Santa Monica City Council
February 22, 2022

1 Office of the City Manager

MEMORANDUM
DATE: February 22, 2022

TO: Mayor Himmelrich, Mayor Pro Tem McCowan and City Council FROM: David White, City Manager
Rick Valte, Public Works Director

SUBJECT: Update on Dispensing Unleaded Fuel at SMO
Introduction
On November 23, 2021, the City Council directed the City Manager to cease all storage, distribution, and sale of leaded fuel from equipment and storage tanks owned and operated by the City of Santa Monica at Santa Monica Airport on or before April 1, 2022. The City Manager was instructed to determine and report back by January 11, 2022, what agreements or obligations, if any, would hamper the implementation of the above. In addition, any new leases that would involve the leasing of any current city-owned fuel tanks for leaded fuel be reviewed by the City Council before execution of any such leases.

The City Manager would report back on January 11, 2022 with a progress report in anticipation of a more thorough report on February 22, 2022.

Background
The Santa Monica Airport (SMO) stores fuel at two separate locations. The Southside of the airfield has one 12,000 gallon self-serve fuel tank. This tank is owned and operated by the City of Santa Monica (City) and currently dispenses leaded aviation fuel. The Northside of the airfield has a fuel farm consisting of three 12,000 gallon tanks. Two of the tanks store Jet A fuel (does not contain lead) and one stores leaded aviation fuel.

The fuel farm is owned by the City and operated by Atlantic Aviation.

The efforts to find a replacement to leaded aviation fuel has been going on for a long time. In June 2013, the Federal Aviation Administration (FAA) began the process of finding an alternate fuel replacement for 100 Low Lead (100LL). Since that time, the FAA created the Piston Aviation Fuels Initiative Program (PAFI) to facilitate the development and deployment of an unleaded aviation fuel that would be 2 environmentally safer and operationally as safe as leaded fuels for the current fleet of piston engine aircraft. The FAA continues to support the efforts of fuel producers as they bring forth alternative, unleaded fuels for testing and evaluation, but progress has been slow.

In January 2017, the City and the FAA entered into a consent decree that ended decades of disputes between the City and the FAA. One of the issues addressed by the parties in the Consent Decree was the City’s desire to stop the sale of leaded fuel at SMO. Although the City may not generally restrict leaded fuel sales at SMO by third parties, the Consent Decree does not require that the City itself engage in leaded fuel sales or that leaded fuel be made available at SMO. The Consent Decree also allows the City to close SMO completely as early as January 1, 2029. As a result of the Consent Decree, the SMO’s runway has been shortened to 3,500 feet from nearly 5,000 feet. The runway shortening dramatically reduced jet operations at SMO (82% reduction since 2016), which in turn reduced associated quality of life impacts on the neighboring communities and accomplished one of the Council’s major goals for SMO. Jet noise and exhaust have also been significantly reduced.

In September 2021, the Airport Commission discussed the community impacts of lead emissions from aircraft operating at SMO and ways to reduce/eliminate leaded aviation fuel at SMO. Additionally, the Commission brought forth actions taken by the County of Santa Clara at the Reid-Hillview Airport in Northern California where the County banned the use of leaded fuel. Santa Clara County also joined a nationwide coalition of local governments and community groups in a petition filed by Earthjustice to urge the U.S. Environmental Protection Agency (EPA) to make an endangerment finding regarding the use of leaded aviation fuel. As a result, the City’s Airport Commission unanimously voted to recommend to City Council to review steps taken and actions initiated by the County of Santa Clara in their efforts to address and mitigate lead pollution exposure, and to explore similar measures. The City has since joined the efforts of the other cities and community groups and is also a petitioner before the EPA.

On November 23, 2021, the City Council directed the City Manager to cease all storage, distribution, and sale of leaded fuel from equipment and storage tanks owned and operated by the City on or before April 1, 2022.

On January 11, 2022, the City Manager reported that staff had made significant progress in the transition to unleaded fuel. At that time, staff had begun the process of outlining several action items required to transition the self-serve fuel tank on the sourthside of SMO to unleaded fuel. Staff also began developing a public outreach program that included several meetings with SMO tenants, local flight schools, aviation organizations, and stakeholders to affirm the City’s intent to transition the selfserve fuel station to unleaded fuel. 3 Discussion
A team comprising of staff from SMO, Santa Monica Fire Department, and Aeroplex (the City’s aviation property manager that licenses the operation of the City self-serve fuel tank as an independent third party) collaborated to identify and address the various steps required to transition the City owned and operated fuel tanks from leaded aviation fuel to an unleaded alternative in a safe and compliant manner and to make efforts to minimize the use of leaded fuel by owners and operators of aircraft based at SMO.

It is important to note that Section VII of the Consent Decree provides for the use of unleaded fuel at SMO, but explicitly prohibits the City from restricting the sale of leaded fuel as long as such sale is authorized to be used within the United States:
“The FAA is committed as a matter of national aviation policy to support the development and use of unleaded aviation gas appropriate to the operation of piston aircraft where commercially and technically feasible. The FAA agrees to consider any demonstration project the City may seek to implement pertaining to the use of unleaded fuel. Nothing in this Agreement shall allow the City to restrict the sale of leaded aviation fuel for as long as the FAA authorizes use of such fuels within the United States.”
Equally notable is the recent investigation commenced by the FAA in the actions taken by the County of Santa Clara, including its ban of leaded aviation fuel at the Reid-Hillview and San Martin airports. In their Notice of Informal Investigation, the FAA contended that the ban on the use of leaded fuel constitutes a probable violation of Grant Assurance 22, which requires that the County:
“…will make the airport available as an airport for public use on reasonable terms and without unjust discrimination to all types, kinds and classes of aeronautical activities…” There are two replacement unleaded fuel products in the industry. Swift Fuel UL94 and GAMI UL91 that are currently only permitted for use with a Supplemental Type Certificate (STC) issued by the FAA. Swift UL94 does have some distribution available in California, but the consistency of a supply chain to the Southern California region continues to develop. UL91 has been an approved product, but its production and supply chain availability has not been confirmed. At this time, the Swift 94UL product appears to be the version being considered for implementation by California airports, including SMO.

It is important to note that the unleaded fuel alternatives available today are not a true replacement fuel for the entire fleet of piston powered aircraft that are currently operated and would be used primarily by older and slower aircraft. An FAA approved unleaded alternative is currently not available for newer and faster aircraft. Aircraft owners are required to ensure that 1) their aircraft engine can operate with the unleaded alternative and 2) that they purchase an STC prior to placing this product in their aircraft.
4 The need for the federal government to act quickly and certify an unleaded alternative is crucial to eliminating lead exposure from aviation fuel to neighboring communities. There continues to be a significant national effort to establish a fleet wide fuel replacement product that would not require an STC.

Since the City Manager’s Report on January 11, 2022, staff have accomplished the following:
 Notified the FAA of the City’s intent to transition the self-serve tank on the southside of SMO to unleaded aviation fuel.
 Confirmed the transition should not have an impact on the airport liability insurance.
 Completed necessary changes to the point-of-sale software for the self-serve station.
 Reviewed the Safety Data Sheets and confirmed that the unleaded fuel is compatible for storage within the self-serve tank.
 Updated the Certified Unified Program Agencies (CUPA) AQMD permit.  Initiated the outreach program, meeting and informing SMO tenants, flight schools, aviation organizations, and other stakeholders of the planned transition and encouraging all stakeholders to use the unleaded fuel.

The effort to reach out to SMO tenants, local flight schools, and aviation organizations is ongoing. So far, the users recognize the industry’s need to find a replacement unleaded fuel. Staff also received confirmation that all the based flight schools will use the new unleaded fuel for aircraft that can use the unleaded alternative.

Staff is targeting March 28, 2022 as the date for the self-serve fuel island to begin dispensing unleaded fuel.

Staff will continue to monitor the evolution of unleaded fuel and is committed to providing the latest unleaded fuel alternative that can be used by the entire fleet of piston powered aircraft.

Lastly, for alternative fuel at the north fuel farm, staff are exploring options that are consistent with the City’s obligations under the Consent Decree. Negotiations with Atlantic Aviation are currently in progress.

Attachments:
a) Grant Assurance
b) Consent Decree
Airport Sponsor Assurances 2/2020 Page 1 of 18
FAA
Airports

ASSURANCES

AIRPORT SPONSORS
A. General.

1. These assurances shall be complied with in the performance of grant agreements for airport development, airport planning, and noise compatibility program grants for airport sponsors.

2. These assurances are required to be submitted as part of the project application by sponsors requesting funds under the provisions of Title 49, U.S.C., subtitle VII, as amended. As used herein, the term "public agency sponsor" means a public agency with control of a public-use airport; the term "private sponsor" means a private owner of a public-use airport; and the term "sponsor" includes both public agency sponsors and private sponsors.

3. Upon acceptance of this grant offer by the sponsor, these assurances are incorporated in and become part of this grant agreement.

B. Duration and Applicability.

1. Airport development or Noise Compatibility Program Projects Undertaken by a Public Agency Sponsor.

The terms, conditions and assurances of this grant agreement shall remain in full force and effect throughout the useful life of the facilities developed or equipment acquired for an airport development or noise compatibility program project, or throughout the useful life of the project items installed within a facility under a noise compatibility program project, but in any event not to exceed twenty (20) years from the date of acceptance of a grant offer of Federal funds for the project. However, there shall be no limit on the duration of the assurances regarding Exclusive Rights and Airport Revenue so long as the airport is used as an airport. There shall be no limit on the duration of the terms, conditions, and assurances with respect to real property acquired with federal funds. Furthermore, the duration of the Civil Rights assurance shall be specified in the assurances.

2. Airport Development or Noise Compatibility Projects Undertaken by a Private Sponsor.

The preceding paragraph 1 also applies to a private sponsor except that the useful life of project items installed within a facility or the useful life of the facilities developed or equipment acquired under an airport development or noise compatibility program project shall be no less than ten (10) years from the date of acceptance of Federal aid for the project.

3. Airport Planning Undertaken by a Sponsor.

Unless otherwise specified in this grant agreement, only Assurances 1, 2, 3, 5, 6, 13, 18, 25, 30, 32, 33, and 34 in Section C apply to planning projects. The terms, conditions, and assurances of this grant agreement shall remain in full force and effect during the life of the project; there shall be no limit on the duration of the assurances regarding Exclusive Rights and Airport Revenue so long as the airport is used as an airport.

ATTACHMENT A
Airport Sponsor Assurances 2/2020 Page 2 of 18
C. Sponsor Certification.

The sponsor hereby assures and certifies, with respect to this grant that:

1. General Federal Requirements.

It will comply with all applicable Federal laws, regulations, executive orders, policies, guidelines, and requirements as they relate to the application, acceptance and use of Federal funds for this project including but not limited to the following:
a. Title 49, U.S.C., subtitle VII, as amended.
b. Davis-Bacon Act - 40 U.S.C. 276(a), et seq.1
c. Federal Fair Labor Standards Act - 29 U.S.C. 201, et seq. d. Hatch Act – 5 U.S.C. 1501, et seq.2
e. Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 Title 42 U.S.C. 4601, et seq.1 2
f. National Historic Preservation Act of 1966 - Section 106 - 16 U.S.C. 470(f).1 g. Archeological and Historic Preservation Act of 1974 - 16 U.S.C. 469 through 469c.1 h. Native Americans Grave Repatriation Act - 25 U.S.C. Section 3001, et seq. i. Clean Air Act, P.L. 90-148, as amended.
j. Coastal Zone Management Act, P.L. 93-205, as amended. k. Flood Disaster Protection Act of 1973 - Section 102(a) - 42 U.S.C. 4012a.1 l. Title 49, U.S.C., Section 303, (formerly known as Section 4(f)) m. Rehabilitation Act of 1973 - 29 U.S.C. 794.
n. Title VI of the Civil Rights Act of 1964 (42 U.S.C. § 2000d et seq., 78 stat. 252) (prohibits discrimination on the basis of race, color, national origin); o. Americans with Disabilities Act of 1990, as amended, (42 U.S.C. § 12101 et seq.), prohibits discrimination on the basis of disability).
p. Age Discrimination Act of 1975 - 42 U.S.C. 6101, et seq. q. American Indian Religious Freedom Act, P.L. 95-341, as amended. r. Architectural Barriers Act of 1968 -42 U.S.C. 4151, et seq.1 s. Power plant and Industrial Fuel Use Act of 1978 - Section 403- 2 U.S.C. 8373.1 t. Contract Work Hours and Safety Standards Act - 40 U.S.C. 327, et seq.1 u. Copeland Anti-kickback Act - 18 U.S.C. 874.1
v. National Environmental Policy Act of 1969 - 42 U.S.C. 4321, et seq.1 w. Wild and Scenic Rivers Act, P.L. 90-542, as amended. x. Single Audit Act of 1984 - 31 U.S.C. 7501, et seq.2
y. Drug-Free Workplace Act of 1988 - 41 U.S.C. 702 through 706. z. The Federal Funding Accountability and Transparency Act of 2006, as amended (Pub. L. 109-282, as amended by section 6202 of Pub. L. 110-252).

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EXECUTIVE ORDERS
a. Executive Order 11246 - Equal Employment Opportunity1 b. Executive Order 11990 - Protection of Wetlands
c. Executive Order 11998 –Flood Plain Management
d. Executive Order 12372 - Intergovernmental Review of Federal Programs e. Executive Order 12699 - Seismic Safety of Federal and Federally Assisted New Building Construction1
f. Executive Order 12898 - Environmental Justice
g. Executive Order 13788 - Buy American and Hire American h. Executive Order 13858 – Strengthening Buy-American Preferences for Infrastructure Projects

FEDERAL REGULATIONS
a. 2 CFR Part180 – OMB Guidelines to Agencies on Government-wide Debarment and Suspension (Non-procurement).
b. 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. [OMB Circular A-87 Cost Principles Applicable to Grants and Contracts with State and Local Governments, and OMB Circular A-133 - Audits of States, Local Governments, and Non-Profit Organizations].4, 5, 6 c. 2 CFR Part 1200 – Non-procurement Suspension and Debarment d. 14 CFR Part 13 - Investigative and Enforcement Procedures14 CFR Part 16 - Rules of Practice For Federally Assisted Airport Enforcement Proceedings. e. 14 CFR Part 150 - Airport noise compatibility planning. f. 28 CFR Part 35- Discrimination on the Basis of Disability in State and Local Government Services.
g. 28 CFR § 50.3 - U.S. Department of Justice Guidelines for Enforcement of Title VI of the Civil Rights Act of 1964.
h. 29 CFR Part 1 - Procedures for predetermination of wage rates.1 i. 29 CFR Part 3 - Contractors and subcontractors on public building or public work financed in whole or part by loans or grants from the United States.1 j. 29 CFR Part 5 - Labor standards provisions applicable to contracts covering federally financed and assisted construction (also labor standards provisions applicable to nonconstruction contracts subject to the Contract Work Hours and Safety Standards Act).1 k. 41 CFR Part 60 - Office of Federal Contract Compliance Programs, Equal Employment Opportunity, Department of Labor (Federal and federally assisted contracting requirements).1
l. 49 CFR Part 18 - Uniform administrative requirements for grants and cooperative agreements to state and local governments.3
m. 49 CFR Part 20 - New restrictions on lobbying.

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n. 49 CFR Part 21 – Nondiscrimination in federally-assisted programs of the Department of Transportation - effectuation of Title VI of the Civil Rights Act of 1964. o. 49 CFR Part 23 - Participation by Disadvantage Business Enterprise in Airport Concessions. p. 49 CFR Part 24 – Uniform Relocation Assistance and Real Property Acquisition for Federal and Federally Assisted Programs.1 2
q. 49 CFR Part 26 – Participation by Disadvantaged Business Enterprises in Department of Transportation Programs.
r. 49 CFR Part 27 – Nondiscrimination on the Basis of Handicap in Programs and Activities Receiving or Benefiting from Federal Financial Assistance.1 s. 49 CFR Part 28 –Enforcement of Nondiscrimination on the Basis of Handicap in Programs or Activities conducted by the Department of Transportation. t. 49 CFR Part 30 - Denial of public works contracts to suppliers of goods and services of countries that deny procurement market access to U.S. contractors. u. 49 CFR Part 32 –Government-wide Requirements for Drug-Free Workplace (Financial Assistance)
v. 49 CFR Part 37 –Transportation Services for Individuals with Disabilities (ADA). w. 49 CFR Part 41 - Seismic safety of Federal and federally assisted or regulated new building construction.

SPECIFIC ASSURANCES
Specific assurances required to be included in grant agreements by any of the above laws, regulations or circulars are incorporated by reference in this grant agreement.

FOOTNOTES TO ASSURANCE C.1.
1 These laws do not apply to airport planning sponsors. 2 These laws do not apply to private sponsors.
3 49 CFR Part 18 and 2 CFR Part 200 contain requirements for State and Local Governments receiving Federal assistance. Any requirement levied upon State and Local Governments by this regulation and circular shall also be applicable to private sponsors receiving Federal assistance under Title 49, United States Code.
4 On December 26, 2013 at 78 FR 78590, the Office of Management and Budget (OMB) issued the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards in 2 CFR Part 200. 2 CFR Part 200 replaces and combines the former Uniform Administrative Requirements for Grants (OMB Circular A-102 and Circular A-110 or 2 CFR Part 215 or Circular) as well as the Cost Principles (Circulars A-21 or 2 CFR part 220; Circular A-87 or 2 CFR part 225; and A-122, 2 CFR part 230). Additionally it replaces Circular A-133 guidance on the Single Annual Audit. In accordance with 2 CFR section 200.110, the standards set forth in Part 200 which affect administration of Federal awards issued by Federal agencies become effective once implemented by Federal agencies or when any future amendment to this Part becomes final. Federal agencies, including the Department of Transportation, must implement the policies and procedures applicable to Federal awards by promulgating a regulation to be effective by December 26, 2014 unless different provisions are required by statute or approved by OMB.

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5 Cost principles established in 2 CFR part 200 subpart E must be used as guidelines for determining the eligibility of specific types of expenses. 6 Audit requirements established in 2 CFR part 200 subpart F are the guidelines for audits.

2. Responsibility and Authority of the Sponsor.
a. Public Agency Sponsor:

It has legal authority to apply for this grant, and to finance and carry out the proposed project; that a resolution, motion or similar action has been duly adopted or passed as an official act of the applicant's governing body authorizing the filing of the application, including all understandings and assurances contained therein, and directing and authorizing the person identified as the official representative of the applicant to act in connection with the application and to provide such additional information as may be required.
b. Private Sponsor:

It has legal authority to apply for this grant and to finance and carry out the proposed project and comply with all terms, conditions, and assurances of this grant agreement. It shall designate an official representative and shall in writing direct and authorize that person to file this application, including all understandings and assurances contained therein; to act in connection with this application; and to provide such additional information as may be required.

3. Sponsor Fund Availability.

It has sufficient funds available for that portion of the project costs which are not to be paid by the United States. It has sufficient funds available to assure operation and maintenance of items funded under this grant agreement which it will own or control.

4. Good Title.
a. It, a public agency or the Federal government, holds good title, satisfactory to the Secretary, to the landing area of the airport or site thereof, or will give assurance satisfactory to the Secretary that good title will be acquired.
b. For noise compatibility program projects to be carried out on the property of the sponsor, it holds good title satisfactory to the Secretary to that portion of the property upon which Federal funds will be expended or will give assurance to the Secretary that good title will be obtained.

5. Preserving Rights and Powers.
a. It will not take or permit any action which would operate to deprive it of any of the rights and powers necessary to perform any or all of the terms, conditions, and assurances in this grant agreement without the written approval of the Secretary, and will act promptly to acquire, extinguish or modify any outstanding rights or claims of right of others which would interfere with such performance by the sponsor. This shall be done in a manner acceptable to the Secretary.
b. Subject to the FAA Act of 2018, Public Law 115-254, Section 163, it will not sell, lease, encumber, or otherwise transfer or dispose of any part of its title or other interests in the property shown on Exhibit A to this application or, for a noise compatibility program project, that portion of the property upon which Federal funds have been expended, for the duration of the terms, conditions, and assurances in this grant agreement without approval by the Airport Sponsor Assurances 2/2020 Page 6 of 18
Secretary. If the transferee is found by the Secretary to be eligible under Title 49, United States Code, to assume the obligations of this grant agreement and to have the power, authority, and financial resources to carry out all such obligations, the sponsor shall insert in the contract or document transferring or disposing of the sponsor's interest, and make binding upon the transferee all of the terms, conditions, and assurances contained in this grant agreement.
c. For all noise compatibility program projects which are to be carried out by another unit of local government or are on property owned by a unit of local government other than the sponsor, it will enter into an agreement with that government. Except as otherwise specified by the Secretary, that agreement shall obligate that government to the same terms, conditions, and assurances that would be applicable to it if it applied directly to the FAA for a grant to undertake the noise compatibility program project. That agreement and changes thereto must be satisfactory to the Secretary. It will take steps to enforce this agreement against the local government if there is substantial non-compliance with the terms of the agreement.
d. For noise compatibility program projects to be carried out on privately owned property, it will enter into an agreement with the owner of that property which includes provisions specified by the Secretary. It will take steps to enforce this agreement against the property owner whenever there is substantial non-compliance with the terms of the agreement. e. If the sponsor is a private sponsor, it will take steps satisfactory to the Secretary to ensure that the airport will continue to function as a public-use airport in accordance with these assurances for the duration of these assurances.
f. If an arrangement is made for management and operation of the airport by any agency or person other than the sponsor or an employee of the sponsor, the sponsor will reserve sufficient rights and authority to insure that the airport will be operated and maintained in accordance Title 49, United States Code, the regulations and the terms, conditions and assurances in this grant agreement and shall insure that such arrangement also requires compliance therewith.
g. Sponsors of commercial service airports will not permit or enter into any arrangement that results in permission for the owner or tenant of a property used as a residence, or zoned for residential use, to taxi an aircraft between that property and any location on airport.

