LUIS MUÑOZ MARÍN INTERNATIONAL AIRPORT LEASE AGREEMENT dated as of

Exhibit 4.16

EXECUTION COPY

▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ INTERNATIONAL AIRPORT

LEASE AGREEMENT

dated as of

July 24, 2012

by and between

THE PUERTO RICO PORTS AUTHORITY

and

AEROSTAR AIRPORT HOLDINGS, LLC

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▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ INTERNATIONAL AIRPORT

LEASE AGREEMENT

This ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ INTERNATIONAL AIRPORT LEASE AGREEMENT (this “Agreement”) is made and entered into as of this 24th day of July, 2012 (the “Date of this Agreement”), by and between the Puerto Rico Ports Authority (the “Authority”), a public corporation and governmental instrumentality of the Commonwealth of Puerto Rico, created pursuant to Act No. 125 of the Legislative Assembly of Puerto Rico enacted on May 7, 1942, as amended, and Aerostar Airport Holdings, LLC (the “Lessee”), a limited liability company organized under the laws of the Commonwealth of Puerto Rico.

R E C I T A L S

WHEREAS, the Authority owns and operates the LMM Airport Facility (as defined herein);

WHEREAS, pursuant to, and under the terms and conditions contained in Act No. 29 of the Legislative Assembly of Puerto Rico enacted on June 8, 2009 (the “Act”), the Authority is authorized to execute and deliver this Agreement, perform its obligations hereunder and enter into the Transaction (as defined, along with other capitalized terms, herein);

WHEREAS, the Authority, the respective Signatory Airlines and the Lessee are parties to the Use Agreement with respect to the LMM Airport Facility, which agreement will become effective upon the Closing Date;

WHEREAS, the Authority desires to grant an exclusive lease, which is also a Partnership Contract (contrato de alianza) pursuant to the Act, to the Lessee for the primary purpose and essential consideration of operating a public use airport in a safe and secure manner; maintaining the safety and security of the LMM Airport Facility at the highest possible levels; promoting, facilitating, aiding and enhancing commerce, tourism and economic development for the Commonwealth, in recognition that the LMM Airport Facility is the primary point of access in the Commonwealth with respect to economic activity, tourism and transportation; and providing various other benefits to the Airlines, the traveling public and the Authority; and the Authority, the Lessee and the Signatory Airlines have agreed upon the terms and conditions of the Use Agreement and the Operating Standards in order to assure the fulfillment of their continuing vital interest in the safe, secure, economical and effective operation of the LMM Airport Facility; and

WHEREAS, the Lessee desires to receive the lease from the Authority to operate the LMM Airport Facility, as hereinafter provided;

NOW THEREFORE, for and in consideration of the mutual covenants, representations, warranties and agreements contained herein and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties covenant and agree as follows:

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ARTICLE 1
DEFINITIONS AND INTERPRETATION

Section 1.1               Definitions.  Unless otherwise specified or the context otherwise requires, for the purposes of this Agreement the following terms have the following meanings:

“AA-Compensation” has the meaning ascribed thereto in Section 14.1(b).

“AA-Dispute Notice” has the meaning ascribed thereto in Section 14.1(c).

“AA-Termination Damages” has the meaning ascribed thereto in Section 14.2(a).

“AA-Notice” has the meaning ascribed thereto in Section 14.1(c).

“AA-Preliminary Notice” has the meaning ascribed thereto in Section 14.1(c).

“AAA” has the meaning ascribed thereto in Section 19.3(b).

“AAA Commercial Rules” has the meaning ascribed thereto in Section 19.4(a).

“AAA Technical Arbitration Rules” has the meaning ascribed thereto in Section 19.4(b).

“ACDBE” has the meaning ascribed thereto in Section 11.14.

“Account LC” means an unconditional and irrevocable Letter of Credit in favor of the Lessee or any Leasehold Mortgagee issued by a financial institution whose long-term senior unsecured indebtedness has obtained a rating of “BBB+” or better by Standard & Poor’s Ratings Services and an equivalent credit rating by another Rating Agency (or an equivalent credit rating from at least two nationally recognized Rating Agencies if the named Rating Agency ceases to publish ratings) and which Letter of Credit is not secured by the Lessee Interest and does not impose on the Lessee any obligation to reimburse draws in respect thereof.

“Act” has the meaning ascribed thereto in the Recitals.

“Act No. 458 Crime” means any crime specified in Act No. 458 of the Legislative Assembly of Puerto Rico enacted on December 29, 2000, as amended.

“AD-Termination Damages” has the meaning ascribed thereto in Section 16.2(c).

“Additional Coverages” has the meaning ascribed thereto in Section 13.2(l).

“Additional Lands” means any lands required for a Modification.

“Adjusted for Inflation” means, with respect to the amount to be “Adjusted for Inflation,” to multiply such amount by the CPI Factor for the applicable adjustment period.

“Adverse Action” has the meaning ascribed thereto in Section 14.1(a).

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“Affected Property” means any public or private property, including a highway, street, road, roadway, bridge, railroad, rail or other transit way, rights-of-way, bicycle or hiking path and any ancillary facilities related to any of the foregoing, under the jurisdiction and control of the Authority, any other Governmental Authority or any other Person (including any private road) that is located above, intersects with, crosses over or under or is adjacent to the LMM Airport Facility or any part thereof.

“Affiliate”, when used to indicate a relationship with a specified Person, means a Person that, directly or indirectly, through one or more intermediaries has a 10% (or in the case of “majority-owned Affiliates,” 50%) or more voting or economic interest in such specified Person or controls, is controlled by or is under common control with (which shall include, with respect to a managed fund or trust, the right to direct or cause the direction of the management and policies of such managed fund or trust as manager, advisor or trustee pursuant to relevant contractual arrangements) such specified Person, and a Person shall be deemed to be controlled by another Person, if controlled in any manner whatsoever that results in control in fact by that other Person (or that other Person and any Person or Persons with whom that other Person is acting jointly or in concert), whether directly or indirectly and whether through share ownership, a trust, a contract or otherwise (it being understood and agreed that for purposes of this definition, a managed fund or trust shall be deemed to be an Affiliate of the Person managing such fund or trust and a limited partner in a managed fund or trust shall be deemed to be an Affiliate of such fund or trust and of the Person managing such fund or trust).  For the avoidance of doubt, with respect to the Lessee, its Affiliates shall include Equity Participants and each Person controlled by the Equity Participants.

“Agreed Modification” has the meaning ascribed thereto in Section 5.1(d).

“Agreement” has the meaning ascribed thereto in the preamble to this Agreement (including all schedules referred to herein), as amended from time to time in accordance with the terms hereof.

“AIP Grants” means grants and any funding under the Airport Improvement Program of the FAA, which program is authorized by 49 U.S.C. ch. 471.

“Air Transportation Business” means the carriage by aircraft of persons or property as a common carrier for compensation or hire, or the carriage of cargo or mail by aircraft in commerce, as defined in 49 U.S.C. Subtitle VII, as amended.

“Airline” means any Person actively engaged in an Air Transportation Business at the LMM Airport Facility.

“Airline Capital Improvement Contracts” has the meaning ascribed thereto in Section 4.5.

“Airline Capital Improvement Projects” has the meaning ascribed thereto in Section 4.5.

“Airport Emergency” means any event that results in a material danger to the safety or security of LMM Airport Facility Operations or a material impairment to the LMM Airport Facility or to the continuing use of the LMM Airport Airport as a commercial service airport.

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“Airport Purposes” means the use of the LMM Airport Facility to provide general airport services to members of the general public, any services ancillary or complementary thereto, and for other purposes consistent with the purposes of services provided at Comparable Public Airports.

“Airport Revenues” means all fees, rents, tariffs, revenues and any other type of charge for use of or in connection with the LMM Airport Facility to the fullest extent permitted by Section 10(c) of the Act, but excluding any Government Grants-In-Aid and PFC revenues.

“Airport Security Program” means “TSA-approved Airport Security Program.”

“Annual Authority Payment” has the meaning ascribed thereto in Section 2.1(b).

“Annual Authority Revenue Share” has the meaning ascribed thereto in Section 2.1(c).

“Approval”, “Approved”, “Approves”, “Approved by the Authority”, consent, determination and similar expressions mean approved or consented to by the Authority, which shall be made in accordance with the provisions of Section 1.17.

“Assigned LMM Airport Facility Contracts” means the agreements that are set forth on Schedule 2 under the heading “Assigned LMM Airport Facility Contracts.”

“Assumed Liabilities” has the meaning ascribed thereto in Section 3.2(c).

“Atlantic Standard Time” means time as measured in Puerto Rico by subtracting four hours from Greenwich Mean Time.

“Audit” and similar expressions mean, with respect to any matter or thing relating to the LMM Airport Facility, the LMM Airport Facility Operations or this Agreement, including compliance with the terms of this Agreement, the performance by or on behalf of the Authority of such reviews, investigations, inspections and audits relating to such matter or thing as the Authority may determine, in its reasonable discretion, to be advisable or necessary in the circumstances, conducted in each case in accordance with applicable United States audit practices customarily accepted in the airport industry, if any, and the terms of this Agreement or as required by Law.

“Authority” has the meaning ascribed thereto in the preamble to this Agreement.

“Authority Default” has the meaning ascribed thereto in Section 16.2(a).

“Authority Employee” means each person employed by the Authority with respect to the LMM Airport Facility as of the Date of this Agreement.

“Authority Related Entity” has the meaning ascribed thereto in Section 3.7(a).

“Authority’s Option” has the meaning ascribed thereto in Section 18.8(a).

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“Authorization” means any approval, certificate of approval, authorization, consent, waiver, variance, exemption, concession, endorsement, declaratory order, exception, license, filing, registration, permit, special lease or other requirement of any Person that applies to all or any portion of the LMM Airport Facility or the LMM Airport Facility Operations.

“Authorized Auditor” has the meaning ascribed thereto in Section 8.2(a).

“Bank Rate” means the prime rate of interest announced publicly by The Wall Street Journal (or its successors) as the so-called “prime rate.”

“Bid Date” means July 16, 2012.

“Breakage Costs” means any breakage costs, financing fees, make-whole premium payments, termination payments or other prepayment amounts (including premiums) that are required to be paid by the Lessee with respect to Leasehold Mortgage Debt or Qualified Debt as a result of the early repayment of such Leasehold Mortgage Debt or Qualified Debt prior to its scheduled maturity date, including the cost of early termination of interest rate hedging arrangements.

“Business Day” means any day that is neither a Saturday, a Sunday nor a day observed as a holiday by either the Commonwealth or the United States government.

“CAF” has the meaning ascribed thereto in Section 3.20(a).

“Capital Costs Reserve” has the meaning ascribed thereto in Section 16.3(h)(ii).

“Capital Lease” means a lease under which the obligations of the lessee would, in accordance with GAAP, be included in determining total liabilities as shown on the liability side of a balance sheet of a lessee.

“Capital Project” means any purchase, Capital Lease, creation, improvement or renovation of a Fixed Asset.

“Cargo Facility” has the meaning ascribed thereto in Section 3.20(a).

“Cash Deposit” has the meaning ascribed thereto in Section 2.3(a)

“Casualty Cost” has the meaning ascribed thereto in Section 13.3(a).

“CE-Dispute Notice” has the meaning ascribed thereto in Section 15.1(a).

“CE-Notice” has the meaning ascribed thereto in Section 15.1(a).

“CE-Preliminary Notice” has the meaning ascribed thereto in Section 15.1(a).

“Change in Control” means, with respect to any Person, whether accomplished through a single transaction or a series of related transactions and whether accomplished directly or indirectly, (i) a change in ownership so that more than 50% of the direct or indirect voting or economic interests in such Person is transferred to another Person or group of Persons acting in

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concert, (ii) the power directly or indirectly to direct or cause the direction of management and policy of such Person, whether through ownership of voting securities, by contract, management agreement, or common directors, officers or trustees or otherwise, is transferred to another Person or group of Persons acting in concert that did not have such power immediately prior to such transaction or transactions or (iii) the merger, consolidation, amalgamation, business combination or sale of substantially all of the assets of such Person for the purpose of or with the effect contemplated in clauses (i) or (ii) above; provided, however, that notwithstanding anything to the contrary set forth in this definition, none of the following shall constitute a “Change in Control” for the purposes of this Agreement:

(A) Transfers of direct or indirect ownership interests in the Lessee between or among Persons that are Affiliates of each other or Persons who are under common control (a Person shall be deemed to be controlled by another Person if controlled in any manner whatsoever that results in control in fact by that other Person (or that other Person and any Person or Persons with whom that other Person is acting jointly or in concert)), whether directly or indirectly and whether through share ownership, a trust, a contract or otherwise (it being understood and agreed that for purposes of this definition, a fund or trust shall be deemed to be under common control with the Person managing or advising such fund or trust (with respect to each of the foregoing, notwithstanding the fact that an independent board or trustee makes final investment decisions with respect thereto) and a limited partner or equivalent in a fund or trust shall be deemed to be under common control with such fund or trust and of the Person managing or advising such fund or trust);

(B) Transfers of shares of the Lessee or the direct or indirect shareholders of the Lessee pursuant to bona fide open market transactions on the New York Stock Exchange, NASDAQ, London Stock Exchange or comparable United States or foreign securities exchange, including any such transactions involving an initial or “follow on” public offering;

(C) Transfers of direct or indirect ownership interests in the Lessee by any Equity Participant or its beneficial owner(s) to any Person so long as the Equity Participants or their respective beneficial owner(s) having ownership interests in the Lessee (as of the later of (1) the Date of this Agreement or (2) the date on which the Authority most recently approved a Change in Control) together retain, in the aggregate, 50% or more of the direct or indirect voting or economic interests in the Lessee or the power directly or indirectly to direct or cause the direction of management and policy of the Lessee, through ownership of voting securities or common directors, officers or trustees;

(D) Transfers of direct or indirect ownership interests in the Lessee by any Equity Participant or its direct or indirect beneficial owner(s) to any partners, members, shareholders, directors, officers, employees or investors who are distributees of investments held by such Equity Participant or beneficial owner(s) pursuant to any bona fide liquidation of such Equity Participant or beneficial owner(s) as a result of which securities held by such entity are distributed to such distributees;

(E) any change of ownership that is attributable to a lease, sublease, concession, management agreement, operating agreement or other similar arrangement that is subject and subordinate in all respects to the rights of the Authority under this Agreement so long as (1) no

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“Change in Control” occurs with respect to the Lessee and (2) the Lessee remains obligated under this Agreement;

(F) the creation of a trust or any other transaction or arrangement that is solely a transfer of all or part of the Lessee’s economic interest under this Agreement to another entity so long as (1) no “Change in Control” occurs with respect to the Lessee and (2) the Lessee remains obligated under this Agreement; and

(G) Transfers of direct or indirect ownership interests in the Lessee (1) between or among investment funds, including infrastructure funds, and investors therein; provided that following such Transfer, such direct or indirect ownership interests remain under common ownership, management or control or (2) from investment funds, including infrastructure funds, or investors therein, to any Person; provided that such direct or indirect ownership interests, following consummation of such Transfer, remain under common management or control, it being understood in each of (1) and (2) above that (x) ownership interests shall be deemed to be controlled by a Person if controlled in any manner whatsoever that results in control in fact, whether directly or indirectly, and whether through share ownership, a trust, a contract or otherwise and (y) ownership interests of an investment fund shall be deemed to be managed by a Person if such Person has the right to direct, recommend or propose all or substantially all of the investments of such investment fund (with respect to each of the foregoing, notwithstanding the fact that an independent board or trustee makes final investment decisions with respect thereto).

“Claim” means any demand, action, cause of action, suit, proceeding, arbitration, claim, judgment or settlement or compromise relating thereto which may give rise to a right to indemnification under Section 12.1 or 12.2.

“Closing” has the meaning ascribed thereto in Section 2.2(a).

“Closing Agreement” has the meaning ascribed thereto in Section 2.4(a)(xi).

“Closing Date” has the meaning ascribed thereto in Section 2.2(a).

“Closing LOC” has the meaning ascribed thereto in Section 2.3(a).

“Code of Ethics” has the meaning ascribed thereto in Section 9.2(j).

“Commonwealth” means the Commonwealth of Puerto Rico.

“Commonwealth Court” has the meaning ascribed thereto in Section 19.4(c).

“Commonwealth Registry of Property” means the First Section of the Municipality of Carolina of the Registry of Property of the Commonwealth and where the Lease Agreement must be recorded.

“Commonwealth Retirement System” has the meaning ascribed thereto in Section 2.5(k)(ii).

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“Comparable Public Airport” means an airport in the United States of America (whether publicly or privately owned) open to the general public that is reasonably comparable to the LMM Airport Facility with respect to the matter to be determined.

“Compensation Event” has the meaning ascribed thereto in the definition of “Leasehold Compensation” below.

“Consent” means any approval, consent, ratification, waiver, exemption, franchise, license, permit, novation, certificate of occupancy or other authorization of any Person, including any consent issued, granted, given or otherwise made available by or under the authority of any Governmental Authority or pursuant to any applicable Law.

“Contractor” means, with respect to a Person, any contractor with whom such Person contracts to perform work or supply materials or labor in relation to the LMM Airport Facility, including any subcontractor of any tier, supplier or materialman directly or indirectly employed pursuant to a subcontract with a Contractor, but excluding, for the avoidance of doubt, any financial advisor retained by the Equity Participants or the Lessee to provide advice in relation to the financing of the Lease or any Capital Projects and any legal counsel retained by the Equity Participants or the Lessee.

“Contratante” means “Contratante” as defined in the Spanish version of the Act.

“Contracts” means any contract or agreement entered into by the Lessee related to the LMM Airport Facility (or subcontracts thereunder).

“Covered Party” has the meaning ascribed thereto in Section 9.2(k).

“CPI Factor” means (i) with respect to a one-year adjustment period (e.g. where the amount is to be Adjusted for Inflation annually), the amount equal to (A) CPI Value for the calendar year immediately prior to the date of such adjustment divided by (B) the CPI Value for the calendar year two years prior to the date of such adjustment (for illustrative purposes only, if an amount is to be Adjusted for Inflation on April 1, 2010, for the one-year period of April 1, 2009 through April 1, 2010, the CPI Value for such calculating adjustment is equal to 1.017, which is the CPI Value for calendar year 2009 (which is 219.235) divided by the CPI Value for calendar year 2008 (which is 215.572)) or (ii) with respect to a multiple-year adjustment period, the amount equal to (A) the CPI Value for the calendar year immediately prior to the date of such adjustment divided by (B) the CPI Value for the calendar year immediately prior to the date of the start of such adjustment period (for illustrative purposes only, if an amount is to be Adjusted for Inflation on the fifth anniversary of April 1, 2010, for the five-year period of April 1, 2005 through April 1, 2010, the CPI Value for such calculating adjustment is equal to 1.115, which is the CPI Value for calendar year 2009 (which is 219.235) divided by the CPI Value for calendar year 2004 (which is 196.600)); provided, however, that in no case shall be the CPI Factor for any adjustment period be less than 1.000.

“CPI Value” means the “Annual Value” of that year obtained from “Consumer Price Index—All Urban Consumers—U.S. All Items Less Food and Energy (CUUR0000SA0L1E)” published by the Bureau of Labor Statistics of the United States Department of Labor (for illustrative purposes only, the CPI Value for the calendar year 2009 is 219.235); provided,

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however, that if such index is changed so that the base year thereof changes, such index shall be converted in accordance with the conversion factor published by the United States Department of Labor, Bureau of Labor Statistics; provided further that if such index is discontinued or revised during the Term, such other index or computation with which it is replaced shall be used in order to obtain substantially the same result as would be obtained if such index had not been discontinued or revised; provided further that any such revision shall not result in the retroactive adjustment of any amounts paid or payable pursuant to this Agreement prior to such revision.

“DACO” has the meaning ascribed thereto in Section 2.4(a)(xiii).

“Date of this Agreement” means the date that the Lessee signs this Agreement, at which time all Parties will have signed the Agreement.

“DBE” has the meaning ascribed thereto in Section 11.13.

“Debt Service Reserve Requirement” has the meaning ascribed thereto in Section 3.8.

“Defending Party” has the meaning ascribed thereto in Section 12.1(e).

“Deferral Notice” has the meaning ascribed thereto in Section 16.2(c).

“Delay Event” means any of the following events that results in or would result in a delay or interruption in the performance by the applicable performing Party of any obligation under this Agreement: (i) an event of Force Majeure, (ii) a failure to obtain, or delay in obtaining, any Authorization from a Governmental Authority (provided that such failure or delay could not have been reasonably prevented by technical and scheduling measures of the applicable performing Party in the ordinary course), (iii) the enactment of a new Law or the modification, amendment or change in enforcement or interpretation of a Law (including a change in the application or interpretation thereof by any Governmental Authority) after the Bid Date, (iv) a delay caused by the performance of works (including the activities authorized by Section 3.7) carried out by a Governmental Authority or any utility or railway operator (including the relocation of utilities) or a delay caused by the performance of works by any other Person not acting under the authority or direction of, or pursuant to a contract, sublease or any other agreement or arrangement with the Lessee, (v) a failure by the other Party to perform or observe any of its covenants or obligations under this Agreement, (vi) a delay caused by the presence in, on, under or around the LMM Airport Facility of any Hazardous Substance or other contaminant that was present in the LMM Airport Facility at any time prior to the Time of Closing, which, in each case, results in or would result in a delay or interruption in the performance by the Lessee of any obligation under this Agreement, (vii) a delay caused by the implementation of Engineering or Institutional Controls related to the LMM Airport Facility (but only if such failure or delay could not have been reasonably prevented by technical and scheduling measures of the Lessee), (viii) a delay required by Law due to the discovery of protected plant or animal species, archaeological, paleontological or cultural resources at or about a site of a construction required or permitted to be undertaken pursuant to this Agreement or (ix) a delay in the performance by the Lessee of any of the General Accelerated Upgrades due to the postponement of such works by the Authority; provided in each case that such delay or the cause thereof is neither otherwise specifically dealt with in this Agreement nor arises by reason of (A) the negligence or intentional misconduct of the Party affected by the Delay Event

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or such Party’s Representatives, or Contractors to or agents of such Party or its Representatives, (B) any act or omission by the Party affected by the Delay Event or its Representatives in breach of the provisions of this Agreement, (C) except in the case of funds contemplated to be provided by the Authority pursuant to Section 5.2, lack or insufficiency of funds or failure to make payment of monies or provide required security on the part of the Party affected by the Delay Event or its Representatives, or Contractors to or agents of such Party or its Representatives, (D) except to the extent such events constitute an event of Force Majeure, any strike, labor dispute or other labor protest involving any Person retained, employed or hired by the Party affected by the Delay Event or its Representatives, or Contractors to or agents of such Party or its Representatives to supply materials or services for or in connection with the LMM Airport Facility Operations or any strike, labor dispute or labor protest caused by or attributable to any act (including any pricing or other price or method of operation) or omission of such Party or its Representatives, (E) except to the extent such events constitute an event of Force Majeure, any weather conditions or (F) the development, redevelopment, construction, maintenance, modification or change in the operation of any existing mode of transportation that results in the reduction of revenues generated at the LMM Airport Facility or in the number of users using the LMM Airport Facility.

“Delay Event Dispute Notice” has the meaning ascribed thereto in Section 15.2(d).

“Delay Event Notice” has the meaning ascribed thereto in Section 15.2(d).

“Delay Event Remedy” has the meaning ascribed thereto in Section 15.2(c).

“Depositary” means a savings bank, a savings and loan association or a commercial bank or trust company that would qualify as an Institutional Lender, designated by the Lessee to serve as depositary pursuant to this Agreement and Approved by the Authority; provided, however, that so long as a Leasehold Mortgage is in effect, the Depositary contemplated under Section 13.3 shall be the institution acting as the collateral agent or depositary under the financing secured by such Leasehold Mortgage.

“Designated Person” means each representative of a Party or the GDB who is designated as such for the purposes of Article 19.

“Document” has the meaning ascribed thereto in Section 1.17(b).

“DOT” means the United States Department of Transportation created under 49 U.S.C. § 101, et seq., or any successor agency or department thereto.

“Eligible Investments” means any one or more of the following obligations or securities: (i) direct obligations of, and obligations fully guaranteed by, the United States of America or any agency or instrumentality of the United States of America, the obligations of which are backed by the full faith and credit of the United States of America; (ii) demand or time deposits, federal funds or bankers’ acceptances issued by any Institutional Lender (provided that the commercial paper or the short-term deposit rating or the long-term unsecured debt obligations or deposits of such Institutional Lender at the time of such investment or contractual commitment providing for such investment have been rated “A” or higher by a Rating Agency or any other demand or time deposit or certificate of deposit fully insured by the Federal Deposit Insurance Corporation); (iii) commercial paper (including both non-interest-bearing discount obligations and interest-

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bearing obligations payable on demand or on a specified date not more than one year after the date of issuance thereof) that has been rated “A” or higher by a Rating Agency at the time of such investment; (iv) any money market funds, the investments of which consist of cash and obligations fully guaranteed by the United States of America or any agency or instrumentality of the United States of America, the obligations of which are backed by the full faith and credit of the United States of America and that have been rated “A” or higher by a Rating Agency and (v) other investments then customarily accepted by the Authority in similar circumstances; provided, however, that no instrument or security shall be an Eligible Investment if such instrument or security evidences a right to receive only interest payments with respect to the obligations underlying such instrument or if such security provides for payment of both principal and interest with a yield to maturity in excess of 120% of the yield to maturity at par.

“Encumbrance” means any mortgage, lien, judgment, execution, pledge, charge, security interest, restriction, easement, servitude, option, reservation, lease, claim, trust, deemed trust or encumbrance of any nature whatsoever, whether arising by operation of Law, judicial process, contract, agreement or otherwise created.

“End Date” means the date on which this Agreement expires or is terminated.

“Engineering or Institutional Controls” means those engineering, environmental or institutional controls required by a Governmental Authority (other than the Authority) in relation to the remediation or avoidance of a release of a Hazardous Substance.

“Environment” means soil, surface waters, groundwaters, land, stream sediments, surface or subsurface strata, ambient air, plants, animals, and other life forms, flora, fauna and humans.

“Environmental Laws” means all applicable Laws regulating or imposing liability or standards of conduct concerning or relating to the protection of human health, the Environment or the use, generation, disposal, discharge, Release, transportation, storage or management of Hazardous Substances.

“Equity Participant” means any Person who holds any shares of capital stock or securities of, or units, partnership interests, membership interests or other equity interests in, the Lessee.

“Excluded Liabilities” has the meaning ascribed thereto in Section 3.2(c).

“Exon-▇▇▇▇▇▇ Act” has the meaning ascribed thereto in Section 2.4(c)(iii)(D).

“FAA” means the Federal Aviation Administration established under 49 U.S.C. § 101 et seq., or any successor agency thereto, and where the context otherwise requires, DOT.

“Financing Costs” means any transaction costs and expenses (including legal fees), Taxes, and disbursements incurred by the Authority to finance, arrange for the financing of, or otherwise fund, the payment of any PIC-Termination Damages or any amount payable by the Authority pursuant to Section 16.6(e).

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“Fixed Asset” means tangible property used in the LMM Airport Facility Operations, but not expected to be converted into cash in the ordinary course of events, such as plant, machinery and equipment, furniture and fixtures, buildings, land and leasehold improvements.

