NVF:JAC:CAG
5/6/24
Rev. 2/16/23
SJC Hangars LLC 1
First Amendment to Lease and SASO Agreement
Document No. 10761-LE-24-1
T-46604.004 / SJC HANGARS LLC 10761-LE-24-1 - FINAL
FIRST AMENDMENT TO
LEASE AND SASO OPERATING AGREEMENT
BETWEEN
THE CITY OF SAN JOSE
AND
SJC HANGARS LLC
This FIRST AMENDMENT TO LEASE AND SASO OPERATING AGREEMENT is entered into this ____ day of ____________, 20__, by the CITY OF SAN JOSE, a chartered municipal corporation of the State of California (“City”), and SJC HANGARS LLC, a Delaware limited liability company authorized to do business in California (“Tenant”).
RECITALS
WHEREAS, on March 21, 2024, City and Tenant entered into an a greement entitled “LEASE AND SASO OPERATING AGREEMENT BETWEEN THE CITY OF SAN JOSE AND SJC HANGARS LLC” (“Lease”); and
WHEREAS, City and Tenant desire to amend the Lease to revise provisions to allow for Rent and Term reductions in the event Tenant fails to receive required approval s and associated environmental review for construction of Additional Hangar Space Leasehold Improvements, and to correct clerical errors;
NOW, THEREFORE, the parties agree to amend the Lease as follows:
SECTION 1. S
ECTION 1, “DEFINITIONS AND SUMMARY OF LEASE TERMS”, the following term is restated solely to repair clerical errors to the section references to read as follows:
“ “
Expiration Date” (§2 TERM) means 20 years from the Commencement Date subject to earlier termination as provided for under the terms of the Lease and in Section
2.3, and extension provisions in Section 2.4 .”
DRAFT--Contact the Office of the City Clerk at (408) 535-1260 or [email protected] for final document.
NVF:JAC:CAG
5/6/24
Rev. 2/16/23
SJC Hangars LLC 2
First Amendment to Lease and SASO Agreement
Document No. 10761-LE-24-1
T-46604.004 / SJC HANGARS LLC 10761-LE-24-1 - FINAL
SECTION 2 . SECTION 2 “TERM,” is amended and restated in its entirety as follows:
“2.1 Term
The term of this Lease shall commence on the Commencement Date and shall continue through the Expiration Date, unless sooner expired pursuant to Section 2.3 , or unless extended pursuant to Section 2.4 , or otherwise sooner terminated in accordance with the terms of this Lease.
2.2 Commencement of Transitional/Ramp Up Operations and Possession of Premises
From the Effective Date Tenant shall take possession of the Premises. From the Effective Date Tenant and subtenants shall be permitted to begin transitional/ramp up operations.
2.3 Tenant’s Option to Reduce the Expiration Date
If, for reasons beyond Tenant’s reasonable control, Tenant does not receive the required CEQA and NEPA approvals within four (4) years of the Commencement Date to construct the Leasehold Improvements for the Additional Hangar Space (by April 30, 2028), Tenant shall have the option to reduce the Expiration Date from twenty (20) years after the Commencement Date (April 30, 2048) to ten (10) years after the Commencement Date (April 30, 2038). Tenant shall provide written notice to the Director of Tenant’s election to exercise its option to reduce the Expiration Date, no later than ninety (90) days after April 30, 2028 (by July 29, 2028). In such event, Tenant agrees to execute a “Notice of Exercise of Option” as attached in Exhibit M. Tenant’s exercise of its option to reduce the Expiration Date pursuant to this Section does not preclude Tenant’s eligibility for the mutual five- year Term extension described in Section 2.4. Soley for clarity, in the event that Tenant does receive approvals to construct the Leasehold Improvements in the Additional Hangar Space by April 30, 2028, then Tenant will no longer be able to exercise the option to reduce the Expiration Date by 10 years.
2.4 Mutual Extension of Term
Upon mutual agreement by parties, the term of this Lease may be extended for five (5) years. This option to extend is only offered one- time and must be completely executed no later than 18 months prior to the then-current Expiration Date, subject to Tenant’s Expiration Date reduction option in Section 2. 3 of this Lease, provided the Tenant is in good standing as determined solely by the Airport.
2.5 Holdover
It is not the intent of this Lease to create any tenancy by Tenant beyond the expiration or termination date hereinabove set forth. Any holding over after the
DRAFT--Contact the Office of the City Clerk at (408) 535-1260 or [email protected] for final document.
