2004-246S:\Our Documents\Ordinances\04\Airport Hangars LLC Ordinance.doc
ORDINANCE NO. ~.~0¢- ~4¢
AN ORDINANCE APPROVING A COMMERCIAL OPERATOR AIRPORT LEASE
AGREEMENT BETWEEN THE CITY OF DENTON, TEXAS AND DENTON AIRPORT
HANGARS, LLC.; AND PROVDING AN EFFECTIVE DATE.
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS:
SECTION 1. The City Manager or his designee is hereby authorized to execute an airport
lease agreement for commercial operator between the City of Denton and Denton Airport
Hangars, L.L.C., 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 7~/t day of ~//7~/~d~,/o,/ ,2004.
EULINE BROCK, MAYOR
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
AIRPORT LEASE AGREEMENT
COMMERCIAL OPERATOR
This Lease Agreement is made and executed to be effective this Seventh day of
September, 2004 (the "Effective Date") at Denton, Texas, by and between the City of
Denton, Texas, a municipal corporation, hereinafter referred to as "Lessor", and Denton
Airport Hangars, LLC, 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:
I. CONDITION.q C)F T,F..ASF, ACtRF. FiMFNT
NOTWITHSTANDING ANY LANGUAGE TO THE CONTRARY HEREINAFTER
CONTAINED, THE LANGUAGE IN PARAGRAPHS A THROUGH D OF THIS
SECTION SHALL BE BINDING.
A. PRINC. IPT.E,q OF OPFRATION!S. The fight to conduct aeronautical and related
activities for furnishing services to the public is granted to Lessee subject to Lessee
agreeing:
1. To fumish said services on a fin:, equal and not unjustly discriminatory basis
to all users thereof; and
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-DISCRIMINATION: 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:
1. No person on the grounds of race, religion, color, sex, or national origin shall
be excluded fi:om 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 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;
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, Subtitle A, Office of the Secretary, Part 21, Nondiscrimi-
nation 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 INDIVIDIIAI.~q TO MAIN!TAINI AIRCRAFT. It is clearly
understood by Lessee that no right or privilege has been granted which would operate to
prevent any person, fu'm 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, mtfmtenance and repair) that it may choose to perform.
D. NON-ENCI,II,qlV'R, I~IGI-IT 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. pTIFIT,IC ARF, AS.
Lessor reserves the right to further develop or improve the landing area of the
Airport as it sees fit, regardless of the desires or views of Lessee, and without
interference or hindrance.
Lessor shall be obligated to maintain and keep in good 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.
During time of war or national emergency, Lessor shall have the right to lease
the lantYmg 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.
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, would
limit the usefulness or safety of the Airport or constitute a hazard to itrcraft or
to aircraft navigation.
5. This Lease Agreement shall be subordinate to the provisions of any existing or
future agreement between Lessor and the United States or agency thereof,
3 - AGR DAHP.Doc Page 2
relative to the operation or maintenance of the Airport.
II. [J~A.qFD PRF(MT.qF.q
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
bom Lessor, for the lease term described in Article 11I, the following described land situated
in Denton County, Texas:
A. !,and. A tract of land, being approximately 220,000 square feet, or 5.05 acres,
drawn and outlined on Attachment "A", and legally described in Attachment "B," such
attachments being incorporated herein by reference (the "Leased Premises").
Together with the fight 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 ail property located within the metes and bounds described
and identified within Attachment "B", including leasehold improvements constructed by the
Lessee, but not including certa'm easements or property owned and/or controlled by the
Lessor.
A legal description of the leased premises is not currently attached as Attachment "B".
Lessee shall deliver to Lessor no later than 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 legal
description will be attached to this Agreement as Attachment "B".
B. IMPROVRIv~NTR PROV1DF, D I:IY l,F,,q~qOR: The only improvements
provided by Lessor, except as set forth in Article 1I.E. "Access to Utilities" below, shall be
as follows: On or before completion of the final foundation/airport apron for the hangar
complex, Lessor shall improve the gravel access road immediately south of the Leased
Premises with an asphait and/or concrete wear surface. The access road is depicted on
Attachment "A".
For the purpose of this Lease Agreement, 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, which enhance or increase, the value or quality of the Leased
Premises. 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.
C.. ]MPROVFMFNT~q PROVIDF, D FlY I,I~%qF.F, On the Leased Premises, Lessee
shall construct a series of hangar/office facilities totaling not less than 70,000 square feet.
