Loading...
2002-164FILE REFERENCE FORM 2002-164 Additional File Exists Additional File Contains Records Not Public, According to the Public Records Act Other FILE(S) Date Initial S Amendment to Airport Lease - Ordinance No. 2003-307 09/16/2003 S:\Our Documents\Ordinances\02~John Kristoferson Airport Lease.doc OP rN CE NO./ AN ORDINANCE APPROVING A COMMERCIAL OPERATOR AIRPORT LEASE AGREEMENT BETWEEN THE CITY OF DENTON, TEXAS AND JOHN KRISTOFERSON AND PROVIDING AN EFFECTIVE DATE. THE COUNCIL OF THE CITY OF DENTON, TEXAS HEREBY ORDAINS: SECTION 1. The City Manager or his designee is hereby authorized to execute a airport lease agreement for commercial operator between the City of Denton and John Kristoferson, 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 4¢ dayof ~(~_~' ,2002. EUL1NE BROCK, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY H~EP~ IVY; ~TO LEGAL FORM: g~iY, CITY ATT EY BY: ~ AIRPORT LEASE AGREEMENT COMMERCIAL OPERATOR THE STATE OF TEXAS COUNTY OF DENTON KNOW ALL MEN BY THESE PRESENTS: This lease is made and executed this 4th day of June, 2002, at Denton, Texas by and between the City of Denton, Texas, a municipal corporation, hereinaRer referred to as "Lessor," and Dr. John Kristoferson, his heirs, permitted successors and assigns having his permanent mailing address at 912 Chiquita, Denton, TX 76205, hereinafter referred to as "Lessee." WITNESSETH: WHEREAS, Lessor now owns, controls, and operates the Municipal Airport (Airport) in the City of Denton, County of Denton, State of Texas; and WHEREAS, Lessee desires to lease certain premises on said airport and construct and maintain an aircraft hanger and related aviation facilities thereon; and NOW, THEREFORE, for and in consideration of the promises and the mutual covenants contained in this Agreement, the parties agree as follows: I. CONDITIONS OF AGREEMENT NOTWITHSTANDING ANY LANGUAGE TO THE CONTRARY HEREINAFTER CONTAINED, THE LANGUAGE IN PARAGRAPHS A THROUGH D OF THIS SECTION SHALL BE BINDING. A. PRINCIPLES OF OPERATIONS. The right to conduct aeronautical activities for furnishing services to the public is granted 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 similar types of price reductions to volume purchasers. B. NON-DISCRIMINATION: Lessee, for himself, his personal representatives, successors and interests, and assigns, as a part of the consideration hereof, does hereby covenant and agree as a covenant nmning with the land that: 1. 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 furnishings of services thereon, 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 otherwise be subjected to disefimination; 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, Subtitle A, Office of the Secretary, Part 21, Nondiscrimination in Federally assisted programs of the Department of Transportation - Effectual of Title VI of the Civil Rights Act of 1964, as said Regulations may be amended. C. RIGHT OF INDIVIDUALS TO MAINTAIN AIRCRAFT. It is clearly understood by Lessee that no fight or privilege has been granted which would prevent any person, firm, or corporation operating aircraft on the airport fi:om performing any services on its own aircraft with its own regular employees Cmchiding, but not limited to, maintenance and repair) that it may choose to perform. D. NON-EXCLUSIVE RIGHT. It is understood and agreed that nothing herein contained shall be construed to grant or authorize the granting of an exclusive right within the meaning of Title 49 U.S.C. Appendix § 1349. E. PUBLIC AREAS. 1. Lessor reserves the right to further develop or improve the landing area of the airport as it sees fit, regardless of the desires or views of Lessee, and without interference or hindrance. 2. Lessor shall be obligated to maintain and keep in repair the land'mg area of the airport and all publicly owned facilities of the airport, together with the fight to direct and control all activities of Lessee in this regard subject to the rights, duties, and responsibilities of the Parties set out herein, 3. During time of war or national emergency, Lessor shall have the right to lease the landing area or any part thereof to the United States Government for military or naval use, and, if such lease is executed, the provisions of this instrument insofar as they are inconsistent with the provisions of the lease to the Government, shall be suspended. 4. Lessor reserves the right to take any action it considers necessary to protect the aerial approaches of the airport aga'mst obstruction, together with the right to prevent Lessee for 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 aimraft or to aircraft navigation. 5. This Lease shall be subordinate to the provisions of any existing or future agreement between Lessor and the United States or agency thereof, relative to the operation or ma'mtenance of the airport. 