Document:

Exhibit 10.3

 

THIRD AMENDMENT TO

AAR CORP. SUPPLEMENTAL KEY EMPLOYEE RETIREMENT PLAN

 

(As Amended and Restated
Effective January 1, 2005)

 

WHEREAS, AAR CORP., a Delaware corporation (the “Company”),
maintains the AAR CORP. Supplemental Key Employee Retirement Plan, as amended
and restated effective January 1, 2005 (the “Plan”); and

 

WHEREAS, pursuant to Section 7.1, the Company has
reserved the right to amend the Plan and now deems it appropriate to do so.

 

NOW, THEREFORE, the Plan is hereby amended, effective as of
June 11, 2010 as follows:

 

1.             By amending the Appendix to the Plan to add a new
Participant Type and Contribution percentage as follows:

 

	
  “Participant
  Type

  	
   

  	
  Contribution

  
	
   

  	
   

  	
   

  
	
  President

  	
   

  	
  16%”

  

 

IN WITNESS WHEREOF, the Company has caused
this Third Amendment to be executed on its behalf, by its officers, duly
authorized, on this 11th
day of June, 2010.

 

 

	
   

  	
  AAR
  CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Timothy O. Skelly

  
	
   

  	
   

  	
  Timothy O. Skelly, Vice
  PresidentExhibit 10.10

 

FOURTH AMENDMENT

TO

LEASE AGREEMENT

AAR AIRCRAFT SERVICES, INC.

INDIANAPOLIS AIRPORT AUTHORITY

 

THIS
FOURTH AMENDMENT made and entered into the 2nd day of March,
2010 by and between the Indianapolis Airport Authority, (hereinafter referred to
as Authority) and AAR Aircraft Services, Inc. (hereinafter referred to as
Tenant),

 

W I T N E S S E T H:

 

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

 

                WHEREAS, Authority and
Tenant entered into Amendment No. 1 dated January 21, 2005 amending the Leased
Premises described in Exhibit B, revised the terms of Article XII, Financial
Security and revised Exhibit K, Operating Rules; and

 

                WHEREAS, Authority and
Tenant entered into Amendment No. 2 dated May 19, 2006 amending the Leased
Premises described in Exhibit B, revised Activation Notice language in Article
II, revised rental language in Article VI, addition of language in Article II
and Article VI for the activation of On-Call Bays, and addition of language in
Article VI for training grant aid including an update to Exhibit G and the
addition of Exhibit L; and

 

                WHEREAS, Authority and
Tenant entered into Amendment No.3 dated May 16, 2008 amending the Use of
Premises within Article II, Maintenance and Repair language within Article X
and utility and services language within Article XI all related to Tenant’s
modifications to Bay 5B in the creation of a “Paint Bay”; and

 

                WHEREAS, Tenant is
exercising its right to a portion of the Expansion Area; and

 

                WHEREAS, Authority and
Tenant agree modifications to the Lease Agreement are necessary in the further
growth of the Facility and find it necessary to update bay activation/deactivation
process, expansion area language, rental language, maintenance and repair
language, facility services language, environmental, language and associated
lease exhibits;

 

                NOW THEREFORE, in
consideration of the mutual covenants and considerations contained herein, the
parties agree that Article II, Lease of Leased Premises; Ownership of
Improvements and Equipment; Use of Premises, Section 205. Possession of
Leased Premises; Activation, (B), (C) and (D), Article IV, Option to Expand
Leased Premises, Section 401. Tenant’s Option to Expand Leased Premises,
(A), (D) and (G), Article V, Term; Extension Periods, Section 501. Term;
Extension Options (A) and (B) (1), Article VI, Rentals, Fees and Records,
Section 601, Rental, (A), (B) and (C), Article VII, Obligations of
Tenant, Section 707. Signs, Article X, Maintenance, Repairs and
Replacements, Section 1002.  Maintenance
Repairs and Replacements of and to Equipment, (A), Article XI, Facilities
Operations and Services, Section 1101. Services, Article XVII, General
Indemnity, Section 1702.  Authority
Obligations, (A), (2),    and Exhibit B (cover only) and Exhibit E
(entirety), are hereby deleted and the following are substituted and Article
VI, Rentals, Fees and Records, Section 601, Rental, (D), Article X,
Maintenance, Repairs and Replacements, Section 1002.  Maintenance Repairs and Replacements of
and to Equipment, (B), and Exhibits B-35 thru B-38 are hereby added:

 

 

ARTICLE
II

 

LEASE
OF LEASED PREMISES; OWNERSHIP OF IMPROVEMENTS

AND EQUIPMENT; USE OF LEASED PREMISES

 

Section 205.           Possession of Leased Premises; Activation.

 

(B)           Not
later than ninety (90) days after the Effective Date of this Lease, Tenant
shall send the Authority an Activation Notice indicating which of the Bays
and/or other areas of the Leased Premises that Tenant desires for the Authority
to first Activate. Thereafter, during the Term of this Lease, as Tenant desires
for additional Bays and/or other areas of the Leased Premises to be Activated
by the Authority, Tenant shall provide an Activation Notice to the Authority,
with respect to those Bays and/or other areas of the Leased Premises, with each
such Activation Notice to specify the date by which Tenant needs that portion
of the Leased Premises to be Activated (the “Requested Activation Date”);
provided, however, that the Requested Activation Date may not be fewer than ten
(10) days from the date that Tenant delivers its Activation Notice to the
Authority.  Authority agrees to use its
best efforts to make any Bay available in less than ten (10) days.  However, should Authority find it cannot
complete in total an activation of a Bay within ten (10) days, Authority shall
be required to provide to Tenant a listing of items that remain to be repaired
or replaced with a timetable for completion.  
In addition, Authority and Tenant agree upon the next activation of Bay
6B, the Authority shall have a one-time, thirty (30) day timeframe in which to
prepare Bay 6B for occupancy.  Authority
and Tenant agree the thirty (30) day timeframe related to Bay 6B is necessary
as the Bay has been inactive for several years. 
The Authority acknowledges that, at the time Tenant provides its
Activation Notice to the Authority with respect to a particular portion of the
Leased Premises, Tenant may not know what Available Equipment it will need for
the Authority to furnish with respect to that portion of the Leased
Premises.  Consequently, the Authority
hereby agrees that Tenant may defer providing the Authority with Tenant’s
written list of requested Available Equipment for the Activation of that
portion of the Leased Premises until after the date on which Tenant delivers
its Activation Notice for that portion of the Leased Premises; provided,
however, that the Authority shall not be obligated to provide that Available
Equipment by the Requested Activation Date unless Tenant provides the Authority
with the list of Tenant’s requested Available Equipment for that portion of the
Leased Premises at least thirty (30) business days prior to the Requested
Activation Date for that portion of the Leased Premises.  The Authority shall use is best efforts to
provide Available Equipment by the Activation Date and shall notify the Tenant
of Equipment which may not be available by Activation Date.

