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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
Date of Report (Date of earliest event reported) January 25, 2022
 
Sky Harbour Group Corporation
(Exact name of registrant as specified in its charter)
 
Delaware
 
001-39648
 
85-2732947
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)
 
136 Tower Road, Suite 205
Westchester County Airport
White Plains, NY
 
10604
(Address of principal executive offices)
 
(Zip Code)
 
(212) 554-5990
Registrant’s telephone number, including area code
 
(Former name or former address, if changed since last report.)
 

 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Class A common stock, par value $0.0001 per share
 
SKYH
 
NYSE American LLC
Warrants, each whole warrant exercisable for one share of Class A common stock at an exercise price of $11.50 per share
 
SKYH WS
 
NYSE American LLC
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
Emerging growth company ☒
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
 


 
 

 
Introductory Note
 
As used in this Current Report on Form 8-K, unless otherwise stated or the context clearly indicates otherwise, the terms the “Company,” “Registrant,” “we,” “us” and “our” refer to the entity formerly named Yellowstone Acquisition Company, after giving effect to the Business Combination (as defined below), and as renamed Sky Harbour Group Corporation.
 
On January 25, 2022 (the “Closing Date”), Yellowstone Acquisition Company, a Delaware corporation (“YAC”), completed the previously announced business combination pursuant to that certain Equity Purchase Agreement, dated as of August 1, 2021 (the “Equity Purchase Agreement”), between YAC and Sky Harbour LLC, a Delaware limited liability company (“Sky”). Each of Sky’s existing equityholders (collectively, the “Sky Existing Equityholders”) separately entered into an Equityholders Voting and Support Agreement irrevocably agreeing to vote in favor of the business combination set forth in the Equity Purchase Agreement. As contemplated by the Equity Purchase Agreement and described in the section titled “Proposal No. 1 — The Business Combination Proposal” beginning on page 98 of the definitive proxy statement (the “Proxy Statement”), filed by YAC on January 7, 2022 with the Securities and Exchange Commission (the “SEC”), on the Closing Date the following occurred: (a) YAC changed its name to “Sky Harbour Group Corporation”; (b) all outstanding shares of Class B common stock of YAC, par value $0.0001 per share (“Sponsor Stock”), held by BOC Yellowstone LLC, a Delaware limited liability company (the “Sponsor”), were converted into shares of Class A common stock of the Company, par value $0.0001 per share (the “Class A Common Stock”); (c) Sky restructured its capitalization, issued to the Company 14,937,581 common units of Sky (the “Sky Common Units”), which was equal to the number of outstanding shares of Class A Common Stock immediately after giving effect to the Business combination (taking into account the redemption of Class A Common Stock and the Class A Common Stock issued under the BOC PIPE (as defined below)), reclassified the existing Sky Common Units (other than the existing Sky incentive common units (the “Sky Incentive Units”)), existing Sky Series A preferred units and the existing Sky Series B preferred units into Sky Common Units; (d) effected certain adjustments to the number of Sky Incentive Units to reflect the new capital structure; (e) appointed the Company as the managing member of Sky; (f) the Sky Common Units issued to BOC YAC Funding LLC (“BOC YAC”) in respect of its Series B preferred units were converted into 5,500,000 shares of Class A Common Stock; (h) holders of Sky Common Units received one share of Class B common stock, $0.0001 par value per share (the “Class B Common Stock”) for each Sky Common Unit, and as consideration for the issuance of 14,937,581 Sky Common Units by Sky to the Company, YAC contributed to Sky $39,773,567 consisting of the amount held in the YAC trust account after (i) deducting $123,068,515 required to fund the redemption of the Class A Common Stock held by eligible stockholders who properly elected to have their shares redeemed as of the Closing Date, (ii) taking into account the $45,000,000 purchase of Class A Common Stock by Boston Omaha (the “BOC PIPE”) and (iii) deducting $20,900,674 consisting of deferred underwriting commissions, transaction expenses, the BOC Yellowstone LLC promissory note repayment and the payment to Atalaya Capital Management LP in connection with a forward purchase transaction; and (i) without any action on the part of any holder of YAC Warrants, each YAC Warrant that is issued and outstanding immediately prior to the closing became a SHG Corporation Warrant (the transactions referred to in clauses (a) through (i), collectively, the “Business Combination”).
 
As a result of the Business Combination, the Company is organized as an “Up-C” structure in which substantially all of the operating assets of Sky’s business are held by Sky, and the Company’s only assets are its equity interests in Sky.
 
As of the open of trading on January 26, 2022, the Class A Common Stock and Warrants of the Company, formerly those of YAC, began trading on the NYSE American LLC (“NYSE American”) as “SKYH” and “SKYH WS,” respectively.
 
Certain terms used in this Current Report on Form 8-K have the same meaning as set forth in the Proxy Statement. This Current Report on Form 8-K contains summaries of the material terms of various agreements executed in connection with the transactions described herein. The summaries of these agreements are subject to, and are qualified in their entirety by, reference to these agreements, which are filed as exhibits hereto and incorporated herein by reference.
 
Immediately following the Business Combination, the Company’s ownership was as follows:
 
 
YAC’s former public stockholders own 1,537,857 shares of the Company’s outstanding common stock, all of which is Class A Common Stock, and represents approximately 2.7% of the voting power of the Company;
   
 
 
Boston Omaha, through the Sponsor, BOC Yellowstone II LLC, the BOC PIPE and the conversion of BOC YAC’s equity interests in Sky, owns 13,399,724 shares of the Company’s outstanding common stock, all of which is Class A Common Stock, and represents approximately 23.5% of the voting power of the Company;
   
 
 
The Existing Sky Equityholders own 42,192,250 shares of the Company’s outstanding common stock, consisting of entirely of Class B Common Stock, which represent approximately 73.9% of the voting power of the Company.
 
 

 
Item 1.01. Entry into a Material Definitive Agreement.
 
Stockholders Agreement
 
On January 25, 2022, in connection with the completion of the Business Combination and as contemplated by the Equity Purchase Agreement, the Company, the Existing Sky Equityholders and the Sponsor entered into a stockholders’ agreement (the “Stockholders’ Agreement”). The material terms of the Stockholders’ Agreement are described in the section of the Proxy Statement beginning on page 113 titled “Proposal No. 1 – The Business Combination Proposal – Related Agreements – Stockholders’ Agreement and Election of Directors.” Such description is qualified in its entirety by the full text of the Stockholders’ Agreement, which is included as Exhibit 10.1 to this Current Report on Form 8-K (this “Report”) and is incorporated herein by reference.
 
Registration Rights Agreement
 
On January 25, 2022, in connection with the completion of the Business Combination and as contemplated by the Equity Purchase Agreement, Sky, the Existing Sky Equityholders and Sponsor entered into a registration rights agreement (the “Registration Rights Agreement”). The material terms of the Registration Rights Agreement are described in the section of the Proxy Statement beginning on page 128 titled “Proposal No. 1 — The Business Combination Proposal — Related Agreements —Registration Rights Agreement.” Such description is qualified in its entirety by the text of the Registration Rights Agreement, which is included as Exhibit 10.2 to this Report and is incorporated herein by reference.
 
Tax Receivable Agreement
 
On January 25, 2022, in connection with the completion of the Business Combination and as contemplated by the Equity Purchase Agreement, the Company, Sky, the Existing Sky Equityholders and Tal Keinan, as the TRA Holder Representative, entered into a tax receivable agreement (the “Tax Receivable Agreement”). The material terms of the Tax Receivable Agreement are described in the section of the Proxy Statement beginning on page 110 titled “Proposal No. 1 — The Business Combination Proposal — Related Agreements — Tax Receivable Agreement.” Such description is qualified in its entirety by the text of the Tax Receivable Agreement, which is included as Exhibit 10.3 to this Report and is incorporated herein by reference.
 
A&R Operating Agreement
 
On January 25, 2022, in connection with the completion of the Business Combination and as contemplated by the Equity Purchase Agreement, the Company, Sky and each of the Existing Sky Equityholders entered into the Third A&R Operating Agreement, which, among other things, (i) restructured the capitalization of Sky, and (ii) appointed the Company as the managing member of Sky. The material terms of the Third A&R Operating Agreement are described in the section of the Proxy Statement beginning on page 110 titled “Proposal No. 1 — The Business Combination Proposal — Related Agreements — A&R Operating Agreement of Sky.” Such description is qualified in its entirety by the text of the Third A&R Operating Agreement, which is included as Exhibit 10.4 to this Report and is incorporated herein by reference.
 
Indemnification Agreements
 
In connection with the closing of the Business Combination, the Company entered into indemnification agreements with each of its directors and executive officers. Each indemnification agreement provides for indemnification and advancement by the Company of certain expenses and costs relating to claims, suits or proceedings arising from service to the Company or, at its request, service to other entities, as officers or directors to the maximum extent permitted by applicable law, for both the current directors and executive officers of the Company and the former YAC directors and executive officers. The foregoing description of the indemnification agreements does not purport to be complete and is qualified in its entirety by the terms and conditions of the indemnification agreements, a form of which is attached hereto as Exhibit 10.8 and is incorporated herein by reference.
 
Item 2.01. Completion of Acquisition or Disposition of Assets.
 
The information set forth in the “Introductory Note” above is incorporated into this Item 2.01 by reference. On January 25, 2022, the Business Combination was approved by the stockholders of YAC at a special meeting of stockholders (the “Special Meeting”). The Business Combination was completed on January 25, 2022.
 
Consideration to YACs Stockholders in the Business Combination
 
In connection with the Business Combination, holders of 12,061,041 shares of Class A Common Stock exercised their right to redeem those shares for cash at an approximate price of $10.20 per share, for an aggregate of approximately $123 million, which was paid to such holders on the Closing Date.
 
Upon completion of the Business Combination, 3,399,724 shares of Sponsor Stock held by the Sponsor converted into shares of Class A Common Stock at the closing of the Business Combination. Following such conversion, the Sponsor intends to transfer 206,250 shares to Glazer Capital LLC and an aggregate of 75,000 shares to YAC’s former independent directors that resigned upon the closing of the Business Combination.
 
Consideration Paid to the Existing Sky Equityholders in the Business Combination
 
The consideration paid to the Existing Sky Equityholders in connection with the Business Combination consisted of 42,192,250 shares of Class B Common Stock.
 
The material terms and conditions of the Equity Purchase Agreement are described in the section entitled “Proposal No. 1 — The Business Combination Proposal” beginning on page 98 of the Proxy Statement, which are incorporated herein by reference.
 
 

 
Company Securities Outstanding Following the Business Combination
 
On the Closing Date, all of YAC’s outstanding units separated into their component parts of one share of YAC Class A Common Stock and one half of one YAC Warrant. Immediately after the Business Combination, there were 14,937,581 shares of Class A Common Stock, Warrants to purchase 14,519,218 shares of Class A Common Stock (including 7,719,779 private placement warrants) and 42,192,250 shares of Class B Common Stock issued and outstanding. On the Closing Date, there were 42,192,250 Sky Common Units outstanding (excluding Sky Common Units held by the Company) and 2,807,750 Sky Incentive Units outstanding. The Sky Incentive Equity Units are convertible, subject to the terms of the Third Amended and Restated Operating Agreement of Sky, into Sky Common Units, which are redeemable for shares of Class A Common Stock at each Sky Common Unit holder’s election.
 
FORM 10 INFORMATION
 
Forward-Looking Statements
 
Some of the information contained in this Current Report on Form 8-K, or incorporated herein by reference, contains forward-looking statements. When contained in this Current Report on Form 8-K, and incorporated herein by reference, the words “estimates,” “projected,” “expects,” “anticipates,” “forecasts,” “plans,” “intends,” “believes,” “seeks,” “may,” “will,” “should,” “future,” “propose” and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside the Company’s management’s control, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. These forward-looking statements are based on information available as of the date of this Current Report on Form 8-K, and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and the Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
 
As a result of a number of known and unknown risks and uncertainties, the Company’s actual results or performance may be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to:
 
 
expectations regarding the Company’s strategies and future financial performance, including the Company’s future business plans or objectives, prospective performance and commercial opportunities and competitors, services, pricing, marketing plans, operating expenses, market trends, revenues, liquidity, cash flows and uses of cash, capital expenditures, and the Company’s ability to invest in growth initiatives;
   
 
 
the outcome of any legal proceedings that may be instituted against the Company or Sky in connection with the Business Combination and related transactions;
   
 
 
the risk that the proposed Business Combination disrupts Sky’s current operations as a result of the announcement and consummation of the transactions described herein;
   
 
 
Sky’s limited operating history makes it difficult to predict future revenues and operating results;
   
 
 
financial projections with respect to Sky may not prove to be reflective of actual financial results;
 
 

 
 
the ability to recognize the anticipated benefits of the Business Combination, which may be affected by, among other things, competition, and the ability of the combined business to grow and manage growth profitably;
   
 
 
costs related to the Business Combination;
   
 
 
changes in applicable laws or regulations;
   
 
 
the possibility that the Company or Sky may be adversely affected by other economic, business, and/or competitive factors; and
   
 
 
other risks and uncertainties indicated in the Proxy Statement, including those set forth under the section entitled “Risk Factors.”
 
Should one or more of these risks or uncertainties materialize, or should any of the underlying assumptions prove incorrect, actual results may vary in material respects from those expressed or implied by these forward-looking statements. You should not place undue reliance on these forward-looking statements.
 
Business
 
The information set forth in the section entitled “Other Information about the SHG Corporation” beginning on page 153 of the Proxy Statement is incorporated herein by reference.
 
Risk Factors
 
The information set forth in the section entitled “Risk Factors” beginning on page 48 of the Proxy Statement is incorporated herein by reference.
 
Selected Consolidated Historical Financial and Other Information
 
Reference is made to the disclosure set forth in Item 9.01 of this Current Report on Form 8-K concerning the financial information of YAC and Sky. Reference is further made to the disclosure contained in the Proxy Statement in the sections titled “Comparative Share Information” beginning on page 47.
 
Unaudited Pro Forma Condensed Combined Financial Information
 
The information set forth in Exhibit 99.1 to this Current Report on Form 8-K, which includes the unaudited pro forma condensed combined financial information of the Company and Sky is incorporated herein by reference.
 
Managements Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures About Market Risk
 
Reference is made to the disclosure contained in the Proxy Statement in the sections titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Sky” beginning on page 174 and that information is incorporated herein by reference. 
 
Facilities
 
The information set forth in the section entitled “Other Information about SHG Corporation — Initial Portfolio” on page 155 of the Proxy Statement is incorporated herein by reference.
 
 

 
Security Ownership of Certain Beneficial Owners and Management
 
Following the Business Combination, Sky is a subsidiary of the Company. In its capacity as managing member of Sky, the Company will operate and control all of Sky’s business and affairs and will consolidate Sky’s financial results into the Company’s financial statements.
 
The following table sets forth information regarding the beneficial ownership of the Company’s common stock as of the Closing Date by:
 
 
each person known to be the beneficial owner of more than 5% of the Company’s outstanding ordinary shares;
   
 
 
each director and each of the Company’s named executive officers; and
   
 
 
all current executive officers and directors as a group.
 
The information below is based on an aggregate of 14,937,581 shares of Class A Common Stock and 42,192,250 shares of Class B Common Stock issued and outstanding as of the Closing Date, and does not reflect any possible redemptions from funds which acquired Class A Common Stock in the public markets and have not yet filed a corresponding Schedule 13G reflecting a change in ownership. Beneficial ownership is determined according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if she, he or it possesses sole or shared voting or investment power over that security, including options and warrants that are currently exercisable or exercisable within 60 days. Voting power represents the combined voting power of shares of Class A Common Stock and Class B Common Stock owned beneficially by such person. On all matters to be voted upon, holders of shares of Class A Common Stock and Class B Common Stock will vote together as a single class on all matters submitted to the stockholders for their vote or approval. Holders of Class A Common Stock and Class B Common Stock are entitled to one vote per share on all matters submitted to the stockholders for their vote or approval.
 
Unless otherwise indicated, we believe that all persons named in the table below have sole voting and investment power with respect to all shares of Common Stock beneficially owned by the individuals below:
 
   
Class A
Common Stock
   
Class B
Common Stock
   
Combined
Voting
Power
(%)(2)
 
Name and Address of Beneficial Owner(1)
 
Number
   
%
   
Number
   
%
         
Five Percent Holders:
                                       
Boston Omaha Corporation(3)
    4,500,000       30.1
%
    -       -       7.9
%
BOC Yellowstone LLC(4)
    3,193,474       21.4
%
    -       -       5.6
%
BOC YAC Funding LLC(5)
    5,500,000       36.8
%
    -       -       9.6
%
Hudson Bay Capital Management LP and Sandler Gerber(6)
    900,000       6.0
%
    -       -       1.6
%
Glazer Capital, LLC and Paul J. Glazer(7)
    1,265,352       8.5
%
    -       -       2.2
%
Karpus Management LLC(8)
    1,717,277       11.5
%
    -       -       3.0
%
Polar Asset Management Partners Inc.(9)
    984,371       6.6
%
    -       -       1.7
%
Barclays PLC and Barclays Bank PLC(10)
    759,608       5.1
%
    -       -       1.3
%
Shaolin Capital Management LLC(11)
    750,955       5.0
%
    -       -       1.3
%
Due West Partners LLC(12)(15)
    -       -       11,640,460       27.6
%
    20.4
%
Center Sky Harbour LLC(13)
    -       -       11,637,960       27.6
%
    20.4
%
Directors and Executive Officers:
            -                          
Tal Keinan
    -       -       17,943,792       42.5
%
    31.4
%
Alex Saltzman
    -       -       -       -       -  
Francisco Gonzalez
    -       -       -       -       -  
Michael Schmitt
    -       -       -       -       -  
Gerald Adler
    -       -       -       -       -  
Walter Jackson
    -       -       412,072       *       *  
Alethia Nancoo
    -               -       -       -  
Alex B. Rozek(14)
    13,399,724       89.7
%
    -       -       23.5
%
Lysa Leiponis
    -       -       -       -       -  
Nick Wellmon(15)
    -       -       11,640,460       27.6
%
    20.4
%
Robert S. Rivkin
    -       -       -       -       -  
All directors and executive officers, as a group (11 individuals)
    13,399,724       89.7
%
    29,996,324       71.2
%
    76.0
%
 
 
*
less than 1%
 
 

 
 
(1)
This table is based on 57,129,831 shares of Common Stock outstanding as of January 25, 2022. Beneficial ownership is determined in accordance with the rules of the SEC and includes voting and investment power with respect to shares. Unless otherwise noted, the business address of each of those listed in the table above is c/o Sky Harbour Group Corporation, 136 Tower Road, Suite 205, Westchester County Airport, White Plains, NY 10604.
 
(2)
Percentage of combined voting power represents voting power with respect to all shares of Class A common stock and Class B Common Stock, voting together as a single class. Holders of Class A Common Stock and Class B Common Stock are entitled to one vote per share on all matters submitted to the stockholders for their vote or approval.
 
(3)
The business address of Boston Omaha Corporation is 1601 Dodge Street, Suite 3300, Omaha, Nebraska 68102.
 
(4)
The business address of BOC Yellowstone LLC is c/o BOC Yellowstone LLC 1601 Dodge Street, Suite 3300, Omaha, Nebraska 68102.
 
(5)
The business address of BOC YAC Funding LLC is c/o BOC Yellowstone LLC 1601 Dodge Street, Suite 3300, Omaha, Nebraska 68102.
 
(6)
According to Schedule 13G filed on filed on February 11, 2021. The business address of Hudson Bay Capital Management LP and Mr. Sander Gerber is 777 Third Avenue, 30th Floor, New York, New York 10017.
 
(7)
According to Schedule 13G filed on February 16, 2021. The business address of Glazer Capital, LLC and Mr. Paul J. Glazer is 250 West 55th Street, Suite 30A, New York, New York 10019.
 
(8)
According to Schedule 13G filed on July 9, 2021. Karpus Management, Inc., d/b/a Karpus Investment Management‘s business address is 183 Sully's Trail, Pittsford, New York 14534.
 
(9)
According to Schedule 13G filed on February 11, 2021. The business address of Polar Asset Management Partners Inc. is 401 Bay Street, Suite 1900, PO Box 19, Toronto, Ontario M5H 2Y4, Canada.
 
(10)
According to Schedule 13G filed on February 11, 2021. The business address of Barclays PLC and Barclays Bank PLC is 1 Churchill Place, London, E14 5HP, England.
 
(11)
According to Schedule 13G filed on February 24, 2021. The business address of Shaolin Capital Management LLC is 1460 Broadway, New York, New York 10036.
 
(12)
The business address of Due West Partners LLC is 8260 SE 31st St., Mercer Island, Washington 98040.
 
(13)
The business address of Center Sky Harbour LLC is 9355 Wilshire Blvd, Suite 350, Beverly Hills, California 90210.
 
(14)
The business address of Mr. Rozek is c/o Boston Omaha Corporation 1601 Dodge Street, Suite 3300, Omaha, Nebraska 68102. Mr. Rozek is an officer, director and stockholder of Boston Omaha Corporation. Mr. Rozek is a manager of BOC Yellowstone LLC, which is owned by Boston Omaha Corporation and is the sole managing member of BOC Yellowstone II LLC. As such, he may be deemed to have or share beneficial ownership of the Class A common stock held directly by BOC Yellowstone LLC and BOC Yellowstone II LLC. Mr. Rozek disclaims any beneficial ownership of the reported shares other than to the extent of any pecuniary indirect interest he may have therein as a stockholder of Boston Omaha Corporation.
 
(15)
Represents shares held by Due West Partners LLC (“Due West”). Mr. Wellmon is the Founder and Managing Partner of Due West, and as such has voting and investment discretion with respect to the shares of Class B Common Stock held of record by Due West and may be deemed to have shared beneficial ownership of the shares of Class B Common Stock held directly by Due West. Mr. Wellmon disclaims any beneficial ownership of the reported shares other than to the extent of any pecuniary indirect interest he may have therein.
 
 
Directors and Executive Officers
 
Information with respect to the Company’s directors and executive officers immediately after the closing is set forth in the section entitled “SHG Corporation Management After the Business Combination” beginning on page 189 in the Proxy Statement and Item 5.02 of this Current Report on Form 8-K and is incorporated herein by reference.
 
Each of Tal Keinan, Walter Jackson, Alethia Nancoo, Alex B. Rozek, Lysa Leiponis, Nick Wellmon and Robert S. Rivkin were elected to serve as directors of the Company. Mr. Keinan was appointed as Chairman of the board of directors, and Ms. Leiponis was appointed as lead independent director. The size of the board is seven members. Biographical information for these individuals is set forth in the section entitled “SHG Corporation Management After the Business Combination” beginning on page 189 in the Proxy Statement and is incorporated herein by reference. In accordance with the Second Amended and Restated Certificate of Incorporation of the Company (the “A&R Certificate of Incorporation”), each director will have a term that expires at the Company’s annual meeting of stockholders in 2022 or until their respective successors are duly elected and qualified, or until their earlier resignation, removal or death.
 
 

 
The Board appointed Ms. Leiponis, Mr. Jackson and Mr. Rivkin to serve on the Audit Committee, with Mr. Jackson serving as its chairman. The Board appointed Mr. Keinan, Ms. Leiponis, Ms. Nancoo, Mr. Jackson, Mr. Wellmon and Mr. Rozek to serve on the Compensation Committee, with Ms. Nancoo serving as its chairman. The Board appointed Mr. Kienan, Ms. Leiponis, Ms. Nancoo, Mr. Rivkin and Mr. Rozek to serve on the Nominating and Corporate Governance Committee, with Ms. Leiponis serving as its chairman. Information with respect to the Company’s Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee is set forth in the section entitled “SHG Corporation Management After the Business Combination — Committees of the Board of Directors” beginning on page 190 of the Proxy Statement and is incorporated herein by reference.
 
In connection with the completion of the Business Combination, Tal Keinan was appointed to serve as the Company’s Chief Executive Officer, Alex Saltzman was appointed to serve as the Chief Operating Officer and Francisco Gonzalez was appointed to serve as Chief Financial Officer. Biographical information for these individuals is set forth in the section entitled “SHG Corporation Management After the Business Combination” beginning on page 189 of the Proxy Statement and is incorporated by reference herein.
 
Executive Compensation
 
The information set forth in the section entitled “Compensation of Executive Officers and Directors After the Business Combination” beginning on page 195 of the Proxy Statement, which includes the executive compensation information of Sky is incorporated herein by reference.
 
Director Compensation
 
The information set forth in the section entitled “Compensation of Executive Officers and Directors After the Business Combination” beginning on page 195 of the Proxy Statement, which includes the director compensation information of Sky is incorporated herein by reference.
 
Certain Relationships and Related Transactions
 
The information set forth in the sections entitled “Certain Relationships and Related Party Transactions — YAC’s Related Party Transactions” beginning on page 202 of the Proxy Statement and “Certain Relationships and Related Party Transactions — Sky’s Related Party Transactions” beginning on page 204 of the Proxy Statement are incorporated herein by reference.
 
Director Independence
 
At the closing of the Business Combination, the board of directors of the Company adopted NYSE American listing standards to assess director independence. The board of directors has determined that each of Walter Jackson, Alethia Nancoo, Lysa Leiponis, Nick Wellmon and Robert S. Rivkin qualifies as “independent” under the listing requirements of NYSE American. Mr. Jackson is also an “audit committee financial expert” under the rules of the Securities and Exchange Commission.
 
Legal Proceedings
 
The information set forth in the section entitled “Other Information about Sky—Legal Proceedings” on page 173 of the Proxy Statement is incorporated herein by reference.
 
Market Price of and Dividends on the Registrants Common Equity and Related Stockholder Matters
 
Prior to the Closing Date, the Company’s publicly traded units, common stock and warrants were listed on The New York Stock Exchange (“NYSE”) under the symbols “YSACU,” “YSAC,” and “YSACW,” respectively. Upon the closing, the Company’s Class A Common Stock and warrants were listed on the NYSE American under the symbols “SKYH” and “SKYH WS,” respectively. The Company’s publicly traded units automatically separated into their component securities upon the closing of the Business Combination, and as a result, no longer trade as a separate security and were delisted from NYSE.
 
 

 
As of January 25, 2022, following the completion of the Business Combination, there were four holders of record of Class A Common Stock and three holders of record of Warrants. However, because many of the shares of Class A Common Stock and the Warrants are held by brokers and other institutions on behalf of stockholders, the Company believes there are substantially more beneficial holders of Class A Common Stock and Warrants than record holders.
 
The information set forth in the section entitled “Price Range of Securities and Dividends—YAC” on page 226 of the Proxy Statement is incorporated herein by reference.
 
Market Information and Holders of the Company
 
As of January 25, 2022, following the completion of the Business Combination, there were 14,937,581 shares of Class A Common Stock, 14,519,218 SHG Warrants (including 7,719,779 private placement warrants) and 42,192,250 Sky Common Units (excluding Sky Common Units held by the Company), which are convertible into Class A Common Stock, outstanding. The Company has reserved a total of 5,211,975 shares of Class A Common Stock for issuance pursuant to the 2022 Incentive Award Plan, subject to certain adjustments set forth therein.
 
Dividends of the Company
 
YAC has never paid any cash dividends on YAC’s Class A Common Stock. The payment of cash dividends in the future will be dependent upon revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of the Business Combination. The payment of any cash dividends subsequent to the Business Combination will be within the discretion of the Company’s board of directors and the board of directors will consider whether or not to institute a dividend policy. The board of directors currently anticipates the Company will retain all earnings of the Company, if any, for use in the Company’s business and operations and, accordingly, the board of directors does not anticipate declaring any dividends in the foreseeable future.
 
Description of Registrants Securities
 
Pursuant to the A&R Certificate of Incorporation, there are 260,000,000 authorized shares of the Company, consisting of 200,000,000 shares of Class A Common Stock, 50,000,000 shares of Class B Common Stock and 10,000,000 shares of preferred stock, par value $0.0001 per share.
 
The information set forth in the section entitled “Description of SHG Corporation Securities” beginning on page 217 of the Proxy Statement is incorporated herein by reference.
 
Indemnification of Directors and Officers
 
In connection with the closing of the Business Combination, the Company entered into indemnification agreements with each of its directors and executive officers. Each indemnification agreement provides for indemnification and advancement by the Company of certain expenses and costs relating to claims, suits or proceedings arising from service to the Company or, at its request, service to other entities, as officers or directors to the maximum extent permitted by applicable law, for both the current directors and executive officers of the Company and the former YAC directors and executive officers. The foregoing description of the indemnification agreements does not purport to be complete and is qualified in its entirety by the terms and conditions of the indemnification agreements, a form of which is attached hereto as Exhibit 10.8 and is incorporated herein by reference.
 
Further information about the indemnification of the Company’s directors and officers is set forth in the section entitled “Description of SHG Corporation Securities — Limitations on Liability and Indemnification of Officers and Directors” beginning on page 224 of the Proxy Statement and is incorporated herein by reference.
 
Financial Statements, Supplementary Data and Exhibits
 
The information set forth under Item 9.01 of this Current Report on Form 8-K is incorporated herein by reference.
 
 

 
Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.
 
On the Closing Date, all of YAC’s outstanding units separated into their component parts of one share of Class A Common Stock and one half of one Warrant to purchase one share of Class A Common Stock and YAC’s units ceased trading on NYSE.
 
Item 3.02 Unregistered Sales of Equity Securities.
 
On January 25, 2022, in connection with the completion of the Business Combination and as contemplated by the Equity Purchase Agreement and the Subscription Agreements, the Company made the following issuances of unregistered securities, as further described in the disclosure set forth under the Introductory Note above:
 
 
4,500,000 shares of Class A common stock to Boston Omaha for aggregate consideration of $45.0 million;
   
 
 
5,500,000 shares of Class A common stock to BOC YAC Funding LLC upon conversion of series B preferred units in Sky for aggregate consideration of $55.0 million; and
   
 
 
42,192,250 shares of Class B Common Stock to the Existing Sky Equityholders.
 
The Sky Common Units are redeemable for shares of Class A Common Stock at each Sky Common Unit holder’s election. Up to 42,192,250 shares of Class A Common Stock are issuable upon the redemption of the Sky Common Units. The Company issued the foregoing securities in transactions not involving an underwriter and not requiring registration under Section 5 of the Securities Act of 1933, as amended, in reliance on the exemption afforded by Section 4(a)(2) thereof.
 
Item 3.03 Material Modification to Rights of Security Holders
 
On the Closing Date, in connection with the completion of the Business Combination, the Company’s Certificate of Incorporation and Bylaws were amended and restated. Pursuant to the A&R Certificate of Incorporation, there are 260,000,000 shares authorized, of which 200,000,000 shares are shares of Class A Common Stock, par value $0.0001 per share, 50,000,000 shares are shares of Class B Common Stock, par value $0.0001 per share, and 10,000,000 shares are shares of preferred stock, par value $0.0001 per share. The disclosure set forth in the sections titled “Description of YAC Securities” and “Description of SHG Corporation Securities” in the Proxy Statement is incorporated herein by reference.
 
The foregoing description of the A&R Certificate of Incorporation and Bylaws of the Company does not purport to be complete and is qualified in its entirety by the terms of the A&R Certificate of Incorporation and Bylaws of the Company, which are attached hereto as Exhibits 3.1 and 3.2, respectively, and are incorporated herein by reference.
 
The material terms of each of the A&R Certificate of Incorporation and the Bylaws and the general effect upon the rights of holders of the Company’s capital stock are included in the Proxy Statement under the sections titled “Proposal No. 1 — The Business Combination Proposal — Related Agreements — A&R Certificate of Incorporation,” “Proposal No. 1 — The Business Combination Proposal — Related Agreements — Anti-Takeover Effects of the A&R Certificate of Incorporation and the SHG Corporation Bylaws” and “Description of SHG Corporation Securities” beginning on pages 108, 109 and 217 of the Proxy Statement, respectively, which are incorporated herein by reference.
 
Item 4.01 Change in Registrants Certifying Accountant.
 
On January 25, 2022, the Audit Committee of the Board of Directors approved the engagement of EisnerAmper LLP (“EA”) as the Company’s independent registered public accounting firm to audit the Company’s consolidated financial statements as of and for the year ending December 31, 2022.
 
 

 
EA served as independent registered public accounting firm of Sky prior to the Business Combination. Accordingly, KPMG LLP (“KPMG”), YAC’s independent registered public accounting firm prior to the Business Combination, was informed that it would be replaced by EA as the Company’s independent registered public accounting firm following completion of its audit of YAC’s financial statements as of and for the year ended December 31, 2021, which consists only of the accounts of the pre-Business Combination special purpose acquisition company, YAC.
 
The audit report of KPMG on YAC’s, the Company’s legal predecessor, financial statements as of December 31, 2020 and for the period from August 25, 2020 (inception) to December 31, 2020 did not contain an adverse opinion or a disclaimer of opinion, and was not qualified or modified as to uncertainties, audit scope or accounting principles. As discussed in Note 2 to the financial statements, the 2020 financial statements have been restated to correct certain misstatements.
 
During the period from August 25, 2020 (inception) to December 31, 2020 and the subsequent interim period through January 25, 2022, there were no (1) disagreements between YAC and KPMG on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to their satisfaction would have caused them to make reference in connection with their opinion to the subject matter of the disagreements and (2) no “reportable events” (as defined in Item 304(a)(1)(v) of Regulation S-K under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) except as described in the following paragraph.
 
On May 24, 2021, following the issuance of the statement regarding the accounting and reporting considerations for warrants issued by special purpose acquisition companies entitled “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”)” by the Commission, YAC’s management and the Audit Committee of YAC’s board of directors, after consultation with management, concluded that YAC’s financial statements as of December 31, 2020 and the period from August 25, 2020 (inception) to December 31, 2020 (the “Original Financial Statements”) should no longer be relied upon and are to be restated in order to correct a classification error. The Original Financial Statements were restated in the financial statements accompanying YAC’s Annual Report on Form 10-K/A filed with the Commission on May 24, 2021. As part of such process, YAC identified a material weakness in its internal controls over financial reporting, solely related to YAC’s accounting for warrants.
 
The Company has provided KPMG with a copy of the foregoing disclosures and has requested that KPMG furnish the Company with a letter addressed to the SEC stating whether it agrees with the statements made by the Company set forth above. A copy of KPMG’s letter dated January 31, 2022 is filed as Exhibit 16.1 to this Current Report on Form 8-K.
 
Item 5.01. Changes in Control of Registrant.
 
The information set forth under in the sections titled “Proposal No. 1 — The Business Combination Proposal” beginning on page 98 of the Proxy Statement and “Introductory Note” and Item 2.01 in this Current Report on Form 8-K is incorporated herein by reference.
 
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
 
Election of Directors and Appointment of Officers
 
On January 25, 2022 each of Tal Keinan, Walter Jackson, Alethia Nancoo, Alex B. Rozek, Lysa Leiponis, Nick Wellmon and Robert S. Rivkin were elected as directors of the Company, with Tal Keinan appointed as chairman of the board, in each case, effective upon the completion of the Business Combination. Biographical information with respect to such directors is set forth in the section entitled “SHG Corporation Management After the Business Combination” beginning on page 189 of the Proxy Statement and is incorporated herein by reference.
 
 

 
On January 25, 2022, Tal Keinan was appointed to serve as the Chief Executive Officer, Alex Saltzman was appointed to serve as the Chief Operating Officer, Francisco Gonzalez was appointed to serve as Chief Financial Officer, Michael Schmitt was appointed to serve as the Chief Accounting Officer and Gerald Adler was appointed to serve as the General Counsel and Corporate Secretary, in each case, effective upon the closing of the Business Combination. Biographical information with respect to Tal Keinan, Francisco Gonzalez and Alex Saltzman is set forth in the section entitled “SHG Corporation Management After the Business Combination” beginning on page 189 of the Proxy Statement is incorporated herein by reference.
 
Michael Schmitt, the Company’s Chief Accounting Officer, has over fourteen years of accounting and audit experience, most recently at PricewaterhouseCoopers LLP (“PwC”), where he held roles of increasing responsibility within the firm’s audit practice since 2012. While at PwC, Mr. Schmitt most recently served as an Assurance Director from July 2021 until January 2022 and an Assurance Senior Manager from July 2019 until June 2021. During Mr. Schmitt’s time at PwC, he served clients primarily in the transportation, travel, and logistics industries, inclusive of airlines, aircraft leasing and finance companies, as well and other multibillion-dollar SEC registrants in the consumer and industrial sectors. Mr. Schmitt holds a Bachelor of Science in Accountancy from Bryant University and is a licensed Certified Public Accountant and a member of the American Institute of Certified Public Accountants.
 
Gerald Adler, the Company’s interim General Counsel and Corporate Secretary, has over thirty-five years of experience practicing corporate law. Before joining the Company, Mr. Adler operated a solo practice in 2020, where he advised businesses, start-ups, and venture capital and private equity firms on general corporate and commercial law matters including mergers, acquisitions, financings, capital raises, restructuring, employment matters and commercial licenses and agreements. He previously served as Chief Operating Officer and General Counsel of Paine Schwartz Partners, LLC, a private equity firm specializing in sustainable food chain investing, from 2012 until 2019, and served as a Partner in the Corporate and Securities groups of Friedman Kaplan Seiler & Adelman, LLP from 2008 until 2011, Dechert, LLP from 2005 until 2007 and Swidler Berlin Shereff Friedman from 1989 until 2004. Mr. Adler holds a Bachelor of Arts in Economics from Yeshiva University and a J.D. from the Columbia University School of Law. He is admitted to practice law in New York and is a member of the New York City Bar Association.
 
Departure of Directors and Certain Officers
 
Effective upon the Closing Date, each of Adam K. Peterson, Sydney C. Atkins, David J. Bronczek and Shanna N. Khan resigned as directors of the Company, and Tal Keinan replaced Adam K. Peterson and Alex B. Rozek as chairman of the board of directors, although Mr. Rozek will continue as a director of the Company. Effective upon the Closing Date, each of Adam K. Peterson, Alex B. Rozek and Joshua P. Weisenburger resigned as executive officers of the Company.
 
2022 Incentive Award Plan
 
On January 25, 2022, the Sky Harbour Group Corporation 2022 Incentive Award Plan (the “2022 Incentive Award Plan”) became effective. The 2022 Incentive Award Plan was approved by YAC’s stockholders at the Special Meeting on January 25, 2022. The purpose of the 2022 Incentive Award Plan is to promote the success and enhance the value of the Company and Sky by attracting, retaining and motivating selected employees, consultants and directors of the Company and Sky. The 2022 Incentive Award Plan provides for grants of stock-based compensation awards, including without limitation, non-qualified stock options, incentive stock options, stock appreciation rights, or SARs, restricted stock awards, restricted stock unit awards, incentive unit awards other stock or cash based awards and dividend equivalent awards. Employees, officers and consultants of the Company or any parent or affiliate, including Sky, or any non-employee director of the Company’s board of directors are eligible to receive awards under the 2022 Incentive Award Plan. The 2022 Incentive Award Plan is administered by the Company’s board of directors which may delegate its duties and responsibilities to committees of the Company’s board of directors and/or officers, referred to herein as the “plan administrator”, subject to certain limitations that may be imposed under Section 16 of the Exchange Act, and/or stock exchange rules, as applicable. The plan administrator has the authority to make all determinations and interpretations under, prescribe all forms for use with, and adopt rules for the administration of, the 2022 Incentive Award Plan, subject to its express terms and conditions. The plan administrator also has the authority to set the terms and conditions of all awards under the 2022 Incentive Award Plan, including any vesting and vesting acceleration provisions, subject to the conditions and limitations in the 2022 Incentive Award Plan.
 
 

 
The Company has 5,211,975 shares of Class A Common Stock for issuance pursuant to the 2022 Incentive Award Plan, and the maximum number of shares that may be issued pursuant to the exercise of incentive stock options granted under the 2022 Incentive Award Plan may not exceed the initial pool size, in each case, subject to certain adjustments set forth therein.
 
The information set forth in the section entitled “Proposal No. 5 — The Incentive Plan Proposal” beginning on page 139 of the Proxy Statement is incorporated herein by reference. The foregoing description of the 2022 Incentive Award Plan and the information incorporated by reference in the preceding sentence does not purport to be complete and is qualified in its entirety by the terms and conditions of the 2022 Incentive Award Plan, which is incorporated by reference to this Current Report on Form 8-K as Exhibit 10.5.
 
Compensatory Arrangements for Directors
 
In connection with the completion of the Business Combination, the Company’s board of directors also approved a compensation program for the Company’s non-employee directors (the “Director Compensation Program”). The material terms of the Director Compensation Program are described in the section of the Proxy Statement beginning on page 199 entitled “Compensation of Executive Officers and Directors After the Business Combination — Sky Executive Officer and Director Compensation Following the Business Combination.”
 
Compensatory Arrangements for Executive Officers
 
On January 25, 2022, in connection with the completion of the Business Combination, the Company assumed the employment agreements that Sky entered into with certain of its executive officers: Tal Keinan, Francisco Gonzalez and Alex Saltzman. Pursuant to the employment agreements, each of Messrs. Keinan, Gonzalez and Saltzman receives an annual base salary and is eligible to participate in Sky’s customary health, welfare and fringe benefit plans. In addition, Messrs. Gonzalez and Saltzman have entered into standard non-compete and non-disclosure agreement.
 
Prior to the closing of the Business Combination, Sky’s compensation committee agreed to certain terms of employment with Mr. Keinan, which would remain in effect after the closing of the Business Combination. Pursuant to the terms of the agreement, Mr. Keinan will receive a base salary at an annual rate of $500,000 beginning in 2022, and will be eligible to receive a target bonus of 100% of his base salary subject to certain specified performance metrics to be determined by the compensation committee; the actual bonus received by Mr. Keinan may be more or less than the target bonus based on satisfaction of the relevant performance metrics. In addition, Mr. Keinan, along with other executives of SHG Corporation to be determined, may be eligible to participate in a long-term equity incentive program at levels that are customary for similarly situated executives as determined by the compensation committee based on consultation with its compensation consultant. The compensation committee has determined that Mr. Keinan’s grant of equity for 2022 will not exceed $750,000 in restricted stock units (based on grant date fair market value of the underlying shares) subject to vesting conditions pursuant to the Sky Harbour Group Corporation 2022 Incentive Award Plan.
 
Sky entered into an employment agreement with Mr. Saltzman on March 22, 2021 in connection with his appointment as Chief Operating Officer, which does not provide for potential payments upon a termination or change of control. For 2021, Mr. Saltzman receives an annual salary of $400,000 and is eligible to receive an annual bonus, which bonus is based on established performance variables and an individual component. The target bonus is equal to 50% of base salary. Mr. Saltzman has entered into Sky’s standard employee covenants agreement containing customary restrictive covenants.
 
Sky entered into an employment agreement with Mr. Gonzalez on July 1, 2021 in connection with his appointment as Chief Financial Officer, which was amended on December 21, 2021. For 2021, Mr. Gonzalez received an annual salary of $300,000.  Pursuant to his amended employment agreement, as part of Mr. Gonzalez’s 2021 compensation, he was awarded an incentive cash bonus of $1.95 million. Beginning in January 2022, Mr. Gonzalez is also eligible to receive a one-time per square foot incentive bonus, paid quarterly without duplication, which is to be determined based on the amount of new square footage of indoor space available for leasing by Sky or its subsidiaries to tenants in any given quarter.  Mr. Gonzalez has entered into Sky’s standard employee covenants agreement containing customary restrictive covenants.
 
The information set forth in the section entitled “Compensation of Executive Officers and Directors After the Business Combination” beginning on page 195 of the Proxy Statement is incorporated herein by reference. The employment agreements for Messrs. Gonzalez and Saltzman are attached as Exhibits 10.8 and 10.9 hereto, respectively.
 
 

 
Item 5.06. Change in Shell Company Status.
 
As a result of the Business Combination, YAC ceased being a shell company. The material terms of the Business Combination are described in the section entitled “Proposal No. 1 — The Business Combination Proposal” beginning on page 98 of the Proxy Statement, in the information set forth under “Introductory Note” and in the information set forth under Item 2.01 in this Current Report on Form 8-K, each of which is incorporated herein by reference.
 
Item 9.01. Financial Statement and Exhibits.
 
(a) Financial statements of businesses acquired
 
The financial statements of Sky as of and for the years ended December 31, 2020 and 2019, the related notes and report of independent registered public accounting firm thereto are set forth in the Proxy Statement beginning on page F-56 and are incorporated herein by reference. The unaudited financial statements of Sky as of and for the nine months ended September 30, 2021 and the related notes thereto are set forth in the Proxy Statement beginning on page F-32 and are incorporated herein by reference.
 
The financial statements of YAC as of the year ended December 31, 2020 and for the period from August 25, 2020 (inception) to December 31, 2020, the related notes and report of independent public accounting firm thereto are set forth in the Proxy Statement beginning on page F-14 and are incorporated herein by reference. The financial statements of YAC as of and for the nine months ended September 30, 2021 and the related notes thereto are set forth in the Proxy Statement beginning on page F-2 and are incorporated herein by reference.
 
(b) Pro Forma Financial Information
 
The information set forth in Exhibit 99.1 to this Current Report on Form 8-K, which includes the unaudited pro forma condensed combined financial information of the Company as of September 30, 2021 and for the year ended December 31, 2020 and the nine months ended September 30, 2021 is set forth in Exhibit 99.1 and is incorporated herein by reference.
 
(d) Exhibits.
 
Exhibit No.
 
Document
2.1*
 
3.1
 
3.2
 
4.1
 
10.1*
 
10.2*
 
10.3*
 
10.4*
 
10.5†
 
10.6†
 
10.7†
 
10.8†
 
10.9†
 
10.10
 
10.11
 
10.12
 
10.13   Ground Sublease between Sunborne XVI, LTD. and APA Hangars LLC
10.14*   Unsubordinated Ground Lease and Option to Lease Additional Land between City of Phoenix and DVT Hangars LLC
10.15   Lease Agreement by and between The Metropolitan Nashville Airport Authority and Sky Harbour, LLC
10.16*   First Amendment to the Lease Agreement by and between The Metropolitan Nashville Airport Authority  and Nashville Hangars LLC
10.17*   Sublease Agreement by and between AA Acquisitions, LLC and Sky Harbour Opa Locka Airport, LLC
10.18*   First Amendment to Sublease Agreement between AA Acquisitions, LLC and Sky Harbour Opa Locka Airport, LLC
10.19   Amended and Restated Standard Form Airport Corporate Hangar Land Lease between the City of Sugar Land and Sky Harbour Sugar Land Airport, LLC
10.20   Amendment No. 2 to the Standard Form Airport Corporate Hangar Land Lease between the City of Sugar Land and Sky Harbour Sugar Land Airport, LLC
16.1
 
21.1
 
99.1
 
 
*
Certain schedules and exhibits to this Exhibit have been omitted pursuant to Item 601(a)(5) or Item 601(b)(10)(iv), as applicable, of Regulation S-K. The Registrant agrees to furnish supplemental copies of all omitted exhibits and schedules to the Securities and Exchange Commission upon its request.
 
Indicates a management contract or compensatory plan.
 
 

 
SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
Dated: January 31, 2022
 
 
SKY HARBOUR GROUP CORPORATION
     
 
By:
/s/ Tal Keinan
 
Name:
 Tal Keinan
 
Title:
 Chief Executive Officer
 
 

Exhibit 3.1

 

 

 

SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

of

YELLOWSTONE ACQUISITION COMPANY

 

(Pursuant to Section 242 and 245 of
the General Corporation Law of the State of Delaware)

 

January 25, 2022

 

Yellowstone Acquisition Company, a corporation organized and existing under the laws of the State of Delaware (the “Corporation”), hereby certifies as follows:

 

1.         The name of the Corporation is Yellowstone Acquisition Company. The Corporation was incorporated under the same name by the filing of its original certificate of incorporation of the Corporation with the Secretary of State of the State of Delaware on August 25, 2020.

 

2.         This Second Amended and Restated Certificate of Incorporation (this “Amended Certificate of Incorporation”) amends, integrates and restates in its entirety the Corporation’s certificate of incorporation as currently in effect as follows, and has been duly adopted in accordance with the provisions of Sections 228, 242 and 245 of the General Corporation Law of the State of Delaware (as from time to time in effect, the “General Corporation Law”).

 

3.         The text of the certificate of incorporation of the Corporation, as heretofore amended, is hereby amended and restated by this Amended Certificate of Incorporation to read in its entirety as set forth in EXHIBIT A attached hereto.

 

IN WITNESS WHEREOF, Yellowstone Acquisition Company has caused this Amended Certificate of Incorporation to be signed by a duly authorized officer of the Corporation, on January 25, 2022.

 

 

YELLOWSTONE ACQUISITION COMPANY,
a Delaware corporation

 

 

 

 

 

 

 

 

 

 

By:

/s/ Alex B. Rozek

 

 

Name:

Alex B. Rozek

 

 

Title:

Co-Chief Executive Officer and Co-President

 

 

 

 

 

EXHIBIT A

 

SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
SKY HARBOUR GROUP CORPORATION

 

 

1.    Name. The name of the corporation is Sky Harbour Group Corporation (the “Corporation”).

 

2.    Address; Registered Office and Agent. The address of the Corporation’s registered office in the State of Delaware is 16192 Coastal Hwy, in the City of Lewes, County of Sussex, State of Delaware, 19958, and the name of the Corporation’s registered agent at such address is Harvard Business Services, Inc.

 

3.    Purpose. The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (the “General Corporation Law”) as it now exists or may hereafter be amended and supplemented.

 

4.    Number of Shares.

 

4.1    The total number of shares of all classes of stock that the Corporation shall have authority to issue is 260,000,000 shares, consisting of:

 

(a)    200,000,000 shares of Class A common stock, with the par value of $0.0001 per share (the “Class A Common Stock”),

 

(b)    50,000,000 shares of Class B common stock, with the par value of $0.0001 per share (the “Class B Common Stock” and together with the Class A Common Stock, the “Common Stock”), and

 

(c)    10,000,000 shares of preferred stock, with the par value of $0.0001 per share (the “Preferred Stock”).

 

Upon the filing of this Amended Certificate of Incorporation (the “Effective Time”), each share of Class B common stock, par value $0.0001 per share of the Corporation issued and outstanding immediately prior to the Effective Time shall, automatically without any further action by the Corporation or any stockholder, be reclassified into one fully paid and nonassessable share of Class A Common Stock.

 

4.2    Subject to the rights of the holders of any one or more series of Preferred Stock then-outstanding, the number of authorized shares of any class of the Common Stock or the Preferred Stock may be increased or decreased, in each case by the affirmative vote of the holders of a majority of the total voting power of the outstanding shares of capital stock of the Corporation entitled to vote thereon, voting together as a single class, irrespective of the provisions of Section 242(b)(2) of the General Corporation Law, and no vote of the holders of any class of the Common Stock or the Preferred Stock voting separately as a class will be required therefor. Notwithstanding the immediately preceding sentence, the number of authorized shares of any particular class may not be decreased below the number of shares of such class then outstanding, plus:

 

2

 

(a)    in the case of Class A Common Stock, the number of shares of Class A Common Stock issuable (x) assuming the exchange of all outstanding common units of the OpCo (the “Common Units”) for Class A Common Stock, as a result of Redemptions pursuant to the applicable provisions of Article 11 of the OpCo Operating Agreement (including for this purpose any Common Units issuable upon the exercise of any options, warrants or similar rights to acquire Common Units) and (y) in connection with the exercise of all outstanding options, warrants, exchange rights (other than Redemptions pursuant to clause (x)), conversion rights or similar rights for Class A Common Stock; and

 

(b)    in the case of Class B Common Stock, the number of shares of Class B Common Stock issuable in connection with the exercise of all outstanding options, warrants, exchange rights, conversion rights or similar rights for Class B Common Stock.

 

5.    Classes of Shares. The designation, relative rights, power and preferences, qualifications, restrictions and limitations of the shares of each class of stock are as follows.

 

5.1    Common Stock.

 

(a)    Voting Rights.

 

(i)    (A) Each share of Class A Common Stock will entitle the record holder thereof to one vote on all matters on which stockholders generally are entitled to vote and (B) each share of Class B Common Stock will entitle the record holder thereof to one vote on all matters on which stockholders generally are entitled to vote, except that, in each case, to the fullest extent permitted by law, holders of shares of each class of Common Stock, as such, will have no voting power with respect to, and will not be entitled to vote on, any amendment to this Amended Certificate of Incorporation (including any certificate of designations relating to any series of Preferred Stock) that relates solely to the terms of any outstanding Preferred Stock if the holders of such Preferred Stock are entitled to vote as a separate class thereon under this Amended Certificate of Incorporation (including any certificate of designations relating to any series of Preferred Stock) or under the General Corporation Law.

 

(ii)    Except as otherwise required in this Amended Certificate of Incorporation or by applicable law, the holders of Common Stock will vote together as a single class on all matters (or, if any holders of Preferred Stock are entitled to vote together with the holders of Common Stock, as a single class with the holders of Preferred Stock).

 

(b)    Dividends; Stock Splits or Combinations.

 

(i)    Subject to applicable law and the rights, if any, of the holders of any outstanding series of Preferred Stock or any class or series of stock having a preference senior to or the right to participate with the Class A Common Stock with respect to the payment of dividends, dividends of cash or property may be declared and paid on the Class A Common Stock out of the assets of the Corporation that are by law available therefor, at the times and in the amounts as the Board in its discretion may determine.

 

3

 

(ii)    Except as provided in Section 5.1(b)(iii) with respect to stock dividends, dividends of cash or property may not be declared or paid on the Class B Common Stock.

 

(iii)    In no event will any stock dividend, stock split, reverse stock split, combination of stock, reclassification or recapitalization (each, a “Stock Adjustment”) be declared or made on any class of Common Stock unless a corresponding Stock Adjustment for all other classes of Common Stock at the time outstanding is made in the same proportion and the same manner (unless the holders of shares representing a majority of the voting power of any such other class of Common Stock (voting separately as a single class) waive such requirement in advance and in writing, in which event no such Stock Adjustment need be made for such other class of Common Stock). Notwithstanding the foregoing, the Corporation shall be entitled to (A) declare a stock dividend on the Class A Common Stock only in the event that such stock dividend is made in connection with the issuance of Common Units by OpCo to the Corporation in exchange for additional capital contributions made by the Corporation to OpCo and (B) declare a stock split or stock dividend in connection with the repurchase of shares of Class A Common Stock such that after giving effect to such repurchase and subsequent stock split or stock dividend there shall be outstanding an equal number of shares of Class A Common Stock as were outstanding prior to such repurchase and subsequent stock split or stock dividend, in each case (A) and (B), without any corresponding Stock Adjustment to the other classes of Common Stock. Stock dividends with respect to each class of Common Stock may only be paid with shares of stock of the same class of Common Stock.

 

(c)    Liquidation. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, after payment or provision for payment of the debts and other liabilities of the Corporation and of the preferential and other amounts, if any, to which the holders of Preferred Stock are entitled, if any, the holders of all outstanding shares of Common Stock will be entitled to receive, pari passu, an amount per share equal to the par value thereof, and thereafter the holders of all outstanding shares of Class A Common Stock will be entitled to receive the remaining assets of the Corporation available for distribution ratably in proportion to the number of shares of Class A Common Stock held by such holders. The holders of shares of Class B Common Stock, as such, will not be entitled to receive, with respect to such shares, any assets of the Corporation in excess of the par value thereof, in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation.

 

(d)    Restriction on Issuance of Class B Common Stock. No shares of Class B Common Stock may be issued by the Corporation except to a holder of Common Units, such that after such issuance of Class B Common Stock such holder of Common Units holds an identical number of Common Units, as applicable, and shares of Class B Common Stock.

 

(e)    Restriction on Transfer of Class B Common Stock. A holder of Class B Common Stock may transfer or assign shares of Class B Common Stock (or any legal or beneficial interest in such shares) (directly or indirectly, including by operation of law) only to a Permitted Transferee of such holder, and only if such holder also simultaneously transfers an equal number of such holder’s Common Units to such Permitted Transferee in compliance with the OpCo Operating Agreement. Any purported transfer of shares of Class B Common Stock in violation of the preceding sentence shall be null and void and shall not be recognized by the Corporation, the Corporation’s transfer agent or the Secretary of the Corporation.

 

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5.2    Preferred Stock. Shares of Preferred Stock may be issued from time to time in one or more series of any number of shares, provided that the aggregate number of shares issued and not retired of any and all such series shall not exceed the total number of shares of Preferred Stock hereinabove authorized, and with such powers, including voting powers, if any, and the designations, preferences and relative, participating, optional or other special rights, if any, and any qualifications, limitations or restrictions thereof, all as shall hereafter be stated and expressed in the resolution or resolutions providing for the designation and issue of such shares of Preferred Stock from time to time adopted by the Board. The powers, including voting powers, if any, preferences and relative, participating, optional and other special rights of each series of Preferred Stock, and the qualifications, limitations or restrictions thereof, if any, may differ from those of any and all other series at any time outstanding. Each series of shares of Preferred Stock: (i) may have such voting rights or powers, full or limited, if any; (ii) may be subject to redemption at such time or times and at such prices, if any; (iii) may be entitled to receive dividends (which may be cumulative or non-cumulative) at such rate or rates, on such conditions and at such times, and payable in preference to, or in such relation to, the dividends payable on any other class or classes or series of stock, if any; (iv) may have such rights upon the voluntary or involuntary liquidation, winding up or dissolution of, upon any distribution of the assets of, or in the event of any merger, sale or consolidation of, the Corporation, if any; (v) may be made convertible into or exchangeable for, shares of any other class or classes or of any other series of the same or any other class or classes of stock of the Corporation (or any other securities of the Corporation or any other Person) at such price or prices or at such rates of exchange and with such adjustments, if any; (vi) may be entitled to the benefit of a sinking fund to be applied to the purchase or redemption of shares of such series in such amount or amounts, if any; (vii) may be entitled to the benefit of conditions and restrictions upon the creation of indebtedness of the Corporation or any subsidiary, upon the issue of any additional shares (including additional shares of such series or of any other series) and upon the payment of dividends or the making of other distributions on, and the purchase, redemption or other acquisition by the Corporation or any subsidiary of, any outstanding shares of the Corporation, if any; (viii) may be subject to restrictions on transfer or registration of transfer, or on the amount of shares that may be owned by any Person or group of Persons; and (ix) may have such other relative, participating, optional or other special rights, qualifications, limitations or restrictions thereof, if any; all as shall be stated in said resolution or resolutions of the Board providing for the designation and issue of such shares of Preferred Stock.

 

6.    Certain Provisions Related to Redemption Rights.

 

6.1    Reservation of Shares of Class A Common Stock for Redemptions. The Corporation will at all times reserve and keep available out of its authorized and unissued shares of Class A Common Stock, for the purposes of effecting any exchanges pursuant to the applicable provisions of Article 11 of the OpCo Operating Agreement, the number of shares of Class A Common Stock that are issuable in connection with the exchange of all outstanding Common Units as a result of any Redemption or Direct Exchange pursuant to the applicable provisions of Article 11 of the OpCo Operating Agreement (including for this purpose any Common Units issuable upon the exercise of any options, warrants or similar rights to acquire Common Units), as applicable (without regard to any restrictions on Redemption contained therein and assuming no Redemptions for cash). The Corporation covenants that all the shares of Class A Common Stock that are issued upon any such Redemption or exchange of such Common Units will, upon issuance, be validly issued, fully paid and non-assessable.

 

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6.2    Retirement of Class B Common Stock. In the event that a share of Class A Common Stock is issued as a result of any Redemption or Direct Exchange of a Common Unit outstanding as of the effective date of the OpCo Operating Agreement, pursuant to the applicable provisions of Article 11 of the OpCo Operating Agreement, pursuant to the applicable provisions of Article 11 of the OpCo Operating Agreement, a share of Class B Common Stock held by the holder of such Common Unit in its sole discretion will automatically and without further action on the part of the Corporation or the holder thereof be transferred to the Corporation for no consideration and thereupon the Corporation shall promptly take all necessary action to cause such share to be retired, and such share thereafter may not be reissued by the Corporation.

 

6.3    Taxes. The issuance of shares of Class A Common Stock pursuant to the applicable provisions of Article 11 of the OpCo Operating Agreement will be made without charge to the applicable holder of Common Units receiving such shares in redemption or exchange for Common Units for any transfer taxes, stamp taxes or duties or other similar tax in respect of the issuance.

 

7.    Board of Directors; Committees.

 

7.1    Number of Directors. The business and affairs of the Corporation shall be managed by, or under the direction of, the Board. Unless and except to the extent that the by-laws of the Corporation (as such By-laws may be amended from time to time, the “By-laws”) shall so require, the election of the directors of the Corporation (the “Directors”) need not be by written ballot. Except as otherwise provided for or fixed pursuant to the provisions of Section 5.2 of this Amended Certificate of Incorporation relating to the rights of the holders of any series of Preferred Stock to elect additional Directors, the number of authorized Directors may be fixed from time to time by the Board (subject to the Stockholder’s Agreement if then in effect), which number shall initially be seven (7).

 

7.2    Preferred Stock Directors. During any period when the holders of any series of Preferred Stock have the right to elect additional Directors as provided for or fixed pursuant to the provisions of Section 5.2 (“Preferred Stock Directors”), upon the commencement, and for the duration, of the period during which such right continues: (i) the then-total authorized number of Directors shall automatically be increased by such specified number of Preferred Stock Directors, and the holders of the related Preferred Stock shall be entitled to elect the Preferred Stock Directors pursuant to the provisions of the certificate of designation for the series of Preferred Stock, and (ii) each such Preferred Stock Director shall serve until such Preferred Stock Director’s successor shall have been duly elected and qualified, or until such Preferred Stock Director’s right to hold such office terminates pursuant to such provisions, whichever occurs earlier, subject to his or her earlier death, disqualification, resignation or removal. Except as otherwise provided by the Board in the resolution or resolutions establishing such series, whenever the holders of any series of Preferred Stock having such right to elect Preferred Stock Directors are divested of such right pursuant to the provisions of such stock, the terms of office of all such Preferred Stock Directors elected by the holders of such Preferred Stock, or elected to fill any vacancies resulting from the death, resignation, disqualification or removal of such Preferred Stock Directors, shall forthwith terminate and the total and authorized number of Directors shall automatically be reduced accordingly.

 

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7.3    Vacancies and Newly Created Directorships. Subject to the rights of the holders of any one or more series of Preferred Stock then-outstanding and subject to obtaining any required stockholder votes or consents under the Stockholders’ Agreement (or complying with any stockholders’ designation rights under the Stockholders’ Agreement), newly created directorships resulting from any increase in the authorized number of Directors or any vacancies on the Board resulting from death, resignation, retirement, disqualification, removal from office or other cause shall be filled solely by the affirmative vote of the remaining Directors then in office, even if less than a quorum of the Board. Any Director so chosen shall hold office until the next election of the Directors in which such Director is included and until his or her successor shall be duly elected and qualified or until such Director’s earlier death, disqualification, resignation or removal. No decrease in the number of Directors shall shorten the term of any Director then in office.

 

7.4    Removal of Directors. Except for Preferred Stock Directors and subject to obtaining any required stockholder votes or consents under the Stockholders’ Agreement, any Director or the entire Board may be removed from office at any time, with or without cause and only by the affirmative vote of the holders of a majority of the total voting power of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of Directors, voting together as a single class.

 

8.    Meetings of Stockholders.

 

8.1    No Action by Written Consent. The stockholders of the Corporation may not effect any action by written consent.

 

8.2    Special Meetings of Stockholders. Subject to any special rights of the holders of any series of Preferred Stock, and to the requirements of applicable law, special meetings of stockholders of the Corporation may be called only by or at the direction of the Board. Any business transacted at any special meeting of stockholders shall be limited to matters relating to the purpose or purposes stated in the notice of meeting.

 

9.    General Corporation Law; Section 203 and Business Combinations. The Corporation hereby expressly elects not to be governed by Section 203 of the General Corporation Law.

 

10.   Limitation of Liability.

 

10.1    To the fullest extent permitted under the General Corporation Law, no Director shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a Director.

 

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10.2    Any amendment or repeal of this Article 10 shall not adversely affect any right or protection of a Director hereunder in respect of any act or omission occurring prior to the time of such amendment or repeal.

 

11.   Indemnification. The Corporation shall have the power to provide rights to indemnification and advancement of expenses to its current and former officers, Directors, employees and agents and to any person who is or was serving at the request of the Corporation as a Director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise.

 

12.   Adoption, Amendment or Repeal of By-laws.

 

12.1    In furtherance and not in limitation of the powers conferred by law, subject to the Stockholders’ Agreement (for so long as it remains in effect), the Board is expressly authorized to make, alter, amend or repeal the By-laws subject to the power of the stockholders of the Corporation entitled to vote with respect thereto to make, alter, amend or repeal the By-laws.

 

12.2    The stockholders of the Corporation also shall have the power to adopt, amend or repeal the By-laws. Notwithstanding the foregoing, any adoption, amendment or repeal of the By-laws of the Corporation may only be done in accordance with the Certificate of Incorporation, the Stockholders’ Agreement and the General Corporation Law.

 

13.   Adoption, Amendment and Repeal of Certificate. Subject to the Stockholders’ Agreement (for so long as it remains in effect), the Corporation reserves the right to amend, alter, change or repeal any provision contained in this Amended Certificate of Incorporation, in the manner now or hereafter prescribed by the General Corporation Law, and all rights, preferences and privileges of whatsoever nature conferred upon stockholders, Directors or any other Persons whomsoever by and pursuant to this Amended Certificate of Incorporation in its present form or as hereafter amended, are granted and held subject to this reservation.

 

14.   Severability. If any provision or provisions of this Amended Certificate of Incorporation shall be held to be invalid, illegal or unenforceable as applied to any circumstance for any reason whatsoever: (i) the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Amended Certificate of Incorporation (including, without limitation, each portion of any paragraph of this Amended Certificate of Incorporation containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and (ii) to the fullest extent possible, the provisions of this Amended Certificate of Incorporation (including, without limitation, each such portion of any paragraph of this Amended Certificate of Incorporation containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to permit the Corporation to protect its Directors, officers, employees and agents from personal liability in respect of their good faith service to or for the benefit of the Corporation to the fullest extent permitted by law.

 

15.   Definitions. As used in this Amended Certificate of Incorporation, unless the context otherwise requires or as set forth in another Article or Section of this Amended Certificate of Incorporation, the term:

 

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(a)    “Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with such Person; provided, that (i) neither the Corporation nor any of its subsidiaries will be deemed an Affiliate of any stockholder of the Corporation or any of such stockholders’ Affiliates and (ii) no stockholder of the Corporation will be deemed an Affiliate of any other stockholder of the Corporation, in each case, solely by reason of any investment in the Corporation or any rights conferred on such stockholder pursuant to the Stockholders’ Agreement (including any representatives of such stockholder serving on the Board).

 

(b)    “Amended Certificate of Incorporation” means this Second Amended and Restated Certificate of Incorporation.

 

(c)     “Board” means the board of directors of the Corporation.

 

(d)    “By-laws” is defined in Section 7.1.

 

(e)    “Class A Common Stock” is defined in Section 4.1.

 

(f)    “Class B Common Stock” is defined in Section 4.1.

 

(g)    “Common Stock” is defined in Section 4.1.

 

(h)    “Common Unit” means a Common Unit of OpCo.

 

(i)    “control” (including the terms “controlling” and “controlled”), with respect to the relationship between or among two or more Persons, means the possession, directly or indirectly, of the power to direct or cause the direction of the affairs or management of such subject Person, whether through the ownership of voting securities, as trustee or executor, by contract or otherwise.

 

(j)    “Corporation” is defined in the introductory paragraph.

 

(k)    “Direct Exchange” has the meaning set forth in the OpCo Operating Agreement.

 

(l)    “Director” is defined in Section 7.1.

 

(m)    “General Corporation Law” is defined in the recitals.

 

(n)    “OpCo” means Sky Harbour LLC, a Delaware limited liability company, or any successor thereto.

 

(o)    “OpCo Operating Agreement” means the Third Amended and Restated Limited Liability Company Operating Agreement of OpCo, dated as of January 25, 2022, as the same may be amended, restated, supplemented and/or otherwise modified, from time to time.

 

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(p)    “Permitted Transfer” has the meaning set forth in the OpCo Operating Agreement.

 

(q)    “Person” means any individual, general partnership, limited partnership, limited liability company, corporation, trust, business trust, joint stock company, joint venture, unincorporated association, cooperative or association or any other legal entity or organization of whatever nature, and shall include any successor (by merger or otherwise) of such entity.

 

(r)    “Preferred Stock” is defined in Section 4.1.

 

(s)    “Preferred Stock Directors” is defined in Section 7.2.

 

(t)    “Redemption” has the meaning set forth in the OpCo Operating Agreement.

 

(u)    “Share Settlement” has the meaning set forth in the OpCo Operating Agreement.

 

(v)    “Stock Adjustment” is defined in Section 5.1(b)(iii).

 

(w)    “Stock Exchange Rules” means the rules and regulations for listed companies as in effect from time to time of the principal United States national securities exchange on which the Class A Common Stock is listed for trading, which as of the date hereof is The Nasdaq Stock Market LLC.

 

(x)    “Stockholders Agreement” means the Stockholders’ Agreement, dated as of January 25, 2022, by and among the Corporation and the other Persons party thereto or that may become parties thereto from time to time, as the same may be amended, restated, supplemented and/or otherwise modified, from time to time.

 

[Remainder of page intentionally left blank.]

 

 

 

 

10

Exhibit 3.2

 

 

 

Bylaws of

Sky Harbour Group Corporation

(a Delaware corporation)

 

 

 

TABLE OF CONTENTS

Page

 

Article I — Corporate Offices

1

1.1

Registered Office

1

1.2

Other Offices

1

Article II — Meetings of Stockholders

2

2.1

Place of Meetings

1

2.2

Annual Meeting

1

2.3

Special Meeting

1

2.4

Advance Notice Procedures for Business Brought before a Meeting

2

2.5

Advance Notice Procedures for Nominations of Directors

5

2.6

Notice of Stockholders’ Meetings

9

2.7

Manner of Giving Notice; Affidavit of Notice

9

2.8

Quorum

10

2.9

Adjourned Meeting; Notice

10

2.10

Conduct of Business

11

2.11

Voting

11

2.12

Record Date for Stockholder Meetings and Other Purposes

11

2.13

Proxies

12

2.14

List of Stockholders Entitled to Vote

12

2.15

Inspectors of Election

13

2.16

Delivery to the Corporation

13

Article III — Directors

14

3.1

Powers

14

3.2

Number of Directors

14

3.3

Election, Qualification and Term of Office of Directors

14

3.4

Resignation and Vacancies

14

3.5

Place of Meetings; Meetings by Telephone

14

3.6

Regular Meetings

15

3.7

Special Meetings; Notice

15

3.8

Quorum

15

3.9

Action by Written Consent without a Meeting

16

 

-i-

 

TABLE OF CONTENTS

(continued)

Page

 

3.10

Fees and Compensation of Directors

16

Article IV — Committees

16

4.1

Committees of Directors

16

4.2

Committee Minutes

17

4.3

Meetings and Actions of Committees

17

Article V — Officers

17

5.1

Officers

17

5.2

Appointment of Officers

18

5.3

Subordinate Officers

18

5.4

Removal and Resignation of Officers

18

5.5

Vacancies in Offices

18

5.6

Representation of Shares of Other Corporations

18

5.7

Authority and Duties of Officers

18

5.8

Compensation

19

Article VI — Records

19

Article VII — General Matters

19

7.1

Execution of Corporate Contracts and Instruments

19

7.2

Stock Certificates

19

7.3

Lost Certificates

20

7.4

Shares Without Certificates

20

7.5

Construction; Definitions

20

7.6

Dividends

20

7.7

Fiscal Year

20

7.8

Seal

21

7.9

Transfer of Stock

21

7.1

Stock Transfer Agreements

21

7.11

Registered Stockholders

21

7.12

Waiver of Notice

21

Article VIII — Notice

22

Article IX — Indemnification

23

 

-ii-

 

TABLE OF CONTENTS

(continued)

Page

 

9.1

Indemnification of Directors and Officers

23

9.2

Indemnification of Others

23

9.3

Prepayment of Expenses

23

9.4

Determination; Claim

24

9.5

Non-Exclusivity of Rights

24

9.6

Insurance

24

9.7

Other Indemnification

24

9.8

Continuation of Indemnification

24

9.9

Amendment or Repeal; Interpretation

25

Article X — Amendments

25

Article XI — Forum Selection

26

Article XII — Definitions

26

 

-iii-

 

 

Bylaws of

Sky Harbour Group Corporation

 


 

Corporate Offices

 

Article I — Corporate Offices

 

1.1    Registered Office.

 

The address of the registered office of Sky Harbour Group Corporation (the “Corporation”) in the State of Delaware, and the name of its registered agent at such address, shall be as set forth in the Corporation’s certificate of incorporation, as the same may be amended and/or restated from time to time (the “Certificate of Incorporation”).

 

1.2    Other Offices.

 

The Corporation may have additional offices at any place or places, within or outside the State of Delaware, as the Corporation’s Board may from time to time establish or as the business of the Corporation may require.

 

Article II — Meetings of Stockholders

 

2.1    Place of Meetings.

 

Meetings of stockholders shall be held at such place, if any, within or outside the State of Delaware, designated by the Board. The Board may, in its sole discretion, determine that a meeting of stockholders shall not be held at any place, but may instead be held solely by means of remote communication as authorized by Section 211(a)(2) of the General Corporation Law of the State of Delaware (the “DGCL”). In the absence of any such designation or determination, stockholders’ meetings shall be held at the Corporation’s principal executive office.

 

2.2    Annual Meeting.

 

The Board shall designate the date and time of the annual meeting. At the annual meeting, directors shall be elected and other proper business properly brought before the meeting in accordance with Section 2.4 may be transacted.

 

2.3    Special Meeting.

 

Special meetings of the stockholders may be called only by such Persons and only in such manner as set forth in the Certificate of Incorporation.

 

No business may be transacted at any special meeting of stockholders other than the business specified in the notice of such meeting.

 

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2.4   Advance Notice Procedures for Business Brought before a Meeting.

 

(i)    At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be (a) specified in a notice of meeting given by or at the direction of the Board, (b) if not specified in a notice of meeting, otherwise brought before the meeting by the Board or the chairperson of the meeting, or (c) otherwise properly brought before the meeting by a stockholder present in person who (A) (1) was a stockholder of the Corporation both at the time of giving the notice provided for in this Section 2.4 and at the time of the meeting, (2) is entitled to vote at the meeting and (3) has complied with this Section 2.4 or (B) properly made such proposal in accordance with Rule 14a-8 under the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (as so amended and inclusive of such rules and regulations, the “Exchange Act”), which proposal has been included in the proxy statement for the annual meeting. The foregoing clause (c) shall be the exclusive means for a stockholder to propose business to be brought before an annual meeting of the stockholders. The only matters that may be brought before a special meeting are the matters specified in the Corporation’s notice of meeting given by or at the direction of the Person calling the meeting pursuant to the Certificate of Incorporation and Section 2.3 of these bylaws. For purposes of this Section 2.4 and Section 2.5 of these bylaws, as applicable, “present in person” shall mean that the stockholder proposing that the business be brought before the annual or special meeting of the Corporation, or, if the proposing stockholder is not an individual, a qualified representative of such proposing stockholder, appear at such annual meeting, and a “qualified representative” of such proposing stockholder shall be (A) any person who is authorized in writing by such stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of stockholders or (B) if such proposing stockholder is (x) a general or limited partnership, any general partner or Person who functions as a general partner of the general or limited partnership or who controls the general or limited partnership, (y) a corporation or a limited liability company, any officer or Person who functions as an officer of the corporation or limited liability company or any officer, director, general partner or Person who functions as an officer, director or general partner of any entity ultimately in control of the corporation or limited liability company or (z) a trust, any trustee of such trust. This Section 2.4 shall apply to any business that may be brought before an annual or special meeting of stockholders other than nominations for election to the Board at an annual meeting, which shall be governed by Section 2.5 of these bylaws. Stockholders seeking to nominate persons for election to the Board must comply with Section 2.5 of these bylaws, and this Section 2.4 shall not be applicable to nominations for election to the Board except as expressly provided in Section 2.5 of these bylaws.

 

(ii)    Without qualification, for business to be properly brought before an annual meeting by a stockholder pursuant to Section 2.4(iii)(c), (a) the stockholder must provide Timely Notice (as defined below) thereof in writing and in proper form to the Secretary of the Corporation, (b) the stockholder must provide any updates or supplements to such notice at the times and in the forms required by this Section 2.4 and (c) the proposed business must constitute a proper matter for stockholder action. To be timely, a stockholder’s notice must be delivered to, or mailed and received at, the principal executive offices of the Corporation not less than ninety (90) days nor more than one hundred twenty (120) days prior to the one-year anniversary of the preceding year’s annual meeting (which, in the case of the first annual meeting of stockholders following the closing of the Corporation’s initial underwritten public offering of common stock, the preceding year’s annual meeting date shall be deemed to be June 5, 2021); provided, however, that if the date of the annual meeting is more than thirty (30) days before or more than sixty (60) days after such anniversary date, notice by the stockholder to be timely must be so delivered, or mailed and received, not later than the ninetieth (90th) day prior to such annual meeting or, if later, the tenth (10th) day following the day on which public disclosure of the date of such annual meeting was first made (such notice within such time periods, “Timely Notice”). In no event shall any adjournment or postponement of an annual meeting or the announcement thereof commence a new time period or extend a time period for the giving of Timely Notice as described above.

 

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(iii)    To be in proper form for purposes of this Section 2.4, a stockholder’s notice to the Secretary shall set forth:

 

(a)    As to each Proposing Person (as defined below), (A) the name and address of such Proposing Person (including, if applicable, the name and address that appear on the Corporation’s books and records); and (B) the number of shares of each class or series of stock of the Corporation that are, directly or indirectly, owned of record or beneficially owned (within the meaning of Rule 13d-3 under the Exchange Act) by such Proposing Person, except that such Proposing Person shall in all events be deemed to beneficially own any shares of any class or series of stock of the Corporation as to which such Proposing Person has a right to acquire beneficial ownership at any time in the future (the disclosures to be made pursuant to the foregoing clauses (A) and (B) are referred to as “Stockholder Information”);

 

(b)    As to each Proposing Person, (A) the full notional amount of any securities that, directly or indirectly, underlie any “derivative security” (as such term is defined in Rule 16a-1(c) under the Exchange Act) that constitutes a “call equivalent position” (as such term is defined in Rule 16a-1(b) under the Exchange Act) (“Synthetic Equity Position”) and that is, directly or indirectly, held or maintained by such Proposing Person with respect to any shares of any class or series of stock of the Corporation; provided that, for the purposes of the definition of “Synthetic Equity Position,” the term “derivative security” shall also include any security or instrument that would not otherwise constitute a “derivative security” as a result of any feature that would make any conversion, exercise or similar right or privilege of such security or instrument becoming determinable only at some future date or upon the happening of a future occurrence, in which case the determination of the amount of securities into which such security or instrument would be convertible or exercisable shall be made assuming that such security or instrument is immediately convertible or exercisable at the time of such determination; and, provided, further, that any Proposing Person satisfying the requirements of Rule 13d-1(b)(1) under the Exchange Act (other than a Proposing Person that so satisfies Rule 13d-1(b)(1) under the Exchange Act solely by reason of Rule 13d-1(b)(1)(ii)(E)) shall not be deemed to hold or maintain the notional amount of any securities that underlie a Synthetic Equity Position held by such Proposing Person as a hedge with respect to a bona fide derivatives trade or position of such Proposing Person arising in the ordinary course of such Proposing Person’s business as a derivatives dealer, (B) any rights to dividends on the shares of any class or series of stock of the Corporation owned beneficially by such Proposing Person that are separated or separable from the underlying shares of the Corporation, (C) any material pending or threatened legal proceeding in which such Proposing Person is a party or material participant involving the Corporation or any of its officers or directors, or any Affiliate of the Corporation, (D) any other material relationship between such Proposing Person, on the one hand, and the Corporation or any Affiliate of the Corporation, on the other hand, (E) any direct or indirect material interest in any material contract or agreement of such Proposing Person with the Corporation or any Affiliate of the Corporation (including, in any such case, any employment agreement, collective bargaining agreement or consulting agreement), (F) any other information relating to such Proposing Person that would be required to be disclosed in a proxy statement or other filing required to be made in connection with solicitations of proxies or consents by such Proposing Person in support of the business proposed to be brought before the meeting pursuant to Section 14(a) of the Exchange Act (the disclosures to be made pursuant to the foregoing clauses (A) through (F) are referred to as “Disclosable Interests”); provided, however, that Disclosable Interests shall not include any such disclosures with respect to the ordinary course business activities of any broker, dealer, commercial bank, trust company or other nominee who is a Proposing Person solely as a result of being the stockholder directed to prepare and submit the notice required by these bylaws on behalf of a beneficial owner and (G) a representation whether any Proposing Person, intends or is part of a group which intends to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock required to approve or adopt the proposal and/or otherwise to solicit proxies or votes from stockholders in support of such proposal; and

 

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(c)    As to each item of business that the stockholder proposes to bring before the annual meeting, (A) a brief description of the business desired to be brought before the annual meeting, the reasons for conducting such business at the annual meeting and any material interest in such business of each Proposing Person, (B) the text of the proposal or business (including the text of any resolutions proposed for consideration), (C) a reasonably detailed description of all agreements, arrangements and understandings (x) between or among any of the Proposing Persons or (y) between or among any Proposing Person and any other Person or entity (including their names) in connection with the proposal of such business by such stockholder and (D) any other information relating to such item of business that would be required to be disclosed in a proxy statement or other filing required to be made in connection with solicitations of proxies in support of the business proposed to be brought before the meeting pursuant to Section 14(a) of the Exchange Act; provided, however, that the disclosures required by this Section 2.4(iii) shall not include any disclosures with respect to any broker, dealer, commercial bank, trust company or other nominee who is a Proposing Person solely as a result of being the stockholder directed to prepare and submit the notice required by these bylaws on behalf of a beneficial owner.

 

(iv)    For purposes of this Section 2.4, the term “Proposing Person shall mean (a) the stockholder providing the notice of business proposed to be brought before an annual meeting, (b) the beneficial owner or beneficial owners, if different, on whose behalf the notice of the business proposed to be brought before the annual meeting is made, (c) any participant (as defined in paragraphs (a)(ii)–(vi) of Instruction 3 to Item 4 of Schedule 14A) with such stockholder in such solicitation or (d) any associate (within the meaning of Rule 12b-2 under the Exchange Act for the purposes of these bylaws) of such stockholder, beneficial owner or any other participant.

 

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(v)    A Proposing Person shall update and supplement its notice to the Corporation of its intent to propose business at an annual meeting, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 2.4 shall be true and correct as of the record date for notice of the meeting and as of the date that is ten (10) business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to, or mailed and received by, the Secretary at the principal executive offices of the Corporation not later than five (5) business days after the record date for notice of the meeting (in the case of the update and supplement required to be made as of such record date), and not later than eight (8) business days prior to the date for the meeting or, if practicable, any adjournment or postponement thereof (and, if not practicable, on the first practicable date prior to the date to which the meeting has been adjourned or postponed) (in the case of the update and supplement required to be made as of ten (10) business days prior to the meeting or any adjournment or postponement thereof). For the avoidance of doubt, the obligation to update and supplement as set forth in this paragraph or any other Section of these bylaws shall not limit the Corporation’s rights with respect to any deficiencies in any notice provided by a stockholder, extend any applicable deadlines hereunder or enable or be deemed to permit a stockholder who has previously submitted notice hereunder to amend or update any proposal or to submit any new proposal, including by changing or adding matters, business or resolutions proposed to be brought before a meeting of the stockholders.

 

(vi)    Notwithstanding anything in these bylaws to the contrary, no business shall be conducted at an annual meeting that is not properly brought before the meeting in accordance with this Section 2.4. The presiding officer of the meeting shall, if the facts warrant, determine that the business was not properly brought before the meeting in accordance with this Section 2.4, and if he or she should so determine, he or she shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted.

 

(vii)    In addition to the requirements of this Section 2.4 with respect to any business proposed to be brought before an annual meeting, each Proposing Person shall comply with all applicable requirements of the Exchange Act with respect to any such business. Nothing in this Section 2.4 shall be deemed to affect the rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.

 

(viii)    For purposes of these bylaws, “public disclosure” shall mean disclosure in a press release reported by a national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Exchange Act.

 

2.5   Advance Notice Procedures for Nominations of Directors.

 

(i)    Subject in all respects to the provisions of the Stockholders’ Agreement and Certificate of Incorporation, nominations of any person for election to the Board at an annual meeting or at a special meeting (but only if the election of directors is a matter specified in the notice of meeting given by or at the direction of the person calling such special meeting) may be made at such meeting only (a) by or at the direction of the Board, including by any committee or persons authorized to do so by the Board or these bylaws, or (b) by a stockholder present in person (as defined in Section 2.4) who (1) was a beneficial owner of shares of the Corporation both at the time of giving the notice provided for in this Section 2.5 and at the time of the meeting, (2) is entitled to vote at the meeting and (3) has complied with this Section 2.5 as to such notice and nomination. The foregoing clause (b) shall be the exclusive means for a stockholder to make any nomination of a person or persons for election to the Board at any annual meeting of stockholders other than in accordance with the provisions of the Stockholders’ Agreement and the Certificate of Incorporation.

 

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(ii)    Without qualification, for a stockholder to make any nomination of a person or persons for election to the Board at an annual meeting, the stockholder must (a) provide Timely Notice (as defined in Section 2.4(ii) of these bylaws) thereof in writing and in proper form to the Secretary of the Corporation, (b) provide the information, agreements and questionnaires with respect to such stockholder and its candidate for nomination as required by this Section 2.5, and (c) provide any updates or supplements to such notice at the times and in the forms required by this Section 2.5. In no event shall any adjournment or postponement of an annual meeting or the announcement thereof commence a new time period or extend a time period for the giving of a stockholder’s notice as described above.

 

(iii)    To be in proper form for purposes of this Section 2.5, a stockholder’s notice to the Secretary shall set forth:

 

(a)    As to each Nominating Person (as defined below), the Stockholder Information (as defined in Section 2.4(iii)(a) of these bylaws) except that for purposes of this Section 2.5, the term “Nominating Person” shall be substituted for the term “Proposing Person” in all places it appears in Section 2.4(iii)(a);

 

(b)    As to each Nominating Person, any Disclosable Interests (as defined in Section 2.4(iii)(b), except that for purposes of this Section 2.5 the term “Nominating Person” shall be substituted for the term “Proposing Person” in all places it appears in Section 2.4(iii)(b) and the disclosure with respect to the business to be brought before the meeting in Section 2.4(iii)(c) shall be made with respect to nomination of each person for election as a director at the meeting) and a representation whether any Nominating Person intends or is part of a group which intends to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock required to elect the nominee and/or otherwise to solicit proxies or votes from stockholders in support of such nomination; and

 

(c)    As to each candidate whom a Nominating Person proposes to nominate for election as a director, (A) all information with respect to such candidate for nomination that would be required to be set forth in a stockholder’s notice pursuant to this Section 2.5 if such candidate for nomination were a Nominating Person, (B) all information relating to such candidate for nomination that is required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors in a contested election pursuant to Section 14(a) under the Exchange Act (including such candidate’s written consent to being named in the Corporation’s proxy statement as a nominee and to serving as a director if elected), (C) a description of any direct or indirect material interest in any material contract or agreement between or among any Nominating Person, on the one hand, and each candidate for nomination or his or her respective associates or any other participants in such solicitation, on the other hand, including, without limitation, all information that would be required to be disclosed pursuant to Item 404 under Regulation S-K if such Nominating Person were the “registrant” for purposes of such rule and the candidate for nomination were a director or executive officer of such registrant, and (D) a completed and signed questionnaire, representation and agreement as provided in Section 2.5(iv).

 

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(iv)    For purposes of this Section 2.5, the term “Nominating Person shall mean (a) the stockholder providing the notice of the nomination proposed to be made at the meeting, (b) the beneficial owner or beneficial owners, if different, on whose behalf the notice of the nomination proposed to be made at the meeting is made, (c) any other participant (as defined in paragraphs (a)(ii)–(vi) of Instruction 3 to Item 4 of Schedule 14A) in such solicitation and (d) any associate (within the meaning of Rule 12b-2 under the Exchange Act for the purposes of these bylaws) of such stockholder or beneficial owner or any other participant in such solicitation.

 

(v)    A stockholder providing notice of any nomination proposed to be made at a meeting shall further update and supplement such notice, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 2.5 shall be true and correct as of the record date for notice of the meeting and as of the date that is ten (10) business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to, or mailed and received by, the Secretary at the principal executive offices of the Corporation not later than five (5) business days after the record date for notice of the meeting (in the case of the update and supplement required to be made as of such record date), and not later than eight (8) business days prior to the date for the meeting or, if practicable, any adjournment or postponement thereof (and, if not practicable, on the first practicable date prior to the date to which the meeting has been adjourned or postponed) (in the case of the update and supplement required to be made as of ten (10) business days prior to the meeting or any adjournment or postponement thereof). For the avoidance of doubt, the obligation to update and supplement as set forth in this paragraph or any other Section of these bylaws shall not limit the Corporation’s rights with respect to any deficiencies in any notice provided by a stockholder, extend any applicable deadlines hereunder or enable or be deemed to permit a stockholder who has previously submitted notice hereunder to amend or update any nomination or to submit any new nomination.

 

(vi)    Notwithstanding anything in Section 2.5(ii) to the contrary, in the event that the number of directors to be elected to the Board at the annual meeting is increased effective after the time period for which nominations would otherwise be due under Section 2.5(ii) and there is no public announcement by the Corporation naming the nominees for the additional directorships at least one hundred (100) days prior to the first anniversary of the preceding year’s annual meeting, a stockholder’s notice required by this Section 2.5 shall also be considered timely, but only with respect to nominees for the additional directorships, if it shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the tenth (10th) day following the day on which such public announcement is first made by the Corporation.

 

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(vii)    Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting. Nominations of persons for election to the Board may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation’s notice of meeting (1) by or at the direction of the Board or (2) provided that the Board has determined that directors shall be elected at such meeting, by any stockholder of the Corporation who is a stockholder of record at the time the notice provided for in this Section 2.5 is delivered to the Secretary of the Corporation, who is entitled to vote at the meeting and upon such election and who complies with the notice procedures set forth in this Section 2.5. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board, any such stockholder entitled to vote in such election of directors may nominate a person or persons (as the case may be) for election to such position(s) as specified in the Corporation’s notice of meeting, if the stockholder’s notice required by Section 2.5(ii) shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the close of business on the one hundred twentieth (120th) day prior to such special meeting and not later than the close of business on the later of the ninetieth (90th) day prior to such special meeting or the tenth (10th) day following the day on which the Corporation first makes a public announcement of the date of the special meeting at which directors are to be elected. In no event shall the public announcement of an adjournment or postponement of a special meeting commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above.

 

(viii)    To be eligible to be a candidate for election as a director of the Corporation at an annual meeting, a candidate must be nominated in the manner prescribed in this Section 2.5 (or otherwise in accordance with the Stockholders’ Agreement or Certificate of Incorporation, as applicable) and the candidate for nomination, whether nominated by the Board or by a stockholder of record, must have previously delivered (in the case of a nomination by a stockholder pursuant to Section 2.5(i)(b), in accordance with the time period prescribed in this Section 2.5 for delivery of the stockholder notice of nomination), to the Secretary at the principal executive offices of the Corporation, (a) a completed written questionnaire (in the form provided by the Corporation) with respect to the background, qualifications, stock ownership and independence of such candidate for nomination, and such additional information with respect to such proposed nominee as would be required to be provided by the Corporation pursuant to Schedule 14A if such proposed nominee were a participant in the solicitation of proxies by the Corporation in connection with such annual or special meeting and (b) a written representation and agreement (in the form provided by the Corporation) that such candidate for nomination (A) is not, and will not become a party to, any agreement, arrangement or understanding with any Person or entity other than the Corporation with respect to any direct or indirect compensation or reimbursement for service as a director of the Corporation that has not been disclosed therein and (B) if elected as a director of the Corporation, will comply with all applicable corporate governance, conflict of interest, confidentiality, stock ownership and trading and other policies and guidelines of the Corporation applicable to all directors and in effect during such person’s term in office as a director (and, if requested by any candidate for nomination, the Secretary of the Corporation shall provide to such candidate for nomination all such policies and guidelines then in effect).

 

(ix)    The Board may also require any proposed candidate for nomination as a Director to furnish such other information as may reasonably be requested by the Board in writing prior to the meeting of stockholders at which such candidate’s nomination is to be acted upon in order for the Board to determine the eligibility of such candidate for nomination to be an independent director of the Corporation in accordance with the Corporation’s corporate governance guidelines.

 

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(x)    In addition to the requirements of this Section 2.5 with respect to any nomination proposed to be made at a meeting, each Nominating Person shall comply with all applicable requirements of the Exchange Act with respect to any such nominations.

 

(xi)    No candidate shall be eligible for nomination as a director of the Corporation unless such candidate for nomination and the Nominating Person seeking to place such candidate’s name in nomination has complied with this Section 2.5, as applicable. The presiding officer at the meeting shall, if the facts warrant, determine that a nomination was not properly made in accordance with this Section 2.5, and if he or she should so determine, he or she shall so declare such determination to the meeting, the defective nomination shall be disregarded and any ballots cast for the candidate in question (but in the case of any form of ballot listing other qualified nominees, only the ballots cast for the nominee in question) shall be void and of no force or effect.

 

(xii)    Notwithstanding anything in these bylaws to the contrary, no candidate for nomination shall be eligible to be seated as a director of the Corporation unless nominated and elected in accordance with this Section 2.5.

 

(xiii)    Notwithstanding anything to the contrary contained in these bylaws, for as long as any party to the Stockholders’ Agreement has a right to designate or nominate a Director, the procedure for any such nomination shall be governed by the Stockholders’ Agreement and such party shall not be subject to the notice procedures set forth in these bylaws for the nomination of any person to serve as a Director at any annual meeting or special meeting of stockholders.

 

2.6   Notice of Stockholders Meetings.

 

Unless otherwise provided by law, the Certificate of Incorporation or these bylaws, the notice of any meeting of stockholders shall be sent or otherwise given in accordance with Section 2.7 of these bylaws not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting. The notice shall specify the place, if any, date and hour of the meeting, the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called.

 

2.7   Manner of Giving Notice; Affidavit of Notice.

 

Notice of any meeting of stockholders shall be deemed given:

 

(i)    if mailed, when deposited in the U.S. mail, postage prepaid, directed to the stockholder at his or her address as it appears on the Corporation’s records; or

 

(ii)    if electronically transmitted as provided in the DGCL.

 

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An affidavit of the secretary or an assistant secretary of the Corporation or of the transfer agent or any other agent of the Corporation that the notice has been given by mail or by a form of electronic transmission, as applicable, shall, in the absence of fraud, be prima facie evidence of the facts stated therein.

 

2.8   Quorum.

 

Unless otherwise provided by law, the Certificate of Incorporation, the Stockholders’ Agreement or these bylaws, the holders of a majority in voting power of the stock issued and outstanding and entitled to vote, present in person, or by remote communication, if applicable, or represented by proxy, shall constitute a quorum for the transaction of business at all meetings of the stockholders. A quorum, once established at a meeting, shall not be broken by the withdrawal of enough votes to leave less than a quorum. If, however, a quorum is not present or represented at any meeting of the stockholders, then either (i) the chairperson of the meeting or (ii) a majority in voting power of the stockholders entitled to vote at the meeting, present in person, or by remote communication, if applicable, or represented by proxy, shall have the power to adjourn the meeting from time to time in the manner provided in Section 2.9 of these bylaws until a quorum is present or represented. At any recessed or adjourned meeting at which a quorum is present or represented, any business may be transacted that might have been transacted at the meeting as originally noticed.

 

2.9   Adjourned Meeting; Notice.

 

When a meeting is adjourned to another time or place, if any, notice need not be given of the adjourned meeting if the time, place, if any, thereof, and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken. At any adjourned meeting, the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. If after the adjournment a new record date for determination of stockholders entitled to vote is fixed for the adjourned meeting, the Board shall fix as the record date for determining stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote at the adjourned meeting, and shall give notice of the adjourned meeting to each stockholder of record as of the record date so fixed for notice of such adjourned meeting.

 

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2.10   Conduct of Business.

 

The date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting shall be announced at the meeting by the person presiding over the meeting. The Board may adopt by resolution such rules and regulations for the conduct of the meeting of stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board, the chairperson of any meeting of stockholders shall have the right and authority to convene and (for any or no reason) to recess and/or adjourn the meeting, to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairperson, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board or prescribed by the chairperson of the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present; (iii) limitations on attendance at or participation in the meeting to stockholders entitled to vote at the meeting, their duly authorized and constituted proxies or such other persons as the chairperson of the meeting shall determine; (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (v) limitations on the time allotted to questions or comments by participants. The presiding person at any meeting of stockholders, in addition to making any other determinations that may be appropriate to the conduct of the meeting (including, without limitation, determinations with respect to the administration and/or interpretation of any of the rules, regulations or procedures of the meeting, whether adopted by the Board or prescribed by the person presiding over the meeting), shall, if the facts warrant, determine and declare to the meeting that a matter of business was not properly brought before the meeting and if such presiding person should so determine, such presiding person shall so declare to the meeting and any such matter or business not properly brought before the meeting shall not be transacted or considered. Unless and to the extent determined by the Board or the chairperson of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.

 

2.11   Voting.

 

Each stockholder shall be entitled to a number of votes based on the number of and type of shares of capital stock held by such stockholder as provided in the Certificate of Incorporation, the Stockholders’ Agreement or as required under the DGCL.

 

Except as otherwise provided by the Certificate of Incorporation or the Stockholders’ Agreement, at all duly called or convened meetings of stockholders at which a quorum is present, for the election of directors, a plurality of the votes cast shall be sufficient to elect a director. Except as otherwise provided by the Certificate of Incorporation, these bylaws, the rules or regulations of any stock exchange applicable to the Corporation, or applicable law or pursuant to any regulation applicable to the Corporation or its securities, each other matter presented to the stockholders at a duly called or convened meeting at which a quorum is present shall be decided by the affirmative vote of the holders of a majority of the votes cast (excluding abstentions and broker non-votes) on such matter.

 

2.12   Record Date for Stockholder Meetings and Other Purposes.

 

In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board, and which record date shall not be more than sixty (60) days nor less than ten (10) days before the date of such meeting. If the Board so fixes a date, such date shall also be the record date for determining the stockholders entitled to vote at such meeting unless the Board determines, at the time it fixes such record date, that a later date on or before the date of the meeting shall be the date for making such determination. If no record date is fixed by the Board, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be the close of business on the next day preceding the day on which notice is first given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board may fix a new record date for the adjourned meeting; and in such case shall also fix as the record date for stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote in accordance herewith at the adjourned meeting.

 

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In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment or any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of capital stock, or for the purposes of any other lawful action, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty (60) days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto.

 

2.13    Proxies.

 

Each stockholder entitled to vote at a meeting of stockholders may authorize another Person or Persons to act for such stockholder by proxy authorized by an instrument in writing or by a transmission permitted by law filed in accordance with the procedure established for the meeting, but, no such proxy shall be voted or acted upon after three (3) years from its date, unless the proxy provides for a longer period. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions of Section 212 of the DGCL. A proxy may be in the form of an electronic transmission which sets forth or is submitted with information from which it can be determined that the electronic transmission was authorized by the stockholder.

 

2.14   List of Stockholders Entitled to Vote.

 

The Corporation shall prepare, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting (provided, however, that if the record date for determining the stockholders entitled to vote is less than ten (10) days before the date of the meeting, the list shall reflect the stockholders entitled to vote as of the tenth day before the meeting date), arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. The Corporation shall not be required to include electronic mail addresses or other electronic contact information on such list. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting for a period of at least ten (10) days prior to the meeting: (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours, at the Corporation’s principal executive office. In the event that the Corporation determines to make the list available on an electronic network, the Corporation may take reasonable steps to ensure that such information is available only to stockholders of the Corporation. If the meeting is to be held at a place, then the list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting. Such list shall presumptively determine the identity of the stockholders entitled to vote at the meeting and the number of shares held by each of them. Except as otherwise provided by law, the stock ledger shall be the only evidence as to who are the stockholders entitled to examine the list of stockholders required by this Section 2.14 or to vote in person or by proxy at any meeting of stockholders.

 

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2.15   Inspectors of Election.

 

Before any meeting of stockholders, the Corporation shall appoint an inspector or inspectors of election to act at the meeting or its adjournment and make a written report thereof. The Corporation may designate one or more Persons as alternate inspectors to replace any inspector who fails to act. If any Person appointed as inspector or any alternate fails to appear or fails or refuses to act, then the chairperson of the meeting shall appoint a Person to fill that vacancy.

 

Such inspectors shall:

 

(i)    determine the number of shares outstanding and the voting power of each, the number of shares represented at the meeting and the validity of any proxies and ballots;

 

(ii)    count all votes or ballots;

 

(iii)    count and tabulate all votes;

 

(iv)    determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspector(s); and

 

(v)    certify its or their determination of the number of shares represented at the meeting and its or their count of all votes and ballots.

 

Each inspector, before entering upon the discharge of the duties of inspector, shall take and sign an oath faithfully to execute the duties of inspection with strict impartiality and according to the best of such inspector’s ability. Any report or certificate made by the inspectors of election is prima facie evidence of the facts stated therein. The inspectors of election may appoint such Persons to assist them in performing their duties as they determine.

 

2.16   Delivery to the Corporation.

 

Whenever this Article II requires one or more persons (including a record or beneficial owner of stock) to deliver a document or information to the Corporation or any officer, employee or agent thereof (including any notice, request, questionnaire, revocation, representation or other document or agreement), such document or information shall be in writing exclusively (and not in an electronic transmission) and shall be delivered exclusively by hand (including, without limitation, overnight courier service) or by certified or registered mail, return receipt requested, and the Corporation shall not be required to accept delivery of any document not in such written form or so delivered. For the avoidance of doubt, the Corporation expressly opts out of Section 116 of the DGCL with respect to the delivery of information and documents to the Corporation required by this Article II.

 

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Article III — Directors

 

3.1    Powers.

 

Except as otherwise provided by the Certificate of Incorporation, the Stockholders’ Agreement or the DGCL, the business and affairs of the Corporation shall be managed by or under the direction of the Board.

 

3.2    Number of Directors.

 

The total number of directors constituting the Board shall be determined in accordance with the Certificate of Incorporation and the Stockholders’ Agreement.

 

3.3    Election, Qualification and Term of Office of Directors.

 

The procedures for election of directors, as well as the terms and qualifications of directors, shall be as set forth in the Certificate of Incorporation and the Stockholders’ Agreement.

 

3.4    Resignation and Vacancies.

 

Subject to the terms of the Certificate of Incorporation and the Stockholders’ Agreement, any director may resign at any time upon notice given in writing or by electronic transmission to the Corporation. The resignation shall take effect at the time specified therein or upon the happening of an event specified therein, and if no time or event is specified, at the time of its receipt. When one or more directors so resigns and the resignation is effective at a future date or upon the happening of an event to occur on a future date, except as otherwise provided for in the Certificate of Incorporation or the Stockholders’ Agreement, a majority of the directors then in office, including those who have so resigned, shall have the power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each director so chosen shall hold office as provided in this section in the filling of other vacancies.

 

Vacancies and newly created directorships resulting from any increase in the authorized number of directors shall be filled in accordance with the Certificate of Incorporation and the Stockholders’ Agreement.

 

3.5    Place of Meetings; Meetings by Telephone.

 

The Board may hold meetings, both regular and special, either within or outside the State of Delaware.

 

Unless otherwise restricted by the Certificate of Incorporation or these bylaws, members of the Board, or any committee of the Board or subcommittee of the Board, in each case, designated by the Board, may participate in a meeting of the Board, or any committee of the Board or subcommittee of the Board, by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting pursuant to this bylaw shall constitute presence in person at the meeting.

 

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3.6    Regular Meetings.

 

Regular meetings of the Board may be held within or outside the State of Delaware without notice at such time and at such place as shall from time to time be determined by the Board.

 

3.7    Special Meetings; Notice.

 

Special meetings of the Board for any purpose or purposes may be called at any time by the chairperson of the Board or a majority of the total number of directors constituting the Board.

 

Notice of the time and place of special meetings shall be:

 

(i)    delivered personally by hand, by courier or by telephone;

 

(ii)    sent by United States first-class mail, postage prepaid;

 

(iii)    sent by facsimile or electronic mail; or

 

(iv)    sent by other means of electronic transmission,

 

directed to each director at that director’s address, telephone number, facsimile number or electronic mail address, or other address for electronic transmission, as the case may be, as shown on the Corporation’s records.

 

If the notice is (i) delivered personally by hand, by courier or by telephone, (ii) sent by facsimile or electronic mail, or (iii) sent by other means of electronic transmission, it shall be delivered or sent at least twenty-four (24) hours before the time of the holding of the meeting. If the notice is sent by U.S. mail, it shall be deposited in the U.S. mail at least four (4) days before the time of the holding of the meeting. The notice need not specify the place of the meeting (if the meeting is to be held at the Corporation’s principal executive office) nor the purpose of the meeting.

 

3.8    Quorum.

 

Subject to the Certificate of Incorporation, at all meetings of the Board, a majority of the total number of directors shall constitute a quorum for the transaction of business. The vote of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board, except as may be otherwise specifically provided by statute, the Certificate of Incorporation or these bylaws. If a quorum is not present at any meeting of the Board, then a majority of the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present.

 

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3.9    Action by Written Consent without a Meeting.

 

Unless otherwise restricted by the Certificate of Incorporation, the Stockholders’ Agreement or these bylaws, any action required or permitted to be taken at any meeting of the Board or of any committee of the Board or subcommittee of the Board, may be taken without a meeting if all members of the Board or committee or subcommittee, as the case may be, consent thereto in writing or by electronic transmission. After such an action is taken by written consent without a meeting, the consent or consents relating thereto shall be filed with the minutes of the proceedings of the Board or any committee or subcommittee thereof in the same paper or electronic form as the minutes are maintained.

 

3.10    Fees and Compensation of Directors.

 

Unless otherwise restricted by the Certificate of Incorporation or these bylaws, the Board shall have the authority to fix the compensation, including fees and reimbursement of expenses, of directors for services to the Corporation in any capacity.

 

3.11    Lead Independent Director.

 

The independent directors on the Board shall annually designate one independent director to serve as the lead independent director of the Board (the “Lead Independent Director”) for a term of one year. The Lead Independent Director shall have and may exercise such powers as may, from time to time, be assigned to him or her by the Board or by the other independent directors in matters upon which only independent directors may act. The Lead Independent Director shall be “independent” pursuant to applicable Stock Exchange Rules and shall not be an officer or employee of the Corporation. Notwithstanding the foregoing, the Board shall not be required to designate a Lead Independent Director if the chairperson of the Board is “independent” pursuant to applicable Stock Exchange Rules and shall not be an officer or employee of the Corporation.

 

Article IV — Committees

 

4.1    Committees of Directors.

 

Subject to the terms of the Certificate of Incorporation and the Stockholders’ Agreement, the Board may designate one (1) or more committees of the Board or the Board, each committee of the Board to consist, of one (1) or more of the directors of the Corporation and each committee of the Board, if different than the Board, to consist of one (1) or more members of the Board. The Board may designate one (1) or more directors or members of the Board, as applicable, as alternate members of any committee of the Board, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board or in these bylaws, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers that may require it; but no such committee or subcommittee shall have the power or authority to (i) approve or adopt, or recommend to the stockholders, any action or matter expressly required by the DGCL to be submitted to stockholders for approval, or (ii) adopt, amend or repeal any bylaw of the Corporation. The presence of a majority of the members of any committee of the Board or subcommittee thereof shall be necessary in order for a quorum to be obtained.

 

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4.2    Committee Minutes.

 

Each committee shall keep regular minutes of its meetings and report the same to the Board when required.

 

4.3    Meetings and Actions of Committees.

 

Meetings and actions of committees shall be governed by, and held and taken in accordance with, the provisions of:

 

(i)    Section 3.5 (place of meetings and meetings by telephone);

 

(ii)    Section 3.6 (regular meetings);

 

(iii)    Section 3.7 (special meetings and notice);

 

(iv)    Section 3.9 (action without a meeting); and

 

(v)    Section 7.12 (waiver of notice),

 

with such changes in the context of those bylaws as are necessary to substitute the committee and its respective members for the Board and its members. However:

 

(i)    the time of regular meetings of committees may be determined either by resolution of the Board or by resolution of the committee;

 

(ii)    special meetings of committees may also be called by resolution of the Board or the chairperson of the applicable committee; and

 

the Board may adopt rules for the governance of any committee to override the provisions that would otherwise apply to the committee pursuant to this Section 4.3; provided that such rules do not violate the provisions of the Certificate of Incorporation or applicable law.

 

Article V — Officers

 

5.1    Officers.

 

The officers of the Corporation shall initially include a chief executive officer, a president and a secretary. The Corporation may also have, at the discretion of the Board, a chairperson of the Board, a vice chairperson of the Board, a chief financial officer, a treasurer, one (1) or more vice presidents, one (1) or more assistant vice presidents, one (1) or more assistant treasurers, one (1) or more assistant secretaries, and any such other officers as may be appointed in accordance with the provisions of these bylaws. Any number of offices may be held by the same person.

 

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5.2    Appointment of Officers.

 

The Board or a duly authorized committee or subcommittee thereof shall appoint the officers of the Corporation, except such officers as may be appointed in accordance with the provisions of Section 5.3 of these bylaws.

 

5.3    Subordinate Officers.

 

The Board or a duly authorized committee or subcommittee thereof may appoint, or empower the chief executive officer or, in the absence of a chief executive officer, the president, to appoint, such other officers and agents as the business of the Corporation may require. Each of such officers and agents shall hold office for such period, have such authority, and perform such duties as are provided in these bylaws. As the Board or a duly authorized committee or subcommittee thereof may from time to time determine, or as determined by the officer upon whom such power of appointment has been conferred by the Board or a duly authorized committee or subcommittee thereof.

 

5.4    Removal and Resignation of Officers.

 

Subject to the rights, if any, of an officer under any contract of employment, any officer may be removed, either with or without cause, by the Board or a duly authorized committee or subcommittee thereof or, except in the case of an officer chosen by the Board or a duly authorized committee or subcommittee thereof, by any officer upon whom such power of removal may be conferred by the Board or a duly authorized committee or subcommittee thereof.

 

Any officer may resign at any time by giving written notice to the Corporation. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice. Unless otherwise specified in the notice of resignation, the acceptance of the resignation shall not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the Corporation under any contract to which the officer is a party.

 

5.5    Vacancies in Offices.

 

Any vacancy occurring in any office of the Corporation shall be filled by the Board or a duly authorized committee or subcommittee thereof or as provided in Section 5.2.

 

5.6    Representation of Shares of Other Corporations.

 

The chief executive officer, the president, the chairperson of the Board, any vice president, the treasurer, the secretary or assistant secretary of this Corporation, or any other Person authorized by the Board, the chief executive officer, the president or a vice president, is authorized to vote, represent and exercise on behalf of this Corporation all rights incident to any and all shares or securities of any other corporation or entity standing in the name of this Corporation. The authority granted herein may be exercised either by such Person directly or by any other Person authorized to do so by proxy or power of attorney duly executed by such Person having the authority.

 

5.7    Authority and Duties of Officers.

 

All officers of the Corporation shall respectively have such authority and perform such duties in the management of the business of the Corporation as may be provided herein or designated from time to time by the Board and, to the extent not so provided, as generally pertain to their respective offices, subject to the control of the Board.

 

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5.8    Compensation.

 

The compensation of the officers of the Corporation for their services as such shall be fixed from time to time by or at the direction of the Board. An officer of the Corporation shall not be prevented from receiving compensation by reason of the fact that he or she is also a director of the Corporation.

 

Article VI — Records

 

A stock ledger consisting of one or more records in which the names of all of the Corporation’s stockholders of record, the address and number of shares registered in the name of each such stockholder, and all issuances and transfers of stock of the corporation are recorded in accordance with Section 224 of the DGCL shall be administered by or on behalf of the Corporation. Any records administered by or on behalf of the Corporation in the regular course of its business, including its stock ledger, books of account, and minute books, may be kept on, or by means of, or be in the form of, any information storage device, or method, or one or more electronic networks or databases (including one or more distributed electronic networks or databases), provided that the records so kept can be converted into clearly legible paper form within a reasonable time and, with respect to the stock ledger, that the records so kept (i) can be used to prepare the list of stockholders specified in Sections 219 and 220 of the DGCL, (ii) record the information specified in Sections 156, 159, 217(a) and 218 of the DGCL, and (iii) record transfers of stock as governed by Article 8 of the Delaware Uniform Commercial Code.

 

Article VII General Matters

 

7.1    Execution of Corporate Contracts and Instruments.

 

The Board, except as otherwise provided in these bylaws, may authorize any officer or officers, or agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the Corporation; such authority may be general or confined to specific instances. Unless so authorized or ratified by the Board or within the agency power of an officer, no officer, agent or employee shall have any power or authority to bind the Corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount.

 

7.2    Stock Certificates.

 

The shares of the Corporation may be certificated or uncertificated, subject to the sole discretion of the Board and applicable law. Certificates for the shares of stock, if any, shall be in such form as is consistent with the Certificate of Incorporation and applicable law. Every holder of stock represented by a certificate shall be entitled to have a certificate signed by, or in the name of the Corporation by, any two officers authorized to sign stock certificates representing the number of shares registered in certificate form. The chief executive officer, chairperson of the Board, the president, vice president, the treasurer, any assistant treasurer, general counsel or deputy general counsel, the secretary or any assistant secretary of the Corporation shall be specifically authorized to sign stock certificates. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he or she were such officer, transfer agent or registrar at the date of issue.

 

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7.3    Lost Certificates.

 

Except as provided in this Section 7.3, no new certificates for shares shall be issued to replace a previously issued certificate unless the latter is surrendered to the Corporation and cancelled at the same time. The Corporation may issue a new certificate of stock or uncertificated shares in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen or destroyed certificate, or such owner’s legal representative, to give the Corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares.

 

7.4    Shares Without Certificates.

 

The Corporation shall adopt a system of issuance, recordation and transfer of its shares of stock by electronic or other means not involving the issuance of certificates, provided the use of such system by the Corporation is permitted in accordance with applicable law.

 

7.5    Construction; Definitions.

 

Unless the context requires otherwise, the general provisions, rules of construction and definitions in the DGCL shall govern the construction of these bylaws. In connection herewith, to the extent there are conflicts among these bylaws, the Certificate of Incorporation or the Stockholders’ Agreement, priority shall first be given to the Certificate of Incorporation, second to the Stockholders’ Agreement and third to these bylaws, in each case except as otherwise required by the DGCL. Without limiting the generality of this provision, the singular number includes the plural and the plural number includes the singular.

 

7.6    Dividends.

 

The Board, subject to any restrictions contained in either (i) the DGCL, (ii) the Certificate of Incorporation or (iii) the Stockholder’s Agreement, may declare and pay dividends upon the shares of its capital stock. Dividends may be paid in cash, in property or in shares of the Corporation’s capital stock.

 

The Board may set apart out of any of the funds of the Corporation available for dividends a reserve or reserves for any proper purpose and may abolish any such reserve. Such purposes shall include but not be limited to equalizing dividends, repairing or maintaining any property of the Corporation, and meeting contingencies.

 

7.7    Fiscal Year.

 

The fiscal year of the Corporation shall be fixed by resolution of the Board and may be changed by the Board.

 

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7.8    Seal.

 

The Corporation may adopt a corporate seal, which shall be adopted and which may be altered by the Board. The Corporation may use the corporate seal by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced.

 

7.9    Transfer of Stock.

 

Shares of the Corporation shall be transferable in the manner prescribed by law and in these bylaws subject to any transfer restrictions contained in the Certificate of Incorporation and the Stockholders’ Agreement. Shares of stock of the Corporation shall be transferred on the books of the Corporation only by the holder of record thereof or by such holder’s attorney duly authorized in writing, upon surrender to the Corporation or a subsidiary of the Corporation pursuant to applicable provisions of the governing documents of such subsidiary of the Corporation, of the certificate or certificates representing such shares endorsed by the appropriate Person or Persons (or by delivery of duly executed instructions with respect to uncertificated shares), with such evidence of the authenticity of such endorsement or execution, transfer, authorization and other matters as the Corporation may reasonably require, and accompanied by all necessary stock transfer stamps. No transfer of stock shall be valid as against the Corporation for any purpose until it shall have been entered in the stock records of the Corporation by an entry showing the names of the Persons from and to whom it was transferred.

 

7.10    Stock Transfer Agreements.

 

The Corporation shall have the power to enter into and perform any agreement with any number of stockholders of any one or more classes or series of stock of the Corporation to restrict the transfer of shares of stock of the Corporation of any one or more classes owned by such stockholders in any manner not prohibited by the DGCL.

 

7.11    Registered Stockholders.

 

The Corporation:

 

(i)    shall be entitled to recognize the exclusive right of a Person registered on its books as the owner of shares to receive dividends and to vote as such owner; and

 

(ii)    shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of another Person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of Delaware.

 

7.12    Waiver of Notice.

 

Whenever notice is required to be given under any provision of the DGCL, the Certificate of Incorporation or these bylaws, a written waiver, signed by the Person entitled to notice, or a waiver by electronic transmission by the Person entitled to notice, whether before or after the time of the event for which notice is to be given, shall be deemed equivalent to notice. Attendance of a Person at a meeting shall constitute a waiver of notice of such meeting, except when the Person attends a meeting for the express purpose of objecting at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders needs to be specified in any written waiver of notice or any waiver by electronic transmission unless so required by the Certificate of Incorporation or these bylaws.

 

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Article VIII — Notice

 

Without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders given by the Corporation under any provisions of the DGCL, the Certificate of Incorporation, or these bylaws may be given in writing directed to the stockholder’s mailing address (or by electronic transmission directed to the stockholder’s electronic mail address, as applicable) as it appears on the records of the Corporation and shall be given (1) if mailed, when the notice is deposited in the U.S. mail, postage prepaid, (2) if delivered by courier service, the earlier of when the notice is received or left at such stockholder’s address or (3) if given by electronic mail, when directed to such stockholder’s electronic mail address unless the stockholder has notified the Corporation in writing or by electronic transmission of an objection to receiving notice by electronic mail. A notice by electronic mail must include a prominent legend that the communication is an important notice regarding the Corporation.

 

Without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders given by the Corporation under any provision of the DGCL, the Certificate of Incorporation or these bylaws shall be effective if given by a form of electronic transmission consented to by the stockholder to whom the notice is given. Any such consent shall be revocable by the stockholder by written notice or electronic transmission to the Corporation. Notwithstanding the provisions of this paragraph, the Corporation may give a notice by electronic mail in accordance with the first paragraph of this section without obtaining the consent required by this paragraph.

 

Any notice given pursuant to the preceding paragraph shall be deemed given:

 

(i)    if by facsimile telecommunication, when directed to a number at which the stockholder has consented to receive notice;

 

(ii)    if by a posting on an electronic network together with separate notice to the stockholder of such specific posting, upon the later of (A) such posting and (B) the giving of such separate notice; and

 

(iii)    if by any other form of electronic transmission, when directed to the stockholder.

 

Notwithstanding the foregoing, a notice may not be given by an electronic transmission from and after the time that (1) the Corporation is unable to deliver by such electronic transmission two (2) consecutive notices given by the Corporation and (2) such inability becomes known to the Secretary or an Assistant Secretary of the Corporation or to the transfer agent, or other person responsible for the giving of notice, provided, however, the inadvertent failure to discover such inability shall not invalidate any meeting or other action.

 

An affidavit of the Secretary or an Assistant Secretary or of the transfer agent or other agent of the Corporation that the notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein.

 

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Article IX Indemnification

 

9.1    Indemnification of Directors and Officers.

 

The Corporation shall indemnify and hold harmless, to the fullest extent permitted by the DGCL as it presently exists or may hereafter be amended, any director or officer of the Corporation who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”) by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was a director or officer of the Corporation or, while serving as a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership (a “Covered Person”), joint venture, trust, enterprise or non-profit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses (including attorneys’ fees, judgments, fines ERISA excise taxes or penalties and amounts paid in settlement) reasonably incurred by such person in connection with any such Proceeding. Notwithstanding the preceding sentence, except as otherwise provided in Section 9.4, the Corporation shall be required to indemnify a person in connection with a Proceeding initiated by such person only if the Proceeding was authorized in the specific case by the Board.

 

9.2    Indemnification of Others.

 

The Corporation shall have the power to indemnify and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any employee or agent of the Corporation who was or is made or is threatened to be made a party or is otherwise involved in any Proceeding by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was an employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or non-profit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses reasonably incurred by such person in connection with any such Proceeding.

 

9.3    Prepayment of Expenses.

 

The Corporation shall to the fullest extent not prohibited by applicable law pay the expenses (including attorneys’ fees) incurred by any Covered Person, and may pay the expenses incurred by any employee or agent of the Corporation, in defending any Proceeding in advance of its final disposition; provided, however, that such payment of expenses in advance of the final disposition of the Proceeding shall be made only upon receipt of an undertaking by the person to repay all amounts advanced if it should be ultimately determined that the person is not entitled to be indemnified under this Article IX or otherwise.

 

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9.4    Determination; Claim.

 

If a claim for indemnification (following the final disposition of such Proceeding) under this Article IX is not paid in full within sixty (60) days, or a claim for advancement of expenses under this Article IX is not paid in full within thirty (30) days, after a written claim therefor has been received by the Corporation the claimant may thereafter (but not before) file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim to the fullest extent permitted by law. In any such action the Corporation shall have the burden of proving that the claimant was not entitled to the requested indemnification or payment of expenses under applicable law.

 

9.5    Non-Exclusivity of Rights.

 

The rights conferred on any person by this Article IX shall not be exclusive of any other rights which such person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, these bylaws, agreement, vote of stockholders or disinterested directors or otherwise.

 

9.6    Insurance.

 

The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust enterprise or non-profit entity against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify him or her against such liability under the provisions of the DGCL.

 

9.7    Other Indemnification.

 

The Corporation’s obligation, if any, to indemnify or advance expenses to any person who was or is serving at its request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, enterprise or non-profit entity shall be reduced by any amount such person may collect as indemnification or advancement of expenses from such other corporation, partnership, joint venture, trust, enterprise or non-profit enterprise.

 

9.8    Continuation of Indemnification.

 

The rights to indemnification and to prepayment of expenses provided by, or granted pursuant to, this Article IX shall continue notwithstanding that the person has ceased to be a director or officer of the Corporation and shall inure to the benefit of the estate, heirs, executors, administrators, legatees and distributees of such person.

 

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9.9    Amendment or Repeal; Interpretation.

 

The provisions of this Article IX shall constitute a contract between the Corporation, on the one hand, and, on the other hand, each individual who serves or has served as a director or officer of the Corporation (whether before or after the adoption of these bylaws), in consideration of such person’s performance of such services, and pursuant to this Article IX the Corporation intends to be legally bound to each such current or former director or officer of the Corporation. With respect to current and former directors and officers of the Corporation, the rights conferred under this Article IX are present contractual rights and such rights are fully vested, and shall be deemed to have vested fully, immediately upon adoption of theses bylaws. With respect to any directors or officers of the Corporation who commence service following adoption of these bylaws, the rights conferred under this provision shall be present contractual rights and such rights shall fully vest, and be deemed to have vested fully, immediately upon such director or officer commencing service as a director or officer of the Corporation. Any repeal or modification of the foregoing provisions of this Article IX shall not adversely affect any right or protection (i) hereunder of any person in respect of any act or omission occurring prior to the time of such repeal or modification or (ii) under any agreement providing for indemnification or advancement of expenses to an officer or director of the Corporation in effect prior to the time of such repeal or modification.

 

Any reference to an officer of the Corporation in this Article IX shall be deemed to refer exclusively to the Chief Executive Officer, President, and Secretary, or other officer of the Corporation appointed by (x) the Board pursuant to Article V of these bylaws or (y) an officer to whom the Board has delegated the power to appoint officers pursuant to Article V of these bylaws, and any reference to an officer of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise shall be deemed to refer exclusively to an officer appointed by the board of directors (or equivalent governing body) of such other entity pursuant to the certificate of incorporation and bylaws (or equivalent organizational documents) of such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise. The fact that any person who is or was an employee of the Corporation or an employee of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise has been given or has used the title of “Vice President” or any other title that could be construed to suggest or imply that such person is or may be an officer of the Corporation or of such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise shall not result in such person being constituted as, or being deemed to be, an officer of the Corporation or of such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise for purposes of this Article IX.

 

Article X Amendments

 

The Board is expressly empowered to adopt, amend or repeal the bylaws of the Corporation. The stockholders also shall have the power to adopt, amend or repeal the bylaws of the Corporation. Notwithstanding the foregoing, in any adoption, amendment or repeal of the bylaws of the Corporation may only be done in accordance with the Certificate of Incorporation, the Stockholders Agreement and the DGCL.

 

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Article XI Forum Selection

 

Unless the Corporation consents in writing to the selection of an alternative forum, (a) the Court of Chancery (the “Chancery Court”) of the State of Delaware (or, in the event that the Chancery Court does not have jurisdiction, the federal district court for the District of Delaware or other state courts of the State of Delaware) shall, to the fullest extent permitted by law, be the sole and exclusive forum for (i) any derivative action, suit or proceeding brought on behalf of the Corporation, (ii) any action, suit or proceeding asserting a claim of breach of a fiduciary duty owed by any director, officer or stockholder of the Corporation to the Corporation or to the Corporation’s stockholders, (iii) any action, suit or proceeding arising pursuant to any provision of the DGCL or the Certificate of Incorporation or these bylaws (as either may be amended from time to time) or (iv) any action, suit or proceeding asserting a claim against the Corporation governed by the internal affairs doctrine; and (b) subject to the preceding provisions of this Article XI, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended. If any action the subject matter of which is within the scope of clause (a) of the immediately preceding sentence is filed in a court other than the courts in the State of Delaware (a “Foreign Action”) in the name of any stockholder, such stockholder shall be deemed to have consented to (x) the personal jurisdiction of the state and federal courts in the State of Delaware in connection with any action brought in any such court to enforce the provisions of clause (a) of the immediately preceding sentence and (y) having service of process made upon such stockholder in any such action by service upon such stockholder’s counsel in the Foreign Action as agent for such stockholder.

 

Any person or entity purchasing or otherwise acquiring any interest in any security of the Corporation shall be deemed to have notice of and consented to this Article XI. Notwithstanding the foregoing, the provisions of this Article XI shall not apply to suits brought to enforce any liability or duty created by the Securities Exchange Act of 1934, as amended, or any other claim for which the federal courts of the United States have exclusive jurisdiction.

 

If any provision or provisions of this Article XI shall be held to be invalid, illegal or unenforceable as applied to any circumstance for any reason whatsoever, (a) the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Article XI (including, without limitation, each portion of any paragraph of this Article XI containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and (b) the application of such provision to other persons or entities and circumstances shall not in any way be affected or impaired thereby.

 

Article XII Definitions

 

As used in these bylaws, unless the context otherwise requires, the term:

 

Affiliate” means, with respect to any Person, any other Person that controls, is controlled by, or is under common control with such Person. For the purposes of this definition, “control,” when used with respect to any Person, means the power to direct or cause the direction of the affairs or management of that Person, whether through the ownership of voting securities, as trustee (or the power to appoint a trustee), personal representative or executor, by contract, credit arrangement or otherwise and “controlled” and “controlling” have meanings correlative to the foregoing.

 

Board” means the board of directors of the Corporation.

 

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An “electronic transmission” means any form of communication, not directly involving the physical transmission of paper, including the use of, or participation in, one or more electronic networks or databases (including one or more distributed electronic networks or databases), that creates a record that may be retained, retrieved and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.

 

An “electronic mail” means an electronic transmission directed to a unique electronic mail address (which electronic mail shall be deemed to include any files attached thereto and any information hyperlinked to a website if such electronic mail includes the contact information of an officer or agent of the Corporation who is available to assist with accessing such files and information).

 

An “electronic mail address” means a destination, commonly expressed as a string of characters, consisting of a unique user name or mailbox (commonly referred to as the “local part” of the address) and a reference to an internet domain (commonly referred to as the “domain part” of the address), whether or not displayed, to which electronic mail can be sent or delivered.

 

Person” means any individual, general partnership, limited partnership, limited liability company, corporation, trust, business trust, joint stock company, joint venture, unincorporated association, cooperative or association or any other legal entity or organization of whatever nature, and shall include any successor (by merger or otherwise) of such entity.

 

Stock Exchange Rules” has the meaning set forth in the Certificate of Incorporation.

 

Stockholders Agreement” means the Stockholders’ Agreement, dated as of January 25, 2022, by and among the Corporation and the other parties thereto or that may become parties thereto from time to time, as it may be amended, supplemented or modified.

 

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Exhibit 10.1

 

STOCKHOLDERS AGREEMENT

 

This Stockholders’ Agreement (this “Agreement”) is made as of January 25, 2022, by and among (i) Sky Harbour Group Corporation, a Delaware corporation (the “Company”); (ii) Tal Keinan (“Founder”); (iii) Due West Partners LLC, a Washington limited liability company (“Due West”); (iv) Center Sky Harbour LLC, a Delaware limited liability company (“Center Sky” and, together with Due West and Founder, the “SH Equityholders”); (v) BOC Yellowstone LLC, a Delaware limited liability company (“Sponsor I”); and (vi) BOC Yellowstone II LLC, a Delaware limited liability company (“Sponsor II” and, together with Sponsor I, “Sponsor”).

 

RECITALS

 

WHEREAS, the Company has entered into that certain Equity Purchase Agreement, dated as of August 1, 2021 (as it may be amended or supplemented from time to time, the “Purchase Agreement”), by and among (i) Sky Harbour LLC, a Delaware limited liability company (“OpCo”) and (ii) Yellowstone Acquisition Company, a Delaware corporation and predecessor to the Company (“Yellowstone”), pursuant to which the parties thereto have agreed to consummate the transactions contemplated by the Purchase Agreement (collectively, the “Transaction”);

 

WHEREAS, pursuant to the Purchase Agreement, among other things, (i) OpCo issued a number of OpCo Common Units (as defined below) to the Company in exchange for a contribution of cash from Yellowstone, (ii) the Class B common stock of Yellowstone, held by Sponsor, converted into an equivalent number of shares of Class A Common Stock (as defined below) of the Company, and (iii) the Company issued Class B Common Stock (as defined below) to the SH Equityholders;

 

WHEREAS, in connection with the Transaction, the SH Equityholders and Sponsor (collectively, the “Stockholder Parties”) have agreed to execute and deliver this Agreement;

 

WHEREAS, as of immediately following the closing of the Transaction (the “Closing”), each of the Stockholder Parties Beneficially Owns (as defined below) the respective number of shares of Class A common stock, par value $0.0001 per share (the “Class A Common Stock”), Class B common stock, par value $0.0001 per share (the “Class B Common Stock” and together with the Class A Common Stock, the “Common Stock”), of the Company, set forth on Annex A hereto;

 

WHEREAS, the number of shares of Common Stock Beneficially Owned by each Stockholder Party may change from time to time, in accordance with the terms of (x) the Purchase Agreement, (y) the Amended and Restated Certificate of Incorporation of the Company, as it may be amended, supplemented and/or restated from time to time (the “Charter”), and (z) the by-laws of the Company, as they may be amended, supplemented and/or restated from time to time (the “Bylaws”);

 

WHEREAS, the Stockholder Parties desire to maintain a group and to enter into this Agreement to provide for voting agreements, pursuant to which all of the Stockholder Parties’ shares of Common Stock will be voted together with respect to elections of the Company’s board of directors (the “Board”).

 

 

 

 

NOW THEREFORE, in consideration of the foregoing and of the promises and covenants contained herein, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

AGREEMENT

 

1.    Definitions. Capitalized terms used herein but not defined in this Agreement shall have the meanings ascribed to them in the Purchase Agreement. In addition to the terms defined elsewhere in this Agreement, the following terms shall have the meanings indicated when used in this Agreement with initial capital letters:

 

Affiliate” shall have the meaning ascribed to such term in Rule 12b-2 of the General Rules and Regulations under the Exchange Act.

 

Center Sky Holders” shall mean Center Sky and its Permitted Transferees.

 

Closing Date” shall have the meaning given in the Purchase Agreement.

 

Competitor” shall mean a Person engaged, directly or indirectly (including through any partnership, limited liability company, corporation, joint venture or similar arrangement (whether now existing or formed hereafter)), in the business of developing and leasing airport real estate infrastructure in North America but shall not include any financial investment firm or collective investment vehicle that, together with its Affiliates, holds less than ten percent (10%) of the outstanding equity of any Competitor and does not, nor do any of its Affiliates, have a right to designate any members of the board of directors of any Competitor.

 

Confidential Information” shall mean all information (whether or not specifically identified as confidential), in any form or medium, that is disclosed to, or developed or learned by, the Company or any of its Subsidiaries, or a Stockholder Party, as the case may be, in the performance of duties for, or on behalf of, the Company or any of its Subsidiaries or that relates to the business, products, services or research of the Company or any of its Subsidiaries or any of their investors, partners, Affiliates, strategic alliance participants, officers, directors, employees or stockholders or their respective Affiliates, including, without limitation: (i) internal business information of the Company and its Subsidiaries (including, without limitation, information relating to strategic plans and practices, business, accounting, financial or marketing plans, practices or programs, training practices and programs, salaries, bonuses, incentive plans and other compensation and benefits information and accounting and business methods); (ii) identities of, individual requirements of, specific contractual arrangements with, and information about, the Company or any of its Subsidiaries, its Affiliates, their respective customers and their respective confidential information; (iii) any confidential or proprietary information of any third party that the Company or any Subsidiary of the Company has a duty to maintain confidentiality of, or use only for certain limited purposes; (iv) industry research compiled by, or on behalf of the Company or any of its Subsidiaries, including, without limitation, identities of potential target companies, management teams, and transaction sources identified by, or on behalf of, the Company or any of its Subsidiaries; (v) compilations of data and analyses, processes, methods, track and performance records, data and data bases relating thereto; and (vi) information related to the Company’s Intellectual Property and updates of any of the foregoing; provided that “Confidential Information” shall not include any information that a Stockholder Party can demonstrate has become generally known to and widely available for use other than as a result of the acts or omissions of such Stockholder Party or any Person over which such Stockholder Party has control to the extent such acts or omissions are not authorized by such Stockholder Party in the performance of such Person’s assigned duties for such Stockholder Party.

 

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Due West Holders” shall mean Due West and its Permitted Transferees.

 

Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

Founder Holders” shall mean Founder and his Permitted Transferees.

 

Law” shall mean any federal, state, local or foreign law, regulation or rule or any decree, judgment, permit or order.

 

Nasdaq” shall mean the Nasdaq Stock Market LLC.

 

Necessary Action” shall mean, with respect to any party and a specified result, all actions (to the extent such actions are not prohibited by applicable Law, within such party’s control and do not directly conflict with any rights expressly granted to such party in this Agreement, the Purchase Agreement, the Charter or the By-laws) reasonably necessary and desirable within his, her or its control to cause such result, including, without limitation (i) calling special meetings of the Board and the stockholders of the Company, (ii) voting or providing a proxy with respect to the Voting Shares Beneficially Owned by such party, (iii) voting in favor of the adoption of stockholders’ resolutions and amendments to the Charter or the By-laws, (iv) requesting members of the Board (to the extent such members were elected, nominated or designated by the party obligated to undertake such action) to act (subject to any applicable fiduciary duties) in a certain manner or causing them to be removed in the event they do not act in such a manner and (v) making, or causing to be made, with governmental, administrative or regulatory authorities, all filings, registrations or similar actions that are required to achieve such a result.

 

OpCo Common Units” shall mean the “Common Units” of OpCo as defined in the OpCo LLCA.

 

OpCo LLCA” shall mean the Third Amended and Restated Limited Liability Company Operating Agreement of OpCo, dated as of January 25, 2022, as it may be amended, supplemented, restated and/or modified from time to time.

 

Permanent Incapacity” shall mean, with respect to any Person, when a competent medical authority who is treating such Person has given a written opinion to the Company stating that such Person has become permanently incapable of carrying out his or her functions as an officer or member of the Board, as applicable.

 

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Permitted Transferees” shall mean, with respect to any stockholder of the Company party to this Agreement: (i) the Company, OpCo, or any of their Subsidiaries; (ii) any Person approved in writing in advance by the Board, in its sole discretion; (iii) in the case of Due West, Center Sky and Sponsor, any of their controlled or controlling Affiliates (only for so long as such transferee remains a controlled or controlling Affiliate); and (iv) if the stockholder is a natural Person, any of such stockholder’s controlled Affiliates, or any trust or other estate planning vehicle that is under the control of such stockholder and for the sole benefit of such stockholder and/or such stockholder’s spouse, former spouse, ancestors and descendants (whether natural or adopted), parents and their descendants and any spouse of the foregoing Persons, in the case of each of clauses (i) through (iv), only if such transferee becomes a party to this Agreement; provided that, notwithstanding the foregoing, in no event will any Person that is a Competitor to the Company be a Permitted Transferee hereunder.

 

Person” shall mean individual, corporation, limited liability company, partnership, joint venture, association, trust, unincorporated organization or any other entity, including a governmental authority.

 

Securities Act” shall mean the Securities Act of 1933, as amended.

 

Sponsor Holders” shall mean Sponsor and its Permitted Transferees.

 

Stockholder Designating Party” shall mean each of Founder, Due West, Center Sky and Sponsor.

 

Stockholder Shares” shall mean all securities of the Company registered in the name of, or Beneficially Owned by the Stockholder Parties, including any and all securities of the Company acquired and held in such capacity subsequent to the date hereof.

 

Subsidiary” shall mean, with respect to any Person, (i) any corporation of which more than fifty percent (50%) of the outstanding voting securities is, directly or indirectly, owned by such Person, and (ii) any partnership, limited liability company, joint venture or other entity of which more than fifty percent (50%) of the total equity interest is, directly or indirectly, owned by such Person or of which such Person or any Subsidiary is a general partner, manager, managing member or the equivalent.

 

Transfer” shall mean the (i) sale of, offer to sell, contract or agreement to sell, hypothecate, pledge, grant of any option to purchase or otherwise dispose of or agreement to dispose of, directly or indirectly, or establishment or increase of a put equivalent position or liquidation with respect to or decrease of a call equivalent position within the meaning of Section 16 of the Exchange Act with respect to, any security, (ii) entry into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any security, whether any such transaction is to be settled by delivery of such securities, in cash or otherwise, or (iii) public announcement of any intention to effect any transaction specified in clause (i) or (ii).

 

2.    Agreement to Vote. During the term of this Agreement, each Stockholder Party shall vote or cause to be voted all securities of the Company that may be voted in the election of the Company’s directors registered in the name of, or beneficially owned (as such term is defined in Rule 13d-3 under the Exchange Act) (“Beneficially Owned” or “Beneficial Ownership”) by such Stockholder Party, including any and all securities of the Company acquired and held in such capacity subsequent to the date hereof (hereinafter referred to as the “Voting Shares”), in accordance with the provisions of this Agreement, including, without limitation, voting or causing to be voted all Voting Shares Beneficially Owned by such Stockholder Party so that the Board is comprised of the Persons designated pursuant to Section 3. Except as explicitly provided in this Agreement, each Stockholder Party is free to vote or cause to be voted all Voting Shares Beneficially Owned by such Stockholder Party. For the avoidance of doubt, nothing in this Section 2 shall require a Stockholder Party to exercise or convert any security exercisable or convertible for voting securities of the Company.

 

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3.    Board of Directors.

 

(a)    Board Representation. The Board shall initially consist of seven (7) directors. Subject to the terms and conditions of this Agreement, from and after the date of this Agreement, the Company and each Stockholder Party shall take all Necessary Action to cause, effective beginning immediately following the Closing Date, the Board to be comprised of seven (7) directors who, initially, shall be the Persons identified on Exhibit 3(a).

 

(b)    Founder Designees.

 

(i)    Subject to Sections 3(b)(ii) and 3(f), the Founder Holders, by a majority of shares held by them, shall have the right to nominate, and the Board and the Stockholder Parties will appoint and vote for, four (4) members of the Board (the “Founder Designees” and each an “Founder Designee”), who are initially designated as set forth as set forth on Exhibit 3(a) hereto and all of which shall thereafter be designated by the Founder Holders by a majority of shares held by them.

 

(ii)    In the event the Founder Holders cease collectively, as of any date after the Closing Date, to own voting stock of the Company bearing greater than: (A) thirty-three percent (33%) of outstanding voting power of the Company held by them at the Closing, the Founder Holders shall only be entitled to nominate three (3) members of the Board as of the date Founder Holders cease to hold the aforementioned requisite securities of the Company; (B) twenty-five percent (25%) of the outstanding voting power of the Company held by them at the Closing, the Founder Holders shall only be entitled to nominate two (2) members of the Board as of the date Founder Holders cease to hold the aforementioned requisite securities of the Company; (C) fifteen percent (15%) of the outstanding voting power of the Company held by them at the Closing, the Founder Holders shall only be entitled to nominate one (1) member of the Board as of the date Founder Holders cease to hold the aforementioned requisite securities of the Company; and (D) five percent (5%) of the outstanding voting power of the Company held by them at the Closing, the Founder Holders shall no longer be entitled to nominate any members of the Board as of the date the Founder Holders cease to hold the aforementioned requisite securities of the Company. The Stockholder Parties agree that, in the event the size of the Board is increased or decreased, the number of Founder Designees that the Founder Holders are entitled to appoint to the Board shall increase or decrease proportionately to the size of the Board.

 

(iii)    Notwithstanding the foregoing, for so long as the Founder Holders are entitled to nominate at least four (4) members of the Board, at least one (1) Founder Designee must (x) qualify as an “independent director” under Nasdaq Rules and (y) qualify as an “audit committee financial expert” within the meaning of Regulation S-K of the Securities Act.

 

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(c)    Due West Designee.

 

(i)    Until the Due West Fall-Away Date, the Due West Holders, by a majority of shares held by them, shall have the right to nominate, and the Board and the Stockholder Parties will appoint and vote for, one (1) member of the Board (the “Due West Designee”), who is initially designated as set forth on Exhibit 3(a) hereto and shall thereafter be designated by the Due West Holders. The Due West Designee must at all times qualify as an “independent director” under Nasdaq Rules.

 

(ii)    The “Due West Fall-Away Date” shall be the first date following the Closing Date on which either of the following events occurs: (A) the Due West Holders cease to own voting stock of the Company bearing greater than thirty-three percent (33%) of the outstanding voting power of the Company held by them at the Closing; or (B) Due West’s designation rights have been terminated pursuant to Section 3(f).

 

(d)    Center Sky Designee.

 

(i)    Until the Center Sky Fall-Away Date, the Center Sky Holders, by a majority of shares held by them, shall have the right to nominate, and the Board and the Stockholder Parties will appoint and vote for, one (1) member of the Board (the “Center Sky Designee”), who is initially designated as set forth on Exhibit 3(a) hereto and shall thereafter be designated by the Center Sky Holders. The Center Sky Designee must at all times qualify as an “independent director” under Nasdaq Rules.

 

(ii)    The “Center Sky Fall-Away Date” shall be the first date following the Closing Date on which either of the following events occurs: (A) the Center Sky Holders cease to own voting stock of the Company bearing greater than thirty-three percent (33%) of the outstanding voting power of the Company held by them at the Closing; or (B) Center Sky’s designation rights have been terminated pursuant to Section 3(f).

 

(e)    Sponsor Designee.

 

(i)    Until the Sponsor Fall-away Date, the Sponsor Holders, by a majority of shares held by them, shall have the right to nominate, and the Board and the Stockholder Parties will appoint and vote for, one (1) member of the Board (the “Sponsor Designee” and, together with the Founder Designees, the Due West Designee and the Center Sky Designee, the “Stockholder Designees”), who is initially designated as set forth on Exhibit 3(a) hereto and shall thereafter be designated by the Sponsor Holders. The Sponsor Designee must at all times qualify as an “independent director” under Nasdaq Rules; provided that in the event the Sponsor Designee is either Adam K. Peterson or Alex B. Rozek, and is not at such time considered an “independent director” under Nasdaq Rules, then the number of Founder Designees who must qualify as an “independent director” under Nasdaq Rules pursuant to Section 3(b)(iii) shall, solely for the duration of the period of time during which Mr. Rozek or Mr. Peterson is the Sponsor Designee, increase to two (2).

 

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(ii)    The “Sponsor Fall-Away Date” shall be the first date following the Closing Date on which either of the following events occurs: (A) the Sponsor Holders cease to own voting stock of the Company bearing greater than thirty-three percent (33%) of the outstanding voting power of the Company held by them at the Closing, or (B) the first date following the Closing upon which Sponsor’s designation rights have been terminated pursuant to Section 3(f).

 

(f)    Additional Lapse of Designation Rights. Notwithstanding anything to the contrary set forth in this Agreement, the right of any Stockholder Designating Party to designate nominees for appointment to the Board as set forth in Section 3(b), Section 3(c), Section 3(d), or Section 3(e) shall terminate if at any time (A) such Stockholder Designating Party or any of its Affiliates becomes a Competitor of the Company, (B) such Stockholder Designating Party or any of its Affiliates commences any legal proceeding against the Company, its Subsidiaries or any other member of the Board of Directors; or (C) such Stockholder Designating Party or any of its Affiliates has the right (whether exercised or not) to designate or appoint a member of or observer to the board of directors (or similar governing body) of any Competitor.

 

(g)    Resignation; Removal; Vacancies. Any member of the Board designated pursuant to Section 3(b), Section 3(c), Section 3(d), or Section 3(e) may resign, or may be removed either (i) with or without cause solely at the direction of the Stockholder Designating Party who designated such member of the Board, or (ii) by the affirmative written vote or written consent of a majority of the remaining members of the Board upon death or Permanent Incapacity of such member of the Board. The Stockholder Designating Party who designated such resigned or removed director (or such Stockholder Designating Party’s successors or Permitted Transferees) shall have the exclusive right to designate a replacement for such member of the Board, which individual shall be appointed and approved pursuant to Section 3(b), Section 3(c), Section 3(d), or Section 3(e) as applicable, for so long as such Stockholder Designating Party is entitled to designate such nominee pursuant to such sections.

 

(h)    Voting. Each of the Company and the Stockholder Parties agrees not to take, directly or indirectly, any actions (including removing directors in a manner inconsistent with this Agreement) that would knowingly frustrate, obstruct or otherwise affect the provisions of this Agreement and the intention of the parties hereto with respect to the composition of the Board as herein stated. Each Stockholder Party, to the extent not prohibited by the Charter, shall vote all Voting Shares held by such Stockholder Party in such manner as may be necessary to elect and/or maintain in office as members of the Board those individuals designated in accordance with this Section 3 and to otherwise effect the intent of the provisions of this Agreement; provided that, notwithstanding the foregoing, each Stockholder Party agrees that, at all times, at least four (4) directors shall be independent under Nasdaq Rules.

 

(i)    From and after the lapse or termination of a Board designation rights set forth in Section 3(b), Section 3(c), Section 3(d), or Section 3(e) in accordance with the terms of this Agreement, the Board seat that would have been designated pursuant to such designation right had such right not lapsed or terminated will be filled in accordance with the Charter and the By-laws.

 

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(j)    Board Observer Rights. For so long as the Sponsor Holders continue to own voting stock of the Company bearing at least twenty percent (20%) of the outstanding voting power of the Company held by them at the Closing, the Sponsor shall be entitled to designate one individual to receive notice of and to attend Board meetings on a non‑voting basis (a “Board Observer”). Board Observers will receive copies of any materials distributed to members of the Board in connection with any meeting or consent solicitation. The Board may exclude such Board Observer from any portion of the Board meeting or Board materials where, in the exercise of its reasonable discretion, it believes such exclusion is necessary to preserve attorney‑client privilege.

 

4.    Stockholder Designee Requirements.

 

(a)    The Company’s and the Stockholder Parties’ obligations with respect to the Stockholder Designees pursuant to this Agreement shall in each case be subject to each Stockholder Designee’s satisfaction of all requirements set forth in this Section 4. Each of the Stockholder Designating Parties agrees that they shall designate only Stockholder Designees that satisfy, and shall cause each of the Stockholder Designees nominated by them to, at all times satisfy, the requirements set forth in this Section 4.

 

(b)    Each Stockholder Designee shall, at all times, (i) satisfy all requirements regarding service as a director of the Company under applicable Law and the listing rules of Nasdaq (the “Nasdaq Rules”), to the extent such Nasdaq Rules are applicable to such Stockholder Designee as a director.

 

(c)    Each Stockholder Designating Party shall cause each Stockholder Designee designated by it: (i) to make himself or herself reasonably available for interviews in a manner reasonably consistent as required for all other non-executive directors of the Company; (ii) to consent to such reference and background checks or other investigations as the Board may reasonably request in order to determine such Stockholder Designee meets the requirements to serve as a director of the Company, solely to the extent such checks or investigations have been or will be required from all other non-executive directors of the Company, and (iii) to provide to the Company a completed copy of the directors and officers questionnaire submitted by the Company to its other directors in the ordinary course of business.

 

(d)    No Stockholder Designee (or any replacement thereof appointed by a Stockholder Designating Party) shall be eligible to serve as a director if he or she (x) has been involved in any of the events enumerated under Item 2(d) or (e) of Schedule 13D under the Exchange Act or Item 401(f), other than Item 401(f)(1), of Regulation S-K of the Securities Act, (y) has been or could be disqualified as a “Bad Actor” under Section 506 of Regulation D of the Securities Act or (z) is subject to any outstanding order, judgment, injunction, ruling, writ or decree of any governmental authority prohibiting service as a director of any public company. In the event that a Stockholder Designee no longer satisfies all the requirements set forth in (1) the immediately preceding sentence and (2) Section 4(b), such Stockholder Designee’s term of office shall immediately terminate in accordance with the Charter and the By-laws, and the vacancy resulting from the termination of such Stockholder Designee’s term of office may be filled as provided by Section 3(g) of this Agreement and the Charter and the By-laws. Each Stockholder Designating Party agrees that, in the event a Stockholder Designee designated by it no longer satisfies the requirements set forth in the immediately preceding sentence, it shall take all Necessary Action to remove or cause the removal of such Stockholder Designee from the Board.

 

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(e)    As a condition to a Stockholder Designee’s designation or election to the Board, pursuant to Section 3, such Stockholder Designee must provide to the Company:

 

(i)    all information reasonably requested by the Company that is required to be or is customarily disclosed for directors, candidates for directors and their respective Affiliates and representatives in a proxy statement or other filings in accordance with applicable Law, the Nasdaq Rules or the Charter, the By-laws or other corporate governance guidelines;

 

(ii)    all information reasonably requested by the Company in connection with assessing eligibility, independence and other criteria applicable to directors or satisfying compliance and legal or regulatory obligations, solely to the extent such information has been or will be required from all other non-executive directors of the Company; and

 

(iii)    an undertaking in writing by such Stockholder Designee:

 

(A)    to be subject to, bound by and duly comply with a standard confidentiality agreement in a form acceptable to the Company, the code of conduct and other policies of the Company, in each case, solely to the extent applicable to all other non-executive directors of the Company; and

 

(B)    at the request of the Board, to recuse himself or herself from any deliberations or discussions of the Board or any committee thereof regarding matters that, in the reasonable determination of the Board, present actual or potential conflicts of interest with the Company.

 

5.    Representations and Warranties of Each Stockholder Party. Each Stockholder Party on its own behalf hereby represents and warrants to the Company and each other Stockholder Party, severally and not jointly, with respect to such Stockholder Party and such Stockholder Party’s ownership of his, her or its Stockholder Shares set forth on Annex A, as of the Closing Date:

 

(a)    Organization; Authority. If Stockholder Party is a legal entity, Stockholder Party (i) is duly incorporated or organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or organization and (ii) has all requisite power and authority to enter into this Agreement and to perform its obligations hereunder. If Stockholder Party is a natural person, Stockholder Party has the legal capacity to enter into this Agreement and perform his or her obligations hereunder. If Stockholder Party is a legal entity, this Agreement has been duly authorized, executed and delivered by Stockholder Party. This Agreement constitutes a valid and binding obligation of Stockholder Party enforceable in accordance with its terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general principles of equity (regardless of whether considered in a proceeding in equity or at law).

 

9

 

(b)    No Consent. Except as provided in this Agreement and for filing requirements under applicable securities laws, no consent, approval or authorization of, or designation, declaration or filing with, any governmental Authority or other Person on the part of Stockholder Party is required in connection with the execution, delivery and performance of this Agreement, except where the failure to obtain such consents, approvals, authorizations or to make such designations, declarations or filings would not materially interfere with a Stockholder Party’s ability to perform his, her or its obligations pursuant to this Agreement. If Stockholder Party is a natural person, no consent of such Stockholder Party’s spouse is necessary under any “community property” or other laws for the execution and delivery of this Agreement or the performance of Stockholder Party’s obligations hereunder. If Stockholder Party is a trust, no consent of any beneficiary is required for the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby.

 

(c)    No Conflicts; Litigation. Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, nor compliance with the terms hereof, will (A) if such Stockholder Party is a legal entity, conflict with or violate any provision of the organizational documents of Stockholder Party, or (B) violate, conflict with or result in a breach of, or constitute a default (with or without notice or lapse of time or both) under any provision of, any trust agreement, loan or credit agreement, note, bond, mortgage, indenture, lease or other agreement, instrument, concession, franchise, license, notice or Law applicable to Stockholder Party or to Stockholder Party’s property or assets, except, in the case of clause (B), that would not reasonably be expected to impair, individually or in the aggregate, Stockholder Party’s ability to fulfill its obligations under this Agreement. As of the date of this Agreement, there is no Action pending or, to the knowledge of a Stockholder Party, threatened, against such Stockholder Party or any of Stockholder Party’s Affiliates or any of their respective assets or properties that would materially interfere with such Stockholder Party’s ability to perform his, her or its obligations pursuant to this Agreement or that would reasonably be expected to prevent, enjoin, alter or delay any of the transactions contemplated by this Agreement.

 

(d)    Ownership of Shares. Stockholder Party Beneficially Owns his, her or its Stockholder Shares free and clear of all Liens. Except pursuant to this Agreement, the Support Agreements, the Letter Agreement, dated as of October 21, 2020, among Sponsor I, Buyer and certain of Buyer’s officers and directors, and the Purchase Agreement, there are no options, warrants or other rights, agreements, arrangements or commitments of any character to which Stockholder Party is a party relating to the pledge, acquisition, disposition, Transfer or voting of Stockholder Shares and there are no voting trusts or voting agreements with respect to the Stockholder Shares. Stockholder Party does not Beneficially Own (i) any shares of capital stock of the Company other than the Stockholder Shares set forth on Annex A and (ii) any options, warrants or other rights to acquire any additional shares of capital stock of the Company or any security exercisable for or convertible into shares of capital stock of the Company, other than as set forth on Annex A (collectively, “Options”).

 

10

 

6.    Covenants of the Company.

 

(a)    The Company shall: (i) take any and all action reasonably necessary to effect the provisions of this Agreement and the intention of the parties with respect to the terms of this Agreement and (ii) not take any action that would reasonably be expected to adversely frustrate, obstruct or otherwise affect the rights of the Stockholder Parties under this Agreement without the prior written consent of the Stockholder Parties.

 

(b)    The Company shall (i) purchase and maintain in effect at all times directors’ and officers’ liability insurance in an amount and pursuant to terms determined by the Board to be reasonable and customary, and (ii) cause the Charter and the By-laws to at all times provide for the indemnification, exculpation and advancement of expenses of all directors of the Company to the fullest extent permitted under applicable Law.

 

(c)    The Company shall pay all reasonable out-of-pocket expenses incurred by the members of the Board in connection with the performance of his or her duties as a director and in connection with his or her attendance at any meeting of the Board. The Company shall enter into customary indemnification agreements with each member of the Board.

 

7.    No Other Voting Trusts or Other Arrangement. Each Stockholder Party shall not (a) deposit any Voting Shares or any interest in any Voting Shares in a voting trust, voting agreement or similar agreement, (b) grant any proxies, consent or power of attorney or other authorization or consent with respect to any of the Voting Shares or (c) subject any of the Voting Shares to any arrangement with respect to the voting of the Voting Shares, in each case, that conflicts with or prevents the implementation of this Agreement.

 

8.    Additional Shares. Each Stockholder Party agrees that all securities of the Company that may vote in the election of the Company’s directors that such Stockholder Party purchases, acquires the right to vote or otherwise acquires Beneficial Ownership of (including by the exercise or conversion of any security exercisable or convertible for shares of Common Stock) after the execution of this Agreement shall be subject to the terms of this Agreement and shall constitute Voting Shares for all purposes of this Agreement.

 

9.    No Agreement as Director or Officer. Each Stockholder Party is signing this Agreement solely in his, her or its capacity as a stockholder of the Company. No Stockholder Party makes any agreement or understanding in this Agreement in such Stockholder Party’s capacity as a director or officer of the Company or any of its Subsidiaries (if Stockholder Party holds such office). Nothing in this Agreement will limit or affect any actions or omissions taken by a Stockholder Party in his, her or its capacity as a director or officer of the Company, and no actions or omissions taken in such Stockholder Party’s capacity as a director or officer shall be deemed a breach of this Agreement. Nothing in this Agreement will be construed to prohibit, limit or restrict a Stockholder Party from exercising his or her fiduciary duties as an officer or director to the Company or its stockholders.

 

10.    Confidentiality. Each Stockholder Party agrees, and agrees to cause its Affiliates, to keep confidential and not disclose, divulge, or use for any purpose (other than to monitor its investment in the Company) any Confidential Information; provided, however, that a Stockholder Party may disclose Confidential Information to (a) its attorneys, accountants, consultants, and other professionals to the extent necessary to obtain their services in connection with monitoring its investment in the Company, (b) to any Affiliate, partner, member, equityholder or wholly-owned Subsidiary of such Stockholder Party in the ordinary course of business; provided that such Stockholder Party informs such Person that such information is confidential and directs such Person to maintain the confidentiality of such information or (c) as may otherwise be required by law, regulation, rule, court order or subpoena or by obligations pursuant to any listing agreement with any securities exchange or securities quotation system, provided that such Stockholder Party promptly notifies the Company of such disclosure and takes reasonable steps to minimize the extent of any such required disclosure.

 

11

 

11.    Specific Enforcement. It is agreed and understood that monetary damages would not adequately compensate an injured party for the breach of this Agreement by any party hereto and, accordingly, that this Agreement shall be specifically enforceable, in addition to any other remedy to which such injured party is entitled at law or in equity, and that any breach of this Agreement shall be the proper subject of a temporary or permanent injunction or restraining order. Further, each party hereto waives any claim or defense that there is an adequate remedy at law for such breach or threatened breach or an award of specific performance is not an appropriate remedy for any reason at law or equity and agrees that a party’s rights would be materially and adversely affected if the obligations of the other parties under this Agreement were not carried out in accordance with the terms and conditions hereof. Each party further agrees that no party shall be required to obtain, furnish or post any bond or similar instrument in connection with or as a condition to obtain any remedy referred to in this Section 11, and each party irrevocably waives any right it may have to require the obtaining, furnishing or posting of any such bond or similar instrument.

 

12.    Termination.

 

(a)    Following the Closing, with respect to each Stockholder Party, except as set forth in Section 12(b), (a) Sections 2 (Agreement to Vote), 3 (Board of Directors), 4 (Stockholder Designee Requirements), 7 (No Other Voting Trusts or Other Arrangements) and 8 (Additional Shares) of this Agreement shall terminate automatically (without any action by any party hereto) on the first date on which such Stockholder Party no longer has the right to designate a director to the Board under this Agreement; and (b) the remainder of this Agreement shall terminate automatically (without any action by any party hereto) as to each Stockholder Party when such Stockholder Party ceases to Beneficially Own any Stockholder Shares.

 

(b)    Notwithstanding the foregoing, the obligations set forth in Section 10 (Confidentiality), Section 11 (Specific Enforcement), Section 12 (Termination), Section 13 (Amendments and Waivers), Section 15 (Assignment), Section 18 (Severability), Section 19 (Governing Law), Section 20 (Jurisdiction), and Section 21 (WAIVER OF JURY TRIAL) shall survive termination of this Agreement.

 

13.    Amendments and Waivers. Any provision of this Agreement may be amended or waived if, but only if, such amendment or waiver is in writing and is signed by each Stockholder Party that (i) remains a party to this Agreement at such time and (ii) (x) in the case of any amendment to the rights of any Stockholder Party hereunder, has such right at the time of such amendment and (y) in the case of an amendment to any obligation of a Stockholder Party hereunder, remains subject to such obligation at the time of such amendment. No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by Law.

 

12

 

14.    Stock Splits, Stock Dividends, etc. In the event of any stock split, stock dividend, recapitalization, reorganization or the like, any securities issued with respect to Voting Shares held by Stockholder Parties shall become Voting Shares for purposes of this Agreement. During the term of this Agreement, all dividends and distributions payable in cash with respect to the Voting Shares shall be paid, as applicable, to each of the undersigned Stockholder Parties and all dividends and distributions payable in Common Stock or other equity or securities convertible into equity with respect to the Voting Shares shall be paid, as applicable, to each of the undersigned Stockholder Parties, but all dividends and distributions payable in Common Stock or other equity or securities convertible into equity shall become Voting Shares for purposes of this Agreement.