2 II. LEASED PREMISES 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 hire and take l~om Lessor, the following described land situated in Denton County, Texas. A. LAND: A tract of land, containing approximately 14,440 square feet, being 80' x 180', and containing approximately 0.331 acres drawn and outlined on Exhibit "A," and legally described in Exhibit "B." Exhibits A and B are incorporated herein by reference. Together with the right of ingress and egress to said property; and the right in common with others so authorized of passage upon the Airport property generally, subject to reasonable regulations by the City of Denton and such rights shall extend to Lessee's employees, passengem, patrons, and invitees. For purposes of this agreement, the term "Premises" shall mean all property located within the metes and bounds described and identified within Exhibit "B', including leasehold improvements consmacted by the Lessee, but not including certain easements or property owned and/or controlled by the Lessor. B. IMPROVEMENTS PROVIDED BY LESSOR: There will be the following improvements provided by LESSOR, and as set for in Article II.D. "Access to Utilities" below LESSOR will extend or give credit against the Lease for the cost to extend the current taxiway in a direct line to the East edge of lease property, no more than 80 feet, to be the full width of current existing taxiway. For the purpose of this Agreement, the term "Lessor improvements" shall mean those things on the leased premises belonging to, constructed by, or to be constructed by Lessor, which enhances or increases, or will enhance or increase, the value or quality of the leased land or property. Unless otherwise noted herein, all Lessor improvements are and will remain the property of Lessor. All Lessor improvements must be described in detail above, or above referenced and attached to this Agreement in an exhibit approved by Lessor. C. EASEMENTS: Lessor and Lessee by mutual agreement may establish, on the lease premises, easements for public access on roads and taxiways. D. ACCESS TO UTILITIES. Lessor represents that there are water lines within 100 feet and 3-phase electricity lines within 100 feet of the leased premises available to "tap-in" by Lessee, and that the same are sufficient for usual and customary service on the leased premises and Lessee will at Lessee's expense connect Lessee's aircraf~ ramp to Taxiway I in accordance with Lessor's plans and specifications for taxiways. IlL TERM The term of this agreement shall be for a period of 30 years, commencing on the 5th day of June, 2002 and continuing through the 4th day of June, 2032 unless earlier temainated under the provisions of the Agreement. Lessee shall have the option to extend the term of this lease for two (2) successive renewal terms of ten (10) years each. The Lessor shall give Lessee one hundred eighty (180) days written notice of the expiration of the initial lease and, if applicable, similar notice of the expiration of the first renewal term. Should Lessee desire to exercise either of the options above, then ninety (90) days prior to the expiration of the initial term and, if applicable, the first renewal term, Lessee shall complete negotiations for renewal(s) of this lease with Lessor. 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 taking into consideration that if Lessor and Lessee are unable to agree to terms for the first renewal term, Lessor must purchase property per vm.c.4. The Lessor shall not unreasonably withhold consent or approval for the above referenced renewal terms. IV. PAYMENTS, RENTALS, AND FEES Lessee covenants and agrees to pay Lessor, as consideration for this lease, the following payment, rentals, and fees: A. .LAND RENTAL shall be due and payable in the stun of 15¢ per square foot or Two Thousand One Hundred Sixty Dollars ($2,160.00) per year, payable in twelve (12) equal monthly installments in the sum of One Hundred Eighty Dollars ($180.00) in advance, on or before the first day of each and every month during the term of this agreement. Lessee has the option to pay annually in advance at election of Lessee. The rental for the initial term and the two (2) ten (10) year renewal periods, if applicable, will be adjusted annually based on the consumer price index criteria in Section IV.D. Notwithstanding the foregoing, the annual lease rental is to be reduced by the product of 15¢ per square foot, as adjusted by the CPI-U referenced in Section IV.D., times the number of square feet comprising all easements established in accordance with Article II.C. Lessee shall be entitled to a proportional refund for any rental paid as required above for any period of delay in obtaining approval in the progress of the design and construction of the hanger