EXHIBIT 10.30(a)
"A" LEASE
SPECIAL FACILITIES
LEASE AGREEMENT
(AUTOMATED PEOPLE MOVER PROJECT)
______________________________________
by and between
CITY OF HOUSTON, TEXAS
as Lessor
and
CONTINENTAL AIRLINES, INC.
as Lessee
______________________________________
Dated as of March 1, 1997
SPECIAL FACILITIES
LEASE AGREEMENT
(AUTOMATED PEOPLE MOVER PROJECT)
I N D E X
Page No.
ARTICLE I
DEFINITIONS AND INTERPRETATIONS
Section 1.01: Definitions . . . . . . . . . . . . . . . . . . .2
Section 1.02: Interpretations . . . . . . . . . . . . . . . . .6
ARTICLE II
REPRESENTATIONS
Section 2.01: Representations by the City . . . . . . . . . . .7
Section 2.02: Representations by Lessee . . . . . . . . . . . .7
ARTICLE III
LEASE AND TERM; GRANT OF EASEMENTS AND GROUND LEASES
Section 3.01: Lease of Special Facilities . . . . . . . . . . .8
Section 3.02: Term of Lease of Special Facilities . . . . . . .8
Section 3.03: Easements and Ground Leases . . . . . . . . . . .8
Section 3.04: Condition of Special Facilities . . . . . . . . .8
Section 3.05: City Right of Entry . . . . . . . . . . . . . . .9
ARTICLE IV
ISSUANCE OF BONDS; PAYMENT OF COSTS OF THE PROJECT
Section 4.01: Issuance of Series 1997A Bonds. . . . . . . . . .9
Section 4.02: Issuance of Additional Bonds. . . . . . . . . . .9
Section 4.03: Application of Proceeds; Insufficiencies. . . . 10
Section 4.04: Refunding Bonds . . . . . . . . . . . . . . . . 10
Section 4.05: Optional Redemption of Bonds. . . . . . . . . . 11
ARTICLE V
DESIGN, CONSTRUCTION AND ACQUISITION OF THE SPECIAL FACILITIES
Section 5.01: General . . . . . . . . . . . . . . . . . . . . 11
Section 5.02: Special Provisions for Project. . . . . . . . . 12
Section 5:03: Inventory of Special Facilities; Replacements . 14
Section 5.04: Title to Project, Plans and Contracts . . . . . 14
Section 5.05: Design, Construction and Acquisition of
Additional Special Facilities . . . . . . . . . 15
Section 5.06: Personal Property Not Constituting Special
Facilities. . . . . . . . . . . . . . . . . . . 15
ARTICLE V
INET RENT AND GROUND RENT
Section 6.01: Net Rent While Bonds Outstanding. . . . . . . . 16
Section 6.02: Obligation to Pay Net Rent Unconditional. . . . 17
Section 6.03: Pledge of Net Rent. . . . . . . . . . . . . . . 18
Section 6.04: Operation and Maintenance Expenses; Other Costs 18
Section 6.05: Ground Rentals. . . . . . . . . . . . . . . . . 19
ARTICLE VII
USE OF SPECIAL FACILITIES;
REPRESENTATIONS AND UNDERTAKINGS BY LESSEE AND CITY
Section 7.01: General . . . . . . . . . . . . . . . . . . . . 19
Section 7.02: Use of Project. . . . . . . . . . . . . . . . . 19
Section 7.03: Representations by City with Respect to the
Project . . . . . . . . . . . . . . . . . . . . 20
Section 7.04: Reaffirmation of Options to City with Respect
to the Project. . . . . . . . . . . . . . . . . 23
ARTICLE VIII
LESSEE'S OBLIGATIONS AND CONDITIONS TOLESSEE'S
USE OF SPECIAL FACILITIES
Section 8.01: Maintenance of Special Facilities at
Lessee's Expense. . . . . . . . . . . . . . . . 24
Section 8.02: Taxes, Charges, Utilities, Liens. . . . . . . . 24
Section 8.03: Compliance with Airport Rules and Regulations
and Law; Nondiscrimination. . . . . . . . . . . 24
Section 8.04: Compliance with Tax Law . . . . . . . . . . . . 25
Section 8.05: Environmental Matters . . . . . . . . . . . . . 25
Section 8.06: City's Right To Maintain or Repair Special
Facilities. . . . . . . . . . . . . . . . . . . 28
Section 8.07: Termination Procedures. . . . . . . . . . . . . 28
ARTICLE IX
LIABILITY, INSURANCE AND CONDEMNATION
Section 9.01: Release and Indemnification of City . . . . . . 28
Section 9.02: General Insurance Requirements. . . . . . . . . 30
Section 9.03: Risks and Minimum Limits of Coverage. . . . . . 31
Section 9.04. Other Provisions. . . . . . . . . . . . . . . . 32
Section 9.05: Disposition of Insurance Proceeds . . . . . . . 33
Section 9.06: Condemnation. . . . . . . . . . . . . . . . . . 34
Section 9.07: Reconstruction or Repair. . . . . . . . . . . . 36
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
Section 10.01: Events of Default. . . . . . . . . . . . . . . 36
Section 10.02: Remedies on Default. . . . . . . . . . . . . . 37
Section 10.03: Additional Remedy. . . . . . . . . . . . . . . 39
Section 10.04: No Remedy Exclusive. . . . . . . . . . . . . . 39
Section 10.05: Agreement to Pay Attorneys' Fees and Expenses. 39
Section 10.06: No Additional Waiver Implied by One Waiver . . 39
Section 10.07: Enforcement by City Attorney . . . . . . . . . 39
Section 10.08: Special Rights of Bond Insurer . . . . . . . . 40
ARTICLE XI
ASSIGNMENTS, SUBLETTING AND TERMINATION BY LESSEE
Section 11.01: Assignments and Subletting by Lessee . . . . . 40
Section 11.02: Termination of Agreement by Lessee . . . . . . 41
Section 11.03: Special Provisions Regarding Leasehold
Mortgage . . . . . . . . . . . . . . . . . . . 41
ARTICLE XII
MISCELLANEOUS
Section 12.01: Lessee to Maintain Its Corporate Existence . . 42
Section 12.02: Exempt Facilities. . . . . . . . . . . . . . . 42
Section 12.03: Notices. . . . . . . . . . . . . . . . . . . . 42
Section 12.04: Consents and Approvals . . . . . . . . . . . . 44
Section 12.05: Rights Reserved to City. . . . . . . . . . . . 45
Section 12.06: Force Majeure. . . . . . . . . . . . . . . . . 45
Section 12.07: Severability Clause. . . . . . . . . . . . . . 45
Section 12.08: Place of Performance; Laws Governing . . . . . 45
Section 12.09: Brokerage. . . . . . . . . . . . . . . . . . . 46
Section 12.10: Individuals Not Liable . . . . . . . . . . . . 46
Section 12.11: Binding Nature of Agreement; Benefits of
Agreement. . . . . . . . . . . . . . . . . . . 46
Section 12.12: Ambiguities. . . . . . . . . . . . . . . . . . 46
Section 12.13: Survival . . . . . . . . . . . . . . . . . . . 46
Section 12.14: No Merger of Title . . . . . . . . . . . . . . 46
Section 12.15: Entire Agreement . . . . . . . . . . . . . . . 47
Description of Project Exhibit "A"
Description of Easements Exhibit "B"
Description of Ground Lease Properties Exhibit "C"
Deed and ▇▇▇▇ of Sale for Project Exhibit "D"
SPECIAL FACILITIES
LEASE AGREEMENT
(Automated People Mover Project)
THE STATE OF TEXAS
COUNTY OF ▇▇▇▇▇▇
THIS SPECIAL FACILITIES LEASE AGREEMENT (hereinafter called
"Agreement") dated as of the 1st day of March, 1997, is made and
entered into between the CITY OF HOUSTON, TEXAS, a municipal
corporation and Home Rule City, situated principally in ▇▇▇▇▇▇
County, Texas (hereinafter called "City"), and CONTINENTAL
AIRLINES, INC., a corporation organized and existing under the laws
of the State of Delaware, duly authorized to do business in the
State of Texas (hereinafter called "Lessee").
W I T N E S S E T H :
WHEREAS, City is the owner of land and certain improvements
known as the Houston Intercontinental Airport, located in the City
of Houston, ▇▇▇▇▇▇ County, Texas (hereinafter called "Airport"),
which is operated as a public airport, as a part of the City's
Airport System (as hereinafter defined), and City has the power and
authority to lease premises and facilities thereon and to grant
rights and privileges with respect thereto, including those set
forth herein; and
WHEREAS, Lessee is engaged in the business of commercial air
transportation as a scheduled air carrier and is certificated or
otherwise authorized by the United States Government and the
hereinafter described Use and Lease Agreement to engage in such
business at the Airport (hereinafter referred to as "authorized
business"); and
WHEREAS, City and Lessee have heretofore entered into the Term
Sheet (as hereinafter defined) pursuant to which the City has
agreed to lease to Lessee certain space and facilities in Terminals
B and C at the Airport and to issue certain special facilities
revenue bonds to finance certain special facilities projects, which
bonds are to be secured by the pledge of certain net rentals of the
special facilities projects payable by the Lessee; and
WHEREAS, Lessee has heretofore requested the City to undertake
the financing of the Project (as hereinafter defined); and
WHEREAS, the City has found and determined that it is in the
public interest and a public purpose for the City to finance the
costs of the Project through the issuance of certain special
facilities revenue bonds payable from certain net rentals of the
Project; and
WHEREAS, all ordinances heretofore adopted by the City
authorizing the issuance of its Airport System Revenue Bonds
payable from any or all gross revenues, tolls, rents, lease moneys,
returns, and charges derived by the City from the operation of its
Airport System, which includes the Airport, provide for the
exclusion from the pledge of such revenues "any rentals (except
ground rentals) from net rent leases which may be executed in the
future wherein the lease consideration is pledged or otherwise
utilized to finance the construction of buildings or facilities for
lessee-tenants of the City, but only for such time and to such
extent in each case as the rentals reserved in the lease or any
extension or renewal thereof (other than ground rent) are required
to be deposited in a separate interest and redemption fund in order
to meet the City's obligation for interest payments and principal
repayment on the bonds or other instruments of indebtedness issued
or sold to finance the improvement which is the subject matter of
the lease"; and
WHEREAS, the City and Lessee desire to enter into this
Agreement (i) to constitute a "net rent lease", to provide for the
construction and acquisition of certain Special Facilities
initially consisting of the Project, to provide for the issuance of
revenue bonds to finance certain costs of such Special Facilities,
and to provide for the payment by Lessee of certain Net Rent at
times and in amounts sufficient to meet the City's obligation for
interest payments and principal repayment on all revenue bonds sold
to finance the costs of such Special Facilities and (ii) to set
forth certain other agreements of the parties with respect to the
Special Facilities and Ground Lease Properties; and
WHEREAS, the City has heretofore determined that the Project
is essential to the development and operation of the Airport and,
but for the timing requirements stipulated by Lessee, would have
been financed, constructed and operated by the City for the benefit
of the same members of the traveling public who are intended to be
served by the APM (as hereinafter defined);
NOW, THEREFORE, for and in consideration of the premises and
of the mutual covenants and agreements herein contained and in
consideration of the rentals and other amounts to be paid as herein
provided, the City and Lessee do hereby covenant and agree as
follows:
ARTICLE I
DEFINITIONS AND INTERPRETATIONS
Section 1.01: Definitions. In this Agreement, the following
terms shall have the following meanings, respectively, unless the
context clearly indicates otherwise:
"Additional Bonds" shall mean all additional bonds which may
be issued by the City payable from the same source as the Series
1997A Bonds (including Net Rent payable under this Agreement) for
the purposes and in the general manner specified in Section 4.02
hereof.
"Airport" shall mean ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇, as it now exists or may be modified or expanded
from time to time in the future.
"Airport System" shall mean all airport, heliport and aviation
facilities, or any interest therein, now or from time to time
hereafter owned, operated or controlled in whole or in part by the
City, together with all properties, facilities and services
thereof, and all additions, extensions, replacements and
improvements thereto, and all services provided or to be provided
by the City in connection therewith, but expressly excluding
Special Facilities. The Airport System currently includes the
present airports of the City, known as "Houston Intercontinental
Airport," "▇▇▇▇▇▇▇ ▇. Hobby Airport" and "▇▇▇▇▇▇▇▇▇ Field" and the
"CBD Heliport."
"Airport System Senior and Subordinate Lien Revenue Bonds"
shall mean any or all of the City's outstanding bonds and notes of
such designation secured by and payable from senior or subordinate
liens on Airport System net revenues, including any bonds and notes
hereafter issued on a parity therewith.
"APM" or "Automated People Mover" shall mean the automated
people mover system to run between Terminals B and C at the Airport
as more fully described in Exhibit "A" attached to this Agreement.
"APM Easement" shall mean the Easement(s) so designated in
Exhibit "B" attached to this Agreement, for the purpose of the APM,
including APM stations.
"Available Moneys" shall mean (i) moneys received by the
Trustee and held in the Interest and Redemption Fund for a period
of at least 124 days (or, if any such moneys are paid to or for the
benefit of any person who is an "insider" within the meaning of the
United States Bankruptcy Code with respect to the City or the
Lessee or is paid by any such person who is an "insider," 367 days)
and not commingled with any moneys so held for less than said
period and during and prior to which period no petition in
bankruptcy was filed by or against the City or the Lessee under the
United States Bankruptcy Code, (ii) moneys with respect to which
the Trustee shall have received an opinion of counsel experienced
in matters pertaining to the United States Bankruptcy Code that the
contemplated use of such moneys would not constitute a transfer of
property voidable under Sections 544 or 547 of the United States
Bankruptcy Code should the City or the Lessee become a debtor under
such Code, or (iii) investment income derived from the investment
of moneys described in clauses (i) or (ii).
"Bond Insurer", with respect to the Series 1997A Bonds, shall
mean Financial Security Assurance Inc., a New York stock insurance
company, or any successor thereto.
"Bonds" shall mean collectively the Series 1997A Bonds and any
Additional Bonds and Refunding Bonds from time to time hereafter
issued.
"Business Day" shall mean any day other than a Saturday,
Sunday, or legal holiday or the equivalent (other than a
moratorium) on which banking institutions generally in Houston,
Texas or New York, New York are authorized or required by law or
executive order to close.
"City" shall mean the City of Houston, Texas, or such other
agency, board, authority, or private entity which may succeed to
the jurisdiction of the City over the Airport.
"Costs of the Project" or "Costs of the Special Facilities"
shall mean all costs of financing the construction and acquisition
of the Project or Special Facilities, as the case may be, and the
issuance of Bonds for such purpose, including without limitation
the following:
(i) all amounts paid by the Lessee, or authorized by the
Lessee and paid by or on behalf of Lessee, to design, construct,
acquire, fabricate, equip and install the Project or Special
Facilities, including without limitation, all costs of utility
extensions and connections and all amounts paid under all contracts
for goods, services and facilities related thereto;
(ii) all amounts necessary to provide for work performed,
material purchased or expenditures incurred, pertaining to or in
connection with the Project or any other Special Facilities
approved by City and Lessee including, without limitation, the
charges of any architects or engineers for plans, specifications,
drawings, supervision and inspection for the Project or Special
Facilities;
(iii) all expenses incurred by the Lessee and the City for
the review of plans, specifications and contracts for the Project
or the Special Facilities and for the inspection in connection with
the construction and acquisition thereof;
(iv) the cost of any and all permits, licenses, fees,
performance and payment bonds, appraisals and insurance policies
procured in connection with the acquisition and construction of the
Project or Special Facilities;
(v) legal, accounting and bond advisory, underwriting and
consultant fees and expenses, including any fees and expenses of
any bond insurer and the provider of any reserve fund surety, and
all costs and expenses incident to the authorization, issuance,
delivery and sale of the Bonds, including without limitation the
preparation, execution, delivery and recording of this Agreement,
the Trust Indenture, any preliminary and the final offering
documents pertaining to the Bonds, and any printing fees for such
documents, any purchase agreements pursuant to which the Bonds will
be sold, all credit agreements and other documents providing
security for the Bonds or the Lessee's obligations and all other
agreements and documents involved and contemplated hereby, the
costs and fees, including legal fees, incident to the qualification
of the Bonds for offer and sale under securities laws and the
preparation of any memorandum as to the eligibility of the Bonds
for offer and sale and for investment under state laws if required
or if applicable;
(vi) interest accruing on the Bonds during the period of
construction of the Project or Special Facilities financed with the
proceeds thereof, the term of which period shall be determined in
the Trust Indenture; and
(vii) such other and additional fees, costs, expenses and
expenditures of whatever nature incidental or pertaining to the
design, acquisition, construction, fabrication, equipping and
installation of the Project or the Special Facilities, including
funding of the Reserve Account, and all other costs and expenses
that may properly be capitalized as costs of the Project or the
Special Facilities.
"Director" shall mean the Director of the Department of
Aviation of the City or his designee.
"Easements" shall mean all of the easement or easements
described in Exhibit "B" attached hereto, including without
limitation the APM Easement.
"Event of Default" shall mean those events so defined in
Section 10.01 hereof.
