ORDER N0.28543
APPROVAL OF AGREEMENT TO CONSOLIDATE AND EXTEND LEASES
FOR PROPERTY AND FACILITIES AT
I{ERRVILLE/KERR COUNTY AIRPORT
On this the 23rd day of February 2004, upon motion made by Commissioner Williams,
seconded by Commissioner Baldwin, the Court unanimously approved by a vote of 4-
0-0, of agreement to consolidate and extend leases for property and facilities at
Kerrville/Kerr County Airport between Mooney Airplane Company and Kerr County and
the City of Kerrville.
COMMERCIAL LEASE AGREEMENT
AMONG
THE KERRVILLE-KERB COUNTY AIRPORT BOARD, THE CITY OF
KERRVILLE, TEXAS, THE COUNTY OF KERB, TEXAS
AND
MOONEY AIRPLANE COMPANY, INC.
THIS LEASE AGREEMENT, made this 1st day of March 2004, by and among the Kerrville-Kerr County
Airport Board, governing board of the Kerrville-Kerr County Airport pursuant to the Texas Municipal and County
Airport Act, Tex. Transportation Code Chapter 22, hereinafter called the "Boazd"; the City of Kerrville, Texas, a home
rule municipal corporation, hereinafter called "City"; and the County of Kerr, Texas, a political subdivision of the State
of Texas, hereinafter called "County," City and County being the record owners of the herein-described real property
(Board, City and County sometimes collectively referred to as "Lessor"), and MOONEY AIRPLANE COMPANY,
INC., successor in interest to Mooney Aircraft Corp., Inc., whose principal offices aze located in Kerrville, Texas,
hereinafter referred to as "Lessee".
RECITALS
WHEREAS, the Lessor owns and operates the Kerrville-Kerr County Municipal Airport, located in the City of
Kerrville, Texas, hereinafter referred to as "Airport", and;
WHEREAS, Lessee, successor in interest to Mooney Aircraft Corp., Lessee of certain premises located at the
Kerrville-Kerr County Airport, desires to modify and extend these leases of certain Lessor-owned land at the Airport to
manufacture general aviation aircraft and to engage in certain aeronautical-related aircraft services to be provided to the
public as hereinafter permitted; and
NOW, THEREFORE, for and in consideration of the covenants and conditions herein stated, Lessor and Lessee
agree as follows:
ARTICLE 1.
GRANT OF LEASE
1.01 Leased Premises: The County and City aze Lessors under currently existing lease agreements for
approximately 51.69 acres of real property, identified in the attached map, labeled Exhibit "A" (Tracts One, Two, Three
and Four, which shall be more specifically described by a supplemental surveyed property description to be added after
such survey is completed) together with all improvements thereon and fixtures attached thereto. This Agreement
supersedes and replaces all of the agreements between the parties relating to the referenced property, and may be
recorded as such, subject to the new surveyed property description referenced above. As part of the consideration for
this new Agreement, Lessee agrees to release to Lessor control over the 33.69 acres of land and improvements identified
on Exhibit "A" as Tracts Two and Four, Such release shall be executed as follows:
a. Tract Two and all real property improvements thereon shall be released within thirty (30) days of
execution of this Agreement with Lessee removing all personal property within that same period, save
and except, the personal property stored in the buildings within said Tract Two marked as Bldg. 2-1
and Bldg. 2-2 (as indicated in Exhibit "A"). Lessee shall have the right to continue to store said
personal property in said Bldg. 2-1 and Bldg 2-2 along with the right of reasonable ingress and egress
to said buildings for so long as Lessee maintains insurance on said buildings and personal property
and provides proof of same to Lessor, or until such time as Lessor provides notice of its requirement
to utilize Bldg. 2-1 and/or Bldg 2-2 for any purpose Lessor, in its sole discretion, deems necessary.

Upon such notice Lessee shall vacate Bldg. 2-1 and/or Bldg. 2-2 (including removal of all personal
property) within thirty (30) days of notice.
b. Tract Four shall be released upon execution of this Agreement.
Lessee hereby leases the land and improvements identified on Exhibit "A" as Tracts One and Three, hereinafter referred
to as "Leased Premises". Such lease shall include, at no additional cost to Lessee, a specified access easement as shown
on Exhibit "A" from Tract One to Tract Three (subject to the conditions provided in Section 1.02[c]), and the
reasonable right of ingress and egress over Tract Two to Buildings 2-1 and 2-2.
1.02 Rip,~t of First Refusal to Lease Additional Property: In return for the released approximately 33.69
acres of property described above (Tracts Two and Four), Lessor hereby grants to Lessee:
a. aright of first refusal for lease of all or any portion of the approximately 33.69 acres in Tracts
Two and Four unti12013, at no cost to Lessee for such right; provided, however, that any future lease
of any or all of this acreage to Lessee or any subsidiary or sublessee shall be at a rate equal to the
market rate then in effect for Airport improved property, or the market rate or a minnnum of $0.10 per
square foot for unimproved property. Written notice shall be provided to Lessee of Lessor's intent to
lease or otherwise encumber any portion of Tracts Two and Four. Lessor agrees that it will not give
such notice without having a bonafide plan to develop said property, and Lessor further agrees that if a
written commitment to develop such property is not entered into by Lessor within 180 days after
Lessee responds to the notice of intent to lease or encumber, then Lessee's right of first refusal shall be
reinstated until the original 2013 date. Lessee shall have thirty (30) days to respond to any notice of
intent to lease or encumber, and failure to respond timely to such notice shall constitute notice to
Lessor of Lessee's intent not to lease the additional property and shall forever release such property
from the right of first refusal provisions of this Agreement, unless such right is reinstated as provided
for above; and
b. for any unimproved property on which Lessee exercises it right of first refusal, hereinafter
referred to as "New Property" Lessee shall begin to construct improvements, as provided below, on at
least 85% of the area of such premises or on such portion of the New Property as required in the then-
current Airport Minimum Standards and in conformance with the provisions below:
1. Application for Building Permit: Upon exercising the right of fast refusal
option Lessee shall make application for a building permit ("Permit") with the
appropriate governmental agency on or before 120 days from date such right is
exercised for the construction of facilities on the New Property, such timeline
being subject to any necessary approvals by the FAA or other necessary federal
agencies, and Lessee shall pursue obtaining such Permit with reasonable
diligence. Lessor agrees to cooperate with Lessee in this matter.
2. Approval of Construction Plans: Not later than 90 days after Lessee
exercises it's right of first refusal and receives the necessary authorization(s)
from the FAA and/or other necessary federal agencies, and prior to any
construction, alteration, or changes to the New Property, Lessee shall submit to
the Airport Manager scaled plans and specifications of such construction, and a
site use plan with all drainage and utility services as existing or proposed
indicated thereon. Lessee is solely responsible for ascertaining the requirements
of any and all, federal, state, or local government agencies with regard to permit
and application procedures necessary to obtain final approvals and building
permits prior to beginning any construction on the Leased Premises. Lessee shall
not commence any construction until it has received prior written approval from
the Airport Manager and until the Lessee or the Lessor or both have received the
necessary approvals from the Federal Aviation Administration, the City's
~~
Building Official, and such other governmental authorities as aze necessary for
the type of construction contemplated. In those instances in which the Lessor is
required to make application for construction or alteration of the Airport due to
the Lessor being the holder of the Airport Operating Certificate, the Lessor
agrees to promptly and diligently make and prosecute such applications. Once
necessary approvals and permit(s) have been obtained, Lessee shall, not later
than 180 days after issuance of approval and permit(s), solely and entirely at
Lessee's cost, risk and expense, commence to construct, build and erect the
Improvements in accordance with the final construction plans and specifications
hereinabove mentioned.
c. An access easement across Tract Two to Tract Three as is generally depicted on Exhibit "A".
Such easement is at no cost to Lessee. Lessor reserves the right to change the location of this access
easement during the term of this Lease at Lessor's cost when and if such change of location becomes
convenient or necessary to Lessor. If Lessor determines that a change of location is convenient or
necessary for the easement, the change will not be effective until Lessor has made provisions for such
new access easement to be at a similazly convenient location and has a surface that is substantially
similaz to the surface now existing on the current easement.
1.03 Easements: This Agreement shall be subject to such easements, rights-of--way, drill sites, or other
rights or reservations affecting the Leased Premises which are of record or aze clearly visible as of the date of this
Agreement.
ARTICLE 2.
SUBJECT MATTER AND TERM OF AGREEMENT
2.01 Previous Leases Superseded: This lease Agreement supersedes and replaces all prior lease
agreements between the parties.