authorized herein, in excess of sixty (60) days from the filing by Lessee of its (1) plans and specifications for the construction of Lessee's hangar or (2) application for a building permit for Lessee's hanger, if the delay in the approval of the applicable documents is not caused by such plans and specifications or application being deficient or failure of the Lessee to timely correct a deficiency in the applicable documents filed with the City of Denton by Lessee provided said deficiency is identified specifically to Lessee in a timely manner. B. LESSOR IMPROVEMENTS RENTALS. NONE. There are no Lessor improvements on the leased premises. C. PAYMENT, PENALITY, ADJUSTMENTS. All payments made hereunder by Lessee shall be made to Lessor at the office of the Finance Department of the City of Denton, Accounts Receivable, 215 E. McK/nney, Denton, Texas, unless otherwise designated in writing by the Lessor. All monthly rental payments shall be due and payable on or before the first day of each month and shall be paid by Lessee without demand or notice from Lessor. All rental amounts paid by Lessee after the twentieth (20th) day of the month will be delinquent and shall include an additional monetary amount (penalty) which shall equal five percent (5%) of the rental amount due. If payments are not received by the first of the subsequent month an additional penalty of 1% of the unpaid rental amount will be due. A 1% charge will be added on 4 the first of each subsequent month until unpaid rental payment is made. Failure to pay the rent or penalty amounts on delinquent rent shall constitute an event of default of this Lease. D. CPI-U. The yearly rental for land and improvements herein leased shall be readjusted at the end of each year period during the initial term of this lease, and during the renewal terms after the beginning rental is agreed to by the parties as set forth in Section III., on the basis of the proportion that the then current Unites States 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 bears the applicable index at the execution of this contract. The original land rental amount is based upon 15¢ per square foot per year for the land herein leased. Each rental adjustment, if any, shall occur on the 1st day of July, beginning 2004 and every other year thereafter on such date. The adjustments in the yearly rent shall be determined by multiplying the minimum yearly rent as set forth in Section IV.A. by a fraction, the numerator of which is the index number for the last month prior to the adjustment, and the denominator of which is the index number applicable at the execution of the contract. If the product of this multiplication is greater than the minimum yearly rent as set forth in Section IV.A., Lessee shall pay this greater amount as the yearly rent until the time of the next rental adjustment as called for in this section. If the product of this multiplication is less than the minimum yearly rent as set forth in Section IV.A, there shall be no adjustment in the annual rent at that time, and Lessee shall pay the minimum yearly rent as set forth in Section IV.A, 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 minimum yearly rent as set forth in Section IV.A. The adjustment shall be limited so that the annual rental payment determined for any given year shall not exceed the annual rental payment calculated for the previous year by more than ten percent (10%). 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 term of this lease, the remaining rental adjustments called for in this section shall be made using the formula set forth in Subsection (a) above, but 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 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 term of this lease, 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 term of this lease, 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. RIGHTS AND OBLIGATIONS OF LESSEE A. USE OF LEASED PREMISES. Lessee is granted the non-exclusive privilege to engage in or provide the following: 5 1. Hanger Leases and Rental. The rental or lease of hangars and hangar space related facilities upon the leased premises. 2. Office Space Lease or Rental. The rental or lease of office space in or adjoining Lessee's hangars. 3. Aircraft Storage, Shop Space and Tie Down. To provide parking, storage, maintenance shop and tie down service, for both Lessee's and itinerant aircraft upon or within the leased premises. 