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HomeMy WebLinkAboutMINUTES - 12162008 - C.28 .1 TO: BOARD OF SUPERVISORS taw-s=`---., Contra FROM: KEITH FREITAS, DIRECTOR OF AIRPORTS " Costa DATE: December 16, 2008 a.- = "`� County sra'cbUN`� SUBJECT: APPROVE and AUTHORIZE the Director of Airports,or designee,to execute a Long-Term Lease with Buchanan Airport Hangar Owners Association, Inc. for a Buchanan Field Airport Aviation Project, Pacheco Area(District IV). Specific Request(s) or Recommendation(s) & Background & Justification I. RECOMMENDED ACTION: APPROVE and AUTHORIZE the Director of Airports, or designee, to EXECUTE, on behalf of the County, a long-term ground lease between the County, as landlord, and Buchanan Airport Hangar Owners Association,Inc., as tenant,in the amount of$6,263.75 per month with incremental increases, for the lease of approximately 3.3 acres of land located at Sally Ride Drive, for the period of December 2008 to December 2033 (the "Lease"). II. FINANCIAL IMPACT: There is no negative impact on the General Fund. The Airport Enterprise Fund will receive lease rental and other revenues and the County General Fund will receive property,sales and possessory interest tax revenues from this development. Continued on Attachment: X SIGNATURE: ' RECOMMENDATION OF COUNTY ADMINISTRATOR COMMENDATION OF BOARD COMMITTEE APPROVE _OTHER SIGNATURE(S): ACTION OF BOARD ON &IO1►'J,6f.pel`., 4&oprAPP ED AS RECOMM ED OTHER VOT F SUPERVISORS UNANIMOUS(ABSENT AYES: NOES: I hereby certify that this is a true and correct copy of an ABSENT: ABSTAIN: action taken and entered on the minutes of the Board of Supervisors on the date shown. H:\PSAlease.bos Orig.Div: Contra Costa County Airports ATTESTED:AG+G �Y�C� Contact: Beth Lee,Phone(925)646-5722 DAVID TWA,Clerk of the Board of Supervisors and County cc: County Administrator Administrator Auditor-Controller Community Development Public Works Director Public Works Accounting By , Deputy Public Works Real Property Federal Aviation Administration ,.s, .� 4 4 �. ..w '.,rf1. a� tL:A'r '��r'J+"+�"..9.+ ^ray y.,�'S.:y r:''.Y':�v*c�.^�."„'};�a4 t �� a r, �, l _.,_ � "t, . .. J.. A SUBJECT: Authorization to Execute a Long-Term Lease with Buchanan Airport Hangar Owners Association, Buchanan Field Airport DATE: December 16, 2008 PAGE: 2 III. REASONS FOR RECOMMENDATIONBACKGROUND: The Lease between Contra Costa County and Buchanan Airport Hangar Owners Association,Inc.(BAHOA) supersedes and replaces the original lease between the County and BAHOA dated September 1,2003. This new Lease is for a twenty-five year term that expires in 2033; representing a twenty-year extension of existing term. The tenant has the right to request two additional five-year extensions of the lease term, which the County may deny in its sole discretion. BAHOA will provide the Airport Enterprise Fund with a one-time lease extension payment of$25,000 plus they will construct a bathroom on the premises to Americans with Disability Act standards. Under the new lease, the initial ground rent paid by BAHOA is about $7,000 higher per year than the existing lease. The Lease will permit a continuation of needed and desired general aviation activities and services at the Buchanan Field Airport. This general aviation focus is consistent with the policies identified within the Buchanan Field Airport Master Plan. Further, the Lease will provide rental and sales tax revenue to the Airport Enterprise Fund and County General Fund. A copy of the Lease signed by the tenant is attached hereto. IV. CONSEQUENCES OF NEGATIVE ACTION: The County General Fund and the Airport Enterprise Fund would not realize the additional revenues. The County-owned land and building would be vacated and could negatively impact general aviation aircraft facilities, services and Airport demand needs. LEASE BETWEEN CONTRA COSTA COUNTY AND BUCHANAN AIRPORT HANGAR OWNERS ASSOCIATION, INC. 12/5/2008 TABLE OF CONTENTS 1. RECITALS....................................................................................................................................... 1 2. PURPOSE........................................................................................................................................ 1 3. LEASE. ........................................................................................................................................ 1 4. TERM ............................................................................................................................................. 1 5. HOLDING OVER.............................................................................................................................. 2 6. RENT............................................................................................................................................. 2 7. ADDITIONAL PAYMENT PROVISIONS................................................................................................ 3 8. LESSOR PROCESSING AND TRANSACTION FEES................................................................................ 4 9. USE OF PREMISES........................................................................................................................... 4 10. UNAUTHORIZED USES..................................................................................................................... 5 11. CONDITION OF PREMISES............................................................................................................... 5 12. SITE IMPROVEMENTS...................................................................................................................... 6 13. UTILITY OBLIGATIONS.................................................................................................................... 8 14. ALTERATIONS AND ADDITIONS....................................................................................................... 8 15. MAINTENANCE, REPAIR AND STORAGE............................................................................................ 8 16. LAWFUL CONDUCT.......................................................................................................................... 9 17. WASTE, QUIET CONDUCT, NUISANCE, POLLUTION ........................................................................... 9 18. HAZARDOUS MATERIALS................................................................................................................10 19. STORMWATER DISCHARGE. .........................................................................................................11 20. NOISE ORDINANCE........................................................................................................................12 21. SECURITY......................................................................................................................................12 22. HOLD HARMLESS AND INDEMNIFICATION.......................................................................................12 23. INSURANCE...................................................................................................................................13 24. TAXES...........................................................................................................................................14 25. INSPECTION, ACCESS AND NOTICE.................................................................................................14 26. RENTAL OPERATIONS ....................................................................................................................14 27. ASSIGNMENT AND ENCUMBRANCES................................................................................................15 28. DEFAULT.......................................................................................................................................15 29. LESSOR'S REMEDIES......................................................................................................................17 30. DESTRUCTION...............................................................................................................................18 31. CONDEMNATION............................................................................................................................18 32. CANCELLATION BY LESSOR............................................................................................................19 33. NON-DISCRIMINATION ..................................................................................................................19 34. OPERATION OF AIRPORT BY LESSOR..........................................'....................................................20 35. AIRPORT USE AND DEVELOPMENT..................................................................................................21 36. DEVELOPMENT OF PREMISES .........................................................................................................21 37. INSTRUMENT OF TRANSFER...........................................................................................................22 38. CHOICE OF LAW............................................................................................................................22 39. NOTICES.......................................................................................................................................22 40. TIME IS OF THE ESSENCE ..............................................................................................................22 41. BINDING ON SUCCESSORS.............................................................................................................22 42. INVALID PROVISIONS; SEVERABILITY.............................................................................................23 43. PROVISIONS..................................................................................................................................23 44. ENTIRE AGREEMENT......................................................................................................................23 45. CUMULATIVE RIGHTS AND REMEDIES.............................................................................................23 46. NO THIRD-PARTY BENEFICIARIES...................................................................................................23 47. NO CONTINUING WAIVER ..............................................................................................................23 48. COVENANT AGAINST LIENS............................................................................................................23 49. HEADINGS AND CAPTIONS.............................................................................................................25 EXHIBIT A - LEASED PREMISES EXHIBIT B - SITE PLAN EXHIBIT C - MINOR MAINTENANCE LEASE BETWEEN CONTRA COSTA COUNTY AND BUCHANAN AIRPORT HANGAR OWNERS ASSOCIATION, LLC. This lease agreement is dated 2008, and is between the COUNTY OF CONTRA COSTA, a political subdivision of the State of California ("Lessor', and Buchanan Airport Hangar Owners Association, Inc., a California corporation ("Tenant's. 1. RECITALS A. Lessor owns and operates Buchanan Field, a public airport located at Concord, California "Airport", as shown on the Airport Layout Plan, which plan is on file in the office of the Contra Costa County Director of Airports (the"Director of Airports'. B. Lessor and Tenant are parties to that certain lease between Lessor and Tenant for the Location and Maintenance of Portable T-Hangars at Buchanan Field Airport dated September 1, 2003 (the "2003 Lease') under which Tenant leased from Lessor that certain real property consisting of 3.3 acres of land that is located at the Airport and described in Exhibit A and Exhibit B (the "Premises', for use and operation of T-Hangars. The parties, therefore, agree as follows: 2. PURPOSE This lease supersedes and replaces the 2003 Lease. Effective on the Commencement Date of this lease, the 2003 Lease will have no force or effect, except that the provisions of the 2003 Lease continue to apply to obligations incurred under the 2003 Lease. 