2.02 Lease Term: This Agreement shall commence at 12:01 a.m on Mazch 1, 2004, and terminate at
midnight on September 30, 2033, ("the Lease Term") unless terminated earlier pursuant to the provisions of this
Agreement.
2.03 Optional Extension of Lease Term: Lessee shall have the option of extending the Lease Term at the
current market rate then in effect for airport property for an additional 10 years so long as the combined total of yeazs do
not exceed a 40 year period and all covenants outlined in the lease have been met, and Lessee has provided to Lessor at
least 90 days' written notice of Lessee's desire to exercise the lease extension option for the period commencing October
1, 2033, and ending September 30, 2043.
2.04 Holdover of Lessee: If Lessee holds over or remains in possession of the Leased Premises after
the termination of this Agreement in the absence of a new lease agreement between the Lessor and Lessee, such
continuation beyond the date of termination, or the collection or acceptance of rent, fees and/or other charges by the
Lessor, shall not be construed as a renewal or extension of this Agreement, but shall be construed solely as creating
a tenancy at will and not for any other term whatsoever. During the term of such tenancy at will, Lessee shall pay to
Lessor the fees and charges herein reserved, and Lessee shall be bound by and comply with all the relevant
provisions of this Agreement. The Lessor may terminate the tenancy at will by giving Lessee thirty (30) days
written notice thereof.
ARTICLE 3.
RENT
3.01 Amount of Rent: Lessee a egr es to pav to Lessor rent for the Leased Premises as follows:
1. March 1, 2004 through September 30, 2013: $0.02197 per square foot per yeaz (based on acreage
contained in Leased Premises this equates to a $1,433.92 monthly lease payment)

October 1, 2013 through September 30, 2023: $0.05000 per squaze foot per yeaz (based on
acreage contained in Leased Premises this equates to a $3,263.37 monthly lease payment)
October 1, 2023 through September 30, 2033: $0.10000 per square foot per year (based on
acreage contained in Leased Premises this equates to a $6,526.74 monthly lease payment)
3.02 Adjustment of Rent During Lease Term: During the years 2013-2033, inclusive, the rent price per
square foot to be paid by Lessee for such period shall be increased or decreased on each October 15` in accordance
with changes in the Consumer Price Index for all Urban Consumers (Southern Urban Area) (the "Consumer Price
Index") as promulgated by the Bureau of Labor Statistics of the United States Department of Labor, which
Consumer Price Index shall be that established for January 2012, (the "Base Index") . The Rent to be paid during
the term of this Agreement shall bear the same ratio to the Consumer Price Index for the month of January preceding
the date of the rent adjustment, as the original "$.OS per square foot per year" for the years 2013-2023 and "$.10 per
square foot per year" for the years 2024-2033 bears to the Base Index. In no event, however, shall the rent due be
less than $.OS per square foot per year for the years 2013-2023 and $.10 per square foot per year for the years 2024-
2033. In the event the Consumer Price Index ceases to incorporate a significant number of items, or if a substantial
change is made in the method of establishing such Consumer Price Index, then the Consumer Price Index shall be
adjusted to the figure that would have resulted had no change occurred in the manner of computing such Consumer
Price Index. In the event such Consumer Price Index (or a successor or substitute index) is not available, a reliable
governmental or other nonpartisan publication, evaluating the information thereto for use in determining the
Consumer Price Index, shall be used in lieu of such Consumer Price Index. As an example of how the rent will be
adjusted for any year between 2013 and 2033, the following example is included for illustrative purposes only:
If•
Consumer Price Index for January, 2012 = 200
Consumer Price Index for January, 2013 = 210
Rent specified in Section 3.01 for this period = $.OS
Then:
Calculation of Rent Adjustment would be as follows --
is the new rental rate.
210
200 x $.OS = .0525 per square foot per year
3.03 Additional Rent: Deleted.
3.04 Gross Sales: Deleted .
3.05 Accounting Records: Deleted.
3.06 Delivery of Rent: All payments required of Lessee by this Agreement shall be delivered by mail, or in
person, to the Office of the Airport Manager, c/o City of Kerrville, Texas, 800 Junction Highway, Kerrville, Texas
78028, or to such other location as specified in writing by the Lessor from time to time, no later than the first day of each
calendar month of the Lease Term for which the payment is due, unless such due date falls on a Saturday, Sunday, or
legal holiday, in which case such rent shall be due on the first City business day following the date such payment is due.
3.07 Delinquent Rent Payments: In the event that payments to the Lessor for rent or other fees or charges
are not received by the Lessor on or before the tenth day following the due date, Lessee shall pay a late rental charge of
Two Percent (2.0%) of the rent amount due for that month. All rent and other payments which aze past due more than
thirty (30) days shall accrue simple interest at the rate of eighteen percent (18.0%) annually or (b) the maxunum
percentage rate allowed by law, whichever is less. Notwithstanding anything to the contrary in this section, if at the time
performance of the provisions set forth in this secfion becomes due the interest to be paid in accordance with this section
exceeds the limits on the payment of interest established by law, then the amount of interest to be paid shall be reduced
to the maximum limit allowed by law; furthermore, if, from any circumstances, Lessor should ever receive as interest an
4
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amount that would exceed the highest lawful rate, the amount that would be excessive interest shall be applied to the
payment of rent owing pursuant to the provisions of this Lease Agreement and not to the payment of interest.
3.08 Application of Amounts Received: Payments received shall be applied in the following order: (1)
interest accrued for late payments, (2) late rental charges, (3) past due rent, beginning with the oldest amount due, (4)
other past due amounts, (5) rent currently due, and (6) other amounts currently due.
3.09 Other Charges: Nothing herein shall be deemed to relieve Lessee and its tenants, sublessees, patrons,
invitees and others from Airport use charges, including fuel flowage fees paid on fuel purchased by Lessee, as are levied
generally by the Lessor directly upon the operation of aircraft, or from automobile parking permit fees for parking areas
that are not included within the Leased Premises, or from security fees.
ARTICLE 4.
USE OF LEASED PREMISES
4.01 Permitted Uses: Lessee shall be permitted to use the Leased Premises for the purpose of conducting,
manufacturing, designing, storing, testing, servicing, repairing, and distributing aircraft, aircraft components, and parts,
avionics, and other products related to aviation, for the purposes of administrative and office uses and for all related and
incidental purposes and uses. No other uses of the premises will be permitted unless specifically agreed to in writing
between Lessor and Lessee.
4.02 Prohibited Uses: Lessee agrees at all times to comply with the following:
a. Lessee shall at no time use, or permit the use of, the Leased Premises in a manner that is contrary
to applicable federal, state, county or city laws, orders, ordinances, rules, or regulations, which shall
include, but not be limited to, applicable Federal Aviation Administration rules and regulations and
applicable regulations for the use of the Airport as may from time to time be promulgated by the
Lessor;
b. Lessee shall not permit any permanent, unshielded light or illumination source to cause glare
as viewed from any street, adjacent properties or operating aircraft;
c. Lessee shall not cause or permit the burial or storage above ground on the Leased Premises of
any hazardous waste or materials, as deemed by federal or state law, except in accordance with
applicable federal, state, county or city laws, orders, ordinances, regulations and rules, as may be
adopted or amended from time to time;
d. Lessee shall not cause or permit any use or activity on the Leased Premises that would create
a hazardous condition for aircraft operating at the Airport;
e. Lessee shall not allow the Leased Premises to be used for parking of motor vehicles,
motorcycles, or motor driven equipment by anyone other than customers, employees, or
contractors of Lessee except as may be authorized by the Airport Manager, with all such parking
being limited to areas designated by Lessor for such parking. Lessee shall not be in default for the
improper parking of vehicles over which neither Lessee nor any of its subtenants, customers,
employees, or contractors has any control;
f. Lessee shall not allow scheduled airline passenger operations to be conducted on the Leased
Premises.
g. Lessee shall not permit aircraft to access the Leased Premised from outside the Airport property
such that such access would constitute a "through the fence" operation prohibited by contracts
between Lessor and the State of Texas or the United States of America.
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4.03 Compliance with Minimum Standards: All activities conducted upon the Leased Premises, whether
by Lessee or its officers, employees, contractors, or agents, shall be in substantial conformance with the Code of
Ordinances of the City of Kerrville, Texas, "Airport Rules, Regulations, and Minirrmm Standards", as such regulations
exist or may be duly amended from time to time by the Lessor to the extent that such regulations apply to Lessee's
operations; provided however, that any use currently existing at the time this lease is executed will continue to be
permitted as long as such use does not violate federal or state law or regulations.
