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HomeMy WebLinkAboutResolution 967 RESOLUTION FILE N0. -` RESOLUTION NO. WHEREAS, the Board of Directors of the Dallas-Fort Worth Regional Airport Board has authorized the execution and delivery of a certain Agreement and Indenture of Lease to and with GTE Realty Corporation, a Delaware Corporation, pertaining to the leasing of certain lands and properties comprising a part of the Dallas-Fort Worth Regional Airport; and WHEREAS, the term of said agreement extends beyond a period of forty (40) years, and, accordingly, the Contract and Agreement between the Cities of Fort Worth and Dallas, dated as of April 15, 1968, and Article 46d-14, Vernon's Texas Civil Statutes, as amended, requires the approval thereof by this City Council; NOW, THEREFORE, Be It Resolved by the City Council of the City of Fort Worth, Texas: 1. That the Agreement and Indenture of Lease, between the Dallas- Fort Worth Regional Airport Board and GTE Realty Corporation, in substantially the form and substance attached hereto, is hereby in all things accepted and approved. 2. That the appropriate officers of the City are authorized and directed to execute the same as required and where indicated in said Agreement. 3. That the Dallas-Fort Worth Regional Airport Board is authorized to perform under and to administer said Agreement without further action of this City Council except that no amendment shall be authorized by the Board extending the period of occupancy of any properties covered thereby without the approval of this City Council. ADOPTED this 7th day of February, 1984. Mayor City of Fort Worth ATTEST: City Secretary APPROVED AS TO FORM: City Attorney (SEAL) THE STATE OF TEXAS § COUNTY OF TARRANT § CITY OF FORT WORTH § I, the undersigned, City Secretary of the City of Fort Worth, Texas, DO HEREBY CERTIFY that the above and foregoing is a true and correct copy of a resolution adopted by the City Council of the City of Fort Worth, Texas, on the 7th day of February, 1984, approving the Agreement and Indenture of Lease between the Dallas-Fort Worth Regional Airport Board and GTE Realty Corporation, which resolution is correctly enrolled among the permanent records of the City of Fort Worth, Texas. I FURTHER CERTIFY that said resolution was passed at a meeting held after due notice of the time, place and purposes thereof was given in accordance with Section 3A, Article 6252, Vernon's Texas Civil Statutes, as amended. WITNESS MY HAND AND THE SEAL OF THE CITY OF FORT WORTH, TEXAS, this the 7th day of February, 1984. City Secretary, City of Fort Worth (SEAL) Air Canada American t, Braniff " Continental CX Delta +Eastern+ FW Airline Advisory Board Flying Tigers VFrontier Ozark Texas Intl February 3, 1984 Mr. Ernest E. Dean Executive Director Dallas/Fort Worth Regional Airport Board Post Office Drawer DFW Dallas/Fort Worth Airport, Texas Dear Ernie: The DFW- Airline Advisory Board met on February 1st, in extraordinary session, to review the terms of the proposed lease of Braniff Place. Since that meeting was -the first time that most of our members had seen the proposed lease, there was little opportunity for in-depth analysis. We nevertheless attempted to quantify the cost exposures which the proposed lease creates. Under the terms of the proposed lease there are five circumstances in which Airport funds will or could be expended: 1. A payment of $3 million to restore Braniff Place to tenantable condition; 2. The expenditure of approximately $600,000 for building maintenance and operating expenses for the May 1, 1984 - May 1 , 1985 period; 3. Since we do not know how the Airport Board intends to handle the rent deferral , exposure could range from (a) an Airport loan of two year's debt service on the Braniff Special Facility Bonds to cover the rent deferral period (to be repaid over the ensuing eight years at nine percent) to (b) the difference between the rate of interest the Board pays for its funds and the nine percent to be repaid in the event a third party advanced the funds; 4. A $1.5 million shortfall in the May 1 , 1984 debt service payment for which the lessee is not responsible; and 5. Unknown costs for extending utilities and roadways to the sites of the lessee's several options. Mr. Ernest E. Dean February 6, 1984 Page 2 The direct first-year cost of the proposed lease to the Airport is thus at least $5.1 million plus the present value of the deferred rents for the first two years which could approximate another $5 million. Postponing ground rent for 20 months at present rates will cost an additional $440,000. Consequently, it appears that the cost of the proposed lease in the first two years will be approximately $10.5 million. The signatory carriers feel this is an unacceptable cost burden. The AAB has also examined the probable costs which would result from rejecting the proposed lease and adding Braniff Place costs to general airport costs. It seems likely that items 1, 2 and 4 above would be spent in either case and -that the $5,837,000 of debt service due in Fiscal 1985 would raise first-year direct costs to approximately $11 million. The Signatory Airlines simply cannot consider accepting incremental costs of this magnitude. Thus, neither acceptance of the proposed lease, nor inclusion of Braniff Place in our costs is acceptable. Since all interested parties are anxious to find some way of avoiding default on the Braniff Place Special Facility Bonds, we recommend that the Airport Board negotiate improvements in the terms of the proposed lease. From our perspective, it would appear that this is the only acceptable near-term alternative. The lease renegotiation should address several issues in addition to its unacceptble economic provisions. For example, the proposed 99-year term is highly unusual and was not even legally possible until the state legislature recently changed Texas law at the behest of the Airport Board, an action we assume was taken in anticipation of this proposed agreement. The signatory carriers feel that the term is unwarranted either by the circumstances or by the consideration offered by the proposed lessee.' Moreover, we object to according a new tenant, who has had no part in building DFW, who has little on-going reason to support DFW and who has no inherent interest in preserving and fostering the- primary functions of the airport, lease terms and conditions substantially better than those now enjoyed by the Signatory Airlines themselves. Mr. Ernest E. Dean February 6, 1984 Page 3 The possible consequences of granting the proposed lessee a 99-year term are both portentous and profound. Lease provisions which may be merely onerous in the short term become unacceptable when held in force for a '99-year term. This lessee would, for example have the unique ability to sublease or assign its leasehold interest to others without Airport Board approval. The absence of this most elemental privilege of a landlord opens thi possibility, if not the probability, that a private agency will be effectively granted an Airport Board franchise to operate a real estate development. An option granted to the prospective lessee could result in the establishment of a fixed-base operation at DFW. Additional options contemplate the installation of earth-to-satellite communication stations and, although the proposed lease contains a covenant requiring the lessee to avoid interfering with "airport communications systems", the contract does not provide appropriately specific definitions. Has the FAA been asked to comment on the adequacy with which the protective covenant will safeguard vital aviation communication capabilities? In summary, the Signatory Airlines believe that the proposed lease should be rejected and the prospective lessee invited to negotiate a lease of Braniff Place on terms and conditions more consistent with the long-term interests of the airport. While the law may require that the Airport Board take every reasonable action to protect the interests of the Special Facility bondholders, it does not require the Airport Board to make an arrangement that vitiates many of its managerial rights and responsibilities, that mortgages the future of the airport and that ignores the interests of the airlines who have built DFW into one of the largest and most successful airports in the world. Very truly yours, Ri hard B. Jami on Chairman DFW Airline Advisory Board cc: DFW AAB DFW Airport Board Members E. Ray Hutchison J. R. Alderson G .. 5 Airport Board Agreement No. 25452 AGREEMENT AND INDENTURE OF LEASE THE STATE OF TEXAS § COUNTY OF DALLAS § COUNTY OF TARRANT § THIS AGREEMENT AND INDENTURE OF LEASE ("this Agreement"), dated and effective as of this the 8th day of February, 1984, is made by and between DALLAS-FORT WORTH REGIONAL AIRPORT BOARD (hereinafter called "Board"), being the duly and lawfully constituted and operating Board of Directors of the Dallas-Fort Worth Regional Airport (hereinafter called the "Airport"), belonging to the Cities of Dallas and Fort Worth, Texas (hereinafter called the "Cities"), and having an office at East Airfield Drive, Dallas-Fort Worth Airport, Texas 75261; and GTE REALTY CORPORATION (hereinafter called "Lessee"), a corporation of the State of Delaware, having an office and place of business at One Stamford Forum, Stamford, Connecticut 06904. PRELIMINARY STATEMENTS: A. Lessee desires to lease and occupy certain land and facilities located at the Airport. B. Board desires to lease to Lessee such land and facilities. C. Board desires to make provisions therefor in this Agreement. NOW, THEREFORE, for and in consideration of the premises and of the obligation of Lessee to pay rent as provided in this Agreement, and in consideration of the other terms, covenants, and conditions of this Agreement, the parties hereto do hereby agree as follows: Section 1. Granting Clause. Board does hereby lease, demise, and let unto Lessee, and Lessee does hereby hire, take, and lease from Board, that certain land located at the Airport containing approximately 77.06 acres described by metes and bounds on Exhibit A attached hereto and made a part hereof for all purposes, together with all buildings, fixtures, and other improvements now located thereon, and certain personal ro rt described in Exhibit G attached hereto (such land, together with such buildings,and other improvements located thereon, and together with such other land and properties as shall hereafter be leased hereunder, and such personal property being hereinafter referred to as the "Premises"), TO HAVE AND TO HOLD the Premises, together with its appurtenances and all rights and privileges described herein, including the right of use and enjoyment of all improvements now or s hereafter placed thereon by Lessee, and all rights of structural support and of ingress and egress and access to and from the Premises by way of Airport access-ways or passageways now or hereafter adjacent or contiguous thereto, to the extent and as herein provided, for the purposes, and upon and subject to the terms, conditions, and provisions set forth, permitted and contained in this Agreement. Section 2. Term. This Agreement shall become effective as of February 8, 1984 (the "Effective Date"), and, unless otherwise sooner terminated in accordance with the terms and provisions hereof, shall expire on February 7, 2083. As used herein, the word "Term" means the period of time this Agreement is in effect in accordance with its provisions. Subject to the terms and provisions of this Agreement, and unless otherwise specifically provided herein, Lessee shall be entitled to use and occupy the Premises as of the Effective Date for the purposes permitted in or determined in accordance with Sections 4 and 13 hereof and to continue such use and occupancy for the entire Term. Section 3. Rental. (a) Ground Rental. (1) Lessee shall pay Board an annual ground rental (the "Developed Ground Rental") equal to the product of the total number of acres developed within the Premises, from time to time, with improvements thereon (the "Developed Acres"), and an amount equal to the rental rate per acre under a formula more particularly described in Exhibit C attached .hereto which provides that the rental per acre is computed by dividing the "Airport Services Cost" (as defined in Exhibit C attached hereto) projected to be incurred by Board during Board's next succeeding fiscal year by the "Total Developed Acreage of the Airport" (as defined in Exhibit C attached hereto). The present annual Developed Ground Rental per acre is Eight Thousand Five Hundred and No/100 Dollars ($8,500.00), but as shown by such formula, it is subject to change from year to year. Board agrees to permit Lessee, upon reasonable notice and during business hours, to inspect or copy and audit at Lessee's expense Board's determination of Developed Ground Rental. (2) Lessee's obligation to pay Developed Ground Rental shall not commence until January 1, 1986. From and after January 1, 1986, Developed Ground Rental shall commence, as herein provided and shall be payable by Lessee to Board monthly in equal installments in advance. The first installment of Developed Ground Rental shall be due and payable on January 1, 1986, with subsequent installments to be due and payable by Lessee to Board on the first day of each calendar month thereafter throughout the Term. (3) As of the Effective Date, it is agreed that 29.37 acres within the Premises constitute Developed Acres and are subject to the payment of Developed Ground Rental. If Tract 6 becomes a part of the Premises, as permitted under Section 4 hereof, all of said Tract shall for all purposes hereof be considered Developed Acres and Developed Ground Rental shall be payable as provided in subsection 4(c) hereof. (4) The remaining balance of 47.69 acres within the Premises, more particularly described in Exhibit D attached hereto (herein called "Tract 511) is unimproved, and rental ("Undeveloped Ground Rental") with respect to Tract 5 shall 0040H -2- B S be paid for by Lessee to Board at the rate of ten dollars ($10.00) per acre per annum; provided, however, except as set forth in paragraph (4) of subsection 4(c), Developed Ground Rental shall commence to the extent and upon the happening of the following: on the date which is the earlier of beneficial occupancy by Lessee (as evidenced b a Certificate of Beneficial Y Occupancy of the Director [as hereinafter defined]) of any improvements constructed upon any portion of Tract 5 or on the date which is two (2) years from the date of the approval by the Director of a Construction Application (in the form set forth as Exhibit I hereto) with respect to improvements to be constructed on Tract 5, in which event Developed Ground Rental shall commence on such portion of land as may be so developed, used and occupied (but only such portion). The Undeveloped Ground Rental shall be payable by Lessee to Board monthly, in advance, in equal installments of $.83334 per acre for each acre of Tract 5 that does not become Developed Acres as provided above; provided that Lessee's obligation to pay the Undeveloped Ground Rental shall not commence until January 1, 1986. The first installment of the Undeveloped Ground Rental shall be due and payable on January 1, 1986, and subsequent installments shall be due and payable by Lessee to Board on the first day of each calendar month thereafter through September 1, 2009. Beginning October 1, 2009, and continuing monthly throughout the Term hereof, Lessee shall pay the Developed