Proposed buildings nos. 1 and 2 as depicted in Attachment "A" shall each be no less than
3 - AGR DAHP.DOC- Page 3
10,000 square feet with the remaining buildings being no less than 8,000 square feet.
Lessee shall also construct taxiway access and appropriate culverts or drainage as required
by City ordinances in the utility right of way south and north of the proposed hangar as well
as other improvements as determined necessary by City ordinances (all such hangar/office
facilities and other improvements constructed by Lessee are called the "Lessee's
Improvements"). The Lessee's Improvements shall be commenced no later than 270 days
and completed no later than 720 days after the Effective Date of this Lease Agreement as
evidenced by the issuance of a certificate of occupancy (the "Construction Period").
Commencement of construction shall be when a building permit is issued for Lessee's
Improvements and actual construction work has been done.
Notwithstanding anything contained in this Lease Agreement to the contrary, a
failure 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 be 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.
D. I~ASF. MFiNT~q Lessor and Lessee by mutual agreement may establish, on the
Leased Premises, easements for public access on roads and taxiways.
E. ACcR~qs TO llTll,lTll~q 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.
m. TF, RM
The term of this Lease Agreement shall be for a period of thirty (30) years, com-
mencing on the 7th day of September, 2004 and continuing through the sixth day of
September of 2034, unless earlier terminated under the provisions of the Lease Agreement
(the "Lease Term"). Any attempt by Lessee to renegotiate this Lease Agreement shall be in
writing addressed to the City Manager or his designee at least one hundred eighty (180)
days before the expiration of the Lease Term, and at least 180 days before the expiration of
any additional renegotiated 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 consistent
with the then value, rentals and terms of similar property on the Airport.
3 - AGR DAHP.Doc- Page 4
IV. PAYMENTS; RENTAI,S AND FEES
Lessee covenants and agrees to pay Lessor, as consideration for this Lease Agreement,
the following payments, rentals and fees:
A. I.AND RENTAL shall be due and payable in the sum of $0.17 per square foot or
approximately $37,400.00 per year (the "Original Rent"), payable in twelve (12) equal
· monthly installments in the sum of Three Thousand One Hundred Sixteen Dollars and sixty
seven cents ($3,116.67) in advance, on or before the 1st 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 1st day of October, at the beginning of the City's fiscal year, each
and every year of tiffs Lease Agreement.
1. The annual lease rental will be reduced by the current lease rate per square foot, as
adjusted by a survey performed prior to issuance of building permits, or as adjusted by the
CPI-U referenced in Section IV.C., times the number of square feet comprising all
easements established in accordance with Article II (D).
2. So long as Lessee is not in default under this Lease Agreement rental payments
will be abated until the issuance of the Certificate of Occupancy of the. first of the
Hangar/Office Space facilities or March 1, 2005, which ever occurs first (the "Rental
Abatement Period"). Should Lessee fail to commence or complete construction of Lessee's
Improvements as provided in Section II.C then rental for the Rental Abatement Period will
become immediately due and payable to Lessor.
Notwithstanding the foregoing, the annual lease rental will be adjusted 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 all easements established in accordance with Article II (D).
B. I,ESSOR IMPROVI~M'FNTS RENTAI.,q. NONE:
improvements on the Leased Premises.
There are no Lessor
C. PAYMENT: PENAI,TY: ADJI ISTMF, NT,q. All payments due Lessor fxom 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 designated
in writing by the Lessor. If 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. If payments are not received
by the first of the subsequent month, an additional penalty of one percent (1%) of the unpaid
rental/fee amount will 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 shall 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 2004 index, which was 170 1 (1982-84 = 100). Each
rental adjustment, if any, shall occur on the 7th day of September, beginning 2006, and
3 AGR DAHP.Doc- Page 5
every other year thereafter on such date.
The adjustments in the yearly rent shall be determined by multiplying the Original
Rent by a tSaction, 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
execution of this Lease Agreement. If the product of this multiplication is greater than
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 Original 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 annual rental payment calculated for the previous
CPI adjustment by more than twenty percent (20%) percent.
If the consumer price index 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 discontinued during the Lease Term, the remaining rental 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. If both the CPI-U for the Dallas-
Fort Worth geographical 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 statistics of the Bureau of Labor Statistics of the United States Department of Labor that
are most nearly comparable to the CPI-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 consumer dollar
during the Lease Term, the remaining rental adjustments called for in this section shall be
made using the most nearly comparable statistics pubhshed by a recognized financial
authority selected by Lessor.