4.04 Grandfatherin~: Any use prohibited or limited under future federal or state law or regulations but
grandfathered as to current usage shall be considered grandfathered under this Lease as well.
4.05 Non-exclusive Uses: Lessee understands and acknowledges that, as to that part of the Airport not
included within the Leased Premises, the allowable uses permitted herein are on anon-exclusive basis with respect to
other potential providers of aeronautical services at the Airport.
ARTICLE 5.
OBLIGATIONS OF LESSEE WITH REGARD TO
CONSTRUCTION AND/OR IMPROVEMENTS
5.01 Additional Requirements:
a. In addition to the terms outlined in this lease, and as further consideration for Lessor's agreement
to extend the existing lease and to offer other incentives herein, Lessee agrees to make immediate
arrangements to connect to the City's sewer system for industrial waste, and to make environmental
improvements, including constructing any necessary pre-treatment facilities required for industrial
waste disposal prior to such connection. Additionally, Lessee shall immediately cease use and
operation of the industrial waste ponds and these shall thereafter be closed in compliance with this
Section.
b. Lessee has commenced a study to determine the required level of pretreatment needed, if any, for
connection of its industrial waste stream to the City's sewer system Such study shall be completed by
an engineering firm with the necessary expertise in such field and shall be completed no later than
March 31, 2004. Subsequently, all improvements required by the engineering study, the EPA, TCEQ
and the City for pretreatment shall be made and connection completed no later than September 30,
2004. Should Lessee fail to complete the referenced improvements by September 30, 2004, Lessee
agrees that Lessors, at their option may enter the premises and make such modifications to the
property as are necessary to comply with this provision, and Lessee further agrees to reimburse Lessor
for the full cost of such repairs and modifications. This remedy is not exclusive, and Lessors' decision
to pursue other remedies for breach are not precluded by this section.
c. In addition to the requirement that Lessee shall design and install all necessary pre-treatment
facilities and connect its industrial waste stream to the City's sewer system; Lessee also agrees upon
connection with the City's sewer system to immediately discontinue any use of the industrial waste
pond that is currently being used for depositing of industrial waste, upon such connection to the City's
sewer system and approval by the City. Within 30 days after cessation of the use of the ponds Lessee
shall submit a plan approved by the TCEQ for remediation of the ponds. Regardless of the foregoing
30-day timeline, Lessee agrees to, within one (1) year from the date upon which the sewer connection
is commenced, to complete its remediation of the waste pond in conformance with state, federal and
local law and regulations required to obtain final "closure" by the TCEQ and/or EPA. Lessee's failure
to complete the necessary work within the time frame allowed will cause Lessee to be in substantial
breach of the lease. Should Lessee fail to complete the necessary remediation within the time allowed
Lessee agrees that Lessors, at their option, may enter the premises and make such modifications to the
property as are necessary to comply with this provision, and Lessee further agrees to reimburse Lessor
for the full cost of such repairs and modifications. This remedy is not exclusive, and Lessors' decision
to pursue other remedies for breach are not precluded by this section.
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d. Lessee further agrees that damages for the potential breaches outlined in (a) and (b), above, are
not susceptible to quantification at this point, and that therefore it is not reasonable for the parties to
agree on a specific amount of liquidated damages for such breach. Lessee agrees therefore, that in the
event of a breach by Lessee of either or both waster water and environmental provisions above, it shall
be liable for liquidate damages in the amount equal to the amount that it costs the City to accomplish
such remediation.
5.02 Discharge to Sanitary Sewer: Pre-treatment: Lessee shall at no time discharge or allow the discharge
of any substance into City's sanitary sewer system that is otherwise prohibited by federal, state, or local law, ordinance,
or regulation. In the event that pre-treatment of waste is required prior to the discharge into the City's sanitary sewer
system of waste generated from the Leased Premises, Lessee must construct, maintain and operate such pre-treatment
facility at its sole expense in compliance with applicable federal, state, and local laws and regulations, and this contract.
5.03 Approval of Construction Plans: Not later than 60 days after March 31, 2004, and prior to any
construction, alteration, or changes to the Leased Premises, Lessee shall submit to the Airport Manager engineered plans
and specifications of the construction required by paragraph 5.01, and a site use plan with all drainage and utility services
as existing or proposed indicated thereon. Lessee is solely responsible for ascertaining the requirements of any and all,
federal, state, or local government agencies with regard to permit and application procedures necessary to obtain final
approvals and building permits prior to beginning any construction on the Leased Premises. Lessee shall not commence
any construction or improvements until it has received prior written approval from the Airport Manager and until the
Lessee or the Lessor or both have received the necessary approvals from the Federal Aviation Administration, the City's
Building Official, and such other governmental authorities as are necessary for the type of construction or improvements
contemplated. In those instances in which the Lessor is required to make application for construction or alteration of the
Airport due to the Lessor being the holder of the Airport Operating Certificate, the Lessor agrees to promptly and
diligently make and prosecute such applications. Once necessary approvals and pemut(s) have been obtained, Lessee
shall, after issuance of approval and pernut(s), solely and entirely at Lessee's cost, risk and expense, commence to
construct, build and erect the construction, alterations or improvements contemplated by Section 5.01 of this contract in
accordance with the final construction plans and specifications hereinabove mentioned.
5.04 Approval of Plans Not Assurance of Design Ouality: The approval by the City's Engineer or anyone
else acting on behalf of Lessor of any plans and specifications applies only to the conformity of such plans with
construction requirements and/or the general architectural and operational plan for the Leased Premises and the Airport.
The approval by the City Engineer of plans does not constitute approval of the quality of the architectural or engineering
work performed. Neither Lessor nor the City Engineer assumes any liability or responsibility for the architectural or
engineering design or for any defect in any building or improvement constructed from the plans or specifications.
Construction of any contemplated improvements shall be in accordance with the plans presented to and approved by the
City Engineer. All construction work shall be subject to inspection by a representative employed by the Lessor or an
inspector from the City's Engineering Department to determine that such work confom~s to the plans and specifications
approved by the Lessor.
5.05 Contractor's Insurance: At any time construction activities are undertaken on the Leased Premises,
Lessee shall require that its contractor or contractors keep in force insurance issued by a responsible insurance company
or companies authorized to conduct business in the State of Texas insuring the improvements during construction under
Completed Builder's All Risk Insurance, including fire, extended coverage, vandalism and malicious mischief, where
applicable, in an amount equal to the full insurable value of such construction as the same progresses in order to insure
continuity of construction and ultimate completion despite damage or destruction suffered during the course thereof.
The foregoing shall be made a part of any contract between Lessee and its contractor or contractors. In the event Lessee
does any construction work itself, it shall comply with the all-risk insurance provisions hereof.
5.06 Compliance With Building Codes and Federal Standards: All improvements made to the Revised
Leased Premises by Lessee shall comply with all applicable City Building Codes and Federal standards for construction
of airport improvements in effect at the time construction commences as well as all other applicable federal aviation
regulations, if any.

5.07 Encumbrance of Leasehold Estate: All improvements constructed by Lessee on the Leased Premises
shall be and remain the property of Lessee through the Lease term In connection with such construction Lessee may
obtain financing and Lessee shall have the right to grant mortgages to any bank, insurance company, other lending
institution, or any governmental agency, covering its leasehold interest created by this Lease, and in and to the
improvements and fixtures, furnishings, machinery and equipment located therein and in the event of a mortgage the
following terms and provisions shall apply:
a. Notices. If any holder of such leasehold mortgage (herein called "Mortgagee") shall have notified
Lessor in writing of the existence of one or more leasehold mortgages, Lessor shall give to such Mortgagee a
copy of any notices sent or required to be given to Lessee under the terms of this Lease after the date Lessor is
so notified. Such copy shall be addressed to such Mortgagee at the address last fiunished to Lessor. In the
event of receipt of any such notice from a Mortgagee, Lessor shall not be entitled to deliver a notice to Lessee
terminating this Lease or to exercise its right of re-entry unless a copy of any notice of default shall have been
given to such Mortgagee as herein above provided and the time specified above for the curing of such default
shall have expired without the same having been cured. Any Mortgagee shall have the right, but not the
obligation, to cure any such default or to perform any conditions or agreement to be performed hereunder by
Lessee, or to exercise any other right granted hereunder to Lessee, as attorney-in-fact for Lessee. The
performance by any such Mortgagee of any condition or agreement on the part of Lessee to be performed
hereunder will be deemed to have been performed with the same force and effect as though performed by
Lessee.
b. Performance of Lessee's Obli ag tions. Lessor will accept performance by any Mortgagee who has
theretofore notified Lessor in writing of the existence of such mortgage, within the following periods of time
(which shall be concurrent with the time periods set forth above) of any term, covenant or condition to be
performed by Lessee:
as to any payment of money, within thirty (30) days after notice of such default is delivered
to such Mortgagee; and
ii. as to all other defaults, within ninety (90) days after such notice is delivered to such
Mortgagee; provided, however, that with respect to any such default which cannot
reasonably be cured within such ninety (90) day period, Lessor will accept performance by
any Mortgagee if such Mortgagee has commenced to cure such default within ninety (90)
days after notice is delivered to such Mortgagee and is diligently and continuously
proceeding therewith.