"Ground Lease" shall mean (i) the lease of the Ground Lease
Properties by the City to Lessee pursuant to Section 3.03(b) hereof
and (ii) with respect to those Ground Lease Properties located
within Terminal B, the Use and Lease Agreement.
"Ground Lease Properties" shall mean the properties described
in Exhibit "C" attached hereto.
"Ground Rentals" shall mean the rentals to be paid by Lessee
directly to the City pursuant to Section 6.05 as consideration for
the lease of those Ground Lease Properties described in
Exhibit "C."
"Guaranty" shall mean the guaranty agreement dated as of
March 1, 1997, from the Lessee to the Trustee with respect to the
Series 1997A Bonds.
"Interest and Redemption Fund" shall mean the fund so defined
in the Trust Indenture for the collection of Net Rent and payment
of the Bonds.
"Leased Premises under the Use and Lease Agreement" shall mean
that certain space and improvements in and around at the Airport
which were leased by the City to Lessee pursuant to the Use and
Lease Agreement.
"Leasehold Mortgage" shall mean any deed of trust or mortgage
of Lessee's leasehold estate created hereunder which is authorized
to be granted pursuant to Section 11.03 of this Agreement.
"Leasehold Mortgagee" shall mean the beneficiary or mortgagee
under a Leasehold Mortgage.
"Lessee" shall mean Continental Airlines, Inc., a Delaware
corporation, and its successors and assigns as lessee hereunder.
"Net Rent" shall mean the net rentals payable by Lessee to the
Trustee on behalf of the City pursuant to Section 6.01(a)(i) and
(ii) hereof for the purpose of being applied to the payment of the
Bonds and making required deposits to the Interest and Redemption
Fund and payment of all other amounts due the Bond Insurer under
the Trust Indenture.
"Outstanding" shall have the meaning assigned in the Trust
Indenture.
"Project" shall mean the APM, together with all replacements
thereof and substitutes therefor as required to be made herein,
together with any modifications or additions thereto approved by
the Director and Lessee. The Project shall constitute the initial
Special Facilities.
"Refunding Bonds" shall mean all refunding bonds which may be
issued by the City for the purposes set forth in Sections 4.04
hereof, and which shall be payable from the same sources as the
Series 1997A Bonds (including Net Rent payable under this
Agreement).
"Reserve Account" shall mean the account to be created within
the Interest and Redemption Fund so defined in the Trust Indenture
for the purpose of constituting a reserve for the payment of Bonds.
"Series 1997A Bonds" shall mean the first series of Bonds to
be issued pursuant to this Agreement, which shall be entitled the
"City of Houston, Texas, Airport System Special Facilities Revenue
Bonds (Automated People Mover Project), Series 1997A."
"Special Facilities" shall mean the Project, all extensions,
additions, modifications and improvements thereto and all other
improvements, fixtures, equipment and facilities that, pursuant to
this Agreement or any supplement hereto or amendment hereof, are
financed with any proceeds of the Series 1997A Bonds or any
Additional Bonds.
"Term Sheet" shall mean that certain Term Sheet entitled
"Continental Expansion at Houston Intercontinental Airport" entered
into between the City and Continental on July 5, 1996.
"Trust Indenture" shall mean the Trust Indenture, dated as of
March 1, 1997, together with all supplements and amendments
thereto, entered into by and between the City and the Trustee to
provide for the issuance of and security for the Series 1997A
Bonds.
"Trustee" shall mean the bank designated as Trustee under the
Trust Indenture, or any successor trustee thereunder.
"Use and Lease Agreement" shall mean that certain use and
lease agreement or agreements with respect to Terminals B and C at
Houston Intercontinental Airport to be entered into between the
City and Lessee as provided in the Term Sheet and, pending the
execution thereof, the Term Sheet and the City's and Lessee's
existing use and lease agreement for Terminal C at the Airport and
Lessee's rights under any existing use and lease agreement for
Terminal B at the Airport, and, in the event a definitive use and
lease agreement is not entered into on or prior to the expiration
of existing use and lease agreement(s) (scheduled to be
December 31, 1997), any ordinance or ordinances of the City
establishing rates and charges and the terms of occupancy for
Terminals B and C (consistent with the Term Sheet) or other
mutually agreed upon interim agreement with respect thereto between
the City and Lessee.
Section 1.02: Interpretations. All terms defined herein and
all pronouns used in this Agreement shall be deemed to apply
equally to singular and plural and to all genders. The table of
contents, titles and headings of the articles and sections of this
Agreement have been inserted for convenience of reference only and
are not to be considered a part hereof and shall not in any way
modify or restrict any of the terms or provisions hereof. This
Agreement and all the terms and provisions hereof shall be
liberally construed to effectuate the purposes set forth herein
and, to provide for the full and timely payment of all Bonds from
time to time hereafter issued by the City, which Bonds shall be
secured by a pledge of the Net Rent payable under this Agreement.
In the event of any ambiguity contained herein, it shall not be
construed for or against any party hereto on the basis that such
party did or did not author same.
ARTICLE II
REPRESENTATIONS
Section 2.01: Representations by the City. The City makes
the following representations as the basis for its undertakings in
this Agreement:
(a) The City, as the owner of the Airport, is authorized
to enter into this Agreement;
(b) The City has the power and authority to grant the
Easements and the Ground Leases to the Lessee for the purposes of
constructing, installing, equipping, maintaining and operating the
Project;
(c) The City has the power and authority to acquire the
Project constructed, installed and equipped by Lessee on the Ground
Lease Properties and the Easements, to acquire the other Special
Facilities, and to lease same to Lessee pursuant to the terms and
conditions contained herein;
(d) The City has the power and authority to issue the
Bonds for the purpose of paying the Costs of the Special Facilities
and to pledge to the payment of the Bonds the Net Rent payable
under this Agreement and by proper municipal action it has been
authorized to execute and deliver this Agreement; and
(e) All representations relating to the City contained in
the recitals to this Agreement are true and correct in all material
respects.
Section 2.02: Representations by Lessee. The Lessee makes
the following representations as the basis for its undertakings in
this Agreement:
(a) Lessee is a corporation validly existing under the
laws of the State of Delaware; it is in good standing under its
certificate of incorporation and the laws of the State of Delaware;
it is duly authorized to do business in the State of Texas; it has
the power to enter into this Agreement without violating the terms
of any other agreement to which it is a party; and by proper cor-
porate action it has been duly authorized to execute and deliver
this Agreement;
(b) Lessee will occupy and possess the Easements and
Ground Lease Properties for the purposes and upon the terms and
conditions set forth herein; it will, subject to the City's
issuance and sale of the Series 1997A Bonds, construct, install and
equip the Project substantially in the manner herein provided; it
will convey the Project to, or cause title to the Project to vest
in, the City in the manner herein provided; and it will occupy,
possess, operate and maintain the Project and any other Special
Facilities for the purposes and in the manner provided herein, all
subject to the terms and conditions of this Agreement; and
(c) All representations relating to Lessee contained in
the recitals to this Agreement are true and correct in all material
respects.
ARTICLE III
LEASE AND TERM; GRANT OF EASEMENTS AND GROUND LEASES
Section 3.01: Lease of Special Facilities. Subject to the
terms and conditions of this Agreement, the City hereby leases,
lets and demises unto Lessee, and Lessee hereby leases and rents
from the City, the Special Facilities, which shall consist
initially of the Project.
Section 3.02: Term of Lease of Special Facilities. The term
of this Agreement and the leasehold estate hereby created in the
Special Facilities shall commence on April 17, 1997, being the date
of delivery hereof by both the City and Lessee and shall continue,
unless sooner terminated in accordance with this Agreement, until
the 31st day of December, 2017.
Section 3.03: Easements and Ground Leases. (a) Subject to
the terms and conditions of this Agreement, the City hereby grants
and conveys to Lessee the Easements for a term corresponding to the
term of Lessee's leasehold estate in the Special Facilities
including any extensions or renewals thereof. The Easements shall
be used solely for the purpose of constructing, equipping,
acquiring, operating and maintaining the APM.
(b) Subject to the terms and conditions of this Agreement,
the City hereby leases and demises to Lessee the Ground Lease
Properties described in Exhibit "C," for a term corresponding to
the term of Lessee's leasehold estate in the Special Facilities,
including any extensions or renewals thereof. Except as may
otherwise be expressly provided herein or in the Use and Lease
Agreement, the Ground Lease Properties shall be used solely for the
purpose of constructing, equipping, acquiring, operating and
maintaining the APM.
(c) Subject to the terms hereof, Lessee shall have the
right of reasonable ingress to and egress from the Special
Facilities over the portions of the Airport necessary for the
construction, operation and maintenance of the Special Facilities
in accordance with the terms hereof but subject to reasonable
regulations promulgated by the Director.
(d) In the event the City and Lessee determine it is
necessary or desirable to amend, correct, further define or
delineate, delete from or add to any descriptions of the Easements
or the Ground Lease Properties, they may do so by a supplement or
addendum hereto duly executed by the respective parties and
consented to by the Bond Insurer.
Section 3.04: Condition of Special Facilities. The Lessee
has full and exclusive responsibility for ascertaining the
suitability of the Special Facilities, Easements and Ground Lease
Properties for their intended use. The City makes no
representations or warranties, either express or implied, as to the
condition of the Special Facilities, Easements and Ground Lease
Properties for the use intended by the Lessee. The Lessee takes
the Special Facilities, Easements and Ground Lease Properties in
their "as-is" condition. The City acknowledges that Lessee does
not assume any responsibility for any Hazardous Materials (as
defined in Section 8.05C below) that existed on the Easements or
the Ground Lease Properties as of the date hereof.
Section 3.05: City Right of Entry The City may enter upon
the Easements, Ground Lease Properties and Special Facilities
(i) at any reasonable time for any purpose necessary, incidental to
or connected with the performance of Lessee's obligations
hereunder, or in the exercise of the City's governmental functions,
and (ii) upon the termination or cancellation of this Agreement in
accordance with the provisions of Article X hereof, and such entry
or reentry shall not constitute a trespass nor give Lessee a cause
of action for damages against the City; provided, however, the City
shall use all reasonable efforts to minimize any interference or
interruption with Lessee's business operations.
ARTICLE IV
ISSUANCE OF BONDS; PAYMENT OF COSTS OF THE PROJECT
Section 4.01: Issuance of Series 1997A Bonds. Subject to the
terms and conditions of this Agreement, the City shall diligently
use its best efforts to issue, sell and deliver the Series 1997A
Bonds in an amount sufficient to pay the Costs of the Project,
which amount shall be established in the Trust Indenture. The City
shall have no obligations to issue, sell, or deliver the Series
1997A Bonds if (i) there exists an Event of Default under this
Agreement by Lessee, or (ii) Lessee has not given written approval
of the Trust Indenture. The City shall not authorize the sale of
the Series 1997A Bonds or enter into the Trust Indenture until the
terms of such Bonds and the form of such Trust Indenture have been
approved in writing by Lessee in the manner provided in
Section 12.04 hereof, which written approval shall be conclusively
binding upon Lessee.
Section 4.02: Issuance of Additional Bonds. The City, at the
direction of Lessee with the prior written approval of the Bond
Insurer, may issue Additional Bonds in amounts sufficient to pay
(i) any part of the Costs of the Project not fully funded or
provided for out of the proceeds of the Series 1997A Bonds, or (ii)
the Costs of the Special Facilities for any additional Special
Facilities approved pursuant to Section 5.05 hereof. The City
agrees to use its best efforts to issue any Additional Bonds
required under Clause (i) above, and the Director shall cooperate
in a reasonable manner with Lessee to request the City to issue
Additional Bonds under Clause (ii) above; however, no
representation is made or assurance given or implied by the City
that it will be able to issue, sell and deliver Additional Bonds on
terms and conditions satisfactory to Lessee or the Bond Insurer or
that it will agree to issue Additional Bonds for any other purpose
than as set forth above. Moreover, the issuance of Additional
Bonds is made subject to the same conditions enumerated in
Section 4.01 and the additional condition that there shall have
been executed a supplement to this Agreement to provide for the
manner of construction, acquisition and payment for any additional
Special Facilities to be financed with such Additional Bonds and to
provide for any other matters reasonably deemed necessary by the
City in connection with such financing. All Additional Bonds shall
be secured and payable as provided in the Trust Indenture. Upon
the issuance of any Additional Bonds, the Net Rent and other
amounts payable hereunder shall automatically be increased in the
amounts required to provide for the full and timely payment of all
principal, interest, redemption premiums, Trustee charges, fees or
charges to or of credit enhancers and other related costs and
expenses in respect of all Bonds then outstanding, including the
Additional Bonds to be issued and amounts due as provided in clause
(y) of Section 6.01 hereof. However, the City shall not authorize
the issuance of Additional Bonds until the terms thereof and of the
supplement to the Trust Indenture relating thereto have been
approved in writing by Lessee, which written approval shall be
conclusively binding upon Lessee.
Section 4.03: Application of Proceeds; Insufficiencies. (a)
Subject to the other terms and provisions hereof, the City hereby
agrees to apply the proceeds of the Series 1997A Bonds (by
depositing the proceeds into the "Acquisition Fund" and other Funds
as established, defined and provided in the Trust Indenture) and
any Additional Bonds to pay (but only to the extent of such
proceeds) the Costs of the Special Facilities financed therewith.
In the event that the proceeds of the Series 1997A Bonds or any
Additional Bonds shall be insufficient to pay all Costs of the
Special Facilities for which such Bonds were issued, then Lessee
shall deposit into the Acquisition Fund amounts which, together
with other amounts therein, shall be sufficient to pay all Costs of
the Project or Special Facilities as the case may be. Proceeds of
such Bonds and deposits, if any, shall be applied first to make any
deposits required by the Trust Indenture authorizing the issuance
of such Bonds, second to pay all Costs of the Special Facilities
incurred on behalf of the City by the Lessee (and which are
reasonably approved by Lessee), including the cost of issuance of
such Bonds, and last to pay any Costs of the Special Facilities
incurred by or on behalf of Lessee. Any proceeds of the Bonds
remaining after paying all Costs of the Special Facilities shall be
deposited into the Interest and Redemption Fund as provided under
the Trust Indenture.
(b) Although the Trust Indenture provides that a reserve
fund surety policy may be substituted for funds initially credited
to the Reserve Account, Lessee shall not cause such a reserve fund
surety policy to be delivered nor shall Lessee request the
withdrawal or application of amounts in the Reserve Account for any
purpose other than as a reserve for the payment of debt service on
the Bonds as provided in the Trust Indenture (or for redeeming
Bonds or purchasing Bonds in the open market for cancellation as
may be permitted by the Trust Indenture) without the prior written
consent of the Director.
Section 4.04: Refunding Bonds. Lessee reserves the right to
request the City from time to time to issue Refunding Bonds in any
manner permitted by law for the purpose of refunding any of the
Bonds from time to time outstanding. Although, no representation
is made or assurance given or implied by the City that it will be
able to issue, sell and deliver such Refunding Bonds on terms and
conditions satisfactory to the Lessee, the City agrees to use its
best efforts to issue Refunding Bonds at Lessee's request provided
they have a similar maturity pattern, similar redemption features
and similar security. All Refunding Bonds, if any, shall be
secured and payable as provided in the Trust Indenture, and the Net
Rent and other amounts payable hereunder shall automatically be
adjusted to provide for the full and timely payment of all
principal, interest, redemption premiums, Trustee charges, fees or
charges to or of credit enhancers and other related costs and
expenses in respect of all Bonds to be outstanding following the
issuance of the Refunding Bonds and amounts due as provided in
clause (y) of Section 6.01 hereof. Notwithstanding the foregoing,
the City shall not authorize the sale of any Refunding Bonds or
authorize any supplement to the Trust Indenture for such purpose
until the terms of such Refunding Bonds and the supplement to the
Trust Indenture are approved in writing by Lessee in the manner
provided in Section 12.04 hereof, and it is provided further that
the City's receipt of such approval shall be conclusively binding
upon Lessee.
Section 4.05: Optional Redemption of Bonds. The City agrees
that at the written request of Lessee, the City will exercise any
reserved right of optional redemption for any of the Bonds,
provided that Lessee makes such request in sufficient time as
specifically set forth in the Trust Indenture to permit the City to
give any notice required by the Trust Indenture and provided
further that Lessee gives the City adequate assurances that it will
pay all additional Net Rent required to provide for the payment of
the applicable redemption price for such Bonds, together with any
related costs and expenses in connection with such redemption. No
such Lessee request or approval is required for the City to
exercise rights of optional redemption of the Bonds as provided in
Section 7.03(d) hereof.
ARTICLE V
DESIGN, CONSTRUCTION AND ACQUISITION OF THE SPECIAL FACILITIES
Section 5.01: General. Lessee shall cause the Special
Facilities to be designed, procured, constructed, installed and
completed in accordance with the following provisions.
(a) All plans and specifications for the design,
procurement, construction and installation of any discrete element
of the Special Facilities, including any alteration or addition
thereto, shall be submitted to and receive the written approval of
the Director prior to the commencement of any such discrete element
of procurement, construction, alteration or installation. The City
acknowledges that time is of the essence in reviewing such plans
and specifications and shall use diligence to review and respond to
all submissions of plans and specifications in a prompt and timely
manner; provided that the City will continue its review to the
extent practical, as determined by the City, while awaiting
additional information from the Lessee. The City's review and
response shall be conducted to avoid material, adverse impacts to
the most recently published construction schedule approved by the
City and the Lessee. The Lessee acknowledges that the City cannot
review and respond in such a timely manner unless the Lessee
assures that complete and thorough submissions are made to the City
for review. Further, the Lessee acknowledges timely review and
response by the City requires reasonable response by the Lessee to
requests of the City for additional information necessary to
complete the City's review.
