Loading...
HomeMy WebLinkAboutResolution - 3128 - Lease Agreement - Southwest Airlines - Operations Space, LIA - 06_22_1989Resolution # 3128 June 22, 1989 Item #7 HW:da 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 an Airline Lease Agreement with Southwest Airlines Co., attached herewith, which shall be spread upon the minutes of the Council and as spread upon the minutes of this Council shall constitute and be a part of this Resolution as if fully copied herein in detail. Passed by the City Council this 22nd day of June 1989. B.C. McMINN, MAYOR APPROVED AS TO CONTENT: Marvin Coffee, Diftttor of Aviation APPROVED AS TO FORM: arold Wi and Assistan Cii` t Attorne y y AIRLINE LEASE AGREEMENT BY AND BETWEEN THE CITY OF LUBBOCK, TEXAS AND SOUTHWEST AIRLINES CO. THIS AGREEMENT IS SUBJECT TO ARBITRATION PURSUANT TO THE TEXAS GENERAL ARBITRATION ACT (ART. 224. ET SEO. V.A.C.S.) TABLE OF CONTENTS Page ARTICLE I - DEFINITIONS 2 1.01 - Definitions 2 ARTICLE II - LEASED PREMISES AND USES 5 2.01 - Description of Exclusive Leased Premises 5 2.02 - Description of Non -Exclusive Use Premises 5 2.03 - Exhibit Designating Leased Premises 5 2.04 - Description of Privileges, Uses and Rights 6 2.05 - Rights and Privileges Specifically Excluded 10 2.06 - Right of Ingress and Egress 11 2.07 - Effect of Ordinances, Rules and Regulations 11 ARTICLE III - TITLE TO LESSEE 3.01 - Installed Improvements and Property ARTICLE IV - OBLIGATIONS OF CITY 4.01 - Right to Lease Property 4.02 - Maintenance and Operation of Airport 4.03 - Maintenance and Services on the Exclusive Leased Premises 4.04 - Governmental Facilities 4.05 - Restaurants 4.06 - Ticket Counter 4.07 - Outbound Baggage System ARTICLE V - OBLIGATIONS OF LESSEE 5.01 - Maintenance of Exclusive Leased Premises 5.02 - Porter Service 5.03 - Additions, Alterations or Replacements 5.04 - Removal and Demolition 5.05 - Trash and Garbage 5.06 - Taxes and Licenses 5.07 - Rules and Regulations 5.08 - Duty to Prevent Unauthorized Access to the Premises ARTICLE VI - TERM 6.01 - Term ARTICLE VII - RENTALS AND FEES 7.01 - Rental for Exclusive Terminal Building Space 7.02 - Landing Fee 7.03 - Rental for Common Use Area 7.04 - Rental for Public Address System 7.05 - Aircraft Storage 7.06 - Time of Payment 7.07 - Default for Failure to Pay Rentals, Fees and Charges ARTICLE VIII - READJUSTMENT OF RENTALS, FEES AND OTHER CHARGES 8.01 - Procedure for Readjustment of Rentals, Fees and Other Charges ARTICLE IX - RIGHTS AND PRIVILEGES RESERVED BY CITY 9.01 - Right to Charge Use Fees to Others 9.02 - Right to Improve and Protect the Airport 11 11 11 11 12 13 13 13 13 13 14 14 14 14 15 15 16 16 16 16 16 18 18 19 20 24 25 25 25 26 26 26 26 27 ARTICLE X - INDEMNIFICATION, INSURANCE AND BONDS 28 10.01 - Indemnification, Etc. 28 10.02 - Insurance 29 ARTICLE XI - DAMAGE OR DESTRUCTION OF LEASED PREMISES 30 11.01 - Partial Damage 30 11.02 - Extensive Damage 30 11.03 - Complete Destruction 31 11.04 - Right to Recover Damages 31 11.05 - Limit of City's Obligations Defined 32 ARTICLE XII - TERMINATION OF LEASE, CANCELLATION, ASSIGNMENT AND TRANSFER 32 12.01 - Termination 32 12.02 - Cancellation by Lessee 32 12.03 - Cancellation by City 34 12.04 - Notice of Termination 35 12.05 - Assignment and Subletting 35 ARTICLE XIII - PROPERTY RIGHTS UPON TERMINATION 35 13.01 - Lessee's Right of Removal 35 13.02 - City's Rights at Termination 36 ARTICLE XIV - GENERAL PROVISIONS 36 14.01 - Other Ordinances 36 14.02 - Arbitration 36 14.03 - Nondiscrimination 37 14.04 - Rules and Regulations 38 14.05 - Interpretation of Lease 38 14.06 - Invalid Provisions 38 14.07 - Sponsor's Assurances 38 14.08 - Consent Not to be Unreasonably Withheld 38 14.09 - Redelivery of Premises 39 14.10 - Holding Over 39 14.11 - Inspection 39 14.12 - Nonexclusive 39 14.13 - Lease Made in Texas 39 14.14 - Successors 39 14.15 - Headings 39 14.16 - Time of Essence 40 14.17 - Notices 40 14.18 - Understanding of the Parties 40 ARTICLE XV - MISCELLANEOUS PROVISIONS 41 15.01 - security Charges 41 THIS AGREEMENT IS SUBJECT TO ARBITRATION PURSUANT TO THE TEXAS GENERAL ARBITRATION ACT (ART. 224, ET SEO. V.A.C.S.) CERTIFICATED PASSENGER AIRLINE LEASE Lubbock International Airport Lubbock, Texas THIS LEASE AGREEMENT, made this � day of , 19, by and between the City of Lubbock, Texas, (hereinafter referred to as "City"), and Southwest Airlines Co., a corporation incorporated under the laws of the State of Texas, with its principal office at Dallas, Texas (hereinafter referred to as "Lessee"). WITNESSETH WHEREAS, City owns and operates Lubbock International Airport, located in Lubbock County, Texas, (hereinafter referred to as "Airport"); and WHEREAS, Lessee is engaged in the business of air transportation of persons, property and cargo, and is certificated by the Federal Aviation Administration to provide such services through Lubbock International Airport; and WHEREAS, City also owns and operates a terminal building at said Airport, which has been expanded and remodeled to provide additional space for airline ticketing and operations facilities; and WHEREAS, City and Lessee executed an agreement on or about April 28, 1977, in which Lessee agreed to lease from City space and facilities in the terminal building sufficient to enable Lessee to conduct its business of air transportation at the Airport; and WHEREAS, Lessee has in effect been a hold over tenant at the Airport since the term of said agreement executed on or about April 28, 1977, as subsequently modified, expired on November 8, 1985; and WHEREAS, City and Lessee both desire to execute a new lease agreement whose terms and conditions are substantially comparable to the terms and conditions contained in leases executed by similarly situated air carriers that are tenants at the Airport; NOW THEREFORE, for and in consideration of the mutual covenants hereof, City hereby leases to Lessee and Lessee hereby hires and takes from City certain exclusive premises (hereinafter called "Exclusive Leased Premises"), and certain non-exclusive use premises, facilities, rights and privileges in connection with and on the Airport, as hereinafter described, upon the terms and conditions that follow: ARTICLE I DEFINITIONS section 1.01 - Definitions. The following words, terms and phrases whenever used in this Lease shall, for the purposes of this Lease, have the following meanings: Adequate heating and air conditioning facilities - those heating and air conditioning facilities necessary to maintain a more or less constant reasonable temperature throughout the terminal building. Approved maximum gross landing weight - the maximum landing weight for an aircraft approved by the Federal Aviation Administration for that aircraft. Certificated Passenger Air Transportation Company - for the purpose of this Lease shall be used interchangeably with the term "air carrier" and shall mean any commercial air carrier who on a regularly scheduled basis transports passengers, baggage and cargo either to or from the Airport. Classification of air carriers - for the purpose of establishing different classes of air carriers as tenants at the Airport, the following classifications shall control: (a) standard long-term tenant - a Certificated Passenger Air Transportation Company which has a long-term lease with the City. -2- , (b) standard short-term tenant - a Certificated Passenger Air Transportation Company which has a short- term lease with the City. (c) month -to -month tenant - a Certificated Passenger Air Transportation Company that conducts business at the Airport but which has neither a standard long-term lease nor a standard short-term lease with the City. Director of Aviation - the Director of Aviation of the City of Lubbock or his designated representative. ' Enplaned Passenger - any person that initially boards an airplane at the Airport or any person that leaves an airplane and reboards an airplane at the Airport. Federal Aviation Administration - the Federal Aviation Administration created by the Federal Government under the Federal Aviation Act of 1958, or such other Federal Government authority as may be the successor thereto or be vested with the same or similar authority. Ordinance - a legislative act enacted by the City Council of the City of Lubbock, Texas. Public airport facilities - include, but are not limited to, approach areas, runways, taxiways, aprons, aircraft parking areas, roadways, sidewalks, navigational and avigational aids, lighting facilities, terminal facilities and other public facilities appurtenant to the Airport. Regulation - any rule or order promulgated by any federal or state agency which has authority to promulgate such rule or order, or any regulation of the City or the Airport Board of the City which is enacted or promulgated for the health, safety or welfare of the general public, or any other such rule promulgated by the City or Airport Board as that term is herein defined. Relamp - the replacement of any bulb in light fixtures not functioning properly. Rule - any regulation, directive or order adopted by the Airport Board of the City of Lubbock and applicable to -3- the operation of the Airport, and any directive issued by the Director of Aviation. Similarly situated air carriers - those Certificated Passenger Air Transportation Companies that fall within the same classification as herein defined, examples being as follows: (a) all such air carriers which have a written lease agreement with the City whose initial term is three (3) or more years shall be deemed similarly situated; (b) all such air carriers which have a written lease agreement with the City whose initial term is less than three (3) years (but who are not tenants at will or hold over tenants) shall be deemed similarly situated; (c) all such air carriers who are tenants at will shall be deemed similarly situated. standard long-term lease - a written lease agreement with Lessee or other similarly situated air carrier which establishes the business relationships between the City and Lessee or other similarly situated air carrier and has an initial term of three (3) or more years. Standard short-term lease - a written lease agreement with an air carrier (other than a tenant at will or hold over tenant) which establishes the business relationships between the City and the air carrier and which has an initial term of less than three (3) years. Sterile area - any area at the Airport which Lessee possesses or controls either singularly or in conjunction with other air carriers and to which access is controlled by the inspection of persons and property in accordance with any security program mandated by the Federal Aviation Administration. Tenant at will - a business relationship established between the City and an air carrier on a month -to -month basis which may or may not be in writing but which relationship shall not exceed a term of one (1) year. -4 - ARTICLE II LEASED PREMISES AND USES Section 2.01 - Description of Exclusive Leased Premises. A. The Exclusive Leased Premises shall consist of 