Kingman Municipal Airport Ground Lease

GROUND LEASE

This Airport Land Lease Agreement (“Lease”) is executed to be effective the __ day of______, 202_ (“Effective Date”), between the City of Kingman, an Arizona municipal corporation (“the City”), and <LESSEE Name> (“LESSEE”). The LESSOR and LESSEE are sometimes referred to collectively as the “Parties,” or individually as a “Party.”

WHEREAS, the City is the owner of the Kingman Municipal Airport

WHEREAS, LESSEE desires to lease certain property at the Airport on which to construct a combination of buildings, utilities, roads, ramps, and parking lots containing approximately 53,966 square feet of land(1.238 Acres) (subject to survey) and being more particularly described in Exhibit A attached to this Lease (the “Property”).

WHEREAS, LESSEE desires to use the Property to conduct _< Type of Aviation Operation> operations, in accordance with Airport Rules and Regulations and Minimum Standards, and subject to the terms and conditions of this Agreement; and

WHEREAS, the City is willing to lease the Property to LESSEE on the terms and conditions specified below.

THEREFORE, in consideration of the following mutual covenants and conditions, the parties hereby agree as follows:

RECITALS

A. LESSOR is the owner of the real property along with the buildings and improvements thereon, if any, which are described and depicted in the attached Exhibit A. This real property together with any buildings or other improvements thereon are collectively known as the "Premises."

B. The Premises are subject to all terms and conditions of that certain Instrument of Transfer between the United States of America and Mohave County, which the City of Kingman assumed all responsibilities and agreements as the Kingman Municipal Airport sponsor under the Instrument of Transfer. The restrictions and terms of these recorded instruments are collectively referred to as the "Transfer Restrictions."

C. The real property, which is the subject of this Lease, in addition the obligations and restrictions contained in the Instrument of Transfer, is subject to the Assurances made by the LESSOR in each Airport Improvement Program ("AIP") grant accepted as the airport Sponsor.

D. LESSOR desires to lease to LESSEE, and LESSEE desires to lease from LESSOR, the Premises for development and use for aeronautical purposes under the terms and conditions of this Lease.

AGREEMENT

In consideration of the terms and conditions in this Lease, the Parties agree as follows:

1. DEFINITIONS AND ADDITIONAL PROVISIONS.

1.1. Definitions. All references in this Lease to terms defined in this section of the Lease shall have the meanings specified herein.

1.1.1. "Additional Improvements" means additions, alterations, changes, or other improvements collectively other than the Minimum Improvements.

1.1.2. “Adjustment Date” means the date that base rent is adjusted which shall be July 1st of each calendar year.

1.1.3. "Airport" means Kingman Municipal Airport, located in Mohave County, Arizona.

1.1.4. "Commencement of Construction" means both (i) the obtaining of a building permit by LESSEE for the construction of all improvements included in the Minimum Improvements, and (ii) the actual commencement of physical construction on the Premises necessary to achieve Completion of Construction of the Minimum Improvements.

1.1.5. "Completion of the Minimum Improvements" means that all the Minimum Improvements have been completed, a permanent Certificate of Occupancy has been issued from Mohave County (if applicable), and LESSEE has removed all construction equipment and unused construction materials from the Airport.

1.1.6. "Construction Completion Date" is <written out months> (#) months from the Lease Effective Date, which is the date that is <written out months> (#) months after the Lease Effective Date.

1.1.7. "Construction Start Date" is the day that is no later than the date that is <written out months> (#) months after the Lease Effective Date, which is <written out months> (#) months following the Lease Effective Date.

1.1.8. “FAA" means Federal Aviation Administration.

1.1.9. “Hazardous Material" means any hazardous or toxic substance, material, or waste that is or becomes regulated by the United States, the State of Arizona, or any local government authority having jurisdiction over the Premises or Improvements. Hazardous Material includes without limitation: (i) any “hazardous substance” as defined in the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) (42 United States Code §§ 9601-9675); (ii) any "hazardous waste" as defined in the Resource Conservation and Recovery Act of 1976 (RCRA) (42 United States Code §§ 6901-6992K); (iii) any pollutant, contaminant, or hazardous, dangerous, or toxic chemical, material, or substance, within the meaning of any other applicable federal, state, or local law, regulation, ordinance, or requirement; (iv) petroleum products; (v) radioactive material, including any source, special nuclear, or byproduct material as defined in 42 United States Code§§ 2011-22970-4; (vi) asbestos in any form or condition; and (vii) polychlorinated biphenyls (PCBs) and substances or compounds containing PCBs.

1.1.10. “Initial Insurance Coverage Amounts” means the minimum insurance limits and coverages required under Section 14 of this Lease. (Insurance coverage may change before finalizing lease depending on what operations will be conducted on property).

1.1.11. "Improvements" means the Minimum Improvements and Additional Improvements collectively.

1.1.12. "Kingman Municipal Airport Layout Plan” (ALP) means the FAA-approved drawings used to graphically depict current and future airport facilities.

1.1.13. "Minimum Improvements" means the Development Plans of the Premises attached hereto as Exhibit C.

1.1.14. "Premises" means the real property identified as Parcel(s), legally described in the attached Exhibit A, and all buildings, structures, and other improvements presently existing thereon or as may be constructed pursuant to the terms of this Lease. The Premises is generally depicted on Exhibit B attached hereto. The approximate location of the Premises is identified on Exhibit B-1. In the event of any inconsistency between Exhibits A, B, and B-1, Exhibit A shall control.

