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HomeMy WebLinkAboutConsent to Collateral Assignment 07/20/2011DANNY L. KOLHAGE CLERK OF THE CIRCUIT COURT DATE: July 28, 2011 TO: Peter Horton, Director of Airports VIA: April Pearson FROM: Pamela G. Hanc 5ck_4C_. At the July 20, 2011, Board of County Commissioners meeting, the Board granted approval and authorized execution of Item C31 Consent to Collateral Assignment for KWIA Hangar Corporation and Island City Flying Service, Inc. Enclosed is a duplicate original of each of the above -mentioned for your records. Should you have any questions, please feel free to contact our office cc: County Attorney Finance File CONSENT The undersigned, as the lessor of that certain lease (the "Lease") dated June 24, 2002 (and effective April 17, 2002) between the undersigned and KWIA Hangar Corporation, a Florida corporation hereby consents to that certain Hangar Sublease Agreement dated September 25, 2003 heretofore entered into by and between KWIA Hangar Corporation, a Florida corporation and Island City Flying Service, Inc., a Florida corporation, a copy of which sublease agreement is attached hereto as Exhibit "A" (the "Sublease"). The undersigned further consents to that certain Collateral Assignment of the aforementioned Sublease by Island City Flying Service, Inc., a Florida corporation to Branch Banking and Trust company, a North Carolina banking corporation ("BB & T"), dated November 19, 2007, as amended on April 10 , 2011 and also to any renewal, modification, or extension thereof by and between the said Island City Flying Service, Inc., a Florida corporation and BB & T and to the granting by Island City Flying Service, Inc.., a Florida corporation of a security interest in connection therewith. The undersigned further agrees that, in the event of a default in the Lease which would enable the undersigned to terminate the said Lease, the undersigned shall give BB & T notice of such default and a thirty (30) day opportunity to cure such default. In the event BB & T succeeds to the interest of either Island City Flying Service, Inc., a Florida corporation or KWIA Hangar Corporation, a Florida corporation, under the Lease or Sublease, the undersigned will recognize BB & T or any assignee of BB & T as lessee under the Lease. Dated the 20thday of Jul WITNESSES: Print Name: Print Name: (MJP/dh-B22217-143 599) 2011. Monroe County By. Print Name- HeitbIr Carruthers T-We: Mavor r.j SLK SAR: #95939vI HANGAR SUBLEASE AGREEMENT This Sublease Agreement (referred to here as this "Sublease") is made on this 2510 day of Se th4cr. , 2003 by and between and KVVIA HANGAR CORPORATION, a Florida corpo ar tion (referred to herein as the "Lessor"), and ISLAND CITY FLYING SERVICE, INC. (referred to herein as the "Lessee"). 1. PREMISES By the execution of this Sublease, Lessor subleases to Lessee and Lessee rents from Lessor, approximately 11,200 square feet of space, commonly referred to as Hangar 19, Building F, and the tie -down space for approximately 10 airplanes along the Northern boundary of the demised premises as set forth in the primary lease, located at the Key West International Airport, and being more particularly described on the sketch attached hereto as Exhibit A, for Lessee's exclusive use, said property to be referred to herein as the "Hangar." Lessee shall also have unrestricted non- exclusive access to all Common Areas, the Common Areas being more particularly set forth on the sketch attached hereto as Exhibit B. The Hangar and the Common Areas are hereinafter collectively referred to as the "Premises." 2. TERM The term of this Sublease shall be for a period of thirty (30) years. The term to commence on the date the hangar and related infrastructure are constructed and available for use by Lessee. Upon Commencement of the Term, the parties will execute a Commencement Date Agreement in substantially the same form as that set forth in Schedule 1. Notwithstanding the foregoing, this Sublease shall take effect and bind the parties upon execution of this Sublease by both parties. 3. USE Lessee covenants that the Premises will be used and occupied during the term of this Sublease for the purpose of storage of Lessee's privately owned aircraft, and for uses ancillary thereto, such as maintenance and repair which is authorized by the FAA; but, in no event shall Lessee use and occupy the Premises for any other purpose, including but not limited to commercial use, without prior written consent of Lessor. 