 

15.    Assignment.

 

(a)    Neither this Agreement nor any of the rights, duties, interests or obligations of the Company hereunder shall be assigned or delegated by the Company in whole or in part.

 

(b)    No Stockholder Party may assign or delegate such Stockholder Party’s rights, duties or obligations under this Agreement, in whole or in part, except in connection with a Transfer of Stockholder Shares by such Stockholder Party to a Permitted Transferee in accordance with the terms of the Lock-Up Agreement among the Company and the Stockholder Parties and this Section 15.

 

(c)    This Agreement and the provisions hereof shall, subject to Section 15(b), inure to the benefit of, shall be enforceable by and shall be binding upon the respective assigns and successors in interest of each Stockholder Party, as applicable, including with respect to any of such Stockholder Party’s Stockholder Shares that are transferred to a Permitted Transferee in accordance with the terms of this Agreement and the Lock-Up Agreement among the Company and the Stockholder Parties.

 

(d)    No assignment in accordance with this Section 15 by any party hereto (including pursuant to a Transfer of any Stockholder Party’s Stockholder Shares) of such party’s rights, duties and obligations hereunder shall be binding upon or obligate the Company or any other party hereto unless and until each of the other parties hereto shall have received (i) written notice of such assignment as provided in Section 23 and (ii) the executed written agreement of the assignee, in a form reasonably satisfactory to the Company, to be bound by the terms and provisions of this Agreement (which may be accomplished by an addendum or certificate of joinder to this Agreement) as fully as if it were an initial signatory hereto. Each Stockholder Party shall not permit the Transfer of any such Stockholder Party’s Stockholder Shares to a Permitted Transferee unless and until the Person to whom such securities are to be transferred has executed a written agreement as provided in clause (ii) of the preceding sentence.

 

(e)    Any transfer or assignment made other than as provided in this Section 15 shall be null and void.

 

13

 

(f)    Notwithstanding anything herein to the contrary, for purposes of determining the number of shares of capital stock of the Company held by each Stockholder Party, the aggregate number of shares so held by such Stockholder Party shall include any shares of capital stock of the Company transferred or assigned to a Permitted Transferee in accordance with the provisions of this Section 15; provided, that any such Permitted Transferee has executed a written agreement agreeing to be bound by the terms and provisions of this Agreement as contemplated by Section 15(d) above, including agreeing to vote or cause to be voted the Voting Shares Beneficially Owned by such Permitted Transferee as required of the applicable transferring Stockholder Party.

 

16.    Permitted Transferees. In the event any Permitted Transferee to whom any securities of the Company are transferred hereunder ceases to be a Permitted Transferee, such Person shall as promptly as practicable following the date upon which he, she or it ceases to be a Permitted Transferee, Transfer such Company securities to the stockholder from whom such securities were originally received or acquired.

 

17.    Other Rights. Except as provided by this Agreement, each Stockholder Party shall retain the full rights of a holder of shares of capital stock of the Company with respect to the Stockholder Shares, including the right to vote the Stockholder Shares subject to this Agreement.

 

18.    Severability. In the event that any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

19.    Governing Law. This Agreement, the rights and duties of the parties hereto, any disputes (whether in contract, tort or statute), and the legal relations between the parties arising hereunder shall be governed by and interpreted and enforced in accordance with the Laws of the State of Delaware without reference to its conflicts of laws provisions.

 

20.    Jurisdiction. Any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement shall be brought against any of the parties in the Court of Chancery of the State of Delaware (the “Chancery Court”) (or, in the event that the Chancery Court does not have jurisdiction, the federal district court for the District of Delaware or other state courts of the State of Delaware) and each of the parties hereby consents to the exclusive jurisdiction of such courts (and of the appropriate appellate courts) in any such suit, action or proceeding and waives any objection to venue laid therein. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such courts.

 

21.    WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT.

 

22.    Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument.

 

14

 

23.    Notices. Any notices provided pursuant to this Agreement shall be in writing and given by (i) deposit in the United States mail, addressed to the party to be notified, postage prepaid and registered or certified with return receipt requested, (ii) delivery in person or by courier service providing evidence of delivery, or (iii) transmission by electronic mail. Notices provided pursuant to this Agreement shall be provided, (x) if to the Company, in accordance with the terms of the Purchase Agreement, (y) if to any other party hereto, to the address or email address, as applicable, of such party set forth on Annex A hereto, or (z) to any other address or email address, as a party designates in writing to the other parties in accordance with this Section 23.

 

24.    Entire Agreement. This Agreement constitutes the full and entire understanding and agreement among the parties, and supersedes any prior agreement or understanding among the parties, with regard to the subject matter hereof, and no party shall be liable or bound to any other party in any manner by any warranties, representations or covenants except as specifically set forth herein.

 

25.    Effectiveness. Notwithstanding anything contained in this Agreement to the contrary, this Agreement shall be effective upon the Closing. If the Purchase Agreement is terminated in accordance with its terms, this Agreement shall terminate concurrently therewith and shall be of no further force and effect.

 

[Remainder of page intentionally left blank; signature pages follow]

 

15

 

 

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first above written.

 

 

COMPANY:

 

     
  Sky Harbour Group Corporation  

 

 

 

 

 

By:

/s/ Tal Keinan

 

 

Name:

Tal Keinan

 

 

Title:

Chief Executive Officer

 

 

 

 

 

[Signature Page to Stockholders’ Agreement]

 

 

 

 

STOCKHOLDER PARTIES:

 

     
  Tal Keinan  

 

 

 

 

 

 

 

 

 

/s/ Tal Keinan

 

 

 

 

[Signature Page to Stockholders’ Agreement]

 

 

 

 

Due West Partners LLC

 

     
  a Washington limited liability company  

 

 

 

 

 

By:

/s/ Nick Wellmon

 

 

Name:

Nick Wellmon

 

 

Title:

Managing Partner

 

 

 

 

[Signature Page to Stockholders’ Agreement]

 

 

 

  Center Sky Harbour LLC  
       
  a Delaware limited liability company  
       
  By: /s/ Alex Valner  
  Name: Alex Valner  
  Title: Manager  

 

 

 

[Signature Page to Stockholders’ Agreement]

 

 

 

  BOC Yellowstone LLC  
       
  a Delaware limited liability company  
       
  By: /s/ Adam K. Peterson  
  Name: Adam K. Peterson  
  Title: Manager  
       
       
       
  BOC Yellowstone II LLC  
       
  a Delaware limited liability company  
       
  By:  /s/ Adam K. Peterson  
  Name:   Adam K. Peterson  
  Title: Manager  

 

 

 

[Signature Page to Stockholders’ Agreement]

 

 

 

Annex A

 

Stockholder Shares

 

Holder

 

Address

 

Shares of Common Stock

 

Warrants, Options, or

Other Equity

Securities/Rights to Acquire

Equity Securities

Tal Keinan

 

159 West 91st Street

New York, NY 10024

 

17,943,792 shares of Class B Common Stock

 

0

Due West Partners LLC

 

8260 SE 31st St

Mercer Island, WA 98040

 

11,640,460 shares of Class B Common Stock

 

0

Center Sky Harbour LLC

 

9355 Wilshire Blvd

Suite 350

Beverly Hills, CA 90210

 

11,637,960 shares of Class B Common Stock

 

0

BOC Yellowstone LLC

 

1601 Dodge Street

Suite 3300

Omaha, Nebraska 68102

 

3,193,474 shares of Class A Common Stock1

 

7,719,779 Warrants to purchase

Class A Common Stock

BOC Yellowstone II LLC

 

1601 Dodge Street

Suite 3300

Omaha, Nebraska 68102

 

206,250 shares of Class A Common Stock2

 

0

 


1 BOC Yellowstone LLC will distribute 25,000 shares to each of Sydney Atkins, David Bronczek and Shanna Khan immediately post-Closing (75,000 total shares of Class A Common Stock).

2 The 206,250 shares of Class A Common Stock held by BOC Yellowstone II LLC will be distributed to Glazer Capital, LLC immediately post-Closing.

 

 

 

Exhibit 3(a)

 

Initial Board Designees

 

1.

The Founder Designees shall initially be:

 

 

Tal Keinan;

 

Alethia Nancoo;

 

Lysa Leiponis; and

 

Walter Jackson.

 

2.

The Due West Designee shall initially be Nick Wellmon.

 

3.

The Center Sky Designee shall initially be Robert S. Rivkin.

 

4.

The Sponsor Designee shall initially be Alex B. Rozek.

 

 

Exhibit 10.2

 

 

 

 

 

REGISTRATION RIGHTS AGREEMENT

 

BY AND AMONG

 

SKY HARBOUR LLC

 

AND

 

THE HOLDERS

 

DATED AS OF SEPTEMBER 14, 2021

 

 

 

 

 

 

 

 

TABLE OF CONTENTS

 

Page

 

ARTICLE I DEFINITIONS

1

1.1

Defined Terms

1

ARTICLE II INTERPRETATION

5

2.1

General Interpretive Principles

5

ARTICLE III SHELF AND DEMAND REGISTRATION

6

3.1

Shelf Registration.

6

3.2

Demand Registration

6

3.3

Effective Registration

7

3.4

Registration Statement Form

7

3.5

Withdrawal and Cancellation of Registration

7

ARTICLE IV PIGGYBACK REGISTRATIONS

8

4.1

Holder Piggyback Registration

8

4.2

Withdrawals

8

ARTICLE V UNDERWRITTEN OFFERINGS

9

5.1

Election of Underwritten Offerings by Major Holders

9

5.2

Piggyback Underwritten Offerings

10

5.3

Participation in Underwritten Offerings

11

5.4

Selection of Underwriters

11

5.5

Withdrawal from Underwritten Offerings

11

ARTICLE VI SUSPENSION PERIODS

12

6.1

Company Suspension Period

12

ARTICLE VII REGISTRATION PROCEDURES

13

7.1

Company Obligations

13

7.2

Holder Obligations

15

ARTICLE VIII INDEMNIFICATION

16

8.1

Indemnification by the Company

16

8.2

Indemnification by the Holders

17

8.3

Notice of Claims, Etc.

18

8.4

Contribution

18

ARTICLE IX REGISTRATION EXPENSES

19

9.1

Registration Expenses

19

ARTICLE X MISCELLANEOUS

19

10.1

Notice Generally

19

10.2

Priority on Demand Registrations

21

10.3

Rule 144 and Regulation S Compliance

21

10.4

Successors and Assigns

22

10.5

Amendments; Waivers

22

10.6

Calculations of Beneficial Ownership

22

10.7

No Third Party Beneficiaries

22

10.8

Remedies

22

10.9

Termination of Registration Rights

22

10.1

Severability

23

10.11

Headings

23

10.12

Governing Law; Jurisdiction

23

10.13

Counterparts and Facsimile Execution

23

10.14

Entire Agreement

23

10.15

Further Assurances

23

10.16

Authorship

23

 

i

 

REGISTRATION RIGHTS AGREEMENT

 

This REGISTRATION RIGHTS AGREEMENT (this agreement, as it may be amended, supplemented or restated from time to time in accordance with its terms, this “Agreement”), dated as of September 14, 2021, by and among Sky Harbour LLC, a Delaware limited liability company (the “Company”) and the Holders (as hereinafter defined).

 

ARTICLE I


    DEFINITIONS

1.1    Defined Terms.

 

As used in this Agreement, the following capitalized terms (in their singular and plural forms, as applicable) have the following meanings:

 

Action” has the meaning assigned to such term in Section 8.3.

 

Affiliate” of a Person means any Person that, directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, such other Person. For purposes of this definition, the term “control” (including the terms “controlling,” “controlled by” and “under common control with”) means the possession, direct or indirect, of the power to cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

 

Agreement” has the meaning assigned to such term in the introductory paragraph to this Agreement.

 

Alternative Equity Financing Warrant” has the meaning assigned to such term in that certain Series B Preferred Unit Purchase Agreement, dated as of August 1, 2021, by and among the Company and the other parties thereto (the “Purchase Agreement”).

 

Business Day” means each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which banking institutions in the Borough of Manhattan, The City of New York are authorized or obligated by law or executive order to close.

 

Commission” means the United States Securities and Exchange Commission and any successor United States federal agency or governmental authority having similar powers and the staff thereof.

 

Common Units” means the Common Units (as defined in the LLC Agreement), and any common stock or any common equity security of the Company Public Entity into which Common Units are reclassified or reconstituted or for which Common Units are exchanged.

 

Company” (i) has the meaning assigned to such term in the introductory paragraph to this Agreement and (ii) following the Qualified Public Event, the Company Public Entity.

 

 

 

 

Company Indemnified Person” has the meaning assigned to such term in Section 8.2.

 

Company Public Entity” means the Company, its successor, a parent, or a Subsidiary that becomes publically traded in the Qualified Public Event.

 

Demand Registration” has the meaning assigned to such term in Section 3.2(a).

 

Demand Request” has the meaning assigned to such term in Section 3.2(a).

 

DeSPAC Transaction” means a merger or other business combination of the Company with a public special purpose acquisition company listed on the New York Stock Exchange or the NASDAQ Stock Market (including through an Up-C structure).

 

Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor statute, and the rules and regulations of the Commission thereunder.

 

FINRA” means the Financial Industry Regulatory Authority, Inc.

 

Founder Unit” has the meaning assigned to such term in the LLC Agreement.

 

Holder Fault” have the meanings assigned to such terms in Section 8.1.

 

Holders” means any holder of Registrable Securities that is a party to this Agreement or that succeeds to the rights hereunder pursuant to Section 10.4.

 

Indemnified Person” has the meaning assigned to such term in Section 8.1.

 

Indemnitee” has the meaning assigned to such term in Section 8.3.

 

Launch Date” means, with respect to an Underwritten Offering, the commencement of marketing activities or, if no such marketing activities are contemplated, the earliest of (x) the filing of a preliminary Prospectus covering such Underwritten Offering, (y) the public announcement of the Company’s intention to conduct such Underwritten Offering, and (z) the public announcement of the pricing of such Underwritten Offering.

 

Lead Investor Warrants” has the meaning assigned to such term in the Purchase Agreement.

 

LLC Agreement” means the Second Amended and Restated LLC Agreement of the Company dated on or about the date hereof, as amended or restated from time to time in accordance with its terms.

 

Long-Form Registration Statement” means a registration statement on Form S‑1 (or successor form or similar long-form registration statement) under the Securities Act.

 

Loss” and “Losses” have the meanings assigned to such terms in Section 8.1.

 

2

 

Major Holder” means a Major Member, as such term is defined in the LLC Agreement..

 

Participating Holder” means any Holder on whose behalf Registrable Securities are registered pursuant to the terms hereof.

 

Person” means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity.

 

Piggyback Registration” has the meaning assigned to such term in Section 4.1.

 

Piggyback Request” has the meaning assigned to such term in Section 4.1.

 

Prospectus” means any prospectus included in any Registration Statement, all amendments and supplements to any such prospectus and all material incorporated by reference in any such prospectus.

 

Qualified Public Event” means any of (a) the closing of the first bona fide underwritten public offering of the Common Units with gross proceeds to the Company Public Entity in excess of $50 million, (b) the closing of a DeSPAC Transaction, or (c) a direct listing or other event in which the Common Units become listed on the New York Stock Exchange, the NASDAQ Stock Market or such other securities exchange approved by the Series B Requisite Majority.

 

Reduction Securities” has the meaning assigned to such term in Section 10.2.

 

register,” “registered” and “registration” mean a registration effected by preparing and filing with the Commission a Registration Statement on an appropriate form in compliance with the Securities Act, and the declaration or order of the Commission of the effectiveness of such Registration Statement under the Securities Act.

 

Registrable Securities” means (i) any Common Units issued or issuable upon conversion of the Series B Preferred Units and the Series A Preferred Units beneficially owned by the Holders as of the date hereof as well as any securities issued under and the warrants issued by the Company in connection with the Lead Investor Warrants and the Alternative Equity Financing Warrant, each as defined in the Purchase Agreement, (ii) any Common Units issued or issuable with respect to any units described in clause (i) by way of a unit or stock dividend or unit or stock split, (iii) any securities of the Company Public Entity into which the Common Units described in clauses (i) or (ii) and the Series B Preferred Units may be converted or exchanged pursuant to any merger, consolidation, sale of assets, corporate conversion or other extraordinary transaction of the Company held by a Holder (whether now held or hereafter acquired, and including any such securities received by a Holder upon the conversion or exchange of other securities held by such Holder) and (iv) solely for purposes of Article IV and Sections 5.2, 5.3, 5.4 and 5.5, (a) Founder Units, (b) any Founder Units issued or issuable with respect to any Founder Units by way of a unit dividend or unit split and (c) any securities of the Company Public Entity into which Founder Units described in clause (a) or (b) may be converted or exchanged pursuant to any merger, consolidation, sale of assets, corporate conversion or other extraordinary transaction of the Company held by a Holder (whether now held or hereafter acquired, and including any such securities received by a Holder upon the conversion or exchange of other securities held by such Holder); provided, however, that any securities shall cease to constitute “Registrable Securities” for purposes of this Agreement to the extent that: (1) a Registration Statement with respect to the sale of such Registrable Securities shall have been declared effective under the Securities Act and such Registrable Securities shall have been disposed of pursuant such Registration Statement, (2) such Registrable Securities shall have been distributed, sold or otherwise transferred to any Person (other than an Affiliate) pursuant to Rule 144, Regulation S or another applicable exemption from the Securities Act, and shall no longer bear a legend restricting transfer under the Securities Act and subsequent public distribution of them shall not require registration under the Securities Act, (3) such Registrable Securities are no longer outstanding or (4) with respect to the Registrable Securities held by any Holder, together with its Affiliates, the later to occur of (A) the five (5) year anniversary of the closing date of the Qualified Public Event, (B) the occurrence of a Liquidation Event as defined in the LLC Agreement, except to the extent the Company is acquired by a third party in a transaction other than for cash and holders of a majority of the outstanding Series A Preferred Units and Series B Preferred Units (voting together as single class on an as-converted basis) do not consent that such securities shall cease to be Registrable Securities hereunder or otherwise approve alternative registration rights to be applied to such securities, and (C) the date on which such Holder, together with its Affiliates, is permitted to sell all such Registrable Securities held by such Holder in any three-month period pursuant to Rule 144 without regard to the volume and manner of sale limitations contained thereunder.

 

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Registration Statement” means any registration statement of the Company filed with, or to be filed with, the Commission under the rules and regulations promulgated under the Securities Act, including any Prospectus, amendments and supplements to such registration statement, including post-effective amendments, and all exhibits and all material incorporated by reference in such registration statement.

 

Regulation S” means Regulation S (or any successor thereto) promulgated under the Securities Act.

 

Requesting Holder(s)” has the meaning assigned to such term in Section 3.2(a).

 

Rule 144” means Rule 144 (or any successor thereto) promulgated under the Securities Act.

 

Rule 415” means Rule 415 (or an successor thereto) promulgated under the Securities Act.

 

Securities Act” means the Securities Act of 1933, as amended, or any successor statute, and the rules and regulations of the Commission thereunder.

 

Series A Preferred Units” has the meaning assigned to such term in the LLC Agreement.

 

Series B Preferred Units” has the meaning assigned to such term in the LLC Agreement.

 

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Series B Requisite Majority” means the holders of a majority of the outstanding Series B Preferred Units, which majority must include BOC YAC Funding LLC (or its affiliates) for so long as BOC YAC Funding LLC (or its affiliates) holds either (i) at least twenty percent (20%) of the number of Series B Preferred Units outstanding as of the date of this Agreement or (ii) eight hundred three (803) Series B Preferred Units.

 

Shelf Registration Statement” means, if the Company is then eligible, a Short-Form Registration Statement for an offering to be made on a continuous or delayed basis pursuant to Rule 415 under the Securities Act.

 

Short-Form Registration Statement” means a registration statement on Form S-3 (or successor form or similar short-form registration statement that permits forward incorporation of substantial information by reference to other documents filed by the issuer with the Commission) under the Securities Act.

 

Subsidiary” means, with respect to any Person, any entity of which securities or other ownership interests having voting power to elect a majority of the board of directors or other persons performing similar functions are directly or indirectly owned by such Person.

 

Suspension Period” has the meaning assigned to such term in Section 6.1(a).

 

Underwritten Offering” means a public offering of securities registered under the Securities Act in which an underwriter participates in the distribution of such securities, including on a firm commitment basis for reoffer and resale to the public.

 

Underwritten Offering Request” has the meaning assigned to such term in Section 5.1(a).

 

ARTICLE II


INTERPRETATION

 

2.1    General Interpretive Principles. Whenever used in this Agreement, except as otherwise expressly provided or unless the context otherwise requires, any noun or pronoun shall be deemed to include the plural as well as the singular and to cover all genders. The name assigned to this Agreement and the Section captions used herein are for convenience of reference only and shall not be construed to affect the meaning, construction or effect hereof. Unless otherwise specified, the terms “hereof,” “herein,” “hereunder” and similar terms refer to this Agreement as a whole (including the exhibits and schedules hereto), and references herein to “Sections” refer to Sections of this Agreement. The words “include,” “includes” and “including,” when used in this Agreement, shall be deemed to be followed by the words “without limitation.”

 

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ARTICLE III


SHELF AND DEMAND REGISTRATION

 

3.1    Shelf Registration. As soon as reasonably practicable following the completion of a DeSPAC Transaction, and in any event within 45 days thereof, the Company shall prepare and file, and shall thereafter use its reasonable best efforts to make and keep effective (including by renewing or refiling upon expiration), a Registration Statement permitting the resale from time to time on a delayed or continuous basis pursuant to Rule 415 by the Holders of the Registrable Securities, which Registration Statement shall be filed on (a) a Short-Form Registration Statement if the Company is eligible for such filing, or (b) a Long-Form Registration Statement if the Company is not then eligible to file a Short-Form Registration Statement.

 

3.2    Demand Registration.

 

(a)    Subject to the other provisions hereof, including this Section 3.2 and Article VI, beginning on the date that is 120 days following the consummation of the Qualified Public Event, any Holder or group of Holders (each, a “Requesting Holder” and collectively, the “Requesting Holders”), may, from time to time, make a written request to the Company (a “Demand Request”) that the Company effect the registration under the Securities Act of any specified number of Registrable Securities held by the Requesting Holder(s) (a “Demand Registration”); provided, that such Requesting Holder, or the Requesting Holders collectively, hold more than $10,000,000 of the Registrable Securities outstanding as of the date of the Demand Request and that at least one Requesting Holder holds $5,000,000 or more of the Registrable Securities outstanding as of the date of the Demand Request; and provided, further, that the Holders shall be limited to two (2) Demand Requests in any twelve (12) month period. Each Demand Request shall specify the kind and aggregate amount of Registrable Securities to be registered and the intended methods of distribution.

 

(b)    Promptly upon receipt of any Demand Request (but in no event more than five (5) Business Days thereafter), the Company shall deliver a written notice (a “Demand Notice”) of any such Demand Request to all Holders other than the Requesting Holders, and the Company shall include in such Demand Registration Statement all Registrable Securities that the Requesting Holders requested to be registered along with all Registrable Securities with respect to which the Company has received written requests for inclusion therein from all other Holders within fifteen (15) Business Days after the date that the Demand Notice has been delivered. All requests made pursuant to this Section 3.2(b) shall specify the aggregate amount of Registrable Securities to be registered and the intended method of distribution of such securities. If any Holder other than a Requesting Holder does not deliver a notice within fifteen (15) Business Days after the delivery of the Demand Notice, such Holder shall be deemed to have irrevocably waived any and all rights under this Section 3.2(b) with respect to such registration.

 

(c)    Subject to the other provisions hereof, including this Section 3.2 and Article VI, as promptly as reasonably practicable following receipt of a Demand Request (and in any event not later than (i) forty-five (45) days in the case of a Short-Form Registration Statement and (ii) sixty (60) days in the case of a Long-Form Registration Statement), the Company shall prepare and file with the Commission a Registration Statement covering the resale at any time or from time to time, pursuant to Rule 415, of all Registrable Securities requested to be included thereon pursuant to this Section 3.2. The Company shall use its reasonable best efforts to cause any such Registration Statement to be declared effective under the Securities Act as promptly as practicable after the filing thereof with the Commission and to keep such Registration Statement current and effective for a period necessary for the completion of the resale of the Registrable Securities registered thereon.

 

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(d)    Notwithstanding the foregoing, the Company shall not be obligated to file a Registration Statement relating to any Demand Request (i) within one hundred eighty (180) days after the effective date of any Demand Registration Statement or (ii) if a Shelf Registration Statement is then effective, and such Shelf Registration Statement may be utilized by the Requesting Holder(s) and all other Holders in accordance with Section 3.2(b) for the offering and sale of all of their Registrable Securities without a requirement under the Commission’s rules and regulations for a post-effective amendment thereto.

 

3.3    Effective Registration. A registration shall not count as a Demand Registration under this Agreement unless the related Registration Statement has been declared effective under the Securities Act and has remained effective until such time as the earliest to occur of (i) the date on which all of such Registrable Securities covered thereby have been disposed of in accordance with the intended methods of disposition by the Participating Holders and (ii) the first anniversary of the date that such Registration Statement becomes effective, not including any Suspension Periods.

 

3.4    Registration Statement Form. Demand Registrations shall be on such appropriate registration form of the Commission that the Company is then eligible to use (i) as reasonably requested by the Requesting Holder(s) and (ii) as shall permit the disposition of the Registrable Securities in accordance with the intended method or methods of disposition specified in the applicable Holders’ requests for such registration. Subject to the provisions hereof, including Article VI, the Company shall (i) cause a Shelf Registration Statement to include a resale Prospectus intended to permit each Holder to sell, at such Holder’s election, all or part of the applicable class or series of Registrable Securities held by such Holder without restriction under the Securities Act, (ii) use its reasonable best efforts to prepare and file with the Commission such supplements, amendments and post-effective amendments to such Shelf Registration Statement as may be necessary to keep such Shelf Registration Statement continuously effective for so long as the securities registered thereunder constitute Registrable Securities (but in no event for a period of more than one year), and (iii) use its reasonable best efforts to cause the resale Prospectus to be supplemented by any Prospectus supplement required in order for such Holders to sell their Registrable Securities without restriction under the Securities Act.

 

3.5    Withdrawal and Cancellation of Registration. Any Participating Holder in a Demand Registration pursuant to this Article III may withdraw all or any portion of its Registrable Securities from a Demand Registration by providing written notice to the Company at least two (2) Business Days prior to the anticipated effective date of the applicable Demand Registration Statement. The Company shall continue its reasonable best efforts to secure effectiveness of the applicable Demand Registration Statement in respect of the Registrable Securities of any other Participating Holder that has requested inclusion in the Demand Registration Statement pursuant to this Article III; provided, however, that, in the event that the Registrable Securities remaining in such Demand Registration Statement represent less than 25% of the Common Units requested by the Requesting Holders in the Demand Request to be included in such Demand Registration Statement, the Company shall immediately cease all efforts to secure effectiveness of the applicable Demand Registration Statement and such Demand Registration shall not be counted as a Demand Registration under this Agreement.

 

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ARTICLE IV

 

PIGGYBACK REGISTRATIONS

 

4.1    Holder Piggyback Registration. If the Company proposes to file (i) a new Registration Statement or (ii) a supplement or amendment to an existing Registration Statement, in each case with respect to an offering of Common Units for its own account or for the account of holders of equity securities (other than the Holders) of the Company (except pursuant to registrations in connection with any merger, acquisition or other business combination or registrations on Form S‑4 or any successor form, on Form S-8 or any successor form relating solely to securities issued pursuant to any benefit plan, an offering of securities solely to then existing securityholders of the Company, a dividend reinvestment plan or an exchange offer) on a form that would permit registration of Registrable Securities for sale to the public under the Securities Act, then the Company shall give written notice of such proposed filing to the Holders not less than fifteen (15) Business Days before the anticipated filing date, describing in reasonable detail the proposed registration (including the number and class or series of securities proposed to be registered, the proposed date of filing of such Registration Statement and any proposed means of distribution of such securities), and offering such Holders the opportunity to register such number of Registrable Securities as each such Holder may request in writing (each a “Piggyback Registration”). Subject to Section 6.1, upon the written request of any Holder (a “Piggyback Request”) received by the Company no later than fifteen (15) Business Days after receipt by such Holder of the notice sent by the Company, to register, on the same terms and conditions as the securities otherwise being sold pursuant to such registration, any of such Holder’s Registrable Securities (which request shall state the intended method of disposition thereof if the securities otherwise being sold are being sold by more than one method of disposition), the Company shall cause such Registrable Securities as to which registration shall have been so requested to be included in the Registration Statement proposed to be filed by the Company on the same terms and conditions as the securities otherwise being sold pursuant to such registration; provided, however, that notwithstanding the foregoing, the Company may at any time, in its sole discretion, without the consent of any other Holder, delay or abandon the proposed registration in which any Holder had requested to participate pursuant to this Section 4.1 or cease the filing (or obtaining or maintaining the effectiveness) of or withdraw the related Registration Statement or other governmental approvals, registrations or qualifications. In such event, the Company shall so notify in writing each Holder that has delivered a Piggyback Request and the Company shall incur no liability for its failure to complete any such registration.

 

4.2    Withdrawals. Each Holder shall have the right to withdraw its request for inclusion of all or any of its Registrable Securities in any Registration Statement pursuant to this Article IV by giving written notice to the Company of its request to withdraw in accordance with Section 10.1; provided, however, that (i) such request must be made in writing at least two (2) Business Days prior to the earlier of the execution of an underwriting agreement, if any, and the effective date of the applicable Registration Statement and (ii) such withdrawal shall be irrevocable.

 

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ARTICLE V


UNDERWRITTEN OFFERINGS

 

5.1    Election of Underwritten Offerings by Major Holders.

 

(a)    Upon the Company’s receipt of a written request of any Major Holder or group of Major Holders from time to time for an Underwritten Offering under a Registration Statement filed in accordance with the terms of this Agreement (an “Underwritten Offering Request”), the Company shall (A) promptly (but in no event more than five (5) Business Days thereafter) give written notice of such Underwritten Offering Request to all Holders other than such Major Holder(s) and (B) cooperate with such Major Holder(s) and any underwriter, as well as any other Holders that have requested that their Registrable Securities be included in such Underwritten Offering within fifteen (15) Business Days after receiving the notice from the Company in clause (A) above, in effecting an Underwritten Offering under any Registration Statement filed pursuant to this Agreement as promptly as reasonably practicable following receipt of such Underwritten Offering Request; provided, however, that Major Holders shall not be entitled to make in the aggregate more than two (2) Underwritten Offering Requests that result in priced Underwritten Offerings during the term of this Agreement. Each Underwritten Offering Request will specify the number of Registrable Securities proposed by the Major Holder(s) to be included in such Underwritten Offering, the intended method of distribution and the estimated gross proceeds of such Underwritten Offering, which may not be less than $5,000,000 in the case of an Underwritten Offering under a Short-Form Registration Statement and $10,000,000 in the case of a Long-Form Registration Statement.

 

(b)    Notwithstanding any other provision of this Section 5.1, in the case of an Underwritten Offering pursuant to an Underwritten Offering Request, if the managing underwriter or underwriters of an Underwritten Offering advise the selling Holders that, in its or their good faith opinion, the number of securities requested to be included in such Underwritten Offering exceeds the number which can be sold in such Underwritten Offering without being likely to have a material and adverse effect on the price, timing or distribution of the securities offered or the market for the securities offered, the securities to be included in such Underwritten Offering (i) first, shall be allocated pro rata among the Major Holders participating in the Underwritten Offering based on the relative number of Registrable Securities then held by each such Major Holder (provided that any securities thereby allocated to a Major Holder that exceed such Major Holder’s request shall be reallocated among the remaining Major Holders or other Participating Holders, as applicable, in like manner), (ii) next, and only if all the securities referred to in clause (i) have been included, shall be allocated pro rata among Participating Holders other than the Major Holders, up to the number of securities that the Participating Holders other than the Major Holders propose to include in such Underwritten Offering that, in the good faith opinion of the managing underwriter or underwriters can be sold without having such material and adverse effect, and (iii) next, and only if all the securities referred to in clauses (i) and (ii) have been included, shall be allocated pro rata among the Company and any other shareholder that has a right to participate in such Underwritten Offering, up to the number of securities that the Company and any such other shareholder proposes to include in such Underwritten Offering that, in the good faith opinion of the managing underwriter or underwriters can be sold without having such material and adverse effect. Notwithstanding the foregoing, in no event shall (x) the number of Registrable Securities included in the Underwritten Offering be reduced unless all other securities (other than securities to be sold by the Company) are first entirely excluded from the offering, or (y) the number of Registrable Securities included in the Underwritten Offering be reduced below twenty percent (20%) of the total number of securities included in such offering, unless such Underwritten Offering is conducted in connection with the Qualified Public Event, in which case the Major Holders and other Participating Holders may be excluded further if the managing underwriter or underwriters make the good faith determination described above and no other stockholder’s securities are included in such Underwritten Offering.

 

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(c)    The Company will have the right to delay an Underwritten Offering by any Major Holder(s) following receipt of an Underwritten Offering Request if the Company intends to effect its own Underwritten Offering by giving the Requesting Holder(s) written notice of such intent (a “Stand-Down Notice”), whereby the Company’s obligation to cooperate with the Requesting Holder(s) and any underwriter in effecting an Underwritten Offering shall be suspended until the Resumption Date (as defined below); provided, however, that (x) the Company will not be entitled to deliver a Stand-Down Notice in respect of an Underwritten Offering Request later than 5 p.m. New York time on the next Business Day following receipt of such Underwritten Offering Request; (y) the Company will not be entitled to more than one (1) Stand-Down Notice in any twelve (12) month period; and (z) the Company will be deemed to have rescinded the Stand-Down Notice automatically, whereby the Company’s obligation to cooperate with the Requesting Holder(s) and any underwriter in effecting an Underwritten Offering shall resume, if (I) the Launch Date in respect of the Company’s Underwritten Offering has not occurred by the end of the tenth (10th) Business Day after the date of the Underwritten Offering Request or (II) the Company’s Underwritten Offering has not been priced by the end of the fifth (5th) Business Day after the Launch Date (the date following automatic rescission of a Stand-Down Notice pursuant to either clause (I) and clause (II) above, a “Resumption Date”). The Holders acknowledge and agree that the receipt of any Stand-Down Notice may constitute material non-public information regarding the Company and shall keep the existence and contents of any Stand-Down Notice confidential.

 

5.2    Piggyback Underwritten Offerings. In connection with any Underwritten Offering of the Company’s equity securities pursuant to Section 4.1, the Company shall not be required to include any Registrable Securities in such Underwritten Offering unless such selling Holders accept the terms of the Underwritten Offering as agreed upon between the Company and its underwriters. In connection with any proposed Underwritten Offering of Registrable Securities included in a Piggyback Registration pursuant to Section 4.1, if the managing underwriter or underwriters of such proposed Underwritten Offering informs the Company in writing (a copy of which shall be provided to the Holders) that, in its or their good faith opinion, the number of Registrable Securities and other securities requested to be included in such Underwritten Offering exceeds the number which can be sold in such Underwritten Offering without being likely to have a material and adverse effect on the price, timing or distribution of the securities offered or the market for the securities offered, then the securities to be included in such Underwritten Offering shall be allocated as follows: (i) first, the securities proposed to be sold in such Underwritten Offering by the Company for its own account, and (ii) second, the number of Registrable Securities that, in the good faith opinion of such managing underwriter or underwriters, can be sold without having such material and adverse effect, with such number to be allocated pro rata among the Participating Holders based on the relative number of Registrable Securities then held by each such Participating Holder (provided that any securities thereby allocated to a Participating Holder that exceed such Participating Holder’s request shall be reallocated among the remaining Participating Holders in like manner); provided, however, that the number of Registrable Securities to be included in such Underwritten Offering (a) shall not be reduced unless all other securities to be sold by other shareholders are first entirely excluded from such Underwritten Offering and (b) shall not be reduced below twenty percent (20.0%) of the total number of securities included in such Underwritten Offering; provided, further, that the Company shall not be required to include any Registrable Securities in the Registration Statement related to an Underwritten Offering conducted in connection with the Qualified Public Event so long as no equity securities of the Company are registered for resale for the account any other securityholder of the Company in such Registration Statement.

 

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5.3    Participation in Underwritten Offerings. No Person may participate in any Underwritten Offering hereunder unless such Person (i) agrees to sell such Person’s securities on the basis provided in any underwriting arrangements approved by the Persons entitled to approve such arrangements and (ii) promptly completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements. Notwithstanding the foregoing, no Holder (or any of their assignees) shall be required to make any representations, warranties or indemnities except as they relate to such Holder’s ownership of shares and authority to enter into the underwriting agreement and to such Holder’s intended method of distribution, and the liability of such Holder shall be several and not joint, and limited to an amount equal to the net proceeds from the Underwritten Offering received by such Holder.

 

5.4    Selection of Underwriters. In the case of an Underwritten Offering under Section 5.1, the price, underwriting discount and other financial terms for the Registrable Securities shall be determined in good faith by the Major Holder(s) holding the majority of Registrable Securities to be included in an Underwritten Offering, and such Major Holder(s) shall have the right to select one or more underwriters for such Underwritten Offering; provided, that any underwriter must be approved by the Company, which approval will not be unreasonably withheld, conditioned or delayed. In the case of any Underwritten Offering under Section 4.1, the Company shall have the sole right to determine the underwriters and all other matters affecting the Underwritten Offering, including the price, underwriting discount and other financial terms of the Underwritten Offering.

 

5.5    Withdrawal from Underwritten Offerings. In the case of any Underwritten Offering under Section 4.1 or Section 5.1, any Holder may elect to withdraw all or part of its Registrable Securities from such Underwritten Offering by giving written notice to the Company of its request to withdraw; provided, that (i) such request must be made in writing at least two (2) Business Days prior to the earlier of the anticipated Launch Date and the anticipated pricing or trade date of such Underwritten Offering and (ii) such withdrawal shall be irrevocable and, after making such withdrawal, the Holder shall no longer have any right to include Registrable Securities in the Underwritten Offering as to which such withdrawal was made. In the case of any withdrawal by a Holder in connection with an Underwritten Offering under Section 5.1, the Company shall continue to cooperate with the other Participating Holders in such Underwritten Offering; provided, that in the event that the estimated gross proceeds from such Underwritten Offering are reasonably expected to be less than the applicable minimum amount set forth in Section 5.1(a) due to any such withdrawal(s), the Company shall immediately cease all efforts with respect to such Underwritten Offering. In the case of an Underwritten Offering that is abandoned in accordance with the immediately preceding sentence, the Company shall not be obligated to pay for any expenses in connection with such Underwritten Offering (in which case the withdrawing Holders shall bear such expenses on a pro rata basis), unless the Major Holders agree (by vote of a majority-in-interest of Registrable Securities held by Major Holders) to forfeit their right to one of the Underwritten Offering Requests provided by Section 5.1(a).

 

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ARTICLE VI


SUSPENSION PERIODS

 

6.1    Company Suspension Period.

 

(a)    Notwithstanding anything to the contrary in this Agreement, if the Company furnishes to the Holders requesting a registration under this Agreement a certificate signed by an officer of the Company stating that in the good faith judgment of the Company’s Board of Directors it would be materially detrimental to the Company and its stockholders for a Registration Statement to be filed pursuant to this Agreement or to either become effective or remain effective for as long as such Registration Statement otherwise would be required to remain effective, or to allow the Holders to sell securities pursuant to such Registration Statement, because such action would: (i) materially interfere with a significant acquisition, corporate reorganization, or other similar transaction involving the Company; (ii) based on the reasonable advice of the Company’s counsel, require premature disclosure of material non-public information that the Company has a bona fide business purpose for preserving as confidential; or (iii) render the Company unable to comply with requirements under the Securities Act or Exchange Act, then the Company shall have the right to defer taking action with respect to such filing, and/or to require such Holders not to sell securities pursuant to a Registration Statement or other document or otherwise suspend the use of effectiveness of such Registration Statement or other document, for a period of not more than sixty (60) days (a “Suspension Period”) after the request to such Holders is given; provided, however, that the Company may not invoke this right more than once in any twelve (12) month period; and provided further that the Company shall not register any securities for its own account or that of any other stockholder during such Suspension Period.

 

(b)    In the event of any suspension pursuant to this Article VI, the Company shall use its reasonable best efforts to keep the Holders apprised of the estimated length of the anticipated delay and such information shall be kept confidential and used by the Holders solely for purposes of planning in connection with the exercise of their rights hereunder. The Company will notify the Holders in writing promptly upon the termination of the Suspension Period(and in any event no less than one (1) Business Day following such termination). Upon notice by the Company to the Holders of any determination to commence a Suspension Period, the Holders shall, except as required by applicable law, including any disclosure obligations under Section 13 of the Exchange Act, keep the fact of any such Suspension Period strictly confidential, and during any Suspension Period, promptly halt any offer, sale, trading or transfer of any Common Units for the duration of the Suspension Period under the applicable Registration Statement until the Company has provided written notice to the Holders that the Suspension Period has been terminated.

 

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(c)    After the expiration of any Suspension Period and without any further request from any Holder, the Company shall as promptly as reasonably practicable prepare a Registration Statement or post-effective amendment or supplement to the applicable Demand Registration Statement or Prospectus, or any document incorporated therein by reference, or file any other required document so that, as thereafter delivered to purchasers of the Registrable Securities included therein, the Prospectus will not include a material misstatement or omission and will be effective and useable for resale of Registrable Securities.

 

ARTICLE VII

 

REGISTRATION PROCEDURES

 

7.1    Company Obligations. Whenever the Company is required pursuant to this Agreement to register Registrable Securities, it shall:

 

(a)    provide the Participating Holders and their respective counsel a reasonable opportunity to review any Registration Statement to be prepared and filed pursuant to this Agreement prior to the filing thereof with the Commission and consider their comments in good faith;

 

(b)    prepare and file with the Commission such amendments and supplements to any such Registration Statement, and the Prospectus used in connection with such Registration Statement, as may be necessary to comply with the Securities Act in order to enable the disposition of all securities covered by such Registration Statement;

 

(c)    furnish to the Participating Holders such number of conformed copies of such Registration Statement and of each such amendment thereto (in each case including all exhibits thereto, except that the Company shall not be obligated to furnish to any such Participating Holder more than two copies of such exhibits), such number of copies of the Prospectus included in such Registration Statement (including each preliminary Prospectus and each supplement thereto), and such number of the documents, if any, incorporated by reference in such Registration Statement or Prospectus, as the Participating Holders reasonably may request;

 

(d)    use its reasonable best efforts to register or qualify the Registrable Securities covered by such Registration Statement under such securities or “blue sky” laws of such jurisdictions as the Participating Holders reasonably shall request, except that the Company shall not, for any such purpose, be required to qualify generally to do business as a foreign corporation in any jurisdiction in which it is not obligated to be so qualified, or to subject itself to taxation in any such jurisdiction, or to consent to general service of process in any such jurisdiction;

 

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(e)    promptly notify the Participating Holders in writing, at any time when a Prospectus or Prospectus supplement relating thereto is required to be delivered under the Securities Act, upon discovery that, or upon the occurrence of any event as a result of which, the Prospectus included in such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, which untrue statement or omission requires amendment of the Registration Statement or supplementing of the Prospectus, and, as promptly as practicable (subject to Article VI ), prepare and file with the appropriate authorities in the applicable jurisdictions, and furnish to the Participating Holders a reasonable number of copies of, a supplement or amendment to such Prospectus as may be necessary so that, as thereafter delivered to the purchasers of such Registrable Securities, such Prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that with respect to Registrable Securities registered pursuant to such Registration Statement, each Holder agrees that it shall not enter into any transaction for the sale of any Registrable Securities pursuant to such Registration Statement during the time after the furnishing of the Company’s written notice that the Company is preparing a supplement to or an amendment of such Prospectus or Registration Statement and until the filing and effectiveness thereof;

 

(f)    promptly notify the Participating Holders and the managing underwriter, if any, in writing of (i) the time when such Registration Statement has been declared effective or a supplement to any related Prospectus has been filed, and (ii) the any request by the Commission or any other federal or state governmental authority for amendments or supplements to such Registration Statement or related Prospectus;

 

(g)    promptly notify the Participating Holders and the managing underwriter, if any, in writing of issuance by the Commission or any other federal or state governmental authority of any stop order suspending the effectiveness of such Registration Statement or the initiation of any proceedings for that purpose;

 

(h)    use reasonable best efforts to prevent the issuance of any stop order suspending the effectiveness of the Registration Statement or of any order preventing or suspending the use of any preliminary Prospectus and, if any such order is issued, use reasonable best efforts to obtain the withdrawal of any such order at the earliest possible moment;

 

(i)    in the event of an Underwritten Offering of Registrable Securities pursuant to Article V, enter into customary agreements (including underwriting agreements in customary form) and take such other actions (including participating in road show presentations and otherwise engaging in such reasonable marketing support in connection with any such Underwritten Offering, including the obligation to make its executive officers reasonably available for such purpose if so requested by the managing underwriter for such offering) as are reasonably requested by the managing underwriter in order to expedite or facilitate the sale of such Registrable Securities; provided, however, that the Company shall not be required to participate in any road show presentations or otherwise provide marketing support except (i) in connection with the first Demand Registration made following the date of this Agreement and (ii) in connection with any Underwritten Offering in which the expected proceeds from the sale of the Registrable Securities included in such Underwritten Offering are reasonably expected to be at least $30 million; provided, further, that the Company shall not be required to participate in any road show presentations with respect to more than two registered offerings of Registrable Securities in any 18-month period;

 

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(j)    make available for inspection by each Participating Holder, any underwriter participating in any disposition pursuant to such registration, and any attorney, accountant or other agent retained by such Participating Holder or any such underwriter reasonable and customary access to its books and records and reasonable opportunities to discuss the Company’s business and financial statements with its officers, counsel and independent certified public accountants, in each case as shall be reasonably necessary to enable them to exercise their due diligence responsibility; provided, however, that (i) any such diligence shall be conducted to minimize any disruption to the operation by the Company of its business and shall comply with all the Company safety and access rules, (ii) records and information obtained hereunder shall be used only to exercise their due diligence responsibility and (iii) the Company may condition any such access or inspection on entry into a customary confidentiality agreement;

 

(k)    in connection with any Underwritten Offering of Registrable Securities pursuant to Article V, use reasonable best efforts to obtain for delivery to Participating Holders and to the underwriters (i) opinion or opinions of counsel to the Company and (ii) comfort letter or comfort letters from the Company’s independent public accountants pursuant to Statement on Auditing Standards No. 72 (or any successor thereto), each in customary form and covering such matters of the type customarily covered by opinions or comfort letters, as the case may be, for Underwritten Offerings and in form, substance and scope reasonably satisfactory to such Holders and underwriters or agents and their counsel;

 

(l)    use its reasonable best efforts to cause all Registrable Securities covered by the applicable Registration Statement to be listed or quoted on a national securities exchange or trading system and each securities exchange and trading system, if any, on which similar securities issued by the Company are then listed;

 

(m)    provide a transfer agent and registrar for all Registrable Securities registered pursuant to this Agreement and provide a CUSIP number of all such Registrable Securities, in each case not later than the effective date of such registration;

 

(n)    reasonably cooperate with each seller of Registrable Securities and any underwriter in the disposition of such Registrable Securities and with underwriters’ counsel, if any, in connection with any filings required to be made with FINRA; and

 

(o)    reasonably cooperate with the Participating Holders and the managing underwriter, underwriters or agent, if any, to facilitate the removal or modification of any restrictive legends attached to any Registrable Securities registered hereunder.

 

7.2    Holder Obligations. Each Holder agrees that it shall (and each Holder acknowledges and agrees that the Company’s obligations hereunder shall be subject to the Holder’s compliance with the following obligations):

 

15

 

(a)    furnish to the Company such information regarding such Holder and the plan and method of distribution of Registrable Securities intended by such Holder as shall be required by law or by the Commission in connection with the registration of such Holder’s Registrable Securities and promptly thereafter notify the Company of any changes to such information that to such Holder’s knowledge would be required to be updated in a Registration Statement filed under this Agreement, including promptly notifying the Company if it becomes aware of any information regarding such Holder or its intended plan and method of distribution, as a result of which a Prospectus included in a Registration Statement hereunder, as then in effect, includes an untrue statement of material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and which untrue statement or omission requires amendment of the Registration Statement or supplementing the Prospectus; and

 

(b)    in the case of an Underwritten Offering of Registrable Securities pursuant to this Agreement, if requested by the managing underwriter, to enter into an underwriting agreement with the underwriters for such offering containing such representations and warranties by each Holder and such other terms and provisions as are customarily contained in such underwriting agreements for selling shareholders, including customary indemnity and contribution provisions and “lock-up” obligations reasonably acceptable to such managing underwriter and such Holder.

 

ARTICLE VIII

 

INDEMNIFICATION

 

8.1    Indemnification by the Company. The Company shall indemnify and hold harmless to the fullest extent permitted by law each Holder, such Holder’s Affiliates and their respective officers, directors, managers, partners, members, stockholders, advisers, counsel and representatives, and each of their respective successors and assigns, any underwriter (as defined in the Securities Act) who participates in the offering or sale of Registrable Securities and each other Person, if any, who controls such Holder or any such underwriter (each such Person being sometimes referred to as an “Indemnified Person”), against any and all losses, claims, damages, liabilities (joint or several) and reasonable expenses (including reasonable costs of investigations and reasonable legal expenses) (each a “Loss” and collectively “Losses”), to which such Indemnified Person may become subject, to the extent that such Losses arise out of or are based upon (A) any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement in which such Registrable Securities were included for registration under the Securities Act, including any preliminary or summary Prospectus or any final Prospectus included in such Registration Statement (or any amendment or supplement to such Registration Statement or Prospectus) or any document incorporated by reference therein, (B) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of the Prospectus and any preliminary Prospectus in light of the circumstances under which they were made) not misleading or (C) any violation or alleged violation by the Company (or any of its agents or Affiliates) of the Securities Act, the Exchange Act, any state securities law, or any rule or regulation promulgated under the Securities Act, the Exchange Act, or any state securities law; provided, however, that the Company shall have no obligation to provide any indemnification or reimbursement hereunder to a Holder for any Losses arising out of or based on (i) an untrue statement or alleged untrue statement or omission or alleged omission made in such Registration Statement, preliminary Prospectus, final Prospectus, amendment or supplement, in reliance upon and in conformity with written information furnished to the Company or its representatives by or on behalf of such Holder expressly for inclusion in such Registration Statement, preliminary Prospectus, final Prospectus, amendment or supplement (except to the extent such information has been corrected in a subsequent writing prior to or concurrently with the sale of Registrable Securities to the Person asserting the claim) (a “Holder Fault”), or (ii) in the case of a sale directly by a Holder of Registrable Securities (including a sale of such Registrable Securities through any underwriter retained by such Holder engaging in a distribution solely on behalf of Holders), if the Company, in accordance with Section 7.1(d), notified such Holder that a Prospectus included an untrue statement of material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading and corrected such misstatement or omission in an amended or supplemented Prospectus provided to such Holder prior to the confirmation of the sale of the Registrable Securities to the Person asserting any such Loss, and such Holder failed to deliver a copy of the amended or supplemented Prospectus at or prior to such confirmation of sale.

 

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8.2    Indemnification by the Holders. Each Holder shall, severally and not jointly, indemnify and hold harmless the Company, the Company’s controlled Affiliates and their respective officers, directors, managers, partners and representatives, and each of their respective successors and assigns (each such Person being sometimes referred to as a “Company Indemnified Person”), against Losses to which the Company or any such Persons may become subject, to the extent that such Losses (or related actions or proceedings) arise out of or are based upon any Holder Fault by such Holder but only to the extent that such untrue statement or omission is contained in any information or affidavit so furnished in writing by such Holder expressly for use therein;. ; provided, however, that the indemnity agreement contained in this Section 8.2 shall not apply to amounts paid in settlement of any such claim or proceeding if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld; and provided, further, that in no event shall the aggregate amounts payable by any Holder liable for a Holder Fault by way of indemnity or contribution under Section 8.2 or Section 8.4 exceed the proceeds from the offering received by such Holder (net of any selling expenses paid by such Holder), except in the case of fraudulent misrepresentation or willful misconduct by such Holder. The obligation to indemnify shall be several, not joint and several, among such Holders of Registrable Securities liable for such Holder Fault, and the liability of each such Holder of Registrable Securities shall be in proportion to and limited to the net proceeds received by such Holder from the sale of Registrable Securities pursuant to such Registration Statement. The Holders of Registrable Securities shall indemnify the Underwriters, their officers, directors and each person who controls such Underwriters (within the meaning of the Securities Act) to the same extent as provided in the foregoing with respect to indemnification of the Company.

 

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8.3    Notice of Claims, Etc. Promptly after receipt by any Person entitled to indemnity under Section 8.1 or Section 8.2 (an “Indemnitee”) of notice of the commencement of any action or proceeding (an “Action”) involving a claim referred to in such Sections, such Indemnitee shall, if indemnification is sought against an indemnifying party, give written notice to such indemnifying party of the commencement of such Action; provided, however, that the failure of any Indemnitee to give said notice shall not relieve the indemnifying party of its obligations under Section 8.1 or Section 8.2, except to the extent that the indemnifying party is actually prejudiced by such failure. In case an Action is brought against any Indemnitee, and such Indemnitee notifies the indemnifying party of the commencement thereof, each indemnifying party shall be entitled to participate therein and, to the extent it elects to do so by written notice delivered to the Indemnitee reasonably promptly after receiving the aforesaid notice, to assume the defense thereof with counsel selected by such indemnify party and reasonably satisfactory to such Indemnitee. Notwithstanding the foregoing, the Indemnitee shall have the right to employ its own counsel in any such case, but the fees and expenses of such counsel shall be at the expense of such Indemnitee, unless (i) the indemnifying party shall not have employed counsel to take charge of the defense of such Action reasonably promptly after notice of the commencement thereof or (ii) such Indemnitee reasonably and in good faith shall have concluded that there may be defenses available to it that are different from or additional to those available to the indemnifying party that, if the indemnifying party and the Indemnitee were to be represented by the same counsel, could result in a conflict of interest for such counsel or materially prejudice the prosecution of the defenses available to such Indemnitee. If any of the events specified in clauses (i) or (ii) of the preceding sentence shall have occurred or otherwise shall be applicable, then the fees and expenses of counsel for the Indemnitee shall be borne by the indemnifying party; it being understood, however, that the indemnifying party shall not, in connection with any one such claim or proceeding, or separate but substantially similar or related claims or proceedings arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys (together with appropriate local counsel) at any time for all Indemnitees hereunder, or for fees and expenses that are not reasonable. Anything in this Section 8.3 to the contrary notwithstanding, an indemnifying party shall not be liable for the settlement of any action effected without its prior written consent, which shall not be unreasonably withheld, delayed or conditioned. No indemnifying party shall, without the prior written consent of the Indemnitee (which consent shall not be unreasonably withheld or delayed), consent to entry of any judgment or enter into any settlement or compromise, with respect to any pending or threatened action or claim in respect of which the Indemnitee would be entitled to indemnification or contribution hereunder (whether or not the Indemnitee is an actual party to such action or claim), which (i) does not include as a term thereof the unconditional release of the Indemnitee from all liability in respect of such action or claim or (ii) includes an admission of fault, culpability or a failure to act by or on behalf of the Indemnitee.

 

8.4    Contribution. If the indemnification provided for in this Article VIII is unavailable or insufficient to hold harmless an Indemnitee in respect of any Losses, then each indemnifying party shall, in lieu of indemnifying such Indemnitee, contribute to the amount paid or payable by such Indemnitee as a result of such Losses in such proportion as appropriate to reflect the relative fault of the indemnifying party, on the one hand, and the Indemnitee, on the other hand, which relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by such Indemnitee or indemnifying party, and such parties’ relative intent, knowledge, access to information and opportunity to correct or mitigate the damage in respect of or prevent the untrue statement or omission giving rise to such indemnification obligation. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who is not guilty of such fraudulent misrepresentation.

 

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ARTICLE IX


REGISTRATION EXPENSES

 

9.1    Registration Expenses. The Company shall pay all expenses incident to the Company’s performance of or compliance with this Agreement, including (i) all registration and filing fees, (ii) all fees and expenses of compliance with state securities or “blue sky” laws (including reasonable fees and disbursements of counsel in connection with “blue sky” laws qualifications of the Registrable Securities), (iii) internal expenses of the Company (including all salaries and expenses of its officers and employees performing legal or accounting duties), (iv) fees and disbursements of counsel for the Company and fees and expenses of independent certified public accountants retained by the Company (including the expenses of any comfort letters or costs associated with the delivery by independent certified public accountants of a comfort letter or comfort letters or with any required special audits), (v) the reasonable fees and expenses of any special experts retained by the Company, (vi) fees and expenses in connection with any review of underwriting arrangements by FINRA, (vii) reasonable fees and expenses of not more than one counsel for the Participating Holders (as a group), (viii) fees and expenses in connection with listing, if applicable, the Registrable Securities on a securities exchange, (ix) all printing, duplicating, distribution and delivery expenses, and (x) if the underwriter for any Underwritten Offering reasonably determines a “road show” is necessary, all expenses incurred by the Company related to the road show for such Underwritten Offering, and, if the managing underwriter requests the participation of any Participating Holder in such road show, all reasonable and documented out of pocket expenses of any such Participating Holder. Notwithstanding the foregoing, in connection any offerings pursuant to a Registration Statement filed in accordance with this Agreement, each Participating Holder shall pay (a) any underwriting fees, discounts or commissions attributable to the sale of Registrable Securities by such Participating Holder in connection with an Underwritten Offering, (b) any fees and expenses of brokers or counsel to such Participating Holder (other than as set forth in clause (vii) of the immediately preceding sentence) and (c) any applicable transfer or similar taxes.

 

ARTICLE X


MISCELLANEOUS

 

10.1    Notice Generally. Any notice, demand, request, consent, approval, declaration, delivery or other communication hereunder to be made pursuant to the provisions of this Agreement shall be deemed sufficiently given or made if in writing and signed by the party making the same, and either delivered in person with receipt acknowledged or sent by registered or certified mail, return receipt requested, postage prepaid, or by telecopy and confirmed by telecopy answerback, addressed as follows:

 

if to any Holder or the Holder Representative, addressed to it at the address set forth on such Holder’s signature page attached hereto, or at:

 

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and if to the Company, at:

 

Sky Harbour LLC

136 Tower Road, Hangar M, Westchester County Airport

White Plains, NY 10604

 

 

 

 

with copies to:

 

Mitchell Presser

Morrison & Foerster LLP

250 West 55th Street

New York, NY 10019-9601

 

Omar Pringle

Morrison & Foerster LLP

250 West 55th Street

New York, NY 10019-9601

 

 

or at such other address as may be substituted by notice given as herein provided. The giving of any notice required hereunder may be waived in writing by the party entitled to receive such notice. Every notice, demand, request, consent, approval, declaration, delivery or other communication hereunder shall be deemed to have been duly given or served and received on the date on which personally delivered, with receipt acknowledged, telecopied and confirmed by telecopy answerback or three (3) Business Days after the same shall have been deposited in the United States mail (by registered or certified mail, return receipt requested, postage prepaid), whichever is earlier. Each Holder acknowledges and agrees that, as of the date hereof, it holds the number of Registrable Securities set forth next to its name on Schedule I attached hereto. Any Person that desires to become a Holder in accordance with the terms of this Agreement shall provide written notice to the Company setting forth its address and the number of Registrable Securities held by such Person and agreeing to be bound by the terms hereof, and upon receipt of such notice the Company shall amend Schedule I attached hereto to reflect such Holder, its address and the number of Registrable Securities held thereby without any further action or consent required from the parties to this Agreement. From time to time and promptly following a written request by the Company, each such Holder shall provide written notice to the Company of any increase or decrease in the number of Registrable Securities held by such Person, and upon receipt of any such notice, the Company shall amend Schedule I attached hereto to reflect such increase or decrease in the number of Registrable Securities held by such Person without any further action or consent required from the parties to this Agreement; provided that if any such Holder discloses such increase or decrease in the number of Registrable Securities held by such person in any filing made pursuant to Section 13 or 16 of the Exchange Act, such Holder shall be deemed to have provided notice to the Company as provided in this sentence. Solely for purposes of this Agreement, in determining the number of Registrable Securities outstanding at any time and the Holders thereof, the Company shall be entitled to rely on Schedule I attached hereto (as so amended in accordance with the terms of this Agreement to reflect all such written notices received by the Company from time to time).

 

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10.2    Priority on Demand Registrations. Notwithstanding anything contained herein to the contrary, in the event that the Commission limits the amount of Registrable Securities that may be included and sold by Holders in any Registration Statement, pursuant to Rule 415 or any other basis, the Company may reduce the number of Registrable Securities included in such Registration Statement on behalf of the Holders in whole or in part (in case of an exclusion as to a portion of such Registrable Securities, such portion shall be allocated pro rata among the Participating Holders based on the relative number of Registrable Securities then held by each such Participating Holder (provided that any securities thereby allocated to a Participating Holder that exceed such Participating Holder’s request shall be reallocated among the remaining Participating Holders in like manner)) (such excluded Registrable Securities, the “Reduction Securities”); provided, however, that prior to making any such reduction, the Company shall be obligated to use its reasonable best efforts to advocate with the Commission for the Registration of all of the Registrable Securities. In such event the Company shall give the Holders prompt written notice of the number of such Reduction Securities excluded and the Company will not be liable for any damages under this Agreement in connection with the exclusion of such Reduction Securities. The Company shall use its reasonable best efforts at the first opportunity that is permitted by the Commission to register for resale the Reduction Securities. Such new Registration Statement shall be on Form S-3 (except if the Company is not then eligible to Register for resale the Reduction Securities on Form S-3, such Registration Statement shall be on another appropriate form for such purpose). The Company shall use its reasonable best efforts to cause each such Registration Statement to be declared effective under the Securities Act as soon as possible, and shall use its reasonable best efforts to keep such Registration Statement continuously effective under the Securities Act during the entire period required by this Agreement.

 

10.3    Rule 144 and Regulation S Compliance. The Company covenants that it will use reasonable best efforts to (a) file the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the Commission thereunder (or, if the Company is not required to file such reports, it will, upon the reasonable request of any Holder, use reasonable best efforts to make publicly available such necessary information for so long as necessary to permit sales pursuant to Rule 144 or Regulation S), and (b) take such further action as the Holders may reasonably request, all to the extent required from time to time to enable the Holders to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 or Regulation S or any similar rule or regulation hereafter adopted by the Commission. Upon the reasonable request of a Holder, the Company will deliver to such Holder a written statement as to whether it has complied with such requirements.

 

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10.4    Successors and Assigns. Any Holder may assign its rights under this Agreement to (i) any Affiliate transferee of all or a portion of such Holder’s Registrable Securities or (ii) any non-Affiliate transferee of such Holder’s Registrable Securities; provided, that, in the case of a non-Affiliate transferee, after giving effect to such transfer, such non-Affiliate transferee beneficially owns Registrable Securities that represent not less than 20% of such Holder’s Registrable Securities outstanding as of the date of such transfer; and provided, further, that in each case, such transferee agrees in writing in form and substance reasonably acceptable to the Company to be bound by the terms of this Agreement. Subject to the preceding sentence, this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. To the extent that the Company is not the Company Public Entity, this Agreement shall be automatically assigned by the Company to the Company Public Entity upon completion of the Qualified Public Event, without any further action.

 

10.5    Amendments; Waivers. This Agreement may be amended, supplemented or otherwise modified and the observance of any term hereof may be waived (either generally or in a particular instance and either retroactively or prospectively) only by a written instrument executed by the Company and Holders then holding a majority of the Registrable Securities; provided that if (x) any such modification, amendment, supplement, termination or waiver would adversely and disproportionately affect any Holder in a manner different than the Holders voting in favor thereof, for a reason other than a difference in the amount or percentage of Registrable Securities beneficially owned by such Holder, such modification, amendment, supplement, termination or waiver will also require the prior written approval of the holders of a majority of the Registrable Securities (determined on an as-converted basis) held by the Holder(s) so adversely and disproportionately affected. No provision of this Agreement affecting a party may be waived except pursuant to a writing signed by the party so waiving.

 

10.6    Calculations of Beneficial Ownership. Any calculations of beneficial ownership for purposes of this Agreement shall be calculated in accordance with Rule 13(d) of the Exchange Act.

 

10.7    No Third Party Beneficiaries. This Agreement is not intended to and shall not confer any rights or remedies on any persons that are not party hereto other than as expressly set forth in Article VIII.

 

10.8    Remedies. It is hereby agreed and acknowledged that it will be impossible to measure in money the damages that would be suffered if the parties fail to comply with any of the obligations herein imposed on them and that in the event of any such failure, an aggrieved Person will be irreparably damaged and will not have an adequate remedy at law. Any such Person shall, therefore, be entitled (in addition to any other remedy to which it may be entitled in law or in equity) to injunctive relief, including specific performance, to enforce such obligations, and if any action should be brought in equity to enforce any of the provisions of this Agreement, none of the parties hereto shall raise the defense that there is an adequate remedy at law.

 

10.9    Termination of Registration Rights. This Agreement shall automatically terminate as to any Holder, at such time when such Holder ceases to hold any Registrable Securities (including, for the avoidance of doubt, upon the occurrence of any of the events set forth in the definition of “Registrable Securities” herein following which securities will cease to be deemed Registrable Securities hereunder). This Agreement shall terminate automatically, and the Company shall have no further obligations hereunder, at such time when no Holder holds Registrable Securities.

 

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10.10    Severability. Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

 

10.11    Headings. The headings used in this Agreement are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Agreement.

 

10.12    Governing Law; Jurisdiction. THIS AGREEMENT SHALL BE GOVERNED EXCLUSIVELY BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF Delaware. Each party to this Agreement hereby irrevocably agrees that any legal action or proceeding arising out of or relating to this Agreement or any agreements or transactions contemplated hereby may be brought in the courts of the State of Delaware or Court of Chancery of the State of Delaware and hereby expressly submits to the personal jurisdiction and venue of such courts for the purposes thereof and expressly waives any claim of improper venue and any claim that such courts are an inconvenient forum. Each party hereby irrevocably consents to the service of process of any of the aforementioned courts in any such suit, action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to the address set forth in Section 10.1, such service to become effective ten days after such mailing.

 

10.13    Counterparts and Facsimile Execution. This Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute one and the same instrument. This Agreement may be executed by facsimile signatures.

 

10.14    Entire Agreement. This Agreement (i) embodies the entire agreement and understanding between the Company and the Holders in respect of the subject matter contained herein and (ii) supersedes all prior agreements and understandings between the parties with respect to the subject matter of this Agreement.

 

10.15    Further Assurances. Each of the parties hereto shall execute such documents and perform such further acts as may be reasonably required or desirable to carry out or to perform the provisions of this Agreement.

 

10.16    Authorship. The parties agree that the terms and language of this Agreement are the result of negotiations among the parties and their respective advisors and, as a result, there shall be no presumption that any ambiguities in this Agreement shall be resolved against any party. Any controversy over construction of this Agreement shall be decided without regard to events of authorship or negotiation

 

[Remainder of page intentionally left blank.]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the date first above written.

 

 

 

Sky Harbour LLC

 

 

 

 

 

 

By:

/s/ Tal Keinan

 

 

Name:

Tal Keinan

 

 

Title:

Chief Executive Officer

 

       
       
  [Holders]  
       
  By:    
  Name:    
  Title:    

 

Signature Page to Registration Rights Agreement

 

 

 

SCHEDULE I

 

Name of Holder/Additional Holder

Address of Holder/Additional Holder

Number of Registrable Securities Held

Due West Partners LLC

8260 SE 31st St

Mercer Island, WA 98040

15,000
Series A Preferred Units

Center Sky Harbour LLC

9355 Wilshire Blvd

Suite 350

Beverly Hills, CA 90210

15,000
Series A Preferred Units

Walter Jackson

418 Carriage Lane

Wyckoff, NJ 07481

531.25
Series A Preferred Units

Joshua Lobel

5646 Meadowood Road
Dallas, TX 75220

531.25
Series A Preferred Units

Haydeh Davoudi

4618 Staunton Street

Houston, TX 77027

125
Series A Preferred Units

Amodae Capital LLC

400 W 63rd St, 2101
New York, NY 10069

62.5
Series A Preferred Units

BOC YAC Funding LLC

1601 Dodge Street, Suite 3300
Omaha, Nebraska 68102

8,049.409
Series B Preferred Units

Tal Keinan

159 West 91st Street

New York, NY 10024

27,035.04
Founder Units

 

 

Exhibit 10.3

 

 

 

TAX RECEIVABLE AGREEMENT

 

by and among

 

SKY HARBOUR GROUP CORPORATION

 

SKY HARBOUR LLC,

 

TAL KEINAN, as TRA HOLDER REPRESENTATIVE,

 

and

 

the several TRA HOLDERS (as defined herein)

 

FROM TIME TO TIME PARTY HERETO

 

Dated as of January 25, 2022

 

 

 

TABLE OF CONTENTS

Page

 

Article 1. DEFINITIONS

2

1.1

Definitions

2

1.2

Rules of Construction

9

Article 2. DETERMINATION OF REALIZED TAX BENEFIT

10

2.1

Basis Adjustments; LLC 754 Election; Revaluation

10

2.2

Basis Schedules

11

2.3

Tax Benefit Schedules

11

2.4

Procedures; Amendments

12

Article 3. TAX BENEFIT PAYMENTS

13

3.1

Timing and Amount of Tax Benefit Payments

13

3.2

No Duplicative Payments

16

3.3

Pro-Ration of Payments as Between the TRA Holders

16

3.4

Overpayments

17

Article 4. TERMINATION

17

4.1

Early Termination of Agreement; Breach of Agreement

17

4.2

Early Termination Notice

19

4.3

Payment Upon Early Termination

20

Article 5. SUBORDINATION AND LATE PAYMENTS

21

5.1

Subordination

21

5.2

Late Payments by the Corporation

21

Article 6. TAX MATTERS; CONSISTENCY; COOPERATION

21

6.1

Participation in the Corporation’s Tax Matters

21

6.2

Consistency

22

6.3

Cooperation

22

Article 7. MISCELLANEOUS

22

7.1

Notices

22

7.2

Counterparts

23

7.3

Entire Agreement; No Third Party Beneficiaries

23

7.4

Governing Law

23

7.5

Severability

24

 

-i-

 

TABLE OF CONTENTS

(continued)

Page

 

7.6

Assignments; Amendments; Successors; No Waiver

24

7.7

Titles and Subtitles

25

7.8

Resolution of Disputes

25

7.9

Reconciliation

26

7.10

Withholding

27

7.11

Admission of the Corporation into a Consolidated Group; Transfers of Corporate Assets

27

7.12

Change in Law

28

7.13

Interest Rate Limitation

28

7.14

Independent Nature of Rights and Obligations

28

7.15

LLC Agreement

29

7.16

TRA Holder Representative

29

7.17

Non-Effect of Other Tax Receivable Agreements

30

 

Exhibits

 

Exhibit A         -         Form of Joinder Agreement

 

-ii-

 

TAX RECEIVABLE AGREEMENT

 

This TAX RECEIVABLE AGREEMENT (as the same may be amended, restated, amended and restated, supplemented or otherwise modified from time to time, this “Agreement”), dated as of January 25, 2022, is hereby entered into by and among Sky Harbour Group Corporation, a Delaware corporation (the “Corporation”), Sky Harbour LLC, a Delaware limited liability company (the “LLC”), the TRA Holder Representative (as defined below), and each of the TRA Holders (as defined below).

 

RECITALS

 

WHEREAS, the LLC is treated as a partnership for U.S. federal income tax purposes;

 

WHEREAS, each of the members of the LLC other than the Corporation directly or indirectly owns limited liability company interests in the LLC (the “Units”);

 

WHEREAS, pursuant to that certain Equity Purchase Agreement by and among (i) the LLC, (ii) Yellowstone Acquisition Company, a Delaware corporation and predecessor to the Corporation, and (iii) BOC Yellowstone LLC, a Delaware limited liability company and BOC Yellowstone II LLC, a Delaware limited liability company, the Corporation will acquire newly-issued LLC Units in exchange for the Closing Date Contribution Amount (as defined therein) and become the Managing Member of the LLC (as defined in the LLC Agreement) (such Equity Purchase Agreement the “Equity Purchase Agreement,” and the foregoing transactions, the “Business Combination”);

 

WHEREAS, in connection with the Business Combination, the LLC will revalue its property for U.S. federal income tax purposes (and any corresponding U.S. state or local tax purposes) pursuant to Section 1.704-1 of the Treasury Regulations;

 

WHEREAS, pursuant to and subject to the terms of the LLC Agreement, from time to time following any applicable Lock-Up Period (as defined in the Lock-Up Agreement), each holder of Units (other than the Corporation) has the right to require the LLC to redeem (a “Redemption”) all or a portion of such holder’s Units for Class A Common Stock contributed to the LLC by the Corporation; provided that, at the election of the Corporation in its sole discretion, the Corporation may effect a direct exchange (a “Direct Exchange”) of such shares of Class A Common Stock for such Units (holders described in this clause, the “TRA Holders”);

 

WHEREAS, the LLC and any direct or indirect Subsidiary (owned through a chain of entities each of which is treated as a partnership or a disregarded entity for U.S. federal income tax purposes) of the LLC that is treated as a partnership for U.S. federal income tax purposes (together with the LLC and any direct or indirect Subsidiary (owned through a chain of entities each of which is treated as a partnership or a disregarded entity for U.S. federal income tax purposes) of the LLC that is treated as a disregarded entity for U.S. federal income tax purposes, the “LLC Group”) will, to the extent such direct or indirect Subsidiary is treated as a partnership for U.S. federal income tax purposes, have in effect an election under Section 754 of the Code (as defined below) for the Taxable Year (as defined below) in which any Exchange (as defined below) occurs, which election should result in an adjustment to the Corporation’s share of the tax basis of the assets owned by the LLC Group as of the date of the Exchange; and

 

 

 

 

WHEREAS, the parties to this Agreement desire to provide for certain payments and make certain arrangements with respect to certain tax benefits derived by the Corporation as a result of any Exchanges, certain tax attributes of the LLC Group and the receipt of payments under this Agreement.

 

NOW, THEREFORE, in consideration of the foregoing and the respective covenants and agreements set forth herein, and intending to be legally bound hereby, the parties hereto agree as follows:

 

ARTICLE 1.
DEFINITIONS

 

1.1    Definitions. As used in this Agreement, the terms set forth in this Article I shall have the following meanings (such meanings to be equally applicable to both (i) the singular and plural and (ii) the active and passive forms of the terms defined).

 

Advisory Firm” means any accounting firm that is nationally recognized as being an expert in Covered Tax matters and is not an Affiliate of the Corporation, provided that such Advisory Firm that is used by the Corporation shall be selected by the Corporation and be reasonably acceptable to the TRA Holder Representative.

 

Actual Interest Amount” is defined in Section 3.1.2.7 of this Agreement.

 

Affiliate” means, with respect to any Person, any other Person that directly or indirectly, through one or more intermediaries, Controls, is Controlled by, or is under common Control with, such first Person.

 

Agreed Rate” means SOFR plus 100 basis points.

 

Agreement” is defined in the preamble to this Agreement.

 

Amended Schedule” is defined in Section 2.4.2 of this Agreement.

 

Assumed State and Local Tax Rate” means the tax rate equal to the sum of the products of (x) the Corporation’s income tax apportionment factor for each state and local jurisdiction in which the Corporation files income or franchise tax returns for the relevant Taxable Year and (y) the highest corporate income and franchise tax rate in effect for such Taxable Year for each such state and local jurisdiction in which the Corporation files income tax returns for each relevant Taxable Year.

 

Attributable” is defined in Section 3.1.2.1 of this Agreement.

 

Bankruptcy Code” is defined in Section 4.1.3 of this Agreement.

 

Basis Adjustment” means the increase or decrease to the tax basis of, or the Corporation’s share of, the tax basis of the Reference Assets (i) under Section 734(b), 743(b) and 754 of the Code (in situations where, following an Exchange, the LLC remains in existence as an entity for tax purposes) and (ii) under Sections 732, 755 and 1012 of the Code (in situations where, as a result of one or more Exchanges, the LLC becomes an entity that is disregarded as separate from its owner for tax purposes), in each case, as a result of any Exchange and any payments made under this Agreement. Notwithstanding any other provision of this Agreement, the amount of any Basis Adjustment resulting from an Exchange of one or more Units shall be determined without regard to any Pre-Exchange Transfer of such Units and as if any such Pre-Exchange Transfer had not occurred.

 

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Basis Schedule” is defined in Section 2.2 of this Agreement.

 

Business Combination” is defined in the recitals to this Agreement.

 

Business Combination Date” means the closing of the Business Combination.

 

Business Day” means any day excluding Saturday, Sunday and any day that is a legal holiday under the laws of the State of New York or is a day on which banking institutions located in New York are closed.

 

Change of Control” means the occurrence of any of the following events:

 

(1)         any “person” or “group” (within the meaning of Sections 13(d) and 14(d) of the Exchange Act, but excluding any employee benefit plan of such person and its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan, and excluding the Specified Parties) becomes the “beneficial owner” (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of shares of Class A Common Stock, Class B Common Stock, preferred stock and/or any other class or classes of capital stock of the Managing Member (if any) representing in the aggregate more than fifty percent (50%) of the voting power of all of the outstanding shares of capital stock of the Managing Member entitled to vote;

 

(2)         the stockholders of the Managing Member approve a plan of complete liquidation or dissolution of the Managing Member or there is consummated an agreement or series of related agreements for the sale or other disposition, directly or indirectly, by the Managing Member of all or substantially all of the Managing Member’s assets (including a sale of all or substantially all of the assets of the Company); or

 

(3)         there is consummated a merger or consolidation of the Managing Member with any other corporation or entity, and, immediately after the consummation of such merger or consolidation, the voting securities of the Managing Member immediately prior to such merger or consolidation do not continue to represent, or are not converted into, more than fifty percent (50%) of the combined voting power of, or economic interest in, the then outstanding voting securities of the Person resulting from such merger or consolidation or, if the surviving company is a Subsidiary, the ultimate parent thereof.

 

Notwithstanding the foregoing, a “Change of Control” shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the Class A Common Stock, Class B Common Stock, preferred stock and/or any other class or classes of capital stock of the Managing Member immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in and voting control over, and own substantially all of the shares of, an entity which owns all or substantially all of the assets of the Managing Member immediately following such transaction or series of transactions.

 

3

 

Class A Common Stock” means the Class A Common Stock, par value $0.0001 per share, of the Corporation.

 

Class B Common Stock” means the Class B Common Stock, par value $0.0001 per share, of the Corporation.

 

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

 

Common Basis” means the existing tax basis of the Reference Assets (determined, with respect to each TRA Holder, as of immediately prior to such TRA Holder’s Exchange Transaction) that are depreciable or amortizable (including assets that will eventually be subject to depreciation or amortization, once placed in service) for U.S. federal income tax purposes attributable to Units acquired by the Corporation in an Exchange. For the avoidance of doubt, Common Basis shall not include any Basis Adjustments.

 

Control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or other agreement.

 

Corporation” is defined in the preamble to this Agreement.

 

Covered Person” is defined in Section 7.16 of this Agreement.

 

Covered Tax Benefit” is defined in Section 3.3.1 of this Agreement.

 

Covered Taxes” means any and all U.S. federal, state, local, and foreign taxes, assessments or similar charges that are based on or measured with respect to net income or profits and any interest related thereto.

 

Cumulative Net Realized Tax Benefit” is defined in Section 3.1.2.3 of this Agreement.

 

Default Rate” means SOFR plus 400 basis points.

 

Default Rate Interest” is defined in Section 3.1.2.8 of this Agreement.

 

Determination” shall have the meaning ascribed to such term in Section 1313(a) of the Code or similar provision of U.S. state tax law, as applicable, or any other event (including the execution of IRS Form 870-AD) that finally and conclusively establishes the amount of any liability for tax.

 

Direct Exchange” is defined in the recitals to this agreement.

 

Dispute” is defined in Section 7.8.1 of this Agreement.

 

4

 

Early Termination Effective Date” means the date of an Early Termination Notice for purposes of determining the Early Termination Payment.

 

Early Termination Notice” is defined in Section 4.2 of this Agreement.

 

Early Termination Payment” is defined in Section 4.3.2 of this Agreement.

 

Early Termination Rate” means the SOFR plus 100 basis points.

 

Early Termination Reference Date” is defined in Section 4.2 of this Agreement.

 

Early Termination Schedule” is defined in Section 4.2 of this Agreement.

 

Equity Purchase Agreement” is defined in the recitals to this Agreement.

 

Estimated Tax Benefit Payment” is defined in Section 3.4 of this Agreement.

 

Exchange” means any Direct Exchange or Redemption.

 

Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, and any applicable rules and regulations promulgated thereunder, and any successor to such statute, rules or regulations.

 

Exchange Date” means the date of any Exchange.

 

Expert” is defined in Section 7.9 of this Agreement.

 

Final Payment Date” means any date on which a payment is required to be made pursuant to this Agreement. For the avoidance of doubt, the Final Payment Date in respect of a Tax Benefit Payment is determined pursuant to Section 3.1 of this Agreement.

 

Hypothetical Tax Liability” means, with respect to any Taxable Year, the hypothetical liability of the Corporation that would arise in respect of Covered Taxes, using the same methods, elections, conventions and similar practices used on the actual relevant Tax Returns of the Corporation but (i) calculating depreciation, amortization, or other similar deductions, or otherwise calculating any items of income, gain, or loss, using the Corporation’s share of the Non-Adjusted Tax Basis as reflected on the applicable Basis Schedule, including amendments thereto for the Taxable Year, and (ii) excluding any deduction attributable to Imputed Interest for the Taxable Year; provided, that for purposes determining the Hypothetical Tax Liability, the combined tax rate for U.S. state and local Covered Taxes (but not, for the avoidance of doubt, federal Covered Taxes) shall be the Assumed State and Local Tax Rate. For the avoidance of doubt, (A) the Hypothetical Tax Liability shall be determined without taking into account the carryover or carryback of any tax item attributable to Imputed Interest, Basis Adjustments (or portions thereof), or Common Basis and (B) the calculation of the Hypothetical Tax Liability shall take into account any U.S. federal income tax benefit actually realized by the Corporation with respect to state and local jurisdiction income taxes (with such benefit taking into account the Corporation’s marginal U.S. federal income tax rate for the relevant Taxable Year, the Assumed State and Local Tax Rate, and the deductibility, if any, of state and local jurisdiction income taxes).

 

5

 

Imputed Interest” is defined in Section 3.1.2.6 of this Agreement.

 

IRS” means the U.S. Internal Revenue Service.

 

Joinder” means a joinder to this Agreement, in form and substance substantially similar to Exhibit A to this Agreement.

 

Joinder Requirement” is defined in Section 7.6.1 of this Agreement.

 

LLC” is defined in the preamble to this Agreement.

 

LLC Agreement” means that certain Third Amended and Restated Limited Liability Company Agreement of the LLC, dated as of the date hereof, as such agreement may be further amended, restated, supplemented and/or otherwise modified from time to time.

 

LLC Group” is defined in the recitals to this Agreement.

 

Lock-Up Agreement” shall have the meaning given to such term in the Equity Purchase Agreement.

 

Net Tax Benefit” is defined in Section 3.1.2 of this Agreement.

 

Non-Adjusted Tax Basis” means (i) with respect to any Reference Asset at any time the tax basis for purposes of U.S. federal income tax law that such asset would have had at such time if no Basis Adjustments had been made, and (ii) in the case of any Reference Asset that is depreciable or amortizable (including, for the avoidance of doubt, any amortizable Section 197 intangible (as such term is used in the Code)), for purposes of U.S. federal income tax law, treating such Reference Asset as having a Common Basis of zero at all times.

 

Objection Notice” is defined in Section 2.4.1.1 of this Agreement.

 

Parties” means the parties named on the signature pages to this agreement and each additional party that satisfies the Joinder Requirement, in each case with their respective successors and assigns.

 

Person” means any individual, corporation, firm, partnership, joint venture, limited liability company, estate, trust, business association, organization, governmental entity or other entity.

 

Pre-Exchange Transfer” means any transfer of one or more Units (including upon the death of a TRA Holder) (i) that occurs after the Business Combination but prior to an Exchange of such Units and (ii) to which Section 743(b) of the Code applies.

 

Realized Tax Benefit” is defined in Section 3.1.2.4 of this Agreement.

 

Realized Tax Detriment” is defined in Section 3.1.2.5 of this Agreement.

 

Reconciliation Dispute” is defined in Section 7.9 of this Agreement.

 

6

 

Reconciliation Procedures” is defined in Section 2.4.1 of this Agreement.

 

Redemption” has the meaning in the recitals to this Agreement.

 

Reference Asset” means any tangible or intangible asset of any member of the LLC Group or any of their respective successors or assigns, whether held directly by the LLC or indirectly by the LLC through any entity in which the LLC now holds or may subsequently hold an ownership interest (but only if such entity is treated as a partnership or disregarded entity for U.S. federal income tax purposes and for purposes of state or local income tax law), at the time of an Exchange or other applicable transaction. A Reference Asset also includes any asset the tax basis of which is determined, in whole or in part, by reference to the tax basis of an asset that is described in the preceding sentence, including “substituted basis property” within the meaning of Section 7701(a)(42) of the Code.

 

Schedule” means any of the following: (i) a Basis Schedule, (ii) a Tax Benefit Schedule, or (iii) the Early Termination Schedule, and, in each case, any amendments thereto.

 

SOFR” means the Secured Overnight Financing Rate, as reported by the Wall Street Journal.

 

Senior Obligations” is defined in Section 5.1 of this Agreement.

 

Specified Parties” means (i) the SH Equityholders (as defined in the Stockholders’ Agreement) as of the Closing Date (as defined in the Equity Purchase Agreement); (ii) any Permitted Transferee (as defined in the Stockholders’ Agreement) that becomes party to the Stockholders’ Agreement; (iii) any Affiliate of any of the foregoing; or (iv) any “group” (within the meaning of Sections 13(d) and 14(d) of the Exchange Act) in which the Persons referred to in the foregoing clauses (i) – (iv) beneficially own (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act) in the aggregate, directly or indirectly, a majority of the voting power of the shares of Class A Common Stock and Class B Common Stock.

 

Subsidiary” means, with respect to any Person and as of the date of any determination, any other Person as to which such Person, owns, directly or indirectly, or otherwise controls, more than 50% of the voting power or other similar interests, or the sole general partner interest, or managing member or similar interest, of such Person.

 

Subsidiary Stock” means any stock or other equity interest in any Subsidiary of the Corporation that is treated as a corporation for U.S. federal income tax purposes and applicable state and local tax purposes.

 

Stockholders Agreement” means the Stockholders’ Agreement, dated as of January 25, 2022, by and among (i) the Corporation, (ii) Tal Keinan, (iii) Due West Partners LLC, a Washington limited liability company, (iv) Center Sky Harbour LLC, a Delaware limited liability company, (v) BOC Yellowstone LLC, a Delaware limited liability company, and (vi) BOC Yellowstone II LLC, a Delaware limited liability company.

 

Tax Benefit Payment” is defined in Section 3.1.2 of this Agreement.

 

7

 

Tax Benefit Schedule” is defined in Section 2.3.1 of this Agreement.

 

Tax Return” means any return, declaration, report or similar statement filed or required to be filed with respect to taxes (including any attached schedules), including, without limitation, any information return, claim for refund, amended return and declaration of estimated tax.

 

Taxable Year” means a taxable year of the Corporation as defined in Section 441(b) of the Code or comparable section of U.S. state or local tax law, as applicable (and, therefore, for the avoidance of doubt, may include a short taxable period of less than 12 months for which a Tax Return is made), ending on or after the Business Combination Date.

 

Taxing Authority” means any national, federal, state, county, municipal, or local government, or any subdivision, agency, commission or authority thereof, or any quasi-governmental body, or any other authority of any kind, exercising regulatory or other authority in relation to tax matters.

 

Termination Objection Notice” is defined in Section 4.2 of this Agreement.

 

TRA Holders” is defined in the recitals to this Agreement.

 

TRA Holder Representative” is defined in Section 7.16 of this Agreement.

 

Treasury Regulations” means the final, temporary, and (to the extent they can be relied upon) proposed regulations under the Code, as promulgated from time to time (including corresponding provisions and succeeding provisions) as in effect for the relevant taxable period.

 

U.S.” means the United States of America.

 

Units” is defined in the recitals to this Agreement.

 

Valuation Assumptions” means, as of an Early Termination Effective Date, the assumptions that:

 

(1)         in each Taxable Year ending on or after such Early Termination Effective Date, the Corporation will have taxable income sufficient to fully use the deductions arising from the Basis Adjustments, Common Basis, and the Imputed Interest during such Taxable Year or future Taxable Years (including, for the avoidance of doubt, Basis Adjustments and Imputed Interest that would result from future Tax Benefit Payments that would be paid in accordance with the Valuation Assumptions) in which such deductions would become available, taking into account clause (4) below;

 

(2)         (i) the U.S. federal income tax rates that will be in effect for each such Taxable Year will be those specified for each such Taxable Year by the Code and other law as in effect on the Early Termination Effective Date, except to the extent any change to such tax rates for such Taxable Year have already been enacted into law, and (ii) the combined U.S. state and local income tax rates (but not, for the avoidance of doubt, U.S. federal income tax rates) for each such Taxable Year shall be the Assumed State and Local Tax Rate for the Taxable Year that includes the Early Termination Effective Date;

 

8

 

(3)         all taxable income of the Corporation will be subject to the maximum applicable tax rates for each Covered Tax throughout the relevant period; provided, the combined tax rate for U.S. state and local income taxes (but not, for the avoidance of doubt, federal income tax) shall be the Assumed State and Local Tax Rate, and, for the avoidance of doubt, the applicable calculations shall take into account any U.S. federal income tax benefit actually realized by the Corporation with respect to state and local jurisdiction income taxes (with such benefit taking into account the Corporation’s applicable marginal U.S. federal income tax rate, the Assumed State and Local Tax Rate, and the deductibility, if any, of state and local jurisdiction income taxes);

 

(4)         any loss or disallowed interest or other loss carryovers or carryforwards generated by any Basis Adjustments, Common Basis, or Imputed Interest (including any such Basis Adjustments, and Imputed Interest generated as a result of payments under this Agreement) and available as of the Early Termination Effective Date will be used by the Corporation on a pro rata basis from the Early Termination Effective Date through (A) the scheduled expiration date of such loss carryovers or (B) if there is no such scheduled expiration, the five-year anniversary of the Early Termination Effective Date (in each case, determined without regard to any limitations on the use of such net operating losses or other tax attributes pursuant to Sections 382, 383, or 384 of the Code, or any successor provision or similar provision of state or local law);

 

(5)         any non-amortizable assets (other than Subsidiary Stock) will be disposed of on the earlier of (i) the fifteenth anniversary of the applicable Basis Adjustment (or, if such Basis Adjustment occurred more than fifteen years before the Early Termination Effective Date, the Early Termination Effective Date) and (ii) the fifteenth anniversary of the Early Termination Effective Date;

 

(6)         any Subsidiary Stock will be deemed never to be disposed of except if Subsidiary Stock is directly disposed of in the Change of Control;

 

(7)         if, on the Early Termination Effective Date, any TRA Holder has Units that have not been Exchanged, then such Units shall be deemed to be Exchanged for the fair market value that would be received by such TRA Holder if such Units had been Exchanged on the Early Termination Effective Date, and such TRA Holder shall be deemed to receive the amount of cash such TRA Holder would have been entitled to pursuant to Section 4.3 had such Units actually been Exchanged on the Early Termination Effective Date; and

 

(8)         any payment obligations pursuant to this Agreement will be satisfied on the date that any Tax Return to which such payment obligation relates is required to be filed under applicable law as of the Early Termination Effective Date excluding any extensions.

 

1.2    Rules of Construction. Unless otherwise specified herein:

 

1.2.1    The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms.

 

1.2.2    For purposes of interpretation of this Agreement:

 

9

 

1.2.2.1    The words “herein,” “hereto,” “hereof” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision thereof.

 

1.2.2.2    References in this Agreement to a Schedule, Article, Section, clause or sub-clause refer to the appropriate Schedule to, or Article, Section, clause or subclause in, this Agreement.

 

1.2.2.3    References in this Agreement to dollars or “$” refer to the lawful currency of the United States of America.

 

1.2.2.4    The term “including” is by way of example and not limitation.

 

1.2.2.5    The term “documents” includes any and all instruments, documents, agreements, certificates, notices, reports, financial statements and other writings, however evidenced, whether in physical or electronic form.

 

1.2.2.6    The term “or” shall not be exclusive and shall instead mean “and/or.”

 

1.2.3    In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including;” the words “to” and “until” each mean “to but excluding;” and the word “through” means “to and including.”

 

1.2.4    Unless otherwise expressly provided herein, (a) references to organization documents (including the LLC Agreement), agreements (including this Agreement) and other contractual instruments shall be deemed to include all subsequent amendments, restatements, extensions, supplements and other modifications thereto, but only to the extent that such amendments, restatements, extensions, supplements and other modifications are permitted hereby; and (b) references to any law (including the Code and the Treasury Regulations) shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such law.

 

ARTICLE 2.
DETERMINATION OF REALIZED TAX BENEFIT

 

2.1    Basis Adjustments; LLC 754 Election; Revaluation.

 

2.1.1    Basis Adjustments. The Parties acknowledge and agree to treat (A) to the fullest extent permitted by law each Direct Exchange as giving rise to Basis Adjustments and (B) to the fullest extent permitted by law each Redemption using Class A Common Stock contributed to the LLC by the Corporation as a direct purchase of Units by the Corporation from the applicable TRA Holder pursuant to Section 707(a)(2)(B) of the Code as giving rise to Basis Adjustments.

 

2.1.2    Section 754 Election. The Corporation shall ensure that, on and after the date hereof and continuing throughout the term of this Agreement, the LLC and each other member of the LLC Group that is treated as a partnership for U.S. federal income tax purposes will have in effect an election under Section 754 of the Code (and under any similar provisions of applicable U.S. state or local law).

 

10

 

2.1.3    Revaluation. Pursuant to, and in accordance with, Section 1.704-1 of the Treasury Regulations, for U.S. federal income tax purposes (and any corresponding U.S. state or local tax purposes), the LLC shall revalue its property to fair market value as of the time of the Business Combination.

 

2.2    Basis Schedules. Within ninety (90) days after the filing of the U.S. federal income Tax Return of the Corporation for each relevant Taxable Year, the Corporation shall deliver to the TRA Holder Representative a schedule developed in consultation with the Advisory Firm (the “Basis Schedule”) that shows, in reasonable detail as necessary in order to understand the calculations performed under this Agreement: (a) the Basis Adjustments with respect to the Reference Assets as a result of the relevant Exchanges effected in such Taxable Year, (b) the period (or periods) over which each Basis Adjustment is amortizable and/or depreciable, (c) the Non‑Adjusted Tax Basis with respect to the Reference Assets described in clause (a) as of each relevant Exchange, (d) the Common Basis Attributable to the relevant TRA Holder that remains (if any) and may give rise to payments pursuant to the terms of this Agreement, and (e) the period (or periods) over which the Common Basis is amortizable and/or depreciable. The Basis Schedule will become final and binding on the Parties pursuant to the procedures set forth in Section 2.4.1 and may be amended by the Parties pursuant to the procedures set forth in Section 2.4.2.

 

2.3    Tax Benefit Schedules.

 

2.3.1    Tax Benefit Schedule. Within ninety (90) days after the filing of the U.S. federal income Tax Return of the Corporation for any Taxable Year in which there is a Realized Tax Benefit or Realized Tax Detriment, the Corporation shall provide to the TRA Holder Representative a schedule developed in consultation with the Advisory Firm showing, in reasonable detail, the calculation of the Realized Tax Benefit or Realized Tax Detriment for such Taxable Year (a “Tax Benefit Schedule”). The Tax Benefit Schedule will become final and binding on the Parties pursuant to the procedures set forth in Section 2.4, and may be amended by the Parties pursuant to the procedures set forth in Section 2.4.

 

2.3.2    Applicable Principles. Subject to the provisions of this Agreement, the Realized Tax Benefit or Realized Tax Detriment for each Taxable Year is intended to measure the decrease or increase in the actual liability of the Corporation for Covered Taxes for such Taxable Year attributable to the Basis Adjustments, Common Basis, and Imputed Interest, as determined using a “with and without” methodology described in Section 2.4. Carryovers, carryforwards, or carrybacks, of any tax item attributable to any Basis Adjustment, Common Basis, or Imputed Interest or any other tax item in respect thereof shall be considered to be subject to the rules of the Code and the Treasury Regulations or the appropriate provisions of U.S. state or local tax law, as applicable, governing the use, limitation, and expiration of carryovers, carryforwards, carrybacks, or other tax items of the relevant type. If a carryover or carryback of any tax item includes a portion that is attributable to any Basis Adjustments, Common Basis, or Imputed Interest (a “TRA Portion”) and another portion that is not (a “Non-TRA Portion”), such portions shall be considered to be used in accordance with the “with and without” methodology so that: (i) the amount of any Non-TRA Portion is deemed utilized first, followed by the amount of any TRA Portion (calculated by taking into account the provisions of Section 3.3 to the extent applicable); and (ii) in the case of a carryback of a Non-TRA Portion, such carryback shall not affect the original “with and without” calculation made in the prior Taxable Year. The Parties agree to treat (i) all Tax Benefit Payments (other than Imputed Interest) solely to the extent attributable to an Exchange and to the extent permitted by applicable law (A) as subsequent upward purchase price adjustments that give rise to further Basis Adjustments in respect of an applicable Exchange and (B) have the effect of creating additional Basis Adjustments arising in the Taxable Year in which the applicable Tax Benefit Payment is made and (ii) as a result, to the extent permitted by applicable law, any additional Basis Adjustments arising from such a Tax Benefit Payment shall be treated as giving rise to a Basis Adjustment in the Taxable Year in which the Tax Benefit Payment is made on an iterative basis continuing until any incremental Basis Adjustment is immaterial as reasonably determined by the TRA Holder Representative and the Corporation in good faith and in consultation with the Advisory Firm.

 

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2.4    Procedures; Amendments.

 

2.4.1    Procedures. Each time the Corporation delivers an applicable Schedule to the TRA Holder Representative, under this Agreement, including any Amended Schedule delivered pursuant to Section 2.4, but excluding any Early Termination Schedule or amended Early Termination Schedule delivered pursuant to the procedures set forth in Section 4.2, the Corporation shall also: (x) deliver supporting schedules and work papers from an Advisory Firm and any additional materials as reasonably requested by the TRA Holder Representative that are reasonably necessary in order to understand the calculations that were relevant for purposes of preparing the Schedule; and (y) allow the TRA Holder Representative and its advisors to have reasonable access to the appropriate representatives, as reasonably requested by the TRA Holder Representative, at the Corporation and the applicable Advisory Firm in connection with a review of such Schedule. Without limiting the generality of the preceding sentence, the Corporation shall ensure that any Tax Benefit Schedule that is delivered to the TRA Holder Representative, along with any supporting schedules and work papers, provides a reasonably detailed presentation of the calculation of the actual liability of the Corporation for Covered Taxes (the “with” calculation) and the Hypothetical Tax Liability of the Corporation (the “without” calculation), and identifies any material assumptions or operating procedures or principles that were used for purposes of such calculations. An applicable Schedule or amendment thereto shall become final and binding on the Parties forty-five (45) days from the date on which the TRA Holder Representative first receives the applicable Schedule or amendment thereto unless:

 

2.4.1.1    the TRA Holder Representative within forty-five (45) days after receiving the applicable Schedule or amendment thereto provides the Corporation with written notice of a material objection to such Schedule that is made in good faith and that sets forth in reasonable detail the TRA Holder Representative material objection (an “Objection Notice”) or

 

2.4.1.2    the TRA Holder Representative provides a written waiver of its right to deliver an Objection Notice within the time period described in 2.4.1.1 above, in which case such Schedule or amendment thereto becomes binding on the date the waiver from the TRA Representative is received by the Corporation.

 

In the event that the TRA Holder Representative or any TRA Holder timely delivers an Objection Notice pursuant to 2.4.1.1 above, and if the Corporation and the TRA Holder Representative, for any reason, are unable to successfully resolve the issues raised in the Objection Notice through good faith discussions within thirty (30) days after receipt by the Corporation of the Objection Notice, the Corporation and the TRA Holder Representative shall employ the reconciliation procedures as described in Section 7.9 of this Agreement (the “Reconciliation Procedures”).

 

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2.4.2    Amended Schedule. The applicable Schedule for any Taxable Year may be amended from time to time by the Corporation: (i) in connection with a Determination affecting such Schedule; (ii) to correct material inaccuracies in the Schedule identified as a result of the receipt of additional factual information relating to a Taxable Year after the date the Schedule was originally provided to the TRA Holder Representative; (iii) to comply with an Expert’s determination under the Reconciliation Procedures applicable to this Agreement; (iv) to reflect a change in the Realized Tax Benefit or Realized Tax Detriment for such Taxable Year attributable to a carryback or carryforward of a loss or other tax item to such Taxable Year; (v) to reflect a change in the Realized Tax Benefit or Realized Tax Detriment for such Taxable Year attributable to an amended Tax Return filed for such Taxable Year; or (vi) to adjust a Basis Schedule to take into account any Tax Benefit Payments made pursuant to this Agreement (any such Schedule, an “Amended Schedule”).

 

ARTICLE 3.
TAX BENEFIT PAYMENTS

 

3.1    Timing and Amount of Tax Benefit Payments.

 

3.1.1    Timing of Payments. Subject to Sections 3.2 and 3.3, within three (3) Business Days following the date on which each Tax Benefit Schedule that is required to be delivered by the Corporation to the TRA Holder Representative pursuant to Section 2.3 of this Agreement becomes final in accordance with Section 2.4 of this Agreement, the Corporation shall pay to each relevant TRA Holder the Tax Benefit Payment as determined pursuant to Section 3.1 that is Attributable to the relevant TRA Holder. Each such Tax Benefit Payment shall be made by wire transfer of immediately available funds to the bank account previously designated by such TRA Holder or as otherwise agreed by the Corporation and such TRA Holder. For the avoidance of doubt, without limiting the Corporation’s ability to make offsets against Tax Benefit Payments with respect to a particular TRA Holder to the extent permitted by Section 3.5, the TRA Holders shall not be required under any circumstances to return any portion of any Tax Benefit Payment previously paid by the Corporation to the TRA Holders (including any portion of any Early Termination Payment).

 

3.1.2    Amount of Payments. For purposes of this Agreement, a “Tax Benefit Payment” with respect to any TRA Holder means an amount, not less than zero, equal to the sum of: (i) the portion of the Net Tax Benefit that is Attributable to such TRA Holder (including Imputed Interest, if any, calculated in respect of such amount); and (ii) the Actual Interest Amount and any Default Rate Interest with respect to the Net Tax Benefit described in (i).

 

3.1.2.1    Attributable. A Net Tax Benefit is “Attributable” to an TRA Holder to the extent that it is derived from any Common Basis, Basis Adjustment, or Imputed Interest, that is attributable to such TRA Holder (whether through an Exchange, which in the case of Common Basis shall be based on the Common Basis attributable to such TRA Holder’s LLC Units subject to a given Exchange for U.S. federal income tax purposes as of immediately prior to the applicable Exchange(s)), determined without regard to any dilutive or antidilutive effect of any contribution to or distribution from the LLC after an applicable Exchange.

 

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3.1.2.2    Net Tax Benefit. The “Net Tax Benefit” for a Taxable Year equals the amount of the excess, if any, of (x) 85% of the Cumulative Net Realized Tax Benefit as of the end of such Taxable Year over (y) the aggregate amount of all Tax Benefit Payments previously made under this Section 3.1. For the avoidance of doubt, without limiting the Corporation’s ability to make offsets against Tax Benefit Payments with respect to a particular TRA Holder to the extent permitted by Section 3.5, if the Cumulative Net Realized Tax Benefit as of the end of any Taxable Year is less than the aggregate amount of all Tax Benefit Payments previously made, no TRA Holder shall be required to return any portion of any Tax Benefit Payment previously made by the Corporation to such TRA Holder.

 

3.1.2.3    Cumulative Net Realized Tax Benefit. The “Cumulative Net Realized Tax Benefit” for a Taxable Year equals the cumulative amount of Realized Tax Benefits for all Taxable Years of the Corporation, up to and including such Taxable Year, net of the cumulative amount of Realized Tax Detriments for the same periods. The Realized Tax Benefit and Realized Tax Detriment for each Taxable Year shall be determined based on the most recent Tax Benefit Schedule or Amended Schedule, if any, in existence at the time of such determination. The computation of the Cumulative Net Realized Tax Benefit shall be adjusted to reflect any applicable Determination with respect to any Realized Tax Benefits and/or Realized Tax Detriments.

 

3.1.2.4    Realized Tax Benefit. The “Realized Tax Benefit” for a Taxable Year equals the excess, if any, of (a) the Hypothetical Tax Liability over (b) the actual liability of the Corporation for Covered Taxes; provided, that for purposes of determining the Hypothetical Tax Liability and actual liability of the Corporation for Covered Taxes, the Corporation shall use the Assumed State and Local Tax Rate for purposes of determining such liabilities for all state and local Covered Taxes. For the avoidance of doubt, the calculation of the Hypothetical Tax Liability and the actual liability of the Corporation for Covered Taxes shall take into account any U.S. federal income tax benefit, if any, received by the Corporation with respect to state and local jurisdiction income taxes (with such benefit taking into account the Corporation’s marginal U.S. federal income tax rate for the relevant Taxable Year, the Assumed State and Local Tax Rate, and the deductibility, if any, of state and local jurisdiction income taxes). If all or a portion of the actual liability for such Covered Taxes for the Taxable Year arises as a result of an audit by a Taxing Authority of any Taxable Year, such liability shall not be included in determining the Realized Tax Benefit unless and until the Corporation has exhausted all of its rights at the Appeals level of the Internal Revenue Service or equivalent agency at the state level or, in the event the Company has determined to litigate such matter in Tax Court or other court of competent jurisdiction, unless and until such litigation becomes final (whether pursuant to a decision by the Tax Court or a judgment, decree, or other order by such other court) or has been finally settled or otherwise compromised.

 

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3.1.2.5    Realized Tax Detriment. The “Realized Tax Detriment” for a Taxable Year equals the excess, if any, of the actual liability of the Corporation for Covered Taxes over the Hypothetical Tax Liability for such Taxable Year; provided, that for purposes of determining the Hypothetical Tax Liability and actual liability of the Corporation for Covered Taxes, the Corporation shall use the Assumed State and Local Tax Rate for purposes of determining such liabilities for all state and local Covered Taxes. For the avoidance of doubt, the calculation of the Hypothetical Tax Liability and the actual liability of the Corporation for Covered Taxes shall take into account any U.S. federal income tax benefit received by the Corporation with respect to state and local jurisdiction income taxes (with such benefit taking into account the Corporation’s marginal U.S. federal income tax rate for the relevant Taxable Year, the Assumed State and Local Tax Rate, and the deductibility, if any, of state and local jurisdiction income taxes). If all or a portion of the actual tax liability for such Covered Taxes for the Taxable Year increases as a result of an audit by a Taxing Authority of any Taxable Year, such liability shall not be included in determining the Realized Tax Detriment unless and until the Corporation has exhausted all of its rights at the Appeals level of the Internal Revenue Service or equivalent agency at the state level or, in the event the Company has determined to litigate such matter in Tax Court or other court of competent jurisdiction, unless and until such litigation becomes final (whether pursuant to a decision by the Tax Court or a judgment, decree, or other order by such other court) or has been finally settled or otherwise compromised.

 

3.1.2.6    Imputed Interest. The Parties acknowledge that the principles of Sections 1272, 1274, or 483 of the Code, as applicable, and the principles of any similar provision of U.S. state and local tax law, may, as applicable, apply to cause a portion of any payments by the Corporation to a TRA Holder under this Agreement to be treated as imputed interest (“Imputed Interest”). For the avoidance of doubt, the deduction for the amount of Imputed Interest, if any, as determined with respect to any payments made by the Corporation to a TRA Holder shall be excluded in determining the Hypothetical Tax Liability of the Corporation for purposes of calculating Realized Tax Benefits and Realized Tax Detriments pursuant to this Agreement.

 

3.1.2.7    Actual Interest Amount. The “Actual Interest Amount” calculated in respect of the Net Tax Benefit for a Taxable Year, will equal an amount equal to interest calculated at the Agreed Rate from the due date (without extensions) for filing the U.S. federal income Tax Return of the Corporation for such Taxable Year until the date on which the Corporation makes a timely Tax Benefit Payment to the TRA Holder on or before the Final Payment Date as determined pursuant to Section 3.1.

 

3.1.2.8    Default Rate Interest. In accordance with Section 5.2, in the event that the Corporation does not make timely payment of all or any portion of a Tax Benefit Payment to a TRA Holder on or before the Final Payment Date as determined pursuant to Section 3.1, the amount of any “Default Rate Interest” calculated and payable in accordance with Section 5.2 (if any) in respect of the Tax Benefit Payment (including previously accrued Imputed Interest and Actual Interest Amounts) for a Taxable Year will equal interest calculated at the Default Rate from the Final Payment Date for a Tax Benefit Payment as determined pursuant to Section 3.1 until the date on which the Corporation makes such Tax Benefit Payment to such TRA Holder.

 

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3.1.2.9    The Corporation and the TRA Holders hereby acknowledge and agree that, as of the date of this Agreement and as of the date of any future Exchange that may be subject to this Agreement, the aggregate value of the Tax Benefit Payments cannot be reasonably ascertained for U.S. federal income or other applicable tax purposes. Notwithstanding anything to the contrary in this Agreement, with respect to each Exchange by any TRA Holder, if such TRA Holder notifies the Corporation in writing of a stated maximum selling price (within the meaning of Treasury Regulation 15A.453-1(c)(2)) to be applied with respect to such Exchange, the amount of the initial consideration received in connection with such Exchange and the aggregate Tax Benefit Payments to such TRA Holder in respect of such Exchange (other than amounts accounted for as interest under the Code) shall not exceed such stated maximum selling price.

 

3.1.3    Interest. The provisions of Section 3.1 and Section 5.2 in respect of Default Rate Interest are intended to operate so that interest will effectively accrue (or in the case of Imputed Interest be treated as accruing solely for U.S. federal income or applicable state or local income tax purposes) in respect of the Net Tax Benefit (or Tax Benefit Payment in respect of any Actual Interest Amount or Default Rate Interest) for any Taxable Year as follows:

 

3.1.3.1    first, solely for U.S. federal income or applicable state or local income tax purposes, at the applicable rate used to determine the amount of Imputed Interest under the Code (from the relevant Exchange Date until the due date (without extensions) for filing the U.S. federal income Tax Return of the Corporation for such Taxable Year and, if required under applicable law, through the Final Payment Date for a Tax Benefit Payment as determined pursuant to Section 3.1);

 

3.1.3.2    second, at the Agreed Rate (from the due date (without extensions) for filing the U.S. federal income Tax Return of the Corporation for such Taxable Year until the Final Payment Date for a Tax Benefit Payment as determined pursuant to Section 3.1); and

 

3.1.3.3    third, in accordance with Section 5.2, at the Default Rate (from the Final Payment Date for a Tax Benefit Payment as determined pursuant to Section 3.1 until the date on which the Corporation makes the relevant Tax Benefit Payment to the applicable TRA Holder).

 

3.2    No Duplicative Payments. It is intended that the provisions of this Agreement will not result in the duplicative payment of any amount (including interest) that may be required under this Agreement and the provisions of this Agreement shall be consistently interpreted and applied in accordance with that intent.

 

3.3    Pro-Ration of Payments as Between the TRA Holders.

 

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3.3.1    Insufficient Taxable Income. Notwithstanding anything in Section 3.1 to the contrary, if the aggregate potential depreciation, amortization or other tax benefit in respect of the Basis Adjustments, Imputed Interest, Actual Interest Amounts, and Default Rate Interest for purposes of determining the Corporation’s liability for Covered Taxes (the “Covered Tax Benefit”) is limited in a particular Taxable Year because the Corporation does not have sufficient taxable income, then the available Covered Tax Benefit for the Corporation shall be allocated among the TRA Holders in proportion to the respective Tax Benefit Payments that would have been payable if the Corporation had in fact had sufficient taxable income and there had been no such limitation. As an illustration of the intended operation of this Section 3.3.1, if the Corporation had $200 of aggregate potential Covered Tax Benefits in a particular Taxable Year (with $50 of such Covered Tax Benefits being attributable to TRA Holder 1 and $150 of such Covered Tax Benefits being attributable to TRA Holder 2), such that TRA Holder 1 would have potentially been entitled to a Tax Benefit Payment of $10.62 and TRA Holder 2 would have been entitled to a Tax Benefit Payment of $31.87 if the Corporation had $200 of actual taxable income (assuming for purposes of this illustration a 25% tax rate), and if the Corporation in fact (for purposes of this illustration) only had $100 of actual taxable income in such Taxable Year, then $25 of the aggregate $100 actual Covered Tax Benefit for the Corporation for such Taxable Year would be allocated to TRA Holder 1 and $75 of the aggregate $100 actual Covered Tax benefit for the Corporation would be allocated to TRA Holder 2, such that TRA Holder 1 would receive a Tax Benefit Payment of $5.31 and TRA Holder 2 would receive a Tax Benefit Payment of $15.94. Notwithstanding anything to the contrary in Section 3.1, in no event will the aggregate of the portions of the Net Tax Benefit that are “Attributable” to the TRA Holders exceed 100% of the Net Tax Benefit.

 

3.3.2    Late Payments. If for any reason the Corporation is not able to timely and fully satisfy its payment obligations under this Agreement with respect to having insufficient taxable income only in respect of a particular Taxable Year, then Default Rate Interest will begin to accrue pursuant to Section 5.2 and the Corporation and other Parties agree that (i) the Corporation shall pay the Tax Benefit Payments due in respect of such Taxable Year to each TRA Holder pro rata in proportion to the amount of such Tax Benefit Payments, without favoring one obligation over the other, and (ii) no Tax Benefit Payment shall be made in respect of any Taxable Year until all Tax Benefit Payments to all TRA Holders in respect of all prior Taxable Years have been made in full.

 

3.4    Overpayments. To the extent the Corporation makes any Tax Benefit Payment to a TRA Holder in respect of a particular Taxable Year in an amount in excess of the amount of such payment that should have been made to such TRA Holder in respect of such Taxable Year (taking into account this Article III) under the terms of this Agreement, then such excess shall be applied to reduce the amount of any subsequent future Tax Benefit Payments to be paid by the Corporation to such TRA Holder and such TRA Holder shall not receive any further Tax Benefit Payments until such TRA Holder has foregone an amount of Tax Benefit Payments equal to such excess. The amount of any excess Tax Benefit Payment shall be deemed to have been paid by the Corporation to the relevant TRA Holders on the original due date for the filing of the subsequent Tax Return to which the excess Tax Benefit Payment relates for purposes of determining the Actual Interest Amount to which such relevant TRA Holders shall be entitled. Notwithstanding the foregoing or anything to the contrary contained in this Agreement, the TRA Holders shall not be required, under any circumstances, to return any portion of any Tax Benefit Payment previously paid by the Corporation to the TRA Holders (including any portion of any or any Early Termination Payment).

 

ARTICLE 4.

TERMINATION

 

4.1    Early Termination of Agreement; Breach of Agreement.

 

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4.1.1    Corporations Early Termination Right. The Corporation may completely terminate this Agreement, as and to the extent provided herein, with respect to all amounts payable to the TRA Holders pursuant to this Agreement by paying to the TRA Holders the Early Termination Payments; provided that Early Termination Payments may be made pursuant to this Section 4.1.1 only if made to all TRA Holders that are entitled to such a payment, and provided further, that the Corporation may withdraw any notice to execute its termination rights under this Section 4.1.1 prior to the time at which any Early Termination Payment has been paid. Upon the Corporation’s payment of the Early Termination Payments, the Corporation shall not have any further payment obligations under this Agreement, other than with respect to any: (i) prior Tax Benefit Payments that are due and payable under this Agreement but that still remain unpaid as of the date of the Early Termination Notice and that remain unpaid as of the payment of the Early Termination Payments (which Tax Benefit Payments shall not be included in the Early Termination Payments); and (ii) current Tax Benefit Payments due for the Taxable Year ending on or including the date of the Early Termination Notice (except to the extent that the amount described in clause (ii) is included in the calculation of the Early Termination Payments or is included in clause (i)) that remain unpaid as of the payment of the Early Termination Payments. If an Exchange subsequently occurs with respect to Units for which the Corporation has exercised its termination rights under this Section 4.1.1 and paid all amounts owed in connection with the exercise of such rights, the Corporation shall have no obligations under this Agreement with respect to such Exchange.

 

4.1.2    Acceleration Upon Change of Control. In the event of a Change of Control, the TRA Holder Representative shall have the option, by written notice to the Corporation, to cause the acceleration of all unpaid payment obligations of the Corporation hereunder as calculated pursuant to this Article IV as if an Early Termination Notice had been delivered on the closing date of the Change of Control and utilizing the Valuation Assumptions by substituting the phrase “the closing date of a Change of Control” in each place where the phrase “Early Termination Effective Date” appears. Such obligations shall include, without duplication, but not be limited to, (i) the Early Termination Payments calculated as if an Early Termination Notice had been delivered on the closing date of the Change of Control, (ii) any Tax Benefit Payments agreed to by the Corporation and the TRA Holders as due and payable but unpaid as of the Early Termination Notice (which Tax Benefit Payments shall not be included in the Early Termination Payments) and that remain unpaid as of the payment of the Early Termination Payments, and (iii) any Tax Benefit Payments due for any Taxable Year ending prior to, with or including the closing date of a Change of Control unpaid as of the Early Termination Notice (except to the extent that any amounts described in clause (iii) are included in the Early Termination Payments or are included in clause (ii)) and that remain unpaid as of the payment of the Early Termination Payments. For the avoidance of doubt, Sections 4.2 and 4.3 shall apply to a Change of Control, mutatis mutandis.

 

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4.1.3    Acceleration Upon Breach of Agreement. In the event that the Corporation materially breaches any of its material obligations under this Agreement, whether as a result of failure to make any payment when due, failure to honor any other material obligation required hereunder, or by operation of law as a result of the rejection of this Agreement in a case commenced under Title 11 of the United States Code (11 U.S.C. § 101 et seq.) (the “Bankruptcy Code”) or otherwise, then, at the option of the TRA Holder Representative, all obligations of the Corporation hereunder shall be accelerated and become immediately due and payable upon notice of acceleration from the TRA Holder Representative (provided that in the case of any proceeding under the Bankruptcy Code or other insolvency statute, such acceleration shall be automatic without any such notice), and such obligations shall be calculated as if an Early Termination Notice had been delivered on the date of such notice of acceleration (or, in the case of any proceeding under the Bankruptcy Code or other insolvency statute, on the date of such breach) and shall include, but not be limited to: (i) the Early Termination Payments calculated as if an Early Termination Notice had been delivered on the date of such acceleration; (ii) any prior Tax Benefit Payments that are due and payable under this Agreement but that still remain unpaid as of the date of such acceleration (which Tax Benefit Payments shall not be included in the Early Termination Payments) and that remain unpaid as of the payment of the Early Termination Payments; and (iii) any current Tax Benefit Payments due for the Taxable Year ending with or including the date of such acceleration (except to the extent included in the Early Termination Payments or in clause (ii)) and that remain unpaid as of the payment of the Early Termination Payments. Notwithstanding the foregoing, in the event that the Corporation breaches this Agreement and such breach is not a material breach of a material obligation, the TRA Holder Representative and each TRA Holder shall still be entitled to enforce all of its rights otherwise available under this Agreement, excluding, for the avoidance of doubt, seeking or otherwise obtaining an acceleration of amounts payable under this Agreement pursuant to this Section 4.1.3. For purposes of this Section 4.1.3, and subject to the following sentence, the Parties agree that the failure to make any payment due pursuant to this Agreement within sixty (60) days of the relevant Final Payment Date shall be deemed to be a material breach of a material obligation under this Agreement for all purposes of this Agreement, and that it will not be considered to be a material breach of a material obligation under this Agreement to make a payment due pursuant to this Agreement within sixty (60) days of the relevant Final Payment Date. Notwithstanding anything in this Agreement to the contrary, it shall not be a material breach of a material obligation of this Agreement if the Corporation fails to make any Tax Benefit Payment within sixty (60) days of the relevant Final Payment Date to the extent that the Corporation has insufficient funds or cannot make such payment as a result of obligations imposed in connection with the Senior Obligations or under applicable law, and cannot obtain sufficient funds to make such payments by taking commercially reasonable actions or would become insolvent as a result of making such payment; provided that the interest provisions of Section 5.2 shall apply to such late payment (unless the Corporation does not have sufficient funds to make such payment as a result of limitations imposed by any Senior Obligations, in which case Section 5.2 shall apply, but the Default Rate shall be replaced by the Agreed Rate); and further provided that such payment obligation shall nonetheless accrue for the benefit of the TRA Holders and the Corporation shall make such payment at the first opportunity that it has sufficient funds and is otherwise able to make such payment.

 

4.2    Early Termination Notice. If the Corporation chooses to exercise its right of early termination under Section 4.1 above, the Corporation shall deliver to the TRA Holder Representative a notice of the Corporation’s decision to exercise such right (an “Early Termination Notice”). Upon delivery of the Early Termination Notice or the occurrence of an event described in Section 4.1 (or an early termination pursuant to Section 4.1), the Corporation shall deliver a schedule developed in consultation with the Advisory Firm (the “Early Termination Schedule”) showing in reasonable detail the calculation of the Early Termination Payment. The Corporation shall also (x) deliver to the TRA Holder Representative supporting schedules and work papers from an Advisory Firm and any additional materials reasonably requested by the TRA Holder Representative that are reasonably necessary in order to understand the calculations that were relevant for purposes of preparing the Early Termination Schedule; and (y) allow the TRA Holder Representative and its advisors to have reasonable access to the appropriate representatives at the Corporation and the applicable Advisory Firm as determined by the Corporation or as reasonably requested by the TRA Holder Representative, in connection with a review of such Early Termination Schedule. The Early Termination Schedule shall become final and binding on each Party forty-five (45) days from the first date on which the TRA Holder Representative received such Early Termination Schedule unless:

 

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4.2.1.1    the TRA Holder Representative within forty-five (45) days after receiving the Early Termination Schedule, provides the Corporation with notice of a material objection to such Early Termination Schedule made in good faith and setting forth in reasonable detail the TRA Holder Representative’s material objection (a “Termination Objection Notice”); or

 

4.2.1.2    the TRA Holder Representative provides a written waiver of such right of a Termination Objection Notice within the period described in clause (i) above, in which case such Early Termination Schedule becomes binding on the date the waiver from the TRA Holder Representative is received by the Corporation.

 

In the event that the TRA Holder Representative timely delivers a Termination Objection Notice pursuant to clause (i) above, and if the Parties, for any reason, are unable to successfully resolve the issues raised in the Termination Objection Notice within thirty (30) days after receipt by the Corporation of the Termination Objection Notice, the Corporation and the TRA Holder Representative shall employ the Reconciliation Procedures. The date on which the Early Termination Schedule becomes final in accordance with this Section 4.2 shall be the “Early Termination Reference Date.”

 

4.3    Payment Upon Early Termination.

 

4.3.1    Timing of Payment. Within three (3) Business Days after the Early Termination Reference Date, the Corporation shall pay to each TRA Holder an amount equal to the Early Termination Payment for such TRA Holder. Such Early Termination Payment shall be made by the Corporation by wire transfer of immediately available funds to a bank account or accounts designated by such TRA Holder or as otherwise agreed by the Corporation and such TRA Holder.

 

4.3.2    Amount of Payment. The “Early Termination Payment” payable to a TRA Holder pursuant to and subject to Section 4.3.1 shall equal the present value, discounted at the Early Termination Rate as determined as of the Early Termination Reference Date, of all Tax Benefit Payments that would be required to be paid (and which have not yet been paid prior to the Early Termination Effective Date) by the Corporation to such TRA Holder, whether payable with respect to Units that were Exchanged prior to the Early Termination Effective Date or on or after the Early Termination Effective Date, beginning from the Early Termination Effective Date and using the Valuation Assumptions.

 

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ARTICLE 5.

SUBORDINATION AND LATE PAYMENTS

 

5.1    Subordination. Notwithstanding any other provision of this Agreement to the contrary, any Tax Benefit Payments or Early Termination Payment required to be made by the Corporation to the TRA Holders under this Agreement shall rank subordinate and junior in right of payment to any principal, interest, or other amounts due and payable in respect of any obligations owed in respect of secured or unsecured indebtedness for borrowed money of the Corporation and its Subsidiaries (“Senior Obligations”) and shall rank pari passu in right of payment with all current or future unsecured obligations of the Corporation that are not Senior Obligations. To the extent that any payment under this Agreement is not permitted to be made at the time payment is due as a result of this Section 5.1 and the terms of the agreements governing Senior Obligations, such payment obligation nevertheless shall accrue for the benefit of the TRA Holders and the Corporation shall make any such payments at the first opportunity that such payments are permitted to be made in accordance with the terms of the Senior Obligations. Furthermore, each TRA Holder shall enter into any subordination agreements in a form reasonably satisfactory to the TRA Holder Representative in order to effectuate the purposes of this Section 5.1.

 

5.2    Late Payments by the Corporation. Except as otherwise provided in this Agreement, the amount of all or any portion of any Tax Benefit Payment or Early Termination Payment not made to the TRA Holders when due under the terms of this Agreement shall be payable together with any interest thereon, computed at the Default Rate and commencing from the Final Payment Date on which such Tax Benefit Payment or Early Termination Payment was first due and payable to the date of actual payment of such Tax Benefit Payment or Early Termination Payment; provided that if any Tax Benefit Payment or Early Termination Payment is not made to the TRA Holders when due under the terms of this Agreement as a result of Section 5.1 and the terms of the agreements governing Senior Obligations, any such interest shall be computed at the Agreed Rate and not the Default Rate.

 

ARTICLE 6.
TAX MATTERS; CONSISTENCY; COOPERATION

 

6.1    Participation in the Corporation’s Tax Matters. Except as otherwise provided herein, the Corporation shall have full responsibility for, and sole discretion over, all tax matters concerning the Corporation and its Subsidiaries including without limitation the preparation, filing, or amending of any Tax Return and defending, contesting or settling any audit, contest, or other proceeding pertaining to taxes; provided, however, that the Corporation shall not settle or fail to contest any issue pertaining to Covered Taxes that is reasonably expected to materially and adversely affect the TRA Holders’ rights and obligations under this Agreement without the consent of the TRA Holder Representative, such consent not to be unreasonably withheld or delayed. The Corporation shall notify the TRA Holder Representative of, and keep it reasonably informed with respect to, the any tax audit or other tax contest of the Corporation the outcome of which is reasonably expected to reduce or defer the Tax Benefit Payments payable to any TRA Holder under this Agreement and the TRA Holder Representative shall have the right to (i) discuss with the Corporation, and provide input and comment to the Corporation regarding, any portion of any such tax audit or other tax contest and (ii) participate in, at the TRA Holder Representative’s expense, any such portion of any such tax audit or other tax contest to the extent it relates to issues the resolution of which would reasonably be expected to reduce or defer the Tax Benefit Payments payable to any TRA Holder under this Agreement. To the extent there is a conflict between this Agreement and either the Equity Purchase Agreement or the LLC Agreement relating to tax matters concerning Covered Taxes and the Corporation, including preparation, filing or amending of any Tax Return and defending, contesting or settling any issue pertaining to taxes, this Agreement shall control solely with respect to the matters governed by this Agreement.

 

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6.2    Consistency. Except as otherwise required by applicable law, all calculations and determinations made hereunder, including, without limitation, any Basis Adjustments, the determination of any deductions arising from Common Basis, the Schedules or the determination of any Realized Tax Benefits or Realized Tax Detriments, shall be made in accordance with the elections, methodologies or positions taken by the Corporation and the LLC on their respective Tax Returns. Each TRA Holder shall prepare its Tax Returns in a manner that is consistent with the terms of this Agreement and any related calculations or determinations that are made hereunder, including, without limitation, the Schedules provided under this Agreement, unless otherwise required by applicable law. In the event that an Advisory Firm or Expert is used and is replaced with another Advisory Firm or Expert, such replacement Advisory Firm or Expert shall perform its services under this Agreement using procedures and methodologies consistent with the previous Advisory Firm or Expert, unless otherwise required by applicable law or unless the Corporation and the TRA Holder Representative agree to the use of other procedures and methodologies.

 

6.3    Cooperation. The TRA Holder Representative and each TRA Holder, on the one hand, and the Corporation, on the other hand, shall (i) furnish to the other in a timely manner such information, documents and other materials as the other may reasonably request for purposes of making, reviewing, or approving any determination or computation necessary or appropriate under or with respect to this Agreement, preparing any Tax Return or contesting or defending any audit, examination, controversy or other proceeding with any Taxing Authority, or estimating any future Tax Benefit Payments hereunder, (ii) make itself available to the other and its representatives to provide explanations of documents and materials and such other information as may be reasonably requested in connection with any of the matters described in clause (i) above, and (iii) reasonably cooperate in connection with any such matter. Subject to Section 6.1, the Corporation shall provide reasonable assistance as reasonably requested by the TRA Holder Representative on behalf of any TRA Holder in connection with such TRA Holder’s tax returns or financial reporting materials that are required to be prepared under applicable law or contract and/or the consummation of any assignment or transfer of any of its rights and/or obligations under this Agreement, including without limitation, providing any information or executing any documentation. The requesting Party shall reimburse the other Party for any reasonable and documented out-of-pocket costs and expenses incurred by such other Party pursuant to Section 6.3.

 

ARTICLE 7.
MISCELLANEOUS

 

7.1    Notices. Any notice hereunder shall be sent in writing, addressed as specified below, and shall be deemed given: (a) if by hand or recognized courier service, by 5:00 PM on a Business Day, addressee’s day and time, on the date of delivery, and otherwise on the first Business Day after such delivery; (b) if by fax or email, on the date that transmission is sent electronically without any “bounce back” or similar error message; or (c) five days after mailing by certified or registered mail, return receipt requested. Notices shall be addressed to the respective Parties as follows (excluding telephone numbers, which are for convenience only), or to such other address as a Party shall specify to the others in accordance with these notice provisions:

 

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If to the Corporation or the LLC, to:

 

c/o Sky Harbour Group Corporation

136 Tower Road, Hangar M, Suite 205

Westchester County Airport

West Harrison, NY 10604
Attention: Tal Keinan
E-mail: tkeinan@skyharbour.group

 

with a copy (which shall not constitute notice to the Corporation) to:

 

Morrison & Foerster LLP

250 West 55th Street

New York, New York 10019

Attention: Mitchell Presser; Omar Pringle; Aly El-Hamamsy

E-mail: mpresser@mofo.com; opringle@mofo.com; aelhamamsy@mofo.com

 

If to the TRA Holder Representative:

 

Tal Keinan

136 Tower Road, Hangar M, Suite 205

Westchester County Airport

West Harrison, NY 10604

Email: tkeinan@skyharbour.group

 

Any Party may change its address, fax number or e-mail address by giving each of the other Parties written notice thereof in the manner set forth above.

 

7.2    Counterparts. This Agreement may be executed in counterparts, each of which shall constitute an original, but all of which shall constitute one agreement. This Agreement shall become effective upon delivery to each party of an executed counterpart or the earlier delivery to each party of original, photocopied, or electronically transmitted signature pages that together (but need not individually) bear the signatures of all other parties.

 

7.3    Entire Agreement; No Third Party Beneficiaries. This Agreement sets forth the entire agreement of the parties with respect to the subject matter hereof and thereof and supersedes all prior and contemporaneous understandings and agreements related thereto (whether written or oral), all of which are merged herein. No provision of this Agreement may be explained or qualified by any agreement, negotiations, understanding, discussion, conduct or course of conduct. Except as otherwise expressly stated herein, there is no condition precedent to the effectiveness of any provision hereof or thereof.

 

7.4    Governing Law. This Agreement shall be construed and enforced in accordance with and governed by the laws (both substantive and procedural) of the State of Delaware, without giving effect to the conflict of laws principles thereof.

 

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7.5    Severability. A determination by a court or other governmental authority (including any Taxing Authority) that any provision that is not of the essence of this Agreement is legally invalid shall not affect the validity or enforceability of any other provision hereof. The Parties shall cooperate in good faith to substitute (or cause such court or other governmental authority to substitute) for any provision so held to be invalid a valid provision, as alike in substance to such invalid provision as is lawful.

 

7.6    Assignments; Amendments; Successors; No Waiver.

 

7.6.1    Assignment. Each TRA Holder may assign, sell, pledge, or otherwise alienate or transfer any interest in this Agreement, including the right to receive any Tax Benefit Payments under this Agreement, without the consent of the Corporation, to any Person; provided such Person executes and delivers a Joinder agreeing to succeed to the applicable portion of such TRA Holder’s interest in this Agreement and to become a Party and TRA Holder for all purposes of this Agreement (the “Joinder Requirement”). For the avoidance of doubt, if a TRA Holder transfers Units in accordance with the terms of the LLC Agreement but does not assign to the transferee of such Units its rights under this Agreement with respect to such transferred Units, such TRA Holder shall continue to be entitled to receive the Tax Benefit Payments arising in respect of a subsequent Exchange of such Units (and any such transferred Units shall be separately identified, so as to facilitate the determination of Tax Benefit Payments hereunder). The Corporation may not assign any of its rights or obligations under this Agreement to any Person (other than any direct or indirect successor (whether by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Corporation) without the prior written consent of each of the TRA Holders (and any purported assignment without such consent shall be null and void).

 

7.6.2    Amendments. No provision of this Agreement may be amended unless such amendment is approved in writing by (i) the Corporation, (ii) the TRA Holder Representative, and (iii) TRA Holders who would be entitled to receive at least two-thirds of the Early Termination Payments payable to all TRA Holders in the event the Corporation exercised its rights pursuant to Section 4.1 as of the later of the most recent Exchange Date, in which case such amendment shall be permitted. Notwithstanding the foregoing, no such amendment shall be effective if such amendment would have a disproportionate adverse impact on the payments certain TRA Holders will or may receive under this Agreement unless all such disproportionately impacted TRA Holders consent in writing to such amendment (such consent not to be unreasonably withheld, conditioned or delayed). No provision of this Agreement may be waived unless such waiver is in writing and signed by the Party against whom the waiver is to be effective.

 

7.6.3    Successors. Except as provided in Section 7.6, all of the terms and provisions of this Agreement shall be binding upon, and shall inure to the benefit of and be enforceable by, the Parties hereto and their respective successors, assigns, heirs, executors, administrators and legal representatives. The Corporation shall require and cause any direct or indirect successor (whether by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Corporation, by written agreement, expressly to (i) assume and agree to perform this Agreement, in the same manner and to the same extent that the Corporation would be required to perform if no such succession had taken place and (ii) become a Party to this Agreement.

 

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7.6.4    Waiver. No failure by any Party to insist upon the strict performance of any covenant, duty, agreement, or condition of this Agreement, or to exercise any right or remedy consequent upon a breach thereof, shall constitute a waiver of any such breach or any other covenant, duty, agreement, or condition.

 

7.7    Titles and Subtitles. The titles of the sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.

 

7.8    Resolution of Disputes.

 

7.8.1    Except for Reconciliation Disputes subject to Section 7.9, any and all disputes which cannot be settled amicably, including any ancillary claims of any Party, arising out of, relating to or in connection with the validity, negotiation, execution, interpretation, performance or non-performance of this Agreement (including the validity, scope and enforceability of this arbitration provision) (each a “Dispute”) shall be finally resolved by arbitration in accordance with the International Institute for Conflict Prevention and Resolution Rules for Administered Arbitration by three arbitrators, of which the Corporation shall appoint one arbitrator and the TRA Holders party to such Dispute shall appoint one arbitrator in accordance with the “screened” appointment procedure provided in Rule 5.4. The arbitration shall be governed by the Federal Arbitration Act, 9 U.S.C. §§ 1 et seq., and judgment upon the award rendered by the arbitrators may be entered by any court having jurisdiction thereof. The place of the arbitration shall be New York, New York.

 

7.8.2    Notwithstanding the provisions of Section 7.8.1, any Party may bring an action or special proceeding in any court of competent jurisdiction for the purpose of compelling another Party to arbitrate, seeking temporary or preliminary relief in aid of an arbitration hereunder, and/or enforcing an arbitration award and, for the purposes of this Section 7.8.2, each Party (i) expressly consents to the application of Section 7.8.3 to any such action or proceeding, and (ii) agrees that proof shall not be required that monetary damages for breach of the provisions of this Agreement would be difficult to calculate and that remedies at law would be inadequate. For the avoidance of doubt, this Section 7.8 shall not apply to Reconciliation Disputes to be settled in accordance with the procedures set forth in Section 7.9.

 

7.8.3    Each Party irrevocably consents to service of process by means of notice in the manner provided for in Section 7.1. Nothing in this Agreement shall affect the right of any Party to serve process in any other manner permitted by law.

 

7.8.4    WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).

 

7.8.5    In the event the parties are unable to agree whether a dispute between them is a Reconciliation Dispute subject to the dispute resolution procedure set forth in Section 7.9 or a Dispute subject to the dispute resolution procedure set forth in this Section 7.8, such disagreement shall be decided and resolved in accordance with the procedure set forth in this Section 7.8.

 

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7.9    Reconciliation. In the event that the Corporation and the TRA Holder Representative are unable to resolve a disagreement with respect to a Schedule prepared in accordance with the procedures set forth in Section 2.4, or with respect to an Early Termination Schedule prepared in accordance with the procedures set forth in Section 4.2, within the relevant time period designated in this Agreement (a “Reconciliation Dispute”), the Reconciliation Dispute shall be submitted for determination to a nationally recognized expert (the “Expert”) in the particular area of disagreement mutually acceptable to the disputing Parties. The Expert shall be a partner or principal in a nationally recognized accounting firm, and unless the Corporation and the TRA Holder Representative agree otherwise, the Expert shall not, and the firm that employs the Expert shall not, have any material relationship with the Corporation, the TRA Holder Representative or other actual or potential conflict of interest. If the disputing Parties are unable to agree on an Expert within fifteen (15) days of receipt by the respondent(s) of written notice of a Reconciliation Dispute, the selection of an Expert shall be treated as a Dispute subject to Section 7.8 and an arbitration panel shall pick an Expert from a nationally recognized accounting firm that does not have any material relationship with the Corporation, the TRA Holder Representative or other actual or potential conflict of interest. The Expert shall resolve any matter relating to any Schedule or an amendment thereto or the Early Termination Schedule or an amendment thereto within thirty (30) days and shall resolve any matter relating to a Tax Benefit Schedule or an amendment thereto within fifteen (15) days or as soon thereafter as is reasonably practicable, in each case after the matter has been submitted to the Expert for resolution. Notwithstanding the preceding sentence, if the matter is not resolved before any payment that is the subject of a disagreement would be due (in the absence of such disagreement) or any Tax Return reflecting the subject of a disagreement is due, the undisputed amount shall be paid on the date prescribed by this Agreement and such Tax Return may be filed as prepared by the Corporation, subject to adjustment or amendment upon resolution. The Corporation and the TRA Holder Representative shall bear their own costs and expenses of such proceeding, unless (i) the Expert adopts the TRA Holder Representative’s position, in which case the Corporation shall reimburse the TRA Holder Representative for any reasonable and documented out-of-pocket costs and expenses in such proceeding (including for the avoidance of doubt any costs and expenses incurred by the TRA Holder Representative relating to the engagement of the Expert or amending any applicable Tax Return), or (ii) the Expert adopts the Corporation’s position, in which case the TRA Holder Representative on behalf of such TRA Holder(s)) shall reimburse the Corporation for any reasonable and documented out-of-pocket costs and expenses in such proceeding (including for the avoidance of doubt costs and expenses incurred by the Corporation relating to the engagement of the Expert or amending any applicable Tax Return). The Corporation may withhold payments under this Agreement to collect amounts due under the preceding sentence. The Expert shall finally determine any Reconciliation Dispute and the determinations of the Expert pursuant to this Section 7.9 shall be binding on the Corporation, the TRA Holder Representative and the TRA Holders and may be entered and enforced in any court having competent jurisdiction.

 

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7.10    Withholding. Notwithstanding anything in this Agreement, the Corporation, or any other applicable withholding agent, shall be entitled to deduct and withhold (or cause there to be deduction or withholding), from any payment that is payable to any TRA Holder (or any other person) pursuant to this Agreement any taxes or other amounts as the Corporation or other applicable withholding agent is required to deduct and withhold with respect to the making of any such payment under the Code or any provision of U.S. state, local or foreign tax law or other applicable tax law. Any such deducted or withheld taxes or other amounts, to the extent paid over to the appropriate Taxing Authority or other governmental entity shall be treated for all purposes of this Agreement as having been paid by the Corporation (and/or other applicable withholding agent) to the relevant TRA Holder or other person in respect of which such deduction or withholding was made. Each TRA Holder or other recipient of any payments hereunder shall provide the Corporation with any applicable tax forms, including IRS Form W-9 or the appropriate series of IRS Form W-8, as applicable, or any other information or certifications reasonably requested by the Corporation or other applicable withholding agent in connection with determining whether any such deductions and withholdings are required under the Code or any provision of U.S. state, local or foreign tax law. Notwithstanding the foregoing, if a withholding obligation arises as a result of a Change of Control or other transaction that causes the Corporation (or its successor) to become a non-U.S. Person (for U.S. federal income tax purpose), any amount payable to a TRA Holder under this Agreement shall be increased such that after all required deductions and withholdings have been made (including such deductions and withholdings applicable to additional sums payable under this sentence) the relevant TRA Holder receives an amount equal to the sum that it would have received had no such deductions or withholdings been made.

 

7.11    Admission of the Corporation into a Consolidated Group; Transfers of Corporate Assets.

 

7.11.1    If the Corporation is or becomes a member of an affiliated or consolidated group of corporations that files a consolidated income Tax Return pursuant to Section 1501 or other applicable Sections of the Code governing affiliated or consolidated groups, or any corresponding provisions of U.S. state or local tax law, then: (i) the provisions of this Agreement shall be applied with respect to the group as a whole; and (ii) Tax Benefit Payments, Early Termination Payment, and other applicable items hereunder shall be computed with reference to the consolidated Covered Taxes of the group as a whole.

 

7.11.2    If the Corporation, its successor in interest or any member of a group described in Section 7.11.1 or any member of the LLC Group transfers one or more Reference Assets to a corporation (or a Person classified as a corporation for U.S. federal income tax purposes) with which such entity does not file a consolidated Tax Return pursuant to Section 1501 of the Code, such entity, for purposes of calculating the amount of any Tax Benefit Payment or Early Termination Payment due hereunder, shall be treated as having disposed of such Reference Asset in a fully taxable transaction on the date of such transfer. The consideration deemed to be received by such entity shall be equal to the fair market value of the transferred Reference Asset as determined by a valuation expert mutually agreed upon by the Corporation and the TRA Holder Representative plus, without duplication, (i) the amount of debt to which any such Reference Assets is subject, in the case of a transfer of an encumbered Reference Asset or (ii) the amount of debt allocated to any such Reference Asset, in the case of a transfer of a partnership interest. For purposes of this Section 7.11, a transfer of a partnership interest shall be treated as a transfer of the transferring partner’s share of each of the assets and liabilities of that partnership. Notwithstanding anything to the contrary set forth herein, if the Corporation, its successor in interest or any member of a group described in Section 7.11.1, transfers its assets pursuant to a transaction that qualifies as a “reorganization” (within the meaning of Section 368(a) of the Code) in which such entity does not survive or pursuant to any other transaction, in each case, to which Section 381(a) of the Code applies (other than any such reorganization or any such other transaction, in each case, pursuant to which such entity transfers assets to a corporation with which the Corporation, its successor in interest or any member of the group described in Section 7.11.1 (other than any such member being transferred in such reorganization or other transaction) does not file a consolidated Tax Return pursuant to Section 1501 of the Code), the transfer will not cause such entity to be treated as having transferred any assets to a corporation (or a Person classified as a corporation for U.S. income tax purposes) pursuant to this Section 7.11.2.

 

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7.12    Change in Law. Notwithstanding anything herein to the contrary, if, as a result of or, in connection with an actual or proposed change in law, a TRA Holder reasonably believes that the existence of this Agreement could cause adverse tax consequences to such TRA Holder or any direct or indirect owner of such TRA Holder, then at the written election of such TRA Holder in its sole discretion (in an instrument signed by such TRA Holder and delivered to the Corporation and the TRA Holder Representative) and to the extent specified therein by such TRA Holder, this Agreement shall cease to have further effect and shall not apply to such TRA Holder after a date specified by such TRA Holder.

 

7.13    Interest Rate Limitation. Notwithstanding anything to the contrary contained herein, the interest paid or agreed to be paid hereunder with respect to amounts due to any TRA Holder hereunder shall not exceed the maximum rate of non-usurious interest permitted by applicable law (the “Maximum Rate”). If any TRA Holder shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the Tax Benefit Payment, or Early Termination Payment, as applicable (but in each case exclusive of any component thereof comprising interest) or, if it exceeds such unpaid non-interest amount, refunded to the Corporation. In determining whether the interest contracted for, charged, or received by any TRA Holder exceeds the Maximum Rate, such TRA Holder may, to the extent permitted by applicable law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the payment obligations owed by the Corporation to such TRA Holder hereunder. Notwithstanding the foregoing, it is the intention of the Parties to conform strictly to any applicable usury laws.

 

7.14    Independent Nature of Rights and Obligations. The rights and obligations of each TRA Holder hereunder are several and not joint with the rights and obligations of any other Person. A TRA Holder shall not be responsible in any way for the performance of the obligations of any other Person hereunder, nor shall a TRA Holder have the right to enforce the rights or obligations of any other Person hereunder (other than the Corporation). Nothing contained herein or in any other agreement or document delivered at any closing, and no action taken by any TRA Holder pursuant hereto or thereto, shall be deemed to constitute the TRA Holders acting as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the TRA Holders are in any way acting in concert or as a group with respect to such rights or obligations or the transactions contemplated hereby, and the Corporation acknowledges that the TRA Holders are not acting in concert or as a group and will not assert any such claim with respect to such rights or obligations or the transactions contemplated hereby.

 

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7.15    LLC Agreement. This Agreement shall be treated as part of the LLC Agreement as described in Section 761(c) of the Code and Sections 1.704-1(b)(2)(ii)(h) and 1.761‑1(c) of the Treasury Regulations.

 

7.16    TRA Holder Representative. By executing this Agreement, each of the TRA Holders shall be deemed to have irrevocably constituted and appointed Tal Keinan (in the capacity described in this Section 7.16 and each successor as provided below, the “TRA Holder Representative”) as its agent and attorney in fact with full power of substitution to act from and after the date hereof and to do any and all things and execute any and all documents on behalf of such TRA Holders which may be necessary, convenient or appropriate to facilitate any matters under this Agreement, including but not limited to, and unless otherwise provided by this Agreement: (i) execution of the documents and certificates required pursuant to this Agreement; (ii) receipt and forwarding of notices and communications pursuant to this Agreement; (iv) administration of the provisions of this Agreement; (v) giving or agreeing to, on behalf of such TRA Holders, any and all consents, waivers, amendments or modifications deemed by the TRA Holder Representative, in its sole and absolute discretion, to be necessary or appropriate under this Agreement and the execution or delivery of any documents that may be necessary or appropriate in connection therewith; (vi) taking actions the TRA Holder Representative is expressly authorized to take pursuant to the other provisions of this Agreement; (vii) negotiating and compromising, on behalf of such TRA Holders, any dispute that may arise under, and exercising or refraining from exercising any remedies available under, this Agreement or any other agreement contemplated hereby and executing, on behalf of such TRA Holders, any settlement agreement, release or other document with respect to such dispute or remedy; (viii) engaging attorneys, accountants, agents or consultants on behalf of such TRA Holders in connection with this Agreement or any other agreement contemplated hereby and paying any fees related thereto; and (ix) effectuating the purposes of Section 5.1 (Subordination). If the TRA Holder Representative is unwilling to so serve, then the person then-serving as the TRA Holder Representative shall be entitled to appoint its successor which such successor shall be subject to the approval of a majority of the TRA Holders. To the fullest extent permitted by law, none of the TRA Holder Representative, any of its Affiliates, or any of the TRA Holder Representative’s or Affiliate’s directors, officers, employees or other agents (each a “Covered Person”) shall be liable, responsible or accountable in damages or otherwise to any TRA Holder, the LLC, or the Corporation for damages arising from any action taken or omitted to be taken by the TRA Holder Representative or any other Person with respect to the LLC or the Corporation, except in the case of any action or omission which constitutes, with respect to such Person, willful misconduct or fraud. Each of the Covered Persons may consult with legal counsel, accountants, and other experts selected by it, and any act or omission suffered or taken by it on behalf of the LLC or the Corporation or in furtherance of the interests of the LLC or the Corporation in good faith in reliance upon and in accordance with the advice of such counsel, accountants, or other experts shall create a rebuttable presumption of the good faith and due care of such Covered Person with respect to such act or omission; provided that such counsel, accountants, or other experts were selected with reasonable care. Each of the Covered Persons may rely in good faith upon, and shall have no liability to the LLC, the Corporation or the TRA Holders for acting or refraining from acting upon, any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture, or other paper or document reasonably believed by it to be genuine and to have been signed or presented by the proper party or parties. For the avoidance of doubt, notwithstanding the foregoing, if a provision of this Agreement provides a right or entitlement of any kind to a TRA Holder, this Section 7.16 shall not override the TRA Holder’s ability to exercise or enforce such right or enjoy such entitlement.

 

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7.17    Non-Effect of Other Tax Receivable Agreements. If the Corporation enters into any other agreement after the date hereof (for the avoidance of doubt other than the Equity Purchase Agreement, the LLC Agreement, or any related agreement entered into in connection with the execution of the Equity Purchase Agreement or as contemplated by the Equity Purchase Agreement in connection with the consummation of the transactions contemplated thereby) after the date of the execution of this Agreement that obligates the Corporation to make payments to another party in exchange for tax benefits conferred upon the Corporation, unless otherwise agreed by the TRA Holder Representative, such tax benefits and such payments shall be ignored for all purposes of this Agreement (including for purposes of calculating the Hypothetical Tax Liability and the actual Tax liability of the Corporation hereunder).

 

[Signature Page Follows This Page]

 

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IN WITNESS WHEREOF, the undersigned have executed or caused to be executed on their behalf this Agreement as of the date first written above.

 

 

CORPORATION:

 

     
  SKY HARBOUR GROUP CORPORATION  

 

 

 

 

 

By:

/s/ Tal Keinan

 

 

Name:

Tal Keinan

 

 

Title:

Chief Executive Officer

 

 

 

 

  LLC:  
       
  SKY HARBOUR LLC  
       
  By: /s/ Tal Keinan  
  Name: Tal Keinan  
  Title: Chief Executive Officer  

 

 

 

  TRA HOLDER REPRESENTATIVE:  
       
  By: /s/ Tal Keinan  
  Name: Tal Keinan  

 

 

 

  TRA HOLDER:  
       
  By: /s/ Tal Keinan  
  Name: Tal Keinan  

 

 

 

  TRA HOLDER:  
       
  DUE WEST PARTNERS LLC  
       
  By: /s/ Nick Wellmon  
  Name: Nick Wellmon  
  Title: Managing Partner  

 

 

 

  TRA HOLDER:  
       
  CENTER SKY HARBOUR LLC  
       
  By: /s/ Alex Valner  
  Name:  Alex Valner  
  Title: Manager  

 

 

 

  TRA HOLDER:  
       
  AMODAE CAPITAL LLC  
       
  By: /s/ Eli Elefant  
  Name:  Eli Elefant  
  Title: Managing Member  

 

 

 

  TRA HOLDER:  
       
  By: /s/ Walter Jackson  
  Name:  Walter Jackson  

 

 

 

  TRA HOLDER:  
       
  By: /s/ Joshua Lobel  
  Name:  Joshua Lobel  

 

 

 

  TRA HOLDER:  
       
  By: /s/ Haydeh Davoudi  
  Name:  Haydeh Davoudi  

 

 

 

 

Exhibit A

 

FORM OF JOINDER AGREEMENT

 

This JOINDER AGREEMENT, dated as of _________________, 20___ (this “Joinder”), is delivered pursuant to that certain Tax Receivable Agreement, dated as of January 25, 2022 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Tax Receivable Agreement”) by and among Sky Harbour Group Corporation, a Delaware corporation (the “Corporation”), Sky Harbour LLC, a Delaware limited liability company (the “LLC”), the TRA Holder Representative (as defined in the Tax Receivable Agreement), and each of the TRA Holders (each as defined in the Tax Receivable Agreement) from time to time party thereto. Capitalized terms used but not otherwise defined herein have the respective meanings set forth in the Tax Receivable Agreement.

 

 

1.

Joinder to the Tax Receivable Agreement. Upon the execution of this Joinder by the undersigned and delivery hereof to the Corporation, the undersigned hereby is and hereafter will be a TRA Holder under the Tax Receivable Agreement and a Party thereto, with all the rights, privileges and responsibilities of a TRA Holder thereunder. The undersigned hereby agrees that it shall comply with and be fully bound by the terms of the Tax Receivable Agreement as if it had been a signatory thereto as of the date thereof.

 

 

2.

Incorporation by Reference. All terms and conditions of the Tax Receivable Agreement are hereby incorporated by reference in this Joinder as if set forth herein in full.

 

 

3.

Address. All notices under the Tax Receivable Agreement to the undersigned shall be direct to:

 

[Name]

[Address]

[City, State, Zip Code]

Attn:

Facsimile:

E-mail:

 

IN WITNESS WHEREOF, the undersigned has duly executed and delivered this Joinder as of the day and year first above written.

 

 

[NAME OF NEW PARTY]

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

Annex C-A-1

 

Acknowledged and agreed
as of the date first set forth above:

 
   

SKY HARBOUR GROUP CORPORATION

 
   

By:                                                                                                 

 

Name:

 

Title:

 

 

Annex C-A-2

Exhibit 10.4

 


SKY HARBOUR LLC

A Delaware Limited Liability Company


 

THIRD AMENDED AND RESTATED OPERATING AGREEMENT

 

Dated as of January 25, 2022

 

 

 

 

 

 

 

 

 

 

THE UNITS REPRESENTED BY THIS THIRD AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY OTHER APPLICABLE SECURITIES LAWS. SUCH UNITS MAY NOT BE SOLD, ASSIGNED OR OTHERWISE DISPOSED OF AT ANY TIME WITHOUT EFFECTIVE REGISTRATION UNDER SUCH ACT AND LAWS OR EXEMPTION THEREFROM, AND COMPLIANCE WITH THE OTHER SUBSTANTIAL RESTRICTIONS ON TRANSFERABILITY SET FORTH HEREIN.

 

 

 

TABLE OF CONTENTS

 

Page

 

ARTICLE 1 DEFINITIONS

2

ARTICLE 2 FORMATION OF LIMITED LIABILITY COMPANY

12

2.1

Formation and Tax Classification

12

2.2

Continuation of the Company

12

2.3

Company Name

12

2.4

Term of Company

12

2.5

Purposes

12

2.6

Limitation of Liability

12

2.7

Title to Company Property

13

ARTICLE 3 MANAGEMENT

13

3.1

Management of the Company

13

3.2

Officers

13

3.3

No Management by Members

13

3.4

Reliance by Third Parties

13

3.5

Personnel; Expenses; Insurance; Reimbursements; Related Party Transactions.

14

3.6

Restrictions on the Managing Member’s Authority

15

ARTICLE 4 MEMBERS, UNITS, CAPITAL CONTRIBUTIONS, CAPITAL ACCOUNTS

15

4.1

Identity of Members

15

4.2

Units.

15

4.3

Capital Contributions

18

4.4

Accounts

18

4.5

Additional Ownership Interests

19

4.6

Advances

19

4.7

No Resignation or Withdrawal; No Interest

20

4.8

Nature of Ownership Interest; No Partition

20

4.9

Warrants

20

4.10

Authorization and Issuance of Additional Common Units

20

4.11

Repurchase or Redemption of Shares of Class A Common Stock

21

4.12

Managing Member Equity Awards

22

 

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TABLE OF CONTENTS

(Continued)

Page

 

4.13

Forfeiture of Incentive Equity Units

24

ARTICLE 5 ALLOCATIONS

24

5.1

Allocations of Profits and Losses

24

5.2

Regulatory Allocations

24

5.3

Tax Allocations

26

ARTICLE 6 DISTRIBUTIONS

27

6.1

Distributions

27

6.2

Distributions In-Kind

27

6.3

Tax Distributions

28

6.4

Amounts Withheld

29

6.5

Limitations on Distribution

29

ARTICLE 7 BOOKS AND RECORDS

30

7.1

Books, Record and Financial Statements

30

7.2

Accounting Methods

30

7.3

Audit

30

ARTICLE 8 TAX MATTERS

31

8.1

Partnership Representative

31

8.2

Section 754 Election

32

8.3

Section 83(b) Elections

32

8.4

Other Tax Matters.

33

8.5

Adverse Tax Consequences

34

8.6

Post-Closing Covenants

35

ARTICLE 9 LIABILITY, EXCULPATION AND INDEMNIFICATION

35

9.1

Exculpation

35

9.2

Indemnification by the Company

35

9.3

Insurance

37

ARTICLE 10 RESTRICTIONS ON TRANSFERS OF OWNERSHIP INTERESTS

37

10.1

Transfers by the Managing Member

37

10.2

Transfers by Members

38

10.3

Certain Provisions Applicable to Transfers

38

 

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TABLE OF CONTENTS

(Continued)

Page

 

10.4

Pledges

39

10.5

Certain Transactions with Respect to the Managing Member

39

ARTICLE 11 REDEMPTION

41

11.1

Redemption Right of a Member

41

11.2

Contribution of the Managing Member

43

11.3

Exchange of Incentive Equity Units

44

11.4

Direct Exchange Right of the Managing Member

44

11.5

Reservation of Shares of Class A Common Stock; Listing; Certificate of Incorporation

45

11.6

Effect of Exercise of Redemption

46

11.7

Tax Treatment

46

11.8

Blocker Merger Transaction Cooperation

46

ARTICLE 12 DISSOLUTION, LIQUIDATION AND TERMINATION

47

12.1

Dissolution

47

12.2

Notice of Dissolution

47

12.3

Liquidation

47

12.4

Termination

47

12.5

Claims of the Members

47

ARTICLE 13 PROCEDURES FOR ACTIONS AND CONSENTS OF MEMBERS

47

13.1

Procedures for Actions and Consents of Members

47

13.2

Actions and Consents of Members.

47

ARTICLE 14 MISCELLANEOUS

49

14.1

Notices

49

14.2

Failure to Pursue Remedies

49

14.3

Cumulative Remedies

49

14.4

Binding Effect

49

14.5

Interpretation

49

14.6

Severability

50

14.7

Counterparts

50

14.8

Integration

50

14.9

Amendments

50

14.10

Headings

50

14.11

Governing Law

50

14.12

Consent to Jurisdiction

50

14.13

Waiver of Jury Trial

50

 

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SKY HARBOUR LLC

 

THIRD AMENDED AND RESTATED OPERATING AGREEMENT

 

This THIRD AMENDED AND RESTATED OPERATING AGREEMENT (this “Agreement”) of SKY HARBOUR LLC, a Delaware limited liability company (the “Company”), is made and entered into and becomes effective as of the 25th day of January, 2022 (the “Effective Date”) by and among the Company, Sky Harbour Group Corporation, a Delaware corporation (f/k/a Yellowstone Acquisition Company), as the managing member of the Company (together with any successor managing member permitted pursuant to this Agreement, the “Managing Member”) and the Members.

 

RECITALS

 

WHEREAS, the Company was organized on October 19, 2017 by filing a Certificate of Formation (the “Certificate”) with the office of the Secretary of State of the State of Delaware pursuant to the provisions of the Delaware Limited Liability Company Act (6 Del. C. §18-101 et. seq.), as amended from time to time (the “Act”);

 

WHEREAS, the Company and certain other persons have entered into that certain Second Amended and Restated Operating Agreement of Sky Harbour LLC, dated as of September 14, 2021 (the “Previous Agreement”);

 

WHEREAS, in connection with a Boston Omaha SPAC Transaction (as defined in the Previous Agreement), the Board of Managers of the Company may amend and restate this Agreement in substantially the form contemplated hereby; and

 

WHEREAS, in connection with the transactions contemplated by the Boston Omaha Business Combination Agreement (as defined in the Previous Agreement), pursuant to which a Boston Omaha SPAC Transaction will be consummated (the “Purchase Agreement”), the Members desire to, and the Board of Managers of the Company have resolved to, amend and restate the Previous Agreement to, among other things: (i) reflect Sky Harbour Group Corporation as the Managing Member, (ii) recapitalize the Company to (x) reclassify the Existing Company Common Units, Existing Company Preferred Units and Existing Company Incentive Units (collectively, the “Previous Interests”) as set forth herein, (y) create two classes of units, Common Units and Incentive Equity Units and (z) provide for the issuance of additional Common Units as contemplated by the Purchase Agreement and the issuance of the Warrants pursuant to the Warrant Agreements; and

 

NOW, THEREFORE, in consideration of the mutual covenants herein contained and other valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

 

 

 

AGREEMENT

 

ARTICLE 1

DEFINITIONS

 

As used in this Agreement, the following terms have the following meanings:

 

Act” has the meaning given to such term in the recitals to this Agreement.

