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Hangar Site A-1: S27 T Hangar Condo/Ken BeneshKALISPELL AIRPORTASSOCL4TION, INC. HANGAR SITE LEASE THIS HANGAR SITE LEASE, made and entered into this day of fi% , 20� 1by and between Kalispell Airport Association, Inc. a Montana not -for -profit corporation, hereafter refer&d to as "AAA", and the following named individual, whose mailing address appears as follows: (Printed Name of Tenant(s)) A-1: S27 T Hangar Condo Owners Assc.-Ken Benesh (Mailing Address of Tenant(s)) 67 Overlook Ridge Kalispell, MT 59901 hereafter referred to as "TENANT". whether one or more: WITNESSETH: WHEREAS, the AAA operates the Kalispell City Airport, in accordance with and pursuant to the terms, covenants and conditiW of a certai Kalispell Municipal Airport Lease and Agreement 4 to Assign, dated the day of u , 2018 (hereinafter referred to as "KAA-City Airport L se"); and WHEREAS, the TENANT represents that TENANT has read and reviewed the said KAA-City Airport TLe and is fully aware of its contents and the contents of a certain Novation, dated the day of 'V C , 2018, related thereto; and further TENANT desires to un ertake and enter into this agreement with AAA being fully advised of the foregoing instruments; and WHEREAS, the KAA desires, in order to provide a source of income for airport maintenance and to increase the utilization of said airport, to lease tracts of land to various tenants in order that the tenants may erect and maintain structures and related appurtenances thereto for the storage and protection of aircraft based at said airport. NOW, THEREFORE IT IS AGREED BETWEEN THE PARTIES HERETO AS FOLLOWS: 1. The KAA does hereby agree to lease to TENANT, and TENANT hires from KAA, those certain premises located at the Kalispell City Airport, Kalispell, Montana, which are more particularly described in Exhibit "A", which is attached to this Lease and by this reference is fully incorporated herein. 2. T term f this Lease all be for twenty (20� years, commencing on the day 20 and ending on the day of jlei 'O , 20� unless sooner terminated by mutual agreemen � the parties or one of the part es unde_gf� P Y p the specific provisions hereof or by those events or circumstances more particularly described in the KAA-City Airport Lease, should KAA's authority to operate the airport KAA Hangar Site Lease Page 1 of 10 cease in accordance therewith. TENANT shall have the option to renew the lease term for up to two (2) additional successive terms of ten (10) years each, provided that such extensions are then available to KAA as the operator of said airport in accordance with paragraph 2 of the KAA-City Airport Lease. KAA shall give TENANT sixty (60) days written notice prior to the end of each term and TENANT shall give KAA written notice of TENANT'S intention to exercise said option no later than thirty (30) days from the end of each term. Upon expiration of the forgoing terms, TENANT shall have the right of first refusal to an additional lease not to exceed five (5) years under such terms and conditions as may be agreed upon at such time, provided that such extended term is then available in accordance with the KAA-City Airport Lease. 3. TENAN es to pay to the KAA for the use and benefit of the KAA the sum of $0. cents) per square foot per year for the existing or projected bui di1 ng area, which for purposes of this provision shall be one hundred and fifty percent (150%) of the actual square footage occupied by the hangar, herein authorized, payable as follows: a. Upon the commencement date, TENANT shall pay the pro-rata portion of the annual rent for the time period from the commencement date to July 1 next succeeding. b. On each July 1, TENANT, without demand, shall pay the annual rental to the next succeeding fiscal year. C. On July 1, at the commencement date of the fiscal year during which this Lease terminates, TENANT, without demand, shall pay the pro-rata portion of the annual rent for the time period from July 1 to the termination date of the Lease. d. During the initial twenty-year term of the lease, the annual lease payment shall increase 3% annually, from the previous year's payment. In the event TENANT elects to exercise his option to renew this lease for any and all available subsequent ten-year term(s), the annual lease payment shall be reviewed and reset by KAA prior to such extension. e. The KAA or its designee will be responsible for the collection of lease payments or administrative fees for existing hangar and ground leases, and for adjustments to lease fees resulting from application of the criteria established in paragraph 3 (d) above. 