Document:

Exhibit 10.19

 

LEASE
AGREEMENT

 

by and between

 

INDIANAPOLIS
AIRPORT AUTHORITY

 

and

 

AAR AIRCRAFT
SERVICES, INC.

 

Dated as of June 14,
2004

 

 

Index to IMC
Lease Agreement

 

	
  ARTICLE I.

  	
  DEFINITIONS

  	
   

  
	
   

  	
   

  
	
  Section 101.

  	
  Definitions below:

  	
   

  
	
   

  	
   

  
	
  ARTICLE II.

  	
  LEASE OF
  LEASED PREMISES; OWNERSHIP OF IMPROVEMENTS AND EQUIPMENT; USE OF LEASED
  PREMISES

  	
   

  
	
   

  	
   

  
	
  Section 201.

  	
  Lease of Leased Premises

  	
   

  
	
  Section 202.

  	
  Ownership of Improvements and Equipment

  	
   

  
	
  Section 203.

  	
  Master Lists of Equipment and Excluded Property.

  	
   

  
	
  Section 204.

  	
  Condition of Leased Premises

  	
   

  
	
  Section 205.

  	
  Possession of Leased Premises; Activation.

  	
   

  
	
  Section 206.

  	
  Use of Leased Premises; Prohibited Uses.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE III.

  	
  REPRESENTATIONS,
  WARRANTIES AND COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 301.

  	
  Representations, Warranties and Covenants by Authority

  	
   

  
	
  Section 302.

  	
  Representations, Warranties and Covenants by Tenant

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV.

  	
  OPTION TO EXPAND LEASED PREMISES

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 401.

  	
  Tenant’s Option to Expand Leased Premises

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE V.

  	
  TERM; EXTENSION PERIODS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 501.

  	
  Term; Extension Option.

  	
   

  
	
  Section 502.

  	
  Right to Terminate Upon Certain Events.

  	
   

  
	
  Section 503.

  	
  Rights at Expiration/Termination.

  	
   

  
	
  Section 504.

  	
  Early Termination Rights.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI.

  	
  RENTALS, FEES AND RECORDS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 601.

  	
  Rental.

  	
   

  
	
  Section 602.

  	
  Field Use Charge

  	
   

  
	
  Section 603.

  	
  Time and Place of Payments

  	
   

  
	
  Section 604.

  	
  Delinquent Rentals

  	
   

  
	
  Section 605.

  	
  Authority Incentives.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII.

  	
  OBLIGATIONS OF TENANT

  	
   

  
	
   

  	
   

  
	
  Section 701.

  	
  Payment of Rental and Other Amounts

  	
   

  
	
  Section 702.

  	
  Operation and Use of Leased Premises.

  	
   

  
	
  Section 703.

  	
  Trash, Garbage and Other Refuse; Outside
  Storage.

  	
   

  
				

 

i

 

	
  Section 704.

  	
  Licenses and Permits

  	
   

  
	
  Section 705.

  	
  Hazardous Materials.

  	
   

  
	
  Section 706.

  	
  Industrial Discharge Permit; Air Permits.

  	
   

  
	
  Section 707.

  	
  Signs

  	
   

  
	
  Section 708.

  	
  Rules and Regulations for Safety, Care
  and Cleanliness

  	
   

  
	
  Section 709.

  	
  Taxes

  	
   

  
	
  Section 710.

  	
  Nondiscrimination.

  	
   

  
	
  Section 711.

  	
  Civil Rights

  	
   

  
	
  Section 712.

  	
  Affirmative Action.

  	
   

  
	
  Section 713.

  	
  INTENTIONALLY OMITTED.

  	
   

  
	
  Section 714.

  	
  Observance of Statutes

  	
   

  
	
  Section 715.

  	
  Hazard Lights

  	
   

  
	
  Section 716.

  	
  Liens.

  	
   

  
	
  Section 717.

  	
  Tenant to Maintain Organizational Existence

  	
   

  
	
  Section 718.

  	
  Advances by Authority

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII.

  	
  OBLIGATIONS OF AUTHORITY

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 801.

  	
  Ingress and Egress

  	
   

  
	
  Section 802.

  	
  Quiet Enjoyment of the Leased Premises.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX.

  	
  COMPLIANCE WITH SECURITY REQUIREMENTS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 901.

  	
  Security Agreement

  	
   

  
	
  Section 902.

  	
  Security Rules and Regulations of
  Authority, FAA and TSA

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE X.

  	
  MAINTENANCE, REPAIRS AND REPLACEMENTS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 1001.

  	
  Maintenance, Repairs and Replacements to
  Facilities and Leased Premises (other than Equipment)

  	
   

  
	
  Section 1002.

  	
  Maintenance Repairs and Replacements of and
  to Equipment.

  	
   

  
	
  Section 1003.

  	
  Prompt Notification of Damage, Defects or
  Malfunction

  	
   

  
	
  Section 1004.

  	
  Access to Leased Premises

  	
   

  
	
  Section 1005.

  	
  Inventory of Equipment at Leased Premises.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI.

  	
  FACILITIES OPERATIONS AND SERVICES

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 1101.

  	
  Services

  	
   

  
	
  Section 1102.

  	
  Authority Not Liable for Malfunctions

  	
   

  
	
  Section 1103.

  	
  Utilities to Be Obtained and Maintained by
  Tenant

  	
   

  
	
  Section 1104.

  	
  Energy and Utility Conservation

  	
   

  
	
  Section 1105.

  	
  Reimbursement by Tenant

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XII.

  	
  FINANCIAL SECURITY

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 1201.

  	
  Letter of Credit

  	
   

  
	
  Section 1202.

  	
  Guaranty

  	
   

  
				

 

ii

 

	
  ARTICLE XIII.

  	
  AUTHORITY’S RESERVATIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 1301.

  	
  Improvement, Relocation or Removal

  	
   

  
	
  Section 1302.

  	
  Inspection of Leased Premises; Exhibition
  of Leased Premises

  	
   

  
	
  Section 1303.

  	
  Subordination to U.S. Government

  	
   

  
	
  Section 1304.

  	
  Suspension of Lease Agreement

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIV.

  	
  COMMON AREAS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 1401.

  	
  Definition

  	
   

  
	
  Section 1402.

  	
  Tenant’s Use of Common Areas

  	
   

  
	
  Section 1403.

  	
  Maintenance

  	
   

  
	
  Section 1404.

  	
  Reservation of Rights

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XV.

  	
  INSURANCE

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 1501.

  	
  Authority’s Insurance

  	
   

  
	
  Section 1502.

  	
  Tenant’s Insurance.

  	
   

  
	
  Section 1503.

  	
  Application of Insurance Proceeds

  	
   

  
	
  Section 1504.

  	
  Release and Waiver of Subrogation

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XVI.

  	
  CASUALTY DAMAGE AND CONDEMNATION

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 1601.

  	
  Damage by Casualty

  	
   

  
	
  Section 1602.

  	
  Condemnation.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XVII.

  	
  GENERAL INDEMNITY

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 1701.

  	
  Tenant Indemnity

  	
   

  
	
  Section 1702.

  	
  Authority Indemnity.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XVIII.

  	
  EVENTS OF DEFAULT BY AUTHORITY

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 1801.

  	
  Events of Default by Authority

  	
   

  
	
  Section 1802.

  	
  Remedies of Tenant on Default

  	
   

  
	
  Section 1803.

  	
  No Additional Waiver Implied By One Waiver;
  Consents to Waiver

  	
   

  
	
  Section 1804.

  	
  Delay Not a Waiver

  	
   

  
	
  Section 1805.

  	
  No Remedy Exclusive

  	
   

  
	
  Section 1806.

  	
  Notice of Termination

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIX.

  	
  EVENTS OF DEFAULT BY TENANT

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 1901.

  	
  Events of Default By Tenant

  	
   

  
	
  Section 1902.

  	
  Certain Remedies of the Authority on Rental
  Default.

  	
   

  
	
  Section 1903.

  	
  Additional Remedies of Authority on
  Default.

  	
   

  
	
  Section 1904.

  	
  Tenant to Remain Liable for Payments;
  Reletting.

  	
   

  
	
  Section 1905.

  	
  Disposition of Excluded Property

  	
   

  
	
  Section 1906.

  	
  No Remedy Exclusive

  	
   

  
	
  Section 1907.

  	
  No Additional Waiver Implied By One Waiver;
  Consents to Waiver

  	
   

  
	
  Section 1908.

  	
  Notice of Termination

  	
   

  
				

 

iii

 

	
  Section 1909.

  	
  Possession by Authority

  	
   

  
	
  Section 1910.

  	
  Delay Not A Waiver

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XX.

  	
  RIGHTS UPON TERMINATION

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2001.

  	
  Improvements

  	
   

  
	
  Section 2002.

  	
  Excluded Property

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XXI.

  	
  ASSIGNMENT AND SUBLETTING; RIGHT OF FIRST REFUSAL AND LEASE OF
  AVAILABLE SPACE

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2101.

  	
  Subleases and Assignments.

  	
   

  
	
  Section 2102.

  	
  Subletting

  	
   

  
	
  Section 2103.

  	
  Payments from Assignees, Subtenants or
  Occupants

  	
   

  
	
  Section 2104.

  	
  Mortgages Prohibited

  	
   

  
	
  Section 2105.

  	
  Lease of Available Space; Tenant’s Right of
  First Refusal.

  	
   

  
	
  Section 2106.

  	
  Sole Remedy

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XXII.

  	
  GENERAL PROVISIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2201.

  	
  Non-Interference with Operation of Airport

  	
   

  
	
  Section 2202.

  	
  Binding Upon Successors and Assigns; No
  Intent to Benefit Third Parties

  	
   

  
	
  Section 2203.

  	
  Entire Agreement; Amendments

  	
   

  
	
  Section 2204.

  	
  Waiver

  	
   

  
	
  Section 2205.

  	
  Section Headings

  	
   

  
	
  Section 2206.

  	
  Governing Law; Interpretation

  	
   

  
	
  Section 2207.

  	
  Relationship

  	
   

  
	
  Section 2208.

  	
  Notices

  	
   

  
	
  Section 2209.

  	
  Counterparts

  	
   

  
	
  Section 2210.

  	
  Exculpation of Directors and Officers;
  Limited Liability

  	
   

  
	
  Section 2211.

  	
  Covenants Concerning the Other Lease
  Agreements and Bond Issues

  	
   

  
				

 

iv

 

LEASE
AGREEMENT

 

THIS LEASE AGREEMENT (hereinafter called this “Lease Agreement” or this
“Lease”) is made and entered into as of the 14 day of June, 2004 (the “Effective
Date”), by and between the INDIANAPOLIS AIRPORT AUTHORITY, a municipal
corporation existing under and by virtue of the laws of the State of Indiana
(the “Authority”), and AAR AIRCRAFT SERVICES, INC., a corporation incorporated
in the State of Illinois and authorized to do business in the State of Indiana,
with its principal office at 1100 North Wood Dale Road, Wood Dale,
Illinois  60191 (“Tenant”).

 

WITNESSETH
THAT:

 

WHEREAS, the Authority owns and operates the Airport; and

 

WHEREAS, the Authority owns and holds a leasehold interest in the Land
and the Facilities that have been developed on the Land; and

 

WHEREAS, the Authority shall lease to Tenant pursuant to this Lease
Agreement the leasehold interests of the Authority in the Leased Premises,
which constitute a portion of the Land and Facilities; and

 

WHEREAS, Tenant is engaged in the aviation and aerospace business,
including the business of providing aircraft maintenance, repair and overhaul
services to commercial airlines and other operators of aircraft, and related
services; and

 

WHEREAS, Tenant desires to lease the Leased Premises upon the terms and
conditions hereinafter stated:

 

NOW, THEREFORE, in consideration of the mutual covenants and payments
herein contained, the Authority and Tenant hereby agree as follows:

 

ARTICLE I.

 

DEFINITIONS

 

Section 101.                                Definitions
below:

 

“145 Certificate” has the meaning set forth in Section 302(G) of
this Lease.

 

“Act” means Indiana Code 8-22-3.

 

“Activate” or “Activation” has the meaning set forth in Section 205(A) of
this Lease.

 

“Activation Notice” has the meaning set forth in Section 205(A) of
this Lease.

 

“Actual Facilities Costs and Expenses” has the meaning set forth in Section 601(B)(2) of
this Lease.

 

 

“Additional Rent” has the meaning set forth in Section 601(B)(1) of
this Lease.

 

“Additional Rental Per Square Foot Per Annum” has the meaning set forth
in Section 601(B)(2) of this Lease.

 

“Affiliate” means any entity, directly or indirectly, controlled by,
controlling, or under common control with Tenant.

 

“Air Operations Area” means any portion of the Airport designed and
used for landing, taking off, or surface maneuvering of airplanes.

 

“Airport” means the Indianapolis International Airport.

 

“Airport Director” means the Airport Director of the Airport.

 

“Apron” means that area shown on Exhibit I
to this Lease, as the same may be amended by the Authority from time to time.

 

“Authority” means the Indianapolis Airport Authority, a municipal
corporation duly organized and operating under the laws of the State, including
the Act, or any successor thereto or assignee thereof.

 

“Authority Permits” has the meaning set forth in Section 704 of
this Lease.

 

“Authority’s Non-Compliance Notice” has the meaning set forth in Section 705(D) of
this Lease.

 

“Authority’s Notice of Proposed Agreement” has the meaning set forth in
Section 2105(A)(3) of this Lease.

 

“Authority Termination Event” has the meaning set forth in Section 504(A) of
this Lease.

 

“Available Equipment” means those items of Equipment on the Master List
of Equipment that have not already been provided to Tenant for its then
currently Occupied space at the Leased Premises.

 

“Available Space” has the meaning set forth in Section 2105(A) of
this Lease.

 

“BAA” means BAA Indianapolis LLC, an Indiana limited liability company.

 

“BAA USA” means BAA USA (Holdings), Inc., a Delaware corporation.

 

“Baseline Environmental Audit” has the meaning set forth in Section 705(C) of
this Lease.

 

“Base Rent” has the meaning set forth in Section 601(A)(1) of
this Lease.

 

2

 

“Bay” means that separate area, within a Hangar, which comprises
approximately one-half (1/2) of the Hangar. 
A “Bay” includes all of the office, storage, and employee support space
associated with that particular Bay.

 

“Bond Issues” means the City Bonds, the State
Bonds, and the Special Facility Bonds.

 

“Casualty” has the meaning set forth in Section 1601(A)(1) of
this Lease.

 

“City Bonds” means one or more series of tax-exempt revenue bonds,
including refunding bonds, issued by the Redevelopment Authority payable solely
from lease rentals from legally available funds of the Commission.

 

“Commission” means the Metropolitan Development Commission of Marion
County, Indiana, acting as the Redevelopment Commission of the City of
Indianapolis, Indiana.

 

“Commission Lease Agreement” means the Commission Lease Agreement dated
as of December 1, 1991 between the Commission and the Authority, as the
same has been or may hereafter be amended or supplemented from time to time.

 

“Common Area” has the meaning set forth in Section 1401 of this
Lease.

 

“Condemnation” has the meaning set forth in Section 1602(A) of
this Lease.

 

“Condition” has the meaning set forth in Section 2105(A)(2) of
this Lease.

 

“Corporate Overhead” has the meaning set forth in Section 601(C)(3)(c) of
this Lease.

 

“Corporate Overhead Allocation Guidelines” has the meaning set forth in
Section 601(C)(3)(c) of this Lease.

 

“Credits” has the meaning set forth in Section 605(B)(1) below.

 

“Credit Thresholds” has the meaning set forth in Section 605(B)(1) below.

 

“Deficit” has the meaning set forth in Section 501(B)(3) of
this Lease.

 

“Effective Date” has the meaning set forth in the Preamble to this
Lease.

 

“Employees” means, as to Tenant or its subtenants, respectively,
Persons who are either employed directly or indirectly by Tenant or a
subtenant, respectively, or are contracted by Tenant or a subtenant,
respectively, to perform day-to-day work that would otherwise be performed by
employees of Tenant or a subtenant, respectively.

 

“Entity” means any corporation, partnership, limited partnership,
limited liability partnership, joint venture, association, limited liability
company, joint-stock company, trust, or other entity or unincorporated
association, or any Governmental Entity.

 

“Environmental Audits” has the meaning set forth in Section 705(D) of
this Lease.

 

3

 

“Environmental Laws” means all Federal, State and local laws, including
without limitation all statutes, regulations, ordinances, codes, rules,
policies, orders, decrees, guidance, guidelines, conditions, permits issued to
the Authority, and other governmental restrictions and requirements, relating
to the environment or Hazardous Materials, and shall include, without
limitation, the Federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980 as amended by the Superfund Amendments and
Reauthorization Act of 1986, the Federal Solid Waste Disposal Act, the
Occupational Safety and Health Act, the Federal Water Pollution Control Act,
the Federal Clean Air Act, the Federal Clean Water Act, the Resource
Conservation and Recovery Act of 1976, the Safe Drinking Water Act, the Toxic
Substances Control Act, the Refuse Act, the Hazardous Materials Transportation
Act, the Emergency Planning and Community Right-to-Know Act, the Federal
Insecticide, Fungicide and Rodenticide Act, the Endangered Species Act, the
National Environmental Policy Act, regulations of the Environmental Protection
Agency, regulations of the Nuclear Regulatory Agency, the Indiana Air and Water
Pollution Control Law, the Indiana Groundwater Protection Act, the Indiana
Hazardous Waste Law, the Indiana Underground Storage Tanks Act, the Indiana
Wastewater Management Law, the Indiana Fish and Wildlife Act, the Indiana Flood
Control Act, the Indiana Environmental Policy Act, the Indiana Environmental
Management Act, regulations of any State Department of Natural Resources or
State Environmental Protection Agency, Environment, Health and Safety
Requirements, and any amendments or supplements thereto and any rules or
regulations promulgated pursuant thereto or in connection therewith, as now or
anytime hereafter in effect.  The term “Environmental
Laws” shall include regulations, ordinances, codes, rules, policies, guidance,
guidelines, conditions, restrictions and requirements relating to the
environment or Hazardous Materials that are issued, passed or imposed by the
Authority, whether now or hereafter in effect, to the extent those regulations,
ordinances, codes, rules, policies, guidance, guidelines, restrictions or
requirements are or would be generally applicable to any tenant or other Person
who is operating or conducting business at the Airport or to the extent
generally applicable to the public.

 

“Environment, Health and Safety Requirements” means all of the terms
and conditions of all permits, licenses, and other authorizations which are
required under, and all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules, and timetables which are
contained in, any and all Laws relating to public health and safety, worker
health and safety, or pollution or protection of the environment, including
without limitation Environmental Laws relating to emissions, discharges,
releases, or threatened releases of Hazardous Materials into ambient air,
surface water, ground water, or lands, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling of Hazardous Materials.

 

“Equipment” means the equipment, fixtures, permanent inventory,
tangible personal property, tooling (including general tooling and aircraft
maintenance tooling), or other items of property made available by the
Authority to Tenant whether now owned or hereafter acquired, as the same shall
be substituted or replaced from time to time in accordance with Article X,
all as identified on the Authority’s Master List of Equipment from time to
time, and all products and proceeds thereof.

 

“Estimated Completion Date” has the meaning set forth in Section 1601(C) of
this Lease.

 

4

 

“Estimated Facilities Costs and Expenses” has the meaning set forth in Section 601(B)(2) of
this Lease.

 

“Event of Default” means, with respect to Tenant, any of the Events of
Default set forth in Section 1901 hereof and, with respect to the
Authority, any of the Events of Default set forth in Section 1801 hereof.

 

“Excluded Property” means the equipment, permanent inventory or
tangible personal property of Tenant located at the Leased Premises, as
identified on Tenant’s Master List of Excluded Property from time to time; provided,
however, that aircraft parts inventory, shop supplies, and office supplies
shall always be Excluded Property and need not be identified on the Master List
of Excluded Property.

 

“Excluded Systems” means those utilities and/or building systems at the
Facilities that the Authority and Tenant mutually determine that the Authority
will not be obligated to make operational or to furnish to Tenant under this
Lease.  Among other utilities and/or
building systems that may be Excluded Systems, the fueling system at the
Facilities shall be deemed to be an “Excluded System”.  Once the Authority and Tenant have mutually
determined that a particular utility or building system is an “Excluded System”,
that utility or building system shall thereafter remain an “Excluded System”
unless the Authority and Tenant mutually agree otherwise.

 

“Expansion Area” has the meaning set forth in Section 401 of this
Lease.

 

“Expansion Option” has the meaning set forth in Section 401 of
this Lease.

 

“Expansion Space” has the meaning set forth in Section 401 of this
Lease.

 

“Extension Notice” has the meaning set forth in Section 501(B) of
this Lease.

 

“Extension Option” has the meaning set forth in Section 501(B) of
this Lease.

 

“Extension Term” has the meaning set forth in Section 501(B) of
this Lease.

 

“FAA” means the Federal Aviation Administration.

 

“Facility” or “Facilities” means (a) the buildings, structures,
improvements and facilities located on the Land, whether now or hereafter
existing and wherever located; and (b) any extensions, improvements,
replacements, and additions to and personal property (including, without
limitation, equipment, fixtures and permanent inventory) for such buildings,
structures, improvements and facilities, whether now or hereafter existing,
that are located on the Land.

 

“Facilities Manager” means the Person designated by the Authority, from
time to time, to be located “on-site” and to serve as the “facilities manager”
for the Facilities.

 

“Facilities Security Rules and Regulations” has the meaning set
forth in Section 902 of this Lease.

 

5

 

“Facilities Systems” means those Utilities and building systems, other
than Excluded Systems, that are applicable to a particular area within the
Leased Premises, which exist and shall be operable as of the Activation Date
for that particular area of the Leased Premises.

 

“Final Audit” had the meaning set forth in Section 1005(B)(2) of
this Lease.

 

“Full-Time Equivalent” means, with respect to an Indiana Resident
Employee, that the Indiana Resident Employee is hired to perform, and with rare
exception has performed, no fewer than eight (8) hours of a work day, five
(5) days per week, in ninety percent (90%) of the weeks during the period
in question.  In determining the number
of “Full-Time Equivalent” Indiana Resident Employees for a particular period,
the total number of hours per week worked during that period by Indiana
Resident Employees who do not, individually, qualify as “full time” pursuant to
the preceding sentence will be added and divided by forty (40).  The quotient shall be rounded to the nearest
whole number and shall be included toward the number of “Full-Time Equivalent”
Indiana Resident Employees that Tenant is to be credited with having employed
during the period in question.

 

“GAAP” has the meaning set forth in Section 601(C)(3) of this
Lease.

 

“Governmental Entity” means any court, government agency, department,
commission, board, bureau, office, officer or instrumentality of the United
States, any local, county, state, federal or political subdivision thereof, or
any foreign governmental entity of any kind, including but not limited to the
Authority.

 

“Grant Proceeds” has the meaning set forth in Section 605(A)(1) of
this Lease.

 

“Grant-Related Expenditures” has the meaning set forth in Section 605(A)(1) of
this Lease.

 

“Grants” has the meaning set forth in Section 605(A)(1) of
this Lease.

 

“Grant Thresholds” has the meaning set forth in Section 605(A)(1) of
this Lease.

 

“Gross Sales” has the meaning set forth in Section 601(C)(3) of
this Lease.

 

“Group” has the meaning set forth in Section 601(C)(3) of
this Lease.

 

“Group Expenses” has the meaning set forth in Section 601(C)(3) of
this Lease.

 

“Group Overhead” has the meaning set forth in Section 601(C)(3)(b) of
this Lease.

 

“Hangar” means those areas at the Facilities that are described as “hangars”
in Exhibit B.   Each Hangar (with the exception of Hangar 4)
consists of two (2) Bays.

 

“Hazardous Materials” means any hazardous or toxic substance and any pollutant
or contaminant, material or waste which is or becomes regulated by any local
Governmental Entity, the State of Indiana or the United States Government,
including, without limitation, any material

 

6

 

or substance which is (a) petroleum,
batteries, or liquid solvents or similar chemicals, (b) asbestos, (c) radioactive
material or waste, (d) polychlorinated biphenyls (“PCBs”), (e) designated
as a “hazardous substance” pursuant to Section 311 of the Federal Water
Pollution Control Act (33 U.S.C. § 1317), (f) defined as a “hazardous
waste” pursuant to Section 1004 of the Federal Resource Conservation and
Recovery Act, 42 U.S.C. § 6901 et seq. (42 U.S.C. § 6903), or
pursuant to Section 13-11-2-99 of the Indiana Code, or determined to be a “hazardous
waste” under Section 13-22-2-3(b) of the Indiana Code, (g) defined
as a “hazardous substance” pursuant to Section 101 of the Comprehensive
Environmental Response, Compensation and Liability Act, of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. § 9601
et seq. (42 U.S.C. § 9601), or pursuant to Section 13-11-2-98 of the
Indiana Code, (h) regulated under the Toxic Substances Control Act (15
U.S.C. § 2601 et seq.) or defined as a PCB pursuant to Section 13-11-2-155
of the Indiana Code, (i) defined as a “contaminant” pursuant to Section 13-11-2-42
of the Indiana Code, or (j) any other substance or material similarly
classified by any other federal, state or local Law or by any rule or
regulation promulgated or adopted pursuant thereto, whether now existing or
hereinafter enacted.

 

“IDP” has the meaning set forth in Section 706(A) of this
Lease.

 

“Improvement-Related Permits” has the meaning set forth in Section 605(A)(2)(c)(iii) of
this Lease.

 

“Improvement Rent Credits” has the meaning set forth in Section 605(C)(1) of
this Lease.

 

“Indiana Resident Employees” means individuals (i) who are Indiana
residents, and (ii) who are either (a) employed by Tenant or its
subtenants, respectively, at the Leased Premises, or (b) contracted by
Tenant or its subtenants, respectively, to perform day-to-day work at the
Leased Premises that would otherwise be performed by Persons employed directly
or indirectly by Tenant or its subtenants, respectively.

 

“Initial Term” has the meaning set forth in Section 501(A) of
this Lease.

 

“Invitees” shall mean, as to Tenant or any of its subtenants, (i) any
individual who enters the  Leased Premises by means of the main lobby
entrance to the Facilities, has been cleared by and issued a visitor
identification badge by Facilities security personnel at the security
checkpoint located at the main lobby entrance to the Facilities, and an
individual who bears an Authority-issued Tenant (or subtenant of Tenant) employee
badge acknowledges, in person at the security checkpoint, that such individual
is their guest and thereafter accompanies such individual from the security
checkpoint (even if that individual who bears the Authority-issued Tenant (or
subtenant of Tenant) employee badge fails to continue to accompany the
individual in violation of FAA/TSA security requirements), or (ii) any
individual who is otherwise accompanied into or onto the Leased Premises by an
individual who bears an Authority-issued Tenant (or subtenant of Tenant)
employee badge (even if that individual who bears the Authority-issued Tenant
(or subtenant of Tenant) employee badge thereafter fails to continue to
accompany the individual in violation of FAA/TSA security requirements). 
For purposes of subsection (i) above, Facilities security personnel
at the security checkpoint will not issue a visitor identification badge to an
individual unless  an individual who bears an Authority-issued

 

7

 

Tenant (or subtenant of Tenant) employee
badge acknowledges, in person at the security checkpoint, that such
individual is their guest and thereafter accompanies such individual from
the security checkpoint (even if that individual who bears the Authority-issued
Tenant (or subtenant of Tenant) employee badge, fails to continue to accompany
the individual in violation of FAA/TSA security requirements).

 

“ITFA” means the Indiana Transportation Finance Authority created under
IC 8-9.5-8 and acting pursuant to IC 8-21-12.

 

“ITFA Lease Agreement” means the Lease
Agreement between ITFA and the Authority dated as of December 1, 1991, as
the same has been or may hereafter be amended or supplemented from time to
time.

 

“Land” means the real estate located at the Airport, as shown on the
attached Exhibit A, consisting of
approximately two hundred seventeen (217) acres.  The Leased Premises is located on, and
consists of, a portion of the Land.

 

“Landlord Indemnified Parties” has the meaning set forth in Section 705(E) of
this Lease.

 

“Laws” means any and all applicable local, county, state, federal,
foreign or other laws, statutes, codes, regulations, ordinances, conditions,
requirements, rules, orders, decrees, consent decrees, judgments, writs,
settlement agreements, stipulations, injunctions, guidelines, demand letters,
or other governmental requirements enacted, promulgated, entered into, agreed
or imposed by any Governmental Entity from time to time, including without
limitation Environmental Laws.  The term “Laws”
shall include all regulations, ordinances, codes, rules, conditions,
guidelines, guidance, policies, restrictions and requirements that are issued,
passed or imposed by the Authority, whether now or hereafter in effect, to the
extent those regulations, ordinances, codes, rules, conditions, guidelines,
guidance, policies, restrictions or requirements are or would be generally
applicable to any tenant or other Person who is operating or conducting
business at the Airport or to the extent generally applicable to the public. “Lease
Agreement” or “Lease” means this Lease Agreement, as the same may be amended
and supplemented.

 

“Leased Premises” means (a) that portion of the Facilities
described in Exhibit B and shown on Exhibit B-1 attached hereto together with the Land on
which that portion of the Facilities is located; (b) that Equipment on the
Master List of Equipment (as hereafter defined) which is provided from time to
time by the Authority to Tenant pursuant to this Lease; and (c) any
applicable Expansion Area as to which Tenant properly exercises its Expansion
Option pursuant to this Lease.

 

“Leased Premises Improvements” has the meaning set forth in Section 605(A)(2)(c) of
this Lease.

 

“Letter of Credit” means the irrevocable Letter of Credit to be
obtained and maintained by Tenant pursuant to Section 1201 of this Lease.

 

8

 

“Liabilities” means any and all claims, demands, suits, proceedings,
judgments, costs, expenses, penalties, fees, fines, damages, losses, and liabilities
and includes, without limitation, reasonable attorneys’ fees.

 

“Lien” has the meaning set forth in Section 716(A) of this
Lease.

 

“Master List of Equipment” has the meaning set forth in Section 203(A) of
this Lease.

 

“Master List of Excluded Property” has the meaning set forth in Section 203(B) of
this Lease.

 

“Minimum Additional Rent” has the meaning set forth in Section 601(B)(8) of
this Lease.

 

“Minimum Base Rent” has the meaning set forth in Section 601(A)(3) of
this Lease.

 

“Minimum Monthly Rent” has the meaning set forth in Section 601(B)(8) of
this Lease.

 

“Mobilization Expenses” has the meaning set forth in Section 605(A)(1) of
this Lease.

 

“Net Proceeds” means the gross proceeds derived from insurance or any
eminent domain or condemnation award, or from any agreement in lieu of an
eminent domain or condemnation award, less payment of attorneys’ fees and
expenses properly incurred in the collection of those gross proceeds.

 

“Notice of Exercise of Right of First Refusal” has the meaning set forth
in Section 2105(A)(3) of this Lease.

 

“Occupied” means, with respect to any portion of the Leased Premises
that Tenant has requested be Activated and for which the Authority has
completed its Activation obligations with respect thereto; provided, however,
that if the Authority completes the Activation prior to the Requested
Activation Date (as hereinafter defined) for that portion of the Leased
Premises, “Occupancy” of that portion of the Leased Premises shall be deemed to
commence when Tenant takes possession of or begins to conduct Tenant’s Business
from that portion of the Leased Premises pursuant to Section 205 of this
Lease which shall in no case be later than the Requested Activation Date.  After a portion of the Leased Premises is
deemed to be Occupied, it shall remain Occupied unless and until Tenant has
subsequently de-Occupied that Activated portion of the Leased Premises in
accordance with Section 205(D) below regardless of whether Tenant is
actually using such space in connection with Tenant’s Business.

 

“Operating Profit” has the meaning set forth in Section 601(C)(3) of
this Lease.

 

“Operating Rules” has the meaning set forth in Section 705(A)(1) of
this Lease.

 

“Paint Booths” has the meaning set forth in Section 1001 of this
Lease.

 

“Parent” has the meaning set forth in Section 1202 of this Lease.

 

“Part 70 Permit” has the meaning set forth in Section 706(B) of
this Lease.

 

9

 

“Part 70 Permit Agreement” has the meaning set forth in Section 706(B) of
this Lease.

 

“Part 70 Permit Amendment” has the meaning set forth in Section 706(B) of
this Lease.

 

“Percentage Rent” has the meaning set forth in Section 601(C)(1) of
this Lease.

 

“Percentage Rent Certificate” has the meaning set forth in Section 601(C)(2) of
this Lease.

 

“Period” has the meaning set forth in Section 601(C)(2) of
this Lease.

 

“Permitted Encumbrances” means those matters listed in the attached Exhibit C.

 

“Person” means any individual or Entity.

 

“Plans” has the meaning set forth in Section 605(A)(2)(c)(i) below.

 

“POTW” has the meaning set forth in Section 706(A) of this
Lease.

 

“Proposed Agreement” has the meaning set forth in Section 2105(A)(3) of
this Lease.

 

“Redevelopment Authority” means the Marion County Convention and
Recreational Facilities Authority created under IC 36-10-9.1 and acting
pursuant to IC 36-7-15.3.

 

“Redevelopment Lease Agreement” means the
Lease Agreement between the Redevelopment Authority and the Commission, dated
as of December 1, 1991, as the same has been or may hereafter be amended
or supplemented from time to time.

 

“Rental” means the Base Rent, Additional Rent, and Percentage Rent
assessed against Tenant pursuant to Article VI.

 

“Requested Activation Date” has the meaning set forth in Section 205(B) of
this Lease.

 

“Right of First Refusal” has the meaning set forth in Section 2105(A)(3) of
this Lease.

 

“Site and Facilities Lease Agreement” means
the Site and Facilities Lease Agreement dated as of December 1, 1991 by
and among the Authority and the Redevelopment Authority, ITFA and the
Authority, or any successors, as tenants in common under the Tenancy in Common
Agreement, as the same has been or may hereafter be amended or supplemented
from time to time.

 

“Special
Facility Bonds” means one or more series of bonds, including refunding bonds,
issued by the Authority payable in part from Rental payments under this Lease
Agreement.

 

“State” means the State of Indiana.

 

“State Bonds” means one or more series of tax-exempt revenue bonds,
including refunding bonds, issued by ITFA, payable solely from lease rentals
payable by the Authority

 

10

 

under the ITFA Lease Agreement from any State
appropriations which may be made by the Indiana General Assembly for such purpose.

 

“Success Payment” has the meaning set forth in Section 605(D) of
this Lease.

 

“Tax Restrictions” means (1) covenants made by the Authority in
the Settlement Agreement entered into, effective as of February 13, 2004,
between the Authority and The Bank of New York Trust Company, N.A., and (2) all
rules and restrictions of the Internal Revenue Code of 1986, as amended,
as such rules and restrictions apply to the use of the Facilities due to
its financing with tax-exempt bonds.

 

“Tenancy in Common Agreement” means the
Agreement Among Tenants of Leasehold Estate in Airport Development Project by
and among the Redevelopment Authority, ITFA, and the Authority, as tenants in
common, dated as of December 1, 1991, as the same has been or may
hereafter be supplemented or amended from time to time.

 

“Tenant” means AAR Aircraft Services, Inc., an Illinois
corporation doing business as AAR Aircraft Services - Indianapolis.

 

“Tenant Fiscal Year” means the period from June 1 of any year
through May 31 of the following year.

 

“Tenant Reimbursement Parties” has the meaning set forth in Section 1702(A) of
this Lease.

 

“Tenant’s Business” has the meaning set forth in Section 206(A) of
this Lease.

 

“Tenant’s Controller” means the Person designated by Tenant as the
controller for Tenant’s Business at the Leased Premises (and Tenant shall
provide written notice from time to time to the Authority as to the name of the
person who is serving from time to time as Tenant’s Controller).

 

“Tenant Termination Event” has the meaning set forth in Section 504(B) of
this Lease.

 

“Term” and “Term of this Lease Agreement” means, collectively, the
Initial Term and, if Tenant has properly exercised its Extension Option, the
Extension Term, unless sooner terminated as provided in this Lease.

 

“TSA” means Transportation Security Administration.

 

“Wastewater Treatment Facility” has the
meaning set forth in Section 706(A) of this Lease.

 

11

 

ARTICLE II.

 

LEASE OF LEASED PREMISES; OWNERSHIP OF
IMPROVEMENTS

AND EQUIPMENT; USE OF LEASED PREMISES

 

Section 201.                                Lease
of Leased Premises.  Subject to and
upon the terms, covenants, conditions and provisions hereinafter set forth, and
each in consideration of the duties, covenants and obligations of the other hereunder,
the Authority hereby leases, demises and lets to Tenant, and Tenant hereby
leases from the Authority, the Leased Premises. 
The square footage of the Leased Premises shall be as calculated by the
Authority and confirmed by Tenant.

 

Section 202.                                Ownership
of Improvements and Equipment.  The
Leased Premises, including without limitation any buildings, fixtures,
facilities, structures, additions, Equipment or improvements in, on or to the
Leased Premises, are and shall remain the property of the Authority, subject to
Tenant’s rights hereunder to use the same during the Term of, and in accordance
with, this Lease Agreement.  Tenant shall
not remove, or permit the removal, of any of the Equipment from the Leased
Premises without the prior written consent of the Authority.  The Excluded Property is and shall remain the
property of Tenant.

 

Section 203.                                Master
Lists of Equipment and Excluded Property.

 

(A)                              The
Authority shall generate and maintain a comprehensive list of Equipment that it
agrees to furnish to Tenant for Tenant’s use in connection with this Lease (the
“Master List of Equipment”), as follows:

 

(1)                                  The
Authority shall provide Tenant, on or before the Effective Date of this Lease,
with a written list of all items of Equipment that are or will be, as of the
Effective Date, available for Tenant’s use at the Leased Premises;

 

(2)                                  Tenant
shall be provided access to such Equipment after the Effective Date of this
Lease and prior to Activation of a portion of the Leased Premises only for
testing and certification purposes, and Tenant shall not be permitted to use
such Equipment to operate Tenant’s Business prior to Tenant Occupying such
space;

 

(3)                                  At
the time Tenant provides an Activation Notice pursuant to Section 205
below, the Tenant shall indicate which items of Available Equipment that Tenant
requires in connection with the Activation of that portion of the Leased
Premises that is identified in Tenant’s Activation Notice.  As space in the Leased Premises is Activated
pursuant to Section 205 of this Lease, the Authority shall indicate on the
Master List of Equipment which items of Equipment have been provided to the
Tenant for its use and which items of Equipment are Available Equipment for the
future Activation of areas of the Leased Premises; and

 

(4)                                  To
the extent that, pursuant to the Authority’s obligations under Section 1002,
the Authority removes and/or replaces an item of Equipment from the Leased
Premises, the Authority shall provide Tenant with written notice thereof in
order to

 

12

 

update the Master List of
Equipment, and the list of Equipment furnished to Tenant from the Master List
of Equipment, in order to reflect that removal and/or replacement.

 

(B)                                Tenant
shall generate and maintain a comprehensive list of Excluded Property (the “Master
List of Excluded Property”) as follows:

 

(1)                                  To
the extent that, from and after the Effective Date, Tenant brings items of
Excluded Property onto the Leased Premises, or subsequently removes or replaces
an item of Excluded Property on such list, Tenant shall at the time the
Authority conducts its annual audit of Equipment provide the Authority with an
updated, comprehensive list of Excluded Property.

 

Section 204.                                Condition
of Leased Premises.  Subject to performance
by the Authority of its obligations with respect to the Activation of Bays and
other portions of the Leased Premises as provided in this Lease, including in Section 205
below, and subject to Sections 705 and 1702, Tenant accepts the Leased Premises
in its “AS-IS” condition, and acknowledges and agrees that except as otherwise
expressly provided in this Lease Agreement, the Authority shall have no
obligation to perform or complete any alterations, improvements or
modifications to the Leased Premises.

 

Section 205.                                Possession
of Leased Premises; Activation.

