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2005-074-RES GROUND LEASE WITH OPTION TO CONSTRUCT IMPROVEMENTS KNOX AERIAL SPRAYING RESOLUTION NO. 2005-074 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PARIS, PARIS, TEXAS, APPROVING AND AUTHORIZING A GROUND LEASE WITH OPTION TO CONSTRUCT IMPROVEMENTS BETWEEN THE CITY OF PARIS AND KNOX AERIAL SPRAYING FOR PROPERTY LOCATED ON THE GROUNDS OF COX FIELD AIRPORT; MAKING OTHER FINDINGS AND PROVISIONS RELATED TO THE SUBJECT; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, the City Council of the City of Paris has received a request from Knox Aerial Spraying, 1201 FM 1509, Brookston, Texas 75421, for a ground lease to lease property at Cox Field Airport, Paris, Texas, for the purpose of erecting a concrete pad and other improvements and possibly a future hangar building in support of an aerial spraying business and other aeronautical activities; and, WHEREAS, it is deemed to be in the best interest of the Cox Field operation and the City of Paris that aeronautical activities for the flying public be encouraged; and, WHEREAS, the form of a Lease Agreement, attached hereto as Exhibit A, should in all things be approved, and the Mayor should be authorized to execute the same; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PARIS, PARIS, TEXAS: Section I. That the findings set out in the preamble to this resolution are hereby in all things approved. Section 2. That a Ground Lease Agreement by and between the City of Paris and Knox Aerial Spraying for the leasing of property located at Cox Field Airport for the purpose of constructing a concrete pad and other improvements and a possible hangar building, in support of an aerial spraying business and other aeronautical activities, a copy of which said Lease is attached hereto and incorporated herein for all purposes as Exhibit A, shall be, and the same is hereby approved, and the Mayor shall be and is hereby authorized to execute and City Clerk to attest to the aforesaid Lease Agreement. Section 3. That this resolution shall be effective from and after its date of passage, PASSED AND APPROVED this 27th day of J ATTEST: ~,o,fOO~o , . ce Ellis, City Clerk , ' -- <' GROUND LEASE AGREEMENT COUNTY OF LAMAR ) ) ) KNOW ALL MEN BY THESE PRESENTS: .STATE OF TEXAS THIS GROUND LEASE AGREEMENT is made this 27th day of June, 2005, by and between the CITY OF PARIS, PARIS, TEXAS, a municipal corporation, acting by and through its City Manager, Tony N, Williams, duly authorized, hereinafter referred to as LESSOR, and KNOX AERIAL SPRAYING, 1201 F,M, 1509, Brookston, Texas, 75421, Lamar County, Texas, hereinafter referred to as LESSEE. WITNESSETH For and in consideration of the possible future construction of a hangar and the payment of the monthly ground lease payment, due on or before the 1 st day of each month, to the LESSOR, and each month thereafter, as follows: $100.00 per month, said LESSOR does lease, rent, and let unto LESSEE that portion of Cox Field property described in Exhibit "A," attached hereto and made a part hereoffor all legal purposes, hereinafter referred to as the property or leased premises. The first such monthly payment shall be due and payable on or before the first day of July, 2005, with successive monthly payments being due and payable on the first day of each month thereafter during the term hereof. LESSEE hereby leases the leased premises from LESSOR subject to the terms, covenants and conditions stated below, and shall have the right and privilege to construct and maintain certain improvements as described herein on the leased premises. LESSEE has inspected the leased premises and accepts it in its present (as-is) condition unless expressly noted otherwise in this Lease, LESSOR and any agent have made no express or implied warranties as to the condition or permitted use of the leased premises. LESSEE must satisfy Ground Lease AEreement. page 1 EXHIBIT ./l itself that the leased premises may be used as LESSEE intends by independently investigating all matters related to the use of the leased premises, LESSEE agrees that it is not relying on any warranty or representation made by LESSOR concerning the use of the leased premises. LESSOR shall deliver possession of the leased premises to LESSEE as of the effective date hereof. LESSEE shall be responsible for maintenance and insurance of the leased premises upon delivery of possession to LESSEE. The term of this Lease is for five (5) years, beginning on the 1st day of July, 2005, and ending on the 30th day of June, 2020, In the event LESSEE, during the term of this Lease, desires to construct a hangar in accordance with the provisions hereof, the term of this lease shall, from the date of the commencement of construction of the hangar, be extended to a term of fifteen (15) years. The rent established herein shall be subject to increase every five (5) years, in July of each sixth year, in the percentage amount of increase in the Consumer Price Index for All Urban Consumers (CPI-U United States City Average [1982-84=100%]) above the rate for January 2000, which shall be determined to equal 168,7. In determining the rate increase, the LESSOR shall, by or before March I of each fifth year, or as soon thereafter as reasonably possible, provide written notice to the LESSEE of the amount of the cpr increase (including appropriate documentation thereof) and the LESSOR's calculation of the new montWy rental based on said increase. Beginning with the montWy payment due the first of the month following receipt of LESSOR's notice, LESSEE shall pay the adjusted monthly rate as determined herein. If, for any reason, the CPI adjustment would result in a decrease in the monthly rental due, the previous rental shall remain in effect. In no event shall the monthly rental rate be decreased. Ground Lease A2reement - page 2 At the end of the initial term as specified herein, and if a hangar has been ~onstructed by LESSEE under this Lease, the LESSOR shall solicit competitive prices for lease of the hangar upon such terms and conditions and for such lengths of time as the LESSOR in its sole discretion shall determine. LESSOR's right to reject all bids and solicit new bids when LESSOR deems such action in LESSOR's best interest is hereby preserved, Based on the results of said solicitation for bids, the LESSOR shall determine that bid which represents the highest and best bid meeting all criteria established by the LESSOR for rental of the property. When the LESSOR has determined the successful bid, the LESSOR shall thereafter offer LESSEE the opportunity for thirty (30) days to lease the premises on the same terms and conditions as applicable to the designated successful bidder. The LESSEE shall, within the thirty (30) day offer period, provide notice to LESSOR in writing as to whether or not LESSEE desires