4. RENTAL (a) Base Rent: In consideration for this Sublease, as rental for the Premises, the Lessee agrees to pay to the Lessor, without deduction, setoff, prior notice or demand, Lessee's proportionate share, as defined below, of the initial annual rent as set forth in the primary lease by and between Lessor and Monroe County dated the 24t" day of June, 2002, but effective the 17th day of April, 2002, hereinafter referred to as "Primary Lease." The initial annual rent is in the amount of seventy-five SUBLEA--2ATF thousand and 00/100 dollars ($75,000), plus applicable sales tax, if any. The annual rent shall be adjusted pursuant to the Primary Lease. (b) Lessee shall also pay as additional rent, a proportionate share of the permitting expenses, architect and engineer expenses, and the cost of construction of the hangars, said expenses set forth on Exhibit C. (c) Lessee shall also pay as additional rent, a proportionate share of the Common Area Maintenance (CAM) for the repair and maintenance of those areas set forth on Exhibit B. CAM shall be all costs and expense related to the common area as shown on Exhibit B including without limitation the cost of insurance, painting, administration of the association, landscaping, gate, tarmac and bathroom. (d) Lessee's proportionate share shall mean twenty and eight tenths percent (20.8%) in regard to the foregoing items. Therefore, Lessee's base rent and additional expenses for construction and Common Area Maintenance shall be calculated by multiplying the cost of said items by Lessee's proportionate share. (e) Lessee shalt also pay as additional rent, in addition to foregoing amounts, a percentage of the Building Maintenance associated with Building F. Lessee's percentage in regard to the maintenance of Building F shall be one hundred percent (100%). Maintenance of the Building shall include roof maintenance and repair, pest control, any taxes or assessments, painting of the building, and any other maintenance required in regard the building. (f) All rental installments will be paid by Lessee, as provided in this Sublease,to Lessor at its place of business as set forth in paragraph 29 until written notice to the contrary is given by Lessor. Other remedies for non-payment of rent notwithstanding, if the monthly rental payment and other expenses to be paid by Lessee are not received by Lessor on or before the first (1st) day of the month for which rent is due, a service charge of five percent (5%) of the past due amount shall become due and payable in addition to the amounts owed under this Sublease. (g) Security Deposit. Intentionally deleted. (h) Lessee agrees to pay as additional rent all costs for repairs and maintenance associated with the tie -down areas referred to above. 5. PEACEFUL ENJOYMENT Lessee shall, and may peacefully have, hold and enjoy the Hangar subject to the terms of the Primary Lease and this Sublease, and provided Lessee pays the rentals recited in this Sublease, and Lessee also covenants and agrees to comply with the Primary Lease and all the rules and regulations of the Officers or Boards of the City, County and State having jurisdiction over the Premises, and with all ordinances and regulations of governmental authorities where the Premises are located, including SUBLEA--2.RTF 2 but not limited to the FAA, but only insofar as any such rules, ordinances and regulations pertain to the manner in which the Lessee shall use the Premises; the obligation to comply in every other case and also all cases where such rules, regulations and ordinances require repairs, alterations, changes or equipment, or any part of either, being expressly assumed by Lessor under this Sublease. 6. PAYMENTS Lessee will pay all rents and sums provided to be paid to Lessor under this Sublease at the time and in the manner provided in this Sublease. Time is of the essence as regards all rents and other sums provided to be paid to Lessor by Lessee. 7. REPAIRS AND RE-ENTRY Lessee will, at Lessee's own cost and expense, repair or replace any damage or injury done to the interior of the Hangar, and the door of the Hangar. If Lessee fails to make repairs or replacements promptly, or within thirty (30) days of occurrence, Lessor, may, at its option, make the repairs or replacements, and Lessee shall repay as additional rent the cost of the repairs or replacements to Lessor on demand. Additionally, Lessee shall not commit waste in the Hangar or Common Areas and shall keep the Premises immediately adjacent to the Hangar in a safe, neat, clean and orderly condition and free of rubbish. Lessee shall also keep and maintain the interior of the Hangar in good order and repair. 8. ASSIGNMENT OR SUBLEASE Lessee shall not transfer or assign, in whole or part, its rights and obligations in the Premises and in the Hangar that are the subject of this Sublease without obtaining Lessor's written consent, which may not be unreasonably withheld. Additionally, prior to an assignment or transfer, Lessee must first comply with the terms and provisions of the Primary Lease and the right of first refusal set forth in Paragraph 9 below. In the event, Lessee does transfer or assign his rights in the Premises, Lessee agrees that his interest in KWIA Hangar Corporation shall also be assigned with the sublease automatically. Lessee agrees to execute any and all documents necessary to perfect the transfer of its interest in the Corporation. Prior to assignment, the transferee shall agree to abide by the Primary Lease, the Sublease and all rules and regulations of the Association. Lessee may not sublease this sublease without the prior written consent of the Lessor, said consent shall not be unreasonably withheld. 