Document:

ex_330005.htm

 

Exhibit 10.14

 

 

 

 

 

 

CITY OF PHOENIX AVIATION DEPARTMENT

 

UNSUBORDINATED GROUND LEASE AND OPTION TO LEASE 

 

ADDITIONAL LAND

 

 

 

NO. 154206--0

 

 

 

Between

 

CITY OF PHOENIX,

 

an Arizona municipal corporation,

 

Landlord,

 

and

 

DVT HANGARS LLC,

 

a Delaware limited liability company,

 

Tenant,

 

at Phoenix Deer Valley Airport

 

 

 

 

Page 1 of 54

 

 

TABLE OF CONTENTS

 

	
			ARTICLE 1 – DEFINITIONS

				3
	
			ARTICLE 2 – THE PREMISES, ITS USE, AND OPTION TO LEASE ADDITIONAL LAND

				5
	
			ARTICLE 3 – RIGHT OF ENTRY RESERVED

				12
	
			ARTICLE 4 – TERM

				13
	
			ARTICLE 5 – LANDLORD RIGHT TO RECLAIM

				
			14

			
	
			ARTICLE 6 – NET RENT

				15
	
			ARTICLE 7 – TAXES

				18
	
			ARTICLE 8 – UTILITIES

				19
	
			ARTICLE 9 – PERFORMANCE GUARANTEE

				20
	
			ARTICLE 10 – INDEMNIFICATION

				21
	
			ARTICLE 11 – INSURANCE

				22
	
			ARTICLE 12 – ENVIRONMENTAL CONDITIONS

				22
	
			ARTICLE 13 – UNAVOIDABLE DELAYS

				26
	
			ARTICLE 14 – ASSIGNMENTS, SUBLEASES, OR MORTGAGES

				26
	
			ARTICLE 15 – SIGNAGE

				34
	
			ARTICLE 16 – BREACH AND REMEDIES FOR BREACH

				34
	
			ARTICLE 17 – NO WAIVER

				36
	
			ARTICLE 18 – TENANT IMPROVEMENTS

				36
	
			ARTICLE 19 – DAMAGE OR DESTRUCTION TO PREMISES

				41
	
			ARTICLE 20 – CONDEMNATION

				43
	
			ARTICLE 21 – MAINTENANCE AND CUSTODIAL

				45
	
			ARTICLE 22 – NO IMPAIRMENT OF LANDLORD’S TITLE

				46
	
			ARTICLE 23 – NOTICE

				47
	
			ARTICLE 24 – COMPLIANCE WITH LAWS

				47
	
			ARTICLE 25 – GENERAL PROVISIONS

				49

 

EXHIBIT A-1 Site Map of the Premises (Phase 1 and Fuel Farm)

EXHIBIT A-2 Site Map of Phase 2 Parcel (Lease Option)

EXHIBIT B-1 Legal Description – Premises (Phase 1 & Fuel Farm)

EXHIBIT B-2 Legal Description – Phase 2 Parcel (Lease Option)

EXHIBIT C-1 Irrevocable Letter of Credit form

EXHIBIT C-2 Cash Deposit for Performance Guarantee Form

EXHIBIT D    Insurance Requirements

EXHIBIT E     Landlord-Approved Form of Sublease

EXHIBIT F     Supplemental Terms and Conditions to All Airport Agreements

EXHIBIT G    Compliance with Environmental Laws

EXHIBIT H    Memorandum of Lease

EXHIBIT I      Site Map of First Refusal Right Parcel (Police Land)

Exhibit J          Legal Description of First Refusal Right Parcel (Police Land)

 

Page 2 of 54

 

 

CITY OF PHOENIX AVIATION DEPARTMENT

UNSUBORDINATED GROUND LEASE NO. ____________

 

This Unsubordinated Ground Lease (Lease) is made and entered into by and between the City of Phoenix, an Arizona municipal corporation (Landlord), and DVT Hangars LLC, a Delaware limited liability company, as successor in interest to Sky Harbour Deer Valley Airport, LLC, a Delaware limited liability company (Tenant). Landlord and Tenant are collectively referred to herein as the “Parties” and individually as a “Party.” This Lease is effective when signed by Landlord (Effective Date).

 

RECITALS

 

A.         Landlord owns and operates Phoenix Deer Valley Airport (Airport) located at 702 West Deer Valley Road in Phoenix, Arizona.

 

B.         Tenant desires to lease from Landlord certain real property located at the Airport to construct an executive hangar complex to store aircraft and associated office space and to sublease the hangars to third parties.

 

C.         On April 3, 2019, the Phoenix City Council adopted Ordinance S-45535, which authorized the City Manager to enter an unsubordinated ground lease with Tenant.

 

AGREEMENT

 

THEREFORE, the Parties agree as follows:

 

ARTICLE 1 – DEFINITIONS

 

For purposes of this Lease, the following words and terms have the following meanings:

 

A.          Applicable Law means all federal, state, and local statutes, rules, regulations, and ordinances that apply to this Lease, the Premises (defined in Article 2.1), Tenant’s use or occupancy of the Premises, and the Airport, including all future amendments, supplements, and revisions to those laws. Applicable Laws also includes all covenants, restrictions, easements, and agreements related to the Premises and the Airport, and all applicable Airport Rules and Regulations, Aviation Department Minimum Standards Rules and Regulations 02-01 to 02-12, and Chapter 4 of the Phoenix City Code. Applicable Laws also includes all present and future City of Phoenix building restrictions and regulations, zoning laws, ordinances, resolutions, and regulations, and all present and future ordinances, laws, regulations, and orders of all boards, bureaus, commissions, and bodies of any municipal, county, state, or federal authority now or hereafter having jurisdiction over Tenant or the Premises.

 

B.          Days means calendar days.

 

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C.         FAA means the Federal Aviation Administration and any successor agency.

 

D.         Improvement means all buildings, structures, and other fixtures on the Premises on the Effective Date of this Lease.

 

E.         Tenant Improvement means the hangars, office space, fuel farm, and other buildings, structures, and fixtures that Tenant constructs or installs on the Premises and, if Tenant exercises the Lease Option, on the Phase 2 Parcel. Tenant Improvement includes any extensive alteration of an Improvement or Tenant Improvement but does not include Trade Fixtures. If a dispute arises as to what is or is not a Tenant Improvement, then Landlord’s decision resolving the dispute will be final and nonappealable.

 

F.         Tenant Improvement Process means the process that requires Tenant to submit to Landlord for review and approval all plans and specifications for any Tenant Improvement that Tenant intends to construct or install on the Premises. The Tenant Improvement Process is described in the Aviation Department’s Tenant Improvement Handbook, as it may be amended from time to time, and as further described in Article 18, Tenant Improvements. The Tenant Improvement Handbook is available at https://www.skyharbor.com/docs/default-source/default-document-library/ti-handbook-(1).pdf?sfvrsn=2 .

 

G.         Trade Fixture means equipment and other items of personal property that Tenant affixes to the Premises that appear to be part of the Premises but are deemed by Landlord and Tenant to be Tenant’s personal property. If a dispute arises as to what is or is not a Trade Fixture, then Landlord’s decision resolving the dispute will be final and nonappealable.

 

H.         Year means a twelve- (12) month period beginning on the Effective Date and each successive anniversary thereof.

 

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ARTICLE 2 – THE PREMISES, ITS USE, OPTION TO LEASE PHASE 2

PARCEL, AND FIRST RIGHT OF REFUSAL (POLICE LAND)

 

2.1         Premises. Landlord hereby leases to Tenant and Tenant hereby leases from Landlord approximately 384,474 square feet (SF) of unimproved real property (Premises) located at the Airport. The Premises consist of Phase 1 of Tenant’s proposed aircraft-hangar development plus Tenant’s proposed fuel farm. Tenant’s aircraft-hangar development (Development) consists of two phases to be built on two parcels: the Premises (Phase 1, which includes the fuel farm) and the Phase 2 parcel, consisting of 288,152 SF (Phase 2 Parcel). Subject to the conditions set forth in this Lease, Landlord hereby grants to Tenant an option to lease the Phase 2 Parcel (Lease Option). The dates by no later than which the Phase 1 and Phase 2 Tenant Improvements must be fully and finally developed, designed, and constructed are set forth in Article 4. The date by which the Lease Option must be exercised and other Lease Option terms and conditions are set forth in Article 2.18. An Aerial Map of the Premises, depicting Phase 1 and the fuel farm, is attached as Exhibit A-1. An Aerial Map depicting the Phase 2 Parcel is attached as Exhibit A-2. Landlord, at its expense, has engaged a licensed surveyor to prepare metes-and-bounds descriptions of the Premises and Phase 2 Parcel, and Landlord has provided a complete copy of the survey to Tenant. The Legal Descriptions of the Premises and Phase 2 Parcel are set forth in Exhibits B-1 and B-2. The Premises include all Tenant Improvements on the Premises on the date a certificate of occupancy is issued. If Tenant properly exercises the Lease Option, then the term “Premises” in this Lease will be deemed amended to include the Phase 2 Parcel and all Phase 2 Tenant Improvements constructed on the real estate.

 

2.2         Use. Tenant shall comply with all of the following:

 

A.         Tenant shall use the Premises solely for: (1) constructing, operating, repairing, and maintaining the Tenant Improvements, including the fuel farm; (2) subleasing the hangars to aeronautical operators and approved service providers; (3) storing aircraft in the hangars; (4) occupying the office space; (5) parking the personal vehicles of Tenant and its officers, managers, employees, contractors, guests, invitees, and subtenants, and for no other use or purpose whatsoever. The storage of aircraft used only for corporate travel or other business use by Tenant or subtenants constitutes an approved commercial use of the Premises, subject to Tenant applying for and obtaining an appropriate Specialized Aviation Service Operator’s (SASO) permit. Tenant shall not store anything (other than airplanes and items customarily used in the foregoing uses) on or around the Premises. Any other commercial activity on the Premises is prohibited without Landlord’s prior written approval, which may not be unreasonably withheld, conditioned, or delayed. If another commercial activity is allowed by Landlord, the commercial activity will be subject to Tenant’s compliance with, and payment of any fees required by, the Deer Valley Minimum Standards and Rules and Regulations.

 

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B         Tenant shall comply with all Applicable Laws. Tenant acknowledges the applicability of the regulations of the FAA and Environmental Protection Agency (EPA).

 

C.         Tenant shall use the Premises in a manner that does not unreasonably interfere with or disturb any other person’s use or occupancy of the Airport.

 

D.         Tenant shall use the Premises in a manner that does not unreasonably interfere with or disturb Landlord’s use, operation, or maintenance of the Airport, including the effectiveness or accessibility of drains, sewers, utilities, communications, fire protection, radar, radio, or other systems at the Airport.

 

2.3         Condition of Premises and Absence of Warranties. Tenant accepts the Premises in AS IS, WHERE IS condition on the Effective Date. Landlord makes no representation or warranty that the Premises are fit or suitable for any particular use or purpose.

 

A.         Promptly following Lease execution by the Parties, Tenant shall examine title to the Premises and to the Phase 2 Parcel. If the title examination discloses a condition that materially and adversely affects Tenant’s ability to construct and operate the Tenant Improvements, then Tenant may rescind this Lease without further obligation or liability to Landlord and without Landlord’s further obligation or liability to Tenant. Except as otherwise provided in this Article, Tenant acknowledges that it entered into this Lease after a full and complete examination of the use, ownership, environmental, and other conditions of the Premises. Tenant accepts the Premises in its present condition without any representation or warranty, express or implied, in fact or by law, by Landlord and without recourse against Landlord as to the title thereto; the nature, condition, or usability thereof; or the use or uses to which the Premises or any part thereof may be put.

 

B.         Landlord is not required to furnish any services or facilities to the Premises, to make any repairs or alterations in or to the Premises, or to provide any off-site improvements, such as utilities or paving. Landlord is not required to furnish any access to the Premises other than the access that exists on the Effective Date and the public access that Landlord is required to provide consistent with Landlord’s obligations under its federal airport grant funding. Tenant assumes sole responsibility for the condition, construction, operation, repair, demolition, replacement, maintenance, and management of the Premises, including the performance of all burdens running with the land.

 

2.4         General Privileges. The Airport includes all landing area appurtenances, including approach areas, runways, taxiways, aprons, aircraft and automobile parking areas, sidewalks, roadways, and navigational aids, lighting facilities, and other public facilities, in accordance with the Airport’s Airport Layout Plan approved by the Federal Aviation Administration. Tenant has non-exclusive access to these areas (in accordance with the Airport’s Rules and Regulations and subject to the Airport’s published rates and charges) and to the ramp area near the Premises. Tenant may enter, exit, and use the Airport to the same extent as the general public, and Landlord shall provide Tenant with aircraft access to runways. Notwithstanding the foregoing, Tenant shall maintain the taxi lane located within the Premises, as depicted in Exhibit A-1 (Development Taxi Lane), in accordance with Article 21.

 

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2.5         Modifications of Privileges. To comply with rules or regulations imposed by the Federal Aviation Administration, the Transportation Security Administration, or any other federal or state agency with jurisdiction, Landlord at any time may modify the Premises’ use and general privileges described in this Article upon reasonable prior notice to Tenant. Landlord will endeavor to implement modifications in the least intrusive manner required to comply with the foregoing governmental requirements. If a federal or state agency with jurisdiction orders a temporary change to the Premises or its use, and the change would prohibit Tenant from accessing and using the Premises for five days or more, then Net Rent will be reduced proportionately. If a federal or state agency with jurisdiction orders a reduction of the Premises’ area, and the reduction would prohibit Tenant from accessing and using part of the Premises for the duration of the Lease, then this action will be deemed a taking and addressed under Article 20. If a dispute arises concerning the uses or activities authorized on the Premises, then Landlord’s reasonable decision resolving the dispute will be final and nonappealable. Landlord will give Tenant at least ten (10) days prior notice if Landlord needs access to the Premises, or any part thereof, to make any modification to the Premises. Tenant shall not unreasonably obstruct or interfere with Landlord’s access to or work on the Premises.

 

2.6         Prohibited Activities. Tenant and its trustees, owners, officers, directors, managers, agents, employees, contractors, guests, invitees, and subtenants shall not engage in any unauthorized activity on the Premises without Landlord’s prior written approval, including any of the following: (A) advertising or placing signage on the Premises, except as authorized under Article 15, Signage, (B) storing surplus or non-airworthy aircraft, except aircraft that are currently undergoing required maintenance for airworthiness, (C) storing or parking vehicles, furniture, and other non-aeronautical items other than that used to support aeronautical activities, and (D) parking or staging any type of material or equipment other than that used to support aeronautical activities.

 

2.7         Vehicle Parking. Tenant shall park all vehicles related to the Premises in parking areas designated in the development plan approved by Landlord. Tenant shall not park or locate any vehicle on any ramp area of the Airport, except for the limited purpose of loading or unloading the vehicle—and then only for a reasonable time to load or unload. Tenant has no right to reserved parking at the Airport.

 

2.8         Aircraft Parking. Tenant shall require that all Subtenant aircraft on the Premises agree to not obstruct any Airport taxiway or taxilane.

 

2.9         Utility Licenses. Upon at least thirty (30) days’ prior notice thereof to Tenant, Landlord may grant any license upon, over, across, and under the Premises where utilities are or will be installed, but only if it is not commercially reasonable to install the utilities on other parts of the Airport and only if the license does not unreasonably interfere with Tenant’s use or occupancy of the Premises. Any such license may grant to the utility the right to enter, exit, occupy, and use the Premises for the purpose of installing, maintaining, repairing, servicing, enlarging, extending, modernizing, and upgrading any utility on the Airport. If a utility performs work that would temporarily prohibit Tenant or its subtenants from accessing and using the Premises for five days or more, then Net Rent will be reduced proportionately. If a utility performs work that would reduce the Premises’ area for the duration of the Lease, then this action will be deemed a taking and addressed under Article 20. As used herein, "utility" includes electricity, natural gas, water, sanitary sewers, telephone, cable television, and other facilities of general use and benefit commonly regarded as utilities.

 

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2.10         Reference to Licenses Not Required. Any license granted under or reserved in this Lease is appurtenant to and shall pass with Tenant’s leasehold interest in the Premises, whether or not specifically referred to in any instrument granting or conveying the leasehold interest.

 

2.11         Waste. Tenant and its trustees, owners, officers, directors, managers, agents, employees, contractors, guests, invitees, and subtenants shall not cause or allow others to cause waste or damage to the Premises or the Airport. As used in this Article, “waste” means any destruction, misuse, neglect, unapproved alteration, or damage to the Premises that injures or prejudices Landlord’s estate or interest in the Premises.

 

2.12         Limitation on Use. Tenant may use the Premises only as provided in this Lease and for no other use or purpose whatsoever without Landlord’s prior written approval. Tenant may use the Premises as provided in this Lease, and these uses will not violate any of the restrictive covenants in Article 2.15.

 

 

2.13         Avigation Easement. Landlord hereby reserves to itself, its successors and assigns, and the general public an assignable easement and right-of-way for the following, which Tenant may also use:

 

A.         For the free and unobstructed right to use the Airspace for Aircraft Operations, as that term is defined below;

 

B.         To cause noise and other negative impacts in the Airspace related to Aircraft Operations, including the imposition of light, smoke, dust, noise, sleep loss, air currents, electronic and other emissions, vibrations, discomfort, inconvenience, and interference with the use and quiet enjoyment of the Premises; and

 

C.         To operate any aircraft in, though, across, and about the Airspace, including aircraft landing at, taking off from, and maneuvering about the Airport.

 

Page 8 of 54

 

 

As used in this Article, “Airport Operations” means any and all existing and future activities that are inherent in the operation of the Airport and Aircraft using the Airport, including landing at, taking off from, and maneuvering about the Airport, and “Airspace” means the airspace above and within the boundaries of the Airport beginning at 100 feet above the surface of the ground.

 

2.14         Right to Enforce Avigation Easement. If Tenant hinders or violates any avigation easement right under this Article, then Landlord may enter, exit, and occupy the Premises for as long as necessary to do any or all the following:

 

A.         Enforce these avigation easement rights at Tenant’s expense.

 

B.          Install, maintain, and repair one or more permanent markers, beacons, or lights related to Aircraft Operations at the Airport.

 

C.         Eliminate or abate the source of any interference with radio communications between the Airport and any aircraft or with radar operations at the Airport or by any aircraft.

 

D.         Eliminate or abate any condition or object that interferes with Airport Operations or that may constitute a hazard to any aircraft or the Airport.

 

E.         Remove any obstacle or abate any condition from and to keep the Airspace free of any obstructions of any kind.

 

Landlord shall give Tenant at least five (5) days’ prior notice of Landlord’s intent to remove any obstruction in the Airspace. Tenant’s use of the Premises shall not unreasonably interfere with the avigation easement rights granted by this Article.

2.15         Restrictive Covenants. Tenant shall comply with the following restrictive covenants:

 

A.         Tenant shall keep the Airspace free and clear of all objects of any kind or nature, including buildings, trees, towers, tethered objects, smoke, unmanned aircraft systems of any size or drones, and other things (other than using the Airspace in connection with Tenant’s aircraft).

 

B.         Tenant shall not construct, cause, or allow any object of any kind or nature to be located in the Airspace.

 

C.         Tenant shall not use or allow others to use the Premises in any manner that unreasonably obstructs or interferes with Landlord’s or the public’s rights under this avigation easement.

 

D.         Tenant shall not install, cause, or allow any device to be located on the Premises that causes, any electrical or electronic interference with radio communications or radar operations between the Airport and any aircraft.

 

Page 9 of 54

 

 

E.         Tenant shall not use the Premises in any manner that impairs the visibility of the Airport or endangers aircraft taking off from, landing at, or maneuvering about the Airport, including objects that reflect light, spotlights, and laser lights.

 

F.         Tenant shall not use the Premises in any manner that unreasonably interferes with Airport operations or that constitutes a hazard to the Airport or any aircraft. Tenant shall not create or maintain landfills (or refuse piles), water retention ponds, wetlands, or any condition or undertake any activity that may attract birds.

 

G.         Tenant shall not use the Premises in any manner that violates the terms of this Lease, unreasonably interferes with Airport operations (including causing glint or glare), or makes it difficult for pilots to identify or land at the Airport.

 

H.          When applicable, Tenant shall submit to the FAA an FAA 7460-1 – Notice of Proposed Construction or Alteration.

 

2.16         Release. Tenant hereby releases Landlord from all claims, losses, liabilities, and expenses (collectively, Losses) that Tenant has now or may have in the future arising from the burdens imposed upon the Premises and Tenant by this avigation easement, including noise and other negative impacts. Tenant hereby waives the right to sue Landlord for damages suffered in connection with Losses and covenants not to attempt to enjoin the burdens imposed upon the Premises and Tenant by this avigation easement. Tenant hereby waives the right to object to, enjoin, or interfere with any Aircraft Operations in the Airspace and waives any claim for any diminution in the value of the Tenant Improvements resulting from this avigation easement or Airport Operations.

 

2.17         First Right of Refusal to Lease Additional Land. Subject to the conditions set forth in this Article 2.17, Landlord hereby grants to Tenant a first right of refusal to lease certain real estate (First Refusal Right) now known as the “Phoenix Police Department Air Support Unit” (Police Land), which First Refusal Right must be exercised (if at all) in writing within five years from the date that the Phoenix Police Department vacates the Police Land (predicted to be approximately two years from the Lease’s Effective Date) (First Refusal Period). The Police Land is depicted in Exhibit I, and its legal description is set forth in Exhibit J. This First Refusal Right is conditioned on the following terms.

 

A.    This First Refusal Right requires Landlord to offer to lease the Police Land to Tenant on the same terms and conditions as a bona fide offer on the Police Land made by an independent third person unrelated to Tenant during the First Refusal Period.

 

Page 10 of 54

 

 

B.    The First Refusal Right must be exercised in writing during the First Refusal Period, and time is of the essence. If Tenant properly exercises the First Refusal Right before the Phoenix Police Department has vacated the Police Land, then the Parties may begin performing the due diligence contemplated in this Article 2.17. But neither Party will have any duty or obligation to the other under this Lease as a consequence of Tenant exercising the First Refusal Right until the Phoenix Police Department vacates the Police Land.

 

C.    Tenant may not exercise the First Refusal Right if at the time Tenant would exercise the First Refusal Right, Tenant is in default of any Lease provision. Tenant’s exercise of the First Refusal Right does not affect any of Tenant’s Lease obligations, all of which will remain in full force and effect. If Tenant does not exercise the First Refusal Right within the First Refusal Period, then Tenant shall deliver an executed First Refusal Right Waiver to Landlord in a form reasonably acceptable to the Parties.

 

D.    The First Refusal Right applies only to the unimproved real estate. The existing Phoenix Police Department Air Support Group buildings and all other improvements must be demolished within a reasonable time after Tenant exercises the First Refusal Right or within a reasonable time after the Phoenix Police Department vacates the Police Land, whichever is later.

 

E.    After Tenant properly exercises the First Refusal Right, the Parties shall conduct an environmental site assessment of the Police Land in the same manner as set forth in this Lease. If Tenant accepts the Police Land in its then-existing condition, the Parties shall amend this Lease to include the Police Land.

 

F.    The formal Lease amendment must address all other required changes to the Lease, including (among others) the increase of Net Rent attributable to Tenant’s exercise of the First Refusal Right. The amendment is subject to formal approval by the Phoenix City Council.

 

2.18         Lease Option. The Lease Option granted in Article 2.1 must be exercised (if at all) within four years from the Lease’s Effective Date (Lease Option Period). The Lease Option is conditioned on the following terms.

 

A.         The Lease Option must be exercised in writing during the Lease Option Period, and time is of the essence. When Tenant properly exercises the Lease Option, the Parties shall begin performing the due diligence contemplated in this Article 2.18.

 

B.         Tenant may not exercise the Lease Option if at the time Tenant would exercise the Lease Option, Tenant is in default of any provision of this Lease. Tenant’s exercise of the Lease Option does not affect any of Tenant’s Lease obligations, all of which will remain in full force and effect. If Tenant does not exercise the Lease Option within the time provided under this Article 2.18, then Tenant shall deliver an executed Lease Option Waiver to Landlord in a form reasonably acceptable to the Parties.

 

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C.         Tenant shall pay Landlord the lump sum of $40,341 on the Lease’s Effective Date as compensation for the first year of the Lease Option Period. On each anniversary of the Effective Date until the Lease Option expires, unless the Lease Option has been exercised earlier, Tenant shall pay Landlord $77,801 for each succeeding year of the Lease Option Period. The Lease Option compensation must be paid in a lump sum and may not be paid in equal installments similar to Net Rent under Article 6.2.

 

D.         If Tenant properly exercises the Lease Option, the Parties shall conduct an environmental site assessment of the Phase 2 Parcel in the same manner as set forth in this Lease. The Parties may exercise all rights arising out of or relating to the environmental assessment in the same manner and to the same extent as the rights applicable to the original Premises’ environmental assessment.

 

E.         If, in consequence of the environmental site assessment, Tenant accepts the Phase 2 Parcel in its then-existing condition, this Lease will be deemed amended to include the Phase 2 Parcel, and the Net Rent will be deemed increased by the product of (1) the then applicable lease rate per square foot (the original lease rate as adjusted under Article 6.7 to reflect the passage of time from the Lease’s Effective Date to the date the Lease Option has been exercised) multiplied by (2) the area of the Phase 2 Parcel set forth in Article 2.1. The Parties shall then execute a memorandum of rent change to memorialize that the Net Rent has been revised due to Tenant’s exercise of the Lease Option.

 

ARTICLE 3 – RIGHT OF ENTRY RESERVED

 

3.1         Inspections. At any time between 7:00 a.m. and 7:00 p.m. Phoenix time and after giving Tenant at least twenty-four (24) hours’ prior written notice, Landlord may enter the Premises, and any part thereof, to observe Tenant’s performance under this Lease; service, post, or keep posted notices required by any Applicable Law; and post notices that Landlord reasonably deems necessary or appropriate.

 

3.2         Breach. Provided Landlord has given notice of default to Tenant and Tenant has not cured its default within the time provided by Article 16, Landlord may enter the Premises at any time and without further notice to cure the default or breach of this Lease by Tenant.

 

3.3         Emergency. Landlord may enter the Premises at any time and without prior notice to respond to any matter that Landlord reasonably deems to pose an imminent threat of: (1) injury to or death of any person, (2) material damage to property, or (3) the violation of any law or regulation (each, an “Emergency”).

 

3.4         Police Power. Nothing in this Lease limits or may be construed to limit the exercise of Landlord’s police power.

 

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ARTICLE 4 – TERM

 

4.1         Term. This Lease’s term is forty (40) years (Term) unless the Lease is terminated earlier in accordance with the Lease’s terms and conditions. The Term will commence, and the obligation to pay Net Rent (defined in Article 6) will begin, on the date a certificate of occupancy for the Phase 1 Tenant Improvements has been issued or twelve (12) months after the Effective Date, whichever occurs first. This Lease does not contain an option to renew or extend the Term.

 

4.2         Construction Period. Tenant shall diligently prosecute and complete construction of: (1) Phase 1 Tenant Improvements within twelve (12) months after receiving all required Phase 1 permits and approvals, and (2) Phase 2 Tenant Improvements within twelve (12) months after receiving all Phase 2 permits and approvals, but in no event later than sixty (60) months after the Effective Date (Construction Period), unless Landlord extends the Construction Period for delays beyond Tenant’s control and without its fault. Commencing no later than the Effective Date, Tenant shall diligently pursue the Phase 1 permits and approvals. Construction of the respective Phase 1 and Phase 2 Tenant Improvements will be deemed complete when a separate certificate of occupancy is issued for each phase. Tenant’s failure to complete construction of the Phase 1 and Phase 2 Tenant Improvements within the Construction Period constitutes a material breach of this Lease if the failure continues for more than thirty (30) days after notice to Tenant, unless Tenant diligently and in good faith proceeds to construct and complete the Tenant Improvements.

 

4.3         Surrender of Possession. Upon the expiration or termination of this Lease, Tenant’s right to occupy the Premises shall cease and Tenant shall immediately and peaceably vacate and surrender possession of the Premises to Landlord in a broom-clean condition free of damage. Reasonable wear and tear is not considered damage. The provisions of this Article shall survive the expiration or termination of this Lease.

 

4.4         Landlord Right to Possession. Nothing in this Lease gives or may be construed to give Tenant any right to holdover after this Lease expires or is terminated. Landlord may exercise all rights and remedies available at law and in equity to recover possession of the Premises during a holdover period, including a self-help re-entry and lockout. Tenant shall reimburse Landlord for all actual, out-of-pocket attorney fees, court costs, and other expenses incurred by Landlord in recovering possession of the Premises.

 

4.5         Wrongful Holdover. If Tenant continues to occupy the Premises after the expiration or termination of this Lease without Landlord’s prior written approval, then Tenant shall be deemed a trespasser and Tenant shall pay, for as long as Tenant holds possession, an occupancy fee equal to 200% of the then monthly Net Rent, but in no event less than the Net Rent in effect when this Lease expired or was terminated. During the wrongful holdover period, Tenant is bound by and shall comply with all other provisions of this Lease. A wrongful holdover does not create and may not be construed to create a month-to-month tenancy or any other leasehold estate or interest in the Premises.

 

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4.6         Permissive Holdover. If Tenant continues to occupy the Premises after the expiration or termination of this Lease with Landlord’s prior written approval, then Tenant’s occupancy shall be deemed a tenancy from month-to-month and Tenant shall pay monthly Net Rent and Additional Payments in effect when this Lease expired or was terminated. During the permissive holdover period, Tenant is bound by and shall comply with all other provisions of this Lease.

 

ARTICLE 5 – LANDLORD RIGHT TO RECLAIM

 

5.1         Right to Reclaim.

 

A.         If Landlord acting reasonably or if any federal or state agency determines that termination of the Lease is necessary for the safe or efficient operation of the Airport or to preserve the public health or safety , then Landlord may terminate this Lease and recover possession of the Premises without penalty, cost, or liability to Tenant. Tenant shall vacate and abandon the Premises within twelve (12) months after receipt of notice from Landlord terminating this Lease under this Article.

 

B.         Landlord, in its unrestricted discretion, reserves the right to, and may, further expand and develop the Airport as it sees fit, provided that the development does not materially and adversely affect Tenant’s use of the Premises or Tenant’s rights under this Lease. Nothing in this Article prevents Tenant from participating in the public process associated with airport planning. If Landlord reasonably determines that termination is necessary for future expansion or development of the Airport in accordance with the Airport’s Master Plan, then Landlord may terminate this Lease and recover possession of the Premises. Tenant shall vacate the Premises within twelve (12) months after receipt of notice from Landlord terminating this Lease. Landlord’s decision to terminate this Lease is final and non-appealable.

 

5.2         Reimbursement of Unamortized Investment. If this Lease is terminated under Article 5.1 above, then Landlord shall reimburse Tenant for its unamortized, actual investment in the Tenant Improvements as of the termination date. Notwithstanding the previous sentence, the reimbursement may not exceed $15,300,000 for Phase 1 of the Development, and Tenant’s remaining unamortized investment must be calculated in accordance with a thirty (30)-year straight-line depreciation schedule. If this Lease is terminated under Article 5.1 after Tenant has exercised the Lease Option and after Tenant has constructed all of the Phase 2 Tenant Improvements to complete the Development, then Landlord shall also reimburse Tenant for its unamortized, actual investment in the Phase 2 Tenant Improvements as of the termination date. Notwithstanding the previous sentence, the reimbursement may not exceed $14,600,000 for Phase 2 of the Development, and Tenant’s remaining unamortized investment must be calculated in accordance with a thirty (30)-year straight-line depreciation schedule. To receive the reimbursement, Tenant shall submit to Landlord complete documentation showing the actual costs incurred by Tenant to construct the Phase 1 (and, if built, the Phase 2) Tenant Improvements and the Development as-built drawings, together with all of Tenant’s accounting documents requested by Landlord to establish depreciation and the unamortized-investment calculations.

 

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ARTICLE 6 – NET RENT

 

6.1         Net Rent. Commencing on the date that is twelve (12) months after the Effective Date or on the date when Tenant substantially completes the Phase 1 Tenant Improvements, whichever occurs first, Tenant shall pay to Landlord net annual rent (Phase 1 Net Rent) in the amount of $207,616 (384,474 SF @ $0.54/SF) for the first Year. If Tenant exercises the Lease Option, then commencing on the date that is sixty (60) months after the Effective Date or on the date when Tenant completes the Phase 2 Tenant Improvements, whichever occurs first, Tenant shall also pay to Landlord net annual rent (Phase 2 Net Rent) in the amount set forth in Article 2.18 for the first Year. After Tenant is obligated to pay Phase 2 Net Rent, Tenant shall pay to Landlord combined net annual rent for both Phases 1 and 2 (Combined Net Rent) in the amount of Phase 1 Net Rent as adjusted under this Article 6 through the date that Phase 2 Net Rent commences plus Phase 2 Net Rent in accordance with Article 2.18. In this Lease, the term “Net Rent” means Phase 1 Net Rent, Phase 2 Net Rent, or Combined Net Rent, whichever rent Tenant is obligated to pay at the time. Net Rent will be adjusted according to any change in the square footage of the Premises as determined in accordance with Article 2.1.

 

6.2         Monthly Installments. Tenant shall pay Net Rent to Landlord in twelve (12) equal monthly installments during any twelve (12) month period without notice or demand on the first day of each month during the Term of this Lease. If the Term starts on a day other than the first day of the month, then the first installment shall be prorated to the end of that month. Tenant shall pay each installment by a business check to:

 

City of Phoenix

Aviation Department

P.O. Box 29110

Phoenix, AZ 85038-9110

 

If Tenant defaults in paying monthly installments of Net Rent more than three (3) times, Landlord may, from time to time, require Tenant to pay Net Rent in another form, such as cash, cashier’s check, or certified check.

 

6.3         Unencumbered Net Rent. Except as otherwise provided in this Article, Tenant shall pay Net Rent and Additional Payments (as that term is defined below) to Landlord without notice or demand and free of any claim, assessment, imposition, offset, or deduction of any kind whatsoever. Tenant shall pay all costs, expenses, and obligations related to the maintenance, security, and operation of the Premises, including the costs of construction, alterations, repairs, and replacements, that become due during the Term, and Tenant shall defend, indemnify, and hold harmless Landlord from and against such costs, expenses, and obligations.

