DRO Terminal Food Beverage Concession Agreement - 2025 Final.docx

DURANGO-LA PLATA COUNTY AIRPORT

TERMINAL FOOD AND BEVERAGE CONCESSION AGREEMENT

THIS FOOD AND BEVERAGE CONCESSION AGREEMENT, made and entered into this _____ day of _________________, 20____ by and among the BOARD OF COUNTY COMMISSIONERS, La Plata County, Colorado, and the CITY OF DURANGO, Colorado, joint owners and operators of the Durango‑La Plata County Airport, (Hereinafter collectively referred to as "Lessor" or “Airport”); and ___________________________________________________ (Hereinafter referred to as “Concessionaire” or “Lessee”).

W I T N E S S E T H:

WHEREAS, Lessor is owner and operator of Durango‑La Plata County Airport (the "Airport") located in La Plata County, Colorado, and has the right to lease portions of the Airport and to grant operating privileges thereon subject to the terms and conditions hereinafter set forth; and

WHEREAS, Concessionaire desires to acquire certain premises and facilities, rights, services and privileges for the purposes hereinafter set forth; and

WHEREAS, Airport and Concessionaire each understand that the Airport is in the process of making improvements to Airport facilities that will potentially impact Concessionaire’s operations in the short term but will also ultimately improve Airport facilities for the long term and that these improvements will require mutual cooperation and coordination during the term of this lease.

NOW, THEREFORE, in consideration of the mutual promises, covenants, and conditions herein set forth in this Agreement, Concessionaire and Airport agree to be bound by the terms of this Agreement as set forth below.

ARTICLE 1

TERM

Section 1.01 Term

The term of this Agreement shall be five (5) years, effective as of ___________________, 20____, and, unless otherwise terminated as provided herein, shall expire at midnight five (5) years from the date set forth in the “Notice to Proceed with Operations” to be issued pursuant to Section 1.05.

If Lessee remains in possession of the Premises after the termination or expiration of this Agreement, Lessee agrees that it will continue to be bound by its obligations under this Agreement. Such holding over shall not be deemed to operate as a renewal or extension of this Agreement, but shall only create a tenancy from month to month, which may be terminated by the Lessor or Lessee upon thirty (30) days written notice.

Section 1.02 Extended Term

Subject to the conditions set forth herein, Concessionaire shall have the option to request an extension of the term of this Agreement for one (1) additional period of five (5) years, hereinafter the "Extended Term", provided Airport approves the extension in writing prior to the expiration of the initial term and Concessionaire is not in default in the payment of any rent or in default in any other provisions of this Agreement at the time of its request of any such option. The Airport reserves the exclusive right to approve or deny said request for extended term at its sole discretion. The Airport will provide a written acceptance or rejection of any extension request within ninety (90) days of receiving Concessionaire’s written request.

Concessionaire may request an extended term by giving written notice to the Airport not less than nine (9) months prior to the expiration of the Initial or any Extended Term. The terms and conditions applicable during the Initial Term of this Agreement shall remain applicable during any Extended Term.

Section 1.03 Entire Agreement

On the effective date of this Agreement, all prior agreements, oral or written, shall cease and terminate without any further action on the part of either party hereto. This Agreement, together with all exhibits attached hereto, constitutes the entire Agreement between the parties hereto, and all other representations of statements heretofore made, verbal or written, are merged herein. This Agreement may be amended only in writing, and executed by duly authorized representatives of the parties hereto.

Section 1.04 Surrender of the Premises

Airport shall not be required to give notice to Concessionaire to surrender possession at the expiration of this Agreement, and Concessionaire covenants and agrees that upon expiration of this Agreement, or upon earlier termination as hereinafter provided, it will peaceably surrender possession of the premises leased hereunder in good condition, reasonable wear and tear or acts of God excepted. Concessionaire will return the Premises in “broom clean” condition, capable to be relet by Airport without significant repair, excepting only reasonable wear and tear. All such costs of removal and restoration shall be borne by Concessionaire, without contribution by the Airport.

Concessionaire and Airport agree to work in good faith to facilitate a seamless transition of services upon the expiration or earlier termination of this Agreement. Concessionaire agrees to fulfill its responsibilities through the duration of the Agreement and maintain a continuous food and beverage presence for the traveling public. Airport will endeavor to provide advanced notice of any applicable transition plans to Concessionaire with the goal of maintaining uninterrupted food and beverage services throughout a transition period.

All permanent and non-removable improvements installed by the Concessionaire in the Leased Premises shall be and remain the property of Concessionaire until the expiration or earlier termination of this Agreement, at which time said permanent improvements shall become the property of Airport.