(b) All such procurement, construction, alteration or
installation may be made only after obtaining any required building
or construction licenses and permits, which the City agrees to use
reasonable efforts to expedite or to assist in obtaining, and, in
addition to usual City inspection, shall be subject to inspection
by the Director to see that the approved plans and specifications
are being followed; provided, however, that the City shall use
reasonable efforts to eliminate or avoid any interference or
interruption with the construction of the Project.
(c) All such procurement, construction, alteration and
installation shall be designed and carried out in accordance with
the Department of Aviation's Tenant Improvement Manual, except to
the extent inconsistent herewith, which is incorporated herein by
reference and a copy of which has been provided to Lessee or as
otherwise agreed by the City and Lessee. All such procurement,
construction, alteration or installation shall be carried out and
completed substantially in accordance with the most recently
published construction schedule approved by Director and Lessee.
Upon completion of construction, Lessee shall provide the Director
with as-built drawings of improvements all on CADD diskette.
(d) Lessee shall make good faith efforts to ensure that
its Special Facilities contractors meet the City's overall MWBE
participation goals of 24% for design, 17% for construction and 11%
for procurement. Lessee shall provide periodic reports as may be
reasonably required by the Director or the City's Director of
Affirmative Action. The City shall have the right to audit
Lessee's efforts under this subsection throughout the term of this
Agreement in the same manner as it audits other City contractors.
(e) Lessee shall make good faith efforts to ensure that
its Special Facilities contractors that supply services and/or
labor comply with the City's drug free work place policy as set
forth in City of Houston Executive Order 1-31, as amended.
(f) Upon completion of the Project, Lessee shall
(i) submit to the City an affidavit executed by any officer
authorized to bind Lessee of Lessee certifying that the Project has
been constructed in substantial accordance with the plans and
specifications approved by the Director as provided in Section
5.01; all contractors, subcontractors, laborers, materialmen,
architects, engineers, and all other parties who have performed
work on or furnished materials for the construction, landscaping,
fixturing and equipping the Project have been paid in full together
with, when appropriate, executed and delivered releases of lien;
the Project is fully equipped, furnished, and supplied and is ready
for operation; and Lessee has obtained all necessary licenses,
permits, and other authorization required as of such date from all
governmental authorities having jurisdiction, and (ii) cause the
architect of the Project to execute and deliver to the City an
affidavit stating that the Project has been constructed and
equipped substantially in accordance with the plans and
specifications referred to in Section 5.01.
(g) In the event of default of any contractor or
subcontractor under any contract made by it in connection with the
Project or in the event of breach of warranty with respect to any
materials, workmanship, or performance guarantee, the Lessee will
promptly proceed, either separately or in conjunction with the
City, to exhaust the remedies of the Lessee against the contractor,
subcontractor or supplier so in default and against the surety for
the performance of such contract. The Lessee agrees to advise the
City of the steps it intends to take in connection with any such
default.
Section 5.02: Special Provisions for Project. The following
special conditions relate to the design and construction of the
Project:
(a) The Project shall be designed as the first phase of an
Airport-wide automated people mover system that may eventually be
expanded to connect with the International Airlines Building and
Terminal A.
(b) Lessee shall make available to the City's construction
manager, on a timely basis, copies of all final contract documents
and reports regarding progress payments and budget status for the
Project.
(c) The City shall designate a construction manager to
work diligently in a cooperative manner with Lessee in monitoring
the design, construction, installation and testing of the Project,
and Lessee shall give due consideration to the input and reasonable
requests of the City's construction manager in matters affecting
the design, construction, installation and testing of the Project.
(d) The sizing of the Project vehicles shall be made by
Lessee in consultation with the City, taking into consideration the
anticipated peak demands of an integrated Airport-wide automated
people mover system to be developed over the long term.
(e) Lessee's bid documents for the Project shall provide
for payment and performance bonds for the construction of the
guideway and acquisition and installation of the Project systems
and vehicles, which shall name the City as a dual obligee and shall
be subject to the timely review and approval of the City's Legal
Department.
(f) In connection with the design, construction,
procurement and installation of the Project and, for so long as
Lessee does not elect to contract with the City for its operation,
then:
(i) Lessee will obtain or cause to be obtained
insurance policies in conformity with Sections 9.02-9.04
hereof;
(ii) Lessee will cause the City and the
Leasehold Mortgagee to be named as an additional insured
under such policies of insurance and will use its best
efforts to cause all contractor warranties and guarantees
to inure to the benefit of the City as well as to Lessee;
and
(iii) Lessee will use its best efforts to provide
indemnities from its contractors to the City to the same
extent as Lessee obtains indemnities from such
contractors.
(g) The bid documents issued by Lessee for the Project
will provide that the contractors/ suppliers contractually commit
to providing unit prices (subject to consumer price index or some
other reasonably determined escalation) for acquisition of the
systems and vehicles required for future expansions to the Project
by the City and that such unit prices remain in effect and
available to the City for up to 24 months from the date Lessee and
its primary construction contractor enter into a contract for the
construction of the technology phase of the Project.
(h) The Project shall also be designed and used to support
a baggage transfer facility for the sole use of Lessee; provided,
however, that:
(i) such baggage transfer facility shall not
constitute a part of the Project and the Project shall not
include the baggage transfer facility but the baggage transfer
facility, if constructed, shall be entitled to rights of
support by or suspension from the Project structure;
(ii) such baggage transfer facility shall be designed
to be compatible with the Project and shall be operated and
maintained at all times so as not to interfere in any material
way with the operation, maintenance, security or use of the
Project;
(iii) the City may inspect such baggage transfer
facility at any time on reasonable notice; provided that the
City shall use all reasonable efforts to minimize any
interference or interruption with Lessee's business
operations.
(i) Lessee shall contractually provide that all parties
contracting directly with Lessee for the preparation of Project
Plans and Contracts (as defined in Section 5.04(b) below) to
expressly recognize the City's and the Leasehold Mortgagee's rights
to use, enjoy and exercise all rights as owner of the Project,
subject to the limitations contained in Section 5.04(b).
Section 5:03: Inventory of Special Facilities; Replacements.
Upon completion of the Project, and upon the construction and
acquisition of any additional Special Facilities, Lessee shall
provide the Director with a detailed written inventory of all
furnishings, fixtures and equipment constituting a material part of
such Special Facilities, certified by any officer authorized to
bind Lessee, which inventory shall include a complete description
of each such item or class of items of such furnishings, fixtures
and equipment including make, model and serial numbers, if any.
Lessee shall from time to time, upon the reasonable request by
Director, amend and revise such inventory to reflect all
replacements and substitutes of any such items; provided, however,
that Lessee may substitute for or replace commercially fungible
items in such inventory with substantially comparable items and
take the other actions permitted in Sections 8.01 and 8.04 hereof
without notice. All such Special Facilities, and all replacements
and substitutions therefor, shall be the absolute property of the
City and shall not be disposed of by Lessee except as permitted
herein.
Section 5.04: Title to Project, Plans and Contracts. (a) In
consideration for the City's issuance of Bonds to finance the Costs
of the Project as provided herein, the City shall acquire title to
the Project at the time of construction, acquisition or
installation and from time to time during construction, subject to
the terms and provisions of this Agreement, the leasehold estate of
Lessee herein created and the rights of the Leasehold Mortgagee,
and such title shall automatically vest in the City immediately
upon such construction, acquisition or installation without further
notice or action. In this regard, Lessee hereby agrees to execute
and deliver to the City the Deed and ▇▇▇▇ of Sale for Project,
after completion thereof, as set forth in Exhibit "D" and such
further documentation as shall be reasonably requested by the City
to evidence the City's acquisition of title to the Project in
accordance with the terms of this Agreement.
(b) As further consideration for the City's issuance of
Bonds to finance the Costs of the Project, the City shall acquire
an interest (on a par with Lessee's interest therein and the rights
of the Trustee and the Bond Insurer under the Leasehold Mortgage)
in all plans, specifications, drawings, contracts, warranties,
bonds and other documents and contractual rights relating to the
Special Facilities, the cost of which constitutes a Cost of the
Project (collectively, the "Project Plans and Contracts").
Moreover, Lessee shall cause the City to be authorized, as owner of
an interest in the Project Plans and Contracts, to have the
authority, right and power to use, enjoy and exercise all rights
under the Project Plans and Contracts available to Lessee in order
to be able to cause the design, construction, acquisition,
completion and operation of the Project. The City agrees that it
will not exercise any such authority, rights or powers under this
subsection so long as it has not acquired or assumed Lessee's
leasehold in the Project as contemplated in Section 7.03 hereof or
no Event of Default by Lessee has occurred and is continuing
hereunder.
Section 5.05: Design, Construction and Acquisition of
Additional Special Facilities.
(a) From time to time hereafter, Lessee may request the
City to undertake to issue Additional Bonds to finance additional
Special Facilities. The Director shall cooperate in a reasonable
manner with Lessee to request the City to provide such financing,
and if consummated, then this Agreement shall be supplemented to
provide for the design, construction and acquisition of such
Special Facilities, for payment of the Costs of the Special
Facilities and any other matters deemed appropriate by the City and
Lessee. The Net Rent and other amounts payable hereunder shall
automatically be increased to provide for the payment of the
Additional Bonds, in the amount and manner set forth in
Section 4.02 hereof.
(b) It is expressly acknowledged and understood by Lessee
that this Agreement shall impose no obligation of any kind upon the
City to issue or undertake to issue any Additional Bonds to finance
additional Special Facilities except for the best efforts
obligations set forth in Section 4.02. If the City elects not to
issue Additional Bonds for such purpose, Lessee may construct such
improvements at its sole cost.
Section 5.06: Personal Property Not Constituting Special
Facilities. Lessee's equipment, trade fixtures and personal
property not constituting Special Facilities (i.e. not financed
with Bonds and not constituting a replacement, repair or
substitution for Special Facilities) may be located on the
Easements or Ground Lease Property without becoming Special
Facilities and, so long as no Event of Default by Lessee has
occurred and is continuing hereunder, may be removed by Lessee
provided that such removal will not damage or impair the Special
Facilities or that Lessee at its expense restores the Special
Facilities to the same or better condition than existed prior to
such removal. Any and all such equipment, trade fixtures and
personal property not removed by Lessee prior to the expiration of
this Agreement, or if this Agreement ends by early termination,
within 60 days after receipt by Lessee of a written notice issued
by the Director to remove such property, shall thereupon become a
part of the land upon which it is located and title thereto shall
thereupon vest in the City, and City reserves the right to remove
such property not so removed by Lessee, and if such removal is
accomplished within the 30 day period after the expiration of this
Agreement or the 60 day period referred to above (after the early
termination of the Agreement), such removal by the City shall be at
Lessee's expense.
ARTICLE VI
NET RENT AND GROUND RENT
Section 6.01: Net Rent While Bonds Outstanding. (a) Lessee
shall pay to the City, by depositing directly with the Trustee for
the account of the Interest and Redemption Fund, Net Rent for so
long as any Bonds remain Outstanding or amounts are due and owing
to the Bond Insurer under the Trust Indenture at such times and in
such amounts as follows:
(i) on or before the fourth Business Day prior
to each interest and/or principal payment date on the
Bonds,
(A) all interest payable on all
Bonds on such date; plus
(B) all principal (if any)
payable on all Bonds on such date,
whether payable at maturity (whether
scheduled or accelerated) or earlier
redemption (regardless of whether such
redemption is optional, extraordinary or
mandatory); plus
(C) all redemption premiums (if
any) payable on all Bonds on such date.
(ii) immediately upon receipt of written notice
from the Trustee for the Bonds advising it that such
amounts are due and payable:
(A) all unpaid principal,
accrued interest and redemption premiums
and/or indemnifications on all Bonds
which are declared due and payable under
any extraordinary redemption or
acceleration provision in the Trust
Indenture; plus
(B) any deficiency in the
Reserve Account of the Interest and
Redemption Fund resulting from any
withdrawal from such Account required by
the Trust Indenture or from a decrease
in valuation of investments in such
Reserve Account;
(C) all fees, charges,
reimbursements, expenses and interest
charges due to any bond insurer or
provider of a reserve fund surety in
connection therewith;
provided, however, that if the Trust Indenture allows payments
of such amounts as are described in (ii) above on a later date
or in installments, they shall be payable as required by the
Trust Indenture without further notice by the Trustee.
In addition to the above described Net Rent, Lessee shall pay (x)
directly to the Trustee, all Trustee charges and any other related
costs and expenses in connection with the payment of principal,
interest or redemption premiums on the Bonds in accordance with the
Trust Indenture, and (y) directly to the Trustee at such times and
in such amounts, together with amounts available therefor under the
Trust Indenture so as to ensure compliance with the provisions of
Section 148 of the Internal Revenue Code of 1986, as amended, and
the regulations promulgated thereunder and Section 4.9 of the Trust
Indenture.
(b) So long as the Reserve Account is fully funded in the
amount and manner required by the Trust Indenture, the Net Rent
payable under subsection 6.01(a) of this Agreement shall be reduced
by the total of any amounts then on deposit in the Interest and
Redemption Fund (exclusive of the Reserve Account therein) in
excess of the amount then needed for the purpose of paying, or
reimbursing the Bond Insurer for the payment of, previously matured
interest, principal, matured or redeemed Bonds, and redemption
premiums, if any, whether such excess amounts become available by
reason of (i) amounts deposited in the Interest and Redemption Fund
from the proceeds of the Bonds, (ii) previous overpayments of Net
Rent, (iii) surplus funds from proceeds of the Bonds deposited to
the credit of such Interest and Redemption Fund at the end of the
construction and acquisition of the Project, (iv) interest earnings
from the investment or deposit of any amounts from time to time
credited to the Interest and Redemption Fund (including interest
earnings from the Reserve Account therein that are not required to
be retained in the Reserve Account and are permitted to be used for
such purpose by the Trust Indenture), or (v) any other circumstance
which results in excess funds, other than amounts provided by the
Bond Insurer, being properly deposited in the Interest and
Redemption Fund that are available for such purpose. The
reductions in the Net Rent payments contemplated by this
subsection 6.01(b) shall be made by applying such excess amounts as
a credit(s) against the next Net Rent payment(s) due after such
excess amounts have actually become available in the Interest and
Redemption Fund, until such excess amounts are exhausted. The City
shall request the Trustee to calculate such reductions and furnish
them to the Lessee in a timely manner prior to the date on which
Net Rent is payable. In the event the Trustee fails to furnish
Lessee with the amount of any such reduction, it shall be the
Lessee's obligation to ascertain the correct amount of such
reductions or pay as Net Rent the full amount provided in
subsection 6.01(a) hereof. After all Net Rent has been paid and no
Bonds remain Outstanding within the meaning of the Trust Indenture
and no amounts remain due and owing to the Bond Insurer or
otherwise under the Trust Indenture, then, any amounts remaining in
the Interest and Redemption Fund or Reserve Account therein which
are paid over to the City by the Trustee shall be deemed
overpayments of Net Rent and paid over by the City to Lessee within
30 days of their receipt by the City.
Section 6.02: Obligation to Pay Net Rent Unconditional. It
is understood and acknowledged by the Lessee that the Bonds will be
insured by the Bond Insurer and sold to the purchasers thereof in
reliance upon the commitment of Lessee to make the payments of Net
Rent and other amounts payable pursuant to Section 6.01(a)
hereunder provided in Section 6.01 above, subject only to the
reductions provided in subsection (b) thereof. Accordingly, the
obligations of the Lessee to make the payments of Net Rent and
other amounts payable pursuant to Section 6.01(a) hereunder thus
required shall be absolute and unconditional and so long as the
Bonds remain outstanding within the meaning of the Trust Indenture
or any amount is due and owing the Bond Insurer under the Trust
Indenture, the Lessee (i) will not suspend or discontinue any
payments of Net Rent and other amounts payable pursuant to Section
6.01(a) hereunder provided herein or seek any offset against its
obligations to pay such amounts or recoupment of any amounts so
paid, and (ii) will not terminate this Agreement or otherwise seek
to avoid or to reduce the payment of Net Rent and other amounts
payable pursuant to Section 6.01(a) hereunder for any reason,
including without limiting the generality of the foregoing,
termination of the Use and Lease Agreement, failure of the Lessee
to complete the Project, failure of the City to acquire the
Project, failure of the Lessee or the City to complete the
construction or acquisition of any other Special Facilities,
failure of the City to pay or cause to be paid any Costs of the
Special Facilities (but without limiting the City's obligations
under Section 4.03 hereof) or any acts or circumstances that may
constitute failure of consideration, destruction or damage to or
condemnation of such facilities, or frustration of purpose, any
change in the tax or other laws of the United States of America or
the State of Texas, or any political subdivision of either thereof
or any failure of the City to perform or observe any agreement,
whether expressed or implied, or any duty, liability or obligation
arising out of or connected with this Agreement. It is provided,
however, that nothing contained in this Section shall be construed
to release the City from the performance of any of the agreements
on its part herein contained, and in the event the City should fail
to perform such agreement, the Lessee may, without limitation of
any other rights that the Lessee may then have, institute such
actions against the City as it may deem necessary to compel the
performance thereon, to seek damages or other relief or to restrain
or enjoin forbidden acts provided that such institution of such
actions shall not result in a reduction of the payment of Net Rent
or other amounts payable pursuant to Section 6.01(a) hereunder.
