LEASE AGREEMENT
BETWEEN
THE CITY OF SALINAS
AND ADVANCETECH AIRCRAFT MAINTENANCE, INC.
TABLE OF CONTENTS
Page
ARTICLE 1. Definitions and Exhibits…………………………..…………………….4 Section 1.1 Definitions……………………………………….…….…….4
Section 1.2 Exhibits…………………………………...………………….5
ARTICLE 2 – RECITALS. 5
ARTICLE 3 – LEASE PROVISIONS………………………………………………...6
Section 3.1 Premises. 6
Section 3.2 Use of the Premises. 6
Section 3.3 Term. 6
Section 3.4 Rent. 6
Section 3.5 Holding Over. 8
ARTICLE 4 – AIRPORT USE RESTRICTIONS 8
Section 4.1 Lessor's Reservations. 8
Section 4.2 Lessee’s Obligations………………………………………..10
Section 4.3 City of Salinas Regulations. 11
Section 4.4 Federal Requirements. 11
ARTICLE 5 - OTHER COVENANTS 13
Section 5.1 Improvements. 13
Section 5.2 Maintenance and Repair. 15
Section 5.3 Signs. 15
Section 5.4 Liens and Claims. 16
Section 5.5 Right to Assign or Transfer. 17
Section 5.6 Encumbrances of Leasehold Interests. 18
Section 5.7 Right to Enter. 19
Section 5.8 Abandonment. 19
Section 5.9 Recording of Lease Forbidden. 19
Section 5.10 Licenses and Permits. 19
ARTICLE 6 – RISK MANAGEMENT 20
Section 6.1 Indemnification. 20
Section 6.2 Insurance. 20
Section 6.3 Reporting Damage. 20
Section 6.4 Disclaimer and Release; ADA Notice. 20
Section 6.5 Hazardous Substances. 21
Section 6.6 Survival. 22
ARTICLE 7 – DEFAULT AND TERMINATION 22
Section 7.1 Termination for Nonpayment of Rent or Other Charges. 22 Section 7.2 Other Events of Default. 22
Section 7.3 Force Majeure. 22
Section 7.4 Insolvency. 23
Section 7.5 Casualty. 23
Section 7.6 Eminent Domain. 24
Section 7.7 Airport Development……………………………………….24
Section 7.8 Remedies Cumulative. 25
Section 7.9 Lease Termination. 25
ARTICLE 8 – MISCELLANEOUS PROVISIONS 25
Section 8.1 Reservations ………………………..……..25
Section 8.2 Use of Public Airport Facilities…………………….………27 Section 8.3 Common Airport Areas..…………………………..……….27
Section 8.4 Co-ordinates………………………………….…………….27
Section 8.5 No Waiver of Rights……………………………………….27
Section 8.6 Litigation Involving Lease…………………...…………….28 Section 8.7 Lessee’s Assumption and Waiver………………………….28 Section 8.8 Construction of Lease……………………………………....28
Section 8.9 Time…………………….……………………..…...………29
Section 8.10 Material Breach………………..……………………..…….29
Section 8.11 Notices…………………..……………………….…………29
Section 8.12 Heirs, Successors and Assigns…..………………...……….29 Section 8.13 Headings…………..…………………………………….….30
Section 8.14 Severability………………………………..……...…..…….30
Section 8.15 Counterparts……………………………….….……………30
Section 8.16 Legal Representation…………………..………...….……...30 Section 8.17 Warranty of Authority….…………………………………..30
Section 8.18 Integration and Agreement...………………..….…………..30 Section 8.19 Jurisdiction………….….…………………………………..30
THIS LEASE AGREEMENT (“Lease”) is entered into this 8th day of October 2024 (the “Effective Date”) by and between the City of Salinas, a California charter city and municipal corporation of the State of California (hereinafter referred to as “Lessor”) and ADVANCETECH AIRCRAFT MAINTENANCE, INC., a California corporation (hereinafter referred to as “Lessee”).
WITNESSETH:
A. Lessor owns and operates the Salinas Municipal Airport in the City of Salinas, State of California; and B. Lessee desires to lease a portion of Airport for the uses permitted and upon the terms and conditions herein.
NOW, THEREFORE, in consideration of the foregoing, the mutual promises and covenants set forth in this Agreement, and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties agree as follows:
Article 1. Definitions And Exhibits
Section 1.1 Definitions.
The following capitalized terms have the meanings set forth in this Section 1.1 whenever used in this Agreement, unless otherwise provided:
"Improvements" has the meaning given in Section 5.1.
"Airport" means the Salinas Municipal Airport in the City of Salinas, State of California. "Rent" has the meaning given in Section 3.4, and includes the combined rent for the Building. "Building" has the meaning given in Section 3.1.
"City Code" has the meaning given in Section 3.2(b).
"Claims" has the meaning given in Section 5.1.
"Event of Default" means any material breach of this Lease. "FAA" means the Federal Aviation Administration, as set forth in Section 3.3(e). "Land Use Plan" has the meaning given in Section 3.2(a). "Lease" means this Agreement, as set forth in the opening paragraph. "Lessee" means Serv-Aero Engineering, Inc., as set forth in the opening paragraph. "Lessor" means the City of Salinas, a California charter city and municipal corporation, as set forth in the opening paragraph. "Ordinance No. 1719" has the meaning given in Section 3.4(d). "Original Term" has the meaning given in Section 2.3(a). "Part 21" has the meaning given in Section 3.3(c)(2).
"Part 77" has the meaning given in Section 3.3(d).
"Premises" means the [Building and the Ramp Space licensed to Lessee] pursuant to Section 2.1 of this Agreement. "Released and Indemnified Parties" means Lessor and its elected officials, officers, employees, agents, and assigns. ["Renewal Term" has the meaning given in Section 2.3(b).] "Rules" is defined in Section 3.2(a).
"Super Adjacent Air Space" is defined in Section 3.1(e). "TSA" means the Transportation Security Administration, as set forth in Section 3.3(e).
Section 1.2 Exhibits.
The following exhibits are attached to this Lease and are incorporated into it by this reference; provided, however, that any conflict between an exhibit and the main body of this Lease will be construed in favor of the latter:
Exhibit A Depiction of the Premises
Exhibit B Permitted Uses of Premises
Exhibit C Permitted Uses of Premises
Exhibit D Insurance Requirements
Exhibit E RESERVED
ARTICLE 2 – RECITALS
WHEREAS, Lessor owns and operates the Salinas Municipal Airport in the City of Salinas, State of California (hereinafter “Airport”); and WHEREAS, by way of Resolution No. 17181, Lessee entered into a ground lease for the Premise, on February 1, 2000, and amended said lease (“Amendment No. 1”) by way of Resolution No. 18356; and WHEREAS, the Lessee desires to enter into a new lease with terms and conditions; and WHEREAS, the Lease and subsequent Amendment No. 1 entered into, at the execution of this Lease shall terminate; and NOW, THEREFORE, in consideration of the foregoing, the mutual promises and covenants set forth in this Agreement, and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties agree as follows:
ARTICLE 3 – LEASE PROVISIONS
Section 3.1 Premises.
General Description. Lessor hereby leases to Lessee, certain real property located at the Airport (herein referred to as the “Leased Premises and/or Premises”) and more particularly described in Exhibit A - Depiction of the Premises attached hereto.
Section 3.2 Use of the Premises.
The Premises will be used only for the purposes described in Exhibit B – Permitted Uses of the Premises. The Premises may not be used for any other purpose without Lessor's prior written consent, at Lessor's sole discretion and in compliance with the Lessee’s Operational Plan and Security Plan, as approved in writing by Lessor.
Section 3.3 Term.
The term of this Lease shall be for a period of approximately 26 years, commencing on October 1, 2024 (“Commencement Date”) and ending September 30, 2050, unless sooner terminated in the manner and under the conditions herein provided (the “Original Term”). Rent due pursuant to Section 4 begins upon commencement of the term, not upon the occupancy of the Premises or Improvements.
Section 3.4 Rent.
Time and Place of Payments.
The Lessee shall make all rental payments monthly in advance on or before the first day of each new month. Checks should be made payable to the City of Salinas and be delivered to:
City of Salinas
Office of the Finance Director, Attn: Airport Fund
200 Lincoln Avenue
Salinas, California 93901
Failure to pay rent within a ten (10) daytime frame from due date constitutes a default, within the meaning of Section 29(a) of this Agreement. The place and time of payment may be changed at any time by the Lessor upon thirty (30) days’ written notice to Lessee. Lessee assumes all risk of loss and responsibility for late payment charges.
Rent.
During the Original Term, rent shall be payable, at the option of the Lessee, in either annual or equal monthly installments, at the annual rate of $0.45 per square foot, which equals $1,882.42 per month, or $22,589.04 per annum. The rent amount shall be adjusted annually by 3%. In the event that Lessee elects to pay said rent annually, said payment shall be due and payable on the annual anniversary date of the execution of this Agreement, subject to any adjustment to rent pursuant to Section 4B(3). In the event that Lessee elects to pay said rent on a monthly basis, said rent shall be due and payable on the 1st day of each calendar month.
Mid Term Market Adjustment
(1) Lessor reserves the right to update the rate and fees structure to market adjustment through an appraisal process no earlier than August 1, 2038. The appraisal process shall require Lessor to obtain a ground lease appraisal from the certified appraiser and provide a copy of the appraisal to Lessee for review. Lessee then shall have the option to accept the proposed rent adjustment based on Lessor’s appraisal, negotiate with Lessor for a different rent adjustment, or then at his own cost, to obtain his own independent appraisal on the ground lease and a determination of a fair market rental value. If the Lessee elects to proceed with obtaining his own appraisal, said appraisal shall be completed in a reasonable time, and upon competition be provided to the Lessor. At that time, Lessor and Lessee shall meet and confer in order to negotiate a new rental amount for the ground lease based on the appraisals. If the parties are unable to come to an agreement after a reasonable time, the parties shall jointly retain a third appraiser to review the prior two appraisal and determine a binding ground lease fair market value rent. At such time, the rent shall be adjusted to either the negotiated rental value, or the fair market value determined by the third appraiser, as the case may be.
