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HomeMy WebLinkAboutContract 23512-EC1 CITY SECRETARY CONTRACT NO. LESSOR ESTOPPEL CERTIFICATE AND CONSENT March 6, 2014 AT Industrial Owner 6 LLC c/o Hillwood Alliance Services, LLC 13600 Heritage Parkway, Suite 200 Fort Worth, Texas 76177 Attention: Property Manager— 13901 Aviator Way BAE Systems Technology Solutions & Services, Inc. 520 Gaither Road Rockville, Maryland 20850 Attention: Barbara Siskin Bell Helicopter Textron Inc. P.O. Box 482 Fort Worth, Texas 76101 Attn: Neil Cannon Ladies and Gentlemen: Alliance Aviation Investors, L.P. ("Prior Lessee") and the City of Fort Worth (the "City") entered into a written ground lease agreement dated July 29, 1997, and on file in the City Secretary's Office as City Secretary Contract No. 23512, a copy of which, accompanied by all amendments or modifications thereto, is attached hereto on Exhibit "A" and incorporated herein by reference (the "Lease"), pursuant to which the city leased to Prior Lessee and Prior Lessee leased from the City certain premises located at Alliance Airport in the City of Fort Worth, as described in the Lease (the "Premises"). The Lease was assigned by Prior Lessee to Airport Building Partners, Ltd. ("Lessee") as permitted therein. The City hereby certifies to and agrees as follows: 1. That the Lease has not been modified, altered, or amended in writing or orally, except for the First Amendment to Ground Lease dated effective as of July 29, 1997, and Amendment No. 1 to City Secretary Contract No. 23512 dated January 23, 2003 (City Secretary Contract No. 28548). 2. The Lease (including any amendments or modifications referred to in P bQ-ve constitutes the only contractual agreement between the City and Le eee,-�it�� 1� .0 SEcRE'tARV wpRTH,TX RECEIVED MAR 0 7 20# 51, Premises. In accordance with Section 5.7 of the Lease, the City and Lessee executed a Pledge Agreement to secure Lessee's obligations to maintain and repair the Premises, which pledge will be secured by a letter of credit issued by a financial institution and in a form reasonably acceptable to the City rather than by the treasury securities contemplated by the Lease. The City Council approved such Pledge Agreement. 3. The Lease is in full force and effect and, to the best of the City's knowledge, no uncured breach or event of default has occurred as of the date hereof. The City has no right to setoffs, claims or defenses to the enforcement of the Lease by Lessee against the City, except as may be provided by the Lease or by federal, state, or local law or ordinance. 4. As of the date hereof, the City, to the best of the City's knowledge, is not in default in the performance of the Lease and has not committed any breach of the Lease. 5. That to the City's knowledge, Lessee has not transferred, assigned or sublet the Lease or the Premises in whole or in part except for the Galaxy Sublease (as defined below) and the Bell Sublease (as defined below). 6. That the Effective Date of the Lease, as defined therein, was January 19, 1999; and that the Lease term will expire in accordance with its terms on July 31, 2029, subject to Lessee's right to renew the Lease for up to ten additional years, as provide by City Secretary Contract No. 28548. 7. That no security deposit is payable to the City under the Lease other than the pledge provided by Lessee under the Pledge Agreement by and between the City and the Lessee. 8. That in addition to rent provided under the Lease and the pledge to be provided under the Pledge Agreement or other instrument, Lessee is not obligated to pay any other sums to the City under the Lease, other than as follows: DESCRIBE ACCRUED MONETARY OBLIGATIONS IF ANY: NONE 9. That the City previously reviewed and approved Lessee's sublease (the "Galaxy Sublease") to Galaxy Aerospace Corporation ("Galaxy"). 10. The City consented to (a) the assignment of the Galaxy Sublease from Galaxy to Galaxy Aerospace Company, LP ("Galaxy, LP"), (b) the assignment of the Galaxy Sublease from Galaxy, LP to Gulfstream Aerospace LP ("Gulfstream"). and (c) the assignment of the Galaxy Sublease to Bell Helicopter Textron Inc. ("Bell") and the City agreed that all references to Galaxy in the Lease shall mean and refer to Bell and all rights under the Lease inuring to the benefit of Galaxy and/or Gulfstream shall inure in favor of Bell. 11. The City hereby acknowledges the assignment of the Bell Sublease to BAE Systems Technology Solutions and Services, Inc. ("BAE Systems") and agrees that all references to Galaxy in the Lease shall now mean and refer to BAE Systems and all rights under the Lease inuring to the benefit of Galaxy and/or Gulfstream and/or Bell shall now inure in favor of BAE Systems. 12. The City agrees that so long as the insurance requirements of the Tenant (as defined in the BAE Systems Sublease) under Paragraph 10 of the BAE Systems Sublease are satisfied by BAE Systems, Lessee shall not be in default under the Lease for failure to maintain insurance coverage for the Premises. 13. To the best of the City's knowledge after inquiry, the current use of the Premises is in accordance with all of the terms and conditions of the Lease and in accordance with the City's Minimum Standards for Fixed Base Operations and Other Tenants. 14. The City acknowledges and agrees that so long as BAE Systems Sublease is in effect, the City will not (i) accept a voluntary surrender of the Premises or (ii) declare the occurrence of a default of the Lease due to vacation or abandonment of the Premises by BAE Systems and/or Lessee, so long as there is no other uncured default under the Lease at such time. 15. The City acknowledges that the rights of BAE Systems, as tenant under the BAE Systems Sublease will not be disturbed by any default of Lessee. 16. The City acknowledges that BAE Systems will be performing work in the Premises for customers that require BAE Systems to restrict access to the Premises for security purposes. The City agrees to access the Premises only in accordance with the access provisions applicable to the Lessee. EXECUTED on. J , 2014. THE CITY OF FORT WORTH, TEXAS, A Texas municipal corporation By:<� Ger- B.w Print: Fernando Costa Its: Assistant City Manager APPROVED AS TO FORM AND LEGALITY: Assistant City Attorney A y� M&C: None Required Exhibit A—the Ground Lease M J. ayS ®R T �o o� UIRLD —! OFFICIAL RECORD NO NI&C R1LQ to$ a= CITY SECRETARY '$°°T,00000° FT. WORTH, TX �XP► CITY SECRETARY����� CONTRACT NO. GROUND LEASE AGREEMENT 01-22-9 4 C S :L_ This Ground Lease Agreement is made and entered into this 29th day of July, 1997 by and between: The CITY OF FORT WORTH, TEXAS, having offices at 1000 Throckmorton, Ft. Worth, Tx. 76102, hereinafter referred to as the " it '; and ALLIANCE AVIATION INVESTORS, L.P., a Texas limited partnership (formerly known as ALLIANCE AIR PARTNERS, LTD.), having an office at 2221 Alliance Boulevard, Suite 100, Fort Worth, Texas 76177, hereinafter referred to as the "Lessee." Lessee's Federal Tax Identification Number is 752521969. WPTNESSETH THAT WHEREAS, the City is the owner of an airport consisting of approximately 680 acres of land and facilities known as the Fort Worth Alliance Airport, located in the Counties of Denton and Tarrant in the State of Texas, hereinafter, the"Airport"; and WHEREAS, the City, as "Lessor", and Alliance Air Services, Inc., as "Lessee", entered into that certain Lease Agreement dated December 15, 1993, and designated as City Secretary Contract No. 20061 (the "Original Lease")for the lease of certain unimproved real property at the Airport (the "Original Leased Proper"), which Original Lease was assigned from Alliance Air Services, Inc. to Alliance Air Partners,Ltd. on February 22, 1994;and WHEREAS, Lessee desires to lease a portion of the Airport from the City for the purpose of constructing certain "Aviation Related Facilities" as defined in Section 4.4 below; and WHEREAS, the City desires to lease a portion of the Airport to Lessee for the purpose of constructing the Aviation Related Improvements. NOW, THEREFORE, in consideration of the premises and of the rents, covenants, and conditions herein contained, the City does hereby lease to Lessee approximately 6.639 acres of unimproved land at the Airport as more particularly described in Article 2 hereof, which unimproved land is hereinafter referred to as the "Leased Premises," during the term hereof for the term and pursuant to the conditions hereinafter set forth. ARTICLE 1 TERM;NO CROSS DEFAULT 1 A Except as provided in the next sentence,this Ground Lease shall be a binding obligation of the parties as of the date it is "made and entered into" as shown on the first page hereof. Notwithstanding the foregoing, however, the obligations of Lessee are expressly conditioned upon Lessee entering into an agreement with Galaxy Aerospace Corporation. 40 (or its Affiliates, as hereafter defined) ("Galax ") for the design, construction, use and Galaxy Ground Lem-Pevised-m mg Page 1 07515.0092:0273045.12 R operation of the Aviation Related Improvements. The terms and conditions of the agreement between Galaxy and Lessee must be acceptable to Lessee. If Lessee and Galaxy are unable to so agree within 365 days after the "made and entered into" date shown on the first page hereof, then either party shall have the right to terminate this Ground Lease by giving written notice of termination to the other; whereupon, neither party shall have any further rights, obligations or remedies under this Ground Lease. The term of this Ground Lease shall begin on the"Effective Date," unless sooner terminated in accordance with the provisions hereof and shall tenminate on the last day of the 366th month following the month in which the Effective Date falls. The "Effective Date" is defined to be the date on which the City issues a certificate of occupancy for the Aviation Related Facilities. 1.2 Lessor and Lessee acknowledge and agree: 1.2.1 that the Leased Premises are not part of the Original Leased Property; and 1.2.2 that no provision of the Original Lease shall apply to this Ground Lease or to the Leased Premises; and 1.2.3 that no event of default under the Original Lease shall be an event of default under this Ground Lease(or any separate lease created pursuant to Article 32 hereof) or otherwise in any way affect the rights, obligations, or remedies of the parties under this Ground Lease (or any separate lease created pursuant to Article 32 hereof); and 1.2.4 that no event of default under any of the separate leases created pursuant to the Original Lease or pursuant to Article 32 hereof shall be an event of default under this Ground Lease or otherwise in any way affect the rights, obligations, or remedies of the parties under this Ground Lease;and 1.2.5 that no event of default under this Ground Lease shall be an event of default under the Original Lease or otherwise in any way affect the rights, obligations, or remedies of the parties under the Original Lease;and 1.2.6 that no event of default under this Ground Lease shall be an event of default under any of the separate leases created pursuant to the Original Lease or pursuant to Article 32 hereof or otherwise in any way affect the rights, obligations, or remedies of the parties under any such separate leases. ARTICLE 2 LEASED PREMISES 2.1 The "Leased Premises" shall consist of Parcel No. 2 (approximately 2.921 unimproved acres) and Parcel No. 5 (approximately 3.718 unimproved acres), being part of Alliance Airport Lot 1, Block 1, Cabinet A, Slide 622 (as described on Exhibit A-1 attached Galaxy c,,d Lease-Revived-t R 1/9s Page 2 07515.0092:0273043.12 r l hereto), together with all improvements (collectively, the "Leasehold Improvements") hereafter constructed thereon, including, but not limited to,the Aviation Related Facilities. 2.2 Lessee shall also have the non-exclusive use of that portion of the paved aircraft parking apron (the "Transient Apron') that abuts the Leased Premises along the entire westerly boundary of the Leased Premises. The Transient Apron area that abuts the Leased Premises is shown on Exhibit A-2 attached hereto. If at any time during the term of this Ground Lease, Alliance Air Services, Inc. (or any of its affiliates) is not the operator of the Airport, then Lessee, as further consideration for Lessee's use of the Transient Apron, shall keep and maintain the Transient Apron free of trash, debris, and other foreign objects that result from the use of the Transient Apron by Lessee or anyone claiming a right by, through, or under Lessee. The City or the Airport operator shall otherwise be responsible at all times for the maintenance and reconstruction of the Transient Apron and shall maintain and keep the Transient Apron free from snow and ice; all at the sole cost and expense of the City or the Airport operator. The timing of such maintenance and reconstruction shall be at the City's sole discretion. 2.3 The Transient Apron is not a part of the Leased Premises. ARTICLE 3 USE OF LEASED PREMISES • Lessee shall occupy and use the Leased Premises for any lawful purpose and in a manner which conforms to the City's Minimum Standards for Fixed Base Operators and Other Airport Tenants, as may be amended from time to time. ARTICLE 4 RENT AND USE FEES 4.1 For use and occupancy of the Leased Premises and privileges herein granted, Lessee agrees to pay to the City during the period commencing on the Effective Date, an annual rental equal to (i) 19g Ber square foot multiplied times the number of square feet within Parcel No. 2, subject to adjustment pursuant to Section 4.2 below and pursuant to Article 19 hereof (upon partial termination) plus (ii)32� per square foot multiplied times the number of square feet within Parcel No. 5, subject to the adjustment pursuant to Section 4.2 below and pursuant to Article 19 hereof(upon partial termination). 4.2 Commencing on the first anniversary of the Effective Date, and on each anniversary thereof during the remainder of the term of this Ground Lease and any extension thereof, the ground rental rates set forth in Section 4.1 above shall be adjusted based upon the upward percentage change in the Consumer Price Index for the Dallas/Fort Worth Metropolitan Area, as announced by the United States Department of Labor during any preceding 12-month period or in accordance with the formula, index or other method, if any, that is most favorable to Lessee of any of the formulas, indices, or methods being used and actually applied by the City for the adjustment of any rental rates at the Airport. Galaxy Ground Lease-Revised-In 1 i9a Page 3 07515.0M.0277045.12 4.3 The annual rent payable hereunder shall be paid in equal monthly installments. Each installment shall be made no later than the first day of that month for which payment is due and shall be made at the office of the Airport operator or at such other office as may be directed in writing by the City. The annual rental during the first year of the term of this Ground Lease pursuant to Section 4.1 shall be $76,003.04, payable in monthly installments of$6,333.59. 4.4 Lessee, as additional rent, shall construct on the Leased Premises the improvements more particularly described on Exhibit A-3 attached hereto consisting of a corporate headquarters office facility, an aircraft service and completion center, and a customer service center(collectively, the"Aviation Related Facilities"). 4.5 Lessee hereby agrees to pay all fuel flowage fees, landing fees and tie down fees imposed by the City from time to time, provided such fees are not unjustly discriminatory. ARTICLE 5 ACCEPTANCE,CARE,MAINTENANCE,IMPROVEMENTS AND REPAIR 5.1 Lessee warrants it has inspected the Leased Premises and accepts possession of the Leased Premises "AS IS" in its present condition, and subject to all limitations imposed upon the use thereof by the rules and regulations of the Federal Aviation Administration and by ordinances of the City, and admits its suitableness and sufficiency for the uses permitted hereunder. Except as may otherwise be provided for herein, the City shall not be required to maintain nor to make any improvements, repairs, or restoration upon or to the Leased Premises or to any of the Leasehold Improvements hereafter constructed thereon. The City shall not have any obligation to repair, maintain, or restore, during the term of this Ground Lease, any Leasehold Improvements placed upon the Leased Premises by Lessee, its successors and assigns. 5.2 Lessee shall, throughout the term of this Ground Lease, assume the entire responsibility, cost, and expense for all repair and maintenance whatsoever of the Leased Premises and all Leasehold Improvements thereon in a good workmanlike manner, whether such repair or maintenance be ordinary or extraordinary, structural or otherwise. Additionally, Lessee, without limiting the generality hereof, shall: 5.2.1 Keep at all times, in a clean and orderly condition and appearance, the Leased Premises, all Leasehold Improvements thereon and all of Lessee's fixtures, equipment and personal property which are located on any part of the Leased Premises. 5.2.2 Provide and maintain on the Leased Premises all obstruction lights and similar devices and safety equipment required by law. 5,2.3 Repair any damage caused by Lessee to paving or other surface of the Leased Premises caused by any oil, gasoline, grease, lubricants or other flammable liquids and substances having a corrosive or detrimental effect thereon. c.i..y c."a U.-Rv,a -1121198 Page 4 07513.0092:0273045.t 2 5.2.4 Take measures to prevent erosion, including, but not limited to, the planting and replanting of grasses with respect to all portions of the Leased Premises not paved or built upon; and in particular, shall plant, maintain and replant any landscaped areas. 5.2.5 Be responsible for the maintenance and repair of all utility services fines placed on the Leased Premises and used by Lessee exclusively, including, but not limited to, water lines, gas lines, electrical power and telephone conduits and fines, sanitary sewers and storm sewers. 5.3 In the event Lessee fails: (a) to continence to maintain, clean, repair, replace, rebuild or repaint within a period of thirty (30) days after written notice from the City to do any maintenance or repair work required to be done under the provisions of this Ground Lease, other than preventive maintenance; (b) or within a period of ninety(90) days if the said notice specified that the work to be accomplished by Lessee involves preventive maintenance only; (c) or to diligently continue to completion any repairs, replacement, rebuilding, painting or repainting as required under this Ground Lease.then, the City may enter the Leased Premises involved, without such entering causing or constituting a termination of this Ground Lease or an interference with the possession of the Leased Premises, and repair, replace, rebuild or paint all or any part of the Leased Premises or the Leasehold Improvements thereon, and do all things reasonably necessary to accomplish the work required, and the cost and expense thereof shall be payable to the City by Lessee on demand. Provided, however, if in the opinion of the City, Lessee's failure to perform • any such maintenance endangers the safety of the public,the employees or property of the City or other tenants at the Airport, and the City so states same in its notice to Lessee, the City may elect to perform such maintenance at any time after the giving of such notice, and Lessee agrees to pay to the City the cost and expense of such performance, on demand. The City's costs and expenses shall include, but not be limited to, all direct and indirect costs and expenses of the City, its agents, contractors, and employees, and all financing charges, if any, and all allocations of fringe benefits, overhead, legal, and administration charges the City deems appropriate. Furthermore, should the City, its officers, employees or agents, undertake any work hereunder, Lessee hereby waives any claim for damages, consequential or otherwise, as a result therefrom except for claims for damages arising from the negligence of the City,its agents and contractors. The foregoing shall in no way affect or alter the primary obligations of Lessee as set forth in this Ground Lease and shall not impose or be construed to impose upon the City any obligations to maintain the Leased Premises, unless specifically stated otherwise herein. 