the Authority Transfers any or all of its interest in the LMM Airport Facility or this Agreement other than in compliance with Section 17.4.

 

(b)                                 Remedies of Lessee Upon Authority Default.  Upon the occurrence and during the continuance of an Authority Default, the Lessee may by notice to the Authority with a copy to the Signatory Airlines, the FAA Associate Administrator of Airports and the TSA Federal Security Director for the LMM Airport Facility in accordance with the terms hereof, declare the

 

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Authority to be in default and may, subject to the provisions of Article 19, do any or all of the following as the Lessee, in its discretion, shall determine:

 

(i)                                     the Lessee is entitled to be paid by the Authority the Leasehold Compensation with respect thereto;

 

(ii)                                  upon the occurrence of an Authority Default described in Section 16.2(a)(ii), the Lessee is entitled to terminate this Agreement (without the need for any other action on behalf of the Lessee) by giving 90 days’ prior notice to the Authority (the “Initial Termination Notice”) (for the avoidance of doubt, the entitlement of the Authority to cure such Authority Default by the delivery of an approved work plan, as described in Section 16.2(b)(iii), shall not apply thereto); and upon such termination the Authority shall be obligated to pay to the Lessee an amount (which amount shall be paid from general Authority funds and not from LMM Airport Facility revenues) calculated in accordance with Section 16.2(c);

 

(iii)                               upon the occurrence of an Authority Default other than one described in Section 16.2(a)(ii), the Lessee is entitled to terminate this Agreement (without the need for any other action on behalf of the Lessee) by giving 90 days’ prior notice to the Authority (like the notice described in Section 16.2(b)(ii), also the “Initial Termination Notice”); provided, however, that the Authority shall be entitled to cure an Authority Default pursuant to Section 16.2(a)(i) by providing the Lessee with a written work plan within such 90-day period, which work plan shall be approved by the Lessee (which approval shall not be unreasonably withheld, delayed or conditioned), outlining the actions by which the Authority will ensure future compliance with either the obligation, covenant, agreement, term or condition in this Agreement or the requirement or directive of the final award in accordance with Article 19 that the Authority failed to perform or observe; and upon such termination the Authority shall be obligated to pay to the Lessee an amount (which amount shall be paid from general Authority funds and not from LMM Airport Facility revenues) calculated in accordance with Section 16.2(c);

 

(iv)                              the Lessee is entitled to seek to recover its Losses arising from such Authority Default and any amounts due and payable under this Agreement and, in connection therewith, exercise any recourse available to any Person who is owed damages or a debt under applicable Law; and

 

(v)                                 the Lessee is entitled to exercise any of its other rights and remedies provided for hereunder or at law or in equity.

 

(c)                                  Calculation of Termination Damages.  Upon termination in accordance with Section 16.2(b)(ii) or Section 16.2(b)(iii), the Authority shall be obligated to pay on the Reversion Date to the Lessee an amount (which amount shall be paid from general Authority funds and not from LMM Airport Facility revenues) equal to the aggregate, without duplication, of (i) the LMM Airport Facility Leasehold Value as of the date of termination, plus (ii) the reasonable out-of-pocket and documented costs and expenses incurred by the Lessee as a direct result of such termination, plus (iii) the Leasehold Compensation calculated for the period between the date of the Authority Default and the date of termination, less (iv) any insurance or condemnation proceeds payable to the Lessee (or that should have been payable to the Lessee but for (x) the insurer’s inability to pay, (y) the breach by the Lessee of an obligation to take out or maintain

 

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insurance under this Agreement or (z) the invalidity or breach of any insurance policy caused by the Lessee under which such policy proceeds would have been paid) with respect to all or any portion of the LMM Airport Facility as a result of the occurrence of such Authority Default (collectively, the “AD-Termination Damages”) to the Lessee or, if the AD-Termination Damages are determined on a date subsequent to the Reversion Date, then not later than 60 days following the date of determination (which determination shall not be unreasonably delayed) of the AD-Termination Damages (together with interest at the rate set forth in Section 20.9 from the Reversion Date to the date on which payment is made); provided that, subject to the right of the Lessee to receive interest at the rate set forth in Section 20.9 on the payment owed by the Authority from the Reversion Date to the date on which payment is made, the Authority may defer any such payment for an additional 120 days if the Authority reasonably determines that such additional period is necessary to obtain financing to make such a payment; provided further that, subject to (A) the right of the Lessee to receive interest at the rate set forth in Section 20.9 on the payment owed by the Authority from the Reversion Date (or, if earlier, the 60th day after the giving of the Initial Termination Notice) to the date on which payment is made and (B) the Authority providing written notice of such deferral (a “Deferral Notice”) to the Lessee no later than 30 days after the date on which the Lessee gives the Initial Termination Notice, the Authority may defer any such payment for an additional 120 days if the Authority reasonably determines (which determination shall be certified to in the Deferral Notice) that such additional period is necessary to obtain financing to make such a payment (it being agreed by the Authority and the Lessee that if the Authority gives a Deferral Notice, then the Lessee shall have the option (by giving written notice thereof to the Authority) to postpone the termination of this Agreement from the date of termination set forth in the Initial Termination Notice to any date that is on or prior to the expiration of such additional 120-day period and such postponement shall not further defer the date on which any such payment is required to be made by the Authority); provided, however, that any amounts received by the Lessee or any Leasehold Mortgagee from any insurance policies payable as a result of damage or destruction to the LMM Airport Facility that has not been remedied prior to the Reversion Date, shall, to the extent not used to remedy such effects, be deducted from the amount payable by the Authority to the Lessee so long as the Authority has not received any such amounts pursuant to Article 13.

 

(d)                                 Any dispute arising out of the determination of the AD-Termination Damages shall be submitted to the dispute resolution procedure in Article 19.

 

(e)                                  No notice given by the Lessee to the Authority in which the Lessee states that it elects to exercise its right of termination of this Agreement shall be valid for any purpose unless, if any Leasehold Mortgage Debt remains outstanding and if and to the extent required by the terms of any Leasehold Mortgage, the Lessee has first obtained and delivered to the Authority the written consent of the Leasehold Mortgagee to such notice.

 

Section 16.3                                      Letters of Credit; Capital Costs Reserve.

 

(a)                                 The Lessee shall deliver no later than the first day of the Term Year that is five years prior to the final Term Year of the Term, a Letter of Credit in the amount that the Independent Engineer reasonably determines is appropriate to cover all costs of capital improvements for the remainder of the Term as set forth in the capital improvement requirements included in the Operating Standards.

 

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(b)                                 Subject to Section 16.3(c), such Letter of Credit shall be replaced on every anniversary of such Term Year until the date that is three years after the later of (i) the expiration of the Term and (ii) such time as there is no unresolved dispute with respect to the Lessee’s compliance with or performance or observation of any obligation, covenant, agreement, term or condition in this Agreement with a Replacement Letter of Credit in the amount of the undrawn balance of such Letter of Credit plus the amount of interest that would have been earned on such balance if invested for the next 12-month period at the Bank Rate.  The required amount of any Letter of Credit may be adjusted from time to time (at intervals that may be shorter than one Term Year) by the amount that the Independent Engineer reasonably determines is appropriate (taking into account progress by the Lessee made toward the completion of capital improvements and changes in costs of remaining capital improvements) such that the amount of the Letter of Credit after such adjustment remains sufficient to cover all costs of capital improvements for the remainder of the Term as required by the Operating Standards.  Upon the occurrence and continuance of a Lessee Default (or if there is a dispute as to the occurrence of a Lessee Default, upon a final decision pursuant to Article 19 that a Lessee Default has occurred), the Authority shall have the right (in addition to all other rights and remedies provided in this Agreement, but with the understanding that any other monetary damages that the Authority may recover will be reduced by the amount so drawn, and without the Authority’s exercise of such right being deemed a waiver or a cure of the Lessee’s failure to perform and whether or not this Agreement is thereby terminated), with three Business Days’ prior notice to the Lessee, to draw against such Letter of Credit or any replacement thereof, upon presentation of a sight draft and a certificate confirming that the Authority has the right to draw under such Letter of Credit in the amount of such sight draft, up to the amount due to the Authority with respect to such Lessee Default.

 

(c)                                  The Lessee shall replace each Letter of Credit with a replacement Letter of Credit (the “Replacement Letter of Credit”) at least 60 days prior to the expiry date of a Letter of Credit which is expiring.  If the Lessee does not deliver to the Authority a Replacement Letter of Credit within such time period, the Authority shall have the right (in addition to all other rights and remedies provided in this Agreement and without the Authority’s exercise of such right being deemed a waiver or a cure of the Lessee’s failure to perform and whether or not this Agreement is thereby terminated) to draw immediately the full amount of the Letter of Credit upon presentation of a sight draft and a certificate confirming that the Authority has the right to draw under such Letter of Credit in the amount of such sight draft; provided that any drawings under such Letter of Credit must be used by the Authority solely for the purposes of covering the cost of capital improvements for the remainder of the Term as required by the Operating Standards.  After the Lessee delivers to the Authority a Replacement Letter of Credit complying with the provisions of this Agreement, the Authority shall deliver in accordance with the Lessee’s reasonable instructions the Letter of Credit being replaced (provided that at such time no sight draft under such Letter of Credit is outstanding and unpaid) and, if applicable, shall return to the Lessee any proceeds of any drawings under such Letter of Credit pursuant to the preceding sentence.  Any Replacement Letter of Credit shall be upon the same terms and conditions as the Letter of Credit replaced and satisfy the requirements for a Letter of Credit, but in any event (i) the amount of each Replacement Letter of Credit, except as provided in Section 16.3(b), shall equal or exceed the amount of the Letter of Credit being replaced at the time of replacement and (ii) the date of the Replacement Letter of Credit shall be its date of issuance.  The expiry date of the Replacement Letter of Credit, as referred to in the opening paragraph of such Replacement Letter of Credit, shall be not earlier than one year

 

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later than the expiry date of the Letter of Credit being replaced or such other shorter period acceptable to the Authority as required hereunder.

 

(d)                                 If this Agreement is terminated by the Authority prior to the expiration of the Term as a result of a Lessee Default in accordance with the terms hereof, the Authority shall have the right, but without duplication to Section 16.3(b) (in addition to all other rights and remedies provided in this Agreement, but with the understanding that any other monetary damages recoverable by the Authority may be reduced by the amount so drawn, and without the Authority’s exercise of such right being deemed a waiver or a cure of the Lessee’s failure to perform), with three Business Days’ prior notice to the Lessee, to draw against any Letter of Credit, upon presentation of a sight draft and a certificate confirming that the Authority has the right to draw under such Letter of Credit in the amount of such sight draft, up to the amount due to the Authority pursuant to the terms of this Agreement with respect to such Lessee Default.

 

(e)                                  The Authority will accept the Letters of Credit to be delivered pursuant to this Section 16.3 (and pursuant to Section 2.3) as security for the Lessee’s obligations under this Agreement, in place of a cash deposit in the same amount.  The Lessee’s sole remedy in connection with the improper presentment or payment of sight drafts drawn under the Letter of Credit shall be the right to obtain from the Authority a refund of the amount of any sight draft the proceeds of which were drawn inappropriately or misapplied and the reasonable costs incurred by the Lessee as a result of such draw or misapplication (including, for the avoidance of doubt, interest thereupon); provided, however, that at the time of such refund, the Lessee increases the amount of the Letter of Credit to the amount (if any) then required under the applicable provisions of this Agreement. The Lessee acknowledges that the presentment of sight drafts drawn under the Letter of Credit could not under any circumstances cause the Lessee injury that could not be remedied by an award of money damages, and that the recovery of money damages would be an adequate remedy therefor.  The Lessee shall not request or instruct the issuer of the Letter of Credit to refrain from paying any sight draft drawn under a Letter of Credit.

 

(f)                                   If the Authority desires to assign its rights and obligations in accordance with Section 17.4 of this Agreement, the Lessee shall cooperate so that concurrently with the effectiveness of such assignment, either Replacement Letters of Credit as described in Section 16.3(c) for, or appropriate amendments to, the Letters of Credit then held by the Authority, in either case identifying as beneficiary the appropriate party after the assignment becomes effective, shall be delivered to the Authority, at no cost to the Lessee.

 

(g)                                  The Lessee shall obtain and furnish all Letters of Credit and Replacement Letters of Credit at its sole cost and expense (except as noted above) and shall pay all charges imposed in connection with the Authority’s presentation of appropriate sight drafts and drawing against the Letters of Credit or Replacement Letters of Credit.

 

(h)                                 In lieu of any Letter of Credit to be provided by the Lessee pursuant to the terms of this Section 16.3, whether in whole or in part, the Lessee shall, at the Lessee’s discretion, have the option:

 

(i)                                     to provide a surety bond or other similar form of security (in each case, consistent (including as to form and credit quality of issuer) with the requirements set forth

 

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herein for Letters of Credit) or to deposit with a Depositary for the benefit of the Authority, as collateral security, cash or Eligible Investments in an amount equal to the amount of such Letter of Credit, or relevant part thereof, at the time of such deposit, or

 

(ii)                                  to create and maintain a reserve account (the “Capital Costs Reserve”) in such amount as may be required by, and under the control of, the Leasehold Mortgagee for the purpose of providing for the payment, whether in whole or in part, of the costs of capital improvements required by the Operating Standards for the remainder of the Term; provided that the terms under which such Capital Costs Reserve is established and maintained under the applicable financing agreements will ensure its availability to the Authority in the case of a Lessee Default, subject only to the rights of the Leasehold Mortgagee.  In the event the Lessee opts to establish a deposit pursuant to Section 16.3(h)(i), the Depositary shall invest and reinvest such amounts in Eligible Investments at the direction of the Lessee and any earnings thereon shall be paid to the Lessee.  If, at any time during the Term, the Authority would have the right to draw any amount on a Letter of Credit for which the Lessee has substituted cash or Eligible Investments or the Capital Costs Reserve pursuant to this Section 16.3(h), the Lessee shall cause the Depositary to pay such amount to the Authority from such cash deposit or Eligible Investments or the Lessee shall cause the Leasehold Mortgagee to pay such amount to the Authority from the Capital Costs Reserve, as the case may be, in accordance with the terms of this Section 16.3, and all rights and remedies of the Authority and the Lessee with respect to such cash deposits or, Eligible Investments, if any, and Capital Costs Reserve (subject to the rights of the Leasehold Mortgagee in the Capital Costs Reserve) shall be the same as those provided in this Section 16.3 with respect to any Letter of Credit; provided, however, that the certification that would have been provided by the Authority with the sight draft had cash or Eligible Investments not been so substituted shall be made to the Depositary and delivered to the Depositary together with the Authority’s written demand for payment.

 

(i)                                     If Letters of Credit shall not in the future be available at commercially reasonable terms and rates or shall not be a commercially reasonable form of security in similar transactions, the Lessee shall furnish the Authority with comparable security instruments or Eligible Investments that then are commonly used in similar transactions and which are Approved by the Authority; and if no such security instruments shall be available, the Lessee shall deposit with the Authority cash as security.

 

(j)                                    In the event that the issuer of a Letter of Credit, a Replacement Letter of Credit, a surety bond or any other form of security delivered pursuant to Section 16.3(h) no longer meets the credit rating requirements for such issuer set forth in this Agreement, then the Lessee shall have the obligation to replace such Letter of Credit, Replacement Letter of Credit, surety bond or other security with an instrument that meets the requirements set forth in this Agreement.  If the Lessee shall not have replaced such Letter of Credit, Replacement Letter of Credit, surety bond or other security with an instrument that meets the requirements set forth in this Agreement within 30 days, the Authority shall have the right (in addition to all other rights and remedies provided for in this Agreement, without the Authority’s exercise of such right to be deemed a waiver or cure of the Lessee’s failure to perform and whether or not this Agreement is thereby terminated), with two Business Days’ prior notice to the Lessee, to draw against such Letter of Credit, Replacement Letter of Credit, surety bond or other security in accordance with its terms in

 

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the full amount available thereunder, but with the understanding that any other monetary damages that the Authority may recover will be reduced by the amount so drawn.

 

(k)                                 Any Letter of Credit, Replacement Letter of Credit, surety bond or other form of security delivered pursuant to Section 16.3(h) shall provide that the Authority may draw on such Letter of Credit, Replacement Letter of Credit, surety bond or other security in accordance with its terms in the circumstances set forth in Section 16.4(j).

 

Section 16.4                                      Consequences of Termination or Reversion.

 

(a)                                 Upon the termination of this Agreement and, in the event of termination pursuant to Section 14.1, Section 16.2(b)(ii), Section 16.2(b)(iii), Section 16.5 or Section 16.6, concurrently with the payment to the Lessee of all Termination Damages due as a result of such termination (notwithstanding any claims the Parties may have against each other and subject to Section 16.2(b)(iv) and Article 18), the following provisions shall apply: the Lessee shall, without any action whatsoever being necessary on the part of the Authority, well and truly surrender and deliver to the Authority the LMM Airport Facility (including all improvements to the LMM Airport Facility), the LMM Airport Facility Assets and all tangible and intangible personal property (including inventories) located at the LMM Airport Facility or used in connection with the LMM Airport Facility Operations (except in the case of a termination in the circumstances contemplated by Section 13.3(b)) in good order, condition and repair (reasonable wear and tear excepted), determined reasonably in accordance with the then applicable Operating Standards, free and clear of all Encumbrances created, incurred, assumed or suffered to exist by the Lessee or any Person claiming through it other than (i) Permitted Lessee Encumbrances set forth in clause (v), clause (viii) and clause (ix) as it pertains to clauses (v), (viii) and clause (ix) of the definition of that term, (ii) Permitted Authority Encumbrances, (iii) those created by or suffered to exist or consented to by the Authority or any Person claiming through it and (iv) with respect to any property added to the LMM Airport Facility after the Time of Closing, title defects affecting such property in existence on the date such property is added to the LMM Airport Facility;

 

(b)                                 the Lessee hereby waives any notice now or hereafter required by Law with respect to vacating the LMM Airport Facility on the Reversion Date;

 

(c)                                  the Authority shall, as of the Reversion Date, assume full responsibility for the LMM Airport Facility Operations (including with respect to all of the Lessee’s obligations under the Use Agreement; provided that the Authority shall not be obligated to assume all or any portion of an amended or new use agreement that is entered into after the Closing Date unless the Authority has consented to such amended or new use agreement (which consent the Authority will not unreasonably withhold, delay or condition), in which case the terms and conditions of the Use Agreement shall govern), and as of the Reversion Date, the Lessee shall have no liability or responsibility for LMM Airport Facility Operations occurring after such date and the Authority shall be responsible for satisfying all applicable FAA, TSA and other Governmental Authority requirements (including maintaining compliance with 14 C.F.R. Part 139 and obtaining TSA approval under 49 C.F.R. Part 1542 of an Airport Security Program);

 

(d)                                 the Lessee shall be liable for all costs, expenses and other amounts for which it is expressly liable or responsible hereunder incurred up to but not including the Reversion Date,

 

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and the Authority shall be liable for all costs, expenses and amounts incurred in connection with the LMM Airport Facility Operations on and after the Reversion Date;

 

(e)                                  the Authority shall have the option by providing notice to the Lessee of requiring that the Lessee assign (to the extent assignable), without warranty or recourse to the Lessee, all of its right, title and interest in, to and under all or any of the Operating Agreements then in effect and all Authorizations to the Authority or its nominee for the remainder of their respective terms (and the Lessee during the Term shall require and ensure that all Operating Agreements contain appropriate assignment provisions that will allow the Lessee and the other party thereto to effectuate the foregoing); provided, however, that if the Authority exercises such option, the right, title and interest of the Lessee in, to and under such Operating Agreements and Authorizations shall be assigned to the Authority or its designee as of the Reversion Date and the Lessee shall surrender the LMM Airport Facility to the Authority and shall cause all Persons claiming under or through the Lessee to do likewise, and the Authority shall assume in writing, pursuant to an assumption agreement reasonably satisfactory to the Lessee, the Lessee’s obligations under the Operating Agreements that arise in respect of, or relate to, any period of time falling on and after the Reversion Date; provided further that if the Authority does not exercise such option, the Lessee shall, unless the Authority has granted to a Leasehold Mortgagee or its nominee, a new lease agreement containing the same provisions as are contained in this Agreement, take such steps as are necessary to terminate the Operating Agreements;

 

(f)                                   all plans, drawings, specifications and models prepared in connection with construction at the LMM Airport Facility and in the Lessee’s possession and all “as-built” drawings shall become the sole and absolute property of the Authority, and the Lessee shall promptly deliver to the Authority all such plans, drawings, specifications and models and all such as-built drawings (but may keep copies of those plans, drawings, specifications and models that were developed by the Lessee or its Representatives);

 

(g)                                  the Lessee, at its sole cost and expense, shall promptly deliver to the Authority copies of all records and other documents relating to the revenues generated at the LMM Airport Facility that are in the possession of the Lessee or its Representatives and all other then existing records and information relating to the LMM Airport Facility as the Authority, acting reasonably, may request;

 

(h)                                 the Lessee shall execute and deliver to the Authority a release or other instrument reasonably required by the Authority to evidence such expiration or termination;

 

(i)                                     the Lessee shall assist the Authority in such manner as the Authority may reasonably require to ensure the orderly transition of control, operation, management, improvement, enhancements, development, maintenance and rehabilitation of the LMM Airport Facility, and shall, if appropriate and if requested by the Authority, take all steps as may be necessary to enforce the provisions of the Operating Agreements pertaining to the surrender of the LMM Airport Facility;

 

(j)                                    the Authority and the Lessee shall make appropriate adjustments, including adjustments relating to any Operating Agreements assigned to the Authority, fees and other similar charges collected on and after the Reversion Date that are incurred prior to the Reversion Date,

 

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and utilities, and any adjustments and payment therefor shall be made by the appropriate Party on the Reversion Date, but shall be subject to readjustment if necessary because of error in matters such as information, calculation, payments and omissions that are identified within the period of 180 days following the Reversion Date; provided, however, that the Authority and the Lessee acknowledge that certain adjustments or readjustments may have to be made when a third-party provides to the Authority or the Lessee a final adjustment amount in respect of a matter, and for such matters the adjustment and readjustment date shall each be correspondingly extended;

 

(k)                                 in the event that, at the time of expiration of the Term (but not the earlier termination in accordance with the terms of this Agreement), the Lessee had constructed, or commenced construction on, any capital improvement projects required to be completed in accordance with the terms of this Agreement or the Use Agreement (including in respect of the Operating Standards), other than the General Accelerated Upgrades, for which reimbursement (in the form of PFCs, Government Grants-In-Aid, increased Airline charges to the extent permitted by the Use Agreement, or otherwise) was anticipated by the Lessee, but for which the Lessee had not received, as of the date of such expiration of the Term, such anticipated reimbursement for the amounts incurred by the Lessee on such capital improvement projects, the Authority shall provide reimbursement to the Lessee on the Reversion Date in an amount equal to the amount of the anticipated reimbursements not yet received by the Lessee as of the Reversion Date; provided that, with respect to any project that is commenced after the last day of the Term Year that is ten years prior to the final Term Year of the Term, this provision shall be applicable only to the extent that (i) such project is a Government-Mandated Capital Project (as such term is defined in the Use Agreement), (ii) such project has been approved by the Airlines pursuant to Section 6.3 of the Use Agreement (or the equivalent provision in any successor use agreement) or (iii) the Authority has granted prior Approval for such project; and provided further that, subject to the right of the Lessee to receive interest at the rate set forth in Section 20.9 on the payment owed by the Authority from the Reversion Date to the date on which payment is made, the Authority may defer any such payment for an additional 120 days if the Authority reasonably determines that such additional period is necessary to obtain financing to make such a payment; and provided further, however, that, the Lessee shall use its Reasonable Efforts to cooperate with the Authority with respect to transferring (to the extent practicable) any Lessee financing in respect of such capital improvement projects secured by or payable from such PFC, Government Grants-In-Aid, increased Airline charges or other revenues or otherwise effectuating substitute financing for such Lessee financing secured by or payable from such PFC, increased Airline charges or other revenues;

 

(l)                                     if this Agreement is terminated as a result of an Adverse Action, the payment by the Authority to the Lessee of the amounts required under Article 14 or Article 19 shall constitute full and final settlement of any and all Claims the Lessee may have against the Authority for and in respect of the termination of this Agreement and upon such payment, the Lessee shall execute and deliver all such releases and discharges as the Authority may reasonably require to give effect to the foregoing;

 

(m)                             the Authority hereby covenants and agrees that in the event of any termination of this Agreement and reversion of the LMM Airport Facility to the Authority, or in the event the Lessee should abandon and cease to perform its obligations at any time prior to such termination, the Authority will take all reasonable actions, subject to all necessary approvals by the FAA and the TSA, to assume responsibility for the management of the LMM Airport Facility

 

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in order to permit its continued operation without interruption in accordance with the Operating Standards and all applicable Law; and

 

(n)                                 the Lessee shall make any final payment of the Annual Authority Payment or Annual Authority Revenue Share required in accordance with Section 2.1.

 

This Section 16.4 shall survive the expiration or any earlier termination of this Agreement.

 

Section 16.5                                      Termination Other Than Pursuant to Agreement.  If this Agreement is terminated by the Authority other than pursuant to Article 16 or is canceled, rescinded or voided by the Authority during the Term for any reason over the objection and without action by the Lessee, any Leasehold Mortgagee or their respective Affiliates (other than by reason of the application of Section 16.6), the Authority shall pay to the Lessee the AD-Termination Damages as of the date of termination in accordance with Section 16.2.  The Authority hereby acknowledges and agrees that it may only terminate this Agreement in accordance with the express terms hereof and shall not, in any event, have the right to terminate this Agreement for convenience.

 

Section 16.6                                      Termination Required by Act No. 458 and Public Integrity Crimes.

 

(a)                                 This Agreement shall automatically be rescinded by operation of Act No. 458 of the Legislative Assembly of Puerto Rico, enacted on December 29, 2000, 3 P.R. Laws Ann. § 928 et seq., as amended, if the Lessee or any subsidiary or alter ego thereof is convicted or enters a plea of guilty in respect of any Act No. 458 Crime, or if any other Covered Party, while in the employ of the Lessee, is convicted or enters a plea of guilty in respect of any Act No. 458 Crime.

 

(b)                                 This Agreement shall terminate as required by Act No. 237 of the Legislative Assembly of Puerto Rico, enacted on August 31, 2004, as amended, or the Code of Ethics, if the Lessee is convicted of a Public Integrity Crime that is not an Act No. 458 Crime.

 

(c)                                  If this Agreement is rescinded or terminated during the Term pursuant to Section 16.6(a) or (b) and, in the case of a rescission caused by the conviction or the entering of a plea of guilty for an Act No. 458 Crime, such crime was not committed in connection with the procurement of this Agreement, then the Authority shall be obligated to pay to the Lessee an amount equal to the lesser of (i) the LMM Airport Facility Leasehold Value and (ii) the Unamortized Leasehold Fee, in each case calculated as of the End Date (the “PIC-Termination Damages”); provided that, (x) subject to the right of the Lessee to receive interest at the rate set forth in Section 20.9 on the payment owed by the Authority from the End Date to the date on which payment is made, the Authority may defer any such payment for an additional 120 days if the Authority reasonably determines that such additional period is necessary to obtain financing or required approvals to make such payment and (y) if the amount of the PIC-Termination Damages is less than or equal to the sum of the Leasehold Mortgage Debt and any related Breakage Costs as of the End Date, then the Authority shall enter into a New Agreement with the Leasehold Mortgagee, or its designee or nominee, subject to and in accordance with Section 18.5 (and subject to clause (e) of this Section 16.6), and the Authority shall be released from any obligation to pay PIC-Termination Damages or any other compensation to the Lessee in connection with such rescission or termination.

 

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(d)                                 If this Agreement is rescinded during the Term pursuant to Section 16.6(a) as a result of an Act No. 458 Crime committed in connection with the procurement of this Agreement, then the Authority shall enter into a New Agreement with the Leasehold Mortgagee, or its designee or nominee, subject to and in accordance with Section 18.5 (and subject to Section 16.6(e)), and the Lessee shall not be entitled to receive any PIC-Termination Damages or other compensation of any form or amount from the Authority in connection with such rescission.

 

(e)                                  Notwithstanding anything to the contrary herein, in the event the Authority is required to enter into any New Agreement pursuant to Section 16.6(c) or (d), the Authority may elect, in its sole option by notice to the Lessee at any time prior to the execution and delivery of such New Agreement, to pay to the Lessee a sum equal to the Leasehold Mortgage Debt and any related Breakage Costs, and upon such notice the Authority shall be (i) released from the obligation to enter into such New Agreement and (ii) obligated to pay such sum to the Lessee in cash; provided that, subject to the right of the Lessee to receive interest at the rate set forth in Section 20.9 on the payment owed by the Authority from the End Date to the date on which payment is made, the Authority may defer any such payment for an additional 120 days if the Authority reasonably determines that such additional period is necessary to obtain financing or required approvals to make such payment.

 

(f)                                   If this Agreement is rescinded or terminated during the Term pursuant to this Section 16.6, then the Authority shall recover from the Lessee all of the Authority’s reasonable out-of-pocket expenses and Financing Costs, if any, arising in connection with such rescission or termination, together with any reasonable Re-Tender Costs relating to any Re-Tender of the LMM Airport Facility following such rescission or termination.

 

(g)                                  Without limiting the obligation of the Lessee to make any payment in accordance with Section 16.6(f) or any other payment then expressly due under any other provision of this Agreement, the Authority and the Lessee acknowledge and agree that if this Agreement is rescinded or terminated pursuant to this Section 16.6, the Lessee shall not be liable as a result of such rescission or termination to return any revenues generated at the LMM Airport Facility or other amounts received by it in accordance with this Agreement during the Term. The provisions of this Section 16.6 shall survive the termination of this Agreement and shall continue in full force and effect thereafter to the same extent as if this Section 16.6 were a separate and independent contract made by the Authority with each of the Leasehold Mortgagee and the Lessee.

 

ARTICLE 17
 RESTRICTIONS ON TRANSFERS

 

Section 17.1                                      Transfers by the Lessee.

 

(a)                                 The Lessee shall not Transfer, or otherwise permit the Transfer of, any or all of the Lessee Interest to or in favor of any Person (a “Transferee”), unless (i) the FAA and TSA have approved such proposed Transfer and Transferee, (ii) such proposed Transferee obtains all necessary approvals and exemptions from the FAA as required pursuant to 49 U.S.C. § 47134 (including an FAA exemption to earn compensation from the LMM Airport Facility Operations), (iii) the Authority has Approved (based upon a determination in accordance with Section 17.1(b) and in compliance with Section 8.2 of the Use Agreement (or any comparable provision of a

 

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successor use agreement)) such proposed Transferee (unless it is the Leasehold Mortgagee or its designee or nominee permitted under Article 18) and (iv) the proposed Transferee (unless it is the Leasehold Mortgagee or its designee or nominee permitted under Article 18) enters into an agreement with the Authority in form and substance reasonably satisfactory to the Authority wherein the Transferee acquires the rights and assumes the obligations of the Lessee and agrees to perform and observe all of the obligations and covenants of the Lessee under this Agreement and the Use Agreement, including the obligations to (y) comply in all material respects with all applicable Laws with respect to the LMM Airport Facility and (z) maintain in full force and effect all qualifications necessary to carry on its business pertaining to the LMM Airport Facility (including the Part 139 Airport Operating Certificate and a TSA-approved Airport Security Program).  Any Transfer made in violation of the foregoing provision shall be null and void ab initio and of no force and effect; provided that, while any Leasehold Mortgage is outstanding, the Authority shall not agree to any Transfer of any or all of the Lessee Interest to or in favor of any Person without the previous written confirmation from the Leasehold Mortgagee that such Transfer is permitted under all outstanding Leasehold Mortgages.

 

(b)                                 The Approval of the Authority of a proposed Transferee may be withheld only if the Authority reasonably determines that (i) the proposed Transfer is prohibited by or would result in a violation of applicable Law or (ii) such proposed Transferee is not capable of performing the obligations and covenants of the Lessee under this Agreement, which determination shall be based upon and take into account one or more of the following factors: (A) the financial strength and integrity of the proposed Transferee, its direct or indirect beneficial owners, any proposed managers or operating partners and each of their respective Affiliates; (B) the experience of the proposed Transferee or any proposed managers or operating partners to be engaged by the proposed Transferee in operating airports and performing other relevant projects; and (C) the background and reputation of the proposed Transferee, its direct or indirect beneficial owners, any proposed managers or operating partners, each of their respective officers, directors and employees and each of their respective Affiliates (including the absence of criminal, civil or regulatory claims or actions against any such Person and the quality of any such Person’s past or present performance on other projects).

 

(c)                                  No Transfer of all or any of the Lessee Interest (except a Transfer to a Leasehold Mortgagee or its nominee upon the Leasehold Mortgagee’s exercise of remedies under its Leasehold Mortgage provided in Article 18 and any subsequent Transfer to the Transferee of the Leasehold Mortgagee or its nominee that has been Approved under Section 17.1(b)) shall be made or have any force or effect if, at the time of such Transfer there has occurred and is continuing a Lessee Default that has not been remedied or an event that with the lapse of time, the giving of notice or otherwise would constitute a Lessee Default.

 

Section 17.2                                      Transfers of Equity Holder Interests or Other Change in Control Transactions.  Nothing contained in the foregoing shall be deemed to prohibit or limit, whether accomplished through a single transaction or a series of related or unrelated transactions and whether accomplished directly or indirectly, Transfers of direct or indirect ownership interests in the Lessee by any Equity Participant or its beneficial owner(s) to any Person; provided that if any such Transfer results in a Change in Control of the Lessee (other than a Change in Control occasioned by the exercise by any Leasehold Mortgagee of its remedies under any pledge of shares, limited liability company interests or partnership interests), the Approval of the Authority shall be

 

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required for any such Transfer in accordance with Section 17.1, including that the Transfer would not violate any applicable FAA, TSA or other Governmental Authority requirement.  Any other transaction that results in a Change in Control of the Lessee (other than a Change in Control occasioned by the exercise by any Leasehold Mortgagee of its remedies under any pledge of shares, limited liability company interests or partnership interests) shall also require the Approval of the Authority.  The Approval of the Authority under this Section 17.2 shall be in compliance with Section 8.2 of the Use Agreement (or any comparable provision of a successor use agreement) and otherwise may be withheld only if the Authority reasonably determines or is informed in writing by the FAA, TSA or other Governmental Authority that the proposed transaction (i) is prohibited by or would result in a violation of applicable Law (such as 14 C.F.R. Part 139 or 1542) or (ii) is likely to result in a material adverse change in the LMM Airport Facility Operations.

 

Section 17.3                                      Other Corporate Actions.

 

(a)                                 Nothing contained in the foregoing shall be deemed to prohibit or limit the Lessee from changing its organizational form or status (including a change from a limited liability company to a corporation or limited partnership); provided that such change in organizational form or status does not result in a Change in Control of the Lessee.

 

(b)                                 Neither (i) a change of ownership that is attributable to a lease, sublease, concession, management agreement, operating agreement or other similar arrangement that is subject and subordinate in all respects to the rights of the Authority under this Agreement, nor (ii) the creation of a trust or any other transaction or arrangement that is solely a transfer of all or part of the Lessee’s economic interest under this Agreement to another entity shall be deemed to be a Transfer of the Lessee Interest for purposes of Section 17.1(a).

 

Section 17.4                                      Assignment by the Authority.  During the Term, the Authority shall have the right to Transfer any or all of the Authority’s interest in the LMM Airport Facility and this Agreement; provided that (a) it shall be jointly and severally obligated with the Transferee (unless the Transferee is the Authority’s successor) for the performance and observance of the obligations and covenants of the Authority under this Agreement and any agreement entered into by the Authority under this Agreement (including agreeing directly with any Leasehold Mortgagee to be bound by the agreement entered into in accordance with Section 18.5), (b) any such Transfer by the Authority shall not materially limit or reduce any of the Lessee’s other rights, benefits, remedies or privileges under this Agreement or negatively affect the fair market value of the Lessee Interest, (c) any such Transfer is in compliance with applicable Law, and the Authority has obtained all necessary consents, including from the FAA, the TSA and any other Governmental Authorities and (d) the GDB Payment Guaranty remains in full force and effect after giving effect to such Transfer.  Without limiting the generality of the foregoing, the Lessee acknowledges and agrees that any action that may be taken under this Agreement by the Authority may be taken by the Authority or any other department, instrumentality or agency of the Commonwealth and that any action taken by the Authority or any other department, instrumentality or agency of the Commonwealth shall be deemed to have been taken by the Authority for purposes of this Agreement; provided that the Authority or any such other department, instrumentality or agency shall comply with the obligations of the Authority as set forth in this Agreement and under applicable Law.

 

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ARTICLE 18
 LENDER’S RIGHTS AND REMEDIES

 

Section 18.1                                      Leasehold Mortgages.  The Lessee shall have the right, at its sole cost and expense, to grant one or more (subject to Section 18.7) Leasehold Mortgages, if at the time any such Leasehold Mortgage is executed and delivered to the Leasehold Mortgagee, no Lessee Default exists unless any such Lessee Default will be cured pursuant to Section 18.3 in connection with entering into such Leasehold Mortgage, and upon and subject to the following terms and conditions:

 

(a)                                 the Lessee shall have provided the form of the Leasehold Mortgage to the Authority and the Authority shall have, after delivery of the form of Leasehold Mortgage to, and consultation with, the Signatory Airlines, determined that each such Leasehold Mortgage is in compliance with this Section 18.1 and the Use Agreement;

 

(b)                                 a Leasehold Mortgage may not cover any property of, or secure any debt issued or guaranteed by, any Person other than the Lessee (or a financial institution providing a financial guaranty or similar credit enhancement in respect of any debt of the Lessee); provided that it may cover shares or equity interests in the capital of the Lessee and any cash reserves or deposits held in the name of the Lessee;

 

(c)                                  no Person other than an Institutional Lender shall be entitled to the benefits and protections accorded to a Leasehold Mortgagee in this Agreement; provided, however, that lessors and lenders to the Lessee, including any financial insurers, shall be entitled to the benefits and protections accorded to a Leasehold Mortgagee in this Agreement so long as any Leasehold Mortgage securing the relevant debt or financial insurance provided by such Persons is held by an Institutional Lender acting as collateral agent or trustee with the customary powers given collateral agents or trustees in similar commercial financing transactions;

 

(d)                                 no Leasehold Mortgage or other instrument purporting to mortgage, pledge, encumber or create a lien, charge or security interest on or against any or all of the Lessee Interest shall extend to or affect the fee simple interest in the LMM Airport Facility, the Authority’s interest hereunder or its reversionary interest and estate in and to the LMM Airport Facility or any part thereof (other than a Permitted Lessee Encumbrance);

 

(e)                                  the Authority shall have no liability whatsoever for payment of the principal sum secured by any Leasehold Mortgage, or any interest accrued thereon or any other sum secured thereby or accruing thereunder, and, except for violation by the Authority of the express obligations to the Leasehold Mortgagee set forth in this Article 18 and for any remedies of the Leasehold Mortgagee provided by Law, the Leasehold Mortgagee shall not be entitled to seek any damages or other amounts against the Authority for any or all of the same;

 

(f)                                   the Authority shall have no obligation to any Leasehold Mortgagee in the enforcement of the Authority’s rights and remedies herein and by Law provided, except as expressly set forth in this Agreement and unless such Leasehold Mortgagee has provided the Authority with notice of its Leasehold Mortgage in accordance with the Leasehold Mortgagee Notice Requirements;

 

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(g)                                  each Leasehold Mortgage shall provide that if an event of default under the Leasehold Mortgage has occurred and is continuing and the Leasehold Mortgagee gives notice of such event of default to the Lessee, then the Leasehold Mortgagee shall give notice of such default to the Authority (and the Authority shall be obligated to provide a copy of such notice to the Signatory Airlines);

 

(h)                                 subject to the terms of this Agreement and except as specified herein, all rights acquired by a Leasehold Mortgagee under any Leasehold Mortgage shall be subject and subordinate to all of the provisions of this Agreement and to all of the rights of the Authority hereunder and to all of the rights of the Signatory Airlines under this Article 18 and under the Use Agreement;

 

(i)                                     while any Leasehold Mortgage is outstanding, the Authority shall not agree to any amendment to or modification of this Agreement that could reasonably be expected to have a material adverse effect on the rights or interests of the Leasehold Mortgagee or agree to a voluntary surrender or termination of this Agreement by the Lessee without the consent of the Leasehold Mortgagee, which consent shall not be unreasonably withheld, delayed or conditioned;

 

(j)                                    notwithstanding any enforcement of the security of any Leasehold Mortgage, the Lessee shall remain liable to the Authority for the payment of all sums owing to the Authority under this Agreement and the performance and observance of all of the Lessee’s covenants and obligations under this Agreement, unless otherwise satisfied;

 

(k)                                 a Leasehold Mortgagee shall not, by virtue of its Leasehold Mortgage, acquire any greater rights or interest in the LMM Airport Facility than the Lessee has at any applicable time under this Agreement, other than such rights or interest as may be granted or acquired in accordance with Sections 18.2, 18.3, 18.4 or 18.5; and

 

(l)                                     each Leasehold Mortgagee, the Authority, the Lessee and the GDB shall enter into a consent agreement in a form acceptable to all parties whereby all parties consent to the assignment of this Agreement to an agent in connection with the financing of the Leasehold Mortgage; provided that such consent agreement shall be in a customary form and shall include only the rights and protections provided to the Leasehold Mortgagee in this Agreement (including those provided in Section 16.6 and this Article 18).  Nothing herein shall obligate the Authority to consent to service of process, become subject to any legal process in any jurisdiction other than in the Commonwealth, or enter into any agreement not governed by the Laws of the Commonwealth.

 

Section 18.2                                      Notices and Payments to Leasehold Mortgagees.  Whenever a Leasehold Mortgage exists as to which the Authority and the Signatory Airlines have been provided notice by the holder thereof in accordance with the Leasehold Mortgagee Notice Requirements, the Authority and the Signatory Airlines shall, simultaneously with providing the Lessee any required notice under this Agreement, provide a copy of such notice to such Leasehold Mortgagee, and no such notice to the Lessee shall be effective against the Leasehold Mortgagee until a copy thereof is duly provided to such Leasehold Mortgagee at its address specified in its notice given to the Authority and the Signatory Airlines in accordance with the Leasehold Mortgagee Notice Requirements (or any subsequent change of address notice given to the Authority and the Signatory Airlines pursuant to the requirements of Section 20.1).  With respect

 

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to a Leasehold Mortgage regarding which the Authority and the Signatory Airlines have been provided notice in accordance with the Leasehold Mortgagee Notice Requirements, unless the Leasehold Mortgagee recognized by the Authority pursuant to Section 18.7 has otherwise advised the Authority in writing, and solely to the extent so required pursuant to the terms of the financing secured by such Leasehold Mortgage, all payments to the Lessee to be made by the Authority under this Agreement shall be made to the Leasehold Mortgagee or to the institution acting as the collateral agent or depository under the financing provided by such Leasehold Mortgagee.

 

Section 18.3                                      Leasehold Mortgagee’s Right to Cure.  The Leasehold Mortgagee shall have a period of 180 days with respect to any Lessee Default beyond any cure period expressly provided to the Lessee herein, in which to cure or cause to be cured any such Lessee Default; provided, however, that such 180-day period shall be extended if the Lessee Default is nonmonetary, is not a Lessee Default described in Section 16.1(a)(v) or Section 16.1(a)(vi) and may be cured but cannot reasonably be cured within such period of 180 days, and the Leasehold Mortgagee begins to cure such default within such 180-day period (or if possession is necessary in order to effect such cure, the Leasehold Mortgagee, within such 180-day period, files the appropriate legal action to commence foreclosure on the liens of the Leasehold Mortgage) and thereafter proceeds with all due diligence to cure such Lessee Default (including by proceeding with all due diligence to effect such foreclosure and during such foreclosure action (to the extent practicable) and thereafter to effect such a cure) within a reasonable period of time acceptable to the Authority, acting reasonably; provided, further, that if any Leasehold Mortgagee is prohibited from curing any Lessee Default by any process, stay or injunction issued by any Governmental Authority or pursuant to any bankruptcy or insolvency proceeding involving the Lessee, then the time periods specified in this Section 18.3 for curing such Lessee Default shall be extended for the period of such prohibition.  If a Leasehold Mortgagee is acting to cure a Lessee Default in accordance with this Section 18.3 then the Authority shall not exercise its right to terminate this Agreement by reason of such Lessee Default; provided, however, that the Authority may exercise any of its other rights and remedies provided for hereunder at law or in equity so long as the exercise of such rights does not interfere with the Leasehold Mortgagee’s rights hereunder.  In furtherance of the foregoing, the Authority shall permit the Leasehold Mortgagee and its Representatives the same access to the LMM Airport Facility as is permitted to the Lessee hereunder and permit the Leasehold Mortgagee or its representatives to take all actions and exercise all rights of the Lessee under this Agreement (all at the Lessee’s sole cost and expense); provided that any actions taken by a Leasehold Mortgagee or its Representatives pursuant to this Section 18.3 shall be undertaken in accordance with the provisions of this Agreement that would be applicable to the Lessee were it taking such actions.  The Authority shall accept any such performance by a Leasehold Mortgagee or its nominee as though the same had been done or performed by the Lessee.  Any payment to be made or action to be taken by a Leasehold Mortgagee hereunder as a prerequisite to keeping this Agreement in effect shall be deemed properly to have been made or taken by the Leasehold Mortgagee if such payment is made or action is taken by a nominee, agent or assignee of the rights of such Leasehold Mortgagee.  Any exercise of the Leasehold Mortgagee’s rights to cure hereunder shall not result in the assumption by such Leasehold Mortgagee of the Lessee’s obligations hereunder.

 

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Section 18.4                                      Rights of the Leasehold Mortgagee.

 

(a)                                 Subject to the provisions of this Agreement (including all necessary approvals and exemptions in accordance with Section 17.1(a)(i) and (ii)), a Leasehold Mortgagee may (i) enforce any Leasehold Mortgage in any lawful way, (ii) acquire the Lessee Interest in any lawful way or (iii) take possession of in any lawful way and manage the LMM Airport Facility.  Upon foreclosure of the Leasehold Mortgage (or without foreclosure upon exercise of any contractual or statutory power of sale under such Leasehold Mortgage or an assignment in lieu) and subject to the provisions of Article 17 (applied to the Leasehold Mortgagee as if it were the Lessee), a Leasehold Mortgagee may Transfer the Lessee Interest; provided, however, that no Transfer by a Leasehold Mortgagee shall be effective unless the Transfer is made in accordance with Article 17.  Any Person to whom the Leasehold Mortgagee Transfers the Lessee Interest (including such Leasehold Mortgagee) shall take the Lessee Interest subject to any of the Lessee’s obligations under this Agreement (including the obligations to (y) comply in all material respects with all applicable Laws with respect to the LMM Airport Facility and/or (z) maintain in full force and effect all qualifications necessary to carry on its business pertaining to the LMM Airport Facility (including the Part 139 Airport Operating Certificate and the TSA-approved Airport Security Program)).  The Leasehold Mortgagee is not permitted in connection with its enforcement of its lien to do anything that would materially and adversely affect the LMM Airport Facility, the LMM Airport Facility Operations or the rights of the Signatory Airlines under the Use Agreement, in each case that is inconsistent or otherwise not permitted by this Agreement.  Moreover, in the event that the Leasehold Mortgagee forecloses on the Leasehold Mortgage or otherwise exercises any rights in connection with any lien encumbering the LMM Airport Facility, the LMM Airport Facility Operations or the rights of the Signatory Airlines under the Use Agreement, the Leasehold Mortgagee acknowledges and agrees that the Use Agreement with respect to each Signatory Airline will remain in full force and effect and will be fully enforceable against the Leasehold Mortgagee in accordance with its respective terms.  The Authority agrees that if requested by a Leasehold Mortgagee that is exercising its rights under this Section 18.4, the Authority will, subject to the receipt of any necessary approvals by the FAA and TSA, assume the obligation to manage and operate the LMM Airport Facility by agreement with such Leasehold Mortgagee or with any Person to whom such Leasehold Mortgage may Transfer the Lessee Interest hereunder; provided that such agreement provides for the payment to the Authority of its reasonable costs of performing such obligation, including a reasonable administrative charge and provided further that, except with the consent of the Authority, the Leasehold Mortgagee shall use its best efforts to retain a qualified third-party to assume such obligation, and obtain any necessary approvals by the FAA and TSA for such assumption, as soon as reasonably practicable.

 

(b)                                 Except as provided in Section 18.3, unless and until a Leasehold Mortgagee (i) forecloses or has otherwise taken ownership of the Lessee Interest or (ii) has taken possession or control of the Lessee Interest, whether directly or by an agent as a mortgagee in possession or a receiver or receiver and manager has taken possession or control of the Lessee Interest by reference to the Leasehold Mortgage, the Leasehold Mortgagee shall not be liable for any of the Lessee’s obligations under this Agreement or be entitled to any of the Lessee’s rights and benefits contained in this Agreement, except by way of security.  During any period in which the Leasehold Mortgagee itself or by an agent or a receiver or a receiver and manager is the owner, or is in control or possession, of the Lessee Interest, it shall be bound by all liabilities and obligations of the Lessee accruing under this Agreement during such period (including the obligations set forth in Section

 

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3.3).  Once the Leasehold Mortgagee goes out of possession or control of the Lessee Interest or Transfers the Lessee Interest to another Person in accordance with the provisions of this Agreement, the Leasehold Mortgagee shall cease to be liable for any of the Lessee’s obligations under this Agreement accruing thereafter, and to the extent assumed by any Transferee or any other Person acceptable to the Authority in accordance with this Agreement and the Use Agreement, for any of the Lessee’s obligations under this Agreement accrued during the period in which the Leasehold Mortgagee itself or by an agent or a receiver and manager was the owner, or was in control or possession, of the Lessee Interest, and shall cease to be entitled to any of the Lessee’s rights and benefits contained in this Agreement, except, if the Leasehold Mortgage remains outstanding, by way of security.

 

Section 18.5                                      Authority’s Termination of this Agreement; New Agreement.

 

(a)                                 Without prejudice to the rights of a Leasehold Mortgagee under Section 18.3 or the Signatory Airlines under the Use Agreement, if this Agreement is (i) terminated prior to the expiration of the Term due to a Lessee Default (in which case the Authority shall notify the Leasehold Mortgagee of such termination and deliver to the Leasehold Mortgagee, together with such notice, a Statement of Estimated Liabilities), (ii) rejected or disaffirmed pursuant to any bankruptcy Law or proceeding or other similar Law or proceedings affecting creditors’ rights generally with respect to a bankruptcy proceeding relating to the Lessee or otherwise or (iii) is rescinded or terminated pursuant to Section 16.6 as a result of a Public Integrity Crime or an Act No. 458 Crime in circumstances where the provisions of Section 16.6(c) or Section 16.6(d) are applicable, then the Authority agrees, if there are outstanding obligations to a Leasehold Mortgagee (subject to the receipt of all necessary approvals and exemptions in accordance with Section 17.1(a)(i) and (ii) and, in the case of circumstances described in Section 18.5(a)(iii), subject to Section 16.6(e)), upon the written request of the Leasehold Mortgagee, to enter into a new lease agreement of the LMM Airport Facility (the “New Agreement”) with the Leasehold Mortgagee (or its designee or nominee) and any ancillary documents or agreements as may be necessary or desirable to give full effect to the New Agreement; provided that such designee or nominee either is controlled by the Leasehold Mortgagee or is Approved by the Authority as Transferee under Section 17.1) for the remainder of the Term upon all of the covenants, agreements, terms, provisions and limitations of this Agreement, including Section 3.3, effective as of the date of such termination.