1.1.15. “Premises Size” means approximately 53,966. Final square footage will be determined upon completion of a survey by a licensed surveyor. Survey is to be provided by LESSEE at LESSEE's sole expense. Upon completion of the survey, a rental rate adjustment will be made based upon final square footage.

1.1.16. "Real Property" means as described in the legal description attached as Exhibit A.

1.1.17. “Rent” shall refer to either the Initial Term Rent or the Permanent Term Rent.

1.1.18. "Security Deposit" means the amount to be received from LESSEE prior to occupancy to cover the full and faithful performance by LESSEE of all of the terms and conditions of the Lease, including without limitation, payment of the Rent. The Security Deposit shall equal two (2) months of the then-current monthly Rent.

1.1.19. “Term” means, collectively, the Initial Term and the Permanent Term.

1.1.20. “Transfer Restrictions" means the exceptions, reservations, restrictions, and conditions set forth in the Instrument of Transfer from the United States of America to the Airport Sponsor.

1.2. Additional Provisions. In addition to all the other terms and provisions of this Lease, LESSEE shall comply with the following additional provisions:

1.3. LESSEE shall have the option to renew this Lease for a total of <Written #> (<#>) additional <written #> (<#>) year Option Term as follows:

First Option Term: the <written #> (<#>) year period commencing immediately upon the expiration of the Initial Term and ending on the tenth anniversary thereof.

LESSEE may exercise the option provided that LESSEE is then in full compliance with all the material provisions, covenants, conditions, and requirements of this Lease. The option shall be exercisable by LESSEE by providing LESSOR with written notice of exercise at least one hundred eighty (180) days prior to the beginning of the Option Term on the same terms, covenants, and conditions, except for the rental rate, and subject to the same restrictions and exceptions contained in this Lease. The rental rate for the Option Term shall be determined as provided in Section 4 of this Lease.

2. TERM.

2.1. Initial Term. The Initial Term of this Lease shall be <written years> (<#>) years, commencing on the Effective Date and ending on the date that is <written years> (<#>) years after the Effective Date (the “Initial Term Expiration Date”). Any extension of the term of the Lease beyond the Initial Term will be pursuant to the Option Term set forth in Section 1.3.

2.2. Permanent Term. The Permanent Term shall commence on the Effective Date (or upon Completion of the Minimum Improvements, if later) and shall continue for the duration of the Initial Term and any exercised Option Term. The Permanent Term is a continuation of the Lease under the same terms except for the rental rate as provided in this Lease. Rent under Section 3 shall commence on the first day of the month following the Effective Date, or as otherwise agreed by the Parties.

3. RENT.

3.1. Term Rent. During the Term, LESSEE shall pay to LESSOR rent in the amount of the Permanent Term Rent plus all applicable taxes, and subject to the rental rate adjustment as provided in this Lease. Permanent Term Rent is <written dollar amount> Dollars and <written cents> Cents ($<#>), plus applicable taxes, calculated as follows: square feet x $.<#> per square foot= $<amount> for land lease. 960 square feet x $<amount> per square foot=$<amount> for building. Tenant shall pay the Permanent Term Rent in advance, on a monthly basis, in the amount of $<amount> per month, plus applicable taxes, calculated as follows: $<amount> /12 months= $<amount>. Rent is due on the first day of each month of the Permanent Term beginning on the first day of the month following the Effective Date (or such other date as the Parties may agree in writing).

3.2. Term and Proration. For the initial payment of the Initial Term Rent or the Permanent Term Rent, the LESSOR may prorate the rental amount in order to adjust the first payment if the payment date does not fall on the first of the month or other date upon which future payments will be due.

3.3. Payment of Rent. LESSEE shall, without prior notice or demand and without any set off or deduction whatsoever, pay the Rent and any other rent or other charges due under this Lease. LESSEE covenants and agrees that all sums to be paid under this Lease, if not paid when due, shall bear interest on the unpaid portion thereof at the rate described in Section 3.5.

3.4. Late Charge and Interest. In the event that any payment required to be made by LESSEE to LESSOR under the terms of this Lease is not received within the notice and cure period, if any, a late charge shall become immediately due and payable as a late charge in an amount equal to fifteen percent (15%) of the payment that is late. Further, in the event of LESSEE's failure to pay Rent or any other amounts due under this Lease, LESSEE shall pay LESSOR interest on any such overdue payments and associated late charges at the rate of one and one-half percent (1½%) per month until such sums are paid, but in no event an amount greater than permitted by law. The late charge and interest on overdue amounts shall not limit any claim by LESSOR for damages due to LESSEE's default.

3.5. Waivers, LESSOR's Right to Accept Rent. No waiver by either party of any breach, default or any of the terms, covenants or conditions of this Lease shall be construed or held to be a waiver or custom of waiver of any same, similar, succeeding or preceding breach, default or term of this Lease, as the case may be. To be effective, all waivers shall be in writing and signed by the party to be charged. In case of a breach by LESSEE of any of the covenants or undertakings of LESSEE, LESSOR nevertheless may accept from LESSEE any payments hereunder without in any way waiving LESSOR's right to exercise the remedies hereinbefore provided for by reason of any breach or lapse which was in existence at the time such payment or payments were accepted by LESSOR.