4. Construction and Permit. Lessee shall file building permit within 365 days of lease agreement and complete construction within 720 days of date of lease. Lessee, his tenants, and sublessees shall not be authorized to conduct any services not specifically listed in this agreement. The use of the lease premises by the tenants or sublessees of Lessee shall be limited to only those commercial, retail, or industrial activities having to do with or related to airports and aviation. No person, business, or corporation may operate a commercial, retail, or industrial business upon the premises of Lessee or upon the Airport without a lease or license fi:om Lessor authorizing such commercial, retail, or industrial activity. The Lessor shall not unreasonably withhold authorization to conduct aeronautical or related services. Private, personal, non-commercial, or public services uses are permitted and controlled pursuant to the provisions of paragraph V.A.4.abelow. B. STANDARDS. Lessee shall meet or exceed the following standards: 1. Address. Lessee shall file with the Airport Manager and keep current his mailing addresses, telephone numbers, and contacts where he can be reached in an emergency. 2. List. Lessee shall file with the Airport Manager within thirty (30) days of any written request and keep current a list of his tenants and sublessees. 3. Conduct. Lessee shall contractually require his employees and sublessees (and sublessee's invitees) to abide by the terms of this agreement. Lessee shall promptly enforce his contractual fights in the event ora default of such covenants. 4. Utilities, Taxes, and Fees. Lessee shall meet all expenses and payments in connection with the use of the Premises and the rights and privileges herein granted, including the timely payments of utilities, taxes, permit fees, and assessments lawfully levied or assessed. 5. Laws. Lessee shall comply with 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 6. Maintenance of Property. 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 Premises, and shall keep said Premises neat, clean, and in respectable condition, free from any objectionable matter or thing. 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 aircraft, aircraft parts, automobiles, vehicles of any type, or any other equipment or items which would distract from 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. Unauthorized use of premises. Lessee may not use any of the leased land or premises for the operation of a motel, hotel, restaurant, private club or bar, apartment house, or for industrial, commercial, or retail purposes, except as authorized herein. 8. Dwellings. It is expressly understood and agreed that no permanent dwelling or domicile may be built, moved, or established on or within the leased premises nor may lessee, his tenants, invitees, or guests be permitted to reside or remain as a resident on or within the leased premises or other airport premises save and except Lessee may temporarily reside on the premises for brief periods (usually less than one week in length). 9. Quit Possession. Lessee shall quit possession of all premises leased herein at the end of the primary term of this lease or any renewal or extension thereof, and deliver up the premises to Lessor in as good condition as existed when possession was taken by Lessee, reasonable wear and tear excepted. 10. Hold Harmless. Lessee shall indemnify and hold harmless Lessor from and against all loss and damages, including death, personal injury, loss of property, or other damages, arising or resulting from the operations of Lessee's business in and upon the leased premises. 11. Chemicals. Lessee agrees to properly store, collect, and dispose of all chemicals and chemical residues; to properly store, confine, collect, and dispose of all paint, including paint spray in the atmosphere, and paint products; and to comply with all Local, State, and Federal regulations governing the storage, handling, or disposal of such chemicals and paints. 12. Hazardous Activities. Should Lessee violate any law, role, restriction, or regulation of the City of Denton or the Federal Aviation Administration, or should the Lessee engage in or permit other persons or agents to engage in activities which could produce hazards or obstruction to air navigation, obstructions to visibility, or interference with any aircraft navigational aid station or device, whether airborne or on the ground, then Lessor shall state such violation in writing and deliver written 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 conformance 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 from 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), 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. 