LEASE AGREEMENT
THIS LEASE AGREEMENT (the AAgreement@), dated as of July 1, 1999, by and
between the KENTON COUNTY AIRPORT BOARD (the AIssuer@), a public body
corporate and politic established as a local air board, constituting a
political subdivision of the Commonwealth of Kentucky, duly organized and
validly existing under the laws of the Commonwealth of Kentucky, including
Chapter 183 of the Kentucky Revised Statutes, and MESABA AVIATION, INC.,
d/b/a/ Mesaba Airlines, a corporation duly organized and validly existing
under the laws of the State of Minnesota, and duly qualified to do business in
the Commonwealth of Kentucky (the ACompany@);
WHEREAS, the Company has previously requested the Issuer to authorize and
issue, for the benefit of the Company, one or more series of Special
Facilities Revenue Bonds pursuant to the statutory authority of Chapter 183
and Sections 103.200 to 103.285, inclusive, of the Kentucky Revised Statutes
(the AAct@), for the purpose of funding qualified airport facilities to be
leased, operated and used by the Company in its operations, consisting of an
aircraft hanger and related maintenance and repair facilities approximately
126,000 square feet in size, of which approximately 63,000 square feet will be
comprised of hanger bay space for the Company=s commercial passenger aircraft
and approximately 63,000 square feet will be comprised of aircraft maintenance
shops and facilities and support space, including functionally related and
necessary machinery and equipment, plus associated and adjacent aircraft
parking ramp areas (collectively, the AProject Facilities@), which Project
Facilities will be situated at the Cincinnati/ Northern Kentucky International
Airport in ▇▇▇▇▇ County, Kentucky (the "Airport") and which will constitute an
airport or facilities functionally related and subordinate to an airport
within the meaning of Section 142(a)(1) of the Internal Revenue Code of 1986,
as amended (the ACode@). The Project facilities will be used for airport and
air transportation purposes, be available for public use and will provide
public benefit; and
WHEREAS, the Issuer owns and operates the Cincinnati/Northern Kentucky
International Airport in ▇▇▇▇▇ County, Kentucky and is authorized by the
provisions of the Constitution and laws of the Commonwealth of Kentucky,
including KRS Chapter 183, KRS Sections 103.200 to 103.286, inclusive, and
Section 142 of the Code, to cause the Project Facilities to be acquired and
constructed and to lease the Project Facilities to the Company for such
rentals and upon such conditions as are herein provided; and
WHEREAS, the airport facilities to be financed, constructed and installed
for lease to the Company, an airline and a common carrier, will promote the
economic development of the Commonwealth of Kentucky, relieve conditions of
unemployment and encourage the increase of industry in Kentucky and will
otherwise perform public purposes as provided by the Act, and as approved in
the cases, inter alia of ▇▇▇▇▇▇▇▇▇ v. City of Danville (Ky), 232 SW2d 80,
▇▇▇▇▇▇▇ ▇. City of Danville (Ky), 355 SW2d 689, ▇▇▇▇▇▇▇ ▇. City of
Lewisport (Ky), 369 SW2d 133 and ▇▇▇▇▇▇ v. City of Franklin (Ky), 384 SW2d
505; and
WHEREAS, in accordance with such requests by the Company, the
Issuer adopted a Resolution on January 18, 1999 agreeing to the
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issuance of such Special Facilities Revenue Bonds, to be paid
solely and only by lease payments and other payments to be made by
the Company or from the Proceeds of such Bonds or from moneys
derived from enforcement of the Leasehold Mortgage, hereinafter
defined; and the corporate parent of the Company, Mesaba Holdings,
Inc., a Minnesota corporation, has, pursuant to the Guaranty,
guaranteed (i) the payment of principal of, premium, if any and
interest on the 1999 Series A Bonds, hereinafter defined and (ii)
the full and prompt performance and observance by the Company of
all of the Company=s obligations and covenants under this Lease,
the Ground Lease, as hereinafter defined, and the Leasehold
Mortgage; and
WHEREAS, the Company has, pursuant to the foregoing, caused to
be designed and has initiated construction and acquisition of,
certain airport facilities constituting the Project Facilities to
the Company's specifications to meet the Company's special air
transportation business needs and purposes, which will be
exclusively leased by the Company under this Agreement for the
periods specified herein and which will be financed in whole or in
part pursuant to KRS Sections 103.200 to 103.285, inclusive; and
WHEREAS, the Issuer has, by resolution duly adopted on August
16, 1999, duly authorized the issuance of its Special Facilities
Revenue Bonds, 1999 Series A (Mesaba Aviation, Inc. Project) (the
A1999 Series A Bonds@) to provide funds to finance some or all of
the Project Facilities; and
WHEREAS, pursuant to an Indenture of Trust of even date
herewith (said Indenture of Trust, as hereafter amended and
supplemented from time to time, being herein referred to as the
AIndenture@) between the Issuer and Norwest Bank Minnesota,
National Association, as trustee (said trustee, or its successors
under the Indenture, being herein referred to as the ATrustee@),
the Issuer has issued $14,000,000 aggregate principal amount of
1999 Series A Bonds, the Proceeds of which are to be applied for
financing the Project Facilities; and
WHEREAS, contemporaneously with the issuance of the 1999
Series A Bonds, the Issuer will assign its rights and benefits
under this Agreement (except for certain Unassigned Rights) to the
Trustee as further security for the 1999 Series A Bonds; and
WHEREAS, the Bonds issued pursuant to this Agreement and the
Indenture shall be special and limited obligations of the Issuer,
payable solely and only from and secured by, the Trust Estate, as
defined in the Indenture, including but not limited to the revenues
or other receipts, funds or moneys to be derived by the Issuer
under this Agreement, from the Guaranty, from the Leasehold
Mortgage, as security for its performance hereunder, from the
unexpended Proceeds of the Bonds, and from the earnings on all of
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the amounts held by the Trustee under the Indenture (except moneys
held in the Rebate Fund); and
WHEREAS, the execution and delivery of this Agreement has been
duly and lawfully authorized by both the Issuer and the Company,
and all conditions, acts and things necessary and required by the
Constitution and statutes of the Commonwealth of Kentucky (the
ACommonwealth@) or otherwise, to exist, to have happened, or to
have been performed precedent to and in the execution and delivery
of this Agreement and in the issuance of the 1999 Series A Bonds
authorized in the Indenture, do exist, have happened and have been
performed in regular form, time and manner.
NOW, THEREFORE, for and in consideration of the premises and
of the mutual representations, covenants and agreements herein set
forth, the Issuer and the Company, each binding itself, its
successors and assigns,do mutually promise, covenant and agree as
follows, provided that in the performance of the agreements of the
Issuer herein contained, any obligation it may incur for the
payment of money shall not be an obligation, debt or liability or
give rise to any pecuniary liability of the Issuer, the
Commonwealth or any political subdivision thereof, including the
Issuer and the County of Kenton, Kentucky and neither the Issuer,
the Commonwealth, the County of Kenton, Kentucky, nor any such
political subdivision shall be liable on any obligation so
incurred, but any such obligation shall be payable solely and only
from, and secured by, the Trust Estate, including the Receipts and
Revenues.
ARTICLE I
DEFINITIONS
Section 1.01. Use of Defined Terms. In addition to the words
and terms defined elsewhere in this Agreement or in the Indenture
or by reference to another document, the words and terms set forth
in Section 1.02 and 1.03 shall have the meanings set forth therein
unless the context or use clearly indicates another meaning or
intent. Such definitions shall be equally applicable to both the
singular and plural forms of any of the words and terms defined
therein.
Section 1.02. Incorporation of Certain Terms by Reference.
When and if used in this Agreement, the following terms shall have
the meaning set forth in Section 1.01 of the Indenture:
AAct@
AAdditional Bonds@
AAgreement@
AAirport@
AAuthenticating Agent@
AAuthorized Company Representative@
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ABankruptcy Code@
ABankruptcy Counsel@
ABond Fund@
ABusiness Day@
ACompany@
AConstruction Fund@
ACosts of Construction@
ACounsel@
ADate of Issuance@
AFacility Rentals@
AFavorable Opinion of Bond Counsel@
AGovernment Obligations@
AGround Lease@
AGround Lease Termination@
AGuaranty@
AGuarantor@
AIndenture@
AInterest Payment Date@
AInvestment Securities@
AIssuer@
AMoody's@
AOutstanding@
AOwner@
APaying Agent@
APerson@
ARating Category@
AReceipts and Revenues@
ARegistrar@
ASeries@ or ASeries of Bonds@
AS&P@
ATrust Estate@
ATrustee@
AUnassigned Rights@
A1999 Series A Bonds@
Section 1.03. Additional Definitions. In addition to the
terms whose definitions are incorporated by reference herein
pursuant to Section 1.02, the following terms shall have the
meanings set forth in this Section unless the use or context
clearly indicates otherwise:
AAcquisition and Construction@ means, as appropriate, any
design and any temporary or permanent acquisition, construction,
equipping, demolition, installation, additional improvement to,
restoration, reacquisition, expansion, reconstruction, reproduction
or reequipping of the Project Facilities and including any related
and necessary demolition of existing facilities or improvements.
AAdministration Expenses@ shall mean the reasonable
administrative expenses incurred by the Issuer with respect to the
Bonds, the Indenture, this Agreement, the Leasehold Mortgage and
the Guaranty (except for expenses incurred by the Issuer excluded
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from indemnification pursuant to Section 6.08 hereof, if any),
including, without limitation, the reasonable fees and
disbursements of Bond Counsel and Counsel for the Issuer and
reasonable out-of-pocket expenses of the Issuer incurred in
connection with the authorization, issuance and sale of the Bonds
and the compensation and reimbursement of reasonable fees, expenses
and advances payable to the Trustee, the Registrar and the Paying
Agent and the Authenticating Agent (including the reasonable fees
and expenses of their counsel) under the Indenture, together with
applicable taxes and other governmental charges.
A Arbitrage Certificate@ means the Arbitrage Certificate dated
as of the Date of Issuance and delivery of the 1999 Series A Bonds,
to be issued by the Issuer, based upon a certification furnished by
the Company.
AAuthorized Issuer Representative@ means the person or persons
at the time designated by written certificate furnished to the
Company and the Trustee containing the specimen signature of each
such person and signed on behalf of the Issuer by its Chairman or
its Secretary-Treasurer, to act on behalf of the Issuer. Such
certificate shall designate an alternate or alternates.
ABond@ or ABonds@ means all 1999 Series A Bonds and all
Additional Bonds, delivered under and pursuant to the Indenture and
any Supplemental Indenture, including any bonds issued in
substitution therefor.
ABond Counsel@ means ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ or any other
firm of attorneys approved by the Issuer and not unacceptable to
the Company, having a national reputation in the field of municipal
law whose opinions with respect to the exclusion of interest on
state or local governmental obligations from gross income for
purposes of federal income taxation are generally accepted by
purchasers of state or local governmental obligations.
ABond Resolution@ shall mean the resolution of the Issuer
adopted on August 16, 1999, authorizing the issuance and sale of
the 1999 Series A Bonds and authorizing the execution, delivery and
performance of this Agreement and the Indenture and determining
other matters in connection therewith.
ABond Year@ shall have the meaning ascribed to such term in
the Indenture.
ACode@ means the Internal Revenue Code of 1986, as amended, or
any successor legislation applicable to the Bonds, and the
regulations and published rulings promulgated thereunder.
ACommonwealth@ means the Commonwealth of Kentucky.
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ACompany Tax Certificate@ means the Company Tax Certificate
and Compliance Agreement, executed and delivered by the Company on
the Date of Issuance, regarding compliance with the Code to assure
that interest on the 1999 Series A Bonds which is intended to be
excluded from gross income for federal income tax purposes is so
excluded.
ACompletion Date@ means the date of completion of the
Acquisition and Construction of the Project Facilities financed by
the 1999 Series A Bonds, as such date or dates shall be certified
as provided in Section 3.04 hereof.
ADetermination of Taxability@ shall have the meaning specified
in Section 9.02 of this Agreement.
AExcluded Equipment@ shall have the meaning specified in
Section 5.03 of this Agreement.
AGross Award@ means the total of amounts awarded to or
received by the Issuer and/or the Company as damages, compensation
or otherwise, by reason of the taking of the Project Facilities or
any part thereof as a result of or in anticipation of the exercise
of the right of condemnation or eminent domain. The term AGross
Award@ shall include any amounts awarded as damages, compensation
or otherwise, by reason of the taking as a result of or in
anticipation of the exercise of the right of condemnation or
eminent domain of any of the land leased to the Company pursuant to
any ground lease.
AGround Lease@ means the Ground Lease, dated as of September1,
1999 by and between the Issuer and the Company.
ALeasehold Mortgage@ means the Leasehold Mortgage dated as of
July 1, 1999, granted by the Company to the Trustee, as the same
may be amended, supplemented or otherwise modified from time to
time.
ANet Proceeds@ means, with respect to the 1999 Series A Bonds
and all Additional Bonds, the Proceeds of such issue of Bonds
reduced by amounts of such Proceeds in a reasonably required
reserve or replacement fund.
ANet Insurance Proceeds@ means the gross receipts from the
policy or policies of property insurance required to be procured
and maintained pursuant to Section 5.06 remaining after payment of
all expenses (including attorney's fees and any extraordinary fee
of the Trustee) incurred in the collection of such gross receipts.
APerson@ means any natural person, corporation, cooperative,
partnership, trust or unincorporated organization, government or
governmental body or agency, political subdivision or other legal
entity as in the context may be appropriate.
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APlans and Specifications@ means the plans and specifications
for the Acquisition and Construction of the Project Facilities,
prepared by the Company and approved by the Issuer, as the same may
be supplemented, amended or modified from time to time upon the
approval of the Issuer as to any such substantial and material
amendments, supplementations or modifications, and shall include
all plans and specifications prepared by the Company and approved
by the Issuer for any additions or improvements to, or any
restoration, reacquisition, expansion, reconstruction, reproduction
or reequipping of the Project Facilities in accordance with Section
3.01. All such Issuer approvals shall be for the purpose of
assuring compatibility of the Project Facilities with existing
Airport facilities and with the continuous operation of the Airport
and for assuring that the Project Facilities do not violate, or
cause the Issuer to violate, applicable law or regulations as
provided in Section 3.01(a). Such Issuer approvals shall not be
unreasonably withheld.
AProceeds@ shall have the meaning ascribed to such term by
Section 1.141-2 of the Treasury Regulations promulgated under
Section 141 of the Code.
AProject Facilities@ shall mean, collectively, the airport
facilities and improvements financed with the Proceeds of the 1999
Series A Bonds and the site thereof, all as described in Exhibit A
attached hereto, as such exhibit may be amended by the Company in
its discretion from time to time (provided that no such amendment
shall materially change or alter the nature and character of the
Project Facilities as facilities constituting an airport or
facilities functionally related and subordinate thereto), and
including, until completion thereof, inter alia, any necessary
temporary facilities, necessary utilities, public ways,
thoroughfares and roads, and similar facilities.
A Rebatable Arbitrage@ means with respect to any series of
Bonds, the amount required to be rebated to the United States
pursuant to Section 148(f)(2) of the Code or successor provisions
applicable to the Bonds.
ARebate Expert@ means any of the following, chosen by the
Company and acceptable to the Issuer: (a) any national firm of
certified public accountants or (b) any reputable firm which offers
to the tax-exempt bond industry rebate calculation services and
holds itself out as and is generally recognized as having expertise
in that area.
ARebate Fund@ means the fund bearing such name created in by
Section 6.02 of the Indenture.
A S.E.C.@ means the United States Securities and Exchange
Commission.
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Section 1.04. Interpretation. Any reference herein to the
Issuer or to any member or officer thereof includes entities or
officials succeeding to their respective functions, duties or
responsibilities pursuant to or by operation of law or lawfully
performing their functions.
Any reference to a section or provision of the Constitution of
the Commonwealth or the Act, or to a section, provision or chapter
of the Kentucky Revised Statutes, as amended, or to any statute of
the United States of America, includes that section, provision or
chapter as amended, modified, revised, supplemented or superseded
from time to time; provided, that no amendment, modification,
revision, supplement or superseding section, provision or chapter
shall be applicable solely by reason of this provision, if it
constitutes in any way an impairment of the rights or obligations
of the Issuer, the Owners of the Bonds, the Trustee or the Company
under this Agreement.