All non-permanent equipment, trade fixtures, materials and supplies, and personal property installed or placed by Concessionaire at its expense are and shall remain the property of Concessionaire unless Concessionaire shall fail within thirty (30) days following the expiration or earlier termination of this Agreement to remove such personal property. In the event of such failure to remove non-permanent property, title to such personal property shall, at the option of Airport, vest in Airport at no cost to Airport, and Airport shall be authorized to remove such property. Concessionaire shall not abandon any of its property on the premises without written consent of the Airport. Any and all Airport property damaged by, or as a result of, the removal of Concessionaire’s property shall be restored by Concessionaire, and its own expense, to the condition existing prior to such damage.

Section 1.05 Initial Build Out and Operations

The Leased Premises are located in the Airport’s new terminal building area, which is under construction as of the effective date of this agreement. The Airport shall issue to the Concessionaire a “Notice to Proceed with Build Out” for each area of the Leased Premises when it is available for the Concessionaire’s occupancy. The Operator accepts each area of the Leased Premises in its “As-Is” condition as of the date set forth in the “Notice to Proceed with Build Out.”

The Concessionaire shall plan, design, and build out the Leased Premises, at its sole cost, as further described in Concessionaire’s proposal. Approval of Concessionaire’s plans and the build out construction shall be in accordance with Article 8 of this agreement.

The Initial Build Out of each area of the Leased Premises shall be completed within ninety (90) days after the date set forth in each “Notice to Proceed with Build Out.” Upon notice from the Concessionaire of presumptive completion of the Initial Build Out of an area, the Airport and/or its designee will inspect the area, and if the area is in compliance with this agreement and the plans and specifications approved by the Airport, the Initial Build Out of that area shall be deemed completed. If, however, the inspection discloses any part of the Initial Build Out of that area as being unsatisfactory, the Airport will give the Concessionaire the necessary instructions for correction of same and the Concessionaire shall immediately comply with and execute such instructions without expense to the Airport.

When the Airport determines, in its sole discretion, that the terminal building and the Leased Premises are ready for the Concessionaire to provide food and beverage services to the traveling public at the Leased Premises, the Airport shall issue a “Notice to Proceed with Operations” to the Operator designating the date the Concessionaire is to commence operations.

ARTICLE 2

CONCESSIONAIRE PRIVILEGES

2.01 Airport does hereby grant Concessionaire the non-exclusive right to design, operate, and manage food and beverage and automated food/beverage vending services within the airport terminal building and the right to use the Leased Premises described herein in accordance with the terms and conditions of this Agreement. For purposes of this Agreement, food and beverage concessions shall include sit-down, counter service, carry-out/take-away and food delivery service within the terminal. Food and beverage concessions include the sale of beer, wine, spirits and mixed drinks for on-site consumption, provided Concessionaire maintains a valid liquor license and liquor liability insurance as part of, or in addition to, the commercial general liability insurance required hereunder. Automated vending refers to the approved vending machine locations within the terminal which dispense prepackaged food and canned or bottled beverages.

2.02 Concessionaire shall have the right to prepare and sell food for off-site catering so long as Concessionaire’s catering activities are considered secondary and do not interfere with Concessionaire’s primary activity of providing prompt, high quality food and beverage services to airport customers. Concessionaire shall have the right to prepare and sell "in-flight meals" for consumption aboard aircraft when ordered by aircraft operators, crews, or passengers. This right, however, is not to be construed as prohibiting such aircraft operators, crews, or passengers from obtaining in-flight meals from other sources.

2.03 Services shall be provided in accordance with the Airport’s Request for Proposals – Terminal Food & Beverage Concession, which is attached hereto and incorporated herein as Exhibit B, and Concessionaire’s Proposal, attached hereto and incorporated herein as Exhibit C. These documents, together with this Agreement, make up the entire Agreement between the parties. In the event of a conflict between the documents such conflict and interpretation shall be resolved in the following order of priority, the provisions of this Agreement shall control, then Airport’s Request for Proposals Exhibit B, and finally the Concessionaire’s Proposal Exhibit C.

2.04 Concessionaire shall not make use of the Leased Premises or the Airport in any manner which might interfere with the effectiveness of or accessibility to the drainage, sewer, water, communications, fire protection, utility, electrical or other systems installed or located from time to time at the Airport. In the event this covenant is not upheld, Airport reserves the right to cause the abatement of such interference at the expense of Concessionaire and to place such restrictions on the operations of Concessionaire as Airport deems necessary in the public interest.

2.05 Concessionaire shall not use the Leased Premises, nor permit others to use the Leased Premises, for any purpose other than the operation of food, beverage, and vending concessions, unless Airport authorizes Concessionaire, in writing, to use the Leased Premises for additional purposes.

ARTICLE 3

LEASED PREMISES

3.01 The Leased Premises, as evidenced in the Facilities Drawings attached hereto at and made a part hereof as “Exhibit A,” consist of:

Area A - Terminal (Landside Non-Sterile) Concession: (New construction)

· Size: Approximately eight hundred twenty-nine (829) square feet of public café space, with an additional five hundred ninety-two (194) square feet of adjacent kitchen space, and an additional three hundred fifty-seven (357) square feet of adjacent back of house/office/storage space.