 

(A)                              For
purposes of this Lease, an “Activation Notice” means written notice from Tenant
as to which Bay or Bays, or other areas of the Leased Premises, that Tenant
wishes for the Authority to Activate, together with a specific, detailed list
of which pieces of Available Equipment and which Facilities Systems (other than
Excluded Systems) Tenant will need for the Authority to furnish to Tenant in
connection with Tenant’s use of that Bay or other area of the Leased Premises,
and the Tenant’s Requested Activation Date. 
“Activation” by the Authority of a Bay or other area of the Leased
Premises, or the Authority’s “Activating” of a Bay or other area of the Leased
Premises, means that the Authority furnishes to Tenant not earlier than the
Requested Activation Date (except as otherwise provided in subsection (C) below),
in good working order and condition, all Facilities Systems (other than
Excluded Systems) and Available Equipment that are reasonably requested by
Tenant in its Activation Notice.  Tenant
hereby acknowledges and agrees that Facilities Systems means only those
Facilities Systems which are installed in and/or otherwise located at the
Leased Premises as of the Effective Date of this Lease (and in their current
locations as of the Effective Date of this Lease), and does not include
Excluded Systems.  Tenant hereby further
acknowledges and agrees that unless the Authority otherwise expressly agrees in
writing, the Authority shall not have any obligation, in connection with
Activating any portion of the Leased Premises or otherwise, to install new or
additional Facilities Systems within any portion of the Leased Premises, to
extend to any portion of the Leased Premises any Facilities Systems which have
not, as of the Effective Date, already been extended to that portion of the
Leased Premises, or to make operational any Excluded Systems. Tenant hereby
further agrees that in connection with Activating a portion of the Leased
Premises, the Authority will only be obligated to furnish the Available
Equipment requested by Tenant in its Activation Notice (i.e., the Authority
will not be obligated to purchase new

 

13

 

equipment,
tooling, or other personal property in order to Activate any portion of the
Leased Premises).

 

(B)                                Not
later ninety (90) days after the Effective Date of this Lease, Tenant shall
send the Authority an Activation Notice indicating which of the Bays and/or
other areas of the Leased Premises that Tenant desires for the Authority to
first Activate. Thereafter, during the Term of this Lease, as Tenant desires
for additional Bays and/or other areas of the Leased Premises to be Activated
by the Authority, Tenant shall provide an Activation Notice to the Authority,
with respect to those Bays and/or other areas of the Leased Premises, with each
such Activation Notice to specify the date by which Tenant needs that portion
of the Leased Premises to be Activated (the “Requested Activation Date”); provided,
however, that the Requested Activation Date may not be fewer than thirty (30)
days from the date that Tenant delivers its Activation Notice to the
Authority.  However, the Authority
acknowledges that, at the time Tenant provides its Activation Notice to the
Authority with respect to a particular portion of the Leased Premises, Tenant
may not know what Available Equipment it will need for the Authority to furnish
with respect to that portion of the Leased Premises.  Consequently, the Authority hereby agrees
that Tenant may defer providing the Authority with Tenant’s written list of
requested Available Equipment for the Activation of that portion of the Leased
Premises until after the date on which Tenant delivers its Activation Notice
for that portion of the Leased Premises; provided, however, that the Authority
shall not be obligated to provide that Available Equipment by the Requested
Activation Date unless Tenant provides the Authority with the list of Tenant’s
requested Available Equipment for that portion of the Leased Premises at least
ten (10) business days prior to the Requested Activation Date for that
portion of the Leased Premises.

 

(C)                                Subject
to Section 705(G)(3) below, the Authority shall use commercially
reasonable efforts to Activate, by the Requested Activation Date, those Bays
and/or other areas of the Leased Premises that are identified in Tenant’s
Activation Notice. At such time as the Authority has Activated a Bay or other
portion of the Leased Premises pursuant to an Activation Notice from Tenant,
the Authority shall deliver to Tenant a written notice that the Activated Bay
or other such portion of the Leased Premises is Activated as per Tenant’s
Activation Notice.  Tenant shall have the
right to inspect, within seven (7) days after receipt of the Authority’s
written notice, the Activated Bay(s) or other such portion of the Leased
Premises that has been Activated to confirm that such areas have been Activated
as per Tenant’s Activation Notice.  To
the extent that Authority has the areas of the Leased Premises identified in
the Activation Notice ready for activation prior to the Requested Activation
Date, Tenant shall have the option to take possession of such areas prior to
the Requested Activation Date and if Tenant does so, Tenant shall be deemed to
Occupy such space on such earlier date. If Tenant discovers any material
deficiencies upon said inspection, Tenant shall give the Authority a written
list of those material deficiencies. For purposes of this subsection (C),
a “material deficiency” means that the Activated space fails to comply, in a
material manner, with the Tenant’s requests for Facilities Systems and
Equipment as set forth in Tenant’s Activation Notice for that space.  If Tenant does not notify the Authority
within the seven (7) day period that there are any material deficiencies,
Tenant shall be deemed to have accepted the condition of the Activated space.
The Authority shall correct any material deficiencies noted by Tenant in
accordance with the prior sentences prior to Tenant’s being obligated to take
possession of that Activated Bay and/or other portion of the Leased Premises.
However, Tenant may elect to take possession of said space prior to the

 

14

 

correction of
the material deficiencies, and Authority shall correct said material
deficiencies within fifteen (15) days of Tenant taking possession of said
space.  If Tenant chooses not to take
possession due to such noted material deficiencies, Tenant must take possession
of that space once the Authority corrects the material deficiencies, provided
that the Requested Activation Date has passed. Upon Tenant taking possession of
said space, Tenant shall be deemed to Occupy such space until de-Occupying such
space pursuant to paragraph (D) below.  Once the Bay or other portion of the Leased
Premises has been Activated, the Authority shall have no further obligations
with respect to that Activated Bay or other portion of the Leased Premises
except as otherwise expressly provided in this Lease.

 

(D)                               Tenant
shall have the right at any time, upon not fewer than sixty (60) days’ prior
written notice to the Authority, to de-Occupy a particular portion of the
Leased Premises. Tenant shall specifically identify in its written notice which
portions of the Leased Premises that Tenant is de-Occupying, and what the date
of de-Occupation will be.  However, the
date specified in Tenant’s written notice as the date of de-Occupation may not
be fewer than sixty (60) days after the date Tenant delivers the written notice
of de-Occupation to the Authority, and Tenant may not deliver a notice of
de-Occupation to the Authority with respect to a particular portion of the
Leased Premises until Tenant has Occupied that portion of the Leased Premises
(and paid Base Rent and Additional Rent to the Authority therefor) for at least
one full calendar month. Tenant shall always Occupy at least the minimum amount
of Leased Premises to enable Tenant to satisfy the Minimum Monthly Rent
requirements set forth in Sections 601(A) and (B) of this Lease. With
respect to Tenant’s de-Occupation of Activated space, Tenant may not de-Occupy
less than all of a Bay and its related space. With respect to any Expansion
Area as to which Tenant has exercised its Expansion Option pursuant to Section 401
below, Tenant may not de-Occupy that Expansion Area. If Tenant exercises its
Right of First Refusal as to any Available Space pursuant to Section 2105
below, Tenant must Occupy that Available Space for at least twelve (12)
consecutive calendar months and may not de-Occupy that Available Space until it
has Occupied it for at least twelve (12) consecutive calendar months. Upon the
effective date of the de-Occupation, Tenant shall return possession of the
de-Occupied space to the Authority, together with all Equipment that the
Authority provided to Tenant in connection with the Authority’s Activation of
that space (or that was otherwise furnished by the Authority to Tenant for
Tenant’s use in connection with that de-Occupied space). Upon the date of
de-Occupation, the Authority shall have the right, at the Authority’s option,
to restrict Tenant from accessing and entering into that portion of the Leased
Premises that has been de-Occupied and to cease providing the Facilities
Systems to that portion of the Leased Premises (provided, however, that the
Authority will continue providing some or all of the Facilities Systems to that
portion of the Leased Premises if the Authority wishes or as is necessary to
provide the Facilities Systems to those areas of the Leased Premises that
Tenant is Occupying).  Tenant and the
Authority will mutually agree on what personal property of Tenant or its
agents, representatives, or customers will be removed from the de-Occupied
space; provided, however, that Tenant hereby acknowledges and agrees that the
Authority shall have no liability or obligation for any loss, damage, or
liability with respect to (and no obligation to insure) any such personal
property that remains in the de-Occupied space. 
Base Rent and Additional Rent shall continue to accrue for space on
which a de-Occupation notice has been sent until the effective date of the
de-Occupation; Base Rent and Additional Rent shall not accrue for a particular
portion of the Leased Premises if such portion of the Leased Premises is
de-Occupied. If Tenant thereafter

 

15

 

wishes for the
Authority to re-Activate that portion of the Leased Premises, Tenant shall
provide an Activation Notice to the Authority pursuant to the procedure
described in subsections (A), (B) and (C) above.

 

(E)                                 Tenant
hereby acknowledges and agrees that, notwithstanding anything in this Section 205
to the contrary, commencing on the earlier of (i) December 1, 2004,
or (ii) the first date that any aircraft of Tenant’s customer(s) is
located at the Leased Premises, and continuing thereafter through the Term
hereof, Tenant shall be obligated to pay at least the Minimum Monthly Rent
pursuant to Section 601 below, regardless of which (if any) portions of
the Leased Premises that Tenant elects to Activate and regardless of which (if
any) portions of the Leased Premises that Tenant is Occupying from time to
time.

 

(F)                                 The
Authority hereby acknowledges that Tenant desires to be able to enter upon the
Leased Premises, prior to the Activation of the first portion of the Leased
Premises, solely for purposes of preliminary operational planning and for
purposes of obtaining FAA certifications to enable Tenant to conduct Tenant’s
Business at the Leased Premises, and the Authority hereby agrees that Tenant
may enter onto the Leased Premises for those purposes, provided that the
activities of Tenant and its Employees, agents, contractors and Invitees do not
interfere in any material manner with the activities of the Authority in
connection with the Leased Premises. 
Tenant hereby agrees that it will not be conducting Tenant’s Business
from the Leased Premises during this period of preparation and hereby
acknowledges and agrees that the provisions of this Lease (including, without
limitation those set forth in Sections 705, 1502 and 1701), other than those
provisions pertaining to payment of Rental, will be applicable during this
period.

 

(G)                                In
addition to the other obligations of the Authority under this Lease, the
Authority shall be liable for all costs, expenses, fees and disbursements
related to remedying, curing or remediating any condition existing at or on the
Leased Premises on or prior to date Tenant first Occupies that portion of the
Leased Premises, necessary to comply with Environmental, Health and Safety
Requirements.

 

Section 206.                                Use
of Leased Premises; Prohibited Uses.

 

(A)                              Tenant
may only use the Leased Premises for operation of an aircraft, airframe, engine
and component maintenance, repair and overhaul (“MRO”) facility for the
commercial airlines and other owners, operators or service/maintenance
providers of aircraft (including without limitation military and governmental
operators of aircraft), including the operation and use of aircraft bays, aircraft
engine and component overhaul and repair shops, test cells, aircraft wash and
enclosed paint areas, component, part and tooling production, reproduction, or
construction (i.e., make from raw materials or piece parts) for MRO, component
maintenance, and modification activities. 
In addition, Tenant may use the Leased Premises for activities
functionally related and subordinate to the uses permitted above, including
warehouse and storage areas, common areas, facilities maintenance shops,
administrative and support areas, truck docks and aprons, special materials
storage areas, aircraft taxiways and parking areas, fire protection facilities
and employee and visitor parking so long as such activities are of a size
commensurate with such operation.

 

16

 

(B)                                Tenant
shall not use the Leased Premises for any purposes other than, or in addition
to, those identified in subsection (A) above without the Authority’s
prior written consent, which consent will not be unreasonably withheld, and
shall not use the Leased Premises in a manner that would result in a violation
of any Tax Restrictions or applicable Law, as now or hereafter in effect, with
respect to the Authority, the Land, the Facilities and/or other portions of the
Airport.  Without limiting the generality
of this restriction, the following conditions shall apply to the use and
operation of the Leased Premises:

 

(1)                                  Tenant
shall not store aviation fuel, except in connection with the defueling and
refueling of maintained aircraft and only in those areas that have been
expressly designated for such purposes by the Authority and in accordance with
Airport ordinances; shall not block any common use taxiway; and shall not park
any aircraft upon that portion of the Leased Premises described in Exhibit D hereto in a manner that
would constitute a violation of any Laws or regulations concerning Airport
operations.  Passenger loading and
unloading of general aviation aircraft is permitted, but only to the extent
such any such loading or unloading of passengers is not subject to any rules or
regulations of the TSA (including without limitation rules and regulations
regarding passenger screening) as now or hereafter in effect; otherwise, any
passenger loading and unloading is prohibited except in an emergency or with
the prior written approval of the Authority. 
Subject to Section 703(B) of this Lease, aircraft ramp and
service equipment may be stored only within the Leased Premises.  All refueling trucks moving to and from the
Leased Premises, including their routing and parking, must be approved by the
Authority.  Except in designated areas
with prior written approval of the Authority, Tenant shall not store any
Class-A explosives (as defined by the United States Department of
Transportation) at, on or in the Leased Premises.  All vehicles used in Air Operations Areas
shall be equipped and operated in accordance with applicable Laws and the
regulations of the Authority, the FAA, the TSA, and all other applicable
Governmental Entities.

 

(C)                                Except
as otherwise expressly provided in this Lease, the rights granted in this Lease
Agreement shall not be construed as permitting any Person to conduct any
business at the Airport (including without limitation at, on or in the Leased
Premises) except after first securing from the Authority a license and/or other
form of permission to conduct that business and paying applicable fees and
charges therefor.

 

ARTICLE III.

 

REPRESENTATIONS, WARRANTIES AND COVENANTS

 

Section 301.                                Representations,
Warranties and Covenants by Authority. 
The Authority makes the following representations, warranties and
covenants to Tenant as the basis for the Authority’s undertakings herein:

 

17

 

(A)                              The
Authority is duly organized as a municipal corporation pursuant to the laws of
the State and has the power to execute, deliver and enter into this Lease
Agreement and to carry out its obligations hereunder.  By proper action of its board, the Authority
has been duly authorized to execute, deliver and perform its obligations under
this Lease Agreement.

 

(B)                                This
Lease Agreement constitutes the valid and binding obligation of the Authority,
enforceable against the Authority in accordance with its terms, subject to (i) bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors’
rights generally heretofore or hereafter enacted; and (ii) the exercise of
judicial discretion in accordance with the general principles of equity.

 

(C)                                No
approvals or consents, other than those that have been obtained, are necessary
in order for the Authority to adopt, execute and deliver this Lease Agreement.

 

(D)                               The
Authority has a leasehold interest in the Facilities, subject to Permitted
Encumbrances.

 

(E)                                 The
Authority has full right and authority to lease the Leased Premises to Tenant
as set forth herein.

 

(F)                                 This
Lease Agreement has been duly executed and delivered by duly authorized
officers of the Authority.

 

(G)                                Neither
the execution and delivery of this Lease Agreement, the consummation of the
transactions contemplated hereby, nor the fulfillment of or compliance with the
terms and conditions of this Lease Agreement, will conflict with or result in a
material breach of any of the terms, conditions or provisions of any
restriction, ordinance, agreement or instrument to which the Authority is now a
party or by which it is bound, or constitute a material default under any of
the foregoing, or result in the creation or imposition of any material lien,
charge or encumbrance of any nature whatsoever upon any of the property or
assets of the Authority under the terms of any instrument or agreement.

 

(H)                               There
is no litigation now pending or, to the knowledge of the Authority, threatened
that challenges or would challenge the execution of this Lease Agreement or
that could reasonably be expected to have a material adverse effect on the
Authority’s ability to perform hereunder.

 

(I)                                    The
Authority shall use its best efforts to protect all of Tenant’s financial
information (including but not limited to information regarding Tenant’s costs,
prices, pricing methods, revenues, sales and Operating Profit) provided to the
Authority as “Confidential financial information obtained upon request from a
person” pursuant to the provisions of IC 5-14-3-4 or to protect it from public
disclosure under any other allowable exception. The Authority shall promptly
notify the Tenant in writing of any inadvertent disclosure of Tenant’s
financial information, if and when the Authority becomes aware of any such
disclosure.

 

18

 

(J)                                   The
Authority shall execute such collateral access agreements in favor of Tenant’s
secured lenders as Tenant’s secured lenders may reasonably request, provided
that the terms of those collateral access agreements are reasonably acceptable
to the Authority.

 

(K)                               The
Authority acknowledges that its presence on the Leased Premises will place it
in a position that it may have access to confidential and/or proprietary
information concerning the business of the Tenant and/or its Affiliates,
including but not limited to trade secrets, secret processes, know-how,
products, maintenance procedures, recent and proposed developments, sources of
supply and customer names and relationships (“Proprietary Information”) and
that such Proprietary Information is among the most valuable of the Tenant’s
and/or its Affiliates assets and the value of such information may be destroyed
by unauthorized disclosure.  Information
imparted to or learned by the Authority with respect to the Tenant and/or its
Affiliates (whether acquired before or after the date hereof) will be deemed to
be confidential Proprietary Information. The Authority hereby covenants that
the Authority will use commercially reasonable efforts not to disclose the
Proprietary Information and will use commercially reasonable efforts to treat
all Proprietary Information with the same degree of care that the Authority
accords to its own confidential or proprietary information (and the Authority
hereby represents to Tenant that the Authority exercises reasonable care to
protect its own confidential or proprietary information), unless (1) such
Proprietary Information is or has been made generally available to the public, (2) express
prior written authorization to use or disclose such Proprietary Information has
been received from Tenant, or (3) the Authority is obligated to disclose
such Proprietary Information pursuant to the Indiana Access to Public Records
Law (IC 5-14-3-1 et seq.) as the same may amended or supplemented from time to
time (the “Access to Public Records Law”). 
By way of example only, Tenant hereby acknowledges that the Authority
may be obligated, under the Access to Public Records Law, to disclose the
following, among other things: this Lease, official action by the Authority or
its manager pursuant to the terms of this Lease, and the amount of the Rental
payments and invoices pertaining thereto.

 

(1)                                  As
part of its commercially reasonable efforts described in the preceding sentences,
the Authority shall, with respect to those Persons who, from time to time,
serve as the Authority’s “on-site” staff at the Facilities and with respect to
contractors hired by the Authority to provide services at the Leased Premises,
either (a) require those Persons or contractors to sign confidentiality
agreements with the Authority which impose obligations of confidentiality upon
those Persons or contractors that are consistent with the covenants of the
Authority under this Subsection (K), or (b) impose in the service or
employment contracts (if applicable), between those Persons or contractors and
the Authority, obligations of confidentiality upon those Persons or contractors
which are consistent with the covenants of the Authority under this Subsection (K).

 

(2)                                  Tenant
hereby acknowledges and agrees that, notwithstanding the foregoing, the
Authority may be required (by depositions, interrogatories, requests for
information or documents in legal proceedings, subpoenas, civil investigative
demand or similar process, including, without limitation, requests to disclose
pursuant to the Access to Public Records Law) to disclose Proprietary
Information.  However, the Authority
will, to the extent reasonably possible, give Tenant prompt written notice of such
request or requirement so that Tenant may seek an appropriate protective order
or other remedy

 

19

 

and/or waive compliance with
the provisions of this Subsection (K), and the Authority will cooperate as
reasonably necessary with Tenant to obtain such protective order.

 

(3)                                  Except
as required by the Access to Public Records Law and/or any other applicable
Law, upon termination of this Lease Agreement for any reason, the Authority
will, within a reasonable period of time, destroy any documents or other
tangible property containing or reflecting Proprietary Information.

 

(4)                                  The
Authority shall promptly notify the Tenant in writing of any inadvertent
disclosure of Proprietary Information, if and when the Authority becomes aware
of any such disclosure. The covenant of the Authority set forth in this Subsection (K)
will survive any termination of this Agreement.

 

(L)                                 The
Authority shall deliver to Tenant, for Tenant’s benefit and reliance, on the
Effective Date, an opinion, concerning such matters in this Section 301 as
are reasonably satisfactory to Tenant, from Ice Miller, in form reasonably
acceptable to Tenant.

 

Section 302.                                Representations,
Warranties and Covenants by Tenant. 
Tenant makes the following representations, warranties and covenants to
the Authority as the basis for Tenant’s undertakings herein:

 

(A)                              Tenant
is a corporation duly organized under the laws of the State of Illinois and
duly qualified to do business in the State, is in good standing in the State of
Illinois and the State, and has power to execute, deliver and enter into this
Lease Agreement and to carry out its obligations hereunder.  By proper organizational action, Tenant has
been duly authorized to execute, deliver and perform its obligations under this
Lease Agreement.

 

(B)                                This
Lease Agreement constitutes the valid and binding obligation of Tenant,
enforceable against Tenant in accordance with its terms, subject to (i) bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors’
rights generally heretofore or hereafter enacted, and (ii) the exercise of
judicial discretion in accordance with the general principles of equity.

 

(C)                                No
approvals or consents, other than those that have been obtained, are necessary
for Tenant to execute and deliver this Lease Agreement.

 

(D)                               This
Lease Agreement has been duly executed and delivered by the duly authorized
officers of Tenant.

 

(E)                                 There
is no litigation now pending or, to Tenant’s knowledge, threatened that challenges
or would challenge the execution of this Lease Agreement, or that could
reasonably be expected to have a material adverse effect on the Tenant’s
ability to perform hereunder.

 

(F)                                 Neither
the execution and delivery of this Lease Agreement, the consummation of the
transactions contemplated hereby, nor the fulfillment of or compliance with the
terms and conditions of this Lease Agreement, will conflict with the Tenant’s
articles of incorporation or by-laws or conflict with or result in a material
breach of any of the terms, conditions or

 

20

 

provisions of
any agreement or other instrument to which Tenant is now a party or by which it
is bound, or constitute a material default under any of the foregoing, or
result in the creation or imposition of any material lien, charge or
encumbrance of any nature whatsoever upon any of the property or assets of
Tenant under the terms of any instrument or agreement.

 

(G)                                Except
for those Authority Permits to be obtained and maintained by the Authority,
Tenant has duly and validly obtained (or shall hereafter duly and validly
obtain as and when necessary), and shall maintain in full force and effect
during the Term, all such certificates, licenses and permits from all
Governmental Entities, required or appropriate to enable Tenant to carry on
Tenant’s Business as it is now conducted and subsequently conducted and/or to
enable Tenant to enter into this Lease Agreement, including without limitation
a “repair station certificate” as required under 14 CFR Part 145 (the “145
Certificate”).

 

(H)                               Tenant
shall deliver to the Authority, for the Authority’s benefit and reliance, on
the Effective Date, an opinion, concerning such matters in this Section 302
as are reasonably satisfactory to the Authority, signed by an authorized person
at Tenant’s inside counsel, in form reasonably acceptable to the Authority.

 

ARTICLE IV.

 

OPTION TO EXPAND LEASED PREMISES

 

Section 401.                                Tenant’s
Option to Expand Leased Premises. 
The term “Expansion Space” means that portion of the Land and Facilities
that is shown on Exhibit E
attached hereto, which consists of the following areas (each, an “Expansion
Area”): (a) the machine shop area, consisting of approximately Forty-Two
Thousand Three Hundred Forty-Six (42,346) square feet; (b) the interior
shop area, consisting of approximately Fifty-Six Thousand Nine Hundred
Eighty-Eight (56,988) square feet; (c) the composite shop area #1,
consisting of approximately Seventy-Eight Thousand Five Hundred Forty-Nine
(78,549) square feet; and (d) the composite shop area #2, consisting of
approximately Seventy-Eight Thousand Five Hundred Forty-Nine (78,549) square
feet. Tenant, at its option, may expand the Leased Premises to include one or
more of the Expansion Areas, subject to the following terms and conditions (the
“Expansion Option”):

 

(A)                              Tenant
must provide the Authority with at least ninety (90) days’ prior written notice
of Tenant’s desire to exercise its Expansion Option as to any Expansion
Area.  Tenant’s written notice must
specify which of the Expansion Area(s) that Tenant desires to lease pursuant to
its Expansion Option.  Tenant may not
exercise its Expansion Option as to less than all of a particular Expansion
Area.

 

(B)                                At
the time Tenant provides the Authority with Tenant’s written notice of Tenant’s
desire to exercise its Expansion Option as to any Expansion Area and on the
date Tenant’s lease of that Expansion Area is to commence, there shall not be
an Event of Default by Tenant under this Lease (or, if a default by Tenant
under any term or condition of this Lease then exists which would, with the
giving of notice, the passage of time or both, constitute an Event of Default
under this Lease, Tenant shall cure that default within the applicable grace or
cure period provided under this Lease prior to exercising its Expansion
Option).

 

21

 

(C)                                This
Lease Agreement shall be in effect at the time Tenant provides the Authority
with Tenant’s written notice of Tenant’s desire to exercise its Expansion
Option as to any Expansion Area and on the date Tenant’s lease of that
Expansion Area is to commence.

 

(D)                               Subject
to Sections 705 and 1702, Tenant shall accept any Expansion Area as to which it
has exercised its Expansion Option on an “AS-IS” basis, and the Authority shall
not be required to make any alterations, improvements, modifications, repairs
or replacements thereto unless the Authority specifically agrees with Tenant,
in writing, to do so.  To the extent
Tenant wishes to make any improvements or alterations to that portion of the
Expansion Area as to which it has exercised its Expansion Option (including
without limitation any subdivision of the Expansion Space which must be made in
order to separate that portion of the Expansion Area as to which Tenant has
exercised its Expansion Option from the other Expansion Areas), Tenant shall be
responsible, at its cost and expense, for performing those improvements and
alterations in accordance with the terms of this Lease (including without
limitation Section 702(H) below), subject to Sections 605(A) and
605(C) below.  Tenant’s notice to
Authority of its decision to exercise its Expansion Option shall serve as an
Activation Notice for such space pursuant to Section 205 above.  In no event whatsoever shall the Tenant’s
Occupation date begin prior to the Requested Activation Date.

 

(E)                                 The
duration of Tenant’s lease of the Expansion Area(s) as to which Tenant
exercises its Expansion Option shall be co-terminous with the Term of this
Lease Agreement.

 

(F)                                 Except
as otherwise provided in this Lease Agreement, the terms, covenants, and
conditions of this Lease Agreement shall apply in all respects to the Tenant’s
lease of any Expansion Space.

 

(G)                                Tenant
hereby acknowledges and agrees that at the time Tenant first exercises its
Expansion Option as to any portion of the Expansion Space, Tenant’s Minimum
Monthly Rent shall increase such that, for the remainder of the Lease Term,
Tenant (1) shall be obligated to pay Minimum Base Rent on at least four (4) Bays,
plus the Hangar 4 Office Space, plus that portion of the Expansion Space as to
which Tenant first exercises its Expansion Option and (2) shall be
obligated to pay Minimum Additional Rent on at least  four (4) Bays plus that portion of the
Expansion Space as to which Tenant first exercises its Expansion Option; and
thereafter, Tenant’s obligation to pay Minimum Monthly Rent shall further
increase to include any additional Expansion Areas as to which Tenant
thereafter exercises its Expansion Option.

 

ARTICLE V.

 

TERM; EXTENSION PERIODS

 

Section 501.                                Term;
Extension Option.

 

(A)                              Initial
Term.  The term of this Lease
Agreement shall begin on the Effective Date and shall end on the earlier of (1) December 1,
2014 or (2) the tenth (10th) anniversary of the first date that any
aircraft of Tenant’s customer(s) is located at the Leased Premises, unless
sooner terminated as provided for under this Lease (the “Initial Term”).

 

22

 

(B)                                Extended
Terms.

 

(1)                                  Tenant
shall have the option (an “Extension Option”) to extend the Initial Term for
one (1) period of ten (10) consecutive years (the “Extension Term”)
upon fulfillment of all the following terms and conditions:

 

(a)                                  Tenant
shall provide written notice to the Authority, not earlier than twenty-four
(24) months, and not later than twelve (12) months, prior to the expiration of
the Initial Term, that Tenant elects to exercise such Extension Option (the “Extension
Notice”);

 

(b)                                 On
the date Tenant delivers Tenant’s Extension Notice to the Authority or on the
date the Extension Term is to commence, there shall not be an Event of Default
by Tenant under this Lease (or, if a default by Tenant under any term or
condition of this Lease then exists which would, with the giving of notice, the
passage of time or both, constitute an Event of Default under this Lease,
Tenant shall cure that default within the applicable grace or cure period
provided under this Lease); and

 

(c)                                  This
Lease Agreement shall not have been terminated during the Initial Term.

 

(2)                                  All
terms, covenants, conditions and provisions hereof applicable to the Initial
Term (including, without limitation, Tenant’s obligations to pay Base Rent,
Additional Rent, Minimum Monthly Rent, and Percentage Rent), shall apply with
like force and effect to the Extension Term, except where specifically
inapplicable or where the context otherwise indicates, and except that the
amount of the Additional Rent to be assessed by the Authority with respect to
the Leased Premises during the Extension Term shall be increased to a rate
based on the Actual Facilities Costs and Expenses incurred during the twelve
(12) consecutive month period immediately preceding the date that Tenant
delivers its Extension Notice to the Authority. Not later than ninety (90) days
after the Authority receives Tenant’s Extension Notice, the Authority shall
provide Tenant with a written statement that sets forth the annual and monthly
amounts that the Authority proposes for the Additional Rent to be for the
Extension Term, including evidence of the Actual Facilities Costs and Expenses
for the twelve (12) consecutive month period immediately preceding the date
that Tenant delivers its Extension Notice to the Authority. If Tenant is
dissatisfied with that increased Additional Rent amount for any reason, Tenant
may elect not to proceed further with exercising the Extension Option, by
providing written notice to the Authority of Tenant’s intention not to proceed
with the Extension Option (which written notice must be delivered to the
Authority not later than thirty (30) days after Tenant receives the Authority’s
written statement of the amount of the increase in the Additional Rent for the
Extension Term).

 

(3)                                  If
the Authority demonstrates that Rentals and other revenues derived from the
Land and Facilities during the twelve (12) consecutive month period immediately
preceding the Authority’s receipt of Tenant’s Extension Notice to exercise

 

23

 

the Extension Option were not
sufficient to cover the Actual Facilities Costs and Expenses of the Land and
Facilities incurred with respect to that twelve (12) month period (the “Deficit”),
then the Authority shall have the right to prohibit Tenant from exercising the
Extension Option; provided, however, that if the Deficit is caused by the negative
impact on the Actual Facilities Costs and Expenses from the costs and expenses
of ownership and operation of other Authority-funded facilities which are
constructed on the Land after the Effective Date of this Lease, the Authority
may not exercise this right.  If the
Authority desires to exercise this right, then the Authority shall notify
Tenant in writing, not later than ninety (90) days after the Authority receives
Tenant’s Extension Notice, that the Authority is exercising this right.

 

(4)                                  Subject
to Tenant’s right to elect not to proceed with the Extension Option as
described in subsection (2) above, and subject to the Authority’s
right to elect not to permit Tenant to proceed with the Extension Option as
described in subsection (3) above, Tenant must (if Tenant provides an
Extension Notice to the Authority) enter into a written amendment to this Lease
not later than ninety (90) days after the Authority notifies Tenant of the
amount of the increase in the Additional Rent for the Extension Term, which
amendment shall confirm the increased Additional Rent and other terms
consistent with the foregoing provisions of this subsection (B), and shall
otherwise be in a form reasonably acceptable to the Authority.

 

Section 502.                                Right
to Terminate Upon Certain Events.

 

(A)                              In
addition to any other provisions of this Lease that expressly grant Tenant the
right to terminate this Lease prior to the expiration of the Term, Tenant shall
have the right, upon written notice to the Authority, to terminate this Lease
upon the occurrence of either of the following events or circumstances:

 

(1)                                  The
assumption by the United States Government or any authorized agency thereof of
the operation, control, or use of the Airport and facilities, or any
substantial part or parts thereof, in a manner that substantially and adversely
affects Tenant’s use of that portion of the Leased Premises which Tenant is
then Occupying or Tenant’s ability to Occupy additional space at the Leased
Premises or expand into Expansion Space for a period of at least ninety (90)
consecutive days.

 

(2)                                  The
issuance by any court of competent jurisdiction of an injunction in any way
preventing or restraining the use of the Airport, so as to substantially and
adversely affect Tenant’s use of that portion of the Leased Premises which
Tenant is then Occupying or Tenant’s ability to Occupy additional space at the
Leased Premises or expand into Expansion Space, for a period of at least ninety
(90) consecutive days; provided, that the injunction is not due to Tenant’s operations
at the Airport.

 

(B)                                In
addition to any other provisions of this Lease that expressly grant the
Authority the right to terminate this Lease prior to the expiration of the
Term, the Authority shall have the right, upon written notice to Tenant, to
terminate this Lease, if Tenant takes any action, or operates all or any
portion of Tenant’s business at the Leased Premises in a manner that would

 

24

 

result in a
violation of the Tax Restrictions and jeopardize the tax-exempt status of the
Bond Issues.  The Authority may inspect
Tenant’s actions or operations at the Leased Premises to determine if such
actions or operations violate the Tax Restrictions and jeopardizes the
tax-exempt status of the Bond Issues. Prior to the Authority exercising its
right to terminate under this subsection (B), the Authority shall give
Tenant written notice of such violation and describe the basis for such
violation. If the violation is curable under the Tax Restrictions by curative
action within thirty (30) days, Tenant shall have thirty (30) days from the
date of receipt of said written notice from the Authority to alter Tenant’s
operations or actions so as to cure any such violation; and, if Tenant cures
such violation within the thirty (30) day period, then the Authority shall not
have the right to terminate this Lease. 
In the event that this Lease is terminated under this Section 502(B),
Tenant shall remain liable for all Rental that has accrued for periods prior to
the effective date of termination of this Lease, and for other liabilities and
obligations of Tenant under this Lease Agreement (including without limitation Section 705
and Section 1701 of this Lease) that have accrued for periods prior to the
effective date of termination of this Lease, but shall not be liable for any
Rentals that would otherwise have accrued for periods after the effective date
of the termination of this Lease and shall not be obligated to repay the
Grants, the Credits, or the Improvement Rent Credits.  The sole remedy available under this Lease
Agreement to the Authority for Tenant’s failure to adhere to the Tax
Restrictions applicable to it shall be to so terminate this Lease Agreement.

 

Section 503.                                Rights
at Expiration/Termination.

 

(A)                              In
no event shall Tenant or any of its subtenants continue to possess, occupy or
use the Leased Premises beyond the expiration or sooner termination of the Term
without the Authority’s written consent, which consent may be withheld in the
Authority’s sole and absolute discretion.

 

(B)                                Tenant
further agrees that upon the expiration or earlier termination of the Term, the
Leased Premises shall be delivered to the Authority in at least as good
condition as originally delivered to Tenant, reasonable wear and tear and
matters covered by insurance excepted, and subject to performance by the
Authority of the Authority’s maintenance, repair and replacement obligations
under this Lease, including but not limited to its maintenance, repair and
replacement obligations pursuant to Sections 1001 and 1002 below, and the
Authority’s obligations under Article VII and Section 1702 of this
Lease.

 

Section 504.                                Early
Termination Rights.

 

(A)                              Authority
Early Termination Rights. 
Notwithstanding the Term of this Lease Agreement, the Authority shall
have the right to terminate this Lease Agreement prior to the expiration of the
Term if any of the following events occur (each, an “Authority Termination
Event”):

 

(1)                                  If,
on or before October 1, 2008, Tenant has not Occupied (and been assessed
Base Rent and Additional Rent on), simultaneously, for at least one full thirty
(30) consecutive day period, at least five (5) Bays; or if, on or before October 1,
2008, the Authority has not otherwise leased and collected rent, for at least
one full thirty (30)

 

25

 

consecutive day period, for at
least five (5) Bays, simultaneously (including any Bays Occupied by Tenant
(and for which Tenant was assessed Base Rent and Additional Rent) during that
thirty (30) consecutive day period);

 

(2)                                  If,
on or before October 1, 2009, Tenant has not Occupied (and been assessed
Base Rent and Additional Rent on), simultaneously, for at least one full thirty
(30) consecutive day period, at least seven (7) Bays; or if, on or before October 1,
2009, the Authority has not otherwise leased and collected rent, for at least
one full thirty (30) consecutive day period, for at least seven (7) Bays,
simultaneously (including any Bays Occupied by Tenant (and for which Tenant was
assessed Base Rent and Additional Rent) during that thirty (30) consecutive day
period);

 

(3)                                  If
on or prior to December 31, 2005, Tenant and its subtenants have not
employed, on each day, during at least one full thirty (30) consecutive day
period, a total of at least 250 Full-Time Equivalent Indiana Resident Employees
at the Leased Premises;

 

(4)                                  If
on or prior to December 31, 2007, Tenant and its subtenants have not
employed, on each day, during at least one full thirty (30) consecutive day
period, a total of at least 500 Full-Time Equivalent Indiana Resident Employees
at the Leased Premises;

 

(5)                                  If
on or prior to December 31, 2009, Tenant and its subtenants have not
employed, on each day during at least one full thirty (30) consecutive day
period, a total of at least 800 Full-Time Equivalent Indiana Resident Employees
at the Leased Premises; or

 

(6)                                  (a) 
If the Authority has not received, during any rolling two (2) consecutive
Tenant Fiscal Years starting with the Tenant Fiscal Year beginning on June 1,
2007, at least fifty percent (50%) of the projected annual Percentage Rent as
set forth on Exhibit F
attached hereto for each of those two (2) Tenant Fiscal Years, and (b) if,
within ninety (90) days after the last day of the second such Tenant Fiscal
Year, Tenant does not make a payment to the Authority in an amount that equals
the difference between the actual Percentage Rent received by the Authority for
that second such Tenant Fiscal Year and fifty percent (50%) of the projected
annual Percentage Rent which the Authority was projected to receive for that
second such Tenant Fiscal Year as set forth on Exhibit F, provided, however, Tenant shall not be
obligated to make such payment.

 

Within thirty
(30) days after the date Tenant has satisfied the Full-Time Equivalent
employment thresholds as described in subsections (3), (4) and (5) above,
respectively, Tenant shall provide written notice to the Authority that Tenant
has satisfied the applicable “Full-Time Equivalent” employment threshold.
Tenant’s written notice shall be accompanied by a list, with respect to each
day of the thirty (30) consecutive day period during which the “Full-Time
Equivalent” employment thresholds were satisfied, of the names of the Full-Time
Equivalent Indiana Resident Employees who were employed by Tenant (and/or its
subtenants at the Leased Premises) on each such day during that thirty (30) day
period, the hours such Full-Time Equivalent Indiana Resident Employees worked
during such time period and such other

 

26

 

information as
the Authority shall reasonably request. 
The Authority shall thereafter have a period of ninety (90) days from
the Authority’s receipt of Tenant’s written notice to verify that the
applicable Full-Time Equivalent employment thresholds have in fact been
achieved by Tenant.  If the Authority
does not, within that ninety (90) day period, deliver written notice to Tenant
that the Authority disputes that Tenant has achieved the applicable Full-Time
Equivalent employment threshold, the Authority shall be deemed to have agreed
that Tenant achieved the applicable Full-Time Equivalent employment threshold.