to re-lease the facility on the basis of the successful bid. If the LESSEE declines to match the successful bid, or fails to respond within the designated thirty (30) day period, then the LESSOR may proceed in leasing the facility to the designated successful bidder, and the LESSOR's obligation to LESSEE under this right-of-first-refusal shall have been satisfied. If, at the end of the initial term as specified herein, LESSOR has not constructed a permanent hangar on the leased premises, then the annual rent shall be based upon the ground lease rate established by the City Council ofthe City of Paris and in effect at that time. IN CONSIDERATION HEREOF, it is mutually agreed by and between LESSOR and LESSEE as follows: 1. That LESSEE pay to LESSOR, or order, at the City Hall in the City of Paris, the agreed rental in advance, promptly and without neglect, default, and delay. In the event LESSOR fails to receive any payment within ten (10) days after the same is due, a late payment penalty equal to 10% of such payment shall be charged to LESSEE. In the event Ground Lease Aereement - page 3 LESSEE shall become delinquent for more than thirty (30) days, this Lease may be terminated by LESSOR as further stated herein. 2. That this Lease is subject to all the terms, provisions, and conditions of the deed of conveyance of such premises from the United States of America to the City of Paris, recorded in Book 308, Page 287, Deed Records of Lamar County, Texas, to which reference is made for all purposes. 3, That LESSEE, LESSEE's successors or assigns, agree that, in the event facilities are coristructed, maintained, or otherwise operated on the said property described in this Lease for a purpose for which a Department of Transportation program or activity is extended or for another purpose involving the provision of similar services or benefits, LESSEE shall maintain and operate such facilities and services in compliance with all other requirements imposed pursuant to Title 49, Code of Federal Regulations, Department of Transportation, Subtitle A, Office of the Secretary, Part 21, Nondiscrimination in Federally-Assisted Programs of the Department of Transportation- Effectuation of Title VI of the Civil Rights Act of 1964, and as said Regulations may be amended. 4. That LESSEE, LESSEE's successors and assigns, will complete a Federal Aviation Administration (FAA) Form 7460-1, "Notice of Proposed Construction or Alteration," and receive a favorable determination from the FAA prior to any construction on the property. 5. That LESSEE, LESSEE's successors or assigns, agree that (i) no person, on the grounds of race, color, creed, sex, age, national origin, or disability shall be excluded from participation in, denied the benefits of, or be otherwise subjected to discrimination in the use of said facilities; (ii) that, in the construction of any improvements on, over, or under such land and the furnishing of services thereon, no person, on the grounds of race, color, creed, sex, age, national origin, or disability shall be excluded from participation in, denied the benefits of, or otherwise be Ground Lease A2reement - page 4 subjected to discrimination; (iii) that the LESSEE shall use the leased premises in compliance with all other requirements imposed by or pursuant to Title 49, Code of Federal Regulations, Department , of Transportation, Subtitle A, Office of the Secretary, Part 21, Nondiscrimination in Federally- Assisted Programs of the Department of Transportation-Effectuation of Title VI of the Civil Rights Act of 1964, and as said Regulations may be amended. In the event of breach of any of the preceding nondiscrimination covenants, LESSOR shall have the right to terminate this Lease and any aeronautical permits, and to re-enter and repossess said land and the facilities thereon, and hold the same as if said Lease had never been made or issued. 6. That LESSEE shall comply with all conditions and requirements established in Department of Transportation, Federal Aviation Administration, Grant Agreements No. 8-48-0169- 02 and No. 6-48-0169-03. 7. That LESSEE will abide by and comply with all rules, regulations, ordinances, and laws pertaining to the use of the Airport located at Cox Field, including but not limited to the City of Paris Airport Manual and Federal Aviation Administration rules and regulations pertaining to Cox Field, as the same shall currently exist or be hereafter amended or adopted, and in addition thereto will abide by and comply with all ordinances of the City of Paris and all laws of the State of Texas governing citizens and property within the City of Paris, as the same shall currently exist or be hereafter amended or adopted, 8. That LESSEE will use such leased premises only for aeronautical activities for which LESSEE holds a permit issued by the City of Paris in accordance with Article II of Chapter 6 of the Code of Ordinances of the City of Paris, This Lease does not constitute the issuance of any such permit. Additionally, LESSEE may, at its option, (I) install a temporary hangar of such size as shall be approved in advance in writing by LESSOR, to be placed on a concrete slab constructed by the Ground Lease Al!reement - page 5 LESSEE, (2) install a portable storage building of such size as shall be approved in advance in writing by LESSOR, on a concrete slab constructed by the LESSEE, and/or (3) construct and . maintain a private hangar of such size as shall be approved in advance in writing by LESSOR, on the lease premises in furtherance of its permitted activity. The LESSOR and LESSEE recognize and agree this Lease shall be subject to such regulations and approvals as required by the FAA and TxDOT Aviation and in particular those FAA regulations which provide that the property subject to this Lease shall be used for Airport purposes and in such a manner so as not to materially and adversely affect the development and improvement, operation or maintenance of the Airport; and to the requirements of a national emergency. LESSEE agrees to cooperate and assist LESSOR in complying with such regulations and conditions of approval. All runways and Airport facilities shall be open to the general traveling public for the landing and operation of aircraft therefrom without hindrance or interference on the part of LESSEE, No hangar constructed on the leased premises governed by this Lease shall be used as a residence or for residential purposes. However, such items as a sink, bathroom, or associated facility to allow temporary overnight stay or perhaps occasional social uses of a portion of the hangar will be permitted. Failure to comply with this requirement shall constitute grounds for termination of this Lease. 