13. Painting of Exterior of Hangar. During the original term of this Lease 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 premises be reviewed by the Airport Advisory Board for the purpose of determining whether painting of the exteriors of such buildings or hangars is necessary. If the Airport Advisory Board determines painting is necessary, it shall furnish a recommendation to this effect to the City Council. The Council, may, upon the Board's recommendation, 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 six (6) months 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's City Council within the six (6) month period shall constitute Lessee's default under this Lease. C. SIGNS. During the term of this Agreement, Lessee shall have the right, at its own expense, to place in or on the lease Premises signs identifying Lessee. Said signs shall be of a size, shape, and design and at a location or locations, approved by the Lessor and in conformance with any overall directional graphics or sign program established by Lessor for the Airport. Lessor's approval shall not be withheld unreasonable. Said signs shall be maintained in good repair throughout the term of this agreement. Notwithstanding any other provision of this agreement, said signs shall remain the property of Lessee. Lessee shall remove, at its expense, all lettering, signs, end placards so erected on the premises at the expiration of the term of this Agreement or extensions thereof. VI. COVENANTS BY LESSOR Lessor hereby agrees as follows: A. PEACEFUL ENJOYMENT. That on payment of rent, fees, and performance of the covenants and agreements on the part of Lessee to be performed hereunder, Lessee shall peaceable hold and enjoy the leased premises and all rights end privileges herein granted: B. COMPLIANCE. Lessor warrants and represents that in the establishment, construction and operation of said Denton Municipal Airport, that Lessor has heretofore and at this time is complying with all existing rules, regulations, and criteria distributed by the Federal 8 Aviation Administration, or any other governmental authority relating to and including, but not limited to, noise abatement, air fights, 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 normal take-off and landing procedures from said Denton Municipal Airport; Lessor further warrants and represents that at all times during the term hereof, or any renewal or extension of same, that it will continue to comply with the foregoing. VII. SPECIAL CONDITIONS It is expressly understood and agreed by and between Lessor and Lessee that this lease agreement is subject to the following special terms and conditions. A. RUNWAYS AND TAXIWAYS. That because of the present sixty thousand (60,000) pound continuous use weight beating capacity of the runway and taxiways of the Airport, Lessee herein agrees to limit all aeronautical activity including landing, take-off, and taxiing, to aircrafl having an actual weight, including the weight of its fuel, of sixty thousand (60,000) 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 that 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 negligent disregard of the provisions of this section shall be sufficient to cause the immediate termination of this entire Agreement and subject Lessee to liability for any damages to the Airport that might result. VIII. LEASEHOLD IMPROVEMENTS A. REQUIREMENTS: Before commencing the construction of any improvements upon the premises, Lessee shall submit: 1. Documentation, specifications, or design work, to be approved by the Lessor, which shall establish that the improvements to be built or constructed upon the lease premises are in conformance with the overall size, shape, color, quality, and design, in appearance and structure of the program established by Lessor on the Airport. 2. All plans and specifications showing the location upon the premises of the proposed construction; 3. The estimated cost of such construction. No construction may commence until Lessor, acting by its City Council, has approved the plans and specifications and the location of the improvements, the estimated costs of such construction and the agreed estimated life of the building or structure. Approval by the City Council shall not be unreasonably withheld; should the Council fail to deny Lessee's plans and specifications within sixty (60) days of submission thereof to the Council, such plans and 9 specifications shall be deemed approved. Documentary evidence of the actual cost of construction on public areas only (such as taxiways) shall be delivered by Lessee to Lessor's City Manager fi:om time to time as such costs are paid by Lessee, and Lessor's City Manager is hereby authorized to endorse upon a copy of this lease 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 agreement. B. ADDITIONAL CONSTRUCTION OR IMPROVEMENTS: Lessee is hereby authorized to construct upon the land herein leased, at his 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, provided however, before commencing the construction of any improvements upon the premises, Lessee shall submit plans and specifications for approval by Lessor as specified in Article Vm.A., above. C. OWNERSHIP OF IMPROVEMENTS: All buildings and improvements constructed upon the premises by Lessee shall remain the property of Lessee unless said property becomes the property of Lessor under the following conditions, terms, and provisions: 1. Removal of Buildings. No building or permanent fixture may be removed fi'om the premises. 