 

If the Authority is entitled to and desires to terminate this Lease
pursuant to subsections (A)(1), (2), (3), (4), (5) or (6) above, the
Authority shall provide written notice to Tenant, not later than six (6) months
after the Authority becomes eligible under subsections (1), (2), (3), (4), (5) or
(6) above to elect to terminate this Lease, that the Authority intends to terminate
this Lease pursuant to subsection (A)(1), (2), (3), (4), (5) or (6),
as applicable; provided, however, that with respect to subsection (A)(6) above,
the six (6) month period may be extended, day for day, if the Authority
exercises its right to conduct an audit, pursuant to Section 601(C)(3) below,
regarding Tenant’s Operating Profit and Gross Sales with respect to one or both
of the applicable two (2) Tenant Fiscal Years (and/or with respect to any
Period therein). If the Authority terminates this Lease pursuant to this Section 504(A),
the termination shall be effective upon the earlier of (a) the first
anniversary of the date of delivery to Tenant of the Authority’s termination
notice, and (b) the expiration date of the term (not including unexercised
renewal or extension options or periods) of Tenant’s then-longest third party
maintenance agreement with its customers. 
For purposes of this subsection (A), Tenant’s “third party
maintenance agreements with its customers” shall mean only those of Tenant’s
third party maintenance agreements with its customers that are in effect on the
date when the Authority provides Tenant with the Authority’s written notice of
termination pursuant to a particular Authority Termination Event. Within thirty
(30) days after the Authority provides Tenant with the Authority’s written
notice of intent to terminate pursuant to this Section 504(A), Tenant
shall provide a written, sworn certification to the Authority from Tenant’s
Controller which states the expiration dates of Tenant’s third party
maintenance agreements with its customers, and the Authority shall have the
right to verify the information set forth in Tenant’s sworn certification
(including, without limitation, the right to review copies of Tenant’s third
party maintenance agreements).  If the
Authority elects to terminate this Lease pursuant to this Section 504(A),
Tenant shall remain liable for all Rental that has accrued for periods prior to
the effective date of the termination of this Lease, and for other liabilities
and obligations of Tenant (including without limitation Tenant’s obligations
and liabilities under Section 705 and Section 1701 of this Lease)
that have accrued for periods prior to the effective date of the termination of
this Lease, but shall not be liable for any Rentals that would otherwise have
accrued for periods after the effective date of the termination of this Lease
and shall not be obligated to repay the Grants, the Credits, or the Improvement
Rent Credits.  If the Authority does not
provide Tenant with a written notice of termination pursuant to a particular
Authority Termination Event within six (6) months after the date the
Authority becomes eligible to terminate for that particular Authority
Termination Event, then the Authority will be deemed to have waived its right
to terminate this Lease for that particular event based on those particular
circumstances which triggered that Authority Termination Event; provided,
however, that this shall not be deemed to restrict, prohibit or limit the
Authority from thereafter exercising its right to terminate based on that
particular Authority Termination Event if a different set of circumstances or
events thereafter triggers that Authority Termination Event.

 

27

 

(B)                                Tenant
Early Termination Rights. 
Notwithstanding the Term of this Lease Agreement, Tenant shall have the
right to terminate this Lease Agreement at any time prior to expiration of the
Term if any of the following events occur (each, a “Tenant Termination Event”):

 

(1)                                  If,
at any time, (a) Tenant is able to demonstrate to the Authority that,
despite using good faith, reasonable efforts to attract, solicit, employ and
retain a sufficient number of qualified personnel, Tenant is unable to employ
or retain a sufficient number of qualified personnel at the Leased Premises
which, in Tenant’s determination (in Tenant’s sole discretion) (i) meet
Tenant’s hiring qualifications, or (ii) can be employed or retained at a
cost that would allow Tenant to operate Tenant’s Business at the Leased
Premises within Tenant’s projected profit margins for the Leased Premises;
provided, however, that before Tenant exercises its termination right as a
result of this Tenant Termination Event, Tenant shall first provide the
Authority (if the Authority so desires) with a period of at least ninety (90)
days after Tenant satisfies subsection (a) above, in which to assist
Tenant with attracting, employing and retaining a sufficient number of
qualified personnel which (in Tenant’s sole discretion) satisfy the
requirements of subsections (a)(i) and (ii) above, and if, during
that ninety (90) day period, Tenant is able to employ and retain a sufficient
number of qualified personnel at the Leased Premises who satisfy the requirements
under (a)(i) and (ii) above, Tenant may not proceed with exercising
its termination right under this subsection (1) in that instance.

 

(2)                                  Unless
Tenant has consented thereto pursuant to Section 2105 of this Lease, if at
any time the Authority leases any space at the Facilities to another Person who
is a direct competitor of Tenant in the business of providing maintenance,
repair, or overhaul for aircraft (provided, however, that Tenant hereby
acknowledges that a commercial airline or a Governmental Entity will not be
deemed to be a “direct competitor” of Tenant even if the airline or the
Governmental Entity engages in maintenance, repair, and/or overhaul
activities).

 

(3)                                  If
at any time, starting in the Tenant Fiscal Year beginning June 1, 2005,
Tenant’s annual Operating Profit with respect to the Leased Premises is
negative for any two (2) consecutive Tenant Fiscal Years.

 

(4)                                  If,
at any time, Tenant’s average Employee costs for Tenant’s Business at the
Leased Premises increase in any quarter of a Tenant Fiscal Year in excess of
three percent (3%) of the average Employee costs for the same Employees for the
immediately prior quarter, or Tenant experiences workplace disruptions which
result in suspension of or a material reduction in Employee productivity as
demonstrated to the Authority by Tenant.

 

If any of the foregoing Tenant Termination Events occurs, the Tenant
may notify the Authority in writing that Tenant elects to terminate this Lease
Agreement.  With respect to the Tenant
Termination Events described in subsections (B)(2) and (B)(3) above,
if Tenant desires to exercise its right to terminate this Lease pursuant to the
circumstances described in either

 

28

 

subsection (B)(2) or subsection (B)(3),
respectively, Tenant must provide the Authority with Tenant’s written notice of
intent to terminate within the following timeframes:  (a) if termination is pursuant to subsection (B)(2) above,
Tenant must provide the Authority with Tenant’s written notice of intent to
terminate this Lease not later than six (6) months after the Authority
enters into the lease with the other Person; and (b) if termination is
pursuant to subsection (B)(3) above, Tenant must provide the
Authority with Tenant’s written notice of intent to terminate this Lease not
later than six (6) months after the second of the two (2) such
consecutive Tenant Fiscal Years for which Tenant’s annual Operating Profit was
negative. With respect to the Tenant Termination Event described in subsection (B)(3) above,
Tenant hereby acknowledges and agrees that the Authority shall be entitled to
verify, by process of audit pursuant to Section 601(C)(3) below,
Tenant’s Operating Profit and Gross Sales in order to verify that this Tenant
Termination Event has in fact been satisfied. 
The termination shall be effective on the earlier of (y) the first
anniversary of the date of delivery to the Authority of Tenant’s termination
notice, and (z) the expiration date of the term (not including unexercised
renewal or extension options or periods) of Tenant’s then-longest third party
maintenance agreement with its customers. 
For purposes of this subsection (B), Tenant’s “third party
maintenance agreements with its customers” mean only those of Tenant’s third
party maintenance agreements with its customers that are in effect on the date
when the Tenant provides the Authority with Tenant’s written notice of
termination pursuant to this Section 504(B).  At the time Tenant provides the Authority
with Tenant’s written notice of Tenant’s intent to terminate pursuant to this Section 504(B),
Tenant will provide a written, sworn certification to the Authority from Tenant’s
Controller which states the expiration dates of Tenant’s third party
maintenance agreements with its customers and the Authority shall have the
right to verify the information set forth in Tenant’s sworn certification
(including, without limitation, the right to review copies of the Tenant’s
third party maintenance agreements).  If
Tenant elects to terminate this Lease pursuant to this Section 504(B),
Tenant shall remain liable for all Rental that has accrued for periods prior to
the effective date of the termination of this Lease, and for other liabilities
and obligations of Tenant (including without limitation Tenant’s obligations
and liabilities under Section 705 and Section 1701 of this Lease)
that have accrued for periods prior to the effective date of the termination of
this Lease, but shall not be liable for any Rentals that would otherwise have
accrued for periods after the effective date of the termination of this Lease
and shall not be obligated to repay the Grants, the Credits, or the Improvement
Rent Credits.

 

ARTICLE VI.

 

RENTALS, FEES AND RECORDS

 

Section 601.                                Rental.

 

(A)                              Base
Rent.

 

(1)                                  Subject
to Sections 605(B) and 605(C) below, Tenant will pay the Authority,
in arrears, on or before the fifteenth (15th) day of each calendar month, base
rent (“Base Rent”) with respect to the Leased Premises for the preceding
calendar month.  Subject to Section 601(A)(3) below,
the Base Rent that is assessed by the Authority for a particular calendar month
will be calculated solely on basis of the square footage of the

 

29

 

Leased Premises that Tenant
Occupied during that calendar month.  The
annual Base Rent rate for the Leased Premises during the Term will be Two
Dollars and NO/100 ($2.00) per square foot.

 

By way of example only, if Tenant Occupies 100,000 square feet of the
Leased Premises during a particular calendar month, Tenant will (subject to
Sections 605(B) and (C) below) pay the Authority Base Rent for that
calendar month in the amount of $16,666.67 (i.e., 100,000 square feet x $2.00
per square foot per annum /12 months).

 

(2)                                  As
it relates to Occupancy and subsequent de-Occupancy of Leased Premises, if
Tenant Occupies a particular portion of the Leased Premises during less than
all of a calendar month, Tenant shall pay a prorated portion of the Base Rent
for that calendar month based on the number of days Tenant Occupies that
portion of the Leased Premises.

 

(3)                                  Notwithstanding
anything in this Lease to the contrary, however, and regardless of which (if
any) portions of the Leased Premises that Tenant elects to Activate and
regardless of which (if any) portions of the Leased Premises that Tenant is
Occupying or using from time to time, Tenant hereby agrees that commencing on
the earlier of (a) December 1, 2004 or (b) the first date that
any aircraft of Tenant’s customer(s) is located at the Leased Premises, and
continuing thereafter during the Term of this Lease, Tenant shall be obligated
to pay monthly Base Rent on at least two (2) Bays plus the Hangar 4 Office
Space (the “Minimum Base Rent”).  Minimum
Base Rent is subject to increase as provided in Section 401(G) and Section 2105(A)(3) of
this Lease.

 

(B)                                Additional
Rent.

 

(1)                                  Subject
to the other provisions of this Section 601(B) and Sections 605(B) and
(C) of this Lease, in consideration for the Authority’s operations and
maintenance obligations under this Lease with respect to the Facilities,
including  providing Utilities and
performance of those obligations set forth in Articles X and XI of this Lease,
Tenant will pay the Authority monthly additional rent (“Additional Rent”), in
arrears, on or before the fifteenth (15th) day of each calendar month for the
prior calendar month.  Subject to Section 601(B)(8) below,
the Additional Rent that is assessed by the Authority for a particular calendar
month will be calculated solely on basis of the square footage of the Leased
Premises that was Occupied by Tenant during that calendar month.

 

(2)                                  During
the Initial Term, Tenant’s monthly payments of Additional Rent shall be paid
based upon an annual Additional Rent, per calendar year, of Six Dollars and
20/100 ($6.20) per square foot (the “Additional Rental Per Square Foot Per
Annum”).  Within one hundred twenty (120)
days after the end of each calendar year during the Term, the Authority shall
provide Tenant with a statement showing the actual costs and expenses incurred
by the Authority in owning, operating, insuring, maintaining, repairing, and
replacing the Land, the Facilities, the Facilities Systems, the Equipment, and
all other aspects and components of the Land and the Facilities (the “Actual
Facilities Costs and Expenses”), and, to the extent reasonably requested by
Tenant, will provide

 

30

 

Tenant with supporting data
therefor.  In the event that the Actual
Facilities Costs and Expenses per square foot of the total Facilities, for that
calendar year, are less than $6.20 per square foot of the Facilities (the “Estimated
Facilities Costs and Expenses”), Tenant shall be entitled to a credit from the
Authority against future Additional Rent that would otherwise be payable by
Tenant under this Lease, which credit shall be in an amount that is equal to
the amount of Additional Rent that was actually assessed against Tenant for
that calendar year (based on the Estimated Facilities Costs and Expenses) less
the amount of Additional Rent that should have been assessed against Tenant for
that calendar year (based on the Actual Facilities Costs and Expenses).  If there are any overpayment credits against
Additional Rent remaining under this Section as of the expiration or
sooner termination of the Term of this Lease, those overpayment credits will be
applied toward any unpaid Additional Rent assessed for periods prior to the
expiration or sooner termination of the Term; and any remaining overpayment
credits that are not applied toward any unpaid Additional Rent assessed for
periods prior to the expiration or sooner termination of the Term will be paid
to the Tenant in cash.

 

(3)                                  The
Additional Rent shall be increased during the Extension Term as provided in Section 501(B) above.

 

(4)                                  Notwithstanding
subsection (B)(1) above, Tenant will not be charged any Additional
Rent with respect to the Hangar 4 Office Space (as defined in Exhibit B) at any time during the
Term.

 

(5)                                  As
it relates to Occupancy and subsequent de-Occupancy of Leased Premises, if
Tenant Occupies a particular portion of the Leased Premises during less than
all of a calendar month, Tenant shall be assessed a prorata portion of the
Additional Rent based on the number of days Tenant Occupies that portion of the
Leased Premises during that calendar month. Notwithstanding the preceding
sentence, however, prior to the third (3rd) anniversary of the Effective Date,
Additional Rent will not be assessed with respect to any particular Bay at the
Leased Premises for any seven (7) consecutive day period during the months
of July and August, during which Tenant does not conduct Tenant’s Business
in that Bay.  For purposes of the
preceding sentence, Tenant shall be deemed to have conducted Tenant’s Business
in a particular Bay during a particular seven (7) day period if Tenant
Occupied and had at least one (1) aircraft in that Bay on at least one (1) day
during that seven (7) day period.

 

(6)                                  If,
at any time, Tenant adequately demonstrates to Authority that Tenant’s
operations are specifically and directly responsible for a material reduction
in operating costs at the Facilities, the entire demonstrated cost savings
shall be applied as a reduction to Tenant’s Additional Rent over the remaining
Term of the Lease; however, going forward Tenant must continue to demonstrate
its direct responsibility for the reduction in operating costs.

 

(7)                                  By
way of example, if on July 1, 2005, Tenant is Occupying 300,000 square
feet of Leased Premises, of which 25,000 square feet is Hangar 4 Office Space
and another 100,000 square feet constitutes empty Bay space for one seven (7)

 

31

 

consecutive day period during
the month, the Additional Rent that would be assessed by the Authority for that
calendar month would be an amount equal to $130,416.66 (i.e., ((300,000 square
feet – 25,000 square feet) x $6.20 per square foot per annum) /12 months) – ((7
days/31 days) x (100,000 square feet x $6.20 per square foot per annum/12
months)).

 

(8)                                  Notwithstanding
anything in this Lease to the contrary, however, and regardless of which (if
any) portions of the Leased Premises that Tenant elects to Activate and
regardless of which (if any) portions of the Leased Premises that Tenant is
Occupying or using from time to time, Tenant hereby agrees that commencing on
the earlier of (a) December 1, 2004 or (b) the first date that
any aircraft of Tenant’s customer(s) is located at the Leased Premises, and
continuing thereafter during the Term of this Lease, Tenant shall be obligated
to pay monthly Additional Rent on at least two (2) Bays (the “Minimum
Additional Rent” and, together with the Minimum Base Rent, the “Minimum Monthly
Rent”).  Minimum Additional Rent is
subject to increase, in the same manner and at the same time as the Minimum
Base Rent, as provided in Section 401(G) above and Section 2105(A)(3) below.

 

(C)                                Percentage
Rent.

 

(1)                                  If
during the Term, Tenant’s annual Operating Profit (expressed as a percentage of
Gross Sales) is greater than nine and 25/100 percent (9.25%) of Gross Sales at
the end of a Tenant Fiscal Year, then Tenant will pay the Authority a
percentage rent (“Percentage Rent”) for that Tenant Fiscal Year in an amount
that is equal to thirty-three percent (33%) of the amount by which Tenant’s
annual Operating Profit for that Tenant Fiscal Year exceeds nine and 25/100
percent (9.25%) of Tenant’s Gross Sales for that Tenant Fiscal Year.  By way of example, if at the end of a Tenant
Fiscal Year, Tenant had Gross Sales of $99,000,000 and an annual Operating Profit
of $11,880,000, then Tenant’s annual Operating Profit would equal twelve
percent (12%) of its Gross Sales (i.e., $11,880,000 / $99,000,000).  9.25% of $99,000,000 equals $9,157,500.
Therefore, for this Tenant Fiscal Year, Tenant would pay the Authority $898,425
(i.e., .33 x ($11,880,000 — $9,157,500)). If Tenant had Gross Sales of
$100,000,000 for a Tenant Fiscal Year and an annual Operating Profit of
$9,000,000 for that Tenant Fiscal Year, then Tenant’s annual Operating Profit
for that Tenant Fiscal Year would equal nine percent (9%) of its Gross Sales
(i.e., $9,000,000 / $100,000,000) and as a result, no Percentage Rent would be
due the Authority for that Tenant Fiscal Year.

 

(2)                                  Tenant
will calculate its Operating Profit on a cumulative basis at the end of each
fiscal quarter (August 31, November 30, February 28/29, and May 31)
(each, a “Period”) for the applicable Tenant Fiscal Year, and will make interim
Percentage Rent payments, if any are due, within sixty (60) days after the end
of the applicable fiscal Period.  Not
later than ninety (90) days after the end of each of the Tenant Fiscal Years
(i.e., not later than August 31 of each year), Tenant will calculate the
cumulative Operating Profit of Tenant for each such Tenant Fiscal Year, and
likewise calculate the Percentage Rent that should have been paid to the
Authority for each such Tenant Fiscal Year, and reconcile it to the interim
Percentage Rent payments actually made to the

 

32

 

Authority during that Tenant
Fiscal Year with respect to each of the Periods during that Tenant Fiscal
Year.  If the Percentage Rent that should
have been assessed against Tenant for the Tenant Fiscal Year exceeds what
Tenant has actually paid to the Authority for that Tenant Fiscal Year, then
Tenant shall pay the Authority the difference within ninety (90) days after the
end of that Tenant Fiscal Year.  If the
Percentage Rent that should have been assessed against Tenant for that Tenant
Fiscal Year is less than what Tenant has actually paid to the Authority for
that Tenant Fiscal Year, then the Authority shall credit the difference against
Tenant’s obligations to pay Rental under this Lease with respect to the Tenant
Fiscal Year(s) following the Tenant Fiscal Year for which Tenant overpaid
Percentage Rent. The Authority shall refund in cash to Tenant any unused
credits that have accrued, but have not been applied to Rental, under this subsection (C)(2) at
the expiration or earlier termination of this Lease.  Each such payment that is due and payable by
Tenant shall be accompanied by a certificate signed and sworn by the Tenant’s
Controller, setting forth the Operating Profit and Gross Sales during such
Period (the “Percentage Rent Certificate”). 
In the event of a partial Period at the beginning or end of the Term,
the Percentage Rent payable for that partial Period shall be based upon the
Gross Sales and Operating Profit during that partial Period.

 

(3)                                  Tenant
shall keep in the Leased Premises full, accurate, true and complete records of
all Gross Sales and Operating Profit with respect to the Leased Premises.  Such records shall be retained by the Tenant
for not fewer than five (5) years after the expiration of the Tenant
Fiscal Year to which they relate, and such records shall be kept in accordance
with generally accepted accounting principles (“GAAP”) that are applied
consistently with respect to the Leased Premises from Period to Period. For
purposes of permitting verification by the Authority of the Gross Sales and
Operating Profit reported by the Tenant with respect to the Leased Premises,
the Authority or its agent shall have the right for a period of up to five (5) years
after the end of each Tenant Fiscal Year, upon not fewer than thirty (30) days’
prior written notice to Tenant, to inspect, audit or cause to be audited Tenant’s
books and records relating to Gross Sales and Operating Profit for the Tenant
Fiscal Year in question.  If such
inspection or audit discloses that Tenant has underpaid any Percentage Rent due
under this Lease, and if Tenant does not in good faith dispute the findings of
the audit or inspection, Tenant shall within thirty (30) days of the findings
remit the amount of the underpayment to the Authority, together with interest
thereon from the date such amount was originally due and owing to the Authority
hereunder, at the rate specified in Section 604 below.  If such inspection or audit discloses that
Tenant has overpaid any Percentage Rent due hereunder, and if the Authority
does not in good faith dispute the findings of the audit or inspection, the
Authority shall within thirty (30) days of the findings remit the amount of the
overpayment to Tenant.  If the inspection
or audit discloses that Tenant underpaid any Percentage Rent, Tenant shall also
reimburse the Authority, a reasonable hourly rate, for the time incurred by the
Authority’s personnel in conducting the audit or inspection, plus their actual
expenses in conducting the audit or inspection; provided, however, that the
total amount for which Tenant would be obligated to reimburse the Authority
under this sentence shall not, itself, exceed an amount that is equal to the
amount of the underpayment.

 

33

 

“Gross Sales”
shall mean, for a particular Period, the aggregate amount, expressed in U.S.
Dollars, of all goods and services sold or otherwise provided by Tenant at,
from or with respect to the Leased Premises during that Period and recorded on
the books of Tenant in accordance with GAAP. 
“Gross Sales” shall also include all goods and services sold from or
provided at other locations of Tenant and/or its Affiliates with respect to
customer orders and/or contracts generated or invoiced at, from or with respect
to the Leased Premises; and “Gross Sales” shall also include goods and services
intentionally diverted away from the Leased Premises to other locations of
Tenant and/or its Affiliates to avoid including those sales in Gross Sales.
However, Gross Sales shall not include goods and services diverted to other
locations of Tenant and/or its Affiliates if such diversion was done for a
legitimate, good faith business reason and which diversion would have occurred
even in the absence of a Percentage Rent obligation and not to avoid including
those sales in Gross Sales, including, but not limited to the sale of goods and
services performed at another location due to a customer request, workplace
disruptions, aircraft scheduling conflicts, aircraft emergencies, or weather.
Discounts, price reductions, rebates and other similar arrangements by Tenants
or its Affiliates shall not be granted in a manner that would serve to
intentionally deflect revenues to another facility of Tenant or any of its
Affiliates so as to artificially reduce Gross Sales. In the event any goods or
services are provided by Tenant to any Affiliate of Tenant on any basis that is
less than the fair market value thereof, the fair market value thereof shall be
deemed to have been received by Tenant for those goods or services for purposes
of calculating Gross Sales. To the extent any charges imposed by Tenant or any
Affiliate for goods and services that are to be included in “Gross Sales” shall
be in amounts less than what is required by the preceding sentences, Gross
Sales shall be increased so as to equal the amount that Tenant or its Affiliate
would have received had it imposed charges in accordance with the preceding
sentences. “Gross Sales” shall not include goods and services sold from or
provided at other locations including those of Tenant and/or its Affiliates
with respect to customer orders and/or contracts generated at, from, or with
respect to the Leased Premises when such goods and services are provided at
such locations as a result of a Casualty at the Leased Premises (other than a Casualty
that results from the fault or negligence of Tenant, its subtenants, or any of
their respective Employees, agents, contractors or Invitees) that prevents them
from being provided at the Leased Premises, the occurrence of any of the events
described in Section 502(A), or an interruption under Section 1102
which is caused by the Authority and which prevents those goods and services
from being provided at the Leased Premises.

 

“Operating
Profit” for a particular Period shall be expressed as a percentage of Gross
Sales and shall mean, for a particular Period, Gross Sales for that Period less
expenses directly related to Tenant’s operations at the Leased Premises for
that Period, as calculated in accordance with GAAP.  Group/Corporate Expenses allocated to Tenant
shall also be deducted from Gross Sales for purposes of Operating Profit.  No intercompany fees relative to any members
of the Group, to Tenant’s Parent (as hereinafter defined), or to any Affiliate
of Tenant or its Parent, shall be included as expenses of Tenant’s operations
at the Leased Premises except as contemplated by the definition of “Group/Corporate
Expenses” set forth below.  The expenses
for the Leased Premises shall be reduced by the amount of any grants, if
applicable, Success Payments

 

34

 

or credits provided to Tenant
by any Governmental Entity with respect to the Leased Premises during that
particular Period, and shall also be reduced by the amount of any and all
Rental credits that are provided to Tenant under this Lease during that
particular Period. For purposes of this provision, “Group” means the subset of
organizational companies, within the Parent company organization, in which
Tenant belongs. “Group/Corporate Expenses” means the following, all of which
must be verifiable by the Authority (a particular item of Group/Corporate
Expense may only be deducted pursuant to one of the following categories (i.e.,
a particular item of Group/Corporate Expense may not be deducted more than once
for purposes of calculating Operating Profit)):

 

(a)                                  Production
Materials and Labor from Sister Companies: The actual cost and expenses
incurred by Tenant in procuring production materials and labor from a “sister
company” (i.e., an Entity that is directly or indirectly owned, in whole or in
part, by Tenant’s Parent) for purposes of Tenant’s providing goods and services
to Tenant’s customers at, from or with respect to the Leased Premises.  The price charged by Tenant’s sister
companies to Tenant shall be at not more than normal and customary market rates
consistent with an arm’s length transaction.

 

(b)                                 Group
Overhead Allocation: Allocation of general Group overhead costs and expenses,
which shall consist of Tenant’s proportionate share of all costs and expenses
(including, without limitation, salaries, benefits, travel and living expenses,
supplies, and educational costs) reasonably incurred that are associated with
the operation of the Group, in general, and are not specifically allocable to
any particular division or Entity within the Group (the “Group Overhead”).  Such costs and expenses may include, by way
of example, costs and expenses generally incurred by the Group, as a whole, for
the following: business development, operations, finance, and sales. Tenant’s
proportionate share of Group Overhead, for a particular period, shall be a
percentage equal to Tenant’s Gross Sales for that period divided by the gross
sales of the entire Group.  Tenant’s
proportionate share of Group Overhead shall not exceed for any Tenant Fiscal
Year, the amount of Four Hundred Thousand Dollars ($400,000) per Tenant Fiscal
Year, for purposes of calculating Operating Profit for that Tenant Fiscal Year.

 

(c)                                  Corporate
Overhead Allocation: Allocation to Tenant, as described in this subsection (c),
of Tenant’s proportionate share of the corporate overhead costs and expenses of
Tenant’s Parent, reasonably incurred in connection with the operation of the
Parent and those subsidiaries which Parent (directly or indirectly) wholly owns,
including those for insurance premiums, banking services, routine financial
statement audits, tax preparation services, benefits administration, pension
administration, payroll administration, accounts payable administration,
routine compliance procedures under the Sarbanes-Oxley Act of 2002, 15 U.S.C.
¶7201 et  seq., and routine treasury-related
administrative activities with respect to the receipt, custody and disbursement
of funds (the “Corporate Overhead”). Tenant’s proportionate share of Corporate
Overhead, for a particular Period, shall be as allocated pursuant to the Parent’s
“General Guidelines for Corporate 

 

35

 

Expense Allocation” (as Parent
may amend from time to time), provided that the Parent’s “General Guidelines
for Corporate Expense Allocation” are applicable on a consistent basis to all
of Parent’s operating units and subsidiaries (the “Corporate Overhead
Allocation Guidelines”). The amount of Tenant’s share of Corporate Overhead
which may be deducted for purposes of calculating Operating Profit for a
particular Period shall be no greater than an amount that is proportionate to
the ratio that Tenant’s Gross Sales for that Period bear to Parent’s entire
gross sales from all of Parent’s operations (whether at the Leased Premises of
at other Parent locations) for that Period. Tenant’s Percentage Rent
Certificate for each Period shall include a certificate, signed and sworn to by
the Parent’s Chief Financial Officer, certifying to the Authority that the
Corporate Overhead Allocation Guidelines are applied on a consistent basis with
respect to all of Parent’s operating units and subsidiaries and that the
allocation to Tenant of its share of the Corporate Overhead for that Period has
been made in accordance with the then-applicable Corporate Overhead Allocation
Guidelines.  The Authority shall have the
right, as part of any audit performed by the Authority as described above in
this subsection (C)(3), to audit the Parent’s books and records relevant
to the Corporate Overhead Allocation  in
order to verify (i) that the Corporate Overhead Allocation Guidelines that
were used to calculate Tenant’s share of Corporate Overhead were in fact
applied on a consistent basis to all of the Parent’s operating units and
subsidiaries and (ii) that the calculation of Tenant’s share of Corporate
Overhead pursuant to the Corporate Overhead Allocation Guidelines was correctly
calculated.  The Parent shall retain its
books and records pertaining to Corporate Overhead and allocations thereof for
not fewer than five (5) years after the expiration of each Tenant Fiscal
Year for which Tenant is allocated any portion of Corporate Overhead.

 

(d)                                 Corporate
Direct Charges: Charges reasonably assessed to Tenant, for time and actual materials
costs incurred by employees at the Parent’s headquarters in providing support
services (including, without limitation, legal support, systems programming or
direct support hardware, environmental support, and human resources support)
directly to and for the benefit of Tenant with respect to Tenant’s operations
at the Leased Premises.   Such charges
shall not include any “profit” component, and shall be in amounts and at rates
that are commercially reasonable and not in excess of what would reasonably be
charged to Tenant if Tenant were to obtain such services from a service
provider unaffiliated with Tenant.

 

(e)                                  Systems
Allocation:  Actual, reasonable costs and
expenses for the Parent’s maintaining systems that are shared generally by
members of the Group, such as a corporate email system, security systems, and
similar types of systems.  These costs
and expenses are to be allocated equally, by division, across the Parent
company organization (the Group constituting one of those divisions), with each
division being charged an amount equal to the amount charged to each other
division in the Parent company organization. 
Tenant’s share of those costs and

 

36

 

expenses shall be equal to the
share of those costs and expenses that are borne by other member companies in
the Group.

 

Capital charges and income taxes are not to be deducted from Gross
Sales in determining Operating Profit. 
The cost of goods and services received by Tenant from its Affiliates
and from other Persons must not exceed what Tenant would reasonably be required
to pay in an arm’s-length transaction. Allocation to Tenant by its vendors,
suppliers, and contractors of costs, expenses, fees, charges, rebates, credits,
allowances, price reductions and other such items must be done in a manner that
will not (a) allocate to Tenant more than Tenant’s rightful share of the
costs, expenses, fees, charges and other such items, and (b) allocate to
parties other than Tenant more than their rightful share of any rebates,
credits, allowances, price reductions and other such items.

 

Attached hereto as Exhibit J
is an illustrative model indicating how Tenant may calculate Gross Sales and
Operating Profit, which model may be subject to modification in accordance with
GAAP.

 

Section 602.                                Field
Use Charge.  This Lease Agreement
does not and shall not be deemed to grant Tenant the right to use any aircraft
parking apron (except as may be designated from time to time by the Facilities
Manager to Tenant or except as contemplated by Section 703(B) below)
or taxiway not on the Leased Premises. 
Any use of aircraft operational areas outside of the Leased Premises, or
other Airport property not included in the Leased Premises, by Tenant, its
Employees or its agents shall be by separate agreement and only upon payments
of appropriate fees.  Nothing in this
Section, however, shall prohibit Tenant, its Employees or its agents from the
joint use with others at the Airport of interior and exterior roadways serving
the Leased Premises as granted herein and in accordance with Airport rules,
regulations and/or restrictions. 
Notwithstanding the foregoing, the Authority covenants and agrees that
Tenant and its customers will not be charged any landing fees by any
Governmental Entity with respect to aircraft landing at the Land for
maintenance, repair, or overhaul at the Leased Premises, and that Tenant’s
customers (when and to the extent they are taking off from and landing at the
Airport in connection with the maintenance, repair and overhaul services they
are receiving at the Leased Premises) will be entitled to use and access to the
Airport on terms no less favorable than the Authority gives to other users of
the Airport.

 

Section 603.                                Time
and Place of Payments.  The Rental
due under Section 601 hereof shall be payable to the Authority, at the
office of the Airport Director at the address set forth in Section 2208
hereof.

 

Section 604.                                Delinquent
Rentals.  If Tenant does not pay the
Rental described in Section 601 hereof on the due date thereof, Tenant
shall pay to the Authority, as additional rental, an interest charge of
eighteen percent (18%) per annum, applied against the delinquent amount due for
each full calendar month of delinquency, computed as simple interest.  Such interest shall be computed from the due
date until the delinquent payment, together with accrued interest, is paid in
full.

 

37

 

Section 605.                                Authority
Incentives.

 

(A)                              Grants.

 

(1)                                  Tenant
shall be entitled to receive grants from the Authority, in accordance with the schedule set
forth on Exhibit G hereto
(the “Grants”, and the funds to be paid by the Authority to Tenant pursuant to
the Grants being referred to herein as the “Grant Proceeds”).  The purpose of the Grants is to pay or
reimburse Tenant, as the case may be, solely for (a) Tenant’s actual costs
and expenses in purchasing materials and equipment for Authority-approved
additions to and/or improvements to the Leased Premises, (b) Tenant’s
actual costs and expenses in purchasing computer related hardware for use by
Tenant at the Leased Premises; and (c) Tenant’s mobilization and start-up
costs (the costs and expenses described in subsection (c) being
referred to in this Section 605(A) as “Mobilization Expenses”; and
the costs and expenses described in subsections (a) and (b) being
referred to, collectively, as “Grant-Related Expenditures”); however, Tenant
shall only be entitled to use for Mobilization Expenses those Grant Proceeds
that are payable by the Authority to Tenant on the thirtieth (30th) day after
the Effective Date and on the one hundred fifth (105th) day after the Effective
Date. As described on Exhibit G,
Tenant shall be deemed to have earned certain portions of the Grant Proceeds
(i.e., those portions payable for “Mobilization Expenses”) on the thirtieth
(30th) day after the Effective Date (the first two (2) installments of
Grant Proceeds for Mobilization Expenses being payable on the thirtieth (30th)
day after the Effective Date) and on the one hundred fifth (105th) day after
the Effective Date. Thereafter, as indicated on Exhibit G, Tenant shall be deemed to have earned certain
additional portions of the Grant Proceeds at such times as Tenant has sent the
Authority an Activation Notice with respect to a certain number of Bays in the
Leased Premises as set forth on Exhibit G
hereto (except for those portions of the Grant Proceeds which are, as shown on Exhibit G, payable at the commencement
of the 1st year of the Extension Term and at the commencement of the 2nd year
of the Extension Term). Those Bay or date thresholds that Tenant must satisfy,
as set forth on Exhibit G, in
order to be deemed to have earned a particular portion of the Grant Proceeds,
are referred to herein as the “Grant Thresholds”. After such time as the
applicable dates on Exhibit G
occur with respect to which Tenant would be entitled to receive the Grant
Proceeds for Mobilization Expenses, the Authority shall pay Tenant the
applicable Grant Proceeds corresponding to those dates, provided that Tenant
first delivers to the Authority a list of Tenant’s anticipated Mobilization
Expenses. However, Tenant hereby acknowledges that the Authority shall only be
required to actually disburse the remainder of the Grant Proceeds (i.e., the
portion of the Grant Proceeds that may be used for Grant-Related Expenditures)
to Tenant when Tenant has satisfied the procedure for disbursement that is set
forth in subsection (A)(2) below. Tenant may not use the Grant
Proceeds for Mobilization Expenses for any Leased Premises Improvements (as
defined below), unless Tenant complies with the procedures described in subsection (A)(2) below.
Tenant hereby acknowledges and agrees that it may not receive both
reimbursement from Grant Proceeds and Improvement Rent Credits for a particular
Leased Premises Improvement.  Tenant
hereby further acknowledges and agrees that it may not be reimbursed using
Grant Proceeds for any Grant-Related Expenditure for which Tenant has received Grant
Proceeds for Mobilization Expenses.

 

38

 

(2)                                  In
order for Tenant to obtain the Grant Proceeds for Grant-Related Expenditures
corresponding to those Grant Thresholds that are satisfied by Tenant from time
to time, the following must occur:

 

(a)                                  Prior
to commencing any purchasing or other activities for which Tenant will seek
reimbursement from Grant Proceeds, Tenant must obtain the Authority’s prior
written approval of the proposed Grant-Related Expenditures.

 

(b)                                 If
the Grant-Related Expenditures have been approved by the Authority as described
in subsection (a) above, and are not Leased Premises Improvements (as
defined below), Tenant shall submit to the Authority a written request for
reimbursement, which request shall contain a certification by Tenant that the
amounts for which Tenant seeks reimbursement have actually been spent and paid
for by Tenant, and which request shall contain a detailed breakdown (together
with such supporting data as the Authority shall request) regarding the amounts
for which Tenant seeks reimbursement. 
Provided that Tenant has satisfied the foregoing provisions of subsection (a) above
and this subsection (b), the Authority shall, not later than thirty (30)
days after it receives Tenant’s written request and all supporting data that
the Authority has requested with respect thereto, reimburse Tenant for the
amounts so requested by Tenant.  However,
the Authority shall only be obligated to reimburse Tenant to the extent of
Grant Proceeds which Tenant has then earned as described in subsection (1) above
and which have not theretofore been applied toward Grant-Related Expenditures.

 

(c)                                  If
the Grant-Related Expenditures have been approved by the Authority as described
in subsection (a) above, and consist of improvements, alterations or
other modifications to that portion of the Leased Premises that is not
Equipment (“Leased Premises Improvements”), the following terms and conditions
must be satisfied in order for the Authority to disburse Grant Proceeds to
reimburse Tenant for the cost and expense of those Leased Premises
Improvements:

 

(i)                                     Tenant
must submit to the Authority, prior to commencing the Leased Premises
Improvements, a complete and detailed set of plans and specifications, prepared
by an architect or engineer reasonably acceptable to the Authority, detailing
those proposed Leased Premises Improvements, which plans and specifications
must be reasonably acceptable to the Authority (the plans and specifications
approved by the Authority being referred to herein as the “Plans”). Tenant
shall perform and complete the Leased Premises Improvements in strict
accordance with Plans.  Tenant shall be
responsible for ensuring that the Plans satisfy and comply with all applicable
federal, state, county or other governmental Laws and the Authority shall have
no responsibility or liability therefor.

 

(ii)                                  Tenant
shall be responsible, at its cost and expense, for constructing the Leased
Premises Improvements and performing all work 

 

39

 

relating thereto including,
without limitation, paying fees, space planning, construction drawing services,
obtaining all Improvement-Related Permits (as defined below), and furnishing
all labor and materials necessary or appropriate to complete the Leased
Premises Improvements, and the Authority shall have no responsibility or
liability therefor.  The contractors and
subcontractors used by Tenant shall be reasonably acceptable to the Authority,
and Tenant shall furnish a list of their names and copies of the applicable
contracts and subcontracts upon request by the Authority.

 

(iii)                               Prior
to performing the Leased Premises Improvements, Tenant shall, at its sole cost
and expense, obtain all permits, authorizations, consents, licenses, and
approvals, if any, necessary or appropriate to perform the Leased Premises
Improvements, including, without limitation, the permit(s) required by the City
of Indianapolis, if any, with respect to the Leased Premises Improvements (the “Improvement-Related
Permits”).  Prior to performing the
Leased Premises Improvements, Tenant shall deliver to the Authority:  (A) copies of the Improvement-Related
Permits; and (B) evidence reasonably satisfactory to the Authority that
Tenant has procured or has caused others to procure workers’ compensation,
general liability, builder’s risk, and personal and property damage insurance
in amounts reasonably satisfactory to the Authority, and naming the Authority
as additional insured and loss payee.

 

(iv)                              Tenant
shall, and shall cause its contractors and subcontractors to, perform the
Leased Premises Improvements:  (A) in
accordance with the Plans and Permits; and (B) in a good and workmanlike
manner and in compliance with all applicable federal, state, county or other
governmental Laws, including, without limitation, zoning ordinances and The
American With Disabilities Act, as amended, and the rules, regulations,
guidelines, and orders promulgated or entered thereunder.  Tenant also shall, and shall cause its
contractors and subcontractors to, observe, perform and comply with all Laws
promulgated from time to time by any applicable Governmental Entity, and
complete Leased Premises Improvements free of all mechanics’ and materialmens’
liens.  Tenant shall keep the Authority
advised of the status of construction and completion of the Leased Premises
Improvements and of the anticipated completion dates for the Leased Premises
Improvements.

 

(v)                                 Upon
completion of the Leased Premises Improvements, Tenant shall deliver to the
Authority final, unconditional lien waivers from all contractors,
subcontractors, and materialmen performing labor or supplying materials or
services in connection with the Leased Premises Improvements; a Certificate of
Substantial Completion issued by Tenant’s project architect on the appropriate
AIA form (or in any other form as 

 

40

 

reasonably required by the
Authority), certifying to the Authority that the Leased Premises Improvements
have been completed in accordance with the Plans and Permits and all applicable
Laws; and an “as-built” set of drawings of the Leased Premises
Improvements.  The Authority must be
reasonably satisfied that the Leased Premises Improvements have been fully
completed, and have been completed in a good and workmanlike manner in
accordance with the Plans, Permits and applicable Law.