Lessor additionally agrees not to exercise any of its rights to terminate this Lease during such reasonable time
as any Mortgagee shall require in order to exercise its rights under such mortgage so long and only so long as
the Mortgagee proceeds reasonably with its remedies under the mortgage on the leasehold estate and thereafter
prosecutes the same with all due diligence to cure any non-monetary default which cannot be cured within
ninety (90) days.
c. New Lease. Lessor shall also be obligated to give to any Mortgagee who has notified Lessor in
writing of the existence of its mortgage, any notice of termination given by Lessor to Lessee, simultaneously
with giving such notice to Lessee. In the event this Lease is terminated by Lessor, or by operation of law with
or without the intention of Lessor to so terminate, the Mortgagee shall then have the right within ninety (90)
days after receipt by Mortgagee of such termination notice, or after receipt by law, to notify Lessor in writing
that such Mortgagee or any designee or nominee of such Mortgagee elects to enter into a news lease (herein
called the "New Lease") leasing the Leased Premises from the date of termination of this Lease for the
remainder of the original Lease Term, at the rent and upon the same terms, covenants, and conditions as are
herein set forth, with the same priority as this Lease and vesting in such Mortgagee, its designee or nominee, all
of the rights, titles, interest, powers and privileges which Lessee held hereunder prior to any default hereunder.
Lessor shall, on such written election by a Mortgagee, execute and deliver such New Lease to such Mortgagee
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or its designee or nominee within ninety (90) days after receipt of such request, which New Lease shall be
effective as of the date of the termination of Lease, provided that such Mortgagee shall (i) within ten (10) days
after delivery to Lessor of notice of such election pay to Lessor all rent and other sums due under this Lease up
to and including the date of commencement of the term of such New Lease, but excluding any damages or
other claim for rent attributable to the period of time covered by the term of such New Lease, (ii) pay Lessor all
reasonable expenses and attorney's fees incurred by Lessor in connection with the preparation, execution and
delivery of such New Lease. Nothing contained in this Section shall be deemed to relieve Lessee from any
liability it may have as a result of the breach of any provision under this Lease, but all rental and other amounts
paid to Lessor under the New Lease shall be applied in reduction of Lessee's obligations hereunder. If there is
more than one mortgage outstanding at the time of the termination of this Lease, Lessor shall not be required to
execute and deliver such New Lease to any Mortgagee, or its nominee or designee, other than to the Mortgagee
which Lessee has designated to Lessor in writing as the holder of first lien priority or by an agreement of
records between all such Mortgagees covering their respective rights with respect to such New Lease. Lessor,
however, shall not be obligated to deliver physical possession of the Leased Premises and improvements to the
Mortgagee or its designee or nominee until such parties shall pay all amounts (including any fees or use
charges) due Lessor. In no event shall the Mortgagee be under any obligation or liability whatsoever with
respect to any such New Lease entered into by its designee or nominee.
d. Mortgagee's Possession: In the event any Mortgagee shall, by foreclosure of its mortgage lien or
otherwise, acquire and become the owner of Lessee's rights and interests under this Lease, it is expressly
agreed that such Mortgagee shall be obligated and liable under this Lease only during the period of its
occupancy of the Leased Premises and shall have no further obligation or liability under this lease subsequent
to its assignment hereof or otherwise beyond the period of its occupancy of the Leased Premises. No
acquisition, by foreclosure of a mortgage lien or otherwise, of Lessee's rights and interests under this Lease by
any Mortgagee shall release Lessee of any liability which it may have as a result of any provisions of this
Lease.
e. Estoppel Letter: Lessor shall, if required, confirm to Mortgagee that this Lease sets forth the entire
agreement of the parties hereto, is in full force and effect in accordance with its terms, and has not been
amended, modified or assigned, except as herein set forth and state what, if any, offsets or credits against rentals
exist, and what rentals are due under this Lease to the date thereof, and what, if any, defaults by either party or
ground for cancellations exist under the Lease.
f. Foreclosure. If such Mortgagee succeeds to the interest of the Lessee under this Lease, it shall be
bound to all of the terms, covenants, and conditions set forth herein from and after its succession to such
interest; provided that it and its successors and assigns shall have no corporate or personal liability for the
performance of the obligations of the Lessee hereunder, and its liability and that of its successors and assigns
for any and all defaults of the Lessee under the terms of the Lease shall be limited to its interest in the Leased
Premises, including all improvements, and connection with any foreclosure under the Deed of Trust, or transfer
in lieu thereof, or if subsequent thereto, Mortgagee is the successor or in the case of the foreclosure of the Deed
of Trust, the Trustee shall be authorized and may assign, transfer or sublease this Lease to any other party
without the consent or approval of Lessor; provided however, that any subsequent assignee shall thereupon be
bound by the terms and conditions of this Lease.
5.08 Ownership of Buildings. Improvements and Fixtures: Deleted.
5.09 Failure to Construct Improvements: Deleted.
5.10 Availability of Sanitary Sewer: Deleted.
/~"
ARTICLE 6.
REPAIRS, MAINTENANCE AND RESTORATION
6.01 Maintenance by Lessor: Lessor shall, at Lessor's sole expense, keep in good repair, condition and
appearance the taxiways and roadways which have been or may be constructed by Lessor, or which are within the
Lessee's leasehold area. Lessor shall commence required repairs as soon as reasonably practicable after receiving
written notice from Lessee thereof.
6.02 Maintenance by Lessee: Lessee shall, at Lessee's sole expense, keep the Leased Premises and all
improvements of any kind, which may be existing at the commencement of the Lease Term or erected, installed, or
made thereon by Lessee after commencement of the Lease Term, not required herein to be maintained by Lessor, in
at least as good repair, condition and appearance as such improvements existed at the commencement of the lease,
normal wear and tear excepted. Lessor shall be the sole judge of the quality of Lessee's maintenance; provided,
however, Lessor shall not unreasonably withhold acceptance of said repairs or maintenance. Upon written notice by
Lessor to Lessee, Lessee shall be required to perform such reasonable maintenance under this Section 6.02 as Lessor
considers necessary. If Lessee does not undertake such maintenance within ten (10) days after receipt of written
notice, Lessor shall have the right to enter on the Leased Premises and perform the necessary maintenance, the cost
of which shall be borne by Lessee. Lessee shall pay such amounts to Lessor within 60 days of receiving written
notice from Lessor of the cost of such repair and/or maintenance. Lessee's failure to make timely payment shall
constitute a breach of this Agreement. Amounts due and payable under this provision shall incur an interest penalty
of 10%, or the highest interest rate allowed by law, whichever is less, beginning on the 61S` day after Lessee received
notice from Lessor of amounts due under this provision.
6.03 Release of Premises to Lessor on Termination of Lease: On the last day of the Lease Term, or on
any sooner termination, Lessee shall surrender the Leased Premises to Lessor in the same condition as received and
clean and free of debris, except for fire and casualty damages or ordinary wear and tear. Lessee shall be responsible
for the cost of any damage to the premises, or any cleanup required to be made after the premises are released to
Lessor upon termination of this Lease, other than repair or cleanup that would reasonably be required by ordinary
wear and tear. Lessee shall pay Lessor the cost of any repair or cleanup required over and above that which is
reasonably required by ordinary wear and tear within 60 days of receiving written notice from Lessor of the cost of
such repair and/or cleanup. Amounts due and payable under this provision shall incur an interest penalty of 10%, or
the highest interest rate allowed by law, whichever is less, beginning on the 61St day after Lessee received notice
from Lessor of amounts due under this provision.