3. LEASE For and in consideration of the rent, ,fees, and faithful performance by Tenant of the terms and conditions and the mutual covenants hereof;Lessor hereby leases to Tenant, and Tenant hereby leases from Lessor the Premises, subject to all easements and encumbrances of record. 4. TERM A. TERM: The "Term" of this lease is comprised of an initial term and, with the concurrence of the Director of Airports, extension terms. The initial term is twenty-five (25) years, commencing , 2008, (the"Commencement Date'), and ending 2033. B. OPTIONAL EXTENSIONS: Tenant has two (2) options to extend this lease for a term of five (5) years for each option (each an "Extension Period'D upon all the terms, covenants and conditions set forth herein, provided (i) Tenant is not in default beyond any applicable cure period as of the commencement of the Extension Period, and (ii) Tenant is not in default on the day an Extension Request, as defined below, is given. 1 No earlier than the beginning of the twenty-second (22nd) year of the initial term, and no later than the end of the twenty-fourth (24th) year of the initial term, Tenant may request that this lease be extended for five (5) years (the "First Extension Period') by giving the County written notice of its desire to extend the Term (the "Extension Request'). The Extension Request will be deemed received by the County upon the Director of Airport's execution of an acknowledgment of receipt of the Extension Request. The Director of Airports, in his or her sole discretion may, but is not required to, approve the Extension Request, The Director of Airports will respond in writing to Tenant within sixty (60) days after receipt of the Extension Request. Failure of the Director of Airports to respond in writing within sixty (60) days constitutes a denial of the Extension Request. No earlier than the beginning of the third (3rd) year of the First Extension Period, and no later than the fourth (4t) year of the First Extension Period, Tenant may request that this lease be extended for a second five (5) year period (the "Second Extension Period's by following the same procedures set forth above. Failure to deliver an Extension Request within the timeframe set forth above constitutes a waiver of Tenant's right to request an extension. Upon commencement of an Extension Period, all references to the Term of this lease will be deemed to mean the Term as extended pursuant to this Section. 5. HOLDING OVER In the event Tenant remains in possession of the Premises after the expiration of the Term, such holding over does not constitute a renewal or extension of this lease, but shall be construed to be a tenancy from month to month on the same terms and conditions herein specified. If Tenant fails to surrender the Premises to Lessor on expiration or within thirty (30) days after cancellation or termination of this lease, Tenant shall defend, indemnify, and hold Lessor harmless from any and all claims, liability, costs, and damages resulting from Tenant's failure to surrender the Premises, including, without limitation, claims made by a succeeding tenant or renter. 6. RENT A. Upfront Payment. In recognition of this lease effectively extending the 2003 Lease, Tenant shall pay $25,000, an amount equal to a one-time lease extension payment, as a non- refundable upfront payment to Lessor on or before January 16, 2009. B. Rent: Commencing Tenant shall pay rent to Lessor on the first day of each month during the Term in an amount equal to Six Thousand Two Hundred Sixty Three and 75/100 dollars ($6,263.75), subject to adjustment as provided in Subsection 6.C. In no event will the rent for any year be less than the rent in effect for the immediately preceding year. C. Adjustment to Rent: Commencing and on lit of each year thereafter throughout the Term and any hold over period, Lessor, without prior RB:sr 12/5/2008 2 notice to Tenant, may revise the rent then in effect based on the CPI Factor, as defined below. Any such adjustment may not exceed six and one-half percent (6.5%) per annum of rent then in effect. The CPI Factor may not be applied to reduce rent below the then existing rent. In the event there is a decrease in the CPI, rent for the year in question will be the same as the rent for the preceding year. The "CPI Factor" means the percentage by which the "Index" (as defined below) as of any adjustment date has increased over the Index in effect as of the immediately preceding adjustment date, calculated to the nearest one-tenth of one percent. The term "Index" means the Consumer Price Index, all Urban Consumers and San Francisco, Oakland, San Jose, CPI Index. All Items (1982-84 = 100), published by the United States Department of Labor, Bureau of Labor statistics, or any successor or substitute index published as a replacement for that Index by said Department or by any other United States governmental agency. 7. ADDITIONAL PAYMENT PROVISIONS A. Late Rental Payments: In the event Tenant fails to pay Lessor any amount due under this lease within five (5) days after such amount is due, Tenant shall pay to Lessor a late charge of One Hundred and No/100 Dollars ($100) per occurrence (the "Late Charge', plus interest on the unpaid balance at a rate of one and one-half percent (1.5%) per month, from the date the pay- ment was due and payable until paid in full. Tenant shall pay all Late Charges as additional rent on or before the date the next installment of rent is due. Lessor and Tenant hereby agree that it is and will be impracticable and extremely difficult to ascertain and fix Lessor's actual damage from any late payments and, thus, that Tenant shall pay as liquidated damages to Lessor the Late Charge specified in this Section, which is the result of the parties' reasonable endeavor to estimate fair average compensation therefore (other than attorneys' fees and costs). Lessor's acceptance of the Late Charge as liquidated damages does not constitute a waiver of Tenant's default with respect to the overdue amount or prevent Lessor from exercising any of the rights and remedies available to Lessor under this lease. B. Form and Place of Payment: Tenant shall pay all rents and fees in cash or by personal check, certified check, or money order, payable to the County of Contra Costa, by delivering same on or before due date to the Director of Airports, 550 Sally Ride Drive, Concord, California 94520, or at such other place as Lessor may designate from time to time. C. Returned Checks: If a check written by Tenant is returned for insufficient funds, Lessor may impose a reasonable service charge in addition to any Late Charge and in addition to any charges imposed by the bank. Lessor may require Tenant to pay rent by certified check or money order if Tenant's bank or banks have returned one or more personal checks within the preceding twelve (12) month period. D. Security Deposit: 1. Upon execution of this lease, Tenant will continue to maintain on deposit with Lessor the sum of Twelve Thousand Eight Hundred Four and No/100 Dollars ($12,804.00) in cash as security for the faithful performance of the terms, covenants, and conditions of this lease (the"Security Deposit'. RB:sr 12/5/2008 3 2. The amount of the Security Deposit may increase during the Term or any holdover period, in accordance with Subsection 11.D. Security Deposit Adjustment. 3. Upon the occurrence of a Default, as defined in Section 28, Lessor may in its sole discretion (but is not required to) apply the Security Deposit, or any portion of it, to any expense, loss or (i) any rent or other sum owed to Lessor, (ii) any amount that Lessor may spend or become obligated to spend in exercising Lessor's rights under this lease, or (iii) damage sustained by Lessor resulting from Tenant's Default. Upon demand by Lessor, Tenant shall immediately pay to Lessor a sum equal to that portion of the Security Deposit expended or applied by Lessor as provided in this subsection so as to maintain the Security Deposit at its original level, or as adjusted pursuant to Subsection 11.D., as the case may be. Upon the expiration or termination of this lease and (i) Tenant's satisfaction of the conditions set forth in Section 11. Condition of Premises, and (ii) a final accounting by Lessor, any remaining Security Deposit balance shall be refunded to Tenant, without interest. Tenant waives the provisions of California Civil Code section 1950.7, and all other provisions of law in force or that become in force after the date of execution of this lease, that provide that Lessor may claim from a Security Deposit only those sums reasonably necessary to remedy defaults in the payment of Rent, to repair damage caused by Tenant or to clean the Premises. Lessor and Tenant agree that Lessor may, in addition, claim those sums reasonably necessary to compensate Lessor for any other foreseeable or unforeseeable loss or damage caused by the act or omission of Tenant or Tenant's officers, agents, employees, independent contractors or invitees. 8. LESSOR PROCESSING AND TRANSACTION FEES In the event that Tenant requires or requests Lessor's review, investigation, processing, recordation, or any other action in connection with any Tenant document, proposal or other matter (e,g.,,review of an Extension Request, a proposed assignment or other transfer, or an estoppel certificate), Tenant shall pay to Lessor a transaction fee of Two Thousand Five Hundred and No/100 Dollars ($2,500.00) plus all of Lessor's costs, including, but not limited to, staff time at rates determined by the County Auditor, for Lessor's time spent in connection with Lessor's reviewing a transaction until said transaction is completed ("Transaction Fee's. The Transaction Fee will increase by Five Hundred and No/100 Dollars ($500.00) on every fifth anniversary of the Commencement Date and is due thirty (30) days after demand therefore by Lessor. 9. USE OF PREMISES The following are the-only uses permitted on the Premises: A. Storage of Tenant's or subtenant's aircraft; B. Minor Maintenance (as such term is defined in Exhibit C) of aircraft owned by Tenant or any of Tenant's subtenants, provided that all Minor Maintenance is performed ONLY by (i) the owner of RB:sr 12/5/2008 4 the aircraft, (ii) a bonafide employee or contractor of the owner of the aircraft, or (iii) an established Buchanan Field Airport.Fixed Based Operator. C. Operation of corporate aircraft on non-commercial aviation basis; D. The initiation (start up or taxi out of aircraft) or termination (taxi in and shut down of an aircraft) for FAR Part 135 or Charter operations. 