“Force Majeure” means any event that is unforeseeable or otherwise beyond the reasonable control of the applicable performing Party that delays or interrupts the performance of such Party’s obligations hereunder, including an intervening act of God or public enemy, war (whether or not declared), invasion, armed conflict, act of foreign enemy, blockade, revolution, act of terror, sabotage, civil commotions, interference by civil or military authorities, condemnation or confiscation of property or equipment by any Governmental Authority, aircraft crash or forced landing, nuclear or other explosion, radioactive or chemical contamination or ionizing radiation, fire, tornado, hurricane, Named Windstorm, flooding, tsunami, tidal wave, earthquake or other natural disaster, riot or other public disorder, epidemic, quarantine restriction, strike, labor dispute or other labor protest, stop-work order or injunction issued by a Governmental Authority of competent jurisdiction, governmental embargo; provided that such event neither is otherwise specifically dealt with in this Agreement nor arises by reason of (i) the negligence or intentional misconduct of the applicable performing Party or its Representatives, (ii) any act or omission by the applicable performing Party or its Representatives in breach of the provisions of this Agreement, (iii)  except in the case of funds contemplated to be provided by the Authority pursuant to Section 5.2, lack or insufficiency of funds or failure to make payment of monies or provide required security on the part of the applicable performing Party, (iv) any strike, labor dispute or other labor protest involving any Person employed by the applicable performing Party or its Representatives in connection with the LMM Airport Facility Operations or any strike, labor dispute or labor protest caused by or attributable to any act (including any pricing or other practice or method of operation) or omission of the applicable performing Party or its Representatives or (v) any weather conditions that are ordinarily or customarily encountered or experienced at or in the vicinity of the LMM Airport Facility, including any Ordinary Storm, but excluding any tornado, hurricane or Named Windstorm.

“Foreign Corrupt Practices Act” means the Foreign Corrupt Practices Act of 1977, 15 U.S.C. §§ 78dd-1, et seq., as amended.

“GDB” means the Government Development Bank of the Commonwealth, or any successor agency thereto.

“GDB Payment Guaranty” has the meaning ascribed thereto in Section 2.4(a)(ix).

“General Accelerated Upgrades” has the meaning ascribed thereto in Section 4.1.

“Government Agreement” has the meaning ascribed thereto in Section 3.13(a).

“Government Grants-in-Aid” means those monies granted to the Lessee by the United States of America or any agency thereof (including AIP Grants), or the Commonwealth, or any political subdivision or agency thereof, to pay all or a portion of the cost of a Capital Project at or related to the Airport after the Closing Date.

“Governmental Authority” means the Commonwealth or any municipality, political subdivision, instrumentality, agency or public corporation of or in the Commonwealth and any

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▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, county, local (including all municipalities, municipal authorities and districts) or foreign government, department, court, commission, board, bureau, agency or instrumentality or other regulatory, judicial, administrative, governmental or quasi-governmental authority.

“Governor” means the Governor of the Commonwealth or another official of the Commonwealth acting under the direction and pursuant to the authority of the Governor.

“Grant Agreements” means the agreements, as amended, involving grants under the FAA’s Airport Improvement Program with respect to the LMM Airport Facility between the Authority and the FAA and between the Lessee and the FAA, including grant agreements and assurances, subject to any exemptions granted by the FAA pursuant to 49 U.S.C. § 47134 or otherwise.

“Hazardous Substance” means, but is not limited to, any solid, semi-solid, sludge, liquid, gas, odor, heat, sound, vibration, radiation or other substance or emission which is a contaminant, pollutant, dangerous substance, toxic or otherwise regulated substance, hazardous waste, subject waste, hazardous material or hazardous substance which is or becomes regulated by applicable Environmental Laws or which is classified as hazardous or toxic under applicable Environmental Laws (including lead-based paint, gasoline, diesel fuel or other petroleum hydrocarbons, polychlorinated biphenyls, asbestos and urea formaldehyde foam insulation).

“Hotel Operator” has the meaning ascribed thereto in Section 3.19.

“Hotel Property” has the meaning ascribed thereto in Section 3.19.

“Indemnified Party” means any Person entitled to indemnification under this Agreement.

“Indemnifier” means any Party obligated to provide indemnification under this Agreement.

“Indemnity Payment” has the meaning ascribed thereto in Section 12.3(b).

“Independent Engineer” means the licensed professional consulting engineering firm appointed by the Lessee pursuant to the Operating Standards that is reasonably acceptable to the Authority.

“Information” means any and all information of the Lessee relating to the LMM Airport Facility Operations, including (i) income statements, balance sheets, statements of cash flow and changes in financial position, details regarding revenues generated at the LMM Airport Facility (including information regarding the collection thereof), operating income, expenses, capital expenditures and budgeted operating results relating to the LMM Airport Facility Operations, (ii) all certificates, correspondence, data (including test data), documents, facts, files, information, investigations, materials, notices, plans, projections, records, reports, requests, samples, schedules, statements, studies, surveys, tests, test results, airport information and parking information (including volume counts, classification counts and vehicle jurisdiction data) analyzed, categorized, characterized, created, collected, generated, maintained, processed, produced, prepared, provided, recorded, stored or used by the LMM Airport Facility, the Lessee or any of its Representatives in connection with the LMM Airport Facility or the LMM Airport Facility Operations and (iii) books, records, accounts and documents of the Lessee relating to the LMM

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Airport Facility Operations, including any Information that is stored electronically or on computer-related media; provided, however, that nothing in this Agreement shall require the disclosure by any Party of Information that the Party has a reasonable basis to believe is protected by attorney-client or other legal privilege.

“Initial Termination Notice” has the meaning ascribed thereto in Section 16.2(b)(ii).

“Interim Adjustment” has the meaning ascribed thereto in Section 3.8.

“Institutional Lender” means (i) the United States of America, any state or commonwealth thereof or any agency or instrumentality of any of them, any municipal agency, public benefit corporation or public authority, advancing or insuring mortgage loans or making payments which, in any manner, assist in the financing, development, operation and maintenance of projects, (ii) any (A) savings bank, savings and loan association, commercial bank, trust company (whether acting individually or in a fiduciary capacity) or insurance company organized and existing under the laws of the United States of America or any state or commonwealth thereof, (B) foreign insurance company or commercial bank qualified to do business as an insurer or commercial bank as applicable under the laws of the United States (if such qualification is necessary in connection with the acquisition of Leasehold Mortgage Debt), (C) pension fund, foundation or university or college or other endowment fund or (D) real estate investment fund, infrastructure investment fund, investment bank, pension advisory firm, mutual fund, investment company or money management firm, (iii) any “qualified institutional buyer” under Rule 144(A) under the Securities Act or any other similar Law hereinafter enacted that defines a similar category of investors by substantially similar terms, (iv) a Governmental Authority acting (directly or through a trust or other single purpose vehicle controlled by it) as a conduit for the purpose of issuing private activity bonds authorized by Law for the benefit of the Lessee or (v) any other financial institution or entity designated by the Lessee and Approved by the Authority; provided, however, that each such entity or combination of such entities if the Institutional Lender shall be a combination of such entities shall have individual or combined assets, as the case may be, of not less than $1,000,000,000.

“Law” means any order, writ, injunction, decree, judgment, law, ordinance, decision, ruling, statute, code, rule or regulation of any Governmental Authority.

“Lease” has the meaning ascribed thereto in Section 2.1.

“Leasehold Compensation” means with respect to (i) any applicable entry into the LMM Airport Facility pursuant to Sections 3.7(a)(v) through 3.7(a)(ix), (ii) the Lessee’s compliance with or the implementation of any Required Modification or any modified or changed Operating Standard (as contemplated by Section 6.2(c)), (iii) any breach of the covenant set forth in Section 3.11(b), (iv) amounts payable as a remedy under Section 16.2(b)(i), (v) action by the Authority or any other Governmental Authority established under the Laws of the Commonwealth as contemplated by Section 3.22 or (vi) the occurrence of an Adverse Action or any other event, the occurrence of which under the terms of this Agreement requires the payment of Leasehold Compensation (each of the foregoing, a “Compensation Event”), compensation payable by the Authority to the Lessee in order to restore the Lessee to the same after-Tax economic position the Lessee would have enjoyed if such Compensation Event had not occurred, which shall be calculated in accordance with Section 15.1(d) and (e).

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“Leasehold Fee” has the meaning ascribed thereto in Section 2.1.

“Leasehold Mortgage” means any lease, indenture, pledge, mortgage, deed of trust or other security agreement or arrangement, including a securitization transaction with respect to revenues generated at the LMM Airport Facility, encumbering any or all of the Lessee Interest, in each case that satisfies all of the conditions in Section 18.1.

“Leasehold Mortgage Debt” means any bona fide debt secured by a Leasehold Mortgage, including (i) principal (including accreted principal under interest rate ▇▇▇▇▇▇ or bonds); (ii) accrued interest (including capitalized interest and interest pursuant to an original issue discount); (iii) customary fees, costs, premiums, expenses and reimbursement obligations with respect thereto owed to lenders, financial insurers, agents, trustees and similar service providers; (iv) all payment obligations under interest rate hedging agreements with respect thereto (including accreting interest rate hedging agreements); (v) reimbursement obligations with respect thereto to any financial insurer and (vi) an assignment in connection with a securitization transaction, in each case, pursuant to an agreement entered into prior to the delivery by the Lessee to the Authority of an AA-Preliminary Notice or a notice under Section 16.2(b) stating that an Authority Default has occurred.  For the purposes of determining LMM Airport Facility Leasehold Value, Leasehold Mortgage Debt shall not include: (A) debt from an Affiliate of the Lessee, unless such debt is secured debt on terms consistent with terms that would reasonably be expected from a non-Affiliate lender acting in good faith; provided that the Lessee may request at any time during the Term that the Authority confirm in writing, and the Authority shall so confirm within a reasonable time following such request, whether any such debt is on terms consistent with terms that would reasonably be expected from a non-Affiliate lender acting in good faith; (B) any increase in debt to the extent such increase is the result of an agreement or other arrangement entered into after delivery by the Lessee to the Authority, with a copy to the Leasehold Mortgagee, of an AA-Preliminary Notice or a notice under Section 16.2(b) stating that an Authority Default has occurred; or (C) any debt with respect to which the Leasehold Mortgagee Notice Requirements apply and the Leasehold Mortgagee does not provide the Authority with notice in all material respects in accordance with the Leasehold Mortgagee Notice Requirements.  Notwithstanding anything herein to the contrary, except with respect to any such bona fide secured debt which was incurred or committed on or prior to the Closing Date, all of which incurred or committed debt shall be deemed to be Leasehold Mortgage Debt (except to the extent excluded from Leasehold Mortgage Debt pursuant to clauses (A) or (B) above), Leasehold Mortgage Debt shall not include any new debt incurred or committed following the Closing Date (it being understood and agreed by the Parties that any capitalization of interest or accretion of principal or other committed increases on any debt incurred or committed on or prior to the Closing Date or any refinancing of any debt that has previously qualified as Leasehold Mortgage Debt up to the original principal amount thereof, plus any premium and customary fees, costs, expenses and reimbursement obligations with respect thereto, shall not constitute such new debt) that (together with the aggregate amount of Leasehold Mortgage Debt and any Qualified Debt after giving effect to the incurrence or commitment of any such new debt) exceeds 80% of the fair market value of the Lessee Interest set forth in an appraisal; provided that, in order for such new debt to qualify as Leasehold Mortgage Debt, such appraisal shall (x) be prepared at the Lessee’s expense by an independent third party appraiser described under “LMM Airport Facility Leasehold Value” and delivered to the Authority prior to the incurrence or commitment of such new debt, (y) be a written appraisal of the fair market value of the Lessee Interest as of the time of the incurrence or

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commitment of such new debt and (z) identify the extent to which such new debt (together with the aggregate amount of Leasehold Mortgage Debt and any Qualified Debt after giving effect to the incurrence or commitment of any such new debt) exceeds 80% of the fair market value of the Lessee Interest set forth in such appraisal at the time of incurrence or commitment of such new debt; provided that any capitalization of interest or accretion of principal or other committed increases on any debt set forth in such appraisal shall constitute Leasehold Mortgage Debt to the extent such debt constitutes Leasehold Mortgage Debt on the date such appraisal is given; and provided further that the Parties agree that for the purposes of this definition and notwithstanding the requirements of the foregoing sub-clauses (x), (y) and (z), the amount of the Leasehold Fee paid at the Closing shall be deemed to constitute the fair market value of the Lessee Interest for a period of 12 months after the Closing Date and, as such, no appraisal shall be required within such 12-month period.  The appraisal requirement in the preceding sentence shall not apply to any protective advances made by any Leasehold Mortgagee or advances made by any Leasehold Mortgagee to cure Lessee defaults under the Leasehold Mortgage (regardless of whether entered into on or after the Closing Date) or other financing documents of such Leasehold Mortgagee.

“Leasehold Mortgagee” means the holder or beneficiary of a Leasehold Mortgage, including a financial insurer, or an agent, trustee or other representative or designee of such a holder or beneficiary.

“Leasehold Mortgagee Notice Requirements” means the delivery, by a Leasehold Mortgagee (or the Lessee on behalf of the Leasehold Mortgagee) to the Authority, the GDB, the FAA and the Airlines, after the execution and delivery of a Leasehold Mortgage by the Lessee, of a true and complete copy of the executed original of such Leasehold Mortgage, together with a notice containing the name and post office address of the holder of such Leasehold Mortgage.

“Leasehold Mortgagee’s Notice” has the meaning ascribed thereto in Section 18.8(a).

“Lessee” has the meaning ascribed thereto in the preamble to this Agreement.

“Lessee Default” has the meaning ascribed thereto in Section 16.1(a).

“Lessee Interest” means the interest of the Lessee in the LMM Airport Facility created by this Agreement and the rights, benefits and obligations of the Lessee under this Agreement (including the right to receive Leasehold Compensation and Termination Damages hereunder).

“Letter of Credit” means an irrevocable, unconditional, commercial letter of credit, in favor of the Authority as payee (without dual or multiple beneficiaries), in form and content reasonably acceptable to the Authority, payable immediately in United States dollars upon presentation of a sight draft and a certificate confirming that the Authority has the right to draw under such letter of credit in the amount of such sight draft, without presentation of any other document, statement or authorization (including the original letter of credit), which letter of credit (i) is issued by a commercial bank or trust company that is a member of the New York Clearing House Association and that has and maintains a current credit rating of “BBB+” or better by Standard & Poor’s Ratings Services and an equivalent credit rating by another Rating Agency (or an equivalent credit rating from at least two nationally recognized Rating Agencies if the named Rating Agency ceases to publish ratings) (or by such other commercial bank, trust company or other issuer reasonably

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acceptable to the Authority prior to the submission of the letter of credit), (ii) is substantially in the form of Schedule 6 (or otherwise in form and content reasonably acceptable to the Authority prior to the submission of the letter of credit) and (iii) provides for the continuance of such letter of credit for a period of at least one year or as otherwise provided in this Agreement.  The office for presentment of sight drafts specified in the Letter of Credit shall be located at a specified street address within the Commonwealth or such other location within the continental United States as is reasonably acceptable to the Authority.  For the avoidance of doubt, the obligations of the account party during the Term to reimburse the issuer for draws under the Letter of Credit may be secured by a Leasehold Mortgage.

“LMM Airport Facility” means that airport known as ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ International Airport (a legal description of the airport is attached hereto as Schedule 1 and by this reference made a part hereof) situated in the Municipality of Carolina, Commonwealth of Puerto Rico and all easements, licenses, privileges, rights and appurtenances related thereto, including all terminals, hangars, runways, buildings, structures (above grade and below grade), roadways, and all fixtures, and related facilities, now situated on that real property as the same may be enlarged, enhanced, improved, reconstructed, rebuilt, rehabilitated, developed or otherwise modified in accordance with this Agreement.

“LMM Airport Facility Assets” means (i) each of the tangible assets described on Schedule 7, and (ii) each other tangible and intangible asset (including intellectual property) of or relating solely to the LMM Airport Facility owned by the Authority.

“LMM Airport Facility Contracts” means the agreements to which the Authority is a party relating to the operations of the LMM Airport Facility that are set forth on Schedule 2 under the heading “LMM Airport Facility Contracts.”

“LMM Airport Facility Leasehold Value” means, as of any date, the fair market value of the Lessee Interest determined (without regard to the effect of the Adverse Action, Authority Default, Act No. 458 Crime or Public Integrity Crime giving rise to such determination) as of the time of the occurrence of the relevant Adverse Action or Authority Default (or as of the time of the conviction or guilty plea relating to the relevant Act No. 458 Crime or Public Integrity Crime, as the case may be) and taking into account the operations, traffic and revenues thereof, as determined pursuant to a written appraisal by an independent third party appraiser that is nationally recognized in appraising similar assets and that is reasonably acceptable to the Authority and the Lessee; provided, however, that the LMM Airport Facility Leasehold Value shall in no event be less than the amount equal to the sum of (i) any Leasehold Mortgage Debt and any Qualified Debt (except that in the case such value is determined in connection with the rescission or termination of this Agreement pursuant to Section 16.6, such Qualified Debt shall exclude any Qualified Debt provided by any Affiliate of the Lessee) and (ii) any related Breakage Costs, in each case as of the End Date and provided further that, solely in the case of a determination of the LMM Airport Facility Leasehold Value occasioned by (A) an Authority Default or an Adverse Action on or prior to the fifth anniversary of the Closing Date or (B) an Authority Default after the fifth anniversary of the Closing Date due to the failure of the Authority to make one or more monetary payments owed to the Lessee that, as of the time of such failure, in the aggregate exceed five times the amount of the immediately preceding payable Annual Authority Payment or Annual Authority Revenue Share (without regard to any offsets taken against such amount), the LMM Airport

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Facility Leasehold Value shall in no event be less than the greater of (1) the amount equal to the sum of (I) any Leasehold Mortgage Debt and any Qualified Debt and (II) any related Breakage Costs, and (2) the amount equal to the sum of (I) the Leasehold Fee, (II) all Annual Authority Payments actually paid by the Lessee up to the date of such determination, (III) any and all amounts actually paid by the Lessee under Section 3.19, Section 3.20 or Section 3.21, and (IV) the sum of the amounts of the reasonable, documented and unreimbursed (from PFCs, Government Grants-In-Aid, increased Airline charges to the extent permitted by the Use Agreement, or otherwise) expenditures made by the Lessee for any capital improvement projects (w) contemplated by Section 6.3 of the Use Agreement, (x) contemplated by the initial business plan referred to in Section 3.2(e), (y) required to be completed in accordance with this Agreement or the Use Agreement (including the Operating Standards) and (z) undertaken by the Lessee for which the consent of the Authority has been obtained, in each case as of the End Date.  If the Parties fail to agree upon such a single appraiser within 30 days after a Party requests the appointment thereof, then the Authority and the Lessee shall each appoint an independent third party appraiser and both such appraisers shall be instructed jointly to select a third independent third party appraiser to make the appraisal referred to above.  If either Party fails to appoint such independent third party appraiser or if the independent third party appraisers appointed by the Parties fail to select a third independent third party appraiser, in each case, within 60 days after the request of the Authority or the Lessee, then either the Authority or the Lessee may request the appointment of an independent third party appraiser (which appraiser shall be appointed by a Person agreed to by the Lessee and the Authority or if the Parties fail to agree on such Person within 30 days after a Party requests the appointment hereof, such appraiser shall be appointed by the AAA) to make the appraisal referred to above.  The Parties shall each pay 50% of the costs and expenses of any appraisal.  In the event that the Authority is authorized by the final FAA order under the Airport Privatization Pilot Program to use proceeds of the Lease for purposes other than investment in airports in the Puerto Rico airport system, then the Authority will be prohibited from using airport revenues to make payment of the LMM Airport Facility Leasehold Value to the Lessee upon termination of the Agreement pursuant to Section 14.2 or Section 16.2.  This prohibition shall only apply up to the amount of the portion of lease proceeds used for such non-airport purposes.

“LMM Airport Facility Operations” means (i) the operation, management or maintenance of the LMM Airport Facility, in each case in accordance with this Agreement, and (ii) all other actions relating to the operation of the LMM Airport Facility or otherwise that are to be performed by or on behalf of the Lessee pursuant to this Agreement (including the Operating Standards).

“Loss” or “Losses” means, with respect to any Person, any loss, liability, damage, penalty, increased financing costs, charge or out-of-pocket and documented cost or expense actually suffered or incurred by such Person, but excluding any punitive, special, indirect and consequential damages and any contingent liability until such liability becomes actual.  For avoidance of doubt, all actual payments reasonably made by any Person to third parties or reasonable out-of-pocket and documented costs or expenses actually suffered or incurred by any Person in respect of Claims made by third parties shall constitute Losses of such Person whether or not such payments or such costs and expenses relate to punitive, special, indirect and consequential damages or contingent liabilities of such third parties.

“Material Adverse Effect” means a material adverse effect on the business, condition (financial or otherwise) or results of operations of the LMM Airport Facility taken as a whole or

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the rights of the Lessee under this Agreement; provided, however, that no effect arising out of or in connection with or resulting from any of the following shall be deemed, either alone or in combination, to constitute or contribute to a Material Adverse Effect: (i) general economic conditions or changes therein; (ii) financial, banking, currency or capital markets fluctuations or conditions (either in the United States or any international market and including changes in interest rates); (iii) conditions affecting any or all of the real estate, financial services, construction or aviation industries generally; (iv) any existing event, occurrence or circumstance of which the Lessee has actual knowledge as of the Bid Date; (v) any action, omission, change, effect, circumstance or condition contemplated by this Agreement or attributable to the execution, performance or announcement of this Agreement or the transactions contemplated hereby or (vi) any negligence, intentional misconduct or bad faith of the Lessee or its Representatives.

“Modification” means deleting, dispensing with or changing the dimensions, character, quantity, quality, description, location or position of any part of the LMM Airport Facility or making other changes to the LMM Airport Facility; provided, however, that no Modification may require the Lessee to do or omit any act that could reasonably be expected to violate any applicable Law or cause the Lessee to fail to be in compliance with this Agreement.

“Named Windstorm” is a storm or weather disturbance that is named by the National Oceanic and Atmospheric Administration’s National Hurricane Center or similar body until sustained wind speeds drop below the parameter for naming storms.

“New Agreement” has the meaning ascribed thereto in Section 18.5(a).

“New P.R. Revenue Code” means the “Internal Revenue Code for a New Puerto Rico”, Act No. 1 of the Legislative Assembly of Puerto Rico, enacted on January 31, 2011, as amended.

“Notice Period” has the meaning ascribed thereto in Section 12.1(d).

“Notifying Party” has the meaning ascribed thereto in Section 3.14.

“Officer’s Certificate” means a certificate duly executed by an officer of the Lessee if required by the terms of this Agreement certifying to the relevant facts and circumstances as required hereunder.

“Offsets” has the meaning ascribed thereto in Section 12.5(a).

“Operating Agreement” means any material agreement, contract or commitment to which the Lessee is a party relating to the LMM Airport Facility Operations as in force from time to time (including the Assigned LMM Airport Facility Contracts and any warranties or guaranties assigned), but excluding any Leasehold Mortgage and financing documents related thereto.

“Operating Standards” (attached hereto as Schedule 12, and as modified from time to time in accordance with Article 6 and with Section 3.4 of the Use Agreement) means the standards, specifications, policies, procedures and processes that apply to the operation, maintenance, construction and rehabilitation of and capital improvements to, the LMM Airport Facility set forth on Schedule A to the Use Agreement, including any plans submitted by the Lessee to the Authority

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as required therein.  For the avoidance of doubt, the Operating Standards shall survive the termination or expiration of the Use Agreement.

“Opex Reserve Requirement” has the meaning ascribed thereto in Section 3.8.

“Ordinary Storm” means a storm that is comparable to any storm in length or severity of its effect on the LMM Airport Facility that has occurred on or around the LMM Airport Facility within 10 years prior to the Bid Date; provided that in no event shall a Named Windstorm or tornado be deemed an Ordinary Storm.

“Outside Closing Date” has the meaning ascribed thereto in Section 2.2(a).

“Part 139 Airport Certification Manual” means an airport certification manual authorized and approved by the FAA pursuant to 14 C.F.R. Part 139 with respect to the Part 139 Airport Operating Certificate.

“Part 139 Airport Operating Certificate” means an airport operating certificate issued by the FAA pursuant to 14 C.F.R. Part 139 authorizing the Lessee to operate the LMM Airport Facility.

“Party” means a party to this Agreement and “Parties” means all of the parties to this Agreement.

“Permitted Authority Encumbrance” means, with respect to the LMM Airport Facility: (i) the rights and interests of the Lessee under this Agreement and the Use Agreement; (ii) any Encumbrance that is being contested, or being caused to be contested, by the Authority in accordance with Section 3.5(b) (but only for so long as such contestation effectively postpones enforcement of any such Encumbrance); (iii) inchoate materialmen’s, mechanics’, workmen’s, repairmen’s, employees’, carriers’ or warehousemen’s liens or other like Encumbrances arising in the ordinary course of business of the LMM Airport Facility or the Authority’s performance of any of its rights or obligations hereunder, and in respect of obligations that are either (A) not delinquent or (B) being contested, or being caused to be contested, by the Authority in accordance with Section 3.5(b) (but only for so long as such contestation effectively postpones enforcement of any such Encumbrance); (iv) any easement, covenant, condition, right-of-way, servitude or any zoning, building, environmental, health or safety Law (including any Engineering or Institutional Control implemented thereunder) relating to the development, use or operation of the LMM Airport Facility (or other similar reservation, right or restriction) or other defects and irregularities in the title to the LMM Airport Facility that do not materially (individually or in the aggregate) interfere with the LMM Airport Facility Operations (in whole or in part) or the rights and benefits of the Lessee under this Agreement or materially impair the value of the Lessee Interest; (v) any right reserved to or vested in any Governmental Authority (other than the Authority) by any statutory provision or under common law (it being understood and agreed that nothing in this clause (v) shall limit or otherwise affect the Authority’s obligations or the Lessee’s rights hereunder); (vi) any Encumbrances created, incurred, assumed or suffered to exist by the Lessee or any Person claiming through it; (vii) any rights reserved to or vested in the Authority by any statutory and/or regulatory provision or under common law (it being understood and agreed that nothing in this clause (vii) shall limit or otherwise affect the Authority’s obligations or the Lessee’s

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rights hereunder) and (viii) any amendment, extension, renewal or replacement of any of the foregoing Permitted Authority Encumbrances on substantially similar terms as such Permitted Authority Encumbrances.