4. TENANT agrees to properly maintain the structure described on Exhibit "A" for the purpose of housing light aircraft on said land, and TENANT further agrees to maintain said building, together with access to runway and appurtenances related thereto, in accordance with the specifications contained in hangar construction and design standards on file with the City of Kalispell and/or KAA and any and all other standards, regulations KAA Hangar Site Lease Page 2 of 10 or requirements the KAA, City of Kalispell, State of Montana or other applicable federal law and regulation. a. TENANT shall have the right, upon the termination of this Lease, unless a lease for a further term be negotiated, to remove the hangar structure, but shall do so within twelve (12) months, pursuant to paragraph 7(b) of the KAA-City Airport Lease and shall leave the premises in a restored condition, except that any paving shall be left, reasonable wear and tear excepted. b. If TENANT does not remove said building within such allotted time, it shall then become the property of KAA without further action on the part of the KAA. C. TENANT may expand the square footage of any building constructed on the Airport site, subject, however, to the prior written consent of KAA. In the event KAA approves any building expansion during the primary lease term or any extension thereof, TENANT'S lease payments shall be adjusted in accordance with the criteria set forth in paragraph 3 above. 5. TENANT shall use said property for the storage of light aircraft and other lawful purposes necessarily incidental thereto and for no other purpose. a. TENANT may sublet the premises for aviation purposes, subject, however, to the prior written consent of KAA and the City of Kalispell, when applicable. Any such sublease shall be in writing and shall be reviewed by KAA prior to approval of such proposed subletting agreement. b. KAA'S approval of any sublease shall not relieve TENANT and/or leasee of TENANT of any obligation imposed by this agreement or controlling standards or regulation discussed herein. TENANT shall provide to KAA a signed copy of the final sublease agreement for its file and shall notify KAA of any terminations of said sublease within fourteen (14) days thereof, in writing. TENANT shall also provide to KAA the name, address, preferred telephone number and email address of any such subleasee of TENANT, in writing, on submitting the approved sublease to KAA. 6. TENANT shall have the right and privilege of sale, assignment or transfer of this Lease for the purpose defined in paragraph 5 hereof, upon written notice to the KAA stating the name and address of the proposed buyer, assignee, or transferee. a. If the KAA shall determine that said proposed buyer, assignee, or transferee is objectionable, any such reasonable objection shall be stated in writing to the TENANT within twenty (20) days after receipt of said written notice. KAA Hangar Site Lease Page 3 of 10 b. The KAA shall not unreasonably withhold consent to sell, assign, or transfer this Lease, but reserves the right to adjust the annual rental payments following assignment. C. After fully completed sale or assignment by TENANT of its interest here and the receipt of written notice described herein, TENANT shall be relieved from liability for rental payments accruing thereafter, and the buyer, assignee, or transferee shall thereafter be liable. d. Transferee under this paragraph shall only acquire the balance of the term of the lease and shall be subject to all terms and conditions of this lease, including the obligation to provide KAA with proof of insurance coverage as required by paragraph 7. 7. TENANT shall hold harmless, indemnify and defend the KAA from any and all liability claims of any kind or nature, whatsoever, arising out of the erection or expansion of the building upon the premises described herein, or the use of said premises by TENANT or TENANT' invitees or licensees. a. As evidence of TENANT's covenant herein, TENANT at TENANT'S sole expense shall keep in force, during the term of this Lease, insurance, issued by an insurance company, licensed to do business in Montana, protecting the KAA against all liabilities, judgments, costs, damages and expenses which may accrue against, be charged to, or recovered from the KAA, by reason of damage to property of, injury to or death of any person or persons on account of any matter or thing which may occur on the demised premises. b. Policy or policies in the amount of Seven Hundred and Fifty Thousand Dollars ($750,000.00) with respect to any one person, and One Million and Five Hundred Thousand Dollars ($1,500,000.00) with respect to any one occurrence shall be held. Said insurance policy shall name the KAA, its officers, employees and agents as additional named insureds, and shall not be canceled or materially changed without at least thirty (30) days prior notice to the KAA, and shall be subject to approval as to coverage by the KAA. C. Proof of insurance coverage required by this Lease shall be provided by TENANT to KAA at the time of execution of this agreement. KAA reserves the right at any time during the primary lease term or any extension thereof, to require TENANT to provide to KAA proof of continued insurance coverage. d. Policy limits are subject to change in accordance with §2-9-108, MCA, "Limitations on Governmental Liability for Damages in Tort." TENANT shall file certificates of said insurance with the KAA, and said insurance shall be in full KAA Hangar Site Lease Page 4 of 10 force and effect, throughout the primary term of this Lease and any and all extensions thereto. e. Failure or refusal by the TENANT to obtain or maintain said insurance as required hereunder shall constitute a material breach of this Lease and, in such event, KAA, in its sole discretion, may terminate this Lease without liability to TENANT hereunder, or elect to obtain like coverage and the cost for such coverage shall be paid by TENANT. 