 

(C)           Subject to Section 705(G)(3) below, the Authority shall use commercially
reasonable efforts to Activate, by the Requested Activation Date, those Bays
and/or other areas of the Leased Premises that are identified in Tenant’s
Activation Notice. At such time as the Authority has Activated a Bay or other
portion of the Leased Premises pursuant to an Activation Notice from Tenant,
the Authority shall deliver to Tenant a written notice that the Activated Bay
or other such portion of the Leased Premises is Activated as per Tenant’s
Activation Notice.  Tenant shall have the
right to inspect, within seven (7) days after receipt of the Authority’s
written notice, the Activated Bay(s) or other such portion of the Leased
Premises that has been Activated to confirm that such areas have been Activated
as per Tenant’s Activation Notice.  To
the extent that Authority has the areas of the Leased Premises identified in
the Activation Notice ready for activation prior to the Requested Activation
Date, Tenant shall have the option to take 

 

2

 

possession of such areas prior to the Requested
Activation Date and if Tenant does so, Tenant shall be deemed to occupy such
space on such earlier date. If Tenant discovers any material deficiencies upon
said inspection, Tenant shall give the Authority a written list of those
material deficiencies. For purposes of this subsection (C), a “material
deficiency” means that the Activated space fails to comply, in a material
manner, with the Tenant’s requests for Facilities Systems and Equipment as set
forth in Tenant’s Activation Notice for that space.  If Tenant does not notify the Authority
within the seven (7) day period that there are any material deficiencies,
Tenant shall be deemed to have accepted the condition of the Activated space.
The Authority shall correct any material deficiencies noted by Tenant in
accordance with the prior sentences prior to Tenant’s being obligated to take
possession of that Activated Bay and/or other portion of the Leased Premises.
However, Tenant may elect to take possession of said space prior to the
correction of the material deficiencies, and Authority shall correct said
material deficiencies within fifteen (15) days of Tenant taking possession of
said space.  If Tenant chooses not to
take possession due to such noted material deficiencies, Tenant must take
possession of that space once the Authority corrects the material deficiencies,
provided that the Requested Activation Date has passed. Upon Tenant taking
possession of said space, Tenant shall be deemed to occupy such space until
de-Occupying such space pursuant to paragraph (D) below.  Once the Bay or other portion of the Leased
Premises has been Activated, the Authority shall have no further obligations
with respect to that Activated Bay or other portion of the Leased Premises
except as otherwise expressly provided in this Lease.

 

(D)          Tenant shall have the right at any time, upon not fewer than ten (10)
days’ prior written notice to the Authority, to de-Occupy a particular portion
of the Leased Premises. Tenant shall specifically identify in its written
notice which portions of the Leased Premises that Tenant is de-Occupying, and
what the date of de-Occupation will be. 
However, the date specified in Tenant’s written notice as the date of
de-Occupation may not be fewer than ten (10) days after the date Tenant
delivers the written notice of de-Occupation to the Authority, and Tenant may
not deliver a notice of de-Occupation to the Authority with respect to a
particular portion of the Leased Premises until Tenant has Occupied that
portion of the Leased Premises (and paid Base Rent and Additional Rent to the
Authority therefor) for at least one full calendar month. Tenant shall always
Occupy at least the minimum amount of Leased Premises to enable Tenant to
satisfy the Minimum Monthly Rent requirements set forth in Sections 601(A) and
(B) of this Lease. With respect to Tenant’s de-Occupation of Activated space,
Tenant may not de-Occupy less than all of a Bay and its related space. With
respect to any Expansion Area as to which Tenant has exercised its Expansion
Option pursuant to Section 401 below, Tenant may not de-Occupy that Expansion
Area. If Tenant exercises its Right of First Refusal as to any Available Space
pursuant to Section 2105 below, Tenant must Occupy that Available Space for at
least twelve (12) consecutive calendar months and may not de-Occupy that
Available Space until it has Occupied it for at least twelve (12) consecutive
calendar months. Upon the effective date of the de-Occupation, Tenant shall
return possession of the de-Occupied space to the Authority, together with all
Equipment that the Authority provided to Tenant in connection with the
Authority’s Activation of that space (or that was otherwise furnished by the
Authority to Tenant for Tenant’s use in connection with that de-Occupied
space). Upon the date of de-Occupation, the Authority shall have the right, at
the Authority’s option, to restrict Tenant from accessing and entering into
that portion of the Leased Premises that has been de-Occupied and to cease
providing the Facilities Systems to that portion of the Leased Premises
(provided, however, that the Authority will continue providing some or all of
the Facilities Systems to that portion of the Leased Premises if the Authority
wishes or as is necessary to provide the Facilities Systems to 

 

3

 

those areas of the Leased Premises that Tenant is
Occupying).  Tenant and the Authority
will mutually agree on what personal property of Tenant or its agents,
representatives, or customers will be removed from the de-Occupied space;
provided, however, that Tenant hereby acknowledges and agrees that the
Authority shall have no liability or obligation for any loss, damage, or
liability with respect to (and no obligation to insure) any such personal
property that remains in the de-Occupied space. 
Base Rent and Additional Rent shall continue to accrue for space on
which a de-Occupation notice has been sent until the effective date of the
de-Occupation; Base Rent and Additional Rent shall not accrue for a particular
portion of the Leased Premises if such portion of the Leased Premises is
de-Occupied. If Tenant thereafter wishes for the Authority to re-Activate that
portion of the Leased Premises, Tenant shall provide an Activation Notice to
the Authority pursuant to the procedure described in subsections (A), (B) and
(C) above.

 

ARTICLE
IV

 

OPTION
TO EXPAND LEASED PREMISES

 

Section
401.           Tenant’s Option to Expand Leased Premises.  The
term “Expansion Space” means that portion of the Land and Facilities that is
shown on Exhibit E attached
hereto, which consisted of the following areas (each, an “Expansion Area”): (a)
the machine shop area, consisting of approximately Forty Five Thousand Three
Hundred and Thirty Nine (45,339) square feet; (b) the interior shop area,
consisting of approximately Fifty Three Thousand Two Hundred and Forty Nine
(53,249) square feet; and (c) the composite shops consisting of approximately
One Hundred Thirty Five Thousand Nine Hundred and Seventy Three (135,973)
square feet. Tenant, at its option, may expand the Leased Premises to include
one or more of the Expansion Areas, subject to the following terms and
conditions (the “Expansion Option”):

 

(A)                              Tenant must provide the Authority with at
least ninety (90) days’ prior written notice of Tenant’s desire to exercise its
Expansion Option as to any Expansion Area. 
Tenant’s written notice must specify which of the Expansion Area(s) that
Tenant desires to lease pursuant to its Expansion Option.  Tenant may not exercise its Expansion Option
as to less than all of a particular Expansion Area.  Notwithstanding the foregoing, by execution of
this Fourth Amendment, Authority and Tenant agree, Tenant has exercised its
Expansion Option to the following Expansion Areas with an effective lease date
of January 1, 2010:  (a) the machine shop
area, consisting of approximately Forty Five Thousand Three Hundred and Thirty
Nine (45,339) square feet; and (b) the composite shops consisting of
approximately One Hundred Thirty Five Thousand Nine Hundred and Seventy Three
(135,973) square feet.  Authority and
Tenant agree the Expansion Area to which Tenant has exercised its Expansion
Option, including any and all tooling and equipment owned by the Authority
residing in the activated Expansion Area will be accepted by Tenant in “AS-IS”
condition excepting any environmental condition(s) remaining from the Expansion
Area’s previous tenant that requires remediation, for which the Authority will
remediate at its sole cost and expense notwithstanding any provision in this
Lease to the contrary In addition, Authority and Tenant agree, the remaining
Expansion Area:  the interior shop area,
consisting of approximately Fifty Three Thousand Two Hundred and Forty Nine
(53,249) square feet is hereby removed from Tenant’s Expansion Area as an
Expansion Option and Tenant shall hold no existing or future right to the
interior shop.  Tenant further agrees to
provide Authority access through Tenant’s Expansion Area to Rooms SO3-102,
SO3-128, SS5-112 and SS5-117.  The
purpose of these stated Rooms is for the Authority’s obligation to 

 

4

 

perform tooling and
maintenance on Authority owned tooling and equipment that resides in Tenant’s
activated Bay areas.