“Permitted Lessee Encumbrance” means, with respect to the LMM Airport Facility: (i) the rights and interests of the Lessee under this Agreement and the Use Agreement; (ii)  any Encumbrance that is being contested, or being caused to be contested, in accordance with Section 3.5(a) (but only for so long as such contestation effectively postpones enforcement of any such Encumbrance); (iii) any (A) lien or security interest for obligations not yet due and payable to a Contractor or other Person (including in respect of Taxes not yet due and payable), (B) any statutory lien, deposit or other non-service lien or (C) lien, deposit or pledge to secure mandatory statutory obligations or performance of bids, tenders, contracts (other than for the repayment of borrowed money) or leases, or for purposes of like general nature, any of which are incurred in the ordinary course of business of the LMM Airport Facility Operations and in respect of obligations that are either (1) not delinquent or (2) being contested, or being caused to be contested, by the Lessee in accordance with Section 3.5(a) (but only for so long as such contestation effectively postpones enforcement of any such Encumbrance); (iv) inchoate materialmen’s, mechanics’, workmen’s, repairmen’s, employees’, carriers’ or warehousemen’s liens, or other like Encumbrances arising in the ordinary course of business of the LMM Airport Facility or the Lessee’s performance of any of its rights or obligations hereunder, and in respect of obligations that are either (A) not delinquent or (B) being contested, or being caused to be contested, by the Lessee in accordance with Section 3.5(a) (but only for so long as such contestation effectively postpones enforcement of any such Encumbrance); (v) any right reserved to or vested in any Governmental Authority by any statutory and/or regulatory provision or under common law; (vi) any other Encumbrance permitted hereunder (including any Leasehold Mortgage (and financing statements relating thereto including purchase money liens) and any Encumbrance created in connection with any financing permitted hereunder) and any Encumbrance created in favor of an Airline pursuant to its respective Use Agreement; (vii) liens incurred in the ordinary course of business in connection with workers’ compensation, unemployment insurance, social security and other governmental rules and that do not in the aggregate materially impair the use, value or operation of the LMM Airport Facility; (viii) any Encumbrances for Taxes not yet due and owing or being contested in good faith; (ix) any Encumbrances created, incurred, assumed or suffered to exist by the Authority or any other Governmental Authority or any Person claiming through it except to the extent caused by an act or omission of the Lessee; (x) any (A) right to build, (B) surface rights or (C) lease, use, concession or similar rights or agreements granted by the Lessee, in each case with Approval of the Authority, in connection with the Lessee’s conduct of LMM Airport Facility Operations and (xi) any amendment, extension, renewal or replacement of any of the foregoing.  Notwithstanding anything to the contrary contained herein, no Permitted Lessee Encumbrance shall be permitted to attach to the fee simple interest in the LMM Airport Facility.

“Persistent Breach Month” has the meaning ascribed thereto in Section 16.1(a)(iv).

“Person” means any individual (including the heirs, beneficiaries, executors, legal representatives or administrators thereof), corporation, partnership, joint venture, trust, limited liability company, limited partnership, joint stock company, unincorporated association or other entity or a Governmental Authority.

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“PFC” means the passenger facility charge as authorized under 49 U.S.C. § 40117, or any predecessor or successor Law, and as approved by the FAA from time to time with respect to the LMM Airport Facility.

“PIC-Termination Damages” has the meaning ascribed thereto in Section 16.6(c).

“Plans” has the meaning ascribed thereto in Section 3.15.

“PRANG” has the meaning ascribed thereto in Section 3.21.

“PRANG Contract” has the meaning ascribed thereto in Section 3.21.

“PRANG Property” has the meaning ascribed thereto in Section 3.21.

“P.R. Mortgage and Property Registry Law” means Act No. 198 of the Legislative Assembly of Puerto Rico, enacted on August 8, 1979, 30 P.R. ▇▇▇▇ ▇▇▇. § 2001 et seq., as of the date hereof.

“P.R. Penal Code” means the Penal Code of the Commonwealth.

“P.R. Revenue Code” means the Puerto Rico Internal Revenue Code of 1994, 13 P.R. ▇▇▇▇ ▇▇▇. § 8001 et seq., as amended.

“President” means the President of the United States of America.

“Pre-Existing Hazardous Substance” has the meaning ascribed thereto in Section 3.2(c)(vii).

“Public Integrity Crime” means any crime described in Section 5(p) of the Code of Ethics, Section 5(ñ) of Act No. 237 of the Legislative Assembly of Puerto Rico enacted on August 31, 2004, as amended, or in other sections of such Laws.

“Public-Private Partnerships Authority’s Ethical Guidelines” means the “Public-Private Partnerships Authority’s Guidelines for the Evaluation of Conflicts of Interest and Unfair Advantages in the Procurement of Public-Private Partnership Contracts”, promulgated by the Public-Private Partnerships Authority and dated as of December 19, 2009.

“Qualified Debt” means any senior or subordinated bona fide debt not otherwise constituting Leasehold Mortgage Debt that is incurred at any time to finance or refinance, directly or indirectly, the Leasehold Fee payable hereunder or is otherwise expected to be paid exclusively from the revenues generated at the LMM Airport Facility, including: (i) principal (including accreted principal included in interest rate ▇▇▇▇▇▇ or bonds); (ii) accrued interest (including capitalized interest and interest pursuant to an original issue discount); (iii) customary and reasonable lender or financial insurer, agent and trustee fees, costs, premiums, expenses and reimbursement obligations with respect thereto; (iv) all payment obligations under interest rate hedging agreements with respect thereto (including accreting interest rate hedging agreements); (v) reimbursement obligations with respect thereto to any financial insurer and (vi) an assignment in connection with a securitization transaction; provided that, in each case, the Lessee, promptly

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after the incurrence of any such debt, notifies the Authority of such debt and the material terms thereof.  For the purposes of determining LMM Airport Facility Leasehold Value, Qualified Debt shall not include (A) debt from any Equity Participant or its Affiliate or (B) debt the holders of which have the benefit of a guaranty or payment from an Affiliate of the Lessee, unless, in each case, such debt is debt on terms consistent with terms that would reasonably be expected from a non-Affiliate lender acting in good faith, provided that the Lessee may request at any time during the Term that the Authority confirm in writing, and the Authority shall so confirm within a reasonable time following such request, whether any such debt is on terms consistent with terms that would reasonably be expected from a non-Affiliate lender acting in good faith. Notwithstanding anything herein to the contrary, except with respect to any such senior or subordinated bona fide debt incurred or committed on or prior to the Closing Date, all of which incurred or committed debt shall be deemed to be Qualified Debt (except to the extent excluded from Qualified Debt pursuant to clauses (A) or (B) above), Qualified Debt shall not include any new debt incurred or committed following the Closing Date (it being understood and agreed by the Parties that any capitalization of interest or accretion of principal or other committed increases on any debt incurred or committed on or prior to the Closing Date or any refinancing of any debt that has previously qualified as Qualified Debt up to the original principal amount thereof shall not constitute such new debt) that (together with the aggregate amount of Leasehold Mortgage Debt and any Qualified Debt after giving effect to the incurrence or commitment of any such new debt) exceeds 80% of the fair market value of the Lessee Interest set forth in an appraisal; provided that, in order for such new debt to qualify as Qualified Debt, such appraisal shall (x) be prepared at the Lessee’s expense by an independent third party appraiser described under “LMM Airport Facility Leasehold Value” and delivered to the Authority prior to the incurrence or commitment of such new debt, (y) be a written appraisal of the fair market value of the Lessee Interest as of the time of the incurrence or commitment of such new debt and (z) identify the extent to which such new debt (together with the aggregate amount of Leasehold Mortgage Debt and any Qualified Debt after giving effect to the incurrence or commitment of any such new debt) exceeds 80% of the fair market value of the Lessee Interest set forth in such appraisal at the time of incurrence or commitment of such new debt; provided that any capitalization of interest or accretion of principal or other committed increases on any debt set forth in such appraisal shall constitute Qualified Debt to the extent such debt constitutes Qualified Debt on the date such appraisal is given; and provided further that the Parties agree that notwithstanding the requirements of the foregoing sub-clauses (x), (y) and (z), the amount of the Leasehold Fee paid at the Closing shall be deemed to constitute the fair market value of the Lessee Interest for a period of 12 months after the Closing Date and, as such, no appraisal shall be required within such 12-month period.  The appraisal requirement in the preceding sentence shall not apply to any protective advances made by any provider of Qualified Debt or advances made by any provider of Qualified Debt to cure Lessee defaults under the agreements evidencing such Qualified Debt (regardless of whether entered into on or after the Closing Date) or other financing documents of such Qualified Debt.

“Qualified Employees” has the meaning ascribed thereto in Section 2.5(k)(ii).

“Qualifying Account Instrument” means either (i) an Account LC or (ii) a revolving working capital or liquidity facility that is available for drawing by the Lessee at any time, and from time to time, to pay operating expenses or debt service (as applicable) as it becomes due; provided that (A) the maturity of such revolving working capital or liquidity facility shall in no event be less than 12 months from the date of determination of the Opex Reserve Requirement or

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Debt Service Reserve Requirement (as applicable), (B) such revolving working capital or liquidity facility shall have no conditions precedent to drawing other than (1) the non-occurrence of a payment default in respect of any Leasehold Mortgage Debt, (2) the non-acceleration of any Leasehold Mortgage Debt as a result of an event of default with respect thereto, (3) the non-occurrence of any of the events set forth in Sections 16.1(a)(v) or (vi) of this Agreement with respect to the Lessee or (4) other customary conditions precedent for a liquidity facility and (C) such revolving working capital or liquidity facility shall be provided by one or more financial institutions whose long-term senior unsecured indebtedness has obtained a rating of “BBB+” or better by Standard & Poor’s Ratings Services and an equivalent credit rating by another Rating Agency (or an equivalent credit rating from at least two nationally recognized Rating Agencies if the named Rating Agency ceases to publish ratings).

“Rating Agency” means any of Standard & Poor’s Rating Services, ▇▇▇▇▇’▇ Investors Service, Inc. or Fitch Investors Service, Inc. or any similar entity or any of their respective successors.

“Reasonable Efforts” means the taking of those commercially reasonable steps in the power of the relevant Person that are capable of producing the desired result, being steps which a reasonable person desiring to achieve such result would take; provided that, subject to the relevant Person’s other express obligations under this Agreement, the relevant Person shall not be required to expend any funds other than those funds (i) necessary to meet the reasonable costs reasonably incidental or ancillary to the steps to be taken by the relevant Person and (ii) the expenditure of which is not the obligation of another Person hereunder.

“Recitals” means the recitals of this Agreement.

“Release” means any unlawful spilling, leaking, emitting, discharging, disposing, depositing, leaching, escaping, dumping, pumping, emptying, injecting, pouring, or migration into or through the Environment.

“Replacement Letter of Credit” has the meaning ascribed thereto in Section 16.3(c).

“Reporting Year” means each calendar year during the Term, except that unless the Closing Date is the first day of January, the first Reporting Year shall be a partial year commencing on the Closing Date and ending on December 31st of such calendar year and the last Reporting Year shall be a partial Reporting Year commencing January 1st of such Reporting Year and ending on the End Date.

“Representative” means, with respect to any Person, any director, officer, employee, official, lender (or any agent or trustee acting on its behalf), partner, member, owner, agent, lawyer, accountant, auditor, professional advisor, consultant, engineer, Contractor, other Person for whom such Person is responsible at law or other representative of such Person and any professional advisor, consultant or engineer designated by such Person as its “Representative.”

“Required Coverages” has the meaning ascribed thereto in Section 13.1.

“Required Modification” has the meaning ascribed thereto in Section 5.2(a).

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“Restoration”, “Restore”, or “Restoring” means, with respect to any casualty loss, destruction or damage of the LMM Airport Facility, to repair or rebuild the affected portions of the LMM Airport Facility in accordance with all Laws applicable at the time of the repair or rebuilding to restore them to at least the same condition in which they were before the occurrence of such casualty loss, destruction or damage.

“Restoration Funds” has the meaning ascribed thereto in Section 13.3(a).

“Re-Tender Costs” means any costs, expenses (including legal fees), Taxes, fees, charges, disbursements and other Losses that are incurred by the Authority (or to the best of the Authority’s knowledge after due inquiry, are expected to be paid or incurred by the Authority) in connection with any Re-Tender of the LMM Airport Facility.

“Re-Tender of the LMM Airport Facility” means (a) any process by which the Authority (i) requests tenders from any Person interested in entering into a concession, lease or other transaction in respect of the LMM Airport Facility, (ii) evaluates any response to such request from such Person or (iii) grants or enters into such concession, lease or other transaction with such Person, or (b) any financing, bonding or similar transaction undertaken by the Authority in respect of the LMM Airport Facility.

“Reversion Date” means the day immediately following the End Date.

“Secretary” means the U.S. Secretary of Transportation.

“Securities Act” means the United States Securities Act of 1933, as amended.

“Signatory Airlines” has the meaning ascribed thereto in the Use Agreement.

“State” means any state in the United States of America or any possession or territory thereof.

“Statement of Estimated Liabilities” means a statement by the Authority setting forth (i) the relevant Lessee Default or other circumstances giving rise to its right to terminate this Agreement, (ii) all amounts that (A) are estimated to be due and payable by the Lessee to the Authority under this Agreement as of the date of such statement or (B) to the best of the Authority’s knowledge after due inquiry, are expected to become due and payable by the Lessee under this Agreement on or prior to the date that is 30 days after the date of such statement, (iii) to the extent not included in clause (ii) above, all other obligations of the Lessee under this Agreement known to the Authority that should have been, but have not been, performed as of the date of such statement and (iv) to the extent not included in clauses (ii) or (iii) above, all costs and expenses (including legal fees), Taxes, fees, charges and disbursements estimated to be paid or incurred by the Authority in connection with any Lessee Default, the termination of this Agreement, the recovery of possession from the Lessee, and the preparation, execution and delivery of the New Agreement and related agreements and the Statement of Estimated Liabilities that (A) are estimated to have been paid or incurred by the Authority as of the date of such statement or (B) to the best of the Authority’s knowledge after due inquiry, are expected to be paid or incurred by the Authority on or prior to the date that is 30 days after the date of such statement.

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“Sworn Statement” means the sworn statement required by Act No. 458 of the Legislative Assembly of Puerto Rico enacted on December 29, 2000, as amended.

“Sworn Statement for Closing” means the sworn statement in the form of Schedule 8.

“Tax” means any federal, Commonwealth, State, municipal, local or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, customs duties, permit fees, capital stock, franchise, profits, withholding, social security, unemployment, disability, real property, personal property, parking, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated or other tax, levy, impost, duty, fee, withholding or similar imposition of any kind payable, levied, collected, withheld or assessed at any time, including any interest, surcharge, penalty or addition thereto, whether disputed or not.

“Term” means the term of the Lease referred to in Section 2.1.

“Term Year” means (i) if the Closing Date occurs on the first day of a calendar month, the 12-month period beginning on the Closing Date or (ii) if the Closing Date does not occur on the first day of a calendar month, the period from the Closing Date through the 12-month anniversary of the end of the calendar month in which the Closing Date occurred and, in either case of clause (i) or (ii), each succeeding 12-month period and in any case ending on the End Date.

“Termination Damages” means AA-Termination Damages, AD-Termination Damages or PIC-Termination Damages.

“Third Party Claim” means any Claim asserted against an Indemnified Party by any Person who is not a Party or an Affiliate of such a Party.

“Time of Closing” means 10:00 a.m. on the Closing Date or such other time on such date as the Authority and the Lessee may agree to in writing.

“Transaction” has the meaning ascribed thereto in Section 2.1.

“Transfer” means to sell, convey, assign, lease, sublease, mortgage, encumber, transfer or otherwise dispose of.

“Transferee” has the meaning ascribed thereto in Section 17.1(a).

“TSA” means the Transportation Security Administration created under the Aviation and Transportation ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇ ▇.▇.▇. § ▇▇▇▇▇ et seq., or any successor agency thereto.

“TSA-approved Airport Security Program” means the airport security program approved by TSA under 49 C.F.R. Part 1542 with respect to the LMM Airport Facility.

“Unamortized Leasehold Fee” means, as of the End Date, the amount equal to:

(i) the product of (A) the Leasehold Fee, multiplied by (B) the difference of (1) one less (2) the quotient of (I) the number of days elapsed from the Closing Date through and including the

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End Date, divided by (II) 14,610 (plus such number of days as may be added to the Term in the event of an extension of the Term); plus

(ii) for each Annual Authority Payment actually paid by the Lessee, the product of (A) each such Annual Authority Payment actually paid by the Lessee, multiplied by (B) the difference of (1) one less (2) the quotient of (I) the number of days elapsed from the date that each such Annual Authority Payment was paid by the Lessee through and including the End Date, divided by (II) the difference of (x) 14,610 (plus such number of days as may be added to the Term in the event of an extension of the Term) less (y) the number of days that elapsed between the Closing Date through and including the date that each such Annual Authority Payment was paid by the Lessee; plus

(iii) if the Lessee paid the Authority compensation in connection with the Hotel Property pursuant to Section 3.19, the product of (A) such compensation paid by the Lessee to the Authority in accordance with Section 3.19 upon consummation of such transaction, multiplied by (B) the difference of (1) one less (2) the quotient of (I) the number of days elapsed from the date on which the notice of resolution of litigation was given by the Authority to the Lessee in accordance with Section 3.19(c) through and including the End Date, divided by (II) the number of days that would elapse from the date on which such notice was given through and including the 40th anniversary of the Closing Date (plus such number of days as may be added to the Term in the event of an extension of the Term); plus

(iv) if the Lessee paid the Authority compensation in connection with the Cargo Facility pursuant to Section 3.20, the product of (A) such compensation paid by the Lessee to the Authority in accordance with Section 3.20 upon consummation of such transaction, multiplied by (B) the difference of (1) one less (2) the quotient of (I) the number of days elapsed from the date on which the notice of resolution of litigation was given by the Authority to the Lessee in accordance with Section 3.20(c) through and including the End Date, divided by (II) the number of days that would elapse from the date on which such notice was given through and including the 40th anniversary of the Closing Date (plus such number of days as may be added to the Term in the event of an extension of the Term); plus

(v) if the Lessee paid the Authority compensation for the inclusion of the PRANG Property pursuant to Section 3.21, the product of (A) such compensation paid by the Lessee to the Authority for the inclusion of the PRANG Property upon consummation of such transaction (excluding any payments made periodically to the Authority after the consummation of the transaction with respect to the PRANG Property), multiplied by (B) the difference of (1) one less (2) the quotient of (I) the number of days elapsed from the date on which the transaction for the inclusion of the PRANG Property was consummated through and including the End Date, divided by (II) the number of days that would elapse from the date on which the transaction for the inclusion of the PRANG Property was consummated through and including the 40th anniversary of the Closing Date (plus such number of days as may be added to the Term in the event of an extension of the Term).

“U.S. Revenue Code” means the United States Internal Revenue Code of 1986, as amended.

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“Use Agreement” means the airport use agreement substantially in the form attached hereto as Schedule 3 (the “Use Agreement”) and any successor airport use agreement.

“Utility Systems” means gas, electricity, light, heat, power, telephone, water and other utilities and services used in the LMM Airport Facility Operations or supplied to the LMM Airport Facility during the Term.

Section 1.2                                             Number and Gender.  In this Agreement, terms defined in the singular have the corresponding plural meaning when used in the plural and vice versa and words in one gender include all genders.

Section 1.3                                             Headings.  The division of this Agreement into articles, sections and other subdivisions is for convenience of reference only and shall not affect the construction or interpretation of this Agreement.  The headings in this Agreement are not intended to be full or precise descriptions of the text to which they refer and shall not be considered part of this Agreement.

Section 1.4                                             References to this Agreement.  The words “herein”, “hereby”, “hereof”, “hereto” and “hereunder” and words of similar import refer to this Agreement as a whole and not to any particular portion of it.  The words “Article”, “Section”, “paragraph”, “sentence”, “clause” and “Schedule” mean and refer to the specified article, section, paragraph, sentence, clause or schedule of, or to, this Agreement.

Section 1.5                                             References to Agreements and Other Documents.  Unless specified otherwise, a reference to an agreement or other document is considered to be a reference to such agreement or other document (including any schedules or exhibits thereto) as it may be amended, modified or supplemented from time to time.

Section 1.6                                             References to Any Person.  A reference in this Agreement to any Person at any time refers to such Person’s permitted successors and assigns.

Section 1.7                                             Meaning of Including.  In this Agreement, the words “include”, “includes” or “including” mean “include without limitation”, “includes without limitation”, “including without limitation” and “including but not limited to”, respectively, and the words following “include”, “includes” or “including” shall not be considered to set forth an exhaustive list.

Section 1.8                                             Meaning of Discretion.  In this Agreement, unless otherwise qualified or limited, the word “discretion” with respect to any Person means the sole and absolute discretion of such Person.

Section 1.9                                             Meaning of Notice.  In this Agreement, the word “notice” means “written notice” unless specified otherwise.

Section 1.10                                      Meaning of Promptly.  In this Agreement, the word “promptly” means as soon as reasonably practicable in light of then-prevailing circumstances.

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Section 1.11                                      Consents and Approvals.  Wherever the provisions of this Agreement require or provide for or permit an approval or consent by either Party, such approval or consent, and any request therefor, must be in writing (unless waived in writing by the other Party).

Section 1.12                                      Trade Meanings.  Unless otherwise defined herein, words or abbreviations that have well-known trade meanings are used herein in accordance with those meanings.

Section 1.13                                      Laws.  Unless specified otherwise, a reference to a Law is considered to be a reference to (a) such Law as it may be amended, modified or supplemented from time to time, (b) all regulations and rules pertaining to or promulgated pursuant to such Law, (c) the successor to the Law resulting from recodification or similar reorganizing of Laws and (d) all future Laws pertaining to the same or similar subject matter.  Nothing in this Agreement shall ▇▇▇▇▇▇ or otherwise interfere with the right and authority of any Governmental Authority to enact, administer, apply and enforce any Law.  Except for Adverse Actions or if compensation or other relief is otherwise available or provided for pursuant to applicable Law or this Agreement, the Lessee shall not be entitled to claim or receive any compensation or other relief whatsoever as a result of the enactment, administration, application or enforcement of any Law by any Governmental Authority.

Section 1.14                                      Currency.  Unless specified otherwise, all statements of or references to dollar amounts or money in this Agreement are to the lawful currency of the United States of America.

Section 1.15                                      Accounting Principles.  All accounting and financial terms used herein, unless specifically provided to the contrary, shall be interpreted and applied in accordance with then generally accepted accounting principles in the United States of America, consistently applied.

Section 1.16                                      Time.

(a)                                 References to Specific Time.  Unless specified otherwise, all statements of or references to a specific time in this Agreement are to Atlantic Standard Time.

(b)                                 Period of Days.  For purposes of this Agreement, a period of days shall be deemed to begin on the first day after the event that began the period and to end at 5:00 p.m. on the last day of the period.  If, however, the last day of the period does not fall on a Business Day, the period shall be deemed to end at 5:00 p.m. on the next Business Day.

Section 1.17                                      Approvals, Consents and Performance by the Authority.

(a)                                 Procedures.  Wherever the provisions of this Agreement require or provide for or permit an approval or consent by the Authority of or to any action, Person, Document or other matter contemplated by this Agreement, the following provisions shall apply, as applicable: (i) such request for approval or consent must (A) contain or be accompanied by any documentation or information required for such approval or consent in reasonably sufficient detail, (B) clearly set forth the matter in respect of which such approval or consent is being sought, (C) form the sole subject matter of the correspondence containing such request for approval or consent and (D) state

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clearly that such approval or consent is being sought; (ii) such approval or consent shall not be unreasonably or arbitrarily withheld, conditioned or delayed (unless such provision provides that such approval or consent may be unreasonably or arbitrarily withheld, conditioned or delayed or that it may be given or provided at the discretion of the Authority); (iii) the Authority shall, within such time period set forth herein (or (A) if no time period is provided, within 45 days, subject to the Authority’s right to extend such period once for an additional 15 days or (B) in the event of an Airport Emergency, as promptly and reasonably practicable under the circumstances) after the giving of a notice by the Lessee requesting an approval or consent, advise the Lessee by notice either that it consents or approves or that it withholds its consent or approval, in which latter case it shall (unless such provision provides that such approval or consent may be unreasonably or arbitrarily withheld, conditioned or delayed or is subject to the discretion of the Authority) set forth, in reasonable detail, its reasons for withholding its consent or approval, which reasons may include the insufficiency, as determined by the Authority acting reasonably, of the information or documentation provided; (iv) if the responding notice mentioned in clause (iii) of this Section 1.17(a) indicates that the Authority does not approve or consent, the Lessee may take whatever steps may be necessary to satisfy the objections of the Authority set out in the responding notice and, thereupon, may submit a revised request for approval or consent from time to time and the provisions of this Section 1.17 shall again apply until such time as the approval or consent of the Authority is finally obtained; (v) if the disapproval or withholding of consent mentioned in clause (iv) of this Section 1.17(a) is subsequently determined pursuant to Article 19 to have been improperly withheld, conditioned or delayed by the Authority, such approval or consent shall, unless otherwise determined pursuant to Article 19, be deemed to have been given on the date on which such approval or consent was originally required; and (vi) for the avoidance of doubt, any dispute as to whether or not a consent or approval has been unreasonably withheld, conditioned or delayed shall be resolved in accordance with the provisions of Article 19.

(b)                                 Approved Documents.  Subject to the other provisions hereof, wherever in this Agreement an approval or consent is required with respect to any document, proposal, certificate, plan, drawing, specification, contract, agreement, budget, schedule, report or other written instrument whatsoever (a “Document”), following such Approval such Document shall not be amended, supplemented, replaced, revised, modified, altered or changed in any material respect without first obtaining a further Approval in accordance with the provisions of this Section 1.17.

ARTICLE 2
THE TRANSACTION; CLOSING; CONDITIONS PRECEDENT; COVENANTS

Section 2.1                                             Grant of Lease; Right to Sublease; Intent of the Parties; Allocation of the Leasehold Fee.

(a)                                 Upon the terms and subject to the conditions of this Agreement, effective at the Time of Closing, (i) the Lessee (A) shall pay the Authority the exact amount of $615,000,000 in cash (the “Leasehold Fee”), (B) agrees to pay the Annual Authority Payment described in Section 2.1(b) and (C) agrees to pay the Annual Authority Revenue Share described in Section 2.1(c) and (ii) the Authority shall and does hereby (A) grant the Lessee a lease free and clear of Encumbrances other than Permitted Authority Encumbrances, for and during the term (the “Term”) commencing as of the Time of Closing and expiring at 11:59 p.m. on the 40th anniversary of the Closing Date, unless terminated earlier or extended in accordance with the terms of this

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Agreement, to operate, manage, maintain, improve, enhance, develop and rehabilitate the LMM Airport Facility for Airport Purposes and otherwise in accordance with and pursuant to this Agreement and (B) grant the Lessee the right to collect and retain all fees, charges and revenues in respect of the LMM Airport Facility, the LMM Airport Facility Assets and the LMM Airport Facility Contracts, including PFCs and Government Grants-in-Aid (the “Lease”).  In addition to the Lease granted hereby to the Lessee, the Authority hereby assigns, transfers and otherwise conveys to the Lessee each (and all) of the LMM Airport Facility Assets (provided that no cash received prior to the Time of Closing shall be assigned, transferred or otherwise conveyed to the Lessee, except for cash tendered as security deposits under the Assigned LMM Airport Facility Contracts and cash or cash equivalents on deposit or required to be deposited in the accounts holding the PFCs collected prior to the Closing Date in respect of PFC eligible projects) and the Assigned LMM Airport Facility Contracts (including any security deposits tendered to the Authority by the counterparties thereto), and the Lessee shall accept each such grant, assignment, transfer and conveyance (collectively, including the Lease, the “Transaction”).

(b)                                 On or before the last day of each of the first five full Reporting Years, the Lessee shall pay to the Authority, in cash, the exact amount of $2,500,000 (the “Annual Authority Payment”).  In the event that this Agreement is terminated prior to the end of the fifth full Reporting Year, the Annual Authority Payment in respect of the Reporting Year in which such termination occurs shall be pro-rated for the number of days elapsed in such Reporting Year prior to such termination and shall be due and shall be paid by the Lessee on the Reversion Date.  The payment of the Annual Authority Payment shall be senior and prior to the payment of any debt of the Lessee.

