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HomeMy WebLinkAboutMINUTES - 06122007 - C.19 TO: BOARD OF SUPERVISORS Contra FROM: KEITH FREITAS, DIRECTOR OF AIRPORTS ��or _ _' :•• '� Costa .. ra couxti DATE: June 12, 2007 County SUBJECT: Rescission of Prior Lease Approval; Approval and Authorization to Execute a Long-Term Lease with Seecon Builders, Inc. for a Buchanan Field Airport Development Project, Pacheco Area. (District IV). Specific Request(s) or Recommendation(s) & Background & Justification I. RECOMMENDED ACTION: RESCIND the December 20, 2005, approval and authorization of the Public Works Director to execute a 40-year ground lease between the County and Seecon Builders, Inc. for approximately 2 acres located north of the Airport Offices at 550 Sally Ride Drive; and APPROVE and AUTHORIZE the Director of Airports,or designee,to execute,on behalf of the County,a 40-year ground lease between the County, as Lessor, and Seecon Builders,Inc.,as Tenant,for the lease and development on approximately 2 acres located north of the Airport Offices at 550 Sally Ride Drive. II. FINANCIAL IMPACT: There is no negative impact on the General Fund. The Airport'Enterprise Fund will receive lease and other revenues and the County General Fund will receive property an possess interest tax revenues from this Continued on Attachment: X SIGNATURE: ECOMMENDATION OF COUNTY ADMINISTRATOR _RECOMMENDATION OF BOARD COMMITTEE ✓APPROVE OTHER SIGNATURE(S): ACTION OF B D ON 1d�nG /?_, APPROVED AS RECOMMENDED THER .VOT" "SUPERVISORS V UNANIMOUS(ABSENT � ) AYES: NOES: ABSENT: ABSTAIN: I hereby certify that this is a true and correct copy of an action taken and entered on the minutes of the Board of Supervisors on the date shown. G:\buchanan dev negotiation.bos.doc Board Orders\130-Negot.doc Orig.Div: Public works(Airl.)c.n'ts Division) ATTESTED: \/N'"e, Contact: Beth Lee.Phone(925)646-5722 JOHN CULLEN, Clerk of the Board of Supervisors and cc: County Adminisirttor County Administrator Auditor-Controller Community Development Public Works Director Public Works Accounting By , Deputy Federal Aviation Administration SUBJECT: Rescission of Prior Lease Approval and Authorization to Execute a Lease, Buchanan Field Airport DATE: June 12, 2007 PAGE: 2 development.The ground rent will begin at$24,096 per year and increase annually to$100,824 per year in Year 9. Every 10 years the lease will be revalued based on market appraisals and use a CPI inflator in intervening years. The fuel flowage fee is $0.08 per gallon and increases annually by $0.005 per gallon. III. REASONS FOR RECOMMENDATION/BACKGROUND: The development area at issue is approximately 2 acres of land owned by the County and located on the westerly side of Sally Ride Drive and north of the County Airport offices as shown on the attached property map. The parcel is adjacent to the Buchanan Field runways and is designated for aviation use on the Buchanan Field Master Plan.The parcel is under the jurisdiction of the Buchanan Field Airport and entirely within the unincorporated County. On July 26, 2005, the Board adopted a Negative Declaration in compliance with the California Environmental Quality Act, and authorized staff to advertise the Buchanan development project at its discretion. Thereafter,staff negotiated lease and development terms with Seecon Builders,Inc.and,when it appeared that Seecon was ready to proceed with the development, staff presented the lease terms to the Board for approval. On December 20, 2005, the Board approved and authorized the Public Works Director to enter into a lease with Seecon Builders, Inc. for a term of forty years for the purpose of constructing and operating an executive hangar and office area at Buchanan Field Airport(the "Lease"). The Tenant did not execute the Lease due to financial concerns relative to hangar construction and the type of fire suppression systems required for its development. These issues affected all airport development and were resolved in March 2007. The Tenant would now like to proceed with project implementation. Under the terms of the Lease, the Commencement Date is the date the Lease is approved by the Board. Since the Tenant never executed the Lease following the Board's approval on December 20,2005,and since staff desires to have the Lease commence at this time, instead of on December 20, 2005, staff recommends that the Board rescind its prior approval of the Lease. Staff has revised the Lease to reflect a 2007 Commencement Date, with the exact date to be established upon Board approval. A copy of the revised Lease signed by the Tenant is attached. The terms of the attached Lease, including a 40-year term, are the same as the terms approved by the Board on December 20, 2005, except that all payment and performance obligations will be determined by reference to the newly established Commencement Date for the Lease. In addition, the Tenant requested that the property boundary be amended to allow additional space to meet the Clean Water requirements and to better site the office building.The revised Lease also includes an additional 800 square feet of property and the ground rent was modified to reflect the added property. IV. CONSEQUENCES OF NEGATIVE ACTION: The County General Fund and the Airport. Enterprise Fund would not realize additional revenues. The County-owned land would remain vacant and may negatively impact general aviation aircraft facilities, services and Airport demand needs. LEASE BETWEEN CONTRA COSTA COUNTY AND SEECON BUILDERS, INC 1 Final Lease 5/17/2007 C:\Documents and Settings\]Coniglio\Desktop\Seecon Revised lease 5-3-07.doc LEASE BETWEEN CONTRA COSTA COUNTY AND SEECON BUILDERS, INC. 1. PARTIES.........................................................................................................................................4 2. PURPOSE.......................................................................................................................................4 3. PREMISES.......................................................................................................................................4 4. TERM ..............................................................................................................................................5 5. HOLDING OVER......................................................................................................................5 6. RENT .....................................................................................................................................5 7. ADDITIONAL PAYMENT PROVISIONS.......................................................................................17 8. LESSOR PROCESSING AND TRANSACTION FEE ........................................................................19 9. USE OF PREMISES ..................................................................................................................19 10. RENTAL OPERATIONS............................................................................................................21 11. CONDITION OF PREMISES .....................................................................................................23 12. SITE IMPROVEMENTS ............................................................................................................23 13. UTILITY OBLIGATIONS ..........................................................................................................30 14. ALTERATION AND ADDITIONS ...............................................................................................30 15. MANTENANCE, REPAIR, AND STORAGE...................................................................................31 16. LAWFUL CONDUCT ................................................................................................................33 17. WASTEFUL, QUIET CONDUCT.................................................................................................33 18. HAZARDOUS MATERIALS........................................................................................................34 19. STORMWATER DISCHARGE ....................................................................................................37 20. RULES AND REGULATIONS.....................................................................................................38 21. NOISE ORDINANCE................................................................................................................38 22. SECURITY..............................................................................................................................38 23. HOLD HARMLESS AND INDEMNIFICATION ..............................................................................39 24. INSURANCE............................................................................................................................40 2 .. Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc 25. TAXES...................................................................................................................................43 26. INSPECTION, ACCESS AND NOTICE........................................................................................44 27. ASSIGNMENT AND EMCUMBRANCES.......................................................................................44 28. SURRENDER OF POSSESSION.................................................................................................45 29. DEFAULT...............................................................................................................................47 30. LESSOR'S REMEDIES..............................................................................................................48 31. DESTRUCTION.......................................................................................................................51 32. CONDEMNATION ...................................................................................................................51 33. CANCELLATION BY LESSOR....................................................................................................53 34. FINANCING OF LEASEHOLD ESTATE.......................................................................................55 35. NON-DISCRIMINATION ..........................................................................................................58 36. OPERATION OF AIRPORT BY LESSOR .....................................................................................61 37. AIRPORT USE AND DEVELOPMENT.........................................................................................61 38. DEVELOPMENT OF PREMISES.................................................................................................62 39. INSTRUMENT OF TRANSFER...................................................................................................63 40. CHOICE OF LAW ....................................................................................................................64 41. NOTICES ...............................................................................................................................64 42. TIME IS OF THE ESSENCE......................................................................................................65 43. BINDING OF SUCCESSORS .....................................................................................................65 44. INVALID PROVISIONS: SEVERABILITY....................................................................................65 45. PROVISIONS..........................................................................................................................66 46. ENTIRE AGREEMENT..............................................................................................................66 47. CUMULATIVE RIGHTS AND REMEDIES .........:...........................................................................66 