Sponsors of general aviation airports entering into any arrangement that results in permission for the owner of residential real property adjacent to or near the airport must comply with the requirements of Sec. 136 of Public Law 112-95 and the sponsor assurances.

6. Consistency with Local Plans.

The project is reasonably consistent with plans (existing at the time of submission of this application) of public agencies that are authorized by the State in which the project is located to plan for the development of the area surrounding the airport.

7. Consideration of Local Interest.

It has given fair consideration to the interest of communities in or near where the project may be located.

8. Consultation with Users.

In making a decision to undertake any airport development project under Title 49, United States Code, it has undertaken reasonable consultations with affected parties using the airport at which project is proposed.

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9. Public Hearings.

In projects involving the location of an airport, an airport runway, or a major runway extension, it has afforded the opportunity for public hearings for the purpose of considering the economic, social, and environmental effects of the airport or runway location and its consistency with goals and objectives of such planning as has been carried out by the community and it shall, when requested by the Secretary, submit a copy of the transcript of such hearings to the Secretary.

Further, for such projects, it has on its management board either voting representation from the communities where the project is located or has advised the communities that they have the right to petition the Secretary concerning a proposed project.

10. Metropolitan Planning Organization.

In projects involving the location of an airport, an airport runway, or a major runway extension at a medium or large hub airport, the sponsor has made available to and has provided upon request to the metropolitan planning organization in the area in which the airport is located, if any, a copy of the proposed amendment to the airport layout plan to depict the project and a copy of any airport master plan in which the project is described or depicted.

11. Pavement Preventive Maintenance.

With respect to a project approved after January 1, 1995, for the replacement or reconstruction of pavement at the airport, it assures or certifies that it has implemented an effective airport pavement maintenance-management program and it assures that it will use such program for the useful life of any pavement constructed, reconstructed or repaired with Federal financial assistance at the airport. It will provide such reports on pavement condition and pavement management programs as the Secretary determines may be useful.

12. Terminal Development Prerequisites.

For projects which include terminal development at a public use airport, as defined in Title 49, it has, on the date of submittal of the project grant application, all the safety equipment required for certification of such airport under section 44706 of Title 49, United States Code, and all the security equipment required by rule or regulation, and has provided for access to the passenger enplaning and deplaning area of such airport to passengers enplaning and deplaning from aircraft other than air carrier aircraft.

13. Accounting System, Audit, and Record Keeping Requirements. a. It shall keep all project accounts and records which fully disclose the amount and disposition by the recipient of the proceeds of this grant, the total cost of the project in connection with which this grant is given or used, and the amount or nature of that portion of the cost of the project supplied by other sources, and such other financial records pertinent to the project.

The accounts and records shall be kept in accordance with an accounting system that will facilitate an effective audit in accordance with the Single Audit Act of 1984. b. It shall make available to the Secretary and the Comptroller General of the United States, or any of their duly authorized representatives, for the purpose of audit and examination, any books, documents, papers, and records of the recipient that are pertinent to this grant. The Secretary may require that an appropriate audit be conducted by a recipient. In any case in which an independent audit is made of the accounts of a sponsor relating to the disposition of the proceeds of a grant or relating to the project in connection with which this grant was given or used, it shall file a certified copy of such audit with the Comptroller General of the United States not later than six (6) months following the close of the fiscal year for which the audit was made.

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14. Minimum Wage Rates.

It shall include, in all contracts in excess of $2,000 for work on any projects funded under this grant agreement which involve labor, provisions establishing minimum rates of wages, to be predetermined by the Secretary of Labor, in accordance with the Davis-Bacon Act, as amended (40 U.S.C. 276a-276a-5), which contractors shall pay to skilled and unskilled labor, and such minimum rates shall be stated in the invitation for bids and shall be included in proposals or bids for the work.

15. Veteran's Preference.

It shall include in all contracts for work on any project funded under this grant agreement which involve labor, such provisions as are necessary to insure that, in the employment of labor (except in executive, administrative, and supervisory positions), preference shall be given to Vietnam era veterans, Persian Gulf veterans, Afghanistan-Iraq war veterans, disabled veterans, and small business concerns owned and controlled by disabled veterans as defined in Section 47112 of Title 49, United States Code. However, this preference shall apply only where the individuals are available and qualified to perform the work to which the employment relates.

16. Conformity to Plans and Specifications.

It will execute the project subject to plans, specifications, and schedules approved by the Secretary. Such plans, specifications, and schedules shall be submitted to the Secretary prior to commencement of site preparation, construction, or other performance under this grant agreement, and, upon approval of the Secretary, shall be incorporated into this grant agreement. Any modification to the approved plans, specifications, and schedules shall also be subject to approval of the Secretary, and incorporated into this grant agreement.

17. Construction Inspection and Approval.

It will provide and maintain competent technical supervision at the construction site throughout the project to assure that the work conforms to the plans, specifications, and schedules approved by the Secretary for the project. It shall subject the construction work on any project contained in an approved project application to inspection and approval by the Secretary and such work shall be in accordance with regulations and procedures prescribed by the Secretary.

Such regulations and procedures shall require such cost and progress reporting by the sponsor or sponsors of such project as the Secretary shall deem necessary.

18. Planning Projects.

In carrying out planning projects:
a. It will execute the project in accordance with the approved program narrative contained in the project application or with the modifications similarly approved. b. It will furnish the Secretary with such periodic reports as required pertaining to the planning project and planning work activities.
c. It will include in all published material prepared in connection with the planning project a notice that the material was prepared under a grant provided by the United States. d. It will make such material available for examination by the public, and agrees that no material prepared with funds under this project shall be subject to copyright in the United States or any other country.
e. It will give the Secretary unrestricted authority to publish, disclose, distribute, and otherwise use any of the material prepared in connection with this grant.

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f. It will grant the Secretary the right to disapprove the sponsor's employment of specific consultants and their subcontractors to do all or any part of this project as well as the right to disapprove the proposed scope and cost of professional services. g. It will grant the Secretary the right to disapprove the use of the sponsor's employees to do all or any part of the project.
h. It understands and agrees that the Secretary's approval of this project grant or the Secretary's approval of any planning material developed as part of this grant does not constitute or imply any assurance or commitment on the part of the Secretary to approve any pending or future application for a Federal airport grant.

19. Operation and Maintenance.
a. The airport and all facilities which are necessary to serve the aeronautical users of the airport, other than facilities owned or controlled by the United States, shall be operated at all times in a safe and serviceable condition and in accordance with the minimum standards as may be required or prescribed by applicable Federal, state and local agencies for maintenance and operation. It will not cause or permit any activity or action thereon which would interfere with its use for airport purposes. It will suitably operate and maintain the airport and all facilities thereon or connected therewith, with due regard to climatic and flood conditions. Any proposal to temporarily close the airport for non-aeronautical purposes must first be approved by the Secretary. In furtherance of this assurance, the sponsor will have in effect arrangements for1) Operating the airport's aeronautical facilities whenever required; 2) Promptly marking and lighting hazards resulting from airport conditions, including temporary conditions; and
3) Promptly notifying airmen of any condition affecting aeronautical use of the airport.

Nothing contained herein shall be construed to require that the airport be operated for aeronautical use during temporary periods when snow, flood or other climatic conditions interfere with such operation and maintenance. Further, nothing herein shall be construed as requiring the maintenance, repair, restoration, or replacement of any structure or facility which is substantially damaged or destroyed due to an act of God or other condition or circumstance beyond the control of the sponsor. b. It will suitably operate and maintain noise compatibility program items that it owns or controls upon which Federal funds have been expended.

20. Hazard Removal and Mitigation.

It will take appropriate action to assure that such terminal airspace as is required to protect instrument and visual operations to the airport (including established minimum flight altitudes) will be adequately cleared and protected by removing, lowering, relocating, marking, or lighting or otherwise mitigating existing airport hazards and by preventing the establishment or creation of future airport hazards.

21. Compatible Land Use.

It will take appropriate action, to the extent reasonable, including the adoption of zoning laws, to restrict the use of land adjacent to or in the immediate vicinity of the airport to activities and purposes compatible with normal airport operations, including landing and takeoff of aircraft. In addition, if the project is for noise compatibility program implementation, it will not cause or permit any change in land use, within its jurisdiction, that will reduce its compatibility, with Airport Sponsor Assurances 2/2020 Page 10 of 18
respect to the airport, of the noise compatibility program measures upon which Federal funds have been expended.

22. Economic Nondiscrimination.
a. It will make the airport available as an airport for public use on reasonable terms and without unjust discrimination to all types, kinds and classes of aeronautical activities, including commercial aeronautical activities offering services to the public at the airport. b. In any agreement, contract, lease, or other arrangement under which a right or privilege at the airport is granted to any person, firm, or corporation to conduct or to engage in any aeronautical activity for furnishing services to the public at the airport, the sponsor will insert and enforce provisions requiring the contractor to1) furnish said services on a reasonable, and not unjustly discriminatory, basis to all users thereof, and
2) charge reasonable, and not unjustly discriminatory, prices for each unit or service, provided that the contractor may be allowed to make reasonable and nondiscriminatory discounts, rebates, or other similar types of price reductions to volume purchasers.
c. Each fixed-based operator at the airport shall be subject to the same rates, fees, rentals, and other charges as are uniformly applicable to all other fixed-based operators making the same or similar uses of such airport and utilizing the same or similar facilities. d. Each air carrier using such airport shall have the right to service itself or to use any fixedbased operator that is authorized or permitted by the airport to serve any air carrier at such airport.
e. Each air carrier using such airport (whether as a tenant, non-tenant, or subtenant of another air carrier tenant) shall be subject to such nondiscriminatory and substantially comparable rules, regulations, conditions, rates, fees, rentals, and other charges with respect to facilities directly and substantially related to providing air transportation as are applicable to all such air carriers which make similar use of such airport and utilize similar facilities, subject to reasonable classifications such as tenants or non-tenants and signatory carriers and nonsignatory carriers. Classification or status as tenant or signatory shall not be unreasonably withheld by any airport provided an air carrier assumes obligations substantially similar to those already imposed on air carriers in such classification or status. f. It will not exercise or grant any right or privilege which operates to prevent any person, firm, or corporation operating aircraft on the airport from performing any services on its own aircraft with its own employees [including, but not limited to maintenance, repair, and fueling] that it may choose to perform.
g. In the event the sponsor itself exercises any of the rights and privileges referred to in this assurance, the services involved will be provided on the same conditions as would apply to the furnishing of such services by commercial aeronautical service providers authorized by the sponsor under these provisions.
h. The sponsor may establish such reasonable, and not unjustly discriminatory, conditions to be met by all users of the airport as may be necessary for the safe and efficient operation of the airport.

Airport Sponsor Assurances 2/2020 Page 11 of 18
i. The sponsor may prohibit or limit any given type, kind or class of aeronautical use of the airport if such action is necessary for the safe operation of the airport or necessary to serve the civil aviation needs of the public.

23. Exclusive Rights.

It will permit no exclusive right for the use of the airport by any person providing, or intending to provide, aeronautical services to the public. For purposes of this paragraph, the providing of the services at an airport by a single fixed-based operator shall not be construed as an exclusive right if both of the following apply:
a. It would be unreasonably costly, burdensome, or impractical for more than one fixed-based operator to provide such services, and
b. If allowing more than one fixed-based operator to provide such services would require the reduction of space leased pursuant to an existing agreement between such single fixedbased operator and such airport. It further agrees that it will not, either directly or indirectly, grant or permit any person, firm, or corporation, the exclusive right at the airport to conduct any aeronautical activities, including, but not limited to charter flights, pilot training, aircraft rental and sightseeing, aerial photography, crop dusting, aerial advertising and surveying, air carrier operations, aircraft sales and services, sale of aviation petroleum products whether or not conducted in conjunction with other aeronautical activity, repair and maintenance of aircraft, sale of aircraft parts, and any other activities which because of their direct relationship to the operation of aircraft can be regarded as an aeronautical activity, and that it will terminate any exclusive right to conduct an aeronautical activity now existing at such an airport before the grant of any assistance under Title 49, United States Code.

24. Fee and Rental Structure.

It will maintain a fee and rental structure for the facilities and services at the airport which will make the airport as self-sustaining as possible under the circumstances existing at the particular airport, taking into account such factors as the volume of traffic and economy of collection. No part of the Federal share of an airport development, airport planning or noise compatibility project for which a grant is made under Title 49, United States Code, the Airport and Airway Improvement Act of 1982, the Federal Airport Act or the Airport and Airway Development Act of 1970 shall be included in the rate basis in establishing fees, rates, and charges for users of that airport.

25. Airport Revenues.
a. All revenues generated by the airport and any local taxes on aviation fuel established after December 30, 1987, will be expended by it for the capital or operating costs of the airport; the local airport system; or other local facilities which are owned or operated by the owner or operator of the airport and which are directly and substantially related to the actual air transportation of passengers or property; or for noise mitigation purposes on or off the airport. The following exceptions apply to this paragraph:
1) If covenants or assurances in debt obligations issued before September 3, 1982, by the owner or operator of the airport, or provisions enacted before September 3, 1982, in governing statutes controlling the owner or operator's financing, provide for the use of the revenues from any of the airport owner or operator's facilities, including the airport, to support not only the airport but also the airport owner or operator's general debt obligations or other facilities, then this limitation on the use of all revenues generated Airport Sponsor Assurances 2/2020 Page 12 of 18
by the airport (and, in the case of a public airport, local taxes on aviation fuel) shall not apply.
2) If the Secretary approves the sale of a privately owned airport to a public sponsor and provides funding for any portion of the public sponsor’s acquisition of land, this limitation on the use of all revenues generated by the sale shall not apply to certain proceeds from the sale. This is conditioned on repayment to the Secretary by the private owner of an amount equal to the remaining unamortized portion (amortized over a 20- year period) of any airport improvement grant made to the private owner for any purpose other than land acquisition on or after October 1, 1996, plus an amount equal to the federal share of the current fair market value of any land acquired with an airport improvement grant made to that airport on or after October 1, 1996. 3) Certain revenue derived from or generated by mineral extraction, production, lease, or other means at a general aviation airport (as defined at Section 47102 of title 49 United States Code), if the FAA determines the airport sponsor meets the requirements set forth in Sec. 813 of Public Law 112-95.
b. As part of the annual audit required under the Single Audit Act of 1984, the sponsor will direct that the audit will review, and the resulting audit report will provide an opinion concerning, the use of airport revenue and taxes in paragraph (a), and indicating whether funds paid or transferred to the owner or operator are paid or transferred in a manner consistent with Title 49, United States Code and any other applicable provision of law, including any regulation promulgated by the Secretary or Administrator. c. Any civil penalties or other sanctions will be imposed for violation of this assurance in accordance with the provisions of Section 47107 of Title 49, United States Code.

26. Reports and Inspections.

It will:
a. submit to the Secretary such annual or special financial and operations reports as the Secretary may reasonably request and make such reports available to the public; make available to the public at reasonable times and places a report of the airport budget in a format prescribed by the Secretary;
b. for airport development projects, make the airport and all airport records and documents affecting the airport, including deeds, leases, operation and use agreements, regulations and other instruments, available for inspection by any duly authorized agent of the Secretary upon reasonable request;
c. for noise compatibility program projects, make records and documents relating to the project and continued compliance with the terms, conditions, and assurances of this grant agreement including deeds, leases, agreements, regulations, and other instruments, available for inspection by any duly authorized agent of the Secretary upon reasonable request; and
d. in a format and time prescribed by the Secretary, provide to the Secretary and make available to the public following each of its fiscal years, an annual report listing in detail:
1) all amounts paid by the airport to any other unit of government and the purposes for which each such payment was made; and
2) all services and property provided by the airport to other units of government and the amount of compensation received for provision of each such service and property.

Airport Sponsor Assurances 2/2020 Page 13 of 18

27. Use by Government Aircraft.

It will make available all of the facilities of the airport developed with Federal financial assistance and all those usable for landing and takeoff of aircraft to the United States for use by Government aircraft in common with other aircraft at all times without charge, except, if the use by Government aircraft is substantial, charge may be made for a reasonable share, proportional to such use, for the cost of operating and maintaining the facilities used. Unless otherwise determined by the Secretary, or otherwise agreed to by the sponsor and the using agency, substantial use of an airport by Government aircraft will be considered to exist when operations of such aircraft are in excess of those which, in the opinion of the Secretary, would unduly interfere with use of the landing areas by other authorized aircraft, or during any calendar month that –
a. Five (5) or more Government aircraft are regularly based at the airport or on land adjacent thereto; or
b. The total number of movements (counting each landing as a movement) of Government aircraft is 300 or more, or the gross accumulative weight of Government aircraft using the airport (the total movement of Government aircraft multiplied by gross weights of such aircraft) is in excess of five million pounds.

28. Land for Federal Facilities.

It will furnish without cost to the Federal Government for use in connection with any air traffic control or air navigation activities, or weather-reporting and communication activities related to air traffic control, any areas of land or water, or estate therein, or rights in buildings of the sponsor as the Secretary considers necessary or desirable for construction, operation, and maintenance at Federal expense of space or facilities for such purposes. Such areas or any portion thereof will be made available as provided herein within four months after receipt of a written request from the Secretary.

29. Airport Layout Plan.
a. Subject to the FAA Reauthorization Act of 2018, Public Law 115-254, Section 163, it will keep up to date at all times an airport layout plan of the airport showing:
1) boundaries of the airport and all proposed additions thereto, together with the boundaries of all offsite areas owned or controlled by the sponsor for airport purposes and proposed additions thereto;
2) the location and nature of all existing and proposed airport facilities and structures (such as runways, taxiways, aprons, terminal buildings, hangars and roads), including all proposed extensions and reductions of existing airport facilities; 3) the location of all existing and proposed non-aviation areas and of all existing improvements thereon; and
4) all proposed and existing access points used to taxi aircraft across the airport’s property boundary. Such airport layout plans and each amendment, revision, or modification thereof, shall be subject to the approval of the Secretary which approval shall be evidenced by the signature of a duly authorized representative of the Secretary on the face of the airport layout plan. The sponsor will not make or permit any changes or alterations in the airport or any of its facilities which are not in conformity Airport Sponsor Assurances 2/2020 Page 14 of 18
with the airport layout plan as approved by the Secretary and which might, in the opinion of the Secretary, adversely affect the safety, utility or efficiency of the airport. b. Subject to the FAA Reauthorization Act of 2018, Public Law 115-254, Section 163, if a change or alteration in the airport or the facilities is made which the Secretary determines adversely affects the safety, utility, or efficiency of any federally owned, leased, or funded property on or off the airport and which is not in conformity with the airport layout plan as approved by the Secretary, the owner or operator will, if requested, by the Secretary (1) eliminate such adverse effect in a manner approved by the Secretary; or (2) bear all costs of relocating such property (or replacement thereof) to a site acceptable to the Secretary and all costs of restoring such property (or replacement thereof) to the level of safety, utility, efficiency, and cost of operation existing before the unapproved change in the airport or its facilities except in the case of a relocation or replacement of an existing airport facility due to a change in the Secretary’s design standards beyond the control of the airport sponsor.

30. Civil Rights.

It will promptly take any measures necessary to ensure that no person in the United States shall, on the grounds of race, creed, color, national origin, sex, age, or disability be excluded from participation in, be denied the benefits of, or be otherwise subjected to discrimination in any activity conducted with, or benefiting from, funds received from this grant. a. Using the definitions of activity, facility and program as found and defined in §§ 21.23 (b) and 21.23 (e) of 49 CFR § 21, the sponsor will facilitate all programs, operate all facilities, or conduct all programs in compliance with all non-discrimination requirements imposed by, or pursuant to these assurances.
b. Applicability
1) Programs and Activities. If the sponsor has received a grant (or other federal assistance) for any of the sponsor’s program or activities, these requirements extend to all of the sponsor’s programs and activities.
2) Facilities. Where it receives a grant or other federal financial assistance to construct, expand, renovate, remodel, alter or acquire a facility, or part of a facility, the assurance extends to the entire facility and facilities operated in connection therewith. 3) Real Property. Where the sponsor receives a grant or other Federal financial assistance in the form of, or for the acquisition of real property or an interest in real property, the assurance will extend to rights to space on, over, or under such property. c. Duration.

The sponsor agrees that it is obligated to this assurance for the period during which Federal financial assistance is extended to the program, except where the Federal financial assistance is to provide, or is in the form of, personal property, or real property, or interest therein, or structures or improvements thereon, in which case the assurance obligates the sponsor, or any transferee for the longer of the following periods:
1) So long as the airport is used as an airport, or for another purpose involving the provision of similar services or benefits; or
2) So long as the sponsor retains ownership or possession of the property.