(c)                                  The Lessee shall pay to the Authority, in cash, an amount (the “Annual Authority Revenue Share”) equal to (i) for the sixth full Reporting Year through and including the thirtieth full Reporting Year, 5% of the gross Airport Revenues earned by the Lessee in such Reporting Year or (ii) for the thirty-first full Reporting Year and each succeeding Reporting Year, 10% of the gross Airport Revenues earned by the Lessee in such Reporting Year.  The Annual Authority Revenue Share for each Reporting Year is due and shall be paid by the Lessee within 30 days after the delivery of the audited annual financial report for such Reporting Year as required by Section 8.1(c)(ii).  Any Annual Authority Revenue Share in respect of the final Reporting Year shall be due and shall be paid by the Lessee within 90 days after the Reversion Date.  The payment of the Annual Authority Revenue Share shall be senior and prior to the payment of any debt of the Lessee.

(d)                                 As part of the Lease, the Authority grants the Lessee the right to sublease the non-aeronautical areas of the LMM Airport Facility as provided in this Agreement and collect and retain all fees, charges, payments and revenues in respect of such subleased facilities.  Pursuant to this right to sublease, the Authority, by the Time of Closing, shall cause all those LMM Airport Facility Contracts that are lease or concession agreements to include the Lessee as a party thereof or shall assign such LMM Airport Facility Contracts to the Lessee in order for the Lessee to have the right to collect and retain all fees, charges, payments and revenues in respect of such LMM Airport Facility Contracts.

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(e)                                  It is the intent of the Parties that the Lessee shall have the right to use the LMM Airport Facility as provided in this Agreement as lessee and that the Authority in no way is assigning, transferring or otherwise conveying title of the LMM Airport Facility to the Lessee.

(f)                                   Prior to the Closing, the Leasehold Fee as allocated among the rights and interests described in Section 2.1(a), shall be set forth on an agreed Schedule to this Agreement.  For the avoidance of doubt, to the extent that an Assigned LMM Airport Facility Contract includes services to be provided to the Authority in connection with other facilities or assets of the Authority not being conveyed to the Lessee as part of the Lease, the Authority may partially assign such Assigned LMM Airport Facility Contract to the Lessee, and the Lessee shall accept such partial assignment, in accordance with the foregoing.

Section 2.2                                             Closing.

(a)                                 The closing of the Transaction (the “Closing”) shall take place on a Business Day not later than 180 days after the Bid Date (unless otherwise agreed in writing by the Authority and the Lessee with notice to the Signatory Airlines) (the “Outside Closing Date”) that is specified by the Lessee in a notice to the Authority and the Signatory Airlines not less than 10 Business Days prior to such Business Day; provided that the Closing shall not take place prior to the later of (i) the first Business Day that is 90 days after the Date of this Agreement and (ii) the date on which all Closing conditions shall have been satisfied or waived by the Party or Parties for the benefit of which such conditions are applicable (the “Closing Date”).  The Closing shall be held at the offices of ▇▇▇▇▇ ▇▇▇▇▇ LLP, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other place agreed to in writing by the Authority and the Lessee, with notice to the Signatory Airlines.  At the Time of Closing, the Lessee shall deliver or cause to be delivered to the Authority same-day funds by wire transfer in the amount of the Leasehold Fee (less the amount of any Cash Deposit and any interest thereon withdrawn by the Authority pursuant to Section 2.3(c)) in full payment for the Lessee Interest, and upon receipt of such payment the Transaction shall be effective.  Upon receipt of the funds described in the preceding sentence, the Authority shall immediately cancel and return the Closing LOC in accordance with the Lessee’s instructions.

(b)                                 The Authority shall be entitled to all revenues with respect to the LMM Airport Facility and shall be responsible for all charges, costs and expenses with respect to Assumed Liabilities that shall have accrued as of 11:59 p.m. on the day immediately preceding the Closing Date.  If the Authority and the Lessee are unable to determine if any revenues or charges, costs and expenses with respect to the Assumed Liabilities actually accrued as of 11:59 p.m. on the day immediately preceding the Closing Date, such revenues, charges, costs and expenses shall be prorated between the Authority and the Lessee as of 11:59 p.m. on the day immediately preceding the Closing Date based upon the actual number of days in the month and a 365-day year.  Any amounts payable to or owed by the Authority pursuant to this Section 2.2(b) shall be added to or subtracted from the Leasehold Fee accordingly.  If final amounts cannot be determined at the Closing for any items contemplated by this Section 2.2(b), then the Authority and the Lessee shall allocate such items on a fair and equitable basis as soon as revenue statements, invoices or bills are available, with final adjustment to be made as soon as reasonably possible after the Closing Date.  The Authority and the Lessee shall have reasonable access to, and the right to inspect and audit, the other’s books to confirm such final determinations, subject to the terms and conditions set forth in Article 8 and Article 19.  Payment of any amount due under the final adjustment will

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be paid by the Lessee to the Authority or by the Authority to the Lessee (as applicable) within 30 days of agreement by the Authority and the Lessee of the final adjustment.  It is understood and agreed that the Authority shall, up to and including 11:59 p.m. on the day immediately preceding the Closing Date, be entitled to all of the cash or cash equivalents in or generated by the LMM Airport Facility (other than cash or cash equivalents on deposit or required to be deposited in the accounts holding the PFCs collected prior to the Closing Date in respect of PFC eligible projects and any security deposit under any Assigned LMM Airport Facility Contract).

Section 2.3                                             Deposit.

(a)                                 The Authority acknowledges receipt from the Lessee of cash (a “Cash Deposit”) or one or more Letters of Credit with a term of at least 180 days from the Date of this Agreement (the Closing LOC”), or a combination of the foregoing, in an aggregate amount equal to 5% of the Leasehold Fee as of the date hereof, to be held by the Authority for the sole purpose described in Section 2.3(b).  The Authority shall deposit any Cash Deposit with a Depositary, which shall invest such amount in Eligible Investments pending Closing. The Lessee may provide a combination of a Cash Deposit and Closing LOC to comply with the requirements of this Section 2.3(a), in which case the relevant provisions of this Agreement related to a Cash Deposit and to a Closing LOC, including the rights of the Parties related thereto, shall be construed to apply to both forms of security.

(b)                                 If the Authority terminates this Agreement pursuant to Section 2.4(d)(iv) because a condition set forth in Section 2.4(b) remains unsatisfied (unless such Section 2.4(b) condition remains unsatisfied solely because a condition set forth in Section 2.4(a) or Section 2.4(c) remains unsatisfied), then the Authority shall be entitled to (i) retain any Cash Deposit and all interest earned thereon and/or (ii) draw immediately without notice to the Lessee, the full amount of the Closing LOC upon presentation of a sight draft and a certificate confirming that the Authority has the right to draw under the Closing LOC in the amount of such sight draft, and the Authority shall be entitled to retain all of the proceeds of the Closing LOC, in either case, as the sole and exclusive remedy or right of the Authority against the Lessee hereunder for any cause of action arising under or relating to this Agreement or any document executed in connection herewith.  If this Agreement is terminated for any other reason, the Authority shall, within five days, return any Cash Deposit and all interest earned thereon and return the Closing LOC, if any, to the Lessee marked cancelled.  The right of the Authority to retain any Cash Deposit and all interest earned thereon or to draw the Closing LOC is intended to be, and shall constitute, liquidated damages and the exclusive remedy to compensate the Authority for the cost of foregoing alternative opportunities and for other costs incurred by the Authority in reliance on the Lessee’s agreement to enter into the transaction contemplated hereunder, and full retention of any Cash Deposit and all interest earned thereon and full payment of the entire draw on the Closing LOC to the Authority shall terminate all other rights and remedies of the Authority with respect to the Lessee.  The Parties acknowledge that the damages suffered by the Authority as a result of such termination would be impossible to ascertain and that the combined amount of any Cash Deposit and all interest earned thereon and the Closing LOC is a reasonable estimate thereof and is not intended as a penalty.

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(c)                                  At Closing, upon satisfaction of the conditions set forth in Sections 2.4(a), (b) and (c), the Authority shall withdraw the Cash Deposit and all interest earned thereon as a credit against the Leasehold Fee.

Section 2.4                                             Conditions Precedent; Termination.

(a)                                 Conditions for the Benefit of the Lessee. The Lessee shall be obligated to consummate the Closing in accordance with the terms hereof only if each of the following conditions has been satisfied in full at or before the Time of Closing, unless waived in writing by the Lessee:

(i)                                     the representations and warranties of the Authority set forth in Section 9.1 shall be true and correct on and as of the Date of this Agreement and at and as of the Time of Closing with the same force and effect as if made at and as of such time and date except for (A) such representations and warranties made as of a specified date, in which case such representations and warranties shall be true and correct as of such specified date, and (B) failures of representations and warranties (other than the representation and warranty set forth in Section 9.1(o)) to be true or correct that, individually or in the aggregate, have not had and are not reasonably likely to have a Material Adverse Effect (it being understood that, for purposes of determining whether such failures have not had and are not reasonably likely to have a Material Adverse Effect, all materiality qualifications and references to a Material Adverse Effect contained in such representations and warranties shall be disregarded);

(ii)                                  the Authority shall not be in material breach of any covenant on its part contained in this Agreement that is to be performed or complied with by the Authority at or prior to the Time of Closing, and the GDB shall not be in material breach of any covenant on its part contained in the GDB Payment Guaranty that is to be performed or complied with by the GDB at or prior to the Time of Closing; provided that the Authority or the GDB, as the case may be, shall have been given prompt notice of such breach and given a reasonable opportunity to cure such breach prior to the Closing Date (it being understood that the opportunity to cure such breach prior to the Closing Date may not extend beyond the Outside Closing Date);

(iii)                               the Authority shall have arranged for the deposit of funds from the Leasehold Fee or from other sources sufficient to provide for the payment, in full, of all obligations of the Authority payable from and secured in whole or in part by the LMM Airport Facility, the LMM Airport Facility Operations, the LMM Airport Facility Assets or the revenues generated at the LMM Airport Facility and outstanding at the Time of Closing in such a manner that such obligations shall be legally retired as of the Closing Date and no longer treated as outstanding under the documents under which such obligations were issued and are secured, and at the Closing, the Authority shall deliver to the Lessee a certificate executed by the Executive Director of the Authority certifying that any and all security interests and collateral securing any such obligations will be released in full as of the Time of Closing; and concurrently with such deposit, all such security interests and collateral shall have been released;

(iv)                              the Authority shall have delivered to the Lessee a legal opinion of (A) the Authority’s General Counsel, substantially in the form attached hereto as Schedule 9A and

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(B) the GDB’s General Counsel, substantially in the form attached hereto as Schedule 9B, together with all factual certificates delivered with respect thereto;

(v)                                 the Authority shall have executed and delivered to the Lessee (A) the estoppel certificate contemplated by Section 10.2(b) and (B) the consent agreement contemplated by Section 18.1(l);

(vi)                              neither the Authority nor the Commonwealth nor any other Governmental Authority established under the Laws of the Commonwealth shall have enacted any legislation or ordinance or promulgated any rule or regulation or taken any action that would constitute an Adverse Action hereunder were such action to take place during the Term or that has resulted or (in the case of any pending review or proceeding, if adversely determined) could reasonably be expected to result in such Governmental Authority conditioning, restricting or prohibiting the consummation of the Transaction in a manner that would impose a material impairment on the Transaction or the rights of the Lessee hereunder or make the consummation of the Transaction illegal;

(vii)                           the Authority shall have duly filed this Agreement with the Office of the Comptroller of the Commonwealth pursuant to Act No. 18 of the Legislative Assembly of Puerto Rico enacted on October 30, 1975, as amended;

(viii)                        the Authority shall have duly filed the Partnership Committee Report with respect to this Agreement pursuant to Article 9(g)(ii) and (iii) of the Act;

(ix)                              the GDB shall have delivered on the Date of this Agreement the GDB Payment Guaranty in substantially the form attached hereto as Schedule 15 (the “GDB Payment Guaranty”);

(x)                                 all necessary Authorization, approvals and certifications with respect to the execution, delivery and performance by the Authority of the Agreement or the consummation of the Transaction shall have been obtained from the Board of Directors of the Authority and the Puerto Rico Public-Private Partnerships Authority and the Governor of the Commonwealth;

(xi)                              the Department of Treasury of the Commonwealth shall have delivered the closing agreement (the “Closing Agreement”) in substantially the form attached hereto as Schedule 11;

(xii)                           the Authority shall have disclosed to the Lessee any Excluded Liabilities arising under Environmental Laws (as described in Section 3.2(c)(vii)) of which the Authority has become aware since delivering the Phase I Environmental Site Assessment of the Airport to the Lessee;

(xiii)                        the Lessee shall have obtained: (A) a license to operate the parking facilities at the LMM Airport Facility from the Department of Consumer Affairs of Puerto Rico (“DACO”) and (B) an exemption for the duration of the Term from the application of DACO Regulation 6753 with respect to the maximum fees chargeable at the LMM Airport Facility’s parking facilities, pursuant to Section 8(E) of DACO Regulation 6753; and

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(xiv)                       the Authority shall have delivered to the Lessee a certificate confirming that each of the conditions set forth in Sections 2.4(a)(i) through (xiii) has been satisfied in full by the Authority or the GDB, as the case may be, (except for any such condition that has been waived in writing by the Lessee) at or before the Time of Closing.

(b)                                 Conditions for the Benefit of the Authority. The Authority shall be obligated to consummate the Closing in accordance with the terms hereof only if each of the following conditions precedent has been satisfied in full at or before the Time of Closing, unless waived by the Authority:

(i)                                     the representations and warranties of the Lessee in Section 9.2 shall be true and correct on and as of the Date of this Agreement at and as of the Time of Closing with the same force and effect as if made at and as of such time and date except for (A) such representations and warranties made as of a specified date, in which case such representations and warranties shall be true and correct as of such specified date, and (B) failures of representations and warranties to be true or correct that, individually or in the aggregate, have not had and are not reasonably likely to have a material adverse effect on the ability of the Lessee to consummate the transactions contemplated hereby or perform its obligations hereunder (it being understood that, for purposes of determining whether such failures have not had and are not reasonably likely to have a material adverse effect on the ability of the Lessee to consummate the transactions contemplated hereby or perform its obligations hereunder, all materiality qualifications and references to a material adverse effect contained in such representations and warranties shall be disregarded);

(ii)                                  the Lessee shall not be in material breach of any covenant on its part contained in this Agreement that is to be performed or complied with by the Lessee at or prior to the Time of Closing; provided that the Lessee shall have been given prompt notice of such breach and given a reasonable opportunity to cure such breach prior to the Closing Date (it being understood that the opportunity to cure such breach prior to the Closing Date may not extend beyond the Outside Closing Date);

(iii)                               the Lessee shall have delivered to the Authority a legal opinion of counsel to the Lessee, substantially in the form attached hereto as Schedule 10;

(iv)                              the Lessee shall have delivered to the Authority (A) the evidence of insurance policies (which may be in the form of certificates of insurance) required to be delivered by the last sentence of Section 2.5(e), (B) an Officer’s Certificate certifying that the Lessee has a capitalization as of the Closing Date that includes equity that is equal to at least 20% of the Leasehold Fee and (C) Sworn Statement for Closing (duly notarized as of the Closing Date); and

(v)                                 the Lessee shall have delivered to the Authority a certificate confirming that each of the conditions set forth in Section 2.4(b)(i) through (iv) has been satisfied in full by the Lessee (except for any such condition that has been waived in writing by the Authority) at or before the Time of the Closing.

(c)                                  Conditions for the Benefit of Each of the Parties. The Authority and the Lessee shall each be obligated to consummate the Closing in accordance with the terms hereof

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only if each of the following conditions precedent has been satisfied in full at or before the Time of Closing, unless waived by each of the Authority and the Lessee, or otherwise required by Law:

(i)                                     there shall be no preliminary or permanent injunction or temporary restraining order or other order issued by a Governmental Authority of competent jurisdiction (provided that the Authority may not claim the benefit of this condition if such injunction or restraining order has been issued by the Authority or any agency thereof) or other legal restraint or prohibition enjoining or preventing the Transaction or preventing Airlines from serving the LMM Airport Facility;

(ii)                                  there shall be no action taken (including the pendency of any review or proceeding), or any Law enacted, entered, enforced or deemed applicable to the Transaction by any Governmental Authority of competent jurisdiction (provided that the Authority may not claim the benefit of this condition if such injunction or restraining order has been issued by the Authority or any Governmental Authority under the direction of the Authority) that, in any such case, has resulted or (in the case of any pending review or proceeding, if adversely determined) could reasonably be expected to result in such Governmental Authority conditioning or restricting the consummation of the Transaction in a manner that would impose a material impairment on the Transaction or make the consummation of the Transaction illegal;

(iii)                               all necessary material Authorizations, approvals and certifications with respect to this Agreement and the Transaction and the operation by the Lessee of the LMM Airport Facility in the manner contemplated hereby shall have been obtained from all relevant Governmental Authorities (other than as described in Section 2.4(a)(x)), including:

(A)                               all necessary approvals and exemptions by the FAA (which may be subject to or contingent upon the transfer of the leasehold interest to the Lessee and the deposit of operating funds by the Lessee) under the airport privatization pilot program pursuant to 49 U.S.C. § 47134 for the Lessee to receive all fees and revenues generated at the LMM Airport Facility, to charge fees as set forth in the Use Agreement, to receive and apply PFCs and Government Grants-In-Aid (including approvals of any amendments filed by the Authority with respect to existing FAA approvals necessary to permit the Lessee to charge and collect PFCs previously approved by the FAA (and not representing new PFC authority) in amounts sufficient to pay debt service on approximately $90,000,000 of indebtedness to be incurred by the Lessee to finance a portion of the Leasehold Fee contemplated to be applied by the Authority to retire an equivalent principal amount of previously approved PFC-supported debt issued to fund approved PFC-eligible projects), to transfer and assign all existing Government Grants-In-Aid and PFC approvals to the Lessee and for the Authority’s receipt and use for general Authority purposes of the Leasehold Fee, the Annual Authority Payment and the Annual Authority Revenue Share; and no objections shall have been raised in writing or at the public hearing held by the FAA that, in the judgment of either party, create a material possibility of a non-frivolous appeal from the final FAA order under 49 U.S.C. § 47134;

(B)                               the receipt by the Lessee from the FAA of a Part 139 Airport Operating Certificate and a Part 139 Airport Certification Manual;

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(C)                               the approval by TSA of an Airport Security Program reflecting the Lessee as the airport operator having such TSA-approved Airport Security Program; and

(D)                               if the Authority has determined that the Transaction may result in control of LMM Airport Facility by foreign interests, the Lessee and the Authority shall have submitted a “Voluntary Notice of Transaction” under Section 721 of Title VII of the Defense Production Act of 1950, as amended (the “Exon-▇▇▇▇▇▇ Act”) and any of the following shall have occurred: (1) the Authority shall have received notice that a review has been completed and that either the Transaction is not a covered transaction under the Exon-▇▇▇▇▇▇ Act or there are no unresolved national security concerns; (2) the President or his designee shall have commenced an investigation and the Authority shall have received notice that such investigation has been completed and that either the Transaction is not a covered transaction under the Exon-▇▇▇▇▇▇ Act or there are no unresolved national security concerns; (3) the President shall have announced a decision not to take any action to suspend, prohibit or place any limitations on the Transaction; or (4) the President or his designee shall have indicated that a mitigation agreement shall be required in order to resolve national security concerns and the Lessee and the Authority, after good faith efforts (including as required by Section 2.5(a)), are able to reach agreement with the President or his designee on the terms of a mitigation agreement acceptable to the Lessee and the Authority;

(iv)                              the prescription period specified in the Act for the commencement of any action challenging the validity of this Agreement shall have expired and no such action shall be pending;

(v)                                 the Parties shall have executed such documents as are necessary to enable the Lessee to record this Agreement in the Commonwealth Registry of Property;

(vi)                              the Use Agreement between the Authority, the Lessee and any Airline that is a subsidiary of AMR Corporation shall have been authorized to be executed and delivered by such Airline in accordance with all applicable Law and with the approval of the appropriate U.S. federal court having jurisdiction over such bankruptcy matters;

(vii)                           the Use Agreements (which, prior to the Bid Date, shall have been delivered into escrow by those Airlines that have previously executed a Use Agreement) shall have been duly executed and delivered by the Authority and the Lessee, and shall have become effective as of the Closing Date, and such agreements shall be sufficient in number to satisfy the condition set forth in Section 2.4(c)(iii)(A); and

(viii)                        those certain Transaction Implementation Agreements shall have been duly executed and delivered by, and shall remain in effect up to the Closing Date among the Authority and Signatory Airlines.

(d)                                 Termination. This Agreement may be terminated at any time prior to the Closing:

(i)                                     by the consent of both the Authority and the Lessee in a written instrument;

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(ii)                                  by either the Authority or the Lessee, upon notice to the other Party, if (A) any Governmental Authority of competent jurisdiction (other than, with respect to the Authority, the Authority or any Governmental Authority under the direction of the Authority) shall have issued an order, decree or ruling or taken any other action permanently restraining, enjoining or otherwise prohibiting the Transaction or which would materially impair the Transaction or make the consummation of the Transaction illegal, and such order, decree, ruling or other action has become final and nonappealable; provided, however, that the right to terminate this Agreement under this Section 2.4(d)(ii)(A) shall not be available to any Party whose failure to comply with any provision of this Agreement has been the cause of, or resulted in, any order, decree, ruling or other action being imposed or becoming final and nonappealable, (B) any condition set forth in Section 2.4(c)(iii) remains unsatisfied as of the Time of Closing; provided, however, that the right to terminate this Agreement under this Section 2.4(d)(ii) shall not be available to any Party whose failure to comply with any provision of this Agreement has been the cause of, or resulted in, the failure of such condition or conditions to be satisfied or (C) the Closing shall not have occurred as of 11:59 p.m. on the Outside Closing Date, unless such date is extended by mutual written agreement of the Lessee and the Authority (provided that the right to terminate this Agreement under this Section 2.4(d)(ii)(C) shall not be available to any Party whose actions or failure to act caused the Closing not to occur);

(iii)                               by the Lessee, upon notice to the Authority, if any condition set forth in Section 2.4(a) or Section 2.4(c) remains unsatisfied as of the Outside Closing Date; provided, however, that the Lessee shall not have the right to terminate this Agreement under this Section 2.4(d)(iii) if the Lessee’s failure to comply with any provision of this Agreement has been the cause of, or resulted in, the failure of such condition or conditions to be satisfied;

(iv)                              by the Authority, upon notice to the Lessee, if any condition set forth in Section 2.4(b) or Section 2.4(c) remains unsatisfied as of the Outside Closing Date; provided, however, that the Authority shall not have the right to terminate this Agreement under this Section 2.4(d)(iv) if the Authority’s failure to comply with any provision of this Agreement has been the cause of, or resulted in, the failure of such condition or conditions to be satisfied; or

(v)                                 by the Authority, upon notice to the Lessee, if any material casualty loss, destruction of or damage to any part of the LMM Airport Facility has occurred and such casualty loss, destruction or damage would permit the Lessee, before giving effect to Section 2.5(i)(iii)(A), to reduce the Leasehold Fee to an amount that is less than 85% of the Leasehold Fee specified in Section 2.1(a)(i)(A).

(e)                                  Effect of Termination.

(i)                                     In the event of termination of this Agreement by either the Authority or the Lessee as provided in Section 2.4(d), this Agreement shall forthwith become void and there shall be no liability or obligation on the part of the Authority or the Lessee or their respective Representatives, except as set forth in Section 2.3(b), this Section 2.4(e) and Article 12 and subject to and in accordance with Article 19 and Article 20 and except that no Party shall be relieved or released from any liabilities or damages arising out of its breach of this Agreement (subject to Section 2.3(b) in connection with the Authority’s termination of this Agreement pursuant to Section 2.4(d)(iv)).

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(ii)                                  In the event that the Lessee terminates this Agreement pursuant to Section 2.4(d)(iii) because a condition set forth in Section 2.4(a) remains unsatisfied or pursuant to Section 2.4(d)(v), the Authority will compensate the Lessee for up to $8,000,000 of the actual documented and reasonable out-of-pocket costs and expenses incurred by the Lessee (or any Affiliate thereof) in connection with the transactions contemplated by this Agreement after the date on which the Authority publicly announced the selection of the Lessee as the winning bidder with respect to such transactions and in connection with its due diligence and preparation of a proposal to act as the Lessee under this Agreement but excluding the costs associated with the unwinding of any hedging arrangement entered into in connection with the prospective financing of the Leasehold Fee.

(iii)                               Any Cash Deposit and all interest earned thereon shall be retained or returned, and the Closing LOC shall be drawn upon or returned cancelled under the circumstances described in and in accordance with Section 2.3. In the event of termination other than by the Authority as described in Section 2.3, the Authority shall promptly return to the Lessee any Closing LOC marked “canceled” and any Cash Deposit and any interest earned thereon.

(f)                                   Change in Interest Rate. Using the 10-year, mid-market LIBOR swap rate in the “Money & Investing, Borrowing Benchmarks” section of The Wall Street Journal, from the close of business on the Business Day immediately prior to the Bid Date (as published on the Bid Date) through the close of business two Business Days prior to the Closing Date (as published on the Business Day immediately prior to the Closing Date), the amount of the Leasehold Fee will either be (i) decreased by 1/20 of 1% for every one basis point increase (above the first 25 basis points increase) in the 10-year, mid-market LIBOR swap rate or (ii) increased by 1/20 of 1% for every one basis point decrease (below the first 25 basis points decrease) in the 10-year, mid-market LIBOR swap rate.

Section 2.5                                             Covenants.

(a)                                 Cooperation. The Parties shall cooperate with each other in good faith in order to permit the Closing to be consummated on the Closing Date as described in this Section 2.5.

(b)                                 Reasonable Efforts. Each Party shall use all Reasonable Efforts (i) to take, or cause to be taken, all actions necessary to comply promptly with all requirements of Law that may be imposed on such Party to consummate the Transaction promptly and (ii) to obtain or transfer (and to cooperate with the other Party to obtain or transfer) any Consent or Authorization of any Governmental Authority or any other public or private third-party that is required to be obtained or made by such Party in connection with the consummation of the Transaction, including all Consents and Authorizations from the FAA and TSA with respect to the airport privatization process of the LMM Airport Facility pursuant to 49 U.S.C. § 47134 (including (y) the execution of all necessary approvals and exemptions for the Lessee to receive all revenues generated at the LMM Airport Facility and charge fees as set forth in the Use Agreement and for the Authority’s receipt and use for general Authority purposes of the Leasehold Fee, the Annual Authority Payments and the Annual Authority Revenue Share and (z) the receipt by the Lessee of a Part 139 Airport Operating Certificate and a TSA-approved Airport Security Program). The Parties shall promptly cooperate with and furnish information to the other Party at such other Party’s reasonable

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request in connection with any such efforts by, or requirement imposed upon, any of them in connection with the foregoing.