 

Action” means any claim, action, suit, charge, litigation, arbitration, mediation audit, notice of violation or citation received, or other proceeding at law or in equity (whether civil, criminal or administrative) by or before any Governmental Entity.

 

Adjusted Capital Account Deficit” means with respect to the Capital Account of any Member as of the end of any Fiscal Year, the amount by which the balance in such Capital Account is less than zero. For this purpose, such Member’s Capital Account balance shall be:

 

(a)         reduced for any items described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5), and (6); and

 

(b)         increased for any amount such Member is obligated to contribute or is treated as being obligated to contribute to the Company pursuant to Treasury Regulation Section 1.704‑1(b)(2)(ii)(c) (relating to partner liabilities to a partnership) or 1.704-2(g)(1) and 1.704-2(i) (relating to minimum gain).

 

Affiliate” means with respect to a specified Person, any Person that directly or indirectly controls, is controlled by, or is under common control with, the specified Person. As used in this definition, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise, and is not limited, for instance, to the ownership of more than fifty percent (50%) of the voting securities of a corporate Person. For purposes of this Agreement, no Member shall be deemed to be an Affiliate of any other Member solely as a result of membership in the Company.

 

Agreement” has the meaning given to such term in the Preamble.

 

Assumed Tax Rate” has the meaning set forth in Section 6.3.

 

Black-Out Period” means any “black-out” or similar period under the Managing Member’s policies covering trading in the Managing Member’s securities to which the applicable Redeeming Member is subject (or will be subject at such time as it owns Class A Common Stock), which period restricts the ability of such Redeeming Member to immediately resell shares of Class A Common Stock to be delivered to such Redeeming Member in connection with a Share Settlement.

 

Blocker Corporation” has the meaning set forth in Section 11.8.

 

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Blocker Merger Transaction” has the meaning set forth in Section 11.8.

 

Board” means the Board of Directors of the Managing Member.

 

Book Value” means, with respect to any property of the Company (including any property of any Subsidiary that is treated as a disregarded entity for U.S. federal income tax purposes), the Company’s adjusted basis for U.S. federal income tax purposes, adjusted from time to time to reflect the adjustments required or permitted by Treasury Regulation Section 1.704-1(b)(2)(iv)(d)-(g).

 

Boston Omaha Units” has the meaning ascribed to such term in the Previous Agreement.

 

Capital Account” means, with respect to any Member, the account maintained for such Member in accordance with the provisions of this Agreement.

 

Capital Contribution” means a contribution of money or other property by a Member to the Company.

 

Catch-Up Unit” means an Incentive Equity Unit that has a “catch-up” right pursuant to which the holders of such Catch-Up Units are entitled to priority distributions pursuant to Section 6.1.1(a) until their Unreturned Catch-Up Amount has been paid in full.

 

Certificate” has the meaning set forth in the Preamble.

 

Change of Control” means the occurrence of any of the following events:

 

(1)         any “person” or “group” (within the meaning of Sections 13(d) and 14(d) of the Exchange Act, but excluding any employee benefit plan of such person and its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan, and excluding the Permitted Holders) becomes the “beneficial owner” (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of shares of Class A Common Stock, Class B Common Stock, preferred stock and/or any other class or classes of capital stock of the Managing Member (if any) representing in the aggregate more than fifty percent (50%) of the voting power of all of the outstanding shares of capital stock of the Managing Member entitled to vote;

 

(2)         the stockholders of the Managing Member approve a plan of complete liquidation or dissolution of the Managing Member or there is consummated an agreement or series of related agreements for the sale or other disposition, directly or indirectly, by the Managing Member of all or substantially all of the Managing Member’s assets (including a sale of all or substantially all of the assets of the Company); or

 

(3)         there is consummated a merger or consolidation of the Managing Member with any other corporation or entity, and, immediately after the consummation of such merger or consolidation, the voting securities of the Managing Member immediately prior to such merger or consolidation do not continue to represent, or are not converted into, more than fifty percent (50%) of the combined voting power of, or economic interest in, the then outstanding voting securities of the Person resulting from such merger or consolidation or, if the surviving company is a Subsidiary, the ultimate parent thereof.

 

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Notwithstanding the foregoing, a “Change of Control” shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the Class A Common Stock, Class B Common Stock, preferred stock and/or any other class or classes of capital stock of the Managing Member immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in and voting control over, and own substantially all of the shares of, an entity which owns all or substantially all of the assets of the Managing Member immediately following such transaction or series of transactions.

 

Change of Control Date” has the meaning set forth in Section 10.5.1.

 

Change of Control Transaction” means any Change of Control that was approved by the Board prior to such Change of Control.

 

Class A Common Stock” means the Class A Common Stock, par value $0.0001 per share, of the Managing Member.

 

Class B Common Stock” means the Class B Common Stock, par value $0.0001 per share, of the Managing Member.

 

Closing” has the meaning set forth in the Purchase Agreement.

 

Closing Date” has the meaning set forth in the Purchase Agreement.

 

Code” means the Internal Revenue Code of 1986, as amended from time to time, or any corresponding federal tax statute enacted after the date of this Agreement.

 

Common Unit” means a unit of Ownership Interest which entitles the holder thereof to the distributions, allocations, and other rights that are accorded holders of Common Units under this Agreement.

 

Common Unit Redemption Price” means, with respect to any Redemption, the arithmetic average of the volume weighted average prices for a share of Class A Common Stock (or any class of stock into which it has been converted) on the Stock Exchange, or any other exchange or automated or electronic quotation system on which the Class A Common Stock trades, as reported by Bloomberg, L.P., or its successor, for each of the five (5) consecutive full trading days ending on and including the last full trading day immediately prior to the applicable Redemption Date, subject to appropriate and equitable adjustment (if any) for any stock splits, reverse splits, stock dividends or similar events affecting the Class A Common Stock as determined by the Managing Member in good faith. If the Class A Common Stock no longer trades on the Stock Exchange or any other securities exchange or automated or electronic quotation system as of any particular Redemption Date, then the Managing Member (through a majority of its independent directors (within the meaning of the rules of the Stock Exchange)) shall determine the Common Unit Redemption Price in good faith.

 

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Company” has the meaning given to such term in the preamble to this Agreement.

 

Consent” means the consent to, approval of, or vote in favor of a proposed action by a Member given in accordance with Article 13 hereof.

 

Converted Common Units” has the meaning set forth in Section 4.2.3.2.

 

Converting Existing Company Common Units” has the meaning set forth in Section 4.2.3.2.

 

Corresponding Rights” means any rights issued with respect to a share of Class A Common Stock or Class B Common Stock pursuant to a “poison pill” or similar stockholder rights plan approved by the Board.

 

Covered Person” has the meaning set forth in Section 9.1.1.

 

Covered Proceeding” has the meaning set forth in Section 9.2.2.

 

Direct Exchange” has the meaning set forth in Section 11.4.

 

Distribution Threshold” means, with respect to an Incentive Equity Unit, the Distribution Threshold applicable to such Incentive Equity Unit as set forth on Exhibit C as may be adjusted pursuant to the terms of this Agreement.

 

Draft Tax Statements” has the meaning set forth in Section 8.4.2.3.

 

Effective Date” has the meaning set forth in the Preamble.

 

Effective Time” means the effective time of the Closing.

 

Equity Securities” means, with regard to any Person, as applicable, (a) any capital stock, voting, partnership, membership, joint venture or other ownership or equity interests, or other share capital of such Person, (b) any debt or equity securities of such Person, directly or indirectly, convertible into or exchangeable for any capital stock, partnership, membership, joint venture or other ownership or equity interests, or other share capital (whether voting or non-voting, whether preferred, common or otherwise) of such Person or containing any profit participation features with respect to such Person, (c) any rights or options directly or indirectly to subscribe for or to purchase any capital stock, partnership, membership, joint venture or other ownership or equity interests, other share capital of such Person or securities containing any profit participation features with respect to such Person or directly or indirectly to subscribe for or to purchase any securities directly or indirectly convertible into or exchangeable for any capital stock, partnership, membership, joint venture or other ownership interests, other share capital of such Person or securities containing any profit participation features with respect to such Person, (d) any share, unit or Ownership Interest appreciation rights, phantom share rights, contingent interest or other similar rights relating to such Person, or (e) any Equity Securities of such Person issued or issuable with respect to the securities referred to in clauses (a) through (d) above in connection with a combination of shares, units or Ownership Interests or recapitalization, exchange, merger, consolidation or other reorganization.

 

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Estimated Tax Periods” means the periods from January 1 to March 31, from April 1 to May 31, from June 1 to August 31, and from September 1 to December 31, which may be adjusted by the Managing Member to the extent necessary to take into account changes in estimated tax payment due dates for U.S. federal income taxes under applicable law.

 

Exchanged Incentive Equity Units” has the meaning set forth in Section 11.3.

 

Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, and any applicable rules and regulations promulgated thereunder, and any successor to such statute, rules or regulations.

 

Exchange Election Notice” has the meaning set forth in Section 11.4.2.

 

Excluded Instruments” has the meaning set forth in Section 4.9.

 

Existing Company Common Unit Conversion Ratio” has the meaning set forth in Section 4.2.3.2.

 

Existing Company Common Units” means Common Units as defined in Previous Agreement.

 

Existing Company Founder Units” means Common Units as defined in the Previous Agreement.

 

Existing Company Pre-Transaction Recapitalization” means the automatic conversion of all Existing Company Series A Preferred Units and Existing Company Founder Units into Existing Company Common Units prior to the Effective Time pursuant to Section 2.10(p) of the Previous Agreement, including the issuance of Additional Common Units (as defined in the Previous Agreement) pursuant to Sections 2.10(p)(i)(E) and 2.11(c) of the Previous Agreement.

 

Existing Company Incentive Units” means the Incentive Units issued pursuant to the Previous Agreement.

 

Existing Company Preferred Units” means, collectively, the Existing Company Series A Preferred Units and the Existing Company Series B Preferred Units.

 

Existing Company Series A Preferred Units” means all Series A Preferred Units (as defined in the Prior Agreement) outstanding immediately prior to the Existing Company Pre-Transaction Recapitalization.

 

Existing Company Series B Preferred Units” means those Series B Preferred Units (as defined in the Prior Agreement) outstanding immediately prior to the Existing Company Pre-Transaction Recapitalization.

 

Fair Market Value” means, with respect to any asset, Unit or other security, as of the date of determination, the cash price (as determined in the reasonable discretion of the Managing Member) at which a willing seller would sell, and a willing buyer would buy, each being apprised of all relevant facts and neither acting under compulsion, such asset or security in an arm’s‑length negotiated transaction with an unaffiliated third party without time constraints.

 

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Final Tax Statements” has the meaning set forth in Section 8.4.2.3.

 

Fiscal Year” means (i) any twelve (12)-month period commencing on January 1 and ending on December 31 or (ii) any portion of the period described in clause (i) of this sentence for which the Company is required to allocate Profits, Losses and other items of Company income, gain, loss or deduction pursuant to Article 4, subject to, in either case for tax matters, Section 706 of the Code.

 

GAAP” means U.S. generally accepted accounting principles, in effect as of the date of determination thereof.

 

Governmental Entity means any nation or government, any state, province or other political subdivision thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including any court, arbitrator (public or private) or other body or administrative, regulatory or quasi-judicial authority, agency, department, board, commission or instrumentality of any federal, state, local or non-U.S. jurisdiction.

 

Incentive Equity Exchange” has the meaning set forth in Section 11.3.

 

Incentive Equity Exchange Date” has the meaning set forth in Section 11.3.

 

Incentive Equity Exchange Notice” has the meaning set forth in Section 11.3.

 

Incentive Equity Exchange Right” has the meaning set forth in Section 11.3.

 

Incentive Equity Exchanging Member” has the meaning set forth in Section 11.3.

 

Incentive Equity Unit” means a unit of Ownership Interest designated as an Incentive Equity Unit which entitles the holder thereof to the distributions, allocations, and other rights that are accorded holders of Incentive Equity Units under this Agreement.

 

Incentive Equity Unit Adjustment Amount” means, with respect to an Incentive Equity Unit, (a) the number of Existing Company Common Units deemed to have been issued with respect to such Incentive Equity Unit pursuant to Section 2.12(c)(ii) of the Previous Agreement upon a hypothetical conversion of all vested and unvested Existing Company Incentive Units into Common Units concurrently with the Existing Company Pre-Transaction Recapitalization to the holder of the Original Existing Company Incentive Units (or fraction thereof) which converted into such Incentive Equity Unit multiplied by (b) the Existing Company Common Unit Conversion Ratio.

 

Incentive Equity Unit Grant Agreement” shall mean the Incentive Unit Grant Agreement or other agreement pursuant to which Existing Company Incentive Units or Incentive Equity Units were originally granted.

 

Lender” has the meaning set forth in Section 10.4.2.

 

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Lock-Up Agreement” means the Lock-Up Agreement, dated the Effective Date, by and among the Members party thereto.

 

Managing Member” has the meaning set forth in the preamble.

 

Managing Member Equity Plan” means any stock incentive or equity purchase plan or other similar equity compensation plan now or hereafter adopted by the Managing Member, including the Sky Harbour Group Corporation 2022 Incentive Award Plan.

 

Member(s)” means the Persons identified as the Members on Exhibit A hereto and such other Persons who may become Members from time to time under the terms of this Agreement. Any reference to a particular Member or holder of an Ownership Interest shall include successors and permitted transferees of such Member.

 

Member Representative” means Tal Keinan.

 

Member Schedule” has the meaning set forth in Section 7.1.1.

 

Minimum Gain” means “partnership minimum gain” determined pursuant to Treasury Regulation Section 1.704-2(d).

 

Optionee” means a Person to whom a Stock Option is granted under any Managing Member Equity Plan and any holder of an Incentive Equity Unit.

 

Original Existing Company Incentive Units” has the meaning set forth in Section 4.2.4.

 

Ownership Interest” means the entire ownership interest of a Member in the Company at any particular time, including the right of such Member to any and all benefits to which a Member may be entitled under this Agreement and the Act, together with the obligations of such Member to comply with all the terms and provisions of this Agreement with which such Member is required to comply.

 

Partnership Representative” has the meaning set forth in Section 8.1.1.

 

Percentage Interest” means, with respect to any Member as of any time, the percentage determined by dividing the number of Units held by the Member as of such time by the total number of Units then outstanding, provided that Incentive Units whose Distribution Threshold has not yet been reached shall not be included in the calculation of Percentage Interest as described in Section 6.1.4.

 

Permitted Holder” means (i) the Stockholder Parties (as defined in the Stockholders’ Agreement) as of the Closing; (ii) any Permitted Transferee (as defined in the Stockholders’ Agreement) that becomes party to the Stockholders’ Agreement; (iii) any Affiliate of any of the foregoing; or (iv) any “group” (within the meaning of Sections 13(d) and 14(d) of the Exchange Act) in which the Persons referred to in the foregoing clauses (i) – (v) beneficially own (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act) in the aggregate, directly or indirectly, a majority of the voting power of the shares of Class A Common Stock and Class B Common Stock beneficially owned by such “group.”

 

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Permitted Transfer” has the meaning set forth in Section 10.2.2.

 

Permitted Transferee” has the meaning set forth in Section 10.2.2.

 

Person” means any individual, corporation, association, partnership (general or limited), joint venture, trust, estate, limited liability company, or other legal entity or organization, and any government or subdivision thereof or any governmental or regulatory agency.

 

Pre-Closing Tax Proceeding” has the meaning set forth in Section 8.1.4.

 

Previous Agreement” has the meaning set forth in the Recitals.

 

Previous Interests” has the meaning set forth in the Recitals.

 

Profits” and “Losses” means, for each Fiscal Year or other applicable period, an amount equal to the Company’s taxable income or loss for such Fiscal Year or other applicable period, determined in accordance with Section 703(a) of the Code (but including in taxable income or loss for this purpose all items of income, gain, loss or deduction required to be stated separately pursuant to Section 703(a)(1) of the Code), with the following adjustments:

 

(i)         any income of the Company exempt from federal income tax and not otherwise taken into account in computing Profits or Losses pursuant to this definition will be added to such taxable income or loss;

 

(ii)         any expenditures of the Company described in Section 705(a)(2)(B) of the Code (or treated as expenditures described in Section 705(a)(2)(B) of the Code pursuant to Treasury Regulation § 1.704-1(b)(2)(iv)(i)) and not otherwise taken into account in computing Profits or Losses pursuant to this definition will be subtracted from such taxable income or loss;

 

(iii)         depreciation, amortization, and gain or loss with respect to any property shall be computed with regard to the Book Value of the property;

 

(iv)         if the Book Value of any Company property is adjusted pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(e) or (f), the amount of such adjustment shall be taken into account as gain or loss from the disposition of such property;

 

(v)         items of income, gain, loss or deduction attributable to the disposition of Company property having a Book Value that differs from its adjusted basis for tax purposes shall be computed by reference to the Book Value of such property;

 

(vi)         to the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Sections 732(d), 734(b) or 743(b) is required, pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis); and

 

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(vii)         such other adjustments shall be made as are reasonably required in the good faith discretion of the Managing Member in order for the allocations under Article 4 to comply with Section 704(b) of the Code and the Treasury Regulations promulgated thereunder.

 

Items of Company income, gain, loss, deduction, and expense that are to be specially allocated under any provision hereof shall be computed in a manner consistent with the computation of “Profits and Losses.”

 

Pubco Offer” has the meaning set forth in Section 10.5.2.

 

Purchase Agreement” has the meaning set forth in the Recitals.

 

Redeemed Units” has the meaning set forth in Section 11.1.1.

 

Redeeming Member” has the meaning set forth in Section 11.1.1.

 

Redemption” has the meaning set forth in Section 11.1.1.

 

Redemption Date” has the meaning set forth in Section 11.1.1.

 

Redemption Notice” has the meaning set forth in Section 11.1.1.

 

Redemption Right” has the meaning set forth in Section 11.1.1.

 

Registration Rights Agreement” means the Registration Rights Agreement, dated the Effective Date, by and among the Managing Member, the Sponsor and the other parties thereto from time to time.

 

Regulatory Allocations” has the meaning set forth in Section 5.2.6.

 

Securities Act” means the U.S. Securities Act of 1933 and the rules promulgated thereunder, each as amended from time to time.

 

Share Settlement” means a number of shares of Class A Common Stock (together with any Corresponding Rights) equal to the number of Redeemed Units.

 

Sponsor” means, collectively, BOC Yellowstone LLC, a Delaware limited liability company and BOC Yellowstone II LLC, a Delaware limited liability company.

 

State” means any state or commonwealth of the United States of America; the District of Columbia; the Commonwealth of Puerto Rico; and any other dependency, possession or territory of the United States of America.

 

Stock Exchange” means The Nasdaq Stock Market LLC.

 

Stock Option” has the meaning set forth in Section 4.12.1.

 

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Stockholders Agreement” means the Stockholders’ Agreement, dated the Effective Date, by and among the Managing Member and the other parties thereto from time to time.

 

Subsidiary” means, for any Person, any other Person of which the initial Person directly or indirectly owns more than fifty percent (50%) of the outstanding voting securities or that is required to be consolidated with the initial Person under GAAP. Unless the context otherwise specifically requires, the term “Subsidiary” shall be a reference to a Subsidiary of the Company.

 

Tax Date” has the meaning set forth in Section 4.12.2.2.

 

Tax Distribution Amount” has the meaning set forth in Section 6.3.

 

Tax Receivable Agreement” means the Tax Receivable Agreement, dated as of the Effective Date, by and among the Company, the Managing Member and the other parties named therein.

 

Tax Withholding/Payment Amounts” has the meaning set forth in Section 6.4.

 

Transfer” means any sale, exchange, transfer, or assignment (including a pledge or other grant of a security interest), whether voluntary or involuntary.

 

Transferee” has the meaning set forth in Section 10.3.

 

Treasury Regulations” means the income tax regulations, including temporary regulations, promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).

 

Units” means, collectively, the Common Units and the Incentive Equity Units.

 

Unreturned Catch-Up Amount” means, with respect to any Catch-Up Unit, as of any date, the amount (if any) by which (i) such Catch-Up Unit’s Catch-Up Amount exceeds (ii) the aggregate amount distributed or deemed distributed with respect to such Catch-Up Unit through such date pursuant to Section 6.1.1 and to its Original Existing Company Incentive Unit pursuant to the Previous Agreement. For purposes of determining the Unreturned Catch-Up Amount, any amounts distributable in respect of an unvested Catch-Up Unit but withheld by the Company until such Catch-Up Unit becomes a vested Catch-Up Unit shall be deemed to have been distributed with respect to such Catch-Up Unit.

 

Warrant Agreements” has the meaning set forth in Section 4.9.

 

Warrants” has the meaning set forth in Section 4.9.

 

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Other terms defined in this Agreement have the meanings so given them.

 

ARTICLE 2

FORMATION OF LIMITED LIABILITY COMPANY

 

2.1    Formation and Tax Classification. The Company has been previously formed as a limited liability company under and pursuant to the Act. Each Member represents and warrants that such Member is duly authorized to join in this Agreement and that the person executing this Agreement on its behalf is duly authorized to do so. The Members intend that the Company will and shall continue to be classified as a partnership for federal, state and local income and franchise tax purposes and each Member and the Company shall file all tax returns and shall otherwise take all tax and financial reporting positions in a manner consistent with such treatment. The Members intend that the Company shall not be a partnership (including, without limitation, a limited partnership) for any other purpose.

 

2.2    Continuation of the Company. The Members hereby continue the Company as a limited liability company under the Act and agree to operate the Company on the terms and subject to the conditions and for the purposes and the term set forth herein. The rights and obligations of the Members shall be as provided in the Act, except as expressly provided herein. As of the Effective Time, any previous agreement for the formation, organization, or governance of the Company (including, but not limited to, the Previous Agreement) is hereby superseded and amended by substituting this Agreement in its entirety. The Managing Member shall, from time to time, execute or cause to be executed all such certificates, instruments and other documents, and do, make, or cause to be done or made all such filings, recordings, publishings and other acts as the Managing Member may deem necessary or appropriate to comply with the requirements of law for the continuation and operation of the Company in all jurisdictions in which the Company shall desire to conduct its business.

 

2.3    Company Name. The name of the Company is “Sky Harbour LLC.” The business of the Company shall be conducted under such name or such other name as shall be designated from time to time by the Managing Member in compliance with the Act.

 

2.4    Term of Company. The term of the Company shall be deemed to have commenced on the date that the Certificate of the Company was initially filed with the Secretary of State of the State of Delaware and shall continue until dissolved or otherwise terminated pursuant to this Agreement or the laws of the State of Delaware.

 

2.5    Purposes. The Company has been formed for the object and purpose of engaging in any lawful act or activity for which a limited liability company may be organized under the Delaware Act.

 

2.6    Limitation of Liability. Except as provided in the Act or as expressly provided in this Agreement, no Member of the Company shall be obligated personally for any debt, obligation, or liability of the Company or of any other Member solely by reason of being a Member of the Company. In no event shall any Member or former Member (i) be obligated to make any capital contribution or payment to or on behalf of the Company except as expressly provided for in this Agreement, (ii) have any liability in its capacity as a Member in excess of such Member’s obligation to make capital contributions or other payments pursuant to Section 4.4 and any other payments expressly provided for in this Agreement or (iii) have any liability to return distributions received by such Member from the Company except as otherwise specifically provided in this Agreement or other related agreements, as expressly agreed to in another writing, or as may be required by applicable law.

 

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2.7    Title to Company Property. Title to Company property may be held in the name of the Company or a nominee of the Company.

 

ARTICLE 3

MANAGEMENT

 

3.1    Management of the Company. The business and affairs of the Company will be managed by and under the direction of the Managing Member. Subject to the terms of this Agreement, including, without limitation, Section 3.6, the Managing Member will have full, exclusive, and complete discretion to manage and control the business and affairs of the Company and, except as expressly otherwise provided in this Agreement as it may be amended from time to time, to make all decisions affecting the business and affairs of the Company and to take all such actions as it deems necessary, appropriate, advisable, incidental, or convenient to accomplish the purposes of the Company as set forth herein. The Managing Member will have the sole power to bind the Company, except and to the extent that such power is expressly delegated by the Managing Member pursuant to Section 3.2. Any reference in this Agreement to a decision, determination, or other action which may be made or taken by the Managing Member shall mean that such decision, determination, or other action may be made or taken in the sole and absolute discretion of the Managing Member (or in the sole and absolute discretion of any Person to whom the Managing Member has expressly delegated the authority or duty to make or take such decision, determination, or other action pursuant to Section 3.2). The Managing Member may not be removed.

 

3.2    Officers. The Managing Member may, from time to time, delegate to one or more Persons (including any other Member, any officer of the Company or of any Member, or any member, partner, shareholder, or Affiliate of any Member) such authority and duties and assign such titles to such Persons as the Managing Member shall determine. Any such delegation pursuant to this Section 3.2 may be revoked at any time by the Managing Member.

 

3.3    No Management by Members. No Member (other than the Managing Member, in its capacity as such) will take part in the day to day management, operation, or control of the business and affairs of the Company. Except and only to the extent expressly provided for in this Agreement and as delegated by the Managing Member, no Member or other Person, other than the Managing Member, will be an agent of the Company or have any right, power or authority to transact any business in the name of the Company or to act for or on behalf of or to bind the Company. Notwithstanding the foregoing, nothing in this Section 3.3 shall limit the rights of any Person under the Purchase Agreement or the Tax Receivable Agreement.

 

3.4    Reliance by Third Parties. Any Person dealing with the Company or the Managing Member may rely upon a certificate signed by the Managing Member as to:

 

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(a)         The identity of any officers of the Managing Member, any officer of the Company, or any Member thereof;

 

(b)         the existence or non-existence of any fact or facts which constitute a condition precedent to acts by the Managing Member or in any other manner germane to the affairs of the Company;

 

(c)         the Persons who are authorized to execute and deliver any agreement, instrument, or document of or on behalf of the Company; or

 

(d)         any act or failure to act by the Company or as to any other matter whatsoever involving the Company or any Member.

 

3.5    Personnel; Expenses; Insurance; Reimbursements; Related Party Transactions.

 

3.5.1    The Company may employ or contract with personnel to carry on the Company’s business. Subject to the terms of any employment, consulting, or other contract to which the Company or any of its Subsidiaries is a party and to any other provision of this Agreement, the Managing Member may employ, dismiss from employment, terminate and determine the compensation of any and all employees, agents, independent contractors, attorneys, accountants, and such other persons as it shall determine to be necessary, advisable, incidental, or convenient. Without limiting the generality of the foregoing, the Company may employ or contract any Person who is a Member or a member, partner, shareholder, or Affiliate of a Member.

 

3.5.2    The Managing Member may cause the Company to purchase, at the Company’s expense, (i) such liability, casualty, property, life, and other insurance as the Managing Member in its discretion deems necessary, advisable, incidental, or convenient to protect the Company’s assets and personnel against loss or claims of any nature, and (ii) any insurance covering the potential liabilities of any contractor for, or agent or employee of, the Company or the Managing Member, and any of the officers, directors and employees of the Managing Member or the Company, and potential liabilities of the Managing Member or any other Person serving at the request of the Managing Member as a director and/or officer of a corporation or official of any other entity in which the Company has an investment; provided, however, the Managing Member shall not be liable to the Company or other Members for its failure to purchase any insurance or its failure to purchase insurance with adequate coverage.

 

3.5.3    The Company may reimburse the Members, officers, and employees of the Company for all out of pocket expenses incurred by such Persons on behalf of the Company in accordance with such reimbursement policies as may be established by the Managing Member, as such policies may be limited by the terms of any applicable employment agreement and any agreement that may be entered into among the Members amending the terms of this Agreement. In addition, the Company shall reimburse and indemnify and hold harmless the Managing Member for the direct and indirect costs of carrying on its business, including without limitation, (i) operating, administrative and other similar costs, (ii) any insurance, legal, tax, accounting and other professional fees and expenses (but, for the avoidance of doubt, excluding any income tax liabilities of the Managing Member (which shall include any withholding tax liabilities with respect to the Managing Member)), (iii) fees and expenses related to any securities offering, investment or acquisition transaction authorized by the Managing Member, (iv) other fees and expenses in connection with the maintenance of the existence of the Managing Member, (v) any other liabilities of the Managing Member to the extent permitted by law, and (vi) any costs or expenses with respect to directors, officers or employees of the Managing Member. The Managing Member’s reasonable determination of which expenses may be reimbursed to a Member or officer of the Company, as applicable, and the amount of such expenses, shall be conclusive and binding on the Members. Such reimbursement shall be treated as an expense of the Company and shall not be deemed to constitute a distributive share of the Profits or a distribution or return of capital to any Member.

 

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3.5.4    The Company may engage in any transaction or contract with any Member or Affiliate of a Member or any employee or officer of such Member or Affiliate of a Member, on such terms and conditions as may be prescribed by the Managing Member in its discretion.

 

3.6    Restrictions on the Managing Members Authority. The Managing Member may not take any action in contravention of an express prohibition or limitation of this Agreement without the Consent of the Members (other than the Managing Member), and may not, without limitation:

 

(a)         Take any action that would make it impossible to carry on the ordinary business of the Company, except as otherwise provided in this Agreement;

 

(b)         perform any act that would subject a Member to personal liability in any jurisdiction or any other liability except as provided herein or under the Act; or

 

(c)         enter into any contract, mortgage, loan or other agreement that expressly prohibits or restricts (i) the Managing Member or the Company from performing its specific obligations under Section 11.1 or Section 11.3 hereof or (ii) a Member from exercising its rights under Section 11.1 or Section 11.3 hereof to effect a Redemption or an Exchange, respectively.

 

ARTICLE 4

MEMBERS, UNITS, CAPITAL CONTRIBUTIONS, CAPITAL ACCOUNTS

 

4.1    Identity of Members. The names and addresses of the Members of the Company as of the Effective Date are set forth on Exhibit A hereto.

 

4.2    Units.

 

4.2.1    As of the Effective Date, each Member’s Ownership Interest in the Company shall be represented by Units, which may be divided into one or more types, classes or series, or subseries of any type, class or series, with each type, class or series, or subseries thereof, having the rights and privileges, as determined by the Managing Member in accordance with this Agreement. The classes of Units as of the Effective Date are as follows: Common Units and Incentive Equity Units. The Members shall have no right to vote on any matter, except as specifically set forth in this Agreement, or as may be required under the Delaware Act. Any such vote shall be at a meeting of the Members entitled to vote or in writing as provided herein.

 

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4.2.2    The Managing Member shall have the right to authorize and cause the Company to issue an unlimited number of Units.

 

4.2.3    Exchange of Existing Company Units and Existing Company Series B Preferred Units at Closing.

 

4.2.3.1    The number of Existing Company Common Units, Existing Company Series A Preferred Units and Existing Company Series B Preferred Units that were issued and outstanding and held by the Members immediately prior to the Effective Time (and prior to the Existing Company Pre-Transaction Recapitalization), and the number of Existing Common Units issued in the Existing Company Pre-Transaction Recapitalization, are as set forth in Exhibit B.

 

4.2.3.2    Each Existing Company Common Unit that was issued and outstanding and held by the Members immediately prior to the Effective Time (assuming completion of the Existing Company Pre-Transaction Recapitalization) (the “Converting Existing Company Common Units”) shall be automatically exchanged, at the Closing, into Common Units pursuant to Section 2.1(a) of the Purchase Agreement. The number of Common Units issued to each holder of Existing Common Units upon the foregoing exchange (the “Converted Common Units”) shall be set forth opposite the such holder’s name on Exhibit B hereto under the heading “Converted Common Units,” and such Common Units are hereby deemed to be issued and outstanding immediately following the Effective Time and the holders of such Common Units are Members hereunder. The “Existing Company Common Unit Conversion Ratio” shall mean (a) the number of Converted Common Units divided by (b) the number of Converting Existing Company Common Units.

 

4.2.3.3    Each Existing Company Series B Preferred Unit that was issued and outstanding and held by the Members immediately prior to the Effective Time (assuming no conversion of Existing Company Series B Preferred Units into Common Units pursuant to Section 2.10(p)(i)(A) of the Previous Agreement) shall be automatically exchanged, at the Closing, into Common Units pursuant to Section 2.1(b)(i) of the Purchase Agreement, and immediately after the Closing such Common Units shall be subject to redemption as provided in Section 2.1(b)(ii) of the Purchase Agreement.

 

4.2.4    The number of Existing Company Incentive Units that were issued and outstanding, and the names of the holders thereof, immediately prior to the Effective Time are as set forth in Exhibit C hereto. Each Existing Company Incentive Unit held by a Member immediately prior to the Effective Time shall be, and hereby is automatically converted, as of the Effective Time, into a number of Incentive Equity Units equal to the Existing Company Common Unit Conversion Ratio, which Incentive Equity Units shall (a) shall have the same Distribution Threshold applicable to the Existing Company Incentive Unit which converted into such Incentive Equity Units (the “Original Existing Company Incentive Unit”) and (b) except as expressly provided herein, shall have the same vesting, forfeiture, repurchase and other terms and provisions applicable to Original Existing Company Incentive Unit as set forth in the original Incentive Equity Units Grant Agreement under which such Original Existing Company Incentive Unit was issued. Exhibit C shall also set forth the number of Equity Incentive Units issued to each Member upon conversion of the Existing Company Incentive Units pursuant to this Section 4.2.4, the Distribution Threshold applicable to such Equity Incentive Units, whether or not such Equity Incentive Units are Catch-Up Units and, if so, the Catch-Up Amount, and the date of the original Incentive Equity Unit Grant Agreement under which such Equity Incentive Units were issued.

 

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4.2.5    Each holder of an Incentive Equity Unit acknowledges and agrees that the information set forth on Exhibit C is confidential and proprietary information of the other holders of Incentive Equity Units and that without the Managing Member’s consent, which may be withheld in the Managing Member’s sole discretion, a holder of an Incentive Equity Units may not be permitted to access such information of other holders of Incentive Equity Units. Each holder of Incentive Equity Units waives, in accordance with Section 18-305 of the Act, all rights to receive or inspect (a) a copy of the Incentive Equity Unit Grant Agreement of any other holder of Incentive Equity Units; (b) Exhibit C, and (c) this Agreement in any form other than as prepared and provided to such holder by the Managing Member, and, for the avoidance of doubt, each such holder waives all rights to see, review or know the terms that have been redacted and any information withheld by the Managing Member pursuant to the preceding two sentences, and waives all rights to receive any version of the Agreement other than such redacted version.

 

4.2.6    Exhibit B hereto also reflects the Common Units and Warrants issued to the Managing Member in connection with the transactions contemplated by the Purchase Agreement.

 

4.2.7    The Common Units and Incentive Equity Units shall have such economic rights and interests and legal rights and obligations as are set forth in this Agreement.

 

4.2.8    All holders of Common Units and all holders of Incentive Equity Units shall be entitled to the allocations of Profit and Loss (and items of income, gain, loss, and deduction) provided by Article 5 and the distributions described in Article 6.

 

4.2.9    The Managing Member may cause the Company to authorize and issue from time to time such other Units or other Equity Securities of any type, class or series, in each case, having the designations, preferences and/or special rights as may be determined by the Managing Member. Such Units or other Equity Securities may be issued pursuant to such agreements as the Managing Member shall approve in its sole discretion. When any such other Units or other Equity Securities are authorized and issued, the Member Schedule and this Agreement shall be amended by the Managing Member to reflect such additional issuances and the resulting dilution, which shall be borne pro rata by all Members based on their Common Units and Incentive Equity Units.

 

4.2.10    Except as otherwise determined by the Managing Member, the Company shall not in any manner effect any subdivision (by any stock or Unit split, stock or Unit dividend or distribution, reclassification, reorganization, recapitalization or otherwise) or combination (by reverse stock or Unit split, reclassification, reorganization, recapitalization or otherwise) of the outstanding Common Units or Incentive Equity Units unless accompanied by a substantively identical subdivision or combination, as applicable, of the outstanding Equity Securities of the Managing Member, with corresponding changes made with respect to any other exchangeable or convertible securities, to maintain at all times a one-to-one ratio between the number of Common Units owned by the Managing Member and the number of outstanding shares of Class A Common Stock. For each Common Unit issued to a Member other than the Managing Member, the Managing Member shall issue to such Member one share of Class B Common Stock.

 

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4.2.11    Unless the Managing Member otherwise consents, Units will not be represented by certificates. Notwithstanding the foregoing sentence, the Managing Member will provide Members with Units represented by certificates to facilitate pledges pursuant to Section 10.4 or Transfers otherwise permitted by Article 10 of this Agreement and the Stockholders’ Agreement.

 

4.3    Capital Contributions. No Member will be required to make any Capital Contributions to the Company or to lend any funds to the Company unless all the Members agree. No Member will have any personal liability for the payment or repayment of any Capital Contribution of any other Member or its predecessor.

 

4.4    Accounts.

 

4.4.1    A Capital Account shall be established and maintained for each Member in accordance with Treasury Regulation Section 1.704-1(b)(2)(iv) and, to the extent consistent with said Treasury Regulations, in accordance with Section 4.4.2, Section 4.4.3, Section 4.4.4, and Section 4.4.5 for items accounted for from and after the date of this Agreement.

 

4.4.2    The Capital Account of each Member shall be credited with: (i) the amount of any Capital Contribution made in cash by such Member; (ii) the fair market value (net of any liabilities the Company is considered to assume or take subject to under Section 752 of the Code) of any Capital Contribution made in property other than cash by such Member (as determined in good faith by the Managing Member); (iii) allocations to such Member of Profits pursuant to Article 5; and (iv) any other item required to be credited for proper maintenance of capital accounts by the Treasury Regulations under Section 704(b) of the Code.

 

4.4.3    A Member’s Capital Account shall be debited with: (i) the amount of any cash distributed to such Member; (ii) the fair market value (net of liabilities that such Member is considered to assume or take subject to under Section 752 of the Code) of any property other than cash distributed to such Member (as determined in good faith by the Managing Member); (iii) allocations to such Member of Losses pursuant to Article 5; and (iv) any other item required to be debited for proper maintenance of capital accounts by the Treasury Regulations under Section 704(b) of the Code.

 

4.4.4    The Company may (in the discretion of the Managing Member), upon the occurrence of the events specified in Treasury Regulation Section 1.704-1(b)(2)(iv)(f) or as otherwise provided in the Treasury Regulations, increase or decrease the Capital Accounts of the Members in accordance with the rules of such Treasury Regulation and Treasury Regulation Section 1.704-1(b)(2)(iv)(g) to reflect a revaluation of Company property. The fair market value of Company property used to determine such increases or decreases shall be determined in good faith by the Managing Member.

 

4.4.5    Following the date hereof, upon any permitted Transfer by a Member of an Ownership Interest in accordance with the terms of this Agreement, so much of the Capital Account of the Transferring Member as is attributable to the Ownership Interest Transferred shall be Transferred to the Capital Account of the Transferee Member.

 

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4.5    Additional Ownership Interests.

 

4.5.1    The Managing Member shall have the right to cause the Company to create and/or issue Equity Securities of the Company (including other classes, groups or series thereof having such relative rights, powers, and/or obligations as may from time to time be established by the Managing Member, including rights, powers, and/or obligations different from, senior to or more favorable than existing classes, groups and series of Equity Securities of the Company), in which event the Managing Member shall have the power to amend this Agreement to reflect such additional issuances and to make any such other amendments as the Managing Member reasonably and in good faith deems necessary to reflect such additional issuances (including amending this Agreement to increase the authorized number of Equity Securities of any class, group or series, to create and authorize a new class, group or series of Equity Securities and to add the terms of such new class, group or series of Equity Securities including economic and governance rights which may be different from, senior to or more favorable than the other existing Equity Securities), in each case without the Consent of any Member. In connection with any issuance of Equity Securities of the Company pursuant to this Section 4.5.1, each Person who acquires such Equity Securities shall execute a counterpart to this Agreement, accepting and agreeing to be bound by all terms and conditions hereof. Each Person who acquires Equity Securities of the Company may be required in exchange for such Equity Securities to make a Capital Contribution to the Company in an amount to be determined by the Managing Member.

 

4.5.2    The Company may issue preferred Ownership Interests, which may have such designations, preferences, and relative, optional or other special rights as shall be fixed by the Managing Member and, notwithstanding any provision to the contrary contained herein, the Managing Member may, without the Consent of any Member, make such amendments to this Agreement as are necessary or appropriate to effect the terms and conditions of any such issuance.

 

4.5.3    Each Person who subscribes for an additional Ownership Interest and satisfies the conditions established by the Managing Member shall be admitted to the Company as a Member in respect of said Ownership Interest, effective upon the execution by such Person of a counterpart of this Agreement, without the Consent of the Members.

 

4.5.4    In the event that following the Effective Time the Company issues new Ownership Interests that are pari passu with or junior to Common Units with respect to distributions, the Distribution Threshold of the outstanding Incentive Units shall be adjusted upward in an amount equal to the Capital Contributions made to the Company in respect of such new Ownership Interests, if any.

 

4.6    Advances. If any Member advances any funds to the Company, the amount of such advance will neither increase its Capital Account nor entitle it to any increase in its share of the distributions of the Company. The amount of any such advance will be a debt obligation of the Company to such Member (which may be evidenced by a promissory note) and, unless otherwise specifically provided in this Agreement, will be repaid to it by the Company with interest at a rate equal to (a) an annual floating rate equal to the average bank prime lending rate as published in the Wall Street Journal from time to time or (b) such higher rate as may be approved by all the Members, and upon such other terms and subject to such other conditions as may be determined by the Managing Member. Unless otherwise specifically provided in this Agreement, any such advance will be payable and collectible only out of Membership assets, and the other Members will not be personally obligated to repay any part thereof. No Person who makes any such loan to the Company will have or acquire, as a result of making such loan, any direct or indirect interest in the profits, capital or property of the Company, other than as a creditor.

 

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4.7    No Resignation or Withdrawal; No Interest. Except as approved by the Managing Member in its sole discretion or as expressly provided herein, a Member (i) may not resign, withdraw, or dissociate from the Company prior to the dissolution and winding up of the Company in accordance with the provisions of Article 12 or in connection with a Transfer of all of such Member’s Ownership Interests, (ii) may not receive the return of, or interest on, its Capital Contribution, Capital Account, or other amount, and (iii) shall not have the right to petition or to take any action to subject Membership assets or any part thereof to the authority of any court or other governmental body in connection with any bankruptcy, insolvency, receivership or similar proceeding.

 

4.8    Nature of Ownership Interest; No Partition. An Ownership Interest shall for all purposes be personal property. A Member has no interest in specific Membership property. Each Member waives any and all rights that it may have to maintain an action for partition of the Company’s property.

 

4.9    Warrants. On the Effective Date, in connection with the transactions contemplated by the Purchase Agreement, the Company has issued warrants to purchase Common Units (the “Warrants”) to the Managing Member as set forth on Exhibit B hereto pursuant to warrant agreements (the “Warrant Agreements”) entered into between the Company and the Managing Member as of the Effective Date. Upon the valid exercise of a Warrant in accordance with the applicable Warrant Agreement, the Company shall issue to the Managing Member the number of Common Units, free and clear of all liens and encumbrances other than those arising under applicable securities laws and this Agreement, to be issued in connection with such exercise. Excluding warrants, options or similar instruments governed by Section 4.12 (the “Excluded Instruments”), which shall be governed by such section, in the event any holder of a warrant (other than an Excluded Instrument) to purchase shares of Class A Common Stock (the “Upstairs Warrants”) exercises an Upstairs Warrant, then the Managing Member agrees that it shall cause a corresponding exercise (including by effecting such exercise in the same manner, i.e., by payment of a cash exercise price or on a cashless basis) of a Warrant with similar terms held by it, such that the number of shares of Class A Common Stock issued in connection with the exercise of such Upstairs Warrant shall match with a corresponding number of Common Units issued by the Company pursuant to the Warrant Agreements, the Managing Member agrees that it will not exercise any Warrants other than in connection with the corresponding exercise of an Upstairs Warrant. In the event an Upstairs Warrant is redeemed, the Company will redeem a Warrant with similar terms held by the Managing Member.

 

4.10    Authorization and Issuance of Additional Common Units.

 

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4.10.1    The Company shall undertake all actions, including, without limitation, an issuance, reclassification, distribution, division, combination or recapitalization, with respect to the Common Units, to maintain at all times a one-to-one ratio between the number of Common Units owned by the Managing Member, directly or indirectly, and the number of outstanding shares of Class A Common Stock, disregarding, for purposes of maintaining the one-to-one ratio, (i) unvested shares of Class A Common Stock, (ii) treasury stock or (iii) preferred stock or other debt or equity securities (including without limitation warrants, options or rights) issued by the Managing Member that are convertible into or exercisable or exchangeable for Class A Common Stock (except to the extent the net proceeds from such other securities, including any exercise or purchase price payable upon conversion, exercise or exchange thereof, has been contributed by the Managing Member to the equity capital of the Company). In the event the Managing Member issues, transfers or delivers from treasury stock or repurchases Class A Common Stock in a transaction not contemplated in this Agreement, the Managing Member shall take all actions such that, after giving effect to all such issuances, transfers, deliveries or repurchases, the number of outstanding Common Units owned by the Managing Member will equal on a one-for-one basis the number of outstanding shares of Class A Common Stock. In the event the Managing Member issues, transfers or delivers from treasury stock or repurchases or redeems the Managing Member’s preferred stock in a transaction not contemplated in this Agreement, the Managing Member shall have the authority to take all actions such that, after giving effect to all such issuances, transfers, deliveries, repurchases or redemptions, the Managing Member holds (in the case of any issuance, transfer or delivery) or ceases to hold (in the case of any repurchase or redemption) equity interests in the Company which (in the good faith determination of the Managing Member) are in the aggregate substantially equivalent to the outstanding preferred stock of the Managing Member so issued, transferred, delivered, repurchased or redeemed. Except as specifically contemplated by this Agreement, to maintain at all times a one-to-one ratio between the number of Common Units owned by the Managing Member and the number of outstanding shares of Class A Common Stock, the Company shall not undertake any subdivision (by any Common Unit split, Common Unit distribution, reclassification, recapitalization or similar event) or combination (by reverse Common Unit split, reclassification, recapitalization or similar event) of the Common Units that is not accompanied by an identical subdivision or combination of Class A Common Stock, unless such action is necessary to maintain at all times a one-to-one ratio between the number of Common Units owned directly or indirectly by the Managing Member and the number of outstanding shares of Class A Common Stock as contemplated by the first sentence of Section 4.4.1. In addition, the Company and the Members shall undertake all actions that the Managing Member in its reasonable discretion determines are necessary, including, without limitation, an issuance, reclassification, distribution, division, combination or recapitalization, with respect to the Common Units, to maintain at all times a one-to-one ratio between the number of Common Units owned by any Member (other than the Managing Member), directly or indirectly, and the number of outstanding shares of Class B Common Stock owned by such Member.

 

4.10.2    The Company shall only be permitted to issue additional Common Units, and/or establish other classes of Ownership Interests to the Persons and on the terms and conditions provided for in Section 4.5, this Section 4.10 or Section 4.12.

 

4.11    Repurchase or Redemption of Shares of Class A Common Stock. If, at any time, any shares of Class A Common Stock are repurchased or redeemed (whether by exercise of a put or call, automatically or by means of another arrangement) by the Managing Member for cash, then the Managing Member shall cause the Company, immediately prior to such repurchase or redemption of Class A Common Stock, to redeem a corresponding number of Common Units held by the Managing Member, at an aggregate redemption price equal to the aggregate purchase or redemption price of the shares of Class A Common Stock being repurchased or redeemed by the Managing Member (plus any expenses related thereto) and upon such other terms as are the same for the shares of Class A Common Stock being repurchased or redeemed by the Managing Member. Notwithstanding the foregoing, the provisions of this Section 4.11 shall not apply in the event that such repurchase of shares of Class A Common Stock is paired with a stock split or stock dividend such that after giving effect to such repurchase and subsequent stock split or stock dividend there shall be outstanding an equal number of shares of Class A Common Stock as were outstanding prior to such repurchase and subsequent stock split or stock dividend. Notwithstanding any provision to the contrary contained in this Agreement, the Company shall not make any repurchase or redemption if such repurchase or redemption would violate any applicable law.

 

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4.12    Managing Member Equity Awards.

 

4.12.1    Options Granted to Service Providers. If at any time or from time to time, an option to purchase shares of Class A Common Stock that was granted under any Managing Member Equity Plan to an employee or other service provider of the Company or its Subsidiaries (or any stock appreciation right or similar award, collectively, a “Stock Option”) is duly exercised:

 

4.12.1.1    For each share of Class A Common Stock with respect to which the Stock Option is exercised, the Managing Member shall be considered to have sold to the Optionee, and the Optionee shall be considered to have purchased from the Managing Member, for a cash price per share equal to the value of a share of Class A Common Stock at the time of the exercise, a number of shares of Class A Common Stock equal to the quotient of (x) the per share exercise price of such Stock Option divided by (y) the value of a share of Class A Common Stock at the time of such exercise (provided, that if such Stock Option is exercised on a cashless basis, no such shares of Class A Common Stock shall be considered to have been purchased by the Optionee pursuant to this Section 4.12.1.1).

 

4.12.1.2    The Managing Member shall be considered to have sold to the Company (or if the Optionee is an employee of, or other service provider to, a Subsidiary of the Company, the Managing Member shall be considered to have sold to such Subsidiary), and the Company (or such Subsidiary, as applicable) shall be considered to have purchased from the Managing Member, a number of shares of Class A Common Stock equal to the excess of (x) the number of shares of Class A Common Stock as to which such Stock Option is being exercised over (y) the number of shares of Class A Common Stock sold to the Optionee pursuant to Section 4.12.1.1 hereof (provided, that if such Stock Option is exercised on a cashless basis, the Managing Member shall be considered to have sold to the Company (or an applicable Subsidiary of the Company) the number of shares of Class A Common Stock into which such Stock Option is settled on a cashless basis). The purchase price per share of Class A Common Stock for such sale of shares of Class A Common Stock to the Company (or such Subsidiary) shall be the fair market value of a share of Class A Common Stock as of the date of exercise of such Stock Option (as determined in good faith by the Managing Member).

 

4.12.1.3    The Company shall be considered to have transferred to the Optionee (or if the Optionee is an employee of, or other service provider to, a Company Subsidiary, the Subsidiary shall transfer to the Optionee) at no additional cost to such Optionee and as additional compensation to such Optionee, the number of shares of Class A Common Stock described in Section 4.12.1.1.

 

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4.12.1.4    The Managing Member shall be considered to have made a Capital Contribution to the Company in an amount equal to all proceeds considered to have been received by the Managing Member pursuant to Section 4.12.1.1 and Section 4.12.1.2 in connection with the exercise of such Stock Option. The Managing Member shall receive for such Capital Contribution, a number of Common Units equal to the number of shares of Class A Common Stock for which such Stock Option was exercised (or, if such Stock Option is exercised on a cashless basis, the number of shares of Class A Common Stock into which such Stock Option is settled on a cashless basis).

 

4.12.2    Restricted Stock Granted to Service Providers. If at any time or from time to time, in connection with any Managing Member Equity Plan, any shares of Class A Common Stock are issued to an employee of the Company or its Subsidiaries (including (i) any shares of Class A Common Stock that are subject to forfeiture in the event such employee terminates his or her employment with the Company or any Subsidiary, and (ii) any shares of Class A Common Stock issued in settlement of restricted stock units or any other non-Stock Option award under a Managing Member Equity Plan) in consideration for services performed for the Company or any Subsidiary:

 

4.12.2.1    the Managing Member shall issue such number of shares of Class A Common Stock as are to be issued to such employee in accordance with the applicable Managing Member Equity Plan;

 

4.12.2.2    on the date (such date, the “Tax Date”) that the value of such shares is includible in taxable income of such employee, the following events will be deemed to have occurred: (A) the Managing Member shall be deemed to have sold such shares of Class A Common Stock to the Company (or if such employee is an employee of, or other service provider to, a Subsidiary, to such Subsidiary) for a purchase price equal to the value of such shares of Class A Common Stock on the Tax Date, (B) the Company (or such Subsidiary) shall be deemed to have delivered such shares of Class A Common Stock to such employee, (C) the Managing Member shall be deemed to have contributed the purchase price described in clause (A) for such shares of Class A Common Stock to the as a Capital Contribution and (D) in the case where such employee is an employee of a Subsidiary, the Company shall be deemed to have contributed such amount to the capital of the Subsidiary; and

 

4.12.2.3    the Company shall issue to the Managing Member on the Tax Date a number of Common Units equal to the number of shares of Class A Common Stock issued under Section 4.12.2.1 in consideration for a Capital Contribution that the Managing Member is deemed to make to the Company pursuant to clause (C) of Section 4.12.2.2 above.

 

4.12.3    Future Managing Member Equity Plans. Nothing in this Agreement shall be construed or applied to preclude or restrain the Managing Member from adopting, modifying or terminating stock incentive plans for the benefit of employees, directors or other business associates of the Managing Member, the Company or any of their respective Affiliates. The Members acknowledge and agree that, in the event that any such plan is adopted, modified or terminated by the Managing Member, the Managing Member and the Company and their Affiliates shall be entitled to administer such plans in a manner consistent with the provisions of this Section 4.12, and that the Managing Member and the Company may make any amendments that are necessary or advisable to this Section 4.12 to accommodate such administration, without the requirement of any further Consent or acknowledgement of any other Member.

 

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4.13    Forfeiture of Incentive Equity Units. Notwithstanding anything to the contrary set forth herein, Incentive Equity Units may be subject to vesting, forfeiture and/or repurchase as set forth in any applicable Incentive Equity Unit Grant Agreement. Except as otherwise set forth in any applicable Incentive Equity Unit Grant Agreement, in the event that the employment or service of a holder of Incentive Equity Units terminates, all unvested Equity Incentive Units held by such holder (after giving effect to any vesting arising from such termination of employment or service pursuant to such Incentive Equity Grant Agreement) shall cease vesting and shall be automatically forfeited to the Company and deemed canceled without any payment or other consideration payable to such holder.

 

ARTICLE 5

ALLOCATIONS

 

5.1    Allocations of Profits and Losses.

 

5.1.1    Except as otherwise provided herein, each item of income, gain, loss or deduction of the Company (determined in accordance with U.S. tax principles as applied to the maintenance of capital accounts) shall be allocated among the Capital Accounts of the Members as of the end of each Fiscal Year or as circumstances otherwise require or allow, in a manner that as closely as possible causes each Member’s Capital Account balance to equal the amount that would be distributed to such Member if the Company sold all of its assets for their Book Values, repaid all of its liabilities and distributed the balance pursuant to Article 12.

 

5.1.2    If during any Fiscal Year there is a change in any Member’s Ownership Interest as a result of the admission of one or more Members, the withdrawal of a Member, or a Transfer of an Ownership Interest, the Profits, Losses, or any other item allocable to the Members under this Agreement for the Fiscal Year shall, subject to the terms of the Purchase Agreement (and for the avoidance of doubt, to the extent there is a conflict between this Section 5.1.2 and Section 7.11(a) of the Purchase Agreement, Section 7.11(a) of the Purchase Agreement shall control), be allocated among the Members so as to reflect their varying interests in the Company during the Fiscal Year, using any permissible method convention or extraordinary item under Section 706 of the Code and the Treasury Regulations promulgated thereunder, as reasonably selected by the Managing Member in consultation with the Members. In furtherance of the foregoing, any such permissible method, convention or extraordinary item selected by the Managing Member shall be set forth in a dated, written statement maintained with the Company’s books and records. The Members hereby agree that any such selection by the Managing Member is made by “agreement of the partners” within the meaning of Treasury Regulation Section 1.706‑4(f).

 

5.2    Regulatory Allocations.

 

5.2.1    Losses attributable to partner nonrecourse debt (as defined in Treasury Regulation Section 1.704-2(b)(4)) shall be allocated in the manner required by Treasury Regulation Section 1.704-2(i). If there is a net decrease during a Fiscal Year in partner nonrecourse debt minimum gain (as defined in Treasury Regulation Section 1.704-2(i)(3)), Profits for such Fiscal Year (and, if necessary, for subsequent Fiscal Years) shall be allocated to the Members in the amounts and of such character as determined according to Treasury Regulation Section 1.704‐2(i)(4).

 

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5.2.2    Nonrecourse deductions (as determined according to Treasury Regulation Section 1.704-2(b)(1)) for any Fiscal Year shall be allocated pro rata among the Members in accordance with their Percentage Interests. Except as otherwise provided in Section 5.2.1, if there is a net decrease in the Minimum Gain during any Fiscal Year, each Member shall be allocated Profits for such Fiscal Year (and, if necessary, for subsequent Fiscal Years) in the amounts and of such character as determined according to Treasury Regulation Section 1.704-2(f). This Section 5.2.2 is intended to be a minimum gain chargeback provision that complies with the requirements of Treasury Regulation Section 1.704-2(f), and shall be interpreted in a manner consistent therewith.

 

5.2.3    If any Member that unexpectedly receives an adjustment, allocation or distribution described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6) has an Adjusted Capital Account Deficit as of the end of any Fiscal Year, computed after the application of Sections 5.2.1 and 5.2.2 but before the application of any other provision of this Article 5, then Profits for such Fiscal Year shall be allocated to such Member in proportion to, and to the extent of, such Adjusted Capital Account Deficit. This Section 5.2.3 is intended to be a qualified income offset provision as described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted in a manner consistent therewith.

 

5.2.4    If the allocation of Losses to a Member as provided in Section 5.1 would create or increase an Adjusted Capital Account Deficit, there shall be allocated to such Member only that amount of Losses as will not create or increase an Adjusted Capital Account Deficit. The Losses that would, absent the application of the preceding sentence, otherwise be allocated to such Member shall be allocated to the other Members in accordance with their relative Percentage Interests, subject to this Section 5.2.4.

 

5.2.5    Profits and Losses described in clause (vi) of the definition of “Profits” and “Loss” shall be allocated in a manner consistent with the manner that the adjustments to the Capital Accounts are required to be made pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(j), (k) and (m).

 

5.2.6    The allocations set forth in Section 5.2.1 through and including Section 5.2.5 (the “Regulatory Allocations”) are intended to comply with certain requirements of Sections 1.704-1(b) and 1.704-2 of the Treasury Regulations. The Regulatory Allocations may not be consistent with the manner in which the Members intend to allocate Profit and Loss of the Company or make distributions. Accordingly, notwithstanding the other provisions of this Article 5, but subject to the Regulatory Allocations, income, gain, deduction and loss shall be reallocated among the Members so as to eliminate the effect of the Regulatory Allocations and thereby cause the respective Capital Accounts of the Members to be in the amounts (or as close thereto as possible) they would have been if Profit and Loss (and such other items of income, gain, deduction and loss) had been allocated without reference to the Regulatory Allocations. In general, the Members anticipate that this will be accomplished by specially allocating other Profit and Loss (and such other items of income, gain, deduction and loss) among the Members so that the net amount of the Regulatory Allocations and such special allocations to each such Member is zero.

 

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5.2.7    Allocations and other adjustments with respect to any “non-compensatory options” (as defined in Treasury Regulation Section 1.721-2(f)), shall be made in accordance with the Treasury Regulations including Treasury Regulations Section 1.721-2.

 

5.3    Tax Allocations.

 

5.3.1    The income, gains, losses, deductions and credits of the Company will be allocated, for federal, state and local income tax purposes, among the Members in accordance with the allocation of such income, gains, losses, deductions and credits among the Members for computing their Capital Accounts; provided that if any such allocation is not permitted by the Code or other applicable law, the Company’s subsequent income, gains, losses, deductions and credits will be allocated among the Members so as to reflect as nearly as possible the allocation set forth herein in computing their Capital Accounts.

 

5.3.2    Items of Company taxable income, gain, loss and deduction with respect to any property contributed to the capital of the Company shall be allocated among the Members in accordance with Section 704(c) of the Code so as to take account of any variation between the adjusted basis of such property to the Company for federal income tax purposes and its Book Value using any proper method reasonably selected by the Managing Member.

 

5.3.3    If the Book Value of any Company asset is adjusted pursuant to Section 4.4.4, subsequent allocations of items of taxable income, gain, loss and deduction with respect to such asset shall take account of any variation between the adjusted basis of such asset for federal income tax purposes and its Book Value using any proper method reasonably selected by the Managing Member.

 

5.3.4    Allocations of tax credits, tax credit recapture, and any items related thereto shall be allocated to the Members as reasonably determined by the Managing Member taking into account the principles of Treasury Regulation Section 1.704-1(b)(4)(ii).

 

5.3.5    For purposes of determining a Member’s share of the Company’s “excess nonrecourse liabilities” within the meaning of Treasury Regulation Section 1.752-3(a)(3), each Member’s interest in income and gain shall be determined pursuant to any proper method, as reasonably determined by the Managing Member.

 

5.3.6    Allocations pursuant to this Section 5.3 are solely for purposes of federal, state and local taxes and shall not affect, or in any way be taken into account in computing, any Member’s Capital Account or share of Profits, Losses distributions or other items.

 

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ARTICLE 6

DISTRIBUTIONS

 

6.1    Distributions. Distributions shall be made to the Members, as and when determined by the Managing Member in its sole discretion. Each distribution shall be paid as follows:

 

6.1.1    first, and subject to the provisions of Section 6.1.4, (a) 5.8% to the holders of Catch-Up Units pro rata pro rata in accordance with their respective Unreturned Catch-Up Amount relating thereto and (b) the remainder of such distribution pro rata to the Members in accordance with their respective Percentage Interests until payment in full of the Unreturned Catch-Up Amount on the Catch-Up Units (provided that in no event shall any amounts be distributed pursuant to Section 6.1.1(a) with respect to a Catch-Up Unit in excess of the aggregate Unreturned Catch-Up Amount with respect to such Catch-Up Unit); and

 

6.1.2    subject to Section 6.1.4, the remainder pro rata to the Members in accordance with their respective Percentage Interests.

 

6.1.3    Except (a) for pro rata distributions to the Members in accordance with this Section 6.1 and Section 6.2, (b) for distributions in accordance with Section 6.3 or (c) as authorized by written Consent of each Member, the Company shall not make any distributions (in cash or in kind) or dividend payments to any Member.

 

6.1.4    Notwithstanding any provision in this Agreement to the contrary, no Incentive Equity Unit (including any Catch-Up Unit) shall be included in the calculation of Percentage Interest, participate in (and no Incentive Equity Unit shall be treated as outstanding for purposes of apportioning) any distributions under this Section 6.1 (other than Tax Distributions under Section 6.3 that are treated as advances on distributions made pursuant to Section 6.1) until a total amount equal to the Distribution Threshold with respect to such Incentive Equity Unit has been distributed in respect of all other outstanding Units (including distributions made in respect of Original Existing Company Incentive Units pursuant to the Previous Agreement) subsequent to the issuance of such Incentive Equity Unit (or, if such Incentive Equity Unit was issued upon conversion of an Original Incentive Equity Unit, subsequent to the issuance of such Incentive Equity Unit). For the avoidance of doubt, if a Catch-Up Unit is not deemed to be outstanding pursuant to this Section 6.1.4, there shall be no requirement that any distributions be made on such Catch-Up Unit pursuant to Section 6.1.1 before distributions may be made pursuant to Section 6.1.2. The Managing Member shall make any determinations required under this Section 6.1.4.

 

6.2    Distributions In-Kind. To the extent that the Company makes pro rata distributions of property in-kind to the Members, the Company shall be treated as making a distribution equal to the fair market value of such property for purposes of Section 6.1 and such property shall be treated as if it were sold for an amount equal to its fair market value. Any resulting gain or loss shall be allocated to the Members’ Capital Accounts in accordance with Article 5. The fair market value of such property shall be determined in good faith by the Managing Member.

 

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6.3    Tax Distributions. The Managing Member shall cause the Company to make distributions to each Member (“Tax Distributions”), pro rata in proportion to each Member’s respective Percentage Interests in an amount such that the Member with the highest Tax Distribution Amount per Common Unit receives an amount equal to such Member’s Tax Distribution Amount, on a quarterly basis at least five (5) days prior to the date on which any estimated tax payments are due, in order to permit each Member to timely pay its estimated tax obligations for each such Estimated Tax Period (or portion thereof) (and solely in the case of Sky Harbour Group Corporation, to satisfy its obligations under the Tax Receivable Agreement). The “Tax Distribution Amount” for a Member for an Estimated Tax Period (or portion thereof) shall be equal to (i) the product of (A) the highest marginal combined federal, state, and local income tax rate applicable to an individual or corporation resident in New York, New York, whichever is higher, (after giving effect to income tax deductions (if allowable) for state and local income taxes and excluding, for this purpose, any reduction in rate attributable to Section 199A of the Code) for such Estimated Tax Period (or portion thereof) (the “Assumed Tax Rate”), and (B) the aggregate amount of taxable income or gain of the Company that is allocated or is estimated to be allocated to such Member for U.S. federal income tax purposes for such Estimated Tax Period (or portion thereof) and all prior Estimated Tax Periods (to the extent no Tax Distribution has previously been made with respect to any amounts of taxable income or gain including to the extent such amounts of taxable income or gain were not taken into account in calculating the Tax Distribution Amount for which a Tax Distribution was previously made (e.g. if upon filing the Company’s final tax return for the applicable taxable year taxable income or gain of the Company is higher than estimated)) reduced, but not below zero, by any tax deduction, loss, or credit previously allocated to such Member and not previously taken into account for purposes of the calculation of the amount of any Tax Distribution Amount plus (ii) solely with respect to Sky Harbour Group Corporation, to the extent the amounts described in clause (i) are not sufficient to permit Sky Harbour Group Corporation to timely pay its actual U.S. federal, state, local, and foreign tax liabilities related to tax items of the Company and timely meet its obligations pursuant to the Tax Receivable Agreement, any incremental amount required to permit Sky Harbour Group Corporation to timely pay such actual tax liabilities and timely meet its obligations pursuant to the Tax Receivable Agreement (with all Tax Distribution Amounts updated to reflect the final Company tax returns for each applicable taxable year). The Managing Member may adjust the Assumed Tax Rate as it reasonably determines is necessary to take into account the effect of any changes in applicable tax law. Tax Distribution Amounts pursuant to this Section 6.3 shall be computed without regard to the effect of any special basis adjustments or resulting adjustments to taxable income made pursuant to Sections 734(b), 743(b), and 754 of the Code. Notwithstanding the foregoing, final Tax Distributions in respect of the applicable quarterly period (or portion thereof) shall be made immediately prior to and in connection with any distributions made pursuant to Section 12.3 below. The Assumed Tax Rate shall be the same for all Members, regardless of the actual combined income tax rate of the Member or its direct or indirect owners. The Managing Member shall make, in its reasonable discretion, equitable adjustments (downward (but not below zero) or upward) to the Members’ Tax Distributions (but in any event pro rata in proportion to the Members’ respective number of Common Units) to take into account increases or decreases in the number of Common Units held by each Member during the relevant period. All Tax Distributions shall be treated for all purposes under this Agreement as advances against, and shall offset and reduce dollar-for-dollar, subsequent distributions under Section 6.1.

 

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6.4    Amounts Withheld. To the extent the Company (or any entity in which the Company holds a direct or indirect interest) or the Managing Member is required by law to deduct or withhold any amounts or to make tax payments (including, without limitation, any imputed underpayments under the Code, or similar amounts under state, local, or non-U.S. law) on behalf of or with respect to any Member or in respect of any Redemption, Direct Exchange, Incentive Equity Exchange, conversion of any interest into a Unit, or any other acquisition of Units or Ownership Interests by any Person, or if any entity in which the Company holds a direct or indirect interest is required to withhold on amounts payable to the Company or its Subsidiaries as a result of the status (e.g., based on tax residency or treaty qualification status) of a Member, the Managing Member may deduct or withhold or cause the Company (or other applicable withholding agent) to deduct or withhold any such amounts and make any such tax payments as so required without any gross-up payments owed to the applicable Member or other Person. All such amounts deducted or withheld, or to be deducted or withheld, or payments made, or to be made, on behalf of a Member or as a result of the status of a Member (“Tax Withholding/Payment Amounts”) shall, at the option of the Managing Member, (i) be promptly paid to the Company (or the Managing Member, as applicable) by the Member or other Person on whose behalf such Tax Withholding/Payment Amounts were made or are to be made (either before the deduction or withholding (e.g. if there is no cash payment from which to withhold) or payment is required to be made or after the Managing Member, the Company (or other applicable withholding agent) undertakes such deduction or withholding or makes such tax payment), or (ii) be repaid by reducing the amount of the current or next succeeding distribution or distributions which would otherwise have been made to such Member or, if such distributions are not sufficient for that purpose, by so reducing the proceeds of liquidation otherwise payable to such Member. Whenever the Managing Member selects option (ii) pursuant to the preceding sentence for repayment of a Tax Withholding/Payment Amount by a Member, for all other purposes of this Agreement such Member shall be treated as having received all distributions (whether before or upon liquidation) unreduced by the amount of such Tax Withholding/Payment Amount. At the reasonable request of the Managing Member, the Company, or any applicable withholding agent, the Members (or other applicable Persons) shall provide the Managing Member, the Company, or other applicable withholding agent with any necessary tax forms, including Internal Revenue Service Form W-9 or the appropriate series of Internal Revenue Service Form W-8, as applicable, or any other information or form that is relevant to determine whether any deduction or withholding is required. To the fullest extent permitted by law, each Member hereby agrees to indemnify and hold harmless the Company, the Managing Member, and the other Members from and against any liability (including, without limitation, any liability for taxes, penalties, additions to tax, interest or imputed underpayments under Section 6232(a) of the Code, or similar amounts under state, local, or non-U.S. law) with respect to income attributable to or distributions or other payments or property deliverable to such Member, including any amounts required to be deducted or withheld in respect thereof. Each Member’s obligations under this Section 6.4 shall survive the termination, liquidation, winding up and dissolution of the Company for the applicable statute of limitations period and will survive any partial or complete transfer or redemption of a Member’s interest in the Company. To the extent any amounts are deducted or withheld and paid over to the appropriate taxing authority pursuant to this Section 6.4, such amounts shall be treated as having been paid to the Person to whom such amounts would otherwise have been required to be paid.

 

6.5    Limitations on Distribution. Notwithstanding any provision to the contrary contained in this Agreement, the Company will not make a distribution to any Member if such distribution would violate applicable law or the terms of any indebtedness of the Company.

 

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ARTICLE 7

BOOKS AND RECORDS

 

7.1    Books, Record and Financial Statements.

 

7.1.1    The number and type of Units issued to each Member shall be set forth opposite such Member’s name on the schedule of Members of the Company held by the Company in its books and records (the “Member Schedule”). The Member Schedule shall be maintained by the Managing Member on behalf of the Company in accordance with this Agreement. When any Units or other Equity Securities of the Company are issued, repurchased, redeemed, converted or Transferred in accordance with this Agreement, the Member Schedule shall be amended by the Managing Member to reflect such issuance, repurchase, redemption or Transfer, the admission of Additional Members or Substitute Members and the resulting Percentage Interest of each Member. Following the date hereof, no Person shall be admitted as a Member and no additional Units shall be issued except as expressly provided herein.

 

7.1.2    At all times during the continuance of the Company, the Managing Member shall cause the Company to maintain, at its principal place of business, separate books of account for the Company that will show a true and accurate record of all costs and expenses incurred, all charges made, all credits made and received and all income derived in connection with the operation of the Company’s business in accordance with generally accepted accounting principles consistently applied, and, to the extent inconsistent therewith, in accordance with this Agreement.

 

7.2    Accounting Methods. For financial reporting purposes and for purposes of determining Profits and Losses and other items required to be allocated pursuant to Article 5, the books and records of the Company will be kept on the accrual method of accounting, in accordance with GAAP consistently applied, and to the extent inconsistent therewith, in accordance with this Agreement. Such books and records and the entries therein will reflect all Company transactions and be appropriate for the Company’s business.

 

7.3    Audit. The financial statements of the Company, or of the Managing Member if such statements are prepared solely on a consolidated basis with the Managing Member, will be audited at the end of each Fiscal Year by the Company’s independent certified public accountant, with each such audit to be accompanied by a report of such accountant containing its opinion, addressed and provided to each of the Members. The cost of such audits will be an expense of the Company. A copy of any such audited financial statements and accountant’s report, and any management letters from such accountants, will be provided to the Members promptly upon receipt by the Company thereof. The Managing Member may select and change the Company’s independent public accountants.

 

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ARTICLE 8

TAX MATTERS

 

8.1    Partnership Representative.

 

8.1.1    The Managing Member is hereby designated as the “partnership representative” pursuant to Section 6223 of the Code for U.S. federal income and applicable state and local income tax purposes (the “Partnership Representative”). For each Taxable Year in which the Partnership Representative is an entity, the Company shall appoint the “designated individual” identified by the Partnership Representative to act on its behalf in accordance with the applicable Treasury Regulations or analogous provisions of state or local law. Each Member, by execution of this Agreement (and subject to the terms of the Purchase Agreement), hereby consents to the appointment of the Managing Member as Partnership Representative as set forth herein and agrees to execute, certify, acknowledge, deliver, swear to, file and record, at the appropriate public offices, such documents as may be necessary or appropriate to evidence such consent and agrees to take, and that the Managing Member is authorized to take (or cause the Company to take), such other actions as may be necessary pursuant to Treasury Regulations or other Internal Revenue Service or Treasury guidance or applicable state or local law to cause such designation. Subject to the terms of this Agreement and the Purchase Agreement (including, for the avoidance of doubt, Section 8.1.4), the Partnership Representative shall have the power and authority to (A) manage, control, settle, challenge, litigate, or prosecute, on behalf of the Company, any administrative proceeding or other Action at the Company level with the Internal Revenue Service or any other Governmental Entity relating to the determination of any item of Company income, gain, loss, deduction, or credit for federal income tax purposes or otherwise relating to tax matters of the Company, (B) make any election under Sections 6221-6241 of the Code, and (C) shall have all other rights and powers granted under the BBA Rules with respect to the Company and its Members. If the Partnership Representative causes the Company to make an election under Section 6226(a) of the Code or any successor provision (or any analogous provision of state, local, or non-U.S. law), each Member who was a Member of the Company for U.S. federal income tax purposes for the “reviewed year” (within the meaning of Section 6225(d)(1) of the Code or similar concept under applicable state, local law, or non-U.S. law), shall take any adjustment to income, gain, loss, deduction, credit, or otherwise (as determined in the notice of final partnership adjustment or similar concept under applicable state, local, or non-U.S. law) into account as provided for in Section 6226(b) of the Code (or similar concept under applicable state, local, or non-U.S. law). Each Member other than the Partnership Representative or the Managing Member (any such Member an “Other Member”) agrees to cooperate in good faith with the Partnership Representative with respect to its rights and responsibilities hereunder, including timely providing any information and complying with any requirements that are necessary or advisable to reduce the amount of any tax, interest, penalties or similar amounts the cost of which is (or would otherwise be) borne by the Company (directly or indirectly), or to make any election permitted by this Agreement and the Code or other relevant tax law unless such Other Member is restricted from providing such information under any applicable law or contract. Subject to the foregoing, each Other Member shall provide the Partnership Representative with reasonable advance notice prior to treating any Company item inconsistently on such Other Member’s tax return with the treatment of the item on the Company’s tax return or prior to independently acting with respect to tax audits, examinations, or other proceedings affecting the Company.

 

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8.1.2    The Partnership Representative will, within ten (10) days of the receipt of any notice from the Internal Revenue Service in any administrative proceeding at the Company level relating to the determination of any Company item of income, gain, loss, deduction or credit, mail a copy of such notice to each Member.

 

8.1.3    The Company shall not be obligated to pay any fees or other compensation to the Partnership Representative in its capacity as such. However, the Company shall reimburse and indemnify and hold harmless the Partnership Representative (and any “designated individual”) for any and all out-of-pocket costs and expenses (including reasonable attorneys and other professional fees) incurred by it in its capacity as Partnership Representative (or “designated individual”).

 

8.1.4    With respect to any tax audit, examination, or other proceeding for any Fiscal Year (or portion thereof) ending on or before the Closing Date (a “Pre-Closing Tax Proceeding”), the Partnership Representative shall cause the Company to timely make the election provided for in Section 6226 of the Code (or any similar provision of state, local, or non-U.S. law) in accordance with applicable Laws; provided, however, that in the event such election is not available, (1) the Member Representative shall be entitled to participate in such Pre-Closing Tax Proceeding, (2) the Partnership Representative shall keep the Member Representative reasonably informed of all material developments in respect of such Pre-Closing Tax Proceeding, and (3) the Partnership Representative shall not compromise, settle or abandon such Pre-Closing Tax Proceeding without the prior written consent of the Member Representative (such consent not to be unreasonably withheld, conditioned or delayed).

 

8.1.5    This Section 8.1 shall be interpreted to apply to Members and former Members and shall survive the transfer of a Member’s Ownership Interest, the termination of this Agreement, and the termination, dissolution, liquidation and winding up of the Company.

 

8.2    Section 754 Election. The Company (and to the extent provided in the Tax Receivable Agreement, each Subsidiary of the Company that is treated as a partnership for U.S. federal income tax purposes) shall have in effect an election under Section 754 of the Code for the taxable year in which the date of this Agreement occurs. Each Member will, upon request of the Partnership Representative, supply the information necessary to give effect to any such election.

 

8.3    Section 83(b) Elections. Each Member who acquires Units that are subject to a “substantial risk of forfeiture” within the meaning of Section 83 of the Code at the time of such acquisition shall consult with such Member’s tax advisor to determine the tax consequences of such acquisition and the advisability of filing an election under Section 83(b) of the Code with respect to such Units. Each Member who acquires Units that are intended to constitute profits interests, and at the time of such acquisition are subject to a “substantial risk of forfeiture” within the meaning of Section 83 of the Code shall make a timely election under Section 83 of the Code with respect to such Units. It is the sole responsibility of a Member, and not the Company, to file the election under Section 83(b) of the Code even if such Member requests the Company or any of its representatives to assist in making such filing. Each Member who files an election under Section 83(b) of the Code with respect to Units (including each Member who is required to file such an election under this Section 8.3) shall provide a copy of such election and proof of filing of such election to the Company on or before the due date for the filing of such election.

 

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8.4    Other Tax Matters.

 

8.4.1    Certain Tax Agreements.

 

8.4.1.1    The Members and the Company intend that (i) payments made under the Tax Receivable Agreement in respect of Redemptions be treated as additional consideration in respect of the transfer of the interests in the Company effectuated in connection with such Redemptions except to the extent required to be treated as imputed interest under applicable law or as otherwise provided under the Tax Receivable Agreement; (ii) the conversion of the Previous Interests into interests in the Company in connection with the transactions contemplated by Section 4.2 be treated as a non-taxable recapitalization of the equity interests in the Company; and (iii) the Managing Member’s contribution of cash to the Company for Units in accordance with the Purchase Agreement be treated as a Capital Contribution governed by Section 721(a) of the Code (and any similar applicable state, local or non-U.S. provision of tax law). The Members and the Company will, and the Other Members will cause all of their Affiliates to, file all tax returns consistent with the foregoing, unless otherwise required by applicable law including a determination of an applicable taxing authority that is final.

 

8.4.1.2    The Members and the Company agree to cooperate in good faith to consider whether the Company, or any Company Subsidiary, shall apply, or make any elections out of the application of, the additional depreciation allowances under Section 168(k) of the Code and the Treasury Regulations promulgated thereunder with respect to any applicable class of property of the Company or any Company Subsidiary placed into service in a relevant taxable year, taking into account what would be in the best interest of the Members, the Company or any applicable Company Subsidiary, based on the applicable facts and law in effect at the time of such determinations.

 

8.4.2    Tax Returns.

 

8.4.2.1    The Managing Member shall arrange for the preparation and filing of all tax returns required to be filed by the Company in accordance with the procedures set forth in this Section 8.4.2.

 

8.4.2.2    For any taxable period that ends on or before, or includes, the Closing Date, the Managing Member shall cause the tax returns of the Company for such taxable period to be prepared in a manner consistent with the past practices of the Company, unless otherwise required by applicable law; provided, however, that (1) items of income, gain, loss, deduction and credit for such taxable period shall be allocated among the Members using the “interim closing method” under Section 706 of the Code (or any similar provision of state, local or non-U.S. law), and (2) any and all deductions, losses, or credits of the Company resulting from, attributable to, or accelerated by the payment of expenses in connection with the transactions contemplated by the Purchase Agreement are allocated to the portion of the taxable period ending on and including the Closing Date.

 

8.4.2.3    On or before April 15, June 15, September 15, and December 15 of each Fiscal Year (or, if the due dates for estimated tax payments applicable to the Members or their equityholders are modified after the date of this Agreement, on or before such modified due dates), the Company shall send to each Person who was a Member at any time during the prior quarter, an estimate of information that each such Member reasonably requires in connection with discharging its tax reporting and estimated tax payment obligations.

 

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8.4.2.4    As soon as reasonably practicable after the end of a Fiscal Year, the Managing Member shall cause the Company to provide to the Member Representative, on behalf of each Member, a statement showing an estimate of each Member’s state tax apportionment information and each Member’s estimated allocations of taxable income, gains, losses, deductions and credits for such Fiscal Year and, as soon as reasonably practicable following the end of the prior Fiscal Year, the Managing Member shall cause the Company to provide to the Member Representative, on behalf of each Member, a statement showing each Member’s final state tax apportionment information and allocations to the Members of taxable income, gains, losses, deductions and credits for such Fiscal Year and a completed Internal Revenue Service Schedule K‑1 (and, if applicable, completed Schedules K-2 and K-3) (the statements referred to in this sentence, collectively, the “Draft Tax Statements”). Upon delivery of any Draft Tax Statements to the Member Representative, the Member Representative shall have thirty (30) days to review the applicable Draft Tax Statements and provide any comments to the Managing Member on such Draft Tax Statements. The Managing Member shall incorporate all reasonable comments received from the Member Representative during the thirty (30) day review period and such statements, reflecting the Member Representative’s reasonable comments, shall be the (“Final Tax Statements”). The Managing Member shall cause the Company to deliver Final Tax Statements to each applicable Member within five (5) days of such statements becoming Final Tax Statements.

 

8.4.2.5    At least thirty (30) days prior to the due date for the filing of any tax return of the Company or any Company Subsidiary, the Managing Member shall send a draft of such tax return, which shall be prepared consistently with any applicable Final Tax Statements, to the Member Representative for the Member Representative’s review and comment. The Managing Member shall incorporate all reasonable comments received from the Member Representative at least five (5) days prior to the due date for the filing of any such tax return and shall not file any tax return without receiving prior written consent of the Member Representative.

 

8.5    Adverse Tax Consequences. Notwithstanding anything to the contrary in this Agreement, the Purchase Agreement, the Previous Agreement, the Registration Rights Agreement, the Stockholders’ Agreement, the Tax Receivable Agreement or the Warrant Agreements, the Managing Member shall have the authority to, and shall, take any steps it determines are necessary or appropriate to prevent the Company from being taxable as a corporation for U.S. federal income tax purposes. In furtherance of the foregoing, except with the consent of the Managing Member, no Transfer by a Member of its Units (including any Redemption, Direct Exchange, Incentive Equity Exchange, conversion of any interest into a Unit or any other acquisition of Units by any Person or the Company) may be made to or by any Person if such Transfer, Redemption, Direct Exchange, Incentive Equity Exchange, conversion, acquisition or other action could result in the Company being unable to qualify for one or more of the “safe harbors” set forth in Regulations Section 1.7704-1 (or such other guidance subsequently published by the Internal Revenue Service setting forth safe harbors under which interests will not be treated as “readily tradable on a secondary market (or the substantial equivalent thereof)” within the meaning of Section 7704 of the Code).

 

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8.6    Post-Closing Covenants. Without the prior written consent of the Member Representative (not to be unreasonably withheld, conditioned or delayed), the Managing Member shall not cause or permit the Company or any Company Subsidiary to (1) make, change or revoke any election of the Company or any Subsidiary of the Company with retroactive effect to any taxable period (or portion thereof) ending on or before the Closing Date, or (2) initiate discussion, voluntary disclosure or examination with any taxing authority regarding taxes or tax returns of the Company or any Subsidiary of the Company for any taxable period (or portion thereof) ending on or before the Closing Date.

 

ARTICLE 9

LIABILITY, EXCULPATION AND INDEMNIFICATION

 

9.1    Exculpation.

 

9.1.1    A “Covered Person” shall mean any Member, any Affiliate of a Member, any partner, shareholder, member, director, officer, agent, or employee of any Member or of any Affiliate of any Member, any director, officer, agent, or employee of the Company or of any of its Subsidiaries, and any Person who, at the request of the Company serves in any capacity on behalf of another entity, including, without limitation, any director, officer or employee of the Managing Member. No Covered Person will be liable to the Company or any other Covered Person for any loss, damage or claim incurred by reason of any act or omission performed or omitted by such Covered Person in good faith on behalf of the Company and in a manner reasonably believed to be within the scope of authority conferred on such Covered Person by this Agreement, except that a Covered Person will be liable for any such loss, damage or claim incurred by reason of such Covered Person’s gross negligence, willful misconduct, or knowing violation of the law or of this Agreement.

 

9.1.2    A Covered Person will be fully protected in relying in good faith upon the records of the Company (or such other entity which he or she serves) and upon such information, opinions, reports or statements presented to the Company (or such other entity which he or she serves) by any Person as to matters the Covered Person reasonably believes are within such other Person’s professional or expert competence and who in the reasonable belief of such Covered Person has been selected with reasonable care by or on behalf of the Company (or such other entity which he or she serves), including information, opinions, reports or statements as to the value and amount of the assets, liabilities, profits, losses, or any other facts pertinent to the existence and amount of assets from which distributions to Members might properly be paid.

 

9.2    Indemnification by the Company.

 

9.2.1    To the fullest extent permitted by law, in addition to any indemnification obligations of the Managing Member, the Company shall indemnify any Covered Person to the extent and in the manner specified in this Section 9.2.

 

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9.2.2    A Covered Person who was or is a party, or is threatened to be made a party, to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of alleged acts or omissions in his capacity as a Covered Person (a “Covered Proceeding”), other than a Covered Proceeding brought by or in the right of the Company or the Members generally, shall be indemnified and held harmless by the Company from and against all losses, claims, damages, liabilities, costs, expenses (including reasonable legal fees and expenses), judgments, fines, settlements, and other amounts which the Covered Person may actually and reasonably incur in connection with or by reason of such Covered Proceeding, by reason of any acts, omissions, or alleged acts or omissions committed directly or indirectly on behalf of the Company (whether or not the Covered Person is still acting in such capacity at the commencement of or during such Covered Proceeding), except to the extent that such act or omission was done fraudulently or in bad faith or as a result of willful and wanton misconduct or gross negligence or except to the extent that, with respect to any criminal action or proceeding, such Person had reasonable cause to believe his conduct was unlawful. The termination of any Covered Proceeding by judgment, order, conviction, plea, settlement, or its equivalent, shall not of itself create a presumption that the act or omission was done fraudulently or in bad faith or as a result of wanton or willful misconduct or, with respect to any criminal Covered Proceeding, that the Person had reasonable cause to believe that his conduct was unlawful.

 

9.2.3    A Covered Person who was or is a party, or is threatened to be made a party, by reason of alleged acts or omissions in his capacity as a Covered Person, to any Covered Proceeding brought by or in the right of the Company or of the Members generally to procure a judgment in its or their favor, shall be indemnified and held harmless as set forth in Section 9.2.2 to the extent that such Covered Person acted in good faith and in a manner such Covered Person reasonably believed to be in or not opposed to the best interests of the Company. If the Covered Person shall have been adjudicated by final and nonappealable order in such Covered Proceeding to be liable to the Company or to the Members generally, then the indemnification provided for in the preceding sentence shall apply only to the extent that the tribunal having jurisdiction over such Covered Proceeding shall determine that, despite the adjudication of liability, in view of all the circumstances of the case, the Covered Person is fairly and reasonably entitled to such indemnification.

 

9.2.4    The Company shall pay, (i) from the inception of a Covered Proceeding and for its entire duration, all costs and expenses of the Covered Person with respect to such Covered Proceeding as they become due, including without limitation reasonable legal fees and expenses, and (ii) in connection with the termination of a Covered Proceeding (whether or not appellate or other review proceedings are taken or contemplated), all judgments, fines, settlement payments, other costs and expenses (including reasonable legal fees and expenses) and other amounts incurred by the Covered Person, provided that in each case described in clause (i) or (ii), the Covered Person shall have delivered to the Company a written undertaking to repay all such amounts to the Company to the extent it is determined, as provided in Section 9.2.2 or Section 9.2.3, that the Covered Person is not entitled to indemnification with respect to part or all of the amounts paid.

 

9.2.5    The Managing Member shall control the defense of any Covered Person in a Covered Proceeding as well as any settlement with respect to such Covered Person, including without limitation the selection and direction of counsel. The Covered Person shall not consent to the entry of any judgment or other dispositive order or to any settlement without the consent of the Managing Member. The Managing Member and counsel selected by it shall not consent to the entry of any judgment or other dispositive order as to the Covered Person which does not provide for a complete and unconditional release of all liability in favor of the Covered Person.

 

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9.2.6    The obligations of the Company under this Section 9.2 shall be enforceable solely against the assets of the Company, and not against the assets of any Member, of any securityholder of the Managing Member, or of any officer, director, agent, or employee of the Company or the Managing Member. The provisions of this Section 9.2 are solely for the benefit of the Covered Person and his, her, or its heirs, personal representatives, successors, and assigns.

 

9.2.7    The rights and remedies granted a Covered Person by this Section 9.2 shall be in addition to, and not in lieu of, (i) any and all rights and remedies available to a Covered Person against the Company or any other Person, whether conferred by any provision of law, by any agreement, bylaw, articles of incorporation, or other document, or by any resolution or other action, and (ii) any and all rights and claims available to a Covered Person under any policy of insurance. Amounts payable under this Section 9.2 shall not be reduced or deferred by reason of any such other rights, remedies, or claims which may be available to a Covered Person, provided however, that a Covered Person shall have only one satisfaction with respect to amounts incurred, and provided further, that the Company shall be subrogated to a Covered Person’s claims against other Persons and under any policy of insurance, to the extent of payments made by the Company to such Covered Person under this Section 9.2. Notwithstanding anything herein to the contrary, no Person shall be entitled to any rights under this Section 9.2 without the prior written consent of the Managing Member.

 

9.3    Insurance. The Company may purchase and maintain such insurance with such coverages on behalf of Covered Persons and such other Persons as the Managing Member may determine, against any liability that may be asserted against or expenses that may be incurred by any such Person in connection with the activities of the Company (or such other entity which he or she serves), regardless of whether the Company (or such entity) would have the power to indemnify such Person against such liability under the provisions of this Agreement. The Managing Member and the Company may enter into indemnity contracts with Covered Persons or other parties and adopt written procedures pursuant to which arrangements are made for the advancement of expenses and the funding of obligations under Section 9.2.2 above and containing such other procedures regarding indemnification as are appropriate, provided that such contracts and procedures shall not be in derogation of the protections provided by this Article 9. No Covered Person shall be permitted to make a claim under any insurance coverage purchased and maintained by the Company without the prior written consent of the Managing Member. For the avoidance of doubt, any costs or liabilities under any indemnity contract entered into by the Managing Member with a Covered Person shall be paid by the Company.

 

ARTICLE 10

RESTRICTIONS ON TRANSFERS OF OWNERSHIP INTERESTS

 

10.1    Transfers by the Managing Member. Except as otherwise provided in this Agreement, including in Sections 4.9, 4.10, 4.11 and 10.5, the Managing Member may not Transfer all or any part of its Ownership Interest without the Consent of the Members (other than the Managing Member) holding at least a majority of the aggregate Common Units then outstanding and held by such Members.

 

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10.2    Transfers by Members.

 

10.2.1    Except as set forth in Section 10.2.2 or Section 10.5, to the fullest extent permitted by law, no Member may Transfer all or any part of such Member’s Ownership Interests without the prior written consent of the Managing Member, which consent may be given or withheld in the Managing Member’s sole and absolute discretion. Unless a Transferee is admitted as a substitute Member in accordance with Section 10.3, a Transfer by a Member of all or any part of such Member’s Common Units shall not release such Member from any of such Member’s obligations or liabilities hereunder or limit the Managing Member’s rights with respect to such Member of any nature whatsoever arising under this Agreement; provided, that any such Transferee shall be entitled to allocations and distributions with respect to its Common Units but shall not have any of the other rights of a Member under this Agreement.

 

10.2.2    The restrictions contained in the first sentence of Section 10.2.1 shall not apply to any of the following (each, a “Permitted Transfer” and each transferee, a “Permitted Transferee”): (i)(A) a Transfer pursuant to a Redemption in accordance with Article 11 or (B) a Transfer by a Member to another Member, the Company or any of its Subsidiaries, (ii) a Transfer to an Affiliate of, or owner of an equity interest in, a Member (including any distribution by such Member to its members, partners or shareholders or any redemption of the equity interests in such Member held by one or more of its members, partners or shareholders, and any related distributions or redemptions by such members, partners or shareholders to their respective members, partners or shareholders) or (iii) any Transfer of equity or other interests in such Member (including, for the avoidance of doubt, any Transfers of equity or other interests in the Managing Member) so long as such Transfer is consistent with the terms of any agreement with the Managing Member and/or the Company; provided, however, that (x) the restrictions contained in this Agreement will continue to apply to the transferred Units after any Permitted Transfer of such Units, and (y) in the case of the foregoing clause (ii), prior to such Transfer the transferor will deliver a written notice to the Managing Member, which notice will disclose in reasonable detail the identity of the proposed Permitted Transferee.

 

10.3    Certain Provisions Applicable to Transfers. Any Person who acquires Common Units in accordance with this Agreement (“Transferee”) shall be admitted as a Member upon the satisfaction of the following conditions:

 

10.3.1    the Transferee agrees to be bound by all the terms and provisions of this Agreement applicable to it;

 

10.3.2    the Transferor and Transferee execute and acknowledge such other instruments, in form and substance satisfactory to the Managing Member, as the Managing Member may deem necessary or desirable to effect such substitution; and

 

10.3.3    such Transfer does not (A) cause the Company to become a “publicly traded partnership”, as such term is defined in Section 469(k)(2) or 7704 of the Code, or (B) cause the Company to become subject to regulation or inspection under the Bank Holding Company Act of 1956, as amended.

 

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For purposes of this Article 10, a transaction shall be deemed to be a Transfer, irrespective of its form, if it has economic effect which is substantially equivalent to that of a Transfer under the relevant circumstances.

 

10.4    Pledges. A holder of Common Units may pledge or grant a security interest in such Common Units subject to the following conditions:

 

10.4.1    such holder provides thirty (30) days’ prior written notice of the pledge or grant to the Managing Member;

 

10.4.2    such pledge or grant of security interest shall be made in connection with a bona fide extension of credit by a Person (the “Lender”) who in the ordinary course of such Person’s business engages in such extensions of credit; and

 

10.4.3    prior to completing such pledge or grant of security interest, such holder shall deliver to the Managing Member an undertaking or other instrument reasonably satisfactory to the Managing Member (and for the benefit of each holder of Common Units) in which the Lender acknowledges and agrees that the exercise by the Lender of remedies involving Transfer of ownership of such shares or of rights appurtenant thereto will be a Transfer subject to all the terms of conditions of this Agreement.

 

Notwithstanding the foregoing, the Managing Member may prevent a holder from pledging or granting a security interest in its Common Units if it determines that the exercise of the Lender’s remedies could cause a Transfer otherwise prohibited by this Agreement, including a Transfer prohibited by Section 10.3.3.

 

10.5    Certain Transactions with Respect to the Managing Member.

 

10.5.1    In connection with a Change of Control Transaction, each Member shall, and the Managing Member shall have the right, in its sole discretion, to require each Member to effect an Incentive Equity Exchange of all of such Member’s vested Incentive Equity Units (if any) pursuant to Section 11.3, and, a Redemption of all or a portion of such Member’s Common Units (including, but not limited to, any Common Units received by such member pursuant to such Incentive Equity Exchange and any other Common Units held by any Member), pursuant to which such Common Units will be exchanged for shares of Class A Common Stock (or economically equivalent cash or securities of a successor entity), mutatis mutandis, in accordance with the Redemption provisions of Article 11 and otherwise in accordance with this Section 10.5.1. Any such Redemption pursuant to this Section 10.5.1 shall be effective immediately prior to the consummation of such Change of Control Transaction (and, for the avoidance of doubt, shall be contingent upon the consummation of such Change of Control Transaction and shall not be effective if such Change of Control Transaction is not consummated) (the date of such Redemption pursuant to this Section 10.5.1, the “Change of Control Date”). From and after the Change of Control Date, (i) the Common Units subject to such Redemption shall be deemed to be transferred to the Managing Member on the Change of Control Date and (ii) each such Member shall cease to have any rights with respect to the Common Units subject to such Redemption (other than the right to receive shares of Class A Common Stock (or economically equivalent cash or equity securities in a successor entity) pursuant to such Redemption). In the event of an expected Change of Control Transaction, the Managing Member shall provide written notice of an expected Change of Control Transaction to all Members within the earlier of (x) five (5) Business Days following the execution of a definitive agreement providing for such Change of Control Transaction and (y) ten (10) Business Days before the proposed date upon which the contemplated Change of Control Transaction is to be effected, including in such notice such information as may reasonably describe the Change of Control Transaction, subject to applicable law or regulation, including the date of execution of such agreement or such proposed effective date, as applicable, the amount and types of consideration to be paid for shares of Class A Common Stock in the Change of Control Transaction and any election with respect to types of consideration that a holder of shares of Class A Common Stock, as applicable, shall be entitled to make in connection with a Change of Control Transaction (which election shall be available to each Member on the same terms as holders of shares of Class A Common Stock). Following delivery of such notice and on or prior to the Change of Control Date, the Members shall take all actions reasonably requested by the Managing Member to effect such Redemption, including taking any action and delivering any document required pursuant to this Section 10.5.1 to effect such Redemption.

 

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10.5.2    In the event that a tender offer, share exchange offer, issuer bid, take-over bid, recapitalization, or similar transaction with respect to Class A Common Stock (a “Pubco Offer”) is proposed by the Managing Member or is proposed to the Managing Member or its stockholders and approved by the Board or is otherwise effected or to be effected with the consent or approval of the Board, the Managing Member shall provide written notice of the Pubco Offer to all Members within the earlier of (i) five (5) Business Days following the execution of an agreement (if applicable) with respect to, or the commencement of (if applicable), such Pubco Offer and (ii) ten (10) Business Days before the proposed date upon which the Pubco Offer is to be effected, including in such notice such information as may reasonably describe the Pubco Offer, subject to applicable law or regulation, including the date of execution of such agreement (if applicable) or of such commencement (if applicable), the material terms of such Pubco Offer, including the amount and types of consideration to be received by holders of shares of Class A Common Stock in the Pubco Offer, any election with respect to types of consideration that a holder of shares of Class A Common Stock, as applicable, shall be entitled to make in connection with such Pubco Offer, and the number of Common Units held by such Member that is applicable to such Pubco Offer. The Members shall be permitted to participate in such Pubco Offer by delivering a written notice of participation that is effective immediately prior to the consummation of such Pubco Offer (and that is contingent upon consummation of such offer), and shall include such information necessary for consummation of such offer as requested by the Managing Member. In the case of any Pubco Offer that was initially proposed by the Managing Member, the Managing Member shall use reasonable best efforts to enable and permit the Members to participate in such transaction to the same extent or on an economically equivalent basis as the holders of shares of Class A Common Stock, and to enable such Members to participate in such transaction without being required to exchange Common Units prior to the consummation of such transaction.

 

10.5.3    In the event that a transaction or proposed transaction constitutes both a Change of Control Transaction and a Pubco Offer, the provisions of Section 10.5.1 shall take precedence over the provisions of Section 10.5.2 with respect to such transaction, and the provisions of Section 10.5.2 shall be subordinate to provisions of Section 10.5.1, and may only be triggered if the Managing Member elects to waive the provisions of Section 10.5.1.

 

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ARTICLE 11

REDEMPTION

 

11.1    Redemption Right of a Member.

 

11.1.1    Each Member (other than the Managing Member and its Subsidiaries) shall be entitled to cause the Company to redeem (a “Redemption”) its Common Units in whole or in part (the “Redemption Right”) at any time and from time to time and, to the extent applicable to such Member, following the waiver or expiration of the Lock-Up Period (as defined in the Lock-Up Agreement), relating to the shares of the Managing Member that may be applicable to such Member. A Member desiring to exercise its Redemption Right (each, a “Redeeming Member”) shall exercise such right by giving written notice (the “Redemption Notice”) to the Company with copies to the Managing Member. The Redemption Notice shall specify the number of Common Units (the “Redeemed Units”) that the Redeeming Member intends to have the Company redeem and a date, not less than three (3) Business Days nor more than ten (10) Business Days after delivery of such Redemption Notice (unless and to the extent that the Managing Member in its sole discretion agrees in writing to waive such time periods), on which exercise of the Redemption Right shall be completed (the “Redemption Date”); provided, that the Company, the Managing Member and the Redeeming Member may change the number of Redeemed Units and/or the Redemption Date specified in such Redemption Notice to another number and/or date by mutual agreement signed in writing by each of them; provided, further, that the Redemption may be conditioned (including as to timing) by the Redeeming Member on the closing of an underwritten distribution of the shares of Class A Common Stock that may be issued in connection with such proposed Redemption. Subject to Section 11.3 and unless the Redeeming Member has revoked or delayed a Redemption as provided in Section 11.1.2, on the Redemption Date (to be effective immediately prior to the close of business on the Redemption Date):

 

11.1.1.1    the Redeeming Member shall Transfer and surrender, free and clear of all liens and encumbrances the Redeemed Units to the Company (including any certificates representing the Redeemed Units if they are certificated); and

 

11.1.1.2    the Company shall (a) cancel the Redeemed Units, (b) transfer to the Redeeming Member the Share Settlement, and (c) if the Units are certificated, issue to the Redeeming Member a certificate for a number of Common Units equal to the difference (if any) between the number of Common Units evidenced by the certificate surrendered by the Redeeming Member pursuant Section 11.1.1 and the Redeemed Units.

 

11.1.2    A Redeeming Member shall be entitled to revoke its Redemption Notice or delay the consummation of a Redemption if any of the following conditions exists:

 

11.1.2.1    any registration statement pursuant to which the resale of the Class A Common Stock to be registered for such Redeeming Member at or immediately following the consummation of the Redemption shall have ceased to be effective pursuant to any action or inaction by the SEC or no such resale registration statement has yet become effective;

 

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11.1.2.2    the Managing Member shall have failed to cause any related prospectus to be supplemented by any required prospectus supplement necessary to effect such Redemption;

 

11.1.2.3    the Managing Member shall have exercised its right to defer, delay or suspend the filing or effectiveness of a registration statement and such deferral, delay or suspension shall affect the ability of such Redeeming Member to have its Class A Common Stock registered at or immediately following the consummation of the Redemption;

 

11.1.2.4    the Redeeming Member is in possession of any material non-public information concerning the Managing Member, the receipt of which results in such Redeeming Member being prohibited or restricted from selling Class A Common Stock at or immediately following the Redemption without disclosure of such information (and the Managing Member does not permit disclosure of such information);

 

11.1.2.5    any stop order relating to the registration statement pursuant to which the Class A Common Stock was to be registered by such Redeeming Member at or immediately following the Redemption shall have been issued by the SEC;

 

11.1.2.6    there shall have occurred a material disruption in the securities markets generally or in the market or markets in which the Class A Common Stock is then traded;

 

11.1.2.7    there shall be in effect an injunction, a restraining order or a decree of any nature of any Governmental Entity that restrains or prohibits the Redemption;

 

11.1.2.8    the Managing Member shall have failed to comply in all material respects with its obligations under the Registration Rights Agreement, and such failure shall have affected the ability of such Redeeming Member to consummate the resale of Class A Common Stock to be received upon such Redemption pursuant to an effective registration statement; or

 

11.1.2.9    the Redemption Date would occur three (3) Business Days or less prior to, or during, a Black-Out Period;

 

If a Redeeming Member delays the consummation of a Redemption pursuant to this Section 11.1.2, the Redemption Date shall occur on the fifth (5th) Business Day following the date on which the condition(s) giving rise to such delay cease to exist (or such other day as the Managing Member, the Company and such Redeeming Member may agree in writing).

 

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11.1.3    The number of shares of Class A Common Stock (together with any Corresponding Rights) applicable to any Share Settlement shall not be adjusted on account of any distributions previously made with respect to the Redeemed Units or dividends previously paid with respect to Class A Common Stock; provided, however, that if a Redeeming Member causes the Company to redeem Redeemed Units and the Redemption Date occurs subsequent to the record date for any distribution with respect to the Redeemed Units but prior to payment of such distribution, the Redeeming Member shall be entitled to receive such distribution with respect to the Redeemed Units on the date that it is made notwithstanding that the Redeeming Member Transferred and surrendered the Redeemed Units to the Company prior to such date; provided, further, however, that a Redeeming Member shall be entitled to receive any and all distributions pursuant to Section 6.3 that such Redeeming Member otherwise would have received in respect of income allocated to such Member for the portion of any taxable period irrespective of whether such distribution(s) are declared or made after the Redemption Date. For the avoidance of doubt and for the purpose of avoiding duplication, the Redeeming Member entitled to receive any distribution pursuant to the preceding sentence shall not also receive the dividend declared on the applicable Share Settlement in connection with the same distribution.

 

11.1.4    In the case of a Share Settlement, in the event a reclassification or other similar transaction occurs following delivery of a Redemption Notice, but prior to the Redemption Date, as a result of which shares of Class A Common Stock are converted into another security, then a Redeeming Member shall be entitled to receive the amount of such other security (and, if applicable, any Corresponding Rights) that the Redeeming Member would have received if such Redemption Right had been exercised and the Redemption Date had occurred immediately prior to the record date of such reclassification or other similar transaction.

 

11.1.5    Notwithstanding anything to the contrary contained herein, neither the Company nor the Managing Member shall be obligated to effectuate a Redemption if such Redemption could (as determined in the reasonable discretion of the Managing Member) cause the Company to be treated as a “publicly traded partnership” or to be taxed as a corporation pursuant to Section 7704 of the Code or successor provisions of the Code.

 

11.2    Contribution of the Managing Member. Unless the Redeeming Member has timely revoked or delayed a Redemption as provided in Section 11.1.2, subject to Section 11.5, on the Redemption Date (to be effective immediately prior to the close of business on the Redemption Date) (i) the Managing Member shall make a capital contribution to the Company (in the form of the Share Settlement), and (ii), the Company shall issue to the Managing Member a number of Common Units equal to the number of Redeemed Units surrendered by the Redeeming Member.

 

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11.3    Exchange of Incentive Equity Units. From and after the later of the (i) twelve (12)-month anniversary of the consummation of the transactions contemplated by the Purchase Agreement and (ii) six (6)–month anniversary of the date on which the relevant Incentive Equity Units vests (unless such time restriction is waived by the Managing Member in its sole discretion with respect to any proposed Incentive Equity Exchange or such restriction is expressly waived in an individual award agreement), and subject to (A) the terms of any Trading Policy (including any Black-Out Period contained therein), (B) the waiver or expiration of any contractual lock-up period relating to the shares of the Managing Member (or any corresponding Units) that may be applicable to such Member and (C) the terms of this Agreement, each Member shall be entitled to cause the Company to exchange (an “Incentive Equity Exchange”) its vested Incentive Equity Units for Common Units, in whole or in part (the “Incentive Equity Exchange Right”) at any time and from time to time. A Member desiring to exercise its Incentive Equity Exchange Right (an “Incentive Equity Exchanging Member”) shall exercise such right by giving written notice (the “Incentive Equity Exchange Notice”) to the Company. The Incentive Equity Exchange Notice shall specify the number of Incentive Equity Units (the “Exchanged Incentive Equity Units”) that the Incentive Equity Exchanging Member intends to have the Company exchange for Common Units, the corresponding Incentive Equity Unit Grant Agreement under which such Exchanged Incentive Equity Units (or the Original Existing Company Incentive Units which converted into such Exchanged Incentive Equity Units) were issued, and a date, not less than three (3) Business Days nor more than ten (10) Business Days after delivery of such Incentive Equity Exchange Notice (unless and to the extent that the Managing Member in its sole discretion agrees in writing to waive such time periods), on which exercise of the Incentive Equity Exchange Right shall be completed (the “Incentive Equity Exchange Date”); provided, that the Company and the Incentive Equity Exchanging Member may change the number of Exchanged Incentive Equity Units and/or the Incentive Equity Exchange Date specified in such Incentive Equity Exchange Notice to another number and/or date by mutual agreement signed in writing by each of them. On the Incentive Equity Exchange Date (to be effective immediately prior to the close of business on the Incentive Equity Exchange Date): (a) the Incentive Equity Exchanging Member shall Transfer and surrender, free and clear of all liens and encumbrances, the Exchanged Incentive Equity Units to the Company and (b) the Company shall (i) cancel the Exchanged Incentive Equity Units, (ii) issue to the Incentive Equity Exchanging Member a number of Common Units equal to the sum (A) (x) the aggregate Fair Market Value of the Exchanged Incentive Equity Units (taking into consideration the Distribution Threshold and Unreturned Catch-Up Amount, if any, on such Exchanged Incentive Equity Units, but excluding any value associated with the Common Units to be issued pursuant to clause (B) of this sentence) divided by (y) the per-Unit Fair Market Value of the Common Units plus (B) the aggregate Incentive Equity Unit Adjustment Amount with respect to the Exchanged Incentive Equity Units, and (iii) if the Exchanged Incentive Equity Units are certificated, issue to the Incentive Equity Exchanging Member a certificate for a number of Incentive Equity Units equal to the difference (if any) between the number of Incentive Equity Units evidenced by the certificate surrendered by the Incentive Equity Exchanging Member pursuant to clause (a) of this Section 11.3 and the Exchanged Incentive Equity Units. Upon issuance of the Common Units, such Common Units shall immediately be subject to all of the provisions herein applicable to Common Units, including the Redemption provisions contained in this Article 11, and notwithstanding anything herein to the contrary, immediately upon consummation of any Exchange, unless otherwise agreed in writing between the Incentive Equity Exchanging Member and the Managing Member, the Incentive Equity Exchanging Member shall be deemed to have initiated its Redemption Right with respect to the new Common Units received in such Incentive Equity Exchange, and therefore the provisions of the foregoing Section 11.1 shall be deemed to apply as though the applicable Member had sent a Redemption Notice thereunder on the date that it sent the Incentive Equity Exchange Notice under this Section 11.3, such that the Redemption occurs on the same day as, and immediately following, the Incentive Equity Exchange.

 

11.4    Direct Exchange Right of the Managing Member.

 

11.4.1    Notwithstanding anything to the contrary in this Article 11 (without limitation to the rights of the Members under this Article 11, including the right to revoke a Redemption Notice), the Managing Member may, in its sole and absolute discretion, elect to effect on the Redemption Date the exchange of Redeemed Units for the Share Settlement through a direct exchange of such Redeemed Units and the Share Settlement between the Redeeming Member, on the one hand, and the Managing Member, on the other hand (a “Direct Exchange”) rather than contributing the Share Settlement to the Company for purposes of the Company redeeming the Redeemed Units from the Redeeming Member in consideration of the Share Settlement. Upon such Direct Exchange pursuant to this Section 11.4, the Managing Member shall acquire the Redeemed Units and shall be treated for all purposes of this Agreement as the owner of such Units.

 

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11.4.2    The Managing Member may, at any time prior to a Redemption Date, deliver written notice (an “Exchange Election Notice”) to the Company and the Redeeming Member setting forth its election to exercise its right to consummate a Direct Exchange; provided, that such election is subject to the limitations set forth in Article 11 and does not unreasonably prejudice the ability of the parties to consummate a Redemption or Direct Exchange on the Redemption Date. An Exchange Election Notice may be revoked by the Managing Member at any time; provided, that any such revocation does not unreasonably prejudice the ability of the parties to consummate a Redemption or Direct Exchange on the Redemption Date. The right to consummate a Direct Exchange in all events shall be exercisable for all of the Redeemed Units that would have otherwise been subject to a Redemption.

 

11.4.3    Except as otherwise provided by this Section 11.4, a Direct Exchange shall be consummated pursuant to the same timeframe as the relevant Redemption would have been consummated if the Managing Member had not delivered an Exchange Election Notice and as follows:

 

11.4.3.1    the Redeeming Member shall transfer and surrender, free and clear of all liens and encumbrances, the Redeemed Units to the Managing Member;

 

11.4.3.2    the Managing Member shall pay to the Redeeming Member the Share Settlement; and

 

11.4.3.3    the Company shall (x) register the Managing Member as the owner of the Redeemed Units and (y) if the Units are certificated, issue to the Redeeming Member a certificate for a number of Common Units equal to the difference (if any) between the number of Common Units evidenced by the certificate surrendered by the Redeeming Member pursuant to this Section 11.4 and the Redeemed Units, and issue to the Managing Member a certificate for the number of Redeemed Units acquired from the Redeeming Member pursuant to this Section 11.4.

 

11.5    Reservation of Shares of Class A Common Stock; Listing; Certificate of Incorporation. At all times the Managing Member shall reserve and keep available out of its authorized but unissued Class A Common Stock, solely for the purpose of issuance upon a Share Settlement in connection with a Redemption, such number of shares of Class A Common Stock as shall be issuable upon any such Share Settlement pursuant to a Redemption; provided that nothing contained herein shall be construed to preclude the Managing Member from satisfying its obligations in respect of any such Share Settlement pursuant to a Redemption by delivery of purchased Class A Common Stock (which may or may not be held in the treasury of the Managing Member). Subject to the terms of the Registration Rights Agreement, the Managing Member shall deliver Class A Common Stock that has been registered under the Securities Act with respect to any Share Settlement pursuant to a Redemption to the extent a registration statement is effective and available with respect to such shares. The Managing Member shall use its commercially reasonable efforts to list the Class A Common Stock required to be delivered upon any such Share Settlement pursuant to a Redemption prior to such delivery upon each national securities exchange upon which the outstanding shares of Class A Common Stock are listed at the time of such Share Settlement pursuant to a Redemption (it being understood that any such shares may be subject to transfer restrictions under applicable securities Laws). The Managing Member covenants that all shares of Class A Common Stock issued in connection with a Share Settlement pursuant to a Redemption will, upon issuance, be validly issued, fully paid and non-assessable. The provisions of this Article 11 shall be interpreted and applied in a manner consistent with any corresponding provisions of the Managing Member’s certificate of incorporation (if any).

 

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11.6    Effect of Exercise of Redemption. This Agreement shall continue notwithstanding the consummation of a Redemption by a Member and all rights set forth herein shall continue in effect with respect to the remaining Members and, to the extent the Redeeming Member has any remaining Common Units following such Redemption, the Redeeming Member. No Redemption shall relieve a Redeeming Member of any prior breach of this Agreement by such Redeeming Member.

 

11.7    Tax Treatment. Unless otherwise required by applicable law including a determination of an applicable taxing authority that is final, the parties hereto agree to treat any Redemption (including any Redemption occurring in connection with an Incentive Equity Exchange) or Direct Exchange as a direct exchange between the Managing Member and the Redeeming Member for U.S. federal and applicable state and local income tax purposes and each of the Company, the Managing Member and the applicable Redeeming Members and their respective Affiliates shall report any Redemption or Direct Exchange consistent therewith for all U.S. federal and applicable state and local income tax purposes unless otherwise required by applicable law including a determination of an applicable taxing authority that is final.

 

11.8    Blocker Merger Transaction Cooperation. Following the waiver or expiration of the Lock-Up Period (as defined in the Lock-Up Agreement), if requested by any Member, the Managing Member and the Company shall work together in good faith with any such requesting Member to structure a transaction that provides for such Member (or an Affiliate thereof) to, in lieu of exercising Redemption Rights applicable to all or a portion of the Common Units held (directly or indirectly) by such Member, merge an entity (a “Blocker Corporation”) that (i) is classified as a corporation for U.S. federal income tax purposes, (ii) has no material assets other than Common Units and (iii) has no liabilities other than any liabilities directly relating to the Common Units held by such corporation (iv) does not have, and has never engaged in, any activities other than holding Common Units, and (v) was formed sufficiently in advance of any merger with and into the Managing Member or with or into one or more Subsidiaries of the Managing Member that is treated as a corporation or an entity that is disregarded as separate from the Managing Member for U.S. federal income tax purposes (any such merger, or any substantially similar transaction pursuant to which the equityholder of the Blocker Corporation receives Class A Common Stock in exchange for all of the interests in the Blocker Corporation, a “Blocker Merger Transaction”). Such Member shall notify the Managing Member and the Company in writing of any request by the Member to implement a Blocker Merger Transaction, and the Managing Member, the Company and the applicable Member shall work together to structure any such Blocker Merger Transaction in a manner that qualifies as a “reorganization” within the meaning of Section 368(a) of the Code and shall draft definitive documentation with respect to any such Blocker Merger Transaction. Such definitive documentation shall include customary representations and customary indemnification, including customary indemnification with respect to any taxes of or with respect to the Blocker Corporation, and shall provide for the rights, if any, the Member may have under the Tax Receivable Agreement following any such Blocker Merger Transaction. Notwithstanding the foregoing, in no event shall any Blocker Merger Transaction be required if such Blocker Merger Transaction would reasonably be expected to result in adverse tax consequences to the Company or any Subsidiary thereof, the Managing Member or any Subsidiary thereof, or any other Member.

 

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ARTICLE 12

DISSOLUTION, LIQUIDATION AND TERMINATION

 

12.1    Dissolution. The Company will be dissolved and its affairs will be wound up upon the occurrence of the first of any of the following events: (a) the written agreement of Members holding 80% of the Units then outstanding; or (b) dissolution required by operation of law.

 

12.2    Notice of Dissolution. Upon the dissolution of the Company, the Managing Member will promptly notify each of the Members of such dissolution.

 

12.3    Liquidation. Upon dissolution of the Company, the Managing Member, as liquidating trustee, will immediately commence to wind up the Company’s affairs; provided, however, that a reasonable time will be allowed for the orderly liquidation of the assets of the Company and the satisfaction of liabilities to creditors so as to enable the Members to minimize the losses attendant upon a liquidation. The Members will continue to share Profits and Losses and other items required to be allocated under Article 5, in the same manner as before the dissolution of the Company. The proceeds of liquidation will be applied (i) first, to the payment of amounts owed to creditors, (ii) then to the establishment of such reserves for contingent liabilities and costs of liquidation as the Managing Member may reasonably determine, and (iii) then to distributions to the Members in accordance with Section 6.1 or Section 6.2.

 

12.4    Termination. The Company will terminate when all of the assets of the Company have been distributed in the manner provided for in Section 12.3. Notwithstanding the foregoing, Section 3.5, Article 5, Article 8, Article 9, Section 11.7, this Article 12 and Article 14 will survive termination of the Company and this Agreement in accordance with their terms.

 

12.5    Claims of the Members. Members and former Members will look solely to the Company’s assets for the return of their Capital Contributions, and if the assets of the Company remaining after payment of or due provision for all debts, liabilities and obligations of the Company are insufficient to return such Capital Contributions, the Members and former Members will have no recourse against the Company or any other Member.

 

ARTICLE 13

PROCEDURES FOR ACTIONS AND CONSENTS OF MEMBERS

 

13.1    Procedures for Actions and Consents of Members. The actions requiring Consent of any Member or Members pursuant to this Agreement, including Section 3.6 hereof, or otherwise pursuant to applicable law, are subject to the procedures set forth in this Article 13.

 

13.2    Actions and Consents of Members.

 

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13.2.1    Meetings of the Members may be called only by the Managing Member to transact any business that the Managing Member determines. The call shall state the nature of the business to be transacted. Notice of any such meeting shall be given to all Members entitled to act at the meeting not less than seven (7) days nor more than sixty (60) days prior to the date of such meeting. Members may vote in person or by proxy at such meeting. Unless approval by a different number or proportion of the Members is required by this Agreement, the affirmative vote of Members holding a majority of the outstanding Units held by the Members entitled to act on any proposal shall be sufficient to approve such proposal at a meeting of the Members. Whenever the vote, consent or approval of Members is permitted or required under this Agreement, such vote, consent or approval may be given at a meeting of Members by written Consent in accordance with the procedure prescribed in Section 13.2.2 hereof.

 

13.2.2    Any action requiring the Consent of any Member or group of Members pursuant to this Agreement or that is required or permitted to be taken at a meeting of the Members may be taken without a meeting if a consent in writing or by electronic transmission setting forth the action so taken or consented to is given by Members whose affirmative vote would be sufficient to approve such action or provide such Consent at a meeting of the Members. Such consent may be in one instrument or in several instruments, and shall have the same force and effect as the affirmative vote of such Members at a meeting of the Members. Such consent shall be filed with the Managing Member. An action so taken shall be deemed to have been taken at a meeting held on the effective date so specified by the Managing Member. For purposes of obtaining a Consent in writing or by electronic transmission, the Managing Member may require a response within a reasonable specified time, but not less than fifteen (15) days, and failure to respond in such time period shall constitute a Consent to the Managing Member’s recommendation with respect to the proposal; provided, however, that an action shall become effective at such time as requisite Consents are received even if prior to such specified time.

 

13.2.3    Each Member entitled to act at a meeting of the Members may authorize any Person or Persons to act for it by proxy on all matters in which a Member is entitled to participate, including waiving notice of any meeting, or voting or participating at a meeting. Each proxy must be signed by the Member or its attorney-in-fact. Every proxy shall be revocable in the discretion of the Member executing it, such revocation to be effective upon the Company’s receipt of written notice of such revocation from the Member executing such proxy, unless such proxy states that it is irrevocable and is coupled with an interest.

 

13.2.4    The Managing Member may set, in advance, a record date for the purpose of determining the Members (i) entitled to Consent to any action, (ii) entitled to receive notice of or vote at any meeting of the Members or (iii) in order to make a determination of Members for any other proper purpose. Such date, in any case, shall not be prior to the close of business on the day the record date is fixed and shall be not more than ninety (90) days and, in the case of a meeting of the Members, not less than five (5) days, before the date on which the meeting is to be held or Consent is to be given. If no record date is fixed, the record date for the determination of Members entitled to notice of or to vote at a meeting of the Members shall be at the close of business on the day on which the notice of the meeting is sent, and the record date for any other determination of Members shall be the effective date of such Member action, distribution or other event. When a determination of the Members entitled to vote at any meeting of the Members has been made as provided in this section, such determination shall apply to any adjournment at such meeting.

 

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13.2.5    Each meeting of Members shall be conducted by the Managing Member or such other Person as the Managing Member may appoint pursuant to such rules for the conduct of the meeting as the Managing Member or such other Person deems appropriate in its sole and absolute discretion. Without limitation of the foregoing, meetings of Members may be held at the same time as and as part of, and conducted in the same manner as, the meetings of the Managing Member’s stockholders.

 

ARTICLE 14

MISCELLANEOUS

 

14.1    Notices. All notices provided for in this Agreement will be in writing, duly signed by the party giving such notice, addressed as follows:

 

(a)         If given to the Company, to the Managing Member at the address for such Member set forth on Exhibit A; and

 

(b)         If given to any Member or any of such Member’s members or shareholders, at its address set forth on Exhibit A.

 

All notices required or permitted by this Agreement shall be given by overnight first class mail, postage prepaid, sent by commercial overnight courier service or by electronic mail (with a subject indicating that it is a notice pursuant to this Agreement). Any such notice will be deemed to have been duly given or made and to have become legally effective, in each case, only at the time of receipt thereof by both the primary Person to whom it is directed and each Person to whom a copy is required to be sent in accordance with Exhibit A. Any provision in this Agreement referring to the “giving” or “delivery” of a notice shall be construed in accordance with the preceding sentence.

 

14.2    Failure to Pursue Remedies. The failure of any party to seek redress for violation of, or to insist upon the strict performance of, any provision of this Agreement will not prevent a subsequent act, which would have originally constituted a violation from having the effect of an original violation.

 

14.3    Cumulative Remedies. The rights and remedies provided by this Agreement are cumulative and the use of any one right or remedy by any party will not preclude or waive its right to use any or all other remedies. Said rights and remedies are given in addition to any other rights the parties may have by law, statute, ordinance or otherwise.

 

14.4    Binding Effect. Subject to other applicable provisions of this Agreement, this Agreement will be binding upon and inure to the benefit of the parties and, to the extent permitted by this Agreement, their successors, heirs, legal representatives and assigns. Whenever any provision of this Agreement refers to a Member, such provision shall be deemed to refer also to any Transferee of an Ownership Interest of such Member, subject to other applicable provisions of this Agreement.

 

14.5    Interpretation. All references to “this Agreement” include the exhibits, schedules, and appendixes hereto. Throughout this Agreement, nouns, pronouns and verbs will be construed as masculine, feminine, neuter, singular or plural, whichever will be applicable. All references herein to Sections, subsections, paragraphs or clauses, or to exhibits, schedules or appendixes, will refer to corresponding provisions of this Agreement. Use of the word “including” shall mean “including without limitation,” unless otherwise stated.

 

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14.6    Severability. The invalidity or unenforceability of any particular provision of this Agreement will not affect the other provisions hereof, and this Agreement will be construed in all respects as if such invalid or unenforceable provision were omitted.

 

14.7    Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

 

14.8    Integration. This Agreement and all Exhibits and Appendices hereto, together with all other agreements that will become effective on the Effective Date, constitute the entire agreement among the parties hereto pertaining to the subject matter hereof and shall supersede all prior agreements and understanding pertaining hereto.

 

14.9    Amendments. Subject to the Stockholders’ Agreement, this Agreement may be amended, supplemented, waived or modified by the written consent of the Managing Member in its sole discretion without the approval of any other Member or other Person.

 

14.10    Headings. The headings and subheadings in this Agreement are included for convenience and identification only and are in no way intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any provision hereof.

 

14.11    Governing Law. This Agreement and the rights of the parties hereunder will be interpreted in accordance with the laws of the State of Delaware and all rights and remedies will be governed by such laws without regard to principles of conflict of laws.

 

14.12    Consent to Jurisdiction. Each party to this Agreement hereby irrevocably submits to the exclusive jurisdiction of any state or federal court sitting in the State of Delaware in any action or proceeding arising out of or relating to this Agreement, and each party hereby irrevocably agrees that all claims asserted in such action or proceeding shall be heard and determined in any such court. Each party further irrevocably waives any objection which such party may now or hereafter have to the venue of the state or federal court in the State of Delaware having jurisdiction, and irrevocably agrees not to assert that such court is an inconvenient forum.

 

14.13    Waiver of Jury Trial. EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY TRANSACTION DOCUMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

 

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the parties hereto have executed and delivered this Third Amended and Restated Operating Agreement of Sky Harbour LLC, as of the date first above written.

 

 

COMPANY:

   
 

SKY HARBOUR LLC, a Delaware limited

liability company

   
  /s/ Tal Keinan
 

Name: Tal Keinan

 

Title: Chief Executive Officer

 

 

MANAGING MEMBER:

   
 

SKY HARBOUR GROUP CORPORATION, a Delaware corporation

   
  /s/ Tal Keinan
 

Name: Tal Keinan

 

Title: Chief Executive Officer

 

 

[Signature Page to Third Amended and Restated Operating Agreement]

 

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed and delivered this Third Amended and Restated Operating Agreement of Sky Harbour LLC, as of the date first above written.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

/s/ Tal Keinan

 

 

Tal Keinan, Individually

 

 

 

[Signature Page to Third Amended and Restated Operating Agreement]

 

 

 

 

 

DUE WEST PARTNERS LLC, a Washington limited liability company

 

 

 

 

 

 

 

 

 

 

By:

/s/ Nick Wellmon

 

 

Name: Nick Wellmon

 

  Title: Managing Partner  

 

 

[Signature Page to Third Amended and Restated Operating Agreement]

 

 

 

 

 

CENTER SKY HARBOUR LLC, a Delaware

limited liability company

 

 

 

 

 

 

 

 

 

 

By:

/s/ Alex Valner

 

 

Name: Alex Valner

 

  Title: Manager  

 

 

[Signature Page to Third Amended and Restated Operating Agreement]

 

 

 

 

 

AMODAE CAPITAL LLC, a New York limited

liability company

 

 

 

 

 

 

 

 

 

 

By:

/s/ Eli Elefant

 

 

Name: Eli Elefant

 

  Title: Managing Member  

 

 

[Signature Page to Third Amended and Restated Operating Agreement]

 

 

 

 

 

 

 

 

By:

/s/ Walter Jackson

 

 

Walter Jackson, Individually

 

 

 

[Signature Page to Third Amended and Restated Operating Agreement]

 

 

 

 

       
 

By:

/s/ Joshua Lobel  
 

Joshua Lobel, Individually

 

 

 

[Signature Page to Third Amended and Restated Operating Agreement]

 

 

 

 

       
 

By:

/s/ Haydeh Davoudi  
  Haydeh Davoudi, Individually  

 

 

[Signature Page to Third Amended and Restated Operating Agreement]

 

 

 

EXHIBIT A

 

Names and Addresses of the Members for Notice and Other Purposes

 

If to the Company or the Managing Member:

Sky Harbour LLC
136 Tower Road, Hangar M, Suite 205
White Plains, NY 10604
Attention: Tal Keinan
E-mail: tkeinan@skyharbour.group

 

With a copy to:

 

Morrison & Foerster LLP
250 West 55th Street
New York, New York 10019
Attention: Mitchell Presser; Omar Pringle; Aly El-Hamamsy
E-mail: mpresser@mofo.com; opringle@mofo.com; aelhamamsy@mofo.com

 

If to the Members:

Due West Partners LLC

8260 SE 31st St

Mercer Island, WA 98040

Attention: Nick Wellmon

Email: nickw@duewestpartners.com

 

Center Sky Harbour LLC

9355 Wilshire Blvd

Suite 350

Beverly Hills, CA 90210

Attention: Alex Valner

Email: avalner@centercp.com

 

Walter Jackson

418 Carriage Lane

Wyckoff, NJ 07481

Email: walteralford.jackson@gmail.com

 

Joshua Lobel

5646 Meadowood Road

Dallas, TX 75220

Email: jlobel@focusroq.com

 

A-1

 

Haydeh Davoudi

4618 Staunton Street

Houston, TX 77027

Email: ali@davoudi.com

 

Amodae Capital LLC

400 W 63rd St, 2101

New York, NY 10069

Attention: Eli Elefant

Email: eli@pbcus.com

 

Tal Keinan

159 West 91st Street

New York, NY 10024

Email: tkeinan@skyharbour.group

 

A-2

 

EXHIBIT B

 

Schedule of Converting Units and Warrants

 

 

Holder

 

Existing Company

Units

 

Converted

Common Units

 

Common

Units

Issued Under Warrants

Tal Keinan

 

27,035.04 Founder Units

 

17,943,792

 

--

Due West Partners LLC

 

15,000 Series A Preferred Units

 

11,640,460

 

--

Center Sky Harbour LLC

 

15,000 Series A Preferred Units

 

11,637,960

 

--

Walter Jackson

 

531.25 Series A Preferred Units

 

412,072

 

--

Joshua Lobel

 

531.25 Series A Preferred Units

 

412,072

 

--

Haydeh Davoudi

 

125 Series A Preferred Units

 

97,004

 

--

Amodae Capital LLC

 

62.5 Series A Preferred Units

 

48,890

 

--

BOC YAC Funding LLC

 

8,049.409 Series B Preferred Units

 

0

 

--

Sky Harbour Group Corporation, as Managing Member

 

--

 

14,937,581*

 

14,519,278

 

* Newly issued units to the Managing Member as of the Effective Date.

 

B-1

 

EXHIBIT C

 

Schedule of Incentive Equity Units

 

 

Name of Member

Number of Existing

Company Incentive

Units

Number of

Incentive Equity

Units

Distribution

Threshold

Date of Incentive

Equity Unit Grant

Agreement

Francisco Gonzalez

1,976*

1,421,587*

$66,000,000

May 13, 2021

Francisco Gonzalez

329

201,986

$66,000,000

May 13, 2021

Alexander Saltzman

1,317*

947,485*

$66,000,000

May 13, 2021

Timothy Herr

329*

236,692*

$66,000,000

May 13, 2021

TOTAL

3,951

2,807,750

$66,000,000

 

 

* Denotes whether the Incentive Equity Units are Catch-Up Units.

 

C-1

Exhibit 10.5

 

SKY HARBOUR GROUP CORPORATION 2022 INCENTIVE AWARD PLAN

 

ARTICLE 1.
PURPOSE

 

The purpose of the Sky Harbour Group Corporation 2022 Incentive Award Plan (as it may be amended or restated from time to time, the “Plan”) is to promote the success and enhance the value of Sky Harbour Group Corporation, a Delaware corporation (the “Company”) and Sky Harbour LLC (the “Operating Company”) by linking the individual interests of Directors, Employees, and Consultants to those of Company stockholders and by providing such individuals with an incentive for outstanding performance to generate superior returns to Company stockholders. The Plan is further intended to provide flexibility to the Company and the Operating Company and their subsidiaries in their ability to motivate, attract, and retain the services of those individuals upon whose judgment, interest, and special effort the successful conduct of the Company’s and the Operating Company’s operation is largely dependent.

 

ARTICLE 2.
DEFINITIONS AND CONSTRUCTION

 

Wherever the following terms are used in the Plan they shall have the meanings specified below, unless the context clearly indicates otherwise. The singular pronoun shall include the plural where the context so indicates.

 

2.1    “Administrator” shall mean the Board or a Committee to the extent that the Board’s powers or authority under the Plan have been delegated to such Committee.

 

2.2    “Affiliate” shall mean the Operating Company and any other person or entity that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with the Company, including any Subsidiary and any Affiliate that is a domestic eligible entity that is disregarded, under Treasury Regulation Section 301-7701-3, as an entity separate from either the Company or any Subsidiary. As used in this definition, “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of the Company, whether through ownership of voting securities, by contract or otherwise.

 

2.3    “Aggregate Fully Diluted Shares” means as of any given date, without duplication, and using the treasury stock method (where applicable) (a) the aggregate number of shares of Common Stock that are (i) issued and outstanding as of such date, (ii) issuable upon, or subject to, the settlement of any Awards, any warrants, convertible notes or any other securities and instruments convertible or exchangeable into Common Stock (assuming the conversion or exercise of any such instruments then outstanding, whether or not currently vested, convertible, exchangeable or exercisable, and including all membership interests and units that are or could become convertible or exchangeable for Common Stock pursuant to the Organizational Documents) and (iii) all incentive units outstanding under the Operating Company LLCA as of such date (with an assumed 1:1 exchange for such incentive units for shares of Common Stock).

 

2.4     “Applicable Accounting Standards” shall mean Generally Accepted Accounting Principles in the United States, International Financial Reporting Standards or such other accounting principles or standards as may apply to the Company’s financial statements under United States federal securities laws from time to time.

 

2.5    “Applicable Law” shall mean any applicable law, including, without limitation: (a) provisions of the Code, the Securities Act, the Exchange Act and any rules or regulations thereunder; (b) corporate, securities, tax or other laws, statutes, rules, requirements or regulations, whether federal, state, local or foreign; and (c) rules of any securities exchange or automated quotation system on which the Shares are listed, quoted or traded.

 

2.6     “Award” shall mean an Option, a Stock Appreciation Right, a Restricted Stock award, a Restricted Stock Unit award, an Incentive Equity Unit award, an Other Stock or Cash Based Award or a Dividend Equivalent award, which may be awarded or granted under the Plan.

 

 

 

2.7    “Award Agreement” shall mean any written notice, agreement, terms and conditions, contract or other instrument or document evidencing an Award, including through electronic medium, which shall contain such terms and conditions with respect to an Award as the Administrator shall determine consistent with the Plan.

 

2.8    “Board” shall mean the Board of Directors of the Company.

 

2.9    “Change in Control” shall mean

 

(a)    any “person” or “group” (within the meaning of Sections 13(d) and 14(d) of the Exchange Act, but excluding any employee benefit plan of such person and its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan, and excluding the Permitted Holders (as defined in the Operating Company LLCA)) becomes the “beneficial owner” (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of shares of Common Stock, Class B Common Stock, and/or any other class or classes of capital stock of the Company (if any) representing in the aggregate more than 50% of the voting power of all of the outstanding shares of capital stock of the Company entitled to vote;

 

(b)    the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement or series of related agreements for the sale or other disposition, directly or indirectly, by the Company of all or substantially all of the Company’s assets (including a sale of all or substantially all of the assets of the Operating Company); or

 

(c)    there is consummated a merger or consolidation of the Company with any other corporation or entity, and, immediately after the consummation of such merger or consolidation, the voting securities of the Company immediately prior to such merger or consolidation do not continue to represent, or are not converted into, more than 50% of the combined voting power of the then outstanding voting securities of the person resulting from such merger or consolidation or, if the surviving company is a subsidiary, the ultimate parent thereof.

 

Notwithstanding the foregoing, (i) a “Change in Control” shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the Common Stock, Class B Common Stock, and/or any other class or classes of capital stock of the Company immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in and voting control over, and own substantially all of the shares of, an entity which owns all or substantially all of the assets of the Company immediately following such transaction or series of transactions and (ii) if a Change in Control constitutes a payment event with respect to any Award (or any portion of an Award) that provides for the deferral of compensation that is subject to Section 409A, to the extent required to avoid the imposition of additional taxes under Section 409A, the transaction or event described in subsections (a), (b) or (c) with respect to such Award (or portion thereof) shall only constitute a Change in Control for purposes of the payment timing of such Award if such transaction also constitutes a “change in control event,” as defined in Treasury Regulation Section 1.409A-3(i)(5) (it being understood that vesting of the Award may accelerate upon a Change in Control, even if payment or settlement of the Award may not accelerate pursuant to this clause (ii)).

 

The Administrator shall have full and final authority, which shall be exercised in its sole discretion, to determine conclusively whether a Change in Control has occurred pursuant to the above definition, the date of the occurrence of such Change in Control and any incidental matters relating thereto; provided that any exercise of authority in conjunction with a determination of whether a Change in Control is a “change in control event” as defined in Treasury Regulation Section 1.409A-3(i)(5) shall be consistent with such regulation.

 

2.10    “Class B Common Stock” means the Class B Common Stock, par value $0.0001 per share, of the Company.

 

2.11     “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, together with the regulations and official guidance promulgated thereunder, whether issued prior or subsequent to the grant of any Award.

 

 

 

2.12    “Committee” shall mean the Board, or another committee or subcommittee of the Board which may be comprised of one or more Directors and/or executive officers of the Company as appointed by the Board, to the extent permitted in accordance with Applicable Law.

 

2.13    “Common Stock” shall mean the Class A Common Stock, par value $0.0001 per share, of the Company.

 

2.14    “Common Units” means Common Units, as defined in the Operating Company LLCA.

 

2.15     “Company” shall have the meaning set forth in Article 1.

 

2.16    “Consultant” shall mean any consultant or adviser engaged to provide services to the Company or any parent of the Company or Affiliate who qualifies as a consultant or advisor under the applicable rules of the Securities and Exchange Commission for registration of shares on a Form S-8 Registration Statement.

 

2.17    “Director” shall mean a member of the Board, as constituted from time to time.

 

2.18     “Dividend Equivalent” shall mean a right to receive the equivalent value (in cash or Shares) of dividends paid on Shares, awarded under Section 9.2.

 

2.19    “DRO” shall mean a “domestic relations order” as defined by the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended from time to time, or the rules thereunder.

 

2.20    “Effective Date” shall mean the date the Plan is adopted by the Board, subject to approval of the Plan by the Company’s stockholders.

 

2.21    “Eligible Individual” shall mean any person who is an Employee, a Consultant or a Non-Employee Director, as determined by the Administrator.

 

2.22    “Employee” shall mean any officer or other employee (as determined in accordance with Section 3401(c) of the Code and the Treasury Regulations thereunder) of the Company or of any parent of the Company or Affiliate.

 

2.23    “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.

 

2.24    “Fair Market Value” shall mean, as of any given date, the value of a Share determined as follows:

 

(a)    If the Common Stock is (i) listed on any established securities exchange (such as the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market), (ii) listed on any national market system or (iii) quoted or traded on any automated quotation system, its Fair Market Value shall be the closing sales price for a Share as quoted on such exchange or system for such date or, if there is no closing sales price for a Share on the date in question, the closing sales price for a Share on the last preceding date for which such quotation exists, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;

 

(b)    If the Common Stock is not listed on an established securities exchange, national market system or automated quotation system, but the Common Stock is regularly quoted by a recognized securities dealer, its Fair Market Value shall be the mean of the high bid and low asked prices for such date or, if there are no high bid and low asked prices for a Share on such date, the high bid and low asked prices for a Share on the last preceding date for which such information exists, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; or

 

(c)    If the Common Stock is neither listed on an established securities exchange, national market system or automated quotation system nor regularly quoted by a recognized securities dealer, its Fair Market Value shall be established by the Administrator in good faith.

 

 

 

2.25    “Greater Than 10% Stockholder” shall mean an individual then owning (within the meaning of Section 424(d) of the Code) more than 10% of the total combined voting power of all classes of stock of the Company or any subsidiary corporation (as defined in Section 424(f) of the Code) or parent corporation thereof (as defined in Section 424(e) of the Code).

 

2.26    “Holder” shall mean a person who has been granted an Award.

 

2.27    “Incentive Stock Option” shall mean an Option that is intended to qualify as an incentive stock option and conforms to the applicable provisions of Section 422 of the Code.

 

2.28    “Incentive Equity Unit” shall mean, to the extent authorized by the Operating Company LLCA, a class of limited liability company unit in the Operating Company that is granted pursuant to Section 9.7 hereof and is intended to constitute a “profits interest” within the meaning of the Code.

 

2.29     “Non-Qualified Stock Option” shall mean an Option that is not an Incentive Stock Option or which is designated as an Incentive Stock Option but does not meet the applicable requirements of Section 422 of the Code.

 

2.30    “Operating Company” means shall have the meaning set forth in Article 1.

 

2.31    “Operating Company LLCA” means the Third Amended and Restated Operating Agreement of the Operating Company, as may be amended and/or restated from time to time.

 

2.32    “Option” shall mean a right to purchase Shares at a specified exercise price, granted under Article 5. An Option shall be either a Non-Qualified Stock Option or an Incentive Stock Option; provided, however, that Options granted to Non-Employee Directors and Consultants shall only be Non-Qualified Stock Options.

 

2.33    “Option Term” shall have the meaning set forth in Section 5.4.

 

2.34    “Organizational Documents” shall mean, collectively, (a) the Company’s articles of incorporation, certificate of incorporation, bylaws or other similar organizational documents relating to the creation and governance of the Company, (b) the Committee’s charter or other similar organizational documentation relating to the creation and governance of the Committee, and (c) the Operating Company LLCA.

 

2.35    “Other Stock or Cash Based Award” shall mean a cash payment, cash bonus award, stock payment, stock bonus award, performance award or incentive award that is paid in cash, Shares or a combination of both, awarded under Section 9.1, which may include, without limitation, deferred stock, deferred stock units, performance awards, retainers, committee fees, and meeting-based fees.

 

2.36     “Performance Goals” shall mean, one or more goals established in writing by the Administrator. The Performance Goals may be expressed in terms of overall Company performance or the performance of an Affiliate, division, business unit, or an individual. The achievement of each Performance Goal shall be determined with reference to Applicable Accounting Standards or any other methodology as determined appropriate by the Administrator.

 

2.37    “Permitted Transferee” shall mean, with respect to a Holder, any “family member” of the Holder, as defined in the General Instructions to Form S-8 Registration Statement under the Securities Act (or any successor form thereto), or any other transferee specifically approved by the Administrator after taking into account Applicable Law.

 

2.38    “Plan” shall have the meaning set forth in Article 1.

 

2.39    “Program” shall mean any program adopted by the Administrator pursuant to the Plan containing the terms and conditions intended to govern a specified type of Award granted under the Plan and pursuant to which such type of Award may be granted under the Plan.

 

 

 

2.40    “Restricted Stock” shall mean Common Stock awarded under Article 7 that is subject to certain restrictions and may be subject to risk of forfeiture or repurchase.

 

2.41    “Restricted Stock Units” shall mean the right to receive Shares awarded under Article 8.

 

2.42    “Rule 16b-3” means Rule 16b3 of the Exchange Act and any amendments thereto.

 

2.43    “SAR Term” shall have the meaning set forth in Section 5.4.

 

2.44    “Section 409A” shall mean Section 409A of the Code and the Department of Treasury regulations and other interpretive guidance issued thereunder, including, without limitation, any such regulations or other guidance that may be issued after the Effective Date.

 

2.45    “Securities Act” shall mean the Securities Act of 1933, as amended.

 

2.46    “Shares” shall mean shares of Common Stock.

 

2.47    “Share Reserve” shall have the meaning set forth in Section 3.1.

 

2.48    “Stock Appreciation Right” shall mean an Award entitling the Holder (or other person entitled to exercise pursuant to the Plan) to exercise all or a specified portion thereof (to the extent then exercisable pursuant to its terms) and to receive from the Company an amount determined by multiplying (i) the difference obtained by subtracting (x) the exercise price per share of such Award from (y) the Fair Market Value on the date of exercise of such Award by (ii) the number of Shares with respect to which such Award shall have been exercised, subject to any limitations the Administrator may impose.

 

2.49    “Subsidiary” shall mean any entity (other than the Company), whether domestic or foreign, in an unbroken chain of entities beginning with the Company if each of the entities other than the last entity in the unbroken chain beneficially owns, at the time of the determination, securities or interests representing at least 50% of the total combined voting power of all classes of securities or interests in one of the other entities in such chain.

 

2.50    “Substitute Award” shall mean an Award granted under the Plan in connection with a corporate transaction, such as a merger, combination, consolidation or acquisition of property or stock, in any case, upon the assumption of, or in substitution for, outstanding equity awards previously granted by a company or other entity; provided, however, that in no event shall the term “Substitute Award” be construed to refer to an award made in connection with the cancellation and repricing of an Option or Stock Appreciation Right.

 

2.51    “Termination of Service” shall mean the date the Holder ceases to be an Eligible Individual. The Administrator, in its sole discretion, shall determine the effect of all matters and questions relating to any Termination of Service, including, without limitation, whether a Termination of Service has occurred, whether a Termination of Service resulted from a discharge for cause and all questions of whether particular leaves of absence constitute a Termination of Service; provided, however, that, with respect to Incentive Stock Options, unless the Administrator otherwise provides in the terms of any Program, Award Agreement or otherwise, or as otherwise required by Applicable Law, a leave of absence, change in status from an employee to an independent contractor or other change in the employee-employer relationship shall constitute a Termination of Service only if, and to the extent that, such leave of absence, change in status or other change interrupts employment for the purposes of Section 422(a)(2) of the Code and the then-applicable regulations and revenue rulings under said Section. For purposes of the Plan, a Holder’s employee-employer relationship or consultancy relations shall be deemed to be terminated in the event that the Affiliate employing or contracting with such Holder ceases to remain an Affiliate following any merger, sale of stock or other corporate transaction or event (including, without limitation, a spin-off).

 

 

 

ARTICLE 3.
SHARES SUBJECT TO THE PLAN

 

3.1    Number of Shares.

 

(a)    Subject to Sections 3.1(b) and 12.2, Awards may be made under the Plan covering an aggregate number of Shares equal to 7% of the Aggregate Fully Diluted Shares as of the Effective Date (the “Share Reserve”). The Share Reserve shall also constitute the maximum number of Awards under the Plan that may be granted as Incentive Stock Options. Commencing on January 1, 2023 and on each subsequent anniversary thereof (but not following the Expiration Date), the Share Reserve shall be increased, if and to the extent approved by the Board, by a number of Shares equal to either (i) 0.5% of the Aggregate Fully Diluted Shares as of such date, or (ii) such lesser amount determined by the Board. Any Shares distributed pursuant to an Award may consist, in whole or in part, of authorized and unissued Common Stock, treasury Common Stock or Common Stock purchased on the open market. Subject to Section 12.2, each Incentive Equity Unit issued pursuant to an Award shall count as one Share for purposes of calculating the aggregate number of Shares available for issuance under the Plan as set forth in this Section 3.1(a).

 

(b)    If any Shares are forfeited or expire, or such Award is settled for cash (in whole or in part) (including Shares repurchased by the Company under Section 7.4 at the same price paid by the Holder), the Shares subject to such Award shall, to the extent of such forfeiture, expiration or cash settlement, again be available for future grants of Awards. Shares tendered by a Holder or withheld by the Company in payment of the exercise price of an Option and Shares tendered by the Holder or withheld by the Company to satisfy any tax withholding obligation with respect to an Award shall also again be available for future grants of Awards. Notwithstanding anything to the contrary contained herein, the following Shares shall not be added to the Share Reserve and shall not be available for future grants of Awards: (i) Shares subject to a Stock Appreciation Right or other stock-settled Award (including Awards that may be settled in cash or stock) that are not issued in connection with the settlement or exercise, as applicable, of the Stock Appreciation Right or other stock-settled Award and (ii) Shares purchased on the open market by the Company with the cash proceeds received from the exercise of Options. Any Shares repurchased by the Company under Section 7.4 at the same price paid by the Holder so that such Shares are returned to the Company shall again be available for Awards. The payment of Dividend Equivalents in cash in conjunction with any outstanding Awards shall not be counted against the Shares available for issuance under the Plan. Notwithstanding the provisions of this Section 3.1(b), no Shares may again be optioned, granted or awarded if such action would cause an Incentive Stock Option to fail to qualify as an incentive stock option under Section 422 of the Code.

 

(c)    Substitute Awards may be granted on such terms as the Administrator deems appropriate, notwithstanding limitations on Awards in the Plan. Substitute Awards shall not reduce the Shares authorized for grant under the Plan, except as may be required by reason of Section 422 of the Code, and Shares subject to such Substitute Awards shall not be added to the Shares available for Awards under the Plan as provided in Section 3.1(b) above. Additionally, in the event that a company acquired by the Company or any Affiliate or with which the Company or any Affiliate combines has shares available under a pre-existing plan approved by its stockholders and not adopted in contemplation of such acquisition or combination, the shares available for grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used for Awards under the Plan and shall not reduce the Shares authorized for grant under the Plan (and Shares subject to such Awards shall not be added to the Shares available for Awards under the Plan as provided in Section 3.1(b) above); provided that Awards using such available Shares shall not be made after the date awards or grants could have been made under the terms of the pre-existing plan, absent the acquisition or combination, and shall only be made to individuals who were not employed by or providing services to the Company or its Affiliates immediately prior to such acquisition or combination.

 

ARTICLE 4.
GRANTING OF AWARDS

 

4.1    Participation. The Administrator may, from time to time, select from among all Eligible Individuals those to whom an Award shall be granted and shall determine the nature and amount of each Award, which shall not be inconsistent with the requirements of the Plan. No Eligible Individual or other person shall have any right to be granted an Award pursuant to the Plan and neither the Company nor the Administrator is obligated to treat Eligible Individuals, Holders or any other persons uniformly. Participation by each Holder in the Plan shall be voluntary and nothing in the Plan or any Program shall be construed as mandating that any Eligible Individual or other person shall participate in the Plan.

 

 

 

4.2    Award Agreement. Each Award shall be evidenced by an Award Agreement that sets forth the terms, conditions and limitations for such Award as determined by the Administrator in its sole discretion (consistent with the requirements of the Plan and any applicable Program). Award Agreements evidencing Incentive Stock Options shall contain such terms and conditions as may be necessary to meet the applicable provisions of Section 422 of the Code. The Administrator, in its sole discretion, may grant Awards to Eligible Individuals that are based on achievement of one or more Performance Goals or any such other criteria or goals as the Administrator shall establish.

 

4.3    Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of the Plan, the Plan, and any Award granted or awarded to any individual who is then subject to Section 16 of the Exchange Act, shall be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including Rule 16b-3) that are requirements for the application of such exemptive rule. To the extent permitted by Applicable Law, the Plan and Awards granted or awarded hereunder shall be deemed amended to the extent necessary to conform to such applicable exemptive rule.

 

4.4    At-Will Service. Nothing in the Plan or in any Program or Award Agreement hereunder shall confer upon any Holder any right to continue in the employ of, or as a Director or Consultant for, the Company or any Affiliate, or shall interfere with or restrict in any way the rights of the Company and any Affiliate, which rights are hereby expressly reserved, to discharge any Holder at any time for any reason whatsoever, with or without cause, and with or without notice, or to terminate or change all other terms and conditions of employment or engagement, except to the extent expressly provided otherwise in a written agreement between the Holder and the Company or any Affiliate.

 

4.5    Foreign Holders. Notwithstanding any provision of the Plan or applicable Program to the contrary, in order to comply with the laws in countries other than the United States in which the Company and its Affiliates operate or have Employees, Non-Employee Directors or Consultants, or in order to comply with the requirements of any foreign securities exchange or other Applicable Law, the Administrator, in its sole discretion, shall have the power and authority to: (a) determine which Affiliates shall be covered by the Plan; (b) determine which Eligible Individuals outside the United States are eligible to participate in the Plan; (c) modify the terms and conditions of any Award granted to Eligible Individuals outside the United States to comply with Applicable Law (including, without limitation, applicable foreign laws or listing requirements of any foreign securities exchange); (d) establish subplans and modify exercise procedures and other terms and procedures, to the extent such actions may be necessary or advisable; provided, however, that no such subplans and/or modifications shall increase the share limitation contained in Section 3.1; and (e) take any action, before or after an Award is made, that it deems advisable to obtain approval or comply with any necessary local governmental regulatory exemptions or approvals or listing requirements of any foreign securities exchange.

 

ARTICLE 5.
GRANTING OF OPTIONS AND STOCK APPRECIATION RIGHTS

 

5.1    Granting of Options and Stock Appreciation Rights to Eligible Individuals. The Administrator is authorized to grant Options and Stock Appreciation Rights to Eligible Individuals from time to time, in its sole discretion, on such terms and conditions as it may determine, which shall not be inconsistent with the Plan, including any limitations in the Plan that apply to Incentive Stock Options; provided, however that Options and Stock Appreciation Rights may not be granted with respect to stock that is not “service recipient stock” as defined in Treasury Regulation Section 1.409A-1(b)(5)(iii).

 

 

 

5.2    Qualification of Incentive Stock Options. The Administrator may grant Options intended to qualify as Incentive Stock Options only to employees of the Company, any of the Company’s present or future “parent corporations” or “subsidiary corporations” as defined in Sections 424(e) or (f) of the Code, respectively, and any other entities the employees of which are eligible to receive Incentive Stock Options under the Code. No person who qualifies as a Greater Than 10% Stockholder may be granted an Incentive Stock Option unless such Incentive Stock Option conforms to the applicable provisions of Section 422 of the Code. To the extent that the aggregate fair market value of stock with respect to which “incentive stock options” (within the meaning of Section 422 of the Code, but without regard to Section 422(d) of the Code) are exercisable for the first time by a Holder during any calendar year under the Plan, and all other plans of the Company and any parent corporation or subsidiary corporation thereof (as defined in Section 424(e) and 424(f) of the Code, respectively), exceeds $100,000, the Options shall be treated as Non-Qualified Stock Options to the extent required by Section 422 of the Code. The rule set forth in the immediately preceding sentence shall be applied by taking Options and other “incentive stock options” into account in the order in which they were granted and the fair market value of stock shall be determined as of the time the respective options were granted. Any interpretations and rules under the Plan with respect to Incentive Stock Options shall be consistent with the provisions of Section 422 of the Code. Neither the Company nor the Administrator shall have any liability to a Holder, or any other person, (a) if an Option (or any part thereof) which is intended to qualify as an Incentive Stock Option fails to qualify as an Incentive Stock Option or (b) for any action or omission by the Company or the Administrator that causes an Option not to qualify as an Incentive Stock Option, including, without limitation, the conversion of an Incentive Stock Option to a Non-Qualified Stock Option or the grant of an Option intended as an Incentive Stock Option that fails to satisfy the requirements under the Code applicable to an Incentive Stock Option.

 

5.3    Option and Stock Appreciation Right Exercise Price. The exercise price per Share subject to each Option and Stock Appreciation Right shall be set by the Administrator, but shall not be less than 100% of the Fair Market Value of a Share on the date the Option or Stock Appreciation Right, as applicable, is granted (or, as to Incentive Stock Options, on the date the Option is modified, extended or renewed for purposes of Section 424(h) of the Code). In addition, in the case of Incentive Stock Options granted to a Greater Than 10% Stockholder, such price shall not be less than 110% of the Fair Market Value of a Share on the date the Option is granted (or the date the Option is modified, extended or renewed for purposes of Section 424(h) of the Code). Notwithstanding the foregoing, in the case of an Option or Stock Appreciation Right that is a Substitute Award, the exercise price per share of the Shares subject to such Option or Stock Appreciation Right, as applicable, may be less than the Fair Market Value per share on the date of grant; provided that the exercise price of any Substitute Award shall be determined in accordance with the applicable requirements of Section 424 and 409A of the Code.

 

5.4    Option and SAR Term. The term of each Option (the “Option Term”) and the term of each Stock Appreciation Right (the “SAR Term”) shall be set by the Administrator in its sole discretion; provided, however, that the Option Term or SAR Term, as applicable, shall not be more than (a) 10 years from the date the Option or Stock Appreciation Right, as applicable, is granted to an Eligible Individual (other than a Greater Than 10% Stockholder), or (b) 5 years from the date an Incentive Stock Option is granted to a Greater Than 10% Stockholder. Except as limited by the requirements of Section 409A or Section 422 of the Code and regulations and rulings thereunder or the first sentence of this Section 5.4 and without limiting the Company’s rights under Section 10.7, the Administrator may extend the Option Term of any outstanding Option or the SAR Term of any outstanding Stock Appreciation Right, and may extend the time period during which vested Options or Stock Appreciation Rights may be exercised, in connection with any Termination of Service of the Holder or otherwise, and may amend, subject to Section 10.7 and 12.1, any other term or condition of such Option or Stock Appreciation Right relating to such Termination of Service of the Holder or otherwise.

 

5.5    Option and SAR Vesting. The period during which the right to exercise, in whole or in part, an Option or Stock Appreciation Right vests in the Holder shall be set by the Administrator and set forth in the applicable Award Agreement. Unless otherwise determined by the Administrator in the Award Agreement, the applicable Program or by action of the Administrator following the grant of the Option or Stock Appreciation Right, (i) no portion of an Option or Stock Appreciation Right which is unexercisable at a Holder’s Termination of Service shall thereafter become exercisable and (ii) the portion of an Option or Stock Appreciation Right that is unexercisable at a Holder’s Termination of Service shall automatically expire on the date of such Termination of Service.

 

ARTICLE 6.
EXERCISE OF OPTIONS AND STOCK APPRECIATION RIGHTS

 

6.1    Exercise and Payment. An exercisable Option or Stock Appreciation Right may be exercised in whole or in part. However, unless the Administrator otherwise determines, an Option or Stock Appreciation Right shall not be exercisable with respect to fractional Shares and the Administrator may require that, by the terms of the Option or Stock Appreciation Right, a partial exercise must be with respect to a minimum number of Shares. Payment of the amounts payable with respect to Stock Appreciation Rights pursuant to this Article 6 shall be in cash, Shares (based on its Fair Market Value as of the date the Stock Appreciation Right is exercised), or a combination of both, as determined by the Administrator.

 

 

 

6.2    Manner of Exercise. Except as set forth in Section 6.3, all or a portion of an exercisable Option or Stock Appreciation Right shall be deemed exercised upon delivery of all of the following to the Secretary of the Company, the stock plan administrator of the Company or such other person or entity designated by the Administrator, or his, her or its office, as applicable:

 

(a)    A written notice of exercise in a form the Administrator approves (which may be electronic) complying with the applicable rules established by the Administrator. The notice shall be signed or otherwise acknowledged electronically by the Holder or other person then entitled to exercise the Option or Stock Appreciation Right or such portion thereof;

 

(b)    Such representations and documents as the Administrator, in its sole discretion, deems necessary or advisable to effect compliance with Applicable Law;

 

(c)    In the event that the Option shall be exercised pursuant to Section 10.3 by any person or persons other than the Holder, appropriate proof of the right of such person or persons to exercise the Option or Stock Appreciation Right, as determined in the sole discretion of the Administrator; and

 

(d)    Full payment of the exercise price and applicable withholding taxes for the Shares with respect to which the Option or Stock Appreciation Right, or portion thereof, is exercised, in a manner permitted by the Administrator in accordance with Sections 10.1 and 10.2.

 

6.3    Notification Regarding Disposition. The Holder shall give the Company prompt written or electronic notice of any disposition or other transfer (other than in connection with a Change in Control) of Shares acquired by exercise of an Incentive Stock Option which occurs within (a) two years from the date of granting (including the date the Option is modified, extended or renewed for purposes of Section 424(h) of the Code) such Option to such Holder, or (b) one year after the date of transfer of such Shares to such Holder. Such notice shall specify the date of such disposition or other transfer and the amount realized, in cash, other property, assumption of indebtedness or other consideration, by the Holder in such disposition or other transfer.

 

ARTICLE 7.
AWARD OF RESTRICTED STOCK

 

7.1    Award of Restricted Stock. The Administrator is authorized to grant Restricted Stock, or the right to purchase Restricted Stock, to Eligible Individuals, and shall determine the terms and conditions, including the restrictions applicable to each award of Restricted Stock, which terms and conditions shall not be inconsistent with the Plan or any applicable Program, and may impose such conditions on the issuance of such Restricted Stock as it deems appropriate. The Administrator shall establish the purchase price, if any, and form of payment for Restricted Stock; provided, however, that if a purchase price is charged, such purchase price shall be no less than the par value, if any, of the Shares to be purchased, unless otherwise permitted by Applicable Law. In all cases, legal consideration shall be required for each issuance of Restricted Stock to the extent required by Applicable Law.

