Document:

AIRCRAFT HANGAR FACILITY

LEASE AGREEMENT

 

 

Between

 

Metropolitan Airports
Commission

Minneapolis-St. Paul

 

And

 

Mesaba Aviation, Inc.

 

 

 

September 2002

 

 

Lease Summary

 

	
  Type of
  Agreement

  	
   

  	
  Aircraft Hangar Facility Lease

  
	
  Tenant

  	
   

  	
  Mesaba Aviation, Inc. (d/b/a Mesaba Airlines)

  
	
  Representative

  	
   

  	
  Robert E. Weil

  
	
  Phone

  	
   

  	
  612-713-6308

  
	
  FAX

  	
   

  	
  612-726-1568

  
	
  E-Mail

  	
   

  	
  Weil_Bob@mesaba.com

  
	
  Mesaba 

  Notice Address

  	
   

  	
  Mesaba
  Aviation, Inc.

  7501 – 26th Avenue

  South  Minneapolis, MN 55450

  
	
  MAC
  Representative

  	
   

  	
  Eric Johnson

  
	
  Phone

  	
   

  	
  612-725-8322

  
	
  FAX

  	
   

  	
  612-970-9600

  
	
  E-mail

  	
   

  	
  Ejohnson@mspmac.org

  
	
  MAC

  Notice Address

  	
   

  	
  Attn: Comm. Mgmt. & Airline Affairs

  6040 28th Avenue South

  Minneapolis, MN  55450

  
	
  Effective Date

  	
   

  	
  September      , 2002

  
	
  Term

  	
   

  	
  25 years from DBO

  
	
  Expiration

  	
   

  	
  25 years from DBO

  
	
  Leased Premises

  	
   

  	
  10.36 acres

  
	
  Rent

  	
   

  	
  $1,328,686.00 annually (to be reconciled to actual
  after construction complete)

  
	
  Rental Increases

  	
   

  	
  Ground rent only based ordinance change

  
	
  Utilities

  	
   

  	
  Mesaba

  
	
  Maintenance

  	
   

  	
  Mesaba responsible for all maintenance with the
  exception of ramp maintenance which will be done by MAC

  
	
  Authorized
  Use(s)

  	
   

  	
  Maintenance and operation of Mesaba aircraft,
  storage of equipment, administrative offices, and vehicle maintenance as part
  of operations on the Airport.

  
	
  Minimum
  Insurance

  	
   

  	
  Commercial General Liability $100 million

  Property Damage Liability $100 million

  Workers’ Compensation $100,000

  

 

Note:  This Lease Summary is presented as a reference of the
Lease information at the time of execution.  
If there is a discrepancy between the information contained in this Lease
Summary
and the requirements contained in the remainder of this Lease, the requirements
as stated in the remainder of this Lease will be applied.

 

2

 

Metropolitan
Airports Commission

AIRCRAFT
HANGAR FACILITY LEASE AGREEMENT

 

Table
of Contents

 

 

	
  ARTICLE I

  	
   

  	
  SPECIAL TERMS
  AND CONDITIONS

  
	
   

  	
  1.

  	
   

  	
  DEFINITIONS

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.

  	
   

  	
  LEASED PREMISES

  
	
   

  	
   

  	
   

  	
  A.         Exclusive Ground Area

  
	
   

  	
   

  	
   

  	
  B.         Preferential Use Leased Premises

  
	
   

  	
   

  	
   

  	
  C.         Building Improvements

  
	
   

  	
   

  	
   

  	
  D.         Future Development

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.

  	
   

  	
  EFFECTIVE DATE AND TERM

  
	
   

  	
   

  	
   

  	
  A.         Effective Date

  
	
   

  	
   

  	
   

  	
  B.         Term

  
	
   

  	
   

  	
   

  	
  C.         Holdover

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.

  	
   

  	
  RENTAL FEES AND CHARGES

  
	
   

  	
   

  	
   

  	
  A.         Ground
  Rent

  
	
   

  	
   

  	
   

  	
  B.         Revision of Ground Rent

  
	
   

  	
   

  	
   

  	
  C.         Site Improvement Costs

  
	
   

  	
   

  	
   

  	
  D.         Facilities Rent

  
	
   

  	
   

  	
   

  	
  E.          Snow Removal,
  Maintenance and Repair

  
	
   

  	
   

  	
   

  	
  F.          Reserve Requirement

  
	
   

  	
   

  	
   

  	
  G.         Late Fee

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.

  	
   

  	
  AUTHORIZED USE

  
	
   

  	
   

  	
   

  	
  A.         Leased Premises

  
	
   

  	
   

  	
   

  	
  B.         Fueling

  
	
   

  	
   

  	
   

  	
  C.         Aircraft Deicing

  
	
   

  	
   

  	
   

  	
  D.         Maintenance of Other Aircraft

  
	
   

  	
   

  	
   

  	
  E.          Noise

  
	
   

  	
   

  	
   

  	
  F.          Storage

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.

  	
   

  	
  TITLE TO IMPROVEMENTS

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.

  	
   

  	
  CONSTRUCTION AND
  FINANCIAL COMMITMENT

  
	
   

  	
   

  	
   

  	
  A.         Project

  
	
   

  	
   

  	
   

  	
  B.         Design and Construction

  
	
   

  	
   

  	
   

  	
  C.         Construction Fund

  
	
   

  	
   

  	
   

  	
  D.         Maximum Amount to be Financed

  
	
   

  	
   

  	
   

  	
  E.          Finishes and Equipment
  Provided by Mesaba

  

 

3

 

	
   

  	
  8.

  	
   

  	
  CONSENTS,
  APPROVALS, AND NOTICES

  
	
   

  	
   

  	
   

  	
  A.         Consent

  
	
   

  	
   

  	
   

  	
  B.         Notice

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.

  	
   

  	
  MAINTENANCE
  OF LEASED PREMISES AND IMPROVEMENTS

  
	
   

  	
   

  	
   

  	
  A.         Maintenance by MAC and Mesaba

  
	
   

  	
   

  	
   

  	
  B.         Condition of Leased Premises

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.

  	
   

  	
  BUILDING CONSTRUCTION, REPAIRS,
  SECURITY FOR LIENS

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.

  	
   

  	
  INDEMNIFICATION AND
  INSURANCE

  
	
   

  	
   

  	
   

  	
  A.         Indemnification

  
	
   

  	
   

  	
   

  	
  B.         Property Insurance on Buildings

  
	
   

  	
   

  	
   

  	
  C.         Insurance

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.

  	
   

  	
  ENVIRONMENTAL

  
	
   

  	
   

  	
   

  	
  A.         Definitions

  
	
   

  	
   

  	
   

  	
  B.         Indemnification

  
	
   

  	
   

  	
   

  	
  C.         Compliance with Environmental Laws

  
	
   

  	
   

  	
   

  	
  D.         Claims Relating to
  Environmentally Regulated Substances

  
	
   

  	
   

  	
   

  	
  E.          Testing and Reports

  
	
   

  	
   

  	
   

  	
  F.          Notification

  
	
   

  	
   

  	
   

  	
  G.         Right to Investigate

  
	
   

  	
   

  	
   

  	
  H.         Right to Take Action

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.

  	
   

  	
  TANKS

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.

  	
   

  	
  UTILITIES

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.

  	
   

  	
  MAC TO OPERATE AIRPORTS

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  16.

  	
   

  	
  PUBLIC
  DATA

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  17.

  	
   

  	
  FUTURE LEASES

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  18.

  	
   

  	
  SIGNS

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  19.

  	
   

  	
  BANKRUPTCY

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  20.

  	
   

  	
  MAC’S RIGHT UPON DEFAULT

  
	
   

  	
   

  	
   

  	
  A.         Events of Default

  
	
   

  	
   

  	
   

  	
  B.         Remedies

  

 

4

 

	
   

  	
  21.

  	
   

  	
  TERMINATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  22.

  	
   

  	
  CONDEMNATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  23.

  	
   

  	
  QUIET ENJOYMENT

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  24.

  	
   

  	
  THE RIGHT TO AUDIT

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  25.

  	
   

  	
  NONDISCRIMINATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  26.

  	
   

  	
  CIVIL
  RIGHTS

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  27.

  	
   

  	
  GENERAL
  PROVISIONS

  
	
   

  	
   

  	
   

  	
  A.         Memorandum of Agreement

  
	
   

  	
   

  	
   

  	
  B.         Waiver of Breach

  
	
   

  	
   

  	
   

  	
  C.         Commitments to Federal or State Agencies

  
	
   

  	
   

  	
   

  	
  D.         Sublease or Assignment

  
	
   

  	
   

  	
   

  	
  E.          Taxes and Other Charges

  
	
   

  	
   

  	
   

  	
  F.          Headings

  
	
   

  	
   

  	
   

  	
  G.         Severability

  
	
   

  	
   

  	
   

  	
  H.         Compliance with Laws

  
	
   

  	
   

  	
   

  	
  I.           Authority of MAC and Executive Director

  
	
   

  	
   

  	
   

  	
  J.          Attorney’s
  Fees

  
	
   

  	
   

  	
   

  	
  K.         Minnesota
  Law

  
	
   

  	
   

  	
   

  	
  L.          Entire Agreement

  

 

	
  Exhibit A

  	
   

  	
  Leased Premises

  
	
  Exhibit B

  	
   

  	
  Building and Facility Improvements

  
	
  Exhibit C

  	
   

  	
  Rental Fees and Charges

  
	
  Exhibit D

  	
   

  	
  Maintenance Responsibility Matrix

  
	
  Exhibit E

  	
   

  	
  Aircraft Deicing Field Rule

  
	
  Exhibit F

  	
   

  	
  Beneficial Occupancy Certificate

  
	
  Exhibit G

  	
   

  	
  Mesaba Hangar Project Budget Summary

  
	
  Exhibit H

  	
   

  	
  Mesaba Aviation, Inc. Agreement for Termination of
  Facilities Lease and Operating Agreement and First Amendment

  

 

5

 

AIRCRAFT HANGAR
FACILITY LEASE AGREEMENT

 

 

This Agreement, dated this 30th day of September, 2002 between the
Metropolitan Airports Commission, a public corporation of the State of
Minnesota (“MAC”), and Mesaba Aviation, Inc. (d/b/a/ Mesaba Airlines), a
corporation of the State of Minnesota (“Mesaba”).

 

WHEREAS, MAC owns and operates the Minneapolis-St. Paul International
Airport (“Airport”) located in Hennepin County, Minnesota; and

 

WHEREAS, MAC is in the process of constructing Runway 17-35 to
accommodate the increased flight activity on the Airport; and

 

WHEREAS, the runway construction necessitated MAC and Mesaba to enter
into an Agreement for Termination of Facilities Lease and Operating Agreement
dated June 27, 2001 (“Termination Agreement”) to terminate the Facilities
Lease and Operating Agreement dated April 18, 1988, as amended; and

 

WHEREAS, simultaneous with the execution of this
Agreement, the parties agree to amend the Termination Agreement to modify the
termination date from January 1, 2003 to September 30, 2003; and

 

WHEREAS, Mesaba has a
need for new facilities on the Airport, to replace the facilities being removed
for the construction of Runway 17-35 and to accommodate the growth in Mesaba’s
operations at the Airport; and

 

WHEREAS, MAC will finance and construct a facility to lease to Mesaba
for storage and maintenance of aircraft and related administrative functions in
support of Mesaba’s on-airport airline activity; and

 

WHEREAS, MAC will construct a Preferential Use Aircraft Parking Area
and associated common taxilanes, taxiways and related areas to be used in
conjunction with Mesaba’s facilities.

 

NOW THEREFORE, it is mutually agreed, in consideration of rents to be
paid by Mesaba and the mutual undertakings of the parties hereto, as follows:

 

6

 

ARTICLE I —
SPECIAL TERMS AND CONDITIONS

 

1.        DEFINITIONS

 

A.            Affiliates.  “Affiliated Airline” as defined in the
Airline Agreement.

 

B.            Air Transportation
Business.  “Air Transportation
Business” as defined in the Airline Agreement.

 

C.            Aircraft Parking
Area.  “Aircraft Parking Area” has
the meaning given in Section 2.B. and Exhibit A of this Agreement, or as amended.

 

D.            Airline Agreement.  Airline Operating Agreement and Terminal
Building Lease for Minneapolis-St. Paul International Airport dated
January 1, 1999, or as amended, superceded or replaced.

 

E.             DBO.  Date of Beneficial Occupancy as set forth in
Section 3.B.

 

F.             Executive Director.  MAC’s Executive Director or such other
person designated by the Executive Director to exercise functions with respect
to the rights and obligations of MAC under this Agreement.

 

G.            Mesaba Project.  Mesaba Project has the meaning given in
Section 7.A.

 

H.            Plans and
Specifications.  Plans and
Specifications has the meaning given in Section 7.A.

 

I.              Preferential Use.   Aircraft Parking Area is designated as
preferential use, meaning that Mesaba has the first opportunity to use all ramp
area that is part of the Leased Premises under this Agreement.

 

J.             Trade Fixtures.
An article used by an airline in the usual course of its aircraft maintenance
business that was once personal property, but has been attached to the land or
building in a manner so that it is regarded in law as part of the real estate.

 

2.             LEASED PREMISES

 

MAC leases to Mesaba the
premises as shown on the attached Exhibit A, and as listed below,
collectively called “Leased Premises”. Such Leased Premises shall be used by
Mesaba to accommodate Mesaba’s operation at the Airport.

 

A.            Exclusive Ground Area  

 

MAC leases to Mesaba
approximately 365,625 square feet of exclusive use premises as shown on Exhibit A,
which includes the hangar pad, shop/office space, and employee parking.

 

7

 

B.            Preferential Use Leased Premises 

 

MAC
grants to Mesaba, on a Preferential Use basis, the use of approximately 85,795
square feet as shown on Exhibit A (“Aircraft Parking Area”). Mesaba
shall be granted priority to utilize such Preferential Use Aircraft Parking
Area.

 

The
Preferential Use Aircraft Parking Area shall be used by Mesaba for its own
aircraft. If Mesaba is not using any Aircraft Parking Area that is not
directly in front of its hangar facility and another airline has a need for
aircraft parking, MAC may encourage the two parties to negotiate a sublease.
Payment will be made directly to Mesaba as subtenant rent in accordance with
Section 27.D. of this agreement.  MAC acknowledges
that Mesaba is not likely to have Aircraft Parking Area available for such use
by other airlines unless and until the Leased Premises is expanded.

 

Mesaba agrees that such use and assignment of Preferential Use Aircraft
Parking Areas shall be consistent with FAA criteria to enable such Aircraft
Parking Areas to remain eligible for Federal AIP grant and other funding.

 

C.            Building Improvements

 

MAC will lease to Mesaba building improvements in accordance with, and
will provide the level of finishes in the building improvements as specified,
in Exhibit
B.

 

D.            Future
Development

 

Both parties understand that Mesaba has an interest in
expanding its maintenance facility. MAC will use its best efforts to
concentrate future land development on the southwest side of the ramp area and
expanding to the north. If through the development of the area over time or due
to operational requirements the land adjacent to Mesaba becomes the focus for a
long term development MAC will provide Mesaba 120 days notice during which time
the Commission will consider the highest and best use of the land in question.

 

3.             EFFECTIVE DATE AND TERM

 

A.            Effective
Date 

 

The Aircraft Hangar Facility Lease Agreement shall be
effective on the date executed by both parties (hereinafter “Effective Date”).

 

B.            Term

 

The Term of this Agreement shall commence on the Date of Beneficial
Occupancy (DBO), and expire on the last day of the month twenty-five (25) years
beyond the DBO.  The DBO shall be the
date on which MAC and Mesaba substantially 

 

8

 

complete the improvements and MAC delivers a Final Certificate of
Occupancy issued by the MAC Building Official. 
A copy of the Final Certificate of Occupancy will be attached as Exhibit F
to the Agreement.

 

Prior to any occupancy of the Leased Premises, at a minimum, a
Temporary Certificate of Occupancy shall be issued by the MAC Building
Official.

 

Mesaba shall have the use of the
Preferential Use Aircraft Parking Area commencing on the DBO and continuing
through the term of this Agreement, subject to the terms and conditions of this
Agreement.

 

C.            Holdover

 

Any holding over beyond the term of the Agreement will be on a month to
month basis and shall be at the rental rates in effect prior to the termination
of the Agreement.

 

4.             RENTAL FEES AND CHARGES

 

Rent will commence
effective on the DBO.  Mesaba shall pay
all rentals, fees and charges in advance on the first day of the month without
the issuance of an invoice or notice by MAC, in accordance with Exhibit C
attached hereto and incorporated by this reference, and as further identified
below. 
Rent will be comprised of three components: (A) Ground Rent, (B)
Site Improvement Costs, (C) Facility Rent.

 

A.            Ground Rent

 

Commencing on the DBO Mesaba shall pay ground rent in
advance on the first day of each month, without demand or invoice, subject to
Section 4.B.

 

	
  LEASE AREA

  	
   

  	
  AREA

  	
   

  	
  RATE

  	
   

  	
  MONTHLY

  	
   

  	
  ANNUALLY

  	
   

  
	
  Exclusive

  Ground Area

  	
   

  	
  365,625

  	
   

  	
  $

  	
  0.20

  	
   

  	
  $

  	
  6,093.75

  	
   

  	
  $

  	
  73,125.00

  	
   

  
	
  - Hangar pad, shop/office site, employee parking

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Preferential

  Ramp Area

  	
   

  	
  85,795

  	
   

  	
  $

  	
  0.20

  	
   

  	
  $

  	
  1,429.92

  	
   

  	
  $

  	
  17,159.00

  	
   

  

 

If anytime during
the term of this Agreement Mesaba stops flying passenger service to the
Minneapolis-St. Paul International Airport, the ground rent shall be adjusted
to the applicable classification defined by the Ordinance 83 and its revisions
effective the first day of the month following the termination of passenger
service.

 

9

 

B.            Revision of Ground Rent

 

In conjunction with Ordinance 83
and its revisions anytime after October 1, 2002, and no more frequent than
every fifth year during the remainder of the term of the Agreement, MAC
reserves the right to amend ground rent, either upward or downward. MAC shall
rely upon appraisals obtained from one or more qualified, independent
appraisers chosen by MAC. It is understood, consistent with Minnesota Statutes,
that any revision or changes in rents shall be reasonable and uniform covering
Mesaba’s lease rights with those charges to other users at the Airport in the
same class of users as Mesaba.

 

C.            Site Improvement
Costs (Preferential Use Aircraft Parking Area, Common Use Taxilanes/Areas and
Site Work)

 

MAC shall have the necessary site work, paving of the Preferential Use
Aircraft Parking Area, common use taxilanes/areas and work incidental thereto
completed that will serve as the Preferential Use Aircraft Parking Area of the
Leased Premises and associated areas.  Such
work shall be completed prior to the DBO as defined above.

 

The cost of such work shall be recovered by MAC and paid by Mesaba in
monthly payments as described on the attached Exhibit C, commencing on the
DBO.  The amount to be recovered by MAC
shall be the actual cost of all work directly related to the Mesaba Project and
the common use taxilanes/areas and work incidental thereto. The cost of the
common taxilanes/areas shall be allocated to Mesaba based on the percentage
that its Preferential Use Aircraft Parking Area is of the total Preferential
Use Aircraft Parking Area in the designated West Side area.

 

The costs of the work shall be amortized over thirty (30) years at an
annual interest rate equal to that being paid on the bonds issued for the
financing of this portion of the Runway 17-35 program, plus a debt coverage
amount determined by MAC. The annual amount shall be divided by twelve (12) to
determine the monthly amount to be paid by Mesaba.  The cost to be paid by Mesaba shall be determined initially based
on estimates of cost of the work, including contingencies, and adjusted to
actual costs no later than 120 days after substantially all elements relating
to the cost of the Mesaba Project have been completed.  MAC shall notify Mesaba in writing of the
actual cost and the associated amount to be paid.  Upon reconciliation of the Mesaba Project costs, Exhibit C
shall be amended to reflect actual expenses. Mesaba may request and MAC will
furnish reasonable documentation to substantiate the reconciled costs used to
determine its rental rate.

 

D.            Facilities Rent

 

MAC shall complete the necessary site work for the building and adjacent
areas, construction of exclusive Leased Premises, including employee vehicle
parking, equipment parking, and necessary related facilities as identified in Exhibit B.

 

10

 

The cost of such work shall be recovered by MAC and paid by Mesaba in
monthly payments as described in Exhibit C, commencing on the DBO. The
amount to be recovered by the MAC shall be the actual cost of all work directly
related to the Mesaba Project.

 

The cost to be paid by Mesaba shall be determined initially based on
estimates of cost of the work, including contingencies, and adjusted to actual
costs no later than 120 days after substantially all elements relating to the
cost of the Mesaba Project have been completed.  MAC shall notify Mesaba in writing of the actual cost and the
associated amount to be paid.  Upon reconciliation
of the Mesaba Project costs, Exhibit C shall be amended to reflect
actual expenses.

 

The rent is calculated as shown on Exhibit C
such that Mesaba is not paying full debt service on a portion of the employee
parking area.  The parties agree that at
such time as Mesaba desires to expand the Aircraft Maintenance Hangar and
Leased Premises, rent will be recalculated to make full debt service applicable
to the entire Leased Premises.

