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1998-350AN ORDINANCE AUTHORIZING THE CITY MANAGER TO EXECUTE AN AIRPORT LEASE AGREEMENT BETWEEN THE CITY OF DENTON AND JIM OSBORNE TO LEASE CERTAIN PREMISES OF THE MUNICIPAL AIRPORT FOR THE PURPOSE OF CONSTRUCTING AND MAINTAINING OFFICE AND HANGAR FACILITIES THEREON, AND PROVIDING AN EFFECTiVE DATE THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS SECTION I That the City Manager is authorized to execute an mrport lease agreement between the City of Denton, Texas and Jim Osborne, to lease certmn premises of the Mumc~pal Airport for the purposes of and constructing and mmntmmng a office and hangar facthtles thereon, under the terms and conditions contained w~thln th~s Agreement, whmh is attached hereto and made a part hereof SECTION II That this ordinance shall become effective immediately upon its passage and approval PASSED AND APPROVED thls the ~/~~ dayof (~2~~ ,1998 ATTEST JENNIFER WALTERS, CITY SECRETARY APPR(~4E; AS~O LEGAI~F;~ HERBERT L PROUTY, CITY ATTORNEY AIRPORT LEASE AGREEMENT COMMERCIAL OPERATOR THE STATE OF TEXAS § § KNOW ALL MEN BY THESE PRESENTS COUNTY OF DENTON Thls lease is made and executed this. _~.~--~d ~~ 1998, at Denton, Texas, by and between the cl5y o~YD=~ton, ex , municipal corporation, hereinafter referred to as "Lessor", and Jim Osborne, having his principal offices at 1912 Vintage Drive, Corinth, Texas 76205, hereinafter referred to as "Lessee" WITNESSETH~ WHEREAS, Lessor now owns, controls and operates the Municipal Airport (Airport) in the City of Denton, County Df Denton, State of Texas, and WHEREAS, Lessee desires to lease certain premises on said airport and construct and maintain an aircraft hangar and related aviation facilities thereon, and NOW, THEREFORE, for and in consideration of the promises and the mutual covenants contained in this Agreement, the parties agree as follows I. CONDITIONS OF AGREEMENT NOTWITHSTANDING ANY LANGUAGE TO THE CONTRARY HEREINAFTER CONTAINED, THE LANGUAGE IN PARAGRAPHS A THROUGH D OF THIS SECTION SHALL BE BINDING A PRINCIPLES OF OPERATIONS The right to conduct aeronautical activities for furnishing services to the public is granted to Lessee subject to Lessee agreeing 1 To furnish said services on a fair, equal and not unjustly dlscrlm~natory bas~s to all users thereof, and 2 To charge fair, reasonable and not un]ustly discriminatory prices for each unit or service, provided, that Lessee may be allowed to make reasonable and nondiscriminatory discounts, rebates, or other similar types of price reductions to volume purchasers B NON-DISCRIMINATION Lessee, for himself, his personal representatives, successors and interests, and assigns, as a part of the consideration hereof, does hereby covenant and agree as a covenant running with the land that 1 No person on the grounds of race, rellg~on, color, sex, or national origin shall be excluded from partlc~pat~on in, denied the benefits of, or be otherwise subjected to d~scrlm~nat~on ~n the use of said facilities, 2 In the construction of any improvements on, over, or under such land and the furnishings of services thereon, no person on the grounds of race, religion, color, sex, or national origin shall be excluded from participation in, denied the benefits of, or otherwise be subjected to discrimination, 3 Lessee shall use the premises zn 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, Nondiscrimination in Federally assisted programs of the Department of Transportation Effectual of Title VI of the Civil Rights Act of 1964, as said Regulations may be amended C RIGHT OF INDIVIDUALS TO MAINTAIN AIRCRAFT It zs clearly understood by Lessee that no right or privilege has been granted which would operate to prevent any person, firm or corporation operating aircraft on the airport from performing any services on its own aircraft with its own regular employees (including, but not limited to, maintenance and repair) that it may choose to perform D NON-EXCLUSIVE RIGHT It is understood and agreed that nothing herein contained shall be construed to grant or authorize the granting of an exclusive right within the meaning of Title 49 U S C Appendix §1349 E PUBLIC AREAS 1 Lessor reserves the right to further develop or improve the landing area of the airport as ~t sees fit, regardless of the desires or views of Lessee, and without interference or hindrance 2 Lessor shall be obligated to maintain and keep zn 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 3 During time of war or national emergency, Lessor shall have the right to lease the landing area or any part thereof to the United States Government for military or naval use, and, if such lease is executed, the provisions of this instrument insofar as they are inconsistent with the provisions of the lease to the Government, shall be suspended Osborne Lease Agreement Page 2 4 Lessor reserves the right to take any action it considers necessary to protect the aerial approaches of the airport against obstruction, together with the r~ght to