6.04 Ownership of Buildings, Improvements and Fixtures: All buildings existing on the Leased
Premises at the inception of this Lease and previously owned by Lessee shall remain the property of Lessee under
this Lease. Any and all buildings, improvements (including, but not limited to all aprons, taxiways and roadways),
additions, alterations, and fixtures existing on the commencement date of the Lease or constructed or placed on any
part of the Leased Premises or New Property during the Lease Term by Lessor or Lessee, shall remain thereon, and
shall not be removed by Lessee or any sublessee without the written consent of Lessor. Except as otherwise
provided in this Lease or an Addendum hereto, any and all buildings, improvements, additions, alterations, and
fixtures thereon shall become the sole property of Lessor upon termination of this Agreement without compensation
to Lessee, it being understood and agreed by Lessee that the transfer of title to the Lessor of the buildings and
improvements located on the subject premises at the end of the Lease Term is additional consideration for this
Agreement. Notwithstanding the above, Lessee shall have the right at any time during Lessee's occupancy of the
subject premises, or within a reasonable time thereafter, to remove any and all furniture, machinery, equipment, or
other trade fixtures, owned or placed by Lessee, in, under, or on the subject premises; provided, however, prior to
the termination of the Lease Term, Lessee shall repair any damage to any buildings or improvements on the subject
premises resulting from their removal. Any such personal property items or trade fixtures which are not removed
within sixty (60) days after the termination date of this Agreement shall become the property of Lessor as of that
date.
10
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6.05 Trash and Waste Removal: Lessee agrees to cause to be removed from the Leased Premises, at its
own expense, all waste, garbage and rubbish, and agrees not to deposit same on the Leased Premises except
temporarily in waste or garbage containers provided by Lessee at Lessee's expense. Lessee further agrees that
Lessee will store all parts, supplies, and other materials on the interior of buildings located on the Leased Premises,
provided, however, that any parts or supplies which must be kept outside because of volatility of the supply item or
the size of the part will be kept out of view of the public traveling on public rights of way or other surrounding
tenants by installation of fencing or other means of screening approved by the Airport Manager.
ARTICLE 7.
ACCESS TO AND USE OF AIRPORT
7.01 Access to Airport: Lessor shall maintain all roads on the Airport giving access to the Leased Premises
in good and adequate condition for use by cars and trucks and shall maintain free and uninterrupted access to the Leased
Premises over said roads at all times; provided, however, Lessor shall not be in default of this Agreement if access is
interrupted for any of the reasons set forth in Section 16.03, below.
7.02 Right to Use Airport: Lessee and Lessee's officers, employees, agents, contractors, invitees, and
guests shall have the right to use that part of the Airport and its facilities not included within the Leased Premises in
common with others authorized to do so. Such use shall be subject to any and all applicable federal, state or local laws,
ordinances, statutes, rules, regulations, or orders of any governmental authority, lawfully exercising jurisdiction over the
Airport or the activities and business operations of Lessee, including any limitations, restrictions or prohibitions affecting
the aviation activities or operafions of Lessee.
7.03 Vehicular Operations on the Airfield: No vehicles of Lessee, its officers, employees, agents,
contractors, invitees, and guests will be operated on, or cross, the runways of the Airport except pursuant to the Airport
Rules and Regulations.
7.04 Airport Certification Rules and Re ations: Lessee shall comply with such rules that pertain to its
operation on the Airport under the Airport Certifications Rules of Federal Aviation Regulations Part 139, as amended
[ 14 CFR Part 139, as amended], to the extent such regulations are applicable to the operation of the Airport.
7.05 Airport Security Rules and Regulations: Lessee, its officers, employees, agents, contractors, invitees,
and guests shall comply with all federal and local Airport Security Regulations adopted by the Lessor as such rules and
regulations exist or may hereafter be amended. LESSEE AGREES TO INDEMNIFY AND HOLD HARMLESS THE
LESSOR ITS OFFICERS AND EMPLOYEES, from any charges, fines or penalties that may be assessed or levied by
the FAA or the Texas Department of Transportation by reason of the NEGLIGENT OR INTENTIONAL FAILURE OF
LESSEE, ITS OFFICERS, EMPLOYEES, AGENTS, CONTRACTORS, INVITEES, AND GUESTS to comply with
such Airport Security Regulations.
7.06 14 C.F.R. Part 77 Requirements: Lessee agrees to comply with the notification and review
requirements set forth in Part 77 of the Federal Aviation Regulations [14 CFR Part 77] in the event any future structure,
antenna or building is planned for the Leased Premises, or in the event of any planned modification of any present or
future building, antenna or structure located on the Leased Premises.
7.07 Control of Structures: Lessee shall not erect nor permit the erection of any structure or object, nor
permit the growth of any tree on the Leased Premises which highest point is above a mean sea level elevation established
by the FAA and Lessor as a height limitation on such structures or objects. Lessor reserves the right to enter upon the
Leased Premises and to remove the offending structure or object and cut the offending tree at Lessee's expense.
7.08 Aerial Approaches: Lessor reserves the right to take any action it considers necessary to incorporate
and/or protect the existing or future aerial approaches of the Airport against obstruction together with the right to modify
existing buildings or structures or to prevent Lessee from erecting, modifying or pemutting to be erected any building or
other structure on or adjacent to the Airport which, in the opinion of the Lessor, would limit the usefulness of the Airport
11
~,,.'
or constitute a hazard to aircraft. Any action undertaken pursuant to this provision will be at Lessor's sole cost and
expense.
7.09 Right of Overflight: There is hereby reserved to the Lessor, for the use and benefit of the public, a
right of flight for the passage of aircraft above the surface of the Leased Premises, together with the right to cause in said
airspace such noise as may be inherent in the operation of aircraft, now known or hereafter used for navigafion of or
flight in the air, using said airspace for landing at, taking off from or operating on the Airport.
ARTICLE 8.
INSURANCE
8.01 Lessee's Minimum Insurance Amounts: Lessee shall obtain and maintain continuously in effect at all
times during the Lease Term, at Lessee's sole expense, at least the following minimum insurance with a carrier or
carriers licensed to do business in the State of Texas and satisfactory to the Lessor:
a. Commercial General Liability Insurance against claims for bodily injury, death, or property
damage occurring on, in or about the Leased Premises, or any other portion of the Airport, in at
least the amount of $1,000,000.00 per individual, $2,000,000.00 per occurrence and $1,000,000.00
with respect to property damage. In the event that the Texas Torts Claims Act, as amended (Tex.
Civ. Prac. & Rem. Code §101.001, et seq.) or its successor statute, is amended to increase the
amount of liability of municipalities for acts described in said Act above the levels set forth in this
Section 8.O1.A, Lessee agrees to increase the amount of insurance coverage required by this
Section 8.O1.A. to an amount sufficient to provide coverage to the level of potential liability per
occurrence under said Act; and
b. Automobile Liability Coverage on all motor vehicles owned and/or operated by Lessee or its
employees on the Leased Premises or other Airport property in amounts of not less that
$500,000.00 combined single limit or equivalent; provided, however, separate automobile
coverage shall not be required if such coverage is provided under Lessee's comprehensive general
liability policy.
c. Property and Casualty Insurance on improvements constructed on the property, whether
owned by Lessee or Lessor, insuring against loss or damage to improvements due to fire, lightning
and all other perils included in standard extended coverage policies, and vandalism and malicious
mischief, all in amounts of not less than ninety percent (90%) of replacement value;
d. If required pursuant to the Code of Ordinances of the City of Kerrville or its successor
ordinance, Hangarkeeper's Liability coverage in the minimum amount of $1,000,000.00 per
occurrence unless similar coverage exists under the required general liability policy;
e. Environmental Liability Coverage in the amount of not less than $1,000,000.00 per
occurrence.
8.02 Lessee's Coverage Primary: All insurance herein required shall apply as primary and not in excess of
or contributing with other insurance which the Lessee may carry. Insurance provided pursuant to Section 8.01 shall
name the Lessor as an additional insured or loss payee as the case may be. The comprehensive general liability policy as
provided in paragraph 8.O1.A. shall provide contractual liability coverage sufficiently broad so as to include the liability
assumed by Lessee in the indemnity and hold harmless provisions included in Article 9 of this Agreement.
8.03 Contents of General Liability Policy: Lessee's Comprehensive General Liability policy shall protect
the Lessor and Lessee against any and all liability to any person or persons whose property damage or personal injury
arises out of or is in connection with the occupation, use, or condition of the Leased Premises or resulting from any
injury or damage occurring on or about the roads, driveways or other public areas of the Leased Premises used by
12
Lessee, its officers, employees, agents, contractors, invitees, and guests at the Airport, whether or not such damage or
injury is the result of negligence of the Lessee or its officers, employees, agents, contractors, invitees, and guests.
8.04 Cancellation; Certificates of Insurance: Lessee's insurance as required by this Agreement shall not be
subject to cancellation or material alteration until at least thirty (30) days written notice has been provided to the Lessor.