2. Assumption. All buildings and improvements of whatever nature remaining upon the leased premises at the end of the primary term, or any extension thereof, of this lease shall automatically become the property of Lessor absolutely in fee without any cost to Lessor. 3. Building Life. It is agreed that the life of the building to be constructed by Lessee on the property herein leased is forty (40) years. 4. Cancellation. Should this lease be cancelled for any reason before the end of the forty (40) year expected building life, it is expressly understood and agreed that Lessor reserves the fight to purchase all buildings, structures, and improvements then existing upon the premises by tendering to Lessee one fortieth (1/40) of the undepreciated value of such building for each year remaining on the agreed life of such building. The undepreciated value of all improvements is to be determined by having such improvements appraised by three appraisers, one appointed by Lessee and one appointed by the two appraisers. XL SUBROGATION OF MORTGAGEE A. Any person, corporation, or institution that lends money to Lessee for purchase, constmction, or improvement of any hangar, structure, building, or improvement on the leased premises 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 said leased premises and operate or manage said hangar, structure, building, or improvement according to the terms of this Agreement, for a period not to exceed the term of the mortgage with Lessee, or until the loan is paid in full, whichever comes first, but in no event longer than the term of this 10 lease. It is expressly understood and agreed that the fight of the mortgagee referred to herein is limited and restricted to those improvements constructed with funds borrowed from mortgagee or purchase money furnished for the acquisition of same. B. Lessee shall have the right to place a first mortgage lien upon its leasehold in an amount not to exceed eighty percent (80%) of the construction cost or current market value of the leasehold improvements. C. Lender's duties and rights are as follows: 1. The Lender shall have the right, in case of default, to assume the rights and obligations of Lessee herein and become a substituted Lessee, with the further right to assign the Lessee's interest to a third party, subject to approval of the Lessor, such approval to not be unreasonably withheld or delayed. Lender's obligations under this Lease as substituted Lessee shall cease upon assignment to a third party and approval by the Lessor. 2. As a condition precedent to the exercise of the right granted to Lender by this paragraph, Lender shall notify the Lessor of all action taken by it in the event payments on such loans shall become delinquent. Lender shall also notify the Lessor, in writing, of any change in the identity or address of the Lender. 3. All notices of default, as well as all notices required by Article XIII herein (Cancellation by Lessor) to be given by the Lessor to Lessee shall also be given by the Lessor to Lender at the same time and in the same manner, provided the Lessor has been furnished with written notice of Lender's interest and its address. Such notice shall be given to the City Secretary and the Airport Manager. Upon receipt of such notice, Lender shall have the same rights as Lessee to correct any default. X. RIGHT OF EASEMENT Lessor shall have the right to establish easements, at no cost to Lessee, upon the leased ground space for the purpose of providing underground utility services to, fi'om, or across the airport property or for the construction of public facilities on the Airport. However, any such easements shall not interfere with Lessee's use of the leased premises and Lessor shall restore the property to original condition upon the installation of any utility services on, in, over, or under any such easement or the conclusion of such construction. Construction in or at the easement shall be complete within a reasonable time. XI. ASSIGNMENT OF LEASE 1. Lessee expressly covenants that it will not assign this lease, convey more than ten percent (10%) of the interest in his business, through the sale of stock or otherwise, transfer, license, nor sublet the whole or any part of the said premises for any purpose, except for rental of hangar space for the storage of aircraft or tie-down space, without the written consent of Lessor. Lessor agrees that it will not unreasonably withhold its approval of such sale, sublease, transfer, license, or assignment of the facilities for the airport related purposes. The provisions of this lease shall remain binding upon the assignees, tenants, and sublessees, if any, of Lessee. Lessee 11 shall be responsible for the observance by its tenants, sublessees, and assignees of the terms and conditions of this lease. In the event that the Lessor determines that a sublessee or assignee is operating a non-aviation related business or is operating an aviation related business without complying with the minimum standards apphcable thereto, the sublease or assignment may be terminated in the manner as provided by Article XIII herein for leases. 