Ground Rental on all 77.06 acres of the Premises (except to the extent released to Board as provided in subsection 4(c) hereof), plus any additional land leased hereunder, regardless of which portions may be developed or undeveloped, or used for lakes, landscaping, or otherwise. As used herein, "Ground Rental" means the sum of the Developed Ground Rental and the Undeveloped Ground Rental. (b) Facilities Rental. (1) In addition to the Ground Rental, Lessee shall pay a rental (the "Facilities Rental") to Board in accordance with the amounts shown on Exhibit E attached hereto (except as provided below) for the use and occupancy of the improvements now located on the existing Developed Acres of the Premises (such improvements being herein, collectively, called the "Existing Facilities" or, singly, the "Existing Facility"). ; (2) The Facilities Rental shall, subject to subsection 3(c) of this Agreement, commence on May 1, 1984, and shall be payable on the first day of each month thereafter through, and including, September 1, 2009, in such amounts as specified in Exhibit E attached hereto, unless prepaid or deferred as hereinafter provided. It is understood and agreed, however, that no Facilities Rental for the Existing Facilities shall ' be due after September 1, 2009, or after prepayment thereof; provided, however, subject to the terms and provisions of this Agreement, including, without limitation, Lessee's right to defer payments under subsection 3(c) below, it is specifically understood and agreed that during the Term so long as any Facilities Rental payments shall remain outstanding, Lessee shall not withhold, reduce, abate, or for any reason fail to pay same in full when due, and, accordingly, Lessee's obligation to pay the Facilities Rental when due shall be irrevocable and unconditional, except as provided in Sections 20 and 33 hereof. It is understood and agreed by Board that the Facilities Rental will be used when and as required to pay debt service on the revenue bonds described in paragraph (3) immediately below. It is further understood and agreed that Lessee may prepay any or all of the installments of the Facilities Rental at any time. Prepayments under this paragraph 0040H -3- (2) shall be applied against the next Facilities Rental coming due and shall reduce Lessee's obligation hereunder to pay Facilities Rental on the date or dates with respect to which Facilities Rentals have been prepaid. (3) Alternatively to the method of prepaying all or a :part of the Facilities Rental provided in paragraph (2), next above, Lessee shall have the right at any time to prepay all (but not less than all) of the Facilities Rental by paying to and depositing with Board (for the benefit of the holders of the bonds below described) that amount of money which can be invested in then currently available securities issued directly by the United States of America, which will, together with the earnings payable on such securities according to the terms thereof, mature and become due at such times as will provide to Board on a timely basis, without the necessity of reinvestment, sums of money that, to a mathematical certainty, will be sufficient to pay, when and as due, the then outstanding principal of and interest thereafter to accrue (to the next earliest call date, if and to the extent callable) on the following revenue bonds, to-wit: (i) Dallas-Fort Worth Regional Airport Braniff Special Facilities Revenue Bonds, Series 1976, dated August 1, 1976; and (ii) Dallas-Fort Worth Regional Airport Braniff Special Facilities Revenue Bonds, Series 1978, dated February 1, 1978; and (iii) Dallas-Fort Worth Regional Airport Braniff Special Facilities Revenue Bonds, Series 1979, dated May 1, 1979. It is provided, however, that the option of prepayment granted in this paragraph (3) shall not be exercised until or unless Board has received an opinion from bond counsel selected by it that such prepayment in the manner and amount and in the securities required herein (i) will not cause said bonds to be "arbitrage" bonds within the meaning of the Section 103(c) of the Internal Revenue Code of 1954, as amended, under rules, regulations and rulings then in effect and (ii) will result in the bonds being defeased and the principal and interest payments thereon being solely payable from such securities and the interest earnings thereon. (c) Deferral of Facilities Rental. Notwithstanding anything to the contrary contained in subsection 3(b) of this Agreement, the payments of the monthly installments of Facilities Rental which accrue and which are otherwise due and payable by.Lessee prior to May 1, 1986, shall be deferred and paid in accordance with this subsection 3(c). Each payment of Facilities Rental which would otherwise be due and payable prior to May 1, 1986, shall not be payable by Lessee, but rather shall be accrued by Board in a deferred rental account (the "Deferred Rent Account"), which account shall bear interest at a rate of nine percent (9%) per annum, computed on each accrued, but unpaid, installment of Facilities Rental from the date of accrual in accordance with subsection 3(b) above until paid in full by Lessee. On or before April 20, 1986, Board shall notify Lessee of (i) the then outstanding balance of the Deferred Rent Account, both principal and accrued interest, as of May 1, 1986, and (ii) the amount of an equal monthly payment computed to completely amortize such Deferred Rent Account, both principal and interest accrued to that date plus continuing interest at said rate on the outstanding balance from time to time until fully paid, assuming ninety-six (96) equal monthly payments commencing on May 1, 1986, and a continuing interest rate of nine 0040H -4- percent (9%) per annum (the "Rent Amortization Payment"). Commencing on May 1, 1986, and on the first day of each calendar month thereafter through April 1, 1994, Lessee shall pay, in addition to its regularly scheduled payments Rental and Facilities Rental, the Rent Amortization Payment. It is understood and agreed that Board shall have the right to pledge or assign the Rent Amortization Payments, in whole or in part, with or without the consent or approval of Lessee, and in the event of such pledge or assignment and when Lessee has received a copy, certified by Board as true, of such pledge or assignment, Lessee agrees to pay over to such third party assignee as directed by Board each such Rent Amortization Payment so pledged or assigned as it becomes due. Lessee may, at its sole option, prepay all or part of the Deferred Rent Account at any time or from time to time, any such partial prepayments being applied to the next due Rent Amortization Payments, and Lessee shall have no further obligation to make monthly payments of the Rent Amortization Payments at such time as the balance in the Deferred Rent Account has been reduced to zero and all accrued interest thereon is paid in full. (d) Maintenance Operation and Occupancy of Existing Facilities until May 1, 1985.. Except as provided in the follounng sentences, Board will maintain and operate, at no expense to Lessee, the Existing Facilities and the remainder of the Premises until May 1, 1985. Until such date, Board shall be responsible for the payment of all operating costs attributable to the Existing Facilities, including, without limitation, costs and expenses attributable to utilities, security, heating, ventilating and air conditioning, minor repairs, insuring, lighting, and other operational and maintenance costs and expenses necessary to keep the Existing Facilities in the condition at least as good as that existing on the Effective Date; provided that from June 1, 1984, Lessee shall reimburse Board for the cost of electricity incurred by Board for the provision of such service from such date to the flight simulator building and the flight computer building to a user thereof, but only for those buildings. At any time and from time to time, Lessee, its agents, employees, and contractors, shall have access to the Existing Facilities for the purpose of performing all finish work thereto. Further, Lessee may occupy the Existing Facilities, or any part thereof, for the uses and purposes permitted in this Agreement. It is provided, however, that no such access, work or occupancy shall have the effect of increasing Board's costs under this paragraph except for reasonable increases in the costs of utilities. (e) Maintenance Operation and Occupancy of Existing Facilities beginning May 1, 1985. Beginning May 1, 19859 Lessee shall be responsible for the payment of all operating costs attributable to the Existing Facilities, including, without limitation, those enumerated in subsection 3(d), it being the intent of the parties that this shall be a "triple-net" lease with no further responsibilities or costs to Board from and after May 1, 1985. (f) Place of Payments, Delinquencies. All payments of Ground Rental and Facilities Rental all be made on the dates specified in Sections 3 and 4 at the principal office of Board. Board, at its option, in addition to any remedy available to it hereunder in the event of default because of nonpayment of rent, may impose a delinquency charge, payable upon demand against Lessee, in accordance with the formula set forth in Exhibit B hereto. 0040H -5- Section 4. Options for Other Land Substitute for Tract 5 (a) Option for Additional Land. Lessee is granted an option to Lease a certain tract of land (the "Additional Land") containing approximately six (6) acres described on Exhibit F attached hereto for the sole and exclusive purpose of constructing and using an aircraft hangar and aircraft support facilities for Lessee's or Lessee's affiliates' private aircraft which hangar and support facilities shall not be used for the carrying of passengers or cargo for hire. This option is conditioned on the following terms: 0) Lessee may exercise the option to lease the Additional Land by giving written notice to Board and beginning the lease on or before February 1, 1986. (ii) If Lessee does not give notice of exercise of the option on or before February 1, 1986, Lessee may extend the option for three (3) successive twelve (12) month periods, by paying to Board on or before February 1, 1986, February 1, 1987, and February 1, 1988, as an option price for each such period, an amount equal to 20% of the Developed Ground Rental in effect on the commencement date of each such extension period which would otherwise be applicable to the Additional Land if leased by Lessee. (iii) During the initial or any extended option period, Lessee may exercise the option to lease the Additional Land for a period of 40 years from the date of the exercise of such option by giving written notice thereof to Board. (iv) If any payment required by paragraph (ii), above, is not timely made, or if the notice required by paragraph (iii), above, is not given prior to February 1, 1989, the option to lease the Additional Land shall terminate and Lessee shall execute such releases or acknowledgements as Board shall reasonably request. (v) If Lessee exercises its option to lease the Additional Land, the same shall become a part of the Premises and Lessee shall pay Developed Ground Rental, computed in the same manner as provided in subsection 3(a) hereof with respect to the entire acreage included in said Additional Land commencing on and effective as of the date of the exercise of such option. Developed Ground Rental with respect to the Additional Land shall continue thereafter in equal monthy installments payable to Board on the first day of each month throughout the lease term permitted by this subsection 4(a) with respect to the Additional Land. It is specifically understood that Board shall have no obligation to construct a taxiway or other access to the Additional Land unless pursuant to a separate agreement with Lessee whereby Lessee shall bear all of the costs of such construction. Board agrees, however, that as other users lease lands served by such taxiway or other access, Board will use its best efforts to impose charges, pro-rata, for the costs of construction thereof and will reimburse Lessee appropriately in accordance with standard Board policy. 0040H -6- (b) Option for Land for Satellite Stations. For a period of 5 years from the Effective Date, and upon thirty (30) days' prior written notice by Lessee to �°- Board, Lessee shall have the right to lease, from time to time, a sufficient area or areas of land (the "Satellite Land") not to exceed twenty (20) acres in the aggregate at a location or locations mutually approved by Lessee and Board for the sole and exclusive purpose of constructing thereon and using earth to satellite and satellite to earth telecommunication facilities and equipment. If Lessee exercises its option with respect to one or more areas of the Satellite Land, Lessee shall pay Board, with respect to such area or areas Developed Ground Rental on such area or areas, computed in the same manner as provided in subsection 3(a) hereof. Such rental shall commence with respect to each such area on the date of the earlier of one year from the date of the approval of a Construction Application with respect to improvements to be constructed thereon, or the date of beneficial occupancy by Lessee (as evidenced by a Certificate of Beneficial Occupancy of the Director) of such improvements, but in no event later than two years from the date of the exercise of the option. Developed Ground Rental with respect to the Satellite Land shall continue thereafter in equal monthly installments payable to Board on the first day of each month in advance throughout the lease term permitted in this subsection 4(b) with respect to the Satellite Land. The term of each such lease shall not exceed forty (40) years from the date Lessee gives its written notice to Board of the exercise of such option with respect to each such lease. (c) Substitute for Tract 5. Option for Tract 6. (1) It is understood and -� agreed that Tract 5 is leased hereunder for the purposes described in subsection 13(b) hereof, and that Lessee intends to construct, equip and occupy improvements for such purposes containing approximately 900,000 square feet. While the design of such facilities has not been accomplished, it is believed by the parties that a design can be developed for facilities having such dimensions that: (i) will not use any air space above the Premises in violation of applicable Federal Aviation Administration Regulations, as they may be amended from time to time; and (ii) will not violate any existing height obstruction ordinance (now in effect or hereafter amended) of the Statutory Joint Airport Zoning Board; and (iii) will not obstruct the view of any existing or future runways or taxiways at the Airport from the controller's tower on the Airport; and (iv) , will be compatible with other aircraft, runway and other similar uses of the Airport so that Tract 5 will continue throughout the Term to be habitable for the purposes described in subsection 13(b) hereof without material disruption or later change in design or increase in cost. The parties agree to cooperate and to use their best efforts, at the expense of the Lessee, to design a building(s) on Tract 5 having such dimensions and meeting such criteria. (2) For the purpose of providing Lessee with adequate time in which to determine whether Tract 5 can be placed in use for the purposes set forth in subsection 13(b) hereof, and as an alternative location for such purposes if Tract 5 is 0040H -7- determined