9. RIGHT OF FIRST REFUSAL Lessee may assign or transfer with the prior written consent of lessor, its rights and obligations in this Sublease, but only provided that the following terms are complied with: SUBLEA-2.RTF (a) Notice of Transfer. If Lessee intends to transfer or assign this Sublease, Lessee shall give written notice of such intention to the Lessor. Such written notice, in addition to stating the intention to transfer, shall state (i) the Hangar number (ii) the name, business, and residence address of the proposed assignee, and (iii) whether or not the transfer or assignment is for valuable consideration, and, if so, the amount of the consideration and the other material terms of the transfer. If the intended transfer is for valuable consideration (i) the intended transfer must be pursuant to a legally enforceable offer in writing, made and signed by the proposed assignee, who is a person financially capable of carrying out the terms of such offer and the terms of this Sublease, and (ii) a copy of the written offer must be attached to the notice. In the event of an involuntary transfer, including but not limited to the death of Lessee, Lessee filing bankruptcy, Lessee's default under the terms of a note and mortgage associated with the Hangar, notice shall be deemed given and received on the date Lessor has actual notice of such involuntary transfer. The written notice given by a Member or an Assignee in accordance with this provision or actual notice of an involuntary transfer shall hereinafter be referred to as "Notice." (b) Option to Purchase. Within 30 days of the receipt of Notice, unless extended to determine the purchase price as set forth below, Lessor may exercise an option to purchase by providing Lessee with notice of its intent to purchase the rights of Lessee under this Lease. The notice must include a signed contract on the same terms and conditions as the bonafide offer, together with a check for any deposits required in said bonafide offer. In the event Lessor fails to respond within thirty (30) days, Lessee shall be free to sell the Sublease rights pursuant to the terms set forth in the notice. (c) In the event of an involuntary transfer, the purchase price for the rights of Lessee under this sublease shall be equal to a fair market value of this Sublease. The fair market value shall be determined by an appraiser who is selected and agreed to by Lessor and Lessee. If the parties cannot agree upon an appraiser within ten (5) days from the Notice, Lessee, or their representative or lender, shall select one appraiser and the Lessor shall select one appraiser, and those two appraisers shall select a third appraiser and the three appraisals shall be averaged. The cost of such appraisals shall be bome one-half by the selling party and one-half by the purchasing party. Each party must notify the other of its choice of appraiser within twenty (20) days after the Notice; otherwise, if one party fails to do so then the appraiser selected by the other party who gave timely notification shall be the sole appraiser. SUBLEA-2.RTF 4 10, LEGAL USE AND VIOLATIONS OF INSURANCE COVERAGE Lessee will not occupy or use, or permit any portion of the Premises to be occupied or used, or do or permit to be done in or about the Building, for any purpose which is unlawful or immoral, in part or in whole, or deemed to be hazardous in any manner, or which will be disreputable or harmful to the character or reputation of the Premises or which will be bothersome to other lessees of the Premises or visitors to the Premises, or which will be a nuisance. Lessee will not do anything or permit anything to be done in or about the Premises which will, in any way, increase the rate of insurance on the Premises andlor its contents; and, in the event, that by reason of acts or omission of Lessee, there shall be an increase in rate of any insurance on the Premises or its contents, then Lessee agrees to pay the insurance increase in full and to remedy the condition on thirty (30) days written demand by Lessor. 11. INDEMNIFICATION Lessee agrees to indemnify and hold harmless Lessor of and from any and ail fines, suits, claims, demands and action of any kind (including expenses and attorney's fees) by reason of any breach, violation, or nonperformance of any condition of this Sublease by Lessee, including failure to abide by the Rules of the Association (discussed below), and including any act or omission on the part of the Lessee, its agents, invitees, or employees. Lessee is familiar with the Hangar and Premises and acknowledges that the Premises are received by Lessee in a good state of repair and accepted by Lessee in the condition in which they are now or shall be when ready for use and that Lessor has not made any representations as to the Hangar or Premises. Lessor shall not be liable to Lessee or Lessee's agents, employees, invitees or visitors for any damage to persons or property due to the condition, the design, or any defect in the Hangar, which may now exist or subsequently occur. Lessee accepts the Premises as suitable for the purposes for which the Premises are leased and assumes all risks of damages to persons or property, and agrees that no representations except the ones that are contained here have been made to the Lessee respecting the conditions of the Premises. 