9. That LESSEE may build, at LESSEE's own expense, a hangar building ofa minimum internal size of five hundred (500) square feet, along with accompanying apron and appropriate taxi lane, if necessary, in pursuit of such permitted uses as specified herein, upon application and approval for building permit or permits from the City of Paris, of all steel construction, similar in appearance and construction to the existing enclosed hangars and in accordance with the floor plan approved by the City of Paris, and in conformance with the rules or Ground Lease Al!reement - page 6 regulations of the City of Paris or the Federal Aviation Administration. LESSEE agrees to complete the construction of all buildings, ramps, and facilities, within eighteen (18) months of the commencement of construction. Prior to construction of the improvements, the LESSEE shall obtain the LESSOR's written approval of the plans and specifications for such construction. The preliminary submission by the LESSEE shall employ essentials of aesthetics, convenience, function and design, and shall be compatible in such respect with those of the Airport. Upon approval of such preliminary plans, LESSEE shall prepare complete plans and specifications for the proposed construction, A construction application and final plans and specifications, when rendered, shall be submitted to the LESSOR for approval. The LESSEE shall include in all construction contracts entered into by it, in connection with any or all of the construction work, a provision requiring all contractors to indemnify, hold harmless, defend and insure LESSOR, its officers, agents, and employees, against the risk of 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. The LESSEE shall require all contractors to furnish liability insurance in such reasonable amounts as may be required by the LESSOR. In the alternative, the LESSEE itself may provide the indemnity and liability insurance otherwise required of contractors. All plans and specifications referred to above and all construction, renovation, remodeling, or refurbishing to or upon the leased premises shall meet all current codes required by the LESSOR and shall provide for the construction to be from material satisfactory and acceptable to the LESSOR. During the progress of all work, LESSOR's duly authorized representative may enter upon the leased premises and make such inspections as may be reasonably necessary for the purpose of satisfying LESSOR that the work or construction meets such requirements and standards. Ground Lease A2reement - page 7 The LESSEE further covenants that all construction work to be performed by it or its contractors, including all workmanship or materials shall be of first class quality and shall be 'performed in accordance with the plans and specifications approved by the LESSOR. LESSEE agrees that it shall deliver to the LESSOR "as built" transparencies of the improvements constructed by it and shall, during the term of this Lease keep such transparencies, if any, current, showing thereon any changes or modifications which may be made in or to the improvements. LESSEE shall also provide a detailed cost summary of the costs incurred in constructing the hangar. The requirements stated herein for construction of the improvements shall likewise apply to any improvements or alterations to the original structure approved by LESSOR. In the event that LESSEE fails to comply with the provisions of this section of this Lease, the LESSOR may, in addition to any other remedies available to it, terminate this Lease. 10. That ownership of the hangar building, apron, and other associated improvements and/or alterations authorized by and constructed pursuant to this Lease shall revert to LESSOR (at no cost) upon expiration of the original term of the Lease, II, That LESSEE may install in or upon the leased premises all such machines, tools, equipment, or other items of personal property as necessary in connection with the activities authorized in this Lease. All personal property belonging to LESSEE located on the leased premises and/or in the improvements located thereon shall be there at the sole risk ofthe LESSEE. LESSOR shall have no liability or responsibility for any theft, misappropriation, or damage to any personal property belonging to the LESSEE, any subtenant, or customer of the LESSEE. The LESSEE shall be entitled during the term of this Lease to remove from the leased premises, or any part thereof, all aircraft, tools, machinery, equipment, and non-structural improvements located thereon; provided, however, that all buildings from which any property is so removed shall be restored by LESSEE in Ground Lease Al!reemeot - page 8 such a manner that the buildings are not materially damaged (i.e" restored to same condition that existed before installation or placement of the property) and that those items removed are not . required in order for the structure to be utilized as a hangar. LESSEE shall remove all equipment, fixtures, and systems (as specified in this Lease) upon termination or expiration of this Lease. If LESSEE fails to remove such property from the leased premises upon termination or expiration of this Lease, then LESSOR retains the right to remove or have removed at the expense of LESSEE all equipment, fixtures, and systems, and LESSEE agrees to pay LESSOR for such expense within fifteen (15) days after receipt of an invoice from LESSOR. 12. That, except as otherwise provided herein, LESSEE will use the leased premises only for aviation purposes, and administrative offices, and in any lawful manner necessary or incidental to the conduct thereof. LESSOR hereby grants, assigns, and conveys to LESSEE reasonable non-exclusive, non- discriminatory use, as defined by the FAA, of the runways, landing and taxiing ways, and common use portions of the Airport and related facilities at all times, subject, however, to the right of others entitled to use thereof. The LESSEE shall pay reasonable and customary fees, if any, as the same now exist or shall hereafter be charged, for the use of such portions of the Airport. The LESSOR reserves for the use and benefit of the public a right of flight for the passage of aircraft in the airspace over the leased premises and for such noise as may be inherent in the operation of aircraft in said airspace, and for landing on, taking off from or operating on the Airport. 