7.580 square feet, more or less, in the terminal building of the Airport. B. It is understood and agreed that the square footage stated herein is an estimate, and City and Lessee are obligated and hereby jointly agree to measure the actual space occupied on or before six months after occupancy thereof and to make the necessary rental rate adjustments which will be retroactive to the beneficial occupancy date, and both City and Lessee further agree that any credits or additional rental due under this paragraph will be applicable to the next subsequent monthly rental. Section 2.02 - Description of Non -Exclusive Use Premises. In addition to the Exclusive Leased Premises hereinabove defined, Lessee is hereby granted the non-exclusive use, in common with others elsewhere authorized, of such space and facilities as may be designated by City in and adjacent to the terminal building, which space and facilities, without limiting the generality hereof, shall consist of: (A) Ground area for the taxiing of aircraft. (B) Space for a reasonable amount of Lessee's apron equipment. (C) Loading gates. (D) Adequate and reasonably convenient vehicular parking space for use by Lessee and its employees. Such space shall be at locations designated by City in common with other Airport employees and the use thereof shall be provided at the same charge per month as established for other Airport employees. Section 2.03 - Exhibit Designating Leased Premises. The location of the Exclusive Leased Premises and the Non -Exclusive Use Premises herein leased to Lessee are each designated and set forth on Exhibit A attached hereto and by this reference made a part hereof for all purposes. -5- Section 2.04 - Description of Privileges, Uses and Rights. Lessee shall be entitled, in common with others elsewhere authorized, to the general use of all public airport facilities and improvements which are now part of the Airport, except as hereinafter provided. Lessee's use of said public airport facilities shall be for the sole purpose of operating a transportation system for transporting by aircraft persons, property, cargo, express and mail (hereinafter referred to as "Air Transportation"), which use, without limiting the generality hereof, shall include: (A) The handling, ticketing, billing and manifesting of passengers, baggage, cargo, express and mail in Air Transportation by Lessee or on behalf of any other Certificated Passenger Air Transportation Company which has a lease with City. (B) The repairing, maintaining, conditioning, servicing, testing, parking or storage of aircraft or other equipment operated by Lessee, or of any other Certificated Passenger Air Transportation Company. Such right and the rights referred to in subparagraphs (C) and (D) below shall not be construed as authorizing Lessee to conduct a separate business, but shall permit Lessee to exercise such rights only in connection with Air Transportation. (C) The training on Airport premises of personnel either employed by or to be employed by Lessee or any other Certificated Passenger Air Transportation Company. However, in all instances where such training involves aircraft either landing at or taking off from the Airport, Lessee shall be required to pay City landing fees in accordance with Section 7.02. (D) The sale, lease, transfer, disposal or exchange of Lessee's aircraft engines, accessories and other equipment or supplies. Said right shall include the sale, lease, transfer or disposal of any article or goods used by or bought for use by Lessee in connection with -6- Air Transportations provided, however, that Lessee shall not: (1) Sell food or beverages other than for consumption by passengers on aircraft and as provided in Subparagraph (I) of this Section 2.04. (2) Sell gasoline, fuel, propellants, grease or other lubricants except when said products are of a particular grade desired by others and are not otherwise available at the Airport (except to other Certificated Passenger Air Transportation Companies). (E) Subject to approval of the Director of Aviation, the servicing by Lessee's employees or others under Lessee's control of aircraft and other equipment operated by Lessee on the apron, by truck or otherwise, with gasoline, oil, grease, lubricants and any other fuel or propellant or other supplies required by Lessee, all of which shall include, without limiting the generality hereof, the right of Lessee to install and maintain on the Airport, subject to terms and conditions mutually agreeable to the parties hereto, adequate storage facilities for such gasoline, oil, grease, lubricants and other fuel or propellant or supplies, together with the necessary pipes, pumps, motors, filters and other appurtenances incidental to the use thereof, and the installation and maintenance of pipes in connection with such facilities, as well as a pipeline or pipelines between Lessee's source of supply and said storage facilities. Lessee shall submit to the Director of Aviation for his written approval complete written plans and specifications for such storage facilities and pipelines prior to installation. Lessee's exercise of its rights hereunder shall be subject to the execution by the parties hereto of a separate lease on such terms, conditions and consideration as may be mutually agreed upon. -7- (F) The landing, taking off, flying, taxiing, towing, parking, loading and unloading of Lessee's aircraft or other Air Transportation equipment operated by Lessee, used in connection with scheduled, shuttle, courtesy, test, training, inspection, emergency, special charter, sight-seeing and other flights, all of which shall incidentally include, without limiting the generality hereof, the right to load and unload Lessee's aircraft, or the aircraft of any other Certificated Passenger Air Transportation Company having an existing lease with City, adjacent to a convenient entrance to the terminal building at common area loading gates located on the loading apron at points to be designated by City; provided, however, that flights carrying cargo or freight only shall load and unload at convenient and accessible points to be designated by City. (G) The loading and unloading of property, cargo, express and mail at said Airport by such motor vehicles or other means of conveyance as Lessee'may desire or require in the operation of its Air Transportation system, with the right to designate the particular carrier or carriers which shall regularly transport Lessee's property, cargo, express and mail to and from the Airport. (H) The right to install, maintain and operate, for its own use, either by Lessee alone, or by Lessee in conjunction with other Lessees at the Airport, or through a nominee, a computer system, message system, or any other electronic system used to transmit communications of any nature whatsoever. The installation, maintenance and operation of such systems as described above shall be without cost or expense to City, and shall be subject to reasonable rental payments by Lessee to the City for any space used, as well as prior written approval of the Director of Aviation as to location, plans and specifications. -8- (I) The right to provide food and beverages for consumption in flight by passengers and crews of Lessee or by passengers and crews of any other Certificated Passenger Air Transportation Companies. Lessee shall also have the right to arrange for food and beverages to be provided to its passengers and crew members when said passengers or crew members are grounded at the Airport because of weather, mechanical conditions or other similar emergency conditions; provided, however, that if said passengers or crew members are to be given food and beverages at the Airport, Lessee shall arrange for this service from the person, firm or corporation holding concession rights from the City for food and beverage service at the Airport. In addition, Lessee may furnish, free of cost, coffee and doughnuts to its passengers, provided such items are purchased through the person, firm or corporation holding concession rights from the City for food and beverage service at the Airport. Except to the extent hereinabove specifically provided, nothing in this subparagraph (I) shall be deemed to give Lessee the right to maintain or operate at the Airport a cafeteria, restaurant, bar, cocktail lounge or vending machines or in any manner otherwise providing for the sale of food or beverages to the public. (J) Subject to prior approval of the Director of Aviation, the right to place signs or replace existing signs identifying Lessee's business in or on the Exclusive Leased Premises. Said signs shall be substantially similar to existing signs in size, type and location. A change in existing signs as to number, type, size, design and location shall be subject to the written approval of the Director of Aviation prior to installation. Such installation and operation shall be without cost or expense to City. (K) The right to install, maintain and operate singularly or in conjunction with any other Certificated Passenger Air -9- Transportation Companies who are Lessees at the Airport, or through a nominee, such radio communications, meteorological and aerial navigation equipment and facilities in or on the Exclusive Leased Premises, without cost or expense to the City and subject to the written approval of the Director of Aviation as to location, method and type of installation prior to installation. (L) The right, except as herein otherwise specifically provided, to purchase or otherwise obtain personal property of any nature including, but not limited to, gasoline, fuel, propellants, lubricating oil, grease, food, beverages and other materials, equipment and supplies deemed by Lessee necessary or incidental to its operations, its exercise of the rights herein granted, and its discharge of the obligations herein imposed. Said purchases may be made through any person, partnership, firm, association or corporation Lessee may choose. (M) The rights and privileges granted the Lessee under subparagraphs (E), (G), (H), and (K) of this Section 2.04 may be exercised by Lessee for and on behalf of any other Certificated Passenger Air Transportation Company operating at the Airport of, by or through a nominee of Lessee, but said nominee shall be subject to the prior written approval of the Director of Aviation. It is specifically provided, however, that any such nominee shall have no greater rights than Lessee hereunder. Section 2.05 - Rights and Privileges Specifically Excluded. Except as specifically provided for in Section 2.04, nothing herein shall be deemed to give Lessee any right or permission to sell at the Airport any goods or services to the public other than Air Transportation services. Without limiting the generality of the foregoing, this prohibition includes insurance sales (except when not otherwise available at the Airport). -10- Section 2.06 - Right of Ingress and Egress. City hereby grants to Lessee, its employees, agents, passengers, guests, patrons, suppliers