prevent Lessee from erecting, or permitting to be erected, any building or other structure on or adjacent to the airport which, in the opinion of Lessor, would l~mlt the usefulness or safety of the airport or constitute a hazard to aircraft or to aircraft navigation 5 This Lease shall be subordinate to the provisions of any existing or future agreement between Lessor and the United States or agency thereof, relative to the operation or maintenance of the airport II. LEASED PREMISES Lessor, for and in consideration of the covenants and agree- ments herein contained, to be kept by Lessee, does hereby demise and lease unto Lessee, and Lessee does hereby hire and take from Lessor, the following described land situated in Denton County, Texas A LAND A tract of land, being approximately 8,800 square feet, or 0 202 acres, drawn and outlined on Attachment "A", and legally described in Attachment "B", such attachments being incorporated herein by reference Together with the right of ingress and egress to said property, and the right in common with others so authorized of passage upon the Airport property generally, subject to reasonable regulations by the City of Denton and such rights shall extend to Lessee's employees, passengers, patrons and lnv~tees For purposes of this agreement, the term "Premises" shall mean all property located within the metes and bounds described and identified within Attachment "B", including leasehold Improvements constructed by the Lessee, but not including certain easements or property owned and/or controlled by the Lessor B IMPROVEMENTS PROVIDED BY LESSOR NONE There will be no improvements provided by Lessor, except as set forth in Article II E "Access to Utilities" below For the purpose of this Agreement, the term "Lessor improve- ments'' shall mean those things on the leased premises belonging to, constructed by, or to be constructed by Lessor, which enhances or increases, or will enhance or increase, the value or quality of the leased land or property Unless otherwise noted herein, all Lessor improvements are and will remain the property of Lessor All Lessor improvements must be described in detail above, or above referenced and attached to this Agreement in an exhibit approved by Lessor Osborne Lease Agreement Page C IMPROVEMENTS PROVIDED BY LESSEE On Lot 3, Lessee shall construct a hangar and office facility not less than 2,500 square feet with taxiway access and approprlate culverts as required by C~ty ordlnances in the utlllty rlght of way south of the proposed hangar and north of the Taxlway (Lockheed) as well as other improvements as shown on the site plan attached hereto and made a part hereof for all purposes and ~dent~fled as Attachment KC" D EASEMENTS Lessor and Lessee by mutual agreement may establish, on the lease premises, easements for public access on roads and taxlways E ACCESS TO UTILITIES Lessor represents that there are water and 3-phase electr~clty lines wlthln three hundred feet (300') of the leased premises avallable to "tap-~n" by Lessee, and that the same are sufficient for usual and customary service on the leased premises Lessor shall make required sewer lines available to Lessee wlthln twelve months (12) from the effective date of this agreement Sewer l~nes wlll be w~th~n one hundred (100) feet of the leased premzses Lessee will be requzred to connect to said sewer line wzthln slx (6) months of completion of said sewer lzne III. TERM The term of this Agreement shall be for a perlod of thirty (30) years, commencing on the 15th day of October , 1998, and cont~nu- lng through the 15=h Day of October, 2028, unless earlier terminated under the provisions of the Agreement Any attempt by Lessee to renegotlate this Lease shall be ~n writing addressed to the C~ty Manager at least one hundred eighty (180) days before the expiration of the stated term of th~s lease, and at least 180 days before the expiration of any additional renegotlated period Lessee has the option to renew for two (2) additional ten {10) year terms The rental and terms to be negotiated shall be reasonable and conslstent with the then value, rentals and terms of s~mllar property on the airport IV. PAYMENTS, RENTALS AND FEES Lessee covenants and agrees to pay Lessor, as consideration for th~s lease, the following payments, rentals and fees A LAND RENTAL shall be due and payable ~n twelve (12) equal monthly installments in the sum ~n advance, on or before the 15th day of each and every month durlng the term of th~s agreement Lessee may have the option to pay annual rentals and fees in whole on or before the 15th day of October each and every year of th~s lease 1 10/15/98 $0 06 per square foot minimum yearly rental, adjusted annually per paragraph IV C 2 10/15/03 The current lease rate (previous year's rental) will be increased by an additional $0 06 per square foot, and then adjusted annually per paragraph IV C 3 10/15/13 The current lease rate (previous year's rental) will be zncreased by an additional $0 02 per square foot, and then