5.4 Final plans and specifications for all repairs, construction, alterations, modifications, additions or replacements of the Leasehold Improvements shall be submitted to the City by Lessee and be accompanied by the City's Building Permit Application. The plans shall include landscaping, architectural details and color schemes. The Building Permit Application must receive the written approval of the City, and no such work shall be commenced until such written approval is obtained from the City, which approval shall not be unreasonably withheld or delayed,provided the architectural detail and aesthetics of the Galaxy Grand Uwe-Revised-1121199 Page 5 07515.0092-0273045.12 Leasehold Improvements are reasonably satisfactory to the City. The City shall advise Lessee within thirty(30) days after receipt of the written request, together with copies of the plans and specifications for the proposed Leasehold Improvements in sufficient detail to make a proper review thereof; of its approval or disapproval of the proposed Leasehold Improvements, and, in the event it disapproves, stating its reason therefor. In determining whether to approve a major repair, construction, alteration, modification, addition or replacement, the City shall be guided by the criteria set forth in Section 2 of Appendix A to this Ground Lease. 5.5 If Lessee makes any Leasehold Improvements without City approval that are disapproved by the City,then,upon reasonable notice to do so, Lessee shall remove the same, or at the option of the City cause the same to be changed to the reasonable satisfaction of the City. If Lessee fails to comply with such notice within thirty (30) days or to commence to comply and pursue diligently to completion, the City may effect the removal or change without any liability by the City for such removal or change, and Lessee shall pay the cost thereof(as defined in Section 5.3 hereof)to the City. 5.6 Upon the completion of construction or installation, title to all Leasehold Improvements located on the Leased Premises shall remain in Lessee until the expiration or earlier termination of this Ground Lease, at which time title shall immediately vest in the City free and clear of any and all claims by any Leasehold Mortgagee, free and clear of any and all claims on the part of Lessee, and free and clear of any mechanics' and materialmen's liens by any person on account of any repair or improvement work done or to be done under • the terms hereof by Lessee. This vesting of title in the City at the time specified is a part of the consideration for this Ground Lease. The City shall not be liable (i)to assume, take subject to, or otherwise be responsible for the payment or performance under any Leasehold Mortgage (as hereinafter defined) or (ii) to Lessee or Lessee's contractors, Sublessees, or anyone else, for the value of any Leasehold Improvements constructed or located on the Leased Premises. 5.7 Lessee agrees to secure its obligations to maintain and repair the Leased Premises through the execution and delivery of a "Pledge Agreement" in the form attached hereto as Exhibit B. A separate pledge agreement will be executed for each improvement constructed pursuant to this Ground Lease. The value of the collateral held pursuant to each pledge agreement shall equal or exceed $2.00 per net rentable square foot of the applicable improvement. ARTICLE 6 ADDPTIONAL OBLIGATIONS OF LESSEE 6.1 Lessee shall conduct its operations hereunder in an orderly and proper manner, considering the nature of such operation, so as not to unreasonably annoy, disturb, endanger or be offensive to others. 6.2 Further,Lessee shall take all reasonable measures: Galaxy Ground Leas-Roixd-U2 ins Page 6 07 515.0092:0273045.12 • 6.2.1 To reduce to a practicable minimum vibrations tending to damage any equipment, structure, buildings or portions of buildings. 6.2.2 Not to produce on the Airport, through the operation of machinery or equipment, any electrical, electronic or other disturbance that interferes with the operation by the City or the Federal Aviation Administration of air navigational, communication or flight equipment on the Airport or on aircraft using the Airport or with ground transportation communications. 6.3 Lessee shall control the conduct and demeanor of its officers, agents, employees, invitees and, upon objection from the City concerning the conduct or demeanor of any such person, Lessee shall immediately take all lawful steps necessary to remove the cause of the objection. If the City shall so request, Lessee agrees to supply and require its employees to wear badges or other suitable means of identification, which shall be subject to the prior and continuing approval of the Airport operator. 6.4 Lessee shall comply with all health and safety laws and requirements and any other federal, state or municipal laws, ordinances, rules, regulations and requirements applicable to the Leased Premises and the Leasehold Improvements thereon and its operations at the Airport hereunder. 6.5 Lessee shall comply with all written instructions of the City in disposing of its trash and refuse at Lessee's expense. Lessee shall be responsible for removal from the Airport, or otherwise disposing of in a manner approved by the City, all garbage, debris and other waste materials (whether solid or liquid) arising out of its occupancy of the Leased Premises or out of its operations. Lessee shall provide and use suitable covered metal or other rigidly and sturdily constructed receptacles, suitably screened from public view, for all garbage, trash and other refuse created on or arising in connection with the activities conducted on the Leased Premises. Piling of boxes, cartons, barrels or other similar items, in an unsightly or unsafe manner, on or about the Leased Premises is forbidden. The manner of handling and disposing of trash, garbage and other refuse and the frequency of removal thereof from the Airport shall at all times be subject to the rules, regulations and approval of the City. Lessee shall use extreme care when handling, disposing of, and removing all such waste to prevent littering the Airport. 6.6 Lessee shall cause no nuisance, waste or injury on or to the Leased Premises and shall not do, or permit to be done, anything which may result in the creation, commission or maintenance of such nuisance, waste or injury on or to the Leased Premises. 6.7 Lessee shall not do, nor permit to be done, anything which may interfere with the effectiveness or accessibility of the drainage system, sewer system, fire protection system, sprinkler system, alarm system and fire hydrants and hoses, if any, installed or located on the Leased Premises. • Galaxy Ground Ww-Revised-V21198 Page 7 075 15.0092:0Z73045.12 l 6.8 Lessee shall take measures to insure security in compliance with Federal Aviation • Regulations and the Airport Security Plan. 6.9 Lessee shall not overload any floor, structure, structural member or paved area on the Leased Premises, or paved area elsewhere on the Airport, and shall repair at Lessee's expense any floor, structure, structural member, or any paved area damaged by overloading without limiting Lessee's obligations pursuant to Article 5 above. 6.10 Lessee shall not do, nor permit to be done, any act or thing upon the Leased Premises: 6.10.1 which will invalidate or conflict with any fire insurance policies or regulations applicable to the Leased Premises or any part thereof;or, 6.10.2 which may constitute a hazardous condition that increases the risks attendant upon the operations permitted by this Ground Lease. 6.11 Lessee shall not use any flammable liquids within any covered or enclosed portion of the Leased Premises, except those oils, solvents and fuels and other liquids used to manufacture, repair and maintain aircraft and ground equipment (or otherwise used in the day-today use and operation of the Aviation Related Facilities), as long as such liquids are kept only in working supply quantities. Any other supplies of such liquids shall be kept and stored in safety containers of a type approved by the Underwriters Laboratories. The term"working supply" as used in this Section 6.11 shall mean the amount consumed by Lessee and other parties using the Leased Premises during any normal work day. 6.12 From time to time, the City may conduct pressure, water flow, and other appropriate tests of the fire extinguishing system and apparatus, if installed, which constitutes a part of the Leased Premises, and Lessee's proportionate share of the cost of such tests shall be paid to the City by Lessee upon demand. 6.13 Except for uses permitted under Article 3 hereof to be performed by Lessee or Lessee's subcontractors, Lessee shall provide prompt written notice to the City of any person, firm or corporation performing flight instruction of any sort, air taxi, aircraft charter, or any ground taxi services and any other ground transportation for hire on the Leased Premises for commercial purposes without a valid permit from the City. 6.14 It is the intent of the parties hereto that noise, including, but not limited to, noise caused by aircraft engine operation, shall be held to a reasonable minimum. To this end, Lessee will conduct its operations in such a manner as to keep the noise produced by aircraft engines and component parts thereof or any other noise, to a reasonable minimum by such methods as are practicable considering the extent and type of the operations of Lessee. In addition, Lessee will employ noise arresting and noise reducing devices that are available and economically practicable, considering the extent of the operations of Lessee, but in no event less than those devices required by federal, state or local law. In its use of the Leased Premises, Lessee shall take all reasonable care, caution and precaution, and shall • use all reasonable efforts,to minimize prop or jet blast interference to aircraft: operating on cry cm,nd Lmw-Revixd-vz u9s Page 8 07515.0092:0273045.12 taxiways or to buildings, structures and roadways, now located on or which in the future • may be located on areas adjacent to the Leased Premises. In the event the City determines that Lessee has not used all reasonable efforts to curb the prop or jet blast interference, Lessee hereby covenants and agrees to erect and maintain, at its own expense, such structure or structures as may reasonably be necessary to prevent prop or jet blast interference, subject, however to the prior written approval of the City as to type, manner and method of construction, which approval shall not be unreasonably withheld. 6.15 In the event of any product spills or other environmentally polluting discharges arising from Lessee's equipment or caused by Lessee, its employees, agents or servants, clean up of such spills or discharges and the payment of all fines and penalties(including the cost of such cleanup) shall be the sole responsibility of Lessee. Lessee shall immediately commence containment and clean up operations as necessary for operational or safety consideration and shall notify the City and the appropriate state and federal authorities immediately of the spill and such cleanup operation. Such cleanup shall be to the standards required by the U.S. Environmental Protection Agency and any other agency with jurisdiction over the Leased Premises. A spill or discharge means a discharge of any petroleum or hazardous substance which is in such quantity or concentration as may be harmful or which poses a foreseeable risk of harm to public health or welfare or to natural resources or which is defined as a spill or discharge by federal, state, or local laws, or ordinances. All costs of containment or clean up for such spill or discharge shall be borne by Lessee. Lessee shall comply with all applicable federal and state laws, regulations and • rules regarding aboveground and underground storage tanks. The obligations of Lessee under this Section 6.15 shall survive the termination of this Ground Lease. ARTICLE 7 LESSEE'S USE OF THE AIRPORT 7.1 General Use of the Airport. The City hereby grants to Lessee the right to use, on a nonexclusive basis, including the unobstructed right of ingress, the public areas of the Airport and runways, taxiways, aprons, lighting, navigation aids, and other facilities necessary for the operation of aircraft, for all lawful purposes related to Lessee's aviation- related activities, including but not limited to. 7.1.1 landing, taking off, flying over, taxiing, pushing, towing, parking, loading, and unloading of aircraft; 7.1.2 testing of aircraft and other equipment; 7.1.3 purchase at the Airport or elsewhere, from any person or company, of aviation fuel, ground vehicle fuel, lubricating oil, grease, solvents, and other materials, supplies and services; and 7.1.4 installation, operation, and maintenance of directional and identification signs approved in • writing by the City. Galaxy Ground Lease-Revised-1 r21l98 Page 9 07515.0092:027304 5.12 7.2 The City or the Airport operator will at all times maintain and operate with adequate and efficient personnel and keep in good repair, the Airport and specifically the runways and taxiways, and the appurtenances, facilities, and services now or hereafter connected therewith, and keep the Airport and its approaches free from obstruction, congestion, and interference, including snow removal, for the safe, convenient, and proper use thereof by Lessee; will maintain the Airport in accordance with FAA certification requirements; and will maintain adequate rescue and firefighting equipment and personnel to meet such FAA certification requirements. The Airport will be operational 24 hours per day, 365 days per year (366 days per year during leap years), unless Lessee agrees in writing to a reduced operating schedule. There will be no restrictions placed on Lessee's night operations. 7.3 To the maximum extent permitted by law, and notwithstanding any term or provision of this Lease to the contrary,the City will not during the term of this Lease adopt ordinances, laws, rules, or regulations of any type (collectively, a "Material Operating Restriction") that would be materially more restrictive on flight operations, or the sale, completion, service or maintenance of aircraft (collectively, "Aircraft Operations") performed by Galaxy in or from the Leased Premises, then those applicable to other entities engaged in Aircraft Operations at the Airport, including,without implied limitation, limitations on 24- hours per day, seven day per week aircraft flight, maintenance, and service operations at the Airport and noise or vibration abatement procedures or restrictions. For purposes of this Section 7.3, the City shall not be responsible to Lessee or to Galaxy for violation of • this section if the City is mandated by federal, state or county governmental agencies or authorities having jurisdiction over the City to take such action. 7.4 The use of any such roadway, taxiway and public landing areas shall be subject to the Rules and Regulations of the Airport which are now in effect or which may hereafter be promulgated. The City may, at any time, temporarily or permanently, close or consent to, or request the closing of, any such roadway or taxiway and any other way at, in or near the Leased Premises presently or hereafter used as such, so long as a reasonable means of ingress and egress as provided above remains available to Lessee. Lessee hereby releases and discharges the City, its officers, employees and agents, and all other governmental authorities and their respective successors and assigns, of and from any and all claims, demands, or causes of action which Lessee may now or at anytime hereafter have against any of the foregoing, arising or alleged to arise out of the closing of any street, roadway or other area, provided that a reasonable means of access to the Leased Premises remains available to Lessee. Lessee shall not do or permit anything to be done which will interfere with the free access and passage of others to space adjacent to the Leased Premises or in any streets or roadways on the Airport_ ARTICLE 8 INSURANCE, DAMAGE OR DESTRUCTION 8.1 To safeguard the interest and property of the City, Lessee, at its sole cost and expense, shall procure and maintain through the term of this Ground Lease insurance protection for Gaiaxy Ground Leans-Revised-1121l98 Page 10 07515.0092:0273045.12 all risk coverage on the Leasehold Improvements located on the Leased Premises to the extent of one hundred percent (Wla) of the actual replacement cost thereof. Such insurance shall be written by insurers of recognized financial standing and authorized to conduct business in the State of Texas. If said insurers become financially incapable of performing under the terms of said policy, Lessee shall promptly obtain a new policy issued by a financially responsible and authorized carrier and shall submit such new policy as previously provided. 8.1.1 The property insurance shall provide for thirty (30) days notice of cancellation or material change, by registered mail, to the City, Attention: City Manager, and to the Airport operator. 8.1.2 Lessee shall settle all losses with the insurance carrier and shall consult with the City and use all reasonable efforts to obtain a settlement that covers the cost of repairing or rebuilding. 8.1.3 Lessee shall provide certificates of insurance, marked "premium paid," evidencing existence of all insurance required to be maintained prior to the commencement of this Ground Lease. Upon the failure of Lessee to maintain such insurance as above provided, the City, at its option, may take out such insurance and charge the cost thereof to Lessee, or City may give notice of default hereunder pursuant to Article 18 herein. 8.2 In the event any Leasehold Improvements, insurable or uninsurable, on the Leased Premises are damaged or destroyed, the use of all insurance proceeds and Lessee's obligations, if any, to rebuild shall be governed solely by any Leasehold Mortgage(s)that covered the Leasehold Improvements at the time of the damage or destruction. If the damaged or destroyed Leasehold Improvements are not covered by any Leasehold Mortgages (or if covered by a Leasehold Mortgage, the Leasehold Mortgagee does not require Lessee to rebuild), Lessee shall have the election of repairing or reconstructing the Leasehold Improvements substantially as they were immediately prior to such casualty or in a new or modified design, subject to the provisions of Section 8.3 and 8.4 below, Article 5 hereof, and applicable building codes existing at the time of repairing or rebuilding; or, notwithstanding the provisions of Article 5 hereof, not to reconstruct the Leasehold Improvements, in which case the provisions of Section 8.5 below shall apply. Lessee shall give the City written notice of its election hereunder within sixty (60) days after the occurrence of such casualty or the adjustment of the claim, whichever is later. In the event of damage or destruction to any of the Leasehold Improvements upon the Leased Premises, the City shall have no obligation to repair or rebuild the Leasehold improvements or any fixtures, equipment or other personal property installed by Lessee pursuant to this Ground Lease. 8.3 If the damaged or destroyed Leasehold Improvements are not covered by any Leasehold Mortgages, the insurance proceeds shall be paid to an escrow agent (the"Escrow Agent") mutually agreed upon by Lessee and the City. If Lessee elects to repair or reconstruct the • damaged Leasehold Improvements, to the extent that any loss is recouped by payment to a.1wy Ground Lease-Revised.1n 1/9s Page 11 07515.0092:0273045.12 the Escrow Agent of the proceeds of the insurance, the amount of such proceeds, together • with any interest thereon, will be paid to Lessee to the extent necessary to cover its costs of rebuilding or repairing the portion or all of the Leased Premises which have been damaged or destroyed. Such payments will be made by the Escrow Agent to Lessee, subject to the prior written approval of the City, in installments as work progresses, provided that as to each request for payment Lessee shall certify to the Escrow Agent and the City, by a responsible officer or authorized representative, that the amounts requested are due and payable to its contractors for work completed. Upon completion of all the work, Lessee shall certify to the Escrow Agent and the City, by a responsible officer or authorized representative, that such rebuilding and repairs have been completed, that all costs in connection therewith have been paid by Lessee and said costs are fair and reasonable, and said certification shall also include an itemization of costs. If the insurance proceeds are not sufficient, Lessee agrees to bear and pay the deficiency. If the insurance proceeds are in excess of all costs incurred, the Escrow Agent shall pay such excess proceeds to Lessee. Nothing herein contained shall be deemed to release Lessee from any of its repair, maintenance or rebuilding obligations under this Ground Lease. 