 

7.2    Rights as Stockholders. Subject to Section 7.4, upon issuance of Restricted Stock, the Holder shall have, unless otherwise provided by the Administrator, all of the rights of a stockholder with respect to said Shares, subject to the restrictions in the Plan, any applicable Program and/or the applicable Award Agreement, including the right to receive all dividends and other distributions paid or made with respect to the Shares to the extent such dividends and other distributions have a record date that is on or after the date on which the Holder to whom such Restricted Stock are granted becomes the record holder of such Restricted Stock; provided, however, that, in the sole discretion of the Administrator, any extraordinary dividends or distributions with respect to the Shares may be subject to the restrictions set forth in Section 7.3. Notwithstanding anything to the contrary herein, with respect to any award of Restricted Stock, dividends which are paid to holders of Common Stock prior to vesting shall only be paid out to the Holder holding such Restricted Stock to the extent that the vesting conditions are subsequently satisfied. All such dividend payments will be made no later than March 15 of the calendar year following the calendar year in which the right to the dividend payment becomes non-forfeitable.

 

 

 

7.3    Restrictions. All shares of Restricted Stock (including any shares received by Holders thereof with respect to shares of Restricted Stock as a result of stock dividends, stock splits or any other form of recapitalization) and any property or cash transferred to Holders in connection with an extraordinary dividend or distribution shall be subject to such restrictions and vesting requirements as the Administrator shall provide in the applicable Program or Award Agreement.

 

7.4    Repurchase or Forfeiture of Restricted Stock. Except as otherwise determined by the Administrator, if no price was paid by the Holder for the Restricted Stock, upon a Termination of Service during the applicable restriction period, the Holder’s rights in unvested Restricted Stock then subject to restrictions shall lapse, and such Restricted Stock shall be surrendered to the Company and cancelled without consideration on the date of such Termination of Service. If a price was paid by the Holder for the Restricted Stock, upon a Termination of Service during the applicable restriction period, the Company shall have the right to repurchase from the Holder the unvested Restricted Stock then subject to restrictions at a cash price per share equal to the price paid by the Holder for such Restricted Stock or such other amount as may be specified in the applicable Program or Award Agreement.

 

7.5    Section 83(b) Election. If a Holder makes an election under Section 83(b) of the Code to be taxed with respect to the Restricted Stock as of the date of transfer of the Restricted Stock rather than as of the date or dates upon which the Holder would otherwise be taxable under Section 83(a) of the Code, the Holder shall deliver a copy of such election to the Company promptly after filing such election with the Internal Revenue Service along with proof of the timely filing thereof with the Internal Revenue Service.

 

ARTICLE 8.
AWARD OF RESTRICTED STOCK UNITS

 

8.1    Grant of Restricted Stock Units. The Administrator is authorized to grant Awards of Restricted Stock Units to any Eligible Individual selected by the Administrator in such amounts and subject to such terms and conditions as determined by the Administrator. A Holder will have no rights of a stockholder with respect to Shares subject to any Restricted Stock Unit unless and until the Shares are delivered in settlement of the Restricted Stock Unit.

 

8.2    Vesting of Restricted Stock Units. At the time of grant, the Administrator shall specify the date or dates on which the Restricted Stock Units shall become fully vested and nonforfeitable, and may specify such conditions to vesting as it deems appropriate, including, without limitation, vesting based upon the Holder’s duration of service to the Company or any Affiliate, one or more Performance Goals or other specific criteria.

 

8.3    Maturity and Payment. At the time of grant, the Administrator shall specify the maturity date applicable to each grant of Restricted Stock Units, which shall be no earlier than the vesting date or dates of the Award and may be determined at the election of the Holder (if permitted by the applicable Award Agreement); provided that, except as otherwise determined by the Administrator, and subject to compliance with Section 409A, in no event shall the maturity date applicable to each Restricted Stock Unit occur following the later of (a) the 15th day of the third month following the end of the calendar year in which the applicable portion of the Restricted Stock Unit vests; and (b) the 15th day of the third month following the end of the Company’s fiscal year in which the applicable portion of the Restricted Stock Unit vests. On the maturity date, the Company shall, in accordance with the applicable Award Agreement and subject to Section 10.4(f), transfer to the Holder one unrestricted, fully transferable Share for each Restricted Stock Unit scheduled to be paid out on such date and not previously forfeited, or in the sole discretion of the Administrator, an amount in cash equal to the Fair Market Value of such Shares on the maturity date or a combination of cash and Common Stock as determined by the Administrator.

 

 

 

ARTICLE 9.
AWARD OF OTHER STOCK OR CASH BASED AWARDS, DIVIDEND

 EQUIVALENTS AND INCENTIVE EQUITY UNITS

 

9.1    Other Stock or Cash Based Awards. The Administrator is authorized to grant Other Stock or Cash Based Awards, including awards entitling a Holder to receive Shares or cash to be delivered immediately or in the future, to any Eligible Individual. Subject to the provisions of the Plan and any applicable Program, the Administrator shall determine the terms and conditions of each Other Stock or Cash Based Award, including the term of the Award, any exercise or purchase price and Performance Goals, transfer restrictions, vesting conditions and other terms and conditions applicable thereto, which shall be set forth in the applicable Award Agreement. Other Stock or Cash Based Awards may be paid in cash, Shares, or a combination of cash and Shares, as determined by the Administrator, and may be available as a form of payment in the settlement of other Awards granted under the Plan, as stand-alone payments, as a part of a bonus, deferred bonus, deferred compensation or other arrangement, and/or as payment in lieu of compensation to which an Eligible Individual is otherwise entitled.

 

9.2    Dividend Equivalents. Dividend Equivalents may be granted by the Administrator, either alone or in tandem with another Award, based on dividends declared on the Common Stock, to be credited as of dividend payment dates during the period between the date the Dividend Equivalents are granted to a Holder and the date such Dividend Equivalents terminate or expire, as determined by the Administrator. Such Dividend Equivalents shall be converted to cash or additional Shares by such formula and at such time and subject to such restrictions and limitations as may be determined by the Administrator. Notwithstanding the forgoing, Dividend Equivalents with respect to an Award shall only be paid to the Holder to the extent that the vesting conditions are subsequently satisfied. All such Dividend Equivalents will be made no later than March 15 of the calendar year following the calendar year in which the right to the Dividend Equivalent payment becomes non-forfeitable, unless determined otherwise by the Administrator.

 

9.3    Incentive Equity Units. The Administrator is authorized to grant Incentive Equity Units (if authorized under the Operating Company LLCA) in such amount and subject to such terms and conditions as may be determined by the Administrator; provided, however, that Incentive Equity Units may only be issued to a Holder for the performance of services to or for the benefit of the Operating Company (a) in the Holder’s capacity as a member of the Operating Company, (b) in anticipation of the Holder becoming a member of the Operating Company, or (c) as otherwise determined by the Administrator, provided that if and to the extent that the Incentive Equity Units are intended to constitute “profits interests” within the meaning of the Code, including, to the extent applicable, Revenue Procedure 93-27, 1993-2 C.B. 343 and Revenue Procedure 2001-43, 2001-2 C.B. 191, such Incentive Equity Units shall be granted, administered and interpreted in all respects in accordance with the requirements thereof. The Administrator shall specify the conditions and dates upon which the Incentive Equity Units shall vest and become nonforfeitable. Incentive Equity Units shall be subject to the terms and conditions of the Operating Company LLCA and such other restrictions, including restrictions on transferability, as the Administrator may impose. These restrictions may lapse separately or in combination at such times, pursuant to such circumstances, in such installments, or otherwise, as the Administrator determines at the time of the grant of the Award or thereafter.

 

ARTICLE 10.
ADDITIONAL TERMS OF AWARDS

 

10.1    Payment. The Administrator shall determine the method or methods by which payments by any Holder with respect to any Awards granted under the Plan shall be made, including, without limitation: (a) cash, wire transfer of immediately available funds or check, (b) Shares (including, in the case of payment of the exercise price of an Award, Shares issuable pursuant to the exercise of the Award) or Shares held for such minimum period of time as may be established by the Administrator, in each case, having a Fair Market Value on the date of delivery equal to the aggregate payments required, (c) delivery of a written or electronic notice that the Holder has placed a market sell order with a broker acceptable to the Company with respect to Shares then issuable upon exercise or vesting of an Award, and that the broker has been directed to pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction of the aggregate payments required; provided that payment of such proceeds is then made to the Company upon settlement of such sale, (d) other form of legal consideration acceptable to the Administrator in its sole discretion, or (e) any combination of the above permitted forms of payment. Notwithstanding any other provision of the Plan to the contrary, no Holder who is a Director or an “executive officer” of the Company within the meaning of Section 13(k) of the Exchange Act shall be permitted to make payment with respect to any Awards granted under the Plan, or continue any extension of credit with respect to such payment, with a loan from the Company or a loan arranged by the Company in violation of Section 13(k) of the Exchange Act.

 

 

 

10.2    Tax Withholding. The Company or any Affiliate shall have the authority and the right to deduct or withhold, or require a Holder to remit to the Company, an amount sufficient to satisfy federal, state, local and foreign taxes (including the Holder’s FICA, employment tax or other social security contribution obligation) required by law to be withheld with respect to any taxable event concerning a Holder arising as a result of the Plan or any Award. The Administrator may, in its sole discretion and in satisfaction of the foregoing requirement, or in satisfaction of such additional withholding obligations as a Holder may have elected, allow a Holder to satisfy such obligations by any payment means described in Section 10.1 hereof, including without limitation, by allowing such Holder to elect to have the Company or any Affiliate withhold Shares otherwise issuable under an Award (or allow the surrender of Shares). The number of Shares that may be so withheld or surrendered shall be limited to the number of Shares that have a fair market value on the date of withholding or repurchase no greater than the aggregate amount of such liabilities based on the maximum statutory withholding rates in such Holder’s applicable jurisdictions for federal, state, local and foreign income tax and payroll tax purposes that are applicable to such taxable income. The Administrator shall determine the fair market value of the Shares, consistent with applicable provisions of the Code, for tax withholding obligations due in connection with a broker-assisted cashless Option or Stock Appreciation Right exercise involving the sale of Shares to pay the Option or Stock Appreciation Right exercise price or any tax withholding obligation.

 

10.3    Transferability of Awards.

 

(a)    Except as otherwise provided in Sections 10.3(b) and 10.3(c):

 

(i)    No Award under the Plan may be sold, pledged, assigned or transferred in any manner other than (A) by will or the laws of descent and distribution or (B) subject to the consent of the Administrator, pursuant to a DRO, unless and until such Award has been exercised or the Shares underlying such Award have been issued, and all restrictions applicable to such Shares have lapsed;

 

(ii)    No Award or interest or right therein shall be liable for or otherwise subject to the debts, contracts or engagements of the Holder or the Holder’s successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, hypothecation, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy) unless and until such Award has been exercised, or the Shares underlying such Award have been issued, and all restrictions applicable to such Shares have lapsed, and any attempted disposition of an Award prior to satisfaction of these conditions shall be null and void and of no effect, except to the extent that such disposition is permitted by Section 10.3(a)(i); and

 

(iii)    During the lifetime of the Holder, only the Holder may exercise any exercisable portion of an Award granted to such Holder under the Plan, unless it has been disposed of pursuant to a DRO. After the death of the Holder, any exercisable portion of an Award may, prior to the time when such portion becomes unexercisable under the Plan or the applicable Program or Award Agreement, be exercised by the Holder’s personal representative or by any person empowered to do so under the deceased Holder’s will or under the then-applicable laws of descent and distribution.

 

(b)    Notwithstanding Section 10.3(a), the Administrator, in its sole discretion, may determine to permit a Holder or a Permitted Transferee of such Holder to transfer an Award other than an Incentive Stock Option (unless such Incentive Stock Option is intended to become a Nonqualified Stock Option) to any one or more Permitted Transferees of such Holder, subject to the following terms and conditions: (i) an Award transferred to a Permitted Transferee shall not be assignable or transferable by the Permitted Transferee other than (A) to another Permitted Transferee of the applicable Holder or (B) by will or the laws of descent and distribution or, subject to the consent of the Administrator, pursuant to a DRO; (ii) an Award transferred to a Permitted Transferee shall continue to be subject to all the terms and conditions of the Award as applicable to the original Holder (other than the ability to further transfer the Award to any person other than another Permitted Transferee of the applicable Holder); (iii) any transfer of an Award to a Permitted Transferee shall be without consideration, except as required by applicable law; (iv) the Holder (or transferring Permitted Transferee) and the receiving Permitted Transferee shall execute any and all documents requested by the Administrator, including, without limitation documents to (A) confirm the status of the transferee as a Permitted Transferee, (B) satisfy any requirements for an exemption for the transfer under Applicable Law and (C) evidence the transfer; and (v) the transfer of an Award to a Permitted Transferee shall be without consideration. In addition, and further notwithstanding Section 10.3(a), hereof, the Administrator, in its sole discretion, may determine to permit a Holder to transfer Incentive Stock Options to a trust that constitutes a Permitted Transferee if, under Section 671 of the Code and other Applicable Law, the Holder is considered the sole beneficial owner of the Incentive Stock Option while it is held in the trust.

 

 

 

(c)    Notwithstanding Section 10.3(a), a Holder may, in the manner determined by the Administrator, designate a beneficiary to exercise the rights of the Holder and to receive any distribution with respect to any Award upon the Holder’s death. A beneficiary, legal guardian, legal representative, or other person claiming any rights pursuant to the Plan is subject to all terms and conditions of the Plan and any Program or Award Agreement applicable to the Holder and any additional restrictions deemed necessary or appropriate by the Administrator. If the Holder is married or a domestic partner in a domestic partnership qualified under Applicable Law and resides in a community property state, a designation of a person other than the Holder’s spouse or domestic partner, as applicable, as the Holder’s beneficiary with respect to more than 50% of the Holder’s interest in the Award shall not be effective without the prior written or electronic consent of the Holder’s spouse or domestic partner. If no beneficiary has been designated or survives the Holder, payment shall be made to the person entitled thereto pursuant to the Holder’s will or the laws of descent and distribution. Subject to the foregoing, a beneficiary designation may be changed or revoked by a Holder at any time; provided that the change or revocation is delivered in writing to the Administrator prior to the Holder’s death.

 

10.4    Conditions to Issuance of Shares.

 

(a)    The Administrator shall determine the methods by which Shares shall be delivered or deemed to be delivered to Holders. Notwithstanding anything herein to the contrary, the Company shall not be required to issue or deliver any certificates or make any book entries evidencing Shares pursuant to the exercise of any Award, unless and until the Administrator has determined that the issuance of such Shares is in compliance with Applicable Law and the Shares are covered by an effective registration statement or applicable exemption from registration. In addition to the terms and conditions provided herein, the Administrator may require that a Holder make such reasonable covenants, agreements and representations as the Administrator, in its sole discretion, deems advisable in order to comply with Applicable Law.

 

(b)    All share certificates delivered pursuant to the Plan and all Shares issued pursuant to book entry procedures are subject to any stop-transfer orders and other restrictions as the Administrator deems necessary or advisable to comply with Applicable Law. The Administrator may place legends on any share certificate or book entry to reference restrictions applicable to the Shares (including, without limitation, restrictions applicable to Restricted Stock).

 

(c)    The Administrator shall have the right to require any Holder to comply with any timing or other restrictions with respect to the settlement, distribution or exercise of any Award, including a window-period limitation, as may be imposed in the sole discretion of the Administrator.

 

(d)    Unless the Administrator otherwise determines, no fractional Shares shall be issued and the Administrator, in its sole discretion, shall determine whether cash shall be given in lieu of fractional Shares or whether such fractional Shares shall be eliminated by rounding down.

 

(e)    The Company, in its sole discretion, may (i) retain physical possession of any stock certificate evidencing Shares until any restrictions thereon shall have lapsed and/or (ii) require that the stock certificates evidencing such Shares be held in custody by a designated escrow agent (which may but need not be the Company) until the restrictions thereon shall have lapsed, and that the Holder deliver a stock power, endorsed in blank, relating to such Shares.

 

(f)    Notwithstanding any other provision of the Plan, unless otherwise determined by the Administrator or required by Applicable Law, the Company shall not deliver to any Holder certificates evidencing Shares issued in connection with any Award and instead such Shares shall be recorded in the books of the Company (or, as applicable, its transfer agent or stock plan administrator).

 

10.5    Forfeiture and Claw-Back Provisions. All Awards (including any proceeds, gains or other economic benefit actually or constructively received by a Holder upon any receipt or exercise of any Award or upon the receipt or resale of any Shares underlying the Award and any payments of a portion of an incentive-based bonus pool allocated to a Holder) shall be subject to the provisions of any claw-back policy implemented by the Company, including, without limitation, any claw-back policy adopted to comply with the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act (and any rules or regulations promulgated thereunder) or any other Applicable Law, whether or not such claw-back policy was in place at the time of grant of an Award, to the extent set forth in such claw-back policy and/or in the applicable Award Agreement.

 

 

 

10.6    Repricing. Subject to Section 12.2, the Administrator may not, without the approval of the stockholders of the Company, (a) authorize the amendment of any outstanding Option or Stock Appreciation Right to reduce its price per Share, or (b) cancel any Option or Stock Appreciation Right in exchange for cash or another Award when the Option or Stock Appreciation Right price per Share exceeds the Fair Market Value of the underlying Shares. Furthermore, for purposes of this Section 10.6, except in connection with a corporate transaction involving the Company (including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination or exchange of shares), the terms of outstanding Awards may not be amended to reduce the exercise price per Share of outstanding Options or Stock Appreciation Rights or cancel outstanding Options or Stock Appreciation Rights in exchange for cash, other Awards or Options or Stock Appreciation Rights with an exercise price per Share that is less than the exercise price per Share of the original Options or Stock Appreciation Rights without the approval of the stockholders of the Company.

 

10.7    Amendment of Awards. Subject to Applicable Law and Section 10.6, the Administrator may amend, modify or terminate any outstanding Award, including but not limited to, substituting therefor another Award of the same or a different type and changing the date of exercise or settlement. The Holder’s consent to such action shall be required unless (a) the Administrator determines that the action, taking into account any related action, would not materially and adversely affect the Holder, or (b) the change is otherwise permitted under the Plan (including, without limitation, under Section 12.2 or 12.10).

 

10.8    Lock-Up Period. The Company may, in connection with registering the offering of any Company securities under the Securities Act, prohibit Holders from, directly or indirectly, selling or otherwise transferring any Shares or other Company securities during a period of up to one hundred eighty days following the effective date of a Company registration statement filed under the Securities Act, or such longer period as determined by the underwriter. In order to enforce the foregoing, the Company shall have the right to place restrictive legends on the certificates of any securities of the Company held by the Holder and to impose stop transfer instructions with the Company’s transfer agent with respect to any securities of the Company held by the Holder until the end of such period.

 

10.9    Data Privacy. As a condition of receipt of any Award, each Holder explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of personal data as described in this Section 10.9 by and among, as applicable, the Company and its Affiliates for the exclusive purpose of implementing, administering and managing the Holder’s participation in the Plan. The Company and its Affiliates may hold certain personal information about a Holder, including but not limited to, the Holder’s name, home address and telephone number, date of birth, social security or insurance number or other identification number, salary, nationality, job title(s), any shares of stock held in the Company or any of its Affiliates, details of all Awards, in each case, for the purpose of implementing, managing and administering the Plan and Awards (the “Data”). The Company and its Affiliates may transfer the Data amongst themselves as necessary for the purpose of implementation, administration and management of a Holder’s participation in the Plan, and the Company and its Affiliates may each further transfer the Data to any third parties assisting the Company and its Affiliates in the implementation, administration and management of the Plan. These recipients may be located in the Holder’s country, or elsewhere, and the Holder’s country may have different data privacy laws and protections than the recipients’ country. Through acceptance of an Award, each Holder authorizes such recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing the Holder’s participation in the Plan, including any requisite transfer of such Data as may be required to a broker or other third party with whom the Company or any of its Affiliates or the Holder may elect to deposit any Shares. The Data related to a Holder will be held only as long as is necessary to implement, administer, and manage the Holder’s participation in the Plan. A Holder may, at any time, view the Data held by the Company with respect to such Holder, request additional information about the storage and processing of the Data with respect to such Holder, recommend any necessary corrections to the Data with respect to the Holder or refuse or withdraw the consents herein in writing, in any case without cost, by contacting his or her local human resources representative. The Company may cancel the Holder’s ability to participate in the Plan, and, in the Administrator’s discretion, the Holder may forfeit any outstanding Awards if the Holder refuses or withdraws his or her consents as described herein. For more information on the consequences of refusal to consent or withdrawal of consent, Holders may contact their local human resources representative.

 

 

 

ARTICLE 11.
ADMINISTRATION

 

11.1    Administrator. The Committee shall administer the Plan (except as otherwise permitted herein). To the extent required to comply with the provisions of Rule 16b-3, it is intended that each member of the Committee will be, at the time the Committee takes any action with respect to an Award that is subject to Rule 16b-3, a “non-employee director” within the meaning of Rule 16b-3. Additionally, to the extent required by Applicable Law, each of the individuals constituting the Committee shall be an “independent director” under the rules of any securities exchange or automated quotation system on which the Shares are listed, quoted or traded. Notwithstanding the foregoing, any action taken by the Committee shall be valid and effective, whether or not members of the Committee at the time of such action are later determined not to have satisfied the requirements for membership set forth in this Section 11.1 or the Organizational Documents. Except as may otherwise be provided in the Organizational Documents or as otherwise required by Applicable Law, (a) appointment of Committee members shall be effective upon acceptance of appointment, (b) Committee members may resign at any time by delivering written or electronic notice to the Board and (c) vacancies in the Committee may only be filled by the Board. Notwithstanding the foregoing, (i) the full Board, acting by a majority of its members in office, (A) shall conduct the general administration of the Plan with respect to Awards granted to Non-Employee Directors and, with respect to such Awards, the term “Administrator” as used in the Plan shall be deemed to refer to the Board, and (B) may re-vest in itself at any time any authority of the Committee hereunder, and (ii) the Board or Committee may delegate its authority hereunder to the extent permitted by Section 11.6.

 

11.2    Duties and Powers of Administrator. It shall be the duty of the Administrator to conduct the general administration of the Plan in accordance with its provisions. The Administrator shall have the power to interpret the Plan, all Programs and Award Agreements, and to adopt such rules for the administration, interpretation and application of the Plan and any Program as are not inconsistent with the Plan, to interpret, amend or revoke any such rules and to amend the Plan or any Program or Award Agreement; provided that the rights or obligations of the Holder of the Award that is the subject of any such Program or Award Agreement are not materially and adversely affected by such amendment, unless the consent of the Holder is obtained or such amendment is otherwise permitted under Section 10.7 or Section 12.10. In its sole discretion, the Board may at any time and from time to time exercise any and all rights and duties of the Committee in its capacity as the Administrator under the Plan except with respect to matters which under Rule 16b-3 or any successor rule, or any regulations or rules issued thereunder, or the rules of any securities exchange or automated quotation system on which the Shares are listed, quoted or traded are required to be determined in the sole discretion of the Committee.

 

11.3    Action by the Administrator. Unless otherwise established by the Board, set forth in any Organizational Documents or as required by Applicable Law, a majority of the Administrator shall constitute a quorum, and the acts of a majority of the members present at any meeting at which a quorum is present, and acts approved in writing by all members of the Administrator in lieu of a meeting, shall be deemed the acts of the Administrator. Each member of the Administrator is entitled to, in good faith, rely or act upon any report or other information furnished to that member by any officer or other employee of the Company or any Affiliate, the Company’s independent certified public accountants, or any executive compensation consultant or other professional retained by the Company to assist in the administration of the Plan. Neither the Administrator nor any member or delegate thereof shall have any liability to any person (including any Holder) for any action taken or omitted to be taken or any determination made in good faith with respect to the Plan or any Award.

 

11.4    Authority of Administrator. Subject to the Organizational Documents, any specific designation in the Plan and Applicable Law, the Administrator has the exclusive power, authority and sole discretion to:

 

(a)    Designate Eligible Individuals to receive Awards;

 

(b)    Determine the type or types of Awards to be granted to each Eligible Individual (including, without limitation, any Awards granted in tandem with another Award granted pursuant to the Plan);

 

(c)    Determine the number of Awards to be granted and the number of Shares to which an Award will relate;

 

 

 

(d)    Determine the terms and conditions of any Award granted pursuant to the Plan, including, but not limited to, the exercise price, grant price, purchase price, any Performance Goals, any restrictions or limitations on the Award, any schedule for vesting, lapse of forfeiture restrictions or restrictions on the exercisability of an Award, and accelerations or waivers thereof, and any provisions related to non-competition and claw-back and recapture of gain on an Award, based in each case on such considerations as the Administrator in its sole discretion determines;

 

(e)    Determine whether, to what extent, and under what circumstances an Award may be settled in, or the exercise price of an Award may be paid in cash, Shares, other Awards, or other property, or an Award may be canceled, forfeited, or surrendered;

 

(f)    Prescribe the form of each Award Agreement, which need not be identical for each Holder;

 

(g)    Decide all other matters that must be determined in connection with an Award;

 

(h)    Establish, adopt, or revise any Programs, rules and regulations as it may deem necessary or advisable to administer the Plan;

 

(i)    Interpret the terms of, and any matter arising pursuant to, the Plan, any Program or any Award Agreement, resolve any ambiguities under the Plan or any Award and supply any omissions; and

 

(j)    Make all other decisions and determinations that may be required pursuant to the Plan or as the Administrator deems necessary or advisable to administer the Plan.

 

11.5    Decisions Binding. The Administrator’s interpretation of the Plan, any Awards granted pursuant to the Plan, any Program or any Award Agreement and all decisions and determinations by the Administrator with respect to the Plan are final, binding and conclusive on all persons.

 

11.6    Delegation of Authority. The Board or Committee may from time to time delegate to a committee of one or more Directors or one or more officers of the Company the authority to grant or amend Awards or to take other administrative actions pursuant to this Article 11; provided, however, that in no event shall an officer of the Company be delegated the authority to grant Awards to, or amend Awards held by, the following individuals: (a) individuals who are subject to Section 16 of the Exchange Act, or (b) officers of the Company (or Directors) to whom authority to grant or amend Awards has been delegated hereunder; provided, further, that any delegation of administrative authority shall only be permitted to the extent it is permissible under any Organizational Documents and Applicable Law. Any delegation hereunder shall be subject to the restrictions and limits that the Board or Committee specifies at the time of such delegation or that are otherwise included in the applicable Organizational Documents, and the Board or Committee, as applicable, may at any time rescind the authority so delegated or appoint a new delegatee. At all times, the delegatee appointed under this Section 11.6 shall serve in such capacity at the pleasure of the Board or the Committee, as applicable, and the Board or the Committee may abolish any committee at any time and re-vest in itself any previously delegated authority.

 

11.7    Acceleration. Subject to the Organizational Documents, any specific designation in the Plan and Applicable Law, the Administrator has the exclusive power, authority and sole discretion to accelerate, wholly or partially, the vesting or lapse of restrictions (and, if applicable, the Company shall cease to have a right of repurchase) of any Award or portion thereof at any time after the grant of an Award, subject to whatever terms and conditions it selects and Section 12.2.

 

ARTICLE 12.
MISCELLANEOUS PROVISIONS

 

12.1    Amendment, Suspension or Termination of the Plan.

 

(a)    Except as otherwise provided in Section 12.1(b), the Plan may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Board; provided that, except as provided in Section 10.7 and Section 12.10, no amendment, suspension or termination of the Plan shall, without the consent of the Holder, materially and adversely affect any rights or obligations under any Award theretofore granted or awarded, unless the Award itself otherwise expressly so provides.

 

 

 

(b)    Notwithstanding Section 12.1(a), the Board may not, except as provided in Section 12.2, take any of the following actions without approval of the Company’s stockholders given within 12 months before or after such action: (i) increase the limit imposed in Section 3.1 on the maximum number of Shares which may be issued under the Plan, (ii) reduce the price per share of any outstanding Option or Stock Appreciation Right granted under the Plan or take any action prohibited under Section 10.6, or (iii) cancel any Option or Stock Appreciation Right in exchange for cash or another Award in violation of Section 10.6.

 

(c)    No Awards may be granted or awarded during any period of suspension or after termination of the Plan, and notwithstanding anything herein to the contrary, in no event may any Award be granted under the Plan after the tenth anniversary of the earlier of (i) the date on which the Plan was adopted by the Board and (ii) the date the Plan was approved by the Company’s stockholders (such anniversary, the “Expiration Date”). Any Awards that are outstanding on the Expiration Date shall remain in force according to the terms of the Plan, the applicable Program and the applicable Award Agreement.

 

12.2    Changes in Common Stock or Assets of the Company, Acquisition or Liquidation of the Company and Other Corporate Events.

 

(a)    In the event of (i) any equity distribution, extraordinary dividend or other distribution (whether in the form of securities or other property), recapitalization, division of Shares or Common Units, Share or unit split, reverse Share or unit split, reorganization, merger, consolidation, split-up, split-off, combination, repurchase or exchange of Shares or Common Units or other securities of the Company or an Affiliate, as applicable, issuance of warrants or other rights to acquire Shares or Common Units or other securities of the Company or an Affiliate, as applicable, or other similar corporate transaction or event (including, without limitation, a Change in Control) that affects the Shares or Common Units, or (ii) unusual or nonrecurring events (including, without limitation, a Change in Control) affecting the Company or an Affiliate, or the financial statements of the Company or an Affiliate, or changes in applicable rules, rulings, regulations or other requirements of any governmental body or securities exchange or inter-dealer quotation system, accounting principles or law, such that in either case an adjustment is determined by the Administrator in its sole discretion to be necessary or appropriate, then the Administrator shall make any such adjustments in such manner as it may deem equitable, including without limitation any or all of the following:

 

(i)    Adjusting any or all of (A) the number of Shares or other securities of the Company or an Affiliate (or the number and kind of other securities or other property) that may be delivered in respect of Awards or with respect to which Awards may be granted under the Plan (including, without limitation, adjusting any or all of the limitations under Section 3 of the Plan) and (B) the terms of any outstanding Award, including, without limitation, (1) the number of Shares or other securities of the Company or an Affiliate (or the number and kind of other securities or other property) subject to outstanding Awards or to which outstanding Awards relate, (2) the exercise price with respect to any Award or (3) any applicable performance measures;

 

(ii)    Providing for a substitution or assumption of Awards, accelerating the exercisability of, lapse of restrictions on, or termination of, Awards or providing for a period of time for exercise prior to the occurrence of such event; and

 

(iii)    Cancelling any one or more outstanding Awards and causing to be paid to the holders thereof, in cash, Shares, other securities or other property, or any combination thereof, the value of such Awards, if any, as determined by the Administrator (which, if applicable, may be based upon the price per Share received or to be received by other holders of the Shares or same class or series of securities as the securities subject to the Award in such event), including without limitation, in the case of an outstanding Option or SAR, a cash payment in an amount equal to the excess, if any, of the Fair Market Value (as of a date specified by the Administrator) of the Shares subject to such Option or SAR over the aggregate exercise price of such Option or SAR, respectively (it being understood that, in such event, any Option or SAR having an exercise price equal to, or in excess of, the Fair Market Value of a Share subject thereto may be canceled and terminated without any payment or consideration therefor).

 

 

 

For the avoidance of doubt, in the case of any “equity restructuring” (within the meaning of the Financial Accounting Standards Board Accounting Standard Codification (ASC) Section 718, Compensation Stock Compensation (FASB ASC 718)), the Administrator shall make an equitable or proportionate adjustment to outstanding Awards to reflect such equity restructuring. Any adjustments under this Section 12.2(a) shall be made in a manner that does not adversely affect the exemption provided pursuant to Rule 16b-3, to the extent applicable. The Administrator or its designee shall give each Holder notice of an adjustment hereunder and, upon notice, such adjustment shall be conclusive and binding for all purposes.

 

(b)    Except to the extent otherwise provided in an Award Agreement, in the event of a Change in Control, notwithstanding any provision of the Plan to the contrary, the Administrator may provide in its sole discretion that, with respect to all or any portion of a particular outstanding Award or Awards:

 

(i)    To provide for the cancellation of any such Award in exchange for either an amount of cash or other property with a value equal to the amount that could have been obtained upon the exercise or settlement of the vested portion of such Award or realization of the Holder’s rights under the vested portion of such Award, as applicable; provided that, if the amount that could have been obtained upon the exercise or settlement of the vested portion of such Award or realization of the Holder’s rights, in any case, is equal to or less than zero, then the Award may be terminated without payment;

 

(ii)    To provide that such Award shall vest and, to the extent applicable, be exercisable as to all Shares covered thereby, notwithstanding anything to the contrary in the Plan or the provisions of such Award;

 

(iii)    To provide that such Award be assumed by the successor or survivor corporation, or a parent or subsidiary thereof, or shall be substituted for by awards covering the stock of the successor or survivor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and/or applicable exercise or purchase price, in all cases, as determined by the Administrator;

 

(iv)    To make adjustments in the number and type of Shares (or other securities or property) subject to outstanding Awards and/or with respect to which Awards may be granted under the Plan (including, but not limited to, adjustments of the limitations in Article III on the maximum number and kind of shares which may be issued) and/or in the terms and conditions of (including the grant or exercise price or applicable performance goals), and the criteria included in, outstanding Awards;

 

(v)    To replace such Award with other rights or property selected by the Administrator; and/or

 

(vi)    To provide that the Award will terminate for no consideration and cannot vest, be exercised or become payable after the applicable event.

 

Notwithstanding the foregoing, in the event of a Change in Control: (x) all Performance Goals applicable to an Award shall be deemed satisfied at the greater of target or actual performance at the time of such Change in Control and (y) any unvested Award that is not assumed or substituted under the immediately preceding clause (iii) shall automatically vest and, to the extent applicable, be exercisable as to all Shares covered thereby.

 

To the extent practicable, any actions taken by the Administrator under the immediately preceding clauses (i) through (vi) shall occur in a manner and at a time which allows affected Holders the ability to participate in the Change in Control transaction with respect to the Shares subject to their Awards.

 

12.3    Approval of Plan by Stockholders. The Plan shall be submitted for the approval of the Company’s stockholders within 12 months after the date of the Board’s initial adoption of the Plan. Awards may be granted or awarded prior to such stockholder approval; provided that such Awards shall not be exercisable, shall not vest and the restrictions thereon shall not lapse, and no Shares shall be issued pursuant thereto prior to the time when the Plan is approved by the Company’s stockholders; and provided, further, that if such approval has not been obtained at the end of said 12 month period, all Awards previously granted or awarded under the Plan shall thereupon be canceled and become null and void.

 

 

 

12.4    No Stockholders Rights. Except as otherwise provided herein or in an applicable Program or Award Agreement, a Holder shall have none of the rights of a stockholder with respect to Shares covered by any Award until the Holder becomes the record owner of such Shares.

 

12.5    Paperless Administration. In the event that the Company establishes, for itself or using the services of a third party, an automated system for the documentation, granting or exercise of Awards, such as a system using an internet website or interactive voice response, then the paperless documentation, granting or exercise of Awards by a Holder may be permitted through the use of such an automated system.

 

12.6    Effect of Plan upon Other Compensation Plans. The adoption of the Plan shall not affect any other compensation or incentive plans in effect for the Company or any Affiliate. Nothing in the Plan shall be construed to limit the right of the Company or any Affiliate: (a) to establish any other forms of incentives or compensation for Employees, Directors or Consultants of the Company or any Affiliate, or (b) to grant or assume options or other rights or awards otherwise than under the Plan in connection with any proper corporate purpose including without limitation, the grant or assumption of options in connection with the acquisition by purchase, lease, merger, consolidation or otherwise, of the business, stock or assets of any corporation, partnership, limited liability company, firm or association.

 

12.7    Compliance with Laws. The Plan, the granting and vesting of Awards under the Plan and the issuance and delivery of Shares and Incentive Equity Units and the payment of money under the Plan or under Awards granted or awarded hereunder are subject to compliance with all Applicable Law (including but not limited to state, federal and foreign securities law and margin requirements), and to such approvals by any listing, regulatory or governmental authority as may, in the opinion of counsel for the Company, be necessary or advisable in connection therewith. Any securities delivered under the Plan shall be subject to such restrictions, and the person acquiring such securities shall, if requested by the Company, provide such assurances and representations to the Company as the Company may deem necessary or desirable to assure compliance with all Applicable Law. The Administrator, in its sole discretion, may take whatever actions it deems necessary or appropriate to effect compliance with Applicable Law, including, without limitation, placing legends on share certificates and issuing stop-transfer notices to agents and registrars. Notwithstanding anything to the contrary herein, the Administrator may not take any actions hereunder, and no Awards shall be granted, that would violate Applicable Law. To the extent permitted by Applicable Law, the Plan and Awards granted or awarded hereunder shall be deemed amended to the extent necessary to conform to Applicable Law.

 

12.8    Titles and Headings, References to Sections of the Code or Exchange Act. The titles and headings of the Sections in the Plan are for convenience of reference only and, in the event of any conflict, the text of the Plan, rather than such titles or headings, shall control. References to sections of the Code or the Exchange Act shall include any amendment or successor thereto.

 

12.9    Governing Law. The Plan and any Programs and Award Agreements hereunder shall be administered, interpreted and enforced under the internal laws of the State of Delaware without regard to conflicts of laws thereof or of any other jurisdiction.

 

 

 

12.10    Section 409A. To the extent that the Administrator determines that any Award granted under the Plan is subject to Section 409A, the Plan, the Program pursuant to which such Award is granted and the Award Agreement evidencing such Award shall incorporate the terms and conditions required by Section 409A. In that regard, to the extent any Award under the Plan or any other compensatory plan or arrangement of the Company or any of its Affiliates is subject to Section 409A, and such Award or other amount is payable on account of a Holder’s Termination of Service (or any similarly defined term), then (a) such Award or amount shall only be paid to the extent such Termination of Service qualifies as a “separation from service” as defined in Section 409A (and for clarity, the foregoing shall apply to any Award or other amount that is payable on account of a Holder’s Termination of Service (or similarly defined term) and which relies on an exemption from Section 409A linked to a “separation from service”), and (b) if such Award or amount is payable to a “specified employee” as defined in Section 409A then to the extent required in order to avoid a prohibited distribution under Section 409A, such Award or other compensatory payment shall not be payable prior to the earlier of (i) the expiration of the six-month period measured from the date of the Holder’s Termination of Service, or (ii) the date of the Holder’s death. To the extent applicable, the Plan, the Program and any Award Agreements shall be interpreted in accordance with Section 409A. Notwithstanding any provision of the Plan to the contrary, in the event that following the Effective Date the Administrator determines that any Award may be subject to Section 409A, the Administrator may (but is not obligated to), without a Holder’s consent, adopt such amendments to the Plan and the applicable Program and Award Agreement or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Administrator determines are necessary or appropriate to (A) exempt the Award from Section 409A and/or preserve the intended tax treatment of the benefits provided with respect to the Award, or (B) comply with the requirements of Section 409A and thereby avoid the application of any penalty taxes under Section 409A. The Company makes no representations or warranties as to the tax treatment of any Award under Section 409A or otherwise. The Company shall have no obligation under this Section 12.10 or otherwise to take any action (whether or not described herein) to avoid the imposition of taxes, penalties or interest under Section 409A with respect to any Award and shall have no liability to any Holder or any other person if any Award, compensation or other benefits under the Plan are determined to constitute non-compliant, “nonqualified deferred compensation” subject to the imposition of taxes, penalties and/or interest under Section 409A.

 

12.11    Unfunded Status of Awards. The Plan is intended to be an “unfunded” plan for incentive compensation. With respect to any payments not yet made to a Holder pursuant to an Award, nothing contained in the Plan or any Program or Award Agreement shall give the Holder any rights that are greater than those of a general creditor of the Company or any Affiliate.

 

12.12    Indemnification. To the extent permitted under Applicable Law and the Organizational Documents, each member of the Administrator (and each delegate thereof pursuant to Section 11.6) shall be indemnified and held harmless by the Company from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by such member in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action or failure to act pursuant to the Plan or any Award Agreement and against and from any and all amounts paid by him or her, with the Board’s approval, in satisfaction of judgment in such action, suit, or proceeding against him or her; provided he or she gives the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf and, once the Company gives notice of its intent to assume such defense, the Company shall have sole control over such defense with counsel of the Company’s choosing. The foregoing right of indemnification shall not be available to the extent that a court of competent jurisdiction in a final judgment or other final adjudication, in either case not subject to further appeal, determines that the acts or omissions of the person seeking indemnity giving rise to the indemnification claim resulted from such person’s bad faith, fraud or willful criminal act or omission. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled pursuant to the Organizational Documents, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.

 

12.13    Relationship to Other Benefits. No payment pursuant to the Plan shall be taken into account in determining any benefits under any pension, retirement, savings, profit sharing, group insurance, welfare or other benefit plan of the Company or any Affiliate except to the extent otherwise expressly provided in writing in such other plan or an agreement thereunder.

 

12.14    Expenses. The expenses of administering the Plan shall be borne by the Company and its Affiliates.

 

 

Exhibit 10.6

 

SKY HARBOUR GROUP CORPORATION

 

2022 INCENTIVE AWARD PLAN

 

RESTRICTED STOCK UNIT GRANT NOTICE

 

Sky Harbour Group Corporation, a Delaware corporation (the “Company”), has granted to the participant listed below (“Participant”) the Restricted Stock Units (the “RSUs”) described in this Restricted Stock Unit Grant Notice (this “Grant Notice”), subject to the terms and conditions of the Sky Harbour Group Corporation 2022 Incentive Award Plan (as may be amended from time to time, the “Plan”) and the Restricted Stock Unit Agreement attached hereto as Exhibit A (the “Agreement”), both of which are incorporated into this Grant Notice by reference. Capitalized terms not specifically defined in this Grant Notice or the Agreement have the meanings given to them in the Plan.

 

Participant:

[                                                        ]

Grant Date:

[                                                        ]

Number of RSU:

[                                                        ]

Vesting Commencement Date:

[                                                        ]

Vesting Schedule:

[                                                        ]

 

By accepting (whether in writing, electronically or otherwise) the RSUs, Participant agrees to be bound by the terms of this Grant Notice, the Plan and the Agreement. Participant has reviewed the Plan, this Grant Notice and the Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Grant Notice and fully understands all provisions of the Plan, this Grant Notice and the Agreement. Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan, this Grant Notice or the Agreement.

 

SKY HARBOUR GROUP CORPORATION   PARTICIPANT
       
By:      
Name:      

Title:

     

 

 

 

Exhibit A

 

RESTRICTED STOCK UNIT AGREEMENT

 

Capitalized terms not specifically defined in this Agreement have the meanings specified in the Grant Notice or, if not defined in the Grant Notice, in the Plan.

 

ARTICLE I
GENERAL

 

1.1    Award of RSUs. The Company has granted the RSUs to Participant effective as of the Grant Date set forth in the Grant Notice (the “Grant Date”). Each RSU represents the right to receive one Share as set forth in this Agreement. Participant will have no right to the distribution of any Shares until the time (if ever) the RSUs have vested.

 

1.2    Incorporation of Terms of Plan. The RSUs are subject to the terms and conditions set forth in this Agreement and the Plan, which is incorporated herein by reference. In the event of any inconsistency between the Plan and this Agreement, the terms of the Plan will control.

 

1.3    Unsecured Promise. The RSUs will at all times prior to settlement represent an unsecured Company obligation payable only from the Company’s general assets.

 

ARTICLE II
VESTING; FORFEITURE AND SETTLEMENT

 

2.1    Vesting; Forfeiture. The RSUs will vest according to the vesting schedule in the Grant Notice except that any fraction of an RSU that would otherwise be vested will be accumulated and will vest only when a whole RSU has accumulated. In the event of Participant’s Termination of Service for any reason, all unvested RSUs will immediately and automatically be cancelled and forfeited, except as otherwise determined by the Administrator or provided in a binding written agreement between Participant and the Company.

 

2.2    Settlement.

 

(a)    The RSUs will be paid in Shares as soon as administratively practicable after the vesting of the applicable RSU, but no later than 30 days following the applicable date on which any RSU vests.

 

(b)    Notwithstanding the foregoing, the Company may delay any payment under this Agreement that the Company reasonably determines would violate Applicable Law until the earliest date the Company reasonably determines the making of the payment will not cause such a violation (in accordance with Treasury Regulation Section 1.409A-2(b)(7)(ii)); provided the Company reasonably believes the delay will not result in the imposition of excise taxes under Section 409A.

 

As used in this Agreement, “Cause” means any of the following events that the Board has determined, in good faith, has occurred: (i) Participant’s failure to substantially perform Participant’s duties (other than a failure resulting from Participant’s disability), including Participant’s failure to follow any lawful directive from the Board or Participant’s immediate supervisor; (ii) Participant’s violation of any code or standard of behavior generally applicable to Employees or executives of the Company; (iii) engaging in conduct that may reasonably result in reputational, economic or financial injury to the Company or its affiliates; (iv) Participant’s commission of, indictment for or plea of nolo contendere to a felony, any crime involving fraud or embezzlement under federal, state or local laws or a crime involving moral turpitude; (v) Participant’s failure to devote substantially all of Participant’s working time to the business of the Company and its affiliates; (vi) Participant’s unlawful use (including being under the influence) or possession of illegal drugs on the premises of the Company or any of its affiliates or while performing Participant’s duties and responsibilities for the Company or any of its affiliates; (vii) Participant’s commission of an act of fraud, willful misconduct or gross negligence with respect to the Company or its affiliates, or Participant’s material breach of fiduciary duty against the Company or any of its affiliates; (viii) Participant’s engaging in misconduct in connection with the performance of any of Participant’s duties, including by embezzlement or theft from the Company or its affiliates, misappropriating funds from the Company or its affiliates or securing or attempting to secure personally any profit in connection with any transaction entered into on behalf of the Company or its affiliates; or (ix) Participant’s active disloyalty to the Company or its affiliates, including willfully aiding a competitor or improperly disclosing confidential information.

 

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ARTICLE III
TAXATION AND TAX WITHHOLDING

 

3.1    Representation. Participant represents to the Company that Participant has reviewed with Participant’s own tax advisors the tax consequences of this award of RSUs (the “Award”) and the transactions contemplated by the Grant Notice and this Agreement. Participant is relying solely on such advisors and not on any statements or representations of the Company or any of its agents.

 

3.2    Tax Withholding.

 

(a)    Participant acknowledges that Participant is ultimately liable and responsible for all taxes owed in connection with the RSUs, regardless of any action the Company or any Affiliate takes with respect to any tax withholding obligations that arise in connection with the RSUs. Neither the Company nor any Affiliate makes any representation or undertaking regarding the treatment of any tax withholding in connection with the awarding, vesting or payment of the RSUs or the subsequent sale of Shares. The Company and its Affiliates do not commit and are under no obligation to structure the RSUs to reduce or eliminate Participant’s tax liability. Participant agrees to pay to the Company or any Affiliate any amount of tax withholding obligations that the Company or an Affiliate may be required to withhold or account for as a result of Participant’s participation in the Plan that cannot be satisfied by the means described in this Section. The Company may refuse to issue or deliver the Shares, or the proceeds of the sale of Shares, if Participant fails to comply with Participant’s obligations in connection with any applicable withholding tax obligations.

 

(b)    Prior to the relevant taxable or tax withholding event, as applicable, Participant agrees to make adequate arrangements satisfactory to the Company and/or an Affiliate to satisfy all applicable withholding tax obligations in connection with the RSUs. In this regard, Participant authorizes the Company or an Affiliate, or their respective agents, at their discretion, to satisfy the obligations with regard to all withholding tax liabilities by one or a combination of the following:

 

(i)    cash, wire transfer of immediately available funds or check,

 

(ii)    Shares or Shares held for such minimum period of time as may be established by the Administrator, in each case, having a Fair Market Value on the date of delivery equal to the aggregate payments required,

 

(iii)    delivery of a written or electronic notice that the Participant has placed a market sell order with a broker acceptable to the Company with respect to Shares then issuable vesting of the RSUs, and that the broker has been directed to pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction of the aggregate payments required; provided that payment of such proceeds is then made to the Company upon settlement of such sale,

 

(iv)    other form of legal consideration acceptable to the Administrator in its sole discretion, or

 

(v)    any combination of the above permitted forms of payment.

 

Notwithstanding the foregoing, if Participant is an officer of the Company whom the Administrator has determined is subject to the reporting requirements of Section 16 of Section 16 of the Exchange Act, unless otherwise determined by the Board, the Shares will be delivered net of any withholding taxes as the Company determines necessary to satisfy the applicable withholding obligations. In the event the Company or an Affiliate withholds more than the withholding taxes using one of the methods described above, Participant may receive a refund of any over-withheld amount in cash but will have no entitlement to the Shares sold or withheld.

 

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ARTICLE IV
OTHER PROVISIONS

 

4.1    Dividend Equivalents. Dividend Equivalents shall not be credited to Participant while the RSUs are outstanding.

 

4.2    Adjustments. Participant acknowledges that the RSUs and the Shares subject to the RSUs are subject to adjustment, modification and termination in certain events as provided in this Agreement and the Plan.

 

4.3    Administration and Interpretation. Any question or dispute regarding the administration or interpretation of the Plan, the Grant Notice or this Agreement shall be submitted by Participant or by the Company to the Administrator. The resolution of such question or dispute by the Administrator shall be final and binding.

 

4.4    Personal Data Authorization. Participant understands and acknowledges that the Company and its affiliates hold certain personal information regarding Participant for the purpose of managing and administering the Plan, including Participant’s name, home address, telephone number, date of birth, social security number, salary, nationality, job title, any Shares or directorships held in the Company and details of all Awards canceled, exercised, vested, unvested or outstanding in Participant’s favor (“Data”). Participant further understands and acknowledges that the Company and its affiliates will transfer Data among themselves as necessary for the purpose of implementation, administration and management of Participant’s participation in the Plan and that the Company and any its affiliates may each further transfer Data to any third party assisting the Company in the implementation, administration and management of the Plan. Participant understands and acknowledges that the recipients of Data may be located in the United States or elsewhere.

 

4.5    Clawback. The Award and the Shares issuable hereunder shall be subject to any clawback or recoupment policy in effect on the Grant Date or as may be adopted or maintained by the Company following the Grant Date, including the Dodd-Frank Wall Street Reform and Consumer Protection Act and any rules or regulations promulgated thereunder.

 

4.6    Notices. Any notice to be given under the terms of this Agreement to the Company must be in writing and addressed to the Company in care of the Compensation Committee of the Board, the Chief Executive Officer or the General Counsel at the Company’s principal office or the Chief Executive Officer’s or the General Counsel’s then-current email address. Any notice to be given under the terms of this Agreement to Participant must be in writing and addressed to Participant (or, if Participant is then deceased, to Participant’s designated beneficiary) at Participant’s last known mailing address, email address or facsimile number in the Company’s personnel files. By a notice given pursuant to this Section, either party may designate a different address for notices to be given to that party. Any notice will be deemed duly given when actually received, when sent by email, when sent by certified mail (return receipt requested) and deposited with postage prepaid in a post office or branch post office regularly maintained by the United States Postal Service, when delivered by a nationally recognized express shipping company or upon receipt of a facsimile transmission confirmation.

 

4.7    Titles. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement.

 

4.8    Conformity to Securities Laws. Participant acknowledges that the Plan, the Grant Notice and this Agreement are intended to conform to the extent necessary with all Applicable Law and, to the extent Applicable Law permits, will be deemed amended as necessary to conform to Applicable Law.

 

4.9    Successors and Assigns. The Company may assign any of its rights under this Agreement to a single or multiple assignees, and this Agreement will inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth in this Agreement or the Plan, this Agreement will be binding upon and inure to the benefit of the heirs, legatees, legal representatives, successors and assigns of the parties hereto.

 

4.10    Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of the Plan or this Agreement, if Participant is subject to Section 16 of the Exchange Act, the Plan, the Grant Notice, this Agreement and the RSUs will be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3) that are requirements for the application of such exemptive rule. To the extent Applicable Law permits, this Agreement will be deemed amended as necessary to conform to such applicable exemptive rule.

 

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4.11    Entire Agreement; Amendment. The Plan, the Grant Notice and this Agreement (including any exhibit hereto) constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and Participant with respect to the subject matter hereof. To the extent permitted by the Plan, this Agreement may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Administrator or the Board; provided, however, that except as may otherwise be provided by the Plan, no amendment, modification, suspension or termination of this Agreement shall materially and adversely affect the RSUs without the prior written consent of Participant.

 

4.12    Agreement Severable. In the event that any provision of the Grant Notice or this Agreement is held illegal or invalid, the provision will be severable from, and the illegality or invalidity of the provision will not be construed to have any effect on, the remaining provisions of the Grant Notice or this Agreement.

 

4.13    Limitation on Participants Rights. Participation in the Plan confers no rights or interests other than as herein provided. This Agreement creates only a contractual obligation on the part of the Company as to amounts payable and may not be construed as creating a trust. Neither the Plan nor any underlying program, in and of itself, has any assets. Participant will have only the rights of a general unsecured creditor of the Company with respect to amounts credited and benefits payable, if any, with respect to the RSUs, and rights no greater than the right to receive cash or the Shares as a general unsecured creditor with respect to the RSUs, as and when settled pursuant to the terms hereof.

 

4.14    Not a Contract of Employment. Nothing in the Plan, the Grant Notice or this Agreement confers upon Participant any right to continue in the employ or service of the Company or any Affiliate or interferes with or restricts in any way the rights of the Company and any Affiliate, which rights are hereby expressly reserved, to discharge or terminate the services of Participant at any time for any reason whatsoever, with or without Cause, except to the extent expressly provided otherwise in a written agreement between the Company or an Affiliate and Participant.

 

4.15    Counterparts. The Grant Notice may be executed in one or more counterparts, including by way of any electronic signature, subject to Applicable Law, each of which will be deemed an original and all of which together will constitute one instrument.

 

* * * * *

 

 

 

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Exhibit 10.7

 

FORM OF INDEMNIFICATION AGREEMENT

 

This INDEMNIFICATION AGREEMENT (this “Agreement”) is entered into as of January 25, 2022 (the “Effective Date”), by and among SKY HARBOUR GROUP CORPORATION, a Delaware corporation (the “Company” or the “Indemnitor”) and ____________________________ (the “Indemnitee”).

 

WHEREAS, the Indemnitee is an officer [or][and] a member of the Board of Directors of the Company and in such [capacity][capacities] is performing a valuable service for the Company;

 

WHEREAS, Delaware law permits the Company to enter into contracts with its officers or members of its Board of Directors with respect to indemnification of, and advancement of expenses to, such persons;

 

WHEREAS, the Second Amended and Restated Certificate of Incorporation of the Company (the “Charter”) provides that the Company shall have the power to indemnify and advance expenses to its directors and officers to the maximum extent permitted by Delaware law in effect from time to time;

 

WHEREAS, the Bylaws of the Company (the “Bylaws”) provide that each director and officer of the Company shall be indemnified by the Company to the maximum extent permitted by Delaware law in effect from time to time and shall be entitled to advancement of expenses consistent with Delaware law; and

 

WHEREAS, to induce the Indemnitee to provide services to the Company as an officer [or][and] a member of the Board of Directors, and to provide the Indemnitee with specific contractual assurance that indemnification will be available to the Indemnitee regardless of, among other things, any amendment to or revocation of the Charter or the Bylaws, or any acquisition transaction relating to the Company, the Indemnitor desires to provide the Indemnitee with protection against personal liability as set forth herein.

 

NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Indemnitor and the Indemnitee hereby agree as follows:

 

1.

DEFINITIONS.

 

For purposes of this Agreement:

 

(a)    Change in Control” shall have the meaning ascribed to it by the Sky Harbour Group Corporation Equity Incentive Plan or any equity incentive or stock compensation plan adopted by the Board of Directors and approved by the stockholders of the Company that may later replace the Sky Harbour Group Corporation Equity Incentive Plan.

 

(b)    Corporate Status” describes the status of a person who is or was a director or officer of the Company or is or was serving at the request of the Company as a director, officer, partner (limited or general), member, director, employee or agent of any other foreign or domestic corporation, partnership, joint venture, limited liability company, trust, other enterprise (whether conducted for profit or not for profit) or employee benefit plan. The Company shall be deemed to have requested the Indemnitee to serve an employee benefit plan where the performance of the Indemnitee’s duties to the Company also imposes or imposed duties on, or otherwise involves or involved services by, the Indemnitee to the plan or participants or beneficiaries of the plan.

 

 

 

 

(c)    Expenses” shall include all attorneys’ and paralegals’ fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, or being or preparing to be a witness in a Proceeding. Expenses shall also include Expenses incurred in connection with any appeal resulting from any Proceeding, including, without limitation, the premium, security for and other costs relating to any cost bond, supersedeas bond or other appeal bond or its equivalent.

 

(d)    Proceeding” includes any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation (including any internal investigation), administrative hearing, or any other proceeding, including appeals therefrom, whether civil, criminal, administrative, or investigative, except one (i) initiated by the Indemnitee pursuant to paragraph 8 of this Agreement to enforce such Indemnitee’s rights under this Agreement or (ii) pending or completed on or before the Effective Date, unless otherwise specifically agreed in writing by the Company and the Indemnitee. If the Indemnitee reasonably believes that a given situation may lead to or culminate in the institution of a Proceeding, such situation shall also be considered a Proceeding.

 

(e)    Special Legal Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, or in the past two years has been, retained to represent (i) the Indemnitor or the Indemnitee in any matter material to either such party, or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Special Legal Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or the Indemnitee in an action to determine the Indemnitee’s rights under this Agreement, unless such conflict of interest is waived by both the Company and the Indemnitee.

 

2.

INDEMNIFICATION.

 

The Indemnitee shall be entitled to the rights of indemnification provided in this paragraph 2 and under applicable law, the Charter, the Bylaws, any other agreement, a vote of stockholders or resolution of the Board of Directors or otherwise if, by reason of such Indemnitee’s Corporate Status, such Indemnitee is, or is threatened to be made, a party to any threatened, pending, or completed Proceeding, including a Proceeding by or in the right of the Company. Unless prohibited by paragraph 14 hereof and subject to the other provisions of this Agreement, the Indemnitee shall be indemnified hereunder to the maximum extent permitted by Delaware law in effect on the Effective Date and as amended from time to time (provided, however, that no change in Delaware law shall have the effect of reducing the benefits available to the Indemnitee hereunder based on Delaware law as in effect on the Effective Date) against judgments, penalties, fines, liabilities, and settlements and reasonable Expenses actually incurred by or on behalf of such Indemnitee in connection with such Proceeding or any claim, issue or matter therein; provided, however, that if such Proceeding was initiated by or in the right of the Company, indemnification may not be made in respect of such Proceeding if the Indemnitee shall have been finally adjudged to be liable to the Company. For purposes of this paragraph 2, excise taxes assessed on the Indemnitee with respect to an employee benefit plan pursuant to applicable law shall be deemed fines.

 

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3.

EXPENSES OF A SUCCESSFUL PARTY.

 

Without limiting the effect of any other provision of this Agreement, including the rights provided for in paragraphs 2 and 4 hereof, and without regard to the provisions of paragraph 6 hereof, to the extent that the Indemnitee is, by reason of such Indemnitee’s Corporate Status, a party to and is successful, on the merits or otherwise, in any Proceeding pursuant to a final non-appealable order, such Indemnitee shall be indemnified against all reasonable Expenses actually incurred by or on behalf of such Indemnitee in connection therewith. If the Indemnitee is not wholly successful in such Proceeding pursuant to a final non-appealable order but is successful, on the merits or otherwise, as to one or more but less than all claims, issues, or matters in such Proceeding pursuant to a final non-appealable order, the Indemnitor shall indemnify the Indemnitee against all reasonable Expenses actually incurred by or on behalf of such Indemnitee in connection with each successfully resolved claim, issue or matter. For purposes of this paragraph and without limitation, the termination of any claim, issue or matter in such Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

 

4.

ADVANCEMENT OF EXPENSES.

 

Notwithstanding anything in this Agreement to the contrary, but subject to paragraph 14 hereof, if the Indemnitee is or was or becomes a party to or is otherwise involved in any Proceeding (including as a witness), or is or was threatened to be made a party to or a participant (including as a witness) in any such Proceeding, by reason of the Indemnitee’s Corporate Status, or by reason of (or arising in part out of) any actual or alleged event or occurrence related to the Indemnitee’s Corporate Status, or by reason of any actual or alleged act or omission on the part of the Indemnitee taken or omitted in or relating to the Indemnitee’s Corporate Status, then the Indemnitor shall advance all reasonable Expenses incurred by the Indemnitee in connection with any such Proceeding within twenty (20) days after the receipt by the Indemnitor of a statement from the Indemnitee requesting such advance from time to time, whether prior to or after final disposition of such Proceeding; provided that, such statement shall reasonably evidence the Expenses incurred or to be incurred by the Indemnitee and shall include or be preceded or accompanied by (i) a written affirmation by the Indemnitee of the Indemnitee’s good faith belief that the standard of conduct necessary for indemnification by the Indemnitor as authorized by this Agreement has been met and (ii) a written undertaking by or on behalf of the Indemnitee to repay the amounts advanced if it should ultimately be determined that the standard of conduct has not been met. The undertaking required by clause (ii) of the immediately preceding sentence shall be an unlimited general obligation of the Indemnitee but need not be secured and may be accepted without reference to financial ability to make the repayment.

 

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5.

WITNESS EXPENSES.

 

Notwithstanding any other provision of this Agreement, to the extent that the Indemnitee is, by reason of such Indemnitee’s Corporate Status, a witness for any reason in any Proceeding to which such Indemnitee is not a named defendant or respondent, such Indemnitee shall be indemnified by the Indemnitor against all Expenses actually incurred by or on behalf of such Indemnitee in connection therewith.

 

6.

DETERMINATION OF ENTITLEMENT TO AND AUTHORIZATION OF INDEMNIFICATION.

 

(a)    To obtain indemnification under this Agreement, the Indemnitee shall submit to the Indemnitor a written request, including therewith such documentation and information reasonably necessary to determine whether and to what extent the Indemnitee is entitled to indemnification.

 

(b)    Indemnification under this Agreement may not be made unless authorized for a specific Proceeding after a determination has been made in accordance with this paragraph 6(b) that indemnification of the Indemnitee is permissible in the circumstances because the Indemnitee has met the following standard of conduct: the Indemnitor shall indemnify the Indemnitee in accordance with the provisions of paragraph 2 hereof, unless it is established that: (a) the act or omission of the Indemnitee was material to the matter giving rise to the Proceeding and (x) was committed in bad faith or (y) was the result of active and deliberate dishonesty; (b) the Indemnitee actually received an improper personal benefit in money, property or services; or (c) in the case of any criminal proceeding, the Indemnitee had reasonable cause to believe that the act or omission was unlawful. Upon receipt by the Indemnitor of the Indemnitee’s written request for indemnification pursuant to subparagraph 6(a), a determination as to whether the applicable standard of conduct has been met shall be made within the period specified in paragraph 6(e): (i) if a Change in Control shall have occurred, by Special Legal Counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to the Indemnitee, with Special Legal Counsel selected by the Indemnitee (the Indemnitee shall give prompt written notice to the Indemnitor advising the Indemnitor of the identity of the Special Legal Counsel so selected); or (ii) if a Change in Control shall not have occurred, (A) by the Board of Directors by a majority vote of a quorum consisting of directors not, at the time, parties to the Proceeding, or, if such quorum cannot be obtained, then by a majority vote of a committee of the Board of Directors consisting solely of two or more directors not, at the time, parties to such Proceeding and who were duly designated to act in the matter by a majority vote of the full Board of Directors in which the designated directors who are parties may participate, (B) if the requisite quorum of the full Board of Directors cannot be obtained therefor and the committee cannot be established (or, even if such quorum is obtainable or such committee can be established, if such quorum or committee so directs), by Special Legal Counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee, with Special Legal Counsel selected by the Board of Directors or a committee of the Board of Directors by vote as set forth in clause (ii)(A) of this paragraph 6(b) (or, if the requisite quorum of the full Board of Directors cannot be obtained therefor and the committee cannot be established, by a majority of the full Board of Directors in which directors who are parties to the Proceeding may participate) (if the Indemnitor selects Special Legal Counsel to make the determination under this clause (ii), the Indemnitor shall give prompt written notice to the Indemnitee advising him or her of the identity of the Special Legal Counsel so selected) or (C) if so directed by a majority of the members of the Board of Directors, by the stockholders of the Company. If it is so determined that the Indemnitee is entitled to indemnification, payment to the Indemnitee shall be made within ten (10) days after such determination. Authorization of indemnification and determination as to reasonableness of Expenses shall be made in the same manner as the determination that indemnification is permissible. However, if the determination that indemnification is permissible is made by Special Legal Counsel under clause (ii)(B) above, authorization of indemnification and determination as to reasonableness of Expenses shall be made in the manner specified under clause (ii)(B) above for the selection of such Special Legal Counsel.

 

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(c)    The Indemnitee shall cooperate with the person or entity making such determination with respect to the Indemnitee’s entitlement to indemnification, including providing upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to the Indemnitee and reasonably necessary to such determination. Any reasonable costs or expenses (including reasonable attorneys’ fees and disbursements) incurred by the Indemnitee in so cooperating shall be borne by the Indemnitor (irrespective of the determination as to the Indemnitee’s entitlement to indemnification) and the Indemnitor hereby indemnifies and agrees to hold the Indemnitee harmless therefrom.

 

(d)    In the event the determination of entitlement to indemnification is to be made by Special Legal Counsel pursuant to paragraph 6(b) hereof, the Indemnitee, or the Indemnitor, as the case may be, may, within seven days after such written notice of selection shall have been given, deliver to the Indemnitor or to the Indemnitee, as the case may be, a written objection to such selection. Such objection may be asserted only on the grounds that the Special Legal Counsel so selected does not meet the requirements of “Special Legal Counsel” as defined in paragraph 1 of this Agreement. If such written objection is made, the Special Legal Counsel so selected may not serve as Special Legal Counsel until a court has determined that such objection is without merit. If, within twenty (20) days after submission by the Indemnitee of a written request for indemnification pursuant to paragraph 6(a) hereof, no Special Legal Counsel shall have been selected or, if selected, shall have been objected to, either the Indemnitor or the Indemnitee may petition a court for resolution of any objection which shall have been made by the Indemnitor or the Indemnitee to the other’s selection of Special Legal Counsel and/or for the appointment as Special Legal Counsel of a person selected by the court or by such other person as the court shall designate, and the person with respect to whom an objection is so resolved or the person so appointed shall act as Special Legal Counsel under paragraph 6(b) hereof. The Indemnitor shall pay all reasonable fees and expenses of Special Legal Counsel incurred in connection with acting pursuant to paragraph 6(b) hereof, and all reasonable fees and expenses incident to the selection of such Special Legal Counsel pursuant to this paragraph 6(d). In the event that a determination of entitlement to indemnification is to be made by Special Legal Counsel and such determination shall not have been made and delivered in a written opinion within ninety (90) days after the receipt by the Indemnitor of the Indemnitee’s request in accordance with paragraph 6(a), upon the due commencement of any judicial proceeding in accordance with paragraph 8(a) of this Agreement, Special Legal Counsel shall be discharged and relieved of any further responsibility in such capacity.

 

5

 

(e)    If the person or entity making the determination whether the Indemnitee is entitled to indemnification shall not have made a determination within forty-five (45) days after receipt by the Indemnitor of the request therefor, the requisite determination of entitlement to indemnification shall be deemed to have been made and the Indemnitee shall be entitled to such indemnification, absent: (i) a misstatement by the Indemnitee of a material fact, or an omission of a material fact necessary to make the Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law. Such 45-day period may be extended for a reasonable time, not to exceed an additional fifteen (15) days, if the person or entity making said determination in good faith requires additional time for the obtaining or evaluating of documentation and/or information relating thereto. The foregoing provisions of this paragraph 6(e) shall not apply: (i) if the determination of entitlement to indemnification is to be made by the stockholders and if within fifteen (15) days after receipt by the Indemnitor of the request for such determination the Board of Directors resolves to submit such determination to the stockholders for consideration at an annual or special meeting thereof to be held within seventy-five (75) days after such receipt and such determination is made at such meeting, or (ii) if the determination of entitlement to indemnification is to be made by Special Legal Counsel pursuant to paragraph 6(b) of this Agreement.

 

7.

PRESUMPTIONS.

 

(a)    In making a determination with respect to entitlement or authorization of indemnification hereunder, the person or entity making such determination shall presume that the Indemnitee is entitled to indemnification under this Agreement and the Indemnitor shall have the burden of proof to overcome such presumption.

 

(b)    The termination of any Proceeding by conviction, or upon a plea of nolo contendere or its equivalent, or an entry of an order of probation prior to judgment, creates a rebuttable presumption that the Indemnitee did not meet the requisite standard of conduct described herein for indemnification.

 

8.

REMEDIES.

 

(a)    In the event that: (i) a determination is made in accordance with the provisions of paragraph 6 that the Indemnitee is not entitled to indemnification under this Agreement, or (ii) advancement of reasonable Expenses is not timely made pursuant to this Agreement, or (iii) payment of indemnification due the Indemnitee under this Agreement is not timely made, the Indemnitee shall be entitled to an adjudication in an appropriate court of competent jurisdiction of such Indemnitee’s entitlement to such indemnification or advancement of Expenses.

 

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(b)    In the event that a determination shall have been made pursuant to paragraph 6 of this Agreement that the Indemnitee is not entitled to indemnification, any judicial proceeding commenced pursuant to this paragraph 8 shall be conducted in all respects as a de novo trial on the merits. The fact that a determination had been made earlier pursuant to paragraph 6 of this Agreement that the Indemnitee was not entitled to indemnification shall not be taken into account in any judicial proceeding commenced pursuant to this paragraph 8 and the Indemnitee shall not be prejudiced in any way by reason of that adverse determination. In any judicial proceeding commenced pursuant to this paragraph 8, the Indemnitor shall have the burden of proving that the Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be.

 

(c)    If a determination shall have been made or deemed to have been made pursuant to this Agreement that the Indemnitee is entitled to indemnification, the Indemnitor shall be bound by such determination in any judicial proceeding commenced pursuant to this paragraph 8, absent: (i) a misstatement by the Indemnitee of a material fact, or an omission of a material fact necessary to make the Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law.

 

(d)    The Indemnitor shall be precluded from asserting in any judicial proceeding commenced pursuant to this paragraph 8 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court that the Indemnitor is bound by all the provisions of this Agreement.

 

(e)    In the event that the Indemnitee, pursuant to this paragraph 8, seeks a judicial adjudication of such Indemnitee’s rights under, or to recover damages for breach of, this Agreement, if successful on the merits or otherwise as to all or less than all claims, issues or matters in such judicial adjudication, the Indemnitee shall be entitled to recover from the Indemnitor, and shall be indemnified by the Indemnitor against, any and all reasonable Expenses actually incurred by such Indemnitee in connection with each successfully resolved claim, issue or matter.

 

9.

NOTIFICATION AND DEFENSE OF CLAIMS.

 

The Indemnitee agrees promptly to notify the Indemnitor in writing upon being served with any summons, citation, subpoena, complaint, indictment, information, or other document relating to any Proceeding or matter which may be subject to indemnification or advancement of Expenses covered hereunder, but the failure so to notify the Indemnitor will not relieve the Indemnitor from any liability that the Indemnitor may have to Indemnitee under this Agreement unless the Indemnitor is materially prejudiced thereby. With respect to any such Proceeding as to which Indemnitee notifies the Indemnitor of the commencement thereof:

 

(a)    The Indemnitor will be entitled to participate therein at its own expense.

 

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(b)    Except as otherwise provided below, the Indemnitor will be entitled to assume the defense thereof, with counsel reasonably satisfactory to Indemnitee. After notice from the Indemnitor to Indemnitee of the Indemnitor’s election so to assume the defense thereof, the Indemnitor will not be liable to Indemnitee under this Agreement for any legal or other expenses subsequently incurred by Indemnitee in connection with the defense thereof other than reasonable costs of investigation or as otherwise provided below. Indemnitee shall have the right to employ Indemnitee’s own counsel in such Proceeding, but the fees and disbursements of such counsel incurred after notice from the Indemnitor of the Indemnitor’s assumption of the defense thereof shall be at the expense of Indemnitee unless (a) the employment of counsel by Indemnitee has been authorized by the Indemnitor, (b) the Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Indemnitor and the Indemnitee in the conduct of the defense of such action, (c) such Proceeding seeks penalties or other relief against the Indemnitee with respect to which the Indemnitor could not provide monetary indemnification to the Indemnitee (such as injunctive relief or incarceration) or (d) the Indemnitor shall not in fact have employed counsel to assume the defense of such action, in each of which cases the fees and disbursements of counsel shall be at the expense of the Indemnitor. The Indemnitor shall not be entitled to assume the defense of any Proceeding brought by or on behalf of the Indemnitor, or as to which Indemnitee shall have reached the conclusion specified in clause (b) above, or which involves penalties or other relief against Indemnitee of the type referred to in clause (c) above.

 

(c)    The Indemnitor shall not be liable to indemnify Indemnitee under this Agreement for any amounts paid in settlement of any action or claim effected without the Indemnitor’s written consent. The Indemnitor shall not settle any action or claim in any manner that would impose any penalty or limitation on Indemnitee without Indemnitee’s written consent. Neither the Indemnitor nor Indemnitee will unreasonably withhold or delay consent to any proposed settlement.

 

10.

MAINTENANCE OF LIABILITY INSURANCE

 

(a)    The Company will use its reasonable efforts to acquire directors and officers liability insurance (including “insuring clause A”, commonly known as “Side A Coverage”, or similar coverage pursuant to which the Indemnitee as an individual, and not the Company, is the insured party, with reasonable limits, retentions and other terms and conditions), on terms and conditions and in such amounts deemed appropriate by the Board, covering the Indemnitee or any claim made against the Indemnitee for service as a director or officer of the Company and covering the Company for any indemnification or advance of expenses made by the Company to the Indemnitee for any claims made against the Indemnitee for service as a director or officer of the Company. Without in any way limiting any other obligation under this Agreement, the Company shall indemnify the Indemnitee for any payment by the Indemnitee arising out of the amount of any deductible or retention and the amount of any excess of the aggregate of all judgments, penalties, fines, settlements and reasonable expenses incurred by the Indemnitee in connection with a Proceeding over the coverage of any insurance referred to in the previous sentence.

 

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(b)    If, at the time of the receipt of a notice of a claim, the Company has directors’ and officers’ liability insurance in effect, the Company shall give prompt notice of the commencement of such proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such policies.

 

(c)    To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors or officers of the Company, the Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available, and upon any “Change in Control”, the Company shall obtain continuation and/or “tail” coverage for the Indemnitee to the maximum amount obtainable at such time.

 

11.

NON-EXCLUSIVITY; SURVIVAL OF RIGHTS; INSURANCE SUBROGATION.

 

(a)    The rights of indemnification and to receive advancement of reasonable Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which the Indemnitee may at any time be entitled under applicable law, the Charter, the Bylaws, any other agreement, a vote of stockholders, a resolution of the Board of Directors or otherwise, except that any payments otherwise required to be made by the Indemnitor hereunder shall be offset by any and all amounts received by the Indemnitee from any other indemnitor or under one or more liability insurance policies maintained by an indemnitor or otherwise and shall not be duplicative of any other payments received by an Indemnitee from the Indemnitor in respect of the matter giving rise to the indemnity hereunder. No amendment, alteration or repeal of this Agreement or any provision hereof shall be effective as to the Indemnitee with respect to any action taken or omitted by the Indemnitee prior to such amendment, alteration or repeal.

 

(b)    In the event of any payment under this Agreement, the Indemnitor shall be subrogated to the extent of such payment to all of the rights of recovery of the Indemnitee, who shall execute all papers required and take all actions necessary to secure such rights, including execution of such documents as are necessary to enable the Indemnitor to bring suit to enforce such rights.

 

(c)    The Indemnitor shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that the Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement, or otherwise.

 

12.

CONTINUATION OF INDEMNITY.

 

(a)    All agreements and obligations of the Indemnitor contained herein shall continue during the period the Indemnitee is an officer or a member of the Board of Directors of the Company and shall continue thereafter so long as the Indemnitee shall be subject to any threatened, pending or completed Proceeding by reason of such Indemnitee’s Corporate Status and during the period of statute of limitations for any act or omission occurring during the Indemnitee’s term of Corporate Status. This Agreement shall be binding upon the Indemnitor and its respective successors and assigns and shall inure to the benefit of the Indemnitee and such Indemnitee’s heirs, executors and administrators.

 

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(b)    The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all, substantially all or a substantial part, of the business and/or assets of the Company, by written agreement in form and substance reasonably satisfactory to the Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.

 

13.

SEVERABILITY.

 

If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever, (i) the validity, legality, and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any paragraph of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby, and (ii) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any paragraph of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provisions held invalid, illegal or unenforceable.

 

14.

EXCEPTIONS TO RIGHT OF INDEMNIFICATION OR ADVANCEMENT OF EXPENSES.

 

Notwithstanding any other provisions of this Agreement, the Indemnitee shall not be entitled to indemnification or advancement of reasonable Expenses under this Agreement with respect to (i) any Proceeding initiated by such Indemnitee against the Indemnitor other than a proceeding commenced pursuant to paragraph 8 hereof, or (ii) to the extent applicable, any Proceeding for an accounting of profits arising from the purchase and sale by Indemnitee of securities of the Company in violation of Section 16(b) of the Securities Exchange Act of 1934, as amended, rules and regulations promulgated thereunder, or any similar provisions of any federal, state or local statute.

 

15.

NOTICE TO THE COMPANY STOCKHOLDERS.

 

Any indemnification of, or advancement of reasonable Expenses, to an Indemnitee in accordance with this Agreement, if arising out of a Proceeding by or in the right of the Company, shall be reported in writing to the stockholders of the Company with the notice of the next Company stockholders’ meeting or prior to the meeting.

 

16.

HEADINGS.

 

The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

 

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17.

MODIFICATION AND WAIVER.

 

No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by each of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

 

18.

NOTICES.

 

All notices, requests, demands, and other communications hereunder shall be in writing and shall be deemed to have been duly given if (i) delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed, (ii) delivered by e-mail or (iii) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed, if so delivered or mailed, as the case may be, to the following addresses:

 

If to the Indemnitee, to the address set forth in the records of the

Company.

If to the Indemnitor, to:

Sky Harbour Group Corporation

136 Tower Road, Hangar M, Suite 205

White Plains, NY 10604

Attention: Tal Keinan

 

with a copy (which shall not constitute notice) to:

Morrison & Foerster LLP

250 W 55th Street

New York, NY 10019

Attention: John Owen

Email: JOwen@mofo.com

 

or to such other address as may have been furnished to the Indemnitee by the Indemnitor or to the Indemnitor by the Indemnitee, as the case may be.

 

19.

GOVERNING LAW.

 

The parties agree that this Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without application of the conflict of laws principles thereof.

 

20.

NO ASSIGNMENTS.

 

The Indemnitee may not assign its rights or delegate obligations under this Agreement without the prior written consent of the Indemnitor. Any assignment or delegation in violation of this paragraph 20 shall be null and void.

 

11

 

21.

NO THIRD-PARTY RIGHTS.

 

Nothing expressed or referred to in this Agreement will be construed to give any person other than the parties to this Agreement any legal or equitable right, remedy or claim under or with respect to this Agreement or any provision of this Agreement. This Agreement and all of its provisions are for the sole and exclusive benefit of the parties to this Agreement and their successors and permitted assigns.

 

22.

COUNTERPARTS.

 

This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together constitute an agreement binding on all of the parties hereto.

 

[Signature page follows.]

 

12

 

 

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

 

 

SKY HARBOUR GROUP CORPORATION

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

       
  INDEMNITEE:  
       
  By:    
  Name:    
  Title:    

 

 

[Signature Page to Indemnification Agreement]

 

 

Exhibit 10.8

 

AMENDED AND RESTATED

 

EMPLOYMENT AGREEMENT

 

This Amended and Restated Employment Agreement (“Agreement”) is entered into by and between Francisco Gonzalez (“Employee”) and Sky Harbour LLC (“Company”).

 

1.

Employment

 

The Company agrees to employ Employee on the terms and conditions as set forth in this Agreement. Employee’s employment will commence on the earlier of (i) July 1, 2021; (ii) 5 days after the closing of the first issuance of tax exempt bonds; and (iii) 5 days after the closing of special purpose acquisition company (SPAC) transaction involving the Company, with (i) and (ii) both conditioned on the successful issuance of tax-exempt bonds for the financing of Sky Harbour projects. Employee shall be employed on a full-time basis in the position and roles of Chief Financial Officer and Executive Committee Member. Employee shall be responsible for certain management responsibilities of the Company including, but not limited to:

 

 

Collaboration with CEO and Executive Committee in setting and driving company strategy.

 

Translating strategy into actionable goals, plans and budgets.

 

Implementing, refining, and managing corporate financial strategy, project finance strategy, treasury, accounting and all other functions normally associated with the Chief Financial Officer role, with an emphasis on robust corporate growth, capital efficiency, and risk management.

 

Setting an example for leadership, teamwork, personal responsibility, and results‑orientation.

 

Ensuring effective partnerships and service-provider relationships in pursuit of the above goals.

 

Ensuring effective recruiting, onboarding, professional development, performance management, and retention of finance and accounting team members.

 

2.

Work Location

 

Employee’s primary work location will be White Plains, New York. Frequent travel will be required.

 


1 Employee has disclosed to the Company that he is working on several projects away from Sky Harbour that have already commenced and which may be ongoing for years to come. As long as these projects do not interfere with his Sky Harbour responsibilities, the Company hereby acknowledges and will not prohibit outside business and investment activities that do not interfere with Mr. Gonzalez responsibilities and duties with the Company. Any new project or activity will require the consent of the Company, which will not be unreasonable withheld, as long as it is not in conflict with the Company’s business or interferes with the Employees’ duties and responsibilities to the Company. The determination of the existence of a business conflict or interference of duties will be made by the Company in its reasonable judgment.

 

 

 

 

3.

Compensation

 

The Employee will be compensated as follows, subject to legally required deductions and withholdings:

 

 

1)

Annual Base Salary: $300,000, payable in accordance with Company’s normal payroll processes.

 

 

2)

Incentive bonuses as follows::

 

 

a)

For calendar year 2021, a cash bonus in the amounts and subject to the criteria listed on Exhibit A (the “2021 Bonus”). The 2021 Bonus will paid as soon as reasonably practicable, but in no event later than March 15, 2022. To be eligible for and receive payment of the 2021 Bonus, you must be employed by the Company on December 31, 2021.

 

 

b)

Beginning on January 1, 2022 through the end of the quarter in which this Agreement terminates, a one-time per square foot payment (without duplication) for each square foot of indoor space constructed by or on behalf of the Company or acquired from a third party or is otherwise delivered by the Company or its subsidiaries and available for leasing to tenants, a cash payment of $1.52 per square foot payable in cash on a quarterly basis, within 15 days from the end of each quarter.

 

 

3)

A Discretionary Bonus to be determined as a function of corporate performance and personal contribution thereto. For Employee to be eligible for the Discretionary Bonus, Employee must be employed by Company on December 31 of the year for which the Discretionary Bonus, if any, is earned and the Discretionary Bonus will be paid no later than March 15 of the year following the year in which the Discretionary Bonus is earned.

 

 

4)

Initial Founder Unit Allocation:

 

 

a)

Operating Agreement: Defined terms used but not otherwise defined in this Section 3(a) shall have the meaning ascribed to such terms in the Amended and Restated Operating Agreement of the Company, dated as of March 12, 2021 (the “Operating Agreement”) or the Restricted Unit Grant Agreement entered into by the Company and Employee dated as of March 26, 2021 (the “Grant Agreement”).

 

 

b)

Grant: Employee is to be granted Founder Units of the Company equivalent to a Percentage Interest of 3% on a fully-diluted basis as of the completion of the Company’s equity investment round as of March 18, 2021), pursuant to the Grant Agreement.

 

 

c)

Vesting period for Founder Units: Four years starting on the Employment Commencement Date, with the first 25% vesting following 12 months from such date, and the remaining 75% vesting in equal monthly installments over the subsequent 36 months (the “Vesting Period”).

 

2

 

 

d)

Accelerated vesting: Full acceleration of unvested Founder Units upon change of control of Company within the vesting period. In the case of a public listing of the Company, full acceleration of unvested Founder Units within the vesting period upon a termination without cause of Employee. For the avoidance of doubt, no acceleration if there is a termination for cause or at Employee’s initiative.

 

 

e)

Future Incentive Unit or Founder Unit or other Unit allocations are at the discretion of the Compensation Committee and require Employee’s consent. Should Employee gain a position equal to or exceeding 5% equivalent of fully- vested ownership units in the company, consisting of Incentive Units and Founder Units plus Preferred Units on a converted basis, by any combination of Employee Unit Allocations and purchases, Employee will no longer be entitled to formulaic bonus distributions as defined in section 3(2). Instead, Employee will then be eligible for discretionary cash or equity incentive compensation as determined by the Compensation Committee.

 

 

5)

Unit Options:

 

 

a)

Option to purchase Preferred Units equivalent to up to 0.5% of Sky Harbour percentage interest.

 

 

b)

Exercise date: Later of:

 

 

i

Within six months of final closing of first tax-exempt bond offering.

 

 

ii

Within three months of employment commencing.

 

 

c)

Exercise price: In accordance with post-money valuation equity at closing (approximately $66MM) (the “Current Valuation”).

 

 

d)

Company shall maintain the option to repurchase these Preferred Units, for a period of 24 months from exercise, at the valuation of its most recent funding in the following events:

 

 

i

Termination for Cause

 

 

ii

Termination at Employee’s initiative

 

 

6)

Discretionary Annual Bonus. The Company at its sole discretion may provide additional cash or equity annual bonus to the Employee for recognition of M&A or development opportunities outside the scope of CFO.

 

3

 

4.

Employment Benefits

 

Employee shall be entitled to medical and dental benefits and other benefits of employment that are generally available to executive employees of Company on the same terms and conditions generally applicable to such benefits. Employee will be covered by the Company’s Director & Officer and Employment Practices Liability insurance policies.

 

5.

Employment at Will

 

The employment relationship between Employee and Company is “at-will,” meaning it may be terminated at any time by either Employee or Company, for any or no reason, with or without cause.

 

6.

Entire Agreement

 

This Agreement shall constitute the entire agreement and understanding between Company and Employee with respect to Employee’s employment with Company and supersedes and is in full substitution for any and all prior understandings or agreements (whether written or oral) with respect to Employee’s employment, except that any non‑disclosure or confidentiality agreements with Company signed by Employee prior to or contemporaneously with the signing of this Agreement shall survive execution of this Agreement. The Grant Agreement executed contemporaneously to this Agreement shall also survive execution of this Agreement.

 

7.

Severability

 

If any provision of this Agreement (or part thereof) is held to be invalid, illegal, or unenforceable, such invalidity, illegality, or unenforceability will not affect any other provision and all other terms and conditions of this Agreement shall nevertheless remain in full force and effect.

 

8.

Successors and Assigns

 

This Agreement is intended to bind and inure to the benefit of and be enforceable by Employee, Company, and their respective successors, assigns, heirs, executors, and administrators, except that Employee may not assign any of his duties or rights hereunder.

 

9.

Governing Law

 

This Agreement is entered into in the State of New York and shall in all respects be interpreted, enforced and governed under the laws of the State of New York.

 

4

 

In Witness Whereof, the parties have executed this Agreement on the date or dates set forth below.

 

COMPANY

 
   

By: /s/ Tal Keinan

Date: December 22, 2021

Printed Name: Tal Keinan

 
   
   
   

EMPLOYEE

 
   

By: /s/ Francisco Gonzalez

Date: December 22, 2021

Francisco Gonzalez

 

 

5

 

EXHIBIT A

 

 

Performance Target

 

Potential
Bonus

   

Achieved
Bonus

 
                   
1

Prepare Company for Public Offering

  $ 200,000     $ 200,000  
 

Complete interim Financials

  $ 400,000     $ 400,000  
 

Complete full audited financials by filing date

               
 

Select, engage and manage external service providers

               
 

a.     Legal

  $ 100,000     $ 100,000  
 

b.     Accounting

  $ 100,000     $ 100,000  
 

c.     Audit

  $ 100,000     $ 100,000  
 

d.     Banking

  $ 100,000     $ 100,000  
 

e. IR

  $ 100,000     $ 100,000  
 

Draft legal and accounting team

               
 

a.     Chief Legal Officer

  $ 75,000     $ 75,000  
 

b.     Chief Accounting Officer

  $ 50,000     $ 50,000  
 

c.     Director of HR

  $ 25,000     $ 25,000  
2

Securing and Financing of each new location

  $ 100,000     $ 100,000  
3

Construction Projects at or ahead of schedule on Dec 31, 21

               
 

a.     OPF

  $ 100,000     $ 100,000  
 

b.     BNA

  $ 100,000     $ 100,000  
4

New Building Permits Issued by Dec 31, 21

               
 

a.     APA

  $ 50,000     $ 0  
 

b.     DVT

  $ 50,000     $ 0  
5

Promote expansion of airport pipeline and progress toward securing new locations

  $ 500,000     $ 400,000  
      $ 2,150,000     $ 1,950,000  

 

 

6

Exhibit 10.9

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (“Agreement”) is entered into by and between Alexander Saltzman (“Employee”) and Sky Harbour LLC (“Company”).

 

1.

EMPLOYMENT

 

The Company agrees to employ Employee on the terms and conditions as set forth in this Agreement. Employee’s employment will commence on March 29, 2021. Employee shall be employed on a full-time basis in the position and roles of Chief Operating Officer; Executive Committee Member. Employee shall be responsible for certain management responsibilities of Company, including but not limited to:

 

 

Collaboration with CEO and Management Committee in setting and driving company strategy.

 

 

Translating strategy into actionable goals, plans and budgets.

 

 

Implementing, refining, and managing business, reporting and control processes to support, measure and improve operational consistency, capital efficiency and robust corporate growth.

 

 

Setting an example for leadership, teamwork, personal responsibility, and results- orientation.

 

 

Ensuring effective recruiting, onboarding, professional development, performance management, and retention of team members.

 

 

Developing and managing partnerships and supplier relationships.

 

2.

WORK LOCATION

 

Employee’s primary work location will be White Plains, New York. Frequent travel will be required.

 

3.

COMPENSATION

 

Employee will be compensated as follows, subject to legally required deductions and withholdings:

 

 

a)

Annual Base Salary:

 

 

i.

Year 1, as of 3/29/21: $400,000, payable in accordance with Company’s normal payroll processes.

 

 

ii.

Year 2, as of 3/29/22: $525,000

 

 

iii.

Year 3, as of 3/29/23: $625,000

 

 

 

 

 

b)

An Annual Bonus with a target bonus equivalent to 50% of the Annual Base Salary, to be determined as a function of corporate performance and personal contribution thereto. Bonus amounts shall be set at the sole discretion of Company Compensation Committee. For Employee to be eligible for the Annual Bonus, Employee must be employed by Company on December 31 of the year for which the Annual Bonus is paid. The Annual Bonus shall be paid in its entirety no later than forty-five days after the end of the Company’s fiscal year (such fiscal year to end on December 31).

 

 

c)

Issuance of Incentive Units:

 

 

i.

Operating Agreement: Defined terms used but not otherwise defined in this Section 2(c) shall have the meaning ascribed to such terms in the Amended and Restated Operating Agreement of the Company, dated as of March 12, 2021 (the “Operating Agreement”).

 

 

ii.

Grant: Employee is to be granted Incentive Units of the Company equivalent to a Percentage Interest of 2% on a fully-diluted basis as of the completion of the Company’s current equity investment round as of March 2021, pursuant to a grant agreement to be entered into by the Company and Employee on terms consistent with the Operating Agreement and this Section 2(c).

 

 

iii.

Vesting period: Four years starting on 3/29/21 and ending 3/29/25, with the first 25% vesting following 12 months from the date hereof, and the remaining 75% vesting in equal monthly installments over the following 36 months (the “Vesting Period”).

 

 

iv.

Accelerated vesting: Full acceleration of unvested Incentive Units upon the occurrence during the Vesting Period of (i) a Capital Transaction, or (ii) a termination of Employee’s employment without cause.

 

4.

EMPLOYMENT BENEFITS

 

Employee shall be entitled to medical and dental benefits and other benefits of employment that are generally available to executive employees of Company on the same terms and conditions generally applicable to such benefits.

 

5.

OUTSIDE ACTIVITIES

 

Employee shall be permitted to participate in for-profit and non-profit boards, and manage personal investments so long as such activities do not conflict, or interfere, with Employee’s obligations to the Company and so long as Employee obtains the prior written approval of the Company, which shall not be unreasonably withheld.

 

6.

EMPLOYMENT AT WILL

 

The employment relationship between Employee and Company is “at-will,” meaning it may be terminated at any time by either Employee or Company, for any or no reason, with or without cause.

 

2

 

7.

INDEMNIFICATION AND INSURANCE

 

With respect to actions taken in Employee’s capacity as an officer of the Company, the Company will provide (i) indemnification to the fullest extent permitted by applicable corporate law but not for gross negligence or willful misconduct by Employee and (ii) coverage under Director & Officer and Employment Practices Liability insurance policies.

 

8.

LEGAL FEES

 

The Company agrees to reimburse Employee his legal fees in connection with his employment and equity arrangements with the Company up to a maximum of $5,000.

 

9.

ENTIRE AGREEMENT

 

This Agreement shall constitute the entire agreement and understanding between Company and Employee with respect to Employee’s employment with Company and supersedes and is in full substitution for any and all prior understandings or agreements (whether written or oral) with respect to Employee’s employment, except that any non-disclosure or confidentiality agreements with Company signed by Employee prior to or contemporaneously with the signing of this Agreement shall survive execution of this Agreement.

 

10.

SEVERABILITY

 

If any provision of this Agreement (or part thereof) is held to be invalid, illegal, or unenforceable, such invalidity, illegality, or unenforceability will not affect any other provision and all other terms and conditions of this Agreement shall nevertheless remain in full force and effect.

 

11.

SUCCESSORS AND ASSIGNS

 

This Agreement is intended to bind and inure to the benefit of and be enforceable by Employee, Company, and their respective successors, assigns, heirs, executors, and administrators, except that Employee may not assign any of his duties or rights hereunder.

 

12.

MODIFICATION

 

This Agreement may not be orally changed, modified or amended, and no change, modification or amendment, or waiver of any rights shall be effective or binding, unless in writing and signed by the parties to this Agreement.

 

13.

GOVERNING LAW

 

This Agreement is entered into in the State of New York and shall in all respects be interpreted, enforced and governed under the laws of the State of New York.

 

3

 

IN WITNESS WHEREOF, the parties have executed this Agreement on the date or dates set forth below.

 

COMPANY

 
   

By: /s/ Tal Keinan

Date: March 22, 2021

   

Printed Name: Tal Keinan

 
   

EMPLOYEE

 

/s/ Alexander Saltzman

 

Alexander Saltzman

 

 

Date: March 22, 2021

 

 

4

Exhibit 10.10

 



 

 

TRUST INDENTURE

 

between

 

PUBLIC FINANCE AUTHORITY

 

and

 

THE BANK OF NEW YORK MELLON, AS TRUSTEE

 

Dated as of September 1, 2021

 

Relating to:

 

$166,340,000

Public Finance Authority

Senior Special Facility Revenue Bonds

(Sky Harbour Capital LLC Aviation Facilities Project),

Series 2021

 

 



 

 

 

TABLE OF CONTENTS

 

Page

 

ARTICLE I. . DEFINITIONS AND INTERPRETATION

4

Section 1.1.

Definitions

4

Section 1.2.

Interpretation.

18

ARTICLE II. AUTHORIZATION, ISSUANCE, CONDITIONS AND TERMS OF BONDS

19

Section 2.1.

Authorization and Issuance of Bonds.

19

Section 2.2.

Method and Place of Payment.

20

Section 2.3.

Payment of Principal and Interest of Bonds; Acceptance of Terms and Conditions.

20

Section 2.4.

Calculation and Payment of Interest

21

Section 2.5.

Maximum Interest Rate

21

Section 2.6.

Book Entry System

21

Section 2.7.

Execution and Authentication of Bonds.

22

Section 2.8.

Delivery of Bonds.

23

Section 2.9.

Issuance of Additional Bonds.

23

ARTICLE III. REDEMPTION OF BONDS

25

Section 3.1.

Optional, Mandatory Sinking Fund and Special Mandatory Redemption of Series 2021 Bonds.

25

Section 3.2.

Mandatory Taxability Redemption

27

Section 3.3.

Extraordinary Optional Redemption.

27

Section 3.4.

General Provisions.

28

ARTICLE IV. GENERAL TERMS AND PROVISIONS OF BONDS

29

Section 4.1.

Date of Bonds

29

Section 4.2.

Form and Denominations

29

Section 4.3.

Medium of Payment

30

Section 4.4.

Legends.

30

Section 4.5.

Bond Details

30

Section 4.6.

Interchangeability; Transfer and Registry.

30

Section 4.7.

Bonds Mutilated, Destroyed, Stolen or Lost

31

Section 4.8.

Cancellation and Destruction of Bonds

31

Section 4.9.

Requirements With Respect To Transfers

32

 

-i-

 

TABLE OF CONTENTS

(continued)

 

Page

 

Section 4.10.

Registrar

32

Section 4.11.

Principal Balance; Annual and Monthly Reports

32

ARTICLE V. CUSTODY AND INVESTMENT OF FUNDS

32

Section 5.1.

Creation of Funds.

32

Section 5.2.

Debt Service Fund.

34

Section 5.3.

Debt Service Reserve Fund.

36

Section 5.4.

Rebate Fund.

37

Section 5.5.

Series 2021 Construction Account.

38

Section 5.6.

Series 2021 Capitalized Interest Account

39

Section 5.7.

Investment of Funds and Accounts; Valuation.

39

Section 5.8.

Non-presentment of Bonds

40

ARTICLE VI. PROCEDURES FOR REDEMPTION OF BONDS

41

Section 6.1.

Privilege of Redemption and Redemption Price

41

Section 6.2.

Selection of Bonds to be Redeemed

41

Section 6.3.

Notice of Redemption

41

Section 6.4.

Payment of Redeemed Bonds.

42

Section 6.5.

Cancellation of Redeemed Bonds.

42

Section 6.6.

Purchase In Lieu of Redemption.

43

ARTICLE VII. PARTICULAR COVENANTS

43

Section 7.1.

No Pecuniary Liability on Issuer or Officers.

43

Section 7.2.

Payment of Principal; Redemption Price, if any, and Interest

44

Section 7.3.

Further Assurances

44

Section 7.4.

Inspection of Project Books

44

Section 7.5.

Rights under Financing Documents

44

Section 7.6.

Creation of Liens, Indebtedness

45

Section 7.7.

Recording and Filing.

45

Section 7.8.

Notice of Reserve Fund Increase or Decrease.

46

ARTICLE VIII. EVENTS OF DEFAULT; REMEDIES OF BONDHOLDERS

46

Section 8.1.

Events of Default; Acceleration of Due Dates.

46

Section 8.2.

Enforcement of Remedies.

48

 

-ii-

 

TABLE OF CONTENTS

(continued)

 

Page

 

Section 8.3.

Application of Revenues and Other Moneys After Default

49

Section 8.4.

Actions by Trustee

51

Section 8.5.

Required Bondholders Control Proceedings

52

Section 8.6.

Individual Bondholder Action Restricted.

52

Section 8.7.

Effect of Discontinuance of Proceedings

52

Section 8.8.

Remedies Not Exclusive

53

Section 8.9.

Delay or Omission Upon Default

53

Section 8.10.

Notice of Default

53

ARTICLE IX. TRUSTEE AND PAYING AGENT

53

Section 9.1.

Appointment and Acceptance of Duties.

53

Section 9.2.

Indemnity

53

Section 9.3.

Rights and Responsibilities of Trustee.

54

Section 9.4.

Compensation

56

Section 9.5.

Evidence on Which Trustee May Act.

56

Section 9.6.

Evidence of Signatures of Owners of the Bonds and Ownership of Bonds.

57

Section 9.7.

Trustee and Paying Agent Deal in Bonds and With Obligated Group

58

Section 9.8.

Resignation or Removal of Trustee.

58

Section 9.9.

Successor Trustee.

58

Section 9.10.

Resignation or Removal of Paying Agent; Successors.

59

Section 9.11.

Moneys Held for Particular Bonds

60

Section 9.12.

Continuation Statements

60

Section 9.13.

Obligation to Report Defaults

60

Section 9.14.

Payments Due on non-Business Day

60

Section 9.15.

Appointment of Co-Trustee.

61

ARTICLE X. AMENDMENTS OF INDENTURE

61

Section 10.1.

Limitation on Modifications

61

Section 10.2.

Supplemental Indentures Without Consent of Owners of the Bonds.

61

 

-iii-

 

TABLE OF CONTENTS

(continued)

 

Page

 

Section 10.3.

Supplemental Indentures With Consent of Owners of the Bonds.

63

Section 10.4.

Supplemental Indenture Part of the Indenture

65

ARTICLE XI. AMENDMENTS OF FINANCING DOCUMENTS

65

Section 11.1.

Rights of Borrowers

65

Section 11.2.

Amendments of Financing Documents Not Requiring Consent of Owners of the  Bonds

66

Section 11.3.

Amendments of Financing Documents Requiring Consent of Owners of the  Bonds.

66

ARTICLE XII. DEFEASANCE; DISCHARGE OF INDENTURE

67

Section 12.1.

Defeasance.

67

ARTICLE XIII. GENERAL PROVISIONS

69

Section 13.1.

Notices

69

Section 13.2.

Bondholder Directions and Consents.

70

Section 13.3.

Waiver of Personal Liability

71

Section 13.4.

No Obligation to Enforce Assigned Rights

71

Section 13.5.

Third-Party Beneficiaries

71

Section 13.6.

No Impairment of Rights

71

Section 13.7.

Issuer’s Performance

71

Section 13.8.

Parties Interested Herein

72

Section 13.9.

Effective Date; Counterparts

72

Section 13.10.

Continuing Disclosure

72

Section 13.11.

Date for Identification Purposes Only

72

Section 13.12.

Governing Law

72

Section 13.13.

Non-Liability of Issuer

73

Section 13.14.

Limited Liability

73

Section 13.15.

Patriot and U.S.A. Freedom Act Requirements of the Trustee

73

 

-iv-

 

 

 

TRUST INDENTURE

 

THIS TRUST INDENTURE (as amended and supplemented from time to time, this “Indenture”), made and dated as of September 1, 2021, by and between the PUBLIC FINANCE AUTHORITY (together with its successors and assigns, the “Issuer”), a joint powers commission created under Section 66.0304 of the Wisconsin Statutes, a unit of government and a body corporate and politic organized and existing under the laws of the State of Wisconsin (the “State”) with the powers, among others, set forth in Sections 66.0301, 66.0303 and 66.0304, as amended, of the Wisconsin Statutes (the “Act”), and THE BANK OF NEW YORK MELLON, as trustee, a New York banking corporation, existing, and authorized to accept and execute trusts of the character herein set out under and by virtue of the laws of the United States (together with its successors and assigns, the “Trustee”),

 

WITNESSETH THAT:

 

WHEREAS, the Issuer is authorized and empowered under the Act and by the Joint Exercise Agreement (as hereinafter defined) to, among other things, issue bonds, notes or other evidences of indebtedness in connection with, and to make loans to assist in the financing and refinancing of, “projects” (as defined in the Act) located inside and outside of the State;

 

WHEREAS, the Borrowers have applied for the financial assistance of the Issuer in the financing or refinancing of the 2021 Project (as hereinafter defined);

 

WHEREAS, the Issuer has authorized the issuance of its airport facilities revenue bonds in the principal amount of $166,340,000 designated “Public Finance Authority Senior Special Facility Revenue Bonds (Sky Harbour Capital LLC Aviation Facilities Project), Series 2021” (the “Series 2021 Bonds”), the proceeds of which will be used to: (i) finance or refinance the projects described in the attached Exhibit C (collectively, the “2021 Project”), (ii) fund the deposit to the Debt Service Reserve Fund for the Series 2021 Bonds, and (iii) pay the costs of issuance of the Series 2021 Bonds;

 

WHEREAS, the facilities comprising the 2021 Project are located within the territorial limits of the political subdivisions listed on Schedule II to the Loan Agreement, which political subdivisions have approved the issuance of the 2021 Bonds allocable to such facilities; and

 

WHEREAS, based on representations of the Borrowers (hereinafter defined) but without independent investigation, the Issuer has found and determined that the financing and refinancing of the 2021 Project will promote significant economic, cultural and community development opportunities, including the creation or retention of employment, the stimulation of economic activity and the promotion of improvements in the health, safety and welfare of persons in the Project Jurisdictions where the 2021 Project is located;

 

WHEREAS, the Issuer is authorized, by a Bond Resolution adopted by its Board of Directors (as amended, the “Series 2021 Bond Resolution”) to issue the Series 2021 Bonds and loan the proceeds of the Series 2021 Bonds to Sky Harbour Sugar Land Airport, LLC, Sky Harbour Opa Locka Airport, LLC, Nashville Hangars LLC, APA Hangars LLC and DVT Hangars LLC (each, a “Borrower” and collectively, the “Borrowers”) pursuant to a Loan Agreement, dated as of September 1, 2021 (the “Loan Agreement”), between the Issuer and the Borrowers, for the purpose of financing and refinancing the 2021 Project;

 

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WHEREAS, the Loan Agreement specifies the terms and conditions of the loan by the Issuer to the Borrowers of the proceeds of the Series 2021 Bonds to provide for financing of the 2021 Project and of the payment by the Borrowers to the Issuer of amounts sufficient for the payment of the principal of, premium, if any, or interest on the Bonds and costs incidental thereto;

 

WHEREAS, the Series 2021 Bonds will be secured by that certain Senior Master Indenture Promissory Note No. 2021-1 (the “Master Indenture Note”), issued by, and evidencing a joint and several obligation of, the Members of the Obligated Group (hereinafter defined) under that certain Master Trust Indenture, dated as of September 1, 2021, as supplemented from time to time, including by the First Supplemental Master Trust Indenture, dated as of September 1, 2021 (collectively, the “Master Indenture”), each between the Members of the Obligated Group and The Bank of New York Mellon, as master trustee (the “Master Trustee”);

 

WHEREAS, in order to provide for the authentication and delivery of the Bonds, to establish and declare the terms and conditions upon which the Bonds are to be issued and secured and to secure the payment of the principal (or Redemption Price) thereof and interest thereon, the Issuer has authorized the execution and delivery of this Indenture; and

 

WHEREAS, all acts and proceedings required by law and all other things necessary to make the Series 2021 Bonds, when executed by the Issuer, authenticated and delivered by the Trustee and issued as in this Indenture provided, the valid, binding, and legal obligations of the Issuer and to constitute this Indenture a valid and binding agreement for the uses and purposes herein set forth in accordance with its terms, have been done and performed, and the creation, execution, and delivery of this Indenture, and the creation, execution, and issuance of the Series 2021 Bonds subject to the terms hereof, have in all respects been duly authorized;

 

NOW, THEREFORE, KNOW ALL PERSONS BY THESE PRESENTS:

GRANTING CLAUSES

 

That the Issuer in consideration of the premises and the acceptance by the Trustee of the trusts hereby created and of the purchase and acceptance of any Bonds by the holders and owners thereof, and of the sum of One Dollar, lawful money of the United States of America, to it duly paid by the Trustee at or before the execution and delivery of these presents, and for other good and valuable consideration, the receipt of which is hereby acknowledged, and in order to secure the payment of the principal or Redemption Price, if any, of, and interest on all Bonds according to their tenor and effect and all other amounts due in connection therewith and the performance and observance by the Issuer of all the covenants expressed or implied herein and in the Bonds, does hereby grant, bargain, sell, convey, pledge, and assign unto, and grant a security interest in and to, the Trustee, and unto its respective successors in trust, and to their respective assigns, forever, for the securing of the performance of the obligations of the Issuer hereinafter set forth, the following:

 

I.

 

The General Financing Documents (as such term is defined in Article I below and, except to the extent to which any such document provides for retention of Unassigned Rights), including, without limitation, the Loan Agreement and the Master Indenture Notes, and including all extensions and renewals of the term thereof, if any, together with all right, title, and interest of the Issuer therein (including rights, title and interests of the Borrowers pledged to the Issuer to secure the Borrowers’ obligations to the Issuer pursuant to the Loan Agreement) including, but without limiting the generality of the foregoing, the present and continuing right to claim, collect, and receive any of the moneys, income, revenues, issues, profits, and other amounts payable or receivable thereunder, to bring actions and proceedings thereunder or for the enforcement thereof, and to do any and all things which the Issuer is or may become entitled to do under the Loan Agreement and the Master Indenture Notes but reserving in all cases, however, to the Issuer the Unassigned Rights upon the conditions therein set forth;

 

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II.

 

Subject only to the rights of the Issuer to apply amounts under the provisions of this Indenture, the pledge and assignment of the Trust Estate (as hereinafter defined) hereby made shall immediately attach thereto and shall be effective, binding and enforceable from and after the time of the delivery by the Trustee of the first bonds authenticated and delivered under this Indenture. The security so pledged and any assignment then or thereafter received by the Trustee from the Issuer as security for the Bonds shall immediately be subject to the lien of such pledge and assignment and the lien of such pledge and assignment shall be valid and binding against the Issuer, purchasers thereof, creditors and all other parties having claims against the Issuer irrespective of whether such parties have notice thereof and without the need for any physical delivery, recordation, filing or further act.

 

III.

 

All Funds (as such term is defined in Article I below and except the Rebate Fund) and moneys and securities therein; and

 

IV.

 

All moneys and securities from time to time held by the Trustee or the Paying Agent under the terms of this Indenture (except moneys and securities in the Rebate Fund) and any and all other real or personal property of every name and nature concurrently herewith or from time to time hereafter by delivery or by writing of any nature conveyed, mortgaged, pledged, assigned, or transferred as and for additional security hereunder by the Issuer or by anyone in its behalf, or with its written consent, to the Trustee or the Paying Agent, which are hereby authorized to receive any and all such property at any and all times and to hold and apply the same subject to the terms hereof;

 

TO HAVE AND TO HOLD all and singular the above described trust estate (as the same is further defined herein, the “Trust Estate”), whether now owned or hereafter acquired, unto the Trustee and its respective successors and assigns in trust forever to its and their own proper use and behalf:

 

BUT IN TRUST NEVERTHELESS, for the benefit and security of all present and future holders, in the following order of priority, first of the Senior Bonds, second of the Subordinate Class A Bonds and third of the Subordinate Class B Bonds: (i) with all payment of principal and Redemption Price of and interest on the Senior Bonds and any fees and charges payable on the Senior Bonds and all security rights in and to the Trust Estate and all other rights and privileges hereunder with respect to the Senior Bonds to be prior and superior in all respects to any payment on or with respect to the Subordinate Bonds and all security rights in and to the Trust Estate and all other rights and privileges hereunder with respect to the Subordinate Bonds, and (ii) with all payment of principal and Redemption Price of and interest on the Subordinate Class A Bonds and any fees and charges payable on the Subordinate Class A Bonds and all security rights in and to the Trust Estate and all other rights and privileges hereunder with respect to the Subordinate Class A Bonds to be prior and superior in all respects to any payment on or with respect to the Subordinate Class B Bonds and all security rights in and to the Trust Estate and all other rights and privileges hereunder with respect to the Subordinate Class B Bonds, but without preference of any Senior Bond over any other Senior Bond or any Subordinate Class A Bond over any other Subordinate Class A Bond, or any Subordinate Class B Bond over any other Subordinate Class B Bond, except, in each case as herein specifically provided, and for enforcement of payment of the Bonds in accordance with their terms and all other sums payable hereunder or on the Bonds and for the performance of and compliance with the obligations, covenants and conditions of this Indenture, as if all the Bonds at any time Outstanding had been authenticated, executed and delivered simultaneously with the execution and delivery of this Indenture, all as herein set forth;

 

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PROVIDED, HOWEVER, that if the Issuer, or its successors or assigns, shall well and truly pay, or cause to be paid, the principal or Redemption Price, if any, of, and interest on, the Bonds due or to become due thereon, and all other amounts due thereunder, at the times and in the manner mentioned in the Bonds according to their tenor, and shall cause the payments to be made on the Bonds as required under Article VI hereof, or shall provide, as permitted hereby, for the payment thereof by depositing with the Trustee the entire amount due or to become due thereon, and shall well and truly keep, perform, and observe all the covenants and conditions pursuant to the terms of this Indenture to be kept, performed, and observed by it, and shall pay or cause to be paid to the Trustee all sums of money due or to become due to it in accordance with the terms and provisions of the Loan Agreement and the Master Indenture Notes, and this Indenture, then upon the final payment thereof this Indenture and the rights hereby granted shall cease, determine, and be void; otherwise this Indenture to be and remain in full force and effect.

 

THIS TRUST INDENTURE FURTHER WITNESSETH, and it is expressly declared, that all Bonds issued and secured hereunder are to be issued, authenticated, and delivered and all of the property, rights, and interests, including, without limitation, the loan payments and other amounts hereby assigned and pledged, are to be dealt with and disposed of under, upon, and subject to the terms, conditions, stipulations, covenants, agreements, trusts, uses, and purposes as hereinafter expressed, and the Issuer has agreed and covenanted, and does hereby agree and covenant, with the Trustee and with the respective holders and owners of the Bonds as follows:

 

ARTICLE I.
DEFINITIONS AND INTERPRETATION

 

Section 1.1.    Definitions. Terms capitalized herein but not defined herein shall have the meanings ascribed thereto under the Loan Agreement. In addition, as used in this Indenture:

 

Account” means any account within a special trust fund as established under this Indenture.

 

Act of Bankruptcy” means with respect to any Person, the filing of a petition in bankruptcy (or the other commencement of a bankruptcy or similar proceeding) by or against such Person, under the Federal Bankruptcy Code or any other applicable bankruptcy, insolvency, reorganization or similar law, now or thereafter in effect; provided, however, that no involuntary petition in bankruptcy, or appointment of a trustee, custodian or receiver, without the consent of such Person, shall constitute an Act of Bankruptcy until one hundred and twenty (120) days shall have elapsed from the date of filing thereof, during which time such Person has been unable to obtain the dismissal of the petition or appointment.

 

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Additional Bonds” means Bonds of one or more Series, other than the Series 2021 Bonds, authorized and issued by the Issuer, in the Issuer’s sole and exclusive discretion, pursuant to this Indenture, each of which Series shall be designated as either Senior Bonds or Subordinate Bonds.

 

Additional Senior Bonds” means Bonds of one or more Series of Senior Bonds that qualify as Additional Bonds hereunder.

 

Additional Subordinate Bonds” means Bonds of one or more Series of Subordinate Bonds that qualify as Additional Bonds hereunder.

 

Authorized Denominations” shall mean $500,000 and any integral multiple of $5,000 in excess thereof, provided that at such time as the Borrower Representative shall provide to the Issuer and the Trustee written evidence to the effect that each Rating Agency then rating a Class of Bonds has rated such Class of Bonds “BBB-” or equivalent, or higher (without regard for gradation within a rating category and without regard for credit enhancement unless such credit enhancement extends through the final maturity date of the Bonds), the Authorized Denominations of such Class of Bonds shall be changed (if requested by the Borrower Representative) to denominations of $5,000 or any integral multiple thereof, in each case, notwithstanding whether at a future time the Bonds of that Class are no longer rated at such rating.

 

Authorized Representative” means, in the case of the Issuer, any Authorized Signatory of the Issuer, in the case of the Obligated Group, any Authorized Representative of the Obligated Group under the Master Indenture, and, when used with reference to the performance of any act, the discharge of any duty, or the execution of any certificate or other document, any officer, employee or other person authorized to perform such act, discharge such duty or execute such certificate or other document, provided the Trustee receives written evidence of such person’s authorization.

 

Authorized Signatory” means any officer, director or other Person designated by resolution of the Board of Directors of the Issuer (whether such resolution is adopted in connection with the issuance of the Bonds or otherwise) or by the Issuer’s Bylaws as an ‘Authorized Signatory’ empowered to, among other things, execute and deliver on behalf of the Issuer, this Indenture, the Issuer Finance Documents, and the Bonds.

 

Available Moneys” shall mean (i) moneys held by the Trustee (other than in the Rebate Fund) and under this Indenture for a period of at least 123 days and not commingled with any moneys so held for less than said period and during which period no petition in bankruptcy was filed by or against, and no receivership, insolvency, assignment for the benefit of creditors or other similar proceeding has been commenced by or against, any Borrower, unless such petition or proceeding was dismissed and all applicable appeal periods have expired without an appeal having been filed, (ii) investment income derived from the investment of moneys described in clause (i) and (iii) moneys with respect to which an opinion of nationally recognized bankruptcy counsel has been received by the Trustee to the effect that payments by the Trustee in respect of the Bonds, as provided in this Indenture, derived from such moneys should not constitute transfers avoidable under 11 U.S.C. §547(b) and recoverable from the Owners under 11 U.S.C. §550(a) should any Borrower be the debtor in a case under Title 11 of the United States Code, as amended.

 

Beneficial Owner” shall mean, so long as the Bonds are negotiated in the Book-Entry System, any Person who acquires a beneficial ownership interest in a Bond held by the Securities Depository. If at any time the Bonds are not held in the Book-Entry System, Beneficial Owner shall mean Owner for purposes of this Indenture.

 

5

 

Bond Counsel” shall mean Greenberg Traurig, LLP, or any other law firm approved by the Issuer having a national reputation in the field of municipal law, whose legal opinions are generally accepted by purchasers of municipal bonds.

 

Bond Year” shall mean each one-year period that ends at the close of business on the day selected by the Borrower Representative, initially December 31 of each year. The first and last Bond Years may be short periods. If no day is selected by the Borrower Representative before the earlier of the date the last Bond is discharged or the date that is five (5) years after the Date of Delivery of the Bonds, Bond Years shall end on each anniversary of the Date of Delivery of the Bonds and on the date the last Bond is discharged. Different Series of Bonds may have different Bond Years if the Trustee is so notified in writing.

 

Bondholder,” “holder,” or “owner” or words of similar import when used with reference to Bonds shall, unless otherwise specified, mean any person who shall be the registered owner of any Outstanding Bond.

 

Bonds” means the Series 2021 Bonds and any Additional Bonds authorized and issued pursuant to Section 2.8 hereof.

 

Book-Entry System” shall mean the system maintained by the Securities Depository described in Section 2.5 hereof.

 

Borrower Financing Documents” means all documents and agreements executed and delivered by any Borrower on the Date of Delivery as security for or in connection with the issuance of the Bonds, including the Loan Agreement, the Tax Certificate, the Master Indenture Notes and the General Certificate of each Borrower, and all other documents executed in connection therewith.

 

Borrower Representative” shall mean Sky Harbour Capital LLC or such other Person at the time designated to act on behalf of the Borrowers for purposes of this Indenture by a written instrument furnished to the Trustee containing the specimen signature of the Authorized Representatives of such Person and signed on behalf of each Borrower by any of their respective officers. The certificate may designate an alternate or alternates.

 

Business Day” shall mean any day other than a Saturday, Sunday or a day on which banking institutions in New York, New York and/or the cities in which the principal corporate trust or principal operations offices of the Master Trustee and the Trustee to whom a payment is to be made, as applicable, are located are authorized or obligated by law or executive order to be closed or the New York Stock Exchange is closed.

 

Cede & Co.” means the nominee for The Depository Trust Company (DTC) who shall act as securities depository for the Bonds.

 

Class” means a particular level of subordination of Bond, “Senior” being the most senior level, “Subordinate Class A” being the next level of subordination and “Subordinate Class B” being the most subordinate level.

 

Code” shall mean the Internal Revenue Code of 1986, as amended, and the treasury regulations promulgated thereunder.

 

6

 

Computation Date” shall mean an Installment Computation Date or the Final Computation Date.

 

Date of Delivery” means the date that the Series 2021 Bonds are initially delivered pursuant to Section 2.7 hereof.

 

Debt Service Fund” means the special trust fund so designated, established and maintained pursuant to Section 5.1 hereof.

 

Debt Service Reserve Fund” means the special trust fund so designated, established and maintained pursuant to Section 5.1 hereof and the accounts therein.

 

Debt Service Reserve Requirement” means, with respect to the Series 2021 Bonds, (a) so long as the Series 2021 Bonds do not carry an investment grade rating, an amount equal to the least of (i) the maximum annual principal and interest requirements of the Series 2021 Bonds, (ii) 10% of the Sale Proceeds of the Series 2021 Bonds, and (iii) 125% of the average annual principal and interest requirements of such Bonds, and (b) so long as the Series 2021 Bonds carry an Investment Grade Rating, an amount equal to fifty percent (50%) (unless and until such date as the Trustee has received a Notice of Reserve Fund Increase, after which date it shall be equal to one hundred percent (100%) until such time as the Trustee has received a Notice of Reserve Fund Decrease) of the maximum annual debt service requirements for the Series 2021 Bonds provided that, in the case of any issue of Tax-Exempt Bonds for purposes of Section 148 of the Code, in no event greater than the least of (i) the maximum annual principal and interest requirements of such Tax-Exempt Bonds, (ii) 10% of the Sale Proceeds and (iii) 125% of the average annual principal and interest requirements of such Bonds, in each case which amount shall be certified by the Borrower Representative, and with respect to any other Senior Bonds, the amount designated in the Supplemental Indenture providing for the issuance thereof.

 

Default” means any event or condition which will, with the lapse of time, or the giving of notice, or both, become an Event of Default.

 

Defeasance Collateral” means:

 

(a)    non-callable direct obligations of the United States of America, non-callable and non-prepayable direct federal agency obligations the timely payment of principal of and interest on which are fully and unconditionally guaranteed by the United States of America, non‑callable direct obligations of the United States of America which have been stripped by the United States Treasury itself or by any Federal Reserve Bank (not including “CATS,” “TRS” and “TIGRS”) and the interest components of REFCORP bonds for which the underlying bond is non-callable (or non-callable before the due date of such interest component) for which separation of principal and interest is made by request to the Federal Reserve Bank of New York in book-entry form, and shall exclude investments in mutual funds and unit investment trusts;

 

(b)    non-callable obligations the timely payment of principal and interest on which are fully and unconditionally guaranteed by the United States of America; and

 

(c)    bonds or other obligations of any state of the United States of America or of any agency, instrumentality or local government unit of any such state (i) which are not callable at the option of the obligor or otherwise prior to maturity or as to which irrevocable notice has been given by the obligor to call such bonds or obligations on the date specified in the notice, (ii) timely payment of which is fully secured by a fund consisting only of cash or obligations of the character described in clause (a) or (b) which fund may be applied only to the payment when due of such bonds or other obligations, and (iii) which are rated “AAA” by Standard & Poor’s or Fitch or “Aaa” by Moody’s Investors Service.

 

7

 

Determination of Taxability” means, with respect to any Series 2021 Bonds, a determination that the interest income on any Series 2021 Bond does not qualify as being excludable from the gross income of the holder thereof (“exempt interest”) for any reason other than that such holder is a “substantial user” of the Project or a “related person” as such terms are defined in Section 147 of the Code, which determination shall be deemed to have been made upon the first to occur of any of the following: (a) the date on which any change in law or regulation becomes effective or on which the Internal Revenue Service issues any private ruling, technical advice memorandum or any other written communication to the effect that the interest income on any of the Series 2021 Bonds does not qualify as exempt interest; or (b) the date on which the Borrower Representative shall receive notice from the Trustee in writing that the Trustee has been advised by any holder or former holder that the Internal Revenue Service has issued a thirty-day letter or other notice which asserts that the interest on any such Series 2021 Bond does not qualify as such exempt interest; or (c) the date on which the Trustee receives written notice from any Bondholder that any Borrower has, or the Issuer has taken any action inconsistent with, or has failed to act consistently with, the tax exempt status of interest on the Series 2021 Bonds; provided that no Determination of Taxability shall be deemed to have occurred as a result of a determination by any Bondholder pursuant to clause (c) above unless such determination is supported by an opinion of Bond Counsel to the effect that the interest income on Series 2021 Bonds does not constitute exempt interest and that the Series 2021 Bonds do not qualify for a remedial action under the applicable regulations, compliance with which would render the interest on the Series 2021 Bonds tax exempt. With respect to any other Tax-Exempt Bonds, “Determination of Taxability” shall have the meaning, if any, provided in the Supplemental Indenture authorizing the issuance of such Tax-Exempt Bonds.

 

DTC” or “The Depository Trust Company” means the limited-purpose trust company organized under the laws of the State of New York which shall act as securities depository for the Bonds, and any successor thereto.

 

Electronic Means” shall mean telecopy, facsimile transmission, e-mail transmission, secure electronic transmission containing applicable authorization codes, passwords and/or authentication keys issued by the Trustee, or another method or system specified by the Trustee as available for use in connection with its services hereunder.

 

Environmental Regulations” means any federal, state or local law, statute, code, ordinance, regulation, requirement or rule relating to dangerous, toxic or hazardous pollutants, Hazardous Substances, chemical waste, materials or substances.

 

Event of Default” has the meaning given such term in Section 8.1 hereof.

 

Favorable Opinion of Bond Counsel” shall mean, with respect to any action the occurrence of which requires such an opinion, an unqualified Opinion of Counsel, which shall be a Bond Counsel, to the effect that such action is permitted under this Indenture and will not adversely affect the exclusion of interest on the Bonds from gross income for purposes of Federal income taxation (subject to the inclusion of any exceptions contained in the opinion delivered upon original issuance of the Bonds).

 

8

 

Final Computation Date” shall have the meaning ascribed thereto in the Regulations.

 

Fiscal Year” shall mean a period of twelve consecutive months ending on December 31 or on such other date as may be specified in a certificate delivered to the Trustee.

 

Fitch shall mean Fitch, Inc., and its successors and assigns, except that if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, then the term “Fitch” shall be deemed to refer to any other nationally recognized securities rating agency selected by the Borrower Representative.

 

Fund” means any special trust fund established pursuant to Article V hereof.

 

Fund Letter of Credit” means the irrevocable, transferable letter of credit, if any, deposited in an applicable Fund in lieu of or in partial substitution for cash or securities on deposit therein, which shall be payable or available to be drawn upon on any date that moneys therein are required to be transferred; provided that the issuer providing such letter of credit shall be a banking association, bank or trust company or branch thereof whose letter of credit obligations are rated in any of the three highest rating categories of Fitch, Moody’s or Standard & Poor’s at the time such Fund Letter of Credit is issued.

 

General Financing Documents” means the Borrower Financing Documents and the Issuer Financing Documents.

 

Governmental Obligations” shall mean:

 

(i)         direct obligations of, or obligations the timely payment of the principal of and interest on which is guaranteed by, the United States of America;

 

(ii)       evidences of ownership of a proportionate interest in specified direct obligations of, or specified obligations the timely payment of the principal of and the interest on which are unconditionally and fully guaranteed by, the United States of America, which obligations are held by a bank or trust company organized and existing under the laws of the United States of America or any state thereof in the capacity of custodian;

 

(iii)     obligations issued by the Resolution Funding Corporation pursuant to the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (the “FIRRE Act”), (A) the principal of which obligations is payable when due from payments of the maturing principal of non-interest bearing direct obligations of the United States of America which are issued by the Secretary of the Treasury and deposited in the Funding Corporation Principal Fund established pursuant to the FIRRE Act, and (B) the interest on which obligations, to the extent not paid from other specified sources, is payable when due by the Secretary of the Treasury pursuant to the FIRRE Act; and

 

(iv)      obligations which are (A) issued by any state or political subdivision thereof or any agency or instrumentality of such a state or political subdivision, (B) fully secured as to principal and interest by obligations described in clause (i), (ii) or (iii) above and (C) rated at the time of purchase in one of the two highest ratings categories by at least one Nationally Recognized Rating Agency.

 

9

 

Group Representative” shall mean Sky Harbour Capital LLC, a Delaware limited liability company, and its successors and assigns, including, without limitation, any other Member of the Obligated Group which shall have been designated to assume the responsibilities of the Group Representative pursuant to the Master Indenture.

 

Hazardous Substances” means (a) any oil, flammable substance, explosives, radioactive materials, hazardous wastes or substances, toxic wastes or substances or any other wastes, materials or pollutants which (i) pose a hazard to the Project or to persons on or about the Project or (ii) cause the Project to be in violation of any Environmental Regulation; (b) asbestos in any form which is or could become friable, urea formaldehyde foam insulation, transformers or other equipment which contain dielectric fluid containing levels of polychlorinated biphenyls, or radon gas; (c) any chemical, material or substance defined as or included in the definition of “waste,” “hazardous substances,” “hazardous wastes,” “hazardous materials,” “extremely hazardous waste,” “restricted hazardous waste,” or “toxic substances” or words of similar import under any Environmental Regulation including, but not limited to, the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), 42 USC §§ 9601 et seq.; the Resource Conservation and Recovery Act (“RCRA”), 42 USC §§ 6901 et seq.; the Hazardous Materials Transportation Act, 49 USC §§ 1801 et seq.; the Federal Water Pollution Control Act, 33 USC §§ 1251 et seq. and any state environmental law or regulation applicable to the location of any Project; (d) any other chemical, material or substance, exposure to which is prohibited, limited or regulated by any governmental authority or agency or may or could pose a hazard to the health and safety of the occupants of the Project or the owners and/or occupants of property adjacent to or surrounding the Project, or any other person coming upon the Project or adjacent property; or (e) any other chemical, materials or substance which may or could pose a hazard to the environment.

 

Indebtedness” shall mean and include: (a) the Loan and (b) any additional obligation for the payment of money to a Person other than a Borrower, which obligation is incurred, assumed or guaranteed by a Borrower and is in the form of (i) a loan, (ii) a capitalized lease, installment sale agreement or other comparable arrangement to provide for the acquisition, renovation or construction of capital assets, or (iii) any other extension of credit by a third party which is properly treated as indebtedness under generally accepted accounting principles.

 

Indenture” means this Indenture as from time to time amended or supplemented by Supplemental Indentures in accordance with Article X hereof.

 

Independent Public Accountant” has the meaning provided in the Master Indenture.

 

Installment Computation Date” means the last day of the fifth Bond Year and each succeeding fifth Bond Year.

 

Interest Accrual Period” shall mean the period during which a Bond accrues interest payable on the next Interest Payment Date applicable thereto. Each Interest Accrual Period shall commence on (and include) the last Interest Payment Date to which interest has been paid (or, if no interest has been paid, from the date of original authentication and delivery of the Bonds) to, but not including, the Interest Payment Date on which interest is to be paid. If, at the time of authentication of any Bond, interest is in default or overdue on the Bonds, such Bond shall bear interest from the date to which interest has previously been paid in full or made available for payment in full on Outstanding Bonds.

 

Interest Payment Date” shall mean each date on which interest is to be paid and is each January 1 and July 1, commencing on January 1, 2022.

 

10

 

Investment Securities” shall mean and include any of the following to the extent the same are legal investments under the laws of any applicable jurisdiction:

 

(i)         cash deposits (insured at all times by the Federal Deposit Insurance Corporation or otherwise collateralized with Government Obligations);

 

(ii)        Government Obligations;

 

(iii)      obligations of the following federal agencies so long as such obligations are backed by the full faith and credit of the United States of America: (a) U.S. Export-Import Bank (Eximbank), (b) Rural Economic Community Development Administration, (c) Federal Financing Bank, (d) General Services Administration, (e) U.S. Maritime Administration, (f) U.S. Department of Housing and Urban Development (PHAs) (g) Small Business Administration, (h) Government National Mortgage Association (GNMA), (i) Federal Housing Administration, and (j) Farm Credit System Financial Assistance Corporation;

 

(iv)      direct obligations of any of the following federal agencies which obligations are not fully guaranteed by the full faith and credit of the United States of America: (a) senior debt obligations rated in the highest long-term rating category by at least two nationally recognized Rating Agencies issued by the Federal National Mortgage Association (FNMA) or Federal Home Loan Mortgage Corporation (FHLMC), (b) senior debt obligations of the Federal Home Loan Bank System, and (c) senior debt obligations of other United States government sponsored agencies bearing the same or higher ratings as Government Obligations;

 

(v)       U.S. dollar denominated deposit accounts, federal funds, bankers’ acceptances and other deposit products with domestic commercial banks which either (a) have a rating on their short-term certificates of deposit on the date of purchase in the highest short-term rating category of at least two nationally recognized Rating Agencies, (b) are insured at all times by the Federal Deposit Insurance Corporation or (c) are collateralized with Government Obligations at 102% of the value thereof, valued daily. All such certificates must mature no more than 360 days after the date of purchase (ratings on holding companies are not considered as the rating of the bank);

 

(vi)       commercial paper which is rated at the time of purchase in the highest short-term rating category of at least two nationally recognized Rating Agencies and which matures not more than 270 days after the date of purchase;

 

(vii)     investments in (a) money market funds registered under the Investment Company Act of 1940, as amended, whose shares are registered under the Securities Act of 1933, as amended, and rated in the highest short-term rating category of at least two nationally recognized Rating Agencies, including, without limitation, funds for which the Trustee, its Affiliates and subsidiaries serve as investment manager, administrator, shareholder servicing agent, and/or custodian or subcustodian or provide investment advisory or other management services (notwithstanding that the Trustee or an Affiliate receives and retains fees for services provided to such funds), and (b) public sector investment pools operated pursuant to SEC Rule 2a-7 in which the issuer’s deposit shall not exceed 5% of the aggregate pool balance at any time and such pool is rated in one of the two highest short-term rating categories of at least two nationally recognized Rating Agencies;

 

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(viii)     pre-funded municipal obligations defined as follows: any bonds or other obligations of any state of the United States of America or of any agency, instrumentality or local government unit of any such state which are not callable at the option of the obligor prior to maturity or as to which irrevocable instructions have been given by the obligor to call on the date specified in the notice and (a) which are rated, based on an irrevocable escrow account or fund (the “escrow”), in the highest long-term rating category of at least two nationally recognized Rating Agencies (without regard to gradations), or (b)(1) which are fully secured as to principal and interest and redemption premium, if any, by an escrow consisting only of cash or Government Obligations, which escrow may be applied only to the payment of such principal of and interest and redemption premium, if any, on such bonds or other obligations on the maturity date or dates thereof or the specified redemption date or dates pursuant to such irrevocable instructions, as appropriate, and (2) which escrow is sufficient, as verified by a nationally recognized independent certified public accountant, to pay principal of and interest and redemption premium, if any, on the bonds or other obligations described in this clause (viii) on the maturity date or dates specified in the irrevocable instructions referred to above, as appropriate;

 

(ix)       general obligations of states with a short-term rating in one of the two highest rating categories and a long-term rating in one of the two highest rating categories of at least two nationally recognized Rating Agencies. In the event such obligations are variable rate obligations, the interest rate on such obligations must be reset not less frequently than annually;

 

(x)         investment agreements with a Qualified Investment Provider;

 

(xi)        other forms of investments (including repurchase agreements) approved in writing by a Qualified Financial Institution providing a Credit Facility or not unacceptable to the Rating Agencies then rating any Bonds;

 

(xii)      repurchase agreements relating to securities described in clauses (i), (ii), (iii), (iv), (vi), (viii) and (ix) above, with Qualified Investment Provider which agreement shall provide that (A) such securities have a value of at least 103% (valued on each interest payment date for the Bonds) of the specified repurchase price and are deposited with the Trustee or with a third party custodian approved by, and in accordance with documentation satisfactory to, the Trustee, (B) the provider will repurchase such securities without penalty upon request of the Trustee in order to use the proceeds for any purpose for which the Fund from which the investment was made may be used, (C) if such rating falls below “A3” or “A-,” respectively by either Moody’s and Standard & Poor’s, the provider must notify the Trustee and repurchase such securities without penalty within five (5) Business Days of such downgrade and (D) the Trustee is expressly authorized to liquidate such securities in the event of the insolvency of the provider or the commencement by or against the provider of a case under the federal Bankruptcy Code or the appointment or taking possession by a trustee or custodian of the assets of the provider; and

 

(xiii)      a guaranteed investment contract with a defined termination date, secured by Government Obligations or other security not unacceptable to the Rating Agencies then rating the Bonds, if any, in an amount at least equal to the amount invested under the contract and pledged to the Trustee.

 

Issuer means Public Finance Authority, its successors and assigns.

 

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Issuer Financing Documents means, collectively, this Indenture, the Loan Agreement, the Tax Certificate, and all other documents executed and delivered by the Issuer in connection therewith.

 

Joint Exercise Agreement” means the Amended and Restated Joint Exercise of Powers Agreement Relating to the Public Finance Authority, dated September 28, 2010 by and among Adams County, Wisconsin, Bayfield County, Wisconsin, Marathon County, Wisconsin, Waupaca County Wisconsin and the City of Lancaster, Wisconsin, as such agreement may be amended from time to time.

 

Letter of Representations” means the Letter of Representations of the Issuer to DTC.

 

Loan Agreement” means the Loan Agreement of even date herewith between the Issuer and the Borrowers, and any amendments and supplements thereto.

 

Master Indenture” means that certain Master Trust Indenture dated as of September 1, 2021, as supplemented by a First Supplemental Master Trust Indenture, dated as of September 1, 2021, each between the Members of the Obligated Group and the Master Trustee, as the same may be further amended and supplemented from time to time.

 

Master Indenture Notes” means, collectively, the Senior Notes and the Subordinated Notes.

 

Master Trust Indenture Documents” means the Master Indenture, the Mortgages and the ground leases under which the Members of the Obligated Group hold their respective leasehold interests in the ground that is a part of any project financed pursuant to the terms of the Master Indenture.

 

Master Trustee” means The Bank of New York Mellon, as master trustee under the Master Indenture and its successors and assigns thereunder.

 

Maturity Date” shall mean the date of final maturity of any Series of Bonds.

 

Maximum Rate” shall mean a rate of interest that shall not (as a result of an event of default or otherwise) exceed (i) the not to exceed interest rate stated in the Series 2021 Bond Resolution, 12% per annum, or (ii) the highest rate allowed by law.

 

Member of the Obligated Group” means those members of the obligated group, from time to time, that are parties to the Master Indenture.

 

Moodys” shall mean Moody’s Investors Service, a corporation duly organized and existing under and by virtue of the laws of the State of Delaware, and its successors and assigns, except that if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, then the term “Moody’s” shall be deemed to refer to any other nationally recognized securities rating agency selected by the Borrower Representative.

 

Mortgages” means the Mortgages, as such term is defined in the Master Indenture from certain of the Members of the Obligated Group to the Master Trustee given against the interests of the Members of the Obligated Group under the Related Ground Leases to secure the payment of the Obligations issued under the Master Indenture, including, without limitation, the Master Indenture Notes.

 

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Notice of Reserve Fund Decrease” shall have the meaning set forth in Section 7.9 hereof.

 

Notice of Reserve Fund Increase” shall have the meaning set forth in Section 7.9 hereof.

 

Notice Parties” shall mean the Issuer, the Borrower Representative, the Trustee, the Paying Agent, the Master Trustee and the Group Representative.

 

Obligated Group” shall have the meaning set forth in the Master Indenture.

 

Opinion of Counsel” shall mean a written legal opinion from a firm of attorneys experienced in the matters to be covered in the opinion.

 

Outstanding”, when used with reference to a Bond or Bonds, as of any particular date, means all Bonds which have been authenticated and delivered hereunder, except:

 

(1)         Any Bonds canceled by the Trustee because of payment or redemption prior to maturity or surrendered to the Trustee for cancellation;

 

(2)         Any Bond (or portion of a Bond) paid or redeemed or for the payment or redemption of which there has been separately set aside and held in the Redemption Account of the Debt Service Fund moneys in an amount sufficient to effect payment of the principal or applicable Redemption Price thereof, together with accrued interest on such Bond to the payment or redemption date, which payment or redemption date shall be specified in irrevocable instructions given to the Trustee to apply such moneys to such payment on the date so specified;

 

(3)         Bonds in exchange for or in lieu of which other Bonds shall have been authenticated and delivered under Article IV hereof; and

 

(4)         Any Bond deemed to have been paid as provided in Section 12.1(b) hereof.

 

Owner” shall mean the registered owner of a Bond, including the Securities Depository, if any, or its nominee.

 

Paying Agent” shall mean the commercial bank, trust company or other entity which may from time to time be appointed to serve as Paying Agent as provided in Section 9.1 hereof. Until such time as an alternate Paying Agent is appointed, the Paying Agent shall be the Trustee.

 

Permitted Encumbrances” shall have the meaning set forth in the Master Indenture (as in effect on the date hereof) with respect to any particular Project.

 

Person” shall mean an individual, a corporation, a partnership, an association, a joint venture, a trust, an unincorporated organization or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

 

Principal and Interest Account” means the Account so designated, established within the Debt Service Fund pursuant to Section 5.1 hereof.

 

Principal Payment Date” shall mean any date upon which the principal amount of Bonds is due hereunder, including the Maturity Date, any Redemption Date, any date on which a Sinking Fund Payment is due, or the date the maturity of any Bond is accelerated pursuant to the terms hereof or otherwise.

 

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Project” means the land, facilities, equipment and other property financed by the proceeds of the Series 2021 Bonds or any Additional Bonds, and includes, without limitation, the 2021 Project.

 

Qualified Financial Institution” shall mean a bank, trust company, national banking association, insurance company, other financial services company or government or quasi-governmental agency whose unsecured long term debt obligations (in the case of a bank, trust company, national banking association, other financial services company, government or quasi-governmental agency) or whose claims paying abilities (in the case of an insurance company) are rated in any of the three highest rating categories (without regard to gradation) by one or more of Moody’s, Fitch and S&P, including the rating agency, if any, then rating the Bonds (i.e., the equivalent of A or higher).

 

Qualified Investment Provider” shall mean a financial institution or insurance company which has (or the parent company or guarantor of which has), at the date of execution of the applicable investment agreement, an outstanding issue of unsecured, uninsured and unguaranteed debt obligations or a claims paying ability rated in either of the two highest long-term rating categories by Moody’s, Fitch or S&P, including the rating agency, if any, then rating the Bonds (without regard to gradations).

 

Rating Agencies” shall mean any of Moody’s, S&P or Fitch, which is then providing a rating on the Bonds.

 

Rebate Amount” has the meaning ascribed in Section 1.148-3(b) of the Regulations and generally means the excess as of any date of the future value of all receipts on Nonpurpose Investments over the future value of all payments on Nonpurpose Investments all as determined in accordance with Section 1.148-3 of the Regulations.

 

Rebate Analyst” means Bond Counsel or an Independent Public Accountant or other Independent financial analyst qualified and experienced in the calculation of Rebate Payments under Section 148 of the Code and not unacceptable to the Trustee, charged with calculating to Rebate Amounts and Rebate Payments with respect to a Tax-Exempt Bonds.

 

Rebate Fund” means the special trust fund so designated, established pursuant to Section 5.1 hereof.

 

Rebate Payment” shall mean the minimum amount of rebatable arbitrage required to be paid with respect to any particular Tax-Exempt Series 2020 Bonds on a Computation Date.

 

Regulations” means the applicable Income Tax Regulations under Sections 103 and 141 through 150 of the Code and, to the extent appropriate, any predecessor statute, whether at the time proposed, temporary, final or otherwise.

 

Record Date” shall mean the fifteenth (15th) day (whether or not a Business Day) of the month next preceding each Interest Payment Date.

 

Redemption Account” means the Account so designated, established within the Debt Service Fund pursuant to Section 5.1 hereof.

 

Redemption Date” shall mean the date fixed for redemption of Bonds subject to redemption in any notice of redemption given in accordance with the terms hereof.

 

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Redemption Price” shall mean an amount equal to the principal of and premium, if any, and accrued interest, if any, on the Bonds to be paid on the Redemption Date.

 

Required Bondholders” means in the case of consent or direction to be given hereunder, the holders of the majority in aggregate principal amount Outstanding of Senior Bonds or, (i) if no Senior Bonds remain outstanding, or (ii) if the Holders of the Outstanding Senior Bonds have so consented pursuant to a Special Senior Consent, the Holders of the majority in aggregate principal amount Outstanding of Subordinate Class A Bonds or, (iii) if no Senior Bond and no Subordinate Class A Bond remains Outstanding, the Holders of the majority in aggregate principal amount Outstanding of Subordinate Class B Bonds.

 

Responsible Officer” means, when used with respect to the Trustee, any vice president, assistant vice president, senior associate, associate or other officer of the Trustee within the corporate trust office specified in Section 13.1 (or any successor corporate trust office) customarily performing functions similar to those performed by the persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred at the corporate trust office specified in Section 13.1 because of such person’s knowledge of and familiarity with the particular subject and having direct responsibility for the administration of this Indenture.

 

S&P” shall mean S&P Global Ratings, a business unit of Standard & Poor’s Financial Services LLC, and its successors and assigns, except that if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, then the term “S&P” shall be deemed to refer to any other nationally recognized securities rating agency selected by the Borrower Representative.

 

Securities Depository” shall mean The Depository Trust Company, 711 Stewart Avenue, Garden City, New York 11530, Fax (516) 227-4039 or 4190 and such other securities depository as the Members of the Obligated Group may designate in a certificate of the Members of the Obligated Group delivered to the Trustee.

 

Senior Bonds” means, initially, the Series 2021 Bonds and as Series of Additional Bonds are issued, any Additional Bonds of any Series designated as “Senior” and secured by a Senior Note.

 

Senior DSR Account” means the special trust account so designated, established and maintained pursuant to Section 5.1 hereof.

 

Senior DSRFR” shall have the meaning set forth under “Debt Service Reserve Fund Requirement” above.

 

Senior Notes” means Senior Master Indenture Promissory Note No. 2021-1 delivered pursuant to the Master Indenture, and any other senior notes issued pursuant to the Master Indenture as the same may be amended or supplemented from time to time.

 

Series” means any series of Bonds.

 

Sinking Fund Payment” means the amount required by the Indenture as payable on a single future date for the retirement of any Outstanding Bonds which are expressed to mature after such future date, but does not include any amounts payable by reason only of the maturity of a Bond.

 

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Special Senior Consent” means with respect to any action of the Trustee to be taken upon the direction or consent of Holders of Subordinate Bonds, written consent of the Holders of a majority in aggregate principal amount Outstanding of the Senior Bonds which may be obtained in respect of rights affecting the Subordinate Bonds alone.

 

State” means the State of Wisconsin.

 

Subordinate Class A Bonds means any Additional Bonds issued hereunder and secured by a Subordinate Class A Note under the Master Indenture.

 

Subordinate Class A DSR Account” means the special trust account so designated, established and maintained pursuant to Section 5.1 hereof.

 

Subordinated Class A DSRFR” shall have the meaning set forth in a Supplemental Indenture.

 

Subordinate Class A Note shall have the meaning set forth in the Master Indenture.

 

Subordinate Class B Bonds means any Additional Bonds issued hereunder and secured by a Subordinate Class B Note under the Master Indenture.

 

Subordinate Class B DSR Account” means the special trust account so designated, established and maintained pursuant to Section 5.1 hereof.

 

Subordinated Class B DSRFR” shall have the meaning set forth in a Supplemental Indenture.

 

Subordinate Class B Notes” shall have the meaning set forth in the Master Indenture.

 

Subordinate Bonds” means the Bonds of any Series of Additional Bonds designated as “Subordinate” and secured by the Subordinate Notes.

 

Subordinate Notes” means any subordinate note issued under the Master Indenture.

 

Supplemental Indenture” means any indenture supplemental hereto or amendatory hereof, adopted by the Issuer in accordance with Article X hereof.

 

Tax Certificate” means collectively, the Arbitrage and Tax Certificate dated the date of initial issuance and delivery of the Series 2021 Bonds, executed by the Issuer and the Borrowers, and any amendments and supplements thereto.

 

Taxable Bonds” means any Series of Bonds, the interest on which is includable in federal income tax under the Code.

 

Tax-Exempt Bonds” means the Series 2021 Bonds and any other Series of Bonds, the interest on which is excludable from the gross income of the holders thereof for federal income tax purposes.

 

Tax Incidence Date” means the date as of which interest on any Tax-Exempt Bonds becomes or became includable in the gross income of the recipient thereof (other than the Members of the Obligated Group or another substantial user or related person) for federal income tax purposes for any cause, as determined by a Determination of Taxability.

 

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Term” when used with reference to the Loan Agreement, means the term of the Loan Agreement determined as provided in Article III thereof.

 

Trust Estate” means all property and rights granted to the Trustee pursuant to the granting clauses of this Indenture, as the same may be amended or supplemented from time to time.

 

Trustee” shall mean the commercial bank, trust company or other entity which may from time to time be appointed to serve as Trustee as provided in Section 9.1 hereof. The initial Trustee shall be The Bank of New York Mellon.

 

Unassigned Rights” means the Issuer’s rights under Sections 3.2(a)(iv), 3.2(b), 3.3, 4.3, 7.4, 7.5, 7.6, 7.10 7.11, 7.13, 7.14 and 7.15 of the Loan Agreement, and, to the extent not expressly provided in such sections or in any other sections hereof or thereof), the Issuer’s rights hereunder or thereunder to (i) inspect books and records, (ii) give or receive notices, approvals, consents, requests, and other communications, (iii) receive payment or reimbursement of expenses, including, without limitation, “Additional Payments” as defined in the Loan Agreement and the Issuer’s Annual Fee, (iv) immunity from and limitation of any liability, (v) indemnification by each Borrower or any other Person, (vi) security for the indemnification obligation of each Borrower, and (vii) to enforce, in the Issuer’s own name and on the Issuer’s own behalf, those provisions hereof or of the Loan Agreement and any other document, instrument or agreement entered into with respect to the Bonds that provides generally for the foregoing enumerated rights or any similar rights of the Issuer or any Issuer Indemnified Person. For avoidance of doubt, the “Unassigned Rights” referenced in clauses (iv), (v), and (vi), above, shall include (but not be limited to) the rights of the Issuer Indemnified Persons to immunity from and limitation of liability and indemnification by the Borrower as provided in the Loan Agreement and the right of any such Issuer Indemnified Person to enforce such rights in his, her or its own name.

 

Section 1.2.    Interpretation.

 

(a)    In this Indenture:

 

(i)    Any capitalized word or term used but not defined herein shall have the meaning ascribed to such word or term in the Loan Agreement or the Tax Certificate, as the case may be.

 

(ii)    The terms “hereby”, “hereof’, “hereto”, “herein”, “hereunder” and any similar terms, as used in this Indenture, refer to this Indenture, and the term “hereafter” means after, and the term “heretofore” means before, the date of execution of this Indenture.

 

(iii)    Words of the masculine gender mean and include correlative words of the feminine and neuter genders and words importing the singular number mean and include the plural number and vice versa.

 

(iv)    Words importing persons include firms, associations, partnerships (including limited partnerships), limited liability companies, trusts, corporations and other legal entities, including public bodies, as well as natural persons.

 

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(v)    Any headings preceding the texts of the several Articles and Sections of this Indenture, and any table of contents appended to copies hereof, shall be solely for convenience of reference and shall not constitute a part of this Indenture, nor shall they affect its meaning, construction or effect.

 

(vi)    All approvals, consents and acceptances required to be given or made by any person or party hereunder shall be at the reasonable discretion of the party whose approval, consent or acceptance is required except to the extent otherwise specified herein.

 

(vii)    This Indenture shall be governed by and construed in accordance with the applicable laws of the State.

 

(viii)    Unless otherwise provided herein, all references to a particular time are to Eastern Time.

 

(b)    Whenever the Issuer is named or referred to, it shall be deemed to include its successors and assigns whether so expressed or not. All of the covenants, stipulations, obligations, and agreements by or on behalf of, and other provisions for the benefit of, the Issuer contained in this Indenture shall bind and inure to the benefit of such successors and assigns and shall bind and inure to the benefit of any officer, board, commission, issuer, agency or instrumentality to whom or to which there shall be transferred by or in accordance with law any right, power or duty of the Issuer, or of its successors or assigns, the possession of which is necessary or appropriate in order to comply with any such covenants, stipulations, obligations, agreements or other provisions hereof.

 

(c)    If any one or more of the covenants or agreements provided herein on the part of the Issuer or the Trustee to be performed should be contrary to law, then such covenant or covenants or agreement or agreements shall be deemed separable from the remaining covenants and agreements hereof, and shall in no way affect the validity of the other provisions of this Indenture or of the Bonds.

 

(d)    For purposes hereof, the Trustee shall not be deemed to have knowledge of any fact or the occurrence of any event unless and until a Responsible Officer of the Trustee has written notice thereof or actual knowledge thereof, provided that the Trustee shall be deemed to have knowledge of any default in payments due on the Bonds or under Section 3.1(c) or (d) of the Loan Agreement, and of any draw and failure to replenish the Debt Service Reserve Fund.

 

ARTICLE II.
AUTHORIZATION, ISSUANCE, CONDITIONS AND TERMS OF BONDS

 

Section 2.1.    Authorization and Issuance of Bonds.

 

(a)    Bonds of the Issuer issued hereunder shall be subject to the terms, conditions and limitations established herein. No Bonds may be authenticated and delivered except in accordance with this Article II.

 

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(b)    There shall be issued under and secured by this Indenture a series of Bonds to be designated “Public Finance Authority Senior Special Facility Revenue Bonds (Sky Harbour Capital LLC Aviation Facilities Project), Series 2021”, in the aggregate principal amount of $166,340,000.

 

(c)    The Series 2021 Bonds shall mature on July 1 of each year set forth below and bear interest, payable on each Interest Payment Date, at the rate per annum set forth in the following table:

 

TERM BONDS

     

Year (July 1)

Amount

Interest Rate

2036

$21,085,000

4.000%

2041

30,435,000

4.000

2054

114,820,000

4.250

 

(d)    The Series 2021 Bonds shall be numbered from one upward, in consecutive numerical order with the number of each number prefixed by a Code as follows: “Sen” for Senior. Bonds issued in exchange shall be numbered in such manner as the Trustee in its discretion shall determine.

 

Section 2.2.    Method and Place of Payment.

 

(a)    Unless otherwise provided in any writing with or from the Securities Depository, the interest on the Bonds shall be paid by the Paying Agent on the Interest Payment Dates by wire transfer of immediately available funds to an account specified by the Owner in a writing delivered to the Paying Agent. Any such specified account shall remain in effect until revised by such Owner by an instrument in writing delivered to the Paying Agent. The principal of and premium, if any, on each Bond shall be payable on the Principal Payment Date, upon surrender thereof at the office of the Paying Agent.

 

(b)    Except as may be specifically set forth herein, the Paying Agent, the Trustee, the Borrowers and the Issuer may treat the Owner of a Bond as the absolute owner thereof for all purposes, whether or not such Bond shall be overdue, and the Paying Agent, the Trustee, the Borrowers, and the Issuer shall not be affected by any knowledge or notice to the contrary; and payment of the principal of and premium, if any, and interest on such Bond shall be made only to such Owner, which payments shall be valid and effectual to satisfy and discharge the liability of such Bond to the extent of the sum or sums so paid. All Bonds at maturity or on earlier redemption paid pursuant to the provisions of this Section shall be cancelled by the Paying Agent.

 

Section 2.3.    Payment of Principal and Interest of Bonds; Acceptance of Terms and Conditions.

 

(a)    The interest on the Bonds shall become due and payable on the Interest Payment Dates in each year to and including the Maturity Date, on each Redemption Date, and on the date of any acceleration prior thereto. The principal of the Bonds shall become due and payable on the Principal Payment Dates.

 

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(b)    By the acceptance of its Bond, the Owner and each Beneficial Owner thereof shall be deemed to have agreed to all the terms and provisions of such Bond as specified in such Bond and this Indenture including, without limitation, the applicable interest rates, mandatory and optional redemption provisions applicable to such Bond, method and timing of redemption, payment, etc. Such Owner and each Beneficial Owner further agree that if, on any date upon which one of its Bonds is to be redeemed or paid at maturity or earlier due date, funds are on deposit with the Paying Agent or the Trustee to pay the full amount due on such Bond, then such Owner or Beneficial Owner shall have no rights under this Indenture other than to receive such full amount due with respect to such Bond and that interest on such Bond shall cease to accrue as of such date.

 

Section 2.4.    Calculation and Payment of Interest. Interest shall be calculated on the basis of a 360 day year comprised of twelve 30-day months. Payment of interest on each Bond shall be made on each Interest Payment Date for such Bond for unpaid interest accrued during the Interest Accrual Period to the Owner of record of such Bond on the applicable Record Date. In the absence of manifest error, the record of interest rates maintained by the Paying Agent shall be conclusive and binding upon the Paying Agent, the Trustee, the Issuer, the Borrowers, the Owners and the Beneficial Owners.

 

Section 2.5.    Maximum Interest Rate. Notwithstanding any provision herein to the contrary, at no time, whether as a result of an Event of Default or otherwise, shall the Bonds bear interest at an interest rate higher than the Maximum Rate.

 

Section 2.6.    Book Entry System. Initially the Bonds will be issued as book-entry only bonds and the Letter of Representations with DTC and the provisions of such Letter of Representations shall be incorporated herein by reference; provided, however, that a Supplemental Indenture authorizing a Series of Bonds may include provisions superseding the provisions of the Letter of Representations with respect to that Series.

 

Unless otherwise provided in the Supplemental Indenture authorizing a Series of Bonds, the Bonds of each Series shall be initially issued in the form of a single, fully-registered certificate in the aggregate principal amount of each maturity of each Series or in more than one such certificate if and to the extent, required by DTC. So long as the Bonds of a Series are held in the Book-Entry System the registered owner of all of the Bonds of such Series shall be DTC, and the Bonds of the Series shall be registered in the name of Cede & Co., as nominee for DTC. The Trustee and the Issuer may treat DTC (or its nominee) as the sole and exclusive registered owner of the Bonds of such Series registered in its name for the purposes of payment of the principal of or interest on the Series of Bonds, giving any notice permitted or required to be given to registered owners under this Indenture and the Letter of Representations, registering the transfer of Bonds, obtaining any consent or other action to be taken by registered owners and for all other purposes whatsoever; and neither the Trustee nor the Issuer shall be affected by any notice to the contrary. Neither the Trustee nor the Issuer shall have any responsibility or obligation to any DTC Participant, any person claiming a beneficial ownership interest in the Bonds of a Series under or through DTC or any DTC Participant, or any other person which is not shown on the registration books of the Trustee as being a registered owner, with respect to the accuracy of any records maintained by DTC or any DTC Participant; the payment of DTC or any DTC Participant of any amount in respect of the principal of or interest on the Bonds of the Series; any notice which is permitted or required to be given to registered owners under this Indenture and the Letter of Representations; or any consent given or other action taken by DTC as registered owner. The Trustee shall pay from monies available hereunder all principal of, and interest on the Bonds of a Series only to or “upon the order” of DTC (as that term is used in the Uniform Commercial Code as adopted in the State), and all such payments shall be valid and effective to fully satisfy and discharge the Issuer’s obligations with respect to the principal of and interest on the Bonds of a Series to the extent of the sum or sums so paid. So long as the Bonds of a Series are held in the Book-Entry System, no person other than DTC shall receive an authenticated bond certificate of that Series. Upon delivery by DTC to the Trustee of DTC’s written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., and subject to the provisions of the Supplemental Indenture and this Indenture with respect to transfers of Bonds, the term “Cede & Co.” in the Supplemental Indenture and this Indenture shall refer to such new nominee of DTC; provided, however, registered ownership of the Bonds of a Series, or any portions thereof, may not be transferred except (i) to any successor of DTC or its nominee, provided that any such successor shall be qualified under any applicable laws to provide the service proposed to be provided by it; (ii) to any substitute depository or its successor; or (iii) to any person as provided in the following paragraph.

 

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In the event that (i) DTC or its successor (or substitute depository or its successor) resigns or is removed from its functions as depository, and no substitute depository can be obtained, or (ii) the Issuer determines following direction from the Borrower Representative to discontinue the use of the Book Entry System the ownership of Bonds may then be transferred to any person or entity as provided in the Indenture and the Bonds shall no longer be held in the Book-Entry System. In any such event, the Issuer (subject to Section 13.4 hereof) shall deliver a written request to the Trustee, together with a supply of bond certificates, to issue Bonds as provided in this Indenture in any authorized denomination. Upon receipt of all then Outstanding Bonds by the Trustee, together with the aforementioned written request of the Issuer new Bonds shall be issued and authenticated in such denominations and registered in the names of such persons as are requested in such written request.

 

The Bondholders have no right to require the use of the Book Entry System.

 

Whenever DTC requests the Issuer to do so, the Issuer (subject to Section 13.4 hereof) will cooperate with DTC in taking appropriate action after written notice to arrange for another securities depositary to maintain custody of certificates evidencing the Bonds.

 

Section 2.7.    Execution and Authentication of Bonds.

 

(a)    After their authorization as provided in this Article, Bonds may be executed by or on behalf of the Issuer by any Authorized Signatory and delivered to the Trustee for authentication. Each Bond shall be executed in the name of the Issuer by the manual or facsimile signature of any one or more Authorized Signatory.

 

(b)    In case any officer who shall have signed any of the Bonds shall cease to be such officer before the Bonds so signed shall have been authenticated and delivered by the Trustee, such Bonds may nevertheless be authenticated and delivered as herein provided as if the person who so signed such Bonds had not ceased to be such officer. Any Bond may be signed on behalf of the Issuer by any person who, on the date of such act, shall hold the proper office, notwithstanding that at the date of such Bond such person may not have held such office.

 

(c)    The Bonds shall each bear thereon a certificate of authentication, in the form set forth in Exhibit A hereto, executed manually by the Trustee. Only such Bonds as shall bear thereon such certificate of authentication shall be entitled to any right or benefit under this Indenture and no Bond shall be valid or obligatory for any purpose until such certificate of authentication shall have been duly executed by the Trustee. Such certificate of the Trustee upon any Bond executed on behalf of the Issuer shall be conclusive evidence that the Bond so authenticated has been duly authenticated and delivered under this Indenture and that the holder thereof is entitled to the benefits hereof.

