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HomeMy WebLinkAboutResolution - 2004-R0383 - Lease Agreement With Hangars Of Lubbock, Inc. At Airport - 08_16_2004Resolution No. 2004-RO383 August 16, 2004 Item No. 28 RESOLUTION BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: THAT the Mayor of the City of Lubbock BE and is hereby authorized and directed to execute for and on behalf of the City of Lubbock a Lease Agreement with the Hangars of Lubbock, Inc. at Lubbock International Airport, and all related documents. Said Agreement is attached hereto and incorporated in this Resolution as if fully set forth herein and shall be included in the minutes of the Council. Passed by the City Council this 16th day of ATTEST: 6 0,4 ec�—" 1-11-� - Reb cca Garza, City Secretary AS TO CONTENT: " , W. Loomis, Director of Aviation APPROVED AS TO FORM: Linda L. Chamales, Senior Attorney Office Practice Section Lc: IJATTTY/Linda/RESOLUTIONS/Res-Hangars July 30, 2004 2004. GAL, MAYOR Resolution No. 2004-RO383 August 16, 2004 Item No. 28 THE STATE OF TEXAS § KNOW ALL MEN BY THESE PRESENTS: COUNTY OF LUBBOCK § LEASE AGREEMENT This LEASE AGREEMENT, hereinafter referred to as the "Agreement" or "Lease," is entered into at Lubbock, Texas, by and between the CITY OF LUBBOCK (referred to herein as Lessor) and HANGARS OF LUBBOCK, INC., (referred to herein as Lessee). WITNESSETH WHEREAS, Lessor owns, controls and operates the Lubbock International Airport (referred to herein as Airport), situated at Route 3, Lubbock, Lubbock County, Texas, and has the authority to grant certain rights and privileges with respect thereto, including those hereinafter set forth; and WHEREAS, Lessor deems it advantageous to itself and to its operation of the Airport to lease unto Lessee the T-hangars and premises described herein, on the east ramp, together with certain privileges, rights, uses and interests therein, as hereinafter set forth; and WHEREAS, Lessee intends to utilize the T-hangars and premises herein leased for the purpose of conducting a T-hangar rental service for aircraft and items related to servicing aircraft; and WHEREAS, Lessee has indicated a willingness and an ability to properly keep, maintain and improve said T-hangars and premises in accordance with standards established by Lessor, and PAGE 1 NOW THEREFORE, for and in consideration of the mutual promises, covenants, terms and conditions, both general and special, as hereinafter set forth, Lessor hereby grants to Lessee the rights and privileges hereinafter described; Lessee agrees to accept the duties, responsibilities and obligations as hereinafter set forth; and the parties hereto, for themselves, their successors and assigns, agree as follows: ARTICLE ONE DEMISE OF LEASED PREMISES 1.01 LEASED PREMISES For and in consideration of the terms, conditions and covenants of this Lease to be performed by Lessee, all of which Lessee, accepts, Lessor does hereby lease unto Lessee twelve (12) T-hangars which are approximately 12,489 square feet and located on the east ramp of Lubbock International Airport (collectively referred to as the "Premises" or the "Leased Premises" in this Lease). The location of said Leased Premises is depicted on Exhibit A attached hereto and by this reference made a part of this Lease for all purposes. 1.02 PURPOSE AND PRIVILEGES The Lessee is entitled to use the Leased Premises for the following activities: A. Lessee may use the Leased Premises for conducting a T-hangar rental service for aircraft and items related to servicing, aircraft. B. Lessee, at its own expense, shall be responsible for securing all permits, clearances, rights -of way and other matters necessary to conduct business in a lawful manner. PAGE 2 C. The Lessee is entitled to use the Leased Premises for activities set out in Section 1, Fixed Base Operator, of the Minimum Standards for Aeronautical Activities, 1991, as may be amended from time to time, with prior written approval of the Director of Aviation. 1.03 USE OF AIRPORT During the term of this lease, Lessee and his tenants shall have free use of, in common with others at the Airport, all runways, taxiways, public ramps and public parking areas available at the Airport, and the right of ingress to and egress from the above described premises, which right shall extend to Lessee's employees, guests, invitees, tenants and patrons. If, during the term of this Agreement, the use of the Airport by Lessee is temporarily suspended, restricted or interfered with for a period of thirty (30) days or more for reasons beyond the practical control of the Lessor, in such manner so as to substantially affect the use of the Leased Premises or operation of aircraft by Lessee or his tenants, all fees during such period shall abate and the term of the Agreement shall, at the election of Lessee, be extended for an equivalent period of time. 1.04 PUBLIC BENEFIT If Lessee is authorized by this lease to conduct business of any nature on the Airport, Lessee agrees