2005-218S:\Our Documents\Ordinances\05\2nd Lease Estoppel-Jet Works.doc
ORDINANCE NO. &06_-210
AN ORDINANCE OF THE CITY OF DENTON, TEXAS APPROVING A SECOND LEASE
ESTOPPEL BETWEEN THE CITY OF DENTON, JET WORKS AVIATION, INC. AND
GREATER EAST TEXAS CERTIFIED DEVELOPMENT CORPORATION; AND
PROVIDING AN EFFECTIVE DATE.
WHEREAS, on June 21, 2005 the City of Denton, Texas (hereinafter the "City") entered
into a First Amendment to that certain Airport Commercial Operators Lease Agreement for
commercial airport operator between the City of Denton and Jet Works Aviation, Inc. ("Jet
Works") dated December 1, 2004 ("Lease") and entered into a Lease Estoppel Agreement with
Southwest Bank further amending the Lease to facilitate the financing of improvements to be
constructed by Jet Works under the Lease; and
WHEREAS, the City Council and Jet Works desire to further amend the Lease by
entering into a second Lease Estoppel Agreement with the Greater East Texas Certified
Development Corporation ("CDC'); and
WHEREAS, the City Council deems it in the public interest to enter into a secatd Lease
Estoppel with Jet Works and CDC, which will amend the Lease and will further facilitate the
financing of the improvements to be constructed by Jet Works under the Lease; NOW,
THEREFORE,
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS:
SECTION 1. The City Manager or his designee is hereby authorized to execute a Lease
Estoppel between the City of Denton, Jet Works Aviation, Inc., and CDC that will amend the
Lease, which Lease Estoppel 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 164 day of '2005.
EULINE BROCK, MAYOR
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
BY: Qyjq &Z(-
SA0w Documents\0rdinances\05\2nd Lease Estoppel-Jet Works.doc
APPROVED AS TO LEGAL FORM:
EDWIN M. SNYDER, CITY ATTORNEY
BY:
Page 2
LEASE ESTOPPEL
This Lease Estoppel (the "Agreement") dated f /o , 2005 is entered
into by the CITY OF DENTON, TEXAS, a municipal corpo • tion (hereinafter called "Lessor"),
JETWORKS AVIATION, INC. (hereinafter called "Lessee"), and GREATER EAST TEXAS
CERTIFIED DEVELOPMENT CORPORATION (hereinafter called "Lender").
WHEREAS, the Lessee desires to obtain financing through Lender to facilitate the
construction of Lessee's Improvements, as defined and more fully described in Section II. D. of
the Lease (as hereinafter defined); and
WHEREAS, the Lender requires the parties to execute this Agreement before it will
provide financing to Lessee, the proceeds of which will be used to build Lessees Improvements.
NOW, THEREFORE, in consideration of the premises and mutual covenants contained
in this Agreement, the parties agree as follows:
ARTICLE 1 - DEFINITIONS
As used in this Agreement, the following terms shall have the following meanings:
Lease: the Airport Lease Agreement - Commercial Operator - dated December 1, 2004
between the City of Denton, Texas, a municipal corporation, as lessor, and Jetworks
Aviation, Inc., a Texas corporation, as lessee, including the First Amendment to Airport
Commercial Operator Lease Agreement with Jet Works Aviation, Inc. dated R e-
Z 1 , 2005, and all extensions and modifications thereof and future amendments thereto.
Loan Documents: the documents, as modified, that are now or hereafter executed in
connection with or as security for the CDC Loan, including without limitation, any
promissory notes, loan agreements, guarantees, deeds of trust, security agreements,
certifications, and affidavits.
Project Property: The leasehold estate in the real property created by the Lease and being
more particularly described on Exhibit "A" incorporated herein for all purposes.
CDC Loan: The loan from Lender to Lessee extended pursuant to the Authorization for
Debenture Guaranty, as amended, issued by the Small Business Administration and
bearing SBA Loan No. 85271440-05. It is currently contemplated that the CDC Loan will
be in the original principal amount of $793,000.00.