Unless the context indicates otherwise, words importing the
singular number include the plural number, and vice versa; the
terms Ahereof@, Ahereby@, Aherein@, Ahereto@, Ahereunder@ and
similar terms refer to this Agreement; and the term Ahereafter@
means after, and the term Aheretofore@ mean before, the date of
delivery of the 1999 Series A Bonds. Words of any gender include
the correlative words of the other genders, unless the sense
indicates otherwise.
Any reference to an Article number (e.g., Article IV) or a
Section number (e.g., Section 8.03) without further qualification
shall be construed to be a reference to the designated Article
number or Section number hereof unless the use or context clearly
indicates otherwise.
Section 1.05. Captions and Headings. The captions and
headings in this Agreement are solely for convenience of reference
and in no way define, limit or describe the scope or intent of any
Articles, Sections, subsections, paragraphs, subparagraphs or
clauses hereof.
ARTICLE II
REPRESENTATIONS
Section 2.01. Representations, Warranties and Covenants of
the Issuer. The Issuer makes the following representations,
warranties and covenants as the basis for the undertakings on its
part herein contained, provided, however, that the Issuer shall
incur no liability whatsoever arising out of or in any way related
to the reliance by the Company, the Trustee or any other person
upon the truth or accuracy of any such representation or warranty
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by the Issuer and/or performance of any such covenant by or on the
part of the Issuer:
(a) Authorization. The Issuer is a body politic and
corporate and a local air board established pursuant to
Chapter 183 of the Kentucky Revised Statutes constituting a
political subdivision of the Commonwealth of Kentucky and
existing pursuant to the Kentucky Revised Statutes.
(b) Power and Authority. The Issuer has full power and
authority to execute, deliver, issue and perform its duties
under the 1999 Series A Bonds, the Indenture, this Agreement
and the Ground Lease and to execute, deliver and perform all
other agreements and instruments executed and delivered or to
be executed and delivered by the Issuer pursuant to or in
connection with this Agreement and the transactions
contemplated hereby.
(c) Obligations Legal, Valid and Binding. This
Agreement, the Indenture and the Ground Lease have been duly
and validly executed and delivered by the Issuer, and the
Bonds constitute and will constitute the legal, valid and
binding limited and special obligations of the Issuer payable
solely from the Trust Estate; and the 1999 Series A Bonds, the
Indenture, this Agreement and the Ground Lease are enforceable
against the Issuer in accordance with their respective terms,
except insofar as enforcement may be limited by applicable
bankruptcy, insolvency, or similar laws affecting and
enforcement of creditors= rights and remedies generally, and
by equitable principles.
(d) No Legal Bar. The Issuer is not in violation of
the Act, or any other laws of the Commonwealth, which would
affect the Issuer's existence or its powers referred to in
this Agreement. The execution, delivery and performance by
the Issuer of the 1999 Series A Bonds, the Indenture, this
Agreement and the Ground Lease and all other agreements and
instruments relating to all the foregoing to be executed and
delivered by the Issuer in connection herewith and therewith,
(a) do not and will not violate any provision of the Act, the
laws of the Commonwealth, or any other applicable law,
regulation, order, writ, judgment or decree of any court,
arbitrator or governmental authority, (b) do not and will not
violate any provision of, constitute a default under, or
result in the creation or imposition of any lien on any of the
assets of the Issuer pursuant to the provisions of, any
mortgage, indenture, contract, agreement or other undertaking
to which the Issuer is a party or which purports to be binding
on the Issuer or on any of its assets, and (c) will not
create, with respect to the obligations of the Issuer under
this Agreement, a general or subordinated revenue obligation
of the Issuer, but only a special obligation payable solely
from the Trust Estate, including the Receipts and Revenues.
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(e) Consents. Except as otherwise disclosed in an
exhibit attached to this Agreement on or before the Date of
Issuance of the 1999 Series A Bonds, the Issuer will have
obtained any consents, permits, licenses and approvals
required under law to authorize the execution, delivery and
performance of the Indenture, this Agreement and the Ground
Lease, the issuance of the 1999 Series A Bonds and the
consummation of the transactions contemplated thereby, and all
such consents, permits, licenses and approvals remain in full
force and effect.
(f) Litigation. There is no litigation pending or
threatened (a) which might materially affect the transactions
contemplated by this Agreement and the Ground Lease, or affect
the validity or enforceability hereof or thereof, or any
agreement or instrument to which the Issuer is bound and which
is used or contemplated for use in the consummation of the
transactions contemplated by the Indenture, this Agreement and
the Ground Lease, or (b) which in any way contests the
existence or organization of the Issuer; or (c) which in any
way contests or seeks to enjoin the issuance of any of the
1999 Series A Bonds. The Issuer is not in default with
respect to any order of any court, governmental authority or
arbitration board or tribunal or under any agreement,
indenture, mortgage, lease or other instrument to which the
Issuer is a party or by which it is or may be bound or
affected.
(g) Maintenance of Exempt Status. The Issuer will take
no action that may cause the Plans and Specifications to be
materially changed or revised, or the Project Facilities to be
operated, maintained, repaired or renovated, in a manner such
that the Project Facilities financed by the Proceeds of the
1999 Series A Bonds or any Additional Bonds will not qualify
as an airport or facilities functionally related and
subordinate to an airport within the meaning of Section 142 of
the Code and the income tax regulations promulgated
thereunder, as determined by a written opinion of Bond
Counsel.
(h) No Defaults. No event has occurred and no condition
exists with respect to the Issuer which would constitute an
Event of Default under this Agreement, the Ground Lease or the
Indenture or which, with the lapse of time or with the giving
of notice or both, would become an Event of Default under this
Agreement, the Ground Lease or the Indenture.
(i) No Prior Pledge. Neither this Agreement, the Ground
Lease nor the Receipts and Revenues have been or will be
pledged, assigned or hypothecated by the Issuer, in whole or
in part, in any manner or for any purpose other than as
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provided in the Indenture as security for the payment of the
interest, principal and premium on the 1999 Series A Bonds.
Section 2.02. Limited Obligations. Notwithstanding anything
herein contained to the contrary, no obligation or liability,
either direct or contingent, that the Issuer may incur for the
payment of money arising out of this Agreement, the Indenture, the
issuance of the Bonds or any other related document to which the
Issuer is a party or by which the Issuer is bound shall constitute
a debt or a pledge of the faith and credit of the Issuer or of the
Commonwealth or of any political subdivision thereof, but shall be
special and limited obligations of the Issuer payable solely from
(i) the Trust Estate, (ii) Proceeds derived from the sale of the
1999 Series A Bonds and (iii) amounts on deposit from time to time
in the Bond Fund, subject to the provisions of this Agreement and
the Indenture permitting the application thereof for the purposes
and on the terms and conditions set forth herein and therein.
Section 2.03. No Warranty by Issuer of Condition or
Suitability of the Project Facilities. The Issuer makes no
representations or warranty, either express or implied, as to the
suitability, fitness or utilization of the Project Facilities or
the absence of mechanic=s or materialments liens thereon or with
respect thereto or as to the condition of the Project Facilities or
that the same is or will be free from defects, latent or patent, or
will be suitable for the Company's purposes or needs, all of the
same being leased to the Company as is, where is, with all faults
and without warranty of merchantability or fitness for a particular
purpose.
Section 2.04. Representations and Warranties of the Company.
The Company makes the following representations as the basis for
the undertakings on its part herein contained:
(a) Corporate Organization and Power. The Company (i)
is a corporation duly organized, validly existing and in good
standing under the laws of the State of Minnesota and is
qualified to do business and is in good standing under the
laws of the Commonwealth, and (ii) has all requisite power and
authority and all material licenses and permits to own and
operate its properties and to carry on its business as now
being conducted and as presently proposed to be conducted and
to enter into and to perform and observe the agreements on its
part contained in this Agreement and the Ground Lease; and by
proper corporate action has been duly authorized to execute
and deliver this Agreement and the Ground Lease. The Company
is a wholly-owned subsidiary of Mesaba Holdings, Inc., a
Minnesota corporation.
(b) Pending Litigation. There are no actions, suits,
proceedings, inquiries or investigations pending, or to the
knowledge of the Company threatened, against or affecting the
11
Company in any court or before any governmental authority or
arbitration board or tribunal which, in the Company's opinion,
are likely to materially and adversely affect the transactions
contemplated by this Agreement, the Ground Lease or the
Indenture, or which, in any way, adversely affect the validity
or enforceability of the 1999 Series A Bonds, the Indenture,
this Agreement or the Ground Lease.
(c) Agreements Are Valid and Authorized. The execution
and delivery by the Company of this Agreement, the Ground
Lease and the Leasehold Mortgage and the compliance by the
Company with all of the provisions hereof and thereof and the
consummation of the transactions contemplated hereby and
thereby will not (i) materially conflict with or result in any
material breach of any of the terms, conditions or provisions
of, or constitute a material default under, any agreement,
charter document, by-law or other instrument to which the
Company is a party or by which it may be bound, or any
licenses, judgment, decree, law, statute, order, rule or
regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its activities or
properties, or (ii) result in the creation or imposition of
any prohibited material lien, charge or encumbrance of any
nature whatsoever upon any material property or assets of the
Company under the terms of any instrument or agreement to the
extent that any of the events described in clauses (i) and
(ii) would have a material adverse effect on the financial
condition of the Company.
(d) Governmental Consent. In connection with the
transactions contemplated by this Agreement, the Ground Lease
and the Indenture, no circumstances in connection with the
execution, delivery and performance by the Company of this
Agreement or the offer, issue, sale or delivery by the Issuer
of the 1999 Series A Bonds, is such as to require the consent,
approval or authorization of, or the filing, registration or
qualification with, any governmental authority on the part of
the Company, other than those already obtained as of the Date
of Issuance of the 1999 Series A Bonds;provided, however, no
representation is made herein as to compliance with the
securities or Ablue sky@ laws of any jurisdiction.
(e) No Defaults. No event has occurred and no condition
exists with respect to the Company that would constitute an
Event of Default under this Agreement or the Ground Lease or
which, with the lapse of time or with the giving of notice or
both, would become an Event of Default under this Agreement or
the Ground Lease.
(f) Consents and Permits. All necessary orders,
consents, authorizations, permits, licenses and approvals
legally required by governmental authorities to be obtained by
the Company as of the date hereof in connection with the
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Acquisition and Construction of the Project Facilities have
been obtained and are in full force and effect, and the
Company knows of no reason why it is not eligible to obtain
all other necessary orders, consents, authorizations, permits,
licenses and approvals legally required by governmental
authorities to be obtained by the Company after the date
hereof in connection with the completion of the Acquisition
and Construction and the operation of the Project Facilities.
(g) Useful Life of Project Facilities. The reasonably
expected economic life of the Project Facilities to be
financed with the Proceeds of the 1999 Series A Bonds (as
determined under Section 147(b) of the Code) is ______ years,
as shown in Exhibit B, attached hereto and made a part hereof.
The Company presently intends to continue to operate or cause
the Project Facilities to be operated as airport facilities or
facilities functionally related and subordinate thereto
pursuant to the Code until all of the 1999 Series A Bonds are
paid and discharged.
(h) Average Maturity of 1999 Series A Bonds. The
weighted average maturity of the 1999 Series A Bonds does not
exceed 120% of the reasonably expected weighted average
economic life of the Project Facilities to be financed with
the Proceeds of the 1999 Series A Bonds, as reflected in
Exhibit B, attached hereto and made a part hereof.
(i) Tax Status of 1999 Series A Bonds. The Company has
not taken and will not take any action, and knows of no action
that any other person, firm or corporation has taken or
intends to take, which would cause interest on the 1999 Series
A Bonds to be includable in the gross income of the recipients
thereof for federal income tax purposes (except any 1999
Series A Bond for any period during which such 1999 Series A
Bond is held by a Asubstantial user@ of the Project Facilities
financed with the Proceeds of the 1999 Series A Bonds or a
Arelated person@ to such Asubstantial user@ as such terms are
defined in Section 147(a) of the Code).
(j) No Change in Financial Condition. The Company=s
financial operations are consolidated with those of its
corporate parent, the Guarantor, for accounting presentation
and federal income tax purposes. The annual, quarterly and
other required filings periodically made by the Guarantor with
the United States Securities and Exchange Commission (the
AS.E.C.@) are incorporated herein by reference. Since the
adoption by the Issuer on January 18, 1999, of a reimbursement
resolution in respect of the financing of the Project
Facilities, there has been no material adverse change in the
financial condition of the Guarantor from the condition
reflected in the S.E.C. statements filed by the Guarantor as
of such date.
13
(k) Inducement. The availability of the financial assistance
by the Issuer in issuing the 1999 Series A Bonds has been an
important inducement to the Company to undertake the Project
Facilities and to locate the Project Facilities in the
Commonwealth.
(l) Title to Project Facilities Financed with Proceeds
of the 1999 Series A Bond s. The Company agrees that in
accordance with Section 142(a)(1) of the Code, title to the
Project Facilities financed with the Proceeds of the 1999
Series A Bonds shall be governmentally owned by the Issuer.
(m) Ground Lease. The Ground Lease continues in full
force and effect as the legal, valid and binding obligation of
the Company thereunder, without material default by the
Company, or to the best knowledge of the Company, by the
Issuer thereunder; and the Company has neither received nor
delivered any notice of default or termination under the
Ground Lease.
(n)Guaranty Agreement. The Guaranty Agreement continues
in full force and effect as the legal, valid and binding
obligation of the Guarantor, Mesaba Holdings, Inc., without
material default by the Guarantor, and the Guarantor has
neither received nor delivered any notice of default or
termination under the Guaranty Agreement. The Company also
represents that this Agreement does not cause a default under
the Guaranty Agreement.
(o) Leasehold Mortgage. The Leasehold Mortgage continues
in full force and effect as the legal, valid and binding
obligation of the Company, without material default by the
Company, or to the best knowledge of the Company, by the
Trustee thereunder; and the Company has neither received nor
delivered any notice of default or termination under the
Leasehold Mortgage.
ARTICLE III
COMMENCEMENT AND COMPLETION OF
THE PROJECT FACILITIES; ISSUANCE OF BONDS
Section 3.01. Agreement Regarding the Acquisition and
Construction of the Project Facilities.
(a) Subject to (i) the provisions of Section 3.05
hereof, (ii) compliance with the provisions of the Ground
Lease and (iii) the obtaining of all governmental approvals
required for the Acquisition and Construction of the Project
Facilities, including, but not limited to, any necessary
approvals or permits of the Federal Aviation Administration
(AFAA@), the Company will use its best efforts and proceed
14
with reasonable speed and dispatch to cause the Acquisition
and Construction of the Project Facilities substantially in
accordance with the Plans and Specifications as prepared by
the Company in reasonable detail and delivered to and approved
by the Issuer. Any supplements, amendments, changes and
additions to such Plans and Specifications shall be subject to
the reasonable approval of the Issuer as to their compliance
with the rules, regulations and procedures of the Issuer,
however, that the Issuer shall incur no pecuniary liability to
the Company, the Trustee or any other Person as a result of
having given or withheld such approval. No material
supplements, amendments, changes or additions to the Plans and
Specifications shall materially change the descriptions set
forth in the exhibits hereto or change the function of any
principal component described in the Plans and Specifications,
unless there shall be filed with the Issuer and the Trustee
the written approving opinion of Bond Counsel to the effect
that such supplement, amendment, change or addition will not
result in the inclusion of interest on any 1999 Series A Bond
in the gross income of the holder thereof for federal income
tax purposes (except in respect to Asubstantial users@ and
Arelated persons@ as described in Section 147(a)(1) of the
Code) and will not adversely affect the qualification of the
Project Facilities as a financeable project under the Act or
the Code. In the event of such a change in the descriptions
set forth in the exhibits hereto and following receipt by the
Issuer and the Trustee of such opinion of Bond Counsel, the
Issuer and the Company shall amend (without any requirement
for Bondholder consent) any or all of the exhibits to this
Agreement and the Ground Lease to reflect such change.