of materials and furnishers of service the right of ingress to and egress from, but not the use of, except as otherwise provided in this Lease, the Exclusive Leased Premises and non-exclusive use premises described in Sections 2.01 and 2.02. Section 2.07 - Effect of Ordinances, Rules and Regulations. This Lease is subject to such ordinances, rules and regulations duly enacted or adopted for the operation, maintenance and existence of the Airport, and all such ordinances, rules and regulations enacted or adopted which relate to the health, safety or welfare of the general public shall always take precedence over the terms of this Lease. Such ordinances, rules and regulations enacted or adopted which do not affect the health or safety of the general public shall take precedence over this Lease only when such ordinances, rules and regulations are not in direct conflict with the terms of this Lease. This Lease shall never be understood or construed as a delegation or surrender of the City of Lubbock's governmental authority. ARTICLE III TITLE TO LESSEE Section 3.01 - Installed Improvements and Property. All improvements, equipment and property installed, erected or placed by Lessee in, on or about the Airport shall be deemed to be personalty and remain the property of Lessee, save and except those improvements, equipment and property which are so attached to Airport premises so as to damage the premises upon removal or impair the functional or operational use thereof. Said improvements, equipment and property so attached shall be deemed permanent improvements and shall become the property of City upon installation. ARTICLE IV OBLIGATIONS OF CITY Section 4,01 - Right to Lease Property. City represents that it has the full right to lease that portion of the Airport referred to herein, together with all the premises, facilities, rights, -11- licenses, services and privileges herein granted, and has full power and authority to enter into this Lease in respect thereof. City further represents that all things have occurred that are necessary to make the granting of this Lease effective, and City warrants to Lessee peaceful possession and quiet enjoyment of the Exclusive Leased Premises, appurtenances, facilities, rights, licenses and privileges during the term hereof upon performance of Lessees covenants herein. Section 4.02 - Maintenance and Operation of Airport. Except as otherwise specifically provided herein, City shall, during the term of this Lease, operate, maintain and keep in good repair the terminal building, terminal apron and all airport facilities utilized by the general public, as well as the improvements, machinery and equipment placed by City in these areas. City shall not, however, be required under this Lease to perform maintenance to or make repairs to the Exclusive Leased Premises or to perform any maintenance or effect any repairs necessary due to misuse or abuse or the negligence of Lessee, its sublessees, employees, agents, servants, patrons or invitees. However, City may perform such maintenance or make such repairs as necessary and charge the cost of same to Lessee, provided Lessee has failed to perform such maintenance or make such repairs to the satisfaction of the Director of Aviation within a reasonable time after receiving a written request from said Director of Aviation. In all areas utilized by the general public, City shall provide janitorial and cleaning services, including window washing, lighting and adequate heating and air conditioning facilities. The City shall be responsible for structural, exterior and roof maintenance and exterior window washing in all portions of the terminal building. City shall also provide and supply adequate lighting for vehicular parking spaces and aircraft loading ramps and adequate field lighting. The obligations assumed by City under this Article IV shall not obligate City, except as provided in Article XI hereof, to repair or rebuild any of the facilities at said Airport in the -12- event of damage by the elements, fire, explosion or other causes beyond the control of City. City shall deliver to Lessee all of the premises leased hereunder in a condition which complies with the City's Building Code and other applicable City ordinances. Section 4.03 - Maintenance and Services on the Exclusive Leased Premises. Notwithstanding any language to the contrary in Section 4.02, City shall be responsible for and shall be obligated to perform only the following maintenance and services on the Exclusive Leased Premises: (A) Adequate heating and air conditioning. (B) Maintenance of mechanical and electrical systems installed by City, excluding relamping behind and above the ticket counter and office areas. Section 4.04 - Governmental Facilities. It is expressly agreed that if funds provided by the United States Government for the construction, maintenance and operation of the Control Tower, Instrument Landing System, and/or other air navigation aids are discontinued even though needed for Lessee's operations at the Airport, City shall not be required to provide said facilities. Section 4.05 - Restaurants. City agrees to provide space in the terminal building for a restaurant or coffee shop for the purpose of selling food and beverages to the general public. Section 4.06 - Ticket Counter. Lessee is hereby granted the right to construct and install a ticket counter shell on the Exclusive Leased Premises. said ticket counter shell shall be constructed and installed according to Lessee's own needs, plans and specifications, which plans and specifications shall be submitted to the Director of Aviation of City for written approval prior to construction and installation. Section 4.07 - Outbound Baggage System. Lessee is hereby granted the right to construct and install as a permanent improvement an outbound baggage system on the Exclusive Leased Premises. Such outbound baggage system shall be constructed and installed according to Lessee's own needs, plans and specifications, which plans and specifications shall be submitted -13- to the Director of Aviation for written approval prior to construction and installation. Lessee shall maintain said outbound baggage system in good condition and shall pay all costs of repair and maintenance for said system while this Lease is in effect. ARTICLE V OBLIGATIONS OF LESSEE Section 5.01 - Maintenance of Exclusive Leased Premises. Except as provided in Section 4.03, Lessee shall be obligated, without cost or expense to City, to maintain the Exclusive Leased Premises and every part thereof including, but not limited to, the counter shell and the outbound baggage system in good order, repair and safe condition. Lessee shall, at its own expense, provide janitorial services in the Exclusive Leased Premises, either singularly or in conjunction with other Certificated Passenger Air Transportation Companies which may now or hereafter be Lessees at the Airport. Lessee shall relamp light fixtures as necessary, and shall repaint the interior of the Exclusive Leased Premises as necessary. All such relamping and repainting shall be accomplished with materials and workmanship comparable to the original materials and workmanship. All paint colors or schemes shall harmonize with the decor of the passenger terminal area and shall be subject to the prior approval of the Director of Aviation. Section 5.02 - Porter Service. Lessee may, at its option, provide porter service for the convenience of its passengers in and adjacent to the baggage claim area of the terminal building. Said service may be provided by Lessee alone, by Lessee in conjunction with other Certificated Passenger Air Transportation Companies which may now or hereafter be Lessees at the Airport, or by a nominee of Lessee if approved by the Director of Aviation. Section 5.03 - Additions, Alterations or Replacements. Lessee shall have the right to construct, alter or replace on the Exclusive Leased Premises those improvements or facilities which Lessee reasonably deems necessary for the proper conduct and operation of Lessee's business. However, Lessee shall not -14- 1 construct, alter or replace any such improvements or facilities without prior written approval of the Director of Aviation. Lessee shall also have the right to install on the Exclusive Leased Premises such equipment as Lessee reasonably deems necessary to conduct its Air Transportation business; however, in all instances where electrical wiring, plumbing facilities, climactic controls or other structural changes or alterations are required, Lessee shall obtain approval from the Director of Aviation prior to making such changes or alterations. In all cases where improvements or facilities installed by Lessee require structural changes or additional wiring, plumbing or climactic controls, Lessee agrees to be responsible for all costs in connection with such installations (including maintenance and energy costs) and to comply with all applicable City codes. In performing any construction or other work authorized in this Section 5.03, Lessee shall keep the Exclusive Leased Premises free from accumulation of debris as much as practically possible and perform such work so as to minimize inconvenience to the general public and other Lessees of City. Section 5.04 - Removal and Demolition. Lessee shall not remove or demolish, in whole or in part, any improvements that already exist on the Exclusive Leased Premises without the prior written consent of the Director of Aviation who may, at his discretion, condition such consent upon Lessee's agreement to replace the same improvements specified in such consent upon termination of this Lease. The Director of Aviation shall not withhold consent unreasonably and shall not impose unreasonable conditions as a prerequisite for obtaining his consent. Section 5.05 - Trash and Garbage. Lessee shall provide at its own expense a complete and proper arrangement for the adequate sanitary handling and disposal, away from the Airport, of all trash, garbage and other refuse resulting from Lessee's operations on the Airport. Lessee shall provide and use suitable covered metal receptacles for all garbage, trash and other refuse in the areas leased by Lessee. Piling of boxes, cartons, barrels or other -15- similar items in an unsafe manner in or about Airport premises shall not be permitted. Section 5.06 - Taxes and Licenses. Lessee shall pay all taxes of whatever character that may be lawfully levied or charged upon Lessee's leasehold improvements or operations hereunder and upon Lessee's rights to use Airport property. Lessee shall obtain and pay for all licenses or permits necessary or required by law for the construction of any improvements, additions or alterations, or the installation of equipment and furnishings, and any other licenses necessary to conduct its Air Transportation business. Section 5.07 - Rules and Regulations. In conducting its operations hereunder, Lessee shall comply with all applicable laws of the United States of America and the State