Delinquent Rent.
If Lessee fails to pay the rent when due, Lessee will pay, in addition to the rents, ten percent (10%) of the delinquent rent per month from the date when due and payable under the terms of this Agreement until the same shall be paid. In the event that Lessor elects to pay said rent in annual installments, rent shall be considered delinquent if not paid within 15 days following the annual anniversary date of the execution of this agreement. In the event that Lessor elects to pay rent in monthly installments, rent shall be considered delinquent if not paid by the 10th day of each month.
Section 3.5 Holding Over.
Any holding over after the expiration of this Lease with the consent of Lessor shall be construed to be a tenancy from month to month at a monthly rental equal to one hundred twenty-five percent (125%) of the rental for the year immediately preceding the expiration of said term, and shall otherwise be on the terms and conditions herein in this Lease specified so far as applicable, except that there shall be no right to extend the term of this Lease.
ARTICLE 4 – AIRPORT USE RESTRICTIONS
Section 4.1 Lessor's Reservations.
Utilities. Lessor reserves the right, upon reasonable prior notice to Lessee, to install, lay, construct, maintain, repair, and operate such sanitary sewers, drains, storm water sewers, pipelines, manholes, and connections; water, oil and gas pipelines; telephone, telegraph and electric power lines; and the appliances and appurtenances necessary or convenient in connection therewith, in, over, upon, through, across, under, and along any and all portions of the Premises. No right reserved by Lessor in this Subsection shall be so exercised as to interfere unreasonably with Lessee’s permitted use or operations hereunder or to impair the security or any secured creditor of Lessee. Lessor further agrees that rights granted to third parties by reason of this clause shall contain provisions that the Premises will be restored as nearly as practicable to its original condition upon the completion of any construction. Lessor further agrees that should the exercise of these rights temporarily interfere with the use of any and all of the Premises by Lessee, the rental and other charges due hereunder shall be reduced in proportion to the interference with Lessee’s use of the Premises.
Reservations in Gross. The easements and rights herein reserved and excepted by Lessor, and the easements and rights herein granted by Lessee to Lessor, shall be deemed both in gross and also appurtenant to each and every portion of the real property of the Airport (save and except the Premises).
Other Federal Requirements. Lessee agrees that Lessee's use of the Premises, including any initial construction, all future construction, and any maintenance, repair, or modification of the Premises, will comply with all applicable Federal Aviation Regulations or other applicable federal statutes, regulations, or rules affecting airports or aviation as may now be in force or that may be hereafter adopted by any federal agency or instrumentality. This Subsection will be construed broadly to ensure compliance with applicable federal requirements. the interference with Lessee’s use of the Premises.
Lessor’s Rights. Lessor reserves the following rights:
Nothing contained in this Agreement shall be construed, in any way, to limit the use of the Airport by Lessor, its Police Department, Fire Department, FAA, or other Agencies performing official duties at the Airport or others.
Lessor reserves the right to designate specific areas of the Airport to be used for specific purposes and/or engaging in specific activities.
Lessor reserves the right to develop and make any improvements, repairs, restoration, or replacement on, at, or to the Airport it deems necessary. Lessor will provide advance notice of the date and time of such projects. Lessor shall not be obligated or required to reimburse or compensate Lessee, Sublessee, or any other entities for any cost and/or expense incurred, for any revenue lost, or for any inconvenience that may result from, arising out of, or be associated in any way with such projects.
Lessor (and its representatives, officers, officials, employees, agents, and volunteers) shall not be responsible for loss, injury, or damage to persons or property at the Airport resulting from, caused by, arising out of, or associated in any way with any acts of nature, natural disasters, or illegal activity.
During time of war or national emergency, Lessor shall have the right to enter into an agreement with the United States Government for military use of part or all of the Airport and its facilities. If any such agreement is executed, this Agreement or any other agreement between the Parties, insofar as the agreements may be inconsistent with the agreement between Lessor and the United States Government, shall be suspended, without any liability to Lessor.
Lessor will not relinquish the right to take any action Lessor considers necessary to protect the aerial approaches of the Airport against obstruction or to prevent any person from erecting or permitting to be erected any facility or structure which might limit the usefulness of the Airport or constitute a hazard to aircraft.
Lessor will not waive any sovereign, governmental, or other immunity to which Lessor may be entitled nor shall any provision of this Agreement or any other agreement between the Parties be so construed.
Lessor will not submit to the laws of any state other than those of the State.
Lessor is under no obligation to obtain or provide financing or funding, make any improvements to the Airport, and/or facilitate any development proposed by Lessee or others.
Lessor reserves the right to take such actions as it may deem necessary to protect the safety and security of the public.
Lessor shall have no responsibility or liability to furnish any services to Lessee, however Lessee may request the provision of services and if agreed upon, shall pay Lessor the amount of compensation agreed upon by the Parties.
Nothing contained in this Agreement shall be construed, in any way, as restricting or limiting the powers of Lessor to fully exercise its governmental functions and/or authority or fulfill its obligations under the Airport Sponsor Assurances (or any bond covenants) or comply with applicable Legal Requirements.
Lessor’s Privileges. Lessor shall have the following privileges:
Normal Access to the Leased Premises. Lessor shall have the right to enter in, upon, or under the Leased Premises at reasonable times, upon not less than twenty-four (24) hours prior notice to Lessee, for reasonable purposes (e.g., to ensure Lessee’s compliance with the terms and conditions of this Agreement including, but not limited to, Section 4.7. of this Agreement). Lessor may at any time during the last one hundred twenty (120) calendar days of the term of this Agreement place on or about the Leased Premises any ordinary “For Lease” signs, all without rebate of rent or liability to Lessee.
Emergency Access to the Leased Premises. Lessor shall have the right to enter the Leased Premises at any time in the event of an apparent or actual emergency (e.g., fire, flood, or failure of an Improvement or utility, etc.).
Performance of Acts. All acts performable under this Agreement by Lessor may, at the option of Lessor and without right of objection by Lessee, be performed by a representative of Lessor.
Exercising Rights. No exercise of any rights reserved by Lessor shall be deemed or construed, in any way, as grounds for any abatement of rents, fees, or other charges nor serve as the basis for any claim or demand for damages of any nature whatsoever.
Section 4.2 Lessee’s Obligations.
Conduct. Lessee shall be responsible for the conduct, demeanor, and appearance of its representatives, officers, agents, employees, guests, patrons, suppliers, vendors, invitees, contractors, subcontractors, sublessees, or any other entity on the Leased Premises. Lessee’s personnel shall: (a) be neat, clean, and courteous, (b) not conduct operations in an objectionable manner, and (c) shall wear suitable attire. Upon receipt of a complaint, Lessee shall act to immediately resolve the complaint. Lessee’s personnel shall cooperate with Lessor, its representative’s or Agencies in dealing with emergencies on the Leased Premises and at the Airport.
Disturbances. Lessee shall conduct its authorized uses and Activities in an orderly and proper manner so as to not annoy, disturb, or interfere with others. Lessee agrees that it will not in any manner interfere with Aircraft operations or create a hazard to Aircraft, other lessees, or the public. Lessee shall prevent escape of hazardous fumes, odors, smoke, gas, or other hazardous substances from the Leased Premises (or cause or permit to be caused any act that would adversely affect the environment).
Costs, Expenses, and Other Charges. Lessee shall pay all other costs, expenses, and other charges of every kind and nature whatsoever relating to the Leased Premises and/or Lessee’s Activities during the term of this Agreement.
The costs of bringing utilities of gas, electricity, sewage, drainage, telephone and water to the Premises as may be necessary, shall be borne by Lessee.
Lessee shall install, connect and maintain, at Lessee’s sole cost and expense, all necessary utilities and utility facilities and services, including but not limited to light, power, gas, telephone, water, sewage, drainage, garbage, rubbish and other disposal facilities and services. In addition to the rent hereinbefore reserved, Lessee shall pay for all water, gas, heat, light, power, telephone, sewage, garbage and rubbish disposal, and all other services supplied to the Premises.
Based Aircraft Reporting. Lessee shall maintain and furnish on or before the 10th of January each year (or upon request of Lessor) a report identifying all Based Aircraft on the Leased Premises. The report shall identify the aircraft owner, contact information, registration number, year, make, and model of the Aircraft. Lessee shall immediately provide an updated report of any changes to the Based Aircraft report.
Business Status. Lessee shall notify Lessor immediately of any changes to Lessee’s business or corporate structure or status or if Lessee’s authorization to conduct business at the Airport, in the State, or in the United States will be (or has been) suspended or revoked.
Special Events. Lessee shall not conduct or hold special events without obtaining (a) appropriate permits and approval from the Agencies having jurisdiction and (b) the prior written consent of Lessor.
Section 4.3 City of Salinas Regulations.
PMCDs and Land Use Plan Incorporated. The Salinas Municipal Airport Rules and Regulations (the "Rules"), Airport Minimum Standards, and the Salinas Municipal Airport Land Use Plan (the "Land Use Plan"), as those documents may be amended or superseded from time to time, are incorporated into this Lease by this reference. Lessee will comply fully with the Rules, Airport Minimum Standards, and Lessee's use of the Premises will be consistent with the Land Use Plan.
City of Salinas Municipal Code. Lessee agrees to comply with applicable provisions of the City of Salinas Municipal Code (the "City Code"), including but not limited to Chapter 4 (Public Property) and Chapter 37 (Zoning). Lessor agrees that the Premises are compliant with such provisions as of the date of this Lease.