Lessee shall fiunish to the Lessor, annually, Certificates of Insurance showing Lessor as an additional insured and
evidencing that all of the herein stated requirements have been met.
8.05 Lessor's Right to Purchase Insurance: In the event such insurance as required by Section 8.01, above,
shall lapse, the Lessor reserves the right to obtain such insurance at Lessee's expense. Upon demand from Lessor,
Lessee shall reimburse Lessor for the full amount of the premium paid on Lessee's behalf.
ARTICLE 9
INDEMNITY
9.01 Generallv: LESSEE AGREES TO INDEMNIFY, DEFEND, AND HOLD HARMLESS THE CITY,
COUNTY, AND THEIR RESPECTIVE OFFICERS, EMPLOYEES AND AGENTS from and against any and all loss,
damage, liability, claims, demands, costs, charges, expenses and causes of action including all costs of defense thereof
(and including reasonable attorney fees) of whatsoever character which the Lessor may incur, sustain, or be subjected to
on account of loss, damage to property and loss thereof and for bodily injury to or death of any persons (including but
not limited to the property, employees, customers, contractors, agents, invitees and licensees of each party hereto)
ARISING OUT OF THE CONDUCT OR OPERATIONS, NEGLIGENT OR OTHERWISE, OF LESSEE, ITS
DIRECTORS, OFFICERS, EMPLOYEES, SUBLESSEES, CONTRACTORS, SUBCONTRACTORS OR AGENTS
on the Leased Premises. The Lessor will give Lessee prompt notice of any claim made or suit instituted which in any
way affects or might affect the Lessor. Similarly, Lessee will accord the Lessor the same notice and rights.
9.02 Environmental Matters: LESSEE AGREES TO INDEMNIFY, DEFEND, AND HOLD
HARMLESS CITY, COUNTY, AND THEIR RESPECTIVE OFFICERS, EMPLOYEES, AND AGENTS from and
against any loss, costs, damages, claims, assessments, fines, and/or penalties (including reasonable attorney's fees)
(together referred to as "Losses") which may be incurred by or levied against ANY OF THOSE HEREIN
INDEMNIFIED BY ANY THIRD PARTY, INCLUDING BUT NOT LIMITED TO, THE U.S. ENVIRONMENTAL
PROTECTION AGENCY OR THE TEXAS COMMISSION ON ENVIRONMENTAL pUALITY OR THEIR
SUCCESSOR AGENCIES as the result of Lessee's construction, operation, or maintenance of any aircraft painting and
refinishing facility on the Leased Premises. As used in this Section 9.02, the term Losses shall include, but not be
limited to, any losses, costs, damages, claims, assessments, fines or penalties, including but not limited to cost of
remediation, resulting from the contamination of any soil, water, or air by hazardous materials discharged by Lessee, or
by Lessee's officers, employees, agents, sublessees, invitees, licensees, guests, trespassers, or contractors, either
intentionally or negligently, into the soil, water, or air.
ARTICLE 10.
UTILITIES
Lessee shall be solely responsible for the payment of all electric, telephone, water, wastewater, refuse, natural
gas and other public utility services used on the Leased Premises.
ARTICLE 11.
SIGNS
11.01 Consent Required: Except with the prior written consent of the Airport Manager, which shall not be
unreasonably withheld, Lessee shall not erect, maintain or display any signs or any advertising at, or on, the exterior part
of structures on the Leased Premises, or inside any buildings located on the Leased Premises so as to be visible through
the window or exterior doors thereof.
13
I ,~
11.02 Removal on Ternunation: Upon the temunation of this Agreement, Lessee shall remove, obliterate or
paint out, as the Lessor may direct, any and all signs and advertising on the Leased Premises or elsewhere at the Airport,
and in connection therewith shall restore the Leased Premises to the same condition as prior to the placement of any such
signs or advertising. In the event that there is a failure by Lessee to so remove, obliterate or paint out each and every
sign or advertising and so to restore the Leased Premises, the Lessor may, at its option, perform the necessary work at the
expense of Lessee, and the charge therefor shall be paid by Lessee to the Lessor on demand. In certain circumstances,
the Lessor may elect to allow specific signs to remain at the termination of this Agreement. Such signs shall be
identified and agreed upon mutually, in writing, by Lessee and Lessor.
ARTICLE 12.
ASSIGNMENT AND SUBLEASING
12.01 Assignment by Lessee: At no time shall Lessee sublease any portion of the Leased Premises or assign
its interests or obligations in this Lease Agreement without the written consent of Lessor, which consent shall not be
unreasonably withheld or denied. Any such assignment or attempted assignment without Lessor's consent to same shall
be void. If this Lease is assigned or if the Leased Premises are subleased, in whole or in part, Lessee shall be released
from the further performance by Lessee of the covenants, conditions and agreements contained in this Lease, and shall
not remain liable under this Lease nor for the performance and fulfillment of the covenants, conditions, terms,
agreements and obligations contained in this Lease, as to the portion so assigned or subleased; provided that any
assignment or sublease by Lessee shall obligate the assignee or sublessee to perform all the covenants, conditions, terms,
agreements and obligations that Lessee would otherwise be obligated to hereunder, and that any rent paid under any such
assignment or sublease by the assignee or sublessee shall be paid to Lessor.
12.02 Assignment by Lessor: Lessor may transfer and assign this Agreement to any successor in interest of
Lessor to whom the Airport may be sold or assigned; provided that the successor in interest shall execute and deliver to
Lessor, with copy to Lessee, an instnunent assuming the lawful obligations of Lessor under this Agreement.
ARTICLE 13.
TAX LIENS
Lessee shall be solely responsible for the collection and payment of all applicable federal, state, and local taxes,
including, but not limited to, sales, use, fuel, amusement, airport rental car surcharge, or excise tax required to be
collected and paid over by Lessee to the appropriate taxing authority. Furthermore, Lessee shall be responsible for the
payment of any applicable ad valorem taxes and any taxes on Lessee's personal property located on the Leased Premises.
Lessee shall at no time permit the foreclosure of any tax liens to Lessee's leasehold interest in the Leased Premises or the
buildings, fixtures, or other improvements located on the Leased Premises.
ARTICLE 14.
DEFAULT AND REMEDIES
14.01 Default by Lessee: The following shall be deemed to be events of default by Lessee under this
Agreement:
a. Lessee shall fail to pay when due any installment of rent or any other payment
required pursuant to this Agreement;
b. Lessee shall abandon any substantial portion of the Leased Premises;
c. Lessee or any guarantor of Lessee's obligations hereunder shall file a petition or be adjudged
bankrupt or insolvent under any applicable federal or state bankruptcy or insolvency law or admit
that it cannot meet its financial obligations as they become due, or a receiver or trustee shall be
appointed for all or substantially all of the assets of Lessee or any guarantor of Lessee's
obligations hereunder;
14
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d. Lessee or any guarantor of Lessee's obligations hereunder shall make a transfer in fraud of
creditors or shall make an assignment for the benefit of creditors;
e. Lessee shall do or permit to be done any act that results in a lien being filed against the
Leased Premises;
f. The liquidation, termination, dissolution of Lessee or any guarantor of Lessee's obligations
hereunder; or
g. Lessee shall be in noncompliance with any other term, provision or covenant of this
Agreement, other than those specified in subparts A. through F. above.
14.02 Failure to Construct Improvements: Lessor shall have the right, exercisable at its sole option, to
terminate this Lease Agreement if:
A. Lessee fails to commence construction of the improvements required to conduct Lessee's
operations on the Leased Premises or New Property as required in Section 5 of this Agreement; or
B. After construction of the required improvements has commenced, Lessee fails to complete
construction of the improvements on or before the second anniversary of commencement of
construction.
14.03 Termination Upon Lessee's Default: Except for an event of default resulting from the filing of a
petition in bankruptcy, if an event of default by Lessee shall continue for ten (10) days after service of notice of such
event of default by Lessor to Lessee, Lessor may give notice of its election to terminate this Agreement, and thirty (30)
days after service of such notice of election to terminate, this Agreement shall cease and terminate as if the day of
Lessor's election were the day originally fixed for ternnation of this Agreement. Such election to temunate by Lessor
shall not be construed as a waiver of any claim it may have against the Lessee consistent with such termination. If,
however, the event of default is of such nature that it cannot reasonably be remedied within ten (10) days after receipt of
notice by Lessee, and if the Lessee shall have commenced curing such event of default within ten (10) days after receipt
of such notice, and shall continuously and diligently proceed in good faith to cure such event of default, then the period
for curing the event of default shall be extended for such length of time as is reasonably necessary to cure the event of
default. Furthermore, if the event of default is the result of Lessee filing a petition in bankruptcy, then termination shall
not occur unless the trustee in banlmiptcy has failed to ratify this lease within sixty (60) days following the date of filing
of the petition in bankruptcy.