12. ENTRY FOR REPAIRS AND INSPECTION Lessee will permit Lessor or its officers, agents or representatives the right to enter into and on any and all parts of the Hangar, at all reasonable hours to inspect the Hangar or make repairs or alterations or additions as Lessor may deem necessary or desirable, and Lessee shall not be entitled . to any abatement or reduction of rent by reason of Lessor's entry for these purposes. Lessor shall be entitled to enter into and on the Hangar at any time to make emergency repairs. 13. ALTERATIONS AND REPAIRS Lessee shall not perform any construction or erect any improvement on the SUBLEA-21TF Common Areas, or alter or modify the exterior of the Hangar without the prior written approval of Lessor. Lessee will not undertake any such construction without such approval, which may not be unreasonably withheld. 14. LIABILITY INSURANCE Lessee shall, at its sole cost and expense, obtain and maintain in full force and effect for the mutual benefit of Lessor and Lessee, comprehensive public liability insurance in an amount to be determined by the Board of Directors of the Association, against claims for bodily injury, death or property damage arising out of the use and occupancy of the Premises. A certificate of insurance shall be furnished to the Lessor at the commencement of the lease term and each renewal certificate of insurance shall be furnished to Lessor at least thirty (30) days prior to the expiration of the policy it renews. Each policy of insurance shall contain an agreement by the insurer that the policy shall not be canceled without thirty (30) days prior written notice to Lessor. The insurance may be in the form of general coverage, floater policy, or blanket policy issued by insurers of recognized responsibility. The nature and scope of the policy of insurance and the insurer providing the policy shall be subject to Lessor's approval, which shall not be unreasonably withheld or delayed. Should the Lessee fail to procure policies as is provided in this Sublease, the Lessor may obtain the insurance, and the premiums on the insurance shall be deemed additional rental to be paid by the Lessee to the Lessor on demand. 15. CASUALTY INSURANCE Lessor may at its reasonable discretion, at all times during the term of this Sublease, maintain a policy or policies of insurance with the premiums paid in advance, issued by and binding on some solvent insurance company, insuring the Hangar against loss or damage by fire, explosion or other hazards and contingencies for the full insurable value; provided, that the Lessor shall not be obligated in any way or manner to insure any personal property (including, but not limited to any planes, machinery, goods or supplies) of Lessee or which Lessee may have on the Premises or in the Hangar or any fixtures installed by or paid for by Lessee on the Premises or in the Hangar or any additional improvements which Lessee may construct, or which Lessor may construct for Lessee on the Premises. Lessee shall, at all times during the term of this Sublease, at Lessee's expense, maintain a policy or policies of insurance with the premiums paid in advance, insuring Lessee's plane, machinery, goods or supplies, any additional improvements which Lessee may construct within the Premises. Lessee also agrees to maintain any other insurance reasonably requested by Lessor. 16. CONDEMNATION If the Premises, or any part of the Premises, or any interest in the Premises, be SUBLEA-2.RTF 6 taken by virtue of (or sold under threat of) eminent domain or for any public or quasi - public use or purpose, this Sublease and the estate granted by this Sublease, at the option of the Lessor, shall terminate as of the date of the taking. Any interest, which Lessee may have or claim to have in any award resulting from the condemnation proceeding, shall be limited to removal expenses for Lessee's movable fixtures and other personal property. 17. LOSS OR DAMAGE Lessor shall not be liable or responsible for any loss or damage to any property or person occasioned by theft, fire, water, wind, vandalism, rain, leakage of the Hangar, act of God, public enemy, injunction, war, court order, requisition, or order of governmental body or authority, unavailability of fuel or energy, or other matter beyond the control of Lessor, or for any damage or inconvenience which may arise through repair or alteration of any part of the Building, or failure to make such repairs, or from any cause whatever. 