8.4 In the event Lessee elects to repair or reconstruct as provided in Section 8.3 above, Lessee, if it elects to continue its operation on the Airport, shall, at its expense, replace and repair any and all fixtures, equipment and other personal property necessary to properly and adequately continue its airport business on the Airport, but in no event shall Lessee be obligated to provide equipment and fixtures in excess of those existing prior to • such damage or destruction, except for requirements of construction codes existing at the time of repair or replacement. During such period of repair or replacement, the rentals provided for elsewhere herein shall be proportionately abated during the period from the date of such damage, destruction or loss until the same is repaired, replaced, restored or rebuilt, according to the portion of the Leasehold Improvements on the Leased Premises that are used only for repair or rebuilding of same and not for the uses described in Article 3. Such abatement shall not exceed the actual time required for arranging for and the doing of such work. The proportional amount of reduction of rentals will be reasonably determined by the City. Lessee agrees that such work will be promptly commenced and prosecuted to completion with due diligence; subject to delays beyond Lessee's control. 8.5 If the damaged or destroyed Leasehold Improvements are not covered by any Leasehold Mortgages (or if covered by a Leasehold Mortgage, the Leasehold Mortgagee does not require Lessee to rebuild), and if Lessee shall elect not to repair or to reconstruct the damaged Leasehold Improvements, Lessee shall, at its own cost and expense, remove all debris resulting from such damage to the Leased Premises, including foundations, concrete piers, pavement, etc., and shall stub up utilities and restore the surface to a level condition at its original elevation, and the Escrow Agent shall deliver the balance of the insurance proceeds to the City. Upon completion of such debris removal and restoration, and the insurance proceeds payment by the Escrow Agent to the City, Lessee may elect to terminate this Ground Lease or continue to use the Leased Premises for other aeronautical purposes. There shall be no obligation on the part of the City or the Escrow Agent to reimburse Lessee from the insurance proceeds for the loss or damage to fixtures, Galaxy Ground Lease-Revised-112IM Page 12 07515.0092:0273045.12 equipment or other personal property of Lessee. Lessee, for its own protection, may • separately insure such fixtures, equipment or other personal property as its interests may appear. ARTICLE 9 LIABILITY.INSURANCE AND INDEMNIFICATION 9.1 THE CITY SHALL IN NO WAY, NOR UNDER ANY CIRCUMSTANCES, BE RESPONSIBLE FOR ANY PROPERTY BELONGING TO LESSEE, ITS OFFICERS, AGENTS, EMPLOYEES, LICENSEES, INVITEES, TENANTS, GUESTS, PATRONS, CONTRACTORS AND SUBCONTRACTORS, WHICH MAY BE STOLEN, DESTROYED OR IN ANY WAY DAMAGED, AND LESSEE HEREBY COVENANTS AND AGREES TO INDEMNIFY, HOLD HARMLESS, AND DEFEND THE CITY, AND ITS OFFICERS, AGENTS AND EMPLOYEES, FROM AND AGAINST ANYAND ALL SUCH CLAIMS 9.2 LESSEE HEREBY COVENANTS AND AGREES TO (7) INDEMNIFY, HOLD HARMLESS, AND DEFEND THE CITY, AND ITS OFFICERS, AGENTS AND EMPLOYEES, FROM AND AGAINST ANY AND ALL CLAIMS OR SUITS FOR PROPERTY DAMAGE AND/OR PERSONAL INJURY, INCLUDING DEATH, TO ANY AND ALL PERSONS, OF WHATSOEVER KIND OR CHARACTER, WHETHER REAL OR ASSERTED, ARISING OUT OF OR IN CONNECTION WITH THE OPERATION, MAINTENANCE, USE, OR OCCUPANCY OF THE LEASED PREMISES BY LESSEE, ITS OFFICERS, EMPLOYEES, CONTRACTORS, SUBCONTRACTORS, LICENSEES, OR TENANTS, AND (II) PROVIDE SUCH INSURANCE, AS REQUIRED IN SECTION 9.3 HEREOF, COVERING THE ACTS AND OMISSIONS OF ALL NAMED INSUREDS, INCLUDING THE CITY, AND LESSEE HEREBY ASSUMES ALL LIABILITY AND RESPONSIBILITY FOR SUCH CLAIMS OR SUITS LESSEE LIKEWISE SHALL ASSUME ALL RESPONSIBILITY AND LIABILITY FOR, AND SHALL INDEMNIFY AND HOLD HARMLESS THE CITY, FOR ANY AND ALL INJURY OR DAMAGE TO THE AIRPORT, THE LEASED PREMISES OR THEIR FACILITIES, ARISING OUT OF OR IN CONNECTION WITH THE OPERATION, MAINTENANCE, USE OR OCCUPANCY OF THE LEASED PREMISES, BY LESSEE, ITS OFFICERS, EMPLOYEES, CONTRACTORS, SUBCONTRACTORS, LICENSEES, OR TENANTS Upon the filing with the City of a claim for damages or injuries arising out of or in connection with the incidents for which Lessee herein agrees to indemnify and hold the City harmless, the City shall immediately notify Lessee of such claim, and in the event Lessee does not settle or compromise such claim, then Lessee shall provide, at Lessee's expense, the legal defense for the City should any litigation or arbitration result from such claim. • Galaxy Ground Lease-Revised-1121/98 Page 13 07515.0092:0273045.12 9.3 In addition to Lessee's undertaking, as stated in this Article, and as a means of further protecting the City, its officers, agents, servants and employees, Lessee shall at all times during the term of this Ground Lease obtain and maintain in effect insurance coverage consistent with the requirements of Section 9.2 hereof and Schedule A attached hereto and made a part hereof. In this connection, Lessee agrees to require its contractors doing work on the Airport, and Lessee's tenants and Sublessees, to carry adequate insurance coverage. 9.3.1 Lessee shall review its coverage annually and increase the minimum liability insurance set forth in Schedule A to an amount when, in Lessee's opinion, the risks attendant to Lessee's operations hereunder have increased. The City shall not be liable for any shortfall in Lessee's coverage or the coverage of Lessee's tenants or Sublessees. In no event shall Lessee allow such insurance coverage to be below the minimum requirements set forth in Schedule A. Failure to maintain such insurance in the types and amounts specified herein shall constitute a material and substantial breach of this Ground Lease. 9.4 Lessee represents that it is the owner of or fully authorized to use any and all services, processes, machines, articles, marks, names or slogans used by it in its operations under or anywise connected with this Ground Lease. Lessee agrees to save and hold the City, its officers, employees, agents and representatives, free and harmless of and from any loss, liability, expense, suit or claim for damages in connection with any actual or alleged infringement of any patent, trademark or copyright, or arising from any alleged or actual • unfair competition or other similar claim, arising out of the operations of Lessee under or in anywise connected with this Ground Lease. ARTICLE 10 RULES AND REGULATIONS AND MIS LJM STANDARDS 10.1 From time to time the City may adopt and enforce Rules and Regulations and Minimum Standards with respect to the occupancy and use of the Airport. Lessee agrees to observe and obey any and all such Rules and Regulations and Minimum Standards and all other Federal, State and municipal rules, regulations and laws in effect from time to time and to require its officers, agents, employees, tenants, Sublessees, contractors, and suppliers, to observe and obey the same. This provision will include compliance with the Airport's Noise Abatement Plan, as promulgated. The City reserves the right to deny access to the Airport and its facilities to any person, firm or corporation that fails or refuses to obey and comply with such Rules and Regulations, laws and Minimum Standards. Notwithstanding anything to the contrary contained in this Article 10, however, the City acknowledges and agrees that the Aviation Related Facilities shall, from the "made and entered into" date set forth on the first page of this Ground Lease until the Effective Date of this Ground Lease, only have to comply with the Rules and Regulations, Minimum Standards, and other Airport-related municipal rules and regulations that were in effect on said "made and entered into" date. Galaxy Ground tease-Revised-1/21/98 Page 14 07313.0092:0273045.12 ARTICLE 11 SIGNS Lessee shall have the right to install and maintain one or more signs on the Leased Premises identifying it and its operations, provided, however, the subject matter, type, design, number, location and elevation of such signs, and whether lighted or unlighted, shall be subject to and in accordance with the written approval of the City. No sign will be approved which, in the City's opinion, may be confusing to aircraft pilots or automobile drivers or other traffic or which fails to conform to the architectural scheme of the Airport or meet the requirements of the City. ARTICLE 12 LEASEHOLD M12RTGAGES,SUBLETTMG,AND ASSIGNMENT 12.1 Lessee shall have the right, at any time and from time to time, without the City's consent, and on terms and conditions determined by Lessee to be appropriate, to mortgage, pledge, grant deed(s) of trust, or otherwise encumber all or any portion of the leasehold estate created hereby and all or any portion of the right, title, and interest of Lessee hereunder (including Lessee's interest in the Leasehold Improvements and each Sublessee's interest in a Sublease and in and to the Leasehold Improvements hereunder), and to assign, hypothecate,or pledge the same as security for the payment of any debt to any holder of a promissory note or other evidence of indebtedness(such notes, mortgages, deeds of trust, and other documents evidencing and securing such loans shall be referred to as a "Leasehold Mortgge"; and a holder of a Leasehold Mortgage as a "Leasehold Mortgagee"). No Leasehold Mortgagee, trustee, or other person claiming by, through, or under any Leasehold Mortgagee shall by virtue thereof acquire any liens on the fee interest of the City in the Leased Premises or any greater right in the Leased Premises than Lessee then had under this Ground Lease, except for the rights expressly granted to such Leasehold Mortgagee, trustee, or other person under the terms of this Ground Lease. All Leasehold Mortgages shall be subject to all of the conditions, covenants, and obligations of this Ground Lease and to all of the rights of the City hereunder. Lessee shall also have the right to finance any Leasehold Improvements(or any additions, alterations, or improvement thereof)through the issuance of bonded indebtedness secured, in whole or in part, by the Leased Premises, the Leasehold Improvements, or any rents or other revenues resulting therefrom. After the execution and recordation of any Leasehold Mortgage, Lessee or the Leasehold Mortgagee shall notify the City in writing that such Leasehold Mortgage has been given and executed by Lessee and shall furnish the City with the address to which copies of notices should be mailed. The City agrees that it will thereafter give to the Leasehold Mortgagee, at the address so given, duplicate copies of any and all notices in writing which the City may from time to time give or serve upon Lessee under and pursuant to the terms and provisions of this Ground Lease. Such Leasehold Mortgagee shall have the same cure rights available to Lessee with respect to any alleged failure by Lessee to Galaxy Ground Leave-Revised-1121/98 Page 15 07 515.0092:0273045.12 perform under this Ground Lease, and if the alleged failure is cured, the City will accept such cure tendered by such Leasehold Mortgagee. In addition to the cure rights of a Leasehold Mortgagee as described above, each Leasehold Mortgagee shall also have the right to partially cure any alleged default by Lessee under this Ground Lease to the extent that such default affects any portion of the Leased Premises or Leasehold Improvements covered by its Leasehold Mortgage (including, but not limited to, a prorated payment of rent and use fees as set forth in Article 4 hereof). In the event of such a partial cure by a Leasehold Mortgagee, the City agrees that this Ground Lease shall continue in full force and effect with respect to the portion of the Leased Premises and Leasehold Improvements covered by the Leasehold Mortgage of such Leasehold Mortgagee; provided, however, all reasonable and necessary City costs related to such documentation, including reasonable and necessary attorneys fees, shall be paid to the City by Lessee. The City agrees to reasonably cooperate with Lessee and any prospective Leasehold Mortgagee in documenting these partial cure rights in a manner reasonably requested by such Leasehold Mortgagee. No Leasehold Mortgagee shall be or become liable to the City as an assignee of this Ground Lease or otherwise until it expressly assumes such liability in writing, and no assumption shall be inferred or result from foreclosure or other appropriate proceedings in the nature thereof or as the result of any other action or remedy provided for by any Leasehold Mortgage or other instrument executed in connection with such Leasehold Mortgage or from a conveyance from Lessee pursuant to which the purchaser at • foreclosure(or grantee or transferee in lieu thereof) shall acquire the rights and interests of Lessee under the terms of this Ground Lease. 12.2 Lessee may enter into agreements (collectively, "Subleases") with sub-lessees, licensees, and concessionaires (collectively, "Sublessees") for the right to use or occupy the Leased Premises or the Leasehold Improvements or any part thereof without the consent of the City; provided, however, all Sublessees must still obtain FBO permits or commercial operating permits, as applicable, from the City in accordance with the Minimum Standards in effect from time to time. All Subleases shall be subordinate to all the terms, conditions, and covenants of this Ground Lease and shall contain a written provision to that effect (or otherwise be null and void), and no such Sublease shall extend beyond the term of this Ground Lease. 12.3 Except as provided in Sections 12.1 and 12.2 above, Lessee covenants and agrees that it will not sell, convey, transfer, mortgage, pledge, or assign this Ground Lease, or any part hereof or any interests herein, or any rights created hereby, without the prior written consent of the City. The foregoing notwithstanding, the City, in consideration of the investments by Lessee, agrees that (i) Lessee may, without the consent of the City, assign all or any portion of its interest in this Ground Lease, the Leased Premises, or the Leasehold Improvements to any"Affiliate" (i.e., any entity that controls, is controlled by, or is under common control with Lessee) of Lessee and (ii) the City will consent to the assignment of this Ground Lease by Lessee to a responsible third party, provided, that the Galaxy Ground j-=.e.Revised-v2119s Page 16 07515.0092-0273045.12 • request for the City's consent is in writing and presented at least sixty days prior to the date of assignment and provided further,that the City determines, in its sole discretion and to its satisfaction, that the prospective assignee is financially and operationally responsible to fulfill the duties and responsibilities prescribed by this Ground Lease. The City shall not unreasonably delay action on Lessee's request for its consent; provided, however,that any such consent shall be given only by formal action of the City Council of the City of Fort Worth. 12.4 Except as provided in Section 12.1 and Section 12.2 above, any attempted assignment or transfer of this Ground Lease, or any rights of Lessee hereunder, without the prior written consent of the City, shall be void. 12.5 Any assignment of this Ground Lease shall be on the condition that the assignee accepts and agrees to all of the terms, conditions and provision of this Ground Lease and agrees to accept and discharge all of the covenants and obligations of Lessee hereunder, including, but not limited to, the payment of all sums due and to become due by Lessee under the terms hereof. 12.6 No Sublease shall in any way relieve Lessee of any of its obligations to the City set forth or arising from this Ground Lease. Any termination of Lessee's rights hereunder shall only give the City the right to terminate"below-market" Subleases with Affiliates(defined in Section 12.3 above) of Lessee. All other Subleases, however, shall survive any • termination of Lessee's rights hereunder, and the rights of such Sublessees shall not be disturbed so long as they perform in accordance with their respective Subleases; provided, however, that if any provision of such Subleases conflicts with or is ambiguous in relation to the terms and provisions of this Lease, the Sublessee shall be bound by the more restrictive provision or the provision that is more beneficial to the City, at the City's sole election. Under any surviving Sublease, sublessee shall be deemed to have agreed to attorn to the City, and from that time the City shall have all of the rights and remedies of Lessee under all such Subleases. So long as Sublessee is not in default (beyond any period given tenant in the Sublease to cure such default) in the payment of rent or in the performance of any of the terms, covenants or conditions of the Sublease on Sublessee's part to be performed (i) Sublessee's possession of the Leased Premises shall not be diminished or interfered with by the City in the exercise of any of its rights under this Lease, and (ii) the City will not join Sublessee as a party defendant in any action or proceeding for the purpose of terminating Sublessee's interests and estate under the Sublease because of any default under this Lease. The rights, duties and obligations of the City and Galaxy under the Galaxy Sublease surviving the termination of Lessee's rights hereunder and under this Lease shall be in accordance with the following: 12.6.1 Galaxy shall be deemed to have agreed to attom to the City under this Lease as of the date the Lessee's rights under this Lease are terminated (the "Rights Termination Date"). Such attornment shall be effective and self-operative without the execution of any further instrument. Galaxy shall be deemed to have agreed, however, to execute and deliver at • any time and from time to time, upon the request of the City, any instrument or certificate c,.i.womw Lmw-Revised-1n1/9s Page 17 07515.0092:0273045.12 which, in the reasonable judgment of the City may be necessary or appropriate to evidence such attornment. 12.6.2 From and after the Rights Termination Date, the City shall have all of the rights and remedies as landlord under this Lease and shall be bound to Galaxy under all of the terms, covenants and conditions of this Lease, and Galaxy shall, from and after Galaxy's succession to the interest of Lessee under this Lease, have the same remedies against the City for the breach of this Lease that Lessee had against the City if the Galaxy had not succeeded to the interest of the Lessee under this Lease; provided, however, that the City shall not in any event be: (a) liable for any act or omission occurring prior to the Rights Termination Date; (b) subject to any offsets or defenses which Lessee might have against the City by reason of any act or omission occurring prior to the Rights Termination Date; or(c) obligated to perform any duty set forth in the Sublease greater than its duties under the terms and conditions of this Lease; and Galaxy shall not in any event be: (i) liable for any act or omission of any prior tenant (including Lessee); or(ii) subject to any offsets or defenses which the City might have against any prior tenant (including Lessee); or (iii) bound by or liable for any obligation of any prior tenant (including Lessee) to pay any sums of money to or for the benefit of the City for concessions or inducements granted to any prior tenant (including Lessee) except as expressly set forth in the Lease or(iv) bound by any amendment or modification of this Lease made without Galaxy's consent. 12.7 If Lessee assigns, sells, conveys, transfers, mortgages, or pledges this Ground Lease in violation of the foregoing provisions of this Article, the City may collect from such • assignee, or anyone else who claims a right to this Ground Lease or who occupies the Leased Premises, any charges or fees payable by it and may apply the net amount collected to the rents hereunder, and no such collection shall be deemed a waiver by the City of the agreements contained in this Article nor of acceptance by the City of any assignee, claimant, or occupant, nor as a release of Lessee by the City from the further performance by Lessee of the agreements contained herein. 