Other Legal Requirements. Lessee further agrees to comply with all other applicable Legal Requirements, for the use of the Premises and all other portions of the Airport, including any rules and regulations established by the Salinas City Council, the Salinas Airport Commission, and the Salinas Airport Manager.
Section 4.4 Federal Requirements.
Subordination to Federal Agreements. This Lease is subordinate to the provisions and requirements of any existing or future agreement between the Lessor and the United States of America, relative to the development, operation, or maintenance of the Airport.
Non-Exclusive Right. It is understood and agreed that nothing herein contained shall be construed to grant or authorize the granting of an exclusive right within the meaning of 49 U.S.C. sections 40103 (e) and 47107(a)(4).
Nondiscrimination.
The Lessee, its duly authorized representatives, successors in interest, and assigns, as a part of the consideration hereof, does hereby covenant and agree that: no person on the grounds of race, color 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; that in the construction of any improvements on, over, or under such land and the furnishing of services thereon, no person on the grounds of race, color, or national origin shall be excluded from participation in, denied the benefits of, or otherwise be subjected to discrimination; that the Lessee shall use the premises in compliance with all other requirements imposed by or pursuant to 49 C.F.R. Part 21 - Nondiscrimination in Federally Assisted Programs of the Department of Transportation – Effectuation of Title VI of the Civil Rights Act of 1964; 49 CFR Part 23 - Participation of Disadvantaged Business Enterprise in Airport Concessions; 49 CFR Part 26 - Participation By Disadvantaged Business Enterprises In Department Of Transportation Financial Assistance Programs and as said Regulations may be amended.
The Lessee will furnish services on a reasonable and not unjustly discriminatory basis to all users, and charge reasonable and not unjustly discriminatory prices for each unit or service, provided that the contractor may be allowed to make reasonable and nondiscriminatory discounts, rebates, or other similar types of price reductions to volume purchasers.
The Lessee assures that it will comply with pertinent statutes, Executive Orders and such rules as are promulgated to assure that no person shall, on the grounds of race, creed, color, national origin, sex, age or handicap be excluded from participating in any activity conducted with or benefiting from Federal assistance. This Provision obligates the Lessee or its transferee for the period during which Federal assistance is extended to the airport program, except where Federal assistance is to provide, or is in the form of personal property or real property or interest therein or structures or improvements thereon. In these cases, the Provision obligates the party or any transferee for the longer of the following periods: (a) the period during which the property is used by the sponsor or any transferee for a purpose for which Federal assistance is extended, or for another purpose involving the provision of similar services or benefits; or (b) the period during which the airport sponsor or any transferee retains ownership or possession of the property. In the case of contractors, this provision binds the contractors from the bid solicitation period through the completion of the contract.
Height Restrictions. The Lessee by accepting this Lease agreement expressly agrees for itself, its successors and assigns that it will not erect nor permit the erection of any structure or building nor permit object of natural growth or other obstruction on the land leased hereunder above a height as determined by the application of the requirements of 14 C.F.R. Part 77. In the event the aforesaid covenants are breached, the owner reserves the right to enter upon the land hereunder and to remove the offending structure or object or cut the offending natural growth, all of which shall be at the expense of the Lessee.
FAA Form 7460-1, Notice of Construction or Alteration. The Lessee agrees to comply with the notification and review requirements of 14 C.F.R. Part 77 in the event future construction of a building is planned for the leased premises or in the event of any planned modification or alteration of any present or future building or structure situated on the leased premises. This requires the submission of FAA Form 7460-1, Notice of Construction or Alteration to the FAA.
Interference. The Lessee by accepting this Lease agrees for itself, its successors and assigns that it will not make use of the Leased premises in any manner which might interfere with the operation of aircraft or otherwise constitute a hazard. In the event the aforesaid covenant is breached, the owner reserves the right to enter upon the premises hereby Leased and cause the abatement of such interference at the expense of the Lessee.
Right of Flight. There is reserved to the 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 Leased 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 operating on the airport premises.
Development of Landing Area. The Lessor reserves the right to further develop or improve the landing area of the airport as it sees fit, regardless of the desires or views of the Lessee and without interference or hindrance.
Security. The Lessee will conform to airport and FAA safety and security rules and regulations regarding use of the airport operations area including runways, taxiways, aircraft aprons by vehicles, employees, customers, visitors, etc. in order to prevent security breaches and avoid aircraft incursions and vehicle/pedestrian deviations; will complete and pass airfield safe driving instruction program when offered or required by the airport; and will be subject to penalties as prescribed by the airport for violations of the airport safety and security requirements.
Facility Repairs. The Lessor reserves the right, but shall not be obligated to the Lessee to maintain and keep in repair the landing area of the airport and all publicly owned facilities of the airport, together with the right to direct and control all activities of the (lessee, licensee, permittee, etc.) in this regard.
War or National Emergency. This Lease and all the provisions of it are subject to whatever right the United States of America has affecting the control, operation, regulation, and taking over of the Airport or the exclusive or non-exclusive use of the Airport by the United States of America during the time of war or national emergency.
ARTICLE 5 - OTHER COVENANTS
Section 5.1 Improvements.
(a) Application to Make Improvements. Prior to making any Improvements (including any alterations to existing Improvements, removal of existing Improvements, or construction of new Improvements) to the Leased Premises, Lessee shall submit to Lessor for its review and approval detailed plans, designs, and specifications, which shall be prepared by a registered architect and approved by a registered engineer, both licensed in the State. Said plans shall include cost estimates, a project schedule, and a list of the contractors selected by Lessee. If applicable, Lessee shall also complete and include FAA Form 7460-1 Notice of Proposed Construction Alterations. (b) Written Consent. Lessee shall not make any Improvements to the Leased Premises without the prior written consent of Lessor. (1) Any Improvements made to the Leased Premises without the prior written consent of Lessor may be removed by Lessor or Lessor may require, by written notice, that Lessee modify the Improvements to Lessor’s satisfaction. If Lessee fails to comply with such notice within thirty (30) calendar days, Lessor may affect the removal or modification of said Improvements and Lessee shall pay 125% of the costs and expenses thereof within thirty (30) calendar days upon receipt of an invoice from Lessor. (c) Schedule. Within ninety (90) calendar days of Lessor’s written consent, Lessee shall make Improvements in conformance with the City approved plans, designs, specifications, and schedule and any other terms and conditions of Lessor’s written consent. (1) If the Improvements are not completed in accordance with the schedule (or Improvements have only been partially completed), at Lessor’s option, the Improvements that have been made may be removed or demolished by Lessor. (d) Compatibility and Compliance. Any Improvements made to the Leased Premises shall be:
(1) compatible with the Airport and associated airspace; (2) consistent with the Airport’s Master Plan, Layout Plan, and the Land Use Plan; (3) in compliance with 14 CFR Part 77 Safe, Efficient Use, and Preservation of the Navigable Airspace; and (4) in compliance with Section 3.4. of this Agreement.
(e) Permits. Lessee shall procure all required building, fire, safety, and other permits from federal, State, and local Agencies having jurisdiction. (f) Insurance. No Improvements shall be made to the Leased Premises until evidence of required insurance satisfactory to Lessor has been provided. Lessee shall be fully liable for any damages related to making any Improvements. (g) Liens. Lessee shall pay all claims lawfully made against it by its contractors, subcontractors, material men, and workmen, and all claims lawfully made against Lessee by other third persons resulting from, caused by, arising out of, or associated with the Improvements being made to the Leased Premises, and shall cause its contractors, subcontractors, material men, and workmen to pay all such claims lawfully made against them. Lessee shall also pay all liens held by contractors, subcontractors, material men, and workmen and provide proof of payment to Lessor.
Notwithstanding circumstances beyond Lessee’s control, all Improvements made to the Leased Premises shall be free and clear of liens, claims, or liability for labor or material. (2) Nothing in this Agreement shall be construed, in any way, to constitute consent to the creation of any lien or claim against the Leased Premises or Lessor. (h) Indemnity for Claims. Lessee shall defend and indemnify Lessor against all claims, liabilities, and losses of any type arising out of making Improvements on the Leased Premises by Lessee, together with reasonable attorneys' fees and all costs and expenses reasonably incurred by Lessor in negotiating, settling, defending, or otherwise protecting against such claims. (i) Assurance of Completion. Prior to the commencement of any alteration or construction expected to cost more than twenty-five thousand dollars ($25,000), Lessee shall furnish Lessor evidence that assures Lessor that sufficient funds will be available to complete the proposed Improvements being made to the Leased Premises. The amount of such assurance shall be at least the total estimated cost of Improvements. Evidence of such assurance shall take one of the forms set out below and shall guarantee Lessee’s full and faithful performance of all of the terms and conditions of this Agreement:
(1) completion bond;
(2) performance, labor and material bonds, supplied by Lessee’s contractor or contractors, provided the bonds are issued jointly to Lessee and Lessor; (3) irrevocable letter of credit from a financial institution; (4) proof of cash or other liquid assets; or
(5) any combination of the above.
All bonds and letters of credit must be issued by a company qualified to do business in the State and be acceptable to Lessor. All bonds and letters of credit shall be in a form acceptable to Lessor, and shall insure faithful and full observance and performance by Lessee of all of the terms and conditions of this Agreement relating to the Improvements being made to the Leased Premises. (j) Certificate of Inspection. Upon completion of the Improvements being made to the Leased Premises, Lessee shall submit to Lessor a Certificate of Inspection, verifying that the Improvements were completed in conformance with Title 24 of the California Code of Regulations for non-residential construction. (k) As-Built Plans. Upon completion of the Improvements being made to the Leased Premises, Lessee shall provide to Lessor a complete set of reproducible as-built plans and specifications in digital computer-aided design (CAD) format reflecting actual alterations or construction within or upon the leased Premises. (l) Reversion of Improvements. Unless otherwise stated in this Agreement, upon expiration or earlier termination of this Agreement, at Lessor’s option, the ownership of Improvements made to the Leased Premises shall revert (transfer) to Lessor or Lessee shall remove and/or demolish any and/or all Improvements (as designated by Lessor) and return the Leased Premises to its original condition and character, ordinary and reasonable wear and tear excepted.
