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2005-169 S:IOur DoeumcntslAirportlOrdinaneeslO51NTDenton Leasing.doe ORDINANCE NO. d 005"-16 q AN ORDINANCE APPROVING A COMMERCIAL OPERATOR AIRPORT LEASE AGREEMENT BETWEEN THE CITY OF DENTON, TEXAS AND NTDENTON LEASING, INc. ON APPROXIMATELY 0.5854 ACRE OF LAND AT THE DENTON MUNICIPAL AIRPORT; AND PROVIDING AN EFFECTIVE DATE. THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION I. The City Manager or his designee is hereby authorized to execute an airport lease agreement for commercial operator between the City of Denton and NTDenton Leasing, Inc. on approximately 0.5854 acre of land at the Denton Municipal Airport, in substantially the form of the Airport Lease Agreement which is attached to and made a part of this Ordinance for all purposes. SECTION 2. This Ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the .di / 5t day of qfJ/Ll.- ,2005. ê~kd( EULlNE BROCK, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APP ED AS 0 LEGAL FORM: EDWIN M. SNYDER, INTERIM CITY ATTORNEY BY: f~~Y rI~- . I NTDenton Leasing AGR.doc AIRPORT LEASE AGREEMENT COMMERCIAL OPERATOR This Lease Agreement is made and executed to be effective as of the Twenty-First day of June, 2005 (the "Effective Date") at Denton, Texas, by and between the City of Denton, Texas, a municipal corporation, hereinafter referred to as "Lessor", and NTDenton Leasing, Incorporated, hereinafter referred to as "Lessee". WITNESSETH: WHEREAS, Lessor now owns, controls and operates the Denton Municipal Airport (the "Airport") in the City of Denton, County of Denton, State of Texas; and WHEREAS, Lessee desires to lease certain premises at the Airport and construct and maintain an aircraft hangar and related aviation facilities thereon; NOW, THEREFORE, for and in consideration of the promises and the mutual covenants contained in this Agreement, the parties agree as follows: 1. r:ONOITIONS OF I FASF A<lRFFMFNT NOTWITHSTANDING ANY LANGUAGE TO THE CONTRARY HEREINAFTER CONTAINED, THE LANGUAGE IN PARAGRAPHS A THROUGH D OF THIS SECTION SHALL BE BINDING. A. PRTNr:TPT FS OF OPFR A TTONS. The right to conduct aeronautical and related 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 discriminatory basis to all users thereof; and 2. To 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 types of price reductions to volume purchasers. B. NON-nTSr:RIMINATTON: Lessee, for itself, its personal representatives, successors, and assigns, as a part of the consideration hereof, does hereby covenant and agree as a covenant running with the land that: ]. No person on the grounds of race, religion, color, sex, 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. In the construction of any improvements on, over, or under such land and the furnishing of services thereon, no person on the f,'founds 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 in compliance with all other requirements imposed by or pursuant to Title 49, Code of Federal Regulations, Department of Transportation, SubtitJe A, Office of the Secretary, Part 21, Nondiscrimi- nation in Federally assisted programs of the Department of Transportation - Effectual of TitJe VI of the Civil Rights Act of] 964, as said Regu1ations may be amended. C. RT<lHT OF TNnNmTJAT S TO MATNTAIN ATRr:RAFT . It is 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-FXr:T T JSNF RT<lHT 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 TitJe 49 U.S.C. Appendix § 1349. E. PTJRT ¡r: ARFAS 1. Lessor reserves the right to further develop or improve the landing area of the Airport as it sees fit, regard1ess of the desires or views of Lessee, and without interference or hindrance. 2. Lessor shall be obligated to maintain and keep in good repair the 1anding area of the Airport and all publicly owned facilities of the Airport, together with the right to direct and contro1 al1 activities of Lessee in this regard. 3. During time of war or national emergency, Lessor shal1 have the right to lease the 1anding area or any part thereof to the United States Governinent for mi1itary 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. 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 right 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, wou1d limit the usefulness or safety of the Airport or constitute a hazard to aircraft or to aircraft navigation. The hangar/office/shop complex as currently proposed as provided in Section II.D. does not vi01ate this provision. 5. This Lease Agreement shall be subordinate to the provisions of any existing or NTOenton Leasing AGR.doc- Page 2 future agreement between Lessor and the United States or agency thereof, relative to the operation or maintenance of the Airport. II. T FASFO PRFMTSFS Lessor, for and in consideration of the covenants and agreements herein contained, to be kept by Lessee, does hereby demise and lease unto Lessee, and Lessee does hereby lease ITom Lessor, for the lease term described in Article ill, the following described land situated in Denton County, Texas: A. LAllIl. A tract of land, being approximate1y 150 feet by ] 70 feet or 0.5854 acre, drawn and outlined on Attachment "A", and 1egally described in Attachment "B" as Parcel 1, such attachments being incorporated herein by reference (the "Leased Premises"). Together with the right of ingress and egress to the Leased Premises; 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 invitees. For purposes of this agreement, the term "Leased 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. A lega1 description of the leased premises is not currently attached as Attachment "B". Lessee shall deliver to Lessor no later then 30 days after the date of this Agreement a legal description of the leased premises accurately describing the leased premises that is acceptable to Lessor. If Lessee fails to do so, Lessor at its option may terminate this Agreement, in which case it will have no further force and effect. The approved 1egal description will be attached to this Agreement as Attachment "B". B. TMPROVFMFNTS PROVmFO BY T FSSOR: NONE: There will be no improvements provided by Lessor, except as set forth in Article II.F. "Access to Utilities" below. The term "Lessor improvements" shall mean those things on or adjacent to the Leased Premises belonging to, constructed by, or to be constructed by the Lessor. 