(b) In no event shall any changes or revisions in Plans
and Specifications (i) cause the Project Facilities, or any
portion thereof, to be structurally unsound, unsafe or
hazardous; (ii) fail to provide for sufficient clearance for
taxiways and aprons, if applicable; (iii) provide for use of
the Project Facilities, or any portion thereof, for purposes
other than those initially contemplated and agreed to by the
Issuer, unless approved in writing by the Issuer;
(iv) adversely affect the qualification of the Project
Facilities as a financeable project under the Act or the Code
or impair the exclusion of interest on any of the 1999 Series
A Bonds from gross income for purposes of federal income
taxation (except with respect to Asubstantial users@ and
Arelated persons@ as described in Section 147(a)(1) of the
Code); or (v) fail to comply with or be inconsistent with the
terms and conditions of this Agreement. The Company shall not
be deemed to be in default under the provisions of this
Section 3.01 if the Acquisition and Construction of all or any
portion of the Project Facilities shall be delayed or
prevented by the Company's inability to secure needed labor or
material, stormy or inclement weather, strikes, labor
15
disputes, lockouts or like trouble, acts of God, acts of
neglect of the Issuer or its agents or employees, laws,
regulations or restrictions of or imposed by any governmental
entity, agency or board, orders of any court, or fire or other
similar catastrophe or any other cause that is beyond the
Company's reasonable control;provided, however, that if any
of such events occur in connection with the Acquisition and
Construction of all or any portion of the Project Facilities,
the Company shall in good faith use its best efforts to remedy
the cause or causes preventing it from carrying out such
Acquisition and Construction if practicable, at reasonable
cost (in the Company's judgment) and subject to the remaining
terms hereof; and provided further that settlement of strikes,
lockouts and other labor disputes shall be entirely within the
discretion of the Company.
(c) Issuer approvals required by this Section 3.01 shall
be for the purpose of assuring the compatibility of the
Project Facilities with existing Airport facilities and with
the continuous operation of the Airport and to assure
compliance with the Ground Lease and/or applicable federal
and/or Issuer regulations as provided in clause (a) of this
Section 3.01. Such Issuer approvals shall not be unreasonably
withheld. The Issuer's approval rights under this Section
3.01 are Unassigned Rights, which are not assigned to, or
granted to the Issuer for the benefit of, the Trustee, and the
Trustee shall not have any right pursuant to this Agreement or
the Indenture to approve any supplements, amendments, changes
and additions to or deletions from the Plans and
Specifications or the Project Facilities.
(d) The Plans and Specifications, including any
supplements, amendments and additions thereto and as-built
Plans and Specifications, in form as reasonably stipulated by
the Issuer, shall be filed by the Company with the Issuer.
Section 3.02. Agreement to Issue 1999 Series A Bonds.
(a) In order to provide funds for payment of the Costs
of Construction of the Project Facilities, the Issuer agrees
to use its best efforts to issue the 1999 Series A Bonds in an
aggregate principal amount not to exceed $14,000,000. The
Company may request the Issuer to issue Additional Bonds
pursuant to Section 2.17 of the Indenture to (1) finance the
cost of completing any portion of the Project Facilities, (2)
refund any of the 1999 Series A Bonds or Additional Bonds,
including the costs of issuance and sale of such 1999 Series
A Bonds or (3) finance the Acquisition and Construction of
additions, expansions and improvements to the Project
Facilities or additional facilities at the Airport for
operation and use by the Company. If the Company is not in
default hereunder, the Issuer, upon request of the Company to
16
issue such Additional Bonds pursuant to the preceding sentence
and the authorizations of the Issuer=s governing board, will
endeavor to issue such Additional Bonds if it is legally
permitted to do so. Additional Bonds shall be issued upon
such terms and conditions as may be agreed upon by the Issuer
and the Company in accordance with the provisions of Section
2.17 of the Indenture. The Issuer and the Company hereby
agree that, to the extent permitted by law, any statutory
mortgage lien provided for by KRS 103.250(1) or KRS 103.250(2)
is expressly waived and released and shall not be applicable
to the Project Facilities or constitute security for the
payment of the 1999 Series A Bonds.
(b) It is understood and agreed that the principal
amount, interest rate or rates, terms and other provisions of
any Additional Bonds shall be subject to the direction and
written consent of the Company prior to the issuance of any
such Additional Bonds and that the Issuer will not issue any
such Additional Bonds without such direction and approval.
If, however, the Issuer is unable to issue any such Additional
Bonds as aforesaid after a request of the Company under this
Section 3.02, the Company shall, upon demand, pay or reimburse
the Issuer for all reasonable costs and expenses, if any,
expended by the Issuer in attempting to issue such Additional
Bonds. The Issuer shall not refund any 1999 Series A Bonds or
change or modify any 1999 Series A Bonds, this Agreement, the
Ground Lease or the Indenture in any way without prior written
direction and approval of the Company.
(c) The Company hereby approves the form of the
Indenture and the terms, provisions and conditions thereof.
Section 3.03.
Application of the Proceeds of 1999 Series A
Bond s. The Proceeds of the 1999 Series A Bonds shall be deposited
with the Trustee in the funds and accounts specified in the
Indenture. The application of such Proceeds shall be subject to
the conditions set forth in the Indenture. Payments shall be made
by the Trustee under the Indenture for the Costs of Construction,
acquisition, installation and equipping of the Project Facilities,
and all such payments shall be made at the times, to the persons,
subject to the conditions, and in accordance with the procedures
set forth in the Indenture. The Proceeds of the 1999 Series A
Bonds which are deposited in the Construction Fund shall be
expended only for the cost of the construction, acquisition and
installation of the Project Facilities, as provided in the
Indenture. No 1999 Series A Bond Proceeds shall be subject to
attachment or levy in the suit of any creditor of the Company or
any agent, manufacturer, supplier, contractor or subcontractor.
Section 3.04. Establishment of the Completion Date. The
Company covenants that it has obtained or will cause to be obtained
all necessary approvals and permits from any and all governmental
17
agencies requisite to the construction and operation of the Project
Facilities, and that the Project Facilities have been or will be,
as applicable, acquired, constructed and operated in all material
respects in compliance with all federal, state and local laws,
ordinances and regulations applicable thereto. The Company shall,
with all reasonable dispatch, commence construction and proceed
with due diligence to complete the construction, acquisition and
installation of the Project Facilities.
The Completion Date of the Project Facilities financed by the
1999 Series A Bonds shall be evidenced in each case to the Issuer
and the Trustee by issuance of the Company=s Completion
Certificate, as provided by Section 6.01 of the Indenture. Any
amounts to be retained by the Trustee for payment of Costs of
Construction not then due and payable shall be the subject of
specific instructions and directions of the Company to the Trustee.
Notwithstanding the foregoing, each certificate of completion
shall state that it is given without prejudice to any rights of the
Issuer or the Company, as the case may be, against third parties
which exist at the date of such certificate or which may
subsequently come into being.
Section 3.05. Company Required to Pay Costs of Construction
in Event Proceeds of 1999 Series A Bonds Insufficient.
(a) In the event that moneys held in the Construction
Fund available for payment of the Costs of Construction of the
Project Facilities are not sufficient to pay such Costs of
Construction in full, the Company either (i) shall request the
Issuer to issue Additional Bonds pursuant to Section 3.02
hereof to pay any or all of such excess Costs of Construction,
or (ii) shall complete and pay all Costs of Construction of
such Project Facilities in accordance with the Plans and
Specifications, as such Plans and Specifications may be
modified with the approval of the Issuer, which approval shall
not be unreasonably withheld, at the Company's expense;
provided that in the event the Company requests the Issuer to
issue Additional Bonds and the Issuer does not do so, the
Company shall comply with clause (ii) of this sentence.
(b) The Issuer does not make any warranty, either
express or implied, that the moneys paid into the Construction
Fund and available for payment of the Costs of Construction of
the Project Facilities will be sufficient for such purpose.
The Company agrees that if after exhaustion of such moneys
the Company should pay any portion of the Costs of
Construction of the Project Facilities pursuant to the
provisions of this Section 3.05, it shall not be entitled to
any reimbursement therefor from the Issuer (except from the
Proceeds of any Additional Bonds or pursuant to separate
agreement) or from the holders of any 1999 Series A Bonds, nor
18
shall the Company be entitled to any diminution of the rents
payable under Article IV hereof.
Section 3.06. Company to Pursue Remedies Against Contractors,
Subcontractors and Suppliers and Their Sureties. In the event of
default of any contractor, subcontractor or supplier under any
contract made in connection with the Project Facilities, the
Company will, if in its sole discretion it deems it appropriate,
promptly proceed, either separately or in conjunction with the
Issuer (but at the expense of the Company), if the Issuer consents
(which consent shall not be unreasonably withheld) or with others,
to pursue the remedies of the Company against the contractor,
subcontractor or supplier so in default and against any surety for
the performance of such contractor, subcontractor or supplier. The
Company agrees to advise the Issuer and the Trustee of any default
by a contractor, subcontractor or supplier material to the
operations of the Airport and any legal actions or proceedings it
intends to commence in connection with any such default. Any
amount recovered by way of damages, refunds, adjustment or
otherwise in connection with the foregoing shall, after
reimbursement to the Issuer and the Company of any cost incurred by
them by reason of such default and legal and other related costs
expended in prosecuting all claims against such defaulting party,
(i) prior to the Completion Date shall be used to pay Costs of
Construction of the Project Facilities and (ii) after the
Completion Date shall be paid to the Trustee for deposit into the
Bond Fund and applied, at the direction of the Authorized Company
Representative, (A) to purchase 1999 Series A Bonds in the open
market (excluding any portion of the purchase price which is
attributable to interest accrued and/or accruing on such 1999
Series A Bonds until the date of purchase) for the purpose of
cancellation; (B) to redeem 1999 Series A Bonds on their earliest
redemption date, as applicable (paying principal sums only) for the
purpose of cancellation; or (C) used to pay the principal of and/or
interest on the 1999 Series A Bonds, provided that prior to
exercising the rights set out in clause (C) above the Company shall
deliver to the Trustee and the Issuer a Favorable Opinion of Bond
Counsel to the effect that such transfer will not impair the
exclusion of the interest on the 1999 Series A Bonds from gross
income for federal income tax purposes. The Company agrees that if
the Issuer participates in any legal action or proceedings, it and
its officers and employees shall be fully indemnified and held
harmless by the Company in connection therewith.
Section 3.07. Directions by Company. In all cases where
action may be taken under this Agreement or the Indenture by the
Issuer at or upon the direction of the Company, the Issuer hereby
authorizes the Company to give notice on behalf of the Issuer of
the exercise of such action. Such notice shall be given
concurrently to both the Issuer and the Trustee and may be given
either in writing or by telephone or telegraph, confirmed in
writing.
19
Section 3.08. Title to the Project Facilities.
(a) The Company agrees and acknowledges that, subject to
Section 3.09, all right, title and interest in the Project
Facilities, including any portion thereof heretofore or
hereafter acquired or constructed, whether constituting real,
personal or mixed property, shall, pursuant to the
requirements of Section 142(b)(1)(B) of the Code, be
governmentally-owned by the Issuer, subject to the leasehold
estate of the Company (and the rights of all successors
thereto, whether by law, equity or contract) created by this
Agreement in respect of the Project Facilities. The Company
hereby agrees to execute any further written instrument as
shall be necessary to satisfy the requirements of Section
142(b)(1)(B) of the Code, with respect to such governmental
ownership, subject to the leasehold estate of the Company
created by this Agreement. It is intended that nothing in
this Section 3.08 shall cause any Company property not
financed by the Proceeds of the 1999 Series A Bonds which is
or may be installed in or on the Project Facilities pursuant
to Article V or cause any AExcluded Equipment@ under Article
V hereof to become part of the Project Facilities.
(b) Pursuant to Section 142(b)(1)(B)(i) of the Code, the
Company hereby makes an irrevocable election, binding upon the
Company, the Guarantor and all their successors in interest
under this Agreement, not to claim depreciation or any
investment tax credit with respect to the 1999 Series A Bond-
financed Project Facilities.
Section 3.09. Failure to Issue 1999 Series A Bonds. If for
any reason the 1999 Series A Bonds are not issued, this Agreement
shall automatically terminate and the Project Facilities, if then
constructed in whole or in part by the Company, shall continue to
be owned by the Company. In that event, notwithstanding any other
provision in this Agreement to the contrary, there shall be no
rental applicable to such facilities for the original Agreement
term and any additional option terms. Furthermore, upon any such
occurrence, the Issuer agrees to take, at the Company=s cost and
expense, whatever actions the Company may reasonably request to
carry out the intent of this provision, including, without
limitation conveying all present and future right, title and
interest of the Issuer in such Project Facilities as may be now or
hereafter constructed, to the Company and executing any further
deed, conveyance, ▇▇▇▇ of sale or other written instrument as shall
be necessary or desirable to convey any interest it has in such
facilities to the Company.
ARTICLE IV
LEASE OF THE PROJECT FACILITIES; OPTIONS TO
20
RENEW; EFFECTIVE DATE OF THIS AGREEMENT; DURATION OF
AGREEMENT TERM; RENTAL PROVISIONS; PREPAYMENTS AND CREDITS
Section 4.01. Demise of Project Facilities. The Issuer does,
by these presents, hereby lease and demise to the Company, and the
Company does, by these presents, hereby take and hire from the
Issuer, for and during the term provided in Section 4.02 and upon
and subject to the terms, provisions and conditions herein set
forth, the Project Facilities. It is the intention of the Issuer
and the Company that the Project Facilities shall at all times be
governmentally-owned by the Issuer, as provided by Section
142(b)(1)(B) of the Code.
Section 4.02. Effective Date of This Agreement; Duration of
Agreement Term; Options to Renew.
(a) This Agreement shall become effective upon the
delivery hereof, and the leasehold estate created in this
Agreement shall then begin, and shall continue in full force
and effect, subject to Section 2.02 hereof, unless terminated
prior thereto as hereinafter provided, for an initial term
expiring July 1, 2029, subject to the options set forth in
clause (b) of this Section 4.02. Notwithstanding any other
provisions of this Agreement, the aggregate sum of the initial
term of this Agreement, plus all option terms, including the
Fair Market Value Term, if applicable, shall not exceed 40
years.
(b) Upon expiration of the initial Agreement term, the
Company is hereby granted the options, exercisable in the case
of each such option not more than 18 months nor less than 12
months prior to the expiration of either the initial Agreement
term or the applicable option term, to renew this Agreement in
respect of the Project Facilities for two additional option
terms ending respectively on (i) July 1, 2034 (the AFirst
Option Term@) and (ii) July 1, 2039 (the ASecond Option
Term@). In the event the First Option Term and the Second
Option Term (as adjusted, pursuant to clause (d) of this
Section 4.02) in the aggregate equal 80% of the reasonably
expected economic life of the Project Facilities, as of the
Date of Issuance of the 1999 Series A Bonds, determined
pursuant to Section 147(b) of the Code, but do not, in the
aggregate, equal 40 years, the Company is hereby granted an
option to renew this agreement, at fair market rental value,
from the date of the expiration of the Second Option Term to
July 1, 2039 (the AFair Market Value Term@). The Company
represents to the Issuer that (y) the initial Agreement term
plus both (z) the First Option Term and the Second Option Term
do not, in the aggregate, exceed 80% of the reasonably
expected economic life of the Project Facilities, as of the
Date of Issuance of the 1999 Series A Bonds, determined
pursuant to Section 147(b) of the Code.
21
(c) The rental payable for the Project Facilities during
each of the First Option Term and Second Option Term shall be
$1.00 per annum plus payment of Facility Rentals described in
Sections 4.03(a) and 4.03(b) hereof, if any. The rental
payable for the Project Facilities during the Fair Market
Value Term shall be the fair market rental value of the
Project Facilities during such term, determined in accordance
with clause (e) of this Section 4.02.
(d) Upon completion of Acquisition and Construction of
the Project Facilities, the Company shall recalculate the
reasonably expected economic life of the Project Facilities to
be leased pursuant hereto, based on final, definitive costs of
the Project Facilities; and to the extent required to assure
that the Project Facilities to be leased pursuant hereto are
not leased for more than 80% of their reasonably expected
economic life (as determined under Section 147(b) of the Code)
by the Company at rental rates other than fair market rent
(the A80% Test@), the First Option Term and Second Option Term
commencement and termination dates shall, if necessary, be
adjusted to dates identified by the Company which comply with
the 80% Test. The Company shall notify the Issuer in writing
of any such rental period adjustments and shall provide upon
request reasonable information to verify compliance with the
80% Test.