adjusted annually per paragraph IV C Notwithstanding the foregoing, the annual lease rental to be reduced by the current lease rate per square foot, times the number of square feet comprising all easements established in accordance w~th Article II(D) B LESSOR IMPROVEMENTS RENTALS NONE There are no Lessor improvements on the leased premises C PAYMENT, PENALTY, ;%DJUSTMENTS All payments due Lessor from Lessee shall be made to Lessor at the offices of the F~nance Department of the City of Denton, Accounts Receivable, 215 E McKlnney, Denton, Texas, unless otherwise designated in wrltlng by the Lessor If payments are not received before or on the 15th, a five (5) percent penalty will be due as of the 16th If payments are not received by the 1st of the subsequent month, an additional penalty of one (1) percent of the unpald rental/fee amount wzll be due A one (1) percent charge will be added on the 1st of each subsequent month until the unpaid rental/fee payment ~s made Failure to pay the rent or penalty amounts on delinquent rent shall constitute an event of default of th~s lease The yearly rental for land and improvements herein leased shall be readjusted at the end of each one (1) year perzod during the term of this lease on the basis of the proportion that the then current Unzted States Consumer Price Index for all urban consumers (CPI-U) for the Dallas-Fort Worth geographical regzon, as compiled by the U S Department of Labor, Bureau of Labor Statistics bears to the applzcable index at the executzon of this lease The orzglnal land rental amount is based upon the formulae set forth in Section IV A for the land herein leased Each rental adjustment, if any, shall occur on the 15th day of October, beginning 1999, and every year thereafter on such date The ad3ustments in the yearly rent shall be determined by multiplying the minimum yearly rent as set forth in Section IV A by a fraction, the numerator of which is the index number for the last month prior to the adjustment, and the denominator of which is the index number applicable at the executzon of th~s lease If the product of th~s multlpllcat~on ~s greater than the m~n~mum yearly rent as set forth in Section IV A , Lessee shall pay this greater amount as the yearly rent until the time of the next rental adjustment as called for in this section If the product of Osborne Lease ~reement Page 5 thzs multiplication is less than the mznzmum yearly rent of as set forth in Sectzon IV A , there shall be no adjustment zn the annual rent at that tzme, and Lessee shall pay the previous year's annual rent untzl the time of the next rental adjustment as called for in this sectzon In no event shall any rental adjustment called for in this section result zn an annual rent less than the previous year's annual rent The ad3ustment shall be limited so that the annual rental payment determined for any given year shall not exceed the annual rental payment calculated for the previous year by more than ten (10) percent, except for the adjustments under the lease effective 10/15/03 and 10/15/13 If the consumer price lndex for all urban consumers (CPI-U) for the Dallas-Fort Worth geographical region, as compiled by the U S Department of Labor, Bureau of Labor Statistics, is d~scontlnued during the term of thzs lease, the remaining rental adjustments called for in this section shall be made using the formula set forth in Subsectlon (a) above, but substztut~ng the index numbers for the Consumer Price Index-Seasonally Adjusted U S City Average For All Items For All Urban Consumers (CPI-U) for the Index numbers for the CPI-U applicable to the Dallas-Fort Worth geographical region If both the CPI-U for the Dallas-Fort Worth geographical region and the U S Czty Average are d~scontlnued during the term of this lease, the remaining rental adjustments called for in this section shall be made using the statistics of the Bureau of Labor Statzstlcs of the Un,ted States Department of Labor that are most nearly comparable to the CPI-U applicable to the Dallas-Fort Worth geographlcal region If the Bureau of Labor Statistics of the United States Department of Labor ceases to exzst or ceases to publish statistics concerning the purchasing power of the consumer dollar during the term of thzs lease, the remaining rental adjustments called for in this section shall be made using the most nearly comparable statistics published by a recognized financial authorlty selected by Lessor V. RIGHTS AND OBLIGATIONS OF LESSEE A USE OF LEASED PREMISES Lessee is granted the non- exclusive privilege to engage in or provide the following 1 Hangar Leases and Rental The rental or lease of hangars and hangar space and related facilities upon the leased premises 2 Off~ce Space Lease or Rental The rental or lease of office space in or adjoining Lessee's hangars 3 A~rcraft Storage and Tie Down To provide parking, storage and tie down service, for both Lessee's and ~tlnerant aircraft upon or within the leased premises Osborne Lease Agreement - Page 6 Lessee, his tenants