V. RIGI-IT.q AND ORI JGATION~q OF I,F,S~qF, F,
A. Ii'SE OF I,I~A~qF, D PRRMTSES, Lessee is granted the non-exclusive privi!ege to
engage in or provide the following:
1. Flight lnatmetinn, Less is granted the non-exclusive right to operate a flight
instruction operation.
2. Pilot ~qhop. Lessee is granted the non-exclusive right to operate a pilot supply
retail operation.
3. Hangar ,qpace, l,e, aging Lessee is granted the non-exclusive right to rent hangar
space.
3 - AGR DAHP.Doc- Page 6
Office Space 1~easing Lessee is granted the non-exclusive right to rent office
space for aviation related activities or other commercial activities with written
approval of airport management. Non-aviation related activities will be
limited to Building #1 and will be limited to commercial operations using
office area only. Hangar/Aviation operations area shall not be impacted.
5. Tie-Dnwn Service,q. Lessee is granted the non-exclusive right to charge for tie-
down services on Lessee's property.
6. Airc~'afl Maintenance ,qervices Lessee is granted the non-exclusive right to
perform aircraft maintenance services on Lessee's property.
7. Aircraft Charter ,qervicea. Lessee is granted the non-exclusive right to operate
aircraft charter services on Lessee's property.
8. Aircraft Painting Service,~. Lessee is granted the non-exclusive right to
perform aircraft paint'mg services on Lessee's property.
Aircraft Sale~ and l~,asing Lessee is granted the non-exclusive right to
perform aircraft sales, leasing, management, and rental services on Lessee's
property.
10.
Additinnal Services. Lessee is granted the non-exclusive right to perform
additional aircratt related services on Lessee's property with written approval
by airport management. Such approval will not be reasonably withheld.
11. Aircraft Fueling Services Lessee is granted the non-exclusive right to perform
aircraft fuel and oil storage and sales on Lessee's property.
12. Additicmal Services. Lessee is granted the non-exclusive fight to perform
aircraft restoration 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
by Lessee, its tenants, employees, invitees or guests shall be limited to only those private,
commercial, retail or industrial activities having to do with or related to airports and avia-
tion. 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 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 file with the Airport Manager and keep current its
mail'mg addresses, telephone numbers and contacts where it can be reached in
3 - AGR DAHP.Doc- Page 7
an emergency.
2. liqt. Lessee shall file with the Airport Manager and keep current a list of its
tenants and sublessees.
3. Cnnrl,mt. Lessee shall contractually require its employees and sublessees (and
sublessee's invitees) to abide by the terms of this Lease Agreement. Lessee
shall promptly enfome its contractual rights in the event of a default of such
covenants.
4. l}'tilitie~: Taxe~ and Feeg Lessee shall meet all expenses and payments in
connection with the use of the Leased 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. l.aw.q. Lessee shall comply with all current and future federal, state and local
laws, roles 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 hcenses or permits.
6. Maintenance nf Properly.. Lessee shall be responsible for the maintenance,
repair and upkeep of all property, buildings, structures and improvements,
including the mowing or elimination of grass and other vegetation on the
Leased Premises, and shall keep the Leased Premises neat, clean and in
respectable condition, free from any objectional matter or thing, including
trash or debris. Lessee agrees not to utilize or permit others to utilize areas on
the Leased Premises which are located on the outside of any hangar or
building for the storage of wrecked or permanently disabled aimraft, aimrafr
parts, automobiles, vehicles of any type, or any other equipment or items
which would distract from 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.
Painting of glnildinga 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 building(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 from 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 default under this Lease Agreement.
3 - AGR DAHP.Doc- Page 8
8. [~Dm~thnri~ed une nfl,ea~ed Pre. mi~e~ Lessee may not use any of the Leased
Premises for any use not authorized herein unless Lessor gives Lessee prior
written approval of such additional use. Without limifmg the foregoing the
Leased Premises shall not be used for the operation of a motel, 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. Dwellingn. 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.