 

(D)          Subject to Sections 705
and 1702, Tenant shall accept any Expansion Area as to which it has exercised
its Expansion Option, including any and all tooling and equipment owned by the
Authority residing in the activated Expansion Areas, in “AS-IS” condition, and
the Authority shall not be required to make any alterations, improvements,
modifications, repairs or replacements thereto unless the Authority
specifically agrees with Tenant, in writing, to do so.  To the extent Tenant wishes to make any
improvements or alterations to that portion of the Expansion Area as to which
it has exercised its Expansion Option (including without limitation any
subdivision of the Expansion Space which must be made in order to separate that
portion of the Expansion Area as to which Tenant has exercised its Expansion
Option from the other Expansion Areas), Tenant shall be responsible, at its
cost and expense, for performing those improvements and alterations in
accordance with the terms of this Lease (including without limitation Section
702(H) below), subject to Sections 605(A) and 605(C) below.  Tenant’s notice to Authority of its decision
to exercise its Expansion Option shall serve as an Activation Notice for such
space pursuant to Section 205 above.

 

(G)                                Tenant hereby acknowledges and agrees that at the time Tenant first
exercises its Expansion Option as to any portion of the Expansion Space, Tenant’s
Minimum Monthly Rent shall increase such that, during the term that Tenant is
leasing the Expansion Space, Tenant (1) shall be obligated to pay Minimum Base
Rent on at least four (4) Bays, plus the Hangar 4 Office Space,  and (2) shall be obligated to pay Minimum
Additional Rent on at least four (4) Bays. 
Thereafter, at such time Tenant is no longer leasing the Expansion
Space, Tenant’s Minimum Monthly Rent and Minimum Additional Rent shall decrease
such that, Tenant (1) shall be obligated to pay Minimum Base Rent on at least
two (2) Bays, plus the Hangar 4 Office Space and (2) shall be obligated to pay
Minimum Additional Rent on at least two (2) Bays.

 

ARTICLE
V

 

TERM;
EXTENSION PERIODS

 

Section 501.           Term; Extension Option

 

(A)          Initial Term.  The term of this
Lease Agreement shall begin on the Effective Date and shall end on the earlier
of (1) December 1, 2014 or (2) the tenth (10th)
anniversary of the first date that any aircraft of Tenant’s customer(s) is
located at the Leased Premises, unless sooner terminated as provided for under
this Lease (the “Initial Term”). 
Notwithstanding the foregoing, Authority and Tenant agree the term for
the Machine and Composite Shops will commence January 1, 2010 and terminate
June 30, 2011 and Tenant will have two eighteen (18) month option terms and
after the two eighteen (18) month option terms, one six (6) month option term
based on the rental terms as stated in Article VI.  Tenant’s option to extend the term for the
Machine and Composite Shops will be based on the criteria and notice periods as
noted below in this Article (B) Extended Terms (a), (b) and (c).

 

5

 

(B)           Extended Terms.

 

(1)           Tenant
shall have the option (an “Extension Option”) to extend the Initial Term for
the Leased Premises with or without the Expansion Space for one (1) period of ten
(10) consecutive years (the “Extension Term”) upon fulfillment of all the
following terms and conditions:

 

(a)           Tenant shall provide written notice to the
Authority, not earlier than twenty-four (24) months, and not later than twelve
(12) months, prior to the expiration of the Initial Term, that Tenant elects to
exercise such Extension Option (the “Extension Notice”); and specific to the
Machine and Composite Shops, not later than three (3) months prior to the
expiration of the then initial term or extension term (as the case may be),
that Tenant elects to exercise its option to extend the term for the Machine
and Composite Shops, both known separately as the “Extension Notice”;

 

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

 

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

 

ARTICLE
VI

 

RENTALS,
FEES AND RECORDS

 

Section
601.           Rental.

 

(A)          Base Rent.

 

(1)           Subject
to Sections 605(B) and 605(C) below, Tenant will pay the Authority, in arrears,
on or before the fifteenth (15th) day of each calendar month, base rent (“Base
Rent”) with respect to the Leased Premises for the preceding calendar
month.  Subject to Section 601(A)(3)
below, the Base Rent that is assessed by the Authority for a particular
calendar month will be calculated solely on basis of the square footage of the
Leased Premises that Tenant Occupied during that calendar month.  The annual Base Rent rate for the Leased
Premises during the Term will be Two Dollars and NO/100 ($2.00) per square
foot.

 

By
way of example only, if Tenant Occupies 100,000 square feet of the Leased Premises
during a particular calendar month, Tenant will (subject to Sections 605(B) and
(C) below) pay 

 

6

 

the
Authority Base Rent for that calendar month in the amount of $16,666.67 (i.e.,
100,000 square feet x $2.00 per square foot per annum /12 months).

 

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

 

(3)           Notwithstanding anything in this Lease to the contrary, however, and
regardless of which (if any) portions of the Leased Premises that Tenant elects
to Activate and regardless of which (if any) portions of the Leased Premises
that Tenant is Occupying or using from time to time, Tenant hereby agrees that
commencing on the earlier of (a) December 1, 2004 or (b) the first date that
any aircraft of Tenant’s customer(s) is located at the Leased Premises, and
continuing thereafter during the Term of this Lease, Tenant shall be obligated
to pay monthly Base Rent on at least two (2) Bays plus the Hangar 4 Office
Space (the “Minimum Base Rent”).  Minimum
Base Rent is subject to increase as provided in Section 401(G) and Section
2105(A) (3) of this Lease.  Authority and
Tenant hereby acknowledge and agree that Tenant has exercised its Expansion
Option to the Expansion Space and Tenant’s Minimum Monthly Rent shall increase
such that, during the term that Tenant is leasing the Expansion Space, Tenant
(1) shall be obligated to pay Minimum Base Rent on at least four (4) Bays, plus
the Hangar 4 Office Space, and (2) shall be obligated to pay Minimum Additional
Rent on at least four (4) Bays. Thereafter, at such time Tenant is no longer
leasing the Expansion Space, Tenant’s Minimum Monthly Rent and Minimum
Additional Rent shall decrease such that, Tenant (1) shall be obligated to pay
Minimum Base Rent on at least two (2) Bays, plus the Hangar 4 Office Space and
(2) shall be obligated to pay Minimum Additional Rent on at least two (2) Bays.