14.04 Abandonment of Business by Lessee: Lessee further agrees that the abandonment for a period of
thirty (30) days by Lessee of the conduct of its business activities at the Airport shall terminate Lessee's rights under this
Agreement. By so temunating this Agreement, Lessor does not waive any other claim or rights against Lessee. For the
purposes of this paragraph, the term "abandonment" shall mean the failure of Lessee to be open for business on the
Leased Premises except in the case of war, strike, catastrophe or causes beyond Lessee's control.
14.05 No Remedy Exclusive: No remedy herein conferred upon or reserved to the Lessor or Lessee is
intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative
and shall be in addition to every other remedy given under this Agreement or hereafter existing under law or in equity.
No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or
shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often
as may be deemed expedient. In order to entitle the Lessor and Lessee to exercise any remedy reserved to it in this
section, it shall not be necessary to give any notice, other than such notice as maybe herein expressly required.
14.06 No Waiver of Breach: Lessor's failure or delay in declaring the existence of an event of default by
Lessee shall not be construed as a waiver thereof, nor shall it be construed so as to waive or to lessen the right of the
Lessor to insist upon the perfom~ance by Lessee of any terns, covenant or condition hereof, or to exercise any rights
., , ~ ~
given it on account of any such event of default. A waiver of any particular event of default shall not be deemed to be a
waiver of the same, similar of any other subsequent event of default.
14.07 Expeditious Action. Notwithstanding any provision as to notice in this Agreement herein contained, if
in Lessor's reasonable judgment the continuance of any event of default by Lessee for the full period of the notice to cure
the event of default will jeopardize the operation of the Airport or the rights of the Lessor or the other Airport tenants,
Lessor may, without notice, elect to perform those acts in respect to which Lessee is in default. Lessee shall reimburse
Lessor for any reasonable and necessary costs incurred by the Lessor pursuant to this Section 14.06.
14.08 Default in Rent Payment: Notwithstanding anything to the contrary above, if there should be any
default in the payment by Lessee of any rents, fees or charges due to Lessor as provided herein, the Lessor may give
Lessee a ten (10) day written notice to pay all sums then due or cease operations, and if such payment is not made within
such ten (10) day period or such longer time as Lessor may set forth, Lessee's rights under this Agreement shall
terminate. By so terminating this Agreement, the Lessor does not waive any other claim or rights against Lessee.
However, if such monetary default consists only of underpayment of a disputed and unliquidated sum, under $1,000.00,
the temunation of this Agreement may be forestalled by tender of the liquidated sum and deposit of the amount in
controversy in escrow.
ARTICLE 15.
TERMINATION BY LESSEE
Except for the payment by Lessee to Lessor of rents or other amounts past due or accrued but not yet due,
Lessee shall have the right to terminate this Agreement in its entirety, and all rights and obligations ensuing there from
immediately upon the occurrence of the following:
a. The issuance of any order, rule or regulation of the Federal Aviation Administration, or its
successor Federal Agency, or other competent government authority, Federal or State, or the
issuance and execution of any judicial process by any court of competent jurisdiction, materially
restricting for a period of at least sixty (60) days, the use of the Airport for aeronautical purposes;
provided that none of the foregoing is due to any fault of Lessee; or
b. The material restriction of the Lessor's operation of the Airport by action of the Federal
Government, or any department or agency thereof, under its wartime or emergency powers, and
the continuance thereof for a period of not less than sixty (60) days; provided however, that
without prejudice to the rights of Lessee to terminate as above provided, the Lessor and Lessee
may mutually agree to adjust fees and charges; or
c. Material restriction of the operation of the Airport arising from Lessor's failure to maintain
and keep in repair the landing area of the Airport.
d. In the event that Lessor shall breach any of the provisions of the Lease, shall default under
this Lease and/or shall fail to perform any of its obligations under this Lease; provided that in any
such event Lessee may elect to request Lessor to cure and eliminate any such breach, default or
failure and in such case the rent obligation payable by Lessee under this Lease shall be released
and abated so long as such default, breach and/or failure persists but at any time thereafter Lessee
may elect to terminate this Lease if such default, breach and/or failure is not cured and eliminated.
e. In the event that any of the matters specified in Sections 4.02 or 4.03 materially and adversely
affect Lessor's use of the Leased Premises for the purposes set forth in Section 4.01.
If Lessee terminates this Lease for any of the reasons set forth in this Article 15, Lessor shall promptly repay
Lessee any rent previously paid by Lessee attributable to the period following the date of such termination.
16
ARTICLE 16.
MISCELLANEOUS PROVISIONS
16.01 Damages: LESSEE HEREBY RELEASES BOARD. CITY, COUNTY, AND THEIR
RESPECTIVE OFFICERS, EMPLOYEES, AGENTS AND CONTRACTORS FROM LIABILITY TO LESSEE FOR
ANY DAMAGE TO THE PERSONAL PROPERTY OF LESSEE including its aircraft, caused by the act of negligence
of any of those hereby released or any other user of the Airport, the bursting leaking or mm~ing of any cistern, water
closet, waste pipe, tank, water, gas, steam or sewer pipe, or oil and/or gas pipelines in, above, upon or about the Leased
Premises, the Airport, or any part thereof, any heating, gas or electrical device, or vehicle, or any flooding or other
weather related casualty. This release also specifically includes a release of liability for damage to personal property of
Lessee contained within Bldg. 2-1 as identified in Exhibit "A".
16.02 Quiet Enjoyment: Upon the performance of the covenants and agreements on the part of the Lessee to
be performed hereunder, the Lessee shall peaceably have and enjoy the Leased Premises, appurtenances, facilities,
licenses and privileges granted in this Agreement.
16.03 Force Majeure: Neither the Lessor nor Lessee shall be deemed in violation of this Agreement if it is
prevented from performing any of its obligations hereunder except the obligation to pay rent by reason of strikes,
boycotts, labor disputes, embargoes, shortages of materials, act of God, acts of the public enemy, act of superior
governmental authority, weather conditions, floods, riots, rebellions, acts of sabotage or any other circumstances for
which it is not responsible or which are not in its control.
16.04 No Partnership, Agency, Joint Venture: It is mutually understood and agreed that nothing in this
Agreement is intended or shall be construed as in any way creating or establishing any partnership, joint venture, agency,
or any other relationship between the Lessor and Lessee other than landlord and tenant, respectively.
16.05 hLSpection by Lessor: Lessor may enter upon the Leased Premises at any reasonable time for any
purpose necessary, incidental to or connected with the performance of Lessor's obligations hereunder, or in the exercise
of its govemmental functions, for fire protection or security purposes, or for inspecting or maintaining the Leased
Premises, or doing any and all things Lessor is obligated to do, or which may be deemed by Lessor necessary or
desirable for the proper conduct and operation of the Airport or the protection of Lessor's interests.
16.06 Conformance with Rules and ReQUlations: The use of the Airport by Lessee shall be subject to any
and all rules, regulations and ordinances which are now in force or which may be hereafter adopted by the Lessor with
respect to the operation and use of the Airport, but no such rules, regulations, or ordinances shall increase the Rent
payable by Lessee under this Lease or otherwise materially and adversely affect Lessee's tenure of the Leased Premises
under this Lease. Furthermore, this Agreement and Lessee's use of the Airport shall be subject to any and all applicable
laws, ordinances, resolutions, statutes, rules, regulations or orders of any Federal, State or local governmental authority
lawfully exercising jurisdiction over the Airport or the activities and business operations of Lessee, including any
limitations, restrictions or prohibitions affecting the aviation activities or operations of Lessee.
16.07 Licenses and Permits: Lessee hereby agrees that it shall, at its own expense and cost, procure and
obtain all lawfully required licenses and pemuts, certificates and other authorizations required by any governmental
authority, in connection with or covering the operations or activities permitted to be performed by it under the provisions
of this Agreement.
16.08 Notices: Notices provided for in this Agreement shall be either hand delivered or sent by certified
mail, return receipt requested, postage prepaid, and properly addressed as follows:
If to Lessor: Airport Manager
c/o City of Kerrville
800 Junction Highway
Kerrville, Texas 78028
AND
17
City Manager
800 Junction Highway
Kerrville, Texas 78028
County Judge
Kerr County Courthouse
700 Main Street
Kerrville, Texas 78028
If to Lessee: J. Nelson Happy
President, Mooney Aerospace Group, Ltd.,
On behalf of
Mooney Airplane Company, Inc.