to operate the Leased Premises for the use and benefit of the public and further agrees: A. To use reasonable efforts to furnish good, prompt and efficient services adequate to meet all the demands for its services at the Airport; PAGE 3 B. To furnish said services on a fair, equal and not unjustly discriminatory basis to all users thereof, and C. To charge fair, reasonable and nondiscriminatory prices for each unit of sale or service, provided that the Lessee may make reasonable nondiscriminatory discounts, rebates or other similar types of price reductions for volume purchases. ARTICLE TWO TERM 2.01 TERM The initial term of this Agreement shall be for a period of FIVE (5) years and shall begin on NOVEMBER 1, 2004, and terminate on OCTOBER 31, 2009. Upon written notice of Lessee, delivered to the office of the Director of Aviation of Lessor at least thirty (30) days prior to the expiration of the initial term of this lease, this lease may be extended for one (1) additional five (5) year term. 2.02 HOLDING OVER In the event Lessee remains in possession of the Leased Premises after the expiration of this Agreement or any extension thereof, without any written renewal or extension of the Agreement, such holding over shall not be deemed as a renewal or extension of this Lease, and may be terminated at any time by the Director of Aviation of Lessor. ARTICLE THREE RENTAL AND FEES 3.01 RENTALS In consideration of the rights and privileges herein granted, Lessee shall pay to the Lessor the following rentals and fees: PAGE 4 A. T-Hangar rental: 12,489 sq. ft. @ $.2704 per sq. ft. per year. Annual rental shall be in the amount of THREE THOUSAND THREE HUNDRED SEVENTY- SEVEN AND 02/100 DOLLARS ($3,377.02) per year, which shall be made in monthly payments in the amount of TWO HUNDRED EIGHTY-ONE AND 42/100 DOLLARS ($281.42) per month. B. The parties hereto mutually agree that during the initial term of this Agreement, and during any renewal period, except as otherwise might be set out in this Agreement, the rental rates will be adjusted upward or downward for each ensuing calendar year beginning January 1, 2005, in direct proportion to the fluctuation in the U.S. Department of Labor, Bureau of Labor Statistics Consumer Price Index (CPI) for all urban consumers. Any adjustment to the rental rates resulting from changes in the CPI shall be determined by calculating the increase or decrease in the CPI for the preceding twelve (12) months. C. In addition to the above rental and fees, Lessee shall pay the Lessor a processing fee and a deposit for security badges for each of Lessee's employees on the Leased Premises. Lessor's Aviation Director shall determine the amount of the processing fee and deposit, each of which shall be reasonable and uniform for all similarly situated tenants at the Airport. Said deposit shall be refundable upon return of the badges to the Aviation Director. 3.02 PAYMENTS All payments that become due and payable by the Lessee under this Agreement shall be made to the Lessor at the Office of the .Director of Aviation, Lubbock International Airport, Lubbock, Texas on or before the 20th day of the month. Lessee shall pay Lessor PAGE 5 a late payment charge of five percent (5%) of the total amount of rentals payable if payment of such rentals is not made when due. 3.03 DEFAULT FOR FAILURE TO PAY RENTALS OR FEES If Lessee fails to pay any rent due and owing to Lessor hereunder within fifteen (15) days of the due date, the Director of Aviation of Lessor shall provide written notice to the Lessee. Thereafter, if the rent remains unpaid for more than fifteen (15) days after such notice is received, Lessor may exercise its rights under Article Seven of this Agreement. ARTICLE FOUR RIGHTS RESERVED TO LESSOR 4.01 SAFETY 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 constructing or permitting construction of any building or other structure on or off the Airport which, in the opinion of Lessor, would limit the usefulness of the Airport or constitute a hazard to aircraft. 4.02 MAINTENANCE OF PUBLIC AREA Lessor reserves the right, but shall not be obligated to Lessee, to maintain and keep in repair the landing area of the Airport and all publicly owned facilities of the Airport. Lessee will perform no maintenance activities outside the leased premises without the consent of the Aviation Director. 4.03 STANDARDS Lessor reserves the right to establish reasonable standards for the construction and maintenance of and alterations, repairs, additions or improvements of Lessee's facilities. PAGE 6 This includes structural design, color, materials used, landscaping and maintenance of Lessee's facilities and Leased Premises. 4.04 TIME OF EMERGENCY During time of war or national emergency, the Lessor shall have the right to lease the landing area and any other portion of the Airport to the United States for governmental use and, if any such lease is executed, the provisions of this instrument, insofar as they are inconsistent with the provisions of the lease to the United States, shall be suspended. 