4. RENTAL RATE ADJUSTMENT TO THE PERMANENT TERM RENT.

4.1. Rate Adjustment. Effective on July 1st of each and every year and continuing during the entire Term of this Lease thereafter, the rent amount shall be adjusted by multiplying the then-current rent by the percentage change in the Consumer Price Index for All Urban Consumers (CPI-U), U.S. City Average, All Items (1982-84 = 100), published by the U.S. Bureau of Labor Statistics, comparing the index for the month of May immediately preceding the Adjustment Date to the index for the same month of the prior year.

4.2. Modifications and Replacement of Index. If the lndex is changed so that the base year differs from that in effect when the term commenced, the lndex shall be converted in accordance with the conversion factor published by the United States Department of Labor, Bureau of Labor Statistics. If the Index is discounted or revised during the term, such other government index or computation with which it is replaced, as reasonably determined by LESSOR, shall be used in order to obtain substantially the same result as would be obtained if the Index had not been discounted or revised. If the CPl-U index is no longer published by the US Department of Labor, the parties shall use the US Department of Labor index or report most clearly approximating the CPI-U, as reasonably determined by LESSOR. If the US Department of Labor ceases to publish any index that approximates the CPI U, LESSOR shall have the right to select such available replacement index as LESSOR reasonably determines will most closely approximate the CPI-U.

4.3. Delay in Adjustment. If the Parties fail to timely recognize any adjustment of the rent, the rent shall adjust automatically notwithstanding such failure of the Parties, and any increased rent not paid as a result of such failure of the Parties shall be due and payable by LESSEE within thirty (30) days following notice from LESSOR.

5. SECURITY DEPOSIT.

5.1. Security Deposit. LESSEE shall, at execution of the Lease by LESSOR, deposit with LESSOR a Security Deposit in the amount to be received from LESSEE prior to occupancy to cover the full and faithful performance by LESSEE of all of the terms and conditions of the Lease, including without limitation, payment of the Rent. The Security Deposit shall be in the amount of <written amount> ($<amount>), which is equal to two (2) months of Rent, with such deposit to be by cash or certified check. If LESSEE defaults hereunder, LESSOR may apply or retain all or any part of the Security Deposit for the payment of any sum due hereunder or any amount which LESSOR may spend or become obligated to spend by reason of LESSEE's default, or to compensate LESSOR for any other loss or damage which LESSOR may suffer by reason of LESSEE's default. Upon the application or retention of any or all of the Security Deposit by LESSOR, LESSEE shall, within fifteen (15) days after written demand by LESSOR, deposit cash with LESSOR in an amount sufficient to restore the Security Deposit to its original amount. LESSOR shall not be required to keep the Security Deposit separate from its general funds, and LESSEE shall not be entitled to interest on the Security Deposit. If LESSEE is in compliance with every provision of the Lease and owes no monies to LESSOR at the expiration or termination of this Lease, the Security Deposit or any remaining balance thereof shall be returned to LESSEE (or, at LESSOR's option, to the last assignee of LESSEE's interest hereunder) within thirty (30) days following expiration or termination of the Term.

6. TAXES.

6.1. Taxes and Rental Impositions. With and in addition to the Rent and at the same times as Rent is payable. LESSEE agrees to pay to LESSOR as additional rent (or pay the appropriate governmental body) any and all excise, privilege, license or sales taxes, assessments, special assessments, enhanced municipal services district assessments, water and sewer rents, rates and charges, charges for public utilities, excises, levies, licenses and permit fees, and other governmental or quasi-governmental charges, general and special, ordinary and extraordinary, foreseen and unforeseen, of any kind or nature whatsoever which, at any time during the Term may be assessed, levied, confirmed, imposed upon, or become due and payable out of or with respect to, or become a lien on or encumbering, the Premises or any part thereof, or any appurtenances thereto. LESSEE will pay, prior to them becoming delinquent, all taxes of every nature levied or assessed against either the interest of LESSOR or LESSEE on the Premises during the term hereof, and on all property of LESSEE placed upon the Premises. Further, LESSEE shall also pay any governmental property lease excise taxes or other taxes imposed on this Lease or LESSEE's lease of the Premises on or prior to the due date of such taxes. Within ten (10) days following request by LESSOR, LESSEE shall provide LESSOR with evidence of payment of all such taxes or impositions.

7. UTILITIES.

LESSEE will pay for all charges, fees, deposits and other amounts for utilities used at the Property. The Airport will cooperate in the facilitation of the utility hook-ups for the building/hangar LESSEE constructs on the Property. All utility installation costs and any changes to utility facilities shall be strictly limited to the Property and shall be undertaken by LESSEE at its sole cost and expense.

8. PREMISES AND USE OF PREMISES.

8.1. Lease of Premises. For and in consideration of the rents, covenants and agreements in this Lease, LESSOR hereby leases to LESSEE, and LESSEE leases and accepts the Premises, subject to any prior, valid, existing claims or rights of way, including the Transfer Restrictions and any presently existing roads, easements, restrictions, and all other encumbrances of record and under the terms of this Lease. The Premises is also subject to all, current and future, applicable federal (including FAA regulations and rules), state, Mohave County, and City or Kingman laws, rules, regulations, ordinances, and policies.