ARTICLE 2 - AGREEMENTS
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Lender has agreed to extend long-term financing to Lessee to finance the construction of
improvements to the Project Property. The CDC Loan will be secured, inter alia, by subordinate
liens against Lessee's leasehold estate in the Project Property, subject only to the prior liens in
favor of Southwest Bank. In order to induce Lender to fund the CDC Loan, and in consideration
of the CDC Loan, the undersigned hereby agree as follows:
Lessor's Consent to Granting and Existence of Liens. Lessor consents to the granting and
existence of liens against Lessee's leasehold interest in the Project Property to secure the
CDC Loan.
2. Subordinate Rights and Liens of Lender. Lender and Lessor acknowledge that Lender's
liens will be subordinate and inferior to the liens in the Project Property to be granted by
Lessee in favor of Southwest Bank. Lender and Lessor further acknowledge that Lender's
rights pursuant to this Lease Estoppel will be subordinate and inferior to the rights of
Southwest Bank pursuant to that certain Lease Estoppel by and between Lessor, Lessee,
and the Southwest Bank of even date herewith.
3. Lease Modifications and Cancellations. The Lease will not be modified or canceled
without the prior written consent of Lender, which consent shall not be unreasonably
withheld, conditioned or delayed. In the event the Lease is cancelled or terminated
pursuant to Section II or Section XIII, or any other provisions of the Lease, the Lender
shall have the right to:
(a) acquire the Lease and assume all the Lessee's rights and obligations under
the Lease;
(b) present to the Lessor a replacement lessee to assume all the Lessee's
obligations under the Lease, which replacement lessee must be approved
by Lessor; Lessor agrees that so long as the replacement lessee submitted
by Lender intends to conduct aeronautical and related activities as required
under the Lease, Lessor's approval of the replacement lessee shall not be
unreasonably withheld, conditioned, or delayed, or
(c) exercise its rights pursuant to the Loan Documents to remove Lessee's
Improvements for further disposition free and clear of any claims of
Lessor, but only to the extent of Lender's interest in Lessee's
Improvements at the time of such removal, unless the Lessor purchases
Lessee's Improvements from Lender in accordance with Section VIII. C.4
of the Lease. In the event of such removal, the Lender shall pay all
delinquent rent and cure any other condition of monetary default then
existing, and, at its sole cost and expense, remove the Improvements to
ground level including all debris and including the foundation of buildings
if requested by Lessor, but not including removal of piers for
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Improvements existing below ground level and otherwise deliver up the
Lease premises in as good condition as existed at the inception of the
Lease, reasonable wear and tear excepted. However, so long as Lender
shall cure a default as provided in Paragraph 8 of this Agreement in the
event of a monetary default and/or comply with the provisions of Paragraph
9 of this Agreement concerning nonmonetary defaults, the fifty percent
(50%) reduction in the Purchase Price (as defined in the Lease) provided
for in Section VIII.C.4 of the Lease shall not be operative.
Provided, however, in the event of any cancellation of the Lease which is not caused by
a default of Lessor, Lessee, Lender or any assignee or successor in interest to Lessee shall
pay all Lessor's administrative costs of such cancellation, including without limitation, all
reasonable attorney's fees, administrative costs and Lessor's staff time associated with
such cancellation.
4. Lender's Right to Acquire Leasehold Estate. If there is a default under the Loan
Documents, then the Lender will have the right to acquire the leasehold estate through
foreclosure or assignment of lease in lieu of foreclosure. The Lender's acquisition of the
leasehold estate will not constitute a default or termination of the Lease.