48. NO THIRD-PARTY BENEFICIARIES..........................................................................................66 49. NO CONTINUING WAIVER......................................................................................................67 50. CONVENANT AGAINST LIENS .................................................................................................67 51. ATTORNEY'S FEES .................................................................................................................67 52. LEASE AUTHORIZATION.........................................................................................................68 53. LEASE COUNTERPARTS..........................................................................................................68 54. CONSTRUCTION .....................................................................................................................68 55. SIGNATURES ................................!........................................................................................69 3 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc LEASE BETWEEN CONTRA COSTA COUNTY AND SEECON BUILDERS, INC. 1. PARTIES The COUNTY OF CONTRA COSTA, a political subdivision of the State of California (the "County"), hereinafter referred to as "Lessor," and Seecon Builders, Inc., a California corporation, hereinafter referred to as "Tenant," hereby mutually agree and promise as follows: 2. PURPOSE Lessor owns and operates Buchanan Field, a public airport located at Concord, California, hereinafter "Airport", as shown on the Airport Layout Plan, which plan is on file in the office of the Director of Airports ("Director of Airports"). Tenant desires to lease 2.05 acres of land to maintain a Corporate Hangar. The purpose of this Lease is to lease to Tenant said 2.05 acre parcel of real property at the Airport, shown generally on Exhibit "B" Site Plan pursuant to the terms and conditions set forth herein. 3. PREMISES For and in consideration of the rent, fees, and, faithful performance by Tenant of the terms and conditions and the mutual covenants hereof, Lessor does hereby lease to Tenant, and Tenant hereby leases from Lessor, subject to all easements and encumbrances of record, that parcel of real property described in Exhibit "A" and shown 4 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc on Exhibit "B", attached hereto and made a part hereof, hereinafter referred to as the "Premises." 4. TERM This Lease is for a term ("Term") of forty (40) years, commencing on 2007 (the "Commencement Date"), and expiring on 2047. The Commencement Date shall be the date this Lease is approved by the County Board of Supervisors and shall also be known as the first day of year one of the Lease. 5. HOLDING OVER In the event Tenant shall remain in possession of the Premises after the expiration of the Term of this Lease, such holding over shall not be deemed to operate as a renewal or extension of this Lease, but shall only create a tenancy from month to month, which may be terminated at any time by Lessor or Tenant' ipon thirty (30) days written notice. All terms and conditions of this Lease then in place shall govern the month-to-month tenancy. 6. RENT: Tenant shall pay to Lessor all rent and fees as set forth herein (collectively "Rent") in accordance with the following provisions: A. Construction Period Rent: Beginning on the Commencement Date and ending twelve (12) months after Commencement Date or upon Substantial Completion (as defined below) of, the Improvements described in Section 12. Site Improvements and depicted on ' Exhibit C, attached hereto and incorporated .5 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc herein, whichever occurs first ("Construction Period Rent Expiration Date"), the rental payment shall be One Thousand and No/100 ($1,000.00) Dollars per month ("Construction Period Rent") payable in advance and without demand on or before the first day of each month. Construction Period Rent for any partial month shall be prorated at the rate of 1/30th of the monthly Construction Period Rent per day. Substantial Completion shall mean the date that the Improvements pass final inspection by the Contra Costa County Building Inspection Department. B. Ground Rent: Tenant shall pay Ground Rent commencing on the next calendar day following the Construction Period Rent Expiration Date, or upon Substantial Completion, whichever comes first ("Ground Rent Commencement Date"). Ground Rent shall be payable in advance and without demand on or before the first day of each month during the Term of this Lease. Ground Rent for any partial month shall be prorated at the rate of 1/30th of the applicable monthly Ground Rent per day. If the Ground Rent Commencement Date occurs during the first year following the Commencement Date of the Lease (Year 1), Ground Rent for any remaining period of Year 1 shall be $2,008.00 per month. Ground Rent for Year 2 through 9 is detailed on the schedule below. Ground Rent for Year 11 and each year thereafter shall be increased by the change in the Consumer Price Index, determined in accordance with subsection 6.C. Consumer Price Index Adjustment, except in years 10, 20, and 30, during which the Ground Rent shall be revalued in accordance with Section 6.D. Revaluation of Ground Rent. In no event shall the Ground Rent for any year ever be less 6 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 3-3-07.doc than the Ground Rent in effect for the immediately preceding year. In the event there is a decrease in the Consumer Price Index (CPI), Ground Rent for the year in question shall be the same as the Ground Rent for the preceding year. Set forth below is an example of the schedule of adjustments to Ground Rent. Year Monthly Ground Rent 1 $ 2,008.00 2 $2,826 3 $3,644 4 $4,387.00 5 $5,205 6 $6023 7 $6,841 8 $7,584 9 $8,402 10 Revaluation of Ground Rent per Subsection 6.D. below. 11-19 Prior year's Ground Rent, .increased annually by CPI Adjustment unless CPI Adjustment would result in a rent decrease, in which 7 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc case rent will remain the same as the preceding year's Ground Rent. 20 Revaluation of Ground Rent per Subsection 6.D. below. 21-29 Prior year's Ground Rent, increased annually by CPI Adjustment unless CPI Adjustment would result in a rent decrease, in which case rent will remain the same as the preceding year's Ground Rent. 30 Revaluation of Ground Rent per Subsection 6.D. below 31-39 Prior year's Ground Rent, increased annually by CPI Adjustment unless CPI Adjustment would result in a rent decrease, in which case rent will remain the same as the preceding year's Ground Rent C. Consumer Price Index Rent Adjustment: Effective upon the first day of Years 11 through 19, Years 21 through 29, and Years 31 through 39, the Ground Rent shall be adjusted by the change in Consumer Price Index ("CPI") for the most recent one year period ending March 31. CPI, as used herein, shall mean the Consumer Price Index for all Urban Consumers, All Items, for the San Francisco-Oakland-San Jose Metropolitan Area (1982-84 = 100), as published by the Bureau of Labor Statistics of the U.S. Department of Labor, or its successor. At no time will the Ground Rent be decreased by a CPI adjustment. In the event there is a decrease in the CPI, the 8 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc Ground Rent for the year in question shall be the same as the Ground Rent for the preceding year. For example, if Year 11 of the Lease commences on November 1, 2017, the CPI Index for June 2016 is 210.0, the CPI Index for June 2015 is 205.0, and the Ground Rent for Year 10 was revalued at $10,000.00, the Ground Rent for Year 11 shall be increased from $10,000.00 (hypothetical Year 10 Ground Rent) to $10,243.90 per month ($10,000.00 X (1+(210.0- 205.0/205.0)). Continuing the example, if the CPI for June 2017 is 205.0, the Ground Rent for Year 12 will be the same.as the Ground Rent for Year 11 ($10,243.90). Then if the CPI for June 2018 is 210.0, the Ground Rent for Year 13 shall be increased by the CPI increase from June 2017 to June 2018, from $10,243.90 to $10,493.75 [$10,243.90 x (1+(210.0-205.0/205.0))]. Lessor will notify Tenant of the increase in Ground Rent when Lessor completes the calculation of the increased rent. If the notice is after the effective date of the increase, Tenant will pay any increased rent retroactively to the effective date. D. Revaluation of Ground Rent. Ground Rent shall be revalued by Lessor on the tenth anniversary of the Commencement Date of this Lease, and thereafter, at the end of each succeeding ten (10)"year period of the Lease Term. Ground Rent shall be revalued on , 2017, 2027, and 2037 ("Revaluation Dates"). Ground Rent shall be revalued based upon the fair market rental value of the Premises, using the Revaluation Process described in this Section below, provided, however, that the revalued Ground Rent shall never be less than the Ground Rent during the :preceding year. In other words, in the event there is a 9 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc decrease in the fair market rental. value for the year in question, the revalued Ground Rent shall be the same as the Greund Rent for the preceding year. Prior to each Revaluation Date, Lessor shall initiate a Ground Rent Revaluation Process ("Revaluation Process") for the determination of Ground Rent for the following period. (1) Conditions of Revaluation: The revaluation of Ground Rent, including any appraisals prepared as part of the Revaluation Process, shall be conducted under the following conditions: a) All negotiations and actions taken by Lessor and Tenant under this Section shall be undertaken and conducted by the parties in good faith. b) If the Revaluation Process is not concluded by the Revaluation Date, the Ground Rent determined by the Revaluation Process described herein shall be retroactive to the Revaluation Date to which the Revaluation Process applies. Tenant shall make any retroactive payments of Ground Rent no later than thirty (30) days following the completion of the Revaluation Process. c) Except as otherwise provided herein, no waiver by Lessor of any of the provisions of this Section shall be deemed to have been made by Lessor, unless made expressly in writing by the Director of Airports and no waiver by Tenant shall be deemed to have been made unless made expressly in writing by the duly authorized agent of Tenant. 10 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc d) All time periods specified in this Section shall be counted in calendar days. (2) Revaluation Process: The Revaluation Process shall',consist of the following: a) The Lessor shall make an initial determination of the amount of the Ground Rent revaluation ("Lessor Revaluation") and shall notify Tenant in writing of the amount of the new monthly Ground Rent ("Revaluation Notice"). b) If Tenant disagrees with the Lessor Revaluation, the Tenant may file with the Lessor a dispute of the amount of the Lessor Revaluation ("Tenant Dispute"). The Tenant Dispute must be in writing and delivered to the Director of Airports no later than twenty- one (21) days after fhe Revaluation Notice is mailed to Tenant ("Dispute Period"). In the event that the Tenant does not file a Tenant Dispute with the Lessor within the Dispute Period, the Lessor Revaluation shall automatically be deemed to be accepted by Tenant, Tenant shall be deemed to have waived the right to contest the amount of the Lessor Revaluation, and the new Ground Rent, as initially determined by the Lessor, shall become effective on the applicable Revaluation Date, and the Revaluation Process shall be concluded. 