 

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6.4         Triple Net Lease. This is a triple net Lease to Landlord. Tenant shall pay all expenses related to the Premises, including taxes, insurance, utilities, maintenance, repairs, and custodial expenses. Tenant shall pay all expenses directly to the supplier that furnished the service.

 

6.5         Additional Payments. Additional Payments means all of the following:

 

A.         All fines, penalties, interest, and costs that become due or are imposed by operation of law for the nonpayment of Net Rent or other charges.

 

B.         All sums, impositions, costs, expenses, and other payments and all taxes, including leasehold tax; sales tax; transaction privilege tax; taxes on Net Rent, this Lease, or Tenant’s occupancy of the Premises; use taxes; government property lease excise tax; all federal, state, and local taxes; real and personal property taxes; and business taxes that are now or may hereafter be levied on the Premises, Tenant, Tenant’s interest in this Lease, Landlord’s interest in the Premises, Tenant’s use or occupancy of the Premises, and Tenant’s Trade Fixtures and other personal property used in connection with the Premises, but specifically excluding the Excluded Taxes defined in Article 7.1.

 

C.         All assessments, special assessments, and water and sewer rents; all rates and charges; charges for public utilities; excise, levy, license, and permit fees; and other expenses incurred by Landlord on Tenant’s behalf.

 

D.         All governmental or quasi-governmental charges, whether general or special, ordinary or extraordinary, or foreseen or unforeseen, of any kind and nature whatsoever that are assessed, levied, confirmed, imposed upon, or become due and payable arising out of or with respect to, or becomes a lien on, the Premises or any appurtenance thereto, including any use or occupation of the Premises and franchises as may be appurtenant to the use of the Premises, whether or not such charge is levied, charged, or assessed on Landlord or Tenant, provided that:

 

1.         If any Additional Payment may, at Tenant’s option, be paid in installments, then Tenant may exercise the option to pay the Additional Payment and any accrued interest thereon in installments. Tenant shall pay the installments as they become due and before any fine, penalty, further interest, or cost is assessed.

 

2.         Additional Payments, including those that have been converted into installment payments as provided above, relating to a fiscal period of the taxing authority, a part of which period is included within the Term and a part of which is included in the period of time after the expiration or termination of this Lease, shall, whether or not the Additional Payment is assessed, levied, confirmed, imposed upon, or becomes a lien upon the Premises, or becomes payable during the Term, be adjusted between Landlord and Tenant as of the expiration or termination of this Lease so that Tenant shall pay that portion of the Additional Payment attributable to the tenancy period and Landlord shall pay the remainder.

 

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E.         Tenant may contest the validity or amount of any Additional Payment, in which event Tenant may defer the payment thereof during the pendency of the contest; provided that, upon request by Landlord after the Additional Payment became due, Tenant shall deposit with Landlord an amount sufficient to pay the contested item together with interest and penalties thereon. The amount shall be determined by Landlord and shall be applied to the payment of the item when the amount is finally fixed and determined to be valid. Tenant shall not allow anything to remain unpaid for a length of time that causes the Premises, any part thereof, to be sold or encumbered by any lien created by the nonpayment of any item. If the amount deposited by Tenant exceeds the amount of the item, then the excess shall be paid by Landlord to Tenant. If there is a deficiency, then the amount of the deficiency shall be paid by Tenant to Landlord, together with all interest, penalties, and other charges that related thereto.

 

F.         Tenant may endeavor to reduce the amount of an Additional Payment, and Landlord may reasonably cooperate with Tenant at no cost or liability to Landlord. Tenant may collect any refund paid as a result of the endeavor, and the refund shall be the property of Tenant.

 

G.         Except as specifically provided in this Article, Tenant shall pay all Additional Payments when due. If Tenant fails or refuses to pay any Additional Payment when due, and the failure continues more than ten (10) days after notice to Tenant, then Landlord may pay the item, and upon demand Tenant shall reimburse Landlord for all actual, out-of-pocket costs incurred by Landlord upon proof of the costs incurred.

 

6.6         No Joinder Required. Landlord may, at its expense, join in any action or proceeding initiated by Tenant pursuant to Article 6.5(E) or 6.5(F)

 

6.7         CPI Adjustments. At the beginning of the second Year and of every Year thereafter, Net Rent will be adjusted upward according to the Consumer Price Index (CPI) (as that term is defined below) in an amount not to exceed three percent (3%) during any given year.

 

A.         Net Rent will not be adjusted to be less than the amount of Net Rent for the preceding Year. Under the CPI method, the amount of each adjustment will be determined by multiplying the previous Year’s Net Rent by the sum of one plus the CPI percentage change. The CPI percentage change will be computed by comparing the CPI figure that was published at least two (2) months before the date on which the next increase takes effect against the CPI figure published for the same half year for the preceding Year.

 

B.         CPI means the Phoenix-Mesa-Scottsdale, All Urban Consumers (December 2001=100) Consumer Price Index published by the U.S. Department of Labor, Bureau of Labor Statistics (Agency) or such revised index that may be published by the Agency. If the Agency ceases to issue a Price Index as described in this Article, then the monthly CPI, All Urban Consumers, All Cities, or any other measure hereafter employed in lieu thereof issued by the Agency, or any successor federal agency issuing such indices or data, shall be used.

 

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6.8           No rent credits. Landlord shall not give, and Tenant shall not receive, any rent credit for any Tenant Improvements constructed or installed on the Premises or for any development, repair, or maintenance of the Premises.

 

6.9         Delinquent Account Fee. Without waiving any other right or remedy available to Landlord, if any installment of Net Rent, Additional Payments, or other amount required to be paid by Tenant to Landlord under this Lease is not received within ten (10) days of due date, then delinquent account fees shall be assessed at the rate of eighteen percent (18%) per annum pursuant to Phoenix City Code § 4-7 (Delinquent Account Fees). Tenant shall pay Delinquent Account Fees from the date the amount became due until the amount is paid in full. Delinquent Account Fees shall be computed and accrued on a daily basis and assessed until the account balance, including Delinquent Account Fees, are paid in full. Delinquent Account Fees are due and payable within thirty (30) days after demand by Landlord.

 

6.10         Obligation to Pay. The expiration or termination of this Lease does not relieve Tenant of its obligation to pay all Net Rent, Additional Payments, and any other amounts that accrued during the Term or during the period of time Tenant had possession or use of the Premises.

 

6.12         No Release of Obligations. Except as expressly provided in this Lease, no event, occurrence, or situation, whether foreseen or unforeseen and however extraordinary, will allow Tenant to vacate, abandon, or surrender possession of the Premises or terminate this Lease; will relieve Tenant of its obligation to pay all Net Rent, Additional Payments, and other amounts due; or will relieve Tenant of any other obligation under this Lease.

 

ARTICLE 7 – TAXES

 

7.1         General. On or before the date due, Tenant shall pay to the appropriate collecting authority all leasehold taxes; sales taxes; transaction privilege taxes; and federal, state, and local taxes, including real and personal property taxes and business taxes, that are now or may be levied on the Premises, Tenant, Tenant’s interest in this Lease, the activities conducted on the Premises, or on any of Tenant’s Trade Fixtures or other personal property used on the Premises whether or not the tax, fee, or assessment is levied, charged, or assessed on Landlord; provided that Tenant shall not be responsible for paying any net income, franchise, “value added,” inheritance, gift, estate, capital gains, recording, capital stock, excise taxes, or any other tax computed on Landlord’s income or profits (collectively, “Excluded Taxes”). Tenant, at its own expense, may dispute the validity of a tax, fee, or assessment, in which case Tenant shall, upon Landlord’s request, deposit with Landlord an amount sufficient to pay the contested item, in accordance with Article 6.5 (E). If any Applicable Law or judicial decision results in the imposition of a real property tax on the Airport, then the tax attributable to the Premises must be paid by Tenant.

 

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7.2         GPLET. If applicable, Tenant is hereby notified of its potential tax liability under the Government Property Lease Excise Tax provisions of A.R.S. §§ 42-6201, et seq. Tenant’s failure to pay the tax after notice and an opportunity to cure (which cure period is not less than thirty (30) days’ notice thereof to Tenant), may result in the termination of this Lease and Tenant’s right to possession of the Premises.

 

7.3         Survival. Tenant’s obligations under this Article shall survive the expiration or termination of this Lease.

 

ARTICLE 8 – UTILITIES

 

8.1        Tenant is Responsible. Tenant shall pay for all utilities used in connection with the Premises, including water, sewer, gas, and electric services. Tenant shall pay directly to each supplier all charges related to the services. Tenant shall commence service with each utility supplier and shall be liable for any service charge that may be billed to Landlord. Tenant shall pay for all costs associated with the relocation, modification, and improvement of the existing utilities in, on, under, and over the Premises if the relocation, modification, or improvement is for the Tenant’s benefit or initiated by Tenant. Tenant shall ensure that any utility installed by Tenant does not cause any interference with the Airport’s utilities infrastructure and communication users, including aviation related operations and equipment at the Airport, wireless users at the Airport, and the Airport’s radio systems.

 

8.2         Telecommunication Services. If Tenant commences telecommunication services at the Premises, including telephone, cable, and internet, then Tenant shall do so at its own expense and shall pay directly to each supplier all charges related to the services.

 

8.3         Interference. If Tenant installs any special cabling, wiring, or hookups for telephone, cable services, or computers at the Premises, including wireless internet services, then Tenant shall ensure that the wireless access points installed by Tenant do not cause any interference with communication users at the Airport, including aviation related operations and equipment, the operation of any wireless users, and the Airport’s radio systems. Tenant shall reasonably cooperate with Landlord and any third party to identify and eliminate the cause of any interference. If Landlord determines that a wireless access point is the cause of any interference, then Tenant shall, after notice to Tenant accompanied by reasonable evidence of Landlord’s determination, promptly cease operating all or any part of the wireless access point or otherwise take prompt action to eliminate the interference.

 

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8.4         Landlord Not Liable. Landlord is not liable to Tenant for any blackout, brownout, cessation, interruption, or failure of any utility or telecommunication service, whether located on or off the Premises and whether foreseen or unforeseen. Landlord is not liable for any direct, indirect, incidental, consequential, punitive, or special damages or for any other losses or damages that result from any lost business, lost profits, loss of use, loss of or damage to data, or economic loss, however caused by any blackout, brownout, cessation, interruption, or failure of any utility, whether foreseeable or unforeseen and even if Landlord is advised of the possibility of such.

 

8.5         Entry for Construction and Maintenance. After giving Tenant at least ten (10) days’ prior notice, Landlord may enter, exit, and use the Premises to the extent necessary to construct, install, repair, reconstruct, restore, and maintain any utility on the Premises and perform any other obligation of Landlord under this Lease. Tenant shall not hinder or interfere with Landlord’s work on the Premises. If Landlord performs work that would temporarily prohibit Tenant from accessing and using the Premises for five days or more, then Net Rent will be reduced proportionately. If Landlord performs work that would reduce the Premises’ area for the duration of the Lease, then this action will be deemed a taking and addressed under Article 20.

 

ARTICLE 9 – PERFORMANCE GUARANTEE

 

9.1         Performance Guarantee. On or before the Effective Date, Tenant shall provide Landlord with a form of security approved by Landlord that guarantees Tenant’s timely payment of Net Rent, Additional Payments, and all other amounts that become due and payable to Landlord under this Lease (Performance Guarantee). Tenant shall continuously maintain the Performance Guarantee during the Term of this Lease. The Performance Guarantee must be in the amount of $51,904, which equals three (3) months’ Phase 1 Net Rent. If Tenant exercises the Lease Option, then the Performance Guarantee will be increased by the amount of a reasonable estimate of three (3) months’ Phase 2 Net Rent, and, within ten business days of the date Tenant exercises the Lease Option, Tenant shall pay the increased Performance Guarantee to Landlord. The Performance Guarantee may be an Irrevocable Letter of Credit (LOC) in the form marked Exhibit C-1 attached, a Cash Deposit in the form marked Exhibit C-2 attached, or any other form of security approved in advance by Landlord.

 

9.2         Irrevocable Letter of Credit. If the Performance Guarantee is an LOC, then it shall be issued by a financial institution in the Phoenix metropolitan area, and Landlord must be able to draw upon the LOC at any of the financial institution’s counters in the Phoenix metropolitan area. If Tenant fails to provide Landlord with a written extension of the LOC in a form acceptable to Landlord at least sixty (60) days before the end of the term of the LOC, then Landlord, without notice to Tenant, may draw upon the full amount of the LOC and hold the proceeds as a cash Performance Guarantee. Landlord may retain any interest that accrues to Tenant on the Performance Guarantee.

 

9.3         Adjustment. Landlord may increase the Performance Guarantee by any amount Landlord deems appropriate, not to exceed the amount of then three (3) months’ rent, by giving Tenant at least thirty (30) days’ prior notice of the increase, including for the reasons: (A) Tenant’s financial obligations under this Lease increase, (B) Tenant fails to pay any Net Rent, Additional Payments, or other amounts in full and when due, or (C) Tenant’s financial condition changes to the extent that Landlord is concerned about Tenant’s ability to perform under this Lease. Tenant shall pay to Landlord the additional amount necessary to increase the Performance Guarantee within thirty (30) days after demand.

 

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9.4         Duty to Restore. The Performance Guarantee is intended to insure the full and timely performance by Tenant of all provisions of this Lease and is security for payment by Tenant of all Net Rent, Additional Payments, or other amounts due to Landlord. Landlord may draw on or make a claim against the Performance Guarantee if Tenant defaults under this Lease. If Landlord draws on or makes a claim against the Performance Guarantee, then Tenant shall replenish the Performance Guarantee to its previous amount within thirty (30) days of Landlord’s draw or claim.

 

9.5         Refund. Within thirty (30) after expiration or termination of this Lease, Landlord shall refund the Performance Guarantee to Tenant after deducting any Net Rent, Additional Payments, and other amounts due to Landlord that Tenant has failed to pay within ten (10) days after notice.

 

ARTICLE 10 – INDEMNIFICATION

 

Tenant (Indemnitor) must defend, indemnify, and hold harmless Landlord and its officers, officials (elected and appointed), agents, and employees (Indemnitee) from and against any and all claims, actions, liabilities, damages, losses, or expenses (including, but not limited to, court costs; attorney fees; expert fees; and costs of claim processing, investigation, and litigation) of any nature or kind whatsoever (Losses) caused, or alleged to be caused, in whole or in part, by the wrongful, negligent, or willful acts, errors, or omissions of Indemnitor or any of its owners, officers, directors, members, managers, agents, employees, or contractors (Indemnitor’s Agents) arising out of or related to Indemnitor’s occupancy and use of the Premises or the Airport.  This defense and indemnity obligation includes holding Indemnitee harmless for any Losses or other amounts arising out of or recovered under any state’s Workers’ Compensation Law or arising out of the failure of Indemnitor or Indemnitor’s Agents to conform to any federal, state, or local law, statute, ordinance, rule, regulation, or court decree.  Indemnitor’s duty to defend Indemnitee accrues immediately at the time a claim is threatened or a claim is made against Indemnitee, whichever is first.  Indemnitor’s duty to defend exists regardless of whether Indemnitor is ultimately found liable.  Indemnitor must indemnify Indemnitee from and against any and all Losses, except where it is proven that those Losses are solely as a result of Indemnitee’s own negligent or willful acts or omissions.  Indemnitor will be responsible for primary loss investigation, defense, and judgment costs where this indemnification applies.  In consideration for the use and occupancy of the Premises, Indemnitor waives all rights of subrogation against Indemnitee for losses arising from or related to the use, occupancy, or condition of the Premises or the Airport.  The obligations of Indemnitor under this provision shall survive the termination or expiration of this Lease.

 

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The obligations of Tenant under this provision shall survive the expiration or termination of this Lease.

 

ARTICLE 11 – INSURANCE

 

11.1         Tenant Obligation to Insure. Tenant shall procure, and continuously maintain throughout the Term of this Lease, insurance against claims for injuries to persons or damages to property that arise out of or are caused by the acts or omissions of Tenant or any of its trustees, owners, officers, directors, managers, agents, employees, contractors, guests, invitees, and subtenants in connection with or related to this Lease or the Premises. Tenant shall strictly comply with the provisions of the Insurance Requirements marked Exhibit D attached.

 

11.2         Risk of Loss. Landlord is not required to carry any insurance covering the Premises or any Tenant Improvement, Trade Fixture, or personal property on the Premises. Tenant assumes the risk of any loss, damage, and claim related to the Premises and the contents thereof.

 

11.3         Failure to Maintain Insurance. If Tenant fails to provide a copy of the renewal insurance certificates required by the Insurance Requirements marked Exhibit D attached, or otherwise fails to procure and maintain the insurance required by this Lease and such failure continues for more than five (5) days after notice to Tenant, then Landlord may, without further notice to Tenant, procure and maintain the insurance. Landlord shall give Tenant notice of Landlord’s payment of the premiums, the amounts paid, and the name of each insurer and insured. Tenant shall reimburse Landlord for all out-of-pocket premiums and other amounts paid by Landlord to procure and maintain the insurance within ten (10) days after written demand.

 

ARTICLE 12 – ENVIRONMENTAL CONDITIONS

 

12.1         Environmental Site Assessment. Before the Effective Date, Landlord will conduct, at its expense, a Phase I Environmental Site Assessment (ESA) of the Premises in accordance with the current American Society of Testing and Materials (ASTM) E1527 standards. If the Phase I ESA does not indicate the presence or likely presence of any Regulated Substance (as that term is defined in Exhibit G attached) or petroleum product on or in the Premises (Recognized Environmental Condition), then neither Landlord nor Tenant is required to conduct any environmental remediation of or at the Premises. The Phase I ESA will serve as the baseline environmental condition of the Premises as of the Effective Date. As used in this Article, “environmental condition of the Premises” means the Premises are deemed to be free of all Regulated Substances, or one or more Regulated Substances may be present at the Premises in concentrations below regulatory cleanup levels (e.g., residential soil remediation levels and groundwater protection levels).

 

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12.2         Pre-possession Phase II Environmental Site Assessment. If the Phase I ESA conducted by Landlord indicates the presence or likely presence of any Recognized Environmental Condition at the Premises, then Landlord may conduct, at its expense, a Phase II ESA in accordance with current ASTM E1903 standards.

 

A.         If the Phase II ESA discloses the presence of any Regulated Substance that Landlord is not required by Applicable Law to remediate, then Landlord shall determine whether it will remediate the Regulated Substance(s). If Landlord determines that it will not remediate any Regulated Substance, then Landlord and Tenant shall consult whether to execute this Lease. If Landlord declines to execute the Lease, then Landlord shall reimburse Tenant for the reasonable fees Tenant paid to qualified environmental consultants engaged to evaluate the Premises, together with any money Tenant paid to Landlord. If the Parties execute the Lease, then the Phase II ESA shall serve as the baseline environmental condition of that part of the Premises subject to the Phase II ESA as of the Effective Date. The Phase I and Phase II ESAs together shall serve as the baseline environmental condition of the Premises as of the Effective Date.

 

B.         If Landlord determines that it will or must remediate the Regulated Substance(s) disclosed by the Phase II ESA, then Landlord and Tenant shall consult whether to execute this Lease. If the Parties determine that any required environmental remediation will substantially interfere with Tenant’s use and occupancy of the Premises, then Tenant may (i) elect to withdraw from and cancel this Lease or (ii) accept the interference, agree that Landlord may execute this Lease, and agree that Tenant will be bound by this Lease despite the interference. Tenant shall not construct or install any Tenant Improvement on the Premises that may interfere with or obstruct Landlord’s environmental remediation. After the environmental remediation is complete, Landlord (or its consultants) will prepare a cleanup report. The cleanup report will serve as the baseline environmental condition of the remediated part of the Premises as of the Effective Date. The Phase I ESA and the cleanup report together will serve as the Premises’ baseline environmental condition as of the Effective Date.

 

12.3         Post-Possession ESA Reports. Not more than 180 days before the Lease Term’s end or within sixty (60) days after the Lease has been terminated, Tenant shall conduct, at its expense, a Phase I ESA and, if the Phase I reasonably indicates that a Phase II ESA should be conducted, then also a Phase II on the Premises. Tenant shall provide copies of the Phases I and II (if applicable) to Landlord. Tenant shall give Landlord at least five (5) days’ prior notice of any sampling event on the Premises, and Landlord may attend all sampling events and take split samples for independent testing at Landlord’s expense.  Tenant may not file any environmental report with any governmental agency or department without Landlord’s prior review and approval.  If Landlord reasonably believes that either ESA is inaccurate, incomplete, or misleading, then Tenant shall have the entire ESA or the deficient parts corrected at Tenant’s expense and without delay. If it is determined that the ESA was accurate and complete, then Tenant may deduct its additional costs from any rental payment. The ESAs shall be prepared by a qualified, independent engineer licensed by the state of Arizona and in compliance with current ASTM E1527 and E1903 standards.

 

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A.         If Tenant’s Phase II ESA discloses (i) that there are no Regulated Substances on the Premises other than those listed in the ESA(s) conducted by Landlord under this Article and (ii) the concentration of any Regulated Substance listed in the ESA(s) conducted by Landlord has not increased, then Tenant shall have no responsibility to remediate the Premises.

 

B.         If Tenant’s Phase II ESA discloses (i) the presence of any Regulated Substance that was not listed in the ESA(s) conducted by Landlord under this Article or (ii) the concentration of any Regulated Substance listed in the ESA(s) conducted by Landlord has increased above regulatory or advisory limits established or defined by Applicable Law, then Tenant shall remediate, at its expense, the contaminated parts of the Premises to substantially the same or to a better environmental condition that existed on the Effective Date, unless Tenant establishes that Tenant, its subtenants, their respective contractors, and all other persons or entities for which Tenant is liable did not cause or contribute to the presence or increase of Regulated Substances on or in the Premises. Landlord may do its own testing and sampling and may be present at and oversee all environmental remediation performed by Tenant on the Premises. If this Lease expires or is terminated before or during Tenant’s environmental remediation of the Premises, then Tenant shall pay to Landlord an amount equal to 150% of Net Rent and Additional Payments each month until the Premises are completely remediated. Tenant agrees that the 150% Net Rent payment is to compensate Landlord for damages caused by Tenant’s activities that prevent Landlord from re-leasing the Premises, and the additional Net Rent is not a penalty. If this Lease expires or is terminated before or during Tenant’s environmental remediation, then Tenant may only enter the Premises with Landlord’s prior written approval (which shall not be unreasonably withheld, conditioned, or delayed) and only then for the purpose of conducting environmental remediation and for no other purpose whatsoever. The Lease Term will not be extended or renewed because of Tenant’s environmental remediation. Tenant shall request and receive Landlord’s prior written approval (which shall not be unreasonably withheld, conditioned, or delayed) of all environmental remediation.

 

C.         If Tenant fails or refuses to conduct and complete the Phase I and Phase II ESAs or fails to complete the environmental remediation according to Article 12(B) above, then Landlord may conduct the ESA(s) or environmental remediation, and Tenant shall reimburse Landlord for all out-of-pocket costs incurred, including administrative costs and staff time, upon demand.

 

12.4         Remediation of Releases. When Tenant becomes aware of any release, Tenant shall immediately report the release or discharge of any Regulated Substance on the Premises to Landlord. The report shall describe what environmental remediation Tenant intends to take to clean up any contamination caused by Tenant and return the Premises to the environmental condition that existed before the release or discharge. Landlord shall approve all environmental remediation (which approval shall not be unreasonably withheld, conditioned, or delayed) before Tenant commences any work. If Tenant fails or refuses to promptly remediate any release by Tenant of Regulated Substances after reasonable notice, then Landlord may remediate the Regulated Substances, and Tenant shall reimburse Landlord for all actual out-of-pocket costs incurred, including administrative costs and staff time, upon demand.

 

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12.5         No Environmental Testing or Reporting. Tenant shall not conduct any sampling, boring, or drilling, or other environmental activity on the Premises at any time without Landlord’s prior written approval (which approval shall not be unreasonably withheld, conditioned, or delayed) and oversight. Tenant shall not file any environmental report, test result, or other document concerning the Premises with the Arizona Department of Environmental Quality, the EPA, or any other governmental agency or department without Landlord’s prior written approval.

 

12.6         Post-possession Property Condition Assessment. Not more than sixty (60) days before the expiration of this Lease or within thirty (30) days after this Lease is terminated, Tenant shall conduct, at its expense, a Property Condition Assessment (PCA) on the Tenant Improvements, including buildings and other structures, on the Premises and provide a copy to Landlord. The PCA’s purpose is to determine if the Tenant Improvements have suffered excessive wear and tear (abuse) or damages due to the intentional or negligent acts of parties other than Landlord, The PCA must be conducted in compliance with current ASTM E2018 standards. If Tenant fails or refuses to conduct a PCA, then Landlord may conduct the PCA and Tenant shall reimburse Landlord for all costs incurred.

 

12.7         Unsafe Conditions. Tenant shall immediately report to Landlord any unsafe or dangerous condition on the Premises. The report shall describe what activities Tenant intends to take to correct the condition. If this Lease expires or is terminated before or during the Tenant’s corrective activities, Tenant may only enter the Premises with Landlord’s prior written approval (which approval shall not be unreasonably withheld, conditioned, or delayed) and only to the extent necessary to correct the unsafe or dangerous condition(s) and for no other use or purpose whatsoever. The Term of this Lease shall not be extended or renewed because of Tenant’s corrective activities. Tenant shall request and receive Landlord’s prior written approval of all corrective activities (which approval shall not be unreasonably withheld, conditioned, or delayed). If Tenant fails or refuses to correct the unsafe or dangerous condition(s), and the failure continues for more than thirty (30) days after notice to Tenant, then Landlord may correct the unsafe or dangerous condition(s), and Tenant shall reimburse Landlord for all actual, out-of-pocket costs incurred, including administrative costs and staff time within thirty (30) days after demand.

 

12.8         No Exclusive Rights. Landlord’s rights and remedies under this Article are in addition to all other rights and remedies available under this Lease and any Applicable Law.

 

12.9         Survival. The requirements of this Article shall survive the expiration or termination of this Lease.

 

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ARTICLE 13 – UNAVOIDABLE DELAYS

 

If either Party is unable to perform under this Lease because of war, national emergency, terrorism, pandemic, flood, earthquake, fire, and other acts of God, then the deadline for the Party’s performance will be extended for a reasonable time. If Tenant is unable to perform within a reasonable time after the force majeure ends, then Landlord may terminate this Lease unless Landlord grants Tenant additional time to perform. Tenant’s lack of money or inability to obtain financing is not an unavoidable delay and cannot excuse Tenant or justify its failure to pay any Net Rent, Additional Payments, or other amounts due under this Lease. If Landlord fails to deliver possession of the Premises by the deadline set forth in this Lease, then Tenant’s duty to pay Net Rent or any other compensation under this Lease abates until Landlord delivers possession. If Landlord fails to deliver the Premises for more than 60 days past the deadline, then Tenant may terminate the Lease without further obligation between the Parties.

 

ARTICLE 14 –ASSIGNMENTS, SUBLEASES, OR– MORTGAGES 

 

14.1         Assignment. The following is a non-exhaustive list of transfers and events that are deemed assignments of this Lease and that require Landlord’s prior written approval as provided in Article 14.2 below:

 

A.         If Tenant is a corporation, Tenant sells or transfers more than fifty percent (50%) of Tenant’s voting shares of stock, whether the sale or transfer is voluntary or involuntary, or as a matter of law. The sale or transfer may be in one transaction or over a period of time in a series of transactions.

 

B.         If Tenant becomes a party to a merger or consolidation with another corporation or business entity, and Tenant is not the surviving company. A name change by Tenant is not an assignment.

 

C.         If Tenant sells or transfers all or substantially all its assets to another corporation or business entity, whether the sale or transfer is voluntary, involuntary, or as a matter of law.

 

D         If Tenant is a general partnership, joint venture, or limited partnership, a change in a majority of its partners as they existed on the Lease’s Effective Date.

 

E.         If Tenant is a member-managed limited liability company, a change in a majority of its members as they existed on the Lease’s Effective Date. If Tenant is a manager-managed limited liability company, a change in a majority of its managers as they existed on the Lease’s Effective Date.

 

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F.         If Tenant is a trust, a change in a majority of its trustees as they existed on the Lease’s Effective Date.

 

14.2         Landlord Approval Required. Tenant shall not assign, convey, mortgage, pledge, encumber, or in any manner assign or transfer this Lease or any interest in this Lease (including the Lease Option) without Landlord’s prior written approval, which approval may not be unreasonably withheld, conditioned, or delayed. Tenant may assign the Lease to a parent company or subsidiary with the written approval of the Director of Aviation Services, which approval shall not be unreasonably withheld, conditioned, or delayed.

 

14.3         Sublease. Tenant shall not sublease the Premises or any part thereof without Landlord’s prior written approval, which approval may not be unreasonably withheld, conditioned or delayed. Notwithstanding the foregoing, Tenant is not required to obtain Landlord’s prior written approval if Tenant uses Landlord-Approved Form of Sublease, attached as Exhibit E (Sublease). If Tenant chooses to use its own form of sublease, then Tenant must submit the sublease form (Tenant’s Sublease Form) to Landlord for prior written approval, which approval may not be unreasonably withheld. If Landlord approves Tenant’s Sublease Form, Tenant is not required to obtain Landlord’s prior written approval to sublease part of the Premises. Neither the Sublease nor Tenant’s Sublease Form may be materially modified without Landlord’s prior written approval, which approval may not be unreasonably withheld. Subleases are subordinate to this Lease. Subleases may not be recorded. Except as provided in Article 14.6 below, Subleases will terminate on the date this Lease expires or is terminated. Tenant shall provide copies of all Subleases to Landlord within thirty (30) days of each Sublease’s effective date.

 

14.4         Tenant’s Continuing Guaranty of Lease. Unless otherwise agreed to in writing by Landlord and Tenant, an assignment of this Lease, the Lease Option, or a sublease of the Premises or any part thereof shall not relieve Tenant from any of its obligations under this Lease, including the payment of all Net Rent, Additional Payments, and other amounts due under this Lease through the end of the Term.

 

14.5         Tenant’s Liability for Assignee’s or Sublessee’s Defaults. Any act or omission by Tenant’s assignee or sublessee that constitutes a default or breach of this Lease will be deemed an act of Tenant. Landlord shall notify Tenant of the default or breach in accordance with the terms of this Lease. Tenant shall promptly cure the default or breach in accordance with the Lease’s terms. If Tenant fails to cure the default or breach within the time and as provided in this Lease, then Landlord may exercise all remedies allowed by the Lease, including termination.

 

14.6         Attornment by Subtenant Accepted. If this Lease is terminated before the expiration of the Term, then a subtenant shall (A) promptly attorn to Landlord, or (B) immediately vacate and abandon the subleased space, leaving it in a clean and neat condition free of damage. At the time this Lease is terminated, if the subtenant attorns to Landlord, and if the subtenant is then in compliance with all Phoenix Aviation Department and DVT Airport Rules and Regulations, then Landlord shall accept the subtenant’s attornment. The subtenant shall pay to Landlord all rent and other amounts due and that become due under the Sublease and shall comply with all of the Sublease’s terms and conditions and all Phoenix Aviation Department and DVT Airport Rules and Regulations. As used in this Article, “attorn” and “attornment” mean that a subtenant formally recognizes Landlord as its sublandlord under the Sublease, and the subtenant agrees to perform all of the subtenant’s Sublease obligations directly to Landlord.

 

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14.7         Subtenant’s Failure or Refusal to Attorn. If the subtenant fails or refuses to attorn to Landlord, the subtenant shall immediately vacate the subleased space in a clean and neat condition free of damage, ordinary wear and tear excepted.

 

A.         Subtenant shall remove its movable personal property from the Premises. If subtenant’s personal property cannot be removed without causing material damage to the Premises, then it shall not be removed. If subtenant causes any damage to the Premises by removing any personal property, then subtenant shall repair the damage at its expense and to Landlord’s reasonable satisfaction. If subtenant fails to repair the damage to Landlord’s reasonable satisfaction, then Landlord may make the repairs, and subtenant shall reimburse Landlord for all costs incurred, including general and administrative expenses, on demand. If the work is performed by Landlord's contractor, then subtenant shall reimburse Landlord for all repair costs and Landlord’s attorneys’ fees, administrative costs, and other expenses incurred.

 

B.         All personal property not removed from the Premises by subtenant within five (5) days after this Lease expires or is terminated shall be deemed abandoned by subtenant, and title to the property shall automatically be transferred to Landlord at no cost, unless Landlord refuses to accept title to any or all of the property. If Landlord refuses to accept title, then Landlord may remove the abandoned personal property, and subtenant shall reimburse Landlord for all costs incurred to remove, transport, and store the personal property upon demand.

 

C.         Subtenant shall not remove, damage, or tamper with any Tenant Improvement, Improvement, or fixture that subtenant constructed or installed on the Premises, unless Landlord reasonably instructs subtenant to remove the item at subtenant’s expense.

 

D.         If a subtenant continues to occupy the subleased space after expiration or termination of this Lease without Landlord’s prior written approval, then the subtenant’s occupancy shall be at sufferance, and the subtenant shall pay, for as long as subtenant holds possession, an occupancy fee equal to 200% of the then rent and other charges due and that become due under the sublease, but in no event in an amount less than the Net Rent, Additional Payments, and other amounts in effect when the Lease expired or was terminated. During the wrongful holdover period, the subtenant shall be bound by and comply with all other provisions of its sublease. A wrongful holdover does not create, and may not be construed as creating, a month-to-month tenancy or any other leasehold interest in the subleased space or the Premises.

 

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E.         If a subtenant continues to occupy the subleased space after the expiration or termination of this Lease with Landlord’s prior written approval, then its occupancy is deemed a tenancy from month-to-month, and subtenant shall pay monthly rent and other charges in effect under the sublease when this Lease expired or was terminated. During the permissive holdover period, subtenant is bound by, and shall comply with, all other provisions of its sublease.

 

14.8          Landlord’s Consent to Leasehold Mortgage (Deed of Trust). A leasehold deed of trust is not an assignment of this Lease or of Tenant’s interest in the Lease, and a deed of trust does not and shall not be construed to make Landlord a principal or surety on the loan or any other financial obligation secured by the deed of trust or similar security. If Tenant borrows money to construct or install any Tenant Improvement on the Premises, and the lender requires a leasehold mortgage or similar security as collateral for the loan, then Tenant may, without Landlord’s further consent, enter into a deed of trust or similar security with the lender (Lender), if all the following conditions are satisfied.