Section 5.2 Maintenance and Repair.
Lessee's Maintenance and Repair Obligations. Except as otherwise specifically provided in this Lease Agreement, Lessee shall be solely responsible for keeping the Premises clean and in good condition and repair, reasonable wear and tear excepted. Lessee shall, at its own cost and expense, be responsible to repair and maintain the entirety of all Tenant Improvements made to the Leased Premises.
Lessee shall maintain the Premise in an aesthetically pleasing manner, including without limitation removing weeds and debris on the Premise, replacing components that are broken or worn, refreshing painted surfaces associated with the Premise, ensuring the Premise is pest free, and preventing the accumulation of stored materials outside. Lessee will also be responsible for all damage or destruction of the Premises caused by any acts of Lessee or by Lessee's employees, agents, licenses, contractors, assignees, sublessees, guests, or invitees.
Lessor's Right to Cure; Additional Rents. If, in the opinion of the Lessor’s Airport Manager, the Premises are not being properly maintained, the Airport Manager shall, after giving written notice to Lessee and after a reasonable time to cure, cause such repair and maintenance to be made. The cost of such maintenance or repair will be added to the rent, and will be due immediately upon invoice.
Section 5.3 Signs.
Lessee may post such signs as necessary and usual in the conduct of its business in and upon the Premises. Location, size, shape, and copy of all signs will be in accordance with the City Code, and will be approved by Lessor's Airport Manager, Community Development Department, and Permit Center prior to installation. Subject to all requirements of the City Code and other applicable Legal Requirements, approval will not be withheld unreasonably.
Section 5.4 Liens and Claims.
Possessory Interest. Lessee acknowledges that this lease may create a real property possessory interest subject to taxation. Without limiting Lessee's obligation pursuant to this Lease to pay taxes, assessments, property-related fees, and other charges and impositions associated with the Premises, payment of real property taxes levied on such possessory interest will be the sole responsibility of Lessee, with no right of offset of rent, charges, or other fees due under this Lease.
No Liens. Lessee shall pay all taxes, assessments, property-related fees, and other charges and impositions that Lessee is obligated to pay under this Lease before the same becomes delinquent. Furthermore, Lessee will not permit or suffer any liens or encumbrances to be imposed upon the Premises, the Airport, or any building or structure thereon as a result of nonpayment of any obligation of Lessee. Neither will Lessee permit or suffer any lien, claim, or demand to be imposed upon the Premises, the Airport, or any building or structure thereon, arising from any work of construction, repair, restoration, or maintenance at or on the Premises (except liens, claims, or demands suffered by or arising from the actions of Lessor). Should Lessee fail or refuse to pay any lien, claim, or demand arising out of the construction, repair, restoration, maintenance and use of the Premises and the buildings and improvements hereon, or any other claim charge or demand which Lessee has agreed to pay under the covenants of this Lease, Lessee or its authorized encumbrances, if any, shall, within thirty (30) days provide written notice from Lessor to Lessee or its said encumbrancer, pay and discharge the same or shall furnish to City, in a form satisfactory to City, sufficient security to hold Lessor and said land free from all liability for such lien, claim, or demand and all costs and expenses in connection therewith. Should Lessee or its said encumbrancer, within said thirty (30) days period, not pay discharge said lien, claim or demand or not provide said security to Lessor, then Lessor may at its own option, either treat such failure or refusal as a breach of or default under this lease, or may pay any such lien, claim or demand, or settle or discharge any action therefore or judgment thereon, and all costs, expenses and other sums incurred or paid by Lessor in connection therewith shall be repaid to Lessor by Lessee upon written demand, together with interest thereon at the rate of ten percent (10%) per annum from the date of payment until repaid, and any default in such repayment shall constitute a breach of the covenants and conditions of this Lease.
Payment Bonds. To ensure the completion of works of improvement and to protect the Premises from liens, prior to the commencement of any work related to the repair, restoration, or maintenance at or on the Premises, which exceeds Five Hundred Thousand Dollars ($500,000.00) in cost, Lessee shall furnish to Lessor's Airport Manager, at no cost to Lessor, payment bonds approved as to form by the Lessor's City Attorney in the full amount of the total cost of the contract or contracts for the contemplated work to be performed.
Contesting Charges. Notwithstanding anything to the contrary in this Section, with prior notice to Lessor, Lessee may contest any tax, assessment, fee, charge, imposition, claim, or demand for payment that may become a lien on Lessor's property if left unpaid, provided that nonpayment is permitted only during the pendency of any contest without the foreclosure of the lien or the imposition of any fine or penalty that could become a debt of Lessor. Lessee will prosecute any contest diligently, and will provide such security as may be requested by, and acceptable, to Lessor to hold Lessor and Lessor's property free from liability.
Payment by Lessor. If Lessee fails to pay any amount required by this Section to be paid by Lessee, Lessor will have the right, but not the duty, on five (5) days' prior written notice to Lessee, pay, discharge, or adjust such obligation for Lessee's benefit. On written demand from Lessor, Lessee will, as additional rent, reimburse Lessor within ten (10) days for the full amount expended by Lessor, together with interest from the date of payment at the lesser of ten percent (10%) or the maximum amount allowed by law.
Section 5.5 Right to Assign or Transfer.
Limitation on Assignment, Subleasing, Encumbrance, or Transfer. Lessee will not sublease the Premises or otherwise encumber, assign or transfer this Lease, or any right or interest herein, to any of the buildings and improvements on the Premises, without the prior written consent of the Lessor, which shall not be unreasonably withheld, and no such assignment, sublease or transfer, whether voluntary or involuntary, by operation of law, under legal process or proceedings, or otherwise, shall be valid or effective without such prior written consent.
Lessee shall provide Lessor copy of written agreement between Lessee and Sublessee(s). The written agreement shall include the following provisions:
Each Sublessee shall secure and maintain a Salinas Municipal Airport Use Permit and insurance coverage in types and amounts, and subject to such conditions, as specified in the Permit.
Each Sublessee shall indemnify, hold harmless, and defend (with counsel reasonably acceptable to Lessor) the Released and Indemnified Parties against any and all claims, actions, causes of action, liabilities, costs (including reasonable attorneys' fees), expenses, liens, judgments, damages, or civil or administrative fines (collectively, "Claims") caused by Sublessee's use of the Premises, including, without limitation, Claims for property damage, personal injury, or wrongful death; provided, however, that Lessee's indemnification obligation does not extend to Claims arising out of the Released and Indemnified Parties gross negligence or willful misconduct.
Change in Control. The transfer, assignment, or hypothecation of any stock or interest in said entity, in the aggregate in excess of twenty-five percent (25%) will be deemed an assignment within the meaning of this Lease. The following transfers are excepted from the provisions of this Subsection:
Transfer or assignment of stock or interest to a shareholder or member of Lessee or an entity controlled by, under common control with, or controlling Lessee, or pursuant to a merger or sale of all or substantially all of the assets of Lessee.
Transfer or assignment of stock or interest to a spouse, child, or grandchild of a shareholder, member, or partner, or to a trust for the benefit of the same.
Lessor's Option to Terminate. Notwithstanding any other provision in this Lease regarding default or termination, should Lessee attempt to make or suffer to be made any such encumbrance, assignment, sublease, or transfer in violation of this Section, or should any right or interest of Lessee hereunder or in or to the Premises be transferred or sold by or under court order or legal process, or otherwise, then any of the foregoing events will be deemed a breach of this Lease and thereupon Lessor may, at its option, terminate this Lease immediately by written notice to Lessee, or exercise other rights provided by law or in this Lease to be exercisable by Lessor in the event of any default or breach under this Lease. Should Lessor consent to any such encumbrance, assignment, sublease, or transfer, such consent will not constitute a waiver of any of the restrictions of this Section, and the same will apply to each and every encumbrance, assignment, sublease, or transfer hereunder and shall be severally binding upon each and every encumbrancer, assignee, sublessee, transferee, and other successor in interest of Lessee.
Grounds for Withholding Consent. It is agreed and understood that Lessor may withhold Lessor's consent to any assignment, transfer, sublease, or encumbrance under the following circumstances:
If a proposed assignee or sublessee will not covenant in writing to keep, perform, and be bound by each and all the covenants and conditions of this Lease, and to assume any previously accrued obligations hereunder.
If Lessee is in default under this Lease at such time in any respect.
If construction, repair, or demolition of improvements on the Premises is in progress, or if said construction, repair, or demolishment is incomplete.
Until a determination has been made by Lessor that the assignee, transferee, or other successor in interest of Lessee can pay rent and operate in accordance with the standards required by Lessor.
Lessor is not satisfied, in its sole and absolute discretion, that Lessee is willing and able to discharge any proposed encumbrance.
Any other reasonable basis.
Incorporation of Lease; Effect of Assignment. Any document that purports to assign, sublease, transfer, or encumber the Premises or any part thereof, will incorporate directly or by reference all provisions of this Lease unless otherwise amended in writing. Upon any assignment or transfer approved by Lessor, Lessee will be relieved of any further obligations arising under this Lease after the effective date thereof.
Section 5.6 Encumbrances of Leasehold Interests.
Subject to Section 4.7, Lessee may encumber Lessee’s interest in the Premises to secure a loan from a federally insured institutional lender to construct the Tenant Improvements and any Additional Improvements, provided the unpaid balance of any such loan will not at any time exceed $750,000.00 without the prior written consent of Lessor's City Council. Such encumbrance will be subject, however, to the following covenants and conditions:
Any document evidencing the loan, or any security given for it must be filed with Lessor’s City Clerk within ten (10) days after its execution.