 

E.             Snow Removal, Maintenance and Repair

 

MAC shall be responsible
for snow removal, routine maintenance, operation, repair and replacement on the
Preferential Use Aircraft Parking Area of the Leased Premises and common use
taxilanes in accordance with Exhibit D (Maintenance Responsibility
Matrix).  Mesaba shall pay costs for MAC
performing such snow removal, routine maintenance, operations and repair on the
Preferential Use Aircraft Parking Area of the Leased Premises and its pro-rata
share of such costs for common use taxilanes/areas as billed by MAC.  MAC will use its best efforts to minimize
the snow removal costs to Mesaba by requiring one half inch of snow
accumulation on the ramp prior to calling out the snow removal contractors. At
the discretion of MAC’s maintenance staff there may be situations or particular
snow conditions that will warrant a waiver to this standard in order to
maintain Mesaba’s aircraft operations. 
Mesaba hereby grants to MAC the right to access the Preferential Use
Aircraft Parking Area for the purpose of performing snow removal, maintenance,
operational activities and repairs as MAC determines appropriate.  MAC shall use reasonable efforts not to
interfere with Mesaba’s business operations when performing such
obligation.  MAC shall provide equipment
and labor to fulfill these responsibilities in keeping with Mesaba’s
operational needs in a reasonable manner.

 

Mesaba shall be
responsible for the snow removal from all areas of the Leased Premises with the
exception of the Preferential Use Aircraft Parking Areas as described
above.  Notwithstanding the above,
Mesaba shall be responsible for snow removal on the Preferential Use Aircraft
Parking Areas to the extent that Mesaba shall remove snow from such areas that
are immediately adjacent to Mesaba’ building, Mesaba’s airside building doors,
and other appurtenances which cannot be reasonably efficiently reached by
routine airfield snow removal equipment utilized by MAC.   

 

11

 

F.             Reserve Requirement

 

A reserve requirement is due and payable upon execution of this
Agreement.  An irrevocable letter of
credit, in a form acceptable to MAC, is acceptable in guaranteeing the reserve
requirement.  The reserve requirement
shall be automatically renewed each year by Mesaba and is required in advance
for each year during the term of this Agreement and shall be provided to MAC
thirty (30) days prior to the expiration of the previous letter of credit.

 

The amount of the reserve requirement is equal to three (3) months rent,
to be calculated as the sum of 1 and 2:

 

1.             Rent Reserve Requirement

 

A rent reserve requirement defined
as maintenance and operating costs for the site and taxilanes, common use area,
and land rent.  This amount is currently
estimated at $25,000 per month or $75,000 in total. This amount is subject to
change based on final construction figures and modification to the ground rent
ordinance.

 

2.             Debt Reserve
Requirement

 

A debt reserve requirement in the amount of $773,000.
This amount represents the projects’ proportionate share of the debt service
reserve requirement associated with the funding source, which is MAC’s 2001
General Airport Revenue Bond Issue. 
This amount is subject to change based on final construction figures.

 

G.            Late Fee

 

Any payment not received
within thirty (30) days of the due date shall accrue interest at the rate of
1.5 percent per month measured from the due date until paid in full.

 

5.             AUTHORIZED USE

 

A.            Leased
Premises

 

The Leased Premises shall
only be used by Mesaba for the maintenance and operation of Mesaba aircraft,
storage of equipment, administrative offices and vehicle maintenance as a part
of Mesaba’s operations on the Airport and for other purposes as authorized by
this Agreement.  Any use and/or activity not expressly authorized pursuant to this
Section requires the prior written approval of MAC.

 

B.            Fueling

 

Mesaba may fuel or
defuel its own aircraft, its ground equipment and vehicles used in Mesaba’s
operation at the Airport, with its own employees or a

 

12

 

commercial vendor
authorized by MAC to operate at the Airport. 
Mesaba shall not engage in fueling activities other than as specified
above.  No bulk fuel storage, except
propane, is permitted on the Leased Premises.

 

C.            Aircraft Deicing

 

Mesaba shall only
de-ice its aircraft in areas of the Airport specifically designated by MAC pursuant
to field rule entitled: Aircraft Deicing, dated July 21, 1999, attached as
Exhibit E,
as such may be amended from time to time. 
Mesaba acknowledges that it is aware of and has read and will comply
with the Field Rule.  Mesaba is
responsible for being aware of and complying with all current field rules and
any revisions as they may occur from time to time whether or not this Agreement
is amended to incorporate the revised field rule.

 

D.            Maintenance of
Other Aircraft

 

Mesaba
may provide routine servicing and maintenance consisting of A, B, C or other
similar level checks, and emergency repair or maintenance services, to other
air carrier type aircraft owned, leased or operated by air carriers other than
Mesaba, provided such services are not provided to hushkitted or
widebody aircraft. It is understood that
Mesaba does not intend to and will not solicit or engage in such maintenance
activities for aircraft not otherwise serving the Minneapolis-St. Paul area and
that such maintenance activities shall not include major modifications,
conversions, remodeling or the maintenance, servicing, handling or hangaring of
general aviation or corporate aircraft. 
Mesaba will provide MAC with written monthly reports of any maintenance
done on air carrier type aircraft owned, leased or operated by air carriers
other than Mesaba.

 

E.             Noise

 

Mesaba agrees to abide by all current and future
Airport noise rules, regulations, and field rules. The parties agree that use
of the facility will be for aircraft consistent with Mesaba’s fleet mix up to
aircraft equal in size to the Airbus A320. Any variation requires the prior
approval of MAC.

 

At the date the Agreement
is executed, Mesaba and MAC are parties to an Airline Agreement, which is
scheduled to expire December 31, 2015. 
In the event anytime during the term of this Agreement Mesaba shall
either fail to renew such Airline Agreement or for any reason not be a party to
the most current Airline Agreement between MAC and signatory airlines at the
Airport, Mesaba shall, as a term and condition of this Agreement, comply with
all aircraft noise and operational provisions of the then current Airline
Agreement although Mesaba is not a party to the then current Airline Agreement.

 

F.             Storage

 

Mesaba is authorized to store necessary supplies for
maintaining aircraft on the Leased Premises, provided that Mesaba (1) meets all
environmental and

 

13

 

regulatory requirements, and (2) that such storage is
approved by MAC.  Such consent will not be
unreasonable withheld.

 

6.             TITLE
TO IMPROVEMENTS

 

For any and all improvements constructed on the Leased Premises, not
financed by MAC, the title to the improvements and possession except personal
property and Trade Fixtures paid for and installed by Mesaba on the Leased
Premises shall revert to MAC at the expiration of the term or upon early
termination of this Agreement for any reason. 
Any  Trade Fixtures removed by
Mesaba must not negatively impact the structure or finishes of the facility; in
the event such condition should arise, Mesaba must restore the condition of the
Leased Premises after such removal. Title to all improvements financed and/or
put in place by MAC will remain with MAC and will be leased to Mesaba pursuant
to this Agreement, except as provided in Section 13.

 

7.             CONSTRUCTION AND FINANCIAL COMMITMENT

 

A.            Project

 

The Project will include
site preparation, utility installation and construction of the following
facilities: 137,410  sq. ft. of maintenance shop, office
facility, and hangar; hangar fire suppression system; 85,795 sq. ft. of
Aircraft Parking Area; 228,215  sq. ft. of auto parking space and related
appurtenances.  All dimensions listed
are approximated for the purpose of this document. Upon completion, the
premises indicated on Exhibits A and B, will be leased by Mesaba
(the “Mesaba Project”).

 

MAC and Mesaba will
coordinate and develop a set of plans and specifications (Project number:
106-4-092,
dated July 23, 2002) (as amended from time to time, the “Plans
and Specifications”).  MAC will ensure
integration of the facilities being constructed by MAC with the installation
and operation of necessary aircraft maintenance equipment to be installed by
Mesaba.  MAC will construct the project
in accordance with the Plans and Specifications and Exhibit B.

 

B.            Design and
Construction

 

The Mesaba Project shall be constructed pursuant to Plans and
Specifications prepared and adopted as follows:

 

1.             Plans and Specifications

 

Mesaba has selected, and
MAC has approved, consultants to prepare Plans and Specifications for the
Mesaba Project and related improvements to be constructed on the Airport to
meet the requirements of Mesaba for its aircraft maintenance hangar.  Mesaba will provide input to the plans and
specification to ensure integration of the facilities to be constructed with
other MAC facilities or plans for future facilities.  Mesaba shall provide to MAC a complete set of Plans and
Specifications in paper and electronic form.

 

14

 

The parties will cooperate to establish a project team
to ensure coordination among all elements of the Mesaba Project, to minimize
impacts on the traveling public and to attain project completion in accordance
with the date established in the construction documents and in coordination
with development of Runway 17-35. The parties will coordinate with Mesaba and
other entities as necessary to ensure coordination among all elements
comprising the West Side airline development area.

 

2.             Bids

 

MAC shall advertise for bids according to all applicable laws.  The contracts for construction shall include
such provisions and alternates provided in the plans as Mesaba may reasonably
request and which are not inconsistent with the statute.  Award of contracts for the construction of
the Mesaba Project and work incidental thereto shall require the written
concurrence of Mesaba.  If the total of
low responsible bids for the Mesaba Project at any time is projected to or does
exceed the Maximum Amount to be Financed by MAC according to Section 7.D., one
of the following shall occur:

 

a.             Modify Project

 

If Mesaba is unwilling to pay the excess cost, MAC with Mesaba’s
concurrence shall make such modifications to the Plans and Specifications for
the Mesaba Project as necessary to reduce the costs so the total design and
construction portion of the Mesaba Project Costs to be financed by MAC do not
exceed the Maximum Amount to be Financed, and MAC shall effect such
modifications in such a manner that will meet the requirements of applicable
law.

 

b.             Mesaba
Pay Additional Costs

 

If Mesaba agrees to pay all design and construction Project Costs
exceeding the Maximum Amount to be Financed, MAC will proceed with the award of
the applicable contract(s) and Mesaba shall pay to MAC an amount equal to the
total costs exceeding the Maximum Amount to be Financed.  Such amount shall be paid by Mesaba to MAC
prior to MAC executing the contract(s). MAC shall deposit such amount in the
Construction Fund and such excess costs shall not be considered part of the
Project Costs to be financed by MAC.

 

Mesaba’s not to exceed costs identified in this Section, shall be
comprised of the following:

 

15

 

(i)            Lowest Responsible Bid for the project
construction as outlined on the bid documents and specifications.  The lowest Responsible Bid for the project
construction shall be the general contract amount, excluding any contingencies,
for the project construction as specified in the Plans and Specifications bid
documents.

 

Mesaba shall not be responsible and shall not pay for any additional
construction cost in excess of this amount with the exception as follows:
Mesaba may initiate and approve, in writing, additions to the scope of
work.  Such approval may add to or
reduce the construction cost and shall be subject to the provisions of the
contract.

 

Mesaba will also approve additions to the general contract amount for
fair and reasonable costs associated with design omissions.  Fair and reasonable amounts shall be
established at the option of Mesaba, via a proposal for the work submitted to
Mesaba, a bid amount for the work, or Mesaba may approve the work subject to a
cost adjustment that is determined by construction unit costs and audit of the
work performance by Mesaba’s representative

 

(i)            Architectural and engineering fees necessary for
the design and administration of the bid documents and construction
coordination and administration.  Mesaba
will pay fair and reasonable architectural and engineering fees and construction
coordination fees in an amount not-to-exceed $799,500, for the design, design
services, and construction coordination for the Mesaba Project.  Such fee amounts are shown on Exhibit G.

 

(ii)           Any additions and/or deletions to the project scope of work that may be
requested and approved in writing by Mesaba’s assigned representative.

 

3.             Approvals

 

No construction shall occur until all necessary
approvals are received from the FAA and the Environmental Quality Board (EQB),
including but not limited to shadow and airspace studies.  No construction shall commence until Mesaba
has approved in writing the final Plans and Specifications for the Mesaba
Project.  Such consent not to be
unreasonably withheld.

 

16

 

7

4.             Construction

 

MAC will be responsible for design and construction of the Mesaba
Project as noted in the Plans and Specifications to ensure that integration
with surrounding facilities is maintained. 
MAC will be responsible for the design and construction of the utility
corridor and bringing the necessary utilities to the Mesaba Project.  It is understood and agreed that
representatives of Mesaba shall have full inspection rights during
construction.

 

5.             Warranties

 

MAC will ensure that all transferable
warranties will transfer to the benefit of Mesaba or its successors or
assigns.  If the warranties cannot be
transferred, MAC will cooperate with Mesaba or its successors or assigns to
satisfy warranty claims.

 

C.            Construction
Fund

 

MAC will create and maintain a special bookkeeping
account to be designated on its books as the “Project construction fund” (the
“Construction Fund”), in which it will record all receipts and disbursements of
funds used to pay costs of the development of the Mesaba Project, as follows:

 

1.             Receipts

 

The receipts to be
credited to the Construction Fund shall be:

 

a.             Such sums as Mesaba
is required by the provisions hereof or may determine to apply toward the
development cost; and

 

b.             Any sums recovered by
MAC incident to the payment of the development costs and the construction of
the Mesaba Project and incidental work, including without limitation,
penalties, liquidated damages, rebates and insurance proceeds; and

 

c.             Any sums in addition
to those specified in subparagraphs (a) and (b) above required to fund the
Mesaba Project which sums shall be provided by MAC as needed, not to exceed the
Maximum Amount to be Financed by MAC as stated in Section 7.D..

 

2.             Project Costs

 

The expenses to be
charged to and paid from the Construction Fund shall make up the Project Costs
and shall include:

 

17

 

a.             The cost of all
planning fees, engineering and design fees, construction
management/coordination fees, fees for environmental studies and testing,
inspection fees levied by appropriate agencies, interest during construction,
financing costs (i.e. capitalized interest, costs of issuance, and funding of
mandatory reserves with bond proceeds), the costs associated with installing a
new hangar fire suppression system, and all other funds that are expended
directly on or toward the construction, purchase, installation and completion
of the Mesaba Project; and

 

b.             The reasonable cost
of all fiscal, legal and other professional service and all printing and
publications incurred by MAC, including traveling expenses, if any reasonable,
necessary and incidental to the financing or construction of the Mesaba
Project; and

 

c.             Interest on sums, if
any, at an imputed interest rate of 6.4440% per annum advanced by MAC from its
other funds for any of the foregoing purposes, from the respective dates of any
such advances to the date of repayment to be computed at the net average
interest rate on all MAC bonds outstanding; and

 

d.             Costs associated with
changes, modifications, additions or improvements prior to and during the
construction of the Mesaba Project; and

 

e.             All
other costs incurred by MAC and approved by Mesaba, which, in accordance with
generally accepted accounting practice, are capital expenditures related to the
completion of the Mesaba Project.

 

D.            Maximum Amount to be Financed

 

The amount of financing provided by MAC to finance
construction of the Mesaba Project shall not exceed $10,736,570 (“Maximum Amount
to be Financed”).  The Mesaba Project’s
elements and costs are as set out in the attached Exhibit C.  If the cost of the Mesaba Project, as
modified by MAC’s Project Change Management Policy and as approved by Mesaba in
writing at any time exceeds such amount, the provisions of Section 7.B.2 above
will apply.

 

E.             Finishes and Equipment Provided by
Mesaba

 

Mesaba, at its sole cost and expense, will install all
interior finishes and equipment necessary for its aircraft maintenance and
storage related activities, except as stated on Exhibit B.  Mesaba will have access to the Leased
Premises

 

18

 

during the construction period to the extent necessary
to complete such installation in a timely manner.  During such access, Mesaba agrees to: (1) use its best efforts to
not disrupt construction by MAC or other projects in the vicinity, and (2)
arrange for its own construction power and other required utilities or
participate in its proportionate share of such utility costs.

 

8.             CONSENTS, APPROVALS, AND NOTICES

 

A.            Consent

 

Whenever in this Agreement the
consent or approval of MAC or Mesaba is required, such consent or approval
shall mean the consent or approval of the Executive Director on behalf of MAC
and a representative designated by Mesaba in writing on behalf of Mesaba.

 

B.            Notice

 

All notices required by this Agreement shall be in writing and shall be
given by registered or certified mail by depositing the same in the U.S. mail
in the continental United States, postage prepaid, return receipt requested, or
by personal or courier delivery.  Either
party shall have the right, by giving written notice to the other, to change
the address at which its notices are to be received.  Notice shall be given to:

 

	
  1)

  	
   

  	
  MAC:

  	
   

  	
  Director
  – Commercial Management and Airline Affairs

  Metropolitan Airports Commission

  6040 28th Avenue South

  Minneapolis, MN  55450

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2)

  	
   

  	
  Mesaba:

  	
   

  	
  Mesaba
  Aviation, Inc.

  7501 – 26th Avenue South

  Minneapolis, MN 55450

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3)

  	
   

  	
  If notice is given in another
  manner or place, it shall also be given at the place and in the manner
  specified above.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4)

  	
   

  	
  The effective date of such
  notice, consent, or approval shall be the date of the receipt as shown by the
  U.S. Postal Service Return Receipt or the courier receipt, or the date
  personal delivery is certified, unless provided otherwise in this Agreement.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5)

  	
   

  	
  MAC
  and/or Mesaba shall notify the other party in the event of a corporate name
  change.

  
							

 

19

 

ARTICLE II —
GENERAL TERMS AND CONDITIONS

 

9.             MAINTENANCE OF LEASED PREMISES  AND IMPROVEMENTS

 

A.            Maintenance by MAC and Mesaba

 

Mesaba will be
responsible for providing all maintenance of the Leased Premises as defined in Exhibit D and
Section 3E, except as otherwise provided in this Agreement.

 

MAC by its
authorized officers, employees, agents, contractors, subcontractors, or other
representatives, will have the right (at such times as may be reasonable under
the circumstances and with as little interruption of Mesaba’s operation as is
reasonably practicable) to enter the Leased Premises for the following
purposes:

 

1)             To inspect such space
to determine whether Mesaba has complied and is currently in compliance with
the terms and conditions of the Lease.

 

2)             Upon reasonable notice to perform such
maintenance, cleaning, or repair as MAC’s Executive Director deems necessary,
if Mesaba fails to perform its obligations under the Agreement, and to recover
the reasonable cost of such maintenance, cleaning, or repair from Mesaba, which
will include a 15% administrative fee.

 

For items not specifically identified on Exhibit D,
Mesaba shall be responsible for maintenance, repair and replacement of the
following: 1) other systems and equipment serving the Leased Premises
exclusively; 2) alterations to the Premises whether installed by MAC or Mesaba;
3) improvements to the Premises whether installed by MAC or Mesaba; 4) all
other repairs, replacements, renewals and restorations, interior and exterior,
ordinary and extraordinary, foreseen and unforeseen; and 5) all other work
performed by or on behalf of Mesaba pursuant to the Agreement.

 

B.            Condition of Leased
Premises

 

Mesaba will ensure all
maintenance, repairs, replacement, and restorations of building components and
building systems are completed in compliance with manufacturer recommendations
and warranty specifications.  Upon
request by MAC, Mesaba will provide evidence substantiating that such
maintenance was performed by a qualified professional.

 

Mesaba at all times at its own
costs and expense shall take good care of the Leased Premises and the
buildings, structures or improvements located thereon

 

20

 

and shall keep and maintain them
in good order and repair and in a clean and neat condition.  Mesaba shall not suffer or permit any waste
or nuisance on the Leased Premises or anything thereon that shall interfere
with the rights of other airlines or MAC in connection with the use of portions
of the Airport not leased to Mesaba.

 

10.           BUILDING CONSTRUCTION, REPAIRS, SECURITY FOR
LIENS

 

Whenever and as often as Mesaba shall erect or shall
cause to have erected any building, structure or improvement, regardless of the
dollar value, on the Leased Premises and whenever and as often as it shall
repair, rebuild, alter, enlarge or extend any building, structure, or
improvement which may from time to time be on the Leased Premises, or cause the
same to be done, Mesaba shall in each instance satisfy the following
requirements.

 

a.             Procure from the
necessary authority all building permits that may be required,

 

b.             Do or cause the work
to be done in a good and professional manner and to be completed within a
reasonable time and in conformity with such building codes, zoning ordinances,
or regulations and orders of any lawful authority applicable to the Airport,

 

c.             Keep the Leased
Premises and every building, structure and improvement on the Leased Premises
free and clear from all liens for labor performed and materials furnished
therefor.  If notice of lien is filed,
Mesaba shall bond over or obtain a release within 30 days of notice of the
lien,

 

d.             Defend, at its own
cost and expense, each and every such lien asserted or filed against the land,
or any part thereof, or against any building, structure or improvement thereon,
and pay each and every judgment made or given against the land, building or any
part thereof,

 

e.             Indemnify and save
harmless MAC from each and every claim, demand, action, and cause of action
(including reasonable attorney’s fees), arising out of or in connection with
any act or omission of Mesaba or of any agent, employee, or contractor of
Mesaba in or about the premises caused by the removal, erection, alteration,
enlargement or extension of any building, structure or improvement on the
Leased Premises, arising out of or connected with the assertion or filing of
any such  lien on the land or against
any building, structure or improvements thereon,

 

f.              Comply with the
current version, at the time of design and construction, of the Airport
Facility Guidelines for Minneapolis-St. Paul International Airport and MAC
Ordinance 94 (MSP Building Code Ordinance), as amended or changed, and

 

g.             Provide MAC an
estimate from a responsible contractor showing the expense of completing the
work, and unless waived by MAC, a bond or other security in amount, form and
with surety satisfactory to MAC, conditioned for the commencement and
completion and payment for such work, and against loss or

 

21

 

damage by reason of mechanics liens, and an insurance
policy from an insurance company approved by MAC protecting MAC from all
liability to persons or property for damages arising out of the contemplated
work. MAC shall within thirty (30) days after receipt thereof approve or disapprove
the Plans and Specifications and notify Mesaba with respect to the bond or
security required, provided that such approval shall not be unreasonably
withheld.