12.8 The rights of the Lessees set forth in this Article 12 shall inure to the benefit of a Sublessee if, but only if, such Sublessee shall have secured the prior written consent of City to the mortgage, pledge, deed(s) of trust, encumbrances, sublease, assignment, or other actions set forth in this Article 12 which the Sublessee proposes to undertake, which consent the City agrees will not be unreasonably withheld or delayed. ARTICLE 13 CONDEMNATION 13.1 In the event that the Leased Premises or any part thereof shall be condemned and taken by authority of eminent domain for any purpose during the term of this Ground Lease or sold to such authority in lieu of a taking (collectively, a "condemnation"), any award which shall be made as a result of such condemnation (i) if for the fee interest in the Leased Premises, shall be paid to the City and (ii) if for the leasehold interest in the Leased Premises or for any interest in any Leasehold Improvements placed, located, or Galaxy Ground Lease-Revised-U21 M Page 18 0 7313.0092.02 73 04 3.12 a • constructed thereon, shall be paid to Lessee and any Leasehold Mortgagees in accordance with the rights under any Leasehold Mortgages, it being understood that the City has fee title to the real property and title to all Leasehold Improvements thereon is vested in Lessee until the expiration or earlier termination of this Ground Lease. Either party, consistent with its rights under applicable law, may appear in any such condemnation proceeding and present its claims for damages, if any, arising from such condemnation. 13.2 Rentals for that portion of the Leased Premises condemned shall be abated from the date that Lessee is dispossessed therefrom; provided, however, if all of the Leased Premises are condemned, or if a portion of the Leased Premises are condemned and in Lessee's judgment, the remaining portion of the Leased Premises is insufficient for Lessee's operations authorized hereunder, Lessee may terminate this Ground Lease, and all of its rights and unaccrued obligations hereunder effective as of the date of the taking of the condemned portion by giving the City written notice of its desire to terminate. 13.3 Lessee shall be entitled to the award made for a temporary taking of possession of all or part of the Leased Premises for any period of time within the term of this Ground Lease. Such award shall be full compensation to Lessee for such temporary taking and no claims for damages arising out of the temporary taking shall be made against the City. ARTICLE 14 NON-DISCRIMINATION • 14.1 Lessee, for itself and on behalf of its heirs, personal representatives, successors in interest, and assigns, as a part of the consideration hereof; does hereby covenant and agree, as a covenant running with the land, that in the event facilities are constructed, maintained, or otherwise operated on the Leased Premises for a purpose for which a United States Government program or activity is extended, Lessee shall maintain and operate such facilities and services in compliance with all other requirements imposed pursuant to Title 49, Code of Federal Regulations, Department of Transportation, Subtitle A, Office of the Secretary,Part 21,Nondiscrimination in Federally-assisted programs of the Department of Transportation-Effectuation of Title VI of the Civil Rights Act of 1964, and as said Regulations may be amended. 14.2 Lessee, for itself and on behalf of its personal representatives, successors in interest and assigns, as a part of the consideration hereof, does hereby covenant and agree as a covenant running with the land that(i)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 the Leased Premises; (ii) that in the construction of any Leasehold 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, (iii) that Lessee shall use the Leased Premises in compliance with all other requirements imposed by or pursuant to Title 49, Code of Federal Regulations, Department of • Transportation, Subtitle A, Office of the Secretary, Part 21, Nondiscrimination in Galaxy Gramd Lease-Revised-1/21199 Page 19 07515.0092:0273045.12 Federally assisted programs of the Department of Transportation-Effectuation of Title VI of the Civil Rights Act of 1.964, and as said Regulations may be amended. 14.3 In this connection, the City reserves the fight to take whatever action it might be entitled by law to take in order to enforce this provision. This provision is to be considered as a covenant on the part of Lessee, a breach of which, continuing after notice by the City to cease and desist, will constitute a material breach of this Ground Lease and will entitle the City, at its option, to exercise its right of termination as provided for herein, or take any action that it deems necessary to enforce compliance herewith. 14.4 Lessee shall include the foregoing provisions in every agreement or concession pursuant to which any person or persons, other than Lessee, operates any facility at the Leased Premises providing service to the public and shall include therein a provision granting the City a right to take such action as the United States may allow or direct to enforce such covenant. 14.5 Lessee shall indemnify and hold harmless the City from any claims and demands of third persons, including the United States of America, resulting from Lessee's noncompliance with any of the provisions of this Section and Lessee shall reimburse the City for any loss or expense incurred by reason of such noncompliance. 14.6 To the extent legally required and applicable, Lessee assures that it will undertake an • affirmative action program as required by 14 CFR Put 152, Subpart E and 49 CFR Part 23, Subparts E & F, if applicable, to insure that no person shall on the grounds of race, creed, color, national origin, or sex be excluded from participation in any employment activities covered in 14 CFR Part 152, Subpart E and 49 CFR Part 23, Subparts E & F, if applicable. 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. Lessee assures that it will require that its tenants and Sublessees and its covered suborganizations provide assurances to Lessee that they similarly will undertake affirmative action programs and that they will require assurances from their suborganizations, to the extent required by 14 CFR Part 152, Subpart E and 49 CFR Part 23, Subparts E&F, if applicable, to the same effect. ARTICLE 15 GOVERNMENTAL REQUIREMENTS 15.1 Lessee shall procure all licenses, certificates, permits, or other authorizations from all governmental authorities, if any, having jurisdiction over Lessee's operations at the Leased Premises which may be necessary for Lessee's operations thereat, 15.2 Lessee shall pay all taxes, license, certification, permit and examination fees, and excise taxes which may be assessed, levied, exacted, or imposed on the Leased Premises or operation hereunder or on the gross receipts or gross income to Lessee therefrom, and • shall make all applications, reports and returns required in connection therewith. Galaxy Ground rzam_Revised-1l21/99 Page 20 07515.0092.0273045.12 15.3 In addition to compliance by Lessee with all laws, ordinances, governmental rules, regulations, and orders now or at any time in effect during the term hereunder adopted in accordance with Section 7.3 of this Lease and which, as a matter of law, are applicable to the operation, use or maintenance by Lessee of the Leased Premises or the operations of Lessee under this Ground Lease, Lessee agrees that it shall conduct all its operations under this Ground Lease and shall operate, use, and maintain the Leased Premises in such manner that there will be at all times a practicable minimum of air pollution or any other type of pollution, and in accordance with Section 6.14, a practicable minimum of noise emanating from, arising out of, or resulting from the operation, use, or maintenance of the Leased Premises by Lessee and from the operations of Lessee under this Ground Lease. 15.3.1 The City hereby reserves the right from time to time and at any time during the term of this Ground Lease to require Lessee, and Lessee agrees, to design and construct at its sole cost and expense such reasonable structures, fences, equipment, devices, and other facilities as may be necessary or appropriate to accomplish the objective as set forth in Section 15.3 hereof. All locations, the manner, type, and method of construction and the size of any of the foregoing shall be determined by the City. 15.3.2 Lessee shall submit for City approval an application together with its plans and specifications covering the required work or any other work and, subject to receiving such approval, shall proceed diligently to construct the same. ARTICLE 16 RIGHTS OF ENTRY RESERVED 16.1 The City, by its officers, employees, agents, representatives, and contractors, shall have the right at all reasonable times to enter upon the Leased Premises for any and all reasonable purposes not inconsistent with this Ground Lease. 16.2 Without limiting the generality of the foregoing, the City, by its officers, employees, agents, representatives contractors, and furnishers of utilities and other services, shall have the right, at its own cost and expense, whether for its own benefit or for the benefit of others than Lessee at the Airport, to maintain existing and future underground mechanical, underground electrical and other underground utility systems and to enter upon the Leased Premises at all reasonable times, and upon notice to Lessee, to make such repairs, replacements, or alterations thereto, as may, in the opinion of the City, be deemed necessary or advisable, and from time to time (with the prior written approval of Lessee, which approval will not be unreasonably withheld) to construct or install under the Leased Premises such underground systems or parts thereof and, in connection with such maintenance, use the Leased Premises for access to such underground systems. The City agrees that in the event it exercises the rights reserved in this Section 16.2, the City, at its costs and expense, shall repair any damage to the Leased Premises that result therefrom (including damage caused by the City or its employees, agents, representatives, contractors, or any other person to whom such rights have been assigned). It is Galaxy Gro and lease-Revised-1/21M Page 21 07313.0092-.0273045,12 specifically understood and agreed that the reservation of the aforesaid right by the City shall not impose or be construed to impose upon the City any obligation to repair, replace, or alter any utility service lines now or hereafter located on the Leased Premises for the purpose of providing utility services only to the Leased Premises. 16.3 In the event that any personal property of Lessee shall obstruct the access of the City, its officers, employees, agents,or contractors, or the utility company furnishing utility service to any of the underground utility systems described in Section 16.2 above, and thus shall interfere with the inspection, maintenance, or repair of any such system pursuant to Section 16.2, Lessee shall move such property, as directed by the City or said utility company, in order that access may be had to the system or part thereof for inspection, maintenance or repair. If Lessee shall fail to so move such property after direction from the City or said utility company to do so, the City or the utility company may move it, and Lessee hereby agrees to pay the cost of such moving upon demand, and further Lessee hereby waives any claims against the City for damages as a result therefrom. 16.4 Exercise of any or all of the foregoing rights in this Article, by the City, or others under right of the City, shall not be, nor be construed to be, an eviction of Lessee, nor be made the grounds for any abatement of rental nor any claim or demand for damages against the City, consequential or otherwise. ARTICLE 17 ADDITIONAL RENTS AND CHARGES 17.1 Except as provided in Section 5.3 (b), in the event Lessee fails within thirty (30)days after receipt of written notice from the City to perform or commence to perform any obligation required herein to be performed by Lessee, the City may enter the Leased Premises (without any liability for such entry and without such entering causing or constituting a cancellation of this Ground Lease or an interference with the possession of such Leased Premises by Lessee) and do all things reasonably necessary to perform such obligation, charging to Lessee the cost and expense thereof, and Lessee agrees to pay to the City upon demand such charge in addition to any other amounts payable by Lessee hereunder. Provided, however, that if Lessee's failure to perform any such obligation endangers the safety of the public or employees or property of the City or other tenants of the Airport, and the City so states in its notice to Lessee, the City(without any liability to Lessee) may perforrn such obligation of Lessee at any time after the giving of such notice and charge to Lessee the reasonable cost and expense thereof which Lessee shall pay upon demand. 17.2 If the City elects to pay any sum or sums or incur any obligation or expense by reason of the failure, neglect, or refusal of Lessee to perform or fulfill any one or more of the conditions, covenants, or agreements contained in this Ground Lease, or as the result of any act or omission of Lessee contrary to said conditions, covenants, or agreements, Lessee hereby agrees to pay the sum or sums so paid or expense so incurred by the City as the result of such failure, neglect, or refusal of Lessee, including interest, not to exceed twelve percent (12%) per annum, together with all costs, damages and penalties. n such Galaxy Ground Lease-Revised-1/21/99 Page 22 07515.0092:0273045.12 event, the total of such amounts may be added to any installment of rent thereafter due hereunder, and each and every part of the same shall be and become additional rent recoverable by the City in the same manner and with like remedies as if it were originally a part of the rent provided for in this Ground Lease. ARTICLE 18 TERMINATION BY 2=!QM 18.1 In the event Lessee (or any successor in interest to Lessee) ceases to pay the full amount of rental or any other charges required by this Ground Lease to be paid to the City, the City shall give written notice to Lessee of such default. K within fifteen (15) days after the date the City gives such notice, Lessee has not corrected said default and paid the delinquent amount in full, the City may by written notice to Lessee terminate Lessee's rights under this Ground Lease and all rights and privileges granted hereby to Lessee in and to the Leased Premises. 18.2 Upon the default by Lessee in the performance of any covenant or conditions required to be performed by Lessee, and the failure of Lessee to commence to remedy such default for a period of thirty (30) days after receipt from the City of written notice to remedy the same (except as otherwise provided in Section 5.3 (b) above) and thereafter diligently pursue the completion of such remedy and, except default in the timely payment of any money due the City, within fifteen (15) days after notice to Lessee, the City shall have the • right to terminate Lessee's rights under this Ground Lease for such cause by giving written notice to Lessee. Notwithstanding the fact that Lessee may be diligently pursuing the completion of any remedy, Lessee must substantially complete such remedy within nine months after beginning same. 18.3 Upon the default by Lessee, and the giving of notice of the default by the City as provided for elsewhere herein, and the expiration of all applicable cure periods, the notice of termination of Lessee's rights under this Lease shall become final; provided, however, that should the City determine that Lessee is diligently remedying such default to completion, the City may withhold said notice of termination. If, however, the City determines, in its reasonable discretion, that such default is no longer being diligently remedied to conclusion, the City shall have the right to issue said notice of termination, and said notice of termination shall no longer be held in abeyance for any reason and shall become final upon notice to Lessee. 18.4 Upon termination of Lessee's rights under this Ground Lease for any reason, all rights of Lessee shall terminate. The rights of any Sublessees who are Affiliates of Lessee and who occupy the Leased Premises at "below-market" rates shall also terminate. The rights of other Sublessees under the terms of this Lease, however, shall not terminate, and their rights shall not be disturbed so long as they perform in accordance with their respective Subleases as more particularly provided in Section 12.6. Upon termination of this Lease as permitted under Section 12.6, the Leased Premises, except for Lessee's equipment, is fixtures, and other personal property which may be removed from said Leased Premises as Galaxy Grwmd Lease-Revised-In L/98 Page 23 07313.0092 0273045.l2 provided elsewhere herein, shall be free and clear of all claims of Lessee, and the City shall • have immediate right of possession to the Leased Premises, The City shall not be liable (i) to assume, take subject to, or otherwise be responsible for the payment or performance under any Leasehold Mortgage or (ii) to Lessee or Lessee's contractors, Sublessees, or anyone else, for the value of Leasehold Improvements constructed or located on the Leased Premises. 18.5 Failure by the City to take any authorized action upon default by Lessee of any of the terms, covenants or conditions required to be performed, kept, and observed by Lessee shall not be construed to be, nor act as, a waiver of said default nor of any subsequent default of any of the terms, covenants and conditions contained herein to be performed, kept, and observed by Lessee. Acceptance of rentals by the City from Lessee, or performance by the City under the terms hereof, for any period or periods after a default by Lessee of any of the terms, covenants, and conditions herein required to be performed, kept and observed by Lessee shall not be deemed a waiver or estoppel of any right on the part of the City to cancel this Ground Lease for any subsequent failure by Lessee to so perform, keep, or observe any of said terms, covenants or conditions. 18.6 Foreclosure by Leasehold Mortgagee. Notwithstanding anything in this Ground Lease to the contrary, the City shall not be entitled to exercise its right to terminate this Ground Lease as provided in this Article 18 during the period that a Leasehold Mortgagee shall require to (i)foreclose its mortgage or otherwise to fulfill or complete its remedies under its Leasehold Mortgage or (ii) cure any default under this Ground Lease; provided, • however, such period shall not exceed 180 days after the City gives notice of termination pursuant to Section 18.1 and Section 18.2 hereof and provided further that within such period: (a) such Leasehold Mortgagee proceeds promptly and with due diligence with its remedies under its Leasehold Mortgage or its cure under this Ground Lease; (b) there is timely paid to the City the rental and all other sums which have, or may, become due and payable with respect to the portion of the Leased Premises or Leasehold Improvements covered by the Leasehold Mortgage of such Leasehold Mortgagee and (c) and all other terms and provisions of this Ground Lease, to the extent they are applicable to the portion of the Leased Premises covered by the Leasehold Mortgage of such Leasehold Mortgagee,are duly complied with by such Leasehold Mortgagee. 