Except as otherwise provided in this Section, any instrument securing the loan will be subordinate to this Lease and Lessor's interests in the Premises, the Airport, and all improvements thereon. In the event of any conflict between the provisions of this Lease and the provisions of such security instrument, the provisions of this Lease will control, and any person acquiring any interest in the Premises by foreclosure, trustee's sale, or any similar remedy, will acquire that interest subject to Lessee's obligations under this Lease.
If Lessee elects to terminate this Lease pursuant to Section 6.5 in the case of any casualty, Lessee will be obligated disburse the proceeds of any insurance first to repay a loan secured by Lessee's interest in the Premises. The remaining proceeds, if any, will be paid to Lessor for such amounts, if any, due and owing to Lessor by Lessee under this Lease. Thereafter, any proceeds remaining may be disbursed to Lessee.
To the extent that a loan secured by Lessee's interest in the Premises is reasonably necessary for Lessee to finance the Tenant Improvements and any Additional Improvements authorized by Lessor, and provided that the Lessor has approved such encumbrance pursuant to Section 4 and this Section, Lessor will not unreasonably withhold agreement to customary creditor protections, including by providing the lender notice and an opportunity to cure any breach of this Lease on Lessee's behalf prior to exercising any remedy hereunder that would threaten the lender's security.
Section 5.7 Right to Enter.
Lessor reserves the right by its officers, employees, agents, and contractors, to enter the Premises upon prior notice at reasonable times (except in cases of emergency), (i) for any reason otherwise authorized under this Lease, including as allowed in Section 3.1; (ii) to inspect the Premises and to ensure compliance with this Lease; (iii) in furtherance of any maintenance obligation of Lessor; (iv) to post notices, including notices of non-responsibility for improvements, alterations, or repairs if and when Lessor desires to do so; and (v) whenever reasonably necessary in the interest of public health or safety.
Section 5.8 Abandonment.
Lessee may not abandon, vacate, or surrender the Premises, except as otherwise provided in this Lease. In the case of any unauthorized abandonment, Lessor may reenter and relet the Premises. Mere failure to operate the Premises will not constitute abandonment provided the Lessee continues to maintain the Premises and pay all rent and other obligations hereunder. Any belongings or other property left on the Premises following termination of this Lease or abandonment of the Premises will, at the option of Lessor, be deemed abandoned.
Section 5.9 Recording of Lease Forbidden.
Lessee will not record this Lease, or a memorandum or abstract of it, and will not cause or permit any other person to do the same on its behalf, without express written permission from Lessor's Airport Manager.
Section 5.10 Licenses and Permits.
Lessee has obtained or, will obtain at such time as may be necessary, each and every approval, license or permit as may be necessary to operate the Premises as contemplated hereunder.
ARTICLE 6 – RISK MANAGEMENT
Section 6.1 Indemnification.
Lessee will indemnify, hold harmless, and defend (with counsel reasonably acceptable to Lessor) the City of Salinas, its elected and appointed officials, officers, employees, representatives, volunteers, and agents (hereinafter collectively the “Released and Indemnified Parties”) Parties against any and all claims, actions, causes of action, liabilities, costs (including reasonable attorneys' fees), expenses, liens, judgments, damages, or civil or administrative fines (collectively, "Claims") caused by Lessee's use of the Premises, including, without limitation, Claims for property damage, personal injury, or wrongful death; provided, however, that Lessee's indemnification obligation does not extend to Claims arising out of the gross negligence or willful misconduct of the Released and Indemnified Parties.
Section 6.2 Insurance.
Lessee will provide insurance coverage in types and amounts and subject to such conditions as specified in Exhibit D – Insurance Requirements.
Section 6.3 Reporting Damage.
Lessee shall report any transaction or occurrence at or relating to the Premises for which Lessor may have significant exposure to liability. Such report will be made immediately by phone, and within one (1) business day in writing, to Lessor's Airport Manager or such other person as Lessor may designate in writing. The written report will describe the incident in reasonable detail, including a description of the nature of the damages and the identity and contact information (if available) of any witnesses. The report will also identify any insurance policy that may be available to cover the damage.
Section 6.4 Disclaimer and Release; ADA Notice.
General Release.
Lessee agrees that this is a commercial lease negotiated in good faith and that it was provided a reasonable opportunity prior to entering into this Agreement to inspect the Premises and to conduct such due diligence as it, in its discretion, has deemed appropriate.
Lessee accepts the Premises subject to and as provided in this Lease in its current "as-is" condition, including all faults or defects, zoning conditions, or hazardous conditions known or unknown (if any). Lessor will not be liable to Lessee for, and Lessee hereby releases the Released and Indemnified Parties from any and all liability, whether in tort or in contract, for any injury, damage, or loss resulting from or attributable to the condition or status of the Premises.
Lessee hereby waives and agrees not to commence any action, legal or administrative proceeding, cause of action, or suit in law or equity, of whatever kind or nature, directly or indirectly against the Released Parties in connection with the Premises, this Lease or Lessee's use of the Premises pursuant to this Lease.
Lessee, on its own behalf and of any other party claiming by or through Lessee, expressly waives the provisions of Civil Code Section 1542, which states:
A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.
Lessee's Initials:
Lessee acknowledges that the release set forth above is an integral part of this Lease, and that Lessor would not have agreed to enter into this Lease without it. The release shall survive the expiration and termination of this Lease.
Notwithstanding anything to the contrary herein, this Subsection shall not be construed to hold Released and Indemnified Parties harmless for liability for the breach of this Lease or for intentional and active fraud, willful misconduct, or gross negligence.
Assumption of Risks and Waiver. Lessee assumes all risks associated with the use of the Airport and Premises for aviation purposes, including, without limitation, risks (including without limitation any psychological risks) associated with noise, vibration, currents and other effects of air, illumination, and fuel consumption. Lessee expressly waives any and all claims whatsoever against the Released and Indemnified Parties arising in any manner out of the normal operation of the Airport as an airport, and waives any nuisance claim Lessee may have against another lessee or licensee of Airport property so long as the lessee or licensee is in full compliance with all applicable Legal Requirements, as well as with its lease or license. Lessees within the scope of the foregoing waiver are intended beneficiaries of the waiver.
Section 6.5 Hazardous Substances.
Notice of Releases. Pursuant to Health and Safety Code Section 25359.7, Lessee will notify Lessor in writing within a reasonable time after Lessee obtains knowledge of any material release of hazardous substances and of any hazardous substances that have come to be located beneath the Airport.
Removal of Hazards. Prior to the expiration of this Lease, Lessee will, at its sole expense, remove all items of personal property from the Premises, including but not limited to all flammable substances and hazardous materials and wastes (as defined by Legal Requirements) at the time of expiration of this Lease to the extent released or deposited by Lessee and to the extent the presence of which violates applicable Law. Lessee will have no liability or responsibility for removal of flammable substances or hazardous materials and wastes migrating to beneath the Leased Premises or existing prior to the Effective Date.
Availability of Records. Lessee shall make available for inspection to the Lessor, all records relating to the maintenance, release, mitigation, cleanup and disposal of any hazardous substances on the Premises.
Compliance with Applicable Laws. Lessee shall comply with all Legal Requirements relating to hazardous materials and wastes it uses, stores, releases or discharges on the Premises during the term of this Lease and shall timely comply with the orders of any governmental agencies relating thereto. Lessee will be responsible for meeting current storm water pollution prevention best management practices, as identified by Lessor in Lessor’s Storm Water Pollution Prevention Plan, as it may be amended from time to time. Such practices include, without limitation:
Providing a labeled and stocked spill kit on site;
Proper storage and labeling of hazardous substances or components of potentially hazardous substances;
Providing personnel with appropriate routine spill response training; Keeping repair, construction, and maintained appropriately covered from wet weather;
Making appropriate use of drip pans, dry cleanup models, and spill and overflow protection; and
Removing pollutants offsite as necessary or appropriate.
Lessee understands and agrees that failure to comply with such best practices may result in Lessee no longer being included by Lessor in Lessor’s participation in the general permit of the California State Water Resources Control Board concerning storm water discharges.
Indemnification. Without limiting Lessee's indemnification obligations in any manner under this Lease, Lessee agrees to hold harmless, indemnify, and defend the Released and Indemnified Parties for any liability to the extent caused by Lessee's breach of this Section.
Section 6.6 Survival.
As provided for in applicable Legal Requirements, Lessee's duties under this Article survive the termination of this Lease.
ARTICLE 7 – DEFAULT AND TERMINATION
Section 7.1 Termination for Nonpayment of Rent or Other Charges.
Lessee’s failure to pay rent or any other charge due to Lessor under this Agreement within ten (10) days of the due date for such payment will constitute an Event of Default. Upon the occurrence of such Event of Default, Lessor will provide Lessee with written notice of the default. Unless the default is cured or waived within thirty (30) days of such notice, or unless the parties reach some other agreement in writing regarding payment of the amount due, the Lessor may take whatever action at law or in equity as may appear reasonably necessary to enforce performance or observance of any obligations, agreements, or covenants of the Lessee under this Lease, including without limitation, termination of this Lease. In the event of such default, the Lessor’s remedies shall be cumulative, and no remedy expressly provided for in this Lease, Article, or Section shall be deemed to exclude any other remedy allowed by law.
Section 7.2 Other Events of Default.
In the case of any Event of Default under this Lease other than as described in Section 6.1, Lessee will cure the default on thirty (30) days' written notice from Lessor; provided that if a cure cannot reasonably be accomplished within such time, Lessee will commence a cure within thirty (30) days, and will diligently pursue a cure as quickly as reasonably possible. If the default is not timely cured, the Lessor may take whatever action at law or in equity as may appear reasonably necessary to enforce performance or observance of any obligations, agreements, or covenants of the Lessee under this Lease, including without limitation, termination of this Lease. In the event of such default, the Lessor’s remedies shall be cumulative, and no remedy expressly provided for in this Section shall be deemed to exclude any other remedy allowed by law.