 

11.           INDEMNIFICATION AND INSURANCE

 

A.            Indemnification

 

Mesaba agrees to indemnify and hold harmless MAC for
loss, damage or injury from act or omission of Mesaba, its employees, agents,
contractors, subcontractors, subsidiaries, licensees, sublessees, and invitees
while on MAC property, including the Leased Premises, to the person or property
of the parties hereto and their employees, and to the person or property of any
other person or corporation, and MAC shall not be liable to any extent for, nor
will Mesaba make any claim against MAC for or on account of any injury, loss or
damage to the Leased Premises, the buildings or structures thereon, the
personal property facilities located therein, or to any person or property at
anytime on the Leased Premises whether occasioned by fire, water, smoke, steam,
gas, electricity, or other agency or instrumentality which may come or be on
the Leased Premises or occasioned by any other cause, unless any such injury or
damage shall result from the sole negligence or willful misconduct of MAC.

 

B.            Property Insurance
on Buildings

 

Mesaba will keep all buildings on the Leased Premises
continuously insured, during the term of this Agreement, including fire and all
risk coverage, for an aggregate amount equal to 100 percent of their
replacement value, and any money received from the insurance shall be divided between
Mesaba and MAC as their interests may appear (the amount owed to MAC, if any,
shall be based upon the unamortized principal amount of funds contributed by
MAC to fund capital improvements).  Such
policies shall be in a form reasonably satisfactory to MAC and name MAC as a
loss payee as its interest may appear. 
Mesaba shall keep evidence of such insurance on file with MAC at all
times.

 

In the event of damage or destruction to any buildings
or improvements on the Leased Premises, all insurance proceeds shall be used to
repair, rebuild and/or restore the buildings and improvements on the Leased
Premises unless otherwise mutually agreed in writing by both MAC and Mesaba.

 

C.            Insurance

 

Mesaba shall procure and maintain insurance for
protection from claims against it under worker’s compensation acts, claims for
damages because of bodily injury

 

22

 

including personal injury, sickness or disease or
death of any and all employees or of any person other that such employees, and
from claims for damages against it because of injury to or destruction of
property including loss of use resulting therefrom.

 

Mesaba shall carry premises operations liability
insurance and aircraft liability insurance on each aircraft engaged in air
carrier activities which is owned and / or operated by Mesaba at the
Airport.  All such insurance shall be in
at least the following amount, shall include MAC as an additional insured and
shall be in form reasonably acceptable to MAC. 
Mesaba shall keep evidence of such insurance on file with MAC at all
times.  MAC reserves the right and
Mesaba agrees to revisions upwards or downwards in the minimum insurance
requirements hereinafter set forth either by field rule or ordinance of MAC,
provided, however, that any such revision shall be nondiscriminatory.

 

1)             Commercial General
Liability Policy for Bodily injury and Property Damage - $100 million.

 

2)             Owned and Non-Owned
Aircraft Bodily Injury and Property Damage Liability including Passenger Liability
- $100 million.

 

3)             Workers’ Compensation
to statutory limits and employer’s liability to at least $100,000 bodily injury
by accident, $500,000 policy limit each accident bodily injury by disease,
$100,000 each employee.

 

12.           ENVIRONMENTAL

 

A.            Definitions

 

“Environmentally Regulated Substances” means any
elements, compounds, pollutants, contaminants, or toxic or Hazardous
Substances, material or wastes, or any mixture thereof, regulated pursuant to
any Environmental Law, including but not limited to products that might
otherwise be considered of commercial value, such as asbestos, polychlorinated
biphenyls, petroleum products and byproducts, glycol and other materials used
in de-icing operations.

 

“Environmental Law (or Laws)” means any case law,
statute, rule, regulation, law, ordinance or code, whether local, state or
federal, that regulates, creates standards for or imposes liability or
standards of conduct concerning any element, compound, pollutant, contaminant,
or toxic or Hazardous Substance, material or waste, or any mixture thereof,
including but not limited to products that might otherwise be considered of
commercial value, such as asbestos, polychlorinated biphenyls and petroleum
products and byproducts. Such laws shall include, but not be limited to, the
National Environmental Policy Act (“NEPA”) 42 U.S.C. Section 4321 et seq., the
Comprehensive Environmental Response, Compensation and Liability Act
(“CERCLA”), 42 U.S.C. Section 9601 et seq., the Resource Conservation and
Recovery Act (“RCRA”), 42 U.S.C. Section 6901 et seq., the Federal Water
Pollution Control Act (“FWPCA”), 33 U.S.C. Section 1251

 

23

 

et seq. the Federal Clean Air Act (“FCAA”), 42 U.S.C.
Section 7401 et seq., the Toxic Substances Control Act (“TSCA”), 15 U.S.C.
Section 2601 et seq., the Federal Insecticide, Fungicide and Rodenticide Act
(“FIFRA”), 7 U.S.C. Section 136 et seq., and any amendments thereto, as are now
or at anytime hereafter may be in effect, as well as their state and local
counterparts, including but not limited to the Minnesota Environmental Response
and Liability Act (“MERLA”), Minn. Stat. Section 115B the Minnesota Petroleum
Tank Release Clean Up Act (“MPTRCA”) Minn. Stat. Section 115C, and the
Minnesota Environmental Rights Act (“MERA”), Minn. Stat. Section 116B.

 

“Hazardous Substances” shall be interpreted in the
broadest sense to include any and all substances, materials, wastes,
pollutants, oils or governmental regulated substances or contaminants as
defined or designated as hazardous, toxic, radioactive, dangerous, or any other
similar term in or under any of the Environmental Laws, including but not
limited to asbestos and asbestos containing materials, petroleum products
including crude oil or any fraction thereof, gasoline, aviation fuel, jet fuel,
diesel fuel, lubricating oils and solvents, urea formaldehyde, flammable
explosives, PCBs, radioactive materials or waste, or any other substance that,
because of its quantity, concentration, physical, chemical, or infectious
characteristics may cause or threaten a present or potential hazard to human
health or the environment when improperly generated, used, stored, handled,
treated, discharged, distributed, disposed, or released. Hazardous Substances
shall also mean any hazardous materials, hazardous wastes, toxic substances, or
regulated substances under any Environmental Laws.

 

B.            Indemnification

 

In addition to the general indemnification provided by
Mesaba in this Agreement, Mesaba indemnifies and agrees to defend, protect, and
hold harmless, MAC, Commission members, its officers, employees or agents, and
their respective successors, as well as successors in title to any interest in
the Leased Premises (“Indemnitees”), from and against any and all losses, liabilities,
fines, damages, injuries, penalties, response costs, or claims of any and every
kind whatsoever paid, incurred or asserted against, or threatened to be
asserted against, any Indemnitee (“Environmental Claims”), including, without
limitation:  (i) all consequential
damages; (ii) the costs of any investigation, study, removal, response or
remedial action, as well as the preparation and implementation of any
monitoring, closure or other required plan or response action; and (iii) all
reasonable costs and expenses incurred by any Indemnitee in connection
therewith, including but not limited to, reasonable fees for attorney and
consultant services; which Environmental Claims arise out of or relate to (A)
the presence on, in or under, or the escape, seepage, leakage, spillage,
discharge, deposit, disposal, emission or release of Environmentally Regulated
Substances on, in or from the Leased Premises not in full accordance with
Environmental Laws arising out of Mesaba’s past or present operations on the Leased
Premises, or (B) any material and intentional inaccuracy, incompleteness,
breach or misrepresentation under Parts C and D hereof, provided, however,
Mesaba shall not be required to

 

24

 

indemnify against any Environmental Claims hereunder
to the extent such Environmental Claims arise out of, directly or indirectly,
the negligence, willful misconduct, or recklessness of any Indemnitee or any
third-party unrelated to Mesaba.

 

If any Environmental Claim or action shall be brought
against any Indemnitee hereunder, then after such Indemnitee notifies Mesaba
thereof, Mesaba shall be entitled to participate therein as a party, and shall
assume the defense thereof at the expense of Mesaba with counsel reasonably satisfactory
to such Indemnitee and shall be entitled to settle and compromise any such
claim or action; provided, however, that such Indemnitee may elect to be
represented by separate counsel, at such Indemnitee’s sole expense, and if such
Indemnitee so elects, such settlement or compromise shall be effected only with
the consent of such Indemnitee.  This
indemnification and Mesaba’s obligations hereunder, shall survive after the
cancellation, termination or expiration of the term of this Agreement.

 

C.            Compliance with Environmental Laws

 

Mesaba shall keep and maintain and shall conduct its
operations on the Leased Premises in full compliance with all applicable
Environmental Laws. Mesaba shall further ensure that its employees, agents,
contractors and subcontractors occupying or present on the Leased Premises and
any other invitees or persons conducting any activities on the Leased Premises
under the control of Mesaba comply with all applicable Environmental Laws. By
virtue of its operational control of the Leased Premises, Mesaba shall be fully
responsible for obtaining all necessary permits or other approvals under the
Environmental Laws and shall have full responsibility for signing and
submitting any necessary applications, forms, documentation, notifications or
certifications relating thereto. Upon request of MAC, Mesaba shall provide
copies to MAC of any such applications, forms, documents, notifications or
certifications.

 

D.            Claims Relating to Environmentally
Regulated Substances

 

Mesaba represents and warrants that to the best of
Mesaba’s actual knowledge, except as previously disclosed to the MAC or any
applicable regulatory body as required, (i) no enforcement, investigation,
cleanup, removal, remedial or response action or other governmental or regulatory
actions have been asserted against Mesaba with respect to the Leased Premises,
pursuant to any Environmental Laws or relating to Environmentally Regulated
Substances; (ii) no violation or noncompliance with Environmental Laws has
occurred with respect to Mesaba’s past or present operations conducted on the
Leased Premises; (iii) no claims have been made or been threatened by any third
party against Mesaba with respect to the Leased Premises relating to
Environmental Laws or Environmentally Regulated Substances, including by any
governmental entity, agency or representative (collectively “Governmental
Entity”).

 

25

 

E.             Testing and
Reports

 

Mesaba shall provide to MAC within ten (10) days of
request, a copy of any notice regarding violation of any Environmental Law
arising out of Mesaba’s past or present operations on the Leased Premises, a
copy of any inquiry regarding environmental matters by any Governmental Entity,
a copy of any reports required by the Environmental Laws regarding violation of
any Environmental Law arising out of Mesaba’s past or present operation of the
Leased Premises, or a copy of any notice of the emission or release of
Environmentally Regulated Substances in violation of any Environmental Law
arising out of Mesaba’s past or present operations on the Leased Premises. If
MAC has a reasonable basis to believe that Mesaba is not meeting the
obligations of subsection C. of this Section, MAC may by notice require Mesaba
to conduct a reasonable review of its records for such documents as MAC
reasonably believes have not been provided and submit any such documents as
required.

 

F.             Notification

 

Mesaba shall notify MAC in writing within fifteen (15)
business days of any matter that Mesaba obtains knowledge of that may give rise
to an indemnified claim under subsection B. of this Section or that constitutes
any emission or release or any threatened emission or release of any
Environmentally Regulated Substance in, on, under or about the Leased Premises
arising out of Mesaba’s past or present operations which is or may be in
violation of the Environmental Laws.

 

G.            Right to
Investigate

 

Subject to subsections E. and H. of this Section, upon
reasonable notice to Mesaba, MAC shall have the right, but not the obligation
or duty, at anytime from and after the date of this Agreement, to investigate,
study and test the Leased Premises (at MAC’s own expense, unless otherwise
provided herein) and without unreasonably interfering with Mesaba’s operation or
the Leased Premises, during normal business hours, except under emergency
circumstances, to determine whether Environmentally Regulated Substances are
located in, on or under the Leased Premises, or were emitted or released
therefrom, which are not in compliance with Environmental Laws, provided that
such investigation, study and testing shall not unreasonably interfere with
Mesaba’s operations on and use of the Leased Premises.  Mesaba shall be entitled to have a representative
present during such investigation.

 

H.            Right to Take
Action

 

MAC shall have the right, but not the duty or
obligation, to take whatever reasonable action it deems appropriate to protect
the Leased Premises from any material impairment to its value resulting from
any escape, seepage, leakage, spillage, discharge, deposit, disposal, emission
or release of Environmentally Regulated Substances from the Leased Premises
which is not in full accordance with any Environmental Law and arises out of
Mesaba’s past or present

 

26

 

operations during the term of this Agreement. MAC
shall notify Mesaba of its intention to take such action in writing thirty (30)
days before proceeding under this subsection . 
Within that thirty (30) day period, Mesaba shall have the opportunity to
take whatever reasonable action is deemed appropriate by MAC or provide MAC a
binding commitment to do so within a reasonable time. If Mesaba does not take
such action or provide a binding commitment within the thirty (30) day period,
MAC may proceed under the terms of this subsection H of this Section.  All costs associated with any action by the
MAC in connection with this provision, including but not limited to reasonable
attorneys’ fees, shall be subject to subsection B. of this Section.

 

13.           TANKS

 

Mesaba, or its assignee, accepts title and ownership
to all tanks installed as part of the Mesaba Project or at anytime during the
term of this Agreement or during any period of holding over. Underground tanks
shall be prohibited and any tanks shall not be installed without written
approval of MAC.

 

Both Mesaba, or its assignee, and MAC acknowledge and
agree that any tanks located on the Leased Premises during the term of this
Agreement continue to remain under the ownership and control of Mesaba until
such tanks are removed from the Leased Premises by Mesaba.  At the expiration or termination of this
Agreement, Mesaba is required to remove all tanks from the Leased Premises and
conduct a Phase I environmental review or other studies to adequately
demonstrate that there was no environmental contamination to the Leased
Premises.

 

14.           UTILITIES

 

Mesaba agrees to promptly pay all fees in addition to
its rent for all water, sewer, gas, electric, trash removal, and other service
facilities supplied to or consumed by Mesaba relative to Mesaba’s operations on
the Leased Premises.  Utilities will be
metered separately when reasonably possible, otherwise Mesaba shall pay its
prorated share of utilities.

 

15.           MAC TO OPERATE AIRPORTS

 

MAC shall properly maintain, operate, and manage the
Airport at all times and in a safe manner not dissimilar to generally accepted
good practices in the State of Minnesota for airports of similar size and
character.  If for any reason beyond the
control of MAC (including but not limited to war, strikes, riots, and civil
commotion), MAC shall fail to properly maintain, operate and manage the
Airport, such failure shall not operate as a breach of this Agreement or render
MAC liable in damages.  In such case
Mesaba will be able to cancel this Agreement upon one hundred eighty (180) days
written notice and rent will abate during the time of non-use.

 

27

 

16.           PUBLIC DATA

 

The parties agree that this Agreement is subject to
the Minnesota Government Data Practices Act.

 

17.           FUTURE LEASES

 

MAC shall be free in its discretion to rent any other
space or concessions on the Airport to any other person, persons, or
corporations, and for any purpose that it desires, subject, however, to the
provisions of Minn. Stat. § 473.651.

 

18.           SIGNS

 

Mesaba shall be allowed to erect suitable advertising
signs on the Leased Premises to advertise its business, subject to the prior
written approval of MAC as to the form, type, size, location and method of
installation so as to be consistent with the current version at time of design
and installation of the following: 1) MAC’s Exterior Signage and Promotional
Activities Policy, 2) Airport Facility Guidelines for Minneapolis-St. Paul
International Airport, and 3) MAC Ordinance 94 (MSP Building Code Ordinance) as
amended or changed.

 

19.           BANKRUPTCY

 

Section 27.D. shall not apply to any valid assumption
or assignment of this Agreement by a trustee as a debtor in possession under
Section 365 of the Bankruptcy Code of 1978, as amended.  However, adequate assurance of future
performance as provided by Section 365 of the Bankruptcy Code of 1978, as
amended, for the purposes of the assumption or assignment of this Agreement
shall include, but shall not be limited to:

 

A.            Adequate assurance of
the reliability of the source of all of the rentals, fees, charges, and other
consideration due under this Agreement after the assumption or assignment of
this Agreement.

 

B.            Adequate assurance
that neither the assumption or assignment of this Agreement nor the exercise of
rights hereunder by the party assigning or the assignee will breach any
provision in any other agreement to which MAC is bound, any federal or state
statute, rule or regulation affecting MAC or the Airport, or any rule,
regulation, or ordinance made by MAC.

 

C.            Adequate assurance
that the assumption or assignment of this Agreement will not disrupt the
operation of the Airport.

 

D.            Adequate assurance of
future performance under this Agreement as may be requested by MAC, including
the procurement of a bond from a financially reputable surety covering any
costs or damages incurred by MAC in the event that MAC, within five (5) years
after assumption or assignment of this Agreement exercises its right to relet the
Leased Premises.

 

28

 

E.             Adequate assurance
that the Leased Premises will be used to provide the services permitted by this
Agreement.

 

20.           MAC’S RIGHTS UPON DEFAULT

 

A.            Events of Default

 

The
occurrence and continuation of any one or more of the following shall
constitute an event of default:

 

1)             Mesaba
fails to make payment in full when due of any rents, fees, charges or any other
amount payable hereunder within 5 business days after notice thereof from MAC;

 

2)             Mesaba
shall make or permit any unauthorized assignment or transfer of this Agreement,
or any interest herein, or of the right to use or possession of the Premises,
or any part thereof;

 

3)             Any
insurance required by the terms hereof shall at any time not be in full force
or effect;

 

4)             Failure
of Mesaba to perform, comply with, or observe, in any material respect, any
other term, condition or covenant of this Agreement not identified elsewhere in
Section A of this Article within thirty (30) days after receipt of notice from
MAC of such failure, or for such longer period of time as may be reasonably
necessary to cure the event of default, but only for such longer period if: (a)
Mesaba is reasonably capable of curing the event of default and (b) Mesaba
promptly and continuously undertakes to cure and diligently pursues the curing
of the event of default at all times until such event of default is cured;

 

5)             Any
representation or warranty of a material fact made by Mesaba herein or in any
certificate or statement furnished to the MAC pursuant to or in connection with
this Agreement proves untrue in any material respect as of the date of issuance
or making thereof;

 

6)             (a)
Mesaba shall commence any case, proceeding or other action (i) under any
existing or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an
order for relief entered with respect to Mesaba, or seeking to adjudicate
Mesaba as bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, liquidation, dissolution, composition or other relief with respect
to Mesaba or any of its debts, or (ii) seeking appointment of a receiver,
trustee, custodian or other similar official for Mesaba or for all or any
substantial part of any of its property; or (b) Mesaba shall make a general
assignment for the benefit of its creditors; or (c) there shall be commenced
against Mesaba any case, proceeding or

 

29

 

other action of nature referred to in clause (a) above
or seeking issuance of a warrant of attachment, execution, distraint or similar
process against all or any substantial part of any of its property, which case,
proceeding or other action results in the entry of an order for relief or
remains undismissed, unvacated, undischarged and unbonded for a period of sixty
(60) days; or (d) Mesaba shall take any action consenting to or approving of
any of the acts set forth in clause (a) or (b) above; or (e) Mesaba shall
generally not, or shall be unable to, pay its debts as they become due or shall
admit in writing its inability generally to pay its debts as they become due;

 

7)             Any
money judgment, writ or warrant of attachment or similar process, or any
combination thereof, involving an amount in excess of $25,000,000 shall be
entered or filed against Mesaba or any of its assets and shall remain
undischarged, unvacated, unbonded and unstayed for a period of sixty (60) days
or in any event later than five (5) days prior to the date of any proposed sale
or execution thereunder;

 

8)             Any act occurs that deprives Mesaba permanently
of any material right, power or privilege necessary for the conduct and
operation of its Air Transportation Business; or

 

9)             If Mesaba fails to use its exclusive use space
for a period of ninety (90) consecutive days, except when such cessation or
abandonment is due to the default of MAC or the circumstances beyond the
control of Mesaba.