Airport Sponsor Assurances 2/2020 Page 15 of 18
d. Required Solicitation Language. It will include the following notification in all solicitations for bids, Requests For Proposals for work, or material under this grant agreement and in all proposals for agreements, including airport concessions, regardless of funding source:
“The (Name of Sponsor), in accordance with the provisions of Title VI of the Civil Rights Act of 1964 (78 Stat. 252, 42 U.S.C. §§ 2000d to 2000d-4) and the Regulations, hereby notifies all bidders that it will affirmatively ensure that any contract entered into pursuant to this advertisement, disadvantaged business enterprises and airport concession disadvantaged business enterprises will be afforded full and fair opportunity to submit bids in response to this invitation and will not be discriminated against on the grounds of race, color, or national origin in consideration for an award.”
e. Required Contract Provisions.
1) It will insert the non-discrimination contract clauses requiring compliance with the acts and regulations relative to non-discrimination in Federally-assisted programs of the DOT, and incorporating the acts and regulations into the contracts by reference in every contract or agreement subject to the non-discrimination in Federally-assisted programs of the DOT acts and regulations.
2) It will include a list of the pertinent non-discrimination authorities in every contract that is subject to the non-discrimination acts and regulations. 3) It will insert non-discrimination contract clauses as a covenant running with the land, in any deed from the United States effecting or recording a transfer of real property, structures, use, or improvements thereon or interest therein to a sponsor. 4) It will insert non-discrimination contract clauses prohibiting discrimination on the basis of race, color, national origin, creed, sex, age, or handicap as a covenant running with the land, in any future deeds, leases, license, permits, or similar instruments entered into by the sponsor with other parties:
a. For the subsequent transfer of real property acquired or improved under the applicable activity, project, or program; and
b. For the construction or use of, or access to, space on, over, or under real property acquired or improved under the applicable activity, project, or program. f. It will provide for such methods of administration for the program as are found by the Secretary to give reasonable guarantee that it, other recipients, sub-recipients, subgrantees, contractors, subcontractors, consultants, transferees, successors in interest, and other participants of Federal financial assistance under such program will comply with all requirements imposed or pursuant to the acts, the regulations, and this assurance. g. It agrees that the United States has a right to seek judicial enforcement with regard to any matter arising under the acts, the regulations, and this assurance.

31. Disposal of Land.
a. For land purchased under a grant for airport noise compatibility purposes, including land serving as a noise buffer, it will dispose of the land, when the land is no longer needed for such purposes, at fair market value, at the earliest practicable time. That portion of the proceeds of such disposition which is proportionate to the United States' share of acquisition of such land will be, at the discretion of the Secretary, (1) reinvested in another project at the airport, or (2) transferred to another eligible airport as prescribed by the Secretary. The Secretary shall give preference to the following, in descending order, (1) Airport Sponsor Assurances 2/2020 Page 16 of 18
reinvestment in an approved noise compatibility project, (2) reinvestment in an approved project that is eligible for grant funding under Section 47117(e) of title 49 United States Code, (3) reinvestment in an approved airport development project that is eligible for grant funding under Sections 47114, 47115, or 47117 of title 49 United States Code, (4) transferred to an eligible sponsor of another public airport to be reinvested in an approved noise compatibility project at that airport, and (5) paid to the Secretary for deposit in the Airport and Airway Trust Fund. If land acquired under a grant for noise compatibility purposes is leased at fair market value and consistent with noise buffering purposes, the lease will not be considered a disposal of the land. Revenues derived from such a lease may be used for an approved airport development project that would otherwise be eligible for grant funding or any permitted use of airport revenue.
b. For land purchased under a grant for airport development purposes (other than noise compatibility), it will, when the land is no longer needed for airport purposes, dispose of such land at fair market value or make available to the Secretary an amount equal to the United States' proportionate share of the fair market value of the land. That portion of the proceeds of such disposition which is proportionate to the United States' share of the cost of acquisition of such land will, (1) upon application to the Secretary, be reinvested or transferred to another eligible airport as prescribed by the Secretary. The Secretary shall give preference to the following, in descending order: (1) reinvestment in an approved noise compatibility project, (2) reinvestment in an approved project that is eligible for grant funding under Section 47117(e) of title 49 United States Code, (3) reinvestment in an approved airport development project that is eligible for grant funding under Sections 47114, 47115, or 47117 of title 49 United States Code, (4) transferred to an eligible sponsor of another public airport to be reinvested in an approved noise compatibility project at that airport, and (5) paid to the Secretary for deposit in the Airport and Airway Trust Fund. c. Land shall be considered to be needed for airport purposes under this assurance if (1) it may be needed for aeronautical purposes (including runway protection zones) or serve as noise buffer land, and (2) the revenue from interim uses of such land contributes to the financial self-sufficiency of the airport. Further, land purchased with a grant received by an airport operator or owner before December 31, 1987, will be considered to be needed for airport purposes if the Secretary or Federal agency making such grant before December 31, 1987, was notified by the operator or owner of the uses of such land, did not object to such use, and the land continues to be used for that purpose, such use having commenced no later than December 15, 1989.
d. Disposition of such land under (a) (b) or (c) will be subject to the retention or reservation of any interest or right therein necessary to ensure that such land will only be used for purposes which are compatible with noise levels associated with operation of the airport.

32. Engineering and Design Services.

Engineering and Design Services. If any phase of such project has received Federal funds under Chapter 471 subchapter 1 of Title 49 U.S.C., it will award each contract, or sub-contract for program management, construction management, planning studies, feasibility studies, architectural services, preliminary engineering, design, engineering, surveying, mapping or related services in the same manner as a contract for architectural and engineering services is negotiated under Chapter 11 of Title 40 U. S. C., or an equivalent qualifications-based requirement prescribed for or by the sponsor of the airport.

Airport Sponsor Assurances 2/2020 Page 17 of 18

33. Foreign Market Restrictions.

It will not allow funds provided under this grant to be used to fund any project which uses any product or service of a foreign country during the period in which such foreign country is listed by the United States Trade Representative as denying fair and equitable market opportunities for products and suppliers of the United States in procurement and construction.

34. Policies, Standards, and Specifications.

It will carry out the project in accordance with policies, standards, and specifications approved by the Secretary including, but not limited to, the advisory circulars listed in the Current FAA Advisory Circulars for AIP projects, dated , and included in this grant, and in accordance with applicable state policies, standards, and specifications approved by the Secretary.

35. Relocation and Real Property Acquisition.
a. It will be guided in acquiring real property, to the greatest extent practicable under State law, by the land acquisition policies in Subpart B of 49 CFR Part 24 and will pay or reimburse property owners for necessary expenses as specified in Subpart B. b. It will provide a relocation assistance program offering the services described in Subpart C and fair and reasonable relocation payments and assistance to displaced persons as required in Subpart D and E of 49 CFR Part 24.
c. It will make available within a reasonable period of time prior to displacement, comparable replacement dwellings to displaced persons in accordance with Subpart E of 49 CFR Part 24.

36. Access By Intercity Buses.

The airport owner or operator will permit, to the maximum extent practicable, intercity buses or other modes of transportation to have access to the airport; however, it has no obligation to fund special facilities for intercity buses or for other modes of transportation.

37. Disadvantaged Business Enterprises.

The sponsor shall not discriminate on the basis of race, color, national origin or sex in the award and performance of any DOT-assisted contract covered by 49 CFR Part 26, or in the award and performance of any concession activity contract covered by 49 CFR Part 23. In addition, the sponsor shall not discriminate on the basis of race, color, national origin or sex in the administration of its Disadvantaged Business Enterprise (DBE) and Airport Concessions Disadvantaged Business Enterprise (ACDBE) programs or the requirements of 49 CFR Parts 23 and 26. The sponsor shall take all necessary and reasonable steps under 49 CFR Parts 23 and 26 to ensure nondiscrimination in the award and administration of DOT-assisted contracts, and/or concession contracts. The sponsor’s DBE and ACDBE programs, as required by 49 CFR Parts 26 and 23, and as approved by DOT, are incorporated by reference in this agreement.

Implementation of these programs is a legal obligation and failure to carry out its terms shall be treated as a violation of this agreement. Upon notification to the sponsor of its failure to carry out its approved program, the Department may impose sanctions as provided for under Parts 26 and 23 and may, in appropriate cases, refer the matter for enforcement under 18 U.S.C. 1001 and/or the Program Fraud Civil Remedies Act of 1936 (31 U.S.C. 3801).

38. Hangar Construction.

If the airport owner or operator and a person who owns an aircraft agree that a hangar is to be constructed at the airport for the aircraft at the aircraft owner’s expense, the airport owner or Airport Sponsor Assurances 2/2020 Page 18 of 18
operator will grant to the aircraft owner for the hangar a long term lease that is subject to such terms and conditions on the hangar as the airport owner or operator may impose.

39. Competitive Access.
a. If the airport owner or operator of a medium or large hub airport (as defined in section 47102 of title 49, U.S.C.) has been unable to accommodate one or more requests by an air carrier for access to gates or other facilities at that airport in order to allow the air carrier to provide service to the airport or to expand service at the airport, the airport owner or operator shall transmit a report to the Secretary that1) Describes the requests; 2) Provides an explanation as to why the requests could not be accommodated; and 3) Provides a time frame within which, if any, the airport will be able to accommodate the requests.
b. Such report shall be due on either February 1 or August 1 of each year if the airport has been unable to accommodate the request(s) in the six month period prior to the applicable due date.

UNITED STATES DISTRICT COURT

FOR THE CENTRAL DISTRICT OF CALIFORNIA

CITY OF SANTA MONICA,
Petitioner,
v.

Civil Action No. 13-CV-8046-JFW (VBKx)
UNITED STATES OF AMERICA, et al.

Respondent.

STIPULATION AND ORDER/CONSENT DECREE
It is stipulated by and between the undersigned parties by their respective attorneys that:

1. The Court has jurisdiction over each of the parties, and venue of this action is proper in the United States District Court for the Central District of California.

2. The City of Santa Monica (the City) filed this case seeking to quiet title to certain properties and the United States disputes these claims. Live controversies exist between the parties including these and other issues.

3. The parties consent to the Court's entry of the Settlement Agreement in the form attached to this Stipulation and Order/Consent Decree.

4. The parties' execution of this Stipulation and Order/Consent Decree and the Settlement Agreement shall settle and resolve any and all claims of the City arising from the events giving rise to the allegations described in the Complaint in this action and in c~~·~in other pr9,ceedings between the parties, as provided in the Settlement Agreement.
1 Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 1 of 72 Page ID #:945

ATTACHMENT B

5. Neither this Stipulation and Order/Consent Decree nor the attached Settlement Agreement shall be construed to preclude the United States or the Federal Aviation Administration from bringing an action against the City for any violation( s) of any laws, regulations or orders other than those addressed in the Settlement Agreement.

6. In the event that the proposed Settlement Agreement is not entered pursuant to this Stipulation and Order/Consent Decree, this Stipulation shall become null and void and shall be of no effect whatever, and the making of this Stipulation shall be without prejudice to any party in this or any other proceeding.
2 Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 2 of 72 Page ID #:946 3 Reginald C. Govan
Chief Counsel
Federal Aviation Administration
For the De11artment of Justice

JOYCE BRANDA
Acting Assistant Attorney General
EILEEN M. DECKER
United States Attorney

JUDRY SUBAR
Assistant Branch Director
RAPHAEL 0. GOMEZ (D.C. Bar #305540)
Senior Trial Counsel
U.S. Department of Justice
Civil Division, Federal Progra1hs Branch
P.O. Box 883
Washington, D.C. 20044
Telephone: (202) 514- 13 18
Facsimile· (202) 616-8460
Rapha ~r. ome _,usdoj.gov
Gl\~1'. . l . · :;L:DON (D.C. IJnr #987142)
Trial ~ orney
U.S. Department of Justice
Civil Division, Federal Programs Branch
P.O. Box 883
Washington, D.C. 20044
Telephone: (202) 5 t 4-4686
Fax: (202) 616-8460
Email: [email protected] ''"
Dated: <r_btihr · " . "'i ~.,I
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 3 of 72 Page ID #:947 4 For the City of Santa Monica:

JOSEPH LAWRENCE
Interim City Attorney
LANCE S. GAMS
Chief Deputy City Attorney
IV AN 0. CAMPBELL
Deputy City Attorney
1685 Main Street, Third Floor
Santa Monica, CA 90401-3295
Telephone: 310-458-8336
Facsimile: 310-393-6727
ARTUROJ.GONZALEZ
Morrison & Forester LLP
425 Market Street
San Francisco, CA 94105
Telephone: 415-268-7000
Facsimile: 415-268-7522 1
WILLIAM V. O'CONNOR, JR.

JOANNA L. SIMON
Morrison & Foerster LLP
12531 High Bluff Drive, Suite 100
San Diego, CA 92130
Telephone: 858-720-5100
Facsimile: 858-720-5125
wILLIAN1.rv. o'coNNoR, JR . . >~j ~:

Dated: January3u , 2017
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 4 of 72 Page ID #:948 ORDER
IT IS SO ORDERED by this Court, this ____ day of January, 2017, at Los Angeles, California.

Honorable John F. Walter
United States District Court
For the Central District of California
5 ,,
•'
",.1
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 5 of 72 Page ID #:949

SETTLEMENT AGREEMENT/CONSENT DECREE BETWEEN THE FEDERAL

AVIATION ADMINISTRATION AND THE CITY OF SANTA MONICA
The United States of America, acting through the Federal Aviation Administration (FAA) and the City of Santa Monica, CA (City) (collectively, the Parties) enter into this Settlement Agreement (Agreement), by and through their undersigned representatives, to resolve the disputes outlined below and pertaining to the operation of the Santa Monica Municipal Airport (Airport or SMO). This Agreement, once signed by the FAA and the City, shall be presented to the U.S. District Court for the Central District Court of California (U.S. District Court) for entry as a Consent Decree.

Background
Airport Property & Runway
SMO is generally composed of two parcels of property.

1. First Parcel. The first parcel consists of approximately one hundred and seventy acres that the City of Santa Monica (City) leased to the U.S. gqvernment during World War II. (This parcel is referred to herein as the First Parcel and is more fully described as the premises referred to as "Clover Field, Santa Monica Municipal Airport" in the leases, as modified, that are referred to in that certain Instrument of Transfer, dated as of August 10, 1948, between the United States of America and the City that was recorded at Book 28055, Pages 211through222, inclusive, in the Official Records of Los Angeles County, California (the IOT).)

2. Second Parcel. The second parcel consists of approximately eighteen acres with respect to which the United States of America duly executed a Quitclaim Deed dated April 8, 1949, and recorded at Book 30037, Pages 364 though 370, inclusive, in the Official Records of Los Angeles County, California (the Quitclaim Deed), conveying its interests in said parcel to the City. (This parcel is referred to herein as the Second Parcel.) (The First Parcel and the Second Parcel, together with any other right, title and interest in any premises, structures, improvements or other property CO!J.Y~y..yed by the United States of "1" ·' . America to the City in the IOT or the Quitclaim Deed, arWc<?llectiyely~;referred to herein as Airport Property). · -"'~~~ · <(~
Airport Runwav. The Airport's current runway of 4,973 feet occupies land in both the First Parcel and Second Parcel, and also includes adjoining land that the Douglas Aircraft Company conveyed to the City by grant deed in 1945.
1 Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 6 of 72 Page ID #:950 District Court Litigation
On August 10, 1948, pursuant to the Surplus Property Act of 1944 (SPA), the U.S. Government and the City executed an "Instrument of Transfer" (IOT) by which the U.S. Government surrendered its leaseholds and which the U.S. Government contends imposed certain restrictions on the future use of the Airport property including that:
the land, buildings, structures, improvement and equipment in which this instrument transfers any interest shall be used for public airport purposes for the use and benefit of the public, on reasonable terms and with unjust discrimination and without grant or exercise of any exclusive right ....

The I OT further provides that "the restrictions ... shall run with the land .... " and requires that:
the entire landing area ... be maintained for the use and benefit of the public at all times in good and serviceable conditions, provided, however, that such maintenance shall be required as to structures, improvement, facilities and equipment only during the remainder of their estimated life ....

On April 8, 1949, the U.S. government effected a Quit Claim Deed, transferring its interests in all or substantially all of the Second Parcel to the City.

On October 31, 2013, the City sued the FAA under the Quiet Title Act regarding the meaning and effect of the IOT. City of Santa Monica v. United States of America, et al., Case No. CV 13- 08046 JFW (VBKx). The City's claim seeks, in :part, a declaratory judgment providing that the City has unencumbered title to the Airport Property.

On February 13, 2014, the U.S. District Court dismissed the City's claim based on the statute of limitations. However, on March 11, 2016, the U.S. Court of Appeals for the Ninth Circuit reversed the District Court's dismissal and remanded the case to the District Court. Trial is currently set for August 29, 2017.

Circuit Court Litigation
On June 27, 1994, the City accepted a $1,604,700.00 federal grant for certain improvements at the Airport pursuant to the terms of a grant agreement that the ~/~~es agree remained irt.~ff ect for twenty years. On August 27, 2003, the City and the FAA ex~'cu!ed a grarlf amendment that provide~ $240,600.00 in federal funds to the City. The Parties"eH.spfae whether the terms of the grant remain in effect for twenty years from the date of the acceptance of the amendment or for twenty years from the date of the acceptance of the initial agreement in which case they have expired.
2 Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 7 of 72 Page ID #:951 In response to a complaint filed pursuant to 14 C.F.R. part 16, on August 15, 2016, the FAA issued a Final Agency Decision (FAD} holding that by accepting the additional funds, the grant expiration elate was extended until August 27,2023. Nat'! Bus. Aviation Assoc., v. City of Santa lvfonica, FAA Docket No. 16-14-04. The City sought review of the FAD in the U.S. Court of Appeals for the Ninth Circuit. City of Santa lvfonica v. FAA, Case No. 16-72827 (9th Cir.).

Federal Administrative Proceedings
The FAA issued a Notice of Investigation (NOI) to determine, in part, whether the City is violating its federal obligations to provide access to the fixed based operators (FBOs). In re Compliance with Fed. Obligations by the City of Santa Monica, FAA Docket No. 16-16-13. The NOI is based on the City's handling of the tenancy of the Airport's FBOs, the possible ban on the sale of unleaded fuels, and the City's declared intent tO provide certain aeronautical services at SMO on an exclusive basis (proprietary exclusive). The City filed a response to the NOI asserting that it has fully complied with its obligations in regard to these matters.

On December 12, 2016, the FAA issued an Interim Cease and Desist order ordering the City to cease and desist from removing the FBO' s until the FAA issues a final agency decision under the NOI. No final decision has been reached regarding the NOI.

NOW, THEREFORE, in consideration of the mutual covenants and other consideration described herein, the the Parties agree it is in the interest of the public and civil aviation to AGREE as follows:

I. COMPLETE SETTLEMENT OF ALL CLAIMS
Within 30 days of this Agreement's execution, the Parties shall jointly move in City of Santa Monica v. United States of America, et al., Case No. 13-CV-8.046-JFW (VBKx) (C.D. Cal.), for entry of this Agreement as a Consent Decree and for a stay of the the litigation pending the decision on the Consent Decree. Also within 30 days of this Agreement, the Parties shall jointly move to stay City of Santa lvfonica v. Federal Aviation Administration, No. 16-72827, (9th Cir.), pending the entry of the Consent Decree. Within 14 days of the entry of the Consent Decree, the City shall dismiss with prejudice City of Santa Monica v. Federal Aviation Administration, No. 16~ 72 82 7, (9th Cir.). Furthermore, the Parties agree that entry of the Consent Decree shall resolve all pending disputes at issue in In re .Compliance with F~de.ral Obligations by th.e.'.City of Santa Monica, FAA NO. 16-16-13 (U.S. Dep't ofTransp., Fecf~~~Viation Ad~in.), and that the FAA shall therefore dismiss the NOI. · >:~.-:

In addition, the FAA shall send a letter in substantially the form of Exhibit A to this Agreement to private parties that have filed Part 16 complaints raising issues within the scope of this Agreement requesting that the parties withdraw those complaints. The Parties acknowledge that the FAA does not have authority to require private parties to withdraw their Part 16 complaints 3 Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 8 of 72 Page ID #:952 and that the FAA must consider any complaints not withdrawn. Thus, the Parties further acknowledge that no action of a private party in a Part 16 proceeding can constitute a breach of this Agreement.

Unless modified by the court having jurisdiction over the Consent Decree, the Decree shall expire on December 31, 2028. The Parties agree that the expiration of the Decree shall have no effect on the terms or condition of this Agreement, which terms or 9onditions shall survive the expiration of the Decree.

Further, the Parties agree that this Agreement upon entry of the Consent Decree shall resolve all claims by the Parties that have been brought, or could have been brought, in City of Santa Monica v. United States of America, et al., Case No. 13-CV-8046-JFW (VBKx) (C.D. Cal.), City of Santa Monica v. Federal Aviation Administration, No. 16-72827, (9th Cir.), or In re Compliance with Federal Obligations by the City of Santa Monica, FAA NO. 16-16-13 (U.S.

Dep't of Transp., Fed. Aviation Admin.), including all the Parties' actual or potential claims pertaining to the past operation of the Airport by the City pertaining to tenants, non-tenant aircraft and FBOs.

If one of the Parties alleges a .breach of the terms or conditions of this Agreement, the exclusive venue for remedying such a breach shall be the court having jurisdiction over the Consent Decree.