8.2. Condition of Premises. LESSEE acknowledges, represents, and agrees that (i) LESSEE is leasing the Premises "AS IS" based on its own inspection and investigation and not in reliance on any statement representation, inducement or agreement of LESSOR except as may be expressly set forth in this Lease, (ii) LESSEE shall take possession of the Premises in an "AS IS" condition WITH ALL FAULTS and without warranties or representations from LESSOR that the Premises, or any portions thereof, are suitable for a particular purpose, or can accommodate any particular building(s) or weight or size of aircraft, and (iii) this Lease confers no ownership rights either with regard to the subsurface of the land below the ground level of the Premises or with regard to the air space above the top of the roof of any building that is part of the Premises, except to the extent necessary for construction or installation of any building, including fixtures and appurtenances, as approved by the LESSOR. LESSEE hereby acknowledges that the Premises (in its current condition) is in a condition acceptable to LESSEE.

8.3. Permitted Use of the Premises. LESSEE shall use the Premises consistent and in accordance with the FAA-approved Kingman Municipal Airport Layout Plan, as may be amended, FAA policies, rules, regulations and guidelines, and the terms and conditions of the Development Plans in Exhibit C.

Further, LESSEE shall use the Premises primarily for aeronautical purposes, unless otherwise authorized by the City and the FAA, and in compliance with the terms and conditions of this Lease.

8.4. Prohibited Uses. The Premises shall not be used for any purpose in violation of this Lease or any City, state, federal (including the FAA) policies, rules, regulations, guidelines, orders, laws, statutes, by-laws, ordinances. or resolutions.

8.5. Storage of Equipment and Materials. LESSEE shall not store on the Premises any type of equipment or material, including, but not necessarily limited to, non-airworthy aircraft, salvage aircraft, wreckage, unsightly aircraft components, and aircraft equipment outside of buildings unless screened by a method pre-approved in writing by LESSOR. This provision does not preclude LESSEE from parking airworthy aircraft or aircraft actively being repaired on the Premises.

LESSEE may not store equipment or materials outside that are unrelated to an aeronautical use, including, but not limited to, recreational vehicles, motor homes, boats, campers, trailers, semi tractor trailer trucks, mobile homes, and vehicles with expired licenses and registrations on the Premises for more than two (2) weeks without prior written consent of the LESSOR.

8.6. Prohibited Actions. LESSEE shall not commit waste on the Premises. LESSEE shall not conduct any drilling operations, remove any sand, dirt, gravel or other substances from the Premises, or in any manner change the contour or grade of the Premises without LESSOR's prior written consent, which may be granted or withheld in LESSOR's sole and absolute discretion.

8.7. Underground Storage Tanks. LESSEE shall not install, or use any unapproved existing, underground storage tanks without the prior written consent of LESSOR, which may be given or withheld in the LESSOR's sole discretion. If consent is granted by LESSOR. LESSEE shall comply with all applicable federal, state (including Arizona Department of Environmental Quality) rules and regulations, City of Kingman and Mohave County ordinances and regulations, and all requirements that may be imposed by LESSOR as part of LESSOR's consent to such use. Upon request of LESSOR, LESSEE shall further provide copies of documentation and certifications of compliance with all necessary Arizona Department of Environmental Quality rules and regulations concerning operation of any underground storage tank system on the Premises.

8.8. Above Ground Storage Tanks. LESSEE shall not install any new above ground storage tanks on property located along runways and/or taxiways. LESSEE shall not install any new above ground storage tanks on property not located along runways and/or taxiways without LESSOR's consent and screening acceptable to LESSOR. In the event LESSEE wishes to utilize an existing above ground storage tank located on the Premises, LESSEE shall comply with all applicable federal, state (including Arizona Department of Environmental Quality) rules and regulations, City of Kingman and Mohave County ordinances and regulations, and all requirements that may be imposed by LESSOR as part of LESSOR's consent to such use. Upon request of LESSOR, LESSEE shall further provide copies of documentation and certifications of compliance with all necessary Arizona Department of Environmental Quality rules and regulations concerning operation of any above ground storage tank system on the Premises.

8.9. No Interference with Airport Operations. LESSEE, its employees, guests, invitees, contractors, subcontractors, vendors, visitors, sub-lessees, successors and assigns shall not interfere with the operation and use of the Airport by LESSOR or other persons and organizations entitled to use the Airport; and LESSEE shall conduct all work on the Premises, including construction, repair, and maintenance work, so as to not interfere with the use of the Airport.

8.10. No Interference with Aircraft. LESSEE, by accepting the Lease, agrees for itself, its employees, guests, invitees, contractors, subcontractors, vendors, visitors, sublessees, successors and assigns that it will not make use of the Premises in any manner which will interfere with the landing and taking off of aircraft from the Airport or otherwise constitute a hazard to aircraft or ground operations normally conducted on an airport. In the event that the aforesaid covenant is breached, LESSOR shall have the right to enter upon the Premises and cause the abatement of such interference at the expense of LESSEE.