 

B.            Remedies

 

If an event of default
occurs hereunder, MAC, at its option, may at any time thereafter, do one or
more of the following as MAC in its sole discretion shall elect, to the extent
permitted by, and subject to compliance with any mandatory requirements of,
applicable law then in effect:

 

1)             Declare all rents,
fees and other charges payable hereunder, whether currently or hereafter
accruing, to be immediately due and payable;

 

2)             Proceed
by appropriate court action or actions, either at law or in equity, to enforce
performance by Mesaba of the applicable covenants and terms of this Agreement
or to recover damages for the breach thereof;

 

3)             Enter and take possession of the Premises and/or
the rights of Mesaba hereunder without such re-entry terminating Mesaba’s
obligations for the full term hereof, which remedy shall be in addition to all
other remedies at law or in equity, including action for forcible entry and
lawful detainer, for ejectment or for injunction;

 

4)             Terminate
all rights of Mesaba under this Agreement (without terminating the continuing
obligation of Mesaba to fulfill its past and future obligation hereunder) and
in such case Mesaba further agrees to indemnify and hold harmless MAC against
all loss in rents, fees, and charges and other

 

30

 

damages which MAC shall incur by reason of such
termination, including, without limitation, costs of restoring and repairing
the Leased Premises and putting the same in rentable condition, costs of
reletting the Leased Premises to another airline (including without limitation
Mesaba improvement costs and related fees), loss or diminution of rents and
other damage which MAC incurs by reason of such termination, and all reasonable
attorneys’ fees and expenses incurred in enforcing the terms of this Agreement;

 

5)             In
the event of any default hereunder, Mesaba shall reimburse MAC for all
reasonable fees and costs incurred by MAC, including reasonable attorneys’
fees, relating to such default and/or the enforcement of MAC’s rights
hereunder; and

 

6)             Apply
any of the reserve requirement granted by Mesaba to any unpaid obligations of
Mesaba hereunder.

 

Any waiver or any breach of covenants herein contained
to be kept and performed by Mesaba shall not be deemed or considered a
continuing waiver and shall not operate to bar or prevent MAC from declaring a
forfeiture for any succeeding breach either of the same condition or covenant
or otherwise.

 

21.           TERMINATION

 

MAC may terminate the
Agreement on twenty-four months advance written notice if, in its sole
discretion, it determines that the Leased Premises or any portions thereof are
needed to permit the development of the 2010 Plan. The termination would be
without recourse by Mesaba and will relieve Mesaba from accruing further
financial obligation under this Agreement beyond such date Mesaba vacates the
Leased Premises.  The notice will also
constitute a twenty-four month period for Mesaba’s right to remove the personal
property on the Leased Premises or any improvements constructed or installed on
the Leased Premises that were not financed by MAC as part of this Project.  In the event MAC terminates the Agreement,
MAC will pay to Mesaba within 30 days after the date Mesaba surrenders the
Leased Premises to MAC in the condition required pursuant to the Agreement, the
Leasehold Improvement Termination Amount in effect on the effective date of
such termination with respect to each element or portion of the leasehold
improvements.

 

The Leasehold Improvement
Termination Amount will be applicable to improvements constructed on the Leased
Premises and paid for by Mesaba.  Such
Leasehold Improvement Termination Amount will be the unamortized costs of each
improvement, assuming the full amount of the initial capital cost (not
including cost of personal property or Trade Fixtures that Mesaba removes or is
eligible to remove from the Leased Premises) of each improvement as if fully
amortized on a straight line basis (at zero percent interest) over a period
from such time as the improvement was completed to the natural expiration of the
Agreement.  MAC must approve any other
amortization period in writing.  This
section constitutes all compensation to which Mesaba is entitled in the event
of such termination.  Mesaba is entitled
to no compensation from MAC if Mesaba voluntarily vacates the Leased Premises
during the term of the Agreement.

 

31

 

22.           CONDEMNATION

 

If it is determined to be
in the public interest, MAC will have the power to condemn the property
interests created by the Agreement even though it is itself a party to the
Agreement; provided that this provision will not be construed as a waiver by
Mesaba of its right to contest the validity of any such condemnation action.

 

Upon taking by MAC and without limitation to the
preceding paragraph, (a) in the event of a taking by MAC of the Agreement or
any portion of the Leased Premises, the improvements or other property of
Mesaba, Mesaba’s award shall be limited solely and exclusively to Mesaba’s
relocation expenses and those relating to a permanent taking of Mesaba’s
personal property and value of leasehold improvement made by Mesaba, and (b) in
no event shall Mesaba be entitled to any award relating to the value of any
unexpired portion of the term of this Agreement, the improvements constructed
by MAC (including, without limitation, the Initial leasehold improvements) any
fixture located on or about the Property, or any loss, damage or diminution in
Mesaba’s business.

 

23.           QUIET ENJOYMENT

 

MAC covenants and agrees with Mesaba that upon
Mesaba’s paying the rent and keeping, paying and performing all the terms of
this Agreement on Mesaba’s part, Mesaba shall have ingress and egress to the
Leased Premises, and may, subject to the terms of this Agreement, peaceably and
quietly have and hold the Leased Premises for the term of this Agreement.

 

MAC shall have the right to enter the Leased Premises
at anytime, to inspect the same for operations conducted from the Leased
Premises, and for the purpose of making repairs or improvements to any adjoining
Leased Premises or to the Airport and to install through or upon the Leased
Premises, such pipes, wires and appurtenances as it may deem necessary or
useful to the operation of the Airport, but the making of such repairs,
improvements or installations shall be done in such a manner as will not
interfere materially with the use and enjoyment of the Leased Premises by
Mesaba, except in cases of emergency and shall be at MAC’s expense except as
provided herein.

 

24.           THE RIGHT TO AUDIT

 

MAC shall retain the right to audit data, financial
books and records, at any reasonable time upon notice, directly connected with
or related to operations taking place on or about the Leased Premises.

 

25.           NONDISCRIMINATION

 

Mesaba for itself, its heirs, personal representatives,
successors in interest, and assigns, as a part of the consideration hereof,
does hereby covenant and agree as a covenant running with the land that in the
event facilities are constructed, maintained, or otherwise operated on the
property described in this Agreement for a purpose for which a Department of
Transportation program or activity is extended or for another purpose

 

32

 

involving the provision of similar services or
benefits, Mesaba shall maintain and operate such facilities and services in
compliance with all other requirements imposed pursuant to 49 CFR Part 21,
Nondiscrimination in Federally Assisted Programs of the Department of
Transportation, and as the Regulations may be amended.

 

Mesaba for itself, its personal representatives,
successors in interest, and assigns, as a part of the consideration hereof,
does hereby covenant and agree as a covenant running with the land that (1) no
person on the grounds of race, color, or national origin shall be excluded from
participation in, denied the benefits of, or be otherwise subjected to
discrimination in the use of the facilities thereon, (2) that in the
construction of any improvements on, over or under such land and the furnishing
of services thereon, no person on the grounds of race, color, or national
origin shall be excluded from participation in, denied the benefits of, or
otherwise be subjected to discrimination, and (3) that Mesaba 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, and as the Regulations may be amended.

 

26.           CIVIL RIGHTS

 

Mesaba assures that it will comply with applicable
statutes, Executive Orders and such reasonable rules as are promulgated to
assure that no person shall, on the grounds of race, creed, color, national
origin, sex, age, or handicap be excluded from participating in any activity
conducted with or benefiting from federal assistance.  This provision obligates Mesaba or its transferee for the period
during which federal assistance is extended to the Airport program, except
where federal assistance is to provide, or is in the form of personal property
or real property or interest therein or structures or improvements
thereon.  In these cases, the provision
obligates the party or any transferee for the longer of the following
periods:   (1) 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 or benefits; or (2) the period during which the Airport
sponsor or any transferee retains ownership or possession of the property.  In the case of contractors, this provision
binds the contractors from the bid solicitation period through the completion
of the contract.

 

27.           GENERAL PROVISIONS

 

A.            Memorandum of Agreement

 

At the request of either party, the parties shall
execute a Memorandum of this Agreement for recording purposes.

 

B.            Waiver of Breach

 

The waiver by MAC or Mesaba of any breach of any term,
covenant or condition of this Agreement shall not be deemed to be a waiver of
any subsequent breach of the same or any other term, covenant or condition.

 

33

 

C.            Commitments to Federal or State Agencies

 

Nothing in this Agreement shall be construed to
prevent MAC from making such commitments as it desires to the Federal
Government or to the State of Minnesota in order to qualify for the expenditure
of Federal or State funds on the Airport.

 

D.            Sublease or Assignment

 

Mesaba may not assign any
of its rights under this Agreement without the prior consent of MAC, except
that Mesaba may assign any of its rights and obligations under this Agreement
to any of its respective Affiliates, including Northwest Airlines, Inc., and
its subsidiaries without the consent of MAC.

 

It will not be
unreasonable for MAC to disapprove or condition a sublease of the Leased
Premises if the proposed subleasee is not an Air Transportation Business, as
defined in the Airline Agreement with MAC.

 

In the event Mesaba
subleases or assigns the Leased Premises in accordance with the terms of this
Agreement, Mesaba will not charge, on a per square foot basis, more than 15%
above the per square foot cost being incurred by Mesaba.

 

E.             Taxes and Other Charges

 

Mesaba shall pay all real estate and personal property
taxes and assessments of any nature levied against Mesaba’s interest in the
Leased Premises or against any improvements made by Mesaba or equipment on the
Leased Premises, without deduction or set-off against the rent to be paid under
this Agreement.

 

F.             Headings

 

The headings in this Agreement are for convenience in
reference and are not intended to define or limit the scope of any provision of
this Agreement.

 

G.            Severability

 

If any part of this Agreement shall be held invalid,
this does not affect the validity of the remaining parts of this Agreement,
provided that such invalidity does not materially prejudice either MAC or
Mesaba under the remaining parts of this Agreement.

 

H.            Compliance With Laws

 

Mesaba shall comply with all applicable federal, state
and local laws, ordinances, resolutions, rules and regulations including those
of MAC relating to the Leased Premises and with respect to control of ground
and air traffic operations, de-icing operations, and the general use of the
Airport.

 

34

 

I.              Authority of MAC and Executive
Director

 

Whenever the term MAC or Commission appears in this
Agreement, including all parts thereof, it means the Metropolitan Airports
Commission, sometimes referred to as the Minneapolis-St. Paul Metropolitan
Airports Commission, and where this Agreement speaks of approval by or consent
of MAC or Commission, such approval or consent means action by the Executive
Director or a designated representative of MAC.

 

J.             Attorney’s Fees

 

In any action brought by either party for the
enforcement of any provisions of this Agreement, the party prevailing in said
action shall be entitled to recover reasonable attorney’s fees from the other
party.

 

K.            Minnesota
Law

 

This Agreement is governed by Minnesota Law.

 

L.             Entire Agreement

 

This Agreement supercedes all prior agreements between
the parties regarding the same premises on the Airport.  This Agreement may only be modified if done
in writing and executed by both parties.

 

Mesaba and MAC may also be party to an Airline
Agreement or other agreements regarding use of the Airport or airfield.  Should the provisions of this Agreement and
the Airline Agreement conflict, this Agreement governs with respect to the
Leased Premises; the Airline Agreement shall govern with respect to other parts
of the Airport or airfield.

 

35

 

In witness whereof, the parties have caused this Agreement to be
executed by their proper officer(s) or partner(s).

 

 

	
  Date: 
  September 17, 2003

  	
   

  	
  METROPOLITAN AIRPORTS COMMISSION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/  Gordon
  P. Wennerstrom

  	
   

  
	
   

  	
   

  	
  Gordon P. Wennerstrom

  Director, Commercial Management & Airline Affairs

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date: 
  September 17, 2003

  	
   

  	
  MESABA AVIATION, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/  Robert
  E. Weil

  	
   

  
	
   

  	
   

  	
   

  	
  Robert E. Weil

  Vice President & CFO

  
							

 

36

 

	
  STATE OF MINNESOTA

  	
  )

  
	
   

  	
  ) ss.

  
	
  COUNTY OF HENNEPIN

  	
  )

  

 

 

This instrument was
acknowledged before me on the
          day of
                       ,
2002, by Gordon P. Wennerstrom the Director of Commercial Management &
Airline Affairs of the Metropolitan Airports Commission.

 

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Notary Public

  	
   

  

 

 

	
  STATE OF

  	
  )

  
	
   

  	
  ) ss.

  
	
  COUNTY OF ____________

  	
  )

  

 

 

This instrument was acknowledged before me on the
           day of
                         ,
2002, by

 

 

Robert E. Weil, the Vice President & CFO of Mesaba Aviation, Inc.

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Notary Public

  	
   

  

 

37SPECTRUM
COMMERCE CENTER

 

LEASE

 

 

This
Lease is entered into as of April 25, 2003, between SPECTRUM INVESTMENT
GROUP, L.L.C., a Minnesota limited liability company (“Lessor”) and Mesaba
Aviation, Inc., a Minnesota corporation (“Tenant”).

 

1.             Definitions.  In
this Lease:

 

(a)           “BOMA” means Building Owners and Managers Association.

 

(b)           “Building” means that certain
office/warehouse building, parking ramp, and the surrounding land, driveways,
walkways and accessways owned and maintained by Lessor and known as Spectrum
Commerce Center, located on the Land in Eagan, Dakota County, Minnesota as set
forth on Exhibit A attached hereto.  The
Building as currently constructed contains 199,714 rentable square feet and
191,463 usable square feet.

 

(c)           “Casualty” means a fire, flood, explosion,
tornado, or other cause of damage to or destruction of the Building or
Premises.

 

(d)           “Certificate of Occupancy Date” shall mean the date when Lessor shall
have obtained a Certificate of Occupancy (temporary or permanent) from the City
of Eagan, Minnesota for the Premises permitting legal use of the Premises for
the purposes specified in the Lease; provided that if Lessor has obtained only
a temporary Certificate of Occupancy, Lessor shall remain obligated under the
Lease to obtain a permanent Certificate of Occupancy as promptly as reasonably
possible and in the interim to renew or extend the temporary Certificate of
Occupancy so that a Certificate of Occupancy is always in full force and
effect.  Tenant agrees to take all
necessary and reasonable actions to cooperate with Lessor in obtaining a
Certificate of Occupancy.

 

(e)           “Commencement Date” means:

 

January 1, 2004,
subject to extension as provided in Section 5 of this Lease.

 

(f)            “Common Areas” means any halls, lavatories,
loading facilities, driveways and grade level open lot parking areas, designed
for the nonexclusive use of the owner and occupants of the Building, and not
designed or intended for the exclusive use of a single tenant, as designated by
Lessor from time to time.

 

(g)           “Costs” means the monthly Tax Costs plus the
monthly Operating Costs.

 

 

(i)            “Operating Costs” means all costs of
managing, operating, maintaining and repairing the Property, including all
costs, expenditures, fees and charges for: (A) operation, maintenance and
repair of the Property (including maintenance, repair and replacement of glass,
and landscaping and maintenance of the roof covering or membrane); (B)
utilities and services (including telecommunications facilities and equipment,
recycling programs and trash removal), and associated supplies and materials;
(C) compensation (including employment taxes and fringe benefits) for persons
at or below the level of the building manager who perform duties in connection
with the operation, management, maintenance and repair of the Building, such
compensation to be appropriately allocated for persons who also perform duties
unrelated to the Building; (D) property (including coverage for earthquake and
flood if carried by Lessor), liability, rental income and other insurance
relating to the Property, and expenditures for deductible amounts paid under
such insurance; (E) licenses, permits and inspections; (F) complying with the
requirements of any law, statute, ordinance or governmental rule or regulation or
any orders pursuant thereto (collectively “Laws”);
(G) amortization of capital improvements required to comply with Laws, or which
are intended to reduce Operating Costs or improve the utility, efficiency or
capacity of any Building System, with interest on the unamortized balance a
rate equal to two hundred basis points over the Prime Rate, as published by The
Wall Street Journal, over such useful life as Lessor shall reasonably
determine; (H) property management fees in an amount equal to three percent “*”
of Base Rent and Costs payable to Lessor; (I) a reasonable allowance for
depreciation on machinery and equipment used to maintain the Property on other
personal property owned by Lessor in the Property (including window coverings
and carpeting in common areas); (J) the Building’s share of any shared or
common area maintenance fees and expenses (including costs and expenses of
operating, managing, owning and maintaining the surface parking lot and the
common areas of the Project); and (K) any other cost, expenditure fee or
charge, whether or not hereinbefore described, which in accordance with general
accepted property management practices would be considered an expenses of
managing, operating, maintaining and repairing the Property.

 

Operating Costs shall not
include (i) capital improvements (except as otherwise provided above); (ii)
costs of special services rendered to individual tenants (including Tenant) for
which a special charge is made; (iii) interest and principal payments on loans
or indebtedness secured by the Building; (iv) costs of improvements for Tenant
or other tenants of the Building; (v) costs for which Lessor is reimbursed by
other tenants of the Building other than through payment of tenants’ shares of
increases in Operating Costs and Taxes; (vi) leasing commissions, attorneys’
fees and other expenses incurred in connection with leasing space in the
Building or enforcing such leases; (vii) depreciation or amortization, other
than as specifically enumerated in the definition of Operating Costs above;
(vii) costs, fines or penalties incurred due to Lessor’s violation of Law;
(viii) any costs or expenses associated with the second-level parking lot; and
(viv) those exclusions set forth on Exhibit F attached hereto.

 

* Omitted pursuant to a request for confidential
treatment.

 

2

 

(ii)           “Tax Costs” means all real estate taxes,
levies, and charges due and payable, and installments of special assessments
(including interest on deferred assessments) assessed, levied or imposed on, or
allocated to, the Land and Building and all reasonable attorneys’ fees,
consultants’ fees, witness fees, court costs and other expenses of Lessor in
connection with any proceeding to contest these amounts.  Notwithstanding the aforementioned, the
amount of special assessments attributable to assessments which are pending or
levied as of the date of this Lease on a pro-rata basis for the Premises will
not exceed the following numbers:

 

	
  2003 

  	
  $

  	
  “*”

  	
   

  
	
  2004 

  	
  $

  	
  “*”

  	
   

  
	
  2005 

  	
  $

  	
  “*”

  	
   

  
	
  2006 

  	
  $

  	
  “*”

  	
   

  
	
  2007 

  	
  $

  	
  “*”

  	
   

  
	
  2008 

  	
  $

  	
  “*”

  	
   

  
	
  2009 

  	
  $

  	
  “*”

  	
   

  
	
  2010 

  	
  $

  	
  “*”

  	
   

  
	
  2011 

  	
  $

  	
  “*”

  	
   

  
	
  2012 

  	
  $

  	
  “*”

  	
   

  
	
  2013 

  	
  $

  	
  “*”

  	
   

  

 

The above-mentioned limits are based upon a Premises square footage of
32,742 at 11.30672008% Tenant’s Share, and the limits will be adjusted
accordingly when the final Premises square footage is established.  If the square footage and limits are
adjusted, the Parties will execute an amendment to this Lease to reflect the
adjustment.  The above-listed special
assessment costs attributable to the Premises Tax costs for Tenant will be 50%
of the amount set forth above, and Lessor will be responsible for the remaining
50%.  Tax Costs shall specifically not
include real estate taxes or other governmental charges on the second-story
parking ramp located above the Premises. 
2003 Tax Costs are estimated to be* per usable square foot.  Upon request, Lessor shall furnish Tenant
with Lessor’s calculations of applicable Tax Costs for any year of the Lease
Term for Tenant’s review.

 

(h)           “Environmental Law” means the Comprehensive
Environmental Response, Compensation, and Liability Act (42 U.S.C. § 9601 et
seq.), the Hazardous Material Transportation Act (49 U.S.C. § 1801 et
seq.), the Resource Conservation and Recovery Act (42 U.S.C. § 6901
et  seq.), the Federal Water Pollution Control Act (33 U.S.C. §
1251 et  seq.), the Oil Pollution Act of 1990 (P.L. 101-380), the
Safe Drinking Water Act (42 U.S.C. § 300(f), et  seq.), the Clear
Air Act (42 U.S.C. § 7401 et  seq.), the Toxic Substances
Control Act, as amended (15 U.S.C. § 2601 et  seq.), the Federal
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. § 136 et  seq.),
and OSHA as it relates to Hazardous

 

* Omitted pursuant to a request for confidential
treatment.

 

3

 

Materials,
as such laws have been and hereafter may be amended or supplemented, and any
present or future Federal, state or local, statutes, rules, regulations, common
law rule, ordinances, licenses, permits and interpretations and orders of
regulatory and administrative bodies analogous or related to the above statutes
or otherwise related to human health, safety or the environment.

 

(i)            “Exhibit” means an Exhibit attached to and
thereby made a part of this Lease.

 

(j)            “Hazardous Substance” shall mean any
pollutant, contaminant, chemical, or industrial or hazardous, toxic or
dangerous waste, substance or material, defined or regulated as such in (or for
purposes of) any Environmental Law and any other toxic, reactive, or flammable
chemicals, including any asbestos, any petroleum (including crude oil or any
fraction), any radioactive substance and any polychlorinated biphenyls or any
constituent of any such substance or waste, and specifically also including
hydraulic fluids; provided, in the event that any Environmental Law is
amended so as to broaden the meaning of any term defined thereby, such broader
meaning shall apply subsequent to the effective date of such amendment; and provided,
further, to the extent that the applicable laws of any state establish a
meaning for “hazardous material,” “hazardous substance,” “hazardous waste,”
“solid waste” or “toxic substance” which is broader than that specified in any
federal Environmental Law, such broader meaning shall apply.

 

(k)           “Land” means Lot 2, Block 1, Spectrum
Business Park, Dakota County, Minnesota.

 

(l)            “Lessor’s Work” means the responsibility of
Lessor to deliver the space in accordance with Exhibits C and C-1, and
according to the schedule set forth in Exhibit G.