(c)                                  Injunctions. If any Governmental Authority of competent jurisdiction (other than the Authority) issues a preliminary or permanent injunction or temporary restraining order or other order before the Time of Closing that would prohibit or materially restrict, hinder or adversely affect the Closing, each Party shall use all Reasonable Efforts (unless the Authority or the Lessee terminates this Agreement pursuant to Section 2.4(d)(ii)) to have such injunction, decree or restraining order or other order dissolved or otherwise eliminated or to eliminate the condition that formed the basis for such injunction or order, in each case promptly and, in any event, prior to the Time of Closing. Subject to Section 2.4(e), any and all costs incurred by any Party pursuant to any action taken in accordance with this Section 2.5(c) shall be borne by the Party against whom such injunction, restraining order or other order has been entered or whose alleged action or inaction in violation of applicable Law is the basis for issuance of such injunction, restraining order or other order (except to the extent that such injunction or other order resulting from, in whole or in part, the actions, direction or instrument of the other Party, in which case such costs shall be borne by such other Party).

(d)                                 Operation of the LMM Airport Facility. From the Date of this Agreement up to the Time of Closing, the Authority shall (i) cause the LMM Airport Facility to be operated in the ordinary course in a manner consistent with past practice, (ii) use all Reasonable Efforts to preserve the goodwill of the LMM Airport Facility and to maintain good business relationships with the Airlines and others having business dealings with the Authority in connection with the LMM Airport Facility, (iii) maintain the LMM Airport Facility Assets in normal operating condition and repair in accordance with past practice (ordinary wear and tear excepted) and not dispose of or acquire the LMM Airport Facility Assets other than in the ordinary course of business, (iv) perform (or cause to be performed) in all material respects all of the Authority’s obligations under the LMM Airport Facility Contracts, (v) not enter into any material contracts relating to the LMM Airport Facility or the LMM Airport Facility Operations unless such contracts are terminable by the Lessee on the Closing Date (at no cost to the Lessee) or are approved or consented to in writing by the Lessee prior to the execution thereof, (vi) not incur any Encumbrances on the LMM Airport Facility (other than Permitted Authority Encumbrances) that are not satisfied by the Closing Date or retained by the Authority as an Excluded Liability after the Closing Date and (vii) cause the LMM Airport Facility to be operated in all material respects in accordance with all applicable Laws (except to the extent any non-compliance is being contested in good faith by appropriate proceedings), all with the purpose that the LMM Airport Facility as a going concern shall be unimpaired and leased to the Lessee at the Closing in a condition substantially similar to the condition as of the Date of this Agreement. Without limiting the foregoing, the Authority shall not terminate, assign, amend, modify or agree to a waiver of the terms of any material Assigned LMM Airport Facility Contract or any material Authorization related to the LMM Airport Facility after the Date of this Agreement and before the Time of Closing (or in the case of any material Assigned LMM Airport Facility Contract that has not been assigned or transferred to the Lessee as contemplated herein, before such assignment or transfer is completed) and shall not enter into any new contracts of a similar nature, in each case without the Lessee’s consent.

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(e)                                  Policies of Insurance. The Authority shall cause all applicable policies of insurance maintained in respect of the LMM Airport Facility to be continued in full force and effect from the Date of this Agreement up to the Time of Closing. During the Term, the Lessee shall be responsible for maintaining insurance for the LMM Airport Facility in accordance with the terms of this Agreement.

(f)                                   Disclosure of Changes.

(i)                                     From the Date of this Agreement up to the Time of Closing, each Party shall promptly disclose to the other Party any matter which becomes known to it which is inconsistent in any material respect with any of such Party’s representations or warranties contained in Article 9. From the Date of this Agreement up to the Time of Closing, each Party shall use good faith efforts to promptly disclose to the other Party any matter which becomes known to it which is inconsistent in any material respect with the representations or warranties of the other Party contained in Article 9; provided that the failure of a Party to so notify the other Party shall not operate to foreclose any remedy otherwise available to the Party in accordance with this Agreement with respect to such inconsistency. No such disclosure shall be deemed to change any representation or warranty or cure any breach thereof or affect any inability to make such a representation or warranty for purposes of Section 2.4(a) or for any other purpose.

(ii)                                  From the Date of this Agreement up to the Time of Closing, the Authority may supplement or amend any schedule hereto, including one or more supplements or amendments to correct any matter that would constitute a breach of any representation or warranty contained herein. No such supplement or amendment shall be deemed to change any representation and warranty, cure any breach thereof or affect any inability to make such a representation and warranty for purposes of Section 2.4(a) or for any other purpose.

(g)                                  Access to Information. From the Date of this Agreement up to the Time of Closing, the Authority shall (i) give the Lessee and its Representatives reasonable access during normal business hours and on reasonable notice to (A) the LMM Airport Facility, subject to the Authority’s policies and regulations regarding safety and security and any other reasonable conditions imposed by the Authority and (B) employees and management personnel of the LMM Airport Facility, (ii) permit the Lessee and its Representatives to make such inspections of the LMM Airport Facility and such related documents and information as they may reasonably request and (iii) furnish the Lessee and its Representatives with such financial and operating data and other information (including, subject to satisfying the requirements of TSA in 49 C.F.R. Part 1520 and other applicable Governmental Authorities, sensitive security information) that is available with respect to the LMM Airport Facility as they may from time to time reasonably request. The Authority’s obligations in the preceding sentence are subject to all confidentiality obligations binding on the Authority with respect to any Person; provided that the Authority has disclosed to the Lessee the applicable agreement or other document in which such confidentiality obligations are set out in order to enable the Lessee to evaluate the materiality and significance of not disclosing the information that is subject to such confidentiality obligations. From the Date of this Agreement until the Closing Date, the Lessee shall hold and will cause its Representatives to hold in strict confidence all documents and information concerning the LMM Airport Facility to the extent and in accordance with the terms and conditions of the confidentiality agreement entered into prior to the Date of this Agreement governing the Authority and the Lessee as if such terms

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and conditions were fully restated herein; provided that to the extent that the terms and conditions of such confidentiality agreement conflict with the terms of this Agreement, the terms of this Agreement shall prevail (with terms and conditions of such confidentiality agreement becoming null and void at any time following the Closing Date). From the Closing Date and until the End Date, the Authority shall hold and will cause its Representatives to hold in strict confidence all documents and information concerning the LMM Airport Facility to the extent and in accordance with Section 8.2(b). After the Closing Date, the Lessee shall, at the request of the Authority, provide reasonable assistance with respect to claims or actions brought by third parties against the Authority or by the Authority against third parties based upon events or circumstances concerning the LMM Airport Facility and in that regard the Lessee shall (A) provide reasonable assistance in the collection of information or documents and (B) make the Lessee’s employees available when reasonably requested by the Authority.

(h)                                 Transition. From the Date of this Agreement up to the Time of Closing, the Parties shall cooperate with each other and with the Airlines to ensure the orderly transition of control, custody, operation, management, maintenance, improvement, enhancement, development and rehabilitation of the LMM Airport Facility at the Time of Closing. The Authority shall cooperate with and provide the Lessee with reasonable assistance in carrying out the Transition Plan (as defined in the Use Agreement). At the request of the Lessee, the Authority shall provide the Lessee, for up to six months following the Closing Date (which six-month period can be extended by the Lessee for up to an additional six months upon reasonable notice to the Authority), the services of the Authority Employees who do not become employees of the Lessee and remain employed by the Authority and the services of employees of the Authority who are assigned for such purpose. The Authority shall also provide, for up to 18 months following the Closing Date (which 18-month period may be extended by the Lessee for up to an additional six months upon reasonable notice to the Authority), administrative or operational informational technology systems and services (including relevant hardware, software, personnel and all operating manuals, guidelines and instructions) related to the operation of the LMM Airport Facility that were provided prior to the Closing Date by the Authority employees who were not LMM Airport Facility employees. The Lessee shall compensate the Authority for the provision of all such services in an amount equal to the Authority’s reasonable cost therefor, including pro rata employment costs and related reasonable expenses allocable to such employees, for the relevant period of time for services being rendered to the Lessee, which amount shall be billed to the Lessee as soon as reasonably practicable following the end of each month and shall be payable by the Lessee within 30 days of receipt of any such billing statement. Such services shall be provided upon such other reasonable terms and conditions as the Authority and the Lessee shall agree.

(i)                                     Casualty Loss Prior to Closing.

(i)                                     Restoration. If, following the Bid Date and prior to the Time of Closing, there has occurred any material casualty loss, destruction or damage to any part of the LMM Airport Facility and this Agreement has not been terminated under Section 2.4(d), then the Authority shall promptly and diligently Restore the affected portion of the LMM Airport Facility; provided that if the affected portion of the LMM Airport Facility cannot be Restored prior to the Closing Date, then the Authority shall make or cause to be made such Restoration as can reasonably be completed prior to the Closing Date (in a good and workmanlike manner, in accordance with any applicable Operating Standards and using Reasonable Efforts to minimize

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interference with the LMM Airport Facility Operations and further damage to the LMM Airport Facility) and assign all warranties and guarantees in respect of such Restoration to the Lessee on the Closing Date and, at the option of the Lessee, either (A) the Authority, prior to the Closing Date, shall provide to the Lessee a plan for the completion of such Restoration efforts by the Authority or its agents following the Time of Closing at the Authority’s sole expense and subject to the Lessee’s reasonable approval and shall then complete such Restoration in substantial accordance with such plan; provided that the Lessee may choose in its discretion to undertake such Restoration pursuant to such approved plan at the Authority’s sole cost and expense or (B) the Lessee shall Restore the remaining affected portion of the LMM Airport Facility in accordance with its own plan for the completion of such Restoration. Notwithstanding whether the Authority is required to complete the Restoration or the Lessee shall have elected to complete the Restoration as contemplated above, the Authority shall provide Leasehold Compensation to the Lessee during the period from the Closing Date until the Restoration is complete (which Leasehold Compensation, for the avoidance of doubt, may be provided by extending the Term in accordance with Section 15.1(c)(i)).

(ii)                                  Compensation. If the Lessee exercises its option to Restore the remaining affected portion of the LMM Airport Facility as described in Section 2.5(i)(i)(B), then (A) the Authority shall assign to the Lessee all available insurance and other proceeds payable by third-party insurers or other third parties to the Authority in respect of such casualty loss, destruction or damage and enforce (with the cooperation of the Lessee) all of its rights, remedies and privileges under any applicable insurance policies with third-party insurers any rights to recovery it may have against other third parties, whether at law, pursuant to contract or otherwise and (B) the Lessee shall have the right to reduce the Leasehold Fee to be paid at Closing by any expected deficiency between the amount of such insurance and the cost to the Lessee of Restoring the affected portion of the LMM Airport Facility, in each case as estimated by the Lessee.

(iii)                               Adjustments.

(A)                               In no event shall the Leasehold Fee be reduced in accordance with Section 2.5(i)(ii)(B) to an amount that is less than 85% of the Leasehold Fee specified in Section 2.1(a)(i)(A).

(B)                               In the event that the cost of Restoring the affected portion of the LMM Airport Facility pursuant to Section 2.5(i)(i)(B) is greater than the net amount of insurance proceeds received by the Lessee from the Authority therefor plus the amount deducted from the Leasehold Fee in accordance with Section 2.5(i)(ii), such event shall be a Compensation Event, and the Authority shall pay Leasehold Compensation to the Lessee in accordance with Section 15.1(b) with respect to any Restoration required to be undertaken pursuant to this Section 2.5(i).

(C)                               In the event that the cost of Restoring the affected portion of the LMM Airport Facility pursuant to Section 2.5(i)(i)(B) is less than the net amount of insurance proceeds received by the Lessee from the Authority therefor plus the amount deducted from the Leasehold Fee in accordance with Section 2.5(i)(ii), such excess shall be the property of the Authority and shall be paid by the Lessee to the Authority upon the Restoration of the affected portion of the LMM Airport Facility.

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(j)                                    Airport Security Program.  The Lessee acknowledges and agrees that it is obligated under 49 C.F.R. Part 1542 to develop and have in effect the TSA-approved Airport Security Program as of the Closing Date.  The Lessee understands and agrees that the implementation, maintenance and operation of the LMM Airport Facility pursuant to the requirements of a TSA-approved Airport Security Program that complies with TSA’s security regulations is essential to the operation of the LMM Airport Facility.  The Authority shall cooperate with the Lessee and TSA (including by making relevant Authority personnel available) in connection with the preparation and approval process relating to the TSA-approved Airport Security Program.

(k)                                 Airport Employees.

(i)                                     Within 20 days after the Date of this Agreement, the Authority shall provide the Lessee with a list of the Authority Employees.  Prior to the Time of Closing, the Lessee shall use its Reasonable Efforts to interview all Authority Employees who apply to the Lessee for employment and to offer, on terms and conditions designated by the Lessee taking into account applicable Law, employment to commence following the Closing Date to such Authority Employees who, as determined by the Lessee, meet the Lessee’s stated requirements for employment; provided, however, that the Lessee shall have no obligation to offer employment to any such Authority Employee.  On the Closing Date, the Lessee shall deliver to the Authority a list of all Authority Employees hired by the Lessee or its affiliates as of the Time of Closing.

(ii)                                  With respect to any Authority Employee hired by the Lessee who, on the Closing Date, has 10 years or more of accumulated service under the Commonwealth Employee Retirement System (the “Commonwealth Retirement System”) and elects to continue participating in the Commonwealth Retirement System (each such Authority Employee, a “Qualified Employee”), the Lessee agrees to make the employer contributions that government employers are required to make pursuant to Sections 2-116, 3-105 and 4-113 of Act No. 447, approved by the Legislative Assembly of Puerto Rico on May 15, 1951, as amended, that would become due and payable after the Closing Date for all Qualified Employees hired by the Lessee.

(l)                                     Noticed Required by the Act.  The Authority shall have sent all notices required under the Act in sufficient time to have allowed the prescription period specified in the Act for the commencement of any action challenging the validity of this Agreement to have expired by the Time of Closing.

Section 2.6                                             Recordation of Lease.  At the Time of Closing, the Parties shall execute such documents as are necessary to enable the Lessee, at its expense, to record this Agreement in the appropriate Commonwealth Registry of Property (including a deed of elevation of this Agreement).  To the extent that changes are made to this Agreement with respect to the Term or other material matters, the Parties shall execute, deliver and record, at the Lessee’s expense, an amendment to the recorded Agreement reflecting such changes.  For the sole purposes of determining the fee payable in connection with the deed of elevation and the recordation of the Agreement pursuant to Article 2 of the P.R. Mortgage and Property Registry Law, the Parties agree that the Leasehold Fee, the Annual Authority Payments and the Annual Authority Revenue Share will be allocated to each year of the Term in the manner set forth in Schedule 16.

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Section 2.7                                             Closing Deliveries.  At the Time of Closing, each Party shall execute and deliver all assets, agreements, bills of sale, assignments, endorsements, instruments, affidavits and documents as are reasonably necessary in the opinion of the other Party to effect the Transaction (and in form and substance that are reasonably satisfactory to such other Party).

Section 2.8                                             Intended Treatment for Federal Income Tax Purposes.  This Agreement is intended for United States federal income Tax purposes to be (a) with respect to the transfer of the LMM Airport Facility and the LMM Airport Facility Assets, (i) a sale to the Lessee of those portions of the LMM Airport Facility and the LMM Airport Facility Assets that are tangible property having useful lives of 40 years or less and (ii) a lease to the Lessee of the portions of the LMM Airport Facility and those LMM Airport Facility Assets that are tangible property having useful lives materially greater than 40 years and (b) with respect to the Lease, the acquisition by the Lessee of one or more Section 197 intangibles within the meaning of Section 197(d) of the U.S. Revenue Code.  The Parties agree, in the absence of a change of Law or final adverse determination by the Internal Revenue Service, to report the transactions contemplated herein consistently with the intentions expressed in this Section 2.8 for U.S. federal income tax purposes, to treat the Agreement consistently with such intentions and not to take any positions inconsistent with such treatment.

Section 2.9                                             Intended Treatment for Commonwealth Income Tax Purposes.  This Agreement is intended for Commonwealth income tax purposes to be considered an intangible asset acquired by purchase by the Lessee consisting of an exclusive lease and a contrato de alianza granting the right to administer and operate the LMM Airport Facility during the Term pursuant to the Act and amortizable under the provisions of Section 1033.07(a)(1)(D) of the New P.R. Revenue Code.  It is the intention that the Lessee shall be subject to the provisions of Article 12 of the Act and the Closing Agreement.

ARTICLE 3
TERMS OF THE LEASE

Section 3.1                                             Right to Operate; Present Condition.

(a)                                 Right to Operate.  The Authority agrees that, so long as no Lessee Default has occurred and is continuing hereunder, the Lessee shall, at all times during the Term, be entitled to and shall have the exclusive right to conduct LMM Airport Facility Operations and the rights and privileges granted to the Lessee hereunder, subject to the provisions contained in this Agreement.  The Authority and the Lessee acknowledge that the Lessee’s rights to use and operate the LMM Airport Facility as a public airport are subject to the right of the Authority, in accordance with the terms of this Agreement, to monitor compliance with this Agreement to ensure that the LMM Airport Facility is used and operated as required by this Agreement and Law.  The Authority shall, at its sole cost and expense and at all times during the Term, defend its title to the LMM Airport Facility and the rights granted to the Lessee hereunder, or any portion thereof, against any Person claiming any interest adverse to the Authority or the Lessee in the LMM Airport Facility, or any portion thereof, except where such adverse interest arises as a result of the act, omission, negligence, willful misconduct or violation of Law of the Lessee, its Affiliates or their respective Representatives.

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(b)                                 Present Condition.  Subject to Section 2.5(i) and Section 3.2(c) and except as specifically set forth in Section 9.1, the Lessee understands, agrees and acknowledges that the Lessee (i) by the execution of this Agreement, agrees to accept the LMM Airport Facility “AS IS” at the Time of Closing (subject to the “Excluded Liabilities” and subject to the Authority’s obligation for Restoration under Section 2.5(i)) and (ii) has inspected the LMM Airport Facility and is aware of its condition and acknowledges that the Authority neither has made nor is making any representation or warranty, express or implied, regarding the condition of the LMM Airport Facility (or any part thereof) or its suitability for the Lessee’s proposed use.

Section 3.2                                             LMM Airport Facility Operations.

(a)                                 Use.  The Lessee and the Authority agree that a primary purpose and essential consideration of this Agreement is for the Authority to operate a public use airport in a safe and secure manner.  Except as otherwise specifically provided herein, the Lessee shall, at all times during the Term, (i) be responsible for all aspects of the LMM Airport Facility Operations and (ii) cause the LMM Airport Facility Operations to be performed in accordance with the provisions of this Agreement (including the Operating Standards), the Use Agreement and applicable Law (including maintaining compliance with 14 C.F.R. Part 139, 49 C.F.R. Parts 1520, 1540 and 1542 and 49 U.S.C. § 47134).  The LMM Airport Facility Operations will not be interrupted in the event that the Lessee becomes insolvent or seeks or becomes subject to any federal, Commonwealth or State bankruptcy, reorganization, insolvency, liquidation, or dissolution proceeding or any petition or similar law seeking the dissolution or reorganization of the Lessee or the appointment of a receiver, trustee, custodian, or liquidator for the Lessee or a substantial part of the Lessee’s property, assets, or business.

(b)                                 Costs and Expenses.  Except as otherwise specifically provided herein, the Lessee shall, at all times during the Term, pay or cause to be paid all costs and expenses relating to the LMM Airport Facility Operations as and when the same are due and payable; provided, however, that the Lessee shall not be responsible, and shall not be required to reimburse the Authority, for costs and expenses incurred by the Authority in connection with LMM Airport Facility Operations following the Closing, except as otherwise specifically provided herein.

(c)                                  Assumed Liabilities.  The Lessee agrees to assume and discharge or perform when due, all debts, liabilities and obligations whatsoever relating to the LMM Airport Facility or the LMM Airport Facility Operations to the extent arising out of or relating to, or based on actions occurring during the Term, but only to the extent such debts, liabilities or obligations do not arise from or relate to any breach by the Authority of any covenant, representation or warranty set forth in this Agreement (collectively, the “Assumed Liabilities”); provided, however, that the Assumed Liabilities shall not include, and the Authority shall perform or cause to be performed and discharge or cause to be discharged as and when due, any debts, liabilities and obligations, whether such debts, liabilities or obligations are initially charged to the Authority, the Lessee or any other Person, (i) with respect to the Authority’s obligations under this Agreement; (ii) arising out of the satisfaction of the conditions precedent set forth in Section 2.4(a) of this Agreement; (iii) arising out of LMM Airport Facility Operations prior to the Time of Closing (including any debts, liabilities or obligations in existence at the Time of Closing that are required to be paid or performed upon the consummation of the transactions contemplated hereby to occur at the Time of Closing); (iv) with respect to the employment of any Authority Employee hired by the Lessee

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if such debts, liabilities and obligations arise under employment or labor Law or under any contracts or arrangements with or regarding such Employee and relate to, or were otherwise incurred or accrued during, the time period prior to or at the Time of Closing (including obligations in respect of benefits that had accrued but had not vested in favor of such Employee prior to the Time of Closing), including any unfunded compensation or other benefits or any pension or retirement fund liabilities at the Time of Closing; (v) with respect to any claim made by any Authority Employee not hired by the Lessee arising under employment or labor Law (except if such claim arises from the act or omission of the Lessee); (vi) with respect to any LMM Airport Facility Contracts that are not assigned to the Lessee; (vii) under any Environmental Law arising out of or relating to (A) any Additional Lands required by any Required Modifications, (B) any Additional Lands required by any Agreed Modifications in accordance with the terms thereof or (C) the ownership, operation or condition of the LMM Airport Facility (including the LMM Airport Facility Assets) at any time prior to the Time of Closing, including any noncompliance with Environmental Law that existed at or prior to the Time of Closing and continued after the Time of Closing, or (D) any Hazardous Substance or other contaminant that was present or Released on or migrated or escaped from or was Released from the LMM Airport Facility (including the LMM Airport Facility Assets) or otherwise existed at any time prior to the Time of Closing (a “Pre-Existing Hazardous Substance”), to the extent the Release or condition is not exacerbated as a result of the Lessee’s negligent, unlawful or willful acts or omissions, including and subject to the preceding conditions:  (1) the full extent of any Release that began prior to the Time of Closing and continued after the Time of Closing, (2) any Release that occurs after the Time of Closing as a result of any Capital Project undertaken by the Lessee and (3) the proper disposal of any such Pre-Existing Hazardous Substances required as a result of any Capital Project undertaken by the Lessee, and including any environmental conditions existing prior to the Time of Closing, whether or not the manifestation of which occurs at or following the Time of Closing, in each case whether or not known by the Authority or the Lessee at the Time of Closing (including the conditions identified as recognized environmental conditions in the Phase I ESA Report of URS Caribe, LLP dated April 2012); (viii) arising out of the PRANG Property until such time, if ever, as the PRANG Property is included in the LMM Airport Facility in accordance with Section 3.21; (ix) arising out of the Hotel Property until such time, if ever, as the payment in respect of the Hotel Property is made by the Lessee as described in Section 3.19; (x) arising out of the Cargo Facility until such time, if ever, as the payment in respect of the Cargo Facility is made by the Lessee as described in Section 3.20; and (xi) arising prior to the Time of Closing out of (A) work in connection with any Airline Capital Improvement Project and (B) any contract assigned to the Lessee pursuant to Section 4.5 (collectively, the “Excluded Liabilities”).  Notwithstanding the foregoing, the Assumed Liabilities shall include any liabilities and obligations arising due to the Lessee’s failure to comply with established Engineering or Institutional Controls for such environmental conditions on the LMM Airport Facility; provided that, prior to having any obligation to comply therewith, the Lessee shall have (i) received written notice of such Engineering or Institutional Controls from the Authority and (ii) a reasonable period of time in which to implement such controls (which period shall not exceed 60 days unless such implementation reasonably requires a longer period, and the Lessee has demonstrated to the satisfaction of the Authority, acting reasonably, that it is proceeding with all due diligence during such period to implement such compliance); and provided further that the Lessee may submit any dispute with respect to such obligation to dispute resolution in accordance with Article 19.

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(d)                                 Operating Agreements.  The Lessee may not enter into any Operating Agreement that extends beyond the Term unless (i) such agreement is assignable to the Authority and subject to a right by the Authority to terminate such agreement without penalty within three Business Days’ notice or (ii) the Authority consents to such Operating Agreement.

(e)                                  Business Plan.  The Lessee shall endeavor in good faith to implement its initial business plan, a copy of which is attached hereto as Schedule 14, subject to alterations thereto in light of changing conditions and the ongoing business judgment of the Lessee.  To the extent that the implementation of any part of the Lessee’s initial business plan (including as modified to reflect the alterations contemplated above) constitutes a Modification, the Authority and the Lessee shall be considered to have agreed to and approved such Modification, as if in accordance with Section 5.1, without further action (it being understood, however, that (x) the implementation of such Modification shall be subject to approval by the Airlines as required under and in accordance with Section 8.8 of the Use Agreement and (y) to the extent that any alterations to the initial business plan constitute Modifications, any such Modifications that are not consistent with the types of Modifications originally contemplated in the initial business plan and that are material shall be subject to Section 5.1.

Section 3.3                                             Lessee Responsibility.

(a)                                 The Lessee shall, at all times during the Term, (i) remain solely responsible for compliance with the Part 139 Airport Operating Certificate and (ii) be the sole holder of the Part 139 Airport Certification Manual.

(b)                                 The Lessee shall, at all times during the Term, be responsible for the LMM Airport Facility Operations in a manner consistent with the Operating Standards, the Use Agreement and all applicable requirements of Law, including the Part 139 Airport Operating Certificate, Part 139 Airport Certification Manual and the TSA-approved Airport Security Program.  The Lessee may, consistent with the operations plan under the Operating Standards and the provisions of the Part 139 Airport Operating Certificate and the TSA-approved Airport Security Program, enter into contracts or agreements with other parties (which may include Affiliates of the Lessee) to provide services in connection with the LMM Airport Facility Operations.  No contract or agreement of any kind between the Lessee and any other Person shall relieve the Lessee of its responsibility and liability for the performance of all of its obligations under this Agreement, the Part 139 Airport Operating Certificate and the TSA-approved Airport Security Program.  Further, no agreement or contract of any kind between the Lessee and any other Person shall affect the right of the Authority to exercise any remedies provided hereunder, including any right of access to the LMM Airport Facility in connection therewith, for the failure by the Lessee to carry out any of its obligations under this Agreement.

Section 3.4                                             FAA Airport Privatization Pilot Program.

(a)                                 FAA Airport Privatization Pilot Program.  The Lessee shall, at all times during the Term and (except as otherwise set forth herein or in the Use Agreement) at its sole cost and expense, observe and comply with, in all material respects, and cause the LMM Airport Facility Operations to comply with, in all material respects, all applicable Laws now existing or later in effect that are applicable to it or the LMM Airport Facility Operations with respect to the

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FAA’s Airport Privatization Pilot Program pursuant to 49 U.S.C. § 47134, including by ensuring that:

(i)                                     the LMM Airport Facility will continue to be available for public use on reasonable terms and conditions and without unjust discrimination;

(ii)                                  the LMM Airport Facility Operations will not be interrupted in the event that the Lessee becomes insolvent or seeks or becomes subject to any federal, Commonwealth or State bankruptcy, reorganization, insolvency, liquidation, or dissolution proceeding or any petition or similar Law seeking the dissolution or reorganization of the Lessee or the appointment of a receiver, trustee, custodian, or liquidator for the Lessee or a substantial part of the Lessee’s property, assets, or business;

(iii)                               the Lessee will maintain, improve, and modernize the LMM Airport Facility through capital investments and will submit to the Secretary a plan for carrying out such maintenance, improvements, and modernization;

(iv)                              every fee of the LMM Airport Facility imposed on an air carrier on the day before the Closing will not increase faster than the rate of inflation unless a higher amount is approved by at least 65% of the Airlines serving the LMM Airport Facility and by Airlines whose aircraft landing at the LMM Airport Facility during the preceding calendar year had a total landed weight during the preceding calendar year of at least 65% of the total landed weight of all aircraft landing at the LMM Airport Facility during such year;

(v)                                 the percentage increase in fees imposed on general aviation aircraft at the LMM Airport Facility will not exceed the percentage increase in fees imposed on air carriers at the airport;

(vi)                              safety and security at the LMM Airport Facility will be maintained at the highest possible levels;

(vii)                           the adverse effects of noise from LMM Airport Facility Operations will be mitigated to the same extent as at a public airport;

(viii)                        any adverse effects on the Environment from LMM Airport Facility Operations will be mitigated to the same extent as at a public airport; and

(ix)                              any collective bargaining agreement that covers employees of the LMM Airport Facility and is in effect on the Date of this Agreement will not be abrogated by this Agreement.