4.05 DEVELOPMENT OF AIRPORT Lessee agrees that Lessor has the right to further develop or improve the Airport as Lessor sees fit, regardless of the desires or views of the Lessee, and without interference or hindrance therefrom. 4.06 SPONSOR'S ASSURANCE SUBORDINATION This lease shall be subordinate to the provisions of any existing or future agreement between the Lessor and the United States concerning the operation or maintenance of the Airport, the execution of which has been or may be required as a condition precedent to the expenditure of federal funds for the development of the Airport. Should the effect of such agreement with the United States be to take any of the property under this lease or otherwise diminish the commercial value of this lease, the Lessor shall not be held liable therefore. The Lessor covenants and agrees that it will during the term of this Agreement operate and maintain the Airport as a public facility consistent with and pursuant to the Assurances given by the Lessor to the United States Government under federal law. ARTICLE FIVE PAGE 7 RIGHTS RESERVED TO LESSEE 5.01 WAGES To the extent that it is applicable, Lessee shall comply with Ch. 2258, Tex. Govt. Code. 5.02 LESSEE'S DUTY TO REPAIR Except as provided herein, any property of Lessor, or for which Lessor may be responsible, which is damaged or destroyed incident to the exercise of the rights or privileges herein granted, or which damage or destruction is occasioned by the negligence of Lessee, its employees, agents, servants, patrons or invitees, shall be properly repaired or replaced by Lessee to the reasonable satisfaction of the Director of Aviation of Lessor, or in lieu of such repair or replacement, Lessee shall, if so required by the Director of Aviation, pay Lessor money in any amount reasonable to compensate the Lessor for the loss sustained or expense incurred by Lessor as a result of the loss of, damage to, or destruction of such property. 5.03 PARKING Lessee shall at its sole cost and expense provide adequate and suitable parking areas for use by its customers, employees, patrons, guests and invitees. 5.04 WARRANTY OF NO SOLICITATION Lessee warrants that it has not employed any person employed by Lessor to solicit or secure this Agreement upon any agreement for a commission, percentage, brokerage or contingent fee. ARTICLE SIX GENERAL CONDITIONS 6.01 RULES AND REGULATIONS Lessor reserves the right to issue through its Director of Aviation such reasonable rules, regulations and procedures for activities and operations conducted on the Airport as deemed necessary to protect and preserve the safety, security and welfare of the Airport and all persons, property and facilities located thereon. The Lessee's officers, agents, employees and servants will obey all rules and regulations which may be promulgated from time to time by the Lessor or its authorized agents at the Airport, or by other lawful authority, to ensure the safe and orderly conduct of operations and traffic on the Airport. 6.02 OPERATION OF AIRCRAFT, COMPLIANCE WITH RULES AND REGULATIONS Lessee agrees to operate and conduct his , business, including but not limited to the operation of aircraft and the occupancy of said Leased Premises, at all times in compliance with applicable federal, state and local rules and regulations and in compliance with all applicable statutes, ordinances, rules and regulations affecting the use, occupancy or operation of the Leased Premises and Airport. Lessee further agrees that in the event that a civil penalty or fine is levied against the Airport as a result of Lessee's failure to comply or act in accordance with said regulations, statutes and/or ordinances, Lessee shall within fifteen days reimburse the Airport the full amount of the penalty or fine and immediately correct the failure, act or omission leading to, causing or contributing to the violation. Failure of the Lessee to comply with any requirement of this paragraph shall be cause for immediate termination of this Lease Agreement by Lessor's Director of Aviation. Provided, however, that the duty of the Lessee to reimburse Lessor is subject to Lessor providing written notice of any potential fine or PAGE 9 penalty. Lessee shall be provided notice to participate in the proceeding and defend itself, with counsel of its choice, at its own cost. 6.03 IMPROVEMENTS OR ALTERATIONS Lessee shall not make, permit or suffer any additions, improvements or alterations to the Leased Premises which constitute any major structural change or changes without first submitting plans and specifications for such additions, improvements of alterations to the Director of Aviation of the Lessor and securing prior written consent from the Director of Aviation. Any such additions, improvements or alterations made with the consent of the Director of Aviation shall solely at the expense of the Lessee and, unless such consent provides specifically