(e) (i) For purposes of clause (c) of this Section 4.02,
in determining the fair market rental value of the Project
Facilities for purposes of the Fair Market Value Term, the
Issuer and the Company shall, not more than four (4) months
nor less than three (3) months prior to the expiration of the
term preceding the Fair Market Value Term, each select an
appraiser, which shall be knowledgeable, experienced and
qualified in the evaluation of the fair market value of
airport properties and leases of airport properties, whose
fees shall be paid, respectively, by the Issuer and the
Company. Those two appraisers shall, within 5 days of their
appointments, select a third similarly qualified appraiser,
whose fee shall be shared equally by the Issuer and the
Company. In the event the three appraisers so selected cannot
agree upon the fair market rental value for the Project
Facilities during the Fair Market Value Term, each of the
three appraisers shall, within 15 days of appointment,
independently appraise the fair market rental value of the
Project Facilities for the Fair Market Value Term. For
purposes of those appraisals, fair market rental value shall
mean the rental value as of the expiration date of the Option
Term preceding the Fair Market Value Term payable in cash in
monthly installments, that a bona fide willing lessee who is
not in possession and a bona fide willing lessor who is under
no compulsion to lease are willing to pay to lease the Project
Facilities for the Fair Market Value Term. The Company's
22
option to lease under this subparagraph (e) shall be at the
fair market rental value as determined either by (i) the
agreement of the three appraisers or (ii) the average of such
three separate appraisals. The Issuer agrees to cooperate
with the Company to ensure that the appraisals and rental
rates determined thereby are made available to the Company at
least fifteen (15) days in advance of the latest date on which
the Company can exercise its option. If the Company exercises
any option to renew granted by this Agreement, this Agreement
shall continue in full force and effect for such Fair Market
Value Term.
(ii) Notwithstanding the provisions of Section 4.02(e)(i)
of this Agreement, the fair market rental value of the Project
Facilities during the Fair Market Value Term must, at the time
of any exercise of the Fair Market Value Term Option, comply
with the provisions of Section 142 of the Code and the
provisions of this Agreement shall be construed to accomplish
such requirements.
Section 4.03. Rentals Payable. Throughout the Agreement
term, the Company shall pay or cause to be paid to the Issuer each
of the following Facility Rentals at the following times and in the
following amounts:
(a) With respect to any Outstanding 1999 Series A Bonds,
in the manner, at the times and in the amounts set forth in
clauses (i) and (ii) of this subsection 4.03(a), the Company
shall make such payments so that there shall be on deposit in
the Bond Fund (i) on each maturity, redemption or principal
payment date (whether by scheduled maturity or optional or
mandatory redemption), an amount equal to the principal of and
redemption premium, if any, due on such 1999 Series A Bonds
(whether such payment date be by reason of maturity or upon
redemption, prepayment or by acceleration or otherwise) on
such maturity, redemption or principal payment date and (ii)
on each Interest Payment Date, an amount equal to the interest
due on such 1999 Series A Bonds on such Interest Payment Date;
provided, however, the Company shall receive a credit against
any rental amount due under this Section 4.03(a) and such
obligation shall be deemed satisfied in the amount of any sum
required to be paid under this Section 4.03(a) which is paid
from any amounts on hand available for such purposes under the
Trust Indenture, including any amounts paid pursuant to the
Guaranty; and
In order to satisfy the requirements of this subsection
(a), the Company shall pay on or prior to the first day of
each month:
(y) To the Bond Fund, taking into account any
amounts already on deposit therein, an amount sufficient
23
to produce the interest component of then accrued Debt
Service Requirement of the 1999 Series A Bonds and
thereafter monthly an amount equal to one-sixth (1/6) of
the interest coming due on the 1999 Series A Bonds on the
next Interest Payment Date;
(z) To the Bond Fund, taking into account any
amounts already on deposit therein, an amount sufficient
to produce the principal and sinking fund installment
component of then accrued Debt Service Requirement of the
1999 Series A Bonds and thereafter monthly an amount
equal to one-twelfth (1/12) of the principal and sinking
fund installment coming due on the 1999 Series A Bonds on
the next July 1.
(b) A rental commencing upon delivery of this Agreement
payable from time to time within thirty (30) days after
receipt by the Company of a requisition therefor from the
Issuer, until the principal of and premium, if any, and
interest on all 1999 Series A Bonds shall have been fully paid
or provision for the payment thereof shall have been made, in
an amount equal to previously unreimbursed Administration
Expenses, which may be payable to the Issuer or to third
parties, at the request of the Issuer.
(c) The Company further agrees to pay or cause to be
paid to the Trustee until the principal of, premium, if
any, and interest on the 1999 Series A Bonds shall have been
fully paid or provision for the payment thereof shall have
been made in accordance with the provisions of the Indenture,
(i) an amount equal to the annual fee of the Trustee for the
ordinary services of the Trustee, as trustee, rendered and its
ordinary expenses incurred under the Indenture, as and when
the same become due, (ii) the reasonable fees, charges and
expenses of the Trustee, for acting as Registrar and Paying
Agent as provided in the Indenture, as and when the same
become due and (iii) the reasonable fees, charges and expenses
of the Trustee and its counsel for the necessary extraordinary
services rendered by it and extraordinary expenses incurred by
it under the Indenture with prior written notice to the
Company, as and when the same become due.
(d) In the event the Company should fail to make or
cause to be made any of the payments required in this Section
4.03, the item or installment so in default shall continue as
an obligation of the Company until the amount in default shall
have been fully paid, and the Company agrees to pay the same
with interest on all outstanding amounts due hereunder at the
rate of interest per annum then borne by the 1999 Series A
Bonds until paid.
(e) Notwithstanding any other provision of this
Agreement, the Company shall (i) make payments or cause
24
payments to be made at such times and in such amounts as will
enable the Issuer to meet all of its obligations under the
1999 Series A Bonds and the Indenture, including any payment
required to be made to the Rebate Fund under the Indenture and
to the Bond Fund under the Indenture, (ii) to pay and thereby
eliminate any deficiency in the minimum requirements of any
other funds created by and under the Indenture and (iii) to
make any payment due on an acceleration of the maturity of the
1999 Series A Bonds pursuant to the terms thereof.
Accordingly, the Company agrees (but such agreement shall not
limit the generality of the preceding sentence) that if any
additional amounts become payable by the Issuer to the Owners
of the 1999 Series A Bonds pursuant to the terms thereof, then
additional amounts shall be due and payable by the Company to
the Issuer hereunder equal to any additional amounts that may
be so payable by the Issuer, whether before or after payment
of principal on the 1999 Series A Bonds, all of which amounts
shall be paid by the Company no later than the date that the
comparable amounts are due by the Issuer to the Owners of the
1999 Series A Bonds. The Company further agrees to pay or
cause to be paid all costs of maintenance and repair, all
taxes and assessments, insurance premiums and other costs and
expenses concerning or in any way related to ownership,
maintenance and use of the Project Facilities, or any part
thereof, during the term of this Agreement or any renewal
thereof.
(f) Notwithstanding anything to the contrary which may
be contained in this Agreement, any amount payable pursuant to
this Agreement with respect to the principal of (whether at
maturity or upon redemption or acceleration or otherwise) or
premium, if any, and interest on the 1999 Series A Bonds shall
be deemed satisfied and discharged to the extent moneys are
available for such payment in accordance with the terms of the
Indenture.
Section 4.04. Assignment of Rights; Payees of Rental
Payments. As security for the payment of the 1999 Series A Bonds,
the Issuer will assign to the Trustee the Issuer's rights under
this Agreement, including the rights to receive payments hereunder,
but exclusive of Unassigned Rights and the Company herewith assents
to such assignment. The rent provided for in Section 4.03(a) (i)
and (ii) hereof shall be paid by the Company directly to the
Trustee and shall be used by the Trustee to pay principal of and
premium, if any, and interest on the 1999 Series A Bonds. The rent
provided for in Section 4.03(b) shall be paid either to the Issuer
or directly to third parties, at the direction and request of the
Issuer.
Section 4.05. Obligations of the Company Hereunder Absolute
and Unconditional. The obligations of the Company to make the
payments required under Section 4.03(a), 4.03(b), 4.03(c), and
25
4.03(e) and to pay the premiums or charges necessary to maintain or
cause to be maintained the insurance required by Section 5.06 not
otherwise paid in accordance with other provisions of this
Agreement shall be absolute and unconditional and the Company will
not suspend or discontinue any such payments referred to in Section
4.03(a), 4.03(b), 4.03(c), and 4.03(e) so long as any 1999 Series
A Bonds are Outstanding and will not terminate this Agreement for
any cause including, without limiting the generality of the
foregoing, (A) any abatement, suspension, deferment, reduction,
setoff, defense (other than payment), counterclaim or recoupment
whatsoever, or any right to any thereof, which the Company may now
or hereafter have, (B) any insolvency, composition, bankruptcy,
reorganization, arrangement, liquidation or similar proceedings
relating to the Issuer or the Company, (C) any delay or failure of
the Project Facilities, or any portion thereof, to be completed,
operating or operable, or any defect in the title, quality,
condition, design, operation or fitness for use of, or any damage
to, or loss of, or loss of use of, or destruction or theft of, all
or any part of the Project Facilities from any cause whatsoever,
(D) any interruption or prohibition of the use or possession by the
Issuer or the Company of, or any ouster or dispossession by
paramount title or otherwise of the Issuer or the Company from, all
or any part of the Project Facilities, or any interference with
such use or possession by any governmental agency or board or other
person or otherwise, (E) the invalidity or unenforceability or
disaffirmance, in whole or in part, of this Agreement or any
failure, omission, delay or inability of the Issuer to perform any
of its obligations contained in this Agreement, (F) any amendment,
extension or other change of, or any assignment or encumbrance of
any rights or obligations under, this Agreement, or any waiver or
other action or inaction, or any exercise or non-exercise of any
right or remedy, under or in respect of this Agreement, (G) any
sale, release, substitution, exchange or other action or inaction
with respect to the Project Facilities, (H) any acts or
circumstances that may constitute failure of consideration, (I) any
change in the tax or other laws of the United States of America or
of the Commonwealth or any political subdivision of either thereof,
(J) any failure of the Issuer to perform and observe any agreement,
whether express or implied, or any duty, liability or obligation
arising out of or connection with this Agreement, or (K) any other
circumstance, happening or event whatsoever, whether foreseeable or
unforeseeable and to the extent permitted by applicable law, any
and all rights which it may now have or which may at any time
hereafter be conferred upon it, by statute or otherwise, to
terminate, cancel, quit or surrender any of its obligations under
this Agreement in regard to payments referred to in Section 4.03
and agrees that if, for any reason whatsoever, this Agreement shall
be terminated in whole or in part by operation of law or otherwise,
the Company will nonetheless promptly pay to the Trustee as
assignee of the Issuer amounts equal to all such amounts referred
to in Section 4.03(a) and 4.03(b) which shall become due and
payable pursuant to this Agreement, to the same extent as if this
Agreement had not been terminated in whole or in part. Each
26
payment referred to in Section 4.03(a) and 4.03(b) made by the
Company pursuant to this Agreement, including such other amounts,
shall be final, and the Company shall not seek to recover all or
any part of such payment from the Issuer, the Trustee or any holder
of 1999 Series A Bonds for any reason whatsoever. Nothing
contained in this Section 4.05 shall be construed to relieve the
Issuer or the Trustee from the performance of any of the agreements
on their part contained herein or in the Indenture or to constitute
a waiver by the Company of its rights to enforce the performance
thereof.
Section 4.06. Prepayment of Rents.
(a) There is expressly reserved to the Company the right,
and the Company is authorized, at any time or times it may
choose, to prepay or cause to be prepaid all or any part of
the Facility Rentals to provide for the redemption of 1999
Series A Bonds in whole or in part, or to provide for the
defeasance of 1999 Series A Bonds pursuant to the Indenture,
and the Issuer agrees that the Trustee shall accept such
prepayment of rents when the same are tendered by the Company.
All Facility Rentals so prepaid (including interest accrued
thereon) shall be deposited in accordance with the Indenture
and applied to such payment, redemption or defeasance in
accordance with the terms thereof.
(b) At the time of the issuance of the 1999 Series A
Bonds, the Company shall file a certificate with the Issuer
and the Trustee allocating the Proceeds of the 1999 Series A
Bonds to the several airport facilities comprising the Project
Facilities, on the basis of the amount of the Proceeds of the
1999 Series A Bonds expected to be expended for each such
airport facility. Within a reasonable period of time after
completion of Acquisition and Construction of the Project
Facilities, the Company, based on final, definitive costs of
the Project Facilities shall file a supplemental certificate
with the Trustee to the extent required to accurately allocate
the Proceeds of the 1999 Series A Bonds to the Project
Facilities.
ARTICLE V
MAINTENANCE, TAXES AND INSURANCE
Section 5.01. Maintenance of Project Facilities by the
Company.
(a) During the term of this Agreement, the operation,
maintenance and repair of the Project Facilities and the
related Leased Premises, as defined in the Ground Lease, shall
be the obligation and responsibility of the Company and shall
be in strict accordance with all of the relevant terms of the
Ground Lease, which are incorporated herein by reference. In
27
such regard, the Company shall pay, as the same shall become
due, all costs and expenses incurred by it in the operation,
maintenance and repair of the Project Facilities and such
Leased Premises, including any machinery, equipment or related
property substituted for any equipment therein.
(b) The Company shall at all times stipulated in clause
(a), keep or cause to be kept the Project Facilities, together
with all property of the Company located in or on the Project
Facilities, in a clean, sanitary and orderly condition and
appearance, as required by the Ground Lease.
Section 5.02. Utility Services.
(a) The Issuer shall, in accordance with the provisions
of the Ground Lease, at the expense of the Company, bring or
cause to be brought and maintained such utility facilities and
connections for the supply of water, gas, electricity,
telephone and other utilities, and for the disposal of sewage,
as the Company shall require up to such point or points on the
boundary or boundaries of the Leased Premises upon which the
Project Facilities, are to be situated, as the parties shall
mutually determine. The obtaining and maintaining of all
other or additional utility services with respect to the
Project Facilities shall be in accordance with the Ground
Lease. As provided in the Ground Lease, the Company shall
accept from the Issuer and pay for all water supply services
and sanitary sewer connection services required by the
Company. All other utility services and supplies shall be
obtained and paid for by the Company from the appropriate
public utilities.
(b) The Company shall pay all lawful charges for utility
services furnished to the Company as the same become due, both
during and after Acquisition and Construction of the Project
Facilities.
(c) So long as any 1999 Series A Bonds are Outstanding,
no failure, delay or interruption in any utility service or
services, whether such are supplied by the Issuer or others,
shall relieve or be construed to relieve the Company of any of
its obligations hereunder, or shall be or construed to be an
eviction of the Company, or shall constitute grounds for
diminution or abatement of the Facility Rentals payable by the
Company pursuant to this Agreement, except as provided in
Section 8.02 hereof, the provisions of which are incorporated
herein by reference.
Section 5.03. Installation of the Company's Property.
Except as otherwise provided in the Ground Lease, the
Company shall have the right (i) to make structural
28
improvements, alterations or modifications not inconsistent
with the Plans and Specifications to the Project Facilities
which shall become part thereof and be the property of the
Issuer, and (ii) to install its own furnishings, equipment,
machinery or other personal property in or on the Project
Facilities or to attach fixtures or structures in or on the
Project Facilities which, if same can be removed without
material damage to or alteration of the Project Facilities,
shall not become a part of the Project Facilities (the
AExcluded Equipment@). Except as otherwise provided in the
Ground Lease, from time to time, including upon the
termination of the term of this Agreement by lapse of time or
otherwise (including without limitation, upon exercise by the
Issuer of the remedies reserved to it in Article VIII, Section
8.07), the Company may remove from the Project Facilities, at
its own expense, any of its furnishings, equipment, machinery
or other personal property, fixtures or structures added by it
which constitute Excluded Equipment and do not constitute part
of the Project Facilities; provided, however, that such
removal shall be accomplished so as to leave the Project
Facilities, except for ordinary wear and tear, in
substantially the same condition as they were before the
Company's furnishings, equipment, machinery or other personal
property, fixtures or structures were added by it to the
Project Facilities, and that any damage occasioned by such
removal shall be repaired by the Company at its own expense.
The Company shall, before or within a reasonable time after
the termination of the term of this Agreement by lapse of time
or otherwise (including, without limitation, upon the exercise
by the Issuer of the remedies reserved to it in Article VIII,
Section 8.07), remove its Excluded Equipment from the Project
Facilities. Except as otherwise provided in the Ground Lease,
all furnishings, equipment, machinery or other personal
property installed by the Company pursuant to clause (ii) of
the first sentence of this Section 5.03(a) shall remain the
property of the Company in which the Issuer shall have no
interest and shall not in any way be subject to the terms and
provisions of this Agreement.
Section 5.04. Changes to the Project Facilities After the
Completion Thereof.