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. D.. TM1'ROVFMFNTS PROVmFO BY 1 FSSFF On the Leased Prernises, Lessee shall construct a hangar not less than] 0,000 square feet with taxiway access. Lessee shall also construct appropriate culverts or drainage as required by City ordinances in the utility right of way south and north ofthe proposed hangar as well as other improvements as determined necessary by City ordinances (All above described NTDenton Leasing AGR.doc- Page 3 improvements to be constructed by Lessee are called the "Lessee's Improvements"). Construction of Lessee's Improvements shall be commenced no later than 270 days (the "Commencement Period") and completed no later than 720 days after the Effective Date (the "Construction Period"). Construction of Lessee's Improvements are considered commenced upon issuance of a building permit and construction of any portion of the hangar. Construction of Lessee's Improvements are considered complete upon the issuance of a Certificate of Occupancy for the entire hangar, drainage and utility improvements are completed. In addition, as a condition precedent to the effectiveness of this Lease Agreement, within 60 days after the Effective Date of this Lease Agreement, Lessee shall provide to Lessor (i) a written estimate of the cost to construct Lessee's Improvements prepared by a contractor who has demonstrated experience in the successful construction of improvements similar to Lessee's Improvements (the "Construction Cost Estimate"), (ii) a written schedule of construction to complete Lessee's Improvements, and (iii) a written loan commitment ti-om a lending institution providing for sufficient funding to cover the Construction Cost Estimate (called "Conditions Precedent"). Should the Conditions Precedent not be met either party may terminate this Lease Agreement by giving the other party written notice, in which case this Lease Agreement shall be null and void and of no further force and effect. Such termination shall not prevent the Lessee ti-om submitting a new proposed lease request at a later date. The parties may extend the 60 day time period if in writing signed by both parties. Lessee is not entitled to take possession of the Leased Premises under this Lease Agreement until the Conditions Precedent have been fulfilled. Notwithstanding anything contained in this Lease Agreement to the contrary, a failure to commence the Lessee's Improvements within the Commencement Period or to complete the Lessee's Improvements within the Construction Period may, at the sole option and discretion of the Lessor, result in the immediate termination and cancellation of this Lease Agreement upon 30 days written notice of cancellation to Lessee. In such case Lessee's rights under the Lease Agreement will immediately cease and he forfeited, and all of Lessee's Improvements shall immediately become the property of Lessor at no cost, expense or other compensation paid by Lessor to Lessee; and Lessee shall immediately vacate the Leased Premises. E. FASFMFNTS. Lessor and Lessee by mutual agreement may establish, on the Leased Premises, easements for public access on roads and taxiways. F. Ar:r:FSS TO (¡TIT TTTFS Lessor represents that there are water, sewer and 3- phase electricity lines within close proximity to the Leased Premises available to "tap-in" by Lessee, and that the same are sufficient for usual and customary service on the Leased Premises. ill. TERM The term of this Lease Agreement shall be for a period of thirty (30) years, com- mencing on the 2]st day of June, 2005 and continuing through the 20th day of June of2035, unless earlier terminated under the provisions of the Lease Agreement (the "Lease Term"). Lessee has the option to renew for two (2) additional ten (I 0) year terms. In order to NrDenton Leasing Agreement. doc- Page 4 exercise the first option Lessee must provide written notice to Lessor of its intent to exercise the first 10 year option no later than 180 days before the expiration of the 30 year primary term. To exercise the second option such written notice must be provided no later than 180 days before the expiration of the first] 0 year option term. The rental and terms to be negotiated for the option tenns shal1 be reasonable and consistent with the then value, rentals and terms of similar property on the Airport. IV. PAYMFNTS RFNTATS ANOFFFS Lessee covenants and agrees to pay Lessor, as consideration for this Lease Agreement, the following payments, rentals and fees: A. T A NO A NO RFNT A r Rental shal1 be due and payable to Lessor in the sum of $0. I 7 per square foot or $4,335.00 per year (the "Original Rent"), payable in twelve (12) equal monthly instal1ments in the sum of Three Hundred Sixty-one Dol1ars and Twenty-five Cents ($361.25) in advance, on or before the ]st day of each and every month during the term of this Lease Agreement. Lessee has the option to pay annual rentals and fees in whole on or before the 151 day of October, at the beginning of the City's fiscal year, each and every year of this Lease Agreement. Notwithstanding the foregoing, the annual renta1 will be reduced by the current lease rate per square foot, as adjusted by the CPI-U referenced in Section IV.c., times the number of square feet comprising al1 easements established in accordance with Article II (E). B. ] FSSOR TMPROVFMFNTS RFNTAT S. NONE: improvements on the Leased Premises. There are no Lessor C. P A YMFNT PFN AT TY A f) TT ¡STMFNTS. Al1 payments due Lessor from Lessee shall be made to Lessor at the offices of the Finance Department of the City of Denton, Customer Service Division, 601 West Hickory, Denton, Texas, unless