1:1 .. -. . .. Final Lease 5/17/2007 C:\Documents and Settings\]Coniglio\Desktop\Seecon Revised lease 5-3-07.doc c) If Tenant delivers a Tenant Dispute to the Lessor within the Dispute Period, Lessor and Tenant shall have twenty-one (21) days following Lessor's receipt of the Tenant Dispute to attempt to establish a new Ground Rent by negotiation ("Rent Negotiation Period"). The Rent Negotiation Period may not be extended beyond the initial twenty-one (21) day period except by mutual written agreement of the Tenant and the Director of Airports. d) If Lessor and Tenant are unable to agree upon a new Ground Rent during the Rent Negotiation Period, Lessor and Tenant shall proceed to the next step in the Revaluation Process by each appointing an appraiser to appraise the fair market value of the Premises and providing written notice to the other identifying that party's appraiser. The appointment of the appraiser shall be made and notice of the appointment shall be given to the other party not less than twenty-one (21) days after the end of the Rent Negotiation Period (including any agreed-upon extension. thereof) ("Selection Period"). Each appraiser shall be a member of the American Institute of Real estate Appraisers, have the designation of Member of the Appraisal Institute ("MAI"), and have current aviation appraisal experience in appraising property in the geographic real estate market where the Premises is situated. Each party shall be responsible for paying the fees and costs of the appraiser it has selected. 12 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc In the event that Tenant does not appoint an appraiser and provide Lessor with written notice of the appointment within the Selection Period: A) the initial Lessor Revaluation shall automatically be deemed to be accepted by Tenant, B) the new monthly Ground Rent, as initially determined by the Lessor Revaluation, shall become effective on the applicable Revaluation Date, C) Tenant shall be deemed to have waived the right to further contest the amount of the Lessor Revaluation by arbitration or in any other manner, and D) the Revaluation Process shall be concluded. In the event that Lessor does not appoint an appraiser and provide Tenant with written notice of the appointment within the Selection Period specified in this Section above, A) the new monthly Ground Rent shall be the Ground Rent as determined by Tenant's appraiser, or as determined in the preceding revaluation of Ground Rent, whichever is greater, B) such new monthly Ground Rent shall become effective on the applicable Revaluation Date, C) Lessor shall be deemed to have waived the right to contest the amount of the new monthly Ground Rent by arbitration or in any other manner, and D) the Revaluation Process shall be concluded. e) If Lessor and Tenant. each properly appoint an appraiser during the Selection Period, the issueof the Ground Rent revaluation shall be submitted to the two appraisers to each make an independent determination of the fair market value of the Premises. Each 13 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc appraisal must be completed and a copy of the appraisal report delivered to the other party no later than sixty (60) days from the date of his or her appointment ("Appraisal Period") unless otherwise extended by the mutual agreement of Lessor and Tenant. f) Upon completion of both of the above appraisals, Lessor and Tenant shall make a final attempt to establish a new monthly Ground Rent by negotiation. In the event that Lessor and Tenant cannot agree on a revaluation of the monthly Ground Rent, either Lessor or Tenant may declare an impasse in the negotiations by providing written notice of the impasse to the other parry. The written notice of impasse (referred to hereinafter as the "Final Proposal") shall include all of the following information: A) a statement that the declaring party has determined that negotiations have reached an impasse; B) the declaring party's final proposed Ground Rent revaluation figure; C) a statement that the recipient has ten (10) days to either give written acceptance of the amount of the Ground Rent revaluation specified in the Final Proposal or deliver a counter-final proposal ("Counter-Final Proposal") to the declaring parry; and D) any other supplementary information as the declaring party deems appropriate. The party upon whom the Final Proposal is served shall then have ten (10) days following receipt of the Final Proposal to either accept the Final Proposal or to reject 141 ;. Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc the Final Proposal and deliver a Counter-Final Proposal to the declaring party. g) If neither the Final Proposal nor the Counter Final Proposal is accepted, not later than thirty-five (35) days after delivery of the Final Proposal, the parties shall jointly select an arbitrator who shall make a binding determination as to which proposal is the closest to the actual fair market value of the land underlying the Premises. If the parties cannot agree on an arbitrator within fifteen (15) days from rejection of the Final Proposal and the Counter Final Proposal, either party may submit the matter to the American Arbitration Association, or another professional arbitration firm as agreed in writing by both parties, for the immediate selection of an arbitrator. The arbitrator shall be an Al and have current aviation appraisal experience in appraising property in the geographic real estate market where the Premises is situated. The arbitrator shall conduct the arbitration under the. 'provisions of the commercial arbitration rules of the American ArbitratioH Association. The arbitration shall be conducted in Contra Costa County, California, unless the parties agree in writing to another location. The arbitrator shall not have the right to combine, average, or otherwise modify the proposals, but shall select from among them. The arbitrator shall have no power to modify the provisions of this Lease. The arbitrator's 15 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc decision shall be binding on all parties and shall apply retroactively to the Revaluation Date:, The arbitrator's decision shall be subject to challenge only 1) on the grounds set forth in California Code of Civil Procedure section 1286.2 or 2) based upon the arbitrator's incorrect application of the substantive laws of California. E. Fuel Flowage Fees: On the first day of each calendar quarter, Tenant shall pay to Lessor a fuel flowage fee for the preceding quarter equal to $0.08 per gallon. The Fuel Flowage Fee shall increase annually by $0.005 per gallon. The first annual increase shall take place one (1) year from the Commencement Date. The Fuel Flowage Fee shall be �review�dl" and 'may be revised by Lessor in its sole discretion every five (5) years after the Commencement Date of this Lease. Lessor shall give notice to Tenant in writing of any revised fuel flowage fee, which shall be effective the month after such notice is given. Tenant may operate a fueling facility or fuel truck on the Premises for the purpose of self-fueling of based aircraft only. All self-fueling must be in compliance with Federal Aviation Administration Advisory Circular 150/5190-5. No fueling is allowed for automobiles or trucks. With respect to non-Tenant aircraft, Tenant may not taxi. such aircraft to Tenant's fueling facility, or deliver fuel to such aircraft by operation of.a fuel,truck, or,provide any other assistance in the fueling of such aircraft. 16 Final Lease 5/17/2007 C;\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc F. Records to Be Maintained. Tenant shall record all sales or other transactions, whether cash or credit, and shall keep full and accurate books of account and records in accordance with generally accepted accounting principles consistently applied, including without limitation, a sales journal general ledger, and all bank account statements showing deposits ,,of,.Gross Sales revenue. In addition, Tenant shall keep all cash register receipts with regard to Gross Sales, credits, refunds and other pertinent transactions, as well as record of any other exclusions or deductions from Gross Sales. G. Additional Rent: In addition to Construction Period Rent, Ground Rent, and Fuel Flowage Fees, Tenant shall pay, as additional rent ("Additional Rent"), all other charges, costs and fees required to be paid pursuant to the provisions of this Lease. 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, plus interest on said unpaid balance at a rate of one and one-half percent (1-1/2%) per month, from the date said payment was due and payable until paid in full. Tenant shall pay said late charge on or before 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 17 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc 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 therefor. B. Form and Place of Payment: All Rents and fees shall be paid in cash or by personal check, certified check, or money order, payable to the County of Contra Costa, and must be received on or before due date at the Director of Airports Office, 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 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 in a twelve (12) month period. D. Security Deposit: Upon execution of this Lease, Tenant shall pay to Lessor the sum of Sixteen Thousand Eight Hundred Fifty and No/100 Dollars ($16,850) in cash as security ("Security Deposit") for the faithful performance of the terms, covenants, and conditions of this Lease. If Tenant is in default of this Lease, Lessor may in its sole discretion use the Security Deposit, or any portion of it, to cure the default or compensate Lessor for damages sustained by Lessor resulting from Tenant's default. Upon demand by Lessor, Tenant shall immediately pay to Lessor a sum equal to the portion of the Security Deposit expended or applied by Lessor as provided in this subsection so as to maintain 18 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc the Security Deposit in the sum initially deposited. Upon final accounting by Lessor, any balance of said deposit shall.be refunded to Tenant, without interest. 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 (such as review of a proposed assignment, or other transfer, or estoppel certificate or financing of Leasehold Estate), Tenant shall pay such costs and expenses incurred by Lessor thirty (30) days after demand therefor by Lessor. Tenant shall pay to Lessor a transaction fee ("Transaction Fee") of Two Thousand Five Hundred and No/100 Dollars ($2,500.00), plus all 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. The Transaction Fee shall be increased by $500.00 every five years after the Commencement Date of this Lease. 9. USE OF PREMISES The Premises shall be used only for the operation of a corporate hangar site and for no other purpose. A. Uses Permitted on the Premises: The following are the only uses permitted on the Premises and may be provided by Tenant only: 19 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc (1) Storage of aircraft owned by Tenant. (2) Maintenance on aircraft owned by Tenant or any of Tenant's subtenants, provided that such maintenance is performed ONLY by (1) the owner of the aircraft, (2) a bonafide employee or contractor of the owner of the aircraft, or (3) an established Buchanan Field Airport Fixed Based Operator. (3) Operation of corporate aircraft on a non-commercial aviation basis. (4) The initiation (start up or taxi out of aircraft) or (2) termination (taxi in and shut down of an aircraft) for FAR Part 135 or Charter operations. (5) Aviation-oriented use of office space. (6) Hangar storage of aircraft other than Tenant-owned aircraft, only on a month-to-month basis: (7) Self-fueling of based aircraft, pursuant to Section 6.E. B. Uses Not Permitted on the Premises: The following uses of the Premises are specifically prohibited: (1) All commercial activities, including but not limited to, Charter or FAR Part 135 operations, including enplanement or disemplanement of passengers, except as, expressly permitted. in Section 9.A. above. 