In the event the court in City of Santa Jvfonica v. United States of America, et al., Case No. 13- CV-8046-JFW (VBKx) (C.D. Cal.) does not enter the Consent Drecree as-written, the Parties shall confer and, as soon as feasible, decide whether to move the court to enter a modified Consent Decree. If the Parties have not reached an agreement on the form of the revised Consent Decree within 3 0 days, the Parties shall jointly move to lift the stays of litigation in City of Santa Monica v. United States of America, et al., Case No. 13-CV-8046-JFW (VBKx) (C.D. Cal.) and City of Santa Monica v. Federal Aviation Administration, No. 16-72827, (9th Cir.). The FAA shall also at that time resume proceedings in In re Compliance with Federal Obligations by the City of Santa Monica, FAA NO. 16-16-13 (U.S. Dep't ofTransp., Fed. Aviation Admin.). In such event each Party agrees that this Agreement shall be of no force and effect and may not be used by either Party for any purpose whatsoever.

II. RUNWAY
A. Runway Length. The Parties agree that the Airj)ort~,s runway shall have an operational.runway length of 3,500 feet. The 3,500 foot distance shall not include the runway safety areas that shall be constructed and maintained at both runway ends. The runway safety area may include an engineered materials arrestor system (EMAS) atthe City's option. The Parties further agree that the Airport shall accomodate aircraft operations that can safely take off 4 Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 9 of 72 Page ID #:953 and land on a runway of the agreed-on length. Prior to the initiation of shortening the runway, the City shall comply with the 30 day notice provisions of 14 C.F.R. Part 157.5(b)(2).

B. Costs to Shorten the Runway. The costs to shorten the runway, including but not limited to the installation of EMAS, shall be borne by the City. If sought by the City, the FAA will provide technical support to the City through the FAA' s Office of Airports to assist in obtaining federal funds to support the shortening of the runway, as consistent with federal laws, regulations and the availability of funds.

C. Environmental Studies. The City shall be responsible for complying with its state and federal environmental requirements related to its planning and implementation of modifications at SMO. The City's responsibility shall include the cost of conducting any necessary environmental studies or other requirements under the National Environmental Policy Act (NEPA). 42 U.S.C. § 4321 et seq.

III. USE AND RELEASE OF PROPERTY
Consistent with the ultimate configuration of the runway pursuant to Section II, the FAA agrees that prior to closure of the Airport, the City may use the property no longer needed for the the Airport with a shortened or reconfigured runway, taking into consideration standard safety areas, including the use of EMAS, for non-aeronautical uses that are safe and compatible with the operation of the Airport. Such land shall be subject to an avigation easement for the period the airport is operated which shall be recorded contemporaneously with any instrument releasing such property. A copy of the form of avigation easement is attached hereto as Exhibit B. This agreement does not constitute FAA approval of any particular future use.

IV. CITY'S PROPRIETARY EXCLUSIVE RIGHT--
A. FAA's Acknowledgement of the City's Right
The City may exercise its proprietary exclusive right to provide aeronautical services at SMO, including but not limited to the sale and into-plane delivery of all types of aviation fuels, in accordance with generally-applicable. rules governing the exercise of proprietary exclusive rights.

B. City's Obligations
The City shall provide any proprietary exclusive aeronautical s~.cy.j,ces at SMO (i) in -_ conformance with the standard of grant assurance 22 (ii) on rea~:bri:~ble tenn.S--·.lit reasonable rates, and (iii) during all hours that such services would normally be- ~tov'tded at comparable general aviation airports, taking into account permissible curfews provided for in section V. The City further agrees that, if the City does not fully provide a type of service at any point in time and a private FBO desires to provide such a service, that operator shall have reasonable access to the airport on commercially reasonable terms and in conformance with the standards of grant assurance 22. See 79 Fed. Reg. 18755 (April 3, 2014).
5 Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 10 of 72 Page ID #:954 C. Timing of the City's. Exercise of Its Right
Subject to the City's right pursuant to subsection D, below, the City will not implement any proprietary exclusive operations, as defined above, until the work to shorten the runway, as provided in Section II above, is complete.

D. Leases for Private Aeronautical Service Providers Prior to the City's Exercise of Its Right
Leases offered to all tenants providing aeronautical services shall be on reasonable terms and in substantially the same form as that attached as Exhibit C. For purposes of this Agreement, the phrase "reasonable terms" shall mean terms that are customary and usual at similarly situated and sized general aviation airports.

The City shall offer all current tenants providing aeronautical services leases of no less than three (3) years with reasonable terms appropriate to the aeronautical service usually and customarily provided such service at similar facilities, including but not limited to tenant investment and financing requirements.

The City shall also offer leases to all prospective tenants providing aeronautical services for which there is space at SMO subject to reasonable terms and consistent with the standards of grant assurance 22, provided the City is not itself providing such services on a proprietary exclusive basis.

Any and all leases providing aeronautical services may, at the City's election, be subject to termination upon six months written notice of the City's exercise of its proprietary exclusive right to provide the category of services otherwise being provided by private FBOs, provided the City is ready, willing, and able to fully provide such aeronautical service in accordance with applicable law.

V. AIRPORT CURFEW
The City may submit an application for enhanced curfews consistent with 14 CF .R. part 161 (Part 161). Review of such an application shall be conducted under the procedural rules and subject to the substantive standards applicable to all Part 161 applications submitted to the FAA, which shall not be affected by this Agreement. Review of any decision made in connection with such an applicC!-tion shall be conducted exclusively in the same manner as, and in the same forum as, review of any decision made in connection with a Part 161 application submitted to the FAA.

That is, this Agreement shall not affect the form or substance ot~:(J:ch a review. Notwith~tanding . ,1 •• ,. .. . .,. any other provision of this Agreement, judicial review of FAA' §"de,cision-ancfrecord thereof with regard to any Part 161 application submitted by the City shall b~ wi~hin the exclusive jurisidiction of the applicable U.S. Court of Appeals.
6 Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 11 of 72 Page ID #:955 VI. DURATION
The City agrees to operate the Airport consistent with its obligations set forth in this Agreement until December 31, 2028, unless an earlier date is agreed to by the Parties. Any subsequent decison by the FAA to release the Airport at an earlier date shall be made consistent with the standard of 49 U.S.C. § 47153. The obligation to operate the Airport until December 31, 2028 shall be binding on any subsequent purchaser of Airport Property. Within 90 days of a Consent Decree embodying this Agreement taking effect, the City shall cause this Agreement to be recorded in the property records for the County of Los Angeles, California.

Without limiting the express terms of this Agreement, the FAA agrees that the Airport Property shall be released from all covenants, reservations, restrictions, conditions, exceptions and reservations of rights imposed under the IOT and the Quitclaim Deed and the grant assurances imposed in 1994 upon the effectiveness of this Agreement and to provide such notice as required under 49 U.S.C. §47153(c). Upon the City's request, the FAA shall execute, acknowledge and deliver from time to time any instruments reasonably necessary requested by the City appropriate to evidence the release of the Airport Property from all such covenants, reservations, restrictions, conditions, exceptions and reservations of rights. The Parties shall record any instruments necessary to effectuate this provision.

The City's operation of the Airport until December 31, 2028 shall conform with (i) the standards set forth in grant assurances 19, 22, 23, 24, 25, and 30; and (ii) all applicable state and federal operational, maintenance, and safety standards. For purposes of this paragraph, thCi substantive I
standards of grant assurances 19, 22, 23, 24, 25, and 30 shall apply until December 31, 2028.

If the City enters into future grant agreements with the FAA, then it shall also be bound by those terms as provided for in any such grant agreement in addition to any applicable the standards expressly set forth in this Agreement.

If the City does not enter into future agreements with the FAA that continue to require the City to operate the Airport after December 31, 2028, the Parties agree.that the City may, in its sole discretion at any time on or after January 1, 2029, cease to operate the Airport as an airport and may close the Airport to all aeronautical use forever, subject only to the applicable 30 day notice requirements set forth in 49 U.S.C. § 46319(a) and 14 C.F.R. Part 157.5(b)(2). · VII. UNLEADED FUEL
The FAA is committed as a matter of national aviation policy to· support the development and use of unleaded aviation gas appropriate to the operation of piston aircraft where com~e~.9ially and technically feasible. The FAA agrees to' consider any demV?P.~tation p~oJe,ct the City inay seek to implement pertaining to the use of unleaded fuel. Nothi#g ~ this·Agreement shall allow the City to restrict the sale of leaded aviation fuel for as long as7 the FAA authorizes use of such
fuels within the United States.
7 Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 12 of 72 Page ID #:956 VIII. MISCELLANEOUS PROVISIONS
A. Enforcement. The Parties reserve the right to judicially enforce any terms or provisions of this Agreement.

B. Consent Decree. The terms of this Agreement shall be memorialized and embodied in a consent decree to be filed in City of Santa Monica v. United States of America, et al., Case No. 13-CV-8046-JFW (VBKx) (C.D. Cal.) in the form attached as Exhibit D. The court shall have jurisdiction to issue injunctive relief only as to the provisions of sections II, III, and IV. Further, the court shall have jurisdiction to enforce the provisions of sections II, III and IV as to any successors, transferees, licensees, agents, heirs, and assigns of the City's interests in, operation of, or sponsorship of SMO. The court shall not have jurisdiction to subject the Parties to penalties or sanctions for any alleged violations of its obligations in this Agreement.

C. Own Costs. Each Party shall bear its own costs, including attorney fees.

D. Authority. The representatives of each Party hereby certify that he or she is duly authorized to enter into the Agreement. The City represents that it has the full authority to perform all of the acts and obligations it has agreed to perform under the terms of this Agreement. The United States, acting though the Department of Justice and the FAA represents that the FAA has the full authority to perform all of the acts and obligations it and the United States of America has agreed to perform under the terms of this Agreement.

E. Copies and Counterparts. It is contemplated that this Agreement may be executed in counterparts, each of which shall be deemed an original, and all of which together constitute one and the same document. Facsimiles, hard·copies, and scanned electronic copies of signatures, including scanned electronic copies sent by email,.~hall constitute acceptable, binding signatures for purposes of this Agreement.

F. Defense of This Agreement. The Parties agree to vigorously and actively defend this Agreement, any resulting Consent Decree, and all terms embodied therein as fair and reasonable, to vigorously and actively defend the same against any challenge by any individual or entity. The Parties further agree not to undermine directly or indirectly this Agreement, any resulting Consent Decree or any terms set forth therein for so long as this Agreement or any resulting Consent Decree remains in effect. 11,1
'.{;··:~~:·
G. Modification. This Agreement may be supple~~~t~~' ame~d6,d, or modified only by the mutual agreement of the Parties, and, once the Consent Decree is entered, only with the approval of the court No supplement, amendment, or modification of this Agreement shall be binding unless it is in writing .and signed by all duly authorized r~presentatives of each Party. 8 Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 13 of 72 Page ID #:957 H. Successors or Assigns. This Agreement and any resulting consent decree shall be binding upon and inure to the benefit of the Parties and their respective successors, transferees, licensees, agents, heirs, and assigns. Prior to any change of the sponsor of SMO or to the identity of the holder of any operating certificate related to the operation or sponsorship of SMO the City shall obtain the written agreement of such new entity to be bound by the terms of this Agreement and any resulting consent decree.

I. Precedent. Nothing in this Agreement shall constitute an admission concerning any allegation, claim, or defense at issue in in CUy of Santa Monica v. United States of America, et al., Case No. 13:-CV-8046-JFW (VBKx) (C:D. Cal.), City of Santa Monica v. Federal Aviation Administration, No. 16-72827, (9th Cir.), or In re Compliance with Federal Obligations by the City of Santa Monica, FAA NO. 16-16-13 (U.S. Dep't ofTransp., Fed. Aviation Admin.), and this Agreement has no precedential effect as to any other dispute between the Parties or between either the City or the FAA and any third party. This Agreement is made in light of the unique circumstances of this case and the uncertainty of the specific matters resolved hereby. Nothing herein shall be construed to be an admission of liability or as an interpretation of the validity or terms or provisions of any other instruments or contracts.

J. Release. Upon the entry of the Consent Decree, the Parties and all their heirs, administrators, representatives, attorneys, successors, and assigns, hereby release, y.raive, acquit, and forever discharge each other and all their respective officers, employees, and agents from, and are hereby forever barred and precluded from prosecuting, any and all claims, causes of action, and/or requests for relief asserted in City of Santa Monica v. United States of America, et al., Case No. 13-CV-8046-JFW (VBKx) (C.D. Cal.), City of Santa Monica v. Federal Aviation Administration, No. 16-72827, (9th Cir.), and In re Compliance with Federal Obligations by the City of Santa Monica, FAA NO. 16-16-13 (U.S. Dep't ofTra~sp., Fed. Aviation Admin.), as well as any and all claims, causes of action, and/or requests for relief, whether or not made, against any Party that could have been raised in those matters, with the exception of proceedings to enforce this Agreement or the Consent Decree.

K. No Third Party Rights. This Agreement is not intended to create, and does not create, any third-party beneficiary rights, confer upon any non-party a right to enforce or sue for an alleged breach of the Agreement, or generate any other kind of right or privilege for any person, group, or entity other than the Parties. ,, I
L. Effective Date. This Agreerlient shall be effecti~~\1pon the ~,ate the Colirt enters an order approving this Agreement. . ~L· . . . "·-
9 Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 14 of 72 Page ID #:958 Reginald . Govan
Chief Counsel
Federal Aviation Administration
For the Department of Justice

JOYCE BRANDA
Acting Assistant Attorney General
EILEEN M. DECKER
United States Attorney

JUDRYSUBAR
Assistant Branch Director
RAPHAEL 0. GOMEZ (D.C. Bar #305540)
Senior Trial Counsel
U.S. Department of Justice
Civil Division, Federal Programs Branch
P.O. Box 883
Washington, D.C. 20044
Telephone: (202) 514 .. 1318
Facsimil : (202) 616-8460
Raphae , omez usdoj, gov
Trial orney
U.S. Department of Justice
Civil Division, Federal Programs Branch
P.O. Box 883
Washington, D.C. 20044
Telephone: (202) 514-4686
Fax: (202) 616-8460
Email: [email protected]
Dated: / /3 6 It f I I
10 l
I
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 15 of 72 Page ID #:959 ~~taJC __
Rfok Cole
City Manager
J-tru.41. -/\ <Jnrituiz&. m,;\J& Denise Anderson-Warren City Clerk
Wil tam V. O'Connor
Morrison & Foerster LLP
12531 High Bluff Drive I San Diego, CA 92130-2040
P: + 1 (858) 720. 7932
[email protected]
Dated:

Attorneys for the City of Santa Monica
IT IS SO ORDERED.

Signed_, ____ , 2017, at Los Angeles, California
Honorable John F. Walter
United States District Court
For the Central District of California .,r·; ~·
11 . '',1
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 16 of 72 Page ID #:960 Acknowledgements:

District of Columbia
City of Washington
Subscribed, sworn and acknowledged before me by Reginald C. Govan, Chief Counsel of the Fe ral Aviation Administration, this .c2l:_day of January, 2017.

Notary Pubic.

My commission expires /o}/tf/ri.tJJ..a I
State of California
County of ____ _
JUt1'1 S. MCGHEE i m.eaa
NOTARV PUBLIC DISTRICT OF COLUMOll'\
My Commission El<plres October 14, 2020
On ______ before me, ___________ personally
Appeared ______________________________ ~
I
I
_______________________ ,whoprovedtomeonthe
basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her /their authorized capacity(ies), and that by his/her /their signature(s) on the · instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.
(Seal)
Signature
''',,\,
12 Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 17 of 72 Page ID #:961 Exhibit A

Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 18 of 72 Page ID #:962

EXHIBIT A
Dear X,
This letter pertains to your complaint filed with the FAA under 14 C.F.R. Part 16 and relating to Santa Monica Municipal Airport {SMO). Among other matters, your complaint alleges:

This letter is to inform you that the City of Santa Monica and the Federal Aviation Administration {FAA) have entered into Settlement Agreement, effective as of the date of signature, which we believe may subsume many of claims made in your Part 16 complaint.

As you may know, there are a number of disputed legal issues pertaining to the operation of at SMO, which continue to be the subject of federal court litigation. See, City of Santa Monica v. F~deral Aviation Administration, Case No. 16-72827, FAA No. 16-14-04 {9th Cir.); City of Santa Monica v. United States of America, et al., Case No. 13-CV-8046-JFW {VBKx) {C.D. Cal.).

The FAA and the City have determined that it is in the public interest to enter into the Settlement and Consent Decree to resolve such litigation, thereby modifying the City's federal obligations and clarifying certain FAA legal and regulatory policy positions as they pertain to the operation of SMO. In sum, the basic terms of the Agreement and Decree:
• Require the City to operate SMO with a runway of 3,500 feet for 12 years duration until December 31, 2028;
• Recognize the City's right to establish an exclusive fixed based aeronautical service provision upon completion of runway construction work; and
• Provide tenants providing aeronautical services reasonable leases for terms of no less than three '',I years, subject to the City's implementation of its exclusive fi>s~~based services. · \·~t . ' (.,' The Settlement Agreement, the terms of which bind the City and the:.:fAAJiwill be entered as a Consent Decree of the U.S. District Court for the Central District of California.

Exhibit A to settlement agreement/consent decree between the FAA and the City of Santa Monica EXHIBIT A PAGE 013
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 19 of 72 Page ID #:963 Your Part 16 complaint was filed to notify the FAA of your belief that the City was violating its obligations as a federally obligated airport sponsor. This letter serves a dual purpose. First, to inform you of the FAA's judgment that because the City's federal obligations to the FAA at issue in the Part 16 complaints now are governed by the terms of the settlement agreement and consent decree, it is the FAA's presumptive position that if the City is in compliance with the terms of the Settlement Agreement and the Consent Order, then the City is meeting its obligations to the FAA. Second, to ask you to thoroughly review your complaint(s) and determine whether the matter has been resolved by the terms of the Agreement and Order. To the extent that your complaint no longer states a valid claim, we ask that you consider withdrawing it in the interest of judicial and administrative economy.

Sincerely,
Reginald C. Govan
Chief Counsel
''.'
Exhibit A to settlement agreement/consent decree between the FAA and the City of Santa Monica EXHIBIT A PAGE 014
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 20 of 72 Page ID #:964 Exhibit B

Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 21 of 72 Page ID #:965

EXHIBITB

SURFACE AND OYERHEAD AVIGATION EASEMENT
WHEREAS, the City of Santa Monica, hereinafter called the Grantor is the fee owner of the parcels of land situated in or in the vicinity of the City of Santa Monica, Los Angeles County, California, specifically described in Attachment A, hereinafter called "Grantor's property" and outlined on an attached Exhibit A map.

NOW, THEREFORE, in consideration of that certain Settleµ:ient Agreement entered into by the United States of America, acting through the Federal Aviation Administration (FAA) and the City of Santa Monica and dated _____ _ (Settlement Agreement); and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Grantor, for itself, its heirs, administrators, executors, successors and assigns do hereby grant the following appurtenant rights and benefits to the FAA hereinafter called the "Grantee" for the use and benefit of the public.

The appurtenant rights and benefits include the uses, rights and restrictions described as follows: 1
The unobstructed use and passage of all types of aircraft in and through the airspace at any height or altitude above the surface of the land.

The right of said aircraft to cause noise, vibrations, fumes, deposits of dust, fuel particles (incidental to the normal operation of aircraft), fear, interference with sleep or communication, and any other effects associated with the normal operation of aircraft taking off, landing or operating in the vicinity of Santa Monica Municipal Airport (SMO).

As used herein, the term "aircraft" shall mean any and all types of aircraft, whether now in existence or hereafter manufactured and developed, to include jet, propeller-driven, civil, military or commercial aircraft; helicopters, regardless"0f existing or future noise levels, for the purpose of transpdhing persons or property through the air, by whoever owned or operated. _;
EXHIBIT B PAGE 015
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 22 of 72 Page ID #:966 The Grantor agrees that during the life of this easement, it will not constnict, erect, suffer to permit or allow any structure or trees or other natural growth on the surface of the burdened property that shall in any way limit the utility of the runway, as it is configured pursuant to the Settlement Agreement or as it may be configured in the future. The Grantor may not permit any places of public assembly or gatherings within the easement area. (Examples: churches, schools, day care facilities, hospitals, restaurants, stadiums, office buildings, etc.) The Grantor is permitted to grow ornamental landscaping or establish a conservation area in the easement area provided that such landscaping or use shall not in any way limit the utility of the runway, as it is configured pursuant to the Settlement Agreement or as it may be configured in the future.

The Grantor agrees to keep the easement area free of the following: structures (permanent or temporary) that might create glare or contain misleading lights; residences, fuel handling and storage facilities and smoke generating activities, and creation of any means of electrical interference that could affect the movement of aircraft over the easement area.

Grantor agrees to waive all damages and claims for damages caused or alleged to be caused by the Grantor's violations of any aspect of this easement document.

The FAA has a right of ingress/egress in the easement area and the right to remove any new structure or vegetation that is not specifically mentioned above as "accepted" for as long as the airport is used as an airport.