 

(vi)                              Tenant
shall submit to the Authority a written request for reimbursement, which
request shall contain a certification by Tenant that the amounts for which
Tenant seeks reimbursement have actually been spent and paid for by Tenant, and
which request shall contain a detailed breakdown (together with such supporting
data as the Authority shall request) regarding the amounts for which Tenant
seeks reimbursement.  Provided that the
foregoing provisions of subsection (a) above and this subsection (c) have
been satisfied, the Authority shall, not later than thirty (30) days after it
receives Tenant’s written request and all supporting data that the Authority
has requested with respect thereto, reimburse Tenant for the amounts so
requested by Tenant.  However, the
Authority shall only be obligated to reimburse Tenant to the extent of Grant
Proceeds which Tenant has then earned as described in subsection (1) above
and which have not theretofore been applied toward Grant-Related Expenditures.

 

(3)                                  All
equipment, tooling, and other personal property for which Tenant has received
payment or reimbursement from the Authority from the Grant Proceeds (including,
without limitation, Grant Proceeds for Mobilization Expenses) shall become the
property of the Authority; provided, however, such personal property will be
part of the Leased Premises for Tenant’s use under the terms of this
Lease.  If Tenant receives reimbursement
in whole or in part from the Grant Proceeds for the costs and expenses of any
Leased Premises Improvement project, Tenant acknowledges and agrees that all of
the Leased Premises Improvement project, in its entirety, will become the
property of the Authority; provided, however, such Leased Premises Improvement
project will be part of the Leased Premises for Tenant’s use under the terms of
this Lease.

 

(4)                                  Tenant
shall have no right to any Grant Proceeds that remain unapplied as of the
expiration or sooner termination of the Term of this Lease.  Tenant shall not be obligated to repay any
Grant Proceeds to the Authority upon the expiration or sooner termination of
the Term of this Lease.

 

(B)                                Credits.

 

(1)                                  Tenant
shall be eligible to receive credits to apply against Base Rent, Additional
Rent or Percentage Rent assessed against the Tenant (the “Credits”) in
accordance with the Schedule set forth in Exhibit G hereto. 
The Credits will be earned by Tenant once Tenant has provided the
Authority with an Activation Notice with respect to the applicable number of
Bays in the Leased Premises as set forth on Exhibit G
hereto 

 

41

 

(those thresholds that Tenant
must satisfy, as set forth on Exhibit G,
in order to be deemed to have earned a particular amount of the Credits, are
referred to herein as the “Credit Thresholds”). 
Once Tenant has earned Credits, such Credits may be applied against
Tenant’s Rental obligations which accrue from and after the time such Credits
are earned in the manner described in paragraph (2) below, but only
so long as Tenant remains “Eligible” to apply the Credits by continuing to
satisfy the Credit Threshold that is applicable to that particular level of
Credits.

 

(2)                                  Any
Credits earned by Tenant shall be applied one twelfth (1/12) per month over the
next twelve (12) months (whether consecutive or not) during which Tenant (a) remains
Eligible to apply such Credits and (b) owes Rental to the Authority.
Tenant may “bank” any earned but unapplied Credits toward future Rental
obligations, subject to the preceding sentences.

 

(3)                                  Tenant
shall have no right to any Credits that remain unapplied as of the expiration
or sooner termination of the Term of this Lease.  Tenant shall not be obligated to repay any
Credits to the Authority upon the expiration or sooner termination of the Term
of this Lease.

 

(C)                                Leasehold
Improvement Credits.

 

(1)                                  In
addition to the Credits described in Subsection (B) above, the
Authority will provide Tenant with credits to be applied against Tenant’s
Rental in an amount equal to fifty percent (50%) of the cost and expense paid
by Tenant for any Leased Premises Improvements that Tenant makes to the Leased
Premises (to the extent Tenant has not received Grant Proceeds therefor) (the “Improvement
Rent Credits”), provided that Tenant satisfies the procedure for disbursement
set forth in subsection (2) below. 
Improvement Rent Credits earned hereunder will be applied dollar for
dollar as and when the Rentals become due and payable by Tenant under the Lease,
subject to subsection (4) below.

 

(2)                                  In
order for Tenant to obtain from the Authority the Improvement Rent Credits, the
following must occur:

 

(a)                                  Prior
to commencing any purchasing or other activities related to the Leased Premises
Improvements, Tenant must obtain the Authority’s prior written approval of the
proposed Leased Premises Improvements.

 

(b)                                 Tenant
must submit to the Authority, prior to commencing the Leased Premises
Improvements, a complete and detailed set of plans and specifications, prepared
by an architect or engineer reasonably acceptable to the Authority, detailing
those proposed Leased Premises Improvements, which plans and specifications
must be reasonably acceptable to the Authority (the plans and specifications
approved by the Authority being referred to herein as the “Plans”).  Tenant shall perform and complete the Leased
Premises Improvements in strict accordance with Plans.  Tenant shall be responsible for ensuring that
the Plans 

 

42

 

satisfy and comply with all
applicable federal, state, county or other governmental Laws, and the Authority
shall have no responsibility or liability therefor.

 

(c)                                  Tenant
shall be responsible, at its cost and expense, for constructing the Leased
Premises Improvements and performing all work relating thereto including,
without limitation, paying fees, space planning, construction drawing services,
obtaining all Improvement-Related Permits, and furnishing all labor and
materials necessary or appropriate to complete the Leased Premises
Improvements, and the Authority shall have no responsibility or liability
therefor.  The contractors and
subcontractors used by Tenant shall be reasonably acceptable to the Authority, and
Tenant shall furnish a list of their names and copies of the applicable
contracts and subcontracts upon request by the Authority.

 

(d)                                 Prior
to performing the Leased Premises Improvements, Tenant shall, at its sole cost
and expense, obtain all “Improvement-Related Permits”.  Prior to performing the Leased Premises
Improvements, Tenant shall deliver to the Authority:  (i) copies of the Improvement-Related
Permits; and (ii) evidence reasonably satisfactory to the Authority that
Tenant has procured or has caused others to procure workers’ compensation,
general liability, builder’s risk, and personal and property damage insurance
in amounts reasonably satisfactory to the Authority, and naming the Authority
as additional insured and loss payee.

 

(e)                                  Tenant
shall, and shall cause its contractors and subcontractors to, perform the
Leased Premises Improvements:  (i) in
accordance with the Plans and Permits; and (ii) in a good and workmanlike
manner and in compliance with all applicable federal, state, county or other
governmental Laws, including, without limitation, zoning ordinances and The
American With Disabilities Act, as amended, and the rules, regulations,
guidelines, and orders promulgated or entered thereunder.  Tenant also shall, and shall cause its contractors
and subcontractors to, observe, perform and comply with all Laws promulgated
from time to time by any applicable Governmental Entity, and complete Leased
Premises Improvements free of all mechanics’ and materialmens’ liens.  Tenant shall keep the Authority advised of
the status of construction and completion of the Leased Premises Improvements
and of the anticipated completion dates for the Leased Premises Improvements.

 

(f)                                    Upon
completion of the Leased Premises Improvements, Tenant shall deliver to the
Authority final, unconditional lien waivers from all contractors,
subcontractors, and materialmen performing labor or supplying materials or
services in connection with the Leased Premises Improvements; a Certificate of
Substantial Completion issued by Tenant’s project architect on the appropriate
AIA form (or in any other form as reasonably required by the Authority),
certifying to the Authority that the Leased Premises Improvements have been
completed in accordance with the Plans and Permits and all applicable Laws; and
an “as-built” set of drawings of the Leased Premises Improvements.  The Authority must be reasonably satisfied
that the Leased Premises 

 

43

 

Improvements have been fully
completed, and have been completed in a good and workmanlike manner in
accordance with the Plans, Permits and applicable Law.

 

(g)                                 Tenant
shall submit to the Authority a written statement, which statement shall
contain a certification by Tenant as to the cost and expenses paid by Tenant
for those Leased Premises Improvements, and which statement shall contain a
detailed breakdown (together with such supporting data as the Authority shall
request) with respect thereto. Provided that the foregoing provisions of subsection (2) have
been satisfied, Tenant shall be entitled to the Improvement Rent Credits as
described in subsection (4) below.

 

(3)                                  If
Tenant receives Improvement Rent Credits with respect to any Leased Premises
Improvement project, Tenant acknowledges and agrees that the entire Leased
Premises Improvement project, in its entirety, will become the property of the
Authority; provided, however, such Leased Premises Improvement project will be
part of the Leased Premises for Tenant’s use under the terms of this Lease.

 

(4)                                  An
amount equal to one forty-eighth (1/48) of the total amount of any Improvement
Rent Credit to which Tenant becomes entitled, as described above, with respect
to a particular Leased Premises Improvement project may thereafter be applied
toward each month’s Rental that thereafter is assessed against and owing from
Tenant with respect to the Leased Premises in any given month.  However, not more than one forty-eighth
(1/48) of that particular Improvement Rent Credit may be applied toward Rental
during any calendar month.  Tenant may “bank”
any earned but unapplied Improvement Rent Credits toward future Rental
obligations, subject to the preceding sentence.

 

(5)                                  Tenant
shall have no right to any Improvement Rent Credits that remain unapplied as of
the expiration or sooner termination of the Term of this Lease.  Tenant shall not be obligated to repay any
Improvement Rent Credits to the Authority upon the expiration or sooner
termination of the Term of this Lease.

 

(D)                               Success
Payments.  For each of the first
three (3) narrow-body (or larger) aircraft that are brought by Tenant’s
customers to the Leased Premises, during the Term, for purposes of Tenant’s
performing on those aircraft, at the Leased Premises, a “C check” or “D check”,
Tenant shall be entitled to receive from the Authority a “success payment” in
an amount equal to Four Hundred Thousand Dollars ($400,000) (each such $400,000
payment being referred to herein as a “Success Payment”).  For purposes of this subsection (D), a “C
check” or a “D check” means that level of single aircraft maintenance required
by Tenant’s customer.  Tenant shall be
entitled to receive the first Success Payment within thirty (30) days after
Tenant provides written evidence reasonably satisfactory to the Authority that
Tenant has completed its “C Check” or “D Check” as to the first such aircraft
at the Leased Premises, shall be entitled to receive the second Success Payment
within thirty (30) days after Tenant provides written evidence reasonably
satisfactory to 

 

44

 

the Authority
that Tenant has completed its “C Check” or “D Check” as to the second such
aircraft at the Leased Premises, and shall be entitled to receive the third
Success Payment within thirty (30) days after Tenant provides written evidence
reasonably satisfactory to the Authority that Tenant has completed its “C Check”
or “D Check” as to the third such aircraft at the Leased Premises.  Tenant shall not be entitled to any Success
Payments that remain unpaid as of the expiration or sooner termination of the
Term of this Lease. Tenant shall not be obligated to repay the Success Payments
to the Authority upon the expiration or sooner termination of the Term of this
Lease.

 

ARTICLE VII.

 

OBLIGATIONS OF TENANT

 

Section 701.                                Payment
of Rental and Other Amounts.  Tenant
hereby agrees and covenants to pay or provide for the payment of all Rental
described in Article VI as and when due hereunder.  Except for the credits to which Tenant may be
entitled from time to time under Sections 601(B)(2), 601(C)(2), 605(B) and
605(C),  all Rental payments shall be
absolutely free from all claims, demands or offsets against the Authority of
any kind or nature whatsoever and without relief from valuation or appraisement
laws.

 

Section 702.                                Operation
and Use of Leased Premises.

 

(A)                              Except
as provided in Sections 705 and 1702, Tenant shall at its own expense (i) keep
the Leased Premises in a safe, neat and attractive condition (except to the
extent of any maintenance or repairs that are the express obligation of the
Authority under Articles X and XI below), and (ii) not permit the
accumulation of any trash, paper or debris on the Leased Premises or trash,
paper or debris belonging to Tenant on any other property of the Authority.

 

(B)                                Tenant,
upon written notice by the Authority to Tenant, shall be required to perform
whatever maintenance is necessary to comply with the provisions of Subsection (A) hereof.  If Tenant does not undertake that maintenance
within thirty (30) days after receipt of written notice, the Authority shall
have the right to enter upon the Leased Premises or in the Facilities and
perform the necessary maintenance, the cost of which shall be paid by Tenant
within thirty (30) days after notice of the cost thereof is provided by the
Authority.

 

(C)                                Tenant
shall not abuse, misuse, or commit or allow any waste or damage to the Leased
Premises and/or the other property of the Authority, including without
limitation the Equipment, except for normal wear and tear.  Without limiting the foregoing, Tenant shall
operate and use all Equipment only in a manner that complies with applicable
manufacturer’s instructions, guidelines, and warranties.

 

(D)                               Tenant
shall not occupy or use, or permit the use or occupation of, any portion of the
Leased Premises for any business or purpose which is unlawful.  Tenant shall not occupy or use, or permit the
occupation or use of, any portion of the Leased Premises for any business or
purpose which is disreputable or deemed to be extra-hazardous on account of
fire, or do or permit anything to be done that would in any way increase the
cost of the Authority’s casualty insurance coverage on the Facilities, the
Leased Premises, the Equipment, or their contents; provided, however, that the
Authority hereby acknowledges and agrees that nothing in this sentence shall be
deemed to prohibit Tenant from using the Leased Premises for Tenant’s Business.

 

45

 

(E)                                 Tenant
shall not place any objects in any part of the Leased Premises that would place
a load on the floors of the Leased Premises in excess of the design load
capacities for the floors, without the prior written approval of the
Authority.  Tenant hereby acknowledges
that, prior to the Effective Date of this Lease, the Authority furnished Tenant
with a copy of the plans and specifications for the Leased Premises which
indicate the design load capacities for the floors in the Leased Premises.  The Authority shall have the right to have a
floor load analysis of any part of the Leased Premises made at any time.  If such analysis should indicate that Tenant
has exceeded the foregoing limitations, Tenant shall promptly take such actions
as may be required to eliminate the overloading condition and shall reimburse
the Authority for the expense incurred in completing the analysis and for the
cost and expense of any damage arising from such overloading condition.

 

(F)                                 Tenant
shall comply with all applicable Laws relating to the use, condition and/or
occupancy of the Leased Premises.

 

(G)                                Tenant
shall conduct Tenant’s Business and control its subtenants (if any) and its and
their respective agents, Employees, contractors and Invitees in such a manner
as to not create any nuisance to the Authority or its other tenants.  Tenant shall not interfere with, annoy or
disturb any other tenant, or the Authority in its operation of the Facilities.

 

(H)                               Tenant
hereby acknowledges and agrees that Tenant shall not permit   its Employees, contractors, agents, or
Invitees, and shall not permit   Tenant’s
subtenants or their Employees, contractors, agents or Invitees, to enter upon
or into any areas at the Leased Premises, the Land, the Facilities, or the
Airport other than those areas of the Leased Premises that are being Occupied
from time to time by Tenant (or, as applicable, Tenant’s subtenants), those
portions of the Apron or other non-public areas of the Facilities, the Land or
the Airport that are designated from time to time by the Authority as being
available for use by Tenant or its subtenants, those areas at the Land and Facilities
that are designated by the Authority from time to time as “Common Areas” open
equally to all tenants at the Land and Facilities, and those areas of the
Airport that are designated by the Authority from time to time as open to the
general public. This subsection (H) shall not be deemed to be an
expansion of Tenant’s rights as stated under any other provisions of this
Lease.

 

(I)                                    Subject
to the terms and conditions of Section 605, Tenant shall not make any
alterations, modifications, improvements or additions of or to the Leased
Premises without the prior written consent of the Authority which consent shall
not be unreasonably withheld.  Subject to
the foregoing, any alterations, modifications, improvements and/or additions by
Tenant of or to the Leased Premises shall be deemed a part of the Leased
Premises and shall belong to the Authority unless the Authority otherwise
agrees in writing that they belong to Tenant.

 

Section 703.                                Trash,
Garbage and Other Refuse; Outside Storage.

 

(A)                              Tenant
shall pick up, and provide for, a complete and proper arrangement for the
adequate sanitary handling and disposal, away from the Airport, of all trash,
garbage, and other refuse caused as a result of its operation and/or occupancy
of and on the Leased Premises.  Tenant
shall provide and use suitable covered outdoor receptacles for all such
garbage, trash, and 

 

46

 

other refuse
on the Leased Premises.  Tenant shall
dispose of medical or biohazardous waste, regulated waste or any Hazardous
Materials recovered or generated as a result of its operations off of the
property of the Airport and in accordance with all applicable Laws and subject
to Section 705.

 

(B)                                Tenant
shall be permitted to store, on a short-term basis, the Equipment, the
equipment and other personal property of Tenant’s customers, and Tenant’s
Excluded Property, on such portions of the Apron as the Authority shall
hereafter designate to Tenant in writing, provided that Tenant’s outside
storage is reasonable, is short-term, and does not materially impair the Air
Operations Area.  However, Tenant
acknowledges and agrees that the Authority also desires to maintain the
appearance of the Apron in a reasonably neat and attractive manner and
condition; therefore, Tenant agrees that if the Authority determines that
Tenant’s storage activities on the Apron detract, in an unreasonable manner,
from the appearance or use of the Apron, the Authority may notify Tenant in
writing as to those items to which the Authority objects being stored by Tenant
on the Apron, and Tenant shall cause those items to be removed from the Apron
(and to be stored within its then-Occupied portions of the Leased Premises)
within forty-eight (48) hours after Tenant receives the Authority’s written
notice.  Under no circumstances may
Tenant perform outside maintenance, repair, or overhaul operations, or other
activities (other than storage as described above) on the Apron on a constant
or continuing basis other than what is recognized common practice in the
industry; and provided that such activities may only occur on such portion of
the Apron as the Authority shall hereafter designate from time to time.

 

Section 704.                                Licenses
and Permits.  Except for the
Authority Permits, Tenant shall obtain and maintain in full force and effect,
and comply with, at its cost and expense, any and all certificates, approvals,
consents, authorizations, licenses, and permits under any applicable Law that
are necessary to comply with this Lease Agreement and the privileges extended
hereunder and/or that are necessary or appropriate for Tenant to obtain and
maintain in connection with the conduct and operation of Tenant’s Business at
the Leased Premises, including, without limitation, the 145 Certificate.  The “Authority Permits” shall mean those
certificates, approvals, consents, authorizations, licenses, and permits that
are listed on Exhibit H
attached hereto and incorporated herein by this reference, and shall also mean
any other certificates, approvals, consents, authorizations, licenses and
permits that are hereafter required by applicable Law to be obtained and
maintained by the Authority in order to own and/or operate the Facilities.
However, and without limiting Tenant’s obligations under the first sentence of
this Section, the Authority shall have no obligation to obtain or maintain any
certificates, approvals, consents, authorizations, licenses or permits that are
for the conduct and operation of Tenant’s Business at the Leased Premises (as
opposed to the ownership and operation of the Facilities, in general), except
that the Authority shall maintain and comply with the IDP (as defined below)
and the Part 70 Permit (as defined below). 
Tenant has obligations regarding wastewater discharges and the Part 70
Permit as described in Section 706 below.

 

Section 705.                                Hazardous
Materials.

 

(A)                              (1)                                  Tenant
shall use, store, handle, load, unload and dispose of Hazardous Materials which
are brought by Tenant, its subtenants, and/or their respective Employees,
agents, 

 

47

 

contractors
and/or Invitees onto the Leased Premises, onto the Apron, and/or onto other
portions of the Airport that are used or accessed by Tenant, its subtenants,
and/or their respective Employees, agents, contractors and/or Invitees, only in
compliance with applicable Laws, except that Tenant, its subtenants and/or
their respective Employees, agents, contractors and Invitees shall not be
deemed to be in breach of this Section 705(A)(1) if there is a
release of Hazardous Materials from, or Hazardous Materials are present in, any
sewer, lift station, force main, or waste treatment system, or any related drains
or pipes, on or off the Leased Premises (unless such release or presence of
Hazardous Materials is caused by the failure of Tenant, its subtenants, or
their respective Employees, agents, contractors or Invitees to comply with the  Exhibit K).  For any Hazardous Material which Tenant or
any of its subtenants brings onto the Leased Premises in quantities
(individually or cumulatively) greater than fifty-five (55) gallons, or for any
Hazardous Materials that Tenant brings onto the Leased Premises which are
considered “extremely hazardous” under Title III of the Superfund Amendments
and Reauthorization Act of 1986 (as supplemented or amended from time to
time), Tenant shall promptly furnish to the Authority a list of such
Hazardous Materials.  “Operating Rules,”
as used in this Lease, means those operating rules that are attached
hereto comprised of the general Operating Rules and the Operating Rules Applicable
To AAR Aircraft Services, Inc., both of which make up Exhibit K.  In the case of any conflict between the
general Operating Rules and the Operating Rules Applicable To AAR
Aircraft Services, Inc., the latter shall control. Tenant hereby
acknowledges and agrees that Exhibit K may be amended by the Authority
from time to time, without the consent of Tenant, to the extent necessary to
comply with modifications or amendments from time to time of the IDP and/or to
comply with changes to applicable Law from time to time; provided, however,
that the Authority shall provide Tenant with at least thirty (30) days’ prior
written notice of any such amendments or modifications of Exhibit K.  Exhibit K may also be amended or
modified upon the mutual written agreement of the Authority and Tenant; and any
such amendments or modifications pursuant to this sentence shall be effective
immediately upon their written approval by both the Authority and Tenant.

 

(2)                                  Without
limiting Tenant’s obligations under  Section 503(B),
and subject to the second following sentence, Tenant shall, at its expense,
comply with Environmental Laws regarding Hazardous Materials, but only (a) to
the extent that Hazardous Materials are first released by Tenant or its
subtenants or their respective Employees, agents, contractors or Invitees after
the Effective Date from the Leased Premises, or from portions of the Apron or
other non-public areas of the Facilities, the Land or the Airport, that are
used or accessed by Tenant or its subtenants or their respective Employees,
agents, contractors, or Invitees, so as to avoid Liability being suffered or incurred
by any Landlord Indemnified Parties (as hereinafter defined) as a result of and
only to the extent of such release and (b) to the extent that Hazardous
Materials are first released from other portions of the Facilities, the Land
and/or other portions of the Airport (other than the Leased Premises or
portions of the Apron or other non-public areas of the Land, the Facilities, or
the Airport that are used or accessed by Tenant or its subtenants or their
respective Employees, agents, contractors or invitees) by Tenant or its
Employees after the Effective Date so as to avoid Liability being suffered or
incurred by any Landlord Indemnified Parties as a result of and only to the
extent of such release. Tenant shall first provide the Authority with written notice
of such compliance actions.  To the
extent the presence or the release of Hazardous Materials from the Leased
Premises, the Land, the Facilities, and/or other portions of the Airport was
caused by (x) a third Person (other than Tenant or its subtenants, or 

 

48

 

their
respective Employees, agents, contractors, or Invitees), (y) the Authority, or
(z) the condition (including leaks) of any sewer, lift station, force main, or
wastewater treatment system, or any related drains or pipes (unless, with
respect to subsection (z), such release or presence of Hazardous Materials
is caused by the failure of Tenant, its subtenants, or their respective
Employees, agents, contractors or Invitees to comply with Exhibit K), or
to the extent any Hazardous Materials were placed on or released from the
Leased Premises, the Land, the Facilities, and/or other portions of the Airport
at any time by any third Person (other than by Tenant or its subtenants, or
their respective Employees, agents, contractors, or Invitees), Tenant shall not
be responsible for and need not take any action regarding those Hazardous
Materials.  If the Authority elects to
pursue the third Person for the collection of the Authority’s remediation costs
and other damages resulting therefrom, Tenant will cooperate at the Authority’s
expense with the Authority in pursuing such actions.  For purposes of Sections 705 and 1702,
neither the Authority nor its employees, agents or contractors, nor any of the
Landlord Indemnified Parties, shall be deemed to be an agent, Employee or
contractor of Tenant, and any Person or Entity other than Tenant, its
subtenants and their Employees, agents, contractors and Invitees shall be
deemed to be a “third Person”.

 

(B)                                Tenant
hereby covenants and agrees to comply in the conduct of its business on the
Leased Premises and on areas of the Apron and other non-public areas of the
Facilities, the Land and the Airport that are used or accessed by Tenant or its
subtenants, and to cause compliance by its subtenants (and Tenant’s and its
subtenants’ respective Employees, agents, contractors and Invitees) in the
conduct of their business on the Leased Premises and on areas of the Apron and
other non-public areas of the Facilities, the Land and the Airport that are
used or accessed by Tenant or its subtenants, with their obligations under all
applicable Environmental Laws. In connection with other areas of the Land, the
Facilities and the Airport (other than the Leased Premises and portions of the
Apron and other non-public areas of the Facilities, the Land and the Airport
that are used or accessed by Tenant or its subtenants) that Tenant or its
Employees may use or enter upon from time to time, Tenant also hereby covenants
and agrees to comply in the conduct of its business, and to cause its Employees
to comply in the conduct of Tenant’s business or while those Employees are
engaged in the scope of their duties for Tenant, with all applicable
Environmental Laws. Tenant shall not be deemed to be in breach of the
obligations in either of the two preceding sentences if there is a release of
Hazardous Materials from or the presence of Hazardous Materials in any sewer,
lift station, force main, or wastewater treatment system, or any related drains
or pipes, unless such release or presence of Hazardous Materials is caused by
the failure of Tenant, its subtenants, or their respective Employees, agents,
contractors or Invitees to comply with Exhibit K.  Tenant shall provide to the Authority,
promptly upon receipt, copies of any correspondence, notice, pleading,
citation, indictment, complaint, order, decree or other document from any
source asserting or alleging a circumstance or condition that requires, or may
require, a clean-up, removal, remedial action, or other response by or on the
part of Tenant or any of its subtenants or the Authority (or any other Landlord
Indemnified Party) at the Leased Premises, the Facilities, the Land and/or any
other portions of the Airport under Environmental Laws or which seeks criminal
or punitive penalties from Tenant or any of its subtenants or the Authority (or
any other Landlord Indemnified Party) for an alleged violation of Environmental
Laws.  Tenant shall advise the Authority
in writing as soon as Tenant becomes aware of any violation of any
Environmental Laws by Tenant, its subtenants or their respective Employees,
agents, contractors or Invitees or a violation of Tenant’s obligations under 

 

49

 

this Section 705.  The first two sentences of this Section 705(B) do
not apply to any Hazardous Materials which were not first placed on the Leased
Premises or released by Tenant, its subtenants, or their respective Employees,
agents, contractors or Invitees or to any environmental condition which was not
created by Tenant, its subtenant, or their respective Employees, agents,
contractors or Invitees.

 

(C)                                The
Authority has obtained a baseline environmental audit (the “Baseline
Environmental Audit”) of the Leased Premises dated May 2004 and has
provided a copy thereof to Tenant.

 

(D)                               The
Authority shall have the right, (i) from time to time during the Term, if
the Authority reasonably suspects that there has been a material breach or
violation of the covenants and obligations of Tenant set forth in Section 705(A) and/or
(B) above, and/or of the covenants and obligations of Tenant under Section 503(B) above
(as and to the extent, for purposes of this subsection (D), those
covenants and obligations under Section 503(B) pertain to
environmental matters); (ii) from time to time during the Term, at such
other times as the Authority so desires (including without limitation pursuant
to the Authority’s periodic compliance review procedure); and (iii) in
addition, following the expiration or sooner termination of the Term, to cause
environmental inspections, audits or site assessments of the Leased Premises
and/or other portions of the Airport that are used or accessed by Tenant or its
subtenants to be performed solely for the benefit of Authority by the Authority
or an environmental consultant selected by the Authority (“Environmental Audits”),
in order to ascertain whether there have been any breaches or violations of
Tenant’s covenants and obligations under Section 705(A) and/or (B) above,
and/or any breaches of Tenant’s covenants and obligations under Section 503(B) above
(as and to the extent, for purposes of this subsection (D), those
covenants and obligations under Section 503(B) pertain to
environmental matters), and/or whether there exist amounts of Hazardous
Materials in excess of those amounts found in the Baseline Environmental
Audit.  If the Authority elects to
conduct an Environmental Audit pursuant to subsection (ii) above, the
Authority shall provide Tenant with reasonable prior written notice of the
Authority’s intent to conduct the Environmental Audit and shall cause the
Environmental Audit to be conducted in a manner designed, to the extent
reasonably possible, to minimize disruption to Tenant’s Business at the Leased
Premises.  If the Authority desires to
conduct an Environmental Audit pursuant to subsection (iii) above,
the Authority shall (except in the event of a termination of this Lease due to
an Event of Default by Tenant) commence that Environmental Audit within five (5) days
after the expiration or sooner termination of this Lease. The Authority may
notify Tenant, in writing (the “Authority’s Non-Compliance Notice”), that the
Authority believes Tenant is in breach of Tenant’s obligations under Section 705(A) or
(B), and/or under Section 503(B) (with respect to, for purposes of
this subsection (D), environmental matters).  Action taken by Tenant to cure a breach of Section 705(A) or
(B), and/or of Section 503(B) (with respect to, for purposes of this
subsection (D), environmental matters), shall be subject to the prior
written approval of the Authority, such approval not to be unreasonably
withheld or delayed.  The Authority or
Tenant may also provide a copy of such Environmental Audits and/or the Baseline
Environmental Audit to any federal, state or local governmental agency having
jurisdiction over the Leased Premises or Hazardous Materials, if required by
Law or court order or if Tenant and the Authority mutually agree to do so (in
which case neither Tenant nor the Authority shall unreasonably refuse to agree
to do so if the other party wishes to do so).

 

50

 

(E)                                 Tenant
shall indemnify, defend and hold harmless the Authority, BAA, BAA USA, the
Redevelopment Authority, the ITFA and the Commission, and each and all of their
respective members, directors, officers, employees, agents, successors and
assigns (collectively, the “Landlord Indemnified Parties”) from and against any
and all Liabilities for personal or bodily injury, death, or property damage
incurred by the Landlord Indemnified Parties or any of them to the extent
caused by a breach by Tenant or its subtenants, or their respective Employees,
agents, contractors, or Invitees, of Tenant’s covenants and obligations set
forth in this Section 705 and/or of Tenant’s covenants and obligations set
forth in Section 503(B) (as and to the extent, for purposes of this
subsection (E), those covenants and obligations under Section 503(B) relate
to environmental matters).  This indemnification
of the Landlord Indemnified Parties by Tenant includes, without limitation,
costs incurred by any of the Landlord Indemnified Parties as a result of such
Liabilities for any fines or penalties, any investigation of conditions
originating from Tenant’s or its subtenant’s use or accessing of the Leased
Premises, the Apron or any other area of the Facilities, the Land or the
Airport , and  any cleanup, remedial,
removal, restoration or monitoring work performed by any Landlord Indemnified
Party as a result of the breach of Tenant’s covenants and obligations set forth
in this Section 705 and/or of Tenant’s covenants and obligations set forth
in Section 503(B) (as and to the extent, for purposes of this subsection (E),
those covenants and obligations under Section 503(B) relate to
environmental matters), and this indemnification shall survive the
cancellation, termination or expiration of the Term.  The Landlord Indemnified Party or Parties
shall give to Tenant prompt and reasonable notice of any such Liability and
Tenant shall have the right to investigate, compromise, and defend the
same.  Tenant shall control the defense
of the Liabilities, and Landlord Indemnified Parties shall take no action to
settle, satisfy or compromise the Liabilities without the prior written consent
of Tenant. The foregoing indemnity shall not be applicable to any circumstances
or Liabilities which arose as a result of the act or omission of any Landlord
Indemnified Party or any third Person.

 

(F)                                 If
the Authority believes there exists an uncorrected violation of Tenant’s
covenants and obligations under Sections 705(A) or (B) above, and/or
of Tenant’s covenants and obligations set forth in Section 503(B) (as
and to the extent, for purposes of this subsection (F), those covenants
and obligations under Section 503(B) relate to environmental
matters), the Authority shall provide written notice to Tenant thereof. Tenant
shall, within thirty (30) days after receipt of the Authority’s written notice,
provide written notice to the Authority as to whether Tenant agrees that such
an uncorrected violation exists; if Tenant does not, within the thirty (30) day
period, provide written notice of disagreement with the Authority’s position,
Tenant shall be deemed to have agreed that the uncorrected violation
exists.  If Tenant agrees (or is deemed
to have agreed, as described in the preceding sentence) that an uncorrected
violation exists, Tenant, at its cost and expense, within thirty (30) days
after Tenant agrees or is deemed to have agreed that an uncorrected violation
exists, shall commence action to cure the violation and shall thereafter
diligently pursue the cure to completion. If Tenant provides the Authority with
written notice, during the thirty (30) day period, that Tenant disagrees as to
whether an uncorrected violation exists, the Authority may thereafter seek (if
the Authority so chooses) to have a determination made by  the Indiana Department of Environmental
Management (or other applicable Governmental Entity (other than the Authority)
or by a court of competent jurisdiction, as to whether an uncorrected violation
exists. If  Governmental Entity (other
than the Authority) or the court makes a final, unappealable determination that
an uncorrected violation exists, Tenant, at its cost and expense, within thirty
(30) days after the court determines 

 

51

 

(pursuant to a
final, unappealable determination) that an uncorrected violation exists, shall
commence action to cure the violation and shall thereafter diligently pursue
the cure to completion. If Tenant is in breach of Sections 705(A) or (B) or
Section 503(B), and if Tenant fails promptly to commence action to cure
such breach, and/or fails to diligently pursue to completion such action to
cure such breach, as provided above, the same shall, at the option of the
Authority, constitute an Event of Default hereunder. Furthermore, in the event
Tenant fails to timely initiate, or to diligently pursue, appropriate action to
cure such breach of Sections 705(A) or (B) or Section 503(B), as
aforesaid, the Authority shall have the right to do so; and Tenant shall
promptly reimburse the Authority for the costs and expenses thereof plus
interest thereon at twelve and no/100 per cent (12%) per annum from the date
such costs are incurred to the date such costs are repaid to the Authority, if
a Governmental Entity (other than the Authority) or a court of competent
jurisdiction determines by final, unappealable decision that Tenant failed
promptly to commence action to cure such breach or failed diligently to pursue
action to cure such breach.

 

(G)                                The
Authority shall, at its cost, perform the following:

 

(1)                                  By
September 10, 2004, the Authority shall complete the removal of dust
(including any accumulation of dust in the trench drains) which contains
Hazardous Materials from the Facilities and Equipment on the Leased Premises
and Expansion Space, regardless of whether the dust is located or situated
where it would be regulated under an Environmental Law, which removal shall be
completed pursuant to the work plan published in the Request for Proposal,
dated April 7, 2004, as amended by certain amendments dated April 12,
2004 and April 14, 2004.

 

(2)                                  Prior
to the Requested Activation Date for a particular portion of the Leased
Premises, the Authority shall (a) inspect, (b) clean, repair and
replace as appropriate, and (c) install suitable containment (if needed)
at the hydraulic elevator locations on that portion of the Leased Premises.

 

(3)                                  Within
ninety (90) days after the Effective Date of this Lease, the Authority shall
clean all storm sewers, wastewater sewers, lift stations, and sumps and all
related drains (other than sanitary sewer drains) and pipes, on and off the
Leased Premises, which could accumulate or convey any wastewater, storm water,
or Hazardous Materials at or from the Leased Premises or the Expansion
Space.  Within sixty (60) days after the
Authority receives an Activation Notice from Tenant for a particular portion of
the Leased Premises, the Authority will inspect the storm sewers, wastewater
sewers, lift stations, and sumps and all related drains (other than sanitary
sewer drains) and pipes, on and off the Leased Premises which will serve that
portion of the Leased Premises, in order to determine if they are in need
of repair, maintenance or replacement and to determine if they leak and, if the
inspection indicates a need for repair, maintenance or replacement, the
Authority will, during that sixty (60) day period, complete any necessary repair,
maintenance or replacement with respect to those storm sewers, wastewater
sewers, lift stations, and sumps and all related drains (other than sanitary
sewer drains) and pipes which serve that portion of the Leased Premises. 
The Authority shall maintain such sewers, lift stations, and sumps and all
related drains and pipes in

 

52

 

good working order in
compliance with Environmental Laws during the Term of this Lease, and
periodically inspect them in accordance with a reasonable schedule.

 

(H)                               The
obligations and covenants of Tenant under this Section 705 shall survive
the expiration or sooner termination of this Lease.

 

Section 706.                                Industrial
Discharge Permit; Air Permits.

 

(A)                              The
Authority and BAA own and/or operate the Indianapolis Maintenance Center
Industrial Wastewater Treatment Facility (the “Wastewater Treatment Facility”),
which discharges wastewater to the City of Indianapolis publicly-owned
treatment works (the “POTW”), and for which the City of Indianapolis has issued
an Industrial Discharge Permit  (the
Industrial Discharge Permit, as modified, amended, supplemented or reissued
from time to time being referred to herein as the “IDP”).  The Authority shall comply with the IDP and
shall properly operate the Wastewater Treatment Facility in order to comply
with the IDP and Environmental Laws and to accept and properly treat discharges
from Tenant or its subtenants which meet the requirements of Exhibit K.
Tenant’s or its subtenant’s discharge to the Wastewater Treatment Facility of
wastewater from Tenant’s or its subtenant’s operations at the Leased Premises
shall comply with Exhibit K.  Tenant
shall make available to the Authority, BAA and their contractors all
information necessary for the Authority to comply with its reporting,
recordkeeping, and other obligations under the IDP and related Environmental
Laws with respect to Tenant’s and its subtenants’ operations at the Leased
Premises and shall cooperate, and cause its subtenants to cooperate, with any
government inspection related to the IDP with respect to Tenant’s or its
subtenants’ operations at the Leased Premises. Tenant shall indemnify, defend
and hold harmless the Landlord Indemnified Parties from and against any and all
Liabilities (including, without limitation, alleged violations of the IDP,
contamination, loss of or harm to fish or wildlife, harm to humans or the
environment, upset or bypass at the Wastewater Treatment Facility or at the
POTW and increased operational or treatment costs) to the extent caused by
wastewater discharged to the Wastewater Treatment Facility by Tenant or its
subtenants in violation of Exhibit K. 
Unless prohibited by applicable Law, the Authority shall promptly pay
the Tenant Reimbursement Parties (as defined in Section 1702) for any
actual costs and expenses incurred by any Tenant Reimbursement Parties arising
out of or in connection with any and all Liabilities (including, without
limitation, alleged violations of the IDP, contamination, loss of or harm to fish
or wildlife, harm to humans or the environment, upset, bypass at the Wastewater
Treatment Facility or at the POTW and increased operational or treatment costs
at the Leased Premises or at the Wastewater Treatment Facility) to the extent
those Liabilities are caused by the Authority’s failure to meet its obligations
under the second sentence of this subsection (A).  The preceding sentence is a contractual
obligation of the Authority under this Lease made in exchange for good and
valuable consideration.