18. ABANDONMENT If the Premises are abandoned by Lessee, except as provided in this Sublease, Lessor shall have the right but not the obligation, to re -let the Premises for the remainder of the period covered by this Sublease; and if the rent is not received through such re -letting at least equal to the rent provided for under this Sublease, Lessee shall pay and satisfy any deficiencies between the amount of the rent called for and that received through re -letting, and all expenses incurred by such other re - letting. Nothing in this Sublease shall be construed as in any way denying Lessor the right, in case of abandonment of the Premises or other breach of this contract by Lessee, to treat the abandonment or other breach as an. entire breach of this contract, and nothing in this Sublease shall be construed as in any way denying Lessor the right to recover damages suffered by Lessor as a result of a breach, or the right to pursue any other remedy provided by law or this Sublease. 19. LOSS BY FIRE OR OTHER CAUSES In case of fire, or loss or damage to the Building or Common Areas from other causes, Lessee shall give immediate notice of the fire, loss or damage to Lessor. In the event of damage to the Building or Common Areas by fire or other causes resulting from fault or negligence of Lessee or Lessee's agents, employees, invitees or visitors, the damage shall be repaired by and at the sole expense of Lessee under the direction and supervision of Lessor. If the Building or Common Areas shall be damaged by fire or other casualty covered by Lessor's insurance and not resulting from the fault or negligence of Lessee or Lessee's agents, employees, invitees or visitors, the damages shall be repaired by and at the expense of Lessor only to the extent that insurance proceeds are available. It shall be the responsibility of the Lessee to make up any shortfall as additional rent. Lessee agrees that rent shall not abate during the period of repair or replacement in the event of damage caused by SUBLEA-2.RTF 7 fire or other casualty. Except as otherwise set forth in the Primary Lease, Lessor agrees, at its expense, to repair promptly any damage of the Building and Common Areas not resulting from the fault or negligence of Lessee or Lessee's agents, employees, invitees, or visitors, except that Lessee agrees to repair and replace the interior of the Hangar, the door of the Hangar, fixtures and improvements within the Hangar, and Lessee's personal property and equipment. No Oenalty shall accrue for reasonable delay, which may arise by reason of adjustment of insurance on the part of Lessor, and for reasonable delay on account of causes beyond Lessor's control. 20. WAIVER OF SUBROGATION RIGHTS Anything in this Sublease to the contrary notwithstanding, Lessor and Lessee each waive any and all rights of recovery, claim, action or cause of action against each other, its agents, officers or employees, for any loss or damage that may occur to the Premises or the Building, or any improvements to the Premises or the Building, or any personal property of any party in the Hangar or on the Premises, by reason of fire, the elements, or any other cause(s) which are insured against policies referred to in Paragraph 14, 15 and 19 of this Sublease, regardless of cause or origin, including negligence of the other party, its agents, officers, or employees. Lessor and Lessee will both exert their best effort to cause all insurance policies to include an endorsement to the effect the provisions of this Section. 21, ATTORNEY'S FEES In the event that Lessee or Lessor defaults in the performance of any of the terms, covenants, agreements or conditions contained in this Sublease and Lessor or Lessee places the enforcement of this Sublease, or any part of this Sublease, or the collection of any rent or other sum due, or to become due under this Sublease, or recovery of the possession of the Premises, in the hands of an attorney, or it files suit on the same, then the prevailing party shall pay all reasonable attorney's fees and costs. 22. AMENDMENT OF SUBLEASE This Sublease may not be altered, changed, or amended, except by an instrument in writing, signed by all parties to this Sublease. 23. DEFAULT BY LESSEE The following shall be deemed to be events of default under this Sublease: (a) Lessee shall fail to pay when due any installment of rent or any other payment required pursuant to this Sublease or within three (3) days after receiving written notice of its failure to pay by Lessor. (b) Lessee shall abandon any substantial portion of the Premises. SUALEA-2.RTF 8 (c) Lessee shall fail to comply with any term, provision or covenant of this Sublease, other than the payment of rent, and the failure is not cured within ten (10) days after written notice to Lessee. (d) Lessee shall file a petition or be adjudged bankrupt or insolvent; or a receiver or trustee shall be appointed for all or substantially all of the assets of Lessee; or Lessee shall make a transfer in fraud of creditors or shall make an assignment for the benefit of creditors. (e) Lessee shall do or permit to be done any act that results in a lien being filed against the Premises. 