TO HA VE AND TO HOLD said easement and "right of way, and all rights appertaining thereto unto the Grantee, its successors, and assigns, until airport operations at SMO are terminated pursuant to the Settlement Agreement and SMO ceases to be used for public airport purposes. It is understood and agreed that all provisions herein shall run with the land and shall be binding upon the Grantor, its heirs, administrators, executors, successors and assigns until airport operations at SMO are terminated pursuant to the Settlement Agreement and SMO ceases to be operated for public airport purposes. . .,_,
IN WITNESS WHEREOF, the grantors have hereunto s~t.tl)eir hands and seals this day of , 20 · ~ '
The City represents that it has the full authority to perform all of the acts and obligations it has EXHIBIT B PAGE 016
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 23 of 72 Page ID #:967 agreed to perform under the terms of this agreement.
______ (SEAL).

City of Santa Monica
_;
EXHIBIT B PAGE 017
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 24 of 72 Page ID #:968 Attachment A
The Santa Monica Municipal Airport consisting of that property referenced in the following documents or otherwise described below:

1. That certain Instrument of Transfer, dated as of August 10, 1948, between the United States of America and the City that was recorded at Book 28055, Pages 211 through 222, inclusive, in the Official Records of Los Angeles County, California consisting of approximately one hundred sixty eight and 87 /100 (168.87) acres;

2. That certain Quitclaim Deed dated April 8, 1949, and re.corded at Book 30037, Pages 364 though 370, inclusive, in the Official Records of Los Angeles County, California (the Quitclaim Deed) consisting of approximately eighteen and 629/1000 (18.629) acres; and

3. That certain property that the Douglas Aircraft Company conveyed to the City of Santa Monica by grant deed in 1945 upon which Is now situated part of the runway at Santa Monica Municipal Airport and is referenced In that certain Settlement Agreement entered Into by the Federal Aviation Administration and the City of Santa Monica and dated _____ _ . '','
•/' '
EXHIBIT B PAGE 018
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 25 of 72 Page ID #:969 EXHIBIT A to Avigation Easement
'',1
EXHIBIT B PAGE 019
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 26 of 72 Page ID #:970 ' ""- '".
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EXHIBIT B PAGE 020
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 27 of 72 Page ID #:971 Exhibit C

Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 28 of 72 Page ID #:972 t • ,.~., ~ ·\
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EXHIBIT C

LEASE AGREEMENT
by and between .

THE CfIY OF SANTA MONICA
and
ATE OF CALIFORNIA, dba

AMERICAN FLYERS
' .

Exhibit 9
· (Agreement No. 8547)
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EXHIBIT C PAGE 021
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 29 of 72 Page ID #:973 ,1• ,I /\,
(
TABtE OF CONTENTS
SECTION 1. PREMISES
SECTION ,21 TERM
2, 1. Commencement Dute and Term

2.2. ·Exph·ation On.h)
2,3. No Hold Ove1· Tenancies

2.4, Sul'tender

2.5, Survi-v-al
SECTION 3, U~E OF THE PREMISES

3.1, Required Activities 1imd Services

3.2, Permitted ActlvJties nnd Services
3,3, Pl'oMbitcd Activities and Se1·vkes

3.4. High Levels of Service
SECTION 4. RENT
4,1. Monthly Base Rent·
412; C:PI Adj,1stments
. 4.3. Fuel Flowage :Fees.

4.4, Lnte Charges As Additional Rent
4,5, Paymentsrt.o the City

4.6. Application of Payment

4.7. ·security Deposit

4.8. Docurhents and Reco1'ds
SECTION 5. COMPLIANCE WITH LAW
5,1, Compliftn~e WUh All Law$ ·

5.2~ Fixed Based OpeJ·atious Shall Be In F,dl Complhmce with the Afrpo••t C<>de
~.3. Cooperntio11 ht Enforcement of Airport Code .
. S.4. No Ser:vices To E:xcluded Pilots, Afrcrnft o}· Owne:rs of Aircrnft

5.5, Perm.its and Licenses ' · .
5,6_ Fede1·al Requirements
SECTION 6. LlCSSEE'S OBLIGATIONS

6.1. Highest Level of Se1·vlce · .

6.2. Obtain Jmd Maintnin All Necessa•·y Licenses nnd Pc1·mJts

6.3, Fnel Suppliel' Agreemeut(s)
. 6.4. Fuel Storage and DeUvety

6.5. Fueling Vehicles

6.6, Retail Fuel Pricing

6.7, Complhm~e W1th Euvirolmten:hll Requirements . ~-
SECTION 7, MAINTENANCE AND REPAIR OF THE PREMlS:ES · AND LEASEHOLD IMl>llOVEMENTS; CONSTRU(±.TION OF . REQUIRED LESSEE IMPROVEMENTS . _,,1 ,

7.l. Midntenmice nnu Repair of Premises
7,2, Repairs To Be In Compliance With·Lnw
Exhibit 9
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EXHIBIT C PAGE 022
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 30 of 72 Page ID #:974 1'
( Exhibit 9

7.3, Alterationst Additions 01· Chang~s to the Prel11ises Require Prior Written · App1·oval.By City .. 15. 7,4. Requb•ed Lessee Improvements ... 15 ~

7.5. Limited Obligation of the City .. 16 ..

SECTION 8. OWNERS~lP OF IMPROVEMENTS AND EQUIPMENT · --17 ~ 8 ~i. · Owne1·sMp of Leasehold lmprovemei•ts During Term .. 17 ,.

8.2, Equipment ... 17 -
. 8,3t Removftl nµd Demolltion .. 17 ...

8.4. Lessee~s Obligations Upon Expiration or .EinjUer Termination of the Agreement; Envfron.inental Remediation
SECTION 9. ltIABILITY AND INSURANCE
9,1. Minimum Limits oflnsnl'ance
·9.2. Minimum Scope of Insu1·mJ.ce ·

9.3. Deductibles nnd SeJf ... Jnsured Retentions

9.4. 'other Insurance Provisions
. 9.5, P1•operty Insurn:nce
9,6. Waiver ofSub1•og~tion

9.7. All Cov.e••figes

9.s·. Accept~bnity of Insure1·s

9.9, Verification of C<m~rnge
· 9.10, Lessee's Contrncto•·'s· InsuNmce
9 .11. Sublessees mtd Licensees
SECTION 10 •. INDEMNIFICATION~ DEFENSE AND HOLD HARMLESS SECTlON 11, CITY'S RIGHTS

11.1. ingress and Egress
11,2, Access 'for Euvironfl1entftl Tests or Wo1·k

11.3·. Ml\b1fonanc~ and Repnir of Underground Storng~ Tonk

11.4. Right 'l"1o Access
11,5, Right to RegufateAc~ess ~ ·
.SECTION 12. RESTRICTIONS ON ASSIGNMENTS OR SUBLEASES

12.1. Assignment ttnu Subletting Require Prior W••itteri Consent from City

12.2, Transfe1• of Corpornte Shnres ..
12,3w Lessee's Applic'ltion for Consent

12.4. Gi•ounds fOl' Denying Consent

12.5. Conditions to Consent

12.6, Acceptnnce of Rent from '.Transferee
SECTION 13. COVENANT AGAINST LIENS
SECTION 14, TAXES AND ASSESSMENTS
14~1. Lessee's Obligation Pay Ta:xes
14,2. Personal Property Taxes

14.3, Reservation of Right$
SECTION 15, UTILITIES.

15.1 Utilities Costs

15.2 Distontlnuanccs and lnt~r1·uptions of UtilHy Services SECTION 16. SIGNS7 LIGHTS AND ADVERTISEMENT
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EXHIBIT C PAGE 023
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 31 of 72 Page ID #:975 . '
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SECTION 17. DAMAGE OR DES'rRUCTION TO THE PREMlSES OR .

IMPROVEMENTS

17.1. Notice, of Damage to the P1·emises
17,2. Repair or Rebuild the Prenrises

17.3. .J?nmage or Destrnctioll to the Common Area

17.4. Lessee's Remedies

17.5.. Insurance Pl'oceeds
17,6. Wftiver
SECTION 18. CONDEMNATION
1s.1. Effe~t of Taking
18~2. Condeumation Awards
SECTION 19. NOTICES'
SECTION 20. DEFAULTS AND REMEDIES FOR DEFAULTS.

20.1. Events Constituting Materinl Default by Lessee

20.2, Remedles fo1· Default
SECTION 21. TERMINATl.O'.N

21.1. · Tex·nrlnntion By City for I..1essee1s Dre.ich

21.2~ Duties· Upon Temrlnatlon
SECTION 22. GENERAL PROVISIONS
22,1. Authodty
22~2~ ·Integrated Agteemeut
22~3, Governing Law

22.4, Time is of the Essence
'.22.5 City's r.1·op1•ietftry Cripncity

22.6, Nonwnive11
22,7, Attorneys~ Fees and Costs
22,s. Counterpftrts
EXHIBITS ' . Exhibit A -Premises, Site Plan and Existing lmp1•ovements Exhibit B ..... Facility Improvemen.t Plan
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EXHIBIT C PAGE 024
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 32 of 72 Page ID #:976 11 ,I
( ( Exhibit 9
LEASE AGREEMENT NO. 8547 (CCS)
ra Thls Leas~_Agreement Number 8547 (CCS) .("Agl'eement") is entered into this ~ 0 . day of Jl.~2006, C~Execµtion DateH) by and between the CITY ,OF SANTA MONICA; a municipal corporation (hereinafter "City" or "Lessot"), and ATE of CALIFORNIA~ a Califomia corporatio11, doing business as AMERICAN FLYERS .Q1ereinafter 11 A TB" or 11Lesseel') 1 with respect to the foll owing~ RECITALS:
· A. The City is a municipal corporation duly organized and validly existing under the laws of .the State of California with the powe1i to cany on its busiiless as it is now being conducte~ under the statutes of the State of Cal.ifomia and the Chart~r· of the City. '
. B, Lessee is a California ooivorntion, duly incorporated or formed> validly existing, and in goqd standing under the laws of the State of Californint Lessee represents and wammts ,that it is experienced in the operation and management of avi~tion fixed based operations.

C. The City owns real property generally located at 2501 Ait'poit Avenue~· Santa Monica~ California 90405~ more specifically identified in the site plan attached hereto ns Exhibit A and incot'porated herein by refe1'e11ce ( 0 Premisesn), at the Santa
Monica Municipal Airport ('~Afrport)t), The Premises is one of two aircraft fueling service areas at the Airport. The City seeks to lease Uie Prer:rises fo1· use as a11 aviatio11 fixed based operation consisting of ail'cl'aft h~ngars, afrcraft tie-downs, aircraft fueling, 'offices, shops and a vehicle pal'ldng u1·ea as more particulady set forth in this Agl'eement. ff
D. On 01··aboutDecember 16~ 19'97> the City and Lessee entered into a Month-. to .. Month Lease Agreement e'Month~to--Month Lease1') for the lease of the Premises, The Month .. to .. Month Lease was replaced by a Lease entered into on or about September 1, 2000 for a period of five (5) years, The parties intend by this Agreement to extend and teplace the September 1, 2000 Lease which expi,red on August 31> 2005 and thereafter becaine a month .. to .. month lease ammgement.

E. The City and Lessee desire to enter into this Agree_tnent for the tental of the.

Premises fot use as a full service fixed base opereitlon fooility,pr.ovidin.g alrcr$lft fueling, trnnsient line services1 aircraft rental, aircmft maintenance angh·egafr and other necessary avi~tion servlces and products for the public ·as described herein, ' NOW THEREFORE~ in consideration of the mutual promises and undertuldngs hereinafter set forth ~nd fol' other good and valuable consideration, the receipt and "1 -
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EXHIBIT C PAGE 025
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 33 of 72 Page ID #:977 •' 11
. ( ( Sxhlblt g
sufficiency of which are hereby acknowledged1 it is mutually agreed by and between the imde1·signed parties ~s follows: · :

SECTION 1. PREMISES.

The City leases to Lessee, and Lessee leases from the City; the Preinises located at · the Airport and depicted· in the Site Plan attached hel'eto as Exhibit HN~ and incorporated herein by refe1·ence. Lessee acknowledges and agrees that it is in possession of the Premises and accepts'the Premises in "as··isn condition. The Premises contain existing buildings a~d other improvements (HBxisting Itnptovementsn) shown in Exhibit A Lessee has been· in occupancy~ possession atid control o'f' the Premises since December 16, 1997 and takes responsibility for the condition of the Premises, the Existing Improvements ·and all other I~asehold imp1·ovements lnsta,lled or located on the P)·eruises from and aftel' said date. · ' • I
SECTION 2, TERM.

2.1. Commencement Dqte and Tern1. This Agreement shall be deemed to commence o~ November 1, 2005 ("Conunenoement Dateu), and shall contiµue until· June 30, 2015 unless eadier terminated pursuant to the terms of this Agreement.

2.2. Exniration Dnte. Unless terminated e~rlier in accordance with the te11ns of this Agreement, this Agreement shall expire and terminate on June 30.2 2015 ("Termination D~te") 1 withoiit the necessity of any notice from eithett City ot· Lessee to 1· terminate this Agreement. Lessee hereby waives notice to vacate or quit the Premises and agrees that City shall b~ entitled to the benefit of all provf sions of law respecting the summary recovety of possession of the Premises fro.ma tenant holding over to the same extent as if statutory notice had been given, Lessee furthe1i agrees that if it fails to " surrender the I)l'emises at the expiration or termination of this Agreement in good condition, reason~ble wear and tear excepted, Lessee shall be liable to City for any ~d . all damages which City may suffer by reason thereof, and Lessee will indemnify,, defend . and hold harmless City against all claims and demands made by any succ0'eding tenants against City,
2,3, No Hold Ovel' Tennncies, If Lessee shall be in possession of the Premises afte1· the expiration of the Term, without the express or implied consent of City, th~n the tenancy under this Agreement shall terminate and City shall be ~ntitled to the benefit of- ''·:
nll p1·ovisions of Jaw respecting the summary recovery of posse's,sfon of the -P1~emlses from a tenant holding over, The acceptance by City of m~mthly re11tJ1·om Lessee after such expiration or earlier te1mi:i:iation of the Agreement sh~Il not result trl a renewal of this Agreement 01· ttn extension of the Term of this Agreement.

EXHIBIT C PAGE 026
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 34 of 72 Page ID #:978 1\ ,f
( ( . Exhibit 9
The City expressly rese1·ves· the right to require Lessee to surre11der possession of the Premises upon the exph'atiori of the Tenn, or upon the earlier termination hereof, to reenter the Premises, and to assert any remedy at law ~r in equity to evict Lessee and/or ,collect damages in connection with such holding over.

2.4. §ur;render. Upon the expil'ation or any eadier termination of this Agreement, Lessee, at its' sole cost and expense> shall surrender up and deliver possession .of the P1·emises to City, in a clean condition> and in the same good operating condition · and repair as it exists 011 the Execi1tion Date> reasonable wear and tear excepted> and · subject to all requil'ements of Section 8.4 of this Agreement, including, without . limitation; Lessee's obligations to perfonn environmental remediation of the Premises.

Lessee agrees that if 1t fails to surrendel· the Premises at the e).{.piration or te11nination of the Agreement in good operating conditio11~ reasonable weat anq te~r excepted~ or if Less'eefa~ls to satisfy its ~nvh'omnental remediation obligations set forth in Section 8 .4 of this Agreement> Lessee shall be Hable to City for any and all damages which City shall suffer by reason the1·eof and Lessee will indemnify City against all costs and expenses to restory the Premises to good operating condition~ teasonable wear and tear·excepted and to perfo1m Lessee~s envit'onmental remediation obligfltions under this Agreement.

2.5. ~Jn·vival. The provisions of this Section Z shall survive the expil'ution or earlier termination of this Agreement,
SECTION 3, USE OF THE PREMISE~.

Lessee ugrees that the Premises shall be 11sed only for the required activities and services identified in S.eotion 3.1~ or the pe1·mitted activiti.es and services identified in Section 3,2. Lessee shall 11otuse or pe1mit the Premises to be used for any other purpose without the City's plior written consent, wliich may be granted or withheld in the City's sole and complete discretionA
, 3.1. Regnfred 'ActivJties and Services. During the. Tenn of this Agreement, Lessee shall conduct the following activities and provide the following services on the Premises to the public consistent with th~ provisions of applicable federal, state and local laws and regulations, including~ but not limited to, the Santa Monica Municipal Code: · (a) Pl'ovide aircraft tie-.down space and aircrd~ storage faciHties foi' rental~ which conform to federal, st~te ~n4'1oo·~l reciufrements.

Lessee shall be requited· to ·provide and maintain 49 aircraft parki11g spaces in eithet· open tie .. down space or ail'craft stotage facilities foibased and tmnsient aircraft. ~·
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EXHIBIT C PAGE 027
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 35 of 72 Page ID #:979 ,r •'
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(b) Provide rental of commercial leasehold space for aviation-related uses.
( c) P1·ovide ramp services for transient aircraft~
( d) Provide aircraft fueling services from City-app1·oved 'facilities, including the sale~. disp·ensing and storage of aviation peti·oleum products from one unde1'groimd sto1·age tank. ·
(e) Provide aircraft maintenance and repah'~ overhaul 01· modificution of aircraft.
(f) Operation of a flight and gtou11d school.
(g) Pi'ovide rental or lea~e of aircraft.
3;2. Permitted_,Activities and Services. In addition to the above required activities and services, Lessee may conduct the following· activities and proyide the · following s~rvioes on the Premises consistent with the p~ovisions of the Santa Moni?a · Municipal Code:
(a)
(b)
(c)
(d)'
(e)
(f)
(g)
Retail or wholesale sale of aircraft parts, components, accessories and allied equipment
Sale of new and U$ed avionics and-electronic equipment and aircraft instrnments, · ·
Sale of pilot ~upplies ·and accessories,
Retail or wholesale sale of aircraft,
Rental or lease of aircraft,
Operntion of a UNICOM radio, tl'ansmitter and receiver. · Washing, detailing and.waxing of ah'craft. 1.
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(h) Upholstery, cabinetry and inter~or services,.f011 aircraft. (i) Parach1;lte, ffre extinguisher and oxygen services fo1· ah-craft.

Exhibit 9
EXHIBIT C PAGE 028
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 36 of 72 Page ID #:980 ,, 11
.....
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Aircraft chmter operations, subject to compliance with all federal, state and local law'9 and regulations,.' including, but not limited to, Santa Monica Municipal Code, Subchapter 1 Q,04.06,
(k) · Filming ~ctivities subject .to the app1·oval in advance by ~he Airport · Directol' or his or he1· designee, ·
(1)
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Such othet• .twes as the Airport Direoto1· may approve in writing fi'om time to time.

Sxhlblt 9

3.3, Prohibit~Jl Activities and Services. Othe1· than the activities and serV-ices . set fo1th in Sections 3.1 and 3.2, above~ Lessee is expressly prohibHed from conducting. any other activity or providing any other services at the Premises. Lessee is specifically prohibited from the following: , . .
(a) Engaging in the storage 9f motor vehfoles, trailers~ boats or other recreational vehicles.
(b) · Engaging in ~ny operation which uses the leasehold as a base for the substantial use of helioopters~ 01· any opetation involving the repetitive, fyequent or continuous use of helicopters, I I. ( c) Engaging in any type of helicopter flight training or helicopter patte111 flying .
. (d) Engaging in any activity or providing any service likely to violate the ~igl1M~me curfew Oll; aircraft take .. offs.
'(e) Salvage yard activities,
(f) Operation of any ramp services during night .. time departure ci1rfew hours as set fotth ln Santa Monica Municipal Coqe Section 10;04,04.080,
(g) Ovemight camping or residential uses.
(h) · Any activity inconsistent or in conti·aven~iqn of the reqi1irements of.· any applicable federal~ state 01· local Iaw~'~f~eglllation, ·;., f ,,

3.4 High Levels of Service. Lessee shall endeav.ot to provide high levels of se1vice consistent with industt'y standards fol' the type of service being pi'ovided to the public at the Airport. Lessee 01· its $Ublessees shall keep and maintain an adequate staff and an appl'opriate stock of mer?handise to service and supply the usual and ordinary w5•
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EXHIBIT C PAGE 029
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 37 of 72 Page ID #:981 1< ,1
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demands and requirements of its customers, Lessee shall provide the services in accordance with all feder~l, state and local laws, rules and regulations:

Exhibit 9
. SECTION 4. ;RENT.

4.1. Mpnthhi: Base Ren~, For use and occupancy of the Prwnises, Lessee · agrees to pay.to the City the stun ofFOUn THOUSAND DOLLARS ANO NO C:ENIS ($4,0QO.OO l for each month, witho~t set off or deductio11, dining the Term of this Agreement (hereinafter "Monthly Base ~ent"), Lessee shall pay Monthly Base Rent to the City on or b~fore the first day of each month. In the ~vent. this Agreement is in effect fol' less than a full calendal' month) Lessee shall pay a pro·1·ata portion of the Monthly Base Rent for the fraction of the month that the Agreement is in effect. In the event that the City provides an invoice to Lessee, this invoice shall be deemed a 9outiesy to the Lessee and the Lessee)s oblig'ation to pay l'ent shall be based upon the provisions ~f · this Agre~ment. ·
· The Monthly Base Rent shall commence on the Execution Date of this Agreement.

4.2. CPI i}djnstments, Du1'lng the Lease Term the Monthly Bas~. Rent me:y be subject to consumer price index adjustments (HCPI" as defined below). The first CPI adjustment may occur on July l~ 2007 C(Fil'st Adjustment Date')). Additional CPI 1 adjustments may occiu· on Jtlly 1, 2010 and July l, 20 I 3. The adjustme11ts to the fy1011thly Base !lent shall be calculated as follows:.