· Anticipated Use: Full counter service with both freshly prepared and pre-prepared food and drinks. Alcoholic beverage service.

· Ceiling: Acoustic ceiling tile and wood baffle ceiling provided by Airport. All upgrades to be provided by Concessionaire.

· Flooring: Sealed concrete floor provided by Airport. All upgrades to be provided by Concessionaire.

· Walls: Mix of framed glass and gypsum board provided by Airport. A tiled wall behind the bar is also provided by Airport. All upgrades to be provided by Concessionaire.

· Millwork: Bar millwork provided by Airport. All additional or upgraded millwork to be provided by Concessionaire.

· Furniture: All seating to be provided by Concessionaire

· Equipment: Kitchen range hood roof penetration provided by Airport. Kitchen range hood and all other equipment/fixtures to be provided by Concessionaire.

Area B - Terminal (Airside Sterile) North Concession: (New construction)

· Size: Approximately eight hundred thirty-one (831) square feet of public café space, with an additional two hundred twenty-five (225) square feet of adjacent kitchen space.

· Anticipated Use: Full counter service both freshly prepared and pre-prepared food and drinks. Alcoholic beverage service.

· Ceiling: Linear wood and wood baffle ceiling provided by Airport. No upgrades anticipated.

· Flooring: LVT and sealed concrete floors provided by Airport. All upgrades to be provided by Concessionaire.

· Walls: Mix of framed glass and gypsum board provided by Airport. A tiled wall behind the bar is also provided by Airport. All upgrades to be provided by Concessionaire.

· Millwork: Bar millwork provided by Airport. All additional or upgraded millwork to be provided by Concessionaire.

· Furniture: All seating to be provided by Concessionaire

· Equipment: Kitchen range hood roof penetration provided by Airport. Kitchen range hood and all other equipment/fixtures to be provided by Concessionaire.

Area C - Terminal (Airside Sterile) South Concession: (New construction)

· Size: Approximately four hundred twenty-eight (428) square feet.

· Anticipated Use: Coffee/drink and grab-and-go setting with both freshly prepared and pre-prepared food and drinks from refrigerator dispensers and display units.

· Ceiling: Acoustic ceiling tile provided by Airport. All upgrades to be provided by Concessionaire.

· Flooring: Sealed concrete floor provided by Airport. All upgrades to be provided by Concessionaire.

· Walls: Gypsum board provided by Airport. All upgrades to be provided by Concessionaire.

· Millwork: All millwork to be provided by Concessionaire.

· Furniture: None. No sit-down service within leased premises.

· Equipment: All equipment/fixtures to be provided by Concessionaire.

Area D – Approved Terminal Vending Locations

· Size: Up to four (4) approved locations, each large enough to accommodate a vending machine with dimensions of approximately three feet deep by three feet wide. The airport reserves the right to approve less than four locations, and as few as zero, pending final terminal layout.

· Use: Automated vending service with pre-prepared food and drinks from dispensers.

· Locations subject to approval by Airport and may be relocated throughout term of agreement as the terminal development program progresses.

3.02 Condition of the Premises

Concessionaire has made such investigations and inspections of the Premises as it deems necessary and accepts the Premises in “as-is” condition except as otherwise specified herein. Concessionaire acknowledges that it has not relied upon any representations or warranties of Airport in connection with the execution of this Agreement and the operation of the concessions. Concessionaire voluntarily enters into this agreement based upon its independent investigation. The Airport is not required to alter or improve the Premises, except to the extent of latent defects later discovered or as otherwise specified. Notwithstanding the foregoing, the Airport warrants and represents that Concessionaire’s intended and permitted use does not contravene any applicable building code and that there are no facts known to the Airport which materially affect the intended use of the Premises or which have not been disclosed to Concessionaire.

3.03 Relocation of the Premises

The Airport may require the temporary or permanent relocation or removal of any portion of the Premises due to changes, remodeling, relocation or other improvements to the terminal building, or at the Airport’s discretion for any airport operational need. Airport will provide as much notice as is practicable under the circumstances and Concessionaire agrees to comply with such any such requirement of the Airport.

Should Airport determine that any portion or all of an approved portion of the Leased Premises is temporarily or permanently required for another use, the Airport may remove that portion of the Premises from the approved Exhibit A and direct Concessionaire to remove all fixtures, equipment, supplies, and materials in that particular location. In such a scenario, the Airport will, in good faith, use its best efforts to communicate such need in advance and add a comparable concession location at the Airport to the approved Exhibit A, with an equivalent amount of comparable space and with comparable commercial value for Food, Beverage, or Vending concessions. Concessionaire shall have the right to reject the substituted area and terminate this Agreement, provided that the Airport shall have no liability or responsibility to compensate Concessionaire in such event.