 

(B)                                The
Authority currently holds a Part 70 Operating Permit issued by the Indiana
Department of Environmental Management and the City of Indianapolis on June 26,
2003 (the Part 70 Operating Permit, as the same may hereafter be modified,
amended, supplemented or reissued from time to time, being referred to herein
as the “Part 70 Permit”), which permits all operations at the Facilities
for purposes of the Federal, State and local air-related Environmental Laws,
including those Paint Booth operations Tenant may be performing and
operating.  Within 

 

53

 

sixty (60)
days after executing this Lease, Tenant and the Authority shall jointly file
with the appropriate governmental agencies the appropriate documents to account
for Tenant’s operations at the Leased Premises under the Part 70 Permit.
The filing shall include, among other things, a written agreement (the “Part 70
Permit Agreement”) between the Authority and Tenant, in form and substance
mutually and reasonably acceptable to the Authority and to Tenant, which splits
the responsibilities under the Part 70 Permit (including, without
limitation, responsibilities for record-keeping, reporting, and compliance) so
that all such responsibilities shall, from and after the effective date of the Part 70
Permit Amendment (as defined in the following sentence), be allocated between
the Authority and Tenant in a manner such that Tenant shall have responsibility
for portions of the Part 70 Permit that cover the Leased Premises
(including, without limitation, all record-keeping, reporting and compliance
obligations thereunder which pertain to the Leased Premises).  The filing will request an administrative
amendment of the Part 70 Permit in a manner that is consistent with the Part 70
Permit Agreement (the “Part 70 Permit Amendment”).  Notwithstanding the Part 70 Permit
Amendment, the Authority will continue to be shown as the owner of the entire
source.  Both before and after the Part 70
Permit Amendment becomes effective, Tenant shall operate (and shall cause its
subtenants to operate) under the Part 70 Permit and shall comply with (and
shall cause its subtenants, and Tenant’s and its subtenants’ respective
Employees, agents, contractors and Invitees to comply with) the Part 70
Permit, as the same may be modified, supplemented or amended from time to time,
to the extent applicable to Tenant’s or its subtenants’ operations at the
Leased Premises. Tenant shall make available to the Authority, BAA and their
contractors all information necessary for the Authority to comply with its
reporting, recordkeeping, and other obligations under the Part 70 Permit
with respect to Tenant’s and its subtenants’ operations at the Leased Premises
and shall cooperate, and shall cause its subtenants to cooperate, with any
government inspection related to the Part 70 Permit with respect to Tenant’s
or its subtenants’ operations at the Leased Premises. Tenant shall indemnify,
defend and hold harmless the Landlord Indemnified Parties from and against any and
all Liabilities (including, without limitation, alleged violations of the Part 70
Permit, contamination, air pollution and harm to humans or the environment) to
the extent caused by Tenant’s or its subtenants’ air emissions or other acts or
omissions in violation of the Part 70 Permit.  Unless prohibited by applicable Law, the
Authority shall promptly pay the Tenant Reimbursement Parties (as defined in Section 1702)
for any actual costs and expenses incurred by any Tenant Reimbursement Parties
arising out of or in connection with any and all Liabilities (including,
without limitation, alleged violations of the Part 70 Permit,
contamination, air pollution, and harm to humans or the environment) to the
extent caused by the Authority’s or a third Person’s (excluding only Tenant and
its subtenants and their respective Employees, agents, contractors and
Invitees) air emissions or other acts or omissions in violation of the Part 70
Permit.  The preceding sentence is a
contractual obligation of the Authority under this Lease made in exchange for
good and valuable consideration.

 

(C)                                Tenant’s
obligations to indemnify, defend and hold harmless the Landlord Indemnified
Parties, and the Authority’s contractual obligations to pay the Tenant
Reimbursement Parties, pursuant to this Section 706 shall survive the
expiration or sooner termination of the Term of this Lease.

 

Section 707.                                Signs.  Tenant shall not erect, maintain, or display
upon the outside of any buildings, structures or other improvements on the
Leased Premises or the Facilities any 

 

54

 

billboards or
advertising signs.  However, that Tenant
may install, on the exterior walls of the Leased Premises or the Facilities,
signage for Tenant’s Business at the Leased Premises or the Facilities,
provided that the quantity, size, location, content, design and appearance of
such signage shall be in compliance with Laws and subject to the prior written
approval of the Authority.  However, the
Authority hereby acknowledges that Tenant desires to install lighted signage,
bearing the “AAR” name, on the exterior of the Facilities, and also desires for
the existing monument sign at the entrance to the Facilities to include signage
bearing the “AAR” name; and the Authority hereby agrees that it will not
withhold its consent to that signage provided that the size and placement of
that signage is reasonably acceptable to the Authority and is in compliance
with all applicable Laws.  Tenant shall
be responsible, at its sole cost and expense, for ensuring that all of Tenant’s
signage complies with any and all applicable Laws, and Tenant shall be
responsible, at its cost and expense, before erecting any signage, for
obtaining any and all necessary or appropriate approvals, permits, consents,
and/or licenses from any applicable Governmental Entities with respect to such
signage.  The Authority’s approval of
such signage shall not, and shall not be deemed to, constitute a representation
or acknowledgement by the Authority that Tenant’s proposed signage complies
with any Laws, nor shall such approval by the Authority relieve Tenant of any
of Tenant’s obligations under the preceding sentences.  Except as provided above, the cost and
expense of obtaining and maintaining Tenant’s signage will be included in the
operating expenses for the Facilities.

 

Section 708.                                Rules and
Regulations for Safety, Care and Cleanliness.  Tenant shall comply with, and shall cause its
subtenants (and its and their respective Employees, agents,  contractors and Invitees) to comply with,
such rules and regulations of the Facilities as are adopted by the
Authority from time to time for safety, care and cleanliness of the Leased
Premises and the Facilities and preservation of good order therein, all of
which shall be sent by the Authority to Tenant in writing and shall thereafter
be carried out and observed by Tenant and its subtenants and its and their
respective Employees, agents, contractors and Invitees.

 

Section 709.                                Taxes.  Tenant shall be responsible for and shall pay
before delinquent all municipal, county, federal or state taxes coming due
during or after the Term of this Lease Agreement against Tenant’s interest
under this Lease Agreement or against personal property (including without
limitation the Excluded Property) of any kind owned or placed in, upon or about
the Leased Premises by Tenant, except to the extent that personal property is
the property of the Authority and part of the Equipment pursuant to the terms
of this Lease Agreement.  Tenant’s
obligations under this Section shall survive expiration or sooner
termination of the Term of this Lease.

 

Section 710.                                Nondiscrimination.

 

(A)                              Tenant,
for itself, its personal representatives, successors in interest, and assigns,
as part of the consideration hereof, does hereby covenant and agree that (i) no
Person shall be excluded from participation in, denied the benefits of, or
otherwise subjected to discrimination in the use of the Leased Premises on the
grounds of race, creed, color, national origin, gender, age or handicap; (ii) in
the construction of any improvements on, over, or under the Leased Premises and
the furnishing of services thereon, no Person shall be excluded from
participation in, denied the benefits of, or otherwise subjected to
discrimination on the grounds of race, creed, color, 

 

55

 

national
origin, gender, age or handicap; and (iii) Tenant shall use the Leased
Premises in compliance with all other requirements imposed by or pursuant to
Title 49, Code of Federal Regulations, Department of Transportation, Subtitle
A, Office of the Secretary, Part 21, Nondiscrimination in
Federally-assisted programs of the Department of Transportation, Effectuation
of Title VI of the Civil Rights Act of 1964, as said Regulations may be
amended, to the extent that said requirements are applicable, as a matter of
Law, to Tenant.

 

(B)                                With
respect to the Leased Premises, Tenant agrees to furnish services on a fair,
equal and not unjustly discriminatory basis to all users thereof, and to charge
fair, reasonable and not unjustly discriminatory prices for each unit or
service; provided, that Tenant may be allowed to make reasonable and
nondiscriminatory discounts, rebates or other similar types of price reductions
to volume purchasers consistent with the limitations set forth in Section 601(C).

 

Section 711.                                Civil
Rights.  Tenant assures the Authority
that Tenant shall comply with pertinent statutes, executive orders, and such rules as
are promulgated to assure that no Person shall, on the grounds of race, creed,
color, national origin, gender, age, or handicap be excluded from participating
in any activity conducted with or benefiting from federal assistance.  This Section obligates Tenant, for the
period during which federal assistance is provided to the Airport program,
except where federal assistance is to provide, or is in the form of, personal
property or real property or interests therein or structures or improvements
thereon.  In these excepted cases, this Section shall
obligate Tenant for the longer of the following periods:  (A) the period during which the property
is used by the sponsor or any transferee for a purpose for which federal
assistance is extended, or for another purpose involving the provision of
similar services and benefits; or (B) the period during which the Airport
sponsor or any transferee retains ownership or possession of the property.  In the case of contractors, this Section shall
bind the contractors from the bid solicitation period through the completion of
the contract.

 

Section 712.                                Affirmative
Action.

 

(A)                              With
respect to the Leased Premises, Tenant agrees to undertake an affirmative
action program as required by 14 CFR Part 152, Subpart E, to ensure that
no Person shall, on the grounds of race, creed, color, national origin or
gender, be excluded from participating in any employment activities covered in
14 CFR Part 152, Subpart E; that no Person shall be excluded on these
grounds from participating in or receiving the services or benefits of any
program or activity covered by that Subpart; and that it will require its
covered suborganizations to undertake affirmative action programs, and to
require assurances from their suborganizations, as required by 14 CFR Part 152,
Subpart E, to the same effect, to the extent that said requirements are
applicable, as a matter of Law, to Tenant.

 

(B)                                With
respect to procurement of construction work and construction-related goods and
supplies and professional services in connection with Grant Proceeds and/or Leasehold
Improvement Credits, Tenant shall use commercially reasonable efforts to strive
to attain a dollar amount at least equal to fourteen percent (14%) utilization
of minority business enterprises and four percent (4%) women business
enterprises.  With respect to the operation of Tenant’s business at the
Facilities (including, without limitation, contracts with vendors of Tenant),
and with respect to employment of Tenant’s own workforce, Tenant shall use
commercially

 

56

 

reasonable,
affirmative efforts to engage and utilize the services of minorities and women.
Tenant shall maintain records of all relevant data with regard to compliance
with these goals, and shall provide such information to the Authority upon the
Authority’s reasonable request from time to time.

 

Section 713.                                INTENTIONALLY
OMITTED.

 

Section 714.                                Observance
of Statutes.  Subject to Section 602
hereof, Tenant shall have the right to use the Airport or its facilities
located on the Airport property in common with others authorized to do so;
provided, however, that Tenant shall observe and comply with any and all
requirements of the constituted public authorities and with all federal, state
or local statutes, ordinances, regulations and standards applicable to Tenant
for its use of the Airport, including but not limited to, rules and
regulations promulgated from time to time by the Airport Director for the
general administration of the Airport.

 

Section 715.                                Hazard
Lights.  Tenant shall, at its expense,
provide and maintain hazard lights on any structure it erects on the Leased
Premises, if required by Authority or FAA regulations.  Any hazard lights so required shall comply
with the specifications and standards established for installation by the FAA.

 

Section 716.                                Liens.

 

(A)                              Tenant
shall not permit any employee lien or mechanic’s, materialmen’s or similar lien
or charge for labor or materials furnished to or for the benefit of Tenant or
its subtenants (a “Lien”) to attach to any portion of the Leased Premises, the
Facilities, or any other part of the Land or the Airport, and Tenant herein
agrees that if any such Lien is filed, Tenant shall:  (i) notify the Authority of the pendency
of such Lien, and (ii) indemnify, protect, defend and save harmless the
Landlord Indemnified Parties from and against any loss, Liability or expense
whatsoever by reason thereof, and shall proceed with and defend, at Tenant’s
expense, such action or proceedings as may be necessary to remove any such Lien
from the records.

 

(B)                                Tenant
may, however, in good faith and with due diligence, contest any such Lien.  Tenant may permit any such Lien to remain
undischarged and unsatisfied during the period of such contest and appeal
therefrom, if and only if (i) Tenant effectively prevents or stays the
execution, foreclosure or enforcement of the Lien, or (ii) the contest or
appeal prevents or stays the execution or enforcement or foreclosure of the
Lien.  If any such Lien is so stayed and
that stay thereafter expires or the Authority gives Tenant written notice that
by nonpayment of any items the Leased Premises, the Facilities, the Land, the
Airport, or any portion thereof will be subject to loss or forfeiture, then
Tenant shall forthwith pay and cause to be satisfied and discharged any such
Lien or secure payment by posting a bond, in form satisfactory to the
Authority.  At the expense of Tenant, the
Authority shall cooperate fully with Tenant in any contest.

 

(C)                                If
Tenant shall fail to contest, discharge or pay any such Lien as required by
subsections (A) and (B) hereof, the Authority may contest, discharge
or pay any such Lien which the Authority may determine to be necessary in order
to protect its interest in the Leased Premises, the Facilities, the Land and/or
the Airport.  In such event, Tenant
agrees to reimburse 

 

57

 

the Authority
for any and all expenses and costs incurred by the Authority in respect
thereto.  Tenant’s obligations under this
Section 716 shall survive the expiration or sooner termination of this
Lease.

 

Section 717.                                Tenant
to Maintain Organizational Existence. 
Tenant shall maintain an organizational existence and shall at all times
either be duly organized and validly existing under the Laws of the State, or shall
be duly qualified to do business as a foreign entity and in good standing under
the Laws of the State.

 

Section 718.                                Advances
by Authority.  If Tenant fails to
maintain full insurance coverage as required by this Lease Agreement, or
otherwise fails to comply with any covenant or agreement set forth in this
Lease Agreement, the Authority may (but shall be under no obligation to) take
out the required policies of insurance or otherwise comply with those covenants
and agreements.  Tenant agrees to pay all
amounts advanced by the Authority in payment of the required premiums for
insurance or to comply otherwise with such agreements and covenants, which
amounts, together with interest thereon at the rate of one and one-half percent
(1.5%) per month, shall become an additional rental obligation of Tenant to the
Authority.

 

ARTICLE VIII.

 

OBLIGATIONS OF AUTHORITY

 

Section 801.                                Ingress
and Egress.  Tenant shall have the
right of ingress to and egress from the Leased Premises for Tenant and its
officers, Employees, agents, servants, customers, vendors, suppliers, and
patrons over the roadway provided by the Authority serving the Leased Premises,
which roadway provides access to the Leased Premises from a public
right-of-way.  The Authority’s roadway
outside the Leased Premises shall be used jointly with other tenants at the
Airport, and Tenant shall not unreasonably interfere with the rights and
privileges of other Persons using these facilities.  Tenant’s use of these facilities shall be
subject to those weight and type use restrictions as the Authority shall adopt
from time to time, provided that the Authority provides written notice of those
restrictions to Tenant (including, without limitation, written notice of any
amendments or modifications thereto that are adopted by the Authority from time
to time).

 

Section 802.                                Quiet
Enjoyment of the Leased Premises.

 

(A)                              By
keeping and performing its covenants and agreements herein contained, Tenant
shall have the right, during the Term of this Lease Agreement, to peaceably and
quietly possess and enjoy the Leased Premises. 
The Authority shall at its expense, defend Tenant’s right to such
peaceable and quiet possession as against any person acting by or through the
Authority.

 

(B)                                The
simultaneously held interests of the Authority in the Leased Premises shall not
be merged, but shall be separate and distinct. 
In addition, notwithstanding that the Term may exceed the term of the
lease agreements or sublease agreements by which, directly or indirectly, the
Authority subleases the Leased Premises from other Persons, this Lease
Agreement constitutes a sublease and not an assignment, and Tenant’s rights in
the Leased Premises are limited to the subleasehold estate granted hereby and
there shall be no merger with any interest 

 

58

 

of the
Authority created by any instrument described herein.  However, if any leasehold interest held by
the Authority terminates and as a result thereof or thereafter any other
interest of the Authority in and to the Leased Premises becomes a present
interest, and the Authority thereby succeeds to such interest by reason of
other interests it holds in the Leased Premises, then the Authority shall be
deemed to have leased such other interest to Tenant on the terms set out
herein.

 

Section 803.                                Operation
as a Public Airport.  The Authority
covenants and agrees that all times it will operate and maintain the Airport,
as a public Airport consistent with and pursuant to the sponsor’s assurances
given by the Authority to the United States Government under the Federal
Aviation Act.

 

Section 804.                                Operation
of Facilities.  Except as required by
applicable federal law, the Authority shall not propose, enact or adopt, and
shall use its best efforts not to permit any other person or entity to enact or
adopt, any law, rule, regulation or ordinance that would prohibit Tenant from
fully utilizing the Leased Premises in the manner currently contemplated on a 24-hour
a day, seven day a week basis, including the flight operation of aircraft to
and from the Facilities coincident with the Tenant’s Business. All of Tenant’s
engine maintenance run-ups shall be conducted in the hush house.

 

Section 805.                                Authority
Permits.  The Authority shall obtain,
maintain in full force and effect, and comply with, at its cost and expense,
the Authority Permits and the IDP.

 

Section 806.                                Authority
Agreements.  The Authority shall
comply with the terms (including covenants) of the Settlement Agreement entered
into, effective as of February 13, 2004 between the Authority and The Bank
of New York Trust Company, N.A., the Bond Issues, and the Other Lease
Agreements (as hereinafter defined).

 

ARTICLE IX.

 

COMPLIANCE WITH SECURITY REQUIREMENTS

 

Section 901.                                Security
Agreement.  Tenant shall have entrances
and gates to the Air Operations Area and shall execute, in connection with this
Lease Agreement, an Airport Security Agreement as required by the Authority in
accordance with TSA regulations, Title 49 CFR Part 1542, which Airport
Security Agreement requires Tenant to control and regulate any doors, openings
or entrances to the Air Operations Area.

 

Section 902.                                Security
Rules and Regulations of Authority, FAA and TSA.  Tenant shall comply with, and shall cause its
subtenants (and its and their respective Employees, agents, contractors and
Invitees) to comply with, such rules and regulations of the Facilities and
other portions of the Airport as are adopted by the Authority from time to
time, in the Authority’s reasonable discretion, for safety and security of the
Leased Premises and the Facilities and other portions of the Airport and
preservation of good order therein, all of which shall be sent by the Authority
to Tenant in writing and shall thereafter be carried out and observed by Tenant
and its subtenants and its and their respective Employees, agents, contractors
and Invitees (the 

 

59

 

“Facilities
Security Rules and Regulations”). 
Tenant acknowledges that the Facilities Security Rules and
Regulations may, among other things, include requirements regarding use of
cards, keys or other access devices to access certain portions of the Leased
Premises or other portions of the Facilities, requirements regarding Tenant’s
obligations for securing the Equipment, provisions restricting Tenant and its
subtenants and any of its or their respective Employees, agents, contractors or
Invitees from accessing or entering into certain portions of the Facilities,
requirements that any visitors to the Facilities register at the entrance to
the Facilities, wear identification and be accompanied by a representative of
the tenant whom they are visiting, and other similar requirements.  The Authority hereby agrees that it will in
good faith, as part of the process of the Authority’s development of the
Facilities Security Rules and Regulations with respect to the Facilities,
consult with Tenant regarding the proposed Facilities Security Rules and
Regulations and will give reasonable consideration to Tenant’s comments and
concerns regarding those Facilities Security Rules and Regulations prior
to their implementation by the Authority. 
In addition to the Facilities Security Rules and Regulations,
Tenant shall also comply with, and cause its subtenants, and its and their
respective Employees, agents, contractors, and Invitees to comply with, all
applicable FAA and TSA security regulations, orders or security direction as in
effect or mandated from time to time.

 

ARTICLE X.

 

MAINTENANCE, REPAIRS AND REPLACEMENTS

 

Section 1001.                          Maintenance,
Repairs and Replacements to Facilities and Leased Premises (other than
Equipment).  Except to the extent
Tenant is responsible therefor under this Section 1001, and subject to Article XVI
of this Lease and subject to the Authority’s obligations under Articles VII and
XVII of this Lease, the Authority shall, at its cost and expense, be
responsible during the Term for (a) performing all maintenance, repairs
and replacements with respect to the Facilities and the Leased Premises (other
than Equipment, which is covered under Section 1002 below), including
without limitation foundations, exterior Facility walls (including door frames,
window frames, doors and windows), exteriors of the Facilities, interior
demising walls (including door frames and window frames), roof, drains,
gutters, and all structural parts of the Facilities, (b) periodically
painting the interior walls, and sealing the concrete floors, within the Leased
Premises in order to maintain them in a reasonably neat, safe condition, and (c) performing
all maintenance, repairs and replacements with respect to the air conditioning,
electrical, heating, mechanical and plumbing systems in the Facilities, all in
at least as good condition as exists on the Effective Date of this Lease
Agreement or in such condition as may be required by applicable Law.  However, the Authority shall not be required
to pay for, and Tenant shall indemnify, defend, save and hold harmless the
Authority from and against (without reimbursement from Grant Proceeds or
Leasehold Improvement Credits), the cost and expense (including without
limitation reasonable attorneys’ fees) of, any such maintenance, repairs or
replacements that become necessary as a result of or by reason of Tenant’s, its
subtenants’ or its or their respective agent’s, contractor’s, Employee’s, or
Invitee’s negligence or willful misconduct. 
Furthermore, provided that the Authority delivered the Paint Booths to
Tenant in good working order and condition and in compliance with all Laws,
Tenant shall, at its cost and expense, be responsible for all maintenance and
repairs (but not replacements, except to the extent described in the proviso to
this sentence) of any paint booths now or hereafter located at 

 

60

 

the Leased
Premises (the “Paint Booths”), and shall perform such maintenance and repairs
(but not replacements, except as described in the proviso to this sentence) as
are necessary or appropriate in order to cause the Paint Booths to remain in
the same condition and repair as when the Paint Booths were first delivered by
the Authority to Tenant (ordinary wear and tear excepted); provided, however,
that if the replacement of the Paint Booths becomes necessary as a result of or
by reason of Tenant’s, its subtenants’, or its or their respective agent’s,
contractor’s, Employee’s, or Invitee’s negligence or willful misconduct. Tenant
shall be responsible, at its cost and expense, for those replacements (without
reimbursement from Grant Proceeds or Leasehold Improvement Credits). Provided
that the Authority delivered the Paint Booths to Tenant in good working order
and condition and in compliance with all Laws, Tenant hereby acknowledges and
agrees that the Authority will have no liability, obligation, or responsibility
for maintaining, repairing or replacing the Paint Booths or any components
thereof. Tenant hereby further acknowledges and agrees that if Tenant replaces
the Paint Booths and is reimbursed for the cost thereof through Grant Proceeds
or Leasehold Improvement Credits, the replacement Paint Booths shall also be
deemed to belong to the Authority.

 

To the extent that, during the Term of this Lease, it becomes necessary
to install and/or operate any air pollution control equipment at, within or
upon the Facilities as a result of Tenant’s or its subtenants’ operations at
the Facilities, and if such air pollution control equipment is not a part of
the Facilities on the Effective Date of this Lease, Tenant shall be
responsible, at Tenant’s cost and expense, for purchasing, installing and
operating such equipment and the Authority shall have no responsibility or
liability therefor. Tenant shall obtain the Authority’s prior written consent
to Tenant’s installation of any such equipment at the Facilities, which consent
shall not be unreasonably withheld. Any such equipment that is installed at,
within or upon the Facilities and which is a fixture shall be deemed a part of
the Facilities and shall belong to the Authority unless the Authority otherwise
agrees in writing that it belongs to Tenant. Tenant may seek reimbursement for
the cost and expense it incurs in purchasing and installing such equipment at
the Facilities through Grant Proceeds (if any Grant Proceeds are then
available) or Leasehold Improvement Credits, subject to the terms and
conditions of Section 605(A) and (C) above.

 

Tenant’s obligations under this Section shall survive the
expiration or sooner termination of the Term of this Lease.

 

Section 1002.                          Maintenance
Repairs and Replacements of and to Equipment.

 

(A)                              Repairs,
Replacements and Maintenance by the Authority.  Except to the extent Tenant is responsible
therefor as provided under this Section 1002, the Authority shall, at its
cost and expense, be responsible during the Term of this Lease Agreement for
performing all maintenance, repairs, and replacements with respect to the
Equipment furnished by the Authority to Tenant (whether that Equipment is
furnished pursuant to an Activation or as replacement Equipment) including
without limitation preventive maintenance upon a periodic schedule in
accordance with manufacturers’ recommendations. The Authority’s maintenance,
repair  and replacements obligations
shall also extend to any Equipment for which Tenant receives reimbursement from
the Authority through Grants or Leasehold Improvement Credits.  To the extent that it becomes necessary to
replace any item of Equipment, the Authority shall only be 

 

61

 

obligated to
replace it from then Available Equipment on the Master List of Equipment; the
Authority shall in no circumstance be obligated to purchase a new item of
replacement equipment, tooling or other personal property. As part of the
Authority’s obligations hereunder, the Authority will provide Tenant with a working
facility with re-certified tooling.  For
purposes of the preceding sentence, a “working facility” means that all
Facilities Systems (other than Excluded Systems) and Equipment, which are
located in the Leased Premises as of the Effective Date of this Lease, shall be
in good working order and condition if and when that portion of the Leased
Premises to which they pertain is delivered to Tenant; provided, however, that
during the Activation of any Bay or other portion of the Leased Premises,
Tenant will provide the Authority, in accordance with Section 205 above,
with a list of those particular Facilities Systems (other than Excluded
Systems) and Available Equipment that Tenant will need for that particular Bay
or other area of the Leased Premises, and Tenant acknowledges that the
Authority’s obligation shall only be to deliver those particular Facilities
Systems (other than Excluded Systems) and Available Equipment to Tenant in good
working order and condition in connection with that Activation.  Notwithstanding any of the foregoing to the
contrary, the Authority shall have no obligation to provide, maintain, repair
or replace any computer hardware or software or related tools, systems or
equipment; and Tenant hereby acknowledges and agrees that Tenant shall not be
entitled to any Grant Proceeds or Leasehold Improvement Credits with respect to
Tenant’s purchase, maintenance, repair or replacement of any computer software.
In addition, notwithstanding the foregoing, Tenant shall, at its cost and
expense, be responsible for maintaining, replacing, removing, and disposing of,
in compliance with all applicable Laws, any and all filters and blast media
relating to any draw down cabinets, draw down tables, and/or blast cabinets,
and the Authority shall have no liability or responsibility for or with respect
to the filters or blast media relating to any draw down cabinets, draw down
tables, and/or blast cabinets. The Authority shall not be required to pay for,
and Tenant shall indemnify, defend, save and hold harmless the Authority from
and against (and without reimbursement from Grant Proceeds or Leasehold
Improvement Credits) the cost and expense, including without limitation
reasonable attorneys’ fees, of any such maintenance, repairs or replacements
that become necessary by reason of Tenant’s, or its subtenant’s, or its or
their respective agent’s, contractor’s, Employee’s or Invitee’s negligence or
willful misconduct.  Tenant’s obligations
under this Section shall survive the expiration or sooner termination of
the Term of Lease.

 

Section 1003.                          Prompt
Notification of Damage, Defects or Malfunction.  Tenant shall promptly notify the Facilities
Manager, in writing, as soon as Tenant becomes aware of any damage, defect or
malfunction in or to any portion of the Facilities and/or the Leased Premises,
including without limitation any of the Equipment.  Tenant acknowledges and agrees that the
Authority’s obligations to perform repairs, replacements and/or maintenance
pursuant to Sections 1001 and 1002 above is conditioned upon the Authority’s
receipt of prompt written notice from Tenant as described in the preceding
sentence.  Tenant further acknowledges
and agrees that if Tenant fails to provide prompt written notice of damage,
defect or malfunction as described above, Tenant shall be responsible for all
costs and expenses of such maintenance, repairs or replacements to the extent
caused by, resulting from or exacerbated by Tenant’s failure to provide prompt
written notice of damage, defects or malfunctions of which Tenant either was
aware or, through the exercise of reasonable diligence and in light of Tenant’s
access to the Leased Premises and the Equipment, should have been aware.

 

62

 

Section 1004.                          Access
to Leased Premises.  The Authority
reserves the right for the Authority (or its employees, agents or contractors)
to enter the Leased Premises as may be necessary or appropriate from time to
time for the purpose of general inspections and for making the repairs, replacements,
or maintenance required for safety, protection and preservation of the Leased
Premises (including without limitation the Equipment) and the Facilities.  Reservation of such right of entry shall not
enlarge in any way the Authority’s obligations for maintenance, repairs, or
replacements as otherwise provided in this Lease Agreement.  The Authority shall use commercially
reasonable efforts (except in the event of an emergency) to provide Tenant with
reasonable advance notice regarding the repairs, replacements or maintenance
and to perform the repairs, replacements or maintenance at reasonable times and
in a manner that will not unnecessarily interfere with the operation by Tenant
of Tenant’s Business; provided, however, that the Authority will use commercially
reasonable efforts to minimize disruption of Tenant’s Business to the extent
reasonably possible.

 

Section 1005.                          Inventory
of Equipment at Leased Premises.

 

(A)                              Identification
of Equipment.  The Authority shall
have the right, at the Authority’s option, to identify some or all of the
Equipment by tags or other means of identification as deemed appropriate by the
Authority in its sole discretion.  The
Authority may also similarly identify any Equipment that is obtained or
otherwise furnished by the Authority pursuant to Section 1002 to replace
any Equipment, or any Equipment for which the Authority reimburses Tenant
through Grant Proceeds or Improvement Rent Credits. Tenant shall not remove any
tags or other identification from the Equipment unless instructed to do so by
the Authority.

 

(B)                                Audit
of Equipment at Leased Premises.

 

(1)                                  The
Authority shall, once per calendar year during the Term of this Lease, and at
the Authority’s cost and expense, conduct (or cause the Authority’s third party
contractor to conduct) an annual audit with respect to any and all items of
Equipment with an individual value in excess of Two Thousand Five Hundred
Dollars ($2,500). In addition, the Authority shall have the right (but not the
obligation), up to one additional time per each calendar year, and upon
reasonable prior written notice to Tenant, to conduct (or cause the Authority’s
third party contractor to conduct) an additional audit, at the Authority’s cost
and expense, with respect to any or all items of Equipment with an individual
value in excess of Two Thousand Five Hundred Dollars ($2,500). The Authority
shall not conduct more than two (2) such audits during any calendar
year.  Tenant agrees to cooperate with
the Authority and its third party contractor during any such audit.  The Authority shall furnish Tenant with a
copy of the written report and list of Equipment generated as a result of the
audit.  If, as a result of any such audit
(comparing the list of Equipment generated as a result of that audit with the Authority’s
then-most recent list of Equipment that has then been furnished by the
Authority to Tenant from the Master List of Equipment), the Authority
determines that there is missing from the Leased Premises any items of
Equipment with an individual value in excess of Two Thousand Five Hundred
Dollars ($2,500), the Authority shall notify Tenant thereof in writing.  Within one hundred eighty (180) days after
receiving the Authority’s written notice as described in the preceding
sentence, Tenant shall, at 

 

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Tenant’s cost and expense,
either (a) produce the item(s) of missing Equipment, (b) replace the
missing item(s) of Equipment with substantially similar equipment that is of
substantially the same or better size, quality, functionality, and capacity as
the missing Equipment, or (c) shall reimburse the Authority for the
reasonable replacement cost of the missing item(s) of Equipment. Tenant shall
not be entitled to seek Leasehold Improvement Credits or Grant Proceeds for
Tenant’s costs and expenses under the preceding sentence. However,
notwithstanding the preceding sentence, if Tenant replaces Equipment that has
been retired due to its having reached the end of its normal life, Tenant may
seek reimbursement of Tenant’s costs and expenses of purchasing that
replacement Equipment through Leasehold Improvement Credits or Grant Proceeds.

 

(2)                                  Within
ninety (90) days after the expiration or sooner termination of the Term of this
Lease, the Authority shall, at the Authority’s cost and expense, conduct an
audit of all Equipment at the Leased Premises (the “Final Audit”).  Tenant agrees to cooperate with the Authority
and its third party contractor during such audit.  The Authority shall furnish Tenant with a
copy of the written report and list of Equipment generated as a result of the
audit.  If, as a result of any such audit
(comparing the list of Equipment generated as a result of that audit with the
Authority’s then-most recent list of Equipment that has been furnished to
Tenant from the Master List of Equipment), the Authority determines that there
is missing from the Leased Premises any items of Equipment, the Authority shall
notify Tenant thereof in writing.  With
respect to the Audit, for purposes of reconciling the list of Equipment that
has then been furnished by the Authority to Tenant with Tenant’s Master List of
Excluded Property, individual items of Equipment located at the Leased
Premises, which have an individual value of Two Thousand Five Hundred Dollars
($2,500) or less and which have not been tagged or otherwise identified by the
Authority pursuant to Section 1005(A) above (such as, by way of
example only, small tools such as hammers, screwdrivers and the like) shall be
assumed to be Equipment rather than Excluded Property until the total number of
items of that particular type of Equipment as reflected by the Final Audit
matches the total number items of that particular type of Equipment which
should be located at the Leased Premises based on the Authority’s then-most
recent list of Equipment that has then been furnished by the Authority to
Tenant; to the extent that the total number of items of that particular type of
Equipment as reflected by the Final Audit exceeds the total number of items of
that particular type of Equipment which should be located at the Leased
Premises based on the Authority’s then-most recent list of Equipment that has
then been furnished by the Authority to Tenant, those excess items of that
particular type of Equipment shall be deemed to be Excluded Property. The
Authority shall provide Tenant with a written list of any items of Equipment
that are missing from the Leased Premises. Within one hundred eighty (180) days
after receiving the Authority’s list as described in the preceding sentence,
Tenant shall, at Tenant’s cost and expense, either (a) produce the item(s)
of missing Equipment, (b) replace the missing item(s) of Equipment with
substantially similar equipment that is of substantially the same or better
size, quality, functionality, and capacity as the missing items(s) Equipment,
or (c) shall reimburse the Authority for the reasonable replacement cost
of the missing item(s) of Equipment. 
Tenant shall not be entitled to seek Leasehold Improvement Credits or
Grant Proceeds for Tenant’s costs and expenses under the preceding
sentence.  However, notwithstanding the 

 

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preceding sentence, if Tenant
replaces Equipment that has been retired due to its having reached the end of its
normal life, Tenant may seek reimbursement of Tenant’s costs and expenses of
purchasing that replacement Equipment through Leasehold Improvement Credits or
Grant Proceeds.

 

ARTICLE XI.

 

FACILITIES OPERATIONS AND SERVICES

 

Section 1101.                          Services.  Except as otherwise provided in this Article XI,
and without limiting the Authority’s obligations under other provisions of this
Lease, the Authority shall, at its cost and expense, furnish the following
services to Tenant during the Term of this Lease Agreement:

 

(A)                              Supply
and replacement of light bulbs and tubes in and on all buildings, obstruction
lights and replacement of all glass in the Facilities, including plate glass.

 

(B)                                Provide
janitorial services in the Common Areas of the Facilities.

 

(C)                                Maintain,
and clean stoppages in, plumbing fixtures, drain lines and septic and
sewage disposal system to the Leased Premises.

 

(D)                               Maintain
all building and overhead doors and door operating systems, including weather
stripping and glass replacement.

 

(E)                                 Conduct
interior and exterior maintenance for all components of the Facilities,
including painting, repairing and replacement, as necessary or appropriate.

 

(F)                                 Remove
snow from Air Operation Area, Common Areas, sidewalks, parking areas and
roadways, and other areas of the Leased Premises and Facilities at such time
and in such a manner as determined by the Authority in its reasonable
discretion.

 

(G)                                Landscape
the Land and the Facilities, at such times and in such manner as determined by
the Authority in its sole discretion.

 

(H)                               Provide
and maintain hand fire extinguishers for the interior of the Facilities,
including all shops, parking and storage areas in accordance with applicable
safety codes, and other applicable Laws.

 

(I)                                    Subject
to such stoppages as are necessary in order to maintain, repair or replace
the Utility pipes, wires, lines, mains, ducts, and other related fixtures and
equipment relating thereto, and subject to Section 1102 below, furnish all
utility services (the “Utilities”) for the Leased Premises and the Facilities,
including electricity, gas, water, septic, sewer, storm water system, other
than those utilities required to be maintained by Tenant under Section 1103
twenty-four (24) hours a day, seven (7) days a week.

 

65

 

(J)                                   Subject
to such stoppages as are necessary in order to maintain, repair or replace
the pipes, wires, lines, ducts and other related fixtures and equipment
relating thereto, and subject to Section 1102 below, furnish central heat,
air conditioning, and ventilation to the Leased Premises twenty-four (24) hours
a day, seven (7) days a week; provided, however, that the temperatures to
be maintained at particular times during the day, and/or in particular portions
of the Leased Premises, and/or on particular days of the week, shall be as
mutually determined by the Authority and Tenant.

 

(K)                               Provide
security with respect to access by third parties to the Facilities through the
front lobby entrance to the Facilities, as reasonably determined by the
Authority (which may include, without limitation, at the Authority’s option,
posting of security personnel, requirements that any visitors to the Facilities
register at the Facilities’ front lobby entrance desk, wear identification and
be accompanied by a representative of the tenant whom they are visiting, and
other similar requirements); provided, that the Authority shall not be liable
to Tenant, its subtenants, or their respective agents, contractors, Employees,
or Invitees for loss due to theft or burglary or personal property damage.

 

Section 1102.                          Authority
Not Liable for Malfunctions.  Should
any of the Utilities, or any of the machinery or equipment utilized in
supplying the services listed above be interrupted or cease to function properly,
the Authority shall use diligence to repair the same or otherwise cause
restoration of the services within a reasonable time under the circumstances,
but Tenant shall have no claim for damages against the Authority on account of
any interruptions of service occasioned thereby or resulting therefrom.
However, if the interruption prevents Tenant from conducting Tenant’s Business
from any particular portion of the Leased Premises that Tenant is then
Occupying at the time the interruption occurred, and if that interruption was
not caused by the negligence or willful misconduct of Tenant, its subtenants,
or their respective Employees, agents, contractors, or Invitees, then the Base
Rent and Additional Rent that otherwise would have been payable by Tenant for
that particular portion of the Leased Premises shall abate from the date that
Tenant ceases to be able to conduct Tenant’s Business from that particular
portion of the Leased Premises until the date on which such service is
resumed.  If the interruption prevents
Tenant from conducting Tenant’s Business from more than fifty percent (50%) of
the entire Leased Premises which Tenant is then Occupying at the time the
interruption occurred, and that interruption continues for more than ten (10) consecutive
days, and if that interruption was not caused by the negligence or willful
misconduct of Tenant, its subtenants, or their respective Employees, agents,
contractors, or Invitees, Tenant may, by written notice to the Authority given
within five (5) days after the ten (10) consecutive day period
expires, terminate this Lease effective as of the date such notice is delivered
to the Authority.  Notwithstanding any
other provisions hereof, in the event that any Law now or hereafter in effect
shall impose a limit on or allocation to the Facilities of any utility or other
service, whether or not the same is to be supplied to the Facilities or the
Leased Premises by the Authority pursuant to this Section, Tenant shall not use
or cause to be consumed on the Leased Premises, nor shall the Authority be
required to provide to the Leased Premises hereunder, such utility or other
service in an amount or in a manner that would result in violation by the
Authority or Tenant of such Law.

 

Section 1103.                          Utilities
to Be Obtained and Maintained by Tenant. 
Tenant shall be responsible, at its cost and expense, for obtaining
telephone, television, internet (or other cable) 

 

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and for any
and all connection costs, usage charges, and any other costs and expenses
associated therewith, and Tenant shall promptly pay all such charges, costs and
expenses as and when they become due and payable.

 

Section 1104.                          Energy
and Utility Conservation. 
Notwithstanding anything to the contrary in this Lease Agreement, the
Authority may, from time to time, institute such policies, programs, measures, rules and
regulations (a) as are, in Authority’s reasonable judgment necessary or
appropriate, and/or as are required by applicable Law, for the conservation and/or
preservation of heat, air-conditioning, energy, energy services, and/or other
Utilities, and/or (b) as are, in the Authority’s reasonable judgment,
necessary or appropriate, and/or as are required by applicable Law, for the
proper function and protection of the heating, air-conditioning and Utility
systems and/or in order to maximize the effect thereof. To the extent such
policies, programs, measures, rules and regulations are instituted by the
Authority pursuant to requirements of applicable Law, Tenant shall abide by
them in all respects.  To the extent such
policies, programs, measures, rules and regulations are not instituted by
the Authority pursuant to applicable Law, but are in the Authority’s reasonable
judgment necessary or appropriate, Tenant shall cooperate with the Authority
with respect to, and abide by, all such policies, programs, measures, rules and
regulations, provided they do not materially adversely effect Tenant’s
Business.

 

Section 1105.                          Reimbursement
by Tenant.  Tenant shall reimburse
the Authority for any cost or expense incurred by the Authority for services
that are provided by the Authority under this Article XI caused by the
active negligence or willful misconduct of
Tenant or its subtenants or their respective Employees, agents, contractors,
and/or Invitees.

 

ARTICLE XII.