that title to the addition or improvements so made shall vest in the Lessee, title thereto shall at all times remain in Lessor, and such additions or improvements shall be subject to all terms and conditions of this Agreement, provided however, that any trade fixtures installed by Lessee may be removed by Lessee at its expense. The Lessee agrees to hold Lessor harmless from Mechanic's and Materialman's liens arising from any construction additions, improvements, repairs or alterations effected by the Lessee. Any property installed or added by Lessee which becomes permanently attached to the Leased Premises shall become the property of Lessor upon termination of this Lease Agreement, provided however, that any trade fixtures installed by Lessee may be removed by Lessee at its expense. 6.04 ADVERTISING The Lessee will erect no outdoor advertising or identification signs and will distribute no advertising in the Airport or on Airport property without the prior written consent of the Lessor's Director of Aviation. Said consent will not be unreasonably withheld. However, PAGE 10 such prior written consent shall not be required for advertising placed by Lessee with any other party having the right to sell, rent or offer Airport terminal advertising space. 6.05 LIENS PROHIBITED The Lessee shall not bind or attempt to bind the Lessor for payment of any money in connection with the construction, repairing, alterations, additions or reconstruction work on the Leased Premises, and Lessee shall not permit any mechanic's, materialman's or contractor's liens to arise against the premises or improvements thereon, or any equipment, machinery and fixtures thereon belonging to the Lessor, and Lessee expressly agrees that it will keep and save the premises and the Lessor harmless from all costs and damages resulting from any liens of any character created or that may be asserted through any act or thing done by the Lessee. In the event that, as a result of Lessee's actions, any mechanic's lien or other lien or order for payment shall be filed against the leased premises or improvements thereon, or against Lessor -owned property located thereon during the initial term hereof, or during any subsequent extension, Lessee shall defend on behalf of the Lessor, at Lessee's sole cost and expense, any action, suit or proceeding which may be brought thereon or for the enforcement of such lien or order. Failure of the Lessee to comply with any requirement of this section after having received fifteen days written notice thereof shall be cause for termination of this agreement by the Lessor. 6.06 INSPECTION OF LEASED PREMISES Lessee agrees that the Leased Premises will be kept reasonably clean and free of all debris and other waste matter. Lessor reserves the right to conduct inspections of the PAGE I Leased Premises at reasonable times to ensure that fire, safety and sanitation regulations and other provisions contained in this lease are being adhered to by the Lessee. 6.07 INSPECTION OF BOOKS & RECORDS If Lessee is authorized to conduct any business on the Airport in return for rentals, the Lessee, following accepted accounting practices and procedures, will maintain true and accurate books, records and receipts. Such books and records may be inspected at any time by Lessor or its duly authorized representatives at Lubbock, Texas, upon reasonable notice to Lessee. In the event Lessee requests such inspection to be performed outside the Lubbock area, such request may be honored at Lessor's discretion; however, any and all expenses incurred by so doing shall be.reimbursed by the Lessee. 6.08 MAINTENANCE The Lessee shall, at its own cost and expense, maintain the Leased Premises in a presentable condition reasonably free of trash, debris and weeds and consistent with good business practices. Lessee shall repair all damages to said Leased Premises caused by his employees, patrons or his business operations thereon; shall perform all maintenance and repair to the interior, including all HVAC and venting systems; and shall repaint the T- hangars as necessary to maintain a clean and attractive appearance. Lessee shall also maintain any drainage structures or other, improvements installed for the benefit of Lessee, septic systems, ceilings, floor coverings, locks, doors, overhead doors, specialized ramp doors, window glass, parking lots and/or surfaces used for employee and/or customer parking. The Lessor shall, at its own cost and expense, maintain the roof, foundation and structural floors and slabs, and load bearing walls, and utility connections to the point of PAGE 12 disconnect. Lessor shall not, however, be responsible for repair to the extent that insurance coverage will provide payment. Upon written notice by Lessor to Lessee, Lessee shall be required to perform whatever reasonable maintenance Lessor deems necessary. If said maintenance is not undertaken by Lessee within twenty (20) days after receipt of written notice, Lessor shall have the right to enter upon the Leased Premises and perform the necessary maintenance, the cost of which shall be borne by Lessee. Lessee shall not, in any case, be required to pay for cost of mitigation, abatement or removal of asbestos not installed by Lessee. 