Section 6.03: Pledge of Net Rent. It is expressly understood
and agreed that the Net Rent and other amounts payable pursuant to
Section 6.01(a) payable hereunder shall be pledged to the payment
of the Bonds and amounts due under the Trust Indenture in
accordance with the Trust Indenture, and that, so long as any Bonds
remain Outstanding or any amount is due and owing the Bond Insurer
under the Trust Indenture, such Net Rent and other amounts payable
pursuant to Section 6.01(a) shall be paid in the amounts and manner
herein specified. In the Trust Indenture the City shall covenant
not to permit any modification of or amendment to Section 6.01 of
this Agreement or to any other provision hereof that would have the
effect of reducing, altering or modifying the commitments of Lessee
contained in Sections 6.01 or 6.02 hereof or would materially
minimize, reduce or lessen the rights of the City after an Event of
Default in the payment of Net Rent and other amounts payable
pursuant to Section 6.01(a) by Lessee or would materially and
adversely affect the security provided for the payment of the Bonds
and other amounts due under the Indenture, and no such modification
or amendment hereto shall be permitted while the Bonds remain
Outstanding or any amount is due and owing the Bond Insurer under
the Trust Indenture.
Section 6.04: Operation and Maintenance Expenses; Other
Costs. The Net Rent and other amounts payable pursuant to Section
6.01(a), which is to be pledged to the payment of the Bonds and
amounts due under the Trust Indenture, is intended to be a net
return to the City. Accordingly, in addition to the payment of all
Net Rent and other amounts payable pursuant to Section 6.01(a)
hereunder, the Lessee hereby agrees to pay all Ground Rentals
directly to the City and to pay (or cause to be paid pursuant to
the Use and Lease Agreement or other agreement with the City or
others) all operation and maintenance expenses applicable to the
Special Facilities, including, without limitation, utility costs,
costs of vehicle, guideway and system maintenance service
contracts, any insurance premiums applicable thereto, any and all
ad valorem or other property taxes lawfully levied or assessed
against the Special Facilities or Lessee's leasehold estate
therein, any and all lawful excise and other types of taxes imposed
on or in respect of such properties, the expenses of upkeep thereof
of every kind and character, including the repair or ordinary
restoration thereof, and every other item of expense imposed on
Lessee pursuant to this Agreement and, if the Special Facilities
are operated by the City, all direct and allocable indirect Airport
System costs of operating and maintaining the Special Facilities in
a manner consistent with other such allocations equitably applied
on an Airport-wide basis.
Section 6.05: Ground Rentals. (a) Lessee shall pay to the
City, as Ground Rentals for the Ground Lease Properties described
in Exhibit "C" the following: (i) For item (1) $0.22 per square
foot for the footings per year beginning January 1, 1999 and
escalating 15% on January 1, 2004 and 15% on each succeeding fifth
year during the term of this Agreement, payable annually in advance
on January 1, 1999 and each January 1 thereafter, and (ii) for
item (2), an amount equal on a per square foot basis to the charge
for comparable space under the Use and Lease Agreement, payable on
the same basis as rates and charges under the Use and Lease
Agreement.
(b) Except as set forth in subsection (a) above, all
charges for Ground Lease Properties and Easements are or will be
included in rents and charges under the Use and Lease Agreement.
(c) The Lessee's undertaking of the Project as herein
provided shall constitute additional consideration to the City for
the demise, as herein provided, of the Ground Lease Properties and
Easements.
(d) The City and Lessee agree that any future Use and
Lease Agreement with respect to Terminal B shall, during the term
of this Agreement, exclude (or be expressly subordinate to) the
leasehold estate herein created in the Ground Lease Properties in
Terminal B.
ARTICLE VII
USE OF SPECIAL FACILITIES;
REPRESENTATIONS AND UNDERTAKINGS BY LESSEE AND CITY
Section 7.01: General. Lessee shall have the rights to use
and enjoy the Special Facilities, including the rights of
possession and quiet enjoyment of the Special Facilities, for the
purpose of (i) constructing, maintaining and operating the Project
in accordance with the terms hereof and (ii) subject to the terms
of the Use and Lease Agreement, conducting other authorized
activities of Lessee not inconsistent with the terms hereof.
Section 7.02: Use of Project. The Lessee hereby covenants
with the City as follows:
(a) The Project shall be used as a transportation
facility, open to the public, without direct charge to the
passengers using it.
(b) While operating the Project, Lessee shall at its sole
expense cause the Project to be operated in a manner consistent
with the applicable sections of 14 CFR Parts 107 and 108 such that
passengers using the Project will continue to be deemed to be
properly screened within the meaning of such regulation, as it may
be amended from time to time. If the City extends the Project,
then the City shall continue to cause the Project to be operated in
such manner.
(c) Lessee understands and acknowledges that fines and/or
penalties may be assessed by the Federal Aviation Administration
for the Lessee's non-compliance with the provisions of 14 CFR
Paragraphs 107 and 108 (1988) entitled "Airport Security." Any
such fines or penalties assessed against the City because of the
Lessee's non-compliance with 14 CFR Paragraphs 107 or 108, as
amended from time to time, shall be promptly reimbursed to the City
by the Lessee.
Section 7.03: Representations by City with Respect to the
Project. In consideration of (i) Lessee's agreement herein to
lease, design, construct, acquire and operate the Project in the
manner herein provided, and to pay Net Rent sufficient to repay the
Bonds, and (ii) Bond Insurer's issuance of a policy of bond
insurance with respect to the Series 1997A Bonds, the City
represents and agrees as follows:
(a) The City reaffirms and incorporates by reference the
commitments contained in the Term Sheet in Section
I(D)(10)-(12) and III(B)(5) thereof with respect to
the exercise of its option to purchase Lessee's
interest in the Project (and all Special Facilities,
Easements and Ground Lease Properties) when the
Project is extended to the International Airlines
Building or Terminal A and is to be operated with the
Project as a single system.
(b) The City covenants and agrees that it will not operate
any extensions of the automated people mover
separately from the Project, but will take appropriate
steps so that the entire Project, as extended to the
International Airlines Building and/or Terminal A, is
operated as a single system.
(c) The City represents that it intends to extend the
Project in the future at its expense to serve one or
more additional terminals at the Airport. The
Department of Aviation of the City has initiated
action to amend its master plan and capital
improvement plan to include an extension of the
Project from Terminal C to the International Airlines
Building, and the City has issued a request for
qualifications to design such extension of the
Project.
(d) The City covenants that in connection with the
purchase, acquisition and/or assumption of Lessee's
leasehold obligations for the Project referred to in
(a) above, it will defease or retire the Bonds at the
earliest date financially beneficial to the City that
such Bonds can be defeased or retired through a
refinancing based on the credit of revenues of the
Airport System or at such earlier date as the City
determines in its sole discretion that it is
financially viable to use other available funds for
the retirement and/or defeasance of such Bonds (such
date hereinafter referred to as the "Bond Discharge
Date"); provided that without Lessee's consent the
City may exercise the right of optional redemption of
the Bonds on or after July 15, 2007 to accomplish such
refinancing or defeasance if it certifies in writing
to Lessee (i) that it has or will when needed have
funds available to redeem such Bonds and (ii) that
such refinancing or defeasance will not, by itself,
cause an increase in the capital component of Lessee's
rates and charges for the Project unless entirely
offset by reductions in Lessee's other rates and
charges at the Airport as a result of such refinancing
or defeasance. From and after the Bond Discharge
Date, all amounts deposited in or credited to all
funds and accounts held under the Trust Indenture
(other than the Policy Payment Account) shall become
property of the City (subject to the rights of the
owners of the Bonds), but must be applied to pay or
reimburse the payment of debt service on the Bonds
and/or pay other expenses under the Trust Indenture
or, after no further amounts are due under the Trust
Indenture, pay for capital expenditures for Special
Facilities. Prior to the Bond Discharge Date, the
City shall fulfill its commitments to acquire and/or
assume Lessee's interest in the Project by entering
into a sublease of the Special Facilities, Ground
Lease Properties and Easements from Lessee pursuant to
which the City Airport System shall become responsible
for all covenants of Lessee arising hereunder after
such acquisition and/or assumption, including payment
of Net Rent, costs of operation, maintenance and
insurance of the Project and the payment of any other
rentals required hereunder and shall irrevocably and
unconditionally make sublease payments equal to
Lessee's Net Rent and other amounts due under Section
6.01 of this Agreement directly to the Trustee for the
Bonds, provided that no such sublease shall relieve
Lessee of its obligations to pay the full amount of
Net Rent and other amounts due under this Agreement.
During any sublease of the Project to the City prior
to the Bond Discharge Date, the City (i) shall use its
best efforts to cause the Project to be operated so as
to provide the same or substantially similar levels of
service (based on frequency and capacity) to Terminals
B and C as were provided prior to such date and (ii)
shall include the costs of subleasing the Project
(including all operation and maintenance expenses for
which Lessee is liable hereunder) in rates and charges
imposed on airlines benefitting from the availability
and service of the Project to the terminals from which
such airlines operate (but no failure by benefitting
airlines to pay such rates and charges shall relieve
the City of its obligations as set forth above).
(e) In order to prevent the acquisition or control of the
leasehold interest herein created in the Special
Facilities, Easements and Ground Lease Properties by
the Trustee or other third party and to assure that
the Project can be utilized and operated as an
integral part of the Airport to provide service to the
traveling public connecting between Terminals B and C
and to be available for expansion by the City as
contemplated herein and in the Term Sheet, the City
further agrees as follows. In the event of (i) a
Lessee bankruptcy or abandonment which allows the City
to exercise the option granted by Lessee in the Term
Sheet and reaffirmed herein to assume both the rights
and obligations of Lessee under this Agreement and the
construction and supplier contracts for the Project,
or (ii) a foreclosure or threatened foreclosure by the
Trustee on Lessee's leasehold estate in the Project
(or any of the Special Facilities, Easements or Ground
Lease Properties), then, without limiting the City's
obligations under Sections 10.02, 10.03 and 10.04, the
Director shall in a timely manner use best efforts to
take all necessary action including seeking such City
Council approval as may be required either (x) to
relet the Project to a lessee or sublessee approved in
writing by the Bond Insurer (whose approval may not
unreasonably be withheld) and exercise such other
remedies as shall be available to it and shall be
permitted by the Trust Indenture and shall apply
proceeds from the exercise of such remedies to debt
service on or redemption of the Bonds and all amounts
due the Bond Insurer as provided in Section 10.02
hereof and all other amounts due under the Trust
Indenture; or (y) to acquire rights to the Lessee's
leasehold estate in the Project (together with its
interest in all Special Facilities, Easements and
Ground Lease Properties) by purchase for a purchase
price equal to the cost of redeeming or defeasing all
outstanding Bonds and payment of all amounts due the
Bond Insurer or by unconditional and irrevocable
sublease for a net rental (after payment of Project
operating and maintenance expenses and Ground Rentals)
equal to the scheduled, unaccelerated debt service on
the Bonds and all amounts due the Bond Insurer and
other amounts due under the Trust Indenture or (z) to
assume the scheduled, unaccelerated obligations of
Lessee hereunder, with the City's obligations under
(y) and (z) secured by and payable from net revenues
of the Airport System after payment of debt service
and all debt service reserve requirements on the
Airport System's Senior and Subordinate Lien Revenue
Bonds only.
(f) So long as the Bonds are Outstanding or any amounts
remain due to the Bond Insurer, in order to further
secure the its obligations and undertakings contained
in this Section 7.03, the City hereby covenants as
follows:
(i) the City will at all times fix, charge, impose
and collect rentals, rates, fees and charges
for the use of the Airport System in order that
revenues will be at least sufficient, after
providing for the payment, funding or
appropriation for all prior and senior
obligations of the Airport System, to provide
for the payment of all scheduled, unaccelerated
obligations undertaken, assumed or otherwise
incurred by the City pursuant to this Section
7.03;
(ii) the City will not permit the sale or
disposition of the Airport System or any
substantial part thereof except as may be
permitted in its ordinances authorizing the
issuance of the City's Airport System Senior
and Subordinate Lien Revenue Bonds (the "Sale
or Encumbrance of Airport System Covenants"),
whether or not such bonds remain outstanding;
provided, however, that, notwithstanding the
Sale and Encumbrance of Airport System
Covenants, (i) the City will not authorize any
transfer of less than all of the Airport that
includes the Special Facilities or any
Terminals at the Airport until the occurrence
of the City's prior purchase, acquisition
and/or assumption of Lessee's leasehold
obligations as provided in subsection (d) above
(without regard to whether the Project has been
extended as contemplated in subsection (a)
above), (ii) any transferee of the Airport
System or any substantial part thereof that
includes the City's interest in the Special
Facilities shall be required to assume all
obligations of the City under or pursuant to
this Agreement and the Trust Indenture, and
(iii) any written opinion of an Airport
Management Consultant required by the Sale or
Encumbrance of Airport System Covenants shall
also conclude that the ability to meet the rate
covenant and other covenants of the City in
this Agreement and the Trust Indenture shall
not be materially and adversely affected to the
same extent as if such covenants were included
in the ordinances authorizing the City's
Airport System Senior and Subordinate ▇▇▇▇
▇▇▇▇▇; and
(iii) the City will not issue any bonds, notes or
other obligations secured on a parity with any
obligations incurred by the City pursuant to
clauses (y) or (z) of subsection (e) above
unless, prior to the issuance of such parity
obligations, the Director of Aviation certifies
the availability of Net Revenues of the Airport
System, after providing for all Debt Service
Requirements on Airport System Senior and
Subordinate Lien Revenue Bonds (as such terms
are defined in the ordinances authorizing the
City's Airport System Senior and Subordinate
Lien Revenue Bonds) at least equal to the
scheduled, unaccelerated debt service on such
obligations to be issued as well as the
obligations incurred by the City pursuant to
such clauses (y) and (z) above.
(g) In the event Lessee has funded any portion of the
capital cost of the Project with funds not reimbursed
with proceeds of Bonds and such expenditure can be
documented to the reasonable satisfaction of the
Director, the purchase price and rental rates for the
City's acquisition or sublease of Lessee's interest in
the Project pursuant to Section 7.03(d) shall be
increased by an amount or amounts derived by assuming
that the original principal amount of the Bonds had
been increased by an amount equal to such unreimbursed
capital contribution and that such assumed additional
amount of Bonds amortized proportionately with the
Series 1997A Bonds, and any resulting increased
amounts in such purchase price or rental rate (over
and above the amounts required to be paid pursuant to
Section 7.03(d)) shall be paid directly to Lessee by
the City.
Section 7.04: Reaffirmation of Options to City with Respect
to the Project. In consideration of the City's agreements herein,
the Lessee hereby reaffirms its grants of options to the City (as
contained in the Term Sheet) to allow the City to purchase Lessee's
interest in the Project as described in Section 7.03(a) above (or
at any time after the Project is operational as provided in the
Term Sheet) in consideration of the City's defeasance, retirement
or assumption of the obligations of Lessee with respect to the
Special Facilities, Easements and Ground Lease Properties as
described in Section 7.03(d) and (e) above, which options may be
exercised immediately by the City at any time upon occurrence of
the conditions referred to in Sections 7.03(a), (d) and (e) or
after the Project is operational upon written notice to Lessee by
the City, and Lessee consents to the City's payment in such events
of all amounts intended for debt service on or defeasance or
redemption of the Bonds directly to the Trustee.
ARTICLE VIII
LESSEE'S OBLIGATIONS AND CONDITIONS TO
LESSEE'S USE OF SPECIAL FACILITIES
Section 8.01: Maintenance of Special Facilities at Lessee's
Expense. Subject to the other terms of this Agreement, Lessee
shall throughout the term of this Agreement assume the entire
responsibility, cost and expense, for all repair and maintenance
whatsoever of the Special Facilities, whether such repair or
maintenance be ordinary or extraordinary, structural or otherwise.
Additionally, without limiting the generality of the foregoing,
Lessee shall:
(a) Maintain at all times the Special Facilities in a good
state of repair and preservation, excepting ordinary wear and tear
and obsolescence in spite of repair.
(b) [omitted]
(c) Keep at all times, in a clean and orderly condition
and appearance, the Special Facilities which are open to or visible
by the general public.
Section 8.02: Taxes, Charges, Utilities, Liens. (a) Lessee
shall pay all taxes that may be levied, assessed or charged upon
the Special Facilities or Lessee's leasehold estate therein by the
State of Texas or any of its political subdivisions or municipal
corporations, and shall obtain and pay for all licenses and permits
required by law. However, Lessee shall have the right to contest,
in good faith, the validity or application of any such tax, license
or permit and shall not be considered in default hereunder as long
as such contest is in progress and diligently prosecuted. City
agrees to cooperate with Lessee in all reasonable ways in
connection with any such contest other than a contest of any tax,
permit or license of the City.