 

A.    The leasehold deed of trust or similar security shall not become a lien or encumbrance on the Premises or the Airport, or on Landlord’s interest in the Premises or the Airport. The deed of trust may only lien or encumber, and must be specifically limited to, Tenant’s leasehold (possessory) interest in the Premises, Tenant's Trade Fixtures, and Tenant’s other personal property.

B.    Intentionally omitted.

 

C.    The leasehold deed of trust is subordinate to this Lease and Landlord’s rights and interests in this Lease, the Premises, and the Airport.

 

D.    The leasehold deed of trust must terminate when this Lease expires or is terminated.

 

E.    The leasehold deed of trust may not give the Lender any right or privilege in this Lease or in the Premises greater than that held by Tenant, except that under no circumstances may the leasehold deed of trust attach to Tenant’s right, title, or interest in the Lease Option before Tenant has exercised the Lease Option. After Tenant exercises the Lease Option, the Phase 2 Parcel will be deemed part of the Premises in all respects, and the Phase 2 Parcel will be treated as Premises for all purposes, including the limitations imposed by this Lease on a leasehold deed of trust.

 

F.    The leasehold deed of trust must contain the following provisions:

 

Notwithstanding anything in this deed of trust to the contrary:

 

1.          This deed of trust does not create or grant an interest in real property and does not attach to, extend to, or affect Landlord’s reversionary or fee interest or estate in or to the Premises, the Phase 2 Parcel, the Lease, or Landlord’s right to receive rent and other amounts due under the Lease. This deed of trust liens or encumbers only the Tenant’s leasehold (possessory) interest in the Premises, Tenant Improvements, and Tenant’s trade fixtures, if any, and the deed of trust will terminate with respect to the Tenant’s leasehold interest, Tenant Improvements, and trade fixtures when the Term of the Lease expires, or the Lease is terminated.

 

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2.         Lender’s right, title, and interest in and to the Premises and the Tenant Improvements is not greater than Tenant’s right, title, and interest under the Lease.

 

3.         Nothing in this deed of trust limits or may be construed to limit Landlord’s rights and remedies under the Lease or under law.

 

4.         Landlord’s lien or any rights Landlord has or may acquire in the Tenant Improvements or in Tenant’s or a subtenant’s trade fixtures and other personal property on the Premises are subordinate to this deed of trust. Landlord’s right, title, and interest in and to the Lease and Premises are not subordinate to the deed of trust.

 

G.    Tenant shall submit copies of the proposed and executed leasehold deed of trust to Landlord. If the deed of trust is assigned or satisfied, Tenant shall promptly provide a copy of any assignment or satisfaction to Landlord.

 

H.    A leasehold deed of trust must require the trustee to give all notices of default and notices of trustee’s sale to Landlord in writing concurrently with each notice’s service on the trustor or each notice’s recording with the county recorder, whichever first occurs.

 

14.9 Subordination. The Lender may enter the Premises at any time—but under no circumstances may the Lender enter the Phase 2 Parcel before Tenant has exercised the Lease Option—to inspect, repair, or replace the Tenant Improvements or to remove the Tenant’s property, including Tenant’s goods, furniture, equipment, machinery, and all proceeds of the Tenant’s property located on the Premises. After entering the Premises, the Lender must repair any damage that it causes to the Premises or to the Tenant Improvements. Otherwise, the Lender will not be liable to Landlord for so entering the Premises, except for the Lender’s negligence or willful misconduct. Notwithstanding the Lender exercises its rights under this Article, no performance by or on behalf of the Lender or, if the Lender’s interests and deed of trust have been assigned, by or on behalf of the leasehold deed-of-trust beneficiary (Beneficiary), will cause the Lender or the Beneficiary to become a “mortgagee in possession” or otherwise cause the Lender or the Beneficiary to be deemed to be in possession of the Premises.

 

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14.10 Landlord’s Notices to Lender or Beneficiary. Landlord shall give to the Lender or the Beneficiary, whose name and address Tenant has previously provided to Landlord, a copy of each notice of default, each notice of termination, and each summons and complaint related to this Lease and served on Tenant at the same time as Landlord serves the notice or summons on Tenant. No Landlord notice of default or notice of termination will be deemed to have been properly given to Tenant unless a copy of the notice has been given to the Lender or to the Beneficiary.

 

14.11 Non-Disturbance. Upon receiving Landlord’s notice of Tenant’s default or notice of termination, the Lender or the Beneficiary may cure Tenant’s failure to pay Net Rent, Additional Payments, or any other sum due to Landlord under this Lease within thirty (30) days from the date the Lender or the Beneficiary receives the notice. The Lender or the Beneficiary may cure any other Tenant default within sixty (60) days from the date the Lender or the Beneficiary receives the notice. If the default cannot objectively be cured within this 60-day period, and if the Lender or the Beneficiary proceeds diligently and in good faith to cure the default, then the Lender or the Beneficiary will be entitled to reasonable additional time to cure. No provision of this Article may be construed to impose upon the Lender or the Beneficiary the duty to perform any Tenant obligation under this Lease or to remedy any Lease default by Tenant. Landlord shall accept the Lender’s or the Beneficiary’s performance of any Tenant covenant, condition, or agreement under this Lease with the same force and effect as though performed by Tenant, and when accepted, the Lease will remain in full force and effect between Landlord and Lender or Beneficiary.

 

A.    If a Tenant default on this Lease cannot be cured, the Lender or the Beneficiary may direct the trustee to exercise the power of sale under the leasehold deed of trust as provided by law. Before exercising the power of sale, the trustee may, but is not required to, first offer to Landlord the right to purchase all right, title, and interest in the leasehold encumbered under the deed of trust directly from the trustee and without public sale for the then outstanding balance due on the note or notes secured by the deed of trust, plus trustee's fees and costs of sale. The trustee's offer to Landlord, if any, must be made no later than ten (10) days following the recording of the trustee’s notice of default, and Landlord may exercise the option to purchase within 60 days following the recording. Any foreclosure of the deed of trust will not affect Landlord’s right, title, or interest in or to the Premises, the Phase 2 Parcel, or this Lease.

 

B.    If Landlord is not offered the right to purchase or does not purchase the Lender’s or the Beneficiary’s interest, the Lender or Beneficiary may:

 

1.    Pursuant to the leasehold deed of trust and as provided by law, cause Tenant's interest in this Lease to be transferred at foreclosure sale, to be judicially foreclosed, or to be conveyed by deed in lieu of foreclosure; or

 

2.    Upon Landlord’s prior approval, which approval may not be unreasonably withheld, cause Tenant's interest in this Lease to be transferred or assigned to a federal- or state-chartered bank, savings-and-loan association, or insurance company. But Landlord’s prior approval is not required to assign or transfer the Lease to a financial institution acting as a bond trustee if the institution possesses at least $500,000,000 in assets and if the institution is regulated, supervised and controlled by an agency or department of the United States or an agency or department of the state of Arizona having jurisdiction over banks, savings-and-loan associations, or other similar financial institutions (“Bond Trustee”).

 

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C.    Except as otherwise provided in this Lease, from the date on which Landlord receives notice of a leasehold deed of trust, Landlord may not amend this Lease in any material respect or accept a surrender of Tenant’s leasehold interest in this Lease without the prior written consent of the Lender or the Beneficiary, which consent may not be unreasonably withheld, conditioned, or delayed.

D.    If the Lender or Beneficiary forecloses a leasehold deed of trust or similar security, or if Tenant executes and delivers a deed in lieu of foreclosure, then Landlord may deem the purchaser at the foreclosure sale or the grantee under the deed in lieu of foreclosure as an assignee of this Lease, and Landlord may permit the purchaser or grantee to assume Tenant’s duties and obligations under this Lease as Tenant’s successor from the date Landlord approves the purchaser or grantee, except that Landlord’s approval is not required if the purchaser or grantee is a Bond Trustee. Landlord may not unreasonably withhold, condition, or delay approval of the purchaser or grantee as assignee of the Lease. The foreclosure will not affect Landlord’s rights, title, or interest in or to the Premises, the Phase 2 Parcel, or this Lease.

 

14.12        Attornment. If the Lender or Beneficiary succeeds to Tenant’s interest under the Lease, and if the Lender or Beneficiary faithfully and continuously performs all of Tenant’s Lease duties and obligations, then the Lease will continue in full force and effect, and Landlord will be bound to the Lender in accordance with all Lease terms and conditions for the balance of the Lease Term but only to the same extent and effect as if the Lender or the Beneficiary were Tenant under the Lease. If the Lender or Beneficiary succeeds to Tenant’s interest under the Lease, the Lender or the Beneficiary shall attorn to Landlord as if each were Tenant under the Lease. The Lender’s or Beneficiary’s duty to so attorn to Landlord arises immediately upon the Lender or Beneficiary succeeding to Tenant’s interest under this Lease, and the duty to attorn is self-executing, requiring no formal writing or further action by Landlord, the Lender, or the Beneficiary.

 

14.13         New Lease with Lender or Beneficiary. If this Lease is terminated for Tenant’s breach before the end of the Term, then Landlord shall provide a copy of the termination notice to the Lender or the Beneficiary, and Landlord shall offer to enter into a new lease of the Premises with the Lender or the Beneficiary. After Landlord gives written notice of the breach to the Lender or the Beneficiary, the Lender or Beneficiary shall: (A) cure the breach in accordance with, and within the time specified by, Article 14.11 of this Lease; and (B) agree in writing to promptly perform all other covenants and conditions of the Lease when due; and (C) enter into a new lease with Landlord in accordance with this Article 14.13. The term of the new lease will be for the remainder of the Term of this Lease, and the new lease will contain the same or similar terms and conditions as this Lease. Landlord will not consider the Lender’s or the Beneficiary’s acceptance of Landlord’s offer to enter into a new lease unless the acceptance (1) is in writing, (2) is received by Landlord within thirty (30) days after the date of Landlord’s offer, and (3) is accompanied by payment to Landlord of all Net Rent, Additional Payments, and other amounts that would have been due under this Lease from the date of termination through the effective date of the new lease. The Landlord or the Beneficiary shall pay to Landlord all attorneys’ fees and other reasonable out-of-pocket costs incurred in connection with preparing and executing the new lease. If Landlord does not enter into a new lease with the Lender or the Beneficiary, then the Lender or Beneficiary shall immediately remove all trade fixtures and other personal property from the Premises and repair, to Landlord’s reasonable satisfaction, any damage caused to the Premises by the removal. The Lender or Beneficiary shall not remove or tamper with any Tenant Improvement or Improvement on the Premises.

 

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14.14         Conditional Assignment of Rents to Lender and Landlord. Tenant may conditionally assign to Lender for the Tenant Improvements all subleases with subtenants, subject to Tenant’s duty to pay Net Rent to Landlord and to perform all of Tenant’s other duties and obligations under this Lease. If Tenant defaults on any material Lease duty or obligation to Landlord, and if the Lender fails to cure the default as and within the time provided in Article 14.8(H) and fails to commence a foreclosure proceeding, then Landlord shall notify the Lender and the subtenants that the conditional assignment is revoked, and subtenants shall attorn to Landlord. Under these circumstances, and upon notice to the Lender of its failure to cure and failure to commence foreclosure, Tenant assigns to Landlord, as security for its performance under this Lease, the right to collect all rent and other amounts any subtenant owes to Tenant and apply the amounts collected to any Net Rent, Additional Payment, and other amounts due under this Lease. This assignment of rents does not impose any duty or obligation on Landlord to perform any of Tenant’s obligations as sub-landlord under any sublease. The collection of rents by Landlord is not, and may not be construed as, a waiver of any provision of this Lease or as Landlord’s acceptance of any subtenant as a new tenant.

 

14.15         Estoppel Certificate. Tenant may request from Landlord and Landlord may request from Tenant an estoppel certificate stating:

 

A.         That this Lease is in full force and effect.

 

B.         The amount and current status of the Net Rent, Additional Payments, and other amounts due under this Lease.

 

C.         Whether this Lease has been modified or amended and, if so, describing with specificity the modifications or amendments.

 

D.         That to the Party’s current knowledge, there is a default or breach of this Lease or any matter exists that, with the passage of time, will result in a default or breach, and describing with specificity the nature of the default or breach.

 

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14.16         Memorandum of Lease. If, as a condition to lending money, the Lender requires a memorandum of lease to be recorded, then Tenant shall use the short form Memorandum of Lease marked Exhibit H attached. The Memorandum of Lease may only be recorded in the Office of the Maricopa County Recorder. This Lease shall not be recorded as a stand-alone document or as an exhibit to a Memorandum of Lease.

 

14.17        Third-Party Beneficiaries. Tenant’s present and future Lenders and any present and future leasehold deed-of-trust Beneficiaries are intended third-party beneficiaries to Article 14 of this Lease. As third-party beneficiaries, they are entitled to the applicable rights under, and may enforce the provisions of, Article 14 as if it they were parties to Article 14.

 

ARTICLE 15 –SIGNAGE

 

Tenant shall not install, post, or erect any sign, poster, banner, flag, or other signage on or about the Premises without Landlord’s prior written approval. A request for signage shall be submitted to Landlord in writing. Tenant shall immediately remove all unapproved signage upon demand by Landlord. If the signage is not removed upon demand, then Landlord may enter the Premises and remove the signage at Tenant’s expense.

 

ARTICLE 16 – BREACH AND REMEDIES FOR BREACH

 

16.1          Events of Breach. The occurrence of any of the following events constitutes a material breach of this Lease by Tenant:

 

A.         Tenant fails to pay Net Rent, Additional Payments, or any other amount when due, and the failure continues for ten (10) days after notice from Landlord.

 

B.         Except for the events of default listed below, Tenant fails to perform any non-monetary obligation under this Lease, and the failure continues for thirty (30) days after notice from Landlord, unless the default cannot objectively be cured within thirty (30) days, and Tenant diligently and in good faith proceeds to cure the default, in which case Tenant is entitled to a reasonable time to cure under the circumstances.

 

C.         Tenant fails to procure and maintain the insurance coverages required under this Lease, and the failure continues for five (5) days after notice from Landlord.

 

D.         Tenant vacates or ceases to use and occupy the Premises for thirty (30) consecutive days or for a total of sixty (60) days in any Lease Year.

 

E.         Tenant abandons or surrenders possession of the Premises. Tenant’s failure to use or occupy the Premises for thirty (30) consecutive days is deemed an abandonment of the Premises.

 

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F.         Tenant’s use or occupancy of the Premises creates a condition that Landlord determines is a danger to the health, safety, or welfare of the Airport or the public, and Tenant fails to correct the condition to Landlord’s satisfaction within two (2) days after notice from Landlord.

 

G.         Tenant or its trustees, owners, officers, directors, managers, agents, employees, contractors, guests, invitees, or subtenants cause any lien or encumbrance to be filed or recorded against the Premises or other Airport property that is not completely discharged and released within thirty (30) days after the date Landlord demands release of the lien or encumbrance.

 

H.         Tenant files a voluntary petition in bankruptcy; is adjudicated bankrupt or insolvent; takes the benefit of any law applicable to bankrupt or insolvent debtors; files a petition or action seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief for itself under any Applicable Law; seeks or acquiesces to the appointment of a trustee, receiver, or liquidator of all or a substantial part of Tenant’s assets; or makes any general assignment for the benefit of creditors.

 

I.         A petition or action is filed against Tenant seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any Applicable Law and the petition or action is not dismissed or stayed ninety (90) days.

 

J.         A trustee, receiver, or liquidator of Tenant is appointed, and the appointment is not vacated or stayed within ninety (90) days.

 

16.2.         Remedies of Landlord. Upon the occurrence of any material breach by Tenant, including those described in Article 16.1 of this Lease, Landlord may elect to do any or all of the following:

 

A.         File a civil action or actions to, among other things, enforce this Lease; recover all Net Rent, Additional Payments, and other amounts due; recover all actual out-of-pocket attorney fees, court costs, and other expenses incurred; and recover possession of the Premises and all Tenant Improvements, Trade Fixtures, and other personal property located thereon without terminating this Lease.

 

B.         Use self-help to recover possession of the Premises and all Tenant Improvements, Trade Fixtures, and other personal property located thereon, without terminating this Lease.

 

C.         At any time before or after taking possession, Landlord may terminate this Lease and recover from Tenant all Net Rent, Additional Payments, and other amounts due through the date of termination and all attorney fees, court costs, and other expenses incurred in recovering possession of the Premises.

 

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D.         If Landlord determines that Tenant’s default or breach involves a condition that endangers the health, safety, or welfare of the Airport or the public, then Landlord may, without prior notice, use self-help to enter and retake possession of the Premises and all Tenant Improvements, Trade Fixtures, and other personal property located thereon without terminating this Lease.

 

E.         Exercise any and all other remedies allowed at law or in equity. The foregoing list of remedies is nonexclusive.

 

16.3          Lender or Beneficiary Cure. The Lender or the Beneficiary may cure a default by Tenant in accordance with Article 14.11. Curing a default does not make the Lender or the Beneficiary the tenant under this Lease.

 

16.4        Tenant Liability Continues. Tenant’s liability and obligation to perform under this Lease will survive the expiration or termination of this Lease. Upon expiration or termination of the Lease, whether or not the Premises or any part thereof has been relet, Tenant shall pay to Landlord the Net Rent, Additional Payments, and any other amounts due under this Lease through the date the Lease expired or was terminated. Tenant shall also pay all reasonable costs incurred by Landlord in connection with or related to releasing the Premises, including repossession costs, broker and real estate commissions, legal expenses, attorneys’ fees, court costs, alteration costs, and expenses to prepare the Premises for releasing.

 

ARTICLE 17 – NO WAIVER

 

A Party’s failure to insist on the other Party’s strict performance of any provision of this Lease or to exercise any right or remedy upon the other Party’s default or breach of this Lease is not and shall not be construed to be a waiver of the default, breach, or of the enforceability of the provision. Landlord’s acceptance of full or partial Net Rent, Additional Payments, or any other amount while Tenant is in default or breach of this Lease is not and shall not be construed to be a waiver of the default or breach. Landlord’s rights and remedies under this Lease and Applicable Law can only be waived, altered, or modified by a written instrument signed by Landlord for that purpose. Landlord’s waiver of a default or breach of any provision of this Lease is not constitute and shall not be construed to be a waiver of Tenant’s subsequent default or breach of that provision or of Tenant’s default or breach of any other provision. Tenant’s rights and remedies under this Lease and Applicable Law can only be waived, altered, or modified by a written instrument signed by Tenant for that purpose. Tenant’s waiver of a default or breach of any provision of this Lease is not constitute and shall not be construed to be a waiver of Landlord’s subsequent default or breach of that provision or of Landlord’s default or breach of any other provision.

 

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ARTICLE 18 – TENANT IMPROVEMENTS

 

18.1         Tenant Improvements. Tenant shall construct and install the Phase 1 Tenant Improvements (estimated to cost $15,300,000) and, if Tenant exercises the Lease Option, the Phase 2 Tenant Improvements (estimated to cost $14,600,000) on the Premises according to the Site Maps marked Exhibits A-1 and A-2 attached, the Tenant Improvement Process, the Tenant Improvement Handbook, and the 2016 DVT Design Guidelines, each of which is incorporated herein by this reference, as may be amended from time to time. Tenant shall not construct or install any Tenant Improvement without Landlord’s prior written approval, which shall not be unreasonably withheld, conditioned, or delayed. All subsequent modifications to the Tenant Improvements are subject to the Tenant Improvement Process, the Tenant Improvement Handbook, the DVT Design Guidelines, and all Applicable Laws.

 

18.2         Building Laws. Tenant shall comply with all building restrictions and regulations, zoning laws, ordinances, resolutions, and regulations of the City of Phoenix and of all boards, bureaus, commissions, and bodies of any municipal, county, state, or federal authority now or hereafter having jurisdiction over Tenant or the Premises. Tenant acknowledges that certain rules and regulations of the FAA and the U.S. Environmental Protection Agency apply to Tenant and the Premises.

 

18.3         Construction. If applicable, construction of the Tenant Improvements, or any subsequent Tenant Improvement, may not commence until an FAA Part 77 Form 7460-I has been approved by the FAA.

 

18.4         Approved Tenant Improvements. If Landlord approves a Tenant Improvement, then Tenant shall comply with the Tenant Improvement Process, the Tenant Improvement Handbook, the DVT 2016 Design Guidelines, and each the following:

 

A.         Tenant agrees that the submission of its plans, drawings, or other documents (Construction Documents) to Landlord for consideration and approval is not subject to the requirements of Senate Bill 1598, which was passed by the Arizona legislature during its First Regular Session of 2011, as amended.

 

B.         Before submitting any Construction Document to Landlord, Tenant shall contact Landlord at:

 

City of Phoenix Aviation Department

Corporate Office Building

Business and Properties Division

2458 East Buckeye Road

Phoenix, Arizona 85034

Attn: Real Estate

 

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C.         Tenant shall furnish conceptual information, including a written description of the Tenant Improvement, conceptual drawings, if any, site plans, and any other information requested by Landlord. After Landlord determines that the proposed Tenant Improvement is acceptable and meets all Lease requirements, Landlord shall provide Tenant with a Tenant Improvement conceptual approval letter to sign and return, a Tenant Improvement submittal sheet to fill out and return, and a copy of the Tenant Improvement Handbook. The conceptual approval letter will enclose an insurance agreement that must be signed by Tenant’s general contractor. Review by Landlord does not constitute approval to commence construction or installation of the proposed Tenant Improvement.

 

D.          Tenant shall submit the Construction Documents to the Aviation Tenant Improvement Coordinator at:

 

City of Phoenix Aviation Department

Design and Construction Services Division

500 South 24th Street

Phoenix, Arizona 85034-4405

Attn: Tenant Improvement Coordinator

 

E.          Landlord shall review the Construction Documents, including architectural and aesthetic matters. Landlord may reject any Construction Document and may require Tenant to resubmit the Construction Documents or the deficient parts thereof if any Construction Document does not comply with the Tenant Improvement Process, the Tenant Improvement Handbook, the DVT 2016 Design Guidelines until the deficient Construction Document meets Landlord’s approval. Only after Landlord gives written approval may Tenant proceed to obtain required regulatory approvals, such as building permits. Landlord’s approval does not constitute a representation or warranty of any kind that the Construction Documents comply with Applicable Law, which Tenant must comply with at all times.

 

F.         Construction Documents shall comply with all Aviation Department Rules and Regulations and applicable City of Phoenix ordinances and building codes. Construction Documents must be prepared, stamped, and sealed by an architect or engineer registered and licensed to practice in the state of Arizona. All construction work shall be performed by contractors who are licensed and bonded by the state of Arizona.

 

G.         Tenant shall make no material change to the Construction Documents after they have been approved by Landlord. Tenant’s request for Landlord’s approval of a change to previously approved Construction Documents shall be made in accordance with the Tenant Improvement Process.

 

H.        Within thirty (30) days after Landlord determines that construction or installation of the Tenant Improvements is deemed complete, Tenant shall furnish the Aviation Tenant Improvement Coordinator with detailed drawings of the work completed. One (1) complete set of the drawings shall be on computer disc in AUTOCAD and one (1) complete set shall be on computer disc using the GIS specifications.

 

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I.         Tenant shall construct and install the Tenant Improvements in a professional, workmanlike manner that does not cause any damage to the Premises, Airport, or any other property. If any damage occurs, then Tenant shall repair the damage at its expense and to Landlord’s satisfaction.

 

J.         Tenant shall provide the following bonds to Landlord before construction or installation of any Tenant Improvement begins:

 

1.         Tenant shall cause its contractors to provide a payment bond in an amount equal to the construction costs of the Tenant Improvements (Payment Bond) to ensure that materials and labor are paid for. Upon completion of the work, Tenant shall record a release of the Payment Bond and provide Landlord with a copy.

 

2.         Tenant shall cause its contractors to provide a performance bond in an amount equal to the total cost of the Tenant Improvements (Performance Bond) to ensure that the work is completed according to the Construction Documents approved by Landlord. Upon completion of the work, Tenant shall record a release of the Performance Bond and provide Landlord with a copy.

 

3.         Tenant shall provide copies of the Payment Bond and Performance Bond to Landlord prior to the start of any work. Each Bond shall name Tenant and Landlord as "obligees" and shall comply with the requirements of Title 34, Arizona Revised Statutes.

 

4.         The surety company providing the Payment Bond and Performance Bond shall have an A.M. Best Rating of B+ VI or better for the past four (4) calendar quarters.

 

5.         All contracts for the construction or installation of the Tenant Improvements shall include provisions of insurance and suretyship satisfactory to Landlord for the protection of Landlord; Tenant’s laborers, suppliers, and subcontractors; and the public.

 

K.         If applicable, Tenant shall obtain prior FAA approval under 14 C.F.R. Part 77, Objects Affecting Navigable Air Space. Tenant shall also coordinate with Landlord regarding FAA approval under the National Environmental Policy Act of 1969, as amended, 42 U.S.C. §§ 4321, et seq.

 

L.         Tenant shall provide Landlord with copies of all licenses, permits, approvals, and all other actions of any federal, state, local, and other governmental authority that authorizes the construction, installation, maintenance, and operation of the Tenant Improvements. Tenant shall also obtain approval of the final Construction Documents by all federal, state, local, and other governmental authorities having jurisdiction in the matter. Tenant shall provide conformed copies of the executed approvals to Landlord along with a certificate of construction costs

 

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M.         If Landlord determines that a modification of a Tenant Improvement is necessary for the safety of air navigation at the Airport or the public, then Tenant shall modify the Tenant Improvement to Landlord’s satisfaction. If the FAA requires the modification or relocation of any air navigation facility as the result of Tenant’s activities on the Premises, then Tenant shall pay the cost to modify or relocate the air navigation facility.

 

N.         Tenant shall construct and install any Tenant Improvement that is necessary to use and occupy the Premises.

 

18.5         Title to Tenant Improvements. Upon expiration or termination of this Lease, all of Tenant’s rights, title, and interest in and to the Tenant Improvements shall be automatically transferred and conveyed to Landlord at no cost, unless Landlord refuses to accept title to any or all of the Tenant Improvements. Tenant shall not remove, damage, or tamper with any Tenant Improvement, unless Landlord reasonably instructs Tenant to remove a damaged, dilapidated, or non-habitable Tenant Improvement at Tenant’s expense. Tenant shall execute and deliver to Landlord a bill of sale or any other instrument necessary to evidence the transfer of the Tenant Improvements’ title to Landlord. Title shall be transferred to Landlord free and clear of all claims, liens, encumbrances, and security interests and at no cost to Landlord.

 

18.6         Trade Fixtures. If a dispute arises as to what is or is not a Trade Fixture or other personal property, then Landlord’s reasonable resolution of the dispute shall be final and nonappealable. Trade Fixtures and personal property used on the Premises by Tenant shall be high quality, safe, and fire-resistant.

 

18.7         Removing Trade Fixtures. Before expiration or termination of this Lease, Tenant shall remove its Trade Fixtures and other personal property from the Premises in a manner and at times that do not interrupt or interfere with the Airport operations. If any Trade Fixture cannot be removed without causing material damage to the Premises, then it shall not be removed. Tenant shall repair all damage to the Premises and the Airport caused by removing any Trade Fixture or other personal property. Tenant shall restore the Premises to the state of good repair that existed before Tenant brought the Trade Fixtures or other personal property onto the Premises, normal wear and tear excepted. If Tenant fails to repair the damage to Landlord’s satisfaction, then Landlord may make the repairs, and Tenant shall reimburse Landlord for all repair costs incurred, including overhead, on demand. If the work is performed by Landlord's contractor, then Tenant shall reimburse Landlord for all repair costs and Landlord’s administrative costs incurred upon demand. Tenant shall not remove or tamper with any Trade Fixture or other personal property at any time Tenant is in default or breach of this Lease. Tenant hereby conveys to Landlord a possessory lien on all Trade Fixtures and other personal property owned by Tenant or Subtenant on the Premises as security for Tenant paying to Landlord all amounts due under this Lease.

 

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18.8         Failure to Remove Trade Fixtures. All Trade Fixtures and other personal property not removed by Tenant within five (5) days after expiration or termination of this Lease shall be deemed abandoned by Tenant, and title thereto shall automatically be transferred to Landlord at no cost, unless Landlord refuses to accept title to any or all the Trade fixtures. If Landlord refuses to accept title, then Landlord may remove the abandoned Trade Fixture or other personal property and Tenant shall reimburse Landlord for all costs incurred to remove, transport, and store the Trade Fixture or other personal property upon demand. Tenant shall execute and deliver to Landlord a bill of sale and all other instruments necessary to evidence transfer of title to a Trade Fixture or other personal property to Landlord. Title shall be transferred to Landlord free and clear of all claims, liens, encumbrances, and security interests and at no cost to Landlord.

 

ARTICLE 19 – DAMAGE OR DESTRUCTION TO PREMISES

 

19.1         Damage or Destruction. If Tenant reasonably determines that the Premises are damaged or destroyed to the extent of less than fifty percent (50%), then Tenant shall continue to perform under this Lease, and Tenant, at its expense—subject to receipt of property insurance proceeds and to the sufficiency of the proceeds for the purpose—shall cause the Premises to be reconstructed, repaired, or replaced with due diligence and as nearly as possible to the Premises’ value, condition, and character immediately prior to the damage or destruction, but commercially reasonable alterations and changes may be approved by Landlord at no cost to Landlord. Tenant shall comply with the Tenant Improvement Process and the Tenant Improvement Handbook in making the repairs. The repair, alteration, restoration, replacement, and rebuilding, including temporary repairs for the protection of the Premises and other property pending completion of the repairs, are referred to in this Article as the “Work”. Tenant shall immediately secure the Premises and undertake all Work necessary to protect the public, the Tenant Improvements, and the Premises from further damage.

 

19.2         Payment of Property Insurance Proceeds. All property insurance proceeds related to the damage or destruction shall be paid to Tenant or the Lender and held in an account. The property insurance proceeds shall be applied by Tenant to pay for the cost of the Work to the extent the insurance proceeds are sufficient to do so. Subject to any reasonable Lender requirements, property insurance proceeds shall be paid out to or for the account of Tenant from time to time as the Work progresses, provided that Tenant has delivered the following to Landlord with respect to the disbursement in question at least fifteen (15) days before the reimbursement:

 

A.         A certificate, dated not more than fifteen (15) days prior to the request, signed by Tenant and by an architect in charge of the Work setting forth that:

 

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1.         The sum to be disbursed has been paid by Tenant or is due to contractors, subcontractors, materialmen, architects, or other persons who have rendered services or furnished materials in connection with the Work. The certificate shall contain a brief description of the services and materials and the amounts paid or due. The certificate shall state that no part of the amount to be disbursed is part of any previous or pending request or has been paid out of any insurance proceeds received by Tenant, and that the amount requested does not exceed the value of the services and materials described in the certificate. If any amount is sought by way of reimbursement, then the request must be accompanied by a lien waiver. If amounts are sought for payment of a lien, then the waiver must be submitted to Landlord within seven days after payment of the lien.

 

2.         Except for the amount stated in the certificate to be due, there is no outstanding indebtedness known to the persons signing the certificate after due inquiry that might become the basis of a vendor, mechanic, or materialman’s or similar lien upon the Work, the Premises, or Tenant’s leasehold interest.

 

B.         Upon compliance with the foregoing provision, Tenant, out of the property insurance proceeds, shall reimburse Tenant, or pay the persons named in the certificate, the respective amounts stated therein to have been paid by Tenant or to be due to the persons named in the certificate, as the case may be.

 

C.         Upon receipt by Landlord of a statutory lien waiver from every contractor and subcontractor working on the project and such other evidence reasonably satisfactory to Landlord of the character required by this Article that the Work is complete and paid for in full and that there are no mechanic’s or materialmen’s liens, and if Tenant is not then in default, then Tenant may retain as its property any remaining balance of the property insurance proceeds.

 

D.        If the property insurance proceeds received by Tenant are not sufficient to pay the entire cost of the Work, then Tenant shall pay the amount of any deficiency. Landlord is not obligated to make any payment, reimbursement, or contribution toward the cost of the Work.

 

19.3         Failure to Commence Repairs. If the Work has not commenced within a reasonable time after the date of the damage or destruction, or if the Work, after it has commenced, does not proceed expeditiously, then this failure to commence or prosecute the Work will constitute a material breach under Article 16 of this Lease, and Landlord may terminate the Lease. If the Lease is terminated, then the property insurance proceeds received by or due to Tenant must be paid to Landlord, and all property insurance proceeds receivable for damage to or destruction of the Premises or Tenant Improvements will belong to and be retained by Landlord without claim thereto by Tenant.

 

19.4         Lease Obligations Continue. Subject to Article 19.5, damage to or destruction of the Premises shall not affect Tenant’s obligation to pay Net Rent, Additional Payments, and other amounts required to be paid under this Lease and shall not release Tenant from its obligation to perform under this Lease. However, Tenant shall receive a temporary abatement, allowance, reduction, or suspension of Net Rent, Additional Payments, and other amounts due and that become due under this Lease because the Premises, or any part thereof, is untenantable due to partial or total destruction. The temporary abatement shall be proportionate to the scope of the damages to the Premises.

 

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19.5         Distribution of Property Insurance Proceeds Upon Lease Termination. If Tenant reasonably determines that the Tenant Improvements are damaged or destroyed to the extent of fifty percent (50%) or more, then Landlord and Tenant shall agree whether or not the Tenant Improvements will be reconstructed, repaired, or replaced. If, within thirty (30) days of the damage or destruction, Landlord and Tenant have not agreed that the Tenant Improvements will be reconstructed, repaired, or replaced, then this Lease shall terminate, and the property insurance proceeds shall be divided as follows:

 

A.         Landlord’s Improvements, if any: All proceeds for Landlord Improvements, if any, shall be paid to Landlord.

 

B.         Tenant’s Improvements: Proceeds shall be divided as follows:

 

1.         Tenant shall receive the percentage equal to the number of months remaining in the Term after the date of the damage or destruction, as the numerator, over the number of months in the Term, as the denominator.

2.         Landlord shall receive the percentage equal to the number of months from beginning of Term to the date of the damage or destruction, as the numerator, over the number of months in the Term, as the denominator.

 

C.         Tenant's Trade Fixtures and Personal Property: To the extent insured by the insurance policy from which proceeds will be paid, all proceeds shall be paid to Tenant.

 

ARTICLE 20 – CONDEMNATION

 

20.1         Total. If title to the Premises are taken in a condemnation proceeding by any right of eminent domain, or by agreement in lieu of such proceedings, then this Lease shall terminate on the date possession is transferred to the condemning authority, and the Net Rent, Additional Payments, and other amounts owed by Tenant shall be apportioned and paid to the date of the taking.