 

(b)                                 The Authority’s obligation to enter into a New Agreement pursuant to Section 18.5(a) is subject to the satisfaction of all of the following requirements and conditions:  (i) such Leasehold Mortgagee commits in writing to the Authority, in a notice delivered to the Authority, within 60 days after the Authority delivers the termination notice and Statement of Estimated Liabilities to the Leasehold Mortgagee (or, if later, upon the termination of any cure period granted to the Leasehold Mortgagee pursuant to Section 18.3) or within 10 Business Days after the effective date of such rejection or disaffirmance (referred to in Section 18.5(a)(ii)) or such rescission or termination (referred to in Section 18.5(a)(iii)), as the case may be, that the Leasehold Mortgagee (or its designee or nominee) will enter into the New Agreement, which notice is accompanied by a copy of such New Agreement, duly executed and acknowledged by the Leasehold Mortgagee (or its designee or nominee); (ii) reasonably in advance of the execution of any New Agreement pursuant to Section 18.5(a)(i), the Leasehold Mortgagee (or its designee or nominee) pays or causes to be paid to the Authority, at the time of the execution and delivery of

 

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such New Agreement, (A) all amounts set forth in the Statement of Estimated Liabilities which, at the time of the execution and delivery thereof, would have been past-due or due and payable in accordance with the provisions of this Agreement but for such termination and (B) all reasonable costs and expenses (including legal fees), Taxes, fees, charges and disbursements set forth in the Statement of Estimated Liabilities paid or incurred by the Authority in connection with such defaults and termination, the recovery of possession from the Lessee, and the preparation, execution and delivery of the New Agreement and related agreements; and (iii) in the case of any New Agreement pursuant to Section 18.5(a)(i), such Leasehold Mortgagee (or its designee or nominee), at the time of such written request, cures all Lessee Defaults under this Agreement (curable by the payment of money) of which the Leasehold Mortgagee has been notified by the Authority in writing that are existing immediately prior to the termination of this Agreement set forth in the Statement of Estimated Liabilities, or, if such defaults cannot be cured by the payment of money, such Leasehold Mortgagee (or its designee or nominee) commits to the Authority in the New Agreement to proceed both promptly and diligently, upon the execution of the New Agreement, to cure all such other Lessee Defaults (to the extent curable) set forth in the Statement of Estimated Liabilities and, if possession is necessary in order to cure such other Lessee Defaults, to proceed both promptly and diligently to obtain the possession required to cure any such other defaults to the extent curable (and such cure shall be a covenant of the Leasehold Mortgagee in the New Agreement).  The omission from a Statement of Estimated Liabilities of (x) any amounts payable to the Authority under the Agreement, (y) any unperformed obligations of the Lessee hereunder or (z) any other costs of the Authority shall not excuse the payment of such amounts or costs or the performance of such unperformed obligations.

 

(c)                                  Nothing contained in this Section 18.5 shall be deemed to limit or affect the Authority’s interest in and to such LMM Airport Facility upon the expiration of the Term of the New Agreement.  The provisions of this Section 18.5 shall survive the termination of this Agreement and shall continue in full force and effect thereafter to the same extent as if this Section 18.5 were a separate and independent contract made by the Authority, the Lessee and the Leasehold Mortgagee and, if the Leasehold Mortgagee satisfies the conditions to a New Agreement from the effective date of such termination of this Agreement to the date of execution and delivery of the New Agreement, the Leasehold Mortgagee may use and enjoy the leasehold created by this Agreement (and all other rights and benefits provided to the Lessee hereunder) without hindrance by the Authority, but only on and subject to the terms and provisions of this Agreement.

 

Section 18.6                                      Right to Dispute Resolution.  In each case specified in this Agreement in which resort to dispute resolution is authorized, the Leasehold Mortgagee shall have the right and privilege if an event of default under the Leasehold Mortgage then exists and notice has been given to the Authority as contemplated by Section 18.1(f), in the Lessee’s name, place and stead, to obtain and participate in such dispute resolution upon notice to the Authority in accordance with Article 19; provided that the Leasehold Mortgagee agrees to be bound by the outcome of the dispute resolution process.

 

Section 18.7                                      Recognition by the Authority of Leasehold Mortgagee.  Notwithstanding anything in this Agreement to the contrary, if there is more than one Leasehold Mortgagee, only that Leasehold Mortgagee, to the exclusion of all other Leasehold Mortgagees, whose notice was earliest received by the Authority pursuant to the Leasehold Mortgagee Notice

 

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Requirements, shall have the rights as a Leasehold Mortgagee under this Article 18, or otherwise under this Agreement, unless such Leasehold Mortgagee has designated in writing another Leasehold Mortgagee to exercise such rights; provided, however, that such notice may name more than one Leasehold Mortgagee and the rights referred to in this Section 18.7 may extend to all Leasehold Mortgagees named therein if such notice is submitted by a representative of all such Leasehold Mortgagees (which representative may itself be a Leasehold Mortgagee).  Any references in this Agreement to the “Leasehold Mortgagee” shall be references to the Leasehold Mortgagee or representative of more than one Leasehold Mortgagee, acting on behalf of such Leasehold Mortgagees, whose notice was earliest received by the Authority pursuant to the Leasehold Mortgagee Notice Requirements unless the context otherwise requires.

 

Section 18.8                                      Authority’s Right to Purchase Leasehold Mortgage.

 

(a)                                 If (i) any event of default by the Lessee has occurred under a Leasehold Mortgage and is continuing and (ii) the Leasehold Mortgagee recognized by the Authority pursuant to Section 18.7 is entitled, pursuant to the intercreditor arrangements then in force and effect, to declare all or part of the indebtedness secured by a Leasehold Mortgage to be immediately due and payable (or, in the case of a Leasehold Mortgage that is a lease, to terminate the lease), then, for 30 days commencing on the date that is 10 days after the date on which such Leasehold Mortgagee shall serve notice upon the Authority with a copy to all other Leasehold Mortgagees (the “Leasehold Mortgagee’s Notice”) that such Leasehold Mortgagee intends and is entitled to, pursuant to the intercreditor arrangements then in force and effect, to commence proceedings to foreclose the Leasehold Mortgage (stating the calculation of the purchase price pursuant to Section 18.8(c)) during such 30-day period, the Authority shall have the right and option (the “Authority’s Option”) to purchase from all Leasehold Mortgagees their Leasehold Mortgages, upon the terms and subject to the conditions contained in this Section 18.8.

 

(b)                                 The Authority’s Option shall be exercised by written notice served upon the Lessee and all Leasehold Mortgagees within such 30-day period.  Time shall be of the essence as to the exercise of the Authority’s Option.  If the Authority’s Option is duly and timely exercised, the Authority shall purchase all Leasehold Mortgages and all Leasehold Mortgagees shall assign their Leasehold Mortgages to the Authority (or its designee) on the date which is 60 days after the date on which a Leasehold Mortgagee’s Notice is served upon the Authority.  The closing shall take place at a mutually convenient time and place.

 

(c)                                  The purchase price payable by the Authority shall be 100% of the aggregate amounts secured by or due under such Leasehold Mortgages (including principal, interest, fees, premiums, Breakage Costs, termination value and other costs and expenses (including attorneys’ fees) and any other amounts secured thereby or due thereunder) as of the closing date of the purchase.  The purchase price shall be paid in full in cash at closing by wire transfer or other immediately available funds.  The purchase price shall be paid by the Authority to each respective Leasehold Mortgagee, to be applied by the Leasehold Mortgagee to the amounts secured by the Leasehold Mortgage owed to such Leasehold Mortgagee, subject to the priorities of lien of such Leasehold Mortgages.

 

(d)                                 At the closing and upon payment in full of the purchase price each Leasehold Mortgagee shall assign its Leasehold Mortgage to the Authority, together with any

 

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security interest held by it in the Lessee’s leasehold interest in the LMM Airport Facility, without recourse, representations, covenants or warranties of any kind, provided that such Leasehold Mortgages and security interests shall be deemed modified to secure the amount of the aggregate purchase price paid by the Authority to all Leasehold Mortgagees (rather than the indebtedness theretofore secured thereby) payable on demand, with interest and upon the other items referred to in this Section 18.8(d).  Each such assignment shall be in form for recordation or filing, as the case may be.  The Authority shall be responsible for paying any Taxes payable to any Governmental Authority upon such assignment.

 

(e)                                  Any Leasehold Mortgage shall contain an agreement of the Leasehold Mortgagee to be bound by the provisions of this Section 18.8.

 

(f)                                   The Authority shall have the right to receive (and each Leasehold Mortgage shall contain an agreement of the Leasehold Mortgagee to deliver) all notices of default under any Leasehold Mortgage contemporaneously with the delivery of such notices to the Lessee (with a copy of such notice to be delivered to the GDB), but the Authority shall not have the right to cure any default under any Leasehold Mortgage, except to the extent provided in this Section 18.8.

 

Section 18.9                                      Application of PFCs to Leasehold Mortgage Debt.  In the event this Agreement is terminated prior to the expiration of the Term due to a Lessee Default, the Authority agrees that in the event PFCs were being collected by the Lessee prior to such termination that were authorized by the FAA to be used for the payment of any Leasehold Mortgage Debt outstanding at the time of such termination, the Authority will, subject to the receipt of all necessary authorizations from the FAA, use its Reasonable Efforts to continue to collect such PFCs and apply them to the payment of such Leasehold Mortgage Debt to the same extent as they would have been applied by the Lessee in the absence of such termination.

 

ARTICLE 19
 DISPUTE RESOLUTION

 

Section 19.1                                      Scope.  Any dispute arising out of, relating to or in connection with this Agreement, including any question regarding its existence, validity or termination, shall be resolved as set forth in this Article 19.  The arbitral panel provided for in Section 19.4 shall have the power to rule upon any challenge to its jurisdiction.  The Lessee acknowledges and agrees that the GDB (or any Designated Person appointed by it) shall be authorized to participate in or act for and on behalf of the Authority in any dispute resolution proceeding contemplated by this Article 19 from and after the Lessee’s receipt of notice from the Authority and the GDB confirming such participation or authority.

 

Section 19.2                                      Informal Dispute Resolution Procedures.  The Parties agree that, at all times, they will attempt in good faith to resolve all disputes that may arise under this Agreement.  The Parties further agree that, upon receipt of written notice of a dispute from a Party, the Parties will refer the dispute to the Designated Person of each Party.  The Designated Persons shall negotiate in good faith to resolve the dispute, conferring as often as they deem reasonably necessary, and shall gather and in good faith furnish to each other the information pertinent to the dispute.  All communications between the Parties during the dispute resolution procedures set forth in this Section 19.2 are confidential and shall be treated as compromise and settlement negotiations

 

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and shall not be admissible in evidence by any proceeding without the mutual consent of the Parties.

 

Section 19.3                                      Mediation.

 

(a)                                 Each Party to this Agreement agrees that it may not initiate a civil action as provided in Section 19.5 and Section 19.6 (other than provisional remedies sought on an expedited basis) unless (i) the matter in question has been submitted to mediation in accordance with the provisions of Section 19.3(b) or (ii) such Party would be barred from asserting its claim in a civil action if it were required to submit to mediation pursuant to Section 19.3(b).

 

(b)                                 Mediation of a dispute under this Agreement may not be commenced until the earlier of: (i) such time as both of the Designated Persons, after following the procedures set forth in Section 19.2, conclude in good faith that amicable resolution through continued negotiation of the matter does not appear likely; or (ii) 30 days after the notice referring the dispute to the Designated Persons, pursuant to Article 19 (the “Negotiation Period”).  If, after such time period, the dispute remains unresolved, either Party shall refer the dispute to a mediator, who shall be an attorney in good standing with the Puerto Rico Supreme Court or, if the matter in dispute is an engineering or technical dispute, the Parties shall refer the dispute to the Independent Engineer, subject to the rights of the Parties pursuant to Section 19.4.  With respect to the selection of a mediator, the Parties, through their respective Designated Persons, shall attempt in good faith to agree on a mediator.  If the Parties cannot so agree within 30 days after it is determined that the Designated Persons cannot resolve the dispute or after the end of the Negotiation Period, the Parties shall promptly apply to the American Arbitration Association (“AAA”) for appointment of a single mediator in accordance with the Commercial Mediation Procedures of the AAA without there being a requirement of previously filing a request for mediation thereunder.  The mediator selected by the AAA shall be an attorney authorized to practice law in the United States or the Commonwealth.  The mediator or the Independent Engineer, as the case may be, shall be paid for the mediation services, and shall be reimbursed for all reasonable out-of-pocket costs incurred in carrying out the mediation duties hereunder, including the costs of consultants.  All fees and costs of the mediation (including payment for the services of the mediator or the Independent Engineer and reimbursement of all reasonable out-of-pockets costs (including the costs of consultants) of the mediator or the Independent Engineer) shall be shared equally by the Parties.  The Parties shall request that the mediator schedule the mediation within 30 days of the mediator’s appointment (or in the case of the Independent Engineer, within 30 days after the Parties refer the dispute to the Independent Engineer), and shall comply with all procedures the mediator or the Independent Engineer establishes for the conduct of the mediation.

 

Section 19.4                                      Arbitration.

 

(a)                                 Arbitration of Required Modifications.  If the procedures described in Sections 19.2 and 19.3 do not result in resolution of a dispute arising under Section 5.2 within 30 Business Days from a reference to mediation, the dispute shall be exclusively and finally settled by arbitration in accordance with the Commercial Arbitration Rules for the AAA then in effect (the “AAA Commercial Rules”). Either Party may initiate the arbitration, as provided in the AAA Commercial Rules.  The place of arbitration shall be San Juan, Puerto Rico, unless the Parties otherwise agree.  Pursuant to Section 20.6, the arbitral panel shall determine the rights and

 

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obligations of the Parties in accordance with the substantive laws of the Commonwealth and without regard to the conflict of laws principles thereof.   Except as agreed by the Parties, the arbitral panel shall have no power to alter or modify any terms or provisions of this Agreement or to render any award that, by its terms or effects, would alter or modify any term or provision of this Agreement.  The arbitral panel shall be composed of three arbitrators, one to be selected by the Authority, one to be selected by the Lessee and the third to be selected by the two previously-selected arbitrators. If the two previously-selected arbitrators cannot agree on the selection of the third arbitrator, the third arbitrator shall be selected in accordance with the AAA Commercial Rules.  Once the arbitral panel has been composed, the arbitrators shall act as neutrals and not as party arbitrators, and no Party shall engage in any ex parte communication with any member of the arbitral panel. Each Party shall bear equally the costs of the arbitral panel and attorneys’ fees as determined by the arbitral panel.  The award shall include interest pursuant to Section 20.9 from the date of any breach or violation of this Agreement or the incurring of any obligation as determined in the arbitral award until paid in full.  The award shall be in writing and state the reasons upon which it is based.  The award shall be final and binding on the Parties.  Judgment on the award may be entered by any court of competent jurisdiction.

 

(b)                                 Technical Arbitration.  Any engineering or technical dispute arising under or related to this Agreement shall be exclusively and finally settled in accordance with the Construction Industry Arbitration Rules for the AAA then in effect (the “AAA Technical Arbitration Rules”) without submitting such dispute to mediation by the Independent Engineer pursuant to Section 19.3 and without submitting the dispute to arbitration pursuant to Section 19.4(a).  Either Party may initiate the arbitration as provided in the AAA Technical Arbitration Rules.  Such engineering arbitration shall be conducted by an Independent Engineering Arbitrator that is acceptable to the Authority and the Lessee. If the Parties fail to agree upon the Independent Engineering Arbitrator within five Business Days after the Parties agree to submit the dispute to engineering arbitration, then the Authority and the Lessee shall each appoint an Independent Engineering Arbitrator and both such arbitrators shall be instructed to select a third Independent Engineering Arbitrator to conduct the engineering arbitration (unless the Parties agree in writing for the dispute to be heard by one Independent Engineering Arbitrator, who will then be selected by the AAA). If the two previously selected Independent Engineering Arbitrators cannot agree on the selection of the third Independent Engineering Arbitrator, the third Independent Engineering Arbitrator shall be selected by the AAA.  The Parties shall each bear their own costs with respect to the arbitration of any such engineering dispute and shall bear equally the cost of retaining such Independent Engineering Arbitrator(s).  The award of the Independent Engineering Arbitrator(s) shall be in writing and state the reasons upon which it is based.  The award of the Independent Engineering Arbitrator(s) shall be final and binding on the Parties.

 

(c)                                  Disputes Regarding Arbitrability.  Any dispute between the Parties as to whether a dispute shall be submitted to arbitration under Sections 19.4(a) or (b) shall be resolved by initiation of an action in the Commonwealth Court of First Instance, San Juan Part (the “Commonwealth Court”) pursuant to Section 19.5.

 

Section 19.5                                      Court Action.  In the event that the Parties fail to resolve the dispute within 90 days after the date the mediator is selected pursuant to the procedures set forth in Section 19.3 (or such longer period as the Parties may mutually agree), either Party may initiate a civil action in Commonwealth Court and in accordance with all applicable rules of civil procedure;

 

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provided that any engineering or technical dispute or claim regarding any Required Modification that is not resolved by mediation pursuant to Section 19.3 within the time period described in this Section 19.5 shall be submitted to arbitration pursuant to Section 19.4.  The Parties acknowledge and understand that, to resolve any and all claims arising out of this Agreement (other than any engineering or technical claim or claim regarding any Required Modification), they may file a civil action, including actions in equity, in Commonwealth Court.

 

Section 19.6                                      Provisional Remedies.  No Party shall be precluded from initiating a proceeding in Commonwealth Court for the purpose of obtaining any emergency or provisional remedy to protect its rights that may be necessary and that is not otherwise available under this Agreement, including temporary and preliminary injunctive relief, restraining orders, and the appointment of a receiver or manager in connection with the collection and retention of revenues generated at the LMM Airport Facility.

 

Section 19.7                                      Tolling.  If a Party receiving a notice of default under this Agreement contests, disputes or challenges the propriety of such notice by making application to the dispute resolution procedure in this Article 19, any cure period that applies to such default shall be tolled for the time period between such application and the issuance of a final decision.

 

Section 19.8                                      Submission to Jurisdiction.  Subject to Section 19.3 and Section 19.4, any judicial action or proceeding against the Lessee or the Authority relating in any way to this Agreement shall be brought and enforced in Commonwealth Court, and each of the Lessee and the Authority hereby irrevocably submits to the jurisdiction of such courts with regard to any such action or proceeding, and irrevocably waives, to the fullest extent permitted by applicable Law, any objection it may have now or hereafter have to the jurisdiction and venue of any such action or proceeding therein and any claim that any such action or proceeding brought therein has been brought in an inconvenient forum.  Service of process on the Authority shall be made in accordance with the Laws of the Commonwealth on the Secretary of the Authority at the address specified in Article 20 and the Attorney General of the Commonwealth.  The foregoing shall not constitute the consent by the Authority to receive service of process for actions or proceedings brought and enforced in any court other than the Commonwealth Court.  Service of process on the Lessee may be made either by registered or certified mail addressed as provided for in Article 20 or by delivery to the Lessee’s registered agent for service of process in the Commonwealth.

 

Section 19.9                                      Request for Documents; Subpoena Duces Tecum.  If the Lessee is presented with a request for documents by any administrative agency or with a subpoena duces tecum regarding any documents that may be in its possession by reason of this Agreement, the Lessee shall, to the extent permitted by Law, give prompt notice to the Authority at the addresses specified for the Authority in Article 20.  The Authority may contest such process by any means available to it before such records or documents are submitted to a court or other third party; provided, however, that the Lessee shall not be obligated to withhold such delivery beyond that time as may be ordered by the court or administrative agency or required by Law, unless the subpoena or request is quashed or the time to produce is otherwise extended.

 

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ARTICLE 20
 MISCELLANEOUS

 

Section 20.1                                      Notice.  All notices, requests for approvals, approvals and other communications and approvals required or permitted by this Agreement shall be in English and in writing and shall be delivered, sent by certified or registered mail (return receipt requested and postage prepaid), addressed as follows:

 

(a)                                 in the case of the Authority:

 

Puerto Rico Ports Authority

P.O. Box 362829

San Juan, Puerto Rico 00936-2829

Attention:                                         Executive Director

Telephone:                                   (787) 729-8715 ext. 2281

Facsimile:                                         (787) 722-7867

 

with copies to:

 

Puerto Rico Ports Authority

P.O. Box 362829

San Juan, Puerto Rico 00936-2829

Attention:                                         General Counsel

Telephone:                                   (787) 729-8552

Facsimile:                                         (787) 729-8835

 

and:

 

Public-Private Partnerships Authority
 c/o Government Development Bank
 Roberto Sánchez Vilella Government Center
 De Diego Avenue, Stop 22
 Santurce, Puerto Rico 00940
 Attention:                                         Executive Director
 Telephone:                                   (787) 722-2525
 Telecopy:                                          (787) 728-0963

 

(b)                                 in the case of the Lessee:

 

Aerostar Airport Holdings, LLC
 P.O. Box 363507
 San Juan, Puerto Rico, 00936-3507
 Attention: President

 

with copies to:

 

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Cleary Gottlieb Steen & Hamilton LLP
 One Liberty Plaza
 New York, NY 10006
 Attention: Richard S. Lincer, Esq.
 Telecopy: (212) 225-3999

 

and:

 

Aeropuerto de Cancún, S.A. de C.V.
 Road Cancun — Chetumal, km. 22
 Municipality of Benito Juarez
 Cancun, Quintana Roo 77500
 MEXICO
 Attention:  General Counsel
 Telecopy:  (55) 52 84 04 54

 

with copies to:

 

Cleary Gottlieb Steen & Hamilton LLP
 One Liberty Plaza
 New York, NY 10006
 Attention: Jorge Juantorena, Esq.
 Telecopy: (212) 225-3999

 

and:

 

Highstar Capital IV, L.P.
 Highstar Capital IV I-A, L.P
 Highstar Capital IV Prism, L.P.
 277 Park Avenue, 45th Floor
 New York, NY 10172
 Attention:  General Counsel
 Telecopy:  (646) 857-8848

 

with copies to:

 

Cleary Gottlieb Steen & Hamilton LLP
 One Liberty Plaza
 New York, NY 10006
 Attention: Richard S. Lincer, Esq.
 Telecopy: (212) 225-3999

 

or such other persons or addresses as either Party may from time to time designate by notice to the other.  A notice, other communication or approval shall be deemed to have been sent and received (i) on the day it is delivered, or if such day is not a Business Day or if the notice is received after ordinary office hours, the notice, other communication or approval shall be deemed to have been

 

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sent and received on the next Business Day, or (ii) on the fourth Business Day after mailing if sent by United States registered or certified mail.

 

Section 20.2                                      Entire Agreement.  This Agreement, including all schedules and other documents executed herewith, constitutes the entire agreement between the Parties pertaining to the subject matter hereof and supersedes all prior agreements, negotiations, discussions and understandings, written or oral, between the Parties.  There are no representations, warranties, conditions or other agreements, whether direct or collateral, or express or implied, that form part of or affect this Agreement, or that induced any Party to enter into this Agreement or on which reliance is placed by any Party, except as specifically set forth in this Agreement.  The Parties acknowledge and agree that (i) each has substantial business experience and is fully acquainted with the provisions of this Agreement, (ii) the provisions and language of this Agreement have been fully negotiated and (iii) no provision of this Agreement shall be construed in favor of any Party or against any Party by reason of such provision of this Agreement having been drafted on behalf of one Party rather than the other.

 

Section 20.3                                      Amendment.  This Agreement may be amended, changed or supplemented only by a written agreement signed by the Lessee and the Authority; provided that any amendment or modification to this Agreement shall comply with all applicable FAA and TSA requirements.

 

Section 20.4                                      Waiver of Rights.  Any waiver of, or consent to depart from, the requirements of any provision of this Agreement shall be effective only if it is in writing and signed by the Party giving it, and only in the specific instance and for the specific purpose for which it has been given.  No failure on the part of any Party to exercise, and no delay in exercising, any right under this Agreement shall operate as a waiver of such right.  No single or partial exercise of any such right shall preclude any other or further exercise of such right or the exercise of any other right.

 

Section 20.5                                      Severability.  Each provision of this Agreement shall be valid and enforceable to the fullest extent permitted by applicable Law.  The invalidity of any one or more phrases, sentences, clauses or sections contained in this Agreement shall not affect the remaining portions of this Agreement or any part thereof.  If any provision of this Agreement or the application thereof to any Person or circumstances is held or deemed to be or determined to be invalid, inoperative or unenforceable in any particular case in any particular jurisdiction or jurisdictions because it conflicts with any other provision or provisions hereof or of any applicable Law, or public policy, or for any other reason, (i) such circumstances shall not have the effect of rendering the provision in question inoperative or unenforceable in any other case or circumstances, or rendering any other provision or provisions herein contained invalid, inoperative or unenforceable to any extent whatever, and (ii) the Parties shall negotiate in good faith to amend this Agreement to implement the provisions set forth herein.  If the Parties cannot agree on an appropriate amendment, either Party may refer the matter for determination pursuant to the dispute resolution procedure in Article 19.  If, by means of the dispute resolution procedure, the Parties are unable, as a result of applicable Law, to resolve the matter in a manner that effectively entitles the Authority to have the same rights after the aforesaid determination of invalidity or unenforceability as before, the Authority shall have the right to enact, and cause to come into force, any Law to provide for the same or substantially the same rights as were determined to be invalid

 

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or unenforceable; provided that the rights of the Lessee or any Leasehold Mortgagee shall in no event be diminished by any such Law.

 

Section 20.6                                      Governing Law.  This Agreement shall be governed by, and interpreted and enforced in accordance with, the laws in force in the Commonwealth (excluding any conflict of laws rule or principle which might refer such interpretation to the laws of another jurisdiction), except where the Federal Supremacy Clause requires otherwise.

 

Section 20.7                                      Further Acts.  The Parties shall do or cause to be done all such further acts and things as may be reasonably necessary or desirable to give full effect to this Agreement, including submission of this Agreement for filing with the Office of the Comptroller of the Commonwealth, pursuant to the provisions of Act. No. 18 of the Legislative Assembly of Puerto Rico, approved October 30, 1975, as amended.  The obligations pursuant to this Agreement shall not be enforceable until it shall have been submitted for filing with the Office of the Comptroller of the Commonwealth as provided by such Act No. 18.  Without limiting the foregoing, each Party will, at any time and from time to time, execute and deliver or cause to be executed and delivered such further instruments and take such further actions as may be reasonably requested by the other Party in order to cure any defect in the execution or delivery of this Agreement.

 

Section 20.8                                      Costs.  Except as otherwise provided in this Agreement, each Party shall be responsible for its own costs and expenses incurred in connection with performing and observing its obligations and covenants under this Agreement.

 

Section 20.9                                      Interest.  Any amount payable under this Agreement and not paid when due under this Agreement shall bear interest before and after judgment at the legal rate of interest provided for under Regulation No. 78-1 (Puerto Rico Regulation No. 3702 of October 25, 1988) of the Office of the Commissioner of Financial Institutions of the Commonwealth, from the date such payment is due until payment.

 

Section 20.10                               Inurement and Binding Effect.  This Agreement shall inure to the benefit of the Parties and their respective permitted successors and assigns and be binding upon the Parties and their respective successors and assigns.

 

Section 20.11                               No Partnership or Third-Party Beneficiaries.  Nothing contained in this Agreement shall constitute or be deemed to create a partnership, joint venture or principal and agent relationship between the Authority and the Lessee.  Except as expressly provided herein to the contrary (including with respect to such rights as are expressly granted to (a) the Secretary and the FAA and the Secretary of Homeland Security and TSA under Section 3.4(b), and (b) each Leasehold Mortgagee or any Indemnified Party pursuant to this Agreement), no term or provision hereof shall be construed in any way to grant, convey or create any rights or interests to or in any Person not a Party to this Agreement.

 

Section 20.12                               Cumulative Remedies.  The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by Law.

 

Section 20.13                               Counterparts; Facsimile Execution.  This Agreement may be executed in any number of counterparts which, taken together, shall constitute one and the same agreement.

 

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This Agreement shall be effective when it has been executed by each Party and delivered to all Parties.  To evidence the fact that it has executed this Agreement, a Party may send a copy of its executed counterpart to the other Party by facsimile transmission.  Such Party shall be deemed to have executed and delivered this Agreement on the date it sent such facsimile transmission.  In such event, such Party shall forthwith deliver to the other Party an original counterpart of this Agreement executed by such Party.

 

Section 20.14                     Waiver of Sovereign Immunity.  The Authority acknowledges that under its enabling act, it is not entitled to raise the defense of sovereign immunity with respect to claims arising out of this Agreement.  Under its enabling act, the Authority does not have sovereign immunity (and any defense based thereon) as to it and its property in respect of the enforcement and execution of any award or other relief (pecuniary or otherwise) rendered against it in accordance with the provisions of this Agreement.

 

Section 20.15                     Commonwealth Obligations.  THE OBLIGATIONS OF THE AUTHORITY UNDER THIS AGREEMENT SHALL NOT BE DEEMED OBLIGATIONS OF THE COMMONWEALTH OR ANY INSTRUMENTALITY OF THE COMMONWEALTH OTHER THAN THE AUTHORITY.

 

[Signature Page Follows]

 

147

 

IN WITNESS WHEREOF, the Authority and the Lessee each has caused this Agreement to be duly executed as of the day and year first above written.

 

	
 
    	
PUERTO   RICO PORTS AUTHORITY
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Bernardo Vazquez Santos
    
	
 
    	
Name:
    	
Bernardo Vazquez Santos
    
	
 
    	
Title:
    	
Executive   Director
    
	
 
    	
 
    
	
 
    	
AEROSTAR   AIRPORT HOLDINGS, LLC
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Adolfo Castro Rivas
    
	
 
    	
Name:
    	
Adolfo   Castro Rivas
    
	
 
    	
Title:
    	
Authorized   Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Emmett McCann
    
	
 
    	
Name:
    	
Emmett   McCann
    
	
 
    	
Title:
    	
Authorized   Signatory
    

 

Lease Agreement Signature Page

 

 

EXECUTION VERSION

 

AMENDMENT NO. 1 TO LUIS MUNOZ MARIN INTERNATIONAL AIRPORT LEASE AGREEMENT

 

THIS AMENDMENT, dated as of February 27, 2013 (this “First Amendment”), to the Luis Munoz Marin International Airport Lease Agreement dated as of July 24, 2012 (the “Lease Agreement”), by and between the Puerto Rico Ports Authority (the “Authority”), a public corporation and government instrumentality of the Commonwealth of Puerto Rico, created pursuant to Act No. 125 of the Legislative Assembly of Puerto Rico enacted on May 7, 1942, as amended, and Aerostar Airport Holdings, LLC (the “Lessee” and, together with the Authority, the “Parties”), a limited liability company organized under the laws of the Commonwealth of Puerto Rico. Capitalized terms used but not defined herein shall have the meanings set forth in the Lease Agreement.

 

WHEREAS, the Parties wish to amend the Lease Agreement in accordance with the terms herein.

 

NOW, THEREFORE, the Lease Agreement is hereby amended and restated, as follows:

 

Section 1.                                           Amendment of Lease Agreement.  Section 3.4(a) of the Lease Agreement is hereby amended (a) by amending clause (ix) to read as follows: “any collective bargaining agreement that covers employees of the LMM Airport Facility and is in effect on the Date of Closing will not be abrogated by this Agreement.” and (b) by adding the following sentence immediately after clause (ix): “To the extent items (vi) and (ix) described above are under the control of the Authority, the Authority will ensure that (A) safety and security at the LMM Airport Facility will be maintained at the highest possible levels and (B) any collective bargaining agreement that covers employees of the LMM Airport Facility and is in effect on the Date of Closing will not be abrogated by this Agreement.”

 

Section 2.                                           Amendment to Lease Agreement Schedules.  Schedule 1 to the Lease Agreement (Legal Description of LMM Airport Facility) is hereby replaced with Schedule 1 attached hereto.

 

Section 3.                                           Representations and Warranties.  Each of the Parties represents and warrants to the other Party that:

 

(a)                                 It has the power and authority to enter into this First Amendment and to do all acts and things and execute and deliver all other documents as are required hereunder to be done, observed or performed by it in accordance with the terms hereof;

 

(b)                                 This First Amendment has been duly authorized, executed and delivered by it and constitutes a valid and legally binding obligation of it, enforceable against it in accordance with the terms hereof, subject only to (i) the effect of bankruptcy, insolvency, reorganization, moratorium or other similar requirements of Law and judicial decisions now or hereafter in effect generally affecting the enforcement of creditors’ rights and remedies and (ii) the effect of requirements of Law governing equitable remedies and

 

1

 

defenses and the discretion of any court of competent jurisdiction in awarding equitable remedies;

 

(c)                                  The execution and delivery of this First Amendment by it and the performance by it of the terms, conditions and provisions hereof do not and/or will not contravene or violate or result in a breach of (with or without the giving of notice or lapse of time, or both) or acceleration of any material obligations of such Party or give rise to a right of termination, cancellation or augmentation of any obligation or loss of a material benefit under or result in the creation of any material Encumbrance under (i) any applicable Law or (ii) any agreement, instrument or document to which such Party is a party or by which such Party is bound;

 

(d)                                 No Consent is required to be obtained by it from, and no notice or filing is required to be given by it to or made by it with, any Person (including any Governmental Authority) in connection with the execution, delivery and performance by it of this First Amendment or the consummation of the transactions contemplated hereby; and

 

(e)                                  Except as amended hereby, the Lease Agreement remains in full force and effect.

 

Section 4.                                           Continuing Effect.  Except as expressly provided in this Amendment, the provisions of the Lease Agreement shall remain in full force and effect, and the Parties hereby reserve all rights and remedies under the Lease Agreement and at law and in equity. This Amendment shall not constitute an amendment or waiver of or consent of any provision of the Lease Agreement except as expressly stated herein and shall not be construed as an amendment, waiver or consent to any action on the part of the Lessee that would require an amendment, waiver or consent of the Authority except as expressly stated herein.

 

Section 5.                                           References to Agreement.  All references to the Lease Agreement from and after the execution and delivery of this Amendment, shall be deemed a reference to the Lease Agreement as amended hereby, unless the context expressly requires otherwise.

 

Section 6.                                           Governing Law.  This Amendment shall be governed by the laws of the Commonwealth of Puerto Rico, without regard to·the choice of law provisions thereof, except that the provisions of Section 19.4 of the Lease Agreement, and any arbitration conducted thereunder, shall be governed exclusively by the Federal Arbitration Act, Article 9 §§1-16 United States Code, to the exclusion of any State, Commonwealth or Municipal Law or Arbitration.

 

Section 7.                                           Incorporation by Reference.  Articles 19 and 20 of the Lease Agreement are hereby incorporated herein mutatis mutuandis.

 

Section 8.                                           Counterparts.  This Amendment may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall constitute one and the same instrument.

 

2

 

SCHEDULE 1

 

LEGAL DESCRIPTION OF THE LMM AIRPORT FACILITY

 

The real property which comprises the LMM Airport Facility is recorded in the Registry of Property of Puerto Rico, First Section of Carolina, at page (folio) 10 of volume (tomo) 564 of Carolina, property number 16,374, and is described in the Spanish language as follows:

 

“RUSTICA: Predio de terreno situado en los Barrios Cangrejo Arriba y Hato Cangrejos del Municipio de Carolina, en la que se encuentran los edificios, estructuras, instalaciones y zonas de amortiguamiento que componen el Aeropuerto Internacional Luis Munoz Marin, con una cabida de cinco millones ochocientos veintidos mil seiscientos setenta y seis punto cuatro uno nueve cinco (5,822,676.4195) metros cuadrados (equivalentes a mil cuatrocientos ochenta y uno punto cuatro cuatro siete ocho (1,481.4478) cuerdas), compuesto de las siguientes tres porciones de terreno:

 

(i)                                     la primera y principal porcion de terreno identificada en el plano de inscripcion como “Parcel A” y “Parcel Al”, con una cabida de cinco millones cuatrocientos sesenta y cinco mil quinientos treinta punto ocho cinco seis uno (5,465,530.8561) metros cuadrados (equivalentes a mil trescientos noventa punto cinco ocho cero tres (1,390.5803) cuerdas), cuya cabida incluye la parcela identificada en el plano de inscripcion como “Parcel A1” con una cabida de ochenta y siete mil quinientos sesenta y dos punto uno dos siete tres (87,562.1273) metros cuadrados (equivalentes a veintidos punto dos siete ocho dos (22.2782) cuerdas), con una forma irregular, en la que se encuentran los edificios, estructuras e instalaciones del Aeropuerto Internacional Luis Munoz Marin, colindando por el NORTE, con la Avenida Boca de Cangrejos; por el SUR, con la Avenida Ramon Baldorioty de Castro (PR-26); por el ESTE, con la Laguna Torrecilla, terrenos ganados al mar de dominio publico y el Canal Suarez; y por el OESTE, con la Avenida Ramon Baldorioty de Castro (PR-26);

 

(ii)                                  la segunda porcion de terreno identificada en el plano de inscripcion como “Parcel B”, con una cabida de doscientos setenta y cuatro mil quinientos noventa y uno punto cero uno cero nueve (274,591.0109) metros cuadrados (equivalentes a sesenta y nueve punto ocho seis tres cinco (69.8635) cuerdas), con una forma irregular, la cual esta localizada al lado OESTE de la primera porcion descrita arriba y sirve como una zona de amortiguamiento para el Aeropuerto Internacional Luis Munoz Marin, colindando por el NORTE Y ESTE, con la Avenida Ramon Baldorioty de Castro (PR-26); y por el SUR y OESTE, con la Laguna San Jose; y

 

(iii)                               la tercera porcion de terreno identificada en el plano de inscripcion como “Parcel D”, con una cabida de ochenta y dos mil quinientos cincuenta y cuatro punto cinco cinco dos cinco (82,554.5525) metros cuadrados (equivalentes a veintiuno punto cero cero cuatro (21.004) cuerdas), con una forma de triangulo, la cual esta localizada al lado ESTE de la primera porcion descrita arriba y sirve como una zona de amortiguamiento para el Aeropuerto Internacional Luis Munoz Marin, colindando por el NORTE, con el Canal Suarez;  por el SUR,  con la Urbanizaci6n Vista Mar; por el ESTE, con la Urbanizaci6n Villa Venecia y la Urbanizaci6n Vista Mar; y por el OESTE, con el Canal Suarez.”

 

 

The portion of the LMM Airport Facility which is demised pursuant to this Agreement and subject to the Lease, is graphically shown as the area included within the yellow boundaries (but excluding the areas shaded in blue and the areas identified as “CAF 2” and “NOAA”) in the plan prepared by URS Caribe, LLP in June 2012 entitled “LMMA Obligation Maps” and attached hereto as Schedule I-A, and which demised portion is described as follows:

 

“Parcel of land with an irregular shape located within the real property which comprises the Luis Munoz Marin International Airport (property number 16,374 of Carolina), with a surface area equal to five million ninety thousand one hundred eight point six one nine five (5,090,108.6195) square meters, equivalent to one thousand two hundred ninety-five point zero six (1,295.06) cuerdas, and which parcel is graphically shown as the area included within the yellow boundaries in the plan prepared by URS Caribe, LLP in June 2012 entitled “LMMA Obligation Maps” and attached as Schedule I-A to the Luis Mufioz Marin International Airport Lease Agreement dated as of July 24, 2012, as amended on February 25, 2013, by and between the Puerto Rico Ports Authority and Aerostar Airport Holdings, LLC. Said parcel of land does not include the areas shaded in blue in the aforementioned plan and/or which are identified therein as “Mufioz Airbase National Guard,” “CAF l ,” “CAF 2,” “CAF 3,” “Vortac,” “AEE Substation,” “AEE Substation,” “FAA,” “Hotel,” “FAA Control Tower,” “ASR,” “NOAA,” and the roads shaded in blue and located at the west boundary of the Luis Mufioz Marin International Airport.”

 

 

IN WITNESS WHEREOF, the Parties hereto have caused this First Amendment to be duly executed and delivered as of the day and year first above written.

 

	
 
    	
PUERTO RICO PORTS AUTHORITY
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Victor Suarez
    
	
 
    	
Name: 
    	
Victor Suarez
    
	
 
    	
Title: 
    	
Executive Director
    
	
 
    	
 
    
	
 
    	
AEROSTAR AIRPORT HOLDINGS, LLC
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Agustin Arellano
    
	
 
    	
Name: 
    	
Agustin Arellano
    
	
 
    	
Title: 
    	
CEO
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

Acknowledged and agreed, solely for purposes of Section 4(a) of the GDB Guaranty:

 

	
GOVERNMENT DEVELOPMENT BANK FOR PUERTO RICO
    
	
 
    	
 
    
	
By:
    	
/s/ Ian J. Figueroa
    	
 
    
	
Name: 
    	
Ian J. Figueroa
    	
 
    
	
Title: 
    	
EVP
    	
 
    

 

First Amendment to Lease Agreement dated as of July 24, 2012 by and between The Puerto Rico Ports Authority and Aerostar Airport Holdings LLC-Signature Page

 

 

 

 

AMENDMENT NO. #2 TO LUIS MUNOZ MARIN INTERNATIONAL AIRPORT LEASE AGREEMENT

 

THIS AMENDMENT, dated as of October 2, 2015 (this “Second Amendment”), to the Luis Munoz Marin International Airport Lease Agreement dated as of July 24, 2012 (the “Lease Agreement”), by and between the Puerto Rico Ports Authority (the “Authority”), a public corporation and government instrumentality of the Commonwealth of Puerto Rico, created pursuant to Act. No. 125 of the Legislative Assembly of Puerto Rico enacted on May 7, 1942, as amended, and Aerostar Airport Holding, LLC (the “Lessee”, and, together with the Authority,  the “Parties”), a limited liability company organized under the laws of the Commonwealth of Puerto Rico. Capitalized terms used but not defined herein shall have the meaning set forth in the Lease Agreement.

 

WHEREAS, the Parties wish to amend the Lease Agreement in order to transfer the responsibility of providing police, fire and emergency services at the LMM Airport Facility from the Authority to the Lessee.

 

NOW, THEREFORE, the Lease Agreement is hereby amended and restated as follows:

 

Section 1.                   Amendment of Lease Agreement.

 

(a)                                 Section 3.l 7(a) of the Lease Agreement is hereby amended in order to read in its entirety as follows:

 

“At all times during the Term, the Lessee shall cause the LMM Airport Facility to be serviced by adequate firefighting services, police and perimeter security, including law enforcement officer (LEO) support as required by federal security requirements (including increases required by the TSA or other federal agencies) and armed perimeter security and other law enforcement services, in each case at a level that satisfies the TSA-approved Airport Security Program. Without limiting the generality of the foregoing, at all times during the Term, the Lessee shall be responsible for providing (or causing the provision of) all remaining security and emergency function at the LMM Airport Facility in compliance with TSA-approved Airport Security Program, including interior auxiliary security and control access functions. Notwithstanding any other provision of this Agreement, and subject to all applicable FAA, TSA and other Governmental Authority requirements, the Lessee shall have the right to contract with the Commonwealth Police Department and private security and emergency service providers for enhanced levels of security.”

 

(b)                                 Section 3.l7(b) of the Lease Agreement is hereby amended to read in its entirety as follows:

 

“During the Term, the Lessee shall be responsible for all costs and expenses related to the provision of all such firefighting, police and perimeter security, including in the event of a fundamental change to the security conditions related to the LMM Airport Facility that requires the Lessee in its reasonable discretion to increase the levels of such services at the LMM Airport Facility on an ongoing

 

 

basis. All expenses directly related to the provision of services by the Lessee shall be the responsibility of the Lessee. The Lessee shall use its Reasonable Efforts to seek reimbursement for the costs and expenses of providing of such police and perimeter security services that may be available from the TSA or another Governmental Authority. The Authority shall provide the Lessee with all reasonable assistance as may be requested by the Lessee in connection with the application for and administration of any reimbursement program referred to in the previous sentence.”

 

(c)                                  The Parties agree to eliminate any and all obligations, covenant and agreements between the Parties established in Section 3.17(c), therefore the Parties have agreed that Section 3.l7(c) of the Lease Agreement is hereby amended to read in its entirety as follows:

 

‘‘Reserved.”

 

Section 2.                   Representations and Warranties.  Each of the Parties represents and warrants to the other Party that:

 

(a)                                 It has the power and authority to enter into this Second Amendment and to do all acts and things to execute and deliver all other documents as are required hereunder to be done observed, or performed by it in accordance with the terms hereof;

 

(b)                                 This Second Amendment has been duly authorized, executed and delivered by it and constitutes a valid and legally binding obligation of it, enforceable against it in accordance with the terms hereof, subject only to (i) the effect of bankruptcy, insolvency, reorganization, moratorium or other similar requirements of Law and judicial decisions now or hereafter in effect generally affecting the enforcement of creditors’ rights and remedies and (ii) the effect of requirements of Law governing equitable remedies and defenses and the discretion of any court of competent jurisdiction in awarding equitable remedies;

 

(c)                                  The execution and delivery of this Second Amendment by it and the performance by it of the terms, conditions and provisions hereof do not and/or will not contravene or violate or result in the breach of (with or without the giving of notice or lapse of time, or both) or acceleration of any material obligations of such Party or give rise to a right of termination, cancellation or augmentation of any obligation or loss of a material benefit under or result in the creation of any material Encumbrance under (i) any applicable Law or (ii) any agreement, instrument or document to which such Party is a party or by which such Party is bound;

 

(d)                                 No consent, other than that of the Government Development Bank for Puerto Rico, as evidenced by their execution hereof, is required to be obtained by it from, and no notice or filing (aside from the filing requirement with Office of the Comptroller of the Commonwealth as set forth in Section 11) is required to be given by it to or made by it with, any Person (including any Governmental Authority) in connection with the

 

2

 

execution, delivery and performance by it of this Second Amendment or the consummation of the transactions contemplated hereby; and

 

(e)                                  Except as amended hereby, the Lease Agreement remains in full force and effect.

 

Section 3.                                           Continuing Effect.  Except as expressly provided in this Second Amendment, the provisions of the Lease Agreement shall remain in full force and effect, and the Parties hereby reserve all rights and remedies under the Lease Agreement at law and in equity. This Second Amendment shall not constitute an amendment or waiver of any consent or any provision of the Lease Agreement except as expressly stated herein and shall not be construed as an amendment, waiver or consent to any action on the part of the Lessee that would require an amendment, waiver or consent of the Authority except as expressly stated herein.

 

Section 4.                                           References to Agreement.  All references to the Lease Agreement from and after the execution and delivery of this Second Amendment, shall be deemed a reference to the Lease Agreement as amended hereby, unless the context expressly requires otherwise.

 

Section 5.                                           Governing Law.  This Second Amendment shall be governed by the laws of the Commonwealth of Puerto Rico, without regard to the choice of law provisions thereof, except that the provisions of Section 19.4 of the Lease Agreement, and any arbitration conducted thereunder, shall be governed exclusively by the Federal Arbitration Act, Article 9 §1- 16 United States Code, to the exclusion of any State, Commonwealth or Municipal Law or Arbitration.

 

Section 6.                                           Incorporation by Reference.  Articles 19 and 20 of the Lease Agreement are hereby incorporated herein in mutatis mutuandis.

 

Section 7.                                           Counterparts. This Second Amendment may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall constitute one and the same instrument.

 

Section 8.                                           Further Acts The Parties shall do or cause to be done all such further acts and things as may be reasonably necessary or desirable to give full effect to this Second Amendment, including submission of this Second Amendment for filing with the Office of the Comptroller of the Commonwealth, pursuant to the provisions of Act. No. 18 of the Legislative Assembly of Puerto Rico, approved October 30, 1975, as amended. The obligations pursuant to this Second Amendment shall not be enforceable until it shall have been submitted for filing with the Office of the Comptroller of the Commonwealth as provided by such Act No. 18. Without limiting the foregoing, each Party will, at any time and from time to time, execute and deliver or cause to be executed and delivered such further instruments and take such further actions as may be reasonably requested by the other Party in order to cure any defect in the execution or delivery of this Second Amendment.

 

[Signature Pages Follow]

 

3

 

IN WITNESS WHEREOF, the Authority hereto has caused this Second Amendment to be duly executed and delivered as of the day and year first above written.

 

 

 

IN WITNESS WHEREOF, the Lessee hereto has caused this Second Amendment to be duly executed and delivered as of the day and year first above written.