 

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Section 2.8.    Delivery of Bonds.

 

The Series 2021 Bonds and each series of Additional Bonds shall be executed in the form and manner set forth herein, presented to the Trustee and thereupon authenticated by the Trustee in accordance with the direction of the Issuer, and deposited with the Trustee to be held as F.A.S.T. agent for DTC. Upon payment to the Trustee of the proceeds of sale thereof, such Bonds shall be delivered by the Trustee to or upon the order of the purchasers thereof, but only upon receipt by the Trustee of:

 

(i)    A certified copy of the Issuer’s resolution authorizing the issuance of such Bonds and the execution and delivery of this Indenture and the other Issuer Financing Documents;

 

(ii)    Original executed counterparts, or certified copies, of the General Financing Documents and, in the case of Additional Bonds, the supplement to or modification or amendment of the Loan Agreement, this Indenture and the Master Indenture Note entered into prior to such delivery and such other documents as the Trustee or the purchaser of such Additional Bonds may require;

 

(iii)    A request and authorization to the Trustee on behalf of the Issuer to authenticate and deliver such Bonds to the purchasers therein identified upon payment to the Trustee, for the account of the Issuer, of a sum specified in such request and authorization, plus any accrued interest on such Bonds to the date of such delivery. The proceeds of such payment shall be paid over to the Trustee and deposited in the Debt Service Fund, the Debt Service Reserve Fund and the Series 2021 Bond Fund pursuant to Article V hereof; and

 

(iv)    A written opinion by Bond Counsel to the effect that the issuance of such Bonds has been duly authorized and that all conditions precedent to the delivery thereof have been fulfilled and, in the case of any series of Additional Bonds, to the effect that the issuance of such Additional Bonds will not impair the exemption from federal income taxation of any Tax-Exempt Bonds Outstanding on the date of issuance of such Additional Bonds.

 

Section 2.9.    Issuance of Additional Bonds.

 

(a)    The Issuer may, in its sole and exclusive discretion, but shall not be obligated to, issue Additional Bonds hereunder, from time to time, for the following purposes:

 

(i)    To acquire and construct or rehabilitate or renovate new or expanded facilities of any Borrower.

 

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(ii)    To pay the cost of refunding through redemption of any Outstanding Bonds issued under this Indenture and subject to such redemption.

 

(iii)    To pay the cost of refunding through redemption any other indebtedness of any Borrower and subject to such redemption.

 

(b)    In any such event the Trustee shall, at the direction of the Issuer, authenticate the Additional Bonds and deliver them as specified in the request, but only upon receipt of:

 

(i)    A Supplemental Indenture: (A) setting forth the terms of the Additional Bonds; (B) for Additional Bonds described in paragraph (a)(i) above, describing the facilities to be added to the Project; (C) for Additional Bonds described in paragraph (a)(i) above, also describing the realty and facilities to become part of the Project; and (D) for any Additional Bonds, (1) stating the purpose of the issue, (2) establishing the series of Bonds to be issued and providing the terms and form of Bonds thereof and directing the payments to be made into the funds hereunder, (3) authorizing the execution and delivery of the Additional Bonds to be issued, (4) authorizing the redemption of any previously issued Bonds which are to be refunded and (5) designating such Additional Bonds as “Senior,” “Subordinate Class A” or “Subordinate Class B”;

 

(ii)    A supplemental Agreement and Master Indenture Note (or Master Indenture Notes) providing for additional payments to be made by the Members of the Obligated Group thereunder sufficient to pay principal and Redemption Price of and interest on the Additional Bonds and all other amounts required to be paid with respect thereto;

 

(iii)    All items required to be delivered pursuant to the Master Indenture in connection with Additional Obligations;

 

(iv)    For any Additional Bonds described in paragraph (a)(ii) above, a certificate of the Borrower Representative (A) stating that notice of redemption of the Bonds to be refunded has been given or that provisions have been made therefor and (B) stating that the proceeds of the Additional Bonds plus the other amounts, if any, stated to be available for the purpose, will be sufficient to accomplish the purpose of the refunding and to pay the cost of refunding, which shall be itemized in reasonable detail;

 

(v)    For any Additional Bonds, a certificate of the Borrower Representative stating that it has no knowledge that an Event of Default hereunder has occurred and is continuing;

 

(vi)    For any Additional Bonds, an opinion or opinions of Bond Counsel that (A) the purpose of the Additional Bonds is one for which Additional Bonds may be issued under this Section, (B) all conditions prescribed herein as precedent to the issuance of the Additional Bonds have been fulfilled, (C) the Additional Bonds have been validly authorized and executed and when authenticated and delivered pursuant to the request of the Issuer will be valid, legally binding, special limited obligations of the Issuer, enforceable against the Issuer in accordance with their terms (except to the extent that the rights and remedies created thereby are subject to bankruptcy, insolvency, reorganization, moratorium and similar laws effecting the rights and remedies of creditors and secured parties, and that the availability of specific enforcement, injunctive relief or other equitable remedies is subject to the discretion of the court before which any proceeding therefor may be brought) and are entitled to the benefit and security of this Indenture, (D) all consents of any regulatory bodies required as a condition to the valid issuance of the Additional Bonds have been obtained and (E) issuance of such Additional Bonds will not adversely affect the tax status of the interest on Outstanding Tax-Exempt Bonds;

 

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(vii)    For any Additional Bonds, an opinion of counsel to the Borrowers and the Members of the Obligated Group addressing the execution and delivery of the documents being executed and delivered in connection with the issuance of the Additional Bonds; and

 

(viii)    For any Additional Bonds, a deposit to the Debt Service Reserve Fund of such amounts as are required so that there shall be on deposit therein an amount equal to the Debt Service Reserve Requirement as recalculated to take into account the Additional Bonds.

 

ARTICLE III.
REDEMPTION OF BONDS

 

Section 3.1.    Optional, Mandatory Sinking Fund and Special Mandatory Redemption of Series 2021 Bonds.

 

(a)    Optional Redemption of Series 2021 Bonds.

 

The Series 2021 Bonds maturing on July 1, 2036 are subject to optional redemption, upon the written direction of the Borrower Representative to the Trustee (a copy of such direction shall be provided to the Issuer), prior to maturity on or after July 1, 2028 in whole at any time, or in part from time to time, at a redemption price equal to the principal amount thereof plus interest accrued to the redemption date. The Series 2021 Bonds maturing after July 1, 2036 are subject to optional redemption, upon the written direction of the Borrower Representative to the Trustee (a copy of such direction shall be provided to the Issuer), prior to maturity on or after July 1, 2031 in whole at any time, or in part from time to time, at a redemption price equal to the principal amount thereof plus interest accrued to the redemption date. Upon the delivery of such written request by the Borrower Representative to the Trustee, the Issuer shall be deemed, without any action on the Issuer’s part, to have exercised its option to redeem the Bonds under this clause (a) of Section 3.1.

 

(b)    Mandatory Sinking Fund Redemption of Series 2021 Bonds. The Series 2021 Bonds described below are subject to mandatory sinking fund redemption in part by lot on July 1 of the years and in the respective principal amounts set forth below, at a Redemption Price equal to the principal amount thereof, from mandatory Sinking Fund payments which will be made in amounts sufficient to redeem, on July 1 of each of the following years, the principal amount of the Series 2021 Bonds set forth opposite such year below, subject to adjustment as described in Section 6.2 hereof:

 

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$21,085,000 Series 2021 Term Bonds

 
 

Maturing on July 1, 2036

 
 

Year

   
 

(July 1)

Amount

 
 

2032

$3,505,000

 
 

2033

3,210,000

 
 

2034

4,190,000

 
 

2035

4,780,000

 
 

2036*

5,400,000

 
       
 

30,435,000 Series 2021 Term Bonds
Maturing on July 1, 2041

 
 

Year

   
 

(July 1)

Amount

 
 

2037

$5,615,000

 
 

2038

5,835,000

 
 

2039

6,075,000

 
 

2040

6,325,000

 
 

2041*

6,585,000

 
       
 

$114,820,000 Series 2021 Term Bonds
Maturing on July 1, 2054

 
 

Year

   
 

(July 1)

Amount

 
 

2042

$ 6,855,000

 
 

2043

7,135,000

 
 

2044

7,445,000

 
 

2045

7,765,000

 
 

2046

8,105,000

 
 

2047

8,455,000

 
 

2048

8,795,000

 
 

2049

9,025,000

 
 

2050

9,410,000

 
 

2051

9,810,000

 
 

2052

10,235,000

 
 

2053

10,670,000

 
 

2054*

11,115,000

 

 


* Maturity.

 

(c)    Special Mandatory Redemption of Series 2021 Bonds. In the event the Series 2021 Bonds are not subject to optional redemption as described above, upon the sale of an asset by any Borrower to a Person not constituting a Member of the Obligated Group, the applicable portion of the Series 2021 Bonds are subject to special mandatory redemption in the years following the date of issuance of the Series 2021 Bonds, as set forth below, at a Redemption Price equal to the percentage set forth below of the Accreted Value (as defined below) of the principal amount thereof to be redeemed, plus accrued interest to the redemption date (provided that the Series 2021 Bonds maturing on July 1, 2036 shall be subject to redemption on or after July 1, 2028 at a redemption price equal to the principal amount thereof plus interest accrued to the redemption date).

 

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(d)    The “Accreted Value” of a Series 2021 Bond:

 

(a)         on any interest payment date shall be, the value set forth in the “Accreted Values for the Series 2021 Bonds Based on $5,000 Par Amount of Bonds” set forth on Exhibit B for each $5,000 par amount of such Series 2021 Bond, as determined and confirmed by the Borrower Representative; and

 

(b)         on any date between interest payment dates shall be determined on the basis of a straight line interpolation between the Accreted Values for the prior interest payment date and the succeeding interest payment date, based upon a 30-day month.

 

Redemption Dates
(both dates inclusive)

 

Percentage of Accreted Value

 

Date of Issuance through June 30, 2026

    110 %

July 1, 2026 through June 30, 2027

    109  

July 1, 2027 through June 30, 2028

    108  

July 1, 2028 through June 30, 2029

    107  

July 1, 2029 through June 30, 2030

    106  

July 1, 2030 through June 30, 2031

    105  

July 1, 2031 and thereafter

    100  

 

Section 3.2.    Mandatory Taxability Redemption. Upon the occurrence of a Determination of Taxability, the Series 2021 Bonds are subject to mandatory redemption in whole on the earliest practicable date for which notice can be given pursuant to Section 6.3 hereof (but in any event no later than sixty (60) days after the Trustee has actual knowledge thereof), at a redemption price equal to the principal amount thereof plus accrued interest. In the case of any redemption pursuant to this subsection, the Issuer or the Borrower Representative shall deliver to the Trustee a certificate of an Authorized Representative specifying the event giving rise to such inclusion in the gross income of the recipient thereof and the dates which are the Tax Incidence Date and the date of the Determination of Taxability. Such certificate shall be delivered at least ten days before notice of redemption is required to be given.

 

Section 3.3.    Extraordinary Optional Redemption.

 

(a)    Extraordinary Optional Redemption Following Certain Damage or Condemnation. The Bonds are subject to redemption in whole or in part, on any date, at a Redemption Price equal to the principal amount thereof plus accrued interest to the extent required by the Master Indenture following certain damage or condemnation events. Bonds redeemed as described in this paragraph shall be redeemed at a Redemption Price equal to the principal amount thereof, plus accrued interest to the redemption date.

 

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(b)    Mandatory Redemption Upon Termination of Ground Lease. The Bonds are subject to extraordinary mandatory redemption, in the amounts set forth below, prior to maturity upon the termination of any Ground Lease of a Borrower (excluding the termination of all or any portion of a Ground Lease in connection with a modification of the scope of the 2021 Project pursuant to the provisions of Exhibit C hereof, provided that the proceeds of the Series 2021 Bonds are reallocated to a new Project site pursuant to such modification within 90 days of the termination of the Ground Lease), unless the following items have been received by the Trustee:

 

(i)    an Opinion of Bond Counsel to the effect that such action will not adversely affect the exclusion of interest on the affected Tax-Exempt Bonds from gross income of the holders thereof for federal income tax purposes, and

 

(ii)    an Officer’s Certificate of the Group Representative with a detailed internal report demonstrating and concluding that the Projected Senior Debt Service Coverage Ratio is projected or forecasted to be at least equal to 1.50 (provided that if the Senior Bonds do not then carry an Investment Grade Rating, such ratio shall be at least equal to 2.25) for each of the first three full Fiscal Years immediately following the date of termination of the Ground Lease.

 

If the above deliverables are not received by the Trustee, the Bonds must be redeemed in an amount equal to the lesser of (1) the amount needed to be redeemed in order to satisfy the condition set forth in clause (ii) above, and (2) the amount of Bonds allocable for federal income tax purposes to the terminated Ground Lease; provided, however, that the amount of the Bonds to be redeemed shall not be less than the amount required to maintain the exclusion of interest from gross income on the remaining Tax-Exempt Bonds.

 

Any such redemption shall be at a Redemption Price equal to the Accreted Value of the principal amount to be redeemed, plus accrued interest to the redemption date, and must occur within 45 days of termination of the Ground Lease, unless funds on hand and available for such redemption are insufficient to pay such Redemption Price, in which case, the redemption must occur not later than 180 days after the termination of the Ground Lease, provided that, to the extent necessary to preserve the exclusion of interest on any remaining Tax-Exempt Bonds from gross income, the Tax-Exempt Bonds may be subject to earlier redemption or initially subject to defeasance.

 

Section 3.4.    General Provisions.

 

(a)    Upon any redemption of Bonds there shall also be due and payable, concurrently with the payment of the Redemption Price, all other amounts then due under the Loan Agreement and the Master Indenture Note.

 

(b)    Redemption of Bonds permitted or required by this Article III shall be made as follows, and the Trustee shall give the notice of redemption referred to in Section 6.3 hereof in respect of each such Redemption:

 

(i)    Redemption shall be made pursuant to the general optional redemption provisions of Section 3.1 on the dates permitted in such subsection and in such principal amounts and maturities as the Borrower Representative shall request in a written notice to the Trustee and the Issuer in accordance with Section 6.2 of the Loan Agreement and the requirements of the Master Indenture.

 

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(ii)    Redemption shall be made pursuant to the extraordinary redemption provisions of Section 3.3 at such date or dates as the Borrower Representative shall specify in a written notice to the Issuer and Trustee in accordance with Section 6.2 of the Loan Agreement and the requirements of the Master Indenture.

 

(iii)    Redemption shall be made pursuant to the mandatory sinking fund redemption provisions of Section 3.1 as and when required by this Section without the necessity of any request by, or notification from the Issuer or from the Borrower Representative, but subject to the provisions of Section 5.3 hereof.

 

(iv)    Redemption shall be made pursuant to the Determination of Taxability redemption provisions of Section 3.2 at the earliest possible date following receipt of the certificate prescribed in Section 3.2 and payments made by the Borrowers prescribed in Section 6.1 of the Loan Agreement, without the necessity of any instructions or further act of the Issuer or the Borrower Representative.

 

(c)    Any Additional Bonds shall be subject to redemption prior to maturity at such times and prices, in the manner and upon such terms and conditions, not inconsistent with this Indenture, as shall be specified in the Supplemental Indenture authorizing such Additional Bonds.

 

(d)    If, on any date set hereunder for the redemption of Bonds, moneys for the redemption of such Bonds or any portions thereof to be redeemed, together with interest to such redemption date, shall be held by the Trustee so as to be available therefor on said date and if notice of redemption shall have been given as required in this Indenture, then, from and after such redemption date interest on such Bonds or portions thereof so called for redemption shall cease to accrue and become payable. If said moneys shall not be so available on such redemption date, such Bonds or portions thereof shall continue to bear interest until paid at the same rate as they would have borne had they not been called for redemption.

 

ARTICLE IV.
GENERAL TERMS AND PROVISIONS OF BONDS

 

Section 4.1.    Date of Bonds. Each Series 2021 Bond shall be dated and bear interest from the Date of Delivery and each Additional Bond shall be dated and bear interest from the date set forth in the Supplemental Indenture authorizing the issuance of such Additional Bonds, except in the case of Bonds delivered in any exchange or transfer hereunder on or subsequent to the first Interest Payment Date of the Bond for which it is exchanged or transferred, which shall be dated and bear interest from the Interest Payment Date next preceding the date of such delivery, unless, as shown by the records of the Trustee, interest on the Bond surrendered in exchange for such Bond shall be in default, in which case such Bond shall be dated as of the date to which interest has been paid in full on the Bond so surrendered, and such Bond shall bear interest from such date.

 

Section 4.2.    Form and Denominations. Unless otherwise provided in the Supplemental Indenture authorizing a series of Bonds, Bonds shall be issued in fully registered form, without coupons, in Authorized Denominations not exceeding the aggregate principal amount of Bonds of the same Series, maturity and interest rate as the Bond for which the denomination is to be specified. The Bonds shall be in substantially the form set forth in Exhibit A to this Indenture, with such variations, omissions and insertions as are permitted or required by this Indenture.

 

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Section 4.3.    Medium of Payment. The principal or Redemption Price, if any, of and interest on the Bonds shall be payable in any coin or currency of the United States of America which, on the respective dates of payment thereof, is legal tender for the payment of public and private debts. Such payment may be made as provided in Section 2.3 hereof.

 

Section 4.4.    Legends.

 

(a)    Each Bond shall contain on the face thereof the following statement: “This Bond is a special limited obligation of the Issuer payable solely from the Trust Estate, and, except from such source, none of the Issuer, any Member, any Sponsor, any Issuer Indemnified Person, the State or any political subdivision or agency thereof, or any political subdivision approving the issuance of this Bond shall be obligated to pay the principal of, premium, if any, or interest hereon or any costs incidental hereto. This Bond is not a debt of the State of Wisconsin or any Member and does not, directly, indirectly or contingently, obligate, in any manner, any Member, the State or any political subdivision or agency thereof, or any political subdivisions approving the issuance of this Bond, to levy any tax or to make any appropriation for payment of the principal of, premium, if any, or interest on, this Bond or any costs incidental hereto. Neither the faith and credit nor the taxing power of the State or any political subdivision or agency thereof, any Member of the Issuer, or any political subdivision approving the issuance of this Bond nor the faith and credit of the Issuer, any Sponsor or any Issuer Indemnified Person shall be pledged to the payment of the principal of, premium, if any, or interest on this Bond or any costs incidental hereto. The Issuer has no taxing power.”

 

(b)    The Bonds may in addition contain or have endorsed thereon such provisions, specifications and descriptive words not inconsistent with the provisions of this Indenture as may be necessary or desirable to comply with custom or otherwise as may be determined by the Issuer prior to the delivery thereof.

 

Section 4.5.    Bond Details

 

. Subject to the provisions hereof, the Bonds shall be dated, shall mature in such years and such amounts, shall bear interest at such rate or rates per annum, shall be subject to redemption on such terms and conditions and shall be payable as to principal or Redemption Price, if any, and interest at such place or places as shall be specified in this Indenture and, in the case of a series of Additional Bonds, in the Supplemental Indenture or the resolution of the Issuer authorizing the issuance of such Additional Bonds.

 

Section 4.6.    Interchangeability; Transfer and Registry.

 

(a)    Each Bond shall be transferable only upon compliance with the restrictions on transfer set forth on such Bond and only upon the books of the Issuer, which shall be kept for the purpose at the designated office of the Trustee, by the registered owner thereof in person or by his attorney duly authorized in writing, upon presentation thereof together with a written instrument of transfer satisfactory to the Trustee duly executed by the registered owner or his duly authorized attorney. Upon the transfer of any Bond the Trustee shall prepare and, authenticate and deliver in the name of the transferee one or more new Bonds of the same aggregate principal amount, Series, Class and maturity as the surrendered Bond.

 

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(b)    Any Bond, upon surrender thereof at the corporate trust office of the Trustee in New York, New York (or some other place as may be designated by the Trustee from time to time) with a written instrument of transfer satisfactory to the Trustee, duly executed by the registered owner or his attorney duly authorized in writing, may, at the option of the owner thereof, be exchanged for an equal aggregate principal amount of Bonds of the same Series and maturity of any other authorized denominations.

 

(c)    Except as otherwise specifically provided herein, the Issuer, the Borrower Representative, the Trustee and any Paying Agent may deem and treat the person in whose name any Bond shall be registered as the absolute owner of such Bond, whether such Bond shall be overdue or not, for the purpose of receiving payment of, or on account of, the principal and Redemption Price, if any, of and interest on such Bond and for all other purposes, and all payments made to any such registered owner or upon his order shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid, and neither the Issuer, the Trustee, the Borrower Representative nor any Paying Agent shall be affected by any notice to the contrary.

 

Section 4.7.    Bonds Mutilated, Destroyed, Stolen or Lost. In case any Bond shall become mutilated or be destroyed, stolen or lost, the Issuer shall execute and thereupon the Trustee shall authenticate and deliver, a new Bond of like Series, maturity and principal amount as the Bond so mutilated, destroyed, stolen or lost, in exchange and substitution for such mutilated Bond, upon surrender and cancellation of such mutilated Bond or in lieu of and substitution for the Bond destroyed, stolen or lost, upon filing with the Trustee of evidence satisfactory to the Issuer and the Trustee that such Bond has been destroyed, stolen or lost and proof of ownership thereof, and upon furnishing the Issuer and the Trustee with indemnity satisfactory to them and complying with such other reasonable requirements as the Issuer and the Trustee may prescribe and paying such expenses as the Issuer and Trustee may incur. All Bonds so surrendered to the Trustee shall be canceled by it. Any such new Bonds issued pursuant to this Section in substitution for Bonds alleged to be destroyed, stolen or lost shall constitute original additional contractual obligations on the part of the Issuer, whether or not the Bonds so alleged to be destroyed, stolen or lost be at any time enforceable by anyone, and shall be equally secured by and entitled to equal and proportionate benefits with all other Bonds issued hereunder in any moneys or securities held by the Issuer, the Trustee or any Paying Agent for the benefit of the owners of the Bonds.

 

Section 4.8.    Cancellation and Destruction of Bonds. All Bonds paid or redeemed in full, either at or before maturity, shall be delivered to the Trustee when such payment or redemption is made, and such Bonds together with all Bonds purchased by the Trustee, shall thereupon be promptly canceled. Bonds so canceled shall be cremated or otherwise destroyed by the Trustee in accordance with its customary practices, which shall thereafter execute a certificate of cremation or destruction in duplicate under signature of one of its authorized officers describing the Bonds so cremated or otherwise destroyed, and one executed certificate shall be filed with the Issuer and the other executed certificate shall be retained by the Trustee.

 

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Section 4.9.    Requirements With Respect To Transfers. In all cases in which the privilege of transferring Bonds is exercised, the Issuer shall execute and the Trustee shall authenticate and deliver Bonds in accordance with the provisions of this Indenture. All Bonds surrendered in any such transfer shall forthwith be canceled by the Trustee. For every such transfer of Bonds, the Issuer or the Trustee may, as a condition precedent to the privilege of making such transfer, make a charge sufficient to reimburse it for any tax, fee or other governmental charge required to be paid with respect to such transfer. The Trustee shall not be required to transfer any Bond (i) during the period from the close of business on the last Business Day on or preceding the fifteenth (15th) day of the calendar month next preceding each Interest Payment Date until the first Business Day following such interest payment date, or (ii) for which notice of redemption has been given.

 

Section 4.10.    Registrar. The Trustee shall also be Registrar for the Bonds, and shall maintain a register showing the names of all registered owners of Bonds, Bond numbers and amounts, and other information appropriate to the discharge of its duties hereunder.

 

Section 4.11.    Principal Balance; Annual and Monthly Reports. The Trustee shall maintain a record of the principal amount of Bonds Outstanding at any time hereunder. Each year, on or before July 31, the Trustee shall deliver to the Master Trustee, the Issuer and the Borrower Representative a written report stating the principal amount of Bonds Outstanding as of June 30 of such year. On or before the tenth (10th) day of each calendar month, the Trustee shall deliver to the Master Trustee, the Issuer and the Borrower Representative a written report stating the balances of each of the funds and accounts established under this Indenture.

 

ARTICLE V.
CUSTODY AND INVESTMENT OF FUNDS

 

Section 5.1.    Creation of Funds.

 

(a)    The Issuer hereby establishes and creates the following special trust Funds:

 

(i)    Series 2021 Bond Fund

 

(A)         Series 2021 Construction Account

 

(1)         Bond Proceeds Subaccount

 

(2)         Equity Subaccount

 

(B)         Series 2021 Costs of Issuance Account

 

(C)         Series 2021 Capitalized Interest Account

 

(ii)    Debt Service Fund

 

(A)         Senior Principal and Interest Account

 

(B)         Senior Redemption Account

 

(C)         Subordinate Class A Principal and Interest Account

 

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(D)         Subordinate Class A Redemption Account

 

(E)         Subordinate Class B Principal and Interest Account

 

(F)         Subordinate Class B Redemption Account

 

(iii)    Debt Service Reserve Fund

 

(A)         Senior DSR Account

 

(B)         Subordinate Class A DSR Account

 

(C)         Subordinate Class B DSR Account

 

(iv)    Rebate Fund

 

(b)    All of the Funds created hereunder shall be held by the Trustee, including one or more depositories in trust for the Trustee. All moneys and investments deposited with the Trustee or any Paying Agent shall be held in trust and applied only in accordance with this Indenture and shall be trust funds for the purposes of this Indenture.

 

(c)    The Trustee shall establish separate accounts or subaccounts (each, a “Subaccount”) within each named Fund or Account for each Borrower and/or for each component or phase of a Project if requested to do so by the Borrower Representative. The Trustee shall transfer funds between such Subaccounts within each named Fund or Account if requested to do so by the Borrower Representative.

 

(d)    On the date of issuance of the Series 2021 Bonds, the Trustee shall make the following deposits from the net proceeds (i.e. par amount, plus original issue premium) of the Series 2021 Bonds in the amount of $166,589,435.55 and equity funds received from the Borrowers in the amount of $47,682,440.38:

 

(i)    $170,871,712.03 to the Series 2021 Construction Account of the Series 2021 Bond Fund and used to pay or reimburse the costs of 2021 Project pursuant to the Loan Agreement and Section 5.5 of this Indenture (of which $133,348,833.23 shall be deposited to the Bond Proceeds Subaccount and $37,522,878.80 shall be deposited to the Equity Subaccount, reflecting the reimbursement of $4,918,858.77 in costs of the 2021 Project from Series 2021 Bond proceeds, which was re-contributed as equity);

 

(ii)    $20,716,984.18 to the Series 2021 Capitalized Interest Account of the Series 2021 Bond Fund ($4,144,628.13 of which is funded from equity);

 

(iii)    $6,933,792.22 to the Series 2021 Cost of Issuance Account of the Series 2021 Bond Fund and used to pay Issuance Costs as directed by the Borrower Representative (all of which is funded from equity);

 

(iv)    $11,749,387.50 to the Senior DSR Account of the Debt Service Reserve Fund; and

 

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(v)    $4,000,000.00 to the Ramp-Up Reserve Fund held by the Master Trustee under the Master Indenture (all of which is funded from equity).

 

Section 5.2.    Debt Service Fund.

 

(a)    The Trustee shall establish separate accounts within the Debt Service Fund to be designated “Senior Principal and Interest Account”, “Senior Redemption Account”, “Subordinate Class A Principal and Interest Account”, “Subordinate Class A Redemption Account”, “Subordinate Class B Principal and Interest Account” and “Subordinate Class B Redemption Account”. The Trustee shall establish separate accounts within the Debt Service Fund in connection with the issuance of Additional Bonds.

 

(b)    The Trustee shall promptly deposit the following receipts in the Debt Service Fund:

 

(i)    Any amount required pursuant to Section 5.1 hereof to be deposited from the proceeds of the Bonds, which shall be credited to the Principal and Interest Account.

 

(ii)    All amounts received by the Trustee pursuant to the Master Indenture, in satisfaction of the obligations under Section 3.1 of the Loan Agreement, which shall be credited to the Senior Principal and Interest Account in the manner set forth in this Indenture and the Loan Agreement.

 

(iii)    Excess or remaining amounts in the Project Fund required to be deposited in the Debt Service Fund pursuant to subsection 5.2(f) hereof, which shall be credited to the Principal and Interest Account to the extent the amount of such transfer plus amounts already on hand in the Principal and Interest Account would not exceed the principal amount of the next scheduled principal payment and sinking fund redemption, unless the Borrower Representative directs any such amounts to be deposited to the Redemption Account, and to the extent the amount to be transferred exceeds the amount required for such scheduled payment and redemption or the Borrower Representative directs such amounts to be deposited to the Redemption Account, such amounts shall be deposited to the Redemption Account.

 

(iv)    Any other amounts required to be paid or transferred to the Debt Service Fund, for payment of principal and interest due on the Bonds, which shall be credited to the Principal and Interest Account.

 

(v)    Prepayments under the Loan Agreement received by the Trustee pursuant to Article VI thereof, which shall be credited to the Senior Redemption Account or the Subordinate Class B Redemption Account, as applicable.

 

(vi)    All other receipts, when and if required by the Borrower Financing Documents or any subsequent agreement or by this Indenture to be paid into the Debt Service Fund, which shall be credited to the Principal and Interest Account.

 

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(c)    There shall be paid from the Senior Principal and Interest Account to the Paying Agent, on each Interest Payment Date for the Senior Bonds, the amounts required for the payment of the principal and interest due on the Senior Bonds on such date (to the extent not paid from moneys in the Series 2021 Capitalized Interest Account pursuant to Section 5.6, or paid from moneys in any other capitalized interest account established pursuant to a Supplemental Indenture). Such amounts shall be applied by the Paying Agent to the payment of principal and interest on the Bonds when due in the following order of priority:

 

(i)    First, the Trustee shall pay principal and Redemption Price for any sinking fund redemption of and interest on the Senior Bonds due on the Interest Payment Date,

 

(ii)    Second, the Trustee shall pay principal and Redemption Price for any sinking fund redemption of and interest on the Subordinate Class A Bonds due on the Interest Payment Date.

 

(d)    There shall be paid from the Subordinate Class B Principal and Interest Account to the Paying Agent, on each Interest Payment Date for the Subordinate Class B Bonds, the amounts required for the payment of principal and interest due on the Subordinate Class B Bonds on such date.

 

(e)    The Trustee shall call for redemption, in the manner provided in Article VII hereof, Bonds for which Sinking Fund Payments are applicable in a principal amount equal to the Sinking Fund Payment then due with respect to such Bonds. Such call for redemption shall be made even though at the time of publication of the notice of such redemption sufficient moneys therefor shall not have been deposited in the Debt Service Fund.

 

(f)    Amounts in the Senior Redemption Account or the Subordinate Class B Redemption Account (or in the Obligated Group’s subaccount in the Payment Account established under the Master Indenture) may be applied by the Trustee (or by the Master Trustee on behalf of the Trustee), upon specific direction of the Borrower Representative, to the purchase of Bonds at prices not exceeding the Redemption Price thereof applicable on the next redemption date plus accrued interest and all other amounts then due under the Borrower Financing Documents in connection with such redemption, provided no Event of Default has occurred and is continuing. Such redemption date shall be the earliest date upon which Bonds are subject to redemption from such amounts. Any amount in the Senior Redemption Account or the Subordinate Class B Redemption Account not so applied to the purchase of Bonds by forty-five (45) days prior to the next date on which the Bonds are so redeemable shall be applied to the redemption of Bonds on such redemption date; provided that if such amount aggregates less than $5,000, it need not be then applied to such redemption. The Bonds to be redeemed shall be selected by the Trustee in the manner provided in Section 6.2 hereof. Amounts in the Redemption Account to be applied to the redemption of Bonds shall be paid to the Paying Agent on or before the redemption date and applied by it on such redemption date to the payment of the Redemption Price of the Bonds being redeemed plus interest on such Bonds accrued to the redemption date and all other amounts then due under the Borrower Financing Documents in connection with such redemption.

 

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(g)    Provided that no Event of Default has occurred and is continuing under the Loan Agreement, the Issuer shall receive a credit in respect of the Sinking Fund Payment for any Bonds which have been delivered by the Issuer or the Borrower Representative to the Trustee for cancellation on or before the forty-fifth (45th) day next preceding any Sinking Fund Payment due date and for any Bonds which prior to such date have been purchased or redeemed (otherwise than through the application of the Sinking Fund Payments) and canceled by the Trustee and not theretofore applied as a credit against any Sinking Fund Payment; provided that such Bonds are of the same series, class and maturity as the Bonds for which a sinking fund payment is otherwise due. Each Bond so delivered shall be credited by the Trustee at 100% of the principal amount thereof on the obligation of the Issuer on such Sinking Fund Payment date for such Bonds and any excess over such amount shall be credited on future Sinking Fund Payments in ascending chronological order, and the principal amount of Bonds to be redeemed by application of Sinking Fund Payments shall be accordingly reduced.

 

(h)    The Borrower Representative shall on or before the forty-fifth (45th) day next preceding each Sinking Fund Payment date furnish the Trustee with the certificate of an Authorized Representative if and to whatever extent the provisions of this Section are to be availed of with respect to such Sinking Fund Payment, stating, in the case of the credit provided for, that such credit has not theretofore been applied against any Sinking Fund Installment and confirming that immediately available cash funds for the balance of the next succeeding prescribed Sinking Fund Payment will be paid on or prior to the next succeeding Sinking Fund Payment date.

 

(i)    Any amounts remaining in the Debt Service Fund after payment in full of all Outstanding Bonds, the fees, charges and expenses of the Issuer and any other payment due to the Issuer or the Issuer Indemnified Persons with respect to the Unassigned Rights, the Trustee and any Paying Agent and all other amounts required to be paid hereunder or under the Borrower Financing Documents shall be paid upon the expiration or sooner termination of the Term of the Loan Agreement to the Master Trustee, so long as the Master Indenture remains in full force and effect, and, thereafter, to or upon the direction of the Borrower Representative.

 

Section 5.3.    Debt Service Reserve Fund.

 

(a)    At the time any Series of Bonds is issued, there shall be deposited into the applicable accounts in the Debt Service Reserve Fund amounts sufficient to cause the total amount on deposit in such accounts of the Debt Service Reserve Fund to an amount not less than the Senior DSRFR, the Subordinate Class A DSRFR and the Subordinate Class B DSRFR, as applicable, with respect to the Bonds being issued. If, on any Interest Payment Date, the amounts in the applicable accounts of the Debt Service Reserve Fund (other than the Subordinate Class B DSR Account) are less (based on the valuation required pursuant to Section 5.5(c) hereof) than the Senior DSRFR and the Subordinate Class A DSRFR, as applicable, the Trustee shall request the Borrowers to fulfill their obligations under Section 3.1(g) of the Loan Agreement (and so notify the Master Trustee) and shall deposit upon receipt any moneys delivered pursuant thereto to the Debt Service Reserve Fund, first to the Senior DSR Account to the extent of any deficiency therein and, second, to the Subordinate Class A DSR Account, to the extent of any deficiency therein.

 

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(b)    Moneys on deposit in the applicable account of the Debt Service Reserve Fund shall be applied as follows (unless otherwise provided herein):

 

(i)    On the date of each required payment in respect of the Bonds, moneys in (A) the Senior DSR Account shall be applied to cure any deficiency (after transfers from moneys held under the Master Indenture, if any, made in accordance with the terms thereof) in the Debt Service Fund needed to pay principal or Redemption Price of or interest on all Outstanding Senior Bonds; (B) the Subordinate Class A DSR Account shall be applied to cure any deficiency (after transfer from moneys held under the Master Indenture, if any, made in accordance with the terms thereof) in the Debt Service Fund needed to pay principal or Redemption Price of or interest on all Outstanding Subordinate Class A Bonds; and (C) the Subordinate Class B DSR Account shall be applied to cure any deficiency (after transfer from moneys held under the Master Indenture, if any, made in accordance with the terms thereof) in the Debt Service Fund needed to pay principal or Redemption Price of or interest on all Outstanding Subordinate Class B Bonds. The Borrowers agree that any transfer from the Debt Service Reserve Fund to the Debt Service Fund pursuant to this paragraph shall not be construed as preventing, waiving or curing any nonpayment of any payments required under Section 3.1(c) or 3.1(d) of the Loan Agreement until the amount of such deficiency has been restored.

 

(ii)    At the time of valuation pursuant to Section 5.5(c), any amount in the Debt Service Reserve Fund in excess of the Debt Service Reserve Requirement not required to be transferred to the Rebate Fund shall be transferred to the Debt Service Fund for the payment of such principal and interest.

 

(iii)    In each month during the twelve-month period preceding the final maturity date of any Series of Bonds, so long as no Event of Default has occurred and is continuing, moneys held in the Debt Service Reserve Fund shall be credited against the payment of principal of and interest on such Series of Bonds and shall be transferred to the Debt Service Fund for the payment of such principal and interest, provided that after such transfer the amount remaining in the Debt Service Reserve Fund satisfies the Debt Service Reserve Fund Requirement.

 

(c)    The Debt Service Reserve Requirement shall be recalculated by the Borrower Representative upon the issuance of any Additional Bonds hereunder and in connection with the mandatory, optional or extraordinary redemption of any Bonds, and the Borrower Representative shall promptly deliver to the Trustee a written certificate indicating such recalculated amount.

 

Section 5.4.    Rebate Fund.

 

(a)    Within 45 days of the Computation Date, the Borrowers shall deposit to the Rebate Fund and direct the Trustee in writing to transfer from earnings held in any Fund or Account to the Rebate Fund amounts such that the amount held in the Rebate Fund after such deposit and transfer is equal to the Rebate Amount on the Funds and Accounts established hereunder calculated as of the last day of the Computation Period in accordance with the Code; provided, however, if the Borrowers fail to make such deposit in accordance with the provisions of this Section, and have not caused the Rebate Amount on the Bonds to be deposited in the Rebate Fund established under the Master Indenture, the Trustee shall, with the prior written consent and at the written direction of the Required Bondholders, withdraw from the Funds and deposit to the Rebate Fund an amount such that the amount held in the Rebate Fund after such deposit is equal to the Rebate Amount calculated as of the last day of the Computation Period; provided, however, that the Trustee may not transfer moneys in accordance with the above provision from the Debt Service Fund.

 

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(b)    Within sixty (60) days after each Computation Date, the Trustee shall withdraw from the applicable Borrower Account of the Rebate Fund and pay to the United States the Rebate Payment required in connection with such Computation Date.

 

(c)    All payments to the United States pursuant to this Section shall be (A) made by the Trustee for the account and in the name of the applicable Borrower, (B) paid by draft posted by registered United States Mail (return receipt requested), addressed to the Internal Revenue Service Center, Ogden, Utah 84201 and (C) accompanied by the relevant Internal Revenue Service Form 8038-T provided by the Borrower Representative in accordance with Section 4.15 of the Loan Agreement.

 

(d)    The Borrower Representative shall preserve copies of all records of transactions in the Rebate Fund.

 

(e)    The Trustee may conclusively rely on the instructions of the Borrower Representative and the Rebate Analyst retained by the Borrowers, if any, with regard to any actions to be taken by it pursuant to this Section and shall have no liability for any consequences of any failure of the Borrower Representative to supply accurate or sufficient instructions. The Trustee shall not be responsible for the calculation of any Rebate Amount with respect to the Bonds.

 

(f)    If at any time during the term of this Indenture the Trustee, any Borrower or the Borrower Representative desires to take any action that would otherwise be prohibited by the terms of this Section, the Trustee, such Borrower or Borrower Representative will be permitted to take such action only if it shall first obtain and provide to the other Persons named herein a Favorable Opinion of Bond Counsel to the effect that such action will not adversely affect the exclusion of interest on the affected Bonds from gross income of the holders thereof for federal income tax purposes.

 

(g)    Any amounts remaining in the Rebate Fund following the payment of all Rebate Amounts for all Bonds following the Final Computation Date for the Bonds, shall be released to the Borrowers in accordance with the instructions of the Borrower Representative.

 

(h)    There shall be credited to the Rebate Fund all amounts required to be credited thereto from interest earnings or net gain on disposition of investments pursuant to this Article V.

 

Section 5.5.    Series 2021 Construction Account.

 

(a)    The Trustee shall disburse moneys in the Series 2021 Construction Account as provided in Section 3.12 of the Loan Agreement. All funds remaining in the Bond Proceeds Subaccount of the Series 2021 Construction Account after the Final Completion Certificate is filed with the Trustee by the Borrower Representative pursuant to Section 3.11 of the Loan Agreement and payment of all other costs then due and payable shall be transferred to the Senior Principal and Interest Account of the Debt Service Fund. All funds remaining in the Equity Subaccount of the Series 2021 Construction Account after the Final Completion Certificate is filed with the Trustee by the Borrower Representative pursuant to Section 3.11 of the Loan Agreement and payment of all other costs then due and payable shall be transferred to the Master Trustee for deposit to the Revenue Fund.

 

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(b)    Payments from the Series 2021 Construction Account shall be made in accordance with this Section and Section 3.12 of the Loan Agreement. Upon receipt of the required certificates, the Trustee shall pay the amount requested to or upon the order of the Borrower Representative.

 

(c)    If an Event of Default occurs under this Indenture, and the principal of all Bonds and the interest accrued thereon are declared due and payable, except as otherwise provided herein, no moneys may be paid out of the Series 2021 Construction Account by the Trustee during the continuance of such an Event of Default; provided, however, that if such an Event of Default shall be waived and such declaration shall be rescinded pursuant to the terms of this Indenture, the full amount of any such remaining moneys in the Series 2021 Construction Account may again be requisitioned by the Borrower Representative and disbursed by the Trustee in accordance with the provisions of the Loan Agreement and this Indenture.

 

Section 5.6.    Series 2021 Capitalized Interest Account

 

. Moneys on deposit in the Series 2021 Capitalized Interest Account shall be used by the Trustee to pay interest due on the Series 2021 Bonds on each Interest Payment Date through and including July 1, 2025, in the amounts set forth below.

 

Interest Payment Date

 

Amount

 

January 1, 2022

  $ 2,062,915.42  

July 1, 2022

    3,470,325.00  

January 1, 2023

    3,470,325.00  

July 1, 2023

    3,470,325.00  

January 1, 2024

    3,470,325.00  

July 1, 2024

    3,470,325.00  

January 1, 2025

    936,675.01  

July 1, 2025

    365,768.75  

 

Section 5.7.    Investment of Funds and Accounts; Valuation.

 

(a)    Amounts in the Funds and Accounts shall, if and to the extent then permitted by law, be invested in Investment Securities. Investments authorized under this Section shall be made by the Trustee at the written request of the Borrower Representative, and may be made by the Trustee through its own investment department or that of its affiliates or subsidiaries, and may charge its ordinary and customary fees for such trades, including investment maintenance fees. The Trustee may conclusively rely upon such instructions as to both the suitability and legality of the directed investments. In the absence of investment instructions from the Borrower Representative, the Trustee shall not be responsible or liable for keeping the moneys held by it hereunder fully invested in permitted investments. Such investments shall mature in such amounts and at such times as may be necessary to provide funds when needed to make payments from such Funds or Accounts. Investments in the Debt Service Reserve Fund shall mature in five years or less or shall provide for liquidation at par when needed to make payments hereunder. The Trustee shall not be responsible or liable for any losses incurred on investments made pursuant to this Section 5.7.

 

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(b)    The income or interest earned and gains realized in excess of losses suffered by any Fund or Account held hereunder shall be credited to the Debt Service Fund (except income or interest earned and gains realized in excess of losses suffered by the Series 2021 Construction Account or the Rebate Fund, which shall be credited to Series 2021 Construction Account or the Rebate Fund, respectively).

 

(c)    The Funds and Accounts established hereunder shall be valued as of each Interest Payment Date on the basis of market value; provided, however, a Fund Letter of Credit, unless disaffirmed or terminated, as applicable, shall be valued at the face amount thereof.

 

(d)    The Trustee is authorized, in making or disposing of any investment permitted by this Section, to deal with itself (in its individual capacity) or with any one or more of its affiliates, whether it or such affiliate is acting as an agent of the Trustee or for any third person or dealing as principal for its own account.

 

(e)    Although the Issuer and the Borrowers recognize that it may obtain a broker confirmation or written statement containing comparable information at no additional cost, the Issuer and the Borrowers hereby agree that confirmations of permitted investments are not required to be issued by the Trustee for each month in which a monthly statement is rendered. No statement need be rendered for any fund or account if no activity occurred in such fund or account during such month.

 

(f)    All amounts in the Funds and Accounts held by the Trustee at the end of any Business Day shall, to the extent required on the next Business Day to make a payment under this Indenture, be held in cash until the next Business Day.

 

(g)    The Borrower Representative shall direct the investment of the Funds and Accounts established hereunder only in accordance with the requirements of the Code including requirements as to yield restriction and rebate, if any.

 

Section 5.8.    Non-presentment of Bonds

 

. In the event any Bond shall not be presented for payment when the remaining principal thereof becomes due, either at final maturity, or at the date fixed for redemption thereof, or otherwise, and funds sufficient to pay any such Bond shall have been made available to the Trustee for the benefit of the holder or holders thereof, all liability of the Issuer to the holder thereof for the payment of such Bond shall forthwith cease, determine and be completely discharged, and thereupon it shall be the duty of the Trustee to pay such funds to the person or persons entitled thereto in the case of a fully registered Bond or, if the person is not known to the Trustee, hold such funds, without liability for interest thereon, for the benefit of the holder of such Bond, who shall thereafter be restricted exclusively to such funds, for any claim of whatever nature on his part under this Indenture or on, or with respect to, such Bond. Subject to applicable escheat laws, funds remaining with the Trustee as described above and unclaimed for two years shall be deposited in the Redemption Account of the Debt Service Fund or, in the event there are no longer any Bonds Outstanding, shall be paid to the Master Trustee so long as the Master Indenture remains in full force and effect, and, thereafter to or upon the direction of the Borrower Representative. Upon deposit or payment of such funds, with the Master Trustee or to the Borrower Representative, as the case may be, the Trustee shall certify the amount thereof and the identifying numbers of the particular Bonds whose holders have a claim against such funds (which holders shall also be identified, if known) and deliver such certificate to the Borrower Representative. Thereafter, such holders shall have an unsecured claim against the Borrowers with respect to the payment of such unpresented Bonds and shall have no further claim whatever against the Issuer or the Trustee.

 

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ARTICLE VI.
PROCEDURES FOR REDEMPTION OF BONDS

 

Section 6.1.    Privilege of Redemption and Redemption Price. Bonds or portions thereof subject to redemption prior to maturity shall be redeemable, upon mailed notice as provided in this Article, at the times, at the Redemption Prices and upon such terms, in addition to and consistent with the terms contained in this Article, as shall be specified in Article III hereof or in any Supplemental Indenture authorizing the issuance of such Bonds, or in such Bonds.

 

Section 6.2.    Selection of Bonds to be Redeemed. In connection with any partial redemption other than a sinking fund redemption, the Borrower Representative shall specify the Classes and Series to be redeemed and the maturities to be redeemed, which selection shall be made in accordance with applicable federal tax requirements, and if no maturities are so specified, the Trustee shall make a pro rata redemption among the Classes and, within each Class, among the Series and within each Series, among the maturities of each Series (and the mandatory sinking fund amounts thereof shall also be reduced on a pro rata basis). So long as the Bonds are in book-entry form, when Bonds are called, allocation within each maturity shall be made by DTC or any successor securities depository and not by the Issuer or the Trustee. In the event the Bonds are not in book-entry form and there is a redemption of less than all the Outstanding Bonds of like Series, Class and maturity, the Trustee shall select by lot, using such method of selection as it shall deem proper in its discretion, the Bonds to be redeemed in Authorized Denominations, provided that the unredeemed portion of the Bonds remaining Outstanding shall be in Authorized Denomination. For purposes of this Section, Bonds or portions of Bonds which have theretofore been selected by lot for redemption shall not be deemed Outstanding.

 

Section 6.3.    Notice of Redemption. When redemption is required or permitted by this Indenture, upon notification of the Trustee by the Borrower Representative of such redemption not less than five (5) days (or such lesser period which is acceptable to the Trustee) prior to the date on which the Trustee must give notice to Holders as provided in this Section or the Letter of Representation between the Issuer and DTC (if the book entry system is still in effect), the Trustee shall give notice, which notice may state that it is subject to the receipt of the redemption moneys by the Trustee on or before the date fixed for redemption and which notice shall be of no effect unless such moneys are so received on or before such date of such redemption in the name of the Issuer, specifying the subsection of Article III hereof and, if applicable, the Section of the Supplemental Indenture, under which the redemption is to be made, the Series, maturities, numbers and amounts of the Bonds or portions thereof to be redeemed, the redemption date and the place or places where amounts due upon such redemption will be payable and the conditions, if any, that must be met as a prerequisite to such redemption. Such notice shall further state that on such date there shall become due and payable upon each Bond or portion thereof to be redeemed the Redemption Price thereof together with interest accrued to the redemption date and all other amounts then due under the Loan Agreement and the Master Indenture Notes, and that from and after such date interest thereon shall cease to accrue and be payable. Notice of redemption shall be given by the Trustee in the name and on behalf of the Issuer by mailing a copy of each such notice to the registered owner of the Bond by first-class mail, postage prepaid, addressed to such registered owner at such registered owner’s last known address as it appears upon the bond register, at least thirty (30) but not more than sixty (60) days prior to the date fixed for redemption. Such notice shall be effective when mailed and any failure to receive such notice shall not affect the validity of the proceedings for redemption. In the event of a postal interruption, the Trustee shall give notice by other appropriate means selected by the Trustee in its discretion.

 

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In the case of an optional redemption pursuant to Section 3 hereof, unless moneys sufficient to pay the Redemption Price of the Bonds called for redemption is received by the Trustee prior to the giving of such notice of redemption, such notice may state that said redemption shall be conditioned upon the receipt of such moneys by the Trustee on or prior to the date fixed for redemption. If such moneys are not received or if such condition is not satisfied, such notice shall be of no force and effect, the Issuer shall not redeem such Bonds, the Redemption Price shall not be due and payable and the Trustee shall give notice, in the same manner in which the notice of redemption was given, that such moneys were not so received and that such Bonds will not be redeemed.

 

Section 6.4.    Payment of Redeemed Bonds.

 

(a)    Notice having been given in the manner provided in Section 6.3 hereof, and the conditions stated in such notice as prerequisite for redemption having been met, the Bonds or portions thereof so called for redemption shall become due and payable on the redemption dates so designated at the Redemption Price, plus interest accrued to the redemption date and all other amounts then due under the Loan Agreement and the Master Indenture Notes. If, on the redemption date, moneys for the redemption of all the Bonds or portions thereof to be redeemed, together with interest to the redemption date, and all other amounts then due under the Loan Agreement and the Master Indenture Notes, shall be held by the Paying Agent so as to be available therefor on such date and if notice of redemption shall have been given as aforesaid, then, from and after the redemption date, interest on the Bonds or portions thereof so called for redemption shall cease to accrue and become payable. If such moneys shall not be so available on the redemption date, such Bonds or portions thereof shall continue to bear interest until paid at the same rate as they would have borne had they not been called for redemption.

 

(b)    Payment of the Redemption Price together with interest shall be made to or upon the order of the registered owner, only upon presentation of the Bond for cancellation or notation as provided in Section 6.5 hereof.

 

Section 6.5.    Cancellation of Redeemed Bonds.

 

(a)    All Bonds redeemed in full under the provisions of this Article shall forthwith be canceled and destroyed by the Trustee and a certificate of destruction furnished to the Issuer, and no Bonds shall be executed, authenticated, issued or delivered in exchange or substitution therefor or for or in respect of any paid portion of a fully registered Bond. In the event that a portion only of a Bond shall be so called for redemption, then, at the option of the registered owner hereof if such owner is a Securities Depository, such Bond may be either submitted to the Trustee for notation thereon of the payment of the portion of the principal hereof called for redemption or surrendered for redemption. If so surrendered, one or more new Bonds shall be issued for the unredeemed portion hereof.

 

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(b)    If there shall be called for redemption less than all of a Bond, the Issuer shall execute and the Trustee shall authenticate and deliver, upon the surrender of such Bond, without charge to the owner thereof, for the unredeemed balance of the principal amount of the Bond so surrendered, Bonds of like Series and maturity in any of the authorized denominations.

 

Section 6.6.    Purchase In Lieu of Redemption.

 

(a)    Any Bonds called for redemption pursuant to this Article VI, or any provision of any Supplemental Indenture, may be purchased by any Borrower, or by any party designated in writing by the Borrower Representative, on the date upon which such Bonds were to have been redeemed (the “Purchase in Lieu of Redemption Date”), at the Redemption Price thereof. The Borrower Representative shall deliver a written direction to the Trustee of the party to purchase the Bonds pursuant to this Section, not later than the Business Day immediately preceding the Purchase in Lieu of Redemption Date. Bonds to be purchased pursuant to this Section which are not delivered to the Trustee on the Purchase in Lieu of Redemption Date shall be deemed to have been so purchased, and the purchaser of such Bonds shall be the Owner of the Bonds for all purposes under this Indenture.

 

(b)    The purchase of Bonds pursuant to this Section shall not be deemed to constitute a redemption of such Bonds or an extinguishment of the debt evidenced thereby.

 

ARTICLE VII.
PARTICULAR COVENANTS

 

Section 7.1.    No Pecuniary Liability on Issuer or Officers.

 

(a)    No provision, covenant or agreement contained in this Indenture or in the Bonds or any obligations herein or therein imposed upon the Issuer or the breach thereof, shall constitute or give rise to a charge upon its general credit, or impose upon the Issuer a pecuniary liability except as set forth herein, which is only to the extent of the Trust Estate (as described in the granting clauses set forth at the beginning of this Indenture), and no bondholder or any other person shall have any right to make any claim against the Issuer under this Indenture or under any Bond beyond such limitation. In making the agreements, provisions and covenants set forth in this Indenture, the Issuer has not obligated itself except with respect to the Project and the application of the revenues derived in connection therewith as hereinabove provided.

 

(b)    All covenants, stipulations, promises, agreements and obligations of the Issuer contained herein shall be deemed to be covenants, stipulations, promises, agreements and obligations of the Issuer and not of Issuer Indemnified Person in such Person’s individual capacity. No recourse shall be had for the payment of the principal or Redemption Price, if any, of or interest on the Bonds, for the performance of any obligation hereunder, or for any claim based thereon or hereunder against any such member, officer, agent or employee or against any natural person executing the Bonds. No such member, officer, agent, employee or natural person is or shall become personally liable for any such payment, performance or other claim, and in no event shall any monetary or deficiency judgment be sought or secured against any such member, officer, agent, employee or other natural person.

 

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Section 7.2.    Payment of Principal; Redemption Price, if any, and Interest. The Issuer covenants that it will promptly pay, but solely from the Trust Estate, the principal or Redemption Price, if any, of and interest on every Bond issued under this Indenture, together with all other amounts due under the Loan Agreement, at the place, on the dates and in the manner provided herein and in the Bonds according to the true intent and meaning thereof.

 

Section 7.3.    Further Assurances. The Issuer (subject to Section 13.4 hereof) and the Trustee each covenants that it will do, execute, acknowledge and deliver or cause to be done, executed, acknowledged and delivered, such indentures supplemental hereto and such further acts, instruments and transfers as the other may reasonably require for the better assuring, transferring, conveying, pledging, assigning and confirming unto the Trustee all and singular the property and rights assigned hereby and the amounts pledged hereby to the payment of the principal or Redemption Price, if any, of and interest on the Bonds and all other amounts due under the Loan Agreement.

 

Section 7.4.    Inspection of Project Books. The Issuer covenants and agrees that all books and documents in its possession relating to the Project and the revenues derived from the Loan Agreement shall at all times be open to inspection by such accountants or other agencies as the Trustee or the Master Trustee may from time to time designate. The Issuer does not represent or covenant that it will maintain current or complete books or records with respect to the Project in its possession.

 

Section 7.5.    Rights under Financing Documents. The General Financing Documents, originals or duly executed counterparts of which have been filed with the Trustee, set forth the covenants and obligations of the Issuer and the Borrowers, including provisions that subsequent to the issuance of Bonds and prior to their payment in full or provision for payment thereof in accordance with the provisions hereof, the General Financing Documents may not be effectively amended, changed, modified, altered or terminated without the written consents provided for therein, and reference is hereby made to the same for a detailed statement of the covenants and obligations of the Borrowers thereunder. It is agreed that the Trustee may and is hereby granted the right to enforce all rights of the Issuer other than the Unassigned Rights and all obligations of the Borrowers under and pursuant to the General Financing Documents, including, without limitation the Master Indenture Notes and the security interests created thereby or securing the same. Nothing in this Section shall permit any reduction in the payments required to be made by the Borrowers under or pursuant to the Loan Agreement and the Master Indenture Notes or any alteration in the terms of payment thereof. All covenants and agreements on the part of the Issuer shall, except as otherwise specifically provided herein, be for the benefit of the holders from time to time of the Bonds and may be enforced in the manner provided by Article VIII hereof on behalf of such holders by the Trustee.

 

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Section 7.6.    Creation of Liens, Indebtedness. The Issuer shall not knowingly create or consent to any lien or charge upon or pledge of the Master Indenture Notes or the amounts to be paid thereunder, except the lien, charge and pledge created by this Indenture and the Bonds. The Issuer shall not knowingly incur any Indebtedness or issue any evidence of Indebtedness, other than the Bonds herein authorized, secured by a lien on or pledge of such revenues and income.

 

Section 7.7.    Recording and Filing.

 

(a)    The Issuer (subject to Section 13.4 hereof) covenants that it will cooperate with the Borrowers and the Trustee to the extent necessary to allow the Borrowers to cause the General Financing Documents, this Indenture and all supplements thereto and hereto, as well as such other security agreements, financing statements, and other instruments as may be required from time to time to be kept, to be recorded and filed in such manner and in such places as may be required by law in order to fully preserve and protect the security of the holders and owners of the Bonds and the rights of the Trustee hereunder. The Issuer is under no obligation to record or file any such documents itself. Notwithstanding anything to the contrary contained herein, the Trustee shall not be responsible for any initial filings of any financing statements or the information contained therein (including the exhibits thereto), the perfection of any such security interests, or the accuracy or sufficiency of any description of collateral in such initial filings or for filing any modifications or amendments to the initial filings required by any amendments to Article 9 of the Uniform Commercial Code. The Trustee shall cause to be filed a continuation statement with respect to each Uniform Commercial Code financing statement relating to the Bonds which was filed at the time of the issuance thereof, in such manner and in such places as the initial filings were made, provided that a copy of the filed original financing statement is timely delivered to the Trustee. Unless the Trustee shall have been notified in writing by the Issuer or the Borrower that the initial filing or description of collateral was or has become defective, the Trustee shall be fully protected in (i) relying on such initial filing and descriptions in filing any financing or continuation statements or modifications thereto pursuant to this Section 7.8 and (ii) filing any continuation statements in the same filing offices as the initial filings were made. The Borrower shall be responsible for the reasonable costs incurred by the Trustee in the preparation and filing of all continuation statements hereunder.

 

(b)    Pursuant to the Uniform Commercial Code in effect in the State, a pledge made by the Issuer in respect to Bonds is valid and binding from the time it is made, the money or property so pledged and thereafter received by the Issuer shall immediately be subject to the lien of the pledge without physical delivery or further act, and the lien of the pledge shall be valid and binding as against all parties having claims of any kind in tort, contract, or otherwise against the Issuer irrespective of whether the parties have notice. This Indenture is not required to be recorded or filed under the provisions of the Uniform Commercial Code to be valid.

 

(c)    The Issuer hereby irrevocably authorizes the Borrowers at any time and from time to time to file in any Uniform Commercial Code jurisdiction any initial financing statements and amendments thereto that (a) indicate the collateral (i) as all assets of the Issuer pledged under this Indenture or words of similar effect, regardless of whether any particular asset comprised in the collateral falls within the scope of Article 9 of the Uniform Commercial Code of the State, or (ii) as being of an equal or lesser scope or with greater detail, and (b) contain any other information required by Article 9 of the Uniform Commercial Code of the state of the Issuer’s location for the sufficiency or filing office acceptance of any financing statement or amendment, including (i) whether the Issuer is an organization, the type of organization and any organization identification number issued to the Issuer, and (ii) in the case of a financing statement filed as a fixture filing or indicating collateral as as-extracted collateral or timber to be cut, a sufficient description of real property to which the collateral relates. The Issuer agrees to furnish any such information to the Borrowers promptly upon request. The Issuer (subject to Section 13.4 hereof) also ratifies its authorization for the Trustee to have filed in any Uniform Commercial Code jurisdiction any continuation statements or financing statement amendments thereto if filed prior to the date hereof.

 

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Section 7.8.    Notice of Reserve Fund Increase or Decrease.

 

No later than 60 days after the end of each fiscal quarter, commencing with the fiscal quarter ending December 1, 2024, the Borrower Representative shall file with the Trustee: (i) if the Senior Debt Service Coverage Ratio or the Projected Senior Debt Service Coverage Ratio delivered with the certification has been below 1.30 for eight (8) consecutive fiscal quarters, a notice (a “Notice of Reserve Fund Increase”) notifying the Trustee that the Debt Service Reserve Requirement has increased to one hundred percent (100%) of maximum annual debt service for the Senior Bonds (subject to the requirements of Section 148(g) of the Code); and (ii) at any time following the delivery of a Notice of Reserve Fund Increase, if the Senior Debt Service Coverage Ratio and the Projected Senior Debt Service Coverage Ratio has been above 1.30 for twenty (20) consecutive fiscal quarters, a notice (a “Notice of Reserve Fund Decrease”) notifying the Trustee that the Debt Service Reserve Requirement has decreased to fifty percent (50%) of the maximum annual debt service for the Senior Bonds (subject to the requirements of Section 148(g) of the Code).

 

ARTICLE VIII.
EVENTS OF DEFAULT; REMEDIES OF BONDHOLDERS

 

Section 8.1.    Events of Default; Acceleration of Due Dates.

 

(a)    Each of the following events is hereby defined as and shall constitute an “Event of Default”:

 

(i)    payment of any installment of principal, Redemption Price of, or interest on, any Senior Bond or Subordinate Class A Bond is not made when due; or

 

(ii)    payment of any installment of principal, Redemption Price of, or interest on, any Subordinate Class B Bond is not made by the first July 1 following the date on which such amount first becomes due; or

 

(iii)    if the Borrowers or the Issuer shall fail to observe or perform any covenant or agreement contained in this Indenture, which failure would have a Material Adverse Effect, and such failure continues for a period of thirty (30) days after written notice of such failure, requiring the same to be remedied, shall have been given by the Trustee to the Borrower Representative and the Issuer, the giving of which notice shall be at the discretion of the Trustee unless the Trustee is requested in writing to do so by the Holders of at least 25% in aggregate principal amount of all Outstanding Senior Bonds or, if no Senior Bonds are Outstanding, of all Outstanding Subordinate Class A Bonds, or if no Senior Bonds and no Subordinate Class A Bonds are Outstanding, of all Outstanding Subordinate Class B Bonds, in which event such notice shall be given; provided, however, that if such observance or performance requires work to be done, actions to be taken, or conditions to be remedied, which by their nature cannot reasonably be done, taken or remedied within such 30-day period but can be done, taken or remedied within a reasonable period of time, no Event of Default shall be deemed to have occurred or to exist if, and so long as, the Borrowers or the Issuer, as the case may be, shall commence such work, action or other remedy within such 30-day period and shall diligently and continuously prosecute the same to completion; or

 

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(iv)    any Event of Default as specified in the Loan Agreement or the Master Indenture shall occur and is continuing and has not been waived; or

 

(v)    the occurrence of an Act of Bankruptcy with respect to the Issuer.

 

(b)    Subject to the provisions of Section (c) below, upon the occurrence of an Event of Default then and in every such case, the Trustee shall (A) at the written request of the Holders of 25% in aggregate principal amount Outstanding of the Senior Bonds or (B) in the case of an Event of Default under subsection (a)(i) above, without any such request, shall declare the principal of all the Senior Bonds and the interest accrued thereon to be immediately due and payable and provide notice of the same to the Master Trustee, the Borrower Representative and the Issuer and upon any such declaration, all principal of and interest on the Senior Bonds become immediately due and payable. Notwithstanding the foregoing, the Senior Bonds shall not be subject to acceleration in the event the applicable Event of Default relates solely to payment of principal of and interest on the Subordinate Bonds;

 

(ii)    Upon the occurrence of an Event of Default the Trustee shall if no Senior Bonds remain Outstanding (A) at the written request of the Holders of a 25% in aggregate principal amount Outstanding of the Subordinate Class A Bonds and with Special Senior Consent if any Senior Bonds remain Outstanding, and (B), in the case of an Event of Default under subsection (a)(i) above, declare the principal of all of the Subordinate Class A Bonds and the interest accrued thereon to be immediately due and payable and give notice of the same to the Master Trustee, the Borrower Representative and the Issuer and upon any such declaration, all principal, and Redemption Price of and interest on the Subordinate Class A Bonds shall become immediately due and payable. Notwithstanding the foregoing, the Subordinate Class A Bonds shall not be subject to acceleration in the event the applicable Event of Default relates solely to payment of principal of and interest on the Subordinate Class B Bonds; and

 

(iii)    Upon the occurrence of an Event of Default if no Senior Bonds or Subordinate Class A Bonds remain Outstanding, the Trustee shall (A) at the written request of the Holders of a majority in aggregate principal amount Outstanding of the Subordinate Class B Bonds and (B) in the case of an Event of Default under subsection (a)(i) or (a)(ii) above, declare the principal of all of the Subordinate Class B Bonds and the interest accrued thereon to be immediately due and payable and give notice of the same to the Master Trustee, the Borrower Representative and the Issuer and upon such declaration all principal and Redemption Price of and interest on the Subordinate Class B Bonds shall become immediately due and payable.

 

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(c)    Any declaration pursuant to subsection (b) above shall be subject to the condition that if, at any time after the principal of all Senior Bonds or Subordinate Bonds shall have been so declared due and payable, and before any judgment or decree for the payment of the moneys due shall have been obtained or entered as hereinafter provided: (i) the Borrowers shall deposit or cause to be deposited with the Trustee a sum sufficient to pay (A) all matured installments of interest upon all Bonds and the principal and premium, if any, of all such Bonds that shall have become due otherwise than by acceleration (with interest on overdue installments of interest, to the extent permitted by law and on such principal and premium, if any, at the respective rates borne by such Bonds to the date of such deposit) and any other amounts required to be paid pursuant to such Bonds, and (B) the expenses and fees of the Trustee and the Master Trustee; and (ii) any and all Events of Default under this Indenture, other than the (X) nonpayment of principal of and accrued interest on Outstanding Bonds that shall have become due by acceleration and (Y) nonpayment of principal or interest on the Subordinate Bonds if any Senior Bonds remain Outstanding and (Z) when no Senior Bonds remain Outstanding, nonpayment of principal or interest on the Subordinate Class B Bonds if any Subordinate Class A Bonds remain Outstanding (and the Holders of the majority in aggregate principal amount Outstanding of the Subordinate Class A Bonds have waived such nonpayment), shall have been remedied, then and in every such case, the Trustee shall, if requested by the Required Bondholders, waive all Events of Default and rescind and annul such declaration and its consequences, but no such waiver or rescission and annulment shall extend to or affect any subsequent Event of Default.

 

Section 8.2.    Enforcement of Remedies.

 

(a)    Upon the happening and continuance of any Event of Default, then and in every case, but subject to the provisions of Section 9.2 hereof, the Trustee, in its own name and as trustee of an express trust, shall be entitled and empowered to, and shall, upon written direction of the Required Bondholders, proceed to protect and enforce its rights and the rights of the Bondholders under the Bonds, the Master Trust Indenture Documents, the General Financing Documents, including, without limitation, the Master Indenture Notes and this Indenture, and under any agreement executed in connection with the foregoing, forthwith by such suits, actions or special proceedings in equity or at law, or by proceedings in the office of any board or officer having jurisdiction, whether for the specific performance of any covenant or agreement contained in this Indenture, the Master Trust Indenture Documents or the General Financing Documents or in aid of the execution of any power granted therein or for the enforcement of any legal or equitable rights or remedies as the written directions of the Required Bondholders shall require.

 

(b)    When the Trustee incurs expenses or renders services after the occurrence of an Act of Bankruptcy with respect to the Issuer or any Borrower, the expenses and the compensation for the services are intended to constitute expenses of administration under any federal or state bankruptcy, insolvency, arrangement, moratorium, reorganization or other debtor relief law.

 

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(c)    In the enforcement of any right or remedy under this Indenture, the Trustee shall be entitled to sue for, enforce payment on and receive any or all amounts then or during any default becoming, and any time remaining, due hereunder for principal, Redemption Price, interest or otherwise under any of the provisions of the Master Trust Indenture Documents, the General Financing Documents, this Indenture or of the Bonds, and unpaid, with interest on overdue payments at the applicable rate or rates of interest specified in the Bonds or any Supplemental Indentures, together with any and all costs and expenses of collection and of all proceedings under the Master Trust Indenture Documents, the General Financing Documents, this Indenture, and the Bonds, without prejudice to any other right or remedy of the Trustee or of the Bondholders, and to recover and enforce judgment or decree against the appropriate party or parties, but solely as provided in the Master Trust Indenture Documents, the General Financing Documents, this Indenture, and the Bonds, for any portion of such amounts remaining unpaid, with interest, costs, and expenses, and to collect in any manner provided by law, the moneys adjudged or decreed to be payable.

 

(d)    Regardless of the happening of an Event of Default, the Trustee, if requested in writing by the Required Bondholders and furnished with reasonable security and indemnity satisfactory to it, shall institute and maintain such suits and proceedings as it may be advised shall be necessary or expedient to prevent any impairment of the security under this Indenture by any acts which may be unlawful or in violation of the Indenture or of any resolution authorizing the Bonds, and such suits and proceedings as the Trustee may be advised shall be necessary or expedient to preserve or protect its interests and the interests of the Bondholders; but no such request shall be otherwise than in accordance with the provisions of law and of the Indenture.

 

(e)    Notwithstanding anything to the contrary in this Indenture, the Issuer shall have no obligation to and instead the Trustee may, without further direction from the Issuer, take any and all steps, actions and proceedings, to enforce any or all rights of the Issuer (other than the Unassigned Rights) under the Indenture or the Loan Agreement, including, without limitation, the rights to enforce the remedies upon the occurrence and continuation of an Event of Default and the obligations of the Borrowers under the Loan Agreement.

 

Section 8.3.    Application of Revenues and Other Moneys After Default

 

. All moneys received by the Trustee pursuant to any right given or action taken under the provisions of this Article, after payment of (i) the cost and expenses of the proceedings resulting in the collection of such moneys and of the fees, expenses, liabilities and advances incurred or made by the Trustee and any Paying Agent, including reasonable attorneys’ fees and (ii) the fees, costs and expenses of the Issuer and the Issuer Indemnified Persons and any other payments due them in respect of the Unassigned Rights (including, without limitation, indemnification payments); provided, that payment of amounts due to the Issuer or the Issuer Indemnified Persons under this Section shall not absolve the Borrowers from liability therefor except to the extent of the amounts received from the Trustee, shall be deposited in the Principal and Interest Account of the Debt Service Fund and all moneys so deposited, to the extent not required under the Master Indenture Notes or the Master Indenture to be delivered to the Master Trustee to be applied under the Master Indenture, in such Fund and available for payment of the Bonds shall be applied as follows:

 

(a)    to the payment of costs and expenses of collection, including reasonable fees of counsel and reasonable compensation to the Master Trustee (to the extent the Master Trustee has not received or retained amounts for such fees and expenses) and the Trustee;

 

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(b)    whether or not the principal of all Outstanding Bonds shall have become or have been declared due and payable:

 

FIRST: To the payment to the Holders entitled thereto of all installments of interest then due on any Senior Bonds in the order of the maturity of such installments and, if the amount available shall not be sufficient to pay in full any installment or installments maturing on the same date, then to the payment thereof ratably, according to such amounts due on such date, without any discrimination or preference;

 

SECOND: To the payment to the Holders entitled thereto of the unpaid principal installments which shall have become due, whether at maturity or by call for redemption, on any Senior Bonds in order of their due dates and, if the amounts available shall not be sufficient to pay in full all principal installments due on the same date, then to the payment thereof ratably, according to the amounts of such principal installments due on such date, without any discrimination or preference;

 

THIRD: To the payment to the Holders entitled thereto of any additional amounts due and unpaid in respect of Senior Bonds, in the order of the due dates of such amounts, and if the moneys available therefor shall not be sufficient to pay in full any such additional amounts due on the same date, then to the payment thereof ratably, according to the amounts due thereon, without any discrimination or preference;

 

FOURTH: To the payment to the Holders entitled thereto of all installments of interest then due on any Subordinate Class A Bonds in the order of the maturity of such installments and, if the amount available shall not be sufficient to pay in full any installment or installments maturing on the same date, then to the payment thereof ratably, according to such amounts due on such date, without any discrimination or preference;

 

FIFTH: To the payment to the Holders entitled thereto of the unpaid principal installments which shall have become due, whether at maturity or by call for redemption, on any Subordinate Class A Bonds in order of their due dates and, if the amounts available shall not be sufficient to pay in full all principal installments due on the same date, then to the payment thereof ratably, according to the amounts of such principal installments due on such date, without any discrimination or preference;

 

SIXTH: To the payment to the Holders entitled thereto of any additional amounts due and unpaid in respect of Subordinate Class A Bonds, in the order of the due dates of such amounts, and if the moneys available therefor shall not be sufficient to pay in full any such additional amounts due on the same date, then to the payment thereof ratably, according to the amounts due thereon, without any discrimination or preference;

 

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SEVENTH: To the payment to the Holders entitled thereto of all installments of interest then due on any Subordinate Class B Bonds in the order of the maturity of such installments and, if the amount available shall not be sufficient to pay in full any installment or installments maturing on the same date, then to the payment thereof ratably, according to such amounts due on such date, without any discrimination or preference;

 

EIGHTH: To the payment to the Holders entitled thereto of the unpaid principal installments which shall have become due, whether at maturity or by call for redemption, on any Subordinate Class B Bonds in order of their due dates and, if the amounts available shall not be sufficient to pay in full all principal installments due on the same date, then to the payment thereof ratably, according to the amounts of such principal installments due on such date, without any discrimination or preference; and

 

NINTH: To the payment to the Holders entitled thereto of any additional amounts due and unpaid in respect of Subordinate Class B Bonds, in the order of the due dates of such amounts, and if the moneys available therefor shall not be sufficient to pay in full any such additional amounts due on the same date, then to the payment thereof ratably, according to the amounts due thereon, without any discrimination or preference.

 

(c)    Whenever moneys are to be applied pursuant to the provisions of this Section, such moneys shall be applied at such times, and from time to time, as the Trustee shall determine, having due regard to the amount of such moneys available for application and the likelihood of additional moneys becoming available for such application in the future. Whenever the Trustee shall apply such funds, it shall fix the date upon which such application shall be made. The Trustee shall give such notice as it may deem appropriate of the deposit with it of any such moneys and of the fixing of any such date, and shall not be required to make payment to the owner of any Bonds until such Bonds shall be presented to the Trustee for appropriate endorsement or for cancellation if fully paid.

 

(d)    Whenever all Bonds and interest thereon and all other amounts due under the Loan Agreement, Master Indenture Note and Tax Certificate have been paid under the provisions of this Section and all fees, expenses and charges of the Trustee and Paying Agent have been paid, any balance remaining in the Debt Service Fund shall be paid to the Master Trustee for deposit to the Revenue Fund established under the Master Indenture for application as revenues held in such Revenue Fund, and if the Master Indenture is no longer in full force and effect, to or upon the direction of the Borrower Representative.

 

Section 8.4.    Actions by Trustee. All rights of action under this Indenture or under any of the Bonds may be enforced by the Trustee without the possession of any of the Bonds or the production thereof in any trial or other proceedings relating thereto and any such suit or proceedings instituted by the Trustee shall be brought in its name as Trustee without the necessity of joining as plaintiffs or defendants any holders of the Bonds, and any recovery of judgment, subject to the provisions of Section 8.3 hereof, shall be for the benefit of the holders of the Outstanding Bonds subject to the priorities and preferences provided for herein.

 

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Section 8.5.    Required Bondholders Control Proceedings. The Required Bondholders shall have the right, at any time, by an instrument or instruments in writing executed and delivered to the Trustee, to direct the method and place of conducting all proceedings to be taken in connection with the enforcement of the terms and conditions of the Indenture, or for any other proceedings hereunder; but such direction shall not be otherwise than in accordance with the provisions of law and of the Indenture.

 

Section 8.6.    Individual Bondholder Action Restricted.

 

(a)    No owner of the Bonds shall have any right to institute any suit, action or proceeding at law or in equity for the enforcement of any provision of this Indenture or the execution of any trust under this Indenture or for any remedy under this Indenture, unless such owner shall have previously given to the Trustee written notice of the happening of an event of default, as provided in this Article, and the Required Bondholders shall have filed a written request with the Trustee, and shall have offered it reasonable opportunity, either to exercise the powers granted in this Indenture or by the laws of the State or to institute such action, suit or proceeding in its own name, and unless such owners shall have offered to the Trustee adequate security and indemnity against the costs, expenses and liabilities to be incurred therein or thereby, and the Trustee shall have refused to comply with such request for a period of sixty (60) days after receipt by it of such notice, request and offer of indemnity, it being understood and intended that no owner of any Bond shall have any right in any manner whatever by his or their action to affect, disturb or prejudice the pledge created by the Indenture, or to enforce any right under the Indenture, except in the manner herein provided; and that all proceedings at law or in equity to enforce any provision of the Indenture shall be instituted, had and maintained in the manner provided in the Indenture and for the equal benefit of all owners of the Outstanding Bonds provided, however, that the right of the Holders of the Senior Bonds to receive such payments as shall then be due and owing shall be prior and superior in all cases to the right of the Holders of the Subordinate Bonds to receive such payments and that the rights of the Holders of the Subordinate Class A Bonds to receive such payments as shall then be due and owing shall be prior and superior in all cases to the rights of the Holders of the Subordinate Class B Bonds to receive such payments.

 

(b)    Nothing herein or in the Bonds contained shall affect or impair the right of any owner of the Bonds to enforce payment of the principal or Redemption Price, if any, of and interest on any Bond or other amounts due under the Loan Agreement and the Master Indenture Notes at and after the maturity thereof, or the obligation of the Borrowers to pay the principal or Redemption Price, if applicable, of and interest on each of the Bonds or other amounts due under the Loan Agreement and the Master Indenture Notes to the respective owners thereof at the time, place, from the source and in the manner herein and in such Bonds expressed.

 

Section 8.7.    Effect of Discontinuance of Proceedings. In case any proceeding taken by the Trustee on account of any event of default shall have been dismissed, discontinued or abandoned for any reason, or shall have been determined adversely, then and in every such case the Issuer, the Trustee, and the owners of the Bonds shall be restored, respectively, to their former positions and rights hereunder, and all rights, remedies, powers and duties of the Trustee shall continue as though no such proceedings had been taken.

 

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Section 8.8.    Remedies Not Exclusive. No remedy by the terms of this Indenture enforced upon or reserved to the Trustee or to the owners of the Bonds is intended to be exclusive of any other remedy, and each and every such remedy shall be cumulative and shall be in addition to any other remedy given hereunder or now or hereafter existing at law or in equity or by statute.

 

Section 8.9.    Delay or Omission Upon Default. No delay or omission of the Trustee or of the owners of any Bond to exercise any right or power arising upon any event of default shall impair any right or power or shall be construed to be a waiver of any such default or any acquiescence therein; and every power and remedy given by this Article to the Trustee and the owner of any Bond, respectively, may be exercised from time to time and as often as may be deemed expedient by the Trustee or by the owner of the Bonds.

 

Section 8.10.    Notice of Default. The Trustee shall promptly mail to each owner of the Bonds written notice of the occurrence of any Event of Default of which it is required to take notice pursuant to Section 9.3(h) hereof, including without limitation notice of failure to pay the principal or interest on the Bonds or any failure by the Borrowers to make a payment required under Section 3.1(c) of the Loan Agreement and of any draw on and failure to reimburse a draw on the Debt Service Reserve Fund within the time permitted herein and in the Loan Agreement. Actual knowledge means the actual knowledge of a Responsible Officer in the Trustee’s corporate trust administration department. The Trustee shall not, however, be subject to any liability to any owner of the Bonds by reason of its failure to mail any notice required by this Section.

 

ARTICLE IX.
TRUSTEE AND PAYING AGENT

 

Section 9.1.    Appointment and Acceptance of Duties.

 

(a)    The Bank of New York Mellon is hereby appointed as Trustee. The Trustee shall signify its acceptances of the duties and obligations of the Trustee by executing this Indenture. All provisions of this Article shall be construed as extending to and including all the rights, duties and obligations imposed upon the Trustee under the Loan Agreement and the other General Financing Documents as fully for all intents and purposes as if this Article were contained in the Loan Agreement and the other General Financing Documents.

 

(b)    The Trustee is hereby appointed as Paying Agent for the Bonds. The Issuer may also from time to time appoint one or more other Paying Agents in the manner and subject to the conditions set forth in Section 9.10 hereof for the appointment of a successor Paying Agent. Each Paying Agent shall signify its acceptance of the duties and obligations imposed upon it by this Indenture by executing and delivering to the Issuer and to the Trustee a written acceptance thereof. The corporate trust operations offices of the Paying Agent are designated as the respective offices or agencies of the Issuer for the payment of the principal or Redemption Price of and the interest on the Bonds.

 

Section 9.2.    Indemnity. Except with respect to the Trustee’s mandatory duties with respect to acceleration of the Bonds pursuant to Section 8.1 hereof and paying or causing to be paid in accordance with this Indenture, the principal, Redemption Price, if any, and interest, on the Bonds from moneys delivered to the Trustee for payment thereof, the Trustee shall be under no obligation to take any action, institute any suit, or to take any remedial proceeding under this Indenture, or to enter any appearance in or in any way defend any suit in which it may be made defendant, or to take any steps in the execution of the trusts hereby created or in the enforcement of any rights and powers hereunder, until it shall be indemnified and provided with adequate security to its satisfaction against any and all reasonable costs and expenses, outlays, and counsel fees and other disbursements, and against all liability not due to its willful misconduct, negligence or bad faith. Such indemnification shall not be provided by the Issuer.

 

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The Trustee shall be indemnified for and held harmless by the Borrowers as provided in Section 7.11 of the Loan Agreement. No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers.

 

Section 9.3.    Rights and Responsibilities of Trustee.

 

(a)    The Trustee shall have no responsibility in respect of the validity or sufficiency of this Indenture or the security provided hereunder or the due execution hereof by the Issuer, or in respect of the title or the value of the Project, or in respect of the validity of any Bonds authenticated and delivered by the Trustee in accordance with this Indenture or to see to the recording or filing of the Indenture or any financing statement (except the filing of continuation statements as provided in Section 7.8 hereof) or any other document or instrument whatsoever. The recitals, statements and representations contained herein and in the Bonds shall be taken and construed as made by and on the part of the Issuer and not by the Trustee; provided that to the extent such recitals, statements and representations pertain to the 2021 Project or the Borrowers, the Issuer is relying, without independent investigation or inquiry on information provided by, and representations of, the Borrowers, and it does not assume any responsibility for the correctness of the same; except that the Trustee shall be responsible for its representation contained in its certificate on the Bonds. The obligation hereunder to pay or reimburse the Trustee for expenses, advances, reimbursements and to indemnify and hold harmless the Trustee pursuant to Section 9.2 shall constitute additional indebtedness hereunder and shall survive the satisfaction and discharge of all obligations under this Indenture and the resignation or removal of the Trustee.

 

(b)    The Trustee shall not be liable or responsible because of the failure of the Issuer to perform any act required of it by the Indenture or the Issuer Financing Documents or because of the loss of any moneys arising through the insolvency or the act or default or omission of any depository other than itself in which such moneys shall have been deposited. The Trustee shall not be responsible for the application of any of the proceeds of the Bonds or any other moneys deposited with it and paid out, invested, withdrawn or transferred in accordance herewith or for any loss resulting from any such investment. The Trustee shall not be liable in connection with the performance of its duties hereunder except for its own willful misconduct, gross negligence or bad faith. The immunities and exemptions from liability of the Trustee shall extend to its directors, officers, employees, attorneys and agents.

 

(c)    The Trustee, prior to the occurrence of an Event of Default (as defined in Section 8.1 hereof) of which the Trustee has actual knowledge (as defined in Section 8.10 hereof), and subsequent to an Event of Default that has been cured, undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied duties shall be read into this Indenture against the Trustee. In case an Event of Default has occurred of which the Trustee has actual knowledge (as defined in Section 8.10 hereof) and which has not been cured, the Trustee, subject to Section 9.2 hereof, shall exercise such of the rights and powers vested in it hereby and use the same degree of care and skill in their exercise as a prudent person would exercise under the circumstances in the conduct of his own affairs.

 

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(d)    The Trustee shall have the right to consult with counsel chosen with due care and may act upon the opinion or advice of such counsel. The Trustee shall not be responsible for any loss or damage resulting from any action or inaction based on its good faith reliance upon such opinion or advice. The Trustee shall in all instances shall act in good faith in incurring costs, expenses and legal fees in connection with the transactions contemplated by this Indenture and the Loan Agreement.

 

(e)    The Trustee shall not be liable or responsible for the failure of the Borrowers to effect or maintain insurance on the Project as provided in the Borrower Financing Documents nor shall it be responsible for any loss by reason of want or insufficiency in insurance or by reason of the failure of any insurer in which the insurance is carried to pay the full amount of any loss against which it may have insured the Issuer, the Borrowers, the Trustee or any other person. The Trustee shall not be liable or responsible for the failure of the Borrowers to comply with any provision of the Loan Agreement or any other General Financing Document.

 

(f)    The Trustee may execute any of the trusts or powers hereof and perform any of its duties by or through attorneys, agents, receivers, or employees and shall not be answerable for the conduct of the same if appointed with due care hereunder, and shall be entitled to advice of counsel concerning all matters of trusts hereof and duties hereunder, and may in all cases pay such reasonable compensation to any attorney, agent, receiver or employee retained or employed by it in connection herewith.

 

(g)    The permissive right of the Trustee to do things enumerated in this Indenture shall not be construed as a duty and the Trustee shall not be answerable for other than its gross negligence or willful misconduct.

 

(h)    The Trustee shall not be required to take notice or be deemed to have notice of any default hereunder (except failure to be made any of the payments to the Trustee required to be made by Article VII) unless a Responsible Officer of the Trustee shall be specifically notified in writing of such default by the Issuer, the Borrowers or by the owners of at least 25% in aggregate principal amount (i) of all Senior Bonds then outstanding or (ii) if no Senior Bonds are outstanding, of all Subordinate Class A Bonds, or (ii) if no Senior Bonds and no Subordinate Class A Bonds are outstanding, of all Subordinate Class B Bonds and all notices or other instruments required by this Indenture to be delivered to the Trustee must, in order to be effective, be delivered at the designated corporate trust office of the Trustee, and in the absence of such notice so delivered the Trustee may conclusively assume there is no default except as aforesaid.

 

(i)    At any and all reasonable times, the Trustee, and its duly authorized agents, attorneys, experts, engineers, accountants and representatives, shall have the right fully to inspect any and all books, papers and records of the Borrowers pertaining to the Bonds, and to take such memoranda from and in regard thereto as may be desired.

 

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(j)    The Trustee shall not be responsible or liable for any failure or delay in the performance of its obligations under this Indenture arising or caused, directly or indirectly, by circumstances beyond its reasonable control, including without limitation acts of God, earthquakes, fire, flood, hurricanes or other storms, wars, terrorism or similar military or quasi-military disturbances, sabotage, epidemic, pandemic, riots, interruptions, loss or malfunction of utilities or communications services, accidents, labor disputes, or acts of civil disobedience, acts of civil or military authority or governmental action, it being understood that the Trustee shall use commercially reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as reasonably practicable under any such circumstances.

 

Section 9.4.    Compensation. The Trustee and Paying Agent shall be entitled to receive and collect from the Borrowers as provided in the General Financing Documents payment for reasonable fees for services rendered hereunder and all advances, counsel fees and expenses and other expenses reasonably and necessarily made or incurred by the Trustee or Paying Agent in connection therewith. The Trustee and the Paying Agent shall have no lien upon any funds or other property held hereunder by the Trustee. The Trustee shall transfer all Additional Payments owed to or for the benefit of the Issuer promptly upon receipt thereof from the Borrowers at the address specified herein for notice to the Issuer or as otherwise directed by the Issuer; except that payments constituting the Issuer’s Annual Fee in accordance with Section 3.3 of the Loan Agreement. To secure the payment or reimbursement to the Trustee provided for in this Section, the Trustee shall have a senior claim, to which the Bonds are made subordinate, on all money or property held or collected by the Trustee, except that held in the Rebate Fund or otherwise held in trust to pay principal of and interest on particular Bonds.

 

Section 9.5.    Evidence on Which Trustee May Act.

 

(a)    In case at any time it shall be necessary or desirable for the Trustee to make any investigation concerning any fact preparatory to taking or not taking any action, or doing or not doing anything, as such Trustee, and in any case in which this Indenture, the General Financing Documents or the Master Trust Indenture Documents provides for permitting or taking any action, it may rely conclusively, without independent investigation upon any certificate required or permitted to be filed with it under the provisions hereof, of the General Financing Documents or of the Master Trust Indenture Documents, and any such certificate shall be evidence of such fact and protect it in any action that it may or may not take, or in respect of anything it may or may not do, in good faith, by reason of the supposed existence of such fact.

 

(b)    The Trustee shall be protected and shall incur no liability in acting or proceeding, or in not acting or not proceeding, in good faith, reasonably and in accordance with the terms of this Indenture, the General Financing Documents or the Master Trust Indenture Documents, upon any resolution, order, notice, request, consent, waiver, certificate, statement, affidavit, requisition, Bond or other paper or document which it shall in good faith reasonably believe to be genuine and to have been adopted or signed by the proper board or person, or to have been prepared and furnished pursuant to any of the provisions of this Indenture, the General Financing Documents or the Master Trust Indenture Documents, or upon the written opinion of any attorney chosen with due care (who may be an attorney for the Issuer or the Borrowers), engineer, appraiser, or accountant reasonably believed by the Trustee to be qualified in relation to the subject matter.

 

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(c)    The Trustee shall have the right to accept and act upon instructions, including funds transfer instructions (“Instructions”) given pursuant to this Indenture and delivered using Electronic Means; provided, however, that the Issuer shall provide to the Trustee an incumbency certificate listing officers with the authority to provide such Instructions (“Authorized Officers”) and containing specimen signatures of such Authorized Officers, which incumbency certificate shall be amended by the Issuer whenever a person is to be added or deleted from the listing. If the Issuer elects to give the Trustee Instructions using Electronic Means and the Trustee in its discretion elects to act upon such Instructions, the Trustee’s understanding of such Instructions shall be deemed controlling. The Issuer understands and agrees that the Trustee cannot determine the identity of the actual sender of such Instructions and that the Trustee shall conclusively presume that directions that purport to have been sent by an Authorized Officer listed on the incumbency certificate provided to the Trustee have been sent by such Authorized Officer. The Issuer shall be responsible for ensuring that only Authorized Officers transmit such Instructions to the Trustee and that the Issuer and all Authorized Officers are solely responsible to safeguard the use and confidentiality of applicable user and authorization codes, passwords and/or authentication keys upon receipt by the Issuer. The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee’s reliance upon and compliance with such Instructions notwithstanding such directions conflict or are inconsistent with a subsequent written instruction. The Issuer agrees: (i) to assume all risks arising out of the use of Electronic Means to submit Instructions to the Trustee, including without limitation the risk of the Trustee acting on unauthorized Instructions, and the risk of interception and misuse by third parties; (ii) that it is fully informed of the protections and risks associated with the various methods of transmitting Instructions to the Trustee and that there may be more secure methods of transmitting Instructions than the method(s) selected by the Issuer; (iii) that the security procedures (if any) to be followed in connection with its transmission of Instructions provide to it a commercially reasonable degree of protection in light of its particular needs and circumstances; and (iv) to notify the Trustee immediately upon learning of any compromise or unauthorized use of the security procedures.

 

Section 9.6.    Evidence of Signatures of Owners of the Bonds and Ownership of Bonds.

 

(a)    Any request, consent, revocation of consent or other instrument which this Indenture may require or permit to be signed and executed by the owners of the Bonds may be in one or more instruments of similar tenor, and shall be signed or executed by such owners of the Bonds in person or by their attorneys appointed in writing. Proof of (i) the execution of any such instrument, or of any instrument appointing any such attorney, or (ii) the holding by any person of the Bonds shall be sufficient for any purpose of this Indenture (except as otherwise herein expressly provided) if made in the following manner:

 

(i)    The fact and date of the execution by any owner of the Bonds or his attorney of such instruments may be proved by a guarantee of the signature thereon by an officer of a bank or trust company or other member of a medallion signature guarantee program or by the certificate of any notary public or other officer authorized to take acknowledgments of deeds, that the person signing such request or other instrument acknowledged to him the execution thereof or by an affidavit of a witness of such execution, duly sworn to before such notary public or other officer. Where such execution is by an officer of a corporation or a member of an association, a limited liability company or a partnership, on behalf of such corporation, association, limited liability company or partnership, such signature guarantee, certificate or affidavit shall be accompanied by sufficient proof of his authority.

 

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(ii)    The ownership of registered Bonds and the amount, numbers and other identification, and date of owning the same shall be proved by the registry books.

 

(b)    Except as otherwise provided in Section 11.3 hereof with respect to revocation of a consent, any request or consent by the owner of any Bond shall bind all future owners of such Bond in respect of anything done or suffered to be done by the Issuer or the Trustee or any Paying Agent in accordance therewith.

 

Section 9.7.    Trustee and Paying Agent Deal in Bonds and With Obligated Group. Any national banking association, bank or trust company acting as a Trustee or Paying Agent, and its directors, officers, employees or agents, may in good faith buy, sell, own, hold and deal in any of the Bonds and may join in any action which any owner of the Bonds may be entitled to take and may otherwise deal with any Borrower or any Member of the Obligated Group with like effect as if such association, bank or trust company were not such Trustee or Paying Agent. The Trustee or any Paying Agent, in its individual capacity, either as principal or agent, may also engage in or be interested in any financial or other transaction with the Issuer or any Borrower, and may act as depository, trustee or agent for any committee or body of Bondowners secured hereby or other obligations of the Issuer as freely as if it did not act in any capacity hereunder.

 

Section 9.8.    Resignation or Removal of Trustee.

 

(a)    The Trustee may resign and thereby become discharged from the trusts created under this Indenture by notice in writing to be given to the Issuer and by notice mailed, postage prepaid to the owners of the Bonds not less than sixty (60) days before such resignation is to take effect, but such resignation shall not take effect until the appointment of a successor Trustee pursuant to Section 9.9 hereof and such successor Trustee shall accept such trust.

 

(b)    The Trustee may be removed at any time thirty (30) days after an instrument or concurrent instruments in writing is filed with the Trustee by the Required Bondholders or their attorneys-in-fact duly authorized, but such removal shall not take effect until the appointment of a successor Trustee pursuant to Section 10.9 hereof and such successor Trustee shall accept such trust. The Trustee shall promptly give notice of such filing to the Issuer.

 

Section 9.9.    Successor Trustee.

 

(a)    If at any time the Trustee shall resign, or shall be removed, be dissolved or otherwise become incapable of acting or shall be adjudged a bankrupt or insolvent, or if a receiver, liquidator or conservator thereof, or of its property, shall be appointed, or if any public officer shall take charge or control of the Trustee or of its property or affairs, the position of Trustee shall thereupon become vacant.

 

(b)    Within sixty (60) days after such vacancy shall have occurred, the Required Bondholders, by an instrument or concurrent instruments in writing, signed by such owners of the Bonds or their attorneys-in-fact thereunto duly authorized and filed with the Issuer, shall appoint a successor Trustee, which shall immediately and without further act, supersede any Trustee theretofore appointed. If no appointment of a successor Trustee shall be made pursuant to the foregoing provisions of this Section, the owner of any Bond then Outstanding or any retiring Trustee may apply to any court of competent jurisdiction to appoint a successor Trustee. Such court may thereupon, after such notice, if any, as such court may deem proper and prescribe, appoint a successor Trustee.

 

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(c)    Any Trustee appointed under this Section shall be a national banking association or a bank or trust company duly organized under the laws of the State or under the laws of any state of the United States, or under the laws of the United States, and authorized to exercise corporate trust powers. At the time of its appointment, any successor Trustee shall have a capital stock and surplus aggregating not less than $50,000,000.

 

(d)    Every successor Trustee shall execute, acknowledge and deliver to its predecessor, and also to the Issuer and the Borrowers, an instrument in writing accepting such appointment, and thereupon such successor Trustee, without any further act, deed, or conveyance, shall become fully vested with all moneys, estates, properties, rights, immunities, powers and trusts, and subject to all the duties and obligations of its predecessor, with like effect as if originally named as such Trustee; but such predecessor shall, nevertheless, on the written request of its successor or of the Issuer, and upon payment of the compensation, expenses, charges and other disbursements of such predecessor which are due and payable pursuant to Section 9.4 hereof, execute and deliver an instrument transferring to such successor Trustee all the estate, properties, rights, immunities, powers and trusts of such predecessor, except any indemnification rights. Every predecessor Trustee shall also deliver all property and moneys held by it under the Indenture to its successor. Should any instrument in writing from the Issuer be required by any successor Trustee for more fully and certainly vesting in such Trustee, the estate, properties, rights, immunities, powers and trusts vested or intended to be vested in the predecessor Trustee any such instrument in writing shall, on request, be executed, acknowledged and delivered by the Issuer (subject to Section 13.4 hereof). Any successor Trustee shall promptly notify the Paying Agent of its appointment as Trustee.

 

(e)    Any company into which the Trustee may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be a party or any company to which the Trustee may sell or transfer all or substantially all of its corporate trust business, provided such company shall be a national banking association or a bank or trust company duly organized under the laws of any state of the United States, shall have a capital stock and surplus aggregating not less than $50,000,000 and shall be authorized by law to perform all the duties imposed upon it by the Indenture, shall be the successor to such Trustee, both in its capacity as Trustee and its capacity as Paying Agent if the Trustee is serving as Paying Agent, without the execution or filing of any paper or the performance of any further act.

 

(f)    Any Trustee which becomes incapable of acting as Trustee shall pay over, assign and deliver to its successor any moneys, funds or investments held by it in the manner provided in Section 9.9(d) and shall render an accounting to the Issuer.

 

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Section 9.10.    Resignation or Removal of Paying Agent; Successors.

 

(a)    Any Paying Agent may at any time resign and be discharged of the duties and obligations created by the Indenture by giving at least sixty (60) days’ written notice to the Issuer, the Trustee and the Borrower Representative. Any successor Paying Agent shall be appointed by the Issuer (subject to Section 13.4 hereof), with the approval of the Trustee, subject to the consent of the Borrower Representative which shall not be unreasonably withheld, and shall be a bank or trust company duly organized under the laws of any State of the United States or a national banking association, having a capital stock and surplus aggregating at least $50,000,000, and willing and able to accept the office on reasonable and customary terms and authorized by law to perform all the duties imposed upon it by this Indenture.

 

(b)    In the event of the resignation or removal of any Paying Agent, such Paying Agent shall pay over, assign, transfer and deliver any moneys held by it as Paying Agent to its successor, or if there be no successor, to the Trustee. In the event that for any reason there shall be a vacancy in the office of any Paying Agent, the Trustee shall act as such Paying Agent.

 

Section 9.11.    Moneys Held for Particular Bonds. The amounts held by the Trustee or Paying Agent for the payment of the interest, principal or Redemption Price due on any date with respect to particular Bonds, on and after such date and pending such payment, shall be set aside on its books and held in trust by it for the owners of the Bonds entitled thereto. Such funds shall be invested in Investment Securities at the direction of the Borrower Representative for the account of the Borrowers or shall otherwise remain uninvested.

 

Section 9.12.    Continuation Statements. The Trustee shall cause continuation statements for the financing statements filed at the time of issuance of the Bonds (a copy of which is provided to the Trustee) to be filed in the applicable state offices so as to continue the perfected status thereof pursuant to the Uniform Commercial Code of the applicable states. In addition, unless the Trustee shall have been notified in writing that any such initial filing or description of collateral was or has become defective, the Trustee shall be fully protected in (i) relying on such initial filing and description in filing any financing or continuation statements or modifications thereto pursuant to this Section and (ii) filing any continuation statements in the same filing offices as the initial filings were made. The Borrowers shall be responsible for the customary fees charged by the Bod Trustee for the preparation and filing of continuation statements and for the reasonable costs incurred by the Trustee in the preparation and filing of all continuation statements hereunder.

 

Section 9.13.    Obligation to Report Defaults. Subject to Section 9.3(h) hereof, the Trustee shall deliver to the Issuer, the Master Trustee and the Borrower Representative a written notice stating the existence of any condition or event which constitutes, or with the giving of notice or the passage of time would constitute, an Event of Default and requesting the Borrower Representative to notify it of the action it purposes to take with respect thereto. Becoming aware means the actual knowledge of an officer in the Trustee’s corporate trust administration department, provided that the Trustee shall be deemed to have actual knowledge of the matters described in Section 1.2(d) of this Indenture.

 

Section 9.14.    Payments Due on non-Business Day. In any case where the date of payment maturity of interest on or principal of the Bonds or the date fixed for redemption of any Bonds shall be a day other than a Business Day, then payment of such amount shall be made on the next succeeding Business Day with the same force and effect as if made on the date of maturity or the date fixed for redemption, and no interest shall accrue for the period after such date.

 

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Section 9.15.    Appointment of Co-Trustee.

 

(a)    The Trustee represents that it has the power and authority to perform all functions required of the Trustee under the General Financing Documents. Without limiting the foregoing, it is the purpose of this Indenture that there shall be no violation of any law of any jurisdiction denying or restricting the right of banking corporations or associations to transact business as trustee in such jurisdiction. It is recognized that in case of litigation under this Indenture or the Loan Agreement, and in particular in case of the enforcement of either the Loan Agreement or the Indenture on default, or in case the Trustee deems that by reason of any present or future law of any jurisdiction it may not exercise any of the powers, rights or remedies herein granted to the Trustee or hold title to the properties, in trust, as herein granted, or take any other action which may be desirable or necessary in connection therewith, it may be necessary that the Trustee appoint an additional individual or institution as a separate trustee or co-trustee. The following provisions of this Section are adapted to these ends.

 

(b)    In the event that the Trustee appoints an additional individual or institution as a separate trustee or co-trustee, each and every remedy, power, right, claim, demand, cause of action, immunity, estate, title, interest and lien expressed or intended by this Indenture to be exercised by or vested in or conveyed to the Trustee with respect thereto shall be exercisable by and vest in such separate trustee or co-trustee but only to the extent necessary to enable such separate trustee or co-trustee to exercise such powers, rights and remedies, and every covenant and obligation necessary to the exercise thereof by such separate trustee or co-trustee shall run to and be enforceable by either of them.

 

(c)    Should any instrument in writing from the Issuer be required by the separate trustee or co-trustee so appointed by the Trustee for more fully and certainly vesting in and confirming to him or it such properties, rights, powers, trusts, duties and obligations, any and all such instruments in writing shall (subject to Section 13.4 hereof), on request, be executed, acknowledged and delivered by the Issuer. In case any separate trustee or co-trustee, or a successor to either, shall die, become incapable of acting, resign or be removed, all the estates, properties, rights, powers, trusts, duties and obligations of such separate trustee or co-trustee, so far as permitted by law, shall vest in and be exercised by the Trustee until the appointment of a new trustee or successor to such separate trustee or co-trustee.

 

ARTICLE X.
AMENDMENTS OF INDENTURE

 

Section 10.1.    Limitation on Modifications. This Indenture shall not be modified or amended in any respect except as provided in and in accordance with and subject to the provisions of this Article.

 

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Section 10.2.    Supplemental Indentures Without Consent of Owners of the Bonds.

 

(a)    Subject to the terms and conditions contained in this Article and Article XI, the Issuer may, from time to time and at any time, adopt Supplemental Indentures with the prior written consent of the Borrower Representative, and without prior notice to, and without the consent of, the owners of the Bonds for any of the following purposes:

 

(i)    To cure any ambiguity or to correct or supplement any provision contained herein or in any supplemental indenture which may be defective or inconsistent with any other provision contained herein or in any supplemental indenture, or to make such other provisions in regard to matters or questions arising under this Indenture or any supplemental indenture as shall not be inconsistent with this Indenture or adversely affect the interests of the Holders of any particular Bonds or series of Bonds.

 

(ii)    To grant to or confer upon the Trustee for the benefit of the owners of the Bonds any additional rights, remedies, powers, authority or security which may lawfully be granted or conferred and which are not contrary to or inconsistent with this Indenture as theretofore in effect.

 

(iii)    To add to the covenants and agreements of the Issuer in this Indenture other covenants and agreements to be observed by the Issuer which are not contrary to or inconsistent with this Indenture as theretofore in effect.

 

(iv)    To add to the limitations and restrictions in this Indenture other limitations and restrictions to be observed by the Issuer which are not contrary to or inconsistent with this Indenture as theretofore in effect.

 

(v)    To confirm, as further assurance, any pledge under, and the subjection to any lien or pledge created or to be created by, this Indenture, of the properties of the Project, or revenues or other income from or in connection with the Project or of any other moneys, securities or funds, or to subject to the lien or pledge of this Indenture additional revenues, properties or collateral.

 

(vi)    To qualify this Trust Indenture under the Trust Indenture Act of 1939, as amended, or corresponding provisions of federal laws from time to time in effect.

 

(vii)    To authorize the issuance of certain Additional Bonds, in accordance herewith, and prescribe the terms, forms and details thereof not inconsistent with this Indenture.

 

(viii)    To amend any provision pertaining to matters under Federal income tax laws, including Section 148(f) of the Code;

 

(ix)    To authorize different authorized denominations of the Bonds and to make correlative amendments and modifications to this Indenture regarding exchangeability of Bonds of different authorized denominations, redemptions of portions of Bonds of particular authorized denominations and similar amendments and modifications of a technical nature;

 

(x)    To provide for any uncertificated system of registering the Bonds or to provide for the change to or from a Book-Entry System for the Bonds;

 

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(xi)    To evidence the succession of a new Trustee or the appointment by the Trustee or the Issuer of a co-trustee;

 

(xii)    To make any change related to the Bonds that does not materially adversely affect the interests of any Bondholder; or

 

(xiii)    To make any other change to this Indenture that will take effect during any period when the Borrowers are permitted to optionally redeem Bonds.

 

(b)    Before the Issuer shall adopt any Supplemental Indenture pursuant to this Section, there shall have been filed with the Trustee an Opinion of Bond Counsel satisfactory to the Trustee to the effect that (i) such Supplemental Indenture is authorized or permitted by this Indenture and complies with its terms, (ii) upon execution, the Supplemental Indenture will be valid and binding upon the Issuer in accordance with its terms, and (iii) the execution and delivery of the Supplemental Indenture will not adversely affect the exclusion of interest on the Tax‑Exempt Bonds from the gross income of the Holders for federal tax purposes

 

Section 10.3.    Supplemental Indentures With Consent of Owners of the Bonds.

 

(a)    Subject to the terms and provisions contained in this Article, the Required Bondholders and the Borrower Representative shall have the right from time to time, to consent to and approve the adoption by the Issuer of any Supplemental Indenture as shall be deemed necessary or desirable by the Issuer for the purpose of modifying, altering, amending, adding to or rescinding, in any particular, any of the terms or provisions contained herein. Nothing herein contained shall permit, or be construed as permitting, without the consent of all of the owners of the Bonds affected thereby (A) a change in the terms of redemption or maturity of the principal of or the interest on any Outstanding Bond, tender provision, or a reduction in the principal amount or redemption price of any Outstanding Bond or the rate of interest thereon without the consent of the owner of such Bond, or (B) the creation of a lien upon or pledge of revenues or other income from or in connection with the Loan Agreement other than the lien or pledge created by this Indenture or the Master Indenture or (C) a preference or priority of any Bond or Bonds over any other Bond or Bonds, except for preferences and priorities (x) of Senior Bonds over Subordinate Bonds, and (y) of Subordinate Class A Bonds over Subordinate Class B Bonds or (D) a reduction in the aggregate principal amount of the Bonds or any subset of the same required for consent to such Supplemental Indenture.

 

(ii)    Notwithstanding anything in this Article to the contrary, while any Senior Bonds remain Outstanding, the Holders of the Subordinate Bonds shall have no right of consent to any amendment, change or modification to this Indenture other than as set forth in this subsection and subsection (iii) below. Any notices required under this Article shall be sent to the Holders of the Senior Bonds with copy to the Holders of Subordinate Bonds. By their purchase of the Subordinate Bonds, the Holders of such Subordinate Bonds shall be deemed to have consented to the provisions of this Section. Nothing in this Section shall permit, or be construed as permitting, without the consent of the Holders of all Outstanding Subordinate Class A Bonds any amendment, change or modification to this Indenture that would cause any of the following effects (1) an extension of the maturity date or redemption dates or the due date of any interest on any Subordinate Class A Bond, (2) a reduction in the principal amount of any Subordinate Class A Bond or the interest rate thereon, (3) a privilege or priority of any Subordinate Class A Bond or Bonds over any other Subordinate Class A Bond or Bonds, (4) a reduction in the aggregate principal amount of the Subordinate Class A Bonds required for consent to remedies or waivers of remedies in connection with the occurrence of an Event of Default hereunder, (5) an extension of the dates on which the Borrowers’ payments with respect to the Subordinate Class A Bonds are due, (6) a reduction in the principal amount or interest rate payable by the Borrowers under the Loan Agreement with respect to the Subordinate Class A Bonds and the Subordinate Class A Note, (7) the creation of any lien on the Trust Estate other than (A) a Permitted Encumbrance or (B) a lien ratably securing all of the Subordinate Class A Bonds at any time Outstanding, or (8) the elimination or diminution of the lien securing the Subordinate Class A Bonds except to the extent necessary and appropriate in connection with a reduction in such lien permitted by the Master Indenture.

 

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(iii)    Notwithstanding anything in this Article to the contrary, while any Senior Bonds or Subordinate Class A Bonds remain Outstanding, the Holders of the Subordinate Class B Bonds shall have no right of consent to any amendment, change or modification to this Indenture other than as set forth in this subsection. Any notices required under this Article shall be sent to the Holders of the Senior Bonds or if no Senior Bonds are Outstanding, to the Holders of the Subordinate Class A Bonds, with copy to the Holders of Subordinate Class B Bonds. By their purchase of the Subordinate Class B Bonds, the Holders of such Subordinate Class B Bonds shall be deemed to have consented to the provisions of this Section. Nothing in this Section shall permit, or be construed as permitting, without the consent of the Holders of all Outstanding Subordinate Class B Bonds any amendment, change or modification to this Indenture that would cause any of the following effects (1) an extension of the maturity date or redemption dates or the due date of any interest on any Subordinate Class B Bond, (2) a reduction in the principal amount of any Subordinate Class B Bond or the interest rate thereon, (3) a privilege or priority of any Subordinate Class B Bond or Bonds over any other Subordinate Class B Bond or Bonds, (4) a reduction in the aggregate principal amount of the Subordinate Class B Bonds required for consent to remedies or waivers of remedies in connection with the occurrence of an Event of Default hereunder, (5) an extension of the dates on which the Borrowers’ payments with respect to the Subordinate Class B Bonds are due, (6) a reduction in the principal amount or interest rate payable by the Borrowers under the Loan Agreement with respect to the Subordinate Class B Bonds and the Subordinate Class B Note, (7) the creation of any lien on the Trust Estate other than (A) a Permitted Encumbrance or (B) a lien ratably securing all of the Subordinate Class B Bonds at any time Outstanding, or (8) the elimination or diminution of the lien securing the Subordinate Class B Bonds except to the extent necessary and appropriate in connection with a reduction in such lien permitted by the Master Indenture.

 

(b)    If at any time the Issuer shall determine to adopt any Supplemental Indenture for any of the purposes of this Section, it shall cause notice of the proposed Supplemental Indenture to be mailed, postage prepaid, to all owners of the Bonds. Such notice shall briefly set forth the nature of the proposed Supplemental Indenture, and shall state that a copy thereof is on file at the offices of the Trustee for inspection by all owners of the Bonds.

 

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(c)    Within one year after the date of such notice, the Issuer may execute such Supplemental Indenture in substantially the form described in such notice, only if there shall have first been filed with the Issuer (i) the written consents of the required percentage of owners of the Bonds then Outstanding so affected and (ii) an opinion of counsel satisfactory to the Trustee stating that such Supplemental Indenture is authorized or permitted by this Indenture and complies with its terms, and that upon adoption it will be valid and binding upon the Issuer in accordance with its terms. Each valid consent shall be effective only if accompanied by proof of the owning, at the date of such consent, of the Bonds with respect to which such consent is given. A certificate or certificates by the Trustee that it has examined such proof and that such proof is sufficient in accordance with this Indenture shall be conclusive that the consents have been given by the owners of the Bonds described in such certificate or certificates. Any such consent shall be binding upon the owner of the Bonds giving such consent and upon any subsequent owner of such Bonds and of any Bonds issued in exchange therefor (whether or not such subsequent owner thereof has notice thereof), unless such consent is revoked in writing by the owner of such Bonds giving such consent or a subsequent owner thereof by filing such revocation with the Trustee prior to the adoption of such Supplemental Indenture.

 

(d)    If the owners of not less than the percentage of Bonds required by this Indenture shall have consented to and approved the execution thereof as herein provided, no owner of any Bond shall have any right to object to the enactment of such Supplemental Indenture, or to object to any of the terms and provisions contained therein or the operation thereof, or in any manner to question the propriety of the adoption thereof, or to enjoin or restrain the Issuer from adopting the same or from taking any action pursuant to the provisions thereof.

 

(e)    Upon the adoption of any Supplemental Indenture pursuant to the provisions of this Section, this Indenture shall be deemed to be modified and amended in accordance therewith, and the respective rights, duties and obligations under this Indenture of the Issuer, the Trustee and all owners of Bonds then Outstanding shall thereafter be determined, exercised and enforced under this Indenture, subject in all respects to such modifications and amendments.

 

Section 10.4.    Supplemental Indenture Part of the Indenture. Any Supplemental Indenture adopted in accordance with the provisions of this Article shall thereafter form a part of this Indenture and all the terms and conditions contained in any such Supplemental Indenture shall be deemed to be part of the terms and conditions of this Indenture for any and all purposes. The Trustee shall execute any Supplemental Indenture adopted in accordance with the provisions of Sections 10.2 or 10.3 hereof; provided, however, that the Trustee may, but shall not be obligated to, enter into any such instrument which adversely affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise.

 

ARTICLE XI.
AMENDMENTS OF FINANCING DOCUMENTS

 

Section 11.1.    Rights of Borrowers. Anything herein to the contrary notwithstanding, any supplement or amendment of any Borrower Financing Document will not be effective until consented to in writing by the Borrower Representative.

 

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Section 11.2.    Amendments of Financing Documents Not Requiring Consent of Owners of the Bonds. The Issuer and the Trustee may, without the consent of and without prior notice to the owners of the Bonds, consent to any amendment, change or modification of the General Financing Documents or the Master Trust Indenture Documents for the purpose of carrying out any of the purposes set forth in Section 10.2, curing any ambiguity or formal defect therein to provide for the issuance of Additional Bonds or to otherwise modify the same in a manner which is not adverse to the interests of the owners of the Bonds, as evidenced to the Trustee by an opinion of counsel. The Trustee shall have no liability to any owner of the Bonds or any other person for any action taken by it in good faith pursuant to this Section.

 

Section 11.3.    Amendments of Financing Documents Requiring Consent of Owners of the Bonds.

 

(a)    Except as provided in the Master Trust Indenture Documents and Section 11.2 hereof and in 11.3(b) and (c) below, the Issuer and the Trustee shall not consent to any amendment, change or modification of the General Financing Documents, without mailing of notice and the written approval or consent of the Required Bondholders, provided that the written approval or consent of the owners of 100% in aggregate principal amount of the affected Bonds at the time Outstanding and so affected, given and procured as in Section 10.3 hereof provided, shall be required for any amendment that causes any of the following effects (1) a reduction in the aggregate principal amount of the Bonds or a Class of Bonds required for consent to remedies or waivers of remedies in connection with the occurrence of an Event of Default thereunder, (2) an extension of the dates on which the Borrowers’ payments with respect to the Bonds are due, (3) a reduction in the principal amount or interest rate payable by the Borrowers under the Loan Agreement and the Master Indenture Notes, (4) the creation of any lien other than a lien securing all Bondholders according to the Class of Bonds they hold and ratably securing all of the Bonds within a Class at any time Outstanding or (5) the elimination or diminution of the liens securing the Bonds except to the extent necessary and appropriate in connection with a reduction in any such lien permitted by the Master Indenture under the General Financing Documents. If at any time the Borrower Representative shall request the consent of the Trustee to any such proposed amendment, change or modification, the Trustee shall cause notice of such proposed amendment, change or modification to be mailed in the same manner as is provided in Article X hereof with respect to Supplemental Indentures. Such notice shall briefly set forth the nature of such proposed amendment, change or modification and shall state that copies of the instrument embodying the same are on file at the principal office of the Trustee for inspection by all owners of the Bonds.

 

(b)    Notwithstanding anything in this Article to the contrary, while any Senior Bonds remain outstanding, the Holders of the Subordinate Bonds shall have no right of consent to any amendment, change or modification to any of the General Financing Documents other than as set forth in this subsection and in subsection (c) below. Any notices required under this Article shall be sent to the Holders of the Senior Bonds with a copy to the Holders of Subordinate Bonds. By their purchase of the Subordinate Bonds, the Holders of such Subordinate Bonds shall be deemed to have consented to the provisions of this Section. Nothing in this Section shall permit, or be construed as permitting, without the consent of the Holders of all Outstanding Subordinate Class A Bonds any amendment, change or modification to any of the General Financing Documents that would cause any of the following effects (1) a reduction in the aggregate principal amount of the Subordinate Class A Bonds required for consent to remedies or waivers of remedies in connection with the occurrence of an Event of Default thereunder, (2) an extension of the dates on which the Borrowers’ payments with respect to the Subordinate Class A Bonds are due, (3) a reduction in the principal amount or interest rate payable by the Borrowers with respect to the Subordinate Class A Bonds under the Loan Agreement and the Subordinate Class A Note, (4) the creation of any lien other than (A) a Permitted Encumbrance or (B) a lien ratably securing all of the Subordinate Class A Bonds at any time Outstanding or (5) the elimination or diminution of the lien securing the Subordinate Class A Bonds except to the extent necessary and appropriate in connection with a reduction in such lien permitted by the Master Indenture.

 

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(c)    Notwithstanding anything in this Article to the contrary, while any Senior Bonds or Subordinate Class A Bonds remain outstanding, the Holders of the Subordinate Bonds Class B shall have no right of consent to any amendment, change or modification to any of the General Financing Documents other than as set forth in this subsection. Any notices required under this Article shall be sent to the Holders of the Senior Bonds or, if no Senior Bonds remain Outstanding, to the Holders of the Subordinate Class A Bonds, with a copy to the Holders of Subordinate Class B Bonds. By their purchase of the Subordinate Class B Bonds, the Holders of such Subordinate Class B Bonds shall be deemed to have consented to the provisions of this Section. Nothing in this Section shall permit, or be construed as permitting, without the consent of the Holders of all Outstanding Subordinate Class B Bonds any amendment, change or modification to any of the General Financing Documents that would cause any of the following effects (1) a reduction in the aggregate principal amount of the Subordinate Class B Bonds required for consent to remedies or waivers of remedies in connection with the occurrence of an Event of Default hereunder, (2) an extension of the dates on which the Borrowers’ payments with respect to the Subordinate Class B Bonds are due, (3) a reduction in the principal amount or interest rate payable by the Borrowers with respect to the Subordinate Class B Bonds under the Loan Agreement and the Subordinate Class B Note, (4) the creation of any lien other than (A) a Permitted Encumbrance or (B) a lien ratably securing all of the Subordinate Class B Bonds at any time Outstanding or (5) the elimination or diminution of the lien securing the Subordinate Class B Bonds except to the extent necessary and appropriate in connection with a reduction in such lien permitted by the Master Indenture.

 

ARTICLE XII.
DEFEASANCE; DISCHARGE OF INDENTURE

 

Section 12.1.    Defeasance.

 

(a)    If the Issuer shall pay or cause to be paid to the holders of all Outstanding Bonds, the principal and interest and Redemption Price, if any, to become due thereon, at the times and in the manner stipulated therein and in this Indenture and any Supplemental Indenture authorizing the issuance of such Bonds, then the pledge of any revenues and other moneys, securities, funds and property hereby pledged and all other rights granted hereby with respect to such Bonds shall be discharged and satisfied. In such event, the Trustee shall, upon the request of the Issuer or the Borrower Representative, execute and deliver to the Issuer or the Borrower Representative all such instruments as may be desirable to evidence such discharge and satisfaction and after all amounts owed to the Trustee have been paid, the Trustee shall pay over or deliver to the Master Trustee, so long as the Master Indenture remains in full force and effect, and, thereafter, to or upon the direction of the Borrower Representative, all moneys or securities held by it pursuant to this Indenture which are not required for the payment or redemption of such Bonds not theretofore surrendered for such payment or redemption. If the Issuer shall pay or cause to be paid, or there shall otherwise be paid, to the holders of all Outstanding Bonds of a particular Series the principal or Redemption Price, if applicable, and interest due or to become due thereon, at the times and in the manner stipulated therein in this Indenture and in the Supplemental Indenture authorizing a Series, such Bonds or Series of Bonds shall cease to be entitled to any lien, benefit or security hereunder and all covenants, agreements and obligations of the Issuer to the holders of such Bonds or Series of Bonds shall thereupon cease, terminate and become void and be discharged and satisfied.

 

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(b)    (i)    Bonds shall, prior to the maturity or redemption date thereof, be deemed to have been paid with the effect expressed in subsection (a) of this Section if (A) in case any of said Bonds are to be redeemed on any date prior to their maturity, the Issuer shall have given to the Trustee in form satisfactory to it irrevocable instructions to mail as provided in Article VI notice of redemption on said date of such Bonds, (B) there shall have been deposited with the Trustee either Available Moneys in an amount which shall be sufficient, or Defeasance Collateral purchased with Available Moneys the principal of and the interest on which when due (without further reinvestment) will provide moneys which, together with the Available Moneys, if any, deposited with the Trustee at the same time, shall be sufficient, in the opinion of a nationally recognized certified public accountant, to pay when due the principal or Redemption Price, if any, of and interest due and to become due on said Bonds on and prior to the redemption date or maturity date thereof as the case may be, and (C) in the event said Bonds do not mature and are not by their terms subject to redemption within the next succeeding sixty (60) days, the Issuer shall have given the Trustee in form satisfactory to it irrevocable instructions to mail, as soon as practicable, a notice to the holders of such Bonds that the deposit required by (B) above has been made with the Trustee and that said Bonds are deemed to have been paid in accordance with this Section and stating such maturity or redemption date upon which moneys are to be available for the payment of the principal or Redemption Price, if any, on said Bonds. Neither Defeasance Collateral nor moneys deposited with the Trustee pursuant to this Section nor principal or interest payments on any such Defeasance Collateral shall be withdrawn or used for any purpose other than, and shall be held in trust for, the payment of the principal or Redemption Price, if any, of and interest on said Bonds; but if any cash received from such principal or interest payments on such Defeasance Collateral deposited with the Trustee, is not then needed for such purpose, the Trustee shall notify the Issuer of such receipt, and upon written direction from the Issuer shall to the extent practicable, reinvest such amounts in Defeasance Collateral maturing at times and in amounts sufficient to pay when due the principal or Redemption Price, if any, and interest to become due on said Bonds on and prior to such redemption date or maturity date thereof, as the case maybe, and interest earned from such reinvestments shall be paid over to the Master Trustee, so long as the Master Indenture remains in full force and effect, and, thereafter, to or upon the direction of the Borrower Representative, as received by the Trustee, free and clear of any trust, lien or pledge hereunder. There shall also be delivered to the Trustee in connection with the deposit of moneys or Defeasance Collateral a Bond Counsel’s Opinion that, with respect to Bonds the interest on which was intended at the time of their initial issuance to be excluded from gross income for federal income tax purposes, the deposit of moneys does not adversely affect the exclusion of interest on the Bonds from gross income for federal income tax purposes and such deposit has been made in compliance with the Indenture.

 

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(c)    If, through the deposit of moneys by the Issuer or otherwise, the Trustee shall hold pursuant to this Indenture, moneys sufficient to pay the principal and interest to maturity on all Outstanding Bonds, or in the case of Bonds in respect of which the Issuer shall have taken all action necessary to redeem prior to maturity, sufficient to pay the Redemption Price and interest to such redemption date, then at the request of the Issuer all moneys held by the Trustee hereunder shall be held by the Trustee for the payment or the redemption of Outstanding Bonds.

 

(d)    Anything in this Indenture to the contrary notwithstanding, any moneys held by the Trustee in trust for the payment and discharge of any of the Bonds which remain unclaimed for two years after the date when all of the Bonds have become due and payable, either at their stated maturity dates or by call for earlier redemption, if such moneys were held by the Trustee at such date, or for two years after the date of deposit of such moneys if deposited with the Trustee after the said date when all of the Bonds became due and payable, shall be paid over to the Master Trustee, so long as the Master Indenture remains in full force and effect, and, thereafter, to or upon the direction of the Borrower Representative, free and clear of any trust, lien or pledge hereunder, and the Trustee shall thereupon be released and discharged.

 

(e)    A Supplemental Indenture may provide that any or all of the provisions of this Section 12.1 are applicable or not applicable, and that other provisions of like or different effect are applicable, to the Series of Bonds authorized by such Supplemental Indenture.

 

ARTICLE XIII.
GENERAL PROVISIONS

 

Section 13.1.    Notices. Any notice, request, demand communication or other paper shall be sufficiently given and shall be deemed given when delivered or, if to Bondholders, mailed by first class mail, and otherwise on the third Business Day after sent by certified mail, return receipt requested, postage prepaid or by trackable overnight delivery (or, if earlier, when received or refused), addressed as follows:

 

Issuer:

PUBLIC FINANCE AUTHORITY

 

22 East Mifflin Street, Suite 900

 

Madison, WI 53703

 

Attention: Scott Carper and Michael LaPierre

   

If to any Borrower or

the Borrower Representative:

SKY HARBOUR CAPITAL LLC

Hangar M, 136 Tower Road
Westchester County Airport
White Plains, NY 10604
Attention: Tal Keinan

   

If to Trustee:

THE BANK OF NEW YORK MELLON

385 Rifle Camp Road

Woodland Park, New Jersey 07424

Attention: Corporate Trust Services, Frederic Belen

 

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A duplicate copy of each notice required to be given hereunder by the Trustee to either the Issuer or the Borrower Representative shall also be given to the other. Any notice party may designate any further or different addresses to which subsequent notices, certificates or other communications shall be sent.

 

Section 13.2.    Bondholder Directions and Consents.

 

(a)    Notwithstanding anything herein to the contrary, during any period when the Book Entry System is in effect, when any consent or direction is permitted to or required of any Bondholder or group of Bondholders or when any notice is required to be given to any Bondholder hereunder or under the General Financing Documents, the Trustee shall comply with terms of this Section.

 

(b)    Any notices required to be delivered to the Bondholders shall be delivered also to each Beneficial Owner at the address most recently given by the Beneficial Owner to the Trustee. Such notice shall be delivered in the manner required for notices to the Bondholders established herein.

 

(c)    Any consent or direction permitted or required of any Bondholder or group of Bondholders may be obtained from the Beneficial Owners directly. To the extent any Beneficial Owner delivers a consent or direction to the Trustee such direction or consent shall be counted towards the total for determining whether the requisite portion of the Bondholders have consented to or directed any action.

 

(d)    If any consent, approval or agreement is requested or required of the Trustee in its capacity as holder of the Master Indenture Notes, the Trustee, absent specific direction of the Required Bondholders, which, it may request in its discretion, the Trustee may take such action as it deems appropriate without giving notice to or obtaining the consent of any Bondholders if, in the Trustee’s reasonable fiduciary judgment, such action is not contrary to the provisions hereof and will not materially adversely affect the Bondholders.

 

(e)    Except as otherwise specifically provided herein, nothing in this Indenture expressed or implied is intended or shall be construed to confer upon, or to give to, any person or entity, other than the Issuer, the Issuer Indemnified Persons, the Trustee, the Borrowers, the Master Trustee, the Paying Agent, if any, and the registered owners of the Bonds, any right, remedy or claim under or by reason of this Indenture or any covenant, condition or stipulation hereof, and all covenants, stipulations, promises and agreements in this Indenture contained by and on behalf of the Issuer shall be for the sole and exclusive benefit of the Issuer, the Issuer Indemnified Persons, the Trustee, the Borrowers, the Paying Agent, if any, and the registered owners of the Bonds. Notwithstanding any provision hereof to the contrary, whenever any certificate or opinion is required by the terms of this Indenture to be given by the Issuer on its own behalf, any such certificate or opinion may be made or given by an Authorized Signatory (and in no event individually) and may be based (i) insofar as it relates to factual matters, upon a certificate of or representation by the Trustee or the Borrowers; and (ii) insofar as it relates to legal or accounting matters, upon a certificate or opinion of or representation by counsel or an accountant, in each case under clause (i) or (ii) without further investigation or inquiry by such Authorized Signatory or otherwise on behalf of the Issuer.

 

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Section 13.3.    Waiver of Personal Liability. No Issuer Indemnified Person shall be individually or personally liable for the payment of any principal of, premium, if any, or interest on the Bonds or any costs incidental thereto or any sum hereunder or under the Loan Agreement or any claim based hereon or thereon, or be subject to any personal liability or accountability by reason of the execution and delivery of this Indenture or the Loan Agreement.

 

Section 13.4.    No Obligation to Enforce Assigned Rights. Notwithstanding anything to the contrary in this Indenture or the Loan Agreement, the Issuer shall have no obligation to and instead the Trustee and/or the Bondholders, as the case may be, in accordance with this Indenture or the Loan Agreement, shall have the right, without any direction from or action by the Issuer, to take any and all steps, actions and proceedings, to enforce any or all rights of the Issuer (other than the Unassigned Rights) under this Indenture or the Loan Agreement, including, without limitation, the rights to enforce the remedies upon the occurrence and continuation of an Event of Default and the obligations of the Borrowers under the Loan Agreement.

 

Section 13.5.    Third-Party Beneficiaries. Notwithstanding any provision hereof to the contrary, it is specifically acknowledged and agreed that, to the extent of their rights hereunder (including, without limitation, their rights to immunity and exculpation from pecuniary liability) each Issuer Indemnified Person is a third-party beneficiary of this Indenture entitled to enforce such rights in his, her, its or their own name.

 

Section 13.6.    No Impairment of Rights. Nothing herein shall be deemed or construed to limit, impair or affect in any way the Issuer (or any Issuer Indemnified Person’s) right to enforce the Unassigned Rights, regardless of whether there is then existing an Event of Default (including, without limitation, a payment default), or any action based thereon or occasioned by an Event of Default or alleged Event of Default, and regardless of any waiver or forbearance granted by the Trustee or any Bondholder in respect thereof. Any default or Event of Default in respect of the Unassigned Rights may only be waived with the Issuer’s written consent.

 

Section 13.7.    Issuers Performance. None of the provisions of this Indenture or the Loan Agreement shall require the Issuer to expend or risk its own funds or otherwise to incur financial liability in the performance of any of its duties or in the exercise of any of its rights or powers hereunder or thereunder, unless payable from the Trust Estate, or unless the Issuer shall first have been adequately indemnified by the Borrower to its satisfaction against the cost, expense, and liability which may be incurred thereby. The Issuer shall not be under any obligation hereunder or under the Loan Agreement to perform any administrative service with respect to the Bonds or the Project Facilities (including, without limitation, record keeping and legal services), it being understood that such services shall be performed or provided by the Trustee or the Borrower. The Issuer covenants that it will faithfully perform at all times any and all covenants, undertakings, stipulations, and provisions expressly contained in this Indenture, the Loan Agreement, and any and every Bond executed, authenticated and delivered under this Indenture; provided, however, that the Issuer shall not be obligated to take any action or execute any instrument pursuant to any provision hereof unless and until it shall have (i) been directed to do so in writing by the Borrower, the Trustee, or the Bondholder having the authority to so direct; (ii) received from the Borrower, the Trustee, or the Bondholder requesting such action or execution assurance satisfactory to the Issuer that the Issuer’s expenses incurred or to be incurred in connection with taking such action or executing such instrument have been or will be paid or reimbursed to the Issuer; and (iii) if applicable, received in a timely manner the instrument or document to be executed, in form and substance satisfactory to the Issuer.

 

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In complying with any provision herein or in the Loan Agreement, including but not limited to any provision requiring the Issuer to “cause” another Person to take or omit any action, the Issuer shall be entitled to rely conclusively (and without independent investigation or verification) (i) on the faithful performance by the Trustee or the Borrowers, as the case may be, of their respective obligations hereunder and under the Loan Agreement and (ii) upon any written certification or opinion furnished to the Issuer by the Trustee or the Borrower, as the case may be. In acting, or in refraining from acting, under this Indenture or the Loan Agreement, the Issuer may conclusively rely on the advice of its counsel. The Issuer shall not be required to take any action hereunder or under the Loan Agreement that it reasonably believes to be unlawful or in contravention hereof or thereof.

 

Section 13.8.    Parties Interested Herein. Except as otherwise specifically provided herein and subject to Section 13.2 hereof, nothing in this Indenture expressed or implied is intended or shall be construed to confer upon, or to give to, any person or entity, other than the Issuer, the Trustee, the Borrowers, the Master Trustee, the Paying Agent, if any, and the registered owners of the Bonds, any right, remedy or claim under or by reason of this Indenture or any covenant, condition or stipulation hereof, and all covenants, stipulations, promises and agreements in this Indenture contained by and on behalf of the Issuer shall be for the sole and exclusive benefit of the Issuer, the Trustee, the Borrowers, the Paying Agent, if any, and the registered owners of the Bonds.

 

Section 13.9.    Effective Date; Counterparts. This Indenture shall become effective on delivery. It may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.

 

Section 13.10.    Continuing Disclosure. The Borrowers have undertaken all responsibility for compliance with applicable continuing disclosure requirements under Rule 15c2-12 of the Securities and Exchange Commission and the Issuer shall have no liability to the Bondholders, the Borrowers or any other person with respect to such rule.

 

Section 13.11.    Date for Identification Purposes Only. The date of this Indenture shall be for identification purposes only and shall not be construed to imply that this Indenture was executed on such date.

 

Section 13.12.    Governing Law. THE EFFECT AND MEANING OF THIS INDENTURE AND THE RIGHTS OF ALL PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF WISCONSIN. All claims of whatever character arising out of this Indenture, or under any statute or common law relating in any way, directly or indirectly, to the subject matter hereof or to the dealings between the Issuer and any other party hereto, if and to the extent that such claim potentially could or actually does involve the Issuer or any Issuer Indemnified Person, shall be brought in any state or federal court of competent jurisdiction located in Dane County, Wisconsin. By executing and delivering this Indenture, each party hereto irrevocably: (i) accepts generally and unconditionally the exclusive jurisdiction and venue of such courts; (ii) waives any defense of forum non conveniens; and (iii) agrees not to seek removal of such proceedings to any court or forum other than as specified above. The foregoing shall not be deemed or construed to constitute a waiver by the Issuer of any prior notice or procedural requirements applicable to actions or claims against or involving joint powers commissions or governmental units of the State of Wisconsin that may exist at the time of and in connection with such matter.

 

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Section 13.13.    Non-Liability of Issuer. The Issuer shall not be obligated to pay the principal of, premium, if any, or interest on the Bonds or any costs incidental thereto, except from the Trust Estate. Neither the faith and credit nor the taxing power of any Sponsor, any Member, the State of Wisconsin or any other political subdivision or agency thereof or any political subdivision approving the issuance of the Bonds, nor the faith and credit of the Issuer, is pledged to the payment of the principal of, premium, if any, or interest on the Bonds or any costs incidental thereto. The Issuer has no taxing power. The Issuer shall not be directly, indirectly, contingently or otherwise liable for any costs, expenses, losses, damages, claims or actions, of any conceivable kind on any conceivable theory, under or by reason of or in connection with this Indenture, the Bonds or the Loan Agreement, except only to the extent amounts are received for the payment thereof from the Borrower Representative under the Loan Agreement.

 

The Trustee hereby acknowledges that the Issuer’s sole source of moneys to repay the Bonds will be provided by the Trust Estate, and hereby agrees that if such amounts in the Trust Estate shall ever prove insufficient to pay all principal of, premium, if any, and interest on the Bonds as the same shall become due (whether by maturity, redemption, acceleration or otherwise) or any costs incidental thereto, then upon notice or demand from the Trustee, the Borrower Representative in accordance with Section 7.5 (second paragraph) of the Loan Agreement shall pay such amounts as are required from time to time to prevent any deficiency or default in the payment of such principal, premium, if any, or interest, or costs incidental thereto including, but not limited to, any deficiency caused by acts, omissions, nonfeasance or malfeasance on the part of the Trustee, the Issuer, the Borrowers or any third party, subject to any right of reimbursement from the Trustee, the Issuer or any such third party, as the case may be, therefor.

 

Section 13.14.    Limited Liability. The Bonds are special limited obligations of the Issuer payable solely from the Trust Estate and, except from such source, none of the Issuer, any Member, any Sponsor or any Issuer Indemnified Person, the State of Wisconsin or any political subdivision or agency thereof or any political subdivision approving the issuance of the Bonds shall be obligated to pay the principal of, premium, if any, or interest thereon or any costs incidental thereto. The Bonds are not a debt of the State of Wisconsin or the Members and do not, directly, indirectly or contingently, obligate in any manner any Member, the State of Wisconsin or any political subdivision or agency thereof or any political subdivision approving the issuance of the Bonds to levy any tax or to make any appropriation for payment of the principal of, premium, if any, or interest on, the Bonds or any costs incidental thereto. Neither the faith and credit nor the taxing power of any Member of the Issuer, the State of Wisconsin or any political subdivision or agency thereof or any political subdivision approving the issuance of the Bonds, nor the faith and credit of the Issuer, any Sponsor or any Issuer Indemnified Person, shall be pledged to the payment of the principal of, premium, if any, or interest on, the Bonds or any costs incidental thereto. The Issuer has no taxing power.

 

Section 13.15.    Patriot and U.S.A. Freedom Act Requirements of the Trustee. To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify and record information that identifies each person who opens an account. Accordingly, the Trustee will require documentation from each non-individual person such as a business entity, a charity, a trust, or other legal entity, verifying its formation as a legal entity. The Trustee may also request financial statements, licenses, identification and authorization documents from individuals claiming authority to represent the entity or other relevant documentation.

 

[The remainder of this page is left blank intentionally.]

 

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IN WITNESS WHEREOF, the Issuer has caused these presents to be signed in its name and behalf by its Authorized Signatory, and to evidence its acceptance of the trusts hereby created the Trustee has caused these presents to be signed in its name and behalf by its duly authorized officer, as of the date first above written.

 

 

PUBLIC FINANCE AUTHORITY

 
       
       
       
  By:

/s/ Ann Marie Austin

 
  Name: Ann Marie Austin  
  Title: Assistant Secretary  
       
       
       
 

THE BANK OF NEW YORK MELLON, as Trustee

 
       
       
  By:

/s/ David J. O’Brien

 
  Name:

David J. O’Brien

 
  Title:

Vice President

 

 

 

 

(Signature Page for Trust Indenture)

 

 

 

EXHIBIT A

 

FORM OF BOND

 

Sen No.: R-__

Principal Amount: $

 

PUBLIC FINANCE AUTHORITY

Senior Special Facility Revenue Bonds
(Sky Harbour Capital LLC Aviation Facilities Project),
Series 2021

 

THIS BOND IS A SPECIAL LIMITED OBLIGATION OF THE ISSUER PAYABLE SOLELY FROM THE TRUST ESTATE (AS DEFINED IN THE HEREINAFTER DEFINED INDENTURE), AND EXCEPT FROM SUCH SOURCE, NONE OF THE ISSUER, ANY SPONSOR (AS DEFINED IN THE LOAN AGREEMENT), ANY MEMBER (AS DEFINED IN THE LOAN AGREEMENT), ANY ISSUER INDEMNIFIED PERSON, THE STATE OF WISCONSIN (THE “STATE”), OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THIS BOND SHALL BE OBLIGATED TO PAY THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST HEREON OR ANY COSTS INCIDENTAL HERETO. THIS BOND IS NOT A DEBT OF THE STATE OF WISCONSIN OR ANY MEMBER AND DOES NOT DIRECTLY, INDIRECTLY OR CONTINGENTLY OBLIGATE, IN ANY MANNER, ANY MEMBER, THE STATE OF WISCONSIN OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THIS BOND TO LEVY ANY TAX OR TO MAKE ANY APPROPRIATION FOR PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON, THIS BOND OR ANY COSTS INCIDENTAL HERETO. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF ANY MEMBER, THE STATE OF WISCONSIN OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THIS BOND, NOR THE FAITH AND CREDIT OF THE ISSUER, ANY SPONSOR OR ANY ISSUER INDEMNIFIED PERSON, SHALL BE PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON, THIS BOND OR ANY COSTS INCIDENTAL HERETO. THE ISSUER HAS NO TAXING POWER.

 

Dated Date

Maturity Date

Interest Rate

CUSIP Number

       
 

July 1, 20____

___%

____

       

REGISTERED OWNER:

CEDE & CO.

   
       

PRINCIPAL AMOUNT:

_____($________)

 

 

THIS BOND HAS BEEN AUTHORIZED AND ISSUED PURSUANT TO THE LAWS OF THE STATE OF WISCONSIN, INCLUDING PARTICULARLY, SECTION 66.0304 OF THE WISCONSIN STATUTES, AS AMENDED. BONDS ISSUED UNDER SECTION 66.0304 SHALL NOT BE INVALID FOR ANY IRREGULARITY OR DEFECT IN THE PROCEEDINGS FOR THEIR SALE OR ISSUANCE.

 

 

    

A-1

 

PUBLIC FINANCE AUTHORITY, a joint powers commission under the Act (as hereinafter defined), the “commission” under Section 66.0304 of the Wisconsin Statutes, and a unit of government and body corporate and politic organized and existing under the laws of the State of Wisconsin (together with its successors and assigns, the “Issuer”), for value received, promises to pay, from the sources described herein, to the registered owner specified above, or registered assigns, the principal amount specified above, on the maturity date specified above (unless this Bond shall have been called for prior redemption) and to pay, from such sources, interest on said sum on January 1, 2022 and on each July 1 and January 1 thereafter (each an “Interest Payment Date”) at the interest rate specified above, until payment of the principal hereof has been made or provided for. This Bond will bear interest from the most recent interest payment date to which interest has been paid or provided for, or, if no interest has been paid, from the Dated Date set forth above.

 

This Bond and the series of Bonds of which it is a part have been authorized and issued pursuant to the laws of the State, including particularly Section 66.0304 of the Wisconsin Statutes, as amended. This Bond is a limited obligation of the Issuer payable solely from the Trust Estate (as defined in the Indenture) and not from any other revenues, funds or assets of the Issuer.

 

Interest shall be payable by mailing by first class mail on the Interest Payment Date a check or draft for such interest payable to the person entitled thereto (such person being the registered owner of record on the books of the Issuer applicable to such Interest Payment Date) at his or her address as it appears on the bond register of the Issuer as maintained by the Trustee as of the fifteenth (15th) day of the month immediately preceding the Interest Payment Date, except that a registered owner of at least $1,000,000 in principal amount of the Bonds shall be paid interest by wire transfer or other reasonable method in immediately available funds to an account in the United States or place within the United State designated by such Holder if such registered owner makes a written request to the Trustee on or prior to the Interest Payment Date specifying such account information as the Trustee may require, such wire transfer or other special payment to be at the expense of the Holder; provided, however, that while this Bond is held in the Book-Entry System (as defined in the Indenture), principal of and interest on this Bond shall be paid as provided in the Indenture. Payment shall be made in any coin or currency which is than legal tender of the United States of America. The amount of interest to be paid is to be computed on the basis of a 360-day year consisting of twelve 30-day months. Notwithstanding anything herein to the contrary, at no time, whether as a result of an Event of Default (as defined in the Indenture) or otherwise, shall the Bonds bear interest at an interest rate higher than the Maximum Rate (as defined in the Indenture).

 

This bond is one of a series of Bonds of the Issuer representing a borrowing in the aggregate principal amount of $166,340,000 (comprising the Issuer’s Public Finance Authority Senior Special Facility Revenue Bonds (Sky Harbour Capital LLC Aviation Facilities Project), Series 2021 (herein called the “Bonds”) authorized to be issued and so issued in fully registered form under and pursuant to a Trust Indenture, dated as of September 1, 2021 (the “Indenture”), by and between the Issuer and the Trustee. The Bonds are issued as Senior Bonds under the terms of the Indenture. Capitalized terms used herein and not defined herein shall have the meaning assigned to such terms in the Indenture.

 

The Bonds are issuable in Authorized Denominations. The Indenture provides for the issuance, from time to time, under the conditions, limitations, and restrictions set forth therein, of additional bonds as Senior Bonds or Subordinate Class A Bonds or Subordinate Class B Bonds on a parity with any other Series of Senior Bonds or Subordinate Class A Bonds or Subordinate Class B Bonds, respectively, issued or to be issued under the Indenture and any supplement thereto.

 

A-2

 

Each and every Senior Bond has priority and preference over every Subordinate Bond to the full extent provided in the Indenture. Each and every Subordinate Class A Bond has priority and preference over every Subordinate Class B Bond to the full extent provided in the Indenture.

 

Reference is hereby made to the Indenture and the Loan Agreement, and all supplements and amendments thereto, for a description of the rights thereunder of the registered Owner of the Bonds, of the payments and funds pledged and assigned as security for payment of the bonds and the nature and extent thereof, of the terms on which the Bonds are issued and the terms and conditions on which the bonds will be deemed to be paid at or prior to maturity or redemption upon provision for payment thereof in the manner set forth in the Indenture, of the rights, duties and immunities of the Trustee and of the rights and obligations of the Issuer thereunder, to all of the provisions of which Indenture the registered Owner of this Bond, by acceptance hereof, assents and agrees.

 

A copy of the Indenture is on file at the trust office of the Trustee in New York, New York, and reference to the Indenture and any and all supplements thereto and modifications and amendments thereof is made for a description of the pledges and covenants securing the Bonds, the nature, extent, and manner of enforcement of such pledges, the rights and remedies of the registered owners of the Bonds with respect thereto, and the terms and conditions upon which the Bonds have been issued and may be issued thereunder. To the extent and in the manner permitted by the terms of the Indenture, the provisions of the Indenture or any indenture amendatory thereof or supplemental thereto may be modified or amended by the Issuer, as provided therein, including in certain cases, without the consent of the holders of the Bonds. The holder of this Bond shall have no right to enforce the provisions of the Indenture, to institute action to enforce the provisions of the Indenture or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Indenture. In certain events, on the conditions, in the manner and with the effect set forth in the Indenture, the principal of all the Bonds issued thereunder and then outstanding, together with accrued interest thereon, may become or may be declared due and payable before the maturity thereof.

 

The Bonds are subject to redemption in whole or in part prior to maturity at such times, under such circumstances, and at such redemption prices as are provided in the Indenture.

 

Neither the Issuer Indemnified Persons (as defined in the Loan Agreement) nor any person executing this Bond shall be liable personally hereon or shall be subject to any personal liability or accountability by reason of its execution.

 

This Bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Indenture until the Certificate of Authentication hereon shall have been signed by the Trustee or its Agent.

 

It Is Hereby Certified, Recited, and Declared that all acts, conditions, and things required by the Act and statutes of the State and the Indenture to exist, to have happened, and to have been performed precedent to and in connection with the issuance of this Bond, exist, have happened, and have been performed in due time, form, and manner as required by law and that the issue of the Bonds, together with all other indebtedness of the Issuer, is within every debt and other limit prescribed by law.

 

A-3

 

IN WITNESS WHEREOF, the Issuer has caused this Bond to be to be executed, under seal, by its Authorized Signatory by manual or facsimile signature.

 

DATED: ______________, 2021

     
       
 

PUBLIC FINANCE AUTHORITY

 
       
       
       
  By:

 

 
  Name:

 

 
  Title:

Assistant Secretary

 

 

A-4

 

CERTIFICATE OF AUTHENTICATION

 

This Bond is one of the Bonds issued under the provisions of and described in the within-mentioned Indenture.

 

Date of Authentication:          , 2021

     
       
 

The Bank of New York Mellon, as Trustee

 
       
  By:    
 

Authorized Signer

 

 

A-5

 

ASSIGNMENT

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
(Please insert Social Security Number or other identifying number of assignee)
(Please print or Typewrite Name and Address of Assignee)

 

the within bond and all rights thereunder, and hereby irrevocably constitutes and appoints _______________________ attorney to transfer the within Bond on the books kept for registration thereof, with full power of substitution in the premises.

 

Dated:                 .
Signature Guaranteed

   

NOTICE: Signature(s) must be
guaranteed by an eligible guaranty
institution.

 

   
     
   

Signature

NOTICE: The Signature to this assignment must correspond with the name as it appears upon the face of the within Bond in every particular, without alteration or enlargement or any change whatever.

 

A-6

 

 

 

EXHIBIT B

 

Accreted Values for the Series 2021 Bonds Based on $5,000 Par Amount of Bonds

 

 

 

Delivery Date

9/14/2021

     
 

Maturity

7/1/2036

7/1/2041

7/1/2054

 
 

Call Date

7/1/2028

7/1/2031

7/1/2031

 
 

Coupon

4.000%

4.000%

4.250%

 
 

Reoffering Yield

3.800%

4.000%

4.250%

 
 

OIP

101.183

100.000

100.000

 
           
 

Payment Date

Accreted Values

 
 

1/1/2022

5,057.10

5,000.00

5,000.00

 
 

7/1/2022

5,053.20

5,000.00

5,000.00

 
 

1/1/2023

5,049.20

5,000.00

5,000.00

 
 

7/1/2023

5,045.10

5,000.00

5,000.00

 
 

1/1/2024

5,041.00

5,000.00

5,000.00

 
 

7/1/2024

5,036.75

5,000.00

5,000.00

 
 

1/1/2025

5,032.45

5,000.00

5,000.00

 
 

7/1/2025

5,028.10

5,000.00

5,000.00

 
 

1/1/2026

5,023.60

5,000.00

5,000.00

 
 

7/1/2026

5,019.05

5,000.00

5,000.00

 
 

1/1/2027

5,014.40

5,000.00

5,000.00

 
 

7/1/2027

5,009.70

5,000.00

5,000.00

 
 

1/1/2028

5,004.90

5,000.00

5,000.00

 
 

7/1/2028

 

5,000.00

5,000.00

 
 

1/1/2029

 

5,000.00

5,000.00

 
 

7/1/2029

 

5,000.00

5,000.00

 
 

1/1/2030

 

5,000.00

5,000.00

 
 

7/1/2030

 

5,000.00

5,000.00

 
 

1/1/2031

 

5,000.00

5,000.00

 
 

7/1/2031

 

5,000.00

5,000.00

 

 

B-1

 

EXHIBIT C

 

2021 PROJECT

 

The 2021 Project comprises the following components at each of the following locations:

 

1)

Sugar Land, Texas: This two phase project includes the development of a general aviation and aircraft storage facility at Sugar Land Regional Airport in Sugar Land, Texas (“SGR”), initially comprising 7 hangars aggregating approximately 66,000 square feet, including approximately 7,000 square feet of related office space for aviation use (“SGR Phase I”) and the subsequent development 6 additional hangars aggregating approximately 51,000 square feet, including approximately 6,000 square feet of related office space for aviation use (“SGR Phase II”).

 

2)

Opa Locka, Florida: This project includes the development of a general aviation and aircraft storage facility at Miami-Opa Locka Executive Airport in Opa Locka, Florida (“OPF”), comprising 19 hangars aggregating approximately 254,000 square feet, including approximately 25,000 square feet of related office space for aviation use, and additional hangars for aviation maintenance, repair overhaul “built to suit” facilities.

 

3)

Nashville, Tennessee: This project includes the development of a general aviation and aircraft storage facility at Nashville International Airport in Nashville, Tennessee (“BNA”), comprising 10 hangars aggregating approximately 150,000 square feet, including approximately 15,000 square feet of related office space for aviation use.

 

4)

Englewood, Colorado: This two phase project includes the development of a general aviation and aircraft storage facility at Centennial Airport in Englewood, Colorado (“APA”), initially comprising 13 hangars aggregating approximately 130,000 square feet, including approximately 13,000 square feet of related office space for aviation use (“APA Phase I”), and the subsequent development 9 additional hangars aggregating approximately 98,000 square feet, including approximately 10,000 square feet of related office space for aviation use (“APA Phase II”), and the acquisition and/or renovation of one or more additional general aviation and aircraft storage facilities (“APA Phase III”).

 

5)

Phoenix, Arizona: This project includes the development of a general aviation and aircraft storage facility at Deer Valley Airport in Phoenix, Arizona (“DVT”), comprising 9 hangars aggregating approximately 104,000 square feet, including approximately 10,000 square feet of related office space for aviation use.

 

C-1

 

The scope of the 2021 Project may be modified by the Borrowers from time to time to include additional facilities located at one or more new or existing Project sites and/or remove facilities not yet constructed at the existing Project sites, upon delivery by the Borrower Representative to the Trustee and the Master Trustee of the items listed below, provided that the amount of Series 2021 Bond proceeds reallocated from an existing component of the 2021 Project to a new component of the 2021 Project as a result of modifications to the scope of the 2021 Project made pursuant to this provision shall not exceed $50,000,0000 in the aggregate:

 

(i)         a certificate of the Borrower Representative (a) describing the modification of the 2021 Project, estimating the resulting increase or decrease in the cost of the 2021 Project and confirming that the Borrowers have sufficient funds available to complete the 2021 Project as modified, and (b) confirming as of the date of the certificate (1) that no default or Event of Default exists under this Indenture, the Loan Agreement or the Master Indenture and (2) that the Debt Service Coverage Ratio (as defined in the Master Indenture) of the Obligated Group for the most recently completed Fiscal Year is at least equal to 1.25, provided that, if the denominator used in calculating such Debt Service Coverage Ratio in accordance with the definition thereof is less than or equal to $0.00, the requirements of this clause (2) shall be deemed satisfied;

 

(ii)         a Consultant’s Report (as defined in the Master Indenture) confirming, based on its reasonable assessment at the time, that the sum of the Projected Senior Debt Service Coverage Ratios (as defined in the Master Indenture) of the Obligated Group for next five full Fiscal Years (the “Five-Year Aggregate DSCR”) projected or forecasted assuming the proposed modification of the 2021 Project is implemented, shall not be less than the Five-Year Aggregate DSCR projected or forecasted assuming the proposed modification is not implemented, provided that, if the denominator used in calculating the Projected Senior Debt Service Coverage Ratio in accordance with the definition thereof is less than or equal to $0.00 for any Fiscal Year, such Fiscal Year shall be excluded from the foregoing calculation;

 

(iii)         a certified copy of the resolution of the Issuer approving the modification of the 2021 Project;

 

(iv)         evidence of receipt of such other approvals, and compliance with such other requirements or conditions then in effect, necessary for Bond Counsel to issue the opinion set forth in clause (v) below;

 

(v)         a Favorable Opinion of Bond Counsel with respect to the modification of the 2021 Project;

 

(vi)         in the event that the affiliate of the Borrower Representative holding an interest (directly or indirectly) in any such additional facility is not then a Borrower under the Loan Agreement, a supplement or amendment to the Loan Agreement joining such affiliate to the Loan Agreement as a Borrower;

 

(vii)         in the event that such additional Borrower is not then a Member of the Obligated Group, such documentation as may be necessary for such additional Borrower to become a Member of the Obligated Group pursuant to the provisions of the Master Indenture; and

 

(viii)         in the event that any additional component of the 2021 Project is not then subject to a mortgage or deed of trust in favor of the Master Trustee, a mortgage or deed of trust on such additional component of the 2021 Project in favor of the Master Trustee.

 

 

C-2

 

Exhibit 10.12

 


 

 

 

LOAN AGREEMENT

 

By and between

 

PUBLIC FINANCE AUTHORITY

 

and

 

THE BORROWERS
IDENTIFIED ON SCHEDULE I HERETO

 

Dated as of September 1, 2021

 

Relating to

 

Public Finance Authority
Senior Special Facility Revenue Bonds
(Sky Harbour Capital LLC Aviation Facilities Project),
Series 2021

 

 


 

 

 

TABLE OF CONTENTS

 

    Page
     

ARTICLE 1 DEFINITIONS AND INTERPRETATION

2

Section 1.1.

Definitions

2

Section 1.2.

Interpretation

4

ARTICLE 2 REPRESENTATIONS AND WARRANTIES

5

Section 2.1.

Representations by the Issuer

5

Section 2.2.

Representations by each Borrower

6

ARTICLE 3 THE LOAN

8

Section 3.1.

Loan Clauses.

8

Section 3.2.

Other Amounts Payable and Other Obligations.

9

Section 3.3.

Additional Payments

10

Section 3.4.

Manner of Payment

11

Section 3.5.

Obligation Unconditional

11

Section 3.6.

Usury

11

Section 3.7.

Issuance of Additional Bonds.

12

Section 3.8.

Effective Date and Term.

12

Section 3.9.

Security for Borrower’s Performance.

13

Section 3.10.

Special Services Covenant

13

Section 3.11.

Agreement to Construct 2021 Project; Completion Certificate.

13

Section 3.12.

Requisition

14

Section 3.13.

Borrowers Required to Pay Costs of the 2021 Project if Construction Accounts Insufficient

14

Section 3.14.

Appointment of Borrower Representative; Authorization of Borrower Representative; Cessation of Status as Borrower Representative.

14

Section 3.15.

Cessation of Status as a Borrower

16

ARTICLE 4 COVENANTS OF THE BORROWERS

16

Section 4.1.

Compliance with Master Indenture

16

Section 4.2.

Continuing Disclosure

16

Section 4.3.

Records; Financial   Reports

16

Section 4.4.

Filing

16

Section 4.5.

Tax-Exempt Bonds Not to Become Taxable.

16

 

-i-

 

TABLE OF CONTENTS

(continued)

 

    Page
     

Section 4.6.

Permitted Indebtedness

17

Section 4.7.

Sale or other Disposition of 2021 Project

18

Section 4.8.

Further Assurances and Corrective Instruments

18

Section 4.9.

Covenant by Borrowers as to Compliance with Trust Indenture

18

Section 4.10.

Assignment of Agreement or Master Indenture Notes

18

Section 4.11.

Default Notification

18

ARTICLE 5 EVENTS OF DEFAULT AND REMEDIES

18

Section 5.1.

Events of Default.

18

Section 5.2.

Remedies on Default.

19

Section 5.3.

No Duty to Mitigate Damages

20

Section 5.4.

Remedies Cumulative

20

Section 5.5.

Notice of Default by Bond Trustee

21

ARTICLE 6 PREPAYMENT PROVISIONS

21

Section 6.1.

Optional and Extraordinary Prepayment.

21

Section 6.2.

Notice of Prepayment

22

ARTICLE 7 GENERAL

22

Section 7.1.

Trust Indenture.

22

Section 7.2.

Benefit of and Enforcement by Bondholders

22

Section 7.3.

Amendments

22

Section 7.4.

Notices

22

Section 7.5.

Non-Liability of Issuer

23

Section 7.6.

Waiver of Personal Liability

24

Section 7.7.

Filing.

24

Section 7.8.

Prior Agreements Superseded

24

Section 7.9.

Execution of Counterparts

25

Section 7.10.

Expenses

25

Section 7.11.

Indemnification

25

Section 7.12.

No Obligation to Enforce Assigned Rights

27

Section 7.13.

Issuer’s Performance

28

Section 7.14.

No Impairment of Rights

28

 

-ii-

 

TABLE OF CONTENTS

(continued)

 

    Page
     

Section 7.15.

Closing Expenses

28

Section 7.16.

Survival of Provisions

29

Section 7.17.

Third Party Beneficiaries

29

Section 7.18.

Governing Law

29

Section 7.19.

Waiver of Jury Trial

29

Section 7.20.

Federal Tax Ownership

30

Section 7.21.

Patriot and U.S.A. Freedom Act Requirements of the Bond Trustee

30

 

EXHIBIT A – Form of Requisition from Series 2021 Construction Account

 

-iii-

 

LOAN AGREEMENT

 

THIS LOAN AGREEMENT (as amended and supplemented from time to time, the “Loan Agreement”), made and dated as of September 1, 2021, by and between PUBLIC FINANCE AUTHORITY (together with its successors and assigns, the “Issuer”), a joint powers commission created under Section 66.0304 of the Wisconsin Statutes, a unit of government and a body corporate and politic organized and existing under the laws of the State of Wisconsin (the “State”) with the powers, among others, set forth in Sections 66.0301, 66.0303 and 66.0304, as amended, of the Wisconsin Statutes (the “Act”), and the BORROWERS IDENTIFIED ON SCHEDULE I HERETO (together with their respective successors and assigns, each a “Borrower” and collectively, the “Borrowers”).