otherwise designatcd in writing by the Lessor. ]f payments are not received on or before the 15th day of the month, a five percent (5%) penalty will be due as of the 16th. Ifpayments are not received by the first of the subsequent month, an additiona1 penaIty of one percent (1 %) of the unpaid renta1!fee anlount wil1 be due. A one percent (1 %) charge will be added on the first of each subsequent month until the unpaid rental/fee payment is made. The Original Rent for the Leased Premises shal1 be readjusted at the end of each one year period during the Lease Term on the basis of the proportion that the then current United States Consumer Price Index for all urban consumers (CPI-U) for the Dallas-Fort Worth Bureau of Labor Statistics bears to the previous odd month 2005 index (March), which was ---1.8.1..l- (1982-84 = ] 00). Each rental adjustment, if any, shall occur on the 1st day of May, beginning 2007, and every other year thereafter on such date. The adjustments in the yearly rent shall be determined by multip1ying the Origina1 Rent 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 appIicab1e at the execution of this Lease Agreement. If the product of this muItipIication is greater than "TDenton Leasing AGR. doc- Page 5 the Original Rent, 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 this multiplication is less than the Origina1 Rent there shall be no adjustment in the annual rent at that time, and Lessee shall pay the previous year's annual rent until the time of the next rental adjustment as called for in this section. In no event shall any rental adjustment called for in this section result in an annual rent less than the previous year's annual rent. The adjustment shall be limited so that the annual rental payment determined for any given two-year period shall not exceed the ammal rental payment calculated for the previous CP] adjustment by more than twenty percent (20%) percent. If the consumer price index for all urban consumers (CP1-U) for the Dallas-Fort Worth geographical region, as compiled by the U.S. Department of Labor, Bureau of Labor Statistics, is discontinued during the Lease Term, the remaining renta1 adjustments called for in this section shall be made using the formula set forth above, but by substituting 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. Ifboth the CPI-U for the Dallas- Fort Worth geographica1 region and the U.S. City Average are discontinued during the Lease Term, the remaining rental adjustments called for in this section shall be made using the státistics of the Bureau of Labor Statistics of the United States Department of Labor that are most nearly comparable to the CP1-U applicable to the Dallas-Fort Worth geographical region. If the Bureau of Labor Statistics of the United States Department of Labor ceases to exist or ceases to publish statistics concerning the purchasing power of the consurner dollar during the Lease Term, the remaining rental adjustments called for in this section shall be made using the most nearly comparable statistics published by a recognized financial authority selected by Lessor. V. RT<lHTS ANn om rr;ATTONS OF ¡ FSSFF A. 1 ¡SF OF IF ASFO PRFMTSFS. Lessee is granted the non-exclusive privi1cgc to engage in owner/operator activities providing the following aviation services: ]. H ""g"r ""<1 Offì~~ Sp"œ T ~",i11g. Lessee is granted the non-exclusive right to rent hangar and office space. 2. <l~11~r"l A ir~r"ft M"i"t~"""œ Lessee is granted the non-exclusive right to conduct airframe and power plant maintenance services. 3. Air~r"ft S"l~, ""<1 Rrok~r"g~ Lessee is granted the non-exclusive right to engage in the sale and/or brokering of aircraft. 4. Ti~-O()w11 S~rviœs. Lessee is granted the non-exc1usive right to charge for tie- down services on Lessee's property. Lessee, its tenants, employees, invitees and guests shall not be authorized to conduct any services not specifically listed in this Lease Agreement. The use of the Leased Premises NTDenton LeaSlng AGR.doc- Page 6 by Lessee, its tenants, employees, invitees or guests shall be limited to on1y those private, commercial, retail or industrial activities having to do with or related to airports and avia- tion. Except as specifically authorized in this Lease Agreement, no person, business or corporation may operate a commercial, retail or industrial business upon the Leased Premises or upon the Airport without a lease or license trom Lessor authorizing such commercial, retail or industrial activity. The Lessor shall not unreasonably withh01d authorization to conduct aeronautical or related services. B. ST ANnA RDS Lessee shall meet or exceed the following standards: 1. Addrf:ss. Lessee shall file with the Airport Manager and keep current its mailing addresses, telephone numbers and contacts where it can be reached in an emergency. 2. List. Lessee shall file with the Airport Manager and keep current a list of its tenants and sub1essees, to ineludc a list of aircraft and the aircraft's corresponding aircraft identification number. 3. Condllct. Lessee shall contractually require its employees and sublessees (and sublessee's invitees) to abide by the terms of this Lease Agreement. Lessee shall promptly enforce its contractual rights in the event of a defauIt of such covenants. 4. T Jtiliti~s To,,~s 011<1 F~~s 011<1 Oth~T r:osts Lessee shall meet all expenses and payments in connection with the use of the Leased Premises and the rights and privi1eges herein granted, ineluding the timely payment of utilities, taxes, permit fees, license fees and assessments lawfully levied or assessed. In the event of an assignment, transfer or conveyance under Section X] of this Lease Agreement or termination or cancellation of this Lease Agreement due to the default of Lessee, Lessee shall pay to Lessor all Lessor's costs of such assignment, transfer, conveyance, or cancellation ineluding without limitation, all Lessor's attorneys fees, staff time and administrative costs necessary to handle or process such assignment, transfer, conveyance or cancellation. 