 

(m)          “Lease” means this Lease, all Exhibits
attached to this Lease, and all properly executed amendments, modifications and
supplements to this Lease

 

(n)           “Lease Year” means a period of 12 consecutive
months commencing on the first day of the first full month of the Term and each
12-month period thereafter during the Term.

 

(o)           “Leasehold Improvements” is defined in the
Work Letter attached hereto as Exhibit C.

 

(p)           “Legal Requirements” shall mean all present
and future Federal, State, local and City laws, statutes, regulations,
ordinances (including Environmental Laws and laws relating to accessibility
and, usability of premises by, disabled individuals) and all covenants,
restrictions and conditions now or hereafter of record which may be applicable
to Lessor, to Tenant, to the leasing of the Premises by Lessor, to any of the
Building, to any of the Premises or to the use, manner of use,

 

4

 

occupancy,
possession, operation, maintenance, alteration, repair or restoration of any of
the Premises or the Building by Lessor and Tenant.

 

(q)           “Monthly Rent” or “Base
Rent” means the amount to be paid by Tenant in connection with its rental of
the Premises in accordance with Section 6.

 

(r)            “Phase I” means that part of the Building
denoted as such on attached Exhibit A.

 

(s)           “Phase II” means that part of the Building
denoted as such on Attached Exhibit A. 
The Premises are contained within Phase II.

 

(t)            “Phase III” means that portion of the
Building denoted as such on Exhibit A which may, but need not, be
constructed by Lessor.

 

(u)           “Premises” means that certain portion of the Building consisting of
approximately 32,742 Usable Square Feet as shown on the drawing attached to
this Lease as Exhibit B.  At
Tenant’s option, the final area of the Premises may be adjusted upward up to
20% provided such adjustment is completed within thirty (30) days of the
signing of this Lease. If the Premises is adjusted upward, the Parties will
execute an amendment to this Lease and will revise Exhibit B to reflect the adjustment.  The Premises shall be adjacent to the
existing portion of the Building currently being subleased by Tenant.

 

(i)            “Office Space” means that portion of the
Premises, finished for office use and designated as such on Exhibit B,
subject to adjustment as provided elsewhere herein.

 

(ii)           “Parking Space” means that portion of the Premises located on grade and
the second-level parking deck as designated on Exhibit B.

 

(v)           “Section” means a section of this Lease.

 

(w)          “S.O.C.” means Tenant’s “Systems Operations
Center.”

 

(x)            “Taking” means acquisition by a public
authority having the power of eminent domain of all or part of the Land or
Building by condemnation or conveyance in lieu of condemnation

 

(y)           “Tenant’s Share” means the percentage of the
Premises obtained by dividing the Usable Square Feet in the Premises by the
Usable Square Feet in the Building, which percentage on the date of this Lease
is estimated to be based on the number of square feet stated in Section 1(b)
above and in Exhibit A attached hereto. 
Tenant’s Share will be modified should Phase III be added to the
Premises.

 

(z)            “Tenant’s Work” means the responsibility of
Tenant to improve the Premises as outlined in the Work Letter attached hereto
as Exhibit C.

 

5

 

(aa)         “Term” means the period of ten (10) years and              zero months, plus any renewal terms, if
exercised, beginning on the Commencement Date, subject to early termination or
extension as provided elsewhere in this Lease.

 

(bb)         “Usable Square Feet of the Building” as of
the date of this Lease means 191,463 square feet.

 

(cc)         “Usable Square Feet of the Premises” means
all space within the demising walls (measured from the inside finish of the
outside walls to the center of tenant division and common area walls) of the
Office Space, but excluding all common areas including, but not limited to, the
common electrical room, elevator, lobby and stairwell to the parking deck.  Upon completion of Tenant’s Work, Lessor
shall calculate the area of the Premises after the demising walls are in place
in accordance with ANSI/BOMA Standard 265.1-1996, upon which time Lessor shall
formalize the final calculation of the area in a written notification to
Tenant.  Unless contested by Tenant
within thirty (30) days of such notice, the area calculation set out in the
notice shall be presumed accurate and final. 
The rentable/usable factor shall be zero.  In the event Tenant contests the area calculation submitted by
Lessor, Lessor and Lessor’s architect shall meet with Tenant and Tenant’s
architect to discuss and negotiate a final mutually agreeable area calculation.

 

(dd)         “Work Letter” means Exhibit C which is
attached hereto.

 

2.             Enumeration of Exhibits

 

The Exhibits enumerated in this Section 2 and attached to this Lease
are incorporated herein by this reference and are to be construed as a part of
this Lease.  Each party agrees to
perform any obligations on its part stated in any and all such Exhibits:

 

	
  Exhibit A.

  	
   

  	
  Site Plan of the Building

  
	
  Exhibit B.

  	
   

  	
  Site Plan of the Premises

  
	
  Exhibit C.

  	
   

  	
  Work Letter

  
	
  Exhibit C-1

  	
   

  	
  Spectrum Shell Specifications

  
	
  Exhibit D.

  	
   

  	
  Rules and Regulations

  
	
  Exhibit E.

  	
   

  	
  Sign Criteria

  
	
  Exhibit F.

  	
   

  	
  Exclusions From and
  Credits To Operating Expenses

  
	
  Exhibit G.

  	
   

  	
  Schedule for Delivery of
  Lessor’s Work

  

 

3.             Lessor’s Representations and Warranties.

 

As of the date upon which this Lease becomes effective, Lessor
represents, warrants and covenants to Tenant, agreeing to defend, indemnify,
and hold Tenant harmless from any claims, demands, liabilities, causes of
action, suits, judgments, damages and reasonable expenses arising from Lessor’s
breach, the following:

 

6

 

(a)           The Building and all quasi-public areas
within the Building (including all toilets) will, at Lessor’s sole expense, as
of the Occupancy Date, comply with ADA and other applicable laws, statutes,
ordinances, rule or regulations relating to handicapped access.

 

(b)           Lessor has full right and lawful authority to
enter into and perform Lessor’s obligations under this lease, that Lessor owns
the Land and improvements thereon in fee simple, free and clear of all other
contracts, leases, tenancy agreements, restrictions, violations, encumbrances
or defects in title of any nature whatsoever that would restrict the use or
enjoyment of Tenant of the Premises.  So
long as no Event of Default shall have occurred and be continuing (subject to
the expiration of any notice or cure period), Tenant shall peaceably and
quietly have, hold and enjoy the Premises for the Term, free of any claim or
other action by the Lessor or anyone rightfully claiming by, through or under
the Lessor (other than the Tenant) with respect to any matters arising from
Lessor’s ownership of the Land and the Building.

 

4.             Premises.

 

Lessor leases the Premises to Tenant, and
Tenant leases the Premises from Lessor, for the Term, under the terms and
conditions of this Lease.

 

5.             Construction

 

(a)           Work Letter. 
The parties shall pay for and perform their respective obligations as
set out in the Work Letter (attached hereto as Exhibit C).  The Premises will be constructed for Tenant
in accordance with Exhibit C. 
All work will be designed, performed, completed and paid for as provided
in Exhibit C.

 

(b)           Construction and Work Schedule.  Lessor
and Tenant acknowledge and agree that due to Tenant’s schedule for occupying
the Premises, the parties must adhere to the work schedule set forth in Exhibit
G attached hereto (the “Work Schedule”) in order to allow the parties to
timely complete their respective construction obligations.  Accordingly, Lessor shall deliver possession
of the Premises to Tenant completed in accordance with the Work Letter
(“Lessor’s Work”) and ready for the installation and completion of Tenant’s
Work on or before the dates outlined on the Work Schedule.  If Lessor, at any time, and for any specific
“milestone” date (each, a “Milestone Date”) as set forth on the Work Schedule,
is late in delivering possession of the Premises in the condition required
under, and with the portion of Lessor’s Work to be completed in accordance
with, the Work Letter, by the Milestone Date set forth in the Work Schedule (a
“Lessor Delay”), which Lessor Delay results in an actual delay in Tenant
performing Tenant’s work, then Lessor shall be liable for any and all costs
incurred by Tenant for storage of materials, escalation of work, the cost of
remobilization of labor forces,

 

7

 

overtime expenses, and
other out-of-pocket expenses, which amount shall be limited to:  (i) Tenant’s actual costs relating to such
delay, including without limitation, the costs set forth herein, or (ii) “*” per month, whichever is less.  Tenant expects that these costs will be
minimal should Lessor experience delays prior to June 1, 2003 and,
provided that the Lessor makes up for such delays by June 1, 2003, the
costs of delays after June 1, 2003 will also be minimal.  Should, however the Lessor find itself in
delay on or after June 1, 2003, the costs of such delay will escalate.  Lessor shall not be liable if any such delay
is caused by Tenant, its employees, agents or contractors (including Tenant’s
obligation to timely provide plans and specifications as set forth in the Work
Letter) (a “Tenant Delay”).  In
addition, in the event that any one or more Lessor Delays causes Tenant to be
actually delayed, then, in addition to Lessor being liable for Tenant’s costs
in connection with such delay as set forth in this Section, the Commencement
Date and Tenant’s obligation to pay Rent will be delayed one day for each day
of Lessor Delay.  Lessor and Tenant will
fully cooperate, and will cause their respective employees, agents and
contractors to fully cooperate, with each other in coordinating and completing
their respective construction obligations, including without limitation,
coordinating access to the Premises and the Building, storage of materials,
scheduling work, and attendance at Tenant’s construction meetings.  During all such construction meetings,
Lessor will timely notify Tenant of the existence of any Tenant Delay.

 

6.             Rent.

 

Monthly Rent shall be calculated by
multiplying the Usable Square Feet of the Premises by the following annual
rates and dividing by 12.

 

	
  Year

  	
   

  	
  Annual Rate Per

  Usable Square

  Foot of the

  Premises

  	
   

  
	
  1

  	
   

  	
   

  	
  “*”

  	
   

  
	
  2

  	
   

  	
   

  	
  “*”

  	
   

  
	
  3

  	
   

  	
   

  	
  “*”

  	
   

  
	
  4

  	
   

  	
   

  	
  “*”

  	
   

  
	
  5

  	
   

  	
   

  	
  “*”

  	
   

  
	
  6

  	
   

  	
   

  	
  “*”

  	
   

  
	
  7

  	
   

  	
   

  	
  “*”

  	
   

  
	
  8

  	
   

  	
   

  	
  “*”

  	
   

  
	
  9

  	
   

  	
   

  	
  “*”

  	
   

  
	
  10

  	
   

  	
   

  	
  “*”

  	
   

  

 

Tenant will pay the Monthly Rent to Lessor at
1000 Blue Gentian Road, Eagan, MN 55121, or such other place as Lessor may
designate, in advance on the first day of each month during the

 

* Omitted pursuant to a request for condfidential treatment.

 

8

 

Term without demand, deduction or setoff,
except as specifically provided in Sections 7, 11, 17, 26 and 28 hereof.
Monthly Rent will begin on the Commencement Date.  If the Term begins on a day other than the first day of a month,
the Monthly Rent for that month will be prorated by multiplying the Monthly
Rent by the number of days of that month included in the Term and dividing the
product by the number of days in that month.

 

Any Monthly Rent or other amounts payable by
Tenant to Lessor under this Lease which are not paid within 10 days after
written notice from Lessor (which notice may be delivered by Lessor to Tenant
via E-mail), will bear interest from the date due to the date paid at the rate
of 18% per annum or the maximum rate of interest permitted by law, whichever is
less, and the interest will be paid to Lessor on demand.  All amounts to be paid by Tenant to Lessor
under this Lease will be deemed to be additional rent for purposes of payment
and collection.  Lessor may from time to
time, but no more than twice per calendar year, estimate in good faith Tenant’s
Share of Costs for the current year and include such estimate in the monthly
installments, and Tenant shall pay such estimated Tenant’s Share of Costs with
the monthly installments.

 

Tenant shall not pay any Security Deposit.  In addition, Tenant shall in no event be responsible for the
payment or reimbursement of any of the following:  (a) any costs of any nature incurred by Lessor in connection
with obtaining any fee mortgage on the Land or the Building or any other
indebtedness of Lessor, (b) any debt service payments of Lessor,
(c) any costs of any nature incurred by Lessor in connection with the
acquisition of the Land or in connection with any sale of the Land or any
interest therein, including transfer or similar taxes and fees, (d) any taxes
imposed or based on Lessor’s net income, revenue, receipts of any kind and
profits, franchise, corporate and capital taxes imposed on it, withholding
taxes payable with respect to payments to Lessor, estate, inheritance and
succession taxes, and any tax imposed solely because of the nature of Lessor,
or (e) any other items listed in Exhibit F hereto.

 

Tenant shall pay Tenant’s Share of Costs during any early occupancy
period prior to the Commencement Date, but in no event shall Tenant be required
to pay Monthly Rent during any early occupancy period.

 

7.       Cost Adjustment

 

The Monthly Rent specified in Section 6 of
this Lease shall be net to Lessor in each year during the Term.  Accordingly, Tenant shall pay, in addition
to Monthly Rent, Tenant’s Share, as defined in Section 1(y) above, of Tenant’s
Costs, as defined in Section 1(g) above, which may arise or become due during
the Term, and Tenant shall indemnify and hold Lessor harmless against such
expenses and obligations.  Tenant shall
pay with each monthly installment of Monthly Rent one-twelfth of the annual
estimated Tenant’s Share of Costs.

 

Within sixty (60) days after the end of each
calendar year during the term of this Lease or any renewal or extension
thereof, Lessor shall determine the actual amount of Tenant’s Share of Costs,
as defined in Section 1(g) above, payable in such calendar year and deliver a
written certification of the amounts to Tenant (“Statement”). If Tenant has
underpaid its share of Costs for such calendar year, Tenant shall pay the
balance of the Tenant’s Share of Costs within thirty (30) days after the
receipt of such statement. If Tenant has overpaid its Tenant’s Share of Costs

 

9

 

for such calendar year, Lessor shall either
(i) refund the excess, or (ii) credit the excess against the most current
monthly installment if Tenant’s Share of Costs for the next following calendar
year. A prorata adjustment of the Tenant’s Share of Costs shall be made for a
fractional calendar year occurring during the term of this Lease or any renewal
or extension thereof based upon the number of days of the term of the Lease
during said calendar year as compared to three hundred sixty-five (365) days
and all additional sums payable by Tenant or credits due Tenant as a result of
the provisions of this Section shall be adjusted accordingly.  On an annual basis and not more than one
time per year, Tenant shall have the right, at its own expense, and at a
reasonable time, to audit Lessor’s books relevant to the Operating Expenses and
additional rentals.  Lessor shall maintain
full and complete books and records with respect to Operating Expenses at the
Building.  If Tenant objects to the
amounts set forth in any Statement, Tenant shall notify Lessor in writing
within sixty (60) days after Tenant’s receipt of the Statement that Tenant
desires to inspect and/or audit Lessor’s books and records.  If Tenant so notifies Lessor, Tenant shall
be entitled to inspect and audit Lessor’s Statement of Operating Expenses and
the underlying books and records, which audit or inspection shall be completed
by Tenant within one hundred twenty (120) days after Tenant’s notice to Lessor
regarding its objection to the Statement. If Tenant’s audit discloses that
Tenant has overpaid its share of Operating Expenses in any calendar year, Lessor
shall within thirty (30) days following the completion of the audit, reimburse
Tenant for the amounts overpaid by Tenant. 
In addition, if the audit discloses that Tenant has overpaid Operating
Expenses by more than ten percent (10%), concurrently with such reimbursement,
Lessor, at its option, shall (i) immediately reimburse to Tenant such
overpayment or, (ii) allow Tenant to offset such overpayment as credit towards
rent owed, together with any interest at the interest rate set forth in Section
6 hereof, from the date of Lessor’s statement through the date of reimbursement
to Tenant.  In addition, Lessor shall
pay $1,000.00 towards Tenant’s audit costs. If, however, within one hundred
fifty (150) days after the receipt of such Statement (i) Tenant and Lessor
still dispute the correctness thereof, specifying the particular respects in
which the Statement is claimed to be incorrect, and (ii) if such dispute shall
not have been settled by agreement, Lessor and Tenant shall submit the dispute
to arbitration within one hundred eighty (180) days after receipt of the
statement.  Pending the determination of
such dispute by agreement or arbitration as aforesaid, Tenant shall, within
thirty (30) days after receipt of such statement, pay Tenant’s share in
accordance with Lessor’s statement and such payment shall be without prejudice
to Tenant’s position.  If the dispute
shall be determined in Tenant’s favor, Lessor shall forthwith pay Tenant the
amount of Tenant’s overpayment of Tenant’s share resulting from compliance with
Lessor’s Statement.

 

8.       Term.

 

The
Term of this Lease will be ten (10) years and zero months (including any
renewal terms, if so exercised), beginning on the Commencement Date, subject to
early termination or extension as provided elsewhere in this Lease.

 

9.       Possession.

 

Lessor
will deliver possession of the Premises completed with Lessor’s Work, to Tenant
on or before the dates outlined in the Work Schedule (attached hereto as
Exhibit G), for the purpose of allowing Tenant to complete Tenant’s Work.  Should Lessor delay in delivering possession
of

 

10

 

the
Premises to Tenant in accordance with the Work Schedule, Lessor shall be liable
to Tenant as set forth in Section 5 of this Lease.  If Tenant Improvements are completed earlier than the
Commencement Date, Lessor shall permit Tenant to occupy the Premises for the
purposes of doing business prior to the Commencement Date.  Upon Tenant’s occupancy of the Premises,
Tenant shall be bound by all of the terms and conditions of this Lease, except
for its obligation to pay Monthly Rent which shall not be payable until the
Commencement Date as set forth herein.

 

If Tenant pays the Monthly Rent and other
charges and performs all of Tenant’s obligations under this Lease, Lessor
promises that Tenant may peaceably and quietly possess and enjoy the Premises
under this Lease.

 

10.          Use.

 

Tenant may use the Premises
24 hours per day, 7 days a week, and 365 days per year, for any and all aspects
of its business of operating an airline, its aircraft training business, office
uses and classroom uses, and such other accessory uses and purposes as shall be
consistent with or incidental thereto, including Tenant parking and shuttle
transportation by Tenant or its agents of Tenant employees, or for any other
lawful purpose.  Tenant will not commit
or permit any act or omission which results in the violation of any law,
governmental regulation, or insurance policy of Lessor, relating to the
Building, or which will increase Lessor’s insurance rates on the Building.  Tenant will not permit any conduct or
condition which may unduly disturb or endanger other occupants of the Building.

 

11.         Care of Premises.

 

Tenant will, at all times
during the Term and any renewals and extensions, at its sole expense, keep and
maintain the Premises in a clean, safe, sanitary, and good condition, ordinary
wear and tear excepted, and in compliance with all applicable laws, codes,
ordinances, rules, and regulations. 
Tenant’s obligations will include but not be limited to the maintenance
and repair, if necessary, of heating, air conditioning and ventilating
fixtures, equipment and systems, all lighting and plumbing fixtures, all
interior walls, partitions and doors within the Premises.

 

If
Tenant fails, refuses or neglects to maintain or repair the Premises as
required in this Lease thirty (30) days after written notice has been given to
Tenant by Lessor, Lessor may make such repairs without liability to
Tenant.  Tenant will pay to Lessor all
reasonable costs, including reasonable administrative costs, incurred by Lessor
in making such repairs upon presentation to Tenant of bill for the
repairs.  However, should Lessor
initiate such repairs, Lessor will perform such repairs diligently,
professionally, promptly and in good faith so as to minimize and limit any
delay or interruption of Tenant’s business activities, and to avoid loss or
damage to Tenant’s merchandise, fixtures or other property.

 

Lessor will at all times during the Term and any renewals and extensions,
at its sole expense, repair, maintain, replace or improve the structural
portions of the Building and Land and access areas, including the walls,
foundation, roof, elevators, stairways, plate glass, windows, driveways,
parking ramps and sidewalks (other than those specifically required to be made
by Tenant in the Premises) necessary to maintain the Building and land and
access areas in a safe

 

11

 

and tenantable condition, and in compliance with all applicable
Federal, State and City laws, codes, ordinances, rules and regulations.  However, where structural repairs are
required to be made by reason of the acts of Tenant, the costs will be
reimbursed by Tenant and payable by Tenant to Lessor upon thirty (30) days
notice by Lessor.  Lessor shall keep and
maintain all portions of the Building, common areas (including all Building
systems servicing those areas) and the sidewalk and areas adjoining the same in
clean, safe and orderly condition, free of accumulation of dirt, rubbish, snow,
and ice.

 

In the event that Lessor fails to make repairs or alterations which
Lessor is obligated to make pursuant to the terms and conditions of this Lease,
and such failure affects the essential services necessary to operate Tenant’s
business (including, without limitation, Tenant’s S.O.C.), then Tenant shall
have the right, upon 48 hours’ notice to Lessor, to make any required repairs
or perform any required maintenance, at Lessor’s expense; provided, however,
that if Lessor, within the foregoing 48-hour period, is diligently,
appropriately and effectively effecting such repairs, Tenant shall not be
entitled to make any required repairs. 
In the event that Lessor fails to make repairs or alterations which
Lessor is obligated to make pursuant to the terms and conditions of this Lease,
and such failure affects the non-essential elements of Tenant’s business, then
Tenant shall have the right, upon thirty (30) days’ notice to Lessor, to make
any required repairs or perform any required maintenance, at Lessor’s expense;
provided, however, that if Lessor, within the foregoing 30-day period, is
diligently, appropriately and effectively effecting such required repairs or
maintenance, Tenant shall not be entitled to make such required repairs or
perform such required maintenance.  In
the event Lessor fails to reimburse Tenant for such expenditures within ten
(10) days after request therefor by Tenant accompanied by evidence detailing
such expenditures, Tenant shall have the right to set-off any such amounts
expended in connection therewith, together with interest thereon at the
interest rate set forth in Section 6 hereof (18% per annum or the maximum rate
of interest permitted by law), against any rent, additional rent or other
charges due under this Lease.