by Lessee to be unsuitable therefor, Lessee is granted an option to lease Tract 6, as described in Exhibit K attached hereto, for a term co-terminus with the Term, as an alternative location on which to construct and equip a building or buildings for such purposes, having such dimensions and meeting the criteria specified in paragraph (1) next above. This option is conditioned on the following terms: (i) Lessee may exercise the option to lease Tract 6 by giving written notice to Board and beginning the lease on or before October 1, 1987. (ii) If Lessee does not give notice of exercise of the option on or before October 1, 1987, Lessee may extend the option period an additional 12 months by paying $25,000 to Board on or before October 1, 1987. If this payment is not made, then Board shall have no obligation to lease Tract 6 to Lessee. If the option period is extended as provided in this subparagraph (ii), Lessee may exercise the option to lease Tract 6 by giving written notice to Board and beginning the lease on or before October 1, 1988. (iii) If Lessee does not give notice of exercise of the extended option on or before October 12 1988, Lessee may extend the option period an additional 12 months by paying an additional $25,000 to Board on or before October 1, 1988. If this payment is not made, then Board shall have no obligation to lease Tract 6 to Lessee. If the option period is extended as provided in this subparagraph (iii), Lessee may exercise the option to lease Tract 6 by giving written notice to Board and beginning the-lease on or before October 1, 1989. (iv) If Lessee does not give notice of exercise of the extended option on or before October 1, 1989, Lessee may extend the option period an additional 12 months by paying an additional $25,000 to Board on or before October 1, 1989. If this payment is not made, Board shall have no obligation to lease Tract 6 to Lessee. If the option period is extended as provided in this subparagraph (iv), Lessee may exercise the option to lease Tract 6 by giving written notice to Board and beginning the lease on or before October 11- 1990. (v) If Lessee does not give notice of exercise of the extended option on or before October 1, 1990, Lessee may extend the option period an additional 12 months by paying an additional $25,000 to Board on or before October 1, 1990. If this payment is not made, then Board shall have no obligation to lease Tract 6 to Lessee. If the option period is extended as provided in this subparagraph (v), Lessee may exercise the option to lease Tract 6 by giving written notice to Board and beginning the lease on or before October 11 1991. (3) If Lessee exercises its option to lease Tract 6, Lessee shall thereafter pay Board, with respect to Tract 6, Developed Ground Rental, computed in the same manner as provided in subsection 3(a) hereof, on the entire acreage included in said Tract 6. Such rental shall commence on the earlier of the date of beneficial occupancy by Lessee (as evidenced by a Certificate of Beneficial Occupancy of the Director) of any improvements located on Tract 6 or on the date which is two (2) years from the date of the approval of a construction application 0040H -8- with respect to improvements to be constructed on Tract 6, but in no event later than two and one-half (2 1/2) years from the date of the exercise of the option to lease said Tract 6. Lessee shall continue to pay Developed Ground Rental with respect to Tract 6 in equal monthly installments on the first day of each month thereafter in advance throughout the Term. (4) If Lessee exercises its option to lease Tract 6, as hereinabove provided, Tract 5 and all improvements thereon, along with appropriate and reasonable access through an existing interior roadway (which Lessee may use in common with Board and others) around the Existing Facilities shall be released to Board and shall cease to be a part of the Premises hereunder. Lessee agrees to execute proper releases, easements (for access and sign locations) and other legal instruments necessary or appropriate for such purpose. Board agrees that it will not use or occupy nor permit the use or occupancy by others of Tract 5 in a manner or for purposes which would materially interfere or would be materially incompatible with Lessee's continued use and occupancy of the Existing Facilities for the purposes for which the same are being used. In lieu of releasing Tract 5 to Board in the event Lessee exercises its option to lease Tract 6, Lessee may, at its option, continue to lease Tract 5 for the remainder of the Term by paying to Board Developed Ground Rental computed in the same manner provided in subsection 3(a) hereof, with respect to the entire acreage contained in Tract 5. Such rental shall commence upon the exercise of the option to retain Tract 5 (which option must be exercised concurrently with the exercise of the option to lease Tract 6) and shall continue in equal monthly installments payable to Board on the first day of each month in advance throughout the Term. Additionally, Lessee covenants and agrees that if it exercises the option to retain Tract 52 it will not cause or permit any improvements to be built, constructed or otherwise placed thereon other than landscaping and other open-space uses, and shall remove at its expense any improvements previously constructed on Tract 5, which were placed thereon without the express consent of Board. (d) Except as otherwise expressly provided in this Agreement, the leasing of the other lands pursuant to the options granted under this Section 4 shall be upon the same terms and conditions as the leasing of the Premises, and shall be upon and subject to all the provisions of this Agreement. Upon the exercise or exercises of any option under this Section, Board and Lessee shall enter into a written agreement or agreements modifying and supplementing this Agreement and specifying that the other land is a part of the Premises under this Agreement and containing other appropriate terms and provisions relating to the addition of such land to this Agreement as the parties may then agree. (e) The options to lease the Statellite Land shall not be construed as a prohibition against or limitation on Board in leasing Airport lands prior to the exercise of any such options to any parties, at any times, for any purposes, at any locations and for any rents Board may deem appropriate, even though such leasing might frustrate such options or render them ineffective and not capable of exercise. Section 5. Letters of Credit, Security or Corporate Guarantees Lessee shall provide an irrevocable letter of credit, in a form reasonably acceptable to Board, for the benefit of Board, on or before May 1, 1986, in the amount of Five Million and No/100 Dollars ($5,000,000.00) (the "Letter of Credit"). 0040x -9- The Letter of Credit may be drawn upon by Board in the event Lessee fails to make payment of either or both Facilities Rental or Rent Amortization Payments. Board agrees to concurrently notify Lessee of any draw under the Letter of Credit. The amount of each draw shall be equal to the amount of Facilities Rental and/or Rent Amortization Payments that Lessee has failed to pay. The Letter of Credit shall be renewed or replaced by Lessee to the extent of Five Million and No/100 Dollars ($5,000,000.00) immediately after each draw and shall remain in effect until all 'Facilities Rentals have been fully and finally paid on September 30, 2009. Notwithstanding the foregoing, in lieu of the Letter of Credit, Lessee, subject to the written approval of Board's Director of Finance, may deposit cash or other forms of mutually agreeable investments, securities or corporate guarantees at the times and in the amounts provided above, for Board to invest or hold as security, as the case may be, with respect to Lessee's obligations to make payments of Facilities Rental and/or Rent Amortization Payments; provided, however, any interest or profit earned on such investments or securities shall be for the benefit of and paid to Lessee unless Lessee shall fail to make any Facilities Rental payment and/or Rent Amortization Payments as required by this Agreement after notice and opportunity to cure as provided in this Agreement. Section 6. Garbage Storage and Removal Lessee shall store its garbage, debris, and other waste materials in a clean and sanitary manner in trash receptacles, which Board shall provide at the Premises, the size, number, and location of which shall be at the reasonable discretion of Board, but which shall in all events be adequate to meet the reasonable needs of Lessee, and Board further agrees to periodically remove such trash from the receptacles. In consideration of the services hereinabove described, Lessee shall pay a standard Airport fee, such fee not to accrue or otherwise be due until May 1, 1985; provided, however, Lessee shall be responsible for the payment of any amounts attributable to the removal of construction debris. Such fee is to be periodically adjusted in accordance with the debt service on Board's capital investment required with respect to garbage removal, as well as the operation and maintenance expenses incurred in the furnishing of such service. The cost to Lessee for such services shall be reasonable and consistent with the amounts charged to other tenants in the Airport for similar services rendered by or on behalf of Board. Lessee shall not be obligated to pay any increase in such cost until Board furnishes Lessee thirty (30) days' written notice in advance of any proposed increase. Section 7. Construction. (a) C_ onstruction of Improvements. Lessee shall have the right to erect and construct, at Lessee's cost and expense, improvements on the Premises, which improvements shall be built in accordance with all applicable governmental laws, ordinances, rules, regulations, requirements and orders, including, without �—. limitation, health and safety alarm systems, fire and building codes, and any directions and standards which Board has lawfully promulgated, as all of the foregoing are or may be amended from time to time (collectively, called "Laws"). Prior to the commencement of construction of improvements estimated to exceed Five Thousand and No/100 Dollars ($5,000.00) in cost, Lessee shall submit preliminary plans, specifications, and other documents or renderings necessary to describe generally the proposed construction to Board's Director of Planning and Engineering (hereinafter and hereinbefore referred to as the "Director"). The oo+ox -10- preliminary submission by Lessee shall employ essentials of aesthetics, convenience, function and design which are compatible in such respects with those of other improvements, from time to time, located on the Airport in accordance with the developmental standards (herein so called), as they shall be amended from time to time, adopted by Board. If such preliminary plans are not in compliance with applicable Laws or developmental standards, the Director, by written notice to Lessee within fifteen (15) days of the Director's receipt of such preliminary plans, may disapprove the same stating the reasons therefor and suggested changes; or otherwise, the preliminary plans shall be deemed to be approved. Upon disapproval of such preliminary plans, Lessee shall prepare additional plans and specifications of the proposed construction with the required changes (if any), which plans and specifications shall be submitted to the Director for approval, which approval shall be given within ten (10) days of receipt of such plans and specifications if such plans and specifications are in compliance with the Laws and are reasonably determined by the Director to comply with applicable developmental standards then in effect. (b) Indemnification. Lessee shall include in all construction contracts entered into by it, in connection with any or all of the construction work performed by or on behalf of Lessee on the Premises, a provision requiring the contractor, or, in the alternative, Lessee, to indemnify, hold harmless, defend and insure Board, the Cities, and their. directors, council members, officers, agents, and employees against the risk of legal liability for death, injury, or damage to persons or property, direct or consequential, arising out of, or in connection with, the performance of any or all of such construction work and against the risk of claims and demands made by third parties, whether such claims and demands are just or unjust, and which arise or are alleged to arise out of the performance of the construction work, unless same are caused by the negligence or willful act of Board or Cities. Furthermore, Lessee shall require its contractor to furnish liability insurance in such reasonable amounts as may be approved by the Executive Director of Board. In all construction contracts over Twenty-Five Thousand and 00/100 Dollars ($25,000.00) performed by or on behalf of Lessee on the Premises, no work shall commence until Lessee or Lessee's contractor has executed a statutory Payment Bond in the full amount of the contract. (c) "As Built" Plans. Lessee agrees that it shall deliver to Director "as built" transparencies of the plans of the improvements within the Premises constructed by Lessee and, during the Term, shall keep said transparencies current, showing therein any changes or modifications which may be made in or to the improvements. (d) Construction by Board. Board agrees that in the event it or its contractors or subcontractors are authorized or required to engage in or perform any construction work on the Premises during the Term, Board, to the extent of its statutory liabilities, shall indemnify and hold harmless Lessee, its officers, agents, and employees, against death, personal injury, or property damage, direct or consequential, arising out of, or in connection with, the negligence or willful act of Board or its independent contractors or subcontractors in connection with or related to any such construction work. This indemnity shall never inure to the benefit of third parties, and no Board contractor or subcontractor shall be exonerated from its negligence, willful acts or omissions. (e) D_ esignation of Landscaped Areas. Lessee shall designate areas not to exceed twenty (20) feet in width along the periphery of the Developed Acres of the oo+ox -11- Premises as such Premises exist on the Effective Date adjacent to West Airfield Drive for use, and to be maintained, by Lessee as landscaped areas. Section 8. Condition of the Premises. It is acknowledged and agreed by Lessee that it has inspected the Existing Facilities and, subject to the provisions of Section 9, agrees to accept the same in their condition as they exist on the Effective Date. Section 9. Initial Repairs and Improvements. (a) It is provided that upon execution and delivery of this Agreement, Board shall create an account within Board's funds for the benefit of the Existing Facilities for the purpose of making initial repairs, such as roof, wall, or other interior or exterior treatment and finishes, which, in the opinion of Lessee, may be required to bring the Existing Facilities to tenantable condition. Lessee shall follow the procedures and requirements set forth in Section 7 hereof with respect to such repairs and improvements. Such account may be requisitioned by Lessee by submitting draw requests on the Form of Requisition in the form attached hereto as Exhibit J for the payment of such repairs and/or treatments and improvements by Lessee as may be designated by