of Texas, the rules and regulations promulgated by their authority pertaining to aviation and air navigation, and all reasonable and applicable rules, regulations and ordinances of the City now in force or hereafter prescribed or promulgated by authority or by law, provided that such rules, regulations and ordinances of the City shall be in conformity with Section 2.07 hereof. Section 5.08 - Duty to Prevent Unauthorized Access to the Premises. Lessee shall prohibit and prevent access or entry into the Exclusive Leased Premises and any sterile area by any person or property whose access or entry is not authorized, and Lessee agrees that in the event that a civil penalty or fine is levied against the Airport or City as a result of Lessee's failure to comply or act in accordance with this provision, or any other applicable federal, state or local statutes, ordinances, rules and regulations affecting the use, occupancy or operation of any of said premises, Lessee shall immediately reimburse the Airport or City the full amount of the penalty or fine and correct the act or omission leading to, causing or contributing to the violation. ARTICLE VI TERM Section 6.01 - Term. A. The initial term of this Lease shall commence on the 1st day of October, 1988, and end on the 30th day of September, 1999. Upon written application of Lessee, delivered -16- to the office of the Director of Aviation of City within twenty (20) days prior to the expiration of the initial term of this Lease, the Director of Aviation may extend this Lease for a period of thirty (30) days, provided Lessee is negotiating with City for a new lease when such initial term expires. During such negotiations, Lessee may apply for as many thirty (30) day extensions of this Lease as Lessee deems necessary, which may or may not be granted by the Director of Aviation in his discretion, but in no case shall this Lease be extended more than twelve (12) months beyond its initial term. Any extension of this Lease granted under this Section 6.01 shall be in writing and signed by the Lessee and the Director of Aviation. During any extension, Lessee shall be subject to the rates, fees, rentals and other charges established by the Airport Board for Certificated Passenger Air Transportation Companies that are month -to -month tenants. Both City and Lessee herein agree, however, that all negotiations for any new lease shall be conducted in good faith. B. Notwithstanding any provision of this Section 6.01, this Lease is also subject to earlier termination as hereinafter provided under Article XII. C. On or before thirty (30) days prior to the expiration of the initial term of this Lease, or any extension of said term, as provided in this Article, the Director of Aviation may notify Lessee in writing that this Lease shall terminate at the end of said thirty (30) day period. Lessee agrees and hereby acknowledges that it is an essential term of this Lease that before the end of said thirty (30) day period Lessee will vacate all of the premises leased hereunder, will remove all of its property and improvements (other than permanent improvements) from same, and will restore said premises to the condition in which they existed at the commencement of the initial term of this Lease, damage by the elements, fire, explosion or other casualty excepted unless such damage results from act or omission of Lessee. All such restoration shall be done in a manner satisfactory to the Director of Aviation and shall be completed within said thirty (30) day period. If Lessee fails to vacate said premises within said thirty -17- (30) days after the date of written notice from City of termination, or if Lessee fails to complete such restoration within said thirty (30) day period, the City shall have the right to remove from said premises any and all of Lessee's property and improvements remaining thereon, to restore said portion of the terminal building and land adjacent thereto to the condition specified above, and to charge all costs incurred by City in so doing to Lessee. Lessee agrees to pay such costs of removal and restoration incurred by City. Failure by the Director of Aviation to notify Lessee of when this Lease shall terminate shall not extend the initial term of this Lease, or any extension of said term granted in accordance with this article. ARTICLE VII RENTALS AND FEES Section 7.01 - Rental for Exclusive Terminal Building Space. Rental for the 7,580 square feet of exclusive leased space within the terminal building of the Airport, as described in Section 2.01, shall consist of a fixed fee of $5.63 per sq. ft. per year (to cover debt service) and a variable sum for Maintenance and Operation (M & O) costs. The M & O portion of the rental shall be subject to adjustments retroactively and prospectively as follows: Effective April 1, 1988, the M & O portion of the rental shall be $2.87 per sq. ft. per year. Effective October 1, 1988, and each year thereafter on the same month and day for the remainder of this Lease, the M & O portion of the rental shall be adjusted upward or downward in accordance with the increase or decrease for the same period of time in the Consumer Price Index published by the Bureau of Labor Statistics of the United States Government, hereinafter called "CPI." In addition to any increase or decrease in the M & O portion of the rental resulting from changes in the CPI, $1.00 per sq. ft. will automatically be added to the M & O rate effective October 1, 1988, and an additional $1.00 per sq. ft. will likewise automatically be added to such rate on the same month and day of the next two succeeding years. Notwithstanding the date on which this Lease is executed, Lessee herein agrees to pay City rentals for the Exclusive Leased -18- Premises retroactively in accordance with this Section 7.01 as though this Lease had been executed and became effective on April 1, 1988. However, in calculating such rentals, Lessee shall be given credit for those exclusive space rentals already paid to City since April 1, 1988. Any rentals due City after such calculations are made shall be immediately due and payable upon execution of this Lease. If such calculations indicate that exclusive space rentals have been overpaid, Lessee shall receive a credit for such overpayments. Section 7.02 - Landing Fee. Effective October 1, 1988, the fee for the use of the landing area and facilities necessary therefor as granted hereunder, except those for which rentals are specifically provided elsewhere herein, shall be .45 per 1,000 pounds of the approved maximum gross landing weight of each actual flight operated. Effective October 1, 1991, the fee for the use of such landing area and facilities shall be 5.50 per 1,000 pounds of the approved maximum gross landing weight of each actual flight operated. Effective October 1, 1994, the fee for the use of such landing area and facilities shall be .55 per 1,000 pounds of the approved maximum gross landing weight of each actual flight operated. Effective October 1, 1997, the fee for the use of such landing area and facilities shall be 60 per 1,000 pounds of the approved maximum gross landing weight of each actual flight operated. Notwithstanding the date on which this Lease is executed, Lessee herein agrees to pay City landing fees retroactively in accordance with this Section 7.02 as though this Lease had been executed and became effective on October 1, 1988. However, in calculating such fees, Lessee shall be given credit for those landing fees already paid to City since October 1, 1988. Any landing fees due City after such calculations are made shall be immediately due and payable upon execution of this Lease. If such calculations indicate that landing fees have been overpaid, Lessee shall receive a credit for such overpayments. Not later than the fifth day of each month, Lessee shall file with the Director of Aviation a report of Lessee's actual landings -19- at the Airport for the preceding month, which report shall include the number and type of aircraft making such landings. Lessee shall further provide the City with a summary of the approved maximum gross landing weights for each type of aircraft it operates at the Airport. Section 7.03 - Rental for Common Use Area. A. Common Bag Claim Area As a result of expansion and remodeling of the terminal building at the Airport, there is now approximately 16.939 square feet of common bag claim area within the terminal building, as shown on Exhibit A attached hereto and by reference made a part hereof. Rental for the 16,939 sq. ft. common bag claim area shall be charged jointly to Lessee and all other Certificated Passenger Air Transportation Companies which now or may hereafter have valid leases at the Airport according to the common bag claim area formula, as hereinafter defined, and Lessee herein agrees to pay its pro rata portion of such rental, which shall consist of a fixed fee of $5.63 per sq. ft. per year (to cover debt service) and a variable sum for Maintenance and Operation (M & 0) costs. The M & 0 portion of the common bag claim area rental shall be subject to adjustments retroactively and prospectively as follows: Effective April 1, 1986, the M & 0 portion of the rental shall be $2.87 per sq. ft. per year. Effective October 1, 1988, and each year thereafter on the same month and day for the remainder of this Lease, the M & O portion of the rental shall be adjusted upward or downward in accordance with the increase or decrease for the same period of time in the Consumer Price Index published by the Bureau of Labor Statistics of the United States Government, hereinafter called "CPI." In addition to any increase or decrease in the M & 0 portion of the rental resulting from changes in the CPI, $1.00 per sq. ft. will automatically be added to the M & 0 rate effective October 1, 1988, and an additional $1.00 per sq. ft. will likewise automatically be added to such rate on the same month and day of the next two succeeding years. Notwithstanding the date on which this Lease is executed, Lessee herein agrees to pay City rentals for use of the common bag -20- claim area retroactively in accordance with this Section 7.03 as though this Lease had been executed and became effective on April 1, 1988. However, in calculating such rentals, Lessee shall be given credit for those bag claim area rentals already paid to City since April 1, 1988. Any bag claim area rentals due after such calculations shall be immediately due and payable upon execution of this Lease. If such calculations indicate that bag claim area rentals have been overpaid, Lessee shall receive a credit for such overpayments. The total common bag claim area charges shall be prorated among all Certificated Passenger Air Transportation Companies at the Airport based on the following formula: 20% of the total charges shall be divided equally among all Certificated Passenger Air Transportation Companies and the remaining 80$ prorated based on each such carrier's percentage of enplanements in the preceding month. Not