 

Tenant, at its own cost and expense, will
enter into a regularly scheduled preventive maintenance and service contract
with a maintenance contractor approved by Lessor for servicing all hot water,
heating and air conditioning systems and equipment within the Premises.  The service contract must include all
services suggested by the equipment manufacturer in its operations and
maintenance manual and must become effective within 30 days of the date Tenant
takes possession of the Premises.

 

12.           Building Rules.

 

Rules and Regulations for the Premises and
the Building in effect on the date of this Lease are attached as Exhibit D.  Lessor will have the right to adopt
different or additional reasonable rules and regulations, and to rescind or
amend the attached rules and regulations, from time to time.  Lessor shall at all times provide Tenant
with advance written notice of any different, additional, rescinded or amended
rules and regulations.  Lessor agrees
that its rules and regulations will be applied in a non-discriminatory manner,
consistent with all other tenants in Lessor’s Building.  Tenant will abide by the rules and
regulations then in force and will cause Tenant’s employees to observe and comply
with them.  No rule change will inhibit
Tenant’s right to access and operate

 

12

 

in the Premises 24 hours per day, 7 days per
week, and 365 days per year at any time during the Term.

 

13.           Compliance
with Laws.

 

Lessor and Tenant will at all times promptly
comply with all Legal Requirements pertaining to the Premises (for Tenant) and
the Building (for Lessor), and each will bear its own expenses in doing
so.  Tenant will pay any taxes or other
charges by any governmental authority on Tenant’s property or trade fixtures in
the Premises or relating to Tenant’s use of the Premises.  Lessor will pay any taxes or other charges
by any governmental authority on Lessor’s property or trade fixtures in the
Building (outside of the Premises) or relating to Lessor’s leasing of the
Premises.

 

The Premises shall not be used in any manner
which under any requirement of law or of any public authority would require
Lessor to make any addition or alteration to or in the Building.  After the construction of any initial
building by Lessor in the Premises, Tenant will be responsible for compliance
with the Americans with Disabilities Act of 1990 as it applies to the
Premises.  The Premises shall not be
used in any manner which will increase the rates required to be paid for public
liability or for all risk insurance covering the Building.  Tenant shall occupy the Premises, conduct
its business and control its agents, employees, invitees, and visitors in such
a way as is lawful and reputable and will not permit or create any nuisance,
noise, odor, or otherwise interfere with, annoy, or disturb any other Tenant in
the Building in its normal business operations or Lessor in its management of
the Building.  Outside storage on the
Land of any type of equipment, property, or materials owned or used by Tenant
or its customers and suppliers is not permitted, except for parking of vehicles
in spaces intended for parking, and except for the rooftop Satellite Dish as
allowed by Lessor pursuant to Section 15(b) herein.

 

Upon Tenant’s occupancy on
the Certificate of Occupancy Date, and during all times during the Term and any
renewals and extensions thereof, Lessor shall be responsible for maintaining
the Building and all quasi-public areas within the Building (including all
toilets) in compliance with the Americans with Disabilities Act of 1990 and
other applicable laws, statutes, ordinances, rule or regulations relating to
handicapped access.  Lessor shall not
manage or utilize the Building, or allow the Building to be utilized, in any
manner which will increase the rates required to be paid by Tenant for public
liability or for all risk insurance covering the Premises; provided, however,
that in no event shall the foregoing limit or restrict Lessor’s ability to
lease Building space, however if such leasing or management of the building
results in increased insurance costs to Tenant, Lessor shall pay or be
responsible for Tenant’s increased insurance cost overages as reasonably
incurred by Tenant.  Lessor shall
maintain the Building in compliance with applicable laws, statutes, ordinances,
rule or regulations, and conduct its business and control its agents,
employees, invitees, and visitors in such a way as is lawful and reputable and
will not permit or create any nuisance, noise, odor, or otherwise interfere
with, annoy, or disturb Tenant and its business operations, or any other tenant
in the Building.

 

14.           Hazardous Substances and Environmental
Matters.

 

a.     Lessor Generally

 

13

 

As of the date upon which this Lease becomes effective, Lessor
represents, warrants and covenants to Tenant, the following:

 

(i)            To the best of
Lessor’s actual knowledge, with no duty of further independent investigation,
the Land does not contain, and there is not located on or about the Land, any
Hazardous Materials.  No part of the
Land is currently used, or has previously been used, for the use, storage,
treatment, production, manufacture, generation, transportation, release or
disposal of Hazardous Materials. Lessor has not received any complaint, order,
summons, citation, notice of violation, directive, letter or other
communication from any governmental authority or other person with regard to
air emissions, water discharges, noise emissions or Hazardous Materials, or any
other environmental, health or safety matters affecting the Land, or any
portion thereof.  Lessor has complied
since its ownership of the Land with all Environmental Laws affecting the Land,
including notification requirements relating to the release of Hazardous
Materials.

 

(ii)           To the best of Lessor’s actual knowledge,
with no duty of further independent investigation, there are no written claims
pending or threatened, and Lessor knows of no basis for any such claim, against
Lessor, or the Land, or any portion thereof, by any governmental authority or
other Person relating to any Hazardous Material or pursuant to any
Environmental Law, whether for enforcement, clean-up, removal, remediation,
assertion of liability, cost recovery, compensation, contribution, recovery of
damages, injunction or other equitable relief or otherwise.

 

(iii)          To the best of Lessor’s actual knowledge,
with no duty of further independent investigation, Lessor has not knowingly
undertaken, permitted, authorized or suffered the presence, or suspected
presence, use, manufacture, handling, generation, storage, treatment,
discharge, release, burial or disposal on, under or about the Land of any
Hazardous Material, except in compliance with Environmental Laws, or the
transportation to or from the Land, of any Hazardous Material in violation of
any Environmental Laws.

 

(iv)          Lessor will retain the obligation to keep the
Building free of Hazardous Substances. 
Lessor agrees that (a) no activity will be conducted in or around the Building
that will produce any Hazardous Substance, except for activities which are part
of the ordinary course of Lessor’s business or that of its Tenants (the
“Permitted Activities”), provided the Permitted Activities are conducted in
accordance with all Environmental Laws; (b) the Building and building grounds
will not be used for storage of any Hazardous Substances, except for temporary
storage of materials used in the Permitted Activities (the “Permitted
Materials”), provided the

 

14

 

Permitted
Materials are properly stored in a manner and location meeting all
Environmental Laws; (c) no portion of the Building or Land will be used by
Lessor as a landfill or a dump; (d) Lessor will not permit any Hazardous Substances
to be brought onto the Building or Land, except for Permitted Materials, and if
so brought or found, Lessor will immediately remove them, with proper disposal,
and will undertake all required cleanup procedures under the Environmental
Laws.

 

(v)           Except as to any matter caused by Tenant’s
actions or failure to act, if, at any time during the Term of this Lease: 1.)
the Building and Land are found to contain the presence of Hazardous
Substances; or 2.) the Building and Land are found to be contaminated or
subject to Conditions prohibited in this Lease, as a direct or indirect result
of any preexisting condition prior to the occupancy of the Premises by Tenant;
or 3.) Lessor breaches the above listed Hazardous Substance and environmental
representations and warranties as set forth in this Section; or 4.) there is
any condition or violation of Environmental Laws by Lessor during the Lease
Term or as a direct or indirect result of any condition or violation taking
place after the termination of the Lease Term or Tenant’s occupancy of the
property, Lessor shall indemnify and hold Tenant harmless from and against any
and all actions, damages, penalties, fines, claims, demands, liens, suits,
liabilities, costs (including cleaning-up costs), judgments and expenses
(including, but not limited to, attorneys’, consultants’ and experts’ fees and
expenses) and obligations of any kind and nature suffered by or asserted
against Tenant arising therefrom, which indemnification shall survive the
termination or expiration of this Lease.

 

b.             Tenant Generally

 

Tenant agrees that (a) no
activity will be conducted on the Premises that will produce any Hazardous
Substance, except for activities which are part of the ordinary course of
Tenant’s business (the “Permitted Activities”), provided the Permitted
Activities are conducted in accordance with all Environmental Laws and have
been approved in advance in writing by Lessor; (b) the Premises will not be
used for storage of any Hazardous Substances, except for temporary storage of
materials used in the Permitted Activities (the “Permitted Materials”),
provided the Permitted Materials are properly stored in a manner and location
meeting all Environmental Laws and approved in advance in writing by Lessor;
(c) no portion of the Premises or Land will be used by Tenant as a landfill or
a dump; (d) Tenant will not install any underground tanks of any type; (e)
Tenant will not cause any surface or subsurface conditions to exist or come
into existence that constitute, or with the passage of time may constitute, a
public or private nuisance; (f) Tenant will not permit any Hazardous Substances
to be brought onto the Premises, except for Permitted Materials, and if so
brought or found, Tenant will immediately remove them, with proper disposal,
and will undertake all required cleanup procedures under the Environmental
Laws.  If, at any time during or after
the

 

15

 

Term of this Lease, the
Premises are found to be contaminated due to Tenant’s activity during the Term
of this Lease, or if, during the Term of this Lease, Tenant causes Conditions
prohibited in this Section 14(b), Tenant will indemnify and hold Lessor
harmless from all claims, demands, actions, liabilities, costs, expenses,
damages and obligations of any nature arising from or as a result of the use of
the Premises by Tenant.  The foregoing
indemnification will survive the termination or expiration of this Lease.

 

15.           Specific Tenant Installations Outside the
Premises.

 

a.             Sign Installation.

 

Tenant will have the right
to install, at its sole cost and expense, exterior and/or interior building
signage subject to Lessor’s and the City of Eagan’s approval, which will not be
unreasonably withheld or delayed. 
Tenant’s signage shall conform to applicable and reasonable Building
Standard Signage as set out in Exhibit E or as otherwise approved in
advance by Lessor.

 

b.             Satellite Dish and Radio Antenna Installation.

 

(i)      Satellite Dishes:  During the
Term of this Lease, Tenant, at its sole cost and expense, shall have the right
to install one or more Satellite Dishes of no more than 12 feet in diameter,
weighing no more than 4,000 pounds. 
Lessor understands and agrees that the Satellite Dishes are absolutely
necessary and essential to Tenant’s operations, and that Tenant requires
specific directional and operational specifications for its Satellite
Dishes.  Tenant understands and agrees
that Lessor, while agreeing to accommodate Tenant’s Satellite Dish requirements,
wishes to preserve the aesthetics of the Building.  Accordingly, Tenant will, assuming such location will allow the
Satellite Dishes to operate properly, locate any Satellite Dishes in the
following order of priority:

 

1.)    In the area behind the Premises on top of the Pan Am hydraulic rooms;

 

2.)    In the area behind the Premises in an area reasonably designated by
Lessor; or

 

3.)    On the rear portion of the roof of the Building in an area reasonably
designated by Lessor.

 

Lessor’s
approval and designation of Satellite installation locations shall not be
unreasonably withheld or delayed. 
Installation of such Satellite Dishes shall be subject to approval by
the City of Eagan and compliance with City codes and requirements.  In addition, should such Satellite Dishes be
installed on the Building rooftop, Tenant agrees to use Lessor’s structural
engineer and Lessor’s roof manufacturer to ensure that any alteration to the
roof will be in compliance with the rooftop warranty issued to Lessor by the
roof

 

16

 

manufacturer.  Upon Commencement of this Lease and during
the Term of this Lease, Tenant shall have the right to install up to two (2)
Satellite Dishes at no additional rent to Lessor for such Satellite Dishes, no
matter if the Satellite Dishes are installed upon the roof of the Building or
upon any other portion of the Building, including the walls, ground or parking
areas.   Beyond the initial two (2)
Satellite Dishes, Tenant, at its sole cost and expense, shall have the ongoing
right to add additional Satellite Dishes as essential for its operations at a
location approved by Lessor, which approval shall not be unreasonably withheld
or delayed, in accordance with the order of location priority set forth above
and subject to City approval and codes. 
In the event Tenant must add additional Satellite Dishes in excess of
the initial two (2) rent-free Satellite Dishes, and if such additional
Satellite Dishes are installed on or around the Building ground area at a
location that results in the loss of available parking stalls, then Tenant
shall pay Lessor for the number of parking stalls utilized for placement of the
Satellite Dishes at a rental amount equal to eighty percent (80%) of the then
prevailing rate for parking stalls on the second level of the Building.  This rental payment requirement shall not
apply if such additional Satellite Dishes can be reasonably installed at any
location that does not remove parking space(s).  For any Satellite Dishes installed on the Building rooftop during
the Term of this Lease, Tenant will at all times have, upon reasonable notice
to Lessor (except no notice is required in the case of an emergency
circumstance), ongoing access to the rooftop to allow for access, repair and
adjustment to the rooftop Satellite Dishes. 
For any Satellite Dishes installed during the Term of this Lease on
Building locations other than the Building rooftop, Tenant will at all times
have an ongoing right, without notice to Lessor, to access the Satellite Dishes
for necessary repair and adjustment.

 

(ii)
Radio Antennas:  Upon Commencement and
during the Term of this Lease, Tenant, shall have the right to utilize the four
(4) Radio Antenna currently utilized by Tenant and located on the adjacent Pan
Am facility, and Tenant, at its sole cost and expense, shall have the right to
install six (6) Radio Antennas, which shall be no more than 10 feet high, upon
the rear portion of the roof of the Building at a location approved by Lessor,
keeping in mind the aesthetics of the Building, which approval shall not be
unreasonably withheld or delayed. 
Tenant shall pay no additional rent to Lessor for such Radio
Antennas.  Installation of such Radio
Antennas shall be subject to approval by the City of Eagan and compliance with
City codes and requirements.  Lessor
understands and agrees that the Antennae are absolutely necessary and essential
to Tenant’s operations, and that Tenant requires specific placement
specifications for its Radio Antennas, specifically such antennae need to be on
the rooftop, free from any other structures that may block or interfere with
Antennae signals.  During the Term of
this Lease, upon reasonable notice to Lessor (except no notice is required in
the case of an emergency circumstance), Tenant will at all times have ongoing access
to the roof to allow for necessary access, repair and adjustment to the Radio
Antennas.  In

 

17

 

the
event of repair or installation of the Radio Antennas, Tenant agrees to use
Lessor’s structural engineer, or a structural engineer approved by the roof
manufacturer to ensure that any alteration to the roof will be in compliance
with the rooftop warranty issued to Lessor by the roof manufacturer.   Tenant, at its sole cost and expense, shall
have the ongoing right to add additional Antennas as essential for its
operations upon the rear portion of the roof of the Building at a location
approved by Lessor, keeping in mind the aesthetics of the Building, which
approval shall not be unreasonably withheld or delayed.  Tenant shall pay to Lessor as additional
rent hereunder the sum of $100.00 per month for each Radio Antenna installed in
excess of the six (6) Antennae that are allowed to be installed as described
herein.

 

c.             Concrete Patio.

 

Tenant shall have the right
to construct at its sole cost and expense a concrete patio adjacent to the
exterior to the Premises for exclusive use by Tenant’s employees of a square
footage of no more than 800 square feet at a location contiguous to Tenant’s
Premises and in the rear of the Building. 
Installation of such patio shall be subject to approval by the City of
Eagan and compliance with City code and requirements.  Tenant shall pay no additional rent for such patio.

 

d.             On-Site Equipment.

 

During the Term and renewal
Terms of this Lease, Tenant shall have the right to install electrical, HVAC,
computer servers, and other operating equipment essential, as of the date of
this Lease, for its entire operations (the “On-Site Equipment”), including but
not limited to S.O.C. and data center functions, at a location adjacent to the
rear of the Premises and, except as required by Code, no more than fifteen (15)
feet from the rear of the Premises, (outside the Premises) of no more than
3,000 square feet.  Such On-site
Equipment installation shall be at Tenant’s sole cost and expense, at a
location approved by Lessor, which approval shall not be unreasonably withheld
or delayed.  The area encompassed by
On-Site Equipment as initially installed as of the Commencement Date, even if
less than the 3,000 square feet allowed hereunder, is herein defined to be the
“Initial On-Site Installation.”  In
addition, such installation of such equipment shall be subject to approval by
the City of Eagan and in compliance with City Codes and requirements.  During the Term of this Lease, Tenant will
at all times have, upon reasonable notice to Lessor (except no notice is
required in the case of an emergency circumstance), ongoing and open access to
On-Site Equipment to allow for access, adjustment or repair of such
equipment.  Tenant shall pay no
additional rent for such usage.  Tenant
shall have the ongoing right to add equipment as essential for its operations
with approval by Lessor, which approval shall not be unreasonably withheld or
delayed.  In the event Tenant must add
additional On-Site Equipment in excess of the Initial On-Site Installation and
if such additional On-Site Equipment needs to be installed on or around the
Building ground area at a location that results in the loss of available parking
stalls, then Tenant shall pay Lessor for the number of parking stalls utilized
for placement of the additional On-Site Equipment at a rental amount equal to
eighty percent

 

18

 

(80%) of the then prevailing
rate for parking stalls on the second level of the Building.  This rental payment requirement shall not
apply if such additional On-Site Equipment can be reasonably installed at any
Building location that does not remove parking space(s).

 

16.           Alterations.

 

After completion of the Building and the
Premises, Lessor will have no obligation to do any redecorating or remodeling
or to make any repairs or alterations, except to the extent of Lessor’s
obligations pursuant to Sections 11 and 13 herein and its obligation to
maintain all common areas and the Building.

 

Tenant will not make any alterations,
additions or improvements in or to the Premises without first obtaining the
written consent of Lessor, which will not be unreasonably withheld or delayed;
provided, however, that the consent of Lessor shall not be required for any
non-structural improvements that are less than $100,000.00.  Tenant will secure Lessor’s prior written
approval of any contractor or subcontractor who is to perform work on the
Premises at Tenant’s request.  All
alterations by Tenant will be constructed with new materials, in a good and
workmanlike manner, and in compliance with the plans and specifications
approved by Lessor, which will not be unreasonably withheld or delayed, and all
applicable laws, ordinances, rules, orders, regulations, or other requirements
of governmental authorities.  Lessor
shall oversee all work.  Tenant will pay
for any labor, services, materials, supplies or equipment furnished or alleged
to have been furnished by Tenant in or about the Premises, and Tenant, within
ten (10) days of being notified by Lessor of the filing of any mechanic’s,
materialmen’s or other lien against the Premises resulting from Tenant’s
failure to make such payment, will pay and discharge such mechanic’s,
materialmen’s or other lien against the Premises resulting from Tenant’s
failure to make such payment, or will contest the lien and deposit with
Lessor’s Title Company cash equal to 150% of the amount of the lien.  If, after a 12 month period the contested
lien is not resolved, Lessor may access the deposited sum submitted by Tenant
to pay for and/or resolve the lien.  If
the lien is reduced to final judgment, Tenant will discharge the judgment and Lessor
will return the cash deposited by Tenant. 
Lessor may post notices of nonresponsibility on the Premises as provided
by law.

 

All alterations, additions and improvements
to the Premises made at Lessor’s or Tenant’s expense, except movable office
furniture and Tenant’s movable trade fixtures and equipment, will become the
property of Lessor upon installation and will be surrendered with the Premises
upon termination of this Lease unless Lessor elects otherwise in writing.  Tenant will not be required to remove any
improvements that are attached to the Building that are part of the original
Tenant’s work or any subsequent alterations approved by Lessor.

 

17.           Utilities and Service.

 

Lessor will provide mains and conduits to
supply water, gas, electricity and (if there is a sink or drain within the
Premises) sanitary sewer services to the Premises in accordance with building
standard specifications set out in the Work Letter.  Tenant will pay all charges for sewer usage, garbage disposal,
and janitorial services for the Premises, refuse removal, water, electricity,
gas,

 

19

 

heating, air conditioning and ventilation
costs, telephone, and any other utility services furnished to the Premises
during the Term which are not a part of the Operating Costs.  If any of such services are furnished by
Lessor, the cost of all such services furnished by Lessor will be a part of the
Operating Costs.  Lessor will not be
liable for any loss or damage resulting from any temporary interruption of
these services due to repairs, alterations or improvements, or any variation,
interruption or failure of these services due to governmental controls,
unavailability of energy, or any other cause beyond Lessors control, unless
such unavailability is caused by the gross negligence or willful misconduct of
Lessor or Lessor’s employees, agents or contractors.  No such interruption or failure of these services will be deemed
as an eviction of Tenant or will relieve Tenant from any of its obligations
under this Lease, however Tenant will have the right to rent payment abatement
or set-off due to such interruption, failure or unavailability caused by the
gross negligence or willful misconduct of Lessor or Lessor’s employees, agents
or contractors from the date of such interruption through the date such service
is restored.