The Lessee shall promptly notify the FAA, the Authority and the Airlines after receiving notice from a Governmental Authority that the Lessee may have violated any of the above. The Lessee shall promptly notify TSA after receiving notice from a Governmental Authority that the Lessee may have violated any Law relating to safety and security at the LMM Airport Facility. This Section 3.4(a) shall not be construed to allow the imposition of new or increased fees in excess of those provided under the Use Agreement.

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(b)                                 Grant Agreements.  The Lessee hereby confirms its acceptance of all Grant Agreements, including the assurances contained therein.  The Lessee and the Authority agree that the Grant Agreements and the assurances required for the granting by the FAA of exemptions under 49 U.S.C. § 47134 create third-party beneficiary rights of the Secretary and the FAA and the Secretary of Homeland Security and TSA in this Agreement with respect to the LMM Airport Facility enforceable by the Secretary and the FAA in administrative or judicial legal proceedings.  Notwithstanding any other provision of this Agreement, and in accordance with the statutory objectives of 49 U.S.C. § 47134 and the regulations promulgated thereunder, the Secretary and the FAA are hereby granted all right, title and interest in, to and under this Agreement as third-party beneficiaries of the Lessee’s obligations with respect to those items set forth in Section 3.4(a) and the Grant Agreements in order to ensure that the statutory objectives of 49 U.S.C. § 47134 are satisfied.  The Authority agrees that it will carry out the terms of all Grant Agreements relating to property or activities that are not part of the LMM Airport Facility.

(c)                                  Authorizations.  The Lessee shall obtain, comply with, promptly renew and maintain in good standing all Authorizations necessary to perform its obligations hereunder; provided, however, that if (i) the Lessee is, at any time during the Term, required to obtain any Authorization from a Governmental Authority that the Authority was not required to obtain in connection with its operation of the LMM Airport Facility prior to the Time of Closing or (ii) any such Authorization can be obtained only by the Authority or some other Governmental Authority, then the Authority shall (x) use its Reasonable Efforts to assist the Lessee in obtaining such Authorization and (y) subject to Law, promptly deliver to the Lessee a copy of any notice, summons, letter or other communication in respect of any Authorization obtained, renewed or maintained in the Authority’s name following the Authority’s receipt thereof.  Nothing in this Agreement, including Section 2.1, shall be deemed to waive or modify any Authorization required to be obtained by the Lessee or any other Person in connection with the LMM Airport Facility, the LMM Airport Facility Operations or any activities generating revenues at the LMM Airport Facility.

(d)                                 Prohibition Against Exclusive Rights.  Nothing in this Agreement shall be construed to authorize the Lessee to grant an Airline the exclusive right to conduct an Air Transportation Business, and the Lessee shall have the right to grant to airlines other than the Signatory Airlines the privileges and right of conducting any or all activities of an aeronautical nature.

(e)                                  Subordination.  The Parties covenant and agree that this Agreement and any Leasehold Mortgage shall be subordinated to the provisions of any existing or future agreement or assurances between the Lessee and the United States federal government (including any such agreement or assurance between the Authority and the United States federal government that are assumed by the Lessee), the execution of which has been or will be required as a condition precedent to the granting of federal funds or the approval to impose or use PFCs for the development of the LMM Airport Facility.  The Authority further agrees that it shall not cause the Lessee to violate any assurances made by the Lessee to the federal government in connection with the granting of such federal funds or approvals.

(f)                                   Qualifications.  The Lessee shall, at all times during the Term, maintain in full force and effect its existence and all qualifications necessary to carry on its business pertaining

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to the LMM Airport Facility (including the Part 139 Airport Operating Certificate and TSA-approved Airport Security Program), the LMM Airport Facility Operations or any activities generating revenues at the LMM Airport Facility, including all rights, franchises, licenses, privileges and qualifications required in connection with the LMM Airport Facility Operations.  Nothing contained in the foregoing shall be deemed to prohibit or limit the Lessee from changing its organizational form or status (for example, a change from a limited liability company to a corporation or a limited partnership), subject to the terms of Section 17.1(a).

Section 3.5                                             No Encumbrances.

(a)                                 By the Lessee.  The Lessee shall not do any act or thing that will create any Encumbrance (other than a Permitted Lessee Encumbrance) against the LMM Airport Facility and shall promptly remove any such Encumbrance (other than a Permitted Lessee Encumbrance) against the LMM Airport Facility unless any such Encumbrance comes into existence as a result of an act or omission by the Authority, any other Governmental Authority or any Person claiming through the Authority or any other Governmental Authority, which in turn was not caused by an act or omission of the Lessee.  The Lessee shall not be deemed to be in default hereunder if the Lessee continuously, diligently and in good faith contests any such Encumbrance, or the validity thereof (or causes such contest), by appropriate legal proceedings that shall operate to prevent the foreclosure of any such Encumbrance; provided that the Lessee (i) has given advance notification to the Authority that it is the intent of the Lessee to contest the validity or collection thereof or cause such contest and (ii) has given a reasonably satisfactory indemnity to the Authority or has deposited with the Authority a Letter of Credit, surety bond consistent (as to form and credit quality of issuer) with the requirements set forth herein for Letters of Credit, cash or Eligible Investment reasonably satisfactory to the Authority in an amount equal to the amount of the claim or Encumbrance, plus such interest and penalties, court costs or other charges as the Authority may reasonably estimate to be payable by the Lessee at the conclusion of such contest or as is required to provide insurance over any potential Encumbrance; provided, however, that in the event such Letter of Credit, surety bond, cash or Eligible Investment shall be so deposited, the same shall be held until such claim or other Encumbrance shall have been released and discharged and shall thereupon be returned to the Lessee, less any amounts expended by the Authority, if any, to procure such release or discharge, or any loss, cost, damage, reasonable attorneys’ fees or expense incurred by the Authority, if any, by virtue of the contest of such Encumbrance.

(b)                                 By the Authority.  Neither the Authority nor any Governmental Authority of or in the Commonwealth shall do any act or thing that will create or permit to exist any Encumbrance (other than a Permitted Authority Encumbrance) against the LMM Airport Facility and shall promptly remove any Encumbrance (other than a Permitted Authority Encumbrance) against the LMM Airport Facility that came into existence as a result of an act of or omission by the Authority or a Person claiming through the Authority.  The Authority shall not be deemed to be in default hereunder if the Authority continuously, diligently and in good faith contests any such Encumbrance, or the validity thereof (or causes such contest), by appropriate legal proceedings that shall operate to prevent the foreclosure of any such Encumbrance; provided that the Authority (i) has given advance notification to the Lessee that it is the intent of the Authority to contest the validity or collection thereof or cause such contest and (ii) has given a reasonably satisfactory indemnity to the Lessee or has deposited with the Lessee a Letter of Credit, surety bond consistent (as to form and credit quality of issuer) with the requirements set forth herein for

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Letters of Credit, cash or Eligible Investment reasonably satisfactory to the Lessee in an amount equal to the amount of the claim or Encumbrance, plus such interest and penalties, court costs or other charges as the Lessee may reasonably estimate to be payable by the Authority at the conclusion of such contest or as is required to provide insurance over any potential Encumbrance; provided, however, that in the event such Letter of Credit, surety bond, cash or Eligible Investment shall be so deposited, the same shall be held until such claim or other Encumbrance shall have been released and discharged and shall thereupon be returned to the Authority, less any amounts expended by the Lessee, if any, to procure such release or discharge, or any loss, cost, damage, reasonable attorneys’ fees or expense incurred by the Lessee, if any, by virtue of the contest of such Encumbrance.

(c)                                  Removal.  Each Party, at the reasonable request of the other Party, shall use its Reasonable Efforts to assist such other Party in attempting to remove any Encumbrance that has come into existence as a result of an act of or omission by such other Party (excluding Encumbrances permitted by Section 3.5(a) or (b)); provided that nothing herein shall obligate the Authority to waive, modify or otherwise limit or affect the enforcement by the Authority of any applicable Law with respect to the LMM Airport Facility or any activities generating revenues at the LMM Airport Facility and provided further that the costs and expenses incurred by any Party in connection with such efforts shall be borne by the Party whose act or omission has given rise to such Encumbrance.

Section 3.6                                             Single Purpose Covenants.  The Lessee shall, at all times during the Term, (a) be formed and organized solely for the purpose of owning the Lessee Interest and using, possessing, leasing, operating and otherwise dealing with the LMM Airport Facility (and carrying out any activities permitted pursuant to this Agreement (and any activities reasonably incidental thereto, including the financing thereof and of the Transaction)), (b) not engage in any business unrelated to clause (a) above, (c) not have any assets other than those related to its activities in accordance with clauses (a) and (b) above, (d) maintain its own separate books and records and its own accounts, in each case that are separate and apart from the books and records and accounts of any other Person; provided, however, that the Lessee’s assets may be included in a consolidated financial statement of a direct or indirect shareholder or other owner of a beneficial interest of the Lessee if inclusion on such consolidated financial statement is required to comply with the requirement of generally accepted accounting principles of the relevant jurisdiction, but only if (i) such consolidated financial statement shall be appropriately footnoted to the effect that the Lessee’s assets are owned by the Lessee and that they are being included on the consolidated financial statement of such shareholder or other owner of a beneficial interest only to comply with the requirements of generally accepted accounting principles of the relevant jurisdiction and (ii) such assets shall be listed on the Lessee’s own separate balance sheet, (e) hold itself out as being a Person, separate and apart from any other Person, (f) not commingle its funds or assets with those of any other Person, (g) conduct its own business in its own name independently and through its own authorized officers and agents, (h) except as noted in clause (d) above, maintain separate financial statements and file its own Tax returns (to the extent required by applicable Law), (i) pay its own debts and liabilities when they become due out of its own funds, (j) observe all corporate, limited partnership or limited liability company, as applicable, formalities and do all things necessary to preserve its existence, (k) have sufficient officers and personnel to run its business operations and to supervise its Contractors pursuant to one or more contractual arrangements, (l) pay the salaries of its own employees, if any, and maintain a sufficient number of employees in

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light of its contemplated business operations, (m) not guarantee or otherwise obligate itself with respect to the debts or obligations of any other Person, or hold out its credit as being available to satisfy the debts or obligations of any other Person, (n) not acquire obligations of or securities issued by its shareholders, partners or members, as applicable, (o) use separate stationery, invoices and checks bearing its own name, (p) except as expressly permitted hereby or by any Leasehold Mortgage or in connection with the ordinary course of business of the LMM Airport Facility, not pledge its assets for the benefit of any other Person or make any loans or advances to any other Person, (q) correct any known misunderstanding regarding its separate identity, (r) maintain adequate capital in light of its contemplated business operations, (s) observe all customary organizational and operational formalities, including taking and maintaining of complete minutes of all member, manager, shareholder, board or similar meetings, (t)  maintain an arm’s length relationship with its Affiliates and enter into transactions with Affiliates only on a commercially reasonable basis and pursuant to enforceable agreements and (u) have organizational documents which do not conflict with the requirements set forth in this Section 3.6.

Section 3.7                                             Rights of the Authority to Access and Perform Work at the LMM Airport Facility.

(a)                                 Reservation of Rights. The Authority (for itself and any of its Representatives and any other Governmental Authority of competent jurisdiction, as well as grantees, tenants, mortgagees, licensees and others claiming or acting by, through or under the Authority (each, an “Authority Related Entity”)) reserves the right and shall, at all times during the Term, have the right to enter the LMM Airport Facility and each and every part thereof in response to any event, circumstance or purpose described in this Section 3.7(a), subject to applicable Law and the Airport Security Program:

(i)                                     to inspect the LMM Airport Facility or determine whether or not the Lessee is in compliance with its obligations under this Agreement pursuant to Section 8.3;

(ii)                                  if a Lessee Default then exists, to make any necessary repairs to the LMM Airport Facility and perform any work therein and take any reasonable actions in connection therewith pursuant to Section 16.1(b)(v);

(iii)                               in the event of an actual or reported emergency, danger, threat, circumstance or event that is reasonably believed by the Authority or its designee (including relevant police, fire, emergency services, armed forces and any other security or emergency personnel in accordance with Section 3.17) to have caused (or to present the imminent potential to cause) injury to individuals, damage to property, or harm to the Environment or to public safety, to take, at such times as the Authority determines necessary in its discretion (or as directed by the FAA, TSA or other affected federal agency) and with notice to the Lessee if practicable under the circumstances, such actions as the Authority or such designee reasonably determines necessary (or as directed by the FAA, TSA or other affected federal agency) to respond to or to rectify such emergency, danger, threat, circumstance or event;

(iv)                              in the event of any circumstance or event that is reasonably believed by the Authority to have caused a material impairment to the continuous operation of the LMM Airport Facility as a public airport (and the Authority shall provide written notice to the Lessee of

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such event or circumstance as soon as is reasonably practicable after first becoming aware of such event or circumstance), and if the Authority in its discretion (or as directed by the FAA, TSA or other affected federal agency) reasonably determines that the Lessee is not then taking all necessary steps to respond to or to rectify such circumstance or event, to take, at such times as the Authority determines necessary in its discretion (or as directed by the FAA, TSA or other affected federal agency) and with notice to the Lessee if practicable under the circumstances, such actions as the Authority determines may be reasonably necessary (or as directed by the FAA, TSA or other affected federal agency) to respond to or to rectify such circumstance or event or to restore the operation of the LMM Airport Facility;

(v)                                 at its own cost and expense, to design, construct, operate, service, manage, maintain, repair, rehabilitate or replace any Affected Property;

(vi)                              at its own cost and expense, to use the LMM Airport Facility for all purposes not inconsistent with the rights granted to the Lessee in this Agreement;

(vii)                           at its own cost and expense, to (A) install, design, manage, maintain, inspect, repair and rehabilitate any existing or future utilities or similar services or safety measures related to such utilities or services (whether provided by the Authority or third parties) in, on, under, across, over or through the LMM Airport Facility (including water and sewer lines, power transmission lines, fiber optic cable, surveillance equipment and other communications and other equipment) (provided that the Authority shall not be required to compensate the Lessee with respect to the use of the LMM Airport Facility for such utilities, services or measurers unless they materially impair the Lessee’s use of the LMM Airport Facility for the LMM Airport Facility Operations and such impairment results in Losses or reduced revenues), (B) grant easements and rights on, over, under or within the LMM Airport Facility for the benefit of suppliers or owners of any such utilities, services or measures and (C) use the LMM Airport Facility in connection with any such installation, design, management, maintenance, repair or rehabilitation (provided that notwithstanding the foregoing clauses (A), (B) and (C), the Lessee shall have the right, but not the obligation, at all times during the Term, and subject to applicable Law, to install, design, manage, maintain, repair and rehabilitate utilities or other services for its own account (and, except as contemplated by the Use Agreement, not for lease, resale or service to third parties) to the extent that the said utilities or services are necessary or desirable for the LMM Airport Facility Operations);

(viii)                        at its own cost and expense, for the purposes described in Section 14 of Act No. 83 of the Legislative Assembly of Puerto Rico, enacted on May 2, 1941, as amended; and

(ix)                              at its own cost and expense (except as otherwise expressly set out in this Agreement) and solely in accordance with the terms hereof, to do any other act or thing that the Authority or any Authority Related Entity may be obligated to do or have a right to do under this Agreement and/or the Use Agreement.

In connection with any entry made pursuant to (x) Section 3.7(a)(i) and (ii), such right to be exercised at all reasonable times upon reasonable prior notice to the Lessee; (y) Section 3.7(a)(iii) and (iv), such right to be exercised at all reasonable time with notice to be provided as set forth in

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such subclauses (iii) and (iv), respectively; and (z) Section 3.7(a)(v) through (vii) and Section 3.7(a)(ix), such right to be exercised at all reasonable times with the Authority to request, with reasonable prior written notice, the Lessee’s consent to the exercise of such right.

In connection with any entry made pursuant to this Section 3.7(a), (aa) such right to enter the LMM Airport Facility shall not include any of the private business offices of the Lessee that may be located at the LMM Airport Facility; (bb) notwithstanding Sections 3.7(a)(v) through (ix), any cost or expense related to any exercise by the Authority of its rights under Section 3.7(a)(ii) shall be borne by the Parties according to Section 16.1(b)(v); (cc) the Authority (A) shall conduct all activities in connection therewith consistent with the TSA-approved Airport Security Program, (B) shall consult with TSA, as appropriate, if such entry is reasonably expected to adversely impact transportation security at the LMM Airport Facility (provided that if the Authority deems in its reasonable discretion that the emergency nature of the situation requiring such entry precludes it from consulting with TSA in advance, it will notify TSA as soon as reasonably practicable following such entry), (C) shall, and shall use its Reasonable Efforts to cause any Authority Related Entity effecting such entry or action to, use Reasonable Efforts to minimize interference with the LMM Airport Facility Operations (including security) and damage to the LMM Airport Facility in connection with any entry on the LMM Airport Facility and (D) pay to the Lessee the Leasehold Compensation, upon demand by the Lessee, resulting from any entry or action on the LMM Airport Facility that qualifies as a Compensation Event pursuant to the definition thereof or as a result of any liability or obligation of or to the Lessee under any Environmental Law directly caused by an entry or action with respect to the LMM Airport Facility or LMM Airport Facility Operations pursuant to this Section 3.7(a).

(b)                                 Access Rights.  The Authority, its Representatives and any Governmental Authority of or in the Commonwealth, during the progress of any work referred to in this Section 3.7, at no additional cost to the Authority, its Representatives or any Governmental Authority of or in the Commonwealth, shall have all necessary or appropriate access rights and may keep and store at the LMM Airport Facility all necessary or appropriate materials, tools, supplies, equipment, shed, mobile trailers and other vehicles, in a reasonably neat and orderly fashion, in material compliance with all Laws (including Environmental Laws) and the Operating Standards; provided that such access and storage shall not unreasonably interfere with the Lessee’s conduct of the LMM Airport Facility Operations.  The Lessee shall not have any liability for theft of or damage to such material and other items or with respect to any acts or omissions of the Authority, its Representatives or any Governmental Authority of or in the Commonwealth or any Person acting on behalf of any of them.  To the extent that the Authority or any Governmental Authority of or in the Commonwealth of any other Person on the Authority’s behalf undertakes works or repairs under this Section 3.7 or any other provision of this Agreement, such work or repairs shall be commenced and diligently completed in a good and workmanlike manner, in accordance with any applicable Operating Standards and in such a manner as not to materially interfere with the Lessee’s conduct of business in or use of such space to the extent reasonably possible without incurring any additional cost.

(c)                                  Effect of Reservation.  Any exercise or reservation of a right by the Authority and any of its Representatives to enter the LMM Airport Facility and to make or perform any repairs, alterations, Restoration or other work in, to or about the LMM Airport Facility that is the Lessee’s obligation pursuant to this Agreement, shall not be deemed to (i) impose any

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obligation on the Authority to do so, (ii) render the Authority liable to the Lessee or any other Person for the failure to do so or (iii) relieve the Lessee from any obligation to indemnify the Authority as otherwise provided in this Agreement.  Nothing in this Agreement shall impose any duty upon the part of the Authority to do any work required to be performed by the Lessee hereunder and performance of any such work by the Authority and any of its Representatives shall not constitute a waiver of the Lessee’s default in failing to perform the same.

Section 3.8                                             LMM Airport Facility Cash Reserves.  In accordance with and subject to any Leasehold Mortgage, the Lessee shall (subject to the penultimate sentence of this Section 3.8) at all times during the Term maintain reserves in an amount equal to at least (on any date of determination) (a) the total amount of debt payable (other than any principal amount of any debt payable within 12 months of the final maturity date of such debt) with respect to the LMM Airport Facility in the then-current Term Year (the “Debt Service Reserve Requirement”) and (b) 25% of the projected operating expenses for the LMM Airport Facility (excluding, for the avoidance of doubt, Annual Authority Revenue Share payments) for the then-current Term Year, as determined as of the commencement of such current Term Year (the “Opex Reserve Requirement”); provided that, if, at any time during the Term Year, changes to the Lessee’s projected operating expenses result in the Lessee maintaining an Opex Reserve Requirement that is 10% more than the amount of the Opex Reserve Requirement that would be required taking into account such changes, then the Lessee may adjust (the “Interim Adjustment”) the amount in reserve to conform to the Lessee’s then-current forecast; provided, further, that in no event will the Lessee be entitled to make more than two Interim Adjustments during any Term Year.  Such cash reserves may not be satisfied with accounts consisting of PFC collection.  The Debt Service Reserve Requirement and the Opex Reserve Requirement may be satisfied by cash (or cash equivalents or Eligible Investments) held by the Lessee for such purpose or by the undrawn available amount of any Qualifying Account Instrument.  The Lessee shall be entitled to use funds on deposit or available in respect of the cash reserves contemplated in this Section 3.8 for the purpose of funding any shortfalls in operating expenses or debt service, as applicable. Following the use of any such funds in the cash reserve for operating expenses, the Lessee shall be obligated to replenish the amount so utilized by the later of (i) the date on which it is required to deliver the compliance certificate noted in the immediately succeeding sentence and (ii) 60 days following any such utilization; and following the use of any such funds in the cash reserve for debt service, the Lessee shall be obligated to replenish the amount so utilized by the date that is six months following any such utilization.  To the extent that the Leasehold Mortgagee requires account reserves substantially similar to the Debt Service Reserve Requirement and Opex Reserve Requirement, such that the Debt Service Reserve Requirement and Opex Reserve Requirement are satisfied in all material respects by compliance with such Leasehold Mortgagee account reserve requirements, the Lessee shall be in compliance with the requirements of this Section 3.8 for so long as the Lessee continues to satisfy such Leasehold Mortgagee account reserve requirements.  The Lessee shall deliver to the Authority on the first Business Day of each quarter of each Term Year (or at such times as may be required by the Leasehold Mortgagee; provided that such Leasehold Mortgagee’s requirement is a quarterly requirement), and as otherwise requested by the Authority from time to time, an Officer’s Certificate in which the Lessee represents and warrants that it is in compliance with the requirements contemplated in this Section 3.8.

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Section 3.9                                             Coordination.

(a)                                 Utility Coordination.  Subject to Section 3.7(a)(vii) and Section 3.9(c), the Lessee shall be responsible for coordinating or ensuring the coordination of all LMM Airport Facility Operations with utilities and Persons having service lines, pipelines, transmission lines and other equipment, cables, systems and other apparatus in, on, under, over or adjacent to the LMM Airport Facility.  The Lessee shall cause provision to be made for the removal or temporary or permanent relocation and restoration of utilities and other services and any lines, equipment, cables, systems and other apparatus that intersect, interfere with, interface with or otherwise affect the LMM Airport Facility Operations and shall arrange for temporary rights of entry and access to utilities and other services to be made available that are necessary in connection with the LMM Airport Facility Operations or as may exist under this Agreement or applicable Law, in each case at the sole cost and expense of such utilities or other Persons or the Lessee.  The Authority shall cooperate with the Lessee with respect to its obligations under this Section 3.9.

(b)                                 Affected Property Coordination.  The Lessee shall be responsible for coordinating or ensuring the coordination of all LMM Airport Facility Operations with Affected Property, but shall have no responsibility for such Affected Property.  The Authority shall cooperate with the Lessee with respect to its obligations under this Section 3.9(b).

(c)                                  No Interference.  The Parties understand and agree that (i) nothing in the foregoing Sections 3.9(a) and (b) is in any way intended to interfere with LMM Airport Facility Operations and (ii) the Authority shall cooperate with the Lessee in minimizing any effect that the obligations of the Lessee under this Section 3.9 may have on the LMM Airport Facility Operations and the revenues of the LMM Airport Facility.

Section 3.10                                      No Entry on Authority Property.  Except in the case of an emergency (and then only to the extent necessary to avoid injury or death to individuals or damage to property) and except for limited access necessary for the Lessee’s performance of its obligations hereunder or its compliance with applicable Laws that does not interfere with the Authority’s use or operation of such other properties in any material respect or otherwise except to the extent available for public use, the Lessee shall not enter upon any property of the Authority adjacent to, above, under or within the boundaries of the LMM Airport Facility, in connection with the LMM Airport Facility Operations without the prior Approval of the Authority.

Section 3.11                                      Payment of Taxes.

(a)                                 Payment of Taxes.  Except as otherwise provided herein, the Lessee shall pay when due all Taxes that are or become payable by the Lessee or that are required to be collected by the Lessee from other Persons in respect of periods during the Term in respect of the operations at, occupancy of or conduct of business, in each case of (or by) the Lessee, in or from the LMM Airport Facility and fixtures or personal property included in the LMM Airport Facility, other than as set forth below.  The Authority reserves the right, without being obligated to do so, to pay the amount of any such Taxes not timely paid by the Lessee, and the amount so paid by the Authority shall be due and payable by the Lessee promptly upon demand by the Authority.  The Lessee shall have the right to contest in good faith the validity or amount of any Taxes which it is responsible to pay under this Section 3.11; provided that (i) the Lessee has given prior notice to the Authority

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of each such contest, (ii) no contest by the Lessee may involve a reasonable possibility of forfeiture or sale of the LMM Airport Facility and (iii) upon the final determination of any contest by the Lessee, if the Lessee has not already done so, the Lessee shall pay the amount found to be due, if any, together with any costs, penalties and interest applicable thereto (if any).  If the Lessee is contesting in good faith the validity or amount of any Taxes in accordance with the immediately preceding sentence, the Authority shall not have the right to pay the amount of such Taxes until there is a final determination of such contest.

(b)                                 Exemption from Taxes.  The Authority covenants that during the Term the Lessee shall not be responsible for, and the Lessee and the LMM Airport Facility shall not be subject to, (i) any real property Tax imposed on or measured by the value of the LMM Airport Facility (including any LMM Airport Facility Assets deemed to be real property constituting part of the LMM Airport Facility) that is imposed by the Authority or any other Governmental Authority of the Commonwealth or that is imposed on the “owner” of the LMM Airport Facility (including relating to future expenditures for real property) or, (ii) sales and use tax imposed by the Commonwealth on the Leasehold Fee or any passenger charges (it being recognized that such a tax is not permitted by federal Law as of the Date of this Agreement), (iii) any personal property tax on personal property owned by the Authority and used by the Lessee exclusively in the LMM Airport Facility or in the operations conducted therein that is imposed by the Authority or any Governmental Authority of the Commonwealth. The Authority shall provide Leasehold Compensation to the Lessee resulting from any breach of the covenant set forth in this Section 3.11(b).