24. REMEDIES FOR LESSEE'S DEFAULT All rights and remedies of the Lessor granted by this Sublease in the event of default shall be cumulative and nothing in this Sublease shall 1exclude any other right or remedy allowed by law. On the occurrence of any Event of Default set forth in this Sublease Agreement, Lessor shall have the option, if Lessor so elects but not otherwise, to pursue any one or more of the following remedies without notice or demand: (a) Terminate this Sublease, in which event Lessee shall immediately surrender the Premises to Lessor. Lessee agrees to pay on demand the amount of all loss and damage which Lessor may suffer by reason of the termination of the Sublease under this subparagraph, whether through inability to relet the Premises on satisfactory terms or otherwise. (b) Enter on and take possession of the Premises, and lock out, expel or remove Lessee or any other person who may be occupying all or any part of the Premises without being liable for any claim for damages, and re -let the Premises on behalf of Lessee and receive directly the rent by reason of the re- letting. Lessee agrees to pay Lessor on demand any deficiency that may arise by reason of any reletting of the Premises. Further, Lessee agrees to reimburse Lessor for any expenditure made by it in order to re -let the Premises. (c) Enter on the Premises, without being liable for prosecution of any claim for damages, and do whatever Lessee is obligated to do under the terms of this Sublease. Lessee agrees to reimburse Lessor on demand for any expenses which Lessor may incur in effecting compliance with Lessee's obligations under this Sublease. Further, Lessee agrees that Lessor shall not be liable for any damages resulting to Lessee from effecting compliance with Lessee's obligations under this Subparagraph caused by the negligence of Lessor or otherwise. (d) In the event that litigation is necessary to enforce the provisions of this Sublease, both Lessor and Lessee waive their respective rights to a jury trial. SUHLEA-2.RTP 9 25. WAIVER OF DEFAULT OR REMEDY Failure of Lessor to declare an Event Of Default immediately on its occurrence, or delay in taking any action in connection with an Event Of Default, shall not constitute a waiver of the default, but Lessor shall have the right to declare the default at any time and take such action as is lawful or authorized under this Sublease. Pursuit of any one or more of the remedies set forth in Paragraph 24 above shall not preclude pursuit of any one or more of the other remedies provided elsewhere in this Sublease by reason of the violation of any of the terms, provisions or covenants of this Sublease. Failure by Lessor to enforce one or more of the remedies provided on an Event Of Default shall not be deemed or construed to constitute a waiver of the default or of any violation or breach of any of the terms, provisions and covenants contained in this Sublease. 26. SUBORDINATION Lessee accepts this Sublease subject and subordinate to any rights of the County presently existing on the Premises. Lessor is now irrevocably vested with full power and authority to subordinate Lessee's interest under this Sublease to the County's interest, and Lessee agrees on demand to execute additional instruments subordinating this Sublease as Lessor or the County may require. Additionally, this Sublease and all provisions hereof are subject and subordinate to the terms and conditions of the Primary Lease, and all of the documents under which the Airport Owner acquired the subject property from the United States of America and shall be given only such effect as will not conflict or be inconsistent with the terms and conditions contained in the lease of such lands from the Airport Owner, and any existing and' subsequent amendments thereto, and are subject to any ordinances, rules or regulations which have been, or may hereafter be adopted by the Airport Owner pertaining to the Key West International Airport. 27. SUCCESSORS This Sublease shall be binding on and inure to the benefit of Lessor and Lessee and their respective heirs, personal representatives, successors and assigns. 28. PARKING During the term of this Sublease, Lessee shall have the non-exclusive use in common with Lessor, other lessees of the Building, their guests and invitees, of the non -reserved common automobile parking areas, driveways, and walkways, subject to the rules and regulations for the use of those areas as prescribed from time to time by Lessor. 