 

(B)           Additional Rent.

 

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

 

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

 

7

 

Costs and Expenses”), and,
to the extent reasonably requested by Tenant, will provide Tenant with supporting
data therefor.  In the event that the
Actual Facilities Costs and Expenses per square foot of the total Facilities,
for that calendar year, are less than $6.20 per square foot of the Facilities
(the “Estimated Facilities Costs and Expenses”), Tenant shall be entitled to a
credit from the Authority against future Additional Rent that would otherwise
be payable by Tenant under this Lease, which credit shall be in an amount
calculated as follows: one-half (1/2) times the amount that equals the
Additional Rent that was actually assessed against Tenant for that calendar
year (based on the Estimated Facilities Costs and Expenses) minus the amount of
Additional Rent that should have been assessed against Tenant for that calendar
year (based on the Actual Facilities Costs and Expenses) provided such number
is a positive number.  If there are any
overpayment credits against Additional Rent remaining under this Section as of
the expiration or sooner termination of the Term of this Lease, those
overpayment credits will be applied toward any unpaid Additional Rent assessed
for periods prior to the expiration or sooner termination of the Term; and any
remaining overpayment credits that are not applied toward any unpaid Additional
Rent assessed for periods prior to the expiration or sooner termination of the
Term will be paid to the Tenant in cash.

 

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

 

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

 

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

 

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

 

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

 

8

 

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

 

(8)           Notwithstanding anything in this Lease to the contrary, however, and
regardless of which (if any) portions of the Leased Premises that Tenant elects
to Activate and regardless of which (if any) portions of the Leased Premises
that Tenant is Occupying or using from time to time, Tenant hereby agrees that
commencing on the earlier of (a) December 1, 2004 or (b) the first date that
any aircraft of Tenant’s customer(s) is located at the Leased Premises, and
continuing thereafter during the Term of this Lease, Tenant shall be obligated
to pay monthly Additional Rent on at least two (2) Bays (the “Minimum
Additional Rent” and, together with the Minimum Base Rent, the “Minimum Monthly
Rent”).  Minimum Additional Rent is
subject to increase, in the same manner and at the same time as the Minimum
Base Rent, as provided in Section 401(G) above and Section 2105(A)(3)
below.  Authority and Tenant hereby
acknowledge and agree that Tenant has exercised its Expansion Option to the
Expansion Space and Tenant’s Minimum Monthly Rent shall increase such that,
during the term that Tenant is leasing the Expansion Space, Tenant (1) shall be
obligated to pay Minimum Base Rent on at least four (4) Bays, plus the Hangar 4
Office Space, and (2) shall be obligated to pay Minimum Additional Rent on at
least four (4) Bays.  Thereafter, at such
time Tenant is no longer leasing the Expansion Space, Tenant’s Minimum Monthly
Rent and Minimum Additional Rent shall decrease such that, Tenant (1) shall be
obligated to pay Minimum Base Rent on at least two (2) Bays, plus the Hangar 4
Office Space and (2) shall be obligated to pay Minimum Additional Rent on at
least two (2) Bays.

 

(9)           Authority and Tenant agree an Annual rental fee of fifty thousand dollars
($50,000) shall be paid by Tenant for each of the On-Call Hangar Bays totaling
one hundred thousand dollars ($100,000). 
Authority and Tenant agree additional rental of one thousand six hundred
and eighty dollars ($1,680.00) per day per bay will be charged for use of the
On-Call Hangar Bays.  Tenant agrees to
report On-Call Hangar Bay usage and payment on or before the fifteenth (15th) day of each calendar month for the previous month’s use of one or both
On-Call Hangar Bays.

 

(C)           Percentage Rent.

 

For purposes of calculating the Percentage Rent
pursuant to this sub-section (C), Tenant and Authority agree that references to
the “Leased Premises” shall exclude the Expansion Space (which is addressed in
sub-section (D) (3) hereof).

 

(1)           If
during the Term, Tenant’s annual Operating Profit (expressed as a percentage of
Gross Sales) is greater than nine and 25/100 percent (9.25%) of Gross Sales at
the end of a Tenant Fiscal Year, then Tenant will pay the Authority a
percentage rent (“Percentage Rent”) for that Tenant Fiscal Year in an amount
that is equal to thirty-three percent (33%) of the amount by which Tenant’s
annual Operating Profit for that Tenant Fiscal Year exceeds nine and 25/100
percent (9.25%) of Tenant’s Gross Sales for that Tenant Fiscal Year.  By way of example, if at the end of a Tenant
Fiscal Year, 

 

9

 

Tenant had Gross Sales of
$99,000,000 and an annual Operating Profit of $11,880,000, then Tenant’s annual
Operating Profit would equal twelve percent (12%) of its Gross Sales (i.e.,
$11,880,000 / $99,000,000).  9.25% of
$99,000,000 equals $9,157,500. Therefore, for this Tenant Fiscal Year, Tenant
would pay the Authority $898,425 (i.e., .33 x ($11,880,000 — $9,157,500)). If
Tenant had Gross Sales of $100,000,000 for a Tenant Fiscal Year and an annual
Operating Profit of $9,000,000 for that Tenant Fiscal Year, then Tenant’s
annual Operating Profit for that Tenant Fiscal Year would equal nine percent
(9%) of its Gross Sales (i.e., $9,000,000 / $100,000,000) and as a result, no
Percentage Rent would be due the Authority for that Tenant Fiscal Year.

 

(2)           Tenant
will calculate its Operating Profit on a cumulative basis at the end of each
fiscal quarter (August 31, November 30, February 28/29, and May 31) (each, a “Period”)
for the applicable Tenant Fiscal Year, and will make interim Percentage Rent
payments, if any are due, within sixty (60) days after the end of the
applicable fiscal Period.  Not later than
ninety (90) days after the end of each of the Tenant Fiscal Years (i.e., not
later than August 31 of each year), Tenant will calculate the cumulative
Operating Profit of Tenant for each such Tenant Fiscal Year, and likewise
calculate the Percentage Rent that should have been paid to the Authority for
each such Tenant Fiscal Year, and reconcile it to the interim Percentage Rent
payments actually made to the Authority during that Tenant Fiscal Year with
respect to each of the Periods during that Tenant Fiscal Year.  If the Percentage Rent that should have been
assessed against Tenant for the Tenant Fiscal Year exceeds what Tenant has
actually paid to the Authority for that Tenant Fiscal Year, then Tenant shall
pay the Authority the difference within ninety (90) days after the end of that
Tenant Fiscal Year.  If the Percentage
Rent that should have been assessed against Tenant for that Tenant Fiscal Year
is less than what Tenant has actually paid to the Authority for that Tenant
Fiscal Year, then the Authority shall credit the difference against Tenant’s
obligations to pay Rental under this Lease with respect to the Tenant Fiscal
Year(s) following the Tenant Fiscal Year for which Tenant overpaid Percentage
Rent. The Authority shall refund in cash to Tenant any unused credits that have
accrued, but have not been applied to Rental, under this subsection (C)(2) at
the expiration or earlier termination of this Lease.  Each such payment that is due and payable by
Tenant shall be accompanied by a certificate signed and sworn by the Tenant’s
Controller, setting forth the Operating Profit and Gross Sales during such
Period (the “Percentage Rent Certificate”). 
In the event of a partial Period at the beginning or end of the Term,
the Percentage Rent payable for that partial Period shall be based upon the
Gross Sales and Operating Profit during that partial Period.