NVF:JAC:CAG
5/6/24
Rev. 2/16/23
SJC Hangars LLC 3
First Amendment to Lease and SASO Agreement
Document No. 10761-LE-24-1
T-46604.004 / SJC HANGARS LLC 10761-LE-24-1 - FINAL
expiration or earlier termination of the term of this Lease shall be conditioned upon the approval of the Director and on terms and conditions approved by the Director. Tenant shall comply with all terms and conditions of this Lease during any holdover period.”
SECTION 3. SECTION 5.1, “Rent and Revenue Share ,” is amended and restated in its entirety as follows:
“5.1.1 Rent
a. Commencing on the Commencement Date, Tenant shall pay Rent as set forth in Section 1. Rent shall be due and payable in advance in twelve equal monthly payments on the first (1st) day of every month in accordance with the provisions of Section 5.5 “Payment of Rent, Activity Fees and Charges” herein and is subject to adjustment as required by Section 5.2.
b. Notwithstanding the foregoing, for the period between April 1, 2024 and the Commencement Date, Tenant shall pay rent of $119,375. Rent shall be due and payable in advance on the first (1st) day of the month in accordance with the provisions of Section 5.5 herein.
c. Rent Reduction. If, for reasons beyond Tenant’s reasonable control, Tenant does not receive CEQA and NEPA approvals, as required for the Leasehold Improvements to construct Additional Hangar Space within twenty-four months from the Commencement Date (by April 30, 2026), then effective May 1, 2026, and after adjusting the a nnual Adjusted Rent with CPI -based Percentage Increase (if any), the Rent shall then be reduced by thirty-three percent (33%) until the earlier of either (i) receipt of required CEQA and NEPA approvals as required for the Leasehold Improvements; or (ii) another twenty -four (24) months after the first 24 months after the Commencement Date ( April 30, 2028). Beginning the earlier of the first day of the month following receipt of necessary approvals or May 1, 2028, the reduced R ent will no longer be in effect and Tenant will resume paying Rent calculated pursuant to Section
5.1.1.a until receipt of Certificate of Occupancy, at which time Rent is adjusted as discussed in Section 5.1.1( e) below. If Tenant is eligible for the Rent reduction, then in no event will the Annual Adjusted Rent commencing May 1, 2026, through April 30, 2028 be less than $1,919,550, subject to annual CPI Percentage Increase Adjustment described in Section 5.2.
d. If Tenant elects to exercise its option to reduce the Expiration Date as stated in Section 2.3, effective on the 4-year Percentage Increase Date (May 1, 2028), the Adjusted Rent will be reduced to $2,200,000 plus the cumulative total of CPI percentage increases for Lease years 1 through 4 and Tenant will be
DRAFT--Contact the Office of the City Clerk at (408) 535-1260 or [email protected] for final document.
NVF:JAC:CAG
5/6/24
Rev. 2/16/23
SJC Hangars LLC 4
First Amendment to Lease and SASO Agreement
Document No. 10761-LE-24-1
T-46604.004 / SJC HANGARS LLC 10761-LE-24-1 - FINAL
released from its obligation to expend Capital Expenditure.
e. Effective the first day of the month following receipt of Certificate of Occupancy for the Leasehold Improvements as stated in Exhibit G, Tenant’s Rent shall be the greater of $3,122,661 or the current year’s Adjusted Rent. The Rent shall at no time fall below the previous year’s Rent. Rent shall be due and payable in advance in twelve equal monthly payments on the first (1st) day of every month in accordance with the provisions of Section 5.5 herein and is subject to adjustment annually as required by Section 5.2.
5.1.2 Revenue Share
Commencing upon the first of the month following the receipt Certificate of Occupancy for the Additional Hangar Space Leasehold Improvements set forth in Exhibit G, Tenant shall pay the City a fifty percent (50%) revenue share for hangar rental rates within the Leasehold Premises that exceed fifty-three dollars ($53.00) per square foot (“Revenue Share Threshold”). For purposes of illustration, Tenant enters into a sublease for the Additional H angar Space or a portion of the Additional H angar Space at the rent of $76 per square foot , then the revenue share would be calculated as $11.50 per square foot (($76-53=23)/2=$11.50).
Revenue Share shall be reported monthly in accordance w ith Section 5.5 and payable in accordance with the provisions of Section 5.5. The Revenue Share Threshold shall increase in accordance with the Rent as set forth in Section 5.2."