 

20.2         Substantial. If title to a substantial portion of the Premises is taken in a condemnation proceeding, by any right of eminent domain, or by agreement in lieu of such proceeding, and if Landlord and Tenant reasonably determine that the remaining portion of the Premises cannot be used or converted for use in an economically feasible manner by Tenant for the uses authorized by this Lease, then this Lease shall terminate on the date possession is transferred to the condemning authority, and the Net Rent, Additional Payments, and other amounts owed by Tenant shall be apportioned and paid to the date of the taking.

 

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20.3         Proceeds. If there is a taking as described above, then this Lease shall terminate. In the condemnation proceedings, the Parties shall insist and formally stipulate that the condemnation award (Award) must adjudicate, determine, and distribute the amount to be paid to each Party for its respective interest in the Premises condemned (including severance damages and repair and restoration costs) and for attorneys’ fees, experts’ fees, and court costs. The interest of the Lender or the Beneficiary under the leasehold deed of trust must be adjudicated and determined as part of Tenant’s interest in the Premises.

 

20.4         Partial Taking—Lease Continues. If the condemning authority takes less than the whole or substantially all of the Premises, and if the taking is not otherwise covered in Article 20.3 of this Lease, then the remaining Term of the Lease will not be affected, and:

 

A.         In the condemnation proceedings, the Parties shall insist and formally stipulate that the Award must adjudicate, determine, and distribute the amount to be paid to each Party for its respective interest in the Premises condemned (including severance damages and repair and restoration costs) and for attorneys’ fees, experts’ fees, and court costs. The interest of the Lender or the Beneficiary under the leasehold deed of trust must be adjudicated and determined as part of Tenant’s interest in the Premises.

 

B.         Tenant shall promptly complete all repairs and restoration of the Premises, protect the Premises and all other property pending completion of the repairs and restoration (collectively Work), and pay all costs of the Work.

 

C.         The aggregate Net Rent payable by Tenant after the partial taking for the remaining term of this Lease shall be apportioned and reduced, from the date of the partial taking, by the percentage equivalent to a fraction in which the area of the Premises remaining is the numerator, and the original area of the Premises is the denominator multiplied by the Net Rent immediately before the taking and the Net Rent in effect during the remaining Term of this Lease.

 

D.         If Tenant reasonably determines that the remaining part of the Premises can feasibly be used or converted for use by Tenant as permitted by this Lease, then Tenant, at its own expense—and whether or not the Award is sufficient for this purpose—shall proceed with reasonable diligence to repair the Premises, including any necessary demolition and reconstruction, and restore the remaining part of the Premises to a complete, self-contained building or buildings in good condition and repair, and usable in accordance with the terms of this Lease.

 

E.          Except as expressly set forth in this Lease, Tenant is not entitled to any abatement, allowance, reduction, or suspension of Net Rent, Additional Payments, or other amounts required to be paid by Tenant or a release from obligations imposed upon Tenant under this Lease as a result of a condemnation or other taking of a portion of the Premises.

 

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20.5         Intentionally Omitted.

 

20.6         Rights of Participation. Landlord and Tenant, at their own expense, may appear in any condemnation proceeding and participate in hearings, trials, and appeals.

 

20.7         Notice of Proceeding. If Landlord or Tenant receives notice of any proposed or pending condemnation proceedings affecting the Premises, then the Party receiving the notice shall promptly notify the other Party of the receipt and contents of the notice.

 

ARTICLE 21 – MAINTENANCE AND CUSTODIAL

 

21.1         Maintenance. Tenant shall keep and maintain the Premises, Tenant Improvements, Development Taxi Lane, Trade Fixtures, and other personal property on the Premises in good, serviceable, and working order, condition, repair, and appearance. Tenant shall regularly inspect, repair, and refurbish the Tenant Improvements, Development Taxi Lane, Trade Fixtures, and other personal property as their condition requires. If Tenant fails to maintain the Tenant Improvements, Development Taxi Lane, and other property in accordance with this Lease’s terms and conditions, and the failure continues for more than thirty (30) days after notice, then Landlord may, among other things, self-perform or hire a contractor to perform the maintenance work and charge Tenant all out-of-pocket costs incurred, which Tenant shall promptly pay upon written demand.

 

21.2         Stormwater. Tenant shall not cause or allow any water or stormwater containing a Regulated Substance to enter the stormwater drainage system. Tenant shall test all water and stormwater according to Applicable Law. In accordance with Landlord’s Stormwater Pollution Prevention Plan, Tenant shall not cause any track-out mud or soil onto public roads. Tenant shall maintain all storm drains and stormwater treatment devices on the Premises as required by Applicable Law.

 

21.3         Fluids. Tenant shall not locate or drain any fluid that contains a Regulated Substance on or around the Premises. Tenant shall use drip pans and absorbent pads to contain incidental drips, leaks, and releases. Tenant shall inspect and clean the drip pans on a regular basis. Tenant shall transport all fluids off the Airport according to Applicable Law.

 

21.4         Janitorial Services. Tenant shall provide custodial, janitorial, trash, cleaning services, and landscape maintenance services (Janitorial Services) to the Premises. Whether Tenant elects to furnish the Janitorial Services itself or use a janitorial or landscaping service, all Janitorial Services shall be commensurate with the high level of Janitorial Services provided by Landlord in similar circumstances. If Tenant fails to maintain a high level of Janitorial Services within thirty (30) days after notice from Landlord, then Landlord may self-perform or hire a contractor to perform the Janitorial Services, and Tenant shall reimburse Landlord for all out-of-pocket costs incurred upon written demand.

 

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21.5         Entry. At any time between the hours of 7:00 a.m. and 7:00 p.m. MST (Phoenix time), and after giving Tenant at least twenty-four (24) hours’ prior notice (except prior notice is not required for Landlord to enter the Development Taxi Way), Landlord may enter the Premises and Development Taxi Way, and all parts thereof, to inspect and maintain the Premises and Development Taxi Way and to (A) repair and maintain the landscaping in accordance with this Lease, (B) repair and maintain any Improvement, Tenant Improvement, Development Taxiway, and utility under the Lease, and (C) perform any other Landlord obligation under the Lease.

 

ARTICLE 22 – NO IMPAIRMENT OF LANDLORD’S TITLE

 

22.1         No Liens. Tenant shall not cause or allow any person or entity to cause any lien, cloud, charge, or encumbrance (Encumbrance) to be filed, recorded, or imposed on the Premises, the Phase 2 Parcel, or the Airport, or any part thereof, or on any Net Rent, Additional Payments, or other amount due to Landlord; provided, however, that a memorandum of lease, as provided in Article 14.3, may be recorded against the Premises. If an Encumbrance is filed, recorded, or imposed, then Tenant shall cause the Encumbrance to be discharged and released within thirty (30) days after the date of notice that it was filed, recorded, or imposed. Tenant shall not create or allow any person or entity to cause anything to occur that impairs Landlord’s right, title, and interest in and to the Premises, the Phase 2 Parcel, or the Airport or any part thereof. Tenant shall indemnify, defend, and hold harmless Landlord from all Encumbrances and other claims, losses, demands, costs, expenses, attorney fees, and liability in connection with or related to any Encumbrance or other claim.

 

22.2         No Subordination. Landlord's right, title, and interest in and to the Premises, the Phase 2 Parcel, and this Lease are not subject or subordinate to any Encumbrance affecting Tenant’s interest in the Premises or this Lease.

 

22.3         Discharge. Tenant shall immediately notify Landlord in writing of any Encumbrance. The notice shall describe in detail the nature of the Encumbrance and what action Tenant has taken and will take to have the Encumbrance discharged or released. Tenant shall give Landlord notice of the status of the Encumbrance on a weekly basis until it is discharged or released. If Tenant fails to cause the Encumbrance to be discharged or released within thirty (30) days after the date it was filed, recorded, or imposed, then Landlord may cause the Encumbrance to be discharged or released by paying the amount claimed to be due or by procuring a deposit or bond. Tenant shall, upon demand, promptly reimburse Landlord for all out-of-pocket costs incurred.

 

22.4         Survival. Tenant’s obligations under this Article shall survive the expiration or termination of this Lease.

 

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ARTICLE 23 – NOTICE

 

23.1         Notices. All notices, consents, approvals, and other communications (collectively, notices) between Landlord and Tenant that are required under this Lease must be given in writing by (A) personal delivery, (B) prepaid delivery to any commercial air courier or express delivery service, or (C) registered or certified mail, postage prepaid and return receipt requested, through the United States Postal Service.

 

23.2           Notices to Landlord shall be sent to:

 

City of Phoenix Aviation Department

Corporate Office Building

Deputy Aviation Director, Business and Properties Division

2485 East Buckeye Road

Phoenix, Arizona 85034

Attention: Deputy Aviation Director

Email: aviation.business@phoenix.gov

 

23.3         Notices to Tenant shall be sent to:

 

DVT Hangars LLC

Attn: Tim Herr, Regional Director

767 5th Avenue, 21st Floor

New York, New York 10153

Email: therr@skyharbour.group

 

23.4         Receipt. Notice given in compliance with this Article is deemed received on the day it is delivered or first refused.

 

23.5         Intentionally Omitted.

 

23.6         Change of Address. If Landlord or Tenant changes the person or address for notice, then the Party making the change shall give notice of the change to the other Party in compliance with this Article. Unless there is a proper change of address, the Parties are not required to give notice to any person or address other than as set forth above. A Party may not raise failure of or of defect in notice as a defense if the Party failed to give the other Party proper notice that it had changed the person or address for notice.

 

23.7         Oral Notice. Notice given orally is invalid, and a notice may not be proved with parol evidence.

 

ARTICLE 24 – COMPLIANCE WITH LAWS

 

24.1         General. Tenant shall comply with all Applicable Laws that apply to this Lease and Tenant’s activities under this Lease, the use and occupancy of the Premises, and the use of the Airport. Upon request, Tenant shall provide Landlord with a copy of all permits, licenses, and other evidence of Tenant’s compliance with such laws.

 

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24.2         Supplemental Terms and Conditions. Tenant agrees that the Airport is part of the national transportation system and, as such, is operated for the benefit of the public and is, from time to time, the recipient of federal funds for such purpose. As a recipient, Landlord is obligated to make certain assurances to the FAA or other federal agencies that Landlord complies with all requirements of federal law, which requirements also become the obligation of Landlord’s contracting parties. Therefore, Tenant shall comply with the applicable requirements set forth in the Supplemental Terms and Conditions to All Airport Agreements (Revised 2/1/19) marked Exhibit F attached.

 

24.3         Subordination to Agreements with the United States. This Lease is subject and subordinate to any agreement currently in force or subsequently entered into between Landlord and the FAA or any other federal agency related to the operation or maintenance of the Airport, whether or not the agreement is required as a condition to Landlord receiving federal rights or property for Airport purposes or required for Landlord to spend federal funds to improve or further develop the Airport in accordance with the Federal Aviation Act of 1958 (49 U.S.C. §§ 1301, et seq.). Landlord’s federal grant assurances and affirmative action requirements are listed in the Supplemental Terms and Conditions to All Airport Agreements marked Exhibit F attached.

 

24.4         Compliance with Environmental Laws. Tenant shall comply with all present and subsequently enacted environmental laws relating to the Premises and affecting Tenant’s use or occupancy of the Premises, including the requirements set forth in the Compliance with Environmental Laws (Revised May 21, 2020) marked Exhibit G attached.

 

24.5         Airport Security Program. Landlord may implement an Airport Security Program in a reasonable form acceptable to the FAA that limits access of persons, vehicles, and aircraft in and around the general aviation area and terminals at the Airport, which does not unreasonably restrict Tenant’s access. Landlord may modify the Program at any time it reasonably deems necessary or appropriate. Tenant shall comply with the Program and indemnify, defend, and hold harmless Landlord from any violations of the Program committed by Tenant, its subtenants, and their respective trustees, owners, officers, directors, managers, agents, employees, and contractors.

 

24.6         Notice of Violation Program. According to the Aviation Department’s Minimum Standards (Rules and Regulations 03-07) and Notice of Violation Program, this Lease is subject to suspension or revocation for violation of the Aviation Department’s Rules and Regulations, including the operation of any unauthorized commercial activity on the Premises or the failure to comply with any Applicable Law.

 

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ARTICLE 25 – GENERAL PROVISIONS

 

25.1         Amendments. All approvals, consents, and amendments required by this Lease shall be in writing, signed by the Parties, and may not be established by oral testimony. This Lease cannot be modified or amended by any verbal agreement or communication with Landlord either before or after this Lease was entered into.

 

25.2         Attorney Fees and Costs. In any contested action related to or arising out of this Lease, the prevailing Party shall recover its attorney fees, court costs, and other expenses from the other Party. Where there are no competing claims, “prevailing Party” means the Party that substantially obtained the relief sought. Where there is any counterclaim, the prevailing Party is the net winner or the Party who prevailed in a totality of the litigation.

 

25.3         Business Certification. If Tenant is a trust, then Tenant certifies that it authorized to do business in the state of Arizona. If Tenant is a corporation, limited liability company, or other business entity regulated by the Arizona Corporation Commission (ACC), then Tenant certifies that it is authorized to do business in the state of Arizona, is in good standing with the ACC, and shall remain in good standing with the ACC throughout the Term of this Lease. If Tenant is a limited partnership or other business entity regulated by the Arizona Secretary of State (ASOS), then Tenant certifies that it is registered with the ASOS, is in good standing with the ASOS, and shall remain in good standing with the ASOS throughout the Term of this Lease. Tenant certifies that it is authorized to transact business in the state of Arizona and shall remain authorized throughout the Term of this Lease. Tenant certifies that the person signing this Lease on its behalf is authorized to bind Tenant to this Lease.

 

25.4         City Council Approval and Cancellation. This Lease is subject to prior approval by the Phoenix City Council, and may be cancelled by Landlord pursuant to A.R.S. § 38-511. [Lease has already been approved by City Council.]

 

25.5         Claims Against Landlord. Tenant agrees to comply with the procedures set forth in Chapter XVIII, § 14 of the Charter of the City of Phoenix (claims or demands against the City) and A.R.S. § 12-821 and § 12-821.01 (notice of claim statutes) for presenting claims or demands against Landlord. Nothing in this Lease constitutes a contractual term, an alternative dispute resolution procedure, or an administrative claims process or review process, as those terms are used in A.R.S. § 12-821.01(C), so as to affect the date on which a cause of action accrues under A.R.S. § 12-821.01(A) and (B).

 

25.6         Continuation During Disputes. The Parties shall continue to perform under this Lease during any period of any dispute between them, unless enjoined by a court order.

 

25.7         Damage to City Property. Tenant, its subtenants, and their respective trustees, owners, officers, directors, managers, agents, employees, and contractors shall not cause any damage to the Premises or any other City property, including the Phase 2 Parcel. Tenant is liable for all damage caused by the wrongful, negligent, or willful acts or omissions of Tenant, its subtenants, and their respective trustees, owners, officers, director, managers, members, agents, employees, and contractors. Tenant shall repair any such damage at is expense and to Landlord’s satisfaction.

 

Page 49 of 54

 

 

25.8         Entire Agreement. This Lease constitutes the entire agreement between the Parties and supersedes all prior written and oral agreements, understandings, discussions, proposals, negotiations, communications, representations, and correspondence related to this Lease and the Premises. The Parties are not bound by any obligation not expressed in this Lease. Tenant certifies that it was not induced to enter into the Lease by any misrepresentation, undue influence, or coercion by Landlord or any of its offices, officials, agents, or employees.

 

25.9         Fair Interpretation. Tenant agrees that the rule that any ambiguous or vague language in a contract is construed against the drafter is waived and does not apply to this Lease. Tenant agrees that this Lease shall be interpreted fairly and not against Landlord simply because Landlord drafted this Lease.

 

25.10         Governing Law, Forum, and Venue. This Lease shall be interpreted and enforced according to the laws of the state of Arizona (without reference to choice-of-law principles). Any action or proceeding related to or arising out of this Lease shall be filed and maintained in a state or federal court located in Maricopa County, Arizona, and the Parties consent to the jurisdiction and venue of such courts. All Applicable Laws referred to or cited in this Lease include all amendments and supplements thereto.

 

25.11         Headings. Headings for all articles, sections, and paragraphs are for reference only and shall not be construed to limit the content or scope of any provision of this Lease.

 

25.12         Inspections and Landlord’s Consent. All approvals, reviews, and inspections by Landlord under this Lease are for Landlord’s benefit and not for the benefit of Tenant or any other person. Except as expressly provided in this Lease, where Landlord’s approval or consent is required, Landlord may withhold its approval or consent in its sole discretion and its decision is final, non-appealable, and without liability to Tenant.

 

25.13         Landlord’s Liens. Tenant hereby conveys to Landlord a possessory lien on all of Tenant’s Trade Fixtures and other personal property owned by Tenant and stored on the Premises to secure the payment of all Net Rent, Additional Payments, and other amounts due and that become due under this Lease. Tenant agrees that Landlord also has a statutory landlord’s lien on all of Tenant’s and its subtenant’s non-exempt personal property on the Premises pursuant to A.R.S. § 33-361 and § 33-362. If Tenant fails to pay any Net Rent, Additional Payment, or other amount when due under this Lease, the Tenant agrees that Landlord may seize and hold Tenant’s nonexempt personal property on the Premises to secure the payment of all overdue amounts. If the delinquent Net Rent, Additional Payment, or other amount due is not paid within sixty (60) days after seizure, then Landlord may sell the property pursuant to A.R.S. § 33-1023. These lien rights are in addition to all other rights and remedies available to Landlord. If this Lease is assigned or the Premises are subleased, then Landlord shall have the same lien against the assignee or subtenant(s) as Landlord has against Tenant and may enforce the lien in the same manner.

 

Page 50 of 54

 

 

25.14         Landlord’s Officials Not Liable. Landlord’s officers, officials, agents, and employees are not personally liable to Tenant for any default or breach of this Lease by Landlord, are not liable for any amount that may become due to Tenant and are not obligated to perform under any provision of this Lease.

 

25.15         Landlord Improvements. Tenant agrees that Landlord may make improvements to the Airport at any time during the Term of this Lease. Landlord will exercise best efforts to make the improvements in a manner that does not unreasonably interfere with Tenant’s use or occupancy of the Premises. If Landlord makes improvements that would temporarily prohibit Tenant from accessing and using the Premises for five days or more, then Net Rent will be reduced proportionately. If Landlord makes improvements that would reduce the Premises’ area for the duration of the Lease, then this action will be deemed a taking and addressed under Article 20. Except as expressly set forth in this Lease, Tenant hereby waives any and all claims against Landlord and its officers, officials, employees, and agents for damages of any kind, including direct, indirect, incidental, consequential, punitive, and special damages, and for all damages that result from lost business, lost profits, loss of use, loss of or damage to data, or damages for pure economic loss, however caused, whether foreseeable or not, and even if Landlord is advised of the possibility of such damages and losses.

 

25.16         National Emergency. This Lease is subject to the right of the United States to control, operate, and regulate the Airport and to use Airport property during the time of war or national emergency.

 

25.17         No Conflicts. Tenant represents to Landlord that the execution, delivery, and consummation of this Lease by Tenant is not prohibited by and does not conflict with any other agreement or instrument to which Tenant is a party or is otherwise subject. Landlord represents to Tenant that the execution, delivery, and consummation of this Lease by Landlord is not prohibited by and does not conflict with any other agreement or instrument to which Landlord is a party or is otherwise subject. As of the Effective Date, Tenant further represents that it has not received any notice asserting that Tenant is not in compliance with any Applicable Law or other federal, state, or local agency having jurisdiction over this Lease or Tenant’s use or occupancy of the Premises. Tenant further represents that, as of the Effective Date, it is not in default under any judgment, order, injunction, or decree of any court, administrative agency, or other governmental authority with respect to the Premises or the activities contemplated by this Lease.

 

25.18         No Exclusive Rights. Except as expressly provided in this Lease, Tenant has no right or privilege to exclusively conduct any activity on the Premises or at the Airport.

 

Page 51 of 54

 

 

25.19         No Liability to Third Parties. Landlord has no liability to any third party for any approval of Tenant’s Construction Documents; construction or installation of any Tenant Improvement; Tenant’s negligence or failure to comply with the provisions of this Lease, including any absence or inadequacy of insurance required to be carried by Tenant; or otherwise as a result of the existence of this Lease.

 

25.20         No Third-Party Beneficiaries. Except as provided in Article 14.17 or as otherwise expressly provided in this Lease, this Lease does not create and may not be construed as creating any right in any person not a Party to the Lease.

 

25.21         Nuisances. Any potential nuisance or hazardous condition on or emanating from the Premises must be immediately corrected by Tenant upon learning of the condition or upon receipt of oral or written notice from Landlord, whichever occurs first. If Landlord reasonably determines that a potential nuisance or hazardous condition exists and Tenant fails to cause the nuisance or hazardous condition to cease within five (5) days after notice, then Landlord may require Tenant to prevent the public from entering the Premises until the nuisance or condition has been corrected. Nothing in this provision precludes Landlord from pursuing any other remedy available to it under this Lease and any Applicable Law.

 

25.22         Recitals and Exhibits Incorporated. The Recitals and Exhibits attached to this Lease are material parts of this Lease and are incorporated herein by this reference.

 

25.23         Relationship of the Parties. The relationship of the Parties is solely that of landlord and tenant. Nothing in this Lease creates or may be construed to create a principal-agent, employer-employee, partnership, joint venture, or similar relationship between the Parties. Tenant agrees that it is not an agent or employee of Landlord for the construction, alteration, or repair of any Tenant Improvement on the Premises. Tenant agrees that its employees and contractors are not employees of Landlord and that Landlord’s civil service, retirement, or personnel rules and benefits do not accrue or apply to Tenant’s employees or contractors. Tenant shall pay all salaries, wages, bonuses, retirement, withholdings, workers’ compensation, unemployment compensation, other benefits, taxes, and premiums appurtenant thereto concerning Tenant’s employees, and Tenant shall indemnify, defend, and hold harmless Landlord with respect thereto.

 

25.24         Right to Amend. If the FAA or any federal agency requires any amendment, modification, revision, supplement, or deletion of any provision of this Lease as a condition to granting funds to Landlord, then Tenant hereby consents to the amendment, modification, revision, supplement, or deletion to the extent necessary to satisfy the FAA’s or other federal agency’s requirements. At Landlord’s request, Tenant shall execute and deliver to Landlord all instruments and other documents necessary to evidence its consent.

 

25.25         Right to Develop Airport. Landlord may improve and further develop the Airport and all landing areas and taxiways as Landlord reasonably deems necessary or appropriate, regardless of the desire or views of Tenant and without any interference or hindrance from Tenant, provided that the development does not materially and adversely affect Tenant’s use of the Premises or Tenant’s rights under this Lease.

 

Page 52 of 54

 

 

25.26         Savings Clause. If any provision of this Lease is ruled invalid or unenforceable by a court, then the provision shall be modified to the extent necessary to make it valid or enforceable, if practicable. If a provision is ruled invalid or unenforceable, then the remaining provisions of this Lease shall remain unchanged and in full force and effect, provided that elimination of the provision by the court does not materially prejudice either Party’s rights and obligations under this Lease, in which case this Lease will terminate.

 

25.27         Successors and Assigns. This Lease binds the Parties and their trustees, owners, officers, directors, managers, members, agents, employees, representatives, trustees, executors, personal representatives, successors, and assigns.

 

25.28         Time of Essence. Time is of the essence in Landlord’s and Tenant’s performance of all its obligations under this Lease.

 

25.29.         Travel Reduction Program. If applicable, Tenant and its subtenants shall comply with the requirements of A.R.S. §§ 49-581 to -593 and Maricopa County Trip Reduction Ordinance No. P-7 and develop and implement a travel reduction plan to encourage employees to use public transit, rideshare, walk, or ride a bike for the commute to and from the Premises. The program shall include a provision of preferential parking spaces for carpoolers and vanpoolers.

 

 

Therefore, the Parties cause this Lease to be executed.

 

	 	LANDLORD	 
	 	CITY OF PHOENIX, an Arizona municipal corporation	 
	 	ED ZUERCHER, City Manager	 
	 	 	 	 
	 	 	 	 
	 	By:	/s/ Chad R. Makovsky	 
	 	 	Chad R Makovsky, C.M.	 
	 	 	Director of Aviation Services	 
	 	 	 	 
	 	 	 	 
	 	Date: May 4, 2021	 

 

ATTEST:

 

 

                                                             

 

Page 53 of 54

 

 

City Clerk

 

APPROVED AS TO FORM:

 

 

                                                              

Acting City Attorney

 

	 	TENANT	 
	 	Sky Harbour Deer Valley Airport, LLC,	 
	 	an Arizona limited liability company	 
	 	 	 	 
	 	 	 	 
	 	By:	/s/ Tal Keinan	 
	 	 	Tal Keinan	 
	 	 	Member	 
	 	 	 	 
	 	 	 	 
	 	Date: April 28, 2021	 

 

 

Page 54 of 54ex_329928.htm

 

Exhibit 10.15

 

 

 

 

 

 

 

 

LEASE AGREEMENT

 

 

BY AND BETWEEN

 

 

THE METROPOLITAN

NASHVILLE AIRPORT AUTHORITY

 

 

AND

 

 

SKY HARBOUR, LLC

 

 

DATED AS OF January 22, 2020

 

 

 

 

 

1

 

 

TABLE OF CONTENTS

 

	
			ARTICLE

				
			PAGE

			
	 	 
	
			DEFINITIONS

				
			5

			
	
			TERM

				
			8

			
	
			RENT AND SECURITY

				
			8

			
	
			RIGHT AND OBLIGATION TO MAKE IMPROVEMENTS

				
			10

			
	
			survey

				
			12

			
	
			USE OF PREMISES

				
			13

			
	
			ACCESS

				
			16

			
	
			REPAIRS AND MAINTENANCE

				
			16

			
	
			COMPLIANCE WITH LAWS

				
			18

			
	
			ENVIRONMENTAL COMPLIANCE

				
			18

			
	
			TRADE FIXTURES

				
			21

			
	
			LIENS

				
			21

			
	
			TAXES

				
			22

			
	
			UTILITIES

				
			23

			
	
			INDEMNIFICATION

				
			23

			
	
			INSURANCE

				
			25

			
	
			DAMAGE AND DESTRUCTION

				
			29

			
	
			TERMINATION BY AUTHORITY AND CONDEMNATION

				
			30

			
	
			ASSIGNMENT AND SUBLETTING

				
			31

			
	
			DEFAULT AND REMEDIES

				
			32

			
	
			HOLDING OVER AND SURRENDER OF LEASED PREMISES

				
			34

			
	
			QUIET ENJOYMENT

				
			34

			
	
			NOTICES

				
			35

			
	
			WAIVER OF COVENANTS, ETC.

				
			36

			
	
			ESTOPPEL CERTIFICATES

				
			36

			
	
			RESERVATION OF AVIGATION EASEMENT

				
			36

			
	
			ENTRY

				
			38

			
	
			BINDING EFFECT

				
			38

			
	
			MISCELLANEOUS PROVISIONS

				
			38

			
	
			PARTIAL INVALIDITY

				
			39

			
	
			GOVERNING LAW

				
			39

			
	
			TIME OF ESSENCE

				
			39

			
	
			RELATIONSHIP OF PARTIES

				
			39

			
	
			MORTGAGE OF LEASEHOLD ESTATE

				
			39

			
	
			SIGNAGE

				
			40

			
	
			NONDISCRIMINATION AND GOVERNMENTAL MATTERS

				
			41

			

 

2

 

 

	
			FORCE MAJEURE

				
			44

			
	
			INTEREST AND OTHER CHARGES

				
			44

			
	
			GOVERNMENTAL REQUIREMENTS

				
			44

			
	
			EASEMENTS

				
			44

			
	
			BROKERS

				
			45

			
	
			RECORD RETENTION AND RIGHT TO AUDIT

				
			45

			
	
			SURVIVAL OF PROVISIONS

				
			45

			
	
			AUTHORITY TO EXECUTE

				
			45

			

 

 

EXHIBITS

 

EXHIBIT A - DEPICTION OF OVERALL PREMISES

EXHIBIT B - RENT ANALYSIS

EXHIBIT C - LETTER OF CREDIT

EXHIBIT D - SURVEYOR’S CERTIFICATE

EXHIBIT E - TITLE VI

EXHIBIT F - INSURANCE DURING CONSTRUCTION PHASE

 

3

 

 

LEASE AGREEMENT

 

THIS LEASE AGREEMENT (the “Lease”) is made and entered into as of January 22, 2020 (the “Effective Date”), by and between THE METROPOLITAN NASHVILLE AIRPORT AUTHORITY, a public corporation existing under the laws of the State of Tennessee (the “Authority” or the “Landlord”), and SKY HARBOUR, LLC, a Delaware corporation authorized to do business in the State of Tennessee (“Sky Harbour” or the “Tenant”).

 

WITNESSETH:

 

WHEREAS, Authority is the owner and operator of the Nashville International Airport, located in Nashville, Davidson County, Tennessee, hereinafter referred to as “the Airport"; and

 

WHEREAS, Tenant desires to lease land (the “Premises”) and the existing building commonly known as Hangar 14 (the “Building Premises”), collectively, (the “Overall Premises”), and to develop additional aircraft hangars for lease at the Airport; and

 

WHEREAS, Tenant will construct additional buildings and improvements as defined in Article IV of this Lease, in accordance with the requirements therein, and to operate such improvements at its sole cost and expense, including a new premium box hangar campus at the Airport, as more fully depicted on Exhibit A; and,

 

WHEREAS, it is the intent of Authority to grant, demise and let unto Tenant, and Tenant intends to lease, accept and rent from Authority, the above referenced property and improvements;

 

NOW, THEREFORE, for and in consideration of the premises, benefits, covenants and agreements contained herein, and in consideration of the rents to be paid to Authority, Authority does hereby lease the Overall Premises to Tenant on the following terms and conditions:

 

4

 

 

ARTICLE I

DEFINITIONS

 

For purposes of this Lease, the following terms are defined as follows, unless the context clearly indicates otherwise:

 

	
			1.

				
			“Additional Rent” shall mean any monies owed to Landlord, by Tenant, not including Annual Rent.

			

 

	
			2.

				
			“Affiliate” or “Subsidiary” as referenced in Article XIX., means a corporation, limited liability company, partnership or other entity that Controls, is Controlled by or is under common Control with Tenant, either directly or through one or more intermediaries; the term "Control" and its correlatives (Controls and Controlled) having ownership of more than fifty percent (50%) of the voting stock or voting equity of the subject entity.

			

 

	
			3.

				
			“Aircraft” shall have the meaning set forth in Article XXVI. hereof.

			

 

	
			4.

				
			“Airport” shall have the meaning set forth in the first recital paragraph hereof.

			

 

	
			5.

				
			“Applicable Laws” shall have the meaning set forth in Article VI.F. hereof.

			

 

	
			6.

				
			“Approved Leasehold Mortgage” shall have the meaning set forth in Article XXXIV.A. hereof.

			

 

	
			7.

				
			“Approved Leasehold Mortgagee” shall have the meaning set forth in Article XXXIV.A. hereof.

			

 

	
			8.

				
			“Aboveground Storage Tank (AST)” as referenced in Article X.B.6, shall mean an aboveground storage tank system, inclusive of tanks, piping and all other equipment or devices used in the operation of the system.

			

 

	
			9.

				
			“Authority” shall have the meaning set forth in the introductory paragraph hereof.

			

 

	
			10.

				
			“Auto Coverage” shall have the meaning set forth in Article XVI.B. hereof.

			

 

	
			11.

				
			“Award” shall have the meaning set forth in Article XVIII.E. hereof.

			

 

	
			12.

				
			“Annual Rent” shall have the meaning set forth in Article III.A. hereof.

			

 

	
			13.

				
			“As-Built Survey” shall have the meaning set forth in Article V. hereof.

			

 

	
			14.

				
			“Best Management Practices (“BMPs”) as referenced in Article X.B(9), means schedules of activities, prohibitions of practices, maintenance procedures, and other management practices to prevent or reduce the pollution of “waters of the United States.” BMPs also include treatment requirements, operating procedures, and practices to control plant site runoff, spillage or leaks, sludge or waste disposal, or drainage from raw material storage.

			

 

	
			15.

				
			 “Building Premises Rent” shall have the meaning set forth in Article III.A. hereof.

			

 

	
			16.

				
			“Business Day” shall have the meaning set forth in Article XX. hereof.

			

 

	
			17.

				
			“CAGL Coverage” shall have the meaning set forth in Article XVI.A. hereof.

			

 

	
			18.

				
			“Initial Capital Improvements” as referenced in Article IV., shall mean any and all improvements permanently affixed to the Overall Premises involving an expenditure of Ten Thousand Dollars ($10,000.00) or more and having a useful life expectancy of more than twelve (12) months.

			

 

	
			19.

				
			“Cash Deposit” shall have the meaning set forth in Article III.E. hereof.

			

 

	
			20.

				
			“Claims” shall have the meaning set forth in Article XV. hereof.

			

 

	
			21.

				
			“Condemning Party” shall have the meaning set forth in Article XVIII.B. hereof.

			

 

	
			22.

				
			“Effective Date” shall have the meaning set forth in the introductory paragraph hereof.

			

 

5

 

 

	
			23.

				
			“Environmental Laws” shall have the meaning set forth in Article X.A.(4) hereof.

			

 

	
			24.

				
			“Event of Default” shall have the meaning set forth in Article XX.A. hereof.

			

 

	
			25.

				
			“Extension Option” shall have the meaning set forth in Article II.B

			

 

	
			26.

				
			“Extension Term” shall have the meaning set forth in Article II.B

			

 

	
			27.

				
			“Federal Aviation Administration (FAA)” shall have the meaning set forth in Article VI.F. hereof.

			

 

	
			28.

				
			“FAA Regulations” shall have the meaning set forth in Article XXVI.A. hereof.

			

 

	
			29.

				
			“Fair Market Value (FMV)” as it relates to Rent shall mean the price the property would lease for on the open market at similar airports throughout the region or state.

			

 

	
			30.

				
			“Federal Aviation Act” shall have the meaning set forth in Article XXXVI.B. hereof.

			

 

	
			31.

				
			“Force Majeure Event” shall mean an extraordinary event beyond the control of the parties, such as a war, strike, riot, crime, or an “act of God”, such as a hurricane, flooding or earthquake, labor disputes, civil commotion, governmental regulations or controls, fire or other casualty, or acts or omissions of the other party which prevents one or both parties from fulfilling their obligations under this Lease.