 

18.           Parking.

 

Tenant shall have the right, during the Term,
and at no additional cost during the Term, to the unrestricted use of a minimum
of 150 unreserved open-air grade parking stalls in the surface lots behind and
in front of the Building, closest to the Premises.  Tenant will also have the use of twelve (12) parking stalls in
the designated parking ramp above the Premises on the second level of the
Building 24 hours per day, free of charge throughout the Term of the Lease.
Tenant agrees that pilots, flight crew or other airport personnel who are
employed by Tenant will not park on the Premises while they are working at the
airport or are in-flight, however Tenant’s employees who are permanently
officed at the Premises, including but not limited to Tenant’s corporate
executive officers, senior management, and management employees, shall be
allowed to park on the Premises when temporarily working off-site.  Tenant agrees not to store vehicles used for
flight operations at the Premises.  If
Tenant increases the Usable Square Footage of the Premises pursuant to Section
36 hereof, Tenant shall be entitled to utilize additional open-air parking
spaces on a proportionate basis.

 

19.           Entry by Lessor.

 

Lessor and its agents and contractors and
mortgagees will have the right to enter the Premises at reasonable times for
inspecting, cleaning, repairing, or exhibiting the Premises, but Lessor shall
only enter the Premises upon 24 hour notice to Tenant, unless such entrance to
the Premises is due to an emergency situation.

 

20.           Subordination.

 

Lessor represents that, except for the
mortgage in favor of Bank of America, there are no other mortgages on the
Building as of the date hereof. At the request of any mortgagee or ground lessor,
this Lease will be subject and subordinate to any mortgage or ground lease
which may now or hereafter encumber the Building, and Tenant will execute,
acknowledge and deliver to Lessor any document reasonably requested by Lessor
to evidence the subordination.  Such
subordination is on the condition that Tenant’s right of possession of the
Premises as provided in this Lease will not be disturbed by the mortgagee or
ground lessor so long as Tenant is not in

 

20

 

default (subject to the expiration of any
applicable notice or cure period) under this Lease.  If the interest of Lessor is transferred to any party by reason
of foreclosure of a mortgage or cancellation of a ground lease, or by delivery
of a deed in lieu of foreclosure or cancellation, Tenant will immediately and
automatically attorn to such party. 
Tenant agrees that upon notification by Lessor or any mortgagee or
ground lessor of the election of a mortgagee or ground lessor to subordinate
its interest in the Premises to this Lease, this Lease will become prior to the
mortgage or ground lease.  Lessor shall
utilize its best efforts to deliver to Tenant a subordination agreement from
the existing mortgagee within thirty (30) days following execution of this
Lease by both parties hereto, which subordination agreement shall contain the
non-disturbance provisions required under this Section.

 

21.           Estoppel
Certificates/Memo of Lease.

 

Within twenty (20) days after written request
from Lessor, Tenant will execute, acknowledge and deliver to Lessor a document
furnished by Lessor, which document may be relied upon by Lessor and any
prospective purchaser or mortgagee of the Building, stating (a) that this Lease
is unmodified and is in full force and effect (or if modified, that the Lease
is in full force and effect as modified and stating the modifications), (b) the
dates to which rent and other charges have been paid, (c) the current Monthly
Rent, (d) the dates on which the Term begins and ends, (e) that Tenant has
accepted the Premises, (f) the Lessor is not, to the best of Tenant’s
knowledge, in default under this Lease, or, if Lessor is in default, specifying
any such default, and (g) including such other information relating to this
Lease.  In the event that Tenant fails
to furnish such document within said twenty (20) days, the Lessor shall be
deemed authorized by this Lease to execute such document in good faith on
Tenant’s behalf and in Tenant’s name and stead, and this Lease shall constitute
an irrevocable power of attorney in favor of Lessor for that limited purpose.

 

Tenant and Lessor shall
execute, deliver and record, file or register from time to time all such
instruments as may be required by any present or future law in order to
evidence the respective interests of Lessor and Tenant in any of the Premises,
and shall cause, at Tenant’s request and sole expense, a memorandum of this
Lease, and any supplement hereto or to such other instrument, if any, as may be
appropriate, to be recorded, filed or registered and re-recorded, refiled or
re-registered in such manner and in such places as may be required by any
present or future law in order to publish notice and protect the validity or
priority of this Lease.  If a memorandum
of this Lease cannot be recorded, filed or registered, this Lease shall be
recorded, filed or registered at Tenant’s sole expense.

 

22.           Waiver
of Claims and Assumption of Risks.

 

Lessor and Tenant release each other from any
liability for loss or damage by fire or other casualty coverable by a standard
form of “all risk” insurance policy, whether or not the loss of damage resulted
from the negligence of the other, its agents or employees.  Each party will use reasonable efforts to
obtain policies of insurance which provide that this release will not adversely
affect the rights of the insured under the policies.  The releases in this Section will be effective whether or not the
loss was actually covered by insurance. 
Tenant assumes all risk of loss or damage of Tenant’s property within the
Premises, including any loss or damage caused by

 

21

 

water leakage, fire, windstorm, explosion,
theft, act of any other tenant, or other cause, unless such loss or damage is
caused by the gross negligence or willful misconduct of Lessor or Lessor’s
employees, agents or contractors. 
Lessor will not be liable to Tenant, or its employees, for loss of or
damage to any property in the Premises, unless such loss or damage is caused by
the gross negligence or willful misconduct of Lessor or Lessor’s employees,
agents or contractors.  Tenant shall not
release Lessor from any liability for loss or damage as a result of any breach
of Lessor’s representations and warranties as set forth in Sections 3 and 14
herein.

 

23.           Indemnification.

 

Tenant will indemnify Lessor and its agents
and employees against all claims, demands and actions, and all related costs
and expenses (including reasonable attorneys’ fees) for injury, death,
disability or illness of any person, or damage to property, occurring in the
Premises or arising out of Tenant’s use of the Premises, except to the extent
caused by the willful misconduct or negligence of Lessor or someone acting on
its behalf.  Lessor will indemnify
Tenant and its agents and employees against all claims, demands and actions,
and all related costs and expenses (including reasonable attorneys’ fees) for
injury, death, disability or illness of any person, or damage to property,
occurring in the Building as defined herein (not including the Premises) or
arising out of Lessor’s use or maintenance of the Building (not including the
Premises), except to the extent caused by the willful misconduct or negligence
of Tenant or someone acting on its behalf. 
Lessor will further indemnify Tenant and its agents and employees for
any claims, demands and actions and all related costs and expenses (including
reasonable attorney’s fees) relating to any breach of Lessor’s representations
and warranties as set forth in the Lease.

 

24.           Insurance.

 

Beginning on the Commencement Date (or upon occupancy of the Premises, if
earlier), Tenant will keep public liability insurance in force at its
expense by an insurer and policy acceptable to Lessor in its reasonable
opinion.  The policy will name Lessor
and its mortgagee as additional insured, for limits of at least $3,000,000
combined single limit for bodily injuries or death, and for property
damage.  Tenant will carry fire and “all
risk” coverage insurance for Tenant’s property and the Premises.  Prior to Tenant’s occupancy of the Premises,
Tenant will deliver to Lessor the liability and casualty policies or
certificates by the insurer showing this coverage to be in effect with premiums
paid.  The insurance will provide that
Lessor will be notified in writing 30 days prior to cancellation of, change in
(so as to result in noncompliance with the insurance requirements hereunder),
or failure to renew, the insurance.

 

Throughout the period during
which Lessor is performing work under the terms of the Work Letter, Lessor
shall carry or cause to be carried for the benefit of Lessor and Tenant such
insurance as is customarily carried by prudent builders of improvements similar
to the Lessor’s work in similar locations. 
Lessor shall pay the premiums for the insurance policies required by
this subparagraph as the same become due and payable. Lessor shall deliver to
Tenant, within fifteen (15) days of commencing the work pursuant to the terms
of the Work Letter, a certificate of Lessor or Lessor’s insurance agent setting
forth the particulars as to all such insurance policies, that all premiums due
thereon have been paid and that the same are in full force and effect.  Not later than fifteen (15) days prior to
the expiration date of each of the insurance

 

22

 

policies required hereby,
Lessor shall deliver to Tenant a certified copy of a renewal policy or policies
marked “premium paid” or accompanied by other evidence of payment of premium
satisfactory to Tenant.

 
In addition, Lessor shall, at its cost and expense, cause the following insurance coverage to be provided and kept in force without lapse at any time and for any reason during the Term of this Lease:
 
(i)    All Risk Insurance coverage policies covering the Premises and Building against loss or damage by lightning, water leakage, fire, windstorm, explosion, theft, or act of any other tenant, in an amount equal to 100% of the full replacement value thereof (excluding foundations and excavation costs), which names Tenant as an additional insured and Loss Payee and which includes an endorsement waiving the right of subrogation. Notwithstanding anything contained in this Lease to the contrary, regardless of whether or not Lessor causes the required insurance covering losses for such causes to be provided and kept in force and regardless of whether or not Tenant, its agents, employees, contractors or others under the control of Tenant cause such damages, Lessor shall be responsible for repairing all damages to the Premises and Building (excluding Tenant’s property as outlined in Section 22 herein) caused by lightning, water leakage, fire, windstorm, explosion, theft, act of any other tenant and such risks as are customarily included in “Special Form” or All Risk coverage endorsements to policies covering property similar to the Premises and Building.
 
(ii)   Commercial General Liability/Public Liability coverage on an “Occurrence Form” basis with limits of at least $3,000,000 Each Occurrence, and $3,000,000 General Aggregate for all claims arising out of Bodily Injury and Personal Injury, and Property Damage Liability.
 
(iii)   Workers Compensation and Employer’s Liability coverage covering all employees, contractors and subcontractors of Lessor, as applicable, working in the State of Minnesota under the statutory provisions of the Minnesota Workers Compensation Act.

 

Each insurance policy to be
carried under this subparagraph shall contain a provision whereby the insurer
(i) agrees that such policy shall not be canceled or modified, and shall not
fail to be renewed, without at least thirty (30)  days’ prior written notice to Tenant, (ii) waives any right to
claim any premiums and commissions against Tenant, (iii) provides that Tenant
is permitted to make payments to effect the confirmation of such policy upon
notice of cancellation due to nonpayment of premiums, and (iv) waives all
rights of subrogation against Tenant. 
In the event any insurance policy shall contain breach of warranty provisions,
such policy shall provide that with respect to the interests of Tenant, such
insurance policy shall not be invalidated by and shall insure Tenant regardless
of (A) any act, failure to act or negligence of or violation of warranties,
declarations or conditions contained in such policy by any named insured, or
(B) any change in title to or ownership of the Leased Premises.

 

23

 

In no event, however, shall Lessor be
required to insure the flight simulators or other trade fixtures and equipment
installed or kept in the Premises by Tenant, regardless of whether the same are
owned by Tenant or a third party.

 

All insurance policies shall be issued by an
insurer admitted to do, and lawfully doing, business in the State of Minnesota
with an A.M. Best rating of A- or better.

 

25.           Assignment
and Subletting.

 

Tenant will have the continuing right to
assign this Lease or sublet all or part of the Premises at any time with
Lessor’s prior written consent, which consent shall not be unreasonably
withheld or delayed.  If Tenant receives
a bona fide offer for an assignment of Tenant’s interest under this Lease or to
sublease all or part of the Premises, and Tenant wishes to accept the offer,
Tenant may request Lessor’s consent in writing, enclosing a copy of the
offer.  Other than as specifically set
forth herein, Tenant will not compensate Lessor for allowing the assignment or
sublease.  In the case of a proposed
assignment or sublease of all of the Premises, Lessor may terminate this Lease,
conditioned on execution of a new lease between Lessor and the party making the
offer on the same terms as the offer to Tenant.  In the case of a proposed sublease for less than all of the
Premises, Lessor may amend this Lease to exclude the portion of the Premises to
be subleased, either conditioned on execution of a new lease between Lessor and
the party making the offer on the same terms as in the offer to Tenant.

 

Lessor shall have the right to receive any
profit made in such assignment or subletting. 
As used herein the term “profit” shall mean any increased rent payable
by such assignee or subtenant above the Monthly Rent but less all transaction
costs of the assignment or sublease incurred by Tenant, including but not
limited to, tenant improvements or other costs of construction paid by Tenant,
as well as any brokerage commissions incurred by Tenant.

 

The provisions of this Section will be
binding on Tenant and any assignee or subtenant of Tenant and will apply to all
portions of the Premises remaining subject to this Lease and to each request by
Tenant, or its assignee or subtenant, for Lessor’s consent to a further or
subsequent assignment or subletting.

 

If Lessor consents to one or more assignments
or subleases, Tenant will still remain liable for all obligations of the Tenant
under this Lease, unless Lessor releases Tenant and terminates this Lease
pursuant to a proposed assignment or sublease of all the Premises conditioned
on execution of a new lease between Lessor and the party making the offer on
the same terms as the offer to Tenant.

 

Lessor’s interest in this Lease will be
freely assignable and the obligations of the Lessor arising or accruing under
this Lease after an assignment will be enforceable only against the assignee.

 

24

 

26.           Damage or Destruction.

 

a. Casualty.

 

If the Premises or Building is damaged by
Casualty, the damage (excluding damage to Building paid for by Tenant or trade
fixtures, equipment or personal property of Tenant) will be promptly repaired
by Lessor at its expense to a condition as near as reasonably possible to the
condition prior to the Casualty.

 

b. Major Casualty.

 

If more than 25% of the total Square Feet in
the Building is rendered untenantable and directly affects Tenant’s business
operations and/or use of the Premises, or if more than 25% of the total Square
Feet in the Premises is rendered untenantable or unusable for Tenant’s intended
purposes, such damage or casualty shall be considered to be a “Major Casualty.”
 Within thirty (30) days of the date of the Major Casualty, Lessor shall
provide Tenant its good-faith written estimate for the time necessary to
restore the Premises.   If the repairs
cannot be completed within two hundred forty (240) days after the date of the
Major Casualty, either party may terminate this Lease by giving written notice
to the other party within ten (10) days of the written estimate, which
termination shall be effective as of the date set forth in the notice. If this
Lease is not terminated, Lessor will begin repairs within 60 days after the
Major Casualty and complete the repairs within 240 days, subject to acts of
God; strikes and other matters not within the control of Lessor.  If Lessor fails to begin, proceed or
complete the repairs as required, Tenant may terminate this Lease by giving
written notice to Lessor.  If Lessor
does not begin or complete the repairs within 30 days after Tenant’s notice,
Tenant may terminate this Lease by written notice to Lessor within 5 days after
expiration of the foregoing 30 day period. 
If this Lease is terminated because of the Major Casualty, rents and
other payments will be prorated as of the date of Major Casualty and will be
proportionately refunded to Tenant or paid to Lessor, as the case may be,
during any period in which the Premises or any portion of the Premises is made
untenantable or made unusable for Tenant’s intended purposes, as a result of
the Major Casualty, the Monthly Rent will be abated for the period of time
untenantable or unusable for Tenant’s intended purposes in the Premises.

 

27.           Eminent
Domain.

 

If there is a taking of 25% or more of the
Premises or 25% or more of the total Square Feet in the Building, either party
may terminate this Lease as of the date the public authority takes possession,
by written notice to the other party within 30 days after the taking.  If this Lease is so terminated, any rents
and other payments will be prorated as of the termination and will be
proportionately refunded to Tenant, or paid to Lessor, as the case may be.  All damages, awards and payments for the
taking will belong to Lessor irrespective of the basis upon which they were
made or awarded, except that Tenant will be entitled to any amounts
specifically awarded for Tenant’s trade fixtures or equipment or as a
relocation payment or allowance.  If
this Lease is not terminated as a result of the taking, Lessor will restore the
remainder of the Premises to a condition as near as reasonably possible to the
condition prior to the taking, the rent will be abated for the period of time
the space is untenantable in proportion to the square foot area

 

25

 

untenantable and this Lease will be amended
appropriately to reflect the deletion of the space taken.

 

28.           Defaults.

 

a.             Default
by Tenant:

 

If (a) Tenant defaults in the payment of rent
or other amounts under this Lease and the default continues for ten (10) days
after written notice by Lessor or Tenant, (b) Tenant defaults in any other
obligation under this Lease and the default continues for thirty (30) days
after written notice by Lessor to Tenant, (c) any proceeding is begun by or
against Tenant to subject the assets of Tenant to any bankruptcy or insolvency
law or for an appointment of a receiver of Tenant or for any of Tenant’s
assets, or (d) Tenant makes a general assignment of Tenant’s assets for the
benefit of creditors, then Lessor may, with or without terminating this Lease,
cure the default and charge Tenant all costs and expenses of doing so, and
Lessor also may reenter the Premises, remove all persons and property; and
regain possession of the Premises, without waiver or loss of any of Lessor’s
rights under this Lease, including Lessor’s right to payment of Monthly
Rent.  Lessor also may terminate this
Lease as to all future rights of Tenant, without terminating Lessor’s right to
payment of Monthly Rent and other charges due under this Lease.

 

Tenant waives any right of restoration to
possession of the Premises after reentry, notice of termination, or of judgment
for possession.  If this Lease is
terminated under this Section, Tenant promises and agrees to pay all Monthly
Rent and other charges due for the remainder of the original Term, and all
reasonable attorneys’ fees and other expenses. 
If Tenant defaults in any of its obligations under this Lease, it will
promptly pay all reasonable costs including reasonable attorneys’ fees incurred
by Lessor in enforcing Tenant’s obligations, whether or not this Lease is
terminated and whether or not suit is brought. 
No right or remedy will preclude any other right or remedy, no right or
remedy will be exclusive of or dependent upon any other right or remedy, and
any right or remedy may be exercised independently or in combination.

 

If Tenant is in default and notice of
termination of Tenant’s right to possession has been mailed to Tenant at the
Premises and it appears in Lessor’s reasonable judgment that Tenant has
abandoned or vacated the Premises, Lessor may reenter the Premises and retake
possession without legal action, without relieving Tenant of the obligation to
pay Monthly Rent or any other obligations under this Lease, and without any
liability to Tenant for re-entry or removal of Tenant’s property.

 

In the event that this Lease is terminated
and/or Tenant is dispossessed from the Premises on account of Tenant’s default
hereunder, Lessor agrees to use good-faith, commercially reasonable efforts to
re-let same and to otherwise mitigate damages.

 

b.             Default
by Lessor:

If Lessor shall fail to keep, observe or perform any of the terms,
covenants or conditions herein to be kept, observed and performed by Lessor,
and such default has not been cured by Lessor within thirty (30) days after
Tenant has given written notice to Lessor, and provided that Lessor is not
diligently and effectively in the process of curing the default, then Tenant in
addition to

 

26

 

any other rights or remedies available to Tenant hereunder, shall
have:  (i) the right, at its option, to
cure such default by such acts as may be reasonably necessary under the
circumstances, and to offset any and all expense thereof, including reasonable
attorneys’ fees, against amounts due to Lessor from Tenant;  (ii) if the default by Lessor is such as to
constructively evict or effectively dispossess Tenant, or substantially destroy
Tenant’s right to quiet enjoyment, Tenant shall have the right to invoke any
and all rights and remedies Tenant may have at law and in equity; or (iii) the
option to exercise any other rights or remedies which Tenant may have at law or
equity.  Notwithstanding the foregoing,
the notice and cure period provided to Lessor above shall not apply to Lessor’s
obligation to timely deliver the Premises as required under this Lease.  If Tenant makes any advances because of a
default by Lessor not cured within thirty (30) days after notice from Tenant,
Lessor is obligated to repay the full amount of such advances, together with
interest on the amount advanced at the rate of interest set forth in Section 5
hereof (18% per annum or the maximum rate of interest permitted by law).  No remedy herein or otherwise conferred upon
or reserved to Tenant shall be considered to exclude or suspend any other
remedy but the same shall be cumulative and shall be in addition to every other
remedy given hereunder, or now or hereafter existing at law or in equity or by
statute, and every power and remedy given by this Lease to Tenant may be
exercised from time to time and so often as occasion may arise or as may be deemed
expedient.

 

29.           Waiver of Lease Provisions.

 

No waiver of any provision of this Lease will
be deemed a waiver of any other provision or a waiver of that same provision on
a subsequent occasion.  The receipt of
rent by Lessor with knowledge of a default under this Lease by Tenant will not
be deemed a waiver of the default. 
Lessor and Tenant will not be deemed to have waived any provision of
this Lease by any action or inaction and no waiver will be effective unless it
is done by express written agreement signed by the waiving party.  Any payment by Tenant and acceptance by
Lessor of a lesser amount than the full amount of all Monthly Rent and other
charges then due will be applied to the earliest amounts due.  No endorsement or statement on any check or
letter for payment of rent or other amount will be deemed an accord and
satisfaction, and Lessor may accept such check or payment without prejudice to
its right to recover the balance of any rent or other amount or to pursue any
other remedy provided in this Lease.  No
acceptance of payment of less than the full amount due will be deemed a waiver
of the right to the full amount due together with any interest and service
charges.