 

(3)           Tenant
shall keep in the Leased Premises full, accurate, true and complete records of
all Gross Sales and Operating Profit with respect to the Leased Premises.  Such records shall be retained by the Tenant
for not fewer than five (5) years after the expiration of the Tenant Fiscal
Year to which they relate, and such records shall be kept in accordance with
generally accepted accounting principles (“GAAP”) that are applied consistently
with respect to the Leased Premises from Period to Period. For purposes of
permitting verification by the Authority of the Gross Sales and Operating
Profit reported by the Tenant with respect to the Leased Premises, the
Authority or its agent shall have the right for a period of up to five (5)
years after the end of each Tenant Fiscal Year, upon not fewer than thirty (30)
days’ prior written notice to Tenant, to inspect, audit or cause to be audited
Tenant’s books and records relating to Gross Sales and Operating Profit for the

 

10

 

Tenant Fiscal Year in
question.  If such inspection or audit
discloses that Tenant has underpaid any Percentage Rent due under this Lease,
and if Tenant does not in good faith dispute the findings of the audit or
inspection, Tenant shall within thirty (30) days of the findings remit the
amount of the underpayment to the Authority, together with interest thereon
from the date such amount was originally due and owing to the Authority
hereunder, at the rate specified in Section 604 below.  If such inspection or audit discloses that
Tenant has overpaid any Percentage Rent due hereunder, and if the Authority
does not in good faith dispute the findings of the audit or inspection, the
Authority shall within thirty (30) days of the findings remit the amount of the
overpayment to Tenant.  If the inspection
or audit discloses that Tenant underpaid any Percentage Rent, Tenant shall also
reimburse the Authority, a reasonable hourly rate, for the time incurred by the
Authority’s personnel in conducting the audit or inspection, plus their actual
expenses in conducting the audit or inspection; provided, however, that the
total amount for which Tenant would be obligated to reimburse the Authority
under this sentence shall not, itself, exceed an amount that is equal to the
amount of the underpayment.

 

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

 

11

 

Employees,
agents, contractors or Invitees) that prevents them from being provided at the
Leased Premises, the occurrence of any of the events described in Section
502(A), or an interruption under Section 1102 which is caused by the Authority
and which prevents those goods and services from being provided at the Leased
Premises.

 

“Operating
Profit” for a particular Period shall be expressed as a percentage of Gross
Sales and shall mean, for a particular Period, Gross Sales for that Period less
expenses directly related to Tenant’s operations at the Leased Premises for
that Period, as calculated in accordance with GAAP.  Group/Corporate Expenses allocated to Tenant
shall also be deducted from Gross Sales for purposes of Operating Profit.  No intercompany fees relative to any members
of the Group, to Tenant’s Parent (as hereinafter defined), or to any Affiliate
of Tenant or its Parent, shall be included as expenses of Tenant’s operations
at the Leased Premises except as contemplated by the definition of “Group/Corporate
Expenses” set forth below.  The expenses
for the Leased Premises shall be reduced by the amount of any grants, if
applicable, Success Payments or credits provided to Tenant by any Governmental
Entity with respect to the Leased Premises during that particular Period, and
shall also be reduced by the amount of any and all Rental credits that are
provided to Tenant under this Lease during that particular Period. For purposes
of this provision, “Group” means the subset of organizational companies, within
the Parent company organization, in which Tenant belongs. “Group/Corporate
Expenses” means the following, all of which must be verifiable by the Authority
(a particular item of Group/Corporate Expense may only be deducted pursuant to
one of the following categories (i.e., a particular item of Group/Corporate
Expense may not be deducted more than once for purposes of calculating
Operating Profit)):

 

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

 

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

 

12

 

(c)           Corporate Overhead Allocation: Allocation to
Tenant, as described in this subsection (c), of Tenant’s proportionate share of
the corporate overhead costs and expenses of Tenant’s Parent, reasonably
incurred in connection with the operation of the Parent and those subsidiaries
which Parent (directly or indirectly) wholly owns, including those for
insurance premiums, banking services, routine financial statement audits, tax preparation
services, benefits administration, pension administration, payroll
administration, accounts payable administration, routine compliance procedures
under the Sarbanes-Oxley Act of 2002, 15 U.S.C. 7201 et  seq., and routine treasury-related administrative
activities with respect to the receipt, custody and disbursement of funds (the “Corporate
Overhead”). Tenant’s proportionate share of Corporate Overhead, for a
particular Period, shall be as allocated pursuant to the Parent’s “General
Guidelines for Corporate Expense Allocation” (as Parent may amend from time to
time), provided that the Parent’s “General Guidelines for Corporate Expense
Allocation” are applicable on a consistent basis to all of Parent’s operating
units and subsidiaries (the “Corporate Overhead Allocation Guidelines”). The
amount of Tenant’s share of Corporate Overhead which may be deducted for
purposes of calculating Operating Profit for a particular Period shall be no
greater than an amount that is proportionate to the ratio that Tenant’s Gross
Sales for that Period bear to Parent’s entire gross sales from all of Parent’s
operations (whether at the Leased Premises or at other Parent locations) for
that Period. Tenant’s Percentage Rent Certificate for each Period shall include
a certificate, signed and sworn to by the Parent’s Chief Financial Officer,
certifying to the Authority that the Corporate Overhead Allocation Guidelines
are applied on a consistent basis with respect to all of Parent’s operating
units and subsidiaries and that the allocation to Tenant of its share of the
Corporate Overhead for that Period has been made in accordance with the
then-applicable Corporate Overhead Allocation Guidelines.  The Authority shall have the right, as part
of any audit performed by the Authority as described above in this subsection
(C)(3), to audit the Parent’s books and records relevant to the Corporate
Overhead Allocation in order to verify (i) that the Corporate Overhead
Allocation Guidelines that were used to calculate Tenant’s share of Corporate
Overhead were in fact applied on a consistent basis to all of the Parent’s
operating units and subsidiaries and (ii) that the calculation of Tenant’s
share of Corporate Overhead pursuant to the Corporate Overhead Allocation
Guidelines was correctly calculated.  The
Parent shall retain its books and records pertaining to Corporate Overhead and
allocations thereof for not fewer than five (5) years after the expiration of
each Tenant Fiscal Year for which Tenant is allocated any portion of Corporate
Overhead.

 

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

 

13

 

to
Tenant if Tenant were to obtain such services from a service provider
unaffiliated with Tenant.