6.09 UTILITIES The cost of utility services provided to Lessee during the initial term hereof are recovered within the square footage rate. Lessee shall have the right to connect to any storm and sanitary sewers and water and utility outlets with written approval from the Director of Aviation, the cost of usage, extension, installation and meters, where required, to be borne by the Lessee. 6.10 TRASH GARBAGE REFUSE ETC. Lessee shall provide a complete and proper arrangement for the adequate sanitary handling and disposal, away from the Airport, of all trash, garbage and other refuse produced as a result of Lessee's business operations on the Leased Premises. 6.11 PAYMENT OF TAXES FEES AND ASSESSMENTS The Lessee agrees to pay promptly when due all federal, state and local government taxes, license fees and occupation taxes levied on either the Leased Premises or on the business conducted on the Leased Premises or on any of Lessee's property used in connection therewith, except as provided herein. PAGE 13 Taxation may be subject to legal protest in accordance with the provisions of the taxing authority whose levy is questioned. Any protest is at the sole expense of Lessee. Delinquency in payment of such obligations after any protest has been settled shall, at the option of the Lessor, be cause for immediate termination of this lease. 6.12 INDEMNIFICATION AND INSURANCE Indemnification. The Lessee shall be deemed to be an independent contractor and operator responsible to all parties for its respective acts and omissions, and the Lessor shall in no way be responsible therefore. Lessee shall indemnify and hold harmless, to the fullest extent permitted by law, Lessor, and Lessor's respected officers, employees, elected officials and agents, from and against any and all losses, damages, claims or liabilities, of any kind or nature, which arise directly or indirectly, or are related to, in any way, manner or form, the activities of Lessee contemplated hereunder, or the omission of the Lessee's activities contemplated hereunder, including, but not limited to, losses, damages, claims or liabilities arising from or related to, in any way, manner or form, the act or omission of third parties on the premises herein leased. Lessee further covenants and agrees to defend any suits or administrative proceedings brought against Lessor and/or Lessor's respective officers, employees, elected officials and/or agents on account of any claim for which it is obligated to indemnify Lessor, and to pay or discharge the full amount or obligation of any such claim incurred by, accruing to, or imposed on Lessor, or Lessor's respective officers, employees, elected officials and/or agents, as applicable, resulting from any such suits, claims, and/or administrative proceedings or any matters resulting from the settlement or resolution of said suits, claims, and or administrative proceedings. In addition, Lessee shall pay to Lessor, Lessor's respective PAGE 14 officers, employees, elected officials and/or agents, as applicable, all attorneys' fees incurred by such parties in enforcing Lessee's indemnity in this section. Both parties hereby agree to mutually release each other and their respective officers, employees, elected officials and agents, shall not be liable, and both parties hereby release each other, and their respective officers, employees, elected officials and agents, for, from and/or against any losses, damages, claims or liabilities to Lessee, on any theory of legal liability, including, but not limited to the negligence, of any type of degree, or fault, of either party, arising from or related to, in any way, manner or form, the unenforceability or voidance, for any reason, of all or any part of this Agreement. The indemnity and release provided herein shall survive the termination or voidance of this Agreement. Indemnification — Environmental Harm. Without limiting any provisions of this Agreement, Lessee shall also defend, indemnify and hold Lessor and its respective officers, employees, elected officials andagents harmless from and against all suits, actions, claims, demands penalties, fines liabilities, settlements, damages, costs and expenses (including but not limited to reasonable attorney's and consultant's fees, court costs and litigation expenses) of whatever kind or nature, known or unknown, contingent or otherwise, brought against Lessor arising out of or in any way related to: 1. Any actual, threatened or alleged contamination by hazardous substances of the premises or contamination by hazardous substances of the Airport by Lessee or its agents; 2. The presence, disposal, release or threatened release of hazardous substances by Lessee or its agents at the Airport that is on, from or