later than the fifth day of each month, the Lessee shall file with the Director of Aviation a summary of the actual number of passenger enplanements on Lessee's aircraft and the actual number of departures of Lessee's aircraft from the Airport for the preceding month. Lessee agrees to pay its calculated pro rata amount of common bag claim area rental monthly in accordance with the above common bag claim area formula. B. Common Boarding Lounge Area When City and Lessee executed the April 28, 1977 agreement hereinbefore mentioned, there were 26.789 square feet of space and six (6) loading gates available for use as common boarding lounge area by all Certificated Passenger Air Transportation Companies that had valid leases at the Airport. However, as a result of expansion and remodeling of the terminal building at the Airport and negotiations with air carriers that provide Air Transportation services at the Airport, approximately 51,685 square feet of space and nine (9) loading gates are now available for use as common boarding lounge area. Both City and Lessee agree that for purposes of this Lease the common boarding lounge area shall consist of those six (6) gates designated as common boarding lounge area on Exhibit A attached hereto and by this reference made a part hereof, -21- but such common area shall be enlarged to include an additional gate for each Certificated Passenger Air Transportation Company that either begins or has already begun providing Air Transportation services at the Airport after January 1, 1987. Effective April 1, 1988, the base rental rate for the common boarding lounge area shall be $2.87 per sq. ft. per year. Effective October 1, 1988, and each year thereafter on the same month and day for the remainder of this Lease, the base rental rate for the common boarding lounge area shall be adjusted upward or downward in accordance with the increase or decrease for the same period of time in the Consumer Price Index published by the Bureau of Labor Statistics of the United States Government, hereinafter called "CPI." In addition to any increase or decrease in the base rental rate resulting from changes in the CPI, $1.00 per sq. ft. will automatically be added to the base rental rate effective October 1, 1988, and a like sum shall automatically be added to such base rental rate on the same month and day of each of the next two succeeding years so that the base rental rate, subject to adiustment for changes in the CPI, shall be as follows: (a) April 1, 1988, to October 1, 1988 -- $2.87 per sq. ft. per year x 51,685 square feet = $148,335.95 (yearly rental), (b) October 1, 1988, to September 30, 1969 -- $3.87 per sq. ft. per year x 51,685 square feet = $200,020.95 (yearly rental), (c) October 1, 1989, to September 30, 1990 -- $4.87 per sq. ft. per year x 51,685 square feet = $251,705.95 (yearly rental); (d) October 1, 1990, to September 30, 1991 -- $5.87 per sq. ft. per year x 51,685 square feet = $303,390.95 (yearly rental). Rental of the common boarding lounge area shall be charged jointly to all Certificated Passenger Air Transportation companies which now or may hereafter have leases at the Airport according to the common boarding lounge area formula, as hereinafter defined, -22- and in accordance with the following calculation, and Lessee herein agrees to pay its pro rata portion of such rental: (6/9 X base rental rate X 51,685 square feet = annual rental) However, the fraction in the above calculation shall be enlarged by one -ninth each time that a Certificated Passenger Air Transportation Company either has begun or does begin providing Air Transportation services at the Airport after January 1, 1987. In like manner, the fraction shall be reduced by one -ninth whenever any Certificated Passenger Air Transportation Company ceases providing Air Transportation services at the Airport after January 1, 1987. Except, however, such fraction shall not be reduced if any Certificated Passenger Air Transportation Company with an unexpired lease takes bankruptcy and refuses to surrender its lease or allow the City to reclaim the space so occupied by such Air Transportation Company for any reason whatsoever. City and Lessee hereby agree that two (2) new Certificated Passenger Air Transportation Companies commenced providing Air Transportation services at Lubbock International Airport after January 1, 1987, and that the fraction in the formula as above set forth shall be adjusted in accordance with the above described procedure from the dates such new Air Transportation Companies commenced services, which dates were November 12, 1987, and January 31, 1989, respectively. Notwithstanding the date on which this Lease is executed, Lessee herein agrees to pay City retroactively in accordance with this Section 7.03 its pro rata portion of the common boarding lounge area rental as though this Lease had been executed on April 1, 1988. However, in calculating such rentals, Lessee shall be given credit for those boarding lounge area rentals already paid to City since April 1, 1988. Any boarding lounge area rentals due City after such calculations are made shall be immediately due and payable upon execution of this Lease. If such calculations indicate that boarding lounge area rentals have been overpaid, Lessee shall receive a credit for such overpayments. -23- The total common boarding lounge area charges shall be prorated among all Certificated Passenger Air Transportation Companies at the Airport based on the following formula: 20% of the total charges shall be divided among all Certificated Passenger Air Transportation Companies based on the percentage of departures in the previous month, and So% shall be prorated based on each such carrier's percentage of enplanements in the previous month. Lessee agrees to pay its calculated pro rata amount of common boarding lounge area rental monthly in accordance with the above common boarding lounge area formula. Loading gates which have not been designated as common boarding lounge area shall not be considered as such unless added to the common area in accordance with this Section 7.03. However, Lessee may at no additional charge utilize the loading gates not included in the common area for diversion or off -schedule operations. Lessee may similarly use these loading gates for charter flights after negotiating a use fee with the Airport Board of City. City herein agrees to train Lessee's personnel to operate such loading gates for these purposes. Section 7.04 - Rental for Public Address System. Lessee shall pay a rental rate of $5.00 per month per microphone connection located on the Exclusive Leased Premises and the non-exclusive use premises. The rental rate per month will be adjusted when necessary to reflect the charges imposed on the City to provide this service. The microphones located on the non-exclusive use premises will be provided for use in conjunction with other Certificated Passenger Air Transportation Companies which now or may hereafter have valid leases at the Airport. These companies shall provide City with a written schedule of the pro rata rental due by each Lessee hereunder and Lessee agrees to pay its stated pro rata amount monthly. The pro rata schedule so furnished to City shall remain in effect until such time as City is provided a revised schedule of the pro rata rental amounts executed by all said Lessees, which revised schedule shall remain in effect until similarly modified. -24- Section 7.05 - Aircraft Storage. City shall have the right to designate apron parking areas for the storage of Lessee's aircraft. Section 7.06 - Time of Payment. Lessee agrees to pay City the rentals, fees and charges due hereunder at such place as City may from time to time designate. Unless otherwise herein stated, the rental for the Exclusive Leased Premises shall be payable monthly in advance on or before the last day of such month. Unless otherwise herein stated, all other rentals, fees and charges shall be payable in monthly installments covering the preceding calendar month of operation. In the event that the commencement or termination of this agreement falls on any date other than the first or last day of a calendar month, the applicable rentals, fees and charges (except landing fees and rentals, fees and charges that are pro rated on the basis of passenger enplanements, aircraft departures and/or other such use measurements) for that month shall be paid on a pro rata basis according to the number of days during which said particular premises, facilities, rights, licenses, services and privileges were enjoyed. City shall, after the end of each calendar month, transmit to Lessee a statement of the rentals, fees and charges incurred by Lessee during said month as hereinabove provided. Payment shall be made by Lessee on or before the 25th day of the month in which such statement is transmitted. Lessee shall pay City a late payment charge of five per cent (5%) of the total amount of rentals, fees and other charges payable if payment is not made when due. Section 7.07 - Default for Failure to Pay Rentals, Fees and Charges. It is expressly agreed that time of payment of the rentals, fees and charges hereinabove provided is of the essence in this entire Lease. Therefore, if Lessee fails to pay any rentals, fees or charges due hereunder within thirty (30) days after City transmits a statement therefor to Lessee, City may, at its option, upon fifteen (15) days written notice to Lessee (unless in such fifteen day period Lessee shall have corrected such failure to pay) immediately, or at any time thereafter, enter into and upon the -25- Exclusive Leased Premises, or &hti part thereof in the name of the whole, and repossess said premises. In said event, City may expel Lessee and those claiming by, through or under Lessee and remove Lessee's effects from Airport property forcibly, if necessary, without being deemed guilty of trespass and without prejudice to any remedy which otherwise might be used for breach of covenant or to collect rentals, fees and charges in arrears. Upon such re- entry this Lease shall terminate. ARTICLE VIII READJUSTMENT OF RENTALS, FEES AND OTHER CHARGES Section 8.01 - Procedure for Readjustment of Rentals, Fees and Other Charges. On April 1, 1991, and every three (3) calendar years thereafter that this Lease remains in effect, all rentals, fees and other charges for the use of any one or all of the premises and facilities leased hereunder for the succeeding three- year period shall be subject to renegotiation upon written notice by either party hereto ninety (90) days prior to the beginning of the next three-year period. Either party giving notice shall, at the time, furnish the other party with a reasonably detailed statement supporting the proposed adjustment. ARTICLE IX RIGHTS AND PRIVILEGES RESERVED BY CITY Section 9.01 - Right to Charge Use Fees to Others. Nothing in this Lease shall be deemed to restrict in any manner City's right to charge any person, partnership, firm, association or