and sublessees shall not be authorized to conduct any services not specifically listed in this agreement The use of the lease premises of Lessee, h~s tenants or sublessees shall be limited to only those private, commercial, retail or in- dustrial activities hav~ng to do with or related to airports and aviation No person, business or corporation may operate a commer- cial, retaml or ~ndustrlal bus,ness upon the premises of Lessee or upon the Airport wlthout a lease or l~cense from Lessor authorizing such commercial, retail or Industrial activity The Lessor shall not unreasonably withhold authorization to conduct aeronautical or related services B STANDARDS Lessee shall meet or exceed the following standards 1 Address Lessee shall f~le with the Airport Manager and ~-~p current h~s mailing addresses, telephone numbers and contacts where he can be reached in an emergency 2 Llst Lessee shall file with the Airport Manager and keep current a list of his tenants and sublessees 3 Conduct Lessee shall contractually require his employers and sublessees (and sublessee's lnvltees) to ab~de by the terms of th~s agreement Lessee shall promptly enforce his contractual rights in the event of a default of such covenants 4 Utilities, Taxes and Fees Lessee shall meet all expenses and payments in connection with the use of the Premises and the rights and privileges herein granted, including the timely payment of utilities, taxes, permit fees, license fees and assessments lawfully levied or assessed 5 Laws Lessee shall comply with all current and future federal, state and local laws, rules and regulations which may apply to the conduct of bus~ness contemplated, including rules, regulations and ordinances promulgated by Lessor, and Lessee shall keep in effect and post in a prominent place all necessary and/or required l~censes or permits 6 Maintenance of Property Lessee shall be responsible for the maintenance, repair and upkeep of all property, build- ings, structures and improvements, including the mowing or elimination of grass and other vegetation on the Premises, and shall keep said Premises neat, clean and ~n respectable condition, free from any ob]ect~onal matter or thing Lessee agrees not to utzllze or permit others to utilize areas on the leased premzses which are located on the outside of any hangar or building for the storage of wrecked or permanently disabled a~rcraft, a~rcraft parts, osborne Lease ~reement Page 7 automobiles, vehmcles of any type, or any other equmpment or mtems which would d~stract from the appearance of the leased premises Lessee agrees that at no tmme shall the leased premises be used for a flea market type sales operation 7 Painting of Bumld~ngs During the ormgmnal term of this Lease and during each extension, Lessor shall have the right to require, not more than once every fmve years, that the metal exterlor of hangar(s) or bumldmng(s) located on the premises be revmewed by the A~rport Advmsory Board for the purpose of determlnang whether painting of the exteriors of such bumld~ngs or hangars ~s necessary If the Aarport Advmsory Board determines pamntlng is necessary, mt shall furnash a recommendation to thms effect to the C~ty Council The Councml, may, upon the Board's recommendatmon, requmre Lessee to repamnt said extermors accordang to Lessors specaflcat~ons (to specify color of paznt, qualmty of workmanship and the year and month ~n which the hangar(s) or buald~ng(s) are to be pamnted, ~f needed ) Lessee shall complete the paznt~ng an accordance wmth such specafacatmons within one (1) year of recempt of notice from lessor Lessee agrees to pay all costs and expense mnvolved mn the hangar or bumldlng palntlng process Famlure of Lessee to complete the palntmng requlred by Lessor's City Counczl wmthmn one (1) year permod shall constitute Lessee's default under this Lease 8 Unauthormzed use of premises Lessee may not use any of the leased land or premmses for the operation of a motel, hotel, restaurant, private club or bar, apartment house, or for ~ndustrmal, commercaal or retaml purposes, except as authorized herein 9 Dwellmngs It ms expressly understood and agreed that no permanent dwellmng or domicile may be built, moved to or establlshed on or within the leased premises nor may lessee, h~s tenants, mnvmtees, or guests be permztted to resmde or remain as a resident on or wathmn the leased premmses or other a~rport premmses 10 Qumt Possessaon Lessee shall qumt possessmon of all premises leased here~n at the end of the primary term of thas lease or any renewal or extensmon thereof, and delzver up the premmses to Lessor an as good condmt~on as exmsted when possession was taken by Lessee, reasonable wear and tear excepted 11 Hold Harmless Lessee shall ~ndemnmfy and hold harmless Lessor from and agamnst all loss and damages, ancludang death, personal injury, loss of property or other damages, arising or resulting from the operation of Lessee's business in and upon the leased premises 12 Chemicals Lessee agrees to properly store, collect