10. UNAUTHORIZED USES The following uses are specifically prohibited on or from the Premises. An inspection of the T-Hangars within 30 days of the Commencement Date is required to assure compliance. A. Fueling or defueling of aircraft except by dealers authorized by Airport. At no time will aircraft be fueled or defueled while the aircraft is in a T-Hangar on the Premises; B. Conducting of any business or commercial activity. C. Use of the premises as a residence; D. Selling or servicing of aircraft on a commercial basis; E. Occupancy by anyone operating pursuant to an FAA Part 135 Certificate (Charter Operations) or any charter activity for hire; F. Flight training operations on a commercial basis; G. Working on aircraft except within the legal limits allowed by FAA for persons working on their own aircraft; H. Servicing of aircraft by mechanics who do not have authorization to do business on the Buchanan Airport, as provided in Buchanan Field Airport Ordinance 87-8. I. Parking of vehicles overnight outside of the hangars. J. Unattended parking of airplanes and vehicles outside of the hangars. K. Long term parking of vehicles outside of designated areas as depicted on Exhibit"B". 11. CONDITION OF PREMISES A. Commencement Date. Tenant is leasing the Premises in an "as is" physical condition with no warranty, express or implied, on the part of Lessor as to the condition of any existing improvements, the condition of the soil or the geology of the soil. B. During Term. Tenant shall maintain the Premises in accordance with Section 15, Maintenance, Repair and Storage. RB:sr 12/5/2008 5 C. Termination Date. Tenant shall, not later than fifteen (15) days following the expiration or termination of this lease or any holdover period, (i) remove the Improvements, as defined in Section 12. Site Improvements, from the Premises and the Airport, and (ii)'cause the pavement covering the Premises to be returned to a usable and safe condition, as determined by the Director of Airports (the"Return Condition'). D. Secures Deposit Adjustment. To ensure.that Airport has adequate funds to effect the Return Condition if Tenant fails to perform this obligation, Tenant shall obtain from a licensed contractor approved by the Director of Airports a written estimate of the cost of effecting the Return Condition (the "Return Condition Estimate's and shall provide a copy of the Return Condition Estimate to the Director of Airports within thirty (30) days of each of the following events (each such date, an "Evaluation Date'): 1. Receipt by Tenant of a written notice from Lessor indicating Lessor is exercising its Material Change Termination Option pursuant to Section 32, Cancellation by Lessor. 2. The seventeenth (17th) anniversary.of the Commencement Date. 3. The second (2nd) anniversary of the commencement of the First Extension Period. 4. The second (2nd) anniversary of the commencement of the Second Extension Period. 5. Each anniversary of the commencement of a holdover period. If on any Evaluation Date the Return Condition Estimate exceeds the amount of the Security Deposit held by the Lessor, Tenant shall increase the Security Deposit to cause it to equal the Return Condition Estimate. The amount of any Security Deposit adjustment is due within thirty (30) days of the Evaluation Date. Tenant is responsible for the cost of obtaining the Return Condition Estimate. 12, SITE IMPROVEMENTS A. Improvements. In connection with the 2003 Lease, Tenant installed two rows of T-Hangars on the Premises (the "T-Hangars'). As a condition of this lease, Tenant shall install on the Premises, (i) an ADA (American with Disability Act) accessible restroom within twelve (12) months of the Commencement Date, and (ii) a waste oil vault within a concrete pad, all in accordance with the Plans and Specifications, as defined below . (the "Required Improvements'. Together, the T-Hangars and the Required Improvements are the "Improvements'). B. Plans and Specifications; Construction; Permits: Prior to installing the Required Improvements, Tenant shall (i) cause an engineer to review and approve plans and specifications for the Required Improvements, including the buildings, paving, and landscaping (the "Plans and Specifications'o and, thereafter (ii) shall obtain the Director of Airports' written approval of the Plans and Specifications. Tenant shall cause the construction and installation of Required Improvements to conform to the Plans and Specifications, and all applicable statutes, ordinances, building codes, Buchanan Field Airport Policy and Standards for Development, and rules and regulations of Lessor, and such other authorities as may have jurisdiction over the Premises or Tenant's operations thereon, including, but not limited to, the Contra Costa County Public Works Department, the Conservation and Development Department, and/or the Federal Aviation Administration. RB:sr 12/5/2008 6 Tenant is solely responsible for obtaining all necessary permits and approvals, and for paying any and all fees required for said construction. Lessor's approval of Tenant's Plans does not constitute a representation or warranty as to such conformity and responsibility remains at all times in Tenant. C. Performance and Payment Bonds: Not less than ten (10) working days before the commencement of any construction of the Required Improvements, Tenant shall, at its sole cost and expense, furnish to Lessor a payment bond of a surety company licensed to transact business in the State of California, or other type of security satisfactory to the Lessor, with Tenant as principal, in the sum of one hundred twenty-five percent (125%) of the total estimated cost of the Required Improvements, guaranteeing the payment of all labor, materials, provisions, supplies and equipment used in, upon, for or about the performance of said construction work or labor done thereon of any kind whatsoever and protecting Lessor from any liability, losses or damages arising therefrom or from Tenant's failure to pay for such labor aned materials. Simultaneously, Tenant shall also provide Lessor a performance bond of a surety company licensed to transact business in the State of California, or other type security satisfactory to Lessor, with Tenant as principal, in an amount equal to one hundred percent (100%) of the total estimated cost of the Required Improvements, guaranteed faithful performance of all construction work associated with the Required Improvements. Said bonds of other security must (i) be in a form acceptable to Lessor, (ii) name Lessor as obligee, and (iii) comply with the requirements of California Civil Code Section 3248. D. Inspection and Acceptance: Tenant shall obtain any necessary permits from and satisfy all of the requirements of, all local, State, County, Federal or other governmental agency that might have jurisdiction over the project, including but not limited to, the Conservation and Development Department, and the Public Works Department. The installation and removal of any Improvements, including but not limited to the T-Hangars, is subject to inspection, testing, and acceptance in accordance with applicable law by the Contra Costa County Public Works Department and Conservation and Development Department. Nothing in this lease shall be construed as approval by Lessor or any other governmental entity acting in its or their governmental capacity to release Tenant from any governmental application, review or requirement. E. No Warranties: The inspection, testing and acceptance by Tenant under this or any other section of this lease, of any plans submitted by or acts performed by Lessor does not constitute a warranty by Lessor, and does not relieve Tenant of its obligation to fulfill the provisions of this lease, nor is Lessor thereby estopped from exercising any of its remedies provided at law or equity or under this lease. F. Engineering; Lessor shall furnish Tenant with control information required for ground and pavement elevations, specifications for earthwork, pavement, and .drainage. Tenant is responsible for all other engineering work and the accuracy thereof. Any material deviations from the approved Plans must have prior written approval by the Lessor. G. Utilities: Tenant shall obtain the prior written approval of the Director of Airports before installing utilities on the Premises. Utilities required by Tenant will be installed at Tenant's own RB:sr 12/$/2008 7 0 cost and expense. Tenant shall pay any and all connection, inspection, and service fees in connection with such utilities. H. Notice of Nonresponsibility: Tenant shall cause a notice of Lessor non-responsibility to be posted and recorded during construction in accordance with Civil Code Sections 3094 and 3129. A copy of the notice is to be mailed to the Director of Airport upon filing it with the County Recorder. I. SiM Tenant may not erect signs and advertising media and place the same upon the T- Hangars without the written approval of the Director of Airports and of any other public agency having jurisdiction. Any signs installed must be in accord with FAA and Buchanan Field Airport Policy and Standards for Development 13. UTILITY OBLIGATIONS Tenant shall pay utility providers directly for all utilities used or consumed on the Premises by Tenant or its subtenants, including, but not limited to gas, water, electricity, garbage disposal, storm and sanitary sewer services,janitorial services, and telephone services. In the event Lessor, or any utility company, requires that any existing or new distribution system be installed underground, Tenant shall, at its own cost and expense, provide all necessary facility changes on the Premises, so as to receive such service. 14. ALTERATIONS AND ADDITIONS Except as provided.in Section 12. Site Improvements, Tenant shall not make any alterations, erect any additional structures, or make any improvements on the Premises without prior written consent of the Director of Airports. In the event Tenant makes alterations or constructs additions that violate the conditions contained in this lease (an "Unauthorized Addition', at the Director of Airports' sole discretion, Tenant shall remove any Unauthorized Addition at Tenant's sole cost and expense. If Tenant is required to remove any Unauthorized Addition, Tenant, at its sole cost and expense, shall restore the Premises to the conditions existing immediately prior to the existence of the Unauthorized Addition, or such other condition designated by.Lessor in its election. If Tenant is not required to remove any Unauthorized Addition, such Unauthorized Additions shall remain on and be surrendered with the Premises on expiration or termination of this lease. If Tenant wishes to make any alterations, erect any additional structures, or make any additional improvements to the Premises as provided in this Section, Tenant may not commence construction until Tenant has the prior written consent of Lessor. In addition, a Notice of Lessor Non-Responsibility shall be posted and recorded by Tenant during construction in accordance with Civil Code Sections 3094 and 3129. Tenant shall mail a copy of such Notice of Lessor Non-Responsibility to Lessor upon filing it with the County Recorder. 