20 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc (2) Maintenance, except as expressly permitted in Subsection 9.A. (3) Use or subletting of any portion of the Premises for storage purposes, except as expressly permitted in Subsection 9.A. (4) Flight instruction for hire. (5) Sale of aviation supplies or services. (6) Aircraft fueling for commercial purposes. (7) Any use not expressly permitted in Section 9.A. Two violations of Section 9.13. within a twelve-month period shall be a default of this Lease. 10. RENTAL OPERATIONS Tenant may rent hangar space for the purpose of aircraft storage only, pursuant to such rules and regulations adopted from time to time by Lessor, including but not limited to the following: A. All hangar rental agreements shall be subject to the terms and conditions of, and be subordinate to, this Lease. Such hangar rental agreements shall not create a landlord-tenant or any other legal relationship between Lessor and Tenant's renter. Tenant is, and shall remain, entirely responsible for the full performance of this Lease. 21 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc B. No commercial operations are permitted by Tenant or Tenant's renters. In a renter is found to be conducting any commercial activity, Tenant shall immediately terminate that renter's agreement. Two violations of this subsection in a 12-month period is a default of this Lease. C. To the extent that Tenant engages in the rental of hangar space, Tenant or its authorized representative shall be available during normal business hours, either at the Airport or by telephone/facsimile to discuss rental terms and to conduct business. D, Hangar space rental rates shall be established and made available to the public. The original established rates and' any and all changes or revisions in the established rates shall be provided immediately in writing to the Director of Airports. E. Tenant shall, the first day of each calendar year, deliver to Lessor a copy of any new, revised, or extended rental agreements entered into by Tenant in the past twelve-month period, which rental agreements shall contain the name, address, and telephone number of the renter, the identification and make of all of the renter's hangared aircraft, and any other information that Lessor from time to time may require. F. Commencing on September 1, 2008, and annually thereafter, Tenant shall provide the Director of Airports with an updated "Premises Occupancy and Active Demand List" identifying current occupants of any improvements located on the Premises, the status of any occupied improvements or portions thereof, and the 22 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc identities of any persons then awaiting future occupancy of any of the hangar or other spaces located on the Premises. G. Tenant is responsible for all materials stored in the hangars, whether said materials are stored by Tenant or by Tenant's agents, employees, or renters. The Director of Airports shall have the right to determine, in his or her sole discretion, what items may be stored in the hangar. Tenant shall inspect all hangar space no less than once each year to determine if materials that violate any applicable codes, or that have not been authorized by the Director of Airports, are being stored in the hangar space, and shall require the immediate removal of such materials. Tenant shall terminate the rental agreements of those renters who have not removed such materials within ten (10) days following Tenant's notice to remove such materials. 11. CONDITION OF PREMISES Except as otherwise expressly stated in this Lease, Lessor hereby lets, demises and leases, and Tenant takes 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. 12. SITE IMPROVEMENTS Tenant shall construct all site improvements shown on the Proposed Site Plan dated August 13, 2004, prepared by Isakson and Associates, Inc., attached hereto as Exhibit "C" and made -a part hereof by reference, together with such additional improvements 23 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc as provided in final construction plans to be approved by Lessor as set forth below. The improvements required by this section shall hereafter be referred to as the "Improvements." A. Construction of Improvements: Tenant shall construct Improvements in accordance with both Exhibit "C" and any revisions thereto that are approved in writing in advance by Lessor. ., At a minimum, Tenant shall construct the following: (1) Not more than a maximum of 33,000 square feet of hangar space capable of handling aircraft; (2) Not more than a maximum of 4,050 square feet for a mechanics area, pilots lounge, and office and storage space to be associated with the hangar space; (3) No fewer than twenty (20) parking spaces for use by employees, passengers, crew members, and other visitors to the Premises; and (4) Not more than a maximum of 45,000 square feet of aircraft parking ramp and taxi space. B. Plans and Lessor's Approval: Tenant shall obtain the Director of Airports' written approval of all plans and specifications (together "Plans") for buildings, paving, landscaping, or other improvements before any construction may be commenced. All Improvements shall conform with any general requirements of Lessor and shall be constructed or installed in conformance with the Plans, 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 24 Final Lease 5/17/2007 Q\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc operations thereon, including, but not limited to, the Contra Costa County Building Inspection Department, Contra Costa County Public Works Department, the Contra Costa County Community Development Department, and/or the Federal Aviation Administration. Tenant shall be 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 shall not constitute a representation or warranty as to such conformity and responsibility shall remain at all times in Tenant. The Contra Costa County Board of Supervisor's has approved and adopted a Negative Declaration in compliance with the California Environmental Quality Act necessary for the development of the Improvements. Copies of the Negative Declaration and Mitigation Monitoring Plan are attached hereto as Exhibit "D". Tenant shall comply with all measures identified in the Mitigation Monitoring Plan. C. Construction Schedule: Within one hundred fifty (150) days following the Commencement Date, Tenant shall submit three (3) sets of Plans and a detailed construction schedule to the Director of Airports for review and approval. Tenant shall not submit the Plans to the Contra Costa County Building Inspection Department until the Director of Airports has approved the Plans. The Director of Airports' review and approval or disapproval shall be completed within thirty (30) days of submission. If Director of Airports disapproves of the Plans, reasons for the same must be given to Tenant, and Tenant shall have thirty (30) days to 25 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc revise the Plans, and resubmit them to the Director of Airports. The Director of Airports' review and approval or disapproval of the revised Plans shall be completed within thirty (30) days oft. re=submission. The Director of Airports' approval is separate and distinct from approvals Tenant is required to obtain from Lessor, other County Departments, and all other authorities having jurisdiction over the Premises, and the requirements imposed on the Director of Airports by this Section do not apply to other County Departments and authorities. Within fourteen (14) days following approval of the Plans by the Director of Airports, Tenant shall submit the Plans to the Contra Costa County Building Inspection Department for review and approval. Tenant shall commence construction of the Improvements within forty-five (45) days after receiving a grading permit for the Improvements from the Contra Costa County Building Inspection Department, and shall complete the construction of the Improvements within twelve (12) months after receiving the grading permit and the Director of Airports' approval. Tenant shall provide Lessor with a Notice of Intent to Construct the Improvements at least sixty (60) days prior to construction or delivery of materials. The deadlines provided in this Section and the Ground Rent Commencement Date may be extended upon written approval of the Director of Airports because of time lost as a result of work stoppages, strikes, shortages of material, acts of God, or other reasons beyond Tenant's. control, as determined by the Director of Airports, in his or her sole discretion. 26 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc D. Performance and Payment Bonds: Not less than ten (10) working days before the commencement of construction of the 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 penal sum of one hundred percent (100%) of the. total estimated cost of the 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. 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 Improvements, guaranteeing faithful performance within 12 months of the Commencement Date of all construction work associated with the Improvements. Said bonds or other security shall be in a form acceptable to Lessor and shall name Lessor as obligee. E. Inspection and Acceptance: Tenant shall be responsible for obtaining any necessary permits from all Contra Costa County departments having jurisdiction over the Airport, including but not limited to, the Building Inspection Department, the Community Development Department and the Public Works Department, and all other agencies having jurisdiction over the Airport. All Improvements, including but not limited to - buildings, on the Premises, shall be subject to inspection, testing, and acceptance in accordance with applicable law by the 27 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3- 7.doc` Contra Costa County Public Works Department and Building Inspection Department. Nothing in this Lease shall be construed as approval by Lessor or any other governmental entity acting in its or their governmental capacity of the Improvements or to release Tenant from any governmental application, review or requirement. F. 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 shall not constitute a warranty by Lessor, and shall not relieve Tenant of its obligation to fulfill the provisions of this Lease and of the Plans as approved by Lessor, nor shall Lessor be thereby estopped from exercising any of its remedies provided at law or equity or under this Lease. G. Engineering: Lessor shall furnish Tenant with control information required.for ground and pavement elevations, specifications for earthwork, pavement, and drainage. Tenant shall be 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. H. Utilities: Upon the prior written approval of the Director of Airports, Tenant may install any utilities on the Premises at.its own cost and expense and shall pay any and all connection, inspection, and se:rvide fees in connection therewith. I. Paving and Concrete: Tenant shall upgrade the pavement for the aircraft movement areas and concrete hangar floors such that they will accommodate the heaviest aircraft expected to operate in the area, or fully loaded fuel trucks, 28 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc whichever is of greater weight, with a minimum expected pavement life of no less than twenty-five (25) years. The road access shall be in accordance with Contra Costa County Public Works. Department standards. J. Frontage Improvements: It is understood and agreed that Tenant shall, at Tenant's sole expense, construct frontage improvements along Sally Ride Drive in accordance with County Standards and Plans, immediately adjacent and contiguous to the Premises, consisting of curbs, gutters and sidewalks. Said frontage improvements shall be completed, according to specifications furnished by Lessor and approved by the Public Works Department, no later than sixty (60) days after Substantial Completion of the Improvements. K. Hangar Setback: Hangar must be designed such that there is adequate ramp space on the aircraft hangar door side(s) so that when the largest anticipated airplane to be housed in the hangar is pulled.full out of the hangar, the aircraft does not obstruct any adjacent taxiways used by the largest aircraft anticipated to use that taxiway. Failure to design the hangar in compliance with this provision shall be grounds for disapproval of the Plans by the Director of Airports pursuant to Section 12.13. L. Notice of Nonresponsibility: A notice of Lessor non-responsibility shall be posted and recorded by Tenant during construction in accordance with Civil Code Sections 3094 and 3129. A copy of notice is to be mailed to the Director of Airport upon filing with the County Recorder. 