			

 

	
			32.

				
			“Fuel Fee” shall have the meaning set forth in Article III.G. hereof.

			

 

	
			33.

				
			“Governmental Authority” shall have the meaning set forth in Article VI.F. hereof.

			

 

	
			34.

				
			“Hazardous Wastes” shall have the meaning set forth in Article X.A.(1) hereof.

			

 

	
			35.

				
			“Hazardous Materials” shall have the meaning set forth in Article X.A.(3) hereof.

			

 

	
			36.

				
			 “Improved Land” means any and all portions of the Premises having been improved for the movement or parking of aircraft, automobiles or the construction of buildings and facilities.

			

 

	
			37.

				
			 “Indemnified Party” shall have the meaning set forth in Article XV.A. hereof.

			

 

	
			38.

				
			 “Initial Improvements” shall have the meaning set forth in Article IV.A. hereof.

			

 

	
			39.

				
			“Initial Improvement Construction Period” shall have the meaning set forth in Article IV.A. hereof.

			

 

	
			40.

				
			“Initial Term” shall have the meaning set forth in Article II.A. hereof.

			

 

	
			41.

				
			“Insurance Coverages” shall have the meaning set forth in Article XVI.G. hereof.

			

 

	
			42.

				
			“Interest Rate” shall have the meaning set forth in Article X.D. hereof.

			

 

	
			43.

				
			“Late Fee” shall have the meaning set forth in Article III.A. hereof.

			

 

	
			44.

				
			“Lease” shall have the meaning set forth in the introductory paragraph.

			

 

	
			45.

				
			“Lease Year” shall mean the 12-month period beginning on the Effective Date of this Lease and each annual anniversary thereof.

			

 

	
			46.

				
			“Letter of Credit” shall have the meaning set forth in Article III.E. hereof.

			

 

	
			47.

				
			“Minimum Capital Improvement Expenditure” shall have the meaning set forth in Article IV.A. hereof.

			

 

	
			48.

				
			“Minimum Rating” shall have the meaning set forth in Article XVI.J. hereof.

			

 

	
			49.

				
			 “Minimum Standards” shall have the meaning set forth in Article VI.B.11. hereof.

			

 

	
			50.

				
			“Notice” shall have the meaning set forth in Article XXIII hereof.

			

 

6

 

 

	
			51.

				
			“National Pollution Discharge Elimination System Program (NPDES)” shall have the meaning set forth in Article X.B.(7) hereof.

			

 

	
			52.

				
			“Order” shall have the meaning set forth in Article X.B.(5) hereof.

			

 

	
			53.

				
			“Pavement Condition Index (PCI)” shall have the meaning set forth in Article VIII.B. hereof.

			

 

	
			54.

				
			“PC Coverage” shall have the meaning set forth in Article XVI.E. hereof.

			

 

	
			55.

				
			“Permitted Use” shall have the meaning set forth in Article VI.A. hereof.

			

 

	
			56.

				
			“Person” shall mean a natural person, corporation, partnership, trust, joint venture, association, limited liability company or other entity.

			

 

	
			57.

				
			“Pollution Coverage” shall have the meaning set forth in Article XVI.D. hereof.

			

 

	
			58.

				
			“Premises”, “Building Premises”, and “Overall Premises”, shall have the meanings set forth in the second recital paragraph hereof and shall include all unimproved and improved property, now existing or as may be constructed during the Term of this Lease, on, in or under the leasehold area as depicted on Exhibit “A”, of this Lease Agreement between Authority and Tenant.

			

 

	
			59.

				
			“Premises Rent” shall have the meaning set forth in Article III.A. hereof.

			

 

	
			60.

				
			“Prohibited Use” shall have the meaning set forth in Article VI.B. hereof.   

			

 

	
			61.

				
			“Property Condition Assessment (PCA)” shall have the meaning set forth in Article VIII.B. hereof.   

			

 

	
			62.

				
			“Rating Service” shall have the meaning set forth in Article XVI.J. hereof.

			

 

	
			63.

				
			“Releasing Parties” shall have the meaning set forth in Article XXVI.D. hereof.

			

 

	
			64.

				
			“Rent” shall have the meaning set forth in Article III.A. hereof.

			

 

	
			65.

				
			  “Rent Adjustment Date” shall have the meaning set forth in Article III.A. hereof.

			

 

	
			66.

				
			“Rules and Regulations” shall have the meaning set forth in Article VI.A. hereof.

			

 

	
			67.

				
			“Second Extension Option” shall have the meaning set forth in Article II.C

			

 

	
			68.

				
			“Second Extension Term” shall have the meaning set forth in Article II.C

			

 

	
			69.

				
			“Security” shall have the meaning set forth in Article III.E. hereof.

			

 

	
			70.

				
			“Tenant” shall have the meaning set forth in the introductory paragraph hereof.

			

 

	
			71.

				
			“Term” shall have the meaning set forth in Article II.B&C. hereof.

			

 

	
			72.

				
			“Toxic Substances” shall have the meaning set forth in Article X.A.(2) hereof.

			

 

	
			73.

				
			“Trade Fixtures” shall have the meaning set forth in Article XI hereof.

			

 

	
			74.

				
			“Transportation Security Administration (TSA)” shall have the meaning set forth in Article VI.F. hereof.

			

 

	
			75.

				
			“Umbrella Coverage” shall have the meaning set forth in Article XVI.F. hereof.

			

 

	
			76.

				
			“Unimproved Land” shall mean all portions of the Leased Premises not having been improved for the movement or parking of aircraft, automobiles, or the construction of buildings or other facilities.

			

 

	
			77.

				
			 “Underground Storage Tank (UST)” as referenced in Article X.B.6, means underground storage tank systems which include the tanks, piping and all other equipment or devices that are used in the system’s operation.

			

 

	
			78.

				
			 “WC Coverage” shall have the meaning set forth in Article XVI.C. hereof.

			

 

7

 

 

ARTICLE II

TERM

 

	
			A.

				
			Initial Term.  Subject to the earlier termination of this Lease as permitted by the terms hereof, the initial term of this Lease (the “Initial Term”) shall commence on the Effective Date and shall expire at 11:59 P.M. Central Time, on January 21, 2060, subject to extensions set forth below.

			

 

	
			B. 

				
			Extension Option. Provided that Tenant is not then in default hereunder beyond any applicable cure period, at the expiration of the Initial Term, Tenant shall have one (1) option (the “Extension Option”) to extend the Term of the Lease for an additional period of five (5) years (the “Extension Term”). Tenant shall exercise the Extension Option by giving Authority advance written notice no later than twelve (12) months prior to the expiration of the Initial Term. Upon Tenant’s exercise of the Extension Option, the Term shall be extended automatically for a period of five (5) years from the expiration date of the Initial Term. Unless otherwise agreed to in writing by the parties, Tenant’s option to extend the Initial Term must be exercised for all of the Overall Premises. Unless otherwise agreed to in writing, in such Extension Term, all of the terms and provisions of this Lease shall be in full force and effect. The Initial Term, and any Extension Term are collectively referred to herein as the “Term”. An appraisal (pursuant to Article III, Section D hereunder) of the Overall Premises shall be performed no later than two hundred seventy (270) days in advance of the end of the Initial Term to establish Fair Market Value rent of the Overall Premises to be effective immediately upon the beginning of the Extension Option.

			

 

	
			C. 

				
			Second Extension Option. At the end of the Extension Term, provided that Tenant is not then in default hereunder, Tenant shall have one (1) additional option (the “Second Extension Option”) to extend the Term for an additional period of 5 years (the “Second Extension Term”). Tenant shall exercise the Second Extension Option by giving Authority advance written notice no later than twelve (12) months prior to the date of the expiration of the Extension Term. Upon Tenant’s exercise of the Second Extension Option, the Extension Term shall be extended automatically for a period of five (5) years from the expiration date of the Extension Term. Unless otherwise agreed to in writing by the parties, Tenant’s option to extend the Extension Term must be exercised for all of the Overall Premises. Unless otherwise agreed to in writing, in such Extension Term, all of the terms and provisions of this Lease shall be in full force and effect.

			

 

ARTICLE III

RENT AND SECURITY

 

	
			A.

				
			Beginning on the Effective Date of this Lease, and on the first day of each month thereafter, for an initial period of twelve (12) months, Tenant shall pay rent for the Building Premises (the “Building Premises Rent”). Beginning one (1) year from Effective Date (unless Tenant’s commencement of construction is significantly delayed due to the actions or omissions of the Authority, in which case rent for the Premises (the “Premises Rent”) shall commence when Tenant receives a Certificate of Occupancy), and for each of the Lease Years following (the “Rent Adjustment Date”) during the Term of this Lease, Tenant shall pay the Building Premises Rent, and the Premises Rent, (collectively known as the “Annual Rent” or “Rent”), which are payable in equal monthly installments in advance, and in advance on the first day of the month, as set forth in Exhibit B, attached hereto and made a part hereof, subject to the provisions of Article IV and Article V of this Lease. Time is of the essence in the performance of all of Tenant’s and Landlord’s obligations hereunder. If any Rent or any other amounts owed by Tenant to Landlord hereunder is not paid within fifteen (15) days following the due date, Landlord may, in its sole discretion, impose on Tenant a late charge equal to five percent (5%) of the outstanding amount (the “Late Fee”) and the Late Fee shall become due and payable from Tenant to Landlord with the next monthly rental installment.

			

 

8

 

 

	
			B. 

				
			On the Effective Date, the Building Premises Rent shall be $5.00 per square feet, based on an initial agreed-upon square footage of 27,202 square feet subject to re-measurement in accordance with BOMA and this Lease and, except for an appraisal year when the Rent shall adjust in accordance with Article III(D), increasing annually at a rate of 2% as shown on the chart contained in Exhibit B.

			

 

	
			C.

				
			On the Rent Adjustment Date, the Premises Rent (which shall be defined as all of the ground area including the ground area under Hangar 14) shall be $0.65 per square foot, based on an initial agreed square footage of 686,070 square feet subject to re-measurement in accordance with BOMA and this Lease and, except for an appraisal year when the Rent shall adjust in accordance with Article III(D), increasing annually at a rate of 2% annually as shown on the chart contained in Exhibit B.

			

 

	D.

			 

				
			On the tenth anniversary of the Rent Adjustment Date and every ten years afterward (the “Ten Year Rent Adjustment Date”), the Rent shall be adjusted (“Appraised Rent”) based on an appraisal (which appraisal process shall commence at least six months prior to Ten Year Rent Adjustment Date), which shall be conducted in conformity with the Uniform Standards of Professional Appraisal Practice (USPAP) and FAA requirements for aeronautical property by determining fair market value rates by comparing the ground lease and hangar on a consolidated basis to other aeronautical property serving the same function at similar airports throughout the region or state. If Tenant disagrees with the Authority’s appraisal, it may engage at its own cost and expense, an experienced aeronautical appraiser to conduct its own appraisal. If there are any differences in the outcome of the two appraisals, the results shall be averaged and the average rentals per square foot shall govern for the next ten year period. In no event shall any increase in the Appraised Rent be greater than four percent (4%) over the prior year’s Rent, nor shall the Rent decrease from the prior year’s rent.

			

 

	
			E.

				
			As security for Tenant’s full, faithful and prompt performance of and compliance with all covenants, terms and conditions of this Lease on the part of Tenant, Tenant shall deposit with Authority the following (the “Security”) prior to the commencement of construction: (i) a cash deposit (the “Cash Deposit”) in an amount of seventy-five thousand dollars ($75,000.00), or (ii) a stand-by, irrevocable letter of credit payable in Nashville, Tennessee (the “Letter of Credit”), with an expiration date which is at least one year after the date of issuance thereof, for the benefit of Authority, in the form of Exhibit C to this Lease, in a stated principal amount that is not less than an amount of seventy-five thousand dollars ($75,000.00), and issued by a national banking association or state-chartered bank subject to examination by federal authority of the United States of America, of good standing and having a combined capital and surplus aggregating not less than Five Hundred Million Dollars ($500,000,000). In the event that Tenant provides a Letter of Credit hereunder, Tenant shall provide to Authority, not less than thirty (30) days prior to the expiration date of such Letter of Credit, a replacement Letter of Credit which meets the requirements of this Article III.B.  The Security shall remain on deposit with Authority throughout the Term, and, in addition to any and all other remedies available to it hereunder or otherwise, Authority shall have the right, at its sole option and at any time, to use the Security or any part thereof in whole or partial satisfaction of any amounts then due to Authority under the terms of this Lease. If a Letter of Credit constitutes the Security, then Authority shall have the right to draw upon the entire stated amount of such Letter of Credit in the event of a draw thereon and to hold and apply any proceeds of such draw in excess of amounts then due to Authority as a Cash Deposit hereunder. Tenant hereby agrees to the deposit of any such excess proceeds with Authority. In the event of the application of any of the Security to amounts due to Authority from Tenant hereunder, Tenant shall, within ten days after such application of all or a portion of the Security, restore the Cash Deposit to the amount required hereunder or cause a replacement Letter of Credit that meets the requirements of this Article III.B. to be issued for the benefit of Authority in the original stated amount of the Letter of Credit upon which Authority has drawn, as applicable (and, upon receipt of such replacement Letter of Credit, Authority shall refund to Tenant the amount of any excess proceeds of the prior Letter of Credit then held by Authority). Authority shall have no obligation to draw upon or apply any of the Security, and neither the existence of such right nor the holding of the Security itself shall cure any default or breach on the part of Tenant under this Lease. Within 30 days after the expiration of the Term or the earlier termination thereof, Authority will return the Security to Tenant, less any amounts then due from Tenant to Authority under this Lease. Tenant hereby waives any right to any interest which may be earned or accrued on the Security during the Term and agrees that, in the case of a Cash Deposit, Authority shall have no obligation to hold such Cash Deposit in a segregated account and Authority may commingle such Cash Deposit with its other funds.

			

 

9

 

 

	
			F.

				
			This Lease is a net lease and it is the intention of the parties that, except as otherwise provided or limited by the specific provisions of this Lease, Tenant shall be responsible for all costs and expenses pertaining to the improvement, maintenance, repair and operation of the Overall Premises incurred during the Term. Any present or future law to the contrary notwithstanding, except as otherwise specifically provided in this Lease, shall Tenant not be entitled to any abatement, reduction, set-off, counterclaim, defense or deduction with respect to any Rent, nor shall the obligations of Tenant hereunder be affected by reason of any damage to or destruction of the Overall Premises, except as provided in Article XVII. hereof, or by any taking of the Overall Premises or any part thereof by condemnation, except as provided in Article XVIII. hereof.

			

 

	
			 

			G.

				
			In the event that Tenant sells or dispenses fuel and lubricants to sub-tenants directly, Tenant further agrees to pay Authority a fuel flowage fee per gallon no greater than the flowage fee imposed on fixed base operators, as may be established by Authority from time to time (the “Fuel Fee”) on all fuels and oils sold, dispensed or consumed from, on or about the Premises. On or before the tenth day of each month, Tenant shall furnish Authority a written statement certifying the gross revenues of Tenant derived from Tenant’s fuel and oil sales for the immediately preceding month that is accompanied by a full payment of the Fuel Fee due to Authority for such month.

			

 

ARTICLE IV

RIGHT AND OBLIGATION TO MAKE IMPROVEMENTS

 

	
			A.

				
			In addition to Tenant’s obligation to repair and maintain the Overall Premises as set forth in Article VIII of this Lease, Tenant hereby agrees to invest a minimum of $17,000,000.00, (the “Minimum Capital Improvement Expenditure”), in capital improvements to the Premises (the “Initial Improvements”) as set forth in Article IV of this Lease as show on Exhibit A including approximately 130,000 square feet of new hangar space and approximately 200,000 square feet of new or improved ramp/apron space to accommodate at least Group II aircraft within twenty-four (24) months from the date that Tenant shall have received all construction permits (the “Initial Improvement Construction Period”). The Initial Improvements shall consist of hard costs and soft costs of up to twenty-five percent (25%), inclusive of architectural and design expenses, permitting, engineering, project management and professional fees. In the event that Tenant expends less than the Minimum Improvement Capital Expenditure for construction of the Initial Improvements, Tenant shall pay the difference between the Minimum Capital Improvement Expenditure and the amount actually expended by Tenant for construction of the Initial Improvements as additional rent hereunder (“Additional Rent”) which shall be due and payable within 60 days after the end of the Initial Improvement Construction Period. Prior to commencement of construction of Initial Improvements, proposed site plans and design plans for the Initial Improvements shall be submitted to Authority in writing and shall be subject to Authority’s written approval and consistent with the Authority’s design standards as outlined in the Airport Improvement Request Manual which approval shall not be unreasonably delayed, conditioned or withheld. Failure by Tenant to complete the Initial Improvements as described herein within the Initial Improvement Construction Period shall constitute an Event of Default (as hereinafter defined) under this Lease. The Initial Improvement Construction Period may be extended, with Authority’s reasonable approval, due to force majeure or for other reasons as long as Tenant is diligently pursuing completion of the Initial Improvements in good faith.

			

 

10

 

 

	
			B.

				
			In addition to the Initial Improvements, Tenant shall have the right to install or erect additional improvements on the Overall Premises, provided however, that construction of all such improvements shall commence only after plans and specifications thereof have been submitted to and approved in writing by the Authority and which shall not be unreasonably withheld, delayed or conditioned. Any such alterations shall be without cost to the Authority within the time specified in the written approval and with the least disturbance possible to the public. All improvements made by Tenant to the Overall Premises shall be of high quality as determined by the Authority in its approval process. All charges, including installation cost, meter deposits and all service charges for water, electricity and other utility services to and within the Overall Premises shall be paid by Tenant. All improvements and equipment constructed or installed by Tenant, its agents, or contractors, including the plans and specifications shall conform to all applicable statutes, ordinances, building codes, rules and regulations, and the Airport Improvement Request Manual.

			

 

	
			C.

				
			No work or construction shall commence until written approval from the Authority is received and the plans are stamped "Approved".

			

 

	
			D.

				
			The Authority shall either approve or disapprove the plans and/or specifications submitted by Tenant. The approval by the Authority of any plans and specifications refers only to the conformity of such plans and specifications for the Overall Premises to existing improvements at the Airport and such approval shall be diligently commenced and not be unreasonably withheld, conditioned or delayed. Such plans and specifications are not approved for architectural or engineering design or compliance with applicable laws or codes, and the Authority, by approving such plans and specifications, assumes no liability or responsibility for any defect in any structure or improvement constructed according to such plans and specifications. The Authority reserves the right to reject any designs submitted, and shall state the reasons for such action.

			

 

	
			E.

				
			In the event of rejection by the Authority, Tenant shall submit necessary modifications and revisions.

			

 

11

 

 

	
			F.

				
			No material changes or alterations shall be made to said plans and specifications after approval by the Authority without the prior written approval of the Authority, which approval shall not be unreasonably withheld, conditioned or delayed. No structural alterations or improvements shall be made to or upon the Leased Premises without the prior written approval of the Authority. Final copies of the plans for all improvements or subsequent changes therein or alterations thereof to the Overall Premises shall be signed by Tenant and submitted to the Authority within 30 days following completion of the project. Notwithstanding the foregoing, Tenant shall have the right to make interior changes or alterations which are non-structural, and which do not affect the mechanical, electrical or plumbing systems in the Overall Premises without the Authority’s approval or consent. Examples of allowable improvements include painting, installation of detached furniture, furniture attached to walls, carpet replacement to match existing, ceiling tile replacement to match existing, and appliance replacements to match existing.

			

 

	
			G.

				
			All improvements made to the Premises and additions and alterations thereto made to the Premises by Tenant shall be and remain the property of Tenant until the expiration of the Initial Term of this Agreement or upon termination of this Agreement (whether by expiration of the term, termination, forfeiture, or otherwise), whichever first occurs; at which time the said improvements shall become the property of Authority, provided, however, that any trade fixtures, signs and other personal property of Tenant or any subtenant not permanently affixed to the Overall Premises shall remain the property of Tenant or its subtenant and shall so remain unless Tenant shall fail within 10 days following the termination of this Agreement to remove its trade fixtures, signs and other personal property of Tenant not permanently affixed to the Overall Premises in which event, at the option of Authority, title to same shall vest in Authority, at no cost to Authority, or Authority may elect to exercise its rights as set forth in Article XX of this Agreement. Upon expiration, or earlier termination, of this Agreement, the Authority reserves the right, at its sole discretion, to require that Tenant remove, at its sole cost and expense, any and all improvements Tenant has made to the Overall Premises which Tenant has performed without the consent of the Authority.

			

 

	
			H.

				
			Tenant shall not remove or demolish, in whole or in part, any improvements upon the Overall Premises without the prior written consent of the Authority, which may be conditioned upon the obligation of Tenant to replace the same by an improvement specified in such consent.

			

 

	
			I.

				
			Tenant shall be responsible for making repairs at its sole expense for any damage resulting from the removal by Tenant of its furniture, trade fixtures, or other personal property.

			

 

	
			J.

				
			Tenant shall be responsible for maintaining the Overall Premises in a first-class condition as determined by the Authority, updating the Overall Premises as needed, as set forth in Article VIII.  

			

 

ARTICLE V

SURVEY

 

Upon completion of new Initial Capital Improvements constructed by Tenant subsequent to the Effective Date of this Lease, Tenant, at Tenant’s sole cost and expense, shall cause an as-built survey (the “As-Built Survey”) to be prepared by a licensed surveyor, satisfactory to both parties, reflecting an accurate metes and bounds description of the Overall Premises based on BOMA standards depicted on Exhibit B, setting forth the acreage and square footage of the Overall Premises, and the location and square footage of Minimum Improvement Capital Expenditure constructed on the Premises. Tenant shall provide copies, in the quantity and formats reasonably requested by the Authority, of “as built" construction drawings of any and all improvements made to the Premises within sixty (60) days of completion of the Initial Capital Improvements.

 

12

 

 

ARTICLE VI

USE OF PREMISES

 

	
			A.

				
			Permitted Use. Authority makes no representations or warranties, either express or implied, as to the condition of the Overall Premises or the suitability of the Overall Premises for the use intended by Tenant. Subject to the Authority’s obligations under Article VIII.F., Tenant takes the Overall Premises in an "as is" condition, and accepts their suitability and sufficiency for Tenant's intended use. During the Term of this Lease, and subject to Tenant’s obligations hereunder, Tenant shall have the right, on a non-exclusive basis, except as specifically restricted in Article VI.B. below, to perform at and provide from the Overall Premises the sub-leasing of hangar storage space, including office and maintenance space (the “Permitted Use”), pursuant to the terms and conditions of Authority’s Aeronautical Service Operator Rules and Regulations (the “Rules and Regulations”), incorporated by reference herein and made a part hereof. In addition to amendments, modifications and supplements adopted by Authority from time to time, the Rules and Regulations shall be deemed automatically amended by any subsequent change to Applicable Laws. Subject to the terms and conditions of Authority’s Rules and Regulations, the Permitted Use shall include Tenant’s right to:

			

 

	 	
			(1)

				
			Engage in the development and construction of improved space on the Premises, to include, but not limited to, hangar, office, and maintenance space, aircraft ramp/apron and taxiway easements, automobile ingress/egress and parking, and other improvements that have been approved in writing by the Authority;

			

 

	 	
			(2)

				
			Engage in the subleasing of space to others for hangar storage of aircraft or aircraft tools and equipment used by aircraft maintenance and repair shops, and for corporate or private aircraft operating functions including office rental;

			

 

	 	
			(3)

				
			Engage a third party to sell or dispense aircraft fuel and lubricants to its sub-tenants, and have the option to sell or dispense fuel and lubricants to sub-tenants directly, subject to the provision in Article III.D., provided that any fuel farm or fuel facility on the Overall Premises has been approved in writing by the Authority, and is in compliance with all applicable laws and regulations. Under no circumstances shall Tenant have the right to sell or dispense fuel to any person or entity that is not a sub-tenant of Tenant.

			

 

	 	
			(4)

				
			Access to the Overall Premises shall be twenty-four (24) hours per day, 365 days per year, except as limited in accordance with other provisions in this Lease.

			

 

	
			B.

				
			Prohibited Use. Without Authority’s prior written consent, which Authority may grant or withhold in Authority’s sole and absolute discretion, the Overall Premises shall not be used for any purpose (the “Prohibited Use”) other than the sub-leasing of hangar storage space, including office and maintenance space, and the offering of related services in compliance with Authority’s Rules and Regulations, including the fueling of Tenant’s Subtenants. By way of example, but not by way of limitation, Tenant is specifically prohibited from:

			

 

	 	
			(1)

				
			Performing any of the activities permitted under Article VI.A. above at a location on the Airport other than the Overall Premises, unless such activity is at the request of the Authority;

			

 

13

 

 

	 	
			(2)

				
			Performing any business on the Overall Premises that is in direct competition with other tenants, lessees or concessionaires of Authority, other than tenants possessing the same or similar rights of use of the Airport;

			

 

	 	
			(3)

				
			The operation of a restaurant, café or dining business or facility (other than a snack or coffee bar or providing a break room for the sole use of Tenant or its subtenants' and/or licensor’s employees, guests, staff, independent contractors, agents or other invitees using the Overall Premises);

			

 

	 	
			(4)

				
			The furnishing of any food (other than a snack or coffee bar or providing a break room for the sole use of Tenant's or its subtenants' and/or licensor’s employees, guests, staff, independent contractors, agents or other invitees using the Overall Premises, or the storage of food and beverages meant to be consumed on-board sub-tenant aircraft);

			

 

	 	
			(5)

				
			The renting or leasing of automobiles in connection with the operation of an automobile rental business, unless such activity is provided through an agreement with one of the Airport’s automobile rental concessionaires who are under an airport concession agreement with the Authority, provided that the provision of courtesy cars to customers shall not be deemed the rental or leasing of automobiles where a fee for such use is not charged;

			

 

	 	
			(6)

				
			The provision of any fee-paid or free public parking facilities other than for Tenant's employees, pilots, agents, contractors and mechanics using the Overall Premises;

			

 

	 	
			(7)

				
			The use of any portion of the Overall Premises for residential purposes, except for temporary sleeping quarters for aircraft personnel (e.g., pilot or mechanic) using the Overall Premises;

			

 

	 	
			(8)

				
			The parking and/or ground servicing of air cargo aircraft in excess of 50,000 pounds maximum aircraft landing weight, except where advance written approval is given by Authority. Ground servicing shall mean any of those aircraft services normally provided by an airport ground service operator including, without limitation, fueling, loading and unloading of cargo, cleaning and/or refurbishing of aircraft interior or exterior;

			

 

	 	
			(9)

				
			The placement of any temporary or mobile-type structures, such as trailers used for office or storage space, in or on the Overall Premises other than those used in the initial construction, renovation, remodeling or reconstruction of improvements to the Overall Premises while such work is diligently being conducted); and

			

 

	 	
			(10)

				
			Any other uses not expressly or by implication permitted by Article VI.A. Notwithstanding the foregoing, nothing in this Article VI.B. shall be deemed or construed to limit, restrict or prohibit the rights of Tenant to conduct the Permitted Uses at, upon and within the Overall Premises.

			

 

	 	
			(11)

				
			Uses performed by FBOs as set forth in the Airport Minimum Standards (the “Minimum Standards”) unless expressly permitted under this Lease, and approved by Authority.

			

 

14

 

 

	
			C.

				
			Authority and Tenant hereby agree that the management, maintenance and operation of the Overall Premises shall at all times be under the supervision and direction of active, and qualified personnel who shall at all times be subject to the direction and control of Tenant and its employees. The actions of Tenant, and its employees, invitees, suppliers and contractors, shall be conducted in an orderly and proper manner so as not to unreasonably annoy, disturb or be offensive to others beyond that typical of a use for the Permitted Use. All employees of Tenant must conduct themselves in accordance with Tenant’s internal rules of conduct. All access and egress by vendors to and from the Overall Premises must be in compliance with all Applicable Laws, and rules and regulations of the Authority, including the requirement that all vendors be escorted by Tenant or its designee, subject to the approval of Authority.

			

 

	
			D.

				
			Authority and Tenant hereby agree that the breach by Tenant of any of the provisions of this Article VI. is likely to cause Authority immediate and irreparable harm for which Authority has no adequate remedy at law. Accordingly, in the event that Tenant violates, or threatens to violate, any of the provisions of this Article VI, then Authority, in addition to its other rights and remedies available hereunder or otherwise at law or in equity, shall have the right to obtain injunctive relief by way of a temporary restraining order, preliminary injunction and/or permanent injunction or otherwise, and that actual damages need not be proved as a result of any such violation for purposes of obtaining such injunctive relief, it being presumed and agreed that such actual damages exist, the exact amount of which shall be subject to proof at a final hearing on the merits and/or for a permanent injunction.

			

 

	
			E.

				
			Should Authority (or any successor entity) cease operation of the Airport in whole or in part for a period of no longer than 90 days that prevents Tenant from using the Overall Premises as permitted by Article VI.A. of this Lease, then Tenant may elect, in its sole discretion, to terminate this Lease at any time by providing Authority with 30 days’ prior notice, in which event Tenant shall have no further obligations under this Lease as of the date of the termination hereof. See Section XVIII (A) if cessation is more than 90 days.

			

 

	
			F.

				
			For purposes of this Lease, “Applicable Laws” means all present and future applicable laws, ordinances, orders, directives, rules, codes, regulations and decrees of federal, state and municipal authorities and agencies and their respective agencies, departments, authorities and commissions (individually, a “Governmental Authority”) and all present and future grant assurances provided by Authority to any Governmental Authority in connection with Authority’s ownership or operation of the Airport and all rules, regulations, policies and procedures of Authority, as the same may be amended, modified or updated from time to time, including the Rules and Regulations. For purposes of this Lease, Governmental Authorities shall specifically include Authority, The Metropolitan Government of Nashville and Davidson County, the State of Tennessee, the United States Department of Transportation, the Federal Aviation Administration (the “FAA”) and the Transportation Security Administration (the “TSA”).

			

 

	
			G.

				
			Authority shall have the following rights that are exercisable without notice and without liability to Tenant for damage or injury to property, person or business (all claims for any such damages or injuries being hereby waived and released, except for claims arising from the breach of this Lease or the negligence or willful misconduct of Authority and/or its employees, contractors and agents, for which Authority shall remain liable) and without effecting an eviction or disturbance of Tenant’s use or possession or giving rise to any claim for set-off against or abatement of Rent:

			

 

15

 

 

	 	
			(1)

				
			To approve all signage and lettering visible upon the Overall Premises; provided, such signage may only be signage for Tenant and its subtenants and such approval shall not be unreasonably withheld, conditioned or delayed.

			

 

	 	
			(2)

				
			Upon prior reasonable notice and during normal business hours to enter the Overall Premises to inspect the property and to make repairs to the property to the extent Authority is permitted or required to do so under the terms hereof; provided, any such entry shall not interfere with the operations at the Overall Premises and, if requested by Tenant, shall be accompanied by a representative of Tenant;

			

 

	 	
			(3)

				
			To adopt amend, modify, rescind or suspend any of the rules and regulations of Authority in effect from time to time and to adopt such additional rules and regulations as Authority, in Authority’s sole discretion, shall determine to be desirable for the safe, economical and efficient operation of the Airport, and Tenant agrees to comply with all such rules and regulations so long as such rules are applied uniformly and are adopted and enforced in a non-discriminatory manner;

			

 

	 	
			(4)

				
			To exercise all other rights reserved by Authority pursuant to the provisions of this Lease; and

			

 

	 	
			(5)

				
			To construct or install over, in, under or through the Overall Premises new lines, pipes, mains, wires, cables, conduits and equipment; provided, any such construction or installation shall not unreasonably interfere with the operation or use of the Overall Premises by Tenant.

			

 

ARTICLE VII

ACCESS

 

Subject to all Applicable Laws, Tenant shall have access to the Overall Premises twenty-four (24) hours per day, seven days a week.

 

ARTICLE VIII

REPAIRS AND MAINTENANCE

 

	
			A.

				
			Authority and Tenant hereby agree that this Lease is and shall be a triple net lease. During the Term, except as otherwise provided in Article VIII.F. below, Tenant, at Tenant’s sole cost and expense, shall be responsible for repairs and maintenance of the Overall Premises and shall keep and maintain all of the Overall Premises, including grassed areas, buildings, roadways, driveways, paved aircraft and automobile parking areas, landscaping, sidewalks, fencing, gates, lighting, retention ponds, drainage and utility facilities and all other improvements located on, in or under the Overall Premises, in a state of first-class condition and repair in accordance with the reasonable requirements of Authority and all Applicable Laws, and shall make all necessary repairs, replacements and renewals, whether structural or nonstructural foreseen or unforeseen and ordinary or extraordinary, in order to maintain such state of condition and repair; it being the intention of the parties that Authority shall have no liability for any of the foregoing, except to the extent of any repairs or restoration necessary as a result of a breach of this Lease or the negligence or willful misconduct of Authority and/or its employees, contractors and agents, for which Authority shall remain liable.

			

 

16

 

 

	
			B.

				
			Tenant shall be responsible for keeping the Overall Premises in a good, clean, safe and sanitary condition, reasonable wear and tear excepted. This shall include the provision of janitorial services, supplies, and trash removal.

			

 

Within ninety (90) days prior to the conclusion of every tenth (10th) Lease Year, Tenant, at Tenant’s sole cost and expense, shall hire a qualified professional, licensed within the State of Tennessee, to complete a Property Condition Assessment (“PCA”) report, inclusive of Pavement Condition Index (“PCI”) tests, to determine if conditions exist which may significantly impact the continued and efficient operation of the Overall Premises or which might significantly adversely affect the value and/or useful life of the Overall Premises. A copy of such PCA/PCI reports shall be delivered to Authority promptly upon receipt by Tenant, and shall be accompanied by a report from Tenant setting forth the items and the cost associated therewith, that have been completed within the current 10-year Lease period, as well as, the items and the estimated cost of such items intended to be accomplished in the next 10-year Lease period by Tenant in accordance with such report(s). In the event Authority should become aware of a condition which Authority determines to be an emergency, then Authority, in addition to all other remedies of Authority, may do all things necessary to effect compliance with the intent of Article VIII.A, and any and all amounts expended by Authority for such purpose shall be repayable by Tenant as Rent in the month or months during which such work is performed. Authority’s determination as to what shall constitute an emergency in this regard shall be final and conclusive.

 

	
			C.

				
			Tenant shall be responsible for paying all drainage fees imposed by The Metropolitan Government of Nashville and Davidson County for the impervious surface on the Overall Premises.