10. Quit Paa~eagian. 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.
I I. lDtte-mnity. 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,
including court costs, attomeys' fees and other reasonable costs, occasioned
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 incidental to this
Lease Agreement, including all 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,
invitees or other persons. Lessee must at all times exercise reasonable
precautions on behalf of, and be solely responsible for, the safety of its
officers, employees, agents, customers, visitors, invitees, licensees and other
persons, as well 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
shall assume no responsibility or liability for harm, injury, or any damaging
events which are directly or indirectly attributable to premise defects, whether
real or alleged, which may now exist or which may hereafter arise upon the
Leased Premises, responsibility for all such defects being expressly assumed
by the Lessee. The Lessee agrees that this indemnity provision applies to all
claims, suits, demands, and actions arising from all premise defects or
conditions.
THF, T,F, RROR AND TI-IF, I,F,R,~F,R ~XPl~,qRT,Y INTT~JqD THIS
3 - AGR DAHP.DOC- Page 9
1NDEMN-[TYPROVT~qTON TO RIRQTI1RE T,ESSEF~ TO INDEMN3FY
AND PROTECT T~ I,E~OR ~ROM T~E CON~QTTENCE~ OF THE
NOTWIT~RTA~G T~E TERMS OF T~E PRECED~G
SENTENCER: T~IR ~E~TY PROVISION DOEg NOT APPI.Y TO
A~ CT,A~: l.OSg: DAMAGE: CAUSE OF ACTION: RIHT A~
I]ARH,~V ~RE T~R ~Y: DEATH: OR DAMAGE RERIH,Tg
FROM THE SOLE ~GIJG~N~E OF THE l,F.g~OR ~R A~ OF ITS
~I.OV~ES: CONTRACTORS: OR AGENTS: I~D WITH THE
FAIH,T OF A~ OTHER PERSON OR ~NTITY.
12. Chemieal.q. 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.
Further, the Lessee shall be solely responsible for all discharges, whether
accidental or intentional, of any chemical and for the costs associated with the
cleanup, remediation and disposal of said chemicals.
13. l-lazardmm Ac.l/vities. Should Lessee violate any law, role, restriction or
regulation of the City of Denton or the Federal Aviation Administration, or
any other regulatory authority, 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
aimraft navigational aid station or device, whether airbome 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 fi.om 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, role or aeronautical
regulation being violated. Should Lessee, Lessee's agent, or the person(s)
responsible for the violation(s) fail to cease and desist fi.om said violation(s)
and to immediately commence correcting the violation(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 corrective action process. In addition, such
violation shall be considered a material default by Lessee authorizing Lessor,
at its sole option and discretion, to immediately terminate and cancel this
3 - AGR DAHP.DOC- Page 10
Lease Agreement.
C. SIGNS. 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 fi.om 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, neat, sightly and good physical condition. All
Signage shall be removed fi'om the Leased Premises by Lessee immediately upon receipt of
instructions for removal of same fi.om Lessor, including without l'unitation, 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.
D. ENTRY. Lessor and its designees shall have the right to enter the Leased
Premises upon reasonable advance notice (written or oral) and at any reasonable times for
the purposes of inspecting the Leased Premises, performing 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 shall not constitute a waiver of Lessee's default.
VI. COVFNANT.q RY
Lessor hereby agrees as follows:
A. pEACF. FI Il. FNIOYMgNT Upon on payment of all rent, fees, and performance
of the covenants and agreements on the part of Lessee to be performed hereunder, Lessee
shall peaceably hold and enjoy the Leased Premises and all rights and privileges herein
granted;
B. COMPlJANCE. Lessor warrants and represents that in the establishment,
construction and operation of the Airport, that Lessor has heretofore and at this time is
complying with all existing roles, regulations, and criteria distributed by the Federal
Aviation Administration, or any other governmental authority relating to and including, but
not limited to, noise abatement, air rights and easements over adjoining and contiguous
areas, over-flight in land'mg 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 normal take-off and landing procedures fi.om 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..RPl~CTAI. 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.