4.2.1. Fil'st Adjustmeut Date. For the F:irst Adjustment Date, the Monthly Base Rent shall be adjusted on July 1, 2007 to an amount calculated by multipl)ring the Monthly Base Rent for June 2007 by a fraction in which the munerator . shall be eq\lal to the CPI published fo1· June 2'007 and the denominator of which shell! be equal to the CPI for November 2005.

4.2,2, Second Adj,lstmen.t Date. The Monthly Base Rent piay be . adjusted on. July 1, 2010 to an amount culculated by multiplying the Monthly Base Rent for June 2010 by a fraction in which the numetator shall be equal to.the CPI published·for June 2010 and the denominator of which shall be equal to the CPI for June 2007. j ' · 4.2.3. Thir~ Adfttsfment Dnt~..t The Monthly 1?.ase Rent may be. adjusted on J,nl~ 1, 2013 to an amount calculated by multiplyin~'. ~he Monthly Base Rent'".' for June 2013 by a fraction in which the nu1nerato1· shall be equ1aJ-to the CPI published foiJune 20.13 and the denominator ofwhioh shall be equal to the CPI f-Ql' June 2010. , City shall> as promptly as· practicable afte1i the beginning of each Rental Y eati when the Adjustment Dates occur; give notice to Lessee of the resulting adjustment> if any, in the Monthly Base Rent as dete1mined by City. City's computation th.ereof shall be .. 6"
EXHIBIT C PAGE 030
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 38 of 72 Page ID #:982 ,1 •'
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conclusive and binding (except for mathematical error), but shall not preclude any further adjustment which may.be 1·equhed in the event'ofa pi.iblished amendment of the CPI.

Until receipt of City's notice, Lessee shall pay monthly installmettts of Monthly Base Rent at the rate applicable tQ the immediately preceding Rental Year in which the Adjustment Date occur~. If at the time of City's notice the total of the monthly installments of Monthly ~ase Rent actually paid by Lessee with 1·espect to the elapse~ pprtion of the current Rental Yea1· is less than the amount of Monthly Base Rent requfred' to be paid fol' such period as indicated in CityTs notice, Lessee shall immediately pay to City the amount of the deficiency.

4.2.4. Deflnitigns. For p~u'Poses. of this section, the following definitions shall apply:

A. The term 11Ren.tal Y ear 11 shall mean that fiscal year of 12 cqnsecutive months commencfng on July 1st ap.d continuing tb1·ough the ne{Ct Exhibit 9
June 3'0th; p1·ovlded, howeve1'> that in no event shall a Rental Y eai- be . shorter than 12 full calendar months, B. The term t'CPI,, shall mean the percentage increase in the cost of living index as measured by the nconsumet· Price Index for A.11 U1fam Consumers)) published by the Bureau of Labor Statistics of the United States Department ofLaboi- for Los Angeles .. Riverside ..

Orange County, California (1982-84i;;;;lQO). In the event the CPI shall hereafter be converted to a different standard t'efe1·enoe base 01· otherwise revised, such conversion factor, f6nnula or table for converting the CPI as may be published by the BUl'eau of Labor . Statistics shall be used, or if the Bureau of Lab9r Statistics shall not publish the same, then such convei·sion· factor, fonnula or table selected by City as m.ay be published by any other nationally recognized ·publisher of sitnifar statistical informafio11 shall be t1sed.

In the event the CPI shall cease to be published, then thel'e shall be substituted for the CPI such other index of similar natu1·e as is then generally recognized and accepted for like dete1minations of purchasing power~ as City shall select.

4.2,5. Minimum and Maxhµu~ 1).dil1s1ments. The CPI adjustments . ", shall be subject to a 'minimum increase adjustment of2% peryea1· and a maximum increase adjustment of 5% pe1· year. . ' ... _
4,2.6. No Waivm'. In the event that the CPI is unavaifoble as of the AdJustment Date> Lessee shall continue to make payments for the Monthly Base Rent based on the monthly installments at the then current amount until notified by the City of the CPI increase, Any delay or failure of City in computing 01· billing Lessee for the .. 7 ..
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EXHIBIT C PAGE 031
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esoalatiqn of Monthly Base Rent based upon a CPI increase shall not constitute a waiver of or in any way impafr tho conti11uing obligation of Lessee to pay such c;rr increase.

Lessee shall provide a retroactive payment to City of the CPI in<:toase from the AdJustment Date to the date of notification of such increase, Exhibit 9

4.3 :fuel Flowage Fees. In addition to the Monthly Base Rent paid to the city · set forth above1 Lessee shall pay to the Qlty fuel flowage fees equivalent to six cents ($.06) per gallon for each gallon of aviation fnel and fifteen cents ($.15) for eac~·gallon of aviation oil·sold~ deliveted or pumped on the Premises for eaoh onlendar month (collectively referred to as HFuel Flowage Fees)') as ~dditional rent. Fuel Flowage Fees shall be subject to adjustment 01· revision by City at its sole and complete discretion based' upon l'ates competitive with neighboring municipal airports within 100 miles of the Santa Monica Municipal Airport. ·
Lessee sliall pay Fuel Flowage Fees to the City dn a monthly basis no later than · the i 5th day of each calendar month for the preceding cale11da1' m.onth durl~g the term of this Agi-eement. Fuel Flowage Fees shall be computed on the basis of the following:
(i) th,e supplier's meter tickets provided by the tankel' truck making the delivery or from refinery mete1· tickets provided to the carrier at the time the tanker truck is lo.aded;. and (ii) invoices detaillng the qnantity of oil delivel'ed to the Premises, The number of l/.S. gallons shown on the tickets and invoices as delivered s~all be multiplied by the fuel flowag~ fee estab~ished by the City. The product of that computation shall be the Fuel Flowage Fees for that calendar month,
4A. Late Chl!rges As Additional Rent. Lessee acknowledges that late payments by the Lessee of its monetary obligations to the City, including Monthly Base Rent~ will cause t~e City to incur costs not contemplated by thfs Agreement. The exact amount of these costs will ~e extremely difficult to ascert~in, ·Therefore~ if Lessee f~ils to pay any of its monetary obligations to the City, including Monthly Base Rent, within ten (1 O) calendar days fi'om the date the payment is due, late· chatges in the amount of I 0 percent (10%) pet month of the unpaid ·arn.o~mt shall be paid by the Lessee as Add.itional . Rent. Lessee shall pay this amount for each calendal' month in which all or any part 'of any payment to the City remains delinquent fo1· mote than ten (10) calendar days after the due date. The.parties agree that late charges represent a fair and reasonable estimate of the costs the City will incur for late pnyment of any monetary obligations. Acceptance of the late cha1·ges by the City shall not constitute a watvet ofthe Lessee's default with respect to the overdue amount or prevent the City from exercisi1l-S·Jlny of its rights and · remedies pursuant to this Agreement. Lessee shall pay the late cliarge as Additiomd Rent with the next installment of Monthly Base Rent. _;
' ' 4.5. faymel}ts to fbp City, Payment shall be made by check 01· money order made payable to the City of Santa Monica and shall be mailed Ol' delivered to the following address:

EXHIBIT C PAGE 032
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 40 of 72 Page ID #:984 ,t •'
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City of Santa Monica
Airpott Ad1nir}.istration Building
3223 Donald Douglas Loop South1 Suite 3
Santa Monica> California 90405
Attention: Airpo~ Dh'ectbr or Airport Manager .

4.6, AppUcatiol1 of Payment. All payments received by the City from Lessee ~hall be applied. to. the oldest payment obligation. owed by Lessee to City, No designation by Lessee, either in a separate writing or on a check or money order) shall modify this · Agreement or have any force or effect.

Exhibit 9

4.7. . Se~u~·ltx Deposit, Lessee has deposited with the City the silm of EIGBT THOUSAND DOLLA&S Ab.SD.BO CENTS ($81000.QO) as a security deposit for the perfonnance of its obligations pursuant to this Agreement, 1f Lessee defaults oµ any provisjon of this Agi-eem~nt, City may, without prejudice to any other remedy it has~ apply all or part of the secudty deposit to~ (a) any Morithiy Base Rent Of othe~· sum in default; (b) any amount that the City may spend to repair damage caused by Lessee or its sublessee; or (o) any expense, loss, or damage that City may suffer because of Lessee's default, If the City applies all or part of the security deposit, and if the City. does not elect to te1minate the Agreement, the Lessee shall provide the City with sufficient funds to restore the full amount of the seci111tydepositwithin ten (10) days after demand by tho <::!ity. '

4.8~ Documents nnd Records. Lessee agrees to provide the City with a written summary of gross receipts from the Premises upon written request. In addition> Lessee agrees to keep and maintain ~t the Pl'emises a foll~ permanent and accm·ate set of books and recotds of all sales of merchandise and l'evenue· derived from its conduct of business in~ at or from the Premises from which gross sales ge11e1·ated from the Premises can be deterinined and all supporting records,
All such records shall be maintained in accordance with genel:ally accepted ~ocounting pl'lnciples and shall be clearly identified and readily accessible.

Lessee furthet agl'ees that it will keep, retain, and preserve for at least three (3) years all records, books~ bankbooks., Oi1 duplicate deposit books, and othel' evldenoe of gross sales and Fuel Flowage Fees generated from the Premises for such year. . . / .. City.sh~ll have the right, upon reasonable notice and ar~ity~s expense; to inspect and a\.ldit Lessee's books and records pertaining to this Agtee1nenrand to make copies of any such books and l'ecords to verify the payment generated from the Pl'emises, City may make such audit at any time durlng normal business hours upon reasonable notice. If , City's audit discloses an error of five percent (5%) or more in Fuel Flowage Fees, as reported by Lessee, which results in an underpayment of the amounts due under Article 4 .. 9 ..
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EXHIBIT C PAGE 033
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of this Agreenwnt, then Lessee sh~ll pay the cost of City's· audit computed on the basis of foul' ( 4) tin1es the direct payroll of the audit staff completing the audit anq audit report.

Les~ee shall immediately pay all deficiencies to the City.

SEOflQN.5. CQMPLIANCE WITH LAW,

5.1. Compliance With All La'\I§. Duiing the term of this Agreement, Lessee shal1 comply with all applicable federal~ state and local. laws, ordinances, codes ·and regulations including> but not limited to, Chapte1· 10.04 of the Santa Monica Municipal Code ("Airport ~ode11 ) and all FAA l'egulations applicable to fixed based operations.

5.2. J!ixed Based Operations Shall Be Iu Full Compliance with the Afrport Code. Lessee understands the importance of the City's airport noise abatement program, and shall operate !ts fixed based operations in a manner, which will be in full compliance with the Airport Code~ the noise abatement program, and all rules, 1tegulations and · procedures. Lessee agrees to info1m its employees; customers and invitees.of all noise ~batement programs, nlles~ procedures1 a11d any l'egulation~ relating thereto I

5.3.. ~001>eration in ,Enforcement of Airport Code. Lessee shall.cooperate · fullywith the City In th~ enforcement of the provisions of the Airport Code and I regulations of the Noise Abatement P;rogram implemented by the City, If Lessee's employees or agents become awal'e of uny circumstance which could constitute a · violation of the Afrpott Code~ regulations~ or Noise Abatement Pl'ogram by any of its customers or invitees, Lessee shall ·inform the Afrport Director Ol' his or her designee ·immediately.
5,4, li_o Services To E:xclnded Pilots, Afrctaft o:r O'vne:rs of Aircraft. Lesse.e shall be prohibited from providing any servlces to any pilot, airctuft oi+ owner of an " · aircraft excluded from the Santa Monica Airport pursuant to the Airport Code. Lessee shall also be prohiblted fi:om providing services to any pilot, aircraft or owner 'of afrcraft for which Lessee does not have adeq~ate facilities 1 services or pel'sonnel. Lessee. shall also not permit any outside vendoi'S frot:n performing services from or at th'e Premises without full compliance with all applicable laws and l'egulations, including, but no't limited 'to, obtaining all applicable permits and H9enses. · · Exhibit 9

5.5. Permits and Licenses. Lessee shall obtain and maintain dudng the 'term of.,., this Agreement, at Lessee's sole expense, all licenses, permits ~~:certificates that may be required in connection with the operation of the facllity and for t4e provision of services set forth in j:his Agreement~ including} but 11ot limited fo, an FAA and City of Santa Monica I~censes, pe~mits and certificates. .

5.6. ;E_ederal Regidrements. Pursuant to the requirements of the FAA, the parties agree as follows:
.. 10.

EXHIBIT C PAGE 034
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 42 of 72 Page ID #:986 i• ,,
( Exhibit 9
· 5.6.1, ~ompliance with Federal Regy.ir~ment~. Lessee agrees to comply with ~11 federal requirements, including but not limited to~ statutes, regulations> Executive Orders; agency regulations, orders 01· advisory circulars. · · 5.6,2." Nondiscrimination, Lessee agrees that it wlll not discl'iininate against any person on the' acooimt of disability, sexual orientation, condition of having .AIDS, race> color, c~·eed, religion> sex, age> marital status, national ol'igin or ancestry with respect· to (i) the use, occupa11cy and possession of the Premises, and (ii) the operations~ activities or services of the Lessee.
· 5.6,3. ;Jlight to Improve Land~ng'Area. The City, as the airport owner> reserves the right to further develop or~improve the landing area of the Airport as it sees fit, regardless of .the desfres or views of the Lessee and the Lessee shall not inte1'fere or hinder such developmen~ or improvement. ·
. · 5,6.4• ·Maintenance· and ~~l}rtir of LMtdlng Area an(j P11blic Facilities '· The City, as the Aitport owner} reserve~ the right, but shall not be obligated to the Lessee to maintain and to keep in t'epair the landing area of the airpor.t and all publicly owned · facilities of the Airpm·~ together with the dght to direct and ~ontrol all activities 9fthe Lessee in this regard. . ·

5.6~5, .Subo1·dinntion ·of this Agreemellt, This Agreement shall be subordinate to the provisions and requirements of .any existing or future· agre~ment between the City and ~he Un~ted States, relative to the developm:ent, operation and mai11tenance of the Airport.

5.6.6~ Right of Fligllt Easement . There is reserved to the City~ its successors and assigns, for the use and benefit of the public, a right of flight for t4~ passage of aircraft in the afrspace above the surface of the leased premises, This public right of flight shall include the dght to cause in said ail'space any noise inherent· in the operation of any aircruft used foi· navigation or flight tl11'ough said afrspace 01· landing at, taking off from or operating on the Afrport premises at the Santa Monica Municipal Airport, Notwithstanding the foregoing> this rese1'vation of a light of flight ea.sement shall'not operate to deprive the Lessee~ tts officers> agents, iiwitees 01· employees of any rights they may have'against any openttor of ail'~raft·or other third parties responsible for negligence or careless operntion of airol'aft. . 1. - "·: 1/. •' ' -;:,Ai • {,..' ·,\

5.6,7~ Part 77 FAA NotlflcatJon. Less~e agi-ees t<f,comply with the notification and review requirements covered 'in Part 77 of the Federal Aviation Regulations in the event future construction of a building is planned for the leased premises or in ·the event of any platmed modification or alteration of any present or future · building or stt'uoture situated on the leased premises . .. 11 ..

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EXHIBIT C PAGE 035
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5~6.8. Heigl1t Restrictions. The Lessee~ by accepting this Agt·eement> expressly agrees for itself; its successors and assigns1 that it will. not erect noi· permit the erection of any structure or object~ nol' pennit the growth of any tree, or.fandsc~ping in contravention of Part 77 of th~ Federal Avi~tion Regulations. ·

5.6.9. Pi~ohiMtiou on Interference with Landings and Take .. Qffs, The Lessee> by accepting this Agteement, expressly agrees. for itself> its success9rs and assigns~ that it will not make any use of the leased' premises in any manner which might interfere with the landing and taking off of aircraft or otherwise constitute a hazard. In the event the tlforesaid covenant is breached~ the City reserves the right~ but not the obligatf on~ to enter upon the leased premises and cause the abatement of such interference at the expense of the Lessee. ·

5.6~10. No ExcJusive Rigl1t Grante<} , It is understood and agl'eed that nothing herein contained shall be conskued to grant or to authorize the gra~ting of an . exclusive right within the meaning of 49 U.S.C §40103(e) and §47107(a)(4» as may be amended from time to time. ·

5.6.11. Federal Control of Aimort. This Ag1·eement and all ~f the provisions hel'eof shall be subject to whatever right :fue United States Govemment now has or in tlle future may have 01· acquh'e1 affecting the control, operation, regulation and taking over of said airport or the exclusive or nonexclusive use of the Air,Port by the United Stfttes .during the time of war or national emergency. .

S.6.12~ Nongiscl·fminato1·y Servfoes and Pricing . The Lessee wHl fumish services on a reasonable, and not unjust discriminatori basis to all users and chru·ge reasonable, and not unjustly discriminatory prices for each imit or services, ·. provided that the Lessee may he allowed to make l'easonable and nondisctiminatory disc~unts~ rebates~ or other similar types of price reductions to volume purchasers.

SECTION 6. !tESSEE'S Ol}LIGATIONS I o
Dnrlng the term of this Agreement, L.essee agrees to operate the fixed based operation on the Premises Jn the following manner: ·
Exhibit 9

6.1. !f!ghest L~vel of Se1iyjce. Lesse~ shall enq~,~vor to provide the · ,, , 'highest level of service to the public at the Santa Monica Municipal Airpo11~ Lessee shall· keep and maintain an adequate staff and an appl'opl'iate stock o~:!Uetchundise and trnde fixtures to service and supply the usual and ordinal'y demands and requfrements of its customers. Lessee shall provide the services in acco1'dance with aH fede1·al> 'state and · local laws, niles and 1·egulations. ·
EXHIBIT C PAGE 036
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 44 of 72 Page ID #:988 ti ,, '
( ( Exhibit 9

6.2.. Obtain nnd MAint9h1 A.II Nec~su1•y_Licenses nud Permits, Lessee shall obtain and maintain all necessal'y licenses and permits to conduct ItS fixed based operations on the Premises. ·
6,3~ ;Fuel Supplie1· Agreement(s). Lessee shall ente14 into wdtten agreements with all' fuel ~upplier(s) to the Pl'emises which contain the ~ollowing provisions~ (i) the fuel supplier(s) shall indemnify the City from any and all loss, .damage~ cost> expense, liability, claims> demands, suits, attorneys' fees~ and judgments arising directly or indirectly from. 01· in any n:ianner related to the delivery of aviation fuel; (ii) the fuel supplier(s) shall provide evidence of hisurance coverage to City in tl11 amo1inttci be designated by the Risk Manager; and (iii) the fuel supplie1·(s) shall make available to City at reasonable times upon written request by the City, its records of transactions involving delivety of aviation fuel to Lessee for purposes of auditing Lessee.1 s performanpe under this Agreement. Copies of all agreements with fuel ·supplier(s) shall be deliv~red to the City's Airport Director prior to the oonunenceinent of the first fuel delivery by that supplier.

6.~. Fuel St9r~ge nnd DeUverl':, Unless otherwise specified by the City, all aviation ftlel deliveries to the Premises by any supplier shall be placed into the underground storage tank 'designated by the City1

6.5. FuelingYehi£l~S.· All fueling vehicles used by·Lessee fOr fueling} defueling or refueling opel'ations at the Premises o:r othe1· locations at th~ Airpo1i shall · conform to the most stringent safety t'egulations and sha!l be ope:tated only by persons qualified and trained in fueling operations,

6.6. Retail Fuel Pridng. It is the .intent of the parties to ensure that the x·etail ptfoe pe,r gallon of aviation gasoline ('<AvGas~ ) shall 1·emain competitive with the A vGas selling price in comparable FBOs in the region to provide the oonsume1· wJth competitiv~ pdces. A.coordingly, the establishment of the retail price per gallon of AvGas dispensed to the public shull be subject to the following procedure. 6-6~1. Submission of an A;tQns Retail Pr!ce Justification Report.

On a monthly basis~ Lessee shall submit a A vGas Retail Pdce Justification Report· (''A vGas Report,,) to the Airport Directol' for approval on a form preapproved by the City. The AvGas Repoit shall contain all of the following information:

A. The wholesale cbst of AvGas·purchase.d from Lessee's fuel supplje1·; >~,' ": · . ~ I l
B, The current pel' gallon rate of applicable taxes and flowage fees;
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EXHIBIT C PAGE 037
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 45 of 72 Page ID #:989 ,.. >'
( gxhlblt 9
C. The results of Lessee's surv~y of the Se?llii1g price (not posted prlce) of AvGas atFBOs at·spe9iflc airports in
the 1·egion, including Corona»Fullerton) Hawthome~
Whiteman, Riverside~ Mo11tgome1y> Cfilmarillo airports · and other airports npproved. by the City. The .City will · have the discretion to adjust the list of specific airports · whi~h are the subject of the survey p~lrsuant to this
Section 6.6.1. The survey shall indicate bo.th self serve . and truck ~·efueling-price, The smvey shall list the
FBO contacted~ bmnd of fuel, contact person and
telephone number; and
D. The proposed 1'etail AvGas selling price (not ppsted price) per gallon for self serve and full serve truck · l'efuelipg, Unde.t_. no circumstances shall the. pt·oposed' retail se11ing pl'ice exceed the lowest sell.ing price .of AvGas of the FBO)s surveyed,
6,6.2. Review by the Afrport Dfl+ector. The Airport Direct01i will review the A vGas Report and notify tho Lessee whether the pl'oposed' price is approved or disapproved. Absent prior approval of frnm the Ah1Jo1i Director) Lessee may not acljust the A vGas selling price. . .