(b) Lessee shall pay for all water, heat, electricity, air
conditioning, sewer rents and other utilities to the extent that
such utilities are furnished to the Special Facilities other than
pursuant to the Use and Lease Agreement.
(c) Lessee shall neither cause or permit any laborers,
mechanics, builders, carpenters, materialmen, contractors, or other
liens or encumbrances (including judgment and tax liens) against
the Special Facilities or any City property by virtue of the
construction, repair or replacement of the Special Facilities;
provided, however, that Lessee may at its own expense in good faith
contest the validity of any alleged or asserted lien and may permit
any contested lien to remain unsatisfied and undischarged during
the period of such contest and any appeal therefrom unless by such
action any part of the Special Facilities may be subject to a
material risk of loss or forfeiture, in any of which events such
lien shall be promptly satisfied or bonded around in accordance
with Texas law.
Section 8.03: Compliance with Airport Rules and Regulations
and Law; Nondiscrimination. With respect to the Special
Facilities, Lessee shall observe and obey Airport rules and
regulations promulgated pursuant to the Use and Lease Agreement,
shall comply with applicable law as provided in the Use and Lease
Agreement, and shall not discriminate against any person or class
of persons by reason of race, color, religion, sex, national origin
or ancestry, age or physical or mental handicaps as provided in the
Use and Lease Agreement.
Section 8.04: Compliance with Tax Law. With respect to the
Special Facilities, Lessee hereby covenants and agrees as follows:
(a) Lessee shall comply or cause to be complied with all
tax covenants with respect to the Special Facilities and the Bonds
contained in Section 5.4 of the Trust Indenture;
(b) Lessee shall continuously repair, preserve, replace or
substitute, as needed, all Special Facilities, at its expense, to
the extent necessary to maintain and/or extend the reasonably
expected economic life of the Special Facilities to satisfy the tax
covenant contained in Section 5.4(c) of the Trust Indenture. All
property for which replacements or substitutions are made by Lessee
as provided herein shall become Lessee's property (and such
replacement or substituted property shall become the City's
property);
(c) Lessee hereby elects not to claim depreciation or an
investment credit for federal income tax purposes with respect to
any portion of the Special Facilities; Lessee will take all actions
necessary to make this election binding on all its successors in
interest under this Agreement; and this election shall be
irrevocable.
Section 8.05: Environmental Matters.
A. Lessee shall comply with all federal, state, local
statutes, ordinances, regulations, rules, policies, codes or
guidelines now or hereafter in effect, as same may be amended from
time to time, which govern Hazardous Materials (as hereinbelow
defined) or relate to the protection of human health, safety or the
environment and which are applicable to the conduct of Lessee's
business operations from the Special Facilities, and shall include
but not be limited to: the Federal Insecticide, Fungicide, and
Rodenticide Act, 7 U.S.C. Section 136 et seq.; the Safe Drinking
Water Act, 42 U.S.C. Section 300(f) et seq.; the Oil Pollution
Control Act of 1990, 33 U.S.C. Section 270 et seq.; the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, 42 U.S.C. Section 9601 et seq.; and as
amended by the Superfund Amendments and Reauthorization Act of
1986, Pub. Law ▇▇. ▇▇-▇▇▇, ▇▇▇ ▇▇▇▇. ▇▇▇▇; the Toxic Substances
Control Act, 15 U.S.C. Section 2601 et seq.; the Clean Air Act as
amended, 42 U.S.C. Section 7401 et seq.; the Clean Water Act, 33
U.S.C. Section 1251, et seq.; the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1801 et seq.; the Resource
Conservation and Recovery Act, 42 U.S.C., Section 6901 et seq.; and
those substances defined as hazardous waste or as hazardous
substances under the laws of Texas and/or the United States or in
regulations promulgated pursuant to such laws (collectively,
"Environmental Laws").
B. Any fines or penalties that may be levied against the
City by the Environmental Protection Agency or the Texas Natural
Resource Conservation Commission or any other governmental agency
for Lessee's failure to comply with the Environmental Laws as
required by Section 8.05(A) hereof shall be reimbursed to the City
by Lessee within ten (10) days of receipt of an invoice from City
for such fines or penalties.
C. Lessee shall prevent the presence, use, generation,
release, omission, discharge, storage, disposal or transportation
of any Hazardous Materials on, under, in, above, to or from
facilities subject to this Agreement by Lessee, other than in
strict compliance with all Environmental Laws. For purposes of
this Section, "Hazardous Materials" shall be interpreted in the
broadest sense to include any and all substances, materials,
wastes, pollutants, oils, or governmental regulated substances or
contaminants as defined or designated as hazardous, toxic,
radioactive, dangerous, or any other similar term in or under any
of the Environmental Laws, including but not limited to, asbestos
and asbestos containing materials, petroleum products including
crude oil or any fraction thereof, gasoline, aviation fuel, jet
fuel, diesel fuel, lubricating oils and solvents, urea
formaldehyde, flammable explosives, PCBs, radioactive materials or
waste, or any other substance that, because of its quantity,
concentration, physical, chemical, or infectious characteristics
may cause or threaten a present or potential hazard to human health
or the environment when improperly generated, used, stored,
handled, treated, discharged, distributed, disposed or released.
Hazardous Materials shall also mean any and all hazardous
materials, hazardous wastes, toxic substances, or regulated
substances under any Environmental Laws.
D. Lessee acknowledges that the Airport is subject to the
National Pollution Discharge Elimination System Program ("NPDES")
and its regulations relating to stormwater discharges, 40 CFR Part
122, for operations that occur at the Airport. Lessee further
acknowledges that it is familiar with these NPDES stormwater
regulations, that it will conduct operations at the Special
Facilities subject to 40 CFR Part 122 as it may be amended from
time to time.
E. City and Lessee both acknowledge that close
cooperation is necessary to ensure compliance with any NPDES
stormwater discharge permit, as well as to ensure safety and to
minimize costs. Lessee acknowledges that it may be necessary to
undertake to minimize the exposure of stormwater to significant
materials generated, stored, handled or otherwise used by Lessee at
the Special Facilities as defined in the federal stormwater
regulations, by implementing and maintaining "Best Management
Practices" as defined in 40 CFR, Part 122.2, as it may be amended
from time to time.
F. Lessee acknowledges that City's NPDES stormwater
discharge permit, to the extent affecting the Special Facilities,
is incorporated by reference into this Agreement and any subsequent
amendments, extensions or renewals. Lessee agrees to be bound by
all applicable portions of said permit. City shall promptly notify
Lessee of any changes to any portions of said permit applicable to,
or that affect, Lessee's operations.
G. City shall provide Lessee with written notice of those
NPDES stormwater discharge permit requirements that Lessee shall be
obligated to perform from time to time at the Special Facilities,
including, but not limited to: certification of non-stormwater
discharges; collection of stormwater samples; preparation of
stormwater pollution prevention or similar plans; implementation of
"good housekeeping" measures or Best Management Practices; and
maintenance of necessary records. Such written notice shall
include applicable deadlines. Lessee, within 15 days of receipt of
such written notice, shall notify City in writing if it disputes
any of the NPDES stormwater discharge permit requirements it is
being directed to undertake. If Lessee does not provide such
timely notice, it is deemed to assent to undertake such
requirements. If Lessee provides City with written notice, as
required above, that it disputes such NPDES stormwater discharge
permit requirements, City and Lessee agree to negotiate a prompt
resolution of their differences. Lessee warrants that it will not
object to City notices required pursuant to this paragraph unless
Lessee has a good faith basis to do so.
H. City and Lessee agree to provide each other upon
request, with any non-privileged information collected and
submitted to any governmental entity(ies) pursuant to applicable
NPDES stormwater regulations applicable to the Special Facilities.
I. Lessee agrees to participate in any reasonable manner
requested by the City in any City organized task force or other
work group established to coordinate stormwater activities at the
Airport.
J. All such remedies of City with regard to environmental
requirements as set forth herein shall be deemed cumulative in
nature and shall survive termination of this Agreement.
K. LESSEE SHALL PROTECT, DEFEND, INDEMNIFY AND HOLD
HARMLESS THE CITY AND ITS OFFICERS, AGENTS AND EMPLOYEES FROM AND
AGAINST ANY LOSS, COST, CLAIM, DEMAND, PENALTY, FINE, SETTLEMENT,
LIABILITY AND EXPENSE (INCLUDING BUT NOT LIMITED TO REASONABLE
ATTORNEYS' AND CONSULTANTS' FEES, COURT COSTS AND LITIGATION
EXPENSES) RELATED TO
(1) LESSEE'S USE OF HAZARDOUS MATERIALS OF WHATEVER KIND
OR NATURE, KNOWN OR UNKNOWN, ON THE SPECIAL FACILITIES;
(2) ANY ACTUAL, THREATENED OR ALLEGED CONTAMINATION BY
HAZARDOUS MATERIALS ON THE GROUND LEASE PROPERTIES, EASEMENTS OR
SPECIAL FACILITIES BY LESSEE OR ITS AGENTS;
(3) THE DISPOSAL, RELEASE OR THREATENED RELEASE OF
HAZARDOUS MATERIALS BY LESSEE OR ITS AGENTS AT THE GROUND LEASE
PROPERTIES, EASEMENTS OR SPECIAL FACILITIES THAT IS ON, FROM OR
AFFECTS THE SOIL, AIR, WATER, VEGETATION, BUILDINGS, PERSONAL
PROPERTY, PERSONS;
(4) ANY PERSONAL INJURY, DEATH OR PROPERTY DAMAGE (REAL OR
PERSONAL) ARISING OUT OF OR RELATED TO HAZARDOUS MATERIALS USED BY
LESSEE AT THE GROUND LEASE PROPERTIES, EASEMENTS OR SPECIAL
FACILITIES; OR
(5) ANY VIOLATION BY LESSEE OF ANY ENVIRONMENTAL LAWS AT
GROUND LEASE PROPERTIES, EASEMENTS OR THE SPECIAL FACILITIES.
PROVIDED HOWEVER, THAT NONE OF THE FOREGOING INDEMNITY SHALL
BE APPLICABLE TO LOSSES, COSTS, EXPENSES, CLAIMS, DEMANDS,
PENALTIES, FINES, SETTLEMENTS, LIABILITIES AND EXPENSES WHICH
RESULT FROM CONDITIONS EXISTING AS OF THE EFFECTIVE DATE OF THIS
AGREEMENT OR WHICH RESULT FROM THE ACTION OF THE CITY OR ITS
AGENTS.
Section 8.06: City's Right To Maintain or Repair Special
Facilities. In the event Lessee fails (i) to commence within
thirty (30) days after written notice from the Director to do any
maintenance or repair work to the Special Facilities required to be
done under the provisions of this Agreement, other than preventive
maintenance; (ii) to commence such work within a period of ninety
(90) days if such notice specifies that the work to be accomplished
by the Lessee involves preventive maintenance only; or (iii) to
diligently continue to completion any such work as required under
this Agreement; then, the Director or the City may, at its option,
and in addition to any other remedies which may be available to it,
enter the Special Facilities, without such entering causing or
constituting a cancellation of this Agreement or an interference
with the possession of the Special Facilities, and repair,
maintain, replace, rebuild or paint all or any part of the Special
Facilities and do all things reasonably necessary to accomplish the
work required, and the reasonable cost and expense thereof shall be
payable to the City by Lessee on written demand; provided, however,
if in the reasonable opinion of the Director or the City, the
Lessee's failure to perform any such repair or maintenance
endangers the safety of the public, the employees or other tenants
at the Airport, and the Director or the City so states same in its
notice to Lessee, the Director or the City may perform such
maintenance at any time after the giving of such notice, and Lessee
agrees to pay to City the reasonable cost and expense of such
performance on demand. In the event of the exercise by City of any
repair work on the Special Facilities, City shall use all
reasonable efforts to minimize any interference or interruption
with Lessee's business operations.
Section 8.07: Termination Procedures. Upon the expiration or
termination of this Agreement pursuant to any terms hereof, Lessee
shall surrender the Special Facilities to the City in a good state
of repair and preservation, excepting ordinary wear and tear and
obsolescence in spite of repair, unless otherwise permitted in
Article IX hereof.
ARTICLE IX
LIABILITY, INSURANCE AND CONDEMNATION
Section 9.01: Release and Indemnification of City.
A. THE LESSEE, ITS SUCCESSORS AND ASSIGNS OF THIS
AGREEMENT (IN THIS SECTION, THE "AIRLINE") HEREBY RELEASE,
RELINQUISH AND DISCHARGE THE CITY, ITS PREDECESSORS, SUCCESSORS,
ASSIGNS, LEGAL REPRESENTATIVES AND ITS COLLECTIVE FORMER, PRESENT
AND FUTURE AGENTS, EMPLOYEES AND OFFICERS (COLLECTIVELY IN THIS
SECTION "CITY") FROM ANY LIABILITY OF THE CITY FOR (i) ANY DAMAGE
TO PROPERTY OF AIRLINE OR (ii) FOR CONSEQUENTIAL DAMAGES SUFFERED
BY AIRLINE, WHERE ANY SUCH DAMAGE IS SUSTAINED IN CONNECTION WITH
OR ARISING OUT OF THE PERFORMANCE OF THIS AGREEMENT.
B. WITH NO INTENT TO AFFECT AIRLINE'S ENVIRONMENTAL
INDEMNIFICATION SET FORTH IN SECTION 8.05(L), AIRLINE, EXPRESSLY
AGREES TO PROTECT, DEFEND, INDEMNIFY AND HOLD THE CITY COMPLETELY
HARMLESS FROM AND AGAINST (BUT SUBJECT TO SECTIONS D, E AND F
HEREOF): (I) ANY AND ALL LIABILITIES, LAWSUITS, CAUSES OF ACTION,
LOSSES, CLAIMS, JUDGMENTS, DAMAGES, FINES OR DEMANDS ARISING BY
REASON OF OR IN CONNECTION WITH THE ACTUAL OR ALLEGED ERRORS,
OMISSIONS, OR NEGLIGENT ACTS OF AIRLINE OR OF THE CITY IN
CONNECTION WITH OR ARISING OUT OF THE PERFORMANCE OF THIS
AGREEMENT, INCLUDING, BUT NOT LIMITED TO, BODILY INJURY, ILLNESS,
PHYSICAL OR MENTAL IMPAIRMENT, DEATH OF ANY PERSON, OR THE DAMAGE
TO OR DESTRUCTION OF ANY REAL OR PERSONAL PROPERTY; AND (II) ALL
COSTS FOR THE INVESTIGATION AND DEFENSE OF ANY AND ALL LIABILITIES,
LAWSUITS, CAUSES OF ACTION, LOSSES, CLAIMS, JUDGMENTS, DAMAGES,
FINES OR DEMANDS REFERRED TO IN THE PRECEDING CLAUSE (I) INCLUDING,
BUT NOT LIMITED TO, REASONABLE ATTORNEY FEES, COURT COSTS,
DISCOVERY COSTS, AND EXPERT FEES). SUBJECT TO SUBSECTIONS D, E AND
F HEREOF, AIRLINE'S AGREEMENT TO PROTECT, DEFEND, INDEMNIFY AND
HOLD HARMLESS THE CITY EXPRESSLY EXTENDS TO THE ACTUAL OR ALLEGED
JOINT OR CONCURRENT NEGLIGENCE OF CITY AND AIRLINE.
C. UPON THE FILING BY ANYONE OF ANY TYPE OF CLAIM, CAUSE
OF ACTION, OR LAWSUIT AGAINST THE CITY FOR ANY TYPE OF DAMAGES
ARISING OUT OF INCIDENTS FOR WHICH CITY IS TO BE INDEMNIFIED BY
AIRLINE PURSUANT TO THIS SECTION 9.01, THE CITY SHALL, WITHIN 45
DAYS OF CITY BECOMING AWARE THEREOF, NOTIFY AIRLINE OF SUCH CLAIM,
CAUSE OF ACTION OR LAWSUIT. IN THE EVENT THAT AIRLINE DOES NOT
SETTLE OR COMPROMISE SUCH CLAIM, CAUSE OF ACTION, OR LAWSUIT AT ITS
OWN COST, TO THE EXTENT AIRLINE IS REQUIRED TO INDEMNIFY CITY
PURSUANT TO THIS SECTION 9.01, THEN AIRLINE SHALL UNDERTAKE THE
LEGAL DEFENSE OF SUCH CLAIM, CAUSE OF ACTION, OR LAWSUIT AT ITS OWN
COST THROUGH COUNSEL OF RECOGNIZED CAPACITY OR OTHERWISE NOT
REASONABLY DISAPPROVED BY THE CITY BOTH ON BEHALF OF ITSELF AND ON
BEHALF OF CITY UNTIL FINAL DISPOSITION, INCLUDING ALL APPEALS. THE
CITY MAY, AT ITS SOLE COST AND EXPENSE, PARTICIPATE IN THE LEGAL
DEFENSE OF ANY SUCH CLAIM, CAUSE OF ACTION, OR LAWSUIT BY AIRLINE
TO DEFEND AGAINST SUCH CLAIM, CAUSE OF ACTION OR LAWSUIT. ANY
FINAL JUDGMENT RENDERED AGAINST CITY FOR ANY CAUSE FOR WHICH CITY
IS TO BE INDEMNIFIED AGAINST PURSUANT TO THIS SECTION 9.01 SHALL BE
CONCLUSIVE AGAINST AIRLINE AS TO LIABILITY AND AMOUNT UPON THE
EXPIRATION OF THE TIME FOR ALL APPEALS.