 

	
 
    	
AEROSTAR AIRPORT HOLDINGS, LLC 
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Agustin Arellano
    
	
 
    	
Name: 
    	
Agustin Arellano
    
	
 
    	
Title: 
    	
CEO
    

 

 

Acknowledged and agreed, solely for purposes of Section 4(a) of the GOB Guaranty:

 

GOVERNMENT DEVELOPMENT BANK FOR PUERTO RICO

 

	
By:
    	
/s/ Jorge A. Clivilles
    	
 
    	
 
    
	
Name:
    	
Jorge A. Clivilles
    	
 
    	
 
    
	
Title:
    	
Executive Vice PresidentExhibit 4.17

 

REPUBLIC OF COLOMBIA

 

MINISTRY OF TRANSPORT

 

UNIDAD ADMINISTRATIVA ESPECIAL DE AERONÁUTICA CIVIL

 

[Logo]

 

[Logo]

 

CONCESSION FOR THE ADMINISTRATION, OPERATION, COMMERCIAL EXPLOITATION, ADJUSTMENT, MODERNIZATION AND MAINTENANCE OF THE AIRPORTS OLAYA HERRERA (MEDELLIN), JOSE MARIA CORDOVA (RIONEGRO), EL CARAÑO (QUIBDO), LOS GARZONES (MONTERIA), ANTONIO ROLDAN BETANCOURT (CAREPA) AND LAS BRUJAS (COROZAL)

 

CONCESSION AGREEMENT No. 8000011-OK

 

[BOGOTA, D.C., COLOMBIA-

MARCH 2018]

 

 

PUBLIC BID NO. 7000132 OL OF 2007

CONCESSION AGREEMENT No. 8000011- K OF 2008

 

TABLE OF CONTENTS

 

	
CHAPTER I - CONSTRUCTION AND   DEFINITIONS
    	
2
    
	
CLAUSE   1.- CONSTRUCTION
    	
2
    
	
CLAUSE   2.- DEFINITIONS
    	
2
    
	
CHAPTER II- GENERAL ASPECTS
    	
10
    
	
CLAUSE   3.- PURPOSE
    	
10
    
	
CLAUSE   4.- ACTIVITIES EXPRESSLY EXCLUDED FROM THE CONCESSION
    	
11
    
	
CLAUSE   5.- CONSUMMATION OF THE AGREEMENT
    	
11
    
	
CLAUSE 6.-   REQUIREMENTS FOR THE FORMALIZATION AND PERFORMANCE OF THE AGREEMENT
    	
11
    
	
CLAUSE   7.- TERM FOR THE PERFORMANCE OF THE AGREEMENT
    	
12
    
	
CLAUSE   8- AMOUNT OF THE AGREEMENT:
    	
12
    
	
CHAPTER III.- REVENUE OF THE   CONCESSION AND CONSIDERATION PAYABLE TO THE GRANTORS
    	
12
    
	
CLAUSE 9.-   ASSIGNMENT OF REVENUE
    	
12
    
	
CLAUSE 10.-   CONCESSIONAIRE REMUNERATION
    	
12
    
	
CLAUSE 11.-   ABSENCE OF GUARANTEES ON MINIMUM REVENUE, FLOWS OR PROFITABILITY:
    	
17
    
	
CLAUSE 12.- FEES   CORRESPONDING TO REGULATED REVENUE:
    	
17
    
	
CLAUSE 13.-   INDEXATION OF FEES CORRESPONDING TO REGULATED REVENUE:
    	
17
    
	
CLAUSE 14.-   COLLECTION OF LOWER FEES BY THE CONCESSIONAIRE:
    	
18
    
	
CLAUSE 15.-   DETERMINATION OF FEES
    	
18
    
	
CLAUSE 16.-   CALCULATION AND PAYMENT OF FEE COMPENSATION
    	
18
    
	
CLAUSE 17.-   COLLECTION
    	
19
    
	
CLAUSE 18.-   SUSPENSION OF SERVICES TO AIRCRAFT EXPLOITERS
    	
19
    
	
CLAUSE 19.-   EXEMPTIONS OF THE AIRPORT RATE:
    	
20
    
	
CLAUSE 20.-   CONSIDERATION PAYABLE TO THE GRANTORS:
    	
20
    
	
CHAPTER IV - REPRESENTATIONS OF   THE CONCESSIONAIRE AND RISKS OF THE AGREEMENT
    	
20
    
	
CLAUSE 21.-   REPRESENTATIONS OF THE CONCESSIONAIRE:
    	
20
    
	
CLAUSE 22.-   ALLOCATION OF RISKS - GENERAL PRINCIPLE:
    	
23
    
	
CHAPTER V - RIGHTS AND   OBLIGATIONS OF THE PARTIES
    	
26
    
	
CLAUSE 24.-   GENERAL RIGHTS OF THE CONCESSIONAIRE:
    	
26
    
	
CLAUSE 25.-   GENERAL OBLIGATIONS OF THE CONCESSIONAIRE:
    	
26
    
	
CLAUSE 26.-   UNDERTAKINGS OF THE CONCESSIONAIRE RELATING TO THE ADMINISTRATION, COMMERCIAL   EXPLOITATION AND OPERATION OF THE AIRPORTS:
    	
28
    
	
CLAUSE 27.-   UNDERTAKINGS OF THE CONCESSIONAIRE REGARDING THE MANAGEMENT OF THE RESOURCES   OF THE CONCESSION
    	
30
    
	
CLAUSE 28.-   UNDERTAKINGS OF THE CONCESSIONAIRE RELATING TO THE ADJUSTMENT AND MODERNIZATION   OF THE AIRPORTS
    	
30
    
	
CLAUSE 29.-   UNDERTAKINGS OF THE CONCESSIONAIRE RELATING TO THE MAINTENANCE OF THE   AIRPORTS
    	
31
    
	
CLAUSE 30.-   GENERAL RIGHTS OF THE GRANTORS
    	
31
    
	
CLAUSE 31.-   GENERAL UNDERTAKINGS OF THE GRANTORS
    	
32
    
	
CHAPTER VI - PRIOR STAGE
    	
32
    
	
CLAUSE 32.-   STAGES FOR THE PERFORMANCE OF THE AGREEMENT:
    	
32
    
	
CLAUSE 33.-   SCOPE OF THE PRIOR STAGE
    	
32
    
	
CLAUSE 34.- TERM   OF DURATION OF THE PRIOR STAGE:
    	
32
    
	
CLAUSE 35.-   ACTIVITIES PRIOR TO THE DELIVERY OF THE AIRPORTS:
    	
33
    
	
CLAUSE 36.-   DELIVERY OF THE AIRPORTS:
    	
33
    

 

 

	
CLAUSE 37.-   ENVIRONMENTAL MATTERS:
    	
36
    
	
CLAUSE 38.-   FINANCIAL CLOSING:
    	
37
    
	
CLAUSE 39.-   PRESENTATION OF THE PRE-DESIGNS OF THE MANDATORY WORKS:
    	
38
    
	
CLAUSE 40. —   PRESENTATION OF THE STUDIES AND DESIGNS OF THE MANDATORY WORKS AND THE   SCHEDULE FOR THE PERFORMANCE THEREOF:
    	
39
    
	
CLAUSE 41.-   APPROVAL OF THE STUDIES AND DESIGN WITHIN THE PRIOR STAGE:
    	
40
    
	
CLAUSE 42.-   TERMINATION OF THE PRIOR STAGE:
    	
40
    
	
CHAPTER VII — ADJUSTMENT AND   MODERNIZATION STAGE
    	
40
    
	
CLAUSE 43. —   SCOPE OF THE ADJUSTMENT AND MODERNIZATION STAGE:
    	
40
    
	
CLAUSE 44. —   TERM OF THE ADJUSTMENT AND MODERNIZATION STAGE:
    	
41
    
	
CLAUSE 45. —   PERFORMANCE OF THE ACTIVITIES OF THE INVESTMENT AND MODERNIZATION PLAN:
    	
41
    
	
CLAUSE 46. —   SCHEDULE OF THE ACTIVITIES OF THE ADJUSTMENT AND MODERNIZATION PLAN:
    	
47
    
	
CLAUSE 47. —   REPORTS:
    	
48
    
	
CLAUSE 48. —   PERMITS AND LICENSES:
    	
48
    
	
CLAUSE 49. —   INCORPORATION TO THE AIRPORTS:
    	
49
    
	
CLAUSE 50. —   EXECUTION OF THE MINUTES OF THE MAINTENANCE STAGE:
    	
49
    
	
CHAPTER VIII — MAINTENANCE   STAGE
    	
49
    
	
CLAUSE 51. — SCOPE   OF THE MAINTENANCE STAGE
    	
49
    
	
CLAUSE 52. —   DURATION OF THE MAINTENANCE STAGE
    	
49
    
	
CLAUSE 53. —   REPORTS
    	
49
    
	
CLAUSE 54. —   UPDATE OF THE INVENTORY OF ASSETS THAT MAKE UP THE AIRPORTS
    	
50
    
	
CLAUSE 55. —   TECHNICAL SPECIFICATIONS
    	
50
    
	
CHAPTER IX — ACTIVITIES COMMON   TO ALL THE STAGES OF THE CONTRACTUAL PERFORMANCE
    	
51
    
	
CLAUSE 56. —   MANAGEMENT, OPERATION AND COMMERCIAL EXPLOITATION ACTIVITIES
    	
51
    
	
CLAUSE 57. —   PERFORMANCE OF VOLUNTARY SUPPLEMENTARY WORKS
    	
51
    
	
CLAUSE 58. —   FIRE SUPPRESSION SERVICE
    	
53
    
	
CLAUSE 59. — PROVISION   OF SAFETY SERVICES AT THE AIRPORTS
    	
53
    
	
CLAUSE 60.   AIRPORT SAFETY AUTHORITIES
    	
55
    
	
CLAUSE 61. —   BIRD HAZARD
    	
56
    
	
CLAUSE 62. —   PROVISION OF HOUSEHOLD UTILITIES
    	
57
    
	
CLAUSE 63. —   MATERIALS AND PERFORMANCE
    	
57
    
	
CLAUSE 64. —   CONCESSIONAIRE’S STAFF
    	
57
    
	
CLAUSE 65. —   LEASING AGREEMENTS
    	
58
    
	
CLAUSE 66. —   INTERNATIONAL AERONAUTICAL FAIR AT THE JOSE MARIA CORDOBA AIRPORT
    	
59
    
	
CHAPTER XI- ESTABLISHMENT AND   OPERATION OF THE ESCROW
    	
59
    
	
CLAUSE 67.-   GENERAL PROVISIONS:
    	
59
    
	
CLAUSE 68.-   ADMINISTRATION OF RESOURCES:
    	
60
    
	
CLAUSE   69.-ESCROW ACCOUNTS:
    	
60
    
	
CLAUSE 70.-   FUNDING OF ESCROW ACCOUNTS:
    	
62
    
	
CLAUSE 71. ·   APPROVAL OF THE GRAFT OF THE ESCROW AGREEMENT AND ESTABLISHMENT OF THE   ESCROW:
    	
62
    
	
CLAUSE 72.-   MANDATORY REQUIREMENTS OF THE ESCROW AGREEMENT:
    	
62
    
	
CLAUSE 73.-   AUDITOR:
    	
64
    
	
CLAUSE 74.-   REPORTS:
    	
64
    
	
CLAUSE 75.-   INVESTMENT CRITERIA FOR ESCROW RESOURCES:
    	
65
    
	
CLAUSE 76.-   REPLACEMENT OF THE ESCROW AGENT:
    	
65
    

 

2

 

	
CHAPTER XI- INSURANCE AND   GUARANTEES
    	
65
    
	
CLAUSE 77.- SOLE   PERFORMANCE BOND:
    	
65
    
	
CLAUSE 78.-   COVERAGE AND INSURED AMOUNT OF THE SOLE PERFORMANCE BOND:
    	
65
    
	
CLAUSE 79.-   AIRPORTS CIVIL LIABILITY POLICY
    	
67
    
	
CLAUSE 80.-   ALTERNATIVES FOR THE TERM OF THE GUARANTEES:
    	
68
    
	
CLAUSE 81.-   DAMAGE INSURANCE:
    	
69
    
	
CLAUSE 82.-   INSURANCE RISKS:
    	
69
    
	
CHAPTER XII- SANCTIONS REGIME
    	
71
    
	
CLAUSE 83.-   FINES:
    	
71
    
	
CLAUSE 84.-   PENALTY CLAUSE:
    	
74
    
	
CHAPTER XIII- DISPUTE   RESOLUTION
    	
75
    
	
CLAUSE 85.-   AMIABLE COMPOSITION:
    	
75
    
	
CLAUSE 86.-   ARBITRATION:
    	
78
    
	
CLAUSE 87.-   CONTINUED PERFORMANCE OF THE OBLIGATIONS:
    	
79
    
	
CHAPTER XIV- REVERSION AND   AIRPORT RESTITUTION
    	
79
    
	
CLAUSE 88.-   REVERSION AND RESTITUTION:
    	
79
    
	
CLAUSE 89.-   DEADLINE FOR THE REVERSION AND RESTITUTION OF THE AIRPORTS:
    	
79
    
	
CLAUSE 90.-   OBLIGATIONS OF THE CONCESSIONAIRE DURING THE REVERSION AND RESTITUTION OF THE   AIRPORTS:
    	
79
    
	
CLAUSE 91.-   ACTIVITIES DURING THE REVISION AND RESTITUTION OF THE AIRPORTS:
    	
80
    
	
CLAUSE 92.-   EXECUTION OF THE MINUTES OF TERMINATION OF THE AGREEMENT:
    	
81
    
	
CHAPTER XV- EXCEPTIONAL CLAUSES   TO GENERAL LAW
    	
81
    
	
CLAUSE 93.-   UNILATERAL TERMINATION:
    	
81
    
	
CLAUSE 94.-   UNILATERAL MODIFICATION:
    	
82
    
	
CLAUSE 95.-   UNILATERAL INTERPRETATION:
    	
82
    
	
CLAUSE 96.-   REVOCATION OF THE AGREEMENT:
    	
82
    
	
CHAPTER XVI- TAKEOVER OF THE   CONCESSION BY THE FUNDERS
    	
83
    
	
CLAUSE 97.-   TAKEOVER OF THE CONCESSION:
    	
83
    
	
CHAPTER XVII- EARLY TERMINATION   AND SETTLEMENT
    	
84
    
	
CLAUSE 98.-   EARLY TERMINATION:
    	
84
    
	
CLAUSE 99.-   TERMINATION COMPENSATION:
    	
85
    
	
CLAUSE 100.-   SETTLEMENT OF THE AGREEMENT:
    	
87
    
	
CHAPTER XVIII — SUPERVISION AND   CONTROL OF THE AGREEMENT
    	
88
    
	
CLAUSE 101. —   POWERS OF THE GRANTORS:
    	
88
    
	
CLAUSE 102. —   RELATIONSHIP BETWEEN THE AUDITOR AND THE CONCESSIONAIRE:
    	
88
    
	
CLAUSE 103. —   FEES OF THE AUDITOR AND FUNDING OF THE AUDITING ACCOUNT:
    	
91
    
	
CHAPTER XIX — GENERAL   PROVISIONS
    	
92
    
	
CLAUSE 104. —   DEFAULT INTERESTS:
    	
92
    
	
CLAUSE 105. —   SUCCESS FEE:
    	
92
    
	
CLAUSE 106. —   SUBCONTRACTING:
    	
92
    
	
CLAUSE 107. —   ASSIGNMENT OF THE AGREEMENT AND OF THE STAKE OF THE CONCESSIONAIRE:
    	
93
    
	
CLAUSE 108. —   SUBJECTION TO COLOMBIAN LAW AND WAIVER TO DIPLOMATIC CLAIM:
    	
93
    
	
CLAUSE 109. — ARCHEOLOGICAL   FINDINGS, TREASURES, MINING FINDING OR OTHER DEPOSITS:
    	
93
    
	
CLAUSE 110. —   LANGUAGE OF THE AGREEMENT:
    	
93
    
	
CLAUSE 111. —   STAMP TAX:
    	
94
    
	
CLAUSE 112. —   AMENDMENT OF THE AGREEMENT:
    	
94
    
	
CLAUSE 113. —   NOTICES:
    	
94
    

 

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CLAUSE 114 —   APPENDIXES AND SCHEDULES:
    	
94
    
	
CLAUSE 115 —   JOINT AND SEVERAL LIABILITY:
    	
95
    

 

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Among the undersigned, on the one hand,

 

(i)                                     Fernando Sanclemente Alzate, of legal age, domiciled in the city of Bogota, D.C., identified with citizenship card No. 80.407.418 issued in Usaquen, acting on behalf and in representation of the Unidad Administrativa Especial de la Aeronáutica Civil, in his capacity as General Director, designated by means of Decree 998 dated April 28 [Sic] 1, 2005, with Minutes of Assumption No. 810 dated April 11, 2005 (hereinafter, “Aerocivil”), and

 

(ii)                                  Francisco Javier Saldarriaga A., of legal age, domiciled in the city of Medellin, identified with citizenship card number 8.250.097 issued in Medellin, acting on behalf and in representation of Establecimiento Público Aeropuerto Olaya Herrera, in his capacity as manager and legal representative, designated by means of Decree No. 067 dated January 15, 2004, and Minutes of Assumption No. 039 dated January 15, 2004, ratified by means of Decree No. 01 dated January 1, 2008 and Minutes of Assumption No. 019 dated January 1, 2008, with the legal powers to contract, pursuant to Law 80 of 1993 and with the bylaws contained in Municipal Decree 2299 of 2001, (hereinafter “AOH”).

 

And on the other hand,

 

(iii)                               Mario Fernando Pinzon Bohorquez, identified with citizenship card No. 91.201.432 issued in Bucaramanga, who, in his capacity as legal representative acts on behalf and in representation of Sociedad Operadora de Aeropuertos Centro Norte S.A. - ACN S.A. (hereinafter the “Concessionaire”), and based on the following

 

RECITALS:

 

1.              Whereas Aerocivil, AOH and the Governor’s Office of Antioquia entered into Inter-administrative Agreement No. 7000284-OH-2007 dated August 31, 2007, the purpose of which was determining the rights and obligations of the parties when performing the activities tending to develop the procedures, administrative and contractual formalities necessary to select and contract the bidder with which this Concession Agreement will be entered into. Also, the Agreement regulates the rights and obligations of the parties in the performance of this Concession Agreement.

 

2.              Whereas in Session No. 3 dated August 24, 2007, the Directing Council of Aerocivil approved the execution of the Concession Agreement for the concession of the Airports, in the terms set forth in item 2 of article 8 of Decree 260 of 2004.

 

3.              Whereas by means of Resolution 4975 dated October 12, 2007, Aerocivil ordered the opening of Public Bid 7000132-OL of 2007,  the purpose of which was to select an Awardee that will enter into a Concession Agreement with Aerocivil and AOH for the administration, operation, commercial exploitation, adjustment, modernization and maintenance of the Airports.

 

4.              Whereas the formalities set forth under articles 18 and 49 of decree 423 of 2001 and, as a result thereof, (i) the Planning Advising Office of the Ministry of Transport and the Municipality of Medellin determined that this Agreement meets the contractual risk policy of the State established by the Economical and Social Policy Council, Conpes (for its

 

 

acronym in English), and (ii) the General Direction of Treasury and Public Credit determined that no contribution shall be made to the Contractual Contingency Fund of the State Entities by reason of this Agreement.

 

5.              Whereas, once the applicable legal proceedings have been met, the Bid was awarded to the Concessionaire by means of Resolution 0829 dated March 3, 2008 of Aerocivil.

 

6.              Whereas, considering the above, the parties have decided to enter into this Agreement, which  shall be governed by the following rules:

 

CHAPTER I - CONSTRUCTION AND DEFINITIONS

 

CLAUSE 1.- CONSTRUCTION

 

This Agreement shall be constructed pursuant to the following rules:

 

(i)                                     This Agreement shall be constructed concording its own Clauses with the Terms of Reference. In case of doubt or conflict among them, the Agreement shall prevail over the Terms of Reference, as well as over any other document of a date earlier to the execution of the Concession Agreement.

 

(ii)                                  References to Chapters, Clauses, Items and Appendixes shall be construed as references to the chapters, clauses, items and appendixes of this Agreement, except when otherwise expressly indicate. The headings and titles of the Chapters and Clauses used in this Agreement shall serve solely for purpose of references and to facilitate consultations hereof, but will not affect the construction of the text of the Agreement.

 

(ii)                                  The rules relating to the allocation of risks referred to under this Agreement shall be deemed as core elements for the interpretation of the scope of each obligation of the parties under this Agreement.

 

CLAUSE 2.- DEFINITIONS

 

In this Agreement, capitalized terms shall have the meaning assigned thereto under this Clause. Capitalized terms include the plural form and viceversa, provided that the context so requires it. Terms not otherwise expressly defined herein shall be construed in the sense attributed thereto by the applicable technical language or, in absence thereof, by their natural and logical meaning, according to the general use thereof.

 

·                  Minutes of Adjustment of Expected Regulated Revenue: Means the document executed by the Grantors, the Auditor and the Concessionaire, evidencing the compensation accrued in favor of the Concessionaire for the performance of the Supplementary Works, as well as the new amount of the Expected Regulated Revenue.

 

·                  Minutes of Delivery: Means the document executed by the Concessionaire and the Auditor, evidencing the actual delivery and transfer by Aerocivil to the Concessionaire, by way of Concession, of each Airport. The Minutes of Delivery of the Olaya Herrera Airport is also executed by AOH, given that the latter is responsible for the actual delivery and transfer of the Olaya Herrera Airport, by way of Concession, to the Concessionaire.

 

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·                  Minutes of Completion of Performance: Means the document executed by the Grantors, the Auditor and the Concessionaire, evidencing the completion of the term for the performance of the Agreement, according to the provisions set forth in Clause 7. By executing these minutes, the term for the performance of the agreement is terminated.

 

·                  Minutes of Commencement of Performance: Means the document executed by the Grantors, the Auditor and the Concessionaire, evidencing that all conditions set forth in this Agreement for the formalization and commencement of the performance hereof have been fully satisfied.

 

·                  Minutes of Commencement of the Maintenance Stage: Means the document executed by the Grantors, the Auditor and the Concessionaire, evidencing  the fulfilment of all the activities required by the Adjustment and Modernization Plan, and the execution thereof initiates the Maintenance Stage.

 

·                  Minutes of Termination: Means the document executed by the Grantors, the Auditor and  the Concessionaire, evidencing the satisfaction of all conditions for the termination of the Agreement.

 

·                  Minutes of Restitution: Means each document executed by Aerocivil, the Concessionaire and the Auditor, evidencing the restitution and reversion of each Airport. The Minutes of Delivery of the Olaya Herrera Airport is also executed by AOH, given that the latter is responsible to receive the Olaya Herrera Airport.

 

·                  Minutes of Verification: Means the documents executed by the Auditor, the Concessionaire and the Grantors, evidencing the termination of an activity of the Adjustment and Modernization Plan or of a Supplementary Work, as well as its compliance with the provisions set forth in this Concession Agreement and in the applicable technical features.

 

·                  Actions of Unlawful Interference: Means the actions or events described in Schedule 17 of International Norms and Methods recommended by OACI regarding international civil aviation safety and protection, that threaten passengers, crew-members, aircrafts, aeronautic or airport premises, including, without being limited to:

 

(i)                                     A violent action committed by a person on board of a flying aircraft and that, given its nature, represents a threat to the aircraft safety.

 

(ii)                                  The action of destroying an aircraft in service, or causing damages to it impairing it for the flight or that, given its nature, represents a threat to the safety of an aircraft during flight.

 

(iii)                               The action of placing or causing the placement of any artifact or substance by any means capable of destroying said aircraft or of causing damages thereto that impairs it for the flight or that, given its nature, represents a threat to the safety of an aircraft during flight.

 

(iv)                              The action of destroying or damaging the premises or air navigation services or disturb the functioning thereof, if said action, given its nature, represents a threat to the safety of an aircraft during flight.

 

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(v)                                 The action of communicating, knowingly, false reports threatening as a result thereof the safety of an aircraft during flight.

 

(vi)                              The action of unlawfully and intentionally using any artifact, weapon, explosive, substance or hazardous material to: (a) commit an action of violence against a person or several persons in an airport at the service of the civil aviation, causing severe injury or casualty, o (b) destroy or cause severe damages in the premises of a public airport or in an aircraft that is not in service and that is located in the Airports, or disrupting Airport services

 

(vii)                           The attempt to commit any conduct listed in the foregoing items, as well as the conspiring or abetting the commitment thereof.

 

(viii)                        Any other action or event that might be considered to attempt against the life and safety of the passengers, crew-members, aircrafts, aeronautic or airport premises.

 

(ix)                              Those other actions or events that appear listed in the Montreal Convention of 1971 and the Montreal Protocol of 1988, referring to the repression of unlawful violent actions in airports providing services to the international civil aviation, or in those other protocols, treaties or conventions that amend, additions or supplements them.

 

·                  Aerocivil: Means the Unidad Administrativa Especial of the Aeronautica Civil (in English: the Special Administrative Unit of the Civil Air Authority), part of the Ministry of Transport, having legal capacity, administrative autonomy and independent equity.

 

·                  Airports: Means, collectively, the Olaya Herrera Airport, the Jose Maria Cordova Airport, the Caraño Airport, the Los Garzones Airport, the Antonio Roldan Betancourt Airport and the Las Brujas Airport.

 

·                  Antonio Roldan Betancourt Airport: Means the Antonio Roldan Betancourt Airport of the city of Carepa (Antioquia), identified with the acronym OACI SKLC, together with the personal and real property that comprise it and that are listed in Appendix A, the Airport Agreements that correspond thereto and which are listed in Appendix B, and all the assets, agreements and rights of any nature whatsoever that have been incorporated to the Concession by the Concessionaire, either when fulfilling the Agreement or willingly.

 

·                  El Caraño Airport: Means the Caraño Airport of the city of Quibdó (Chocó), identified with the acronym OACI SKUI, together with the personal and real property that comprise it and that are listed in Appendix A, the Airport Agreements that correspond thereto and which are listed in Appendix B, and all the assets, agreements and rights of any nature whatsoever that have been incorporated to the Concession by the Concessionaire, either when fulfilling the Agreement or willingly.

 

·                  Jose Maria Cordova Airport: Means the Jose Maria Cordova Airport of the city of Rionegro (Antioquia), identified with the acronym OACI SKRG, together with the personal and real property that comprise it and that are listed in Appendix A, the Airport Agreements that correspond thereto and which are listed in Appendix B, and all the assets, agreements and

 

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rights of any nature whatsoever that have been incorporated to the Concession by the Concessionaire, either when fulfilling the Agreement or willingly.

 

·                  Las Brujas Airport: Means the Las Brujas Airport of the city of Corozal (Sucre), identified with the acronym OACI SKCZ, together with the personal and real property that comprise it and that are listed in Appendix A, the Airport Agreements that correspond thereto and which are listed in Appendix B, and all the assets, agreements and rights of any nature whatsoever that have been incorporated to the Concession by the Concessionaire, either when fulfilling the Agreement or willingly.

 

·                  Los Garzones Airport: Means the Los Garzones Airport of the city of Monteria (Cordoba), identified with the acronym OACI SKMR, together with the personal and real property that comprise it and that are listed in Appendix A, the Airport Agreements that correspond thereto and which are listed in Appendix B, and all the assets, agreements and rights of any nature whatsoever that have been incorporated to the Concession by the Concessionaire, either when fulfilling the Agreement or willingly.

 

·                  Olaya Herrera Airport: Means the Olaya Herrera Airport of the city of Medellin (Antioquia), identified with the acronym OACI SKMD, together with the personal and real property that comprise it and that are listed in Appendix A, the Airport Agreements that correspond thereto and which are listed in Appendix B, and all the assets, agreements and rights of any nature whatsoever that have been incorporated to the Concession by the Concessionaire, either when fulfilling the Agreement or willingly.

 

·                  AOH: Is the Olaya Herrera Airport Public Establishment, a decentralized entity of a municipal level, established by means of Agreement No. 55 of 1991 of the Council of Medellin, amended by Agreement 21 of 2001 of the Council of Medellin.

 

·                  Advisor: Is Union Temporal Aeropuertos de Occidente (in English: Aeropuertos de Occidente Joint Venture) conformed by Structure Banca de Inversion EU and Compañía Profesionales de Bolsa S.A., together with their advisors, subcontractors and employees. The Advisor entered into Consulting Agreement No. 6000003-OJ-2006 with Aerocivil, for the technical, financial and legal structuring of the Bid.

 

·                  Safety Authorities: Means the State organisms to which the Constitution of the Law has entrusted the conduct of specific controls in the Airports, other than those that should be conducted by the Concessionaire in the fulfilment of its obligations regarding Airport Safety, and are all those listed in addition to those having any authority on Airport Safety matters:

 

(i)                                     Policia Nacional (in English: National Police)

 

(ii)                                  Departamento Administrativo de Seguridad (DAS for its acronym in Spanish, in English: Administrative Department of Safety)

 

(iii)                               Direccion de Impuestos y Aduanas Nacionales (DIAN for its acronym in Spanish, in English: National Tax and Customs Bureau)

 

(iv)                              Instituto Colombiano Agropecuario (ICA for its acronym in Spanish, in English: Colombian Agriculture and Livestock Institute)

 

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(v)                                 Ministerio de Medio Ambiente (in English: Ministry of Environment)

 

(vi)                              Ministerio de Protección Social (in English: Ministry of Social Protection)

 

(vii)                           Regional Environmental Authorities

 

·                  Acceptable Bank: Means a credit establishment incorporated and legally authorized to operate in Colombia, subject to the surveillance of the Superintendency of Finance.

 

·                  Financial Closing: Means the documental accreditation, by the Concessionaire, to the effect that part of the resources for the performance of the Concessionaire has been obtained.

 

·                  Success Fee: Means the amount corresponding to the Fees of the Advisor for the structuring of the Bid, and which shall be paid by the Concessionaire in the terms of this Agreement, as indicated in clause 105.

 

·                  Airport Safety Intersector Commision: The Airport Safety Intersector Commission is the highest ranked organism in airport safety in Colombia, and its competence, composition and duties are those set under Decree 1400 of 2002, or in those rules that modify, replace or amend it.

 

·                  Acceptable Insurance Company: Means an insurance company legally authorized to operate in Colombia, duly submitted to the surveillance of the Superintendency of Finance. In addition, in the event that the amount of the guarantees or insurance require the Concessionaire to retain  an optional reinsurance policy, the reinsurancers with which said agreement is entered into shall in no event be rated below “A” by Standard & Poor’s, or its equivalent in Moody’s, Fitch IBC or TBW, renown international rating agencies.

 

·                  Grantors: Mean, collectively, Aerocivil and AOH.

 

·                  Concessionaire: Means the person, consortium or temporary union that, for having been the awardee in the Bid, enters into the Concession Agreement.

 

·                  Consideration:  Means the retribution that, in the terms of Clause 20, shall be paid by the Concessionaire to the Grantors in consideration to the rights the former acquires under the Agreement.

 

·                  Concession Agreement or Agreement: Means this agreement, including any Appendix hereto.

 

·                  Airport Agreements: Means all agreements entered into by the Grantors for the operation, administration and commercial exploitation of the Airports, and which are assigned by the Grantors to the Concessionaire as from the delivery of each Airport. The Airport Agreements are those listed in Appendix B.

 

·                  Business Day or Day: ;eams amu common day from Monday to Friday, excluding the days that are holidays in Colombia. In the event that the last day of any term set forth under the Agreement is not a Business Day, the last day of said term shall be the Business Day after

 

6

 

said common day. Whenever this Agreement makes reference to Days without indicating otherwise, said reference shall be deemed as to Business Days.

 

·                  Dollars or US$: Means the legal tender of the United States of America.

 

·                  DTF: Means the interest rate certified by the Central Bank (Banco de la República) or the entity that replaces it for such duties, that corresponds to the aggregate average of interest rates in the 90-day collection Term Deposit Certificates (CDTs for its acronym in Spanish) offered by the Colombian financial system. For this case, said rate shall be expressed in effective annual terms.

 

·                  Escrow: Means the escrow account (patrimonio autónomo) that shall be established by the Concessionaire by executing an irrevocable commercial administration and payment trust agreement in the terms, and for the purposes, set forth herein.

 

·                  Escrow Agent: Means a financial entity legally authorized to operate in Colombia, with which the irrevocable commercial administration and payment trust agreement that produces the establishment of the Escrow is entered into.

 

·                  Funders: Means the legal entities other than the Concessionaire, that provide the Concessionaire with the indebtedness resources necessary for the performance of the Concession, in any form, agreement or financing instrument whatsoever.

 

·                  IPC: Means the Consumer Price Index certified by the Departamento Administrativo Nacional de Estadistica - DANE (in English: National Administrative Department of Statistics), or by the entity that replaces it in said duty.

 

·                  Gross Revenue: Means the sum of all the Regulated Revenues and the Non-Regulated Revenue invoiced or received by the Concessionaire under any title, as a result of the commercial exploitation of the Concession, regardless of the form how the Concessionaire records it in its accounting. The contributions referred to in Clause 10.5 do not make part of the Gross Revenue.

 

·                  Revenues Produced from the Exploitation of Voluntary Supplementary Works: Means the Non-Regulated Revenues received by the Concessionaire for the commercial exploitation of any Voluntary Supplementary Work carried out in the performance of the Agreement.

 

·                  Expected Regulated Revenue: Means the Initial Expected Regulated Revenue once they have been subject to the adjusted as per the provisions under item 10.4 and item 105 of Clause 10. If the Initial Expected Regulated Revenue are not subject to an adjustment under this Agreement, the Expected Regulated Revenue and the Initial Expected Regulated Revenue shall be equal.

 

·                  Initial Expected Regulated Revenue: Means the total amount, expressed in constant Pesos in the month of January 2007, corresponding to the Regulated Revenue that the Concessionaire expects to receive throughout the term of the performance of the Agreement. The amount of the Initial Expected Regulated Revenue is the one indicated in item 10.4 of Clause 10, and corresponds to the amount of the Financial Proposal of the

 

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Concessionaire. The Initial Expected Regulated Revenue, once adjusted pursuant to the provisions set forth in item 10.4 and item 10.5 of Clause 10, give rise to the Expected Regulated Revenue of the Agreement.

 

·                  Regulated Revenue Generated: Means the sum of all Regulated Revenue accrued in favor of the Concessionaire, re-expressed in constant Pesos of 2007, calculated according to the formula set forth in Item 10.3 of Clause 10. If the Concessionaire performs Voluntary Supplementary Works  under this Agreement, the  Regulated Revenue Generated shall include, in addition to the sum of all Regulated Revenue accrued in favor of the Concessionaire, all Revenues Generated by the Exploitation of Voluntary Supplementary Works, re-expressed in constant Pesos of 2007 and calculated according to the formula set forth in Item 10.3 of Clause 10.

 

·                  Non-Regulated Revenue: Means any revenue, other than the Regulated Revenues, received by the Concessionaire, in cash or in kind, for the exploitation of the Concession.

 

·                  Regulated Revenue: Means any revenue assigned by the Grantors to the Concessionair, and that are received in consideration for the rendering of the Services Associated to the Regulated Revenue, and which are listed in Resolution 04530 dated September 21, 2007.

 

·                  Auditor: MEans the person or persons contracted or designated by the Grantors to perform, on their behalf, the technical, administrative, financial, legal and environmental supervision of the Concession.

 

·                  Bid: Means Bid No. 7000132-OL of 2007 of the Aerocivil.

 

·                  OACI: Means the Organización de Aviación Civil Internacional (in English: the International Civil Aviation Organization).

 

·                  Works: Means, collectively, the Mandatory Works and the Supplementary Works carried out  by the Concessionaire in the performance of the Concession, and that are integrated to the Airports once their performance is completed.

 

·                  Supplementary Works: Means, irrespectively, the Mandatory Supplementary Works and the Voluntary Supplementary Works.

 

·                  Mandatory Supplementary Works: Means the works that the Concessionaire undertakes to carry out in compliance with the Adjustment and Modernization Plan, provided that certain conditions listed in Appendix C are satisfied, and that are remunerated pursuant to the provisions set forth herein.

 

·                  Voluntary Supplementary Works: Means the works that do not make part of the Adjustment and Modernization Plan but are performed at the proposition of the Concessionaire or at the request of the Grantors, and are approved and remunerated pursuant to the provisions set forth herein.

 

·                  Mandatory Works: Means the works the Concessionaire undertakes to carry out in the fulfillment of the Adjustment and Modernization Plan.

 

8

 

·                  Airport Operator: Is the third party holding an indirect interest in the capital of the Concessionaire, and in respect of which the Concessionaire invoked the capacity to accredit the satisfaction of the technical and experience requirements provided in the Terms of Reference. The Airport Operator, as a requirement of item 2.4.2 (ii), second paragraph of the Terms of Reference, enters into this Agreement accepting the joint liability thereof in respect of the undertakings of the Concessionaire relating with the administration, commercial exploitation and operation of the Airports.

 

·                  Pesos or $: Means the legal tender in Colombia.

 

·                  Adjustment and Modernization Plan: Means the investment plan attached as Appendix C herein, which specifies both the Mandatory Works and the Mandatory Supplementary Works that shall be performed by the Concessionaire throughout the Stage of Adjustment and Modernization, as well as the schedule for the performance thereof and the features that such shall meet.

 

·                  Contingency Plan: Means the extraordinary procedures that make part of the Airport Safety Plan and that have the purpose of coordinating efforts among the different safety and air governmental organisms, companies and institutions, to respond to any threat or Action of Unlawful Interference in each Airport. The Contingency Plan shall be prepared by the Concessionaire in the terms set forth in this Concession Agreement.

 

·                  Emergency Plan: Means the extraordinary procedures that make part of the Airport Safety Plan and that have the purpose of coordinating efforts among the different safety and air governmental organisms, companies and institutions, to respond to accidents that derive from air activities, or that originate in telluric or climate factors, or in structural fires, or in any other natural phenomena that may affect the operation and commercial exploitation of the Airports. The Emergency Plan  shall be prepared by the Concessionaire in the terms set forth in this Concession Agreement.

 

·                  Airport Safety Plan: Means the set for ordinary and extraordinary measures applied to Airports, through which the principles and norms established in the National Airport Safety Program, the Concession Agreement and Appendix F are implemented. Ordinary measures are understood as those procedures that are permanently adopted for the control of persons, luggage, mail and cargo in the Airports.

 

·                  Terms of Reference: Means the document containing the terms of reference of the Bid.

 

·                  National Airport Safety Program: Pursuant to the provisions set forth in Resolution 892 of 2004, means all those general measures of a preventive nature adopted by each State, subject to Schedule 17 of the Civil Aviation Convention, to protect civil aviation against Actions of Unlawful Interference.

 

·                  Offer: Means the irrevocable and unconditional offer submitted by the Concessionaire within the Bid, and in the terms provided in the Terms of Reference.

 

·                  Financial Offer: Means the part of the Offer of the Concessionaire that includes the commercial offer thereof.

 

9

 

·                  Air Safety: Means the activity conducted in accordance with the applicable laws and regulations, by means of combining human resources, procedures, measures and technological devices, to control of the air traffic in Colombia and in the Airports, that includes flight protection services.

 

·                  Airport Safety: Means the combination of human resources, procedures, measures and technological devices that shall be implemented by the Concessionaire inside the Airports, in order to prevent Actions of Unlawful Interference, in accordance with the provisions set forth in this Concession Agreement.

 

·                  Services Associated with Regulated Revenues: Means any service referred to under Resolution 04530 dated September 21, 2007 of Aerocivil, and that shall be rendered by the Concessionaire when performing the Concession.

 

·                  Services Not Associated with Regulated Revenues: Means any service other than the Services Associated with Regulated Revenues, that shall be rendered by the Concessionaire when performing the Concession.

 

·                  Airport Rate: Means the fee that shall be collected by the Concessionaire for the services associated to said rate, according to the provisions set forth in Resolution 04530 dated September 21, 2007 of Aerocivil.

 

·                  TRM: Means the Peso per Dollar exchange rate certified each day by the Colombian Financial Superintendency, in the terms of article 80 of Resolution 8 of 2000, issued by the Board of Directors of the Central Bank.

 

CHAPTER II- GENERAL ASPECTS

 

CLAUSE 3.- PURPOSE

 

The purpose of this Agreement is (i) the granting, by Aerocivil and in favor of the Concessionaire, of the concession for the administration, operation, commercial exploitation, adjustment, modernization and maintenance of the Antonio Roldan Betancourt Airport, the Caraño Airport, the Jose Maria Cordoba Airport, the Las Brujas Airport and the Los Garzones Airport, and (ii) the granting, by AOH and in favor of the Concessionaire, of the concession for the administration, operation, commercial exploitation, adjustment, modernization and maintenance of the Olaya Herrera Airport, in consideration of the remuneration set forth in Chapter II herein (hereinafter, the “Concession”).

 

The Concession is granted pursuant to the provisions set forth in article 32, item 4 of law 80 of 1993, law 105 of 1993.

 

The administration, operation, commercial exploitation, adjustment, modernization and maintenance of the Airports granted as Concession shall be at the sole risk and expenses of the Concessionaire, and in the terms and conditions set forth herein.

 

The Grantors are responsible for the supervision and control of the performance of the Concession, who may conduct it directly or through one or more Auditors.

 

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CLAUSE 4.- ACTIVITIES EXPRESSLY EXCLUDED FROM THE CONCESSION

 

Pursuant to the provisions set forth in article 3 of article 48 of law 105 of 1993, the Concession does not include goods that are necessary for the rendering of the service of air traffic control, nor the responsibility for the appropriate functioning of the air radio aids, including the approximation radio aids and communications. Aerocivil reserves the management and responsibility for the on route air traffic control and surveillance duties. The Concession also does not include the liability that derives from Air Safety in the Airports, which remains a responsibility of Aerocivil.

 

CLAUSE 5.- CONSUMMATION OF THE AGREEMENT

 

This Concession Agreement will be consummated upon the execution hereof by Aerocivil, AOH and the Concessionaire.

 

CLAUSE 6.- REQUIREMENTS FOR THE FORMALIZATION AND PERFORMANCE OF THE AGREEMENT

 

The satisfaction of each and all the conditions listed in the following items of this Clause is necessary in order for the commencement of the performance of this Agreement. Upon the satisfaction of all the requirements demanded for the commencement of the performance of the Agreement, the Grantors, the Concessionaire and the Auditor will proceed to execute the Minutes of Commencement of Performance.

 

6.1                               PUBLICATION OF THE AGREEMENT IN THE OFFICIAL SOLE CONTRACTING BULLETIN:

 

The Concessionaire shall publish this Agreement in the Official Sole Contracting Bulletin, a requirement that is deemed satisfied upon the payment of the applicable rights. The receipt of the payment of the publication rights shall be submitted to the Grantors within the ten (10) Days following the date of execution of this Agreement.

 

6.2                               SUBMISSION AND APPROVAL OF THE SOLE PERFORMANCE BOND AND THE AIRPORTS’ CIVIL TORT INSURANCE POLICY:

 

The Sole Performance Bond and the civil tort insurance policy of the Airports shall be submitted to the Grantors within the thirty (30) common days following the date of execution of the Agreement. If the Concessionaire fails to submit the  Sole Performance Bond and the civil tort insurance policy of the Airports within the term granted thereof, the Grantors shall enforce the Guarantee for the Seriousness of the Offer.

 

Upon the submission of the Sole Performance Bond and the civil tort insurance policy of the Airports by the Concessionaire, the Grantors shall have a maximum term of ten (10) Days to issue their approval. If the Grantors fail to approve the Sole Performance Bond or the civil tort insurance policy of the Airports, or both, submitted by the Concessionaire, they will make observations to the Concessionaire, and the latter shall have a term of five (5) Days to submit the Sole Performance Bond or the civil tort insurance policy of the Airports, as applicable, amended or corrected to the satisfaction of the Grantors. In the event the Concessionaire fails to deliver the Sole Performance Bond or the civil tort insurance policy of the Airports to the satisfaction of the Grantors within said term, or if the terms and conditions of the corrections or modifications do not meet the observations made by the Grantors, the latter will not conclusively approve the Sole Performance Bond or the civil tort insurance policy of the Airports, as applicable, submitted by the Concessionaire, and will enforce the Guarantee for the Seriousness of the Offer.

 

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6.3                               PAYMENT OF THE SUCCESS FEE:

 

The Concessionaire shall pay the Success Fee to the Advisor, within the ten (10) Days following the date of execution of the Agreement, in the terms set forth in Clause 105. Within said term, the Concessionaire shall submit to the Grantors a copy of the wire transfer or any other support acceptable for the Grantors, evidencing the payment of the Success Fee.

 

CLAUSE 7.- TERM FOR THE PERFORMANCE OF THE AGREEMENT

 

The term for the performance of the Agreement initiates from the date of execution of the Minutes of Commencement of Performance and elapses on the date in which any of the following events take place, whichever happens first: (i) the Regulated Revenue Generated is equal to the Expected Regulated Revenue, provided that, for that moment, fifteen (15) years counted as from the date of execution of the Minutes of Commencement of Performance have elapsed, or (ii) twenty-five (25) years have elapsed since the date of execution of the Minutes of Commencement of Performance, regardless if, for that moment, the Regulated Revenue Generated have not reached the amount of the Expected Regulated Revenue. If the Regulated Revenue Generated reach the Expected Regulated Revenue before fifteen (15) years have elapsed as from the date of execution of the Minutes of Commencement of Performance, the term of the Agreement shall be, in any case, of fifteen (15) years have elapsed as from the date of execution of the Minutes of Commencement of Performance and, throughout said term, the Concessionaire shall perform all its obligations under this Concession Agreement.

 

The Minutes of Completion of Performance shall be executed upon the termination of the term for the performance of the Agreement.

 

CLAUSE 8- AMOUNT OF THE AGREEMENT:

 

The amount of this Agreement is undetermined.

 

CHAPTER III.- REVENUE OF THE CONCESSION AND CONSIDERATION PAYABLE TO THE GRANTORS

 

CLAUSE 9.- ASSIGNMENT OF REVENUE

 

The Grantors undertake to assign to the Concessionaire the Regulated Revenue and the Non-Regulated Revenue corresponding to each Airport. The Concessionaire shall obtain all its remuneration by reason of the Concession, solely by the assignment of the Regulated Revenue and the Non-Regulated Renueve made in its favor by the Grantors.

 

The corresponding assignment of the Regulated Revenue and the Non-Regulated Revenue of each Airport shall be made as from zero hours (00:00 hours) of the common day following the date in which the Minutes of Delivery of each Airport are executed, and until the Concessionaire is entitled to receive said remuneration in the terms of Clause 10, Item 10.2 of this Agreement.

 

CLAUSE 10.- CONCESSIONAIRE REMUNERATION

 

The remuneration of the Concessionaire under this AGreement is governed by the provisions set forth in the following items.

 

10.1.                     ITEMS THAT CONSTITUTE THE REMUNERATION OF THE CONCESSIONAIRE: The remuneration of the Concessionaire solely and exclusively corresponds to the assignment of the Regulated Revenue and the Non-Regulated Revenue that, in the terms of the Agreement, is made in its favor by the Grantors.

 

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10.2.                     TOTAL AMOUNT OF THE REMUNERATION OF THE CONCESSIONAIRE: The Concessionaire understands and unconditionally accepts that the amount of the Regulated Revenue and the Non-Regulated Revenue accrued in its favor throughout the term of the Agreement remunerate and compensate in full the undertakings and the risks borne by the Concessionaire as a result of this Concession Agreement, except for the express provisions set forth in Item 10.5, the remuneration of the Concessionaire under this Agreement does not contemplate or require additional contributions, payments or setoffs by the Grantors and in favor of the Concessionaire.

 

The Concessionaire shall receive the remuneration under this Agreement until the earlier to occur between the following events: (i) the Regulated Revenue Generated is equal to the Expected Regulated Revenue, according to the provisions set forth in the following Item, or (ii) twenty-five (25) years have elapsed since the date of execution of the Minutes of Commencement of Performance, regardless if, for that moment, the Regulated Revenue Generated have not reached the amount of the Expected Regulated Revenue, whichever occurs first. If the Regulated Revenue Generated reach the Expected Regulated Revenue before fifteen (15) years have elapsed as from the date of execution of the Minutes of Commencement of Performance, the remuneration of the Concessionaire will be, as from said moment and until fifteen (15) years have elapsed as from the date of execution of the Minutes of Commencement of Performance, limited solely to the Non-Regulated Revenue, without prejudice of understanding that throughout said term, the Concessionaire shall meet all its undertakings under this Concession Agreement, including the undertaking to pay the Consideration payable over the received Gross Revenues. In the term between the moment the Regulated Revenue GEnerated reach the Expected Regulated Revenue and the fifteen (15) years counted as from the date of execution of the Minutes of Commencement of Performance, the assignment made by virtue of this Agreement and in favor of the Concessionaire in respect of the Regulated Revenue is reverted, and as from said moment those will be directly received by the Grantors.

 

10.3                        CALCULATION OF REGULATED REVENUE GENERATED: To determine the comparison between the Regulated Revenue Generated and the Expected Regulated Revenue, the amount of the Regulated Revenue Generated shall be calculated for the last day of each month, using the following formula:

 

 

Where,

 

IRGt =                                                            All Regulated Revenue Generated as of the month t of the term of the Concession measured in constant Pesos of 2007.

 

IR1 =                                                                    All Regulated Revenues Received by the Concessionaire in the t period of the term of the Concession, measured in current Pesos.

 

IOCV =                                                      All Revenues Generated for the Exploitation of Voluntary Supplementary Works received by the Concessionaire in the t period of the term of the Concession, measured in current Pesos.

 

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IPC0 =                                                             IPC of the month of January 2007.

 

IPCt =                                                              IPC on the t period.

 

10.4                        ADJUSTMENT OF THE EXPECTED REGULATED REVENUE AS REMUNERATION FOR THE PERFORMANCE OF SUPPLEMENTARY WORKS: In the events the Concessionaire, in the terms and under the conditions of this Agreement, carries out Supplementary Works, the Grantors will remunerate the performance of said Supplementary Works to the Concessionaire by means of the adjustment of the Expected Initial Regulated Revenues. The amount of the Expected Initial Regulated Revenues is Seven Hundred and Eighty Billion, Seven Million, One Hundred and  Thirteen Thousand, One Hundred and Twenty-one ($780.007.113.121) constant Pesos of January 2007, which amount corresponds the the Financial Offer submitted by the Concessionaire in the Bid. However, in the event the Concessionaire, in the terms and under the conditions of this Agreement, carries out Supplementary Works, the Expected Initial Regulated Revenues shall be adjusted according to the following formula, to give space to the Expected Regulated Revenues of the Agreement:

 

 

Where,

 

IRE =                                                                Expected Regulated Revenues adjusted in constant Pesos of January 2007.

 

IREI =                                                           Amount of the Expected Initial Regulated Revenues.

 

ROC =                                                           Remuneration of Supplementary Works in constant Pesos of January 2007

 

I =                                                                                 It refers to the counter of the number of Supplementary Works performed throughout the Agreement

 

The following formula will be used to determine the remuneration for the Supplementary Works:

 

 

Where,

 

ROC =                                                           Remuneration of Supplementary Works in constant Pesos of January 2007

 

VOC =                                                           Amount of the Supplementary Works in constant Pesos of January 2007

 

IREI =                                                           Amount of the Expected Initial Regulated Revenues.

 

VEO =                                                            250.000.000.000, which is the amount estimated in the investments of the Adjustment and Modernization Plan of the Airports in constant Pesos of January 2007

 

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N =                                                                             Time elapsed, in months, as from the execution of the Minutes of Commencement of Performance until the execution of the Minutes of Commencement of Supplementary Works

 

TR% =                                                          Actual Update Rate

 

T =                                                                              

 

The actual update rate of the variable ROC reflects the minimum yield, in actual terms, that will be received by the Concessionaire throughout the term in which it will not receive any remuneration whatsoever for the investment made. For this purpose, an effective actual update rate equal to ten percent (10%) is used.

 

The following formula is used to determine the amount of the Supplementary Works calculated in constant pesos of January 2007:

 

 

Where,

 

VOC0 =                                                      Amount of the Supplementary Works in constant Pesos of January 2007.

 

VOCI =                                                        Amount of the Supplementary Works in current pesos

 

IPCt =                                                              IPC on the t period.

 

In any case, as determined under this Agreement, there will be no need for approval for the performance of Supplementary Works, whenever the Regulated Revenues Generated have reached seventy-five percent (75%) of the amount of the Initial Expected Regulated Revenues.

 

10.5                        ADJUSTMENT TO THE EXPECTED REGULATED REVENUE AS REMUNERATION FOR THE PERFORMANCE OF SUPPLEMENTARY WORKS, WHEN TOTAL OR PARTIAL CONTRIBUTIONS FROM THE GRANTORS EXIST: In the events the Concessionaire, in the terms and under the conditions of this Agreement, performs Supplementary Works in respect of which the Grantors decide to contribute all or part of the value of the Supplementary Works, the Grantors will calculate the amount of the Supplementary Works that shall be remunerated to the Concessionaire, as the difference between the amount of the Supplementary Works measured in current pesos, and calculated in the manner indicated in the preceding Item, and the contribution of the Grantors shaal be measured in current pesos. For such purpose, the amount of the Supplementary Works shall be determined based on the following formula:

 

 

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Where,

 

VOC =           Amount of the Supplementary Works in current Pesos with contributions of the Grantors.

 

VOCI =        Amount of the Supplementary Works in current Pesos

 

APCt =          Contributions made by the Grantors to Supplementary Works in current Pesos

 

Once the amount of the Supplementary Works with contributions of the Grantors has been determined, the adjustment to the Expected Regulated Revenues shall be mad as indicated in Item 10.4 above. The total or partial contributions made by the Grantors, as remuneration of the Concessionaire for the performance of the Supplementary Works, will not be deemed a Regulated Revenue.

 

10.6                        MAXIMUM LIMIT OF THE AMOUNT OF THE SUPPLEMENTARY WORKS:

 

The maximum limit of the amount of the Supplementary Works remunerated in the form indicated in Items 10.4 and 10.5 of this Agreement shall not exceed, in any case, as the amount per each Work or as an aggregate amount of all of them, the equivalent to fifteen percent (15%) of the amount of the Expected Initial Regulated Revenues regarding the Mandatory Supplementary Works, and to ten percent (10%) of the amount of the Expected Initial Regulated Revenues for the case of Voluntary Supplementary Works.

 

10.7                        EXECUTION OF THE MINUTES OF ADJUSTMENT OF THE EXPECTED REGULATED REVENUES:

 

In each opportunity when a set of Minutes of Verification of Supplementary Works, the Concessionaire, the Grantors and the Auditor shall execute the Minutes of Adjustment of the Expected Regulated Revenue which shall record the amount of the remuneration accrued in favor of the Concessionaire in the terms of Items 10.4 and 10.5, as well as the new amount of the Expected Regulated Revenues.

 

10.8                        COMPARISON OF THE EXPECTED REGULATED REVENUES AND THE REGULATED REVENUES GENERATED:

 

The provisions set forth in Clause 7 and in item 10.2 shall be applicable whenever the comparison of the Regulated Revenues Generated, calculated as indicated under Item 10.3, with the Expected Regulated Revenues, shows that the Regulated Revenues Generated have reached the Expected Regulated Revenues.

 

10.9                        COMPLETION OF THE TERM FOR THE PERFORMANCE OF THE AGREEMENT:

 

Promptly upon the notice delivered by the Trust Agent to the Grantors, the Concessionaire and the Auditor communicating the fact that the Regulated Revenues Generated have reached the Expected Regulated Revenues, the Minutes of Completion of Performance shall be executed, and the delivery and reversion of the Airports to the Grantors shall immediately proceed in the terms set forth in Chapter XIV, provided that such notice has been delivered once fifteen (15) years have elapsed as from the date of execution of the Minutes of Commencement of Performance and, as from said moment, the delivery and reversion of the Airports to the Grantors in the terms contained under Chapter XIV shall immediately proceed. If twenty-five (25) years have passed as from the date of execution of the Minutes of Commencement of Performance and the Regulated Revenues Generated have not reached the Expected Regulated Revenues, the term of the performance shall be, in any case, of twenty-five (25) years have passed as from the date of execution of the Minutes of Commencement of Performance and, thereafter, the delivery and reversion of the Airports to the Grantors shall immediately proceed in the terms of Chapter XIV.

 

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If the Concessionaire has, as of the moment of the notice of the Trust Agent, received any remuneration under this Agreement following the date in which the Regulated Revenue Generated have reached the Expected Regulated Revenue, then the provisions set forth in the following item shall be applicable. For such effects, the Trust Agent, when giving the notice indicated under this Item, will additionally indicate the amount of the remuneration that the Concessionaire has received in excess to the one it is entitled under this Agreement.

 

10.10                 RETURN OF FUNDS BY THE CONCESSIONAIRE:

 

Given that it is possible that the notice of the Trust Agent indicated in the preceding Item is given after the effective moment when the Regulated Revenues Generated reach the Expected Regulated Revenues, any amount accrued as remuneration in favor of the Concessionaire following said date, and that the latter has received, either as Regulated Revenues or as Non-Regulated Revenues , shall be returned to the Escrow Account within the five (5) Business Days following the date in which the Escrow Agent indicated the Concessionaire the amount of the remuneration that the Concessionaire has received in excess to that to which it is entitled under this Agreement. If this undertaking is breached, the Concessionaire shall pay the Grantors delay interests at the highest rate permitted by the applicable commercial laws. In any case, the Concessionaire shall remain liable for all obligations under this Agreement until the Minutes of Termination have been executed in the terms of the Agreement.

 

CLAUSE 11.- ABSENCE OF GUARANTEES ON MINIMUM REVENUE, FLOWS OR PROFITABILITY:

 

This Concession Agreement expressly excludes any guarantee from the Grantors to the extent that, by reason of the Concession, a minimum revenue, a minimum cash flow or a minimum yield is assured to the Concessionaire.

 

CLAUSE 12.- FEES CORRESPONDING TO REGULATED REVENUE:

 

Throughout the term of the Agreement, the rates listed under Resolution 04530 dated September 21, 2007 of Aerocivil shall be applicable.

 

CLAUSE 13.- INDEXATION OF FEES CORRESPONDING TO REGULATED REVENUE:

 

The rates corresponding to the Regulated Revenues shall be indexed according to the procedure set forth in Resolution 04530 dated September 21, 2007 of Aerocivil.

 

In each opportunity in which Resolution 04530 dated September 21, 2007 of Aerocivil indicates that the rates shall be indexed, the Concessionaire shall carry out the calculation of the new rates, by applying the indexation formulas set forth in Resolution 04530 dated September 21, 2007 of Aerocivil. Therefore, the indexation of the rates does not require the issuance of a new resolution.