 

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

 

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

 

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

 

(D)          Expansion Area Rental
Structure

 

(1)           As
of January 1, 2010, Tenant has exercised its Expansion Option to a portion of
the Expansion Area, specifically the (a) the machine shop area, consisting of
approximately Forty Five Thousand Three Hundred and Thirty Nine (45,339) square
feet; and (b) the composite shops consisting of approximately One Hundred
Thirty Five Thousand Nine Hundred and Seventy Three (135,973) square feet.  Authority and Tenant, in lieu of a Base Rent
/ Additional Rent rental structure as stated in this ARTICLE VI , Section 601
(A) (B), agree to a rental structure for the Machine and Composite Shops based
on the following sub-section 2 and sub-section 3 below.

 

(2)           Machine
and Composite Shops Rental Structure.  Tenant will pay the Authority, in arrears, on
or before the fifteenth (15th) day of each calendar month, rent with respect to
the Leased Premises (machine and composite shops) for the preceding calendar
month.  The rent shall be paid in equal
monthly installments as stated in the following schedule:

 

14

 

	
  TIMEFRAME

  	
   

  	
  MONTHLY
  BASE RENTAL

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1/1/10
  – 6/30/11

  	
   

  	
  $

  	
  50,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  7/1/11
  – 12/31/12

  	
   

  	
  $

  	
  58,333.33

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1/1/13
  – 6/30/14

  	
   

  	
  $

  	
  66,666.67

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  7/1/14
  – 12/31/14

  	
   

  	
  $

  	
  70,833.33

  	
   

  

 

(3)           Percentage
Rental. 
Tenant shall pay to Authority as additional rent, a percentage rental of
Tenant’s Operating Profit derived from the Expansion Area (machine and
composite shops) operations.  Tenant
shall calculate, report and pay to the Authority on the same basis and
methodology as Percentage Rent is calculated in sub-section (C) above except
that the percentage rental, if any, shall be in accordance with the following
calculation:

 

(a)          Should Tenant’s Operating Profit (expressed as a percentage of Gross
Sales) derived from the Expansion Area, exceed ten percent (10%) of Gross Sales
derived from the Expansion Area, Authority will share in eleven percent (11%)
of the incremental amount of Operating Profit that is above ten percent (10%)
and less than twelve percent (12%).

 

(b)         In
addition to sub-section (a) above, should Tenant’s Operating Profit (expressed
as a percentage of Gross Sales) derived from the Expansion Area exceed twelve
percent (12%) of Gross Sales derived from the Expansion Area, Authority will
share in twenty two percent (22%) of the incremental amount of Operating Profit
that is above twelve percent (12%) and less than fourteen percent (14%).

 

(c)          In addition to sub-section (a) and (b) above, should Tenant’s Operating
Profit (expressed as a percentage of Gross Sales) derived from the Expansion
Area  exceed fourteen percent (14%) of
Gross Sales derived from the Expansion Area, Authority will share in thirty
three percent (33%) of the incremental amount of Operating Profit that is above
fourteen percent (14%).

 

By way of example:  if Tenant’s Gross Sales derived from the
Expansion Area equaled $10,000,000, and the Operating Profit equaled
$1,600,000, Tenants Operating Profit percentage would equal sixteen percent
(16%), i.e. 1,600,000/10,000,000 x 100%. 
In this example the Authority would receive percentage rent as follows:

 

(a)          $22,000 calculated as 11% of $200,000 (12% of
10,000,000 minus 10% of 10,000,000),

 

(b)         $44,000 calculated as 22% of $200,000 (14% of
10,000,000 minus 12% of 10,000,000), and

 

15

 

(c)          $66,000 calculated as 33% of $200,000
(1,600,000 minus 14% of 10,000,000), for a total percentage rent equal to:  $132,000.

 

ARTICLE
VII

 

OBLIGATIONS
OF TENANT

 

Section 707.           Signs.  Tenant
shall not erect, maintain, or display upon the outside of any buildings,
structures or other improvements on the Leased Premises or the Facilities any
billboards or advertising signs. 
However, that Tenant may install, on the exterior walls of the Leased
Premises or the Facilities, signage for Tenant’s Business at the Leased
Premises or the Facilities, provided that the quantity, size, location,
content, design and appearance of such signage shall be in compliance with Laws
and subject to the prior written approval of the Authority.  However, the Authority hereby acknowledges
that Tenant desires to install lighted signage, bearing the “AAR” name, on the
exterior of the Facilities, and also desires for the existing monument sign at
the entrance to the Facilities to include signage bearing the “AAR” name; and
the Authority hereby agrees that it will not withhold its consent to that
signage provided that the size and placement of that signage is reasonably
acceptable to the Authority and is in compliance with all applicable Laws.  Tenant shall be responsible, at its sole cost
and expense, for ensuring that all of Tenant’s signage complies with any and
all applicable Laws, and Tenant shall be responsible, at its cost and expense,
before erecting any signage, for obtaining any and all necessary or appropriate
approvals, permits, consents, and/or licenses from any applicable Governmental
Entities with respect to such signage. 
The Authority’s approval of such signage shall not, and shall not be
deemed to, constitute a representation or acknowledgement by the Authority that
Tenant’s proposed signage complies with any Laws, nor shall such approval by
the Authority relieve Tenant of any of Tenant’s obligations under the preceding
sentences.  The cost and expense of
obtaining and maintaining Tenant’s signage will be at the sole cost of
Tenant.  All other Facility signage shall
be at the cost and expense of the Authority. An example of Authority
responsibility is parking lot signage or other common areas.

 

ARTICLE
X

 

MAINTENANCE,
REPAIRS AND REPLACEMENTS

 

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

 

(A)          Repairs, Replacements and Maintenance by the
Authority.  Except to the extent Tenant is responsible
therefor as provided under this Section 1002, the Authority shall, at its cost
and expense, be responsible during the Term of this Lease Agreement for
performing all maintenance, repairs, and replacements with respect to the
Equipment furnished by the Authority to Tenant (whether that Equipment is
furnished pursuant to an Activation or as replacement Equipment) including
without limitation preventive maintenance upon a periodic schedule in accordance
with manufacturers’ recommendations. The Authority’s maintenance, repair and
replacements obligations shall also extend to any Equipment for which Tenant
receives reimbursement from the Authority through Grants or Leasehold
Improvement Credits.  To the extent that
it becomes necessary to replace any item of Equipment, the Authority shall only
be obligated to replace it from then Available Equipment on the Master List of
Equipment; the Authority shall in no circumstance be obligated to purchase a new
item of replacement equipment, tooling or other personal property. As part of
the Authority’s obligations hereunder, 

 