Lessee. Such requisitions must include any applicable invoices, statements or other applicable documentation. Upon receipt of such request for payment in the form provided for herein, together with satisfactory evidence that such amounts are due and owing, are not the subject of a previous draw and were incurred for the purposes permitted herein, Board will make payment for the requisitioned amount not later than 14 days from and after the request for such payment. It is provided, however, that such requisitions by Lessee and corresponding payments by Board shall not exceed $3,000,000, and, in no event, shall Board be liable for a total sum for repairs, treatments or improvements greater than such sum. The repairs and improvements undertaken by Lessee pursuant to this Section 9(a) shall be and constitute a part of the Premises, but shall be undertaken by Lessee solely as tenant improvements of Lessee and not in the capacity of any agent or contractor of Board. All interest earnings and profits on said monies shall remain the property of Board. Any monies remaining unexpended in said account or which have not been contracted for on May 1, 1986, shall automatically revert to Board and the provisions of this Section shall terminate. Notwithstanding that Lessee may exercise discretion with respect to the repairs and improvements to be made with such funds, Lessee covenants and agrees that it shall cause the roof of the Existing Facilities to be repaired so that it is in a structurally sound and water tight condition, the cost of such repairs being paid with such funds. (b) It is understood that Lessee, apart from the repairs and improve- ments paid for from the fund described above, may, at Lessee's expense, remodel portions of the Existing Facilities. In such event, Lessee and Board agree to cooperate with each other in construction scheduling and access, and in any other manner that may be mutually beneficial. Lessee and Board also agree that they shall cooperate in obtaining joint financing, if same is available and acceptable to both parties, for the costs incurred by them in respect of such remodeling. Section 10. Title to Improvements an d Removal of Goods. All improvements constructed on, installed upon, or affixed to the Premises by Lessee shall be owned by Lessee until the expiration of the Term, at which time 00408 -12- title to all of such improvements shall vest in Board and the Cities. Notwithstand- ing the foregoing, Lessee shall have the right, but not the obligation, to remove its trade fixtures and other personal property now located or hereafter constructed or located on the Premises, which removal shall be in accordance with Subsection 32(b) hereof. Lessee shall have the right to claim the depreciation deductions, investment tax credits, and other tax benefits under this Agreement on the Existing Facilities and other improvements constructed on the Premises and the equipment installed therein, and Board shall in no event claim such deductions, credits, or benefits. Board shall have no interest in equipment installed by Lessee, and all investment tax credits, depreciation deductions, and other tax benefits may be used or retained by potential equipment lessors even if not claimed by Lessee. Section 11. Lessee Financing, Rights and Duties of Lenders and Leasehold Mortgagees. (a) Lessee shall have the right, during the Term to mortgage, encumber, hypothecate or otherwise enter into and execute loan security instruments involving Lessee's leasehold estate created hereby with respect to the Existing Facilities (and the land on which the same are situated), the Future Facilities (hereinafter defined) and in Tract 5 and Tract 6 (if it becomes a part of the Premises). In the event that Lessee, pursuant to a mortgage, deed of trust, or other instrument, mortgages or otherwise encumbers an interest in the leasehold estate, the mortgagee or other secured party or pledgee (the "Mortgagee") shall not become liable to.perform the obligations of Lessee under this Agreement unless and until said Mortgagee becomes the owner of the leasehold estate pursuant to foreclosure, assignment in lieu of foreclosure, or otherwise; and thereafter, said Mortgagee shall remain liable for such obligations only so long as such Mortgagee remains the owner of the leasehold estate. No permanent assumption of liability by a Mortgagee under this Lease shall be inferred or result from any such foreclosure or as the result of any other action or remedy against Lessee by a Mortgagee. All leasehold assignees from a Mortgagee or from Lessee shall be entitled to the benefits accorded Lessee herein and shall be obligated to perform all of Lessee's obligations hereunder. (b) All Mortgagees' rights shall terminate no later than the end of the Term. In the event there is an earlier termination of this Agreement by Board under the provisions hereof, the lien rights of any Mortgagee who has advanced funds pursuant to a security financing arrangement shall terminate and cease immediately, if such Mortgagee fails or refuses to pursue its rights to cure as provided herein. (c) Nothing contained in any leasehold mortgage, leasehold deed of trust or other Lessee security financing arrangement shall ever attempt to pledge, mortgage, encumber, hypothecate, alienate or otherwise grant or convey all or any part of the fee simple title to the real property underlying the leasehold estate herein given. (d) Upon execution and recordation in the Deed of Trust Records of the appropriate County of any leasehold mortgage, the Mortgagee shall notify Board in writing that a leasehold mortgage has been given and executed by Lessee, and shall furnish to Board at the same time the address to which such Mortgagee desires copies of notices to be mailed, or designate some person or corporation as its agent and representative for the purpose of receiving copies of notices. Board hereby 0040H -13- agrees that it will mail to each Mortgagee from whom Board has actually received such notice, or to the agent or representative so designated by each such Mortgagee, at the address so given, duplicate copies of any and all pleadings in suits filed by Board against Lessee and any and all notices in writing which Board may from time to time give or serve upon Lessee under and pursuant to the terms and provisions of this Agreement. However, failure to give any such notice shall not impair or diminish the legal effect of any such pleadings or notice as between Board and Lessee. (e) To the extent that Lessee may grant the right to any Mortgagee, or same may be provided for herein, a Mortgagee may, at its option, at any time before the rights of Lessee hereunder shall have been terminated, pay any rental due hereunder, effect any insurance, pay any taxes, discharge any lien, make any repairs and improvements, make any deposits, or make any other payment required of Lessee by the terms of this Agreement, or do any act or thing which may be necessary and proper to be done in the observance of the covenants and conditions of this Agreement, or to prevent the termination of this Agreement; and all payments so made and all things so done and performed by any such Mortgagee shall be as effective to prevent a forfeiture of the rights of Lessee hereunder as the same would have been if done and performed by Lessee. Any mortgage so given by Lessee may, if Lessee desires, be so conditioned as to provide that, as between any Mortgagee and Lessee, the Mortgagee shall, on curing any such default or defaults on the part of Lessee, be thereby subrogated to or put in the position of assignee of any or all of the rights of Lessee under the terms and provisions of this Agreement, and Board shall recognize such subrogation or assignment. (f) No Mortgagee of Lessee hereunder shall be or become liable to Board, as an assignee of this Agreement or otherwise, for the payment or performance of any obligation of Lessee until it assumes or exercises the rights of Lessee hereunder. (g) Anything contained in this Agreement to the contrary notwithstand- ing, if any default shall occur which entitles Board to terminate Lessee's interests in this Agreement, Board shall have no right to so terminate this Agreement unless, following the expiration of the period of time given Lessee to cure such default (if any), Board shall notify the Mortgagee of Board's intent to so terminate at least thirty (30) days in advance of the proposed effective date of such termination if such default is capable of being cured by payment of money, and at least forty-five (45) days in advance of the proposed effective date of such termination if such default is not capable of being cured by the payment of money. This Agreement shall not be terminated if, during such thirty (30) or forty-five (45) day period, any such Mortgagee shall: (1) notify Board of such Mortgagee's desire to nullify such notice, and (2) pay or cause to be paid all rent, insurance premiums, and other payments then due and in arrears as specified in the notice to such Mortgagee and which may become due during such thirty (30) or forty-five (45) day period, and 0040H -14- (3) comply, or commence to comply, in good faith, with reasonable diligence and continuity, with all nonmonetary requirements of this Agreement then in default, except that Mortgagee shall not be required to cure defaults which cannot be cured by the expenditure of money and not reasonably susceptible to being cured by it, including expressly the defaults specified in subsection 26(a)(iii) of this Agreement. (h) Except as otherwise provided in subsection (g) above, nothing contained herein shall ever increase the rights of any Mortgagee, assignee of Mortgagee or assuming owner beyond those given herein to Lessee; and no covenant, promise or obligation of Lessee shall be considered reduced, modified, waived or forgiven by Board by reason of a transfer of the leasehold title. Section 12. Board Finanein . It is anticipated by the parties hereto that Lessee shall have supplemental and additional requirements for improvements to the Premises or for other locations off Premises with need for construction of improvements. Examples of the foregoing would include additional or incremental office space to be located on the Premises and aircraft hangar and related aircraft parking apron as well as maintenance, storage, and office facilities related to Lessee's aircraft. To the extent permitted by law and when consistent with Board policy, Board agrees to use its best efforts to finance or obtain financing of such improvements when requested to do so by Lessee. Lessee _agrees to execute and provide whatever financial guarantees and assurances as are necessary to market and repay any obligations issued or incurred, all without any cost to Board of any nature or kind. Section 13. Permitted Uses of Premises and Option Lands. (a) Primary Permitted Uses of Existing Facilities. The Existing Facilities, including the land on which the Existing Facilities are situated, are leased hereunder to Lessee for the primary, and every incidental, related and subordinate, purpose of providing general office and related corporate business and research facilities for Lessee, its corporate affiliates, and non-affiliated assignees or sublessees, and for training, computer center, incidental hotel accommodations and other purposes for which the various Existing Facilities were constructed and designed. (b) Primary Permitted Uses of Tract 5 and Tract 6. Tract 5, if retained as a part of the Premises, and Tract 6, if the option is exercised to lease Tract 6, are leased hereunder to Lessee for the primary purpose of constructing and equipping thereon additional general office and research facilities for use by Lessee, its corporate affiliates and non-affiliated assignees and sublessees, and for every incidental, related and subordinate purpose related thereto. It is provided, however, that if Tract 5 is retained by Lessee under the provisions of paragraph (4) of subsection 4(c), then, thereafter, Tract 5 shall be used solely for the purposes and uses permitted by said paragraph. (c) Sole Use of Additional Land. The Additional Land shall, throughout its lease term, be used solely and exclusively for the purposes described in subsection 4(a) hereof. 0040x -15- M Sole Use of Satellite Land. The Satellite Land shall, throughout its lease term, be used solely and exclusively for the purpose described in subsection 4(b) hereof. (e) Alternate Uses and Purposes of Existing Facilities and Future Facilities. (1) In the event the continued use of any part or all of the Existing Facilities or the intended facilities on Tract 5 or Tract 6 (for the purposes specified in subsections (a) or (b), above) become infeasible or economically detrimental to Lessee's corporate needs at any time during the Term, then Lessee shall have the right to convert such properties to another or different use if approved in accordance with the provisions of this subsection 13(e). (2) In the event a change of use is desired by Lessee, Lessee shall make written request to Board for the authority to make a change in use. The request shall state the proposed use or uses of the properties described therein, the reasons therefor and the intended period of use for such purposes. Within sixty (60) days after receipt of such request, Board shall respond to such request by approval or denial. Board shall approve such request unless Board affirmatively finds, in its official, governmental capacity, that the proposed use - (i) is a "prohibited use," as described in Section 14 hereof; or (ii) would be hazardous or detrimental to air navigation or would be disruptive to the Airport as a major aviation facility serving the general public; or (iii) would expose Board to significant economic risk if the Airport properties were used for such purposes; or (iv) would create significant vehicular traffic congestion or hazardous or unsafe ground conditions at the Airport; or (v) would materially and adversely limit Board's ability to place other Airport lands into productive use or would have a materially adverse effect on the continued use of previously developed Airport lands for the purposes for which they are being used; or NO would be inconsistent with any development and use plans officially adopted pursuant to its governmental authority for the lands within the boundaries of the Airport; or (vii) would create a nuisance on the Airport; or (viii) would violate a valid and applicable Law. (3) A denial by Board shall be conclusive, but shall be without prejudice to Lessee's right to request the same use at any time after one (1) year from the date of such denial. Section 14. Prohibited Uses. Lessee covenants and agrees that, throughout the Term, no part of the Premises shall be used for any one or more of the following purposes and uses, to-wit: 0040x -16- public; (1) for the operation of any retail business open to the general r (2) for the operation of commercial hotel facilities for use by the general public, except as to the hotel comprising a part of the Existing Facilities which existing hotel may be incidentally used or used in conjunction with other Existing Facilities or future facilities for hotel purposes; (3) for providing single or multifamily residential housing; or (4) for heavy industrial or heavy manufacturing purposes. Section 15. Ingress and Egress. (a) Existing Access. Lessee and its licensees and sublessees, and their respective contractors, suppliers of materials and furnishers of services, employees, and business invitees, shall have at all times the right of ingress and egress from the Existing Facilities, Tract 5 and Tract 6 to a public right-of-way outside the Airport by means of a paved existing access road known as West Airfield Drive, the same to be used in common with others having rights of passage within the Airport; provided, however, that Board may, subject to Section 15(b) below, from time to time, substitute other means of paved access to the Existing Facilities, Tract 5 and Tract 6. Lessee acknowledges that access to Tract 5 is by the interior roadway system of the Existing Facilities and that Board shall not be required to construct any additional interior roadways within the Premises or to construct any additional access whatsoever with respect to Tract 5 other than pursuant to its obligations to provide alternative access pursuant to subsection 15(b) hereof. The use of such roadway or other access shall be subject to the Rules and Regulations of Board as uniformly applied to lessees of Board at the Airport. (b) Alternative Access. Lessee and Board acknowledge that Board may, during the Term, determine to construct one or more additional runways to serve the Airport, which runways may require the closing or relocation of West Airfield Drive. (1) Prior to or concurrently with constructing any such additional runway, Board shall, after consultation with Lessee, either construct a tunnel and/or relocate West Airfield Drive to an alternate right-of-way, neither of which will substantially increase either travel time or distance from Existing Facilities and Tract 6 (if leased hereunder) to a public right-of-way outside the Airport. (2) At all times during any period of construction of either an alternate access way or of the runway itself, Lessee shall have at least one %— way of ingress and egress to the Existing Facilities and Tract 6 (if leased hereunder) by means of a paved roadway. (c) Access to Other Portions of Premises. Board agrees, at Lessee's request, to provide reasonable access to the Additional Land and the Satellite Land by roadways of reasonable character and design and constructed at the sole expense of Lessee. 