29 Final Lease 5/17/2007 O\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc M. Signs: Tenant may erect signs and advertising media and place the same upon the improvements in accordance with FAA and Buchanan Field Airport Policy and Standards for Development, after obtaining the written approval of the Director of Airports and of any other public agency having jurisdiction. N. Landscaping: The landscaping on the Premises shall be installed by Tenant, at Tenant's sole expense, in accordance with landscaping plans approved pursuant to Section 12.B., and shall be maintained by Tenant in a first-class condition. 13. UTILITY OBLIGATIONS: Tenant shall pay on Tenant's own account for all utilities used or consumed on said Premises, 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 overhead 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 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, at the Director of Airports' sole discretion, Tenant shall remove 30 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease.5-3-07.doc those alterations and additions at Tenant'ta-sole cost and expense. Any such alterations, additions, or improvements made shall remain on and be surrendered with the Premises on expiration or termination of the Lease, except as otherwise provided in Section 28. Surrender of Possession of this Lease. If Tenant is required to remove any such alterations, additions, or improvements pursuant to Section 28. Surrender of Possession, Tenant, at its sole cost and expense, shall restore the Premises to the conditions existing immediately prior to the alteration, addition, or improvement, or such other condition designated by Lessor in its election. If Tenant makes any alterations, erects any additional structures, or makes any additional improvements to the Premises as provided in this Section, Tenant may not commence construction until Tenant has provided Lessor ten (10) days advance written notice thereof. 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. A copy of the notice shall be mailed to Lessor upon filing 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 and all improvements thereon, including, but not limited to, structures, signs, driveways, curbs, ' walkways, pads, aprons, taxiways, mechanical equipment, utility lines, drainage and sewage lines, fuel storage and dispensing facilities, environmental control equipment, irrigation systems and landscaping, in a first-class condition. All maintenance, repairs, and 31 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc replacements shall be of a quality substantially equal to the original material and workmanship and consistent with approved plans. Lessor shall be the sole judge of the maintenance standards required. Tenant shall perform all maintenance and repairs in compliance with, and all maintenance and repairs necessary to comply with, all applicable statutes, ordinances, resolutions, regulations, orders, and policies now in existence or adopted from time to time by the United States, the State of California, the. County of Contra Costa and other government agencies with jurisdiction over the Airport. B. No materials, supplies, products, equipment or other personal property, except for assembled aircraft and ramp equipment and vehicles in regular use, shall be stored or permitted to remain on any.portion of the Premises outside of buildings or structures without the prior written consent of the Director of Airports. Tenant shall store personal property items, supplies, materials and combustibles inside the buildings in a safe, neat and sanitary manner. C. Tenant shall provide or cause to be provided adequate enclosures, screened areas and/or suitable covered metal receptacles within the Premises for the short-term accumulation and storage of solid waste, such as rubbish, trash, garbage, sludge, discarded machinery or parts and any other solid industrial wastes. Such enclosures and/or screened areas shall be designed in such a way as to prevent odors, fumes, attraction of pests, and dispersal of wastes due 32 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc to wind or water runoff, and shall be serviced frequently by qualified waste removal and disposal services. 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 Control Board, and any other government agencies with jurisdiction over the Airport ("Applicable Laws") including, but not limited to, Applicable Laws concerning health, safety, fire, accessibility, police, and the environment. Tenant shall be responsible for paying all fines and penalties levied by any government agency for any violation of an Applicable Law associated with activities on the Premises. 17. WASTE, QUIET CONDUCT 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. 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 33 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc 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 amounts or levels of air pollution, (e.g., gases, particulate matter, odors, fumes, smoke, dust), water pollution, noise, glare, heat emissions, electronic or radio interference with navigational and communication facilities for the operation of the Airport and for its use by aircraft, trash or refuse accumulation, vibration, prop-wash, jet blast, 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" shall mean 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 hazaYdous 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, 34 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc 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, Chapter 2.5 (Hazardous Substances Information and Training Act); (4) any "hazardous waste" as that term is defined in Section 1104 of 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 Section 101 of 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, special nuclear, 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 Material, as defined in this Section, 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 35 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc 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. C. Notification to the Director of Airports.:.: If, during term of this Lease, Tenant becomes aware of (a) any actual or rthreatened 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 Material 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. Tenant shall also, by the next business day after receipt, furnish to Lessor, copies of any claims, notices of violation, reports, or other writings received by Tenant that concern such release or investigation. 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, 36 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07,doc suits liability and expenses arising out of or relating to the violation of any law regulating or the use, handling, generation, emission, release, discharge, storage or disposal of any Hazardous Materials (such as those laws listed in this Section 18) ("Environmental Laws") by Tenant or Tenant's officers, employees, agents, contractors, renters, guests or invitees. This indemnification applies whether or not 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 kind issued by any regulatory agency. This indemnification clause shall survive any expiration or termination of this Lease. 19. STORMWATER DISCHARGE Contra Costa County has applied for and received a National Pollutant Discharge Elimination Permit (NPDEP) 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 will be discharged into the stormwater system at the Airport, and shall comply with the NPDEP in all respects and be held responsible for any such discharge by Tenant or by any of Tenant's officers, employees, agents, contractors, renters, guests, or invitees, during 37 Final Lease 5/17/2007 O\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc 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 these costs upon demand:. .In addition, any discharge of pollutants or Hazardous Materials, as defined herein, on or from the Premises shall.be considered a default of this Lease and shall be grounds for its termination. 20. RULES AND REGULATIONS Tenant agrees to observe and obey all policies, rules, and regulations promulgated and enforced by Lessor and any other governmental entity having jurisdiction over Buchanan Field. 21. NOISE ORDINANCE Tenant shall abide by all conditions of 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 will provide quarterly noise abatement training to pilots of aircraft based on the Premises. 22. SECURITY Lessor shall have no obligation to provide security to the Premises. Tenant shall provide, through the use of buildings, structures, walls, fences, and similar barriers, or a combination thereof, positive uninterrupted on-site security at all times for the prevention of unauthorized pedestrian andVe' thicular access to the aircraft operating 38 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc area by way of the Premises. Direct or indirect points of entry to the aircraft operating area to accommodate authorized individuals and authorized vehicles shall be controlled by Tenant 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. 23, HOLD HARMLESS AND INDEMNIFICATION Tenant shall defend, hold harmless, and indemnify the indemnitees from the liabilities as defined in this section: A. The indemnitees benefited and protected by this promise are Lessor, its governing body, elective and appointive boards, commissions, officers, employees, representatives and agents; B. The liabilities protected against are any liability or claim for damage of any kind allegedly suffered, incurred or threatened because of actions defined below, and including personal injury, death, property damage, inverse condemnation claims of third parties or any combination of these, and including the defense of any 39 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc suits or actions at law or equity concerning these; C. The actions causing liability are any act, intentional or negligent, or omission by Tenant, its agents, representatives, invitees, or contractors in connection with the occupancy and use of the Premises by Tenant, its shareholders, or any renter or assignee, or the matters covered by this Lease, or claimed to be attributable to Tenant, its subcontractors, or any officers, agents, renters, assignees, employees, or one or more of them; D. Non-conditions: The promise and agreement in this Section 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. Site Improvements and Section 14. Alterations and Additions hereof, or has insurance or other indemnification covering any of these matters. 24. 