3 - AGR DAHP.Doc- Page 11
RIINIVVAY.q AN!D TAXIWA¥~q Because of the present thirty thousand (30,000)
pound continuous use weight beating capacity of the runway and taxiways of the Airport,
Lessee herein agrees to limit all aeronautical activity including land'mg, take-off and taxiing,
to aimraft having an actual weight, including the weight of its fuel, of thirty thousand
(30,000) pounds or less, until 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 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 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 liabihty for
any damages to the Airport that might result.
vm. I.F. AgF. I-IC~I.D IMPROV~MVNTS
A. REQIIIRI~MI~NTg: Before commencing the construction of any improvements
on the Leased Prcm~ises including Lessee's Improvements (the "Lease Improvements"),
Lessee shall submit:
Documentation, specifications, or design work, to be approved by the Lessor,
which shall estabhsh that the improvements to be built or constructed upon the
Leased 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 Leased Premises of
the proposed construction and improvements;
3. The estimated cost of such construction.
No construction may commence until Lessor has approved the plans and
specifications and the location of the Lease Improvements, and the estimated costs of such
construction. Approval by the Lessor shall not be unreasonably withheld. Documentary
evidence of the actual cost of construction on pubhc areas only (such as taxiways) shall be
delivered by Lessee to Lessor's City Manager fi:om fune 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 filed 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 later than 30 days after completion of the Lease Improvements, Lessee shall
3 AGR DAHP.Doc- Page 12
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 Improvements
("Cost to Construct Lease Improvements").
B. ADDITIONAl, CON~qTRIICTION OR 1MPRC)VI~MFJNvI'S: 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 VIII.A., above. Such additional
improvements shall be a part of the Lease Improvements.
C. OWNFR.qI-IIP OF IMPROVI~,MI:t, NTT.q: 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. removal of R,,ilding.q. No building or permanent fixture may be removed
from the Leased Premises.
A.q.qumptlon. 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.
Failure to Complete I eanee'~ lmprovement~. The Lease Improvements shall
immediately become the property of Lessor at no cost, expense, or
compensation to Lessee should Lessee fail to complete the Lessee's
Improvements within the Construction Period as provided in Section II.C of
this Lease Agreement.
Caneellatlnn nr Termlnatlnn Should this Lease Agreement be cancelled or
terminated before the end of the Lease Term, 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 most
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
Appraisal District not determine a separate value for the Lease Improvements
then the Purchase Price will be determined taking the Cost to Construct the
Lease Improvements reduced by 1/30 for each year the Lease Term has
expired as of the date of termination. If the termination or cancellation is due
to a default by Lessee that has not been cured within 30 days after written
notice of default to Lessee, then the Purchase Price as determined above shall
be reduced by 50%.
3 - AGR DAHP.DOC- Page 13
D(..~T TPIR OGA TTON' O1~' MOI~ TGA GI~'P.
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 full, whichever comes fncst, 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 pumhased with the borrowed funds, and those
improvements pledged to secure the refinancing of the improvements.
X. RIGHT OF F,A~qF. MI~,NT
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. Construction in or at the easement shall be completed
within a reasonable time.
XI. AS~qTGNMIRNIT OF I.F,A.qR
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 hangar space or tie-down space for storage of aircraft only, 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 Airport related
purposes; provided however, that no such assignment, sublease, transfer, hcense, sale 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 lease, for such portion
of the Leased Premises proposed to be assigned, subleased, transferred, licensed, or
otherwise. The provisions of this Lease Agreement shall remain binding upon the
assignees, if any, of Lessee.
XII. 1NIST 1R AN(2F.
A. RF, QI IlRF, D INISI IR ANCF,: Regardless of the activities contemplated under this
Lease Agreement, Lessee shall maintain continuously in effect at all times during the term
of this agreement, at Lessee's sole expense, the following minimum insurance coverages:
3 - AGR DAHP.Doc- Page 14
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 $1,000,000 per occurrence
and provide coverage for premises/operations and contractual liability AND where
exposure exists, coverage for: products/completed operations; explosion, collapse
and underground property damage.
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. Further, the City of Denton shall be named as a Loss Payee.
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 occurrence.
For other operations the limit of liability shall be consistent with the amount set
by State Law.
B. ADD1TIONIAI. COVF. RAGF.~q: In addition to the above referenced coverages, the
following insurance is required if the activity or exposure exists or is contemplated:
Aircraft Fuel/Oil Storage and Dispensing - Comprehensive Commercial (Public)
General Liability shall include coverage or separate coverage shall be provided for
Environmental Impairment Liability.
Aircraft Sales or Aircraft Charter and Air Taxi Aircraft Liability in the amount of
$1,000,000 per occurrence to include Hull Coverage and Liability. In addition,
Passenger Liability in an amount of $100,000 per person (per passenger seat) shall
be provided.