0040H -17- Section 16. Governmental and Other Requirements. (a) Required Permits. Lessee shall procure from all governmental authorities having jurisdiction of the operations of Lessee hereunder all licenses, franchises, certificates, permits or other authorization which may be necessary for the conduct of Lessee's operations. (b) Compliance with Laws. Lessee shall promptly observe and comply with the provisions of any and all present and future laws, rules, regulations or ordinances which may pertain or apply to its operations or the use and occupancy of the Premises hereunder; provided, however, that Lessee shall have the right, in good faith, and at its sole cost and expense and in its own name, to contest the validity or applicability of any law, rule, regulation or ordinance and may defer its compliance therewith during the pendency of such contest until such noncompliance would permit the Premises or any interest therein to be seized or sold by any governmental authority as a result of such noncompliance. (c) Liens and Taxes. Lessee agrees that it shall not enter into any contracts of a type which would permit a lien or liens to become attached to the reversion interests in the Premises of Board and the Cities. Lessee further agrees to pay, as they become due and payable, and before they become delinquent, all ad valorem taxes, both general and special assessments, and governmental charges, if but only if, lawfully levied or assessed against Lessee's leasehold interest in the Premises, or any part thereof, and upon all the improvements located thereon. In the event any such tax, special assessment, or other governmental charge may be lawfully paid in installments, Lessee shall be entitled to pay such amounts in installments. Lessee shall have the right, in good faith, and at its sole discretion, cost, and expense and in its own name, to contest the validity or amount of any such taxes, charges, and assessments, and in the event of any such contest, the payment thereof may be deferred during the pendency of such contest. Nothing herein contained, however, shall be construed so as to allow such items to remain unpaid for such length of time as shall permit Lessee's leasehold interest in the Premises, or any part thereof, to be sold by governmental, city, or municipal authority for the nonpayment of same. (d) Compliance with Rules and Regulations. Lessee covenants and agrees to observe and obey the nondiscriminatory and uniformly applicable Rules and Regulations of Board for the government of the conduct and operations of Lessee as may from time to time during the Term be promulgated by Board to promote (1) air traffic safety and security, and (2) compatible operations with other activities of the Airport. Section 17. Prohibited Acts. Lessee shall not: (a) Install on the Premises or in any public area any vending machine or device designed to dispense or sell food, beverages, tobacco, tobacco products or merchandise of any kind, nor operate any restaurant, cafeteria, kitchen, stand, or other establishment for the purpose of dispensing .or selling such products to any member of the public, other than to Lessee's employees, officers and business invitees, without approval of Board's Executive Director, in advance. 00408 -18- (b) Create, commit or maintain any factual or legal nuisance on the Premises and shall not do or permit to be done anything which may result in the creation, commission or maintenance of a nuisance on the Premises. Code. (c) Violate any provision of the Airport Building Code or the Airport Fire • (d) Permit the accumulation of paper, cans, bottles, wrappers, rags, trash, junk or debris on the Premises. If such accumulation occurs and continues, Board shall give notice to Lessee, in writing, to clean the Premises. If such clean-up is not accomplished within seven (7) days of the date of the Notice, Board, after telephone notice to Lessee, may proceed to effect such clean-up and may levy a civil contract charge at prevailing wage rates for the necessary clean-up time. If such charge is not paid within sixty (60) days of the date of Board's clean-up, Board may declare a default of this Agreement. (e) Employ any device or devices anywhere on the Airport that would disrupt or interfere with the airport communications systems, or interfere with the communications requirements and standards of governmental authorities having jurisdiction. Section 18. Maintenance and Repairs. (a) Lessee's Obligations. Subject to Board's obligations under Sections 3(d), 6, 9, 20, 24(b), 28, and 33, Lessee shall at all times keep the Premises in a clean and orderly condition and appearance. Except as otherwise provided in Sections 3(d), 6, 9, 20, 24(b), 28 and 33 hereof, Lessee shall maintain, repair, replace, and keep, at its own cost and expense, the Premises and all fixtures, equipment, machinery, fittings, facilities, and improvements located or placed, from time to time,on or within the Premises, in good repair and orderly condition, ordinary wear and tear excepted. (b) Board's Right to Repair. Except for Board's direct obligations when required to do so under this Agreement, including, without limitation, Board's obligations under the provisions of Sections 3(d) and 20, in the event Lessee fails to commence to make repairs or replacements required to be made by it under this Agreement, within a period of thirty (30) days after written notice thereof from Board or fails to diligently continue to complete such repair or replacement, Board may, at its option, repair or replace all or any part thereof included in Board's notice, the cost thereof to be paid by Lessee on demand. (c) Waiver of Liabili ty. Board assumes no responsibility for any property placed in the Premises or any part thereof, and Board is hereby expressly released and discharged from any and all liability for any loss, injury, or damage to persons or r property that may be sustained by reason of the occupancy by Lessee of the Premises under this Agreement, unless such loss, injury, or damage is caused by the negligence or willful act of Board or the Cities. Section 19. Insurance. (a) Insurance with respect to Facilities. Subject to Lessee's right to self-insure after October 1, 2009, with respect to the Existing Facilities, and at any 0040H -19- time with respect to any Future Facilities, Board shall, with respect to the Existing - Facilities, until May 1, 1985,,and Lessee shall, with respect to the Existing Facilities on and after May 1, 1985, and as constructed with respect to the Future Facilities, maintain or cause to be maintained, with respect to each such facility, with responsible insurers, the following kinds and the following amounts of insurance, with such variations as shall reasonably be required to conform to applicable standards or customary Texas insurance provisions, to-wit: (1) Property Damage Insurance. With respect to every structure and the contents and fixtures thereof constituting part of the Existing Facilities and the Future Facilities, multi-risk insurance on each structure and its fixtures and contents, covering direct physical loss or damage (including the cost of removal of debris) to such structure and its fixtures and contents, in such amount and of such character as, under the terms and provisions thereof, will provide a recovery, in the event of the occurrence of any loss or damage from an insured cause, equal to the full amount of loss or damage on a replacement cost basis up to the amount reasonably obtainable as the maximum probable loss or damage (including the cost of removal of debris) to such structure and its fixtures and contents from any such cause; provided, however, that Lessee's insurance may contain a co-insurance clause providing for coverage of not less than eighty percent (80%) of such replacement cost and a deductible not exceeding One Hundred Thousand and No/100 Dollars ($100,000.00) respecting any one casualty. The risks to be insured against pursuant ' to this subsection 19(a) are the risks against direct physical damage or loss from fire and so-called extended coverage perils to the extent such coverage is reasonably obtainable and is customarily obtained for similar facilities at other major airports. (2) Public Liability Insurance. A policy of liability insurance providing for bodily injury (including death) and property damage to third persons in amounts not less than Two Hundred Fifty Thousand and N01100 Dollars ($250,000.00) for any one person and Five Hundred Thousand and No/100 Dollars ($500,000.00) for any one accident for bodily injury and death and Five Hundred Thousand and No/100 Dollars ($500,000.00) for property damage. Such coverage shall be with an insurance carrier licensed to do business in Texas and satisfactory to Board, and Board shall receive a copy of such policy of insurance or a certificate, validly executed by or on behalf of the insurance company or Lessee, as applicable, certifying that such insurance is in full force and effect. (b) Other Insurance Requirements. Unless Lessee self-insures after October 1, 2009 with respect to the Existing Facilities, or at any time with respect to the Future Facilities, all as permitted in subsection 19(a) hereof, all policies evidencing insurance maintained or caused to be maintained by Lessee with respect to the Existing Facilities and the Future Facilities shall be issued by the home office of the insurer(s) or by a duly authorized agent of the insurer(s) and shall name Board, Lessee, and any mortgagee as insureds, as their interests shall appear, and shall be deposited with and kept by Lessee but subject to inspection and examination by Board. Any such insurance may be written in blanket policies issued to Lessee covering other property and operations so long as the Existing Facilities and the Future Facilities are specifically stated to be covered in such policies. If Lessee exercises its option to self-insure the Existing Facilities after October 1, 2009, or the Future Facilities at any time, all as permitted in subsection 19(a) hereof, Lessee shall self-insure against all casualties required to be insured against under this Section 19 to the extent permitted by Law and in such event Lessee shall be deemed 0040H -20- to have taken out such insurance coverage and this Agreement shall be construed accordingly. All proceeds from claims shall be paid directly to Lessee. Board shall have the right and is hereby authorized in its own name to demand and sue, collect and receipt for claims and moneys hereunder if Lessee fails to do so. The net proceeds of any and all such insurance required by Subsection 19(a) shall be applied as prescribed in Section 20 below. Section 20. Casualty. (a) Damage or Destruction with respect to the Existing Facilities. In the event all of the Existing Facilities or such portion thereof are damaged or destroyed by an insured casualty as would render the Existing Facilities or portion thereof so damaged as to be unfit for the purpose for which it was being used as permitted by this Agreement, the following provisions shall be applicable: (1) If at the time of the casualty there is Facilities Rental remaining to be paid and outstanding and the insurance proceeds together with any moneys in any reserve fund established for such purposes are sufficient to pay all of the remaining Facilities Rental in the amount as determined in paragraph (3) of subsection 3(b), or if said proceeds and funds are insufficient and Lessee agrees to pay any deficiency, and Lessee requests that such Existing Facility not be repaired or rebuilt, then all such proceeds shall be paid to Board, and Board will terminate this Agreement and release Lessee from all future obligations hereunder. Alternatively, at Lessee's option, all of said proceeds shall be paid to Board and Lessee may request Board to terminate this Agreement only, with respect to the Developed Acres upon which such Existing Facility is located and the Facilities Rental shall be credited and abated by an amount equal to the insurance proceeds then paid to Board. If the alternative is selected, the insurance proceeds shall be deposited by Board in an interest bearing fund for payment of the remainder of the Facilities Rental and the moneys in said fund and in any reserve fund established for such purposes shall be applied to pay the obligations with respect to the outstanding and unpaid Facilities Rental. If said proceeds and funds are in excess of the amount then necessary to pay the obligations with respect to the outstanding and unpaid Facilities Rental, any such excess shall be divided between Board and Lessee, as their interests may appear, on the basis of the useful life of the Existing Facilities at the time of the casualty in question. (2) If at the time of the casualty there is Facilities Rental remaining to be paid and the insurance proceeds together with any moneys in any reserve fund established for such purposes are not sufficient to pay all of the remaining Facilities Rental as determined by paragraph (3) of subsection 3(b) and Lessee does not agree to pay Board the amount necessary to make up the deficiency (or if the insurance proceeds together with any moneys in any reserve fund are sufficient to pay such obligations with respect to the outstanding Facilities Rental, but Lessee requests that the Existing Facilities be