(a) The Company may remove any item of equipment or any
other part of the Project Facilities which in the opinion of
the Company has become inadequate, obsolete, worn out,
unsuitable, undesirable or unnecessary. The Company shall be
under no obligation to replace removed items or parts with
other items or parts unless and to the extent such replacement
is required in order to avoid a material adverse effect on the
overall operating efficiency of the Project Facilities
remaining after such removal. Any replacement items and parts
required to be so replaced (hereinafter referred to as the
29
AReplacement Property@), other than any item or part of the
Company's own furnishings, equipment, machinery, other
personal property, fixtures, structures in or on the Project
Facilities furnished by the Company pursuant to clause (ii) of
the first sentence of Section 5.03(a)(ii) which are Excluded
Equipment, shall be and become a part of the Project
Facilities and shall be subject to this Agreement. Nothing in
this paragraph shall be a limitation upon or be construed as
a limitation upon, the obligations of the Company set forth in
Section 5.01.
(b) The Company may, with the consent of the Issuer, on
behalf of the Issuer in the case of any part of the Project
Facilities other than Excluded Equipment, sell, trade in,
exchange or otherwise dispose of (as a whole or in part) any
property removed from the Project Facilities pursuant to
subsection (a) of this Section 5.04. The Company shall not be
accountable to the Issuer or the Trustee for such property or
for the Proceeds of the disposition thereof (except as
specifically set forth in subsection (a) and (d) of this
Section 5.04).
(c) The Company will promptly report to the Issuer and
the Trustee each removal, substitution, installation, sale and
other disposition made pursuant to this Section 5.04, other
than Excluded Equipment; provided, that no such report need be
made, and no such payment need be made, as the case may be,
until the amount so to be reported, or so to be paid, as the
case may be, not previously reported, or not previously paid,
as the case may be, aggregates at least $25,000.
(d) The removal from the Project Facilities of any part
of the Project Facilities pursuant to the provisions of this
Section 5.04, or the installation by the Company of any new or
additional property thereon pursuant to the provisions of this
Section 5.04 shall not entitle the Company to any abatement or
diminution of the rentals payable hereunder. The Company
shall not remove or permit the removal of any other machinery,
apparatus, furnishings, equipment or other personal property
constituting part of the Project Facilities except in
accordance with the provisions of Sections 5.03 and 5.04. In
the event that the removal of the property causes material
damage to any remaining buildings or structures, the Company
shall promptly restore and repair the same at its own expense.
Section 5.05. Taxes, Other Governmental Charges and Utility
Charges.
(a) Subject to Section 5.05(b), the Company will pay
during the term of this Agreement, as the same respectively
become due, all taxes and governmental charges of any kind
whatsoever that may at any time be lawfully assessed or levied
30
against or with respect to the Project Facilities or any
machinery, equipment or other property installed, brought by
the Company therein or thereon or with respect to the issuing
of 1999 Series A Bonds (including, without limiting the
generality of the foregoing, any taxes levied upon or with
respect to the rentals of the Issuer derived under this
Agreement, or any transaction privilege taxes or rental taxes
payable as a result of any rental payments hereunder and
similar charges, pursuant to this Agreement) and all
assessments and charges lawfully made by any governmental body
for public improvements; provided that with respect to special
assessments or other governmental charges that may lawfully be
paid in installments over a period of years, the Company shall
be obligated to pay only such installments as are required to
be paid during the term of this Agreement. Upon receipt of
notice thereof by the Issuer, the Issuer will promptly provide
notice to the Company as to the levy or assessment of any such
taxes or governmental charges, but the failure of the Issuer
to provide such notice will not affect the responsibilities of
the Company as set forth in this subsection (a) once such
notice is provided to the Company.
(b) The Company may, at its expense and in its own name
and behalf or in the name and on behalf of the Issuer, but
only after written notice to the Issuer, in good faith contest
any assessed valuation or the amount or the legality of such
taxes, assessments and other charges, and, in the event of any
such contest, may permit the taxes, assessments or other
charges so contested to remain unpaid during the period of
such contest and any appeal therefrom unless the enforcement
of any such contested items is so stayed and such stay
thereafter expires or unless by nonpayment of any such
contested items, any part of the Project Facilities will be
subject to loss or forfeiture, in which event such taxes,
assessments or charges shall be paid promptly or secured by
posting a bond, in form satisfactory to the Issuer, with the
Issuer. The Issuer will cooperate with the Company in any
such contest at the Company=s expense. The Issuer shall
cooperate with the Company, at the Company=s expense, in
connection with any administrative or judicial proceedings for
determining the validity or amount of any such taxes,
assessments or other charges or any payments in lieu of taxes
and appoints the Company to take any action which the Issuer
may lawfully take in respect of such payments and all matters
relating thereto, and the Company shall bear and pay all
reasonable costs and expenses of the Issuer thereby incurred
at the request of the Company or by reason of any such action
taken by the Company on behalf of the Issuer.
Section 5.06. Insurance Required. The Company shall maintain
reasonably adequate insurance against risks, accidents or
casualties, including self-insurance, with respect to the Project
31
Facilities as is customarily carried by persons engaged in similar
businesses and operating facilities like the Project Facilities.
Specifically, the Company shall obtain and maintain all insurance
coverage required by the provisions of the Ground Lease and
provided continuous evidence thereof to the Issuer in accordance
with Section XIII thereof. The Company shall annually file a
certificate of the Authorized Company Representative or other
authorized Company officer affirming such required insurance
coverage with the Trustee upon issuance of the 1999 Series A Bonds
and thereafter within 45 days following the end of each Company
fiscal year.
ARTICLE VI
SPECIAL COVENANT
S
Section 6.01. Maintenance of Existence.
(a) The Company agrees that so long as any 1999 Series
A Bond remains Outstanding, it will maintain its corporate
existence, will not dissolve or otherwise dispose of all or
substantially all of its assets and licenses and will not
merge into or consolidate with any other corporation or other
entity; provided, however, that the Company may, without
violating any provision hereof and without the necessity of
any consent of the Issuer or any owner of any 1999 Series A
Bond, so long as the Guaranty remains in full force and
effect, and except as otherwise provided in the Ground Lease,
consolidate with or merge into another corporation or other
entity or permit one or more other corporations or other
entities to consolidate with or merge into it, or transfer or
convey all or substantially all of its property, assets or
licenses to another corporation or other entity and be
released from any further responsibility hereunder, but only
on the condition that the corporation or other entity
resulting from or surviving such merger (if other than the
Company) or consolidation or the corporation or other entity
to which such transfer or conveyance is made shall either be
a subsidiary of the Company or an affiliate of the Company or
such entity shall (i) be legally qualified to occupy, use and
operate the Project Facilities as exempt facilities
constituting an airport or being functionally related and
subordinate to an airport under Section 142(a)(1) of the Code
and covenant to continue to operate and use the Project
Facilities as such, (ii) expressly assume in writing and agree
to perform all of the Company's obligations under this
Agreement, (iii) be qualified to do business in the
Commonwealth and (iv) if such corporation or other entity
shall not be organized and existing under the laws of the
United States of America or any state or territory thereof or
the District of Columbia, deliver to the Issuer and the
Trustee an irrevocable consent to service of process in, and
32
to the jurisdiction of the courts of, the Commonwealth with
respect to any action or suit, in law or in equity, brought by
the Issuer or the Trustee to enforce this Agreement.
Additionally, a Favorable Opinion of Bond Counsel must be
issued to the effect that the action to be taken will not
adversely affect the exclusion of interest on the 1999 Series
A Bonds from gross income for federal income tax purposes. If
the Company is the surviving corporation in such a merger, the
express assumption referred to in the preceding sentence shall
not be required.
(b) The Company shall preserve and keep in full force
and effect all material licenses and permits necessary to the
proper conduct of its business and necessary to its use and
beneficial occupancy of the Project Facilities.
Section 6.02. Financial Information.
(a) (i) The Company agrees to furnish to the Issuer a
copy of the Guarantor=s annual report and Report on S.E.C.
Form 10-K setting forth the Guarantor=s financial statements
and the report of the independent public accountants with
respect thereto and a copy of the Guarantor=s quarterly
reports on S.E.C. Form 10-Q not later than 60 days after the
Guarantor files such reports with the S.E.C.
(ii) Upon request of the Underwriter and/or the Trustee,
the Company will furnish to such parties copies of the
Guarantor=s annual report and any public financial statements
and reports filed by the Company with the Securities and
Exchange Commission pursuant to the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended.
(iii) If at any time the Guarantor is not required to
file S.E.C. forms 10-K or 10-Q, the Company shall cause the
Guarantor to prepare and file with the Issuer, the original
underwriter of the 1999 Series A Bonds and the Trustee within
120 days following the end of the fiscal year of the Guarantor
audited (i) financial statements of the Guarantor for such
period and (ii) unaudited operating statements and balance
sheets of the Guarantor within 60 days of the end of each
fiscal quarter of the Guarantor.
(b) The Company, the Issuer and the Kentucky Economic
Development Finance Authority (AKEDFA@), a Kentucky state
agency, intend, at the special instance and request of the
Company, in order to assist the Company to obtain financial
incentives from the Commonwealth, to enter into a certain
AService and Technology Agreement@ (the AService Agreement@).
The Service Agreement will require the Issuer to provide to
KEDFA in writing, the following: (i) on an annual basis, no
33
later than ninety (90) days following the end of each fiscal
year of the Company, a report as to the rentals paid under
this Agreement by the Company to the Issuer; (ii) notice of
all defaults of the Company, specifying the nature thereof,
within 10 days of the default declaration; and (iii) notice of
expiration or early termination of this Agreement, without
extension or renewal, within ten (10) days of such expiration
or termination. The Company covenants that it will annually
file the data required by clause (i) in writing with the
Trustee within forty-five (45) days following the end of each
fiscal year of the Company and will file the data required by
clauses (ii) and (iii) in writing with the Trustee within five
(5) days of any default declaration or termination or
expiration of the Lease, so as to enable the Trustee, on
behalf of the Issuer, to comply with such required reporting,
in accordance with the Service Agreement.
Section 6.03. Right of Access to the Project Facilities.
(a) The Issuer or its designees shall have, during the
term of this Agreement at reasonable times and upon reasonable
prior written notice, the right of entry upon the Project
Facilities: (i) to examine and inspect the same, (ii) for any
purpose connected with the Issuer's rights or obligations or
the Company's obligations under the Ground Lease and this
Agreement, (iii) to service or post or keep posted thereon
notices provided by any law or rules or regulations of the
Commonwealth which the Issuer deems to be necessary for the
protection of the Issuer or the Project Facilities; and (iv)
for all other lawful purposes;provided that in exercising the
right of entry pursuant hereto the Issuer shall not
unreasonably interfere with the Company's use or occupancy of
the Project Facilities.
(b) Without limiting the generality of the foregoing,
the Issuer, by its officers, employees, agents,
representatives, contractors and furnishers of utilities and
other services, shall have the right for its own benefit, for
the benefit of the Company or for the benefit of other persons
at reasonable times and upon reasonable prior written notice,
to maintain existing and future utility, mechanical,
electrical and other systems and to enter upon the Project
Facilities at all reasonable times and upon reasonable prior
written notice to make such repairs, replacements or
alterations to such systems as may, in the opinion of the
Issuer, be necessary or desirable and, from time to time, to
construct or install such systems over, in or under the
Project Facilities for access to other parts of the Airport,
provided that the maintenance, construction and installation
of such systems does not unreasonably interfere with the
operation by the Company of the Project Facilities.
34
(c) Nothing in this Section 6.03 shall, or shall be
construed to impose upon the Issuer any obligations so to
maintain, construct or install such systems or to make
repairs, replacements, alterations or additions to the Project
Facilities, or shall create any liability for any failure to
do so provided that nothing herein shall be construed to
reduce or abrogate any of the obligations of the Issuer
arising under Section 5.02(a) hereof.
(d) The Issuer and the Company shall have the rights of
ingress, egress, rights of use of the public streets,
roadways, ramps, taxiways, access roads and runways, as
provided in the Ground Lease.
Section 6.04. Company's Performance Under Indenture;
Amendments to Indenture. The Company agrees, for the benefit of
the Owners from time to time of the 1999 Series A Bonds, to do and
perform all acts and things contemplated in the Indenture to be
done or performed by it, including specifically, but not by way of
limitation, the duties with respect to arbitrage rebate set forth
in the Indenture. The Issuer agrees that it shall not execute or
permit any amendment or supplement to the Indenture which affects
any rights, obligations, powers or authorities of the Company under
the Indenture or this Agreement or which requires a revision of
this Agreement without the prior written consent of the Company.
Section 6.05. Qualification in the Commonwealth. The Company
agrees (except as may be otherwise permitted pursuant to the
provisions of Section 6.01) that throughout the term of this
Agreement, it will continue to be a corporation either organized
under the laws of the Commonwealth or duly qualified to do business
in the Commonwealth as a foreign corporation.
Section 6.06. Compliance with Applicable Laws. The Company
will comply with all laws, ordinances, orders, rules and
regulations of all federal, state and municipal governments and the
appropriate departments, commissions, boards and offices thereof,
including the Issuer, having jurisdiction over the Airport and the
Project Facilities, legally applicable to the Company's
construction, acquisition, installation, use and operation of the
Project Facilities (AApplicable Laws@), including any reasonable
rules and regulations of general applicability of the Issuer;
provided that the Issuer agrees that all Applicable Laws so
promulgated by the Issuer shall not be inconsistent with any
Applicable Laws of the Federal Aviation Administration which are
binding on the Company, as the same now are or may from time to
time be amended or supplemented. Without limiting the generality
of the foregoing, the Company shall construct, acquire and install
and at all times thereafter (subject to the provisions of this
Agreement) use and occupy the Project Facilities in strict
accordance with any and all Applicable Laws that may be imposed by
the Federal Aviation Administration which are binding on the
35
Company with respect to the Project Facilities or the operations
thereof or the Airport and the operations thereof. The Company
may, so long as such action does not, in the reasonable opinion of
the Issuer, subject the Issuer to any liability and the Company
shall indemnify and hold harmless the Issuer from such liability,
in good faith and with due diligence contest any Applicable Laws
and their application, and in the event of such contest, may,
without breach of this covenant, continue any then-existing
noncompliance with any such Applicable Laws during the period of
the contest and any appeal therefrom unless and until it is
judicially determined that such non-compliance will subject the
Project Facilities or any part thereof to loss or forfeiture, in
which event the Company shall, upon such determination, thereafter
promptly comply with such Applicable Laws in issue pending a final
outcome on such contest and the exhaustion of or the failure to
timely pursue the Company's appeal rights.
Section 6.07. Illegal Acts. The Company shall not use the
Project Facilities or any parts thereof or permit within its
knowledge the same to be used by any of its sublessees,
concessionaires, tenants, officers, agents or employees for any
illegal purposes.
Section 6.08. Indemnification of Issuer and Trustee.
(a) The Company will pay, and will protect, indemnify
and save the Issuer and the Trustee, including all officers,
employees and agents of the Issuer and the Trustee (each of
the Issuer, the Trustee or any such officer or employee, an
AIndemnified Party@) harmless from and against any and all
fines, penalties, liabilities, losses, damages, costs and
expenses (including reasonable attorneys' fees and expenses of
the Company, the Issuer and the Trustee), causes of action,
suits, claims, demands and judgments of whatsoever kind and
nature (including, but not by way of limitation, those arising
or resulting from any injury to or death of any person or
damage to property), arising out of the following: (i) the
design, Acquisition and Construction by the Company of the
Project Facilities; (ii) the use, operation or occupancy by
the Company of the Project Facilities; (iii) violation by the
Company of any agreement, warranty, covenant or condition of
this Agreement; (iv) violation by the Company of any other
contract, agreement or restriction relating to the Project
Facilities;(v) violation by the Company of any Applicable Laws
affecting the Project Facilities; (vi) the offering, sale and
issuance of the 1999 Series A Bonds and any Additional Bonds;
and (vii) the taking of any action on the part of the Issuer
authorized or required to be taken by the Issuer under the
Indenture provided that the Company shall not be required to
indemnify any Indemnified Party for such party's sole
negligence or wilful misconduct. To the extent such
indemnification is unavailable to the Issuer, the Company
36
agrees, in lieu of such indemnification, to contribute to the
Issuer an amount equal to all amounts paid or payable by the
Issuer as a result of such claim to the fullest extent
contribution is permitted by law.
(b) Subject to the provisions of Section 10.01 of this
Agreement, the Issuer or the Trustee, as the case may be,
shall promptly notify the Company in writing of any claim or
action brought against the Issuer or the Trustee, as the case
may be, in respect of which indemnity may be sought against
the Company, setting forth the particulars of such claim or
action, and the Company will assume the defense thereof,
including the employment of counsel reasonably acceptable to
the Indemnified Party, and the payment of all expenses. The
Issuer or Trustee, as the case may be, may reasonably employ
separate counsel in any such action and participate in the
defense thereof, and the fees and expenses of such counsel
shall be payable by the Company. The Company shall not be
liable for any settlements of any action effected without its
consent, which consent shall not be unreasonably withheld.