D. THE PROVISIONS OF SECTION 9.01B AND C HEREOF SHALL NOT
APPLY TO ANY CLAIM OR DEMAND (I) ARISING AT ANY TIME WHEN THE CITY
IS OPERATING THE PROJECT (OR IS RESPONSIBLE FOR THE OPERATION
THEREOF PURSUANT TO ANY SUBLEASE OR OTHER AGREEMENT), (II) ARISING
SOLELY FROM THE NEGLIGENCE OF THE CITY OR SOLELY FROM THE BREACH OF
THE CITY'S EXPRESS OBLIGATIONS HEREUNDER, OR WHEN THE CITY IS MORE
THAN 50% LIABLE OR, (III) IF SUCH CLAIM OR DEMAND RELATES TO ANY
ACT OR OMISSION OCCURRING OUTSIDE THE PREMISES LEASED EXCLUSIVELY
OR PREFERENTIALLY TO AIRLINE UNDER THIS AGREEMENT, UNLESS AIRLINE
IS MORE LIABLE FOR (I.E., IS MORE AT FAULT FOR) SUCH CLAIM OR
DEMAND THAN EACH OTHER PARTY TO SUCH CLAIM OR DEMAND, OR (IV) TO
THE EXTENT THE CLAIM OR DEMAND IS COVERED UNDER THE INSURANCE
CARRIED PURSUANT TO SECTIONS 9.02 AND 9.03 HEREOF; PROVIDED, THAT,
IF (a) A CLAIM OR DEMAND IS MADE AGAINST AIRLINE BY A THIRD PARTY
FOR WHICH AIRLINE HAS INSURANCE COVERAGE PURSUANT TO SECTIONS 9.02
AND 9.03 HEREOF, AND (b) THERE IS A DEDUCTIBLE CARRIED BY AIRLINE
APPLICABLE TO SUCH CLAIM OR DEMAND (OR AIRLINE, THROUGH SELF-
INSURANCE OR OTHER SELF-FUNDED INSURANCE PROGRAM, BEARS THE
FINANCIAL RISK OF ANY PORTION OF SUCH CLAIM OR DEMAND AS TO THE
DEDUCTIBLE ONLY), THEN THE PROVISIONS OF SECTION 9.01B AND C (AND
BY REFERENCE, SUBSECTIONS D AND E HEREOF) SHALL APPLY TO SUCH
PORTION OF THE CLAIM OR DEMAND THAT IS SUBJECT TO SUCH DEDUCTIBLE
OR SELF-INSURANCE OF THE DEDUCTIBLE OR OTHER SELF-FUNDED INSURANCE
PROGRAM AS TO THE DEDUCTIBLE (AND TO ANY OTHER PORTION OF THE CLAIM
OR DEMAND AS TO THE CITY THAT IS NOT SATISFIED WITH INSURANCE
PROCEEDS). FOR PURPOSES OF THIS SECTION, LESSEE STIPULATES THAT AS
TO EACH CLAIM OR DEMAND THAT MAY BE SUBJECT TO THE PROVISIONS
HEREOF, THE DEDUCTIBLE AMOUNT SHALL NEVER BE DEEMED TO BE GREATER
THAN $1,000,000.
E. NOTWITHSTANDING ANYTHING IN THIS SECTION TO THE
CONTRARY, THE LIABILITY OF THE AIRLINE UNDER SECTION 9.01.B AND C
SHALL NOT EXCEED $1,000,000 PER OCCURRENCE.
F. THE PROVISIONS OF THIS SECTION 9.01.B, C, D AND E
SHALL BE INDEPENDENT OF ANY INDEMNITIES TO WHICH THE CITY MAY BE
ENTITLED UNDER THE PROVISIONS OF THE USE AND LEASE AGREEMENT OR ANY
OTHER AGREEMENT BETWEEN THE CITY AND LESSEE; PROVIDED, THAT CITY
AGREES THAT IT SHALL NOT REQUIRE THAT AIRLINE ENTER INTO ANY
INDEMNIFICATION UNDER THE USE AND LEASE AGREEMENT EXPANDING
AIRLINE'S DUTIES UNDER THIS SECTION 9.01 SOLELY AS IT RELATES TO
THE SPECIAL FACILITIES OR OTHERWISE ARISING OUT OF THE PERFORMANCE
OF THIS AGREEMENT.
Section 9.02: General Insurance Requirements. With no intent
to limit Lessee's liability or the indemnification provisions
herein, Lessee shall provide and maintain certain insurance in full
force and effect at all times during the term of this Agreement and
all extensions thereto, as set forth in Section 9.03 below. If any
of the insurance is written as "claims made" coverage, then Lessee
agrees to keep such claims made insurance in full force and effect
by purchasing policy period extensions for at least three years
after the expiration or termination of this Agreement.
Section 9.03: Risks and Minimum Limits of Coverage.
Worker's Compensation: Statutory
Employer's Liability: Bodily injury by accident-
$1,000,000 (each accident)
Bodily injury by disease-
$1,000,000 (policy limit)
Bodily injury by disease-
$1,000,000 (each employee)
Commercial General Liability:
(including broad form coverage, Combined single limit of:
contractual liability, bodily and $100,000,000 per
personal injury, and products occurrence/aggregate
and completed operations) Products and Completed
operations
$10,000,000 aggregate
All Risk:
(Covering Special Facilities Replacement value of the
including fire, lightning, Special Facilities, but
vandalism, and extended not less than the prin-
coverage perils) cipal amount of Bonds
Outstanding
Automobile Liability Insurance:
(For automobiles used by Lessee $5,000,000 combined single
in the course of its performance limit per occurrence
under this Agreement, including
Lessee's non-owned and hired autos)
In connection with the design, construction, procurement and
installation of the Special Facilities, Lessee shall
contractually require its principal construction contractors
and architects/engineers contracting with Lessee (as the case
may be) to carry the following additional coverages and limits
of liability, unless Lessee carries policies of insurance
covering such risk; provided, however, if reasonable under the
circumstances, Lessee may, with the concurrence of the
Director, require lower limits of liability:
Professional Liability $10,000,000 per occurrence/
(in the case of architects aggregate
and engineers)
Builders Risk: Replacement value of the
(in the case of contractors) Special Facilities, but
not less than the principal
amount of Bonds Outstanding
(Aggregate limits are per 12-month period unless otherwise
indicated.)
Section 9.04. Other Provisions.
A. Form of Policies. The insurance carried by Lessee may
be in one or more policies of insurance, the form of which shall be
reasonably satisfactory to the Director. Nothing the Director does
or fails to do shall relieve Lessee from its duties to provide the
required coverage hereunder (unless specifically provided otherwise
in such action), and the Director's actions or inactions shall not
be construed as waiving the City's rights hereunder.
B. Issuers of Policies. The issuer of any policy carried
by Lessee shall have a Certificate of Authority to transact
insurance business in the State of Texas and have a Best's rating
of at least B+ and a Best's Financial Size Category of Class VI or
better, according to the most current edition of Best's Key Rating
Guide, Property-Casualty United States. Each issuer must be
responsible and reputable, must have financial capability
consistent with the risks covered, and shall be subject to approval
by the Director.
C. Insured Parties. Each policy carried by Lessee,
except those for Workers Compensation, Professional Liability and
Employer's Liability, shall name the City (and its officers,
agents, and employees) and the Trustee as Additional Insured
parties on the original policy and all renewals or replacements
during the term of this Agreement. The City, the Trustee and
Lessee shall be named joint Loss Payees on All Risk and Builders
Risk coverages, subject to distribution of proceeds as provided
elsewhere herein; provided, that, unless otherwise agreed by the
Lessee, or unless the particular insurance is "claims made"
coverage as set forth in Section 9.02, the City shall not be
entitled to assert any rights by virtue of being an additional
insured in respect of any claim or demand arising out of the
operation or maintenance of the APM if, at the time of the claim or
demand, the City is operating or maintaining the APM or is
responsible for the operation or maintenance thereof pursuant to a
sublease or other agreement.
D. Deductibles. Subject to Section 9.01(D) herein,
Lessee shall assume and bear any claims or losses to the extent of
any deductible amounts (or deductible amounts that are self-insured
by Lessee or covered under any self-funded insurance program of
Lessee) and waives any claim it may ever have for the same against
the City, its officers, agent, or employees.
E. Cancellation. Each policy carried by Lessee shall
expressly state that it may not be canceled, materially modified or
not renewed unless the insurance company gives thirty (30) days'
advance written notice in writing to the Director.
F. Aggregates. Lessee shall give written notice to the
Director within five (5) days of the date upon which total claims
by any party against Lessee reduce the aggregate amount of coverage
below the amounts required by this Agreement. In the alternative,
the policy may contain an endorsement establishing a policy
aggregate for the particular project or location subject to this
Agreement.
G. Subrogation. Each policy carried by Lessee shall
contain an endorsement to the effect that the issuer waives any
claim or right in the nature of subrogation to recover against the
City, its officers, agents, or employees.
H. Endorsement of Primary Insurance. Each policy
hereunder except Worker's Compensation and Professional Liability
shall be primary insurance to any other insurance available to the
Additional Insured and Loss Payee with respect to claims arising
hereunder.
I. Liability for Premium. Lessee shall be solely
responsible for payment of all insurance premiums on Lessee's
policies required hereunder, and the City shall not be obligated to
pay any premiums.
J. Contractors and Subcontractors. Lessee shall
contractually require all its contractors, and all its contractors
to require its subcontractors, to carry insurance naming the City
and the Trustee as an additional insured; however, contractual
liability shall be limited to the extent of such contractor's or
subcontractor's indemnification obligations under the applicable
contract. Such insurance shall meet all of the above requirements
as Lessee can successfully require such contractors or
subcontractors to meet, except amount. The amount shall be
commensurate with the amount of the contract. Lessee shall provide
copies of such insurance certificates to the Director.
K. Proof of Insurance. Within five (5) days of the
effective date of this Agreement and at any time during the term of
this Agreement, Lessee shall furnish the Director, the Trustee and
the Bond Insurer with certificates of insurance, along with an
affidavit from Lessee confirming that the certificates accurately
reflect the insurance coverage that will be available during the
term. If requested in writing by the Director, the Trustee or the
Bond Insurer, Lessee shall furnish the City with certified copies
of Lessee's insurance policies.
Notwithstanding the proof of insurance required to be carried by
Lessee as set forth above, it is the intention of the parties
hereto that Lessee, continuously and without interruption, maintain
in force the required insurance as set forth above. Lessee agrees
that the City shall never be argued to have waived or be estopped
from asserting its right to terminate this Agreement hereunder
because of any acts or omissions by the City regarding its review
of insurance documents provided by Lessee, its agents, employees,
or assigns.
Section 9.05: Disposition of Insurance Proceeds. In the
event all of the Special Facilities or any part thereof is damaged
or destroyed by an insured casualty and any Bonds remain
Outstanding or any amount remains due and owing to the Bond
Insurer, then, notwithstanding any provision to the contrary in the
Use and Lease Agreement, the following provisions shall be
applicable to the expenditure of any insurance proceeds relating to
such Special Facilities:
(i) If either (A) the insurance proceeds (less
the cost of removing the debris resulting from such
casualty) together with any moneys in the Interest and
Redemption Fund (including the Reserve Account) are
sufficient to pay all of the interest, principal and
other obligations accrued and to accrue on said Bonds
until they are fully and finally paid and all other
amounts due under the Trust Indenture and the Lessee
requests that the Special Facilities not be repaired or
rebuilt, or (B) the insurance proceeds (less the cost of
removing the debris resulting from such casualty)
together with any moneys available in the Interest and
Redemption Fund (including the Reserve Account) are
insufficient and the Lessee agrees to pay the deficiency
in Available Moneys and requests that the Special
Facilities not be repaired or rebuilt, then in either
case the Lessee may elect to terminate this Agreement and
be released from all unaccrued obligations hereunder;
provided that the insurance proceeds (less the cost of
removing the debris resulting from such casualty) and the
deficiency payments, if any, paid in Available Moneys by
the Lessee shall be simultaneously deposited into the
Interest and Redemption Fund for the Bonds and the moneys
therein shall be applied to pay the obligations with
respect to the Outstanding Bonds and other amounts due to
the Bond Insurer and under the Trust Indenture. If the
said proceeds and funds are in excess of the amount then
necessary to pay the obligations with respect to the
Outstanding Bonds and other amounts due to the Bond
Insurer and under the Trust Indenture, any such excess
after payment or provision for the payment of the Bonds
within the meaning of the Trust Indenture and other
amounts due to the Bond Insurer and under the Trust
Indenture has been made shall be divided between the City
and the Lessee as their respective interests appear at
the time of such damage or destruction; or
(ii) If all Bonds and all amounts due to the
Bond Insurer and due under the Indenture are not repaid
as provided in clause (i) above, Lessee agrees to cause
such insurance proceeds to be deposited in the
Acquisition Fund under the Trust Indenture and to
promptly repair and rebuild the Special Facilities with
the insurance proceeds, and if such proceeds are
insufficient for such purposes, the Lessee shall pay the
deficiency. If such proceeds are in excess of the amount
necessary for such purposes, any such excess shall be
transferred by the Trustee to the Interest and Redemption
Fund as a credit to the next due payments of Net Rent,
with such credit to continue until the amount thereof is
exhausted and if the Net Rent is paid in full,
thereafter, any excess proceeds shall pay other amounts
due under the Indenture, and if no such amounts are due
and owing, the excess shall be paid to Lessee. The
repair or restoration of the Special Facilities shall
either be in accordance with the original plans and
specifications, together with alterations or
modifications made or agreed upon prior to the casualty,
or in accordance with new or modified plans and
specifications, the alternative to be determined by the
mutual agreement of the City and Lessee. Before any
reconstruction or repair under this paragraph, Lessee
shall submit plans and specifications to the Director for
approval and such reconstruction or repair shall be
substantially in accordance therewith subject to such
changes as may be reasonably requested by Lessee and
approved by the City.
Section 9.06: Condemnation. In the event that the Special
Facilities or any part thereof shall be taken or condemned in any
eminent domain, condemnation, compulsory acquisition or like
proceeding by any competent authority or conveyed under threat
thereof for any public or quasipublic use or purpose and at such
time Bonds remain Outstanding within the meaning of the Trust
Indenture or any other amounts remain due under the Trust
Indenture, then, notwithstanding any provision to the contrary in
the Use and Lease Agreement, the condemnation proceeds shall be
applied as follows:
(i) If all or a substantial part of the Special
Facilities is taken and either (A) the condemnation
proceeds attributable to the Special Facilities together
with any moneys in the Interest and Redemption Fund are
sufficient to pay all of the interest, principal and
other obligations accrued and to accrue on the Bonds
until they are fully and finally paid and all other
amounts due under the Trust Indenture and the Lessee
requests that the Special Facilities not be rebuilt else-
where, or (B) the condemnation proceeds attributable to
the Special Facilities and moneys available in the
Interest and Redemption Fund are insufficient to pay all
of the interest, principal and other obligations accrued
and to accrue on the Bonds until they are fully and
finally paid and all other amounts due under the Trust
Indenture and the Lessee agrees to pay in Available
Moneys the deficiency and requests that the Special
Facilities not be rebuilt elsewhere or terminal
facilities suitable for such purpose are not available
elsewhere, the City will terminate this Agreement and
release the Lessee from all unaccrued obligations
hereunder, provided that the condemnation proceeds
attributable to the Special Facilities and deficiency, if
any, paid by Lessee in Available Moneys shall be
deposited into the Interest and Redemption Fund for the
Bonds and moneys therein shall be applied to pay the
obligations with respect to the outstanding Bonds and all
other amounts due under the Trust Indenture. If the said
proceeds and funds are in excess of the amount then
necessary to pay the obligations with respect to the
Outstanding Bonds and all other amounts due under the
Trust Indenture, any such excess after payment or
provision for the payment of the Bonds and all other
amounts due under the Trust Indenture within the meaning
of the Trust Indenture has been made shall be divided
between the City and the Lessee as their respective
interests appear at the time of the taking.
(ii) If all or a substantial part of the Special
Facilities is taken and the Lessee requests that the
Special Facilities be rebuilt elsewhere, the Special
Facilities shall be rebuilt elsewhere and paid for with
the condemnation proceeds attributable to the Special
Facilities, and if such proceeds are insufficient for
such purposes the Lessee shall pay the deficiency. If
such proceeds attributable to the Special Facilities are
in excess of the amount necessary for such purpose, any
such excess shall be paid to the City and deposited by it
to the Interest and Redemption Fund for said Bonds as a
credit to the next due payments of Net Rent, with such
credit to continue until the amount thereof is exhausted
and, thereafter, any excess proceeds shall pay other
amounts due under the Indenture, and if no such amounts
are due and owing, the excess shall be paid to Lessee.
(iii) In the event that title to or use of less
than a substantial part of the Special Facilities is
taken by the power of eminent domain (that is, if the
primary use of the Special Facilities is not
substantially impaired by deletion of the part taken) the
Lessee shall determine whether any rebuilding is
necessary. Any condemnation proceeds attributable to the
Special Facilities that are not used for the purposes of
rebuilding shall be assigned to the City and deposited
into the Interest and Redemption Fund and applied to
redeem as many Bonds as may be redeemed at the next
available redemption date.