15. MAINTENANCE, REPAIR AND STORAGE A. Tenant shall, at its sole cost and expense throughout the Term of this lease, maintain the Premises in a first-class condition. Building maintenance includes exterior painting and roof RB:sr 12/5/2008 8 repairs. Grounds maintenance includes cracks, sealing and other infracture repairs. All maintenance, repairs, and replacements shall be of.a quality substantially equal to the original material and workmanship. The Director of Airports, or his or her designee, shall be the sole judge of the quality of maintenance. i Any changes in exterior paint colors shall be subject to the prior written approval of the Director of Airports. Tenant shall maintain all painted exterior surfaces and surfaces requiring treatment of any kind in first-class condition and repaint or treat as often as reasonably required in the sole discretion of Airport, in order to preserve the structure and to maintain high standards of appearance at the Airport. Upon written notice by Airport, Tenant shall perform whatever reasonable maintenance Airport deems necessary. If said maintenance is not undertaken by Tenant within thirty (30) days after receipt of written notice, Airport shall have the right to enter upon the Premises and perform such necessary maintenance, the cost of which shall be reimbursed by Tenant to Airport as additional rent, without offset, upon Tenant's receipt of Airport's request for said reimbursement. B. Tenant shall install and maintain "No Smoking" signs in any T-Hangar or other building on the premises. C. Tenant shall not store, or permit others to store, any materials, supplies, products, equipment, or other personal property on the Premises. other than inside Airport-approved buildings. or structures without the prior written consent of the Director of Airports. Tenant shall store personal property. items, supplies, materials and combustibles, authorized by the Director of Airports or by this lease inside the building in a safe, neat and sanitary manner. 16. LAWFUL CONDUCT Tenant shall obey and observe, and shall ensure that all persons entering upon the Premises obey and observe all the terms and conditions of this lease and all statutes, ordinances, resolutions, regulations, orders, and policies now in existence or adopted from time to time by the United States (including, but not limited to, the Federal Aviation Administration), the State of California, the County of Contra Costa, the Central Contra Costa Sanitary District, the San Francisco Bay Regional Water Quality Control Board, and any other government agencies with jurisdiction over the Airport (collectively, the "Applicable Laws' including, but not limited to, Applicable Laws concerning health, safety, fire, accessibility, police, and the environment. Tenant shall pay all fines and penalties levied against it by any government agency for Tenant's violation of any Applicable Law associated with activities on the Premises. 17. WASTE, QUIET CONDUCT, NUISANCE, POLLUTION A. Tenant shall not commit, or suffer to be committed, any waste upon the Premises or any nuisance or other act or thing that may disturb the quiet enjoyment of the use of Buchanan Field Airport or surrounding property. RB:sr 12/5/2008 9 B. Tenant shall provide, as necessary, a separate drainage, collection, and/or separation system to ensure that no untreated liquid waste from any type of operation, including aircraft cleaning and oil change operations will enter the Airport storm drainage or sanitary system. C. Tenant shall not permit any activity on the Premises that directly or indirectly produces unlawful or excessive amounts or levels of air pollution, (e.g., gases, particulate matter, odors, fumes, smoke, dust), water pollution, noise, glare, heat emissions, trash or refuse accumulation, vibration, prop-wash, jet blast, electronic or radio interference with navigational and communication facilities used in the operation of the Airport or by aircraft, or any other activity that is hazardous or dangerous by reason or risk of explosion, fire, or harmful emissions. 18. HAZARDOUS MATERIALS A. Definition of Hazardous Materials: As used in this lease, the term "Hazardous Materials" means any hazardous or toxic substance, hazardous or radioactive material, or hazardous waste, pollutant or contaminant at any concentration that is or becomes regulated by the United States, the State of California, or any local government authority having jurisdiction over the Premises. Hazardous Materials include, but are not limited to, the following: (1) any "hazardous waste,""extremely hazardous waste,"or"restricted hazardous waste,"as defined in Sections 25115, 25117 or 25122.7, or listed pursuant to Section 25140 of the California Health & Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law); (2) any `hazardous substance" as that term is defined in Section 25316 of the California Health & Safety Code, Division 20, Chapter 6.8 (Carpenter-Presley-Tanner Hazardous Substance Account Act), (3) any material or substance listed as a chemical known to cause cancer or reproductive toxicity pursuant to Section 6380 of the California Labor Code, Division 5, Part 1, Chapter 2.5 (Hazardous Substances Information and Training Act); (4) any "hazardous waste" as that term is defined in the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq. (42 U.S.C. Section 6903); (5) any "hazardous substance" as that term is defined in the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. Section 9601 .et seq. (42 U.S.C. Section 9601); (6) any pollutant, contaminant, or hazardous, dangerous, or toxic chemical, material, or substance, within the meaning of any other applicable federal, state, or local statute, ordinance, resolution, regulation, order, policy, or requirement, including consent decrees and administrative orders imposing liability or standards of conduct concerning any hazardous, dangerous, or toxic waste, substance, or material, now or hereafter in effect; (7) any petroleum product; (8) any radioactive material, including any"source materials", "special nuclear materials", or"byproduct material" as defined in 42 U.S.C. Section 2011 et seq.; (9) any asbestos in any form or condition; and (10) any polychlorinated biphenyls (PCBs) and any substances or any compounds containing PCBs: B. Use of Hazardous Materials: Tenant shall not cause or permit any Hazardous Materials, to be generated, brought onto, stored, used, emitted, released, discharged or disposed of in, on, under, or about the Premises by Tenant or its officers, employees, agents, contractors, renters, guests or invitees, except for limited quantities of (1) standard office and janitorial supplies containing chemicals categorized as Hazardous Materials; (2) motor oils, hydraulic fluids, fuel and other materials commonly used in aircraft storage and fueling facilities; (3) such other Hazardous Materials as are approved in advance in writing by Lessor. During the term of this lease, Tenant shall strictly comply with all applicable laws, statutes, ordinances, regulations, RB:sr 12/5/2008 10 orders, etc., in effect that relate to public health and safety and protection of the environment including, but not limited to those identified in this Section ("Environmental Laws'). Notification to the Director of Airports. If, during term of this lease, Tenant becomes aware of (a) any actual or threatened release of any Hazardous Materials on, under, or about the Premises; or (b) any inquiry, investigation, proceeding, or claim by any government agency or other person regarding the presence of Hazardous Materials on, under, or about the Premises, Tenant shall (1) immediately provide verbal notification to the Director of Airports and (2) provide written notification of such release or investigation to the Director of Airports within twenty-four (24) hours after learning of it. In the event Tenant receives any claims, notices of violation, reports, or other writing concerning the aforementioned release or investigation, Tenant shall furnish copies of all such materials to Lessor no later than the business day following Tenant's receipt thereof. Notification to the Director of Airports under this Section does not relieve Tenant of any obligation to notify any governmental agency under any Applicable Law. D. Indemnification: Tenant shall, at Tenant's sole expense and with legal counsel reasonably acceptable to Lessor, indemnify, protect, defend, and hold harmless Lessor and Lessor's officers, employees, agents, and contractors from and against any and all demands, losses, claims costs, suits liability and expenses including without limitation, attorney's fees and consultant fees arising out of or relating to the violation of any Environmental Laws or the use, handling, generation, emission, release, discharge, storage or disposal of any Hazardous Materials by Tenant or Tenant's officers, employees, agents, contractors, renters, guests or invitees. This indemnification applies whether or not the concentration of such Hazardous Materials exceed. state or federal maximum contaminant or action levels or whether any government agency has issued a cleanup order. Losses, claims, costs, suits, liability, and expenses covered by this indemnification provision include, but are not limited to: (1) losses attributable to diminution in the value of the Premises; (2) loss or restriction of use of rentable space on the Premises; (3) adverse effect on the marketing of any rental space on the Premises; and (4) penalties and fines levied by, and remedial or enforcement actions of any Wind issued by any regulatory agency (including but not limited to the costs of any required testing, remediation, repair, removal, cleanup or detoxification of the Premises and surrounding properties). This indemnification clause shall survive any expiration or termination of this lease. 19. STORMWATER DISCHARGE Lessor has applied for and received a National Pollutant Discharge Elimination Permit ("NPDEP'O under the Federal Clean Water Act, which covers Tenant's operations on the Premises. Tenant shall ensure that no pollution or Hazardous Materials of any type is discharged into the storm water system at the Airport, and shall comply with the NPDEP in all respects and is responsible for any such discharge by Tenant or by any of Tenant's officers, employees, agents, contractors, renters, guests or invitees during the entire term of this lease. Any fine or cost of remedial action required of Lessor, by any agency or agencies having jurisdiction thereover, as a result of actions on or discharges from the Premises, will be charged to Tenant, and Tenant shall immediately reimburse Lessor for such RB:sr 12/5/2008 11 costs upon demand. In addition, any discharge of pollutants or Hazardous Materials, as defined herein, on or from the Premises is a Default of this lease and is grounds for its termination. Tenant shall observe and obey all policies, rules, and regulations promulgated and enforced by Lessor and any other governmental entity having jurisdiction over the Airport. 