and dispose of all chemicals and chemical residues, to properly store, confine, collect and dispose of all paint, including paint spray in the atmosphere, and paint products, and to comply with all Local, State and Federal regulations governing the storage, handling or disposal of such chemicals and paints 13 Hazardous Activities Should Lessee violate any law, rule, restriction or regulation of the City of Denton or the Federal Aviation Administration, or should the Lessee engage in or permit other persons or agents to engage in activities which could produce hazards or obstruction to air navigation, obstructions to visibility or interference with any aircraft navigational aid station or device, whether airborne or on the ground, then Lessor shall state such violation in writing and deliver written not~ce to Lessee or Lessee's agent on the leased premises, or to the person(s) on the leased premises who are causing said violation(s), and upon delivery of such written not~ce, Lessor shall have the right to demand that the person(s) responsible for the vlolatlon(s) cease and desist from all such activity creating the violation(s) In such event, Lessor shall have the right to demand that corrective action, as required, be commenced immediately to restore the leased premises into conformance with the particular law, rule or aeronautical regulation being v~olated Should Lessee, Lessee's agent, or the person(s) responsible for the violation(s) fall to cease and desist from said violation(s) and to immediately commence correcting the violation(s), and to complete said correc- tions within twenty-four (24) hours following written notification, then Lessor shall have the right to enter onto the leased premises and correct the violation(s), and Lessor shall not be responsible for any damages incurred to any improvements on the leased premises as a result of the corrective action process D SIGNS During the term of this Agreement, Lessee shall have the right, at its own expense, to place in or on the lease Premises s~gns identifying Lessee Said signs shall be of a size, shape and design, and at a location or locations, approved by the Lessor and in conformance w~th any overall d~rect~onal graphics or s~gn program established by Lessor for the A~rport Lessor's approval shall not be withheld unreasonably Sa~d s~gns shall be maintained in good repair throughout the term of this agreement Notw~thstandlng any other provlslon of this agreement, said s~gns shall remain the property of Lessee Lessee shall remove, at lts expense, all letterlng, slgns and placards so erected on the premises at the expiration of the term of this Agreement or extensions thereof VI. COVENANTS BY LESSOR Lessor hereby agrees as follows A PEACEFUL ENJOYMENT That on payment of rent, fees, and performance of the covenants and agreements on the part of Lessee to be performed hereunder, Lessee shall peaceably hold and en~oy the leased premises and all r~ghts and privileges here~n granted, B COMPLIANCE Lessor warrants and represents that in the establishment, construction and operation of sa~d Denton Municipal A~rport, that Lessor has heretofore and at this time ~s complying w~th all ex~st~ng rules, regulations, and criteria d~strlbuted by the Federal Aviation Administration, or any other governmental authority relating to and including, but not l~m~ted to, no~se abatement, a~r rights and easements over adjoining and contiguous areas, over-flight ~n landing or takeoff, to the end that Lessee will not be legally l~able for any action of trespass or similar cause of action by v~rtue of any aerial operations of adjoining property in the course of normal take-off and landing procedures from sa~d Denton Municipal Airport, Lessor further warrants and represents that at all times during the term hereof, or any renewal or extension of same, that ~t will continue to comply with the foregoing VII. SPECIA~ CONDITIONS It is expressly understood and agreed by and between Lessor and Lessee that this lease agreement is subject to the following special terms and conditions A RUNWAYS AIqD TAXIWAYS That because of the present f~fteen thousand (15,000) pound continuous use weight bearing capacity of the runway and taxlways of the A~rport, Lessee here~n agrees to l~mlt all aeronautical activity including landing, take-off and taxiing, to a~rcraft hav~ng an actual weight, including the weight of its fuel, of fifteen thousand (15,000) pounds or less, until such time that the runway and designated taxlways on the A~rport Osborne Lease ~reement Page 10 have been improved to handle aircraft of such excessive weights It is further agreed that, based on qual~fled engineering studies, the weight restrictions and provIsions of this clause may be adjusted, up or down, and that Lessee agrees to abide by any such changes or revisions as such studies may dictate "Aeronautical Activity" referred to in this clause shall include that activity of the Lessee or its agents or subcontractors, and its customers and lnvltees, but shall not