Section 3.12                                      Utilities.  The Lessee shall pay, or cause to be paid, when due all charges (including all applicable Taxes and fees) for the Utility Systems; provided that, in the event that the Lessee is unable to source utilities from third-party providers at a rate classification that is at least as favorable as that enjoyed by the Authority at other airports operated by the Authority in the Commonwealth, the Lessee shall have the right to receive Leasehold Compensation from the Authority in respect thereof.  Upon the reasonable request of the Authority, the Lessee shall forward to the Authority, within 30 days following the respective due dates, official receipts, photocopies thereof, or other evidence satisfactory to the Authority, acting reasonably, of the payment required to be made by the Lessee in accordance with this Section 3.12.  The Authority does not warrant that any utility services will be free from interruptions caused by war, insurrection, civil commotion, riots, acts of God, government action, terrorism, repairs, renewals, improvements, alterations, strikes, lockouts, picketing, whether legal or illegal, accidents, inability to obtain fuel or supplies or any other causes, and any such interruption of utility services shall never be deemed an Adverse Action or an eviction or disturbance of the Lessee’s use and possession of the LMM Airport Facility or any part thereof unless in such case caused by the Authority, or render the Authority liable to the Lessee for damages or, unless the same constitutes a Delay Event, relieve the Lessee from performance of the Lessee’s obligations under this Agreement.  The Authority shall maintain and preserve, for the length of the Term, all legal rights and easements in its possession related to utility services to the extent necessary for the Lessee to operate the LMM Airport Facility.

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Section 3.13                                      Negotiations with Governmental Authorities.

(a)                                 Prior to entering into any agreement with any Governmental Authority in connection with the LMM Airport Facility Operations (a “Government Agreement”), the Lessee shall submit such Government Agreement for Approval by the Authority, which Approval may be withheld, delayed or otherwise conditioned in the discretion of the Authority in the case of Government Agreements that extend or could extend beyond the Term (unless such agreement is assignable and subject to a right by the Authority to terminate such agreement without penalty upon three Business Days’ notice or less, effective upon such extension) or pursuant to which the Authority may incur any liability whatsoever.  Notwithstanding the foregoing, if the absence of such Government Agreement may cause the Lessee or LMM Airport Facility Operations to fail to be in compliance with applicable Law or the terms of this Agreement, the Lessee may enter into such Government Agreement upon notice to the Authority; provided that the Lessee indemnifies the Authority for any Losses relating thereto.  If the Lessee wishes the Authority to be a party to a Government Agreement, in the place and stead of, or in addition to, the Lessee, then the Lessee must provide notice of the proposed terms of such Government Agreement to the Authority for the Authority’s Approval, which Approval will be in the Authority’s discretion, and all costs and expenses incurred by the Authority in connection with or related to such Government Agreement shall be borne by the Lessee.

(b)                                 The Authority shall use its Reasonable Efforts to cooperate with the Lessee in any negotiations with any Governmental Authority regarding any Government Agreements.  All reasonable out-of-pocket costs and expenses incurred by the Authority in connection with or related to such negotiations shall be borne by the Lessee.

Section 3.14                                      Notices of Defaults and Claims.  The Lessee or the Authority (the “Notifying Party”) shall promptly give notice to the other Party (a) if the Notifying Party becomes aware that it is in default of its obligations under this Agreement (including the Operating Standards), the Use Agreement, any material Assigned LMM Airport Facility Contract or any other Operating Agreement and (b) of all material claims, proceedings, disputes (including labor disputes) or litigation pertaining to the LMM Airport Facility, the LMM Airport Facility Operations or the Notifying Party (whether or not such claim, proceeding or litigation is covered by insurance) of which the Notifying Party has actual knowledge.  The Notifying Party’s notice shall provide all reasonable information requested by the Authority or the Lessee, as applicable, from time to time concerning the status of such default, claims, proceedings or litigation.  A copy of the notices provided pursuant to this Section 3.14 shall be given to each of the Leasehold Mortgagee, FAA Associate Administrator of Airports and TSA.

Section 3.15                                      Assignment of Operating Agreements and Plans.  At the request of the Authority, the Lessee shall collaterally assign, to the extent reasonably practicable, to the Authority, in form and substance satisfactory to the Authority, acting reasonably, all of the right, title and interest of the Lessee in, to and under all or any of the Operating Agreements and all present and future specifications, plans, software (including source code) to the extent that such software is subject to a non-exclusive license permitting collateral assignment, drawings, information and documentation in relation to the LMM Airport Facility Operations except to the extent that any of the foregoing involve proprietary information (the “Plans”) as collateral security to the Authority for the observance and performance by the Lessee of its covenants and obligations

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under this Agreement, to the extent so requested by the Authority and subject to the rights of the Leasehold Mortgagee.  The Lessee covenants that it shall use all Reasonable Efforts to cause all of the right, title and interest of the Lessee in, to and under all Operating Agreements and the Plans entered into or created after the Time of Closing to be collaterally assignable to the Authority for the purposes of this Section 3.15.  The Authority acknowledges that the Operating Agreements and the Plans may also be assigned as security to a Leasehold Mortgagee and that each of the Authority and such Leasehold Mortgagee shall be entitled to use the Operating Agreements or the Plans in enforcing their respective security as hereinafter provided.  The Authority agrees that it shall exercise any amendments or take any other actions necessary for the Lessee to exercise all of the Authority’s rights under the Operating Agreements, and the Authority shall transfer to the Lessee all security under any such Operating Agreements.  Without limiting the generality of the foregoing, but subject to the Authority’s assumption of liabilities under the Operating Agreements accruing after such time as the Authority exercises its rights under this Section 3.15 subject to Article 18, the Authority shall be entitled to use the Operating Agreements and the Plans in each of the following events: (a) if the Authority terminates this Agreement without a lease agreement being granted to the Leasehold Mortgagee or nominee thereof pursuant to the provisions of Article 18 and (b) if the Authority elects to use the Operating Agreements or the Plans to remedy a Lessee Default under this Agreement.  Notwithstanding the foregoing, in the event that the Leasehold Mortgagee has entered into possession or is diligently enforcing and continues to diligently enforce its security, whether by way of exercising the Lessee’s rights under this Agreement, the appointment of a receiver or receiver and manager, foreclosure or power of sale in accordance with Article 18, or otherwise, and is using or reasonably expects to be using the Operating Agreements or the Plans in respect of the LMM Airport Facility Operations, the Authority shall not be entitled to use the Operating Agreements or the Plans in enforcing its security, it being acknowledged that any assignment of the Operating Agreement or the Plans to a Leasehold Mortgagee shall have priority over any assignment of the Operating Agreements or the Plans to the Authority and the Authority shall cooperate with the Lessee and the Leasehold Mortgagee in connection with ensuring such priority, including that the Authority shall execute and deliver to the Leasehold Mortgagee an intercreditor and subordination agreement in form and substance satisfactory to such Leasehold Mortgagee, acting reasonably, acknowledging such priority.  The Lessee shall promptly deliver to the Authority, at the sole cost and expense of the Lessee, forthwith after completion or execution and delivery, a copy of each item of the Operating Agreements and the Plans.

Section 3.16                                      Name.

(a)                                 The name designated for the LMM Airport Facility is “▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ International Airport.”  The Lessee shall not have the right to (i) sell or lease any naming rights for the LMM Airport Facility, or any portion of the LMM Airport Facility, to any third-party or (ii) change the name of the LMM Airport Facility or to sell or lease naming rights for the LMM Airport Facility or any portion thereof without the prior Approval of the Authority, which Approval may be withheld, delayed or otherwise conditioned in the discretion of the Authority.

(b)                                 The Authority, in its discretion, shall have the right to change the name of the LMM Airport Facility, or any portion of the LMM Airport Facility (and to cause the Lessee to change, at the Authority’s expense, any signage on or at the LMM Airport Facility in connection therewith), at any time during the Term upon 90 days’ prior notice to the Lessee; provided, however, that the Authority shall grant a license of the name together with all related logos and

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marks to the Lessee upon terms substantially similar to those contained in Section 3.16(c); provided further that any change in the name of the LMM Airport Facility by the Authority in accordance with this Section 3.16 shall not result in a name of the LMM Airport Facility, or any portion of the LMM Airport Facility, being odious or offensive or otherwise likely to result in a negative association by the public.  The exercise of such right by the Authority shall not constitute an Adverse Action.  The Authority shall have the right to all proceeds and other consideration received in connection with any such name change and shall reimburse the Lessee for all out-of-pocket and documented costs and expenses reasonably incurred by the Lessee in connection with any such name change.

(c)                                  The Authority grants to the Lessee a non-exclusive, non-transferable (except pursuant to a Transfer permitted under Section 17.1), royalty-free license during the Term to use the name “▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ International Airport” together with all existing and future developed logos and marks (not including the Authority seal) used in connection with the LMM Airport Facility Operations, solely in connection with the performance of the Lessee’s obligations and exercise of rights under this Agreement.  The Lessee may grant sublicenses of the same to Contractors.

Section 3.17                                      Police, Fire and Emergency Services; Access Rights.

(a)                                 At all times during the Term, the Authority shall cause the LMM Airport Facility to be serviced by adequate police, perimeter security and firefighting, including law enforcement officer (▇▇▇) support as required by federal security requirements (including increases required by the TSA or other federal agencies) and armed perimeter security and other law enforcement services, in each case at a level that satisfies the TSA-approved Airport Security Program.  The Lessee shall be obligated to utilize all such services and shall not take any actions that would in any way inhibit or restrict the Authority’s ability to provide such services.  Without limiting the generality of the foregoing, at all times during the Term, the Lessee shall be responsible for providing (or causing the provision of) all remaining security and emergency functions at the LMM Airport Facility in compliance with the TSA-approved Airport Security Program, including interior auxiliary security and access control functions.  For the avoidance of doubt, services of the type that are, as of the Bid Date, provided to the Authority by (i) St. ▇▇▇▇▇ Security Services, Inc. pursuant to that certain Agreement, AP-09-10-5-041, dated as of August 14, 2009, and (ii) ▇▇▇▇▇▇▇ Ambulance Corp. pursuant to that certain Agreement, AP-11-12-5-029, dated as of September 1, 2011, are functions for which the Lessee has responsibility during the Term.  The Lessee acknowledges that the Authority’s personnel that provide police, perimeter security and/or firefighting to the LMM Airport Facility may provide other police, perimeter security and/or firefighting in the general vicinity of the LMM Airport Facility; provided that such other services do not unreasonably interfere with the level of police, perimeter security and/or fire fighting to be provided at the LMM Airport Facility.  Notwithstanding any other provision of this Agreement, and subject to all applicable FAA, TSA and other Governmental Authority requirements, the Lessee shall have the right to contract with the Commonwealth Police Department and private security and emergency service providers for enhanced levels of service.

(b)                                 Subject to Section 3.17(c), the Lessee shall reimburse the Authority for all costs and expenses reasonably incurred by the Authority during the Term related to the provision of all such police, perimeter security and firefighting (including employment costs and related

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overhead expenses allocable thereto, as reasonably determined by the Authority based on the time expended by the employees who render such services to the extent that such costs and expenses are not reimbursed to the Authority from a source other than the Lessee; provided that any such allocation of costs (direct and indirect) and related overhead expenses shall be in compliance with DOT/FAA “Policy and Procedures Concerning the Use of Airport Revenue”), including in the event of a fundamental change to the security conditions related to the LMM Airport Facility that requires the Authority in its reasonable discretion to increase the levels of such services at the LMM Airport Facility on an ongoing basis.  All expenses directly related to the provision of services by the Authority pursuant to Section 3.17(a) shall be the responsibility of the Lessee in accordance with the Use Agreement and subject to Section 3.17(c).  The Authority shall use its Reasonable Efforts to seek reimbursement for the costs and expenses of providing of such police, firefighting and perimeter security services that may be available from the TSA or another Governmental Authority.  The Lessee shall provide the Authority with all reasonable assistance as may be requested by the Authority in connection with the application for and administration of any reimbursement program referred to in the previous sentence.

(c)                                  Not less than 60 days prior to the beginning of each Term Year, the Lessee and the Authority shall agree on an annual budget for the police, perimeter security and/or firefighting to be provided with respect to the LMM Airport Facility for that upcoming Term Year, which will specify the level of services to be provided and the cost of such services (and any additional services that may be requested by the Lessee as contemplated herein).  The Authority’s costs and expenses for such services for the first Term Year, which shall be reimbursed by the Lessee, shall be $2,800,000.  If by the first day of any Term Year the Authority and the Lessee have been unable to reach agreement concerning such annual budget, then the annual budget in effect for the immediately prior Term Year, Adjusted for Inflation, shall continue to be in effect until such time as the Authority and the Lessee reach such agreement.  For the avoidance of doubt, if the Lessee pays any provider of such services (which are caused to be provided by the Authority in accordance with the Authority’s obligations hereunder) directly on behalf of the Authority, such amount shall be considered to have been reimbursed to the Authority for the purpose of this Section 3.17(c).

(d)                                 Notwithstanding any other provision of this Agreement, at all times during the Term and without notice or compensation to the Lessee (i) any police, perimeter security and fire and any other security or emergency personnel retained by or on behalf of the Authority (including the Commonwealth Police Department and Authority’s fire/rescue personnel) shall have access, as required by such services or personnel, to the LMM Airport Facility for the performance of their duties; (ii) the Authority shall have access to the LMM Airport Facility as necessary for the protection of public safety; and (iii) any Governmental Authority (including the TSA and the armed forces) with jurisdiction over the LMM Airport Facility shall have access to the LMM Airport Facility as necessary for emergency management and homeland security purposes, including the prevention of, practice drills for, or response to, a public safety emergency.  The Lessee shall cooperate with police, fire and emergency services and any other security or emergency personnel, including the armed forces, in respect of such emergency management and homeland security purposes.

(e)                                  Consistent with its responsibility to satisfy all applicable FAA and TSA requirements (including maintaining compliance with 14 C.F.R. Part 139 and the TSA-approved

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Airport Security Program), the Lessee shall, at all times during the Term, on a 24-hour basis at the LMM Airport Facility maintain sufficient personnel who shall be qualified to respond to emergencies.  If, at any time during the Term, the Authority, in its discretion, determines that the Lessee is not satisfying its obligations under this Section 3.17(e), then the Authority may, at the cost of the Lessee, provide sufficient personnel at the LMM Airport Facility, in addition to those otherwise provided by the Authority and other Governmental Authorities hereunder, to respond to emergencies.  The Lessee shall be responsible for, and shall pay the costs of, any additional security measures implemented at the LMM Airport Facility at the request of any Governmental Authority pursuant to any adopted rule, regulation, standard, recommended practice or procedure.

Section 3.18                                      Other Actions by Governmental Authorities.  In the event that any Governmental Authority (other than the Authority or the Commonwealth (or any subdivision or agency of any of the foregoing)) proposes to take any action at any time during the Term (including or enacting any Law) and the effect of such action is reasonably expected (i) to be principally borne by the Lessee or private operators of Comparable Public Airports or Contratantes and (ii) to have a material adverse effect on the fair market value of the Lessee Interest, except where such action is in response to any act or omission on the part of the Lessee that is illegal (other than an act or omission rendered illegal by virtue of an Adverse Action or such action by any such other Governmental Authority), then at the request of the Lessee, the Authority shall use its Reasonable Efforts to oppose and challenge such action by any such other Governmental Authority; provided, however, that all reasonable out-of-pocket costs and expenses incurred by the Authority in connection with such opposition or challenge shall be borne by the Lessee and provided further that, except as expressly provided in Article 14, the Authority shall have no liability to the Lessee on account of the taking of any action by a Governmental Authority described in this Section 3.18.

Section 3.19                                      Hotel Operations and Litigation Pending Resolution.

(a)                                 From and after the Closing Date, the Authority shall retain responsibility for the litigation, ongoing as of the Closing Date, between the Authority and Hotel Airport, Inc. (the “Hotel Operator”) in connection with that certain Contract for Lease, dated as of March 27, 2003, as amended, by and between them for that certain property (the “Hotel Property”).

(b)                                 Until the final, unappealable resolution of such litigation and the making of the additional up-front payment by the Lessee in accordance with this Section 3.19, the Authority shall be responsible for costs and obligations of the Hotel Property and such Contract for Lease, shall retain the right to use or operate the Hotel Property (without paying compensation to the Lessee) and shall retain all revenues under such Contract for Lease or otherwise derived from the use of the Hotel Property.

(c)                                  Upon the final, unappealable resolution of the litigation between the Authority and the Hotel Operator, the result of which permits use of the Hotel Property by the Lessee, the Authority shall provide the Lessee with notice of the final, unappealable resolution of such litigation.  Within 60 days after receiving such notice, at the option of the Lessee, either (i) the Lessee shall make an additional up-front payment to the Authority, the amount of which shall be equal to the value of the availability of the Hotel Property for use by the Lessee for the then-remaining Term (as determined by mutual agreement of the Parties or, absent such agreement, in accordance with Section 3.19(d) or, if the Lessee elects, Article 19) or (ii) the Authority shall retain

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the right to use the Hotel Property, pursuant to which right the Authority shall pay no compensation to the Lessee, shall assume the costs and obligations of the Hotel Property, shall be entitled to retain all revenues from operations at and use of the Hotel Property and may contract with a third party to operate and use the Hotel Property; provided that use of the Hotel Property by the Authority or a third-party operator shall not materially interfere with the LMM Airport Facility Operations.  Any failure by the Authority to comply with its obligations under this Section 3.19(c) shall constitute a Compensation Event.

(d)                                 If the Parties are unable to agree upon the amount of additional up-front payment for the purposes described in Section 3.19(c), and the Lessee does not elect to determine the value in accordance with Article 19, the Lessee may (within the 60-day period described in Section 3.19(c)) offer to the Authority an amount of additional up-front payment for use of the Hotel Property by the Lessee for the then-remaining Term.

(i)                                     If the Lessee does not make such an offer, the Authority shall retain responsibility for the Hotel Property in accordance with Section 3.19(b) and may solicit bona fide offers from third parties for the use or operation of the Hotel Property, which the Authority may freely accept (and upon consummation of the transaction with such third party, the Authority and the third party, acting as agent of the Authority, shall retain responsibility for the Hotel Property in accordance with Section 3.19(b)).

(ii)                                  If the Lessee makes such an offer, the Authority shall either accept or reject such offer within 30 days of receipt thereof.  If the Authority rejects the Lessee’s offer, the Authority may solicit bona fide offers from third parties for the use or operation of the Hotel Property, which the Authority may accept (and upon consummation of the transaction with such third party, the Authority and the third party, acting as agent of the Authority, shall retain responsibility for the Hotel Property in accordance with Section 3.19(b)); provided that the Authority, before accepting such third-party offer, shall notify the Lessee of the third-party offer and provide the Lessee with an opportunity to match the third-party offer within 15 days of providing notice thereof, and the Authority shall accept the Lessee’s offer, if made, on the same terms as the third-party offer.  If the Authority does not receive a bona fide offer from a third party within 120 days after rejecting the Lessee’s offer, the Lessee shall renew its rejected offer, which the Authority shall accept.

Section 3.20                                      CAF Operations and Litigation Pending Resolution.

(a)                                 From and after the Closing Date, the Authority shall retain responsibility for the litigation, ongoing as of the Closing Date, between the Authority and Caribbean Airport Facilities, Inc. (“CAF”) in connection with that certain agreement, dated as of October 24, 1988, as amended, by and between them for that certain property (the “Cargo Facility”).

(b)                                 Until the final, unappealable resolution of such litigation or the receipt of unencumbered title to the Cargo Facility by the Authority and the making of the additional up-front payment by the Lessee in accordance with this Section 3.20, the Authority shall be responsible for costs and obligations of the Cargo Facility and such Contract for Lease, shall retain the right to use or operate the Cargo Facility (without paying compensation to the Lessee) and

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shall retain all revenues under such Contract for Lease or otherwise derived from the use of the Cargo Facility.

(c)                                  Upon the final, unappealable resolution of the litigation between the Authority and CAF or the receipt of unencumbered title to the Cargo Facility by the Authority, the result of which permits use of the Cargo Facility by the Lessee, the Authority shall provide the Lessee with notice of the final, unappealable resolution of such litigation.  Within 60 days after receiving such notice, at the option of the Lessee, either (i) the Lessee shall make an additional up-front payment to the Authority, the amount of which shall be equal to the value of the availability of the Cargo Facility for use by the Lessee for the then-remaining Term (as determined by mutual agreement of the Parties or, absent such agreement, in accordance with Section 3.20(d) or, if the Lessee elects, Article 19) or (ii) the Authority shall retain the right to use the Cargo Facility, pursuant to which right the Authority shall pay no compensation to the Lessee, shall assume the costs and obligations of the Cargo Facility, shall be entitled to retain all revenues from operations at and use of the Cargo Facility and may contract with a third party to operate and use the Cargo Facility; provided that use of the Cargo Facility by the Authority or a third-party operator shall not materially interfere with the LMM Airport Facility Operations.  Any failure by the Authority to comply with its obligations under this Section 3.20(c) shall constitute a Compensation Event.

(d)                                 If the Parties are unable to agree upon the amount of additional up-front payment for the purposes described in Section 3.20(c), and the Lessee does not elect to determine the value in accordance with Article 19, the Lessee may (within the 60-day period described in Section 3.20(c)) offer to the Authority an amount of additional up-front payment for use of the Cargo Facility by the Lessee for the then-remaining Term.

(i)                                     If the Lessee does not make such an offer, the Authority shall retain responsibility for the Cargo Facility in accordance with Section 3.20(b) and may solicit bona fide offers from third parties for the use or operation of the Cargo Facility, which the Authority may freely accept (and upon consummation of the transaction with such third party, the Authority and the third party, acting as agent of the Authority, shall retain responsibility for the Cargo Facility in accordance with Section 3.20(b)).

(ii)                                  If the Lessee makes such an offer, the Authority shall either accept or reject such offer within 30 days of receipt thereof.  If the Authority rejects the Lessee’s offer, the Authority may solicit bona fide offers from third parties for the use or operation of the Cargo Facility, which the Authority may accept (and upon consummation of the transaction with such third party, the Authority and the third party, acting as agent of the Authority, shall retain responsibility for the Cargo Facility in accordance with Section 3.20(b)); provided that the Authority, before accepting such third-party offer, shall notify the Lessee of the third-party offer and provide the Lessee with an opportunity to match the third-party offer within 15 days of providing notice thereof, and the Authority shall accept the Lessee’s offer, if made, on the same terms as the third-party offer.  If the Authority does not receive a bona fide offer from a third party within 120 days after rejecting the Lessee’s offer, the Lessee shall renew its rejected offer, which the Authority shall accept.

Section 3.21                                      Puerto Rico Air National Guard Property Option.  As of the Closing Date, the property (the “PRANG Property”) utilized by the Puerto Rico Air National Guard

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(“PRANG”) pursuant to that certain Joint Use Agreement by and between the Authority and PRANG, dated as of December 11, 2002, as amended (the “PRANG Contract”), is excluded from the LMM Airport Facility.  At any time during the Term, the Authority may elect to enter into to negotiations with PRANG with respect to the relocation of PRANG to alternate facilities; it being understood that any relocation of PRANG to alternate facilities shall be subject to the consent of PRANG in accordance with the PRANG Contract.  The Authority shall give notice to the Lessee of such election, and the Lessee, at its option, may participate in such negotiations with the Authority and PRANG.  To the extent that PRANG is relocated to alternate facilities, the Lessee shall have the right to include the PRANG Property in the LMM Airport Facility in accordance with the terms of this Section 3.21.

(a)                                 The Authority shall provide the Lessee with notice of any agreement between PRANG and the Authority to relocate PRANG to alternate facilities.

(b)                                 The Lessee may, within 90 days following the Lessee’s receipt of notice from the Authority with respect to the PRANG Property, provide an offer to the Authority to include the PRANG Property in the LMM Airport Facility.  Such offer from the Lessee to the Authority shall include the amount of any compensation that the Lessee is prepared to pay to the Authority in respect of the inclusion of the PRANG Property and any other material terms and conditions related thereto.

(c)                                  Within 30 days after the Authority’s receipt of the offer from the Lessee pursuant to Section 3.21(b), the Authority shall either accept or reject the offer.

(i)                                     If the Authority accepts the Lessee’s offer, the parties shall cooperate with each other to consummate the transaction (and take all actions reasonably necessary to effect the same) within 30 days of such acceptance (or such other time period as the parties shall agree).

(ii)                                  If the Authority rejects the Lessee’s offer, the Authority may solicit other offers for a lease or concession for the PRANG Property from third parties.  If the Authority receives such a bona fide offer from a third party that the Authority is prepared to accept, and if such offer would provide less compensation to the Authority than the offer of the Lessee that was rejected by the Authority, then prior to the Authority accepting such offer, (i) the Authority shall notify the Lessee of the terms and conditions of such bona fide offer and (ii) the Lessee may, within 15 days following the Lessee receipt of such notice, elect to include the PRANG Property in the LMM Airport Facility (by notice to the Authority) at the same price and on the same terms and conditions as such bona fide offer.  If the Lessee so elects in accordance with the foregoing, the parties shall cooperate with each other to consummate the transaction (and take all actions reasonably necessary to effect the same) within 30 days of such election (or such other time period as the parties shall agree).

(d)                                 If the Lessee does not make an offer pursuant to Section 3.21(b) within the time allowed, the Authority may thereafter freely negotiate a lease or concession for the PRANG Property with third parties.

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(e)                                  For the avoidance of doubt, (i) at the time the transaction for the inclusion of the PRANG Property in the LMM Airport Facility is consummated, the PRANG Property will be so included free and clear of all Encumbrances except for Permitted Authority Encumbrances and (ii) in the event that a transaction by which the PRANG Property is included in the LMM Airport Facility is not consummated in accordance with the foregoing, the Authority shall have the right to use the PRANG Property as the Authority may determine in its discretion; provided that such use (including as a result of a new third-party operator) shall not materially interfere with the LMM Airport Facility Operations.  Any failure by the Authority to comply with its obligations under this Section 3.21(e) shall constitute a Compensation Event.

Section 3.22                                      Other Aviation Services.  The Authority shall be required to provide Leasehold Compensation to the Lessee in accordance with Section 15.1 to the extent that the Authority or any other Governmental Authority established under the Laws of the Commonwealth or any other Person that is authorized by the Authority or any other Governmental Authority established under the Laws of the Commonwealth (including under any concession, lease or other similar arrangement) obtains an airport operating certificate under 14 C.F.R. Part 139 (or any successor regulation) that would authorize scheduled passenger commercial service at any airport located within the Commonwealth that did not as of the Date of this Agreement have such a 14 C.F.R. Part 139 Certificate (whether or not such airport existed as of the Date of this Agreement) (a) prior to the 20th anniversary of the Date of this Agreement at any airport located within the jurisdiction of the municipality of Ceiba or (b) prior to the 15th anniversary of the Date of this Agreement at any airport located in the Commonwealth outside the jurisdiction of the municipality of Ceiba.  Any such Leasehold Compensation shall be provided only to the extent that the Lessee reasonably demonstrates a decrease in net income as a result of such commercial scheduled passenger service subsequent to the issuance of the Part 139 operating certificate.  Scheduled passenger commercial service shall be defined to include services offered or operated by a U.S. or foreign air carrier that constitute a “scheduled operation” or a “public charter” as such terms are defined by 14 C.F.R. Sections 110.2 and 380.2 or in the relevant foreign equivalent regulations.  For the avoidance of doubt, no Leasehold Compensation shall be required under this Section 3.22 in respect of commercial aviation services to the extent that such services (i) represent an expansion of scheduled operations as defined by 14 C.F.R.  Section 110.2 at an airport that has a Part 139 certificate as of the date of this Agreement or (ii) consist of cargo aviation services.  Any Leasehold Compensation required under this Section 3.22 shall be paid by the Authority from revenues that do not include revenues from any airport other than the LMM Airport Facility.