20. NOISE ORDINANCE Tenant shall comply with Contra Costa County Ordinances 87-8 and 88-82, as amended, or any other rules or ordinances relating to noise standards at the Airport, as may be approved from time to time by the Contra Costa County Board of Supervisors. Tenant shall provide quarterly noise abatement training to pilots of aircraft based on the Premises. 21. SECURITY Lessor has no obligation to provide security to the Premises. Tenant shall provide, through the use of buildings, structures, walls, fences, gates and similar barriers, or a combination thereof, positive uninterrupted on-site security at all times for the prevention of unauthorized pedestrian and vehicular access to the aircraft operating area by way of the Premises. Tenant shall control direct or indirect points of entry to the aircraft operating area to accommodate authorized individuals and authorized vehicles in compliance with FAA and Airport security requirements. Tenant shall also provide security for on-site facilities, such as vehicular parking lots, aircraft tie-down aprons, buildings, hangars, fuel storage areas and shops. Tenant shall provide adequate lighting to provide for all-night illumination of the perimeter of all buildings on the Premises, including, aprons, aircraft tie-down areas, vehicular parking lots and pedestrian walkways surrounding the Premises. If at any time during the term of this lease, additional security requirements are imposed on the Airport by the FAA or any other agency having jurisdiction over the Airport, Tenant shall comply with said security requirements at Tenant's sole expense. If Airport is fined by FAA for a security violation caused by Tenant, Tenant shall immediately reimburse Lessor upon demand. 22. HOLD HARMLESS AND INDEMNIFICATION Tenant shall defend, hold harmless, and indemnify the Indemnitees (as defined below) from the Liabilities as defined in this Section 22. A. "Indemnitees" means Lessor, its governing body, elective and appointive boards, commissions, officers, employees, representatives and agents. B. "Liabilities" means any liability or claim for damage of any kind allegedly suffered, incurred or threatened because of an Act (as such term is defined below) and such liabilities include, but are not limited to personal injury, death, property damage, inverse condemnation claims of third parties or any combination of these, and including the defense of any suits or actions at law or equity concerning these. C. An "Act" means any act, intentional or negligent, and any omission, of Tenant, its agents, subtenants, representatives, invitees, or contractors in connection with the occupancy and use of the Premises by Tenant, its shareholders, or any subtenant, renter or assignee. RB:sr 12/S/2008 12 D. The promise and agreement in this Section 22 are not conditioned or dependent on whether Tenant or Lessor has prepared, supplied, or approved any plans or specifications in connection with work performed pursuant to Section 12., 14 or 15 or has insurance or other indemnification covering any of these matters. This indemnification clause shall survive any expiration or termination of this Lease. 23. INSURANCE Tenant shall procure and maintain, at its own cost and expense, at all times during the term of this lease, the following policies issued by insurance companies authorized to do business in California, with a financial rating of at least an A-status (unless otherwise stated below) as rated in the most recent edition of Best's Insurance Reports: A. Commercial General Liability, Property Damage, and Hangarkeeper's Insurance: Tenant shall obtain and maintain, owner, landlord, and tenant Commercial General Liability Insurance with a financial rating of at least an A- or P status (pooled insurance coverage) covering and insuring all parties hereto (including naming Contra Costa County and its officers, agents, and employees as additional insureds under the policy or policies) with a minimum combined single limit coverage of One Million and no/100 Dollars ($1,000,000) for all damages due to bodily injury, sickness or disease, or death to any person and damage to property, including the loss of use thereof, arising out of each accident or occurrence arising out of ownership, maintenance, or use of the Premises and all operations necessary or incidental thereto. Lessor shall also obtain and maintain, Hangarkeeper's Liability Insurance in the minimum. amount of One Million and no/100 Dollars ($1,000,000) for each aircraft in or on the Premises. Both liability insurance and Hangarkeeper's insurance shall be factored periodically to maintain adequate coverage. B. Fire Insurance: Tenant shall insure for fire and extended coverage risks all personal property, improvements, and alterations in, on, or about the Premises. Such insurance shall be in an amount equal to one hundred percent (100%) of insurable, full replacement value of any Improvements located thereon, and shall include vandalism and malicious mischief endorsements. C. Worker's Compensation: Tenant shall obtain workers' compensation insurance as required by law, covering all employees of Tenant, and such insurance shall be kept in force during the entire term of this lease. D. Form of Policies: Lessor shall cause policies of insurance required by this Section to be in such standard form and written by such qualified insurance companies as is satisfactory to Lessor. Tenant shall provide evidence of such insurance be provided to Lessor in the form of(i) copy of the policies, (ii) a duly executed certificate of insurance. Said policy or policies or certificates shall contain a provision that written notice of policy lapses, cancellation or any changes thereto shall be delivered to Lessor no fewer than thirty (30) days in advance of the effective date thereof. RB:sr 12/5/2008 13 E. Notice: Tenant shall give Lessor prompt and timely notice of any claim made or suit instituted of which it has knowledge and which could in any way directly, contingently or otherwise, affect either Tenant or Lessor or both, and both Tenant and Lessor shall have the right to participate in the defense of such claim or suit to the extent of its respective interest. 24. TAXES Tenant agrees to pay before delinquency all taxes (including, but not limited to, possessory interest tax), assessments, license fees, and other charges that are levied and assessed upon Tenant's interest in the Premises, or upon Tenant's personal property installed or located in or on the Premises, by Contra Costa County or other legally authorized governmental authority. Tenant may pay any taxes and assessments under protest, without liability, cost or expense to the Lessor, to contest the amount in good faith. 25. INSPECTION, ACCESS AND NOTICE Lessor and its agents have the right at any and all times to go upon and inspect the Premises and any and every building, structure, or improvement thereon. Lessor also has the right to serve or to post and to keep posted on the Premises, or on any part thereof, any notice permitted by law or this lease, including but not limited to a notice pursuant to Section 3094 of the Civil Code. Lessor is not liable in any manner for any inconvenience, disturbance, loss of business, or other damage arising out of Lessor's entry on the Premises as allowed in this Section. Lessor shall conduct its activities as allowed in this Section in a manner that will cause the least possible inconvenience, annoyance, or disturbance to Tenant, and shall not materially interfere with access to or use of the Premises. Tenant shall provide an access gate through the Premises for emergency vehicles. 26. RENTAL OPERATIONS Tenant may rent and/or sell individual T-Hangar units, and may sublease portions of the Premises in connection therewith, in accordance with reasonable rules and regulations adopted from time to time by the Airport, including but not limited to the provisions described in this Section. A. As to any rental activity, Tenant or its authorized representative must be available during the normal and reasonable business hours, either on the airport or by telephone, to discuss rental of hangar units and to conduct business with any interested party. B. Hangar unit rental rates shall be established and made available to the public by Tenant, and the original established rates and any and all changes or revisions in the established rates, shall be provided immediately in writing to Airport. C. All rental and sublease agreements shall only be in a form previously approved in writing by Airport, and shall be subject and subordinate to any and all provisions of this Lease. Except as otherwise provided herein, all subtenants and hangar-owners (except Tenant) must be bonafide aircraft owners or operators and T-Hangars must be used only for aircraft storage purposes, except as provided below. Any other storage on the premises must be incidental to aircraft storage and other uses described in Section 9. Use of Premises, and must comply with Contra Costa Consolidated Fire District requirements and applicable fire codes. RB:sr 12/5/2008 14 D. In connection with the foregoing, beginning and every six (6) months thereafter, Tenant shall provide to the Director of Airports an updated list identifying current occupants of any of the individual T-Hangars on the Premises with contact information (telephone and email, if available), the status of any unoccupied T-Hangars, and the identities of any persons then awaiting future occupancy of any of the hangar units located on the Premises. E. Tenant shall, within five (5) days of the effective date of each T-Hangar rental and/or change of current occupant, deliver to Airport the name, address, and telephone number of the Tenant and/or current occupant, and the identification number and make of the hangared aircraft. 27. ASSIGNMENT AND ENCUMBRANCES Tenant shall not voluntarily sell, assign, transfer or encumber (each, a "Transfer'o, its interest in this lease or in the Premises, or allow any other person or entity (except Tenant's authorized representatives) to occupy or use all or any part of the Premises, without first obtaining Lessor's written consent, which shall not be unreasonably withheld. Notwithstanding the foregoing sentence, Lessor has the right to require additional financial and other information from the proposed assignee, purchaser, transferee or other encumbering party (each, a "Transferee'O, to make its decision, and Tenant agrees to assist Lessor in receiving such information from any proposed Transferee. Any Transfer without Lessor's prior written consent is voidable and, at Lessor's election, constitutes a Default. Any consent to a Transfer does not constitute a further waiver of the provisions of this Section. If Tenant is a corporation or a limited liability company, any (i) dissolution, merger, consolidation, or other reorganization of Tenant, or (ii) the sale or other transfer of a controlling percentage of the capital stock or membership interests, as the case may be, of Tenant, or (iii) the sale of fifty percent (50%) of the value of the assets of Tenant, shall be deemed a voluntary assignment. The phrase "controlling percentage" means (a) in the case of a corporation, the ownership of, and the right to vote, stock possessing more than fifty percent (50%) of the total combined voting power of all classes of Tenant's capital stock issued, outstanding, and entitled to vote for the election of directors or (b) in the case of a limited liability company, ownership of, and the right to vote membership interests possessing more than fifty percent (50%) of the total combined voting interests of Tenant. If Tenant is in default of monetary obligations to Lessor pursuant to this lease, Tenant immediately and irrevocably assigns to Lessor, as security for Tenant's monetary obligations under this lease, all rent from any subletting of all or part of the Premises as permitted by this lease, or a receiver for Tenant appointed on Lessor's application, may collect such rent and apply it toward Tenant's obligations under this lease. 