affects the soil, air, water, vegetation, buildings, personal property, persons, animals or otherwise; PAGE 15 3. Any personal injury (including wrongful death) or property damage (real or personal) arising out of or related to hazardous substances by Lessee at the Airport; or 4. Any violation by Lessee of any Environmental Laws that affects the Airport. Insurance. Lessee shall carry and maintain insurance at all times that this lease is in effect, at Lessee's sole expense with an insurance underwriter authorized to do business in the State of Texas and acceptable to the Lessor, against claims of general liability resulting from Lessee's business activities at the Airport. Lessor may review and adjust the insurance limits in order to reflect reasonable coverage as necessary. General Liability Insurance — The amount of insurance coverage shall not be less than THREE HUNDRED THOUSAND AND N0/100 DOLLARS ($300,000.00) for Combined Single Limit General Liability Insurance. The policy shall all include a waiver of. subrogation. Certificates of insurance or other satisfactory evidence of insurance shall be filed with the Lessor's Director of Aviation prior to entry upon the premises by the Lessee. The General Liability policy shall name the Lessor as an additional insured, require the insurer to notify the Director of Aviation of any alteration, renewal or cancellation, and remain in full force and effect until at least ten (10) days after such notice of alteration, renewal or cancellation is received by the Director of Aviation. Hazard and Extended Coverage — Lessee shall purchase its own Hazard and Extended Coverage insurance based on building market value, provided that Lessor approves of the amount and type of insurance purchased by Lessee. Lessor shall be named as an PAGE 16 additional insured on the policy. Lessee shall furnish the Director of Aviation with evidence that such insurance coverage has been procured and is being maintained. 6.13 NON-DISCRIMINATION PRACTICES Lessee, its agents and employees will not discriminate against any person or class of persons by reason of age, sex, race, religion or national origin in providing any services or in the use of any of its facilities provided for the public. Lessee further agrees to comply with such enforcement procedures as the United States Government might demand that the Lessor take in order to comply with the Sponsor's Assurances. Lessee agrees not to illegally discriminate against any employee or applicant for employment because of age, sex, race, religion or national origin. 6.14 BUSINESS SOLICITATIONS All of Lessee's business operations and solicitations will be confined to the Leased Premises or such other premises at the Airport that have been leased to Lessee. 6.15 PROHIBITION OF SUBLEASES AND ASSIGNMENTS The Lessee will not directly or indirectly assign, sublet, sell, hypothecate or otherwise transfer this lease or any portion of the Leased Premises without the prior written consent of Lessor's Director of Aviation. 6.16 RIGHTS OF OTHERS It is clearly understood by the Lessee that no right or privilege has been granted which would operate to prevent any person, firm or corporation operating aircraft on the Airport from performing any services on its own aircraft with its own regular employees (including, but not limited to, maintenance and repair) that such person, firm or corporation may choose to perform. PAGE 17 6.17 ACCESS Lessee agrees to control all access to the aircraft operations area (AOA) through the Leased Premises and through gates assigned to or controlled by Lessee so as to prevent unauthorized entry to the airfield by persons, animals or vehicles. In the event that unauthorized access to the AOA is gained through the Leased Premises or any area which Lessee controls or is obligated to control, any fines or penalties assessed by the Federal Aviation Administration shall be the responsibility of the Lessee and Lessee hereby agrees to pay all such fines or penalties without delay and make any and all requested changes in operations or facilities necessary to maintain Airport security and prevent reoccurrence of any unauthorized entry. Failure to comply with this paragraph shall be cause for immediate termination of this Lease Agreement by Lessor. 6.18 VEHICULAR MOVEMENT Except as specifically authorized by the Director of Aviation of Lessor, Lessee will not permit the driving of vehicles by employees, customers, guests or invitees on the apron, taxiways or runways. 