 

FINANCIAL SECURITY

 

Section 1201.                          Letter
of Credit.  Subject to Section 1202
below, to secure the performance by Tenant of its obligations under this Lease
Agreement, Tenant will, on or before the date Base Rent is first due, deliver
to the Authority an irrevocable letter of credit from LaSalle Bank National
Association (or from another issuer acceptable to the Authority in its sole
discretion) in the amount of One Million Eight Hundred Thousand Dollars ($1,800,000)
(the “Letter of Credit”). The Letter of Credit terms must provide that the
proceeds of the Letter of Credit shall be available to the Authority by the
Authority’s draft at sight when accompanied by a certificate from the Authority
stating that there has been an Event of Default by Tenant under this Lease, and
must provide that partial drawings and multiple drawings shall be permitted.
Except as described in Section 1202 below, Tenant shall, at Tenant’s cost
and expense, cause the Letter of Credit to be renewed on an annual basis and to
remain in full force and effect during the Term of this Lease and shall not
cause or permit the terms and conditions of the Letter of Credit to be altered,
amended, or rescinded without the prior written consent of the Authority, which
consent may be withheld or granted in the Authority’s sole and absolute
discretion.

 

Section 1202.                          Guaranty.  If AAR Corp., the Tenant’s parent company
(the “Parent”), executes a guaranty agreement in form reasonably acceptable to
the Authority (the “Guaranty”) 

 

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whereby Parent
has guaranteed Tenant’s payment obligations under the Lease in an amount not to
exceed $1.8 million, and if the financial rating of Parent, by Standard &
Poor’s Corporation or Moody’s Investor Service, Inc. remains at or above
an investment grade rating of Baa3 or BBB-, the Authority hereby agrees that
the Tenant may terminate its Letter of Credit required by Section 1201.
Should, however, subsequent to the termination of the Letter of Credit, the
financial rating of Parent, by Standard & Poor’s Corporation and Moody’s
Investor Service, Inc., decrease below the investment grade rating of Baa3
and BBB-, Tenant shall reinstate a Letter of Credit from an issuer acceptable
to the Authority in accordance with the provisions of Section 1201 above
within sixty (60) days of the date of the latest rating downgrade, at which
time the Guaranty will terminate.  In no
event whatsoever shall the Parent be obligated to execute the Guaranty;
provided, however, that if the Parent does not execute a Guaranty, the Letter
of Credit must be and remain in effect.

 

ARTICLE XIII.

 

AUTHORITY’S RESERVATIONS

 

Section 1301.                          Improvement,
Relocation or Removal.  The
Authority, at its sole discretion, reserves the right to further develop or
improve the Air Operations Areas and other portions of the Airport, including
without limitation the right to remove or relocate any unapproved structure on
the Airport, as it sees fit, and to take any action it considers necessary to
protect the aerial approaches of the Airport against obstructions, together
with the right to prevent Tenant from erecting or permitting to be erected any
unapproved building or other structure on the Airport which, in the opinion of
the Authority, would limit the usefulness of the Airport or constitute a hazard
to aircraft.

 

Section 1302.                          Inspection
of Leased Premises; Exhibition of Leased Premises.  The Authority, through its duly authorized
agent or agents, shall have at any reasonable time the full and unrestricted
right to enter the Leased Premises for the purpose of periodic inspection for
fire protection, Environmental Law compliance, for the purpose of repairs,
replacements, and maintenance, for the purpose of performing the Authority’s
obligations under this Lease Agreement, and for the purpose of investigating
compliance by Tenant with the terms of this Lease Agreement; provided, however,
that except in the case of emergency or except as provided in the following
sentence, this right shall be exercised only upon reasonable prior notice to
Tenant.  The Authority also shall have
the right to enter the Leased Premises during Tenant’s normal business hours
and with reasonable advance written notice to Tenant for the purpose of exhibiting
the Leased Premises to prospective mortgagees, prospective purchasers and
prospective tenants; provided, however, that with respect to exhibiting the
Leased Premises to prospective tenants, the Authority shall only have the right
to enter the Leased Premises to do so (a) during the last twelve (12)
months of the Term, (b) from and after the time that the Authority’s
rights are triggered under Section 2105 below, (c) from and after the
time that either Tenant or the Authority has delivered a notice of termination
pursuant to Section 504 above, or from and after the time that Tenant or
the Authority has notified the other of its intent to terminate this Lease
pursuant to any other applicable termination provision in this Lease, or (d) from
and after the time that an Event of Default by Tenant has occurred under this
Lease. The 

 

68

 

Tenant shall
have the right to have a representative present during any such inspection or
exhibition.

 

Section 1303.                          Subordination
to U.S. Government.  This Lease
Agreement shall be subordinate to the provisions of any existing or future
agreements between Authority and the United States Government relative to the
operation and maintenance of the Airport, the terms and execution of which have
been or may be required as a condition precedent to the expenditure or
reimbursement to the Authority for Federal funds for the development,
maintenance or operation of the Airport; provided, however, that the Authority
agrees to notify Tenant as soon as practicable after the Authority has received
written notice of any condition imposed or anticipated to be imposed on the
Authority pursuant to any agreement between the Authority and the U.S.
Government with respect to the operation and maintenance of the Airport which
materially limits the use of the Leased Premises by Tenant in the manner
contemplated by this Lease Agreement; and the Authority further agrees to
cooperate with Tenant in diminishing, to the greatest practicable extent consistent
with this Section 1303, the detrimental effect of any condition imposed on
the Authority pursuant to any agreement between the Authority and the U.S.
Government relative to the operation and maintenance of the Airport which
materially limits the use of the Leased Premises by Tenant in the manner
contemplated by this Lease Agreement.

 

Section 1304.                          Suspension
of Lease Agreement.  During time of
war or national emergency, the Authority shall have the right, upon demand of
the United States government (or any authorized agency thereof) or if the
Authority is required to do so by Law, to lease or grant the right of use over
the landing area and/or any other part of the Airport to the United States
government (and/or any authorized agency thereof) for military use.  If any such lease is executed or grant given,
any provisions of this Lease which are inconsistent with the provisions of the
agreement or arrangement with the United States government (or its authorized
agency) shall be suspended.  However, the
Term of this Lease Agreement shall be extended, day for day, by the number of
days in the period of suspension. In addition, if the suspension would have an
adverse effect on Tenant’s ability to satisfy the Grant Thresholds and the
Credit Thresholds, or would have an impact on the circumstances that determine
whether the Authority may exercise any of its Authority Termination Events as
described in Section 504(A)(1) through (5), or would have an impact
on the circumstances that determine whether Tenant may exercise its Tenant
Termination Event as described in Section 504(B)(3), respectively, then
the time periods for Tenant’s satisfying the Grant Thresholds and Credit
Thresholds, the time periods set forth in Section 504(A)(1) through
(5), for determining whether an Authority Termination Event has occurred, and
the time periods set forth in Section 504(B)(3) for determining
whether the Tenant Termination Event described in Section 504(B)(3) has
occurred, respectively, shall be extended, day for day, by the number of days
in the period of suspension.  Such
suspension shall not affect Tenant’s obligations to pay Rentals pursuant to Article VI
except that Base Rent and Additional Rent shall be abated to the extent Tenant
cannot Occupy certain portions of the Leased Premises, and except that Minimum
Base Rent and Minimum Additional Rent shall be abated if Tenant cannot Occupy a
portion of the Leased Premises such that the portion of the Leased Premises
which Tenant is Occupying is, as a result of the suspension, less than the
amount of space on which the Minimum Base Rent and Minimum Additional Rent is
calculated. However, if the suspension involves the assumption by the United
States government or any authorized agency 

 

69

 

thereof of the
operation, control, or use of the Airport and facilities, or any substantial
part or parts thereof, in a manner that substantially restricts Tenant from
full use of the Leased Premises then-Occupied by Tenant for a period of at
least ninety (90) consecutive days, Tenant may terminate this Lease pursuant to
Section 502(A) above after that ninetieth (90th) day.

 

ARTICLE XIV.

 

COMMON AREAS

 

Section 1401.                          Definition.  As used in this Lease Agreement, the term “Common
Area” shall mean those portions of the Facilities designated by the Authority,
from time to time, for the common use of all tenants and subtenants, their
agents, contractors, employees and invitees, including, among other facilities,
the main entrance lobby to the Facilities, hallways, stairways, access
driveways, parking lots, sidewalks, landscaping, curbs, Authority-designated
loading areas and freight elevators, private streets and alleys, other areas
and improvements provided and designated by the Authority as being for the common
use of all tenants, their agents, contractors employees and invitees, all of
which shall be subject to the Authority’s management and control.  Notwithstanding anything to the contrary in
the foregoing, Tenant acknowledges that, as used herein, the “Common Areas”
shall not include any area not designated by the Authority from time to time as
being a Common Area.

 

Section 1402.                          Tenant’s
Use of Common Areas.  The Authority
hereby grants to Tenant, and its agents, contractors, Employees and Invitees
the nonexclusive right to use the Common Areas, as from time to time
constituted, in common with the Authority and all other tenants, and its and
their respective agents, contractors, Employees and Invitees.  No portion of the Common Areas shall be used
by Tenant for any purpose whatsoever other than those uses permitted by the
Authority from time to time.

 

Section 1403.                          Maintenance.  The Authority shall, at its sole cost and
expense, operate, maintain and repair, or cause to be operated, maintained or
repaired, the Common Areas in such condition and repair which the Authority
deems prudent or advisable in the exercise of its sole discretion.  Notwithstanding the foregoing, subject to the
Authority’s obligations under Articles VII and XVII of this Lease, Tenant
shall fully indemnify, defend, save, and hold harmless the Landlord Indemnified
Parties from and against any and all Liability for damage to any portion of the
Common Areas or any furniture, fixtures, equipment or other personal property
of the Landlord Indemnified Parties or any other Person located therein, to the
extent caused by the negligence or willful misconduct of Tenant, its
subtenants, and/or its or their respective Employees, contractors, agents
and/or Invitees.  The obligations of
Tenant under this Section shall survive the expiration or sooner
termination of the Term of this Lease.

 

Section 1404.                          Reservation
of Rights.  The Common Areas shall at
all times be subject to the exclusive control and management of the
Authority.  The Authority reserves the
right to perform the following, as and to the extent the Authority deems
necessary or appropriate from time to time in its sole discretion:  to enter into, modify and terminate licenses,
easements and other agreements pertaining to the operation, maintenance and use
of the Common Areas; to change the area, level, location, size and arrangement
of parking areas and other facilities located 

 

70

 

in the Common
Areas; to designate tenants, their agents, employees, contractors and invitees,
to use particular parking areas; to close portions of the Common Areas in order
to make changes, additions, deletions, alterations, improvements or repairs
thereto; and to do and perform such other acts in, to and/or with respect to
the Common Areas as the Authority shall determine, in its sole discretion, to
be necessary or appropriate; provided, however, that in connection therewith,
the Authority shall use commercially reasonable efforts to prevent material
obstruction of Tenant’s (or its Employees’, agents’, contractors’, and Invitees’)
right of ingress to and egress from the Leased Premises.  The Authority shall have the right from time
to time to establish, modify and enforce reasonable rules and regulations
regarding the use of Common Areas and to cause its tenants, concessionaires and
suppliers, including without limitation Tenant, its subtenants, and their
respective agents, Employees, contractors, and Invitees, to so abide and
conform; provided, that such rules and regulations do not conflict with
any term or provision specifically provided in this Lease Agreement.  The Authority reserves the right to change
the Land and/or the Facilities, including without limitation the Common Areas,
by adding land and/or buildings thereto and/or by changing therein the number
and location of buildings, building dimensions, the exterior facade of
buildings, the number of floors in any of the buildings, dimensions, changing
the location and arrangement of facilities located in the Common Areas,
changing the identity and type of other tenancies, and to do and perform such
other acts in and to the Land and/or the Facilities (including, without
limitation, the Common Areas) as the Authority shall determine to be advisable;
provided only that (i) the gross leaseable area of the Leased Premises
shall not be substantially changed, (ii) access to the Leased Premises
shall not be materially impaired, (iii) Tenant’s signage shall not be
materially adversely affected, and (iv) Tenant’s use of the Leased
Premises for Tenant’s Business shall not be materially impaired.  The rights herein conferred upon and reserved
to the Authority do not impose any obligations upon the Authority to observe or
perform those rights, which rights may be observed or performed as the
Authority, in its sole discretion, may determine to be necessary or appropriate
under the circumstances.

 

ARTICLE XV.

 

INSURANCE

 

Section 1501.                          Authority’s
Insurance.  The Authority shall, at
its expense, procure, maintain and keep in force during the Term of this Lease
Agreement from a financially secure and reputable company, (A) casualty
insurance insuring the Facilities, including without limitation the Leased
Premises, for such amount as the Authority determines to be necessary or
appropriate but in no event less than the greater of (i) replacement cost
and (ii) the sum of the outstanding balances of the Bond Issues; and (B) commercial
general liability insurance with respect to the Land and the Facilities and the
operation thereof by the Authority, insuring the Authority as the named insured
and the Tenant and the other Tenant Reimbursement Parties as additional
insureds, against liability for injuries to, or death of, Persons and damage
to, or loss of, property, occurring in, on, or about the Land and Facilities
(including the Leased Premises), including contractual liability, which
insurance shall have a minimum limit of combined coverage of bodily injury,
death and property damage of not less than $100,000,000.00 and in any event not
less than the amount Tenant is required to carry under Section 1502(B).
The Authority shall, upon execution of the Lease Agreement and within thirty
(30) days prior to the 

 

71

 

expiration of
the policy, furnish the Tenant and the other additional insureds with a
Certificate of Insurance as evidence of coverage for a period of at least one (1) year;
if such policy is effective for a period of more than one (1) year, Tenant
and the other additional insureds shall have also the right to receive a
Certificate of Insurance during each such year, upon request.

 

The insurance described above shall not be cancelled, terminated or
materially modified or amended except upon thirty (30) days’ prior written
notice to Tenant and the other additional insureds.

 

Section 1502.                          Tenant’s
Insurance.

 

(A)                              Casualty
Insurance.  Tenant shall, at its
expense, procure, maintain and keep in force, at all times during the Term of
this Lease Agreement, casualty insurance covering Tenant’s Excluded Property
and other Tenant personal property, located on, in, or about the Leased
Premises, in such amounts as Tenant determines to be necessary or
appropriate.  Tenant acknowledges and
agrees that all of the Excluded Property and other Tenant personal property,
and all property that Tenant stores for third parties, shall be kept on, in, or
about the Leased Premises at Tenant’s sole risk and expense, except to the
extent covered by the Authority’s indemnity obligations hereunder.

 

(B)                                Liability
Insurance.  Tenant shall, at its
expense, procure, maintain and keep in force, at all times during the Term of
this Lease Agreement, from Lloyds underwriters, or a licensed insurance company
or companies with an A minus or better Bests Rating, commercial general
liability insurance, with respect to the Leased Premises, the other portions of
the Land and the Facilities and the use and occupancy thereof by Tenant,
insuring Tenant as the named insured and the Authority and the other Landlord
Indemnified Parties as additional insureds, against liability for bodily
injury, personal injury, automobile liability, aircraft liability, hangar
keepers liability, product liability for completed operations, death and
property damage, including contractual liability.  Without limiting its liability, Tenant agrees
to carry and keep in force insurance with single limit liability for bodily
injury, personal injury, automobile liability, aircraft liability, hangar keepers
liability, product liability for completed operations, death and property
damage in a sum not less than $100,000,000 per occurrence for each of the types
of liabilities listed above.  The
Authority shall have the right, every fifth (5th) year during the Term, to
require Tenant, at Tenant’s cost and expense, to increase these insurance
coverage amounts by up to ten percent (10%) over the coverage amounts that
Tenant was required to maintain under this Lease during the preceding five (5) year
period.  Tenant shall, upon execution of
this Lease Agreement and at least thirty (30) days prior to the expiration of
the policy, furnish the additional insureds with a certificate of
insurance  as evidence of coverage for a period
of at least one (1) year; if such policy is effective for a period of more
than one (1) year, the additional insureds shall also have the right to
receive a certificate of insurance during each such year, upon request.  This insurance shall not be cancelled,
terminated or materially modified or amended except upon thirty (30) days’
advance written notice to the additional insureds.

 

(C)                                Workers’
Compensation Insurance.  Tenant
shall, at its expense, procure and keep in force, at all times during the Term
of this Lease Agreement, with a financially sound and reputable company
reasonably acceptable to the Authority, a policy of workers’ compensation 

 

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insurance on
the Employees of Tenant in the required statutory amounts.  Tenant shall, upon execution of this Lease
Agreement and at least thirty (30) days before the expiration of the policy,
furnish the Authority with a certificate of insurance as evidence of such
coverage; if such policy is effective for a period of more than one (1) year,
the Authority shall also have the right to receive a certificate of insurance
during each such year, upon request. 
This policy shall not be cancelled, terminated, or materially modified
or amended except upon thirty (30) days’ advance written notice to the Authority.

 

Section 1503.                          Application
of Insurance Proceeds.  In the event
of a Casualty or Condemnation described in Article XVI, the proceeds of
the insurance required to be maintained in accordance with the provisions of Section 1501
hereof shall be paid and disbursed in accordance with the provisions of Article XVI.

 

Section 1504.                          Release
and Waiver of Subrogation.  The
Authority and Tenant each hereby mutually release and discharge one another,
and their respective owners, officers, directors, managers, employees and
agents, from any and all liability for loss or damage to their respective
property arising from or caused by any casualty or hazard covered, or required
under this Lease Agreement to be covered, in whole or in part by insurance on
the Leased Premises, the Facilities and/or the Land, or the contents thereof,
that is required to be maintained by the releasing party (other than liability
for any deductibles that the releasing party may be required to pay with
respect to such insurance) and hereby waive any right of subrogation which
might otherwise exist in or accrue to any Person (including without limitation
their respective insurers) on account hereof, REGARDLESS OF ANY NEGLIGENCE ON
THE PART OF THE RELEASED PERSONS WHICH MAY HAVE CONTRIBUTED TO OR
CAUSED SUCH LOSS OR DAMAGE, but only to the extent that proceeds for such loss
or damage are actually collectable under said policies.  If the policies of insurance provided for
under this Article XV require an endorsement to provide for continued coverage
where there is a waiver of subrogation, the Authority and Tenant will,
respectively, cause their respective policies to be so endorsed.

 

ARTICLE XVI.

 

CASUALTY DAMAGE AND CONDEMNATION

 

Section 1601.                          Damage
by Casualty.  In the event of fire or
other casualty in or to any portion of the Leased Premises, Tenant shall give
prompt notice thereof to the Authority.

 

(A)                              Repair
and Restoration.

 

(1)                                  If
all or a substantial part of the Leased Premises is rendered untenantable or
inaccessible by damage to all or any part of the Facilities from fire, the
elements, accident, terrorist activity, or other casualty (collectively, “Casualty”)
then, unless either party is entitled, and elects, to terminate this Lease
Agreement pursuant to subsections (B) or (C) below, the Authority
shall, at its expense, use reasonable efforts to repair and restore the Leased
Premises and/or the Facilities, as the case may be, to substantially their 

 

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former condition to the extent permitted
by then applicable Laws; provided, however, that in no event shall the
Authority have any obligation:

 

(a)                                  to
make repairs or restoration beyond the extent of Net Proceeds actually received
by the Authority for such Casualty (and not applied by any lender to then
outstanding indebtedness); and/or

 

(b)                                 to
repair, restore, or replace any personal property (including without limitation
the Excluded Property) at the Leased Premises other than the Equipment.

 

(2)                                  If
the Authority is required to repair damage to the Leased Premises and/or the
Facilities resulting from a Casualty, the following shall apply:

 

(a)                                  This
Lease Agreement shall continue in full force and effect, but Tenant’s
obligations to pay Base Rent, Minimum Base Rent, Additional Rent and Minimum
Additional Rent that would otherwise have accrued from and after the date of
the Casualty through the date of substantial completion of the repairs or
restoration shall be abated with regard to any portion of the Leased Premises
that Tenant is prevented from using by reason of such damage or its repair or
restoration; provided, however, that, to the extent the negligence or willful
misconduct of Tenant, its subtenants, and/or their respective agents,
contractors, Employees or Invitees caused such Casualty, Base Rent, Additional
Rent, Minimum Base Rent and Minimum Additional Rent shall not be abated during
the period of restoration of the Leased Premises except to the extent  the Authority collects for such Base Rent,
Additional Rent, Minimum Base Rent and Minimum Additional Rent from rental
insurance maintained by the Authority.

 

(b)                                 Subject
to the Authority’s obligations under Section 1702(B) below, in no
event shall the Authority be liable to Tenant by reason of any injury to or
interference with Tenant’s Business or property arising from a Casualty or by
reason of any repairs or restoration to any part of the Facilities (including
without limitation the Leased Premises) necessitated by the Casualty.

 

(B)                                Authority’s
Right to Terminate.

 

(1)                                  The
Authority may elect to terminate this Lease Agreement following damage from
Casualty, under the following circumstances:

 

(a)                                  If,
in the Authority’s sole judgment, the Leased Premises and/or the Facilities
cannot be substantially repaired and restored under applicable Laws within six (6) months
from the date of the Casualty;

 

(b)                                 If,
in the Authority’s sole judgment, adequate insurance proceeds are not, for any
reason, made available to the Authority from its insurance policies to make the
required repairs or restoration;

 

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(c)                                  If
twenty percent (20%) or more of the Leased Premises is damaged or destroyed
(including without limitation by smoke or water damage);

 

(d)                                 If
twenty percent (20%) or more of the Facilities are damaged or destroyed
(including without limitation by smoke or water damage), regardless of whether
the Leased Premises are damaged or destroyed;

 

(e)                                  If
the Facilities are damaged or destroyed (including without limitation by smoke
or water damage) to the extent that, in the Authority’s sole judgment, the cost
to repair or restore the Facilities would exceed twenty percent (20%) of the
full replacement cost of the Facilities, whether or not the Leased Premises are
damaged or destroyed;

 

(f)                                    If
the Casualty occurs during the last thirty-six (36) months of the Term; or

 

(g)                                 There
exists, at the time of the Casualty, an Event of Default by Tenant under this
Lease Agreement (or, if at the time of the Casualty, there exists a default by
Tenant under any term or condition of this Lease which would, with the giving
of notice, the passage of time or both, constitute an Event of Default under
this Lease, and Tenant fails to cure that default within the applicable grace
or cure period provided under this Lease).

 

(2)                                  If
any of the circumstances described in subsection (B)(1) above exists,
the Authority may notify Tenant, in writing, that the Authority elects to
terminate this Lease Agreement, provided that the Authority must provide Tenant
with the notice of termination within sixty (60) days after the date of the
Casualty.

 

(C)                                Tenant’s
Right to Terminate.  Within sixty
(60) days after the Casualty, the Authority shall deliver to Tenant a written
estimate from an engineering or consulting firm selected by the Authority
stating the estimated date for substantial completion of the repairs or
restoration to the Facilities (the “Estimated Completion Date”).  If all or a substantial part of the Leased
Premises is rendered untenantable or inaccessible as a result of the Casualty,
and if the Estimated Completion Date for the repairs and restoration is more
than six (6) months after the date of the Casualty, Tenant may cancel and
terminate this Lease Agreement with all Rental paid or refunded so as to adjust
to the date of such Casualty.  Tenant
will notify the Authority, in writing, that Tenant elects to terminate this
Lease Agreement within thirty (30) days from the date Tenant receives the
Authority’s written estimate of the Estimated Completion Date. If Tenant does
not terminate this Lease Agreement in accordance with the preceding sentence,
and if the Authority does not terminate this Lease Agreement in accordance with
subsection (B) above, the Authority shall proceed with reasonable
diligence with respect to the repairs and restoration pursuant to this Section,
but subject in all respects to subsections (A)(1) and (A)(2) above.  Notwithstanding anything in this subsection (C) to
the contrary, Tenant shall not have the right to cancel and terminate this
Lease Agreement if any fault or negligence of Tenant, its subtenants, or their
respective agents, contractors, Employees, or Invitees substantially
contributed to the cause of such Casualty.

 

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Section 1602.                          Condemnation.

 

(A)                              Condemnation;
Termination; Restoration.  In the
event of a taking or appropriation of property in the exercise of the power of
eminent domain for a public or quasi-public use or a transfer in lieu of the
exercise of the power of eminent domain (a “Condemnation”) of the entire Leased
Premises or the entire Facilities, this Lease Agreement shall terminate on the
date of the vesting of title to the condemned property or on the date of the
taking of possession of such property by the condemning authority, whichever
shall first occur.  In the event (i) of
a Condemnation with respect to the Leased Premises that exceeds twenty percent
(20%) of the Leased Premises, or (ii) the proceeds available to the
Authority from the Condemnation (and not applied by any lender to
then-outstanding indebtedness) are not, in the Authority’s sole judgment,
adequate for the restoration, the Authority shall have the right to terminate
this Lease Agreement by written notice to Tenant within thirty (30) days after
the vesting of title to the condemned property or the taking of possession of
the property by the condemning authority, whichever is earlier.  In the event of a Condemnation affecting a
portion of the Leased Premises, Tenant shall have the right to terminate this
Lease Agreement if more than twenty percent (20%) of the Leased Premises then
Occupied by Tenant is taken as part of the Condemnation, by providing written
notice of termination to the Authority within thirty (30) days after the
vesting of title to the condemned property or the taking of possession of the
property by the condemning authority, whichever is earlier.  Such termination as to the portion of the
Leased Premises that is taken by the condemning authority shall be effective as
of, and retroactive to, the earlier of the date when the condemning authority
takes possession or the date when title to the condemned property vests in the
condemning authority.  If less than all
of the Leased Premises is taken, such termination as to that portion of the
Leased Premises not taken shall be effective as of the later of (1) the
date when exclusive possession of that portion of the Leased Premises not
subject to the Condemnation is surrendered by Tenant to the Authority, or (2) the
date of vesting of title to the condemned property or the date of taking of
possession of the property by the condemning authority (whichever is
earlier).  Until such time as this Lease
Agreement is fully terminated pursuant to the preceding sentences, Tenant shall
be obligated to continue to pay Rental and all other payments specified in Article VI
hereof.  If the Authority elects to
continue this Lease Agreement in effect, the Authority shall be responsible, to
the extent of Net Proceeds available (and not applied by any lender to
then-outstanding indebtedness), for performance of all work necessary to make
the Leased Premises (or such portion thereof as was not taken in Condemnation)
usable by Tenant in addition to all work necessary in other portions of the
Facilities as a result of such taking.

 

(B)                                Application
of Proceeds.  The Net Proceeds from
the Condemnation may be applied in one or more of the following ways as
determined by the Authority:

 

(i)                                     To
the extent neither party terminates this Lease Agreement as provided above,
toward the restoration of the Leased Premises (or such portion thereof that
were not taken in Condemnation) and Facilities (or such portion thereof that
were not taken in Condemnation) to substantially the same condition as existed
prior to the exercise of the power of eminent domain, to the extent of Net
Proceeds available from the Condemnation (and not applied by any lender to
then- outstanding indebtedness);

 

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(ii)                                  To
the extent neither party terminates this Lease Agreement as provided above,
toward the construction or acquisition of other improvements suitable for
Tenant’s operations on the remaining portion of the Leased Premises (which
improvements shall be deemed a part of the Facilities and available for use and
occupancy by Tenant without the payment of any rent other than as herein
provided to the same extent as if such other improvements were specifically
described herein and demised hereby), to the extent of Net Proceeds available
from the Condemnation (and not applied by any lender to then-outstanding
indebtedness); or

 

(iii)                               To
the extent either party terminates this Lease Agreement as provided above,
payment of such proceeds to the Authority.

 

(C)                                Condemnation
of Tenant’s Personal Property.  All
compensation awarded for any such taking or conveyance of the Authority’s
interest shall be the property of the Authority without deduction therefrom for
any present or future estate of Tenant, and Tenant hereby assigns to the
Authority all right, title and interest in and to such award.  However, Tenant shall have the right to
recover from the condemning authority, but not from the Authority, such
compensation as may be awarded to Tenant, if applicable, on account of moving
and relocation expenses and depreciation to and removal of Tenant’s property.

 

(D)                               Taking
or Condemnation by the Authority.  If
the Authority exercises its right of condemnation or eminent domain with
respect to all or substantially all of the Leased Premises for the purposes set
forth in Section 1301 hereof, the Authority reserves the right, on
eighteen (18) months notice, to relocate or replace the Facilities in
substantially similar form at another comparable location on the Airport or to
replace such portion of the Leased Premises; provided, however, Tenant shall
have the right to terminate this Lease Agreement as and to the extent permitted
pursuant to Section 1602; and provided further, that if Tenant does not
exercise such termination right pursuant to Section 1602, that following
such relocation or replacement, the Leased Premises are substantially similar
to and can be operated in a manner substantially similar to the Leased Premises
prior to such relocation or replacement and Tenant’s Business can be operated
in a manner substantially similar to Tenant’s Business prior to such relocation
or replacement.  The new location shall
constitute thereafter the Leased Premises and the facilities or improvements
located thereon, and equipment thereof, shall thereafter constitute the
Facilities for purposes of this Lease Agreement.  The relocation of the Leased Premises shall
be at no cost to Tenant and the new Facilities must be ready for occupancy by
Tenant prior to the date of required relocation subject to moving Tenant’s
Excluded Property and the Equipment to the new relocated Facilities.  If the Authority complies with the provisions
of this Section, such remedies shall be in lieu of any remedies Tenant may have
pursuant to law or equity with respect to the actions taken by the Authority in
condemning the Leased Premises or relocating the Leased Premises.

 

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ARTICLE XVII.

 

GENERAL INDEMNITY

 

Section 1701.                          Tenant
Indemnity.  Except to the extent
indemnified by the Authority pursuant to the terms of the Lease, or except as
governed by Section 705 hereof, Tenant covenants and agrees fully to
indemnify, defend, save, and hold harmless the Landlord Indemnified Parties
from and against any and all Liabilities for personal injury, bodily injury,
death, and/or property damage (including without limitation all reasonable
expenses incidental to the investigation and defense thereof, including without
limitation reasonable attorneys’ fees) (a) caused by the acts or omissions
of Tenant, its subtenants, and/or any of their respective Employees, agents,
contractors and/or Invitees, and/or any of the other Tenant Reimbursement
Parties, at or on the Leased Premises, and/or at or on the Apron and/or other
non-public areas of the Airport to which Tenant, its subtenants and/or their
respective Employees, agents, contractors and/or Invitees may have access, (b) caused
by the acts or omissions of Tenant and/or any of its Employees, at or on the
other areas of the Land, the Facilities and/or the Airport (other than the
Leased Premises, and/or the Apron and/ or other non-public areas of the Airport
to which Tenant, its subtenants, and/or their respective Employees, agents,
contractors or Invitees may have access), provided, however, that as to Tenant’s
Employees, this subsection (b) shall only apply to acts or omissions
of those Employees in the conduct of Tenant’s business or during the scope of
their employment by Tenant, or (c) caused by the acts or omissions of
Tenant or its Employees, agents, contractors and/or Invitees at or on the
Leased Premises pursuant to Section 205(F) above. The Authority
hereby acknowledges and agrees that for purposes of this Section 1701, the
Authority, its other tenants, the other Landlord Indemnified Parties, and/or
any of their respective employees, contractors and agents shall not be deemed
to be “subtenants,” “contractors” or “agents” of Tenant.  However, Tenant shall not be liable for any
such Liabilities for personal injury, bodily injury, death or property damage
relative to the Leased Premises (y) to the extent caused by the acts or
omissions of the Authority, the other Landlord Indemnified Parties, or any of
their respective employees, agents or contractors or (z) if the Authority is
otherwise obligated for those Liabilities pursuant to other provisions of this
Lease; and the Authority’s insurance coverages relative to those particular
Liabilities shall be deemed “primary” vis-à-vis the Tenant’s insurance
coverages relative to those particular Liabilities.  Except as described in the preceding sentence,
the Authority and Tenant agree that, with respect to the Land, Facilities and
other portions of the Airport (including the Leased Premises) and Tenant’s
Liabilities arising under this Section 1701 relating thereto, Tenant’s
insurance shall be deemed “primary” vis-à-vis the Authority’s insurance. The
Authority shall give Tenant prompt and reasonable notice of any such
Liabilities arising under this Section 1701.  If any action or proceeding is brought
against any of the Landlord Indemnified Parties by reason of any such
Liability, Tenant, upon notice from any of the Landlord Indemnified Parties,
agrees to resist and defend the Liability on demand of any of the Landlord
Indemnified Parties.  Tenant shall not
consent to the entry of any judgment, decree, or order, interim or otherwise,
or propose, approve, consent to, or enter into any settlement or compromise,
against or otherwise affecting any Landlord Indemnified Party, except with the
prior written consent of that Landlord Indemnified Party, which consent shall
not be unreasonably withheld.  Each
Landlord Indemnified Party shall have the right to retain separate counsel in
any such action and to participate in the defense thereof but shall bear the
fees and expenses of such counsel unless (A) Tenant shall have 

 

78

 

specifically
authorized the retaining of such counsel or (B) the parties to such suit
include such Landlord Indemnified Party, and Tenant and such Landlord
Indemnified Party have each been advised by their counsel that one or more
legal defenses may be available to it which may not be available to the other
party and that a conflict of interest is created thereby, in which case Tenant
shall not be entitled to assume the defense of such suit notwithstanding its
obligation to bear the fees and expenses of such counsel.  The obligations of Tenant under this Section 1701
shall survive the expiration or sooner termination of this Lease.

 

Section 1702.                          Authority
Obligations.

 

(A)                              Environmental.

 

(1)                                  Except
with respect to contamination shown to have resulted from releases of Hazardous
Materials after the Effective Date by Tenant, its subtenant, or their
respective Employees, agents, contractors, or Invitees, and, unless prohibited
by applicable Law, the Authority covenants and agrees to promptly pay Tenant
and its subtenants and their respective members, directors, officers,
Employees, agents, successors, and assigns (collectively the “Tenant
Reimbursement Parties”) for all actual costs and expenses incurred by the
Tenant Reimbursement Parties or any of them arising out of or in connection
with any and all Liabilities or obligations under Environmental Laws and
Environmental Health and Safety Requirements to the extent those Liabilities
are caused by or related to the presence or release of Hazardous Materials or
other substances at or from the Leased Premises, the Facilities, the Land, the
Expansion Space, the Apron, or any other location at the Airport.  This contractual obligation to the Tenant
Reimbursement Parties by the Authority, includes, without limitation, costs
incurred by any of the Tenant Reimbursement Parties as a result of Liabilities
and obligations described in the preceding sentence for any fines or penalties,
any investigations of environmental conditions, and any cleanup, remedial,
removal, restoration or monitoring work performed by any Tenant Reimbursement
Party because of the Liabilities and obligations described in the preceding
sentence.  The Tenant Reimbursement Party
or Parties shall give to the Authority prompt and reasonable notice of any such
Liability or obligation, and the Authority shall have the right to investigate,
compromise, perform, and defend the same. The Authority shall control the
defense of the Liabilities and obligations, and the Tenant Reimbursement
Parties shall take no action to settle, satisfy or compromise the Liabilities
or obligations without the prior written consent of the Authority.  The Authority’s obligations under Section 1702(A)(1) include,
but are not limited to, paying for Liabilities and obligations which arise from
the release of Hazardous Materials prior to, on or after the Effective Date
from sewers, lift stations, force mains, the wastewater Treatment Facility or
any related drains or pipes (unless caused by the failure of a Tenant
Reimbursement Party or their agents, contractors, or Invitees to comply with Exhibit K).  The Authority’s contractual obligations under
this subsection (A)(1) shall survive the expiration or sooner
termination of the Term of this Lease. 
The obligations of the Authority under this Section 1702(A)(1) are
contractual obligations of the Authority under this Lease made in exchange for
good and valuable consideration.

 

79

 

(2)                                  On
or before July 15, 2004, the Authority will, at its cost, file an
application with IDEM to participate in IDEM’s Voluntary Remediation Program
pursuant to Indiana Code §§ 13-25-5 et seq., with
respect to contamination or other environmental matters, which exist on the
Effective Date, at the Leased Premises, the Expansion Space, the Land and the
Facilities.  The Authority, at the
Authority’s cost and expense, shall (a) diligently pursue such application
(which shall include Tenant and those specific Tenant Reimbursement Parties
whom Tenant specifies to the Authority at the time the Authority files the
application (“Tenant VRP Parties”)) and enter into the agreement along with
Tenant VRP Parties under the Voluntary Remediation Program, (b) diligently
complete the work under a Voluntary Remediation Work Plan, (c) diligently
and in good faith seek to obtain a Certificate of Completion, and (d) diligently
and in good faith seek to obtain a covenant not to sue on behalf of the
Authority and Tenant VRP Parties.  The
Authority and Tenant each hereby reserves their rights under Indiana Code §§ 13-25-5
et seq.

 

(3)                                  With
respect to the presence or release of Hazardous Materials after the Effective
Date not caused by any Tenant Reimbursement Party or by any Employee, agent
contractor or Invitee of Tenant or of any of its subtenants, the Authority,
upon receipt of written notice from Tenant that Tenant has received notice of a
potential Environmental Law Liability which Tenant has a reasonable basis for
believing was caused by the Authority or any other Person that is not a Tenant
Reimbursement Party and not an Employee, agent, contractor or Invitee of Tenant
or of any of its subtenants and that is not under the direction or control of
any Tenant Reimbursement Party, the Authority agrees, at its cost, to pursue
the responsible Person and to use its best efforts to cause the responsible
Person to resolve such potential Environmental Law Liability, including, but
not limited to, negotiations with appropriate regulatory agencies or defense of
legal action brought by any Person (other than a Tenant Reimbursement Party or
any Employee, agent, contractor or Invitee of Tenant or any of its subtenants);
however, the Authority reserves its rights, subject to Section 1702(A)(1),
to pursue Tenant for such Environmental Law Liability if Authority believes
that any Tenant Reimbursement Parties or any Employees, agents, contractors or
Invitees of Tenant or of its subtenants caused or contributed to such
Environmental Law Liability.  Tenant shall
provide written notice to the Authority of any release of Hazardous Materials
by any of the Tenant Reimbursement Parties or by any Employee, agent,
contractor or Invitee of Tenant or of its subtenants, to the soil or
groundwater at the Leased Premises, the Land, the Facilities, or other portions
of the Airport, which release is known to Tenant and which release is required
to be reported to IDEM by Tenant.  If
Tenant fails to so provide written notice of such a release of Hazardous
Materials at the Leased Premises or other area of the Land or the Facilities
that Tenant or its subtenant is using from time to time, and if the Authority
subsequently learns of that release of Hazardous Materials, Tenant shall be
deemed to be responsible for that release unless Tenant is able to demonstrate
to the Authority that the release was caused by another Person other than a
Tenant Reimbursement Party or other than the Employees, agents, contractors or
Invitees of Tenant or of its subtenants. The Authority’s obligations under this
subsection (A)(3) shall survive the expiration or sooner termination
of the Term of this Lease.

 

80

 

(B)                                General.  Except to the extent indemnified by the
Tenant pursuant to the terms of the Lease, or except as governed by Section 1702(A),
the Authority covenants and agrees, unless prohibited by applicable Law, to
fully to pay the Tenant Reimbursement Parties the actual costs, damages and
expenses incurred by them as a result of any Liabilities for personal injury,
bodily injury, death, and/or property damage (including without limitation all
reasonable expenses incidental to the investigation and defense thereof,
including without limitation reasonable attorneys’ fees), caused by the acts or
omissions of the Authority, the other Landlord Indemnified Parties, and/or any
of their respective employees, agents or contractors, at or on any of the Land
and Facilities and/or other portions of the Airport (including the Leased
Premises). However, the Authority shall not be liable for any such Liabilities
for personal injury, bodily injury, death or property damage relative to the
Land, the Facilities and/or other portions of the Airport, (y) to the extent
caused by the acts or omissions of the Tenant, the other Tenant Reimbursement
Parties, any subtenants of Tenant, or any of Tenant’s or its subtenants’
Employees, agents, contractors or Invitees, or (z) if Tenant is otherwise
obligated for those Liabilities pursuant to other provisions of this Lease; and
the Tenant’s insurance coverages relative to those particular Liabilities shall
be deemed “primary” vis-à-vis the Authority’s insurance coverages relative to
those particular Liabilities.  Except as
described in the preceding sentence, the Authority and Tenant agree that, with
respect to the Land, Facilities and other portions of the Airport (including
the Leased Premises) and the Authority’s Liabilities arising under this Section 1702(B) relating
thereto, the Authority’s insurance shall be deemed to be “primary” vis-à-vis
Tenant’s insurance.  Tenant shall give
the Authority prompt and reasonable notice of any such Liabilities arising
under this Section 1702(B).  If any
action or proceeding is brought against any of the Tenant Reimbursement Parties
by reason of any such Liability, the Authority, upon notice from any of the
Tenant Reimbursement Parties, agrees to resist and defend the Liability or
demand of any of the Tenant Reimbursement Parties.  The Authority shall not consent to the entry
of any judgment, decree, or order, interim or otherwise, or propose, approve,
consent to, or enter into any settlement or compromise, against or otherwise
affecting any Tenant Reimbursement Party, except with the prior written consent
of that Tenant Reimbursement Party, which consent shall not be unreasonably
withheld.  The Authority’s contractual
obligations under this Section 1702(B) shall survive the expiration
or sooner termination of the Term of this Lease. The obligations of the
Authority under this Section 1702(B) are contractual obligations of
the Authority under this Lease made in exchange for good and valuable
consideration and such contractual obligation shall survive the expiration or
sooner termination of the Term of this Lease.