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) 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 40 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc 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. Said fire insurance policies shall contain loss payable endorsements in favor of the parties as their respective interests may appear hereunder. Lessor and its officers, agents, and employees shall be named as additional insureds in such policy or policies. C. Casualties: In the event of-dam' age-fo or. destruction of any buildings or other improvements on the Premises ("Insured Improvements") in excess of twenty- five percent (25%) of the then replacement value of such Insured Improvements, 41 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc Tenant shall determine whether to repair or replace the Insured Improvements. If Tenant determines to repair or replace the Insured Improvements, the proceeds of any insurance policy paid on account of such damage or destruction shall first be applied to the cost of repairing, or replacing the Insured Improvements. If Tenant determines not to repair"or replace the Insured Improvements, Tenant may terminate this Lease upon written notice to Lessor within thirty (30) days of such damage or destruction. It Tenant. terminates this Lease pursuant to this provision after deducting any proceeds payable to Tenant's mortgagee, as defined in Section 34. Financinq of Leasehold Estate, the remaining proceeds of any insurance policy paid on account of such damage or destruction shall be distributed to Lessor and Tenant pursuant to the following formula: Lessor's share shall be the product of the remaining proceeds multiplied by a fraction, the numerator of which is the number of months since the Commencement Date of this Lease until the date the casualty causing such damage or destruction, and the denominator of which is two hundred'forty'(240) months, Tenant's share shall be the excess of the remaining proceeds after subtracting Lessor's share. All fire and extended coverage policies insuring the improvements may have a loss payable clause in favor of any mortgagee of Tenant, as such mortgagee's interest may appear. D. Worker's Compensation: Tenant shall obtain workers' compensation insurance as required by law, covering all employees of Tenant, and said insurance shall be kept in force during the entire term of this Lease. 42 Final Lease 5/17/2007 O\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc E. Form of Policies: All policies of insurance required by this Section shall be in such standard form and written by such qualified insurance companies as shall be satisfactory to Lessor. Evidence of such insurance shall be provided by Tenant by filing with Lessor a copy of the policy and policies, together with a duly executed certificate of insurance to the effect that the insurance required by this Lease is extended in favor and consistent with the terms set forth herein. All of such certificates shall specifically state that "Contra Costa County, its officers, agents, and employees" are named as additional insureds under such policy or policies. 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. F. Notice: Tenant shall give Lessor prompt and timely notice of any claim made or suit instituted coming to its knowledge which in any way directly, contingently or otherwise, affects or might affect either, and both shall have the right to participate in the defense of the same to the extent of its own interest. 25. TAXES Tenant agrees to pay before delinquency all taxes (including, but not limited to, possessory interest tax), assessments, license fees, and other charges which 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 43 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc under protest, without liability, cost or expense to the Lessor, to contest the amount in good faith. 26. INSPECTION, ACCESS AND NOTICE Insofar as the same may be necessary for the protection of Lessor's rights, Lessor and its agents shall at any and all times have the right to go upon and inspect the Premises and any and every building, structure, or improvement erected or constructed or in the course of being erected or constructed, repaired, added to, rebuilt or restored thereon. Lessor shall also have 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 bf the Civil Code. Lessor shall not be 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. 27. ASSIGNMENT AND ENCUMBRANCES Tenant shall not voluntarily assign or encumber 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 unreasonably be withheld. Any encumbrance without Lessor's consent shall be voidable and, at Lessor's election, shall constitute a 44 Final Lease 5/17/2007 O\Documents and Settings\JConiglio\Desktop\Seecon Revised]ease 5-3-07.doc default. No consent to any assignment or encumbrance shall constitute a further waiver of the provisions of this Section. If Tenant is a corporation, 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 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 the ownership of, and the right to vote, stock possessing at least 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. 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. SURRENDER OF POSSESSION Title to all improvements constructed upon the Premises, including all alterations or additions thereto, shall remain in Tenant until the expiration, cancellation, or other earlier termination of this Lease. Upon such expiration, cancellation or other earlier termination of this Lease, title to said improvements shall automatically vest in the Lessor and, except as otherwise provided herein, said improvements shall remain upon and be surrendered with the Premises as part thereof. 45 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc If Lessor does not desire title to said improvements, Tenant shall, upon written notice by Lessor, and at Tenant's sole cost and expense, return the Premises to Lessor clear of any or all improvements, above or below ground level, constructed by Tenant and identified in such notice. Tenant shall complete its removal of such improvements at its expense within one hundred twenty (120) days of the effective date of such notice. If Tenant fails to remove the improvements, Lessor may remove them at Tenant's expense, and Tenant shall immediately reimburse to Lessor, in full, all of Lessor's costs and expenses incurred in removing those improvements upon written demand by Lessor. Title to personal property belonging to Tenant shall at all times during the term of this Lease remain in Tenant, and Tenant shall have the right at any time to remove any or all personal property of any kind and nature whatsoever that Tenant may have placed or installed upon the Premises, provided that upon any such removal, Tenant shall repair, at its sole cost and expense, any damage resulting therefrom and leave the Premises in a clean and neat condition. Upon expiration or within thirty (30) days after cancellation or earlier termination of this Lease, Tenant shall surrender to Lessor the Premises and all improvements, including alterations and additions, in good condition (except for ordinary wear and tear and destruction to the Premises covered by Section 31. Destruction), except for those improvements, alterations and additions that Tenant has the obligation to remove under the provisions of this Section and Section 14. Alterations and Additions. If Tenant fails to remove its personal property from the Premises within sixty (60) days after expiration, cancellation, or termination of this Lease, said property may be removed by Lessor at 46 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc Tenant's expense, by use of the deposit, as provided in Section 7. If Lessor's cost to remove Tenant's personal property exceeds'the amount of the Security Deposit, then Tenant shall reimburse Lessor the difference between Lessor's cost and the amount of the Security Deposit, immediately upon Lessor's written demand. If Tenant fails to surrender the Premises to Lessor on expiration or within thirty (30) days after cancellation or termination of the 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. 29. DEFAULT The occurrence of any of the following shall constitute a default by Tenant: (1) Failure by Tenant to pay any Rent or other charges when due, if the failure continues for thirty (30) days after notice has been given to Tenant. (2) Abandonment and vacation of the Premises. Failure to occupy and operate the Premises for one year shall be deemed abandonment. (3) Insolvency, adjudication of Tenant as bankrupt, or the loss of possession of the Premises, or any portion thereof, by virtue of any attachment, execution, or receivership, if the bankruptcy proceedings are not terminated in Tenant's favor within, or the insolvency or the loss of possession continues for, sixty (60) days thereafter. 47 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc (4) Assignment for the benefit of creditors. (5) Failure to comply with any of the provisions of Section 35. Non- Discrimination. (6) Any act, condition, event, or failure of performance constituting a default under any other provision of this Lease. (7) Failure to perform any other provision of this Lease, if the failure to perform is not cured within thirty (30) days after written notice has been given to Tenant. If, in Lessor's reasonable judgment, the default cannot reasonably be cured 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. Safety hazards must be cured immediately. 30. LESSOR'S REMEDIES Lessor shall have the following remedies if Tenant commits 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. Acts of maintenance, efforts to re-let the 48 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc Premises, or the appointment of a receiver on Lessor's initiative to protect Lessor's interest under this Lease shall not constitute a termination of Tenant's right to possession. On termination, 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 greater. "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 49 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc 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 Tenant commits a default, can cure the default at Tenant's cost, provided Lessor has given Tenant thirty (30) days notice and (1) Tenant. has failed to cure such default within such thirty (30) days or, (2) 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 notice given by Lessor to Tenant, and Jf paid by Tenant at a later date, shall bear interest at the rate of twelve percent (12%) per annum or the maximum rate permitted by law, whichever is greater, from the date the sum is paid by Lessor until Lessor is completely reimbursed by Tenant. The sum, together with interest on it, shall be Additional Rent In the event of default by Tenant in connection with the construction of the Improvements pursuant to Section 12. Site Improvements, Lessor may exercise its rights as an obligee against the surety company on the performance bond required by Subsection 12.C. Performance and Payment Bonds, and may take such steps as are necessary to cause the cure of said default by the principal, the surety company, or others. 50 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc 31. DESTRUCTION If any Improvements erected on the Premises are damaged or destroyed as a result of any uninsurable cause or risk at the time of destruction, in the amount of at least twenty-five percent (25%) of the replacement.cost.of all Improvements, Tenant shall have the option to either terminate this Lease or to replace and rebuild the Improvements so they are in substantially the same . condition as they were in immediately before damage or destruction. Tenant shall give written notice of such election to Lessor within forty-five (45) days of the date of the loss or destruction of the Improvements. If Tenant elects to terminate this Lease, this Lease shall terminate. If Tenant elects to rebuild, only Ground Rent will be abated in an amount proportional to the damage for a period not to exceed three (3) months from the date of such written notice, unless otherwise extended by mutual and written agreement by Lessor and Tenant. If damage is less than twenty-five percent (25%) of the replacement cost of Improvements, Tenant shall rebuild the Improvements, and no Ground Rent abatement shall apply. Tenant shall have one hundred eighty (180) days to commence repair or restoration of the Improvements, and shall diligently pursue the completion of such Improvements. 