5. L=. Lessee shall comply with all current and future federal, state and local laws, rules and regulations which may apply to the conduct of business 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 licenses or permits. 6. Moil1t~110I1C~ of Prop~rty. Lessee shall be responsible for the maintenance, repair and upkeep of all property, buildings, structures and improvements, ineluding the mowing or elimination of l,,'Jass and other vegetation on the Leased Premises, and shall keep the Leased Premises neat, dean and in respectable condition, tree from any objectional matter or thing, including trash or debris. Lessee agrees not to utilize or permit others to uti1ize areas on NTDenton Leaslng AGR.doc- Page 7 the Leased Premises which are located on the outside of any hangar or building for the storage of wrecked or permanently disabled aircraft, aircraft parts, automobiles, vehicles of any type, or any other equipment or items which would distract ITom the appearance of the leased premises. Lessee agrees that at no time shall the Leased Premises be used for a flea market type sales operation. 7. P"intinE of Rllilc1inr;s. During the Lease Term of this Lease Agreement and during each extension, Lessor shall have the right to require, not more than once every five years, that the metal exterior of hangar(s) or bui1ding(s) located on the Leased Premises be repainted. The Lessor may require Lessee to repaint said exteriors according to Lessor's specifications (to specify color of paint, quality of workmanship and the year and month in which the hangar(s) or building(s) are to be painted, if needed.) Lessee shall complete the painting in accordance with such specifications within one (1) year of receipt of notice ITom Lessor. Lessee agrees to pay all costs and expense involved in the hangar or building painting process. Failure of Lessee to complete the painting required by Lessor, within the one (1) year period shall constitute Lessee's defauIt under this Lease Agreement. ' 8. I In"lltnori7ec1 llse of T e"sec1 Premises. Lessee may not use any of the Leased Premises for any use not authorized hercin unless Lessor gives Lessee prior written approval of such additional use. Without limiting the foregoing the Leased Premises shall not be used for the operation of a mote1, hotel, restaurant, private club or bar, apartment house, storage of recreational vehicles, automobiles, or marine vehicles, or for industrial, commercial, retail, or other purposes, except as authorized herein. 9. Dwellings. It is expressly understood and agreed that no dwelling or domicile may be built, moved to or established on or within the Leased Premises nor may lessee, its tenants, employees, invitees, or guests be permitted to reside or remain as a resident on or within the Leased Premises or other Airport premises. Lessee may have a pi10t lounge, including restroom and shower facilities for use by flight crew and passengers. 10. Quit Possession. Lessee shall quit possession of the Leased Premises at the end of the Lease Term or any renewal or extension thereof, or upon cancellation or termination of the Lease Agreement, and deliver up the Lease Premises to Lessor in as good condition as existed when possession was taken by Lessee, reasonable wear and tear excepted. 11. Tnc1emnity. Lessee must indemnify, hold harmless and defend the Lessor, its officers, agents and employees, from and against liability for any and all claims, liens, suits, demands and/or actions for damages, injuries to persons (including death), property damage, (including loss of use), and expenses, inc1uding court costs, attorneys' fees and other reasonab1e costs, occasioned NTDenton Leasing AGR.doc- Page 8 by or incidental to the Lessee's occupancy or use of the Leased Premises or the Airport and/or activities conducted in connection with or incidenta1 to this Lease Agreement, including al1 such causes of action based on common, constitutional or statutory law, or based in whole or in part upon the negligent or intentional acts or omissions of Lessee, its officers, agents employees, invitces or other persons. Lessee must at all times exercise reasonable precautions on behalf of, and be sole1y responsible for, the safety of its officers, employees, agents, cllstomers, visitors, invitees, licensees .and other persons, as wel1 as their property, while in, on, or involved in any way with the use of the Leased Premises. The Lessor is not liable or responsible for the negligence or intentional acts or omissions of the Lessee, its officers, agents, employees, agents, customers, visitors and other persons. The Lessor shal1 assume no responsibility or liability for harm, injury, or any damaging events which are directly or indirectly attributable to premise defects, whether real or al1eged, which may now exist or which may hereafter arise upon the Leased Premises, responsibility for al1 such defects being expressly assumed by the Lessee. The Lessee agrees that this indemnity provision applies to al1 claims, suits, demands, and actions arising from al1 premise defects or conditions. TAl" T FSSOR ANn THF T FSSFF FXPRFSSI Y TNTFNn THTS TNnFMNTTYPROVISION TO RFQT flRF I FSSFF TO INnFMNTFY ANn PROTFr:T THF 1 FSSOR FROM THF r:ONSFQTTFNr:FS OF THF 1 FSSOR'S OWN NFr+T T<lFNr:F WAn F 1 FSSOR TS PARTJr:TPATTN<l IN THTS T FASF A<lRFFMFNT WHFRF THAT NF<lTT<lFNr:F 1S A r:ONr:JJRR1N<l r:ATTSF OF THF TNnJRY OFATH OR OAMA<lF NOTWTTHSTANnlN" THF TFRMS OF THF PRFr:FOTN<l SFNTFNr:FS TmS TNnFMNITY PROVTS10N OOPS NOT APPI Y TO ANY r:J AIM TOSS OAMA<lF rATlSF OF Ar:TTON STITT ANn ¡ lARTTITY WHFRF TAF INJlJRY OFATA OR OAMA<lF RFSTTTTS FROM THF SOT F NFr+T I<lFNr:F OF THF T FSSOR OR ANY OF 1TS FMPT OYFFS r:ONTRAr:TORS OR A<lFNTS TINMTXFn WITH THF FAT IT T OF A NY OTHFR PFR SON OR FNT1TY ]2. r:nemic"ls. Lessee agrees to properly store, col1cct and dispose ofal1 chemicals and chemica1 residues; to properly store, confine, col1ect and dispose of al1 