 

In any case, if at any moment the Grantors of the Auditor find that the Concessionaire is charging a rate above the one fixed in Resolution 04530 dated September 21, 2007 of Aerocivil, the Concessionaire shall conduct all proceedings necessary to return, to whom it corresponds, the payments received in excess. The return shall be made from the resources of the Main Account or from the own resources of the Concessionaire.

 

The resources that cannot be returned by the Concessionaire within the six (6) months following the announcement of return made by the Concessionaire, shall be deposited to the Surplus Accounts of the Grantors, updated by the IPC as from the date of collection thereof and until the

 

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date when deposited in said Account, without prejudice of the penalties set forth under this Agreement and those that Aerocivil can impose in its capacity as the administrative authority.

 

CLAUSE 14.- COLLECTION OF LOWER FEES BY THE CONCESSIONAIRE:

 

Except for the provisions set forth regarding the Airport Rate, the rates established by Resolution 04530 dated September 21, 2007 of Aerocivil  correspond to the maximum amount that the Concessionaire may charge for the rendering of Services Associated with Regulated Revenues. Regarding the Airport Rate, the fee determined by Resolution 04530 dated September 21, 2007 of Aerocivil corresponds to the one that may be charged by the Concessionaire for the rendering of the services associated therewith.

 

As a consequence of the above, and except for the provisions regarding the Airport Rate, the Concessionaire has total autonomy to charge, for the rendering of Services Associated with Regulated Revenues, rates below those established as maximum by Resolution 04530 dated September 21, 2007 of Aerocivil, which it can be made provided that said discount is made in conditions of equality for all users of the applicable Services Associated with Regulated Revenues of which rate is being reduced. On the contrary, the Concessionair cannot make any discount whatsoever on the collection of the Airport Rate.

 

In any case, when exercising the faculty of the Concessionaire to charge rates below those established by Resolution 04530 dated September 21, 2007 of Aerocivil, the Concessionaire shall see for the compliance of the provisions set forth in article 15 of the International Civil Aviation Convention signed in Chicago in 1944.

 

CLAUSE 15.- DETERMINATION OF FEES

 

According to article 30 of law 105 od 1995, the methodology for the determination of the fees established by Resolution 04530 dated September 21, 2007 of Aerocivil makes part of the investment recovery formula, and is of mandatory compliance for the parties and, therefore, any variation thereof shall require the consent of both the Grantors and the Concessionaire.

 

CLAUSE 16.- CALCULATION AND PAYMENT OF FEE COMPENSATION

 

In the event that, without having the consent of the Concessionaire, the Ministry of Transport, Aerocivil or the competent authority, by the issuance of an administrative writ: (i) impedes the collection of the rates associated with Regulated Revenues, pursuant to the provisions set forth in Resolution 04530 dated September 21, 2007 of Aerocivil, (ii) requires the Concessionaire to reduce the rates associated with Regulated Revenues in respect of those set forth by Resolution 04530 dated September 21, 2007 of Aerocivil, (iii) requires the Concessionaire to increase the rates associated with Regulated Revenues in an amount below the one corresponding pursuant to the indexation mechanism set forth in Resolution 04530 dated September 21, 2007 of Aerocivil, or (iv) includes exemptions other than those set forth in Resolution 04530 dated September 21, 2007 of Aerocivil, then, Aerocivil shall pay the Concessionaire the difference between the Regulated Revenues that would have been received thereby, if the conditions of Resolution 04530 dated September 21, 2007 of Aerocivil would not have been amended, and the Regulated Revenues effectively received by the Concessionaire.

 

For the purposes provided under this Clause, the Grantors, the Auditor and the Concessionaire will prepare a liquidate all Regulated Revenues on a monthly basis, for purposes of calculating the difference between the Regulated Revenues that the Concessionaire should have received if the rates set forth by Resolution 04530 dated September 21, 2007 of Aerocivil had been applied, and

 

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the Regulated Revenues effectively received following the amendment of the rate structure contained in Resolution 04530 dated September 21, 2007 of Aerocivil. Evidence of the above shall be recorded in a set of minutes executed by the Concessionaire and the Grantors within the five (5) Days following the end of the month. In the event a controversy exist between the parties regarding the respective amounts, they will revert to the amiable composition mechanism provided under this Agreement in order to settle the controversy.

 

If resources that do not correspond to AOH are available in the Surplus Account of the Grantors, Aerocivil will instruct the wire of the difference within the thirty (30) common days following the execution of the minutes referred to in the preceding item. Throughout this term, no interest whatsoever will accrue in favor of the Concessionaire. If the terms for payment provided under this Clause are breached, the default interests contemplated under Clause 104 will accrue.

 

If the reduction of the rates associated with Regulated Revenues referred to under the preceding item extends for a term exceeding eighteen (18) months, the Concessionaire may request the early termination of the Agreement, in the term and with the effects set forth in Chapter XVII of this Agreement.

 

CLAUSE 17.- COLLECTION

 

The collection of Regulated Revenues and Non-Regulated Revenues shall be solely and exclusively made by the Concessionaire, at its own risk and account. The collection of Regulated Revenues shall be made observing the procedures set forth in Resolution 04530 dated September 21, 2007 of Aerocivil. The invoicing and collection of Non-Regulated Revenues shall be made in the form determined by the Concessionaire with the users of the Services Associated with Non-Regulated Revenues.

 

CLAUSE 18.- SUSPENSION OF SERVICES TO AIRCRAFT EXPLOITERS

 

In the event that, based on the causes set forth in Resolution 04530 dated September 21, 2007 of Aerocivil, the Concessionaire requests Aerocivil de suspension of the services for regular operations of an aircraft exploiter and Aerocivil, within the three (3) Days following the receipt of the request from the Concessionaire fails to perform the corresponding suspension, Aerocivil shall compensate the Concessionaire according to the provisions contained in the following paragraph. Also, in the events in which Aerocivil authorizes the services of an Aircraft Operator in the case of non-regular operations, without having verified the anticipated payment of the corresponding rates, Aerocivil shall compensate the Concessionaire, also according to the provisions set forth in the following paragraph. The above, except if force majeure, acts of God, emergencies or public calamity events exist, or when the declaration of the existence of default is subject to litigation.

 

If resources in the Surplus Account of the Grantors are used and they do not belong to AOH, Aerocivil will instruct a wire for the amount of the rates for Regulated Revenues that had been accrued after the third (3rd) Day counted as from the submission of the request of the Concessionaire, which had been paid by the user to which Aerocivil mistakenly authorized the services. The payment order shall be given by Aerocivil within the thirty (30) common days following the three (3) Day term mentioned above. During  this term, no compensation interests will accrue in favor of the Concessionair. Breaches to the terms of payment shall accrue default interests, according to the provisions set forth in Clause 104 of this Agreement.

 

In any case, the Concessionaire shall be liable before Aerocivil and before the aircraft exploiters in the events in which Aerocivil refrains from authorizing flight plans by the request of the

 

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Concessionaire, and it results that said request was unfounded or unjustified. The Concessionaire shall also be liable before Aerocivil and third parties for the lack of timely notification to Aerocivil about the payment of the delayed accounts by the aircraft exploiters.

 

CLAUSE 19.- EXEMPTIONS OF THE AIRPORT RATE:

 

The sole exemptions to the Airport Rate correspond to those determined in Resolution 04530 dated September 21, 2007 of Aerocivil.

 

CLAUSE 20.- CONSIDERATION PAYABLE TO THE GRANTORS:

 

The Concessionaire undertakes before the Grantors to pay, throughout the term of the Agreement, the Consideration referred to under this clause, in exchange for the rights it acquires by virtue of this Agreement.

 

20.1                        AMOUNT OF THE CONSIDERATION PAYABLE:

 

The Consideration amounts to a figure equal to nineteen percent (19%) of the Gross Revenues of the Concessionaire.

 

20.2                        CURRENCY FOR PAYMENT:

 

The payment of the consideration shall be made in Pesos.

 

20.3                        TERM FOR THE PAYMENT OF THE CONSIDERATION:

 

The Concessionaire shall pay the consideration on a monthly basis, within the first five (5) Days of the month following the one to which the payment corresponds.

 

20.4                        DEFAULT IN THE PAYMENT OF THE CONSIDERATION:

 

In the event the Concessionaire fails to pay the Consideration in the term and form set forth in the Agreement, it shall pay the Grantors default interests at the highest rate permitted by the applicable commercial laws.

 

20.5                        TAX DEDUCTIONS:

 

The payments of the Consideration shall be made net of taxes, in such a manner that the Concessionaire shall be liable for, and will bear the costs of the payment of any tax or encumbrance that results applicable pursuant to the applicable tax laws.

 

20.6                        DISCREPANCIES IN THE MONTHLY PAYMENTS:

 

Any discrepancy on the amount of the Consideration payable shall be resolved through the amiable composition mechanism.

 

20.7                        REGULATED REVENUES RECEIVED IN DOLLARS:

 

For purposes of the payment of the Consideration, the Regulated Revenues received by the Concessionaire in Dollars, or which are expressed in Dollars, shall be converted into Pesos at the TRM applicable on the day in which the Concessionaire records in its accounting the corresponding revenue, regardless of the accounting method of accrual thereof.

 

CHAPTER IV - REPRESENTATIONS OF THE CONCESSIONAIRE AND RISKS OF THE AGREEMENT

 

CLAUSE 21.-  REPRESENTATIONS OF THE CONCESSIONAIRE:

 

The Concessionaire represents that the following facts are true, and it acknowledges their trueness and existence constitute the determining cause for the Grantors to enter into this Agreement:

 

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21.1                        INCORPORATION AND VALIDITY:

 

The Concessionaire (or its integrants, in the case of consortiums or temporary unions) is duly incorporated and validly exists pursuant to the laws of its jurisdiction, and is duly authorized and has the powers to assume its obligations for the performance of the commercial activities due to the nature of its activities or for the property or operation of its assets.

 

21.2                        AUTHORIZATION, EXECUTION AND EFFECTS:

 

The execution and fulfilment of this Agreement by the Concessionaire, as well as the assumption of the obligations contemplated herein, has been duly authorized by the board of directors or by another competent management body of the Concessionaire, and no other action or procedure is required on its end for the validity of this Agreement, or to meet the obligations set forth herein. This Agreement has been duly and validly executed by authorized representatives of the Concessionaire, and produces valid, binding and enforceable obligations for the Concessionaire.

 

21.3                        AUTHORIZATIONS FROM FOREIGN AUTHORITIES:

 

The execution and fulfilment of this Agreement by the Concessionaire (i) does not require a legal or statutory authorization from any authority of any foreign country in which the Concessionaire or any shareholder or participant of the Concessionaire is incorporated or has its main place of business, other than those that have been obtained, and (ii) does not violate any legal or statutory provision in said foreign country.

 

21.4                        FULFILLMENT OF THE AGREEMENT:

 

There is no (i) law, decree, regulation, norm, orders, ruling or restriction from any authority, (ii) provision in the corporate bylaws of the Concessionaire, (iii) convention, contract or other agreement of any nature, that binds the Concessionaire or that affects any of the affiliates or subsidiaries or assets thereof, or (iv) pending or threatening action, trial, investigation, litigation or proceeding before any jurisdictional body, arbitration tribunal or governmental authority whatsoever, that prohibits, restricts, limit, oppose or, in any manner, impede the execution, delivery or fulfilment of the terms and conditions of this Agreement by the Concessionaire.

 

21.5                        PERFORMANCE OF THE AGREEMENT:

 

The Concessionaire acknowledges and accepts that, throughout the term of the Agreement, it will abide to the regulations adopted by the competent authorities. Therefore, the commercial, environmental, regulatory, tax, technical, financial and administrative risks of the Concession that are not expressly allocated to the Grantors, as well as those that derive from changes in laws, shall be exclusively borne by the Concessionaire.

 

21.6                        TECHNICAL AND FINANCIAL  CAPACITY:

 

The Concessionaire has the financial and technical necessary to conduct the exploitation of the Concession, in accordance with the terms of this Agreement. The Concessionaire has the capacity required to manage and mitigate risks inherent to the exploitation of the Concession and, therefor, as from the execution of the Concession Agreement, it assumes the effects that derive from the risks that are expressly allocated thereto under this Agreement, in addition to those that derive from other clauses or provisions under this Agreement, or that derive from the nature thereof.

 

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21.7                        IMPEDIMENTS AND INCOMPATIBILITIES:

 

The Concessionaire represents under oath that it is not immerse in any of the causes for impediment and incompatibility to contract set forth in law 80 of 1993, and any other regulation on the matter.

 

21.8                        RENDERING OF PASSENGER AND CARGO AIR TRANSPORT SERVICES:

 

The Concessionaire represents that neither it or any of its affiliates renders, directly or indirectly, passenger or cargo air transport services.

 

21.9                        SUBMITTED INFORMATION AND BUSINESS PLAN:

 

The Concessionaire additionally represents that:

 

(i)                                     Neither the Republic of Colombia, nor the Ministry of Transport, nor Aerocivil, nor the Municipality of Medellin, nor AOH, nor the Governor’s Office of Antioquia, nor the Adviser, nor their representatives, offices, advisors or employees, nor any person acting on their behalf, have made any representation or statement whatsoever, express or implied, regarding the integrity, accuracy and quality of the information provided to the Concessionaire in relation to the Bid, except for the one contained in the Terms of Reference.

 

(ii)                                  Neither the Republic of Colombia, nor the Ministry of Transport, nor Aerocivil, nor the Municipality of Medellin, nor AOH, nor the Governor’s Office of Antioquia, nor the Adviser, nor their representatives, offices, advisors or employees, nor any person acting on their behalf, are liable in any manner whatsoever before the Concessionaire, or before any other person in relation to the use of the information provided to the Concessionaire in relation to the Bid, except for the one contained in the Terms of Reference.

 

(iii)                               The Concessionaire has conducted its own research, studies and analysis, and is satisfied in respect of any pertinent matter for purposes of adopting its decision to assume the obligations imposed thereto under this Agreement, as well as the risks that derive from its capacity as Concessionaire.

 

(iv)                              The Concessionaire prepared its own business plan based on the assumptions it deemed appropriate, and based thereon, it submitted the Financial Offer  it deemed convenient. Said business plan has not been known by the Republic of Colombia, or the Ministry of Transport, or Aerocivil, or the Municipality of Medellin, or AOH, or the Governor’s Office of Antioquia, or the Adviser, and neither will they have any liability whatsoever for any discrepancy that may exist between such and the actual results of the performance of the Concession. Specifically, the Concessionaire acknowledges that it prepared, at its sole liability, the forecasts that it deemed convenient regarding traffic, rates, costs of the works, administration, operation and maintenance, as well as the macroeconomic variables and other aspects that may affect the financial results expected by the Concessionaire.

 

(v)                                 The Concessionaire unconditionally accepts the method of remuneration agreed under this Agreement and finds it sufficient to recover its investment, and to obtain the profit it deemed pertinent and, specifically, it is satisfied with the method of remuneration of the Supplementary Works.

 

(vi)                              The Concessionaire represents it has knowledge of the details of the operating features and conditions of each Airport.

 

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CLAUSE 22.- ALLOCATION OF RISKS - GENERAL PRINCIPLE:

 

This Agreement has provided for the specific allocation of risks set forth in this Clause.

 

23.1                        RISKS ASSUMED BY THE CONCESSIONAIRE:

 

The Concessionaire assumes the effects deriving from the risks listed below. The risks listed below are merely understood as illustrative, for which reason, any effect that derives from other that are risks inherent to the performance of this Agreement shall follow the general rule of allocation provided for under the preceding Clause:

 

(i)                                     The Concessionaire assumes all effects, favorable or unfavorable, that derive from the contingency consisting on the eventual increase or decrease of the offer and demand of passengers, aircraft exploiters, cargo users and other airport users, meaning, the increase or decrease of the number of passengers effectively transported in the Airports, the cargo effectively transported in the Airports, the number of operations recorded in the Airports, the behaviour of Regulated Revenues and Non-Regulated Revenues for the offer and demand effects in respect of the Services Associated with Non-Regulated Revenues and the Services ASsociated with Regulated Revenues, all in respect of which the Concessionaire estimated, in its own analysis, which motivated it to submit the Offer in the Bid.

 

(ii)                                  The Concessionaire assumes the effects, favorable or disfavorable, that derive from the contingency consisting in the failure to pay or delayed payment, or evasion, in respect of the Services Associated with Regulated Revenues and the Services Associated with Non-Regulated Revenues.

 

(iii)                               The Concessionaire assumes the effects, favorable or disfavorable, that derive from the contingency consisting in the organisms, financial institutions or vendors, granting or not, total or partial, to the Concessionaire, the funds necessary to meet the investment obligations assumed by the Concessionaire by means of this Agreement, in more or less favorable conditions.

 

(iv)                              The Concessionaire assumes the effects, favorable or disfavorable, that derive from the contingency consisting in the prices of input, equipment, material, labor, etc., or their amounts, required to carry out the Works and to make the investments imposed for the performance off the Concession, increase in respect of those independently estimated by the Concessionaire, being therefore the performance of the Agreement by the Concessionaire more expensive.

 

(v)                                 The Concessionaire assumes the effects, favorable or disfavorable, that derive from the contingency consisting in the Works and the investments required for the performance of the Concession not being conducted in accordance with the mandatory schedules agreed and fixed in the manner indicated under this Agreement.

 

(vi)                              The Concessionaire assumes the effects, favorable or disfavorable of the materialization of the risk of the operation and maintenance of the Concession, being it understood as the risk relating to the breach, by the Concessionaire, of the performance criteria specified under this Agreement, or to the costs of the operation and maintenance being higher than those projected by the Concessionaire at the moment of submitting its Offer.

 

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(vii)                           The Concessionaire assumes the effects, favorable or disfavorable, that derive from the contingency that arises from the alteration of the financing conditions as a consequence of the variation of the market variables (such as term or rates, among others). No hedges or setoffs will exist by the Grantors as a consequence of the alleged or actual variation between any initial forecast of the financing conditions against those actually obtained.

 

(viii)                        The Concessionaire assumes the effects, favorable or disfavorable, that derive from the contingency that results from the breach or amendments to environmental licenses, environmental management plans or other environmental permits that are obtained or prepared as a consequence or in connection with this Agreement, or that are assigned by the Grantors, or for the generation of environmental liabilities as a consequence of the performance of this Agreement.

 

(ix)                              The Concessionaire assumes the effects, favorable or disfavorable, that derive from the contingency resulting from regulatory, administrative, legal or constitutional changes, either for the issuance, amendment or removal of the applicable laws, or for the changes in the construction thereof.

 

(x)                                 The Concessionaire assumes the effects, favorable or disfavorable, that derive from the contingency resulting in the variation of the structure or regulation of any tax, national, departmental or municipal in the imposition of rates, taxes, contributions, mandatory investments, mandatory loans or similar figures established by the applicable laws, and that are applied to any aspect relating to the Concession Agreement.

 

(xi)                              The Concessionaire assumes the effects, favorable or disfavorable, that derive from the contingency resulting from the obtention of the permits and licenses to carry out the investments and activities that are the purpose of this Agreement.

 

(xii)                           The Concessionaire assumes the effects, favorable or disfavorable, produced by the occurrence of Actions of Unlawful Interference in any Airport or in the aircrafts that use the Airports, when said Actions of Unlawful Interference were caused by a fault of the Concessionaire, its employees, agents or subcontractors, or when the Concessionaire, its agents or subcontractors fail to adopt all measures and procedures set forth in this Agreement and in the applicable laws on Airport Safety matters to prevent Actions of Unlawful Interference, or if the Concessionaire, its agents or subcontractors have omitted or violated the provisions set forth in the National Program of Airport Safety, the National Airport Safety Plan, Schedule 17 to the International Civil Aviation Convention or in any other Airport Safety norm that results applicable for the specific case.

 

(xiii)                        The Concessionaire assumes the effects, favorable or disfavorable, of the variation of the flows of cash flows received by the Concessionaire, that originate in fluctuations in the exchange rate.

 

(xiv)                       The Concessionaire assumes the effects, favorable or disfavorable, that the events of force majeure or acts of God have on the performance of the Agreement. In this case of risks of events of force majeure or acts of God that can be insured, the Concessionaire assumes the burden, at its sole cost and risk, to insure the damages that may occur in the Airports, for which it will contract the corresponding insurances in the terms indicated in clause 82 under this Agreement. The loss of profit suffered by the Concessionaire as a result of the

 

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occurrence of the risks of events of force majeure or acts of God that cannot be insured and correspond to (a) foreign war, declared or undeclared, (b) terrorist actions, (c) civil war, (d) coup d’etat, (e) national or regional strikes in which the Concessionaire is not directly participating or which are not promoted thereby or by the employees of direction, management or trust, and (f) archeological findings and discovery of treasures, mines or other fields, shall be exclusively born by the Concessionaire.

 

(xv)                          The Concessionaire assumes the effects, favorable or disfavorable, that derive from any and all damages, prejudices or losses to its property, that are caused by third parties.

 

(xvi)                       The Concessionaire assumes the effects, favorable or disfavorable, that derive from the fulfilment of the changes in laws on Airport Safety, however, to mitigate them, the mechanism set forth in Clause 59.10 of the Concession has been provided.

 

(xvii)                    The Concessionaire assumes the effects, favorable or disfavorable, produced by changes of law, political situations or macroeconomic conditions that have a negative impact in the Concession.

 

23.2                        RISKS ASSUMED BY THE GRANTORS:

 

The Grantors solely and exclusively assume the effects that derive from the materialization of the following risks:

 

(i)                                     The damages caused to the Airports for the occurrence of events of force majeure or acts of God relating to (a) foreign war, declared or undeclared, (b) terrorist actions, (c) civil war, (d) coup d’etat, national or regional strikes in which the Concessionaire is not directly participating or which are not promoted thereby or by the employees of direction, management or trust, and (e) archeological findings and discovery of treasures, mines or other fields.

 

(ii)                                  The favorable or disfavorable that derive from archeological findings and discovery of treasures, mines or other fields.

 

23.3                        RISKS ASSUMED BY AEROCIVIL:

 

Aerocivil assumes the effects that derive from the materialization of the following risks:

 

(i)                                     The disfavorable effects that derive from the amendment, by Aerocivil, of the rate structure established in Resolution 04530 dated September 21, 2007 of Aerocivil.

 

(ii)                                  Aerocivil bears the damages caused to the Concessionaire, when said damages are caused by reason of not having adopted all the measures and procedures set forth in the applicable laws on Air Safety.

 

23.4                        ACCEPTANCE OF THE ALLOCATION OF RISKS:

 

By executing this Agreement, the Concessionaire accepts the allocation of risks made among the parties by means of this Agreement, acknowledges that the remuneration agreed under the Agreement is clearly and irrevocably deemed, and will be deemed, for all legal purposes, as a sufficient and adequate remuneration for the allocation of the risks of the Agreement.

 

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CHAPTER V - RIGHTS AND OBLIGATIONS OF THE PARTIES

 

CLAUSE 24.- GENERAL RIGHTS OF THE CONCESSIONAIRE:

 

The Concession granted by virtue of this Agreement grants the Concessionaire the following general rights, without prejudice to any other right set forth throughout the text of the Agreement:

 

(i)                                     To independently exploit the Concession and without interferences or disturbances, and in the terms and under the conditions set forth in this Agreement.

 

(ii)                                  To be granted with the Airports in the form and condition set forth in this Agreement.

 

(iii)                               To be assigned with the Regulated Revenues and Non-Regulated Revenues, in the terms and under the conditions of this Agreement.

 

(iv)                              To receive and freely dispose of the remuneration agreed in relation to the exploitation of the Concession.

 

(v)                                 To enter into the agreements and transactions it deems useful for its interests, provided that they remain within the scope of the rights and obligations that arise by virtue of the Concession, and that they are consistent with the purpose thereof.

 

(vi)                              To encumber or grant liens, in any manner permitted by Colombian laws, over the rights of the Concessionaire to receive the Regulated Revenues and the Non-Regulated Revenues, provided that said limitation has the purpose of securing or guaranteeing the payment of the loans obtained for the performance of the investments that ten to reach a timely performance of this Agreement. The rights of the Grantors over the Consideration can in no event be encumbered. The encumbrances of any nature whatsoever granted by the Concessionaire over its rights shall be subject to the scope thereof and to the limitations that characterize the rights of the Concessionaire under this Agreement.

 

(vii)                           To receive from the Grantors any cooperation necessary to reach the purpose of the Concession.

 

CLAUSE 25.- GENERAL OBLIGATIONS OF THE CONCESSIONAIRE:

 

The Concession granted under this Agreement imposes on the Concessionaire the following general obligations, without prejudice to any other obligation imposed by the laws or throughout the text of the Agreement:

 

(i)                                     The Concessionaire shall be liable for the full and timely performance of the Agreement. For such purpose, the Concessionaire shall carry out, at its sole risk and expenses, any action tending to the due fulfilment of this Agreement.

 

(ii)                                  To perform the Concession and to render Services Associated with Non-Regulated Revenues and Services Associated with Regulated Revenues to third parties, complying with the minimum specifications provided under this Agreement for each activity. In absence of a minimum specification, the Concessionaire shall perform the concession and provide the services at least observing: (i) the practices, methods and actions commonly used in the international industry of airport administration and operation or (ii) any practice, method or action from the adoption of which it could be diligently and reasonably anticipated,

 

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considering the information known at the date, that the expected result would be obtained at a reasonable cost. The determination of whether a specific practice, method or action meets or not the general standard shall be evaluated considering the information known by the Concessionaire at the time of the implementation thereof. In case of doubt, the standards applied by a prudent, diligent and experienced international airport operator shall be deemed as the applicable standards.

 

(iii)                               To pay the Consideration.

 

(iv)                              To pay the Success Fee.

 

(v)                                 To pay the fees and expenses derived from the amicable composition, in the terms of Items 85.2 of Clause 85.

 

(vi)                              Keep the Sole  Performance Bond and any other guarantees required under this Agreement in full force and effect, in the terms and conditions set forth in this Agreement.

 

(vii)                           Refrain from including the rendering of passenger air transport services in its corporate purpose, or from effectively rendering, directly or indirectly, said services.

 

(viii)                        Refrain from amending any clause of the bylaws of the Concessionaire which inclusion therein, pursuant to the Terms of Reference, was mandatory.

 

(ix)                              Refrain from including in its corporate capital a state interest of a Colombian public entity above 50%.

 

(x)                                 Refrain from allowing the shareholders who have contributed their financial capacity to accredit the fulfilment of the financial requirements of the Bid, or who have contributed their experience to accredit the technical requirements and experience in the Bid, to assign under any title their interest in the Concessionaire, except when prior and written authorization has been granted thereto by the Grantors.

 

(xi)                              Obtain the Financial Closing within the terms and conditions set forth in the Agreement.

 

(xii)                           Follow the instructions of the Auditor that meet the laws and the agreement, pursuant to the provisions set forth in Item 102.1, and provide the Auditor with any the information on the Concession, in the conditions and terms set forth in this Agreement.

 

(xiii)                        Submit the accounting of its business to the review and assessment of a renown international external auditor, or designate a fiscal auditor to carry out the auditing and fiscalization activities that correspond to a  renown international external auditor.

 

(xiv)                       Forward to the Auditor and the Grantors the assessment of the external auditor or fiscal auditor on a yearly basis, at the latest, on April 30 of each year, together with the financial statements of the preceding year and with the notes to the financial statements.

 

(xv)                          Forward to the Auditor and the Grantors the financial statements on a quarterly basis, within the fifteen (15) Days of the month following the term that is being reported.

 

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(xvi)                       Adopt an appropriate and adequate administrative organization for the performance of this Agreement, and determine internal control mechanisms that guarantee the quality of its administrative management, of its financial and accounting information, and of the services provided thereby.

 

(xvii)                    Provide qualified personnel  for the performance of the Concession, guaranteeing that (a) the designated personnel has the experience and the technical knowledge required for the appropriate performance of the Concession, (b) the designated personnel is sufficient, in terms of appropriateness, for the performance of the Concession, and (c) the designated personnel is sufficient, in terms of quantity and time destined, considering the estimations made in good faith by the Concessionaire for the performance of the Concession, based on the current conditions of the Airports and on the obligations undertaken by virtue of this Agreement.

 

(xviii)                 Comply with the provisions set forth in the Colombia Aeronautic Regulations.

 

(xix)                       Provide the Grantors and the competent authorities of control and surveillance of the sector, with any information that said entities may request regarding the performance of the Agreement.

 

(xx)                          Pay the fines set forth in this Agreement imposed thereon for the breach to the obligations of the Concessionaire.

 

(xxi)                       Receive the Airports in the manner and under the conditions indicated in this Agreement.

 

(xxii)                    Return and revert the Airports upon the termination of the performance of the Concession.

 

(xxiii)                 Request and obtain any license and permit necessary for to carry out the works that will be made in each Airport when performing the Concession.

 

(xxiv)                Execute the Minutes of Commencement of Performance, the Minutes of Delivery, the Minutes of Termination, the Minutes of Completion of Performance, the Minutes of Verification and any other document provided under this Agreement, whenever the conditions set forth in the Agreement for said execution have been satisfied.

 

CLAUSE 26.- UNDERTAKINGS OF THE CONCESSIONAIRE RELATING TO THE ADMINISTRATION, COMMERCIAL EXPLOITATION AND OPERATION OF THE AIRPORTS:

 

The Concession granted by means of this Agreement imposes on the Concessionaire the general obligation to administer, carry out the commercial exploitation and to operate the Airports, in accordance with the minimum requirements set forth in the Appendixes of this Agreement, and at its sole risk and account. This obligations shall be in place throughout the term of performance the Concession. Accordingly, the following specific obligations are imposed thereto, without prejudice to any other obligation imposed by the laws or throughout the text of the Agreement:

 

(i)                                     Provide the Services Associated with Regulated Revenues and the Services Associated with Non-Regulated Revenues to its users, with the minimum specifications set forth in this Agreement.

 

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(ii)                                  Maintain the operation of the Airports in the minimum levels and specifications set forth in Appendix C, even throughout the Stage of Adjustment and Modernization.

 

(iii)                               Refrain from charging rates for the rendering of the Services Associated with Regulated Revenues, exceeding those listed in Resolution 04530 dated September 21, 2007 of Aerocivil.

 

(iv)                              Refrain from charging an Airport Rate below the one fixed by  Resolution 04530 dated September 21, 2007 of Aerocivil.

 

(v)                                 Refrain from collecting any fee whatsoever for the use of the goods that compose the Airports and that, given their nature, shall be of free access to the public in general, such as sanitary services, elevators and ladders.

 

(vi)                              See that the rendering of the service of luggage carriers is provided in an orderly, efficient and polite manner, and by means of the use of the personnel that currently provides such service in the Airports, using for such effects the same mode of engagement currently used by the operation of the Airports, or any other that the Concessionaire may deem appropriate and that meets Colombian laws.

 

(vii)                           Carry out the proceedings necessary to obtain the certification of the Jose Maria Cordova Airport, in furtherance with the OACI provisions and, specifically, in the document denominated “Aerodrome Certification Manual” (Doc 9774-AN/969). This undertaking shall be met prior to the completion of the Adjustment and Modernization Stage.

 

(viii)                        See for the compliance with the Special Protection Plan provided for the Olaya Herrera Airport, and preserve, at all moments, the condition as National Monument of its buildings.

 

(ix)                              Maintain all ISO certifications that, as of the date of delivery of the Airports, are in place in each one of them.

 

(x)                                 Provide the services of fire extinguishing in accordance with the current provisions, specifically with those set forth in Resolution No. 5319 dated December 27, 2004 of Aerocivil.

 

(xi)                              Assume and be responsible for the Airport Safety in each Airport, according to the minimum specifications set forth in this Agreement.

 

(xii)                           Provide, render, operate and maintain, at its risk and account, any equipment, materials and personnel necessary for the performance of the Concession.

 

(xiii)                        Coordinate with Aerocivil and with the Safety Authorities the adoption of procedures and measures directed towards guaranteeing the safety of the premises and the users of the Airports, in the terms set forth in this Agreement.

 

(xiv)                       Make all the investments necessary, and the actions required, in relation to the environmental permits assigned thereto.

 

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(xv)                          Make all the investments necessary in relation to the environmental management plans of the Airports.

 

(xvi)                       When performing the Concession, fully comply with the applicable environmental regulations, and bear all costs that derive from said compliance.

 

CLAUSE 27.- UNDERTAKINGS OF THE CONCESSIONAIRE REGARDING THE MANAGEMENT OF THE RESOURCES OF THE CONCESSION

 

For the appropriate management of the resources of the Concession, the Concessionaire shall meet the following specific obligations, without prejudice to other obligations imposed by the laws or throughout the text of this Agreement:

 

(i)                                     Establish and maintain the Trust.

 

(ii)                                  Collect the Regulated Revenues and the Non-Regulated Revenues that were assigned thereto by means of this Agreement.

 

(iii)                               Deposit, in the Trust, the Accounts corresponding to all the Regulated Revenues and the Non-Regulated Revenues received when performing the Concession.

 

(iv)                              Take all measures of control required to prevent the evasion and elusion of the Regulated Revenues and the Non-Regulated Revenues.

 

(v)                                 Bear, at its sole risk and account, all the costs and expenses of the Project, being required to obtain all the resources necessary for the performance of the Project, either by means of funding assumed by the Concessionaire, or by way of capital contributions of the members of the Concessionaire, and duly registered in the account of the latter, in the terms of this Agreement.

 

(vi)                              Request the periodic reports to the Escrow Agent regarding the balance of the Escrow, movements, yields, etc.

 

CLAUSE 28.- UNDERTAKINGS OF THE CONCESSIONAIRE RELATING TO THE ADJUSTMENT AND MODERNIZATION OF THE AIRPORTS

 

In the performance of the Concession, the Concessionaire shall carry out the activities for the adjustment and modernization of the Airports, in the terms of the Adjustment and Modernization Plan enclosed hereto as Appendix C. For the above, it shall comply with the following specific obligations, without prejudice to other obligations imposed by the laws or throughout the text of this Agreement:

 

(i)                                     Perform the Mandatory Works and the Mandatory Supplementary Works contained in the  Adjustment and Modernization Plan of the Airports, pursuant to the terms and conditions set forth in Appendix C of the Concession Agreement. Specifically, the Concessionaire shall met the term for performance indicated in the schedule of said Appendix C, or in the schedule approved by the Grantors and the Auditor. Also, the Concessionaire shall comply with the quality, functionality and stability of the works provided in the Adjustment and Modernization Plan of the Airports of Appendix C.

 

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(ii)                                  Carry out, at its sole risk and account, its own studies and designs of the details for the performance of the Adjustment and Modernization Plan of the Airports, pursuant to the provisions set forth in the Concession Agreement.

 

(iii)                               Prepare and deliver the technical memory of the works corresponding to Adjustment and Modernization, in the terms of this Agreement.

 

(iv)                              Establish, document and maintain a quality plan for the studies, designs and construction, pursuant to the provisions set forth in ISO-10005:2005 norm, in its latest versions, understanding that any norm that amends, modifies or supplements it is also applicable.

 

(v)                                 Conduct the real property management, in the terms set forth in this Agreement, for the acquisitions of the real properties required for the performance of all the Works referred to under this Agreement.

 

(vi)                              Acquire, at its own cost, all real properties necessary to perform the Works referred to under this Agreement.

 

CLAUSE 29.- UNDERTAKINGS OF THE CONCESSIONAIRE RELATING TO THE MAINTENANCE OF THE AIRPORTS

 

In the performance of the Concession, the Concessionaire shall carry out, at its sole risk and account, the maintenance activities for the Airports, meeting the specifications set forth in Appendix E, without prejudice to other obligations imposed by the laws or throughout the text of this Agreement.

 

CLAUSE 30.- GENERAL RIGHTS OF THE GRANTORS

 

The Concession granted by means of this Agreement grants the following general rights to the Grantors, without prejudice to other rights set forth under the laws or throughout the text of this Agreement:

 

(i)                                     To receive the Consideration.

 

(ii)                                  To carry out, directly or with the intervention of third parties, the duties of supervision, control and surveillance of the Agreement, and the performance of the Concession.

 

(iii)                               To access the documents and informations pertaining the activities of the Concessionaire.

 

(iv)                              To carry out the duties of en-route air traffic control, air control and safety, by means of the operation and maintenance of aids to navigation and air radio aids.

 

(v)                                 To receive the payment by reason of penalties and fines imposed in accordance with the provisions set forth in this Agreement.

 

(vi)                              To receive the Airports in return upon the termination of the Concession.

 

(vii)                           To receive, by way of reversion, the goods adhered or incorporated by the Concessionaire to the Concession.

 

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CLAUSE 31.- GENERAL UNDERTAKINGS OF THE GRANTORS

 

The Concession granted by means of this Agreement imposes on the Grantors the following general obligations:

 

(i)                                     To deliver the Airports to the Concessionaire, in the terms set forth in this Agreement.

 

(ii)                                  To assign to the Concessionaire the Regulated Revenues and the Non-Regulated Revenues, in the terms and conditions set forth in this Agreement.

 

(iii)                               To pay the fees and expenses derived from the amicable composition, in the terms of Items 85.2 of Clause 85.

 

(iv)                              Execute the Minutes of Commencement of Performance, the Minutes of Delivery, the Minutes of Termination, the Minutes of Completion of Performance, the Minutes of Verification and any other document provided under this Agreement, whenever the conditions set forth in the Agreement for said execution have been satisfied.

 

(v)                                 Comply with all its obligations, as determined in this Agreement, in order to enable the Concessionaire to adequately comply with the real property management of which it is responsible.

 

(vi)                              Recognize the expenses, excluding loss of profit, required by the repairs, constructions or replacements of the Airports affected by events of force majeure or acts of God, when such relate to the risks allocated to the Grantors, in the conditions set forth in this Agreement.

 

CHAPTER VI - PRIOR STAGE

 

CLAUSE 32.- STAGES FOR THE PERFORMANCE OF THE AGREEMENT:

 

For purposes of the performance of the Agreement, the development thereof is divided in three (3) Stages, as follows: (i) Prior Stage, (ii) Stage of Adjustment and Modernization, and (ii) Maintenance Stage. From the three stages, the first two, meaning, the Prior Stage and the Adjustment and Modernization Stage, are deemed as non-operating Stages.

 

CLAUSE 33.- SCOPE OF THE PRIOR STAGE

 

It is the non-operating stage of the contractual performance in which the Concessionaire shall receive the Airports and perform all preparation activities for the commencement of the performance of the obligations set forth under the Adjustment and Modernization Stage. Without prejudice of the above, throughout the Prior Stage, the parties shall meet all the obligations that, without being contained in this Chapter, result applicable pursuant to the terms set forth in this Agreement. In consequence, during the Prior Stage, the Concessionaire shall carry out all the activities corresponding to the administration, operation, commercial exploitation and maintenance that result applicable, pursuant to the provisions set forth in this Agreement.

 

CLAUSE 34.- TERM OF DURATION OF THE PRIOR STAGE:

 

The Prior Stage shall have a term of ten (10) months, counted as from the execution of the Minutes of Commencement of Performance.

 

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CLAUSE 35.- ACTIVITIES PRIOR TO THE DELIVERY OF THE AIRPORTS:

 

As from the date of execution of the Minutes of Commencement of Performance, and throughout the Prior Stage, the parties shall complete the following activities:

 

35.1                        AVAILABILITY OF THE INFORMATION:

 

As from the moment in which the Minutes of Commencement of Performance is executed, the Grantors shall make available for the Concessionaire the information relating to the Concession that is requested by the latter, and that exists and is held by the Grantors. For such purpose, the Concessionaire shall address the manager of each Airport, or the person designated by the Grantors for such purpose, who shall adopt the necessary measures for the delivery of the information requested, within a reasonable term. The Grantors do not guarantee the existence of the information requested.

 

35.2                        INTEGRATION OF OFFICERS:

 

As from the date of execution of the Minutes of Commencement of Performance of the Concession, and until the delivery of the Airports, the Grantors will make available for the Concessionaire, the offices that up to said date have been in charge of the administration, commercial exploitation, operation and maintenance of the Airports, to carry out integration meetings with the officers of the Concessionaire, according to the schedules agreed by the parties for such purpose. The travelling expenses of the officers of the Grantors shall be borne by the Concessionaire.

 

35.3                        UPDATE OF INVENTORIES:

 

Within the ten (10) Days following the execution of the Minutes of Commencement of Performance, the Grantors shall deliver to the Concessionaire an update of the inventories of the movable and real properties that compose the Airports and that are included in Appendix A. The Grantors shall have no limitation regarding the goods that are included or excluded from the initial list, but they guarantee to the Concessionaire that the goods that compose the inventory are those that essentially compose the Airports, and are the same it uses for its administration, commercial exploitation, operation and maintenance.

 

35.4                        UPDATE OF THE AGREEMENTS OR THE AIRPORTS:

 

Within the ten (10) Days following the execution of the Minutes of Commencement of Performance, the Grantors shall deliver to the Concessionaire an update, as of the date thereof, of the Airport Agreements, and their status in respect of those that are listed in Appendix B of this Concession Agreement.

 

35.5                        ESTABLISHMENT OF THE TRUST AND PAYMENT OF THE FIRST CONTRIBUTION TO THE ACCOUNT OF THE AUDITOR:

 

Prior to the date provided for the commencement of the delivery of the Airports, the Concessionaire shall have established the Trust pursuant to the provisions set forth in Clauses 67 and 71 of the Agreement, and shall have made the first contribution to the Account of the Auditor, in the terms of this Agreement.

 

CLAUSE 36.- DELIVERY OF THE AIRPORTS:

 

The Grantors shall deliver the Airports to the Concessionaire, by way of concession. The delivery shall be successively, observing the order of delivery: (1) Olaya Herrera Airport, (2) Jose Maria Cordova Airport, (3) Antonio Roldan Betancourt Airport, (4) Los Garzones Airport, (5) Las Brujas Airport and (6) el Carañol Airport.

 

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The delivery of the Olaya Herrera Airport shall commence, at the latest, within the thirty (3) Days following the date of execution of the Minutes of Commencement of Performance. The delivery of the two first Airports shall maximum take fifteen (15) common days each, and the delivery of the following four Airports shall maximum take ten (10) common days each. Once the delivery of the first Airport is completed, the delivery of the following shall immediately proceed until the process of delivery is completed in full.

 

36.1                        DELIVERY OF THE GOODS THAT COMPOSE THE AIRPORTS:

 

The Airports shall be delivered and transferred to the Concessionaire by means of the preparation of an inventory indicating the actual existence of the goods that are effectively delivered, following which the Minutes of Delivery shall be executed in respect of each Airport, evidencing the corresponding procedure. The goods that compose the Airports shall be delivered in an “as is” condition, which the Concessionaire represents it knows and accepts. The goods delivered shall be those listed in Appendix A, updated in the form set forth in Item 35.3 above. The Concessionaire shall not refuse to accept any of the goods that compose the Airports, if said are listed in Appendix A. Neither can it refuse the delivery of any good that composes the Airports, arguing defaults in its conditions.

 

By executing the Minutes of Delivery, the Concessionaire represents its satisfaction and acceptance of the status and conditions of the Airports, and therein, no reserve, note, claim or similar shall be included, in relation to the status and conditions of the Airports and of the goods that compose them.

 

Executing the Minutes of Delivery in the terms mentioned above is an obligation of the Concessionaire.

 

In the event that, within the procedure of delivery, the parties identify that certain goods should make part of the Concession, given their nature, the Grantors and the Concessionaire shall include them in the inventory of delivery.

 

Except in relation to personal property that, in the opinion of Aerocivil, if it does not exist, the operation of the Airports will not be materially possible and, provided that there is no bad faith of the Grantors, the fact that Appendix A, and the update thereof, exclude personal property in respect of which existence has not been determined in the process of delivery, shall not result in any liability whatsoever for the Grantors, nor in the obligation to replace them, and does not release the Concessionaire to duly comply with its contractual obligations, given that it is understood that providing all the goods and equipment necessary to meet the purpose of the Agreement is one of the undertakings of the Concessionaire for the performance of the Concession.

 

36.2                        ASSIGNMENT OF THE AIRPORT AGREEMENTS:

 

The Grantors shall assign to the Concessionaire the Airport Agreements of each Airport, on the same date and conditions in which the Airports are delivered. In any case, the assignment of the contractual position among the Grantors and the Concessionaire shall produce effects as from the execution of the Minutes of Delivery. Each Airport Agreement assigned, and the condition of the contractual performance thereof, shall be detailed in the Minutes of Delivery.

 

The assignment of the Airport Agreements shall be made without any liability of the Grantors, and will release them in full from their liability thereunder. Therefore, as from the assignment, the

 

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Concessionaire shall assume all rights and obligations that derive from the Airport Agreements that are subject to the assignment.

 

If, as of the delivery of the Airports and thereafter, agreements related with the operation, administration and commercial exploitation of the Airports that were in force and effect, and being performed at said time exist, the Concessionaire and the Grantors will agree on the form to carry out the assignment of said agreements by the Grantors and in favor of the Concessionaire.

 

36.3                        ACTUAL DELIVERY OF THE AIRPORT AGREEMENTS:

 

In the process for the delivery of the Airports, the Grantors shall deliver to the Concessionaire the original version of the Airport Agreements of the Airport in question, or the copies thereof it possesses. The non-existence of the documents evidencing the existence of said Airport Agreement shall not impede the assignment thereof, and the Concessionaire shall be liable to proceed, following the execution of the Minutes of Delivery, to document the contractual relationship with the corresponding assigned contracting party.

 

The actual delivery of the Airport Agreements include the delivery, if any, of the file held by the Grantors and including the documentary history of said agreement.

 

36.4                        COMMODATUM AGREEMENTS:

 

The commodatum agreements that make part of the Airport Agreements and that do not have a Safety Authority as the lender, may be terminated by the Concessionaire, if the latter deems it convenient.

 

When based on the performance of the Concession, the Concessionaire deems necessary to relocate a Safety Authority, the Concessionaire and the Safety Authority shall try to reach a direct arrangement regarding the new conditions of area and location thereof. If no agreement is reached, the dispute shall be submitted to Aerocivil who, within the ten (10) Days following the request of the Concessionaire shall rule on the area to be allocated to the Safety Authority, considering always that the general benefits shall prevail over the individual benefits.

 

The Concessionaire shall be required to observe the ruling of Aerocivil, therefore the are indicated thereto shall be allocated to the Safety Authority.

 

36.5                        ASSIGNMENT OF LITIGATION RIGHTS:

 

Regarding the Airport Agreements that, as of the date of the delivery, are subject to litigation, and are listed in Appendix B, the Grantors, as part of the process of delivery of the Airports, shall assign the litigation rights thereover. At the moment of the delivery, the corresponding notice to the court shall be executed by the Grantors and, as from said moment, the Concessionaire shall assume, in full, the liability that derives from the judicial proceeding in respect of which the litigation rights have been assigned. In consequence, in the event that a judicial ruling is issued in the corresponding proceeding results disfavorable to the Concessionaire, the latter expressly waives any claim or demand of any nature whatsoever against the Grantors, for the payments and indemnifications that result applicable within said proceeding. The Concessionaire shall be entitled to freely designate the attorneys that it deems best, and the Grantos will bear the payments of the frees of the original attorneys, until the date of assignment of the litigation rights. The Grantors may refrain to assign to the Concessionaire the litigation rights over remedies where the argument is the collection of amounts of money.

 

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The execution of this Agreement does not include the assignment of any litigation right that does not related with the Airport Agreements.

 

36.6                        ASSIGNMENT OF OBLIGATIONS OF THE ENVIRONMENTAL MANAGEMENT PLANS AND OTHER ENVIRONMENTAL PERMITS AND LICENSES:

 

The Grantors shall assign to the Concessionaire, on the moment of delivery of each Airport, the obligations contained in the environmental management plans of the Airports, as well as in other existing environmental permits and licenses. The Grantors will not guarantee that the assigned environmental permits and licenses correspon to all the permits and licenses required to operate the Airports.

 

To consummate the assignment, the prior authorization of the Ministry of Environment, Housing and Territorial Development, or the competent authority, and said assignment shall be deemed accepted by the Concessionaire as from the execution of the Concession Agreement. The requests for assignment shall be filed by the Grantors and the Concessionaire before the Ministry, or the competent authority, during the process of delivery of each Airport.

 

As from the execution of the Minutes of Delivery, the Concessionaire undertakes to meet, at its sole cost and risk, all obligations and duties that arise from the obligations of the environmental management plans that have been assigned thereto, and  to bear the corresponding environmental costs. If, for the adequate operation of the Airports, obtaining additional environmental permits and licenses is required, the Concessionaire shall be responsible for the obtention thereof. The Grantors shall not be liable for any prejudice that may derive from the delays caused by the Ministry of Environment, Housing and Territorial Development or by other authorities in addressing the proceeding of authorization.

 

CLAUSE 37.- ENVIRONMENTAL MATTERS:

 

Throughout the performance of this Agreement, the Concessionaire shall comply with the current applicable laws, and with those enacted hereinafter, which govern the protection of the environment and natural resources.

 

Also, the Concessionaire shall adopt, as applicable, the environmental policy of Aerocivil set forth in Resolution 4730 of 2000, or in the norms that replace, modify or supplement it.

 

37.1                        ENVIRONMENTAL LIABILITY FOR ACTIONS PRIOR TO THE CONCESSION:

 

The Concessionaire shall not be liable for the actions related with the environmental management of each Airport from which environmental liability may arise, and which take place prior to the delivery of each Airport. The Grantors, as applicable and as determined, shall be liable for said events occurred prior to the delivery of each Airport.

 

In any case, the Concessionaire shall be liable for the failure to promptly notify to the Grantors any claim, action, suit or administrative proceeding relating to the environmental management of the Airports corresponding to events or actions prior to the delivery of each Airport, for them to be able to adequately exercise their right of defense. If the Concessionaire fails to timely serve said notice, and said failure makes difficult or impossible for the Grantors to exercise their right of defense, then the Concessionaire shall be liable for the fulfilment of the applicable obligations and the reparation of damages.

 

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37.2                        ADDITIONAL LICENSES AND PERMITS

 

In the event that, for the performance of the Adjustment and Modernization Plan, the Concessionaire requires to obtain permits or licenses of and environmental nature, such as environmental licenses, permits for the disposal of debris, exploitation of construction materials or other similar, it shall be solely responsible to obtain said permits, and to abide to the obligations set forth therein.

 

Without prejudice to the general obligation of the Concessionaire to comply with the applicable environmental regulations, with the environmental obligations set forth under this Concession Agreement and to those arising from the assigned environmental management plan, the Concessionaire shall comply with, at its sole cost and risk, the environmental regulations applicable to the building projects carried out thereby in the performance of the Adjustment and Modernization Plan.

 

The compliance with said obligations by the Concessionaire shall not produce any compensation or indemnization whatsoever from the Concessionaires, nor shall it be accepted as a cause for the release of the fulfilment of any obligation undertaken by the Concessionaire under this Agreement.

 

CLAUSE 38.- FINANCIAL CLOSING:

 

The Concessionaire, within the six (6) months following the execution of the Minutes of Commencement of Performance, shall accredit to the Grantors and the Auditor, that it has obtained the Financial Closing of the Concession.

 

The accreditation of the Financial Closing by the Concessionaire shall consist in the submission, before the Grantors and the Auditor, of the documents that evidence that the Concessionaire has resources for at least one hundred million Pesos ($100.000.000.000) to fulfill the initial investments required under the Concession Agreement. This amount does not constitute an estimation by the Grantors of the amount of investments or a guarantee of the price, as it solely corresponds to the minimum threshold of the accreditation referred to under this Clause.

 

The Closing shall be accredited by the Concessionaire, by means of any of the following alternatives, or by any combination thereof:

 

(i)                                     A commitment that is irrevocable, unconditional in respect to the disbursement, and enforceable, to grant the funding for the amount indicated above, issued by one or more financial entities subject to the surveillance of the Colombian Superintendency of Finance. The certificate of existence and legal representation of the corresponding financial entity or entities, issued at the most, one month earlier, evidencing that the commitment is granted by an officer with sufficient powers to do so, shall be enclosed thereto.

 

If the commitment is granted by a foreign financial entity, the documents evidencing the existence of the entity, the powers thereof and of whom grants the commitment, and that the outstanding unsubordinated and long term debt of the respective entity has a global credit rating from Standard & Poor’s Corporation of, at least, BBB, or its equivalent issued by an internationally renown rating agency, shall be enclosed thereto.

 

In the event the commitment is granted by a private investment fund or an investment fund management company, said shall evidence that it has the uncommitted funds necessary to finance the Concessionaire with no condition whatsoever regarding the disbursement

 

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thereof, issued no earlier than a month prior to the date of accreditation, and it shall be registered before the competent surveilling entity of the respective country,

 

The certificate of existence of the commitment shall be issued no earlier that a month prior to the date of accreditation thereof.

 

(ii)                                  In the event the funding is obtained by means of the issuance of securities in capital markets, a certificate issued by the lead of the issuance stating that the total amount of securities issued has been placed, or that an underwriting agreement is in place for the placement of said securities. In no event will the placement or initial disbursement be conditioned in any manner whatsoever.