corporation fees and rentals for the use of City's property or any improvements thereon where such use of said property or improvements is of a regular or permanent nature, as distinguished from a temporary or transitory nature, or where such use is of such a nature as to constitute the performance of a commercial business at the Airport. In addition, City shall have the right to charge persons, partnerships, firms, associations and corporations a fee no less than that set forth in mutual assistance ground services agreements, as revised from time to time. This fee shall be applicable to, but not limited to, fees for ramp use, jetway use, gate use, training flights and aircraft storage and landing fees, -26- which shall never be less than i25t of the landing fee charged Lessee as set out in Section 7.02 hereof. Section 9.02 - Riaht to Improve and Protect the Airport. In addition to any other rights herein retained, City specifically reserves the following rights and privileges: (A) The right to further develop or improve the landing area and other portions of the Airport as City deems necessary. City agrees to advise Lessee of any proposed capital expenditure in excess of $100,000 and to consult with Lessee prior to undertaking such capital expenditure. However, nothing in this section 9.02 or elsewhere in this Lease shall be construed as a delegation of the City's authority to determine when such capital expenditures are deemed necessary. If feasible, such improvements shall be made in a manner which will cause Lessee as little inconvenience as possible. Lessee shall not be assessed any rentals, fees or other charges for such improvements unless Lessee occupies or utilizes such improvements either exclusively or in conjunction with other air carriers, or the improvements are required by the Federal Aviation Administration or for the safe operation of the Airport. (B) The right to take any action City 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 the Airport which, in the opinion of City, would limit the usefulness of the Airport or constitute a hazard to aircraft. (C) The right during time of war or national emergency to lease the Airport or any part thereof to the United States Government for military use. In the event any such Lease is executed, the rights and privileges granted Lessee in this instrument insofar as they are inconsistent with the rights and privileges granted to the Government shall be suspended. -27- ARTICLE X INDEMNIFICATION, INSURANCE AND BONDS Section 10.01 - Indemnification. Etc.. The parties agree that Lessee is and shall always be deemed to be an independent contractor and operator and not an agent or employee of City with respect to Lessee's acts and omissions hereunder. The Lessee agrees that it will indemnify and save the City harmless from all claims arising out of any demands of contractors, subcontractors, laborers, workers, suppliers, mechanics, materialmen and furnishers of equipment or parts thereof, which claims may be incurred by the activities of Lessee at the Airport or by reason of any improvements, alterations, construction or installation on the Exclusive Leased Premises. Lessee shall indemnify fully and save harmless the City, its officers, agents and employees from any and all claims and actions and any and all expenses incidental to the investigation and defense thereof, based upon or arising out of damages or injuries to third persons or their property, and caused by the fault or negligence of Lessee, its contractors, agents or employees in the construction, use or occupancy of the facilities, premises and privileges hereunder; provided, however, that the City shall indemnify fully and save harmless Lessee, its officers, agents and employees from any and all claims and actions and any and all expenses incidental to the investigation and defense thereof, based upon or arising out of damages or injuries to third persons or their property, and caused by the fault or negligence of the City, its agents or employees, or arising out of or as a result of the condition of any of the publicly used premises in or about said Airport, but such indemnification shall never exceed the limits of exposure set forth in the Texas Tort Claims Act when such claims or actions fall within the terms of said Act. City shall give to Lessee prompt and reasonable notice of any claims or actions against City, and failure to so notify Lessee shall relieve Lessee of its obligations to indemnify the City therefor. In all cases where Lessee is obligated to indemnify and save harmless the City as hereinabove provided, Lessee shall have the right to -28- investigate, compromise and defend any such claims or actions to the extent of its own interest, and Lessee shall cooperate with City and protect City's interest to this end. In all cases where City is required to indemnify and save harmless Lessee as hereinabove provided, City shall have the right to investigate, compromise and defend any such claims or actions to the extent of its own interest, and City shall cooperate with Lessee and protect Lessee's interest to this end. Section 10.02 - Insurance. Lessee shall procure and keep in effect at all times during the term of this Lease the forms of insurance set forth in this Section 10.02. All policies or certificates shall contain a provision requiring the insurers to give the City written notice of cancellation or of any material change in said policies or certificates at least thirty (30) days in advance of the effective date of such cancellation or material change. Each policy shall also contain a provision waiving the right of such insurers to subrogation. Lessee shall maintain all insurance required hereunder with insurance underwriters authorized to do business in the State of Texas and satisfactory to City. All policies shall name the City, its officers, servants, agents and employees as additional insureds. Before the initial term of this agreement commences, Lessee shall furnish City with certificates of insurance which indicate that all insurance and provisions required hereunder are in full force and effect or shall provide City with certified copies of said policies. (A) Fire Insurance - Lessee shall insure for fire and extended coverage risks all of Lessee's improvements on the Exclusive Leased Premises. Such insurance shall be in an amount equal to the full insurable replacement value of such improvements. All fire insurance policies shall contain loss payable endorsements in favor of the parties as their respective interests may appear hereunder. City agrees that any payments received from such insurers as a result of loss under such policies -29- shall be applied toward repair and reconstruction of said leasehold improvements. (B) Public Liability and Property Damage Insurance - Prior to undertaking any activities at the Airport, Lessee shall obtain comprehensive general liability insurance for the protection of the City, its officers, agents and employees. Lessee shall provide public liability insurance for personal injuries or death arising out of any one accident or event in a minimum sum of Three Hundred Thousand Dollars ($300,000.00) for one person and Two Million Dollars ($2,000,000.00) for any one accident and, in addition, shall provide property damage liability insurance in a minimum sum of Two Hundred Fifty Thousand Dollars ($250,000.00) for property damage arising out of any one accident or event. Insurance coverages required of Lessee shall be subject to adjustment from time to time to comply with any changes in minimum requirements determined by City to be necessary. ARTICLE XI DAMAGE OR DESTRUCTION OF LEASED PREMISES Section 11.01- Partial Damage. If the Exclusive Leased Premises are partially damaged by fire, explosion, the elements, a public enemy or other casualty, but not rendered untenantable, the same will be repaired with due diligence by City at its own cost and expense; provided, however, that if the damage is caused by an act or omission of Lessee, its sublessees, agents or employees, Lessee shall be responsible for repairing said premises and shall pay the cost therefor. Section 11.02 - Extensive Damage. If damage from fire, explosion, the elements, a public enemy or other casualty is so extensive as to render that portion of the Exclusive Leased Premises situated within the terminal building untenantable but capable of being repaired in thirty (30) days, the same shall be repaired with due diligence by City at its own cost and expense, and the rent payable herein with respect to such premises shall be paid proportionately to the time of such damage and thereafter -30- cease until such time as the premises are fully restored; provided, however, that if the damage is caused by an act or omission of Lessee, its sublessees, agents or employees, Lessee shall be responsible for repairing said premises and shall pay the cost therefor. During any such period where Lessee is responsible for repairing said premises under the terms of this paragraph, the usual rental shall be payable. The abatement of rental for the Exclusive Leased Premises, as aforesaid, shall not be construed as a waiver of other fees due and payable under the terms of Article VII. Section 11.03 - Complete Destruction. In the event the Exclusive Leased Premises are completely destroyed by fire, explosion, the elements, a public enemy or other casualty, or so damaged that they will remain untenantable for more than thirty (30) days, City shall be under no obligation to repair or reconstruct said premises, and rent payable hereunder and attributable to such destroyed premises shall be paid proportionately to the time of such damage or destruction and shall thereafter cease until such time as the premises are fully restored. If within one hundred fifty (150) days after the time of such damage or destruction said premises shall not have been repaired or reconstructed, or other reasonable facilities provided in lieu thereof, Lessee may cancel this Lease in its entirety or such part of this Lease that pertains to the Exclusive Leased Premises by giving City written notice of such cancellation. Notwithstanding the foregoing, if the Exclusive Leased Premises and adjoining premises are completely destroyed as a result of an act or omission by Lessee, City may, in its discretion, require Lessee to repair or reconstruct the Exclusive Leased Premises and adjoining premises and pay the costs therefor. During any such period where Lessee repairs said premises under the terms of this paragraph, the usual rental shall be payable. section 11.04 - Right to Recover Damages. Nothing in this Lease shall be construed as a waiver of the right of either City or Lessee to recover damages from the other arising out of the fault or negligence of the other. -31- Section 11 05 - Limit of City's Obligations Defined. It is understood that in the application of the foregoing Sections 11.01, 11.02 and 11.03, City's obligations shall be limited to repair or reconstruction of the Exclusive