5. Lender's Rights as Lessee. If the Lender acquires the leasehold estate as stated in
paragraphs 4 above, then it will succeed to the rights of Lessee under the Lease, including
without limitation, the right to exercise any options exercisable by the Lessee under the
Lease. And in addition, and notwithstanding any provision contained in the Lease to the
contrary, the Lender, as lessee under the Lease, will have the right to assign the Lease or
to sublease all or any part of the Project Property to a replacement lessee who intends to
conduct aeronautical and related activities as required under the Lease, and Lessor's
approval of said replacement lessee shall not be unreasonably withheld, conditioned, or
delayed. Provided, however, in the event of an assignment of the Lease, Lender or the
replacement lessee shall pay all of Lessor's administrative cost of processing such
assignment as described in Paragraph 2 herein.
6. Lender's Duties as Lessee. If the Lender acquires the leasehold estate as stated in
paragraph 4 above, then it will be obligated to pay rent and to perform Lessee's other
obligations under the Lease, including paying any delinquent, back rental or other charges
and other financial obligations owed as a result of the default.
7. Notice of Defaults. Lessor agrees to give Lender written notice of all defaults under the
Lease. Notice of a default will be given Lender within thirty (30) days of the date that
Lessor becomes aware of such a default and will identify any default with specificity. If
the Lessor fails to give notice of a monetary default within the thirty (30) day period,
Lender's liability for payment of accrued rental or other charges will be limited to
amounts accrued during a period no longer than sixty (60) days preceding written notice
LEASE ESTOPPEL PAGE3
of default given to Lender in order to effect the cures provided in paragraphs 9 and 10
below. Any notice given by one party to the other in connection with this Agreement shall
be in writing, shall be deemed to be given on the date actually received, and shall be sent
by certified mail, return receipt requested, with postage fees prepaid, or via facsimile as
follows:
LESSOR: City Manager
City of Denton
215 E. McKinney Street
Denton, Texas 76201
Fax No. (940) 349-8596
LESSEE: Chris Hoskins, President
Jetworks Aviation, Inc.
400 Gulf Stream Road, 9S
Fort Worth, Texas 76106
Phone(817)626-4584
Fax No. (817) 626-1928
With a copy to:
Morton L. Herman
Cantey & Hangar L.L.P.
Burnett Plaza, Suite 2100
801 Cherry Street, Unit #12
Fort Worth, Texas 76102-6881
Fax No. (817) 877-2807
LENDER: Greater East Texas Certified Development Corporation
P.O. Box 8274
Tyler, Texas 75711-8274
Attn: John Hart, President
Fax No. (903) 535-9232
8. Lender's Right to Cure Defaults. The Lender shall have the right to cure any or all
defaults under the Lease.
9. Opportunity to Cure Monetary Defaults. In the event of a material monetary default under
the Lease, Lessor agrees to give Lender a period of 60 days to cure the default before
exercising any of its remedies under the Lease. The first day of the sixty day period is the
day Lender actually receives the default notice.
10. Opportunity to Cure Non-Monetary Defaults. In the event of a material non-monetary
default under the Lease, Lessor shall take no action to exercise its remedies under the
Lease if within sixty (60) days following receipt by the Lender of a default notice: (i) the
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Lender has cured any non-monetary defaults that arc susceptible of being cured by it (by
way of example but not limitation, Lender will not be required to cure any default of
Lessee under Paragraph MIT of the Lease caused by a Lessee bankruptcy); and (ii) the
Lender has commenced all necessary action to obtain possession of the Project Property,
the Lender is diligently proceeding to obtain possession of the Project Property, and any
rental and other amounts due under the Lease, with all interest, penalties and other charges
that may be due under the Lease, have been and continue to be paid to Lessor.
11. Subordination of Landlord's Lien. Lessor agrees all rights to maintain or enforce a
statutory or contractual landlord's lien, security interest, or any other claim against
Lessee's personal property located on the Project Property shall be subordinate to the liens
of the Lender on such personal property provided Lender pays any delinquent rentals
accrued, subject only to the limitations contained in Section 6 hereof.