Within sixty (60) days of receiving written notice from Airport of the new approved concession location, Concessionaire shall relocate all fixtures and equipment to the designated alternative approved concession location at the cost of Concessionaire. Airport shall have final determination, after considering any information provided by Concessionaire, of whether alternate space is available and its location. Even though such activities may inconvenience and partially impair Concessionaire, Concessionaire agrees no liability shall attach to Airport, its officers, agents or employees by reason of such inconvenience or impairment. Concessionaire waives any right to claim damages of any kind including indirect and consequential damages resulting from such inconvenience or impairment. Concessionaire’s sole remedy for any location or space related impacts will be potential adjustments to the MAG pursuant to Article 4 below.

ARTICLE 4

FEES AND PAYMENTS

4.01

A. Concessionaire agrees to pay Airport, without notice or demand and without deduction or setoff, all applicable rentals, charges, and fees (hereinafter referred to collectively as "Concession Fees") during the term of this Agreement for its use of the leased premises, rights, licenses, and privileges granted hereunder.

B. Concessionaire shall annually pay to Airport the greater of the Minimum Annual Guarantee (MAG) or a Concession Fee (percent of Gross Revenues) derived from the food, beverage, and vending concessions at the Airport. The MAG is the minimum amount the Concessionaire agrees to pay the Airport each year during the term of the contract regardless of the level of sales. The MAG shall be $_____________. The MAG is divided by 12 to arrive at the minimum amount that must be paid monthly. In the event that the monthly MAG exceeds the Concession Fee owed for the month, the Concessionaire shall remit the MAG. Reconciliation of the MAG with Gross Revenues will occur at the end of the contract year.

The Concession Fee shall be calculated as follows:

The MAG stated above shall remain at the amount stated above for the first 12 months of the term of this Agreement. The MAG for the remainder of the term of this Agreement shall be computed at eighty‑five percent (85%) of the previous agreement year's actual total concession fee obligation, (regardless of whether that figure is based upon the MAG or a percentage of gross revenue,) paid to the Airport, or the Year One Minimum Annual Guarantee, whichever is greater, prorated for the remaining term of the Agreement if that remaining term is less than 12 calendar months. In no event shall the MAG for the next ensuing lease year be less than the Lease Year One MAG. Rentals shall be paid in monthly installments and reconciled annually.

4.02 During any period, if Concessionaire's leased space, as designated on Exhibit A and defined in Section 3.01, is reduced in total square footage by an amount equal to or greater than thirty percent (30%) through any action of Airport, or any period when thirty percent or more of the leased space is obstructed so as to result in a corresponding loss of revenues, the MAG, the base amount or percentage fee, whichever applies, shall be reduced by a proportionate amount.

4.03 "Gross Sales or Gross Receipts" as used herein shall be construed to mean the aggregate amount of all sales realized by Concessionaire through Concessionaire’s presence in and use of Airport facilities.

The following shall be excluded or deducted, as the case may be, from Gross Revenues: federal, state, county and municipal sales taxes or other sales taxes separately stated and collected from customers; cash or credit refunds given to customers for returned products purchased at the Airport; the value of any supplies or equipment exchanged or transferred from or to other locations of Concessionaire's business not made for the purpose of avoiding a sale at the Airport; receipts in the form of refunds from or the value of merchandise, supplies or equipment returned by shippers, suppliers or manufacturers;

4.05 Concession fees payable pursuant to this Agreement shall be paid in monthly installments in a sum equal to one twelfth (1/12) of the annual MAG or the month’s applicable Concession Fee (percent of Gross Receipts as defined in 4.01(B)), whichever is greater. If necessary, an adjustment shall be made at the end of each lease year, so as to result in payment by Concessionaire to Airport of the greater of the current minimum annual guarantee or the current annual percentage rate of Concessionaire's gross sales during such agreement year as hereinabove defined. If this Agreement is terminated, the rentals and charges due hereunder shall be prorated to the date of termination on a monthly basis.

4.06 Concessionaire shall, on or before the 15th day of each calendar month, pay for the use during the previous month of the Leased Premises and the attendant rights and privileges granted by Airport according to the terms herein set forth, by submitting to Airport a statement showing its gross sales for such calendar month, as such term is defined above, and by remitting the required concession fee with such statement. Said statement shall show such reasonable detail and breakdown as may be required by Airport, but Airport shall not be bound by any presumption as to the correctness of such statement. If requested by Airport, Concessionaire shall furnish an affidavit verifying the accuracy of the monthly statement referred to hereinabove.

4.07 At the end of each lease year, a review shall be made of the payments made during the previous twelve months by Concessionaire. Should Concessionaire's aggregate concession fee payments during the preceding twelve-month period be less than the greater of the MAG and the annual percentage rate of Concessionaire's gross sales for the entire agreement year, such deficiency shall be paid by Concessionaire to Airport within thirty (30) days of the end of the lease year, without demand or offset. Should the Concessionaire’s aggregate payment exceed the greater of the MAG or the percent of the Annual Gross Revenues due, the Airport will issue a refund or credit.

4.08 Should the Agreement terminate or be terminated at any other time other than at the end of the lease year, the minimum rental for the lease year in which such termination occurs shall be prorated based upon the portion of the lease year for which the Agreement remained in effect.