 

W I T N E S S E T H T H A T :

 

WHEREAS, the Issuer is authorized and empowered under the Act and by the Joint Exercise Agreement (as defined in the hereinafter defined Indenture) to, among other things, issue bonds, notes or other evidences of indebtedness in connection with, and to make loans to assist in the financing and refinancing of, “projects” (as defined in the Act) located inside and outside of the State;

 

WHEREAS, the Borrowers have applied for the financial assistance of the Issuer in the financing or refinancing of the 2021 Project (as hereinafter defined);

 

WHEREAS, the Issuer has authorized the issuance of its airport facilities revenue bonds in the principal amount of $166,340,000 designated “Public Finance Authority Senior Special Facility Revenue Bonds (Sky Harbour Capital LLC Aviation Facilities Project), Series 2021” (the “Series 2021 Bonds”), the proceeds of which will be used to: (i) finance or refinance the projects described in Exhibit C to the Trust Indenture (collectively, the “2021 Project”), (ii) fund the deposit to the Debt Service Reserve Fund for the Series 2021 Bonds, and (iii) pay the costs of issuance of the Series 2021 Bonds;

 

WHEREAS, the facilities comprising the 2021 Project are located within the territorial limits of the political subdivisions listed on Schedule II hereto (the “Project Jurisdictions”), which political subdivisions have approved the use of bonds tax exempt bonds to finance the initial construction of the applicable portion of the 2021 Project; and

 

WHEREAS, based on representations of the Borrowers but without independent investigation, the Issuer has found and determined that the financing and refinancing of the 2021 Project will promote significant economic, cultural and community development opportunities, including the creation or retention of employment, the stimulation of economic activity and the promotion of improvements in the health, safety and welfare of persons in the Project Jurisdications; and

 

WHEREAS, the Issuer has issued the Series 2021 Bonds pursuant to a Trust Indenture dated as of September 1, 2021 (the “Trust Indenture”), between the Issuer and The Bank of New York Mellon, as bond trustee (the “Bond Trustee”);

 

 

 

WHEREAS, the Issuer is authorized, by a Bond Resolution adopted by its Board of Directors (as amended, the “Series 2021 Bond Resolution”) to issue the Series 2021 Bonds and loan the proceeds of the Series 2021 Bonds to the Borrowers pursuant to this Loan Agreement, which specifies the terms and conditions of a loan by the Issuer to the Borrowers of the proceeds of the Bonds to provide for financing of the Project and of the payment by the Borrowers to the Issuer of amounts sufficient for the payment of the principal of, premium, if any, or interest on the Bonds and costs incidental thereto;

 

WHEREAS, the Series 2021 Bonds will be secured by that certain Senior Master Indenture Promissory Note No. 2021-1 (the “Master Indenture Note”), issued by, and evidencing a joint and several obligation of, the Members of the Obligated Group (hereinafter defined) under that certain Master Trust Indenture, dated as of September 1, 2021, as supplemented from time to time, including by the First Supplemental Master Trust Indenture, dated as of September 1, 2021 (collectively, the “Master Indenture”), each between the Members of the Obligated Group and The Bank of New York Mellon, as master trustee (the “Master Trustee”);

 

WHEREAS, the Issuer and the Borrowers have each duly authorized the execution, delivery and performance of this Loan Agreement;

 

NOW, THEREFORE, in consideration of the premises and of the mutual representations, covenants and agreements herein set forth, the Issuer and the Borrowers, jointly and severally, each binding itself and its successors and assigns, do mutually promise, covenant and agree as follows (provided that in the performance of the agreement of the Issuer herein contained, any obligation it may incur for the payment of money shall not constitute an indebtedness or other liability of the State or of a political subdivision of the State, except the Issuer, but any such obligation shall be payable solely out of Trust Estate):

 

ARTICLE 1
DEFINITIONS AND INTERPRETATION

 

Section 1.1.    Definitions. For the purposes of this Loan Agreement, the following words and terms shall have the respective meanings set forth as follows, and any capitalized word or term used but not defined herein is used as defined in the Trust Indenture:

 

“Bond” or “Bonds” means the Series 2021 Bonds and any Additional Bonds.

 

“Closing Date” means the date of issuance of the Series 2021 Bonds.

 

“Event of Default” means an Event of Default as defined in Section 5.1 hereof.

 

“Extraordinary Services” and “Extraordinary Expenses” means all services rendered or all expenses incurred, as applicable, by the Bond Trustee under the Trust Indenture other than Ordinary Services or Ordinary Expenses, as applicable.

 

“Ground Lease” has the meaning set forth in the Master Indenture (as in effect on the date hereof).

 

 

2

 

“Highest Lawful Rate” means the maximum rate of nonusurious interest allowed from time to time by law as is now in effect or, to the extent permitted by law, such higher rate as may hereafter be in effect.

 

“Indemnified Parties” shall have the meaning set forth in Section 7.11 hereof.

 

“Investment Proceeds” shall have the meaning ascribed thereto in the applicable Treasury regulations.

 

“Issuance Costs” means costs incurred by or on behalf of any Borrower in connection with the issuance of the Bonds by the Issuer.

 

“Issuer Indemnified Person” means, collectively, (i) the Sponsors, (ii) the Members and (iii) each and all of the Issuer’s, Sponsors’ and the Members’ respective past, present and future directors, board members, governing members, trustees, commissioners, elected or appointed officials, officers, employees, Authorized Signatories, attorneys, contractors, subcontractors, agents and advisers (including, without limitation, counsel and financial advisers) and each of their respective heirs, successors and assigns.

 

“Issuers Annual Fee” means the Issuer’s annual administration fee determined and payable in the amounts and at the times specified in Section 3.3 hereo.

 

“Material Adverse Effect” shall have the meaning set forth in the Master Indenture (as in effect on the date hereof).

 

“Member” means the parties to the Joint Exercise Agreement and any political subdivision that has been designated in the past, or from time to time in the future is designated, as a member of the Issuer pursuant to the Joint Exercise Agreement.

 

“Net Bond Proceeds” shall have the meaning ascribed to such term in the Code.

 

“Nonpurpose Investment” shall have the meaning ascribed to such term in the Code.

 

“Ordinary Services” and “Ordinary Expenses” means those services normally rendered or those expenses normally incurred, as applicable, by a trustee under instruments similar to the Trust Indenture prior to the occurrence of an event of default, including without limitation, fees and expenses of the Bond Trustee as Paying Agent and bond registrar, and as custodian of the Funds under the Trust Indenture.

 

“Person” means an individual, partnership, corporation, limited liability company, association, trust, unincorporated organization, or a government or agency or political subdivision thereof.

 

“Proceeds” means the Sale Proceeds and Investment Proceeds of the Series 2021 Bonds.

 

3

 

“Project Costs” means the cost of acquisition, construction, reconstruction, renovation, rehabilitation, improvement and expansion of a Project, including the cost of the acquisition of all land, rights-of-way, property rights, leasehold interests, easements and interests, the cost of all machinery and equipment, financing charges, interest prior to and during construction and for one year after completion of construction whether or not capitalized, necessary reserve funds, cost of estimates and of engineering and legal services, plans, specifications, surveys, estimates of cost and of revenue, other expenses necessary or incident to determining the feasibility and practicability of acquiring, constructing, reconstructing, improving and expanding the facilities of a Project, administrative expense and such other expense as may be necessary or incident to the acquisition, construction, reconstruction, improvement and expansion thereof, the placing of the same in operation and the financing or refinancing of a Project, including the refunding of any outstanding obligations, mortgages or advances issued, made or given by any Person for any of the aforementioned costs, and any other cost permitted to be paid out of proceeds of the Bonds by the Act; provided, however, that Issuance Costs are not Project Costs.

 

“Sale Proceeds” means all amounts already or constructively received from the sale of the Series 2021 Bonds, including amounts used to pay underwriter’s discount or compensation.

 

“Sponsor” means the National League of Cities, the National Association of Counties, the Wisconsin Counties Association, the League of Wisconsin Municipalities, and any other Person that holds itself out, or is identified by the Issuer or as an organization sponsoring the Issuer.

 

“Tenant Leases” means those subleases currently in existence or entered into hereinafter, by and between any Borrower and sublessees of all or any portion of a Project.

 

Section 1.2.    Interpretation. In this Loan Agreement:

 

(a)    The terms “hereby”, “hereof’, “hereto”, “herein”, “hereunder” and any similar terms, as used in this Loan Agreement, refer to this Loan Agreement, and the term “hereafter” means after, and the term “heretofore” means before, the date of this Loan Agreement.

 

(b)    Words of the masculine gender mean and include correlative words of the feminine and neuter genders and words importing the singular number mean and include the plural number and vice versa.

 

(c)    Words importing persons include firms, associations, partnerships (including limited partnerships), trusts, corporations and other legal entities, including public bodies, as well as natural persons.

 

(d)    Any headings preceding the texts of the several Articles and Sections of this Loan Agreement, and any table of contents appended to copies hereof, shall be solely for convenience of reference and shall not constitute a part of this Loan Agreement, nor shall they affect its meaning, construction or effect.

 

(e)    Nothing contained in this Loan Agreement shall be construed to cause any Borrower to become the agent for the Issuer or the Bond Trustee for any purpose whatsoever, nor shall the Issuer or the Bond Trustee be responsible for any shortage, discrepancy, damage, loss or destruction of any part of a Project wherever located or for whatever cause.

 

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(f)    All approvals, consents and acceptances required to be given or made by any person or party hereunder shall be at the reasonable discretion of the party whose approval, consent or acceptance is required, except to the extent otherwise specified herein.

 

(g)    All notices to be given hereunder shall be given in writing within a reasonable time unless otherwise specifically provided.

 

(h)    This Loan Agreement shall be governed by and construed in accordance with the applicable laws of the State.

 

(i)    If any provision of this Loan Agreement shall be ruled invalid by any court of competent jurisdiction, the invalidity of such provision shall not affect any of the remaining provisions hereof.

 

ARTICLE 2
REPRESENTATIONS AND WARRANTIES

 

Section 2.1.    Representations by the Issuer. The Issuer represents that:

 

(a)    The Issuer is a joint powers commission under the Act, the “commission” under Section 66.0304 of the Wisconsin Statutes, and a unit of government and body corporate and politic created and validly existing under the laws of the State; and has full power and authority under the Act to adopt the Resolution approving the Series 2021 Bonds and the Issuer Financing Documents; to enter into, perform its obligations under, and exercise its rights under the Issuer Financing Documents; and when executed and delivered by the respective parties thereto, the Issuer Financing Documents will constitute the legal, valid and binding obligations of the Issuer enforceable in accordance with their respective terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium and other laws relating to or affecting creditors’ rights, by the application of equitable principles, by the exercise of judicial discretion in appropriate cases and by the limitation on legal remedies against joint powers commissions or governmental units of the State.

 

(b)    By official action of the Issuer prior to or concurrently herewith, the Issuer has authorized and approved the execution and delivery of the Issuer Financing Documents and the consummation by the Issuer of the transactions contemplated thereby.

 

(c)    To the knowledge of the Issuer, there are no actions, suits, proceedings, inquiries, or investigations, at law or in equity, before or by any court, governmental agency, public board or body, pending against the Issuer seeking to restrain or enjoin the sale or issuance of the Series 2021 Bonds, or in any way contesting or affecting any proceedings of the Issuer taken concerning the sale thereof, the pledge or application of any moneys or security provided for the payment of the Bonds, in any way contesting the validity or enforceability of the Issuer Financing Documents or contesting in any way the existence or powers of the Issuer relating to the authorization, issuance and sale of the Bonds.

 

(d)    The execution and delivery by the Issuer of the Issuer Financing Documents and compliance with the provisions on the Issuer’s part contained therein will neither (i) conflict with nor constitute a material breach of or default under any law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the Issuer is a party or is otherwise subject, nor (ii) result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the properties or assets of the Issuer under the terms of any such law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument, except as provided by the Issuer Financing Documents.

 

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No Issuer Indemnified Person (including any Issuer Indemnified Person who executes any certificate in connection with the Series 2021 Bonds that restates or certifies as to the truth and accuracy thereof) shall be individually liable for the breach by the Issuer of any representation or covenant contained in this Loan Agreement or the Trust Indenture.

 

Section 2.2.    Representations by each Borrower. Each Borrower represents and warrants to the Issuer that, as of the date of execution of this Loan Agreement and as of the date of delivery of the Series 2021 Bonds to the initial purchasers thereof (such representations and warranties to remain operative and in full force and effect regardless of the issuance of the Series 2021 Bonds or any investigations by or on behalf of the Issuer or the results thereof):

 

(a)    Each Borrower has been duly organized, validly exists and is in good standing under the laws of its state of organization, has full legal right, power and authority to enter into this Loan Agreement and the other Borrower Financing Documents, and to carry out and consummate all transactions contemplated hereby and by the Borrower Financing Documents, and by proper organizational action has duly authorized the execution, delivery and performance of this Loan Agreement and the Borrower Financing Documents.

 

(b)    The officers of each Borrower executing this Loan Agreement and the Borrower Financing Documents is duly and properly in office and fully authorized to execute the same.

 

(c)    This Loan Agreement and the Borrower Financing Documents have been duly authorized, executed and delivered by each Borrower party thereto.

 

(d)    (i) This Loan Agreement and the Borrower Financing Documents, when assigned to the Bond Trustee pursuant to the Trust Indenture, will constitute the legal, valid and binding agreements of each Borrower party thereto enforceable against each such Borrower by the Bond Trustee in accordance with their terms, including, without limitation, by the Bond Trustee for the benefit of the Owners of the Bonds, and (ii) the Unassigned Rights constitute the legal, valid, and binding agreements of each Borrower enforceable against each Borrower (A) by the Issuer in its own right, or (B) in the case of the rights of any Issuer Indemnified Person (including, without limitation, the right of any Issuer Indemnified Person to indemnification and immunity from liability), by such Issuer Indemnified Person in his, her or its own right in accordance with their respective terms; except in each case as enforcement may be limited by bankruptcy, insolvency or other laws affecting the enforcement of creditors’ rights generally, by the application of equitable principles regardless of whether enforcement is sought in a proceeding at law or in equity and by public policy.

 

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(e)    The execution and delivery of this Loan Agreement and the Borrower Financing Documents, the consummation of the transactions herein and therein contemplated and the fulfillment of or compliance with the terms and conditions hereof and thereof, will not conflict with or constitute a violation or breach of or default (with due notice or the passage of time or both) under the organizational documents of any Borrower, any applicable law or administrative rule or regulation, or any applicable court or administrative decree or order, or any trust indenture, mortgage, deed of trust, loan agreement, lease, contract or other agreement or instrument to which such Borrower is a party or by which it or its properties are otherwise subject or bound, or result in the creation or imposition of any lien, charge or encumbrance of any nature whatsoever upon any of the property or assets of such Borrower, which conflict, violation, breach, default, lien, charge or encumbrance might have consequences that would materially and adversely affect the consummation of the transactions contemplated by this Loan Agreement or the Borrower Financing Documents, or the financial condition, assets, properties or operations of such Borrower.

 

(f)    No consent or approval of any bond trustee or holder of any indebtedness of any Borrower or any guarantor of indebtedness of or other provider of credit or liquidity of or to such Borrower, and no consent, permission, authorization, order or license of, or filing or registration with, any governmental authority (except with respect to any state securities or “blue sky” laws) is necessary in connection with the execution and delivery of this Loan Agreement or the Borrower Financing Documents, or the consummation of any transaction herein or therein contemplated, or the fulfillment of or compliance with the terms and conditions hereof or thereof, except as have been obtained or made and as are in full force and effect.

 

(g)    There is no action, suit, proceeding, inquiry or investigation, before or by any court or federal, state, municipal or other governmental authority, pending, or to the knowledge of any Borrower, after reasonable investigation, threatened, against or affecting any Borrower or the assets, properties or operations of any Borrower which, if determined adversely to any Borrower or its interests, would have a material adverse effect upon the consummation of the transactions contemplated by, or the validity of, this Loan Agreement or the Borrower Financing Documents, or upon the financial condition, assets, properties or operations of any Borrower, and no Borrower is in default (and no event has occurred and is continuing which with the giving of notice or the passage of time or both could constitute a default) with respect to any order or decree of any court or any order, regulation or demand of any federal, state, municipal or other governmental authority, which default might have consequences that would materially and adversely affect the consummation of the transactions contemplated by this Loan Agreement or the Borrower Financing Documents, or the financial condition, assets, properties or operations of any Borrower. All tax returns (federal, state and local) required to be filed by or on behalf of each Borrower have been filed, and all taxes shown thereon to be due, including interest and penalties, except such, if any, as are being actively contested by any Borrower in good faith, have been paid or adequate reserves have been made for the payment thereof which reserves, if any, are reflected in the audited financial statements described therein. Each Borrower enjoys the peaceful and undisturbed possession of all of the premises upon which it is operating its facilities.

 

(h)    No written information, exhibit or report furnished to the Issuer by any Borrower in its application for financing or by the Borrower or its representatives in connection with the negotiation of this Loan Agreement or the Borrower Financing Documents, regardless of whether the Issuer is a party thereto (including, without limitation, any financial statements, if any, whether audited or unaudited, and any other financial information provided in connection therewith) contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the representation and warranty in this Section 2.2(h) is made only to the Issuer and may not be relied upon by any other Person.

 

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ARTICLE 3
THE LOAN

 

Section 3.1.    Loan Clauses.

 

(a)    Subject to the conditions and in accordance with the terms of this Loan Agreement, the Issuer agrees (i) to issue the Series 2021 Bonds and cause the Bond Trustee to deposit such amounts in accordance with the terms of the Trust Indenture and (ii) to loan the proceeds of the Series 2021 Bonds to the Borrowers in exchange for loan payments equal to the principal and interest due on the Bonds on each Interest Payment Date and Principal Payment Date. Concurrently, with the sale of the Series 2021 Bonds and to further evidence the Borrowers’ joint and several obligation to make loan payments under this Loan Agreement, the Borrowers have executed and delivered the Borrower Financing Documents.

 

(b)    The Loan shall be made available at the time of delivery of the Series 2021 Bonds and receipt of payment therefor by the Issuer against receipt by the Bond Trustee of the Master Indenture Notes duly executed and delivered to evidence the pecuniary indebtedness of the Borrowers hereunder and the security interest of the Bond Trustee in the trust estate pledged under the Master Indenture. As and for the Loan, the Issuer shall apply the proceeds of the Series 2021 Bonds as provided in the Trust Indenture on the terms and conditions therein prescribed. Each Borrower agrees that it will use all of the proceeds of the Series 2021 Bonds for the 2021 Project.

 

(c)    On the Business Day immediately prior to any date on which principal or Redemption Price of, or interest on, the Bonds is due, if insufficient moneys are then on deposit in the Debt Service Fund and available therefor, the Borrowers shall, prior to 10:00 a.m. New York City time on such date, pay (or cause the Master Trustee to pay in accordance with the Master Indenture) to the Bond Trustee for deposit in the Debt Service Fund the amount necessary (in immediately available funds, as necessary) for the payment of such principal, interest, and premium, if any, due on such date. In addition, the Borrowers shall pay or cause the Master Trustee to pay to the Bond Trustee, as and when the same shall become due, all other amounts due under the General Financing Documents, together with interest thereon at the then applicable rate as set forth herein.

 

(d)    The Borrowers shall have the option to prepay their payment obligations hereunder in whole or in part at the times and in the manner provided in Article VI hereof and in accordance with the Trust Indenture. The Borrowers hereby agree to prepay their payment obligations hereunder in the amount required to effect a redemption (at the applicable Redemption Price) of the Bonds in whole or in part at the times and in the manner provided in Article VI hereof and in accordance with the Trust Indenture.

 

(e)    At their option, to be exercised on or before the forty-fifth (45th) day next preceding the date any Bonds are to be redeemed from mandatory Sinking Fund Payments, provided no Event of Default has occurred and is continuing, the Borrowers may deliver to the Bond Trustee Bonds which are subject to mandatory Sinking Fund Payment redemption in an aggregate principal amount not in excess of the principal amount of Bonds to be so redeemed on such date. Each Bond so delivered shall be credited by the Bond Trustee at 100% of the principal amount thereof against the obligation of the Borrowers to make the next payment with respect to principal on the Bonds.

 

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(f)    If the Bond Trustee has not received payment by Noon, New York City time, on the Business Day prior to the date on which principal or Redemption Price of or interest on the Bonds is due, the Bond Trustee shall immediately make oral and facsimile demand to the Master Trustee for such amount with overnight confirmation.

 

(g)    If the amounts in the applicable account of the Debt Service Reserve Fund are not at the level of the Senior DSRFR and the Subordinate Class A DSRFR, as applicable, the Borrowers shall or shall cause the Master Trustee, on or before the fifteenth (15th) day of the month next following the date the Borrower Representative is notified of such deficiency, to deposit with the Bond Trustee sufficient moneys to meet the Senior DSRFR and the Subordinate Class A DSRFR under the Trust Indenture. No withdrawal from the Debt Service Reserve Fund to make up for a deficiency in the Debt Service Fund shall be deemed to cure any failure by the Borrowers to pay or cause to be paid the amounts required by Section 3.1(c) hereof when due.

 

Section 3.2.    Other Amounts Payable and Other Obligations.

 

(a)    Each Borrower hereby further expressly agrees to pay or cause to be paid by the Master Trustee in accordance with the Master Indenture an amount equal to (i) the initial and annual fees of the Bond Trustee for the Ordinary Services of the Bond Trustee rendered and its Ordinary Expenses incurred under the Trust Indenture, including its reasonable fees and expenses as Registrar and in connection with preparation of new Bonds upon exchanges or transfers, and the reasonable fees and expenses of Bond Trustee’s counsel, (ii) the reasonable fees and expenses of the Bond Trustee, and any Paying Agents on the Bonds for acting as such as provided in the Trust Indenture, including the reasonable fees and expenses of its and their counsel, (iii) the reasonable fees and expenses of the Bond Trustee for Extraordinary Services rendered by it and Extraordinary Expenses incurred by it under the Trust Indenture, including reasonable counsel fees and expenses, (iv) the fees and expenses of the Issuer, including the fees and expenses of its counsel, incurred by the Issuer as a result of an Event of Default or otherwise enforcing this Loan Agreement, and (v) any other sums required to be paid by any Borrower under the terms of the Trust Indenture and the Master Indenture Notes. Scheduled fees and expenses shall be paid on or before the scheduled due date. Unscheduled fees and expenses will be paid on the specified due date, or if the due date is fewer than 30 days from receipt, within 30 days of receipt.

 

(b)    The Borrowers agree to pay or cause to be paid all amounts payable by it in connection with compliance with Section 148 of the Code, including any expenses of the Issuer incurred in connection with rebate compliance pursuant to the Trust Indenture and the Master Indenture at the time and in the manner therein provided.

 

(c)    The Borrowers agree to fund, replenish and maintain all amounts required to be funded, replenished and maintained in the Funds and Accounts established in and as required by Article V of the Trust Indenture.

 

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(d)    The Borrowers agree to perform all obligations required to be performed by them under the Trust Indenture in accordance with its terms.

 

Section 3.3.    Additional Payments. In addition to the payments set forth in Section 3.1 and 3.2 hereof, the Borrowers, jointly and severally, shall also pay to the Issuer or to the Bond Trustee, as the case may be, “Additional Payments,” as follows:

 

(a)    All taxes and assessments of any type or character charged to the Issuer or to the Bond Trustee affecting the amount available to the Issuer or the Bond Trustee from payments to be received hereunder or in any way arising due to the transactions contemplated hereby (including taxes and assessments assessed or levied by any public agency or governmental issuer of whatsoever character having power to levy taxes or assessments) but excluding franchise taxes based upon the capital and/or income of the Bond Trustee and taxes based upon or measured by the net income of the Bond Trustee; provided, however, that the Borrower Representative shall have the right to protest any such taxes or assessments and to require the Issuer or the Bond Trustee, at the Borrowers’ expense, to protest and contest any such taxes or assessments levied upon them and that the Borrowers shall have the right to withhold payment of any such taxes or assessments pending disposition of any such protest or contest unless such withholding, protest or contest would adversely affect the rights or interests of the Issuer or the Bond Trustee;

 

(b)    The fees and expenses of such accountants, consultants, attorneys and other experts as may be engaged by the Issuer or the Bond Trustee in connection with the performance of its duties hereunder or in the Trust Indenture and to prepare audits, financial statements, reports, opinions or provide such other services required under this Loan Agreement, the Borrower Financing Documents or the Trust Indenture, including, but not limited to, any audit or inquiry by the Internal Revenue Service or any other governmental body; and

 

(c)    The fees and expenses of the Issuer, including the Issuer’s Annual Fee, or any agent or attorney selected by the Issuer to act on its behalf in connection with this Loan Agreement, the Borrower Financing Documents, the Bonds or the Trust Indenture, including, without limitation, any and all expenses incurred in connection with the authorization, issuance, sale and delivery of any such Bonds or in connection with any litigation, investigation, inquiry or other proceeding which may at any time be instituted involving this Loan Agreement, the Borrower Financing Documents, the Bonds or the Trust Indenture or any of the other documents contemplated thereby, or in connection with the reasonable supervision or inspection of any Borrower, its properties, assets or operations or otherwise in connection with the administration of this Loan Agreement and the Borrower Financing Documents.

 

Such Additional Payments shall be billed to the Borrowers by the Issuer or the Bond Trustee from time to time, together with a statement certifying that the amount billed has been incurred or paid by the Issuer or the Bond Trustee for one or more of the above items. After such a demand, amounts so billed shall be paid by the Borrowers within thirty (30) days after receipt of the bill by the Borrower. Notwithstanding the foregoing, the Issuer may, but shall not be required to, submit a bill to the Borrowers for payment of the Issuer’s Annual Fee. The Issuer’s Annual Fee shall be paid in semiannual installments on the six (6) month anniversary of the Closing Date and subsequently on the same day every sixth (6th) month thereafter. The amount of each semiannual payment shall be determined by multiplying (i) the principal amount of the Series 2021 Bonds Outstanding as of the last day of the calendar month preceding the installment payment due date by (ii) 0.03 percent (3 basis points) by (iii) one half (1/2). Any invoice furnished to any Borrower by the Issuer or the Bond Trustee pursuant to this Section 3.3 shall be deemed to constitute a written notice under Section 5.1(b) sufficient to cause the 30-day period specified in said Section 5.1(b) to commence.

 

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Section 3.4.    Manner of Payment. The payments provided for in Section 3.1 hereof shall be made by any reasonable method providing immediately available funds at the time and place of payment directly to the Bond Trustee for the account of the Issuer and shall be deposited in the Debt Service Fund or the Debt Service Reserve Fund, as appropriate. The additional payments provided for in Section 3.2 shall be made in the same manner directly to the entitled party or to the Bond Trustee for its own use or disbursement to the Paying Agents. To the extent the Borrowers do not pay any amount owed hereunder by its due date, the Bond Trustee shall immediately notify the Master Trustee and request payment from funds available under the Master Indenture in accordance with its items.

 

Section 3.5.    Obligation Unconditional. The obligations of the Borrowers under this Loan Agreement and the other Borrower Financing Documents shall be absolute and unconditional, irrespective of any defense or any rights of setoff, recoupment or counterclaim it might otherwise have against the Issuer or the Bond Trustee. The Borrowers will not suspend or discontinue any such payment or terminate this Loan Agreement (other than in the manner provided for hereunder) for any cause, including, without limiting the generality of the foregoing, any acts or circumstances that may constitute failure of consideration, failure of title, or commercial frustration of purpose, or any damage to or destruction of the Project, or the taking by eminent domain of title to or the right of temporary use of all or any part of the Project, or any change in the tax or other laws of the United States, the State or any political subdivision of either thereof; or any failure of the Issuer or the Bond Trustee to perform and observe any agreement or covenant, whether expressed or implied, or any duty, liability or obligation arising out of or connected with the Borrower Financing Documents.

 

Section 3.6.    Usury. Notwithstanding any provision of the General Financing Documents to the contrary, it is hereby agreed by and between the Issuer and each Borrower that in no event (including without limitation the acceleration of maturity of the Bonds or the redemption of the Bonds pursuant to the General Financing Documents) shall the amount of loan payments contracted for, charged, received, reserved or taken in connection with the loan arrangements made hereunder, if and to the extent such loan payments (or a portion thereof) are treated as interest for purposes of State law (“Interest”), exceed the amount of interest which could have been contracted for, charged, reserved, received or taken at the Highest Lawful Rate. For purposes of this Section, to the maximum extent permitted by law, the rate of interest attributable to loan payments shall be determined by: (i) spreading payments over the term of this loan payments; (ii) if appropriate, characterizing payments as a premium for the privilege of making an optional prepayment of an obligation; and (iii) giving effect to the provisions of any other General Financing Document which require the cancellation or refunding of Interest. Excess interest, if any after the application of the foregoing provisions, provided for in the General Financing Documents shall be cancelled automatically as of the date of such acceleration, redemption or purchase or, if theretofore paid, shall be credited to future loan payments or if all loan payments have been, or would thereby be, paid in full, refunded to the Borrowers (provided, however, that, so long as the Master Indenture remains in full force and effect, any refund shall be paid to the Master Trustee for deposit to the Revenue Fund for application as revenues in accordance with the Master Indenture). However, in lieu of such cancellation or refund, the Bond Trustee shall (if requested by the Holders of all of the Outstanding Bonds affected), to the extent permitted by applicable law, delay the date on which any payment is due hereunder or under any of the General Financing Documents until the earliest Business Day that will result in the payment of Interest at a rate not in excess of the Highest Lawful Rate.

 

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Section 3.7.    Issuance of Additional Bonds.

 

(a)    If the Borrowers are not in default hereunder or under the Borrower Financing Documents, the Issuer may, in its absolute discretion, on written request of an Authorized Representative of the Borrower, from time to time, issue additional Senior Bonds and additional Subordinate Bonds (or one or the other at the same or different times) on a parity with the respective Class of Bonds under which they are designated, in aggregate amounts as requested by the Borrower, but only for the purposes and upon the terms and conditions stated herein, in the Trust Indenture and in the Act. Additional Bonds shall be issued only for the purposes permitted in Article II of the Trust Indenture. In each case, the costs of the issuance and sale of the Additional Bonds and capitalized interest for any construction period and other costs reasonably related to the financing as shall be agreed upon by the Borrowers and the Issuer shall be included in the cost thereof.

 

(b)    No Additional Bonds shall be issued unless (1) the terms of such Additional Bonds, the purchase price to be paid therefor and the manner in which the proceeds therefrom are to be disbursed shall have been approved in writing by the Borrower Representative and the Issuer, (2) the Borrowers and the Issuer shall have entered into supplements to the General Financing Documents reaffirming the representations and covenants of the Issuer and the Borrowers therein contained, describing the completion, restoration, additions, extensions, improvements or facilities, if any, to be acquired and constructed or performed and making provisions for the conveyance, transfer and securing of such real property or interests therein as may be necessary or required therefor, and adjusting the aggregate amount payable hereunder and delivering an additional Master Indenture Note or Master Indenture Notes to an amount sufficient to pay, as and when the same matures and becomes due, the principal or Redemption Price, if any, of and interest on such Additional Bonds and other amounts due under the General Financing Documents, and (3) the Issuer and the Bond Trustee shall have entered into a Supplemental Indenture authorizing the issuance of such Additional Bonds and setting forth the terms thereof and describing or otherwise identifying any real or personal property to be secured by the Trust Indenture in connection with the issuance of such Additional Bonds, and the Issuer shall have otherwise complied with the provisions of the Trust Indenture and the Act with respect to the issuance of such Additional Bonds.

 

Section 3.8.    Effective Date and Term.

 

(a)    This Loan Agreement shall become effective upon its execution and delivery by the parties hereto, shall remain in full force from such date and, subject to the provisions hereof (including particularly Articles V and VI), and shall expire on such date as the Trust Indenture shall be discharged and satisfied in accordance with the provisions of Article 12 thereof. The Borrower’s obligations under Sections 3.13, 5.3, 7.10 and 7.11 hereof, however, shall survive the expiration of this Loan Agreement in accordance with the provisions of said Section.

 

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(b)    Within sixty (60) days of such expiration, the Issuer (subject to Section 7.13 hereof) shall deliver to the Borrower Representative any documents and take or cause the Bond Trustee, at the Borrower’s expense, to take any such reasonable actions as may be necessary to effect the cancellation, release and satisfaction of the Trust Indenture and the General Financing Documents.

 

Section 3.9.    Security for Borrowers Performance.

 

(a)    This Loan Agreement represents the joint and several general obligation of the Borrowers and the obligations created hereunder are evidenced in part by the Master Indenture Notes issued pursuant to the Master Indenture. The Master Indenture Notes are the joint and several general obligations of each Member of the Obligated Group and are secured by such mortgages, liens and security interests as are provided under the Master Indenture. The full faith and credit of each Member of the Obligated Group is pledged to pay all sums due or to become due hereunder and under the Master Indenture Notes. The obligations hereunder are secured by the terms and provisions of the Master Indenture. This Loan Agreement constitutes a Related Financing Document, as defined in the Master Indenture (as in effect on the date hereof).

 

Section 3.10.    Special Services Covenant. The obligations hereunder are secured by the terms and provisions of the Master Indenture and the Borrowers shall continue to operate the 2021 Project for its original intended purpose as long as any Bonds remain Outstanding; provided, however, the Issuer, upon review of such facts as it deems relevant, may, from time to time, allow any Borrower to provide alternative services which provide public benefit to the applicable Project Jurisdiction and its residents, or deem this special services covenant to be satisfied in whole or in part.

 

Section 3.11.    Agreement to Construct 2021 Project; Completion Certificate.

 

(a)    The Borrowers shall cause the 2021 Project to be acquired, constructed and improved with due diligence and pursuant to the requirements of the applicable laws of the State in all material respects.

 

(b)    The Borrowers shall deliver to the Bond Trustee within 90 days after the final completion of each component of the 2021 Project a certificate (the “Completion Certificate”) of the Borrower Representative to the effect that:

 

(i)    Such component of the 2021 Project has been completed substantially in accordance with the plans and specifications for such component of the 2021 Project prepared by an architect, as then amended, and the date of completion;

 

(ii)    The cost of such component of the 2021 Project has been fully paid for and no claim or claims exist against any Borrower or against the 2021 Project out of which a lien based on furnishing labor or material exists or might ripen; provided, however, there may be excepted from the foregoing statement any claim or claims out of which a lien exists or might ripen in the event that a Borrower intends to contest such claim or claims in accordance with this Loan Agreement, in which event such claim or claims shall be described; provided, further, that it shall be stated that moneys are on deposit in the Series 2021 Construction Account sufficient to make payment of the full amount that might in any event be payable in order to satisfy such claim or claims; provided, further, that there may also be excepted from the foregoing statement any claim that has been insured over pursuant to an endorsement to any title insurance;

 

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(iii)    All permits, certificates and licenses necessary for the occupancy and use of such component of the 2021 Project have been obtained and are in full force and effect; and

 

(iv)    Indicating if such Completion Certificate is for the final component of the 2021 Project (the “Final Completion Certificate”).

 

Section 3.12.    Requisition. The Borrowers shall be entitled to disbursements of moneys in the Series 2021 Construction Account to pay the costs related to the 2021 Project, including any development fees due to the Manager (as defined in the Master Indenture). Disbursements from the Series 2021 Construction Account shall be made, subject to compliance with the disbursement requirements set forth in Exhibit A, only (i) upon the Bond Trustee’s receipt of a requisition in the form attached hereto as Exhibit A-1, and (ii) so long as an Event of Default under this Loan Agreement or any of the other General Financing Documents shall not have occurred and be continuing unless such Event of Default shall have been waived pursuant to the terms hereof. The Bond Trustee shall keep a record of all requisitions submitted by the Borrower.

 

Section 3.13.    Borrowers Required to Pay Costs of the 2021 Project if Construction Accounts Insufficient. If the moneys in the Series 2021 Construction Account and the proceeds of the Series 2021 Bonds available for payment of the costs of the 2021 Project (collectively, the “Available Series 2021 Construction Proceeds”) are not sufficient to pay the costs thereof in full, the Borrowers agree to complete the acquisition, construction, renovation, equipping and installation of the 2021 Project and to pay all that portion of costs of the 2021 Project as may be in excess of the Available Series 2021 Construction Proceeds. The Issuer does not make any warranty, either express or implied, that the Available Series 2021 Construction Proceeds will be sufficient to pay all the costs which will be incurred in that connection. The Borrowers agrees that if, after exhaustion of the Available Series 2021 Construction Proceeds, any Borrower pays any portion of the costs of the 2021 Project pursuant to the provisions of this Section, it will not be entitled to any reimbursement therefor from the Issuer or from the Bond Trustee or from the owners of any of the Series 2021 Bonds, nor will it be entitled to any diminution of the loan payments payable under the Master Obligations. The obligation of the Borrowers to complete the construction of the 2021 Project will survive any termination of this Loan Agreement.

 

Section 3.14.    Appointment of Borrower Representative; Authorization of Borrower Representative; Cessation of Status as Borrower Representative.

 

(a)    Sky Harbour Capital, LLC, as the Group Representative (as defined in the Master Trust Indenture) under the Master Indenture, is hereby designated as the Borrower Representative and agrees to assume the responsibilities of Borrower Representative pursuant to this Loan Agreement.

 

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(b)    Any provision herein to the contrary notwithstanding and subject to any applicable requirements of state or federal law, the Borrower Representative is authorized to bind the Borrowers with respect to any obligation issued or delivered pursuant to a Supplemental Indenture if the Supplemental Indenture so states, without further authorization from any other Borrower. Any such authorization is to be construed broadly in favor of the authorization of the Borrower Representative.

 

(c)    Each Borrower hereby irrevocably appoints the Borrower Representative as its agent and true and lawful attorney in fact and grants to the Borrower Representative full and exclusive power to act for the Borrower to (a) as applicable, negotiate and determine the terms of, approve, execute, deliver, perform, amend, waive provisions of, grant consents related to, extend and terminate: loan agreements, bond indentures, bond purchase agreements related to liquidity or insurance, disclosures, and all such other agreements and instruments as are reasonably related to entering into and managing the specific transactions represented by such Supplemental Indentures; (b) negotiate and determine the terms of, approve, execute, deliver, perform, amend, waive provisions of, grant consents related to, extend and terminate certificates and other undertakings as are reasonably necessary or appropriate to entering into and managing the specific transactions represented by such Supplemental Indentures; and (c) manage, oversee, direct, authorize, control, and implement (i) all Outstanding Bonds and financial relationships related in any manner to such Bonds, including, but not limited to: credit support and liquidity facilities; (ii) swaps, hedges, interest rate exchanges and any other derivative instruments of any classification; (iii) related insurance products and policies; (iv) debt management policy setting and determinations such as the mix of fixed and variable debt and similar determinations; (v) allocation, calculations, accounting for, collections from Borrowers, and payment of debt service, discounts, premiums, costs of issuance and other reasonable costs and fees related to the Bonds, including termination, amendment and similar fees; (vi) planning, authorization and implementation of conversions, refunding, defeasances and other debt management or modification activities; (vii) all waivers, consents or amendments to any document or agreement, directly or indirectly, related to one or more of the Bonds, the Trust Indenture and any Supplemental Indenture; and (viii) direction of agents and control, direction and management of third party relationships (such as trustees, paying agents, registrars, issuing authorities, underwriters, remarketing agents, swap counterparties, financial and other advisors, and counsel) related to the Bonds or the issuance of Bonds. The authority granted in this Section shall be and remain irrevocable until and unless any Borrower is permitted to withdraw from this Loan Agreement in accordance with the terms hereof.

 

(d)    In the event that the Borrower Representative ceases to be the Group Representative under the Master Trust Indenture, the Borrowers shall designate a Borrower to assume all of the responsibilities assigned hereunder to the Borrower Representative and shall send written notice of such designation to the Bond Trustee.

 

(e)    Any Borrower Representative, while continuing as a Borrower, may cease to act as the Borrower Representative by giving the other Borrowers and the Bond Trustee at least 30 days’ prior written notice of its intention to do so, so long as a successor has been appointed.

 

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(f)    Each Borrower agrees that the Borrower Representative shall be entitled to take all action it deems necessary or appropriate, including, without limitation, the institution of any legal or other proceedings, to enforce each Borrower’s obligations hereunder.

 

Section 3.15.    Cessation of Status as a Borrower. The Each Borrower covenants that it will not take any action which would cause it to cease to be a Borrower unless such Borrower has withdrawn from the Obligated Group in accordance with Section 10.3 of the Master Indenture.

 

ARTICLE 4
COVENANTS OF THE BORROWERS

 

Section 4.1.    Compliance with Master Indenture. Each Borrower covenants and agrees that, during the term of this Loan Agreement, it will at all times comply in all material respects with the requirements of the Master Indenture.

 

Section 4.2.    Continuing Disclosure. Each Borrower hereby covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Agreement, if and to the extent applicable and required. Notwithstanding any other provision of this Loan Agreement to the contrary, failure of the Borrowers to comply with the Continuing Disclosure Agreement shall not be considered an Event of Default; however, the Bond Trustee may (and, at the request of the holders of at least 25% aggregate principal amount in Outstanding Bonds, of the most senior Class of which Bonds remain Outstanding shall, but only to the extent the Bond Trustee has been tendered funds in an amount satisfactory to it or it has been otherwise indemnified from and against any loss, liability, cost or expense, including without limitation, fees and expense of its counsel and agents and additional fees and charges of the Bond Trustee) or any Bondholder may, take such actions as may be necessary and appropriate, including seeking specific performance by court order, to cause the Borrowers to comply with their obligations under this Section.

 

Section 4.3.    Records; Financial Reports. The financial reports required by Section 6.10 of the Master Indenture also shall be filed with the Bond Trustee and any Bondholder who is a registered Owner of at least $1,000,000 principal amount of Bonds and who requests such reports from each Member of the Obligated Group in writing. The Bond Trustee shall have no responsibility to review any such statements submitted to it. Each Borrower shall keep complete and accurate lists and other records containing all information necessary to reflect the use of proceeds of the Series 2021 Bonds and of each Series of Additional Bonds loaned to it pursuant to this Loan Agreement and from time to time upon request of the Issuer will furnish copies thereof to the Issuer.

 

Section 4.4.    Filing. Each Borrower shall at its own expense or the expense of other members of the Obligated Group join with other members of the Obligated Group to file financing statements with respect to the Master Indenture in accordance with the requirements of Section 6.10 of the Master Indenture.

 

Section 4.5.    Tax-Exempt Bonds Not to Become Taxable.

 

(a)    Each Borrower covenants and agrees that its use of the Proceeds of the Series 2021 Bonds will at all times satisfy the requirements of the Tax Certificate.

 

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(b)    Each Borrower will make such use of the proceeds of the Series 2021 Bonds and all other funds held by the Bond Trustee under the Trust Indenture or otherwise allocable to the Series 2021 Bonds, restrict the investment of such proceeds and other funds, and take such other and further action as may be required so that the Series 2021 Bonds will not constitute “arbitrage bonds” under Section 148(a) of the Code and the Regulations. In particular, but without limitation, each Borrower agrees to instruct the Bond Trustee with respect to investments in accordance with Section 5.5 of the Trust Indenture. Each Borrower agrees to pay all of the fees and expenses of a nationally recognized bond counsel, a certified public accountant and any other necessary consultant employed by such Borrower or the Issuer in connection with any of the requirements imposed by Section 5.5 of the Trust Indenture.

 

(c)    Each Borrower shall comply and shall cause the Borrower Representative to comply with the requirements of Section 148 of the Code as provided in the Master Indenture.

 

(d)    Each Borrower agrees to provide to the Bond Trustee, at such time as required by the Bond Trustee and as otherwise required by the Master Indenture, all information reasonably required by the Bond Trustee with respect to Nonpurpose Investments held under the Trust Indenture or otherwise.

 

(e)    Each Borrower covenants and agrees that the average maturity of the Series 2021 Bonds, taking into account the issue price of the various maturities of the Series 2021 Bonds, will not exceed 120 percent of the reasonably expected economic life of the 2021 Project, taking into account the respective cost of each item composing the 2021 Project. For purposes of the preceding sentence, the reasonably expected economic life of the 2012 Project shall be determined as of the later of (i) the date on which the Series 2021 Bonds are issued or (ii) the date on which the 2021 Project is placed in service (or expected to be placed in service). In addition, land shall not be taken into account in determining the reasonably expected economic life of the 2021 Project.

 

(f)    Each Borrower covenants and agrees not to take any action, or knowingly omit to take any action within its control, that, if taken or omitted, respectively, would cause the Series 2021 Bonds to be “federally guaranteed” within the meaning of section 149(b) of the Code and applicable regulations thereunder, except as permitted by section 149(b)(3) of the Code and such regulations.

 

(g)    Each Borrower hereby elects not to claim depreciation or an investment credit for federal income tax purposes with respect to any portion of the 2021 Project (or any other property financed with the Net Bond Proceeds of any Series 2021 Bonds). Each Borrower will take all actions necessary to make this election binding on all its successors in interest under the Ground Lease. This election shall be irrevocable. Furthermore, each Borrower covenants that no portion of the 2021 Project (or any other property financed with the Net Bond Proceeds of any Series 2021 Bonds) which is subject to the Mortgages will be removed upon the termination of the Ground Lease.

 

Section 4.6.    Permitted Indebtedness. Any Indebtedness incurred or assumed by any Borrower may be incurred or assumed only as permitted by the Master Indenture.

 

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Section 4.7.    Sale or other Disposition of 2021 Project. No Borrower shall sell, transfer, assign or otherwise dispose of any of the 2021 Project or any interest therein except in compliance with the terms and conditions of the Master Indenture.

 

Section 4.8.    Further Assurances and Corrective Instruments. The Issuer (subject to Section 7.13 hereof) and each Borrower agree that they will, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements hereto and such further instruments as may reasonably be required for correcting any inadequate or incorrect description of the Project or for carrying out the intention of or facilitating the performance of this Loan Agreement.

 

Section 4.9.    Covenant by Borrowers as to Compliance with Trust Indenture. Each Borrower covenants and agrees that it will comply with the provisions of the Trust Indenture with respect to such Borrower and that the Bond Trustee and the Bondholders shall have the power and authority provided in the Trust Indenture. Each Borrower further agrees to aid in the furnishing to the Issuer or the Bond Trustee of opinions that may be required under the Trust Indenture. Each Borrower covenants and agrees that the Bond Trustee shall be entitled to and shall have all the rights, including the right to enforce against such Borrower the provisions of the Borrower Financing Documents, pertaining to the Bond Trustee notwithstanding the fact that the Bond Trustee is not a party to the Borrower Financing Documents.

 

Section 4.10.    Assignment of Agreement or Master Indenture Notes. (a) The Borrowers may not assign its rights, interests or obligations hereunder or under the Master Indenture Notes or the Borrower Financing Documents, except as may be permitted pursuant to the Master Indenture.

 

(b)    The Issuer agrees that it will not knowingly assign or transfer any of the Borrower Financing Documents or the revenues and other receipts, funds and moneys to be received thereunder during the Term except to the Bond Trustee as provided in this Loan Agreement and the Trust Indenture.

 

Section 4.11.    Default Notification. The Borrower Representative shall deliver or cause to be delivered to the Issuer and the Bond Trustee at the same time such notices are required to be delivered to the Master Trustee all notices required to be delivered pursuant to Section 7.11 of the Master Indenture.

 

ARTICLE 5
EVENTS OF DEFAULT AND REMEDIES

 

Section 5.1.    Events of Default.

 

“Event of Default”, as used herein, shall mean any of the following events of which a Responsible Officer of the Bond Trustee has received actual written notice (provided that the Bond Trustee shall be deemed to have received written notice with respect to any event specified in subsection (a)), unless in each case cured by the Borrowers, whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or come about or be effected by operation of law or pursuant to or in compliance with any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body:

 

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(a)    if the Borrowers shall fail

 

(i)    to make or cause to be made any payment of principal, Redemption Price or interest pursuant to Sections 3.1(c) or 3.1(d) hereof or when due hereunder or under the terms of the Master Indenture Notes; or

 

(ii)    to make any deposit or other payment required to be made to the Bond Trustee hereunder prior to the earlier of (1) the 15th day following the due date of such deposit or payment in accordance with the terms hereof, or (2) the date on which any payment is required to be made by the Bond Trustee on the Bonds from any such amount; or

 

(b)    if the Borrowers shall fail to observe or perform any covenant or agreement contained in this Loan Agreement or any Company Financing Document, the Mortgage to which it is a party or the Master Indenture or the Ground Lease and such failure continues for a period of 30 days after written notice of such failure, requiring the same to be remedied, shall have been given by the Bond Trustee or the Issuer (with regards to the Unassigned Rights) to the Borrower, the giving of which notice shall be at the discretion of the Issuer or the Bond Trustee unless the Bond Trustee is requested in writing to do so by the Holders of at least 25% in aggregate principal amount of the Outstanding Bonds; provided, however, that if such observance or performance requires work to be done, actions to be taken, or conditions to be remedied, which by their nature cannot reasonably be done, taken or remedied within such 30-day period but can be done, taken or remedied within a reasonable period of time, no Event of Default shall be deemed to have occurred or to exist if, and so long as, the Borrowers shall commence such work, action or other remedy within such 30-day period and shall diligently and continuously prosecute the same to completion; or

 

(c)    if any warranty, representation, certification, financial statement or other information made or furnished to induce the Issuer to enter into this Loan Agreement or allow any Bonds to be issued, or made or furnished, at any time, in or pursuant to the terms of any Borrower Financing Document or the Ground Lease by the Group Representative or the Borrowers shall prove to have been false or misleading in any material respect when made or furnished and shall result in a Material Adverse Effect and, if capable of being cured, such misrepresentation shall continue uncured for thirty (30) or more days from the discovery thereof; provided that if the Borrowers commence efforts to cure such misrepresentation within such thirty (30) day period the Borrowers may continue to effect such cure of the misrepresentation and such misrepresentation shall not be deemed an Event of Default if the Borrowers are diligently pursuing the cure; or

 

(d)    if an Event of Default under the Master Indenture shall occur and is not waived or cured.

 

Section 5.2.    Remedies on Default.

 

(a)    Whenever any Event of Default shall have occurred, the Bond Trustee, or the Issuer where so provided herein, may take any one or more of the following actions:

 

(i)    One or more of the Master Indenture Notes and the corresponding obligations of the Borrowers hereunder may be accelerated or shall be accelerated in the same manner and subject to the same conditions as specified in Sections 8.1(b) and 8.1(c) of the Trust Indenture and, to the extent any Bond is accelerated, the corresponding Master Indenture Note shall be accelerated to the same extent.

 

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(ii)    The Issuer, without the consent of the Bond Trustee or any Bondholder, may proceed to enforce the obligations of the Borrowers to the Issuer in respect of the Unassigned Rights.

 

(iii)    The Bond Trustee may take whatever action at law or in equity it may have to collect the amounts then due and thereafter to become due, or to enforce the performance or observance of the obligations, agreements, and covenants of the Borrowers under the Borrower Financing Documents, including, to the extent permitted by applicable law, by mandamus or by the appointment of a receiver in equity with power to charge and collect rents, purchase price payments, and loan payments and to apply the revenues from the Project in accordance with such Borrower Financing Document.

 

(iv)    The Bond Trustee may exercise any and all rights it may have under the General Financing Documents, including, without limitation, the requirement that each Borrower obtain the prior written consent of the Bond Trustee to the taking of any action otherwise permitted by the General Financing Documents.

 

(b)    In the event that any Event of Default or any proceeding taken by the Issuer or by the Bond Trustee thereon shall be waived or determined adversely to the Issuer or the Bond Trustee, then the Event of Default shall be annulled and the Issuer, the Bond Trustee and the Borrowers shall be restored to their former rights hereunder, but no such waiver or determination shall extend to any subsequent or other default or impair any right consequent thereon.

 

(c)    Notwithstanding anything to the contrary in this Loan Agreement, the Issuer shall have no obligation to and instead the Bond Trustee may, without further direction from the Issuer, take any and all steps, actions and proceedings, to enforce any and all rights of the Issuer (other than the Unassigned Rights) under the Trust Indenture or this Loan Agreement, including, without limitation, the rights to enforce the remedies upon the occurrence and continuation of an Event of Default and the obligations of the Borrowers hereunder.

 

Section 5.3.    No Duty to Mitigate Damages. Unless otherwise required by law, neither the Issuer, the Bond Trustee nor any Bondholder shall be obligated to do any act whatsoever or exercise any diligence whatsoever to mitigate the damages to the Borrowers if an Event of Default shall occur.

 

Section 5.4.    Remedies Cumulative. No remedy herein conferred upon or reserved to the Issuer or the Bond Trustee is intended to be exclusive of any other available remedy or remedies but each and every such remedy shall be cumulative and shall be in addition to every remedy given under this Loan Agreement or now or hereafter existing at law or in equity or by statute. Delay or omission to exercise any right or power accruing upon any default or failure by the Issuer or the Bond Trustee to insist upon the strict performance of any of the covenants and agreements herein set forth or to exercise any rights or remedies upon default by the Borrowers hereunder shall not impair any such right or power or be considered or taken as a waiver or relinquishment for the future of the right to insist upon and to enforce, by injunction or other appropriate legal or equitable remedy, strict compliance by the Borrowers with all of the covenants and conditions hereof; or of the right to exercise any such rights or remedies, if such default by the Borrowers be continued or repeated.

 

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Section 5.5.    Notice of Default by Bond Trustee. Subject to Section 10.3(h) of the Trust Indenture, if the Bond Trustee has actual knowledge or actual or constructive notice of an Event of Default hereunder, the Bond Trustee shall within one Business Day deliver written notice of the same to the Holders and, except to the extent notice of the same has been delivered thereto by another Person (or was sent by such Person) to the Master Trustee, the Issuer, each Borrower and the Borrower Representative.

 

ARTICLE 6
PREPAYMENT PROVISIONS

 

Section 6.1.    Optional and Extraordinary Prepayment.

 

(a)    Each Borrower shall have, and is hereby granted, the option to prepay its obligations hereunder as a whole, or in part, at any time by delivering a written notice to the Bond Trustee in accordance with the Trust Indenture, with a copy to the Issuer, setting forth the amount to be prepaid, the amount of Bonds requested to be redeemed with the proceeds of such payment (to the extent authorized by and in the manner required by the Master Indenture and the Trust Indenture or any Supplemental Indenture authorizing the issuance of such Bonds), and the date on which such Bonds are to be redeemed. Such prepayment must be sufficient to provide moneys for the payment of interest and Redemption Price in accordance with the terms of the Bonds requested to be redeemed with such prepayment and all other amounts then due under the Borrower Financing Documents. In the event of any complete prepayment of the Borrowers’ obligations hereunder, the Borrowers shall, at the time of such prepayment, also pay or provide for the payment of all fees and expenses of the Issuer, the Bond Trustee and Paying Agent (including without limitation attorneys’ fees and expenses) accrued and to accrue through the final payment of all the Bonds. Any such prepayments shall be applied to the redemption of Bonds in the manner provided in Article VII of the Trust Indenture, and credited against payments due hereunder in the same manner.

 

(b)    The Borrower shall be required to prepay their loan payments in whole or in part to the extent and at the times necessary to effect, a mandatory redemption in the manner and at the times required by Article III of the Trust Indenture:

 

(c)    The Borrowers may prepay their loan payments in whole or in part to effect an extraordinary optional redemption to the extent, in the manner and at the times permitted pursuant to the Trust Indenture.

 

(d)    In any such case, the loan payment shall be a sum sufficient, together with other funds deposited with the Bond Trustee and available for such purpose, to redeem the Bonds called for the redemption under the Trust Indenture at the applicable Redemption Price, and with respect to any final payment of the Bonds all other amounts due under this Loan Agreement and the Master Indenture Notes.

 

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Section 6.2.    Notice of Prepayment. To exercise any options granted in this Article, or to consummate the acceleration of the loan payments as set forth in this Article, the written notice to the Bond Trustee and the Issuer shall be signed by an Authorized Representative of the Borrower Representative and shall specify therein the date of prepayment, which date shall be not less than thirty (30) days nor more than ninety (90) days from the date the notice is received by the Bond Trustee. A duplicate copy of any written notice hereunder shall also be filed with the Issuer by the Borrowers.

 

ARTICLE 7
GENERAL

 

Section 7.1.    Trust Indenture.

 

(a)    Moneys received from the sale of the Bonds and all loan payments made by the Borrowers and all other moneys received by the Issuer or the Bond Trustee under the General Financing Documents shall be applied solely and exclusively in the manner and for the purposes expressed and specified in the Master Indenture, the Trust Indenture and in the Bonds and as provided in this Loan Agreement.

 

(b)    Each Borrower shall have and may exercise all the rights, powers and authority given the Borrowers in the Trust Indenture and in the Bonds, and the Trust Indenture and the Bonds shall not be modified, altered or amended in any manner which adversely affects such rights, powers and Issuer or otherwise adversely affects the Borrowers without the prior written consent of each Borrower.

 

Section 7.2.    Benefit of and Enforcement by Bondholders. The Issuer and each Borrower agree that this Loan Agreement is executed in part to induce the purchase by others of the Bonds and for the further securing of the Bonds, and accordingly that all covenants and agreements on the part of the Issuer and each Borrower as to the amounts payable with respect to the Bonds and the Master Indenture Notes hereunder are hereby declared to be for the benefit of the holders from time to time of the Bonds and may be enforced as provided in the Trust Indenture on behalf of the Bondholders by the Bond Trustee.

 

Section 7.3.    Amendments. This Loan Agreement may be amended only in accordance with the requirements of the Trust Indenture.

 

Section 7.4.    Notices. All notices, certificates or other communications hereunder shall be sufficiently given and shall be deemed given when delivered or on the third Business Day after mailed by certified mail, postage prepaid, or trackable overnight delivery, (or if earlier, when received or refused) addressed as follows:

 

Issuer:

PUBLIC FINANCE AUTHORITY

 

22 East Mifflin Street, Suite 900

 

Madison, WI 53703

 

Attention: Scott Carper and Michael LaPierre

 

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SKY HARBOUR CAPITAL LLC

If to the Borrowers:

Hangar M, 136 Tower Road

Westchester County Airport

White Plains, NY 10604

Attention: Tal Keinan

   

If to Bond Trustee:

THE BANK OF NEW YORK MELLON

 

385 Rifle Camp Road

 

Woodland Park, New Jersey 07424

 

Attention: Corporate Trust Services, Frederic Belen

 

A duplicate copy of each notice, certificate or other communication given hereunder by either the Issuer or the Borrowers to the other shall also be given to the Bond Trustee. The Issuer, each Borrower and the Bond Trustee may, by written notice given hereunder, designate any further or different addresses to which subsequent notices, certificates or other communications shall be sent.

 

Section 7.5.    Non-Liability of Issuer. The Issuer shall not be obligated to pay the principal of, premium, if any, or interest on the Bonds or any costs incidental thereto, except from the Trust Estate. Neither the faith and credit nor the taxing power of any Sponsor, any Member, the State or any other political subdivision or agency thereof or any political subdivision approving the issuance of the Bonds, nor the faith and credit of the Issuer, is pledged to the payment of the principal of, premium, if any, or interest on the Bonds or any costs incidental thereto. The Issuer has no taxing power. The Issuer shall not be directly, indirectly, contingently or otherwise liable for any costs, expenses, losses, damages, claims or actions, of any conceivable kind on any conceivable theory, under or by reason of or in connection with this Loan Agreement, the Bonds or the Bond Indenture, except only to the extent amounts are received for the payment thereof from the Borrowers under this Loan Agreement, and except as may result solely from the Issuer’s own willful misconduct.

 

The Borrowers hereby acknowledge that the Issuer’s sole source of moneys to repay the Bonds is the Trust Estate, and hereby agrees that if the payments to be made under this Loan Agreement shall ever prove insufficient to pay all principal of, premium, if any, and interest on the Bonds as the same shall become due (whether by maturity, redemption, acceleration or otherwise) or any costs incidental thereto, then upon notice or demand from the Bond Trustee, the Borrower Representative shall pay such amounts as are required from time to time to prevent any deficiency or default in the payment of such principal, premium, if any, or interest, or costs incidental thereto when due including, but not limited to, any deficiency caused by acts, omissions, nonfeasance or malfeasance on the part of the Bond Trustee, the Issuer, any Borrower or any third party, subject to any right of reimbursement from the Bond Trustee, the Issuer or any such third party, as the case may be, therefor.

 

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Section 7.6.    Waiver of Personal Liability. No Issuer Indemnified Person or any director, officer, agent or employee of any Borrower shall be individually or personally liable for the payment of any principal (or Redemption Price) or interest on the Bonds or costs incidental thereto or any sum hereunder or under the Trust Indenture or be subject to any personal liability or accountability by reason of the execution and delivery of this Loan Agreement, the Trust Indenture, or any other General Financing Document; but nothing herein contained shall relieve any such member, director, officer, agent or employee from the performance of any official duty provided by law or by this Loan Agreement.

 

Section 7.7.    Filing.

 

(a)    Financing statements reflecting the security interest of the Bond Trustee under Section 3.9 hereof and the assignment of such security interests to the Bond Trustee shall be filed by the Borrowers in a form which fully complies with the Uniform Commercial Code filing and in such office as may be at the time provided by law as the proper place for the filing of any of the foregoing by the Borrower. Subject to Section 7.8 of the Trust Indenture, continuation statements for the financing statements filed at the time of issuance of the Bonds shall be filed by the Bond Trustee within the time prescribed by the Uniform Commercial Code in order to continue the perfection of such security interest.

 

(b)    The Borrowers hereby irrevocably authorize the Master Trustee at any time and from time to time to file in any Uniform Commercial Code jurisdiction any initial financing statements and amendments thereto that (a) indicate the collateral (i) as all assets of the Borrowers pledged under this Loan Agreement or words of similar effect, regardless of whether any particular asset comprised in the collateral falls within the scope of Article 9 of the Uniform Commercial Code of the state of organization of the Borrower, or (ii) as being of an equal or lesser scope or with greater detail, and (b) contain any other information required by part 5 of Article 9 of the Uniform Commercial Code of the state of the Borrower’s location for the sufficiency or filing office acceptance of any financing statement or amendment, including (i) whether any Borrower is an organization, the type of organization and any organization identification number issued to each Borrower, and, (ii) in the case of a financing statement filed as a fixture filing or indicating collateral as as-extracted collateral or timber to be cut, a sufficient description of real property to which the collateral relates. Each Borrower agrees to furnish any such information to the Master Trustee promptly upon request. Each Borrower also ratifies its authorization for the Master Trustee to have filed in any Uniform Commercial Code jurisdiction any like initial financing statements or amendments thereto if filed prior to the date hereof

 

Section 7.8.    Prior Agreements Superseded. This Loan Agreement, together with all agreements executed by the parties concurrently herewith or in conjunction with the sale of the Series 2021 Bonds or any other Bonds, shall completely and fully supersede all other prior understandings or agreements, both written and oral, between the Issuer and the Borrowers relating to the leasing of property and financing of the Project, including those contained in any commitment letter executed in anticipation of the issuance of the Series 2021 Bonds or any other Bonds.

 

Section 7.9.    Execution of Counterparts. This Loan Agreement may be executed simultaneously in several counterparts each of which shall be an original and all of which shall constitute but one and the same instrument.

 

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Section 7.10.    Expenses. Each Borrower shall pay and indemnify the Issuer and the Issuer Indemnified Persons all fees, costs and charges, including fees and expenses of attorneys, accountants, consultants and other experts, incurred in good faith and arising out of or in connection with this Loan Agreement, Borrower Financing Documents, the Bonds or the Trust Indenture. Each Borrower shall pay and indemnify the Bond Trustee against all reasonable fees, costs and charges, including reasonable fees and expenses of attorneys, accountants, consultants and other experts, incurred in good faith (and with respect to the Bond Trustee, without negligence) and arising out of or in connection with this Loan Agreement, Borrower Financing Documents, the Bonds or the Trust Indenture. These obligations and those in Section 7.11 shall remain valid and in effect notwithstanding repayment of the loan hereunder or the Bonds or termination of this Loan Agreement or the Trust Indenture.

 

Section 7.11.    Indemnification. (a) The Borrowers hereby fully and forever and irrevocably release and, to the fullest extent permitted by law, each Borrower jointly and severally agrees to indemnify, hold harmless and defend the Issuer, every Issuer Indemnified Person, the Bond Trustee and any of its respective officers, members, directors, officials, employees, attorneys and agents (collectively, the “Trustee Indemnified Persons” and together with the Issuer and the Issuer Indemnified Persons, the “Indemnified Parties”), against any and all fees, losses, damages, claims, actions, liabilities, costs and charges, and expenses of any conceivable nature, kind or character (including, without limitation, fees and expenses of attorneys, accountants, consultants and other experts, litigation and court costs, amounts paid in settlement and amounts paid to discharge judgments) to which the Indemnified Parties, or any of them, may become subject under any statutory law or regulation (including, without limitation, federal or state securities laws and regulations or federal tax laws and regulations) or at common law or otherwise (collectively, “Liabilities”), arising out of or based upon or in any way relating to:

 

(i)    the Bonds, the Trust Indenture, this Loan Agreement, the Borrower Financing Documents or the Tax Agreement or the execution or amendment hereof or thereof or in connection with transactions contemplated hereby or thereby, including the issuance, sale or resale of the Bonds;

 

(ii)    the performance or observance by or on behalf of the Issuer of those things on the part of the Issuer agreed to be performed or observed hereunder or under the Trust Indenture or the other documents identified in Subsection (i) above;

 

(iii)    any act or omission of any Borrower or any of its affiliates or affiliated persons, agents, contractors, servants, employees, tenants or licensees in connection with the Project, the operation of the Project, or the condition, environmental or otherwise, occupancy, use, possession, conduct or management of work done in or about, or from the planning, design, acquisition, installation or construction of, the Project or any part thereof;

 

(iv)    any lien or charge upon payments by any Borrower to the Issuer or the Bond Trustee hereunder, or any taxes (including, without limitation, all ad valorem taxes and sales taxes), assessments, impositions and other charges imposed on the Issuer or the Bond Trustee in respect of any portion of the Project;

 

25

 

(v)    any violation of any Environmental Regulations with respect to, or the release of any Hazardous Substances from, the Project or any part thereof;

 

(vi)    the defeasance and/or redemption, in whole or in part, of the Bonds;

 

(vii)    any untrue statement or misleading statement or alleged untrue statement or alleged misleading statement of a material fact contained in any offering or disclosure document or disclosure or continuing disclosure document for the Bonds or any of the documents relating to the Bonds, or any omission or alleged omission from any offering or disclosure document or disclosure or continuing disclosure document for the Bonds of any material fact necessary to be stated therein in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading;

 

(viii)    any declaration of taxability of interest on the Bonds, or allegations that interest on the Bonds is taxable or any regulatory audit or inquiry regarding whether interest in the Bonds is taxable;

 

(ix)    the Bond Trustee’s acceptance or administration of the trust of the Trust Indenture, or the exercise or performance of any of its powers or duties thereunder or under any of the documents relating to the Bonds to which it is a party; or

 

(x)    any injury to, or death of, any Person or damage to property in or upon any 2021 Projeect or growing out of, or connected with, the use, nonuse, condition or occupancy of the 2021 Project;

 

except (A) in the case of the foregoing indemnification of the Trustee Indemnified Persons, to the extent such Liabilities are caused by the negligence or willful misconduct of such Trustee Indemnified Person; or (B) in the case of the foregoing indemnification of the Issuer and any Issuer Indemnified Person, to the extent such Liabilities are caused by the willful misconduct of the Person seeking indemnification.

 

THE BORROWERS EXPRESSLY ACKNOWLEDGE AND AGREE THAT THE ISSUER AND THE ISSUER INDEMNIFIED PERSONS SHALL BE RELEASED FROM, AND INDEMNIFIED HEREUNDER AGAINST, LIABILITIES ARISING FROM THE ISSUERS OR ANY ISSUER INDEMNIFIED PERSONS OWN NEGLIGENCE OF ANY KIND, DESCRIPTION OR DEGREE (EXPRESSLY WAIVING THE COMPARATIVE NEGLIGENCE PROVISIONS OF SECTION 895.045 OF THE WISCONSIN STATUTES AND THE STATUTORY AND COMMON- LAW CONTRIBUTORY OR COMPARATIVE NEGLIGENCE LAWS OF ANY OTHER STATE OR JURISDICTION), OR BREACH OF CONTRACTUAL DUTY, WITHOUT REGARD TO OR THE NECESSITY OF ANY BREACH OR FAULT ON THE PART OF ANY BORROWER, EXCEPT INSOFAR AS AND TO THE EXTENT THAT ANY SUCH LIABILITIES ARISE FROM THE WILLFUL MISCONDUCT OF THE PERSON SEEKING INDEMNIFICATION.

 

26

 

In the event that any action or proceeding is brought against any Indemnified Party with respect to which indemnity may be sought hereunder, the Borrower, upon written notice from the Indemnified Party, shall assume the investigation and defense thereof, including the employment of counsel selected by the Indemnified Party, and shall assume the payment of all expenses related thereto, with full power to litigate, compromise or settle the same in its sole discretion; provided that the Indemnified Party shall have the right to review and approve or disapprove any such compromise or settlement. Each Indemnified Party shall have the right to employ separate counsel in any such action or proceeding and participate in the investigation and defense thereof, and each of the Borrowers shall pay the fees and expenses of such separate counsel; provided, however, that such Indemnified Party may only employ separate counsel at the expense of the Borrowers if in the judgment of such Indemnified Party a conflict of interest exists by reason of common representation or if all parties commonly represented do not agree as to the action (or inaction) of counsel.

 

(b)    The rights of any Persons to indemnity hereunder and rights to payment of fees and reimbursement of expenses shall survive the final payment or defeasance of the Bonds and in the case of the Bond Trustee any resignation or removal. The provisions of this Section shall remain valid and in effect notwithstanding repayment of the loan hereunder or payment, redemption or defeasance of the Bonds or the termination of this Loan Agreement or the Trust Indenture.

 

(c)    Insofar as any document or instrument issued or delivered in connection with the Bonds (including without limitation, the documents referred to in subsection (a) above) purports to constitute an undertaking by or impose an obligation upon the Borrowers to provide indemnification to the Issuer or the Issuer Indemnified Persons, the indemnification provision or provisions of such document shall not be deemed, interpreted or construed in any way as a modification of or limitation upon any Borrowers’ obligations or the rights of the Issuer or the Issuer Indemnified Person under this Section 7.11, and the provisions of this Section 7.11 shall in every respect supersede the indemnification provisions of any such other document and shall apply thereto as if fully set forth therein.

 

THE BORROWERS’ OBLIGATIONS UNDER THIS SECTION 7.11 SHALL BE JOINT AND SEVERAL.

 

Section 7.12.    No Obligation to Enforce Assigned Rights. Notwithstanding anything to the contrary in this Loan Agreement or the Trust Indenture, the Issuer shall have no obligation to and instead the Bond Trustee and/or the Bondholders, as the case may be, in accordance with this Loan Agreement or the Trust Indenture, shall have the right, without any direction from or action by the Issuer, to take any and all steps, actions and proceedings, to enforce any or all rights of the Issuer (other than the Unassigned Rights) under this Loan Agreement or the Trust Indenture, including, without limitation, the rights to enforce the remedies upon the occurrence and continuation of an Event of Default and the obligations of the Borrower under this Loan Agreement.

 

27

 

Section 7.13.    Issuers Performance. None of the provisions of this Loan Agreement or the Trust Indenture shall require the Issuer to expend or risk its own funds or otherwise to incur financial liability in the performance of any of its duties or in the exercise of any of its rights or powers hereunder or thereunder, unless payable from the Trust Estate, or unless the Issuer shall first have been adequately indemnified to its satisfaction against the cost, expense, and liability which may be incurred thereby. The Issuer shall not be under any obligation hereunder to perform any administrative service with respect to the Bonds or the Project Facilities (including, without limitation, record keeping and legal services), it being understood that such services shall be performed or provided by the Bond Trustee or the Borrower. The Issuer covenants that it will faithfully perform at all times any and all covenants, undertakings, stipulations, and provisions expressly contained in this Loan Agreement, the Trust Indenture, and any and every Bond executed, authenticated and delivered under the Trust Indenture; provided, however, that the Issuer shall not be obligated to take any action or execute any instrument pursuant to any provision hereof unless and until it shall have (i) been directed to do so in writing by the Borrower, the Bond Trustee, or the Bondholder having the authority to so direct; (ii) received from the Borrower, the Bond Trustee, or the Bondholder requesting such action or execution assurance satisfactory to the Issuer that the Issuer’s expenses incurred or to be incurred in connection with taking such action or executing such instrument have been or will be paid or reimbursed to the Issuer; and (iii) if applicable, received in a timely manner the instrument or document to be executed, in form and substance satisfactory to the Issuer.

 

In complying with any provision herein or in the Trust Indenture, including, but not limited to, any provision requiring the Issuer to “cause” another Person to take or omit any action, the Issuer shall be entitled to rely conclusively (and without independent investigation or verification) (i) on the faithful performance by the Bond Trustee or the Borrowers, as the case may be, of their respective obligations hereunder and under the Trust Indenture and (ii) upon any written certification or opinion furnished to the Issuer by the Bond Trustee or the Borrowers, as the case may be. In acting, or in refraining from acting, under this Loan Agreement or the Trust Indenture, the Issuer may conclusively rely on the advice of its counsel. The Issuer shall not be required to take any action hereunder or under the Trust Indenture that it reasonably believes to be unlawful or in contravention hereof or thereof.

 

Section 7.14.    No Impairment of Rights. Nothing herein shall be deemed or construed to limit, impair or affect in any way the Issuer (or any Issuer Indemnified Person’s) right to enforce the Unassigned Rights, regardless of whether there is then existing an Event of Default (including, without limitation, a payment default), or any action based thereon or occasioned by an Event of Default or alleged Event of Default, and regardless of any waiver or forbearance granted by the Bond Trustee or any Bondholder in respect thereof. Any default or Event of Default in respect of the Unassigned Rights may only be waived with the Issuer’s written consent.

 

Section 7.15.    Closing Expenses. In addition to and without in any way limiting the Borrowers’ obligations to pay and indemnify the Issuer and the Issuer Indemnified Persons against fees, costs and charges arising out of or in connection with this Loan Agreement, the Borrower Financing Documents, the Bonds or the Trust Indenture, the Borrowers shall pay, upon the closing of the issuance of the Bonds and as a condition thereto: (i) to the Issuer, the Issuer’s issuance fee of $40,000 plus 0.05% of the par amount of the Bonds in excess of $20 million (less, if applicable, any application fee heretofore paid by the Borrowers to the Issuer); and (ii) attorney’s fees of $40,000 to von Briesen & Roper, s.c. incurred by the Issuer in connection with the issuance of the Bonds.

 

28

 

Section 7.16.    Survival of Provisions. The provisions of this Loan Agreement and the Trust Indenture and any other document in connection with the issuance of the Bonds to which the Issuer is a party concerning (a) the tax-exempt status of the Series 2021 Bonds (including, but not limited to, provisions concerning rebate); (b) the interpretation of this Loan Agreement; (c) the governing law, jurisdiction and venue; (d) the Issuer’s right to rely on written representations of others contained herein or in any other document or instrument issued or entered into in respect of the Bonds, regardless of whether the Issuer is a party thereto; (e) the indemnification rights and exculpation from liability of the Issuer and the Issuer Indemnified Persons; and (f) any other provision of this Loan Agreement not described or enumerated above that expressly provides for its survival, shall survive in full force and effect notwithstanding the payment or redemption in full, or defeasance of the Bonds, the discharge of the Trust Indenture, and the termination or expiration of this Loan Agreement.

 

Section 7.17.    Third Party Beneficiaries. Notwithstanding any provision hereof to the contrary, it is specifically acknowledged and agreed that, to the extent of their rights hereunder (including, without limitation, their rights to immunity and exculpation from pecuniary liability) each Issuer Indemnified Person is a third-party beneficiary of this Loan Agreement entitled to enforce such rights in his, her, its, or their own name.

 

Section 7.18.    Governing Law. This Loan Agreement shall be governed by the laws of the State of Wisconsin, without regard to its conflicts of laws provisions. All claims of whatever character arising out of this Loan Agreement or under any statute or common law relating in any way, directly or indirectly, to the subject matter hereof or to the dealings between the Issuer and any other party hereto, if and to the extent that such claim potentially could or actually does involve the Issueror any Issuer Indemnified Person, shall be brought in any state or federal court of competent jurisdiction located in Dane County, Wisconsin. By executing and delivering this Loan Agreement, each party hereto irrevocably: (i) accepts generally and unconditionally the exclusive jurisdiction and venue of such courts; (ii) waives any defense of forum non conveniens; and (iii) agrees not to seek removal of such proceedings to any court or forum other than as specified above. The foregoing shall not be deemed or construed to constitute a waiver by the Issuer of any prior notice or procedural requirements applicable to actions or claims against or involving joint powers commissions or governmental units of the State of Wisconsin that may exist at the time of and in connection with such matter.

 

Section 7.19.    Waiver of Jury Trial. THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS LOAN AGREEMENT OR ANY RELATED DOCUMENT.

 

29

 

Section 7.20.    Federal Tax Ownership. Each Borrower acknowledges and agrees that for purposes of satisfying Section 142(b) of the Code, each Borrower has relinquished its federal tax rights to depreciate its investment in the 2021 Project and similar tax ownership rights, and that the ground lessor of each component of the 2021 Project (“Ground Lessor”) is the federal tax owner of such component of the 2021 Project for purposes of Section 142(b) of the Code. As such, the Borrower, in applying the proceeds of the Series 2021 Bonds to refinance or finance the cost of the leasehold interest in the existing premises at the 2021 Project and the construction and rehabilitation of the 2021 Project is, for federal income tax purposes, taking such actions for the benefit of the related Ground Lessor, and the related Ground Lessor is receiving the benefit of such application. Therefore, each Borrower is treating the payment of its loan payments hereunder as loan payments for purposes of calculating its federal income tax liability under the Code.

 

Section 7.21.    Patriot and U.S.A. Freedom Act Requirements of the Bond Trustee. To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify and record information that identifies each person who opens an account. Accordingly, the Bond Trustee will require documentation from each non-individual person such as a business entity, a charity, a trust, or other legal entity, verifying its formation as a legal entity. The Bond Trustee may also request financial statements, licenses, identification and authorization documents from individuals claiming authority to represent the entity or other relevant documentation.

 

[The remainder of this page is left blank intentionally.]

 

30

 

 

 

IN WITNESS WHEREOF, the parties to this Loan Agreement have caused this Loan Agreement to be executed all as of the date first above written.

 

PUBLIC FINANCE AUTHORITY

 

By /s/ Ann Marie Austin

 

Name: Ann Marie Austin

 

Title: Assistant Secretary

 
   
 

SKY HARBOUR SUGAR LAND AIRPORT, LLC

   
 

By /s/ Tal Keinan

 

Name: Tal Keinan

 

Title: Authorized Officer

   
   
 

SKY HARBOUR OPA LOCKA
AIRPORT, LLC

   
 

By /s/ Tal Keinan

Name: Tal Keinan

Title: Authorized Officer

   
 

NASHVILLE HANGARS LLC

   
 

By /s/ Tal Keinan

Name: Tal Keinan

 

Title: Authorized Officer

   
 

APA HANGARS LLC

   
 

By /s/ Tal Keinan

Name: Tal Keinan

 

Title: Authorized Officer

   
 

DVT HANGARS LLC

   
 

By /s/ Tal Keinan

Name: Tal Keinan

Title: Authorized Officer

 

 

 

Schedule I

 

Borrowers

 

Sky Harbour Sugar Land Airport, LLC

Sky Harbour Opa Locka Airport, LLC

Nashville Hangars LLC

APA Hangars LLC

DVT Hangars LLC

 

 

 

Schedule II

 

Project Jurisdictions

 

Sugar Land, Texas

Miami-Dade County, Florida

Metropolitan Government of Nashville-Davidson County, Tennessee

Arapahoe County, Colorado

Phoenix, Arizona

 

 

 

EXHIBIT A

 

CONSTRUCTION DISBURSEMENTS

 

Section 1.01. Disbursement Requests to Comply with this Agreement. Each disbursement request for moneys from the Bond Proceeds Subaccount of the Construction Account (“Disbursement Request”) shall be substantially in the form attached hereto as Exhibit A-1 and comply with the terms and conditions of the Loan Agreement and the Indenture and shall be accompanied by a completed AIA G702 and AIA G703 application for payment from each applicable contractor and certified by the applicable architect, with accompanying subcontractor pay applications;

 

Section 1.02. Conditions Precedent to Funding the Initial Disbursement Request with Respect to any Project. Prior to the delivery of the initial Disbursement Request with respect to any payments to be made under a Construction Contract (defined below) for any particular 2021 Project airport site, the Borrower Representative shall deliver, or cause to be delivered, to the Bond Trustee, the following:

 

(a)         Insurance Policies. Insurance policies written by companies and in such forms, amounts and coverages as required by the Construction Contract (defined below).

 

(b)         Architects, Engineers and Contractors Contracts. Copies of the construction contract with the general contractor (or, if applicable, construction manager) (the “Contractor”) applicable to the 2021 Project (“Construction Contract”) and each executed architect’s, engineer’s and contractor’s contracts with the applicabe Borrower relating to the 2021 Project.

 

(c)         Consents. Consent from the Contractor under the Construction Contract in substance substantially similar to the contractor consents delivered at the initial issuance of the Series 2021 Bonds.

 

(d)         Performance and Payment Bonds. Performance and payment bonds for the Construction Contract (“Performance and Payment Bonds”) in customary form (e.g., AIA A312).

 

Section 1.03. Additional Requirements for Each Disbursement Request. Each Disbursement Request shall be subject to, and each Borrower shall be responsible for submitting to the Bond Trustee:

 

(a)         Lien Waivers. Except with respect to Disbursement Requests for payment to parties that do not have lien rights, the Borrower Representative shall obtain lien releases and waivers from the Contractors, subcontractors, consultants, design and engineering professionals and suppliers for the work or materials for which funds are requested in a Disbursement Request, which may be subject to receipt of payment of the funds requested, as follows:

 

(i)    when submitting a Disbursement Request, the Borrower Representative shall provide a conditional statutory lien waiver for each Person described in the foregoing paragraph (a) for which funds are requested in such Disbursement Request, in each case in the amount so requested for such Person;

 

 

 

(ii)    after receipt of payment from the Bond Trustee, on behalf of the applicable Borrower, pursuant to an approved Disbursement Request, and prior to payment pursuant to a subsequent Disbursement Request, the Borrower Representative shall provide an unconditional partial lien waiver for each Person for which a conditional lien waiver was provided pursuant to subparagraph (i), above, through the period covered by such approved Disbursement Request; and

 

(iii)    such lien waivers shall be sent directly to the title company providing title insurance for the 2021 Project when required.

 

(b)         Title Update. A down date endorsement to the title policy with respect to the applicable portion of the 2021 Project that no mechanic’s or materialmen’s liens have been filed of record and indicating that no judgments, tax or other liens, security interests, leases of personalty, financing statements or other encumbrances, other than Permitted Encumbrances, are of record or on file encumbering such portion of the 2021 Project. If policy has a “pending disbursements” endorsement, the down date endorsement must also increase the amount of the policy coverage by the amount of the disbursement

 

(c)         No Event of Default. No Event of Default shall have occurred and be continuing.

 

Section 1.04. Additional Requirements for Final Disbursement. On or prior to the date of the final disbursement with respect to a particular portion of 2021 Project, in addition to satisfaction of the conditions set forth in Sections 1.01, 1.02 and 1.03 of this Exhibit A, as applicable, the Borrower Representative shall have provided the items listed below to the Bond Trustee:

 

(a)         Release of Liens. A final release of liens, conditioned only on receipt of payment, signed by the Contractor and all subcontractors and suppliers under the Construction Contract in form and content reasonably acceptable to the applicable title company; and

 

(b)         Certificate of Substantial Completion. Borrower shall deliver to Bond Trustee a Certificate of Substantial Completion (AIA G704), executed by Contractor, the architect and the applicable Borrower.

 

 

 

Exhibit A-1

 

Form of Requisition From Series 2021 Construction Account

 

$166,340,000

Public Finance Authority
Senior Special Facility Revenue Bonds

(Sky Harbour Capital LLC Aviation Facilities Project),
Series 2021

 

TO:

The Bank of New York Mellon,         

Requisition No.                  
 

as Trustee

Date:                      , 20
  385 Rifle Camp Road  
 

Woodland Park, New Jersey 07424

 
 

Attention: Corporate Trust Services, Frederic Belen

 

 

Pursuant to the Trust Indenture dated as of September 1, 2021 (the “Indenture”), by and between the Public Finance Authority, a joint powers commission created under Section 66.0304 of the Wisconsin Statutes, a unit of government and a body corporate and politic organized and existing under the laws of the State of Wisconsin (the “Issuer”), and The Bank of New York Mellon, as Trustee (the “Trustee”), and pursuant to the Loan Agreement dated as of September 1, 2021 (the “Loan Agreement”), by and between the Issuer and the Borrowers named therein, we request that you make disbursement of funds from the [Bond Proceeds Subaccount/Equity Subaccount] of the Series 2021 Construction Account of the Series 2021 Bond Fund (created by Section 5.1 of the Indenture) held by you, as Trustee under the Indenture, to the following payees in the following amount:

 

Payee:

 

Payee’s Address:

 

Amount:

 

Purpose of Requisition:

 

Subaccount: [Bond Proceeds/Equity]

 

We hereby certify that:

 

 

(a)

none of the items for which funds are being requisitioned has formed the basis for any disbursement heretofore made from the any fund or account created under the Indenture;

 

 

(b)

each item for which funds are being requisitioned from the Series 2021 Construction Account is a proper item to be paid and are being used for the payment of costs of the 2021 Project;

 

 

 

 

(c)

no written notice of any lien, right to lien or attachment upon, or claim affecting the right to receive payment of, any of the moneys payable under this Requisition to any of the persons named herein has been received, or if any notice of any such lien, attachment or claim has been received, such lien, attachment or claim has been released or discharged, or will be released or discharged upon the payment of this Requisition;

 

 

(d)

[Bond Proceeds Only: Bond Trustee has received the title bring down and endorsement that comply with the requirements of Section 1.03(b) of the Exhibit A to the Loan Agreement;

 

 

(e)

all insurance policies required to be in place under the Construction Contract and the Loan Agreement are in full force in effect;

 

 

(f)

all items required to be delivered to Bond Trustee on or before the date hereof pursuant to Exhibit A to the Loan Agreement have been delivered and the Requisition, and all certificates, statements, backup documentation and other writings required to be furnished by Borrower under the terms of this Agreement in connection therewith have been so furnished by Borrower and are true in all material respects and omit no material fact, the omission of which may make them misleading;]

 

 

(g)

to Borrower’s knowledge, all building and other permits for the 2021 Project to be obtained from Governmental Authorities have been obtained or will be obtained when required[.][; and]

 

 

(h)

[For Final Requisition for a Project: (i) the construction of the 2021 Project has been substantially completed in accordance with the applicable plans and specifications, all applicable zoning and building laws, ordinances, rules and regulations and in accordance with the applicable provisions of the Americans with Disabilities Act of 1990, 42 U.S.C. §§ 12101 et seq., (ii) all costs and expenses for all labor, materials, equipment and services used in connection with such construction, equipping and development of the 2021 Project have been paid in full or will be paid in full from the proceeds of this Requisition.]

 

We further hereby certify that no Event of Default (as defined in the Loan Agreement) has occurred and is continuing as of the date hereof.

 

IN WITNESS WHEREOF, the Borrower Representative has caused this Requisition to be executed in its name by its authorized officer as of this _______day of _________ , 20___.

 

SKY HARBOUR CAPITAL LLC

By ________________________

Authorized Officer

 

 

 

Exhibit 10.13

 

 

GROUND SUBLEASE

 

between

 

SUNBORNE XVI, LTD.,

a Colorado limited partnership,

as Sublessor

 

and

 

APA HANGARS LLC,

a Delaware limited liability company,

as Sublessee

 

 

Dated: as of December 1, 2020

 

 

[Parcel 1]

 

 

 

 

GROUND SUBLEASE

(Parcel 1)

 

THIS GROUND SUBLEASE (this "Sublease") dated as of the 1st day of December, 2020 (the "Effective Date") between SUNBORNE XVI, LTD., a Colorado limited partnership, having an office at 8001 South InterPort Boulevard, Suite 300, Englewood, Colorado 80112 (the "Sublessor"), and APA HANGARS LLC, a Delaware limited liability company, having an office at 767 5th Avenue, 21st Floor, New York, NY 10153, Attn: Tim Johnson (the "Sublessee").

 

WITNESSETH:

 

WHEREAS, Sublessor is the lessee under a certain Ground Lease and Agreement dated March 1, 2007, by and between Arapahoe County Public Airport Authority (the "Airport Authority") and Sublessor covering, inter alia, the Demised Premises (as hereinafter defined), as the same has been amended, and as it may hereafter be amended from time to time (the "Master Lease"); and

 

WHEREAS, Sublessor desires to sublease to Sublessee, and Sublessee desires to sublease from Sublessor, the Demised Premises, together with the right to use the Common Areas (as hereinafter defined), upon the terms and conditions more particularly provided hereinafter.

 

NOW, THEREFORE, in consideration of the premises and mutual covenants and agreements contained herein, intending to be legally bound, the parties hereto for themselves, their successors and assigns, hereby covenant and agree as follows:

 

1.    Definition of Certain Terms.

 

1.1    For purposes of this Sublease, the following term shall have the meanings hereinafter set forth, unless the context otherwise requires:

 

1.1.1    The term "Affiliate" shall mean, with respect to a person or entity, any other person or entity that controls, or is controlled by, or is under common control with, such first person or entity.

 

1.1.2    The term "Authorized Institution" shall mean any bank, savings bank, insurance company, trust company, savings and loan association or other person or entity which is authorized to make first mortgage loans in the State of Colorado, and which is the holder of a first mortgage upon Sublessee's interest in this Sublease, other than an Affiliate of Sublessee.

 

1.1.3    The term "Business Day" or "business day" shall mean any day other than a Saturday, Sunday, holiday or other day on which banking institutions in the State of Colorado are authorized to close.

 

1.1.4    The term "Common Areas" shall mean those areas and facilities more particularly described on Exhibit B annexed hereto and made a part hereof.

 

 

 

 

1.1.5    The term "Completion Date" shall mean the date upon which either (i) a valid temporary or final certificate of occupancy or equivalent has been issued by the applicable governmental authority with respect to the Improvements, other than with respect to tenant finish work for premises leased or to be leased by Sublessee to any tenant, or (ii) Sublessee has commenced use and or occupancy of the Improvements.

 

1.1.6    The term "Design Guidelines" shall mean the design guidelines or equivalent in effect as of the Effective Date, a copy of which has been previously delivered by Sublessor to Sublessee.

 

1.1.7    The term "Development Plan" shall mean the development plan to be submitted by Sublessee and processed in accordance with Airport Authority's Development Policy and Application Procedures Manual for Aeronautical and Non-Aeronautical Land use at Centennial Airport ("DPAPM") relating to, inter alia, the Demised Premises and which has been approved by Sublessor and by the Airport Authority, as it may be hereafter modified by Sublessee.

 

1.1.8    The term "Improvements" shall mean any building or buildings and other improvements now or hereafter installed or constructed on the Demised Premises in accordance with the terms and conditions hereof, except that the term "Improvements" shall not include any interior tenant improvement not required to be installed or completed in order to obtain a certificate of occupancy. Notwithstanding the foregoing to the contrary, Improvements shall include all exterior improvements and all interior improvement visible from the exterior, with the exterior doors in closed position.

 

1.1.9    The term "Land" shall mean the parcel of real property described in Exhibit A attached hereto.

 

1.1.10    The term "Minimum Standards" shall mean the "Centennial Airport Minimum Standards for Commercial Aeronautical Activities" adopted on February 5, 1981, as the same may have been or may be from time to time amended, revised, supplemented or updated.

 

1.1.11    The term "mortgage," whether or not used in combination with other qualifying words, shall include a deed of trust to a trustee to secure a note or notes or other loan obligations; the terms "holder," when used with reference to a mortgage, and "mortgagee," shall include the beneficiary under a deed of trust.

 

1.1.12    The term "Project" shall mean the Land, together with any Improvements currently existing or hereinafter constructed on the Land.

 

1.1.13    The term "Sublessor" shall mean the owner at the time of the leasehold estate in the Demised Premises under the Master Lease.

 

1.1.14    Unless the context otherwise requires, the term "tenant" shall mean any tenant of all or a portion of the space in or on the Improvements (other than Sublessee); the term "tenant sublease" shall mean any sublease for the use or occupancy of such space; and the term "subrent" shall mean any rent or other charge for such use or occupancy.

 

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1.1.15    The term "unavoidable delays" or "unforeseen delays" shall mean delays due to strike, lockout or other labor or industrial disturbance (whether or not on the part of employees, agents or contractors of Sublessee), civil disturbance, future valid order of any government, court or regulatory body having proper jurisdiction, act of the public enemy, war, riot, sabotage, blockade, pandemic, embargo, failure or inability to secure materials or labor by reason of priority or regulations or orders of any government or regulatory body, lightening, earthquake, fire, storm, hurricane, flood, washout, explosion, act of God, or any cause beyond the reasonable control of Sublessee similar to the causes hereinbefore enumerated

 

2.    Premises; Term of Sublease: Due Diligence; Termination Rights.

 

2.1    Sublessor, for and in consideration of the rents, covenants and agreements hereinafter reserved, mentioned and contained on the part of Sublessee, its successors and assigns, to be paid, kept and performed, has demised and leased, and by these presents does demise and lease, unto Sublessee, and Sublessee does hereby take and hire, upon and subject to the conditions hereinafter expressed, the Land, together with all rights-of-way, licenses and easements now or hereafter belonging or pertaining to said Land (collectively, the "Demised Premises"); subject, however, to all of the terms and provisions of the Master Lease and to all liens, charges, encumbrances, encroachments, declarations, restrictions, reservations, covenants and other title exceptions and matters, if any, affecting the Demised Premises at the date hereof. Any new rights-of-way, licenses or easements granted by Sublessor will not unreasonably interfere with Sublessee's use of the Demised Premises.

 

TO HAVE AND TO HOLD the same, subject as aforesaid, unto Sublessee, and, subject to the provisions hereof, its successors and assigns, for a term commencing on January 1st, 2021 (the "Commencement Date") and expiring, unless extended or sooner terminated pursuant to any of the terms, covenants or conditions of this Sublease or pursuant to law, on February 28, 2062 (the "Initial Expiration Date"); provided, however, that the Initial Expiration Date will be automatically extended to February 28, 2077 if Sublessor exercises its first option to extend the term of the Master Lease for an additional fifteen (15) years, and further extended to February 28, 2097 if Sublessor exercises its second option to extend the term of the Master Lease for an additional twenty (20) years (the "Expiration Date").

 

2.2    Sublessee agrees to execute and deliver to Sublessor, substantially in the form attached hereto as Exhibit F, an Estoppel and Commencement Date Certificate, within ten (10) days of the Effective Date, certifying as to the actual commencement and expiration dates of the term, and such other matters as may be required by Sublessor.

 

2.3    This Sublease is made upon the covenants, agreements, terms, provisions, conditions and limitations contained herein, all of which Sublessee covenants and agrees to perform and observe.

 

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3.    Rent, Etc.

 

3.1    Rent.

 

3.1.1    Sublessee covenants and agrees to pay to Sublessor at the address specified in or furnished pursuant to Section 21.1 hereof, a net monthly rental (the "Net Rent"), as hereinafter provided.

 

3.1.2    On the Commencement Date (i.e., January 1st, 2021) through the last day of the twelfth (12th) full calendar month of the term of this Sublease, Sublessee shall pay fifty-nine cents ($0.59) per square foot [Two Hundred Ninety-Six Thousand Ninety-Five and 63/100 Dollars ($296,095.63) per annum and Twenty-Four Thousand Six Hundred Seventy-Four and 64/100 ($24,674.64) per month] in Net Rent to Sublessor for that portion of the Demised Premises comprised of 501,857 square feet and described on Exhibit A-1 attached hereto ("Phase 1"). The Net Rent shall be paid in monthly installments in advance on the first (1st) day of each succeeding calendar month during the term of the Sublease (the "Rent Date"). Net Rent shall be as set forth on Exhibit C. In the event that Sublessee exercises its Option (as defined in Section 33) so that the Sublessee adds to the Demised Premises that parcel of property comprised of 371,763 square feet and described on Exhibit A-2 attached hereto ("Phase 2"), the rent schedule set forth on Exhibit C shall be replaced by the rent schedule set forth on Exhibit C-1 so long as the term of the Sublease for Phase 2 commences no earlier than the date which is three (3) years after the Commencement Date. In the event the term of the Sublease for Phase 2 commences prior to three (3) years after the Commencement Date, then Sublessor shall provide Sublessee with an Exhibit C-2 showing the Net Rent which reflects the addition of Phase 2 to the Demised Premises at such earlier date, and such Exhibit C-2 will be attached to an amendment to this Sublease to be promptly executed by Sublessor and Sublessee. Exhibit C-2 will be prepared by Sublessor and will reflect that the Net Rent for Phase 2 will be at the same rate per square foot as the Net Rent per square foot applicable to the original Demised Premises, except that Net Rent for all of the Demised Premises will not escalate in the fourth (4th) year of the Sublease, and such escalation shall commence in the fifth (5th) year of the Sublease at an annual rate of three percent (3%) per annum.

 

3.1.3    Notwithstanding the foregoing, Net Rent in the amount of $24,674.64 per month (the "Abated Net Rent") shall be abated in the first twelve (12) full calendar months following the Commencement Date (the "Abatement Period").

 

3.1.4    Such Net Rent shall be in addition to, and over and above, all other payments to be made by Sublessee as hereinafter provided.

 

3.2    It is the purpose and intent of Sublessor and Sublessee that the Net Rent shall be absolutely net to Sublessor and that all costs, expenses and obligations of every kind and nature whatsoever relating to the Demised Premises and Project shall be paid by Sublessee, and that Sublessor shall be indemnified and saved harmless by Sublessee from and against the same. Without limiting the generality of the foregoing, all costs and expenses of any kind related to the Demised Premises and Project or buildings, equipment or improvements at any time situated on the Demised Premises, shall during the term hereof be paid for by Sublessee exclusively. Notwithstanding the foregoing, Sublessor is solely responsible for payment of Ground Rent as specified in the Master Lease.

 

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3.3    The Net Rent shall be paid to Sublessor without notice or demand and without abatement, deduction or setoff unless otherwise specifically provided for herein.

 

3.4    Sublessee will also pay without notice, or abatement, deduction or set-off, unless otherwise specifically provided herein, as additional rent, all sums, Impositions (as defined in Section 4 hereof), costs, expenses and other payments which Sublessee in any of the provisions of this Sublease assumes or agrees to pay, and, in the event of any non-payment thereof, Sublessor shall have all the rights and remedies provided for herein or by law in the case of non-payment of the Net Rent.

 

3.5    It is hereby agreed that during the Term of this Sublease, as such Term may be extended, Sublessee shall pay to Sublessor an estimate of Sublessee's Pro Rata Share of the Category A and Category B Expenses, all of which are identified respectively in Exhibits E-1 and E-2 attached hereto and incorporated by reference herein. Sublessee's obligations with respect to Category A and B Expenses shall be subject to the following:

 

3.5.1    The Sublessee is not obligated to pay to Sublessor Category A and B Expenses during the Abatement Period. Sublessor shall annually estimate the Category A and B Expenses and reserves for each subsequent calendar year and, beginning the month following expiration of the Abatement Period, Sublessee shall pay monthly on the Rent Date to Sublessor, in advance, Sublessee's Pro Rata Share of one-twelfth (1/12th) of the annual Category A and B Expenses estimated by Sublessor for such calendar year, with an adjustment to be made between the parties at a later date as hereinafter provided. Furthermore, Sublessor may from time to time furnish Sublessee with notice of a re-estimation of the amount of Sublessee's Pro Rata Share of Category A and B Expenses and Sublessee shall within thirty (30) days of the date of such re-estimation pay to Sublessor any additional amount due and owing for such calendar year as a result of the re-estimation. No later than May 1 of each calendar year, Sublessor shall submit to Sublessee a statement setting forth the exact amount of Sublessee's Pro Rata Share of the Category A and B Expenses for the calendar year just completed and the difference, if any, between the actual amount of Sublessee's Pro Rata Share of such expenses for the calendar year just completed and the estimated amount of Sublessee's Pro Rata Share of the Category A and B Expenses which were paid by Sublessee to Sublessor in accordance with this Section for such year. To the extent that Sublessee's Pro Rata Share of the actual Category A and B Expenses for the period covered by such statement is higher than the estimated payments which Sublessee previously paid during the calendar year just completed, Sublessee shall pay to Sublessor the difference within thirty (30) days following receipt of said statement from Sublessor. To the extent that Sublessee's Pro Rata Share of the actual Category A and B Expenses for the period covered by such statement is less than the estimated payments which Sublessee previously paid during the calendar year just completed, Sublessor shall at its option refund said amount to Sublessee within thirty (30) days or credit the difference against Sublessee's estimated Pro Rata Share of Category A and B Expenses for the current year. Sublessee acknowledges that the use of the term "Category A and B Expenses" in this Sublease also includes reserves set aside or to be set aside by Sublessor for future Category A and B Expenses, in such reasonable amounts as Sublessor deems appropriate. Sublessee's Pro Rata Share of the Category A and B Expenses will be payable by Sublessee as and when Sublessee receives approval from the Airport Authority of Sublessee's plans for the Improvements to be constructed on the applicable portion of the Demised Premises.

 

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3.5.2    All of the foregoing obligations of Sublessee with respect to its Category A and Category B Expenses shall survive the expiration or earlier termination of this Sublease. If Sublessee occupies the Demised Premises for less than a full calendar year during the first or last calendar years of the term hereof, Sublessee's Pro Rata Share for such partial year shall be calculated by proportionately reducing the Category A and B Expenses to reflect the number of days in such year during which Sublessee occupied the Premises. Sublessee shall pay any such Sublessee's Pro Rata Share within thirty (30) days following receipt of notice thereof.

 

3.5.3    Sublessee shall have the right, but not more than once per annum, at any time within sixty (60) days after receipt of a statement of actual Category A and B Expenses for a particular calendar year has been provided by Sublessor, at Sublessee's sole cost and expense, to examine and audit Sublessor's books and records during normal business hours and after reasonable notice, at Sublessor's office relating to the determination of such Category A and B Expenses. Unless Sublessee objects to the statement provided by Sublessor within sixty (60) days of receipt of such statement, the adjustment and statement provided by Sublessor shall be deemed conclusive. In the event of any error in the statement, the amount due the other shall be paid or refunded within sixty (60) days of the determination of the error.

 

3.6    As used herein, the following terms shall have the following meanings:

 

3.6.1    "Sublessee's Pro Rata Share" shall mean: (A) with respect to Category A Expenses, that fraction, the numerator of which is the entire square footage of the Demised Premises and the denominator of which is the subtotal of the "Current Leasable Area for the Centennial Interport Project ("Interport Project") (sq. ft.)", as designated on Exhibit E-5 hereto, which area may increase in size as additional development phases within the Interport Project are developed; and (B) with respect to Category B Expenses, that fraction, the numerator of which is the entire rentable square footage of the Demised Premises and the denominator of which is the total leasable square footage of the "Area of Taxilane" and any other areas or facilities set forth as the "Class 'B' Common Areas (sq. ft.)" in Exhibit E-2 attached hereto. If Sublessee exercises the Option, then Sublessee's Pro Rata Share shall be revised to include Phase 2. Sublessor shall from time to time calculate Sublessee's Pro Rata Share and shall deliver notice thereof to Sublessee and such determination by Sublessor shall be determinative except in the event of manifest error by Sublessor. Notwithstanding the foregoing, the parties agree that Sublessee's Pro Rata Share shall not include portions of the Demised Premises until the earlier of (a) the date set forth on Exhibit E-6 for that portion of the Demised Premises, or (b) the date upon which the Airport Authority approves Sublessee's plans for the Improvements to be constructed on such portion of the Demised Premises.

 

3.7    Sublessee shall pay to Sublessor all fees and percentages imposed by Airport Authority that relate to the Demised Premises and Sublessee's activities thereon including, without limitation, those payable pursuant to the terms and conditions of the Minimum Standards, the Master Lease and the Development Policy & Application Procedures for Aeronautical & Non-Aeronautical Land Use at Centennial Airport (the "Policy") (as the same may be modified from time to time), or pursuant to any other requirement of the Airport Authority, together with such other charges as may be negotiated among Sublessor, Sublessee and Airport Authority from and after the date hereof pursuant to the terms of the Minimum Standards and/or the Policy. Such fees shall specifically, without limitation, include the improvement construction fee (the "Improvement Construction Fee") assessed by the Airport Authority that relate to the Demised Premises and any activities of Sublessee thereon, as such Improvement Construction Fee may be revised from time to time. As of the Effective Date, the Improvement Construction Fee is three percent (3%) of costs of construction. At the request of Sublessor, Sublessee shall execute and deliver such addendum to or amendment to this Sublease as Sublessor may request in order to evidence Sublessee's obligation to pay such additional charges as may be negotiated in the future. All such fees and charges described in this Section shall be paid by Sublessee to Sublessor at such times as required by the Airport Authority pursuant to the terms of the Master Lease, the Minimum Standards and/or the Policy or other requirement of the Airport Authority, but in no event later than the thirtieth (30th) day of the month following the month in which such fees and charges accrued.

 

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3.8    With respect to the "building assessment fees" (collectively, the "Special Assessment Charges"), such Special Assessment Charges shall be paid by Sublessor and will not be an obligation of Sublessee.

 

3.9    Interest shall be charged on any such payment overdue five (5) days at a rate per annum equal to the Prime Rate plus five percent (5%) prorated for the number of days late. Such proration shall be based on the date of receipt of payments by Sublessor. As used herein, the term "Prime Rate" shall mean the rate published in the Wall Street Journal in the "Money Rates" column as its "prime rate." The Prime Rate shall be adjusted upon each change in the Prime Rate.

 

4.    Payment of Impositions.

 

4.1    Commencing on the Commencement Date, Sublessee shall pay before any fine, penalty, interest or cost may be added thereto, or become due or be imposed by operation of law for the non-payment thereof, the Impositions, as such term is hereinafter defined; provided, however, that Sublessee shall have the right to contest the amount or basis for the Impositions with the party responsible for assessing, levying or imposing the same in a manner provided by law. If Sublessee contests the amount or basis for the Impositions, Sublessee shall nevertheless pay the same as required in this Section 4, but shall be entitled to reserve the right to seek a refund of the amounts determined not to be owed. The term "Impositions" shall mean all taxes, assessments, water and sewer rents, rates and charges, personal property taxes, charges for public utilities, excises, levies and all other governmental license and permit fees and other governmental charges with respect to the Demised Premises and Improvements, financial obligations and requirements of any kind and nature whatsoever which at any time during the term of this Sublease may be assessed, levied, imposed, required to be paid or become due and payable out of or in respect to, or become a lien on, the Demised Premises, Project or any part thereof or any appurtenance thereto, or any use or occupation of the Demised Premises or Project, this transaction or any document to which Sublessee is a party creating or transferring an interest or estate in the Demised Premises or Project. Notwithstanding the foregoing to the contrary, the Special Assessment Charges and Real Estate Taxes (as such term is hereinafter defined, are NOT included within the definition of Impositions.

 

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4.2    Following expiration of the Abatement Period, Sublessee is responsible for payment in full before due, all Real Estate Taxes in accordance with provisions of this paragraph. "Real Estate Taxes" mean all real property taxes and assessments levied against the Land and Improvements by any governmental or quasi-governmental authority, including any taxes, assessments, surcharges, or service or other fees of a nature not presently in effect which shall hereafter be levied on the Land and Improvements as a result of the use, ownership or operation of the Land and Improvements or for any other reason, whether in lieu of or in addition to any current real estate taxes and assessments. Real Estate Taxes shall also include the costs of consultants retained in an effort to lower taxes and all costs incurred in disputing taxes or in seeking to lower the tax valuation of the Land or Improvements. All of the foregoing obligations of Sublessee with respect to Real Estate Taxes shall survive the expiration or earlier termination of this Sublease, such that Sublessee shall be responsible for all Real Estate Taxes through the date of such termination or expiration until paid in full. If Sublessee occupies the Demised Premises for less than a full calendar year during the last calendar years of the term hereof, Real Estate Taxes for such partial year shall be calculated by proportionately reducing the Real Estate Taxes to reflect the number of days in such year during which Sublessee occupied the Demised Premises. As the Real Estate Taxes for the Demised Premises may not be allocated separately by the Arapahoe County, Colorado Assessor ("Assessor") from other parcels leased by Sublessor from the Airport Authority, Sublessor shall reasonably allocate the Real Estate Taxes for the Demised Premises and other parcels leased by Sublessor based on a valuation of such parcels prepared by the Assessor, or if the Assessor does not value each parcel of the real property leased by Sublessor from the Airport Authority, Real Estate Taxes shall be based upon the percentage obtained by dividing the square footage of the Land contained in the Demised Premises by the square footage of the Land contained in all parcels leased by Sublessor from the Airport Authority. With respect to any Improvements constructed within the Project, the valuation of such Improvements made by the Assessor shall be used to determine the Real Estate Taxes for the Improvements situated within the Project. Following Sublessor's receipt of the tax bill for the Demised Premises and/or Improvements, Sublessor shall make the above-described allocations, if necessary, and shall forward an invoice to Sublessee for the Real Estate Taxes due by Sublessee for the Demised Premises and/or Improvements. Sublessee shall pay Sublessor any such Real Estate Taxes in full within thirty (30) days following receipt of an invoice therefor.

 

4.3    Upon request, either party will furnish to the other evidence reasonably satisfactory to the requesting party, evidencing the payment of the Impositions.

 

4.4    The certificate, advice or bill of the appropriate official designated by law to make or issue the same, or to receive payment of any Imposition, or the non-payment of such Imposition shall be prima facie evidence that such Imposition is due and unpaid at the time of the making or issuance of such certificate, advice or bill.

 

4.5    Sublessee appoints Sublessor the attorney-in-fact of Sublessee for the purpose of making all payments to be made by Sublessee pursuant to any of the provisions of this Sublease to persons or entities other than Sublessor. In case any person or entity to whom any sum is directly payable by Sublessee under any of the provisions of this Sublease shall refuse to accept payment of such sum from Sublessee, Sublessee shall thereupon give written notice of such fact to Sublessor and Sublessee shall pay such sum directly to Sublessor or to such agent as Sublessor from time to time may designate to Sublessee, in trust for the purpose of making such payments, and Sublessor shall thereupon pay or cause such sum to be paid to such person or entity.

 

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5.    Concept Plan; Development Plan; Construction of Improvements.

 

5.1    Concept Plan. A copy of Sublessee's concept for the Demised Premises and Phase 2 ("Concept Plan") is attached hereto as Exhibit G. The Concept Plan has been approved by Sublessor and Sublessee.

 

5.2    Development Plan. Commencing on the Effective Date, Sublessee shall continuously and diligently work on preparation of a Development Plan for the Demised Premises, which Development Plan shall be prepared in accordance with the DPAPM and the Design Guidelines. The Development Plan shall substantially comply with the Concept Plan, except as agreed to by Sublessor in writing in Sublessor's reasonable discretion. Sublessee shall submit a complete Development Plan to Sublessor in accordance with the Design Guidelines on or before January 29, 2021. Following approval of the Development Plan by Sublessor, Sublessee shall also submit a complete Development Plan to the Airport Authority, using reasonable commercial efforts to submit the Development Plan to the Airport Authority a sufficient amount of time in advance of the Airport Authority's regularly scheduled public hearing in April 2021 for consideration by the Airport Authority at its regularly scheduled public hearing in April 2021, but in any event, a sufficient amount of time in advance of the Airport Authority's regularly scheduled public hearing in June 2021 for consideration by the Airport Authority of the Development Plan at such hearing. In addition, Sublessee shall obtain final approval of the Development Plan by the Airport Authority, only with conditions attached to such approval which are approved and accepted by Sublessor in writing, with such approval not to be unreasonably withheld, conditioned or delayed, no later than the Airport Authority's regularly scheduled public hearing in June 2021. In the event Sublessee is unable to (i) submit a complete Development Plan to Sublessor within the time frame specified above, (ii) submit a complete Development Plan to Airport Authority in the time frame provided above, or (iii) obtain final approval of the Development Plan by the Airport Authority, with no conditions objectionable to Sublessor attached to such approval, with such approval not to be unreasonably withheld, conditioned or delayed within the time frame specified above, then either Sublessor or Sublessee shall have the right to terminate this Sublease by providing written notice of the termination to the other, provided that such notice of termination must be delivered by Sublessee to Sublessor within thirty (30) days of the Airport Authority's regularly scheduled public hearing in June 2021, or if such notice of termination is given by Sublessor to Sublessee, within ninety (90) days of the Airport Authority's regularly scheduled public hearing in June 2021, and in such events, the Sublease shall be terminated, the parties shall be released from all obligations under the Sublease, except those that expressly survive termination. In the event of such termination by either Sublessor or Sublessee, all Net Rents and any Security Deposit paid by Sublessee to Sublessor shall be returned by Sublessor to Sublessee within thirty (30) days thereafter. No construction of improvements shall be commenced on the Demised Premises until (i) Sublessee has received written approval of Sublessee's Development Plan from Sublessor, and (ii) after having obtained Sublessor's written approval, Sublessee has received all required approvals of Sublessee's Development Plan for the Demised Premises from Airport Authority and all other applicable authorities including, without limitation, the building department of Arapahoe County, Colorado. The Development Plan must include a narrative setting forth the uses that Sublessee shall be entitled to for the Demised Premises ("Permitted Use"). The Development Plan may be amended by Sublessee from time to time subject to Sublessor's discretionary approval thereof prior to submittal to the Airport Authority. Sublessor does not promise Sublessee that any such amendment will be acceptable to Sublessor or the Airport Authority. In the event of any such amendment to the Development Plan, or any deviation of the Development Plan from the Concept Plan, the parties shall agree upon reasonable amendments to this Sublease to accommodate such amendment(s), but such amendment(s) shall not reduce Net Rent. If Sublessee exercises its Option, Sublessee shall prepare a Development Plan for Phase 2 which Development Plan shall be prepared in accordance with the DPAPM and the Design Guidelines. The Development Plan shall substantially comply with the Concept Plan, except as agreed to by Sublessor in writing in Sublessor's reasonable discretion. Sublessee shall submit a complete Development Plan for Phase 2 to Sublessor in accordance with the Design Guidelines within a commercially reasonable time period. Following approval of the Development Plan by Sublessor, Sublessee shall also submit a complete Development Plan for Phase 2 to the Airport Authority, using reasonable commercial efforts to submit the Development Plan to the Airport Authority. Sublessee acknowledges that if Sublessee does not exercise its Option, Sublessor has the right to develop Phase 2 as Sublessor determines in its discretion, and Sublessor shall have no obligation to comply with Sublessee's Development Plan or any portion thereof with respect to Phase 2, provided that Sublessor shall have the right to implement all or any portion thereof as Sublessor determines.

 

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5.3    Sublessee acknowledges that it is aware that Sublessor has leased the Demised Premises from the Airport Authority pursuant to the Master Lease which permits Sublessor to develop and improve the Demised Premises with Improvements in accordance with an approved Development Plan. The term "commencement of construction" or similar term as used in this Sublease shall be deemed to mean the start of excavation for the purposes of construction. The term "completion of construction" or similar term as used in this Sublease shall be deemed to mean that (i) the Improvements have been finished in accordance with the plans and specifications therefor, to the extent that a certificate of occupancy (whether temporary or permanent) has been issued, (ii) a licensed architect employed by Sublessee has submitted a report to Sublessor and Sublessee that the work has been substantially completed in accordance with the Development Plan and architectural drawings approved by Sublessor, and (iii) the Improvements have been certified as completed by the Sublessee. No changes or modifications of any type or kind whatsoever shall be made by Sublessee to the Development Plan after its approval by Sublessor, without Sublessor's prior review and written approval, which shall not be unreasonably withheld, conditioned or delayed.

 

5.4    Sublessee, at its sole cost and expense, shall, after approval of the Development Plan and/or the Development Plan for Phase 2, apply for all required building permits necessary to complete the Improvements and shall commence physical construction of the Improvements, and upon issuance of the building permits, immediately commence and prosecute with diligence and continuity to completion of construction of the Improvements in accordance with Exhibit H attached hereto, free of mechanic's and other liens, conditional bills of sale, chattel mortgages and other such security agreements and the right to file the same. If Sublessee shall have performed its obligations under this Section with promptness, continuity and diligence and if the Improvements shall not be completed by said date by reason of "unforeseen delays or unavoidable delays" said date and all subsequent dates, shall be extended for such period of time as Sublessee shall have been so delayed, but in no event to exceed sixty (60) days in the aggregate (the "Development Requirements"). In the event that Sublessee shall have failed to perform its obligations under this Section, then and in such event, Sublessee shall be in default under this Sublease. The Development Requirements may be amended from time to time upon request by Sublessee, subject to Sublessor's approval, which shall not be unreasonably withheld so long as Sublessor determines that the requested amendments do not have a material adverse impact on Sublessor.

 

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5.5    The Improvements shall be erected and completed in accordance with plans and specifications and the Development Plan approved by Sublessor and Airport Authority, all requirements and regulations of the Airport Authority of general applicability and all applicable laws, regulations, ordinances and legal requirements, including, but not limited to, the County Building Code for Arapahoe County, Colorado, and all Design Guidelines. No such construction shall be commenced until Sublessor shall have approved such plans and specifications and Development Plan, which shall not be unreasonably withheld, conditioned or delayed, and Sublessee shall have received, and provided Sublessor with a copy of, a building permit issued by the Building Division of the Arapahoe County, Colorado Department of Development Services/Infrastructure Management (the "DSIM"). Promptly following the completion of construction, Sublessee shall provide Sublessor with a complete set of as-built drawings with respect to the Improvements.

 

5.6    No construction shall be commenced until Sublessee shall have delivered to Sublessor a payment, performance and completion bond, in a form satisfactory to Airport Authority, in favor of Sublessor and Airport Authority, in an amount equal to the percentage of the estimated cost of construction of the Improvements which is required at such time by the Airport Authority, and such bond has been approved by the Airport Authority, unless such requirement is waived by Airport Authority. Sublessee agrees to indemnify and save harmless Sublessor of and from all loss, cost, damage and expense whatsoever, including, but not limited to, reasonable counsel fees, that may be incurred or become chargeable against Sublessor or the Demised Premises by reason of any work done or materials furnished to, in or upon the Demised Premises in connection with the construction or equipping of the Improvements, or by reason of any fine, penalty or Imposition or any matter or thing arising out of such construction or equipping of the Improvements. Sublessee shall procure and maintain all permits requisite to the construction and equipping of the Improvements and shall with reasonable diligence apply for and procure an architect's report, and all licenses, permits and certificates required for the occupancy, maintenance and operation of the Improvements. During the construction of the Improvements, and thereafter, Sublessee shall comply with all applicable requirements and regulations of law and governmental authorities and the Improvements shall, when completed, comply with all applicable laws. The Improvements and any and all alterations, additions, improvements, replacements and new buildings placed upon the Demised Premises by Sublessee, as well as all building equipment and all fixtures attached to or used in connection with the Demised Premises or the operation of the Improvements thereon shall become the absolute property of Sublessor on the expiration or termination of this Sublease, except for furniture and furnishings, trade fixtures of Sublessee, and other personal property of Sublessee which are not deemed fixtures under applicable law or otherwise attached to the Improvements. Sublessee shall complete and pay for the Improvements and all furnishings and equipment used in its operation with the time limits prescribed for such completion in Section 5.2.

 

5.7    Sublessee shall improve the Demised Premises substantially in accordance with the Development Plan prepared in accordance with the DPAPM and approved by Airport Authority.

 

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5.8    The Sublessee shall include in all construction contracts entered into by it a provision requiring the contractor to indemnify, release and save harmless Airport Authority and Sublessor, and their commissioners, officers, representatives, agents and employees from and against any and all loss of or damage to property, or injuries to, or death of, any person or persons, and from any and all claims, costs, damages, suits, causes of action, and judgments, including workmen's compensation claims, in any way resulting from, or arising out of such contractor's operations on or in connection with the Demised Premises, and the contractor's use or occupancy of the Demised Premises or of any portion of Centennial Airport; provided, however, that Airport Authority and Sublessor shall give the contractor prompt and timely notice of any claim made against Airport Authority or Sublessor and deliver to the contractor all papers, notices, documents, summonses and other legal process served upon Airport Authority or Sublessor or its agents; and, provided, further, contractor need not indemnify, release and save harmless Airport Authority and Sublessor against loss of property, or injury to or death of persons, caused by the gross negligence or willful misconduct of Airport Authority or Sublessor, or their commissioners, officers, managers, members, representatives, agents and employees. Sublessee shall require the contractor to furnish liability insurance in such amounts as may be required by Airport Authority or Sublessor. The Sublessee shall also include in any construction contract such reasonable provisions as may be generally required by Airport Authority or Sublessor or pursuant to the Master Lease, relating to the operations of the contractor of Centennial Airport.

 

5.9    Notwithstanding the foregoing, if Sublessee requests a waiver of the requirement of the aforesaid payment, performance and completion bond by the Airport Authority, Sublessor shall not object thereto and Sublessor will request Airport Authority to consider such request, if Sublessee has provided evidence that: (a) such bond is not obtainable by its contractor or is not obtainable at a reasonable cost, (b) Sublessee's contractor is of good repute, has experience in constructing buildings of the type to be constructed and is financially capable of performing its obligations under the construction contract, (c) Sublessee's construction lender has in place disbursement procedures designed to protect against the filing of mechanic's liens against the Demised Premises, which procedures are similar to those used generally by construction lenders in connection with non-bonded commercial loans, and (d) Sublessee has adopted a program to insure that the Demised Premises remain posted under the provisions of Colorado law, notifying persons that neither the fee owner of the Demised Premises nor Sublessor will be responsible for the payment of labor or materials supplied to the Demised Premises on behalf of Sublessee or its contractor.

 

5.10    Sublessor shall have no obligation whatsoever to construct any improvements on or offsite of the Demised Premises, including, without limitation, any additional roads or taxiways, except to the extent the Airport Authority requires the taxiway designated as Sierra to be constructed, Sublessor shall either construct such taxiway or cause such taxiway to be constructed in accordance with the plans therefor included in the 2nd ACPAA submittal dated January 30, 2015 ("Current Plans"). Notwithstanding the foregoing, any changes to taxiway Sierra from the Current Plans, whether widening or other changes to the Current Plans, will be the Sublessee's responsibility at Sublessee's sole cost and expense if such changes are the result of Sublessee's development, design or use of the Demised Premises.

 

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6.    Insurance.

 

6.1    Sublessee, at its sole cost and expense, shall keep the Improvements insured for the mutual benefit of Sublessor, Airport Authority and Sublessee, during the term of this Sublease, against loss or damage by fire and against loss or damage by other risks now or hereafter embraced by so-called "Extended Coverage," or "All Risk" policy of casualty insurance, in amounts sufficient to prevent Sublessor or Sublessee from becoming a co-insurer under the terms of the applicable policies, but in any event in an amount not less than one hundred percent (100%) of the then full replacement cost of the Improvements, exclusive of the cost of excavations, foundations and footings below the lowest basement floor. Such full replacement cost shall be determined from time to time (but not more frequently than once in any twelve (12) calendar months) at the request of Sublessor by an insurer or by an appraiser, engineer, architect or contractor designated by Sublessee and approved in writing by Sublessor (such approval not to be unreasonably withheld) and paid by Sublessee. No omission on the part of Sublessor to request any such determination shall relieve Sublessee of any of its obligations under this Section 6. Whenever any Improvements or alterations are in the course of construction, the casualty insurance required by this Section shall be carried by Sublessee in builder's risk form written on a completed value basis, on a non-reporting form, insuring against loss to the extent of the full replacement value of that which is being covered.

 

6.2    Sublessee, at its sole cost and expense, but for the mutual benefit of Sublessor, Airport Authority and Sublessee, shall also maintain:

 

6.2.1    a policy of commercial general liability insurance against claims for bodily injury, death or property damage, occurring on, in or about the Demised Premises or Improvements and on, in or about the adjoining streets, property and passageways, such insurance to afford minimum protection, during the term of this Sublease, with a combined single limit for each occurrence of not less than the amount from time to time required by the Airport Authority, which amount is currently Five Million Dollars ($5,000,000.00) per occurrence and Five Million Dollars ($5,000,000.00) in the aggregate;

 

6.2.2    intentionally deleted;

 

6.2.3    procure and maintain during the course of the construction of any Improvements or alterations on the Demised Premises constructed during the term of this Sublease, or any extensions thereof, owner's contingent or protective liability insurance naming Sublessor and Airport Authority as an additional insured covering claims not covered by or under the terms of the above-mentioned commercial general liability insurance, and Sublessee shall also carry during such period of construction worker's compensation insurance covering all persons employed by Sublessee on or in connection with such construction. Without limiting the generality of the foregoing, Sublessee shall maintain or cause to be maintained at all times during the construction of the Improvements the insurance required pursuant to Section 10.2.6;

 

6.2.4    rent insurance against loss of gross rental income from the Demised Premises and Improvements for a period of not less than twelve (12) months due to the risks referred to in Section 6.1 in an amount not less than the Net Rent, the estimated additional rent payable hereunder and debt charges on any leasehold mortgage for twelve (12) months; and

 

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6.2.5    such other insurance and in such amounts as may from time to time reasonably be required by Sublessor against other insurance hazards which at the time are commonly insured against and generally available in the case of premises similarly situated, due regard being, or to be given, to the height and types of Improvements, their construction and their use and occupancy.

 

6.3    Sublessee may obtain any insurance not required under the provisions of this Sublease, but any such insurance obtained by Sublessee on the Improvements, whether or not required under this Section 6, shall be for the mutual benefit of Sublessor and Sublessee and, at the election of either, any mortgagee, as their interests may appear, and shall be subject to all other provisions of this Section 6 and of Section 15 hereof.

 

6.4    Except as hereinafter otherwise provided, all insurance provided for in this Section 6 shall be obtained under valid and enforceable policies issued by insurance companies authorized to do business in the State of Colorado and with a rating of A-X or better as rated in the most recent edition of Best's Insurance Reports. Except as hereinafter otherwise provided, all casualty policies shall contain the standard non-contributory mortgagee clause in favor of any mortgagees. Upon the execution of this Sublease, and thereafter not less than thirty (30) days prior to the expiration dates of the expiring policies theretofore furnished pursuant to this Section 6, or any other Section of this Sublease, originals or duplicate originals of the policies bearing notations evidencing the payment of premiums or accompanied by other evidence satisfactory to Sublessor of such payment, shall be delivered by Sublessee to Sublessor.

 

6.5    All policies of insurance provided for in Section 6.2.1 shall name Sublessor and Airport Authority as an additional insured.

 

6.6    All policies of insurance provided for in Section 6.1 and in Sections 6.2.2, 6.2.4 and 6.2.5 hereof shall be carried in the name of Sublessor, Airport Authority and Sublessee, as insureds, and shall include the interests of the holders of any mortgages affecting the Sublessor's leasehold estate in the Demised Premises or Sublessee's interest in this Sublease, as their respective interests may appear, provided any such holder shall have agreed in writing that the proceeds of any loss payable under any of the said policies shall be paid and held as provided in this Sublease and shall be applied to the cost of repairing or restoring the Improvements as herein provided. The loss, if any, under any policies provided for in Section 6.1 and Sections 6.2.2 and 6.2.5 shall be adjusted with the insurance companies (x) by Sublessee, in the case of any particular casualty resulting in damage or destruction not exceeding One Hundred Thousand Dollars ($100,000.00) in the aggregate, or (y) by Sublessor and Sublessee in the case of any particular casualty resulting in damage or destruction exceeding One Hundred Thousand Dollars ($100,000.00) in the aggregate. The proceeds of any such insurance shall be payable:

 

6.6.1    to Sublessee in the case of any particular casualty resulting in damage or destruction not exceeding One Hundred Thousand Dollars ($100,000.00) in the aggregate, to be held in trust by Sublessee for the purpose of restoration; or

 

6.6.2    to an Authorized Institution in the case of any particular casualty resulting in damage or destruction exceeding One Hundred Thousand Dollars ($100,000.00) in the aggregate for the purposes set forth in Section 15 of this Sublease. If at any time there is no Authorized Institution, said proceeds shall be held in trust by Sublessee for the purposes of restoration.

 

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All policies provided for in Section 6.1 and in Sections 6.2.2, 6.2.4 and 6.2.5 hereof, if the amount insured thereunder shall exceed One Hundred Thousand Dollars ($100,000.00) (and any other such policies, regardless of the amount insured thereunder, which insure against a common risk and in respect of which the aggregate amount of the risk insured against shall exceed $10,000.00) shall provide that the loss, if any, thereunder shall be adjusted and paid as provided above. Each such policy shall contain (i) a provision that no act or omission of Sublessee shall affect or limit the obligation of the insurance company to pay to Sublessor the amount of any loss sustained, and (ii) an agreement by the insurer that such policy shall not be cancelled without at least thirty (30) days' prior written notice to Sublessor, Airport Authority and the holder of any mortgage to whom a loss thereunder may be payable.

 

6.7    If at any time during the term of this Sublease Sublessor shall request that the amount of liability insurance provided by Sublessee, as required by the provisions of Section 6.2.1 and Section 10.2.6 hereof, be increased on the ground that such coverage is inadequate properly to protect the interest of Sublessor, or if Sublessor shall require other insurance pursuant to the provisions of Section 6.2.5 hereof, and Sublessee shall refuse to comply with any such request or requirements, then the dispute shall be submitted to arbitration as provided in Section 24 hereof. Sublessee shall thereafter carry the amount, and such kind, of insurance as determined by such arbitration to be adequate and required, but in no event shall the amount of liability insurance be less than the amount specified in Section 6.2.1 and in Section 10.2.6.

 

6.8    In no event, notwithstanding anything to the contrary contained herein, shall the scope or amount of the insurance coverages required in this Section 6 or in Section 10, to the extent applicable to Sublessee, be less than that which may be required pursuant to the terms and conditions of the Minimum Standards or the Master Lease.

 

7.    Sublessor's Right to Perform Sublessee's Covenants.

 

7.1    If Sublessee shall at any time fail to pay any Imposition in accordance with the provisions of Section 4 hereof, or to take out, pay for, maintain or deliver any of the insurance policies provided for in Section 6 and Section 10.2.6, or fail to perform the repairs or maintenance as provided in Section 8, or shall fail to make any other payment or perform any other act on its part to be made or performed, then Sublessor, after the expiration of the applicable grace period provided in Section 19 (or at any time, with or without notice, in case of emergency) and without waiving or releasing Sublessee from any obligation of Sublessee contained in this Sublease, may (but shall be under no obligation to):

 

7.1.1    subject to the provisions of Section 4.4 hereof, pay any Imposition payable by Sublessee pursuant to the provisions of Section 4 hereof; or

 

7.1.2    take out, pay for and maintain any of the insurance policies required to be maintained by Sublessee in Section 6 and Section 10 hereof; or

 

7.1.3    make any other payment or perform any other act on Sublessee's part to be made or performed as pursuant to this Sublease, and may enter upon the Demised Premises and the Improvements for any such purpose, and take all such action thereon, as may be necessary therefor.

 

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7.2    All sums paid by Sublessor and all costs and expenses, including all reasonable legal fees, incurred by Sublessor pursuant to the provisions of Section 7.1 hereof, together with interest thereon at the rate of twelve percent (12%) per annum from the respective dates of Sublessor's making of each such payment or incurring of each such cost and expense, shall constitute additional rent payable by Sublessee under this Sublease and shall be paid by Sublessee to Sublessor within ten (10) days of written notice from Sublessor to Sublessee. Sublessor shall not be limited, in the proof of damages which Sublessor may claim against Sublessee arising out of or by reason of Sublessee's failure to provide and keep in force insurance as aforesaid, to the amount of the insurance premium or premiums not paid by Sublessee and which would have been payable if such insurance was obtained, but Sublessor shall also be entitled to recover, as damages for such breach, (i) the uninsured amount of any loss, to the extent of any deficiency in the insurance required by the provisions of this Sublease, or (ii) all damages, costs and expenses suffered or incurred by reason of damage to, or destruction of, the Improvements, occurring during any period when Sublessee shall have failed to provide insurance as required under this Sublease, including reasonable legal fees and court costs.

 

8.    Repairs and Maintenance.

 

8.1    Throughout the Term of this Sublease, Sublessee, at its sole cost and expense, will maintain the Demised Premises, Phase 2 (so long as Phase 2 is part of the Demised Premises), any Improvements constructed thereon, including parking areas, and any sidewalks, curbs and gutters adjoining the Demised Premises and Phase 2 (so long as Phase 2 is part of the Demised Premises), and will keep the same in good order and condition, and shall make all necessary repairs thereto, interior and exterior, structural and non-structural, ordinary and extraordinary, and unforeseen and foreseen. When used in this Section 7.2, the term "repair" shall include all necessary replacements. All repairs made by Sublessee shall be equal in quality and class to the original work.

 

8.2    Sublessee shall keep and maintain all portions of the Demised Premises and Phase 2 (so long as Phase 2 is part of the Demised Premises), including any Improvements thereon, as well as the sidewalks, curbs, gutters and passageways adjoining the Demised Premises and Phase 2 (so long as Phase 2 is part of the Demised Premises), in a clean and orderly condition, free of dirt, rubbish, snow, ice, weeds and unlawful obstructions. Any damaged or broken curb, gutter or sidewalk on the Demised Premises shall promptly be repaired or replaced by Sublessee.

 

8.3    Sublessor shall not be required to furnish any services or facilities or to make any repairs or alterations in or to the Demised Premises or any Improvements thereon. Sublessee hereby assumes the full and sole responsibility for the condition, operation, repair, replacement, maintenance and management of the Demised Premises and any Improvements. Sublessor shall have no responsibility to maintain, repair or replace any improvements on any portion of the Demised Premises, except for any improvements that Sublessor constructs upon the Demised Premises pursuant to this Sublease.

 

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8.4    Sublessee shall have the right to transfer the foregoing maintenance responsibility to a maintenance association at such time as a maintenance association shall be formed; provided, however, that transfer of such obligation to any such association shall not relieve Sublessee from liability in the event such maintenance is not properly and timely performed.

 

9.    Compliance with Laws, Ordinances, Etc.

 

9.1    Throughout the term of this Sublease, Sublessee, at its sole cost and expense, shall promptly comply with all laws, ordinances, codes, orders, rules, regulations and requirements of all federal, state, county and municipal governments, courts, departments, commissions, boards and agencies, any national or local Board of Fire Underwriters, or any other body exercising functions similar to those of any of the foregoing, any and all rules, regulations, codes and standards issued by the National Fire Protection Association foreseen or unforeseen, ordinary as well as extraordinary, which may be applicable to (i) the Demised Premises or any Improvements thereon, including parking areas, and the sidewalks, curbs and gutters adjoining the Demised Premises, or (ii) the use of the same or which places any duty or obligation with respect to the Demised Premises or any Improvements thereon, including parking areas.

 

9.2    Sublessee shall likewise observe and comply with the requirements of all policies of public liability, casualty and all other policies of insurance at any time in force with respect to the Demised Premises or the Improvements, and Sublessee shall, in the event of any violation or any attempted violation of the provisions of this Section 9.2 by any tenant of Sublessee or other occupant, immediately take steps to remedy or prevent the same.

 

10.   Changes and Alterations by Sublessee.

 

10.1    Sublessee shall have the right at any time and from time to time during the term of this Sublease, at its sole cost and expense, to make changes and alterations in or to the Demised Premises and Improvements, subject, however, in all cases to the conditions of Section 10.2, which Sublessee agrees to observe and perform.

 

10.2    Any changes, alterations, demolitions or new construction Sublessee may desire to make pursuant to Section 10.1 shall be made subject to the following conditions:

 

10.2.1    All changes and alterations shall be in compliance with the Minimum Standards, Master Lease, Development Plan and Design Guidelines.

 

10.2.2    No change or alteration to the exterior of the Improvements shall be undertaken without the prior written consent of Sublessor, such consent not to be unreasonably withheld, conditioned or delayed, but Sublessor's approval shall not excuse Sublessee from complying with the other requirements applicable to such change or alteration as set forth in this Sublease, including, without limitation, compliance with the Design Guidelines.

 

10.2.3    No change, alteration, demolition or new construction, and no restoration under Sections 15 or 16, shall be undertaken until Sublessee shall have procured and paid for, so far as the same may be required from time to time, all permits and authorizations of all county and/or municipal departments and governmental subdivisions having jurisdiction. Sublessor shall join in the application for such permits or authorization whenever such action is necessary.

 

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10.2.4    Any change, alteration or new construction shall, when completed, be of such character as not to reduce the economic value of the Demised Premises below its value immediately before such change, alteration or new construction, nor reduce the square footage of the Improvements below its square footage immediately before such change, alteration or new construction, nor impair the structural strength of the Improvements.

 

10.2.5    Any change, alteration, demolition or new construction, and any restoration under Sections 15 and 16, once commenced, shall be made promptly (unavoidable delays excepted) in a good and workmanlike manner and in compliance with all applicable permits, authorizations and building and zoning laws and all other laws, ordinances, codes, rules, regulations and requirements of all federal, state, county and municipal governments, departments, commissions, boards and agencies, any national or local Board of Fire Underwriters, or any other body hereafter exercising functions similar to those of any of the foregoing, and in accordance with any and all rules, regulations, codes and standards issued by the National Fire Protection Association.

 

10.2.6    Workers' compensation insurance covering all persons employed in connection with the work and with respect to whom death or bodily injury claims could be asserted against Sublessor, Sublessee or the Demised Premises or Project and owners' and contractors' general liability insurance for the mutual benefit of Sublessee, Sublessor and Airport Authority with limits of not less than Five Million Dollars ($5,000,000.00) per occurrence and not less than Five Million Dollars ($5,000,000.00) in the aggregate, and with limits of not less than Five Hundred Thousand Dollars ($500,000.00) for property damage, shall be maintained by Sublessee, at Sublessee's sole cost and expense, at all times when any work is in progress in connection with any change, alteration, demolition or new construction or any restoration under Sections 15 or 16. At all such times, the fire and casualty insurance required to be maintained under Section 6 shall be endorsed, amended or replaced to provide for Builder's Risk Insurance, written on the completed value, non-reporting form, or the then equivalent of such insurance. All such insurance shall comply with the provisions of Section 6.4 and all policies or certificates therefor issued by the respective insurers, bearing notations evidencing the payment of premiums or accompanied by other evidence satisfactory to Sublessor of such payment, shall be delivered to Sublessor.

 

10.2.7    A payment and performance and completion bond as required by Section 5.6, provided no performance and payment bond or other security shall be required except (a) in the case of restoration, and (b) to the extent that such estimated cost exceeds the amounts deposited or available for restoration pursuant to Sections 15.2 or 16.3 of this Sublease, provided that Sublessee shall have provided to Sublessor evidence reasonably satisfactory to Sublessor of the availability to Sublessee of funds sufficient to complete any such change or alteration.

 

10.2.8    No change, alteration or new construction shall, when completed, tie in or connect the Demised Premises or any Improvement with any other building on adjoining property, except to the extent required, and approved by Sublessor, to provide access to any other building or buildings hereafter erected on any other portion or portions of the entire parcel of land subject to the Master Lease.

 

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10.2.9    All changes, alterations, demolitions and new construction shall be performed by contractors selected by Sublessee in its reasonable discretion.

 

11.   Covenant against Waste. Sublessee covenants not to do or suffer any waste or damage to the Project or any Improvements. Sublessee shall not permit rubbish, debris, waste materials or anything detrimental to safety or health to remain on any part of the Demised Premises or Project or to be disposed of improperly.

 

12.   Use of Property.

 

12.1    Sublessee will use, or cause to be used, the Demised Premises principally and continuously as and for aircraft hangars with appurtenant office space, as reflected on the Concept Plan attached hereto as Exhibit G, and for other aviation related business operations allowed by the FAA and approved by the Airport Authority. To the extent Sublessee amends the Concept Plan, and after approval by the Sublessor of any such amendment(s), the parties shall agree upon reasonable amendments to this Sublease to accommodate such amended Concept Plan and will substitute and attach the amended Concept Plan to an amendment to this Sublease evidencing the same.

 

12.2    Sublessee shall not suffer or permit the Demised Premises or the Project, or any portion thereof, to be used by the public without restriction or in such manner as might impair Sublessor's title to the Demised Premises, or which could be construed as a dedication of the Demised Premises or any portion thereof.

 

12.3    Sublessee shall not use or permit the use of the Demised Premises or the Project or any part thereof for any purpose, other than the uses permitted under Section 12.1 hereof. Without limiting the generality of the foregoing, the Demised Premises and Improvements shall not be utilized in a manner inconsistent with the uses allowed by the Development Plan approved by Sublessor and the Airport Authority in their respective sole discretion.

 

12.4    The handling, storage, transferring and/or dispensing of fuel on the Demised Premises shall only be provided by an FBO authorized by the Airport Authority.  The Sublessor will consider allowing an FBO to operate on the Demised Premises only in those circumstances where both of the following conditions cannot be met by a single existing FBO authorized by the Airport Authority: (a) sufficient personnel, equipment and service levels are in place to serve the Demised Premises during normal operational hours; and (b) fuel pricing exists at appropriate rates relative to Sublessee’s private and exclusive hangar facilities located on the Demised Premises commensurate with the volume of fuel demanded by Sublessee and Sublessee’s tenants.  Any agreement or authorization by Sublessor to permit the Sublessee to apply for an FBO status on the Demised Premises when the circumstances as provided in the prior sentence are not met shall be subject to the mutual agreement of the parties, and neither party shall unreasonably request, withhold, condition or delay such agreement or authorization.  Notwithstanding any agreement by the parties to permit an FBO to operate on the Demised Premises, both parties acknowledge that the Sublessor cannot give final approval to allow an FBO to operate on the Demised Premises and that the Airport Authority, in its sole discretion, has the authority to approve all FBO applications.

 

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13.   Entry on Property by Sublessor, Etc.

 

13.1    Sublessee will permit Sublessor and Sublessor's authorized representatives and the Airport Authority and its representatives to enter the Demised Premises and Improvements at all reasonable times and upon reasonable notice for the purpose of (a) inspecting the same; (b) following thirty (30) days' written notice to Sublessee and Sublessee's failure to make any repairs required herein to be made by Sublessee, or in the event the repairs are of such a nature that they cannot be completed within thirty (30) days following written notice from Sublessor, that Sublessee has failed to commence making such repairs and diligently prosecute the same to completion, making any necessary repairs thereto; and (c) performing any work therein pursuant to the provisions of Section 7.1 hereof. Nothing herein shall imply any duty upon the part of Sublessor to do any such work; and performance thereof by Sublessor shall not constitute a waiver of Sublessee's default in failing to perform the same.

 

13.2    Sublessor and its designees shall have the right to enter the Demised Premises and Improvements at reasonable times, upon reasonable notice to Sublessee, for the purpose of showing the same to prospective purchasers of the leasehold estate in the Demised Premises or to mortgagees or prospective mortgagees of the leasehold estate in the Demised Premises, and, at any reasonable time within twelve (12) months prior to the expiration of the term of this Sublease, upon reasonable notice to Sublessee, for the purpose of showing the same to prospective tenants. Sublessor shall also have the right at all reasonable times to enter onto the Demised Premises for such reasonable purposes as are necessary to conduct Sublessor's business activities, including, without limitation, for purposes of inspection, installation, maintenance, repair and operation of utilities, provided that such entry shall not unreasonably interfere with Sublessee's operations.

 

14.    Indemnification of Sublessor; Environmental Matters.

 

14.1    Subject to the provisions in Section 14.3 hereof, Sublessee will indemnify, defend and save Sublessor harmless against and from all liabilities, obligations, damages, penalties, claims, costs, charges and expenses, including reasonable architects' and attorneys' fees, which may be imposed upon or incurred by or asserted against Sublessor as owner of its interest in the Demised Premises by reason of any of the following occurring during the term of this Sublease:

 

14.1.1    any work or thing done in, on or about the Demised Premises, the Improvements or any part thereof;

 

14.1.2    any use, non-use, possession, occupation, condition, operation, maintenance or management of the Demised Premises , the Improvements or any part thereof or any street, alley, sidewalk, curb, vault, passageway or space adjacent thereto;

 

14.1.3    any act, omission or negligence on the part of Sublessee or any of its agents, contractors, servants, employees, licensees or invitees;

 

14.1.4    any accident, injury or damage to any person or property occurring in, on or about the Demised Premises, the Improvements or any part thereof or any street, alley, sidewalk, curb, vault, passageway or space adjacent thereto; or

 

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14.1.5    any failure on the part of Sublessee to perform or comply with any of the covenants, agreements, terms or conditions contained in this Sublease on its part to be performed or complied with.

 

14.2    Sublessee shall also indemnify Sublessor against and save it harmless from all costs, reasonable counsel fees, expenses and penalties incurred by Sublessor in connection with any such liability or claim, on condition that if any action or proceeding shall be brought against Sublessor in connection with any such liability or claim, Sublessor shall afford Sublessee an opportunity to defend, and Sublessee covenants and agrees to defend, such action or proceeding, at Sublessee's expense, by counsel selected by any insurance company insuring against any such claim and undertaking to defend such claim, or by other counsel selected by Sublessee and approved by Sublessor, which approval Sublessor agrees not unreasonably to withhold or delay.

 

14.3    Sublessee covenants to Sublessor that Sublessee shall not use the Demised Premises or the Improvements in any manner which would violate any applicable environmental protection or hazardous substance related statutes, laws, rules or regulations. Without limiting the generality of the foregoing, Sublessee covenants to Sublessor that no hazardous substance, hazardous waste, pollutant, contaminant, nuclear or by-product material or toxic waste materials of any kind whatsoever will be stored, generated, manufactured, released or disposed of on the Demised Premises or the Improvements or any part thereof by Sublessee or its tenants or contractors in violation of applicable environmental protection and hazardous substance related statutes, laws, rules or regulations or any permit issued by the Environmental Protection Agency or the Colorado Department of Health. Notwithstanding the foregoing to the contrary, Sublessee shall have the right to have De Minimis Amounts, as such term is hereinafter defined, of hazardous substances to be used and stored on the Demised Premises or in the Improvements, provided Sublessee demonstrates to the Sublessor's reasonable satisfaction that such hazardous substance is necessary, desirable or useful to Sublessee's business or operation on the Demised Premises or in the Improvements and will be used, kept and stored in a manner that complies with all laws regulating any such hazardous substance. No underground storage tanks will be placed in or on the Demised Premises or any part thereof during the term of this Sublease without the prior written approval of Sublessor. Sublessee acknowledges that Sublessor is relying on Sublessee's full and faithful compliance with the covenants contained herein. If (i) Sublessee breaches the obligations stated in this Article 14, or (ii) if the presence of hazardous substance on the Demised Premises or in the Improvements, which is caused by Sublessee, its tenants or contractors, or voluntarily permitted by Sublessee results in contamination of the Demised Premises or the Improvements, or (iii) if contamination of the Demised Premises or the Improvements by hazardous substance otherwise occurs and Sublessee is legally liable to Sublessor for damage resulting therefrom, the Sublessee shall indemnify, defend and hold Sublessor harmless from any and all claims, judgment, damages, penalties, fines, costs, liabilities or losses which arise during or after the term of this Sublease as the result of such contamination. This indemnification of Sublessor by Sublessee includes, without limitation, costs incurred in connection with any investigation of site conditions or any cleanup, remedial, removal or restoration work required by any federal, state or local governmental agency or political subdivision because of hazardous substance present in the soil or ground water on or under the Demised Premises, which occurred during the term of this Lease as a result of Sublessee's or its tenants' or contractors' acts. Without limiting the foregoing, if the presence of a hazardous substance on the Demised Premises or the Improvements caused or permitted by Sublessee or its tenants or contractors results in any contamination of the Demised Premises or the Improvements, Sublessee shall promptly take all actions, at its sole expense, as are necessary to return the Demised Premises to the condition existing prior to the introduction of any such hazardous substance to the Demised Premises; provided that Sublessor's approval of such action should first be obtained, which approval shall not be unreasonably withheld. The term "De Minimis Amounts" as used herein means hazardous substances being used within the Demised Premises or the Improvements in such quantities as are customarily employed in, or associated with, the uses referenced in Section 12.1 hereof on Centennial Airport and subsequent to the completion of construction on the Demised Premises, quantities of hazardous substances stored in the manner required by applicable laws as are customarily employed in connection with the uses referenced in Section 12.1 hereof and at all time in such a manner so as to not violate any environmental laws. De Minimis Amounts do not include any amount of hazardous substances which are disposed of, manufactured, produced or released on the Demised Premises or in the Improvements.

 

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14.4    Sublessee agrees to promptly notify Sublessor in writing of any use, storage, generation, release, disposal or placing of any hazardous substance, hazardous waste, pollutant, contaminant, nuclear or by-product material or toxic waste materials of any kind in, on, about or under the Demised Premises or the Improvements, or any part or parcel thereof, in violation of any environmental protection statute, law, rule, regulation or any permit issued by the Environmental Protection Agency, the Colorado Department of Health or any other similar governmental or quasi-governmental unit, body or agency.

 

14.5    Sublessee agrees to promptly notify Sublessor in writing of the receipt of any notice, order, correspondence, communication or information that (a) a permit is required from the Environmental Protection Agency, the Colorado Department of Health or any similar governmental or quasi-governmental unit, body or agency for the use, maintenance or operation of any Improvement on the Demised Premises; (b) a summons, complaint, citation or order directing compliance or inquiry is being issued or made by the Environmental Protection Agency, the Colorado Department of Health or any similar governmental or quasi-governmental unit, body agency; (c) any governmental or quasi-governmental unit, body agency or any third party has demanded or asserted any right of recovery for payment or reimbursement, or any claim, claim of lien or lien against the Demised Premises or the Improvements, or any part or parcel thereof, for clean-up costs, damages or other costs incurred under or pursuant to any environmental statute, law rule or regulation; or (d) any fine, penalty, assessment, cost forfeiture or imposition has been or will or is sought to be imposed against Sublessee for violation or asserted violation of environmental protection laws.

 

14.6    In the event that Sublessor shall, at any time, give Sublessee written notice that any hazardous substance, hazardous waste, pollutant, contaminant, nuclear or by-product material or toxic waste material is being used, stored, generated, released, or disposed by Sublessee in, upon or under the Demised Premises or in the Improvements, or any part or parcel thereof, in violation of any environmental protection statute, law, rule or regulation, and Sublessee does not cure such condition within thirty (30) days, or such longer period as may in the exercise of due diligence and good faith be reasonably necessary, but in no event to exceed an additional thirty (30) days or such additional time as may be agreed upon in writing by Sublessee and Sublessor, then Sublessor may exercise its remedies under Section 19.

 

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14.7    As used herein, the terms "hazardous substance," "hazardous waste," "pollutant," "contaminant," "nuclear or by-product material" and "toxic waste material" shall be given the broadest construction possible and shall include, but not be limited to, the definition which may be ascribed to such terms under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, the Resource Conservation and Recovery Act of 1976, as amended, the Solid Waste Disposal Act, as amended, the Atomic Energy Act of 1954, the Toxic Substance Control Act, as amended, the Colorado Underground Storage Tank Act, as amended, the Colorado Hazardous Substance Act, as amended, the Colorado Water Quality Control Act, as amended, and the Colorado Air Quality Control Act, as amended, and the rules and regulations of administrative agencies promulgated thereunder, as well as definitions which may be ascribed pursuant to any federal, state or local statutes, laws, rules or ordinances relating to environmental protection. The term "hazardous substance" shall also include, without limitation, asbestos, polychlorinated biphenyls and polybrominated biphenyls and all petroleum products.

 

14.8    The indemnifications provided for in this Section 14 and its subparts shall not apply in the event that the otherwise indemnified act or omission is the result of Sublessor's gross negligence or intentional acts.

 

14.9    Sublessor shall indemnify, defend and save Sublessee harmless from any and all liabilities, obligations, damages, penalties, claims, reasonable costs, charges and expenses, including reasonable attorneys' fees, to the extent imposed upon or incurred by Sublessee arising out of Sublessor's gross negligence, wrongful conduct or intentional actions.

 

15.   Damage or Destruction.

 

15.1    In case of casualty to the Demised Premises or any Improvement, Sublessee shall promptly give written notice thereof to Sublessor. Regardless of the scope or amount of any such damage or destruction, this Sublease shall remain in full force and effect, and Sublessee shall not be entitled to any diminution or abatement of rent. Sublessee, at its sole cost and expense, except as otherwise provided in this Section 15, and whether or not the insurance proceeds, if any, shall be sufficient for the purpose, shall either (i) restore, repair, replace, rebuild the same as nearly as possible to their value, condition and character immediately prior to such damage or destruction or with such changes or alterations as may be made at Sublessee's election in conformity with and subject to the conditions of Section 10 hereof; or (ii) demolish the Improvements and construct new Improvements in replacement thereof in conformity with and subject to the conditions of Section 10 hereof. Such restoration, repairs, replacements, rebuilding, alterations or demolition and new construction shall be commenced within a reasonable time after such damage or destruction and prosecuted with reasonable diligence, unavoidable delays excepted.

 

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15.2    All insurance money paid to Sublessee or to any Authorized Institution on account of such damage or destruction, less the actual costs, fees and expenses, if any, incurred in connection with adjustment of the loss, shall be applied by Sublessee or such Authorized Institution to the payment of the cost of the aforesaid restoration, repairs, replacement or rebuilding, or demolition and new construction, including the cost of temporary repairs or for the protection of property pending the completion of permanent restoration, repairs, replacements or rebuilding (all of which temporary repairs, protection of property and permanent restoration, repairs, replacement or rebuilding are hereinafter collectively referred to as the "restoration"). Such insurance proceeds shall be disbursed from time to time as such restoration progresses; provided that the work for which payment is requested has been done in a good and workmanlike manner and substantially in accordance with the plans and specifications therefor, if any. In the event that the insurance proceeds are held by an Authorized Institution, such disbursement shall be made in conformance with and pursuant to the provisions set forth in the loan documents executed by Sublessee for the benefit of such Authorized Institution, subject, however, to the requirement that Sublessee or such Authorized Institution provides to Sublessor, prior to any such disbursement, mechanic's lien releases for all work performed by any contractor, subcontractor, laborer, materialman, supplier or other persons having a lien right under the laws of the State of Colorado for work performed prior to the date of such disbursement. Further, in the event that any insurance proceeds are being held by Sublessee, Sublessee, in such event prior to such disbursement, shall provide Sublessor mechanic's lien releases for all work performed prior to such disbursement as required above.

 

15.3    If the insurance money at the time then held by Sublessee or any Authorized Institution shall be insufficient to pay the entire cost of such restoration, (i) Sublessee will pay the deficiency to such Authorized Institution within thirty (30) days of notice of such deficiency to Sublessee; or (ii) if no Authorized Institution is holding such insurance proceeds, Sublessee shall directly pay to contractors, subcontractors, laborers, materialmen, suppliers or other persons having a lien right under the laws of the State of Colorado the amount of such deficiency prior to using any insurance proceeds then being held by it.

 

16.   Condemnation.

 

16.1    In the event that the Demised Premises, Improvements or any part thereof, shall be taken in condemnation proceedings or by exercise of any right of eminent domain or pursuant to a conveyance in lieu thereof (hereinafter called, collectively, "condemnation proceedings"), Sublessor and Sublessee shall have the right to participate in any such condemnation proceedings and the award that may be made in any such proceedings or the proceeds thereof shall be deposited with an Authorized Institution, or if at the time there is no Authorized Institution, with Sublessor, and distributed in the manner set forth in this Section 16. The parties hereto agree to execute any and all further documents that may be required in order to facilitate collection of any award or awards and the making of any such deposit.

 

16.2    If at any time during the term of this Sublease, title to the whole or materially all of the Demised Premises shall be taken in condemnation proceedings or pursuant to a conveyance in lieu thereof, this Sublease shall terminate and expire on the date of such taking. For purposes of this Section 16.2 materially all of the "Demised Premises" shall be deemed to have been taken if (i) the portion of the Improvements not taken cannot be repaired or reconstructed, in Sublessee's reasonable judgment, as to constitute a complete, rentable structure capable of producing a fair and reasonable net annual income, after the payment of all operating expenses thereof; or (ii) the Demised Premises are rendered unsuitable for Sublessee's use specified in Section 12.1 hereof. As used above, the term "operating expenses" shall be deemed to exclude depreciation, income taxes and franchise taxes and shall be deemed to include interest and amortization or any leasehold mortgages. In case any dispute shall arise between Sublessor and Sublessee as to whether or not materially all of the Demised Premises have been taken, such dispute shall be determined by arbitration as provided in Section 24 hereof.

 

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16.3    The rights of Sublessor and Sublessee to share in the net award or awards (after expenses of collection) for Land, Improvements and damages upon any such taking shall be determined as follows:

 

16.3.1    In the event of the taking of the whole or materially all of the Demised Premises, Sublessor shall be entitled to receive its expenses and costs, including reasonable counsel and appraisal fees in connection with such taking, plus that portion of the award as represents the value of the leasehold estate in the Demised Premises under the Master Lease, considered as vacant, unimproved and unencumbered land, but in no event, less than a minimum sum equal to a value arrived at by capitalizing the aggregate Net Rent due over the remaining term of this Sublease, including any renewal terms, at eight percent (8%) per annum. Subject to the rights of Airport Authority under the Master Lease, Sublessee shall be entitled to receive the remainder of said award.

 

16.3.2    In the event of the taking of less than the whole or materially all of the Demised Premises, Sublessor shall be entitled to receive its expenses and costs, including reasonable counsel and appraisal fees in connection with such taking, plus that portion of the award as represents compensation for the value of that part of the leasehold estate in the Demised Premises under the Master Lease taken, considered as vacant, unimproved and unencumbered land, but in no event, less than a sum equal to that portion of the minimum sum referred to in Section 16.3.1 multiplied by a fraction, the numerator of which shall be the area of the Demised Premises taken, and the denominator of which shall be the total area of the Demised Premises. Subject to the rights of Airport Authority under the Master Lease, Sublessee shall be entitled to receive the remainder of said award. However, Sublessee's share of said award shall be deposited with the Authorized Institution designated pursuant to Section 16.1 to be held and disbursed for restoration (as defined in Section 15) substantially in the same manner and subject to the same conditions provided in Section 15, or if there is no Authorized Institution, Sublessee's portion of the award shall be retained by Sublessee to be held and disbursed by Sublessee for restoration substantially in the same manner and subject to the same conditions provided in Section 15. Any balance remaining in the hands of such Authorized Institution or Sublessee after payment of the costs of restoration as aforementioned shall be paid to or retained by Sublessee. In the event that the costs of such restoration shall exceed the amount of the award remaining after deduction of Sublessor's share as aforesaid, Sublessee shall pay the deficiency. Subject to the foregoing, Sublessee, at Sublessee's sole cost and expense, shall restore the remaining portion of the Improvements so that the same shall be a complete, tenantable building, as nearly as practicable to its former condition.

 

If the values of the respective interests of Sublessor and Sublessee pursuant to the provisions of Sections 16.3.1 and 16.3.2 shall be determined in the proceeding pursuant to which the Demised Premises or a part thereof or interest therein shall have been taken, the values so determined shall be conclusive upon Sublessor and Sublessee. If such values shall not have been separately determined, such values shall be fixed by agreement between Sublessor and Sublessee or by arbitration pursuant to Section 24.

 

16.4    If title to less than the whole or materially all of the Demised Premises shall be taken as aforesaid, this Sublease and the term hereof shall continue, but the aggregate Net Rent thereafter payable by Sublessee for the remaining term of this Sublease, including any renewal periods, shall be apportioned and reduced, as and from the date of such partial taking, by the percentage equivalent of a fraction in which the area of the Demised Premises remaining is the numerator, and the original area of the Demised Premises is the denominator multiplied by the Net Rent immediately prior to the taking.

 

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16.5    If the temporary use of the whole or any part of the Improvements shall be taken in condemnation proceedings, Sublessee shall give prompt notice thereof to Sublessor, the term of this Sublease shall not be reduced or affected in any way, Sublessee shall continue to pay in full the Net Rent, additional rent and other charges herein reserved without reduction or abatement and Sublessee shall be entitled to receive for itself any award or payment made for such use; provided, however that:

 

16.5.1    If the taking is for a period not extending beyond the then current term of this Sublease and if such award or payment is made in a lump sum, the same shall be paid to and held by an Authorized Institution, or if, at the time, there is no such Authorized Institution, by Sublessee in trust, as a fund for the payments due to Sublessor from Sublessee under the terms of this Sublease, to the payment of all Impositions required to be paid by Sublessee under the provisions of this Sublease and to the payments due under all leasehold mortgages. Notwithstanding the foregoing, if such taking results in changes or alterations in the Improvements which would necessitate an expenditure, after repossession, to restore the affected space within the Improvements to its former condition, then a portion of such award or payment reasonably considered appropriate by Sublessee to cover the expenses of such restoration shall be disbursed as provided in Section 15.2 hereof; and

 

16.5.2    If the taking is for a period extending beyond the then current term of this Sublease, such award or payment shall be apportioned between Sublessor and Sublessee as of the stated expiration date of such term; and Sublessee's share thereof shall, if paid in a lump sum, be paid and applied in accordance with the provisions of Section 16.5.1, and Sublessor's share shall be promptly paid to Sublessor.