18.7 No Voluntary Surrender of Leasehold Estate Without Consent. So long as there exists an unpaid or undischarged Leasehold Mortgage on the estate of Lessee created hereby, the City expressly agrees for the benefit of the Leasehold Mortgagee that it will not accept from Lessee a voluntary surrender of the Leased Premises or a cancellation or amendment of this Ground Lease prior to the expiration of this Ground Lease without the written consent of the Leasehold Mortgagee. So long as Galaxy's Sublease shall remain in effect, the City expressly agrees for the benefit of Galaxy that it will not accept from Lessee a voluntary surrender of the Leased Premises or a cancellation or amendment of this Ground Lease prior to the expiration of this Ground Lease without the written consent of Galaxy. • Galaxy Ground Leese-Revised-1n1/9s Page 24 07313.0092!0273043.12 1 18.8 New Lease with Leasehold Mortgagee or Galaxy upon Termination. If this Ground Lease • shall terminate for any reason, the City agrees that the Leasehold Mortgagee and Galaxy shall each have the right, for a period of 90 days subsequent to such termination of this Ground Lease, to deliver to the City written notice of such parry's election to execute a new lease of the Leased Premises of the character and, when executed and delivered and possession of the Leased Premises is taken thereunder, having the effect hereinafter set forth. The new lease shall be executed by the City and the Leasehold Mortgagee or Galaxy within 15 days after the receipt by the City of such written notice. Such new lease shall be for a term to commence at the termination of this Ground Lease and shall have as the date for the expiration thereof the same date stated in this Ground Lease as the date for the expiration hereof. The rent thereof shall be at the same rate as would have been applicable during such term under the provisions of this Ground Lease had this Ground Lease not so terminated, and all the rents, covenants, conditions, and provisions of such new lease, including, but not limited to, the conditional limitations set forth in this Ground Lease, shall be the same as the terms, conditions and provisions of this Ground Lease. The Leasehold Mortgagee or Galaxy shall, at the time of the execution and delivery of such new lease, pay to the City all rental and other sums which would have become payable hereunder by Lessee to the City to the date of the execution and delivery of such new lease had this Ground Lease not terminated, and which remain unpaid at the time of the execution and delivery of such new lease, together with reasonable attorneys'fees and expenses in connection therewith. Any such new lease, as contemplated in this Section 18.8 may, at the option of the Leasehold Mortgagee or Galaxy, be executed by a nominee of such parry, without the Leasehold Mortgagee or Galaxy assuming the burdens and • obligations of Lessee thereunder beyond the period of its ownership of the leasehold estate created hereby. ARTICLE 19 REMEDIES: SURRENDER; AND RIGHT OF RE-ENTRY 19.1 Limitation on Cityy's Remedies. Notwithstanding any other provision in this Ground Lease to the contrary, upon any default by Lessee of any provision of this Ground Lease or upon any termination of this Ground Lease for any reason (including, but not limited to, any such default by Lessee), the City's sole and exclusive remedy shall be to re-enter and take possession of the Leased Premises (or portion thereof) and to take title to and possession of the Leasehold Improvements (or portion thereof) then located, placed, or constructed thereon, free from any claims by Lessee. The exercise of such remedy (i) shall not obligate the City to assume, take subject to, or otherwise be responsible for the payment or performance under any Leasehold Mortgage and (ii) shall not affect the rights of any Sublessee (except Sublessees that are Affiliates of Lessee and that occupy the Lease Premises at "below-market" rates). The remedy limitation set forth in this Section 19.1 shall not apply to (a) any indemnity obligations of Lessee set forth in this Ground Lease; (b)to the repayment obligations of Lessee pursuant to Sections 5.3 or 5.4 hereof; or(c)to the obligations of Lessee pursuant to Section 6.15 hereof. In addition, nothing contained in this Ground Lease shall be interpreted to constitute the personal obligations of Lessee • to pay or perform under or in accordance with any Leasehold Mortgage. Galaxy Ground Lease-Revised-1/21/98 Page 25 07515.0092:0273045.12 Y • 1 19.2 Upon the expiration or termination of this Ground Lease pursuant to any terms hereof, Lessee agrees peaceably to surrender up the Leased Premises to the City in the same condition as they were at the time of the commencement of the term hereof, and as they may hereafter be repaired and improved by Lessee; save and except, (a) such normal wear and tear thereof as could not have been prevented by ordinary and usual repairs and maintenance, (b) obsolescence in spite of repair, and (c) damage to or destruction of the Leasehold Improvements for which insurance proceeds are received by the City. Upon such termination, the City may re-enter and repossess the Leased Premises together with all Leasehold Improvements. Furthermore, upon such termination, and for a reasonable time thereafter(not exceeding thirty(30)days after such termination, and for which period Lessee will pay to the City current lease rentals), or during the term of this Ground Lease, if Lessee is not in default in rentals or any other charges or obligations due the City, Lessee shall have the right to remove its personal property, fixtures and trade equipment which it may have on the Leased Premises, provided the removal thereof does not impair, limit, or destroy the utility of said Leased Premises or building for the purpose for which they were constructed or improved, and provided further that Lessee repairs all damages that might be occasioned by such removal and restores the Leased Premises to the condition above required. ARTICLE 20 SERVICES TO LESSEE • 20.1 The City covenants and agrees that during the term of this Ground Lease it will operate the Airport as such for the use and benefit of the public, provided however, that the City may prohibit or limit any given type, kind, or class of aeronautical use of the Airport if such action is necessary for the safe operation of the Airport or necessary to serve the civil aviation needs of the public. The City further agrees to use its best efforts to maintain the runways and taxiways in good repair. The City agrees to keep in good repair hard- surfaced public roads for access to the Leased Premises. The City also agrees to provide and maintain water and sanitary sewer services in areas designated for utilities or easements adjacent to the Leased Premises for access thereto by Lessee in accordance with the City policy governing same. 20.2 Lessee will contract with and obtain all required permits from the appropriate departments for any utility services provided by the City for Lessee, paying any required connection fees, including those to be paid by owners, and all such services will be provided at rates and on terms and conditions established by the City for similar users in the City. 20.3 Lessee will also contract with the furnishers of all other utilities for the furnishing of such services to the Leased Premises and shall pay for all water, gas, electricity, sanitary sewer service, other utilities, telephone, private security and fire protection services furnished to the Leased Premises. The City shall allow the providers of such utilities reasonable access to the boundaries of the Leased Premises for the installation of their utility systems. • Galaxy Ground Lease-Revised-1121198 Page 26 07515.0092:0273045.12 ARTICLE 21 • THIS ARTICLE 21 INTENTIONALLY LEFT BLANK ARTICLE 22 THIS ARTICLE 22 INTENTIONALLY LEFT BLANK ARTICLE 23 LIMITATION OF RIGHTS AND PRIVILEGES GRANTED 23.1 Except the exclusive right of Lessee to possession of the Leased Premises, no exclusive rights at the Airport are granted by this Ground Lease, and no greater rights or privileges With respect to the use of the Leased Premises or any part thereof are granted or intended to be granted to Lessee by this Ground Lease, or by any provision thereof; than the rights and privileges expressly and specifically granted hereby. ARTICLE 24 NOTICES 24.1 All notices, consents and approvals required or desired to be given by the parties hereto shall be sent in writing, and shall be deemed given when received at the recipient's notice address, except that notice that must be given by a certain time to be effective and is sent registered or certified mail, postage prepaid, return receipt requested, addressed to the recipient's address shall be deemed given when posted. Notice that starts the running of a time period and is delivered on a non-business day shall be deemed delivered on the next business day if left at the notice address,or the next business day on which it is redelivered if it is not left at the notice address. 24.2 The notice addresses of the parties are as follows: To the City: City Manager City of Fort Worth 1000 Throckmorton Ft. Worth, Texas 76102 and Director Airport Systems Meacham Airport 4201 North Main Street Ft. Worth, Texas 76106 i Galmy Ck..d L.-Revised-1/21198 Page 27 07515.0092:0273043.12 To Lessee: Alliance Aviation Investors, L.P. Attn: Timothy D. Ward 2221 Alliance Boulevard, Suite 100 Ft. Worth, Texas 76177 and Hillwood Development Corporation Attn: Rick Patterson 2421 Westport Parkway, Suite 200 Ft. Worth, Texas 76177 Such addresses shall be subject to change from time to time to such other representatives or addresses as may have been specified in written notice given by the intended recipient to the sender. 24.3 Notice to Leasehold Mortgagee and Sublessees. Notwithstanding anything in this Ground Lease to the contrary, the City agrees, if and so long as the leasehold estate of Lessee is encumbered by any Leasehold Mortgages executed in accordance with the terms and conditions of this Lease in favor of any Leasehold Mortgagees, or by any Sublease in favor of Galaxy, to give-the Leasehold Mortgagees (at such address or addresses as may be specified by said Leasehold Mortgagees to the City in writing) or Galaxy (or such address or addresses as may be specified by Galaxy to the City in writing)duplicate copies of any and all notices in writing which the City may from time to time give or serve upon Lessee under and pursuant to the terms and provisions of this Ground Lease, and no such notice to Lessee shall be effective or be deemed to have been given to Lessee hereunder unless such notice is also given to said Leasehold Mortgagees or Galaxy; and said Leasehold Mortgagees or Galaxy shall have the right, within the said period of time as given to Lessee, and to the same extent and with the same effect as though done by Lessee, to take such action or to make such payment as may be necessary or appropriate to cure any event of default, it being the intention of the parties hereto that the City shall not terminate this Ground Lease or Lessee's rights of possession hereunder without first affording to said Leasehold Mortgagees and Galaxy the same rights and the same notices with respect to any such default and the same period or periods of time within which to cure the same, including the right to enter into possession of the Leased Premises. ARTICLE 25 HOLDING OVER 25.1 No holding over by Lessee after the termination of this Ground Lease shall operate to extend or renew this Ground Lease for any further term whatsoever; but Lessee will by such holding over become a tenant at will of the City and, after written notice by the City • Galaxy Ground Lease-Revised-inios Page 28 07515.0092:0273045.12 • to vacate such premises, continued occupancy thereof by Lessee shall constitute Lessee a trespasser. 25.2 Any holding over by Lessee beyond the thirty (30) day period permitted for removal of fixtures without the written consent of the City shall make Lessee liable to the City for damages equal to double the rentals provided for herein and which were in effect at the termination of this Ground Lease. 25.3 All insurance coverage that Lessee is required under the provisions hereof to maintain in effect shall continue in effect .for so long as Lessee, or any of Lessee's Sublessees or tenants occupy the Leased Premises or any part thereof. ARTICLE 26 INVALID PROVI51ONS 26.1 The invalidity of any provisions, articles, paragraphs, portions, or clauses of this Ground Lease shall have no effect upon the validity of any other part or portion hereof, so long as the remainder shall constitute an enforceable agreement. ARTICLE 27 MISCELLANEOUS PROVISIONS • 27.1 Non-Waiver of R.i hghts. The failure by either party to exercise any right, or rights accruing to it by virtue of the breach of any covenant, condition or agreement herein by the other party shall not operate as a waiver of the exercise of such right or rights in the event of any subsequent breach by such other party, nor shall such other party be relieved thereby from its obligations under the terms hereof. 27.2 Non-liability of Individuals. No director, officer, agent or employee of either party hereto shall be charged personally or held contractually liable by or to the other party under any term or provision of this Ground Lease or of any supplement, modification or amendment to this Ground Lease because of any breach thereof or because of his or their execution or attempted execution of the same. 27.3 QIiet Enjo=ent. The City covenants that as long as Lessee is not in default of any provision of this Ground Lease, Lessee shall and may peaceably and quietly have, hold and enjoy the Leased Premises exclusively to it and the rights appurtenant to the Leased Premises granted in this Ground Lease during the term hereof unless sooner canceled as provided in this Ground Lease. 27.4 Estoppel Certificates. At the request of Lessee in connection with any Leasehold Mortgage, Sublease, or assignment, the City shall execute and deliver a written statement addressed to such Leasehold Mortgagee, Sublessee, or assignee identifying it as the Lessor under this Ground Lease and certifying: (i) the documents that then comprise this • Ground Lease, (ii) that this Ground Lease is in full force and effect, (iii) the then current Galaxy Ground Lease-Revised-I/21/98 Page 29 07515.0092:0273045.12 annual amount of rent and the date through which it has been paid, (iv)the expiration date • of this Ground Lease, (v) that no amounts are then owed by Lessee to the City (or, if amounts are owed, specifying.the same), (vi) to the knowledge of the City, there are no defaults by Lessee, under this Ground Lease or any facts which but for the passage of time, the giving of notice or both would constitute such a default, (vii) that the rights of Sublessees (except Sublessees that are Affiliates of Lessee and that occupy the Leased Premises at"below-market" rates)will not be disturbed by any default of Lessee, and (viii) any other fact or information reasonably requested by such Leasehold Mortgagee, Sublessee, or assignee. The person or entity to whom such statement is addressed shall be entitled to rely conclusively upon such written statement. 27.5 Short Form of Lease. This Ground Lease shall not be recorded, but at the request of either party, the other shall execute a memorandum or short form of lease for recording. 27.6 General Provisions. Lessee shall not use, or permit the use of, the Leased Premises, or any part thereof, for any purpose or use other than those authorized by this Ground Lease. 27.7 This Ground Lease shall be performable and enforceable in Tarrant County, Texas, and shall be construed in accordance with the laws of the State of Texas. 27.8 This Ground Lease is made for the sole and exclusive benefit of the City and Lessee, their successors and assigns, and is not made for the benefit of any third party. 27.9 In the event of any ambiguity in any of the terms of this Ground Lease, it shall not be construed for or against any party hereto on the basis that such party did or did not author the same. 27.10 All covenants, stipulations and agreements in this Ground Lease shall extend to and bind each party hereto, its legal representatives, successors and assigns. 27.11 The titles of the several articles of this Ground Lease are inserted herein for convenience only, and are not intended and shall not be construed to affect in any manner the terms and provisions hereof or the interpretation or construction thereof. 27.12 Nothing herein shall be construed as creating a joint enterprise or partnership between the City and Lessee. Lessee shall at all times be considered an independent contractor in the performance of the terms and conditions of this Ground Lease, and shall be solely responsible for the servants, employees, contractors, and subcontractors. The doctrine of respondent superior shall have no application as between the City and Lessee. 27.13 Leasehold Mortgagee Protection. The City and Lessee shall cooperate in including in this Ground Lease by suitable amendment from time to time any provision which may reasonably be requested by any proposed Leasehold Mortgagee for the purpose of implementing the mortgagee protection provisions contained in this Ground Lease and • allowing such mortgagee reasonable means to protect or preserve the lien of the Galaxy arouwa l.esae-Revised-In 1/98 Page 30 075 13.DM:0273043.12 Leasehold Mortgage on the occurrence of a default under the terms of this Ground Lease. The City and Lessee each agree to execute and deliver (and to acknowledge, if necessary, for recording purposes)any agreement necessary to effect any such amendment; provided, however, that any such amendment shall not in any way affect the term or rent under this Ground Lease nor otherwise in any material respect adversely affect any rights of the City under this Ground Lease. It is understood and agreed, however, that if such amendments or agreements vary the substantive rights of the parties as set forth in this Ground Lease, then such amendments or agreements must be approved by the City Council of the City. 27.14 $gblessee Protection. The City and Lessee shall cooperate in including in this Ground Lease by suitable amendment from time to time any provision which may reasonably be requested by Galaxy for the purpose of implementing the Sublessee protection provisions contained in this Ground Lease and allowing Galaxy reasonable means to protect or preserve Galaxy's interest in the Leased Premises on the occurrence of a default under the terms of this Ground Lease. The City and Lessee each agree to execute and deliver(and to acknowledge, if necessary, for recording purposes) any agreement necessary to effect any such amendment; provided, however, that any such amendment shall not in any way affect the term or rent under this Ground Lease nor otherwise in any material respect adversely affect any rights of the City under this Ground Lease. It is understood and agreed, however,that if such amendments or agreements vary the substantive rights of the parties as set forth in this Ground Lease, then such amendments or agreements must be approved by the City Council of the City. i27.15 Nonmerger. There shall be no merger of this Ground Lease or the leasehold estate created hereby with the fee estate in and to the Leased Premises by reason of the fact that this Ground Lease or the leasehold estate created hereby, or any interest in either of them, may be held directly or indirectly by or for the account of any person who shall own the fee estate in and to the Leased Premises, or any portion thereof, and no such merger shall occur unless and until all persons at the time having any interest in the fee estate and all persons having any interest in this Ground Lease or the leasehold estate, including the holder of any mortgage upon the fee estate, shall join in a written instrument effecting such merger. 27.16 Force Majeure. Any time period specified in this Ground Lease for the performance of any duty or obligation by either the City or Lessee shall be extended to include delays that result from any cause beyond the reasonable control of either party. 27.17 Other Ground-Leas . If at anytime during the term of this Ground Lease the City, as lessor, enters into any other ground lease of real property located at Alliance Airport, and if such other ground lease contains any terms, conditions, or other provisions (including, but not limited to, the payment of rent and use fees, but excluding any provision that would extend the 30-year term of this Ground Lease) which, directly or indirectly, are more favorable or beneficial to Lessee thereunder than are the terms, conditions, and provisions of this Ground Lease to Lessee; then the terms, conditions, and other • provisions of this Ground Lease shall be deemed to be automatically amended to the Waxy CffamW Lease-Revised-1121ro8 Page 31 07313.OM:0273043.12 • extent necessary to confer substantially the same favorable or beneficial treatment upon Lessee. ARTICLE 28 SUBORDINATION CLAUSES 28.1 This Ground Lease is subject and subordinate to the following: 28.1.1 The City reserves the right to develop and improve the Airport as it sees fit, regardless of the desires or view of Lessee, and without interference or hindrance by or on behalf of Lessee. Accordingly, nothing contained in this Ground Lease shall be construed to obligate the City to relocate Lessee. 28.1.2 The City reserves the right to take any action it considers necessary to protect the aerial approaches to 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 the City, would limit the usefulness of the Airport or constitute a hazard to aircraft. 28.1.3 This Ground Lease is and shall be subordinate to the provisions of existing and future agreements between the City and the United States relative to the operation or maintenance of the Airport, the execution of which has been or may be required as a • condition precedent or relevant to the obtaining or expenditure of federal funds for the benefit of the Airport. 