6.7. ~ompliauce With Environmental Reguh•ements, Lessee shall be responsible fo1· the use, operation and mainten~noe of the existing uudergl'ound storage tank (HExisting UST,,), find any new underground storage tank installed by the City, in a manner that is in compliance with applicable municip~i) state and federal law' including,, but not limited to Santa Monica Municipal Code, Chaptel' 8.104. If Lessee has. " knowledge of, or has l'easonable cause to believe, that a spill; release~ discharge> or exposure to any "hazardous substance>' as defined in Santa Monica Municipal Code Section 8.'104.020 has occurred in, on or about the Ptemises, Lessee shall inunediately give wdtten notice of such fact to City, Lessee shall also immediately give Lessot a· copy of any statement, report, notice, l'egistration, application, permit,. claim, action or · proceeding given to, or received from, any gove1nrnental entity or private party~ concerning the ptesence, spill, release, discharge of~ ot exposure to, any "hazardous substance" or co11tamin£ition in, on, 01· about the Premises, including but 11ot limited to, all documentation pertaining to such occurrence, · ",,
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SECTION 7. MA!NTE~ANC~ AND REPAIR OF THE PREMISES AN~
LEASEHOLD IMPROVEMENTS; CONSTRUCTION OF

REQUIRED LESSEE IMPROVEMENTS, I -
. 7.1 · ;Mgintenance and ReQair of Premises. Lessee expressly agre~~ to ma1htain and to keep> at i.ts sole cost and expense> the Premises and all Leasehold Improvements thereon ,hi a safe} clean and sanitary condition, Fo~· purposes of this · Agreement> Leasehold Itnpl'ov.ements (HLe~se~10ld Impt'ovements") shall include all Exhibit a
, Existing Improvements, Required Lessee Improvements as described below, and any additional improvements made to the Premises during the Tel'm hereoft All pavement surfaces used for aircraft transit or parking shall be maintained in accordance with FAA . design standards, including> without limitation, markings~ lighting and physical condition, Lessee hereby consents t.o periodic it1spections by City·for the purpose of detem1i.nihg mai11tenance violations upon l'easonable notice, except in an emergency, in which CQSe no notice will be required. Lessee fmther agrees to promptly correct each and every violation! Lessee shall riot allow refuse, garbage or trash to accumulate on or adjacent to the Premises1 except on the date of scheduled pick~t1p service, and then only 'in appt'opdate receptacles located in areas designated for such purposes.

7.2, Repairs TQ Be In ~omplhlpce Wi,t~ ;Lnw. Lessee shall make all necyssary repairs t9 maintain the Premises and all Leasehold Improvements thereon, including the repairs or replacement of equipment, strnctures, ot other physical improvements 011 the Premises, as well as painting) cleaning, and other upg1-adest Repairs shall maintain the Premises in its current operational condition or the operational condition that exists following the completion of the Required Lessee Improvements under Section 7.4 hereof, less normal wear and tearl _All 1'epairs shall comply with any and all applicable regulations1 laws 01· ordinances of the United States, State of Califomia, County of Los A~geles~ City of Santa Monie~ or other govenunental body including, but not limited to, the Federal Aviation Administi-ation, 7,3, Alterations, Additio;us or Changes to the Premi§es 'R:eguire Pl'ior W:dtten Approvnl By City:, Lessee shall obtain prior written City approval for any alterations~ additions> or changes to the Premises and improvements thereon, including the required ~essee improvements C'Requh'ed Lessee Improvements'') descrlbed in Section 7.4 below. The City may withhold its consent to any alterations, additions or changes in City's sole and complete discretion.

7.4 Beguired Lessee IID;provements. (: ." c
Lessee shall be responsible for the following requfred)eas_ehold impi·ovements (the ''Requh'ed Lessee Improve111ents~'): · · ~ '
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. 7.4.1 Painting. Lessee shall paint all stmcnm~s on the Leasehol~ Premises prior to August 31, 2006 and shall paint all st~uctures on the Le~sehold :

Premises again dudng the period Septembe1· 1, 2010 to August 31~ 2011.

I
. 7.4.2 Installation of Airc1inft Tie-Down Cbab1s. Following the pavement improvements on the ai}'Ol'aft ramp and tie·iCf own areas, Lessee shall install aircraft tie..'.down chains consistent wit~ the standa1'ds utilized by the City in: the installation of its aircraft tie .. down chains. Lessee shall c.onsult and secure the.approval of the Airport Directol' or his or her designee in the process of installing these required aircraft tf e.,down chains. ·

7.4.3 Ramp '.Lighting Sx~tem. Lessee shall.install and maintain a ra~p lighting system. The plans flnd schedule for the installation of the ramp lighting ~ystem shall be submitted fo1· City approval no latet than August 31, 2006, as patt of the.Facility Improvement Plan and'Schedule d.escdbed below, · ·

7.4.4 Facility Improvemel~t Plan· and Schedul~. No late!· than June 30, 2006, Lessee shall prepare and subm~t1 m· cause to be prepared and submitted to ~he Airpott Director 01· his or her designee, for approval> an.d incorporation into this · Exhibit 9
Agreement as Exhibit «B•J, ·a facility improvement plan C~.Faci1Ity lmp1·ovc+nent PlanH) · which shall include all of the following: (i) a detailed layout plan which reflects · 1 locations an:d detaiiect descl'iptions of all 1'equfred Lessee improvements; (ii) & plot plan; (Hi) preliminary plaris and speoifioationa foi· the construction of the Required Lessee ImprQ:vements; (iv) a detailed project schedule; and (v) the cost estimate and budget for ·the Required Lessee Improvements. Lessee shall be responsible for the entire cost all.

Required Lessee Impmvements,
. ~ 7;4.~ Buildjng Pe1•mit nnd Requil'ed Anproyals; Cpnunencement of · ~.onstriiction- Lessee shall obtain all n~cessary approvals to constiuct the Required Lessee Improvements~ obtain the issuance of any required building permits, and commence construction 'of the Required Lessee Improvements by August 31 ~ 20Q6 or the . oonstruotlon commencement date set forth in the project ~chedule set f011~·in'Ex~bit B.

7.4i6 ,Completion·D3tes for Required J~essee Improvements. Lessee shall diligently proceed and carry out co11stn1ction of the Required Lessee Improvements and shall substantially complete the Required Lessee Imp1·ovements1 as set 'forth in Exhibit B. . "~' ;/(" " ' ' :".>I'. •

7.5~ Lbnited Obligotlon of the City. City will make,,~er~in pavement improvements ('fPavement. Improvementsn) to the Premises in an amount not to exceed· $100,000.00 (One Hundred Thousand Dollars)> as more particularly descl'lbed in Exhibit B. Except for the~e Pavement Improvements and any damage to the Px·emises proportionately caused by the City's negligence or willful misconduct; City ~as no .. 15 M
EXHIBIT C PAGE 040
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 48 of 72 Page ID #:992 ,. "
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$5~000>000 9ombined Single Limit per Occil!'rence
$5,000,000 Aggregate ·

2. Ground Hangarkeepers Liabllity:
. $500>000 per Aircmft
$1,000,000 per Occurrence
j, Personal Inj~ry qfibiHty:
$1 ~000,000 per Ocourtence
$1,000,000 Aggregate

4. Premises Medical: $5~000·pe1· Person
$25,000 per OccmTence
Exhibit 9
B. Business Automobiie Liability Insurance shall ~overl~ability adsing out of any ~·µtomobUe (inchtdi11g owned, hired and no11 .. owned . autos). Coverage shall be wdtten on Insurance ServiCes Offices form CA 00 01, CA 00 05~ CA 00 12, CA 00 20, or a svbstitute fotm prnviding equivalent liability coverage. Ifnecessary;the·policy shall be endorsed to provide contractual liability coverage. '. c. . 'Alrcrnft liability insurance shall include coverage for owned, non- .,. owned or hired aircndt.

D, 'Property insurance policies shall contain. a no co"insurnnce. penalty provision. The Property polioy.or policies shnll l;>e endorsed to p!'ovide Business InteAttuption coverage to provide for the pay1J}ent of twelve (12) months of Monthly Base Rent ·due City at the tlme of the loss,
E. Envil'oru1'ental Liability insurance shall provide coveiag'e fo~ sudden · and non-sudden pollution conditions to cover property damage> . " bodily injury and clean ... up costs telated to lessee>s use or occupancy of the P Xe.mises to include any leak or spill. as.sociated w'ith the storage tank located on the Pl'emises. ·

9.3. ;Qeductibles and SeJf ... bJsured Retentions. ,/·" · Any deductibles 01• se)f .. fosu1'ed retentions in excess of $10~000 must be declared to and approved &y the City1 Lessee shall provide a bond ot othet fmancial guarantee in a fo1m re~sonably acceptable to the City~ guaranteeing payment of any deductible or self insured amounts in excess of $25,000. · ' . . .. 20 ...

EXHIBIT C PAGE 041
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 49 of 72 Page ID #:993 ( ( Exhibit 9

9.4. QtJuir Insunmce Provisions,
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The commercial general liability~ business automobile liability, hangarkeepets' liability, aircraft liability and envh'omnental impairment liability policies shall con~ain ot be endorsed to contain the following provisions:. , A. City' of Santa Mo11ica, each member of its City Council, Board 'and Co~ssion, its officers, officials>. employees, and volunteers ("Insured City Parties") al'e to be .covered as additional insureds with respect to liability arising out of automobiles 01· aircraft owned> hired, or non .. owned by Lessee; liability arising out of work or · operations perfoimed by Lessee or on beh&lf of Lessee; 01· aircraft under Le'ssee's care, custody> and control. under the COL policy, using the lnsmance Services Office additional insured endorsement fonn CG 20 11 or a substitute providing equiv(tlent coverage. City · and'other additional insureds mentioned it:l this paragraph shall not, by reason of their inclusion as additional insureds> become liable for any payment of premiums to carriers for such coverage.

B. For any. claims ~·elated to this Agl'eement, Lessee's insurance coverage shall be primary as respects the In~ured City Part!es, Any insurance or self~insut'ance maintained by the Insul'ed City Parties shall be excess of Lessee's insurance and shall not contribute with it.

C, If any of the liability policies· are written on· a claims made basis> it shall be maintained continuously for a period of not less than three (3) years after the termination of this Lease. The uRetro Dat~it must be shown> and must be befol'e the date· of the Lease or commencement date of the Lease,
The· policy or policies shall be endorsed to provide that the lf?.sured City Parties be mnned as additional hmll'eds as their interests may appear.

9.6. )Yaiyer of Subrogatio~.

The Insul'er (for property arid wo1·kers' compen~ation only) sll~Il agree to waive all rights of subrogation against the Insured City Pa1·U~~ fof, lossea arising from activities and operntions of Lessee under this· Agreement.

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EXHIBIT C PAGE 042
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 50 of 72 Page ID #:994 ,1
( . ( Exhibit 9

9.7 t All Coyetages,,
A. . . Each insurance poHcy required by this Sectj.on shall be endorsed to state that coverage shall.not be cancelled excepj after thirty (30) days prior wtitten notioe by certified mai11 return receipt i·~quested and given to the City's Resource Management Department to the attention of the Atwort Director or his or her designee.

B. The minimum amounts .of insurancy may be increased in accordance with increases, if any, reasonably determined by the City to be necessary to maintain policy limits ,from time to time in amounts customary and usual for premises comparable to the Premises; and such increases~ if any, are to be made on a yeal'ly basis· on or. about the commencement of e~\Ch Rental year. I
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C, IfLesst)e, fol' any reason fails to maintain insurance c~verMe which is required pursuant to this Agreement, the same shall be deemed to be a material bl'each Qf oontrnot, City, at its sole optionJ may temlinate this Agreement and obtain damages from Lessee resulting· fi'qm said breach. Alternatively; City may purchase· snch·cov~rage . (but hus no special obligation·to do so), and the cost of same~ · including any interest on insurance premiums paid by City shall· be deemed Additional Rent and shall be payable upon City's demand, . 1 ,

9.8. A£ceptnbilitr of Insurers.

Insurance 1s to be placed with insurance with a curl'ent A.M. Best, s rating of no less than. A:6 unless otherwise approved by the City> s Risk Manager; · ·. 9,9, Verifkntlon of Cove1•nge.

Lessee shall furnish City with original oeittificates and amendafory endorsements effecting coverage required by this Section. The certificates and endorsements for each policy are to be signed by a pel'son authorlzed by the insuret· to bind coverage on its behalf, The cel'tificates and endorsements shall be on fonns _ p1'ovided by the City> or on othet than ~he City's fol'ms, provid~d these fol'ms and· endorsements confonn to the City>s requirements. All certiflcat~~:i-and endorsements are - ·to be received and approved by the City befo1·e occupancy occur~• ·"The City reserves the l'ight to tequhe complete, certified copies of all requ,ired insuranee policies~ includh1g. endo1·se111ents, affecting th~ cove.rage required by these speoific~tions at any time, II I
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EXHIBIT C PAGE 043
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 51 of 72 Page ID #:995 ,, ,,
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9~10. Lessee~s Contructor>s Insurance.
· All coverages for co11traotors and subcontractot's shall be subj eot to' all of the requirements sta.ted herein, except that any contiiactor must maintain a Commercial General Liability policy with limits of not less than $1,000,000 pet· occurrence (for contractors perfonning capital impi'ovements and $1,000,000 per occimence for CO?traoto1·s perforn:dng maintenance and routine rep~frs). Each cont1·actor shall provide a ~'Builders' Risk insm·anqe policy written on an "AU Risk~~ or HSpecial Causes of Loss,, basis in the amount equal to the completed value of the project with no co-insurance · penalty provisions. The insurance shall be on a replacement cost basis and be provitjed on a completed value form. ·

9.11. s·ublessees and Licensees,
Exhibit 9
·Lessee shap include all sublessees and licensees using the Premis.es, and all · consigno1·s and bail ors giving custody and control of personal prope1'ty to Lessee, as additional insureds under its policies ot shall fnrnish separate certificates and endorsements for each sublessee, licensee, consignor and bailor, All coverages for sublessees, licensees, consignors and bailo1·s shall be subject to all of the requirements . . stated herein as requh'ed or modified by the City.

SECTION 10. INDEMNIFICA'fION, DEFENSE AND Hpl,D HARMLESS. . ·Lessee agrees to indemnify, defend, and hold hannless the Insured City Parties from any and all loss, damage, cost, expense, liability, claims, demands, suits~ attomeys' fees, and judgments arising directly or indirectly 'from ot' in any manne1· related to · · L.essee~ s possession, occupancy 01• use of the Premises or arising from or in any manner connected to Lessee's business, activities, operations, servioe or wol'k oond\lcted in or about the Premises~ regardless of the active 01· passive negligence of the City, except as otherwise stated herein. ·
Lessee shall indemnify, defend and hold the Insured City Parties harmless from and against any attd all claims> de~ru1ds, actions, losses~ damages, expenses> costs and the like, including but not limited to CitY's attorneys' foes and costs 01· the value of all legal s·e1vioes supplied to City, suffered or incm1·ed by City by reason of Lessee's failure to timely sut1'ender and vacate the Premises upon the' expiration or earlier termination of this Agreement without the written consent of the City, · ··, ',/· ...

Lessee shall also i'ndenmify, defend, and hold haimles~:~he)nsured dity Parties from and against any and all loss, damage, costs, expe.tise1 liability; claims, demands, suits, attomeys' fees and judgments arising frnm 01· in any manner com1ected to the furnishing Ol' supplying of any work~ setvices, matedal~> equipment or supplies by any 1 ·
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EXHIBIT C PAGE 044
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 52 of 72 Page ID #:996 1t It
( ( Exhibit 9
persons, ffrms, corporations or othel' entlt~es under the .control ot supervision of or invited by tessee in~ on. or aboilt the Premises. . · . . . . :

Notwithstanding the foregoing, Lessee shall have no obligation to indemnify, defend or hold harmless Insured City Parties where the claim al'ises from or relates to willful and wanton misconduct or inaction that is directly attributable to one 01· more of the I11sured City Pa1·ti~s, ·
The Lessee shall pay the City fol' any ~msts inciirred in enforcing this Section. The p1·ov1sions of this Sectiott'shall siirvive the termination of this Agreement with respect to any loss occturing prior to upon termination, . ·
SECTION 11. CITY'S IUGH'TS;

11.1~ Ing1~ess and Egre~s, The Qity l'eserves:the right to enter the Premises at any time> ln the 9ase of an eme1·gency, and otherwise at reasonable times, f9r the purpose of inspecting the condition \'?f the Premises and fol' verifying compliance by Lessee with this Agt'eement and all applicable law .and. to employ. experts and/ ot consultants in connection therewith ~md/or to advise Lessor with respe.ot to Lessee~ s activi#es, including~ but not limited to> the operatlo1i> use~ n1o:nitoring, 01· maintenance, or rnmoval of any Hazardous Mate1fal or storage tank on or from th~ Premises. For purposes of this Le~se, uHazardous Material or Materials" shall mean: (i) "hazardous substance" or "toxic. substances~" as defined by CBRCLA; (ii) 11hazai-doi1s waste," as defined by RCRA.; (iii) 0I1azardous Waste, 11 "Extremely Hazai·ct~us Waste" or "Restdcted Hazardous Waste/' as those terms are defined by Sections 25115~ 25117~ 91' 2S 122 .. 7 of the California Health and Safety Code, Division 20, Chapt(.)l' 6.5, as amended or hereaftei· · amended; (iv) any pollutant or contaminant othaz~rdmis, dangerous or toxic chemic'als, . · mate1ials 011 substances within the meaning of any other environmental laws; (v) mQre than 100 gallons of cmde oil or any fraction thereof. that is liqiiid at standard conditions of temperature and pressure (60 degrees Fahrenheit c;tnd 14.7 pounds per squat·e inch absolute); (vi) tmy radioactive mated al, including any source, special nuclear or by.. ~ product material as defined at 42 U.S,C.' §2011 ~~.,as amended or hereafter amended; and/ol' (vii) asbosto.s or PCBs in any form 01· condition.

11.2. A9cess for Envi)'onmentnl Tests 01· W 011!b • The City teserves the right to access the Premises to perfo~m ·any environmental tests and any other envit'orunerital work on the Premises, The City. will provide the Lessee with pr~ornotioe ofthe date and.", 'location of any environmental tests Ol' workto be performed on:fhe Premises, :·.Prior to the commencement of any environmental tests or woi-k on the Pre1ufses) Lessee and Lessor will agree 011 a work plant.hat ensures continued operations durfng the period of such tests.and wol'lc and, if necessary, the feasibility of au alternative location dut'ing such perlod of testing or work. ·
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EXHIBIT C PAGE 045
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 53 of 72 Page ID #:997 ,1
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1 L3. Maintenimce and Repair of U11de1'ground ~torage Tank. Lessee shall be responsible for the mnhitenancy and repuir of the underground storage tank (UST) installed on the Premises, ·
. 11.4~ Right To Access. In addition to .the rights set forth in Sections 11.1 and l 1.2~ above, the City a.hall have the right at all reasonable times to enter the Premises to:
(a) inspect the ~i-ernises and all Leasehold Improvements; (b) show the Premises to. prospective tenants~ (c) serve? post and keep posted notices requil'ed by law or that the City conside1·s necessary; (d) make repairs> teplacements, alterations, or improvements to the Premises or Leasehold Imp1·ovements that the City considers necessftry 01· desirable (withm.itany obligation to do so); (e) take possession in the manner set forth in this· Agreement; or (f) petfonn any covenants of Lessee that Lessee fails to perform.