28. DEFAULT The occurrence of any of the following is a "Default" by Tenant: A. Tenant's failure to pay when due any rent required to be paid under this lease if the failure continues for three (3) days after written notice of the failure from Lessor to Tenant. RB:sr 12/5/2008 15 B. Tenant's failure to undertake such maintenance of the Premises as is determined to be reasonable by the Director of Airports, in his sole discretion, if the failure continues for thirty (30) days after notice has been given to Tenant. C. Tenant's failure to cure a safety hazard immediately upon notice from Lessor to do so. If, in the sole discretion of the Director of Airports, the required cure of the noticed safety hazard cannot be completed within twenty-four (24) hours, Tenant's failure to perform will constitute a default under the lease unless Tenant undertakes to cure the failure within twenty-four (24) hours and diligently and continuously proceeds to complete the cure as soon as reasonably possible. D. Tenant's failure to provide any instrument or assurance or estopple certificate required by this lease if the failure continues for five (5) days after written notice of the failure from Lessor to Tenant. E. Tenant's failure to perform any other obligation under this lease if the failure continues for thirty (30) days after written notice of the failure from Lessor to Tenant. If, in the sole discretion of the Director of Airports, the required cure of the noticed default cannot be completed within thirty (30) days Tenant shall not be in Default of this Lease if Tenant commences to cure the Default within the thirty (30) day period and diligently and in good faith continues to cure the Default to completion. F. The committing of waste on the Premises. G. Tenant's failure to comply with any of the provision of Section 33, Non-Discrimination. H. Tenant's failure to occupy the Premises for thirty (30) consecutive days, which will be deemed abandonment. I. To the extent permitted by law: a. A general assignment by Tenant or any guarantor of the lease for the benefit of creditors. b. The filing by or against Tenant or any guarantor, of any proceeding under an insolvency or bankruptcy law, unless (in the case of an involuntary proceeding) the proceeding is dismissed within sixty (60) days. C. The appointment of a trustee or receiver to take possession of all or substantially all of the assets of Tenant or any guarantor, unless possession is unconditionally restored to Tenant or that guarantor within thirty (30) days and the trusteeship or receivership is dissolved. d. Any execution or other judicially authorized seizure of all or substantially all of the assets of Tenant located on the Premises, or of,Tenant's interest in this lease, unless that seizure is discharged within thirty (30) days. When this lease requires service of notice, that notice shall replace rather than supplement any RB:sr 12/5/2008 16 equivalent or similar statutory notice, including any notices required by Code of Civil Procedure section 1151 or any similar or successor statute. When a statute requires service of a notice in a particular manner, service of that notice (or similar notice required by this lease) in the manner required -by Section 39, Notices, will replace and satisfy the statuary service-of-notice procedures, including those required by Code of Civil Procedure section 1162 or any similar or successor statute. 29. LESSOR'S REMEDIES Lessor has the following remedies upon the occurrence of a Default. These remedies are not exclusive; they are cumulative and in addition to any remedies now or later allowed by law. A. Lessor may terminate this lease and Tenant's right to possession of the Premises at any time. No act by Lessor.other than giving written notice to Tenant shall terminate this lease. Lessor's acts of maintenance, efforts to re-let the Premises, or the appointment of a receiver on Lessor's initiative to protect Lessor's interest under this lease do not constitute a termination of Tenant's right to possession. Upon termination of this lease, Lessor has the right to recover from Tenant: (1) The worth, at the time of the award, of the unpaid rent and fees that had been earned at the time of the termination of this lease; (2) The worth, at the time of the award, of the amount by which the unpaid rent and fees that would have been earned after the date of termination of this lease until the time of award exceeds the amount of the loss of rent and fees that Tenant proves could have been reasonably avoided; (3) The worth, at the time of the award, of the amount by which the unpaid rent for the balance of the term after the time of award exceeds the amount of the loss of rent and fees that Tenant proves could have been reasonably avoided; and (4) Any other amount, and court costs, necessary to compensate Lessor for all detriment proximately caused by Tenant's Default. "The worth, at the time of the award,"as used in (1) and (2) of this Section, is to be computed by allowing interest at the rate of ten percent (10%) per annum or the maximum rate permitted by law, whichever is less. "The worth, at the time of the award," as used in Paragraph 3 of this Section, is to be computed by discounting the amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of the award, plus one percent (1%). B. Lessor, at any time after the occurrence of a Default, can cure the Default at Tenant's cost, provided Lessor has given Tenant thirty (30) days written notice and (i) Tenant has failed to cure such Default within such thirty (30) days or, (ii) if the Default is of such a nature that it cannot be cured within such thirty (30) day period, Tenant fails to pursue such cure diligently to completion. If Lessor at any time, by reason of Tenant's Default, pays any sum to cure the Default or does any act that requires the payment of any sum, the sum paid by Lessor shall be due from Tenant to Lessor within thirty (30) days from the time the sum is paid, upon written notice given by Lessor to Tenant, and if paid by Tenant at a later date, shall bear interest at the RB:sr 12/5/2008 17 rate of ten percent (10%) per annum or the maximum rate permitted by law, whichever is less, from the date the sum is paid by Lessor until Lessor is completely reimbursed by Tenant. Such sum, together with interest accrued thereon shall be paid by Tenant as additional rent. In the event of Default by Tenant in connection with the construction of the Required Improvements pursuant to Section 12. Site Improvements, Lessor may exercise its rights as an obligee against the surety company on the payment and/or performance bond required by Subsection 12.C. Performance and Payment Bonds, as the case may be, and may take such steps as are necessary to cause the cure of such Default by the principal, the surety company, or others. 30. DESTRUCTION A. Twenty-Five Percent or Less: In the event of damage to or destruction of any Improvement valued at twenty-five percent (25%) or less of the then replacement value of the Improvement, Tenant shall repair or replace the Improvement and no rent abatement will apply. B. Greater than Twenty-Five Percent: In the event of damage to or destruction of any Improvement valued in excess of twenty-five percent (25%) of the then replacement value of the Improvement, Tenant has the option to either terminate this lease or to replace and rebuild the Improvement so it is in substantially the same condition as it was in immediately before such damage or destruction. Tenant shall give written notice of its election to Lessor within forty-five (45) days of the date of the loss or destruction of the Improvement. If Tenant elects to terminate this lease, this lease shall terminate. If Tenant elects to rebuild, Tenant is entitled to a proportionate reduction of rent (i) while such repairs are being made, or (ii) for three (3) months, whichever is less, unless Tenant is compensated by insurance for rent due Lessor, in which case no rent abatement will apply. The proportionate reduction in rent will be calculated by multiplying the monthly rent by a fraction, the numerator of which is the number of square feet that are unusable by the Tenant and the denominator of which is the total square feet in the Premises. Tenant will have one hundred eighty (180) days to commence repair or restoration of the Improvement, and shall diligently pursue the completion of the repair or restoration. 31. CONDEMNATION A. If the whole or any part of the Premises is taken for any public or quasi-public use under any actions or by any statute or by right of eminent domain, or by a conveyance in lieu thereof, then this lease will automatically terminate as to the portion taken. If only a part of the Premises is so taken and, in the discretion of the Lessor, the balance of the Premises is unusable or unsuitable for the intended purpose of this lease, then Lessor, at its sole option and in its sole discretion, has the right to terminate this lease in its entirety on one hundred twenty (120) days notice to Tenant. If only a part of the Premises is so taken and the Tenant, in the exercise of reasonable discretion, determines that the balance of the Premises is unusable or unsuitable for the Tenant's purposes hereunder, then Tenant has the right to terminate this lease in its entirety on thirty (30) days notice to Lessor. RB:sr 12/5/2008 18 B. In the event of a taking of a portion of the Premises under the power of eminent domain that does not result in a termination of this lease, Tenant shall continue to pay rent hereunder without reduction and the lease will continue in full force and effect as to the part not taken. In the event this lease is terminated in its entirety as the result of condemnation, Tenant shall pay all rent provided for in this lease through the date of termination. In no event will Tenant have a claim against Lessor for the value of the unexpired Term of this lease or for any other loss or damage arising or resulting from the termination or partial termination of this lease. . In the event that all or any part of the Premises is taken by eminent domain or conveyed in lieu thereof, both parties have the right to pursue a condemnation award against the condemning agency. Tenant is entitled to any award for lost business, moving expenses and the depreciated value of any fixtures or property improvements installed, and not removed by Tenant. Lessor is entitled to all other amounts awarded, including, but not limited to, all amounts awarded for land value. No claim made by or payments to the Tenant will diminish or otherwise adversely affect the Lessor's award. Provided the Lessor is not the condemning agency, Tenant shall not have and shall not claim against Lessor for any loss, damage or other matter arising out of a condemnation. 