Section 7.3 Force Majeure.
Termination by Lessor. Lessor may terminate this Lease, on such notice as is reasonable under the circumstances, due to an act of God, war, civil unrest, terrorism, the action of another government agency, or for otherwise for good cause not reasonably within Lessor's control, that would prevent Lessee's use of the Premises as contemplated under this Lease, and that gives rise to a need to regain possession of the Premises. Lessor will abate any rent due from Lessee accordingly and will pay Lessee the fair market value of the Tenant Improvements and any Additional Improvements constructed with Lessor's permission.
Termination by Lessee. If, due to an act of God, war, civil unrest, terrorism, the action of another government agency, or for otherwise for good cause not reasonably within Lessor's control, Lessee can no longer use the Premises as contemplated under this Lease, Lessee may, upon three (3) months' written notice, terminate this Lease. Lessor will abate Lessee's rent during such period of notice and will refund any prepaid rent for the period following termination but will otherwise have no liability for any damages to Lessee.
Section 7.4 Insolvency.
Insolvency by Lessee will constitute an Event of Default under this Lease. Insolvency includes any circumstance in which Lessee has, (i) made a general assignment for the benefit of creditors; (ii) filed any voluntary petition in bankruptcy or suffered the filing of an involuntary petition by its creditors (provided that the filing of any involuntary petition in bankruptcy against Lessee will not constitute a breach of this lease unless and until there is an adjudication that Lessee is bankrupt); (iii) suffered the appointment of a receiver to take possession of all or substantially all of its assets; (iv) suffered the attachment or other judicial seizure of all or substantially all of its assets; (v) admitted in writing it inability to pay its debts as they come due; or (vi) made an offer of settlement, extension or composition to its creditors generally.
Section 7.5 Casualty.
Lessor's Right to Restore. If the Premises are totally or partially damaged or destroyed by fire, earthquake, or other casualty, Lessor will have the right, but not the obligation, to restore the Premises by repair or rebuilding. Lessor will not be obligated to repair or restore any alterations, additions, fixtures, equipment, or improvements which Lessee has installed to the Premises. The Lessor will provide the Lessee with a written notice within thirty (30) days following the date of such damage stating whether the Lessor has elected to terminate this Lease or to repair the Premises. If Lessor fails to provide such timely notice, Lessee may terminate this Lease upon ten (10) days' prior written notice. If Lessor provides such timely notice and elects to repair or rebuild, and thereafter is able to commence such restoration within ninety (90) days from the date of damage, and can demonstrate that the Premises can be restored within 180 days, this Lease shall remain in full force and effect. If Lessor is unable to restore the Leased Premises within this time, or if Lessor elects not to restore, then either party may terminate this Lease by giving the other written notice. Upon such election to terminate, the rent under this Lease will be due and payable only through the date of damage. If this Lease is not terminated, the rent due and payable under this Lease will be abated or reduced to the extent that the damage interferes with Lessee's reasonable use of the Premises until such portion of the Premises is restored.
Lessee's Right to Terminate. Notwithstanding the provisions of Subsection (a), if the Premises are so damaged, or the Lessor substantially restricts the use of the airport as an airport for reasons beyond the control of the Lessor as to materially and adversely affect Lessee's ability to conduct its normal business operations, as reasonably determined by Lessee, Lessee will have the right at its option to terminate the Lease upon written notice to Lessor given within thirty (30) days following the date of such damage and rent under this Lease will be due and payable only through the date that such notice is given.
No Obligation to Restore. If Lessor elects to repair and restore, Lessor will restore the Premises to substantially its condition to that prior to the occurrence or damage, provided that Lessor will not be obligated to repair or restore any alterations, additions, fixtures, equipment or improvements which have been installed by Lessee, whether or not Lessee has the right or obligation to remove the same or is required to leave the same on the Premises as of the expiration or earlier termination of this Lease, unless Lessee, in a manner satisfactory to Lessor, assures payment in full of all costs as may be incurred by Lessor in connection therewith. If there be any such alterations, fixtures, additions equipment or improvements installed by Lessee and Lessee does not assure or agree to assure payment of all cost of restoration or repair as aforesaid, Lessor will have the right to determine the manner in which the Premises will be restored so as to be substantially as the Premises existed prior to the damage occurring of this Lease, as if such alterations, additions, fixtures, equipment or improvements installed by Lessee had not then been made or installed.
No Liability for Loss or Interruption of Business. In no event will Lessor be responsible for any loss or interruption to Lessee’s business caused by damage or destruction to the Premises or during the repair or reconstruction thereof regardless of the cause of damage or destruction or the extent of insurance coverage. The parties agree that the rights and obligation of the parties in the event of damage or destruction of the Premises will be governed by this Lease.
Section 7.6 Eminent Domain.
This Lease will terminate automatically if the entire Premises are acquired by eminent domain or sale in lieu of eminent domain. All compensation for the Premises will be payable to Lessor, except that Lessee will have the right to make a claim to the public agency acquiring the property for compensation for its Tenant Improvements and Additional Improvements, relocation expenses, and business losses, as allowed by law. If only a portion of the Premises is acquired by eminent domain or sale in lieu of eminent domain, Lessee may terminate this Lease on thirty (30) days prior written notice; provided that termination will be effective only after Lessee pays any rent, taxes, assessments, property related fees, or other charges due and owing to the date of the termination. Any compensation which would otherwise be payable to Lessee may be paid directly to any encumbrancer of Lessee's leasehold interest to the extent of such encumbrance.
Section 7.7 Airport Development
Future Expansion. In the event Lessor should require the Premises in connection with the future expansion and/or operation of the Airport, Lessor may, upon six (6) months’ written notice, terminate this Lease.
Lessee’s Inability to Use Leasehold Due to Development. Should Lessor alter its proposed plan of development of the Airport in a manner that would preclude Lessee from operating under the terms of this Lease; or should any other government agency assume control of the Airport or any portion thereof in a manner that would preclude Lessee from operating under the terms of this Lease; or should it occur that during the term of this Lease, any governmental action, law, regulation, rule, order, judicial decision or ordinance should come into effect, the terms of which so restrict the use to which the Premises can be put that Lessee is unable to use the Premises in the manner contemplated herein, Lessor will, upon written request from Lessee, terminate this Lease or extend the term of this Lease for the period of time Lessee’s operation is so precluded; and no rent shall accrue during said period.
If this Lease is canceled under the provisions of this section, Lessor shall pay Lessee the fair market value of Lessee’s interest. The term “Lessee’s interest” as used herein is expressly limited to and defined as the then-in-place, fair market value, not to exceed the original purchase cost of the Improvements and construction cost of the Additional Improvements that are considered fixtures under the rules of fixtures, expounded in Section 1013 and 1019 of the Civil Code of California. Fixtures include buildings, floor slabs, foundations, and paving. The fair market value of Lessee’s interest shall be determined in accordance with appraisal procedures delineated in Section 4 herein.
Section 7.8 Remedies Cumulative.
Remedies provided under this Article for any Event of Default are cumulative with any other remedy that may be available to either party at law or in equity. For greater clarity, a termination resulting from Force Majeure, casualty, or eminent domain will be deemed a no-fault termination, and not an Event of Default, and remedies therefore will be limited as provided in this Article.
Section 7.9 Lease Termination.
At the expiration or early termination of this Lease, Lessee shall surrender the Premises to Lessor in the condition required by this Lease. Prior to surrender: (a) Lessee shall remove all alterations and Tenant Improvements designated by Lessor to be removed and shall restore the Premises to the condition existing immediately prior to the installation of such alterations and Tenant Improvements; (b) Lessee shall remove all personal property and trade fixtures from the Premises and all of its signs from the Premises; and (c) Lessee shall repair all damage caused by the installation or removal of any such alterations, Tenant Improvements, personal property, signage or trade fixtures. Lessee shall deliver the Premises to Lessor in “clean and in good condition,” subject to reasonable wear and tear (consistent with Lessee’s repair and maintenance obligations under this Lease) and damage by casualty that is not required to be repaired by Lessee pursuant to this Lease. Clean and good condition, for the purposes of this Lease shall include the following: the floor to be mop clean, windows cleaned inside and out, broken, cracked, or missing windows repaired or replaced; all light fixtures and bulbs in operating conditions; walls are clean and free of stains, holes or other markings on wall and floors as a result of business operations are repaired; all doors are in good mechanical operating condition, carpets are cleaned, roof leaks are repaired; fencing is in good condition; building shall be fumigated for pests or Lessee in-lieu of fumigating the building Lessee can demonstrate through receipts participation in regular pest control; and water fixtures and valves are leak-free and operable. Electrical outlets and breaker boxes shall have appropriate covers/lids. Lessee shall be responsible for ensuring the Tenant Improvements are surrendered to the City in a state of condition that does not present a safety hazard.
ARTICLE 8 – MISCELLANEOUS PROVISIONS
Section 8.1 Reservations
The Premises are accepted as-is by Lessee subject to any and all existing easements and encumbrances. Lessor reserves the right to install, lay, construct, maintain, repair, and operate such sanitary sewers, drains, storm water sewers, pipelines, manholes, and connections; water, oil and gas pipelines; telephone, telegraph and electric power lines; and the appliances and appurtenances necessary or convenient in connection therewith, in, over, upon, through, across and along any and all portions of the Premises. No right reserved by Lessor in this clause shall be so exercised as to interfere unreasonably with Lessee’s permitted use or operations hereunder or to impair the security or any secured creditor of Lessee.