2. It is agreed and understood that the named Lessee herein may desire to transfer or assign Lessee's interest herein to Kristoferson LTD, J.S. ICristoferson M.D., or J.S. Kristoferson M.D. PA. Accordingly, Lessor consents and agrees that the following entities shall be permitted assignees at the election of Lessee without further permission of Lessor: XII. INSURANCE A. REQUIRED INSURANCE: Lessee shall maintain continuously in effect at all times during the term of this agreement, at Lessee's expense, the following insurance coverage: 1. Comprehensive general liability covering the leased premises, the Lessee or its company, its personnel, and its operations on the airport. 2. Aircraft liability to cover all flight operations of Lessee. 3. Fire and extended coverage for replacement value for all facilities used by the Lessee either as a part of this agreement or erected by the Lessee subsequent to this agreement. 4. Liability insurance limits shall be in the following minimum amounts: Bodily Injury and Property Damage: One Million Dollars ($1,000,000) combined single limits on a per occurrence basis. 5. All policies shall name the City of Denton as an additional named insured and provide for a minimum of thirty (30) days written notice to the City prior to the effective date of any cancellation or lapse of such policy. 6. All policies must be approved by the Lessor. 7. The Lessor shall be provided with a copy of all such policies and renewal certificates. During the term of this lease, Lessor herein reserves the right to adjust or increase the liability insurance amounts required of the Lessee, and to require any additional rider, provisions, or certificates of insurance, and Lessee hereby agrees to provide any such insurance requirements as may be required by Lessor; provided however, that any requirements shall be commensurate with insurance requirements at other public use airports similar to the Denton Municipal Airport in size and in scope of aviation activities, located in the southwestern region of the United States. Lessee herein agrees to comply with all increased or adjusted insurance requirements that may be required by the Lessor throughout the original or extended term of this lease, including types of insurance and monetary amounts or limits of insurance, and to comply with said insurance 12 requirements within ninety (90) days following the receipt of a notice in writing from Lessor stating the increased or adjusted insurance requirements. Lessee shall have the right to maintain in force both types of insurance, which exceed Lessor's minimum insurance requirement. In the event that State law should be amended to require types of insurance and/or insurance amounts which exceed those of like or similar public use airports in the southwestern region of the United States of America, then in such event, Lessor shall have the fight to require that Lessee maintain in force types of insurance and/or mount of insurance as specified by State law. Failure to comply with the minimum specified amounts or types of insurance as required by Lessor constitute Lessee's default of this Lease. XIII. CANCELLATION BY LESSOR In the event that Lessee shall file a voluntary petition in bankruptcy or proceedings in bankruptcy shall be instituted against it and Lessee thereafter is 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 the terms, covenants, or conditions herein contained, or on its part to be performed, the Lessor may default shall continue for sixty (60) days after the receipt of such notice by Lessee, then Lessor may terminate this lease by written notice to Lessee, subject to any required approval by any court of competent jurisdiction. In the event of default, Lessor has the fight to purchase any or all structures on the leased premises under the provisions of Section VIII Paragraph C.4. (Cancellation) hereof. XIV. CANCELLATION BY LESSEE Lessee may cancel this Agreement, in whole or part, and 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 jurisdiction of a permanent injunction in any way preventing or restraining the use of said airport or any part thereof for airport purposes; (2) the breach by Lessor of any of the