4.09 In the event that Airport should temporarily close for a period exceeding ten consecutive days, Concessionaire may at its discretion, and in lieu of other remedies granted herein, claim an abatement of rents in an amount proportionate to the length of the temporary closure for any month or months in which the Airport is closed. In the event that Concessionaire exercises this option, all other terms and provisions of this agreement shall remain in full force and effect.

4.10 Without waiving any other right available to Airport in the Event of Default in Concessionaire's payment of rents or charges under this Agreement, in the event that Concessionaire is delinquent in paying Airport any such rents or charges, Concessionaire shall pay Airport interest thereon, from the date such rents or charges become payable to the date of payment, at an annual interest rate of eighteen per cent (18%). Such interest shall not accrue with respect to disputed items being contested in good faith by Concessionaire.

4.11 Partial Abatement

If, for any reason, the number of passengers deplaning on scheduled airline flights at the Airport during any monthly period shall be lower than 75% of the number of such deplaning passengers for the same month of the immediately preceding calendar year, the MAG shall be abated and only the Concession Fee will be due for such month, and such month only.

In the event that partial abatement is enacted, then the Annual MAG for the applicable lease year, and that lease year only, shall be reduced by 1/12 for each month of abatement.

ARTICLE 5

STATEMENTS AND RECORDS

5.01 Concessionaire shall keep full and accurate books and records reflecting all of its gross sales at the Airport, and the Airport shall have the right, through its designated representatives, and with seventy-two (72) hours advance notice to Concessionaire, to inspect, during normal business hours, all such records as may be necessary to verify the gross sales, as reported.

5.02 Concessionaire shall furnish Airport, on demand, within thirty (30) days after the end of each agreement year, a statement, signed by a Certified Public Accountant, stating that, in his/her opinion, the annual payments made by Concessionaire to Airport during the preceding agreement year, were made in accordance with the terms and conditions of this Agreement. Such statement shall show all gross sales as shown on the books and records of Concessionaire as they relate to the Advertising Concession at the Airport.

ARTICLE 6

MAINTENANCE, REPAIR, AND ALTERATIONS

It is understood and agreed that Concessionaire and Airport shall have the following repair and maintenance obligations:

Section 6.01 Concessionaire’s Responsibilities

Concessionaire agrees to maintain the Leased Premises on the Airport in a safe, clean, and orderly condition at all times. Concessionaire is responsible for all damages to Leased Premises caused by employees, agents, customers or invitees of Concessionaire excepting normal wear and tear.

The Concessionaire shall maintain and promptly make necessary general repairs, at its sole expense, to all of the improvements, fixtures, and equipment placed or installed in the Premises by the Concessionaire. Concessionaire agrees to keep and maintain in good condition the furniture, fixtures, cooking equipment, floor coverings, wall coverings, electrical equipment, and drains located at or on the Premises.

All repairs done by the Concessionaire or on its behalf shall be of first-class quality in both materials and workmanship. All repairs shall be performed in conformity with the rules and regulations prescribed from time to time by federal, state, or local authority having jurisdiction over the work in Concessionaire’s Premises.

Concessionaire shall not dispose of any grease or food debris or other foreign matter, including coffee grounds, down airport drains.

Concessionaire shall be responsible for all custodial and cleaning services within the Concession areas including wiping of ordering areas, dining surfaces, seats, tables, and flooring of the public dining areas immediately adjacent to the concession. No Airport custodial services will be provided to the Leased Premises unless coordinated with Airport through another contractual arrangement.

Concessionaire shall perform custodial and cleaning services daily, and as necessary during hours of operation, to maintain a continuous sanitary environment including, but not necessarily limited to the following: mopping and sweeping of floors; vacuuming of carpets; cleaning surfaces of counters, trash receptacles, tables, windows, equipment, signs and chairs; polishing brass; dusting and polishing wood surfaces and other surfaces where dust accumulates; emptying trash receptacles; and, regularly cleaning any grease traps and drains to prevent leakage. These requirements pertain not only to the Premises footprint of the kitchen and exclusive areas, but also to any dining rooms occupied by Concessionaire’s customers.

Concessionaire shall be responsible for the cleaning and maintenance of all food preparation, storage, and service areas, and shall maintain these in a clean and orderly appearance to customers of the concession. Concessionaire shall be responsible to perform CDC recommended cleaning procedures, at the recommended intervals, as established for eating and dining areas.

Concessionaire shall implement a preventative and routine maintenance program, the provisions of which shall be subject to periodic review by the Airport Director. Concessionaire, from time to time, upon request, shall provide the Airport Director with a written schedule of Concessionaire's cleaning and maintenance program. Concessionaire will perform all needed maintenance and repair of the equipment and fixtures provided by Concessionaire on a timely basis.

Concessionaire shall keep Premises free from all fire and other hazards to persons and property and furnish and maintain adequate portable fire protection equipment. Concessionaire shall not employ any method or device which creates smoke or fumes within the terminal building.