SECTION 4. Exhibit M, “Notice of Exercise of Tenant’s Option” is hereby added, attached and incorporated into this First Amendment.
SECTION 5 . All of the terms and conditions of the Lease not modified by this First Amendment shall remain in full force and effect.
[
remainder of page intentionally left blank]
DRAFT--Contact the Office of the City Clerk at (408) 535-1260 or [email protected] for final document.
NVF:JAC:CAG
5/6/24
Rev. 2/16/23
SJC Hangars LLC 5
First Amendment to Lease and SASO Agreement
Document No. 10761-LE-24-1
T-46604.004 / SJC HANGARS LLC 10761-LE-24-1 - FINAL
WITNESS THE EXECUTION HEREOF on the day and year first written above.
APPROVED AS TO FORM:
_______________________________
JON CALEGARI
Senior Deputy City Attorney
Date:
“CITY”
CITY OF SAN JOSE, a chartered
municipal corporation of the State of
California
_______________________________
TONI TABER, CMC
City Clerk
Date: _________________________
“TENANT”
SJC Hangars LLC,
a Delaware limited liability company
authorized to do business in California.
_______________________________
Signature
_______________________________
Print Name
_______________________________
Title
_______________________________
Date
DRAFT--Contact the Office of the City Clerk at (408) 535-1260 or [email protected] for final document.
CERTIFICATE OF LLC AUTHORITY
This Certificate of LLC Authority shall be executed by the manager of the limited liability company.
I, , certify that I am the manager of the
Name of Manager
limited liability company named in the attached agreement;
that s igned the agreement on behalf of the limited
Name of Person that Signed Agreement
liability company as the o f the limited liability
Title of Person that Signed Agreement
company; and that the agreement was duly signed for and on behalf of the limited liability company by authority of its members, and is within the scope of its limited liability company powers.
By:
Name:
Its: Manager
Date:
DRAFT--Contact the Office of the City Clerk at (408) 535-1260 or [email protected] for final document.
NVF:JAC:CAG
4/26/2024
Rev. 2/16/23
SJC Hangars LLC Exhibit M-1
First Amendment to Lease and SASO Agreement
Document No. 10761-LE-24-1
T-46604.004 / SJC HANGARS LLC 10761-LE-24-1 - FINAL
EXHIBIT M
NOTICE OF EXERCISE OF TENANT’S OPTION
TO REDUCE EXPIRATION DATE OF
LEASE AND SASO OPERATING AGREEMENT
BETWEEN
THE CITY OF SAN JOSE
AND
SJC HANGARS LLC
WHEREAS, on May 1, 2024, City of San José (“City”) and SJC Hangars LLC (“Tenant”) entered into the “Lease and SASO Operating Agreement” (“Lease”); and
WHEREAS, on [date], City and Tenant entered into that First Amendment to the Lease to, among other things, provide Tenant an option to reduce the Expiration Date by ten years (from April 30, 2048 to April 30, 2038) in the event Tenant fails to obtain necessary approvals and/or amendment(s) to the Airport Master Plan and associated environmental review to construct the Leasehold Improvements for the Additional Hangar Space by no later than four years after the Commencement Date (by May 1, 2028); and
WHEREAS, Tenant has not received the necessary approvals and/or amendment(s) to the Airport’s Master Plan and associated environmental review to construct the Leasehold Improvements for the Additional Hangar Space by May 1, 2028; and
WHEREAS, Tenant desires to exercise its option to reduce the Expiration Date of the Lease by ten years;
NOW THEREFORE,
Tenant hereby exercises, pursuant to Section 2.3 of the Lease, its option to reduce the Expiration Date of the Lease from 20 years after the Commencement Date (April 30, 2048) to 10 years after the Commencement Date (April 30, 2038).
DRAFT--Contact the Office of the City Clerk at (408) 535-1260 or [email protected] for final document.
NVF:JAC:CAG
4/26/2024
Rev. 2/16/23
SJC Hangars LLC Exhibit M-2
First Amendment to Lease and SASO Agreement
Document No. 10761-LE-24-1
T-46604.004 / SJC HANGARS LLC 10761-LE-24-1 - FINAL
“TENANT”
SJC Hangars LLC,
a Delaware limited liability company
authorized to do business in California.
_______________________________
Signature
_______________________________
Print Name
_______________________________
Title
_______________________________
Date
DRAFT--Contact the Office of the City Clerk at (408) 535-1260 or [email protected] for final document.