include those activities over which it has no sollcltory part or control, such as an unsolicited or unscheduled or emergency landing A pattern of negligent disregard of the provisions of this section shall be sufflc~ent to cause the immediate termination of this entire Agreement and subject Lessee to liability for any damages to the Airport that might result VIII. LEASEHOLD IMPROVEMENTS A REQUIREMENTS Before commencing the construction of any improvements upon the premises, Lessee shall submit 1 Documentation, speclf~catlons, or design work, to be approved by the Lessor, which shall establish that the improvements to be built or constructed upon the lease premises are in conformance with the overall size, shape, color, quality and design, in appearance and structure of the program established by Lessor on the Airport 2 All plans and specifications showing the location upon the premises of the proposed construction, 3 The estimated cost of such construction No construction may commence until Lessor, acting by 1ts City Council, has approved the plans and specifications and the location of the improvements, the estimated costs of such construction and the agreed estimated life of the building or structure Approval by the City Council shall not be unreasonably withheld, should the Council fall to deny Lessee's plans and specifications within sixty (60) days of submission thereof to the Council, such plans and specifications shall be deemed approved Documentary evidence of the actual cost of construction on publmc areas only (such as taxlways) shall be delivered by Lessee to Lessor's City Manager from tlme to time as such costs are paid by Lessee, and Lessor's Cmty Manager is hereby authorized to endorse upon a copy of this lease f~led with the City Secretary of Lessor such actual amounts as he shall have found to have been paid by Lessee, and the findings of the City Manager when endorsed by him upon said contract shall be conclusive upon all parties for all purposes of this agreement Osborne Lease Agreement Page 11 B ADDITIONAL CONSTRUCTION OR IMPROVEMENTS Lessee is hereby authorized to construct upon the land herein leased, at his own cost and expense, bulldmngs, hangars, and structures, that Lessor and Lessee mutually agree are necessary for use mn connection wmth the operatmons authormzed by th~s lease, provided however, before commencmng the construction of any mmprovements upon the premises, Lessee shall submmt plans and specmficatmons for approval by Lessor as specmfmed in Artmcle VIII A , above C OWNERSHIP OF IMPROVEMENTS All bumld~ngs and mmprovements constructed upon the premises by Lessee shall remain the property of Lessee unless sa~d property becomes the property of Lessor under the followmng condmtlons, terms and provlsmons 1 Removal of Bumldmn~s No bu~ldmng or permanent f~xture may be removed from the premmses 2 Assumptmon All bumldmngs and mmprovements of whatever nature remamn~ng upon the leased premises at the end of the primary term, or any extensmon thereof, of thms lease shall automatmcally become the property of Lessor absolutely mn fee w~thout any cost to Lessor 3 Bumld~n~ L~fe It ms agreed that the lmfe of the bu~ldmng to be constructed by Lessee on the property heremn leased · s thmrty (30) years 4 Cancellation Should th~s lease be cancelled for any reason before the end of the thirty (30) year expected bumldmng l~fe, mt is especially understood and agreed that Lessor reserves the rmght to purchase all buildings, structures and mmprovements then exmst~ng upon the premmses by tendering to Lessee one th~rtmeth (1/30) of the undeprecmated value of such buzld~ng for each year remamn~ng on the agreed l~fe of such bumldlng The undeprec~ated value of all mmprovements is to be determmned by havmng such improvements appramsed by three appramsers, one appointed by Lessor, one appomnted by Lessee and one appointed by the two appramsers IX SUBROGATION OF MORTGAGEE A Any person, corporatzon or mnstmtutmon that lends money to Lessee for constructzon of any hangar, structure, bulldmng or mmprovement and retains a securzty mnterest zn samd hangar, struc- ture, building or ~mprovement shall, upon default of Lessee' s oblmgatlons to samd mortgagee, have the r~ght to enter upon sa~d leased premises and operate or manage samd hangar, structure, building or mmprovement according to the terms of thms Agreement, for a permod not to exceed the term of the mortgage w~th Lessee, or untml the loan ms paid mn full, whichever comes first, but In Osborne Lease Agreement Page 12 no event longer than the term of this lease It is expressly understood and agreed that the right of the mortgagee referred to herein is limited and restricted to those improvements constructed with funds borrowed from mortgagee, those improvements purchased with the borrowed funds, and those improvements pledged to secure the refinancing of the improvements B Lessee shall have the right to place a first mortgage lien upon the leasehold ~n an amount not to exceed ezghty-flve percent (85%) of the constructlon cost or current market value of the leasehold improvements X. RIGHT OF EASEMENT Lessor shall have the r~ght to establish easements, at no cost to Lessee, upon the leased ground space for the purpose of providing underground utility services to, from or across the airport property or for the construction of public facilities on the Airport However, any such easements shall not interfere with Lessee's use of the leased premises and Lessor shall restore the property to original condition upon the installation of any utility services on, in, over or under any such easement or the conclusion of such construction Construction in or at the easement shall be completed within a reasonable time XI. ASSIGNMENT OF LEASE Lessee expressly covenants that it will not assign this lease, convey more than ten percent (10%} of the interest ~n his business, through the sale of stock or otherwise, transfer, license, nor sublet the whole or any part of the said premises for any purpose, except for rental of hangar space or tie-down space, without the written consent of Lessor Lessor agrees that it will not unreasonably withhold its approval of such sale, sublease, transfer, license, or assignment of the facilities for the airport related purposes, provided however, that no such assignment, sublease, transfer, license, sale or otherwise shall be approved ~f the rental, fees or payments, received or charged are ~n excess of the rental or fees paid by Lessee to Lessor under the terms of this lease, for such portion of the premises proposed to be assigned, subleased, transferred, licensed, or otherwise The provisions of this lease shall remain b~ndlng upon the assignees, ~f any, of Lessee XII. INSURANCE A REQUIRED INSURANCE Lessee shall maintain continuously in effect at all t~mes during the term of this agreement, at Lessee's expense, the following insurance coverage Osborne Lease Agreement Page 1 Comprehensive general liability covering the leased premises, the Lessee or its company, its personnel, and its operations on the airport 2 Aircraft liability to cover all flight operations of Lessee 3 Fire and extended coverage for replacement value for all facilities used by the Lessee either as a part of this agreement or erected by the Lessee subsequent to this agreement 4 Liability insurance limits shall be in the following minimum amounts Bodily Injury and Property Damage One Million Dollars ($1,000,000) combined single limits on a per occurrence basis 5 All policies shall name the City of Denton as an additional named ~nsured and provide for a minimum of thirty (30) days written notice to the City prior to the effective date of any cancellation or lapse of such policy 6 All pollcles must be approved by the Lessor 7 The Lessor shall be provided w~th a copy of all such policies and renewal certificates During the term of thls lease, Lessor herein reserves the right to adjust or increase the liability insurance amounts required of the Lessee, and to require any additional rider, provisions, or certificates of insurance, and Lessee hereby agrees to provide any such insurance requirements as may be required by Lessor, provided however, that any requirements shall be commensurate with insurance requirements at other public use airports s~mllar to the Denton Municipal Airport in s~ze and in scope of aviation activities, located ~n the southwestern region of the United States Lessee herein agrees to comply w~th all ~ncreased or adjusted Insurance requirements that may be required by the Lessor throughout the original or extended term of this lease, including types of insur- ance and monetary amounts or limits of insurance, and to comply with said insurance requirements within sixty (60) days following the receipt of a notice in writing from Lessor stating the increased or adjusted insurance requirements Lessee shall have the right to maintain ~n force both types of insurance and amounts of insurance which exceed Lessor's minimum insurance requirements In the event that State law should be amended to require types of insurance and/or insurance amounts which exceed those of like or similar public use airports in the southwestern region of the United States of America, then in such event, Lessor shall have the right to require that Lessee maintain in force types of insurance and/or amount of insurance as specified by State law Failure of Lessee to comply with the minimum specified amounts or types of insurance as required by Lessor shall constitute Lessee's default of this Lease XIII. CANCELLATION BY LESSOR In the event that Lessee shall file a voluntary petition in bankruptcy or proceedings in bankruptcy shall be instituted against it and Lessee thereafter is ad3udlcated bankrupt pursuant to such proceedings, or any court shall take ]urlsdlctlon of Lessee and its assets pursuant to proceedings brought under the provisions of any Federal reorganization act, or Lessee shall be divested of its estate herein by other operation of law, or Lessee shall fall to