paint, including paint spray in the atmosphere, and paint products; and to comply with al1 Local, State and Federa1 regulations governing the storage, handling or disposal of such chemicals and paints. Further, the Lessee shal1 be s01ely responsible for al1 discharges, whether accidental or intentional, of any chemical and for the costs associated with the cleanup, remediation and disposal of said chemicals. ]3. A"7",,1011S Activities. Should Lessee violate any law, rule, restriction or regu1ation of the City of Denton or the Federal Aviation Administration, or any other regulatory authority, or should the Lessee engage in or permit other NTDenton Leasing AGR. doc- Page 9 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 notice 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 notice, Lessor shall have the right to demand that the person(s) responsible for the violation(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 conforn1ance with the particular law, rule or aeronautical regulation being violated. Should Lessee, Lessee's agent, or the person(s) responsible for the violation(s) fail to cease and desist nom said violation(s) and to immediately commence correcting the vi01ation(s), and to complete said corrections 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) at the sole cost and expense of Lessee, and Lessor shall not be responsible for any damages incurred to any improvements on the Leased Premises as a result of the concctive action process. In addition, such vi01ation shall be considered a material defau1t by Lessee authorizing Lessor, at its sole option and discretion, to immediately tcnl1inate and cancel this Lease Agreement. ' c. SlGNS.. No signs, posters, or other similar devices ("Signage") shall be placed on the exterior of the Lease Improvements or on any portion of the Leased Premises or Airport property without the prior written approval of Lessor. Lessee, at its sole expense, shall be responsible for the creation, installation and maintenance of all such Signage. Lessee shall pay to Lessor any and all damages, injuries, or repairs resulting nom the installation, maintenance or repair of any such Signage. Any Signage placed on the Leased Premises shall be maintained at all times in a safe, neal, sightly and good physica1 condition. All signage shall be removed nom the Leased Premises by Lessee immediately upon receipt of instructions for removal of same nom Lessor, including without limitation, upon expiration or termination of this Lease Agreement. If Lessee fails to remove the Signage then Lessor may do so at the sole cost and expense of Lessee. Lessee shall be penl1itted the right to place two wall signs, no greater than thirty-two square feet each, identifying the commercial hangar operation. All signage shall comply with an applicable ordinances including the City of Denton sign ordinance." D. ENIRY. Lessor and its designees shall have the right to enter the Leased Prernises upon reasonab1e advance notice (written or oral) and at any reasonable times for the purposes of inspecting the Leased Premises, perfonl1ing any work which Lessor elects to perform under this Lease Agreement, and exhibiting the Leased Premises for sale, lease, or mortgage. Nothing in this section shall imply any duty upon Lessor to do any work, which under any other provision of this Lease Agreement Lessee is . required to perform, and any performance by Lessor shan not constitute a waiver of Lessee's defau1t. NTDenton Leaslng AGR.doc- Page 10 VI. r:OVFN ANTS RY T FSSOR Lessor hereby agrees as follows: A. PF Ar:FF! IT FN1OYMFNT. Upon on payment of all rent, fees, and performance of the covenants and agreements on the part of Lessee to be perforn1ed hereunder, Lessee shall peaceably hold and enjoy the Leased Premises and all rights and privileges herein granted. B. r:OMPT T A Nr:F. Lessor warrants and represents that in the establishment, construction and operation of the Airport, that Lessor has heretofore and at this time is comp1ying with all existing ru1es, regulations, and criteria distributed by the Federal Aviation Administration, or any other govemmental authority relating to and including, but not limited to, noise abatement, air rights and easements over adjoining and contiguous areas, over-flight in landing or takeoff, to the end that Lessee will not be legally liable for any action of trespass or similar cause of action by virtue of any aerial operations of adjoining property in the course of norn1al take-off and landing procedures from the Airport; Lessor further warrants and represents that at all times during the Lease Term, or any renewal or extension of same, that it will continue to comply with the foregoing. VII. SPFr:]Al r:ONDTTlONS It is expressly understood and agreed by and between Lessor and Lessee that this Lease Agreement is subject to the following specia1 terms and conditions. RT INW A YS A NO T A X¡W A YS. Because of the present thirty thousand (30,000) pound continuous use weight bearing capacity of the taxiway, Lessee herein agrees to limit all aeronautical activity including 1anding, take-off and taxiing, to aircraft having an actual weight, including the weight of its fuel, of thirty thousand (30,000) pounds or Jess, unti1 such time that the runway and designated taxiways on the Airport have been improved to handle aircraft of such excessive weights. It is further agreed that, based on qualified engineering studies, the weight restrictions and provisions ofthis clause may be adjusted, up or down, and that Lessee agrees to abide by any such changes or revisions as such studies may dictate. "Aeronautica] activity" refened to in this clause shall include any activity of the Lessee or its agents or subcontractors, and its customers and invitees, but shall not include those activities over which it has no solicitory part or control, such as an unsolicited or unscheduled or emergency landing. A pattern of violating the provisions of this section on two or more occasions shall be sufficient to cause the immediate termination of this entire Lease Agreement and subject Lessee to liability for any damages to the Airport that might resu1t. NTDenton Leaslng AGR.doc- Page 11 VTIl. IF ASFHOf D TMPROVFMFNTS A. RFf2TTTRFMFNTS. Before commencing the construction of any improvements on the Leased Premises including Lessee's Improvements (the "Lease Improvements"), Lessee shall submit: 1. Documentation, specifications, or design work, to be approved by the Lessor, which shall establish that the improvements to be built or constructed upon the Leased Premises are in cOlllornlance with the overall size, shape, color, quality and design, in appearance and stmcture of the program established by Lessor on the Airport. 