29. NOTICES Any rental payment, notice or document required or permitted to be delivered SUBLEA-2.RTF 10 hereunder shall be deemed to be delivered or given when (a) actually received, or (b) signed for or refused as indicated on the U.S. Postal Service Return Receipt. Delivery may be made by personal delivery or by United States mail, postage prepaid, Certified or Registered Mail, addressed to the parties at the respective addresses set out opposite their names below, or at any other addresses that they may later specify by written notice delivered in accordance with this Sublease: LESSOR: KWIA Hangar Corporation c/o Karl Walters PO Box 2669 Key West, Florida 33041 With copy to: Spottswood, Spottswood and Spottswood 500 Fleming St. Key West, FI.33040 LESSEE: Island City Flying Service, Inc. 3471 S. Roosevelt Blvd. Key West, FL 33040 30. SEPARABILITY In the event that any provisions of this Sublease are held invalid, the other provisions shall remain in full force and effect. 31. GOVERNING LAWS This Sublease shall be governed by and construed according to the laws of the State of Florida. 32. CAPTIONS AND CONSTRUCTION OF LANGUAGE Captions are inserted for convenience only, and shall not affect or limit the construction of this Sublease. The terms "Sublease", "Sublease Agreement", or "Agreement" shall be inclusive of each other, and will also include renewals, extensions, or modifications of this Sublease. 33. NO LIENS Notwithstanding anything to the contrary contained in this Sublease, if Lessee makes any repairs or alterations to the Premises, whether or not with Lessor's prior consent, Lessee will not allow any lien of any kind, whether for labor, material, or otherwise to be imposed or remain against the any part of the Premises or Building. Notwithstanding the foregoing, if any lien is filed against the Premises or the Building for work claimed to have been for, or materials fumished to Lessee, whether or not done pursuant to this paragraph, the same shall be discharged by Lessee within SUBLEA-2.RTF 11 fifteen (15) days after that, at Lessee's expense, by transferring the lien to security pursuant to the applicable provisions of the Florida Mechanic's. Lien Law. 34. MORTGAGE FINANCING Lessee shall have the right to encumber, by mortgage or other proper instrument, Lessee's interest under this Sublease, to a lending institution authorized to make leasehold mortgage loans in the State of Florida without obtaining the prior consent of the Lessor, subject, however, to the other terms and conditions of this Sublease and the Primary Lease. If the Lessee shall mortgage its leasehold interest and if the holder of the mortgage or pledge shall forward to the Lessor a duplicate original of the mortgage in form proper for recording, or a copy of the mortgage certified as a true copy by the Office of Official Records of Monroe County, Florida, together with a written notice setting forth the name and address of the leasehold mortgagee, then until the time that the leasehold mortgage shall be satisfied of record, the following provisions of this Paragraph shall apply. (a) When giving notice to the Lessee with respect to any default under the provisions of this Sublease, the Lessor will also serve a copy of such notice upon the leasehold mortgagee. No such notice to the Lessee shall be deemed to have been given unless a copy of such notice has been given to such leasehold mortgagee pursuant to the manner set forth in paragraph 29, which notice must specify the nature of each such default. (b) In case the Lessee shall default under any of the provisions of this Sublease, the leasehold mortgagee shall have the right to cure such default whether the same consists of the failure to pay rent or the failure to perform any other matter or thing which the Lessee is required to do or perform and the Lessor shall accept such performance on the part of the leasehold mortgagee as though the same had been done or performed by the Lessee. (c) Upon the happening of .any default and upon receipt of notice of default from the Lessor, the Lessee agrees to notify the leasehold mortgagee promptly in writing of such occurrence and shall state in the notice what action has been or will be taken by the Lessee to cure the default. (d) The leasehold mortgagee may become the legal owner and holder of this Sublease by foreclosure of its mortgage or as a result of the assignment of this Sublease in lieu of foreclosure, which shall not require Lessor's consent, but will be subject to the right of first refusal set forth in Paragraph 9 and the terms of the Primary lease, and provided mortgagee will expressly assume and agree to be bound by the covenants of Lessee in this Sublease. (e) Within ten (10) days after written request by Lessee or by Lessee's leasehold mortgagee, or in the event that upon any sale, assignment or mortgaging of Lessee's interest in this Sublease by Lessee or Lessee's SusLEA-2.RTF 12 leasehold mortgagee, an offset statement shall be required from the Lessor, the Lessor agrees to deliver in recordable form a certificate to any proposed lease- hold mortgagee, purchaser, assignee or