 

ARTICLE XVIII.

 

EVENTS OF DEFAULT BY AUTHORITY

 

Section 1801.                          Events
of Default by Authority.  The
following shall constitute an Event of Default by the Authority:  (a) the issuance by any court of
competent jurisdiction of an injunction in any way preventing or restraining
the use of the Airport, so as to substantially affect Tenant’s use of the
Leased Premises at the Airport for a period of at least ninety (90) consecutive
days, to the extent the injunction is issued as a result of the negligence or
willful misconduct of the Authority; or (b) if the Authority fails to
observe and perform any material covenant, condition or agreement on its part
to be observed or performed in this Lease Agreement for a period of thirty (30)
days after Tenant gives written notice to the Authority, specifying the failure

 

81

 

and requesting
that it be remedied, unless Tenant agrees in writing to an extension of that
period prior to its expiration.  If a
failure under this subsection is such that it cannot be corrected within
the thirty (30) day period, it shall not constitute an Event of Default under
this Article XVIII if corrective action is instituted by the Authority
within the thirty (30) day period and is diligently pursued until the failure
is corrected, but such additional applicable period shall not exceed sixty (60)
days without the written consent of Tenant.

 

Section 1802.                          Remedies
of Tenant on Default.  If any Event
of Default referred to in Section 1801 occurs, Tenant may institute any
action at law or in equity against the Authority as may appear necessary or
desirable to enforce the performance and observance of any covenant, condition
or obligation of the Authority hereunder or to recover provable compensatory
damages (but not consequential damages) for the Authority’s non-performance or
non-observance of the same or to terminate the Lease Agreement without any
further obligation to the Authority other than those obligations that have
accrued or arisen prior to termination.

 

Section 1803.                          No
Additional Waiver Implied By One Waiver; Consents to Waiver.  The waiver by Tenant of any breach by the
Authority of any of its covenants, conditions or obligations under this Lease
Agreement shall not operate as a waiver of any subsequent breach of the same or
a waiver of any breach of any other covenant, condition, or obligation under
this Agreement.  Tenant’s forbearance to
seek a remedy for any breach by the Authority shall not be a waiver by Tenant
of any of its rights and remedies with respect to the breach or any subsequent
breach of the same covenant, condition or obligation or with respect to any
other breach.

 

Section 1804.                          Delay
Not a Waiver.  No delay or omission
by Tenant to exercise any right or power accruing upon any Event of Default by
the Authority shall impair any such right or power of Tenant or be construed to
be a waiver of any Event of Default by the Authority or any acquiescence
therein, and every power or remedy given by this Lease Agreement to Tenant may
be exercised from time to time and as often as may be deemed expedient.  Tenant may waive any Event of Default by the
Authority that in its opinion has been remedied before the entry of final
judgment or decree in any suit, action or proceeding instituted by it under the
provisions of this Lease Agreement or before the completion of the enforcement
of any other remedies under this Lease Agreement, but no such waiver shall
extend to or affect any other existing or subsequent Event of Default by the
Authority or impair any rights or remedies consequent thereon.

 

Section 1805.                          No
Remedy Exclusive.  No remedy herein
conferred upon the Tenant is intended to be exclusive of any other available
remedy or remedies, and each remedy shall be cumulative and shall be in
addition to every other remedy given under this Lease Agreement or now or
hereafter existing at law or in equity or by statute.  However, if Tenant seeks damages, it may only
seek provable, compensatory damages and not consequential damages.  No delay or omission to exercise any right or
power accruing upon any default granted under this Lease Agreement shall impair
any right or power or shall be construed to be a waiver thereof, and any such
right or power may be exercised from time to time and as often as may be deemed
expedient, and the exercise of any one right or remedy shall not impair the
right of the Tenant, to exercise any or all other remedies under this Lease
Agreement.

 

82

 

Section 1806.                          Notice
of Termination.  If the Tenant
exercises its right to terminate this Lease Agreement upon the happening of any
Event of Default or other provision to which such right of termination applies,
a notice of termination shall be (except as otherwise expressly provided in
this Lease) sufficient to terminate this Lease Agreement; and, upon receipt of
the same, Tenant hereby agrees that it will surrender possession of the Leased
Premises to the Authority on the date set forth in its termination notice.

 

ARTICLE XIX.

 

EVENTS OF DEFAULT BY TENANT

 

Section 1901.                          Events
of Default By Tenant.  The following
shall each constitute an Event of Default by Tenant:

 

(A)                              The
failure to pay any installments of Rental when due (with interest, if
applicable) under Article VI hereof on the date required for such payment;
provided, however, that Tenant shall be entitled to up to two (2) written
notices from the Authority, in any single calendar year, that Tenant has failed
to pay an installment of Rental on its due date and shall have ten (10) days
after receipt of such written notice in which to cure the default (but
provided, further, that after two (2) notices have been sent to Tenant in
any single calendar year, Tenant shall not be entitled to any notice whatsoever
from the Authority for any subsequent payment failures occurring during such
calendar year; and Tenant acknowledges and agrees that the Authority shall
under no circumstances be deemed to have waived this limitation on the number
of notices to which Tenant is entitled if the Authority happens to provide Tenant
with additional notices of failure to pay, in excess of the two (2) notices,
during any particular calendar year, provided, however, that the Authority
shall be required to notify Tenant of the Event of Default within sixty (60)
days of the date of default if Tenant cured said payment default.  Otherwise, the Authority shall be deemed to
have waived such Event of Default).

 

(B)                                The
failure by Tenant to provide any Percentage Rent Certificate when required
under Section 601(C); provided, however, that Tenant shall be entitled to
up to one (1) written notice from the Authority, in any single calendar
year, that Tenant has failed to deliver a Percentage Rent Certificate on its
due date and shall have ten (10) days after receipt of such written notice
in which to cure the default (but provided, further, that after one (1) notice
has been sent to Tenant in any single calendar year, Tenant shall not be
entitled to any notice whatsoever from the Authority for any subsequent
failures to deliver Percentage Rent Certificates occurring during such calendar
year; and Tenant acknowledges and agrees that the Authority shall under no
circumstances be deemed to have waived this limitation on the number of notices
to which Tenant is entitled if the Authority happens to provide Tenant with
additional notices of failure to deliver Percentage Rent Certificates, in
excess of the one (1) notice, during any particular calendar year,
provided, however, that the Authority shall be required to notify Tenant of the
Event of Default within sixty (60) days of the date of default if Tenant cured
said default in providing the Percentage Rent Certificate; otherwise, the
Authority shall be deemed to have waived such Event of Default).

 

83

 

(C)                                The
filing by Tenant of a voluntary petition in bankruptcy or the making of any
assignment for the benefit of creditors of all or substantially all of Tenant’s
assets used or to be used by Tenant with respect to Tenant’s Business at the
Leased Premises (provided, however, that an “assignment” for purposes of this
subsection (C) shall not be deemed to include a collateral assignment
by Tenant of, or grant of a security interest by Tenant in Tenant’s Excluded
Property to a third party lender, if the collateral assignment or grant of
security interest is being granted by Tenant in the ordinary course of
obtaining financing for the day-to-day operation of Tenant’s Business at the
Leased Premises).

 

(D)                               The
filing of a petition against Tenant as a debtor pursuant to any involuntary
bankruptcy proceedings, and such petition is not dismissed within sixty (60)
days of filing.

 

(E)                                 The
taking of control of Tenant or its assets by a court of competent jurisdiction
pursuant to proceedings brought under the provisions of any Federal
reorganization act.

 

(F)                                 The
appointment of a receiver or a trustee, by a court of competent jurisdiction,
or Tenant’s voluntary assignment to its creditors in lieu thereof, for all or
substantially all of Tenant’s assets used or to be used with respect to Tenant’s
Business at the Leased Premises.

 

(G)                                The
failure by Tenant to obtain, maintain, and keep in force at all times during
the Term of this Lease Agreement the insurance coverages that Tenant is
required to obtain, maintain and keep in force pursuant to Article XV
above.

 

(H)                               Except
for de-Occupations as contemplated in Section 205(D) above,
abandonment or vacation of all or any substantial part of the Leased Premises
by Tenant for a period of more than ninety (90) consecutive days without the
prior written consent of the Authority; provided, however, that, subject to Article XVI
above, if cessation of or failure to use the Leased Premises is caused by
reason of war, strikes, embargoes, riots, civil commotion, acts of public
enemies, earthquakes or other natural disasters, or action of the elements,
this Lease shall nonetheless terminate on the ninetieth (90th) day after Tenant
vacates the Leased Premises, but such vacation shall not be deemed to be an
Event of Default under this subsection (H).

 

(I)                                    The
rescission, termination, expiration, alteration or amendment of the Letter of
Credit (except as permitted under Section 1201 or 1202 above).

 

(J)                                   If
Tenant is hereafter permitted under Section 1202 to terminate the Letter
of Credit, but Tenant thereafter becomes obligated to reinstate the Letter of
Credit under Section 1202, and Tenant fails to so reinstate the Letter of
Credit as required under Section 1202 within the sixty (60) day period
described in Section 1202.

 

(K)                               If
the Guaranty is in place pursuant to Section 1202, the breach by the
Parent of its obligations under the Guaranty.

 

(L)                                 The
failure by Tenant to observe and perform any covenant, condition or agreement
on its part to be observed or performed pursuant to this Lease Agreement (other
than those sections referred to in subsections (A) through (K) above) for
a period of thirty (30) days after written notice to Tenant specifying such
failure and requesting that it be remedied, given to 

 

84

 

Tenant by the
Authority unless the Authority shall agree in writing to an extension of such
time prior to its expiration.  If a
failure under this subsection is such that it cannot be corrected within
the thirty (30) day period, it shall not constitute an Event of Default under
this Article XIX, if corrective action is instituted by Tenant within the
thirty (30) day period and diligently pursued until the failure is corrected,
but such additional applicable period shall not exceed sixty (60) additional
days without the written consent of the Authority.  Notwithstanding the foregoing, if any failure
by Tenant to observe and perform any covenant, condition or agreement on its
part to be performed pursuant to this Lease Agreement would materially impair
the use or operation of the balance of the Facilities or Airport operations, it
shall be an Event of Default if Tenant does not cure such failure within three (3) days
after written notice from the Authority. 
If a failure under the preceding sentence is such that it cannot be
corrected within the three (3) day period, it shall not constitute an
Event of Default under this Article XIX, if corrective action is
instituted by Tenant within the three (3) day period and diligently
pursued until the failure is corrected, but such additional applicable period
shall not exceed thirty (30) additional days without the written consent of the
Authority.

 

Section 1902.                          Certain
Remedies of the Authority on Rental Default.

 

(A)                              Upon
the occurrence of an Event of Default by Tenant under Section 1901(A), the
Authority may, without giving Tenant notice: 
(i) declare all amounts payable under Article VI to be due and
payable immediately; and (ii) may take whatever action at law or in equity
as may appear necessary or desirable to collect the Rentals, including but not
limited to redeeming the Letter of Credit described Section 1201 and/or
enforcing the Guaranty under Section 1202 and any other amounts then due
and thereafter to become due pursuant to Article VI hereof, to recover
provable compensatory damages and not consequential damages for Tenant’s
non-payment or to terminate this Lease Agreement without terminating Tenant’s
obligations to pay damages.

 

(B)                                If,
at any time after the Rental due under Article VI hereof have been
declared due and payable by the Authority in any suit, action or proceeding
instituted on account of the default and before the final adjudication of the
termination of this Lease Agreement, every default in the observance or
performance of any covenant, condition or agreement contained in this Lease
Agreement has been remedied to the satisfaction of the Authority, then and in
every such case the Authority may, by written notice to Tenant, rescind and
annul the declaration and its consequences, but no rescission or annulment
shall extend to or affect any subsequent Event of Default or impair any right
consequent thereon.

 

Section 1903.                          Additional
Remedies of Authority on Default.

 

(A)                              If
any Event of Default referred to in Section 1901 occurs, the Authority
may, in its own name and for its own account, in addition to any exercise by
the Authority of any other remedy provided for in this Lease Agreement or by
Law, institute any action at law or in equity against Tenant as may appear
necessary or desirable to collect such Rentals and any other amounts then due
or thereafter to become due under this Lease Agreement, or to enforce the
performance and observance of any covenant, condition or obligation of Tenant
hereunder, or to recover provable compensatory damages and not consequential
damages for Tenant’s

 

85

 

nonpayment,
non-performance or non-observance of the same or to terminate Tenant’s right to
possession or terminate this Lease Agreement without terminating Tenant’s
obligations to pay damages.

 

(B)                                If,
at the time the Authority elects to proceed to enforce its remedies pursuant to
subsection (A) hereof, the Authority may by appropriate judicial
proceedings also proceed to evict Tenant from possession of the Leased Premises
and the Authority may thereafter retake possession of the Leased Premises while
the Event of Default continues. 
Notwithstanding these actions, Tenant shall continue to be obligated to
make the Rental payments due pursuant to Article VI hereof.

 

Section 1904.                          Tenant
to Remain Liable for Payments; Reletting.

 

(A)                              Notwithstanding
the exercise by the Authority of its remedies under Sections 1902 and/or 1903
hereof, Tenant shall continue to be liable for the payment of all Rentals
payable under Article VI hereof and other amounts payable under this Lease
Agreement, and Tenant shall make such payments at the same times and in the
same manner as provided in this Lease Agreement, except as provided in Section 1904(B) hereof.

 

(B)                                The
Authority shall use reasonable efforts to relet the Leased Premises for rentals
equal to the full Rentals due from Tenant pursuant to Article VI hereof.

 

Section 1905.                          Disposition
of Excluded Property.  If any of
Tenant’s personal property, including without limitation any of the Excluded
Property, remains upon the Tenant vacating and the Authority’s reentry of the
Leased Premises pursuant to this Article XIX, the Authority may, but
without any obligation to do so, remove that property and Tenant shall
reimburse the Authority for any expense incurred by the Authority in connection
with the removal and storage of that property. 
In such event, the Authority shall have the right to sell or rent Tenant’s
personal property, provided that it gives to Tenant not less than thirty (30)
days’ prior written notice that it intends to conduct such a sale or
rental.  The proceeds of the sale or
letting shall be applied first, to the cost of the sale or letting, second, to
the payment of the charges for storage or removal, and third, shall be applied
to the Authority.

 

Section 1906.                          No
Remedy Exclusive.  No remedy herein
conferred upon the Authority is intended to be exclusive of any other available
remedy or remedies, and each remedy shall be cumulative and shall be in
addition to every other remedy given under this Lease Agreement or now or
hereafter existing at law or in equity or by statute.  No delay or omission to exercise any right or
power accruing upon any default granted under this Lease Agreement shall impair
any right or power or shall be construed to be a waiver thereof, and any such
right or power may be exercised from time to time and as often as may be deemed
expedient, and the exercise of any one right or remedy shall not impair the
right of the Authority, to exercise any or all other remedies under this Lease
Agreement.

 

Section 1907.                          No
Additional Waiver Implied By One Waiver; Consents to Waiver.  The waiver by the Authority of any breach by
Tenant of any of its covenants, conditions or obligations under this Lease
Agreement shall not operate as a waiver of any subsequent breach of the same or
a waiver of any breach of any other covenant, condition, or obligation under
this 

 

86

 

Lease
Agreement.  Nor shall the Authority’s forbearance
to seek a remedy for any breach by Tenant be a waiver by the Authority of any
of its rights and remedies with respect to the breach or any subsequent breach
of the same covenant, condition or obligation or with respect to any other
breach.

 

Section 1908.                          Notice
of Termination.  If the Authority
exercises its right to terminate this Lease Agreement upon the happening of any
Event of Default or other provision to which such right of termination applies,
a notice of termination shall be (except as otherwise expressly provided in
this Lease) sufficient to terminate this Lease Agreement; and, upon receipt of
the same, Tenant hereby agrees that it will forthwith surrender possession of
the Leased Premises to the Authority.

 

Section 1909.                          Possession
by Authority.  In any of the events
described in Section 1908 hereof, or termination of Tenant’s right of
possession thereunder, the Authority may take immediate possession of the
Leased Premises and remove Tenant’s Personal Property forcibly if necessary,
without being deemed guilty of trespassing or constituting an acceptance of
surrender of the Leased Premises.  In
addition, all rights of Tenant to the Leased Premises shall be forfeited;
provided, however, that the Authority shall have and reserve all of its available
remedies at law as a result of said breach of this Lease Agreement.  Failure of the Authority to declare this
Lease Agreement terminated upon any event described in Section 1908 hereof
shall not operate to bar, destroy or waive the right of the Authority to cancel
this Lease Agreement by reason of any subsequent or other event described in Section 1908
hereof.

 

Section 1910.                          Delay
Not A Waiver.  No delay or omission
by the Authority to exercise any right or power accruing upon any Event of
Default by Tenant shall impair any such right or power of the Authority or be
construed to be a waiver of any Event of Default by Tenant or any acquiescence
therein, and every power or remedy given by this Lease Agreement to the
Authority may be exercised from time to time and as often as may be deemed
expedient.  The Authority may waive any
Event of Default by Tenant that in its opinion has been remedied before the
entry of final judgment or decree in any suit, action or proceeding instituted
by it under the provisions of this Lease Agreement or before the completion of
the enforcement of any other remedies under this Lease Agreement, but no such
waiver shall extend to or affect any other existing or subsequent Event of
Default by Tenant or impair any rights or remedies consequent thereon.

 

ARTICLE XX.

 

RIGHTS UPON TERMINATION

 

Section 2001.                          Improvements.  It is the intent of this Lease Agreement that
the Leased Premises, including without limitation all improvements and
Equipment, shall be and remain the property of Authority both during the entire
Term of this Lease Agreement, subject to Tenant’s leasehold estate, and after
the expiration of the Term.

 

Section 2002.                          Excluded
Property.  Upon expiration or earlier
termination of this Lease Agreement, Tenant shall remove all of Tenant’s
Excluded Property from the Leased Premises 

 

87

 

within sixty
(60) days after the effective date of the expiration or sooner termination and
make all necessary or appropriate repairs to the Leased Premises resulting from
such removal so as to restore the Leased Premises to the condition of said
Leased Premises at the time such property was installed, ordinary wear and tear
excepted.  If Tenant fails to remove all
or any portion of the Excluded Property within the aforesaid sixty (60) day
period, the Authority may thereafter elect to remove the Excluded Property (or
any part thereof) at Tenant’s expense or elect to deem such Excluded Property
or any part thereof as abandoned by Tenant to the Authority.

 

ARTICLE XXI.

 

ASSIGNMENT AND SUBLETTING; RIGHT OF FIRST
REFUSAL AND LEASE OF AVAILABLE SPACE

 

Section 2101.                          Subleases
and Assignments.

 

(A)                              Tenant
shall not assign this Lease Agreement or any part thereof in any manner
whatsoever or assign any of the privileges recited herein without the prior
written consent of the Authority; provided, however that the Authority will not
unreasonably withhold its consent to an assignment of this Lease Agreement if: (i) Tenant
and the proposed assignee can demonstrate to the reasonable satisfaction of the
Authority that the assignee can and shall perform each and every obligation and
condition of Tenant under the terms of this Lease Agreement; (ii) the
proposed assignee’s use of and the business that the proposed assignee proposes
to conduct at the Leased Premises shall be only as provided in Section 206(A) above;
(iii) the proposed assignee demonstrates to the reasonable satisfaction of
the Authority that the proposed assignee will be able to obtain, in a timely manner,
all certificates, licenses and permits from all Governmental Entities, required
or appropriate to enable the proposed assignee to carry on the proposed
assignee’s proposed business at the Leased Premises and to enable the proposed
assignee to assume Tenant’s obligations this Lease Agreement, including without
limitation a “repair station certificate” as required under 14 CFR Part 145
(the “145 Certificate”) and an air quality permit from the applicable
Governmental Entities; (iv) the proposed assignee assumes Tenant’s
then-existing contracts and agreements with Tenant’s customers with respect to
the Leased Premises if such assumption does not violate any of those contracts
or agreements; (v) the proposed assignee shall have submitted to the
Authority a current financial statement for the proposed assignee, audited by a
certified public accountant, showing that the then-current net worth for the
proposed assignee is not less than $100 million; (vi) no Event of Default
by Tenant under this Lease has then occurred and is then continuing; and (vii) the
proposed assignee shall assume the obligations of Tenant under this Lease by
executing, acknowledging and delivering to the Authority, before the effective
date of such assignment, a written assumption agreement in form and substance
reasonably satisfactory to the Authority. In the event of an assignment
consented to by the Authority, if that assignment and the assignee meet the
criteria under subsections (i) through (vii) above, Tenant shall not
remain liable to the Authority to perform all of the obligations of Tenant
hereunder upon failure of the assignee to perform the same.

 

Section 2102.                          Subletting.  Tenant may, without the Authority’s consent,
enter into short-term subleases of portions of its Occupied Space within the
Leased Premises from time to time, as long as (a) the portions of the
Occupied Leased Premises that are being subleased by Tenant, 

 

88

 

at any
particular time, do not exceed in the aggregate more than fifty percent (50%)
of Tenant’s Occupied space as of that time, (b) any such sublease shall
not be for a term of more than twelve (12) consecutive months, and (c) Tenant
shall promptly provide the Authority with written notice of such subletting
(and such other information as the Authority shall reasonably request in
connection therewith) upon Tenant’s entering into any such sublease.  Except as provided in the preceding sentence,
Tenant shall not sublease or permit any part of the Leased Premises to be
occupied by others without the prior written consent of Authority, which
consent may be withheld or granted in the Authority’s sole and absolute
discretion. In the event of a sublease, Tenant shall remain liable to the
Authority to perform all of the obligations of Tenant hereunder upon failure of
the subtenant to perform the same.  To
the extent the Authority’s consent to a subletting is required as described
above, the Authority will not unreasonably withhold its consent to a sublease
if: (i) Tenant and the proposed subtenant can demonstrate to the
reasonable satisfaction of the Authority that the subtenant can and shall
perform each and every obligation and condition of Tenant under the terms of
this Lease Agreement; (ii) the proposed subtenant’s use of and the
business that the proposed subtenant proposes to conduct at that portion of the
Leased Premises that the subtenant shall be subleasing from Tenant shall be
only as provided in Section 206(A) above; (iii) the proposed
subtenant demonstrates to the reasonable satisfaction of the Authority that the
proposed subtenant will be able to obtain, in a timely manner, all
certificates, licenses and permits from all Governmental Entities, required or
appropriate to enable the proposed subtenant to carry on the proposed subtenant’s
proposed business at the Leased Premises and to enable the proposed subtenant
to sublease that portion of the Leased Premises from Tenant, including without
limitation a “repair station certificate” as required under 14 CFR Part 145
(the “145 Certificate”) and an air quality permit from the applicable
Governmental Entities; (iv) no Event of Default by Tenant under this Lease
has then occurred and is then continuing; and (v) the form and substance
of the proposed subtenant’s sublease shall be reasonably satisfactory to the
Authority. The subtenant shall not assign or sublease its sublease except with
the prior written approval of the Authority, which may be withheld or granted
in the Authority’s sole and absolute discretion; and any sublease shall contain
a clause to this effect.  If a subletting
of all or a portion of the Leased Premises is permitted as described in the
first sentence of this Section or is otherwise permitted by the Authority,
Tenant shall be obligated for any breach by the subtenant or the subtenant’s
Employees, agents, contractors or Invitees, of the Tenant’s obligations and
covenants under this Lease.

 

Section 2103.                          Payments
from Assignees, Subtenants or Occupants. 
If the Leased Premises are sublet or occupied by someone other than
Tenant pursuant to Section 2102, all rental and other amounts payable to
Tenant by such subtenant or other occupant shall either be included in Tenant’s
“Gross Sales”, or shall be deducted from Tenant’s costs and expenses, for
purposes of calculating the Percentage Rent to which the Authority is entitled.

 

Section 2104.                          Mortgages
Prohibited.  Tenant hereby agrees
that there shall be no leasehold lien, mortgage, security interest, claim,
charge or other encumbrance granted or permitted by Tenant in or on the Land,
the Facilities, the Leased Premises or Tenant’s leasehold estate.  However, the preceding sentence shall not be
deemed to restrict Tenant from collaterally assigning or granting a security
interest in Tenant’s Excluded Property to a third party lender, if the
collateral assignment or grant of security interest is being granted by Tenant
in the ordinary 

 

89

 

course of
obtaining financing for the day-to-day operation of Tenant’s Business at the
Leased Premises.

 

Section 2105.                          Lease
of Available Space; Tenant’s Right of First Refusal.

 

(A)                              If
Tenant has not on or before October 1, 2007, Occupied (and been assessed
Base Rent and Additional Rent on), simultaneously, for at least one full thirty
(30) consecutive day period, at least five (5) Bays, the Authority may,
from and after October 1, 2007, lease that number of Bays applicable to
that “target date” which Tenant is not Occupying as of October 1, 2007
(i.e., the “Available Space”) to another Person.  If Tenant has not on or before October 1,
2008, Occupied (and been assessed Base Rent and Additional Rent on),
simultaneously, for at least one full thirty (30) consecutive day period, at
least seven (7) Bays, the Authority may, from and after October 1,
2008, lease that number of Bays applicable to that “target date” which Tenant
is not Occupying as of October 1, 2008 (i.e., the “Available Space”) to
another Person.  For purposes of this Section 2105,
October 1, 2007 and October 1, 2008 are referred to as the “target
dates”.  For purposes of this Section 2105,
the “target number of Bays” for the October 1, 2007 “target date” is five (5) Bays,
and the “target number of Bays” for the October 1, 2008 “target date” is
seven (7) Bays. “Available Space”, for purposes of the October 1,
2007 target date, means the difference between five (5) Bays and the
number of Bays that Tenant is actually Occupying on that October 1, 2007
target date.  “Available Space”, for
purposes of the October 1, 2008 target date, means the difference between
seven (7) Bays and the number of Bays that Tenant is actually Occupying on
that October 1, 2008 target date. 
The terms and conditions upon which the Authority may lease the
Available Space to another Person other than Tenant shall be as follows:

 

(1)                                  The
total aggregate Available Space that the Authority may lease pursuant to this Section shall
be capped at a number of Bays equal to the “target number of Bays” for the
applicable “target date” minus the number of Bays Tenant is Occupying on that “target
date.”

 

(2)                                  The
Person to whom the Authority proposes to lease the Available Space must meet at
least one of the following criteria (each, a “Condition”):

 

(a)                                  the
Person is not a direct competitor of Tenant in the business of providing
aircraft, maintenance and overhaul to commercial airlines and other operators
of aircraft;

 

(b)                                 the
Person subcontracts labor from Tenant for some or all of the Person’s
operations at the Facilities;

 

(c)                                  Tenant
consents to such Person’s leasing of Available Space;

 

(d)                                 the
Person is a commercial airline, or a governmental or pari-governmental entity,
operating or maintaining aircraft, and Tenant gives its prior consent, which
consent shall not be unreasonably withheld; or

 

90

 

(e)                                  The
Authority certifies to Tenant that the total rental payable by that Person to
the Authority is at least fifteen percent (15%) higher than the Base Rent and
Additional Rent payable by Tenant under this Lease Agreement.

 

(3)                                  If
the Authority negotiates a lease with another Person for some or all of the
Available Space, or receives an offer from another Person to lease some or all
of the Available Space, the terms of which are acceptable to the Authority (the
“Proposed Agreement”), Tenant shall have a right of first refusal (the “Right
of First Refusal”) to lease the Available Space that is the subject of the
Proposed Agreement, upon the terms and conditions of this Lease (provided,
however, that if the Tenant’s exercise of its Right of First Refusal occurs
during the Extension Term, the rental that will be payable by Tenant for that
Available Space shall be as provided in the Proposed Agreement rather than as
provided in this Lease).  However, if
Tenant exercises its Right of First Refusal as to that Available Space, the
Minimum Monthly Rent shall be increased for the next twelve (12) calendar
months to include that Available Space as to which Tenant exercises its Right
of First Refusal.  The Authority shall
provide Tenant with written notice of the Proposed Agreement and the terms and
conditions thereof (the “Authority’s Notice of Proposed Agreement”).  Tenant shall have thirty (30) days after
receipt of the Authority’s Notice of Proposed Agreement in which to exercise its
Right of First Refusal as to that portion of the Available Space (Tenant’s
notice of exercise of its Right of First Refusal being referred to herein as
the “Notice of Exercise of Right of First Refusal”).  If Tenant notifies the Authority that Tenant
does not wish to exercise its Right of First Refusal as to that Proposed
Agreement, or if Tenant fails within the thirty (30) day period to notify the
Authority that Tenant wishes to exercise its Right of First Refusal as to that
Proposed Agreement, the Authority will be free to lease the Available Space or
portion thereof to such Person in accordance with the terms and conditions of
the Proposed Agreement.

 

(4)                                  If
Tenant does not exercise its Right of First Refusal within the thirty (30) day
period and the Authority leases that Available Space to such Person within the
aforesaid time period, that Available Space shall no longer be part of the
Leased Premises, and Tenant shall have no further obligations or rights with
respect to such Available Space except for any obligations which may have
accrued or arisen with respect to such Available Space prior to the date that
the Authority entered into its lease agreement for that Available Space with
the other Person; provided, however, the Available Space shall be reinstated as
part of the Leased Premises if the lease with the other tenant for that portion
of the Available Space terminates or expires during the Term of this Lease,
including Tenant’s Right of First Refusal. 
Notwithstanding any provision in the Lease to the contrary, if Tenant
thereafter elects to re-Occupy that space pursuant to this Lease, the Authority
shall be obligated to put the Available Space in the condition it was in prior
to the lease of such Available Space to such Person. Tenant hereby acknowledges and agrees that if the Condition
which was the basis for the Authority’s ability to lease the Available Space to
the other Person terminates after the date the lease with that Person is signed
(for example, if Condition (A)(2)(b) above was the basis for the Authority’s
lease with the other Person, and if the subcontract between Tenant and the
other Person expires or is sooner terminated), the Authority shall have no
obligation to terminate the other Person’s lease or its possession of the
Available Space or to take any 

 

91

 

other action with respect to
the other Person, and the other Person may continue to lease the Available
Space pursuant to its lease agreement with the Authority, as the same may thereafter
be amended or modified from time to time. 
Notwithstanding the foregoing, any lease of Available Space to the other
Person shall be counted towards Tenant’s targets for Occupying Bays set forth
in this Lease Agreement, including in Section 504 and this Section 2105.

 

(5)                                  Notwithstanding
anything in this Section 2105 to the contrary, however, Tenant may not
exercise its Right of First Refusal as to any Available Space, (i) if an
Event of Default by Tenant exists as of the date when the Authority’s Notice of
Proposed Agreement is or should have been sent by the Authority, or the date
that the Notice of Exercise of Right of First Refusal is received by the
Authority; or (ii) if there exists, as of the date when the Authority’s
Notice of Proposed Agreement is or should have been sent by the Authority or
the date the Notice of Exercise of Right of First Refusal is received by the
Authority, a default by Tenant that with notice, passage of time or both would
constitute an Event of Default by Tenant under this Lease and Tenant thereafter
fails to cure that default within the applicable grace or cure period provided
under this Lease.

 

Section 2106.                          Sole
Remedy.  Except as may otherwise be
provided in Section 504(A) above, the Authority’s rights under this Section shall
be its sole and exclusive remedy in the event Tenant does not satisfy the
target number of Bays applicable to each target date.

 

ARTICLE XXII.

 

GENERAL PROVISIONS

 

Section 2201.                          Non-Interference
with Operation of Airport.  Tenant,
by accepting this Lease Agreement, expressly agrees for itself and its
successors and assigns that it will not make use of the Leased Premises in any
manner that might interfere with the landing and taking off of aircraft at the
Airport or otherwise might constitute a hazard to the landing and taking off of
aircraft at the Airport.  If this
covenant is breached, the Authority reserves the right to enter upon the Leased
Premises, and cause the abatement of any interference at the expense of
Tenant.  The Authority shall maintain and
keep in repair the Airport landing areas, including taxiways and aircraft
parking Aprons.

 

Section 2202.                          Binding
Upon Successors and Assigns; No Intent to Benefit Third Parties.  All of the terms and conditions of this Lease
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and assigns. 
Except as otherwise expressly provided in this Lease Agreement, the
provisions of this Lease Agreement are not intended to, and shall not, benefit
any Person other than the parties to this Lease Agreement, and the provisions
hereof are not intended to, and shall not create any third party beneficiary
right in any Person.

 

Section 2203.                          Entire
Agreement; Amendments.  This Lease
Agreement, the Exhibits and Addenda referred to herein which form a part of
this Lease Agreement, contain the entire understanding of the parties hereto
with respect to the subject matter hereof. 
There are no 

 

92

 

representations,
promises, warranties, covenants or undertakings of the parties other than those
expressly set forth or provided for herein or therein.  This Lease Agreement supersedes all prior
agreements and understandings between the parties with respect to the
transactions contemplated by this Lease Agreement.  No provision of this Lease Agreement may be
amended except in a writing signed by both parties, and no such amendment shall
extend to anything other than the specific subject matter thereof.

 

Section 2204.                          Waiver.  The party for whose benefit a warranty,
representation, covenant or condition is intended may in writing waive any
inaccuracies in the warranties and representations contained in this Lease
Agreement or waive compliance with any of the covenants or conditions contained
herein and so waive performance of any of the obligations of the other party
hereto and any defaults hereunder; provided, however, that such waiver must be
in writing, and shall not affect or impair the waiving party’s rights with
respect to any other warranty, representation, condition or covenant or any
default hereunder, nor shall any waiver constitute a continuing waiver.

 

Section 2205.                          Section Headings.  The Section headings contained herein
are for convenience of reference and are not intended to define or limit the
scope of any provision of this Lease Agreement.

 

Section 2206.                          Governing
Law; Interpretation.  This Lease
Agreement and all transactions contemplated hereby shall be governed, construed
and enforced in accordance with the Laws of the State of Indiana, and shall be
treated in all respects as a State of Indiana contract, without regard to any
state’s Laws related to choice or conflict of laws.  The terms and conditions of this Lease
Agreement represent the results of bargaining and negotiations between the
parties, each of which has been represented by counsel of its own selection,
and neither of which has acted under duress or compulsion, whether legal,
economic, or otherwise, and represent the results of a combined draftsmanship
effort.  The terms and conditions hereof
shall be interpreted and construed in accordance with their usual and customary
meanings and the parties hereby expressly waive and disclaim any rule of
law or procedure requiring otherwise, specifically including but not limited to
any rule of law to the effect that ambiguous or conflicting terms or
conditions shall be interpreted or construed against the party who (or whose
counsel) prepared this Lease Agreement or any earlier draft hereof.  As used in this Lease, a reference to a “business
day” means any day other than a Saturday, Sunday or a national holiday.  Except as otherwise expressly provided in
this Lease, any reference to “days” shall mean calendar days rather than “business
days”.

 

Section 2207.                          Relationship.
 Nothing contained in this Lease shall be
deemed to constitute a partnership, joint venture, agency, or any other
relationship between the Authority and Tenant, other than the relationship of
landlord and tenant.

 

Section 2208.                          Notices.  Whenever any notice, consent, approval, or
payment is required by this Lease Agreement to be made, given or transmitted to
the parties hereto, that notice or payment shall be enclosed in an envelope
with sufficient postage attached to insure delivery and deposited in the United
States Mail, certified or registered mail, or shall be sent via nationally-recognized

 

93

 

overnight
courier service (e.g., Federal Express), or shall be hand delivered, in any
event addressed to:

 

	
  (a)

  	
   

  	
  If to the Authority:

  	
   

  	
  Indianapolis Airport Authority

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Indianapolis International Airport

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  2500 S. High School Road

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Suite 100

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Indianapolis, Indiana 46241-4941

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Attention: Airport Director

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  If to Tenant:

  	
   

  	
  AAR Aircraft Services, Inc.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  2825 West Perimeter Road

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Indianapolis, Indiana 46241

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Attention: General Manager

  	
   

  	
   

  

 

or to such other or different address as either party shall by written
directive designate in the manner herein provided.  Any notice, consent, approval or payment, if
mailed or otherwise delivered as provided above, shall be deemed to have duly
and properly given on the date service if delivered personally, or, if mailed,
on the second business day after such notice is deposited in the United States
Mail, or on the first business day following deposit with a
nationally-recognized overnight courier service.

 

Section 2209.                          Counterparts.  This Lease Agreement may be simultaneously
executed in two or more counterparts, and by each of the parties on separate
counterparts, each of which shall be deemed an original and all of which shall
constitute but one and the same instrument.

 

Section 2210.                          Exculpation
of Directors and Officers; Limited Liability.  No recourse under or upon any obligation,
covenant or agreement contained in this Agreement shall be had against any
trustee, officer, director or employee, present or future, of either party or
of any successor thereto, either directly or through that party by the
enforcement of any assessment or by any legal or equitable proceeding or by
virtue of any statute or otherwise; it being expressly agreed and understood
that this Agreement and the obligations hereby secured are solely corporate or
organizational obligations, and that no personal liability whatever shall
attach to or be incurred by such officers, directors or employees of either
party, or of any successor thereto, or any of them, under or by reason of any
of the obligations, covenants or agreements contained in this Agreement, or implied
therefrom; and that any and all personal liability of every name and nature,
and any and all right and claims against every such officer, director or
employee, whether arising at common law or in equity, or created by statute or
constitution, are hereby expressly released and waived as a condition of, and
as a part of the consideration for, the execution of the Agreement.  However, nothing in this Section shall
be deemed to waive or release, or limit the personal liability of any trustee,
officer, director or employee, past or future, of either party or of any
successor thereto, to the extent such Person has any personal liability under
applicable Law (such as, by way of example only, personal liability for
fraudulent statements or criminal conduct).

 

94

 

Section 2211.                          Covenants
Concerning the Other Lease Agreements and Bond Issues.  During the Term, except as provided in this
Lease Agreement, the Authority shall not take any action to terminate the Site
and Facilities Lease Agreement, the Commission Lease Agreement or the ITFA
Lease Agreement (collectively, the “Other Lease Agreements”) and shall not take
any action or omit to take any action which would constitute a default by it as
tenant under the Other Lease Agreements if, as a result thereof, the landlord
under the Other Lease Agreements would be entitled to terminate Tenant’s right
to possession of the Leased Premises. 
Except as provided in this Lease Agreement, the Authority shall not
amend, modify or supplement the Other Lease Agreements, the Tenancy in Common
Agreement or any of the Bond Issues, in any way which will adversely affect
Tenant’s leasehold rights and interests under this Lease Agreement without the
prior written consent of Tenant, which consent will not be unreasonably
withheld, conditioned or delayed.  Tenant
understands that the Authority may apply all or a portion of the Rentals to pay
debt service on the Special Facility Bonds or the other Bond Issues.  Nothing in this Lease is intended to make
Tenant responsible for the debt service on the Special Facility Bonds or other
Bond Issues.  The Authority acknowledges
that the Tenant shall have no responsibility whatsoever for payment of debt
service on the Special Facility Bonds or other Bond Issues, or for any other
payments related to the Special Facility Bonds or the other Bond Issues that
are not expressly provided for in this Lease Agreement. The Authority shall (a) give
prompt written notice to Tenant of the receipt by the Authority of any written
notice claiming any default by the Authority in the performance or observance
of any of the terms, covenants or conditions on the part of the Authority to be
performed or observed under any of the Other Lease Agreements, the Tenancy in
Common Agreement or any of the Bond Issues, (b) give prompt written notice
of the receipt by the Authority of any written notice of termination of the
Other Lease Agreements, the Tenancy in Common Agreement or any of the Bond
Issues, and (c) promptly cause a copy of each such written notice received
by the Authority to be delivered to Tenant; and to the extent such notices
received by the Authority or any information contained therein is confidential
or non-public information, Tenant shall 
maintain the confidentiality of such notices and information.