2. All plans and specifications showing the location upon the Leased Premises of the proposed construction and improvements; 3. The estimated cost of such construction. No constmction may commence until Lessor has approved the plans and specifications and the location of the Lease Improvements, and the estimated costs of such constmction. Approval by the Lessor shall not be umeasonably withheld. Documentary evidence of the actua1 cost of construction on public areas only (such as taxiways) shall be delivered by Lessee to Lessor's City Manager from time to time as such costs are paid by Lessee, and Lessor's City Manager or designee is hereby authorized to endorse upon a copy of this Lease Agreement fi1ed 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 Lease Agreement. No 1ater than 30 days after completion of the Lease Improvements, Lessee shall submit to Lessor detailed as built plans of the Lease Improvements and documentary evidence acceptable to Lessor evidencing the total cost to construct the Lease Improvernents ("Cost to Construct Lease Improvements"). B. ADnTTTONAT r:ONSTRTJr:TTON OR lMPROVFMFNTS: Lessee is hereby authorized to construct upon the Leased Premises, at its own cost and expense, buildings, hangars, and structures, that Lessor and Lessee mutually agree are necessary for use in connection with the operations authorized by this Lease Agreement, provided however, Lessee shall comply with all of the requirements of Section VIlLA., above. Such additional improvements shall be a part of the Lease Improvements. C. OWNFRSHTP OF TMPROVFMFNTS: Except as otherwise provided in this Lease Agreement, the Lease Improvements constructed upon the Leased Premises by Lessee shall remain the property of Lessee during the Lease Term subject to the following conditions, terms and provisions: 1. R"mov"l of RlJilrlings. No building or permanent fixture may be rernoved NTDenton Leasing AGR. doo- Page 12 from the Leased Premises. 2. A,'"mptinn. The Lease Improvements shall automatically become the property of Lessor absolutely free, without any cost to Lessor, at the end of the Lease Term, or any extension thereof. 3. F"ill1r~ tn r:nl1lm~nc~ or r:nl1lr¡~t~ ¡ ~,,~~', Tmprnvement,. The Lease Improvements shall immediately become the property of Lessor at no cost, expense, or compensation to Lessee should Lessee fai1 to commence or complete the Lessee's Improvements within the Commencement Period or Construction Period as provided in Section It.D. of this Lease Agreement. 4. r:"ncell"tinn or Terrnin"tinn. Shou1d this Lease Agreement be canceled or terminated before the end of the Lease Tenn, or extension thereof, Lessor shall have the right to purchase all of the Lease Improvements. In the event of a cancellation or termination, other then due to a default by Lessee that has not been cured as provided below, the purchase price shall be equal to the rnost recent value of the Lease Improvements as determined by the Denton County Central Appraisal District ("Value of the Lease Improvements") reduced by 1/30 for each year of the Lease Term that has expired as of the date of termination (the "Purchase Price"). Should the Denton County Central Appraisa1 District not determine a separate value for the Lease Improvements, or should such separate valuation be older than two years, then the Purchase Price will be determined taking the Cost to Construct the Lease Improvements reduced by ]/30 for each year the Lease Term has expired as of the date of ternlination. ]fthe termination or cance1lation is due to a default by Lessee that has not been cured within 30 days after written notice of defauIt to Lessee, then the Purchase Price as determined above shall be reduced by 50%. However, if Lessee provides written notice to Lessor within said 30 day cure period that it is impossible to cure such default within said time period, then the Lessor may consent to an extension of such time to cure, which consent wi1lnot be unreasonably withheld. IX. ST fRRO<lATTON OF MORTnA<lFF Any person, corporation or institution that lends money to Lessee for construction of any hangar, structure, building or improvement and retains a security interest in said hangar, structure, building or improvement shall, upon default of Lessee's obligations to said mortgagee, have the right to enter upon the Leased Premises and operate or manage said hangar, structure, building or improvement according to the terms of this Lease Agreement, for a period not to exceed the ,term of the mortgage with Lessee, or until the loan is paid in fu1l, whichever comes first, but in no event longer than the Lease Term. 