repaired or rebuilt), such Existing Facilities shall be repaired or rebuilt and shall be paid for with the insurance proceeds, and if such proceeds are insufficient for such purposes, then Lessee shall pay the deficiency. If such proceeds are in excess of the amount necessary for such purposes, any such excess shall be paid to Board and deposited by it in an interest-bearing sinking fund for said remaining Facilities Rental as a credit to the next due payments of Facilities Rental, with such credit to continue until the amount thereof is 00408 -21- exhausted. Such Existing Facilities shall be repaired or restored to substantially the condition that existed prior to the casualty, together with alterations or modifications made or agreed upon prior to the casualty, or, at Lessee's option, in accordance with new or modified plans and specifications, the alternative to be determined by Lessee. (3) If at the time of the casualty, and whether or not it is an insured casualty, there is no remaining Facilities Rental, Lessee shall have the right to determine whether or not the Existing Facilities should be reconstructed or repaired. If Lessee elects not to reconstruct or repair the Existing Facilities, any insurance proceeds shall be divided between Board and Lessee as their interests may appear on the basis of the useful life of the Existing Facilities at the time the casualty in question occurs and this Agreement and all unaccrued obligations hereunder shall thereupon be terminated. Alternatively, Lessee may terminate this Agreement only as to the Developed Acres upon which the Existing Facilities so damaged are located. If Lessee elects to reconstruct or repair the Existing Facilities or if the insurance proceeds are insufficient and Lessee agrees to bear and pay the deficiency, the insurance proceeds and the amount paid by Lessee shall be applied to repair or restore such Existing Facilities to substantially the same condition as existed prior to the casualty, together with any alterations or modifications made or agreed upon prior to the casualty, or in accordance with new or modified plans and specifications, the alternative to be determined by Lessee. If said proceeds are in excess of the amount necessary for such repair or restoration, any such excess shall be paid to Lessee. (b) Damage or Destruction With Respect to the Future Facilities. In the event any improvements or facilities built after the Effective Date hereof (herein collectively the "Future Facilities" and singly the "Future Facility") are damaged to such an extent that it would render the Future Facilities or the portion thereof so damaged unfit for the purposes for which it is leased under this Agreement, whether or not by an insured casualty, Lessee shall have the right to determine whether or not the Future Facilities should be reconstructed or repaired. If Lessee elects not to reconstruct or repair the Future Facilities, any insurance proceeds shall be divided between Board and Lessee, as their interests may appear, on the basis of the useful life of the Future Facilities at the time of the casualty in question, and this Agreement and all unaccrued obligations hereunder shall thereupon be terminated, or alternatively, Lessee may terminate this Agreement only as to the Developed Acres upon which the Future Facilities so damaged are located. If Lessee elects to reconstruct or repair the Future Facilities and if the insurance proceeds are sufficient to reconstruct or repair the Future Facilities or if the insurance proceeds are insufficient and Lessee agrees to bear and pay the deficiency, the insurance proceeds and the amount paid by Lessee shall be applied to repair or restore such Future Facilities to substantially the same condition as existed prior to the casualty, together with any alterations or modifications made or agreed upon prior to the casualty, or in accordance with new or modified plans and specifications, the alternative to be determined by Lessee. If the insurance proceeds are in excess of the amount necessary for such repair or restoration, any such excess shall be paid to Lessee. (e) Insubstantial Damage. In the event of any insubstantial damage (as determined by the parties) whether or not by an insured casualty, to any Existing 0040H -22- Facility or Future Facility, Lessee shall have the obligation to repair, reconstruct, or rebuild same. (d) _Plans and Specifications. Before the commencement of any reconstruction or repair under this Section 20, Lessee shall submit a Construction Application in the form attached as Exhibit J and shall submit plans and specifications to Board. Construction shall be in accordance therewith. Section 21. Indemnification. Lessee covenants and agrees to indemnify and hold harmless Board and the Cities, their respective directors, council members, officers, agents, and employees from and against any and all. claims for damages or injuries, including death, to persons and property (other than the Premises) arising out of or incident to the use and occupancy of the Premises by Lessee, unless such damages or injuries are caused by the negligence or willful act of Board or the Cities. Section 22. Signs. (a) Lessee's Sims. Lessee may erect, maintain, or display any corporate identification and directional signs or similar devices at or on the Existing Facilities and the Future Facilities so long as such signage is reasonably similar as to size and type as the signage located on such Existing Facilities as of the Effective Date, otherwise Lessee must obtain the prior written approval of the Director before Lessee may erect, maintain, or display any advertising or signs. (b) Removal of Sims. Except as permitted or provided in Section 22(a), upon demand by Board, Lessee shall remove, obliterate or paint out any and all advertising, signs, posters, and similar devices placed by Lessee on the Premises or elsewhere on the Airport without the prior approval of the Director. In the event of a failure on the part of Lessee to remove, obliterate, or paint out each and every sign or piece of advertising, Board may perform the necessary work and Lessee shall pay the costs thereof to Board on demand. (c) Board's Sims. Board, at Lessee's reasonable cost and expense, shall erect, maintain, and display reasonable directional signs on the Airport, providing directions to and identification of the Premises. The design and locations of such signage are to be determined by Board. Section 23. Assignment and Subletting (a) Lessee shall have the right to assign this Agreement and to sublet all or any part of the Premises without the consent of Board. No such assignment or subletting will in any way affect the terms, conditions, covenants, agreements, and provisions set forth herein. In the event of any subletting, Lessee shall not be released from any liability arising or accruing hereunder. In the event of an assignment of this Agreement, Lessee shall not be released from any liability arising or accruing under this Agreement after the date of such assignment unless (i) Board expressly approves the assignee, and (ii) the assignee executes and delivers to Lessee a valid, binding, and sufficient instrument in writing, approved and directly enforceable by Board, containing the assignee's assumption of Lessee's obligations hereunder, including the obligations to pay all applicable rent and other amounts 0040H -23- reserved in this Agreement and to perform and observe all of Lessee's obligations, covenants, provisions, and conditions under this Agreement, and an original r counterpart of such assumption and agreement is delivered to Board. (b) It is expressly provided that any assignee or sublessee shall take and hold the Premises, or applicable part thereof, solely for the uses permitted and described in Section 4 and Section 13 hereof. (c) Except as provided in subsection (d), below, and notwithstanding the provisions of subsection (a), above, the leasehold interest of Lessee in the Additional Land may not be transferred by assignment, sublease or otherwise, and the same shall not be used or occupied on a continuous basis by any party other than Lessee or its corporate affiliates, without the express approval of Board Lessee requests the approval of an assignment, sublease or other user and Board declines, Lessee shall have the right within ninety (90) days to relinquish and release the Additional Land and all improvements thereon to Board. Board shall have no obligation to compensate Lessee for such improvements but will use its best efforts to require a subsequent user to compensate Lessee for so much of the value thereof as possible. (d) In the event Lessee desires to assign this entire Agreement to a corporation or other entity which is not affiliated with Lessee and Lessee desires to include its leasehold interest in the Additional Land in such assignment, Lessee shall have the right to request Board's approval of such assignment, which approval will not be unreasonably withheld. If such approval is validly withheld, subsection (c), next above, will apply. Section 24. Rights of Entry Reserved. (a) Board, its officers and employees, shall have the right, during business hours, to enter upon the Premises for the purpose of inspecting same and for the doing of any actor thing which Board may be obligated, or have the right, to do under this Agreement. Prior to such inspection, Board shall give oral notice to Lessee and shall identify Board's representative. (b) Without limiting the generality of the foregoing, Board shall have the right, for its own benefit, for the benefit of Lessee, or for the benefit of others than Lessee at the Airport, to maintain the existing and future utilities systems and other systems and portions thereof on the Premises. These shall include systems for the supply of heat, water, gas, fuel and electricity and for the furnishing of fire alarm, fire protection, sprinkler, sewerage, drainage, telephone and telegraph service, including all lines, pipes, mains, wires, conduits, and equipment connected with or appurtenant to such, and Board may enter the Premises to make such repairs, replacements or alterations as may, in the opinion of Board, be deemed necessary or advisable; provided, however, that such systems, and such ingress and egress by r-- Board shall not unreasonably interfere with Lessee's facilities or use thereof nr with clearances therefor. Board shall indemnify and hold Lessee harmless from and against any cost, claim, expense, liability, or action caused by or arising out of the actions taken by Board pursuant to this Section. (c) Board agrees that in the event it or its contractor shall engage in or perform any construction work on the Premises during the term of this Agreement, Board, to the extent of its statutory liability, shall indemnify and hold harmless ' Lessee, its officers, agents and employees against the risk of death, personal injury 0040x -24- or property damage arising or alleged to arise out of, or in connection with, the negligent performance of any or all such construction work performed by Board. However, except as to any rights granted herein to a Mortgagee of Lessee's leasehold estate created hereunder, nothing in this Agreement shall be construed for the benefit of third parties. Nothing contained herein shall expand Board's limitation of liability for injuries or damages in tort under the laws and court decisions of the State of Texas. Section 25. Place of Payments. All payments required of Lessee by this Agreement shall be made at the office of the Director of Finance, Dallas-Fort Worth Regional Airport Board, P.O. Drawer DFW, Dallas-Fort Worth Airport, Texas 75261, or to such other office or address as may be substituted therefor in accordance with the terms of Section 43 of this Agreement. Section 26. Default and Remedies. (a) The following shall be "events of default" under this Agreement and said term shall mean, whenever it is used herein any one or more of the following events: (1) Failure by Lessee or any assignee succeeding to Lessee's rights and obligations hereunder to pay when due or cause to be paid when due any rent payable under this Agreement within five (5) days of the giving of written notice by Board that such payment is past due; (2) Failure by Lessee or any assignee or sublessee to observe and perform any covenant, condition or agreement on its part to be observed or performed other than as referred to in paragraph (1), next above, for a period of sixty (60) days after written notice, specifying such failure and requesting that it be remedied, given to Lessee or such assignee or sublessee by Board; provided, however, if such failure is not reasonably susceptible to being cured within such sixty (60) day period, Board may not terminate this Agreement by reason of such failure if Lessee commences its effort to cure such failure within such sixty (60) day period, so long as Lessee proceeds with reasonable diligence to cure such failure. (3) The dissolution or liquidation of Lessee or any assignee succeeding to Lessee's• rights and obligations hereunder or the filing by Lessee or such assignee of a voluntary petition in bankruptcy, or failure by either within sixty (60) days to lift any execution, garnishment or attachment of such consequence as will impair its ability to carry out its obligations hereunder, or the entry of an order for relief against Lessee or any assignee under applicable bankruptcy or other debtor's relief laws as a bankrupt, or general assignment for the benefit of creditors, or the entry into an agreement of composition with creditors, or the approval by a court of competent jurisdiction of a petition applicable to Lessee or such assignee in any proceeding for reorganization instituted under the provisions of any bankruptcy act, as amended, or under any similar act which may hereafter be enacted; provided, however, the occurrence of any of the foregoing events shall not be an event of default entitling Board to terminate this Agreement 0040H -25- if the Mortgagee otherwise pays and performs all of the other obligations of Lessee under this Agreement. (b) Whenever any event of default shall have happened and be subsisting, Board may take any one or more of the following remedial steps as against Lessee and any assignee succeeding to the rights and obligations of Lessee: (i) Board may re-enter and take possession of the Premises without terminating this Agreement and sublease (or operate as sublessee) the Premises for the account of Lessee holding Lessee (or an assignee if Board has released Lessee from liability hereunder) liable for the difference between the rents and other amounts payable hereunder and the rents and other amounts payable by any sublessee. (ii) Board may terminate this Agreement, exclude Lessee and any assignee or sublessee from possession of the Premises and use its best efforts to lease the same to another party for the account of Lessee, holding Lessee (or an assignee if Board has released Lessee from liability hereunder) liable for all rents and other amounts due under this Agreement and not paid by such other party. (iii) Board may take whatever action in addition to or in combination with or in lieu of the foregoing, at law or in equity as may appear necessary or desirable, including the acceleration of all rents due and payable hereunder, to collect the rent then.due and thereafter to become due, or to enforce performance and observance of any obligations, agreement or covenant of Lessee and any assignee under this Agreement. (c) No remedy herein conferred upon or reserved to Board is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement, or hereafter existing under law or in equity. No delay or omission to exercise any right or power accruing under any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle Board to exercise any remedy reserved to it in this Article, it shall not be necessary to give any notice, unless such notice is herein expressly required or is required by law. (d) In the event there should be an actual, not alleged, default under any of the provisions of this Agreement and Board or Lessee, as the case may be, should determine that the services of an attorney are required or Board or Lessee, as the case may be, incurs other expenses for the collection of rent or the enforcement of performance or observance of any obligation or agreement on the part of Board or Lessee, as the case may be, the defaulting party agrees that it will on demand therefor pay to the non-defaulting party the reasonable and necessary fee of such attorneys and other reasonable expenses so incurred. (e) In the event any covenant contained in this Lease should be breached by either party and thereafter waived by the other party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waiver any other breach hereunder. 