Aircraft Rental or Flight Training - Aircraft Liability in the amount of $1,000,000
per occurrence to include Hull Coverage and Liability, Passenger Liability in the
amount of $100,000 per person (per passenger seat) and Student/Renter Liability
covering all users in the amount of $500,000 per occurrence.
Specialized Commercial Flying (including crop dusting, seeding, and spraying,
banner towing and aerial advertising, aerial photography and surveying, fire
fighting, power line or pipe line patrol) - Aircraft Liability in the amount of
$1,000,000 per occurrence to include Hull Coverage and Liability. In addition,
Passenger Liability in an amount of $100,000 per person (per passenger seat)
shall be provided.
3 - AGR DAHP.Doc- Page 15
5. Aimraft Storage, Maintenance and/or Repair - Aircraft Liability in the amount of
$1,000,000 per occurrence to include Hull Coverage and Liability. In addition,
Hanger Keepers Liability in the amount of $500,000 per occurrence shall be
provided.
C. COV~,RAGF, RF, QI[IIRF. MF. NT.q: All insurance coverages shall comply 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 policy.
All insurance required by this Lease Agreement must be issued by a company or
companies of sound and adequate ftnancial 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 adequacy as to content,
form of protection and providing company.
Required insurance naming the City as an additional insured must be primary
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 liability of the Lessee hereunder.
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 default of this
Lease Agreement.
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.
XIII. ITAN!t~F,T J,ATIC)N PlY T,F,,q,qOR
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 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
3 - ~GR D~HP.DOC- Page 16
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
Agreement by written notice to Lessee. In the event of default, Lessor has the right to
purchase any or all of the Lease Improvements under the provisions of Section VIII.C.4.
hereof.
XIV. C. ANCF. TJ.ATIC}NT BY
Lessee may cancel 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 per/od
than ninety (90) days due to any law or any order, role 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 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.
XV. MT~qf2l~J J ,ANFDI I~q PR CIVI.qIC)N.R
A. F, NT1RI~ AGRF, EMENT. 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 signed by both parties.
B. BINDING F, FFF, C,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. SEVFR ABTT.1TV, If a provision hereof shall be finally declared void or illegal by
any court or adrffmistrative agency having jurisdiction, the entire Lease Agreement shall not
be void; but the remaining provisions shall continue in effect as nearly as possible in
3 - AGR DAHP.Doc- Page 17
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:
1. If to Lessor, addressed to:
City Manager
City of Denton
215 E. McKinney Street
Denton, Texas 76201
Fax No.940.349.8596
2. If to Lessee, addressed to:
Mr. Alan D. Stricklin
CEO & President
Denton Airport Hangars, LLC
3932 Bexhill Dr.
Plano, Texas 75025
Fax 972.491.2439
E. Iq~ADINGS. The head'mgs 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. GOVERNING l .AW AND VENIY[( 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 lawsuit to enforce the terms or conditions of this Lease
Agreement shall be a court of competent jurisdiction in Denton County, Texas.
G. NO WAIVFR, 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 term of this Lease Agreement.
H. NO AGFNCY. 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.
IN WITNESS WHEREOF, the parties have executed this Lease Agreement as of the
Effective Date first above written.
CITY OF DENTON, TEXAS, LESSOR
3 - AGR DAHP.Doc- Page 18
MICHAEL A. C~)~rl)UFlff~ MANAGER
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
HERBERT~~TY ATTORNEY
BY: ~ '"'- ~ ~
By:DENTON~RT~~HANGARS~ LLC.
ALAN D. STRICKLIN,
CEO & PRESDENT
ACKNOWLEDGMENTS
THE STATE OF TEXAS §
COUNTY OF DENTON §
This instrument was acknowledged before me on the '~L~-day of (~/0~,~,,~04, by
Michael A. Conduff, City Manager of the City of Denton, Texas, on behalf of said
municipality.
dANE E. RICHARDs;N'
Not,~/Public, State of Texas
My Comm~sion Expires
June 27, 2005
NO'~TARY PUBLIC, STATE OF TEXAS
THE STATE OF TEXAS §
3 AGR DAHP.Doc- Page 19
COUNTY OF DENTON §
This instrument was acknowledged before me on the ~ day of ~a~(~4~- , 2004 by
Alan Stricklin, President & CEO, Denton Airport Hangars, LLC 0
NOT,4.RY--PUBL~C, S ~AT~"UI~EXAS
3 - AGR DAHP.Doc- Page 20