32. CONDEMNATION A. If any part of the Premises shall be taken as a result of the exercise of the power of eminent domain or be conveyed to any entity having such power under threat of exercise thereof (both of such actions being hereinafter referred to as "condemnation"), this Lease shall automatically terminate as to the portion of the 51 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc Premises which is condemned as of the date physical possession of such portion is taken by condemnor. Any damages to the remainder of the Premises sustained by the Tenant and or Lessor as a result of said condemnation action shall be decided in court or by negotiation and agreement with the condemnor. B. If the remaining part of the Premises will not be reasonably suitable for the use described in Section 9. Use of Premises, this Lease may be terminated by either Lessor or Tenant, at any time by written notice within thirty (30) days after the date possession of the condemned portion is taken by condemnor. If the remaining part of the Premises will be reasonably suitable for the operation of the business described in Section 9. Use of Premises, this Lease shall continue in full force and effect as to such remaining part. If this Lease is not so terminated, as of the date of such taking, the Ground Rent shall continue to be the rate then in effect per square foot per year pursuant to Section 6. Rent, but the total number of square feet shall be reduced by the number of square feet of the Premises taken and the monthly and annual rent shall reflect such reduction. Lessor shall be entitled to the condemnation award attributed to the real property and the Tenant for the taking of its fixtures and equipment, leasehold improvements, relocation expenses, and other award not related to the value of the real property. Nothing herein contained shall prevent Lessor and Tenant from prosecuting claims in any condemnation proceedings for the value of their prospective interests. 52 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc 33. CANCELLATION BY LESSOR If at any time ten (10) years or more after the Commencement Date of this Lease, Lessor requires the Premises for purposes other than a Corporate Hangar, Lessor shall have the right to cancel this Lease and to acquire full title, control and possession of said Premises and all Improvements thereon by giving one (1) year's written notice to Tenant of the effective date of such cancellation. In the event of such cancellation, Lessor and Tenant shall attempt by negotiation to fix the value of Tenant's interest in the Premises and the Improvements thereon, considering the fair market value of the remaining term of the Lease and the then existing fair market value of the Improvements installed by Tenant on the Premises, and any other factors that might be used in making such a determination. In the event that diligent and good faith negotiations fail to establish an agreement on the amount of compensation to be paid to Tenant, either Lessor or Tenant may give written notice ("Appraisal Notice") to the other, declaring an end to negotiations and requiring the amount of compensation to be paid to Tenant to be determined by the appraisal method set forth in this Section 33. The appraisal method shall be as follows: Two qualified and licensed real estate appraisers shall be selected, one by Lessor and one by Tenant. Each appraiser shall be a member of the American Institute of Real Estate Appraisers, have the designation of MAI, and have'C'urrent aviation appraisal experience in appraising property in the geographic real estate'market where the Premises is situated. Lessor and Tenant shall each appoint one appraiser within fifteen (15) days of the Appraisal Notice, and the name of the appraiser so appointed shall be given to the other party. In the event that either Lessor or Tenant defaults in the appointment of an 53 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc appraiser within said fifteen (15) days, the appraiser elected by the non-defaulting party shall name a second appraiser. Upon completion of appointment, said appraisers shall proceed to determine the then existing fair market rental value of Tenant's interest in the Leased Premises within forty-five (45) days. In determining the then existing fair market value of the Tenant's interest in the Premises, the appraisers shall consider the remaining term of the Lease and any other factors then currently in use for standard real estate appraisals as fixed by the American Institute of Real Estate Appraisers. Such determination of value shall be binding on both Lessor and Tenant. In the event said appraisers cannot agree upon fair market value within forty-five (45) days, they will mutually appoint a third appraiser, who shall be a member of the American Institute of Real Estate Appraisers, have the designation of MAI and have current aviation appraisal experience in appraising property in the geographic real estate market where the Premises is situated. Said third appraiser shall be appointed within fifteen (15) days. If a third appraiser is not selected within said fifteen (15) day period, a third appraiser shall be selected by a presiding judge of the Contra Costa County Superior Court. Within thirty (30) days of selection of the third appraiser, the first two appraisers shall inform both parties in writing of their fair market value determinations. Upon completion of the appointment, said third appraiser shall proceed to determine the fair market value in accordance with the foregoing standards within forty-five (45) days. The determination made by said third appraiser shall be binding upon both Lessor and Tenant. Each party shall bear the expense of the appraiser appointed by that party and one=half the expense of the third appraiser, if appointed. 54 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc For purposes of Section 33. hereof, the value of Tenant's interest in the Premises shall include, but is not limited to, (a) the fair market value of this Lease, valued without the Improvements on the Premises and valued as if the Lease were not to be canceled and (b) the fair market value of Tenant's Improvements, were they to remain on the Premises. Also considered shall be the Lessor's current pro rata interest in the Improvements as described in Section 24.C. Casualties. Lessee shall be entitled to payment of the amount fixed by the above appraisal method as of the date Lessor acquires full title, control and possession of the Premises. Lessee shall have no right to recover the value of its Improvements in the event that the Lease is terminated as the result of Lessee's default or for any reason other than as specified in this Section 33. 34. FINANCING OF LEASEHOLD ESTATE Subject to the conditions set forth below, Tenant shall have the right to encumber its leasehold estate ("Leasehold Estate"), and/or the Improvements thereon, with only one Mortgage (as defined below) at any one time. For example, Tenant may subject only the Leasehold Estate to a Mortgage, or:Tenant may obtain one Mortgage covering both the Leasehold Estate and the Improvembnts;��but Tenant shall not subject the Leasehold Estate and the Improvements to separate Mortgages at the same time. Further, Tenant may not then take out additional Mortgages, such as second loans, on either the Leasehold Estate or the Improvements, or both together. Tenant shall have the above rights to finance, subject to the following terms and conditions: 55 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc A. The Mortgage and all rights acquired `under it shall be subject to all of the covenants, conditions, and restrictions contained in this Lease and to all rights and interests of Lessor; B. Tenant shall give Lessor prior written notice of any Mortgage, and shall accompany the notice with a true copy of the note, Mortgage, or other financing documents; C. Lessor shall not exercise its remedies under Section 30. Lessor's Remedies, of this Lease unless: (1) Lessor sends a written notice of default to both Tenant and Mortgagee setting forth the nature and extent of the default, and (2) Within sixty (60) days after service of the notice of default, the Mortgagee fails to do either of the following: a. Cure the default if it can be cured by the payment of money; or b. If Mortgagee does not elect to cure the default by the payment of money, or if the default cannot be cured by the payment of money, the Mortgagee commences foreclosure proceedings and thereafter, in Lessor's sole opinion, diligently prosecutes the foreclosure proceedings to conclusion. D. The Mortgagee shall not be liable to perform Tenant's obligations under this Lease until the Mortgagee acquires the Leasehold Estate by foreclosure, as 56 Final Lease 5/17/2007 O\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc described herein or by transfer in lieu of or under threat of foreclosure. However, after the Mortgagee acquires the Leasehold Estate, Mortgagee shall be liable to pay any Rent or other payments due by Tenant, and to cure any default. After the Mortgagee acquires the Leasehold Estate by foreclosure, the Mortgagee shall be liable to perform Tenant's obligations under this Lease only until the Mortgagee thereafter assigns or transfers the Leasehold Estate. Any assignment or transfer of the Leasehold Estate by the Mortgagee shall first require the written consent of Lessor. Any such assignee or transferee shall then be liable to perform Tenant's obligations under this Lease. E. The time in which the Mortgagee is allowed to cure any default under this Lease shall be extended by any period during which the Mortgagee is precluded by current law from foreclosing due to the bankruptcy of Tenant or any court order prevents the Mortgagee from so acting. F. (1) As used in this Section: (a) "Tenant" shall include all assignees and renters of Tenant; (b) "Mortgagee" shall include the Trustee and beneficiary under a deed of trust; (c) "Mortgage" shall a deed of trust, or any other form of real property security; and 57 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease -3-07.doc (d) "Foreclosure" shall include any judicial foreclosure or sale under the power of sale in lieu of foreclosure, or any transfer in lieu or under threat of foreclosure. (2) Estoppel Certificates. Upon written request by Tenant, Lessor shall execute, acknowledge, and deliver to Tenant or to any lender or Mortgagee, a written statement stating (a) whether the Lease is unmodified and is in full force and effect, and if modified, whether the modified Lease is in full force and effect, and stating the nature of the modification), (b) the dates to which all rents and other payments due hereunder have been paid, (c) whether Lessor is aware of any Tenant default in the performance or observance of any term or condition hereof, and whether any notice has been given to Tenant of any default which has not been cured (and, if so, specifying the same), (d) such other information as Lessor agrees to provide. 