9. USE OF PUBLIC AIRPORT FACILITIES.

9.1. Non-Exclusive Use of Public Airport Facilities. LESSEE is granted the non-exclusive right to use public airport facilities necessary for ingress and egress to the Premises, including taxiways, runways, taxi lanes, aprons, and navigational aids (the "Airfield Areas") for the purpose of operating aircraft. LESSEE's use of the Airfield Areas is on a non-exclusive, non-preferential basis with other authorized users. Further, LESSEE's use of the Airfield Areas is subject to and shall be, at all times, in compliance and accordance with: (i) all laws, rules, and regulations of the United States of America, the State of Arizona, Mohave County, and when applicable the City of Kingman, including without limitation all laws and regulations related to aviation and air navigation; (ii) all requirements imposed on LESSOR under any current or future federal or state grant programs or agreements; (iii) all applicable policies, rules, regulations, and ordinances of LESSOR now in force or hereafter prescribed or promulgated by LESSOR; and (iv) the terms and conditions of this Lease.

9.2. Operation of Airport. LESSOR agrees, during its ownership of the Airport, to operate and maintain the Airport and its public airport facilities as a public airport consistent with, and pursuant to, the Sponsor's Assurances given by LESSOR to the United States Government when accepting federal grants and pursuant to the Instrument of Transfer between the United States of America, the Reconstruction Finance Corporation, and LESSOR.

9.3. Reservation of Rights. Notwithstanding any language in this Lease to the contrary, LESSOR shall have the right to close the runways, taxiways, aprons or any portion of the Airport from time to time at the discretion of LESSOR for, among other reasons, maintenance, repairs, emergencies, or special aeronautical occasions.

10. COMPLIANCE WITH LAWS, NOISE ABATEMENT, AND OBTAINING PERMITS.

10.1. Compliance with Laws. LESSEE shall observe and comply with the Instrument of Transfer restrictions and all applicable present and future laws, statutes, ordinances, policies, rules, regulations, requirements, all verbal and written directives promulgated by LESSOR and other local, state, and federal governmental entities having jurisdiction over the Airport. Further, LESSEE shall comply with LESSOR's insurance companies' written policies covering the Airport, Airfield Areas, or Premises, or any part thereof. Any violation of this provision shall constitute a default under this Lease.

10.2. Obtaining of Permits and Licenses. LESSEE shall promptly obtain all permits, licenses, certificates or other authorizations required in connection with the lawful and proper use of the Premises or required in connection with any building or improvement now or hereafter erected thereon. Without limiting the generality of the foregoing, LESSEE shall comply with all current provisions of the applicable City or County codes, federal grant programs, state grant programs, Kingman Municipal Airport Master Plan (including the Airport Layout Plan), environmental regulations, Surplus Property Instruments and regulations of the Federal Aviation Administration, and the rules and regulations governing Airport operations, all or which as may be amended from time to time.

11. IMPROVEMENTS, CONSTRUCTION, AND MAINTENANCE.

11.1. Minimum Improvements. LESSEE shall construct on the Premises the Minimum Improvements, which is attached as Exhibit C. LESSEE shall complete construction of the Minimum Improvements in accordance with the Project Schedule, which is set forth in Exhibit D. In addition to complying with and obtaining all approvals required by the Mohave County and City of Kingman Codes, ordinances, and regulations. LESSEE shall submit to LESSOR a site plan, elevations, and other plans reasonably requested by the LESSOR. Prior to constructing any Improvements, LESSEE shall obtain the written consent of the Airport General Manager for the construction of the development and shall obtain all necessary FAA approvals (including but not limited to: FAA environmental reviews and FAA's Form 7460 approval). The LESSEE will reimburse the LESSOR for the cost of service of a firm to review the FAA Determination Letter, Airport Layout Plan changes, and environmental documentation should the LESSEE engage with a firm that is not recommended by the LESSOR

11.2. Commencement of Construction. LESSEE shall begin the Commencement of Construction of the Minimum Improvements on or before the Construction Start Date no later than the date that is six (6) months after the Lease Effective Date, which is six (6) months following the Lease Effective Date. LESSEE acknowledges and agrees that this Lease and the tenancy created hereby is conditioned on Commencement of Construction of the Minimum Improvements occurring on or before the Construction Start Date. If Commencement of Construction does not occur on or before the Construction Start Date, this Lease shall automatically terminate, without any notice to LESSEE or opportunity to cure, and be of no further force or effect except for LESSEE's obligations that survive termination; provided further, if LESSEE provides a written request before the Construction Start Date that provides good faith reasons for an extension of the date, LESSOR in its sole and absolute discretion may extend the Construction Start Date.

11.3. Completion of Construction. LESSEE shall achieve Completion of Construction of the Minimum Improvements by the Construction Completion Date. In addition to all other remedies provided in this Lease (including termination), if LESSEE fails to achieve Completion of Construction of the Minimum Improvements by the Construction Completion Date, at the sole discretion of the LESSOR, LESSEE's rental rate will increase to 150% of the current rental rate in effect at the time of the default until LESSEE has achieved Completion of Construction.

11.4. Construction of Additional Improvements. Except for the Minimum Improvements, LESSEE shall make no Additional Improvements to the Premises without the prior written consent of the LESSOR, which may be conditioned or may be granted or denied in LESSOR's sole discretion. Prior to constructing any Additional Improvements. LESSEE shall submit a site plan, elevations, or other plans as reasonably requested by the LESSOR, and LESSEE shalt obtain the written consent of the Airport General Manager for the construction of the Additional Improvements. The consent of the Airport General Manager is in addition to (and does not replace) complying with and obtaining all approvals required by the City of Kingman and/or Mohave County Code and regulations.