Leased Premises to the same extent and quality that existed at the commencement of this Lease. Redecoration and replacement of furniture, equipment and supplies shall be the responsibility of Lessee and any such redecoration and refurnishing/re-equipping shall be of equivalent quality to that originally installed hereunder within the Exclusive Leased Premises. ARTICLE XII TERMINATION OF LEASE CANCELLATION, ASSIGNMENT AND TRANSFER Section 12.01 - Termination. This Lease shall terminate at the end of the full term hereof, or earlier as provided in Sections 12.02 and 12.03, and Lessee shall have no further right or interest in the Exclusive Leased Premises and the non-exclusive use premises, except as provided in Article VI and in Article XIII. Section 12.02 - Cancellation by Lessee. This Lease shall be subject to cancellation by Lessee after the occurrence of any one or more of the following events: (A) The permanent abandonment of the Airport as an airline terminal or the permanent removal of scheduled airline service from the Airport. (B) 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. (C) The issuance of an injunction by any court of competent jurisdiction which prevents or restrains the use of the Airport, or any substantial part thereof, for Airport purposes, provided such injunction remains in force for a period of at least ninety (90) days. -32- v (D) The inability of Lessee to use the Airport for a period in excess of ninety (90) days or to enjoy any of the rights, licenses, services or privileges granted to Lessee hereunder as a result of fire, explosion, earthquake or other casualty or act of God or a public enemy, provided that the same is not caused by negligence or willful acts or failure to act on the part of Lessee, its sublessees, agents or employees. (E) Any failure or refusal by the Federal Aviation Administration which prevents Lessee from operating into, from or through said Airport such aircraft as Lessee may reasonably desire to operate. (F) The default by City in the performance of any covenant or agreement herein required to be performed by City and the failure of City to remedy such default for a period of ninety (90) days after receipt from Lessee of written notice to remedy the same; provided, however, that no notice of cancellation, as below required, shall be of any force or effect if City shall have remedied the default prior to the receipt of Lessee's notice of cancellation. Lessee may exercise such right of cancellation by giving the Director of Aviation sixty (60) days advance written notice at any time after the lapse of the applicable period of time herein stated, and this Lease shall terminate at the end of such sixty (60) day period. Rental due hereunder shall be payable only to the date of said termination, except such portion of the rental attributable to the Exclusive Leased Premises when such premises shall have been completely destroyed by fire, explosion, the elements, a public enemy or other casualty, and such premises remain untenantable for more than thirty (30) days, in which event the rental shall be payable as provided in Article XI, Section 11.03 hereof. Lessee's performance of all or any part of this Lease for or during any period(s) after failure of the City to perform any of the terms, covenants and conditions herein contained shall not be -33- deemed a waiver of any right Lessee has to cancel this Lease for any subsequent failure by City to so perform, keep or observe any of the terms, covenants or conditions hereof. Section 12.03 - Cancellation by City. This Lease shall be subject to cancellation by City after the occurrence of any one or more of the following events: (A) 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. (B) The appointment of a receiver of Lessee's assets. (C) The divestiture of Lessee's assets herein by other operation of law. (D) The abandonment by Lessee of its Air Transportation business at the Airport for a period of thirty (30) days or more. (E) 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 sixty (60) days after receipt of written notice by City to remedy same, except that default for failure to pay any rentals, fees or charges shall be governed by Section 7.07. (F) The lawful assumption by the United States Government, of the operation, control or use of the Airport, or any substantial part or parts thereof, or any authorized agency thereof, in such a manner as to substantially restrict Lessee for a period of at least ninety (90) days from operating thereon. (G) In addition to the foregoing, all rights, privileges and interests acquired hereunder by Lessee may, at the option of city and following written notice of ninety (90) days, be suspended or finally terminated if such suspension or termination is found by City, acting in good faith, to be necessary to enable the City to undertake construction for expansion of the terminal building, or to secure federal financial aid for the development of the Airport, -34- or for the development or promotion of aeronautical operations thereon. If any of the aforesaid events occur, City may enter the Exclusive 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 or in Section 7.07 hereof shall not operate to bar or destroy the right of City to declare this Lease null and void as a result of any subsequent violation of the terms of this Lease. Section 12.04 - Notice of Termination. If any of the events enumerated in Section 12.03 shall occur, City may cancel and terminate this Lease by giving Lessee five (5) days written notice, such cancellation and termination to be effective upon the date specified in such notice. Rental due shall be payable only to the date of cancellation. Section 12.05 - Assignment and Subletting. Lessee shall not sell, assign or transfer this Lease, or any part thereof, and shall not sublease all or any portion of the Exclusive Leased Premises without the prior written consent of the Director of Aviation; provided, however, that Lessee may assign this Lease to any corporation with which Lessee may merge or consolidate or which may succeed to the Air Transportation business of Lessee. ARTICLE XIII PROPERTY RIGHTS UPON TERMINATION Section 13.01 - Lessee's Right of Removal. Upon cancellation or termination of this Lease for any reason, Lessee shall have the right for a period of thirty (30) days after the date on which notice of termination is placed in the United States mail, as provided in Article XIV, Section 14.17 hereinafter, to remove any or all of its property from the Airport. Furthermore, within said thirty (30) day period, Lessee shall restore said premises to the condition in which they existed at the commencement of this Lease, damage by the elements, fire, explosion or other casualty excepted, -35- unless such damage occurs as a result of an act or omission of Lessee, its sublessees, agents or employees, in which event Lessee shall repair and restore said premises as aforesaid. Section 13.02 - City's Rights at Termination. Title to any and all improvements and property not removed by Lessee prior to the expiration of the aforesaid thirty (30) day period shall vest in City; provided, however, that City reserves the right to require Lessee to remove such improvements and property, the cost of which shall be borne by Lessee in the event City removes same on failure of Lessee to perform its obligation hereunder. City also reserves the right to charge a reasonable rental for any period of continued occupancy by Lessee after cancellation or termination of this Lease; provided, however, that no charge shall be made to Lessee if Lessee shall remove its property from the Exclusive Leased Premises within the aforesaid thirty (30) day period. ARTICLE XIV GENERAL PROVISIONS Section 14.01 - Other Ordinances. This Lease supersedes all prior ordinances and any amendments thereto passed by the City Council of City and which pertain to rental rates and landing fees at the Airport. Section 14.02 - Arbitration. In any event, and notwithstanding any provisions made in this Lease, City and Lessee agree to submit to arbitration any question or dispute, except nonpayment of rentals, fees or other charges, arising between said parties and requiring an interpretation of any term, condition or covenant herein contained, or concerning any matter of compliance or noncompliance with the terms of this Lease. Before submitting any question or dispute to arbitration, City and Lessee shall each select one arbitrator and the two so chosen shall then select a competent and disinterested third arbitrator; and the three arbitrators collectively shall then consider the question or dispute submitted to them in writing by the parties hereto. The decision in writing of any two arbitrators shall determine the -36- i particular question or dispute under consideration. The parties hereto shall bear equally the expense of said arbitration. Section 14.03 -'Nondiscrimination. The Lessee for itself, its personal representatives, successors in interest and assigns, as a part of the consideration hereof, does hereby covenant and agrees as a covenant running with the land that: (1) no person on the grounds of race, color or national origin shall be excluded from participation in, denied the benefits of, or be otherwise subjected to discrimination in the use of said Airport facilities; (2) that 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, color or national origin shall be excluded from participation in, denied the benefits of, or otherwise be subjected to discrimination; (3) that the Lessee shall use the premises in compliance with all other requirements imposed by or pursuant to 49 CFR Part 21, Nondiscrimination in Federally Assisted Programs of the Department of Transportation, and as said Regulations may be amended. The Lessee assures that it will undertake an affirmative action program as required by 14 CFR Part 152, Subpart E, to ensure that no person shall on the grounds of race, creed, color, national origin or sex be excluded from participating in any employment activities covered in 14 CFR Part 152, Subpart E. The Lessee assures that no person shall be excluded on these grounds from participating in or receiving the services or benefits of any program or activity covered by this subpart. The Lessee assures that it will require that its covered suborganizations provide assurances to the Lessee that they similarly will undertake affirmative action programs and that they will require assurances from their suborganizations, as required by 14 CFR Part 152, Subpart E, to the same effect. In the event of breach of any of the preceding nondiscrimination covenants, City shall have the right to terminate this Lease, and to reenter and repossess said land and the facilities thereon, and hold the same as if said Lease had never been made or issued. -37- Section 14.04 - Rules and Regulations. City shall have the right to and may from time to time adopt and enforce reasonable rules and regulations, which Lessee agrees to observe and obey, pertaining