13, That LESSEE agrees not to make any additions or modifications to the leased premises unless agreed upon by both parties in writing, In the event of such consent, all improvements or modifications shall be made at the expense of LESSEE and, at the expiration of this Lease, shall become the property of LESSOR, Ground Lease Al!reement - page 9 LESSEE agrees that the usage of the leased premises plus any associated apron shall be limited to the parking of LESSEE's personallcompanylcustomer owned aircraft. All automobiles, buses, trucks, or other transportation modes must be parked or stored in approved automobile parking areas and/or inside any hangar, unless agreed upon by LESSOR in writing. LESSEE agrees not to fuel or defuel any aircraft parked inside any hangar, LESSEE agrees to have a sufficient number of fire extinguishers of acceptable size as determined by the local fire marshal inside any hangar/office. Such fire extinguisher(s) shall be readily accessible in the event of a: fire. The local fire marshal or his designated representative reserves the right to periodically inspect such fire extinguishers and the facility for fire safety compliance. LESSEE agrees that it will not operate any nonaviation-related business or activity on the leased premises. LESSEE agrees that, during the final one hundred eighty (180) days of the term hereof, LESSOR and LESSOR's authorized representatives shall have the right to erect and maintain on or about the leased premises customary signs advertising the leased premises for lease or for sale. 14. That LESSEE agrees at all times to comply with the following: (I) LESSEE shall at no time use, or permit the use of, the leased premises in a manner that is contrary to applicable federal, state, or local laws, ordinances, rules, or regulations, which shall include, but not be limited to, applicable Federal Aviation Administration rules and regulations and applicable regulations for the use of the Airport as may from time to time be promulgated by the LESSOR; (2) LESSEE shall not permit any permanent, unshielded light or illumination source to cause glare as viewed from any street, adjacent properties, or operating aircraft; (3) LESSEE shall not cause or permit the burial on the leased premises of any hazardous waste or materials, as defined by Federal or State law; (4) LESSEE shall not cause or permit any use or activity on the leased premises which would create a Ground Lease Al!reement - page 10 hazardous condition for aircraft operating at the Airport; (5) LESSEE shall not allow the leased premises to be used for parking of motor vehicles, motorcycles, or motor driven equipment by anyone other than customers, employees, or contractors of LESSEE except as may be authorized by the City of Paris, with all such parking being limited to areas designated by LESSOR for such parking; LESSEE shall not be in default for the improper parking of vehicles over which neither LESSEE nor any of its subtenants, customers, employees, or contractors have any control; (6) LESSEE shall not allow scheduled airline passenger operations to be conducted on the leased premises; and (7) LESSEE shall not permit aircraft to access the leased premises from outside the Airport property such that such access would constitute a "through the fence" operation prohibited by contracts between LESSOR and the State of Texas or the United States of America. 15. That LESSEE will take good care of the leased premises and be responsible for and make good to LESSOR for all injuries and damages to the same caused by LESSEE or those under LESSEE's control and will deliver same to LESSOR at the expiration or termination of this Lease in as good condition as when completed, usual wear and tear alone excepted; and LESSEE will, upon the expiration of this Lease, peaceably yield up to LESSOR all and singular the premises and all future erections, additions, or repairs to or upon same, in good repair, including but not limited to the main hangar building, apron, storage building, and permanent installation of equipment, fixtures, and fences. 16. That LESSEE agrees that it will at all times keep the leased premises, including the inside and the outside of any facility, clean and free of trash, litter, tall grass, weeds, junked automobiles, and scrap parts. LESSEE shall abide by all applicable laws and rules of the Environmental Protection Agency, the Texas Natural Resources Conservation Commission, the Texas Department of Agriculture, the Texas Department of Transportation, any other public agency, Ground Lease Al!reement - page II and any local laws or ordinances concerning the use, storage, and disposal of hazardous chemicals, fuel, and/or oil. LESSEE further agrees to abide by the manufacturer's directions in regards to the use, storage, and disposal of all pesticides, herbicides, and other chemicals plus their containers used at the Airport. Should LESSEE fail to keep the leased premises clean and free of hazards, LESSOR may, after thirty (30) days written notice, arrange for the clean-up of the littered or hazardous area, Such clean-up shall be charged to LESSEE and payable upon demand. Failure to render prompt payment for such clean-up is grounds for LESSOR to terminate this Lease. 17. That LESSEE, at LESSEE's own cost and expense, shall keep the interior and exterior (including all structural and non-stmctural) portions of the leased premises including, but not limited to, plumbing, heating, lighting, air conditioning, and any other systems in connection therewith and all other parts of the leased premises in good order and condition and will make all necessary repairs to the leased premises both ordinary and extraordinary, foreseen and unforeseen, and will make all necessary replacements oflike quality when beyond repair. This obligation shall extend to the land and all improvements located thereon. LESSEE shall be responsible for all cleaning, custodial and janitorial, and landscaping services and shall keep the leased premises in neat, safe, sanitary, orderly, and sightly condition and in good working order at all times and shall remove snow and ice therefrom. In the event LESSEE fails to comply with this paragraph, LESSOR may notify LESSEE in writing that such maintenance, repair, or cleaning shall be done, and in the event that LESSEE fails to correct the condition within thirty (30) days of LESSOR's written notice, LESSOR or its authorized designee may enter the leased premises and provide the necessary maintenance or repair services and LESSEE agrees to pay LESSOR such expenses within fifteen (15) days upon receipt Ground Lease Al!reement - page 12 of an invoice. This is not to be construed as a duty or obligation of LESSOR to make any repair or perform any work or cleaning which the LESSEE is required to make or perform. 18, That LESSEE shall payor cause to be paid all charges for water, heat, gas, electricity, sewer, and all other utilities used on the leased premises throughout the term of this Lease, including any connection fees. Furthermore, no wells or septic tanks shall be located on the leased premises by LESSEE without LESSOR's express written approval. 19. That it shall be lawful for LESSOR's designated representatives to enter upon and into the leased premises, and every part thereof, at all times for the purpose of inspecting and examining the condition thereof. 