 

(iii)                               In the event the Financial Closing is accredited with its own capital, the Concessionaire shall submit: (1) a copy of its financial statements prepared as of, no earlier than, two months prior to the date of accreditation, audited by the fiscal auditor or certified by an independent public accountant, evidencing that it has available own resources specifically destined to cover the investments required for the fulfilment of this Concession Agreement, for an amount equal to the minimum amount that shall be accredited, represented in instruments with maturity dates below one hundred and eighty (180) common days, being such liquid negotiable instruments with a rating of no less than AA local, or liquid investments in ordinary common funds or investment funds with the same rating, or liquid available funds, or (2) an enforceable commitment, irrevocable and unconditional, to contribute capital in a term not exceeding one month, for the minimum amount that shall be accredited, issued by the competent corporate body of the Concessionaire or from each partner or shareholder or member of the Concessionaire, which shall be evidenced in a set of minutes approved with all the applicable legal formalities. This commitment shall be accompanied by an irrevocable and unconditional bank guarantee issued in favor of the Trust, for the same amount that is accredited.

 

The failure to accredit the Financial Closing, at the latest, on the maximum date provided in this Clause, shall result in the imposition of successive fines to the Concessionaire.

 

In the event that, after thirty (30) common days have passed as from the date in which the term set forth in this Clause has elapsed, the Concessionaire has failed to accredit the Financial Closing, the Grantors shall enforce the Sole Performance Bond, and will be entitled to declare the revocation of the Agreement.

 

CLAUSE 39.- PRESENTATION OF THE PRE-DESIGNS OF THE MANDATORY WORKS:

 

The Concessionaire shall prepare and present to the Grantors and the Auditor, within the three (3) months following the execution of the Minutes of Commencement of Performance, all pre-designs corresponding to each Mandatory Work of the Adjustment and Modernization Plan set forth in Appendix C.

 

Once the pre-designs have been presented to the Grantors and the Auditor, the Auditor, within the ten (10) Days following the receipt thereof, shall submit, to the consideration of the Grantors, a report on the predesigns presented, and its recommendation regarding the approval or not thereof. The Grantors shall have a maximum term of one (1) month, counted as from the date of the effective receipt thereof to study them and to, based on the analysis of the Auditor and on their own study, approve said pre-designs if they satisfy all the conditions imposed thereon under this

 

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Agreement , or to request the Concessionaire to adjust the pre-designs in order to meet the technical specifications of the Adjustment and Modernization Plan or any other norm or provision set forth in this Concession Agreement, or in the applicable laws and regulations. In the event that comments are made on the pre-designs, the Concessionaire shall provide a response to the Auditor and the Grantors, and shall incorporate them within the ten (10) Days following the date of the communication containing the comments made by the Grantors.

 

CLAUSE 40. — PRESENTATION OF THE STUDIES AND DESIGNS OF THE MANDATORY WORKS AND THE SCHEDULE FOR THE PERFORMANCE THEREOF:

 

Within the six (6) months following the execution of the Minutes of Commencement Performance the Concessionaire shall present to the Grantors and the Auditor, all the studies and designs in the detailed manner corresponding to each of the Mandatory Works of the Adjustment and Modernization Plan set forth in Appendix C. furthermore, a schedule for the performance of the Mandatory Works and other activities of the Adjustment and Modernization Plan shall be presented.

 

The studies and designs include, when applicable, the specifications of the equipment that shall be supplied by the Concessionaire in the performance of the Concession, pursuant to the requirements of Appendix C.

 

All studies and designs prepared by the Concessionaire shall meet all the technical specifications of the Adjustment and Modernization Plan, of the particular and applicable regulations, and in any other regulation or provision set forth in this Concession Agreement and its Appendixes.

 

Once the designs and the schedule are presented to the Auditor and the Grantors, within the twenty (20) calendar days following their reception, the Auditor shall submit a report of the studies and designs presented and its suggestions in relation to the approval thereof, for the Grantors’ judgment. The Grantors shall have a maximum term of one (1) month starting the receipt thereof for its assessment, in order to approve said designs if they meet with all the conditions set forth in this Agreement, based on the assessment of the Auditor and on its own assessment, or to request the Concessionaire the adjustment of the designs to the technical specifications of the Adjustment and Modernization Plan or of any other regulation or provision set forth in this Concession Agreement or in the applicable regulations and regulations. In the event of any observations on the designs, the Concessionaire shall respond to the Auditor and the Grantors, and proceed to incorporate them within the following twenty (20) calendar days following the communication date of the observations made by the Grantors.

 

Once the studies and designs are presented again, the Grantors shall have a new term of (20) calendar days to approve or object to them in the event these still do not meet the specifications set forth in this agreement or in the or in the applicable regulations and regulations. If the Concessionaire deems that these new objections of the Grantors are unsubstantiated, the Concessionaire may initiate the procedure of amiable composition for the settlement of the existing controversy. The foregoing without prejudice to the obligations of the Concessionaire of performing the Mandatory Works within the schedule set forth in Appendix C.

 

The approval of the designs by the Grantors is a necessary requirement to initiate the Mandatory Works of the Adjustment and Modernization Plan. With said approval, permission set forth in article 1821 of the Code Commerce shall be construed as granted.

 

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If the Grantors do not comment on the adjustment of the designs and studies within the terms granted in this Item, they shall be understood as granted. However, for said approval to have full effects, the Concessionaire shall give written notice to the Grantors who, pursuant to the provisions set forth in this Agreement, the designs are construed as approved.

 

For all legal and contractual purposes, the studies, designs, blueprints, maps and other elements constitutive thereof, once approved in the terms of this Item, are of the exclusive responsibility of the Concessionaire who prepared them.

 

The approval of the studies and designs by the Grantors, whether express or implied, shall not release the Concessionaire of the fulfillment of the results required in the technical specifications of the Adjustment and Modernization Plan or of the performance of any other obligation undertaken under this Agreement. Consequently, the Concessionaire shall adjust or modify its own studies and designs of details on any moment, at its own cost, under its responsibility, with the purpose of obtaining the results set forth in this Agreement, considering that the Concessionaire shall have the obligations of delivering the works of the Adjustment and Modernization Plan in the terms and conditions set forth in this Agreement and the Appendixes thereof.

 

Without prejudice to the above, any adjustment or modification made by the Concessionaire to its own studies and detailed designs in the terms of the foregoing paragraph, shall be approved by the Auditor and by the Grantors, with which approval the permit referred to under article 1821 of the Code of Commerce shall be deemed granted. The authorization above shall not be necessary if the Auditor determines that said amendment does not affect the specifications set forth in this Agreement or in the applicable laws and regulations in Colombia.

 

CLAUSE 41.- APPROVAL OF THE STUDIES AND DESIGN WITHIN THE PRIOR STAGE:

 

The Concessionaire shall be solely responsible for obtaining the approval of the studies and designs within the term provided for the Prior Stage. The Grantors shall be required to approve the designs of the Concessionaire, provided that they meet the specifications listed in Appendix C, and  the the applica laws and regulations. Also, the Grantors shall be required to approve the schedule of the activities of the Adjustment and Maintenance Plan, provided that the latter considers: (i) the term of performance set forth in Appendix C for the performance of the Mandatory Works, and for the fulfilment of certain activities, and (ii) that all the activities of the Adjustment and Modernization Plan are performed within the maximum term of five (5) years provided for the Adjustment and Modernization Stage.

 

CLAUSE 42.- TERMINATION OF THE PRIOR STAGE:

 

The Prior Stage shall terminate once the term determined for its duration has elapsed

 

CHAPTER VII — ADJUSTMENT AND MODERNIZATION STAGE

 

CLAUSE 43. — SCOPE OF THE ADJUSTMENT AND MODERNIZATION STAGE:

 

Is the non-operational contractual stage in which the Concessionaire shall perform the activities of the Adjustment and Modernization Plan and that correspond to the performance of Mandatory Works and all other supplies, constructions, and pre-constructions that are expressly described in Appendix C of this Concession Agreement. The activities of the Adjustment and Modernization Plan shall be performed by the Concessionaire with the quality and pursuant to the specifications set forth in Appendix C of this Concession Agreement.

 

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Notwithstanding the foregoing, during the Adjustment and Modernization Stage, parties shall perform all obligations that, without them being enclosed in this Chapter, are applicable pursuant to the provisions set forth in this Agreement.

 

During the Adjustment and Modernization Stage, the Concessionaire shall perform all the activities related to management, operation, commercial exploitation and maintenance that are applicable pursuant to the provisions set forth in this Agreement.

 

CLAUSE 44. — TERM OF THE ADJUSTMENT AND MODERNIZATION STAGE:

 

The Adjustment and Modernization Stage shall have a term of five (5) years as from the termination of the Previous Stage, this ten (10) months after the execution of the Minutes of Commencement of the Works.

 

CLAUSE 45. — PERFORMANCE OF THE ACTIVITIES OF THE INVESTMENT AND MODERNIZATION PLAN:

 

The activities of the Plan of Adjustment and Modernization shall be carried out considering the following activities:

 

45.1                        PERFORMANCE OF MANDATORY WORKS:

 

The Mandatory Works shall be performed by the Concessionaire, abiding by the designs approved by Grantors and observing the specifications enclosed in Appendix C of this Agreement.

 

45.2                        PERFORMANCE OF MANDATORY SUPPLEMENTARY WORKS:

 

The Mandatory Supplementary Works shall be performed by the Concessionaire as soon as the expected conditions arise so as to activate said investment, pursuant to the specifications set forth in Appendix C of this Agreement. If the expected conditions to activate the corresponding investment of the Mandatory Supplementary Works are verified after the Regulated Revenues Generated of the Concessionaire have reached more than seventy-five percent (75%) of the value of the Initial expected Regulated Revenue, pursuant to the certification of the Trust Agent, there will be no obligation by the Concessionaire to perform the Mandatory Supplementary Works and, if the Concessionaire freely so decides to perform them, it shall not receive any compensation for it by the Grantors. Compensation to the Concessionaire by the Mandatory Supplementary Works shall be performed in the manner set forth in Items 10.4 and 10.5 of this Agreement and, as the amount for this, unit prices and amounts of work actually used in the construction of the corresponding Mandatory Supplementary Work shall be taken into account, as such prices and amounts have been accepted by the Auditor and the Grantors.

 

The studies and designs of the Mandatory Supplementary Works, including the amount of the Work with the exact itemization of the unitary prices and the amounts of work, shall be submitted to the Grantors within the six (6) months following the date in which the conditions set forth for starting their performance have been verified. All the studies and designs shall be prepared by the Concessionaire and shall meet the technical specifications of the Plan of Adjustment and Modernization, the particular applicable legislation and regulations and any other regulation or provision set forth in this Concession Agreement and its Appendixes.

 

The approval of the designs of the Mandatory Supplementary Works is a necessary condition for initiating their performance. With said approval, permission set forth in article 1821 of the Code of Commerce shall be construed as granted. For the purposes of approval of the studies and designs, the same procedure set forth for the approval of the Mandatory Works shall follow.

 

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The Mandatory Supplementary Works may be performed in the Maintenance Stage, if the conditions for their performance are verified during said Stage, in which case all the obligations and procedures set forth in this Agreement shall proceed for their performance.

 

Each time the Mandatory Supplementary Works has been received to the satisfaction of the Grantors, the parties shall proceed to sign a Minutes of Adjustment of the Regulated Revenues Generated.

 

45.3                        PROCUREMENT OF REAL PROPERTY FOR THE MANDATORY WORKS AND THE MANDATORY SUPPLEMENTARY WORKS:

 

All duties and undertakings for the procurement of real property required for the performance of the works shall be carried out by the Concessionaire, except in what is expressly set forth in this clause as an undertaking of the Grantors. Within the Previous Stage the Concessionaire shall present a duly individualized inventory of all the real property necessary for the performance of the Mandatory Works to the Grantors and the Auditor. This inventory shall be delivered as soon as the corresponding investment activators of the Mandatory Supplementary Works takes place. Said inventory shall at least contain the following:

 

(i)                                   A precise and georeferenced identification of each and every real property.

 

(ii)                                The real property chip for each and every real property using the format that the Concessionaire considers is best, which at least shall contain the following (a) a property ownership study of each and every real property and (b) the appraisal of the in rem rights and conditions of the property that are required to make use of each and necessary every real property. Pursuant to article 34 of Law 105 of 1993, the Concessionaire shall obtain at its own cost the performance of this appraisal with an suitable entity for these purposes, as per provisions of Decree 1420 of 1998 and any other amending, clarifying and superseding regulations. The apprising entity shall be chosen by the Concessionaire following the objective selection principle for which it shall require tenders, on equal conditions, to three (3) apprising firms that meet the conditions set forth in Decree 1420 of 1998 and shall choose that which offers the best technical conditions in terms of performance.

 

(iii)                             The itemized and the totalized value of each and every real property required for the Works and the tender for payment to the owners shall comply with the provisions set forth in article 57 of law 388 of 1997 or any other amending, clarifying and superseding regulations.

 

Once the inventories of the real property, the Grantors and the Auditor shall have a term of fifteen (15) Days to make observations to the real property inventory delivered by the Concessionaire. Once that terms is due, and neither the Grantor nor the Auditor have made any observations, the inventory and the corresponding real property appraisal shall be construed as accepted, for the purposes of continuing with the procedures of real property acquisition, without prejudice to future observations or adjustments requested by the Grantors or the Auditor. In the event that the Concessionaire or the Auditor make any observations to the inventory or the corresponding real property appraisal, these shall be corrected in a reasonable term set by the Grantors or the Auditor; in the event that such difference continues to exist, parties can resort to the mechanism of amiable composition so as to solve the controversy. In any event, the Concessionaire shall be the only party responsible for the correct identification and encumbrance of the real property, in consequence, it shall be responsible and shall assume the costs of procurement of the real property or portions of

 

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land in excess to those needed for the correct performance of the Works regardless of which the property of such real property or terrains shall in every case be the Aerocivil.

 

As from the approval of the real property inventory, the Concessionaire may initiate all actions of direct negotiation for the procurement of the required real property. These actions shall have a maximum term of one month starting the approval of the real property inventory.

 

Once the term for the direct negotiation is due, the Concessionaire shall have a term of fifteen (15) Days to prepare and deliver all administrative projects set forth in articles 66 and 67 of law 388 of 1997 any other amending, clarifying and superseding regulations to the Grantors, for real property that could not be procured by direct negotiation within the previously mentioned term. Notwithstanding the foregoing, the Concessionaire may continue all actions of direct negotiation of the real property until all administrative acts of expropriation are duly notified.

 

Within the ten (10) Days following the receipt of the documents referred to in the previous item, Grantors may present observations and request changes to the draft of administrative act. If within this term the Grantors do not make any observations, they shall have a term of ten (10) Days to carry out all actions necessary to guarantee that the competent officer duly executes the administrative acts.

 

Once the administrative acts are duly executed, Grantors shall perform, or shall verify the performance of, all procedures necessary for notifying said acts, for their correct enforcement and for their registration in the Public Registrar’s Office, pursuant to the provisions set forth in article 66 of law 388 of 1997 any other amending, clarifying and superseding regulations. In the event of remedies against the administrative acts, Grantors may request the Concessionaire to prepare a draft of reply of said acts, and the Concessionaire agrees to deliver said draft within a maximum term of seven (7) Days starting from the request of the Grantors.

 

Once the aforementioned administrative acts are enforceable, pursuant to the provisions set forth in articles 66 and 67 of law 388 of 1997, the Concessionaire shall perform any actions and duties necessary for obtaining a formal agreement of voluntary sale of each and every required real property. These actions shall be brought forth within the terms, and in the conditions set forth in the current legislation. The Concessionaire shall present to the Grantors a detailed report on the result of the procedures carried out to obtain the formal agreement of voluntary sale within the ten (10) Days following the date in which said term is due. The report shall have enclosed the totality of the sale and purchase promise agreements between the Concessionaire and the sellers of the real property as well as of the drafts of the motivated administrative acts which provide the administrative expropriation of the real property that could not be acquired through voluntary sale. These acts shall meet all the requirements set forth in the current legislation.

 

Within the ten (10) Days following the receipt of the documents referred to in the preceding paragraph, Grantors agree to perform any actions necessary to make sure that the administrative acts are duly executed by the competent officer. Once the aforementioned administrative acts are executed, Grantors shall carry out, or verify that actions are being carried out so as for the due notice of said acts, for their correct enforcement, and to make the compensation price available to the to the expropriated person, as well as any required documents and for their registration in the Public Registrar’s Office, pursuant to the current regulations. In the event in which there are remedies against the aforementioned administrative acts on the administrative jurisdiction, Grantors may request the Concessionaire to prepare a draft of reply of said acts, and the

 

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Concessionaire agrees to deliver said draft within a maximum term of five (5) Days as from the request.

 

45.4                        TRANSFER OF THE REAL PROPERTY:

 

The terms of transfer of the real property, in the event of voluntary sale, shall consider the schedules of performance of the Works. The transfer of the real property shall be made directly by the sellers to the Concessionaire. The agreements of promise of sale and purchase as well as the sale and purchase agreements shall be executed by the Concessionaire who shall carry out all actions necessary and bear the costs for the consummation and transfer thereof, including those of notary nature so as to make all agreements public deeds and those of registration in the Public Registrar’s Office. In any case, in compliance to the provisions set forth in article 34 of law 105 of 1993, the acquired real property will always be under registered under the Aerocivil.

 

In the events of expropriation, Grantors shall ensure to obtain the material transfer of the expropriated real property taking the schedules of performance of the Works into account.

 

45.5                        PAYMENT OF THE PRICE OF THE REAL PROPERTY NECESSARY FOR THE WORKS AND OTHER EXPENSES ASSOCIATED THERETO:

 

All the amount corresponding to the real property required for the performance of the Works shall be borne and paid by the Concessionaire form its own resources and, for such effect, the Concessionaire agrees to be total y compensated pursuant to the provisions set forth in Clause 10 of this Agreement.

 

All expense necessary for the performance of the obligations related to the acquisition of the real property necessary for the performance of the Works, including those necessary for making appraisals, real property chips, contracting, legalization, notary expenses and the registry of acquisitions shall be borne and made solely and exclusively by the Concessionaire.

 

45.6                      SECOND RUNWAY OF THE JOSE MARIA CORDOVA AIRPORT:

 

It is an obligation of the Concessionaire to carry out the building of the second runaway of the Jose Maria Cordova Airport when the conditions set forth in Appendix C of this Agreement take place, and provided that the conditions set forth in Appendix C of this Agreement are met, such as the investment activators for this Mandatory Supplementary Work. There shall be no obligation by the Concessionaire under this Agreement to perform the building of the second runway of the Jose Maria Cordova Airport if the conditions set forth for the activation of this investment are verified after the Regulated Revenue Generated of the Concessionaire have reached more than eighty-five percent (85%) of the Initial Regulated Revenue Expected, as per certificate of the Trust Agent. Furthermore, the limit set forth in Item 10.6 shall not be applicable for the purposes of compensation for the building of the second runway of the Jose Maria Cordova Airport, in such a way that if the Concessionaire is obligated to build the runway, it shall be compensated integrally pursuant to the formulas and criteria set forth in Items 10.4 and 10.5 of this Agreement. Only, and exclusively for this last purpose, the maximum term of performance of this Agreement of twenty-five (25) years set forth in Clause Seven shall not be enforceable, and the Concession Agreement shall be extended inasmuch as the Concessionaire has received all the compensation to which it has a right for the building of the second runway of the Jose Maria Cordova Airport, pursuant to the terms and formulas set forth in Items 10.4 and 10.5. Real Property operation shall be performed by the Concessionaire, who, in addition, shall bear the costs of procurement of the real property in the terms set forth in this Agreement.

 

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45.7                        VERIFICATION OF THE INVESTMENT ACTIVATOR:

 

In order to determine the occurrence of the conditions to activate the investment of the Mandatory Supplementary Works of each Airport, the Auditor will verify, on a monthly basis, if such conditions, in relation to each Airport have been met, and shall immediately notify the Grantors the occurrence of the conditions to activate the investment. At that moment, Grantors shall request the Trust Agent a certificate on whether for the moment in which the conditions to activate the investment took place, the Regulated Revenue Generated had reached the amount set forth in the previous Item, and if it were not the case, the obligation of performing the Mandatory Supplementary Works in relation to the Airport in which the conditions were met to activate the corresponding investment shall arise for the Concessionaire.

 

In relation to each Airport, as soon as there is verification of the occurrence of the conditions to activate the investment in the performance of the Mandatory Supplementary Works, Grantors shall give notice of such condition to the Concessionaire for it to proceed with the initiation of the performance of the Mandatory Supplementary Works of each Airport in which the conditions are met so as to activate the corresponding investment.

 

45.8                        PERSONNEL AND EQUIPMENT:

 

Concessionaire shall have the required personnel and equipment at its disposition so as to perform each activity of the Adjustment and Modernization Plan in the moments defined in Appendix C. The equipment, personnel, material and other implements shall be sufficient for organizing different working fronts necessary for the fulfillment of the obligations of the Concessionaire.

 

At every moment, the personnel, equipment, implements and material that are used by the Concessionaire, its agents and subcontractors shall be under its sole responsibility. Therefore, any damage or prejudice to third parties caused by the personnel, equipment, implements or the material used by the Concessionaire, shall make it accountable thereto, and, in any case, Concessionaire shall hold the Grantors harmless on account of any claim.

 

45.9                        PUTTING THE WORKS OF THE ADJUSTMENT AND MODERNIZATION PLAN INTO SERVICE:

 

The corresponding works to the Adjustment and Modernization Plan that are concluded by the Concessionaire and Accepted by the Grantors, shall be put into service as soon as these are received. As from the date of receipt of any of the works by the Grantors, the Concessionaire is in the obligation of beginning the performance of activities of maintenance thereto, pursuant to the terms of the technical specifications of maintenance of Appendix E.

 

45.10                 VERIFICATION AND ACCEPTANCE OF THE WORKS:

 

For the acceptance of the works of the Adjustment and Modernization Plan, the Concessionaire shall deliver the technical description of the performed work that is to be delivered to the Grantors and the Auditor before the expiration of the term set forth for the termination of each work.

 

Once the technical description of the works is delivered, the Grantors and the Auditors shall have a maximum term of twenty (20) Days to approve the work of the Adjustment and Modernization Plan that is to be delivered, or to make requests of correction or complementation of the works in the event that these do not meet the technical specifications that are included in appendix C, or with any other regulation set forth in this Agreement, or the applicable legislation and regulations.

 

If the Auditor and the Grantors express their acceptance in relation to the works of the Adjustment and Modernization Plan, or if they remain silent for the term set forth in the previous paragraph,

 

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the Concessionaire, the Auditor and the Grantors shall proceed to execute the Minutes of Verification of the corresponding works.

 

45.11                 OBJECTIONS TO THE DELIVERED WORKS:

 

If the Auditor or the Grantors find that any of the works in the Adjustment and Modernization Plan do not fully meet the technical specifications set forth in Appendix C, or any other specification applicable pursuant to this Agreement or with the applicable legislation or regulations, the Auditor and the Grantors shall communicate this to the Concessionaire with the purpose that the Concessionaire corrects said breaches within the maximum reasonable term that the Auditor and the Grantors indicate.

 

Once the works are corrected, the execution of the Minutes of Verification shall follow.

 

45.12                 DEFECTS IDENTIFIED AFTER THE MINUTES OF VERIFICATION:

 

The Concessionaire shall have the obligation or repairing at its expense any defect that arises from the Adjustment and Modernization Plan even after the execution of the Minutes of Verification, regardless of the cause that gives rise to the defects, except in the case of causes attributable to the Grantors.

 

In the event in which the defects occur in flaws of performance, but that remained hidden at the moment of execution of the Minutes of Verification, Grantors shall demand the adjustment of the works of the Investment and Adjustment Plan, on the expense of the Concessionaire, and shall set the term for the performance of said adjustment. In such event, the fines and sanctions set forth in this Agreement shall proceed.

 

45.13                 OBLIGATION TO MAINTAIN QUALITY:

 

Concessionaire shall be responsible for the performance of the works of the Adjustment and Modernization Plan with the quality required to guarantee the expected lifespan and resistance of said works. By its own initiative, or by request of the Auditor, and at its own responsibility and expense, the Concessionaire shall rectify any construction errors that it might have committed in the performance of the activities set forth for the performance of this Agreement, to the satisfaction of the Auditor and the Grantors. It shall be a responsibility of the Concessionaire to immediately warn the Auditor any sort of any spotted errors, and therefore, during all the performance of the Agreement and without prejudice to feasibility of the fines and collateral set forth herein, the Concessionaire shall correct, check, and fix any defect, defect or error that takes place. In the event of defects, faults or errors that were not noticed, these shall be corrected in the event of being identified, even during the Maintenance Stage, and even during the term of the work stability insurance policy, without prejudice to any applicable sanctions.

 

45.14                 ACQUISITION OF EQUIPMENT, MATERIAL, IMPLEMENTS AND SOFTWARE REQUIRED BY THE ADJUSTMENT AND MODERNIZATION PLAN:

 

In addition to the performance of the works in the Adjustment and Modernization Plan as set forth in this Clause, Concessionaire shall acquire, at its own cost, and integrate to the Concession, any equipment, material, implements and software necessary to meet the requirements set forth in the Adjustment and Modernization Plan on these aspects. The acquisition and integration of the equipment, material, implements and software of the Adjustment and Modernization Plan, shall be performed with strict observation of the schedule that is enclosed for such effect in the Plan in Appendix C.

 

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45.15                 VERIFICATION AND ACCEPTANCE OF THE EQUIPMENT, MATERIAL AND IMPLEMENTS REQUIRED BY THE ADJUSTMENT AND MODERNIZATION PLAN:

 

For the acceptance of equipment, material and implements required by the Adjustment and Modernization Plan, in such a way that these can be integrated to the Concession, before the maximum term set forth for the delivery and integration to the Concession, the Concessionaire shall present the technical description of the equipment, materials and implements to the Grantors and the Auditor, and shall put them for physical inspection and to the Grantors and the Auditor, so as to allow them to test their characteristics and functioning, as well as their adjustment to the technical specifications set forth in Appendix C.

 

If the Auditor and the Grantors remain silent for the term set forth in the preceding paragraph, the Concessionaire, the Auditor and the Grantors shall proceed to the execution of the corresponding Minutes of Verification.

 

45.16                 AIRPORT SYSTEMS:

 

The special systems referred to in Appendix C shall be implemented in the conditions and terms set forth in the Adjustment and Modernization Plan. When the Concessionaire implements each of these systems, they shall be made available to the Auditor and the Grantors for their verification, along with a detailed description of the technical characteristics of the system.

 

If the Auditor and the Grantors find that the systems meet the specifications set forth in this Agreement, execution of the Minutes of Verification shall follow. Otherwise, within the twenty (20) Days following the moment in which the Concessionaire made these systems available, the Auditor and the Grantors shall make the corresponding requests with the purpose that the equipment, material, implements and software meet the technical specifications set forth in Appendix C and shall set the maximum term that the Concessionaire has for this end.

 

If the Auditor and the Grantors express their accordance with the systems implemented by the Concessionaire, or if they remain silent for the terms set forth in the preceding paragraph, the Concessionaire, the Auditor and the Grantors shall proceed to execute the Minutes of Verification of the corresponding system.

 

45.17                 DEFECTS IDENTIFIED AFTER THE MINUTES OF VERIFICATION:

 

At its own expense, the Concessionaire shall have the obligation of repairing and keeping in a functioning status, any defects that arises on any equipment, materials, implements and systems implemented thereby even after the execution of the Minutes of Verification, regardless of the cause that gave rise to the defects, except in the case of causes attributable to the Grantors.

 

In the event of defects that were not spotted at the moment of execution of the Minutes of Verification, Grantors shall order the adjustment of the system on account of the Concessionaire, and shall set the term for the performance of such adjustment.

 

CLAUSE 46. — SCHEDULE OF THE ACTIVITIES OF THE ADJUSTMENT AND MODERNIZATION PLAN:

 

The progress, performance and termination of the activities of the Adjustment and Modernization Plan of each Airport shall be made with strict compliance to the schedule that, for each of these, was approved by the Grantors at the moment of approving the design thereof. Reiterated breach of said schedule shall be considered as a breach of the obligations of the Concessionaire that gravely affects the performance of the Concession and shall give place to the imposition of fines in the terms of the

 

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Agreement and, depending on the number of breached activities, shall give place to revocation of the Agreement.

 

CLAUSE 47. — REPORTS:

 

During the Stage of Adjustment and Modernization, the Concessionaire shall present to the Auditor and the Grantors the status of advances and performance of the activities of the Adjustment and Modernization Plan. Advance reports shall be made bimonthly, except in the event that, given the way in which the Concession is being carried out, these shall demand shorter periods.

 

Reports shall be delivered within the ten (10) days following the expiration of each bimonthly period starting from the execution of the Minutes of Delivery. The report shall contain the status of progress of the activities of the Adjustment and Modernization Plan and the activities of management, operation and commercial exploitation of the Airports that were performed in this stage, in which at least the following information shall be included:

 

(i)                         A table of a relation of the activities contained in the building, rehabilitating and remodeling activities that were executed in this period and the equipment, materials, implements and systems that were acquired and integrated to the Concession. Said relation shall be presented pursuant to the identification of the activities of the Adjustment and Modernization Plan set forth in Appendix C.

 

(ii)                      The technical characteristics of each performed work, particularly indicating the type and amount of materials used, the useful lifespan of the work, the capacity of usage of the work (simultaneous number of users) and all other technical characteristics that are relevant on each particular case.

 

(iii)                   The relevant technical characteristics on each piece of equipment, implements, materials and systems incorporated to the Concession.

 

(iv)                  The relation of the studies performed by the Concessionaire to carry out the corresponding works and acquisitions, as well as the relationship of the adjustments that should be made in the previously submitted studies and designs.

 

(v)                     The registry of the corrections and adjustments in the works or the equipment, material, implements and systems for the breach of the specifications of the Agreement.

 

(vii)               The activities performed by the Concessionaire in relation to the fulfillment of the obligations and specifications associated to the operation, management and commercial exploitation of the Airports.

 

CLAUSE 48. — PERMITS AND LICENSES:

 

The Concessionaire shall have the totality of all permits and licenses necessary for the implementation and usage of the systems required by the Adjustment and Modernization Plan and for any other mechanic or informatics system that is implemented thereby as part of the performance of the obligations deriving from this Concession Agreement.

 

Therefore, the Concessionaire shall hold the Grantors harmless for any claim related to the use of patents, permits or licenses, and in any case it shall be held accountable before third parties for the use thereof.

 

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CLAUSE 49. — INCORPORATION TO THE AIRPORTS:

 

As soon as the Minutes of Verification are executed, it shall be understood that the works, equipment, material, implements and systems that have been incorporated to the Concession shall be part of the assets and rights that constitute the Airports.

 

CLAUSE 50. — EXECUTION OF THE MINUTES OF THE MAINTENANCE STAGE:

 

As soon as the Minutes of Verification corresponding to all the activities of the Adjustment and Modernization Plan, the Concessionaire, the Grantors and the Auditor shall execute the Minutes of Commencement of the Maintenance Stage, and for all purposes of this Agreement, the change of Stage shall take place. If the activities of the Adjustment and Modernization Plan end before the estimated term for the Stage of Adjustment and Modernization, the execution of the Minutes of Commencement of the Maintenance Stage shall proceed, and to change Stage without this entailing a decrease in the term of the Concession.

 

CHAPTER VIII — MAINTENANCE STAGE

 

CLAUSE 51. — SCOPE OF THE MAINTENANCE STAGE

 

It is the contractual performance stage in which the Concessionaire must execute all the activities that are reasonably required to properly preserve the Airports to enable the performance of the management, operation and commercial exploitation activities with the specifications set forth in the Agreement. In any case, the Concessionaire shall meet the minimum maintenance specifications set forth in Appendix E of this Agreement when executing its Airport maintenance obligations.

 

During the Maintenance Stage, the Concessionaire shall execute all the activities corresponding to the management, operation and commercial exploitation that are applicable pursuant to the provisions of this Agreement.

 

Additionally, if, Mandatory Supplementary Works or Voluntary Supplementary Works are performed during the Maintenance Stage, the Concessionaire shall fulfill the corresponding obligations pursuant to the provisions of this Agreement.

 

CLAUSE 52. — DURATION OF THE MAINTENANCE STAGE

 

The Maintenance Stage will start with the execution of the Minutes of Commencement of the Maintenance Stage and will extend until the date on which the Minutes of Completion of Performance is signed.

 

CLAUSE 53. — REPORTS

 

During the Maintenance Stage, the Concessionaire shall submit a performance progress report of the Concession to the Auditor and the Grantors. The progress reports will be issued bimonthly unless, due to the form of performance of the Concession and at the Grantors’ choice, they shall have a shorter periodicity.

 

The reports shall be submitted within ten (10) Days following the expiration of each two-month period starting from the signature of the Minutes of Commencement of the Maintenance Stage. The report shall contain the information of assessment and compliance status of the obligations related to the maintenance activities and the management, operation and commercial exploitation activities, which will include, at least, the following information:

 

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(i)                                   The activities carried out by the Concessionaire regarding the fulfillment of the obligations and specifications related to the Airport infrastructure preservation, equipment maintenance, and software maintenance and updating activities.

 

(ii)                                The activities carried out by the Concessionaire regarding the fulfillment of the obligations and specifications related to the Airport operation, management and commercial exploitation activities.

 

CLAUSE 54. — UPDATE OF THE INVENTORY OF ASSETS THAT MAKE UP THE AIRPORTS

 

Every two years, starting from the date on which the Minutes of Commencement of Performance, the Concessionaire shall submit to the Grantors and the Auditor an update of the inventory of all the assets that make up the Airports, which includes at least: origin, useful life, condition and history indicating any damage, repair or maintenance performed.

 

Said inventory update of the assets that make up the Airports will contain the following elements:

 

(i)                                   The movable properties that have been returned to the Grantors by the Concessionaire, indicating the cause for which they have been returned and the date on which they were returned. These assets will be deemed as excluded from the Airports upon submission of the update mentioned in this numeral.

 

(ii)                                The movable properties acquired by the Concessionaire or by a third party and that are used to provide the service which is the purpose of this Agreement, and, therefore, they are part of the Airports. In this case the characteristics of said assets shall be described, as well as their quantity and their location in the Airports.

 

(iii)                             The equipment and systems installed by the Concessionaire to carry out the activities set forth in the Adjustment and Modernization Plan and the Voluntary Supplementary Works, indicating their software and databases. The conditions contained in the licenses by means of which the use of such software and databases is allowed, must be indicated, as well as the term thereof.

 

(iv)                            The civil works, constructions, buildings or any other addition to the real properties that make up the Airports, which have been performed by the Concessionaire by virtue of the works of the Adjustment and Modernization Plan or the Voluntary Supplementary Works. The Technical Specifications may be used in order to give the aforementioned descriptions.

 

As soon as the Regulated Revenue generated amounts to eighty percent (80%) of the Expected Regulated Revenue, the update of the inventory mentioned in this Clause shall be performed on a yearly basis.

 

CLAUSE 55. — TECHNICAL SPECIFICATIONS

 

The Concessionaire must provide a technical specifications sheet for each one of the works of the Adjustment and Modernization Plan and for each one of the Voluntary Supplementary Works, if any. The technical specifications shall include the following elements:

 

(i)                                   The information with all the works of the Adjustment and Modernization Plan and the Voluntary Supplementary Works, if any, required in Clause 45.

 

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(ii)                                Description of the maintenance works performed on all the activities carried out from the moment in which the corresponding Minutes of Verification was signed.

 

(iii)                             Description of the status of each one of the works of the Adjustment and Modernization Plan at the moment in which the technical specifications sheet is prepared, as well as the status of the Voluntary Works, if any.

 

(iv)                            Description of the maintenance works performed on the areas where no activities of the Adjustment and Modernization Plan were carried out, indicating the technical status of such areas.

 

Every six months, the Concessionaire shall update the technical specifications according to the maintenance procedures applied, the deterioration of the works and any other kind of interventions performed in each one of the Airports.

 

CHAPTER IX — ACTIVITIES COMMON TO ALL THE STAGES OF THE CONTRACTUAL PERFORMANCE

 

CLAUSE 56. — MANAGEMENT, OPERATION AND COMMERCIAL EXPLOITATION ACTIVITIES

 

As mentioned throughout this Agreement, the Airport management, operation and commercial exploitation activities must be performed by the Concessionaire under the terms and with the specifications set forth in this Agreement and during all the Stages of contractual performance.

 

To fulfill the aforementioned obligations, the Concessionaire shall perform all the activities required and make the necessary investments to obtain the results stipulated in the Concession Agreement for each one of these obligations.

 

CLAUSE 57. — PERFORMANCE OF VOLUNTARY SUPPLEMENTARY WORKS

 

The Concessionaire may perform such Voluntary Supplementary Works as it considers useful for the Concession. The Voluntary Supplementary Works will be performed at the Concessionaire’s own expense and risk.

 

For the performance of the Voluntary Supplementary Works, the Concessionaire shall follow the following procedure and the provisions in Appendix C of the Concession Agreement.

 

57.1                        PRESENTATION OF THE PROJECT

 

To perform any Voluntary Supplementary Work, the Concessionaire shall submit to the Grantors and the Auditor a request to build new facilities at the Airport, pursuant to the provisions of article 6.3.4 of the Colombian Aeronautical Regulations or any law that replaces, amends or supplements it.

 

In addition to the requirements imposed by the Colombian Aeronautical Regulations for the request to build new facilities, the Concessionaire shall attach (i) the detailed studies and designs of the Voluntary Supplementary Work, (ii) a schedule of performance of the Voluntary Supplementary Work to be carried out and (iii) a Voluntary Supplementary Work performance program showing (1) the mechanisms that will be used so that the performance of the work will not affect the provision of the services, the aeronautical activities or the quality standards of the operation of each one of the Airports, (2) the justification and the economic and technical utility of the corresponding Voluntary Supplementary Work regarding the improvement that it brings to the

 

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provision of the Services Related to the Regulated Revenue or the Services Related to the Non-Regulated Revenue, and (3) a description of the value of the work with the exact detail of unit prices and construction quantities.

 

57.2                        STUDY OF THE PROJECT

 

Once the Concessionaire has presented the project of the Voluntary Supplementary Work, the Auditor will have twenty (20) Days following its submission to issue an opinion on it, and the Grantors will have twenty (20) additional Days to approve or decline the request submitted by the Concessionaire, including the approval of unit prices and construction quantities.

 

57.3                        PERFORMANCE OF THE VOLUNTARY SUPPLEMENTARY WORK

 

Once the approval from the Grantors has been obtained, the Concessionaire may proceed to perform the Voluntary Supplementary Work.

 

The Grantors will directly, through the Auditor, or through an Auditor specifically selected to supervise and control the Voluntary Supplementary Work, depending on its magnitude or quality, supervise the compliance with the technical conditions of the Voluntary Supplementary Work, pursuant to the project that has been approved by it and, if applicable, it will impose the sanctions set forth in this Agreement due to noncompliance with the conditions of the given approval.

 

57.4                        REMUNERATION OF THE VOLUNTARY SUPPLEMENTARY WORK

 

The Concessionaire will be remunerated for the Voluntary Supplementary Work as provided in this Agreement and the unit prices and construction quantities effectively used in the construction of the corresponding Voluntary Supplementary Work will be taken as the value thereof, provided that these prices and quantities have been approved by the Auditor and the Grantors. All the risks related to the performance of the Voluntary Supplementary Works, including the risk of greater construction quantities, the risk of higher prices, the risk of the term, will be assumed entirely and exclusively by the Concessionaire. In the same way, in case that it is necessary to purchase any properties, these will be included in the value of the Work and property procurement, and the related risks will also be assumed by the Concessionaire, following the same procedure indicated in Numerals 45.3, 45.4 and 45.5.

 

57.5                        RECEPTION AND VERIFICATION OF THE VOLUNTARY SUPPLEMENTARY WORKS

 

Once the completion of the performance of the Voluntary Supplementary Works has been verified, the Grantors will apply, for the implementation, reception and verification thereof, the same procedure that for such purpose is set forth in this Agreement for the works of the Adjustment and Modernization Plan. Every time that one of the Voluntary Supplementary Works has been satisfactorily received by the Grantors, they shall proceed to sign the corresponding Minutes of Adjustment of Expected Regulated Revenue.

 

57.6                        DECLINATION OF APPROVAL OF THE PERFORMANCE OF VOLUNTARY SUPPLEMANTARY WORKS

 

The Grantors will decline the approval of the performance of a Voluntary Supplementary Work proposed by the Concessionaire only if one of the following conditions is fulfilled: (i) if the Voluntary Supplementary Work proposed is evidently inconvenient for the Airport, (ii) if the value of the Voluntary Supplementary Work exceeds the limit set forth in Numeral 10.6, (iii) if the performance of the Voluntary Supplementary Work is proposed by the Concessionaire after the Regulated Revenue Generated has reached seventy-five percent (75%) of the Initial Expected Regulated Revenue, (iv) if the Voluntary Supplementary Work is proposed to be performed before

 

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completing the Stage of Adjustment and Modernization or (v) if the Grantors or the Auditor do not agree with the value of the Voluntary Supplementary Work indicated by the Concessionaire in the presentation of the project, as indicated in Numeral 57.1.

 

Any conflict related to the approval of the Voluntary Supplementary Works, will be solved through the amiable composition mechanism.

 

57.7                        PERFORMANCE OF VOLUNTARY SUPPLEMENTARY WORKS UPON REQUEST OF THE GRANTORS

 

The Grantors may propose to the Concessionaire to perform a Voluntary Supplementary Work and its performance will be mandatory for the Concessionaire. In such event, the same procedure indicated in Numerals 57.1, 57.2, and 57.3 will be applied, and its remuneration will be managed in the same way provided for the Voluntary Supplementary Works proposed by the Concessionaire. Once a Voluntary Supplementary Work has been proposed by the Grantors, the Concessionaire will have two (2) months from the date of reception of the Proposal to submit to the Grantors the presentation of the project under the terms of Numeral 57.1. The Concessionaire may only refuse to perform the Voluntary Supplementary Work proposed by the Grantors due to the same causes described in Numeral 57.6.

 

CLAUSE 58. — FIRE SUPPRESSION SERVICE

 

From the date of execution of the Minutes of Delivery of each Airport and until the Termination Date of the Agreement, the Concessionaire will be responsible for providing the fire suppression service, for which it shall have its own staff, who shall have the required qualities to do the job of aeronautical pumping, indicated in Resolution 1782 of 1998 issued by the Aerocivil, or in the laws that supplement, amend or replace it.

 

The fire suppression service shall be provided pursuant to the operational technical specifications included in Appendix D and in Resolution 5319 of 2004 (Chapter VII of the Sixth Part of the Aeronautical Regulations), or in the laws that supplement, amend or replace them.

 

The Concessionaire will provide the fire suppression service with the firefighting equipment made available by the Grantors and until it purchases and incorporates to the Concession its own fire suppression equipment under the terms of the Adjustment and Modernization Plan. As soon as the Concessionaire incorporates its fire suppression equipment, the Concessionaire shall immediately return, and in the same conditions as it was received except for the natural deterioration due to use, the equipment of the Grantors who are then free to use it to provide the service in other places.

 

CLAUSE 59. — PROVISION OF SAFETY SERVICES AT THE AIRPORTS

 

The safety services at the Airports will be provided as indicated in this Clause.

 

59.1                        AIR SAFETY

 

The Aerocivil will be in charge of and responsible for the Air Safety of the Airports under the terms set forth in paragraph 3 of article 48 of Law 105 of 1993, as established in Resolution 0892 of 2004 and other applicable domestic and international laws.

 

59.2                        AIRPORT SAFETY

 

The Concessionaire is in charge of the Airport Safety service. The Concessionaire’s obligations related to Airport Safety are obligations of means and not obligations of result.

 

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The Concessionaire shall carry out the activities and procedures described in this Clause, in Appendix F, in the National Airport Safety Program, in the Airport Safety Plan and in the domestic or international laws on Airport Security that, to prevent the commission of Actions of Unlawful Interference, are applicable to the management of Airport Safety in each one of the Airports.

 

If, despite The Concessionaire’s fulfillment of all the obligations regarding Airport Safety, Actions of Unlawful Interference take place and affect the life or properties of third parties other than the Concessionaire, it will not be deemed responsible before third parties or before the Grantors due to the occurrence of such actions, except when there is evidence of its fault or intention.

 

In any case, the equipment, measures and procedures for Airport Security shall meet the requirements established by the Airport Safety Intersector Commission.

 

59.3                        AIRPORT SAFETY PLAN, CONTINGENCY PLAN AND EMERGENCY PLAN OF EACH AIRPORT

 

As the person responsible for the Airport Safety of each one of the Airports, the Concessionaire will prepare and submit for each one of them, the Contingency Plan and the Emergency Plan, as indicated in the National Airport Safety Program and in Annex 17 of the Convention on International Civil Aviation. In any case, the Airport Safety Plan, the Contingency Plan and the Emergency Plan shall meet the minimum requirements contained in Appendix F.

 

During the period between the signature of the Minutes of Delivery of each Airport and the approval of the Airport Safety Plan, the Contingency Plan and the Emergency Plan prepared by the Concessionaire, the plans that were in force as of the execution date of the Concession Agreement will govern, and they shall be implemented and followed by the Concessionaire in every respect.

 

59.4                        PRESENTATION OF THE AIRPORT SAFETY PLAN, THE CONTINGENCY PLAN AND THE EMERGENCY PLAN OF EACH AIRPORT

 

The Concessionaire will present the first version of the Airport Safety Plan, the Contingency Plan and the Emergency Plan of each Airport, within three (3) months following the execution of the corresponding Minutes of Delivery.

 

Such plans will be reviewed by the Grantors and the Auditor, who will have fifteen (15) Days to request the Concessionaire to modify any of the plans presented when, in their opinion, any of them does not allow to comply with the provisions of this Agreement and its Appendixes, the provisions contained in the National Airport Safety Program or in Annex 17 of the Convention on International Civil Aviation or in any other law that is applicable to the Airport Safety of the Airports.

 

If the Concessionaire agrees with the changes suggested by the Grantors or by the Auditor, it will make the changes to the Airport Safety Plan, the Contingency Plan of the Emergency Plan, as applicable, within ten (10) Days after receiving the modification request.

 

When the Concessionaire disagrees with the changes suggested by the Grantors or the Auditors, it shall use the mechanism of amiable composition provided in this Agreement.

 

59.5                        ADOPTION OF THE AIRPORT SAFETY PLAN, THE CONTINGENCY PLAN AND THE EMERGENCY PLAN OF EACH AIRPORT

 

Once the Airport Safety Plan, the Contingency Plan and the Emergency Plan of each Airport have been defined, either upon agreement between the Concessionaire, The Auditor and the Grantors or through a mechanism that allows the resolution of the conflict, the Concessionaire will proceed to

 

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submit it to the Airport Safety and Supervision Department or the relevant entity, who will have five (5) Days to approve such plans submitted by the Concessionaire or to request its modification.

 

59.6                        YEARLY APPROVAL

 

The procedure contemplated in the above Numerals will be repeated every year for approval of the modification or update of the Airport Safety Plan, the Contingency Plan and the Emergency Plan of each Airport.

 

59.7                        CONFIDENTIALITY

 

The contents of the Contingency Plan are restricted and, therefore, it shall only be disclosed among the Concessionaire’s employees who need to act in each event, the officers of authorities in charge of managing the crisis and the rescue entities.

 

59.8                        PUBLICITY

 

The contents of the Emergency Plan are public and, therefore, it shall be made available to everyone who works in each of the Airports, either for the Concessionaire or for third parties. In the same way, the Concessionaire shall make the evacuation and emergency response procedures available to the general public in each one of the Airports.

 

59.9                        VERIFICATION OF COMPLIANCE

 

Notwithstanding the functions of the Grantors and the Auditor, the General Director of the Aerocivil will constantly review the compliance with the Concessionaire’s obligations regarding Airport Safety, pursuant to the attributions conferred to him by the National Airport Safety Program, and in case of noncompliance by the Concessionaire with the Airport Safety obligations undertaken, he may impose administrative sanctions authorized by the applicable regulations.

 

59.10                 MODIFICATION OF THE LAWS ON AIRPORT SAFETY

 

The Concessionaire is obliged to comply, during the entire term of the Concession Agreement, with all the applicable laws in Colombia regarding Airport Safety, including International Treaties to which Colombia is a party and that are incorporated to the Colombian laws in under the terms provided in the Constitution and the Law, as well as the laws, decrees and resolutions issued in Colombia regarding Airport Safety. In case that the Concessionaire has to perform any works or purchase any equipment to fulfill the obligation provided in this Numeral, regarding its remuneration, it will be dealt with the same way as the Voluntary Supplementary Works and the same procedure will be followed.  If the Grantors do not approve the corresponding works or purchase, then the Concessionaire will be released of its responsibility only regarding the fulfilment of the obligation to update due to the change in the law.

 

CLAUSE 60. AIRPORT SAFETY AUTHORITIES

 

Notwithstanding the Concessionaire’s obligations in its capacity as the person responsible for the Airport Safety in each one of the Airports, it will coordinate with the Airport Safety Authorities, through the Airport Safety Committee or directly with them, its activities and procedures, always aiming at the prevention of Acts of Unlawful Interference.

 

The Airport Safety Committee will serve as a space to coordinate the actions that aim at the effectiveness of the policies established by the Airport Safety Intersector Commission and the National Airport Safety Program, in order to provide an integral and quality safety service to the users of the Airports.

 

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The Airport Safety Committee will be made up by:

 

(i)                                           The Concessionaire’s Manager, who will be the coordinator.

 

(ii)                                        The commander of the National Police assigned to the Airports.

 

(iii)                                     The head of the foreign affairs unit of the Administrative Department of Security (DAS) at the Airports.

 

(iv)                                    The head of the DIAN at the Airports.

 

(v)                                       The commander of the military unit of the jurisdiction where the Airports are located or his deputy.

 

(vi)                                    The head of the public health unit or department at the Airports.

 

(vii)                                 The head of the Colombian Agricultural Institute, ICA, at the Airports.

 

(viii)                              The representative of the aircraft exploiters based in the Airports.

 

(ix)                                    The head of the airport safety department of Aerocivil who will act as the secretary of the committee.

 

The Concessionaire will collaborate with the Airport Safety Authorities in everything necessary to carry out their functions, including the provision of spaces and the communication of relevant information.

 

CLAUSE 61. — BIRD HAZARD

 

Bird Hazard refers to the presence of birds in Airports and its surroundings, which may cause risks of collisions against the aircrafts that use the facilities of any of the Airports.

 

From the execution of the Minutes of Delivery of each Airport and until the termination of the Concession Agreement, the Concessionaire will be obliged to take all the necessary measures to prevent the presence of birds in the Airports. In case of any discrepancy regarding the area where measures should be taken to prevent bird hazard, it will be solved by the Grantors.

 

The Concessionaire will be responsible, through the person designated as manager of the Airports, for taking part in the committees where they analyze and establish mechanisms to prevent bird hazard.

 

The Concessionaire shall comply with the laws related to bird hazard prevention when performing the works of the Adjustment and Modernization Plan and therefore, during the performance thereof, it will avoid the use of materials, water, wastes or any other type of organic or inorganic material that attracts the presence of birds to the Airports.

 

In case that, in addition to the provisions of the Adjustment and Modernization Plan, the Concessionaire has to perform any works or purchase any equipment to fulfill the obligation established in this Clause, regarding its remuneration, it will be dealt with the same way as the Voluntary Supplementary Works and the same procedure will be followed.  If the Grantors do not

 

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approve the corresponding works or purchase, then the Concessionaire will be released of its responsibility only regarding the performance of the works or the purchase of the equipment.

 

The above, notwithstanding the requirements regarding bird hazard prevention established in Appendix F of this Concession Agreement.

 

CLAUSE 62. — PROVISION OF HOUSEHOLD UTILITIES

 

In each one of the Airports delivered to the Concessionaire, the household utilities shall be provided by a Household Utilities Company, as provided in law 142 of 1994, in law 143 of 19944 and in the laws that replace, amend or supplement them.

 

In any case, the provision of household utilities in each one of the Airports delivered to the Concessionaire shall be under conditions of free competition, allowing the final user of the utilities to freely choose the utilities provider that is most convenient, without being forced to obtain the required service from a particular provider, unless there are technical reasons that do not allow the provision of the service by a different provider, or there are no more providers in the market.

 

The Concessionaire will be responsible before the Household Utilities Companies and the Superintendence of Household Utilities for the default in the  payment of the utilities, the unlawful provision of the service, tampering with meters or any other measuring mechanisms, and in general for any action that may cause damage to the household utilities  provision regime or to the uniform condition contracts, unless such action is caused by the mechanism of provision of household utilities to the users of the Airport, established by the Grantors before signing the Concession Agreement.

 

The Concessionaire will have a term of six (6) months from the date of execution of the Minutes of Commencement of Performance of the Agreement to implement the provision of household utilities to each one of the users of the facilities of the Airports who require these services.