Louis Schreiner Field
Kerrville, Texas 78028
The parties may change the representative or address for delivery of notices from time to time by sending written notices
to the other party. All notices shall be in writing and effective only upon actual receipt.
16.09 Governing Law and Venue: This Agreement and all of the transactions contemplated herein shall be
governed by and construed in accordance with the laws of the State of Texas. Venue for any cause of action shall be in a
court of competent jurisdiction in Kerr County, Texas.
16.10 Severability: If any provision of this Agreement is invalid or unenforceable, this Agreement shall be
considered severable as to such provision, and the remainder of this Agreement shall remain valid and binding as though
such invalid or unenforceable provision were not included herein.
16.11 Captions: Section headings are inserted herein only as a matter of convenience and for reference, and
in no way defines, limits or describes the scope or intent to any provision herein.
16.12 Use of Language: Words of any gender used in this Agreement shall be held and construed to include
any other gender, and words in the singular shall be held to include the plural, unless the context otherwise requires.
16.13 Counterparts: This Agreement may be executed in multiple counterparts, each of which shall be
deemed as original, and all of which constitute but one and the same instrument.
16.14 Development of the Airport: Future development, changes, alterations, modifications or improvement
to the Airport shall be at the sole discretion of the Lessor, subject only to such notification to Lessee that the Federal
Aviation Administration may dictate. The Lessor will strive not to hinder the Lessee's operations in carrying out the
provisions of this paragraph.
16.15 Relocation of Facilities: In the event Lessor requires any portion of the Leased Premises for expansion
or development of the Airport, Lessor reserves, at its sole expense, the right, on six (6) months' notice, to relocate Lessee
to substantially similar facilities at another generally comparable site located on the Airport. Lessor reserves the right to
retake minor unimproved portions of the Leased Premises, such as will not substantially interfere with the Lessee's
improvements or operations, without compensation to the Lessee, provided that the rent shall be abated as to that portion
of the Leased Premises which is taken back by Lessor.
16.16 Subordination to State or Federal Agreements: This Agreement shall be subordinate to the provisions
and requirements of any existing or future agreement between the Lessor and the United States or the Lessor and the
State of Texas, relative to the development, operation or maintenance of the Airport.
,w `!~'~/
16.17 No Exclusivity on Aeronautical Services: Nothing herein contained shall be construed to grant or
authorize the granting of the exclusive right to provide aeronautical services to the public as prohibited by Section 308(a)
of the Federal Aviation Act of 1958, as amended.
16.18 Discrimination Prohibited: The Lessee, for itself, its officers, legal representatives, successors-in-
interest and assigns, as a part of the consideration hereof, agrees (1) that no person on the grounds of race, color, sex,
national origin, veteran status or disability shall be excluded from participation in, denied the benefits of or be otherwise
subjected to discrimination in the use of the Leased Premises; (2) that in the construction of any improvements on, over
or under the Leased Premises and the furnishing of services thereon, no person on the grounds of race, sex, color,
national origin, or disability shall be excluded from participation in, denied the benefits of or otherwise be subjected to
discrimination; (3) that the Lessee shall use the Leased Premises and the Airport in compliance with all other
requirements imposed by, or pursuant to, Title 49, Code of Federal Regulations, Department of Transportation, Subtitle
A, office of the Secretary, Part 21, Nondiscrimination in Federally-Assisted Programs of the Department of
Transportation-Effectuation of Title VI of the Civil Rights Act of 1964, and as said regulations maybe amended. In the
event of breach of any of the above nondiscrimination covenants, the Lessor shall give notice of the alleged breach and
state with particularity the basis of, and the facts on which, the alleged breach has occurred. Lessee shall have at least
thirty (30) days in which to cure said alleged breach by eliminating/ceasing any such breach, or such additional period as
may be reasonable and necessary to complete the same. If such alleged breach is not so cured by eliminating/ceasing
any such breach within such period, Lessor may upon written notice to Lessee terminate this Agreement.
16.19 Entire Agreement: This Agreement embodies the entire agreement between the Lessor and Lessee,
and supersedes all prior agreements and understandings, whether written or oral, and all contemporaneous oral
agreements and understandings relating to the subject matter hereof. This Agreement shall not be changed, modified,
discharged or extended, except by written instrument duly executed by Lessor and Lessee. The parties agree that no
representations or warranties shall be binding upon either party unless expressed in writing in the aforesaid Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be legally executed in duplicate
this day of , 2004.
LESSOR: LESSEE:
KERRVILL -KERB COUNTY AIRPORT BOARD
APPROVED:
By:
Dr. Davis, Chair, Airport Board
CITY OF KE LE
By: ~.T--
Steph ~ .Fine,. Mayor
AIItPLANE COMPANY,
i Happy, Presidenl'" V
Aerospace Group, Ltd, on behalf of
Airplane Company, Inc.
COUNTY OF KERB, TEXAS
BY• \ _9J_ ry ~~~
Pat Tinley;-County Judge '~
19
ATTEST:
Brenda G. Craig, C' lerk
APPROVE AS FO
Michael C. ayes, Ci A orney
THE STATE OF TEXAS §
COUNTY OF KERB
ATTEST:
J ette Pieper, County Clerk
~>ti
This instrument was acknowledged before me on this ~2 day of , 2004 by Dr.
John Davis, Chair, Kerrville-Kerr County Airport Board, for the KERRVILLE-KERB COUNTY ORT BOARD,
on behalf of said BOARD. ,
.~' P "'.
=` ~;; PATRICIA A REINHART
''' ~h0 MY COMMISSION EXPIRES
;a~,~ fig= April 24, 2007
,,:~
Notary Public, State of Texas
THE STATE OF TEXAS §
COUNTY OF KERB §
This instrument was acknowledged before me on this ~ day of , 2004 by PAT
TINLEY, County Judge, for COUNTY OF KERB, TEXAS, on behalf of said CO OF KERB, TEXAS.
THEA 80VIL State of Texas
~~~~~~~~ otary bhc,
CO~rlillON iAfIREt:
MARCH 10, 2007
THE STATE OF TEXAS §
COUNTY OF KERB
~~
This instrument was acknowledged before me on this ~ day of 2004 by
STEPHEN P. FINE, Mayor of the CITY OF KERRVILLE, TEXAS, on behalf of said CITY O KERRVILLE,
TEXAS. ~
Notary Public, State of Texas
:'isiti'•"Y ` PATRICIA A REINHART
'' "" MY COMMISSION EXPIRES
'~~,9,~~.-~ Apri124, 2007
THE STATE OF TEXAS §
COUNTY OF KERB
This instrument was aclrnowledged before me on thisUl ~ day of f- , 2004 by J.
Nelson Happy, President of Mooney Aerospace Group, Ltd., for MOONEY AIRPLANE COMPANY. C., on behalf
of said MOONEY AIRPLANE COMPANY, INC.
;~~" PATRICIA A. pEINHART
_'*;~,~~ MY COMMISSION EXPIRES
:.~T Aptil 24, 200'7

Notary Public, State of Texas
21
"Leased Premises°
Total Leaved Mso - 51.89 /lcrea
Total 309,900 Square Feet @rrirdmg Improvements on Leases
(Canprised Tracts 1 thru 5J
Wotar
Tank
Bite
°Re~ised Lease Premises"
Toter Lsoaed Arco - 17.98 Acs
Tatar 309,9010 Square Feet @uildinq rlmpravementsr on Leases
(Comprised of Tracts rand 3)
€~r~>M ,3,,u ir, i.. ~.j~r.q-y
_ _.. ~.._.__ , _.,,-- _,.r_~_._ _...r . ~._kt_..,
TRACT ONE ~ TRACT TWO
t 16.09 ~feS ~ 19.93 P~crr-s
s
eld
_._ _.a _ ..~1
{ € 2-
~ a E }
_~.. _....„y i ~ ( k ilt( i
(~
.. ~ ~ 3
{ l
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I f ~ ! _
~._ ~
` ~ Apeeas Easement TRACT THREE
,~ , _._ ~~_.a
I _µ` _~ i~ ~ - `, TRACT FOUR
13, 76 Aucrea
';
1.89 Acrea
rn
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is
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D~
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Q
tw7
Ru n wQy 02/20
Exhibit "A" -Page 2 of 2
Airport Lease
600 0 500 1000 1600 Feet
N
W E
S