 

	
  Exhibit A -

  	
   

  	
  Land

  
	
  Exhibit B -

  	
   

  	
  Description of Portion of Facilities to Be Leased to Tenant

  
	
  Exhibit B-1 -

  	
   

  	
  Drawing Showing Location and Square Footage of Leased Premises Within
  Facilities

  
	
  Exhibit C -

  	
   

  	
  Permitted Encumbrances

  
	
  Exhibit D -

  	
   

  	
  Restricted Aircraft Parking Area

  
	
  Exhibit E -

  	
   

  	
  Drawing Showing Location and Square Footage of Expansion Space

  
	
  Exhibit F -

  	
   

  	
  Authority’s Projected Annual Percentage Rent

  
	
  Exhibit G -

  	
   

  	
  Incentives

  
	
  Exhibit H -

  	
   

  	
  Authority Permits

  
	
  Exhibit I -

  	
   

  	
  Apron

  
	
  Exhibit J -

  	
   

  	
  Gross Sales/Operating Profit Illustrative Model

  
	
  Exhibit K -

  	
   

  	
  Operating Rules

  

 

95

 

SIGNATURE PAGE

 

IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed as of the Effective Date at Indianapolis, Indiana.

 

	
  ATTEST

  	
   

  	
  “TENANT”

  
	
   

  	
   

  	
   

  
	
  /s/ Donald
  J. Vilim

  	
   

  	
   

  	
  AAR AIRCRAFT
  SERVICES, INC.,

  
	
  Assistant
  Secretary

  	
   

  	
  an Illinois
  corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  /s/ David P.
  Storch

  	
   

  
	
   

  	
   

  	
  Printed:

  	
  David P.
  Storch

  
	
   

  	
   

  	
  Title:

  	
  President

  
							

 

	
  STATE OF ILLINOIS

  	
  )

  
	
   

  	
  ) SS:

  
	
  COUNTY OF DuPAGE

  	
  )

  

 

Before me, a Notary Public in and for said County and State, personally
appeared David P. Storch and Donald J. Vilim, the President and Assistant
Secretary, respectively, of AAR Aircraft Services, Inc., an Illinois
corporation, and acknowledged the execution of the foregoing instrument as such
officer acting for and on behalf of said entity.

 

WITNESS my hand and Notarial Seal this 14th day of June,
2004.

 

 

	
   

  	
   

  	
  /s/ Mary
  Schnaith

  	
   

  
	
   

  	
   

  	
  Mary
  Schnaith, Notary Public

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  My
  Commission Expires:   12/03/2007

  	
   

  	
  My County of
  Residence:   Lake County, IL

  

 

96

 

	
   

  	
   

  	
  “AUTHORITY”

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  INDIANAPOLIS
  AIRPORT AUTHORITY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/ Lacy M.
  Johnson

  	
   

  
	
   

  	
   

  	
   

  	
  Lacy M.
  Johnson, President

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/ H.
  Patrick Callahan

  	
   

  
	
   

  	
   

  	
   

  	
  H. Patrick
  Callahan, Vice-President

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/ David E.
  Mansfield

  	
   

  
	
   

  	
   

  	
   

  	
  David E.
  Mansfield, Secretary

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/ N.
  Stuart Grauel

  	
   

  
	
   

  	
   

  	
   

  	
  N. Stuart
  Grauel, Member

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/ Robert
  H. Voorhies

  	
   

  
	
   

  	
   

  	
   

  	
  Robert H.
  Voorhies, Member

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  absent

  	
   

  
	
   

  	
   

  	
   

  	
  Michael W.
  Wells, Member

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  AUTHORITY

  	
   

  

 

97

 

	
  STATE OF INDIANA

  	
  )

  
	
   

  	
  ) SS:

  
	
  COUNTY OF MARION

  	
  )

  

 

Before me, a Notary Public in and for said County and State, personally
appeared Lacy M. Johnson, President; H. Patrick Callahan, Vice-President; David
E. Mansfield, Secretary; N. Stuart Grauel, Member; Robert H. Voorhies, Member;
and Michael W. Wells, Member, respectively, of the Indianapolis Airport
Authority, and acknowledged the execution of the foregoing instrument as such
officers acting for and on behalf of the Indianapolis Airport Authority.

 

WITNESS my hand and Notarial Seal this 17 day of June, 2004.

 

 

	
   

  	
   

  	
   /s/
  Robert A. Duncan

  
	
   

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Robert A. Duncan

  
	
   

  	
   

  	
  Printed

  	
  Notary Public

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  My
  Commission Expires:

  	
   

  	
  My County of
  Residence:

  
	
   

  	
   

  	
   

  
	
   

  	
  10-22-08

  	
   

  	
   

  	
   

  	
  Hendricks

  	
   

  
									

 

98

 

EXHIBIT A

 

LAND

 

 

EXHIBIT B

 

DESCRIPTION OF PORTION OF
FACILITIES TO BE LEASED TO TENANT

 

1.                                       Hangar
1 (consisting of “ground level” and “mezzanine level” of Bays 1a and 1b, and
associated office, storage and employee support space), Hangar 2
(consisting of “ground level” and “mezzanine level” of Bays 2a and 2b, and
associated office, storage and employee support space), Hangar 3 (consisting of
“ground level” and “mezzanine level” of Bays 3a and 3b, and associated office,
storage and employee support space), Hangar 5 (consisting of “ground level” of
Bays 5a and 5b, and associated office, storage and employee support space), and
Hangar 6 (consisting of “ground level” of Bay 6a and associated office, storage
and employee support space, and “ground level” and “mezzanine level” of Bay 6b
and associated office, storage and employee support space), all as shown in
more detail in the drawing attached hereto as Exhibit B-1.  The approximate square footage of the “ground
level” and “mezzanine level” for each Bay (if applicable) is shown on Exhibit B-1 attached hereto.

 

2.                                       Approximately
24,597 square feet of office space above Hangar 4, as shown in more detail on
the drawing attached hereto as Exhibit B-1
(the “Hangar 4 Office Space”).

 

Total:  approximately 731,355 square feet.

 

 

EXHIBIT B-1

 

DRAWING SHOWING LOCATION AND
SQUARE FOOTAGE

OF LEASED PREMISES WITHIN FACILITIES

 

 

EXHIBIT C

 

PERMITTED ENCUMBRANCES

 

Easements,
rights-of-way, covenants, conditions, restrictions and other matters of record.

 

 

EXHIBIT D

 

RESTRICTED AIRCRAFT PARKING AREA

 

 

EXHIBIT E

 

DRAWING SHOWING LOCATION AND
SQUARE FOOTAGE

OF EXPANSION SPACE

 

 

EXHIBIT F

 

AUTHORITY’S PROJECTED ANNUAL
PERCENTAGE RENT

 

	
  Tenant Fiscal

  Year End

  	
   

  	
  Projected Percentage

  Rent

  	
   

  	
  Fifty Percent (50%) of

  Projected Percentage Rent

  	
   

  
	
  5/31/08

  	
   

  	
  $

  	
  898,425

  	
   

  	
  $

  	
  449,213

  	
   

  
	
  5/31/09

  	
   

  	
  $

  	
  594,825

  	
   

  	
  $

  	
  297,413

  	
   

  
	
  5/31/10

  	
   

  	
  $

  	
  1,061,776

  	
   

  	
  $

  	
  530,888

  	
   

  
	
  5/31/11

  	
   

  	
  $

  	
  1,079,925

  	
   

  	
  $

  	
  539,963

  	
   

  
	
  5/31/12

  	
   

  	
  $

  	
  1,633,500

  	
   

  	
  $

  	
  816,750

  	
   

  
	
  5/31/13

  	
   

  	
  $

  	
  1,670,625

  	
   

  	
  $

  	
  835,313

  	
   

  
	
  5/31/14 and
  thereafter

  	
   

  	
  $

  	
  2,304,225

  	
   

  	
  $

  	
  1,152,113

  	
   

  

 

 

EXHIBIT G

 

INCENTIVES

 

	
  Threshold

  	
   

  	
  Grant Amount

  	
   

  	
  Credit Amount

  	
   

  
	
  30 days
  after Effective Date 

  (number of Bays Occupied N/A)

  	
   

  	
  $

  	
  1,000,000

  	
   

  	
  $

  	
  0

  	
   

  
	
  30 days
  after Effective Date 

  (number of Bays Occupied N/A)

  	
   

  	
  $

  	
  1,000,000

  	
   

  	
  0

  	
   

  
	
  105 days
  after Effective Date 

  (number of Bays Occupied N/A)

  	
   

  	
  $

  	
  1,000,000

  	
   

  	
  0

  	
   

  
	
  3 Bays
  Occupied

  	
   

  	
  0

  	
   

  	
  750,000

  	
   

  
	
  4 Bays
  Occupied

  	
   

  	
  750,000

  	
   

  	
  750,000

  	
   

  
	
  5 Bays
  Occupied

  	
   

  	
  750,000

  	
   

  	
  750,000

  	
   

  
	
  6 Bays
  Occupied

  	
   

  	
  750,000

  	
   

  	
  500,000

  	
   

  
	
  7 Bays
  Occupied

  	
   

  	
  750,000

  	
   

  	
  500,000

  	
   

  
	
  8 Bays
  Occupied

  	
   

  	
  500,000

  	
   

  	
  500,000

  	
   

  
	
  9 Bays
  Occupied

  	
   

  	
  250,000

  	
   

  	
  250,000

  	
   

  
	
  10 Bays
  Occupied

  	
   

  	
  250,000

  	
   

  	
  0

  	
   

  
	
  Commencement
  Date of 1st year of Extension Term 

  (number of Bays Occupied N/A)

  	
   

  	
  250,000

  	
   

  	
  0

  	
   

  
	
  Commencement
  Date of 2nd year of Extension Term 

  (number of Bays Occupied N/A)

  	
   

  	
  250,000

  	
   

  	
  0

  	
   

  
	
  Totals

  	
   

  	
  7,500,000

  	
   

  	
  4,000,000

  	
   

  
								

 

 

EXHIBIT H

 

AUTHORITY PERMITS

 

 

EXHIBIT I

 

APRON

 

 

EXHIBIT J

 

GROSS SALES/OPERATING PROFIT
ILLUSTRATIVE MODEL

 

 

EXHIBIT K

 

INDIANAPOLIS MAINTENANCE CENTER

OPERATING RULES

APPLICABLE TO AAR AIRCRAFT
SERVICES INC.

 

Procedure to Minimize the
Potential for Improper

Discharges Associated with the
Indianapolis Maintenance

Center (IMC) Industrial
Wastewater Facility

 

1.0                               STATEMENT OF
WORK

 

RESPONSIBILITY AND ACTION REQUIRED

 

	
   

  	
   

  	
  1.1

  	
   

  	
  Tenants

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  1.1.1

  	
   

  	
  Maintain a Toxic Organic Management Plan in
  accordance with applicable requirements. Some aspects to be covered, but not
  limited to the following:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  1.1.1.a

  	
   

  	
   

  	
   

  	
  All containers of liquid toxic organics
  will be kept closed except at times of use.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  1.1.1.b

  	
   

  	
   

  	
   

  	
  Used Oil and Hazardous Waste Liquids are
  collected in separate collection containers and are shipped out for proper
  disposal.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  1.1.1.c

  	
   

  	
   

  	
   

  	
  Store Toxic Organics in the Controlled
  Materials Rooms, which are specially-designated chemical accumulation rooms
  that have coated floor areas with berms, sumps, and/or secondary containment.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  1.1.1.d

  	
   

  	
   

  	
   

  	
  Bulk Toxic Organics will be stored as to
  minimize the possibility of breakage or leakage of the containers.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  1.1.1.e

  	
   

  	
   

  	
   

  	
  Areas where Toxic Organic liquids are
  stored must have a spill absorbent material present, with sufficient supplies
  to handle a small spill of such material stored in the area.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  1.1.1.f

  	
   

  	
   

  	
   

  	
  For the majority of materials stored in
  areas other than the Controlled Materials Rooms, containers of Toxic Organic
  liquids will be stored either in cabinets or lockers having integral
  secondary containment. All drums containing Toxic Organic liquids are stored
  in secondary devices.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  1.1.1.g

  	
   

  	
   

  	
   

  	
  Employees who handle and use chemical
  materials must be trained how to respond in the event of a spill and on how
  to

  
											

 

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  prevent spills. The training should focus
  on quick action to minimize the impact of the spill.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  1.1.1.A

  	
   

  	
   

  	
  Sign a Total Toxic Organic (TTO)
  Certification Statement and submit semi-annually, every June and
  December. This certification will be submitted to the Authority as backup to
  the Authority’s Certification, which is the only Certification that will be
  submitted to the City.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  1.1.1.B

  	
   

  	
   

  	
  Any anticipated facility expansions,
  production increases or process modifications which result in new, different,
  or increased discharges of pollutants to the IMC Industrial Wastewater
  Facility must be reported to the Authority.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  1.1.2

  	
   

  	
  Operate leased spaces in a manner that does
  not cause an upset in the IMC Industrial Wastewater Facility. An upset means
  interference with the operation of the IMC Industrial Wastewater Facility
  which results in a discharge to the POTW which is a violation of the IDP
  discharge limits.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  1.1.3

  	
   

  	
  Chemical baths and certain rinses
  associated with the plating are the responsibility of the tenant. These baths
  will be treated as required prior to conveying to the IMC Industrial
  Wastewater Facility.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.0

  	
   

  	
  SPECIAL CIRCUMSTANCES

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.1

  	
   

  	
  Spills

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  2.1.1

  	
   

  	
  All spills to be cleaned up immediately as
  necessary so they will not be discharged and cause an upset.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  2.1.2

  	
   

  	
  All Spills which do discharge or may be
  discharged to the IMC Industrial Wastewater Facility shall be reported to the
  Environmental Manager at 317-487-55070.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.2

  	
   

  	
  ARFFF Releases

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  2.2.1

  	
   

  	
  ARFF release will be directed to the ARFFF
  vault and treated appropriately. The cost to discharge from the ARFF vault is
  the responsibility of the tenant or operator that caused the release.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.3

  	
   

  	
  Tenant shall provide an initial list to the
  Environmental Manager of the IMC Industrial Wastewater Facility of the liquid
  Hazardous Materials which Tenant plans to bring onto the Leased Premises in
  quantities (individually or cumulatively) greater than fifty-five (55)
  gallons or any “extremely hazardous” liquid Hazardous Materials listed under
  Title III of the Superfund Amendments and Reauthorization Act of 1986,
  as amended.

  
												

 

 

	
  3.0

  	
   

  	
  FORMS

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.1

  	
   

  	
  None

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.0

  	
   

  	
  EXHIBITS

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.1

  	
   

  	
  None

  

 

 

FIRST
AMENDMENT

TO

LEASE
AGREEMENT

 

AAR
AIRCRAFT SERVICES, INC.

INDIANAPOLIS
AIRPORT AUTHORITY

 

THIS FIRST AMENDMENT made and entered into the 21st day of January,
2005 by and between the Indianapolis Airport Authority, (hereinafter referred
to as Authority) and AAR Aircraft Services, Inc. (hereinafter referred to
as Tenant),

 

W I T N E S S E T H:

 

WHEREAS, Authority and Tenant entered into a
Lease Agreement dated June 17, 2004, providing for Tenant’s occupancy of a
portion of the Indianapolis Maintenance Center as the Leased Premises; and

 

WHEREAS, Authority and Tenant desire to amend
the Leased Premises described in Exhibit B, revise the terms of Article XII,
Financial Security and revise Exhibit K, Operating Rules;

 

NOW THEREFORE, in consideration of the mutual
covenants and considerations contained herein, the parties agree that Exhibit B,
Leased Premises, Article XII, Financial Security and Exhibit K,
Operating Rules are hereby deleted and the following are substituted:

 

ARTICLE XII

 

FINANCIAL SECURITY

 

Section 1201. (A)  Letter of
Credit/Tenant.                  Subject
to Section 1201 and 1202 below, to secure the performance by Tenant of its
obligation under this Lease Agreement, Tenant will, on or before the date Base
Rent is first due, deliver to the Authority an irrevocable letter of credit
from LaSalle Bank National Association (or from another issuer acceptable to
the Authority in its sole discretion) in the amount of One Million Eight
Hundred Thousand Dollars ($1,800,000) (the “Letter of Credit”).  The Letter of Credit terms must provide that
the proceeds of the Letter of Credit shall be available to the Authority by the
Authority’s draft at sight when accompanied by a certificate from the Authority
stating that there has been an Event of Default by Tenant under this Lease, and
must provide that partial drawings and multiple drawings shall be
permitted.  Except as described in Section 1201.(B) and
Section 1202 below, Tenant shall, at Tenant’s cost and expense, cause the
Letter of Credit to be renewed on an annual basis and to remain in full force
and effect during the Term of this Lease and shall not cause or permit the
terms and conditions of the Letter of Credit to be altered, amended, or
rescinded without the 

 

 

prior written consent of the Authority, which consent may be withheld
or granted in the Authority’s sole and absolute discretion.

 

Section 1201. (B)  Letter of
Credit/IDM.                                 In
addition, it is agreed by the parties that $250,000 of the irrevocable Letter
of Credit submitted by Tenant shall be designated on a one time basis as
security for the base rent payment obligation of Indianapolis Diversified
Machining, Inc. (IDM) pursuant to IDM’s lease agreement dated November 5,
2004 with the Authority (the “IDM Lease”). 
The Letter of Credit terms must provide that up to an aggregate of
$250,000 of the proceeds of the Letter of Credit shall be available to the
Authority on a one time basis by the Authority’s draft at sight when
accompanied by a certificate from the Authority stating that there has been an
Event of Default by IDM in the payment of base rent under the IDM Lease, and
must provide that partial drawings and multiple drawings shall be permitted up
to an amount not to exceed in the aggregate (including partial drawings)
$250,000. Once the Authority has drawn $250,000 in the aggregate pursuant to
this Section 1201.(B) , the Authority acknowledges and agrees that it
shall not have the right to make any further draws on the Letter of Credit with
respect to any IDM obligations under the IDM Lease. Except as described in this
Section 1201.(B) and Section 1202 below, Tenant shall, at Tenant’s
cost and expense, cause the Letter of Credit to be renewed on an annual basis
and to remain in full force and effect during the Term of this Lease and shall
not cause or permit the terms and conditions of the Letter of Credit to be
altered, amended, or rescinded without the prior written consent of the Authority,
which consent may be withheld or granted in the Authority’s sole and absolute
discretion.

 

Section 1202.  Guaranty.                If AAR CORP., the
Tenant’s parent company (the “Parent”), executes a guaranty agreement in form
reasonably acceptable to the Authority (the “Guaranty”) whereby Parent has
guaranteed Tenant’s obligations under this Lease and IDM’s base rent payment
obligations under the IDM Lease (on the same terms, conditions and restrictions
described in Section 1201.(B)) in an amount not to exceed $1.8 million,
and if the financial rating of Parent, by Standard & Poor’s
Corporation or Moody’s Investor Service, Inc. remains at or above an
investment grade rating of Baa3 or BBB-, the Authority hereby agrees that the
Tenant may terminate its Letter of Credit required by Section 1201.  Should, however, subsequent to the
termination of the Letter of Credit, the financial rating of Parent, by
Standard & Poor’s Corporation and Moody’s Investor Service, Inc.,
decrease below the investment grade rating of Baa3 and BBB-, Tenant shall
reinstate a Letter of Credit from an issuer acceptable to the Authority in
accordance with the provisions of Section 1201 above within sixty (60)
days of the date of the latest rating downgrade, at which time the Guaranty
will terminate.  In no event whatsoever
shall the Parent be obligated to execute the Guaranty; provided, however, that
if the Parent does not execute a Guaranty, the Letter of Credit must be and
remain in effect.

 

This First Amendment shall become effective January 21,
2005 (the “Effective Date”) and all other terms and conditions of the Lease
Agreement dated June 17, 2004 as amended shall remain the same.

 

In witness whereof, the parties have caused
this instrument to be executed as of the date first above mentioned.

 

Attachments:

 

2

 

Exhibit B:  Description of
Portion of Facilities to be Leased to Tenant

Exhibit K:  Operating Rules

 

3

 

SIGNATURE PAGE

 

IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed as of the Effective Date at Indianapolis, Indiana.

 

	
  ATTEST

  	
   

  	
  “TENANT”

  
	
   

  	
   

  	
   

  
	
  /s/ Donald
  J. Vilim

  	
   

  	
   

  	
  AAR AIRCRAFT
  SERVICES, INC.,

  
	
  Assistant
  Secretary

  	
   

  	
  an Illinois
  corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ David P.
  Storch

  	
   

  
	
   

  	
   

  	
  Printed:

  	
  David P.
  Storch

  
	
   

  	
   

  	
  Title:

  	
  President

  
							

 

	
  STATE OF ILLINOIS

  	
  )

  
	
   

  	
  ) SS:

  
	
  COUNTY OF DuPAGE

  	
  )

  

 

Before me, a Notary Public in and for said County and State, personally
appeared David P. Storch and Donald J. Vilim, the President and Assistant Secretary,
respectively, of AAR Aircraft Services, Inc., an Illinois corporation, and
acknowledged the execution of the foregoing instrument as such officer acting
for and on behalf of said entity.

 

WITNESS my hand and Notarial Seal this 25 day of January, 2005.

 

 

	
   

  	
   

  	
  /s/ Mary
  Schnaith

  
	
   

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Mary
  Schnaith

  
	
   

  	
   

  	
  Printed

  	
  Notary Public

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  My
  Commission Expires:

  	
   

  	
  My County of
  Residence:

  
	
   

  	
   

  	
   

  
	
  12/3/07

  	
   

  	
   

  	
  Lake

  	
   

  
						

 

4

 

	
   

  	
   

  	
  “AUTHORITY”

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  INDIANAPOLIS
  AIRPORT AUTHORITY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/ Lacy M.
  Johnson

  	
   

  
	
   

  	
   

  	
  Lacy M.
  Johnson, President

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  absent

  	
   

  
	
   

  	
   

  	
  H. Patrick
  Callahan, Vice-President

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/ David E.
  Mansfield

  	
   

  
	
   

  	
   

  	
  David E.
  Mansfield, Secretary

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/ Kelly J.
  Flynn

  	
   

  
	
   

  	
   

  	
  Kelly J. Flynn,
  Member

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/ N.
  Stuart Grauel

  	
   

  
	
   

  	
   

  	
  N. Stuart
  Grauel, Member

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/ Shirley
  M. Haflich

  	
   

  
	
   

  	
   

  	
  Shirley M.
  Haflich, Member

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/ Robert
  H. Voorhies

  	
   

  
	
   

  	
   

  	
   

  	
  Robert H.
  Voorhies, Member

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/ Michael
  W. Wells

  	
   

  
	
   

  	
   

  	
   

  	
  Michael W.
  Wells, Member

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  AUTHORITY

  	
   

  

 

5

 

	
  STATE OF INDIANA

  	
  )

  
	
   

  	
  ) SS:

  
	
  COUNTY OF MARION

  	
  )

  

 

Before me, a Notary Public in and for said County and State, personally
appeared Lacy M. Johnson, President; H. Patrick Callahan, Vice-President; David
E. Mansfield, Secretary; Kelly J. Flynn, Member; Shirley M. Haflich, Member; N.
Stuart Grauel, Member; Robert H. Voorhies, Member; and Michael W. Wells,
Member, respectively, of the Indianapolis Airport Authority, and acknowledged
the execution of the foregoing instrument as such officers acting for and on
behalf of the Indianapolis Airport Authority.

 

WITNESS my hand and Notarial Seal this 21st day
of January, 2005.

 

 

	
   

  	
   

  	
   /s/ Brenda S. Ford

  
	
   

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
    Brenda
  S. Ford

  
	
   

  	
   

  	
  Printed

  	
  Notary Public

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  My
  Commission Expires:

  	
   

  	
  My County of
  Residence:

  
	
   

  	
   

  	
   

  
	
  July 5, 2007

  	
   

  	
   

  	
  Marion

  	
   

  
						

 

6

 

EXHIBIT B

 

DESCRIPTION OF PORTION OF
FACILITIES TO BE LEASED TO TENANT

 

1.                                       Hangar
1 (consisting of “ground level” and “mezzanine level” of Bays 1a and 1b, and
associated office, storage and employee support space), Hangar 2 (consisting of
“ground level” and “mezzanine level” of Bays 2a and 2b, and associated office,
storage and employee support space), Hangar 3 (consisting of “ground level” and
“mezzanine level” of Bays 3a and 3b, and associated office, storage and
employee support space), Hangar 5 (consisting of “ground level” of Bays 5a and
5b, and associated office, storage and employee support space), and Hangar 6
(consisting of “ground level” of Bay 6a and associated office, storage and
employee support space, and “ground level” and “mezzanine level” of Bay 6b and
associated office, storage and employee support space), all as shown in more
detail in the drawing attached hereto as Exhibit B-1 thru Exhibit B-34.  The approximate square footage of the “ground
level” and “mezzanine level” for each Bay (if applicable) is shown on Exhibit B-1 attached hereto.

 

2.                                       Approximately
24,597 square feet of office space designated as Hangar 4 service level as
shown in more detail on the drawing attached hereto as Exhibit B
(the “Hangar 4 Office Space”).

 

3.                                       Approximately
25,531 square feet of storage space designated as Hangar 4 ground level as
shown in more detail on Exhibit B
(the “Hangar 4 Ground Level Storage”).

 

4.                                       Total
square footage for all hangar space and support areas shown on Exhibit B-1 thru Exhibit B-34 is (exempting Hangar
4) office space and ground level.

 

5.                                       The
parties agree that designated smoking areas shall be established outside of the
facilities for Tenant’s employees and Tenant shall be responsible for the
maintenance and cleanup of the smoking areas.Exhibit 10.20

 

AAR CORP.

 

NON-QUALIFIED
STOCK OPTION AGREEMENT

(“Agreement”)

 

1. 
Subject to the provisions set forth herein and the terms and conditions
of the AAR CORP. Stock Benefit Plan (“Plan”), the terms of which are hereby
incorporated by reference, and in consideration of the agreements of __________
(“Grantee”) herein provided, AAR CORP., a Delaware corporation (“Company”),
hereby grants to the Grantee an option entitling the Grantee to purchase from
the Company common stock of the Company, par value $1.00 per share (“Common
Stock”), in the number of shares at the purchase price per share, and on the
schedule, set forth in (a) and (b) below (“Option”).

 

(a)                                  Option

 

	
  Number of Shares

  	
   

  
	
  Subject to Option:

  	
   

  
	
  (Subject to adjustment

  	
   

  
	
  pursuant to the terms of

  	
   

  
	
  this Agreement.)

  	
   

  
	
   

  	
   

  
	
  Option Price Per Share:

  	
   

  
	
  (Subject to adjustment

  	
   

  
	
  pursuant to the terms of

  	
   

  
	
  this Agreement.)

  	
   

  
	
   

  	
   

  
	
  Date of Grant:

  	
   

  

 

 

Option Vesting
Schedule:

 

	
  Number of Shares Becoming

  Subject to Exercise

  	
   

  	
  Date First

  Exercisable

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  First _________ shares of Grant

  	
   

  	
   

  	
   

  
	
  Second

  	
   

  	
   shares
  of Grant

  	
   

  	
   

  	
   

  
	
  Third _________ shares of Grant

  	
   

  	
   

  	
   

  
	
  Fourth _________ shares of Grant

  	
   

  	
   

  	
   

  
	
  Fifth _________ shares of Grant

  	
   

  	
   

  	
   

  
						

 

 

Each of the above option increments shall expire on ____________ (“Expiration
Date” of the Option) or upon the earlier expiration of the Option as provided
in this Agreement.

 

(b)                                 Reload Option

 

	
  Number of Shares Subject

  	
   

  	
   

  
	
  to Reload Option:

  	
   

  	
  The same number of shares (except as
  adjusted pursuant to the terms of this Agreement) of Common Stock as is used
  by the Grantee pursuant to paragraph 4 to pay for shares purchased by
  exercise of the Option from time to time

  
	
   

  	
   

  	
   

  
	
  Reload Option Price

  	
   

  	
   

  
	
  Per Share:

  	
   

  	
  Fair Market Value on the respective dates
  of exercise of the Option giving rise to the reload option(s)

  
	
   

  	
   

  	
   

  
	
  Date of Grant:

  	
   

  	
  Same as date of exercise of the Option

  

 

In the event a Change in Control occurs,
whether or not such Change in Control has the prior written approval of a
majority of the Continuing Directors, and notwithstanding any conditions or
restrictions contained in this Agreement, the Option shall become immediately
exercisable on the date of such Change in Control with respect to all shares of
Common Stock covered thereby, whether vested or not and not previously
purchased upon exercise of the Option and shall remain so exercisable until the
Option expires as provided in paragraph 1 or 3 herein.

 

2.                                       The exercise of
the Option is conditioned upon the acceptance by the Grantee of the terms
hereof as evidenced by the Grantee’s execution of this Agreement and return of
an executed copy to the Secretary of the Company within thirty 

 

2

 

(30) days from the date of the cover letter from the Secretary
transmitting original copies to the Grantee for execution.

 

3.                                       (a)                                  If the Grantee’s
employment with the Company and/or a subsidiary of the Company is terminated
for any reason, other than for Retirement, death, Disability, or termination of
employment for Cause, the Option of Grantee shall terminate on the earlier to
occur of (i) three months after termination of employment or (ii) the
date that the Option expires in accordance with its terms.

 

(b)                                 If the Grantee’s
employment with the Company and/or a subsidiary of the Company is terminated by
reason of Retirement, the Option shall remain exercisable by the retired
Grantee until the Option expires by its terms and may be exercised by the
retired Grantee in the same manner and to the same extent as if the Retired
Grantee had continued employment during that period; provided, however, that if
the Grantee dies before the Option expires, the Option shall be exercisable
only by the Successor of the deceased Grantee to the extent that the deceased
Grantee was entitled at the date of the Grantee’s death.

 

(c)  If (i) the Grantee’s employment with the
Company and/or a subsidiary of the Company is terminated by reason of death or (ii) the
Grantee dies within three months after the termination of employment with the
Company or a subsidiary, except if the termination of employment was for Cause,
the Option shall expire on the earlier to occur of one year after Grantee’s
death or the Expiration Date of the Option; provided, however, that during such
period, the Option shall be exercisable only by the Successor of the deceased
Grantee to the extent that the deceased Grantee was entitled at the date of the
Grantee’s death.

 

3

 

(d)  If the Grantee’s employment is terminated by
reason of Disability, the Option shall expire on the earlier to occur of one
year after termination of employment or the date the Option expires in
accordance with its terms, and during said period the Option may be exercised
by the disabled Grantee with respect to the same number of shares, in the same
manner and to the same extent as if the Grantee had continued employment during
such period.

 

(e)                                  The Option shall
expire immediately upon termination of employment of the Grantee through
discharge for Cause.

 

4.                                       Written notice
of an election to exercise any portion of the Option, specifying the portion
thereof being exercised and the exercise date, shall be given by the Grantee,
or the Grantee’s personal representative in the event of the Grantee’s death or
disability necessitating a Court approved personal representative, by
delivering such notice to the Secretary of the Company, accompanying such
notice with (i) payment in full of the purchase price of any shares to be
purchased (in cash, or in the form of a certified check or a cashier’s check
issued by a federally insured bank or federally insured savings and loan
association, in all cases made payable to AAR CORP., and as set forth in the
Plan) or by surrendering a number of shares of Common Stock of the Company with
a Fair Market Value on the date of exercise equal to the purchase price, or by
directing the Company to withhold such number of shares otherwise issuable upon
exercise of such Option having an aggregate Fair Market Value on the date of
exercise equal to the purchase price, or by any combination of the above, and (ii) payment
of an amount sufficient to satisfy any applicable withholding requirements as
provided for in Section 13 below. 
Any exercise of the Option shall be effective as of the later of the
dates specified 

 

4

 

in such notice and the date the notice and accompanying payment are
actually received by the Secretary of the Company.

 

5.                                       Any exercise of
an Option shall be subject to action by the Board taken at any time in its sole
discretion (i) to effect, amend or maintain any necessary registration of
the Plan or the shares of Common Stock issuable upon exercise of the Option
under the Securities Act of 1933, as amended, or the securities laws of any
applicable jurisdiction, (ii) to permit any action to be taken in order to
(A) list such shares on a stock exchange if the shares are then listed on
such exchange or (B) comply with restrictions or regulations incident to
the maintenance of a public market for its shares of Common Stock, including
any rules or regulations of any stock exchange on which such shares are
listed, or (iii) to determine that such shares and the Plan are exempt
from such registration or that no action of the kind referred to in (ii)(B) above
needs to be taken; and the Company shall not be obligated by virtue of any
terms and conditions of the Option, or any provision of this Agreement or the
Plan, to recognize an exercise of the Option or to sell or issue shares of
Common Stock in violation of the Securities Act of 1933 or the law of any
government having jurisdiction thereof. 
Any such postponement shall not extend the Expiration Date of the
Option, and neither the Company nor its directors or officers shall have any obligation
or liability to the Grantee or to any other person with respect to any shares
as to which the Option shall lapse because of such postponement.  If deemed necessary by the Committee, the
Grantee may be required to represent at the time of each exercise of the Option
that the shares purchased are being acquired for investment and not with a view
toward distribution; and the Company may place a legend on the related stock
certificate to indicate that the stock may not be sold or otherwise disposed of

 

5

 

except in accordance with the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder, including but not
limited to Rule 144.

 

6.                                       Notwithstanding
any provision of this Agreement to the contrary, the Company shall not be
obliged to issue or transfer any of its Common Stock to Grantee upon exercise
of the Option, if the Committee or the Board of Directors of the Company
determines that the issuance or transfer of such Common Stock would be in
violation of any covenant in any of the Company’s loan agreements or other
contracts.

 

7.                                       Any increase or
decrease in the number of outstanding shares of Common Stock of the Company
occurring through stock splits, stock dividends, stock consolidations, spin
offs, other distributions of assets to shareholders or assumption or conversion
of outstanding Options due to an acquisition after the Date of Grant of the
Option shall be reflected proportionately in the number of shares of Common
Stock subject to the Option; and a proportionate reduction or increase, as
applicable, shall be made in the Option Price Per Share hereunder.  Any fractional shares resulting from such
adjustment shall be eliminated.  If
changes in capitalization other than those considered above shall occur, the
Board of Directors of the Company shall make such adjustment in the number or
class of shares purchasable upon exercise of the Option and in the Option Price
Per Share as the Board in its discretion may consider appropriate, and all such
adjustments shall be conclusive upon all persons.

 

8.                                       The Option may
be exercised only by the Grantee during the Grantee’s lifetime and may not be
transferred other than by will, the applicable laws of descent or distribution,
or an assignment subject to and meeting the requirements of Section 11 of
the Plan and made in accordance with Company procedures in effect from 

 

6

 

time to time for approval by the Company and consummation of the
assignment (copies of procedures and forms are available from the Corporate
Secretary upon request).  The Option
shall not otherwise be transferred, assigned, pledged or hypothecated for any
purpose whatsoever and is not subject, in whole or in part, to execution,
attachment, or similar process.  Any
attempted assignment, transfer, pledge or hypothecation or other disposition of
the Option, other than in accordance with the terms set forth herein, shall be
void and of no effect.

 

9.                                       Neither the
Grantee nor any other person entitled to exercise the Option under the terms
hereof shall be, or have any of the rights or privileges of, a stockholder of
the Company in respect of any of the shares of Common Stock issuable on
exercise of the Option, unless and until such shares shall have been actually issued.

 

10.                                 In the event the
Option shall be exercised in part, the Company may require that this Agreement
be delivered by the Grantee to the Company for the purpose of making
appropriate notation thereon, or of otherwise reflecting, in such manner as the
Company shall determine, such partial exercise. 
In the event the Option shall be exercised in whole, this Agreement
shall be surrendered to the Company for cancellation.  In the event that a change in the number or
designation of the Common Stock shall be made, the Company may require the
Grantee to surrender this Agreement to the Company for the purpose of making
appropriate notation thereon, or of otherwise reflecting, such change in the
number or designation of the Common Stock.

 

11.                                 When the Option expires
as herein provided, such expiration shall occur at the Company’s close of
business on the date of expiration.

 

7

 

12.                                 Nothing in the Option
shall confer on the Grantee any right to be or to continue in the employ of the
Company or any of its subsidiaries or shall interfere in any way with the right
of the Company or any of its subsidiaries to terminate the employment of the
Grantee at any time for any reason or no reason.

 

13.                                 Upon any exercise of
the Option, the Grantee shall remit to the Company an amount necessary to
satisfy applicable withholding requirements including those arising under state
and federal income tax laws prior to the delivery by the Company of any
certificate or certificates for shares.

 

The Grantee may satisfy such withholding
requirements in connection with such Option in whole or in part by (i) directing
the Company to withhold a portion of the shares otherwise distributable to the
Grantee or (ii) transferring to the Company shares of Common Stock of the
Company previously acquired by the Grantee having a Fair Market Value on the
date such shares are transferred to the Company equal to the amount of such
withholding or lesser portion thereof as may be desired by the Grantee.  A Grantee’s election pursuant to the
preceding sentence must be made on or prior to the date as of which income is
realized by the Grantee in connection with such Option and must be
irrevocable.  In lieu of a separate
election on each Taxable Date, the Grantee may file a blanket election with the
Committee which shall govern all future Taxable Dates until revoked by the
Grantee.

 

14.                                 The Option shall be
exercised in accordance with such Company administrative procedures as may be
in effect from time to time.

 

15.                                 The Option, and this
Agreement, shall be construed, administered and governed in all respects under
and by the laws of the State of Illinois.

 

8

 

16.                                 This Agreement has
been examined by the parties hereto, and accordingly the rule of
construction that ambiguities be construed against a party which causes a
document to be drafted shall have no application in the construction or
interpretation hereof.  If any part of
this Agreement is held invalid for any reason, the remainder hereof shall
nevertheless remain in full force and effect.

 

17.                                 This Agreement
constitutes the entire Agreement between the parties concerning the subject
matter hereof and any prior understanding or representation of any kind
antedating this Agreement concerning such subject matter shall not be binding
upon either party except to the extent incorporated herein.  No consent, waiver, modification or amendment
hereof, or additional obligation assumed by either party in connection
herewith, shall be binding unless evidenced by a writing signed by both parties
and referring specifically hereto.  No
consent, waiver, modification or amendment with respect hereto shall be
construed as applicable to any past or future events other than the one in respect
of which it was specifically made.

 

18.                                 This Agreement shall
be construed consistent with the provisions of the Plan and in the event of any
conflict between the terms of this Agreement and the terms of the Plan, the
terms of the Plan shall control and any terms of this Agreement which conflict
with Plan terms shall be void.

 

19.                                 Capitalized terms used
herein and not defined herein will have the meaning set forth in the Plan.

 

9

 

IN WITNESS WHEREOF, this Agreement has been
executed for the Company by its duly authorized officer on _____ day of ___________,
 _____.

 

	
   

  	
  AAR CORP.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
				

 

 

The undersigned hereby accepts the foregoing Option and agrees to the
terms and conditions thereof on this _____ day of _______,  _____.

 

 

	
   

  	
   

  
	
   

  	
  Employee

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  

 

10

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