 

CLAUSE 63. — MATERIALS AND PERFORMANCE

 

The Concessionaire, at its own expense and risk, shall supply and contribute with all the materials, labor, as well as all other elements, of any type, that are necessary for the proper performance of this Agreement, either temporarily or permanently, until the full completion of the purpose of the Concession Agreement.

 

The Concessionaire shall provide all the necessary facilities to examine, measure and test the performed works, as well as provide the necessary and usual facilities in this type of operations, to run the tests of the installed equipment according to the obligations under this Agreement. The authorized officers of the Grantors, the Auditor or any person designated by them, shall have free access to the works and assets that make up the Airports and the Concessionaire shall provide all the facilities and all the help necessary to exercise such right to inspect and supervise.

 

CLAUSE 64. — CONCESSIONAIRE’S STAFF

 

All the necessary workers for the fulfillment of the purpose of the Agreement will be engaged by the Concessionaire or by its subcontractors, who shall comply with all the legal provisions regarding the hiring of Colombian or foreign personnel. In the same way, it shall follow the provisions that regulate each profession.

 

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The Concessionaire and its subcontractors will be in charge of the respective salaries, social security and indemnifications of all the workers engaged to the Concession and the responsibility of the employment liability. The concessionaire undertakes to comply with all the laws as provided by the Substantive Labor Code and other supplementary provisions. In the same way, the Concessionaire undertakes to pay all the parafiscal contributions pursuant to the laws that are in force during the performance of the Agreement.

 

Every three (3) months, the Concessionaire shall submit a certificate issued by its statutory auditor or by its legal representative, under the terms of paragraph 1 of article 50 of Law 789 of 2002, amended by article 1 of law 828 of 2003, which certifies the compliance with the payments referred to in the previous paragraph.

 

The Auditor will verify the fulfilment of such obligations.

 

The Concessionaire shall have a permanent Director of the Concession, duly authorized to represent the Concessionaire in every aspect related to the performance of this Agreement- The Director shall have an experience of at least five (5) years managing an airport that has transported at least three million (3,000,000) passengers per year.

 

The Concessionaire guarantees the Grantors that (a) the staff designated for the performance of the Concession have the experience and technical knowledge required for the proper provision of the Services Associated with Regulated Revenues and the Services Associated with Non-Regulated Revenues, (b) that the staff designated for the performance of the Concession is sufficient in terms of suitability for the provision of the Services Associated with Regulated Revenues and the Services Associated with Non-Regulated Revenues and (c) that the staff designated for the performance of the Concession is sufficient in terms of number and time-commitment to provide the Services Associated with Regulated Revenues and the Services Associated with Non-Regulated Revenues.

 

CLAUSE 65. — LEASING AGREEMENTS

 

When executing leasing agreements and entering into new leasing agreements of assets belonging to the Airports, the Concessionaire shall follow the provisions indicated in the following Numerals.

 

65.1                        NEW LEASING AGREEMENTS

 

Leasing agreements, and other continuing-performance agreements, entered into by the Concessionaire with third parties for the exploitation of the Concession, shall include the following mandatory provisions:

 

(i)                                   A provision according to which the Concessionaire may freely assign the Agreement to the Grantors and that, in any case, upon termination of this Agreement due to any cause, the agreements will be deemed as assigned to the Grantors.

 

(ii)                                A provision according to which the tenants will be expressly not allowed to sublease the movable or real property given to them.

 

(ii)                                For the case of commercial passenger airlines with a valid operation permit issued by the Aerocivil, and only when referring to the leasing of (1) counters, (2) hangars used for maintenance of their own equipment, (3) spaces for back office activities, and (4) warehouses to store their own equipment and spare parts, a clause will be included according to which the Concessionaire may not charge a leasing fee of more than eighty-five

 

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percent (85%) of the current leasing values for level-six properties in the city where the respective Airport is located, according to an appraisal made by the Lonja de Propiedad Raiz (the Association of  Real Estate Property) of the respective city. If there is no Lonja de Propiedad in any of the cities where the Airports are located, the appraisal shall be made by the Lonja de Propiedad Raiz of Medellin.

 

65.2                        CONCESSIONAIRE’S OBLIGATIONS REGARDING SUBLETTING

 

In the case of agreements that are currently in force, and for the case of new leasing agreements, the Concessionaire shall make sure that the tenants comply with the contractual and legal provisions on subletting.

 

CLAUSE 66. — INTERNATIONAL AERONAUTICAL FAIR AT THE JOSE MARIA CORDOBA AIRPORT

 

In order to promote the development of the national aeronautical industry, to strengthen technological exchange, to enable an internal and external market that positions the country as one of the most important and thriving business platforms in Latin America, every two years, the Aerocivil organizes the International Aeronautical Fair, F-AIR COLOMBIA, at the Jose Maria Cordova Airport. By virtue of the above, the Concessionaire agrees to make available for the Aerocivil all the platform or ramp areas, boarding bridges, passenger terminal, fire department, airport health, administrative offices, public and restricted areas, outdoor and indoor parking lots, access roads, connections for utilities and all those areas that are necessary for the optimal development of the Fair, which is considered to be of national and international importance.

 

In the same way, the Concessionaire will allow, during the Fair, the exclusive use by the Aerocivil of the areas mentioned and it will collaborate in the rearrangement of commercial, private and military flight schedules that are required, since the Aerocivil will temporarily close the Airport to carry out the shows and exhibitions of the Fair. The Concessionaire will allow, without any limitation, the use of all the areas of the Airport and will collaborate in everything necessary for the Fair.

 

The dates, duration and requirements of the Fair will be autonomously determined by the Aerocivil, who will notify the Concessionaire at least sixty (60) calendar days beforehand. The Concessionaire will not charge the Aerocivil, the Colombian Air Force, the operator contracted by the Aerocivil, the participants of the fair or the third parties, any amount for providing these services. Once the fair has ended, the organizers or whomever they authorize, may access the airport areas as long as it is for purposes exclusively related to the Fair. In the same way, the Concessionaire will abstain from charging any amount due to the entry of people, aircrafts, vehicles, supplies and in general any activity that is directly related to the Fair, nor will they charge fees due to the Services Associated with Regulated Revenues of those who participate in the Fair.

 

CHAPTER XI- ESTABLISHMENT AND OPERATION OF THE ESCROW

 

CLAUSE 67.- GENERAL PROVISIONS:

 

In order to manage the Concession’s resources and payment of obligations in charge of the Concessionaire, the latter undertakes to create an Escrow and transfer to it (i) the entirety of the Gross Revenue received as consideration under this Agreement, and (ii) all the debt and equity resources that it obtains for the performance of the Concession in the terms and amounts as determined, taking into consideration that they must be sufficient for the appropriate performance of the Concession.

 

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The creation of the Escrow shall be carried out by means of executing an irrevocable administrative and payments commercial trust agreement whose term will be the maximum authorized by Colombian commercial law.

 

CLAUSE 68.- ADMINISTRATION OF RESOURCES:

 

By means of this Agreement, the Concessionaire irrevocably authorizes the Escrow Agent during the term thereof to manage all the resources associated with the Concession and to, on its behalf, periodically make payments that, in accordance with this Concession Agreement, are owed to the Grantors and the Auditor.

 

The Escrow Agent will maintain, in accordance with current accounting standards, a record of each and every one of the payments and transfers made to third parties or to the Concessionaire with charge to any of the Accounts, as well as transfers of resources that are made between the Escrow Accounts. The foregoing without prejudice to the understanding that the assignment of the Regulated Revenue and the Non-Regulated Revenue that is made under this Agreement is made by the Grantors to the Concessionaire and not the Escrow and that the debt and equity resources obtained by the Concessionaire shall be adequately registered as such in its own accounting and not in that of the Escrow, since it is constituted solely for purposes of the administration of resources.

 

CLAUSE 69.-ESCROW ACCOUNTS:

 

Without prejudice to other accounts or sub-accounts that, by agreement between the Concessionaire and the Escrow Agent, may be in the Escrow, it will initially consist of the following Accounts: (1) Main Account, (2) Auditor Account and (3) Surplus Account of the Grantor. The Main Account, in turn, should be divided into four (4) Subaccounts, namely: (1) the Subaccount of the Regulated Revenue, (2) the Subaccount of the Non-Regulated Revenue and (3) the Subaccount of Revenues Produced from the Exploitation of Voluntary Supplementary Works and (4) the Sub-account of Other Revenue of the Concessionaire. The resources of these accounts will be handled in the terms set forth in the following sections, which must be included in the Escrow Agreement.

 

69.1 MAIN ACCOUNT: it is the account of the Escrow in which the total of the Gross Revenue of the Concessionaire will be received and from which all the other accounts of the Escrow will be fed. Consequently, the Regulated Revenue and the Non-Regulated Revenue will be received directly in the Main Account of the Escrow. The Main Account will have four (4) Sub-accounts, as such:

 

(i)                         The Subaccount of the Regulated Revenue in which all Regulated Revenue received by the Concessionaire must be deposited.

 

(ii)                      The Subaccount of the Non-Regulated Revenue in which all Non-Regulated Revenue received by the Concessionaire shall be deposited, except revenue corresponding to Revenues Produced from the Exploitation of Voluntary Supplementary Works that will be deposited in the Subaccount of Revenues Produced from the Exploitation of Voluntary Supplementary Works.

 

(iii)                   In the Subaccount of Revenues Produced from the Exploitation of Voluntary Supplementary Works such income shall be deposited.

 

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(iv)                    In the Sub-account of Other Income of the Concessionaire, all other income received by the Concessionaire must be deposited, such as the capital or debt resources received for the performance of the Concession.

 

Debt resources that are raised by the Concessionaire and the equity contributions received by the Concessionaire for the performance of the Concession will also be deposited in the Main Account.

 

The resources that are necessary for payment of all costs and expenses associated or required for the performance and execution of the Concession will come from the Main Account, except for the payment to the Auditor that will be charged to the Auditor Account. As soon as the other accounts of the Escrow different from the Main Account, are fed, its balance will be directly transferred to the Account that the Concessionaire states.

 

69.2                        AUDITOR ACCOUNT:

 

In this Account, the resources required for the payment of the Auditor’s fees will be deposited, under the terms and amounts provided for in Clause 103. The first disbursement of resources provided for in Section 103.2 of Clause 103 of this Agreement must be made directly by the Concessionaire, while the remaining disbursements will be transferred from the Main Account. It will be the obligation of the Escrow Agent to transfer the necessary resources from the Main Account to feed the Auditor Account and make the corresponding payments to the Auditor.

 

This Account must be handled fully independently from the other Accounts of the Escrow and the amounts deposited in it will be used exclusively for the purposes described in the previous paragraph, notwithstanding that its surpluses are used as foreseen in this Agreement.

 

69.3                        SURPLUS ACCOUNT OF THE GRANTORS:

 

This Account must include all the resources that, under the Agreement, correspond to the Grantors.

 

The Surplus Account of the Grantors must be managed fully independently of the other resources of the Escrow. The yields produced by the amounts deposited in the Surplus Account of the Grantors will also be deposited in it, without any amount being deducted by the Escrow Agent for any other concept.

 

The Grantors will be the beneficiaries of the resources deposited in the Surplus Account of the Grantors at a ratio of seventy-one point seventy-three percent (71.73%) for the Aerocivil and twenty-eight point twenty-seven percent (28.27%) for the AOH. Each of the Grantors shall have the freedom to dispose of the resources deposited in the Surplus Account of the Grantor, in the proportion that corresponds to them. The orders to the Escrow Agent that are produced in application of the provisions of this paragraph, must be in writing and be made at least five (5) Days in advance of the date in which the effective transfers must be made by the Escrow Agent. The Grantors will send a written copy of these orders to the Concessionaire.

 

The resources deposited in the Surplus Account of the Grantors will also be used to pay the compensations to the Concessionaire that this Agreement provides for. However, this contingent and eventual allocation of resources from the Surplus Account of the Grantors will not prevent that, until one of the events provided for under this Agreement occurs, the Grantors may, in the terms of the previous paragraph, dispose of the resources in she deposited.

 

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CLAUSE 70.- FUNDING OF ESCROW ACCOUNTS:

 

The Main Account will be funded receiving directly from each user of the Services Associated with Regulated Revenues and Services Not Associated with Regulated Revenues, all of the Concessionaire’s Gross Revenue to which he is entitled as consideration for the execution of the Concession. The other accounts of the Escrow will be funded as stated in the previous Clauses within the first five (5) Days of the month following that in which the Gross Revenue of the Concessionaire is received.

 

CLAUSE 71. · APPROVAL OF THE GRAFT OF THE ESCROW AGREEMENT AND ESTABLISHMENT OF THE ESCROW:

 

Within ten (10) Days following the date of the execution the Minutes of Commencement of Performance, the Concessionaire shall present to the Grantors a copy of the draft of the commercial escrow agreement. The Grantors will proceed to review that said draft includes the minimum provisions set forth in this Agreement and that its general text does not contradict them and is in accordance with the provisions of the Agreement and the spirit of the Concession. As long as the mandatory provisions provided herein for the escrow agreement are not contradicted, the Concessionaire is free to agree on any provisions with the Escrow Agent and is even free to allow and implement the participation of the Funders, without prejudice to the rights of the Grantors in said Escrow.

 

Once the escrow agreement draft has been received, the Grantors must approve the execution of the agreement to the Concessionaire or issue their observations to the draft, as the case may be, within five (5) Days following its receipt. In the event that the Grantors do not make observations within the aforementioned period, it will be understood that the Concessionaire may enter into the escrow agreement in the terms of the draft sent.

 

If the Grantors make observations to the draft of the escrow agreement sent by the Concessionaire, the latter will have a term of five (5) Days to make the corrections or modifications as requested. Once the escrow agreement draft has been sent, including the corrections and modifications requested by the Grantors, they will have a term of three (3) Days to issue their authorization for its execution or to reject the presented draft. Once the escrow agreement draft has been approved, or after the aforementioned deadline has expired without declaration by Aerocivil, the Concessionaire may proceed to execute the escrow agreement according to the last text sent for approval.

 

As soon as the Trust Agreement is signed, and in any case before the delivery of the Airports, the Concessionaire must prove to the Grantors that it has made the first contribution to the Auditor Account and that the value thereof corresponds to the amount provided for in section 103.2 of Clause 103 of this Agreement.

 

If the Concessionaire does not execute the Escrow Agreement or does not make the first contribution to the Auditor Account before the date set for the start of the delivery of the Airports, it will be considered as a breach that prevents the delivery of the Airports that materially affects the performance of the Concession.

 

CLAUSE 72.- MANDATORY REQUIREMENTS OF THE ESCROW AGREEMENT:

 

The commercial escrow agreement that the Concessionaire must enter into, shall contain the following provisions and, in their absence, it will be understood as if they are included into it.

 

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(i)                         The Concession Agreement will be fully incorporated into the escrow agreement and corresponds to one of its schedules.

 

(ii)                      The obligations of the Escrow Agent provided in this Agreement will be understood as obligations of the Escrow Agent under the escrow agreement.

 

(iii)                   The Escrow Agent will be liable to the Grantors for damages caused by the breach of the obligations by the Escrow Agent under this Agreement.

 

(iv)                  The trustor is the Concessionaire exclusively.

 

(v)                     The Grantors are the beneficiaries of the Escrow for the purposes indicated in this Concession Agreement, by virtue of which they will enjoy all the rights conferred by this Concession Agreement and the law.

 

(vi)                  The Escrow will have a Steering and Coordination Committee which will be in charge of the direction and coordination of the activities of the Escrow. The role of this committee to adopt the coordination measures required for the correct performance of the agreement and will also be the guidance and control body for the management of the management by the Escrow Agent and it will decide in the cases that are so required. The purpose of this committee is to provide for the operation mechanisms of the agreement to be established by mutual agreement.

 

(vii)               The Steering and Coordination Committee will be made up by an official of the Escrow Agent, a representative of the Aerocivil, a representative of the AOH and a representative of the Concessionaire. Their meetings will be held following the regulation that the same committee issues for its operation. The Committee must be constituted and issue its regulations within fifteen (15) Days following the creation of the Escrow. Each member of the committee, other than the officer of the Escrow Agent, will be entitled to one vote and decisions will be made by simple majority. The official of the Escrow Agent will have a voice but not vote.

 

(viii)            The Escrow Agent fees will be freely agreed between the Concessionaire and the Escrow Agent, but in any case the fee must be deducted from the amounts that are in the Main Account and in no case the fee will affect the income of the Grantors or be charged from the resources deposited in the Surplus Account of the Grantors or in the Auditor Account including, in all cases, their yields.

 

(ix)                  That the Grantors shall have the capacity to order the Escrow Agent to transfer resources between the Surplus Account of the Grantors, the Auditor Account and the Main Account exclusively for the purposes and conditions set forth in this Agreement.

 

(x)                     The Grantors shall have the capacity to request any report from the Escrow Agent that is related to the purposes of the Concession.

 

(xi)                  The Grantors shall have the right to order the Escrow Agent to transfer funds between the Main Account and the Surplus Account of the Grantors when a fine imposed in the terms of this Agreement becomes in force.

 

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(xii)               The escrow agreement cannot be revoked unilaterally by the Concessionaire or the Escrow Agent. Neither it may be modified or terminated, without the prior, express and written authorization of the Grantors, authorization that will be given in any case when the modification does not imply a breach of the provisions agreed in this Concession Agreement.

 

(xiii)            The term of the escrow agreement will be for the maximum allowed by law. Mechanisms must be agreed so that upon termination, the assets of the Escrow or its administration do not revert to the Concessionaire but to a new escrow created through a new escrow agreement and with a different or the same Escrow Agent. The new escrow agreement must be in force until the end of this Agreement and must, except for its term or the applicable law amendments, correspond to the same contractual text as the original Agreement.

 

(xiv)           Once the settlement is in force and the Minutes of Termination have been signed, the early termination of the Concession Agreement will result in the early termination of the escrow agreement.

 

(xv)              All resources that enter into the Escrow Agent will have the following priority of payments (1) the Consideration and other payments to which the Grantors are entitled, (2) the payments to which the Auditor is entitled, (3) the payments to which the Concessionaire is entitled. Any guarantee granted by the Concessionaire on the income of the Escrow must consider the previous priority.

 

The provisions of the escrow agreement that contradict the provisions of the Concession Agreement shall be considered as unwritten and the Grantors may, at any time during the execution of the agreement, request the modification thereof to adjust it to the provisions of this Agreement. In any case, the application of the provisions of the Concession Agreement, in a preferential manner to any provision of the escrow agreement, is not conditional upon the modification being requested by the Grantors or upon the actual modification being made. The escrow agreement will establish the obligation of the Escrow Agent to accept the provision contained in this clause.

 

The termination of the escrow agreement by the expiration of the maximum legal term for its validity without simultaneously concluding a new agreement in the same terms as the original agreement will be considered a serious breach of the Concession Agreement that will give rise to its revocation.

 

CLAUSE 73.- AUDITOR:

 

The Grantors, directly or through the Auditor, will carry out a permanent audit on the Escrow and its funds, for which it must be agreed, in the Escrow agreement, that the Escrow Agent will provide collaboration to fulfill this work.

 

CLAUSE 74.- REPORTS:

 

The Escrow Agent shall prepare and submit to the Grantors and the Auditor the following periodic reports:

 

74.1                        GROSS REVENUE:

 

Within the first five (5) Days of each calendar month, the Escrow Agent must submit a report on the Gross Revenue of the Concessionaire corresponding to the Gross Revenue accrued and the Gross Revenue received during the bimonthly period prior to the report, detailing Regulated Revenue and Non-Regulated Revenue.

 

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74.2                        REGULATED REVENUE GENERATED:

 

Every two years and, on a monthly basis as from the eighth year of the Concession, the Escrow Agent shall prepare a report on the amount of the Regulated Revenue Generated, calculated as provided in this Agreement, and shall compare them with the Regulated Revenue Expected adjusted as indicated in this Agreement if there is room for such adjustment.

 

74.3                        ESCROW STATUS:

 

Within the first five (5) days of each calendar bimester, the Escrow Agent must submit a report on the operation of the Escrow. In any case, the accounting information of the Escrow must be kept up to date and available so that the Auditor or the Grantors can access it at any time, during the term of the agreement. The reports of the Escrow Agent must be presented in such a way as to verify, in a simple and clear manner, all relevant aspects for the performance of this Agreement

 

74.4                        REPORTS RELATED TO THE SETTLEMENT:

 

Within the month following the date of expiration of the term of performance of the Agreement, the Escrow Agent must prepare a detailed report on the status of each of the Accounts of the Escrow, a report that will be used by the parties for the settlement of the Agreement. Only when this final report has been approved by the Grantors, can the Escrow be liquidated.

 

CLAUSE 75.- INVESTMENT CRITERIA FOR ESCROW RESOURCES:

 

In regards to the investments made with the resources of the Escrow, the Escrow Agent must follow the criteria established in Decree 1O13 of 1995 related to the investment of public resources, or the regulation that replaces, modifies or adds it.

 

CLAUSE 76.- REPLACEMENT OF THE ESCROW AGENT:

 

The Concessionaire may, during the performance of this Agreement, change the Escrow Agent in charge of managing the Escrow, as long as the new Escrow Agent adopts in its entirety the agreement originally executed and has at least the same characteristics of equity solvency of the previous Escrow Agent. In any case, any change of the Escrow Agent must be approved in advance by the Grantors.

 

The Grantors may require the Concessionaire, and the latter must follow the corresponding instruction, the replacement of the Escrow Agent when the latter is not fully complying with its obligations.

 

CHAPTER XI- INSURANCE AND GUARANTEES

 

CLAUSE 77.- SOLE PERFORMANCE BOND:

 

The Concessionaire shall constitute a Sole Performance Bond that may consist of an insurance policy or a bank guarantee that covers the obligations under its charge derived from this Agreement, which must be issued by an Acceptable Insurance Company or an Acceptable Bank. The  Sole Performance Bond must include the Grantors as insured and the Concessionaire as secured. The  Sole Performance Bond must be presented to the Grantors and the Auditor for approval, within thirty (30) calendar days following the date of signing the Contract.

 

CLAUSE 78.- COVERAGE AND INSURED AMOUNT OF THE SOLE PERFORMANCE BOND:

 

The Sole Performance Bond must contain each and every one of the following coverage:

 

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78.1                        COVERAGE FOR PERFORMANCE OF THE AGREEMENT:

 

The coverage will be constituted in favor of the Grantors, in order to guarantee the general fulfillment of all the obligations of the Concessionaire under the Agreement, either by reason of its execution, performance or liquidation or due to the payment of fines, penalty clause and other sanctions imposed on the Concessionaire, for an insured value of twenty-seven thousand million Pesos ($ 27,000,000,000). From the beginning of the Maintenance Stage, the insured value may be reduced to the sum of three thousand three hundred million Pesos ($ 3,300,000,000). Since these sums are given in constant pesos of January 2007, they must be adjusted annually with the following formula:

 

 

Where,

ACCA1                                  =              Compliance coverage value measured in current pesos

ACCA0                                  =              Compliance coverage value included in this clause

IPC0                                                  =             IPC on the month of January, 2007

IPC1                                                  =             IPC on period t

n                                                                     =             Is the difference between the date on which IPC on period t is considered and the date corresponding to IPC of period 0, all divided by 12 (twelve)

 

This coverage must remain in force throughout the term of the Agreement and its settlement and six (6) additional months.

 

78.2                        COVERAGE FOR THE PAYMENT OF SALARIES, SOCIAL BENEFITS AND EMPLOYMENT COMPENSATION:

 

The  Sole Performance Bond will cover the risk of default of any of the obligations related to the payment of salaries, social benefits and labor indemnities of Concessionaire’s workers, or that of its agents, contractors or subcontractors that intervene in the development and execution of the Concession Agreement, for an insured value of thirteen thousand five hundred million Pesos ($ 13,500,000,000). Since this sum is given in constant Pesos of January 2007, it should be adjusted annually with the following formula.

 

 

GUCA1                                  =              Salaries and social benefits coverage value measured in current pesos

GUCA0                                  =              Salaries and social benefits coverage value included in this clause

IPC0                                                  =             IPC on the month of January, 2007

IPC1                                                  =             IPC on period t

n                                                                     =             Is the difference between the date on which IPC on period t is considered and the date corresponding to IPC of period 0, all divided by 12 (twelve)

 

This coverage will be valid for the term of the Concession Agreement and three (3) additional years.

 

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78.3                        COVERAGE FOR STABILITY AND QUALITY OF THE WORKS, EQUIPMENT, GOODS AND SERVICES:

 

As a requisite to begin the execution of the Minutes of Completion of Performance, the Concessionaire must constitute in favor of the Grantors a guarantee of stability and quality of the works, equipment, assets and services considered as the purpose of this Agreement. The value of this coverage will be thirteen thousand five hundred million pesos ($ 13,500,000,000). Since this sum is given in constant Pesos of January 2007, it should be adjusted annually with the following formula.

 

 

GUCA1                                  =              Stability and quality of the Works, equipment, assets, and services coverage value measured in current pesos

GUCA0                                  =              Stability and quality of the Works, equipment, assets, and services coverage value included in this clause

IPC0                                                  =             IPC on the month of January, 2007

IPC1                                                  =             IPC on period t

n                                                                     =             Is the difference between the date on which IPC on period t is considered and the date corresponding to IPC of period 0, all divided by 12 (twelve)

 

This coverage must be valid for five (5) years counted from the signature of the Minutes of Completion of Performance.

 

The purpose of this coverage is the coverage of the responsibility of the Concessionaire for the damages that the Airports present during the validity of this coverage. The coverage of stability and quality of the works will not necessarily be included in the Sole Performance Bonds from its presentation. If not initially included, the  Sole Performance Bond must be extended by the Concessionaire to include the stability and quality of works protection, no less than thirty (30) Days prior to the date on which the coverage must begin pursuant to the provisions of this section. Said extension must be approved by the Grantors.

 

If the Concessionaire does not constitute this coverage in the terms set forth in this section, it will be understood that it has breached the Agreement. Such non-performance shall be understood to be covered by the coverage referred to in Section 78.1 of this Clause.

 

CLAUSE 79.- AIRPORTS CIVIL LIABILITY POLICY

 

The Concessionaire shall hold the Grantors harmless from actions or claims arising from accidents that cause damage to property or the life or personal integrity of third parties or the Grantors, including those of any of its employees, agents or subcontractors.

 

For the foregoing, it must establish an Airports Civil Liability Policy issued by an Acceptable Insurance Company of at least one combined global limit of three hundred and fifty million Dollars (US $ 350,000,000) per event, including liability that arises from war events and allied risks in accordance with the aviation clause AVN 52 for the same aggregate limit.

 

This policy shall cover civil liability for accidents that cause bodily injury and/or damage to property, arising from the maintenance, use or provision of airport services and facilities, including civil works.

 

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This policy must remain in force for annual periods and throughout the term of the Concession.

 

CLAUSE 80.- ALTERNATIVES FOR THE TERM OF THE GUARANTEES:

 

Without prejudice of the obligation of the Concessionaire to keep the  Sole Performance Bond in force during the term of the Agreement complying with all of the conditions, coverages referred to in the previous terms of this Agreement, the Concessionaire may provide policies or bank performance bonds and civil liability with a shorter term than the total term of the Agreement, provided that through its successive periods the entire Agreement is covered. To access this prerogative, the following conditions must be observed, in accordance with the provisions of Decree 280 of 2002:

 

(i)                                   The Concessionaire must proof to the Concessionaires, by means of a certification issued by the Financial Superintendency, that there are no sole performance bonds in the market that cover the Concession Agreements, under the conditions established in Decree 679 of 1994.

 

(ii)                                When the presented policies have a term shorter than the duration of the Agreement, the Concessionaire must provide for the following conditions for the constitution of the coverage:

 

(iii)                             The performance coverage will have a term of six (6) years for the Preliminary and Adjustment and Modernization Stages and in case the duration of the Adjustment and Modernization Stage is extended, the Concessionaire will be forced to extend said term, within thirty (30) days before expiration. The extension of the coverage will be a contractual obligation covered and in force for annual periods and throughout the term of the Agreement, including its reversion. The extension of the coverage will be a contractual obligation covered by this same protection. For the Maintenance Stage, this protection must be in force for annual periods and throughout the term of the Agreement, including its reversion. The extension of the coverage will be a contractual obligation covered by this same protection.

 

(iv)                            The coverage for the payment of salaries, social benefits and labor indemnifications will have, for the Previous and Adjustment and Modernization Stages, a term of six (6) years and in case the duration of the Adjustment and Modernization is extended the Concessionaire will be forced to extend said term within thirty (30) days before its expiration. The extension of the coverage will be a contractual obligation covered by this same protection. For the Maintenance Stage, this protection will be valid for periods of two (2) years and three (3) years, and throughout the term of the Agreement, including its reversion. The extension of the coverage will be a contractual obligation covered by this same protection.

 

(v)                             When the policies presented have a term shorter than the duration of the Agreement, the respective renewals must be submitted to the consideration and approval of the Grantors with a term of notice prior to three (3) months of the expiration date of their validity.

 

(iv)                            If, with the advance notice mentioned in the previous numeral, the Concessionaire does not constitute the coverage in the aforementioned conditions due to a supervening impossibility of obtaining them, certified by a certificate issued by the Financial Superintendency, stating that the Colombian market does not offer guarantees under the conditions provided in decree 679 of 1994, this will result in termination of the Agreement, including said situation

 

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to the causes provided for under Clause 98 of this Agreement, giving consideration that under this event the penalty clause will not be enforceable, nor the guarantee of performance, in accordance with the provisions of Decree 280 of 2002. The settlement of the Agreement will proceed in accordance with the provisions of this Agreement.

 

(v)                                Said guarantees will comply with all the conditions and requirements that are required in this Agreement for such documents and will begin their validity on the following current day to that in which the validity of the policies that are renewed, extended, or replaced expire, without solution of continuity.

 

(vi)                             If the Concessionaire sends the new policies to the Concessionaire and to the Auditor with the required advanced notice, the Grantors and the Auditor will evaluate them and give their approval within thirty (30) calendar days following the date on which they had been delivered. If after said term the Grantors do not issue an opinion on the conditions of the policies, the Concessionaire must request the express and written approval to the Grantors.

 

(vii)                          If during their examination the Grantors or the Auditor find that the policies must be added, modified or corrected, it will notify the Concessionaire, within the term provided in the previous numeral for the approval of the policies, granting a term no longer than fifteen (15) calendar days, counted from the reception of the request made by the Grantors or the Auditor, so that the corrected policies can be presented according to the requests made.

 

(viii)                      If, within the term for the modification, addition or correction of the policies, these are not corrected, the Agreement will be terminated and its settlement will proceed according to the provisions of this Agreement.

 

CLAUSE 81.- DAMAGE INSURANCE:

 

The Concessionaire must constitute an insurance policy that covers damages and/or losses on the group of real estate and personal property that make up the Airports.

 

CLAUSE 82.- INSURANCE RISKS:

 

The Concessionaire will bear the burden, at its cost and risk, to insure the damage caused by force majeure or fortuitous event that may be caused on the works, assets and equipment of the Airports, for which it will execute the required insurance agreements. The Concessionaire will insure said works, assets or equipment against all risks. However, the risks assumed by the Grantors in accordance with this Clause may be excluded from the corresponding insurances, at the option of the Concessionaire.

 

82.1                        RESPONSIBILITY FOR INSURANCE INEXISTENCE:

 

In the event that the Concessionaire does not comply with the obligation referred to in the preceding paragraph, it will assume at its own expense all the costs and expenses necessary to repair, reconstruct or replace the affected works, assets or equipment due to risks that it should have insured, except in the cases dealing with the risks referred to in the following section which will be treated as foreseen in said section.

 

82.2                        RISKS ASSUMED BY THE GRANTORS:

 

The Grantors shall reimburse, as provided for in the following section, the expenses that demand the repairs, reconstructions or replacements of the works, assets or equipment, included within the object of this Agreement, not including loss of profits, affected by acts of force majeure or a

 

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fortuitous event, which can be considered for in the exhaustive enumeration indicated below and provided that: (i) they are assets, works or equipment that at the time of occurrence of such events are directly affected by the Concession and (ii) there is no insurance taken by the Concessionaire that covers the assets affected by acts of force majeure or fortuitous event that are listed exhaustively in this numeral. The Grantors will exclusively bear the following risks:

 

·                  Declared or undeclared foreign war.

·                  Terrorist Acts.

·                  Civil war.

·                  Coup.

·                  National or regional strikes, in which the Concessionaire does not directly participate or are promoted by the latter or its employees of direction, management and trust.

·                  Archaeological findings and discoveries of treasures, mines or other deposits.

 

The Grantors will not assume any responsibility for the events listed in this section when the Concessionaire, its contractors or its employees of direction, management and trust have incurred in fault or responsibility that leads to the occurrence or aggravation of said events.

 

Likewise, the Grantors will not be responsible for the events indicated in numeral (ii) above, provided that such events originated, were facilitated, permitted, or could not have been avoided as a result of the breach of the obligations of the Concessionaire in matters of Airport Safety.

 

82.3                        NECESSARY REPARATIONS FOR REASONS OF FORCE MAJEURE OR FORTUITOUS CASE:

 

In case of force majeure or fortuitous event, the expenses demanded by the repairs, reconstructions or replacements of the works subject to this Agreement shall be borne by the Concessionaire.

 

However, the Grantors will reimburse the Concessionaire for any costs incurred in such repairs, reconstructions or replacements, without consideration to loss of profit, only in the case of damages caused by risks borne by the Grantor, under the terms of this Clause and when the Concessionaire has given notice to the Grantor and the Auditor about the occurrence of such events within five (5) Days following its occurrence.

 

The evaluation of the facts, causes that motivated them and the diligence with which the Concessionaire acted before them, shall be provided for within thirty (30) calendar days following the date on which said causes cease, in minutes signed by the Auditor and the Concessionaire, which will be submitted to the approval of the Grantors.

 

If reimbursement by the Grantors is appropriate, the value of said costs will be agreed by the parties. Once the value of such repairs and/or reconstructions has been determined, the Grantors shall pay the Concessionaire the corresponding value. The Grantors may opt, in their sole discretion, to carry out the reimbursement from the resources available to the Surplus Account of the Grantor, their own budget resources, or may decide that the reimbursement will be made by reducing the future values that the Concessionaire must pay as Consideration.

 

82.4                        INSURANCE TAKEN BY THE GRANTORS:

 

In the event that insurance policies exist in the market that cover the costs (excluding loss of income) of repairs, reconstructions or replacements of the works, assets or equipment subject to this Agreement and are affected by acts of force majeure or fortuitous event that may be included within the exhaustive enumeration of section 82.2 of this same Clause, the Grantors may take, at

 

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their election, said policies. In this case, the reimbursement obligations of the Grantor to the Concessionaire provided for in the previous Section may be covered, totally or partially, through the coverage granted by the policies taken by the Grantors.

 

CHAPTER XII- SANCTIONS REGIME

 

CLAUSE 83.- FINES:

 

If the Concessionaire does not comply with any of the specifications, requirements, obligations and responsibilities that have been imposed on him and that it has agreed to assume under this Agreement, the Concessionaire will be responsible for the corresponding fine from the date on which each obligation becomes enforceable.

 

Notwithstanding the foregoing, in the event that the Concessionaire fails to comply with any of the provisions contained in the applicable aeronautics and airports regulations, the Aerocivil may impose the corresponding sanctions, in its capacity as competent authority and in exercise of the powers that the law grants it.

 

Fines will be incurred as of the scheduled date for the performance of the obligation and until the respective breach ceases.

 

When it is a breach or infraction of an obligation of immediate execution which cannot be corrected, as many fines may be imposed as breaches of immediate execution committed by the Concessionaire, and will quantified in each case.

 

Daily fines will be imposed equivalent to a number of Minimum Legal Monthly Salaries -SMMLV- for each Calendar Day after the date set for the performance of the obligations of the Concessionaire, unless expressly stated otherwise. If said performance is not executed within the terms indicated in the following table, the Grantors may initiate the legal actions that correspond to obtain a declaration of default or proceed to declare the Revocation of the Agreement.

 

83.1                        TABLE OF INFRACTIONS THAT GIVE PLACE TO THE IMPOSITION OF FINES:

 

The following table shows the infractions that will allow the imposition of fines, their description and the value of the fine to be imposed.

 

	
Infraction
    	
 
    	
Fine value in
   SMMLV
    
	
Not constitution of the Escrow
    	
 
    	
Twenty (20) for each day of delay
    
	
For not complying with the Financial Closing
    	
 
    	
Twenty (20) for each day of delay
    
	
Not making contributions to the Auditor Account on   the Escrow
    	
 
    	
Twenty (20) for each day of delay
    
	
Not depositing the Consideration in the Surplus   Account of the Grantor and the other corresponding payments in accordance   with this Agreement
    	
 
    	
Thirty (30) for each day of delay
    
	
Not to deliver the studies and detailed designs for   the execution of works of the Adjustment and Modernization Plan or to deliver   them incomplete or non-adjusted to the minimum requirements 
    	
 
    	
Ten (10) for each day of delay
    

 

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established in this   Agreement.
    	
 
    	
 
    
	
Due to defects in the works of the Adjustment and   Modernization Plan, not corrected within the terms determined by the Auditor.
    	
 
    	
Ten (10) for each day of delay
    
	
Due to defects in the Voluntary Supplementary Works,   not corrected within the terms determiner by the Auditor.
    	
 
    	
Ten (10) for each day of delay
    
	
Not having the equipment, personnel, materials and   other necessary supplies for the initiation of the works or for the adequate   performance of the Adjustment and Modernization Plan or, in general, for the   adequate performance of the Agreement.
    	
 
    	
Ten (10) for each day of delay
    
	
For not complying with the schedule of activities of   the Adjustment and Modernization Plan.
    	
 
    	
Ten (10) 
    
	
For the collection of fares higher than the   ones set in Resolution 04530 of September 21, 2007 of the Aerocivil or   for the collection of an Airport Fare different from the one set in the same   Resolution 04530 of September 21, 2007 of the Aerocivil.
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
In the case of charges higher than those   established, the fine corresponds to the difference between the fare charged   to each user and the fare contained in Resolution 04530 of September 21,   2007 of the Aerocivil, multiplied by the number of users the unauthorized   charge was applied to, and increased by twenty percent (20%), according to   the following formula:
    	
 
    	
For charges above the established ones, the   fine is the result of the established formula.
    
	
 

M = (Tc – Ta) x (Qx , 1 2)

 

Where,

 

M                                            Value of   the Fine

Tc                                          Fare or   Tariff effectively charged by the Concessionaire

Ta                                         Maximum   Fare or Tariff set in Resolution 04530 of September 21, 2007 of the   Aerocivil.

Q                                               Quantity   of users who were charged the fare or tariff on the corresponding calendar   day for the application of the fine.

 

The resulting value of this formula will be applied each time an excess   charge is identified.
    	
 
    	
 

For Airport Fares charges lower than those established, the fine will be   the lowest value charged, times the number of passengers who were charged the   lower value.
    
	
For not complying with the conditions required for   the implementation of any of the computer or mechanical systems set out in   the technical specifications of the Agreement.
    	
 
    	
Twenty (20) for each day of delay
    
	
For using software without a license in any of the   equipment used by the Concessionaire for the performance of this Agreement.   The fines will be imposed from the moment the software has been installed,   until its licensing is produced.
    	
 
    	
Ten (10) for each time it is used
    
	
For not fulfilling any of the technical   specifications of operation or with any of the operating obligations of the   Airports.
    	
 
    	
Two Hundred (200) for each infraction
    

 

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Failing to comply with the obligations that   correspond to it in terms of Airport Safety, in accordance with the   provisions of this Agreement, Appendix F. and applicable Airport Safety   regulations (among them, the National Airport Safety Program and Annex 17 of   the Convention on International Civil Aviation)
    	
 
    	
One hundred (100)
    
	
For not complying with the technical maintenance   specifications or with any of the maintenance obligations of this agreement.
    	
 
    	
Ten (10) for each infraction
    
	
For not maintaining valid, renewing, extending,   correcting or adding the Guarantees, in the terms and for the amounts   established in this Agreement.
    	
 
    	
One thousand (1000)
    
	
For not fulfilling the environmental obligations   that according to this Agreement are enforceable.
    	
 
    	
One hundred (100)
    
	
For not fulfilling the obligations related to the   hiring of its personnel, in accordance with the provisions of this Agreement.
    	
 
    	
Twenty (20) for each infraction
    
	
For allowing the subletting of airport assets   ignoring contractual and legal provisions.
    	
 
    	
Ten (10) for each infraction
    
	
For not delivering to the Auditor the information   related to the subject matter of this Agreement, or delivering it incomplete,   outside deadlines and on the terms of each request made and refusing to   correct said breach.
    	
 
    	
Ten (10) for each infraction
    
	
For not meeting any of the requirements, parameters,   obligations and responsibilities provided in this Agreement, other than those   specifically regulated in the previous clauses.
    	
 
    	
One hundred (100) for each infraction
    
	
For not fulfilling the obligation of restitution and   reversion of the assets, under the conditions contemplated in this Agreement.
    	
 
    	
Twenty (20) for each day of delay
    

 

The foregoing situations may also give rise to the declaration of revocation of the Agreement by the Grantors when the breach of the Concessionaire is of such seriousness as to occur in accordance with Clause 96. In any case, if more than sixty (60) Days pass during which fines are imposed, without the Concessionaire having complied with the respective obligation, the Grantors may declare the revocation of the Agreement.

 

83.2                                             FULFILLMENT OF THE MAIN OBLIGATION:

 

The payment or deduction of the fines provided for in this clause shall not exempt the Concessionaire from the obligation whose delay has caused the imposition of the respective fine, or from the other responsibilities and obligations arising from this Agreement.

 

83.3                                             PROCEDURE FOR THE IMPOSITION OF FINES - GUARANTEE TO THE RIGHT OF DEFENSE OF THE CONCESSIONAIRE:

 

Once the Grantors verify that a breach has occurred that may lead to the imposition of a fine in accordance with the provisions of this Clause, they shall inform the Concessionaire in writing about the origin thereof, its value and the reasons for the imposition.

 

If there is no written objection on the part of the Concessionaire regarding the origin of the fine, or regarding its valuation or quantification, addressed to both the Auditor and the Grantors within five (5) Days following the day on which it was informed as provided in the previous paragraph, the Grantors will proceed to decree the imposition of the fine and, in the case that is not paid voluntarily by the Concessionaire, to deduct it from the resources deposited in the Main Account of

 

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the Escrow or collect it against the  Sole Performance Bond or to initiate the respective executive collection.

 

If there is an objection by the Concessionaire in the terms set out in the previous paragraph, the Grantors must request a written concept from the Auditor that studies the objections of the Concessionaire and the reasons that the Grantors would have, considering the objections presented, to persevere in the imposition of the fine or to desist from its imposition. The Auditor has a term of five (5) Days to issue his opinion.

 

Having considered the Concessionaire’s objections and the Auditor’s opinion on them, the Grantors may declare the occurrence of breach and the imposition of the fine by issuing a written communication to the Concessionaire indicating that they have desisted from imposing the fine and the reasons supporting such procedure.

 

The causation and payment of fines will in no case affect the accounting of the Gross Revenue and the Regulated Revenue Generated of the Concessionaire and, therefore, will not be deducted for the purposes of making the corresponding calculations.

 

83.4                                             LIMIT FOR THE IMPOSITION OF FINES:

 

The total value of the fines imposed by the Grantors to the Concessionaire may not exceed five percent (5%) of the Concessionaire’s Gross Revenue in an annual period.

 

83.5                                           PAYMENT OF FINES:

 

The fines will be paid by the Concessionaire through a transfer between the Main Account and the Surplus Account of the Grantor, which will be ordered to the Escrow Agent by the Grantor or by the Concessionaire, as the case may be.

 

CLAUSE 84.- PENALTY CLAUSE:

 

In case of declaration of revocation or the declaration of default of the Agreement by the Concessionaire, a penalty may be applied as a Penalty Clause, for an amount equivalent to twenty million Dollars settled at the TRM in effect in the date of payment, without prejudice to the fines in charge of the Concessionaire.

 

The Penalty Clause must be covered by an insurance policy in the conditions set out under this Agreement.

 

The penalty referred to in the preceding paragraph will be required by the percentage values that are defined below:

 

(i)                                   One hundred percent (100%) of its value when the breach that results in its enforceability occurs during the Adjustment and Modernization Stage.

 

(ii)                                Seventy percent (70%) of its value, when the breach that results in its enforceability occurs within the first eight (8) years of the Maintenance Stage.

 

(iii)                             Fifty percent (50%) of its value, when the breach that results in its enforceability occurs during the Maintenance Stage, but after eight years have passed since its beginning.

 

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(iv)                            Thirty percent (30%) of its value when the breach that results in its enforceability occurs after the end of the Maintenance Stage.

 

The Monetary Penalty established in this Agreement, will be considered as a pure and simple penalty and, therefore, cumulative with the compensation of damages in favor of the Grantors and to be charged to the Concessionaire, under the terms of article 1600 of the Civil Code, and will be settled as indicated in the previous numerals.

 

CHAPTER XIII- DISPUTE RESOLUTION

 

CLAUSE 85.- AMIABLE COMPOSITION:

 

Without prejudice to the application of the exceptional clauses provided for in Law 80 of 1993, any difference related to the aspects that are determined hereinafter, will be resolved through the mechanism of amiable composition, in accordance with the procedures established in law 446 of 1998, Decree 1818 of 1998, or the rules that replace, modify or add them. The issues that the parties have decided that are decided by the amiable composition, are limited to the following:

 

(i)                                   Calculation of the value of the Mandatory Supplementary Works and of the Voluntary Supplementary Works for the purposes of determining the remuneration of the Concessionaire for its performance, including the determination of the prices of the Works.

 

(ii)                                Any dispute related to the approval of the Voluntary Supplementary Works or the Mandatory Supplementary Works.

 

(iii)                             Calculation of the differences in the updating of fares under Resolution 04530 of September 21, 2007 of the Aerocivil.

 

(iv)                            Calculation of the value of the Consideration.

 

(v)                               Definition of whether, in case of disputes, the studies and designs of the Mandatory Works, the Mandatory Supplementary Works and the Voluntary Supplementary Works comply with the provisions of the specifications of the Agreement and current regulation.

 

(vi)                            Technical disputes that arise between the Auditor and the Concessionaire that are not solved by the Grantors and that the Grantors decide to transfer to the amiable composition.

 

(vii)                         Technical disputes that arise between the Auditor and the Concessionaire and whose resolution by the Grantors is not satisfactory for the Concessionaire.

 

(viii)                      Disputes between the Concessionaire and the Grantor or the Auditor related to the inventory or the property appraisal.

 

(ix)                            Differences that arise between the Grantor and the Concessionaire in relation to the scope and content of the Airport Safety Plan, the Contingency Plan and the Emergency Plan of each Airport.

 

(x)                               Method of calculating all the contractual formulas included in the Agreement.

 

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85.1                        DESIGNATION OF AMIABLE COMPOSITEURS:

 

The amiable compositeurs will be chosen within thirty (30) days following the execution of this Agreement, in accordance with the following rules:

 

(i)                                   The amiable composition will be composed of a panel of three (3) members.

 

(ii)                                Within twenty (20) Calendar Days following the date of execution of the Concession Agreement, each of the parties shall select a panel member to exercise the functions set forth in this Agreement for the entire term of the Concession Agreement. If, after this period expires, either or both parties have not selected one or both members of the amiable composition that must be selected by the parties, they will be selected by the Arbitration and Conciliation Center of the Chamber of Commerce of Bogotá, upon request by any of the parties, which must be raised, in any case, before the execution of the Minutes of Delivery of the first Airport, and as a precedent condition for its signature.

 

(iii)                             The third amiable compositeur will be chosen by the Arbitration and Conciliation Center of the Chamber of Commerce of Medellín, upon request made by any of the parties, which must be raised in any case before the signing of the Minutes of Delivery of the first Airport, and as a precedent condition for its signature.

 

(iv)                            The members of the panel may not be or have been during the two (2) years prior to their appointment, employees or contractors of the Concessionaire, the Aerocivil, the Ministry of Transportation or its decentralized entities, the Auditor, the Municipality of Medellín or its decentralized entities or of any natural person or company that has direct or indirect relationship of capital or any kind of business relationship with the Concessionaire or its shareholders. The amiable compositeurs will not be able to receive payments, gifts, compliments or gifts of any kind from the Grantors, the Concessionaire or the Auditor.

 

(v)                                 The amiable compositeur must have proven experience of at least ten (10) years in engineering, finance, economics or law.

 

The amiable compositeurs will not have the capacity to modify the clauses of the Agreement, although they will be able to interpret them if necessary, in which case the rules of interpretation of agreements, provided for in the regulations in force, will apply.

 

The panel may at any time seek advice from experts according to the specialty of the corresponding discussion topic. In any case, the panel may be accompanied by legal professionals who assist in the interpretation of the Agreement.

 

85.2                        AMIABLE COMPOSITEURS FEE:

 

The amiable compositeurs will receive a fee for each dispute that is submitted to their consideration corresponding to the rate that set for amiable compositeurs established by the Chamber of Commerce of Bogota which, for purposes of this Agreement, will have a minimum per controversy of fifteen million pesos ($ 15,000,000) per amiable compositeur, sum that will be indexed as of the year 2009, on January 1 of each year, with the IPC of the immediately preceding year.

 

The aforementioned sum, as well as the expenses demanded by the process, will be paid to the amiable compositeurs in advance by the party that provokes the dispute. If during the process the amiable compositeurs require additional expenses, these will also be assumed by the convoking

 

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party. In any case, the party that is found to be at fault must assume the aforementioned cost, if so determined by the amiable compositeurs in the decisions they make. If this is not the case, the expenses will be distributed among the Concessionaires and the Grantors in equal parts.

 

85.3                        REPLACEMENT OF AMIABLE COMPOSITEURS:

 

The two members of the panel appointed by the parties may be replaced at any time during the execution of the Agreement by the party that made the appointment, or that was required to do so, provided that they comply with the requirements set forth in Section 85.1 of this Clause. In the case of the third member of the panel, which is designated in all cases by the Arbitration and Conciliation Center of the Chamber of Commerce of Medellín, there will be no substitution by decision of the parties but only by resignation.

 

In case of resignation of a member of the panel, this must be replaced by the party that made its appointment or was required to so, within twenty (20) Days following the receipt of the resignation by the parties. Upon expiration of this period without having made the corresponding appointment, the new member of the panel will be appointed by the Arbitration and Conciliation Center of the Chamber of Commerce of Medellín, upon request of either party.

 

In case of resignation of the third member of the panel, the Arbitration and Conciliation Center of the Chamber of Commerce of Medellin must make a new designation, upon request of either party.

 

85.4                        PERMANENCE OF AMIABLE COMPOSITEURS:

 

The amiable compositeurs will remain active from the moment of their designation and until the termination date of the Agreement, a term during which its members will be obliged -and will expressly recognize this when accepting their designation- to know in detail the characteristics of the Concession Agreement and all its Appendices, as well as the applicable national and international regulations. Likewise, the members of the panel will be obliged to know in detail all the aspects of the execution of the Agreement, its modifications and any other aspect relevant to its development, in such a way that they are able to give a rapid and informed response in all cases in which it is convened. The members of the panel will not have any employment relationship with the parties. Their connection to the parties is framed and strictly limited to the functions that are provided for the figure of the amiable compositeur under Colombian law.

 

Notwithstanding the foregoing, the amiable compositeurs may be summoned to settle disputes between the parties that are not in the list of item ii of Section 85.1 if the parties so decide or that arise after the termination date of the Agreement.

 

85.5                        PROCEDURE:

 

The amiable composition will have its proceeding in the city of Bogotá or Medellin, at the choice of the panel, in the offices of any of the amiable compositeurs. Each party may resort to this mechanism, by prior notice to the other party and each of the amiable compositeurs.

 

The procedure of the amiable composition will be governed by the following rules:

 

(i)                                   The party requesting the intervention of the amiable compositeur shall submit their arguments and the documents supporting them within a period of ten (10) Days, counted from the date on which they notify the other party of their intention to convene the amiable composition panel. Along with the presentation of the argument, the Party must prove the payment of the fees of the amiable compositeurs as well as the payment, upon orders of the

 

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amiable compositeur appointed by the Chamber of Commerce of Medellin, of an amount for expenses equal to half of what was paid to one amiable compositeur.

 

(ii)                                The amiable compositeurs must notify the other party about the initiation of the procedure within five (5) Days after receipt of the arguments of the party who initiated the dispute, and must provide a copy of the documents delivered by the convening party.

 

(iii)                             The convened party will have a term of twenty (20) Days for the purpose of presenting their own arguments and the supporting documents.

 

(iv)                            The amiable compositeurs shall deliver a copy of the arguments presented by each party and the documents supporting them to the Auditor, who shall issue and deliver to the panel its written opinion on the matter submitted to the dispute. The Auditor will have a maximum term of Ten (10) Days to issue his opinion.