covenants or agreements contained herein and the failure of Lessor to remedy such breach for a period of ninety (90) days after receipt of a written notice of the existence of such breach; (3) the inability of Lessee to use said premises and facilities continuing for a longer period than ninety (90) days due to any law or any order, 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 as aforesaid, or may elect to continue this lease under its terms, except, however, that the use of the leased premises shall not be limited to primarily aviation purposes, their use being only limited by such laws and ordinances as may be applicable at that time. 13 XV. MISCELLANEOUS PROVISIONS A. ENTIRE AGREEMENT. This 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 EFFECT. 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. SEVERABILITY. If a provision hereof shall be finally declared void or illegal by any court or administrative agency having jurisdiction the entire Agreement shall not be void; but the remaining provisions shall continue in effect as nearly as possible in accordance with the original intent of the parties. D. NOTICE. Any notice given by one party to the other in connection with this agreement shall be in writing and shall be sent by certified mail, return receipt requested, with postage and certification fees prepaid as follows: 1. If to Lessor, addressed to: City Manager City of Denton 215 E. McKinney Denton, TX 76201 John Kristoferson 912 Chiquita Denton, TX 76205 Notices shall be deemed to have been received on the date of received on the date of receipt as shown on the return receipt. E. HEADINGS. The headings used in this Agreement are intended for convenience of reference only and do not define or limit the scope or meaning of any provision of this Agreement. F. GOVERNING LAW. This Agreement is to be construed in accordance with the laws of the State of Texas. G. MEDIATION. The parties may agree to settle any disputes under this lease by submitting the dispute to mediation or other means of alternate dispute resolution. No mediation or alternate dispute resolution, arising out of or relating to Article V.A. of this lease, involving one party's disagreement may include the other party to the disagreement without the other's approval. 14 H. NO WA1VER. No waiver by Lessor or Lessee of any default or breach of a covenant or term of this lease may be treated as a waiver of any subsequent default or breach of the same or any other covenant or term of this Agreement. I. INDEPENDENT CONTRACTOR. During all times that this Lease is in effect, the parties agree that Lessee is and shall be deemed to be an independent contractor and operate and not an agent or employee of the Lessor with respect to their acts or omissions hereunder. For all the purposes hereunder, Lessee is and shall be deemed an independent contractor and it is mutually agreed that nothing contained herein shall be deemed or construed to constitute a partnership or joint venture between the parties hereto. IN WITNESS WHEREOF, the parties haveB e~y~ and year first above written. ATTEST: STATE OF TEXAS COUNTY OF DENTON FjEANETT~;;-::::-~-~:-----''~'~''E-----~COTT- NOTARY PUBLIC STATF OF TEXAS gTARY PUBLIC, STATE OF TEXAS My commission expires: 15 DENTON DENTON MUNICIPAL AIRPORT, TERMINAL BUILDING, 5000 AIRPORT RD. DENTON1 TEXAS 76207 (940) 349-7736 - (940) 349-7744- Fax (940~ 349-7289 October 8, 2002 Dr. John Kristoferson 912 Chiquita Denton, TX 76205 Dear Dr. Kristoferson: This letter is a "Letter of Understanding" pursuant to our conversation regarding the square footage of your lease agreement with the City of Denton Airport. During our conversation, it was determined that the total area stated in your lease is 14,440 square feet of which 800 square feet (10 feet north/south by 80 feet east/west) is within the City of Denton utility easement. Upon further review, it was also noted that your leased area is 14,400 square feet, not 14,440. Therefore, the total square footage of your lease will be reduced to a total of 13,600 square feet. I have enclosed a copy of pages three and four of your lease for your reference. The lease amount due is $2,040 annually or $170.00 per month. Your account will be credited in the amount of $30.00 for payments received. The amount due October 2002 through September 2003 is $2,010. A copy of this letter will also be included in your lease agreement to reduce the potential of confusion on the total area of your leasehold. I apologize for the delay in this and thank you for your cooperation. Should you have any questions or comments, please feel free to contact me at 349-7702. Sincerely, / ~, / Mark Nelson, C. M. Director of Airport & Transportation Operations Enclosure KRIST LTR.LSE REV.DOC "Dedicated to Qualihd Service' www. cityofdenton.com