Lessor agrees that rights granted to third parties by reason of this clause shall contain provisions that the surface of the Premises shall be restored as nearly as practicable to its original condition upon the completion of any construction. Lessor further agrees that should the exercise of these rights temporarily interfere with the use of any and all of the Premises by Lessee, the rental shall be reduced in proportion to the interference with Lessee’s use of the Premises.
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 the Lessee and without interference or hindrance to Lessee’s permitted use or operations hereunder or to impair the security or any secured creditor of Lessee.
Lessor reserves the right to market and promote the airport as it sees fit, regardless of the desires or views of the Lessee, and without interference. Lessor reserves the right to temporarily close portions or amend in their entirety for safety, construction, maintenance, or other activities as it sees fit. Lessee shall not seek damages from Lessor for loss of use from facilities, business, or any other reason thereon in connection with temporary closures.
The Lessor reserves the right, but shall not be obligated to the Lessee, to maintain and keep in repair the landing area of the Airport and all publicly-owned facilities of the Airport, together with the right to direct and control all activities of the Lessee in this regard.
Lessor reserves the right to take any action it considers necessary to protect the aerial approaches of the Airport against obstruction, together with the right to prevent Lessee from erecting, or permitting to erect, any building or other structures on the Airport which, in the opinion of Lessor, would limit the usefulness of the Airport or constitute a hazard to aircraft.
Lessor reserves and excepts from this Lease all that portion of the real property herein leased which is super adjacent to a plane sixty (60) feet above and parallel to the existing ground surface of said real property (which portion is hereby referred to as “Super adjacent Air Space”).
Lessor further reserves and excepts from this Lease, and Lessee hereby grants to Lessor (insofar as the hereinafter described easements and rights in any manner or to any extent that affect the Premises, any improvements which may be made thereon, and Lessee’s leasehold or other interest therein and Lessee’s use, occupancy or enjoyment thereof):
An avigation easement over and laterally adjacent to the Premises and any improvements which may be made thereon, including but not limited to the easement and right to fly, or cause or permit flight by any person of, any aircraft of and all kinds now or hereafter know, in, through, across or about any portion of said super adjacent air space and any air space laterally adjacent thereto; and The easement and right to cause or create, or permit to be caused or created, such noise, vibration, currents and other effects of air, illumination and fuel consumption which may arise or occur:
from or during the use of said avigation easement and such flight as is described in subsection H.1. hereinabove, or from or during the use by such aircraft of any Salinas Municipal Airport facilities, including but not limited to the landing, storage, repair, maintenance, operation, warm-up and take-off of such aircraft, upon, within or about said Airport, and the approach and departure of aircraft to or from such Airport.
The easements and rights herein reserved and excepted by Lessor, and the easements and rights herein granted by Lessee to Lessor, shall be deemed both in gross and also appurtenant to each and every portion of the real property of the Salinas Municipal Airport (save and except the Premises herein described).
Lessor reserves the right to temporarily close portions or amend in its entirety for safety, construction, maintenance or other activities as it sees fit. Lessor shall provide Lessee with an abatement of rent for the period of time where Lessee does not have access to the Premises due to a loss of use from facilities, business, or any other reason thereon in connection with temporary closures.
Section 8.2 Use Of Public Airport Facilities
Lessee is granted the non-exclusive use of all public Airport facilities, including but not limited to taxiways, runways, aprons, navigational aids, and facilities relating thereto, for purposes of landings, take-offs, and taxiing of Lessee’s and customers, aircraft. All such use shall be in accordance with the laws of the United States of America, the State of California, and the rules and regulations promulgated by their authority with reference to aviation and air navigation, and in accordance with all reasonable and applicable rules, regulations and ordinances of Lessor now in force or hereafter prescribed or promulgated by ordinance or by law.
Section 8.3 Common Airport Areas
Lessee shall have the privilege of using, in common with others to whom such privileges may also be given by Lessor, such airplane runways as are provided in the Salinas Municipal Airport for the take-off and landing of airplanes. Lessee shall also be entitled, in common with others to whom such privileges may also be given by Lessor, to such of the following services as may be provided by said Airport, to facilitate the take-off and landing of aircraft at and the flying of aircraft within and about said Airport, to wit: landing light, floodlights, signals and other such facilities. Such privileges, however, shall be subject to all rules and regulations now in effect or hereafter established by the City of Salinas governing or controlling such privileges, uses or operations, and shall be subject to the payment of all such fees or charges as the City of Salinas may now or hereafter impose for such privileges, uses and operations.
Section 8.4 Co-Ordinates
Co-ordinates used in the description in this lease are based upon the “Horizontal Control Net California Plan Co-ordinates, Zone 4,” for the City of Salinas, on file in the office of the City Engineer of the City of Salinas.
Section 8.5 No Waiver Of Rights
The waiver by Lessor of any breach of any term, covenant or condition contained in this lease shall not be deemed to be a waiver of such term, covenant or condition in any subsequent breach of the same or any other term, covenant or condition; and the consent or approval by Lessor to or of any act by Lessee requiring Lessor’s consent or approval shall not be deemed to waive or render unnecessary Lessor’s consent or approval to or of any subsequent similar acts by Lessee, and the subsequent acceptance of rent hereunder by Lessor shall not be deemed to be a waiver of any preceding breach by Lessee of any term, covenant or condition other than the failure of Lessee to pay the particular rent so accepted, regardless of Lessor’s knowledge of such preceding breach at the time of acceptance of such rent.
Section 8.6 Litigation Involving Lease
In the event Lessor is made a party to any litigation concerning this Lease or the Premises of any act or omission by Lessee, Lessee shall hold Lessor harmless from all loss or liability, including reasonable attorney’s fees incurred by Lessor in such litigation. Further, Lessee shall at its own expense, upon written request by Lessor, defend any such suit or action brought against Lessor, its officers, agents and employees. This section specifically includes any liability arising out of or in connection with separate agreements that Lessor may execute with third parties for services, volunteer or otherwise, relating to or in support of airport activities. In case suit shall be brought for an unlawful detainer of said premises, for the recovery of any rent due under the provisions of this Lease, or because of the breach of any other covenant or provision herein contained on the part of Lessee to be kept or performed, and Lessor prevails therein, Lessee shall pay to Lessor reasonable attorney’s fees, which shall be fixed by the court.
Section 8.7 Lessee’s Assumption And Waiver
This Lease is made upon the express condition, and (in consideration of Lessor’s leasing the Premises as herein provided) Lessee covenants, that Lessee hereby voluntarily assumes all risk of loss, damage or injury to the person or property of Lessee (including the leasehold interest of Lessee herein), and of its agents or employees, and of any other person in or about the Premises, which during the term of this Lease may be caused by or arise or occur in any manner from:
A. Flight of any aircraft of any and all kinds now or hereafter known in, through, across, around, or about any portion of the airspace over the Premises; or B. Noise, vibration, currents and other effects of air, illumination and fuel consumption, or fear thereof, arising or occurring from or during such flight, or from or during the use by such aircraft of Salinas Municipal Airport facilities, including but not limited to landing, storage, repair, maintenance, operation, warm-up, and take-off of such aircraft, and the approach and departure of aircraft to or from said Airport.
Lessee hereby waives and releases Lessor, its officers, employees, agents and contractors, from any and all claims or causes of action which it may now or hereafter have against Lessor, its officers, employees, agents or contractors, for any loss, damage or injury as outlined in subsections A and B of this paragraph except to the extent arising from the negligence or willful misconduct of Lessor. Nothing in this Section shall be construed to be a waiver or release of any claims or causes of action against any third party for any loss, damage or injury arising from such third party’s negligent acts or omissions.
Section 8.8 Construction Of Lease
Whenever the singular number is used in this Lease and when required by the context, the same shall include the plural, and the masculine gender shall include the feminine and neuter genders. If there be more than one Lessee designated in or signatory to this lease, the obligations hereunder imposed upon Lessee shall be joint and several; and the term “Lessee” as used herein shall refer to each and every of said signatory parties severally as well as jointly. Each term and provision of this Lease performable by Lessee shall be construed to be both a covenant and a condition. This instrument contains all of the agreements and conditions entered into and made by and between the parties hereto and may not be modified orally or in any manner other than by an agreement in writing signed by all parties hereto or their respective successors in interest.
Section 8.9 Time
Time is and shall be of the essence of each term and provision of this Lease.
Section 8.10 Material Breach
Each and every term, condition, covenant and provision of this Lease is and shall be deemed to be a material part of the consideration for Lessor’s entry into this Lease, and any breach hereof by Lessee shall be deemed to be a material breach.
Section 8.11 Notices
Except as is otherwise herein provided, all notices, statements, demands, requests, consents, approvals, authorizations, offers, agreements, appointments or designations hereunder by either party shall be in writing and shall be sufficiently given and served upon the other party if sent by mail, postage prepaid and addressed as follows:
If to Lessor, the same shall be addressed to:
Airport Manager
Salinas Municipal Airport
342 Airport Boulevard
Salinas, CA 93905
or to such other place as Lessor may by such similar notice in writing designate.
If to Lessee, the same shall be addressed to:
Advancetech Aircraft Maintenance, Inc.
1605 Moffett Street
Salinas, CA 93905
or to such other place as Lessee may by such similar notice in writing designate.
Section 8.12 Heirs, Successors And Assigns
All of the covenants, agreements, conditions and undertakings herein contained shall, subject to the provisions as to assignments, apply to and bind the representatives, heirs, executors, administrators, successors and/or assigns of all the parties hereto; and all the parties hereto shall be jointly and severally liable hereunder Section 8.13 Headings
The various section headings and numbers herein shall not be deemed to govern, limit, modify, or in any manner affect the scope, meaning or intent of the provisions of this Agreement.