Concessionaire shall repair all damage to the Premises and the Terminal when such damage results from the careless or negligent acts of Concessionaire or Concessionaire's employees, agents, guests, patrons and invitees.

Concessionaire shall store and dispose of all waste matter in a manner satisfactory to the Airport. Concessionaire agrees to arrange for the timely disposal, at its own expense, of all waste material. Concessionaire may not dispose of any such items in the public areas. This may require the use of special devices including, but not limited to, special containers, compactors and disposal systems. Concessionaire agrees to promptly provide and install same and to abide by these requirements. In transporting waste matter, trash, and refuse from the Premises, Concessionaire shall use only carts or conveyances that are covered, leak-proof, and equipped with wheels suitable for operating on carpets without damage thereto. Concessionaire will maintain and implement written plan of its methods of handling and disposal of trash, garbage and refuse, which shall be subject to the approval of the Airport Director.

No storage will be permitted on the exterior areas of the Premises nor on the Terminal perimeter. Ground level storage may be leased from the Airport at its current rates and charges dependent upon space availability. Concessionaire is expressly prohibited from storage of any of its personal property outside of the interior of its leased premises without express written permission of Airport.

Concessionaire shall not store any nonessential equipment within the customer service areas of the Leased Premises. Such space shall be maintained in a manner to maximize customer seating and ingress/egress. Accumulation of trash, boxes, cartons, barrels or other similar items and debris shall not be permitted in any area of the Airport within public view.

Concessionaire shall maintain the Premises free of pests and provide pest control services as needed. Such pest control services shall use humane and pain-free methods whenever possible.

Section 6.02 Airport’s Responsibilities

The Airport shall provide floors, walls, and ceilings for the Premises. The Airport shall maintain the partitions around the perimeter of the Premises, structural walls and supports, structural roof construction, structural floor construction, and exterior window walls designed about the perimeter of the Premises.

The Airport shall pay all heating, cooling, water, and sewer utilities for the Premises and for the Airport outside of the Concessionaire’s Premises. Airport shall be responsible for the payment of electric utilities unless they should be separately metered.

The Airport shall furnish and replace electrical fixtures and bulbs for all integral lighting fixtures. Any proprietary or augmented lighting installed by Concessionaire shall be the sole responsibility of Concessionaire, including the provision and replacement of light bulbs.

The Airport shall further be responsible for custodial services, general maintenance, and upkeep of the Airport outside of Concessionaire’s Premises. Airport shall keep, or make appropriate arrangements to keep, the public areas of the Terminal Building adequately and attractively equipped, furnished, and decorated, and clean and presentable. Airport shall provide and supply in the public areas of the Terminal Building heat, electricity, light, power, wastewater disposal, water, and custodial services (not to include the Leased Premises). Interruptions of services shall not constitute a breach of this Agreement by Airport, but Airport shall use its best efforts to restore such service after such interruption. Airport shall, at its own expense, maintain the exterior portions of the walls and roof of the Leased Premises and all central mechanical, electrical, and water distribution systems in good repair and condition.

The undertakings by Airport under this Section do not relieve Concessionaire of its duties to maintain any leased facilities and to use common facilities with due care.

The Airport shall have the right to construct or install over, in, under or through the Premises new lines, pipes, mains, wires, conduits and equipment; provided, however, that such repair, alteration, replacement or construction shall not unreasonably interfere with Concessionaire’s use of the Premises. Any such repair, alteration, replacement or construction that prohibits public access to the Premises for in excess of five (5) days shall be considered to be an unreasonable interference.

Concessionaire’s sole remedy for such unreasonable interference shall be to request reimbursement from Airport for all revenues lost by Concessionaire as a result of such interference. The Airport will repair at its sole cost, any damage to Concessionaire’s property resulting from such activities.

Section 6.03 Airport’s Right of Entry

Airport, by its authorized officers, employees, agents, contractors, subcontractors, and other representatives, shall have the right (at such times as may be reasonable under the circumstances and with as little interruption of Concessionaire’s operations as is reasonably practicable) to enter upon the Leased Premises for the following purposes:

A. To inspect such space to determine whether Concessionaire has complied and is complying with the terms and conditions of this Agreement.

B. To perform maintenance and make repairs, and in any case where Concessionaire is obligated to perform maintenance or repairs, but has failed to do so, after the Airport has given Concessionaire notice to do so, in which event Concessionaire shall reimburse the Airport for the cost thereof plus a charge of 30% for overhead, promptly upon demand.

C. To gain access to the mechanical, electrical, utility and structural systems of the Airport and the Terminal for the purpose of inspecting, maintaining and repairing such systems.