16

 

the Authority will
provide Tenant with a working facility with re-certified tooling.  For purposes of the preceding sentence, a “working
facility” means that all Facilities Systems (other than Excluded Systems) and
Equipment, which are located in the Leased Premises as of the Effective Date of
this Lease, shall be in good working order and condition if and when that
portion of the Leased Premises to which they pertain is delivered to Tenant;
provided, however, that during the Activation of any Bay or other portion of
the Leased Premises, Tenant will provide the Authority, in accordance with
Section 205 above, with a list of those particular Facilities Systems (other
than Excluded Systems) and Available Equipment that Tenant will need for that
particular Bay or other area of the Leased Premises, and Tenant acknowledges
that the Authority’s obligation shall only be to deliver those particular
Facilities Systems (other than Excluded Systems) and Available Equipment to
Tenant in good working order and condition in connection with that
Activation.  Notwithstanding any of the
foregoing to the contrary, the Authority shall have no obligation to provide,
maintain, repair or replace any computer hardware or software or related tools,
systems or equipment, nor any modifications or installation of equipment
associated with Tenant transforming Bay 5B into a paint hangar bay, nor shall
Authority have any obligation to make any alterations, improvements,
modifications, repairs or replacements to the Expansion Area (machine and
composite shops) including any Equipment (tooling and equipment) residing in the
Expansion Area thereto unless the Authority specifically agrees with Tenant, in
writing, to do so.  To the extent Tenant
wishes to make any improvements or alterations to that portion of the Expansion
Area as to which it has exercised its Expansion Option, Tenant shall be
responsible, at its cost and expense, for performing those improvements and
alterations in accordance with the terms of this Lease; and Tenant hereby
acknowledges and agrees that Tenant shall not be entitled to any Grant Proceeds
or Leasehold Improvement Credits with respect to Tenant’s purchase,
maintenance, repair or replacement of any computer software. In addition,
notwithstanding the foregoing, Tenant shall, at its cost and expense, be
responsible for maintaining, replacing, removing, and disposing of, in
compliance with all applicable Laws, any and all filters and blast media
relating to any draw down cabinets, draw down tables, and/or blast cabinets,
and the Authority shall have no liability or responsibility for or with respect
to the filters or blast media relating to any draw down cabinets, draw down
tables, and/or blast cabinets. The Authority shall not be required to pay for,
and Tenant shall indemnify, defend, save and hold harmless the Authority from
and against (and without reimbursement from Grant Proceeds or Leasehold
Improvement Credits) the cost and expense, including without limitation
reasonable attorneys’ fees, of any such maintenance, repairs or replacements
that become necessary by reason of Tenant’s, or its subtenant’s, or its or
their respective agent’s, contractor’s, Employee’s or Invitee’s negligence or
willful misconduct.  Tenant’s obligations
under this Section shall survive the expiration or sooner termination of the
Term of Lease.

 

(B)           Repairs, Replacements and
Maintenance by the Tenant.

 

(1)           Repairs and Maintenance of Equipment.
The Tenant shall, at its cost and expense, be responsible during the Term of
this Lease Agreement for performing all maintenance, repairs and replacements
with respect to the Equipment furnished by the Authority to Tenant that resides
in the Expansion Area (machine and composite shops), including without
limitation preventive maintenance upon a periodic schedule acceptable to the
Authority.  Tenant shall indemnify,
defend, save and hold harmless the Authority from and against the cost and
expense, including without limitation reasonable attorneys’ fees, of any such
maintenance, repairs or replacements that become necessary by reason of Tenant’s,
or its 

 

17

 

agent’s, contractor’s,
employee’s, invitee’s or visitor’s, neglect or willful misconduct.

 

(2)           Equipment Maintenance Requirements.  Tenant shall be responsible for the
maintenance, repair and upkeep of all Equipment (tooling and equipment)
included in the Expansion Area (machine and composite shops), including,
manufacturers’ recommended preventative maintenance and the provisioning and
replenishment of all consumables. 
Initial and recurrent calibration to regulatory required standards, where
required, shall be the responsibility of Tenant.  Consumables shall include the general
category of materials and attachments used to operate and employ the tools and
equipment such as:  bits, grinding
surfaces, abrasives, lubricants and other general use compounds and attachments
subject to frequent replacement.

 

(3)           Equipment Replacement.  Tenant shall, at its sole cost and expense,
maintain and repair or replace Equipment included in the Expansion Area (“Expansion
Area Equipment”) that becomes damaged or defective from time to time.  Notwithstanding the foregoing, Tenant shall
be entitled to use Grants to replace Expansion Area Equipment.  Tenant shall not have the right to lease,
sell or otherwise transfer to any Person, or to dispose of or abandon, any
Expansion Equipment (including without limitation any Expansion Area Equipment
that has been replaced or is to be replaced by the Tenant) without the prior
written consent of the Authority.  Any
repairs to the Expansion Area Equipment shall be performed in a good and
workmanlike manner, in compliance with all applicable Laws, and in a manner
that is consistent with and in compliance with any warranties then in existence
on the Expansion Area Equipment being repaired. 
Any such repairs, acquisitions or replacements that Tenant makes shall
be at Tenant’s cost and expense, and Tenant shall have no right to
reimbursement or payment from the Authority for any portion thereof.   The proceeds from any sale, transfer or
disposition of Expansion Area Equipment shall be the property of the Authority
and promptly turned over to it.

 

ARTICLE
XI

 

FACILITIES
OPERATIONS AND SERVICES

 

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

 

(A)          Supply and replacement of light bulbs and tubes in and on all buildings,
obstruction lights except those light bulbs and tubes installed by Tenant in
the modification of Bay 5B into a paint hangar and replacement of all glass in
the Facilities, including plate glass.

 

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

 

(C)           Maintain, and clean stoppages in, plumbing fixtures, drain lines and
septic and sewage disposal system to the Leased Premises except any maintenance
or stoppages within Bay

 

18

 

5B associated with Tenant’s aircraft painting
operation or any fixtures or drain lines installed by Tenant within Tenant’s
Expansion Area (machine and composite shops) related to Tenant’s use of the
Equipment residing within the Expansion Area.

 

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

 

(E)           Conduct interior and exterior maintenance for all components of the
Facilities, including painting, repairing and replacement, as necessary or
appropriate except those items of the Facilities located within Bay 5B
installed by Tenant in association with Tenant’s paint hangar operation or
those items located within the Expansion Area that are installed by Tenant

 

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

 

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

 

(H)          Provide and maintain hand fire extinguishers for the interior of the
Facilities, including all shops, parking and storage areas in accordance with
applicable safety codes, and other applicable Laws except any specialty fire
extinguishers that are necessary in association with Tenant modifying Bay 5B so
as to utilize Bay 5B as a paint hangar.

 

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

 

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

 

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

 

19

 

ARTICLE XVII

 

GENERAL
INDEMNITY

 

Section 1702.  Authority Obligations.

 

(A)          Environmental.

 

(2)           The Authority, at its cost, filed an application with IDEM to participate
in IDEM’s Voluntary Remediation Program (“VRP”) pursuant to Indiana Code §§
13-25-5 et seq., with respect to contamination
or other matters which exist on the Effective Date, at the Leased Premises, the
Expansion Space, the Land and the Facilities. 
The Authority and Tenant agree to voluntarily withdraw from the
VRP.  However, the Authority agrees to
diligently and in good faith seek to obtain from IDEM a Site Status Letter (“Letter”),
which shall apply to the Leased Premises, the Expansion Space, and the Land
beneath the Facilities associated with Tenant’s leased areas.