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. NTDenton Lea,ing AGR.doc- Page 13 x. RTr;HT OF F ASFMFNT Lessor shall have the right to establish easements, at no cost to Lessee, upon the Leased Premises 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 the original condition as is reasonable practicable upon the installation of any utility services on, in, over or under any such easement at the conclusion of such construction. Constmction in or at the easement shall be completed within a reasonable time. XI. ASST<lNMFNT OF T FASF Lessee expressly covenants that it will not assign this Lease Agreement, convey more than fifty percent (50%) of the interest in its business, through the sale of stock or otherwise, transfer, license, nor sublet the whole or any part of the Leased Premises for any purpose, except for rental of hang~ space or tie-down space for storage of aircraft only, without the written consent of Lessor. Lessor agrees that it will not unreasonab1y withhold its approval of such sale, sublease, transfer, license, or assignment of the facilities for Airport re1ated purposes; provided however, that no such assignment, sublease, transfer, license, sa1e or otherwise shall be approved if the rental, fees or payments, received or charged are in excess of the rental or fees paid by Lessee to Lessor under the terms of this 1ease, for such portion of the Leased Premises proposed to bc assigned, subleased, transfeITed, licensed, or otherwise. The provisions of this Lease Agreement shall remain binding upon the assignees, if any, of Lessee. XD. INST JR A Nr:F A. RFQT JJRFO INS] JR A Nr:F: Regardless of the activities contemplated under this Lease Agreement, Lessee shall maintain continuously in effect at all times during the term oftms agreement, at Lessee's sole expense, the following minimun1 insurance coverages: 1. Commercial (Public) General Liability covering the Lessee or its company, its employees, agents, tenants and independent contractors, and its operations on the airport. Coverage shall be in an amount not less than $],000,000 per OCCUITence and provide coverage for premises/operations and contractua1 liability AND where exposure exists, coverage for: products/completed operations; explosion, collapse and underground property damage. 2. All risk property insurance on a replacement cost basis covering loss or damage to all facilities used by the Lessee, either as a part of this agreement or erected by the Lessee subsequent to this agreement. Under no circumstances shall the Lessor be liable for any damages to fixtures, merchandise or other personal property of the Lessee or its tenants. NTDenton Leaslng AGR.doc- Page 14 3. Business Automobile Liability to include coverage for Owned/Leased Autos, Non- Owned Autos and Hired Cars: For operation in aircraft movement areas the limit of liability shall be $100,000 per OCCUITence. For other operations the limit of liability shall be consistent with the amount set by State Law. B. A D])TTTON A T r:OVFR A<lFS: ]n addition to the above referenced coverages, the following insurance is required if the activity or exposure exists or is contemplated: 1. Aircraft Fue1l0il Storage and Dispensing - Comprehensive Commercia1 (Public) General Liability shall include coverage or separate coverage shall be provided for Environmental Irnpairment Liabi1ity. 2. Aircraft Sales or Aircraft Charter and Air Taxi - Aircraft Liability in the amount of $1,000,000 per OCCUITence to include Hull Coverage and Liability. In addition, Passenger Liability in an amount of $] 00,000 per person (per passenger seat) shall be provided. 3. Aircraft Rental or Flight Training - Aircraft Liability in the amount of $1,000,000 per OCCUITence to include Hull Coverage and Liability, Passenger Liability in the amount of $] 00,000 per person (per passenger seat) and StlldentlRenter Liability covering all users in the amount of $500,000 per OCCUITence. 4. Specialized Commercial Flying (including crop dusting, seeding, and spraying, banner towing and aerial advertising, aeria1 photography and surveying, fire fighting, power line or pipe line patrol) - Aircraft Liability in the amount of $1,000,000 per OCCUITence to include Hull Coverage and Liability. In addition, Passenger Liability in an amount of $] 00,000 per person (per passenger seat) shall be provided. 5. Aircraft Storage, Maintenance and/or Repair - Aircraft Liability in the amount of $] ,000,000 per occurrence to include Hull Coverage and Liability. In addition, Hanger Keepers Liability in the amount of $500,000 per OCCUITence shaH be provided. The requirement for Hangar Keepers Liability shall not apply to individual owner/operators whose primary use of the hangar space is the storage of their own aircraft. The requirement does not apply to such individuals notwithstanding the fact that they may, from time to time, permit the storage of non-owned aircraft in the hangar space and charge a fee for the storage of such aircraft so long as such use is in the nature of a rent-sharing agreement rather than a commercial aircraft storage business. NTDenton Leaslng AGR.doc- Page 15 c. r:OVFR Ar;F RFQT TTRFMFNTS: All insurance coverages shall comp1y with the following requirements:. ]. All liability policies shall name the City of Denton, and its officers and employees as an additional named insured and provide for a minimum of 30 days written notice to the City of any cancellation or material change to the p01icy. 2. All insurance required by this Lease Agrecmcnt must be issued by a company or companies of sound and adequate financia1 responsibility and authorized to do business in the State of Texas. All policies are subject to the examination and approval of the City's office of Risk Management for their atlequacy as to content, form of protection and providing company. 3. Required insurance naming the City as an additional insured must be prirnary insurance and not contributing with any other insurance available to the City whether from a third party liability policy or other. Said limits of insurance shall in no way limit the liabi1ity of the Lessee hereunder. 4. The Lessor shall be provided with a copy of all such policies and renewal certificates. Failure of Lessee to comply with the minimum specified amounts or types of insurance as required by Lessor shall constitute Lessee's defauIt of this Lease Agreement. 