D. To gain access to the Premises to consider Concessionaire’s compliance with any Safety, Maintenance, or Environmental/Sustainability program as may be adopted by the Airport to include the Premise

ARTICLE 7

CONCESSIONAIRE’S OBLIGATIONS

For and in consideration of the granting of certain rights and privileges together with the granting of certain Leased Premises as set forth in this Lease Agreement, Concessionaire agrees to meet and fulfill the following duties, obligations and operating standards:

Section 7.01 Operating Costs

Concessionaire agrees to provide, at its sole cost and expense, the materials, equipment, supplies, furniture, trade fixtures, additions or changes necessary to operate a food, beverage, and vending concession at the Airport.

Concessionaire shall bear, at its own expense, all costs of operating hereunder and shall pay, in addition to rentals and fees as described herein, all other costs connected with the use of the Leased Premises, including, but not limited to its maintenance (except building structure, heating, ventilation, air conditioning, outside walls, and roof of Terminal Building), separately metered electricity, cleaning and custodial services, insurance, any and all taxes, and supplies. Concessionaire shall be solely responsible for telephone and data line installation which shall be at Concessionaire expense. Concessionaire shall pay for all permits, registrations, and licenses required by Federal and Colorado law for its operations at the Leased Premises. This shall include, but not be limited to, the license fees for selling and distributing alcoholic beverages.

Concessionaire agrees to procure, at its sole expense, the food, alcoholic and non-alcoholic beverages and accompanying supplies necessary to deliver the services detailed in this Agreement. All alcoholic beverages shall be secured by Concessionaire under Concessionaire’s liquor license. All supplies shall be secured at the Concessionaire’s expense, and held in the Concessionaire's name for the Term of this Agreement. Concessionaire additionally agrees to provide the services of dispensing such food and beverages.

Section 7.02 Hours of Operation

Lessee shall be open for business 365 days of the year. Lessee shall have on-site employees, during the hours stipulated below, to accommodate the demand for its services, unless otherwise approved by the Airport Director, at Director’s sole discretion.

The minimum hours of staffed operation for serving the public shall be no later than 45 minutes before the first scheduled commercial airline departure each day and until no earlier than the last scheduled commercial airline departure each day has departed the terminal. In the event that departing commercial airline flights are delayed beyond the normal last scheduled departure time of the day, Concessionaire agrees to keep open airside food/beverage locations and to accommodate the needs of the public and employees until such time that all delayed flights have departed the terminal or have been canceled.

Concessionaire may not change the hours of operation without written application to and the written approval of the Airport Director. The Airport Director may reasonably require Concessionaire to change its hours of operation to reflect changing operational circumstances at the Airport provided that Concessionaire is given ten (10) days advance written notice.

Concessionaire may reduce its operations on major holidays at the discretion of the Airport Director.

Section 7.03 Pricing

The Airport and Concessionaire agree their mutual objective is to provide airport customers top quality products at a reasonable price. The Concessionaire shall provide “Street Pricing” for its products and services. Street Pricing is defined as Concessionaire’s Airport location pricing being comparable, within fifteen percent (15%), to similar outlets providing similar products and services within La Plata County. Airport reserves the right to audit compliance with this requirement.

Section 7.04 Type of Operation

Concessionaire shall maintain and operate its Leased Premises in the terminal building in a first-class manner and shall keep them in a safe, clean, orderly and inviting condition at all times, satisfactory to Airport. Customer service shall be prompt, courteous, and efficient.

Concessionaire shall furnish goods and services to Airport passengers, employees and users in a first-class manner, consistent with the highest quality delivery of goods and services in like settings. Concessionaire shall offer prompt and efficient services that are adequate to meet all reasonable demands thereof at the Airport on a fair, equal and nondiscriminatory basis to all categories of users and in a manner that will reflect credit upon Concessionaire and the Airport. Concessionaire shall offer quality products and shall equip, organize, put into service and manage the Premises so as to provide service within an attractive and pleasant atmosphere. Concessionaire shall operate and maintain the Premises in satisfaction of all public health and safety standards and maintain the highest standards of food safety and cleanliness.

Concessionaire shall be responsible for all aspects of the management and operation of the concession. Further, Concessionaire will provide employees and necessary components of the operation, including inventory, fixtures, equipment and supplies, except as otherwise provided in this Agreement.

The Airport shall not be responsible for the security of any goods, merchandise or equipment used, maintained or stored at the Premises, nor will it be responsible for damage to such goods or merchandise resulting from flood, fire, explosion, vandalism or other causes outside the control of Airport.

Concessionaire agrees that it shall develop, manage, use, and occupy the Premises in accordance with the Americans with Disabilities Act, 42 U.S.C. Section 12101 et seq. (hereafter collectively the "ADA"), including, without limitation, modifying the Concessionaire's policies, practices, and procedures, and providing auxiliary aids and services to disabled persons.

Section 7.05 Minimum Service Requirements

Concessionaire shall provide food, alcoholic and non-alcoholic beverage service comparable in quality, price and menu selection to other first-class airport restaurants or coffee shops in airports of comparable size and demographics to the Durango-La Plata County Airport. Concessionaire shall submit to the Director of Aviation and keep current a menu and price list of all food and beverage items offered for public sale. Concessionaire agrees that the Airport shall have the right to annually review the performance of Concessionaire to determine compliance with the standards set forth in this Agreement and Concessionaire’s original proposal, attached hereto and made a part hereof. Airport may consider the results of any customer surveys and/or Health Department inspection results in determining compliance with these standards.