20. That it is understood and agreed that nothing herein contained shall be construed to grant or authorize the granting of an exclusive right forbidden by Section 308(a) of the Federal Aviation Act of 1958 or for aeronautical activities such as, but not limited to: a) charter operations. b) pilot training c) aircraft rental d) aerial photography e) crop dusting f) sale of aviation petroleum products g) air carrier operations h) aircraft sales and service incidental thereto i) any other activity which, because of its direct relationship to the operation of aircraft, can be regarded as an aeronautical activity, Accordingly, LESSOR reserves the right to grant to others the privilege to engage in (or conduct) anyone or all of the aeronautical activities permitted hereunder. 21, That LESSEE shall not erect, paint upon, attach, exhibit or display in, on, or about said leased premises any sign without the prior express written consent of the LESSOR's designated representative, Ground Lease Al!reement - page 13 22. That LESSEE will not assign this Lease or sublet the leased premises or any part thereof without the express written consent of LESSOR, in writing, first had and obtained. Any assignee shall assume all rights, privileges, duties, and responsibilities contained in this Lease. 23. That LESSEE shall during the term hereof maintain at LESSEE's sole cost and expense insurance relating to the leased premises as follows: (1) Insurance against loss or damage to improvements by fire, lightning, and other risks from time to time included under standard extended coverage policies, and sprinkler, vandalism, and malicious mischief in an amount not less thari the full replacement value of the hangar or other improvements thereon; and (2) Hangar keeper's liability insurance providing for coverage in the following limits: $200,000.00 per aircraft and $400,000.00 per occurrence on property damage to aircraft in the care, custody, or control of LESSEE if the LESSEE does not own all the aircraft stored in LESSEE's hangar. 24. That LESSEE agrees to obtain and maintain construction liability insurance at all times when demolition, excavation, or construction work is in progress on the leased premises. This insurance shall be carried by insurance companies authorized to transact business in the state of Texas, selected by LESSEE and approved by LESSOR, and shall be paid for by LESSEE. This insurance shall have limits of not less than $100,000,00 for property damage and $250,000.00 per person and $500,000.00 per accident for personal injury and shall protect LESSOR and LESSEE, as well as any other person or persons LESSEE may designate, against all liability for injury or damage to any person or property in any way arising out of demolition, excavation, or construction work on the leased premises. 25, That LESSEE agrees to indemnify, save, keep and hold harmless LESSOR from and against any and all demands, debts, liabilities, suits, claims and causes of action of every kind and character whatsoever for damage or injuries to persons and/or property occurring on the leased Ground Lease A~reement - page 14 premises resulting from LESSEE's, LESSEE's invitees, agents, servants or employee's use of the leased premises, and LESSOR shall not be liable to LESSEE, LESSEE's invitees, agents, servants, . employees or visitors due to the improvements located thereon, or hereafter constructed, or any other condition of the leased premises being improperly constructed, maintained or being or becoming out of repair; LESSEE hereby waives any defects therein and agrees to hold and save LESSOR harmless from all claims for any such damages or injuries, and LESSEE must, at all times during the term of this Lease, keep and maintain, in full force and effect, a policy or policies of insurance, providing at least $250,000.00 per person and $500,000,00 for any single occurrence for bodily injury or death and $100,000.00 for any single occurrence for injury to or destruction of property, indemnifying all persons for any and all damages, personal injuries or property damages sustained in or upon the leased premises of said leased property, or any part thereof, as the result of the negligence of LESSEE, LESSEE's invitees, agents, servants or employees, and shall pay all premiums due thereon when due, 26. That with regard to all insurance required under this Lease, it is expressly provided that such insurance policy or policies shall and must be written and issued by a reputable insurance company or companies, with LESSOR as an additional insured, subject to approval by the City Attorney of the City of Paris, and LESSEE or LESSEE's insurance carrier or carriers shall deliver a copy of any such policies to the City Clerk of the City of Paris, 150 1st Street S,E., Paris, Texas 75460, or furnish to said City Clerk a current letter or certificate from such company or companies, evidencing the fact that such insurance is in full force and effect at all times during this Lease, and any extension hereof, and specifically noting thereon that LESSOR is an additional insured. All such policies shall be written so that the LESSOR will be notified of cancellation or of any restrictive amendment of the policies at least thirty (30) days prior to the effective date of such cancellation or Ground Lease A2reement - page 15 amendment. Notice shall be by certified mail, return receipt requested, addressed to the LESSOR at the following address: City Clerk, City of Paris, P. O. Box 9037, Paris, Texas 75461-9037. LESSEE agrees that if LESSEE does not keep all insurance required under this Lease in full force and effect, LESSOR may declare this Lease, and all rights and interest created by it, to be terminated, 27, That, in case of any damage to or destruction of the buildings, structures, and equipment on the leased premises, or any part thereof, LESSEE will promptly give written notice thereof to LESSOR, generally describing the nature and extent of such damage and/or destruction. In case of any damage to or destruction of the buildings, structures, and equipment on the leased premises, or any part thereof, LESSEE, whether or not the insurance proceeds, if any, payable on account of such damage and/or destruction shall be sufficient for such purpose, at LESSEE's sole cost, risk, and expense, will promptly commence and complete the restoration, repair, and replacement of said buildings, structures and equipment as nearly as possible to their value, condition, and character immediately prior to such damage and/or destruction, with such alterations in and additions thereto as may be approved in writing by LESSOR (hereinafter sometimes referred to as the "Restoration"). All insurance proceeds, if any, payable on account of such damage to or destruction of the buildings, structures, and equipment on the leased premises shall be held by LESSOR. LESSOR shall be