to the use of the Airport, public terminal building and appurtenances, provided that such rules and regulations shall not be inconsistent with rules, regulations or orders of the Federal Aviation Administration pertaining to aircraft operations at the Airport, or with the procedures prescribed or approved from time to time by the Federal Aviation Administration pertaining to the operation of Lessee's aircraft at the Airport. Section 14.05 - Interpretation of Lease. Nothing in this Lease shall be construed or interpreted in any manner whatsoever as limiting, relinquishing or waiving any rights or ownership enjoyed by City in the Airport property, or in any manner waiving or limiting City's control over the operation, maintenance, improvement or alteration of Airport property, or in derogation of such governmental rights as City possesses, except as specifically provided for herein. Section 14.06 - Invalid Provisions. In the event any covenant, condition or provision herein contained is held to be invalid by any court of competent jurisdiction, the invalidity of any such covenant, condition or provision shall in no way affect any other covenant, condition or provision herein contained; provided that the invalidity of such covenant, condition or provision does not materially prejudice either City or Lessee in its respective rights and obligations contained in the valid covenants, conditions or provisions of this Lease. Section 14.07 - Sponsor's Assurances. This Lease shall be subject to the terms of the city's Sponsor's Assurances Agreement, as amended. City represents that none of the provisions of this Lease violate any of the provisions of said Sponsor's Assurances Agreement, as amended. Section 14.08 - Consent Not to be Unreasonably withheld. Whenever consent is required hereunder by either City or Lessee, such consent is not to be unreasonably withheld or delayed for an unreasonable period of time. -38- v Section 14.09 - Redelivery of Premises. Lessee shall, upon termination or cancellation of this Lease, quit and deliver up the Exclusive Leased Premises to City peaceably, quietly and in the condition in which they existed at the commencement of this Lease, damage by the elements, fire, explosion or other casualty excepted unless such damage occurs as a result of an act or omission of Lessee, its sublessees, agents or employees. Section 14.10 - Holding Over. In the event Lessee remains in possession of the Exclusive Leased Premises after the expiration of this Lease without any written renewal thereof, such holding over shall not be deemed as a renewal or extension of this Lease, but shall create only a tenancy from day to day which may be terminated at any time by City subject, however, to the rights set forth in Article XII hereof. Section 14.11 - Inspection. City shall have the right at all reasonable times to enter upon the Exclusive Leased Premises to inspect said premises, to observe the performance by Lessee of its obligations hereunder, and to do any act which City may be obligated or have the right to do under this Lease. Section 14.12 - Nonexclusive. It is hereby agreed that nothing herein contained shall be construed to grant or authorize the granting of an exclusive right prohibited by Section 308 of the Federal Aviation Act of 1958, 49 U.S.C.S. 1349, as amended, and City reserves the right to grant to others the privilege and right of conducting any one or all of the aeronautical activities listed herein, or any other activity of an aeronautical nature. Section 14.13 - Lease Made in Texas. This Lease has been executed in and shall be construed in accordance with the laws of the State of Texas, and venue of any lawsuit filed by either party concerning this Lease shall be in Lubbock County, Texas. Section 14.14 - Successors. This Lease shall bind and inure to the benefit of any successor of City and any successor, assignee or sublessee of Lessee. Section 14.15 - Headings. The article and section headings contained herein are for convenience in reference and are not -39- intended to define or limit the scope of any provision of this Lease. Section 14.16 - Time of Essence. Time is of the essence of this Lease. Section 14.17 - Notices. Notices to City provided for herein shall be sufficient if sent by certified mail, postage prepaid, and addressed to: Director of Aviation, Lubbock International Airport, Route 3, Box 389, Lubbock, Texas 79401, and notices to Lessee, if sent by certified mail, postage prepaid, and addressed to: President, Southwest Airlines Company, 1820 Regal Row, Dallas, Texas 75235, or to such other addresses as the parties may designate to each other in writing from time to time. Section 14.18 - Understanding of the Parties. A. Both parties to this Lease agree and understand that the City of Lubbock has created three classifications of Certificated Passenger Air Transportation Companies that may provide Air Transportation services at the Airport and that this Lease is the standard lease for such air carriers that desire a long-term lease with the City as defined in Section 1.01. The parties hereto recognize each of the different classifications as defined in Section 1.01 of this Lease and that the City of Lubbock may apply or agree to different terms and conditions in creating business relationships with Certificated Passenger Air Transportation Companies that fall into a different classification than Lessee so long as the terms and conditions agreed to, as to such other classified air carriers, are consistent and uniform within each classification. It is further understood that any Certificated Passenger Air Transportation Company which desires a lease at the Airport with an initial term of three (3) or more years will execute this standard long-term lease and that the terms and conditions of this long-term lease shall not change or be modified unless herein stated or agreed to in writing by all Certificated Passenger Air Transportation Companies at the Airport classified as holders of standard long- term leases. B. It is the further understanding of the parties hereto that the City has classified Certificated Passenger Air -40- Transportation Companies who desire to conduct business at the Airport in accordance with the term of their lease or business relationship with the City in order to provide the broadest possible Air Transportation services to the general public, to encourage new air carriers to test the market for these services in the Lubbock area and to maintain a fee and rental structure for the facilities and services being provided by the City through its Lubbock International Airport which will make the Airport as self- sustaining as possible. C. It is the further understanding of the parties that the City reserves the right to offer different terms and conditions to Certificated Passenger Air Transportation Companies in different classifications as herein defined so long as the terms and conditions offered to the air carriers are the same or substantially similar within each classification. However, notwithstanding anything set forth in this Section 13.18, the formulas for calculating rental for the common boarding lounge area and common bag claim area will be followed by the City for all classifications of Certificated Passenger Air Transportation Companies doing business at the Lubbock International Airport. Furthermore, City herein agrees not to assess Lessee any rates for rentals, fees and other charges less favorable than those rates for rentals, fees and other charges assessed to standard short-term tenants and month -to -month tenants (as herein defined in Section 1.01) for comparable space or facilities. However, City reserves the right to assess higher rates for rentals, fees and charges to short-term and month -to -month tenants in the future. This Lease shall be executed in triplicate and each executed document shall be deemed to be an original document. ARTICLE XV MISCELLANEOUS PROVISIONS Section 15.01 - Security Charges. Notwithstanding anything to the contrary contained in this Lease, a charge of twenty-five cents (25¢) shall be assessed to Lessee for each of Lessee's enplaned passengers at the Airport for backup security reimbursement. -41- IN WITNESS WHEREOF, the Parties have hereunto set their hands this 2214 day of 0 AA, -o , 19 ATTEST: Ranet a Boyd, C ty Secre ary APPROVED AS TO CONTENT: GZ�(rtyl Marvin Coffee, ratlector of Avation APPROVED AS TO FORM: LESSEE: CITY OF LUBBOCK, TEXAS B.C. MCMI N, MAYOR Harold Willard, AmEdtant C ty Attorney LESSEE: SOUT HM T AIRLINES CO. ATTEST: 0-JAMES F PARKER • VICE PRESIDENT GENERAL COUNSEL -42- THE STATE OF TEXAS COUNTY OF LUBBOCK BEFORE ME, the undersigned authority, a Notary Public in and for Lubbock County, Texas, on this day personally appeared B.C. McMINN, known to me to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he executed the same as the act and deed of the City of Lubbock and as Mayor, for the purposes and consideration therein expressed, and in the capacity therein stated. GTVEN UNDER MY HAND AND PEAL OF OFFICE THIS day of 19. (vz� 18 f Nota Publ c n and for Lubbock County, Texas My Commission Expires: MY COMMISSIO 8ER 30, 1989 OLIVIA R. SOLIS THE STATE OF TEXAS'n COUNTY OF � j��4--) BEFORE ME, a Notary Public 1,P and fo sa County, Texas, on this day personally appeared Q� m_r' t , known to me to be the person whose name is bssccribed to the foregoing instrument and acknowledged to me that he executed the same for the purposes and consideration therein expressed and in the capacity therein stated as the act and deed of Southwest Airlines Co. GIVE�l UNDER MY HAND AND SEAL OF OFFICE THIS day of co==00000000000000000000000000 Si �� �`o� MARY A. BRUNO ' Netary PUNC, State Of Texas My COMM1610 Etpirea 11.25.19M .� % �.�- ot'arrPubl c in and forldz/o� -L-abbb;5k County, Texas My Commission Expires: -43- Lubbock International Airport Passenger Terminal Building Main Level 1 I I I 1 Exhibit A Southwest Airlines Exclusive Ticketing and Office Area ��. C• R a1 II �zj 0 c Iri C'I'o c aJ s �+CD d6h I n tc Iy Diu TY l� Page 1 of 3 I Lubbock International Airport Passenger Terminal Building Apron Level Exhibit A Southwest Airlines Exclusive Operations/Cargo Area ['age 2 of 3 1� M Lubbock International Airport Passenger Terminal Building Main Level I•''r�T•�Y �7�'I � f� A l i I �r�.l lr-I � I l l l l l� f i EI�'i II i' 1 �I ( I I I I I I I I' I' I hl"'iTl"T1-1-1'?`1�.,1 I` I I I I I I I •I I I I'Illlaflllllllllllll�llll i11111r1111111111111111111111111111111illlllilllilllilllllll . t'I 1 1 1 1 1 1 1 1 III,i,I I,I I I,illllllllllllllllllllllllllll 11111111111 IIIIIII 11111 I, i i i l' i' l l 1 14, l l l l l I. JT�{��j��LLL�j;;; f Iliillil'1111 (ill 1�/"• j ; I flfiflI I II11111� % � Iljllli ����1 1 IIIIIII ��`. �,• I l I f '� •� •:v', �llllll +�I l l ... �Ill LII i 1I7IiI Lubbock International Airport I I �. .. llllll I ri 1 - Exhibit A f_ _ _ ,` III Common Bag Claim Area L111 Ii Commom Boarding Lounge Area ( I I I :•r� f l'li •.I i l 111 _ �••..: t�l�l Page 3 of 3