28.1.4 During the time of war or national emergency, the City shall have the right to lease all or any part of the landing area or of the Airport to the United States for military or naval use, and if any such lease is executed, the provisions of this Ground Lease insofar as they may be inconsistent with the provisions of such lease to the Government, shall be suspended, but such suspension shall not extend the term of this Ground Lease. Abatement of rentals shall be reasonably determined by the City in proportion to the degree of interference with Lessee's use of the Leased Premises. 28.1.5 Except to the extent required for the performance of any obligations of Lessee hereunder, nothing contained in this Ground Lease shall grant to Lessee any rights whatsoever in the airspace above the Leased Premises other than those rights which are subject to Federal Aviation Administration rules, regulations and orders currently or subsequently effective. 28.1.6 Nothing in this Ground Lease obligates the City in any way to take any action that is prohibited by the 1968 Concurrent Ordinance adopted by the City of Fort Worth and the City of Dallas, Texas regarding the Dallas/Fort Worth International Airport. Lessee agrees that in the performance of this Ground Lease, it'will do no act and cause no omission that is inconsistent with, or that will place the City in violation of, the 1968 Concurrent Ordinance or any proceedings relating to the operation of the Dallas/Fort Worth • International Airport. The parties hereto acknowledge that the rights and duties of Lessee Oal"y oramd r.em-Reviled-rnrr9s Page 32 ors r s.0092:0273o4s.r 2 and the terms of this Ground Lease may be qualified to the extent that the provisions of the 1968 Concurrent Ordinance and proceedings relating to the operation of the Dallas/Fort Worth International Airport govern the operation of the Airport. 28.1.7 Notwithstanding anything to the contrary stated herein, any contractual or statutory Gen claimed by the City in all goods, wares, equipment, fixtures, furniture and other personal property of Lessee presently or hereafter situated in the Leased Premises and all proceeds therefrom(collectively,the"Collateral")(save and except liens for ad valorem taxes levied on such personal property) shall be subject and subordinate to the rights, if any, of any Leasehold Mortgagee, any holder of any Leasehold Mortgage or any holder of a lien or security interest securing purchase money indebtedness covering any of the Collateral, and the City agrees to execute such additional documents as shall be reasonably necessary to effect or evidence such subordination. Lessee agrees to pay the City all reasonable and necessary costs incurred by the City in connection with the negotiation, preparation, review, and execution of such additional documents, including, but not limited to, all reasonable and necessary attorneys' fees. 28.1.8 It is agreed and understood that nothing in this Ground Lease shall be interpreted to constitute an amendment or modification to the respective rights, duties, and obligations of either the City or the Airport Operator under that certain Management Agreement between Alliance Air Services, Inc., as Operator, and the City of Fort Worth dated December 15, 1993. Notwithstanding the foregoing, however, in the event there is any conflict between this Ground Lease and any term or provision of the Management Agreement that concerns, addresses, or deals with any ground lease of Airport property (including constructing improvements and/or providing FBO services), this Ground Lease shall control. 28.1.9 Any person or entity to which this Ground Lease (or any rights herein) is assigned, conveyed, or otherwise transferred as a result of any foreclosure by any Leasehold Mortgagee (or as a result of any deed or other transfer in lieu of foreclosure) shall be bound by all terms and conditions of this Ground Lease. ARTICLE 29 VENUE 29.1 Should any action, whether real or asserted, at law or in equity, arise out of or in connection with the terms and conditions of this Ground Lease or the performance, nonperformance or- attempted performance hereoZ venue for said action shall lie exclusively in state courts located in Tarrant County, Texas or in the United States District Court for the Northern District of Texas, Fort Worth Division. Galaxy Ground Lease-Revised•1121/98 Page 33 07515.0092:0273045.12 ARTICLE 30 • ENTIRE AGREEMENT 30.1 This Ground Lease consists of Articles l to 30, inclusive, Exhibits A-I. A-2, A-3. and B, Schedule A and Appendix A. 30.2 This Ground Lease constitutes the entire agreement of the parties hereto and may not be changed, modified, discharged or extended except by written instrument duly executed by the City and Lessee. The parties agree that no representations or warranties shall be binding upon the City or Lessee unless expressed in writing in this Ground Lease. ARTICLE 31 LESSEE'S QPPORTUNITY RIGHT 31.1 The City hereby grants Lessee a right of first opportunity (the "Opportunity Rittht") to lease all or a portion of any improvements constructed by Lessee(included,but not limited to, the Aviation Related Facilities) (collectively, the "Constructed Improvements") pursuant to this Ground Lease. The Opportunity Right shall continue until termination (upon an event of Lessee's default) of this Ground Lease; and if no such termination for Lessee's default occurs,until the last of the Constructed Improvements ceases to exist. 31.2 Upon the expiration or termination(other than upon an event of default by Lessee) of this • Ground Lease, the City and Lessee agree to begin (and thereafter use their best efforts to complete) negotiations of a new lease of any of the Constructed Improvements (or such portion thereof as Lessee desires)covered by such expired or terminated lease. If the City and Lessee are unable to negotiate such a new lease, the City shall then be free to solicit offers from third parties to lease such improvements. 31.3 The City shall give Lessee written notice within 10 days after beginning negotiations with any party to lease all or any portion of any Constructed Improvements, which notice shall describe the proposed schedule for negotiations (including a "target date" for submission to the City Council). 31.4 The City shall also give Lessee written notice (the "Opportune , Notice") of any proposed lease of all or a portion of any Constructed Improvements within three days after the city manager's office is prepared to recommend approval of such agreement (the "Recommended Building Lease") to the City Council. The Opportunity Notice shall include the Recommended Building Lease, together with copies of the city manager's recommendation, the applicable "M&C" prepared for the City Council, and any other written materials or information in the City's possession or control that are reasonably necessary or convenient to understanding the Recommended Building Lease. 31.5 Lessee shall have a period of 30 days after receipt of the Opportunity Notice during which to notify the City that Lessee desires to lease the Constructed Improvements upon the same terms and conditions contained in the Recommended Building Lease. Galaxy Ground[w-Revised-na1M Page34 075 n 5.0092:0273045.12 SARTICLE 32 SUBDIVISION OF THE LEASED PREMISES 32.1 Lessee shall have the right to divide the Leased Premises into separately platted portions (a "Putted Portion") for the sole purpose of constructing improvements on such Platted Portions. When Lessee desires to divide any portion of the Leased Premises into a Platted Portion, Lessee shall, at Lessee's expense, prepare a map and legal description of such Platted Portion and shall submit such map and description to the City Manager of the City for the Manager's approval. The City Manager shall approve such map and legal description if the Manager determines that the Leased Premises are being divided into Platted Portions in such manner that each Platted Portion retains reasonable access to the Transient Apron and to adjacent public roadways. It is agreed and understood that any such map and legal description shall be used only for the purpose of describing portions of the Leased Premises and shall not constitute a plat or a subdivision of land within the meaning of Chapter.212, Subchapter A of the Texas Local Government Code, The City and Lessee shall execute a separate lease agreement (in substantially the form of this Ground Lease; provided, however, that (i) plans and specifications for subsequently constructed improvements must be submitted within 12 months after any request to plat or replat a Platted Portion and construction of such improvements must be substantially completed within 18 months after the City has approved*the plans and specifications and issued a building permit and(ii)the term of all separate leases shall begin when certificates of occupancy are issued for such improvements and shall be concurrent with the term of this Ground Lease) for each such Platted Portion; whereupon, such Platted Portion shall become the leased premises for purposes of such separate lease. Upon the execution of such separate lease, the Platted Portion covered thereby shall no longer by part of the Leased Premises under this Ground Lease; and no default under this Ground Lease shall be a default under any such separate lease; and no default under such separate lease shall be a default under this Ground Lease or under any other separate lease. [TIE BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] Galaxy Ground Lzmc-kn iwd-1n 1/9s Page 35 07513.0092:0273045.12 f 1 ._ 4FL Imm I t I I I I I I OJFM i ;•r 1 P _. -------------- 1 1 I 1 , 101 i I I i Jill lit I o Y f�'t '!— Hillxood Property Campaoy { -- ----- --I j�! ---� tl r�n Y t1� I Galaxy Aerospace Faeility b I 1 " u I Forlt Worth,Texas Exhi it B Form of Pledge AS[Mme nt • cry Ground Lcaw.Revised.m i/gs Page 40 073 L 5.0092:0273045.i2 THIS PLEDGE AGBEEHM (the "Pledge Agreement") , entered into as of , by and among Alliance Air Services, Inc. ("Lessee") , the City of Fort Worth, Texas, a municipal corporation of Tarrant and Denton Counties, Texas ("Fort Worth") and NationsBank of Texas, N.A. , a national banking association ("NationsBank") . w I T N E S S E T H: WHEREAS, Lessee and Fort Worth have entered into that certain Lease Agreement dated December 1993, (the "Lease") ; and WHEREAS, the Lease provides that Lessee shall submit to Fort Worth security acceptable to the City (the "Intended Security") for the purpose of guaranteeing satisfactory completion by Lessee of the Improvements (defined below) to be constructed in accordance with the Lease (the "Secured Obligations") ; and • WHEREAS, Lessee and Fort Worth desire and agree that Lessee be allowed to pledge Securities (as defined below) to Fort Worth, to be held by NationsBank as escrow agent, in lieu of and in complete satisfaction of the obligation to submit the Intended Security to secure the performance of the Secured Obligations; Now THEREFORE, for and in consideration of the premises, ten dollars ($10.00) and other good and valuable consideration, the receipt, sufficiency, and adequacy of which are hereby acknowledged and confessed, the parties hereto hereby agree as follows: SECTION 1. DEFINED TERMS. For the purposes of this Pledge Agreement, unless the context otherwise clearly requires, the following terms shall have the following meanings: "Initial Security" shall mean the Securities identified on Exhibit "A" attached hereto having an aggregate Market value of not less than $ , which sum represents 100 percent of the estimated cost of constructing the following improvements (the "Improvements,,) : (DESCRIPTION OF INMPROVEMENTS) 1 I "Lien" shall mean any lien, security interest, charge, tax lien, pledge, encumbrance, conditional sales or other title retention arrangement or any other interest in property designed to secure the repayment of indebtedness or the satisfaction of any other obligation. 'Market Value" shall mean the price, as of any date, obtained on such date from a generally recognized source agreed to by the parties or the most recent closing bid quotation obtained from such a source, excluding accrued interest. The parties agree in advance to any source acceptable to NationsBank that is a nationally recognized exchange. "Securities" shall mean (a) securities that are direct obligations of the United States having a maturity of not more than twenty (20) years and (b) municipal bonds having a maturity of not more than twenty (20) years which are approved by Fort Worth and which are rated "AAA' by Moody's or by Standard & Poor's. • SECTION 2. PLEDGE. As security for the full and punctual performance of the Secured Obligations, Lessee hereby pledges, hypothecates , assigns, transfers, and sets over to Fort Worth, and hereby grants to Fort Worth a security interest in, the Initial Security and all rights and privileges pertaining thereto with the exception of the interest income to be derived therefrom, which interest inc=e shall remain the property of Lessee and shall be distributed by NationsBank in accordance with Lessee's periodic instructions (all such Initial Security, substitutions therefor as permitted hereunder, and other property and rights described are collectively called the "Pledged Collateral") ; TO HAVE AND TO HOLD the Pledged Collateral, together with all rights, titles, interests, privileges, and preferences appertaining to or incidental thereto, unto Fort r Worth subject, however, to the terms covenants, and conditions hereinafter set forth. The security interest granted and the assignments made hereunder are made as ! security only and shall not subject Fort Worth or NationsBank to, or transfer or in any way affect or modify, any obligation of Lessee with respect to any of the Pledged Collateral or any transaction involving or giving rise �+ thereto. • SECTION 3. PHYSICAL POSSESSION OF PLEDGED COLLATERAL. Concurrently with the execution of this Pledge Agreement, Lessee shall have delivered to and deposited with NationsBank the certificates or instruments representing, or evidencing the Pledged Collateral. The parties acknowledge and agree that NationsBank shall be required to segregate the Pledged Collateral from other securities held in trust by NationsBank for Lessee in accordance with the normal practices of NationsBank. NationsBank shall return all certificates or instruments representing or evidencing the Pledged Collateral remaining in its possession to Lessee (or take such other action as Lessee may request or direct) i=ediately after receipt of written notice from Fort Worth that the Secured Obligations have been fully performed. During such time as NationsBank has possession of the Pledged Collateral, NationsBank shall furnish to the City (when requested by the City) written acknowledgments signed by a trust officer listing the Pledged Collateral by name of security, type of security, maturity date, interest rate, and CUSIP number and acknowledging that such collateral has been pledged to the City pursuant to this Pledge Agreement. SECTION 4. REPRESENTATSONS AND WARRANTIES. • Lessee does hereby represent and warrant to Fort Worth and NationsBank that: (a) The Pledged Collateral is free and clear of all Liens except those created by this Pledge Agreement; (b) Lessee (i) is the. owner of the Pledged Collateral or (ii) has obtained the consent of the owner of the Pledged Collateral-to use the Pledged Collateral in the manner con,templat-ed in this Pledge Agreement; _ W Lessee has lawful authority to pledge the Pledged Collateral in the manner hereby contemplated; (d) no consent or approval of any governmental body or regulatory authority is necessary to the validity of the rights created hereunder; (e) the .execution, delivery and consunsaation of this Pledge Agreement will not violate any law, regulation, mortgage, indenture, contract, instrument, judgment or decree applicable to or binding on Lessee; and (f) this Pledge Agreement has been duly authorized, executed and delivered by Lessee and constitutes a legal, valid, and binding obligation of Lessee • enforceable in accordance with its terms except as enforceability may be limited by applicable bankruptcy, insolvency, moratorium, or other similar laws affecting • . (ii) written notice of such Default has been given by Fort Worth to Lessee and NationsBank and such Default was not cured within the time periods provided in the Lease; and (iii) Fort worth is entitled to have the Pledged Collateral sold or disposed of in accordance with the Pledge Agreement. In the event of sale, NationsBank shall not be liable for any fluctuation in Market Value of the Pledged Collateral, and any such sale or other disposition may be as a unit or in parcels (it being agreed that the sale of any part of the Pledged Collateral shall not exhaust the power of sale granted hereunder, but sales may be made from time to time until all of the Pledged Collateral has been sold or until the Secured Obligations have been fully performed) . Fort Worth shall be liable for, and shall return to Lessee, the amount, if any, by which the sales proceeds exceed the amount necessary to complete performance of the Secured obligations. (b) Sale of Pledged Collateral. Upon the consummation • of any sale, NationsBank shall have the right to deliver, assign, and transfer to the purchaser the Pledged Collateral sold. Each purchaser at any such sale shall hold the property sold free from any claim or right of whatsoever kind, and Lessee hereby waives (to the extent permitted by law) all rights of redemption, stay, and/or appraisal. (c) Notices. Any notice required or permitted to be given to Lessee or Fort Worth shall be given in writing and shall be personally delivered or mailed by prepaid certified or registered mail to such party at the address set forth below. Any notice required or permitted to be given to NationsBank shall be given in writing and shall be effective when actually received. Alliance City of Fort Worth Attn: City Manager 1000 Throckmorton Street Fort Worth, Texas 76102 • • creditors rights generally and except as enforceability may be limited by general principles of equity. The delivery at any time by Lessee to NationsBank for the benefit of Fort Worth of instruments, cash or other items evidencing the Pledged Collateral shall . constitute a representation and warranty by Lessee that, with respect to such Pledged Collateral, the matters heretofore warranted in clauses (a) through (f) immediately above are true and correct on, and as if they were made upon, the date of such delivery. SECTION S. COVENANTS. (a) Affirmative Covenants. So long as any of the Secured Obligations remain unperformed, Lessee covenants and agrees that Lessee will: (i) from time to time execute and deliver to Fort Worth all such assignments, certificates, supplemental writings, and other items and do all other acts or things as Fort Worth may reasonably request in order to evidence and perfect the • security interest of Fort Worth in the Pledged Collateral; (ii) furnish Fort Worth with information which Fort Worth may reasonably request concerning the Pledged Collateral; and (iii) notify Fort Worth of any claim, action, or 1 proceeding affecting title to the Pledged Collateral or=-Fort Worth's security interest therein. (b) Negative Covenants. So long as any of the Secured Obligations remain unperformed, Lessee covenants and agrees that Lessee will not: (i) sell, assign or transfer any rights of Lessee in the Pledged Collateral; or (ii) create any Lien in the Pledged Collateral, or any part thereof, or permit the same to be or become subject to any Lien except the security interest herein created in favor of Fort Worth. SECTION 6. VOTING RIGHTS: DIVIDENDS, ETC. , PRIOR TO • DEFAULT. i So long as no Default exists, Lessee shall be entitled to receive, retain, and expend any interest income payable i with respect to the Pledged Collateral and any and all other distributions made on or with respect to the Pledged Collateral. If a Default shall have occurred and be continuing, any interest income payable on the Pledged Collateral, and any and all other distributions made on. or with respect to the Pledged Collateral, shall be and become part of the Pledged Collateral and shall be held in trust for the benefit of. Fort Worth. Fort Worth shall have the right, during the continuance of any Default, to direct NationsBank to notify and direct, and NationsBank shall have the right to notify and direct, the issuer of the Pledged Collateral to make all payments and distributions directly to NationsBank for the benefit of Fort worth. The issuer of the Pledged Collateral making any such payments or