11.5. Compliance with City of Kingman and County Codes and Design Review. LESSEE shall obtain all necessary approvals from City and/or County and comply with the applicable Code(s), the, and all City and/or County rules and regulations (including, without limitation, the Zoning Code, Subdivision Code, Building Code, Fire Code, and Utilities Regulations and requirements) for the design and construction of the Improvements. LESSEE shall obtain a building permit prior to commencing any construction for which a building permit is required. LESSEE shall not occupy or use any improvements for which a certificate of occupancy is required until a certificate of occupancy or temporary certificate of occupancy is issued. LESSEE shall be solely responsible for payment of all permit, inspection, and all other fees and charges in connection with the design and construction of the Improvements.

11.6. FAA Notification Requirements. LESSEE shall comply with the notification and review requirements covered in Part 77 of the Federal Aviation Regulations prior to construction or material modification or alteration of any Improvements.

11.7. Airport Review of Safety and Security Plans. LESSEE shall meet with the Airport General Manager, or his/her designee. to review LESSEE's safety and security plans prior to bringing any construction related equipment to the Premises and prior to starting construction of any improvement, major repair, or major maintenance work on the Premises.

11.8. Approval of Construction and Improvement Plans. All proposed construction and improvement plans must be submitted and approved by the LESSOR prior to (and separate from) submission for City and/or County permits. All construction and improvements must comply with the most current Kingman Municipal Airport Master Plan (Master Plan). Airport Layout Plan, and Minimum Improvements as shown on Exhibit C. LESSEE understands that the Master Plan consists of recommendations for future development and that the recommended alternatives outlined in the Master Plan in no way constitute a commitment on the part of LESSOR. It is further understood that proposed development items in the Master Plan are subject to the current and future needs of the Airport, as well as subject to funding availability. LESSEE shall pay all required City or County fees (including development and building fees).

11.9. Approval of Architectural Plans and Designs. LESSEE agrees to submit its architectural plans and designs, as prepared by an architect or professional engineer registered in the State of Arizona, for LESSOR's approval prior to construction. Such submittal and approval are in addition to LESSEE's obligation to comply with applicable City and/or County Codes.

11.10. Non-Liability of LESSOR. No review or approval by LESSOR or LESSOR's employees or agents of LESSEE's improvement plans, safety plans, security plans, or other plans or drawings shall constitute any representation or warranty by LESSOR that such materials are accurate, correct, or complete, and LESSOR shall have no liability if such materials contain inaccuracies, errors, or deficiencies of any nature. LESSEE shall indemnify, defend and hold LESSOR harmless from any claims, judgments, or actions (i) arising from any construction, maintenance. operation, or repair of any improvements on the Premises or (ii) asserting that LESSOR is liable in any manner as a result of LESSOR's or its employees’ or agents' approval of any plans.

11.11. Obligation to Maintain. LESSEE shall repair and maintain the Improvements in good and working order and repair and keep the Premises in a first-class, neat, safe, clean, and orderly condition and appearance. as determined by the LESSOR. Such obligation shall include, without limitation, the prevention of the accumulation of any refuse, wreckage, debris, waste, or unsightly materials that might be or constitute a fire hazard, a public or private nuisance, or detract from the overall appearance of the Airport. Furthermore, LESSEE agrees to maintain all landscaping and unpaved areas in a clean and orderly appearance and free of weeds and overgrowth. Dead foliage shall be removed and replaced by LESSEE at its expense.

11.12. LESSOR's Right to Effect Repairs. In addition to all other remedies allowed under this Lease, if LESSEE does not properly repair or maintain the Improvements or Premises within fifteen (15) days after receiving written notice from LESSOR, LESSOR may cause such repair and maintenance to be made and may invoice LESSEE for the costs of such repair and maintenance. If the repairs or maintenance involves an issue of health, safety, or welfare or are required for the use of the Airport, no written notice by LESSOR is required, and LESSOR may immediately begin repairs and maintenance and charge LESSEE for the costs of such repairs and maintenance. LESSEE shall pay all costs of such repairs and maintenance made by LESSOR within thirty (30) days following demand for payment. If LESSEE does not pay said costs within thirty (30) days, this Lease shall be deemed to be in default, and LESSOR shall be entitled to all legal remedies provided hereunder, subject to any applicable notice and grace period. Nothing set forth in this Subsection 12.12 obligates LESSOR to perform any maintenance of the Premises or repairs to LESSEE's Improvements.

11.13. LESSOR-No Obligation to Maintain or Repair. Nothing set forth in this Lease obligates LESSOR to perform any maintenance or repairs to the Premises or to the Improvements.

11.14. Mechanic’s Liens. LESSEE agrees to keep the Premises free of mechanics' and materialmen's liens of any kind or nature for any work done, labor performed. or material furnished for the Premises for LESSEE or any contractor, employee, or sublessees of LESSEE. To the extent permitted by law, LESSEE further agrees to defend, indemnify and hold LESSOR harmless for, from, and against any and all claims, liens, demands, costs, and expenses of whatsoever nature for any such work done, labor performed, or materials furnished at LESSEE's request or the request of any contractor, employee or sublessees of LESSEE. LESSEE is not authorized lo act for or on behalf of LESSOR as its agent, or otherwise, for the purpose of constructing any improvements to the Premises, or for any other purpose, and neither LESSOR nor LESSOR's interest in the Premises shall be subject to any obligations incurred by LESSEE. If and as requested by LESSOR, LESSEE agrees to obtain and record a Payment Bond that complies with A.R.S. §33-1003.