protected in acting upon any certificate believed by LESSOR to be genuine and to have been executed by the proper party and shall receive such certificate as conclusive evidence of any fact or as to any matter therein set forth. Such certificate shall be full warranty, authority, and protection to LESSOR in acting thereon, and LESSOR shall be under no duty to take any action other than as set forth in this paragraph. Ground Lease Al!reement - page 16 Insurance proceeds received by LESSOR on account of any damage to or destruction of the buildings, structures, and equipment on the leased premises, or any part thereof (less the costs, fees, and expenses incurred by LESSOR and LESSEE in the collection thereof, including, without limitation, adjuster's and attorney's fees and expenses), shall be applied as follows: A. Net insurance proceeds as above defined shall be paid to LESSEE or as LESSEE may direct from time to time as Restoration progresses to pay (or reimburse LESSEE for) the cost of Restoration, upon written request of LESSEE to LESSOR accompanied by (I) certificate of a supervising architect or engineer approved by LESSOR, describing in reasonable detail the work and material in question and the cost thereof, stating that the same were necessary or appropriate to the Restoration and constitute a complete part thereof, and that no part of the cost thereof has theretofore been reimbursed, and specifying the additional amount, if any, necessary to complete the Restoration, and (2) an opinion of counsel satisfactory to LESSOR that there exist no mechanics' , materialmen's, or similar liens for labor or materials except such, if any, as are discharged by the payment of the amount requested. B. Upon receipt by LESSOR of evidence of the character required by the foregoing clauses (A)(1) and (2) that Restoration has been completed and the cost thereof paid in full, and that there are no mechanics' , materialmen's, or similar liens for labor or materials supplied in connection therewith, the balance, if any, of such proceeds shall be paid to LESSEE or as LESSEE may direct. In the event that LESSEE does not promptly commence Restoration, or after cornmencement LESSEE does not diligently proceed to the completion of same, LESSOR shall have the right to cornmence or complete Restoration after LESSOR has given LESSEE thirty (30) days prior written Ground Lease Al!reement - page 17 notice requesting the eommencement of Restoration or that LESSEE diligently proceeds to the completion of same if LESSEE during such thirty (30) day period does not so cornmence or proceed to diligently complete Restoration. In such event, LESSOR shall retain the insurance proceeds, and LESSEE shall pay any deficiency if such proceeds are not sufficient for Restoration. 28. That LESSEE shall not rent the leased premises, or any part thereof, for aircraft storage unless a permit under Article II, Chapter 6 of the Code of Ordinances of the City of Paris, has been issued to LESSEE for that specific purpose, 29, That LESSOR has the right to take any action it considers necessary to protect the aerial approaches of the Airport against obstruction, together with the right to prevent LESSEE from erecting, or permitting to be erected, any building or other structure on the Airport which, in the opinion of the LESSOR, would limit the usefulness of the Airport or constitute a hazard to aircraft, 30. That LESSEE shall pay and discharge all taxes, including without limit sales, use, and excise taxes, ad valorem taxes, taxes on personal property, general and special assessments, and other charges of every description which are levied on or assessed against the leased premises and all interests in the leased premises and all improvements and other property on the leased premises during the term ofthis Lease, whether belonging to LESSOR or to LESSEE. LESSEE shall pay all such taxes, charges, and assessments directly to the public officer charged with their collection not less than fifteen (15) days before the same shall become delinquent. LESSEE shall at no time permit the foreclosure of any tax liens to LESSEE's leasehold interest in the leased premises or the buildings, fixtures, or other improvements on the leased premises. LESSEE shall have the right in good faith at its own sole cost and expense to contest any such taxes, charges, and assessments, and shall be obligated to pay the contested amount, plus any penalties and interest imposed, only if and when finally determined to be due. At any time that the payment of any item of taxes, special Ground Lease A2reement - page 18 assessments, or governmental charges which LESSEE is obligated to payunderthe provisions of this paragraph remain unpaid and uncontested later than fifteen (15) days before the same shall become delinquent, LESSOR may declare this LEASE, and all rights and interest created by it, to be terminated. 31. That nothing herein shall be deemed to relieve LESSEE and its tenants, sublessees, patrons, invitees and others from Airport use charges, including fuel flowage fees paid on fuel purchased by LESSEE, as are levied generally by the LESSOR directly upon the operation of aircraft, or from automobile parking permit fees for parking areas that are not included within the leased premises, or from security fees. 32, That, if at any time a release of hazardous materials is discovered on, at, or in the leased premises, the Airport, the LESSOR's sewage or storm drainage system, soil, air, groundwater, or any improvements, which was caused or permitted by LESSEE, LESSEE's officers, agents, employees, contractors, permittees, invitees, or subtentants, or there is the danger of such release of hazardous materials, LESSEE, at LESSEE's sole cost and expense, shall ensure removal of such hazardous materials from the leased premises, the Airport, the underlying groundwater, the LESSOR's soil, air, storm drainage, and the sewage system, in accordance with requirements of all appropriate governmental authorities. LESSEE shall immediately notify LESSOR of any release of hazardous materials. Upon discovery of any hazardous materials on, in, under, or emanating from the leased premises, any release or threat of release of a hazardous materials, and/or any illness caused by exposure thereto, LESSEE shall immediately, and at its sole cost and expense, take all actions necessary to remediate, abate, and/or rectify any such conditions at or upon the leased premises, Ground Lease Al!reement - page 19 33. That LESSEE will not use, or permit the use of, said leased premises, or any part thereof, for any purpose which is determined dangerous or hazardous to the Airport operation by . Airport Manager. 