The City covenants that it will not exercise its rights of eminent
domain with respect to the Special Facilities in any manner that
will result in insufficient condemnation proceeds or other funds to
redeem or defease the Bonds and pay all amounts due under the Trust
Indenture except with the prior consent of the Bond Insurer.
Section 9.07: Reconstruction or Repair. The rebuilding of
the Special Facilities under Sections 9.05 or 9.06 shall be either
in accordance with the original plans and specifications, together
with alterations or modifications made or agreed upon prior to the
taking, or in accordance with new or modified plans and
specifications, the alternative to be determined by the mutual
agreement of the Lessee and the Director.
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
Section 10.01: Events of Default. The following shall be
Events of Default as to the Lessee under this Agreement:
(a) Failure by the Lessee to pay the Net Rent required to
be paid under Article VI hereof and, for amounts to be paid
pursuant to Section 6.01(a)(i), the continuation of such failure
for more than one Business Day.
(b) Failure by the Lessee to pay any Ground Rentals due
under Section 6.05(a) hereof within fifteen (15) Business Days
after being notified in writing by the City of such failure.
(c) Failure by the Lessee to observe and perform any
covenant, condition or agreement on its part to be observed or
performed under this Agreement other than as referred to in
subsection (a) or (b) next above, for a period of thirty (30) days
after written notice, specifying such failure and requesting that
it be remedied, is given to the Lessee and the Bond Insurer by the
City (except (i) if any insurance required to be maintained by
Lessee is to be canceled or not renewed, such notice and the period
for remedy by Lessee shall be limited to the period ending on the
date on which such cancellation or nonrenewal is scheduled to occur
and (ii) where fulfillment of another obligation requires activity
over a period of time, and the Lessee shall commence to perform
whatever may be required for fulfillment within thirty (30) days
after the receipt of notice and shall diligently continue such
performance without interruption, except for causes beyond its
control, to completion within sixty (60) days or such longer period
as may be approved by the Bond Insurer).
(d) Any material lien shall be filed against the Special
Facilities or Ground Lease Properties or Lessee's interest therein
or any part thereof in violation of this Agreement by a party other
than the City and shall remain unreleased for a period of sixty
(60) days from the date of such filing unless within said period
the Lessee is contesting in good faith the validity of such lien in
accordance with Section 8.02(c) hereof.
(e) Whenever an involuntary petition shall be filed
against Lessee under any bankruptcy or insolvency law or under the
reorganization provisions of any law of like import or a receiver
of Lessee for all or substantially all of the property of Lessee
shall be appointed without acquiescence and such petition or
appointment is not discharged within ninety (90) days after its
filing.
(f) The dissolution or liquidation of the Lessee or the
filing by the Lessee of a voluntary petition in bankruptcy, or
failure by the Lessee within ninety (90) days to lift any
execution, garnishment or attachment of such consequence as will
impair its ability to carry on its operations at the Special
Facilities, or general assignment by the Lessee for the benefit of
its creditors, or the entry by the Lessee into an agreement of
composition with its creditors, or the approval by a court of
competent jurisdiction of a petition applicable to the Lessee in
any proceeding for its reorganization or liquidation instituted
under the provisions of the federal bankruptcy laws, or under any
similar laws which may hereafter be enacted. The term "dissolution
or liquidation of the Lessee," as used in this subsection, shall
not be construed to include the cessation of the corporate
existence of the Lessee resulting either from a merger or
consolidation of the Lessee into or with another corporation or a
dissolution or liquidation of the Lessee following a transfer of
all or substantially all of its assets as an entirety, under the
conditions permitting such actions contained in Section 12.01
hereof.
(g) Whenever Lessee shall fail to provide adequate
assurance (i) that Lessee will promptly cure all defaults
hereunder, if any; (ii) that Lessee will compensate, or provide
adequate assurance that Lessee will promptly compensate, the City,
the Trustee and the Bond Insurer for any actual pecuniary loss to
such party resulting from any Event of Default hereunder; and (iii)
of future performance by Lessee of the terms and conditions of this
Agreement, each within thirty (30) days after (1) the granting of
an Order for Relief with respect to Lessee pursuant to Title XI of
the United States Code; (2) the initiation of a proceeding under
any bankruptcy or insolvency law or the reorganization provisions
of any law of like import; or (3) the granting of the relief sought
in an involuntary proceeding against the Lessee under any bank-
ruptcy or insolvency law. As used in this Agreement, adequate
assurance of future performance of this Agreement shall include,
but shall not be limited to, adequate assurance (1) of the source
of Net Rent and other consideration due hereunder and (2) that the
assumption or assignment of this Agreement will not breach any
provision, such as a use, management, or ownership provision, in
this Agreement, any other material lease, any financing agreement,
or master agreement relating to the Leased Premises under the Use
and Lease Agreement and/or Special Facilities.
Section 10.02: Remedies on Default. Whenever any Event of
Default referred to in Section 10.01 hereof shall have happened and
continue to exist, then, subject to Sections 10.07 and 10.08 below,
the City may take any one or more of the following remedial steps
as against the Lessee:
(a) The City may, and upon a payment default shall,
re-enter and take possession of the Special Facilities and Ground
Lease Properties without terminating this Agreement and in a timely
manner use its best efforts to (i) complete construction and
equipping of the Special Facilities (and apply proceeds of the
Bonds for such purpose) and (ii) either (x) operate the Special
Facilities and Ground Lease Properties and impose rates and charges
on airline tenants in Terminals B and C for their availability,
operation and maintenance in accordance with the Use and Lease
Agreement or (y) sublease the Special Facilities and Ground Lease
Properties on a net rent lease basis to sublessees which (other
than the City) shall have been approved in writing by the Bond
Insurer (whose approval may not unreasonably be withheld), provided
further that in either event the City shall use its best efforts to
impose and collect rates and charges or rental rates sufficient to
provide for operating and maintenance expenses and Ground Rentals
to the same extent as Lessee is obligated to do so and to provide
additional amounts equal to the Net Rent and other amounts set
forth in Section 6.01, all for the account of the Lessee, holding
the Lessee liable for the difference between the rents and other
amounts payable by the Lessee hereunder and the charges received
from airline tenants and/or the rents and other amounts received
from any sublessee with respect to the Special Facilities and
Ground Lease Properties. All proceeds derived by the City from any
charges and/or rents (net of operating and maintenance expenses and
any allocable Ground Rentals payable or remaining unpaid hereunder,
and up to the amount of all Net Rent payable hereunder) shall be
remitted to the Trustee for deposit in the Interest and Redemption
Fund to support repayment of the Bonds.
(b) The City may terminate this Agreement, exclude the
Lessee from possession of the Special Facilities and Ground Lease
Properties and use its best efforts to (i) complete construction
and equipping of the Special Facilities (and apply proceeds of the
Bonds for such purpose) and (ii) either (x) operate the Special
Facilities and Ground Lease Properties and impose rates and charges
on airline tenants in Terminals B and C for their availability,
operation and maintenance in accordance with the Use and Lease
Agreement or (y) lease the same on a net rent lease basis to
lessees which (other than the City) shall have been approved in
writing by the Bond Insurer (whose approval may not unreasonably be
withheld), provided further that in either event the City shall use
its best efforts to impose and collect rates and charges or rental
rates sufficient to provide for operating and maintenance expenses
and Ground Rentals to the same extent as Lessee is obligated to do
so and to pay the Net Rent and other amounts set forth in Section
6.01, all for the account of the Lessee, holding the Lessee liable
for all rents and other amounts due under this Agreement and not
received by the City from charges or rents with respect to the
Special Facilities and Ground Lease Properties. All gross proceeds
derived by the City from any charges and/or rents (net of operating
and maintenance expenses and any allocable Ground Rentals payable
or remaining unpaid hereunder, and up to the amount of all Net Rent
payable hereunder) shall be remitted to the Trustee for deposit in
the Interest and Redemption Fund to support repayment of the Bonds.
(c) The City may take whatever other action at law or in
equity as may appear necessary or desirable to collect the rent
then due and thereafter to become due, or to enforce performance
and observance of any obligation, agreement or covenant of the
Lessee under this Agreement. The City shall use its best efforts
to cause the Special Facilities to be constructed and installed and
to either (i) cause the Special Facilities and Ground Lease
Properties to be operated in consideration of charges imposed on
airline tenants in accordance with the Use and Lease Agreement or
(ii) sublease (or lease as applicable) the Special Facilities and
Ground Lease Properties on a net rent lease basis for the account
of Lessee as provided in clauses (a) and (b) above after an Event
of Default by Lessee, whether or not City retakes possession of the
Special Facilities and Ground Lease Properties or terminates this
Agreement.
(d) In connection with any reletting of the Special
Facilities and Ground Lease Properties, the City agrees not to
charge tenant(s) Ground Rentals in excess of those charged (or that
would be charged) to Lessee.
Section 10.03: Additional Remedy. In addition to the other
remedies herein provided, the City may, in the case of an Event of
Default under Section 10.01(c), enter the Special Facilities and
Ground Lease Properties (without such entering causing or
constituting a termination of this Agreement or an interference
with the possession of the Special Facilities and Ground Lease
Properties by Lessee) and do all things reasonably necessary to
cure such Event of Default, charging to Lessee the reasonable cost
and expense thereof and Lessee agrees to pay to City upon demand
such charge in addition to all other amounts payable by Lessee
hereunder.
Section 10.04: No Remedy Exclusive. No remedy herein
conferred upon or reserved to the City 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 under this Agreement or hereafter existing under law
or in equity (to the extent not inconsistent with the terms
hereof). No delay or omission to exercise any right or power
accruing upon any Event of Default shall impair any such right or
power or shall be construed to be a waiver thereof, but any such
right and power may be exercised from time to time and as often as
may be deemed expedient. In order to entitle the City to exercise
any remedy reserved to it in this Article, it shall not be
necessary to give any notice, unless such notice is herein
expressly required or is required by law.
Section 10.05: Agreement to Pay Attorneys' Fees and Expenses.
In the event there should be an Event of Default under any of the
provisions of this Agreement and the City should determine that the
services of an attorney are required or the City incurs other
expenses for the collection of rent or the enforcement of
performance or observance of any obligation or agreement on the
part of Lessee, the Lessee agrees that it will on demand therefor
pay to the City the reasonable, just and necessary fee of such
attorneys and other reasonable expenses so incurred.
Section 10.06: No Additional Waiver Implied by One Waiver.
In the event any covenant contained in this Agreement should be
breached by either party and thereafter 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. Failure
of either party hereto to insist on the strict performance of any
of the agreements herein or to exercise any rights or remedies
accruing hereunder upon an Event of Default or failure of
performance shall not be considered a waiver of the right to insist
on, and to enforce by any appropriate remedy, strict compliance
with any other obligation hereunder or to exercise any right or
remedy occurring as a result of any future default or failure of
performance.
Section 10.07: Enforcement by City Attorney. The City
Attorney or his or her designee shall have the right to enforce all
legal rights and obligations under this Agreement without further
authorization. Lessee covenants to provide to the City Attorney
all documents and records within Lessee's possession that the City
Attorney reasonably deems necessary to assist in determining
Lessee's compliance with this Agreement, with the exception of
those documents made confidential by federal or state law or
regulation and provided that the provision of such documents and
records by Lessee shall further be limited in any respect that the
provision of any documents or records by the City pertaining to
this Agreement would be limited pursuant to Chapter 552, Texas
Government Code, as amended, or otherwise.
Section 10.08: Special Rights of Bond Insurer.
Notwithstanding any provision herein to the contrary, in order to
obtain a commitment of insurance for the Series 1997A Bonds from
the Bond Insurer, the City agrees that, so long as the Bond Insurer
is not in default in its payment obligations under its municipal
bond insurance policy for the Series 1997A Bonds (the "Bond
Policy"), the exercise of its remedies as set forth in this Article
shall be subject to the consent of (as further provided below) and
direction by the Bond Insurer except as limited in the Trust
Indenture and that, in addition, the Bond Insurer may, as provided
in the Trust Indenture, exercise any and all rights of the holders
of the Series 1997A Bonds to direct the exercise of such remedies.
The consent of the Bond Insurer to the exercise of remedies (i)
shall only be required for the termination of this Agreement or the
exercise of remedies enumerated in the first sentence of Section
10.02(c), (ii) shall not be unreasonably withheld and (iii) shall,
to the greatest extent practicable, when granted, carry with it the
consent to the implementation of such remedy by the City without
requiring further consent; provided that clause (iii) shall not be
deemed to abrogate the City's obligation to obtain the Bond
Insurer's consent to a new Lessee or sublessee (other than the
City) as provided elsewhere herein and in the Trust Indenture and
provided further that, in order to protect Bond Insurer's interests
in the Leasehold Mortgage and the security for the Bonds and
repayments of claims made under the Bond Policy and other amounts
due to the Bond Insurer, during any period that the Bond Insurer or
Trustee is the Lessee hereunder, the City may not terminate this
Agreement without the Bond Insurer's prior consent, to be given in
the sole discretion of the Bond Insurer, so long as any Bonds
remain Outstanding or any amounts remain due and payable under the
Trust Indenture.
ARTICLE XI
ASSIGNMENTS, SUBLETTING AND TERMINATION BY LESSEE
Section 11.01: Assignments and Subletting by Lessee. (a)
This Agreement may not be assigned or otherwise transferred in
whole or in part by Lessee (except pursuant to Sections 11.03 and
12.01 hereof) without the prior written consent of the Director and
the Bond Insurer; provided, however, that, unless permitted by
Section 7.6(b) of the Trust Indenture or Sections 11.03 or 12.01
hereof, the City will not consent to any assignment by Lessee of
its rights hereunder without first obtaining a written agreement
from the Lessee that Lessee shall remain primarily liable for Net
Rent hereunder. Lessee may sublet the Special Facilities and
Ground Lease Properties or any part thereof to any party, subject
to the condition that in either instance Lessee first obtains the
written consent of the Director and the Bond Insurer to such
subletting and all the terms thereof, unless such subletting is
expressly authorized herein.
(b) If Lessee sublets all or any part of the Special
Facilities and Ground Lease Properties or if all or any part of the
Special Facilities and Ground Lease Properties are occupied
(pursuant to a written consent from the Director and the Bond
Insurer) by anyone other than Lessee (including any subsidiary of
Lessee or a code-share affiliate of Lessee), the City may, if an
Event of Default shall have occurred hereunder and be continuing,
collect rent from such sublessee or occupant and the City shall
apply the amount collected to the extent possible to satisfy the
obligations of Lessee hereunder, but no such collection shall be
deemed a waiver by the City of the covenants contained herein or an
acceptance by the City of any such sublessee, claimant or occupant
as a successor Lessee, nor a release of Lessee by the City from the
further performance by the Lessee of the covenants imposed upon
Lessee herein.
(c) NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE
CONTRARY, SO LONG AS ANY BONDS REMAIN OUTSTANDING OR ANY AMOUNT IS
DUE UNDER THE INDENTURE NO SUCH SUBLEASE OR ASSIGNMENT SHALL BE
AUTHORIZED IF IN ANY WAY IT RELEASES LESSEE FROM ITS PRIMARY
OBLIGATIONS HEREUNDER, INCLUDING ITS OBLIGATION TO PAY NET RENT.
Section 11.02: Termination of Agreement by Lessee. Lessee
shall not terminate this Agreement for any reason whatsoever as
long as any of the Bonds remain Outstanding within the meaning of
the Trust Indenture or any other amounts are due and owing under
the Trust Indenture.
Section 11.03: Special Provisions Regarding Leasehold
Mortgage. In order to further secure the Series 1997A Bonds, the
City expressly consents to Lessee's assignment of its rights
hereunder pursuant to a Leasehold Mortgage and, subject to the
following conditions:
(i) The City shall be given at least 30 days
written notice of any event of default under the
Leasehold Mortgage giving rise to a right of foreclosure
and the City shall have an opportunity to cure the
default (with the consent of the Bond Insurer) or
exercise the rights contained in Section 7.03 hereof or
to take other actions acceptable to the Trustee and the
Bond Insurer to avert such foreclosure;
(ii) Any assignment or sale of the Lessee's
leasehold estate hereunder, unless made to the City or an
entity approved by the Director, shall be made only to an
entity that expressly assumes the insurance and other
obligations of Lessee contained herein with respect to
the operation of the Special Facilities, subject to the
provisions of the Contingent Lease Agreement.
(iii) The City shall give notice to the Leasehold
Mortgagee and the Trustee and the Bond Insurer of any
Event of Default under this Agreement and allow a 30 day
cure period after receipt of such notice prior to
exercising any right to terminate this Agreement or relet
or sublet the leasehold estate hereunder.
(iv) In connection with any such Leasehold
Mortgage, the Director may enter into such reasonable or
customary agreement or agreements with the Leasehold
Mortgagee with respect to notices of default, the cure
periods and forbearance provisions, or consents to future
assignments, with respect to the exercise of remedies,
and the Director shall, upon reasonable request of the
Leasehold Mortgagee or any successor to the rights of
Lessee hereunder by reason of a foreclosure or deed in
lieu of foreclosure under the Leasehold Mortgage, execute
estoppel certificates with respect to this Agreement.