32. CANCELLATION BY LESSOR If Lessor requires the Premises for a purpose other than hangar use, Lessor may terminate this Lease with not less than twelve months' prior written notice to Tenant (the "Material Change Termination Option'). The written notice provided by Lessor will specify the date on which the Lease will terminate (the "Termination Date'). The Termination Date may not be sooner than the tenth anniversary of the Commencement Date. If Lessor elects to exercise its Material Change Termination option (i) Lessor shall pay tenant an amount equal to the value of Tenant's remaining interest in the Premises, based on the fair market value of the remaining term of the Lease and any other relevant factors (the "Termination Value'), and (ii) Tenant shall, within fifteen (15) days after the Termination Date, satisfy the return conditions set forth in Subsection 11.C. The Termination Value will be determined by agreement between the parties or by an appraisal rendered by a neutral party agreed upon by the parties. The Termination Value is due to Tenant within ten (10) days of the earlier to occur of (i) the Termination Date and (ii) Tenant's satisfaction of the return conditions set forth in Subsection 11.C. 33. NON-DISCRIMINATION A. Tenant hereby covenants and agrees that in the event facilities are constructed, maintained, or otherwise operated on the Premises for a purpose for which a United States Department of Transportation program or activity is extended or for another purpose involving the provision of similar services or benefits, Tenant shall maintain and operate such facilities and services in compliance with all requirements imposed pursuant to Title 49, Code of Federal Regulations, Part 21, Non-discrimination in Federally Assisted Programs of the Department of Transportation, ("Title 49, CFR Part 21"), and as such regulations may be amended. B. Tenant hereby covenants and agrees that (1) no person shall be excluded from participation in, denied the benefits of, or be otherwise subjected to, discrimination in the use of the Premises RB:sr 12/5/2008 19 on the grounds of race, color, sex, or national origin, (2) that in the construction of any improvements on, over, or under the Premises and the furnishing of services thereon, no person shall be excluded from participation in, denied the benefits of, or be otherwise subjected to discrimination on the grounds of race, color, sex, or national origin and (3) that Tenant shall use the Premises in compliance with all other requirements imposed by or pursuant to Title 49, CFR Part 21, as such regulations may be amended. C. In the event of a breach of any of the above non-discrimination covenants, Lessor has the right to terminate this lease and to re-enter and repossess the Premises and the facilities thereon. This provision does not become effective until the procedures of Title 49, CFR Part 21 are followed and completed, including the expiration of any appeal rights. D. Tenant shall furnish its accommodations and/or services on a fair, equal, and not unjustly discriminatory basis to all users thereof and it shall charge fair, reasonable, and not unjustly discriminatory prices for each unit or service, provided that Tenant may be allowed to make reasonable and nondiscriminatory discounts, rebates, or other similar types of price reductions to volume purchasers. E. Noncompliance with Subsection D. above constitutes a material breach thereof and, in the event of such noncompliance, Lessor has the right to terminate this lease without liability therefore or, at the election of Lessor or the United States, either or both governments shall have the right to judicially enforce the.provisions of Subsection D. F. Tenant agrees that it shall insert the above subsections A through E in any sublease agreement by which Tenant grants a right or privilege to any person, firm, or corporation to render accommodations and/or services to the public on the Premises. G. Tenant assures that it will undertake an affirmative action program as such term is defined and required by 14 CFR Part 152, Sub-part E ("Sub-part E'� to ensure that no person is excluded from participating in any employment activities covered by Sub-part E on the grounds of race, creed, color, national origin, or sex. Tenant assures that no person shall be excluded on these grounds from participating in or receiving the services or benefits of any program or activity covered by Sub-part E. Tenant assures that it will require that its covered suborganizations provide assurances to Tenant that they similarly will undertake affirmative action programs, and that they will require assurances from their suborganizations, as required by Sub-part E, undertake to the same effort. 34. OPERATION OF AIRPORT BY LESSOR A. Aviation Hazards: Lessor shall take any action it considers necessary to protect the aerial approaches of the Airport against obstructions, including preventing Tenant from erecting, any building or other structure on the Premises which, in the opinion of the Lessor or the Federal Aviation Administration, would limit the usefulness of the Airport or constitute a hazard to aircraft. B. Navigational Aids: Lessor reserves the right during the term of this lease or any renewal and/or extension or holdover period thereof to install air navigational aids including lighting, in, on, RB:sr 12/5/2008 20 over, under, and across the Premises. In the exercise of any of the rights hereof, Lessor agrees to give Tenant no less than ninety (90) days written notice of its intention to install such air navigational aids and to use its best efforts to minimize interference with Tenant's use of the Premises. 35. AIRPORT USE AND DEVELOPMENT A. Lessor reserves the right to further develop or improve the landing area of the Airport as it sees fit, regardless of the desires or view of Tenant and without interference or hindrance. B. Lessor reserves the right, but shall not be obligated to Tenant, to maintain and keep in repair the landing area of the Airport and all publicly-owned facilities at the Airport, together with the right to direct and control all activities of Tenant in this regard. C. This lease is subordinate to the provisions and requirements of any existing or future agreement between Lessor and the United States, including but not limited to the Federal Aviation Administration, relative to the development, operation, and maintenance of the Airport. D. There is hereby reserved to Lessor, its successors and assigns, for the use and benefit of the public, a right of flight for the passage of aircraft in the airspace above the surface of the Premises. This public right of flight includes the right to cause in said airspace any noise inherent in the operation of any aircraft used for navigation or flight through said airspace or landing at, taking off from, or operation at the Airport. 36. DEVELOPMENT OF PREMISES A. Tenant shall comply with the notification and review requirements covered by 14 CFR Part 77 of the Federal Aviation Regulations in connection with any construction, modification or alteration of any present or future building or structure situated on the Premises. B. Tenant shall not erect nor permit the erection of any structure or object, or permit the growth of any tree on the Premises to exceed the established height contours. In the event the aforesaid covenants are breached, Lessor reserves the right to enter upon the Premises and to remove the offending structure or object and cut the offending tree, all of which shall be at Tenant's sole cost and expense. C. Tenant shall not make use of or develop the Premises in any manner that might interfere with the landing and taking off of aircraft from the Airport or otherwise constitute a hazard. In the event the aforesaid covenant is breached, Lessor reserves the right to enter upon the Premises and cause the abatement of such interference at the sole cost and expense of Tenant. D. Nothing herein shall be construed to grant or authorize the granting of an exclusive right within the meaning of Section 308a of the Federal Aviation Act of 1958 (49 U.S.C. § 40103) or to consent to future construction, modification or alteration. E. This lease and all of its provisions are subject to whatever right the United States Government now has or in the future may have or acquire, affecting the control, operation, regulation, and RB:sr 12/5/2008 21 taking over of the Airport by the United States during a time of war or national emergency. In the event the United States Government acquires or takes over the Airport during a time of war or national emergency, rent shall be abated in proportion to that portion of the Premises unavailable for Tenant's use for the period of such acquisition or control by the United States Government. 37. INSTRUMENT OF TRANSFER This lease is subordinate and subject to the provisions and requirements of the Instrument of Transfer by and between the United States and Lessor dated the 9th day of October, 1947, and recorded in Book 1137, at page 114 of the Official Records of the County of Contra Costa, State of California. 38. CHOICE OF LAW This lease is governed by the State of California, with venue in the Superior Court of Contra Costa County, California. 39. NOTICES Any and all notices to be given under this lease may be served by enclosing same in a sealed envelope addressed to the party intended to receive the same, at its address set forth herein, and deposited in the United States Post Office as certified mail with postage prepaid. When so given, such notice will be effective from the date of its mailing. Unless otherwise provided in writing by the parties hereto, the address of Lessor, and the proper party to receive any such notices on its behalf, is: Director of Airports Contra Costa County Airports 550 Sally Ride Drive Concord, CA 94520-5550 and the address of Tenant is: Buchanan Airport Hangar Owners Association, LLC. 268 Castle Hill Ranch Road Walnut Creek, CA 94596 40. TIME IS OF THE ESSENCE Time is of the essence for each provision of this lease. 41. BINDING ON SUCCESSORS The covenants and conditions herein contained, subject to the provisions as to assignment, apply to and bind the heirs, successors, executors, administrators and assigns of all of the parties hereto. RB:sr 12/5/2008 22 42. INVALID PROVISIONS; SEVERABILITY It is expressly understood and agreed by and between the parties hereto that in the event any covenant, condition or provision contained herein is held to be invalid by a court of competent jurisdiction, such invalidity does not invalidate any other covenant, condition or provision of this lease, provided, however, that the invalidity of any such covenant, condition or provision does not materially prejudice either Lessor or Tenant in their respective rights and obligations contained in the valid covenants, conditions and provisions of this lease. 