5. During the Lease Term, or any extension thereof, Lessor herein reserves the right to, with 60 days notice, 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 similar to the Denton Municipal Airport in size and in scope of aviation activities, located in the southwestern region of the United States. xril. r: A Nr:FT I A nON BY I FSSOR In the event that Lessee shan file a voluntary petition in bankruptcy or proceedings in bankruptcy shall be instituted against it and Lessee thereafter is adjudicated bankrupt pursuant to such proceedings, or any court shall take jurisdiction 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 fail 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 defauIt and, if any condition or defau1t shall continue for thirty (30) days after the receipt of such notice by Lessee, then NTDenton Lea,ing AGR.doc- Page 16 Lessor may terminate this Lease Agreement by written notice to Lessee. However, if Lessee provides written notice to Lessor within said 30 day cure period that it is impossible to cure such default within said time period, then the Lessor may consent to an extension of such time to cure, which consent will not be unreasonably withheld. In the event of defauIt, Lessor has the right to purchase any or all of the Lease Improvements under the provisions of Section VITI.CA. hereof. XIV. r:A Nr:FT I A TION RY I FSSFF Lessee may cance1 this Lease Agreement, in whole or part, and terminate 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 juris- diction of a permanent injunction in any way preventing or restraining the use of the 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 the Lease Premises and facilities continuing for a longer period than ninety (90) days due 10 any law or any order, rule or regu1ation of any appropriate govemmental 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 Agreement as aforesaid, or may elect to continue this Lease Agreement 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. Should Lessor close the Airport and relocate the Airport to another location during the primary term of this Lease Agreement, Lessee shall have the right to relocate its facilities to the new airport at a suitable 10cation under the same or similar terms of this Lease Agreement. The cost of relocation of Lessee's facilities will be shared by Lessor and Lessee in proportion to the number of years remaining on the primary term of this Lease Agreement. In this regard Lessor will be responsible for ]/30 of the such costs for every year remaining on the primary term. xv. MTSr:FT T ANFOTIS PROVISIONS A. FNTTRF A (;R EEMENT. This Lease Agreement constitutes the entire understanding between the parties and as of its 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 sigoed by both parties. NTDenton Leasing AGR.doc- Page 17 B. RlNDTN(; FFFFr:T All 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. SFVFR A RTT !TV. If a provision hereof shall be finally declared void or illegal by any court or administrative agency having jurisdiction, the entire Lease 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 Lease Agreement shall be in writing and shall be sent by certified mail, return receipt requested, with postage fees prepaid or via facsimile as follows: ]. If to Lessor, addressed to: City Manager City of Denton 215 E. McKinney Street Denton, Texas 76201 Fax No.940.349.8596 2. Ifto Lessee, addressed to: Chuck Jones, CEO NTDenton Leasing Incorporated PO Box 596 Krum, TX 76249 Fax No.: 940-458-4559 E. HF A OTN(;S. The headings used in this Lease 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. <lOVFRNTN(; I A W A NO VFNT JF. This Lease Agreement is to be construed in accordance with the laws of the State of Texas and is fully performable in Denton County, Texas. Exclusive venue for any 1awsuit to enforce the terms or conditions of this Lease Agreement shall be a court of competent jurisdiction in Denton County, Texas. G. NO W A TVFR. No waiver by Lessor or Lessee of any default or breach of covenant or term of this Lease Agreement may be treated as a waiver of any subsequent default or breach of the same or any other covenant or tenn of this Lease Agreement. H. NO A(;FNr:y. During all times that this Lease Agreement is in effect, the parties agree that Lessee is and shall not be deemed an agent or employee of the Lessor. NTDenton Leasing AGR.doc- Page 18 1. FOR r:F M A 1FT JR F. None of the Parties shall be in defau1t or otherwise liable for any delay in or failure of performance under this Lease Agreement if such delay or failure arises by any reason beyond their reasonable control, including any act of God, any acts of the common enemy or terrorism, the elements, earthquakes, floods, fires, epidemics, riots, - failures or delay in transportation or communications. However, lack of funds shall not be deemed to be a reason beyond a Party's reasonable control. The Parties will promptly inform and consu1t with each other as to any of the above causes, which in their judhTIlent mayor could be the cause of a delay in the perfornlance of this Lease Agreement. IN WITNESS WHEREOF, the parties have executed this Lease Agreement as of the Effective Date first above written. CITY OF DENTON, TEXAS, LESSOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BYYt1A-J Û, 1ft V APPROVED AS TO LEGAL FORM: EDWIN M. SNYDER, INTERIM CITY ATTORNEY BY fle&if} (L;:Jf { . NTDENTON LEASING INC .----- BY:~~ CHUCKJO CHIEF EXECUTIVE OFFICER NTDenton Leasing AGR.doc- Page 19 ACKNOWLEDGMENTS THE STATE OF TEXAS § COUNTY OF DENTON § 5t This instrument was ackoowledged before me on the.,.1 /- day of OM£ ,2005, by Michael A. Conduff, City Manager of the City of Denton, T~lf of said municipality. JANE E. RICHARDSON Notary Public. State of Texas My Commission Expires June 27, 2005 ~ ¿ /; (Ad£a!¡p¿) NO MY PUBLIC, STATE OF TEXAS THE STATE OF TEXAS COUNTY OF DENTON § fk This instrument was ackoowledged before me on th¿¿ dayof!rlfLu-- ,2005 by Chuck Jones, Chief Executive Officer, NTDenton Leasing ~ of said corporation. e~' DIANE LYNN PREslEY . . NOrARY PUBlIC \>~." STATEOFTÐc.<s Camm. &p. 05-13-- NTDenton Leasing AGR.doc- Page 20 ,f : I _1" :r~jjf,',~, ' ir'1Il1i; If,c;:-,n~:;;~Tc~¿';¡¡:;1 . . ¡I- I 1,_1." 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