(c) The obligation of the Company under this Section
6.08 shall survive the termination of this Agreement.
Section 6.09. Issuer's Expenses; Release and Indemnification
Provision
s. The Company agrees, regardless of whether the
transactions contemplated by this Agreement and the Indenture are
consummated, to indemnify and save the Issuer and the Trustee
harmless against liability for the payment of all Administration
Expenses arising in connection with the transactions contemplated
by this Agreement.
Section 6.10. Compensation and Other Indemnification
Provisions. The Company will pay to the Trustee, the Paying Agent
and the Registrar reasonable compensation for their services
rendered under the Indenture and any Tender Agreement and the
Remarketing Agreement, pursuant to the provisions thereof.
Section 6.11. Discharge of Liens.
(a) The Company shall pay or cause to be satisfied and
discharged or make adequate provision to satisfy and
discharge, within 60 days after the same shall accrue, any
lien or charge upon the payments under Section 4.03(a), and
all lawful claims or demands for labor, materials, supplies or
other charges which, if unpaid might be or become a lien
thereon; provided, that, if the Company shall first notify the
Trustee of its intention so to do, the Company may in good
faith and with due diligence contest any such lien or charge
or claims or demands in appropriate legal proceedings, and in
such event may permit the items so contested to remain
undischarged and unsatisfied during the period of such contest
37
and any appeal therefrom, unless the Trustee shall notify the
Company in writing that, in the opinion of Counsel acceptable
to the Trustee, by nonpayment of any such item the lien of the
Indenture as to the Trust Estate shall be materially
endangered, in which event the Company shall promptly secure
a bond for or pay and cause to be satisfied and discharged all
such unpaid items. The Issuer and the Trustee shall cooperate
fully with the Company in any such contest at the Company's
sole cost and expense.
(b) The Company agrees to pay (to the extent moneys
therefor are not then available from the Proceeds of the
Bonds) or cause to be paid when due, all sums of moneys that
may lawfully become due for any labor, services, materials,
supplies, utilities, furnishings, machinery or equipment
alleged to have been furnished or to be furnished to, or for
the Company in, upon or about the Project Facilities. The
Company agrees that, if a mechanic's lien is filed upon the
Project Facilities or the leasehold or against the
Construction Fund or any Receipts and Revenues, the Company
shall protect and save harmless the Issuer against any loss,
liability or expense whatsoever by reason thereof. Upon
receipt of notice thereof by the Issuer, the Issuer will
promptly provide notice to the Company as to the existence of
any such mechanic's lien on the Project Facilities or against
the Construction Fund or any Receipts and Revenues, but the
failure of the Issuer to provide such notice will not affect
the responsibilities of the Company as set forth in this
subsection (b).
(c) The Company may, however, in good faith and with due
diligence, contest any mechanics' or other liens filed or
established against all or any portion of the Project
Facilities or against the Construction Fund or any Receipts
and Revenues or the leasehold, or contest any rule, law,
regulation or other governmental requirement even though such
contest may result in the imposition of a lien or charge
against all or any portion of the Project Facilities or
against the Construction Fund or any Receipts and Revenues or
the leasehold, and in such event may permit the items so
contested and such lien or charge to remain undischarged and
unsatisfied during the period of such contest and appeal
therefrom, (i) if the Company shall effectively prevent or
stay the execution, foreclosure or enforcement of such lien or
charge, and (ii) if and so long as such contest or appeal
shall prevent or stay the execution or enforcement or
foreclosure of such lien or charge; provided, however, that if
such lien or charge is so stayed and such stay thereafter
expires or the Company is notified by the Issuer that by
non-payment of any such items the Project Facilities or any
part thereof or the Construction Fund or any Receipts and
Revenues will be subject to loss or forfeiture, then the
38
Company shall forthwith pay and cause to be satisfied and
discharged such lien or charge or comply with such
governmental requirement or secure such payment by posting a
bond, in form satisfactory to the Issuer, as the case may be.
The Issuer will cooperate fully with the Company in any such
contest, at the cost and expense of the Company.
Section 6.12. Redemption and Purchase of 1999 Series A Bonds.
The Issuer, upon the request in writing at any time of the
Company, shall forthwith take all steps that may be necessary under
the provisions of the Indenture to effect redemption or purchase of
all or a portion of the then Outstanding 1999 Series A Bonds, as
may be specified by the Company, on the earliest date on which such
redemption or purchase may be made under such applicable
provisions. The Issuer shall not redeem, purchase or call for
redemption any 1999 Series A Bonds subject to optional redemption
except upon the written direction of the Company.
Section 6.13. Assignment or Sublease. The Company shall not
assign this Agreement or any part thereof, or sublet all or any
portion of the Project Facilities, without the consent in writing
of the Issuer in accordance with the provisions of Section XVII,
inter alia, of the Ground Lease. No consent of the Trustee, the
owners of the 1999 Series A Bonds or any other party to any such
assignment or sublease shall be required. The consent of the
Issuer shall not be required if the requirements of Section 6.01
hereof are satisfied. Additionally, the following conditions must
be met as to any Sublease:
(a) The sublease does not relieve the Company from
liability for any of its obligations hereunder (without the
Issuer's consent), and, so long as any 1999 Series A Bonds are
Outstanding, in the event of any such sublease, the Company
shall continue to remain liable for payment of the amounts
referred to in Section 4.03 and for performance and observance
of the other covenants, warranties, representations and
agreements on its part herein provided to be performed and
observed to the same extent as though no sublease had been
made;
(b) The sublessee shall assume in writing the
obligations of the Company hereunder to the extent of the
interest assigned; and
(c) The Company shall, at least thirty (30) days prior
to any such sublease, provide the Issuer and the Trustee with
written notice thereof and promptly, but in any event no later
than thirty (30) days after any such event, furnish or cause
to be furnished to the Issuer and to the Trustee a true and
complete copy of such sublease.
39
(d) The Issuer shall receive a Favorable Opinion of Bond
Counsel in respect of the proposed transaction.
Section 6.14. No Liability of Issuer. The 1999 Series A
Bonds shall be special and limited obligations of the Issuer
payable solely and only out of the Facility Rentals paid pursuant
to Section 4.03 hereof. No holder of any 1999 Series A Bond shall
have the right to compel any exercise of the taxing power of the
Commonwealth or any political subdivision thereof or the Issuer or
to require the Issuer to pay or apply any of its general revenues
to pay principal of, premium, if any, or interest on or purchase
price of the 1999 Series A Bonds, and the 1999 Series A Bonds shall
not constitute a general indebtedness of the Issuer, the
Commonwealth or any political subdivision thereof or a loan of
credit thereof within the meaning of any constitutional or
statutory provision or limitation of indebtedness.
Section 6.15. Tax Covenants.
A. Notwithstanding any other provision hereof, the
Company generally covenants and agrees that it will at all
times do and perform all acts and things necessary or
desirable and within its reasonable control in order to assure
that interest paid on the 1999 Series A Bonds shall be
excludable from the gross income of the recipients thereof for
the purposes of federal income taxation, except, in the case
of the 1999 Series A Bonds, in the event that such recipient
is a Asubstantial user@ of the Project Facilities or Arelated
person@ within the meaning of Section 147(a)(1) of the Code.
B. The Company and the Issuer each covenants that it
shall take no action, nor shall the Issuer or the Company
approve the Trustee's taking of any action or making of any
investment or use the Proceeds of the 1999 Series A Bonds or
any other moneys which may arise out of or in connection with,
this Agreement, Indenture or the Project Facilities, which
would cause any of the 1999 Series A Bonds to be treated as
Aarbitrage bonds@ within the meaning of Section 148 of the
Code and applicable Treasury Regulations thereunder. Without
limiting the generality of the foregoing, the Company
covenants and agrees to comply with the requirements of
Section 148 of the Code as the same may be applicable to the
1999 Series A Bonds or the Proceeds derived from the sale of
the 1999 Series A Bonds or any other moneys which arise out of
or in connection with, this Agreement, the Indenture or the
Project Facilities.
C. The Company further agrees that, in the case of the
1999 Series A Bonds, not more than 2% of the Proceeds of the
1999 Series A Bonds shall be used to pay the cost of issuance
of the 1999 Series A Bonds; and (ii) at no time will any funds
constituting Agross proceeds@ (as used with respect to Section
40
148 of the Code) of the 1999 Series A Bonds be used in a
manner that would constitute failure of compliance with
Section 148 of the Code.
D. The Company covenants and agrees that at least
ninety-five percent (95%) of the Net Proceeds of the 1999
Series A Bonds, including investment earnings thereon not
subject to rebate, will be applied to acquire, construct,
install and equip an exempt facility constituting an airport
or facilities functionally related and subordinate to an
airport, within the meaning of Section 142(a)(1) of the Code
and the rules and regulations promulgated thereunder from time
to time applicable to the 1999 Series A Bonds. The Company
further agrees that it will not apply the Proceeds of the 1999
Series A Bonds, including investment earnings not subject to
rebate, in a manner which will result in more than five
percent of (reduced by any allocation of Proceeds not
exceeding 2% of Proceeds for cost of issuance of the 1999
Series A Bonds) of such Proceeds of the 1999 Series A Bonds at
any time being used for a facility which would not be exempt
under such Section 142(a)(1) or for working capital, for
property of a character not subject to the allowance for
depreciation as prescribed in Section 167 of the Code and such
rules and regulations or for otherwise non-qualifying costs
paid or incurred prior to action taken by the Issuer in
respect of any of the Project Facilities pursuant to Treas.
Reg. ' 1.150-2. Except for the expenditures described in this
Section 6.15(C) above, nothing in this Section 6.15 is
intended to limit the uses to which any nonqualifying
expenditure may be applied by the Company. The Company will
not cause the Plans and Specifications to be changed or
revised, or the Project Facilities to be operated, maintained,
repaired or renovated, in a manner, or take or fail to take
any other action, such that the Project Facilities to be
financed by the application of the Proceeds of the 1999 Series
A Bonds will not qualify as an exempt facility within the
meaning of Section 142(a)(1) of the Code and the rules and
regulations promulgated thereunder applicable to the 1999
Series A Bonds.
E. Notwithstanding any other provision hereof, the
Company covenants and agrees that it will not knowingly take
or authorize or permit action to be taken or omit to take any
action (to the extent that such action is within the control
of the Company) with respect to the Project Facilities, or the
Proceeds of the 1999 Series A Bonds (including investment
earnings thereon), or insurance, condemnation, or any other
Proceeds derived directly or indirectly in connection with the
Project Facilities, that will knowingly cause the interest on
the 1999 Series A Bonds to be included in gross income for
federal income tax purposes under Section 103 of the Code
(except for any 1999 Series A Bond during any period while any
41
such 1999 Series A Bond is held by a person referred to in
Section 147(a) of the Code).
F. So long as the 1999 Series A Bonds remain
Outstanding, the Company will fully comply with all effective
rules, rulings and regulations promulgated by the Department
of Treasury and the Internal Revenue Service with respect to
obligations issued in accordance with Section 142 of the Code
so as to maintain in accordance with Section 142 of the Code
the exclusion of interest on the Bonds from gross income for
federal income tax purposes; and specifically the Company will
not cause the Plans and Specifications to be changed or
revised, or the Project Facilities to be operated, maintained,
repaired or renovated, in a manner such that the Project
Facilities financed with the proceeds of the 1999 Series A
Bonds will not qualify as an airport or facilities
functionally related and subordinate to an airport within the
meaning of Section 142 of the Code and the income tax
regulations promulgated thereunder.
G. The Company has not taken and will not take any
action, and knows of no action that any other person, firm or
corporation has taken or intends to take, which would cause
interest on the 1999 Series A Bonds to be includable in the
gross income of the recipients thereof for federal income tax
purposes (except any 1999 Series A Bonds for any period during
which such 1999 Series A Bonds are held by a Asubstantial
user@ of the Project Facilities financed with the Proceeds of
the 1999 Series A Bonds or a Arelated person@ to such
Asubstantial user@ as such terms as defined in Section 147(a)
of the Code).
H. The Company will at all times comply with all
provisions of Section 148 of the Code so long as the 1999
Series A Bonds remain outstanding.
I. The Proceeds of the 1999 Series A Bonds will not be
applied to finance any Project Facilities unless such use of
the Project Facilities shall constitute the first use of such
property.
J. No aircraft, skybox, or other private luxury box,
health club facility, facility primarily used for gambling,
store the principal business of which is the sale of alcoholic
beverages for consumption off premises, private or commercial
golf course, country club, massage parlor, tennis club,
skating facility (including roller skating, skateboard, and
ice skating), racquet sports facility (including handball or
racquetball courts), hot tub facility, suntan facility,
racetrack, impermissible retail food and drink establishments,
automobile sales or service or provision of recreation or
entertainment will be financed from the Proceeds of the 1999
Series A Bonds.
42
K. The 1999 Series A Bonds are not and will not be
Afederally guaranteed@ (within the meaning of Section 149(b)
of the Code).
L. The Company will provide all information relating to
the Project Facilities or the Company reasonably requested by
the Issuer necessary to evidence compliance with the
requirements of the Code, including the information in United
States Internal Revenue Service Form 8038 filed by the Issuer
with respect to the 1999 Series A Bonds and the airport
facilities constituting the Project Facilities, and such
information (not to include any information relating to the
Issuer, as to which no representations will be made) will be
true and correct in all material respects.
M. At least ninety-five per cent (95%) of the Net
Proceeds of the 1999 Series A Bonds and interest thereon (i)
will be used to provide property chargeable to the capital
account of the Project Facilities financed by Proceeds of the
1999 Series A Bonds for federal income tax purposes and
subject to Section 167 of the Code, and will be used either to
provide qualified airport facilities or properties
functionally related and subordinate thereto which shall serve
or be available on a regular basis for the general public use,
or be used by a common carrier, within the meaning of Treasury
Regulations 1.103-8(a)(2), all within the meaning of Sections
142(a), (b) and (c) of the Code and applicable Treasury
Regulations promulgated thereunder and (ii) shall be expended
on costs incurred after the date which is sixty (60) days
prior to the date of adoption of the preliminary approving
resolution of the Issuer adopted in respect of the
acquisition, construction and financing of the Project
Facilities being, to wit: January 18, 1999
N. Within one year prior to the date of issuance of the
1999 Series A Bonds the Company will cooperate with the Issuer
in order to comply with the public approval requirements of
Section 147 of the Code and at or following the issuance of
the 1999 Series A Bonds the Company will cooperate with the
Issuer in order to comply with the information reporting
requirements of Section 149 of the Code by the filing of
Internal Revenue Service Form 8038 with the United States
Internal Revenue Service.
O. Arbitrage Rebate Compliance.
(i) The Company hereby covenants that in
connection with the 1999 Series A Bonds it will comply
with the requirement for payment of Rebatable Arbitrage
to the United States. The Company acknowledges and
agrees that the calculation of Rebatable Arbitrage and
43
the payment of the Rebatable Arbitrage to the United
States shall be the responsibility of the Company and
that neither the Issuer nor the Trustee shall have
obligation therefor. The Trustee shall be entitled to
rely on any certificate delivered to it by the Company
accompanied by an opinion of a Rebate Expert in
accordance with the Indenture and shall have no duty to
verify the accuracy of such certificate. The Company
agrees to indemnify the Issuer and the Trustee against
any loss, liability or expense incurred in connection
with the Company's failure to pay the Rebatable Arbitrage
to the United States as required by this Section.