			

 

	
			D.

				
			It is agreed that Authority is under no obligation to furnish any utilities except as presently exist at or near the Overall Premises. Tenant may install, only upon the Authority's prior written approval, additional meters for any or all of the utilities provided to it. Tenant shall bear the full cost of any utility modifications or additional installations (including meter installations) that Tenant may require. Tenant shall submit detailed plans of any intended modifications or installations to Authority. All such modifications or installations shall have the prior written approval of the Authority before being undertaken, which approval shall not be unreasonably withheld, conditioned or delayed.

			

 

	
			E.

				
			Notwithstanding the foregoing to the contrary, Authority, at its sole cost and expense, shall (i) provide all airfield maintenance, which shall include runway and taxiway pavement maintenance, maintenance of all NAVAIDS, runway/taxiway and obstruction lighting and runway/taxiway marking, which shall be maintained in good condition and repair (ii) correct any defect in the initial construction of the Building Premises (including by enforcing any warranties received by the Authority in connection therewith, and (iii) restore any damage to the Overall Premises caused the negligence or willful misconduct of Authority and/or its employees, contractors and agents. Tenant shall immediately contact Authority’s Maintenance Control Dispatcher, or other designated representative, if repair or maintenance for which Authority is responsible hereunder is required. Except in an emergency, the Authority will not permit or cause any blockage into or out of the Premises.

			

 

17

 

 

ARTICLE IX

COMPLIANCE WITH LAWS

 

In its use and occupancy of the Overall Premises during the Term, Tenant, its officers, agents, servants, employees, contractors, licensees, invitees, and any other person whom Tenant controls or has the right to control shall comply with all applicable laws that are applicable to Tenant’s use and occupancy of the Overall Premises, and Tenant shall pay all costs, expenses, liabilities, losses, fines, penalties, claims and demands, including reasonable attorneys’ fees, that may in any way arise out of or be imposed because of the failure of Tenant to comply with any applicable laws.

 

ARTICLE X

ENVIRONMENTAL COMPLIANCE

 

	
			A.

				
			As used herein:

			

 

	 	
			(1)

				
			“Hazardous Wastes” means all waste materials subject to regulation under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (including the Superfund Amendments and Reauthorization Act of 1986), 42 U.S.C. §§ 9601, et seq.; the Resource Conservation and Recovery Act of 1976, 42 U.S.C. §§ 6901, et seq.; the Toxic Substances Control Act, 15 U.S.C. §§ 2601, et seq.; the Federal Water Pollution Control Act, 33 U.S.C. §§ 1251, et seq.; the Safe Drinking Water Act, 42 U.S.C.§§ 300f, et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. §§ 5101, et seq.; the Clean Air Act, 42 U.S.C. §§ 7401, et seq.; the Clean Water Act, 33 U.S.C. §§ 1251, et seq.; the Tennessee Hazardous Waste Management Act, Tennessee Code Annotated §§ 68-212-101, et seq., the Tennessee Hazardous Waste Management Act of 1983, Tennessee Code Annotated §§ 68-212-201, et seq.; and the Tennessee Petroleum Underground Storage Tank Act, Tennessee Code Annotated §§ 68-215-101, et seq., all as amended, and any other materials, wastes, pollutants, oils or governmentally regulated substances or contaminants defined or designated as hazardous, radioactive, dangerous or any other similar term in or under any of the Environmental Laws.

			

 

	 	
			(2)

				
			“Toxic Substances” means and includes any materials that have been shown to have significant adverse effects on human health or which are subject to regulation under the Toxic Substances Control Act, 15 U.S.C. §§ 2601, et seq., as amended, or any other Applicable Laws now in force or hereafter enacted relating to toxic substances. “Toxic Substances” includes asbestos, polychlorinated biphenyls (PCBs), petroleum products, lead-based paints, flammable explosives, radioactive materials and any other pollutants and any hazardous, toxic or dangerous waste, substance, material or pollutant defined as such in (or for purposes of) the Environmental Laws or listed as such by the United States Environmental Protection Agency.

			

 

	 	
			(3)

				
			“Hazardous Materials” means Hazardous Wastes and Toxic Substances, collectively.

			

 

	 	
			(4)

				
			“Environmental Laws” means and includes all current and future laws relating to Hazardous Materials together with all other Applicable Laws, and any judicial or administrative interpretations thereof, relating to health, safety or environmental matters.

			

 

	
			B.

				
			Tenant (including its agents, contractors, employees, and any other entities for which tenant is responsible), in its use of the Overall Premises shall comply with all federal, state, and local statutes, ordinances, regulations, rules, policies, codes, or guidelines now or hereafter in effect, as they may be amended from time to time, that govern Hazardous Materials (as defined above) or relate to the protection of human health, safety, or the environment and represents, warrants and agrees that:

			

 

18

 

 

	 	
			(1)

				
			It shall not give authorization or consent for any activity at or near the Overall Premises which could involve or lead to the use, manufacture, storage or disposal of any Hazardous Materials, except for (i) the types, and in the amounts, used in the ordinary course of the business of Tenant within the Overall Premises, and (ii) dangerous goods cargo that Tenant transports for its customers in the ordinary course of its business, but all such use, storage or disposal and the handling of dangerous cargo shall, at all times, be in compliance with all applicable Environmental Laws;

			

 

	 	
			(2)

				
			It shall keep the Overall Premises free and clear of any liens imposed pursuant to any applicable Environmental Laws as a result of Tenant’s use of the Overall Premises;

			

 

	 	
			(3)

				
			All licenses, permits and other governmental or regulatory actions necessary for operations that Tenant conducts at the Property to comply with Environmental Laws shall be obtained and maintained and Tenant shall ensure compliance therewith;

			

 

	 	
			(4)

				
			It shall promptly notify Authority in the event of the discovery of any Hazardous Materials on the Overall Premises not permitted hereunder or any violation of any of the Environmental Laws;

			

 

	 	
			(5)

				
			Subject to the terms of this Article X.B.(5), it will promptly forward to Authority copies of all orders, notices, permits, applications or other communications and reports (individually, an “Order”) that Tenant receives and that relate to any violation of Environmental Laws applicable to the Overall Premises or any discharge, spillage, use or discovery of any Hazardous Materials or any other matter relating to the Environmental Laws as it may affect the Overall Premises, and shall promptly comply with each such Order and remediate such violation, subject to Article X.C. hereof. In the event that an Order is subject to an attorney/client or attorney work product privilege, Tenant shall not be required to provide such Order to Authority; provided, however, that Tenant shall promptly provide the notice required under Article X.B.(4) hereof regardless of the source of such information, including an Order subject to an attorney/client or attorney work product privilege. Upon the receipt of any such notice or Order, Authority and any environmental consultant or other Person designated by Authority shall have the right, but not the obligation, to enter upon the Overall Premises at reasonable times to assess the environmental condition of the Overall Premises and its use, including conducting an environmental assessment or audit (the scope of which shall be determined in the sole and absolute discretion of the party conducting the assessment) and taking samples of soil, groundwater or other water, air or building materials; provided, however, that, (i) except in the event of an emergency, any such entry by Authority or any environmental consultant or other Person designated by Authority shall occur between the hours of 8:00 a.m. and 5:00 p.m. after not less than 48 hours prior notice to Tenant, and (ii) Authority shall repair and restore any damage to the Overall Premises resulting from such entry upon the Overall Premises by Authority or any environmental consultant or other Person designated by Authority. Tenant shall reasonably cooperate with and provide access to Authority and any environmental consultant or other Person designated by Authority;

			

 

19

 

 

	 	
			(6)

				
			Except as provided in Article VI (A) (3), infra, which allows Tenant to sell and dispense fuel and lubricants to Subtenants and to construct a fuel farm or facility with the Authority’s approval, it will not use or install on the Overall Premises, or permit the use or installation on the Overall Premises of, any fuel “AST” or “UST,” or equipment that is used to store or transport fuel to vehicles (non-aircraft) without the prior written consent of Authority.

			

 

	 	
			(7)

				
			Tenant acknowledges that the Overall Premises and the Airport are subject to the Clean Water Act and the National Pollution Discharge Elimination System Program (“'NPDES”) and the regulations thereunder relating to stormwater discharges under 40 CFR Part 122, as amended from time to time, for operations that occur at the Airport. Tenant further acknowledges that (a) it is familiar with the NPDES stormwater regulations; (b) it will conduct operations subject to the applicable provisions of 40 CFR Part 122, as amended from time to time; and (C) it is aware that its operations may need to be altered from time to time to ensure compliance with the NPDES permit.

			

 

	 	
			(8)

				
			Tenant acknowledges that, at all times during the term of this Agreement, it will reasonably cooperate with the Authority in complying with the Clean Water Act and the NPDES stormwater discharge permit, together with any subsequent amendments, extensions or renewals thereof. Tenant agrees to be bound by all applicable portions of such permit, amendments, extensions or renewals. The Authority and Tenant both acknowledge that their cooperation may improve compliance with any stormwater discharge permit terms and conditions and may help to reduce the cost of compliance.

			

 

	 	
			(9)

				
			Tenant acknowledges that it is to minimize the exposure of stormwater to significant materials generated, stored, handled or otherwise used by Tenant by implementing and maintaining “Best Management Practices” as defined in 40 CFR Part 122.2, as amended from time to time. If Tenant deices aircraft at the Overall Premises, Tenant agrees to provide the Authority with monthly deicing reports, including the number of aircraft deiced and the amounts of Type I and IV of propylene glycol used per day.

			

 

	 	
			(10)

				
			Tenant acknowledges that the Overall Premises and the Airport are managed to meet the applicable requirements of the Clean Water Act and, to the extent required under applicable Environmental Laws, Tenant, or its contractor, has Stormwater Pollution Prevention (SWPP) and Spill Pollution Control and Countermeasure (SPCC) Plans in place. Tenant agrees to provide copies of such plans to Authority and manage its operations to comply with applicable provisions of the Clean Water Act and the regulatory and procedural requirements within applicable SWPP and SPCC Plans.

			

 

	 	
			(11)

				
			Tenant and the Authority jointly agree that protection of the environment is a mutual goal. Tenant agrees to cooperate to the extent reasonably possible with the Authority in the development of programs to address issues of climate change, air emissions, pollution, traffic congestion, water quality and recycling. Tenant will consider deploying new technologies or best practices which are mutually beneficial in improving environmental stewardship.

			

 

20

 

 

	
			C.

				
			In making the representations, warranties and agreements set forth in Article X.B. hereof and the indemnification set forth in Article XV.D. hereof, Tenant does not undertake any obligation to remediate, or take any other action with respect to, or incur any liability for the cost of remediating or taking other action with respect to, any environmental condition affecting the Overall Premises that (i) has resulted from the migration of Hazardous Materials to the Overall Premises from off-site sources or adjacent property and is not attributable to the activities of Tenant or any of its officers, contractors, subcontractors, invitees, agents, representatives or employees or any of their respective officers, contractors, subcontractors, invitees, agents, representatives or employees, or (ii) is not attributable to the activities of Tenant or any of its officers, contractors, subcontractors, invitees, agents, representatives or employees or any of their respective officers, contractors, subcontractors, invitees, agents, representatives or employees; provided, however, that Authority and Tenant do not intend this Article X.C. to limit Authority’s right to seek contribution or cost-sharing under any applicable Environmental Laws for costs that it may incur in connection with inspections, investigations, studies, design, construction, remediation or operations or maintenance of remedial activities at, on or near the Overall Premises from parties responsible for any contamination occurring at, on or near the Overall Premises. The foregoing express right of Authority to seek contribution or cost-sharing shall in no way increase and alter Tenant’s liability as set forth elsewhere in this Lease.

			

 

	
			D.

				
			If Tenant shall fail to comply with any of the requirements of the Environmental Laws, Authority may, in addition to the other remedies for Tenant’s default set forth herein, at Authority’s election but without the obligation to do so, (i) give such notices, (ii) cause such work to be performed on the Overall Premises, and (iii) take any and all other actions as Authority shall deem necessary or advisable in order to abate, remove or remediate any Hazardous Materials or otherwise cure Tenant’s noncompliance, with the costs thereof to be reimbursed to Authority within 10 days of demand, together with interest thereon from the date of payment until paid at the interest rate (the “Interest Rate”) equal to the lesser of (i) the maximum lawful rate of interest permitted to be charged under Applicable Laws of Governmental Authorities or (ii) the interest rate equal to 2% per annum above the prime rate of interest as published from time to time by The Wall Street Journal.

			

 

ARTICLE XI

TRADE FIXTURES

 

All trade fixtures and personal property, including all machinery, furniture and furnishings and inventories now or hereafter maintained, installed or used in or about the Overall Premises by Tenant or any subtenant or licensee in connection with the trade, business or profession conducted by Tenant (the “Trade Fixtures”) shall remain the property of such Tenant, subtenant or licensee, and may be removed at any time during the Term hereof and for a period of ten (10) business days after the expiration thereof; provided, however, that notwithstanding the foregoing, Tenant shall not have any right to remove any of the Trade Fixtures (i) at any time that an Event of Default (beyond any applicable grace and cure periods) or any act or omission which, with notice or passage of time, would constitute an Event of Default (as hereinafter defined), shall have occurred and is continuing or (ii) in the event that any such removal would cause damage to the Overall Premises (unless Tenant shall repair any such damage and restore the Overall Premises to substantially the same condition as existed prior to the removal of such Trade Fixtures).

 

21

 

 

ARTICLE XII

LIENS

 

	
			A.

				
			Tenant shall not do or suffer anything to be done by which the Overall Premises, or any part thereof, may be encumbered by a lien of any kind. In the event that any mechanic’s or materialmen’s lien or other lien, purporting to be for or on account of any labor done or materials or services furnished in connection with any work on or about the Leased Premises or any part of any thereof done by, for or under the authority of Tenant, or anyone claiming by, through or under Tenant, is filed against the Overall Premises or any part of any thereof, Tenant shall commence action to discharge the same of record within ten (10) business ten days after service upon Tenant of notice of the filing thereof; provided, however, that Tenant shall have the right to remove the lien by bonding against the same in accordance with Applicable Laws and to contest any such lien; provided, further, that Tenant shall diligently prosecute any such contest, at all times effectively staying or preventing any official or judicial sale of the Overall Premises or any part of any thereof under execution or otherwise, and, if unsuccessful, Tenant shall satisfy any final judgment against Tenant adjudging or enforcing such lien or, if successful, Tenant shall obtain a record satisfaction or release thereof. In the event Tenant fails to comply with this Article XII.A., Authority, in addition to all other remedies provided herein or otherwise, shall have the right, but not the obligation, to cause the lien to be released by such means as it shall deem proper, including payment of the claim giving rise to the lien. All such sums paid by Authority and all expenses incurred by it in connection therewith, including reasonable attorneys’ fees and costs, shall be immediately payable to Authority by Tenant with interest thereon at the Interest Rate from the date of payment by Authority until Authority receives payment from Tenant. Authority shall have the right at all times to post and keep posted on the Overall Premises any notices permitted or required by law, or which Authority shall deem proper, for the protection of Authority, the Overall Premises and any other party having an interest therein from mechanic’s or materialmen’s liens.

			

 

	
			B.

				
			All Persons furnishing labor or materials to Tenant in connection with the Initial Improvements or any subsequent alterations or additions thereto are hereby notified that the filing of any mechanic’s or materialmen’s lien shall attach only to Tenant’s leasehold estate in the Overall Premises.

			

 

ARTICLE XIII

TAXES

 

	
			A.

				
			Tenant shall pay, not less than thirty (30) days prior to delinquency:

			

 

	 	
			(1)

				
			All taxes, assessments, levies, fees, fines, penalties and all other governmental charges, general and special, ordinary and extraordinary, foreseen and unforeseen, which during the Term are imposed or levied upon or assessed against (i) the Overall Premises, (ii) any Rent (except for taxes generally classified as income or franchise taxes assessed against Authority), or (iii) this Lease, the leasehold estate hereby created or the operation, possession or use of the Overall Premises;

			

 

	 	
			(2)

				
			Any in-lieu of tax or tax equivalent charges assessed against the Overall Premises by a Governmental Authority as a result of Tenant’s leasehold interest in the Overall Premises and the exempt status of Authority; and

			

 

	 	
			(3)

				
			All gross receipts or similar taxes imposed or levied upon, assessed against or measured by Rent. To the extent Authority receives notice of, the Authority shall promptly deliver any taxes notices specifying such taxes to Tenant. If Tenant fails to pay any of the foregoing before they become delinquent, Authority, after notice to Tenant, may, but shall be under no obligation to, pay such delinquent taxes, assessments, levies, fees, fines, penalties and governmental charges, and all expenditures and costs incurred thereby shall be payable as additional rent hereunder (“Additional Rent”) within ten (10) days after such notice to Tenant with interest thereon at the Interest Rate. Tenant will furnish to Authority, promptly after demand therefor, proof of payment of all items referred to above which are payable by Tenant. If any such assessment may legally be paid in installments, Tenant may pay such assessment in installments; in such event, Tenant shall be liable only for installments that become due and payable during the Term.

			

 

22

 

 

	
			B.

				
			All ad valorem real estate taxes and personal property taxes (and in-lieu of tax or tax equivalent charges) that are assessed against the Overall Premises with respect to any portion of the Term shall be prorated for the first and last years of the Term. Tenant shall be responsible for and shall pay the portion of such taxes or charges relating to the period beginning with the Effective Date through and including the expiration or earlier termination of the Term.

			

 

ARTICLE XIV

UTILITIES

 

Tenant shall, at its sole cost and expense, pay for all utility services required for the operation of or furnished to or consumed on the Overall Premises during the Term, including gas, electricity, water, sewer, heat/air, internet, cable/TV services, and telephone, and all charges associated with any of the foregoing.

 

ARTICLE XV

INDEMNIFICATION

 

	
			A.

				
			For purposes of this Lease, the term “Indemnified Party” shall mean Authority and each of its commissioners, officers, employees, agents, representatives, successors and assigns.

			

 

	
			B.

				
			Tenant agrees to defend, indemnify and hold each of the Indemnified Parties harmless from and against any and all suits, losses, costs, claims, damages, demands, penalties, fines, settlements, liabilities and expenses (including reasonable attorneys’ fees, court costs and litigation expenses) (the “Claims”) arising from any defects in the Overall Premises, whether latent or obvious, and any bodily injury, death and/or property damage (including property in Tenant’s possession or under its control) arising from or relating to the Overall Premises and caused, directly or indirectly, by (i) any defect in or failure of equipment, pipes or wiring, (ii) broken glass or backing up of drains, (iii) leaking gas or water, (iv) fire or smoke, (v) the use, occupancy or condition of the Overall Premises or any part thereof, (vi) any breach by Tenant of this Lease or (vii) any negligent act or omission of Tenant or Sub-Tenant and any of Tenant’s or Sub-Tenant’s officers, contractors, subcontractors, invitees, agents, representatives or employees; provided, however, that Tenant shall have no obligation to defend, indemnify and hold an Indemnified Party harmless from and against any such suits, losses, costs, claims, damages, demands, penalties, fines, settlements, liabilities or expenses arising solely and directly from such Indemnified Party’s gross negligence or willful misconduct; provided, further, however, that the term “gross negligence” shall not include gross negligence imputed as a matter of law to such Indemnified Party by reason of an interest in the Overall Premises or Tenant’s failure to act in respect of matters which are or were the obligation of Tenant under this Lease.

			

 

	
			C.

				
			Tenant agrees to defend, indemnify and hold each of the Indemnified Parties harmless from and against any and all suits, losses, costs, claims, damages demands, penalties, fines, settlements, liabilities and expenses (including reasonable attorneys’ fees, court costs and litigation expenses) claimed or incurred by reason of any bodily injury, death and/or property damage arising from any intentional act of Tenant or Sub-Tenant and any of Tenant’s or Sub-Tenant’s officers, contractors, subcontractors, invitees, agents, representatives or employees of the Overall Premises that arise within the Airport.

			

 

23

 

 

	
			D.

				
			Tenant agrees to defend, indemnify and hold each of the Indemnified Parties harmless from and against any and all Claims arising from any negligent act or omission of Tenant or any of Tenant’s officers, contractors, subcontractors, invitees, agents, representatives or employees relating to (i) any investigation, monitoring, clean-up, containment, removal, storage or restoration work performed by Authority or a third party with respect to the use or placement of Hazardous Materials (of whatever kind or nature, known or unknown) on the Overall Premises or any other areas; (ii) any actual, threatened or alleged contamination by Hazardous Materials on the Overall Premises or any other areas; (iii) the disposal, release or threatened release of Hazardous Materials on the Overall Premises or any other areas that is on, from or affects the soil, air, water, vegetation, buildings, personal property, persons or otherwise; or (iv) any violation of any applicable Environmental Laws.

			

 

	
			E.

				
			Tenant agrees to defend, indemnify and hold each of the Indemnified Parties harmless from and against any and all Claims arising from any intentional act of Tenant or any of Tenant’s officers, contractors, subcontractors, invitees, agents, representatives or employees with respect to (i) any investigation, monitoring, clean-up, containment, removal, storage or restoration work performed by Authority or a third party with respect to the use or placement of Hazardous Materials (of whatever kind or nature, known or unknown) on the Overall Premises or any other areas; (ii) any actual, threatened or alleged contamination by Hazardous Materials on the Overall Premises or any other areas; (iii) the disposal, release or threatened release of Hazardous Materials on the Overall Premises or any other areas that is on, from or affects the soil, air, water, vegetation, buildings, personal property, Persons or otherwise; (iv) any bodily injury, death or property damage with respect to the use or placement of Hazardous Materials on the Overall Premises or any other areas; or (v) any violation of any applicable Environmental Laws.

			

 

	
			F.

				
			Tenant agrees to defend, indemnify and hold each of the Indemnified Parties harmless from and against any and all Claims arising from any use, non-use or condition in, on or about, or possession, alteration, repair, operation, maintenance or management of, any aircraft, vehicle, mobile equipment or other property of Tenant or Sub-Tenant and any of Tenant’s or Sub-Tenant’s officers, contractors, subcontractors, invitees, agents, representatives or employees available for use on Airport premises.

			

 

	
			G.

				
			Tenant agrees to defend, indemnify and hold each of the Indemnified Parties harmless from and against any and all Claims arising from any representation or warranty made herein by Tenant or in any other agreement between Authority and Tenant being false or misleading in any material respect as of the date such representation or warranty was made.

			

 

	
			H.

				
			Tenant agrees to defend, indemnify and hold each of the Indemnified Parties harmless from and against any and all Claims arising from any lien, encumbrance or claim arising from the actions of Tenant or its failure to comply with any Applicable Laws.

			

 

	
			I.

				
			Tenant agrees to defend, indemnify and hold each of the Indemnified Parties harmless from and against any Claims arising from Tenant’s failure to comply with the Rules and Regulations.

			

 

24

 

 

	
			J.

				
			It is expressly understood and agreed that Tenant’s obligations under this Article XV shall survive the expiration or earlier termination of this Lease for any reason but shall not continue beyond the end of any statute of limitations.

			

 

ARTICLE XVI

INSURANCE

 

With no intent to limit Tenant’s liability under the indemnification provisions set forth above, once Tenant receives a Certificate of Occupancy, Tenant covenants to obtain and maintain in full force and effect during the Term of this Lease, and all extensions and amendments thereto, at least the following insurance. In the event any of the following insurance is written as "claims made" coverage and the Authority is required to be carried as an additional insured, then Tenant agrees to purchase policy period extensions so as to provide coverage to the Authority for a period of at least two years after the expiration or termination of this Lease. Prior to the receipt of a Certificate of Occupancy, Tenant shall obtain and maintain in full force the insurance listed in Exhibit F.

 

	
			A.

				
			Tenant shall obtain and maintain continuously in effect at all times while this Lease remains in force and effect, at its sole cost and expense, comprehensive aviation general liability insurance coverage (the “CAGL Coverage”), including products liability and hangar keepers, with coverage limits of not less than Five Million Dollars ($5,000,000) per occurrence, except Ten Million Dollars ($10,000,000) per occurrence and in the annual aggregate as respects to products liability coverage, that insures against claims, damages, losses and liabilities arising from bodily injury, death and/or property damage, including any such claims, damages, losses and liabilities arising from or relating to the operations or presence of Tenant at the Airport. The aggregate deductible amount under the insurance policy or policies providing the CAGL Coverage shall not exceed Fifty Thousand Dollars ($50,000) per occurrence or any higher amount (not to exceed Two Hundred and Fifty Thousand Dollars ($250,000), if necessary to obtain a suitable insurance policy. Each insurance policy providing the CAGL Coverage shall name Authority and its commissioners, officers and employees as additional insureds and shall provide that such insurance policy shall be considered primary insurance as to any other valid and collectible insurance or self-insured retention Authority may possess or retain. Any insurance coverage maintained by Authority shall be considered excess insurance only. Each insurance policy providing the CAGL Coverage shall provide contractual liability coverage under which the issuing insurance company agrees to insure (i) Tenant’s obligations under Article XVI hereof (other than Articles XVI.D. and XVI.E hereof) subject to policy terms, conditions, limitations and exclusions and (ii) any other liability that Tenant has under this Lease for which such insurance policy would otherwise provide coverage. Each insurance company issuing an insurance policy providing the CAGL Coverage shall be (a) admitted to do business in the State of Tennessee and rated not less than the Minimum Rating or (b) as otherwise approved by the Assistant Vice President of Risk Management of Authority. Such approval may be denied or withheld based upon an insurance company’s rating by the Rating Service or other indications of financial inadequacy, as determined in the sole discretion of the Chief Financial Officer of Authority.

			

 

25

 

 

	
			B.

				
			Tenant shall obtain and maintain continuously in effect at all times while this Lease remains in force and effect, at its sole cost and expense, automobile liability insurance coverage (the “Auto Coverage”), with a coverage limit of not less than Five Million Dollars ($5,000,000) per occurrence for vehicles used on the Premises and One Million Dollars ($1,000,000) per occurrence for vehicles used off the Premises, which insures against claims, damages, losses and liabilities arising from automobile-related bodily injury, death and/or property damage, including any such claims, damages, losses and liabilities arising from or relating to the Premises or the leasehold interest in and/or occupancy of the Premises by Tenant. The aggregate deductible amount under the insurance policy or policies providing the Auto Coverage shall not exceed Two Hundred Fifty Thousand Dollars ($250,000) per occurrence. Each insurance policy providing the Auto Coverage shall name Authority and its commissioners, officers and employees as additional insureds thereunder and shall provide that such insurance policy will be considered primary insurance as to any other valid and collectible insurance or self-insured retention Authority may possess or retain. Any insurance coverage maintained by Authority shall be considered excess insurance only. Each insurance policy providing the Auto Coverage shall provide contractual liability coverage under which the issuing insurance company agrees to insure (i) Tenant’s obligations under Article XVI hereof (other than Articles XVI.D. and XVI.E hereof) and (ii) any other liability that Tenant has under this Lease for which such insurance policy would otherwise provide coverage. Each insurance company issuing an insurance policy providing the Auto Coverage shall be (a) admitted to do business in the State of Tennessee and rated not less than the Minimum Rating or (b) as otherwise approved by the Assistant Vice President of Risk Management of Authority. Such approval may be denied or withheld based upon an insurance company’s rating by the Rating Service or other indications of financial inadequacy, as determined in the sole discretion of the Chief Financial Officer of Authority.

			

 

	
			C.

				
			Tenant shall obtain and maintain continuously in effect at all times while this Lease remains in force and effect, at its sole cost and expense, worker’s compensation insurance coverage (the “WC Coverage”) in accordance with statutory requirements and providing employer’s liability coverage with limits of not less than One Million Dollars ($1,000,000) for bodily injury by accident, One Million Dollars ($1,000,000) for bodily injury by disease, and One Million Dollars ($1,000,000) policy limit for disease, including any claims, damages, losses and liabilities arising from or relating to Tenant’s operations or presence at the Airport. Each insurance company issuing an insurance policy providing the WC Coverage shall be (i) admitted to do business in the State of Tennessee and rated not less than the Minimum Rating or (ii) as otherwise approved by the Assistant Vice President of Risk Management of Authority. Such approval may be denied or withheld based upon an insurance company’s rating by the Rating Service or other indications of financial inadequacy as determined in the sole discretion of the Chief Financial Officer of Authority.

			

 

26

 

 

	
			D.

				
			Tenant shall obtain and maintain continuously in effect at all times while this Lease remains in force and effect, at its sole cost and expense, pollution liability insurance coverage (the “Pollution Coverage”), with coverage limits of not less than Five Million Dollars ($5,000,000) per occurrence and Five Million Dollars ($5,000,000) in aggregate, that insures against claims, damages, losses and liabilities arising from a discharge, dispersal, release or escape of any solid, liquid, gaseous or thermal irritant or contaminant, Hazardous Material, smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, medical waste and waste materials, into or upon land or any structure on land, the atmosphere or any watercourse or body of water that results from activities of Tenant or others for which Tenant is responsible, including any such claims, damages, losses and liabilities arising from or relating to Tenant’s operations or presence at the Airport. Policy limits may be achieved through either primary or excess insurance placements. The aggregate deductible amount under the insurance policy or policies providing the Pollution Coverage shall not exceed One Hundred Thousand Dollars ($100,000) per occurrence. Each insurance policy providing the Pollution Coverage shall name Authority and its commissioners, officers and employees as additional insureds thereunder and shall provide that such insurance policy shall be considered primary insurance as to any other valid and collectible insurance or self-insured retention Authority may possess or retain. Any insurance coverage maintained by Authority shall be considered excess insurance only. Each insurance policy providing the Pollution Coverage shall provide contractual liability coverage under which the issuing insurance company agrees to insure (i) Tenant’s obligations under Articles XVI.D and XVI.E. hereof and (ii) any other liability that Tenant has under this Lease for which such insurance policy would otherwise provide coverage. Each insurance company issuing an insurance policy providing the Pollution Coverage shall be (i) rated not less than the Minimum Rating or (ii) otherwise approved by the Assistant Vice President of Authority. Such approval may be denied or withheld based upon an insurance company’s rating by the Rating Service or other indications of financial inadequacy, as determined in the sole discretion of the Chief Financial Officer of Authority. Tenant may provide for reasonable limits of self-insurance against environmental risks. All amounts paid to Authority by Tenant on account of any self-insurance program shall be deemed insurance proceeds for purposes of this Lease. To the extent Tenant self-insures as to environmental liability, the protections afforded the Authority by Tenant shall be the same as if insurance were provided by a third-party insurer, and Tenant shall have all the obligations and liabilities of a third-party insurer hereunder (e.g., obligation to provide a defense.

			

 

	
			E.

				
			Tenant shall obtain and maintain continuously in effect at all times while this Lease remains in force and effect, at its sole cost and expense, property insurance coverage (the “PC Coverage”) with respect to all improvements on the Overall Premises (inclusive of the Initial Improvements) for one hundred percent (100%) of the insurable replacement value of the improvements on the Overall Premises with no co-insurance penalty, that provides (i) special form property insurance at least as broad as that provided by form CP 10 30 (© ISO Properties, Inc.), together with builder’s risk (with respect to the construction or alteration of or addition to Improvements during the Term) with any deductible in excess of Seventy Five Thousand Dollars ($75,000) to be approved by Authority, and (ii) ordinance and law coverage. Each insurance policy providing the PC Coverage shall name Authority as a co-loss payee and shall provide that such insurance policy shall be considered primary insurance as to any other valid and collectible insurance or self-insured retention Authority may possess or retain. Any insurance coverage maintained by Authority shall be considered excess insurance only. Each insurance company issuing an insurance policy providing the PC Coverage shall be (i) admitted to do business in the State of Tennessee and rated not less than the Minimum Rating or (ii) otherwise approved by the Chief Financial Officer of Authority. Such approval may be denied or withheld based upon an insurance company's rating by the Rating Service or other indications of financial inadequacy, as determined in the sole discretion of the chief financial officer of Authority.

			

 

27

 

 

	
			F.

				
			Tenant shall obtain and maintain continuously in effect at all times while this Lease remains in force and effect, at its sole cost and expense, excess liability insurance coverage (the “Umbrella Coverage”), with coverage limits of not less than Five Million Dollars ($5,000,000) per occurrence and Ten Million Dollars ($10,000,000) in aggregate, that provides additional insurance coverage for claims, damages, losses and liabilities which are insured under the CAGL Coverage, the Auto Coverage and the employer’s liability provisions of the WC Coverage, including any such claims, damages, losses and liabilities arising from or relating to Tenant’s operations or presence at the Airport. Policy limits may be achieved through either primary or excess insurance placements. Each insurance policy providing the Umbrella Coverage shall have no deductible and shall name Authority and its commissioners, officers and employees as additional insureds thereunder and shall provide that such insurance policy shall be considered primary insurance as to any other valid and collectible insurance or self-insured retention Authority may possess or retain. Any insurance coverage maintained by Authority shall be considered excess insurance only. Each insurance policy providing the Umbrella Coverage shall provide contractual liability coverage under which the issuing insurance company agrees to insure (i) Tenant’s obligations under Article XVI hereof (other than Articles XVI.D. and XVI.E hereof) and (ii) any other liability that Tenant has under this Lease for which such insurance policy would otherwise provide coverage. Each insurance company issuing an insurance policy providing the Umbrella Coverage shall be (a) admitted to do business in the State of Tennessee and rated not less than the Minimum Rating or (b) otherwise approved by the chief financial officer of Authority. Such approval may be denied or withheld based upon an insurance company’s rating by the Rating Service or other indications of financial inadequacy, as determined in the sole discretion of the Chief Financial Officer of Authority.

			

 

	
			G.

				
			For purposes of this Lease, the CAGL Coverage, the Auto Coverage, the WC Coverage, the PC Coverage, the Pollution Coverage, and the Umbrella Coverage are collectively referred to as the “Insurance Coverages”. Tenant agrees that each insurance policy providing any of the Insurance Coverages (i) shall not be altered, modified, cancelled or replaced without not less than thirty (30) days prior written notice from Tenant to Authority; (ii) shall provide for a waiver of subrogation by the issuing insurance company as to claims against Authority and its commissioners, officers and employees; (iii) shall provide that any “other insurance” clause in such insurance policy shall exclude any policies of insurance maintained by Authority and that such insurance policy shall not be brought into contribution with any insurance maintained by Authority; and (iv) shall have a term of not less than one year.

			

 

	
			H.