8. TENANT shall be responsible for acquiring whatever insurance TENANT deems necessary to safeguard TENANT'S interest in the TENANT's building, herein authorized, and personal property stored in said building, and TENANT expressly covenants and agrees to assert no claim against KAA as a result of the loss or damage to the building or personal property belonging to TENANT or anyone else resulting from the action of any third party. a. TENANT herein covenants and agrees to take whatever steps TENANT sees fit to take in protecting TENANT'S property and persons from loss or damage as a result of vandalism, malicious mischief, theft or kindred losses, and agrees to assert no such claim against the KAA incident thereto. b. All losses suffered by TENANT resulting from criminal activity or others shall be promptly reported to the police. The KAA assumes no responsibility for such losses. 9. In the event that soils or other material are found on the leased site that are "Hazardous or Deleterious Substances" as defined by the Montana Comprehensive Environmental Cleanup and Responsibility Act, §75-10-701 et seq. MCA ("CECRA"), "Hazardous Substances" as defined by the Comprehensive Environmental Response, Compensation and Liability Act, 42 USC §9600, et seq. ("CERCLA"), "Hazardous Waste" as defined by the Montana Hazardous Waste and Underground Storage Tank Act, §75-10-401 et seq., MCA or the Solid Waste Disposal Act, as amended by the Resource Conservation Recovery Act, 42 USC §6901 et seq., or which require special remediation or disposal or disposal pursuant to any other applicable law, TENANT shall excavate, handle and dispose of such soils or other material only in compliance with such statutes and regulations. a. In the event TENANT leaves any of the above -described materials on the property, the KAA may, at its option, have wastes properly disposed of and assess the costs of removal, storage, transport and disposal to TENANT. b. All Hazardous Materials must be appropriately labeled and stored. C. In the event Hazardous Materials are spilled upon the property, it is the responsibility of TENANT to have the spill cleaned up according to State and KAA Hangar Site Lease Page 5 of 10 Federal laws and regulations. In the event that drains or floor sumps are contaminated, it will be the responsibility of TENANT to clean up those systems. d. TENANT is aware that there are significant penalties for improperly disposing of wastes or submitting false information, including the possibility of fine and imprisonment for knowing violations. TENANT must comply with all state, federal and local laws pertaining to the handling and storage of hazardous materials. 10. No construction or installation of any underground fuel storage tank dispensing system shall be allowed upon the premises. 11. Any utility services required by TENANT's building or for its use shall be obtained by TENANT at TENANT's sole expense. 12. TENANT further agrees to the following terms and conditions: a. TENANT agrees that the building and any improvements made thereto will be maintained in good order, repair and safe condition and in compliance with the law and all applicable standards and regulations. TENANT shall make any and all additions to, or alterations or repairs in and about the land and/or improvements which may be required and, in doing so, TENANT shall observe and comply with all existing or future public laws, ordinances and regulations applicable to the land or public airport land upon which the leased premises are located. b. TENANT shall maintain an area of ten (10) feet from the exterior walls of the hangar or of the median point between hangars if there is less than twenty (20) feet between hangars, free from brush and weeds. If TENANT fails to keep and maintain the leased premises and improvements as required hereunder, KAA may, in its discretion, following written notice, undertake to do or have done such, and any expenses incurred by KAA shall be paid by TENANT. C. TENANT shall not store personal property, equipment of any kind, or vehicles, outside of the hangar. 13. TENANT shall be responsible for all taxes levied upon the structure erected hereunder and any equipment or property located therein. The land is owned by the City of Kalispell, but leased to KAA as a not -for -profit operator, and is exempt from taxes, and the KAA, to the greatest extent legally permissible, agrees to maintain such tax exempt status. 