 

30.           Return of Possession to Lessor.

 

On expiration of the Term or sooner termination
of this Lease, Tenant will return possession of the Premises to Lessor, without
notice from Lessor, in good order and condition, except for ordinary wear and
damage, destruction or conditions Tenant is not required to remedy under this
Lease.  If Tenant does not return
possession of the Premises to Lessor, Tenant will pay Lessor all damages Lessor
may suffer as a result of Tenant’s holdover. 
Tenant will give Lessor all keys for the Premises and will inform Lessor
of combinations on any locks and safes on the Premises.  Any property left in the Premises after
expiration or termination of this Lease or after the Premises have been vacated
by Tenant will become the property of Lessor to dispose of as Lessor chooses.

 

27

 

31.           Holding
Over.

 

If
Tenant remains in possession of the Premises after expiration of the Term
without a new lease, any such holding over will be from month-to-month subject
to all the same provisions of this Lease, except that the Monthly Rent will be
150% of the Monthly Rent of the expired Lease. 
The month-to-month occupancy may be terminated by Lessor or Tenant on
the last day of any month by at least 30 days’ prior written notice to the
other.

 

32.           Brokers.

 

Lessor and Tenant represent and warrant one
to another that neither of them has employed or otherwise used any broker or
agent in relation to this Lease except that Lessor has engaged Spectrum
Development Group, LLC or its assigns and Tenant has engaged The Keewaydin
Group as its broker.  Lessor agrees to
pay The Keewaydin Group, Inc., a fee equal to $4.00 per usable square foot
leased by Tenant per this Lease, pursuant to a separate brokerage agreement,
which fee shall be payable one-half upon execution of the Lease and one-half on
the Commencement Date. Lessor will indemnify and hold Tenant harmless, and
Tenant will indemnify and hold Lessor harmless, from and against any claims for
any other brokerage or other commissions or fees arising out of any breach of
the foregoing representation and warranty by the respective indemnitors.  The brokerage fee will be adjusted upwards
or downward based on the actual square footage committed to at the time of
Occupancy.

 

33.           Option to Renew.

 

Provided Tenant is not then in default under
this Lease, to the extent of the portion of the Premises Tenant is actually
occupying at the end of the applicable Term or Option Term, Tenant shall have
the option to renew this Lease for up to two (2) successive periods of five (5)
years each (the “Option Terms(s)”).  If
Tenant exercises any option, all the provisions of the Lease shall remain in
full force and effect and the parties’ rights, duties, and obligations shall
remain the same except Sections 34, 35, and 36 hereof shall be deleted in their
entirety and the rent set forth in Section 5 shall be adjusted as herein
provided.  Tenant may not exercise this
option for any five (5) year period if it is not then a Tenant under this Lease
or if it is in default under this Lease. 
In order to exercise any option, Tenant must give Lessor written
notification of its election to do so, together with a then-current copy of
Tenant’s financial statements, no later than one (1) calendar year prior to the
expiration of the term under which it is currently operating (the initial term
or any subsequently exercised Option Term, whichever is applicable).

 

Base rent payable under any
Option term shall be established for each Option Term prior to its
commencement.  The base rent utilized
for any Option Term shall be the prevailing rate (the “Prevailing Rental Rate”)
at the commencement of such Option Term, for renewals of space in the Building
of equivalent quality, size, utility and location, with the length of the
Option Term and the credit standing of Tenant taken into account.  Within 30 days after receipt of Tenant’s
notice to renew, Lessor shall deliver to Tenant written notice of the
Prevailing Rental Rate and shall advise Tenant of the required adjustment to
Basic Rent, if any, and the other terms and conditions offered including,
whether any letter of credit would be required if Lessor determines,

 

28

 

in its reasonable judgment,
that Tenant’s financial condition or credit-worthiness has materially
deteriorated since the date of this Lease, together with documentation
substantiating such determination. 
Tenant shall, within thirty (30) days after receipt of Lessor’s notice,
notify Lessor in writing whether; (i) Tenant accepts or rejects Lessor’s
determination of the Prevailing Rental Rate; and (ii) whether Tenant disputes
Lessor’s determination that a letter of credit will be required (if a letter of
credit is required in Lessor’s offer). 
If Tenant timely notifies Lessor that Tenant accepts Lessor’s
determination of the Prevailing Rental Rate (including any letter of credit
requirement), then, on or before the commencement date of the Option Term,
Lessor and Tenant shall execute an amendment to this Lease extending the Term
on the same terms provided in this Lease, except as follows:

 

(a)           Basic Rent shall be adjusted to the
Prevailing Rental Rate; and

 

(b)           Lessor shall lease to Tenant the Premises in
their then-current condition, and Lessor shall not provide to Tenant any
allowances (e.g. moving allowance, construction allowance, and the like) or
other tenant inducements, unless mutually agreed to by Lessor and Tenant at
that time.

 

If Tenant accepts Lessor’s
determination of the Prevailing Rental Rate, but rejects Lessor’s requirement
for a Letter of Credit, then Lessor and Tenant agree that the Parties shall
have an additional thirty (30) day period to allow the Parties additional time
to further negotiate the Letter of Credit requirement, including Tenant’s right
to provide documentation, evidence or other assurances to support or
substantiate that Tenant’s financial condition should be reasonably acceptable
to Lessor.  If after the thirty (30) day
additional period, the parties cannot agree whether a Letter of Credit should
be required, then Tenant’s rights under this Section shall terminate and Tenant
shall have no right to renew this Lease.

 

If Tenant rejects Lessor’s
determination of the Prevailing Rental Rate, or fails to timely notify Lessor
in writing that Tenant accepts or rejects Lessor’s determination of the
Prevailing Rental Rate, time being of the essence with respect thereto,
Tenant’s rights under this Section shall terminate and Tenant shall have no
right to renew this Lease.

 

Tenant’s rights under this
Section shall terminate if (1) this Lease or Tenant’s right to possession of
the Premises is terminated, (2) Tenant assigns all of its interest in this
Lease or sublets all of the Premises, (3) Tenant fails to timely exercise its
option under this Section, time being of the essence with respect to Tenant’s
exercise thereof or (4) in connection with an offer, Lessor determines, it its
sole but reasonable discretion, that Tenant’s financial condition or
creditworthiness has materially deteriorated since the date of this Lease and
Tenant fails to provide adequate Credit assurances to Lessor as previously
outlined within in this Section.

 

34.           Early Termination by Tenant.

 

Provided Tenant is not then
in default under this Lease, Tenant shall have the right to terminate this
Lease on the seven (7) year anniversary of the Commencement Date (the “Early
Termination Date”) upon written notice given to Lessor at least one hundred
eighty (180) days in advance of the Early Termination Date.  Should Tenant properly terminate the Lease
pursuant to this

 

29

 

Section, the Lease shall be
deemed to end on the Early Termination Date for all purposes and the Term shall
end on such Early Termination Date.  On
the Early Termination Date, Tenant will pay Lessor the unamortized portion of
the “*” per square foot Tenant Improvement Allowance amortized at a rate of “*”
per annum .  Tenant will pay no other
penalty to Lessor for this right and will have no further obligations to Lessor
or anyone claiming through Lessor under this Lease.

 

35.           Reduction of Space by Tenant. 
Provided Tenant is not then in default under this Lease, Tenant shall
have the option to reduce the square footage of the Premises by up to 15,000
square feet on the seven (7) year anniversary of the Commencement Date and for
the balance of the Term.  In order to
exercise this option, Tenant must give Lessor written notification of its
election, specifying the amount and location of the square footage (which must
be contiguous to the space adjoining the Premises) to be given up by Tenant no
later than one hundred eighty (180) days prior to the date occurring seven (7)
years from the Commencement Date. 
Tenant will not pay any penalty to Lessor for this right and will have
no further obligation to Lessor for the Leased Premises space.  If Tenant
reduces the Premises as set forth in this Section 35, Tenant will pay Lessor
the unamortized portion of the “*” per square foot Tenant Improvement Allowance amortized at a rate of “*” per annum with respect to the Tenant
Improvement Allowance attributable to the relinquished portion of the
Premises.  Tenant will pay no other
penalty to Lessor for this right to reduce the Premises and will have no
further obligations to Lessor or anyone claiming through Lessor under this
Lease with respect to the relinquished portion of the Premises.

 

36.           Option to Increase the Size of the Premises.

 

Provided
Tenant is not then in default under this Lease, Tenant shall have the option to
increase the Usable Square Footage of the Premises by 5,000 square feet on the
three, five and seven year anniversaries of the Commencement Date.  (Each 5,000 square foot addition is
hereafter termed the “Additional Space”.) 
Any square feet added to the Premises must be contiguous to the initial
Premises (or any Additional Space added to the initial Premises.  In order to exercise its option on the
third, fifth or seventh anniversary of the Commencement Date, or any of them,
Tenant shall give written notice of its election to add no later than two
hundred seventy days prior to the third, fifth or seventh anniversary of the
Commencement Date, as the case may be. 
Upon exercise of either option by Tenant, the Additional Space shall be
added to the Usable Square Footage of the Premises effective on the third,
fifth or seventh anniversary of the Commencement Date, as applicable.   Lessor shall allow Tenant to begin
construction up to 180 days prior to the anniversary date.  Tenant shall bear no cost associated with
removal or relocation of any existing tenant of the Additional Space, and such cost
will be paid by the existing tenant or by Lessor.  The Additional Space shall be delivered under the same terms and
conditions as the initial Premises, including the Lessor delivering the
Additional Space to Tenant in accordance with Exhibit C-1 and including the
identical improvements installed as part of the tenant shell improvements of
Tenant’s Work (as set forth in Exhibit C) in the initial Premises.  All Additional Space will be coterminous
with the Initial Premises and will be under the same terms and conditions as
the Initial Premises except that the Monthly Rent for the Additional Space
shall be the sum of:  (i) Base Rent (as
determined below), plus the (ii)
the

 

* Omitted pursuant to a request for confidential treatment.

 

30

 

Tenant Improvement Allowance for the Additional
Space equal to an amount of up to “*” per square foot, amortized
at 9.6% per annum over the remaining Term.

 

For purposes hereof, “Base Rent” for the Additional
Space shall be calculated by multiplying the Usable Square Feet of the
Additional Space by the following annual rates and dividing by 12.

 

 

	
  Year

  	
   

  	
  Annual Rate Per

  Usable Square Foot

  of the Premises

  	
   

  
	
  3

  	
   

  	
   

  	
  “*”

  	
   

  
	
  4

  	
   

  	
   

  	
  “*”

  	
   

  
	
  5

  	
   

  	
   

  	
  “*”

  	
   

  
	
  6

  	
   

  	
   

  	
  “*”

  	
   

  
	
  7

  	
   

  	
   

  	
  “*”

  	
   

  
	
  8

  	
   

  	
   

  	
  “*”

  	
   

  
	
  9

  	
   

  	
   

  	
  “*”

  	
   

  
	
  10

  	
   

  	
   

  	
  “*”

  	
   

  

 

The parties agree to execute an amendment to this
Lease to reflect the Monthly Rent schedule applicable to any expansion space.

 

Except as otherwise mutually agreed, in no
event shall Lessor be obligated to pay a commission with respect to any space
leased by Tenant under this Section, and Tenant and Lessor shall each indemnify
the other against all costs, expenses, attorneys’ fees, and other liability for
commissions or other compensation claimed by any broker or agent claiming the
same by, through, or under the indemnifying party.

 

Tenant’s rights under this Section shall
terminate if (a) this Lease or Tenant’s right to possession of the Premises is
terminated, or (b) less than thirty-six (36) full calendar months remain in the
initial Term of this Lease.

 

37.           Right of First Refusal.

 

(a)    Grant of Right

 

Subject to the renewal or expansion options
of Pan Am, or Tenant (Mesaba) as a current Sub-Tenant of Pan Am, which exist as
of the Commencement Date of this Lease; and 
provided (a) no Event of Default exists, and (b) Tenant is then
occupying at least 15,000 Usable square feet of the Premises, Tenant shall at
all times have a right of first refusal on any space contiguous to the
Premises.  “First Refusal Space” shall
mean, collectively, any space contiguous to the Premises as designated on Exhibit
B, limited to Phase II and the Pan Am leased space located in Phase I,
including Tenant’s subleased space therein (collectively, the “First Refusal
Space”).

 

* Omitted pursuant to a request for confidential treatment.

 

31

 

(b)   Notice of Third Party Lease
Offer.

 

If Lessor enters into good faith negotiations
with any third party to lease all or any part of the First Refusal Space and
sends to or receives from such third party a letter of intent or similar
document acceptable to Lessor in Lessor’s sole discretion to lease all or any
part of the First Refusal Space, Lessor will provide Tenant with an “Offer
Notice” which will notify Tenant of the terms and conditions of the proposed
lease between Lessor and the third party and provide Tenant with a copy of the
letter of intent or similar document. 
The Offer Notice shall be in writing, and shall include the date on which
the First Refusal Space shall be included in the Premises, and shall also
include the financial, economic and other relevant terms of the lease offer for
the First Refusal Space.

 

(c)    Exercise of Right.

 

If Tenant desires to lease the portion of the
First Refusal Space that is the subject of the Offer Notice, Tenant may do so
under the same terms and conditions as the Initial Premises as outlined in this
Lease, except for the Base rent.  Base
rent will be determined by reducing the Base Rent of the third-party lease
offer to the First Refusal Space, reduced by the amortization (at rate of 10%
per annum) of all allowances given to said third-party, including but not
limited to, tenant improvements, moving, architectural or other allowances,
cost of Lessor’s construction of shell condition, and commissions paid to
arrive at the net effective rate (the “Net Effective Rent”). The cost of
delivering the space according to Exhibit C of this Lease will then be
amortized at a rate of 10% per annum over the balance of the Term of this Lease
and added to the Net Effective Rent. 
The sum of this amortization and the Net Effective Rent will constitute
Base Rent for the First Refusal Space. 
Tenant shall notify Lessor in writing whether or not Tenant elects to
lease the entire First Refusal Space on the terms set forth in the Offer
Notice, as amended by the above mentioned rent calculation, within ten (10)
business days after Lessor delivers to Tenant the Offer Notice.  If Tenant provides notice it elects not to
lease the entire First Refusal Space (a “Decline”) it shall state in good faith
in such notice whether its decision was made primarily due to (i) lack of need
for additional space in the Building, or (ii) the amount of the Base Rent for
such First Refusal Space.  If Tenant
does not so notify Lessor within the foregoing ten (10) business days period,
Lessor may lease the subject portion of the First Refusal Space to the third
party on the same terms and conditions described in the Offer Notice, and
Tenant’s right of first refusal with respect to the subject portion of the
First Refusal Space automatically terminates if a Lease document is executed
with Third Party and is of no further force and effect, except as specifically
provided below.  At the expiration of the
term of Third Party’s lease or if so terminated, Tenant shall again have the
right of first refusal;  Provided,
however, if the Third Party’s Lease (i) is in excess of 15,000 square feet, or
(ii) contains a priority right of renewal, then Tenant’s Right of First Refusal
contained herein shall terminate.

 

If Tenant timely elects to lease the First
Refusal Space, then Lessor and Tenant shall execute an amendment to this Lease,
effective as of the date the First Refusal Space is to be included in the
Premises, under the same terms set forth in the terms and conditions of this
Lease except for the Base rent, which will be adjusted as described above.

 

32

 

(d)   Change of Terms

 

If Lessor is entitled to lease all or any
part of the First Refusal Space to a third party as described in Section 37 (c)
above, and, prior to Lessor’s execution of a lease with the third party, the
terms and conditions of the transaction between Lessor and the third party
change by a reduction in the base rent of “*” per square foot or more from that
contained in the initial letter of intent or similar document as described
above, Lessor will notify Tenant of the revised terms and conditions.  If Tenant desires to lease the subject
portion of the First Refusal Space on the revised terms and conditions, Tenant
shall notify Lessor in writing whether Tenant elects to lease the revised
subject portion of the First Refusal within ten (10) business days after Lessor
delivers such notice to Tenant.  If
Tenant does not so notify Lessor within the foregoing ten (10) business days
period, Lessor may lease the subject portion of the First Refusal Space to the
third party on the changed terms and conditions, and Tenant’s right of first
refusal with respect to the subject portion of the First Refusal Space
automatically terminates if a lease document is executed with the third-party
and is of no further force and effect. 
If Tenant timely elects and notified Lessor of its intent to lease the
subject portion of the First Refusal Space as revised and adjusted, then Lessor
and Tenant shall execute an amendment to this Lease, effective as of the date
the First Refusal Space is to be included in the Premises, under the same terms
set forth in the terms and conditions of this Lease except for Base Rent, which
will be adjusted as described above.

 

(e)    Revival of First Refusal
Rights

 

If Lessor is entitled to lease all or any
part of the First Refusal Space to a third party under this Section and does
not thereafter enter into a lease of such space with the third party, Tenant’s
right of first refusal is revived with respect to the First Refusal Space as
designated herein.

 

(f)    Right of First Refusal Terms
and Conditions

 

All such First Refusal Space will be
coterminous with the Initial Premises and will be under the same terms and
conditions as the Initial Premises and this Lease, except for the Base Rent as
adjusted in Section 37(c) hereof.

 

Tenant may not exercise its rights under this
Section if Tenant is in default under this Lease. Except as mutually agreed, in
no event shall Lessor be obligated to pay a commission with respect to any
space leased by Tenant under this Section, and Tenant and Lessor shall each
indemnify the other against all costs, expenses, attorneys’ fees, and other
liability for commissions or other compensation claimed by any broker or agent
claiming the same by, through, or under the indemnifying party.

 

Tenant’s rights under this Section shall
terminate (i) if this Lease or Tenant’s right to possession of the Premises is
terminated, (ii) if the Term of this Lease is extended pursuant to Section 33
hereof and the Offer Notice would occur in years eighteen (18), nineteen (19)
or twenty (20) of the Term, or (iii) subject to the provisions of Section 37(d)
hereof, the Tenant stated in its Decline that its reason for not leasing the
First Refusal Space was due to Tenant’s lack of need for additional space in
the Building.

 

* Omitted pursuant to a request for confidential treatment.

 

33

 

38.           Notice.

 

Any notice under this Lease will be in
writing, and will be sent by prepaid overnight courier service, or by
telephonic facsimile confirmed by certified mail, addressed to Tenant at the
Premises and to Lessor at:

 

Richard V. Morphew

Spectrum Investment Group,
L.L.C.

1000 Blue Gentian Road

Eagan, MN 55121

(Fax: 651-675-2290)

 

or to such other address as is designated in
a notice given under this Section.  A
notice will be deemed given on the date mailed.  Routine mailings to Tenant need not be sent by certified mail.

 

39.           Governing
Law.

 

This Lease will be construed under and
governed by the laws of Minnesota.  If
any provision of this Lease is illegal or unenforceable, it will be severable
and all other provisions will remain in force as though the severable provision
had never been included.

 

40.           Entire
Agreement.

 

This Lease, including all documents and
Exhibits incorporated herein by reference, contains the entire agreement
between Lessor and Tenant regarding the Premises and supercedes and replaces
any and or all prior contemporaneous discussions, negotiations, understandings
and agreements, written and oral, regarding such Premises.  Any Shuttle Services contemplated between
the Parties hereto, if any, shall be addressed in a separate Agreement.  Tenant agrees that it has not relied on any
statement, representation or warranty of any person except as set out in this
Lease.  All Exhibits attached hereto are
fully incorporated herein by reference. This Lease may be modified only by an
agreement in writing signed by Lessor and Tenant.  No surrender of the Premises, or of the remainder of the Term,
will be valid unless accepted by Lessor in writing.  This Lease may be executed in two or more counterparts, each of
which will be deemed an original, but all of which together shall continue one
and the same instrument.

 

41.           Successors
and Assigns.

 

All provisions of this Lease will be binding
on and inure to the benefit of the successors and assigns of Lessor and Tenant,
except that no person or entity holding under or through Tenant in violation of
any provision of this Lease will have any right or interest in this Lease or
the Premises.

 

42.           Force
Majeure

 

In the event
that either party hereto shall be partially or totally delayed or hindered in
or prevented from performing any of its obligations hereunder, or if such
obligations are rendered

 

34

 

impossible due
to any events of Force Majeure, including but not limited to accidents,
breakage, labor strikes, shortage of materials, acts of God, fire, explosion,
flood, wars, riots, acts of public enemy, acts of terrorism, sabotage, civil
commotion,  acts of Government, delays
of governments or any department of regulatory agency thereof or created
thereby (including national aviation authorities), or any other conditions,
events or other causes beyond such party’s reasonable control, then performance
of such acts or obligations shall be excused for the period of the delay and
the period for the performance of any such act shall be extended for a period
equivalent to the period of such delay. 
The party who has suffered the Force Majeure Event shall use its best
efforts to inform the other party of the Event and shall use its best efforts
to ameliorate the situation.  The
occurrence of a Force Majeure Event shall not constitute a breach hereunder.

 

IN WITNESS WHEREOF, Lessor and Tenant have
executed this Lease to be effective as of the date stated in the first
paragraph of this Lease.

 

	
   

  	
  Lessor:

  
	
   

  	
   

  
	
   

  	
  SPECTRUM INVESTMENT GROUP,
  L.L.C.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard V. Morphew

  	
   

  
	
   

  	
  Its President

  
	
   

  	
   

  
	
   

  	
  Tenant:

  
	
   

  	
   

  
	
   

  	
  MESABA AVIATION, INC.

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Randy W. Strobel

  	
   

  
	
   

  	
  Its Vice President, Finance

  
						

 

35

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