 

16.6    Notwithstanding anything to the contrary contained herein, Sublessee acknowledges and agrees that in no event shall Sublessor be obligated to share with Sublessee pursuant to the terms of this Section 16 any award or portion thereof in an amount greater than the amount of any condemnation or similar award or portion thereof received by Sublessor pursuant to the terms and conditions of the Master Lease. If any dispute shall arise as to any matter within this Section 16, at the option of Sublessor the same shall be resolved in a single proceeding involving Sublessor, Sublessee and the Airport Authority.

 

16.7    If any dispute shall arise as to any matter dealt with in this Section 16, it shall be determined by arbitration as provided by Section 24 hereof.

 

17.   Intentionally Deleted.

 

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18.   Assignments, Mortgages and Subleases of Sublessee's Interest.

 

18.1    Sublessee covenants and agrees as follows:

 

18.1.1    Without Sublessor's prior written consent in each instance (i) Sublessee shall not assign Sublessee's interest in this Sublease, except to the extent provided in Section 18.2; and (ii) Sublessee shall not sublet all or any part of the Demised Premises except in accordance with the terms and provisions of Section 18.4. In connection with a request from Sublessee to assign or sublet all or any portion of its interest in the Demised Premises, other than in connection with a mortgage, Sublessee's request shall be in writing accompanied by complete and accurate (a) current financial statements (balance sheet and income statement) of the proposed assignee or tenant; (b) the business background of such proposed assignee or tenant; and (c) such additional information as Sublessor may reasonably request. Upon submittal of such information, Sublessor will not unreasonably withhold or delay consent. However, Sublessor may specifically withhold consent if (i) the proposed assignee's or sublessee's proposed use of the Demised Premises or Improvements involves the use, storage, generation or disposal of hazardous materials; (ii) the proposed assignee's or sublessee's projected use of the Demised Premises or Improvements is not in compliance with Section 12.1 or has not been approved by the Airport Authority, if required; (iii) the proposed assignee or tenant is not sufficiently creditworthy to meet the obligations of this Sublease; (iv) Sublessor has had prior dealings with the proposed assignee or sublessee; and Sublessor determines in its sole discretion that Sublessor is not willing to consent to such assignment or sublease; or (v) notwithstanding the financial capability of the proposed assignee or subtenant, the proposed assignee or subtenant has a reputation in the business community of being difficult, litigious or of not timely fulfilling its contractual obligations. Except as provided herein, Sublessor's consent may be withheld in its sole and absolute discretion.

 

18.1.2    Any assignment of Sublessee's interest in the Sublease, in accordance with Section 18.1.1, shall be an assignment in whole and not in part.

 

18.1.3    No assignment of this Sublease shall be effective unless and until approved by the Airport Authority and Sublessor shall have received an executed counterpart of such assignment in recordable form, together with an instrument, in recordable form, executed by the assignee in which the assignee shall have agreed to observe and perform all of the terms, covenants and conditions of this Sublease on Sublessee's part to be performed and observed. Any such assignment shall be deemed to include an assignment of all right, title and interest of the assignor in and to all leases and rental agreements with all tenants and occupants of the Demised Premises or Improvements. However, in no event shall Sublessee and/or each succeeding assignor be released from any liability hereunder accruing after the effective date of such assignment.

 

18.1.4    In the event of any assignment or sublease with respect to the Demised Premises, the assignee of Sublessee shall continue to use the Demised Premises for the Permitted Use.

 

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18.2    Sublessee, and its successors and assigns, shall have the right from time to time to mortgage and pledge its entire interest in this Sublease and the Demised Premises thereunder, subject, however, to the limitations of this Section 18. Prior to the Completion Date, Sublessee shall only have the right to mortgage and pledge this Sublease to assist Sublessee in the construction of the Improvements. No holder of a mortgage affecting Sublessee's interest in this Sublease (sometimes referred to as a "leasehold mortgage") shall have the rights or benefits mentioned in the provisions of Section 18.3, nor shall the provisions of said Section be binding upon Sublessor with respect to any such leasehold mortgage or any assignment thereof, as the case may be, unless and until an executed counterpart of such leasehold mortgage or of such assignment thereof, as the case may be (or a copy of such mortgage or any such assignment, as the case may be, certified by the holder of such mortgage or by the recording officer to be true), shall have been delivered to Sublessor, notwithstanding any other form of notice, actual or constructive. Further, no leasehold mortgage shall be entered into by Sublessee unless the holder thereof (including any subsequent assignee thereof) shall be an Authorized Institution.

 

Notwithstanding anything herein to the contrary, Sublessee shall have the right to assign this Sublease to an Affiliate of Sublessee's election, subject to Sublessor's consent, not to be unreasonably withheld, conditions or delayed.

 

18.3    If Sublessee, or Sublessee's successors or assigns, shall mortgage Sublessee's interest in this Sublease in compliance with the provisions of Section 18.2, then so long as any such leasehold mortgage shall remain unsatisfied of record, the following provisions shall apply:

 

18.3.1    Sublessor, upon serving Sublessee any notice of default pursuant to the provisions of Section 18.1 hereof, shall also serve a copy of such notice of default upon the holder of such leasehold mortgage, at the address provided for in Section 18.3.5.

 

18.3.2    Any holder of such leasehold mortgage, in case Sublessee shall be in default hereunder, shall have the right, within the time granted to Sublessee in this Sublease, to cure or remedy any such default, or cause any such default to be cured or remedied, and Sublessor shall accept such performance by such holder as if such default had been cured or remedied by Sublessee. If requested in writing by a leasehold mortgagee of Sublessee, Sublessor and Sublessee agree to enter into a subordination, non-disturbance and attornment agreement in a form that is reasonably acceptable to Sublessor, Sublessee and the leasehold mortgagee. Sublessor agrees to submit such agreement to the Airport Authority for its consent.

 

18.3.3    In the event of the termination of this Sublease, prior to the expiration of the term, whether by summary proceedings to dispossess, service of notice to terminate, or otherwise, due to any Event of Default as defined in Section 19 hereof, or due to any other default of Sublessee, Sublessor shall serve upon the holder of such leasehold mortgage written notice that this Sublease has been terminated together with a statement of any and all sums which would at that time be due under this Sublease but for such termination, and of all other defaults, if any, under this Sublease then known to Sublessor. Such holder shall thereupon have the option to obtain a new Sublease.

 

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18.3.4    Upon the written request of the holder of such leasehold mortgage, given within forty-five (45) days after service of such notice that this Sublease has been terminated, Sublessor shall enter into a new lease of the Demised Premises with such holder, or the nominee or designee of such holder. Such new lease shall be entered into at the reasonable cost of the sublessee thereunder, shall be effective as of the date of termination of this Sublease, and shall be for the remainder of the term of this Sublease and at the rent and upon all the agreements, terms, covenants and conditions of this Sublease. Such new sublease shall require the sublessee thereunder to remedy any existing defaults of Sublessee under this Sublease (other than any default of the type described in Sections 19.1.3 and 19.1.4). Upon the execution of such new sublease, the sublessee named therein shall pay any and all sums which would at the time of the execution thereof be due under this Sublease, but for such termination, and shall pay all expenses, including reasonable counsel fees, court costs and disbursements incurred by Sublessor in connection with such defaults and termination, the recovery of possession of said premises, and the preparation, execution and delivery of such new sublease.

 

18.3.5    Any notice or other communication which Sublessor shall desire or is required to give to or serve upon the holder of a leasehold mortgage shall be in writing and shall be served by certified or registered mail, return receipt requested, addressed to such holder at his address as set forth in such mortgage, or in the last assignment thereof delivered to Sublessor pursuant to Section 18.2 hereof, or at such other address as shall be designated by such holder by notice in writing given to Sublessor by registered mail, return receipt requested; provided, however, that Sublessor shall not be required to send notice to more than two addresses of the holder of a leasehold mortgage. Any such notices provided by Sublessor to a holder of a leasehold mortgage shall be valid, even if the addresses for the holder of the mortgage are no longer valid, or Sublessor had constructive or actual notice of such invalidity from a source other than the holder of the leasehold mortgage providing Sublessor notice of its correct notice address as herein provided. Any notice or other communication which the holder of a leasehold mortgage shall desire or is required to give to or serve upon Sublessor shall be deemed to have been duly given or served if sent by certified or registered mail, return receipt requested, addressed to Sublessor at Sublessor's address as set forth in Section 21.1 of this Sublease or at such other address as shall be designated by Sublessor by notice in writing given to such holder by certified or registered mail, return receipt requested. Each such notice and communication shall be governed by Section 21.2 hereof.

 

18.3.6    Effective upon the commencement of the term of any new sublease executed pursuant to Sections 18.3.3 and 18.3.4 all sub-subleases of portions of the Demised Premises or Improvements, if any, shall be assigned and transferred without recourse or representation or warranty by Sublessor to the sublessee under such new sublease, and all moneys on deposit with Sublessor which Sublessee would have been entitled to use but for the termination or expiration of this Sublease may be used by the sublessee under such new sublease for the purposes of and in accordance with the provisions of such new sublease.

 

18.3.7    If the holders of more than one such leasehold mortgage shall make written requests upon Sublessor for a new lease in accordance with the provisions of Sections 18.3.3 and 18.3.4 the new sublease shall be entered into with the holder requesting such new sublease whose leasehold mortgage shall be of the highest priority of record, or with such holder's designee or nominee, and any written requests for a new sublease of each holder of a junior priority leasehold mortgage shall be and be deemed to be void and of no force or effect.

 

18.3.8    Nothing herein contained shall be deemed to obligate Sublessor to deliver physical possession of the Demised Premises or Improvements to the sublessee under any new sublease entered into pursuant to Sections 18.3.3 and 18.3.4.

 

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18.3.9    Nothing contained in this Section or in any new sublease entered into pursuant to this Section will release Sublessee from any of its obligations under this Sublease.

 

18.4    Sublessee covenants and agrees as follows:

 

18.4.1    Subject to the provisions of Section 18.1.1 above, Sublessee and its successors and assigns may sublet the Demised Premises and Improvements in the ordinary course of Sublessee's business, provided the following:

 

(i)    Sublessee provides Sublessor ten (10) days' notice of the sublease. Sublessor shall have ten (10) days to notify Sublessee of an objection to the sublease, and Sublessee provides Sublessor with all information that Sublessor reasonably requires with respect to such sublease. If Sublessor does not object within ten (10) days after Sublessor's receipt of any information requested by Sublessor, Sublessor's lack of objection shall be deemed consent to the sublease. Sublessor shall not unreasonably object to any such sublease;

 

(ii)    subtenant shall use the sublet premises for the conduct of business consistent with the uses permitted herein and for no other purposes or uses;

 

(iii)    any such subtenant lease shall be subject and subordinate to this Sublease, the Master Lease and the Airport Authority's Federal Grant Obligations; and

 

(iv)    Sublessee shall have no right to sublease the Demised Premises or any part thereof which in legal effect would create a total assignment of this Sublease or an assignment of this Sublease pro tanto.

 

18.4.2    Sublessee shall cause any future tenant lease, entered into by Sublessee or any tenant of Sublessee, to contain provisions substantially similar to the following provision:

 

If at any time during the term of this lease the leasehold estate of lessor shall terminate or be terminated for any reason, lessee agrees, at the election and upon demand of any owner or overlessor of the Demised Premises or Improvements, or of any mortgagee in possession thereof, or of any holder of a leasehold now or hereafter affecting premises which include the Demised Premises or Improvements, to attorn, from time to time, to any such owner, overlessor, mortgagee or holder, upon the terms and conditions set forth herein for the remainder of the term demised in this lease. The foregoing provisions shall inure to the benefit of any such owner, overlessor, mortgagee or holder, and shall apply to the tenancy of the lessee notwithstanding that this lease may terminate upon the termination of any such leasehold estate, and shall be self-operative upon any such demand, without requiring any further instrument to give effect to said provisions. Lessee, however, upon demand of any such owner, overlessor, mortgagee or holder, agrees to execute, from time to time, an instrument in confirmation of the foregoing, in which lessee shall acknowledge such attornment and shall set forth the terms and conditions of its tenancy, which shall be the same as those set forth herein and shall apply for the remainder of the term originally demised in this lease. Nothing contained in this Section shall be construed to impair any right, privilege or option of any such owner, overlessor, mortgagee or holder.

 

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If requested in writing by a subtenant of Sublessee, Sublessor agrees to enter into a subordination, non-disturbance and attornment agreement with Sublessor and a subtenant of Sublessee with respect to such subtenant's sub-sublease, in a form that is reasonably acceptable to Sublessor, Sublessee and Sublessee's subtenant, with the understanding that Sublessor will have no obligation to construct premises for such subtenant.

 

18.4.3    Sublessee shall not modify or permit the modification of any future tenant lease in such manner as to eliminate therefrom the provisions similar to those referred to in Section 18.4.2.

 

18.4.4    Neither the interest of Sublessee in any future tenant lease, nor in any rental under any such tenant lease, shall be mortgaged, pledged, sold, assigned, transferred or otherwise disposed of, whether by operation of law or otherwise, except in connection with the assignment or mortgaging of Sublessee's interest in this Sublease.

 

18.4.5    If by reason of Sublessee's default this Sublease shall terminate, or if Sublessor shall, for any reason or cause, recover or come into possession of the Demised Premises or Improvements before the date fixed for the expiration of the term of this Sublease, Sublessor shall have the right at its option to take over any and all leases, letting agreements, subleases or occupancy agreements of tenants of the Demised Premises or Improvements or any part thereof, and at Sublessor's option to have and succeed to all the rights and privileges of said leases, letting agreements, subleases or occupancy agreements, or such of them as Sublessor may elect to take over and assume, and Sublessee, upon any such termination or recovery of possession by Sublessor, hereby expressly assigns, transfers and sets over unto Sublessor such of the tenant leases or occupancy agreements as Sublessor may elect to take over and assume as may exist and be in force and effect at the time of such termination or recovery of possession. Sublessee hereby further expressly covenants that Sublessee, upon request of Sublessor, shall execute, acknowledge and deliver to Sublessor such further assignments and transfers as Sublessor may request.

 

18.5    Sublessee acknowledges and agrees as follows:

 

18.5.1    This Sublease is subject and subordinate to the Master Lease, together with any extensions, modification or amendments thereof, and to any deeds of trust or mortgages now or hereafter encumbering the Demised Premises or the leasehold estate under the Master Lease, together with all amendments, modifications, extensions or supplements thereof. Notwithstanding the foregoing, Sublessee shall not be bound by any amendment or modification to the Master Lease hereafter made to the extent the provisions thereof would materially and adversely affect the rights of Sublessee uner this Sublease. If Sublessor obtains a leasehold mortgage or other similar security agreement, then this Sublease (and any new sublease regardless of when same is entered into) and the lien of any leasehold mortgage with respect to Sublessee’s leasehold interest shall only be subordinate to such leasehold mortgage of Sublessor’s leasehold interest if and when the  Sublessor delivers to Sublessee an executed subordination, non-disturbance and attornment agreement in a form with content reasonably acceptable to Sublessee, Sublessor and beneficiary of the leasehold mortgage of Sublessee’s leasehold interest. At the request of Sublessee from time to time, Sublessor shall, for Sublessee's benefit, request a non-disturbance and attornment agreement from (i) the Airport Authority, pursuant to and in accordance with the terms of the Master Lease; or (ii) the holder of any such deed of trust, granting to Sublessee non-disturbance provided no Event of Default has occurred and is continuing, confirming the foregoing subordination and providing for the agreement of Sublessee to attorn to Airport Authority or any such holder; and

 

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18.5.2    Rents due Sublessor under this Sublease have been assigned to Airport Authority as security for the performance of Sublessor's covenants under Master Lease, which assignment is effective upon the occurrence of any event of default under the Master Lease. Upon receipt of written notification from Airport Authority that such an event of default has occurred and is continuing under the Master Lease, the Sublessee shall pay rent under this Sublease directly to Airport Authority, until the Sublessee receives written notice from Airport Authority that Sublessor has cured the event of default under the Master Lease or is in the process of curing the event of default under the Master Lease in a manner satisfactory to Airport Authority, and such payment by the Sublessee shall be applied to the rents and obligations of the Sublessor under the Master Lease. Upon any termination of the Master Lease, Sublessee shall attorn to Airport Authority at the request of Airport Authority.

 

19.   Default.

 

19.1    If any one or more of the following events shall occur, the same shall be "Events of Default" or an "Event of Default:"

 

19.1.1    Sublessee shall fail to pay any Net Rent, Impositions or additional rent or other sum payable under this Sublease or any provision thereof as and when the same shall become due and payable as provided in this Sublease, and such default shall continue for a period of ten (10) days after written notice from Sublessor to Sublessee of Sublessee's failure to timely pay the applicable amount, provided that Sublessor shall not be obligated to provide Sublessee with such written notice more than two (2) times in any twenty-four (24)-month period, and to the extent that two (2) such notices have been provided by Sublessor to Sublessee, then thereafter, within any such twenty-four (24)-month period, an Event of Default shall occur if a failure to pay default shall continue for a period of ten (10) days after the due date thereof, without the requirement for Sublessor to provide to Sublessee any notice thereof; or

 

19.1.2    Sublessee shall fail to perform or breach with any of the covenants, agreements, terms or conditions contained in this Sublease, other than those referred to in the foregoing Section 19.1.1, and such failure or breach shall continue uncured for a period of thirty (30) days after notice thereof from Sublessor to Sublessee, except that in the case of a non-monetary default which cannot with due diligence be cured within such period of thirty (30) days, the time of Sublessee within which to cure the same shall be extended for such period as may be necessary to cure the same with due diligence, provided Sublessee commences within thirty (30) days and proceeds diligently to cure same unless otherwise mutually agreed by the parties, but in no event shall such additional time period exceed a total of sixty (60) additional days unless otherwise mutually agreed by the parties; or

 

19.1.3    Sublessee shall file a voluntary petition in bankruptcy or shall be adjudicated a bankrupt or insolvent or shall file any petition or answer seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief or an order for relief shall be granted under the present or any future federal bankruptcy act or any other present or future applicable federal, state or other statute of law, or shall seek or consent to or acquiesce in the appointment of any trustee, receiver or liquidator of Sublessee or of all or any substantial part of its properties or the Demised Premises; or

 

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19.1.4    The commencement of any proceeding against Sublessee seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under the present or any future federal bankruptcy act or any other present or future applicable federal, state or other statute or law, such proceeding shall not have been dismissed within sixty (60) days of commencement, or within sixty (60) days after the appointment, without the consent or acquiescence of Sublessee, of any trustee, receiver or liquidator of Sublessee or of all or any substantial part of its properties or of the Demised Premises, such appointment shall not have been vacated; or

 

19.1.5    Sublessee shall default in the performance of or compliance with Section 29.1.10 of this Sublease.

 

19.2    If an Event of Default occurs, Sublessor shall have the right, at its election, then or at any time thereafter and while any such Event of Default shall continue, either:

 

19.2.1    To give Sublessee written notice of intention to terminate this Sublease on the date of such given notice or on any later date specified therein, and on the date specified in such notice, Sublessee's right to possession of the Demised Premises and Improvements shall cease and this Sublease shall thereupon be terminated, except as to Sublessee's liability hereunder as hereinafter provided, as if the date fixed in such notice were the end of the term originally demised; or

 

19.2.2    Without additional demand or notice, to reenter and take possession of the Demised Premises and Improvements or any part thereof, and repossess the same as of Sublessor's former estate and expel Sublessee and those claiming through or under Sublessee, and remove the effects of both or either, using such force for such purposes as may be necessary, without being liable for prosecution thereof, without being deemed guilty of any manner of trespass, and without prejudice to any remedies for arrears of rent or preceding breach of covenants or conditions. Should Sublessor elect to reenter as provided in this Section 19.2.2, or should Sublessor take possession pursuant to legal proceedings or pursuant to any notice provided for by law, Sublessor may, from time to time, without terminating this Sublease, relet the Demised Premises, the Improvements or any part thereof in Sublessor's or Sublessee's name, but for the account of Sublessee, for such term or terms (which may be greater or less than the period which would otherwise have constituted the balance of the term) and on such conditions and upon such other terms (which may include concessions of free rent and alteration and repair of the Demised Premises or the Improvements) as Sublessor, in its sole discretion, may determine, and Sublessor may collect and receive the rents therefor. Sublessor shall in no way be responsible or liable for any failure to relet the Demised Premises, the Improvements or any part thereof, or for any failure to collect any rent due upon such reletting. No such reentry or taking possession of the Demised Premises or the Improvements by Sublessor shall be construed as an election on Sublessor's part to terminate this Sublease, unless a written notice of such intention be given to Sublessee. No notice from Sublessor hereunder or under a forcible entry and detainer statute or similar law shall constitute an election by Sublessor to terminate this Sublease unless such notice specifically so states. Sublessor reserves the right following any such reentry and/or reletting to exercise its right to terminate this Sublease by giving Sublessee such written notice, in which event the Sublease will terminate as specified in said notice.

 

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19.2.3    In the event that Sublessor does not elect to terminate this Sublease as permitted in Section 19.2.1, but, on the contrary, takes possession as provided in Section 19.2.2, Sublessee shall pay to Sublessor (i) the rent and other sums as herein provided, which would be payable hereunder if such repossession had not occurred, less (ii) the net proceeds, if any, of any reletting of the Demised Premises or the Improvements after deducting all of Sublessor's reasonable expenses incurred in connection with such reletting, including, but without limitation, all reasonable (a) repossession costs, (b) brokerage commissions, (c) legal expenses, (d) attorneys' fees, (e) alteration and repair costs, and (f) expenses of preparation for such reletting. If, in connection with any reletting, the new lease term extends beyond the existing term, a fair apportionment of the rent received from such reletting and the expenses incurred in connection therewith as provided aforesaid will be made in determining the net proceeds from such reletting. In addition, in determining the net proceeds from such reletting, any rent concessions will be apportioned over the term of the new lease. Sublessee shall pay such rent and other sums to Sublessor monthly on the days on which the rent would have been payable hereunder if possession had not been retaken and Sublessor shall be entitled to receive the same from Sublessee on each such day.

 

19.2.4    In the event this Sublease is terminated, Sublessee shall remain liable to Sublessor for damages in an amount equal to the rent and other sums which would have been owing by Sublessee hereunder for the balance of the term, had this Sublease not been terminated, less the net proceeds, if any, of any reletting of the Demised Premises or the Improvements by Sublessor subsequent to such termination, after deducting Sublessor's reasonable expenses incurred in connection with such reletting, including, but without limitation, the expenses enumerated above. Sublessor shall be entitled to collect such damages from Sublessee monthly on the days on which the rent and other amounts would have been payable hereunder if this Sublease had not been terminated, and Sublessor shall be entitled to receive the same from Sublessee on each such day. Alternatively, at the option of Sublessor, in the event this Sublease is terminated, Sublessor shall be entitled to recover forthwith against Sublessee, as damages for loss of the bargain and not as a penalty, an aggregate sum which, at the time of such termination, represents the excess, if any, of the aggregate of the rent and all other sums payable by Sublessee hereunder that would have accrued for the balance of the term over the aggregate rental value of the Demised Premises (such rental value to be computed on the basis of a Sublessee paying not only a rent to Sublessor for the use and occupation of the Demised Premises, but also such other charges as are required to be paid by Sublessee under the terms of this Sublease) for the balance of the term, both discounted to present worth at the rate of four percent (4%) per annum.

 

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19.2.5    Suit or suits for the recovery of the amounts and damages set forth hereinabove may be brought by Sublessor, from time to time, at Sublessor's election, and nothing herein shall be deemed to require Sublessor to await the date whereon this Sublease or the term would have expired had there been no such default by Sublessee, or no such termination, as the case may be. Each right and remedy provided for in this Sublease shall be cumulative and shall be in addition to every other right or remedy provided for in this Sublease or now or hereafter existing at law or in equity or by statute or otherwise, and the exercise or beginning of the exercise by Sublessor of any one or more of the rights or remedies provided for in this Sublease or now or hereafter existing at law or in equity or by statute or otherwise shall not preclude the simultaneous or later exercise by Sublessor of any or all other rights or remedies provided for in this Sublease or now or hereafter existing at law or in equity or by statute or otherwise. SUBLESSOR AND SUBLESSEE AGREE THAT ANY ACTION OR PROCEEDING ARISING OUT OF THIS SUBLEASE SHALL BE HEARD BY A COURT SITTING WITHOUT A JURY, AND WAIVE ALL RIGHTS TO A TRIAL BY JURY. All reasonable costs incurred by Sublessor in connection with collecting any amounts and damages owing from Sublessee pursuant to the provisions of this Sublease or to enforce any provision of this Sublease, including reasonable attorneys' fees from the date any such matter is turned over to an attorney, whether or not one or more actions are commenced by Sublessor, shall also be recovered by Sublessor from Sublessee. In addition, Sublessor and Sublessee agree that the prevailing party in any action brought to enforce any of the terms and provisions of this Sublease shall recover its reasonable costs and expenses, including, without limitation, reasonable attorneys' fees, from the non-prevailing party.

 

19.3    No failure by Sublessor to insist upon the strict performance of any agreement, term, covenant, or condition hereof or to exercise any right or remedy consequent upon a breach thereof, and no acceptance of full or partial rent during the continuance of any such breach, shall constitute a waiver of any such breach or such agreement, term, covenant, or condition. No agreement, term, covenant, or condition hereof to be performed or complied with by Sublessee, and no breach thereof, shall be waived, altered, or modified except written instruments executed by Sublessor. No waiver of any breach shall affect or alter this Sublease, but each and every agreement, term, covenant, and condition hereof shall continue in full force and effect with respect to any other then existing or subsequent breach thereof. Notwithstanding any termination of this Sublease or expiration of the term, any provisions hereof which require observance or performance of Sublessor or Sublessee subsequent to termination or expiration shall continue in force and effect and survive such expiration or termination.

 

19.4    Nothing contained in this Section 19 shall limit or prejudice the right of Sublessor to prove and obtain as liquidated damages in any bankruptcy, insolvency, receivership, reorganization, or dissolution proceeding, an amount equal to the maximum allowed by any statute or rule of law governing such proceeding and in effect at the time when such damages are to be proved, whether or not such amount be greater, equal to, or less than the amounts recoverable, either as damages or rent, referred to in any of the preceding provisions of this Section 19.

 

20.   Invalidity of Particular Provisions. If any term or provision of this Sublease or the application thereof to any person or circumstances shall, to any extent, be invalid or unenforceable, the remainder of this Sublease, or the application of such term or provisions to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each term and provision of this Sublease shall be valid and be enforced to the fullest extent permitted by law.

 

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21.   Notices.

 

21.1    All notices, demands, requests and consents required under this Sublease shall be in writing. All such notices, demands, requests and consents shall be deemed to have been properly given if sent by (i) United States certified or registered mail, postage prepaid, return receipt requested, or (ii) messenger or overnight courier service, addressed to Sublessor at 8001 South InterPort Boulevard, Suite 300, Englewood, Colorado 80112, or addressed to Sublessee as follows: Attention: Tal Keinan, 767 Fifth Avenue, New York, New York 10153, or to such other addresses as Sublessor or Sublessee may from time to time designate by notice given in accordance with the provisions of this Section 21. Sublessor shall also use its reasonable efforts, without liability for failure to do so, to provide notice to any Authorized Institution holding a mortgage interest in the Demised Premises and/or Improvements, provided that such Authorized Institution has provided Sublessor with such Authorized Institution's address for notices.

 

21.2    If, at any time during the term of this Sublease, more than one person or entity shall be the owner of this Sublease as Sublessee, then, except as otherwise specifically provided in Section 21.1, any notices, demands or requests given by Sublessor to any one of such persons or entities shall be deemed to have been duly given to Sublessee for all purposes under this Sublease, and any notices, demands or requests given by any one of such persons or entities owning this Sublease as Sublessee to Sublessor shall be deemed to have been duly given by Sublessee for all purposes under this Sublease, it being the intention that each person or entity owning this Sublease as Sublessee irrevocably designates all other such persons or entities, or any one of them, as their, his or its agent for the purpose of giving and receiving all notices, demands and requests required to be given or received under the provisions of this Sublease.

 

21.3    If at any time during the term of this Sublease more than one person or entity shall be the owner of the Demised Premises as Sublessor, then any notices, demands or requests given by Sublessee or any leasehold mortgagee to any one of such persons or entities shall be deemed to have been duly given to Sublessor for all purposes under this Sublease, and any notices, demands or requests given by any one of such persons or entities owning the Demised Premises as Sublessor to Sublessee or any leasehold mortgagee shall be deemed to have been duly given by Sublessor for all purposes under this Sublease, it being the intention that each person or entity owning the Demised Premises as Sublessor irrevocably designates all other such persons or entities, or any one of them, as their, his or its agent for the purpose of giving and receiving all notices, demands and requests required to be given or received under the provisions of this Sublease.

 

22.   Condition of and Title to the Demised Premises, Etc.

 

22.1    Upon execution of this Sublease, Sublessee represents and warrants that the Demised Premises, the title thereto, the sidewalks and structures adjoining the same, any sub-surface conditions thereof, and the present uses and non-uses thereof, will have been examined by Sublessee and that Sublessee will have accepted the same in the "as is" condition or state in which they or any of them now are, subject to all applicable zoning, municipal, county, state and federal laws, ordinances and regulations that may govern and relate to the use of the Demised Premises and subject to all then matters of record, without representation or warranty, express or implied in fact or by law, by Sublessor and without recourse to Sublessor, as to the title thereto, the nature, condition or usability thereof or the use or uses to which the Demised Premises or any part thereof may be put.

 

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22.2    Sublessee's leasehold interest is subject to and burdened by all existing easements filed of public record. Further, Sublessee covenants that it will grant or consent to all requests for easements that may be requested by the Airport Authority, Arapahoe County, Xcel Energy, Arapahoe County Water and Wastewater Authority, Century Link, Southeast Metro Stormwater Authority or other utility supplier, or any successor thereto, so long as the same do not unreasonably restrict, limit or hinder access to, or otherwise materially interfere with the use of, the Demised Premises and/or Improvements.

 

22.3    Sublessee agrees and acknowledges that its construction of any future Improvements on the Demised Premises and its use and operations on the Demised Premises shall be subject to Sublessee complying, at Sublessee's sole cost and expense, with any and all applicable zoning, municipal, county, state and federal laws, ordinances, rules, requirements, and obligations (collectively, the "Applicable Obligations") that may govern, effect, or relate to the use, development or construction upon the Demised Premises, including without limitation all Applicable Obligations, fees, costs, expenses and demands of the Airport Authority, Arapahoe County, Urban Drainage, Arapahoe County Water and Wastewater Authority, South Metro Fire District, Southeast Metro Stormwater Authority and any other public or semi-public agency, district, authority or entity with authority or oversight of any type or kind whatsoever over the Demised Premises. In addition, Sublessee agrees and acknowledges that any future construction of the Improvements on the Demised Premises and its use and operations on the Demised Premises shall be subject to Sublessee complying with any and all rules, regulations, codes and standards issued by the National Fire Protection Association.

 

23.   Quiet Enjoyment; Conveyance by Sublessor.

 

23.1    Sublessee, upon payment of the Net Rent, Impositions, all additional rent and other charges herein provided for and observing and keeping all covenants, agreements and conditions of this Sublease on its part to be kept, shall quietly have and enjoy the Demised Premises and Improvements during the term of this Sublease without hindrance or molestation by anyone claiming by, or through Sublessor, subject, however, to the exceptions, reservations and conditions of this Sublease and the easements, rights-of-way, restrictions, reservations and other title burdens of record. Sublessee shall not interfere in any way with the quiet enjoyment of other sublessees of Sublessor.

 

23.2    Sublessee acknowledges and agrees that this Sublease and Sublessee's rights hereunder shall be expressly subject to the reservation by Airport Authority in the Master Lease for the use and benefit of the public, including a right of flight for the passage of aircraft in the navigable airspace above the surface of the Demised Premises, as determined by the regulations and technical standards promulgated by the Federal Aviation Administration, together with the right to cause in said airspace such noise as may be inherent in the operation of aircraft, now known or hereafter used for navigation of or flights in air, using said airspace for landing at, taking off from, or operating on Centennial Airport.

 

23.3    Sublessee acknowledges and agrees that this Sublease and Sublessee's rights hereunder shall be expressly subject to the reservation by Airport Authority in the Master Lease of all water, gas, oil, hydrocarbon and mineral rights in and under the surface of the Demised Premises; provided, however, that Airport Authority shall not conduct any operations on the surface or below the surface of the Demised Premises for the exploration, development or recovery of the rights and substances reserved which would interfere in any material respect with Sublessee's use and occupancy of the Demised Premises.

 

23.4    In case Sublessor or any successor owner of the leasehold estate in the Demised Premises under the Master Lease shall convey or otherwise dispose of its interest in the Demised Premises and turn over to the transferee any funds held by it hereunder in which the Sublessee has an interest hereunder, all liabilities and obligations on the part of Sublessor or such successor owner as Sublessor under this Sublease shall terminate upon such conveyance or disposition.

 

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24.    Arbitration. In the event of a dispute between the parties which is to be resolved by arbitration pursuant to the provisions of Sections 6.7 and 16.7 ("Dispute"), then any such party may initiate arbitration by serving written notice on the other party of its intention to arbitrate the Dispute (the "Arbitration Notice"), which Arbitration Notice shall contain a statement setting forth the nature of the Dispute and the remedy sought. A copy of such Arbitration Notice shall also be filed at the Denver office of the Judicial Arbiter Group ("JAG") together with this arbitration provision and the appropriate filing fee as required by the JAG; provided, however, that except for arbitration of any dispute arising under said Sections 6.7 and 16.7, neither Sublessor nor Sublessee shall be obligated to resolve by arbitration any other dispute between them under this Sublease. Within ten (10) days of filing of the Arbitration Notice, the parties shall mutually select an arbitrator from JAG's list of available arbitrators. If the parties are unable to so mutually agree during said ten (10)-day period, an arbitrator shall be appointed by JAG, by lot, within the shortest possible period thereafter. In the event JAG no longer exists at the time of any such arbitration, the parties shall select a body of comparable standing to handle the arbitration. Unless otherwise agreed between the parties, the arbitrator must be an impartial retired judge licensed as a member of the State Bar of Colorado, with experience interpreting contracts in the field of real estate. The arbitrator shall faithfully and fairly determine the question at issue. Immediately following appointment, the arbitrator shall provide written notice to the parties indicating the time and location of the scheduled hearing. The hearing must be held within thirty (30) calendar days following the date upon which the arbitrator was appointed. At least ten (10) business days prior to the commencement of the arbitration hearing, the parties shall each provide to the other a statement of its position respecting the Dispute in question and a list of any witnesses who such party expects to testify at such hearing on its behalf. The arbitration proceeding shall take place in Denver, Colorado, and the scope of the arbitration proceedings shall be limited to the matters that are the basis of the Dispute, and shall include no other matters. In no event shall the demand for arbitration be made after the date when institution of legal or equitable proceedings based upon such claim, dispute or other matter in question would be barred by the applicable statute of limitations. No arbitration arising out of or relating to this Sublease shall include, by consolidation, joinder or any other manner, an additional person or entity not a party to this Sublease. The arbitrator shall afford to the parties a hearing and the right to conduct discovery in accordance with the Colorado Rules of Civil Procedure, submit evidence, and have the privilege of cross-examination on the question at issue. The applicable discovery and other time periods under the Colorado Rules of Civil Procedure shall be adjusted, as determined by the arbitrator, in order to permit the prompt conclusion of such proceeding as contemplated by this Section. The arbitrator shall, with all possible speed, make a determination in writing and shall give notice to the parties hereto of such determination within ten (10) business days following the hearing. The arbitrator shall have the authority to award any remedy or relief permitted under this Sublease and that a court of the State of Colorado could order or grant, including, without limitation, specific performance of any obligation created under this Sublease, the issuance of an injunction, or the imposition of sanctions for abuse or frustration of the arbitration process, but the parties shall be limited to recovery of actual damages from any party and shall not be entitled to recover from any party exemplary, punitive, special, indirect, consequential or any other damages other than actual damages (unless the arbitrator finds an abuse or frustration of the arbitration process). The arbitrator's award may be submitted to a court of general jurisdiction for enforcement. The arbitrator shall assess its fees, all other fees and costs of any such arbitration proceeding and reasonable attorneys' fees (collectively, the "Arbitration Fees") against the party who in the arbitrator's opinion is not the prevailing party. For purposes of this Section 24, the term "prevailing party" shall mean (i) with respect to the claimant, one who is successful in obtaining substantially all of the relief sought, and (ii) with respect to the respondent, one who is successful in denying substantially all of the relief sought by the claimant. If neither party substantially prevails, then the award for attorneys' fees shall be apportioned in the arbitrator's discretion. If any arbitrator appointed pursuant to this Section shall thereafter die or become unable or unwilling to act, a successor shall be appointed. In any proceeding conducted pursuant to this Section, the decision and award of the arbitrator shall be final, binding and enforceable in any court of competent jurisdiction.

 

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25.   Certificates by Sublessor and Sublessee.

 

25.1    Sublessee agrees at any time and from time to time upon not less than twenty (20) days' prior written notice by Sublessor to execute, acknowledge and deliver to Sublessor a statement in writing certifying that this Sublease is unmodified and in full force and effect (or if there have been modifications, that the same is in full force and effect as modified and stating the modifications), and the dates to which the Net Rent and other charge have been paid in advance, if any, and stating whether or not to the best knowledge of the Sublessee, Sublessor is in default in the performance of any covenant, agreement or condition contained in this Sublease and, if so, specifying each such default of which Sublessee may have knowledge, it being intended that any such statement delivered pursuant to this Section 25.1 may be relied upon by any prospective purchaser of the leasehold estate in the Demised Premises under the Master Lease or any mortgagee thereof or any assignee of any mortgage held by any such mortgagee.

 

25.2    Sublessor agrees at any time and from time to time upon not less than twenty (20) days' prior notice by Sublessee to execute, acknowledge and deliver to Sublessee a statement in writing certifying that this Sublease is unmodified and in full force and effect (or if there shall have been modifications that the same is in full force and effect as modified and stating the modifications) and the dates to which the Net Rent, additional rent and other charges have been paid in advance, if any, and stating whether or not to the best knowledge of Sublessor, Sublessee is in default in performance of any covenant, agreement or condition contained in this Sublease, and, if so, specifying each such default of which Sublessor may have knowledge, and stating whether or not any notice of any such default has been given by Sublessor to Sublessee with respect to any default which has not been cured at the time of the execution of such statement, it being intended that any such statement delivered pursuant to this Section 25.2 may be relied upon by any prospective sublessee of the entire Demised Premises or assignee of Sublessee's interest in this Sublease or any mortgagee or prospective mortgagee thereof or any assignee or prospective assignee of any mortgage upon the leasehold estate hereby created.

 

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26.   No Merger. It is the intention of the parties hereto that no part of the interest of Sublessee in this Sublease shall merge with the interest of the owner or holder of all or any part of the leasehold estate in the Demised Premises under the Master Lease, and that such interests shall, at all times, remain separate and distinct interests.

 

27.   Surrender.

 

27.1    Sublessee shall and will on the last day of the term hereof or upon any earlier termination of this Sublease, or upon any lawful re-entry by Sublessor upon the Demised Premises and Improvements pursuant to Section 19 hereof, surrender and deliver up the Demised Premises and Improvements into possession and use of Sublessor without delay and in good order, condition and repair, reasonable wear and tear excepted, free and clear of all lettings and occupancies other than tenant leases then terminable at the option of the Sublessor or to which Sublessor shall have specifically consented, and free and clear of all liens and encumbrances other than those, if any, existing at the commencement of the term hereof or consented to by Sublessor.

 

27.2    Any personal property of Sublessee or any tenant or other occupant of the Demised Premises and Improvements which shall remain on the Demised Premises or in the Improvements after the termination of this Sublease may, at the option of Sublessor, be deemed to have been abandoned by Sublessee or such tenant or occupant, and either may be retained by Sublessor as its property or may be disposed of, without accountability, in such manner as Sublessor may see fit. Notwithstanding the foregoing, except if this Sublease shall expire at the end of its natural term or if this Sublease shall be terminated by reason of Sublessee's default, Sublessee shall be entitled to remove such personal property within ten (10) days after the termination of this Sublease.

 

27.3    Sublessor shall not be responsible for any loss or damage occurring to any property owned by Sublessee or tenant or other occupant of the Demised Premises or Improvements in the event that Sublessee does not timely vacate the Demised Premises.

 

27.4    The provisions of this Section 27 shall survive any termination of this Sublease.

 

28.   Maintenance of Common Areas.

 

28.1    Sublessor covenants and agrees, throughout the term of the Sublease, to maintain the Common Areas in good order and repair. Sublessee acknowledges and agrees that Sublessor shall have the right to transfer the foregoing maintenance responsibility to a maintenance association at such time as a maintenance association shall be formed. In the event of such transfer, Sublessor shall be relieved of all such maintenance responsibility, and, from and after such date, all Category A Expenses and Category B Expenses shall be payable directly to such maintenance association. At the request of Sublessor, Sublessee shall execute and deliver such amendment, addendum or modification of or to this Sublease as Sublessor may request in furtherance of the foregoing provisions of this Section.

 

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28.2    Sublessee's right to use the Common Areas shall be nonexclusive and shall be subject to the Design Guidelines and commercially reasonable rules and regulations as Sublessor may adopt and amend from time to time.

 

28.3    The organizational documents and any declaration of covenants, conditions and restrictions, or similar document, to which the Demised Premises is subjected, or which are entered into in connection with, the formation of the aforesaid maintenance association shall be subject to the prior approval of Sublessee, which Sublessee agrees not to unreasonably withhold or delay, so long as any covenants, conditions, restrictions or obligations do not impose obligations on Sublessee that are materially different than the terms and conditions of this Sublease.

 

29.   Additional Sublease Provisions.

 

29.1    Without limiting the generality of the provisions of Section 5 hereof:

 

29.1.1    Sublessee, at Sublessee's sole cost and expense, shall observe and obey all laws, ordinances, rules and regulations of the United States, the State of Colorado, Arapahoe County Airport Authority, and any other public or semi-public agency, district, authority or entity with authority or oversight of any type or kind whatsoever over the Demised Premises which may be applicable to its construction or operations upon the Demised Premises.

 

29.1.2    Sublessee shall conform to all applicable safety, health and sanitary codes and agrees to cooperate with Sublessor and Airport Authority in its fire prevention efforts.

 

29.1.3    Sublessee acknowledges and agrees that this Sublease and its rights thereunder are expressly subject to the right of Airport Authority reserved under the Master Lease to further develop or improve the landing area of Centennial Airport as it sees fit, and without unreasonable interference or hindrance.

 

29.1.4    Sublessee acknowledges and agrees that this Sublease and its rights thereunder are expressly subject to the rights of Airport Authority reserved under the Master Lease to maintain and keep in repair the landing area of Centennial Airport and all publicly-owned facilities of Centennial Airport together with the right to direct and control all activities in this regard.

 

29.1.5    This Sublease shall be subordinate to the provisions of any existing or future agreement between Airport Authority and the United States, relative to the operation or maintenance of Centennial Airport, the execution of which has been or may be required as a condition precedent to the expenditure of Federal funds for the development of Centennial Airport, so long as there is no material effect on Sublessee's rights under this Sublease. The foregoing subordination includes, but is not limited to, the right of Airport Authority, during time of war or national emergency, to lease the landing area, or any part thereof, to the United States for military or naval use, and if any such lease is made, the provisions of any contracts or leases with Sublessee shall be suspended, including Sublessee's obligations under this Sublease, including without limitation, the obligation to pay Net Rent and Category A and B Expenses if Sublessor's rent and expense obligations are suspended under the terms of the Master Lease.

 

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29.1.6    It is understood and agreed that nothing herein shall be construed to grant or authorize the granting of an exclusive right within the meaning of Section 308(a) of the Federal Aviation Act of 1958, as amended, for the development of commercial, office and retail uses at Centennial Airport.

 

29.1.7    In performance of its obligations under this Sublease and with reference solely to the premises covered by this Sublease, Sublessee shall comply with the requirements of any Executive Order barring discrimination; further, in accordance with these requirements, Sublessee shall not discriminate in any manner against any employee or applicant for employment because of political or religious opinion or affiliation, sex, race, creed, color, or national origin, and further, Sublessee shall include a similar clause in all contracts and subcontracts, except contracts and subcontracts for standard commercial supplies or raw materials. Sublessee understands and acknowledges that Airport Authority has given to the United States of America, acting by and through the Federal Aviation Administration, certain assurances in respect to non-discrimination which have been required by Title VI of the Civil Rights Act of 1964, and by or pursuant to Title 49, Code of Federal Regulations, Department of Transportation, Subtitle A, Office of the Secretary, Part 21, Non-Discrimination in Federally-Assisted Programs of the Department of Transportation, as condition precedent to the Government's making grants in aid to Airport Authority, for certain Centennial Airport programs and activities, and that Airport Authority is required under said regulations to include or cause to be included in every agreement or concession pursuant to which any person or persons other than Airport Authority operates or has the right to operate any facility on Centennial Airport providing services to the public the following covenant, to which Sublessee agrees:

 

Lessee, in its operation at and use of the Centennial Airport, covenants that it will not on the grounds of sex, race, color or national origin: discriminate or permit discrimination against any person or group of persons in any manner prohibited by Title 49, Code of Federal Regulations, Department of Transportation, Subtitle A, Office of the Secretary, Part 21; and in the event of such discrimination, lessee agrees that Arapahoe County Public Airport Authority has the right to take such action against lessee as the Federal Government may direct to enforce this covenant.

 

29.1.8    In performance of its obligations under this Sublease and with reference solely to the Demised Premises and Improvements, Sublessee assures that, to the extent required by law, it will undertake an affirmative action program as required by 14 CFR Part 152, Subpart E, to ensure that no person shall on the grounds of race, creed, color, national origin or sex be excluded from participating in any employment activities covered in 14 CFR Part 152, Subpart E. The Sublessee assures that no person shall be excluded on these grounds from participating in or receiving the services or benefits of any program or activity covered by this subpart. The Sublessee assures that, to the extent required by law, it will require that its covered sub organizations provide assurances to the Sublessee that they will require assurances from their sub organizations, as required by 14 CFR Part 152, Subpart E, to the same effect.

 

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29.1.9    Sublessee recognizes that from time to time during the term of this Sublease it may be necessary for Airport Authority or Sublessor to initiate and carry forward extensive programs of construction, reconstruction, expansion, relocation, maintenance and repair in order that the Centennial Airport and its facilities may be suitable for the volume and character of air traffic and flight activity which will require accommodation and that such construction, reconstruction, expansion, relocation, maintenance and repair may inconvenience Sublessee in its operation at the Centennial Airport. Sublessee agrees that no liability shall attach to Sublessor or Airport Authority, or their officers, agents, employees, contractors, subcontractors and representatives, by reason of such inconvenience or interruption, and for and in further consideration of the premises and mutual covenants and agreements contained herein, Sublessee waives any right to claim damages or other consideration therefor, other than as provided in the following sentence. In the event that operations on the Demised Premises cease or are caused to cease as a result of a determination by the Airport Authority in its sole discretion, and Sublessor is entitled to a rent abatement pursuant to Article XVII of the Master Lease, then Sublessee shall be entitled to a comparable and proportional rent abatement of Net Rent to the rent abatement provided to Sublessor under the Master Lease (except there shall be no abatement of any costs and expenses payable by Sublessee pursuant to this Sublease, including, without limitation, Category A and B Expenses) for the period in time in which Sublessee's operations are ceased. The determination as to a rent abatement shall be based upon the decision of the Airport Authority and neither Sublessor nor Sublessee shall have any authority in determining if an event entitles Sublessor and Sublessee to such abatement under the Master Lease and this Sublease.

 

29.1.10    Sublessee agrees and acknowledges that Sublessee does not have the authority to ever represent to the Airport Authority or any other third party the position of Sublessor on any topic. A breach of this Section shall constitute an Event of Default pursuant to Section 19.1.5.

 

29.1.11    Sublessee agrees and acknowledges that any and all submittals, applications, documents, and the like, other than correspondence which does not relate to or impact the use and/or operations of the Demised Premises and/or the Improvements, which Sublessee desires to submit to the Airport Authority, shall first be submitted by Sublessee to Sublessor for Sublessor's prior review and approval. No such submittal, application or document of Sublessee shall be submitted to Airport Authority until Sublessor provides written approval of such submittal, application or documents, and written consent to submission of the same to the Airport Authority. Sublessor's approval of any such item shall not be unreasonably withheld, conditioned or delayed. A breach of this Section shall constitute an Event of Default pursuant to Section 19.1.5.

 

29.1.12    In the event Sublessee is involved in any matter or issue that in any way affects any part of the Sublessor's project, other than the Demised Premises ("Offsite Impact"), Sublessee shall take no action of any type or kind whatsoever without Sublessor's written consent. Sublessor shall be advised of and invited by Sublessee to attend any and all meetings in which issues or matters are discussed which could in any way have an Offsite Impact.

 

29.2    Sublessee covenants and agrees as follows:

 

29.2.1    The terms, covenants and conditions of the Minimum Standards are incorporated herein by reference so that, except to the extent that they are inapplicable, each and every term, covenant and condition of the Minimum Standards shall be binding upon Sublessee and shall inure to the benefit of Sublessor, with the same force and effect as if such terms, covenants and conditions were completely set forth in this Sublease. Such terms, covenants and conditions shall include, but not be limited to, those relating to licenses and certificates, personnel, insurance and fees.

 

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29.2.2    Sublessee covenants and agrees that it shall be responsible for obtaining from Airport Authority and shall obtain and maintain in its files, from time to time, the most recent version of the Minimum Standards and any amendments or supplements thereto.

 

29.3    Intentionally Omitted.

 

29.4    Sublessee acknowledges that the terms and conditions of this Sublease are to remain confidential for Sublessor's benefit, and may not be disclosed by Sublessee to anyone other than Sublessee's accountants, attorneys, investors, members and lenders, by any manner or means, directly or indirectly, without Sublessor's prior written consent. No information shall be regarded as confidential information which was at the time of disclosure already known to the general public through publication or otherwise. Nothing herein shall preclude Sublessee from disclosing this Sublease to the Federal Aviation Administration or disclosing as may be required by law.

 

29.5    Sublessee shall coordinate with Sublessor with respect to the issuance of mutually-agreeable press releases regarding the location of Sublessee's business or office being located at Centennial Airport, and Sublessee shall use reasonable efforts in its marketing materials to refer to its location at Centennial InterPort™.

 

29.6    Except in the event of an arbitration as provided for in Sections 6.7 and 16.7, which shall be governed as provided in Section 24 hereof, in the event of any litigation relating to this Sublease, the court shall award to the substantially prevailing party all reasonable costs and expenses, including reasonable attorneys' fees.

 

30.   Release of Principals of Sublessor; Limitation of Liability. In the event of default by Sublessor in the performance or observance of any of the terms, covenants or conditions of this Sublease on its part to be performed or observed, Sublessee will seek no personal money judgment, or otherwise seek the enforcement of this Sublease, against any third party on any grounds whatsoever, including without limitation the ground that such third party is a manager or member, disclosed or undisclosed, of Sublessor. Sublessor's liability hereunder as a consequence of any such default shall not exceed an amount equal to the fair market value of Sublessor's leasehold interest in the Demised Premises, but in no event shall such amount include the residual value of the Improvements that will exist at the time of termination of this Sublease.

 

31.   Representations and Warranties of Sublessor. Sublessor represents and warrants to Sublessee, as of the Effective Date:

 

31.1    Organization, Authorization and Consents. Sublessor has the right, power and authority to enter into this Sublease in accordance with the terms and provisions of this Sublease, to engage in the transaction contemplated in this Sublease and to perform and observe all of the terms and provisions hereof, and Sublessor is a duly organized and validly existing limited partnership under the laws of the State of Colorado.

 

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31.2    Consents of Third Parties. To the best of Sublessor's actual knowledge, other than the consent of the Airport Authority, no consent, authorization, license, permit, registration or approval of, or exemption or other action by, any governmental or public body, commission or authority is required in connection with the execution, delivery and performance by Sublessor of this Sublease;

 

31.3    Action of Sublessor, Etc. Upon obtaining the consent of the Airport Authority, Sublessor will have taken all necessary action to authorize the execution, delivery and performance of this Sublease.

 

31.4    No Violation of Agreements. Sublessor has not received written notice from any third party and has no actual knowledge that the execution, delivery or performance of this Sublease by Sublessor nor compliance with the terms and provision hereof will: (i) result in any breach of the terms, conditions or provisions of, or conflict with or constitute a default under, or result in the creation of any lien, charge or encumbrance upon the Demised Premised or any portion thereof pursuant to the terms of any indenture, deed to secure debt, mortgage, deed of trust, note, evidence of indebtedness or any other Sublease or instrument by which Sublessor or the Demised Premises is bound; (ii) violate any provision of any legal requirement to which Sublessor or the Demised Premises is subject; and (iii) violate any judgment, order, writ, injunction or decree of any court applicable to Sublessor or the Demised Premises.

 

31.5    Existing Master Lease. (i) Sublessor has not given or received any notice(s) of default under the Master Lease which has not been cured, and has no knowledge of any fact or circumstance which with the giving of notice or the passage of time or both would constitute an event of default under the Master Lease; (ii) all payments of rent (as defined in the Master Lease) are current; and (iii) the Land has not been subleased or reallocated.

 

31.6    Litigation. Sublessor has not received written notice of any pending or threatened suit, legal action or legal proceeding, which (i) if determined adversely to Sublessor, would affect the use of the Demised Premises in accordance with Section 12.1 hereof; or (ii) questions the validity of this Sublease; (iii) questions the validity of the Master Lease; or (iv) relates specifically to the Demised Premises or the title thereto; or (iv ) involves condemnation or eminent domain proceedings (or proceedings in lieu thereof) involving the Demised Premises, or any portion thereof or any plans to restrict, change or otherwise impair access to and from the Demised Premises.

 

31.7    Rights of Third Parties to the Demised Premises. Neither the Demised Premises nor any part thereof are subject to any purchase contract, option to purchase or lease or right of first refusal or offer, other than pursuant to this Sublease.

 

31.8    Payments for Services or Materials. No services, material or work have been supplied to Sublessor or Sublessor's contractors, subcontractors or materialmen with respect to the Demised Premises for which payment has not been made in full or which will not be paid in full in the ordinary course of business prior to the Effective Date.

 

31.9    Notices of Violation. No notices of violation of law or municipal ordinances or of Federal, State, County or municipal or other governmental agency regulations, orders or requirements relating to the Demised Premises have been received by Sublessor, and Sublessor has no reason to believe that any such notice has been, may or will be entered.

 

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31.10    Environmental. Sublessor has not received from any third party (including any federal, state or municipal governmental agency) any request for information, notices of claim, demand letters or other notification and has no actual knowledge of a current situation concerning: (i) a violation of any environmental law (being those identified in Section 14.7 above) on the Demised Premises, (ii) hazardous substance on the Demised Premises, or (iii) that Sublessor is or may be potentially responsible for the removal and/or clean-up of any hazardous substance from the Demised Premises. Sublessor has never used, processed, released, discharged, generated, stored or disposed of any hazardous substance on, under or about the Demised Premises in violation of applicable laws, and, to Sublessor's knowledge, there is no underground storage tank located at the Demised Premises, nor has any underground storage tank been removed from the Demised Premises. Sublessor has received no written notice from any governmental authority that such authority has determined that there are any violations of an environmental law affecting the Demised Premises or that the Demised Premises has been previously used as a landfill or as a repository for garbage or refuse. In the event Sublessor receives written notice form any governmental authority that such authority has determined there are any violations of an environmental law affecting the Demised Premises, Sublessor shall immediately notify Sublessee thereof.

 

31.11    Obligations. Sublessor has, prior to the execution of this Sublease, observed and obeyed all laws, ordinances, rules and regulations of the United States, the State of Colorado, Arapahoe County, the Airport Authority, and any other public or semi-public agency, district, authority or entity with authority or oversight of any type or kind whatsoever over the Demised Premises which may be applicable to its construction or operations upon the Demised Premises prior to the execution of this Sublease, and all obligations with respect to the Demised Premises subsequent to the execution of this Sublease shall be Sublessee's obligations unless otherwise specifically provided in this Sublease to the contrary or unless allocated to the Sublessor under the Master Lease, but not allocated to Sublessor in this Sublease.

 

32.   Miscellaneous.

 

32.1    This Sublease contains the entire understanding of the parties hereto with respect to the subject matter hereof and supersedes all prior negotiations, agreements, options and understandings. Neither of the parties shall be bound by or be deemed to have made any representations, warranties or commitments with respect to the subject matter hereof except those contained herein.

 

32.2    Neither this Sublease nor any of the terms hereof may be terminated, amended, supplemented, waived or modified orally, but only by an instrument in writing signed by the party against which the enforcement of the termination, amendment, supplement, waiver or modification shall be sought.

 

32.3    The headings of the various Sections of this Sublease are for convenience of reference only and shall not modify, define or limit any of the terms or provisions thereof.

 

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32.4    In the event that Sublessor voluntarily or involuntarily sells or transfers its interest in and to the Demised Premises during the term of this Sublease, this Sublease shall remain in full force and effect and Sublessee shall attorn to the purchaser or transferee and shall recognize the same as the Sublessor for all purposes under this Sublease and Sublessor shall be released from all liabilities and obligations under this Sublease.

 

32.5    It is understood and agreed that no provision of this Sublease shall be deemed to create any relationship between Sublessor and Sublessee other than a relationship of landlord and tenant.

 

32.6    This Sublease has been delivered in, and shall in all respect be governed by and construed in accordance with, the laws of the State of Colorado.

 

32.7    This Sublease shall not be recorded against the Demised Premises by the parties hereto. Either party hereto may prepare a memorandum which is reasonably acceptable to both parties hereto and suitable for recording, and the parties hereto shall execute, acknowledge and file of record in the land records of Arapahoe County, Colorado such memorandum.

 

32.8    This Sublease may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument.

 

32.9    Sublessor and Sublessee represent and warrant to each other that they have not dealt with any real estate agent or broker in connection with this Sublease, other than InterPort Realty and Management LLC (the "Broker"). Sublessee shall indemnify and hold Sublessor harmless from and against any and all claims and demands of any broker or agent (other than Broker) claiming a commission by or through Sublessee in connection with this Sublease. Sublessor shall indemnify and hold Sublessee harmless from and against any and all claims and demands of any broker or agent claiming a commission by or through Sublessor in connection with this Sublease. The indemnity of Sublessee contained in this Section 32.9 shall survive the termination of this Sublease.

 

32.10    Subject to the limitations set forth herein, this Sublease shall be binding on and inure to the benefit of Sublessor and Sublessee and their respective successors and assigns.

 

32.11 There is a lot in the northeast corner of the Land ("Adjacent Northeast Parcel") and the Sublessor or its successors and assigns, as determined by Sublessor, shall pay for its prorata share of the Ramp Improvements (as hereinafter defined), the Common Access Road (as hereinafter defined), and certain maintenance and repair costs, as hereinafter set forth, provided that Sublessee exercises its Option and subleases Phase 2.

 

32.11.1 Sublessee will construct all ramp improvements to serve Phase 2 (the "Ramp Improvements"), including any of the Ramp Improvements located on the Adjacent Northeast Parcel and all connections to Taxilane Sierra within what is currently designated as Phase 2. Sublessor will pay to Sublessee Sublessor's prorata share of such Ramp Improvements based on the following formula: the numerator will be the square footage of the building footprint of the proposed facility to be located on the Adjacent Northeast Parcel ("Adjacent Northeast Parcel Facility"), and the denominator will be the total square footage of all the Phase 2 buildings footprints plus the square footage of the Adjacent Northeast Parcel Facility. For example, based on current estimates, if the Adjacent Northeast Parcel Facility has a 15,000 square foot footprint, and Phase 2 as depicted in Exhibit A is planned to 103,000 square feet of footprint, the calculation would be 15,000 square feet/118,000 square feet = 12.71% of the total cost of the Ramp Improvements.

 

32.11.2 Sublessor, at its sole cost and expense, will complete the construction of the access road ("Common Access Road") from the southern boundary of the Adjacent Northeast Parcel to the northern boundary Adjacent Northeast Parcel.

 

32.11.3 Sublessor and Sublessee agree to enter into a shared access agreement for the Common Access Road and the Ramp Improvements (the "Shared Access Agreement"). The Sublessor and Sublessee shall enter into the Shared Access Agreement at the time that the Option is exercised. The Shared Access Agreement shall be on commerciallyreasonable terms and shall provide for payment for installation of the Ramp Improvements and the Common Access Road, as provided in subsections 32.11.1 and 32.11.2 above. Further, the Shared Access Agreement shall set forth that Sublessor and Sublessee shall pay for repair and maintenance of the Ramp Improvements and the Common Access Road on an equitable basis, which shall take into consideration the percentage set forth above.

 

33.   Option. As additional consideration for the covenants of Sublessee under this Sublease, Sublessor grants to Sublessee an option (the "Option") to lease Phase 2 and add such Phase 2 to the Demised Premises for a term commencing within ninety (90) days after Sublessee's Notice (as hereinafter defined) and expiring on the Expiration Date. The Option shall be on the following terms and conditions:

 

33.1    Written notice of Sublessee's interest in exercising the Option shall be given to Sublessor at any time during the first three (3) years of the initial Sublease term, but not later than ninety (90) days prior to the expiration of such three (3)-year period ("Sublessee's Notice").

 

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33.2    Unless Sublessee timely provides Sublessee's Notice to Sublessor in accordance with Section 33.1 above, and the parties execute an amendment as provided above, the Option shall terminate and shall be of no further force or effect.

 

33.3    In addition to the timely written notice as required by Section 33.1 above, as a condition of Sublessee's right to exercise the Option granted hereunder, there shall be no Event of Default on the date of exercise or the date the Option is to commence and Sublessee shall have made all of the Option Payments (as hereinafter defined) when due.

 

33.4    In the event Sublessee exercises the Option, Sublessee must take the entire Phase 2 and may not elect only to lease a portion thereof.

 

33.5    All notifications contemplated by this Section must be in writing and given in the manner provided in the Sublease.

 

33.6    Sublessee's rights with respect to the Option terminate if this Sublease or Sublessee's right to possession of the Demised Premises is terminated at any time prior to the third anniversary of the Commencement Date.

 

33.7    Commencing on the second (2nd) anniversary of the Commencement Date through and including the last day of such second (2nd) year of the term of this Sublease, in order to continue the Option, and in addition to, but not deemed a portion of, the Net Rent, Sublessee shall make monthly payments to Sublessor on the first (1st) day of each calendar month in the amount of $0.25 per square foot of Phase 2 [Seven Thousand Seven Hundred Forty-Five and 06/100 Dollars ($7,745.06)] ("Second Year Option Payments").

 

33.8    Commencing on the third (3rd) anniversary of the Commencement Date through and including the last day of such third (3rd) year of the term of this Sublease, in order to continue the Option, and in addition to, but not deemed a portion of, the Net Rent, Sublessee shall make monthly payments to Sublessor on the first (1st) day of each calendar month in the amount of $0.50 per square foot of Phase 2 [Fifteen Thousand Four Hundred Ninety and 13/100 Dollars ($15,490.13)] (together with the Second Year Option Payments, the "Option Payments"). If any of the Option Payments is not timely made, the Option will terminate and be of no further force or effect, and Sublessee shall have no further right to lease Phase 2. All Option Payments shall be in the amounts specified on Exhibit C. At such time as Sublessee exercises the Option, any Option Payments not yet due shall no longer be payable, and Sublessee shall pay Net Rent for Phase 2 in lieu thereof, as provided in Section 3.1.2.

 

33.9    Upon the exercise of the Option, Phase 2 shall become part of the Demised Premises and, within thirty (30) days after Sublessee has exercised the Option, the parties shall execute an amendment to the Sublease reflecting such addition of Phase 2 to the Demised Premises and setting forth the Net Rent with respect thereto, in accordance with Section 3.1.2, which amendment shall be in form and substance acceptable to Sublessor.

 

 

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33.10    The Option is personal to Sublessee and cannot be exercised by any other party, nor can it be assigned by Sublessee to any other party.

 

34.   AS-IS. Sublessee (i) EXCEPT TO THE EXTENT OTHERWISE SPECIFICALLY PROVIDED HEREIN, ACCEPTS THE DEMISED PREMISES "AS-IS," WITH SUBLESSEE ACCEPTING ALL DEFECTS, IF ANY; AND SUBLESSOR MAKES NO WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, WITH RESPECT TO THE DEMISED PREMISES (WITHOUT LIMITATION, SUBLESSOR MAKES NO WARRANTY AS TO THE HABITABILITY, FITNESS OR SUITABILITY OF THE DEMISED PREMISES FOR A PARTICULAR PURPOSE, NOR AS TO COMPLIANCE WITH ANY APPLICABLE LAWS (AS HEREIN DEFINED), OR AS TO THE ABSENCE OF ANY TOXIC OR OTHERWISE HAZARDOUS MATERIALS), (ii) acknowledges that the Demised Premises are acceptable for Sublessee's use, (iii) waives all claims of defect in the Demised Premises and any implied warranty that the Demised Premises are suitable for Sublessee's intended purposes, and (iv) acknowledges that Sublessor has no obligation to construct any roads or other infrastructure improvements.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Sublease to be executed by their duly authorized representatives as of the day and year first above written.

 

 

SUBLESSOR:

   
 

SUNBORNE XVI, LTD.,

 

a Colorado limited partnership

   
  By:

SunBorne Development, Limited Liability

   

Company, a Colorado limited liability

   

company, its General Partner

     
     
   

By:

/s/ Tyler M. Packard
    Name: Tyler M. Packard
   

Title:

Manager

 

 

SIGNATURE PAGE TO GROUND SUBLEASE

 

 

 

 

 

SUBLESSEE:

   
 

APA HANGARS LLC,

 

a Delaware limited liability company

   
   
 

By:

/s/ Tal Keinan
 

Name:

Tal Keinan
 

Title:

Authorized Signatory

 

 

SIGNATURE PAGE TO GROUND SUBLEASE

 

 

 

EXHIBIT A

 

Land

 

A-1

 

EXHIBIT B

 

Common Areas

 

B-1

 

EXHIBIT C

 

C-1

 

EXHIBIT C-1

 

C-1-1

 

EXHIBIT C-2

 

To be provided by Sublessor if the Option is exercised early

 

C-2-1

 

EXHIBIT D

 

Intentionally Deleted

 

D-1

 

EXHIBIT E-1

 

Category A Expenses

 

This list is intended to illustrate the various categories of expenses within Category A, but is not necessarily all-inclusive.

 

Category A: Main Entry/Streetscape:

 

Lawn care/irrigation/fertilization/water and electricity/aeration/trees/ shrubs and entry treatment and other related expenses with respect to InterPort Boulevard and the main entry feature at InterPort Boulevard.

 

Insurance required under the Master Lease or applicable governmental authority

 

Administration fees

 

Management fees

 

Signage/Maintenance

 

Legal/accounting

 

Payroll expenses

 

Property taxes

 

Reserves for Category A Expenses

 

E-1-1

 

EXHIBIT E-2

 

Category B Expenses

 

This list is intended to illustrate the various categories of expenses within Category B, but is not necessarily all-inclusive.

 

Category B: Aviation Related Facilities

 

Taxilane asphalt & concrete repair/snow removal/sweeping & cleaning

 

Taxilane security card readers/other

 

Taxilane lighting (may be by airport)

 

Taxilane land lease cost

 

Administration fees

 

Management fees

 

Legal/accounting

 

Property taxes

 

Insurance

 

Reserves for Category B Expenses

 

E-2-1

 

EXHIBIT E-3

 

Intentionally Deleted

 

E-3-1

 

EXHIBIT E-4

 

Intentionally Deleted

 

E-4-1

 

EXHIBIT E-5

 

Interport Project

 

E-5-1

 

EXHIBIT E-6

 

Performance Criteria to be negotiated by Sublessor and Sublessee

 

E-6-1

 

EXHIBIT F

 

Estoppel and Commencement Date Certificate

 

THIS ESTOPPEL AND COMMENCEMENT DATE CERTIFICATE ("Certificate") is executed this ____ day of ____________, 202__ by SUNBORNE XVI, LTD., a Colorado limited partnership ("Sublessor") and APA HANGARS LLC, a Delaware limited liability company ("Sublessee"), with respect to and forming a part of that certain Ground Sublease ("Lease") dated ______, 202__, for the premises more particularly described therein ("Premises").

 

WITNESSETH

 

WHEREAS, the parties desire to reaffirm and/or amend and certify to certain provisions of the Sublease; and

 

WHEREAS, the parties desire that the matters set forth herein be conclusive and binding on the parties.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

1.         The Sublease commencement date is deemed and agreed to be ____ 1, 20__, and the Sublease expiration date is agreed and deemed to be ______, 20__, unless sooner terminated, as provided therein.

 

2.         _____________________________________________ Dollars ($________) which was paid by Sublessee on _________, 20__ and accordingly Net Rent is paid through __________, 20__. Sublessee's next annual installment of Net Rent in the amount of ________________________________________ Dollars ($________) for the annual period of __________ 1, 20__ through __________, 20__ is due on _____ 1, 20__.

 

3.         Sublessee's first installment of Sublessee's pro rata shares of operating expenses in the amount of ______________________________________ Dollars ($______________) (is due on) (was paid on) ________________, 20___.

 

4.         Sublessee deposited with Sublessor a security deposit in the amount of ________ Dollars ($___________).

 

5.         Except as may be amended herein, all terms and conditions of the Sublease shall continue in full force and effect and are hereby republished, ratified and reaffirmed in their entirety.

 

6.         This Certificate shall be binding upon and may be relied upon by the parties hereto and their respective legal representatives, successors and assigns.

 

F-1

 

 

IN WITNESS WHEREOF, the parties have executed this Certificate as of the day and year first above written.

 

 

SUBLESSOR:

 

     
  SUNBORNE XVI, LTD.,  
  a Colorado limited partnership  

 

 

 

 

 

 

 

 

 

By:

SunBorne Development, Limited Liability

 

 

 

Company, a Colorado limited liability

 

 

 

company, its General Partner

 

       
    By:                                                             
    Name:                                                        
    Title:    Manager  
       

 

 

STATE OF COLORADO

)

 

) ss.

COUNTY OF ____________

)

 

The foregoing instrument was acknowledged before me this ____ day of ________ 202__, by __________ Packard, as Manager of Sunborne Development, Limited Liability Company, a Colorado limited liability company, as General Partner of SUNBORNE XVI, LTD., a Colorado limited partnership.

 

Witness my hand and official seal.

 

My commission expires:

 

 

  Notary Public

 

F-2

 

 

 

SUBLESSEE:

   
 

APA HANGARS LLC,

 

a Delaware limited liability company

   
   
 

By: 

   
 

Name:

   
 

Title:

   

 

STATE OF COLORADO

)

 

) ss.

COUNTY OF ____________

)

 

The foregoing instrument was acknowledged before me this ____ day of ________ 202__, by ___________________________________, as _______________________________ of APA HANGARS LLC, a Delaware limited liability company..

 

Witness my hand and official seal.

 

My commission expires:

 

 

  Notary Public

 

F-3

 

EXHIBIT G

 

Concept Plan

 

G-1

 

EXHIBIT H

 

Development Schedule

 

H-1
 

Exhibit 10.14

 

 

 

 

 

 

CITY OF PHOENIX AVIATION DEPARTMENT

 

UNSUBORDINATED GROUND LEASE AND OPTION TO LEASE

 

ADDITIONAL LAND

 

 

 

NO. 154206--0

 

 

 

Between

 

CITY OF PHOENIX,

 

an Arizona municipal corporation,

 

Landlord,

 

and

 

DVT HANGARS LLC,

 

a Delaware limited liability company,

 

Tenant,

 

at Phoenix Deer Valley Airport

 

 

 

 

Page 1 of 54

 

TABLE OF CONTENTS

 

ARTICLE 1 – DEFINITIONS

3

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

5

ARTICLE 3 – RIGHT OF ENTRY RESERVED

12

ARTICLE 4 – TERM

13

ARTICLE 5 – LANDLORD RIGHT TO RECLAIM

14

ARTICLE 6 – NET RENT

15

ARTICLE 7 – TAXES

18

ARTICLE 8 – UTILITIES

19

ARTICLE 9 – PERFORMANCE GUARANTEE

20

ARTICLE 10 – INDEMNIFICATION

21

ARTICLE 11 – INSURANCE

22

ARTICLE 12 – ENVIRONMENTAL CONDITIONS

22

ARTICLE 13 – UNAVOIDABLE DELAYS

26

ARTICLE 14 – ASSIGNMENTS, SUBLEASES, OR MORTGAGES

26

ARTICLE 15 – SIGNAGE

34

ARTICLE 16 – BREACH AND REMEDIES FOR BREACH

34

ARTICLE 17 – NO WAIVER

36

ARTICLE 18 – TENANT IMPROVEMENTS

36

ARTICLE 19 – DAMAGE OR DESTRUCTION TO PREMISES

41

ARTICLE 20 – CONDEMNATION

43

ARTICLE 21 – MAINTENANCE AND CUSTODIAL

45

ARTICLE 22 – NO IMPAIRMENT OF LANDLORD’S TITLE

46

ARTICLE 23 – NOTICE

47

ARTICLE 24 – COMPLIANCE WITH LAWS

47

ARTICLE 25 – GENERAL PROVISIONS

49

 

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

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

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

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

EXHIBIT C-1 Irrevocable Letter of Credit form

EXHIBIT C-2 Cash Deposit for Performance Guarantee Form

EXHIBIT D    Insurance Requirements

EXHIBIT E     Landlord-Approved Form of Sublease

EXHIBIT F     Supplemental Terms and Conditions to All Airport Agreements

EXHIBIT G    Compliance with Environmental Laws

EXHIBIT H    Memorandum of Lease

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

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

 

Page 2 of 54

 

CITY OF PHOENIX AVIATION DEPARTMENT

UNSUBORDINATED GROUND LEASE NO. ____________

 

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

 

RECITALS

 

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

 

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

 

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

 

AGREEMENT

 

THEREFORE, the Parties agree as follows:

 

ARTICLE 1 DEFINITIONS

 

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

 

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

 

B.          Days means calendar days.

 

Page 3 of 54

 

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

 

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

 

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

 

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

 

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

 

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

 

Page 4 of 54

 

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

PARCEL, AND FIRST RIGHT OF REFUSAL (POLICE LAND)

 

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

 

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

 

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

 

Page 5 of 54

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Page 6 of 54

 

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

 

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

 

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

 

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

 

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

 

Page 7 of 54

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

Page 8 of 54

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

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

 

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

 

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

 

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

 

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

 

Page 9 of 54

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Page 10 of 54

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Page 11 of 54

 

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

 

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

 

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

 

ARTICLE 3 RIGHT OF ENTRY RESERVED

 

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

 

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

 

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

 

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

 

Page 12 of 54

 

ARTICLE 4 TERM

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE 5 LANDLORD RIGHT TO RECLAIM

 

5.1         Right to Reclaim.

 

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

 

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

 

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

 

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ARTICLE 6 NET RENT

 

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

 

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

 

City of Phoenix

Aviation Department

P.O. Box 29110

Phoenix, AZ 85038-9110

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE 7 TAXES

 

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

 

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

 

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

 

ARTICLE 8 UTILITIES

 

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

 

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

 

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

 

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

 

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

 

ARTICLE 9 PERFORMANCE GUARANTEE

 

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

 

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

 

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

 

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

 

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

 

ARTICLE 10 INDEMNIFICATION

 

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

 

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

 

ARTICLE 11 INSURANCE

 

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

 

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

 

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

 

ARTICLE 12 ENVIRONMENTAL CONDITIONS

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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ARTICLE 13 UNAVOIDABLE DELAYS

 

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

 

ARTICLE 14 ASSIGNMENTS, SUBLEASES, OR MORTGAGES

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

B.    Intentionally omitted.

 

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

 

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

 

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

 

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

 

Notwithstanding anything in this deed of trust to the contrary:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE 15 SIGNAGE

 

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

 

ARTICLE 16 BREACH AND REMEDIES FOR BREACH

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE 17 NO WAIVER

 

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

 

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ARTICLE 18 TENANT IMPROVEMENTS

 

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

 

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

 

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

 

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

 

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

 

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

 

City of Phoenix Aviation Department

Corporate Office Building

Business and Properties Division

2458 East Buckeye Road

Phoenix, Arizona 85034

Attn: Real Estate

 

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

 

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

 

City of Phoenix Aviation Department

Design and Construction Services Division

500 South 24th Street

Phoenix, Arizona 85034-4405

Attn: Tenant Improvement Coordinator

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE 19 DAMAGE OR DESTRUCTION TO PREMISES

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

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

 

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

 

ARTICLE 20 CONDEMNATION

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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20.5         Intentionally Omitted.

 

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

 

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

 

ARTICLE 21 MAINTENANCE AND CUSTODIAL

 

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

 

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

 

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

 

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

 

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

 

ARTICLE 22 – NO IMPAIRMENT OF LANDLORD’S TITLE

 

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

 

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

 

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

 

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

 

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ARTICLE 23 NOTICE

 

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

 

23.2           Notices to Landlord shall be sent to:

 

City of Phoenix Aviation Department

Corporate Office Building

Deputy Aviation Director, Business and Properties Division

2485 East Buckeye Road

Phoenix, Arizona 85034

Attention: Deputy Aviation Director

Email: aviation.business@phoenix.gov

 

23.3         Notices to Tenant shall be sent to:

 

DVT Hangars LLC

Attn: Tim Herr, Regional Director

767 5th Avenue, 21st Floor

New York, New York 10153

Email: therr@skyharbour.group

 

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

 

23.5         Intentionally Omitted.

 

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

 

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

 

ARTICLE 24 COMPLIANCE WITH LAWS

 

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

 

Page 47 of 54

 

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

 

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

 

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

 

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

 

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

 

Page 48 of 54

 

ARTICLE 25 GENERAL PROVISIONS

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Page 50 of 54

 

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

 

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

 

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

 

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

 

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

 

Page 51 of 54

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

Therefore, the Parties cause this Lease to be executed.

 

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

 

ATTEST:

 

 

                                                             

 

Page 53 of 54

 

City Clerk

 

APPROVED AS TO FORM:

 

 

                                                              

Acting City Attorney

 

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

 

 

Page 54 of 54
 

Exhibit 10.15

 

 

 

 

 

 

 

 

LEASE AGREEMENT

 

 

BY AND BETWEEN

 

 

THE METROPOLITAN

NASHVILLE AIRPORT AUTHORITY

 

 

AND

 

 

SKY HARBOUR, LLC

 

 

DATED AS OF January 22, 2020

 

 

 

 

 

1

 

TABLE OF CONTENTS

 

ARTICLE

PAGE

   

DEFINITIONS

5

TERM

8

RENT AND SECURITY

8

RIGHT AND OBLIGATION TO MAKE IMPROVEMENTS

10

survey

12

USE OF PREMISES

13

ACCESS

16

REPAIRS AND MAINTENANCE

16

COMPLIANCE WITH LAWS

18

ENVIRONMENTAL COMPLIANCE

18

TRADE FIXTURES

21

LIENS

21

TAXES

22

UTILITIES

23

INDEMNIFICATION

23

INSURANCE

25

DAMAGE AND DESTRUCTION

29

TERMINATION BY AUTHORITY AND CONDEMNATION

30

ASSIGNMENT AND SUBLETTING

31

DEFAULT AND REMEDIES

32

HOLDING OVER AND SURRENDER OF LEASED PREMISES

34

QUIET ENJOYMENT

34

NOTICES

35

WAIVER OF COVENANTS, ETC.

36

ESTOPPEL CERTIFICATES

36

RESERVATION OF AVIGATION EASEMENT

36

ENTRY

38

BINDING EFFECT

38

MISCELLANEOUS PROVISIONS

38

PARTIAL INVALIDITY

39

GOVERNING LAW

39

TIME OF ESSENCE

39

RELATIONSHIP OF PARTIES

39

MORTGAGE OF LEASEHOLD ESTATE

39

SIGNAGE

40

NONDISCRIMINATION AND GOVERNMENTAL MATTERS

41

 

2

 

FORCE MAJEURE

44

INTEREST AND OTHER CHARGES

44

GOVERNMENTAL REQUIREMENTS

44

EASEMENTS

44

BROKERS

45

RECORD RETENTION AND RIGHT TO AUDIT

45

SURVIVAL OF PROVISIONS

45

AUTHORITY TO EXECUTE

45

 

 

EXHIBITS

 

EXHIBIT A - DEPICTION OF OVERALL PREMISES

EXHIBIT B - RENT ANALYSIS

EXHIBIT C - LETTER OF CREDIT

EXHIBIT D - SURVEYORS CERTIFICATE

EXHIBIT E - TITLE VI

EXHIBIT F - INSURANCE DURING CONSTRUCTION PHASE

 

3

 

LEASE AGREEMENT

 

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

 

WITNESSETH:

 

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

 

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

 

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

 

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

 

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

 

4

 

 

ARTICLE I

DEFINITIONS

 

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

 

1.

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

 

2.

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

 

3.

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

 

4.

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

 

5.

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

 

6.

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

 

7.

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

 

8.

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

 

9.

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

 

10.

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

 

11.

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

 

12.

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

 

13.

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

 

14.

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

 

15.

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

 

16.

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

 

17.

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

 

18.

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

 

19.

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

 

20.

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

 

21.

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

 

22.

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

 

5

 

23.

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

 

24.

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

 

25.

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

 

26.

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

 

27.

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

 

28.

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

 

29.

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

 

30.

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

 

31.

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

 

32.

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

 

33.

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

 

34.

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

 

35.

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

 

36.

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

 

37.

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

 

38.

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

 

39.

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

 

40.

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

 

41.

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

 

42.

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

 

43.

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

 

44.

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

 

45.

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

 

46.

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

 

47.

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

 

48.

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

 

49.

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

 

50.

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

 

6

 

51.

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

 

52.

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

 

53.

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

 

54.

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

 

55.

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

 

56.

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

 

57.

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

 

58.

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

 

59.

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

 

60.

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

 

61.

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

 

62.

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

 

63.

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

 

64.

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

 

65.

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

 

66.

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

 

67.

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

 

68.

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

 

69.

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

 

70.

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

 

71.

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

 

72.

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

 

73.

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

 

74.

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

 

75.

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

 

76.

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

 

77.

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

 

78.

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

 

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ARTICLE II

TERM

 

A.

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

 

B.

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

 

C.

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

 

ARTICLE III

RENT AND SECURITY

 

A.

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

 

8

 

B.

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

 

C.

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

 

D.

 

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

 

E.

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

 

9

 

F.

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

 

 

G.

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

 

ARTICLE IV

RIGHT AND OBLIGATION TO MAKE IMPROVEMENTS

 

A.

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

 

10

 

B.

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

 

C.

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

 

D.

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

 

E.

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

 

11

 

F.

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

 

G.

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

 

H.

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

 

I.

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

 

J.

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

 

ARTICLE V

SURVEY

 

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

 

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ARTICLE VI

USE OF PREMISES

 

A.

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

 

 

(1)

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

 

 

(2)

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

 

 

(3)

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

 

 

(4)

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

 

B.

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

 

 

(1)

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

 

13

 

 

(2)

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

 

 

(3)

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

 

 

(4)

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

 

 

(5)

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

 

 

(6)

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

 

 

(7)

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

 

 

(8)

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

 

 

(9)

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

 

 

(10)

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

 

 

(11)

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

 

14

 

C.

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

 

D.

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

 

E.

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

 

F.

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

 

G.

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

 

15

 

 

(1)

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

 

 

(2)

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

 

 

(3)

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

 

 

(4)

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

 

 

(5)

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

 

ARTICLE VII

ACCESS

 

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

 

ARTICLE VIII

REPAIRS AND MAINTENANCE

 

A.

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

 

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B.

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

 

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

 

C.

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

 

D.

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

 

E.

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

 

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ARTICLE IX

COMPLIANCE WITH LAWS

 

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

 

ARTICLE X

ENVIRONMENTAL COMPLIANCE

 

A.

As used herein:

 

 

(1)

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

 

 

(2)

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

 

 

(3)

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

 

 

(4)

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

 

B.

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

 

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(1)

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

 

 

(2)

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

 

 

(3)

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

 

 

(4)

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

 

 

(5)

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

 

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(6)

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

 

 

(7)

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

 

 

(8)

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

 

 

(9)

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

 

 

(10)

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

 

 

(11)

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

 

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C.

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

 

D.

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

 

ARTICLE XI

TRADE FIXTURES

 

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

 

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ARTICLE XII

LIENS

 

A.

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

 

B.

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

 

ARTICLE XIII

TAXES

 

A.

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

 

 

(1)

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

 

 

(2)

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

 

 

(3)

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

 

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B.

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

 

ARTICLE XIV

UTILITIES

 

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

 

ARTICLE XV

INDEMNIFICATION

 

A.

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

 

B.

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

 

C.

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

 

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D.

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

 

E.

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

 

F.

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

 

G.

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

 

H.

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

 

I.

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

 

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J.

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

 

ARTICLE XVI

INSURANCE

 

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

 

A.

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

 

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B.

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

 

C.

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

 

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D.

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

 

E.

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

 

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F.

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

 

G.

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

 

H.

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

 

I.

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

 

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J.

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

 

K.

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

 

ARTICLE XVII

DAMAGE AND DESTRUCTION

 

A.

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

 

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B.

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

 

ARTICLE XVIII

TERMINATION BY AUTHORITY AND CONDEMNATION

 

A.

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

 

B.

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

 

C.

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

 

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D.

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

 

E.

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

 

F.

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

 

ARTICLE XIX

ASSIGNMENT AND SUBLETTING

 

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

 

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ARTICLE XX

DEFAULT AND REMEDIES

 

A.

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

 

 

(1)

If Tenant shall:

 

 

(a)

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

 

 

(b)

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

 

 

(c)

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

 

 

(d)

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

 

 

(e)

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

 

 

(2)

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

 

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(3)

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

 

B.

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

 

C.

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

 

D.

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

 

E.

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

 

F.

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

 

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G.

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

 

H.

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

 

I.

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

 

ARTICLE XXI

HOLDING OVER AND SURRENDER OF LEASED PREMISES

 

A.

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

 

B.

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

 

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ARTICLE XXII

QUIET ENJOYMENT

 

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

 

ARTICLE XXIII

NOTICES

 

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

 

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

        

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

 

ARTICLE XXIV

WAIVER OF COVENANTS, ETC.

 

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

 

ARTICLE XXV

ESTOPPEL CERTIFICATES

 

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

 

ARTICLE XXVI

RESERVATION OF AVIGATION EASEMENT

 

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

 

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A.

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

 

B.

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

 

C.

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

 

D.

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

 

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ARTICLE XXVII

ENTRY

 

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

 

ARTICLE XXVIII

BINDING EFFECT

 

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

 

ARTICLE XXIX

MISCELLANEOUS PROVISIONS

 

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

 

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ARTICLE XXX

PARTIAL INVALIDITY

 

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

 

ARTICLE XXXI

GOVERNING LAW

 

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

 

ARTICLE XXXII

TIME OF ESSENCE

 

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

 

ARTICLE XXXIII

RELATIONSHIP OF PARTIES

 

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

 

ARTICLE XXXIV

MORTGAGE OF LEASEHOLD ESTATE

 

A.

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

 

B.

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

 

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C.

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

 

D.

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

 

E.

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

 

F.

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

 

ARTICLE XXXV

SIGNAGE

 

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

 

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ARTICLE XXXVI

NONDISCRIMINATION AND GOVERNMENTAL MATTERS

 

A.

During the term of this Agreement:

 

 

(1)

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

 

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

 

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

 

 

(a)

The period during which the property is used by the airport sponsor or any transferee for a purpose for which Federal assistance is extended, or for another purpose involving the provision of similar services or benefits; or

 

 

(b)

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

 

 

(2)

Tenant covenants and agrees that (1) no person on the grounds of race, color, or national origin shall be excluded from participation in, denied the benefits of, or be otherwise subjected to discrimination in the use of said facilities, (2) that in the construction of any improvements on, over or under such land and the furnishing of services thereon, no person on the grounds of race, color, or national origin shall be excluded from participation in, denied the benefits of, or be otherwise subjected to discrimination, (3) that Tenant shall use the premises in compliance with all other requirements imposed by or pursuant to Title 49, Code of Federal Regulations, Department of Transportation, Subtitle A, Office of the Secretary, Part 21, Non-discrimination in Federally Assisted Programs of the Department of Transportation-Effectuation of Title VI of the Civil Rights Act of 1964, and as said Regulations may be amended.

 

 

(3)

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

 

B.

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

 

C.

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

 

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D.

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

 

 

(1)

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

 

 

(2)

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

 

 

(3)

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

 

E.

Tenant hereby agrees as follows:

 

 

(1)

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

 

 

(2)

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

 

 

(3)

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

 

 

(4)

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

 

42

 

 

(5)

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

 

 

(6)

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

 

 

(7)

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

 

 

(8)

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

 

F.

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

 

G.

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

 

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ARTICLE XXXVII

FORCE MAJEURE

 

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

 

ARTICLE XXXVIII

INTEREST AND OTHER CHARGES

 

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

 

ARTICLE XXXVIX

GOVERNMENTAL REQUIREMENTS

 

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

 

ARTICLE XL

EASEMENTS

 

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

 

44

 

ARTICLE XLI

BROKERS

 

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

 

ARTICLE XLII

RECORD RETENTION AND RIGHT TO AUDIT

 

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

 

ARTICLE XLIII

SURVIVAL OF PROVISIONS

 

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

 

ARTICLE XLIV

AUTHORTY TO EXECUTE

 

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

 

 

[Signatures on following page]

 

45

 

 

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

 

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

 

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

 

46

 

 

STATE OF TENNESSEE )
COUNTY OF DAVIDSON )

     

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

 

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

 

 

     
NOTARY PUBLIC    
My Commission Expires:     
     
    [SEAL]

 

STATE OF <fill in>)

COUNTY OF <fill in>)

 

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

 

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

 

     
NOTARY PUBLIC    
My Commission Expires:     
     
    [SEAL]

 

47

 

Exhibit A

To Lease Agreement

 

Depiction of the Overall Premises including proposed Initial Improvements

 

 

 

48

 

 

Exhibit B

To Lease Agreement

 

Rent Analysis

 

 

49

 

 

Exhibit C

To Lease Agreement

 

Form of Letter of Credit

 

 

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

 

Ladies and Gentlemen:

 

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

 

1

 

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

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

2

 

 

Appendix A

To Letter of Credit

 

 

FORM OF DRAFT

 

[Date]

 

 

To:

 

 
     
     
     

 

 

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

 

 

THE METROPOLITAN NASHVILLE

 

  AIRPORT AUTHORITY  

 

 

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

                                                                                                                           

3

 

 

Appendix B

To Letter of Credit

 

 

CERTIFICATE

 

[Date]

 

 

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

 

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

 

 

 

THE METROPOLITAN NASHVILLE

 

  AIRPORT AUTHORITY  

 

 

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

                                          

5

 

 

Appendix C

To Letter of Credit

 

CERTIFICATE

 

[Date]

 

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

 

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

 

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

 

 

 

THE METROPOLITAN NASHVILLE

 

  AIRPORT AUTHORITY  

 

 

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

6

 

Exhibit D

To Lease Agreement

 

Surveyors Certificate

 

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

 

Dated:        
      Surveyor  
      Tennessee Registered Surveyor No.  

 

 

 

 

Exhibit E

To Lease Agreement

 

TITLE VI

 

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

 

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

 

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

 

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

 

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

 

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

 

 

 

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

 

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

 

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

 

VII.    Operation of Facilities: The contractor for itself and its successors in interest and assigns, as a part of the consideration hereof, does hereby covenant and agree as a covenant running with the land that:

 

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

 

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

 

VIII.    Construction/Use/Access of Facilities: The contractor for itself and its successors in interest, and assigns, as a part of the consideration hereof, does hereby covenant and agree as a covenant running with the land that:

 

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

 

 

 

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

 

II.

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

 

 

Exhibit F

To Lease Agreement

 

Insurance during the Construction Phase

 

1)

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

 

a)

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

 

b)

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

 

c)

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

 

d)

Builder’s Risk insurance covering the Overall Premises.

 

e)

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

2)

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

3)

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

4)

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

 

 

Exhibit 10.16

 

FIRST AMENDMENT TO THE LEASE AGREEMENT BY AND BETWEEN THE METROPOLITAN NASHVILLE AIRPORT AUTHORITY AND NASHVILLE HANGARS

 

THIS AMENDMENT TO THE LEASE AGREEMENT (the “this Amendment”) is made this 9     day of       February,       2021, by and between THE METROPOLITAN NASHVILLE AIRPORT AUTHORITY, a public corporation existing under the laws of the State of Tennessee (“Landlord”) and NASHVILLE HANGARS LLC, a Delaware limited liability company authorized to do business in the State of Tennessee (“Tenant”). Landlord and Tenant shall collectively be referred to herein as the Parties.

 

WITNESSETH:

 

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

 

WHEREAS, the Parties entered into a Lease Agreement dated January 22, 2020 pursuant to which Landlord leased Tenant certain premises at the Airport and pursuant to which Tenant agreed to make certain improvements to the leased premises (hereinafter “the Lease Agreement”).

 

WHEREAS, the Landlord and Tenant have agreed to make certain modifications to the Lease Agreement.

 

NOW THEREFORE, in consideration of the mutual promises contained herein and in the Lease Agreement and for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the Parties agree as follows:

 

 

(1)

Exhibit A attached to the Lease Agreement is hereby deleted in its entirety and Exhibit A attached hereto is substituted therefor.

 

 

(2)

Exhibit B attached to the Lease Agreement is hereby deleted in its entirety and Exhibit B attached hereto is substituted therefor.

 

 

(3)

Paragraph A of Article IV of the Lease Agreement is hereby deleted in its entirety and replaced with the following:

 

 

 

  In addition to Tenant’s obligation to repair and maintain the Overall Premises as set forth in Article VIII of this Lease, Tenant hereby agrees to invest a minimum of $17,000,000.00 (the “Minimum Capital Improvement Expenditure”), in capital improvements to the Premises (the “Initial Improvements”) as set forth in Article IV of this Lease as shown on Exhibit A including approximately 107,856 square feet of new hangar space along with approximately 14,303 square feet of other building space (total of approximately 122,159 square feet of new building space) and approximately 206,350 square feet of new or improved ramp/apron space to accommodate at least Group II aircraft along with approximately 124,340 square feet of new or improved non-aircraft rated pavement (total of approximately 330,690 square feet of new or improved pavement) within twenty-four (24) months from the date the Tenant shall have received all construction permits (the “Initial Improvement Construction Period”). The Initial Improvements shall consist of hard costs and soft costs of up to twenty-five percent (25%), inclusive of architectural and design expenses, permitting, engineering, project management and professional fees. In the event that Tenant expends less than the Minimum Capital Improvement Expenditure for construction of the Initial Improvements, Tenant shall pay the difference between the Minimum Capital Improvement Expenditure and the amount actually expended by Tenant for construction of the Initial Improvements as additional rent hereunder (“Additional Rent”) which shall be due and payable within 60 days after the end of the Initial Improvement Construction Period. Prior to commencement of construction of Initial Improvements, proposed site plans and design plans for the Initial Improvements shall be submitted to Authority in writing and shall be subject to Authority’s written approval and consistent with Authority’s design standards as outlined in the Airport Improvement Request Manual which approval shall not be unreasonably delayed, conditioned or withheld. Failure by Tenant to complete the Initial Improvements as described herein within the Initial Improvement Construction Period shall constitute an Event of Default (as hereinafter defined) under this Lease. The Initial Improvement Construction Period may be extended, with Authority’s reasonable approval, due to force majeure or for other reasons as long as Tenant is diligently pursuing completion of the Initial Improvements in good faith.  

 

 

(4)

If there should be any conflict between the provisions of the Lease Agreement and this Amendment, the provisions of this Amendment will control. All other terms and conditions of the Agreement will remain in full force and effect unless otherwise agreed upon in writing by the Parties.

 

2

 

 

(5)

Each person signing this Amendment represents and warrants that they are duly authorized and has legal capacity to execute and deliver this Amendment.

 

 

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

 

 

LANDLORD:

 

THE METROPOLITAN

NASHVILLE AIRPORT

AUTHORITY

 

 

 

/s/ Douglas E. Kreulen  
Douglas E. Kreulen,  
A.A.E. President and CEO  

 

APPROVED AS TO      
FORM AND   RECOMMENDED:  
LEGALITY:      
       
    /s/ Margaret Martin  
/s/ Theodore G. Morrissey   Margaret Martin  
Theodore G. Morrissey,   Vice President, Chief Development Officer  
C.M. Legal Counsel      

 

 

 

 

Tenant    
       
Nashville Hangars LLC    
       
By: /s/ Tal Keinan    
  Tal Keinan    
Title: Authorized Signatory    

 

3

 

Exhibit A

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit B

 

To Lease Agreement

 

Rent Analysis

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 10.17

 

 

 

 

SUBLEASE AGREEMENT

 

by and between

 

AA ACQUISITIONS LLC, as Landlord

 

and

 

SKY HARBOUR OPA LOCKA AIRPORT, LLC, as Tenant

 

 

 

 

 

 

TABLE OF CONTENTS

 

ARTICLE 1 LEASE AGREEMENT, TERM, OPTIONS AND RENTAL

2
     

SECTION 1.01.

GRANT

2

SECTION 1.02.

PROPERTY

2

SECTION 1.03.

TERM AND OPTIONS

3

SECTION 1.04.

USE OF PROPERTY

4

SECTION 1.05.

IMPROVEMENTS

5

SECTION 1.06.

CONSTRUCTION LIENS

6

SECTION 1.07.

HOLDING OVER

7

SECTION 1.08.

RENT AND ADJUSTMENTS

7

SECTION 1.09.

PURCHASE OPTION

9
     

ARTICLE 2 TENANT OBLIGATIONS

9
     

SECTION 2.01.

COMPLIANCE WITH ALL LAWS

9

SECTION 2.02.

UTILITIES

10

SECTION 2.03.

SIGNAGE AND NAMING OF FACILITY

10
     

ARTICLE 3 REPAIRS AND MAINTENANCE

10
     

SECTION 3.01.

REPAIRS AND MAINTENANCE OF THE PREMISES

10

SECTION 3.02.

INDEMNIFICATION BY TENANT

11
     

ARTICLE 4 ADDITIONAL RENT

11
     

SECTION 4.01.

REAL ESTATE TAXES

12

SECTION 4.02.

SOLID WASTE FEES

12

SECTION 4.03.

STORMWATER FEES

12

SECTION 4.04.

EMERGENCY AMBULANCE FEES

12

SECTION 4.05.

OTHER TAXES AND FEES

12
     

ARTICLE 5 INSURANCE AND INDEMNITY

12
     

SECTION 5.01.

LIABILITY INSURANCE

12

SECTION 5.02.

PROPERTY INSURANCE

13

SECTION 5.03.

ENVIRONMENTAL INSURANCE

14

SECTION 5.04.

INSURANCE CERTIFICATES AND REQUIREMENTS

14

SECTION 5.05.

WAIVERS OF SUBROGATION

15

SECTION 5.06.

PERSONAL PROPERTY

15

SECTION 5.07.

INDEMNITY

15
     

ARTICLE 6 SECURITY

16
     

SECTION 6.01.

SECURITY

16
     

ARTICLE 7 DESTRUCTION OF PREMISES

16

 

i

 

ARTICLE 8 CONDEMNATION

17
     

SECTION 8.01.

TOTAL CONDEMNATION

17

SECTION 8.02.

PARTIAL CONDEMNATION

17

SECTION 8.03.

TEMPORARY CONDEMNATION

17
     

ARTICLE 9 DEFAULT BY TENANT

18
     

ARTICLE 10 REMEDIES OF LANDLORD

19
     

SECTION 10.01.

REMEDIES

19

SECTION 10.02.

TENANT’S LIABILITY

20
     

ARTICLE 11 DEFAULT BY LANDLORD

21
     

ARTICLE 12 REAL ESTATE COMMISSION

21
     

ARTICLE 13 IDENTITY OF INTEREST

21
     

ARTICLE 14 NOTICES AND REPORTS

22
     

ARTICLE 15 NO RECORDING

22
     

ARTICLE 16 ENTRY OF LANDLORD

23
     

ARTICLE 17 SURRENDER OF PREMISES AND OWNERSHIP OF IMPROVEMENTS AT LEASE EXPIRATION.

23
     

ARTICLE 18 QUIET ENJOYMENT

23
     

ARTICLE 19 HEIGHT RESTRICTIONS

24
     

ARTICLE 20 NET LEASE

24
     

ARTICLE 21 WARRANTIES

24
     

ARTICLE 22 ASSIGNMENT AND SUBLETTING

25
     

ARTICLE 23 ENVIRONMENTAL REPRESENTATIONS, WARRANTIES, AND INDEMNIFICATION

26
     

SECTION 23.01.

ENVIRONMENTAL REPRESENTATIONS AND WARRANTIES BY TENANT

26

SECTION 23.02.

ENVIRONMENTAL INDEMNIFICATION BY TENANT

26

SECTION 23.03.

ENVIRONMENTAL TESTING

27

SECTION 23.04.

DEFINED TERMS

27
     

ARTICLE 24 SUBORDINATION

28

 

ii

 

SECTION 24.01.

SUBORDINATION

28

SECTION 24.02.

ATTORNMENT AND NON-DISTURBANCE

29

SECTION 24.03.

SUBLEASEHOLD FINANCING

29
     

ARTICLE 25 AS IS WHERE IS

33
     

ARTICLE 26 ALTERATIONS

34
     

ARTICLE 27 OTHER PROVISIONS

34
     

SECTION 27.01.

FORCE MAJEURE

34

SECTION 27.02.

HEADINGS

34

SECTION 27.03.

BINDING EFFECT

34

SECTION 27.04.

AUTHORITY

34

SECTION 27.05.

FEDERAL SUBORDINATION

34

SECTION 27.06.

NO WAIVER

35

SECTION 27.07.

SEVERABILITY

35

SECTION 27.08.

PAYMENT OF TAXES

35

SECTION 27.09.

INTERPRETATION OF AGREEMENT

35

SECTION 27.10.

NO AGENCY

35

SECTION 27.11.

RIGHTS NON-EXCLUSIVE

35

SECTION 27.12.

APPLICABLE LAW; JURISDICTION AND VENUE

36

SECTION 27.13.

ENTIRETY OF AGREEMENT

36

SECTION 27.14.

TOTAL AGREEMENT; APPLICABLE TO SUCCESSORS

36

SECTION 27.15.

WAIVER OF JURY TRIAL/ATTORNEYS FEES

36

SECTION 27.16.

TIME OF THE ESSENCE

36

SECTION 27.17.

EFFECTIVE DATE

36

SECTION 27.18.

RECITALS

37

SECTION 27.19.

GOOD STANDING

37

SECTION 27.20.

DISCLAIMER OF LIABILITY

37

SECTION 27.21.

LIMITATION ON LIABILITY

37

SECTION 27.22.

COUNTERPARTS AND FACSIMILE AND ELECTRONIC TRANSMISSION

38

SECTION 27.23.

EXAMINATION OF LEASE/JOINT PREPARATION

38

SECTION 27.24.

ESTOPPEL CERTIFICATES

38

SECTION 27.25.

CONSENT OF PRIME LESSOR

38

 

iii

 

Exhibit 10.17

 

SUBLEASE AGREEMENT

 

THIS SUBLEASE AGREEMENT (hereinafter referred to as the “Lease” or “Agreement”), is made and entered into this 2nd day of May, 2019 (the “Execution Date,”), by and between AA ACQUISITIONS, LLC a Florida limited liability company, with offices at 15000 NW 44th Avenue, Opa Locka, Florida 33054, (“Landlord”) and SKY HARBOUR OPA LOCKA AIRPORT, LLC, a Delaware limited liability company registered to do business in Florida, with offices at 767 5th Avenue, New York, New York 10153 (“Tenant”). Landlord and Tenant are sometimes referred to herein collectively as the “Parties”.

 

WITNESSETH THAT:

 

WHEREAS, pursuant to that certain Amended and Restated Development Lease Agreement from Miami-Dade County, a political subdivision of the State of Florida (the “County” and/or “Prime Landlord”) dated as of March 22, 2007, as amended by that certain First Amendment to Amended and Restated Development Lease Agreement between Miami-Dade County, Florida and AA Acquisitions, LLC dated March 22, 2007 (the “First Amendment”), Second Amendment to Amended and Restated Development Lease Agreement between Miami-Dade County, Florida and AA Acquisitions, LLC dated December 29, 2009 the “Second Amendment,” and Third Amendment to Amended and Restated Development Lease Agreement between Miami-Dade County, Florida and AA Acquisitions, LLC dated August 4, 2015 (the “Third Amendment,” and together with the Original Master Lease, the First Amendment, Second Amendment and any subsequent amendments, modifications and/or supplements thereof and thereto, collectively the “Prime Lease,” capitalized terms used, but not otherwise defined herein, shall have the meaning set forth in the Prime Lease), Landlord leases from the County certain real property (the “Real Property”; defined as the “Airpark” in the Prime Lease) located at the Miami Opa-Locka Executive Airport (the “Airport”), which Real Property includes the Premises described in Section 1.02 below. A complete copy of the Prime Lease is attached hereto as Exhibit “D”.

 

WHEREAS, Landlord has the exclusive right, power and authority to sublease the real property depicted on Exhibit A-1” attached hereto and incorporated herein (“Phase I Real Property”), which Phase I Real Property consists of approximately 11.36 acres of land located at the Airport.

 

WHEREAS, Landlord has the exclusive right, power and authority to sublease the real property depicted on Exhibit A-2” attached hereto and incorporated herein (“Phase II Real Property”), which Phase II Real Property consists of approximately 8.26 acres of land located at the Airport, which Tenant will have the option to sublease as detailed in this Lease.

 

WHEREAS, Tenant will construct certain improvements on the Phase I Real Property, and if Tenant exercises the Expansion Option (as hereinafter defined), Phase II Real Property, as more particularly described on Exhibit B” attached hereto and incorporated herein (the “Improvements”). The Phase I Real Property and the Phase I Improvements shall be collectively referred to herein as the “Phase I Property” or the “Phase I Premises”. If applicable, the Phase II Real Property and the Phase II Improvements shall be collectively referred to herein as the “Phase II Property” or the “Phase II Premises” and, together with the Phase I Real Property and Phase I Improvements shall be collectively referred to herein as the “Property” or “Premises”.

 

 

 

NOW, THEREFORE, in consideration of the promises, covenants, terms and conditions herein set forth, the parties have agreed as follows:

 

ARTICLE 1
LEASE AGREEMENT, TERM, OPTIONS AND RENTAL

 

SECTION 1.01.    GRANT.

 

Landlord, for and in consideration of the rents and other charges and payments payable by the Tenant and of the covenants, agreements, terms, provisions and conditions to be kept and performed hereunder by Tenant, does hereby demise and sub-lease the Premises to Tenant, and Tenant does hire and sub-lease the Phase I Property from Landlord, and if Tenant exercises the Expansion Option, the Phase II Property, upon and subject to the terms and conditions hereof.

 

SECTION 1.02.    PROPERTY.

 

Subsection 1.02.1    The approximate boundaries and location of the Phase I Property are outlined on the sketch attached Exhibit A-1”. The “Legal Description of the Real Property” as well as the precise square feet shall be determined by a boundary survey (the “Survey”). In the event the Survey is not completed prior to the Effective Date, the Survey will be completed within thirty (30) days of the Effective Date whereupon the legal description set forth therein shall be incorporated herein and evidenced by written agreement of the Landlord and Tenant as the replacement of the sketch on Exhibit A-1”. Said Survey shall be obtained by Tenant, at its sole cost and expense, and approved by Landlord, which consent shall not be unreasonably withheld, conditioned or delayed.

 

Subsection 1.02.2    Expansion Option. Tenant shall have the option (the “Expansion Option”) to lease the Phase II Property as depicted on Exhibit A-2” attached hereto, by providing written notice to Landlord no later than 24 months from the Effective Date. If Tenant exercises its Expansion Option, then, the date Tenant provides Landlord with such notice of exercise shall be the “Exercise Date” and all terms and conditions applicable to Premises, including the Term and calculation of the applicable Phase II Base Rent (as hereinafter defined), shall also apply to the Expansion Property once commencement occurs. The “Legal Description of the Phase II Property” as well as the precise square feet shall be determined by a boundary survey within thirty (30) days of the Effective Date whereupon the legal description set forth therein shall be incorporated herein and evidenced by written agreement of the Landlord and Tenant as the replacement of the sketch on Exhibit A-2”. Said Survey shall be obtained by Tenant, at its sole cost and expense, and approved by Landlord, which approval shall not be unreasonably withheld, conditioned or delayed. If Tenant exercises the Expansion Option, then the Phase II Property shall be added to and included in the Premises, and all references in this Lease to the Premises or the Property shall include the Phase II Property.

 

       

2

 

Subsection 1.02.3    Subject to Prime Lease. Tenant acknowledges and agrees that its rights hereunder and its possession of the Premises are subject to and subordinate to the Prime Lease, with the same force and effect as if fully set forth herein together with all matters to which the Prime Lease is subject and subordinate. Notwithstanding the foregoing, Tenant shall not be bound by any amendment or modification to the Prime Lease hereafter made to the extent the provisions thereof would materially and adversely affect Tenant.

 

All of the terms of the Prime Lease with which Landlord is bound to comply shall, to the extent that the same apply to the Real Property and its development and/or operation and use, as contemplated hereby or otherwise, be binding upon Tenant. Tenant agrees to fully and timely perform, according to the terms of the Prime Lease, all of the duties, covenants, agreements and obligations of tenant under the Prime Lease. While provisions of the Prime Lease are applicable to this Lease, this Lease is intended to be a distinct agreement between its parties.

 

Whenever Prime Landlord’s consent is required for any action to be taken by Tenant, Landlord shall use commercially reasonable efforts to obtain such consent, but failure to obtain such consent shall not be a Landlord default under this Lease. Upon receipt of written notice by Tenant, Landlord shall use commercially reasonable efforts to enforce, on behalf of Tenant, the provisions of the Prime Lease that are applicable to the Premises and set forth in specificity in Tenant’s written notice to Landlord.

 

Subsection 1.02.4    Prior to or contemporaneously with execution of this Lease, Landlord shall request that Prime Landlord execute a consent and non-disturbance agreement in a form that is agreeable to Prime Landlord, Landlord, and Tenant (“Prime Landlord Consent”). If the Prime Landlord Consent has not been delivered to Tenant within sixty (60) days of the Execution Date (“the “Consent Period”), provided that Landlord is diligently pursuing the receipt of the Prime Landlord Consent, then Landlord may, in its sole discretion, elect to continue pursuit of the Prime Landlord Consent for up to two (2) consecutive thirty (30) day periods by delivery written notice to Tenant, whereby the Consent Period shall be extended. If at the end of the Consent Period, as extended, Landlord is unsuccessful in obtaining the Prime Landlord Consent, then unless an extension is otherwise expressly agreed in writing by Landlord and Tenant, Tenant shall have the right to terminate the Lease, and the parties shall thereafter be released from any further obligations under this Lease except for the obligations which expressly survive termination. Further, in the event that Prime Landlord sells or conveys its interest in the Prime Lease to another Person, Landlord shall use commercially reasonable efforts to obtain a non-disturbance agreement executed by the new “Prime Landlord” but failure of Landlord to secure the Prime Landlord non-disturbance agreement shall not be a breach of this Lease. The parties agree to work together in good faith with the Prime Landlord to obtain a Prime Landlord Consent that is reasonably acceptable to Landlord and Tenant.

 

SECTION 1.03.    TERM AND OPTIONS.

 

Subsection 1.03.1    Term of Lease. This Lease shall be effective as of the date of delivery of the Prime Landlord Consent by the Prime Landlord (the “Effective Date”). The Term of this Lease (the “Term”) shall be for a period of forty (40) years commencing on the Effective Date and terminating four hundred eighty (480) months thereafter (the “Termination Date”), unless extended, as set forth below.

 

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Subsection 1.03.2    Option to Extend. Landlord hereby grants Tenant the option to renew (the “Renewal Option”) the base Term for two (2) additional terms of five (5) years each (each a “Renewal Term”), commencing as of the date immediately following the expiration of the then current Term, such option to be subject to the covenants and conditions hereinafter set forth. Notwithstanding the foregoing, in no event shall the Renewal Term extend beyond the term of the Prime Lease. Tenant shall give Landlord written notice of Tenant’s election to exercise each Renewal Option not later than eighteen (18) months prior to the expiration of the then current Term (“Renewal Notice”). If Tenant fails to exercise any Renewal Option by the required deadline, but subsequently notifies Landlord of its desire to exercise such Renewal Option, then Landlord may, at its sole option, accept or reject Tenant’s request to extend the Term for the Renewal Term in question. Tenant shall not be permitted to exercise a Renewal Option if Tenant is in default under this Lease beyond the expiration of applicable cure periods at the time Tenant exercises the Renewal Option or at the commencement of the Renewal Term. The covenants and conditions of this Lease in force during the base Term, as the same may be modified from time to time, shall continue to be in effect during the Renewal Term, except for the following: (i) the Phase I Base Rent and, if applicable, Phase II Base Rent shall increase by the rate of three (3%) percent per annum during the Renewal Term, and (ii) the “Term” for purposes of this Lease shall include the respective Renewal Term properly exercised.

 

Subsection 1.03.3    Option to Terminate. Landlord shall use diligent and good faith efforts to obtain a waiver from Prime Landlord so that Tenant is exempted from the requirement to pay Responsible Wages per section 2-11.16 of the County Code for construction work performed on the Property by Landlord (the “Waiver”) within one twenty (120) days following the Execution Date (“Termination Option Period”). For the avoidance of doubt, the Waiver is not meant to address improvements that Tenant may perform and seek grant money to fund. If the Waiver is not received on or before the expiration of Termination Option Period, or if Landlord notifies Tenant in writing prior to the expiration of the Termination Option Period that the Waiver has been denied by the Prime Landlord, then no later than fifteen (15) days following the earlier of the foregoing conditions to occur, Tenant shall have the right to terminate this Lease. If Tenant fails to notify Landlord in writing of its election to terminate this Lease within said time period, then this contingency shall be deemed satisfied and the Lease shall continue, time being of the essence. If Tenant elects to terminate this Lease as provided above, the parties shall thereafter be released from any further obligations under this Lease except for the obligations which expressly survive termination, which shall include, without limitation, Landlord’s obligation to reimburse Tenant for any payment of its share of Aviation Annual Land Rent (as defined in Section 4.01(A) of the Prime Lease) made by Tenant during the Termination Option Period.

 

SECTION 1.04.    USE OF PROPERTY.

 

Subsection 1.04.1    Use of the Property. Tenant shall use the Property for the purpose of operating aircraft hangar facilities and ancillary uses, (the “Permitted Use”) in compliance with Article 3 of the Prime Lease, Applicable Laws (as defined below) and the fueling limitations set forth in that certain Non-Competition Agreement in favor of Atlantic Aviation-Florida, Inc., a copy of which is attached hereto and incorporated herein by reference as Schedule 1.04.1.

 

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Subsection 1.04.2    Licenses and Permits. Tenant shall promptly apply for all licenses and permits required by the Governing Authorities having jurisdiction over the Property under Applicable Law for the construction of the Improvements, in accordance with the construction timeline attached hereto as Schedule 1.05.2, and Landlord shall not be liable or responsible for any part thereof. Prior to commencement of business operations from the Property, Tenant shall obtain all licenses and permits required by the Governing Authorities having jurisdiction over the Property under Applicable Law for the operation of the Permitted Use from the Premises during the continuance of the Term of this Lease, or any Renewal thereof, and Landlord shall not be liable or responsible for any part thereof. Tenant shall deliver to Landlord copies of such licenses and permits, prior to the commencement of construction of the Improvements, and prior to the commencement of business from the Premises, and/or upon Landlord’s request.

 

SECTION 1.05.    IMPROVEMENTS

 

Subsection 1.05.1    Improvements to the Property. Tenant shall be responsible for the administration of the design, development and construction of the Improvements. The Improvements shall consist of no less than five (5) aviation hangars and related improvements on the Phase I Property, and if Tenant exercises the Expansion Option, no less than five (5) aviation hangars and related improvements on the Phase II Property (collectively, the “Facility”). Tenant shall have a period of 24 months following the Effective Date (subject to Force Majeure) for Completion of Construction (as the term is defined in the Prime Lease) of the Improvements on the Phase I Property (the “Phase I Improvements”). Promptly upon receipt of the building permit, but in no event beyond the deadline set forth in Schedule 1.05.2, Tenant shall promptly commence and diligently pursue construction of the Phase I Improvements without undue delay. On a semiannual basis, Tenant shall provide Landlord with a construction status report. Tenant will comply with all Applicable Laws pertaining to the construction of the Improvements, inclusive of the Facility, including by way of example and not limitation, the Miami-Dade County Aviation Department requirements and the FAA rules and regulations. Tenant commits that the amounts expended in connection with the Phase I Improvements will be no less than $8,500,000.00, which costs and expenses may include, without limitation, the following: all capital contributions, mortgage contributions, if any, fees paid to architects, engineers and consultants, cost of construction, costs of construction bonds, development fees, interest paid during construction, legal fees directly related to this Lease and the Improvements, impact fees, concurrency fees, and grant monies, but expressly excluding the cost of equipment, trade fixtures or movable furnishings. If Tenant exercises the Expansion Option, Tenant shall have a period of 48 months following the Effective Date (subject to Force Majeure) for Completion of Construction (as the term is defined in the Prime Lease) of the Improvements on the Phase II Property (the “Phase II Improvements”). Tenant commits that the amounts expended in connection with the Phase II Improvements will be no less than $6,000,000.00, which costs and expenses may include, without limitation, the following: all capital contributions, mortgage contributions, if any, fees paid to architects, engineers and consultants, cost of construction, costs of construction bonds, development fees, interest paid during construction, legal fees directly related to this Lease and the Improvements, impact fees, concurrency fees, and grant monies, but expressly excluding the cost of equipment, trade fixtures or movable furnishings.

 

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Tenant shall submit to the Landlord for its approval, such approval not to be unreasonably withheld, conditioned or delayed, a site plan and complete plans and specifications for the Improvements described on Exhibit B” (collectively the “Tenants Plans”), provided that it shall be reasonable for Landlord to withhold its consent if the site plan does not provide access from the Phase II Property to the westerm boundary of the Bravo taxiway in the event Tenant does not exercise the Expansion Option. Such access shall be available to Landlord its successors and assigns, agents, contractors, sublessees, licenses and invitees on a non-exclusive basis available 24 hours a day/7 day a week/365(366) days a year, and be configured to allow for the unhampered movement of an aircraft equal to the size of The Bombardier Global 7000, or any iteration of same. Tenant’s Plans shall be certified by an architect or engineer licensed to practice in the State of Florida. Landlord agrees to review and approve Tenant’s Plans in a timely manner. If Landlord fails to respond within ten (10) days, then Tenant shall provide a written reminder notice to Landlord which shall specify that Landlord has an additional five (5) Business Days to approve and/or disapprove Tenant’s Plans, which reminder notice shall include a legend at the top of the first page in a type face twice the size than that used elsewhere in the reminder notice indicating that Landlord is to provide its response within five (5) Business Days of its receipt of the reminder notice. If Landlord fails to respond to Tenant within said five (5)-Business Day period, then Tenant’s Plans shall be deemed approved. In the event of a disapproval, Landlord shall specify with particularity the reasons for such disapproval. In such case, Tenant shall as expeditiously as is reasonable given the circumstances, address the grounds for disapproval by revising Tenant’s Plans. Any resubmission shall be subject to review and approval in accordance with the procedure hereinabove provided for an original submission. Approval by Landlord of Tenant’s Plans shall not be a representation or warranty of Landlord that such plans are adequate for any use, purpose, or condition, or that said plans comply with any applicable code, but shall merely be the consent of Landlord to the performance of the work as shown in Tenant’s Plans. Landlord shall reasonably cooperate with Tenant in connection with the construction of the Improvements, including, but not limited to, by executing any permit applications if required by applicable law.

 

Within twenty (20) days following the Completion of Construction of the Improvements, Tenant shall deliver to each of MDAD and Landlord, one complete set of “as built” drawings, including all pertinent shop and working drawings, copies of warranties, guarantees and manuals, and copies of all release of contractor liens.

 

Subsection 1.05.2    Payment and Performance Bond. Prior to entering into any construction contract for the initial construction of the Improvements or the restoration of the entirety of the Improvements on the Property, Tenant shall require its contractor(s) to execute (i) a completion guaranty, (ii) an unconditional payment and performance bond in the full amount of the of the cost of the contracts for the completion of the Improvements, in form and content acceptable to Landlord and MDAD from a surety insurer authorized to do business in the State of Florida or (iii) an alternative form of security reasonably acceptable to Landlord.

 

SECTION 1.06.    CONSTRUCTION LIENS. All persons and entities contracting or otherwise dealing with Tenant relative to the Premises are hereby placed on notice of the provisions of this Section in accordance with the requirements set forth in Section 713.10, Florida Statutes. The Tenant shall not do or suffer anything to be done whereby the land and building of which the Premises are a part may be encumbered by any construction lien, and shall, whenever and as often as any construction lien is filed against the Property and Improvements purporting to be for labor or materials furnished or to be furnished to the Tenant, discharge the same of record within thirty (30) days after Tenant receives notice thereof. Notice is hereby given that the Landlord shall not be liable for any labor or materials furnished or to be furnished to the Tenant upon credit, and that no construction or other lien for any such labor or materials shall attach to or affect the reversionary or other estate or interest of the Landlord in and to the land and building of which the Premises herein demised are a part.

 

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SECTION 1.07.    HOLDING OVER. The failure of Tenant to surrender the Premises on the termination of the Term (including any Renewal Term), and the subsequent holding over by Tenant, without the consent of Landlord, shall result in the creation of a tenancy at will at a monthly rental of two times the monthly Rent, which shall be payable on the first day of each month in which the Tenant holds over. Landlord shall be entitled to recover from Tenant any and all substantiated damages, including, without limitation, all costs, expenses, attorneys’ fees, and lost rents incurred by Landlord, including without limitation, any claim for damages made by a proposed succeeding tenant, as a result of Tenant’s failure to deliver possession of the Premises to Landlord as required under this Lease.

 

SECTION 1.08.    RENT AND ADJUSTMENTS.

 

Subsection 1.08.1    County Rent.

 

(a)    Commencing on the Effective Date, Landlord and Tenant agree that Tenant shall be obligated to pay fifty percent (50%) of its share of the Aviation Annual Land Rent (as defined in Section 4.01 (A) of the Prime Lease) based on the square footage of the Phase I Property as of the Effective Date of this Lease for such Phase I Property, and said monthly installment of such share of Aviation Annual Land Rent is estimated to be $5,360.79 (based on the following calculation: fifty percent (50%) of $0.26 per square foot multiplied by 494,842 square feet, which Phase I Property square footage may be adjusted based on the Survey), together with all applicable sales taxes thereon, in advance and without demand, set off or deduction, which monthly installment shall adjust in accordance with Section 4.01 (A) of the Prime Lease.

 

(b)    Commencing on the date that is the earlier of (i) the Date of Beneficial Occupancy (as defined in Section 1.20 of the Prime Lease) of the Phase I Improvements and (ii) the date that is last day of the twenty-four (24) month period following the Effective Date (the “Phase I Rent Commencement Date”, Landlord and Tenant agree that Tenant shall be obligated to pay 100 percent (100%) of its share of the Aviation Annual Land Rent (as defined in Section 4.01 (A) of the Prime Lease) based on the square footage of the Phase I Property as of such Phase I Rent Commencement Date for such Phase I Property, together with all applicable sales taxes thereon, in advance and without demand, set off or deduction, which monthly installment shall adjust in accordance with Section 4.01 (A) of the Prime Lease.

 

(c)    Commencing on the Exercise Date, Landlord and Tenant agree that Tenant shall be obligated to pay fifty percent (50%) of its share of the Aviation Annual Land Rent (as defined in Section 4.01 (A) of the Prime Lease) based on the square footage of the Phase II Property as of the Exercise Date for such Phase II Property, and said monthly installment of such share of Aviation Annual Land Rent is estimated to be $3,897.90 (based on the following calculation: fifty percent (50%) of $0.26 per square foot multiplied by 359,806 square feet, which square footage may be adjusted based on the Survey), together with all applicable sales taxes thereon, in advance and without demand, set off or deduction, which monthly installment shall adjust in accordance with Section 4.01 (A) of the Prime Lease.

 

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(d)    Commencing on the date that is the earlier of (i) the Date of Beneficial Occupancy (as defined in Section 1.20 of the Prime Lease) of the Phase II Improvements and (ii) the date that is last day of the forty-eight (48) month period following the Effective Date (the “Phase II Rent Commencement Date”, Landlord and Tenant agree that Tenant shall be obligated to pay 100 percent (100%) of its share of the Aviation Annual Land Rent (as defined in Section 4.01 (A) of the Prime Lease) based on the square footage of the Phase II Property as of such Phase II Rent Commencement Date for such Phase II Property, together with all applicable sales taxes thereon, in advance and without demand, set off or deduction, which monthly installment shall adjust in accordance with Section 4.01 (A) of the Prime Lease.

 

(e)    Tenant will promptly pay all rentals and other charges and render all statements herein prescribed at the office of Landlord, or to such other person or corporation, or at such other place as shall be designated by Landlord in writing as set forth herein; and, if such payment date is not explicitly set forth herein, at least ten (10) days prior to the next ensuing rental payment date. Any payment not received by Landlord by its due date shall incur a “late charge” to compensate Landlord for its administrative expenses in connection with such late payment equal to one hundred dollars ($100.00). Further, Tenant shall pay Landlord interest on any amount delinquent more than 20 days at the same rate of interest charged under Section 4.07 of the Prime Lease for late payments (the “Default Rate”) until such delinquent payment is made.

 

Subsection 1.08.2    Base Rent.

 

(a)    Commencing on the Phase I Rent Commencement Date, monthly installments of base rent for the Phase I Property in the amounts set forth on Schedule 1.09.2 attached hereto and incorporated herein by reference (“Phase I Base Rent”) (together with all applicable sales taxes thereon) shall be payable in advance on the first (1st) day of each and every month, without demand, set off or deduction.

 

(b)    Commencing on the Phase II Rent Commencement Date, monthly installments of base rent for the Phase II Property in the amounts set forth on Schedule 1.09.2 attached hereto and incorporated herein by reference (“Phase II Base Rent”, and together with the Phase I Base Rent, the “Base Rent”) (together with all applicable sales taxes thereon) shall be payable in advance on the first (1st) day of each and every month, without demand, set off or deduction.

 

(c)    Base Rent shall be subject to the same “late charge” assessed against any share of Aviation Annual Land Rent (as defined in Section 4.01 (A) of the Prime Lease) and interest on any amount delinquent more than 20 days shall accrue interest at the Default Rate until such delinquent payment is made. When rental payments are delivered by Tenant through the mails, Tenant shall mail such payments sufficiently in advance so that the Landlord will receive the payments on or before the first day of the calendar month (or on or before the due date in the event the due date is other than the first day of a calendar month). If Landlord shall pay any moneys, or incur any expenses in correction of any violation of any covenant or of any other obligation of Tenant either set forth or implied herein, the amounts so paid or incurred shall, at Landlord’s option and on notice to Tenant, be considered Additional Rent payable by Tenant and may be collected or enforced as by law provided in respect to rentals. TENANT SHALL NOT HAVE THE RIGHT TO WITHHOLD, ABATE OR OFFSET RENT OR TO TERMINATE THIS LEASE EXCEPT AS EXPRESSLY PROVIDED HEREIN. TENANT HEREBY WAIVES AND RELEASES ANY AND ALL STATUTORY RIGHTS AND OFFSET RIGHTS TO THE CONTRARY, IF ANY, UNLESS CAUSED BY LANDLORD’S NEGLIGENCE.

 

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Subsection 1.08.3    Pro-Rata Rent Payments. Rent payments made by Tenant hereunder shall be prorated for any partial months during the Term hereof, as same may be extended.

 

Subsection 1.08.4    Intentionally Deleted.

 

Subsection 1.08.5    Improvement Rents. In connection with Tenant’s obligations to pay Improvement Rent hereunder, as set forth in Section 4.02 (B) of the Prime Lease, Tenant and Landlord have confirmed to their satisfaction that for the purposes of calculating “Improvement Rent” as set forth in the Prime Lease Section 4.02 (B), which is established by multiplying “Gross Revenues realized by Tenant”, that such Gross Revenues refer to rent collected by Landlord from Tenant, and that the gross revenues of Tenant from its operations of the Improvements will not be used in the calculation of Improvement Rent nor shall such revenue be otherwise used to establish or increase any rent under this Lease. Landlord agrees to assist Tenant, at no cost to Landlord, in obtaining such confirmation from MDAD.

 

SECTION 1.09.    PURCHASE OPTION. Tenant shall have a one-time option, to be exercised at any time during the first forty (40) months of the Term, by Tenant or any Affiliate of to purchase Landlord’s interest in the Premises (“Purchase Option”) by delivering a written notice to Landlord (the “Purchase Notice”). The terms of the Purchase Option are set forth on Schedule 1.09 attached hereto and incorporated herein by reference.

 

ARTICLE 2
TENANT OBLIGATIONS

 

SECTION 2.01.    COMPLIANCE WITH ALL LAWS. Tenant agrees that in connection with all its development, construction, operation, and any other activities upon the Premises, Tenant, at its sole cost and expense, shall comply with and shall cause all of its employees, vendors, contractors, licensees, sub-subtenants, customers, guests and agents to comply with (i) any and all matters that may be set forth in the public records of Miami-Dade County, Florida applicable to the Premises, (ii) all restrictions, regulations, codes, laws, requirements, rules, statutes, conditions, decisions, ordinances, orders and any other such promulgation, together with any amendments and additions thereto, and, further together with judicial or administrative interpretation of any of the foregoing, including any judicial or administrative orders or judgments, including without limitation the Americans With Disabilities Act of 1990 (as amended) (collectively, the “Applicable Law”), of any and all federal, state, county, municipal and other governmental or quasi-governmental agencies, authorities, offices, commissions, boards and departments, including the Miami-Dade County Aviation Department (“MDAD”), or any instrumentality of any of them, having or claiming jurisdiction over the matter at issue or the Property, (individually a “Governing Authority” or collectively the “Governing Authorities”), as the same may be in force whether at the execution hereof or during its Term; and (iii) all requirements set forth in this Lease.

 

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SECTION 2.02.    UTILITIES. Tenant shall be responsible for the connection of all utilities to the Improvements and for the provision of phone, internet, electricity, water, sewer, solid waste, heat, gas, or any other utility or service consumed in connection with the occupancy of the Property by Tenant. Installations and all work performed by Tenant or at its direction shall be in accordance with Applicable Laws and this Lease and in a good, workmanlike and lien free manner. Tenant shall be responsible for payment of any hook-up and/or connection fees and any impact fees associated with these utilities. Any utility extensions required by Tenant for the Improvements on the Property shall be at Tenant’s sole cost.

 

Tenant shall not have the right to grant any easements, rights of way, and licenses required by any public or quasi-public utility company with respect to the construction, operation and use of the Improvements. Landlord and/or the County, as applicable, shall execute any commercially reasonable instrument that a public or quasi-public utility company may reasonably request or require from Landlord and/or the County; provided, however, that in each case such easement, right of way or license (i) does not impair the value, utility and remaining usefulness of the Airpark, (ii) is reasonably necessary in connection with the construction, operation or use of the Improvements, and (iii) does not cause the Property or any portion thereof to fail to comply with Applicable Law.

 

SECTION 2.03.    SIGNAGE AND NAMING OF FACILITY. Tenant shall have the right to name the Facility and install any and all signage on the Premises that it deems appropriate so long that said signage is permitted under Applicable Law and further provided that Tenant has obtained Landlord’s prior approval for said signage, which consent shall not be unreasonably withheld, conditioned or delayed.

 

ARTICLE 3
REPAIRS AND MAINTENANCE

 

SECTION 3.01.    REPAIRS AND MAINTENANCE OF THE PREMISES. Landlord shall not be obligated to maintain the Property or the Improvements thereon during the Term (including any Renewal Term) unless required due to the gross negligence or willful act of Landlord. Tenant agrees, at its sole cost and expense, to maintain, and perform all required repairs and/or replacements of all of the Improvements (including other improvements made by Tenant as provided herein), including without limitation the landscaped, grass, paved areas any parking and service areas in a good state of repair and to keep the Premises in a clean, neat, safe and orderly condition as required under the Minimum Standards for Conducting Commercial Aeronautical Activities, which are attached hereto as Exhibit E”, and Applicable Law. Without limiting the coverage of the previous sentence, it is understood that Tenant’s responsibilities therein include the repair and replacement of, the roof, structural components, building systems, including by way of example and not limitation, lighting, heating, air conditioning, plumbing and other electrical, mechanical and electromotive installation, equipment and fixtures and also include all utility repairs in ducts, conduits, pipes and wiring, and any sewer stoppage located in, under and on the Premises. Tenant agrees not to commit, or suffer to be committed, any waste upon the Property. There shall be no excavation of the Property other than what is required for the construction of the Improvements.

 

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SECTION 3.02.    INDEMNIFICATION BY TENANT. If any repairs required to be made by Tenant hereunder are not made within thirty (30) days after written notice delivered to Tenant by Landlord, provided that if the required repair is of such a nature that it cannot be remedied within thirty (30) days, and Tenant promptly commences to perform such repair within such thirty (30) day period and thereafter diligently prosecutes such repair, then such thirty (30) day period shall be extended for a period of time as may be reasonably necessary for such repair to be completed but in no event shall Tenant be allotted with more than an additional ninety (90) days, or Landlord may at its option make such repairs; and Tenant shall pay to Landlord upon demand, as additional rent hereunder, the actual and substantiated third party cost of such repairs, together with interest at the Default Rate, which interest shall start accruing on the tenth (10th ) day after Landlord’s demand until such amount is paid to Landlord.

 

ARTICLE 4
ADDITIONAL RENT

 

The term “Real Estate Taxes” “means all general and special real estate taxes (including taxes on Tenant’s personal property (e.g. movable furniture, furnishings, equipment, movable trade fixtures, and inventory), sales taxes, use taxes, and the like), payments, assessments, municipal water and sewer rents, rates and charges, excises, levies, license and permit fees, fines, penalties and other governmental charges and any interest or costs with respect thereto, general and special, ordinary and extraordinary, foreseen and unforeseen, of any kind and nature whatsoever that during and/or applicable to the Term or any part of it, may be assessed, levied, imposed upon, or become due and payable out of or in respect of, or charged with respect to or become a lien on the Property or Premises (if the Premises are assessed as a separate tax parcel), or the sidewalks or streets in front of or adjoining the Premises, or any vault, passageway or space in, over or under such sidewalk or street, or any other appurtenances of the Premises, or any of Tenant’s personal property or other facility used in the operation thereof, or the rent or income received therefrom, or any use or occupancy thereof. “Real Estate Taxes” shall not, however, include any franchise, income, excess profits, estate, inheritance, succession, transfer, gift, corporation, business, capital levy, or profits tax, or license fee, of Landlord. If at any time during the Term the method of taxation prevailing at the Effective Date shall be altered so that any new tax, assessment, levy (including any municipal, state or federal levy), imposition, or charge, or any part thereof, shall be measured by or be based in whole or in part upon the Premises, then all such new taxes, assessments, levies, Real Estate Taxes, or charges, or the part thereof to the extent that they are so measured or based, shall be deemed to be included within the term “Real Estate Taxes”.

 

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SECTION 4.01.    REAL ESTATE TAXES. Tenant’s share of the Real Estate Taxes shall be determined by multiplying such taxes or assessments (as set forth in the entire tax bill for the Airpark) by a fraction, the numerator of which shall be the total assessed value of the Premises, as determined by the applicable property appraiser, and the denominator of which shall be the total assessed value of the entire Airpark, also as determined by the applicable property appraiser and included in the tax bill. Landlord shall provide such computation of Tenant’s share of Real Estate Taxes to Tenant in writing, together with a copy of the applicable tax bill, and Tenant covenants and warrants to timely deliver to Landlord Tenant’s share of Real Estate Taxes no later than thirty (30) days after its receipt of Landlord’s computation of Tenant’s share of Real Estate Taxes for the applicable year. Payment of any Real Estate Taxes by Tenant pursuant to this section is subject to Tenant providing documentation proving and supporting any applicable exemption. Further, to the extent Landlord benefits from abatements, holidays or other reductions in Real Estate Taxes related to the Property during the Term of this Lease, such abatements, holidays and other reductions will be passed on to Tenant as applicable.

 

SECTION 4.02.    SOLID WASTE FEES. Tenant shall pay all solid waste fees assessed against the Property by the appropriate Governmental Authority as a result of Tenant’s occupancy or use of the Property pursuant to this Lease, whether the billing is addressed to Landlord or Tenant.

 

SECTION 4.03.    STORMWATER FEES. Tenant shall pay all stormwater fees assessed against the Property by the appropriate Governmental Authority as a result of Tenant’s occupancy or use of the Property pursuant to this Lease, whether the billing is addressed to Landlord or Tenant.

 

SECTION 4.04.    EMERGENCY AMBULANCE FEES. Tenant shall pay all emergency ambulance fees assessed against the Property by the appropriate Governmental Authority as a result of Tenant’s occupancy or use of the Property pursuant to this Lease, whether the billing is addressed to Landlord or Tenant.

 

SECTION 4.05.    OTHER TAXES AND FEES. Tenant shall pay, before delinquency, as a result of Tenant’s occupancy or use of the Property pursuant to this Lease, according to the method hereinabove described, any and all taxes, fees, or assessments that may be levied and not known at this time. Notwithstanding the foregoing, Tenant shall not be obligated to pay any such taxes, fees or assessments for which Tenant is exempt to the extent of such exemption, provided Landlord is not otherwise required to make payment to any Government Authorities for such amount.

 

ARTICLE 5
INSURANCE AND INDEMNITY

 

SECTION 5.01.    LIABILITY INSURANCE. In addition to such insurances as may be required by law, Tenant shall maintain, without lapse, for so long as it occupies the Property and Improvements, the following insurance:

 

(a)    Commercial General Liability Insurance or Aviation General Liability Insurance, including Contractual Liability, to cover the Premises, Tenant’s property and Improvements and operations, in an amount not less than $2,000,000 combined single limit per occurrence and $4,000,000 in the aggregate for bodily injury and property damage. Such coverages may be satisfied through a combination of primary and umbrella/excess policies. Landlord must be shown as an additional insured with respect to this coverage. In the event that Tenant’s available coverage falls below the per occurrence amount shown above, Tenant shall immediately secure a new certificate of insurance evidencing the required coverage.

 

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(b)    Intentionally Omitted.

 

(c)    Workers’ Compensation & Employers Liability – Workers’ Compensation - as required by Florida Statute. Employers Liability - - $1,000,000 Each Accident, $1,000,000 Disease Each Employee, $1,000,000 Disease Policy Limit, minimum.

 

(d)    Automobile Liability Insurance covering all owned, non-owned and hired vehicles (including ground or mobile equipment) used by Tenant in connection with its operations under this Lease in an amount not less than:

 

(i)    $1,000,000 combined single limit per occurrence for bodily injury and property damage covering all vehicles and ground and mobile equipment used by Tenant in connection with the Permitted Use.

 

(ii)    $1,000,000 combined single limit per occurrence for bodily injury and property damage covering such vehicles and ground and mobile equipment used by Tenant while off the Airport.

 

Such coverages may be satisfied through a combination of primary and umbrella/excess policies.

 

SECTION 5.02.    PROPERTY INSURANCE.

 

(a)    Hazard Insurance and Builder’s Risk Insurance: Tenant, at its sole cost and expense, throughout the term shall keep the Improvements insured on an “All Risk” basis in an amount not less than 100% of the full replacement value of the Improvements against loss or damage (in excess of a reasonable per occurrence deductible amount, which shall not exceed $100,000.00 or as mutually agreed to by the Parties, which shall be the responsibility of Tenant) by fire, lightning, tornado, hurricane, windstorm, hail, flood, earthquake, explosion, riot, riot attending strike, civil commotion, vandalism and malicious mischief, sprinklers and sprinkler leakage, aircraft, vehicles and smoke, or any other casualty in an amount not less than 100% of the full replacement value of the Improvements and include Business Interruption Insurance, with a limit, at a minimum, sufficient to continue making rent payments. Any deficiency in the amount of the proceeds from such property insurance resulting from a failure by Tenant to re-establish the full replacement value of the Improvements shall be the sole responsibility of Tenant. Landlord and Prime Landlord shall be shown on the policies as a loss payee, as its interest is established by this Lease. During the period of any construction on the Premises, Tenant, at its sole cost and expense, shall obtain All Risk builder’s risk insurance, in amount(s) not less than 100% of the insurable value of the improvements and/or structure(s) under construction to cover all insurable risks during the period of construction. Landlord and Prime Landlord shall be shown on the policies as a loss payee, as its interest is established by this Lease.

 

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SECTION 5.03.    ENVIRONMENTAL INSURANCE.

 

(a)    Pollution and Remediation Legal Liability insurance covering third party claims, remediation expenses and legal defense expenses arising from on-site and off-site loss or expense or claim related to the release or threatened release of hazardous materials in an amount not less than $2,000,000 Each Pollution Condition/Aggregate.

 

(b)    Contractors Pollution Liability & Remediation Coverage - In an amount not less than $2,000,000 Each Pollution Condition/Aggregate – during any construction.

 

SECTION 5.04.    INSURANCE CERTIFICATES AND REQUIREMENTS. Upon the Effective Date and annually thereafter, Tenant shall furnish or cause to be furnished certificates of insurance to Landlord which certificates shall clearly indicate that:

 

(a)    Tenant has obtained insurance in the types, amounts and classifications as required for strict compliance with this Lease;

 

(b)    To the extent obtainable at commercially reasonable rates, each policy shall provide cancellation notification provisions specifying at least thirty (30) days advance written notice of cancellation to Landlord and Prime Landlord.

 

(c)    Landlord and Prime Landlord are named as additional insureds with respect to Tenant’s commercial general liability policies, Automobile policies, and Environmental policies;

 

(d)    Each policy where Landlord and Prime Landlord are named as additional insureds shall be Primary & Non- Contributory with any insurance maintained by Landlord and Prime Landlord;

 

(e)    Each policy shall provide a Waiver of Subrogation in favor of Landlord and Prime Landlord, except to the extent caused by Landlord’s or Prime Landlord’s gross negligence or willful misconduct;

 

(f)    On said insurance certificates, liability coverage shall include contractual liability and notification of cancellation.

 

The insurance required to be carried by Tenant pursuant to the provisions of this Article 5 may be satisfied through policies of insurance carried by Tenant’s contractors or subcontractors, provided that if such contractor or subcontractor does not carry any such policy in the amount required pursuant to the provisions of this Article 5, Tenant shall carry policies in the amounts necessary to address such deficiency.

 

Should Tenant at any time neglect or refuse to provide the insurance required by this Lease, or should such insurance be canceled, Landlord shall have the right, but not the duty, in addition to all other rights and remedies provided herein, to procure the same and Tenant shall pay the cost thereof as Rent promptly upon Landlord’s demand.

 

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SECTION 5.05.    WAIVERS OF SUBROGATION. Anything in this Lease to the contrary notwithstanding, Landlord and Tenant hereby waive any and all rights of subrogation for themselves and any insurer against each other, their respective agents, officers and employees for any loss or damage that may occur to the Premises, and to all property, whether real, personal or mixed, located in or at the Premises or the Building, by reason of any peril to be insured under this Lease regardless of cause or origin, including negligence of the parties hereto, their respective agents, officers and employees, except to the extent caused by Landlord’s or Tenant’s gross negligence or willful misconduct. Since the above mutual waiver will preclude the assignment of any aforesaid claim by way of subrogation (or otherwise) to an insurance company (or any other person), each party hereto agrees immediately to give each insurance company which had issued to it property insurance policies, written notice of the terms of said mutual waivers, and to have said insurance policies properly endorsed, if necessary, to prevent the invalidation of such coverage by reason of said waivers.

 

SECTION 5.06.    PERSONAL PROPERTY. Any personal property of Tenant or of others placed on the Property shall be at the sole risk of Tenant or the owners thereof, and Landlord shall not be liable for any loss or damage, except to the extent such loss or damage was caused by the gross negligence or willful misconduct of the Landlord. Tenant shall pay for any and all damage to the Premises resulting from the activities or use of the Premises by the Tenant or Tenant’s employees, agents, contractors, members, licensees, or invitees. Any property owned by Tenant and brought onto the Premises shall be at the sole risk of Tenant. By signing this Lease, the Tenant agrees that upon surrender or abandonment of the Premises, as defined by the Florida Statutes, the Landlord shall not be liable or responsible for the storage or disposition of the Tenant’s personal property.

 

Subsection 5.06.1    Tenants Right to Remove Personal Property. So long as Tenant is not in default hereunder, on or before the expiration or other early termination of this Lease, Tenant shall have the right to remove all of its fixtures, equipment, personal property and other property from the Improvements which are customarily deemed to be removable (i.e., which are not permanently affixed to the Improvements), provided that Tenant repairs any and all damage caused to the Improvements by the removal of said personal property.

 

SECTION 5.07.    INDEMNITY. Subject to the terms of Section 5.05, Tenant shall indemnify and hold harmless Prime Landlord, Landlord, together with each parties’ respective officers, employees, agents and instrumentalities from any and all liability, losses or damages, including attorneys’ fees and costs of defense, that Landlord or its officers, employees, agents or instrumentalities may incur as a result of claims, demands, suits, causes of action or proceedings of any kind or nature for loss of life, bodily injury, personal injury and/or damage to property occurring in or about the Property or outside the Property but within the Airpark, to the extent caused by Tenant or its employees, agents, servants, partners, principals, contractors, subcontractors, sub-tenants, or invitees, except to the extent caused by Landlord’s negligence or willful misconduct.  Tenant expressly understands and agrees that any insurance protection required by this Lease or otherwise provided by Tenant shall in no way limit the responsibility to indemnify, keep and save harmless and defend Prime Landlord, Landlord, together with each parties’ respective officers, employees, agents, and instrumentalities as herein provided.  The obligations of Tenant hereunder shall survive the termination of this Lease.

 

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ARTICLE 6
SECURITY

 

SECTION 6.01.    SECURITY. Tenant, at its expense, shall observe and comply with all applicable security requirements of (i) all governmental agencies having jurisdiction over such matters, including, but not limited to the Transportation Security Administration (“TSA”), the Miami-Dade County Aviation Department, and the Federal Aviation Administration (“FAA”), and (ii) applicable FAA Regulations and the prevailing Airport Security Program. Tenant shall take such steps as may be reasonably necessary or as may be directed by the Prime Landlord to ensure that all of Tenant’s employees and agents observe these requirements.

 

If Landlord and/or the Prime Landlord incur any fines and/or penalties imposed by the TSA or the FAA, or otherwise incur any expense in enforcing federal regulations and/or the Airport Security Program, as a result of the acts or omissions (where there is a duty to act) of Tenant or Tenant’s agents, Tenant agrees to pay and/or reimburse all such fines and penalties, as well as any reasonable costs and expenses related thereto upon demand. Tenant further agrees to promptly following notice rectify any security deficiency caused by the acts or omissions of Tenant or Tenant’s agents. If Tenant fails to remedy any such security deficiency within the time period prescribed to do so by the controlling Governmental Agencies in charge of such matters, then Landlord may take whatever action it deems to be reasonably necessary to rectify any such security deficiency.

 

ARTICLE 7
DESTRUCTION OF PREMISES

 

In the event the Improvements, or any portion thereof, shall be destroyed or damaged by fire or other casualty during the Term of this Lease, Tenant shall give prompt notice thereof to Landlord; and, Tenant shall promptly commence and complete with due diligence (subject to Force Majeure), the restoration of the damaged or destroyed portion of the Improvements as nearly as reasonably practicable to the value and condition thereof immediately prior to such damage or destruction. In the event of such damage or destruction, the proceeds of all property insurance policies required hereunder shall be used to restore the Improvements to make it function for the Permitted Use. Depositary shall receive the proceeds of all property insurance policies for the Improvements. For purposes of this Article 7, “Depositary” shall mean the then existing Sub-leasehold Mortgagee and if no Sub-leasehold Mortgagee shall then exist, Depositary shall mean a national title insurance company. Tenant shall be obligated to provide any additional monies required to restore the Improvements to the condition immediately prior to such damage or destruction. Tenant, at its sole cost and expense, shall be responsible for the repair and restoration of any Improvements. Notwithstanding any provision of this Lease to the contrary, if any damage or casualty to the Improvements shall occur during the five (5) years prior to the expiration of the Term, and the cost of restoring the Improvements shall exceed twenty (20%) percent of the replacement cost of the Improvements, Tenant shall have the right to terminate this Lease by written notice to Landlord given within sixty (60) days after the occurrence of such damage, provided that Tenant shall within forty-five (45) days of the damage demolish and remove all debris from the Property and assign to Landlord all excess insurance proceeds.

 

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ARTICLE 8
CONDEMNATION

 

SECTION 8.01.    TOTAL CONDEMNATION. If the whole of the Premises shall be taken for any public or quasi-public use under any statute by right of eminent domain, this Lease and the term granted by it shall cease and expire on the date Tenant is deprived of possession pursuant to such taking. All rents and other charges shall be prorated and paid to that date, and Landlord shall refund to Tenant all rents and other charges paid by Tenant in respect of any periods subsequent to such date. Any condemnation award shall be allocated in accordance with Florida law and as provided in Section 12.12 (iv) of the Prime Lease, subject to the rights of a Sub-Leasehold Mortgagee, if any, as provided in an executed SNDRA (as defined below). The party whose award compensates it for removing all debris from, and/or in filling any substantial excavations in and returning the Premises to a level, safe and vacant condition shall be obligated to perform such work at its cost. A transfer by Landlord to any governmental unit or other authority having the power of eminent domain, either under threat of condemnation or while condemnation proceedings are pending, shall be deemed a taking under the power of eminent domain for all purposes under this Article 8.

 

SECTION 8.02.    PARTIAL CONDEMNATION. If any part of the Property shall be acquired or condemned by eminent domain for any public or quasi-public use or purpose, and in the event that such partial taking or condemnation shall, in the reasonable opinion of Tenant, render the Property unsuitable for the Permitted Use, then Tenant shall have the right to terminate this Lease by notice given to the other within sixty (60) days after the date that title vests in such proceeding, and all rentals and other charges shall be paid up to that date and Tenant shall have no claim against Landlord for the value of any unexpired term of this Lease. In the event of a partial taking or condemnation which is not extensive enough to render the Premises unsuitable for the Permitted Use, then Tenant shall promptly restore the Premises to a condition comparable to its condition at the time of such condemnation (less the portion lost in the taking) and the Improvements to the extent necessary to constitute the portion of the Improvements not so taken as a complete architectural unit and this Lease shall continue in full force and effect except that Base Rent shall be reduced to the extent the same is reduced pursuant to the Prime Lease. The condemnation award, if any, shall be applied first for restoration. Tenant shall restore in the same manner as restoration upon Casualty. Any condemnation award remaining after restoration shall be allocated between the Landlord, Tenant in accordance with applicable Florida law, subject to the rights of a Subleasehold Mortgagee, if any, as provided in an executed SNDRA.

 

SECTION 8.03.    TEMPORARY CONDEMNATION. In the event of any taking of the Real Property or any part thereof for temporary use for a period of ninety (90) days or less, (i) this Lease shall be and remain unaffected thereby and Rent shall not abate, and (ii) Tenant shall be entitled to receive for itself such portion or portions of any award received by Landlord with respect to the period of the taking which is within the Term of this Lease, provided that if such taking shall remain in force at the expiration or earlier termination of this Lease, Tenant shall then pay to Landlord a sum equal to the reasonable cost of performing Tenant’s obligations hereunder with respect to the surrendering possession of the Property, and, upon such payment, Tenant shall be excused from such obligations. Any temporary taking that lasts more than ninety (90) days shall be deemed a total taking and shall be governed by the provisions of Section 8.01 hereof

 

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ARTICLE 9
DEFAULT BY TENANT

 

Each of the following events shall constitute a “Default” or “Event of Default” of this Lease by Tenant:

 

(a)    If Tenant shall file a petition in bankruptcy or insolvency or for reorganization under any bankruptcy act, or shall voluntarily take advantage of any such act by answer or otherwise, or shall make an assignment for the benefit of creditors.

 

(b)    If involuntary proceedings under any bankruptcy law or insolvency act shall be instituted against Tenant, or if a receiver or trustee shall be appointed for all or substantially all of the property of Tenant, and such proceedings shall not be dismissed or the receivership or trusteeship vacated within twenty (20) days after the institution or appointment.

 

(c)    If Tenant fails to pay Rent or make any other payment required to be made by Tenant under this Lease which failure continues for ten (10) days after written notice of such non-payment is given to Tenant.

 

(d)    If Tenant fails to make the Phase I Improvements or Phase II Improvements by the applicable date set forth in Section 1.06.01 (subject to Force Majeure) and if such failure shall continue for a period of thirty (30) days after written notice thereof by Landlord to Tenant, or, if the performance cannot be reasonably had within the thirty (30) day period, Tenant shall not have commenced performance within said thirty (30) day period and shall not diligently and continuously proceed to completion of performance.

 

(e)    If Tenant shall fail to perform or comply with any of the conditions of this Lease other than the nonpayment of Rent, and if the nonperformance shall continue for a period of thirty (30) days after written notice thereof by Landlord to Tenant, or, if the performance cannot be reasonably had within the thirty (30) day period, Tenant shall not have promptly commenced performance within said thirty (30) day period and shall not diligently and continuously proceed to completion of performance, but in no event shall said period extend beyond one hundred eighty (180) days, provided that the Prime Lease permits said cure period to be extended for the same length of time.

 

(f)    Tenant breaches any of the terms of the Prime Lease that are applicable to Tenant vis a vis this Lease, beyond the applicable cure period set forth above in subparagraph (e) above.

 

(g)    If Tenant makes a Transfer in violation of the terms of this Lease.

 

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ARTICLE 10
REMEDIES OF LANDLORD

 

SECTION 10.01.    REMEDIES. Following the occurrence of a Default by Tenant, Landlord may, at any time thereafter, in addition to all remedies available to Landlord at law or equity or under any statute or ordinance, exercise any one or more of the following remedies, in its sole discretion:

 

(a)    Bring suit for the breach which has occurred without affecting the obligations of the parties to perform the balance of the Lease.

 

(b)    Reenter the Premises without being liable for damage therefor, and relet the Property, or any part thereof, or operate the same, with or without the Tenant’s furnishings, for the balance of the Term and receive rents at such rental and upon such terms and conditions as Landlord shall deem reasonable, including, without limitation, concessions of free rent. In no event shall the making of any alterations to and/or remodeling of the Premises operate or be construed to release Tenant from liability hereunder as aforesaid. Landlord’s failure to re-let the Premises or in the event of such re-letting, Landlord’s failure to collect the Rent thereunder, shall not release or affect Tenant’s liability for damages hereunder, and Landlord in any event shall not be liable in any way whatsoever for said failures. Any sums received by Landlord on a re-letting shall belong to Landlord.

 

(c)    Terminate this Lease upon notice to Tenant without prejudice to its rights hereunder. No act by Landlord other than its giving written notice to Tenant shall terminate this Lease. Acts of maintenance, efforts to re-let the Premises, or the appointment of a receiver on Landlord’s initiative to protect Landlord’s interest under this Lease shall not constitute a termination of this Lease or Tenant’s right to possession of the Premises. In the event of such termination, all of the right, title, and interest of Tenant under this Lease, including any renewal privileges, shall end, and Tenant shall quit possession the Premises to Landlord.

 

(d)    Undertake and perform the obligations of Tenant under this Lease. All sums so paid by Landlord and all costs incurred by Landlord in making such payment or performing such other act or obligation and/or in enforcing this Lease, including reasonable attorneys’ fees, together with interest thereon at the Default Rate, shall be payable to Landlord on demand and Tenant agrees to pay any such sums, and Landlord shall have (in addition to any other right or remedy hereunder) the same rights and remedies in the event of the non-payment thereof by Tenant as in the case of Default by Tenant in the payment of Rent. Tenant agrees to pay, and Landlord shall be entitled to recover, all reasonable costs and expenses incurred by Landlord, including reasonable attorneys’ fees and costs, in connection with collection of Rent or any other sum due to Landlord hereunder or damages for enforcing other rights of Landlord in the event of a Default of this Lease by Tenant.

 

(e)    In the event of any Default or any threatened default by Tenant of any of the agreements, terms, covenants, or conditions contained in this Lease, Landlord shall be entitled to enjoin such Default or threatened default and shall have the right to invoke any right and remedy allowed at law or in equity or by statute or otherwise even if not specifically provided for in this Lease.

 

(f)    In the event Landlord institutes a distress for rent action and obtains a distress writ under then relevant sections of the Florida Statutes, Tenant expressly, knowingly, and voluntarily waives all constitutional, statutory, or common law bonding requirements, it being the intention of the parties that no bond will be required to be filed by Landlord in any distress action. Tenant further waives the right under Florida Statutes to replevy distrained property.

 

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(g)    Notwithstanding anything in this Lease to the contrary, no provision of this Lease, including but not limited to those referencing a surrender of possession, nor any action of Landlord, is or will be construed as an acceptance by Landlord of Tenant’s offer of surrender or rescission of Tenant’s obligations under this Lease.

 

(h)    Landlord may apply the Security Deposit to the extent necessary to make good any rent arrearage, to pay the cost of remedying a Default or to reimburse Landlord for expenditures made or damages suffered as a consequence of any Default, without prejudice to any other remedies Landlord may have under this Lease. Following any such application of the Security Deposit, Tenant shall pay to Landlord on demand the amount so applied to restore the Security Deposit to its original amount.

 

SECTION 10.02.    TENANTS LIABILITY. If this Lease or Tenant’s possessory interest pursuant thereto is terminated by Landlord pursuant to this ARTICLE 10, Tenant shall remain liable for all Rent (including applicable Base Rent) due and all damages which Landlord sustained to the date of such termination, and in connection with renting the Premises to others from time to time.

 

If this Lease is terminated pursuant to this Article 10, Landlord shall attempt to relet the Premises or any part thereof, alone or together with other premises, for such period or periods (which may be greater or less than the period which otherwise would have constituted the balance of the Term) and on such terms and conditions (which may include concessions for free rent and alterations of the Premises) as Landlord, in its discretion, may determine, and Tenant’s obligations hereunder will be reduced by such reletting. Landlord shall be under no obligation to Tenant to take any action against any new tenant to enforce payment of any such rental, provided that all costs, including but not limited to attorneys’ fees, incurred by Landlord in reletting the Premises and enforcing payment of any such rental shall be deducted from amounts otherwise reimbursable to Tenant hereunder to the extent not recovered from such new tenant.

 

Suit or suits for the recovery of the deficiency or damages referred to in this Article for any installment or installments of Rent due hereunder, or for a sum equal to any such installment or installments, may be brought by Landlord all at once or from time to time at Landlord’s election, and nothing in this Lease shall be deemed to require Landlord to await the date whereon this Lease or the Term hereof would have naturally expired had there been no such default by Tenant or no such termination.

 

The waiver by Landlord of any Event of Default or other breach of any term, condition or covenant herein contained shall not be a waiver of such term, condition or covenant, or any subsequent Event of Default or breach of the same or any other term, condition or covenant herein contained. The consent or approval by Landlord to or of any act by Tenant requiring Landlord’s consent or approval shall not be deemed to waive or render unnecessary Landlord’s consent to or approval of any subsequent similar act by Tenant. The receipt by Landlord of Rent after an Event of Default or other breach of any term, condition or covenant herein contained, or delay on the part of Landlord to enforce any right hereunder, shall not be deemed a waiver of forfeiture, or a waiver of the right of Landlord to terminate this Lease or to reenter said Property or to re-let the same. No delay on Landlord’s part in exercising any right, power or privilege under this Lease shall operate as a waiver of any such privilege, right or power.

 

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ARTICLE 11
DEFAULT BY LANDLORD

 

If Landlord fails to perform any of its covenants, agreements or other obligations under this Lease, and such failure continues for a period of thirty (30) days after receipt by Landlord of written notice of such failure, or in the event of emergency promptly after written notice, then Tenant shall have the right (but not the obligation) to take such actions, and to expend such monies as is necessary and appropriate to perform Landlord’s covenants, agreements or obligations and Landlord shall reimburse Tenant for the reasonable and actual third party costs expended by Tenant. If Landlord does not reimburse Tenant for such costs within thirty (30) days after receipt of an invoice and reasonable supporting documentation, Tenant shall have the right to set off the amount of such costs against the next due installments of Rent.

 

ARTICLE 12
REAL ESTATE COMMISSION

 

Each of the parties represents and warrants that it has dealt with no broker or brokers in connection with the execution of this Lease, and each of the parties agrees to indemnify the other against, and hold it harmless from, all liabilities arising from any claim for brokerage commissions or finder’s fee resulting from the indemnitor’s acts (including, without limitation, the cost of reasonable attorney’s fees in connection therewith).

 

ARTICLE 13
IDENTITY OF INTEREST

 

The execution of this Lease or the performance of any act pursuant to the provisions hereof shall not be deemed or construed to have the effect of creating between Landlord and Tenant the relationship of principal and agent or of a partnership or of a joint venture, and the relationship between them shall be and remain only that of sublandlord and subtenant. It is understood and agreed that neither the method of computation of rentals, fees and charges, nor any other provisions contained herein, nor any acts of the Parties hereto create a relationship other than the relationship of landlord and tenant.