34, That the following events shall be deemed to be events of default by LESSEE under this Lease: A. Failure of LESSEE to pay any lease payment or any other sum payable to LESSOR hereunder on the date that same is due and such failure shall continue for a period of thirty (30) days. B, Failure of LESSEE to comply with any term, condition, or covenant of this Lease other than the lease payment or other sum of money, and such failure shall not be cured within thirty (30) days after written notice thereof to LESSEE, C. Insolvency, the making of a transfer in fraud of creditors, or the making of an assignment for the benefit of creditors by LESSEE or any guarantor of LESSEE's obligations. D. Filing of a petition under any section or chapter ofthe National Bankruptcy Act, as amended, or under any similar law or statute of the United States or any State thereof by LESSEE or any guarantor of LESSEE's obligations, or adjudication as a bankrupt or insolvent in proceedings filed against LESSEE or such guarantor. E. Appointment of a receiver or trustee for all or substantially all of the assets of LESSEE or any guarantor of LESSEE's obligations. F. Abandonment by LESSEE of any substantial portion of the leased premises or cessation of use of the leased premises for the purposes leased, G, The filing of any lien against the leased premises resulting from any act or omission Ground Lease Al!reement - page 20 of LESSEE which is not discharged or contested in good faith as determined by LESSOR by proper legal proceedings within fifteen (15) days of receipt of actual notice by LESSEE, unless LESSEE posts a bond within this time period equal to the amount of the lien, In the event of any default by the LESSEE that is not cured within thirty (30) days of receiving notice from LESSOR, LESSOR may, in addition to any other remedies available to it, terminate this Lease. If the default concerns a failure to make payments to LESSOR, however, no written or other notice of default shall be required. If payments to LESSOR are in arrears for a period of thirty (30) days after the payments become due, then LESSEE shall be in default under this Lease, Notwithstanding the foregoing, no failure to perform or delay in performance which is caused by any war, civil disorder, or other national emergency or which is due to an intervening act of God shall be deemed an event of default. In addition to the termination and forfeiture right described in the preceding paragraph, LESSOR shall have the following rights and remedies upon default by LESSEE: A. The recovery of any unpaid rent, fees, and other payments due and owing at the time of termination, plus any unpaid rent and fees that would have been earned and other payments that would have been made if the Lease had not been breached by LESSEE. B. The recovery of any damages, costs, fees, and expenses incurred by LESSOR as a result of the breach of the Lease by LESSEE, including reasonable attorneys' fees and expenses. C. The removal of all persons from the leased premises, and the removal and storage at Ground Lease Aereement - page 21 LESSEE's expense of all property on the leased premises. D. Any other right or remedy, legal or equitable, that LESSOR is entitled to under applicable law. No termination shall relieve the LESSEE of the obligation to deliver and perform on all outstanding obligations and requirements prior to the effective date of the termination and LESSEE's liabilities under this Lease shall continue. In the event of any such termination as above enumerated, LESSOR shall have the right at once and without further notice to the LESSEE to enter and take full possession of the leased premises occupied by the LESSEE under this Lease, Upon the termination of this Lease for any reason, LESSEE shall yield up said leased premises, facilities, fixtures, and equipment to LESSOR in the same condition as when received, reasonable and ordinary wear and tear and damage by the elements excepted. In the event of the failure on the part ofthe LESSEE upon the termination of this Lease to immediately remove from the leased premises all property owned by it, LESSOR may effect such removal and store such property at LESSEE's expense, LESSEE further covenants and agrees to pay and discharge all reasonable costs, attorney's fees, and expenses that may be incurred by LESSOR in enforcing the covenants, conditions, and agreements of this Lease, re-entering andlorrepossessing the leased premises, restoring the leased premises to good and proper repairlorder, protecting the leased premises, and obtaining a new tenant. The failure of LESSOR to declare this Lease terminated for any of the reasons set out above shall not bar the right of LESSOR to subsequently terminate this Lease for any of the reasons set out above, Further, the acceptance of rents, fees, or other payments due and owing to LESSOR for any period after a default of any of the terms, covenants, or conditions by LESSEE shall not be deemed Ground Lease Aereement - page 22 a waiver of any right on the part of LESSOR to terminate this Lease. 35. That the LESSOR has the right to temporarily close the Airport or any of the facilities thereon for maintenance, improvements, or for the safety of the public, 36. That the LESSOR may, at its option, terminate this Lease as to the land or the entire hangar building, or any parts thereof, which may be necessary in the event the LESSOR desires to use the property, or any portion thereof, for necessary municipal functions as determined by LESSOR, such as, but not limited to, extension of runways or erection of other Airport facilities. In the event of the above determination, the LESSOR shall give the LESSEE ninety (90) days notice, in writing, of its intention to so utilize the building, or any portion thereof, for such purposes. In the event this option is exercised by the LESSOR, LESSEE shall be paid, as LESSEE's sole consideration, the fair market value of improvements previously made by LESSEE to the leased premises and authorized by LESSOR, said fair market value to be determined as of the time the LESSOR exercises the right of termination as provided in this paragraph. In no event shall LESSOR be liable for a claim of lost profits, lost benefit, or other similar claims as a result of termination under this paragraph. 37, That, during time of war or national emergency, LESSOR shall have the right to lease the landing areas or any part thereof to the United States Government for military or naval use, and, if such lease is executed, the provisions of this instrument, insofar as they are inconsistent with the provisions of the lease to the Government, shall be suspended, 38. That the waiver by LESSOR of any breach by LESSEE of the terms, covenants, conditions, or provisions of this Lease shall not be deemed to be a waiver of any other breach of the same or other term, covenant, condition, or provision of this Lease, regardless of when the breach has occurred. Ground Lease Aereement - page 23 39. That, in case anyone or more of the provisions contained in this Lease shall, for any reason, be held by a Court of competent jurisdiction to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision of the Lease, and this Lease shall be construed as if the invalid, illegal, or unenforceable provision had never been included in the Lease. 