12. Condemnation Awards and Hazard Insurance Proceeds. Lessor and Lender agree that
notwithstanding the provisions of the Loan Documents between the Lender and Lessee
dealing with the control and application of any condemnation award or casualty insurance
proceeds, that as between the Lessee and Lender, it is agreed that in the event of damage
or loss to the Project Property, which loss or damage is covered by hazard insurance, the
Lender, at Lender's discretion, will utilize hazard insurance proceeds under its control to
the extent available to either:
(a) Fully repair any loss or damage to the Project Property and the underlying
premises to the condition it was in immediately prior to the hazardous event
causing the loss or damage for which the insurance proceeds were received; or
(b) Remove any damaged Project Property, including debris, to ground level, and
including the foundation of buildings, if requested by Lessor, but not including
removal of piers below ground level and otherwise deliver up the Lease premises
in as good condition as existed at the inception of the Lease, reasonable wear and
tear excepted.
13. Conflicts. In the event of a conflict between the terms of the Lease and this Agreement,
the terms of this Agreement will control, provided that all terms of the Lease which are
not in conflict with this Agreement shall remain in full force and effect.
14. Binding Effect. This Agreement shall be binding upon the undersigned and their
successors, assigns, and legal representative. This Agreement is intended to benefit and
may be enforced by the Lessor, the Lender and their successors, assigns, and legal
representatives. This Agreement is given to assure the Lender and its successors and
assigns, as to the interpretation of certain Lease provisions affecting the Lender's interests.
It is not intended to confer nor shall it confer any right or benefit upon the Lessee or any
third party other than Lender.
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LESSOR:
ATTEST:
Jennifer Walters, City Secretary
By:
APPROVED AS TO LEGAL FORM:
Edwin M. Snyder, Interim City Attorney
By:
LESSEE:
Jetworks Aviation, Inc.
By:
H. Christopher (skins, President
LENDER:
Greater East Texas
Certified Devy)opgnt Corporation
By:
Title:
LEASE ESTOPPEL PAGE 6
City of Denton, Texas, a municipal
STATE OF TEXAS §
COUNTY OF DENTON §
BEFORE ME, the undersigned, a Notary Public in and for the said County and State, on
this day personally appeared Michael A. Conduff, City Manager of the City of Denton, Texas,
a municipal corporation, known to me to be the person whose name is subscribed to the foregoing
document and acknowledged to me that he executed the same in the capacity therein stated and
for the purposes and consideration therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the day of
>Ru.bu-S r , 2005.
LINDA HOLLEY
Notary Public
State of Texas
e+7 My Comm. Exp. 12.08-2005
STATE OF TEXAS §
COUNTY OF DENTON §
64IC, State o Texas
BEFORE ME, the undersigned, a Notary Public in and for the said County and State, on
this day personally appeared H. Christopher Hoskins, President of Jetworks Aviation, Inc.,
known to me to be the person whose name is subscribed to the foregoing document and
acknowledged to me that he executed the same in the capacity therein stated and for the purposes
and consideration therein expressed.
GIVEN NDER MY HAND AND SEAL OF OFFICE, this the day of
2005.
&
M C MCELNANNON
Notary Public
State of Texas
My Commission Expires
June 18. 2007
State
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STATE OF TEXAS §
COUNTY OF SMITH §
BEFORE ME, the undersigned, a N tary Public in and for said County and State, on
this day personally appearedt~nCtK..✓~lCC~Eu
of Greater East Texas Certified Development Corporation, known to me to be the
person whose name is subscribed to the foregoing document and acknowledged to me that she/he
executed the same in the capacity therein stated and for the purposes and consideration therein
expressed.
IVEN UNDER MY HAND AND SEAL OF OFFICE, this thQ=;T'~ day of
2005.
ppe,Ot,pTNORN
M pMMISSION EXPIRES C ii
NOTARY PUBLIC, ate of Texas w`
LEASE ESTOPPEL PAGER