14. TENANT shall comply with all State and Federal laws and regulations and with the Operating Regulations of the City of Kalispell and the KAA. KAA shall have the right, through its agents or employees, for reasonable ingress and egress to inspect premises to ascertain that the terms of this Lease are being adhered to. KAA Hangar Site Lease Page 6 of 10 24. In the event either parry to this Lease shall be required to bring an action against the other parry to enforce this Lease, or any portion thereof, the prevailing parry shall be entitled to reasonable attorney's fees and cost therefore in addition to any damages that might be awarded. 25. TENANT will abide by all rules and regulations established by the KAA for the airport. 26. In the event that this lease is terminated the leasehold shall transfer to the City of Kalispell, as Lessor, and shall convert to a month to month tenancy. The City of Kalispell shall be under no obligation to continue to operate the airport. In the event the City of Kalispell determines thereafter to close the airport, the ground leases shall continue to operate on a month to month basis for up to twelve (12) months at 50% of current rate. Lessees shall have the right to remove those improvements they own, but shall do so within twelve (12) months from notice of the airport's (closure) discontinuance and shall leave the premises in a restored condition, except that any pavement shall be left. Improvements left on the airport property thereafter shall then become the property of the City of Kalispell without further action on the part of the City. 27. This lease shall terminate immediately upon abandonment of the airport as a result of a voter initiative. If the Ground Lease Lessee elects not to remove the improvements as set forth above, the CITY shall pay to the Ground Lease Lessee the fair market value of their leasehold improvements situated on the airport at the then existing usage. The fair market value of the improvements at the then existing usage shall be determined as follows: The City and the Ground Lease Lessee shall each hire, at their own expense, an appraiser to determine the fair market value of the improvements on the leased site and owned by the Ground Lease Lessees at the then existing usage. If the two (2) appraisals do not differ by more than three percent (3%), the fair market value of the improvements shall be the average of the two (2) appraisals. If there is a difference of more than three percent (3%) between the two (2) appraisals, the first two (2) appraisers shall select a third appraiser who shall appraise the fair market value of the improvements at the then existing usage. The parties shall equally share the expense of the third appraiser. The average of the three (3) appraisals shall determine the fair market value of the improvements at the then existing usage. The City shall pay the fair market value of the improvements at the then existing usage to the Ground Lessee within (60) days of the date of determination of the fair market value as set forth above. IN WITNESS WHEREOF, said KAA has caused this Lease to e sign n its behalf by thy, Manager of said KAA and said TENANT has executed this Lease this day of , 201.ti KAA Hangar Site Lease Page 8 of 10 RT ASSOCIATION, INC. IIn NOTARY CERTIFICATION FOR AIRPORT MANAGER STATE OF MONTANA : ss County of Flathead On this P day of X4->e.-,eL , 20,6, before me, a Notary Public in and for the State of Montana, personally appeared B.J. HOLMAN, in his capacity as KAA Airport Manager, known to me to be the person whose name is subscribed to the foregoing instrument, and acknowledged to me that she executed the same. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my Notarial Seal, the day and year first above written. y%NHq D LINHART O a01ARiq Rj. NOTARY PUBLIC for the State of Montana * SEAL. * . Residing at Kalispell, Montana NglF0FM0 p�z My Commission Expires August 22, 2021 SEAL Notary Pub ' , Sx to of Montana Printed Name: 1A e-- [� _- Residing at lf-- it See Gf My Commission expires Gam- 22 - 1. 41 [Remainder ofpage left intentionally blank; Notary Public information and seal to immediately follow) NOTARY CERTIFICATION FOR TENANT(S) KAA Hangar Site Lease Page 9 of 10 STATE OF MONTANA ss County of Flathead On this :9) day of �� � , 209, before me, a Notary Public in and for the State of Montana, personally appeared � �� :-;� 6� t =� known to me to be the person whose name is subscribed to the foregoing instrument, and acknowledged to me that he/she executed the same. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my Notarial Seal, the day and year _.L- __�:++— isHq D LlNHART Q AR NOTARY NOTARY PUBLIC for the * �� * State of Montana ��9TFOFMON Residing at Kalispell, Montana My COMMISSIon Expires August 22, 2021 SEAL STATE OF MONTANA WRi County of Flathead On this day of 1 Notary Pub , State of Montana Printed Name: Z--( W"4,f& j Residing at ~K (f �10 d /1-Z r My Commission expires Q%- Z.Z - 2'a 20_, before me, a Notary Public in and for the State of Montana, personally appeared known to me to be the person whose name is subscribed to the foregoing instrument, and acknowledged to me that he/she executed the same. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my Notarial Seal, the day and year first above written. SEAL Notary Public, State of Montana Printed Name: Residing at My Commission expires KAA Hangar Site Lease Page 10 of 10 NOVATION THE PARTIES AGREE TO THE FOLLOWING FACTS: 1. The City of Kalispell (the "City") has agreed to enter into a municipal airport lease agreement with the Kalispell Airport Association ("KAA"), as shown in Exhibit "A" attached hereto and incorporated fully herein by this reference contingent upon all lease holders executing this novation agreement. The Term "the Lease, " as used in this Agreement, means that lease of municipal airport property made between the Leasee and the City before the effective date of this Agreement, whether or not performance or payment have been completed. The parties intend that the terms of the lease subject to this agreement ("the Subject Lease) shall effectively terminate the Lease and release both the City and the Lessee from any remaining rights, duties, or obligations to one another under the Lease. Included in the term "the Lease" are also any extensions or modifications made under the terms and conditions of the original lease between the Lessee and the City. 2. The City shall give to KAA all rights and obligations to manage the airport assets of the City pursuant to the terms of the municipal airport lease agreement described as Exhibit "A" between the City and KAA. 3. KAA has accepted all the management rights and obligations of the City pursuant to the terms of the municipal airport lease agreement described as Exhibit "A". 4. KAA has assumed all future obligations and liabilities of the City in the management of the airport pursuant to the terms of the municipal airport lease agreement described as Exhibit "A". 5. KAA is in a position to fully perform all obligations as they may exist under the municipal airport lease agreement described as Exhibit "A". 6. A certificate dated the 29 day of December 2017, has been issued by the Secretary of State of Montana, to the effect that NAME is a registered Limited Liability Company in good standing with the State of Montana. 7. It is consistent with Lessee's interests to release the City from its obligations under the Lease and, in consideration of the City releasing Lessee from its obligations under the Lease, to enter into the Subject Lease herein with KAA. IN CONSIDERATION OF THESE FACTS, THE PARTIES AGREE THAT BY THIS AGREEMENT: 1. The City confirms the leasehold rights of KAA under the terms of the municipal airport lease described as Exhibit "A", and hereby waives any nontax related claims and rights against Lessee under the terms of the Subject Lease between Lessee and KAA. 2. KAA agrees to be bound by the terms of the municipal airport lease described as Exhibit "A" and thereby to assume all the management duties, obligations and liabilities owed to Lessee as the manager of the airport. Likewise, the City agrees that it is bound by the terms of the municipal airport lease. 3. Except as expressly provided in this Agreement, the Lessee agrees to waive all rights and claims against the City arising out of the terms of the Lease. Entire Agreement This agreement supersedes all previous agreements in respect of its subject matter and embodies the entire agreement between the parties. a) The Lessee acknowledges that no representations, warranties, promises, undertakings or agreements have been made by the City or any person acting, or purporting to act, on behalf of the City in connection with this novation other than as expressly set out or referred to in this agreement. b) KAA acknowledges that it has not relied on any statement, representation, warranty, promise, undertaking or agreement (whether express or implied, oral or written) resulting from or implied by conduct made in the course of communications or negotiations in connection with this lease, which is not set out in this lease or the municipal airport lease described as Exhibit "A". No reliance or inducement Each party warrants and agrees that when entering into this agreement it relied exclusively on the following matters independently of any statements, inducements or representations made by or on behalf of any other party, including without limitation, by the officers, employees or agents or any other person acting on behalf of a party: a) its own inspections, investigations, skill and judgement; b) the terms expressly contained in this agreement; and c) opinions and advice obtained independently of any other party. Notwithstanding anything in this Novation to the contrary: 1. To the extent that this Novation may compete or conflict with the terms of the municipal airport lease, the municipal airport lease shall be deemed superior to and controlling over this Novation. 2. The provisions contained in paragraphs 7(c) and 8 of the municipal airport lease shall be deemed to be superior to and will supersede any and all provisions of this Novation to the extent that such provisions which may conflict with said Paragraphs 7(c) and 8 of the municipal airport lease. [Remainder of this page left intentionally blank; signature page to immediately follow) Dated this 2(-0 day of G''� h , 2018. City of Kalispell BY: Name Printed: 1�7 Title: �CA /2'n��„ iel Dated this day of Kalispell Airport Association, Inc. kK N DERSON, Its President Leasee RV• 2018.