Section 7.06 Automated Vending Concessionaire shall service and fill any approved vending machines at intervals which ensure the machines are fully stocked and the products are fresh. Upon notification by an Airport representative that a machine is empty or low in inventory, the machine must be serviced/stocked within twenty-four (24) hours of the notification. Concessionaire must maintain a minimum stock of product at all times.

Section 7.07 Sales and Regulations

Concessionaire must conduct all concession operations in accordance with all applicable ordinances, laws, statutes, rules and regulations of any authority having lawful jurisdiction over the premises. Concessionaire is solely responsible for ensuring that service of alcohol is in compliance with state and local liquor laws. Concessionaire shall have sole and absolute authority over the determination of whether service to any consumer is appropriate and whether any consumer should be ejected from any event due to alcohol-related infractions.

Concessionaire shall obtain and pay for all licenses, permits, and taxes, required by law necessary for the operation of the concession pursuant to this Agreement, including applicable liquor licenses and sales/use tax licenses.

Any such licenses or permits held by the Concessionaire in connection with the applicable concession shall be surrendered by the Concessionaire at the time of termination of the Agreement and the Concessionaire expressly agrees to surrender all of such licenses or permits tied specifically to the Airport, and not oppose any new license or permit applications for the Airport by such person or entity as the Airport may select.

The Concessionaire shall collect and remit sales taxes on all taxable sales in the manner prescribed by law.

In the event the Concessionaire is not able to obtain all licenses and permits required to operate the concession at the Airport or the Premises, or such authorization is later revoked, this Agreement shall immediately become null and void as it is related to the Durango-La Plata County Airport, and both parties shall be released from further obligations under this Agreement.

Section 7.08 Environmental Protection and Sustainability Concessionaire agrees to comply at all times in the performance of this Agreement with all applicable environmental laws, statutes, ordinances, regulations and orders, including all rules and regulations adopted by Airport relating to protection of the environment and shall indemnify and hold Airport harmless from any expense to it, or damage to it, directly caused by Concessionaire’s non-performance.

Concessionaire agrees to comply at all times with the Airport’s Environmental Sustainability Plan, Solid Waste Plan, and Recycling Plan, all as may be amended.

Section 7.09 Airport Security Concessionaire shall coordinate with the Airport to conduct background checks and obtain security badges for each employee working or requiring access beyond the security checkpoint (sterile area/gate lounge) in accordance with the Airport Security Plan or as may be required by the Transportation Security Administration (TSA) or other governmental Authority having jurisdiction. The Airport will arrange for the required background check, training, and issuance of security badges, based on information properly supplied by Concessionaire’s employees. The fees charged to Concessionaire for background checks and badge issuance will be as published in the Airport’s Rates and Charges document and shall equal those charged to airlines and other vendors requiring access to the sterile area.

Concessionaire’s employees as well as all food, merchandise, supplies and other items entering the sterile area are subject to search by TSA or Airport personnel. Certain potentially dangerous utensils and materials may be subject to strict controls or be banned from the sterile area. It is understood that the requirements of the FAA, TSA and the Airport regarding security matters may change from time to time and Concessionaire shall comply with all such requirements. Any fines assessed against the Airport for security violations by Concessionaire, its employees or agents shall be the responsibility of Concessionaire.

All Concessionaire staff accessing secure areas of the airport must pass a Transportation Security Administration (TSA) clearance and must always wear visible security identification while at the Airport. Concessionaire is solely responsible for ensuring that its staff undergoes the security procedures and is awarded the appropriate security identification.

Concessionaire assumes responsibility to recover any Airport-issued security badge or similar credential and any keys for Airport doors or locks from personnel that no longer are employed by Concessionaire. Concessionaire shall take all reasonable efforts to recover credentials and keys from any such employee immediately upon termination or separation.

Section 7.10 Personnel Lessee shall maintain, at all times and at its own expense, an optimum staffing level to provide a standard of service comparable to other first class airport restaurants or coffee shops in airports of comparable size and demographics to the Durango-La Plata County Airport.

All representatives of Concessionaire shall be properly trained and provide prompt, efficient, and courteous service. An experienced and licensed manager, or designee, with full authority to represent and act on behalf of the Concessionaire in all matters of operation must be on site or available by phone during all hours of operation.

Concessionaire shall, in the operation of its services under this Agreement, employ only such personnel as will ensure a high standard of service to the public. All employees, while on duty, shall be clean, neat in appearance, and courteous at all times. All concessionaire representatives engaged in public contact shall be property uniformed with shirts displaying the Concessionaire’s branding while on Airport property.

Concessionaire’s employees shall not engage in open or public disputes, disagreements, or conflicts with each…