40. That this Lease constitutes the sole and only agreement of the parties to this Lease and supercedes any prior understandings or written or oral agreements between the parties respecting the subject matter of this Lease. 41. That no amendment, modification, or alteration of the terms of this Lease shall be binding unless it is in writing, dated subsequent to the date of this Lease, and duly executed by the parties of this Lease. 42. That the rights and remedies provided by the Lease are cumulative, and the use of any one right or remedy by LESSOR shall not preclude or waive its right to use any or all other remedies. These rights and remedies are given in addition to any other rights the LESSOR may have by law, statute, ordinance, or otherwise, 43. That all notices required under this Lease must be given by certified mail orregistered mail, addressed to the proper party, at the following addresses: LESSOR City Manager City of Paris P. O. Box 9037 Paris, TX 75461-9037 LESSEE Tom and Kim Knox Knox Aerial Flying 1201 F.M. 1509 Brookston, TX 75421 Either party may change the address to which notices are to be sent by giving the other party notice ofthe new address in the manner provided in this paragraph. 44, That this Lease shall be binding upon, and inure to the benefit of, the respective heirs, Ground Lease Aereement - page 24 executors, administrators, legal representatives, successors, and assigns when permitted by this Lease, 45, That this Lease shall be construed under, and in accordance with, the laws of the State of Texas, and all obligations ofthe parties created by this Lease are performable in Lamar County, Texas. Venue for State court actions arising under this Lease shall be exclusively in the courts of Lamar County, Texas; venue for federal court actions arising under this Lease shall be exclusively in the federal courts for the Eastern District of Texas, EXECUTED ON the dates shown in acknowledgments below, CITY OF PARIS, LESSOR: By: Curtis Fendley, Mayor ATTEST: Janice Ellis, City Clerk APPROVED AS TO FORM: Larry W. Schenk, City Attorney KNOX AERIAL FLYING, LESSEE Name: Tom Knox Name: Kim Knox Ground Lease Agreement - page 25 STATE OF TEXAS ) ) COUNTY OF LAMAR ) BEFORE ME, the undersigned authority, on this day personally appeared CURTIS FENDLEY, Mayor ofthe City of Paris, Paris, Texas, known to me to be the person whose name is subscribed to the foregoing instrument, and acknowledged to me that he executed the same for the purposes and consideration therein expressed and in the capacity therein stated. GIVEN UNDER MY HAND AND SEAL OF OFFICE this the 27th day of July, 2005. Notary Public, State of Texas STATE OF TEXAS ) ) COUNTY OF LAMAR ) BEFORE ME, the undersigned authority, on this day personally appeared TOM KNOX AND KIM KNOX, DOING BUSINESS AS KNOX AERIAL FL YlNG, known to me to be the persons whose names are subscribed to the foregoing instrument, and acknowledged to me that they executed the same for the purposes and consideration therein expressed and in the capacity therein stated. GIVEN UNDER MY HAND AND SEAL OF OFFICE this the _ day of June, 2005. Notary Public, State of Texas Ground Lease Aereement - page 26 Reference Bearing: Center line of main runway 1..0\ oW Cf-Knox Disk-799 6-22-05 . ::.: . City of Pons .,1" ~'L---.:; ,\L" \rol"~- // o rf-.-- "i.,\of:\/ 8"!>' ~o_ -91 Jl-c, c;\.9-;"'- . 9'" ~ ~S~io~ '\55'2.. ~ ~~; C;].~:;~~Ci"G o~ c,~~~O~""O ...;I 't\.C ,\.g..~'O.... ...O~"!>'3-,'O....bi ." 'j;.... ...0' \ ~/'t'(or ,trl..;...-/,.., 0")./< ". oi-....... " S ;"-r;:J::J. /~OJ( 30 I 15 0 ~ - fence reset 30 [ (f)=found 60 I 1" 30' up utility pole % ~ o~ ,~ ,,0 +-(~ ",-0 ,l- e.? dory Une Northwester'tY ~~~rwo)' Concre e <-:::J vA- .... J.M. Nelson, RPLS of Texos. Nelson Surveying Company 920 N. Main st. Paris, Texas 75460 903-785-3551 fax: 903-785-3399 E1nai ;mo18l8met.com ..1M NeI8on, RegIstered Proleeelonal Land llu'veyor 01 Texae, 14025 1hJe IUMY Is only valId If It has on original slgnatur. and .eaI, Any chong.. made wIll vold Ihle NMy, Before any con_wcUon, all ulAlty cumpanle_ ehould b, contacted for locaUon of th,1r roepeetl.... ulllty line_ 100 >",or flood ton., or. t<:anned and In..n,d from FHa" or FIRM unl... oth........ notld her.on. EXHIBIT A- t .~<-~ J #4025 dote clp = 1/2" copped Iron pin @ / z. Poge:_of_ .-~..'.;'~ _.- -A Nels-on Surveying Company 920 North Main Street Paris, Texas 75460 903-785-3551 fax 903-785-3399 e-mail jimn@1stamet.com Jim Nelson, owner J. M. Nelson, Registered Professional land Surveyor of Texas, #4025 These field notes are for use only by the "group or persons" certified 10. SUrveyor .ssurnes no liability for .ny modification or unauthorized copies. CF-Knox Disk-798 WScoll #856 FIELD NOTES Situated within the Limits of the City of Paris, County of Lamar, and State of Texas, a part of the William Scott Survey #856, and being a part of a 1552.97 acre tract of land conveyed the City of Paris by deed recorded in VoL 308, Page 287, of the Deed Records of said County and State, said City of Paris tract being known as the Cox Field Airport property. Beginning at a Yo" capped (NELSON SURVEYING) iron pin (s) for corner, said iron pin being North 62'21'41" East a distance of 2106.30 feet from the centerline station 30+00 as shown on FAA. Project No. 8-48-0169-01, on file in the City of Paris Engineer's Office, said point also being North 74'38'39" East a distance of 4540.83 feet from a y," iron pin (I) at the intersection of the East Boundary Line tangent and the South Boundary Line tangent of Farm Road 1508 , said intersection being an el corner of City of Paris I Cox Field 1552.79 acre tract Thence North 37'58'58" East parallel with and 50 feet Northwest of the Northwesterly Boundary Line of a concrete Taxiway, a distance of 100.00 feet to a 11," capped (NELSON SURVEYING) iron pin (s) for corner; Thence North 52'01'02" West a distance of 100.00 feet to a y,"capped (NELSON SURVEYING) iron pin (s) for corner; Thence South 37'58'58" West a distance of 100.00 feet to a Yo" capped (NELSON SURVEYING) iron pin (s) for corner; Thence South 52'01'02" East a distance of 100.00 feet to the place of beginning and containing 0.230 acres of land. I, J,M. Nelson, Registered Professional Land Surveyor of Texas, #4025, certify to the City of Paris, that the above depicted and described tract of land was taken from an actual survey made on the ground and completed by me on the 22nd day of June, 2005. ~ --2-- A/A t;.-n. "" date J.M. Nelson, RPLS of Texas, #4025 Page 1: of 2- --