 

(v)                               The amiable compositeur shall have a maximum term of thirty (30) Days to solve the dispute in writing, which shall be counted from the day following the presentation of the Auditor’s opinion. This period may be extended at the request of the amiable composition panel, provided that the request is accepted by both parties. In case of disagreement between the amiable compositeurs, it will be resolved by majority, although no dissenting opinion or clarifications shall be made by the dissident amiable compositeurs.

 

(vi)                            Before deciding, and at the time determined by the amiable compositeurs, a hearing shall be scheduled for the parties and the Auditor to present their oral arguments.

 

(vii)                         Both the parties and the Auditor will have permanent access to the case file that contains all the documents related to the procedure.

 

(viii)                      The parties’ arguments must contain: (1) an explanation of the technical or financial or accounting fundamentals, as applicable, and contractual or legal grounds that support the position of the respective party, and (2) the requests made by the respective part to the amiable compositeur to solve the dispute. A written summary of the arguments will be delivered to the panel.

 

(ix)                            Each party shall cooperate in carrying out any investigation that the amiable compositeur makes related to the dispute in question.

 

CLAUSE 86.- ARBITRATION:

 

Without prejudice to the application of the exceptional clauses provided for in law 80 of 1993, any difference that cannot be settled amicably and that do not correspond to a matter expressly assigned to the decision of the amiable compositeurs, will be settled by arbitration in accordance with the rules that are set forth below.

 

(i)                                   The arbitration panel will be appointed by mutual agreement between the parties and, in the event that an agreement is not reached within fifteen (15) calendar days following the notification that one party addresses to the other, the full designation will be made by the Chamber of Commerce of Bogotá, by drawing lots among the arbitrators registered in the lists that the Center for Commercial Arbitration and Conciliation of said Chamber holds;

 

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(ii)                                The constituted panel shall be subject to the provisions of decree 1818 of 1998 and all the provisions and regulations that complement, modify or substitute them;

 

(iii)                             The panel shall consist of three (3) arbitrators, who shall be Colombian citizens and practicing attorneys;

 

(iv)                            The internal organization of the panel shall be subject to the rules established to that purpose by the Commercial Arbitration and Conciliation Center of the Chamber of Commerce of Bogotá;

 

(v)                               The panel’s decision will be made in law; and

 

(vi)                            The panel will operate in the Commercial Arbitration and Conciliation Center of the Chamber of Commerce of Bogotá.

 

CLAUSE 87.- CONTINUED PERFORMANCE OF THE OBLIGATIONS:

 

The obligations of the parties shall be enforceable at all times during the term of the Agreement, including during the time in which disputes or differences arising between the parties are being solved.

 

CHAPTER XIV- REVERSION AND AIRPORT RESTITUTION

 

CLAUSE 88.- REVERSION AND RESTITUTION:

 

Once the term of performance of the Concession ends in accordance with the provisions of Clause 7, the Concessionaire will be forced to proceed with the reversion and restitution of the Airports, which includes not only the assets that were part of them at the time of delivery by the Grantors but all the Works and all the assets included to the Concession by the Concessionaire or those the Concessionaire has affected to the operation, maintenance, commercial exploitation and administration of the Airports.

 

The restitution and reversion process will be finished when the Grantors issue a certificate stating that they have received all the assets delivered in Concession to the Concessionaire and those included by it into the Concession, in the state and conditions provided in this Agreement, and the Minutes of Termination of the Agreement is signed.

 

There will also be a reversion and restitution of the assets, in the event of the early termination of the Concession Agreement, for any of the reasons provided to that purpose in this Agreement.

 

CLAUSE 89.- DEADLINE FOR THE REVERSION AND RESTITUTION OF THE AIRPORTS:

 

The procedure for the reversion and restitution of the Airports will extend from the signing of the Minutes of Completion of Performance and until the date of termination of the Agreement in which the Minutes of Termination of the Agreement is signed. The process cannot, in any case, have a duration greater than three (3) months.

 

CLAUSE 90.- OBLIGATIONS OF THE CONCESSIONAIRE DURING THE REVERSION AND RESTITUTION OF THE AIRPORTS:

 

During the procedure of reversion and restitution of the Airports, the Concessionaire must perform all the activities of administration, operation, commercial exploitation and maintenance of the

 

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airports but will not be entitled to receive any remuneration for such activity since the Regulated Revenues and the Non-Regulated Revenues revert to the Grantors from the date of signing the Minutes of Completion of Performance.

 

CLAUSE 91.- ACTIVITIES DURING THE REVISION AND RESTITUTION OF THE AIRPORTS:

 

During the procedure, the following activities must be carried out:

 

(i)                                   The Airports will be returned physically and materially to the Grantors in a successive manner, using the same order set for the delivery, through the preparation of an inventory stating the material existence of the assets that are returned, after which the Minutes of Restitution will be signed  for each Airport for which the respective procedure will be accounted for.

 

(ii)                                The Minutes of Restitution will include, for each Airport, an inventory of the assets that make up the reverted and restored Airports, an update of the technical log and the list of the agreements executed and in force for operation, commercial exploitation, administration and maintenance of the Airports, as well as the declaration of the Grantors of having received the file of all the agreements.

 

(iii)                             Once the Minutes of Restitution is signed, the corresponding Airport will be considered reversed.

 

(iv)                            The restitution will take effect from zero hours (00:00) on the day following the signing the Minutes of Restitution and the Grantors will acquire possession of whose property is transferred and will resume administration, operation, commercial operation and maintenance of the respective Airport.

 

(v)                               The assets that make up the Airports or that are required for its administration, operation, commercial operation or maintenance and whose tenancy or property is held by the Concessionaire in any capacity, including those affected by leasing schemes, its components, parts and spare parts, will be reverted to the Grantors.

 

(vi)                            Under no circumstances will additional compensation be caused to the Concessionaire due to the reversal and restitution of the Airports.

 

(vii)                         The Airports and the assets that comprise it, including Regulated Revenues and Non-Regulated Revenues, must be delivered to the concessionaires free of any encumbrance, liability or reservation.

 

(viii)                      Full ownership of assets acquired by the Concessionaire for the performance of the contractual purpose will be transferred to the Grantors without incurring in expenditures, taxes, fees, fares, duties, payments or charges that are caused due to said transfer. The assets will be returned in the same state in which they were delivered to the Concessionaire, considering in any case the wear to which they would have been subjected by time, unless they have been subject to replacement by the Concessionaire, in which case the new assets will be transferred to the Grantor.

 

(ix)                            In order to carry out the reversion of the assets that make up the Airports, intellectual property rights that the Concessionaire has over the computerized and/or mechanical

 

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systems put in place must be assigned to Grantor as well as databases that the Concessionaire has developed in the Airports in compliance with the obligations arising from this Agreement. In the event that a program was implemented of which the Concessionaire is the owner, the latter will issue a lifetime license to the Grantors, including the right to receive the updates developed for said system. This assignment will not be made without any charge from the Concessionaire to the Grantors.

 

(x)                               During the reversion period, the Concessionaire will carry out the last update of the technical log referred to in clause 55, and will include the repairs, updates or replacement of assets that make up the Airports made by the Concessionaire, in compliance with the provisions of Appendix A of this Agreement.

 

(xi)                            As part of the activities of the reversion and restitution, the Concessionaire will deliver to the Grantors a list of the current agreement for the operation, administration, commercial exploitation and maintenance of each one of the Airports. Such list shall include the following: (1) reference number of the agreement, (2) parties to the Agreement, (3) purpose of the agreement identifying the area covered by the agreement and its use, (4) value of the last fee or consideration for the use of the area, (5) term of the agreement, (6) date of signing, (6) date of termination, and (7) identification of the Airport to which it corresponds.

 

In addition to this list, the Concessionaire will deliver the files corresponding to each and every one of the enforceable agreements for the operation, administration, commercial operation and maintenance of the Airports.

 

Each agreement file must include the original signed agreement and all of its amendments, cash receipts or payment vouchers issued during its validity, the expert appraisals and regular appraisals made on the corresponding asset and the correspondence crossed with the counterparty.

 

(xii)                         The Grantors shall issue a certificate stating that they have received all the assets delivered in Concession to the Concessionaire and those included by it to the Concession, in the state and conditions set forth in this Agreement, a copy of which shall be part of the Minutes of Termination of the Agreement.

 

(xiii)                      In the case of an early termination of the Concession Agreement, the procedure to be followed for the reversion and restitution of the Airports will be the same as provided under this Clause.

 

CLAUSE 92.- EXECUTION OF THE MINUTES OF TERMINATION OF THE AGREEMENT:

 

Once the Minutes of Restitution of the last Airport is signed, the Grantors, the Concessionaire and the Auditor will issue the Minutes of Termination of the Agreement in which the fulfillment of the obligations of reversion and restitution of the Airports will be recorded.

 

CHAPTER XV- EXCEPTIONAL CLAUSES TO GENERAL LAW

 

CLAUSE 93.- UNILATERAL TERMINATION:

 

Only during the Adjustment and Expansion Stage, the Grantors may decree the early and unilateral termination of the Agreement, for the reasons and under the conditions set forth in Article 17 of

 

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Law 80 of 1993, or in the regulations that add, modify or replace it, in accordance with the provisions of Article 32 of Law 105 of 1993.

 

CLAUSE 94.- UNILATERAL MODIFICATION:

 

If during the Adjustment and Modernization Stage it was deemed necessary to modify the Agreement to avoid the stoppage or serious affectation of the service, and if the parties fail to reach an agreement, the Grantors will modify the Agreement by means of an administrative act duly motivated.

 

If the modifications alter the value of the Agreement by twenty percent (20%), or more, with respect to the estimated value of the Agreement, the Concessionaire may waive the continuation of its performance. In this event, the Grantors will order the settlement of the Agreement, as well as the necessary measures to guarantee the termination of its purpose.

 

CLAUSE 95.- UNILATERAL INTERPRETATION:

 

If, during the Adjustment and Modernization Stage, disputes arise between the parties regarding the interpretation of its provisions which may lead to the stoppage or to the affectation of the service, and if no agreement is reached, the Grantors shall interpret the provisions or clauses that cause the dispute by means of a duly motivated administrative act.

 

CLAUSE 96.- REVOCATION OF THE AGREEMENT:

 

If there is any breach of the obligations in charge of the Concessionaire as established in this Agreement that seriously and directly affects its performance in such a way that it could lead to its stoppage, the Grantors may declare the revocation of the Agreement and order its settlement in the state in which it is found to be, by means of a duly motivated administrative act under the terms and conditions set forth in laws 40 of 1993, 80 of 1993, 418 of 1997, 610 of 2000, 828 of 2003 and other applicable regulations.

 

In particular, there will be a declaration of revocation of the Agreement when, in accordance with Law 789 of 2002 and Law 828 of 2003, the Concessionaire persists in the breach of its obligations to pay contributions to health systems, occupational risks, pensions, Family Compensation Funds, Instituto Colombiano de Bienestar Familiar and Servicio Nacional de Aprendizaje.

 

Once a cause of revocation has occurred, the Grantors must give written notice to the Concessionaire, informing about the occurrence of the event and the Concessionaire will have a term of twenty (20) Business Days to correct it to the satisfaction of the Grantor or to deliver a plan and a defined schedule to correct the breach. If the breach has not been corrected to the satisfaction of the Grantors or if the plan and the correction schedule presented is not satisfactory for the Grantors, they will notify the occurrence of the non-correction of the breach to the Funders for purposes of the provisions of this Agreement. If the Funders do not take possession of the Concession, either because they do not express their will to do so or because the Grantors do not approve the takeover, the Grantors may declare the revocation immediately.

 

In the event that the Concessionaires declare the revocation of the Agreement, the Concessionaire will immediately deliver the Airports in the state in which they are found to be. If this is not done, the Grantors may take possession of the Concession, for which the Grantors shall draw up minutes in which an inventory of the assets that are part of the Concession, the equipment and other elements provided by the Concessionaire, shall be recorded, as well as the details that are considered to be relevant. These minutes shall be signed by an official appointed by the Grantors,

 

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by the Auditor and by a representative of the Concessionaire, if he so wishes. If this is the case, once the Concession is received or taken over, the Grantors will proceed immediately to the settlement of the Agreement.

 

Once the resolution of revocation is in force, the Grantors will make effective the guarantees that may be applicable, the fines pending payment and the corresponding monetary penalty.

 

CHAPTER XVI- TAKEOVER OF THE CONCESSION BY THE FUNDERS

 

CLAUSE 97.- TAKEOVER OF THE CONCESSION:

 

In case of breaches by the Concessionaire of its obligations under this Agreement or under the credit agreements, the Funders or the person designated by them may assume the performance of the Concession Agreement, as follows:

 

97.1                        DUE TO BREACH OF THE CONCESSION AGREEMENT:

 

In the event of any breach by the Concessionaire that in accordance with the law and this Agreement may lead to its revocation, the Funders or the entity designated by them, may assume the continuation of the performance of the Agreement, in accordance with the credit documents, for which the Grantors will notify them of the occurrence of the breach.

 

The Funders must state their intention to correct breaches by the Concessionaire and to assume the continuation of the performance of the Concession within thirty (30) Days following the notice made by the Grantors, in which case they will submit for the name of the new Concessionaire for consideration of the Grantors, attaching the pertinent information to guarantee that the new Concessionaire or the Funders, as the case may be, will fully assume the performance of the Concession.

 

The new Concessionaire or the Funders, as the case may be, will assume the same obligations and will provide the same guarantees and securities granted by the Concessionaire under this Agreement. Notice will be given by the Grantors to the Funders once the term for the Concessionaire has expired to correct the breach in accordance with the provisions of this Agreement, without this breach having been corrected to the satisfaction of the Grantors.

 

The continuation of the execution of the Concession by the Funders or the entity designated by them, will be subject to the prior approval of the Grantors, which will be provided in all case in consideration that the entity designated by the Funders meets the minimum requirements that were taken into account to qualify as acceptable and eligible the offers presented during the Bid. If the Grantors do not give this approval or do not issue a response within a term of thirty (30) Days counted from the notice from the Funders, or if the latter decide not to exercise the right to take over the Concession, the revocation of the Agreement may be declared.

 

In order for full effectiveness of this clause, the Concessionaire will be obligated to make the assignment of the Agreement to the Funders or to the entity designated by them, in the event that the Grantors approve it. Such mandatory assignment will only apply if the takeover is foreseen in the credit agreements.

 

97.2                        BREACH OF THE CREDIT AGREEMENTS:

 

In the event that the Concessionaire is found to be in default with the Funders in accordance with the respective credit and guarantee documents signed between the Concessionaire and the

 

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Funders, and without prejudice to the legal and contractual rights, the following of procedure set below will be authorized, provided that it has been agreed between the Concessionaire and the Funders, and that it complies with the applicable legal requirements:

 

(i)                                   The Funders must give notice to the Grantors in writing of the breach by the Concessionaire, it being understood that the possibilities of correcting the breach have been exhausted and that it has been declared that the Concessionaire has definitively in default of the credit agreements, causing their acceleration and putting at risk performance of the Agreement. Such notice to the Grantors will include the statement by the Funders about their willingness to request the taking over the Concession and the removal of the Concessionaire and will send the relevant information for consideration of the Grantors to guarantee that the new Concessionaire or the Funders, as the case may be, will fully assume the performance of the Agreement, providing the same guarantees and securities granted by the Concessionaire under this Agreement.

 

(ii)                                The new Concessionaire or the Funders, as the case may be, must be approved by the Grantors, which will be given in any case provided that the entity designated by the Funders meets the minimum requirements that were taken into account to qualify as acceptable and eligible the offers presented during the Bid. The approval by the Grantors must occur within thirty (30) Days following the presentation of the Funders’ proposal; in the event that the Grantors do not issue a response, it will be understood that the proposal of the Funders has been denied.

 

CHAPTER XVII- EARLY TERMINATION AND SETTLEMENT

 

CLAUSE 98.- EARLY TERMINATION:

 

The Agreement will terminate before the expiration of the Estimated Term of the Agreement for any of the following causes:

 

98.1                        DECLARATION OF REVOCATION:

 

When the resolution by which the Grantors have declared the revocation of the Agreement becomes enforceable.

 

98.2                        DECLARATION OF UNILATERAL TERMINATION:

 

Once the resolution by which the Grantors have unilaterally terminated this Agreement becomes enforceable.

 

98.3                        DUE TO MODIFICATION OF RATES:

 

When the Concessionaire has requested the Grantors the early termination of the Agreement, due to the occurrence of the circumstance foreseen in Clause 16 of this Agreement.

 

The Concessionaire shall be entitled to termination provided that it is up to date in performing its own obligations under this Agreement.

 

98.4                        DUE TO IMPOSSIBILITY OF RENEWING THE GUARANTEES:

 

When the Concessionaire has requested the Grantors, or the Grantors have arranged the early termination of the Agreement, due to the occurrence of the circumstance provided in Clause 80.

 

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98.5                        DUE TO SUSPENSION OF THE AGREEMENT:

 

When the termination of the Agreement has been requested by any of the parties, due to the total suspension of the Agreement or any of the obligations arising from the provisions thereof, which seriously affect the performance of the Concession during a continuous term of more than four (4) months.

 

98.6                        BY THE MUTUAL AGREEMENT OF THE PARTIES:

 

When the parties mutually agree to terminate this Agreement, a circumstance that shall be recorded in writing.

 

CLAUSE 99.- TERMINATION COMPENSATION:

 

The parties agree to use the compensation formulas described below in case of early termination of the Agreement. If in any of the cases described in this Clause, the value of the compensation is positive, the payment must be made by the Grantors to the Concessionaire. Likewise, if in any of the cases described in this Clause, the value of the compensation is negative, the payment will be made by the Concessionaire to the Grantors. The form of payment of the compensation will be carried out under the conditions established for the settlement of the contract.

 

99.1                        TERMINATION DURING THE EARLY STAGE OR ADJUSTMENT AND MODERNIZATION STAGE:

 

If during the Adjustment and Modernization Stage, the early termination of the Agreement occurs, the compensation will be calculated as follows:

 

 

Where,

 

COMP                  =                                  Compensation for early termination of the Agreement

 

It                                                 =                                Investment carried out by the Concessionaire in period t (measured in months), expressed in current pesos of that period. The start date of the investments is considered to be from the day of signing the Minutes of Delivery. The following are considered a investments: the amounts deposited in the Account of the Auditor in the Escrow and the initial payment for the Auditor made by the Concessionaire, the value of the studies and designs for the execution of Works of the Adjustment and Modernization Plan of the Airports, the value of the studies and designs for the execution of Mandatory Supplementary Works. the value of the studies and designs for the execution of Voluntary Supplementary Works provided that said works have been approved by the Grantors, the value of the Mandatary Works, the value of the Mandatory Supplementary Works and the value of the Voluntary Supplementary Works. The value of the investments will be that recorded in the accounting books of the Concessionaire and must be certified by the Concessionaire’s auditor.

 

Gt                                             =                                Administration, operation and maintenance expenses incurred by the concessionaire in period t (measured in months), expressed in current pesos of that period. These values will be those effectively recorded as such in the accounting books of the concessionaire and must be certified by the Concessionaire’s auditor.

 

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ITDt                             =                                Total Revenue Available. Value received in the main escrow account during period t (measured in months), expressed in current pesos of that period, discounting the values transferred to the surplus account of the grantors.

 

i                                                      =                                Compensation update rate

 

N                                                =                                Month in which the early termination of the agreement occurs

 

CP                                         =                                Value of the penalty clause established in this agreement

 

M                                           =                                Value of the fines owed by the concessionaire to the grantor in the terms established in clause 83

 

OA                                     =                                Value of the obligations that the grantor maintains with the concessionaire on the date of early termination of the contract

 

In the event that early termination occurs due to reasons attributable to the Concessionaire, the compensation update rate will be equal to zero percent (0%).

 

In the event that early termination occurs due to for reasons attributable to the Grantor, the compensation update rate will be equal to one hundred thirty percent (130%) of the DTF in force at the time of the early termination of the agreement and the value of the Penalty Clause will be equal to zero (O).

 

99.2                        TERMINATION DURING THE MAINTENANCE STAGE:

 

If early termination occurs during the Maintenance Stage, the compensation will be calculated as follows:

 

 

Where,

 

FA                                           =                                         Adjustment Factor in the compensation for early termination of the agreement during the maintenance stage.

 

In the event that early termination occurs due to causes attributable to the Concessionaire, the adjustment factor will be equal to:

 

 

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If the previous adjustment factor is less than 1, its use in that period will be omitted.

 

On the other hand, in the event that early termination occurs due to causes attributable to the Grantors, the adjustment factor will be equal to:

 

 

The compensation update rate shall be equal to one hundred thirty percent (130%) of the DTF in effect at the time of the early termination of the agreement and the value of the Penalty Clause shall be equal to zero (O).

 

99.3                        TERMINATION FOR NON-IMPUTABLE CAUSES TO PARTIES AT ANY STAGE OF PERFORMANCE OF THE AGREEMENT:

 

If, during any stage of the performance of the Agreement, the Agreement is terminated for reasons not attributable to the Parties, the compensation shall be calculated as follows:

 

 

The compensation update rate will be equal to the DTF in effect at the time of the early termination of the agreement.

 

Without prejudice to the penalty clause, the parties accept that all mutual indemnities for any loss resulting from the early termination of this Agreement are understood to be included within the amounts agreed upon in the above sections including, but not limited to consequential damages, loss of earnings, direct and indirect damages, present and future losses, losses or interruptions in business, and other similar.

 

CLAUSE 100.- SETTLEMENT OF THE AGREEMENT:

 

The Agreement will be settled by mutual agreement or unilaterally by the Grantors, as indicated below.

 

100.1                 SETTLEMENT OF MUTUAL AGREEMENT:

 

Upon termination of the Agreement for any reason, it will be settled by mutual agreement between the Grantors and the Concessionaire, by means of Minutes of Settlement signed by the parties in which must include the following record:

 

(i)                                     Compliance with the purpose of the Agreement by the Concessionaire.

 

(ii)                                  List of the sums received by the Concessionaires for Consideration.

 

(iii)                               List of extensions and additions agreed for the performance of the Agreement, if any.

 

(iv)                              List of payments of fines and sanctions imposed on the Concessionaire, if any.

 

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(v)                                 Agreements, conciliations and transactions to which the parties may be entitled, if applicable.

 

(vi)                              The sum that one of the parties owes to the other as a result of the settlement or the statement of the parties being free and clear for all concepts related to the Agreement, as the case may be.

 

100.2                 UNILATERAL SETTLEMENT BY THE GRANTORS:

 

In the event that the Concessionaire does not assist to the liquidation by mutual agreement or an agreement is not reached between the Grantors and the Concessionaire, the settlement will be unilaterally carried out by the Grantors and will be included in an administrative act.

 

100.3                 TERM FOR THE SETTLEMENT:

 

The settlement of the Agreement must be carried out within the four (4) months following (i) the date of termination of the Agreement, or (ii) the date of entering into force of the administrative act by means of which the unilateral termination of the Agreement is declared or the revocation is ordered.

 

CHAPTER XVIII — SUPERVISION AND CONTROL OF THE AGREEMENT

 

CLAUSE 101. — POWERS OF THE GRANTORS:

 

Grantors have the power of supervising the performance of the Agreement and controlling the activity carried out by the Concessionaire. Grantors can request the Concessionaire, when so deemed suitable, the information the consider necessary; Concessionaire cannot refuse said request and shall have a reasonable term for its delivery, that shall be set pursuant to the type of information being requested.

 

CLAUSE 102. — RELATIONSHIP BETWEEN THE AUDITOR AND THE CONCESSIONAIRE:

 

The Supervision and the monitoring of the performance and the fulfillment of the Agreement shall be performed by an Auditor, in the terms set forth in this Agreement, and of the corresponding Auditing Agreement.

 

The Auditor shall perform the supervision of all the aspects of contractual execution, which will allow it to have access to the physical premises and to the documents and information that support the work of the Concessionaire, before which a compromise of confidentiality shall be imposed upon the Auditor, in respect to the information to which it has access, which is construed as agreed upon by the Auditor, within the limits set forth in the law for this matter.

 

The Concessionaire cannot impose any internal copyright or non-disclosure agreements or with third parties that may limit or hinder the Auditor or any designated party thereof to access the information of the Concessionaire for the exercise of its powers of surveillance and control.

 

102.1 POWERS OF THE AUDITOR:

 

The Auditor is authorized to (i) give instructions and orders to the Concessionaire on matters regulated in this Concession Agreement and its Appendixes of a mandatory nature by the Concessionaire, and (ii) request any information deemed necessary to the Concessionaire, provided, however, it is related with the purpose of this Agreement, which shall be delivered by the Concessionaire within the three (3) following Business Days after the date of request; the auditor

 

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may; if it so deems it as convenient given the nature of the requested information, extend the term for the delivery of the information by the Concessionaire.

 

The Auditor shall have at its charge, among others, the following functions:

 

(i)                           Verify that the Concessionaire fulfills all its obligations in the performance of the Concession.

 

(ii)                        Request, to the Concessionaire, all the information it considers necessary to verify the correct performance of this Agreement.

 

(iii)                     Verify that the works carried out in the performance of the Agreement meet all the applicable technical specifications.

 

(iv)                    Review and check the quality and amount of the works actually performed and reject and demand correction and replacement in the event that these don’t meet the specifications determined in this Agreement, in its Appendixes and schedules.

 

(v)                       Approve the unit prices and amounts of work so as to determine the value of the Mandatory Supplementary Works and of the Voluntary Supplementary Works.

 

(vi)                    Review and certify the quality and the amount of the equipment and programs provided by the Concessionaire for the operation and Airport Safety and reject and demand correction and replacement in the event these don’t meet any of the specifications set forth in this Agreement and its Appendixes.

 

(vii)                 Verify that the operation of the Airports complies with the requirements set forth in this Agreement and demand their correction to the Concessionaire, in the event of default.

 

(viii)              Execute all the Minutes corresponding to contractual performance, together with the Concessionaire and the Grantors, provided that they meet the conditions set forth in this Agreement for said execution.

 

(ix)                    Assess all the Net Income of the Concessionaire as well as the Regulated Revenue Generated and keep a comparison between these and the Expected Regulated Revenue.

 

(x)                       Participate in the procedures of amiable composition, in the terms set forth in this Agreement.

 

(xi)                    Identify all damages, disturbances, etc. that are generated in the Airports, that have not been reported by the Concessionaire and that are included in the scope of the purpose of this Agreement, communicate such situation to the Concessionaire in writing and verify that the time for reply thereof for addressing and executing all necessary works does not exceed the terms set forth for such matters in this Agreement.

 

(xii)                 Observe compliance on the terms of the different activities at the Concessionaire’s charge, as well as the validity and the value of collateral given thereby, with the purpose of these subjecting to the terms set forth in the Agreement.

 

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(xiii)              Verify if there have been events of default pursuant to the provisions set forth in this Agreement, issue warning to the Grantors and perform the procedure to derive the consequences thereof.

 

(xiv)             Promote the procedure of imposition of fines when necessary.

 

(xv)                Review and control the account of the Trust so as  to verify compliance to the provisions set forth in this Agreement, in compliance to which it shall request the Trust Agent for periodic reports.

 

(xvi)             Provide the Grantors all the analyses related to the Trust.

 

(xvii)          In general, supervise and monitor the management of the Concessionaire and of the Grantors up until the termination of the Agreement and take part in the liquidation thereof.

 

(xviii)       Collaborate with the Concessionaire in the pursuit of the means that allow the achievement of the provisions set forth in this agreement in the shortest term possible. In any case, accountability for the results set forth in this Agreement is solely of the Concessionaire, and the adoption or rejection of the suggestions of the Auditor shall be of its entire responsibility.

 

Auditor shall not perform functions of control of the subcontractors, nor of the approval of the results thereof. However, in the event that the Concessionaire performs its activities through subcontractors, it shall make use of its own auditing or quality control team, the latter of which shall supply any information required to the Auditor to its satisfaction.

 

102.2                 CONTROVERSIES BETWEEN THE AUDITOR AND THE CONCESSIONAIRE:

 

In the event of technical controversies between the Auditor and the Concessionaire, these shall be settled, in principle by the Grantors. For such matter, the Auditor and the Concessionaire shall send, within the five (5) Days following the existence of the controversy, the reports and arguments in which the contents of discrepancy are presented and the reasons for their positions. The Grantors shall define the matter in a term of a maximum of thirty (30) Days, except when the controversy demands for a longer term, which, in any case, shall be communicated by the Grantors to the Auditor and the Concessionaire. Notwithstanding, if the Grantors so consider it, they can transfer the controversy to the amiable composers so they can be the ones to settle it. In this case, for all effects it will be understood that it is the Grantors who have given rise to the controversy. If the opinion of the Grantors is not acceptable for the Concessionaire, the mechanism of amiable composition shall be reached for a definitive and mandatory decision for the parties and in this case the controversy shall be construed as initiated by the Concessionaire.

 

102.3                 LIMITATIONS AND CONDITIONS OF THE AUDITOR:

 

The Auditor shall not exonerate the Concessionaire from his obligations and responsibilities without previous express written authorization of the Grantors. All communications and orders of the Auditor shall be issued or ratified in writing, numbered in a consecutive form and with the corresponding “received” seal.

 

Grantors guarantee the Concessionaire that the auditor will have the proven expertise in supervision of construction of civil engineering and of airport operation.

 

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CLAUSE 103. — FEES OF THE AUDITOR AND FUNDING OF THE AUDITING ACCOUNT:

 

The fees of the Auditor shall come from the Auditing Account created by the Concessionaire pursuant to this Concession Agreement.

 

103.1                 MAXIMUM AMOUNT OF THE COMPENSATION OF THE AUDITOR:

 

The fees of the Auditor as a compensation for his obligations in each Stage shall be of a maximum of: (i) for all the Prior Stage the amount of one thousand five hundred million Pesos ($ 1.500.000.000), (ii) for the Stage of Adjustment and Modernization, the annual sum of six thousand forty million Pesos ($6.040.000.000) and (iii) for the Maintenance Stage, the annual sum of one thousand eight hundred million Pesos ($1.800.000.000). All the aforementioned amounts shall be expressed in Pesos of January 2007 and, for this reason, they shall be updated by using the following formula:

 

 

Where:

 

INT0 =            The value of the amount of the compensation of the auditing in Pesos of January of 2007

 

INT1 =            The value of the amount of the compensation of the Auditing in current Pesos.

 

IPC0 =             IPC of the month of January 2007.

 

IPC1 =             IPC at the moment of calculation of the compensation of the auditing

 

The monthly value that shall be paid to the Auditor as a compensation for the performance of its contractual obligations shall be liquidated pursuant to the provisions set forth for such matter in the Auditing agreement. In any case, the Trust Agent can only make disbursements to the Auditor with prior express and written order of the Grantors.

 

103.2                 CONTRIBUTIONS OF THE CONCESSIONAIRE TO THE AUDITING ACCOUNT:

 

Through the Trust Agent, the Concessionaire shall feed the Auditing Account with the limitations mentioned above. The Trust Agent shall transfer the following resources from the Main Account to the Auditing Account: (i) as from the second month of the initiation of the Prior Stage, and within the five (5) first Days following the termination of the immediately previous month, an amount equal to three percent (3%) of the Gross Revenue of the Concessionaire of the immediately previous month, up until the completion of the limit set forth for the Prior Stage of the previous Item, (ii) as from the second month of the initiation of the Stage of Modernization and Adjustment, and within the first five (5) Days following the termination of the immediately previous month, an amount equal to ten point five percent (10.5%) of the Gross Revenue of the immediately previous month, up until the completion, on every year starting the initiation of the Stage, the annual limit set forth in the Stage of Adjustment and Modernization of the previous Item, and (iii) as from the second month of the initiation of the Stage of  Maintenance, and within the first five (5) Days following the termination of the immediately previous month, an amount equal to (3%) of the Gross Revenue of the Concessionaire of the immediately previous month, up until the completion of the limit set forth for the Stage the limit set forth for the Maintenance Stage of the Previous Item and during the whole term of the Agreement. Upon the completion of the total limit set forth in the Prior Stage and the annual limit set forth for the following Stages, pursuant to the previous item, all discounts for the Prior Stage shall be suspended, and, for the remaining part of the year, for the following Stages, discounts shall be restarted for the following year.

 

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In any case, the first disbursement of resources to pay the Auditor shall be made directly by the Concessionaire, with its own resources, for an amount corresponding to one thousand five hundred Pesos ($ 1.500.000.000) expressed in constant Pesos of January 2007.

 

The difference between the resources agreed upon between the Auditor and the Grantors like the compensation under the Auditing Agreement and the limits set forth in the previous Item belongs to the Grantors and shall be transferred by the Trust Agent to the Surplus Account of the Grantors upon the completion of the Prior Stage, and, afterwards, upon the termination of every year starting from the initiation of the Stage of Renovation and Modernization and the maintenance Stage, as applicable.

 

CHAPTER XIX — GENERAL PROVISIONS

 

CLAUSE 104. — DEFAULT INTERESTS:

 

Except to the extent that in this Agreement a different rate is set forth, for every case of default in the payment obligations between the Grantors and the Concessionaire, the current bank interest certified by the Financial Superintendency, plus the third part of said rate, for any obligation in Pesos shall be applicable, and a rate of LIBOR for six (6) months plus six percentage points (6%) for the obligations in Dollars. In no event shall the applicable rate be greater than the one authorized by Colombian law.

 

The calculation of default interests set forth in this Clause, shall be enforced by monthly periods in which the current bank interest certified by the Financial Superintendency shall be applied, plus the third part of said rate, or to the LIBOR rate plus six percent (6%) as applicable, for the last Business Day of said month.

 

CLAUSE 105. — SUCCESS FEE:

 

Concessionaire shall pay the Advisor the Success Fee as a condition for the initiation of the enforcement of this Agreement.

 

Taxes that are generated by the payment of the Success Fee shall be borne by the Concessionaire, en addition to its amount.

 

Pursuant to the provisions of Consulting Agreement No.6000003-OJ-2006 for the technical financial and legal structuring, of the Bid the fee corresponds to the amount of Two Thousand Million ($ 2,000,000) Pesos.

 

CLAUSE 106. — SUBCONTRACTING:

 

Concessionaire may partially subcontract the performance of the Agreement with individuals or entities that are suitable and able to perform the subcontracted activity.

 

Notwithstanding the foregoing, Concessionaire shall remain accountable for before the Grantors for the fulfillment of all the obligations of the Agreement.

 

The Concessionaire is the only person responsible before the Grantors for entering into subcontracts.

 

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CLAUSE 107. — ASSIGNMENT OF THE AGREEMENT AND OF THE STAKE OF THE CONCESSIONAIRE:

 

Assignment of this Agreement by the Concessionaire and the assignment of the shares of the shareholders of the Concessionaire shall be governed by the following provisions:

 

107.1                 ASSIGNMENT OF THE AGREEMENT BY THE CONCESSIONAIRE: Concessionaire may only assign this Agreement to third parties, with the prior, express and written consent of the Grantors which in any case can only be authorized when the assignment is made to a person that has the same or better indicators of experience and financial capacity that those set forth in the Terms of Reference of the Bid for the selection of the Concessionaire. Assignment to the parties of the consortium or between the members of the temporary union is not allowed.

 

107.2                 ASSIGNMENT BY THE SHAREHOLDERS OF THE CONCESSIONAIRE THAT PROVED FINANCIAL OR TECHNICAL AND EXPERIENCE CAPACITY: Shareholders of the Concessionaire that have contributed their financial capacity or technical capacity or of experience to prove the fulfillment of the financial requirements or of a technical capacity and of experience of the Bid can only assign their share in the Concessionaire to third parties with the prior, express and written authorization of the Grantors, authorization which will be discretional of the Grantors and that shall be made in favor of a person or trust that can accredit the same or better financial indexes or of a technical capacity than those of the assignor.

 

107.3                 ASSIGNMENT OF THE CONDITION OF AIRPORT OPERATOR: The Airport Operator can only assign its condition of jointly obligated party under this Agreement, only with the prior, express and written authorization of the Grantors, authorization which is autonomous of the Grantors, and that, in any case, it shall only be granted when the assignment is made to a person that has the same or better experience indexes than those accredited by the Airport Operator within the Bid for selecting the Concessionaire.

 

CLAUSE 108. — SUBJECTION TO COLOMBIAN LAW AND WAIVER TO DIPLOMATIC CLAIM:

 

This Agreement is governed by Colombian law; the Concessionaire hereby submits to the jurisdiction of the Colombian tribunals and waives any attempt to make diplomatic claims in relation to obligations and rights originated in the Agreement, except in the cases of denial of justice, construed pursuant to the applicable legal definitions.

 

CLAUSE 109. — ARCHEOLOGICAL FINDINGS, TREASURES, MINING FINDING OR OTHER DEPOSITS:

 

In the event in which the performance of this Agreement there is an archeological, or treasure finding, or a mine or any other deposit is found in the underground, the announcement of a finding and the property thereof shall be governed by the provisions of articles 63 and 72 of the Colombian Political Constitution, Laws 163 of 1959 and 397 of 1997 and Decrees 264 of 1963 and 833 of 2002 and all other applicable laws. The greater costs generated for the Concession, not including loss of profit, as a consequence of the finding shall be borne by the Grantors.

 

CLAUSE 110. — LANGUAGE OF THE AGREEMENT:

 

For every purpose, the official language of this Agreement is Spanish. In the event of any translation in any other language, for the purposes of interpretation of nay of the clauses, the document in Spanish shall prevail.

 

93

 

CLAUSE 111. — STAMP TAX:

 

Concessionaire shall pay the stamp tax pursuant to the current applicable tax regulations.

 

CLAUSE 112. — AMENDMENT OF THE AGREEMENT:

 

This agreement can only be amended by written agreement, duly signed by the authorized representatives of the parties, without prejudice to the provisions set for in the matters related to unilateral amendments thereof by the Grantors.

 

CLAUSE 113. — NOTICES:

 

Except when otherwise set forth in this Agreement, all notices and communications made by one party to the other pursuant to the Agreement shall be made in writing and shall be deemed received with the proof of receipt, when delivered in person, or if sent by registered or certified courier mail, or if sent by email, telefax or telegram addressed as follows:

 

Any correspondence addressed to the Concessionaire, win regard to this Agreement, shall be sent as follows:

 

Name: Mario Fernando Pinzon Bohorquez

Address: Avenida Calle 72 No. 6 — 30 Floor 3; Bogota

Phone number: 3267474

Fax: 3172266

Email: mpinzon@it.com.co ; ajaramillo@mazuera.com

 

To the Grantors:

 

Oficina de Comercialización e Inversiones

Aeropuerto Internacional el Dorado

Phone number: 2663866

Fax: 2663946

 

Any notice or communication by facsimile shall be confirmed by sending copies thereof via courier services or registered or certified mail. Any communication and notice are construed as received the Day following the date of their delivery by means of courier or by their sending by telefax, or telegram and five (5) Days after the sending date by means of certified or registered courier mail.

 

For the purposes of communications sent by email, the provisions set forth in law 527 of 1999 shall be observed. Whenever the communications and notifications referred to in this Agreement are to be sent by means of email, it shall be done by means of an original document, understanding by original documents all those that can meet the requirements of article 8 of said law.

 

Any change in the address shall be notified in writing with an advance of no less than thirty (30) Calendar Days to the date in which the new address shall start operating. In the absence thereof, all notices shall have absolute validity if made to the originally given address.

 

CLAUSE 114 — APPENDIXES AND SCHEDULES:

 

The following Appendixes and Schedules are part of this Agreement:

 

Appendix A — Assets of the Concession

Appendix B — Airport Agreements

 

94

 

Appendix C — Adjustment and Modernization Plan

Schedule — Minimum Quantity of Works

Appendix D — Technical Operating and Environmental Features

Appendix E — Technical Maintenance Features

Appendix F — Safety Maintenance Features

Schedule No. 1 — Documents of existence and legal representation of the Grantors

Schedule No. 2 - Documents of existence and legal representation of the Concessionaire

Schedule No. 3 - Documents of existence and legal representation of the Operator of the Airports

Schedule — Protocol

 

CLAUSE 115 — JOINT AND SEVERAL LIABILITY:

 

The Operator of the Airports that served Concessionaire by accrediting the fulfillment of the technical and experience requirements within the Bid, and does not have an interest in the capital of the Concessionaire in a direct way, but in an indirect way, hereby by expressly states that it assumes, along with the Concessionaire, in an unconditional and joint manner, the performance of each and every obligation undertaken by the Concessionaire in this Agreement, in relation to the operation, commercial exploitation, management and maintenance of the Airports. As a way of undertaking the foregoing, the Operator of the Airports hereby executes this Agreement and encloses hereto all documents proving its existence and legal representation, in the same way that, in the event of it being necessary, all legal, contractual o corporate authorizations that allow it to undertake this commitment, all of which are enclosed of this Agreement under Schedule No. 3. Furthermore, it acknowledges the representations made under Clause Twenty-One of this Agreement.

 

In witness whereof, this Agreement is executed in the city of Bogota, D.C. in three (3) original counterparts of the same content, on the 13th day of the month of March, 2008.

 

	
By Aerocivil,
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
[Signed]
    	
 
    
	
Name: Fernando Sanclemente Alzate
    	
 
    
	
General Director
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By Establecimiento Público Aeropuerto Olaya   Herrera
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
[Signed]
    	
 
    
	
Name: Francisco J. Saldarriaga Aristizabal
    	
 
    
	
Manager
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By the Concessionaire,
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
[Signed]
    	
 
    
	
Legal Representative: Mario Fernando Pinzon   Bohorquez
    	
 
    

 

95

 

Corporate name: Sociedad Operadora de Aeropuertos Centro Norte S.A. - OACN S.A.

 

96

 

By the Airport Operator,

 

[Signed]

 

Special Proxy: Nelson Andres Rengifo Mantilla (a broad and sufficient proxy is granted thereto for the execution of the concession agreement and to bind CAH in its capacity as Airport Operator)

 

Corporate name: Capital Airport Holding Company, a company incorporated and existing pursuant to the laws of the Popular Republic of China, a company of which merit are mentioned to credit the technical capacity and experience.

 

97

 

Concession Agreement No. 8000011-OK

Protocols Schedule

 

CONTENTS

 

	
ELECTRICAL PROTOCOLS
    	
2
    
	
1.1. DEFINITION OF   COMMON TERMS — GLOSSARY
    	
2
    
	
1.2. SCOPE
    	
7
    
	
1.2.1. AEROPUERTO DE   RIONEGRO — JOSE MARIA CORDOBA
    	
8
    
	
1.2.2. AEROPUERTO LOS   GARZONES — MONTERIA
    	
9
    
	
1.2.3. AEROPUERTO EL   CARAÑO — QUIBDO
    	
10
    
	
1.2.4. AEROPUERTO   ANTONIO ROLDAN BETANCOURT — CAREPA
    	
11
    
	
1.2.5. AEROPUERTO LAS   BRUJAS — COROZAL
    	
12
    
	
1.2.6. AEROPUERTO OLAYA   HERRERA — MEDELLIN
    	
13
    
	
1.3 RESPONSIBILITIES
    	
13
    
	
1.3.1. CONCESSIONAIRE’S   MAINTENANCE RESPONSIBILITIES
    	
13
    
	
1.3.2. MAINTENANCE   RESPONSIBILITIES OF AEROCIVIL
    	
15
    
	
1.4. ELECTRIC POWER   SUPPLY
    	
15
    
	
1.4.1. OPERATION AND   MAINTENANCE RESPONSIBILITIES
    	
17
    
	
1.5. OTHER   RESPONSIBILITIES
    	
17
    
	
1.6. MEASUREMENT OF   POWER CONSUMPTION AND PAYMENT
    	
18
    
	
2. TELECOMMUNICATIONS   PROTOCOL
    	
18
    
	
2.1. TELECOMMUNICATIONS   NETWORK
    	
18
    
	
2.1.1. ATN NETWORK
    	
18
    
	
2.1.2. APTN NETWORK
    	
18
    
	
2.2. DESCRIPTIONS OF   THE CONCESSION
    	
19
    
	
2.3. TRANSITION PLAN
    	
19
    
	
2.3.3. COMMUNICATION SERVICES   OF AEROCIVIL
    	
20
    
	
2.3.4. IMPROVEMENTS TO   AIRPORT TERMINALS
    	
21
    
	
2.3.5. LOCATIONS IN   CASE OF NEW CONSTRUCTIONS
    	
21
    
	
2.4. INVOICING AND   PAYMENT OF SERVICE
    	
21
    
	
3. AQUEDUCT AND SEWER   PROTOCOL
    	
22
    

 

 

1.              ELECTRICAL PROTOCOLS

 

1.1.                            DEFINITION OF COMMON TERMS — GLOSSARY

 

For the proper interpretation of this protocol, the terms used will have the meaning given to them in clause 1 of the agreement, and if their meaning is not found there, they will be defined in this section. The terms defined in singular form include their plural form when applicable. The terms that are not expressly defined, shall be understood according to the sense given to them by the respective technical language or by their natural and obvious meaning and sense in accordance to their general use.

 

·                  A.

 

Admissible Values of voltage: Limits of voltage variation for permanent system operation conditions.

 

Aerocivil: Unidad Administrativa Especial of the Aeronautica Civil (in English: the Special Administrative Unit of the Civil Air Authority).

 

Aeronautical Services: Those services that, due to their own nature, are necessary and/or supplementary to the provision of passenger and cargo air transport public service when the airplane is airborne, landing or before takeoff at the airport.

 

Airport Services: Those services required for the operation of airports including the following topics: facilitation of passengers and their luggage, cargo and mail; airport service quality; automated services for passengers and their luggage, cargo and mail; application of information technology, automatic systems and telecommunications to support the operation and processes at airports; land access to airports and security aspects; allocation of shifts and schedule coordination; and correlation between facilitation and security.

 

Ammeter: Instrument used to measure current, with a needle and a mobile coil that moves the needle.

 

Ampere: Unit of electric current; in physics, it is defined as the movement of one charge “coulomb” per second.

 

Anomaly: Any flaw of the meter, its accessories and connections, not imputable to the user, which cause an alteration in the accurate measurement of electrical power and energy consumption, or the one established by the technical standards of electrical installations.

 

Average monthly billing: Value equivalent to the cumulative billing in a certain number of months divided by the number of months considered.

 

·                  B.

 

Battery: Set of similar units; particularly, a series connection of primary voltaic elements.

 

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·                  C.

 

Cable: One or more joint conductors isolated or with each other.

 

Cable jointing: The connection between two cables where conductivity and isolation in the junction have the same electrical quality as the cables used.

 

Circuit: The closed link or path through which there is a flow of electric current or a magnetic flow.

 

Concessionaire: Bidder to whom they award the National Public Bid 7000132-OL of the Airports Jose Maria Cordova of Rionegro, Enrique Olaya Herrera of Medellin, Caraño of Quibdo, Los Garzones of Monteria, Las Brujas of Corozal, and Antonio Roldan Betancourt of Carepa.

 

Concession agreement: Means the agreement deriving from National Public Bid 7000132-OL, the documents that make it up, its appendices, modifications, and terms and conditions.

 

Condenser: A device whose main characteristic is CAPACITANCE and which stores energy in its electric field.

 

Conductor: A material that gives a low resistance to the flow of electric current.

 

Coulomb: Measuring unit of electric charge.

 

·                  D.

 

Days: It will be understood as business days unless otherwise indicated.

 

Distributor: Company in charge of conducting the electricity from the commercial generator to the user.

 

Disturbance: Distortions of the voltage wave like rapid oscillations, harmonic distortions and any other parameter that affects the quality of the technical product.

 

·                  E.

 

Electrical energy: Energy transmitted through electromagnetic waves.

 

Electrical System: A technical and economically efficient system for power supply.

 

Electricity: Set of physical phenomena deriving from the effect produced by the movement and interaction between positive and negative electric charges. A form of energy that may be translated into mechanical, lighting, thermal, physiological and chemical phenomena.

 

Energy: A system’s ability to do work; it is measured in Kilowatts. The time variable is implied in energy and it is measured in Kilowatts per hour KWh and power (demand) is measured in Kilowatts (Kw).

 

Energy consumption: Amount of electrical energy used in a certain period of time and measured in Kilowatts per hour KWh.

 

3

 

Extension: Installation required to assist lines and networks in order to provide the service to the user which cannot be provided directly from the distributor’s existing facilities.

 

External cause: Service quality failure attributable to an electrical service supplier other than the distributor.

 

·                  F.

 

Flicker: Low-amplitude change in the voltage levels that take place at a frequency less than 25 (twenty-five) hertz, caused by rapid charge variations that cause luminance fluctuation.

 

Fossil fuel: A fuel that is based on fossilized organic matter.

 

Frequency: Number of times per second that the voltage in an alternating current system changes its polarity; it is measured in cycles per second or hertz.

 

Fuel: Material which produces thermal energy when going through a combustion process.

 

Fuse: A device that protects a circuit against damages caused by the flow of current through it thanks to the fusion of the element.

 

·                  G.

 

Generator: A machine that converts mechanical energy into electrical energy, it is also called ALTERNATOR because it produces alternating current. It is also defined as emergency power plant.

 

Great demand: purchased power greater than 100 KVA.

 

·                  H.

 

Harmonic distortion: Distortion of the shape of the voltage or alternating current wave caused by harmonics, defined as sinusoidal components with a frequency equal to any product of the system frequency.

 

High Voltage: Voltage level greater than or equal to 44 Kv.

 

·                  I.

 

Installed KVA: Nominal power of a device.

 

Internal Cause: Service quality failure attributable to the distributor.

 

Interruption: Disconnection of the service due to technical or safety reasons.

 

Irregularity:  Any alteration to the measurement equipment, its accessories or connections caused by third-party tampering, producing the inaccurate measurement of energy

 

4

 

consumption and demand, as well as illegal outlets, or changes in the use of the service that imply the application of different fees.

 

·                  K.

 

Kilowatt: Unit of power equivalent to 1000 watts

 

Kilowatts per hour: Unit of energy equivalent to the energy transferred when one Kilowatt flows during an hour.

 

·                  L.

 

Law: Organic laws of electric power distribution and utilities.

 

Low Voltage: Voltage level less than or equal to 1 Kv.

 

·                  M.

 

Measurement equipment: Instrument and accessories used to measure the KWh electrical energy and the KVA or Kw power and other parameters.

 

Medium Voltage: Voltage level greater than 1Kv and less than 69 Kv

 

Megawatt: Unit of energy equivalent to one million watts.

 

·                  N.

 

National Electric Code: Colombian NTC 2050 Standard which establishes the minimum rules for the safety installation of conductors and devices.

 

·                  O.

 

Operation: Handling or activation of an electrical device.

 

Operator: Person who operates an electrical device.

 

Out of grid: Status given to the user when the connection of his facilities to the distribution grid requires an extension.

 

·                  P.

 

Power: Intensity of energy flow. Energy per unit of time.

 

Power Feeder: Medium-voltage distribution circuit.

 

Protection box of the measuring equipment: Safety element that consists of a box to especially protect measurement equipment or distribution connection equipment, which may be installed on posts, bases adjacent to the transformation equipment, disconnection cabinets or in the users’ property.

 

5

 

·                  Q.

 

Quality of the Commercial Service: Degree of non-compliance with the established deadlines for dealing with requests and complaints from users.

 

·                  R.

 

Record and Measurement: Storage of data and measurement of different parameters in a certain period of time.

 

·                  S.

 

Service agreement: Document that establishes the terms and conditions that govern the use of the electrical service between the parties thereto.

 

Short Circuit: A connection between two points of an electric circuit with a power source with low or no resistance.

 

Small demand: Purchased power less than or equal to 100 KVA.

 

Substation: A set of devices including any necessary facility to convert, transform or regulate electric power.

 

Supply Connection: Set of conductors used for the connection between the distributor’s power grid and the user’s measuring point.

 

Supply point: Physical place where the meter is installed and where the user’s electrical installations are connected to the distributor’s system. This is the boundary point between the distributor’s and user’s maintenance and safeguarding responsibilities.

 

Switch: A mechanical or electronic device to non-automatically close or open a circuit’s electric current.

 

·                  T.

 

Transformer: Electromagnetic device that allows increasing or decreasing voltage in an electrical circuit maintaining the frequency.

 

Transformer nominal capacity: Transformer capacity expressed in KVA according to the device’s data plate.

 

·                  U.

 

User: Natural or legal person who benefits from the provision of electric power supply, either as the undersigned of a service agreement or as the direct recipient thereof, subject to the rights and obligations established by the organic law of electric power supply and its regulations.

 

6

 

User’s electrical installations: Those located after the distributor’s supply point.

 

User’s total connected and installed capacity: The sum of nominal power expressed in KVA of all the devices in the user’s property which are connected for the user’s service.

 

·                  V.

 

Voltage: Parameter expressed in volts and delivered by the distributor at the supply point to the user’s facilities.

 

Voltage variation: It is an increase in the reduction of supply voltage value in relation to nominal voltage.

 

·                  W.

 

Watt: Unit of power that measures the amount of energy flowing per unit of time; in scientific terms it is equivalent to one erg per second.