				
			Authority shall have the right to change the terms and required coverage amounts of any of the Insurance Coverages if such changes are recommended or imposed by Authority’s insurers as long as such insurance is available, so long as Authority agrees to reimburse Tenant for any increases in insurance premium costs resulting solely from any such change (except that Tenant shall be solely responsible for increases in premium costs resulting from any changes to the requirements for the Insurance Coverages that are reasonably required as a result of relevant insurance market conditions or practices, increases in the CPI, or the requirements of present or future Applicable Laws). Tenant shall provide, prior to the Effective Date, one or more certificates of insurance which shall indicate that Tenant maintains the Insurance Coverages and that the insurance policy or policies referenced or described in each such certificate of insurance comply with the requirements of this Lease. Tenant shall give to Authority written notice of the, cancellation or non-renewal or if coverage limits decrease below the minimums required in this Lease for each such insurance policy not less than thirty (30) days prior to the effective date of the expiration or earlier cancellation of such insurance policy. Upon receipt of a request from Authority, Tenant also agrees to make copies of any or all of the insurance policies providing the Insurance Coverages available for the Authority to view, at the Overall Premises. The certificate(s) of insurance provided by Tenant to evidence the WC Coverage shall specifically certify that the insurance policy or policies which provide the WC Coverage cover Tenant’s activities in the State of Tennessee.

			

 

	
			I.

				
			If Tenant shall at any time fail to obtain or maintain any of the Insurance Coverages, Authority may take, but shall not be obligated to take, all actions necessary to effect or maintain such Insurance Coverages, and all monies expended by it for that purpose shall be reimbursed to Authority by Tenant upon demand therefor or set-off by Authority against funds of Tenant held by Authority or funds due to Tenant. Tenant hereby grants, approves of and consents to such right of set-off for Authority. If any of the Insurance Coverages cannot be obtained for any reason, Authority may require Tenant to cease any activity on the Overall Premises until all Insurance Coverages are obtained.

			

 

28

 

 

	
			J.

				
			The term “Rating Service” shall mean A.M. Best Company, or, if A.M. Best Company no longer exists or discontinues its rating of insurance companies, such alternative rating service for insurance companies as determined in the sole discretion of the Chief Financial Officer of Authority. The term “Minimum Rating” shall mean a rating (if A.M. Best Company is the Rating Service) of A- (Financial Size: X) based upon the criteria for financial strength and financial size ratings utilized by A.M. Best Company on the Effective Date, or such equivalent rating (if A.M. Best Company is not the Rating Service or if A.M. Best Company subsequently revises its criteria for financial strength and financial size ratings) as determined in the sole discretion of the Chief Financial Officer of Authority.

			

 

	
			K.

				
			It is expressly understood and agreed that the minimum limits set forth in the Insurance Coverages shall not limit the liability of Tenant for its acts or omissions as provided in this Lease.

			

 

ARTICLE XVII

DAMAGE AND DESTRUCTION

 

	
			A.

				
			Except as hereinafter provided, if, during the Term, any of the improvements on the Overall Premises shall be damaged or destroyed by fire or any other casualty not due to the Authority’s gross negligence or willful misconduct, Tenant shall thereafter use commercially reasonable efforts commence and diligently prosecute to completion, at Tenant’s sole expense, the repair or rebuilding of the improvements on the Overall Premises or such portion thereof which was damaged, in a good and workmanlike manner using materials of first grade and quality, to the condition of the improvements on the Overall Premises or such portion thereof at the time of such fire or other casualty. Notwithstanding the foregoing, however, in the event the improvements on the Overall Premises are damaged or destroyed at any time during the final three Lease Years of the Initial Term or any time during the Extension Term or the Second Extension Term, and if either (i) the cost to repair or replace the improvements on the Overall Premises, as estimated by a contractor, architect or other construction consultant selected by Tenant and approved by Authority, exceeds fifty percent (50%) of the full replacement value of all improvements located on the Overall Premises, or (ii) such repair and replacement cannot reasonably be completed within one hundred eighty (180) days after the date of the damage or destruction, as estimated by a contractor, architect or other construction consultant selected by Tenant and approved by Authority, then Tenant may terminate this Lease upon such date as is set forth in a notice given to Authority within thirty (30) days after the date of the damage or destruction; provided, however, that the date of termination shall be no less than five and no more than sixty (60) days after the effectiveness of such notice and in no event shall Tenant terminate this Lease upon the occurrence of damage or destruction of the improvements on the Overall Premises unless (a) it has maintained the PC Coverage in the manner required by Article XVI.E. hereof and (b) it pays over to Authority all insurance proceeds from such PC Coverage and the amount of any deductible or self-insurance retention amount with respect to such PC Coverage. Unless this Lease is so terminated, Tenant shall proceed with repair or rebuilding as required by this Article XVII and in accordance with the requirements of Article IV hereof and Authority shall make the net insurance proceeds of such PC Coverage payable with respect to such fire or other casualty available to Tenant on a commercially reasonable basis to pay the costs of such repair and rebuilding, and all costs of such repair or rebuilding in excess of the net insurance proceeds shall be paid by Tenant. There shall be no abatement of Rent during the period of such repair or rebuilding.

			

 

29

 

 

	
			B.

				
			In no event shall Authority be liable for any loss or damage sustained by Tenant by reason of any casualty to the Overall Premises except to the extent such loss or damage arises from the gross negligence or willful misconduct of Authority and / or its employees, contractors, and agents.

			

 

ARTICLE XVIII

TERMINATION BY AUTHORITY AND CONDEMNATION

 

	
			A.

				
			Authority hereby gives Tenant notice that during the term of this Lease, it may become necessary for Authority to terminate this Lease as to some part of or the entire Overall Premises for Airport modification and/or expansion in order to adequately provide airport facilities and air service. Authority shall have the right to terminate this Lease at any time after eight (8) years from the Effective Date of the Lease in the event the Board of Commissioners of Authority shall determine, by resolution adopted in an open meeting at which Tenant shall be afforded an opportunity to be heard, that the Overall Premises, or portion thereof, are necessary for Airport modification or expansion. Authority shall give Tenant at least eighteen (18) months’ notice to vacate the Overall Premises, or the affected portion thereof. In the event of such termination, Tenant shall have no liability for the payment of Rent for the remainder of the term of this Lease with respect to the portion of the Overall Premises so vacated. Tenant shall surrender the Overall Premises and any improvements constructed thereon at the expiration of said eighteen (18) months’ notice and shall be compensated by Authority based on a determination by a qualified appraiser (who shall be agreed upon by the parties) of the fair market value of improvements (excluding any fixtures or finishes) owned by Tenant at the time of termination. If, in the sole opinion of Tenant, any portion of the Overall Premises not terminated by Authority is no longer useful to Tenant for the purposes described in this Lease, Tenant shall have the right to terminate this Lease. A resolution duly enacted by the Board of Commissioners of Authority shall be conclusive evidence that said property or properties are needed for airport modification or expansion. The parties hereto further covenant and agree that Authority reserves the right to further develop or improve the Airport as it may see fit, regardless of the desires or view of Tenant and without interference or hindrance.

			

 

	
			B.

				
			In the event all of the Overall Premises is taken by a “Condemning Party” through the exercise of the power of eminent domain, or is conveyed to a Condemning Party by a negotiated sale in lieu of a taking by exercise of the power of eminent domain, then this Lease shall terminate as of the date of such taking or conveyance. If a portion of the Overall Premises is so taken or conveyed such that the remainder of the Overall Premises cannot be rebuilt or restored such that, upon completion, Tenant may again use the Overall Premises in substantially the same manner as prior to such taking or conveyance, as reasonably determined by Authority and Tenant, then Tenant may terminate this Lease by giving Authority written notice within thirty (30) days of such taking or conveyance, and such termination shall be effective as of the effective date of such notice.

			

 

	
			C.

				
			If a portion of the Overall Premises is so taken or conveyed to a Condemning Party and this Lease is not terminated pursuant to Article XVIII.B above, this Lease shall terminate only with respect to the portion of the Overall Premises so taken or conveyed and the Base Rent shall be adjusted proportionately on the basis of the square footage of the Overall Premises taken or conveyed. There shall be an abatement of Rent during any period of restoration of the Initial Improvements or Overall Premises resulting from such taking or conveyance in lieu thereof.

			

 

30

 

 

	
			D.

				
			In the event of any taking or conveyance in lieu thereof as described in Article XVIII.B. & C. above, any Award therefor shall be paid over in the following manner and order of priority: First, to Authority to the extent of the value of the Overall Premises taken, assuming for the purpose of valuing the Overall Premises in such event that it was subject to this Lease but unimproved; Second, (i) if this Lease is not terminated, to Tenant to the extent required for the repair or restoration of the Initial Improvements, or (ii) if this Lease is terminated, to Tenant to the extent Tenant is entitled to compensation therefor under the Applicable Laws of the State of Tennessee; and Third, any balance of the Award shall be paid to Authority.

			

 

	
			E.

				
			As used in this Article XVIII, the term “Award” shall mean the aggregate of all amounts awarded or consideration paid in one or more proceedings to any party or parties for any purpose as a result of the taking or conveyance in lieu thereof of all or any part of the Overall Premises and shall include all amounts awarded for actual taking, inverse condemnation, demolition, removal or restoration, consequential damages, leasehold value or loss of rent, reduced by the costs, if any, of obtaining any such Award, including reasonable attorneys’ fees.

			

 

	
			F.

				
			In the event any condemnation proceeding affecting the Overall Premises is commenced, Authority and Tenant shall each promptly send to the other copies of any notices, settlement offers, pleadings, or other documents that may be received by either of them with respect to such proceeding. Tenant shall have the right to attend, offer proof and otherwise participate in any hearing or other court action with respect to such proceeding, but Authority shall retain the ultimate control of any such proceeding and the actions taken therein.

			

 

ARTICLE XIX

ASSIGNMENT AND SUBLETTING

 

Except as otherwise provided herein, Tenant shall not assign this Lease in whole or in part or sublet all or any part of the Overall Premises without the prior written consent of Authority, which consent shall not be unreasonably withheld, conditioned or delayed. In the event of any permitted assignment or subletting, Tenant shall remain liable for all of its obligations hereunder (except in the event of an assignment to a Subsidiary or Affiliate of Tenant or to a third party acquiring all or substantially all of Tenant’s assets allocable to its operation at the Airport and where Authority has vetted and approved the financial stability of such assignee as determined in Authority’s sole discretion) and, in the case of any permitted assignment, the assignee shall assume all of Tenant’s obligations under this Lease (with respect to the part of the Overall Premises subject to the assignment) and shall be bound to comply with all of the terms and provisions of this Lease, and Tenant and such assignee shall be jointly and severally liable for the performance of Tenant’s covenants and agreements under this Lease (except in the event of an assignment to a Subsidiary or Affiliate of Tenant or to a third party acquiring all or substantially all of Tenant’s assets allocable to its operation at the Airport and where Authority has vetted and approved the financial stability of such assignee as determined in Authority’s sole discretion). Tenant shall be responsible for payment of all of Authority’s actual, third party costs and expenses, including reasonable attorneys’ fees and expenses, incurred in reviewing any proposed assignment hereunder. Any attempted assignment in violation of this Article XIX shall be null and void at Authority’s option. Notwithstanding the foregoing, the subleasing or licensing by Tenant of office, hangar and maintenance space for the storage of general aviation aircraft and personnel shall not require consent hereunder. However, Tenant shall provide a list of such subleases for office, hangar and maintenance space to the Authority within ten (10) business days of the execution of any such sublease.

 

31

 

 

ARTICLE XX

DEFAULT AND REMEDIES

 

	
			A.

				
			Any of the following occurrences or acts shall constitute an event of default (an “Event of Default”) under this Lease:

			

 

	 	
			(1)

				
			If Tenant shall:

			

 

	 	
			(a)

				
			Fail to pay any Rent under this Lease as and when required to be paid by Tenant hereunder and such failure shall continue for a period of 30 Days following Tenant’s receipt of written notice from Authority of such failure to pay Rent; or

			

 

	 	
			(b)

				
			Fail to pay any Additional Rent or other charge under this Lease as and when required to be paid by Tenant hereunder and such failure shall continue for a period of 30 days for the payment of any such Additional Rent or other charge) following Tenant’s receipt of written notice from Authority of such failure to pay Additional Rent or other charge; or

			

 

	 	
			(c)

				
			Fail to provide any insurance coverage as and when required by this Lease; or

			

 

	 	
			(d)

				
			Fail to discharge any lien, encumbrance or charge upon the Overall Premises arising by, through or under Tenant as provided herein; or

			

 

	 	
			(e)

				
			Breach or fail to observe or perform any of its covenants, agreement or obligations hereunder, other than those described in Articles XX.A.(1) (a), (b), (c) and (d) hereof, and such breach or failure shall continue for 30 days after notice from Authority to Tenant of such breach or failure; provided, however, that if any such breach or failure (i) is such that it cannot be cured or remedied within such 30-day period, (ii) does not involve the payment of any monetary sum, and (iii) does not place any rights or interest of Authority in immediate jeopardy and Authority is given additional security reasonably satisfactory to it to protect it from loss, all as determined by Authority in its sole discretion, then such breach or failure shall not constitute an Event of Default if corrective action is instituted by Tenant to the reasonable satisfaction of Authority within such 30-day period and diligently pursued until such breach or failure is corrected. If Tenant shall fail to correct or cure such breach or failure within such cure period, an Event of Default shall be deemed to have occurred hereunder without further notice or demand of any kind being required; or

			

 

	 	
			(2)

				
			If Tenant (i) shall make an assignment for the benefit of creditors or petition or apply to any tribunal for the appointment of a custodian, receiver or trustee for it, the Overall Premises or a substantial part of its assets; or (ii) shall commence any proceeding under any bankruptcy, reorganization, arrangement, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction, whether now or hereafter in effect, or shall have had any such petition or application filed or any such proceeding commenced against it that is not dismissed within thirty (30) days of the filing or commencement thereof; or (iii) shall indicate, by any act or omission, its consent to, approval of or acquiescence to any such petition, application or proceeding or the appointment of a custodian, receiver or trustee for it, the Overall Premises or a substantial part of its assets; or (iv) shall suffer any such custodianship, receivership or trusteeship to continue undischarged for a period of thirty (30) days or more; or

			

 

32

 

 

	 	
			(3)

				
			If a receiver, trustee or liquidator of Tenant or of all or substantially all of the assets of Tenant or of the Overall Premises or Tenant’s leasehold interest therein shall be appointed in any proceeding brought by Tenant, or if any such receiver, trustee or liquidator shall be appointed in any proceeding brought against Tenant and shall not be discharged within sixty (60) days after Tenant’s receipt of notice of such appointment, or if Tenant shall consent to or acquiesce in such appointment.

			

 

	
			B.

				
			Upon the occurrence of an Event of Default, Authority shall have the right to give Tenant notice of Authority’s termination of this Lease. Upon the effectiveness of such notice, this Lease and the estate hereby granted shall expire and terminate on the date set forth in such notice as fully and completely and with the same effect as if such date were the date herein fixed for the expiration of the Term, and all rights of Tenant hereunder shall expire and terminate, but Tenant shall remain liable as herein provided.

			

 

	
			C.

				
			In addition, upon the occurrence of an Event of Default, Authority shall have the immediate right, whether or not this Lease shall have been terminated pursuant to Article XX.B. hereof, to re-enter and repossess the Overall Premises by summary proceedings, ejectment or any other legal action or in any lawful manner Authority determines to be necessary or desirable, and the right to remove all Persons and property therefrom. No such re-entry or repossession of the Overall Premises shall be construed as an election by Authority to terminate this Lease unless a notice of such termination is expressly given to Tenant pursuant to Article XX.B. hereof, or unless such termination is decreed by a court or other governmental tribunal of competent jurisdiction.

			

 

	
			D.

				
			At any time or from time to time after the re-entry or repossession of the Overall Premises pursuant to Article XX.C. hereof, whether or not this Lease shall have been terminated pursuant to Article XX.B. hereof, Authority may attempt to re-let the Overall Premises for the account of Tenant in the name of Tenant or Authority or otherwise, for such term or terms and on such other conditions and for such uses as Authority, in its sole and absolute discretion, may in good faith determine. Authority may collect and receive any rent payable by reason of such re-letting and shall apply the same to reduce the obligations of Tenant hereunder.

			

 

	
			E.

				
			No termination of this Lease pursuant to Article XX.B. hereof or by operation of law or otherwise, and no re-entry or repossession of the Overall Premises pursuant to Article XX.C. hereof or otherwise, and no re-letting of the Overall Premises pursuant to Article XX.D. hereof or otherwise, shall relieve Tenant of its liabilities and obligations hereunder, all of which shall survive such termination, re-entry, repossession or re-letting.

			

 

	
			F.

				
			Authority may recover from Tenant all damages it may incur by reason of the occurrence of an Event of Default, including the cost of recovering the Overall Premises and the value at the time of termination of the excess, if any, of the amount of Rent and charges reserved in this Lease for the remainder of the Term over the then rental value of the Overall Premises for the remainder of the Term, with both figures being discounted to net present value using a discount rate that is equal to two percent (2%) above the then-current yield on U.S. Treasury securities with a maturity date approximately equal to the then-remaining Term. Authority may elect to keep this Lease in effect and recover monthly from Tenant an amount equal to the Base Rent and Additional Rent due less the amount, if any, of any rent that Authority may receive by re-letting the Overall Premises; provided, however, that nothing contained in this Article XX.F. shall be deemed to impose upon Authority any duty to re-let the Overall Premises.

			

 

33

 

 

	
			G.

				
			No right or remedy herein conferred upon or reserved to Authority is intended to be exclusive of any other right or remedy, and each and every right and remedy shall be cumulative and in addition to any other right or remedy given hereunder, and Authority shall also be entitled to all remedies now or hereafter existing by law, in equity or by statute.

			

 

	
			H.

				
			In the event either party hereto employs the services of an attorney to enforce the terms and provisions hereof, the prevailing party in any suit, action or proceeding shall be entitled to recover from the non-prevailing party its reasonable attorneys’ fees and all expenses and costs related to the enforcement of its rights hereunder.

			

 

	
			I.

				
			For purposes of this Lease, a “Business Day” shall mean each day other than a Saturday, a Sunday or any other legal holiday on which commercial banks in the State of Tennessee are authorized to close under Applicable Laws.

			

 

ARTICLE XXI

HOLDING OVER AND SURRENDER OF LEASED PREMISES

 

	
			A.

				
			If Tenant continues to hold and occupy the Overall Premises after the expiration or earlier termination of the Term, such holding over shall operate as an extension of this Lease on the same terms and conditions as herein provided, except for duration and except that the Base Rent payable hereunder during such holding over shall be paid monthly in advance in an amount equal to one hundred twenty five percent (125%) of the monthly installment of Base Rent payable during the final Lease Year of the Term. Tenant shall then be considered a Tenant-at-will, and Authority may terminate this Lease at any time.

			

 

	
			B.

				
			At the expiration or earlier termination of the Term, Tenant shall surrender the Overall Premises to Authority in substantially the same condition, order and repair as at the Effective Date, except for approved Initial Improvements, ordinary wear and tear, obsolescence and deterioration occurring on account of normal use and aging. Any leasehold or other improvements (including Initial Improvements approved by Authority), except for the Trade Fixtures to the extent provided herein, shall, at the expiration or earlier termination of the Term hereof, become the property of Authority without any compensation whatsoever to Tenant.

			

 

34

 

 

ARTICLE XXII

QUIET ENJOYMENT

 

Authority warrants to Tenant that Authority has full power and authority to enter into this Lease, and that Tenant shall have and enjoy full, quiet and peaceful possession of the Overall Premises during the Term, subject to the provisions of this Lease; taxes and other payments due on or with respect to the Overall Premises for the current year and subsequent years as described in Article XIII hereof; any state of facts that would be disclosed by an accurate survey of the Overall Premises or an independent inspection of the Overall Premises; any and all leases, easements, rights-of-way, encumbrances, conditions, covenants, restrictions, reservations and exceptions of record affecting the Overall Premises; all Applicable Laws; and the right of Authority, which Authority hereby reserves, to maintain, replace and repair underground utility lines and facilities located on the Premises on the Rent Commencement Date that serve adjacent property. Authority hereby agrees to use its best efforts not to unreasonably interfere with any business operations on the Premises in connection with such maintenance, replacement or repair of such underground utility lines and facilities. TENANT REPRESENTS AND CERTIFIES TO AUTHORITY THAT TENANT HAS MADE INSPECTIONS OF THE OVERALL PREMISES AND HAS DETERMINED THAT THE OVERALL PREMISES ARE SATISFACTORY FOR TENANT’S PURPOSES. WITHOUT LIMITING THE AUTHORITY’S OBLIGATIONS HEREUNDER, TENANT ACCEPTS THE OVERALL PREMISES “AS IS, WHERE IS” IN THEIR PRESENT CONDITION, WITHOUT WARRANTY OR REPRESENTATION BY AUTHORITY. TENANT HAS MADE SUCH DETERMINATION INDEPENDENTLY AND NOT IN RELIANCE ON ANY STATEMENTS OR REPRESENTATIONS OF AUTHORITY OR ANY AGENT REPRESENTING, OR HOLDING ITSELF OUT AS REPRESENTING, AUTHORITY. AUTHORITY SPECIFICALLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE.

 

ARTICLE XXIII

NOTICES

 

All notices, approvals, consents, requests, demands and other communications required or permitted by this Lease (individually, a “Notice”) must be in writing to be effective and personally delivered or sent by certified United States Mail, postage prepaid, or by a recognized delivery service that provides registered and verifiable shipment or air bill tracking and delivery record, with costs prepaid, to the addresses set forth below:

 

	If to Tenant: 	Sky Harbour
	 	767 Fifth Avenue, 21st Floor
	 	New York, NY 10153
	 	 
	with a copy to:	Sky Harbour
	 	1480 Murfreesboro Pike
	 	Nashville, TN 37217
	 	Attention: General Manager
	 	 
	If to Authority: 	The Metropolitan Nashville Airport Authority
	 	One Terminal Drive, Suite 501
	 	Nashville, Tennessee 37214-4114
	 	Attention: Chief Legal Officer
	 	 
	with a copy to: 	The Metropolitan Nashville Airport Authority
	 	One Terminal Drive, Suite 501
	 	Nashville, Tennessee 37214-4114
	 	Attention: Commercial Development Department

        

35

 

 

The person and place to which a Notice is to be sent may be changed by a party hereto upon written notice to the other. A Notice shall be deemed received and effective on the date that is three days after the date on which the Notice is deposited in the United States Mail if sent by certified mail, or, if personally delivered, on the date such personal delivery is made. If a Notice is sent by a recognized delivery service, then the Notice shall be deemed received by the addressee on the date on which the signature receipt is recorded by such recognized delivery service. Authority shall send to any Approved Leasehold Mortgagee a copy of any Notice sent to Tenant by Authority hereunder that relates to a default by Tenant hereunder to an address of such Approved Leasehold Mortgagee provided to Authority in writing pursuant to Article XXXIV.A. hereof by such Approved Leasehold Mortgagee.

 

ARTICLE XXIV

WAIVER OF COVENANTS, ETC.

 

No waiver of any condition or covenant of this Lease shall be deemed to imply or constitute a further waiver of the same or any other like condition or covenant, and nothing herein contained shall be construed to be a waiver on the part of a party of any right or remedy in law or otherwise, and all of a party’s remedies herein provided for shall be deemed to be cumulative.

 

ARTICLE XXV

ESTOPPEL CERTIFICATES

 

At any time and from time to time, either party, on or before the date specified in a request therefor made by the other party, which date shall not be earlier than thirty (30) days from the making of such request, shall execute, acknowledge and deliver to the other a certificate stating (i) whether this Lease in is full force and effect; (ii) whether this Lease has been amended in any way and, if so, including any such amendments; (iii) whether, to the knowledge of such party, there are any existing Events of Default hereunder and specifying the nature thereof; (iv) the then-current Base Rent and the date to which Base Rent has been paid; and (v) such other facts with respect to this Lease or the Premises as Authority or Tenant may reasonably request. Each certificate delivered pursuant to this Article XXV may be relied on by any prospective purchaser, mortgagee or transferee of the Overall Premises or of Authority’s or Tenant’s interest hereunder.

 

ARTICLE XXVI

RESERVATION OF AVIGATION EASEMENT

 

Authority hereby reserves from the Overall Premises, for the use and benefit of itself, and its successors and assigns, and the operators, owners and users of aircraft of all types and for the public in general, a perpetual easement and right-of-way for the free and unobstructed flight and passage of aircraft (“aircraft” being defined for the purposes of this Lease as any contrivance now known or hereafter invented, used or designed for navigation of or flight in or through the air) by whomsoever owned or operated, in and through the airspace above, over and across the surface of the Overall Premises, together with the right to cause in such airspace such noise, vibration, odors, vapors, particulate, smoke, dust or other effects as may be inherent in the operation of aircraft for navigation of or flight or passage in and through such airspace, and for the use of such airspace by aircraft for approaching, landing upon, taking off from, maneuvering about or operating on the Airport. This easement is reserved upon and subject to the following terms and conditions:

 

36

 

 

	
			A.

				
			Tenant shall not hereafter plant or construct, cause or permit to be planted or constructed, or suffer to remain, upon the property any bush, shrub, tree, pole, fence, building, structure or other obstruction of any kind or nature whatsoever which extends, or which may at any time in the future extend, into the airspace above the Overall Premises to an elevation exceeding that prescribed in Part 77 of the FAA Regulations, 14 C.F.R. Chapter 1, as currently in effect and as the same may, from time to time, be amended, modified, superseded or replaced (the “FAA Regulations”).

			

 

	
			B.

				
			Authority and/or its authorized agents shall have the immediate and continuing right, as part of the rights herein granted, to enter upon the Overall Premises at any time and to remove therefrom, or in the alternative and at the sole option of Authority, to mark and light as obstructions to air navigation, any bush, shrub, tree, pole, fence, building, structure or other obstruction of any kind or nature whatsoever which extends into the airspace above the Overall Premises to an elevation exceeding that prescribed in the FAA Regulations, and Authority and/or its authorized agents shall have the right of ingress to, egress from and passage over the Overall Premises for the purpose of effecting and maintaining such clearance and of removing or of marking and lighting any and all such elevations. After Authority and/or its authorized agents have entered upon the Overall Premises and cleared it within the meaning of this Lease, Authority and/or its authorized agents shall thereafter have the immediate and continuing right to enter upon the Overall Premises and the continued, continual and continuing right to remove or mark and light any bush, shrub, tree, pole, fence, building, structure or obstruction of any kind or nature whatsoever extending up into the air space and above the Overall Premises to an elevation exceeding that prescribed in the FAA Regulations. Tenant shall not have the option of marking and lighting any such obstruction.

			

 

	
			C.

				
			Tenant shall not hereafter use, cause or permit to be used, or suffer use of, the Overall Premises so as (i) to cause electrical, electronic or other interference with radio, radar, microwave or other similar means of communications between Authority and any aircraft; (ii) to adversely affect or impair the ability of operators of aircraft to distinguish between regularly installed air navigation lights and visual aids and other lights serving the Airport; or (iii) to cause glare in the eyes of operators of aircraft approaching or departing the Airport, or to impair visibility in the vicinity of the Airport, or to otherwise endanger the approaching, landing upon, taking off from, maneuvering about or operating of aircraft on, above and about the Airport; provided, however, that, notwithstanding any contrary provision contained above, Tenant shall be permitted to construct and maintain such improvements and to utilize all lighting, exterior finishes, landscaping and building materials as shall have been submitted to and approved in writing by Authority.

			

 

	
			D.

				
			Tenant, for itself, its assigns, and legal representatives (the “Releasing Parties”), hereby expressly releases and forever discharges Authority and its commissioners, legal representatives, officers, assigns, associates, employees, agents and all others acting in concert with Authority, from any and all claims, debts, liabilities, obligations, costs, expenses, actions or demands, vested or contingent, known or unknown, whether in tort, contract or otherwise, which any of the Releasing Parties may now own or hold, or have at any time heretofore owned or held, or may hereafter at any other time own or hold, by reason of noises, vibration, odors, vapors, particulate, smoke, dust or other effects as may be inherent in the operation of aircraft caused or created by the flight or passage of aircraft in or through the airspace subject to the easement and right-of-way herein reserved.

			

 

37

 

 

ARTICLE XXVII

ENTRY

 

At any reasonable time, upon reasonable notice to Tenant except in the case of an emergency, Authority may (with and in the presence of a representative of Tenant, which Tenant agrees to have present and available at such time) enter the Overall Premises to show it to prospective purchasers and mortgagees and for the purpose of conducting any inspections Authority reasonably requires in connection with Authority’s duties and responsibilities as operator of the Airport and owner of the Overall Premises.

 

ARTICLE XXVIII

BINDING EFFECT

 

This Lease and the covenants and agreements of the parties hereunder shall be binding upon and inure to the benefit of Authority and its successors and assigns and Tenant and its successors and permitted assigns.

 

ARTICLE XXIX

MISCELLANEOUS PROVISIONS

 

The headings used in this Lease are inserted for convenience and are not to be considered in the construction of the provisions of this Lease. The word “Authority” means only the owner of the Overall Premises from time to time, and, in the event of any transfer of the Overall Premises by the owner thereof, the transferring owner of the Overall Premises shall be released from all covenants, agreements and conditions as the Authority hereunder and without further agreement between the parties, and the transferee owner of the Overall Premises shall be deemed to have assumed all covenants, agreements and conditions of Authority hereunder. Such transferee owner of the Overall Premises shall be subject to Tenant’s rights of use and possession under this Lease, so long as no Event of Default has occurred and is continuing hereunder. All exhibits referred to herein are attached hereto and made a part of this Lease. Bracketed provisions in the forms of instruments included in exhibits hereto shall be conformed and/or completed as appropriate for the execution versions thereof. This Lease and the exhibits hereto constitute the entire agreement of the parties with respect to the Overall Premises and all prior understandings and agreements relating to the subject matter hereof are hereby superseded. This Lease and all of the terms and conditions hereof shall be binding on and inure to the benefit of Tenant and its successors and assigns permitted pursuant to Article XVIII hereof. This Lease may not be amended or modified except by agreement in writing signed by both parties. Unless otherwise stated in this Lease, any notices, approvals, consents, requests, demands or other communications required or permitted by this Lease on behalf of the Authority may be executed or sent by the President and CEO, or his/her designee. The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms, and personal pronouns may be read as masculine, feminine and neuter. References to statutes, regulations or ordinances are to be construed as including all provisions consolidating, amending or replacing the referenced statute, regulation or ordinance, and references to agreements and other contractual instruments shall be deemed to include all subsequent amendments to or changes in such agreements or instruments entered into in accordance with their respective terms. Use of the term “include” or “including” means to include or including without limitation.

 

38

 

 

ARTICLE XXX

PARTIAL INVALIDITY

 

In the event any clause, term or condition of this Lease shall be declared null and void, this Lease shall remain in full force and effect as to all other terms, conditions and provisions.

 

ARTICLE XXXI

GOVERNING LAW

 

This Lease shall be governed, construed and enforced in accordance with the laws of the State of Tennessee.

 

ARTICLE XXXII

TIME OF ESSENCE

 

Time is of the essence to this Lease and the obligations and requirements set forth herein.

 

ARTICLE XXXIII

RELATIONSHIP OF PARTIES

 

This Lease vests an estate for years in Tenant. Nothing herein contained shall cause the parties to be deemed or considered as partners or joint venturers in the operation of Tenant’s business or otherwise, nor shall either party be deemed to be the agent of the other except as may be herein specifically provided, and the sole relationship between the parties shall be that of Authority as Landlord and Tenant as Tenant.

 

ARTICLE XXXIV

MORTGAGE OF LEASEHOLD ESTATE

 

	
			A.

				
			With the prior consent of Authority, and subject to the terms and conditions of this Lease, Tenant may convey, pledge or encumber, by deed of trust, mortgage or similar instrument (the “Approved Leasehold Mortgage”), its leasehold interest in and to the Overall Premises in favor of a lender (the “Approved Leasehold Mortgagee”), and Tenant may assign this Lease as collateral security for such Approved Leasehold Mortgage. Any such Approved Leasehold Mortgage, and all rights under or relating thereto, shall be subject to each of the covenants, conditions and restrictions set forth herein, and to all rights of Authority hereunder. Tenant shall be responsible for payment of all of Authority’s costs and expenses, including reasonable attorneys’ fees and expenses, incurred in reviewing any proposed Approved Leasehold Mortgage hereunder. Only one Approved Leasehold Mortgage shall be permitted at any one time and such Approved Leasehold Mortgage shall not cross-collateralize or secure any other indebtedness of Tenant.

			

 

	
			B.

				
			If an Approved Leasehold Mortgagee shall give Authority notice of such Approved Leasehold Mortgagee’s interest in the Overall Premises and such notice shall contain the address to which notices to such Approved Leasehold Mortgagee are to be sent, Authority will thereafter send to such Approved Leasehold Mortgagee, at the address so given, and in the manner set forth in Article XXIII hereof, a copy of any notice of default which Authority may thereafter deliver or send to Tenant. Within the time permitted for the curing or commencing the curing of any default under this Lease, such Approved Leasehold Mortgagee, at its option, may pay any amount due or do any other act or thing required of Tenant by the terms of this Lease, and all amounts so paid or other acts so done by such Approved Leasehold Mortgagee shall be as effective to cure such default as the same would have been if paid or done by Tenant.

			

 

39

 

 

	
			C.

				
			An Approved Leasehold Mortgagee shall not become liable for Tenant’s obligations under this Lease unless and until such Approved Leasehold Mortgagee becomes the owner of the leasehold estate established hereby by foreclosure, assignment in lieu of foreclosure or otherwise, or if such Approved Leasehold Mortgagee gives notice to Authority that such Approved Leasehold Mortgagee will assume Tenant’s obligations under this Lease. An Approved Leasehold Mortgagee shall remain liable for the obligations of Tenant under this Lease only for so long as it remains the owner of the leasehold estate established hereby.

			

 

	
			D.

				
			If any default or event of default occurs under an Approved Leasehold Mortgage, the Approved Leasehold Mortgagee thereunder and Tenant shall immediately notify Authority of the same in writing, in the manner set forth in Article XXIII hereof.

			

 

	
			E.