(ii) The Company hereby covenants that on or prior
to forty-five (45) days subsequent to the end of each
fifth Bond Year applicable to the 1999 Series A Bonds and
the retirement of the last obligation of the 1999 Series
A Bonds, the Company shall retain a Rebate Expert to
compute the Rebatable Arbitrage with respect to the 1999
Series A Bonds for the period ending on the last day of
such fifth Bond Year completed, or the retirement of the
last obligation of the 1999 Series A Bonds occurring,
within forty-five (45) days thereof. Within such
forty-five (45)-day period, the Company shall cause to be
delivered to the Trustee and the Issuer an opinion of the
Rebate Expert concerning its conclusions with respect to
the amount of such Rebatable Arbitrage together with a
written report providing a summary of the calculations
relating thereto. In connection with each such
determination of the Rebatable Arbitrage, the Trustee,
pursuant to the Indenture, shall report to the Issuer and
the Company (i) the amount, if any, theretofore paid to
the United States with respect to the 1999 Series A Bonds
by the Trustee on behalf of the Issuer pursuant to the
Indenture, (ii) the amount in the account of the Rebate
Fund established for the payment of Rebatable Arbitrage
with respect to the 1999 Series A Bonds at the end of
each fifth Bond Year, or at the time of the computation,
in the case of the retirement of the last 1999 Series A
Bond, (iii) the balance to be added to the account of the
Rebate Fund established for the payment of Rebatable
Arbitrage with respect to the 1999 Series A Bonds, (iv)
if additional amounts are required to be added to the
amount in the account of the Rebate Fund established for
the payment of Rebatable Arbitrage with respect to the
1999 Series A Bonds, and (v) the balance, if any, to be
paid by the Company.
(iii) The Company hereby covenants that in the
event the amount in the Rebate Fund shall be insufficient
to properly fund the account in the Rebate Fund
established for the payment of Rebatable Arbitrage with
44
respect to the 1999 Series A Bonds in the manner
specified herein, the Company shall, within five (5) days
of receipt of the report furnished by the Trustee
pursuant to this Section hereof, pay or cause to be paid
to the Trustee for deposit into the account in the Rebate
Fund established for the payment of Rebatable Arbitrage
with respect to the 1999 Series A Bonds, the difference
between the amount required to be added to such account
in the Rebate Fund and the amount then available for such
purpose in the Project Fund. If the Company fails to
make or cause to be made any payment required pursuant to
this Section 6.16(O)(iii) when due, the Issuer or the
Trustee shall have the right, but shall not be required,
to make any such payment on behalf of the Company. Any
amount advanced by the Issuer or the Trustee pursuant to
this clause (iii) shall be added to the moneys owing by
the Company under this Agreement and shall be payable on
demand with interest.
(iv) The Company hereby covenants that it shall
direct the Trustee to withdraw from the Rebate Fund and
pay over to the United States the Rebatable Arbitrage
with respect to the 1999 Series A Bonds in installments
as follows: The first payment shall be made not later
than 60 days after the end of the fifth Bond Year of the
1999 Series A Bonds. Each subsequent payment shall be
made not later than 60 days after the succeeding fifth
Bond Year of the 1999 Series A Bonds. Each installment
shall be in an amount which ensures that at least 90
percent of the amount of the Rebatable Arbitrage with
respect to the 1999 Series A Bonds as of the close of the
period ending on the last day of the most recent fifth
Bond Year of the 1999 Series A Bonds will have been paid
to the United States (determined in accordance with the
opinion of the Rebate Expert and accompanying written
summary given to the Trustee by the Company concerning
Rebatable Arbitrage with respect to the 1999 Series A
Bonds for the period ending on the last day of such fifth
Bond Year). Not later than 60 days after the retirement
of the last obligation of the 1999 Series A Bonds, the
United States shall be paid the remaining balance of the
Rebatable Arbitrage with respect to the 1999 Series A
Bonds.
(v) The Company hereby covenants that it shall
request the Issuer to direct the Trustee to file the
payments to the United States of Rebatable Arbitrage with
respect to the 1999 Series A Bonds at the then applicable
Internal Revenue Service Center, ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ or
such other Internal Revenue Service office authorized to
receive payments of Rebatable Arbitrage. All payments of
Rebatable Arbitrage shall be accompanied by Form 8038-T
45
or such other form prescribed by the Internal Revenue
Service to accompany payments of Rebatable Arbitrage,
prepared by the Company, together with any other
information which the Company requests the Issuer to
instruct the Trustee to accompany such payments. In
furtherance of the foregoing, the Issuer shall cooperate
with the Company by timely executing the Form 8038-T or
such other applicable form prescribed by the Internal
Revenue Service.
(vi) The Company hereby covenants that the Issuer
shall have the right at any time and in the sole and
absolute discretion of the Issuer to obtain from the
Company and the Trustee the information necessary to
determine the amount required to be paid to the United
States pursuant to Section 148(f) of the Code. If the
Company fails to make or retain a Rebate Expert to make
the determination of the amount to be paid to the United
States, the Issuer may make or retain a Rebate Expert to
make the determination of the amount to be paid to the
United States. The Company hereby agrees to be bound by
any such determination, to pay the costs of such
determination, including without limitation the
reasonable fees and expenses of counsel or a Rebate
Expert retained by the Issuer and all Administration
Expenses of the Issuer relating thereto, and to pay to
the Trustee any additional amounts for deposit in the
Rebate Fund required as the result of any such
determination.
P. In the event the Issuer and the Company receive a
written opinion of Bond Counsel to the effect that one or more
of the provisions of this Section 6.15 is no longer in effect
or is no longer applicable to the 1999 Series A Bonds and that
compliance therewith is no longer required, the Issuer and the
Company may amend (without any requirement for Bondholder
consent) this Section 6.15 to comport with such opinion and
shall be under no further duty to comply with any such
requirements.
Section 6.16. Qualified Exempt Facility. The Company
covenants that in the event all or a portion of the Project
Facilities shall no longer qualify as an airport or property which
is functionally related and subordinate to an airport which is an
exempt facility within the meaning of Section 142(a)(1) of the
Code, the Company shall within ninety (90) days either (i) cause
1999 Series A Bonds to be redeemed pursuant to the Indenture in an
amount that will retire all nonqualified bonds (if any) within the
meaning of Treasury Regulations Section 1.142-2(e), (ii) establish
a defeasance escrow within the meaning of Treasury Regulations
Section 1.142-2(c) and deposit therein sufficient funds to defease
all nonqualified bonds (if any) or (iii) purchase the 1999 Series
46
A Bonds in the open market for delivery to the Paying Agent for
cancellation in the amount that will retire all nonqualified bonds
within the meaning of Treasury Regulations Section 1.142-2(e),
unless the Company shall obtain a Favorable Opinion of Bond Counsel
to the effect that failure to take one or more of the actions
described in clauses (i), (ii) or (iii) of the foregoing will not
adversely affect the exclusion of interest on the 1999 Series A
Bonds from gross income for federal income tax purposes.
Section 6.17. No Liability of Issuer. The 1999 Series A
Bonds shall be special and limited obligations of the Issuer
payable solely and only out of the Trust Estate, including the
rental payments made pursuant to Section 4.03 hereof. No holder of
any 1999 Series A Bond shall have the right to compel any exercise
of the taxing power of the Commonwealth or any political
subdivision thereof or of the Issuer to pay principal of, premium,
if any, or interest on the 1999 Series A Bonds, and the 1999 Series
A Bonds shall not constitute a general indebtedness of the Issuer,
the Commonwealth or any political subdivision thereof or a loan of
credit thereof within the meaning of any constitutional or
statutory provision or limitation of indebtedness.
ARTICLE VII
DAMAGE AND DESTRUCTION; CONDEMNATION
Section 7.01. Damage or Destruction.
(a) The receipts and recoveries of insurance carried
pursuant to Section 5.06 shall be applied as provided in this
Section 7.01 and the Ground Lease. In the event that all or
any part of the Project Facilities is destroyed in whole or
damaged by fire or other casualty requiring more than $250,000
for rehabilitation and reconstruction, the Company shall by
notice given pursuant to Section 10.01, notify the Trustee and
the Issuer within 30 days of said occurrence as to whether or
not the Project Facilities, or the damaged or destroyed
portion thereof, shall be reconstructed and reequipped. If
the damage or destruction does not exceed $250,000, the
Company shall be obligated to reconstruct and reequip the
Project Facilities and shall apply the Net Insurance Proceeds,
with the consent of the Issuer, to such reconstruction and
reequipping. To the extent the Net Insurance Proceeds exceed
$250,000, the Company shall elect that the Project Facilities
or some portion thereof be reconstructed and reequipped, (i)
all Net Insurance Proceeds with respect to the Project
Facilities shall be paid to the Trustee for deposit in a
separate account in the Construction Fund and application in
accordance with this Section 7.01, or if no 1999 Series A
Bonds applicable to such destroyed or damaged Project
Facilities are Outstanding, shall be so applied by the Company
and (ii) the Company will promptly use its best efforts and
47
proceed with reasonable speed and dispatch to reconstruct and
reequip the applicable Project Facilities in accordance with
the Plans and Specifications to a condition equivalent to that
immediately prior to the event of damage or destruction
(subject to any changes, modifications, additions and
deletions which the Company desires and to which the Issuer
consents in accordance with Section 3.01(c) hereof) and will
apply for such purposes so much as may be necessary of any
such Net Insurance Proceeds. In the event that the Net
Insurance Proceeds are not sufficient to pay in full the costs
of such Project Facilities reconstruction and reequipping, the
Company will nonetheless complete the work thereof and pay
that portion of the costs thereof in excess of the amount of
such Net Insurance Proceeds, provided that the Company may
request that Additional Bonds be issued to provide Project
Facilities costs. Any balance of Net Insurance Proceeds
incident to the Project Facilities received by the Trustee
remaining after paying therefrom the costs of such
reconstruction and reequipping of the Project Facilities
pursuant to this Section 7.01 shall be paid to the Trustee for
deposit into a separate account in the Bond Fund, and shall be
promptly applied, at the direction of the Authorized Company
Representative, (a) to be applied by the Trustee to purchase
1999 Series A Bonds in the open market (excluding any portion
of the purchase price which is attributable to interest
accrued and/or accruing on such 1999 Series A Bonds until the
date of purchase) for the purpose of cancellation; (b) to
redeem 1999 Series A Bonds on the earliest redemption date
thereof (paying principal sums only) for the purpose of
cancellation; or (c) to pay the principal of and/or interest
on the 1999 Series A Bonds, provided that if the Company
directs the Trustee to apply said balance pursuant to clause
(c) above, the Company shall also deliver to the Trustee and
the Issuer a Favorable Opinion of Bond Counsel to the effect
that such use will not impair the exclusion of the interest on
the 1999 Series A Bonds from gross income for federal income
tax purposes. If the Company shall elect that the Project
Facilities, or any damaged or destroyed portion thereof, not
be reconstructed and reequipped, and any 1999 Series A Bonds
are then Outstanding, then all Net Insurance Proceeds
allocable to those portions of the Project Facilities that
will not be reconstructed and reequipped shall be paid to the
Trustee. All such Net Insurance Proceeds received by the
Trustee shall be deposited into a separate account in the Bond
Fund, and applied to redeem 1999 Series A Bonds (paying
principal sums only) on the earliest redemption date
permissible for the purpose of cancellation. If the Net
Insurance Proceeds are inadequate to pay and discharge the
relevant 1999 Series A Bonds, the Company shall pay to the
Trustee such moneys as may be required for such payment and
discharge. If such Net Insurance Proceeds are in excess of
the amount required to pay, redeem, purchase in the open
48
market or defease 1999 Series A Bonds equal in aggregate
principal amount to all the then Outstanding 1999 Series A
Bonds allocable to such damaged or destroyed portion of the
Project Facilities, all such excess shall be paid to the
Issuer, as the governmental owner of the Project Facilities.
(b) The Company shall not, by reason of the payment of
any excess costs as required by the foregoing provisions of
this Section 7.01 be entitled to any reimbursement from the
Trustee or the Issuer or any abatement or diminution of any of
the rents payable under Section 4.03, except as set forth
above.
(c) In the event that (i) the Company shall have elected
that the damaged or destroyed portion of the Project
Facilities shall not be reconstructed and reequipped, or the
damaged or destroyed portions of the Project Facilities shall
be reconstructed and reequipped at the Company's direction,
and (ii) 1999 Series A Bonds allocable to the Project
Facilities so damaged or destroyed are not then Outstanding,
the Net Insurance Proceeds shall be paid to the Issuer, as the
governmental owner of the Project Facilities.
Section 7.02. Condemnation.
(a) The Company, or the Issuer immediately upon
obtaining knowledge of the institution of any proceedings for
the condemnation or taking of the Project Facilities or any
portion thereof for public or quasi-public use, shall notify
one another and the Trustee of the pendency of such
proceedings.
(b) In the event that title to, or the temporary use of,
the Project Facilities or any part thereof shall be taken as
a result, or in anticipation of, the exercise of the power of
eminent domain by any governmental body or by any person, firm
or corporation acting under governmental authority, the
provisions of this Section 7.02 shall apply.
(c) Subject to the provisions of Section 10.01 of this
Agreement, in the event that all, or any portion of the
Project Facilities shall be so taken by the exercise of the
power of eminent domain, the Company shall promptly by notice
given pursuant to Section 10.01 notify the Trustee and the
Issuer whether or not the Project Facilities, or portion
thereof so taken, shall be reconstructed and reequipped. In
the event the Company determines to reconstruct and reequip
the Project Facilities or some portion thereof, (i) the Gross
Award in respect of the Project Facilities shall be paid to
the Trustee for deposit in a special account or accounts
within the Construction Fund and be applied in accordance with
this Section 7.02, or if no 1999 Series A Bonds are
49
outstanding shall be deposited in a segregated bank account in
the name of the Issuer and applied by the Company for
reconstruction and reequipping of the Project Facilities and
(ii) the Company will promptly use its best efforts and
proceed with reasonable speed and dispatch to reconstruct and
reequip the Project Facilities in accordance with the Plans
and Specifications to a condition equivalent to that of the
Project Facilities immediately prior to the taking (subject to
any changes, modifications, additions and deletions which the
Company desires and to which the Issuer consents in accordance
with Section 3.01(c) hereof) and will apply for such purposes
so much as may be necessary of such Gross Award. In the event
that such Gross Award is not sufficient to pay in full the
costs of such reconstruction and reequipping of the Project
Facilities, the Company will nonetheless complete the work
thereof and will pay that portion of the costs thereof in
excess of the amount of such Gross Award provided that the
Company may request that Additional Bonds be issued to provide
Project Facilities costs. Any balance of any Gross Award
incident to the Project Facilities received by the Trustee
remaining after paying therefrom the costs of such
reconstruction and reequipping of the Project Facilities
pursuant to this Section 7.02 shall be paid to the Trustee for
deposit into a separate account in the Bond Fund, and applied
either (a) to be applied by the Trustee to purchase 1999
Series A Bonds in the open market (excluding any portion of
the purchase price which is attributable to interest accrued
and/or accruing on such 1999 Series A Bonds until the date of
purchase) for the purpose of cancellation or (b) to redeem
1999 Series A Bonds on the earliest redemption date thereof
as may be permitted by the Indenture (paying principal sums
only) for the purpose of cancellation. If the Company shall
elect that all or any portion of the Project Facilities so
taken not be reconstructed and reequipped, then the Gross
Award allocable to the Project Facilities not being
reconstructed or reequipped shall be paid to the Trustee, who
shall apply all or so much of such Gross Award as shall be
required to redeem 1999 Series A Bonds on the earliest
permissible redemption date (paying principal sums only) for
the purpose of cancellation.
(d) In case such Gross Award shall exceed the costs of
reconstruction and reequipping of the Project Facilities
undertaken pursuant to this Section 7.02 and no 1999 Series A
Bonds, as applicable, are Outstanding, the balance of such
Gross Award received by the Trustee remaining after paying
therefrom the costs of such reconstruction and reequipping
shall be paid to the Issuer, as the governmental owner of the
Project Facilities.
(e) The Company shall not, by reason of payment of any
excess costs as required by the foregoing provisions of this
50
Section or by reason of any diminution of all or any part of
the Project Facilities resulting from any taking thereof, be
entitled to any reimbursement from the Trustee or the Issuer
of any abatement or diminution of the rent payable pursuant to
Section 4.03, except as set forth above.
(f) In the event that less than the whole or less than
substantially the whole of the Project Facilities shall be so
taken and the remaining part thereof is reconstructed and
reequipped as provided in the preceding subsections of this
Section 7.02 and the cost of such reconstruction or
reequipping exceeds the Gross Award available therefor, the
Company may request the Issuer to issue Additional Bonds to
provide moneys to pay all or part of such excess costs.
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
Section 8.01. Events of Default. Each of the following
events shall constitute and is referred to in this Agreement as an
AEvent of Default@:
(a) (i) the Company shall fail to pay when due and owing
any installment of Facility Rentals payable pursuant to
Section 4.03(a)(i); or (ii) the Company shall fail to pay when
due and owing any installment of Facility Rentals payable
pursuant to Section 4.03(a)(ii).