43. PROVISIONS All provisions, whether covenants or conditions, on the part of Tenant and/or Lessor are deemed to be both covenants and conditions. 44. ENTIRE AGREEMENT This lease and all exhibits referred to in this lease constitute the entire agreement between the parties relating to the rights herein granted and the obligations herein assumed and supersedes all prior or contemporaneous understandings or agreements of the parties. No alterations or variations of this lease are valid unless in writing and signed by Lessor and Tenant. 45. CUMULATIVE RIGHTS AND REMEDIES The rights and remedies with respect to any of the terms and conditions of this lease are cumulative and not exclusive and are in addition to all other rights and remedies at law or in equity. Each right or remedy shall be construed to give it the fullest effect allowed in law. 46. NO THIRD-PARTY BENEFICIARIES Nothing in this Agreement, express or implied, is intended to confer on any person, other than Lessor and Tenant, and their respective successors-in-interest, any rights or remedies under or by reason of this lease. 47. NO CONTINUING WAIVER The waiver by Lessor of any breach of any of the terms or conditions of this lease does not constitute a continuing waiver or a waiver of any subsequent breach of the same or of any other terms or conditions of this lease. The receipt by Lessor of any rent with knowledge of the breach of any term or condition of this lease shall not be deemed to be a waiver by Lessor, unless such waiver is specifically expressed in writing by the Director of Airports. No payment by Tenant or receipt by Lessor of a lesser amount than specified in this lease shall be deemed to be other than a payment on account of such rent and shall not be deemed a waiver of notice of termination and of forfeiture of this lease. 48. COVENANT AGAINST LIENS Neither Tenant nor Lessor shall permit any mechanic's, materialman's, or other lien against the Premises, or the property of which the Premises forms a part, in connection with any labor, materials, RB:sr 12/5/2008 23 or services furnished or claimed to have been furnished. If any such lien shall be filed against the Premises, or property of which the Premises forms a part, the party charged with causing the lien will cause the same to be discharged, provided however, that either party may contest any such lien, so long as the enforcement thereof is stayed. THIS SECTION LEFT BLANK INTENTIONALLY RB:sr 12/5/2008 24 49. HEADINGS AND CAPTIONS The section headings and captions of this lease are, and the arrangement of this instrument is, for the sole convenience of the parties to this lease. The section headings, captions, and arrangement of this instrument do not in any way affect, limit, amplify or modify the terms and provisions of this lease. The lease is not to be construed as if it had been prepared by one of the parties, but rather as if both parties have prepared it. The parties to this lease and their counsel have read and reviewed this lease and agree that any rule of construction to the effect that ambiguities are to be resolved against the drafting parry does not apply to the interpretation of this lease. The parties are signing this lease as of the date stated in the introductory clause. LESSOR TENANT CONTRA COSTA COUNTY Buc i Airport Hangar Owners Association, Inc. a political subdivision of the State of California By: Name: By: Its: �/G P 1J/O Keith Freitas Director of Airports By: // Name: Its: LLr�O vr� /Vo E:3 RECOMMENDED FOR APPROVAL: ( r,e-a-5wYe-r By: Beth Lee Assistant Director of Airports Note: Two officers must sign on behalf of corporations. The first signature must be that of the chairman of the board, president, or vice president; By: the second signature must be that of the Secretary, Karen Laws assistant secretary, chief financial officer or assistant Principal Real Property Agent controller. APPROVED AS TO FORM: Silvano B. Marchesi County Counsel By: Kathleen Andrus Deputy County Counsel RB:sr 12/5/2008 25 Buchanan Field T Hangar Lease Area Exhibit A A portion of the Rancho Monte Del Diablo, Contra Costa County, California, described as follows: Commencing at the street monument in the centerline of Marsh Drive (56.00 feet in right of way width) at the southerly line of PARCEL A as shown on the map of MS 12.1-72 filed August 25, 1972 in Book 23 of Parcel Maps at page 43, records of said County; thence, from said point of commencement along said centerline of Marsh Drive, North 10 12' 2.2" West 508.01 feet; thence, leaving said centerline, North 880 47' 38" East 102.50 feet to the Point of Beginning of the following described parcel of land. PARCEL TH-I Thence, from said Point of Beginning, continuing North 880 47' 38" East 71.1.54 feet; thence North 250 30' 23" West 118.50 feet; thence South 880 47' 38" West 662.78 feet to a point which shall hereinafter be referred to as Point "A"; thence South 10 12' 22" East 108.00 feet to the Point of Beginning. Containing an area of 74,214 square feet or 1 .704 acres of land, more or less. PARCEL TH-2 Beginning at Point "A" as previously described above in Parcel TH-I; thence, along the northerly line of said PARCEL TH-I, North 880 47' 38" East 662.78 feet; thence, leaving said northerly line, North 250 30' 2.3" )gest 118.50 feet; thence South 880 47' 38" West 61.4.02 feet, to a point which shall herein- after be referred to as Point "B"; thence South 10 12' 22" East 108.00 feet to said Point "A", the Point of Beginning. Containing an area of 68,947 square feet or 1..583 acres of land more or less. PARCEL TH-3 (Non-Exclusive Access) A strip of land 2.0.00 feet in width, the westerly line of which is described as follows: Beginning at said Point "B" as described above in PARCEL TH-2; thence, from said point of beginning along the westerly line of the above described PARCELS TH-1 and TH-2, South 10 12' 22" East 21.6.00 feet; thence continuing South 10 12' 22" East 284.00 feet to the southerly terminus of said 20.00 feet in width strip of land. Bearings and distances used in the above descriptions are based on the California Coordinate System Zone III . To obtain ground distance multiply distances used by 1.0000614. ex.32.t3 March 22, 1983 Exhibit B eo cc LLJ tf -f` , :r r Z f m a. W a tiX : '•�n fit'=( 1, - .\.x,.u.^.` \'. IM1 7 LL t !Cr .:� i..A.:^:.',... .moi pV W W N-A <1 W o J MA IV, LO 1 my g:p.. 7y: ''1 f• 3 V a f Q u :arc; L' • RV'k nF. a<,!r: Ike :l:'�;• ei �:�I 'n1T•q,'ipil� •.'�' , > ...... , 2�1Jt.,. ♦t. T . a •'''411" ,r.;q,'4`.%; OZ S383V £8S-I ,tl t of b i '� ;,,•i t. ti' ti N {_. ld'US Z17689 'V3l1V Z-Hl .l3 JSVd xi ,:.�:: a .. a: gl' 10 .1 d ,9L29-9--- —-- —S—lals, --- ---eV32V -H1 "1372iVd;yy tnS b I Z b cJZ — ?;:j;,.,a?.':,lei; —£- —_ :.�. _ C;:,,,:: fs R' !o oz C\j IV 2-Hl 13D8Vd Ld CD Ul C'J vi <S. ...iQ.-l't`.n,� fns\•� u :t•,jFr-,`,� ..• -- W:.1 -M.B£.Lb.BBS y- -.` w � CIVO)J \ \ ; O w w ;C f a i0 3 O WY J h mt ci z W ,N I\ 4 !� S2.y-li{,•:®�(1,� .. cr cr 1:I:u:i'. . Z O EXHIBIT C MINOR MAINTENANCE The term "Minor Maintenance"means the following activities: 1. Removal, installation and repair of landing gear tires. 2. Replacing elastic shock absorber cords on landing gear. 3. Servicing landing gear shock struts by adding oil, air, or both. 4. Servicing landing gear wheel bearings, such as cleaning and greasing. 5. Replacing defective safety wiring or cotter keys. 6. Lubrication not requiring disassembly other than removal of non-structural items such as cover plates, cowlings, and fairings. 7. Making simple fabric patches not requiring rib stitching or the removal of structural parts or control surfaces. 8. Replenishing hydraulic fluid in the hydraulic reservoir. 9. Repairing upholstery and decorative furnishings of the cabin or cockpit when the repairing does not require disassembly of any primary structure or operating system or interfere with an operating system or affect primary structure of the aircraft. 10. Making small simple repairs to fairings, non-structural cover plates, cowlings, and small patches and reinforcements not changing the contour so as to interfere with proper airflow. 11. Replacing side windows where that work does not interfere with the structure of any operating system such as controls, electrical equipment, etc. 12. Replacing safety belts. 13. Replacing seats or seat parts with replacement parts approved for the aircraft, not involving disassembly of any primary structure or operating system. 14. Troubleshooting and repairing broken circuits in landing light wiring circuits. 15. Replacing bulbs, reflectors, and lenses of position and landing lights. 16. Replacing wheels and skis where no weight and balance computation is involved. 17. Replacing any cowling not requiring removal of the propeller or disconnection of flight controls. 18. Replacing or cleaning spark plugs and setting of spark plug gap clearance. 19. Replacing any hose connection except hydraulic connections. 20. Replacing and servicing batteries. 21. Replacement or adjustment of non-structural fasteners incidental to operations. 22. The installation of anti-misfueling devices to reduce the diameter of fuel tank filler openings provided the specific device has been made a part of the aircraft type certificate data by the aircraft manufacturer, the manufacturer has provided appropriately approved instructions acceptable to the Authority for the installation of the specific device, and installation does not involve the disassembly of the existing filler opening. 23. Wheels. 24. Parts of the control system such as control columns, pedals, shafts, brackets or horns. 25. Remove or open all necessary inspection plates, access doors, fairing, and cowling. 26. Cleaning the aircraft or aircraft engine. 27. Inspection, repair and replacement of the fuselage and hull group: fabric and skin, systems and components, and envelope, gas bags, ballast tanks, and related parts. 28. Inspection, repair and replacement of the cabin and cockpit group: seats and safety belts, windows and windshields, instruments, flight and engine controls, batteries, and all systems. 29. Inspection, repair and replacement of the engine and nacelle group: engine section, studs and nuts, internal engine, engine mount, flexible vibration dampeners, engine controls, lines, hoses, clamps, exhaust stacks, accessories, cowling and all systems. 30. Inspection, repair and replacement of the landing gear group: all units, shock absorbing devices, linkages, trusses and members, retracting and locking mechanism, hydraulic lines, electrical system, wheels, tires, brakes, and floats and skis. 31. Inspection, repair and replacements of the wing and center sections assembly. 32. Inspection, repair and replacement of the complete empennage assembly. 33. Inspection, repair and replacement of the propeller group: propeller assembly, bolts, anti-icing devices, and control mechanisms. v 34. Inspection, repair and replacements of the radio group: radio and electronic equipment, wiring and conduits, bonding and shielding, and antenna.