11.15. Performance Bond/Irrevocable Letter of Credit. If and as requested by LESSOR, LESSEE shall furnish LESSOR with a performance bond or irrevocable letter of credit (ILOC), in the full amount of the Improvements, prior to construction of Improvements. The bond or ILOC must be issued by a company qualified to do business in the State of Arizona, rated "A" or better by the current edition of the Best Rating Service. and shall ensure faithful and full observance and performance by LESSEE of all the terms, conditions, covenants, and agreements set forth in this Lease.

12. OWNERSHIP AND RESTORATION OF IMPROVEMENTS.

12.1. LESSOR's Ownership and LESSEE's Restoration of the Improvements Upon Termination. Except for LESSEE's trade fixtures and personal property, the Improvements shall become the property of the LESSOR at no cost or expense to LESSOR-upon expiration or termination of this Lease; and with a further exception for underground and above ground storage tanks which are defined and discussed in the next section. At no time shall LESSEE have the right to remove any Improvements from the Premises unless otherwise agreed to in writing by the LESSOR. Notwithstanding the foregoing, if upon the expiration or other termination of this Lease, the Improvements are not in substantial conformity with their original condition (normal wear and tear excepted), LESSOR shall have the right to require LESSEE to remove any Improvements or require LESSEE to restore the Improvements to a condition which is in substantial conformity with their original condition. LESSOR shall exercise such right by giving written notice to LESSEE within thirty (30) days after the expiration or other termination of this Lease. If so notified, LESSEE, at LESSEE's sole cost and expense, shall remove or restore the designated Improvements within ninety (90) days after the date of written notification. LESSEE shall restore the Improvements to a condition reasonably acceptable to LESSOR.

12.2. LESSEE Ownership of UST and AST Improvements. During the full term of the Lease and upon the expiration. cancellation, or termination of the Lease for any reason, LESSEE agrees that any and all underground storage tanks ("USTs"), and above ground storage tanks ("ASTs") and related equipment on the Premises shall remain the property and sole responsibility of the LESSEE. At all times, LESSEE shall remain the owner and operator of the USTs and ASTs, and LESSOR shall not become the owner or operator of the USTs or ASTs. In no event shall LESSOR be responsible for, owner of, or operator of the USTs or ASTs. At LESSOR's sole discretion and upon request of LESSOR, prior to and upon expiration of the Lease, all underground and above ground storage tanks shall be removed by LESSEE. LESSEE, at its sole expense shall comply with all applicable federal, state and local laws governing the temporary and permanent closure, removal, remediation, site restoration and clean-up of any UST or AST, its related equipment, and all affected property, water, and soil. All such actions shall be performed pursuant to prescribed standards under the law. LESSEE shall complete all actions required by this Section of the Lease within sixty (60) days after expiration or other termination of this Lease. If LESSEE does not complete all the requirements within this 60-day time period, LESSOR shall have the right to perform such actions on behalf of LESSEE, and LESSEE shall be responsible for and pay to LESSOR all costs incurred by LESSOR as a result of such performance. Notwithstanding any other provision of this Lease, LESSEE shall not maintain any fuel or oil storage facilities on the Premises without the prior written consent of the LESSOR, which it may give or withhold in its sole discretion.

13. INSURANCE

13.1. Insurance Requirements. LESSEE shall, at LESSEE’s sole cost and expense, procure and maintain in full force and effect during the term of this Lease the following insurance coverages:

13.2. Commercial General Liability Insurance. Commercial General Liability insurance written on an occurrence basis with limits of not less than $1,000,000 per occurrence and $2,000,000 general aggregate. Coverage shall include premises and operations liability, personal injury, contractual liability, and products/completed operations. The City of Kingman, its officers, officials, agents, and employees shall be named as Additional Insured on a primary and non-contributory basis with respect to liability arising out of LESSEE’s use and occupancy of the Premises.

13.3. Aircraft Liability Insurance. If an aircraft is stored, operated, or maintained from the Premises, LESSEE shall maintain Aircraft Liability insurance with a combined single limit of not less than $1,000,000 per occurrence. Coverage shall include bodily injury and property damage liability. The City of Kingman shall be named as Additional Insured.

13.4. Commercial Automobile Liability Insurance. LESSEE shall maintain Commercial Automobile Liability Insurance covering all owned, non-owned, leased, and hired vehicles used in connection with operations under this Lease with limits of not less than $1,000,000 combined single limit per occurrence. Coverage shall apply to bodily injury and property damage arising from vehicle operations.

13.5. Workers’ Compensation and Employers Liability Insurance. LESSEE shall maintain Workers’ Compensation Insurance as required by the laws of the State of Arizona and Employers Liability Insurance with limits of not less than $1,000,000 Each Accident, $1,000,000 Disease – Policy Limit, and $1,000,000 Disease / Each Employee. If LESSEE is legally exempt from Workers’ Compensation requirements, LESSEE shall provide written documentation evidencing such exemption.

13.6. Environmental / Pollution Liability Insurance. LESSEE shall maintain Pollution Legal Liability (Environmental Liability) insurance covering claims arising from the release, discharge, escape, seepage, or contamination of hazardous materials, aviation fuel, petroleum products, oils, lubricants, solvents, or other pollutants with limits of not less than $1,000,000 per occurrence and $1,000,000 aggregate. Coverage shall include on-site and off-site cleanup costs, third-party bodily injury, property damage, and defense costs. The City of Kingman shall be named as Additional Insured where available.