35. NON-DISCRIMINATION A. Tenant hereby covenants and agrees thk in the event facilities are constructed, maintained, or otherwise operated on the Premises for a purpose for which a Department of Transportation ("DOT") 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 other requirements imposed pursuant to Title 49, Code of Federal Regulations, DOT, Subtitle A, Office of the Secretary, Part 21, Non-discrimination in Federally 58 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc. Assisted Programs of the Department oft ran sportation, Effectuation of Title VI of the Civil Rights Act of 1964, and as said Regulations may be amended. B. Tenant hereby covenants and agrees that (1)'no person on the grounds of race, color, sex, or national origin shall be excluded from participation in, denied the benefits of, or be otherwise subjected to, discrimination in the use of said facilities, (2) that in the construction of any improvements on, over, or under the Premises and the furnishing of services thereon, no person on the grounds of race, color, sex, or national origin shall be excluded from participation in, denied the benefits of, or be otherwise subjected to discrimination, and (3) that Tenant shall use the Premises in compliance with all other requirements imposed by or pursuant to Title 49, Code of Federal Regulations, DOT, Subtitle A, Office of the Secretary, Part 21, Non-discrimination 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. C. In the event of breach of any of the above non-discrimination covenants, Lessor shall have the right to terminate this Lease and to re-enter and repossess said Premises and the facilities thereon, and hold the same as if said Lease had never been made or issued. This provision does not become effective until the procedures of 49 CFR Part 21 are followed and completed, including expiration of 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, 59 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc 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 shall constitute a material breach thereof and, in the event of such noncompliance, Lessor shall have the right to terminate this Lease without liability therefor or, at the election of Lessor or the United States, either or both said Governments shall have the right to judicially enforce the provisions of said Subsection D. F. Lessor agrees that it shall insert the above five Subsections in any lease agreement by which Lessor grants a right or privilege to any person, firm, or corporation to render accommodations and/or services to the public on the Premises. G. Lessor assures that it will undertake an Affirmative Action program as required by 14 CFR Part 152, Sub-part E ("Sub-part E") to ensure that no person shall on the grounds of race, creed, color, national origin, or sex, be excluded from participating in any employment activities covered in Sub-part E. 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 this 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 60 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc required by Sub-part E, to the same effort. 36. OPERATION OF AIRPORT BY LESSOR A. Aviation Hazards: Lessor reserves the right to take any action it considers necessary to protect the aerial approaches of the Airport against obstructions, together with the right to prevent Tenant from erecting, or permitting to be erected, 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 thereof to install air navigational aids including lighting, in, on, 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. 37. 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. 61 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc C. This Lease shall be 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 shall include 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. 38. DEVELOPMENT OF PREMISES A. Tenant shall comply with the notification and review requirements covered in Part 77 of the Federal Aviation Regulations in the event future construction of a building is planned for the Premises, or in the event of any planned 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 62 Final Lease 5/17/2007 C:\Documents and Settings\]Coniglio\Desktop\Seecon Revised lease 5-3-07.doc 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. § 1349a). E. This Lease and all of its provisions shall be subject to whatever right the United States Government now has or in the future may have or acquire, affecting the control, operation, regulation, and taking over of the Airport by the United States during a time of war or national emergency.- 39, INSTRUMENT OF TRANSFER This Lease shall be 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. 63 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc 40. CHOICE OF LAW This Lease shall be interpreted and enforced under the laws of the State of California, with venue in the Superior Court of Contra Costa County, California. 41. NOTICES Any and all notices to be given under this Lease,: or otherwise, may be served by enclosing same in a sealed envelope addressed to the party intended to receive the same, at its address, and deposited in the United States Post Office as certified mail with postage prepaid. When so given, such notice shall be effective from the date of the mailing of the same. For the purposes thereof, 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: Seecon Builders, Inc. 4021 Port Chicago Highway Concord, CA 94520 64 Final Lease 5/17/2007 C:\Documents and Settings\]Coniglio\Desktop\Seecon Revised lease 5-3-07.doc 42. TIME IS OF THE ESSENCE Time is of the essence for each provision of this Lease. 43. BINDING ON SUCCESSORS The covenants and conditions herein contained shall, subject to the provisions as to assignment, apply to and bind the heirs, successors, executors, administrators and assigns of all of the parties hereto. 44. 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 shall 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. 65 Final Lease 5/17/2007 C:\Documents and Settings\J Coniglio\Desktop\Seecon Revised lease 5-3-07.doc 45. PROVISIONS All provisions, whether covenants or conditions, on the part of Tenant and/or Lessor shall be deemed to be both covenants and conditions. 46. 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 shall be valid unless they are in writing and signed by Lessor and Tenant. 47. CUMULATIVE RIGHTS AND REMEDIES The rights and remedies with respect to any of the terms and conditions of this Lease shall be cumulative and not exclusive and shall be 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. 48. 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. 66 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc 49. NO CONTINUING WAIVER The waiver by Lessor of any beach of any of the terms or conditions of this Lease shall not constitute a continuing wailver 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. 50. 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, 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 howeveIr, that either party may contest any such lien, so long as the enforcement thereof is stayed. 51. ATTORNEY'S FEES In the event suit is brought to: enforce or interpret any part of this Lease, the prevailing 67 Final Lease 5/17/2007 Q\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc party shall be entitled to recover as an element of his costs of suit, and not as damages, a reasonable attorneys fee to be fixed by the court. The "prevailing party" shall be the party who is entitled to recover its costs of suit, whether or not the suit proceeds to final judgment. A party not entitled to recover its costs shall not recover attorney's fees. No sum for attorney's fees shall be counted in calculating the amount of a judgment for purposes of determining whether a party is entitled to recover his costs or attorney's fees. 52. LEASE AUTHORIZATION This Lease is made and entered into by Lessor in exercise of authority as recognized in Section 25536 of the Government Code of the State of California. 53. LEASE COUNTERPARTS This Lease may be executed in one or more counterparts, each of which shall be deemed a duplicate original, but all of which together shall constitute one and the same instrument. 54. CONSTRUCTION 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 shall not be construed as if it had 68 Final Lease 5/17/2007 C:\Documents and Settings\]Coniglio\Desktop\Seecon Revised lease 5-3-07.doc 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 party shall not apply to the interpretation of th.is,Lease. 55. SIGNATURES LESSOR TENANT CONTRA COSTA COUNTY SEECON BUILDERS, INC.. a political subdivision of the State of California A California corporation By B Keith Freitas Albe . Seeno, Director of Airports President RECOMMENDED FOR APPROVAL: By2�QL Jeanne C. Pavao Secretary By Beth Lee Airport Business and Development Manager 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;the second signature must be that of the Secretary, assistant secretary, chief financial officer or assistant controller. APPROVED AS TO FORM: Silvano B. Marchesi County Counsel By Pamela Zaid Deputy County Counsel- 69 Final Lease 5/17/2007 C:\Documents and Settings\JConiglio\Desktop\Seecon Revised lease 5-3-07.doc Exhibit A: Property Description i i i Buchanan Field Airport Seecon Builders, Inc. Hangar Lease EXHIBIT"A" Real property in the unincorporated area of the County of Contra Costa, State of California, being a portion of Rancho Monte Del Diablo, described as follows: Commencing at the northerly of two found standard Contra Costa County monuments on Sally Ride Drive as shown!on the drawing titled "Right of Way Marsh Dr.", on file with the Contra Costa County Public Works Department at file number "BF XI 176"; thence southerly between the two monuments south 01012'22" east, 27.60 feet (the bearing of south 01012'22" east being taken for the purposes of this description); thence north 88°46'29" east, 31.40 feet to the Point of Beginning; thence from said Point of Beginning north 02012'48" west, 46.47 feet; thence north 10029'06" west, 50.56 feet; thence north 23057'31" west, 60.03 feet;j thence north 02049'19" east, 43.80 feet; thence north 57050'07" east, 27.65 feet; thence north 84005'22" east, 34.63 feet; thence north 85036'31" east, 309.87 feet,i thence south 25°30'23" east, 243.05 feet; thence south 88°46'29" west, 216.91 feet; thence south 01013'31" east, 16.31 feet; thence south 88046'29" west, 188.52 feet; thence north 01013'31" west, 8.28 feet; thence south 88046'29" west, 33.10 feet to the Point of Beginning. Containing an area of 89,2241,square feet of land, more or less. Bearings are based on the California Coordinate System Zone III (CCS27). Exhibit "A-1" attached and by this reference made a part hereof. This real property description has been prepared by me or under my direction, in conformance with the Professional Land Surveyors Act. Signature: f' if �� ZW RL LicensedCard Surveyor Contra Costa County Public Works Department 12-31-Oua No.5999 Q Dater PC I I G:1GrpDatalDesign\SURVEYS1Legalsw-7d d.ts20071 Seecon Builders Inc Hangar Lease(rev).doc KT:rc April 26,2007 I Q�pFESStp,�,�l AREA=648 SFt SCALE 1"=60'z_ 'Lk S01'13'31"E co 0 23 53.59' I V0, ti� 525$.2� N �� co OF CALZ�p O_ rn N cp cD� N N v� L4. 1 S01'13'31"E z 16.31' 1 00 cp tL1 w u > SEECON LEASE SITE rn AREA=88,428 SFf OD L4 w O ADDITJ,QNAL:;AREA c0 4: t� 00 '8i1';'SFf rn tLl CLQ TOTAL LEASE AREA= cD 89,229 SFt - 00 po tL1 cn Q —1 M N01'13'31"W M 8.28' Ir N88'46'29"E 18.52' d 18.52' CD N AREA=153 SFt N N88'46'29"E 18.52'(T) N01*13'31"W b +W NO2'12'48" 8.28' o s� N1050 56g'p6+ 46.47' S01'12'22"E ?�+p POC I POB 27.60 000 0 NO2'49'OF N2�5� �1 • N01'12'22"W V' • 3 E S01'12'22"E 1419.54'(M—M) 27.60 v a ISAKSON & ASSOCIATES INC. 2255 YGNACIO VALLEY ROAD. SUITE C WALNUT CREEK. CA. 94598-3349 PHONE92"a 937-9333 FAX 925 937-7926 m CHECKED BY: D01 DRAWN BY: CS JOB NO. 200416 EXHIBIT 'A ♦ SCALE: 1"=60' DATE: 4/20/07 SHEET 1 OF 1 Exhibit B: Airport Site Plan Y" Y. Mw Y'• e �5�AN �y zast;°: 1 r�,� y � J Exhibit C: SITE PLAN i ;I Z Tb C yid b ,.•.,�,,:�: �.d. 1-.?•• C b I ca �L ::Jr�.: asIE3��6 ��b•'F °°Y'',-. 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