distributions shall be fully protected in relying on the written notice from NationsBank. SECTION 7. F,sjTEM OF DEFAULT. Lessee shall be in default under this Pledge Agreement only upon the happening of any the following events (a "Default") : (a) default in the timely performance of the Secured • Obligations after written notice thereof has been given to Lessee and NationsBank and such default is not cured within the time periods provided in the Lease; (b) any warranty or representation made to Fort Worth by Lessee in connection with this Pledge Agreement proves to have been false in any material respect when made; or ` (c) default in delivery of the Additional Securities as provided in Section 13 hereof. SECTION S. RIGHTS AND REH=IES 01 FORT WORTS UPON AND AFTER D�AULT. - - (a) Remedy. Upon the occurrence of a Default, Fort Worth shall have the right to direct NationsBank to sell or otherwise dispose of all or any part of the Pledged Collateral in accordance with normal banking procedures. NationsBank is hereby authorized to sell or otherwise dispose of the Pledged Collateral immediately upon the receipt of a written statement purporting to be executed by an authorized representative of Fort Worth stating that: • (i) a Default by Lessee has occurred under the Lease with respect to construction of the Improvements; and 4 h NationsBank of Texas, N.A. Attn: Ray Colvin, Trust Department P. 0. Box 830241 Dallas, Texas 75283-0241 Any such notice shall be deemed to have been given (whether actually received or not) on the day personally delivered as aforesaid or, if mailed, on the day it is mailed as aforesaid. Any party may change its address for notice by giving all other parties hereto notice of such change in the manner set forth in this Section 8 (c) not later than 10 days before the effective date of such new address. SECTION 9. CERTAIN OTHER RIGHTS AND DUTIES OF FORT WORTS AND NATIONSBANS. (a) Responsibility for Pledged Collateral. Fort Worth and NationsBank shall not have a duty to fix or preserve rights against parties who may have had a prior interest in the Pledged Collateral or to collect any amount payable with respect to the Pledged Collateral, but shall be liable only to the account of Lessee for what Fort Worth and NationsBank may actually collect or receive thereon. (b) Nondisclosure. In so far as permitted by Art. 5252-17, Texas Revised Civil Statutes, Fort Worth shall not discuss or disclose the Pledged Collateral with any persons who are not employed by Fort Worth, and then only to the extent such discussion or disclosure is absolutely required— SECTION 10. NONEXCLUSIVE RIGHTS AND-B=IES. If the Lessee fails to timely perform the Secured Obligations, Fort Worth is entitled to exercise its rights as set forth in Section 8 hereof. SECTION 11. SUBSTITUTION OF COLLATERAL. Notwithstanding any contrary provision in this Pledge Agreement, Lessee shall have the right (without the consent of Fort Worth) , at any time and from time to time, to obtain releases of all or any part of the Pledged Collateral (hereinafter called the "Released Collateral") upon satisfaction of the following conditions: (a) Lessee shall provide Fort Worth and NationsBank written notice (the "Substitution Notice") that Lessee desires to obtain Released Collateral (as specified and described in such notice) in exchange for a contemporaneous substitution of different Securities for collateral (as also specified and described in the Substitution Notice) ; and (b) Lessee shall pledge to Fort Worth, and deliver to NationsBank for the benefit of Fort Worth, substituted p Securities (the "Substituted Collateral") the Market Value of which Substituted Collateral together with the Market value of the remaining non-released Pledged Collateral shall in the aggregate be at least equal to loot of the cost to construct the Improvements. All Substituted Collateral shall be deemed to be Pledged Collateral for purposes of this Pledge Agreement. Upon satisfaction of the above-specified conditions, NationsBank shall be authorized (without the consent- of Fort Worth) to return to Lessee any original certificates or instruments In NationsBank'9 possession that represent or evidence the Released Collateral or take such other action with respect to the Released Collateral as Lessee may request or direct. Lessee shall pay the expenses incurred by NationsBank in connection with obtaining each such release and substitution. SECTION 12. PERIODIC WITHDRAWAL OF COLLATERAL. Notwithstanding any contrary provision in this Pledge Agreement, Lessee shall have the right to monthly withdrawals of the Pledged Collateral (hereinafter called the *Withdrawn Collateral_") , upon satisfaction of the following conditions: W Lessee shall provide Fort Worth and NationsBank 'written notice (the "Withdrawal Notice") that Lessee desires to obtain the Withdrawn Collateral; and (b) the aggregate Market Value of the Pledged Collateral after withdrawal of the Withdrawn Collateral is at least equal to the estimated value of the Secured Obligations-_then.. remaining to be performed (such remaining value is hereinafter called the "Estimated Cost to Complete") . The Withdrawal Notice shall include a description of the Withdrawn Collateral and Lessee's calculation of the Estimated Cost to Complete. Upon receipt of the Withdrawal Notice, Fort Worth shall have ten (10) calendar days to notify Lessee of Fort Worth' s calculation of the Estimated Cost to Complete. If Fort Worth fails to so notify Lessee, then Lessee' s calculation shall be deemed to have been accepted and approved by Fort Worth. If Fort Worth's • calculation is less than, or not more than five percent (5%) higher than, Lessee's calculation, then Fort Worth's calculation shall be deemed to have been accepted and approved by Lessee. If Fort Worth's calculation exceeds Lessee's calculation by more than five percent (5t) , Fort Worth and Lessee shall jointly approve a Estimated Cost - to Complete. within thirty days of receipt of Withdrawal Notice, Fort Worth shall execute a release authorizing NationsBank to return to Lessee any original certificates or instruments in NationsBank's possession that represent or evidence the Withdrawn Collateral or take such other action with respect to the Withdrawn Collateral as Lessee may request or direct. Lessee shall pay the expenses incurred by NationsBank in connection with obtaining each such release. SECTION 13. PERIODIC VALUATION OF PLEDGED COLLATERAL. At any time and from time to time (but not more frequently than once each month) Fort Worth, at Lessee's sole cost and expense, may request NationsBank to obtain or provide the Market Value of the Pledged Collateral. Fort • Worth may cause Lessee to pledge additional Securities (the "Additional Securities") as Pledged Collateral up= satisfaction of the following conditions: (a) Fort Worth shall provide Lessee and NationsBank a written notice setting forth the Market Value of the Pledged Collateral and requesting Lessee to pledge Additional Securities having a specified Market Value; and (b) the aggregate Market Value of the Pledged Collateral (including the Additional Securities) shall be equal to (or, at Lessee's option, greater than) the last-determined Estimated Cost to Complete (or the estimated cost to construct the Improvements if no Estimated Cost to Complete has yet been determined hereunder) . Lessee shall have five days from receipt of such notice to pledge to Fort Worth, and deliver to NationsBank for the benefit of Fort Worth, all certificates or instruments representing or evidencing Additional Securities, the market value of which Additional Securities shall be confirmed by NationsBank within five (5) business days after receipt of same. SECTION 14. M-ASSIGNABILITY OF FORT WORTH'S RIGHTS. The rights, powers, and interest held by Fort Worth hereunder in and to the Pledged Collateral may not be transferred or assigned by Fort Worth in whole or in part. Any attempted transfer or assignment shall be absolutely void and shall entitle Lessee to a release of all Pledged Collateral. SECTION 15. NO WAIVER. No waiver by Fort Worth of any Default shall be deemed to be a waiver of any other subsequent Default. No delay or omission by Fort Worth in exercising any right or power hereunder shall impair any such right . or power or be construed as a waiver thereof, nor shall any single or partial exercise of any such right or power preclude other or further exercise thereof. SECTION 16. B=NDINQ EFFECT. • This Pledge Agreement shall be binding on the parties, their successors and assigns. No provision of this Pledge Agreement may be amended, waived, or modified except pursuant to a written instrument executed by Fort Worth, NationsBank, and Lessee. SECTION 17. CHOICE OF LAMP. This Pledge Agreement is to be construed and interpreted in accordance with the laws of the State of Texas. i SECTION 18. COMMERPARTS. This Pledge Agreement may be executed in any number of multiple counterparts and by different parties on separate counterparts, all of which when taken together shall constitute one and the same agreement. SECTION 19. NATIONSBANR INDEMNITY. Lessee hereby agrees to release, hold harmless, and 1 indemnify NationsBank (and its directors, officers, employees, agents and representatives) from and against all claims, damages, expenses, costs, suits, and other liability I of any kind whatsoever that arise out of or are directly or indirectly related to the performance by NationsBank of its I 1 ♦ , duties hereunder except for the gross negligence or willful misconduct of NationsBank or its directors, officers, employees, agents, or representatives. ALLIANCE By: Title: Date• CITY OF FORT WORTH, TEXAS By: Title: Date• NATIONSBANK OF TEXAS, N.A. By: Title Date: • EXHIBIT A United States Treasury Bills CUSIP No. Due S i Schedule A Lessee shall, at its own cost and expense, take out and maintain such insurance as Lessee is required to take out and maintain under the Workers' Compensation Act; and also take out and maintain such public liability and automobile liability insurance sufficient to fulfill Lessee's indemnification obligations set forth in Article 9 of this Ground Lease. The policies shall provide the amounts of insurance specified in this schedule A and shall name the City and its Airport Operator as additional insureds for their own acts or omissions. All insurance required by this Ground Lease shall be effective on the "made-and-entered- into" date set forth on the first page of this Ground Lease; and upon full execution of this Ground Lease by both the City and Lessee, certificates of insurance in form acceptable to the City and marked"premium paid" must be submitted to the City. Each certificate shall have endorsed thereon: A clause naming the City of Fort Worth and its Airport Operator, Alliance Air Services, Inc., as additional insureds under the policies. "No cancellation or change in the policy shall become effective until after thirty (30) days notice by registered mail to the City Manager, City of Ft. Worth, 1000 Throckmorton, Ft. Worth, TX. 76102." Upon failure of Lessee to furnish, deliver and maintain such insurance as above provided, the City may obtain such insurance and charge Lessee the cost of the insurance plus all appropriate administrative charges and incidental expenses associated with the transaction. Failure of Lessee to take out and/or maintain, or the taking out and/or maintenance of any required insurance shall not relieve Lessee from any liability under this Ground Lease, nor shall the insurance requirements be construed to conflict with the obligations of Lessee concerning indemnification. All required insurance must be in effect and so continue during the life of this Ground Lease in not less than the following amounts: A. Workers' Compensation Unlimited Statutory in compliance with the Compensation Law of the State of Texas. B. General Liability Insurance with a maximum combined single limit of $3,000,000.00 per occurrence. This insurance shall indicate on the Certificate(s) of Insurance, marked"premium paid,"the following coverages: Comprehensive General Liability Prenuses/Operations Contractual Liability Independent Contractors Products and Completed Operations Galaxy Ground Lease-Revised-1121198 Page 41 07515.0092:0273D45.12 Broad Form Property Damage Personal Injury Hangar Keepers Liability C. Auto Liability (single limit or occurrence $500,000.00). Owned, Non-owned and Hired Location of operation shall be "All locations in Tarrant and Denton Counties, Texas". The City reserves the right, from time to time, to change the types of coverages and increase the coverage limits set forth above; which changes and increases must be reasonable and must be based on ordinary and customary principles of risk management adopted by the City and applied to activities at the Airport similar to those activities conducted on the Leased Premises. In the event the City considers it necessary to change such coverages or increase such coverage limits, the City shall give written notice of to Lessee, together with a reasonably detailed explanation of the reason for the change or increase. Lessee agrees that it shall comply with such changes or increases and that the effective date of such changes or increases shall not be sooner than 30 days after the written notice is given to Lessee. Nothing herein contained shall prevent Lessee from taking out any other insurance for protection of its interest which it deems advisable or necessary. • Galaxy Ground lease-Revised-1121/99 Page 42 07515.0092:0773045.12 Appendix A • Construction by Lessee 1. Prior to the commencement of construction of any Leasehold Improvements, Lessee shall submit to the City complete plans and specifications and an estimated time table for such proposed construction. 2. The City may refuse to grant approval of Lessee's plans and specifications i� in its reasonable opinion, the proposed facilities as laid out and indicated by Lessee on such plans or constructed according to such plans and specifications: 2.1 will be structurally unsound or unsafe or hazardous for human occupancy; 2.2 will not substantially comply with all the requirements of this Ground Lease; 2.3 will be so located that there will not be sufficient clearances in respect to existing or planned projecting aprons, runways or taxiways adjacent thereto; 2.4 will be in violation of any state code, OSHA-70, the National Electric and Fire Protection Codes or any other laws, ordinances or regulations of any governmental authority having jurisdiction over the Airport; 2.5 will not be at locations or not-be oriented in accordance with the approved comprehensive plans for the Airport. 3. Upon approval of such plans and specifications by the City, Lessee shall proceed expeditiously and with all reasonable diligence to construct, at its own expense and cost, the facilities in accordance with such approved plans and specifications and complete the facilities in accordance with the estimated time table (subject to delays beyond Lessee's reasonable control). 3.1 (1) Prior to the date of commencement of any modification, renovation, improvement or new construction of any Leasehold Improvements, Lessee shall deliver to the City payment and performance bonds, executed by a corporate surety in accordance with Texas Government Code, Chapter 2253, as amended, in the full amount of each construction contract or project. The bonds shall guarantee (i) satisfactory compliance by Lessee with all requirements, terms and conditions of this Ground Lease, including, but not limited to, the satisfactory completion of the Leasehold Improvements, and (ii) full payments to all persons, firms,corporations or other entities with whom Lessee has a direct relationship for the complete performance of such Leasehold Improvements. Galaxy Caamd1eme-R,,iwd.1t2v9s Page 43 07515.0092:0273045.12 (2) In lieu of the bonds required in Section 3.1(1) of this Appendix A, Lessee • may provide the City with a cash deposit or a pledge of government securities (in the form attached herewith as Exhibit B) and acceptable to Lessee in an amount equal to 100% of the full amount of each construction contract or project. If Lessee fails to complete the Leasehold Improvements, or if claims are filed by third parties on grounds relating to such Leasehold Improvements, the City shall be entitled to draw down the cash deposit or pledge of government securities, in accordance with the terms and conditions of the attached Exhibit B. (3) Prior to the commencement of any modification, renovation, improvement or new construction of Leasehold Improvements, Lessee's respective contractor shall execute and deliver to Lessee payment and performance bonds executed by a corporate surety in accordance with Texas Government Code, Chapter 2253, as amended, to cover the costs of all work performed under such contractor's contract for such Leasehold Improvements. Lessee shall provide the City with copies of such bonds prior to the commencement of such Leasehold Improvements. The bonds shall guarantee (i) the faithful performance and completion of all construction work in accordance with the final plans and specifications as approved by the City and (ii) full payment for all wages for labor and services and of all bills for materials, supplies and equipment used in the performance of the construction contract. Such bonds shall name both the City and Lessee as dual obligees. If Lessee serves as its own contractor, Sections 3.1(1) and (2)shall apply. (4) The City will allow Lessee a dollar-for-dollar reimbursement from its cash deposit account or reduction of its claim upon Lessee's pledge of government securities upon (i) where Lessee serves as its own contractor, verification that Lessee has completed construction work or (ii) where Lessee uses a contractor, receipt of the contractor's invoice and verification that the contractor has completed its work and released Lessee to the extent of Lessee's payment for such work, including bills paid affidavits and waivers of liens. Bonds shall be standard performance and payment bonds provided by a licensed surety company in the State of Texas. 4. All construction work shall be done in accordance with the following terms and conditions: 4.1 Lessee hereby assumes the risk of loss or damage to all of the construction work prior to the completion thereof and the risk of loss or damage to all property of the City arising out of or in connection with the performance of the construction work. In the event of such loss or damage, Lessee shall forthwith repair, replace and make good the construction work and the property of the City without cost or expense to the City. • Galaxy Ground Lease-Revised-1/21/96 Page 44 07515.0092:0273045.12 4.2 Lessee shall itself and shall require its contractors to indemnify, hold harmless and • defend the City, its officers, agents and employees from and against any and all claims or suits for property damage and/or personal injury, including death, to any and all persons, of whatsoever kind or character, whether real or asserted, arising out of or in connection with any construction, maintenance or repair work performed on or in connection with the Leased Premises, by Lessee, its officers, employees, contractors, subcontractors, licensees, invitees, or tenants (and to provide such insurance as required in Section 4.7 of this Appendix) covering the acts and omissions of Lessee and its contractors; and Lessee shall itself assume and shall require its contractors to assume all responsibility and liability for such claims or suits. Lessee shall itself assume and shall require its contractors to assume all responsibility and liability for, and shall indemnify and hold harmless the City for any and all damage to or destruction of Airport property, the Leased Premises, and their facilities, arising out of or in connection with any construction, maintenance or repair work performed on or in connection with the Leased Premises, by Lessee, its officers, employees, contractors, subcontractors, licensees, invitees, or tenants. 4.3 Lessee shall identify a project manager during the construction period with whom the City may communicate at all times. 4.4 The City shall have the right, through its duly designated representatives, to inspect the construction work and the plans and specifications thereof, at any and all reasonable times during the progress thereof and from time to time, in its discretion, to take samples and perform testing on any part of the construction work, but the taking of samples and testing shall be conducted so as to minimize interference with the construction work. 4.5 Lessee agrees that it shall deliver to the City"as-built" drawings(capable of being reproduced) of the construction work and shall during the term of this Ground Lease keep said drawings current showing thereon any changes or modifications which may be made. (No changes or modifications to be made without the City's consent not to be unreasonably withheld or delayed.) 