13.7. Property Insurance. LESSEE shall maintain property insurance covering the hangar structure and all personal property, aircraft, equipment, and improvements located within the Premises at full replacement cost. The City shall not be responsible for loss of or damage to LESSEE’s hangar, aircraft, improvements, or personal property.

13.8. Certificates of Insurance. LESSEE shall provide a Certificate of Insurance to the City prior to execution of this Lease and annually thereafter. Coverage shall not be canceled or materially modified without thirty (30) days prior written notice to the City.

13.9. Environmental Compliance and Hazardous Materials. LESSEE shall comply with all applicable federal, state, and local environmental laws, regulations, and fire code requirements related to the storage, handling, use, and disposal of aviation fuel, petroleum products, oils, lubricants, solvents, batteries, and other hazardous materials. LESSEE shall: (i) Not cause or permit any spill, discharge, release, or contamination of hazardous substances on, under, or about the Premises; (ii) Immediately notify the City of any fuel spill, hazardous material release, or environmental incident occurring on the Premises; (iii) Be solely responsible for all reporting, cleanup, remediation, restoration, and associated costs resulting from LESSEE’s activities; and (iv) Properly store and dispose of all hazardous materials in accordance with applicable laws and fire code requirements. Any environmental contamination resulting from LESSEE’s use of the Premises shall be remedied at LESSEE’s sole cost and expense.

13.10. Waiver of Subrogation. To the fullest extent permitted by law, all insurance policies required under this Lease shall include a waiver of subrogation in favor of the City of Kingman, its officers, officials, agents, and employees. LESSEE waives all rights of recovery against the City of Kingman, its officers, officials, agents, and employees for losses covered by insurance maintained by LESSEE under this Lease. LESSEE shall provide copies of the applicable waiver of subrogation endorsements upon request by the City.

14. DESTRUCTION OF IMPROVEMENTS-LESSEE'S RESTORATION OBLIGATIONS.

14.1. Restoration of Improvements. If the Improvements or buildings on the Premises are damaged or destroyed (in whole or part) by reason of any cause whatsoever, LESSEE shall repair, reconstruct, and rebuild the Improvements and any buildings to a condition equal to or better than existed prior to the damage ("Restoring the Premises") unless otherwise approved by LESSOR. LESSEE shall commence Restoring the Premises within sixty (60) days of the damage or destruction and shall diligently pursue to completion the repair or reconstruction. This Lease shall remain in full force and effect.

14.2. Insurance Proceeds. If the Improvements or buildings on the Premises are damaged or destroyed (in whole or part) by reason of any cause whatsoever, LESSEE shall directly and immediately deposit all insurance proceeds received on account of such damage or destruction (the "Proceeds") with an independent escrow agent or trustee (the "Trustee") that is selected by LESSEE and approved by LESSOR. LESSEE shall also deposit with the Trustee. within thirty (30) days following the damage or destruction, an amount equal to the deductible amount payable under LESSEE's insurance policy, which amount shall be held and disbursed by the Trustee as part of the Proceeds. The Proceeds shall be released by the Trustee as follows: As LESSEE progresses with Restoring the Premises, Trustee will release the Proceeds to LESSEE upon LESSEE's submittal of certificates of costs (as described in Section 14.4). If LESSEE fails to commence, diligently pursue, or complete Restoring the Premises, Trustee will release the Proceeds to LESSOR to enable LESSOR to completely restore the Premises.

14.3. Failure to Commence Restoring the Premises. If LESSEE fails to commence restoration within ninety (90) days after the damage or destruction or fails to diligently pursue such restoration until completion, LESSOR shall have the right to (and the right to use the Proceeds to) raze the Improvements and restore the Premises to the condition existing at the time of the Commencement Date of this Lease, terminate this Lease, and then request reimbursement of the Proceeds from Trustee.

14.4. Certificates of Costs. A certificate of cost is a signed request by LESSEE or LESSOR to Trustee (with a copy to the other Party) requesting Trustee to disburse Proceeds as a payment or reimbursement to LESSEE or LESSOR, as applicable, or contractors, subcontractors, materialmen, architects, or other persons who have rendered services or furnished materials in connection with Restoring the Premises. All certificates of costs shall be accompanied by invoices for such amounts. The Trustee will promptly provide copies of all certificates and other materials received from the Party requesting payment to the other Party. Each of LESSEE's certificate of costs shall also include a certification from an independent architect or contractor that such person has reviewed the budget for the work and certifies that the remaining Proceeds held by the Trustee following such disbursement are sufficient to complete the remainder of the restoration or replacement work. If the LESSEE is unable to provide such a certification, LESSEE shall pay the costs of restoration or replacement until LESSEE is able to provide such certification. If a Party objects to any certificate of costs provided by the other Party prior to the Trustee making a disbursement pursuant to such certificate, Trustee may withhold the amount pending mutual instructions from LESSOR and LESSEE or receipt of a court order. Any objection to a certificate of cost must be in writing and state the costs to which objection is made and the basis for the objection.

14.4.1. Disbursement of Remaining Proceeds. Upon receipt by the Trustee of a statement with…