				
			If a non-monetary default by Tenant under this Lease is susceptible of being cured by an Approved Leasehold Mortgagee only after such Approved Leasehold Mortgagee has obtained possession of the Overall Premises, then an Approved Leasehold Mortgagee shall have an additional period not to exceed thirty (30) days to cure a non-monetary default after obtaining possession of the Property; provided, however, that (i) such Approved Leasehold Mortgagee initiated all necessary actions to obtain possession of the Property, including the initiation of foreclosure proceedings under its Approved Leasehold Mortgage, within thirty (30) days after the earlier of the date on which such Approved Leasehold Mortgagee became aware of such non-monetary default or the date on which such Approved Leasehold Mortgagee received notice from Authority of such non-monetary default; (ii) such Approved Leasehold Mortgagee shall have pursued such actions with reasonable diligence; (iii) such Approved Leasehold Mortgagee, within any applicable cure period provided in this Lease, shall have paid all Rent and other sums then due to Authority under this Lease; and (iv) such Approved Leasehold Mortgagee shall have cured any other defaults by Tenant under this Lease that are susceptible of being cured by such Approved Leasehold Mortgagee without obtaining possession of the Overall Premises. Notwithstanding the foregoing, the rights granted to an Approved Leasehold Mortgagee in this Article XXXIV.A. shall not impair any right granted to Authority in this Lease (a) to perform any obligations under this Lease that Tenant is required, but fails, to perform, and (b) to obtain reimbursement from Tenant of Authority’s costs and expenses incurred in so performing and, subject to rights granted to an Approved Leasehold Mortgagee in Article XXXIV.A. hereof, to declare an Event of Default if Tenant fails so to reimburse within any applicable cure period.

			

 

	
			F.

				
			Nothing contained herein shall release Tenant from any of its obligations under this Lease that may not have been discharged or fully performed by an Approved Leasehold Mortgagee.

			

 

ARTICLE XXXV

SIGNAGE

 

At any time and from time to time during the Term, upon Authority’s prior consent, which consent may not be unreasonably delayed, conditioned or withheld, Tenant, at its sole cost and expense, may install signage on the Overall Premises so long as such signage complies with Authority’s published standards and all other Applicable Laws.

 

40

 

 

ARTICLE XXXVI

NONDISCRIMINATION AND GOVERNMENTAL MATTERS

 

	
			A.

				
			During the term of this Agreement:

			

 

	 	
			(1)

				
			The Tenant and its transferee agree to comply with pertinent statutes, Executive Orders and such rules as are promulgated to ensure that no person shall, on the grounds of race, creed, color, national origin, sex, age, or disability be excluded from participating in any activity conducted with or benefiting from Federal assistance.

			

 

This provision obligates the tenant/concessionaire/lessee or its transferee for the period during which Federal assistance is extended to the airport through the Airport Improvement Program.

 

In cases where Federal assistance provides, or is in the form of personal property; real property or interest therein; structures or improvements thereon, this provision obligates the party or any transferee for the longer of the following periods:

 

	 	
			(a)

				
			The period during which the property is used by the airport 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

			

 

	 	
			(b)

				
			The period during which the airport sponsor or any transferee retains ownership or possession of the property.

			

 

	 	
			(2)

				
			Tenant covenants and agrees 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 said facilities, (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 be otherwise subjected to discrimination, (3) that Tenant shall use the premises in compliance with all other requirements imposed by or pursuant to Title 49, Code of Federal Regulations, Department of Transportation, Subtitle A, Office of the Secretary, Part 21, Non-discrimination in Federally Assisted Programs of the Department of Transportation-Effectuation of Title VI of the Civil Rights Act of 1964, and as said Regulations may be amended.

			

 

	 	
			(3)

				
			Tenant agrees to comply with the additional terms and provisions set forth in Exhibit E.

			

 

	
			B.

				
			Nothing herein contained shall be deemed to grant Tenant any exclusive right or privilege within the meaning of Article 308 of the Federal Aviation Act of 1958, as amended (the “Federal Aviation Act”), in the conduct of any activity at the Airport, except that, subject to the terms and provisions hereof, Tenant shall have the rights with respect to the Premises under the provisions of this Lease.

			

 

	
			C.

				
			This Lease is subject and subordinate to the provisions of any agreement heretofore or hereafter made between Authority and the United States government relative to the operation or maintenance of the Airport, the execution of which has been required as a condition precedent to the transfer of federal rights or property to Authority for Airport purposes, or the expenditure of federal funds for the improvement or development of the Airport, including the expenditure of federal funds for the development of the Airport in accordance with the provisions of the Federal Aviation Act.

			

 

41

 

 

	
			D.

				
			Tenant certifies to the best of its knowledge and belief that:

			

 

	 	
			(1)

				
			No federally or state-appropriated funds have been paid or will be paid by or on behalf of Tenant to any Person for influencing or attempting to influence an officer or employee of any agency of the United States government or a member, officer or employee of the United States Congress, or an employee of a member of the United States Congress, in connection with the awarding of any federal contract, the making of any federal grant or loan, the entering into of any cooperative agreement, or the extension, continuation, renewal, amendment or modification of any federal contract, grant, loan or cooperative agreement; and

			

 

	 	
			(2)

				
			If Tenant has compensated or does compensate any Person for influencing or attempting to influence an officer or employee of any agency of the United States government, a member, officer or employee of the United States Congress, or any employee of a member of the United States Congress, in connection with any contract, grant, loan or cooperative agreement, then Tenant shall complete and submit to Authority, in accordance with its instructions, Standard Form LLL, “Disclosure of Lobbying Activities”; and

			

 

	 	
			(3)

				
			Tenant shall require that the language of this certification be included in the award documents for all sub-awards at all tiers (including subcontracts, sub-grants and contracts under grants, loans and cooperative agreements) and that all sub-recipients shall certify and make disclosures in accordance with this Article XXXVI.D.

			

 

	
			E.

				
			Tenant hereby agrees as follows:

			

 

	 	
			(1)

				
			Tenant will not discriminate against any employee or applicant for employment because of race, color, religion, sex, national origin, handicap or creed, and Tenant will take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to their race, color, religion, sex, national origin, handicap or creed, including action relating to employment; upgrading, demotion or transfer; recruitment or recruitment advertising; lay-off or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeships;

			

 

	 	
			(2)

				
			Tenant will post in conspicuous places, available to employees and applicants for employment, notices to be provided setting forth the provisions of Article XXXVI.A. hereof and this Article XXXVI.E.;

			

 

	 	
			(3)

				
			Tenant will, in all solicitations or advertisements for employees placed by or on behalf of Tenant, state that all qualified applicants will receive consideration for employment without regard to race, color, religion, sex, national origin, handicap or creed;

			

 

	 	
			(4)

				
			Tenant will send to each labor union or representative of workers with which it has a collective bargaining agreement or other contract or understanding, a notice to be provided advising such labor unions or workers’ representatives of Tenant’s commitments under this Article XXXVI.E. and will post copies of the notice in conspicuous places available to employees and applicants for employment;

			

 

42

 

 

	 	
			(5)

				
			Tenant will comply with all provisions of Executive Order 11246 of September 24, 1965, and of the rules, regulations and relevant orders of the United States Secretary of Labor;

			

 

	 	
			(6)

				
			Tenant will furnish all information and reports required by Executive Order 11246 of September 24, 1965, and by the rules, regulations and orders of the United States Secretary of Labor, or pursuant thereto, and will permit access to its books, records and accounts by the administering agency and the United States Secretary of Labor for purposes of investigation to ascertain compliance with such rules, regulations and orders;

			

 

	 	
			(7)

				
			In the event of Tenant’s noncompliance with the nondiscrimination requirements of this Lease, this Lease may be immediately canceled, terminated or suspended, in whole or in part, by Authority by providing notice of termination to Tenant, and Tenant may be declared ineligible for further government contracts or federally assisted construction contracts in accordance with procedures authorized in Executive Order 11246 of September 24, 1965, and such other sanctions may be imposed and remedies invoked as provided in Executive Order 11246 of September 24, 1965, or by rule, regulation or order of the United States Secretary of Labor, or as otherwise provided by law; and

			

 

	 	
			(8)

				
			Tenant will include the provisions of this Article XXXVI.E. in each of its subcontracts or purchase orders unless exempted by rules, regulations or orders of the United States Secretary of Labor issued pursuant to Article 204 of Executive Order 11246 of September 24, 1965, so that such provisions will be binding upon each subcontractor or vendor. Tenant will take such action with respect to any subcontract or purchase order as the administering agency may direct as a means of enforcing such provisions, including sanctions for noncompliance; provided, however, that in the event Tenant becomes involved in or is threatened with litigation by a subcontractor or vendor as a result of such direction by the administering agency, Tenant may request the United States to enter into such litigation to protect the interests of the United States.

			

 

	
			F.

				
			Tenant hereby represents and warrants that, as of the Effective Date, neither Tenant nor any officer, employee, representative or agent of Tenant has given or donated, or promised to give or donate, either directly or indirectly, to any official, employee or commissioner of Authority or to anyone else for its benefit, any sum of money or other thing of value to aid or assist in obtaining this Lease.

			

 

	
			G.

				
			Security Regulations.Tenant will comply with all security regulations established or amended, by but not limited to the Authority, Department of Homeland Security, Customs and border Protection, TSA and the FAA, and to take such steps as may be necessary or directed by Authority, including the installation of mandatory access control if accessing the AOA, to insure that sublessees, employees, invitees, and guests observe these requirements. If Authority incurs any fines and/or penalties imposed by the Federal Aviation Administration and/or the Transportation Security Administration, or any expense in enforcing the regulations of Federal Aviation Regulations Part 1542 and/or the Airport Security Program, as a result of the acts or omissions of Tenant, Tenant agrees to pay and/or reimburse all such costs and expense. Tenant further agrees to rectify any security deficiency as may be determined as such by Authority, the Federal Aviation Administration and/or the Transportation Security Administration. Authority reserves the right to take whatever action necessary to rectify any security deficiency as may be determined as such by Authority, the Federal Aviation Administration and/or the Transportation Security Administration, in the event Tenant fails to remedy the security deficiency.

			

 

43

 

 

ARTICLE XXXVII

FORCE MAJEURE

 

Except as provided below, any prevention, delay or stoppage attributable to strikes, lockouts, terrorism, labor disputes, civil commotion, fire or other casualty not caused directly or indirectly by a party hereto, and acts of God, will excuse the performance of that party for a period equal to the duration of the prevention, delay or stoppage; provided, however, that the foregoing provisions of this Article XXXVII will not apply to the obligations imposed with regard to Rent and other charges Tenant must pay in accordance with the terms of this Lease.

 

ARTICLE XXXVIII

INTEREST AND OTHER CHARGES

 

Notwithstanding any provision of this Lease to the contrary relating to the payment of interest, it is the intent of Authority and Tenant that Authority shall not be entitled to receive, collect, reserve or apply, as interest, any amount in excess of the maximum amount of interest permitted to be charged under Applicable Laws. In the event this Lease requires a payment of interest that exceeds the maximum amount of interest permitted to be charged under Applicable Laws, such interest shall not be received, collected, charged or reserved until such time as that interest, together with all other interest then payable, falls within the maximum amount of interest permitted to be charged under Applicable Laws. In the event Authority receives any such interest in excess of the maximum amount of interest permitted to be charged under Applicable Laws, Authority shall refund to Tenant the amount of such excess and, in such event, Authority shall not be subject to any penalties provided by Applicable Laws for contracting for, charging, reserving, collecting or receiving interest in excess of the maximum amount of interest permitted to be charged under Applicable Laws.

 

ARTICLE XXXVIX

GOVERNMENTAL REQUIREMENTS

 

The parties incorporate herein by reference all provisions lawfully required to be contained herein by any Governmental Authority. In the event that a Governmental Authority requires modifications or changes to this Lease as a condition precedent to the granting of funds for the improvement of the Airport, or otherwise, Tenant shall make or agree to such amendments, modifications, revisions, supplements or deletions of any of the terms, conditions or requirements of this Lease as may be reasonably required and any expenses resulting from such amendments, modifications, revisions, supplements or deletions shall be paid by Authority.

 

ARTICLE XL

EASEMENTS

 

Authority shall reasonably cooperate with Tenant in obtaining all necessary easements, rights or ways, utility feeds and conduit connections, permits and governmental and quasi-governmental approvals or consents reasonably necessary to develop the Initial Improvements on the Premises; provided, however, that this Article XL shall not create any express or implied obligation on the part of Authority to consent to or approve any easements, rights or ways, utility feeds or conduit connections that interfere with or impair Authority’s ownership, operation or development of the Airport or contravene any Applicable Laws applicable to the Airport, all as determined by Authority in Authority’s sole discretion.

 

44

 

 

ARTICLE XLI

BROKERS

 

Authority represents and warrants to Tenant that no Person is entitled to any real estate commission, finder’s fee or the like pursuant to any agreement or understanding with Authority with respect to this Lease. Tenant represents and warrants to Authority that no Person is entitled to any real estate commission, finder’s fee or the like pursuant to any agreement or understanding with Tenant with respect to this Lease. Tenant hereby indemnifies Authority and agrees to defend and hold Authority harmless from any liability, cost and expense (including reasonable attorneys’ fees), which may result from a breach of this warranty by Tenant.

 

ARTICLE XLII

RECORD RETENTION AND RIGHT TO AUDIT

 

Representatives of the Authority have the right to perform, or to have performed, audits of Tenant's books upon reasonable prior notice for the purpose of determining compliance with this Lease. Tenant shall keep its books and records available only as they pertain to Lessee's operation at the Airport for at least three (3) years after this Lease terminates. This provision does not affect the applicable statute of limitations.

 

ARTICLE XLIII

SURVIVAL OF PROVISIONS

 

The provisions of Articles VIII, IX, X, XI, XII, XIII, XIV, XV, XIX, and XXV hereof shall survive the expiration or earlier termination of this Lease.

 

ARTICLE XLIV

AUTHORTY TO EXECUTE

 

Tenant represents and warrants that Tenant has full and lawful authority to enter into and execute this Lease in its own capacity.

 

 

[Signatures on following page]

 

45

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the day and date first written above.

 

	AUTHORITY:	 	 	 
	 	 	 	 
	THE METROPOLITAN NASHVILLE	 	 	 
	AIRPORT AUTHORITY	 	 	 
	 	 	 	 
	ATTEST:	 	APPROVED:	 
	 	 	 	 
	/s/ Amanda Farnsworth	 	/s/ A. Dexter Samuels	 
	Amanda Farnsworth	 	A. Dexter Samuels, Ph.D.	 
	Title: Secretary 	 	Title: Chair	 
	 	 	 	 
	 	 	/s/ Douglas E. Kreulen	 
	 	 	Douglas E. Kreulen, A.A.E.	 
	 	 	President and CEO	 
	 	 	 	 
	APPROVED AS TO	 	 	 
	FORM AND LEGALITY:	 	RECOMMENDED:	 
	 	 	 	 
	 	 	 	 
	/s/ Theodore G. Morrissey	 	/s/ Margaret Martin	 
	Theodore G. Morrissey, C.M.	 	Margaret Martin	 
	Legal Counsel	 	Vice President, Chief Development Officer	 
	 	 	 	 
	 	 	 	 
	 	 	TENANT:	 
	 	 	 	 
	 	 	NASHVILLE HANGARS LLC	 

 

	ATTEST:	 	 	 	 	 
	 	 	 	 	 	 
	By:	 	 	By:  	/s/ Tal Keinan	 
	 	 	 	 	 	 
	Name: 	 	 	Name:  	Tal Keinan	 
	 	 	 	 	 	 
	Title:	 	 	Title:  	Authorized Signatory	 

 

46

 

 

	STATE OF TENNESSEE	)
	COUNTY OF DAVIDSON	)

     

Before me,                                                                , a notary public of the State and County aforesaid, personally appeared A. Dexter Samuels, Ph.D. with whom I am personally acquainted, and who, upon oath, acknowledged himself to be the Chairman of the Board of Commissioners of The Metropolitan Nashville Airport Authority, the within bargainor, a public corporation, and that he as such Chairman of the Board of Commissioners, being authorized so to do, executed the foregoing instrument for the purpose therein contained, by signing the name of the Authority by himself as Chairman.

 

Witness my hand and official seal at Nashville, Davidson County, Tennessee, this _____ day of _________________, 2020.

 

 

	 	 	 
	NOTARY PUBLIC	 	 
	My Commission Expires: 	 	 
	 	 	 
	 	 	[SEAL]

 

STATE OF <fill in>)

COUNTY OF <fill in>)

 

Before me,                                              , a notary public of the State and County aforesaid, personally appeared <insert signatory>, with whom I am personally acquainted (or proved to me on the basis of satisfactory evidence), and who, upon oath, acknowledged himself to be the <authorized signatory officer> of SkyWest Airlines, the within named bargainor, a Utah corporation, and that he/she as such corporate officer, being authorized so to do, executed the foregoing instrument for the purposes therein contained.

 

Witness my hand and official seal at <insert City, County, and State>, this ____ day of _________________, 2019.

 

	 	 	 
	NOTARY PUBLIC	 	 
	My Commission Expires: 	 	 
	 	 	 
	 	 	[SEAL]

 

47

 

 

Exhibit A

To Lease Agreement

 

Depiction of the Overall Premises including proposed Initial Improvements

 

 

 

48

 

 

Exhibit B

To Lease Agreement

 

Rent Analysis

 

 

49

 

 

 

Exhibit C

To Lease Agreement

 

Form of Letter of Credit

 

 

	STAND-BY, IRREVOCABLE	 	 
	LETTER OF CREDIT NO.	 	 
	 	 	 
	STATED AMOUNT:      US $	 	 
	 	 	 
	ISSUANCE DATE: 	 	 
	 	 	 
	EXPIRY DATE: 	 	 
	 	 	 
	BENEFICIARY:	The Metropolitan Nashville Airport Authority	 
	 	One Terminal Drive, Suite 501	 
	 	Nashville, Tennessee 37214	 
	 	 	 
	APPLICANT: 	 	 
	 	 	 
	 	 	 
	 	 	 

 

Ladies and Gentlemen:

 

____________________________ (the “Issuer”) hereby issues in favor of The Metropolitan Nashville Airport Authority (the “Beneficiary”), this Stand-by Irrevocable Letter of Credit No. ______ (the “Credit”), which is available by presentment of one or more drafts of the Beneficiary drawn at sight on the Issuer in the form of Exhibit A to this Credit, together with the appropriately completed Certificate as required herein, in an aggregate stated amount of _________________________________________________________ and ___/100 United States Dollars ($___________) (the “Stated Amount”).

 

1

 

 

A draft of the Beneficiary upon this Credit shall be accompanied by an appropriately completed Certificate of the Beneficiary in the form of Exhibit B to this Credit, provided, however, that, on and after the date (the “Extension Deadline Date”) which is fifteen (15) days prior to the Expiry Date set forth above (such date, as it may be amended from time to time, is referred to as the “Expiry Date”), the draft of the Beneficiary shall be accompanied by an appropriately completed Certificate of the Beneficiary in the form of Exhibit C to this Credit (in lieu of a Certificate in the form of Exhibit B to this Credit). Such draft and Certificate shall be dated the date of presentation, and presentation thereof shall be made at any time during the Issuer’s business hours on a Business Day (as defined herein) at                                                                                                                                                                            . A draft submitted at or before 1:00 p.m., Central Time, on a Business Day shall be paid to the Beneficiary (or its designee) on the same Business Day, and a draft submitted after 1:00 p.m., Central Time, shall be paid to the Beneficiary (or its designee) on the next succeeding Business Day. The Issuer hereby agrees that a draft drawn under and in compliance with the terms of this Credit will be duly honored by the Issuer as provided herein if presented at such office on or before the Expiry Date. As used herein, “Business Day” means any day other than (i) a day on which banks located in Nashville, Tennessee are required or authorized by law or executive order to remain closed or (ii) a day on which the New York Stock Exchange is closed.

 

Except as otherwise expressly stated herein, this Credit is subject to the Uniform Customs and Practice for Documentary Credits, 2007 Revision, ICC Publication No. 600 (the “Uniform Customs”). This Credit shall be deemed to be made under the laws of the State of Tennessee, and shall, as to matters not governed by the Uniform Customs, be governed by and construed in accordance with the laws of the State of Tennessee.

 

	
			 

				
			 

				
			 

			
	
			 

				
			 

				
			 

				
			 

			
	
			 

				
			 

				
			 

				
			 

			
	
			 

				
			By:

				
			 

				
			 

			
	
			 

				
			Name:

				
			 

				
			 

			
	
			 

				
			Title:

				
			 

				
			 

			

 

2

 

 

Appendix A

To Letter of Credit

 

 

FORM OF DRAFT

 

[Date]

 

 

	
			To:

				
			 

				 
	 	 	 
	 	 	 
	 	 	 

 

 

The undersigned beneficiary of Stand-by, Irrevocable Letter of Credit No. ______________ (the “Credit”) issued by                                                                         , hereby draws _____________________________________ United States Dollars ($___________) against the Credit.

 

	
			 

				
			THE METROPOLITAN NASHVILLE

				
			 

			
	 	AIRPORT AUTHORITY	 
	
			 

				
			 

				
			 

				
			 

			
	
			 

				
			 

				
			 

				
			 

			
	
			 

				
			By:

				
			 

				
			 

			
	
			 

				
			Name:

				
			 

				
			 

			
	
			 

				
			Title:

				
			 

				
			 

			

                                                                                                                           

3

 

 

Appendix B

To Letter of Credit

 

 

CERTIFICATE

 

[Date]

 

 

The undersigned, The Metropolitan Nashville Airport Authority (the “Beneficiary”), is the beneficiary of Stand-by, Irrevocable Letter of Credit No. ______________ (the “Credit”) issued by                                                                          . The Beneficiary hereby certifies that an Event of Default, as defined as described in the Lease Agreement, dated as of ___________________, by and between the Beneficiary and _________________________, as it may have been amended or modified from time to time, has occurred and is continuing on the date hereof.

 

IN WITNESS WHEREOF, this Certificate has been duly executed on ___________________.

 

 

	
			 

				
			THE METROPOLITAN NASHVILLE

				
			 

			
	 	AIRPORT AUTHORITY	 
	
			 

				
			 

				
			 

				
			 

			
	
			 

				
			 

				
			 

				
			 

			
	
			 

				
			By:

				
			 

				
			 

			
	
			 

				
			Name:

				
			 

				
			 

			
	
			 

				
			Title:

				
			 

				
			 

			

                                          

5

 

 

Appendix C

To Letter of Credit

 

CERTIFICATE

 

[Date]

 

The undersigned, The Metropolitan Nashville Airport Authority (the “Beneficiary”), is the beneficiary of Stand-by, Irrevocable Letter of Credit No. ______________ (the “Credit”) issued by __________________________________________. The Beneficiary hereby certifies that, to the best of its knowledge, the date of this Certificate (and the accompanying draft against the Credit) is not more than fifteen (15) days prior to the Expiry Date of the Credit.

 

Capitalized terms used and not otherwise defined in this Certificate shall have the meanings assigned to them in the Credit.

 

IN WITNESS WHEREOF, this Certificate has been duly executed on ___________________.

 

 

	
			 

				
			THE METROPOLITAN NASHVILLE

				
			 

			
	 	AIRPORT AUTHORITY	 
	
			 

				
			 

				
			 

				
			 

			
	
			 

				
			 

				
			 

				
			 

			
	
			 

				
			By:

				
			 

				
			 

			
	
			 

				Name:	
			 

				
			 

			
	
			 

				Title:	
			 

				
			 

			

 

 

6

 

 

Exhibit D

To Lease Agreement

 

Surveyor’s Certificate

 

I hereby certify to The Metropolitan Nashville Airport Authority that this survey was made on the ground under my supervision as per field notes and that the angular and linear measurements and all other matters shown hereon are correct. I further certify that this survey correctly shows the total area of the surveyed property in acres and in square feet; the exact dimensions and location of all buildings, structures and improvements, walkways, paved areas and parking areas; the exact relation of buildings, improvements and other structures to the property lines of the surveyed property indicated hereon; and the exact location of visible and recorded easements, building setback lines, and other matters of record affecting the surveyed property. I further certify that there are no encroachments of adjoining buildings or structures onto the surveyed property nor overlap of buildings or structures from the surveyed property other than as shown; that adequate ingress and egress to and from the surveyed property are provided by _________________________and ___________________________, as shown on the survey, the same being paved, dedicated public right-of-way(s) maintained by __________________________; and that the location of all buildings, improvements and other structures on the surveyed property is in accordance with all applicable laws containing minimum set-back provisions and covenants and restrictions of record. I further certify that all utility services required for the operation of the surveyed property either enter the surveyed property through adjoining public streets, or if they pass through or are located on adjoining private land, do so in accordance with valid public or private easements inuring to the owner of the surveyed property and its successors and assigns; that collection and disposal of all roof and surface drainage is via a storm drainage system which is permissible by ordinances or adjacent property owner’s agreements; that any discharge into streams, rivers or other conveyance systems is legally permissible; that the surveyed property does not serve any adjoining property for drainage, ingress and egress, or for any other purpose; and that the surveyed property does not lie within the 100-year flood hazard areas designated by the Federal Emergency Management Agency.

 

	Dated:	 	 	 	 
	 	 	 	Surveyor	 
	 	 	 	Tennessee Registered Surveyor No.	 

 

 

 

 

Exhibit E

To Lease Agreement

 

TITLE VI

 

I.    Compliance with Non-Discrimination Requirements: During the performance of the Agreement, as amended from time to time (the “Amended Agreement”), Tenant, for itself, its assignees, and successors in interest (hereinafter referred to in this Exhibit E as the “contractor”), agrees as follows:

 

I.    Compliance with Regulations:  The contractor (hereinafter in this Exhibit E includes consultants) will comply with the Title VI List of Pertinent Nondiscrimination Statutes and Authorities, as they may be amended from time to time, which are herein incorporated by reference and made a part of the Amended Agreement.

 

II.    Non-discrimination: The contractor, with regard to the work performed by it during the Amended Agreement, will not discriminate on the grounds of race, color, or national origin in the selection and retention of subcontractors, including procurements of materials and leases of equipment. The contractor will not participate directly or indirectly in the discrimination prohibited by the Acts and Regulations, including employment practices when the contract covers any activity, project, or program set forth in Appendix B of 49 CFR part 21.

 

III.    Solicitations for Subcontracts, Including Procurements of Materials and Equipment: In all solicitations, either by competitive bidding, or negotiation made by the contractor for work to be performed under a subcontract, including procurements of materials, or leases of equipment, each potential subcontractor or supplier will be notified by the contractor of the contractor’s obligations under the Amended Agreement and the Acts and Regulations relative to non-discrimination on the grounds of race, color, or national origin.

 

IV.    Information and Reports: The contractor will provide all information and reports required by the Acts and Regulations and directives issued pursuant thereto and will permit access to its books, records, accounts, other sources of information, and its facilities as may be determined by Authority or the Federal Aviation Administration to be pertinent to ascertain compliance with such Acts and Regulations and instructions. Where any information required of a contractor is in the exclusive possession of another who fails or refuses to furnish the information, the contractor will so certify to Authority or the Federal Aviation Administration, as appropriate, and will set forth what efforts it has made to obtain the information.

 

V.    Sanctions for Non-compliance: In the event of a contractor’s non-compliance with the non-discrimination provisions of the Amended Agreement, Authority will impose such contract sanctions as it or the Federal Aviation Administration may determine to be appropriate, including, but not limited to:

 

 

 

 

1.    Withholding payments to the contractor under the contract until the contractor complies; and/or

 

2.    Cancelling, terminating, or suspending a contract, in whole or in part.

 

VI.    Incorporation of Provisions: The contractor will include the provisions of paragraphs (a) through (e) above in every subcontract, including procurements of materials and leases of equipment, unless exempt by the Acts and Regulations and directives issued pursuant thereto. The contractor will take action with respect to any subcontract or procurement as Authority or the Federal Aviation Administration may direct as a means of enforcing such provisions including sanctions for non-compliance. Provided, that if the contractor becomes involved in, or is threatened with litigation by a subcontractor, or supplier because of such direction, the contractor may request Authority to enter into any litigation to protect the interests of Authority. In addition, the contractor may request the United States to enter into the litigation to protect the interests of the United States.

 

VII.    Operation of Facilities: The contractor for itself and its 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:

 

(i)         In the event facilities are constructed, maintained, or otherwise operated on the property described in the Amended Agreement for a purpose for which a Federal Aviation Administration activity, facility, or program is extended or for another purpose involving the provision of similar services or benefits, the contractor will maintain and operate such facilities and services in compliance with all requirements imposed by the Acts and Regulations (as may be amended) such that no person on the grounds of race, color, or national origin, will be excluded from participation in, denied the benefits of, or be otherwise subjected to discrimination in the use of said facilities; and

 

(ii)         In the event of breach of any of the above non-discrimination covenants, Authority will have the right to terminate the Amended Agreement and to enter, re-enter, and repossess said lands and facilities thereon, and hold the same as if the Amended Agreement had never been made or issued.

 

VIII.    Construction/Use/Access of Facilities: The contractor for itself and its 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:

 

(i)         (1) no person on the ground of race, color, or national origin, will be excluded from participation in, denied the benefits of, or be otherwise subjected to discrimination in the use of said facilities, (2) in the construction of any improvements on, over, or under such land, and the furnishing of services thereon, no person on the ground of race, color, or national origin, will be excluded from participation in, denied the benefits of, or otherwise be subjected to discrimination, and (3) the contractor will use the premises in compliance with all other requirements imposed by or pursuant to the Acts and Regulations, as amended; and

 

 

 

 

(ii)         In the event of breach of any of the above non-discrimination covenants, Authority will have the right to terminate the Amended Agreement and to enter or re-enter and repossess said land and the facilities thereon, and hold the same as if said Amended Agreement had never been made or issued.

 

	
			II.

				
			Pertinent Non-discrimination Authorities:  During the performance of the Amended Agreement, the contractor agrees to comply with the following non-discrimination statutes and authorities, including but not limited to:

			

 

	
			●

				
			Title VI of the Civil Rights Act of 1964 (42 U.S.C. § 2000d et seq., 78 stat. 252), (prohibits discrimination on the basis of race, color, national origin);

			

 

	
			●

				
			49 CFR part 21 (Non-discrimination in Federally-Assisted Programs of The Department of Transportation—Effectuation of Title VI of The Civil Rights Act of 1964);

			

 

	
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			The Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, (42 U.S.C. § 4601), (prohibits unfair treatment of persons displaced or whose property has been acquired because of Federal or Federal-aid programs and projects);

			

 

	
			●

				
			Section 504 of the Rehabilitation Act of 1973, (29 U.S.C. § 794 et seq.), as amended, (prohibits discrimination on the basis of disability); and 49 CFR part 27;

			

 

	
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			The Age Discrimination Act of 1975, as amended, (42 U.S.C. § 6101 et seq.), (prohibits discrimination on the basis of age);

			

 

	
			●

				
			Airport and Airway Improvement Act of 1982, (49 USC § 471, Section 47123), as amended, (prohibits discrimination based on race, creed, color, national origin, or sex);

			

 

	
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			The Civil Rights Restoration Act of 1987, (PL 100-209), (Broadened the scope, coverage and applicability of Title VI of the Civil Rights Act of 1964, The Age Discrimination Act of 1975 and Section 504 of the Rehabilitation Act of 1973, by expanding the definition of the terms “programs or activities” to include all of the programs or activities of the Federal-aid recipients, sub-recipients and contractors, whether such programs or activities are Federally funded or not);

			

 

	
			●

				
			Titles II and III of the Americans with Disabilities Act of 1990, which prohibit discrimination on the basis of disability in the operation of public entities, public and private transportation systems, places of public accommodation, and certain testing entities (42 U.S.C. §§ 12131 – 12189) as implemented by Department of Transportation regulations at 49 CFR parts 37 and 38;

			

 

	
			●

				
			The Federal Aviation Administration’s Non-discrimination statute (49 U.S.C. § 47123) (prohibits discrimination on the basis of race, color, national origin, and sex);

			

 

	
			●

				
			Executive Order 12898, Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations, which ensures non-discrimination against minority populations by discouraging programs, policies, and activities with disproportionately high and adverse human health or environmental effects on minority and low-income populations;

			

 

	
			●

				
			Executive Order 13166, Improving Access to Services for Persons with Limited English Proficiency, and resulting agency guidance, national origin discrimination includes discrimination because of limited English proficiency (LEP). To ensure compliance with Title VI, contractor must take reasonable steps to ensure that LEP persons have meaningful access to contractor’s programs (70 Fed. Reg. at 74087 to 74100);

			

 

	
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			Title IX of the Education Amendments of 1972, as amended, which prohibits contractor from discriminating because of sex in education programs or activities (20 U.S.C. 1681 et seq).

			

 

 

 

 

Exhibit F

To Lease Agreement

 

Insurance during the Construction Phase

 

	
			1)

				
			Tenant shall obtain and maintain continuously in effect at all times while this Lease remains in force and effect, at its sole cost and expense, the following coverages during any construction:

			

	 	
			a)

				
			Commercial General Liability Insurance with a combined Bodily Injury and Property Damage limit of at least $1,000,000 per occurrence, $2,000,000 products and completed operations aggregate and $2,000,000 general aggregate.

			

	 	
			b)

				
			Comprehensive Automobile Liability Insurance covering use of all owned, non-owned and hired vehicles with Bodily Injury and Property Damage limit of at least $1,000,000 Combined Single Limit.  

			

	 	
			c)

				
			Excess or Umbrella Liability Insurance in the amount of $3,000,000 per occurrence and in the aggregate.

			

	 	
			d)

				
			Builder’s Risk insurance covering the Overall Premises.

			

	 	
			e)

				
			Worker’s compensation insurance coverage (the “WC Coverage”) in accordance with statutory requirements and providing employer’s liability coverage with limits of not less than One Million Dollars ($1,000,000) for bodily injury by accident, One Million Dollars ($1,000,000) for bodily injury by disease, and One Million Dollars ($1,000,000) policy limit for disease, including any claims, damages, losses and liabilities arising from or relating to Tenant’s operations or presence at the Airport.

			

	
			2)

				
			Insurance is to be placed with insurers duly licensed or authorized to do business in the State of Tennessee and with an “A.M. Best” rating of not less than A- VIII.

			

	
			3)

				
			Tenant shall provide for a waiver of subrogation by the issuing insurance company as to claims against Authority and its commissioners, officers and employees on each policy.

			

	
			4)

				
			Each policy shall name Authority and its commissioners, officers and employees as additional insureds thereunder and shall provide that such insurance policy shall be considered primary insurance as to any other valid and collectible insurance or self-insured retention Authority may possess or retain. Any insurance coverage maintained by Authority shall be considered excess insurance only.

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