ARTICLE 4
CAPITAL PROJECTS

Section 4.1                                             Lessee Responsibility for Capital Projects.  The Lessee’s capital improvement obligations shall comprise the capital improvement projects set forth on Schedule 13 (the “General Accelerated Upgrades”), the capital improvement projects required to be completed by the Lessee during the Term in accordance with the terms of this Agreement (including the Operating Standards) and the capital improvement projects required to be completed by the Lessee in accordance with the Use Agreement (including Section 6.1 of the Use Agreement).  The Lessee, with reasonable diligence, and at its sole cost and expense (except as other provided herein or in the Use Agreement), shall complete or cause the completion of all such capital improvement projects in a good and workmanlike manner in accordance with the terms of this Agreement and

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the Use Agreement.  Each General Accelerated Upgrade set forth on Schedule 13 shall be substantially completed by the Lessee on or before the deadline for completion set forth on Schedule 13.  The Authority at its option may cancel or postpone the commencement of any General Accelerated Upgrade by giving prior notice to the Lessee; provided that (i) to the extent that any notice of cancellation shall have been provided to the Lessee following the date on which the Lessee shall have incurred any liabilities or commitments with respect to such project, the Authority shall be required to provide Leasehold Compensation to the Lessee upon demand, the calculation of which shall, for the avoidance of doubt, take into account the Lessee’s out-of-pocket costs in connection therewith and any cost savings to the Lessee as a result of the cancellation of such project and (ii) the Authority shall provide Leasehold Compensation to the Lessee in connection with the cancellation or postponement of any such project.  The Authority shall consult with the Lessee prior to the postponement of any such projects concerning revised timing and scheduling for implementation and shall use its Reasonable Efforts to ensure that the revised schedule does not unduly interfere with the LMM Airport Facility Operations.  The Lessee shall not be in breach of this Section 4.1 for failure to substantially complete any General Accelerated Upgrade by the deadline for completion thereof as set forth on Schedule 13 if such failure is caused directly by (i) the postponement or cancellation of such project by the Authority in accordance with this Section 4.1 (unless such postponement, cancellation or failure is the result of a Lessee Default), (ii) the discovery of protected plant or animal species, human remains, archaeological, paleontological or cultural resources at or about the site of the lands required by any General Accelerated Upgrade or (iii) any action or omission of the Authority or the Commonwealth or any agency or instrumentality thereof.

Section 4.2                                             Authorizations Related to General Accelerated Upgrades.  The Lessee’s obligation to perform the General Accelerated Upgrades shall be subject to the terms and conditions of this Agreement and the Use Agreement and the timely issuance by the Authority or any other applicable Governmental Authority of any and all Authorizations with respect thereto without extraordinary expenses or conditions, and the Authority agrees not to withhold, condition or delay unreasonably the issuance of any such Authorizations issued by the Authority.  The Authority shall use its Reasonable Efforts to assist the Lessee in obtaining Authorizations from other applicable Governmental Authorities.  For the avoidance of doubt, the Authority hereby acknowledges that all Authorizations of the Authority otherwise required of the Authority for the Initial Capital Projects (as defined in the Use Agreement) and the General Accelerated Upgrades have been given by the Authority.

Section 4.3                                             Authority Responsibility for Affected Property.  The Authority shall maintain, repair and rehabilitate any existing or future roads, streets, sidewalks or bridges constituting any Affected Property under the jurisdiction of the Authority that provide direct access to or from the LMM Airport Facility in such a manner as to maintain reasonable public access to and from the LMM Airport Facility, in each case in a good and workmanlike manner, in accordance with any applicable Operating Standards and in such a manner as could not reasonably be expected to interfere with the LMM Airport Facility Operations.

Section 4.4                                             Condition of the LMM Airport Facility During Work.  The Authority acknowledges that the Lessee shall not be in default under the terms of this Agreement, including for failure to comply with the Operating Standards, in relation to the condition of portions of the LMM Airport Facility that are subject to the General Accelerated Upgrades or other capital

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improvement projects required to be completed by the Lessee in accordance with the terms of this Agreement and the Use Agreement, at any time during which work on any such project and the planning for such project is being undertaken by the Lessee; provided that (a) with respect to the General Accelerated Upgrades, the Lessee shall comply with the requirements of Schedule 13, (b) with respect to all projects, the Lessee shall comply with all obligations under the Operating Standards related to such projects, including the scope of work and construction documents Approved by the Authority for such projects and (c) the Lessee shall comply with all other terms of this Agreement and the Use Agreement, including the Lessee’s general maintenance obligations under the Operating Standards, related to the portions of the LMM Airport Facility subject to a General Accelerated Upgrade or other capital improvement project prior to the commencement of work on any such portion of the LMM Airport Facility.

Section 4.5                                             Airline Capital Improvement Contracts.  The Authority has entered into certain contracts with Airlines identified on Schedule 17 (the “Airline Capital Improvement Contracts”), which contracts obligate the Authority to undertake capital improvements as described therein (the “Airline Capital Improvement Projects”).  To the extent that the Authority has not completed any Airline Capital Improvement Project as the Time of Closing, the Lessee shall complete, as soon as practicable following the Closing Date, such uncompleted Airline Capital Improvement Projects.  To the extent that, as of the Time of Closing, the Authority has entered into any third-party contracts in respect of any uncompleted Airline Capital Improvement Projects, the Authority shall assign such third-party contracts to the Lessee.  As between the Parties, the Authority shall be responsible for any and all costs incurred by the Lessee in connection with the completion of any such uncompleted Airline Capital Improvement Projects (notwithstanding any agreements or terms set forth in the underlying applicable Airline Capital Improvement Contract).

ARTICLE 5
MODIFICATIONS

Section 5.1                                             Agreed Modifications.

(a)                                 Either the Authority or the Lessee may propose a Modification.  Promptly after any proposal of a Modification by the Authority or the Lessee, the Lessee shall prepare and deliver to the Authority a written statement setting forth (i) a description of the Modification and any services, obligations, rights or work related to the Modification, (ii) if applicable, a schedule for the implementation of the Modification, (iii) if applicable, a firm price for implementing the Modification and (iv) the impact the Modification would have on (A) LMM Airport Facility Operations, (B) related changes to the Operating Standards, if any, and increases or decreases to the forecasted cost of operation and maintenance of the LMM Airport Facility following completion of the Modification, (C) any requirement to acquire Additional Lands and (D) any other obligations of either Party under this Agreement related to the proposed Modification.  The costs of preparing such written statement shall be borne by the Party proposing the Modification.

(b)                                 If the Lessee proposes a Modification (i) for which the Lessee will bear the cost, (ii) that does not require (A) Additional Lands, (B) any contribution from the Authority or any other Governmental Authority established under the Laws of the Commonwealth or (C) any related changes to the Authority’s obligations under this Agreement and (iii) that does not produce

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revenue not otherwise permitted under applicable Law as of the Date of this Agreement, then, upon receipt by the Authority of the Lessee’s written statement of the Modification, the Lessee shall be entitled to implement the Modification, subject to the rights of the Airlines under the Use Agreement.

(c)                                  For all Modifications proposed by the Lessee not subject to Section 5.1(b), upon receipt by the Authority of the Lessee’s written statement of the Modification, and for all Modifications proposed by the Authority, the Authority and the Lessee will negotiate in good faith to determine the following, while having no obligation to agree with respect thereto: (i) the final scope of the Modification and any work related to the Modification, (ii) if applicable, the contribution to the cost of implementing the Modification to be made by each of the Authority and the Lessee, (iii) if applicable, the schedule for implementing the Modification, (iv) if applicable with respect to Modifications proposed by the Authority, the compensation for any decrease in fees, charges or revenues from the LMM Airport Facility projected to be incurred during the implementation of the Modification to be paid to the Lessee by the Authority, (v) any additional consideration or share of additional revenues (to the extent the Modification relates to revenues not otherwise permitted under applicable Law as of the Date of this Agreement) to be paid to the Authority following implementation of the Modification, (vi) related changes to the Operating Standards, if any, (vii) any requirement for the Authority to acquire Additional Lands and (viii) any other related changes in the Parties’ obligations under this Agreement (including any obligation to pay monies with respect to such Modification or any of the matters contemplated in this Section 5.1).

(d)                                 If the Parties agree on the terms of the Modification in accordance with Section 5.1(c), they shall memorialize their agreements in a written document (an “Agreed Modification”) that shall take effect when executed by the Parties or as otherwise agreed to by the Parties.  To the extent applicable, an Agreed Modification shall provide for the receipt of all necessary Authorizations by the Lessee and the acquisition of Additional Lands by the Authority as a condition precedent to the commencement of any such Modification.

Section 5.2                                             Required Modifications.

(a)                                 If the Authority and the Lessee cannot agree on the terms of a Modification proposed pursuant to Section 5.1, then the Authority shall have the right to require the Lessee to implement the Modification under terms set forth by the Authority, and the Authority shall provide the Lessee with Leasehold Compensation related thereto pursuant to Section 15.1(b) (a “Required Modification”); provided that the Lessee shall not be required to commence any work related to the Required Modification, until (i) the Authority has obtained the GDB’s consent to such Required Modification, (ii) the Authority has provided to the Lessee evidence reasonably satisfactory to the Lessee of the Authority’s ability to finance such Required Modification and, if the Lessee has requested the Authority to advance funds necessary to implement the Required Modification, the Lessee has received such funds from the Authority, (iii) the Lessee has obtained all Authorizations and the Authority has acquired all Additional Lands required to begin work on the Required Modification and the Lessee has no reason to believe that other required Authorizations that cannot be obtained until a later date will not be obtained when needed and (iii) the Lessee and the Authority have agreed to the terms of the Required Modification (including, as applicable, the amount of Leasehold Compensation payable pursuant to this Section 5.2(a) and any

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additional consideration or share of additional revenues to be paid to the Authority following implementation of such Required Modification), or if not, the terms of the Required Modification and the amount of such Leasehold Compensation payable pursuant to this Section 5.2(a) (or additional Leasehold Fee, Annual Authority Revenue Share or other share of additional revenues to be paid to the Authority) have been resolved pursuant to Article 19.  Any Leasehold Compensation provided pursuant to this Section 5.2 shall include any costs incurred by the Lessee in connection with the preparation of the written statement described in Section 5.1 and shall be payable pursuant to Section 15.1(b).

(b)                                 If a Compensation Event necessitates a Modification, the Parties shall first proceed under this Article 5 to attempt in good faith to negotiate an Agreed Modification that resolves the effects of the Compensation Event.  If the Parties are unable to agree on an Agreed Modification within 60 days (or such longer period of time as the Parties may agree) the Lessee shall be entitled to complete the necessary Modification and receive Leasehold Compensation and shall not be required to pay additional consideration or to provide any other compensation related thereto.

(c)                                  The Parties acknowledge that no Required Modification shall in any way interfere or prevent the Lessee from performing its duties and responsibilities as FAA sponsor at the LMM Airport Facility and from complying with the Part 139 Airport Operating Certificate.

Section 5.3                                             Implementation of Modifications.  The Lessee shall (a) ensure that any work or construction performed in connection with a Modification is performed in a good and workmanlike manner, (b) ensure the terms of an Agreed Modification or a Required Modification are diligently complied with and implemented in such manner that the costs and delays relating to a Modification are minimized and (c) conduct a competitive process, which shall be determined by the Lessee in its discretion, for the services of any Contractor to be engaged in connection with a Modification based on commercially reasonable criteria for contract award (including such Contractor’s technical qualifications, bid price and relevant experience).  Without limiting the generality of the foregoing, the Lessee shall comply with applicable Law, applicable codes, good industry practice and, to the extent not superseded by the terms of the relevant Agreed Modification or Required Modification, the provisions of the Operating Standards with respect to the manner in which Modifications are implemented.

Section 5.4                                             Acquisition or Condemnation by Authority of Additional Lands.

(a)                                 Pursuant to an Agreed Modification.  In the case of an Agreed Modification requiring acquisition of Additional Lands, the Authority shall take such actions as may be reasonably necessary to initiate and diligently pursue to completion the proceedings necessary for the acquisition or condemnation of such Additional Lands.  In such event, the costs and expenses, including all judgments and settlements in condemnation, all awards of compensation, costs and litigation expenses, all awards of damages, all costs incurred in prosecuting the condemnation action, including the cost of all legal and support services and the fees of all witnesses, shall be borne as provided in the related Agreed Modification; provided, however, that any payment by the Lessee of any of the costs or expenses in relation to such acquisition shall not, by itself, entitle the Lessee to any real property interest in the Additional Lands so acquired except as provided in Section 5.1(c).

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(b)                                 Pursuant to a Required Modification.  In the case of a Required Modification pursuant to Section 5.2, the Authority shall take such actions as may be reasonably necessary to initiate and diligently pursue to completion the proceedings necessary for the acquisition or condemnation of Additional Lands for such Required Modification.  The Lessee’s obligation to implement any such Required Modification shall be subject to the prior completion of the proceedings described in the preceding sentence.  In such event, all costs and expenses in respect of such acquisition or condemnation of Additional Lands for such Required Modification, including all judgments and settlements in condemnation, all awards of compensation, costs and litigation expenses, all awards of damages, all costs incurred in prosecuting the condemnation action, including the cost of all legal and support services and the fees of all witnesses, shall be borne by the Authority.

(c)                                  Transfer.  Any lands acquired pursuant to this Section 5.4 shall be deemed to be part of the LMM Airport Facility subject to this Agreement.  In connection with the foregoing, the Lessee shall, and shall cause any Leasehold Mortgagee to, execute such instruments as may be reasonably requested or required by the Authority to give effect to the foregoing.  The applicable costs and expenses with respect to Additional Lands contemplated in this Section 5.4 shall be borne as provided in the related Agreed Modification and the applicable costs and expenses with respect to Additional Lands contemplated by Section 5.4(b) shall be borne by the Authority.

(d)                                 Pre-existing Environmental Conditions.  If a Party proposes a Modification that requires the acquisition of Additional Lands, that Party (or in the case of Required Modifications, the Authority) shall assume and discharge any liabilities and obligations whatsoever arising under any Environmental Law relating to the ownership, operation or condition of the Additional Lands and shall be responsible for any environmental conditions existing prior to the time of acquisition, whether or not the manifestation of which occurs following acquisition (including any Hazardous Substance or contaminant that was present or Released or migrated or escaped from or was Released from Additional Lands or otherwise existed at any time prior to the time of acquisition).  Notwithstanding the foregoing, in all circumstances, the Lessee shall comply with Engineering or Institutional Controls associated with such Additional Lands; provided that, prior to having any obligation to comply therewith, the Lessee shall have (i) received written notice of such Engineering or Institutional Controls from the Authority and (ii) a reasonable period of time in which to implement such controls (which period shall not exceed 60 days unless such implementation reasonably requires a longer period and the Lessee has demonstrated to the satisfaction of the Authority, acting reasonably, that it is proceeding with all due diligence during such period to implement such compliance); provided further that in the case of environmental conditions for which the Authority is responsible pursuant to the preceding sentence, prior to having any obligation to comply therewith, the Lessee shall have received notice of such Engineering or Institutional Controls from the Authority; and provided further that the Lessee may submit any dispute with respect to such obligation to dispute resolution in accordance with Article 19.  Notwithstanding any obligation to assume and discharge any liabilities arising under any Environmental Laws contained in this Section 5.4(d), to the extent the Lessee is obligated to assume such liabilities, the Lessee shall not acquire or be entitled to any real property interest in the Additional Lands associated with such liabilities, except as provided in Section 5.4(c).

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(e)                                  NEPA and FAA Review.  It is acknowledged and agreed that the acquisition or condemnation of Additional Lands and the inclusion of Additional Lands in the LMM Airport Facility may be subject to review or approval in accordance with applicable Law, including the National Environmental Policy Act (42 U.S.C. § 4321 et seq.) and the policies and regulations of the FAA with respect to the Airport’s airport layout plan, and that the Parties’ obligations under this Section 5.4 are subject to such review and approval process.

ARTICLE 6
OPERATING STANDARDS

Section 6.1                                             Compliance with Operating Standards.  The Lessee shall, and shall cause the LMM Airport Facility Operations to, comply with and implement the Operating Standards in all material respects at all times during the Term (including any changes or modifications to the Operating Standards made pursuant to the terms of this Agreement or the Use Agreement); provided that the Lessee shall have a reasonable period of time (a) following the Closing Date to carry out changes to the operations of the LMM Airport Facility in order to cause the LMM Airport Facility to comply with the Operating Standards in effect as of the Closing Date, to the extent the LMM Airport Facility is not in compliance therewith as of the Closing Date (which period of time shall not exceed 180 days; provided that such 180-day period will be extended for a reasonable period of time for the Lessee to cure such noncompliance (i) if such noncompliance cannot be cured within 180 days, (ii) if such noncompliance is susceptible to a cure and (iii) for long as the Lessee is proceeding with diligence and in good faith to cure such noncompliance), and (b) from time to time to comply with the introduction of changes or modifications to the Operating Standards that are made in accordance with the terms of this Agreement and the Use Agreement (which period of time shall not exceed 90 days, except as otherwise may be provided in the revised Operating Standards; provided that such 90-day period will be extended for a reasonable period of time for the Lessee to cure such noncompliance (i) if such noncompliance cannot be cured within 90 days, (ii) if such noncompliance is susceptible to a cure and (iii) for long as the Lessee is proceeding with diligence and in good faith to cure such noncompliance).  The Authority and the Lessee acknowledge and agree that the Operating Standards shall be construed flexibly in light of their objectives.  The Lessee shall have in place procedures that are reasonably designed to achieve compliance with the Operating Standards.  The Operating Standards shall not be deemed to be violated by occasional, isolated acts or omissions, including any occasional, isolated failure to comply with specific requirements set forth therein.  Without limiting the generality of the foregoing, any non-recurring failure to meet specific time limits, durations or frequencies set forth in the Operating Standards shall not constitute a violation; provided that the Lessee is not deliberately violating or failing to comply with such requirements; and provided further that any such violation or failure is not inconsistent with procedures and immediate affirmative corrective steps that are reasonably designed to achieve, through the Lessee’s best efforts, compliance with the requirements set forth in the Operating Standards.  Except as specifically set forth in this Agreement or the Use Agreement (including the Operating Standards), the Lessee shall perform all work required to comply with and implement the Operating Standards (including the capital improvements described therein) as part of the LMM Airport Facility Operations and at its sole cost and expense.  To the extent that any term or provision of the Operating Standards conflicts with any term or provision otherwise specified in this Agreement, then such term or provision of this Agreement shall govern and shall supersede any such conflicting term or provision in the Operating Standards.  To the extent that any term or

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provision of the Operating Standards conflicts with any term or provision otherwise specified in either the Part 139 Airport Certification Manual (including any subsequently-issued amendments thereto as issued by the FAA) or the TSA-approved Airport Security Program (including any subsequently-issued requirements thereunder as issued by TSA), then such term or provision of the Part 139 Airport Certification Manual or the TSA-approved Airport Security Program, as applicable, shall govern and shall supersede any such conflicting term or provision in the Operating Standards.

Section 6.2                                             Modified Operating Standards.

(a)                                 The Authority shall have the right, at any time during the Term, to modify or change the Operating Standards upon reasonable notice to the Lessee to comply with any new Law or FAA or TSA directive or requirement applicable to the LMM Airport Facility, so long as such Law does not constitute an Adverse Action and such modification or change is permitted under the Use Agreement.  In the event that the Authority modifies or changes the Operating Standards in accordance with the immediately preceding sentence, the Lessee, at its cost and expense, shall perform all work required to implement such modification or changes and shall comply with all such modifications or changes and in no event shall the Lessee be excused from compliance with any such modification or change.  For the avoidance of doubt, the Lessee will have the right to challenge any modified Operating Standard pursuant to Article 19 on the basis that it does not meet the requirement set forth above.

(b)                                 The Authority shall have the right, at any time during the Term, to propose a change to the Operating Standards upon reasonable notice to the Lessee to conform the Operating Standards to standards or practices generally adopted at Comparable Public Airports.  Promptly upon receipt of such proposed change, the Lessee shall in good faith engage the Authority to determine whether such proposed change is necessary to satisfy the requirement set forth above.  If the Lessee does not agree that such proposed change is necessary to satisfy the requirement set forth above, the Lessee shall provide prompt written notice of such disagreement to the Authority.  Following the receipt by the Authority of such notice from the Lessee, the parties shall work together in good faith to resolve such disagreement, including by discussing alternative changes to the Operating Standards and examining the standards or practices generally adopted at Comparable Public Airports.  If the Lessee and the Authority are unable to resolve such disagreement, the matter may be submitted to dispute resolution under the provisions of Article 19.

(c)                                  If, during the Term, the Authority is of the opinion that a modification or change to the Operating Standards is necessary or desirable but such modification or change is not subject to Sections 6.2(a) or 6.2(b), the Authority may upon reasonable notice to the Lessee modify or change the Operating Standards, subject to obtaining prior authorization from the GDB; provided, however, that the Authority shall pay the Leasehold Compensation, if any, to the Lessee with respect thereto at the time such modification or change is implemented.  The Lessee shall perform all work required to implement and shall comply with all such modifications and changes, and in no event shall the Lessee be excused from compliance with any such modification or change.  The Authority shall have the right to undertake the work necessary to ensure implementation of and compliance with any modification or change to the Operating Standards if the Lessee fails to do so within a reasonable period of time; provided, however, that to the extent

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that such work is undertaken by the Authority, the Lessee shall pay to the Authority within 10 Business Days following demand therefor, or the Authority may offset from amounts owing to the Lessee in connection with such modification or change, the costs of the portion of the work performed in order to comply with the Operating Standards existing immediately prior to such modification or change, and the Authority shall be responsible only for the incremental costs of the additional work required in order to implement such proposed modification or change to the Operating Standards and, without duplication with the foregoing, the Leasehold Compensation with respect to such modification or change.

(d)                                 If the Lessee, at its cost and expense, wishes to modify the Operating Standards, the Lessee must obtain the Approval of the Authority and the approval of the Signatory Airlines in accordance with Section 3.4(d) of the Use Agreement (or the equivalent provision in any successor use agreement) in accordance with the following:

(i)                                     The Lessee shall submit the proposed modifications to the Authority for Approval and to the Signatory Airlines for approval in accordance with Section 3.4(d) of the Use Agreement (or the equivalent provision in any successor use agreement), together with an explanation of the Lessee’s rationale for making its proposal and all relevant supporting information, certificates, reports, studies, investigations and other materials as are necessary to demonstrate that the Lessee’s proposed modifications are reasonably designed to achieve the objectives of the applicable Operating Standards.  The Authority or a Signatory Airline may request any additional supporting information, certificates, reports, studies, investigations and other materials as are reasonably required to determine if the Lessee’s proposed modifications are reasonably designed to achieve the objectives of the applicable Operating Standards.

(ii)                                  Approval of the Lessee’s proposed modifications may be withheld, delayed or conditioned only if there is a reasonable basis to determine that the Lessee’s proposed operating standards are not reasonably designed to achieve the objectives of the applicable Operating Standards.  Until the modifications are approved by the Authority and the requisite number of Signatory Airlines in accordance with Section 3.4(d) of the Use Agreement (or the equivalent provision in any successor use agreement), the Lessee shall not implement the proposed modifications.  The Lessee’s proposed modifications shall be deemed incorporated into the Operating Standards upon approval by the Authority and the Signatory Airlines in accordance with the terms hereof.  If the Authority or the requisite number of Signatory Airlines refuses to approve any proposed modifications and the Lessee disagrees with such refusal, the Lessee may submit the matter to dispute resolution under the provisions of Article 11 of the Use Agreement (or the equivalent provision in any successor use agreement).

(iii)                               Notwithstanding anything to the contrary, neither the Authority nor a Signatory Airline may withhold, delay or condition the approval of any proposed modification to the Operating Standards if the Lessee reasonably believes that such proposed modification is necessary to comply with the Part 139 Airport Operating Certificate, the TSA-approved Airport Security Program or any other requirements of Law or FAA or TSA directive or requirement; provided that the Authority and the Signatory Airlines each reserves the right to contest any such proposed modification, including by seeking FAA or TSA guidance or interpretation to the extent that the Authority or Signatory Airline reasonably believes that such proposed modification is not reasonably designed to achieve the objective of compliance with either the Part 139 Airport

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Operating Certificate, the TSA-approved Airport Security Program or other requirement of Law.  Any such contest shall be asserted by the Authority or the Signatory Airline, as appropriate, by giving the Lessee prompt notice thereof in accordance with Section 3.4(d) of the Use Agreement (or the equivalent provision in any successor use agreement).  Following the receipt by the Lessee of such notice, the Lessee and the Authority or Signatory Airline, as appropriate, shall work together in good faith to resolve such contest, including by working with the FAA or the TSA, as appropriate.  If the Lessee and the Authority or Signatory Airline, as appropriate, are unable to resolve such contest, the matter may be submitted to dispute resolution under the provisions of Article 11 of the Use Agreement (or the equivalent provision in any successor use agreement).  The Lessee may implement (and continue to implement) any proposed modification to the Operating Standards that it reasonably believes is necessary to comply with the Part 139 Airport Operating Certificate, the TSA-approved Airport Security Program or other requirement of Law while it works in good faith with the Authority or Signatory Airline, as appropriate, to resolve any contest regarding the implementation of such modification.

ARTICLE 7
AIRPORT FEES AND REVENUES

Section 7.1                                             Generally.  The Lessee shall, at all times during the Term, have the right to establish, collect, retain and enforce payment of all fees, rents, tariffs, revenues and any other type of charge for use of or in connection with the LMM Airport Facility to the fullest extent permitted by Section 10(c) of the Act, subject to all applicable requirements of Law and the terms and conditions of any applicable use agreement or Assigned LMM Airport Facility Contract.

Section 7.2                                             Specific Authorizations.                                               Without limiting Section 7.1, the Lessee shall have the sole and specific right to charge, assess, collect, seek and apply the following fees, charges, revenues and grants:

(a)                                 PFCs.               The Lessee shall have the right to charge, assess, collect, seek, and apply such PFCs that may have in the past or in the future been authorized under 49 U.S.C. § 40117, or any predecessor or successor Law, and as approved by the FAA from time to time with respect to the LMM Airport Facility.  PFCs collected for the LMM Airport Facility may not be used to finance projects at any other airport facility.

(b)                                 Government Grants-in-Aid.                                             The Lessee shall have the right to apply for and receive Government Grants-in-Aid, including grants authorized under 49 U.S.C § 47101, et seq., and 49 U.S.C § 44923, or any predecessor or successor Law, and as approved by the appropriate Governmental Authority from time to time with respect to the LMM Airport Facility.

(c)                                  For the avoidance of doubt, during the Term, the Authority shall not apply for any PFCs or Government Grants-in-Aid with respect to the LMM Airport Facility.

(d)                                 Ground Transportation Private Access and Use Fees.  The Lessee shall have the right, subject to applicable Law, to collect any private access and/or use fees for ground transportation at the LMM Airport Facility.

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ARTICLE 8
REPORTING; AUDITS; INSPECTIONS