(b) a failure by the Company to pay when due any other
amount required to be paid under this Agreement (including,
but not limited to Administration Expenses, pursuant to
Section 4.03(b)) or to observe and perform any covenant,
condition or agreement on its part to be observed or performed
hereunder (other than a failure described in Section 8.01(a)
and other than as provided in Section 6.06), which failure
shall continue for a period of 30 days after written notice,
specifying such failure and requesting that it be remedied,
shall have been given to the Company by the Issuer or the
Trustee, unless the Issuer and the Trustee shall agree in
writing to an extension of such period prior to its
expiration; provided, that the Issuer and the Trustee shall be
deemed to have agreed to an extension of such period if
corrective action, approved in advance by the Issuer, is
initiated by the Company within such period and is being
diligently pursued and provided further, that failure by the
Company to observe tax covenants herein shall not constitute
an Event of Default unless (1) such failure results in a
Determination of Taxability and (2) the subject 1999 Series A
Bonds are not either mandatorily redeemed in accordance with
their terms and as provided in the Indenture or defeased as
51
provided in the Indenture prior to such Determination of
Taxability.
(c) the Company shall file a voluntary petition or
institute any proceeding under the United States Bankruptcy
Code, either as such Code now exists or under any amendment
thereof which may hereafter be enacted, or under any act or
acts, State or Federal, dealing with or relating to the
subject or subjects of bankruptcy or insolvency, or under any
amendment to such act or acts, either as a bankrupt, or as an
insolvent, or as a debtor, or in any similar capacity, wherein
or whereby the Company asks, seeks or prays to be adjudicated
a bankrupt, or to be discharged from all of the Company=s
debts or obligations, or asks, seeks or prays for a
reorganization or to effect a plan of reorganization or for a
readjustment of the Company=s debts or for any similar relief;
or any involuntary petition in bankruptcy or any other
proceedings of the foregoing of similar kind or character
shall be filed or be instituted or taken against the Company
and shall not be dismissed within ninety (90) days thereof; or
a custodian or receiver of the Company or of a substantial
portion of the property or assets of the Company shall be
appointed by any court and shall not be dismissed within
ninety (90) days thereof; or the Company shall make a general
assignment for the benefit of the Company=s creditors or the
Company shall enter into an agreement of composition with the
Company=s creditors; or the Company shall admit in writing its
inability to pay its debts generally as they become due.
Section 8.02. Force Majeure. The provisions of Section 8.01,
other than payment of Facility Rentals, are subject to the
following limitations: If by reason of acts of God; strikes,
lockouts or other industrial disturbances; acts of public enemies;
order of any kinds of the government of the United States of
America or of the Commonwealth or any department, agency, political
subdivision, court or official of any of them or any civil or
military authority; riots; lightning; earthquakes; fires;
hurricanes; tornados; storms; floods; washouts; arrests; restraint
of government and people; civil disturbances; explosions; breakage
or accident to machinery; partial or entire failure of utilities;
the Company=s ability to carry out any one or more of its
agreements or obligations contained herein (other than its
obligations under Sections 4.03, 5.06, 6.01, 6.10, 6.11 and 6.16)
is rendered impossible, the Company shall not be deemed in default
by reason of not carrying out said agreement or agreements or
performing such obligation or obligations during the continuance of
such impossibility. The Company shall make reasonable efforts to
remedy with all reasonable dispatch the cause or causes preventing
it from carrying out its agreements;provided,that the settlement
of strikes, lockouts and other industrial disturbances shall be
entirely within the discretion of the Company.
52
Section 8.03. Remedies.
(a) Whenever any Event of Default referred to in clauses
(a) or (c) of Section 8.01 hereof shall have occurred and be
continuing, and in accordance with the terms of the Indenture,
the 1999 Series A Bonds shall have been declared to be
immediately due and payable pursuant to any provision of the
Indenture, the Trustee shall forthwith declare all amounts
payable under this Agreement to be immediately due and
payable. The amount payable upon such an event shall be an
amount equal to the amounts due and payable on the 1999 Series
A Bonds, together with all fees and expenses payable pursuant
to Sections 6.10 and 8.05, and the Trustee may thereafter take
whatever action at law or in equity may be appropriate to
collect any payments then due and thereafter to become due, or
to enforce performance and observance of any obligation,
agreement or covenant of the Company under this Agreement or
enforcement of the Guaranty or the Leasehold Mortgage.
Any waiver of any AEvent of Default@ under the Indenture
and a rescission and annulment of its consequences shall be in
writing and shall constitute a waiver of the corresponding
Event or Events of Default under this Agreement and a
rescission and annulment of the consequences thereof.
(b) Upon the occurrence and continuance of any Event of
Default, the Issuer may take, or cause to be taken, any action
at law or in equity to collect any payments then due and
thereafter to become due, or to enforce performance and
observance of any obligation, agreement or covenant of the
Company hereunder.
(c) Any amounts collected from the Company pursuant to
this Section 8.03 shall be applied in accordance with the
Indenture.
Section 8.04 No Remedy Exclusive. No remedy conferred upon
or reserved to the Issuer hereby is intended to be exclusive of any
other available remedy or remedies, but each and every such remedy
shall be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or in equity or
by statute. No delay or omission to exercise any right or power
accruing upon any default shall impair any such right of power or
shall be construed to be a waiver thereof, but any such right or
power may be exercised from time to time and as often as may be
deemed expedient. In order to entitle the Issuer to exercise any
remedy reserved to it in this Article, it shall not be necessary to
give any notice, other than such notice as may be herein expressly
required.
Section 8.05. Reimbursement of Attorneys' Fees. If the
Company shall default under any of the provisions hereof and the
Issuer or the Trustee shall employ attorneys or incur other
53
reasonable expenses for the collection of payments due hereunder or
for the enforcement of performance or observance of any obligation
or agreement on the part of the Company contained herein, the
Company will on demand therefor reimburse the Issuer or the
Trustee, as the case may be, for the reasonable fees and expenses
of such attorneys and such other reasonable expenses so incurred,
to the extent permitted by law.
Section 8.06. Waiver of Breach. If any obligation created
hereby shall be breached by either of the parties and such breach
shall thereafter be waived by the other party, such waiver shall be
limited to the particular breach so waived and shall not be deemed
to waive any other breach hereunder. In view of the assignment of
certain of the Issuer's rights and interests hereunder to the
Trustee, the Issuer shall have no power to waive any default
hereunder by the Company in respect of such rights and interests
(except Unassigned Rights) without the consent of the Trustee, and
the Trustee may exercise any of the rights of the Issuer hereunder.
Section 8.07. Remedies Reserved Solely to the Issuer. Upon
the occurrence of any Event of Default referred to in clauses (a),
(b) or (c) of Section 8.01 or upon the occurrence of either of the
following:
(i) Any event of default shall have occurred and be
continuing under the provisions of the Ground Lease and such
event of default shall continue unremedied for a period of
thirty (30) days after the Issuer shall have given to the
Company written notice specifying wherein the Company has
failed to observe or perform any such covenant, agreement or
obligation, plus such additional time as is reasonably
required to correct any such failure if the Company has
initiated corrective action in such thirty (30) day period and
is diligently pursuing the same to completion, or
(ii) The Company shall abandon all or substantially all
of the Project Facilities for a period of 90 days, other than
pursuant to and as permitted by Section 8.08
at any time thereafter so long as the same shall be continuing the
Issuer may, at its election, give the Company written notice of
intention to terminate this Agreement on a date specified in said
notice, which date shall not be earlier than thirty (30) days after
such notice is given, and if all Events of Default and events
specified in clauses (i) and (ii) of this Section 8.07 have not
been cured on the date so specified and if curative action has not
been commenced in accordance with clause (b) of Section 8.01 or
clause (i) of this Section 8.07 hereof, the Company's rights to
possession of the Project Facilities shall cease and this Agreement
and term hereof shall thereupon cease; provided that the Company
shall be, and shall remain, liable for all Facility Rentals accrued
hereunder to the date such termination becomes effective and for
all other sums then owing by the Company hereunder; and provided
54
further, that notwithstanding the termination of this Agreement and
the term hereof, the Company nevertheless shall continue to be
liable for the payment of all rentals reserved under Section 4.03
and shall pay such rentals at the same time and in the same manner
as provided in Section 4.03.
Section 8.08. Termination by the Company After 1999 Series A
Bonds are Paid or Defeased. At any time after all of the 1999
Series A Bonds issued under the Indenture have been paid in full,
or provisions for the timely payment thereof have been duly made
and provided for, and the lien of the Indenture has been defeased
according to Article IX thereof, the Company may terminate its
obligations hereunder as to the Project Facilities, except that the
covenant and obligation of the Company to maintain and keep the
Project Facilities in good condition (ordinary wear and tear
excepted) so long as the Ground Lease remains in effect, subject to
certain exceptions upon reletting by the Issuer, as set forth in
Section 5.01 hereof, shall remain in full force and effect in
accordance with its terms, and to pay all accrued and unpaid
Facility Rentals and to pay any accounts payable pursuant to
Section 8.05 hereof.
Section 8.09. Termination of Ground Lease or Related
Agreement. The termination of the Ground Lease for any reason
(AGround Lease Termination@) shall automatically terminate this
Agreement.
ARTICLE IX
REDEMPTION OF 1999 SERIES A BONDS;
COMPLIANCE WITH INDENTURE
Section 9.01.
Redemption of 1999 Series A Bonds. The Company
shall have the option to prepay the Facility Rentals due hereunder
at any time in whole or in part in order to defease all or a
portion of the 1999 Series A Bonds under the circumstances provided
in Article IX of the Indenture or to provide for the redemption of
1999 Series A Bonds pursuant to Article IV of the Indenture. The
Issuer shall take, or cause to be taken, the actions required by
the Indenture to discharge the lien thereof through the redemption,
or provision for payment or redemption, of all 1999 Series A Bonds
then Outstanding, or to effect the redemption, or provision for
payment or redemption, of less than all the 1999 Series A Bonds
then Outstanding, upon receipt, not less than five Business Days
prior to the day on which the Registrar shall be required to give
notice of any such redemption or payment pursuant to the Indenture,
by the Issuer, the Registrar and the Trustee from the Company of a
notice designating the principal amount of the 1999 Series A Bonds
to be redeemed, or for the payment or redemption of which provision
is to be made, and specifying the date of redemption and the
applicable redemption provision of the Indenture. In addition, the
Company shall simultaneously with such notice, furnish to the
55
Registrar a proposed form of notice of such redemption as required
by the Indenture. In connection with any redemption pursuant to
Section 4.04(4) of the Indenture, the Company shall also deliver to
the Trustee the certificate of the Company required by such
Section. Pursuant to Section 5.03, the Company shall provide, any
moneys required by the Indenture to be deposited with the Trustee
or otherwise paid by the Issuer in connection with any of the
foregoing purposes.
Section 9.02. Extraordinary Mandatory Redemption of 1999
Series A Bonds Upon Determination of Taxability. The Issuer and
the Company shall take all actions required to mandatorily redeem
the 1999 Series A Bonds at the cost of the Company upon the terms
specified in this Agreement and in Section 4.04(3) of the Indenture
following the occurrence of a Determination of Taxability,
including, but not limited to, prepaying appropriate amounts due on
the 1999 Series A Bonds in order to effect such redemption. The
1999 Series A Bonds shall be redeemed by the Issuer, in whole, or
in such part as described below, at a redemption price equal to
103% of the principal amount thereof, without redemption premium,
plus accrued interest, if any, to the redemption date, within 180
days following a Determination of Taxability. For purposes of this
section, a ADetermination of Taxability@ shall mean the receipt by
the Trustee of written notice from a current or former registered
owner of a 1999 Series A Bond or from the Company or the Issuer of
(i) the issuance of a published or private ruling or a technical
advice memorandum by the Internal Revenue Service in which the
Company participated or has been given the opportunity to
participate, and which ruling or memorandum the Company, in its
discretion, does not contest or from which no further right of
judicial review or appeal exists, or (ii) a final determination
from which no further right of appeal exists of any court of
competent jurisdiction in the United States in a proceeding in
which the Company has participated or has been a party, or has been
given the opportunity to participate or be a party, in each case,
to the effect that the interest on the 1999 Series A Bonds is
included in the gross income of the owners thereof for federal
income tax purposes, other than with respect to a person who is a
Asubstantial user@ or a Arelated person@ of a substantial user
within the meaning of the Section 147 of Internal Revenue Code of
1986, as amended (the ACode@). No Determination of Taxability
described above will result from the inclusion of interest on any
1999 Series A Bond in the computation of minimum or indirect taxes.
All of the 1999 Series A Bonds shall be redeemed upon a
Determination of Taxability as described above unless, in the
opinion of Bond Counsel, redemption of a portion of the 1999 Series
A Bonds of one or more series or one or more maturities would have
the result that interest payable on the remaining 1999 Series A
Bonds outstanding after the redemption would not be so included in
any such gross income.
56
In the event any of the Issuer, the Company or the Trustee has
been put on notice or becomes aware of the existence or pendency of
any inquiry, audit or other proceedings relating to the 1999 Series
A Bonds being conducted by the Internal Revenue Service, the party
so put on notice shall give immediate written notice to the other
parties of such matters.
Promptly upon learning of the occurrence of a Determination of
Taxability (whether or not the same is being contested), or any of
the events described in this Section 9.02, the Company shall give
notice thereof to the Trustee and the Issuer.
Section 9.03. Extraordinary Mandatory Redemption of 1999
Series A Bonds Upon Ground Lease Termination. The Issuer and the
Company shall take all actions required to mandatorily redeem the
1999 Series A Bonds in whole upon the terms specified in Section
4.01(2) of the Indenture following the occurrence of a Ground Lease
Termination. The Issuer and the Company shall give prompt notice
to the Trustee of the occurrence of a Ground Lease Termination.
ARTICLE X
MISCELLANEOUS
Section 10.01. Notices. Except as otherwise provided in this
Agreement, all notices, certificates, requests, requisitions and
other communications hereunder shall be in writing and shall be
sufficiently given and shall be deemed given when mailed by
registered or certified mail, postage or delivery fee prepaid,
return receipt requested addressed as provided in Section 15.08 of
the Indenture. A copy of each notice, certificate, request or
other communication given hereunder to the Issuer, the Company, the
Trustee, the Registrar or the Paying Agent shall also be given to
the others. Any of the foregoing may, by notice given hereunder,
designate any further or different addresses to which subsequent
notices, certificates, requests or other communications shall be
sent.
Section 10.02. Parties in Interest. This Agreement shall
inure to the benefit of and shall be binding upon the Issuer, the
Company and their respective successors and assigns, and no other
person, firm or corporation, other than the Trustee shall have any
right, remedy or claim under or by reasons of this Agreement.
Section 10.03. No Personal Liability.
(A) No covenant, obligation or agreement of the Issuer
shall be deemed to be a covenant, obligation or agreement of
any present or future member, officer, agent or employee of
the Issuer in other than his official capacity, and neither
the members of the Issuer nor any official executing the 1999
Series A Bonds shall be liable personally with respect to the
57
1999 Series A Bonds or be subject to any personal liability or
accountability by reason of the issuance thereof or by reason
of the covenants, obligations or agreements of the Issuer
contained in this Agreement or in the Indenture.
(B) No covenant, obligation or agreement of the Company
shall be deemed to be a covenant, obligation or agreement of
any present or future officer, agent or employee of the
Company in other than his official capacity, and neither the
officers, agents or employees of the Company nor any officer
executing this Agreement shall be liable personally on the
Agreement or the 1999 Series A Bonds or be subject to any
personal liability or accountability by reason of the delivery
or issuance thereof, respectively or by reason of the
covenants, obligations or agreements of the Company contained
in this Agreement.
Section 10.04. Amendments. This Agreement may be amended
only by written agreement of the parties hereto, subject to the
limitations set forth herein and in the Indenture.
Section 10.05. Counterparts. This Agreement may be executed
in any number of counterparts, each of which, when so executed and
delivered, shall be an original; but such counterparts shall
together constitute but one and the same Agreement.
Section 10.06. Severability. If any clause, provision or
section of this Agreement shall, for any reason, be held illegal or
invalid, such illegality or invalidity shall not affect any other
provision of this Agreement, and this Agreement shall be construed
and enforced as if such illegal or invalid provisions had not been
contained herein.
Section 10.07. Governing Law. The laws of the Commonwealth
shall govern the construction and enforcement of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above
written.
KENTON COUNTY AIRPORT BOARD
(SEAL)
By
__________________________________
▇▇▇▇ ▇.▇▇▇▇▇▇▇▇▇
Chairman
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ATTEST:
By ___________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Secretary-Treasurer
59
MESABA AVIATION, INC.
By
__________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Chief Executive Officer
60