 

The terms and conditions of the Letter and requirements to obtain the
Letter from IDEM shall be subject to the mutual approval of Tenant and the
Authority, it being the intent of Tenant and the Authority that the provisions
of § 1702(A)(2) in the Lease dated June 14, 2004, required extensive
through-the-interior-hanger-floor borings to sample soil and groundwater in
order to obtain a Certificate of Completion and covenant not to sue from IDEM
under the VRP program and that obtaining the Letter will not require such
borings.  The Authority shall seek to
obtain a covenant not to sue from IDEM to apply to Tenant and the areas which
are addressed in the Letter.

 

Subject to the mutual agreement of Tenant and the Authority, the Letter
may not include liability comfort from IDEM or an expression by IDEM to not
take further action regarding soil beneath the Concrete Floor if information
describing contamination of soils beneath the Concrete Floor by Hazardous
Materials is first discovered or first becomes known by IDEM after the date of
the Letter.  Tenant may, in its sole
discretion, direct the Authority to cease efforts to obtain the Letter.

 

The
Authority shall keep Tenant fully informed regarding the progress of the
Authority’s efforts under this § 17.02(A)(2), shall notify Tenant of any
conference calls or meetings with IDEM so that Tenant, at its option, may
attend the meetings or participate in the conference calls, and shall provide
Tenant with a copy of all draft and final reports.  Neither the Authority nor Tenant shall communicate
with IDEM without first notifying the other party so that other party may
participate in such communication.

 

The Authority shall
endeavor to obtain the Letter and provide it to Tenant no later than December 31,
2010 subject, however, to IDEM’s internal process and procedures which may not
be completed by December 31, 2010. 
If the Authority cannot obtain the Letter by June 30, 2011, then
Tenant and the Authority will confer to discuss re-entering the VRP, and upon
Tenant’s written request, the Authority shall reapply and pursue the VRP to its
conclusion as provided in § 17.02(A)(2) as it existed in the Lease dated June 14,
2004.

 

20

 

The Authority shall pay
all its costs associated with obtaining the Letter, including, but not limited
to, all sampling, analytical, remediation, response, environmental consultant,
legal, repair, restoration, engineering, document preparation, and travel
costs.  The Authority and Tenant each
hereby reserve its rights under Indiana Code §§ 13-25-5 et seq.

 

21

 

This Fourth Amendment shall become effective as to
the date first mentioned above and all other terms and conditions of the Lease
Agreement dated June 17, 2004 as amended shall remain the same.

 

Attachments:

 

Exhibit B

Exhibits
B-1 thru B-34

Exhibits
E-1 thru E-4

 

22

 

SIGNATURE PAGE

 

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

 

 

	
   

  	
   

  	
   

  	
  “INDIANAPOLIS
  AIRPORT AUTHORITY”

  
	
   

  	
   

  	
   

  	
   

  
	
  By

  	
  /s/
  M. Stone for

  	
   

  	
  March 2,
  2010

  
	
  John
  D. Clark, III,

  	
   

  	
  Date:

  
	
  Executive
  Director/CEO*

  	
   

  	
   

  
					

 

	
  Approved
  as to Form and Legality:

  	
  /s/
  Anne Mullen O’Connor

  	
   

  
	
   

  	
  General
  Counsel

  

 

*Signed
under authority provided in IAA Board Resolution 14-2009.

 

 

“TENANT”

AAR AIRCRAFT SERVICES, INC.,

an Illinois corporation

 

	
  By:

  	
  /s/
  Timothy J. Romenesko

  	
   

  
	
  Printed:

  	
  Timothy
  J. Romenesko

  	
   

  
	
  Title:

  	
  President &
  Chief Operating Officer

  	
   

  

 

23

 

	
  STATE
  OF INDIANA

  	
  )

  
	
   

  	
  )
  SS:

  
	
  COUNTY
  OF MARION

  	
  )

  

 

Before
me, a Notary Public in and for said County and State, personally appeared John
D. Clark III, CEO and Executive Director; of the Indianapolis Airport
Authority, and acknowledged the execution of the foregoing instrument as such
officer acting for and on behalf of the Indianapolis Airport Authority.

 

WITNESS
my hand and Notarial Seal this 2nd day of March, 2010.

 

	
   

  	
  Signature
  /s/ Cathy J. Winterrowd

  
	
   

  	
  Cathy
  J. Winterrowd

  
	
   

  	
  Printed

  	
  Notary Public

  

 

 

	
  My
  Commission Expires:

  	
  My
  County of Residence:

  
	
   

  	
   

  
	
  June 22,
  2016

  	
  Hendricks

  

 

 

	
  STATE
  OF ILLINOIS

  	
  )

  
	
   

  	
  )
  SS:

  
	
  COUNTY
  OF DuPAGE

  	
  )

  

 

Before
me, a Notary Public in and for said County and State, personally appeared
Timothy J. Romenesko, the President & COO of AAR Aircraft Services, Inc.,
an Illinois corporation, and acknowledged the execution of the foregoing
instrument as such officer acting for and on behalf of said entity.

 

WITNESS
my hand and Notarial Seal this 25th day of February, 2010.

 

	
   

  	
  /s/
  Susan Ann Galle

  
	
   

  	
  Signature

  
	
   

  	
  Susan
  Ann Galle

  
	
   

  	
  Printed

  	
  Notary Public

  
	
   

  	
   

  
	
   

  	
   

  
	
  My
  Commission Expires:

  	
  My
  County of Residence:

  
	
   

  	
   

  
	
  June 19,
  2010

  	
  DuPage

  

 

24

 

EXHIBIT B

 

DESCRIPTION OF PORTION OF FACILITIES TO BE LEASED TO TENANT

 

1.                                       Hangar 1
(consisting of “ground level” and “mezzanine level” of Bays 1a and 1b, and
associated office, storage and employee support space), Hangar 2 (consisting of
“ground level” and “mezzanine level” of Bays 2a and 2b, and associated office,
storage and employee support space), Hangar 3 (consisting of “ground level” and
“mezzanine level” of Bays 3a and 3b, and associated office, storage and
employee support space), Hangar 5 (consisting of “ground level” of Bays 5a and
5b, and associated office, storage and employee support space), and Hangar 6
(consisting of “ground level” of Bay 6a and associated office, storage and
employee support space, and “ground level” and “mezzanine level” of Bay 6b and
associated office, storage and employee support space), Back Shops consisting
of Machine Shop and Composite Shop areas all as shown in more detail in the
drawing attached hereto as Exhibit B-1 thru Exhibit B-34.

 

2.                                       Approximately
24,597 square feet of office space designated as Hangar 4 service level as
shown in more detail on the drawing attached hereto as Exhibit B-21
(the “Hangar 4 Office Space”).

 

3.                                       Approximately
7,840 square feet of storage space designated as Hangar 4 ground level as shown
in more detail on Exhibit B-20
(the “Hangar 4 Ground Level Storage”).

 

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

 

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

 

25

 

EXHIBIT E

 

DRAWING SHOWING LOCATION AND SQUARE FOOTAGE

OF EXPANSION SPACE (MACHINE & COMPOSITE SHOPS)

 

Exhibit E-1

 

Exhibit E-2

 

Exhibit E-3

 

Exhibit E-4

 

26

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00175-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00175-of-00352.parquet"}]]