6.19 EXCLUSIVITY It is understood and agreed that nothing herein contained shall be construed to grant or authorize the granting of an exclusive right to conduct any aeronautical activities, including, but not limited to charter flights, pilot training, aircraft rental and sightseeing, aerial photography, crop dusting, aerial advertising and surveying, air carrier operations, aircraft sales and services, sale of aviation petroleum products whether or not conducted in conjunction with other aeronautical activity, repair and maintenance of aircraft, sale of PAGE 18 aircraft parts, and any other activities which because of their direct relationship to the operation of aircraft can be regarded as a aeronautical activity. ARTICLE SEVEN TERMINATION, CANCELLATION 7.01 TERMINATION This lease shall terminate at the end of the term and any extension thereof. Lessee shall have no further right or interest in any of the premises or improvements hereby demised, except as provided herein 7.02 TERMINATION BY LESSEE This lease shall be subject to cancellation: by Lessee upon the occurrence of any one or more of the following events: 1. The permanent abandonment of the Airport by the Lessor as an air terminal. 2. The lawful assumption by the United States Government, or any authorized agency thereof, of the operation, control or use of the Airport, or any substantial part or parts thereof, in such a manner that substantially restricts Lessee for a period of at least ninety (90) days from operating thereon. 3. The issuance by any court of competent jurisdiction of an injunction in any way preventing or restraining the use and operation of the Airport for a period of at least ninety (90) days. 4. The default of the Lessor in the performance of any covenant or agreement herein required to be performed by the Lessor and the failure of the Lessor to remedy such default for a period of thirty (30) days after receipt from Lessee of written notice to remedy the same. PAGE 19 Lessee may exercise such right of termination by giving sixty (60) days advance written notice to the Lessor at any time after the lapse of the applicable periods of time and this lease shall terminate as of the sixtieth (60th) day after such notice is given. Rental due hereunder shall be payable only to the effective date of said termination. 7.03 TERMINATION BY LESSOR This lease shall be subject to cancellation by Lessor after the happening of one or more of the following events: 1. The taking by a court of competent jurisdiction of Lessee and its assets pursuant to proceedings brought under the provisions of any federal reorganization act. 2. The appointment of a receiver for Lessee's assets. 3. The divestiture of Lessee's assets by other operation of law. 4. The abandonment by Lessee of the premises at the Airport for a period of thirty (30) days or more. 5. The failure by Lessee to pay any rentals or other charges hereunder after notice as specified above. 6. The default by Lessee in the performance of any covenant or agreement herein required to be performed by Lessee and the failure of Lessee to remedy such default for a period of fifteen (15) days after receipt from the Lessor's Director of Aviation of written notice to remedy the same. 7. The lawful assumption by the United States Government, or any authorized agency thereof, of the operation, control or use of the Airport, or any substantial part or parts thereof, in such a manner as to substantially restrict Lessee for a period of at least ninety (90) days from operating thereon. PAGE 20 If any of the aforesaid events occur, Lessor's agents may enter upon the Leased Premises and take immediate possession of the same and remove Lessee's effects. Upon said entry this lease shall terminate, and any rental due hereunder shall be payable to said date of termination. It is agreed that failure to declare this lease terminated upon the default of Lessee for any of the reasons set forth above shall not be construed as a waiver of any of the Lessor's rights hereunder or otherwise bar or preclude Lessor from declaring this lease cancelled as a result of any subsequent violation of any of the terms or conditions of this lease. 7.04 REPLACEMENT AFTER DAMAGE It is agreed between the parties hereto that in the event the Leased Premises are damaged by fire or other accidental cause during the initial term of this lease so as to become totally or partially untenantable, the Lessor shall have the option to restore the Premises to their former condition. If the Lessor elects to exercise the option, the Lessor shall give Lessee notice in writing of its election within thirty (30) days of the occurrence of such damage. If the Lessor elects to restore the premises, the Lessor shall proceed with due diligence and there shall be an abatement of the rent until repairs have been made for the time and to the extent for which the premises, or part thereof, have been untenantable. Should the Lessor not exercise the option to restore the premises, the lease of such untenantable portion of the premises shall cease and terminate effective on the date of damage by fire or other accidental cause. 