(v) So long as any Bonds remain Outstanding,
the City shall not, without the prior written consent of
the Leasehold Mortgagee, either (i) consent to or accept
any abatement or prepayment of Net Rent hereunder or (ii)
accept any surrender of Lessee's leasehold estate
hereunder..
ARTICLE XII
MISCELLANEOUS
Section 12.01: Lessee to Maintain Its Corporate Existence.
The Lessee shall throughout the term hereof maintain its corporate
existence, will not dissolve or otherwise dispose of all or
substantially all of its assets and will not consolidate with or
merge into another entity or permit one or more other entities to
consolidate with or merge into it; provided, that the Lessee may,
without violating the agreement contained in this Section,
consolidate with or merge into another entity, or permit one or
more other entities to consolidate with or merge into it, or sell
or otherwise dispose of all or substantially all of its assets as
an entirety and thereafter dissolve, provided, if Lessee is not the
surviving corporation, the surviving, resulting or transferee
corporation, as the case may be, (i) assumes in writing all of the
obligations of the Lessee herein and (ii) qualifies or is qualified
to do business in Texas.
Section 12.02: Exempt Facilities. In order to assure that
interest on the Bonds shall be exempt from federal income taxation,
the Lessee covenants and agrees that it shall not, and it shall not
permit or allow any other person to, construct, acquire, use,
employ, modify, rebuild or repair the Project or any Special
Facilities in any manner that would cause or allow it or them to be
or become facilities which are not included within those set forth
and described in Sections 142(a)(1) and (c) of the Internal Revenue
Code of 1986, as amended, and the regulations prescribed
thereunder, and the City covenants and agrees that it will not
permit or allow any of the foregoing to occur. The Lessee hereby
makes an irrevocable election, which it shall cause to be binding
on all successors in interest under this Agreement, not to claim
for federal income tax purposes depreciation or investment credit
with respect to the Special Facilities or any component thereof.
It is further agreed and acknowledged by Lessee that the City shall
never be required or requested hereunder to issue any Bonds or
expend any proceeds thereof to pay any Costs of the Special
Facilities that would have the effect of causing interest on any of
the Bonds not to be exempt from federal income taxation.
Section 12.03: Notices. (a) Any and all notices required or
permitted to be given hereunder shall be deemed sufficiently given
when delivered or when mailed by registered or certified mail,
return receipt requested, postage prepaid, or when given by
telephone immediately confirmed in writing by telecopier (or other
communication device acceptable to the party) to any party hereto
as follows or at such other address, telephone number or telecopier
number as any party may from time to time designate in writing to
the other parties hereto:
City:
Director, Department of Aviation
City of Houston
P. O. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Director
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
and
City ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇. ▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: City Attorney
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Lessee:
Continental Airlines, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
and
Continental Airlines, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Staff Vice President,
Corporate Real Estate and
Environmental Affairs
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
and
Continental Airlines, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Vice President, Corporate Finance
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Trustee:
Texas Commerce Bank National Association
Attention: Global Trust Service
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Department
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Bond Insurer:
Financial Security Assurance Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Managing Director -
Surveillance and General
Counsel Re: Policy No. ______
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(b) All computations for the expiration of time periods
required by this Agreement shall be computed from the date such
notice is deposited in the United States mail, as set forth above;
provided, however, that should the last day of the period fall on
a Saturday, Sunday or legal holiday, the period shall run until the
end of the next day which is neither a Saturday, Sunday nor legal
holiday.
Section 12.04: Consents and Approvals. (a) With respect to
the approvals herein required of the Lessee, Lessee shall from time
to time furnish to the City a certificate signed by its Secretary
or an Assistant Secretary, and such certificate shall set forth the
officers or representatives of Lessee who are authorized to grant
such approvals and to bind the Lessee thereto; and the City and all
third parties affected by any such approvals, including the holders
of Bonds, may rely upon any writing purporting to grant such
approvals signed by any officer or representative thus certified as
being conclusively binding upon Lessee, and any such writing shall
itself constitute conclusive evidence that any and all corporate
actions necessary to be taken with respect to the matter thus
approved by such officer or representative to have been so taken by
the corporation, and that the approval therein given has been
authorized by the corporation.
(b) Any consent or approval herein required of the City
may be given by the Director unless otherwise provided.
(c) All consents or approvals of the City, or any
department thereof, the Bond Insurer, or Lessee when required
herein shall not be unreasonably withheld or delayed.
(d) All consents and approvals required or permitted
herein by either party shall be given in writing.
(e) An approval by the Director, or by any other
instrumentality of the City, of any part of Lessee's performance
shall not be construed to waive compliance with this Agreement
except as expressly set forth in such approval or to establish a
standard of performance other than required by this Agreement or by
law.
Section 12.05: Rights Reserved to City. Nothing contained
herein shall unlawfully impair the right of City to exercise its
governmental or legislative functions. This Agreement is made
subject to the Constitution and laws of the State of Texas and to
the provisions of the Airport Improvement Program Grant Agreements
applicable to the Airport and its operation, and the provisions of
such agreements, insofar as they are applicable to the terms and
provisions of this Agreement, shall be considered a part hereof to
the same extent as though copied herein at length to the extent,
but only to the extent, that the provisions of any such agreements
are required generally by the United States at other civil airports
receiving federal funds. To the best of City's knowledge, nothing
contained in such laws or agreements conflicts with the express
provisions of this Agreement.
Section 12.06: Force Majeure. Neither the City nor Lessee
shall be deemed in violation of this Agreement if it is prevented
from performing any of the obligations hereunder by reason of
strikes, boycotts, labor disputes, embargoes, shortage of material,
acts of God, acts of the public enemy, acts of superior
governmental authority, weather conditions, floods, riots,
rebellion, sabotage, war, or any other circumstances for which it
is not responsible or which is not in its control, and the time for
performance shall be automatically extended by the period the party
is prevented from performing its obligations hereunder; provided,
however, that these provisions shall not apply to any failure by
the Lessee to pay the rentals and other charges pursuant to Article
VI hereof, expressly including the Net Rent and other amounts
payable pursuant to Section 6.01(a) payable thereunder.
Section 12.07: Severability Clause. If any word, phrase,
clause, paragraph, section or other part of this Agreement shall
ever be held to be invalid or unconstitutional by any court of
competent jurisdiction, the remainder of this Agreement and the
application of such word, phrase, clause, sentence, paragraph,
section or other part of this Agreement to any other person or
circumstance shall not be affected thereby and it is expressly
agreed and understood that the obligation of Lessee to make the
rental payments to City required under the provisions of Article VI
hereof shall continue to remain in full force and effect.
Section 12.08: Place of Performance; Laws Governing. This
Agreement shall be performable and enforceable in ▇▇▇▇▇▇ County,
Texas, and shall be construed in accordance with the laws of the
State of Texas, the City Charter and Ordinances of the City of
Houston, Federal law and all applicable State and Federal
regulations. Lessee acknowledges that, to the extent the City's
Charter or Texas law requires any expenditure of funds that may be
contemplated to be made by the City herein to be prefunded to be
valid, then such expenditure shall be subject to City Council
approval; provided, that, the City agrees to use its best efforts
to obtain such approval.
Section 12.09: Brokerage. The Lessee and the City each to
the other represents and warrants that no brokers have been
concerned on their behalf in the negotiation of this Agreement and
that there are no such brokers who are or may be entitled to be
paid commissions in connection therewith. The Lessee and the City
shall indemnify and save harmless each other of and from any claim
for commission or brokerage made by any such brokers when such
claims are based in whole or in part upon any acts or omissions of
the Lessee or the City as applicable.
Section 12.10: Individuals Not Liable. No director, officer,
agent or employee of the City or Lessee shall be charged personally
or held contractually liable by or to the other party under any
term or provision of this Agreement or of any supplement or
amendment hereto because of any breach thereof or because of his or
their execution of same.
Section 12.11: Binding Nature of Agreement; Benefits of
Agreement. This Agreement shall inure to the benefit of, and be
binding upon, the City and Lessee, and their respective legal
representatives, successors and assigns. This Agreement is not
made for the benefit of, nor may it be relied upon by, any third
party other than the holders of the Bonds and the Bond Insurer,
unless expressly herein provided.
Section 12.12: Ambiguities. In the event of any ambiguity in
any of the terms of this Agreement, it shall not be construed for
or against any party hereto on the basis that such party did or did
not author the same.
Section 12.13: Survival. Lessee and the City shall remain
obligated to the other party hereto under all clauses of this
Agreement that expressly or by their nature extend beyond the
expiration or termination of this Agreement, including but not
limited to the obligation to pay Net Rent and other amounts payable
pursuant to Section 6.01(a) and the indemnity provisions hereof.
Without limiting the foregoing, Lessee expressly acknowledges that
its obligation to pay Net Rent shall not terminate until all Bonds,
all obligations under the Trust Indenture and all obligations to
the Bond Insurer are fully and finally paid.
Section 12.14: No Merger of Title. There shall be no merger
of this Agreement (or of the leasehold estate created by this
Agreement) with the ownership of any portion of or interest in the
Special Facilities or Ground Lease Properties by reason of the fact
that the same person or entity may acquire, own or hold, directly
or indirectly, this Agreement (or the rights and interests created
by this Agreement) together with an ownership, leasehold or other
right or interest in the Special Facilities or Ground Lease
Properties; and no such merger shall occur unless and until the
City and all persons and entities holding (a) the rights and
interest created by this Agreement and (b) the ownership, leasehold
or other rights or interest in the Special Facilities and Ground
Lease Properties or any part thereof shall join in a written
instrument expressly effecting such merger. Without limiting the
generality of the foregoing, it is agreed that no merger of title
shall arise if the City becomes a sublessee hereunder.
Section 12.15: Entire Agreement. This Agreement, together
with the Trust Indenture, constitutes the entire agreement between
the City and Lessee pertaining to the subject matter hereof.
IN WITNESS WHEREOF, this Agreement has been entered into and
effective as of the date first above written, and executed in
multiple counterparts by the respective officers of the parties
hereto.
ATTEST: CITY OF HOUSTON
______________________________ By___________________________
City Secretary Mayor
APPROVED AS TO FORM COUNTERSIGNED BY:
______________________________ ___________________________
Senior Assistant City Attorney City Controller
APPROVED
______________________________
Director, Department of Aviation
CONTINENTAL AIRLINES, INC.
ATTEST: By:__________________________
Title:_______________________
______________________________
Title: _______________________
THE STATE OF TEXAS
COUNTY OF ▇▇▇▇▇▇
BEFORE ME, the undersigned authority, a Notary Public in and
for ▇▇▇▇▇▇ County, Texas, on this day personally appeared ▇▇▇
▇▇▇▇▇▇, Mayor of the CITY OF HOUSTON, known to me to be the person
and officer whose name is subscribed to the foregoing instrument,
and acknowledged to me that he executed the same for the purposes
and consideration therein expressed, as the act and deed of the
CITY OF HOUSTON, the said municipal corporation, and in the
capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the ______ day of
_______________, 1997.
________________________
Notary Public in and for
▇▇▇▇▇▇ County, Texas
THE STATE OF TEXAS
COUNTY OF ▇▇▇▇▇▇
BEFORE ME, the undersigned authority, on this day personally
appeared _______________, ___________________ of Continental
Airlines, Inc., a corporation, known to me to be the person and
officer whose name is to the foregoing instrument, and acknowledged
to me that he executed the same for the purposes and consideration
therein expressed, in the capacity therein stated, and as the act
and deed of said corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the _______ day
of ___________________, 1997.
_________________________
Notary Public in and for
▇▇▇▇▇▇ County, Texas
EXHIBITS TO BE ATTACHED
Exhibit "A" Description of Project
Exhibit "B" Description of Easements
Exhibit "C" Description of Ground Lease Properties
Exhibit "D" Deed and ▇▇▇▇ of Sale for Project
EXHIBIT "A"
DESCRIPTION OF PROJECT
All properties, facilities, structures, equipment, fixtures,
furnishings, finishes and appurtenances to be acquired,
constructed, fabricated and/or installed in, on, as a part of or
around the Ground Lease Properties and the Easements that are
financed with proceeds of the Series 1997A Bonds and leased to the
Lessee pursuant to the Special Facilities Lease Agreement, includ-
ing without limitation the following:
The Series 1997A Special Facilities (APM) include an
aboveground dual-lane people mover track connecting
Terminals B and C; passenger boarding stations at both
terminals comprised of approximately 9,000 square feet
each; a maintenance facility at Terminal B comprised of
approximately 9,000 square feet; a control facility in
Terminal B comprised of approximately 2,000 square feet;
two APM transportation vehicles (capable of accommodating
80 passengers each and traveling at a speed of
approximately 30 miles per hour); power distribution and
appurtenances as required by HL&P; any required APM
propulsion substation; APM technical and administrative
support area in flight station 6 comprised of
approximately 4,200 square feet; and certain necessary
switches and power distribution, control communications
and station equipment. When completed, the new APM
system between Terminals B and C is expected to be
capable of transporting approximately 2,100 passengers
per hour.
However, there is expressly excluded from the APM any and all
properties, facilities, structures, equipment, fixtures,
furnishings, finishes and appurtenances provided to the Lessee by
the City pursuant to the Use and Lease Agreement.
EXHIBIT "B"
DESCRIPTION OF EASEMENTS
The Easements shall consist of the following:
(1) An aerial easement running between Terminals B and C at
the Airport in the corridor depicted in the diagrams
attached as Exhibit B-1 (the "APM Corridor") for the
purpose of an aboveground APM, together with space for
APM Stations adjacent to Terminals B and C, depicted as
the "Terminal B APM Station" and "Terminal C APM
Station" in the diagram attached as Exhibit B-1, and an
APM propulsion substation. The minimum clearance below
the APM (and any suspended baggage transfer facility)
must be at least 20 feet 0 inches above the roadway
below. The height of the APM guideway surface is 42
feet above the roadway below and the highest point of
the APM stations shall not extend above the parapet of
Terminal B, parking level four, or such other clearance
and/or height as approved by the Director.
EXHIBIT "C"
DESCRIPTION OF GROUND LEASE PROPERTIES
The Ground Lease Properties shall consist of the following:
(1) Footprints for up to 60 support columns located at sites
within the APM Corridor (as described in Exhibit "B")
approved by the Director pursuant to the Agreement with
cross-sections not to exceed 30 square feet each and
footings not to exceed 580 square feet each, or such
other dimensions as shall be approved by the Director.
(2) Such portions of the space located in the Mezzanine
Level of Terminal B in the shaded area depicted in the
diagram attached as Exhibit C-1 and such portions of the
space located in the ramp level of Flight Station 6 of
Terminal B in the shaded area depicted in the diagram
attached as Exhibit C-1 as are necessary for the
administration and operation of the APM.
EXHIBIT "D"
DEED AND ▇▇▇▇ OF SALE
THE STATE OF TEXAS
KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF ▇▇▇▇▇▇
THAT CONTINENTAL AIRLINES, INC., a corporation (hereinafter
called "Grantor"), for and in consideration of the sum of Ten and
No/100 Dollars ($10.00) cash and other good and valuable
considerations to it in hand paid by the CITY OF HOUSTON, TEXAS, a
municipal corporation and home-rule city situated principally in
▇▇▇▇▇▇ County, Texas (hereinafter called "Grantee"), the receipt
and sufficiency of which are here acknowledged and confessed, has
GRANTED, BARGAINED, SOLD AND CONVEYED and by these presents does
GRANT, BARGAIN, SELL AND CONVEY unto the Grantee that certain
airport Special Facilities more fully described in Exhibit "A"
attached hereto located in and at Houston Intercontinental Airport
in leased space and/or in the easements leased or granted to
Grantee by Grantor which leased space and/or easements are more
fully described in Exhibit "B" attached hereto.
TO HAVE AND TO HOLD the aforesaid Special Facilities, together
with all and singular the rights and appurtenances thereto in any
way belonging unto Grantee, its successors and assigns forever; and
it is hereby agreed that Grantor, its successors and legal
representatives are hereby bound to WARRANT AND FOREVER DEFEND, all
and singular, said property unto Grantee, its successors and
assigns against every person whosoever lawfully claiming or to
claim the same, or any part thereof, by, through or under Grantor,
but not otherwise.
THE EXECUTION, delivery and acceptance of this conveyance is
made pursuant to the terms of that certain Special Facilities Lease
Agreement dated as of _______, 1997, by and between Grantor and
Grantee.
EXECUTED as of the _______ day of ________, 199_.
CONTINENTAL AIRLINES, INC.
By _____________________
Title:__________________
ATTEST:
_____________________________
Assistant Secretary
THE STATE OF TEXAS
COUNTY OF ▇▇▇▇▇▇
BEFORE ME, the undersigned authority, on this day personally
appeared ____________________, ______________________________ of
the CONTINENTAL AIRLINES, INC., a corporation, known to me to be
the person and officer whose name is subscribed to the foregoing
instrument, and acknowledged to me that he executed the same for
the purposes and consideration therein expressed, in the capacity
therein stated, and as the act of said corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this _______ day of
_______, 199_.
________________________
Notary Public in and for
▇▇▇▇▇▇ County, Texas
(SEAL)