0040H -26- Section 27. Obstruction Lights. Lessee shall furnish such.obstruction lights as may be required by the FAA, of the type and design approved by the Director, and shall install said lights in the locations designated by FAA. Lessee shall furnish and install all bulbs and shall furnish the electricity necessary for the operation .of the lights. The lights shall be operated in accordance with the directions of Board. Board hereby directs that all obstruction lights shall, until further notice, be operated daily for a period commencing thirty (30) minutes before sunset and ending thirty (30) minutes after sunrise (as sunset and sunrise may vary from day to day throughout the year) and for such other periods as may be directed or requested by the Control Tower of the Airport. Section 28. Services to Lessee. (a) Board, at its sole cost and expense, shall maintain and repair the access road to the Premises at all times during the Term of this Agreement. All improvements constructed by Board pursuant to the terms of this Agreement shall be maintained, repaired or replaced when necessary, including the utilities furnished for Lessee to the exterior boundary of the Premises. Police and Fire protection shall be furnished to the Premises in the regular course of the operations of these Departments in the same manner as is furnished other areas of the Airport. (b) Board shall have the obligation to arrange with the appropriate utility companies or municipalities for supplying necessary utilities and services to the boundaries of the land on which the Existing Facilities are situated, but adequate in size to provide services for Tract 5. Lessee shall arrange for the maintenance and repair of all service lines on the Premises. (c) No failure, delay or interruption in any utilities or services, whether supplied by Board or others, shall relieve Lessee of any of its obligations hereunder. Neither shall such failure, delay or interruption be construed to be an eviction of Lessee, nor shall same constitute grounds for any diminution or abatement of the rental payable under this Agreement. Such failure, delay or interruption shall not be grounds for any claims by Lessee for damages, consequential or otherwise, unless same are caused by the negligence or willful act of Board. Section 29. Brokerage. Lessee and Board each represents and warrants to the other that it has dealt with no broker, agent, or other person in connection with this Agreement and that no broker, agent, or other person brought about this transaction. Lessee and Board each agrees to indemnify and hold the other harmless from and against any claims by any broker, agent, or other person claiming a commission or other form of compensation by virtue of having dealt with Lessee or Board, as the case may be, with regard to this leasing transaction. Section 30. Termination of Agreement By Lessee. Lessee may terminate this Agreement upon the default by Board in the performance of any covenant or agreement herein required to be performed by Board, if such default is not cured within sixty (60) days following written notice 0040H -27- thereof from Lessee to Board; provided, however, if such condition of default is not reasonably susceptible of being cured within such sixty (60) day period, Lessee may not terminate this Agreement by reason of such condition of default if Board commences its effort to cure such condition of default within such sixty (60) day period, so long as Board proceeds with reasonable diligence to cure such condition of default; provided, further, as to any such condition of default which continues beyond sixty (60) days, after such sixty (60) day period, Lessee shall be entitled to a reasonable abatement of Ground Rental commensurate with the extent to which such condition of default substantially interferes with Lessee's use of the Premises. Section 31. Non-Discrimination. (a) Compliance with Non-Discrimination Law. Without limiting the generality of any of the provisions of this Agreement, Lessee, in its operations at the Airport, and also as a part of the consideration hereof, shall maintain and operate its facilities and provide its services in compliance with and pursuant to Title 49, Part 21 of the Code of Federal Regulations (Non-Discrimination in federally-assisted programs of the Department of Transportation - Effectuation of Title VI of the Civil Rights Act of 1964), as said regulations may be amended; and shall not on the grounds of race, creed, color, or national origin discriminate against any person or group of persons in any manner whatsoever. (b) Indemnification. Lessee shall indemnify and hold harmless Board and the Cities from any claims and demands of third persons, including the United States of America, resulting from Lessee's non-compliance with any of the provisions of this Section 31; and Lessee shall reimburse Board for any loss or expense incurred by reason of such non-compliance. Section 32. Removal of Property. (a) Board's Personalty. It is recognized that certain personal property located within the Premises listed in Exhibit G attached hereto and made a part hereof for all purposes is the property of Board but is specifically hereby leased by Board to Lessee for the Term of this Agreement. It is understood, however, that any such personal property which is no longer desired to be retained and maintained by Lessee shall, upon request of Lessee, be declared as "surplus" and sold or disposed of by Board in accordance with Board's policies and procedures then in effect, with the proceeds, if any, from such sale or disposition to be credited to Lessee's next due Facilities Rental payment. It is further understood that except for the amount of any reduction of the Facilities Rental payments arising by reason of any such credit, sale or disposition of any such personalty, any such credit, sale, or disposition shall not otherwise reduce or abate Lessee's obligation to pay the full amount of Facilities Rental in the amounts and at the times due to be so paid as specified herein. (b) Removal of Lessee's Goods. Upon termination of this Agreement by lapse of time or otherwise, Lessee shall have the right, but not the obligation, to remove from the Premises its trade fixtures, including display signs, counters, furniture, equipment, and other items of personal property installed and placed in and upon the Premises, and in any event shall clean up the debris and leave the Premises in a safe, sanitary, and sightly condition, ordinary wear and tear and damage by fire or other casualty and condemnation excepted. 00+ox -28- Section 33. Condemnation. (a) Taking of Entire Premises. If the Premises in their entirety are taken for any public or quasi-public use or improvement by virtue of eminent domain or similar proceedings or by private purchase in lieu thereof, the parties' performance under this Agreement shall terminate. The proceeds derived from any such condemnation shall be divided as follows: (1) An amount equal to the amount required to prepay the bonds described in and in the manner and in the amount required under paragraph (3) of subparagraph 3(b) of this Agreement shall be paid to Board and deposited for the benefit of the holders of said bonds. (2) After all of said bonds are provided for, as required above, any remaining proceeds from such condemnation shall be divided between Lessee and Board as their interests may appear after giving due and full consideration to the property rights of the parties in the Premises prior to such condemnation as adjusted by reference to the amount of the Ground Rental which would otherwise have been payable by Lessee but for the condemnation of the Premises. (b) Partial Taking. If only a portion of the Premises is taken by eminent domain or similar proceedings or by private purchase in lieu thereof, the parties' performance under this Agreement shall remain unaffected except that the rentals hereunder shall be reduced on a just and proportionate basis having due regard to the value of the portion of the Premises so taken as compared to the remainder thereof. Within ninety (90) days after such taping the parties shall determine whether it is reasonable and practical under the circumstances then obtaining to repair or restore any of the improvements which may be affected by such taking. If the parties elect to so repair or restore, Lessee shall be entitled to the recovery of such portion of the award reasonably necessary for such repair and restoration. If the decision is made by the parties not to repair or restore the improvements taken, or if the condemnation award exceeds the amount necessary to make reasonable repairs, then such proceeds from such condemnation shall be divided between Lessee and Board as their interests may appear after giving due and full consideraton to the property rights of the parties in the portion of the Premises so taken prior to such condemnation as adjusted by reference to the amount of the Ground Rental which would otherwise have been payable by Lessee for such portion of the Premises so taken but for such condemnation. (c) Temporary Taking. In the event of a taking of all or part of the Premises by a governmental authority for temporary public or quasi-public use, this Agreement shall not terminate; and Lessee shall be entitled to the award made or damages granted in connection with such temporary taking attributable to any period prior to the expiration of the Terms hereof; provided, however, the rentals hereunder shall not be reduced during the period of such use. Section 34. Recording - Memorandum of Lease. Board and Lessee agree, upon the request of either of them, to execute a short form of memorandum of this Agreement in recordable form for recordation in the deed records of the county or counties where the Premises are situated. The cost of recording shall be borne by the party requesting such memorandum. 0040H -29- Section 35. Estoppel Certificates. Board agrees to execute and deliver, from time to time, such estoppel certificates or other instruments to the mortgagees, assignees, and sublessees of Lessee which certificates, to the extent the facts recited therein are true, shall certify to such mortgagees, assignees, and sublessees that this Agreement is in full force and effect, that to the best knowledge of Board there are no defaults existing, the date through which the rental has been paid, and such other matters as may be reasonably requested by such mortgagees, assignees, and sublessees, it being intended that any such statement delivered pursuant to this Section 35 may be relied upon by any prospective mortgagee, purchaser, assignee, or sublessee of the leasehold estate. Such certificates must be executed by Board's Executive Director, attested by its staff Secretary, and is subject to approval as to legal content by Board's Legal Counsel Section 36. Leasehold Title Certificate and Survey. (a) Abstractor's Certificate. Board agrees to furnish to Lessee, if requested, at Board's expense, an Abstractor's Certificate covering the Premises. If either a Leasehold Title Insurance Policy or a Mortgagee's Title Insurance Policy is requested by Lessee or any mortgagee, the same will be furnished at the expense of Lessee or the party requesting same. (b) Survey. Board agrees diligently to obtain and to cause to be furnished to Lessee, at Board's expense, a survey .of the Premises prepared by a Registered Public Surveyor or a Registered Professional Engineer duly and currently licensed by the State of Texas, and in form reasonably acceptable to Lessee. Such survey shall be currently dated, shall show the location on the Premises of all improvements, easements (including, without limitation, all utility lines), and rights-of-way; shall identify all easements and rights-of-way by reference to the applicable recording information creating same; shall show no encroachments on the Premises (other than those specifically approved in writing by Lessee); and shall contain a.legal description of the Premises by metes and bounds. The surveyor shall certify to Lessee (and any title company if so requested by Lessee) that such survey was made on the ground of the Premises; that there are no visible encroachments, discrepancies, conflicts, improvements, easements, -or rights-of-way except as shown thereon; the total number of acres of land within the exterior boundaries of the Premises; and that such survey is a true, correct, and accurate representation of the Premises. Section 37. Quiet Enjoyment. Board warrants that, so long as there is no uncured event of default under this Agreement, Lessee shall at all times during the Term peaceably and quietly have and enjoy the possession of the Premises, appurtenances, facilities, licenses, and privileges granted herein, without any encumbrance or hindrance by, from, or through Board. Section 38. Warranties. (a) Warranties of Board. 