to Lessee, certifying (if such be the case) (i) the amount of rental due under the Sublease, if any, and the date to which rentals have been paid; (ii) that this Sublease is in full force and effect; (iii) that the Lessor has no knowledge of any default under this Sublease, or if any default exists, specifying the nature of the default; and'(iv) that there are no defenses or offsets which are. known and may be asserted by the Lessor against the Lessee in respect of obligations pursuant to this Sublease. (f) So long as the Lessee's interest in this Sublease shall be mortgaged to a leasehold mortgagee, the parties agree for the benefit of such leasehold mortgagee, that they shall not surrender or accept a surrender of this Sublease or any part of it, nor shall they cancel this Sublease or accept material prepayments of installments of rent to become due without notifying mortgagee in each instance. (g) Reference in this Sublease to acquisition of the Lessee's interests in this Sublease by the leasehold mortgagee shall be deemed to refer, where circumstances require, to acquisition of the Lessee's interest in this Sublease by any purchaser at a sale on foreclosure of the leasehold mortgage and provisions applicable to the leasehold mortgagee in such instance or instances shall also be applicable to any such purchaser, provided that any assignee of the mortgagee will expressly assume and agree to be bound by all the covenants of Lessee in this Sublease. (h) Reference in this Sublease to a leasehold mortgagee shall be deemed to refer where circumstances require, to any assignee of a leasehold mortgagee; provided that such assignee shall forward to the Lessor a duplicate original of the assignment of the leasehold mortgage in form proper for record or a copy of such assignment, certified as a true copy by the office of Official Records of Monroe County, together with a written notice setting forth the name and address of the assignee. (i) Despite any provision which is or may appear to be to the contrary in this Sublease, any leasehold mortgage shall be specifically subject and subordinate to the Lessor's rights under this Sublease, and subject and subordinate to the County's rights pursuant to the Primary Lease. 35. RADON GAS NOTIFICATION RADON GAS: 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 health department. SUBLEA-2.RTF 13 36. PRIMARY LEASE This Sublease is expressly made subject to all terms, conditions, and limitations contained in the Primary Lease. 37. ASSOCIATION Lessee, and any assigns of Lessee, agree to be a shareholder/member of KWIA Hangar Corporation, 38. EARLY TERMINATION Lessee acknowledges that Lessor may terminate this Sublease in the event Lessor chooses to terminate the Primary Lease pursuant to the terms set forth in Paragraph 3(c) of said Primary Lease. IN WITNESS WHEREOF, the parties have executed this Sublease on this 4-6* day of We .M!W , 2003, 10"d Signat f f Witne as V. it Print-1 Njjof Vyi#ness�.-,/j,{ Si ature of Witness JO POLSTON TICKLE Printed Name of Witness Pritytgd KarfiW of Witness Si4eature of Witness IQ p01-SM I-I_1 Printed Name of Witness SUBLEA-2.RTF 14 ISLAND CIW 41NJSERVICE, INC. BY:: k V P'l, Printed Name of Lessee HANGAR CORPORATION By: J01 M. S TTSWOOD, Jr. Its: President SEP-17-2003 WED 10:11 AM FAX NO. 3052922069 P. 02 . .. .. . ... . .. .. . ... . .. .. . ... . gill quir R 1 A 11 SA ji i'll. Ali 11X0 1 a Is 1, SRf -01 In P m is 2, q.. :1 -xi It*' x tIlk! n, Pa F 44 44 G c- ji + 44- 4 HANGAR DEVELOF WENT, BOA90 OF couhny �o SEQUENCE OF momtm TA)OLANES AND �PRON EXHIBIT A-X SEP-17-2003 WED 10:11 AM FAX N0, 3052922069 P. 03 09/17/2883 82:31 3862939118 KAWA CQNS'T PAGE 81 KWIA Monger Association NAME % OI' CONDO % OF OUILOINO 64 FOOTAGE BUILDING D'-8IONATION Island City 20.60 100% 11.200 F CaboNaa 10.40 160% 5,600 3 Dien 6.12 60% 3.300 E worquoy 6.12 60% 3,300 E Foidown 5.66 50% 3,006 0 Simon T 5.56 50% 3,060 0 Rockland 6.66 80% 3,000 B Key Stephen Turco 5.56 60% 3,000 B John Lockwood 5.58 50% 3,000 C 8K Land 5.68 50% 3.000 C Sam swab& 0) 2.06 11 % 1,889 A Spottswead (2) 3.0 13% 1.000 A Men" (3) 2.60 11 % 1.308 A (6) 2.80 11 % 1.969 A Paterson (5) 2.60 11 % 1.3" A Doom (6) 2.60 11 % 1,386 A Wobsbr (7) 2.00 14% 1,388 A Walker (a) 2.60 11% 1,388 A Storage 1.20 3.6% 700 Bath .74 5.0% 440 A EXHIBIT A-2 y SEP-17-2003 WED 10:11 Ali FAX N0. 3052929069 Uli 0 $ll It 'Re o� 9� '�� �4� t p �� �� Ff7 •� q, E:: rF � 4 ! [ �b ¢�.(_r-+til �k�� I:,'.- k '1 , c �JA � ` ;[y °; e• a la : I xts@ [ R ! l : ,'l A�� �,. 1r7 �w IMP NA hVAMM FOR ll T • -,rr i� a . .F � •_ r � 'r.:�y'.''?'<-�l,�y'� •` a -,a •r j� r � � .c x ;N� I , !" r,, �..._. — g• _ � • � .� 1 18".1 1 lifl'i�U��ff=``��L t=_ � .ifti�q.l .». y; ,a t to 60ARD Or COW" COWAS f *Ms ' • . KANGAR�OEVELOPMENT, SEQUENCE OF -- ��• r his"— TAXILANES AND APRON COMSTRUCT �'�: . R•,...• lON ,I EXHIBIT B Common Areas shall be all areas on the Lease preluises outside the footprint of the hangars and excluding the tie -down area.