perform, keep and observe any of the terms, covenants, or conditions herein contained, or on its part to be performed, the Lessor may give Lessee written notice to correct such condition or cure such default and, if any condition or default shall continue for thirty (30) days after the receipt of such notice by Lessee, then Lessor may terminate this lease by written notice to Lessee In the event of default, Lessor has the right to purchase any or all structures on the leased premises under the provisions of Section VIII Paragraph C 4 (Cancellation) hereof XIV. CANCELLATION BY LESSEE Lessee may cancel this Agreement, in whole or part, and termi- nate all or any of its obligations hereunder at any time, by thirty (30) days written notice, upon or after the happening of any one of the following events (1) issuance by any court of competent ]urlsdlctlon of a permanent in]unction in any way preventing or restraining the use of said airport or any part thereof for airport purposes, (2) the breach by Lessor of any of the covenants or agreements contained herein and the failure of Lessor to remedy such breach for a period of ninety (90) days after receipt of a written notice of the existence of such breach, (3) the inability of Lessee to use said premises and facilities continuing for a longer period than ninety (90) days due to any law or any order, rule or regulation of any appropriate governmental authority having jurisdiction over the operations of Lessor or due to war, earthquake or other casualty, or (4) the assumption or recapture by the United States Government, or any authorized agency thereof, of the maintenance and operation of said airport and facilities or any substantial part or parts thereof Upon the happening of any of the four events listed in the preceding paragraph, such that the leased premises cannot be used for aviation purposes, then the Lessee may cancel this lease as Osborne Lease ~reement Page 15 aforesaid, or may elect to continue this lease under its terms, except, however, that the use of the leased premises shall not be limited to aviation purposes, their use being only limited by such laws and ordinances as may be applicable at that time XV. MISCELLANEOUS PROVISIONS A ENTIRE AGREEMENT This Agreement constitutes the entire understanding between the parties and as of 1ts effective date supersedes all prior or independent Agreements between the parties covering the subject matter hereof Any change or modification hereof shall be in writing signed by both parties B BINDING EFFECT Ail covenants, stipulations and agreements herein shall extend to, bind and inure to the benefit of the legal representatives, successors and assigns of the respective parties hereto C SEVERABILITY If a provision hereof shall be finally declared void or illegal by any court or administrative agency hay- lng jurisdiction, the entire Agreement shall not be void, but the remaining provisions shall continue in effect as nearly as possible in accordance with the original intent of the parties D NOTICE Any notice given by one party to the other in connection with this agreement shall be in writing and shall be sent by registered mall, return receipt requested, with postage and registration fees prepaid as follows 1 If to Lessor, addressed to City Manager City of Denton 215 E McKlnney Street Denton, Texas 76201 2 If to Lessee, addressed to Mr Jim Osborne 1912 Vintage Drive Corinth TX 76205 Notlces shall be deemed to have been received on the date of receipt as shown on the return receipt E HEADINGS The headings used in this Agreement are intended for convenience of reference only and do not define or limit the scope or meaning of any provision of this Agreement F GOVERNING LAW This Agreement is to be construed in Osborne Lease Agreement Page 16 accordance wath the laws of the State of Texas G NO WAIVER No wamver by Lessor or Lessee of any default or breach of covenant or term of thas lease may be treated as a waaver of any subsequent default or breach of the same or any other covenant or term of thms Agreement H INDEPENDENT CONTRACTOR Durang all times that thas Lease as mn effect, the partaes agree that Lessee as and shall be deemed to be an andependent contractor and operator and not an agent or employee of the Lessor wath respect to thear acts or ommssmons hereunder For all the purposes hereunder, Lessee ms and shall be deemed an andependent contractor and at ms mutually agreed that nothing contamned heremn shall be deemed or construed to constmtute a partnershmp or ]omnt venture between the partaes IN WITNESS WHEREOF, the partmes have executed this Agreement as of the day and year fmrst above wratten CITY OF DENTON, TEXAS, LESSOR APPROVED AS TO LEGAL FORM HERBERT L PROUTY, CITY ATTORNEY CITY OF DENTON, TEXAS BY c or~e, LESSEE Osborne L~a~e Agreement Page 17 THE STATE OF TEXAS § COUNTY OF DENTON §  h~s,lnstrument was acknowledged before me on the /-~ day of ~ , 199~by LESSEE NO~/~RY PUBLIC, STATE OF TEXAS My Commission Expires ~.~. ~J_ ATTACHMENT "C" / / ~ / I '