 

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ARTICLE 14
NOTICES AND REPORTS

 

Except as otherwise authorized or allowed by statute, any notice, demand, request or other communication required or permitted be given under this Lease shall be in writing, signed by the party giving it or its authorized agent and conclusively deemed to have been properly given to and received and to be effective when sent by (i) personal delivery, or (ii) reputable overnight delivery service (such as Federal Express or UPS) with proof of delivery, or (iii) United States Mail, postage prepaid, registered or certified mail, return receipt requested, or (iv) by email provided that any email notice also have one of the previous three (3) notice types sent within twenty-four (24) hours of the email notice unless recipient acknowledges receipt of such email in which case additional type of notice is not required), sent to the intended addressee at the address set forth below, or to such other address or to the attention of such other person as the addressee shall have designated by written notice sent in accordance herewith, and shall be deemed to have been given either at the time of personal delivery, or, in the case of expedited delivery service or mail, as of the date of first attempted delivery at the address and in the manner provided herein, or, in the case of electronic transmission, as of the date of the electronic transmission provided that an original of such electronic must also sent to the intended addressee by one of the means described in clauses (i) through (iii) above. The respective addresses of the parties are as hereafter set forth:

 

Landlord:

AA ACQUISITIONS, LLC
15000 NW 44th Avenue
Opa Locka, Florida 33054
Attention: Eric Greenwald and Leonard Abess

E-mail: egreenwald@airsidepark.com

E-Mail: leonard@thinklabventures.com

   

With a copy to:

Greenberg Traurig, P.A.
333 Avenue of the Americas
Miami, Florida 33131
Attn: Ilene K. Kobert, Esq.
E-Mail: koberti@gtlaw.com

   

Tenant:

Sky Harbour Opa Locka Airport, LLC
767 Fifth Ave. 21st Floor
New York, New York 10153
Attention: Tal Keinan
E-mail: tkeinan@skyharbour.group

   

With a copy to:

Herrick, Feinstein LLP
Two Park Avenue
New York, New York 10016
Attn: Patrick J. O’Sullivan, Esq.
E-Mail: posullivan@herrick.com

 

Provided, however, that either party may designate a different address from time to time by giving to the other party notice in writing of the change. Rental payments to Landlord shall be made by Tenant at Landlord’s address provided above. Counsel for the parties set forth above may deliver or receive notice on behalf of the parties.

 

ARTICLE 15
NO RECORDING

 

The parties hereto agree that this Lease shall not be recorded in any public records. Simultaneously with the execution of this Lease, the parties shall execute a memorandum of lease in the form attached hereto as Exhibit “G”, which memorandum shall be recorded in the public records of Miami-Dade County, Florida by Tenant at its expense.

 

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ARTICLE 16
ENTRY OF LANDLORD

 

Landlord and Prime Landlord may enter the Property and Improvements thereon, at all reasonable times with reasonable advance notice (not less than two (2) days, except in emergencies constituting an immediate threat to life or property), when no notice is required, and subject to Tenant’s security rules and regulations:

 

(a)    To inspect, test or protect said Property; or

 

(b)    To exhibit the said Property to any prospective purchaser when Tenant is in default of this Lease or has notified Landlord of intention to terminate this Lease or during the last twelve (12) months of the term of this Lease.

 

No authorized entry by Landlord or the County shall constitute an eviction of Tenant or a deprivation of its rights or alter the obligation of Landlord or create any right in Landlord and/or Prime Landlord adverse to the interest of Tenant hereunder, provided Landlord shall enter the Property and/or Improvements without causing a material and adverse effect on the Permitted Use.

 

ARTICLE 17
SURRENDER OF PREMISES AND OWNERSHIP OF IMPROVEMENTS AT LEASE EXPIRATION.

 

At the expiration of the Lease, all Improvements erected on the Property shall become the sole property of Landlord without any payment provided to Tenant and without any further documentation being required. Any and all trade fixtures, signs, moveable trailers, and other personal property placed on the Premises by Tenant shall remain Tenant’s sole property, and Tenant shall have the right to remove the same prior to expiration of the Lease, and any items of personal property purchased by Tenant with funding from the Landlord.

 

Notwithstanding anything to the contrary contained in the Lease, upon the termination of the Term, by lapse of time or otherwise, the Tenant shall surrender possession of the Premises in a condition comparable to the condition in which the Property is at the completion of the Improvements, reasonable wear and tear excepted, and shall surrender possession of all keys for the Premises to Landlord.

 

ARTICLE 18
QUIET ENJOYMENT

 

Subject to the provisions of this Lease, Landlord covenants that Tenant, on paying the rent and performing the covenants of this Lease on its part to be performed, shall and may peaceably and quietly have, hold and enjoy the Property for the Term of this Lease.

 

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ARTICLE 19
HEIGHT RESTRICTIONS

 

Tenant expressly agrees for itself, its successors and assigns, to restrict the height of structures, objects of natural growth and other obstructions on the Property to such a height so as to comply with Applicable Law, including the United States Federal Aviation Regulations, Part 77, as amended from time to time. Tenant expressly agrees for itself, its successors and assigns, to prevent any use of the Property by, through or under Tenant which would interfere with or adversely affect the operation or maintenance of the Airport, or otherwise constitute an airport hazard or violate Applicable Law.

 

Landlord reserves unto itself and the County, together with each respective parties’ successors and assigns, the use and benefit of the public, a right of flight for the passage of aircraft in the airspace above the surface of the Property, together with the right to cause in such airspace such noise as may be permitted by Applicable Law and inherent in the operation of aircraft, now known or hereafter used, for navigation of or flight in the airspace, and for use of said airspace for landing on, taking off from, or the operation of, the Airport. Tenant acknowledges and agrees that such reservation shall not constitute a breach of quiet enjoyment or constitute constructive eviction under this Lease.

 

ARTICLE 20
NET LEASE

 

Except as may be expressly set forth in this Lease including with respect to the payment of Tenant’s share of the Aviation Annual Land Rent (as defined in Section 4.01 (A) of the Prime Lease), this Lease shall be “triple net” to Landlord. All additional costs, expenses, and obligations of every kind and nature relating to the Premises, directly, indirectly ratably or otherwise, that may accrue or become due during the Term or any Renewal Term shall be paid by Tenant, including by way of example and without limitation, all construction, maintenance, repair and restoration costs of the Improvements, all utilities and other services consumed or otherwise utilized by Tenant in the operation of the Permitted Use, all Real Estate Taxes, and any and all operating expenses of the Premises are collectively referred to herein as “Rent”. Further, Tenant shall pay when due any and all impact fees, concurrency fees, development fees, inspection fees, application fees and all other fees, charges or assessments of any kind or nature imposed by any Governmental Authority having jurisdiction over the Premises in connection with the review, approval, inspection, construction of the Improvements or occupation of the Premises by Tenant, including without limitation, all utility tap or connection fees, any required impact fees, and the costs of constructing any utility, drainage, roadway, or other system or improvement required in connection with the construction, use and occupancy of the permitted Improvements.

 

ARTICLE 21
WARRANTIES

 

Landlord warrants that upon commencement of the Term, the Property will be free and clear of all encumbrances except the Prime Lease, Real Estate Taxes for 2019 and subsequent years, and matters of record. Landlord represents to Tenant that (i) Landlord has the corporate authority to execute this Lease and that this Lease constitutes a valid and binding obligation of Landlord, enforceable against Landlord in accordance with its terms, (ii) the Prime Lease is in full force and effect and Landlord has not received written notice from Prime Landlord of a default thereunder, (iii) Landlord is the holder of the tenant’s interest under the Prime Lease, (iv) Landlord has not subleased the Premises to another party, and (v) except as provided in the Recitals to this Lease, the Lease has not been amended or modified in any respect.

 

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ARTICLE 22
ASSIGNMENT AND SUBLETTING

 

Prior to the completion of Phase I Improvements and the Phase II Improvements, if applicable, Tenant shall not assign this Lease, in whole or in part, nor sublet the entirety of the Premises to a single transferee, (individually or collectively, a “Transfer”), without first obtaining the written consent of the Landlord which consent may be given in Landlord’s sole discretion. Any such attempted Transfer shall be void and confer no rights upon any third person. This prohibition includes any subletting or assignment which would otherwise occur by operation of law, merger, consolidation, reorganization, transfer or other change of Tenant’s corporate or proprietary structure. At least sixty (60) days prior to a Transfer, Tenant shall furnish Landlord with (a) all documents related to the Transfer; (b) all financial statements of the proposed transferee, including, but not limited to, the most recent income, balance sheet and changes in financial position statement (with accompanying notes and disclosures of all material changes thereto) in audited form, if available, and certified as accurate by the transferee’s chief financial officer; (c) any other relevant information that Landlord has theretofore reasonably requested regarding the proposed Transfer; and (d) a statement signed by an authorized officer of an assignee, in the case of an assignment, agreeing that the assignee will be liable for all obligations thereafter arising under this Lease. Within thirty (30) days from receipt of Tenant’s request for consent to the Transfer, Landlord shall respond to Tenant’s request, consenting to or withholding consent to such Transfer (and shall set forth the reason for any denial of consent in reasonable detail). Consent by Landlord to any Transfer shall not constitute a waiver of the necessity for such consent to any subsequent assignment or subletting and shall not constitute a release of the Tenant hereunder. Failure of Landlord to respond shall be deemed a denial of Landlord’s consent. Tenant agrees to reimburse Landlord upon demand for Landlord’s reasonable out-of-pocket costs and fees (including professional fees) not to exceed $5,000.00 for Landlord’s consideration of a Transfer, provided that said amount shall increase by three percent (3%) every five years. Notwithstanding the foregoing, after the completion of the Phase I Improvements and the Phase II Improvements, if applicable, if Tenant requests Landlord’s consent to a Transfer, Landlord’s consent shall not be unreasonably withheld, conditioned or delayed. Tenant may, without Landlord’s consent, Transfer this Lease, in its entirety, to an affiliated company that is wholly owned and controlled by Sky Harbour, LLC (an “Affiliate”) or in connection with the merger or consolidation of Tenant into or with another entity or the transfer of all or substantially all of Tenant’s assets or the sale of all or substantially all of the ownership interests in Tenant, provided the tangible net worth (as determined in accordance with generally accepted accounting principles consistently maintained) of the surviving entity of at least ten (10) times the then-current annual Base Rent and Improvement Rent as of the date of the transaction (a “Permitted Transfer”), provided that in the event that the surviving entity does not have such tangible net worth such surviving entity shall have the right to provide an alternative form of security deemed reasonably acceptable to Landlord, in its sole discretion. For the avoidance of doubt, Tenant shall not be permitted to partially assign or bifurcate this Lease. A Permitted Transfer is otherwise subject to and upon all of the terms, provisions and covenants of this Lease, and a Permitted Transferee must agree to continue to operate the Premises for the Permitted Use. Upon the assignment of this Lease (provided said assignment is after the completion of the Phase I Improvements and Phase II Improvements, if applicable), Tenant shall be released from all obligation under this Lease accruing from and after the date of such Transfer, so long as the Permitted Transferee assumes such obligations in writing and meets the above stated tangible net worth threshold. A fully executed copy of the assignment and assumption of Lease shall be delivered to Landlord within ten (10) days of such assignment. Except as otherwise expressly set forth herein, and except for a corporate Tenant whose stock is traded on a nationally recognized stock exchange, NASDAQ or over-the-counter market, a change of “Control” (as hereinafter defined) of Tenant, if Tenant is a corporation, or a change in the composition of persons owning any Controlling interest in any non-corporate Tenant shall be deemed an assignment for the purposes of this Article 22. As used herein, the term “Control”, “Controlled by”, “Controlling” or “under common Control with” shall mean, with respect to a corporation, (i) the ownership, directly or indirectly, of stock possessing, or the right to exercise, of at least 51% of the total combined voting power of all classes of the controlled corporation, issued, outstanding and entitled to vote for the election of directors, and with respect to a partnership or other business entity, the ownership, directly or indirectly, of at least 51% of all of the legal and equitable interests, or (ii) the ability effectively to control or direct the business decisions of such corporation or entity.

 

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Nothing set forth in this Lease shall prohibit Tenant from subleasing or licensing portions of the Improvements.

 

ARTICLE 23
ENVIRONMENTAL REPRESENTATIONS, WARRANTIES, AND INDEMNIFICATION

 

SECTION 23.01.    ENVIRONMENTAL REPRESENTATIONS AND WARRANTIES BY TENANT. Tenant covenants that from and after the Effective Date, subject to the provisions of 23.03(b), at Tenant’s sole expense, Tenant will: (a) comply with Environmental Law and, to the extent Environmental Law requires, clean up any Hazardous Substance Discharge (including making any required related submissions to, and deliver all information required by, and otherwise fully comply with all requirements of any Governmental Agency under Environmental Laws related to such Hazardous Substance Discharge) to the extent resulting from the actions of Tenant, its subtenants, and their respective agents, contractors, employees and invitees; (b) if any Governmental Agency requires any clean-up plan or clean-up because of a Hazardous Substances Discharge caused by Tenant, prepare and submit the required plans and any required financial assurances for such Hazardous Substances Discharge; (c) promptly and diligently carry out all such clean-up plans upon approval by Landlord and MDAD with respect to any Hazardous Substances Discharge caused by Tenant; (d) promptly commence and diligently conduct and complete the portion of the Remedial Action that affects the Premises with respect to any Hazardous Substances Discharge caused by Tenant.

 

SECTION 23.02.    ENVIRONMENTAL INDEMNIFICATION BY TENANT. Tenant hereby indemnifies and agrees to defend and hold Landlord, Prime Landlord and Landlord’s leasehold mortgagee, if any, harmless from and against (a) any non-performance of or delay in completion of such portion of the Remedial Action require to be conducted by Tenant, except to the extent such non-performance of or delay in completion of the Remedial Action is caused by the acts, omissions, gross negligence or willful misconduct of Landlord or Prime Landlord or their respective agents, contractors or employees; and (b) as to events, occurrences, or matters first arising during the period beginning on the Effective Date and ending on the Expiration Date, against any Hazardous Substances Discharge or violation of Environmental Law provided, however, in no event shall Tenant indemnify Landlord for events, occurrences or matters (i) to the extent caused by the acts or omissions of Landlord or Prime Landlord or their respective agents, contractors or employees, or (ii) which are in existence prior to the Effective Date, except to the extent such events, occurrences or matters are exacerbated by Tenant (in which event Tenant shall only indemnify Landlord and Prime Landlord and any leasehold mortgagee, if any, with regards to such exacerbation).

 

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SECTION 23.03.    ENVIRONMENTAL TESTING.

 

(a)    If, during the Term hereof, as same may be extended, the Prime Landlord or any other Governmental Agency having jurisdiction over such matters, requires Landlord to undertake environmental testing of the Property, then Tenant, shall undertake, or cause to be undertaken, at Landlord’s expense, and completed in the time frame specified by the Prime Landlord or such other Governmental Agency, an updated Phase I environmental audit of the Property and, if required by the Prime Landlord, or such other Governmental Agency after submission of an updated Phase I environmental audit of the Premises, a Phase II environmental audit (or then prevailing similar testing) of the Premises.

 

(b)    The Phase I Report shall be attached to this Lease as Exhibit F” and shall be incorporated herein by reference as well as those items set forth in Section 7.03 (C) of the Prime Lease defined as the Baseline Disclosures and shall serve as evidence of the presumed base line environmental condition of the Property as of the Effective Date. Tenant shall not be responsible for any environmental conditions disclosed in the Exhibit “F” or the Baseline Disclosures, except to the extent Tenant exacerbates the environmental condition by its actions. Furthermore, the Parties recognize the possibility that not all pre-existing environmental conditions may be set forth in Exhibit F” or the Baseline Disclosures and any environmental conditions shown to be in existence prior to the Effective Date will be addressed in accordance with the terms and conditions of Section 7.03 (A) of the Prime Lease. Landlord agrees to support and assist Tenant in the efforts or actions it elects to take in connection with the County with regard to Pre-Existing Environmental Conditions (as defined in the Prime Lease), but Landlord shall have no obligation to remediate same, nor expend third party costs or expenses in assisting Tenant in such efforts (unless Tenant agrees to reimburse such costs or expenses).

 

SECTION 23.04.    DEFINED TERMS. For purposes of this Section, the following terms shall be defined as set forth below:

 

“Hazardous Substance” includes any substance or related material that is defined as “hazardous” or “toxic” or a term of similar import or is regulated as such under any Environmental Law, including any material, substance or waste that is: (i) defined as a “hazardous substance” under Section 311 of the Water Pollution Control Act (33 U.S.C. §1317), as amended; (ii) defined as a “hazardous waste” under Section 1004 of the Resource Conservation and Recovery Act of 1976, 42 U.S.C. §6901, et seq., as amended; (iii) defined as a “hazardous substance” or “hazardous waste” under Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Reauthorization Act of 1986, 42 U.S.C. §9601 et seq. or any so-called “superfund” or “superlien” law; (iv) defined as a “pollutant” or “contaminant” under 42 U.S.C.A. §9601(33); (v) defined as “hazardous waste” under 40 C.F.R. Part 260; or (vi) defined as a “hazardous chemical” under 29 C.F.R. Part 1910.

 

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“Hazardous Substances Discharge” means on or after the Effective Date, any deposit, discharge, generation, release, seepage, leakage, spill or other transmission of Hazardous Substances in violation of Environmental Laws that occurs at or from the Premises, or onto the Airpark from the Premises, whether or not caused by Tenant, or that arises at any time from the use, occupancy, or operation of the Premises or any activities conducted therein, or any adjacent or nearby real property. Notwithstanding the foregoing, the term Hazardous Substances Discharge shall not include any Pre-Existing Conditions (as defined in the Prime Lease) and Landlord Condition (as defined in the Prime Lease) unless same are exacerbated by Tenant’s activities on the Premises.

 

“Remedial Action” means those remedial actions required in connection with the use, occupancy, development, repair and/or operations, including but not limited to those actions required in the event of a Hazardous Substance Discharge at the Premises including, but not limited to, those required by the terms of the Prime Lease, and/or all Environmental Laws. Tenant shall not be responsible for any remedial actions related to Hazardous Substances located at, on, in, or under the Premises prior to the Effective Date except to the extent any such Hazardous Substances are exacerbated by Tenant.

 

“Environmental Law” means any Applicable Law regarding the following at, in, under, above, or upon the Premises: (a) air, environmental, ground water, or soil conditions; or (b) clean-up, control, disposal, generation, storage, release, transportation, or use of, or liability or standards of conduct concerning, Hazardous Substances.

 

ARTICLE 24
SUBORDINATION

 

SECTION 24.01.    SUBORDINATION. As of the Effective Date of this Lease, there is no leasehold mortgage encumbering the Landlord’s leasehold interest in the Property. If (i) Landlord obtains a leasehold mortgage or other similar security agreement in the future or (ii) Prime Landlord obtains a fee mortgage or other similar security agreement in the future, then this Lease (and any New Lease regardless of when same is entered into) and the lien of any Sub-Leasehold Mortgage encumbering such sub-leasehold estate shall only be subordinate to such leasehold mortgage or fee mortgage if and when Landlord or Prime Landlord, as applicable, delivers to Tenant an executed subordination, non-disturbance and attornment agreement in form and content reasonably acceptable to Tenant, Landlord or Prime Landlord, as applicable, and the applicable mortgagee.

 

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SECTION 24.02.    ATTORNMENT AND NON-DISTURBANCE. In the event any proceedings are brought for the foreclosure of, or in the event of exercise of the power of sale under any mortgage made by the Landlord covering the Premises or in the event a deed is given in lieu of foreclosure of any such mortgage on the Property and/or Landlord reverts to the County, if requested to do so, Tenant shall attorn to the purchaser, grantee in lieu of foreclosure or County upon any such foreclosure, sale or reversion and recognize such purchaser, grantee in lieu of foreclosure or County as the Landlord under this Lease. Subject to the terms of Section 12.08 of the Prime Lease, the County will not disturb Tenant’s right to occupy the Premises to which a default does not apply so long as the Tenant is remitting Rent to the County with respect to the Premises.

 

SECTION 24.03.    SUBLEASEHOLD FINANCING. Notwithstanding anything in this Lease to the contrary, Tenant shall have the absolute and unconditional right, without Prime Landlord’s or Landlord’s consent, to execute and deliver Sub-Leasehold Mortgage(s) at any time and from time to time during the Term of this Lease. The term “Sub-Leasehold Mortgage” means any mortgage, deed of trust, collateral assignment, or other lien (as modified from time to time) encumbering the sub-leasehold estate. The term “Sub-leasehold Mortgagee” means the holder from time to time of a Sub-Leasehold Mortgage and its successors and assigns, provided Landlord and Prime Landlord has each received written notice of its name and address and a copy of its Sub-Leasehold Mortgage. A Sub-Leasehold Mortgage shall not attach to the fee estate or the leasehold estate under the Prime Lease. Prime Landlord need not join in, or “subordinate the fee estate to,” any Sub-Leasehold Mortgage, and Landlord need not join in, or “subordinate the leasehold estate to,” any Sub-Leasehold Mortgage. No Sub-Leasehold Mortgage shall reduce any party’s rights or obligations under this Lease. Notwithstanding anything in this Lease to the contrary, without Prime Landlord’s or Landlord’s consent, at any time and from time to time: (a) any Sub-Leasehold Mortgagee may initiate and complete a foreclosure and exercise any other rights and remedies against the Tenant and the sub-leasehold estate (but not the fee estate or the leasehold estate) under its Sub-Leasehold Mortgage; and (b) any transferee through a foreclosure, and its successors and assigns, may assign this Lease, subject to the terms and conditions set forth in Article 22 without Landlord’s consent (provided that any future assignments shall be subject to the provisions of Article 22). A foreclosure shall impair no estate or right under the fee estate or the leasehold estate, and shall transfer only the sub-leasehold estate. If requested in writing by a Sub-Leasehold Mortgagee, Landlord agrees to enter into a Subordination, Non-Disturbance, Recognition and Attornment Agreement in a form that is reasonably acceptable to Landlord and Sub-Leasehold Mortgagee (the “SNDRA”). Landlord agrees to submit, with no obligation to obtain, a SNDRA to Prime Landlord.

 

Subsection 24.03.1    Opportunity to Cure. If Tenant shall mortgage its interest in this Lease and the leasehold interest created hereby, Landlord shall give to each Sub-leasehold Mortgagee whose name and address shall have theretofore been provided to Landlord (and in the same manner as is provided for notices to Tenant under Article 14 of this Lease), a copy of each notice of default given to Tenant, each notice of termination of this Lease given to Tenant and each notice of litigation or other adversarial proceeding related to the Lease given to Tenant, at the same time as, and whenever, any such notice of default or notice of termination shall be given by Landlord to Tenant, and no such notice of default or notice of termination by Landlord shall be deemed to have been duly given to Tenant unless and until a copy thereof shall have been so given to each such Sub-leasehold Mortgagee. Each Sub-leasehold Mortgagee shall (A) thereupon have a period of thirty (30) days more in the case of a default resulting from Tenant’s failure to pay Base Rent, Additional Rent or any other sum due to Landlord under this Lease, and sixty (60) days more in the case of any other default which is capable of being cured by the Sub-leasehold Mortgagee, after notice of such default is given to such Sub-leasehold Mortgagee, for curing the default, causing the same to be cured by Tenant or otherwise, than is given Tenant after such notice is given to it, and (B) within such 60-day period and otherwise as herein provided, have the right to cure such default, cause the same to be cured by Tenant or otherwise or cause an action to cure a default to be commenced. Landlord shall not have the right to terminate this Lease or to reenter the Premises, or to otherwise terminate this Lease by reason of a default by Tenant, until the applicable cure period has expired without a cure having been made; provided, however, that nothing contained herein shall be deemed to impose upon any Sub-leasehold Mortgagee the obligation to perform any obligation of Tenant under this Lease or to remedy any default by Tenant hereunder. If there is more than one Sub-leasehold Mortgagee, cure periods for all shall run concurrently. Landlord shall accept performance by a Sub-leasehold Mortgagee of any covenant, condition or agreement on Tenant’s part to be performed hereunder with the same force and effect as though performed by Tenant. Any provision of this Lease to the contrary notwithstanding, no performance by or on behalf of a Sub-leasehold Mortgagee shall cause it to become a “mortgagee in possession” or otherwise cause it to be deemed to be in possession of the Premises or bound by or liable under this Lease.

 

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Subsection 24.03.2    Sub-Leasehold Mortgagees Right to Perform. Landlord hereby acknowledges and agrees that Sub-Leasehold Mortgagee may, in its sole and absolute discretion, observe or perform, or cause to be observed or performed, any of the obligations of Tenant under this Lease and any or all the rights, powers and privileges of Tenant under this Lease and upon such exercise Landlord will observe or perform, or cause to be performed, such obligations of such Persons for the benefit of Sub-Leasehold Mortgagee. This Section 24.03.2 shall not, however, be deemed to limit the obligations of Tenant under this Lease (or to impose such obligations upon Sub-Leasehold Mortgagee) or the Sub-Leasehold Mortgage or related loan documents. Notwithstanding any provisions of this Lease to the contrary, Landlord shall not have the right to terminate this Lease, including under Article 9, reenter the Premises or exercise any other rights or remedies under this Lease by reason of a default by Tenant, as long as:

 

(i)    in the case of a non-monetary default, a Sub-leasehold Mortgagee, in good faith, shall have commenced within the additional cure period set forth in Section 24.03.1 to cure the default in question, other than a Tenant specific default that cannot be cured by the Sub-leasehold Mortgagee, i.e. a Tenant bankruptcy (“Incurable Events of Default”), and shall have notified Landlord within such period of its intention to cure, and if such default is not reasonably susceptible of cure in such additional cure period, prosecutes the same to completion with reasonable diligence and continuity;

 

(ii)    if possession of the Premises is required in order to cure the default in question, a Sub-leasehold Mortgagee, in good faith, (A) shall have entered into possession of the Premises or (B) shall have notified Landlord of its intention to institute foreclosure proceedings or other proceedings to obtain possession directly or through a receiver, and within thirty (30) days after the giving of such notice commences such foreclosure or other proceedings, and thereafter prosecutes such proceedings with reasonable diligence and continuity or receives an assignment of this Lease in lieu of foreclosure from Tenant, and, upon obtaining possession pursuant to clause (A) or clause (B) above, commences promptly to cure the default in question and prosecutes the same to completion with reasonable diligence and continuity;

 

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(iii)    a Sub-leasehold Mortgagee, diligently and in good faith, shall have proceeded pursuant to under Section 24.03.1 to cure such default; provided, that in each case the Sub-leasehold Mortgagee shall have delivered to Landlord its non-binding notice of intention to take the action described in under Section 24.03.1 and that during the period in which such action is being taken (and any foreclosure proceedings are pending), no monetary default then exists beyond the additional thirty (30) Business Day cure period provided to Sub-leasehold Mortgagee and all of the other obligations of Tenant under this Lease, to the extent they are reasonably susceptible of being performed by the Sub-leasehold Mortgagee, are being duly performed within any applicable grace periods, as such grace periods are extended pursuant to the provisions of Section 24.03.1 above; and

 

(iv)    with respect to an Incurable Event of Default, the Sub-Leasehold Mortgagee shall not be required to cure any such Incurable Event of Default, and if such Sub-Leasehold Mortgagee or its assignee, designee or transferee shall acquire the leasehold interest of Tenant in this Lease pursuant to a foreclosure or transfer in lieu of foreclosure, then any such Incurable Event of Default shall no longer be deemed a default.

 

Notwithstanding the foregoing, at any time after the delivery of the aforementioned notice of intention, the Sub-leasehold Mortgagee may notify Landlord, in writing, that it has relinquished possession of the Premises or that it will not institute foreclosure proceedings or, if such proceedings have been commenced, that it has discontinued them, and in such event, the Sub-leasehold Mortgagee shall have no further right to so cure the default referred to in such notice pursuant to this Section after the date it delivers such notice to Landlord and thereupon, Landlord shall thereafter have the unrestricted right, subject to and in accordance with all of the terms and provisions of this Lease, to terminate this Lease and to take any other action it deems appropriate by reason of any default by Tenant, and upon any such termination the provisions of Section 24.03.3 shall apply. For all purposes of this Lease, the term “foreclosure proceedings” shall include, in addition to proceedings to foreclose a mortgage, where applicable, any foreclosure or similar proceedings commenced by a collateral assignee thereof with respect to its collateral assignment.

 

Subsection 24.03.3    New Ground Sublease. If this Lease terminates for any reason (except with Sub-Leasehold Mortgagee’s consent or because of Condemnation), even if Sub-Leasehold Mortgagee failed to timely exercise its cure rights for an Event of Default, Landlord shall promptly give Sub-Leasehold Mortgagee a Termination Notice (the “Termination Notice”). By giving notice to Landlord on or before the day that is thirty (30) days after Sub-Leasehold Mortgagee receives the Termination Notice (such thirty (30) day period, the “New Lease Option Period”), Sub-Leasehold Mortgagee may require Landlord to enter into a new lease with the Sub-Leasehold Mortgagee or a designee, assignee or transferee of the Sub-Leasehold Mortgagee (“New Tenant”), at Sub-Leasehold Mortgagee’s sole cost and expense (the “New Lease”). Landlord need not do so, however, unless New Tenant has in the New Lease committed to cure all monetary Defaults within ten (10) days of commencement of the New Lease, and to cure all nonmonetary Defaults within thirty (30) days of commencement of the New Lease, except, in the case of any such nonmonetary Default that cannot with due diligence be cured within thirty (30) days, New Tenant shall have commenced such cure and committed in the New Lease to diligently and continuously prosecute such cure to completion within a reasonable time under the circumstances, but in no event more than sixty (60) days; and reimburse Landlord’s reasonable costs and expenses (including legal fees and expenses) to terminate this Lease, recover the Premises, and enter into the New Lease. If Sub-Leasehold Mortgagee exercises its option to require Landlord to enter into a New Lease with New Tenant, New Tenant shall execute the New Lease on or prior to the expiration of the New Lease Option Period or the option shall be deemed to be waived and of no further effect.

 

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Subsection 24.03.4    New Lease Implementation. If Sub-Leasehold Mortgagee timely requests a New Lease in conformity with this Lease, then from the date this Lease terminates until the parties execute and deliver a New Lease, Landlord shall not: (a) operate the Premises in an unreasonable manner; (b) terminate any sub-sublease(s) except for a default thereunder beyond all applicable notice and cure periods; or (c) sub-sublease any portion of the Premises except to New Tenant. When the parties thereto sign a New Lease, Landlord shall transfer to New Tenant, all sub-subleases, (including any security deposits actually delivered to and held by Landlord, if any), service contracts, premises operations, and net income Landlord collected from the Premises during the period described in the previous sentence which Tenant was entitled to under this Lease prior to the termination thereof shall automatically be transferred to New Tenant.

 

Subsection 24.03.5    Further Assurances. Upon written request from Tenant or any Sub-Leasehold Mortgagee (prospective or current), Landlord shall promptly, under documentation reasonably satisfactory to it and the requesting party: (a) agree directly with Sub-Leasehold Mortgagee that it may exercise against Landlord all Sub-Leasehold Mortgagee’s rights in this Lease; (b) certify (subject to any then exception reasonably specified) whether this Lease is in full force and effect, whether to Landlord’s knowledge any Events of Default exists, the date through which Rent has been paid, and other factual matters as reasonably requested; and (c) provided Tenant reimburses Landlord’s attorneys’ fees and expenses, amend this Lease and/or provide other assurances as any current or prospective Sub-Leasehold Mortgagee reasonably requests, provided such amendment does not adversely affect Landlord, including reduction of any payment due Landlord, increase of any liability or obligation of Landlord, or change in any Events of Default or cure or notice period.

 

Subsection 24.03.6    Miscellaneous. Notwithstanding anything to the contrary in this Lease, Sub-Leasehold Mortgagee may: (a) exercise its rights through an Affiliate, assignee, designee, nominee, subsidiary, or other Person acting on behalf of Sub-Leasehold Mortgagee, in its own name or in Sub-Leasehold Mortgagee’s name (and anyone acting under this clause “a” shall automatically have the same protections, rights, and limitations of liability as Sub-Leasehold Mortgagee), and Sub-Leasehold Mortgagee or such Affiliate, assignee, designee, nominee, subsidiary, or other Person shall have the right thereafter to assign, sell or transfer this Lease and its rights hereunder to any Affiliate, designee, nominee, or subsidiary of Sub-Leasehold Mortgagee, or to any other Person with a net worth equal to or greater than $50,000,000, without the consent of the Landlord; (b) refrain from curing any Event of Default; (c) abandon such cure at any time; or (d) withhold consent or approval for any reason or no reason, by written notice, except where this Lease states otherwise. Any such consent or approval must be written. To the extent any Sub-Leasehold Mortgagee’s rights under this Lease apply after this Lease terminates, they shall survive such termination.

 

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Subsection 24.03.7    Tenant Bankruptcy. In the event of a Bankruptcy action in which Tenant or any Affiliate thereof is a debtor:

 

(a)    If this Lease is rejected in connection with such Bankruptcy Action by the Tenant or any Affiliate thereof or a trustee in bankruptcy for such Person (or other Person to such proceeding), such rejection shall be deemed an assignment by such Persons to Sub-Leasehold Mortgagee of the sub-leasehold estate and all of Tenant’s interests in this Lease and neither the sub-leasehold estate nor this Lease shall terminate or be cancelled and Sub-Leasehold Mortgagee shall have all rights and obligations of such Person as if such Bankruptcy Action had not occurred, unless Sub-Leasehold Mortgagee shall reject such deemed assignment by Notice to Landlord within thirty (30) Business Days following such rejection.

 

(b)    If any court of competent jurisdiction or other tribunal shall determine that the Lease shall have been terminated or cancelled notwithstanding the provisions of clause (a) above as a result of such rejection, the rights of New Tenant to a New Lease under Section 24.03.6 shall not be affected thereby, and Sub-Leasehold Mortgage and Landlord agree that New Tenant shall enter into such New Lease pursuant to the terms and conditions of Section 24.03.6 notwithstanding the foregoing.

 

ARTICLE 25
AS IS WHERE IS

 

Tenant hereby acknowledges and agrees that the Real Property is leased to Tenant in its “AS IS” condition, and, Landlord makes no representations, warranties or guarantees regarding the Real Property of any nature whatsoever, including in respect of Tenant’s contemplated use or occupancy thereof, or the condition, safety or security of the Real Property. Tenant further acknowledges and agrees that Tenant has relied on and will rely upon its own investigation of the Real Property to determine the status of the Real Property and the suitability of same for Tenant’s contemplated use. LANDLORD HEREBY DISCLAIMS, AND TENANT HEREBY WAIVES, RELEASES AND RENOUNCES, ALL IMPLIED AND EXPRESS WARRANTIES, STATUTORY OR OTHERWISE, INCLUDING, WITHOUT LIMITATION, IMPLIED WARRANTIES OF HABITABILITY, MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, AND ANY CLAIM FOR ANY DIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES RESULTING THEREFROM, with the exception that the County shall be responsible for those certain Environmental Conditions which are determined to be Pre-Existing Conditions as set forth in the Prime Lease. In the eventuality of an occurrence of Pre-Existing Conditions, Tenant shall notify Landlord of the same, and Landlord shall without representation or warranty undertake to enforce its rights under the Prime Lease with respect to Pre-Existing Conditions; provided, however, Tenant will also plan, permit and construct its Improvements, where practicable, in a manner so as to minimize the impact of the Pre-Existing Conditions and their cure while maximizing the potential of the Premises for such period of time.

 

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ARTICLE 26
ALTERATIONS

 

Tenant shall make no Materials Alteration without the prior written consent of Landlord, such consent not to be unreasonably withheld or delayed provided that Tenant’s plans and specifications meet the requirements of this Lease, including insurance requirements, and Applicable Law. For purposes of this Lease, a “Material Alteration” shall be any structural alteration, addition or improvement in or to the initial Improvements constructed by Tenant in accordance with this Lease that exceeds five percent (5%) of the total costs and expenses for the Improvements annually adjusted by CPI. The review protocol for the plans and specifications for the Material Alterations shall be governed by Section 1.06.10 above.

 

ARTICLE 27
OTHER PROVISIONS

 

SECTION 27.01.    FORCE MAJEURE. Except as provided below, any prevention, delay or stoppage attributable to strikes, lockouts, labor disputes, acts of God, civil commotion, fire or other casualty, and other causes beyond the reasonable control of the party obligated to perform (collectively, the “Force Majeure”) will excuse the performance of that party for a period equal to the duration of the prevention, delay or stoppage. If, therefore, this Lease specifies a time period for performance of an obligation of either party, a delay that a Force Majeure causes will extend the period within which the party must complete its performance.

 

SECTION 27.02.    HEADINGS. Any headings preceding the text of any articles, paragraphs or sections of this Lease shall be solely for convenience of reference and shall not constitute a part of this Lease, nor shall they affect its meaning, construction or effect.

 

SECTION 27.03.    BINDING EFFECT. The terms, conditions and covenants of this Lease shall inure to the benefit of and be binding upon the parties hereto and their successors and assigns. This provision shall not constitute a waiver of any conditions prohibiting assignment or subletting.

 

SECTION 27.04.    AUTHORITY. Tenant represents that (a) Tenant is authorized to do business in the State of Florida to enter into and perform its covenants under this Lease, and (b) Tenant’s signatories hereto have all requisite power and authority to execute this Lease on Tenant’s behalf. Upon Landlord’s request, Tenant’s signatories hereto will furnish satisfactory evidence of Tenant’s authorization and their authority to execute this Lease on behalf of Tenant.

 

SECTION 27.05.    FEDERAL SUBORDINATION. This Lease, as is the Prime Lease shall be subordinate to the provisions of any existing or future agreements between Landlord and the United States of America relative to the operation and maintenance of the Airport, the execution of which has been or may be required as a condition precedent to the expenditure of Federal funds for the development of the Airport. All provisions of this Lease shall be subordinate to the right of the United States of America to lease or otherwise assume control over the Airport, or any part thereof, during time of war or national emergency for military or naval use, and any provisions of this Lease inconsistent with the provisions of such lease to, or assumption of control by, the United States of America shall be suspended.

 

34

 

SECTION 27.06.    NO WAIVER. There shall be no waiver of the right of either party to demand strict performance of any of the provisions, terms and covenants of this Lease nor shall there be any waiver of any breach, default or non-performance hereof by either party, unless such waiver is explicitly made in writing by the other party. Any previous waiver or course of dealing shall not affect the right of either party to demand strict performance of the provisions, terms and covenants of this Lease with respect to any subsequent event or occurrence of any subsequent breach, default or nonperformance hereof by the other party.

 

SECTION 27.07.    SEVERABILITY. If any provision of this Lease or the application thereof to either party to this Lease is held invalid by a court of competent jurisdiction, such invalidity shall not affect other provisions of this Lease which can be given effect without the invalid provision, and to this end, the provisions of this Lease are severable.

 

SECTION 27.08.    PAYMENT OF TAXES. Tenant shall pay all taxes and other costs lawfully assessed against its leasehold interests in the Property and Improvements, its improvements and its operations under this Lease; provided, however, Tenant shall not be deemed to be in default of its obligations hereunder for failure to pay such taxes pending the outcome of any legal proceedings instituted to determine the validity of such taxes. Notwithstanding the foregoing, if Tenant elects to contest any taxes, Tenant shall indemnify, save, defend, and hold harmless Landlord from and against all loss, cost, damage and expense incurred by Landlord as a result thereof. At Landlord’s request, Tenant shall escrow or post a bond or other adequate security for the full amount of the taxes or other amounts that are the subject of such proceedings, all as may be required by Applicable Laws to prevent loss of title to the Property. The foregoing requirements related to Tenant’s ability to contest the validity or amount of any tax, assessment, levy, or other governmental charge agreed to in this Lease to be paid by Tenant shall only be deemed to apply to Real Estate Taxes and shall not be deemed to apply to any personal property taxes, which Tenant may freely contest without notice to or involvement of Landlord, unless the personal property taxes are levied as part of a larger parcel, in which case the foregoing requirements shall apply.

 

SECTION 27.09.    INTERPRETATION OF AGREEMENT. This Lease is the result of negotiation between the parties hereto and has been drafted by one party for the convenience of both parties, and the parties covenant that this Lease shall not be construed in favor of or against any of the parties hereto.

 

SECTION 27.10.    NO AGENCY. Nothing contained herein shall be deemed or construed by the parties hereto or by any third party as creating the relationship of principal and agent, partners, joint venturers, or any other similar such relationship between the parties hereto. It is understood and agreed that neither the method of computation of rentals, fees and charges, nor any other provisions contained herein, nor any acts of the parties hereto creates a relationship other than the relationship of landlord and tenant.

 

SECTION 27.11.    RIGHTS NON-EXCLUSIVE. Notwithstanding anything herein contained that may be or appear to the contrary, the rights, privileges and licenses granted under this Lease, except in the Property and Improvements, are “nonexclusive” and Landlord reserves the right to grant similar privileges to other persons, firms or corporations.

 

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SECTION 27.12.    APPLICABLE LAW; JURISDICTION AND VENUE. The parties acknowledge that a substantial portion of negotiation, anticipated performance and execution of this Lease occurred or shall occur in Miami-Dade County, Florida, and that, therefore, each of the parties: (a) agrees that this Lease and all rights and obligations hereunder shall be governed by the laws of the State of Florida; (b) agrees that any suit, action or legal proceeding arising out of or relating to this Lease shall be brought exclusively in the courts of record of the State of Florida in Miami-Dade County; (c) consents to the jurisdiction of each such court in any such suit, action or proceeding and expressly waives removal to a federal court; and (d) waives any objection which it may have to the laying of venue of any such suit, action or proceeding in any of such courts.

 

SECTION 27.13.    ENTIRETY OF AGREEMENT. The parties hereto agree that this Lease sets forth the entire agreement between the parties, and there are no promises or understandings other than those stated herein. None of the provisions, terms and conditions contained in this Lease may be added to, modified, superseded or otherwise altered, except as may be specifically authorized herein or by written instrument executed by the parties hereto.

 

SECTION 27.14.    TOTAL AGREEMENT; APPLICABLE TO SUCCESSORS. This Lease contains the entire agreement between the Parties and cannot be changed or terminated except by a written instrument subsequently executed by the Parties hereto. This Lease and the terms and conditions hereof apply to and are binding upon the successors and assigns of both Parties.

 

SECTION 27.15.    WAIVER OF JURY TRIAL/ATTORNEYS FEES. Landlord and Tenant each hereby waive trial by jury in any action, proceeding or counterclaim brought by either of them against the other in connection with any matter arising out of or in any way connected with this Lease, the relationship of Landlord and Tenant: hereunder, Tenant’s use or occupancy of the Premises, and/or any claim of injury or damage. In the event that it shall become necessary for Landlord or Tenant to employ the services of an attorney in exercising or enforcing any of its rights or remedies hereunder, or to collect any sums due to it under this Lease, or to remedy the breach of or in enforcing any of the terms, conditions, provisions or covenants of this Lease, regardless of whether suit be brought, the prevailing party shall be entitled to recover such fee as shall be charged by the prevailing party’s attorneys for such services. Should suit be brought for the recovery of possession of the Property, or for rent or any other sum due Landlord under this Lease, or in exercising or enforcing any of Landlord’s rights or remedies hereunder or in enforcing any of the terms, conditions, provisions or covenants of this Lease, Tenant shall pay to Landlord all expenses of such suit and any appeal thereof, including attorney’s fees.

 

SECTION 27.16.    TIME OF THE ESSENCE. Time is of the essence and in all provisions of this Lease. The term “Business Days” shall mean all days except Saturday, Sunday, and holidays as designated by either the State of Florida or the federal government of the United States.

 

SECTION 27.17.    EFFECTIVE DATE. The Effective Date shall be the date the last Party signs or initials this Lease and provides a copy to the other Party. The Effective Date shall be filled in on the first page of this Lease.

 

36

 

SECTION 27.18.    RECITALS. The Recitals set forth at the beginning of this Lease form a material part of this Lease and are incorporated by reference.

 

SECTION 27.19.    GOOD STANDING. Tenant represents and warrants to Landlord that it is in good standing under the laws of Delaware and qualified to do business in Florida as of the Effective Date of this Lease, and Tenant covenants to the Landlord that it will remain in good standing under the laws of Delaware and Florida at all times during the Term hereof, as same may be extended. Tenant’s breach of the foregoing representation or covenant shall constitute an Event of Default hereunder.

 

SECTION 27.20.    DISCLAIMER OF LIABILITY. NOTWITHSTANDING THE PROVISIONS OF THE INDEMNIFICATION PROVISIONS SET FORTH IN THIS LEASE, THE PARTIES HEREBY EXPRESSLY AGREE THAT UNDER NO CIRCUMSTANCES SHALL ANY SIGNATORY PARTY BE LIABLE TO ANY OTHER SIGNATORY PARTY (OR ANY PARTY CLAIMING THEREUNDER THROUGH A SIGNATORY PARTY, INCLUDING, BUT NOT LIMITED TO CONTRACTORS, SUBCONTRACTORS, SUBTENANTS, INVITEES OR CUSTOMERS) FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR EXEMPLARY DAMAGES, WHETHER IN CONTRACT OR TORT (INCLUDING STRICT LIABILITY AND NEGLIGENCE), SUCH AS, BUT NOT LIMITED TO, LOSS OF REVENUE, LOSS OF USE, DIMINUTION OF VALUE, LOSS OF ANTICIPATED PROFITS, EXCEPT IN THE CASE OF HOLDING OVER BY TENANT.

 

SECTION 27.21.    LIMITATION ON LIABILITY.

 

ANYTHING CONTAINED IN THIS LEASE TO THE CONTRARY NOTWITHSTANDING, TENANT EXPRESSLY ACKNOWLEDGES AND AGREES THAT THERE SHALL AT NO TIME BE OR BE CONSTRUED AS BEING ANY PERSONAL LIABILITY BY OR ON THE PART OF LANDLORD UNDER OR IN RESPECT OF THIS LEASE OR IN ANY WAY RELATED HERETO OR THE PROPERTY; IT BEING FURTHER ACKNOWLEDGED AND AGREED THAT TENANT IS ACCEPTING THIS LEASE AND THE ESTATE CREATED HEREBY UPON AND SUBJECT TO THE UNDERSTANDING THAT IT SHALL NOT ENFORCE OR SEEK TO ENFORCE ANY CLAIM OR JUDGMENT OR ANY OTHER MATTER, FOR MONEY OR OTHERWISE, PERSONALLY OR DIRECTLY AGAINST ANY MEMBER, OFFICER, DIRECTOR, STOCKHOLDER, PARTNER, PRINCIPAL (DISCLOSED OR UNDISCLOSED), REPRESENTATIVE OR AGENT OF LANDLORD, BUT WILL LOOK SOLELY TO LANDLORDS INTEREST IN THE AIRPORT AND PROCEEDS FOR THE SATISFACTION OF ANY AND ALL CLAIMS, REMEDIES OR JUDGMENTS (OR OTHER JUDICIAL PROCESS) IN FAVOR OF TENANT REQUIRING THE PAYMENT OF MONEY BY LANDLORD IN THE EVENT OF ANY BREACH BY LANDLORD OF ANY OF THE TERMS, COVENANTS OR AGREEMENTS TO BE PERFORMED BY LANDLORD UNDER THIS LEASE OR OTHERWISE, AND NO OTHER ASSETS OF LANDLORD SHALL BE SUBJECT TO LEVY, EXECUTION OR OTHER JUDICIAL PROCESS FOR THE SATISFACTION OF TENANTS CLAIMS; SUCH EXCULPATION OF PERSONAL LIABILITY AS HEREIN SET FORTH TO BE ABSOLUTE, UNCONDITIONAL AND WITHOUT EXCEPTION RADON GAS.

 

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Radon is a naturally occurring radioactive gas that, when it has accumulated in a building in sufficient quantities, may present health risks to persons who are exposed to it over time. Levels of radon that exceed Federal and State guidelines have been found in buildings in Florida. Additional information regarding radon and radon testing may be obtained from your County public health unit.

 

SECTION 27.22.    COUNTERPARTS AND FACSIMILE AND ELECTRONIC TRANSMISSION. This Lease may be executed in any number of counterparts, each of which so executed and delivered shall be deemed to be an original and all of which shall constitute one and the same instrument. Each counterpart may be delivered by facsimile or electronic transmission, and will have the same force and effect as an original signature page. The signature page of any counterpart may be detached therefrom without impairing the legal effect of the signature(s) thereon provided such signature page is attached to any other counterpart identical thereto.

 

SECTION 27.23.    EXAMINATION OF LEASE/JOINT PREPARATION. The submission of this instrument for examination or signature by Tenant, Tenant’s agents or attorneys, does not constitute a reservation of, or an option to lease, and this instrument shall not be effective or binding as a lease or otherwise until its execution and delivery by both Landlord and Tenant. This Lease Agreement has been negotiated fully between the Parties as an arm’s length transaction. Both Parties participated fully in the preparation of this Lease and received the advice of counsel. In the case of a dispute concerning the interpretation of any provision of this Lease, both Parties are deemed to have drafted, chosen, and selected the language, and the doubtful language will not be interpreted or construed against any Party.

 

SECTION 27.24.    ESTOPPEL CERTIFICATES. During the Term, each party shall, without charge, within thirty (30) days of a written request by the other, certify in writing as to the validity of this Lease; the Term; the Base Rent and additional charges owed hereunder; the existence of any amendments, defaults, off-sets or counterclaims; and as to such other matters, regarding the terms of this Lease as are reasonably requested by the requesting party. Such certifications may be relied upon by the party requesting the certificates and its applicable mortgagees, assignees, transferees and the like.

 

SECTION 27.25.    CONSENT OF PRIME LESSOR. If, pursuant to the Prime Lease, the Prime Landlord’s consent is required for Tenant to exercise any right under this Lease or take other action, Landlord shall use commercially reasonable efforts to obtain such consent, including, but not limited to, submitting all documentation and information to Prime Landlord as may be required in order for Prime Landlord to make such determination.

 

[SIGNATURE PAGE FOLLOWS NEXT.]

 

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IN WITNESS WHEREOF the parties hereto have set their hands and seals as of the Effective Date.

 

Signed, Sealed and Delivered
in the presence of:

 

    LANDLORD:
     
    AA ACQUISITIONS LLC, a Florida limited liability company
     
     
    By: /s/ Eric Greenwald
Witness    
    Printed Name: Eric Greenwald
     
Witness   Printed Title: President
     
    Date signed: May 2, 2019
Witness    
    (Corporate Seal)
     
Witness    
     
    TENANT:
     
    SKY HARBOUR OPA LOCKA AIRPORT,
    LLC., a Delaware limited liability company
     
Witness   By: /s/ Tal Keinan
     
Witness   Printed Name: Tal Keinan
     
    Printed Title: Member
     
    Date signed: May 2, 2019
     
    (Corporate Seal)

 

 

 

LIST OF EXHIBITS AND SCHEDULES:

 

Exhibit “A-1”: Legal Description of the Real Property (Survey)
Exhibit “A-2” Legal Description of the Expansion Option
Exhibit “B”: Description of Improvements to be constructed on the Real Property
Exhibit “C”: Site Plan
Exhibit “D”: Prime Lease
Exhibit “E”: Minimum Standards for Conducting Commercial Aeronautical Activities
Exhibit “F”: Phase I Environmental Report
Exhibit “G”: Memorandum of Lease
Schedule 1.04.1 Non-Competition Agreement
Schedule 1.05.2: Construction Timeline
Schedule 1.09.2 Phase I and Phase II Base Rent
Schedule 1.09 Option to Purchase

         

 

 

Exhibit “A”

 

Legal Description of the Real Property (Survey)

 

 

 

 

 

 

Exhibit “B”

 

Description of Improvements to be constructed on the Real Property

 

 

 

 

 

 

Exhibit “C”

 

Site Plan

 

 

 

 

 

 

Exhibit “D”

 

Prime Lease

 

 

 

 

 

Exhibit “E”

 

Minimum Standards for Conducting Commercial Aeronautical Activities

 

 

 

 

 

Exhibit “F”

 

Phase I Environmental Report

 

 

 

 

 

Exhibit “G”

 

Memorandum of Lease

 

 

 

 

 

SCHEDULE 1.05.2

 

 

 

 

 

SCHEDULE 1.09.2

 

 

 

 

 

SCHEDULE 1.09

 

The purchase price for the Property shall be Three Hundred Seventy-Five Thousand Dollars ($375,000) per acre. Upon delivery of the Purchase Notice, the parties shall use good faith efforts to enter into a contract for the sale of the Landlord’s Interest in the Premises on a form of contract of sale with commercially reasonable and customary terms and conditions, which shall also set forth the closing date for the purchase, which shall be no more than forty-five (45) days after execution of the contract of sale. Landlord shall provide a draft contract of sale to Tenant within fifteen (15) days after delivery of the Purchase Notice. Time is of the essence with respect to the terms and conditions of this Section 1.09 provided that with respect to the terms and conditions applicable to Landlord, Tenant shall have used good faith efforts to enter into a contract of sale and, with respect to the terms and conditions applicable to Tenant, Landlord shall have used good faith efforts to enter into a contract of sale.

 

 

Exhibit 10.18

 

 

FIRST AMENDMENT TO SUBLEASE AGREEMENT

 

This First Amendment to Sublease Agreement (“Amendment”) is made this 14th day of May, 2021 (the “Effective Date”), between AA ACQUISITIONS, LLC a Florida limited liability company, with offices at 15000 NW 44th Avenue, Opa Locka, Florida 33054, (“Landlord”), and SKY HARBOUR OPA LOCKA AIRPORT, LLC, a Delaware limited liability company registered to do business in Florida, with offices at 767 5th Avenue, New York, New York 10153 (“Tenant”). Landlord and Tenant are sometimes referred to herein individually as a “Party” and collectively as the “Parties”.

 

RECITALS

 

A.    Landlord and Tenant are the current “Landlord” and “Tenant” under that certain Sublease Agreement dated May 2, 2019 (the “Lease”), pursuant to which Landlord leases unto Tenant, and Tenant leases from Landlord, the Premises (i.e., the Phase I Premises together with the Phase II Premises).

 

B.    Landlord and Tenant desire to enter into this Amendment to amend certain provisions of the Lease, as more particularly set forth in this Amendment.

 

AGREEMENT

 

NOW THEREFORE, in consideration of the mutual covenants herein contained and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Landlord and Tenant hereby agree as follows:

 

1.    Scope of Amendment; Defined Terms; Incorporation of Recitals. Except as expressly provided in this Amendment, the Lease shall remain in full force and effect in all respects and the term “Lease” shall mean the Lease as modified by this Amendment. Capitalized terms used but not otherwise defined in this Amendment have the respective meanings given to them in the Lease. The preamble and recitals set forth above are hereby incorporated into this Amendment by this reference in their entirety.

 

2.    Modifications and Amendments to Lease. Notwithstanding anything in the Lease to the contrary, the Lease is hereby modified and amended as follows:

 

a.    Prime Lease. The definition of “Prime Lease” in the Lease is hereby amended and modified to reflect the addition of that certain Fourth Amendment to Amended and Restated Development Lease Agreement between Miami-Dade County, Florida and AA Acquisitions, LLC dated October 6, 2020, a copy of which is attached hereto as Exhibit D” (the “Fourth Amendment”). All references to the “Prime Lease” in the Lease shall hereinafter refer to the Prime Lease and as amended and modified by the Fourth Amendment. In addition, Exhibit D” to the Lease is hereby amended and modified to include a copy of the Fourth Amendment.

 

b.    Phase I Property and Phase II Property Legal Descriptions. Notwithstanding anything to the contrary contained in Subsection 1.02.1 of the Lease, Exhibit“A-1” of the Lease (i.e., the legal description for the Phase I Property) is hereby deleted in its entirety and replaced with the legal description of the Phase I Property identified on Exhibit A- 1” hereto. Notwithstanding anything to the contrary contained in Subsection 1.02.2 of the Lease (Expansion Option), Exhibit A-2” of the Lease (i.e., the legal description for the Phase II Property) is hereby deleted in its entirety and replaced with the legal description of the Phase II Property identified on Exhibit A-2” hereto.

 

 

 

c.    Exercise Date. The Parties hereby acknowledge and agree that Tenant exercised the Expansion Option on December 23, 2019. As such, the definition of “Exercise Date” in the Lease is hereby amended and modified to be December 23, 2019, and all references to the “Exercise Date” in the Lease shall be modified accordingly.

 

d.    Prime Landlord Consent. The Parties hereby acknowledge and agree that (i) the Prime Landlord Consent was timely obtained by Landlord and delivered to Tenant prior to the expiration of the Consent Period, and (ii) any rights that Tenant may have had to terminate the Lease pursuant to the terms and provisions contained in Subsection 1.02.4 of the Lease are null and void or otherwise hereby waived by Tenant.

 

e.    Effective Date; Termination Date. The Parties hereby acknowledge and agree that the definition of “Effective Date” in the Lease is hereby amended and modified to be July 10, 2019, and all references to the “Effective Date” in the Lease shall be modified accordingly. In addition, the Parties hereby acknowledge and agree that the definition of “Termination Date” in the Lease is hereby amended and modified to be July 9, 2059, and all references to the “Termination Date” in the Lease shall be modified accordingly.

 

f.    Renewal Notice. Notwithstanding anything to the contrary contained in the Lease, (i) Tenant shall have until January 10, 2058, in which to exercise and deliver its Renewal Notice to Landlord with respect to exercising its first Renewal Option to renew the Lease for the Renewal Term, and (ii), solely in the event that the first Renewal Term is realized, Tenant shall have until January 10, 2063 in which exercise and deliver its Renewal Notice to Landlord with respect to exercising its second Renewal Option to renew the Lease for the Renewal Term.

 

g.    Option to Terminate. The Parties hereby acknowledge and agree that any rights that Tenant may have had to terminate the Lease due to Landlord’s failure to timely deliver the Waiver from Prime Landlord to Tenant or otherwise pursuant to the terms and provisions contained in Subsection 1.03.3 of the Lease (Option to Terminate) are null and void or otherwise hereby waived by Tenant.

 

h.   Improvements to the Property. Notwithstanding anything to the contrary contained in the Lease, Tenant shall have (i) until July 31, 2022 (subject to Force Majeure) for Completion of Construction (as the term is defined in the Prime Lease) of the Phase I Improvements, and (ii), since Tenant exercised the Expansion Option, until July 10, 2023 (subject to Force Majeure) for Completion of Construction (as the term is defined in the Prime Lease) of the Phase II Improvements.

 

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i.     County Rent.

 

i.    Subsection 1.08.1(b) of the Lease is hereby deleted in its entirety and replaced with the following:

 

“(b) Commencing on July 10, 2021 (the “Phase I Rent Commencement Date”), Landlord and Tenant agree that Tenant shall be obligated to pay 100 percent (100%) of its share of the Aviation Annual Land Rent (as defined in Section 4.01 (A) of the Prime Lease) based on the square footage of the Phase I Property as of such Phase I Rent Commencement Date for such Phase I Property, together with all applicable sales taxes thereon, in advance and without demand, set off or deduction, which monthly installment shall adjust in accordance with Section 4.01 (A) of the Prime Lease.”

 

ii.    Subsection 1.08.1(d) of the Lease is hereby deleted in its entirety and replaced with the following:

 

“(d) Commencing on the date that is the earlier of (i) the Date of Beneficial Occupancy (as defined in Section 1.20 of the Prime Lease) of the Phase II Improvements and (ii) July 10, 2023 (the “Phase II Rent Commencement Date”), Landlord and Tenant agree that Tenant shall be obligated to pay 100 percent (100%) of its share of the Aviation Annual Land Rent (as defined in Section 4.01 (A) of the Prime Lease) based on the square footage of the Phase II Property as of such Phase II Rent Commencement Date for such Phase II Property, together with all applicable sales taxes thereon, in advance and without demand, set off or deduction, which monthly installment shall adjust in accordance with Section

4.01 (A) of the Prime Lease.”

 

j.    Purchase Option.

 

i.    Section 1.09 (Purchase Option) of the Lease is hereby deleted in its entirety and replaced with the following:

 

“SECTION 1.09. PURCHASE OPTION. Tenant shall have a one- time option, to be exercised at any time prior to December 31, 2021, by Tenant or any Affiliate of Tenant to purchase Landlord’s leasehold interest in the entire Premises (i.e., collectively, the Phase I Premises and the Phase II Premises) (“Purchase Option”) by delivering a written notice to Landlord (the “Purchase Notice”). The Parties acknowledge and agree that the Purchase Option shall be for the entire Premises only, and that Tenant shall have no right to exercise the Purchase Option for only a portion of the Premises. The terms of the Purchase Option are set forth on Schedule 1.09 attached hereto and incorporated herein by reference.”

 

ii.    Schedule 1.09 attached to the Lease is hereby deleted in its entirety and replaced with Schedule 1.09 attached to this Amendment.

 

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k.    Default by Tenant. Subparagraphs (d) and (e) of Article 9 of the Lease (Default by Tenant) are hereby deleted in their entirety and replaced with the following:

 

“(d) If (i) Tenant fails to obtain all necessary permits and approvals and physically commence construction of the Phase I Improvements by July 31, 2021, (ii) Completion of Construction (as the term is defined in the Prime Lease) of the Phase I Improvements is not achieved by July 31, 2022, or (iii) Completion of Construction (as the term is defined in the Prime Lease) of the Phase II Improvements is not achieved by July 9, 2023 (each event subject to Force Majeure), and if such failure shall continue for a period of thirty (30) days after written notice thereof by Landlord to Tenant, or, if the performance cannot be reasonably had within the thirty (30) day period, Tenant shall not have promptly commenced performance within said thirty (30) day period and shall not diligently and continuously proceed to completion of performance, but in no event shall said period extend beyond one hundred eighty (180) days. Time shall be of the essences for all dates and periods provided in this provision.

 

(e) If Tenant shall fail to perform or comply with any of the conditions of this Lease other than the nonpayment of Rent or the conditions provided in subparagraph (d) above, and if the nonperformance shall continue for a period of thirty (30) days after written notice thereof by Landlord to Tenant, or, if the performance cannot be reasonably had within the thirty (30) day period, Tenant shall not have promptly commenced performance within said thirty (30) day period and shall not diligently and continuously proceed to completion of performance, but in no event shall said period extend beyond one hundred eighty (180) days, provided that the Prime Lease permits said cure period to be extended for the same length of time. Time shall be of the essences for all dates and periods provided in this provision.”

 

l.    Notices. The Parties acknowledge and agree that the reference to “Attn: Ilene K. Kobert, Esq.” and “E-Mail: koberti@gtlaw.com” in Article 14 of the Lease are hereby replaced with “Attn: James A. Carenza, Esq.” and “E-Mail: carenzaj@gtlaw.com”, respectively.

 

m.    Surrender of Premises and Ownership of Improvements at Lease Expiration. The first paragraph of Article 17 of the Lease (Surrender of Premises and Ownership of Improvements at Lease Expiration) is hereby deleted in its entirety and replaced with the following:

 

“At the expiration or earlier termination of the Lease, all Improvements erected on the Property shall become the sole property of Landlord without any payment provided to Tenant and without any further documentation being required. Any and all trade fixtures, signs, moveable trailers, and other personal property placed on the Premises by Tenant (excluding any items of personal property purchased by Tenant with funding from the Landlord, if any, which shall remain the property of Landlord) shall remain Tenant’s sole property, and Tenant shall have the right to remove the same prior to the expiration or earlier termination of the Lease.”

 

4

 

n.    Force Majeure. Section 27.01 of the Lease (Force Majeure) is hereby deleted in its entirety and replaced with the following:

 

“SECTION 27.01.         FORCE MAJEURE. Except as provided below, any prevention, delay or stoppage attributable to strikes, lockouts, labor disputes, acts of God, civil commotion, fire or other casualty, and other causes beyond the reasonable control of the party obligated to perform (collectively, the “Force Majeure”) will excuse the performance of that party for a period equal to the duration of the prevention, delay or stoppage, but in no event shall the excuse for such performance exceed ninety (90) days from the date that such Force Majeure event commenced unless the parties mutually agree to extend such period beyond ninety (90) days. If, therefore, this Lease specifies a time period for performance of an obligation of either party, a delay that a Force Majeure event causes will extend the period within which the party must complete its performance for up to the earlier of (i) the number of days between the date in which the Force Majeure event commences and the date in which the Force Majeure event ends, or (ii) the period that is ninety (90) days following the date that such Force Majeure event commenced (unless the parties mutually agree to extend such period beyond ninety (90) days).”

 

o.    Effective Date.Section 27.17 of the Lease (Effective Date) is hereby deleted in its entirety.

 

3.    First Amendment to Memorandum of Lease. In connection with this Amendment, the parties shall execute a first amendment to memorandum of lease in the form attached to this Amendment as Exhibit G”, which first amendment to memorandum of lease shall be recorded in the public records of Miami-Dade County, Florida by Tenant at its expense.

 

4.    Certification by Tenant. As additional consideration for this Amendment, Tenant hereby certifies to Landlord that: (a) the Lease is in full force and effect, unmodified except by this Amendment, and binding on Tenant; (b) to Tenant's current knowledge, there are no uncured defaults on the part of Landlord or Tenant under the Lease; and (c) to Tenant's current knowledge, there are no existing offsets or defenses which Tenant has against the enforcement of the Lease by Landlord.

 

5.    Certification by Landlord. As additional consideration for this Amendment, Landlord hereby certifies to Tenant that: (a) the Lease is in full force and effect, unmodified except by this Amendment, and binding on Landlord; (b) to Landlord's current knowledge, there are no uncured defaults on the part of Landlord or Tenant under the Lease; and (c) to Landlord's current knowledge, there are no existing offsets or defenses which Landlord has against the enforcement of the Lease by Tenant.

 

6.    Waiver. No failure or delay by a party to insist upon the strict performance of any term, condition or covenant of this Amendment, or to exercise any right, power or remedy hereunder shall constitute a waiver of the same or any other term of this Amendment or preclude such party from enforcing or exercising the same or any such other term, conditions, covenant, right, power or remedy at any later time.

 

7.    Force and Effect. As herein modified, the Lease shall remain in full force and effect in accordance with the terms and conditions thereof. This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. In the event of any inconsistency between the provisions of this Amendment and the provisions of the Lease, the provisions of this Amendment shall control.

 

5

 

8.    Governing Law and Severability. This Amendment shall be construed and governed by the laws of the State of Florida. If any provision of this Amendment or the application thereof to any person or circumstances shall be invalid or unenforceable to any extent, the remainder of this Amendment and the application of such provision to other persons or circumstances, other than those to which it is held invalid, shall not be affected and shall be enforced to the furthest extent permitted by law.

 

9.    Counterparts. This Amendment may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute the binding and enforceable agreement of the parties hereto. This Amendment may be executed and delivered by a party by facsimile or email transmission, which transmission copy shall be considered an original and shall be binding and enforceable against such party.

 

10.    Entire Agreement; No Amendment. This Amendment constitutes the entire agreement and understanding between the parties with respect to the subject of this Amendment and shall supersede all prior written and oral agreements concerning this subject matter. This Amendment may not be amended, modified or otherwise changed in any respect whatsoever except by a writing duly executed by authorized representatives of Landlord and Tenant. Each party acknowledges that it has read this Amendment, fully understands all of this Amendment’s terms and conditions, and executes this Amendment freely, voluntarily and with full knowledge of its significance. Each party to this Amendment has had the opportunity to receive the advice of counsel prior to the execution hereof.

 

11.    Authority. This Amendment shall be binding upon and inure to the benefit of the parties, their respective heirs, legal representatives, successors and assigns. Each party hereto warrants that the person signing below on such party’s behalf is authorized to do so and to bind such party to the terms of this Amendment.

 

[SIGNATURE PAGE FOLLOWS]

 

6

 

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

 

 

LANDLORD:

 

     
  AA ACQUISITIONS LLC, a Florida limited liability company  

 

 

 

 

 

 

 

 

 

By:

/s/ Eric Greenwald

 

 

Printed Name: Eric Greenwald

 

 

Printed Title: President

 

       
       
  TENANT:  
       
  SKY HARBOUR OPA LOCKA AIRPORT, LLC, a Delaware limited liability company  
       
       
  By: /s/ Tal Keinan  
  Printed Name: Tal Keinan  
  Printed Title: CEO  

 

7

 

JOINDER OF LEASEHOLD MORTGAGEE

 

 

                                                                , as the Lender (as such terms are defined in the Mortgage described below), as mortgagee under that certain Mortgage recorded on           in Official Records Book         ,Page          , of the Public Records of Miami- Dade County, Florida (as may be hereinafter modified, amended, consolidated, the “Mortgage”), hereby joins in the First Amendment to Sublease and consents to the terms, conditions and provisions of this First Amendment to Sublease and the recordation of the First Amendment to Memorandum of Sublease.

 

Executed as of the day and year of this First Amendment to Sublease.

 

 

     

 

  By:  

                                                                        

Name:  
  Title:  

 

8

 

EXHIBIT A-1

(Legal Description of the Phase I Property)

 

 

 

EXHIBIT A-2

(Legal Description of the Phase II Property)

 

 

 

EXHIBIT D

(Fourth Amendment to Prime Lease)

 

 

 

EXHIBIT G

(First Amendment to Memorandum of Lease)

 

 

This instrument prepared by

(and after recording return to):

 
   

Name:

Address:

James A. Carenza, Esq.

Greenberg Traurig, P.A.

333 S.E. 2nd Ave., Suite 4400

Miami, FL 33131

 

 

 

 

 

 

 

 

FIRST AMENDMENT TO MEMORANDUM OF LEASE

 

THIS FIRST AMENDMENT TO MEMORANDUM OF LEASE (this “Amendment”) is made as of this 14th day of May, 2021 (the “Execution Date”), by and between AA ACQUISITIONS, LLC a Florida limited liability company, with offices at 15000 NW 44th Avenue, Opa Locka, Florida 33054, (“Landlord”), and SKY HARBOUR OPA LOCKA AIRPORT, LLC, a Delaware limited liability company registered to do business in Florida, with offices at 767 5th Avenue, New York, New York 10153 (“Tenant”).

 

W I T N E S S E T H:

 

A.    Landlord and Tenant entered into that certain Sublease Agreement dated as of May 2, 2019 (as amended, the “Lease”), as memorialized of record by that certain Memorandum of Lease dated as of May 2, 2019 and recorded on January 28, 2020 in Official Records Book 31796, Page 1690 of the Public Records of Miami-Dade County, Florida (the “Memorandum”).

 

B.    Landlord and Tenant entered into that certain First Amendment to Sublease Agreement dated as of the Execution Date (the “First Amendment”), which amendment modifies certain terms of the Lease. Landlord and Tenant are recording this Amendment to amend certain provisions of the Memorandum to reflect the modifications to the Lease made pursuant to the First Amendment and to add reference to an additional provision contained in the Lease.

 

12

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant, intending to be legally bound hereby, hereby agree as follows:

 

1.    Recitals; Capitalized Terms. The recitals set forth above are incorporated herein and made a part hereof to the same extent as if set forth herein in full. Capitalized terms used but not defined in this Amendment shall have the meanings given to such terms in the Lease, as amended by the First Amendment.

 

2.    Term. The Lease provides for an initial term of forty (40) years commencing on July 10, 2019, and terminating on July 9, 2059, unless earlier terminated or extended pursuant to the two (2) additional consecutive renewal option(s) of five (5) years each.

 

3.    Construction Liens. The Lease contains substantially the following language: “All persons and entities contracting or otherwise dealing with Tenant relative to the Premises are hereby placed on notice of the provisions of this Section in accordance with the requirements set forth in Section 713.10, Florida Statutes. The Tenant shall not do or suffer anything to be done whereby the land and building of which the Premises are a part may be encumbered by any construction lien, and shall, whenever and as often as any construction lien is filed against the Property and Improvements purporting to be for labor or materials furnished or to be furnished to the Tenant, discharge the same of record within thirty (30) days after Tenant receives notice thereof. Notice is hereby given that the Landlord shall not be liable for any labor or materials furnished or to be furnished to the Tenant upon credit, and that no construction or other lien for any such labor or materials shall attach to or affect the reversionary or other estate or interest of the Landlord in and to the land and building of which the Premises herein demised are a part.”

 

4.    Conflicts; Ratification. The Memorandum as modified hereby is not intended to amend or modify the terms and conditions of the Lease, as amended by the First Amendment. If there is a conflict between the provisions of the Memorandum as modified hereby and the provisions of the Lease, as amended by the First Amendment, the provisions of the Lease, as amended by the First Amendment shall govern and control.

 

1. Execution in Counterparts. This Amendment may be executed in any number of counterparts, each of which shall be deemed to be an original, and all of such counterparts shall constitute one instrument.

 

[Signature Pages Follow]

 

13

 

IN WITNESS WHEREOF, the parties have caused this First Amendment to Memorandum of Sublease to be executed as of the day and year first above written.

 

 

 

LANDLORD:

AA ACQUISITIONS LLC, a Florida

limited liability company

 

 

  By:  
  Printed Name: Eric Greenwald
  Printed Title: President

 

 

 

STATE OF FLORIDA )  
  ) SS:
COUNTY OF MIAMI-DADE )  

 

The foregoing instrument was acknowledged before me by means of [ ] physical presence or [ ] online notarization, this day of February, 2021 by Eric Greenwald as President of AA Acquisition LLC, a Florida limited liability company, on behalf of the company. He is personally known to me or produced                           as identification and did not take an oath.

 

 

  Notary:  
[NOTARIAL SEAL] Print Name:
  NOTARY PUBLIC, STATE OF FLORIDA
  My commission expires    

 

14

 

  TENANT:
  SKY HARBOUR OPA LOCKA
  AIRPORT, LLC, a Delaware limited liability company

 

 

  By:  
  Printed Name: Tal Keinan
  Printed Title:  

 

 

 

STATE OF FLORIDA )  
  ) SS:
COUNTY OF MIAMI-DADE )  

 

The foregoing instrument was acknowledged before me by means of [ ] physical presence or [ ] online notarization, this day of February, 2021 by Tal Keinan as                              of Sky Harbour Opa Locka Airport, LLC, a Delaware limited liability company, on behalf of the company. He is personally known to me or produced                               as identification and did not take an oath.

 

 

  Notary:  
[NOTARIAL SEAL] Print Name:
  NOTARY PUBLIC, STATE OF FLORIDA
  My commission expires    

 

 

 

SCHEDULE 1.09

(Terms of Purchase Option)

 

The purchase price for the Property shall be Three Hundred Seventy-Five Thousand Dollars ($375,000) per acre. Upon delivery of the Purchase Notice, the parties shall use good faith efforts to enter into a contract for the sale and assignment of the Landlord’s leasehold interest in the Premises on a form of contract of sale with commercially reasonable and customary terms and conditions, which shall also set forth the closing date for the purchase, which shall be no more than forty-five (45) days after execution of the contract of sale. The contract of sale shall also provide, amongst other things, that (i) Tenant shall not have any right to terminate the contract of sale due to any due diligence or inspections performed by Tenant, or on Tenant’s behalf, with respect to the Premises, (ii) Tenant shall not have any right to terminate the contract of sale due to any title or survey matters affecting the Premises provided that such title or survey matters were not created by Landlord after the Effective Date and Landlord shall have no obligations to cure any liens or encumbrances affecting the Premises, other than any liens or encumbrances encumbering the Premises that were specifically created by Landlord after the Effective Date, (iii) Landlord’s leasehold interest in the Premises shall be assigned to Tenant with the Premises in its “As-Is, Where-Is” condition and without any obligations of Landlord to improve the Premises or otherwise provide Tenant with any improvement allowances, (iv) Landlord’s obligation to assign Landlord’s leasehold interest in the Premises shall be contingent upon Prime Landlord providing its consent to the sale and assignment of the Premises to Tenant, (v) Tenant shall be obligated to fully pay for any and all assignment fees or similar fees required to be paid for under the Prime Lease with respect to the sale and assignment, and (vi) Landlord shall not be obligated to pay for any commissions, fees or other compensation demanded by any brokers claiming to represent Tenant in connection with the sale and assignment. Landlord shall provide a draft contract of sale to Tenant within fifteen (15) days after delivery of the Purchase Notice. Time is of the essence with respect to the terms and conditions of this Section 1.09 provided that with respect to the terms and conditions applicable to Landlord, Tenant shall have used good faith efforts to enter into a contract of sale and, with respect to the terms and conditions applicable to Tenant, Landlord shall have used good faith efforts to enter into a contract of sale.

 

16

Exhibit 10.19

 

 

 

 

 

AMENDED AND RESTATED STANDARD FORM AIRPORT CORPORATE HANGAR LAND LEASE BETWEEN THE

 

CITY OF SUGAR LAND AND

 

Sky Harbour Sugar Land Airport, LLC

 

 

 

 

 

 

 

 

EFFECTIVE February 6, 2019

 

AMENDED AND RESTATED October 15, 2019

 

 

 

 

 

 

 
 

 

TABLE OF CONTENTS

 

    Page Number
     

SECTION 1.

DEFINITIONS AND EXHIBITS 

3
     

SECTION 2.

LEASED PREMISES

5
     

SECTION 3.

TERM

5
     

SECTION 4.

RENTALS AND PAYMENTS

6
     

SECTION 5.

USE OF PREMISES AND AIRPORT

6
     

SECTION 6.

IMPROVEMENTS TO PREMISES

7
     

SECTION 7.

MAINTENANCE

8
     

SECTION 8.

INSURANCE

9
     

SECTION 9.

TAXES, ASSESSMENTS AND FEES

9
     

SECTION 10.

UTILITIES

9
     

SECTION 11.

DAMAGE TO OR DESTRUCTION OF IMPROVEMENTS

9
     

SECTION 12.

ASSIGNING, SUBLETTING AND ENCUMBERING 

10
     

SECTION 13.

DEFAULT

12
     

SECTION 14.

TERMINATION OF LEASE BY THE CITY

12
     

SECTION 14A.

lease termination for failure to use PREMISES FOR SPECIFIC PURPOSE

13
     

SECTION 15.

TERMINATION BY LESSEE

13
     

SECTION 16.

DISPOSITION OF IMPROVEMENTS

13
     

SECTION 17.

EMINENT DOMAIN

13
     

SECTION 18.

RESERVATIONS TO THE CITY  

14
     

SECTION 19.

FEDERAL SUBORDINATION

14
     

SECTION 20.

HAZARDOUS MATERIALS

17
     

SECTION 21.

MISCELLANEOUS PROVISIONS

17

 

SKY HARBOUR SUGAR LAND AIRPORT, LLC CORPORATE HANGAR LEASE/Page 2

 

AMENDED AND RESTATED STANDARD FORM AIRPORT CORPORATE HANGAR LAND LEASE BETWEEN THE CITY OF SUGAR LAND AND SKY HARBOUR SUGAR LAND AIRPORT, LLC

 

 

The City of Sugar Land, Texas, as owner of the Sugar Land Regional Airport and Sky Harbour Sugar Land Airport, LLC, as Lessee of the Premises described in the Lease, agree as follows:

 

RECITALS

 

The City of Sugar Land agreed to lease approximately 4.085 acres (177,920 square feet) of land adjacent to TAXILANE C A/K/A TAXILANE CHARLIE F/K/A TAXILANE J A/K/A TAXILANE JULIETTE at Sugar Land Regional Airport to Sky Harbour, LLC for the purpose of constructing a hangar and associated improvements on the premises pursuant to that certain Standard Form Airport Corporate Hangar Land Lease effective February 6, 2019 and recorded April 22, 2019 in County Clerk's File No. 2019040080, of the Official Public records, of Fort Bend County, Texas ("Original Lease").

 

Sky Harbour, LLC assigned its interest as lessee in the Original Lease to Sky Harbour Sugar Land Airport, LLC, the Lessee, pursuant to that Assignment and Assumption Agreement dated August 1, 2019 and recorded August 9, 2019 in County Clerk's File No. 2019089208, of the Official Public records, of Fort Bend County, Texas.

 

The City of Sugar Land and Sky Harbour Sugar Land Airport, LLC replaced Exhibit A of the Original Lease containing the description of the premises pursuant to that Correction Instrument dated August 2, 2019 and recorded August 9, 2019 in County Clerk's File No. 2019089209, of the Official Public records, of Fort Bend County, Texas ("Correction Instrument").

 

In addition to the approximately 4.085 acres (177,920 square feet) of land adjacent to TAXILANE C A/K/A TAXILANE CHARLIE F/K/A TAXILANE J A/K/A TAXILANE JULIETTE at Sugar Land Regional Airport as described in the Correction Instrument, the City of Sugar Land agrees to lease approximately 4.041 acres (176,040 square feet) to Sky Harbour Sugar Land Airport, LLC, the Lessee for the purpose of constructing a hangar and associated improvements on the premises. Such premises of approximately 8.126 acres (353,960 square feet) in the aggregate are delineated in Exhibit A attached hereto. After completion of the improvements, Lessee will retain ownership of the improvements during the initial term of this Lease (as hereinafter defined).

 

The parties desire to amend and restate the Original Lease in its entirety pursuant to the terms of this Amended and Restated Standard Form Airport Corporate Hangar Land Lease ("Lease").

 

 

SECTION 1. DEFINITIONS AND EXHIBITS

 

A. Definitions. The following words in this Lease have the following meanings unless the context clearly indicates otherwise:

 

Additional Improvements means the improvements to be constructed on sites 4 and 7, as shown on Exhibit A.

 

Aeronautical Activity means any activity that involves, makes possible, or is required for the operation of aircraft or that contributes to or is required for the safety of such operations. Activities within this definition, commonly conducted on airports, include, but are not limited to, the following: general and corporate aviation, air taxi and charter operations, scheduled and nonscheduled air carrier operations, pilot training, aircraft rental and sightseeing, aerial photography, crop dusting, aerial advertising and surveying, aircraft sales and services, aircraft storage, sale of aviation petroleum products, repair and maintenance of aircraft, sale of aircraft parts, parachute or ultralight activities, and any other activities that, because of their direct relationship to the operation of aircraft, can appropriately be regarded as aeronautical activities. Activities, such as model aircraft and model rocket operations, are not aeronautical activities.

 

SKY HARBOUR SUGAR LAND AIRPORT, LLC CORPORATE HANGAR LEASE/Page 3

 

Airport means the Sugar Land Regional Airport.

 

Airside means the area of the airport that requires access through a controlled point, specifically to the aircraft movement areas.

 

Aviation Director means the City employee designated by the City Manager to oversee the operations of the Airport.

 

City means the City of Sugar Land, Texas, the sole fixed base operator located at the Airport.

 

City Council or Council means the City Council of the City.

 

City Manager means the City's City Manager.

 

Encumbrance means:

(1) any pledge, mortgage, or contract lien, of or on all or part of Lessee's leasehold interest in the Premises; or

 

(2) any transfer of more than 51% of Lessee's total ownership interest in Lessee's business.

 

F.A.A. means the United States Federal Aviation Administration or its successor agency.

 

Improvement means the Lessee's construction, erection, placement, removal, expansion, or modification of any building, structure, or fixture on the Premises, including any parking lot, driveway, walkway, landscaping feature, water well, water supply system, septic system, utility line, or outdoor sign.

 

Initial Improvements means the improvements to be constructed on sites 5 and 6, as shown on Exhibit A.

 

Landside means the general public or private tenant common use areas of the airport such as public roadways, parking lots and buildings which are not contained in the airside area.

 

Lease means this lease agreement.

 

Lessee means Sky Harbour Sugar Land Airport, LLC.

 

Mortgagee means the beneficial holder of a mortgage on any Improvement.

 

SKY HARBOUR SUGAR LAND AIRPORT, LLC CORPORATE HANGAR LEASE/Page 4

 

Premises means the 8.126 acres (353,960 square feet) of real property subject to this Lease delineated in Exhibit A.

 

Sublease means a written agreement, approved by the Aviation Director, stating the terms and conditions under which a third party leases space from Lessee for any purpose, including providing aeronautical services at the Airport.

 

B.   Exhibits. This Lease includes the following exhibits, attached to and incorporated into this Lease by reference. If the City amends Exhibit B, C, D, E, F, or G during the term of this Lease, the amended exhibit will be attached to this Lease showing the modification of this Lease. The amendment to the Exhibit is effective when the City gives Lessee written notice of the amendment.

 

Exhibit A is a lease layout of the Premises, dated July 2019 and attached hereto.                   

 

Exhibit B is the Airport Rules approved by and amended from time-to-time by the City's City Council (Airport Rules).

 

Exhibit C is the Sugar Land Regional Airport Minimum Standards approved by and amended from time-to-time by the City's City Council (Minimum Standards).

 

Exhibit D shows the adjusted monthly ground lease rental payments as they are established for each subsequent five-year term, or portion thereof, of this Lease.

 

Exhibit E is the City's insurance requirements applicable to Lessee under this Lease (PU-111F-6 Insurance for Non-Commercial Operators).

 

Exhibit F is the Sugar Land Regional Airport Construction Safety Rules approved by and amended from time-to-time by the Aviation Director.

 

Exhibit G shows the easements and encumbrances subject to the Premises.

 

Exhibit H is the letter from Sky Harbour dated October ____, 2019.

 

SECTION 2. LEASED PREMISES

 

The City leases to Lessee and Lessee leases from the City the Premises described in Exhibit A.

 

SECTION 3. EFFECTIVE DATE, TERM, AND TERMINATION OF EXISTING LEASE

 

A. The effective date of this Lease is February 6, 2019 ("Effective Date").

 

B. Rent commencement date is the earlier of i) 8 months after the Effective Date or ii) upon receipt of certificate of occupancy for the Project ("Rent Commencement Date").

 

C. The term of this Lease is for 30 years from the Effective Date, unless earlier terminated under the provisions of this Lease.

 

SKY HARBOUR SUGAR LAND AIRPORT, LLC CORPORATE HANGAR LEASE/Page 5

 

D. If Lessee is unable to secure a financing commitment acceptable to Lessee for construction of the Improvements within 90 days following the Effective Date of this Lease, Lessee will have the right to terminate this Lease by written notice to the City within 15 days from the end of the 90-day period.

 

E. If Lessee is unable to secure a financing commitment for construction of the Improvements within 120 days following the Effective Date of this Lease, the City will have the right to terminate this Lease by written notice to Lessee within 15 days from the end of the 120 day period.

 

SECTION 4. RENTALS AND PAYMENTS

 

A. Beginning on the Rent Commencement Date, Lessee will pay to the City $14,749.00 each month in rent for the Lease. Rent is based on a land lease rate of $0.50 (fifty cents) per square foot for 353,960 square feet of leased Premises.

 

B. Beginning on the fifth anniversary of the Effective Date of this Lease and at the beginning of each subsequent five-year anniversary date, the amount of the monthly rent will increase by 10 percent. The adjusted monthly rent established for each subsequent five-year period, or portion thereof, of this Lease will be reduced to writing and attached to this Lease as Exhibit D.

 

C. Lessee will pay the City each monthly rent payment by the first City business day of each month without City notice or billing at the City's Finance Department, P.O. Box 5029, Sugar Land, Texas 77487-5029, or to the department and address that the City specifies in writing from time-to-time.

 

D. Any monthly rent payment not paid by the 15th day of the month due is delinquent and will include an additional monetary amount, as a penalty, equal to five percent of the rent due for that month. All rent payments more than 30 days past due accrue simple interest of eighteen percent annually on the overdue amount, or the maximum amount allowed by law, whichever is less.

 

SECTION 5. USE OF PREMISES AND AIRPORT

 

A. The use of the Premises by the Lessee shall be restricted to aeronautical activities that comply with the Minimum Requirements for Corporate Hangar Development. The Leased Premises may be used for no other purposes without the advance written consent of the Lessor. The Lessee shall use the Leased Premises in good faith continuously for this purpose throughout the term of this Lease. Lessee will operate and manage the Premises in compliance with the Airport Rules. If there is a conflict between this Lease and the Minimum Requirements and Standards or the Lease and the Airport Rules, this Lease governs. Lessee must also make commercially reasonable efforts to comply with any future amendments to the Minimum Requirements and Standards and the Airport Rules that are not in conflict with this Lease and for which the City provides Lessee with prior written notice. Lessee will comply in all material respects with all Federal and State laws and regulations and City ordinances that apply to the Lessee's use of the Premises. Lessee must submit a letter from a registered engineer certifying that their Improvements will comply with the Airport's Storm Water Pollution Prevention Plan and the Airport's Master Drainage Plan.

 

B. The Lessee may only use those areas of the Premises improved with concrete paving for Lessee's activities, unless the Aviation Director gives his prior written consent, such consent not to be unreasonably withheld, conditioned or delayed. The Lessee must erect a fence on the Premises that separates the Landside of the Improvements from the Airside of the Improvements.

 

SKY HARBOUR SUGAR LAND AIRPORT, LLC CORPORATE HANGAR LEASE/Page 6

 

C. Lessee is granted the non-exclusive use of all portions of the Airport that are open for use by the public, including taxiways, runways, aprons, navigational aids and facilities for the purpose of landings, takeoffs and taxiing of aircraft, on the same terms and conditions applicable to the public. The aircraft parking apron on the Premises may not be used for automobile parking.

 

D. Lessee is solely responsible for providing security to protect the Premises and property located thereon against the negligence or criminal acts of third parties. Lessee will not make a claim or bring any action against the City for any loss, damage, or injury to persons or property arising from any negligent or criminal act committed on the Premises by a third party. Lessee will design and construct at Lessee's expense, all gates, fences or barriers on the Premises that Lessee determines are required to prevent unauthorized access to the Premises. Lessee must design, construct and maintain fences, barriers or gates on the Premises so as to preclude casual or inadvertent entry by persons or vehicles onto an aircraft-parking apron, or taxiway, according to plans approved in advance by the Aviation Director. The City may at its cost construct and maintain any fences, gates, walls or barriers on the Premises as may be required for compliance with FAA and Homeland Security regulations in a manner designed, in the Aviation Director's judgment, to prevent unauthorized access to the Airport operating area, taxiways and runways.

 

E. Lessee is solely responsible for providing the labor and equipment necessary to reposition Lessee aircraft in the hangar, on the apron or on the airfield and to start aircraft. Lessee will provide their own flight amenities (ice, coffee, catering, newspapers, etc.)

 

F. City will provide Lessee or Lessee's sub-tenant(s) with aircraft fueling and lavatory cart services upon request and in accordance with the fees set forth by City Ordinance.

 

G. Per FAA Grant Assurances 22 and 23, the City has the proprietary exclusive right to provide fuel on the airfield, and the City controls and administers the fuel pricing and fuel discount program. Additionally, the City has the sole and exclusive right to construct and operate fuel storage facilities at the Airport.

 

SECTION 6. IMPROVEMENTS TO PREMISES

 

A. Prior to making or constructing any Improvements on the Premises, Lessee must submit general drawings and information to the Aviation Director sufficient to show the dimensions, elevations, and layout of Improvements and the construction materials to be used. The Lessee may not receive City permits for the construction of any Improvements unless and until the Lessee's general drawings and information are approved by the Aviation Director in writing, such approval not to be unreasonably withheld, conditioned or delayed. If the Aviation Director refuses to approve Lessee's general drawings and information for the Improvements within six months following the Effective Date of this Lease or within 30 days of the date the general drawings and information for the Improvements are submitted to the Aviation Director for approval, the Lessee may terminate this Lease by giving written notice to the City.

 

B. Lessee will comply in all material respects with all of the City's ordinances applicable to the construction of Improvements, including the requirement to apply for permits, pay permit fees, receive permits, and construct the Improvements in compliance with the City's building codes and ordinances, and Minimum Standards (including Exterior Building and Site Standards (Appendix - Section 3), the Interior Building Standards for Corporate and Business Hangars (Appendix - Section 4) and Exterior Signage and Graphic Standards (Appendix - Section 5)). Any required plans for Improvements submitted by Lessee to the City for the purpose of receiving construction permits must substantially conform to the general drawings and information for Improvements as approved by the Aviation Director.

 

SKY HARBOUR SUGAR LAND AIRPORT, LLC CORPORATE HANGAR LEASE/Page 7

 

C. Lessee must begin construction of the Initial Improvements the later of i) 180 days of the Effective Date of this Lease or ii) 60 days after receiving all permitting documents and must complete construction of the Initial Improvements within 360 days from the start of the construction date. Such completion date may be extended upon proof of a Force Majeure event. Lessee will use commercially reasonable efforts to construct the Initial Improvements in a manner as not to materially interfere with the normal operation and use of the Airport by others. The Initial Improvements will, upon completion, cost not less than $2,000,000. If requested by the Aviation Director, Lessee will file with the Aviation Director a complete set of as-built drawings and documents showing the actual construction costs of the Initial Improvements within 30 days of completion of any Initial Improvements. If for any reason, Lessee fails to begin construction of the Initial Improvements within one year of the Effective Date of this Lease, this Lease automatically terminates on the day following the first anniversary date of this Lease.

 

D. Lessee must begin construction of the Additional Improvements the later of i) 180 days of the Amended and Restated Date of this Lease or ii) 60 days after receiving all permitting documents and must complete construction of the Additional Improvements within 360 days from the start of the construction date. Such completion date may be extended upon proof of a Force Majeure event. Lessee will use commercially reasonable efforts to construct the Additional Improvements in a manner as not to materially interfere with the normal operation and use of the Airport by others. The Additional Improvements will, upon completion, cost not less than $2,000,000. If requested by the Aviation Director, Lessee will file with the Aviation Director a complete set of as-built drawings and documents showing the actual construction costs of the Additional Improvements within 30 days of completion of any Additional Improvements. If for any reason, Lessee fails to begin construction of the Additional Improvements within one year of the Amended and Restated Date of this Lease, this Lease automatically terminates as to sites 4 and 7 on the day following the first anniversary of the Restated and Amended date of this Lease.

 

E. Connection to Taxiways. Lessee will install and maintain any connections between the City's taxiway pavement and the Premises as needed by Lessee for the enjoyment or use of the Premises. Lessee must construct the taxiway connections in accordance with the requirements of this Lease applicable to the approval of Improvements. Lessee may use taxiway connections only for aircraft maneuvering and not aircraft parking unless otherwise approved by the Aviation Director in writing.

 

SECTION 7. MAINTENANCE

 

A. Lessee will, to the Aviation Director's reasonable satisfaction, maintain the Premises and all Improvements on the Premises in good condition and repair and in a safe, clean and sanitary condition. Lessee will provide covered containers on the Premises for trash, garbage and waste. Lessee will comply in all material respects with any reasonable written directive issued by the Aviation Director regarding the type, location, and screening of trash containers maintained by Lessee outside any building.

 

B. If Lessee fails to make repairs to any Improvement, correct any unsafe or unsanitary condition, or remove any litter or waste as required by this Section, the City will give Lessee written notice of the defect. If Lessee fails to correct the condition within 30 days following the date of the City's written notice, the City may enter upon the Premises and correct the condition at Lessee's expense. Lessee will pay the City the City's cost incurred in correcting the condition and an administrative fee of 20 percent of that cost within ten days of receipt of an itemized bill from the City.

 

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C. The City may, at its sole option and cost, do any filling, grading, slope protection, retaining wall construction or replace or repair any City-owned or City-constructed facilities within or without the Premises to protect the Premises or any part of the Airport. The City will give Lessee reasonable advance written notice of the work, will consult with the Lessee on the time and manner of performing the work, and will conduct the work in a manner that will not substantially interfere with Lessee's use of the Premises.

 

D. This section applies to any condition for which the cost to repair or correct does not, according to the City's estimate, exceed $99,999.99.

 

SECTION 8. INSURANCE

 

Lessee will obtain and maintain during this Lease, at Lessee's expense, insurance for Non-Commercial Operators as set forth in PU-111F-6, attached as Exhibit E to this Lease.

 

SECTION 9. TAXES, ASSESSMENTS AND FEES

 

Lessee will timely pay all taxes, assessments and fees assessed or levied upon Lessee, Lessee's property or the Premises by any government entity or political subdivision.

 

SECTION 10. UTILITIES

 

A. The City's water and wastewater facilities sufficient in capacity to serve the Premises are available within approximately 50 feet of the Premises. The City grants Lessee an easement over Airport property and outside of the boundary of the Leased Premises as may be necessary for Lessee to connect to and maintain its water and wastewater service lines. Lessee must place all service lines underground. Lessee will comply in all material respects with the City's ordinances regulating connections to and use of the City's utility system, including the payment of connection fees and usage charges.

 

B. Electricity and telephone facilities and services are available to serve the Premises. Lessee must separately contract with the providers of those utility services and pay all costs charged by the providers for those services.

 

C. The City may, without charge by Lessee, connect to and make use of water, wastewater, electric, gas, or telecommunication lines, equipment, or facilities located upon the Premises if the connections and use do not interfere with the Lessee's use of the Premises and do not result in Lessee incurring any additional charges or costs.

 

SECTION 11. DAMAGE TO OR DESTRUCTION OF IMPROVEMENTS

 

A. Damage or destruction of the Improvements on the Premises does not automatically terminate this Lease. Subject to Mortgagee requirements, within 90 days following the date of the damage or destruction, Lessee will commence and diligently pursue to complete the repair, replacement, or reconstruction of Improvements necessary to permit full use and occupancy of the Premises for the purposes permitted by this Lease.

 

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B. If Lessee wishes to repair or reconstruct the damaged or destroyed Improvements so that the repaired or rebuilt Improvements would not comply with the plans previously approved by the City for the Improvements, Lessee will submit the revised plans to the City and comply in all material respects with the requirements of this Lease that apply to the approval of plans for new Improvements. If Lessee submits revised plans to the City under this paragraph, the City may extend the time to begin construction as provided for in paragraph A of this Section.

 

C. This section applies to damage to or destruction of an Improvement on the Premises for which the cost to repair, replace, or reconstruct the Improvement, according to the City's estimate, exceeds $99,999.99.

 

SECTION 12. ASSIGNING, SUBLETTING AND ENCUMBERING

 

A. Assignments, Mergers or Transfers. The Lessee may not assign or transfer this Lease to any other party, or merge with any other company, without the prior written consent of the City's city manager, which consent will not be unreasonably withheld, conditioned, or delayed.

 

B. Subleases. Lessee, may, with the Aviation Director's written approval, enter into a sublease for a portion of the Premises activities allowed under this Lease. The sublease is subject to termination on notice by Lessee. The failure of Lessee to prohibit an unauthorized activity on the Premises by a subleasee constitutes a break of this Lease and is grounds for termination. Any sublease for all or part of the Premises must be approved by the City's City Manager or designee and must incorporate the provisions of this Lease.

 

C. General Encumbrances. Any proposed Encumbrance by Lessee must be first approved in writing by the City's City Manager or designee, such approval not to be unreasonably withheld, conditioned or delayed. Any Encumbrance not approved by the City is void. Any document used to encumber the Premises must incorporate the provisions of this Lease. The City may withhold consent to an Encumbrance for any of the following reasons:

 

 

1.

Lessee is in default of this Lease beyond applicable notice and cure periods.

 

 

2.

The entity requiring the prospective Encumbrance has not agreed in writing to be bound by this Lease.

 

 

3.

The Encumbrance documents have not been provided to the City.

 

 

4.

Improvements previously undertaken by Lessee have not been completed to the City's reasonable satisfaction.

 

 

5.

Lessee has not paid the processing fee of $500 for approval of an Encumbrance.

 

D. Encumbrance for Financing Improvements. An Encumbrance to finance construction of Improvements is subject to the following additional requirements and covenants:

 

 

(1)

Any deed of trust must require that any notice of default and any notice of sale be given in writing to the City concurrently with the filing of a notice of default and sale. Lessee must furnish to the City a complete copy of the deed of trust and note secured thereby prior to recording.

 

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(2)

The City may not terminate this Lease because of Lessee's breach if, within 60 days after the City gives written notice of the breach to Mortgagee, as provided from time to time by the Lessee, the Mortgagee:

 

 

(a)

Cures the breach if it can be cured by the payment or expenditure of money required to be paid under the terms of this Lease; and

 

 

(b)

Agrees in writing to keep and perform all of the covenants and conditions of this Lease requiring the payment of expenditure of money by Lessee until the time as the leasehold is sold upon foreclosure pursuant to the deed of trust or released or reconveyed under the deed of trust.

 

 

(3)

If the default is not curable, the Mortgagee will cause the trustee to exercise the power of sale under the deed of trust as provided by law. Before exercising the power of sale, the trustee will first offer to the City the right to purchase all right, title, and interest in the leasehold encumbered under the deed of trust directly from trustee and without public sale for the then outstanding balance due on the note or notes secured by the deed of trust, plus trustee's fees and costs of sale. The trustee's offer to the City must be made no later than ten (10) days following the filing of Notice of Default, and the City may exercise the option to purchase within three (3) months following the filing.

 

 

(4)

If the City does not purchase the Mortgagee's interest, the Mortgagee may upon prior approval of the City's City Manager or his designee, which approval shall not be unreasonably withheld, cause Lessee's interest in this Lease:

 

 

(a)

To be transferred at foreclosure sale pursuant to a deed of trust, by judicial foreclosure, or by an assignment in lieu of foreclosure; or

 

 

(b)

To be transferred or assigned to an established bank, savings and loan association, or insurance company.

 

 

(5)

The Mortgagee must give the City written notice of any such transfer, setting forth the name and address of the transferee, the effective date of such transfer and the express agreement of the transferee assuming and agreeing to perform all of the obligations under this Lease, and submits to the City a copy of the document by which such transfer was made.

 

 

(6)

The City agrees that, in the event of a termination of this Lease, the City will upon request of any Leasehold Mortgagee take a new lease to City Council for review and approval to enter into a new lease of the Premises with the Leasehold Mortgagee or its designee for a term equal to what would have been the remainder of the Term if this Lease Agreement had not be terminated, which new lease will be effective as of the date of such termination and will be upon the same terms, provisions, covenants and agreements as are contained in this Lease.

 

 

(7)

The City may terminate this Lease if the Mortgagee fails or refuses to comply with any condition of this Section.

 

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E. Processing Fee. The Lessee must pay a $500 non-refundable fee to the City for processing each of Lessee's requests for the City's consent to an Assignment or Encumbrance.

 

SECTION 13. DEFAULT BY LESSEE

 

A. If Lessee defaults in the performance of this Lease in any material respect, the City will give written notice to Lessee and any Mortgagee of the default and what must be done to correct the default. The City may terminate this Lease by written notice to Lessee if Lessee:

 

 

(1)

Fails to correct the default within 30 days of receiving the City's notice of default, or

 

 

(2)

Where because of the nature of the default Lessee cannot reasonably cure the default within 30 days, Lessee fails to act in good faith and with due diligence to cure the default as soon as practical after the 30-day period.

 

B. The Lessee's right to cure provided for in this section applies only to Lessee's first and second failure in any 12 consecutive month period to pay monthly rental payments when due.

 

C. Upon termination, all Lessee's rights (and any party claiming rights under or through Lessee) expire and are of no further force and effect, and Lessee will execute, acknowledge and deliver to the City, within 30 days after receipt of written demand from the City, a sufficient document quitclaiming all Lessees’ title and interest in the Premises to the City.

 

D. If the City re-enters the Premises after termination of this Lease pursuant to this Section 13, and the manner or method employed by the City in re-entering or taking possession of the Premises gives Lessee a cause of action for damages or in forcible entry and detainer, the total amount of damages to which Lessee is entitled in any such action is $1.00.

 

SECTION 14. LEASE TERMINATION FOR EXPANSION AND COMPENSATION BY CITY

 

A. If the City needs the Premises during the term of this Lease for future expansion of the Airport in accordance with an approved Airport Layout Plan, the City may terminate this Lease by giving Lessee 180 days prior written notice. Upon termination, all Improvements become the City's sole property.

 

B. Within 60 days after the date the City gives Lessee notice of the termination, the City and Lessee will each submit a list of three (3) appraisers to the other party who have a MAI (Member Appraisal Institute) designation. Within 30 days after receiving the list, each party will pick one (1) appraiser from the other party's list of appraisers and contract with that appraiser to complete a written appraisal of the market value of the Improvements as of the date of termination of the Lease based upon a scope agreed upon by the parties. The contracts will specify that the appraisals be completed within 30 days following the dates of the contracts. When each appraisal is completed, each party will provide to the other a copy of the appraisal provided by their respective appraisers. In the event that the lower of the two market values is less than 80% of the higher of the two market values, the parties agree to undertake a new appraisal process. Provided such event does not occur, the market value of the Improvements will be the amount determined by adding together the market value of the Improvements as established by the two (2) appraisals and dividing that amount by two (2). The City will pay Lessee the market value of the Improvements within 30 days following the date of termination of the Lease.

 

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C. Upon termination, all Lessee's rights (and any party claiming rights under or through Lessee) expire and are of no further force and effect, and Lessee will execute, acknowledge and deliver to the City, within 30 days after receipt of written demand from the City, a sufficient document quitclaiming all Lessees’ title and interest in the Premises to the City.

 

SECTION 14A. LEASE TERMINATION FOR FAILURE TO USE PREMISES FOR SPECIFIED PURPOSE

 

If, at any time after completion of construction of the Improvements, the Lessee ceases, for 180 consecutive days or more, to operate an aeronautical activity on the Premises and provided that such cessation is not related to Force Majeure, the City may terminate this Lease by giving Lessee 30-days prior written notice. Upon termination, all Improvements become the City's sole property, and Lessee is entitled to payment of market value of the Improvements as determined using the procedures under Section 14.

 

SECTION 15. LESSEE'S TERMINATION

 

If during this Lease, the City, in the opinion of the F.A.A., fails to maintain the landing areas in a safe condition for aircraft operations, or any ordinance or law becomes effective, the terms of which so restrict the uses to which the Premises may be put that Lessee is unable to continue the use and occupy the Premises substantially in the manner allowed by this Lease, Lessee will give written notice to the City of the condition. Lessee may terminate this Lease by written notice to the City if the City fails or is unable to correct the condition within 90 days of receiving the Lessee's notice. Upon termination, Lessee is entitled to payment for the Improvements made, in accordance with Section 14.

 

SECTION 16. DISPOSITION OF IMPROVEMENTS

 

A. All Improvements installed by Lessee are and remain the property of Lessee during the term of this Lease. Upon termination or expiration of this Lease, the Improvements become the City's property, except as otherwise provided in this Section.

 

B. Upon termination or expiration of this Lease, the City may require Lessee to remove the Improvements from the Premises at Lessee's expense by giving Lessee written notice that the Improvements should be removed. Lessee must commence the removal within 90 days after receipt of the City's notice and must diligently pursue the removal to completion, which removal must not exceed 120 days after the date of the City's notice. If Lessee does not remove all Improvements as required by the City, the City may remove, sell, or destroy the remaining Improvements at Lessee's expense, and Lessee will pay to the City the cost of any such removal, sale, or destruction and an administrative fee of 20% of the costs of removal within 30 days after receiving a billing from the City.

 

SECTION 17. EMINENT DOMAIN

 

A. If all of the Premises is condemned by a public entity other than the City, in the lawful exercise of the power of eminent domain, this Lease terminates upon the date possession is taken by the public entity. If only a part is condemned and the taking of that part does not substantially impair the capacity of the remainder to be used for the purposes allowed by this Lease in the reasonable determination of Lessee, Lessee continues to be bound by the terms, covenants and conditions of this Lease, except the monthly rental will be reduced in proportion to the relationship that the compensation paid by the public entity for the portion of the Premises condemned bears to the value of the whole of the Premises as of the date possession of the part is taken by the public entity.

 

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B. If only a part is condemned and the taking of the part substantially impairs the capacity of the remainder to be used for the purposes allowed by this Lease in the reasonable determination of the Aviation Director, Lessee may give notice to the City within 30 days of the date possession of the part is taken by the public entity that Lessee will:

 

 

1.

Terminate this Lease and have no further obligations under this Lease which have not accrued on the date the public entity takes possession; or

 

 

2.

Continue to occupy the remainder of the Premises and remain bound by this Lease. If Lessee elects to continue to occupy the remainder, the monthly rental is reduced in proportion to the relationship that the compensation paid by the public entity for the portion of the Premises condemned bears to the value of the whole of the Premises as of the date possession of the part is taken by the public entity.

 

C. Lessee and Lessee’s Mortgagee, if any, are entitled to share in any condemnation award for the value of its leasehold interest, if any, as determined by law in the condemnation proceeding.

 

SECTION 18. RESERVATIONS TO THE CITY

 

A. Lessee accepts the Premises subject to existing easements and encumbrances on the Premises. The City may install, lay, construct, maintain, repair and operate water, oil, gas, sanitary sewer, storm water, telephone, communication lines, electrical lines, conduits, and equipment and appurtenances in, over, across and along the Premises. The City may grant franchises, easements, rights of way and permits in, over, upon, through, across and along any and all portions of the Premises that is not occupied by a building. Any right reserved by the City in this Section will not be exercised as to interfere unreasonably with Lessee's operations or impair the security of the Mortgagee. Rights granted to third parties will require that the surface of the land be restored as nearly as practicable to its original condition upon the completion of any construction. The City further agrees that should the exercise of these rights temporarily interfere with the use of any or all of the Premises by Lessee, the rental will be reduced in proportion to the interference with Lessee's use of the Premises.

 

B. The Aviation Director or his designee may enter the Premises during normal business hours and conduct inspections of the premises for compliance with the provisions of this Lease.

 

SECTION 19. FEDERAL AVIATION ADMINISTRATION REQUIREMENTS

 

If there is any conflict between the provisions in this Section and the other provisions in this Lease, the provisions in this Section take precedence.

 

A. Lessee for itself, its heirs, personal representatives, successors in interest, and assigns agrees as a covenant running with the land that in the event facilities are constructed, maintained, or otherwise operated on the Premises for a purpose for which a United States Department of Transportation (DOT) program or activity is extended or for another purpose involving the provision of similar services or benefits, Lessee will maintain and operate the facilities and services in compliance with all other requirements imposed pursuant to Title 49, Code of Federal Regulations, DOT, Subtitle A, Office of the Secretary, Part 21, Nondiscrimination in Federally-Assisted Programs of the Department of Transportation-Effectuation of Title VI of the Civil Rights Act of 1964, and as the Regulations may be amended.

 

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B. Lessee for itself, its personal representatives, successors in interest, and assigns, agrees as a covenant running with the land that: (1) no person on the grounds of race, color, or national origin will be excluded from participation in, denied the benefits of, or be otherwise subjected to discrimination in the use of Lessee's facilities; (2) that in the construction of any Improvements on, over, or under such Premises and the furnishing of services thereon, no person on the grounds of race, color, or national origin shall be excluded from participation in, denied the benefits of, or otherwise be subject to discrimination; (3) that Lessee will use the Premises in compliance in all material respects with all other requirements imposed by or pursuant to Title 49, Code of Federal Regulations, DOT, Subtitle A, Office of the Secretary, Part 21, Nondiscrimination in Federally-Assisted Programs of the Department of Transportation-Effectuation of Title VI of the Civil Rights Act of 1964, and as the Regulations may be amended.

 

C. That in the event of breach of any of the above nondiscrimination covenants, the City has the right to terminate this Lease and to re-enter and repossess Lessee's land and facilities, and hold them as if this Lease had never been made or issued. This provision does not become effective until the procedures of 49 CFR Part 21 are followed and completed including expiration of appeal rights.

 

D. Lessee will furnish its accommodations and services on a fair, equal and not unjustly discriminatory basis to all users and will charge fair, reasonable and not unjustly discriminatory prices for each unit or service; PROVIDED, THAT Lessee may be allowed to make reasonable and nondiscriminatory discounts, rebates or other similar type of price reductions to volume purchasers.

 

E. Non-compliance with Provision "D" of this section constitutes a material breach of this Lease and in the event of such noncompliance the City has the right to terminate this Lease and the estate hereby created without liability or at the election of the City or the United States; either or both Governments have the right to judicially enforce these Provisions.

 

F. Lessee agrees that it will insert the above five provisions in any sublease, contract or agreement by which Lessee grants a right or privilege to any person, firm or corporation to render accommodations or services to the public on the leased Premises

 

G. Lessee assures that it will undertake an affirmative action program as required by 14 CFR Part 152, Subpart E, to insure that no person will on the grounds of race, creed, color, national origin, or sex be excluded from participating in any employment activities covered in 14 CFR Part 152, Subpart E. Lessee assures that no person will be excluded on these grounds from participating in or receiving the services or benefits of any program or activity covered by this subpart. Lessee assures that it will require that its covered suborganizations provide assurances to Lessee that they similarly will undertake affirmative action programs and that they will require the same assurances from their suborganizations, as required by 14 CFR Part 152, Subpart E.

 

Lessee agrees to comply with any affirmative action plan or steps for equal employment opportunity required by 14 CFR Part 152, Subpart E, as part of the affirmative action program, and by any Federal, State or local agency or court, including those resulting from a conciliation agreement, a consent decree, court order, or similar mechanism. Lessee agrees that State or local affirmative action plans will be used in lieu of any affirmative action plan or steps required by 14 CFR Part 152, Subpart E, only when they fully meet the standards set forth in 14 CFR 152.049. Lessee agrees to obtain a similar assurance from its covered organizations, and to cause them to require a similar assurance of their covered suborganizations, as required by 14 CFR Part 152, Subpart E.

 

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H. The City reserves the right to further develop or improve the landing area of the Airport as it sees fit, regardless of the desires or view of Lessee without interference or hindrance.

 

I. The City reserves the right, but is not obligated to Lessee, to maintain and keep in repair the landing area of the Airport and all publicly-owned facilities of the Airport, together with the right to direct and control all activities of Lessee in this regard.

 

J. This Lease is subordinate to the provisions and requirements of any existing or future agreement between the City and the United States, relative to the development, operation or maintenance of the Airport.

 

K. The City, its successors and assigns, reserve for the use and benefit of the public, a right of flight for the passage of aircraft in the airspace above the surface of the leased Premises, including the leased Premises. This public right of flight includes the right to cause in the airspace any noise inherent in the operation of any aircraft used for navigation or flight through the airspace or landing at, taking off from or operation on the Airport.

 

L. Lessee agrees to comply in all material respects with the notification and review requirements covered in Part 77 of the Federal Aviation Regulations in the event future construction of a building is planned for the leased Premises, or in the event of any planned modification or alteration of any present or future building or structure situated on the leased Premises.

 

M. Lessee, by accepting this Lease, expressly agrees for itself, its successors and assigns that it will not erect nor permit the erection of any structure or object, nor permit the growth of any tree on the leased Premises that conflicts with 14 C.F.R. Part 77 of the Federal Aviation Regulations. In the event this covenant is breached, the City reserves the right to enter upon the land leased and to remove the offending structure or object and cut the offending tree at Lessee's expense.

 

N. Lessee, by accepting this Lease, agrees for itself, its successors and assigns that it will not use the leased Premises in any manner which might interfere with the landing and taking off of aircraft from the Airport or otherwise constitute a hazard. If Lessee breaches this covenant, the City may enter the leased Premises and abate the interference at Lessee's expense.

 

O. This Lease does not grant or authorize the granting of an exclusive right within the meaning of 49 U.S.C. §40103.

 

P. This Lease is subject to whatever right the United States Government now has or in the future may have or acquire, affecting the control, operation, regulation and taking over of said Airport or the exclusive or non-exclusive use of the Airport by the United States during the time of war or national emergency.         

 

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SECTION 20. HAZARDOUS MATERIALS

 

A. Definitions.

 

(1)         Hazardous Materials Laws means any Federal, State or local law, ordinance, rule, order, regulation or court decision relating to Hazardous Materials.

 

(2)         Hazardous Materials means any substance or other material that:

 

(a)        is defined as a hazardous substance, hazardous material, hazardous waste or toxic substance under any Hazardous Materials Law or is a flammable or explosive material (including gasoline, diesel, aviation fuels, lubricating oils, and solvents), asbestos, radioactive material, nuclear medicine material, drug, vaccine, bacterial, virus, or injurious or potentially injurious matter; or

 

(b)         is controlled or governed by any Hazardous Materials Law.

 

B. Hazardous Material Handling, Spills, and Cleanup. Lessee must comply with any Hazardous Materials Law in the storage, distribution, processing, handling or disposal of any Hazardous Materials. If any Hazardous Material spills, leaks, or is discharged on or from the Premises, Lessee must, at Lessee's cost, promptly make all repairs necessary to prevent further spills, leaks or discharges and promptly clean up the spill, remove any contaminated soil and promptly dispose of the spilled Hazardous Material and soil as required by Hazardous Materials Laws. If Lessee fails to promptly clean up the spill or properly dispose of any contaminated soil the City may, upon 24 hours written notice to Lessee, clean up the spill and dispose of any contaminated soil. Lessee must reimburse the City for the cost of all such work by the City within 30 days from receipt of a bill from the City. The Lessee must pay, or indemnify the City for the City's payment of, any fines or penalties levied by any federal or state agency as a result of Lessee's release or discharge of any Hazardous Materials from the Premises.

 

C. Termination. Upon termination of this Lease, Lessee must at Lessee's cost, remove any equipment utilized in connection with any Hazardous Materials and clean up, detoxify, repair and restore the Premises to a condition free of Hazardous Materials, to the extent the Lessee or Lessee's sublessee or their respective agents, contractors, employees, licensee or invitees caused the condition.

 

D. Default. Lessee is in default of this Lease if Lessee or Lessee's sublessee releases or discharges any Hazardous Materials or violates any Hazardous Materials Law. In addition to or in lieu of the remedies available under the Lease as a result of the default, the City may, without terminating the Lease, require Lessee to suspend its operations and activities on the Premises until the City is satisfied that appropriate remedial work has been or is being adequately performed. The City's election to suspend Lessee's operations is not a waiver of the City 's right to later declare a default and pursue other remedies set forth in the Lease.

 

SECTION 21. MISCELLANEOUS PROVISIONS

 

A. Holding Over. If Lessee holds over after the term herein granted, the holding over will be deemed to be a tenancy from month-to-month governed by the provisions of this Lease.

 

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B. Removal of Property. Lessee shall remove all personal property from the Premises within 10 days after termination of this Lease and should Lessee fail to do so, the City may elect to retain possession of the property, sell the property and keep the proceeds, or have the property moved at the expense of the Lessee.

 

C. Amendments. This Lease sets forth all of the agreements and understandings of the parties and any modification of this Lease must be written and approved by each party.

 

D. Force Majeure. If Lessee cannot perform any obligation of this Lease by reason of force majeure, it will give notice of the force majeure event to the City in writing within 10 days of the occurrence relied upon. The obligation of Lessee, to the extent and for the period of time affected by the force majeure, is suspended. Lessee will endeavor to remove or overcome the inability with all reasonable effort. In this paragraph, "force majeure" means acts of God, landslides, lightning, earthquakes, hurricanes, storms, floods, or other natural occurrences; strikes, lockouts, insurrections, riots, wars, or other civil or industrial disturbances; orders of any kind of the Federal or State government or of any civil or military authority; explosions, fires, breakage or accidents to machinery, lines, or equipment, or the failure of the system or water supply system; or any other cause not reasonably within the control of Lessee. Force majeure does not include financial inability and does not excuse Lessee from paying any monthly rental or other charge as required by this Lease.

 

E. Partial Invalidity. If a court of competent jurisdiction holds any provision of this Lease invalid, the remainder of the Lease remains in effect.

 

F. Estoppel. City, within 45 days after written request from Lessee or any Mortgagee or prospective Mortgagee, shall furnish a written statement, duly acknowledged, as to the following items:

 

(a)         The amount of the rent due, if any;

(b)         Whether or not the Lease is unmodified and in full force and effect (or, if there have been modifications, whether or not the same are in full force and effect as modified and identifying the modifications);

(c)         Whether or not to City’s knowledge Lessee is in default and specifying the nature of any such default; and

(d)         Such other matters as Lessee or the Mortgagee may reasonably request and which relate to the knowledge of Lessee.

 

G. Americans With Disabilities Act. In carrying out the requirements of this Lease, Lessee will comply in all material respects with the provisions of the Americans with Disabilities Act (Public Law 101-336) and its implementing regulations.

 

H. Unlawful Use. Lessee and its employees and agents will not use or knowingly allow any other person to use the Premises in material violation of any federal, state, county, or local regulation, order, law, or ordinance applicable to the Premises.

 

I. Notices. All notices required to be given under this Lease must be in writing and be sent by United States mail, private mail or courier service, by facsimile or be delivered in person. All notices must be sent or delivered to the following addresses or as the City or Lessee may hereafter designate by written notice:

 

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To the City:    
  Director of Aviation  
  City of Sugar Land  
  12888-B Highway 6 South  
  Sugar Land, TX 77498  
     
With a copy to:    
  City Manager  
  City of Sugar Land  
  P. O. Box 110  
  Sugar Land, TX 77487-0110  
     
To Lessee: Sky Harbour Sugar Land Airport, LLC  
  767 Fifth Ave. 21st Floor  
  New York, New York 10153  
  Attention: Tal Keinan  
     
With a copy to: Sky Harbour Sugar Land Airport, LLC  
  767 Fifth Ave. 21st Floor  
  New York, New York 10153  
  Attention: General Counsel  

 

J. Successors in Interest. Unless otherwise provided in this Lease, this Lease applies to and binds the successors and assigns of Lessee and the City.

 

K. Signs. Lessee may not place any signs, flags, posters, or other advertising or promotional materials on the Premises, the exterior of the Premises, or in the windows of the Premises without having obtained City's prior written consent, such consent not to be unreasonably withheld, conditioned or delayed.

 

L. Indemnification and Hold Harmless. Lessee will indemnify and hold harmless the City from and against any and all claims, losses, damages, causes of action, suits, and liability of every kind, including all expenses of litigation, court costs, and attorney's fees, for injury to or death of any person, or for damage to any property, arising out of or in connection with Lessee's use of the Premises, except to the extent arising from City’s gross negligence or willful misconduct.

 

M. Governing law and venue. Texas law governs this Lease and any lawsuit on this Lease must be filed in a court that has jurisdiction in Fort Bend County, Texas.

 

N. Recordation of Lease. Within ten days of the effective date of this Lease, Lessee must record a copy of this Lease or memorandum thereof in the Real Property Records of Fort Bend County and provide the City with a copy of the recorded Lease or memorandum.

 

IN WITNESS WHEREOF, the parties have executed this Lease on the dates shown below.

 

SKY HARBOUR SUGAR LAND AIRPORT, LLC CORPORATE HANGAR LEASE/Page 19

 

Sky Harbour Sugar Land Airport, LLC

 

 

By: /s/ Alex Saltzman  
     
Title: AS  
     
Date: 10/15/2019  

 

 

CITY OF SUGAR LAND, TEXAS

 

 

/s/ Allen Bogard  
Allen Bogard, City Manager  
     
Date: 10/15/2019  
     
ATTEST:   APPROVED AS TO FORM:

 

                   

SKY HARBOUR SUGAR LAND AIRPORT, LLC CORPORATE HANGAR LEASE/Page 20

Exhibit 10.20

 

AMENDMENT NO. 2

 

To the Standard Form Airport Corporate Hangar and Land Lease between

the City of Sugar Land

and Sky Harbour Sugar Land Airport, LLC.

 

Whereas, effective February 6, 2019, the City of Sugar Land and Sky Harbour, LLC entered into a ground lease for approximately 4.085 acres of land located at the Sugar Land Regional Airport (“Lease”); and

 

Whereas, effective October 15, 2019, the Lease was amended and restated (“Amendment No. 1”) to incorporate a number of changes, including:

 

(1) The addition of two sites constituting 4.041 acres of land to the lease;

 

(2) A construction deadline of October 15, 2021 for improvements on the additional two sites; and

 

(3) The assignment of the lease to Sky Harbour Sugar Land Airport, LLC.

 

Whereas, due to disruptions in the market caused by COVID 19 the construction deadlines contained in Amendment No. 1 were not met; and

 

Whereas, the City of Sugar Land and Sky Harbour Sugar Land Airport, LLC desire to amend the Lease and Amendment No. 1 by extending the construction deadline. NOW, THEREFORE:

 

The City Council of the City of Sugar Land, Texas and Sky Harbour Sugar Land Airport, LLC agree to the following:

 

Section 1.         That Sec. 6, Improvements to the Premises, paragraph D in Amendment No. 1 is revised to read as follows:

 

D. Lessee must begin construction of the Additional Improvements by October 15, 2022, and must complete construction of the Additional Improvements within 365 days from the start of the construction date. Such completion date may be extended upon proof of a Force Majeure event. Lessee will use commercially reasonable efforts to construct the Additional Improvements in a manner as not to materially interfere with the normal operations and use of the Airport by others. The Additional Improvements will, upon completion, cost not less than $2,000,000. If requested by the Aviation Director, Lessee will file with the Aviation Director a complete set of as-built drawings and documents showing the actual construction costs of the Additional Improvements within 30 days of completion of any Additional Improvements. If for any reason, Lessee fails to begin the construction of the Additional Improvements by October 15, 2022, this Lease automatically terminates as to sites 4 and 7 on October 16, 2022.

 

 

 

Section 2.          That the remaining provisions of the Lease as amended and restated in Amendment No. 1 remain in full effect with no edits or deletions.

 

Section 3.          That this Amendment No. 2 is effective September 11, 2021.

 

 

CITY OF SUGAR LAND

 

 

/s/ Michael W. Goodrum

 

Michael W. Goodrum, City Manager

 

Date:    August 18, 2021

 

 

ATTEST:

 

 

/s/ Thomas Harris, III

 

Thomas Harris, III, City Secretary

 

 

APPROVED AS TO FORM:

 

 

/s/ Meredith Riede

 

Meredith Riede, City Attorney

 

 

SKY HARBOUR SUGAR LAND

AIRPORT, LLC

 

 

/s/ Tal Keinan

 

Name:   Tal Keinan

 

Title: Authorized Officer

 

Date: August 10, 2021

 

 

 

Exhibit 16.1

 

KPMG.JPG

January 31, 2022

 

Securities and Exchange Commission

Washington, D.C. 20549

 

 

Ladies and Gentlemen:

 

 

We are currently principal accountants for Yellowstone Acquisition Company (“YAC”) and, under the date of March 12, 2021, except for the effect of the restatement disclosed in Note 2, as to which the date is May 24, 2021, we reported on the financial statements of YAC as of December 31, 2020 and for the period from August 25, 2020 (inception) to December 31, 2020. On January 25, 2022, we were notified that YAC engaged EisnerAmper LLP as its principal accountant for the year ending December 31, 2022 and that the auditor-client relationship with KPMG LLP will cease upon completion of the audit of YAC’s financial statements as of and for the year ended December 31, 2021, and the issuance of our report thereon. We have read YAC's statements included under Item 4.01 of its Form 8-K dated January 31, 2022, and we agree with such statements.

 

 

Very truly yours,

 

 

/s/ KPMG LLP

 

Exhibit 21.1

 

Subsidiaries of Sky Harbour Group Corporation

 

 

Subsidiary

Parent Entity

Sky Harbour LLC

Sky Harbour Group Corporation

Sky Harbour Services, LLC

Sky Harbour LLC

Sky Harbour Holdings LLC

Sky Harbour LLC

Sky Harbour Capital LLC

Sky Harbour Holdings LLC

SHOLA, LLC

Sky Harbour Holdings LLC

SHSLA, LLC

Sky Harbour Holdings LLC

APA Hangers LLC

Sky Harbour Capital LLC

DVT Hangars LLC

Sky Harbour Capital LLC

Nashville Hangars LLC

Sky Harbour Capital LLC

Sky Harbour Florida Holdings, LLC

Sky Harbour Holdings LLC

Sky Harbour Texas Holdings, LLC

Sky Harbour Holdings LLC

Sky Harbour Opa Locka Airport, LLC

SHOLA, LLC

Sky Harbour Sugar Land Airport, LLC

SHSLA, LLC

ADS Hangars LLC

Sky Harbour Holdings LLC

Sky Harbour National Holdings, LLC

Sky Harbour Holdings LLC

 

 

Exhibit 99.1

 

 

Unaudited ProForma Condensed Combined Financial Information

 

Unless otherwise indicated, defined terms included below shall have the same meaning as terms defined and included elsewhere in the Current Report on Form 8-K (the Form 8-K) filed with the Securities and Exchange Commission (the SEC) on January 31, 2022.

 

Introduction

 

The following unaudited proforma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X. For each of the periods presented, the unaudited proforma condensed combined financial information reflects the combination of historical financial information of Sky and YAC, and gives effect to (1) YAC’s initial public offering which was completed on October 26, 2020 (“IPO”), concurrent private placement of warrants to purchase its Class A common stock and payment of offering expenses and (2) the Business Combination, $45,000,000 BOC PIPE, the payment of transaction costs associated with the Business Combination and the cash settlement of certain obligations in accordance with YAC’s initial public offering (for purposes of this section, collectively, the “Transactions”). For purposes of this section, Sky and YAC are collectively referred to as the “Companies,” and the Companies, subsequent to the Business Combination, are referred to herein as the “Combined Company.”

 

The unaudited proforma condensed combined financial information has been presented to provide relevant information necessary for an understanding of the Combined Company subsequent to completion of the Transactions. The unaudited proforma condensed combined balance sheet, which has been presented for the Combined Company as of September 30, 2021, gives effect to the Transactions as if they were consummated on September 30, 2021. The unaudited proforma condensed combined statements of operations, which have been presented for the nine months ended September 30, 2021 and the year ended December 31, 2020, give proforma effect to the Transactions as if they had occurred on January 1, 2020. The unaudited proforma condensed combined balance sheet does not purport to represent, and is not necessarily indicative of, what the actual financial condition of the Combined Company would have been had the Transactions taken place on September 30, 2021, nor is it indicative of the financial condition of the Combined Company as of any future date. The unaudited proforma condensed combined statements of operations do not purport to represent, and are not necessarily indicative of, what the actual results of operations of the Combined Company would have been had the Transactions taken place on January 1, 2020, nor are they necessarily indicative of the results of operations of the Combined Company for any future period.

 

The unaudited proforma condensed combined financial information was derived from, and should be read in conjunction with, the following historical financial statements and notes thereto, which are included in the Proxy Statement:

 

 

The unaudited historical condensed consolidated financial statements of Sky as of and for the nine months ended September 30, 2021, and the historical audited consolidated financial statements of Sky as of and for the year ended December 31, 2020; and

 

 

The unaudited historical condensed financial statements of YAC as of and for the nine months ended September 30, 2021, and the historical audited financial statements of YAC for the period from August 25, 2020 (inception) through December 31, 2020.

 

The unaudited proforma condensed combined financial information should also be read together with the sections of the Proxy Statement entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Sky,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations of YAC”, and “Proposal No. 1— The Business Combination Proposal,” as well as other information included in the Proxy Statement.

 

Description of the Transactions

 

YAC was formed as a blank check company incorporated as a Delaware corporation for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. YAC completed its IPO of 12,500,000 units at an offering price of $10.00 per unit on October 26, 2020. Simultaneously with the closing of the IPO, YAC completed a private placement of 7,500,000 warrants issued to the Sponsor, generating total proceeds of $7,500,000. On December 1, 2020, the underwriters' over-allotment option was partially exercised resulting in the purchase of an additional 1,098,898 Units, generating additional gross proceeds to YAC of $10,988,980 and incurring offering costs of approximately $700,000 (including $600,000 in underwriting fees). In connection with the IPO, including the underwriters’ partial exercise of the over-allotment option, the number of shares of Class B Common Stock was decreased to 3,399,724 shares to maintain the Sponsor’s 20% ownership. Also in connection with the partial exercise of the underwriters' overallotment option, the Sponsor purchased private placement warrants at a price of $1.00 per whole warrant to purchase an additional 219,779 shares of YAC Class A Common Stock at a price of $11.50 per share. Therefore, in connection with the partial exercise of the underwriters' overallotment option, an additional $11,208,760 in proceeds from the exercise of   the over-allotment and the sale of additional private placement warrants were placed in the Trust Account, resulting in total funds held in the Trust Account of $138,716,226, inclusive of earned interest on investments held in the trust account at that time. The Trust Account was located in the United States at JP Morgan Chase Bank, N.A. with Continental Stock Transfer & Trust Company acting as trustee. The funds were invested in U.S. government securities with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act of 1940, as amended, which invest only in direct U.S. government treasury obligations.

 

On January 25, 2022, YAC consummated the Business Combination with Sky, pursuant to the Business Combination Agreement among the parties dated as of August 1, 2021. With YAC being the legal acquirer of Sky, consideration for the Business Combination consisted of shares of YAC’s Class B Common Stock wherein each holder of Sky Common Units received one share of Class B Common Stock for each Sky Common Unit. However, for financial reporting purposes, Sky is deemed the accounting acquirer and YAC the acquired company. See “Accounting for the Business Combination” below.

 

 

 

The following activities are reflected in the unaudited proforma condensed combined financial statements below (either in the historical results or through proforma adjustments):

 

 

In connection with the IPO (and related transactions):

 

 

o

The initial investment by the Sponsor of 3,399,724 of YAC Class B shares for $25,000;

 

 

o

The issuance by YAC of 13,598,898 units at an offering price of $10.00 per unit and receipt of proceeds therefrom;

 

 

o

The issuance by YAC of 7,719,779 private placement warrants to the Sponsor and receipt of proceeds therefrom;

 

 

o

A total of $138,708,760 of net proceeds from the IPO and the private placement placed in the Trust Account;

 

 

o

The payment of offering expenses.

 

 

In connection with the Closing:

 

 

o

A $45,000,000 BOC PIPE investment and the related issuance of 4,500,000 shares of Class A common stock by YAC to Boston Omaha;

 

 

o

The payment of legal fees, underwriting commissions, and other costs incurred by YAC in connection with the IPO;

 

 

o

The repayment of a $1,000,000 working capital loan made by the Sponsor;

 

 

o

The payment of transaction costs incurred by both Sky and YAC;

 

 

o

The redemption of 12,061,041 shares of Class A common stock held by YAC’s public stockholders;

 

 

o

The conversion of YAC’s Sponsor Stock to shares of Class A common stock on a one-for-one basis;

 

 

o

The conversion of BOC YAC’s Series B Preferred Units to shares of Class A common stock on a one-for-one basis;

 

 

o

YAC’s contribution of all of its assets to Sky, including but not limited to, (A) the proceeds from the Trust Account (net of proceeds used to fund the redemption of the Class A common stock held by eligible stockholders who properly elected to have their shares redeemed as of the Closing Date), plus (B) $45,000,000 proceeds from the BOC PIPE, plus any cash held by YAC in any working capital or similar account, less (D) the deferred underwriting commission from the IPO and other transaction expenses of YAC;

 

 

o

Execution of the Third A&R Operating Agreement; and

 

 

o

Execution of the Tax Receivable Agreement.

 

 

o

YAC’s prepayment of amounts due under an OTC Equity Prepaid Forward Transaction Agreement (the “Forward Purchase Agreement”) between ACM ARRT VII E LLC (“ACM”) and YAC, which agreement was entered into on January 17, 2022.

 

Following the closing, the Combined Company is organized as an “Up-C” structure in which substantially all of the operating assets of Sky’s business are held by Sky and it continues to operate through the subsidiaries of Sky. Upon the closing, YAC was renamed Sky Harbour Group Corporation (“SHG”), and SHG’s only assets are its equity interests in Sky. SHG is the sole managing member of Sky in accordance with the terms of the A&R Operating Agreement.

 

Accounting for the Business Combination

 

Notwithstanding the legal form of the Business Combination pursuant to the Business Combination Agreement, the Business Combination was accounted for as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, YAC was treated as the acquired company for financial reporting purposes, and Sky was treated as the accounting acquirer. In accordance with this accounting method, the Business Combination was treated as the equivalent of Sky issuing equity for the net assets of YAC, accompanied by a recapitalization. The net assets of YAC were stated at historical cost, with no goodwill or other intangible assets recorded, and operations prior to the Business Combination will be those of Sky. Sky has been deemed the accounting acquirer for purposes of the Business Combination based on an evaluation of the following facts and circumstances:

 

 

The Existing Sky Equityholders hold a majority voting interest in the Combined Company ;

 

 

The Existing Sky Equityholders have the ability to nominate and elect the majority of the Combined Company’s Board of Directors;

 

 

Sky’s existing senior management team comprise the senior management of the Combined Company;

 

 

Sky’s operations comprise the ongoing operations of the Combined Company; and

 

 

Sky’s assets are larger in relative size compared to YAC’s assets.

 

The Existing Sky Equityholders hold a corresponding share of Class B common stock for each Sky common unit they hold. Each Sky common unit can be redeemed for a share of Class A common stock of SHG and a corresponding share of Class B common stock of SHG will be cancelled. The Class B common stock held by the Existing Sky Equityholders entitles the holders thereof to one vote on all matters which stockholders are generally entitled to vote but have no economic rights. The corresponding economic rights associated with Sky common units held by Existing Sky Equityholders are presented as non-controlling interests in the Combined Company’s financial statements.

 

 

 

Basis of Proforma Presentation

 

In accordance with Article 11 of Regulation S-X, proforma adjustments to the historical combined financial information of Sky and YAC only give effect to events that are both factually supportable and directly attributable to the Transactions. In addition, for purposes of preparation of the unaudited proforma condensed combined statement of operations, adjustments have only been made to give effect to events that are expected to have a continuing impact on the results of the Combined Company following the Business Combination. The unaudited proforma condensed combined financial information does not give effect to any synergies, operating efficiencies, or other benefits that may result from consummation of the Transactions. Sky and YAC have not had any historical relationship prior to the Business Combination. Therefore, preparation of the accompanying proforma financial information did not require any adjustments related to such historical transactions.

 

Pursuant to YAC’s current charter, YAC’s public stockholders were offered the opportunity to redeem their shares of Class A common stock for cash if the Business Combination is consummated, irrespective of whether they voted for or against the Business Combination. If a public stockholder properly exercised its right to redemption of its shares, YAC redeemed each share for cash equal to the public stockholder’s pro rata portion of the Trust Account, calculated as of two business days prior to the consummation of the Business Combination.

 

The unaudited pro forma condensed combined financial information has been prepared to reflect the redemption of 12,061,041 shares of Class A common stock for $123,068,515.

 

The economic ownership percentages of SHG were 26.1% for controlling interests and 73.9% for non-controlling interests after the redemption of the shares of Class A common stock.

 

There are no pro forma adjustments related to the outstanding public warrants and private placement warrants issued in connection with the IPO that are classified as warrant liability in YAC’s historical balance sheet, as such securities continue to be outstanding and classified as a liability after the Closing Date.

 

The following table provides a proforma summary of the shares of the Combined Company’s common stock that would be outstanding if the Transactions had occurred on September 30, 2021.:

 

   

Shares

   

%

 

Stockholder

               

Existing Sky Equityholders

    42,192,250 (1)     73.9 %

YAC's Public Stockholders

    1,537,857 (2)     2.7 %

BOC YAC Initial Investment

    5,500,000 (3)     9.6 %

BOC PIPE Investment

    4,500,000 (4)     7.9 %

YAC Sponsors

    3,193,474 (5)     5.6 %

Others

    206,250 (6)     0.4 %

TOTAL

    57,129,831       100.1 %

 

 

(1)

Represents the shares of Class B common stock issued to SHG Corporation to consummate the Business Combination.

 

 

(2)

Represents the shares held by YAC’s public stockholders after the redemption of 12,061,041 shares of Class A common stock.

 

 

(3)

Represents the shares of Class A common stock held by BOC YAC as the holder of Series B Preferred Units of Sky upon the one-for-one conversion of the Series B Preferred Units into Class A common stock immediately prior to the consummation of the Business Combination.

 

 

(4)

Represents the shares that were issued to Boston Omaha in consideration of the $45,000,000 BOC PIPE investment.

 

 

(5)

Represents the shares of Class B common stock held by the initial stockholders of YAC upon the one-for-one conversion of the founder shares into Class A common stock immediately prior to the consummation of the Business Combination.

 

 

(6)

Represents 206,250 class A common stock held by BOC Yellowstone II LLC.

 

The Combined Company is organized in an “Up-C” structure. It was necessary to consider the income tax impacts and any related proforma adjustments associated with the Transactions. No tax liability is deemed to have been triggered upon consummation of the Business Combination, including related to the Tax Receivable Agreement. The proforma condensed combined provision for income taxes does not necessarily reflect the amounts that would have resulted had Sky and YAC filed consolidated income tax returns for the periods presented.

 

The unaudited proforma condensed combined financial information has been presented for illustrative purposes only. The proforma adjustments represent estimates based on information available as of the date of the unaudited proforma condensed combined financial information and are subject to change as additional information becomes available. Assumptions and estimates underlying the proforma adjustments set forth in the unaudited proforma condensed combined financial information are described in the accompanying notes. The actual financial position and results of operations of the Combined Company subsequent to the Transactions may differ significantly from the proforma amounts reflected herein.

 

 

 

PROFORMA CONDENSED COMBINED BALANCE SHEET

AS OF SEPTEMBER 30, 2021

(UNAUDITED)

 

 

   

HISTORICAL

                 
   

Sky Harbour

   

YAC

   

Proforma Adjustments

   

Proforma Combined

 

Assets

                               
                                 

Cash and cash equivalents

  $ 9,481,594     $ 865,018     $ 40,359,451 (A)   $ 50,706,063  

Restricted cash

    207,558,627       -       -       207,558,627  

Tenant receivable

    72,075       -       -       72,075  

Straight-line rent receivable

    91,847       -       -       91,847  

Prepaid expenses and other assets

    2,094,581       295,041       929,377 (F)     3,318,999  

Subtotal

    219,298,724       1,160,059       41,288,828       261,747,611  

Cost of construction

    14,579,482       -       -       14,579,482  

Constructed assets, net

    14,634,461       -       -       14,634,461  

Right-of-use assets

    57,924,041       -       -       57,924,041  

Investments held in Trust

    -       138,742,756       (138,742,756 )(C)     -  

Long-lived assets, net

    407,047       -       -       407,047  

Total Assets

  $ 306,843,755     $ 139,902,815     $ (97,453,928 )   $ 349,292,642  
                                 

Liabilities

                               
                                 

Accounts payable, accrued expenses and other liabilities

  $ 8,363,628     $ 370,287       (1,133,094 )(F)     7,600,821  

Note payable to Sponsor

    -       1,000,000       (1,000,000 )(D)     -  

Operating lease liabilities

    61,752,435       -       -       61,752,435  

Warrants liability

    -       13,648,074       -       13,648,074  

Bonds payable, net of deferred financing costs

    160,606,290       -       -       160,606,290  

Subtotal

    230,722,353       15,018,361       (2,133,094 )     243,607,620  
                                 
      -       -       -       -  

Deferred underwriting fee payable

    -       4,759,615       (4,759,615 )(E)     -  

Total liabilities

    230,722,353       19,777,976       (6,892,709 )     243,607,620  

Series B Preferred Units subject to possible redemption

    54,028,861       -       (54,028,861 )(I)     -  

Class A common stock subject to possible redemption

    -       138,708,760       (138,708,760 )(I)     -  

Stockholders/Members' Equity:

                               

Non-controlling interest

    -       -       83,062,498 (I)     83,062,498 (J)

Members' equity

    22,092,541       -       (22,092,541 )(I)     -  

Preferred stock

    -       -       - (I)     -  

Class A common stock

    -       -       1,494 (I)     1,494 (J)

Class B common stock

    -       340       (340 )(I)     -  

Additional paid-in capital

    -       -       29,405,632 (I)     29,405,632 (J)

Shares subject to repurchase under Forward Purchase Agreement

                    (6,784,602 )(I)     (6,784,602 )

Accumulated deficit

    -       (18,584,261 )     18,584,261 (I)     -  

Total Stockholders/Members' Equity

    22,092,541       (18,583,921 )     102,176,402       105,685,022  

Total Liabilities, Redeemable Securities and Stockholders'/Members' Equity

  $ 306,843,755     $ 139,902,815     $ (97,453,928 )   $ 349,292,642  

 

See the accompanying notes to the unaudited proforma condensed combined financial statements.

 

 

 

PROFORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021

(UNAUDITED)

 

 

   

HISTORICAL

                 
   

Sky Harbour

   

YAC

   

Proforma Adjustments

   

Proforma Combined

 

Revenue

  $ 1,186,845     $ -     $ -     $ 1,186,845  
                                 

Expenses

                               

Operating expenses

    3,159,936       -       -       3,159,936  

General and administrative

    4,553,523       1,576,668       -       6,130,191  

Depreciation

    425,452       -       -       425,452  

Total expenses

    8,138,911       1,576,668       -       9,715,579  

Operating loss

    (6,952,066 )     (1,576,668 )     -       (8,528,734 )
                                 

Other expense (income)

                               

Unrealized loss on investments held in Trust

    -       1,868       (1,868 )(aa)     -  

Interest expense (income), including amortization of deferred financing costs

    1,160,298       (23,387 )     -       1,136,911  

Change in fair value of warrant liability-(gain) loss

    -       (4,355,766 )     -       (4,355,766 )

Loss on extinguishment of note payable to related party

    250,000       -       -       250,000  

Total other expense (income), net

    1,410,298       (4,377,285 )     (1,868 )     (2,968,855 )

Net (loss) income

    (8,362,364 )     2,800,617       1,868       (5,559,879 )

Net loss attributable to non-controlling interests

    -       -       (4,106,153 )(bb)     (4,106,153 )

Net loss attributable to controlling interests

  $ (8,362,364 )   $ 2,800,617     $ 4,108,021     $ (1,453,726 )
                                 

Pro forma net loss per share information:

                               

Weighted average shares outstanding

                            14,272,672 (cc)

Basic and diluted net loss per share

                          $ (0.10 )(cc)

 

See the accompanying notes to the unaudited proforma condensed combined financial statements.

 

 

 

PROFORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2020

(UNAUDITED)

 

   

HISTORICAL

                 
   

Sky Harbour

   

YAC

   

Proforma Adjustments

   

Proforma Combined

 

Revenue

  $ 685,596     $ -     $ -     $ 685,596  
                                 

Expenses

                               

Operating expenses

    1,941,282       -       -       1,941,282  

General and administrative

    837,336       968,854       -       1,806,190  

Depreciation

    47,024       -       -       47,024  

Total expenses

    2,825,642       968,854       -       3,794,496  

Operating loss

    (2,140,046 )     (968,854 )     -       (3,108,900 )
                                 

Other expense (income)

                               

Unrealized gain on investments held in Trust

    -       (2,081 )     2,081 (aa)     -  

Interest expense (income), including amortization of deferred financing costs

    395,698       (12,297 )     -       383,401  

Change in fair value of warrant liability-(gain) loss

    -       2,070,328       -       2,070,328  

Total other expense (income), net

    395,698       2,055,950       2,081       2,453,729  

Net loss

    (2,535,744 )     (3,024,804 )     (2,081 )     (5,562,629 )

Net loss attributable to non-controlling interests

    -       -       (4,108,184 )(bb)     (4,108,184 )

Net loss attributable to controlling interests

  $ (2,535,744 )   $ (3,024,804 )   $ 4,106,103     $ (1,454,445 )
                                 

Pro forma net loss per share information:

                               

Weighted average shares outstanding

                            14,272,672 (cc)

Basic and diluted net loss per share

                          $ (0.10 )(cc)

 

See the accompanying notes to the unaudited proforma condensed combined financial statements.

 

 

 

Notes to Unaudited Proforma Condensed Combined Financial Information

 

NOTE 1 BASIS OF PROFORMA PRESENTATION

 

The Business Combination was accounted for as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, YAC was treated as the acquired company for financial reporting purposes, and Sky was treated as the accounting acquirer. The Business Combination was treated as the equivalent of Sky issuing stock for the net assets of YAC, accompanied by a recapitalization. The net assets of YAC are stated at historical cost, with no goodwill or intangible assets recorded. Operations prior to the Business Combination are those of Sky.

 

The unaudited proforma condensed combined statements of operations for the year ended December 31, 2020 and for the nine months ended September 30, 2021 give proforma effect to the Transactions as if they had occurred on January 1, 2020. The unaudited proforma condensed combined balance sheet as of September 30, 2021 assumes that the Transactions were completed on September 30, 2021, excluding the IPO (which was completed on October 26, 2020).

 

The unaudited proforma condensed combined financial information was derived from, and should be read in conjunction with, the following historical financial statements and notes thereto, which are included in the Proxy Statement and incorporated herein by reference:

 

 

The unaudited historical condensed consolidated financial statements of Sky as of and for the nine months ended September 30, 2021, and the historical audited consolidated financial statements of Sky as of and for the year ended December 31, 2020; and

 

 

The unaudited historical condensed financial statements of YAC as of and for the nine months ended September 30, 2021, and the historical audited financial statements of YAC for the period from August 25, 2020 (inception) through December 31, 2020.

 

Management has made significant estimates and assumptions in its determination of the proforma adjustments. The proforma adjustments, which are described in the accompanying notes, may be revised as additional information becomes available and is evaluated. Therefore, it is likely that the actual adjustments will differ from the proforma adjustments, and it is possible the differences may be material. Management believes that its assumptions and methodologies provide a reasonable basis for presenting all of the significant effects of the Transactions based on information available to management as of the date of the unaudited proforma condensed combined financial information, and the proforma adjustments give appropriate effect to those assumptions and are properly applied in the unaudited proforma condensed combined financial information.

 

 

 

NOTE 2 ADJUSTMENTS TO UNAUDITED PROFORMA CONDENSED COMBINED BALANCE SHEET AS OF SEPTEMBER 30, 2021

 

The unaudited proforma condensed combined balance sheet as of September 30, 2021 includes the following adjustments:

 

A – Represents the aggregate impact of the following proforma adjustments to cash to give effect to the Transactions:

 

Cash inflow from the BOC PIPE

  $ 45,000,000  

(B)

Cash inflow from YAC’s Trust Account

    138,742,756  

(C)

Repayment of Working Capital Loan to YAC Sponsor

    (1,000,000 )

(D)

Payment of YAC’s deferred IPO fees

    (4,759,615 )

(E)

Payment of transaction costs of the Business Combination

    (7,770,573 )

(F)

Prepayment of Forward Purchase Agreement

    (6,784,602 )

(G)

Redemption of YAC’s publicly traded shares

    (123,068,515 )

(H)

Net Proforma Adjustment to Cash

  $ 40,359,451  

(A)

 

B – Represents $45,000,000 BOC PIPE investment.

 

C – Represents cash equivalents that were released from the Trust Account and relieved of restrictions regarding use upon consummation of the Business Combination.

 

D – Represents the Working Capital Loan from YAC’s Sponsor of $1,000,000 that was repaid in cash upon the Business Combination.

 

E – Represents cash that was used to pay underwriting fees incurred by YAC in connection with the IPO, for which payment was deferred until consummation of the Business Combination.

 

F – Represents cash that was used to pay transaction and advisory fees incurred in connection with the Business Combination, net of amounts already paid as of September 30, 2021. The adjustment to Prepaid expenses and other assets of $929,377 on the proforma condensed combined balance sheet represents the removal of prepaid transaction costs of $1,718,978, net of prepaid Directors’ and Officers’ insurance premiums of $2,648,355 paid in connection with the Business Combination which will be amortized into expense over the subsequent periods covered by the policy. The adjustment to Accounts payable, accrued expenses and other liabilities of $1,133,094 on the proforma condensed combined balance sheet represents the removal of transaction costs that were accrued in the historical balance sheets and paid on the Closing Date, net of other transaction costs that were not paid on the Closing Date and will be paid in the future.

 

G – Reflects prepayment of the Forward Purchase Agreement by YAC. Prior to the Closing Date, ACM purchased 664,909 shares of YAC Class A common stock from investors in the public market. In accordance with the terms of the Forward Purchase Agreement, YAC prepaid an amount of $6,784,602, which is equal to the same $10.20 per-share redemption price as the public Class A common shareholders were eligible to receive for each of their shares multiplied by the total number of shares purchased by ACM. From time to time and on any scheduled trading day after the Closing Date, ACM may sell some or all of these shares at its absolute discretion in one or more transactions, publicly or privately, and, in connection with such sales, terminate the Forward Purchase Agreement as to those shares, and a corresponding $10.20 per share will be returned to the Combined Company from the prepayment amount.

 

H – Reflects the impact on cash available to the Combined Company upon the redemption of 12,061,041 shares of Class A common stock using cash released from the Trust Account.

 

 

 

I – Represents the net impact of the following proforma adjustments related to the Transactions on the capital accounts of the Combined Company:

 

 

         

Par Value (1)

                                   

Total

                 

 

Members' Equity

   

Class A
Common
Stock

   

Founder
Shares -
Class B Common Stock

   

Additional
Paid-In
Capital

   

Accumulated
Deficit

   

Forward Purchase Agreement

   

Non-controlling
Interest

   

Stockholders'/
Members'
Equity

   

Series B Preferred Units subject to possible redemption

   

Class A subject to
possible
redemption

 

Historical Sky Harbour

  $ 22,092,541     $ -     $ -     $ -     $ -     $ -     $ -     $ 22,092,541     $ 54,028,861     $ -  

Historical YAC

    -       -       340       -       (18,584,261 )     -       -       (18,583,921 )     -       138,708,760  

Total historical balance

    22,092,541       -       340       -       (18,584,261 )     -       -       3,508,620       54,028,861       138,708,760  

Sky Harbour rollover equity (2)

    (22,092,541 )     -       -       -       -       -       22,092,541       -       -       -  

Conversion of YAC's founder shares to Class A common shares (3)

    -       340       (340 )     -       -       -       -       -       -       -  

Reclassification of Class A common stock subject to possible redemption

    -       1,360       -       138,707,400       -       -       -       138,708,760       -       (138,708,760 )

BOC PIPE Investment (4)

    -       450       -       44,999,550       -       -       -       45,000,000       -       -  
                                              -                                  

Pro forma adjustments for share issuance and conversion transactions

    (22,092,541 )     2,150       (340 )     183,706,950       -       -       22,092,541       183,708,760       -       (138,708,760 )
                                                                                 

Transaction fees incurred by YAC

    -       -       -       (1,017,370 )     (518,285 )     -       -       (1,535,655 )     -       -  

Transaction fees incurred by Sky Harbour

    -       -       -       (4,172,447 )     -       -       -       (4,172,447 )     -       -  

Elimination of YAC's historical accumulated deficit

    -       -       -       (19,102,546 )     19,102,546       -       -       -       -       -  

Conversion of Series B Preferred Units to Class A common stock (5)

    -       550       -       54,028,311       -       -       -       54,028,861       (54,028,861 )     -  

Redemption of Class A common stock (6)

    -       (1,206 )     -       (123,067,309 )     -       -       -       (123,068,515 )     -       -  

Allocate amount to non-controlling interest (7)

    -       -       -       (60,969,957 )     -       -       60,969,957       -       -       -  

Forward Purchase Agreement (8)

    -       -       -       -       -       (6,784,602 )     -       (6,784,602 )     -       -  

Total pro forma adjustments to equity

    (22,092,541 )     1,494       (340 )     29,405,632       18,584,261       (6,784,602 )     83,062,498       102,176,402       (54,028,861 )     (138,708,760 )

Total pro forma balance

  $ -     $ 1,494     $ -     $ 29,405,632     $ -     $ (6,784,602 )   $ 83,062,498     $ 105,685,022     $ -     $ -  

 

 

(1)

Represents the par value of YAC’s common stock prior to the Business Combination and the par value of the Combined Company’s common stock subsequent to the Business Combination.

 

 

(2)

Shares of Class B common stock were issued to consummate the Business Combination.

 

 

(3)

YAC’s issued and outstanding founder units converted into shares of Class A common stock on a one-for-one basis immediately prior to consummation of the Business Combination.

 

 

(4)

The BOC PIPE investors were issued 4,500,000 shares of Class A common stock in exchange for the $45,000,000 investment.

 

 

 

 

(5)

The Preferred Series B Units of Sky were converted into 5,500,000 shares of Class A common stock on a one-for-one basis immediately prior to consummation of the Business Combination.

 

 

(6)

Represents the redemption of 12,061,041 shares of Class A common stock in exchange for cash held in the Trust Account.

 

 

(7)

Represents an adjustment to revise non-controlling interests to the post-Business Combination ownership percentage in Sky of 73.9%.

 

 

(8)

Represents 664,909 shares of Class A common stock subject to repurchase under the Forward Purchase Agreement.

 

J–Issued and outstanding shares for each class of common stock and preferred stock as of September 30, 2021 on a historical basis and on a proforma basis are as follows:

 

 

Historical

   

Proforma

 

 

Issued

   

Outstanding

   

Issued

   

Outstanding

 

Preferred Stock

    -       -       -       -  
                                 

Common Stock - Class A

                               

YAC's Class A stockholders(1)

    13,598,898       13,598,898       1,537,857       1,537,857  

BOC PIPE Investment (2)

    -       -       4,500,000       4,500,000  

BOC YAC's converted Series B Preferred Units (3)

    -       -       5,500,000       5,500,000  

YAC's converted founder shares (4)

    -       -       3,193,474       3,193,474  

BOC Yellowstone II LLC (5)

                    206,250       206,250  

Total Common Stock - Class A

    13,598,898       13,598,898       14,937,581       14,937,581  
                                 

Common stock - Class B

                               

YAC's founder shares (4)

    3,399,724       3,399,724       -       -  

Existing Sky Equityholders' rollover equity (6)

    -       -       42,192,250       42,192,250  

Total Common Stock - Class B

    3,399,724       3,399,724       42,192,250       42,192,250  

Total Common Stock

    16,998,622       16,998,622       57,129,831       57,129,831  

 

 

(1)

Represents the shares held by YAC’s public stockholders giving effect to the redemption of 12,061,041 shares of Class A common stock. The historical issued and outstanding shares were recorded in temporary equity because they were subject to possible redemption.

 

 

(2)

Represents the shares that were issued to Boston Omaha in consideration of the $45,000,000 BOC PIPE investment.

 

 

(3)

Represents the shares of Class A common stock held by BOC YAC as the holder of Series B Preferred Units of Sky upon the one-for-one conversion of the Series B Preferred Units into Class A common stock immediately prior to the consummation of the Business Combination.

 

 

(4)

Represents the shares of Class B common stock held by the initial stockholders of YAC upon the one-for-one conversion of the founder shares into Class A common stock immediately prior to the consummation of the Business Combination.

 

 

(5)

Represents 206,250 class A common stock held by BOC Yellowstone II LLC.

 

 

(6)

Represents the shares of Class B common stock issued to consummate the Business Combination.

 

 

 

NOTE 3 ADJUSTMENTS TO UNAUDITED PROFORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND THE YEAR ENDED DECEMBER 31, 2020

 

The unaudited proforma condensed combined statements of operations for the nine months ended September 30, 2021 and for the year ended December 31, 2020 include the following adjustments:

 

aa – Represents the elimination of gains or losses on the Investments held in Trust.

 

bb – Represents an adjustment to attribute net loss to non-controlling interests based on its 73.9% post-Business Combination ownership percentage in Sky.

 

cc Represents the proforma weighted average shares of common stock outstanding and proforma loss per share calculated after giving effect to the Transactions, as follows:

 

   

For the Nine

Months ended September

30, 2021

   

For the Year Ended

December 31, 2020

 

Numerator

               

Pro forma net loss attributable to controlling interests

  $ (1,453,726 )   $ (1,454,445 )

Denominator

               

YAC Class A stockholders (1)

    1,537,857       1,537,857  

YAC's converted founder shares (2)

    3,193,474       3,193,474  

BOC YAC Initial Investment (3)

    5,500,000       5,500,000  

BOC PIPE Investment (4)

    4,500,000       4,500,000  

Others (5)

    206,250       206,250  

Shares subject to repurchase under Forward Purchase Agreement (6)

    (664,909 )     (664,909 )

Basic and diluted weighted average shares outstanding

    14,272,672       14,272,672  

Loss per share

               

Basic and diluted (7)

  $ (0.10 )   $ (0.10 )

 

 

(1)

Represents the shares of Class A common stock held by YAC’s public stockholders after the redemption of 12,061,041 shares of Class A common stock. As the Transactions are assumed to have occurred as of January 1, 2020 for purposes of preparing the proforma condensed combined statements of operations, the weighted average shares outstanding reflect the net amount of 1,537,857 shares of common stock as outstanding for the entire nine-month or 12-month period, respectively.

 

 

(2)

Represents the shares of YAC Class B common stock held by the initial stockholders of YAC upon the one-for-one conversion of the founder shares into Class A common stock immediately prior to the consummation of the Business Combination. Consistent with the assumption related to the Transactions, this conversion is assumed to have occurred on January 1, 2020 and, accordingly, these shares are assumed to have been outstanding shares of common stock for the entire nine-month or 12-month period, respectively.

 

 

(3)

Represents the shares of Class A common stock held by BOC YAC as the holders of Series B Preferred Units of Sky upon the one-for-one conversion of the Series B Preferred Units into Class A common stock immediately prior to the consummation of the Business Combination. Consistent with the assumption related to the Transactions, this conversion is assumed to have occurred on January 1, 2020 and, accordingly, these shares are assumed to have been outstanding shares of common stock for the entire nine-month or 12-month period, respectively.

 

 

(4)

Represents the shares that were issued in consideration of the BOC PIPE investment. Consistent with the assumption related to the Transactions, the BOC PIPE investment is assumed to have occurred on January 1, 2020 and, accordingly, these shares are assumed to have been outstanding shares of common stock for the entire nine-month or 12-month period, respectively.

 

 

(5)

Represents 206,250 class A common stock held by BOC Yellowstone II LLC.

 

 

(6)

Represents 664,909 shares of YAC Class A common stock subject to repurchase under the Forward Purchase Agreement.

 

 

(7)

Potentially dilutive shares have been deemed to be anti-dilutive due to the net loss position and, accordingly, have been excluded from the calculation of diluted loss per share. Potentially dilutive shares that have been excluded from the determination of diluted loss per share include 14,519,228 outstanding warrants issued in connection with the IPO.