7.05 CONFLICT OF INTEREST The Lessee acknowledges that it is informed that Texas law prohibits contracts between the City of Lubbock and its "officers" and "employees," and that the prohibition extends PAGE 21 to officers and employees of the City of Lubbock agencies, such as Lessor -owned utilities, and certain City of Lubbock boards and commissions, and to contract with any partnership, corporation or other organization in which the officers or employees have a substantial interest. Lessee certifies (and this Agreement is made in reliance thereon) that neither the Lessee nor any person having an interest in this Agreement is an officer or employee of the City of Lubbock or any of its agencies, boards or commissions. 7.06 PROPERTY PERMANENTLY AFFIXED TO PREMISES Any property belonging to Lessee which becomes permanently, attached to' the Leased Premises (except trade fixtures) shall become the property of the Lessor upon termination of this Agreement, whether upon expiration of the initial term, any extension thereof, or earlier under any provision of this lease. 7.07 REMOVAL OF LESSEE'S PROPERTY The Lessee shall have the right, within thirty.(30) days after the termination of this lease, whether such termination comes upon expiration of the initial term, any extension or otherwise under any provision of this lease, to remove from the leased premises all of Lessee's furniture, fixtures, equipment, furnishings, and other property which has not become the property of the Lessor, but Lessee shall restore the premises to the original condition, normal wear and tear excepted. The Lessor, however, shall have a lien on all of Lessee's property to secure any unpaid rentals or other revenue due the Lessor; and Lessee's right to remove property from the Leased Premises is conditioned upon all amounts due the Lessor from Lessee having been paid in full. Unless a renewal agreement is executed, property left on the premises after ten (10) days from the date of termination of this agreement shall be deemed abandoned and will become the property PAGE 22 of the Lessor, and may be disposed of as the Lessor sees fit, without any liability to the Lessee to account for the proceeds of any sale; and the Lessor, at its option, may require Lessee to remove the abandoned property and may charge rent from the date of expiration or termination of this Agreement through the day of final removal of the property, or of notification to the Lessee of the abandonment of the property and taking by the Lessor, as the case may be. 7.08 TERMINATION OF LEASE SURRENDER OF LEASED PREMISES AND OWNERSHIP OF IMPROVEMENTS The Lessee covenants and agrees that at the expiration of the initial term of this lease, or any extension, or upon earlier termination as provided elsewhere in this Agreement, Lessee will quit and surrender the Leased Premises and the improvements in good state and condition, reasonable wear and tear expected, and the Lessor shall have the right to take possession of the Leased Premises and the improvements, subject to the limitations expressed in Article Seven, of this lease, with or without process of law. ARTICLE EIGHT MISCELLANEOUS PROVISIONS 8.01 NOTICES Notices to the Lessor required or appropriate under this Agreement shall be deemed sufficient if in writing and mailed, registered or certified mail, postage prepaid, addressed to the Director of Aviation, Lubbock International Airport, Route 3, Box 389, Lubbock, Texas 79403. Notices to the Lessee required or appropriate under this Lease shall be deemed sufficient if in writing and mailed by registered mail with postage prepaid to Earl Horton, Hangars of Lubbock, 915 E. Kent Road, Lubbock, TX 79403. PAGE 23 8.02 PARTIES BOUND This Agreement binds, and inures to the benefit of, the parties to the Lease and their respective heirs, executors, administrators, legal representative, successors, and assigns. 8.03 APPLICABLE LAW This Agreement is to be construed under Texas law, and all obligations of the parties created by this Lease are performable in Lubbock County, Texas. Venue for any action brought pursuant to this Agreement, or any activity contemplated hereby, shall lie exclusively in Lubbock County, Texas. 8.04 ATTORNEY'S FEES Should Lessor institute legal action to collect, rent due under this Agreement or damages for default of any covenant made herein, a reasonable sum shall be added to the amount of recovery for attorney's fees together with all costs of court. 8.05 PRIOR AGREEMENTS Both parties hereby agree that this instrument constitutes the final Agreement of the parties and that all other previous agreements, leases and contracts between the parties which pertain to the property described herein are hereby declared null and void. 8.06 AMENDMENT No amendment, modification, or alteration of this Lease is binding unless in writing, dated subsequent to the date of this Lease, and duly executed by the parties. PAGE 24 EXECUTED this 16th day of August , 2004. LESSOR: CITY OF LUBBOCK , Mayor ATTEST: Re6ecca Garza, City Secretary 7APPVED AS TO CONTENT: Jam W. Loomis, Dir-ectoi of Aviation APPROVED AS TO FORM: Linda L. Chamales, Senior Attorney -Office Practice LESSEE: HANGARS OF LUBBOCK, INC. BY: - Earl Horton PAGE 25 E NATIONAL WEATHER SERVICE NEXRAD c%i-rr EXHIBIT A 12 T-Hangars to be leased LJ !40 �8 EXISTING U G FUEL TANK