4.6 Lessee shall pay or cause to be paid all claims lawfully made against it by its contractors, subcontractors, materialmen and workmen, and all claims lawfully made against it by other third persons arising out of or in connection with or because of the performance of any repair, maintenance or construction work, and shall cause its contractors and subcontractors to pay all such claims lawfully made against them, provided, however, that nothing herein contained shall be construed to limit the right of Lessee to contest any claim of a contractor, subcontractor, materialman, workman and/or other person and no such claim shall be considered to be an obligation of Lessee within the meaning of this Section unless and until the same shall have been finally adjudicated. Lessee shall use its best efforts to • camxy GMWd tease-Revised-1nim Page 45 07515.0092:0273045.12 resolve any such claims and shall keep the City fully unformed of its actions with respect thereto. 4.7 Lessee shall procure and maintain comprehensive general liability insurance, including automotive, with a contractual liability endorsement covering the obligations assumed by Lessee in Sections 4.1 and 4.2 of this Appendix, which shall be in addition to all policies of insurance otherwise required under this Ground Lease; or Lessee may provide such insurance by requiring each contractor engaged by it for the construction work to procure and maintain such insurance including such contractual liability endorsement. Said insurance shall not contain any care, custody or control exclusions, any exclusion for explosions, collapses or damage, or any exclusions for bodily injury to or sickness, disease, or death of any employee of Lessee or of any of its contractors which would conflict with or in anyway impair coverage under the contractual liability endorsement. Said insurance shall name the City, its officers, its employees and its agents as additional insureds and be in not less than the following amounts: (i) Bodily Injury Liability: For injury to or wrongful death to one person............................................................................$1,0002000 • For injury or wrongful death of more than one person for any one occurrence.....................................$5,000,000 Aggregate Products Completed Operations.....................................$3,000,000 (u) Property Damage Liability: For all damages arising out of injury to or destruction of property in any one occurrence..........................................................................$3,000,000 Aggregate Products Completed Operations.....................................$3,000,000 Aggregate Operations.....................................................................$3,000,000 Aggregate Productive......................................................................$3,000,000 Aggregate Contractual....................................................................$3,000,000 The insurance required hereunder shall be maintained in effect during the performance of the maintenance, repair or construction work. A certified copy of each of the policies or a certificate or certificates' evidencing the existence thereof, or binders, shall be delivered to the City at least fifteen (15) days prior to the commencement of any work. In the event any binder is delivered, it shall be replaced within thirty (30) days by a certified copy of the policy or a certificate. Each such copy or certificate shall contain a valid provision or endorsement that the policy may not be canceled, terminated, changed or modified without giving fifteen(15) days'written advance notice thereof to the City. Galaxy Ground Leaae-Revisad-1r21/98 Page 46 07515.0092:0273045.12 ir ' w 4.8 Lessee shall procure and maintain or cause to be procured and maintained Builder's Risk Completed Value Insurance covering the construction work during the performance thereof, including material delivered to the construction site but not attached to the realty, in an amount and form satisfactory to the City. Such insurance shall name the City, Lessee and its contractors and subcontractors as additional insureds and such policy shall provide that the loss shall be adjusted in accordance with Article 8 of this Ground Lease. The policies or certificates representing this insurance shall be delivered by Lessee to the City prior to the commencement of construction and each policy or certificate delivered shall bear the endorsement of or be accompanied by evidence of payment of the premium thereon and, also, a valid provision obligating the insurance company to furnish the City fifteen (15) days' advance notice of the cancellation, termination, change or modification of the insurance evidenced by said policy or certificate. 4.9 Nothing contained herein shall grant or be deemed to grant to any contractor, architect, supplier, subcontractor or any other person engaged by Lessee or any of its contractors in the performance of any part of the construction work any right of action or claim against the City, its officers, agents and employees with respect to any work any of them may do in connection with the construction work. 4.10 Nothing contained herein shall create or be deemed to create any relationship between the City and any such contractor, architect, suppliers subcontractor or any • other person engaged by Lessee or any of its contractors in the performance of any part of the construction work, and the City shall not be responsible to any of the foregoing for any payments due or alleged to be due thereto for any work performed or materials purchased in connection with the construction work. 4.11 When the construction work is substantially completed and is ready for use by Lessee, Lessee shall advise the City to such effect and shall deliver to the City a certificate by an authorized officer of Lessee certifying that such construction work has been constructed substantially in accordance with the approved plans and specifications and the provisions of this Ground Lease and in compliance with all applicable laws, ordinances and governmental rules, regulations and orders. Thereafter, such construction work will be inspected by the City and if the same has been completed as specified by Lessee, a certificate to such effect shall be delivered to Lessee, subject to the condition that all risks thereafter with respect to the construction and installation of the same and any liability therefor for negligence or other reason shall be borne by Lessee. Lessee shall not use or permit the use of the construction work for the purposes set forth in this Ground Lease until such certificate is received from the City. The date of delivery of the certificate by the City shall constitute the Completion Date for the purposes of this Ground Lease. Galaxy Grams lease-Revised-1/21/98 Page 47 07515.0092:0273045.12 6. Other Construction by Lessee Title to any construction, improvement, alteration, modification or addition performed by Lessee at or on the Leased Premises in accordance with a City approved building permit shall vest in Lessee and remain in Lessee until the expiration or earlier termination of this Ground Lease. i 40 oaiaxy orou,d[rage-Revised-1 21/9s Page 48 07515.0092:0273043.12 FIRST AMENDMENT TO GROUND LEASE AGREEMENT THIS FIRST AMENDMENT TO GROUND LEASE AGREEMENT (this "Amendment") is made effective as of the 29th day of July, 1997, by and between the City of Fort Worth, Texas, hereinafter referred to as "Cif % and Airport Building Partners, Ltd., a Texas limited partnership, as assignee of Alliance Aviation Investors, L.P., a Texas limited partnership (f/k/a Alliance Air Partners, Ltd.),hereinafter referred to as"Lessee". RECITAL A. City and Lessee are parties to that certain Ground Lease Agreement, dated July 29, 1997 (the "Ground Lease"), covering approximately 6.639 acres of land in Tarrant County, Texas, as more particularly described in the Ground Lease. B. City and Lessee wish to amend the Ground Lease to provide that title to the Leasehold Improvements (as defined in the Ground Lease) are vested in the City from the date of completion of construction or installation of the Leasehold Improvements. AGREEMENT NOW, THEREFORE, in consideration of the premises contained herein and in the Ground Lease and the benefits to be derived by the parties hereto, City and Lessee agree as follows: 1. Section 5.6 of the Ground Lease is hereby amended, in its entirety,to read as follows: Fee simple title to all Leasehold Improvements located on the Leased Premises shall vest in the City free and clear of any and all claims by any Leasehold Mortgagee (provided, however, that any Leasehold Mortgagee shall retain its leasehold mortgage claim on the Lessee's leasehold interest in and to the Leased Premises, including, without limitation, the Leasehold Improvements), free and clear of any and all claims on the part of Lessee (provided, however, that Lessee 1 007515.00092:485346.03 0 0 • shall retain its leasehold interest in and to the Leased Premises,including,without limitation, the Leasehold Improvements), and free and clear of any mechanics' and materialmen's liens by any person on account of any repair or improvement work done or to be done under the terms hereof by Lessee. The vesting of title in the City at the time specified is a part of the consideration for this Ground Lease. The City shall not be liable (i)to assume, take subject to, or otherwise be responsible for the payment or performance of the Lessee's obligations under any Leasehold Mortgage (as hereinafter defined) or (ii)to Lessee or Lessee's contractors, Sublessees, or anyone else, for the value of any Leasehold Improvements constructed or located on the Leased Premises. 2. Section 8.2 of the Ground Lease is hereby modified and amended by adding the words "Lessee's leasehold interest in and to the Leasehold Improvements" following the words "covered the" in the 4 h line of said section, so that the first sentence of such Section 8.2 shall be revised to read as follows: In the event any Leasehold Improvements, insurable or uninsurable, on the Leased Premises are damaged or destroyed,the use of all insurance proceeds and Lessee's obligations, if any, to rebuild shall be governed solely by any Leasehold Mortgage(s) that covered the Lessee's leasehold interest in and to the Leasehold Improvements at the time of the damage or destruction. 3. Section 13.1 of the Ground Lease shall be amended, in its entirety,to read as follows: In the event that the Leased Premises or any part thereof shall be condemned and taken by authority of eminent domain for any purpose during the term of this Ground Lease or sold to such authority in lieu of a taking (collectively, a "condemnation'), any award which shall be made as a result of such condemnation (i)if for the fee interest in the Leased Premises exclusive of the Leasehold Improvements placed, located, or constructed thereon, shall be paid to the City and(ii)if for the Leasehold Improvements placed, located, or constructed thereon and if for a leasehold interest in the Leased Premises, shall be paid to the Lessee and any Leasehold Mortgagee in accordance with the rights under any Leasehold Mortgages. Either party, consistent with its rights under applicable law, may appear in any such condemnation proceeding and present its claims for damages,if any, arising from such condemnation. 4. The first sentence of Section 19.1 of the Ground Lease shall be amended as follows: Notwithstanding any other provision in this Ground Lease to the contrary, upon any default by Lessee of any provision of this Ground Lease or upon any termination of this Ground Lease for any reason(including,but not limited to, any such default by Lessee), the City's sole and exclusive remedy shall be to re-enter and take possession of the Leased Premises(or portion thereof)and the Leasehold 2 0075 L 5.00092:485346.03 Improvements (or any portion thereof) then located, placed, or constructed thereon, free from any claims by Lessee. 5. Except as hereby amended, all other provisions of said Ground Lease remain unchanged and in full force and effect, and the Ground Lease is hereby ratified and affirmed. In the event of a conflict between the terms and conditions of the original Ground Lease and this Amendment,the terms and conditions of this Amendment shall control. [SIGNATURE PAGES FOLLOW] • 3 007515.00092;485346.03 • 've for all pwP°$ea as°f July 29,1997. EXERTED to be effects CITY OF FOR,r'WORTS CITY By' City Manager E: AWORT BUILDING PARTNERS,TNE ,LTD. LE5SE By: Hillwood operating,L.P., a Texas limited partnerships its general partner Liillwood Development Corporation, By' a Texas corporation, its general partner By: APPROVED AS TO FORM AND LEGALITY: C-! $ Assistant MWttocney 4 007515.00092 AB5346.03 THE STATE OF TEXAS COUNTY OF TA,RRANT BEFORE ME, the undersigned notary public, on this day personally appeared Q • M C Co f M i G K , Paribas, Chicago Bank, known to me to be the person and officer whose name is subscribed to the foregoing instrument, and acimawlodged to me that the me was the act of the said Paribas,Chicago Bank,and that he executed the same as the act of such corporation for the purposes and consideration therein expressed, and in the capacity therein stated. Given under my hand and seal of office this ML10ay of SleP 4�-em 4 Qr ,2000. YJ r Notary Public in and for the Stare of.�e*",Pe. W ys-k ND q�ICQSbti o1�1 I tY D*"AMs,No. York so 0 007515.0049Z'""-03 CITY SECRETARY (�� 04-18-03P03:21 HCVD CONTRACT NO. AMENDMENT NO. 1 TO CITY SECRETARY CONTRACT NO. 23512 FORT WORTH ALLIANCE AIRPORT 7 GROUND LEASE AGREEMENT BETWEEN 4 CITY OF FORT WORTH AND AIRPORT BUILDING PARTNERS,LTD. LL C, This AMENDMENT NO. 1 TO CITY SECRETARY CONTRAC NO. 23512, s ("Amendment") is entered into by and between the CITY OF FORT WORT , TEXAS (the "City"), a home rule municipal corporation organized under the laws of the S to of Texas and acting by and through Marc Ott, its duly authorized. Assistant City Manag and AIRPORT -� BUILDING PARTNERS, LTD. ("Lessee"), a Texas limited partnership act' g by and through M. Thomas Mason, the Vice President of Hillwood n, a Texas --cQgwmtiea that is the general partner of Hillwood 8peFafitig, L.P., a Texas limited partnership that is the general partner of Lessee. AI I1[tn ce M6.nA5Qw,t•,� IN- V, The following introductory provisions are true and correct and form the basis of this Amendment. A. On or about July 29, 1997, the City and Alliance Aviation Investors, L.P. entered into City Secretary Contract No. 23512 (the "Ground Lease"), a lease of real property at Fort Worth Alliance Airport generally known as Tracts 2 and 5, as more specifically defined and • depicted in the Ground Lease. B. On or about February 5, 1998, Alliance Aviation Investors, L.P. assigned all of its rights,titles and interests as tenant under the Ground Lease to Lessee. C. The term of the Ground Lease is approximately thirty (30) years and six (6) months. Lessee wishes to extend the term by an additional ten (10) years. Article XIV, Section 17 of the City's Minimum Standards for Fixed Base Operators and Other Airport Tenants, a public document adopted by the Fort Worth City Council ("Council") on June 16, 1992, limits the term of any lease of property on a City-owned airport to a maximum of forty (40) years (thirty(30) years, with an option or options to renew the lease for up to ten(10) additional years, unless a different combination is specifically authorized by the Council,as occurred in this case). Therefore,Lessee's request can only be granted, to the greatest extent possible, by amending the Lease to grant Lessee an option to renew the Lease for a term commencing upon expiration of the original term and expiring on the fortieth anniversary of the,Effective Date of the Ground Lease, NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged,the City and Lessee agree as follows: 1. Article 1 (Term; No Cross Default) of the Lease is hereby amended by deleting the last two sentences of Section 1.1 and adding the following provisions below Section 1.1: Amendment No. t to City Secretary Contract No.23512 Page 1 1.1.1 The term of this Ground Lease shall begin on January 19, 1999 (which is the date on which the City issued a certificate of occupancy for the Aviation Related Facilities and is the "Effective Date" as used in this Ground Lease) and shall expire on July 31, 2029 (which is the last day of the 366th month following the month in which the Effective Date falls) unless sooner terminated in accordance with the provisions hereof ("Initial Term"). 1.1.2 If Lessee performs and abides by all provisions and conditions of this lease,'then upon expiration of the Initial Term Lessee will have an option to renew this Ground Lease for an additional term commencing August 1, 2029 and expiring January 18, 2039 ("Renewal Term"). Lessee may exercise this option by providing written notice of its intent to renew this Ground Lease for the Renewal Term not less than one (1)year prior to the expiration of the Initial Term. If Lessee exercises its option to renew this Ground Lease for the Renewal Term, all terms and conditions of this Ground Lease shall continue in full force and effect during the Renewal Term. 1.1.2. Not more than three (3) years prior to expiration of the Renewal Tenn, Lessee may notify the City in writing of a desire to renew this Ground Lease for an additional ten (10).year term (the "Subsequent Renewal Request"). The City, in the City's sole discretion, may (i) grant the • Renewal Request, either by entering into a new lease or, if allowed by then-current laws and/or City regulations,by amending this Ground Lease, or(ii) deny the Renewal Request,provided that the basis for such denial is not unreasonable under the circumstances. 2. Unless otherwise specifically indicated, references in the Ground Lease to the "term" of the Ground Lease shall,without limitation,include the Initial Term and the Renewal Tend. 3. All terms in this Amendment that are capitalized but not defined shall have the meanings assigned to them in the Lease. 4. This Amendment contains the final written expression of the City and Lessee with respect to the subject matter hereof. This Amendment shall be effective upon execution by both the City and Lessee and may be executed in multiples. EXECUTED as of the a2 day of Ja n UCc 2003. • Amendment No. 1 to City Secretary Contract No.23512 Page 2 CITY OF FORT WORTH: ATTEST- 42LBy: By: Marc Ott Gloria P on Assistant City Manager City Secre ary APPROVED AS TO FORM AND LEGALITY: By: r Peter Vaky Assistant City Attorney M&C No. C-18972 02-19-02 AIRPORT BUILDING PARTNERS, LTD.: lL Al)iAnl-C �1G�nci[�CiniPv�'1' �. By: Hillwood xg,L.P. �J1 a Texas limited partnership and its general partner: By: Hillwood Deyelepment Gegpe:sUon, All%anm �,P, LL a Texas ce;pemkion and i m }Ycl I tc,61, eomfP(rnH its general partner .! By:An M. Thomas Mason Vice President Amendment No. 1 to City Secretary Contract No.23512 Page 3 • r i STATE OF TEXAS § COUNTY OF TA.RRANT § BEFORE ME, the undersigned authority, a Notary Public in and for the State of Texas, on this day personally appeared Marc Ott,known to me to be the person whose name is subscribed to the foregoing instrument, and acknowledged to me that the same was the act of the City of Fort Worth and that he executed the same as the act of the City of Fort Worth for the purposes and consideration therein expressed and in the capacity therein stated. GIVEN UNDER MY HAND AND SEAL OF OFFICE this I� day 2003. 'TvHEME LANE G : Notary Pubic,Sw*of Tom . �FuV' CMMISSW� QE' Notary Public in and for the State of Texas STATE OF TEXAS § COUNTY OF C 4 I I ttS § alllkntC. y' BEFORE ME, the undersigned authority, a No u lie in and for the State of Texas, on this day personally appeared M. Thomas Mason, own to a to be the person whose name is subscribed to the foregoing instrument, and owledged me that the same was the act of Hillwood 'on an illwood g, L.P. on behalf of Airport Q Building Partners, Ltd. and that he ecuted the same as the act of Hillwood Hevekgmwnt n, Hillwood Operatfg, P. and Airport Building Partners, Ltd. for the purposes and consideration therein expressed and in the capacity therein stated. GIVEN UNDER MY HAND AND SEAL OF OFFICE this 3{ day art c r 2003. IRQ�YM M BAR 000"800 :Weis: Notary Public in 4dfor the State of Texas oaot�e u,� Amendment No. 1 to City Secretary Contact No.23512