0040H -30- (1) Board hereby represents and warrants to Lessee that Board and the Cities have good and indefeasible fee simple title to the Premises, that as of the �. date of delivery of this Agreement there are no mortgages or other encumbrances against the Premises other than those listed in Exhibit H attached hereto and made a part hereof (the "Permitted Encumbrances"), and that Board will save Lessee harmless against any claims, damages, actions, or causes of action whatsoever, arising out of the existence of the Permitted Encumbrances and any such other encumbrances other than those created by Lessee. (2) During the Term, Board agrees to warrant and forever defend to Lessee the title to the Premises against the claims of any and all persons whomsoever lawfully claiming or to claim the same or any part thereof, except as to such portion of the Premises, if any, as shall be taken under the power of eminent domain. (3) Board hereby represents and warrants to Lessee that Board is Board of Directors of the Airport owned by Cities and duly organized and validly existing under the laws of the State of Texas and the Cities and has full power and authority to consummate the transactions contemplated herein, to own the Premises, and to perform its obligations under this Agreement. (4) Board hereby represents and warrants to Lessee that the execution, delivery, and performance by Board of this Agreement: (A) are within the powers of Board; (B) have been duly authorized by all requisite action on the part of Board and the Cities; (C) do not require any consent of any governmental authority not already obtained; and (D) will not violate any governmental requirements or any indenture, agreement, or other instrument to which either Board or the Cities is a party or by which Board or the Cities, or any of their respective property is bound. (b) Warranties of Lessee. (1) Lessee hereby represents and warrants that Lessee is a corporation duly organized and validly existing under the Laws of the State of Delaware with authority to transact business in the State of Texas, and has full power and authority to consummate the transaction contemplated herein, to lease the Premises, and to perform its obligations under this Agreement. (2) Lessee hereby represents and warrants that the execution, delivery, and performance by Lessee of this Agreement: (A) are within the corporate powers of Lessee; (B) have been duly authorized by all requisite corporate action on the part of Lessee; (C) do not require the approval of any governmental authority not already obtained; and (D) will not violate any governmental requirement or any indenture, agreement, or other instrument to which Lessee is a party or by which Lessee or any of its property is bound. Section 39. Force Maieure. Neither Board nor Lessee, nor any assignee or sublessee, shall be deemed in violation of this Agreement if it is prevented from performing any of its obligations hereunder by reasons of strikes, boycotts, labor disputes, embargoes, market shortages of material, acts of God, acts of the public enemy, acts of superior governmental authority, severe weather conditions, floods, riots, rebellions, acts of sabotage, or any other circumstances for which it is not responsible or which are not 0040H -31- within its control; provided, however, that this Section shall not apply to failures by Lessee to pay the rentals, fees and charges herein specified. All assertions of force majeure interference by a party places the burden of proof of same as a reason for failure to perform upon the party claiming same. Section 40. Severability. Should any provision of this Agreement be finally declared to be invalid by a court of competent jurisdiction, it is the intention of the parties that the remaining portions of this Agreement shall remain in full force and effect, if the parties may continue to act hereunder in a manner that accomplishes a substantial portion of the Agreement. Section 41. Non-Liability. No member, director, officer, or employee of either party shall be charged personally or held contractually liable by or to the other party under any term or provision of this Agreement, or of any supplement, modification or amendment of this Agreement, or because of any breach thereof, or because of its or their execution or attempted execution of same. Section 42. Approval of Parties. .� In any case in this Agreement where approval or consent or satisfaction is required to be obtained by one party from the other, it is understood and agreed that any such approval or consent or satisfaction shall not be unreasonably withheld, conditioned, or delayed. Failure of Board or Director either to give written notice of approval or disapproval (specifying the basis for any such disapproval with particularity) within thirty (30) days following submittal by Lessee of any request for approval (accompanied by appropriate plans, specifications or other materials where required hereunder) shall conclusively be deemed approval thereof. The party alleging that such approval, consent, or satisfaction is withheld without good reason shall have the burden of proof of that allegation in any adversary proceeding, provided the reasons for the failure by the other party are stated in writing. Section 43. Notices. (a) Place and Effectiveness of Notice. Any notice, request, or demand to be given or served under the terms and provisions of this Agreement must be in writing, and shall be deemed to have been given and received forty-eight (48) hours after a certified or registered letter containing such notice, request, or demand, with postage prepaid, return receipt requested, is deposited in a United States Postal Service depository, addressed as follows: If to the Airport Board: DALLAS-FORT WORTH REGIONAL AIRPORT BOARD East Airfield Drive P. O. Drawer DFW Dallas-Fort Worth Airport Texas 75261 Attention: Executive Director 0040H -32- If to Lessee: GTE REALTY CORPORATION a-� One Stamford Forum Stamford, Connecticut 06904 Attention: President With Copy to: GTE REALTY CORPORATION One Stamford Forum Stanford, Connecticut 06904 Attention: Office of the General Counsel with copy to each leasehold mortgagee of which Board has notice; provided, however, that any party may at any time change the place of receiving notices, requests, or demands by ten (10) days' written notice of such change of address to the other. (b) Additonal Rules With Respect to Notices. If and when included in the terms "Board" or "Lessee" as used in this Agreement there shall at any time be more than one person, firm, or corporation, they shall arrange among themselves for the joint execution of such notice, specifying one of their number for the receipt of notices, requests, demands, and payments, and any notices, requests, demands, and payments made by either Board or Lessee in accordance with each such notice from the other (such arrangements for notices, requests, demands, and payments being subject to change by the delivery of a different notice) shall constitute notice, request, demand, or payment to all persons, firms, and corporations included within the terms "Board" or "Lessee," as the case may be. - Section 44. Flight Training Facilities Permit. Board and Lessee understand and agree that Board has entered into a Permit with Braniff, Inc. for the use of certain flight training facilities located at the Premises. It is further understood and agreed by Board and Lessee, that payment(s) made pursuant to such Permit shall be retained by Board; provided, however, Board shall not renew or extend such Permit, and accordingly, after May 31, 1984, Lessee shall be entitled to possession of any and all flight training facilities which use is allowed by such Permit and Lessee may sublet and receive rentals from such facilities thereafter. Section 45. Mineral Rights. It is agreed and understood that all water, gravel, rock, earth, gas, oil and all other minerals, substances or materials and the rights thereto, in, on and under the soil, are expressly reserved to Board, but Board hereby waives and covenants not to grant, sell or convey any right to enter upon the surface of the Premises (or under the surface if same would in any manner endanger, damage or obstruct Lessee's improvements on, or use of, the Premises) to conduct any drilling or exploration activities during the term of this Agreement for the purpose of producing any such water, gravel, rock, earth, gas, oil or all other minerals, substances or materials. Gravel, rock or earth may be removed or used for construction on the Premises. Section 46. Successors and Assiens. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of the parties hereto. 0040H -33- Section 47. Entire Agreement. This Agreement (which includes Exhibits At B, C, D, E, F, G, H, I, J, and K, attached hereto) constitutes the entire agreement of the parties on the subject matter hereof and may not be changed, modified, discharged, voluntarily surrendered or terminated or extended except by a written instrument duly executed by Board, Lessee, and any mortgagee. Section 48. Governing Law and Venue. This Agreement is being executed .and delivered, and is intended to be performed, in Dallas and/or Tarrant Counties, Texas, and the Laws of the State of Texas and the United States shall govern the rights and duties of the parties hereto and the validity, construction, enforcement, and interpretation hereof. Venue on any suit brought hereunder shall lie exclusively in Dallas or Tarrant County, Texas. Section 49. No Joint Venture or Other Relationship. Nothing herein contained shall be deemed or construed by the parties hereto, nor by a third party, as creating the relationship of principal and agent or of partnership or of joint venture between the parties hereto, it being understood and agreed that neither the method of computation of rental, nor any other provision contained herein, nor any acts of the parties hereto, shall be deemed to create any relationship between the parties hereto other than the relationship of landlord and tenant. Section 50. Headings. The headings, captions, and arrangements used in this Agreement are, unless specified otherwise, for convenience only and shall not be deemed to limit, amplify, or modify the terms of this Agreement, nor affect the meaning thereof. Section 51. Interpretation. All references to "Section," "Sections," "Subsection," or "Subsections" contained in this Agreement are, unless specifically indicated otherwise, references to sections and subsections of this Agreement. Whenever herein the singular number is used, the same shall include the plural, and words of any gender shall include each other gender, if the context and meaning so requires. Section 52. Conflicting Provisions. If and to the extent the provisions contained and in any exhibit attached hereto shall be inconsistent or otherwise in conflict, the provisions contained in the main body hereof shall prevail. Section 53. Counterparts. This Agreement has been executed in a number of identical counterparts, each of which constitutes an original and all of which constitute, collectively, one agreement; but in making proof of this Agreement, it shall not be necessary to produce or account for more than one such counterpart. 0040H -34- IN WITNESS WHEREOF, the parties hereto have executed this instrument at East Airfield Drive, Dallas-Fort Worth Airport, Texas 75261, as of the day and year first above written. BOARD: DALLAS-FORT WORTH REGIONAL AIRPORT BOARD By: Ernest Dean, Executive Director ATTEST AND SEAL: Staff Secretary to Board APPROVED: Legal Counsel to Board LESSEE: GTE REALTY CORPORATION, a Delaware corporation By: President By: Secretary 0040H -35- The Term being for a period of years longer than forty (40), the undersigned Cities each hereby approve of all of the terms, covenants, and conditions contained r in this Agreement and each hereby ratifies and adopts each and all of the representations and warranties of Board to Lessee under this Agreement and hereby agrees to be bound by the covenants, terms and provisions thereof. Executed this the day of 1984 by the City of Dallas, Texas. CITY OF DALLAS ATTEST: CHARLES S. ANDERSON City Manager By: City Secretary Assistant City Manager APPROVED AS TO FORM: ANALESLIE MUNCY City Attorney By: Assistant City Attorney Executed this the day of 1984 by the City of Fort Worth, Texas. CITY OF FORT WORTH, ATTEST: a Texas municipal corporation, Robert L. Herchert, City Manager By: City Secretary Assistant City Manager COUNTERSIGNED: APPROVED AS TO FORM: Wade Adkins, City Attorney By: Commissioner of Accounts Assistant City Attorney 0040H -36- Tiny.' �rsc%n o�, Gtr. I992- - RESOLUTION FILE N'0, A RESOLUTION SUPPORTING ADDITIONAL LEGISLATIVE '-� APPROPRIATIONS AND USER CHARGE INCREASES TO PROVIDE PROPER FINANCING FOR STATE-LOCAL HIGHWAYS AND ROADS WHEREAS enormous increases in Texas' population, accompanied by inflationary pressures and snowballing rates of road and bridge deterioration, have resulted in a near-crisis situation requiring the immediate infusion of additional trans- portation funding; and WHEREAS. recent surveys of the state's transportation system reveal that; (1) Texas leads the nation in the number of deficient bridges (17,200) and deteriorated state roadways (7.740 miles). (2) With the advent of small. fuel-efficient cars. Texas highway users are paying less, per mile of travel. for road construc- tion and maintenance than 20 Years ago. The state's 5; per gallon gas tax is the lowest in the nation, and has not born increased in 27 years. Moreover, in 19650 272 of the state budget went for transportation= in 1982, only about LOX of the state budget will be spent For transportation-related purposes. (3) Texas motorists are paying an increasing "bad roads" tax, which costs each motorist an average of $291 per year in wasted gasoline. give wear, car repairs, insurance and medical bills. (4) Over the next 20 years, the population of Texas will increase by about 50 percent, and the number of licensed drivers will increase by approximately the aaas amount. The state will have ,to triple its current rate of annual expenditures ($751 million) in order to handle the anticipated traffic increase. (5) Transportation spending of $51 billion will be needed over the next 20 years to overcome the current backlog of needa--including $6.2 million for road and bridge rehabilitation. $30.3 billion for reconstruction, $6.7 billion for now routes, and $7.7 billion for maintenance; and WHEREAS, the state's transportation funding problems are mirrored at the local level. The cost of 20-year regional mobility plans just for the state's four large metropolitan areas is in the $34 billion range. Additionally. (1) A TML survey of Texas cities indicated that the backlog of street repair needs exceed $1 billion--a sum that will grow each year, as cities fall further and further behind. (2) Upwards of 20 percent of all municipal streets--more than 12,000 miles--currently are in need of major repair. (3) Texas cities are spending an estimated $180 million per year on street repairs--58 percent more than three years ago. But they are still falling ever further behind, because the street repair backlog is growing at rates that exceed local spending Increases. The cities will never be able to bring their streets and bridges up to standard without state financial assistance. (4) The deterioration of city streets and bridges will continue to accelerate in the future. The 10 million motor vehicles already In the state are wearing out, local roads and bridges faster than they can be repaired. Twenty years fram now, the cities will have 16 million vehicles to contend with•-more than half again today's volume. NOW, THEREFORE, BE IT RESOLVED by the delegates assembled at this 70th Annual Conference of the Texas Municipal League that TML support passage in the 1983 Legislature of an oanibus integrated legislative psarage containing the following componencet (1) Increased state appropriations, including $1 billion in additional annual funding for the State Department of Highways 6 Public Transportation, of which more than 6QX ($600 million) would be spent in urban areas. (2) $100 million par year for the City Street Improvement Fund (the "TML Pothole Bill") proposed during the 1981 legislative session, and $70 million per biennium in *tats grant* to city transit systems for capital Improvements. (3) Increases in the S;/gallon state motor fuel tax and motor vehicle registration f"a in order to shift more of the financial burden for transportation improvements over to users, end away from the state Cenral Fund. PASSED AND APPROVED at Fort Worth, Texas this 26th day of October, 1982. APPROVED /s/ Alan Henry President ATTEST. jai Dick Brown bxecutive Director (Submitted by slob Bolen, Mayor, Fort Worth, and Carole Keeton McClellan, Mayor, Austin)