Section 8.14 Severability
If any term, covenant, condition, or provision of this Lease is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the remainder of the provisions hereof shall remain in full force and effect and shall in no way be affected, impaired. or invalidated thereby.
Section 8.15 Counterparts
This Lease may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute a single agreement.
Section 8.16 Legal Representation
Each party affirms that it has been represented by legal counsel of its own choosing regarding the preparation and the negotiation of this Lease and the matters and claims set forth herein, and that each of them has read this Lease and is fully aware of its contents and its legal effect. Neither party is relying on any statement of the other party outside the terms set forth in this Lease as an inducement to enter into this Lease.
Section 8.17 Warranty Of Authority
Each party represents and warrants that it has the right, power, and authority to enter into this Lease. Each party further represents and warrants that it has given any and all notices, and obtained any and all consents, powers, and authorities, necessary to permit it, and the persons entering into this Lease for it, to enter into this Lease.
Section 8.18 Integration And Agreement
This Lease represents the entire understanding of City and Lessee as to those matters contained herein. No prior oral or written understanding shall be of any force or effect with respect to those matters contained herein. This Lease may not be modified or altered except by amendment in writing signed by both parties.
Section 8.19 Jurisdiction
This Lease shall be administered and interpreted under the laws of the State of California. Jurisdiction of litigation arising from this Lease shall be in the State of California, in the County of Monterey or in the appropriate federal court with jurisdiction over the matter.
IN WITNESS WHEREOF, the parties hereto have made and executed this Lease on the date first written above.
CITY OF SALINAS ADVANCETECH
AIRCRAFT MAINTENANCE, INC.
______________________________ ____________________________ Kimbley Craig By: Bruce Pittenger
Mayor Its: C.E.O.
APPROVED AS TO FORM:
______________________________
Christopher A. Callihan
City Attorney
RECOMMENDED FOR APPROVAL:
________________________________
Matt Nelson
Airport Manager
EXHIBIT A
Depiction of the Premises
EXHIBIT B
Permitted Uses of the Premises
This Lease is made for the purpose of allowing Lessee use of the Premises and for granting to Lessee certain non-exclusive rights and privileges for use of which are more specifically described below:
Landscaping of lands and property; a corporate office for administration of Lessee’s aircraft maintenance business; and a hangar for storage, repairs and maintenance of owned, leased, and non-owned single and multi-engine aircraft for compensation, storage of non-owned aircraft for compensation, and/or aircraft allowed under this Lease; and storage, repairs and maintenance of Lessee owned vehicles, trailers, equipment, supplies and materials used in the operation of Lessee’s aircraft maintenance business.
Only as specifically authorized by local ordinance, including the Salinas Zoning Code, or state or federal law, performing repairs and maintenance on aircraft and owned vehicles, trailers, equipment, supplies and materials. As used in this subparagraph the term “Maintenance” shall be defined as “repair limited to exchange of parts and maintenance requiring no open flame welding or the use of Class I or II liquids,” so as to comply with the provisions of the Uniform Building Code, Chapter 7 and California Administrative Code Title 24.
Lessee shall not use the Premises, or any part thereof, or permit them to be used for any purpose or purposes other than for the uses described above herein. Maintenance shall only be allowed on aircraft owned and non-owned single and multi-engine aircraft by Lessee and Lessee’s customers and stored within the Improvements. Such maintenance shall be restricted to that allowed under the Salinas City Code for the rating of the structure approved under Lessor’s permitting process. Lessee shall not do or permit to be done upon the Premises any act or thing which constitutes a nuisance or which may disturb the quiet enjoyment of the City, of any tenant of the City, or private businesses on adjacent land or neighboring property. Lessee further agrees, within 72 hours from receiving written notice by the Lessor that a nuisance exists, to abate or otherwise cause said nuisance to be cured. In the event Lessee has not taken corrective action within 72 hours, the Lessor may use all available remedies to abate the nuisance, including but not limited to entering and abating said nuisance, at the expense of the Lessee without any liability whatsoever to Lessor for monetary loss or anticipated profits of Lessee or others.
Storage of ancillary items, including without limitation, automobiles, watercraft and other vehicles shall be allowed within the Improvements, subject to Airport Rules and Regulations, as long as the Improvements are primarily used for the storage of aircraft.
EXHIBIT C
Reserved
EXHIBIT D
Insurance Requirements
Coverage shall be at least as broad as:
Commercial General Liability (“CGL”): Insurance Services Office (“ISO”) Form CG 00 01 covering CGL on an occurrence basis, including products and completed operations, property damage, bodily injury, and personal & advertising injury with limits no less than $2,000,000 per occurrence. If a general aggregate limit applies, either the general aggregate limit shall apply separately to this project/location (ISO CG 25 03 or 25 04) or the general aggregate limit shall be twice the required occurrence limit. Lessee shall maintain fire legal liability insurance on the leased property with extended coverage and debris-cleanup provisions in an amount not less than $1,000,000, and in any event that covers at least ninety percent (90%) of the actual cash value of all Improvements, Additional Improvements, and betterments in or on the Premises. Products and completed operations coverage is not required provided that Lessee remains a holding company and does not engage in manufacturing or providing other services. Lessee is required to maintain employment practices coverage if it has or acquires any employees.
Workers’ Compensation: Workers’ Compensation insurance, if applicable due to Lessee having or acquiring employees, as required by the State of California, with Statutory Limits, and Employer’s Liability Insurance with limits of no less than $1,000,000 per incident for bodily injury or disease.
Personal Property: Property insurance against all risk of loss to any Lessee-owned or controlled property, including, without limitation, personal property at full replacement cost with no coinsurance penalty provision and naming City of Salinas as a loss payee for the Improvements, Additional Improvements, and betterments. Any fire legal liability coverage maintained shall also name the City of Salinas as additional insured or as loss payee.
Automobile Liability: Insurance for any Lessee-owned or hired automobiles, and non-owned automobiles, with $1,000,000 each occurrence for bodily injury and property damage. (This is required if Lessee is permitted to drive vehicles on any airport airside locations.) Hangar-Keepers Liability: This is required, if the owner has any aircraft of others in their care, custody, and/or control (such as storing a friend’s aircraft, managing a client’s aircraft, or etc.) $1,000,000 each occurrence.
Other Insurance Provisions:
The insurance policies are to contain, or be endorsed to contain, the following provisions:
Additional Insured Endorsement - The liability policies shall include the City of Salinas, its elected and appointed officials, officers, employees, representatives, volunteers, and agents (hereinafter collectively the “City”) as Additionally Insured via endorsement.
Waiver of Subrogation Endorsement - Lessee hereby grants to City of Salinas a waiver of subrogation which any insurer may acquire against City of Salinas, its officers, officials, employees, and volunteers, from Lessee by virtue of the payment of any loss. Lessee agrees to obtain any endorsement that may be necessary to affect this waiver of subrogation but this provision applies regardless of whether or not the City of Salinas has received a waiver of subrogation endorsement from the insurer. The Workers’ Compensation policy shall be endorsed with a waiver of subrogation in favor of the City of Salinas for all work performed by the Lessee, its employees, agents, and subcontractors.
Primary and Non-contributing Coverage - All required insurance policies and all renewals thereof shall be primary and non-contributing; the required insurance policy shall be primary over any other insurance, deductible, or self-insurance maintained by the City and non-contributory with respect to the City.
Cancellation - Required insurance policies shall not be cancelled or the coverage reduced until a thirty (30) day written notice of cancellation has been served upon the City except ten (10) days shall be allowed for non-payment of premium.
Broader Coverage/Higher Limits - If the Lessee or Permit Holder maintains broader coverage and/or higher limits than the minimums shown above, the Lessee or Permit Holder requires and shall be entitled to the broader coverage and/or higher limits maintained by the Lessee or Permit Holder. Any available insurance proceeds in excess of the specified minimum limits of insurance and coverage shall be available to the City.
Acceptability of Insurers - Insurance is to be placed with insurers authorized to conduct business in the state with a current A.M. Best rating of no less than A: VII, unless otherwise acceptable to the City.
Verification of Coverage – Lessee or Permit Holder shall furnish the City with original Certificates of Insurance including an additional insured endorsement and all required amendatory endorsements (or copies of the applicable policy language effecting coverage required by this clause) and a copy of the Declarations and Endorsement Pages of the liability policies listing all policy endorsements to City before work begins. However, failure to obtain the required documents prior to the work beginning shall not waive the Permit Holder’s obligation to provide them. The City reserves the right to require complete, certified copies of all required insurance policies, including endorsements, required by these specifications, at any time.
Special Risk or Circumstances - City reserves the right to modify these requirements, including limits, based on the nature of the risk, prior experience, insurer, coverage, or other special circumstances.
Self-Insured Retentions - Self-insured retentions must be declared to and approved by the City of Salinas. At the option of the City, the Lessee shall provide coverage to reduce or eliminate such self-insured retentions as respects the City, its officers, officials, employees, and volunteers; or the Lessee shall provide evidence satisfactory to the City guaranteeing payment of losses and related investigations, claim administration, and defense expenses. The policy language shall provide, or be endorsed to provide, that the self-insured retention may be satisfied by either the named insured or City of Salinas.
Sublessees, Contractors, and Subcontractors - Lessee shall require all sublessees, contractors, and subcontractors who perform work on the Premises to maintain general liability insurance in an amount of no less than $1 million combined single limit per occurrence which complies with all of the provisions in this Insurance section above, including providing an additional insured endorsement in favor of the City, and Lessee shall provide City with copies of such insurance certificates and endorsements at the initiation of any sublease between Lessee and a sublessee as well as upon request by the City.
Furthermore, before commencing or allowing commencement of any work of improvement, Lessee shall ensure that all of its employees and/or all employees of any sublessees, contractors and subcontractors, are covered by workers’ compensation insurance.
EXHIBIT E
Reserved
31 10/1/2024