 

1.2.                            SCOPE

 

To establish the scope of the responsibilities of both the Unidad Administrativa Especial de Aeronautica Civil de Colombia and the concessionaire regarding the management of energy in the Airports Jose Maria Cordova of Rionegro, Enrique Olaya Herrera of Medellin, Caraño of Quibdo, Los Garzones of Monteria, Las Brujas of Corozal, and Antonio Roldan Betancourt of Carepa, we have identified three different moments (according to appendix C — Investment Plan), since such scope changes in each one of them.

 

In general terms:

 

·                  Before building the second substation completely independent from the aeronautical circuits (control tower, communications, radar, AKLS and PAPI lights), which will be built and installed in an area defined by the Aerocivil. From the delivery date of the airports until commencement of construction works and separation of each one of the electrical substations. During this period, the Aerocivil is responsible for guaranteeing the electric power supply and for such purpose they will carry out the relevant procedures with the distributor for electric power supply under the terms established by the utilities law, law 142 of 1943.

 

·                  Moment in which the construction of each substation is completed under the terms of the concession agreement and appendix C — Investment Plan. It refers to a transition period in which the concessionaire shall be responsible for the power supply to airport areas and services.

 

·                  Once the construction has been completed and the second substation is operating in each one of the airports. In a six-month term from delivery to the concession operator, where they will install: generating sets, transfers, UPS, distribution cabinets and other protection and measurement equipment, totally new and in compliance with aeronautical laws according to the loads to be managed, for which the regional aeronautical electrical staff and telecommunications director

 

7

 

will perform the corresponding appraisals. The concessionaire is responsible for supplying power to the airport areas and services, and the Aerocivil shall be responsible for supplying power to the aeronautical areas and services.

 

·                  Totally independent ducts will be built for the aeronautical and airport systems. This new substation will have a free area that will be used for the laboratory, office, lounge, kitchenette and restrooms. The aeronautical circuits connected to UPS and emergencies will be moved and reinstalled entirely at the new substation, both the power circuits and the control circuits, by the concessionaire. All these improvements and works will be carried out by the concessionaire within the first six months following the execution of the concession agreement. The electrical systems and circuits under responsibility of the concessionaire will be periodically checked and verified to make sure that they meet the operational technical requirements and that they meet all the requirements of civil aviation control organisms (OACI).

 

·                  As for the visual aid circuits and systems given to the concession (runway border circuits, taxiways, runway axis, contact zone, windsock, wind vane, beacon), they will be directly controlled and supervised by the Aerocivil and the concessionaire shall facilitate this task. In case of change, replacement or installation of new systems, the concessionaire will have the obligation to prioritize training in these new systems for the Aerocivil employees that will control them. this training shall be provided directly by the manufacturers of the equipment, and the Concessionaire will provide the Aeronautical Electric team with a copy of the manuals and catalogues corresponding to this new equipment.

 

·                  The concessionaire will submit a schedule of the preventive and corrective maintenance activities of the visual aid circuits and systems that they manage, so that the Aerocivil monitor them.

 

The concessionaire shall build, provide equipment, test, and deliver in full operating conditions to the Aerocivil in each one of the airports they are in charge of, as follows:

 

1.2.1. AEROPUERTO DE RIONEGRO — JOSE MARIA CORDOBA

 

1.2.1.1. Electrical Substation.

 

We have decided to implement a new electrical substation for aeronautical services, completely independent from the aeronautical circuits (control tower, communications, radio aid, radar, ALS and PAPI lights), leaving remote control to the Aerocivil. This new substation will be built and installed by the concessionaire in the area allocated by the Aerocivil when the time comes.

 

Within a six-month term upon delivery of the concession to the operator, the operator agrees to build, supply, test and deliver to Aerocivil: two (2) generating sets, transfers, 2 parallel UPS, distribution cabinets and other new protection and measurement equipment, in compliance with the aeronautical standards an according to the loads to be managed (400 KVA).

 

8

 

Two completely independent ducts will be built for the aeronautical and airport systems. This new substation will have a free area that will be used for the laboratory, office, lounge, kitchenette and restrooms. The aeronautical circuits connected to UPS and emergencies will be moved and reinstalled entirely at the new substation, both the power circuits and the control circuits, by the concessionaire.

 

The electrical systems and circuits under responsibility of the concessionaire will be periodically checked and verified to make sure that they meet the operational technical requirements and that they meet all the requirements of civil aviation control organisms (OACI).

 

The substation must be built according to the single-line diagram made by the concessionaire and approved by the auditor.

 

1.2.1.2. Visual Aids.

 

The Aerocivil reserves the right to gauge, operate and maintain the ALSF circuits (Approach Lighting System with Sequenced Flashing Lights), located on threshold 36 of the airport and the PAPI lights circuits of both thresholds (18; 36). The power supply from the ALS underground substation where the regulation systems, transformer and distribution boards are located.

 

The PAPI system regulators and the threshold selector will be moved to the new electrical substation, including supply to airfield; these systems will be responsibility of the Aerocivil.

 

The remote control of the different visual aid systems will a controlled by the Aerocivil, including PAPI and ALS.

 

The Concessionaire is entirely responsible for the visual aid circuits and systems given to it.

 

Runway border circuits,

Taxiway circuits,

Runway axis circuits,

Contact zone circuits,

Lighted windsock,

Wind vane and beacon.

 

1.2.2. AEROPUERTO LOS GARZONES — MONTERIA

 

1.2.2.1. Electrical Substation

 

We have decided to implement a new electrical substation for aeronautical services, completely independent from the aeronautical circuits (control tower, communications, radio aid, radar, ALS and PAPI lights), which will be built and installed by the concessionaire in the area allocated by the Aerocivil, preferably close to the control tower. For this case we must consider the construction of a new electrical substation for the ALS to be implemented, which will be given to the Aerocivil for maintenance, operation and conservation, according to the designs submitted by the concessionaire.

 

9

 

Within a six-month term upon delivery of the concession to the operator, the operator agrees to build, supply, test and deliver to Aerocivil: two (2) generating sets, transfers, 2 parallel UPS, distribution cabinets and other new protection and measurement equipment, in compliance with the aeronautical standards an according to the loads to be managed.

 

Two completely independent ducts will be built for the aeronautical and airport systems. This new substation will have a free area that will be used for the laboratory, office, lounge, kitchenette and restrooms. The aeronautical circuits connected to UPS and emergencies will be moved and reinstalled entirely at the new substation, both the power circuits and the control circuits, by the concessionaire.

 

The electrical systems and circuits under responsibility of the concessionaire will be periodically checked and verified to make sure that they meet the operational technical requirements and that they meet all the requirements of civil aviation control organisms (OACI).

 

The substation must be built according to the single-line diagram made by the concessionaire and approved by the auditor.

 

1.2.2.2. Visual Aids.

 

The Aerocivil reserves the right to gauge, operate and maintain the ALSF circuits (Approach Lighting System with Sequenced Flashing Lights), that will be built by the concessionaire and the PAPI lights circuits. The power supply from the ALS underground substation where the regulation systems, transformer and distribution boards will be located.

 

The PAPI system regulators and the threshold selector will be moved to the new electrical substation, including supply to airfield; these systems will be responsibility of the Aerocivil.

 

The Concessionaire is entirely responsible for the visual aid circuits and systems given to it.

 

Runway border circuits,

Taxiway circuits,

Lighted windsock,

Wind vane and beacon.

 

1.2.3. AEROPUERTO EL CARAÑO — QUIBDO

 

1.2.3.1. Electrical Substation

 

We have decided to implement a new electrical substation for aeronautical services, completely independent from the aeronautical circuits (control tower, communications, radio aid, radar, ALS and PAPI lights), which will be built and installed by the concessionaire in the area allocated by the Aerocivil, preferably close to the control tower.

 

Within a six-month term upon delivery of the concession to the operator, the operator agrees to build, supply, test and drive the operation of the new electrical substation at its service. During this period, the Aerocivil will supply the energy to the concessionaire’s systems.

 

10

 

Two completely independent ducts will be built for the aeronautical and airport systems. This new substation will have a free area that will be used for the laboratory, office, lounge, kitchenette and restrooms. The aeronautical circuits connected to UPS and emergencies will be moved and reinstalled entirely at the new substation, both the power circuits and the control circuits, by the concessionaire.

 

The electrical systems and circuits under responsibility of the concessionaire will be periodically checked and verified to make sure that they meet the operational technical requirements and that they meet all the requirements of civil aviation control organisms (OACI).

 

The substation must be built according to the single-line diagram made by the concessionaire and approved by the auditor.

 

1.2.3.2.        Visual Aids.

 

The Aerocivil reserves the right to gauge, operate and maintain the ALSF circuits (Approach Lighting System with Sequenced Flashing Lights), that will be built by the concessionaire and the PAPI lights circuits. The power supply from the ALS underground substation where the regulation systems, transformer and distribution boards will be located.

 

The PAPI system regulators and the threshold selector will be moved to the new electrical substation, including supply to airfield; these systems will be responsibility of the Aerocivil.

 

The Concessionaire is entirely responsible for the visual aid circuits and systems given to it.

 

Runway border circuits,

Taxiway circuits,

Lighted windsock,

Wind vane and beacon.

 

1.2.4.                  AEROPUERTO ANTONIO ROLDAN BETANCOURT — CAREPA

 

1.2.4.1. Electrical Substation

 

We have decided to implement a new electrical substation for aeronautical power systems, completely independent from the airport circuits (Terminal, concessionaires, warehouses, airport systems and visual aid systems that will be given to the concessionaire), which will be built and installed by the concessionaire in the area that it considers suitable.

 

Within a six-month term upon delivery of the concession to the operator, the operator agrees to build, supply, test and drive the operation of the new electrical substation at its service. During this period, the Aerocivil will supply the energy to the concessionaire’s systems.

 

Two completely independent ducts will be built for the airport systems.

 

The electrical systems and circuits under responsibility of the concessionaire will be periodically checked and verified to make sure that they meet the operational technical requirements and that they meet all the requirements of civil aviation control organisms (OACI).

 

11

 

The concessionaire will submit to the Aerocivil a single-line diagram of the substation that it will build for its service.

 

1.2.4.2. Visual Aids.

 

The Aerocivil reserves the right to gauge, operate and maintain the PAPI lights circuits.

 

The regulators of the systems that the concessionaire will be in charge of, will be moved by the concessionaire to the new electrical substation, including supply to airfield; these systems will be responsibility of the concessionaire.

 

The Concessionaire is entirely responsible for the visual aid circuits and systems given to it.

 

Runway border circuits,

Taxiway circuits,

Lighted windsock,

Wind vane and beacon.

 

1.2.5. AEROPUERTO LAS BRUJAS — COROZAL

 

1.2.5.1. Electrical Substation

 

We have decided to implement a new electrical substation for aeronautical power systems, completely independent from the airport circuits (Terminal, concessionaires, warehouses, airport systems and visual aid systems that will be given to the concessionaire), which will be built and installed by the concessionaire in the area that it considers suitable.

 

Within a six-month term upon delivery of the concession to the operator, the operator agrees to build, supply, test and drive the operation of the new electrical substation at its service. During this period, the Aerocivil will supply the energy to the concessionaire’s systems.

 

Two completely independent ducts will be built for the airport systems.

 

The electrical systems and circuits under responsibility of the concessionaire will be periodically checked and verified to make sure that they meet the operational technical requirements and that they meet all the requirements of civil aviation control organisms (OACI).

 

The concessionaire will submit to the Aerocivil a single-line diagram of the substation that it will build for its service.

 

1.2.5.2. Visual Aids.

 

The Aerocivil reserves the right to gauge, operate and maintain the PAPI lights circuits.

 

The regulators of the systems that the concessionaire will be in charge of, will be moved by the concessionaire to the new electrical substation, including supply to airfield; these systems will be responsibility of the concessionaire.

 

12

 

The Concessionaire is entirely responsible for the visual aid circuits and systems given to it.

 

Runway border circuits,

Taxiway circuits,

Lighted windsock,

Wind vane and beacon.

 

1.2.6. AEROPUERTO OLAYA HERRERA — MEDELLIN

 

For this airport, the electric power supply service will be provided as it is currently being provided, this is:

 

The concessionaire guarantees the normal and emergency electric power supply to the aeronautical section located in the control tower building. The Aerocivil will be in charge of the remote control of the different visual aid systems including the PAPI lights control.

 

1.3                               RESPONSIBILITIES

 

The concessionaire’s responsibilities regarding the electric power supply and equipment maintenance for the Airports Jose Maria Cordova of Rionegro, Enrique Olaya Herrera of Medellin, Caraño of Quibdo, Los Garzones of Monteria, Las Brujas of Corozal, and Antonio Roldan Betancourt of Carepa, are the following:

 

·                  The concessionaire is responsible for supplying electric power to the airport areas and services, and to the aeronautical areas and services during the construction of the second electrical substation.

·                  The concessionaire is responsible for the electrical maintenance under the terms established in numeral 10 of the Maintenance Specifications appendix.

 

The way in which the airport’s electric power supply must be operated and the consequent responsibilities of the Aerocivil and the concessionaire are set forth below:

 

1.3.1.                  CONCESSIONAIRE’S MAINTENANCE RESPONSIBILITIES

 

The concessionaire is responsible for performing the maintenance, not the operation, of the systems and equipment of the electrical areas at its own expense and risk, and with its own staff:

 

At the Airports Jose Maria Cordova of Rionegro, Enrique Olaya Herrera of Medellin, Caraño of Quibdo, Los Garzones of Monteria, Las Brujas of Corozal, and Antonio Roldan Betancourt of Carepa, in the areas given to the concessionaire, pursuant to the provisions of section 2. General Requirements, and numeral 10 Maintenance of Electrical Systems of appendix E Maintenance Specifications of the concession agreement, the concessionaire is responsible, among other aspects, for:

 

“Maintain, preserve, rehabilitate, replace and/or repair the facilities, assets, property and equipment given to the concessionaire, to permanently keep them in safe and efficient operating and service conditions.”

 

13

 

“Maintain the facilities and equipment located at the Aerodrome, according to the principles and standards established in the OACI airport services manual, part 9 Airport Maintenance Practices, including but not limited to the following facilities and equipment” Electrical Systems Heading”.

 

The equipment and systems that must be maintained but not operated by the concessionaire are included in numeral 10 Maintenance of Electrical Systems, including the responsibility for the emergency reserve power supply system, which are the following:

 

Main distribution substations.

 

It refers to the main substation, including the physical construction of the distribution systems, the equipment and switchgear, transformer protection devices, electric panels, transfer systems, measurement systems, medium-voltage and low-voltage distribution networks, condenser banks and runway regulators, platform lights and parking lots.

 

Transformers.

 

Voltage increase and reduction equipment including:

 

·                  Main transformer

·                  Runway system transformer

·                  Transformers in the electrical rooms of the Terminal, not including those of the control center.

 

Switch control and transmission boxes

 

Switch control boards and boxes, main boxes, circuit breakers, switchgear and fuses located in the electrical substation.

 

Ducts, wiring and cabling

 

Conduits, including existing wiring and cabling at the airports for areas granted under concession, including: The connections to visual aid systems, connections between distribution equipment and those in the electrical substation.

 

Fuse boxes and switchboxes (sic), these are thermomagnetic switches of the electrical substation and electrical centers.

 

Control panels and monitoring units

 

Control panels, automatic transfers and monitoring units of the different systems, including the visual aid system.

 

Reserve power system for emergencies

 

Maintenance of the emergency power system, identified as electrogen group system, transfer board.

 

14

 

Responsible for making sure that the emergency system is available to feed the aeronautical and airport systems under the parameters established in table 8.1 of annex 14 to the OACI Civil Aviation agreement. According to the maintenance plans submitted by the Aerocivil and agreed upon with the concessionaire.

 

1.3.2.                  MAINTENANCE RESPONSIBILITIES OF AEROCIVIL

 

The Aerocivil, at its own expense and risk, and with its own staff, will perform the maintenance of the following equipment and electrical systems:

 

UPS systems for aeronautical services

Transformer systems that feed the radio beacon

Power systems that feed the VOR and ILS

Power systems that feed aeronautical areas

 

The parties will be responsible for performing the preventive and corrective maintenance of the systems, connections, protections and equipment that they are in charge of, in order to guarantee service continuity and they may carry out joint operation work in order to solve problems that may arise and seriously affect the operation of the airports.

 

1.4.                            ELECTRIC POWER SUPPLY

 

The Aerocivil is responsible for guaranteeing the electric power supply before the grid operator, carrying out the necessary procedures so that service interruptions and the quality of the energy are provided by the distributor under the conditions and characteristics provided by the utilities law.

 

If there is a normal grid, provided by the operator, through the main circuit.

 

CONTROL TOWER

 

To the output of the protection switchgear of the transformer located in the basement of the control tower.

 

TECHNICAL ROOM

 

To the input of the power switch of the UPS system and the respective BYPASS. The Aerocivil is responsible for the power supply of equipment that is supported by the UPS.

 

RADIO BEACON

 

The Aerocivil is solely responsible for supplying normal power to all radio beacon systems from the power supply of the control tower.

 

VOR

 

The Aerocivil is solely responsible for supplying normal power to the VOR station

 

If there is normal grid interruption (grid operator supply)

 

15

 

AEROCIVIL is responsible for coordinating with the grid operator the operation, maintenance and other tasks that must be done in the main substation to reestablish the normal power supply.

 

The concessionaire is responsible for guaranteeing the existence of the electric power supply service as follows:

 

At the main substation

 

Maintaining the correct operation of generating sets, in order to guarantee the airport emergency services, the main substation and the electrical centers of the air section.

 

Switching times of generating sets cannot be greater than those established in table 8.1 of annex 14 volume 1 to the Civil Aviation agreement. Therefore, the concessionaire shall guarantee the maintenance of automatic transfers, control panels and generating sets to meet this requirement.

 

Aerocivil will guarantee with its own autonomous power generation systems, the supply of emergency electric power for the systems located in the VOR.

 

In case of system operations or tests:

 

To perform works or run system tests the AEROCIVIL or the concessionaire shall be informed, as applicable, in order to determine the convenience thereof.

 

Deriving from the maintenance responsibility, when any of the parties, concessionaire and/or AEROCIVIL, performs an operation, they must coordinate with and inform the other party of the operation and the possible impact to the service in order to determine the convenience and timeliness of such operation to guarantee the continuity of the service.

 

MAINTENANCE RESPONSIBILITIES OF THE ELECTRICAL SYSTEM

 

The concessionaire is responsible for carrying out the maintenance of the electrical systems pursuant to numeral 10 of appendix E — Maintenance Specifications, at its own expense and risk and with their own staff in charge of the system.

 

In electrical rooms

 

The concessionaire is responsible for carrying out the maintenance of all the electrical connections and equipment of the electrical substation:

 

Transformers

Switch control and transmission boxes

Wiring and cabling ducts

Fuse and switch box

Control panels and monitoring units

Reserve power system for emergencies

Visual aid system

Air conditioning systems

 

16

 

Automatic transfers

 

AEROCIVIL is responsible for carrying out the maintenance of the runway lights control system.

 

1.4.1.                  OPERATION AND MAINTENANCE RESPONSIBILITIES

 

The AEROCIVIL is responsible for performing the operations that affect the service provided by the power supply distributor to the airports.

 

However, deriving from the maintenance responsibility described in the concession agreement, the parties will be responsible for the operations performed on their equipment and for the impact that these may have on the operation of the airports or of the other party. None of the parties may perform operations on panels or cells belonging to the other party. If, due to requirements of the operation or to maintenance works, it is necessary their own circuits or those deriving from panels that are the responsibility of the other party, this operation must be done in coordination with and upon agreement of the parties.

 

The AEROCIVIL is solely responsible for the operation and maintenance of the following equipment:

 

UPS for aeronautical services

Electrical systems of radar room and technical room

Electrical systems of control tower

Electrical systems of radio beacon

Electrical systems of VOR

Electrical systems of runway lights

 

ACCESS TO AREAS

 

The concessionaire will guarantee access to staff authorized by the Aerocivil to airport areas, including airfield, to perform their tasks or in order to operate the power supply equipment with the distributor, and those who are responsible for maintaining the light control system and the related systems, in compliance with all the airport security rules.

 

1.5.                            OTHER RESPONSIBILITIES

 

The concessionaire shall guarantee access to and use of the ducts, substation and firing rooms needed by the Aerocivil for their interventions.

 

AEROCIVIL STAFF IN CHARGE OF OPERATING THE SUBSTATION

 

The Aerocivil staff in charge of operating the electrical substation will report the corrective and preventive maintenance needs in writing to the Technical Director of the concessionaire with a copy to the auditor and will continue to perform their tasks in the areas that they are currently using in the substation area.

 

17

 

1.6.                            MEASUREMENT OF POWER CONSUMPTION AND PAYMENT

 

The Concessionaire is responsible for paying the entire power supply service of the Airports Jose Maria Cordova of Rionegro, Enrique Olaya Herrera of Medellin, Caraño of Quibdo, Los Garzones of Monteria, Las Brujas of Corozal, and Antonio Roldan Betancourt of Carepa to the local grid operator, and of charging the other users of the airports. The power consumed by the Aerocivil will be paid by the concessionaire until the new substations are fully operating in each one of the airports.

 

Once the power supply for aeronautical services and for airport services become separate, the concessionaire is responsible for the payments corresponding to airport services and Aerocivil is responsible for the payments corresponding to aeronautical services.

 

2.                                      TELECOMMUNICATIONS PROTOCOL

 

2.1.                            TELECOMMUNICATIONS NETWORK

 

The Aerocivil requires independence between the aeronautical and airport services which are currently enabled by one single network in all the airports of the Entity. The aeronautical telecommunications network (ATN) shall be separate from the airport telecommunications network (APTN). The networks shall be independent, at the concessionaire’s expense, who will bear the costs of the network(s) that must be implemented, and the necessary equipment according to the requirements established in appendix C Investment Plan.

 

2.1.1.                  ATN NETWORK

 

The ATN network integrates the infrastructure requirements for the transportation of voice/data services of the technical rooms, control tower and control center (if applicable) of the Aerocivil, with redundant networks from the different cabling centers or MDF.

 

The ATN network will be used exclusively for the communications of the Aerocivil, who will be in charge of its maintenance and operation, for which the concessionaire will grant the permit required to access the areas granted inconcession. The permissions granted and the use of this network, even though it is located in concessionaire’s property, will not generate any costs to the Aerocivil.

 

The concessionaire will not be responsible for the payments generated by the consumption of this network or the charges deriving from the agreements executed or to be executed by the Aerocivil with communication service providers for voice/data transmission. The ATN will include the telecommunication networks of the facilities inside the airport lot, but outside the area granted under concession.

 

2.1.2.                  APTN NETWORK

 

The APTN network will be exclusively used by the concessionaire.

 

The concessionaire will implement the APTN with their own equipment pursuant to the provisions of Appendix C Investment Plan, which includes, among other devices, telephone switchboard, backbone network, intermediate inspection rooms, lockers or strips, junction boxes and manifolds, and areas needed for the operation of the communications concentrator

 

18

 

and the telephone switchboard, and shall be able to provide voice and data services to the users of the area granted under concession.

 

Aerocivil will not be responsible for the payments generated by the consumption of this network or the charges deriving from the agreements executed or to be executed by the concessionaire with communication service providers for voice/data transmission. In the same way the agreements of users of areas granted under concession.

 

The transition to transfer the management and control of the APTN network to the concessionaire will follow a joint plan between the Aerocivil and the Concessionaire.

 

Description of the details and requirements of the Aerocivil to the concessionaire.

 

2.2.                            DESCRIPTIONS OF THE CONCESSION

 

As mentioned in Numeral 1, the concession is based on the premise that the Aerocivil shall guarantee the continuous and safe service of all communications, facilities and aids for air navigation. To fulfill this mission, the Aerocivil shall ensure the chain and control of communication elements, with absolute independence between the concessionaire and the government entity, so that each one of them can carry out their function without any conflicts of interest or limitations that result in a deterioration of the service.

 

The Concessionaire will have to develop its own infrastructure to provide airport communication services in each airport, pursuant to the provisions in Appendix C Investment Plan and Technical Specifications, meeting all the national and international telecommunication standards and protocols for a 24/7 operation. All the costs related to the separation of the concessionaire’s communication systems from those of the Aerocivil, will be borne by the concessionaire.

 

The concessionaire will provide the communication services and will charge the users thereof within the areas granted under concession, including retail, airlines, service and repair stations, and the offices of government entities required in the Terminal and that make part of the airport services (DAS, ICA, POLICE, HEALTH DEPARTMENT (VACCINES), among others).

 

2.3.                            TRANSITION PLAN

 

The transition for communication networks management, and especially the telephone network, will be done according to a plan which shall be proposed by the concessionaire according to the installation of their new equipment and networks. As for the responsibility for the service and the level of intervention and application of the resources, the Aerocivil will be responsible for the telephone service and related charges until the Concessionaire implements the separation of the communication networks and the AEROCIVIL receives an inventory of services.

 

According to the general criteria of the concession, and in order to execute the delivery of the services transported through the telephone and fiber-optic (FO) network infrastructure that the entity currently has, the AEROCIVIL and the concessionaire will consider the following criteria:

 

19

 

·                  The services delivered through the infrastructure that makes up the telephone network and the Fiber Optic network will be given to the concessionaire, following a transition plan, to be implemented in the new network(s) developed by the concessionaire.

·                  The transition will include the investment in and performance of works by the Concessionaire to have its own network independent from the Aerocivil’s network.

·                  The first phase of the transition plan involves the AEROCIVIL and the concessionaire defining the point or space where the concessionaire will place the facilities to locate its telephone switchboard.

·                  The second phase will be the development of the concessionaire’s switching central. The concessionaire will contract the services of a company it considers convenient, to interconnect its central and the public grid through PRI according to the needs of the users of the Terminal, cargo terminals and their users.

·                  The second phase includes the separation of the network and the existing communications infrastructure in the cargo and air terminals annexed to the airport. The concessionaire shall implement its backbone infrastructure with new networks or using the existing cabling, as long as these do not go through the AEROCIVIL’s main distributor or aeronautical information circulates through them. In the same way, in this phase the concessionaire will invest in and implement communication solutions through radio connections, with fiber optic redundancy or vice versa, including the corresponding active equipment and delivering fully operating service to the AEROCIVIL.

·                  The third phase will include the disconnection of the Ericsson MD 110 Central and its connection to the concessionaire’s centrals. For this, the AEROCIVIL will provide the respective twisted pairs in the distribution lockers or junction boxes and from this point to the final user. The delivery will include all the information regarding accounts and billing charges for the concessionaire to develop, at its own expense, all the administrative process to charge for telephone and single pairs services.

·                  Upon completion of the third phase, the concessionaire will execute new service agreements with the users or subscribers and will be responsible for the service and maintenance thereof, releasing the AEROCIVIL from any liability of costs or expenditures whatsoever. During the migration of the services to the concessionaire’s communication network, the concessionaire will be responsible for coordinating with the final user to prevent operational damages and risks of each business. The concessionaire will be responsible for managing the permits and installation of cables, networks or services to third parties within the areas granted under concession.

 

2.3.3.                  COMMUNICATION SERVICES OF AEROCIVIL

 

The Concessionaire will be responsible for all the infrastructure works that affect the currently existing networks used for the communication services of Aerocivil, agreeing to relocate them and to adapt them according to the requirements of the Aerocivil or the company that provides the telecommunication service, with the required redundancy. These works shall be coordinated with the Aerocivil. In the same way, the concessionaire will give special treatment and priority to the communication needs of the Aerocivil that for any need to be implemented in the areas granted under concession.

 

20

 

2.3.4.                  IMPROVEMENTS TO AIRPORT TERMINALS

 

In the case of improvements to Airport Terminals that require the relocation of communications equipment in such buildings, it must be arranged with the Aerocivil to maintain aeronautical and administrative communications of the Entity. Such relocation and supplementary works thereof, such as networks, M.D.F., equipment room, cabinets, among others, will be a responsibility of the concessionaire and shall meet the standards of the Aerocivil in terms of safety, reliability and redundancy.

 

2.3.5.                  LOCATIONS IN CASE OF NEW CONSTRUCTIONS

 

In case that the project implies new constructions for the Entity, the following must be considered:

 

·                  The locations for communications in the new buildings built by the concessionaire to relocate the administrative offices of the AEROCIVIL, must have:

·                  Communications management room, with its security and access control system.

·                  Underground duct system with output to the communications management room, which will be used to introduce the external cabling; the facilities shall have a structured cabling network, in compliance with all the existing standards. Also, horizontal cabling per floor with their respective distribution cabinet, horizontal backbone fiber optic cabling, and one single network management center, where the active equipment will be located. The design, supply and set-up of the cabling and installation of terminal points for final users will be a responsibility of the concessionaire according to the provisions of Appendix C Investment Plan and Technical Specifications. The structured cabling shall be certified and pursuant to the technical protocols of proof and identification.

·                  The contractor shall foresee the ducts, cable ladders and the cabling path to facilitate the installation of communications via radio from the communications management room, the connection to the UPS system, air conditioning system and backup battery bank storage area.

·                  The electrical network shall be parallel to the structured cabling network to facilitate connection of user’s equipment.

 

2.4.                            INVOICING AND PAYMENT OF SERVICE

 

As long as the switching services of the subscribers and related costs are supported with resources from the Aerocivil, the Entity will bill and collect payment thereof from the users. The concessionaire will be responsible for all the infrastructure works that affect the existing networks, agreeing to relocate them and to adapt them according to the requirements of the Aerocivil or the company that provides the telecommunication service to prevent adverse effects on the service to final users. These works shall always be coordinated with the Aerocivil staff.

 

If the concessionaire needs to use any of the services of the communication network of Aerocivil locally or nationally, these will be provided under agreements or contracts that shall be independent from the provisions of the concession, according to the fees of the Aerocivil.

 

Once the separation of the telecommunication services has been complete, the concessionaire will be responsible for paying the services and for charging and billing the users.

 

21

 

3.                                      AQUEDUCT AND SEWER PROTOCOL

 

The provision of the aqueduct and sewer service is governed by the provisions of the Concession Agreement and its Appendixes. This service will be provided to the Aerocivil free of any charge; the costs for the provision of this service will be borne by the Concessionaire during the entire term of the Concession.

 

22

 

AEROPUERTO JOSE MARIA CORDOBA — RIONEGRO

 

	
DESCRIPTION OF THE INVESTMENT
    	
 
    	
UNIT
    	
 
    	
QUANTITY
    	
 
    
	
AERONAVIGATION   AIDS
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Complementation   and repair of platform lights
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
Repair of runway   and taxiway lights
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
Surface signs   and markers
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
TAXIWAYS
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Construction of   New Cargo Terminal connection way
    	
 
    	
M2
    	
 
    	
9,590
    	
 
    
	
Construction of   Quick Exit way
    	
 
    	
Unit
    	
 
    	
1
    	
 
    
	
TERMINAL   BUILDING
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
General   furniture
    	
 
    	
Unit
    	
 
    	
1
    	
 
    
	
Terminal   building improvements
    	
 
    	
M2
    	
 
    	
23,150
    	
 
    
	
Escalators for   passengers
    	
 
    	
Unit
    	
 
    	
2
    	
 
    
	
Terminal   Building extension of domestic flights concourse
    	
 
    	
M2
    	
 
    	
4,100
    	
 
    
	
Construction of   New Cargo terminal
    	
 
    	
M2
    	
 
    	
8,000
    	
 
    
	
Construction of   New Cargo Terminal parking lot
    	
 
    	
M2
    	
 
    	
3,219
    	
 
    
	
Structural   reinforcement of buildings
    	
 
    	
M2
    	
 
    	
25,923
    	
 
    
	
ENVIRONMENTAL   MANAGEMENT
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Environmental   Impact Mitigation Works
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
Gutters and   Drains adaptation works
    	
 
    	
ml
    	
 
    	
13,650
    	
 
    
	
Bird Hazard   Control
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
Environmental   Management Plans
    	
 
    	
Unit
    	
 
    	
1
    	
 
    
	
OTHER
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Dome Replacement
    	
 
    	
M2
    	
 
    	
7,946
    	
 
    
	
FIDS Information   System
    	
 
    	
Unit
    	
 
    	
1
    	
 
    
	
BIDS Information   System
    	
 
    	
Unit
    	
 
    	
1
    	
 
    
	
Fuel Pits
    	
 
    	
Unit
    	
 
    	
1
    	
 
    
	
Pavement   Protection
    	
 
    	
M2
    	
 
    	
108,000
    	
 
    
	
Common Use   Terminal Equipment CUTE includes workstations
    	
 
    	
Unit
    	
 
    	
20
    	
 
    
	
Common Use   Self-Service CUSS includes kiosks
    	
 
    	
Unit
    	
 
    	
4
    	
 
    
	
Purchase   Substation for aeronautical systems
    	
 
    	
Unit
    	
 
    	
1
    	
 
    
	
Supply and   installation of communications server and network
    	
 
    	
System
    	
 
    	
1
    	
 
    
	
Vehicles
    	
 
    	
Unit
    	
 
    	
2
    	
 
    
	
Service Roads   for Land Vehicles
    	
 
    	
M2
    	
 
    	
7,393
    	
 
    
	
OTHER SERVICES
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Search and   Rescue Service Equipment
    	
 
    	
Unit
    	
 
    	
1
    	
 
    
	
Fire Suppression   Service Equipment
    	
 
    	
Unit
    	
 
    	
3
    	
 
    
	
Fire Suppression   Service improvement and maintenance of existing facilities
    	
 
    	
Unit
    	
 
    	
1
    	
 
    
	
Improvement of   Port Health Service
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
Structured cabling,   equipment and server
    	
 
    	
Unit
    	
 
    	
1
    	
 
    
	
RUNWAY
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Runway Strip   Levelling
    	
 
    	
M2
    	
 
    	
324,000
    	
 
    
	
Paving and   Repair of Runway Margins
    	
 
    	
M2
    	
 
    	
52,500
    	
 
    
	
Conformation and   Levelling Runway Threshold 18 Safety Zones
    	
 
    	
M2
    	
 
    	
8,100
    	
 
    
	
Conformation and   Levelling Runway Threshold 36 Safety Zones
    	
 
    	
M2
    	
 
    	
8,100
    	
 
    
	
Repaving runway   at 45% of expected entry
    	
 
    	
M2
    	
 
    	
157,500
    	
 
    
	
Repaving runway   at 90% of expected entry
    	
 
    	
M2
    	
 
    	
157,500
    	
 
    
	
PLATFORM
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Construction of   New Cargo Terminal Platform
    	
 
    	
M2
    	
 
    	
20,000
    	
 
    
	
Extension of   Domestic Passenger Terminal Platform - Asphalt
    	
 
    	
M2
    	
 
    	
11,802
    	
 
    
	
Extension of   Domestic Passenger Terminal Platform - Concrete
    	
 
    	
M2
    	
 
    	
6,579
    	
 
    

 

23

 

	
BOARDING   BRIDGES
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Supply of New   Boarding Bridges
    	
 
    	
Unit
    	
 
    	
12
    	
 
    
	
SECURITY, INFORMATION   AND BAGGAGE
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Security Systems
    	
 
    	
Unit
    	
 
    	
1
    	
 
    
	
Airport   Operational Database AODB
    	
 
    	
Unit
    	
 
    	
1
    	
 
    
	
Baggage   management system includes (3 CTX)
    	
 
    	
Unit
    	
 
    	
1
    	
 
    

 

AEROPUERTO ENRIQUE OLAYA HERRERA — MEDELLIN

 

	
DESCRIPTION OF THE ACTIVITY
    	
 
    	
UNIT
    	
 
    	
QUANTITY
    	
 
    
	
AERONAVIGATION   AIDS
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Marking
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
Runway and   Platform Lights
    	
 
    	
Unidad
    	
 
    	
1
    	
 
    
	
Visual Approach   Slope Indicator Systems
    	
 
    	
Unidad
    	
 
    	
1
    	
 
    
	
TAXIWAYS
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Taxiways Repair   and Repaving
    	
 
    	
M2
    	
 
    	
63,000
    	
 
    
	
Quick Exit Road   Repaving
    	
 
    	
M2
    	
 
    	
5,000
    	
 
    
	
Taxiway Lines
    	
 
    	
M2
    	
 
    	
73,089
    	
 
    
	
Complementation   of Taxiway Guide Signals
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
TERMINAL   BUILDING
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
General   furniture
    	
 
    	
M2
    	
 
    	
13,880
    	
 
    
	
Air conditioning   systems for lounges
    	
 
    	
Unidad
    	
 
    	
1
    	
 
    
	
FIDS Information   System
    	
 
    	
System
    	
 
    	
1
    	
 
    
	
BIDS Information   System
    	
 
    	
System
    	
 
    	
1
    	
 
    
	
Three-stop   elevator
    	
 
    	
Unidad
    	
 
    	
1
    	
 
    
	
Parking Building
    	
 
    	
M2
    	
 
    	
4,067
    	
 
    
	
ENVIRONMENTAL   MANAGEMENT
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Environmental   Impact Mitigation
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
Construction of   noise-proof barriers
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
Environmental   Management Plans
    	
 
    	
Unit
    	
 
    	
1
    	
 
    
	
OTHER
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Internal Improvements   PEP
    	
 
    	
M2
    	
 
    	
13,880
    	
 
    
	
Construction of   Cargo building
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
Police Station   Improvements
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
Common Use   Terminal Equipment CUTE includes workstations
    	
 
    	
Unit
    	
 
    	
10
    	
 
    
	
Common Use   Self-Service CUSS includes kiosks
    	
 
    	
Unit
    	
 
    	
3
    	
 
    
	
Supply and installation   of communications server and network
    	
 
    	
System
    	
 
    	
1
    	
 
    
	
Construction and   Furnishing General and Business Aviation Terminal
    	
 
    	
M2
    	
 
    	
1,000
    	
 
    
	
Construction of   New Control Tower
    	
 
    	
Unit
    	
 
    	
1
    	
 
    
	
Ramp Inspection   Vehicles
    	
 
    	
Unit
    	
 
    	
2
    	
 
    
	
Moving Walkways   for Passengers
    	
 
    	
ml
    	
 
    	
360
    	
 
    
	
Reorganization   of General Aviation Hangars
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
OTHER   SERVICES
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Search and   Rescue Service Equipment
    	
 
    	
Unit
    	
 
    	
1
    	
 
    
	
Fire Suppression   Service Equipment
    	
 
    	
Unit
    	
 
    	
2
    	
 
    
	
Fire Suppression   Service Construction of New Facilities
    	
 
    	
M2
    	
 
    	
600
    	
 
    
	
Improvement of   Port Health Service
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
Structured   cabling, equipment and server
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
RUNWAY
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Runway Strip   Improvement
    	
 
    	
M2
    	
 
    	
280,000
    	
 
    
	
Repaving runway   at 45% of expected entry
    	
 
    	
M2
    	
 
    	
54,000
    	
 
    
	
Repaving runway   at 90% of expected entry
    	
 
    	
M2
    	
 
    	
54,000
    	
 
    

 

24

 

	
BOARDING   SYSTEMS
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Boarding Aisles
    	
 
    	
M2
    	
 
    	
3,000
    	
 
    
	
SECURITY   AND BAGGAGE
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Security Systems
    	
 
    	
Unit
    	
 
    	
1
    	
 
    
	
Baggage   management system
    	
 
    	
Unit
    	
 
    	
1
    	
 
    

 

AEROPUERTO LOS GARZONES — MONTERIA

 

	
DESCRIPTION OF THE ACTIVITY
    	
 
    	
UNIT
    	
 
    	
QUANTITY
    	
 
    
	
AERONAVIGATION   AIDS
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Runway Extension   Lights
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
Surface Signals   and Marks
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
Approach   Lighting System Cat I
    	
 
    	
System
    	
 
    	
1
    	
 
    
	
Visual Approach   Slope Indicator Systems
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
TAXIWAYS
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Taxiways   Repaving
    	
 
    	
M2
    	
 
    	
4,600
    	
 
    
	
Taxiway Guide   Signals
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
TERMINAL   BUILDING
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Construction of   New Cargo Terminal Building
    	
 
    	
M2
    	
 
    	
1,500
    	
 
    
	
Extension of   Terminal Building (gate) including furniture and air conditioning
    	
 
    	
M2
    	
 
    	
300
    	
 
    
	
ENVIRONMENTAL   MANAGEMENT
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Environmental   Impact Mitigation
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
Environmental   Management Plans
    	
 
    	
Unit
    	
 
    	
1
    	
 
    
	
OTHER
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Ramp Inspection   Vehicle
    	
 
    	
Unit
    	
 
    	
1
    	
 
    
	
Repair parking   lot
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
Supply and   installation of communications server and network
    	
 
    	
System
    	
 
    	
1
    	
 
    
	
FIDS Information   System
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
BIDS Information   System
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
Purchase   substation for aeronautical systems
    	
 
    	
Unit
    	
 
    	
1
    	
 
    
	
Service Roads   for Land Vehicles
    	
 
    	
M2
    	
 
    	
800
    	
 
    
	
OTHER   SERVICES
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Fire Suppression   Service Equipment
    	
 
    	
Unit
    	
 
    	
2
    	
 
    
	
Fire Suppression   Service improvement of existing facilities
    	
 
    	
Unit
    	
 
    	
1
    	
 
    
	
Improvement of   Port Health Service facilities and equipment
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
Structured   cabling, equipment and server
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
RUNWAY
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Runway extension
    	
 
    	
M2
    	
 
    	
18,600
    	
 
    
	
Runway strip
    	
 
    	
M2
    	
 
    	
248,400
    	
 
    
	
Turning bays
    	
 
    	
M2
    	
 
    	
1,725
    	
 
    
	
Runway margins
    	
 
    	
M2
    	
 
    	
1,725
    	
 
    
	
Runway extension   (440 mts)
    	
 
    	
M2
    	
 
    	
19,800
    	
 
    
	
Repaving runway   at 45% of expected entry
    	
 
    	
M2
    	
 
    	
103,500
    	
 
    
	
Repaving runway   at 90% of expected entry
    	
 
    	
M2
    	
 
    	
103,500
    	
 
    
	
Runway Threshold   Safety Zones
    	
 
    	
M2
    	
 
    	
16,200
    	
 
    
	
PLATFORM
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Cargo Terminal   Platform
    	
 
    	
M2
    	
 
    	
10,000
    	
 
    
	
Passenger   Terminal Platform Concrete Replacement
    	
 
    	
M2
    	
 
    	
21,281
    	
 
    
	
SECURITY   AND BAGGAGE
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
New baggage   management system includes one CTX
    	
 
    	
Unit
    	
 
    	
1
    	
 
    
	
Security Systems
    	
 
    	
Unit
    	
 
    	
1
    	
 
    

 

25

 

AEROPUERTO EL CARAÑO — QUIBDO

 

	
CONSOLIDATED
    	
 
    	
UNIT
    	
 
    	
QUANTITY
    	
 
    
	
AERONAVIGATION   AIDS
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
REIL Lights
    	
 
    	
System
    	
 
    	
1
    	
 
    
	
Visual Approach   Slope Indicator Systems
    	
 
    	
System
    	
 
    	
1
    	
 
    
	
TAXIWAYS
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Taxiways   Maintenance Works
    	
 
    	
M2
    	
 
    	
1,320
    	
 
    
	
TERMINAL   BUILDING
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Construction of   New Cargo, Packages and Mail Terminal
    	
 
    	
M2
    	
 
    	
400
    	
 
    
	
Construction of   New Passenger Terminal Building includes FIDS and BIDS, furniture and signage
    	
 
    	
M2
    	
 
    	
2,000
    	
 
    
	
ENVIRONMENTAL   MANAGEMENT
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Environmental   Impact Mitigation
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
Environmental   Management Plans
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
Drains and   completion of wastewater treatment plant
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
OTHER
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Air conditioning   systems
    	
 
    	
System
    	
 
    	
1
    	
 
    
	
Purchase   substation for aeronautical systems
    	
 
    	
Unit
    	
 
    	
1
    	
 
    
	
Vehicles
    	
 
    	
Unit
    	
 
    	
1
    	
 
    
	
OTHER   SERVICES
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Fire Suppression   Service Equipment
    	
 
    	
Unit
    	
 
    	
1
    	
 
    
	
Supply and   installation of communications server and network
    	
 
    	
System
    	
 
    	
1
    	
 
    
	
Construction of   Fire Suppression Service facilities
    	
 
    	
M2
    	
 
    	
400
    	
 
    
	
Structured   cabling, equipment and server
    	
 
    	
System
    	
 
    	
1
    	
 
    
	
Improvement of   Port Health Service facilities and equipment
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
RUNWAY
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Runway strip   improvement, levelling and compacting
    	
 
    	
M2
    	
 
    	
182,400
    	
 
    
	
Runway margins   maintenance and improvement
    	
 
    	
M2
    	
 
    	
9,100
    	
 
    
	
Runway   maintenance
    	
 
    	
M2
    	
 
    	
42,000
    	
 
    
	
Repaving runway   at 45% of expected entry
    	
 
    	
M2
    	
 
    	
42,000
    	
 
    
	
Repaving runway   at 90% of expected entry
    	
 
    	
M2
    	
 
    	
42,000
    	
 
    
	
Runway Threshold   Safety Zones
    	
 
    	
M2
    	
 
    	
16,200
    	
 
    
	
PLATFORM
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Platform   Extension
    	
 
    	
M2
    	
 
    	
3,000
    	
 
    
	
Passenger Terminal   Platform Concrete Replacement
    	
 
    	
M2
    	
 
    	
7,041
    	
 
    
	
SECURITY   AND BAGGAGE
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Security Systems
    	
 
    	
System
    	
 
    	
1
    	
 
    
	
New baggage   management system
    	
 
    	
System
    	
 
    	
1
    	
 
    
	
Construction of   missing enclosure
    	
 
    	
ml
    	
 
    	
653
    	
 
    

 

AEROPUERTO EL ANTONIO ROLDAN BETANCOURT — CAREPA

 

	
DESCRIPTION OF ACTIVITIES
    	
 
    	
UNIT
    	
 
    	
QUANTITY
    	
 
    
	
AERONAVIGATION   AIDS
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
REIL Lights
    	
 
    	
System
    	
 
    	
1
    	
 
    
	
Repair Runway   and Taxiway Lights and Relocate Runway Lights
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
Runway and   Platform Signage
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
Visual Approach   Slope Indicator Systems
    	
 
    	
System
    	
 
    	
1
    	
 
    
	
TAXIWAYS
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Taxiways   Pavement Improvement
    	
 
    	
M2
    	
 
    	
1,840
    	
 
    

 

26

 

	
Taxiway strips   Improvement, Levelling and Compacting
    	
 
    	
M2
    	
 
    	
2,750
    	
 
    
	
TERMINAL   BUILDING
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Construction of   New Cargo, Packages and Mail Terminal
    	
 
    	
M2
    	
 
    	
400
    	
 
    
	
Construction of   New Terminal Building includes FIDS, furniture, air conditioning and BIDS
    	
 
    	
M2
    	
 
    	
2,000
    	
 
    
	
ENVIRONMENTAL   MANAGEMENT
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Septic Tank   repair
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
Cleaning and   Maintenance of rainwater drainage system
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
Environmental   Impact Mitigation
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
Environmental   Management Plans
    	
 
    	
Unit
    	
 
    	
1
    	
 
    
	
OTHER
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Demolition of   Control Tower
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
Purchase   substation for aeronautical systems
    	
 
    	
Unit
    	
 
    	
1
    	
 
    
	
Ramp inspection   vehicles
    	
 
    	
Unit
    	
 
    	
1
    	
 
    
	
OTHER   SERVICES
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Fire Suppression   Service Equipment
    	
 
    	
Unit
    	
 
    	
1
    	
 
    
	
Supply and   installation of communications server and network
    	
 
    	
System
    	
 
    	
1
    	
 
    
	
Construction of   Fire Suppression Service facilities
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
Structured   cabling, equipment and server
    	
 
    	
System
    	
 
    	
1
    	
 
    
	
Improvement of   Port Health Service facilities and equipment
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
RUNWAY
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Runway strip   improvement, levelling and compacting
    	
 
    	
M2
    	
 
    	
241,980
    	
 
    
	
Runway margins   improvement
    	
 
    	
M2
    	
 
    	
15,260
    	
 
    
	
Runway pavement   improvement
    	
 
    	
M2
    	
 
    	
65,400
    	
 
    
	
Runway extension   (15 meters wide)
    	
 
    	
M2
    	
 
    	
32,700
    	
 
    
	
Repaving runway   at 45% of expected entry
    	
 
    	
M2
    	
 
    	
98,100
    	
 
    
	
Repaving runway   at 90% of expected entry
    	
 
    	
M2
    	
 
    	
98,100
    	
 
    
	
Runway Threshold   Safety Zones
    	
 
    	
M2
    	
 
    	
16,200
    	
 
    
	
PLATFORM
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Passenger   Terminal Platform Concrete Replacement
    	
 
    	
M2
    	
 
    	
15,971
    	
 
    
	
SECURITY   AND BAGGAGE
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Security Systems
    	
 
    	
System
    	
 
    	
1
    	
 
    
	
Baggage   management system
    	
 
    	
System
    	
 
    	
1
    	
 
    
	
Enclosure   replace fence with chain link
    	
 
    	
ml
    	
 
    	
2,572
    	
 
    

 

AEROPUERTO LAS BRUJAS — COROZAL

 

	
DESCRIPTION OF ACTIVITIES
    	
 
    	
UNIT
    	
 
    	
QUANTITY
    	
 
    
	
AERONAVIGATION   AIDS
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
REIL Lights
    	
 
    	
System
    	
 
    	
1
    	
 
    
	
Repair Runway   and Taxiway Lights and Relocate and extension of lights in Runway extension
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
Relocate Visual   Approach Slope Indicator Systems
    	
 
    	
System
    	
 
    	
1
    	
 
    
	
Runway, Taxiway   and Platform Signage
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
TERMINAL   BUILDING
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Extension of   Terminal Building
    	
 
    	
M2
    	
 
    	
300
    	
 
    
	
FIDS Information   Systems
    	
 
    	
System
    	
 
    	
1
    	
 
    
	
Terminal   Building Signage
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
Structural   Reinforcement of Buildings
    	
 
    	
M2
    	
 
    	
1,500
    	
 
    
	
Construction of   New Cargo, Packages and Mail Terminal
    	
 
    	
M2
    	
 
    	
400
    	
 
    
	
Landscaping and   outdoor repairs
    	
 
    	
Global
    	
 
    	
1
    	
 
    

 

27

 

	
ENVIRONMENTAL   MANAGEMENT
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Cleaning and   repairs of gutters and drains
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
Environmental   Impact Mitigation
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
Septic Tank   Repair and construction of infiltration fields
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
Environmental   Management Plans
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
OTHER
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Structural   Reinforcement and General Maintenance of Control Tower
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
Ramp inspection   vehicles
    	
 
    	
Unit
    	
 
    	
1
    	
 
    
	
Purchase   substation for airport systems
    	
 
    	
System
    	
 
    	
1
    	
 
    
	
Ambulance   Vehicle
    	
 
    	
Unit
    	
 
    	
1
    	
 
    
	
OTHER   SERVICES
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Fire Suppression   Service Equipment
    	
 
    	
Unit
    	
 
    	
1
    	
 
    
	
Construction of   Fire Suppression Service facilities
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
Supply and   installation of communications server and network
    	
 
    	
System
    	
 
    	
1
    	
 
    
	
Structured   cabling, equipment and server
    	
 
    	
System
    	
 
    	
1
    	
 
    
	
Improvement of   Port Health Service facilities and equipment
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
RUNWAY
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Runway strip   levelling and compacting
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
Runway gutters
    	
 
    	
M2
    	
 
    	
42,000
    	
 
    
	
Repaving runway   at 45% of expected entry
    	
 
    	
M2
    	
 
    	
54,000
    	
 
    
	
Repaving runway   at 90% of expected entry
    	
 
    	
M2
    	
 
    	
54,000
    	
 
    
	
Runway Surface   Improvement
    	
 
    	
M2
    	
 
    	
16,200
    	
 
    
	
RUNWAY   EXTENSION
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Land Acquisition
    	
 
    	
M2
    	
 
    	
73,500
    	
 
    
	
Conformation,   levelling and compacting of land
    	
 
    	
M2
    	
 
    	
367,500
    	
 
    
	
Pavement
    	
 
    	
M2
    	
 
    	
12,000
    	
 
    
	
Enclosure
    	
 
    	
ml
    	
 
    	
1,130
    	
 
    
	
Signage
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
Lights for   runway extension
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
Relocate lights
    	
 
    	
Global
    	
 
    	
1
    	
 
    
	
PLATFORM
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Passenger   Terminal Platform Concrete Replacement
    	
 
    	
M2
    	
 
    	
15,971
    	
 
    
	
SECURITY   AND BAGGAGE
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Security Systems
    	
 
    	
System
    	
 
    	
1
    	
 
    
	
Baggage conveyor   belt
    	
 
    	
Unit
    	
 
    	
1
    	
 
    
	
Enclosure repair
    	
 
    	
Global
    	
 
    	
1
    	
 
    

 

28

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00282-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00282-of-00352.parquet"}]]