Exhibit a

11.5. Sjght to Regulate Access. In addition to the dght to access, the 9ity> in its s·ole and complete discre.tion, may at any time control and limit access to> in, or abqut the · Santa Monica Municipal Airport for the public health, safety, welfare, or fol• uny other municipal or p\1blic purpose. The City reserves the l'lght to regulate the hout's and location of deliveries and restrict the activities of the Lessee with 1'egat'd to all delivel'ies~ loading> unloading and servicing of the Pl'emises, and Lessee agrees to abide by the . regulations of the City, The City also resetves the right to restrict and control access routes to the Santa.Monica Municipal Airport and. the Pl'emises during the days and hours which the Santa Monica Municipal Airport is clo~e'd or operations are at m~nimum levels .. ' ' I SECTION 12, ;RESTBJCTIONS ON ASSIGNMENT§ on SUBJ:;EASES,

12.1. Assignment and Subletting Regnfre Pdox• Written Consent from Cit~.

Lessee has been selected to lease the Premises in reliance upon business expedence, ·reputation and stated and unique expertise of the ownet of Lessee and its skill and experience ln operating fixed based operations. Except as pl'Ovided herei11, Lessee shall not assig11) hypothecate or tmnsfer this Agl'eement or any interest herein or sublet the Premises ot any portion thereof, by ope1:atio11 of law ot' otherwise> (generally~ a · "Transfe1·") to any person or entity (
11Transfe1•ee11) without the prior written consent of the· City~ which may be withheld in accordance with this Agreement. Ap.y attempt to Transfer without complying :with the foregoing shall be null and void, and any assignee~ sublessees~ Henholder or transfetee shall acqi1ire no right OJ' interest by reason of suoh attempted Tnmsfel', Any attempt by the Lessee to mak~ a Transfer of its jnterest without the prior wrltten consent and approval of the City shall be dee1f1yd a material bt'each of '., this Agreement. '~ .. ·:·1 >

12.2, Trnnsfer of Corporate SJiares, An'y sale or tr~nsf~r of all or substantially all of the stock, ,assets or other equitable interests of the Lessee that has the effect of a material change in the control of Lessee shall constitute a Transfer of this Agreement reqt1idng the City's prior written approval pursuant to this Section; .. 25-
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EXHIBIT C PAGE 046
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 54 of 72 Page ID #:998 ,,
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12.3. Lessee~s Applfogtion for Con§ent. If Lessee desires to m~ke a Tninsfe1-, Lessee nmst submit in writing to City the name of the proposed Tmnsforee~ the proposed Transferee's business to be conducted in the Pl'emises, the te1ms and provisions of the proposed ·Transfer~ information of the 'proposed Transferee pertaining to ~1e requirements set fo1ih in this Seotion, or other information as City may 1·equest. No request for a Ttansfe1· shall be considered by the Ci~y 1;lntil receipt oftjle above 1nfonnation. ' '

12.4, Grounds fo1• Denying Co'qseut , Since the City would not entei· into this Exhibit 9
Agi+eement but for the business experience, l
1 eputation and expertise of A T E of
California, Inc.~ any ptoposed Transfe1·ee shall not be app1·oved ·unless the City has determined, as minimum requirements, that such proposed Trans:fel'ee has·(a) adequate business experience in opel'ating similar types of establishments to fulfill,Lessee~s · obligations set f<?rth ~n this Agi:eement; (b) a credit quality teasonably satisfactory to fulfill Lessee>s obligations under tliis Agreement and verified by the City; (c).the personal character, reputation and integrity of.the proposed Transferee an~ its principals and operational offlcets and owners are of the at least the same caliber as the Ttansfero1\ and (d) the p1·oposed Transferee agrees to exp1·essly assume pll ofLessee,s obligations · under this Agreement and all liability adsi11g from the condition of the Pre!nises during Lesseels occupancy and use of the Premises, such assumption of obligations including,. without limitation, all monetary obligations and required envfronmental remediati~n under this Agreement. ·City may establish other reaso1rnble requirements of the pl'oposed .

Transferee, and subsections (a), (b) (c) and (d) of this Section are not to the exclusion of any other reasonable requirements which the City may est&blish.

12.5. ~01ulitions to Consent. Prior to any request foi• ·City's consent to any Transfo1·, all of the following conditions shal~ be met: - · A. ' Subject to the requirement for an exptes's written RS$lllnption of obligations by the Transferee, as described in Section 12.4 above, the· original named Lessee shall not be relieved of its obligat.ion to pay Monthly Base Rent which acc~es. on and after the date of Cityt s wi1tten approval of the Tran~fer, and to perfori:n all other obligations to be petformed by Lessee hereunder provided that any S\1Ch approved Transt'e1· is evidenced on City approved forms.· B1 Lessee shall reimburse City for Ci tis attorneys' fees incurred or the'". value of attorneys' services received in coQ.~~ction with tP,e review> · processing and documentation.of such TraiiSfetrequest. .:-- >- ~"· c. Lessee shall inform City of any and ··~n compensation it receives in connection with any Tnmsfet'. City shall have the l'ight to request .. 2eEXHIBIT C PAGE 047
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 55 of 72 Page ID #:999 ,1
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and receive from Lessee any additional infonnation reasonably · related thereto. · ·
The Transferee shall agree that in the event that City gives 11otice to any sublessee thnt the Transfet·ee Lessee is in moneta1·y qefault · unde:r this Agteement, sublessee ~hall thereafter make any subl~ase payments directly to the City, These payments shall be receiVed by the City.without any liabHity pursuant to the sublease, ~nd suble~see shall agree to attom to the City should this Agreement be terminated for any reason> except that in no event shall the City be obligated to accept an attornment. ·
Any such consent shall be effected o.n forms approved by City.

Les~ee shall not be in default heryunder in any respect, nor shall any event have then occurred whichj with the giving of notice o~· passage of time or both, would constitute a default under this Agre,ement which ~as not been cm·ed 01· waived.

G. Any such Tl'ansferee must agi·ee to assume, be bound by and perform all of the terms, covenants and conditions of this · 1 . Agreement, subject to the condition that City shall not be bound to any provision of ~ny agreements pertaining to such Transfer to the extent such agreement grants rights not possessed by Lessee against Clt;y.

B:, On~ executed copy of any and_ali written instruments evidencing or l'elating to any such Transfer shall be delivered t6 City, City agrees not to disclose any confidential information which may be 'cont~ined therein, except as otheiwise requh'ed by applic~ble law.

L All sublessees must obtain and mnintain a Santa Monica Coinmercial Operations Pennit, as well as all other applicable permits and licenses, during the entire term of the sublease.

Exhibit 9

12.6. Acceptance of Rent frgm T11ansfers:e. The acceptance by City of the payment of Rent following an~ assignment 01· other transfor pr?pbited by this Section ", shall "not be deemed to b~ a waiver of any right or remedy of ~lty hereunde1\, I 'f1 I ' SECTION 13. COVEN~tjT AGAINST fiIENS.

Lessee shall not be the c'al.1se or object of any liens or allow any Hens to exist, attach to, oii be place~ on~ or encumber Cityts i~terest in the Premises by operation of ~aw ~ 27 ~
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EXHIBIT C PAGE 048
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 56 of 72 Page ID #:1000 ,I
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or othel'wise. Lessee shall keep the Premises free and clear of ~ny mechanic's 1iens1 and other liens~ and liens for labor, services, supplies~ equipment, or material furnished 01· claimed to have· been furnished to the Lessee or the Premises. If any lien is attached or Lessee 1·eceives notice of any lien> Lessee shall cause the lien to be released aiid removed from the record 01' provide documentation of adequate silt'ety for payment of the lien ~mount within five (5) business days from l'eceipt of notice of lien, and shall notify the .City of the' existence qfthe Hen. Despite any otherpl'Ovision of this Agreement, ifthe lien is not 1·eleased and 1·emoved by Lessee, or if Lessee fails to demonstrate adequate surety for payment of the lien amount, the City may take all a~tion ne-0essary to release ~md remove the lien. Any sm·ety obtained to secure payment of any lien heteunder shall be in a form and' of a duration approved by the City. All expenses, including 1'easonable attorneys' fees) incun:ed by City in connection with the Hen shall be considered Additional Rent by the City under this Agiieement and shall be immediately due ijUd · pivy~ble by the L~ssee. ·
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SECTION 14. 1 A~S AND ASSESSMENTS.

Exhibit 9
14J ;Lessee's Obligation to Pny T!\:Xe~ , The term nTax Year" shall tnea11 and tefer to each twelve (12) month period (deemed, for· the purpose of this Section, to have 395 days) established as the l'eal estate tax year by the taxing. authorities having lawful . · judsdiction over the Premises, Lessee shall pay in each Tax Year dudng the Term~ · directly to the appropriate taxing authodties, all teal estate taxes, bonds) levies 01' . r charges, µ.d valotem taxes and assessments, general and special assessments, .taxes on the :., Premises, or any other tax imposed upon or levied against real estate or upon owners of · real estate, including taxes upon .Leasehold Improvements pay~ble with respect to ot allocable to the Premises, all land and all buildings and improvement situated thereon~ whether assessed to the Pi-e.mises or to City¥ Any taxes to be paid by Lessee undei· this Section shall be paid dfreotly to the pro~er taxing authodties at least ten (lO) days b~fore · due.

14.2. P~rsonal P1ioperty: Taxes. This Agreeme~t may c1·eate a possessory interest in public property which is subject to taxation, I~ the event possessofy interest is created~ Lessee shall pay any and all taxes levied on· such interest. In (ldditfon~ Lessee · shall pay to the appropl'iate agency not less than 10 days pr10l' to delinquency> any and all salesJ excise, anq othe1l taxes and license fees or other charges levied, imposed or assessed by any taxing or levying auth~rity including the State of California and County ., of Los Angeles whether on its goods sold or on its Leasehold Ill)pfovements, equipment,- , furniture, or personal property in or about the Premises ( oolleotfvely, 11 Personal Property Taxestt), In the event any cir all of Lessee's Leasehold Improverhents (as herein defined), equipment> furniture, fixtures 01· personal property shall be assessed vyith the real pmperty or as Taxes charged to City, Lessee shall pay to City all such Personal Propetty Taxes within l O days aftei· delivery to Less<;1e by City of a statement in writing setting fotih the arnol1nt of such Personal Property Taxes applicable to Lessee's ptopetty • .. 28 ..

EXHIBIT C PAGE 049
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14.3 R~servation oflygllts. Lessee tesewes the right to contest any federal, state or local tax assessment of any kind provided that Lessee agl'ees to indemnify, defend and hold harmless the City against a~y damages ~dsing from such contest.

SECTION 15. UTILITIES. ( I
Exhibit 9
· 15,1 Utilities Cos't§, Utilities will be separately metered and Less~e shall pay all charges for all heat~ .wate1-, gas, electricity, light, powe1·, telephone and sewer or other· services used by it and suppliep by City, a public utility or Pl:1blic authority, ,or any other pe~son, fltm or col·poration. . . . ·

15.2 Discontin1rnnc·~s and InterNntions of Utilib! Services. City shall not be Hable to Lessee in damages 01· otherwise (a) if any utility ~hall become unavail~ble from . any public utility compa~y~ public authot'ity or any other person 01· entity (including City) supplying or distributing such utility, or (b) for ~my inter.t'uption in any utility service (inclUding> without limitation, any heating> ventilation or afr .. conditioning) caused by failure to pay such i1tility services, the making of any necessary repairs or improvements or by any cause beyond City's reasonable coptl'ol, and the same shall not constitute a termination of this Agreement or m1 eviction of Lessee, SECTION 16. SIGNS, LlGHTS.i\ND ADVERTISEMEN.I •.

Lessee must si1bmit plans for all s~gns, outside lighting and advei'tisement to the Afrp01i Director, or hi$ 'or her designee, for prior approval. AU signs, outside lighting and advertisement shall be in compliance with the requirements~ Tegulations and o1'dinances of the City of Santa Mo11ica1 Ad.ditiona11y, Lessee shall comply with u11 regulations of the Federal Aviation A9ministratlon pe1tainiilg to signage and lighting of the Premises. Lessee shall mah).tain adequate lighting and illumination ofthe ~)remises.

SECTION 17. DAMAG:E OR DESTRUCTION TO THE PREMISES QR
IMPRQYJkMENT$,1

17.1. ~gtice of Dam~ge to the P•·emises. Lessee agrees to notify the City 'immediately of any damage to the P.1·emises or Leasehold Improvements resulting from fire, earthquake> or .tmy other identifiable event of a sudden, unexpected or unusual natu~·~ whe1'e such damage exceeds the sum of $10,000. · · · ; :-, ~ : . '' . 17,2. Jlepair o'l· Rebuild the Eremises. In the eventthei>remiSes or the Leasehold Improvements are damaged or destroyed) Lessee shall, at Lessee's sole expense, repair 01· rebuil?, as n?cessary, the Premises to at least the quality level existing . prior to the damage or destruction and in any event at a level suitable to conduct the required activities and services set forth in Section 3. 1 (as they were conducted pi:ior to ' '
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EXHIBIT C PAGE 050
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 58 of 72 Page ID #:1002 ,1
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the damage to the Premises), Notwithstanding the fotegoing, LesseeJs obligation to repair or requild the damaged or destroyed Premises shall be subject to a~d limited by the fol~owing conditions;
. A. Ramage or Destruc~oll of the Premises in Final 3 Yea1·s of Remabdng Term. In the event that there are less than thl·ee (3) years remaining o~· the then current term of this Lease Agreement following the date the Pl'emises have been damaged or destroyed, Lessee shall have the following rights !
(1) If damages to the Premises exceed the total amount of insurance pl'oceeds.payable by Lessee's insurers or if Lessee cannot repair the damages and continue its operations on the Premi~es ih an economically viable manne1i, then Lessee may terminate this Agreement subject tp all requirements in Sections 2.4 at1d.8.4 of this Ag1·eement. Upon such tetmination~ Lessee shall tend.er possession of the P1'emi.ses and Leasehold.Improvements to City and shall assign to the City all 1·lght title and interest to the proceeds of'the Lessee's insurance policies maintained pursuant to Section 9 of this Agreement; 01· ·
(2) In the Qase of destruction of the Ptemises and if Lessee cannot rebuild or reoonstJ:uct the destroyed Prem~ses and continue its operatfons on the Premises in an economically viable manner, then Lessee may terminate this Agreement subj~ct to all tequirements in Sections 2.4 and 8.4 of this Ag1·eement. Upon such termination, Less~e shall tender possession of the Pl·e1nises to. City and shall assign to the City all dglit> title and intel'est to the proceeds of " Lessee's hlsimmce.policies maintained pursuant to Section 9 of this Agreement.
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B. Damage or Destruction of Premises with Re~aining Terin · Ji{xceedjng 3 Year~. In the event that there ate more than tlu·ee (3) yea1·s remaining on the then cmTent term of this Agreement following the date the Premises 'are damaged (such that Lessee and Exhibit a
its subtenants cannot continue their respe-0tive operations in a financially viable manner in the Premises) pi;-are destroyed; the City·:
and Lessee shall meet and confe1· bn the f~'slbility of a r~location plan for Lessee and its subtenants, which ,;~vou~d allo;w, Lessee a11d Less~e,s subtenants to continue their respectiv'e operntions in a financially viable manner at the Ail'po1t If the parties are unable to agree on a relocation.plan within thirty (30) days of such damage or destruction of the Premises, then> either party shtdl hav~ the right to .. 30 ..

EXHIBIT C PAGE 051
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 59 of 72 Page ID #:1003 ( Exhibit 9
terminate this Agreement) subject to all requirements in Section's 2.4 and 8.4 of this Agre~men:t. Upon such termination, Lessee shall tender possession of the Premises to the City ~nd shall assign to the City all right title and interest to the proceeds of Lessee's insurance policies maintained pm·su.flnt'to Section 9 of this Agreet.t~ent.

17.3, Damoge 01· Destruction to the Common &regs. in the event that the . Common Areas o~ the Santa Monica Municipal Airport. are damaged or destroyed by fire or any.othel' cause or ~m~ otherwise made unusable, to the·exttmt of fifty percent (SO%) of the total insured value or replacement cost of all such Common Areas or the Airport becomes um.lSable or unavailable for use by general ~viation for any reason for a pe11od gfoate1· than thirty (30) days, either party shall have the right to terminate this Ag1·eement (subject to all requirements in Sections 2.4 and 8.4 of this Agreement)t by 'giving written notice to the othet party, Otherwise~ the City shall repair the damage as soon as · reasonably possible in w,hich event. this Agt·eement sl~ull continue in full force and .effect. . 17.4. Le§see's Remedies. Lessee shall l1ave no claim against City~ its City Council, boards and oonunissions, offlce1·s> agents, and employees for any damage~ loss of business or good will, alterations, improvements, fixtures~ furnishing, equipment, buildings> structures~ vehicles and inventory suffered by reason of any damage, , destruction, repah' .or i
1 estol'ation of the Premises 01· the Common Areas of the Santa Monica Municipal Airport .

17.5, Insurance Proceeds, Except as otherwise specifically provided herein, all insurance proceed~ payable with respect to the Premises and'Le~sehold Improve~ne11ts shall be payable to Lessee, subject to Lessee~s obligation to use any such insimmoe proceeds to either satisfy its repafr and resto1·ation obligations hel'eunde1· or assign 01· transfe1· such insurance proceeds to the City,
17,6. ~aiver, City and Lessee waive the p1·ovisions of any stututes which !'elate to tennination of leases whell leased prope1ty is destroyed and agree that such event shall be governed by the terms of this Agreement to the extent of any conflict between said statutes and this .Agreement.

SECTION 18. ,CQNDEMNA~l'ION.

18.1. Jtffect of' Taking. If the.Premises or any po11,i9n thereof is taken undei•:
the powei· of eminent domaifl: by othe1· than the City or one of;Hs _ constituept parts, this Agreement sh(lll terminate as to the part so 'taken o:q. the date,l.,ess-,ee is required to yield possession the1·eof to the condenming authotity, In the event that only a portion of the Pte:mises is subject to condemnation~ and the conduct of Le:ssee~s business on the remaining portion of the Ptemises would Ifot be commercially feasible in the reason~ble judgment of Lessee, then Lessee shall have the option to tei:i1inate this Agreement 011 • 31 ..

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EXHIBIT C PAGE 052
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 60 of 72 Page ID #:1004 ( (
wdtten notice to City. Lessee1s option.to terminate,hel'eundel' is only valid· if exercised within thirty (30) days of the date when Lessee is required to yield posse~sion, :

If any notice of termi~ation is given pursua11t to this Section~ this Agreement and Exhibit 9
the tights and obligfttions of the parties hereunde1· shall cease as of th~ date of such notice a11d Monthly Base Rent (other than any Additional Rental dqe City by reason of Lessee's · failure to perform any of its obligations here\mder) shall be adjusted as of the date of such · tenninatlpn.
18,2. Qondemnation A'.ward~ .
. All compensation awarded for any taking of the Premises (except for the portion attdbutable to the lost business and lost goodwill of Lessee which shall belong tQ Lessee) shall belong to a:i;id be the property of City, and Lessee hereby assigns to ,City all rights . with l'espect thereto; provide~, however, .nothing contained herein shull prevent Lessee . from applylug for reimbu1'sement from the condemning.authority (ifpermi~ed by Law) for rriov~ng expenses~ the expense ofretnovalof Lessee's ttade fixtul'es, loss of the Leasehold Impj·ovements paid for by Lessee or any other loss incun·ed by Lessee, but if and orily if such action shall not reduce the amount of the award or othe1· compensation otherwise recoverable from the condemning authodty by City for imp1·ovements paid for · by City. Notwithstanding the fol'egoing, if the City is the condemning authority, any compensation for the remaining leasehold value of the Premises wlll belong to Lessee, SECTION 19, NOTICES.

All notices required to be given pursuant to this Agreement shall be in wtiting and either served personally 01· sent by United St~tes mail to the a~dress. listed below, or to · another address as1may be provided by w1'ltten notlce, Notice shall be deemed give,n -yvithin forty .. eight (48) hours from the time of mailing if mailed as pl'ovided ln this · Section1
All notices, demands, requests~ or appi-ovals from Lessee to' City sh'aff be addressed to City at:
with a copy to:

Ait1Jott Directo1· 01· Airport Manager
City of Santa Monica.
· 3223 Donald Douglas Loop South, Suit.e·$
s~mta Monica, California 90405 ". 1 ·" •
Gity Attorney
1685 Main Street, Third Floor
S~mta Monica, California 90401
EXHIBIT C PAGE 053
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 61 of 72 Page ID #:1005 ( (
All notices, demands, requests or approvals from City to Lessee shall be addressed to Lessee at:
' '
ATE of California, dba American Flyers.
2S01Ait'port Avenue
Santa Monica, California 90405
Attention: Mt\ R, Clark McCorinick I
This Section shall 1·eplace rather than supplement any equivalent 01· similar statritory notice including, but not limited to, any notices required by California Code of Civil Procedu1·~ Sections 1161 and 1162. When a statute requires service of a notice .in a particular manner, service of such notice in the manner set forth in this Section shall replace and satisfy the statutory servfoe .. of--notloe procedures~ including those required by Califo111ia Code of Civil Procedure Sections U 61 and 1162. · SECTION 20. DEFAULTS AND REMEDIES FOR DEFAULTS.

20.1. Events Constituting Material Default bX Lessee, The ooci.m·ence of any one or more of the following events shall constitute a mate1fal default and breach of this Agreement by Lessee: I
A. Lessee>s failure to make any payment of Monthly Base Rent~ Additional Rent 01· any otheA' payment to the City as i·equired 1xnder this Agreement, as and when due1 where the failure shall continue for a period of three (3) business days after notice from City to L~ssee. In th.e event that City serves Lessee· with a Notice to Pay Rent or Quit pursuant to applfoable unlawful detainer statutes, the · · Notice to Pay Rent or Quit shall also co.nstit:ute the notice required by this subsectiop.

B. Lessee's engaging in any pl'ohibited activity as defined in Section

3.3 or any othet• activity or service not approved in writing by the Airport Director 01· his or he1· designee.

C. Lessee~s failure' to timely prepa1·e and submit the Facility Improvement Plan. pui:suant Section 7.4 and to complete the Exhibit 9
Required Lessee impl'Ovements in a manner reasonably satisfactory , , ''.to City. ( 1
... •
D. . Lessee's failure tp perform any non .. monot~ry_:obligation under this Agreement including, but not limited to~ the failtwe to provide any of the 11Required Services and Activities11 identified in Section 3, 1 > above> if the failure continues for fourteen (14) business days after written notice of the failure from the City to Lessee . . 33.

EXHIBIT C PAGE 054
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 62 of 72 Page ID #:1006 •'
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Notwithstanding the above, if the nature of Lessee's default'requi~·es more than fouiteen (14) business days for its cure; th~n the Lessee will llOt be deemed to be in default if Lessee commences to cut'e the default within ten ( 10) days and thereafter diligently prosecutes the cure. to completion to the satisfaction of the City,
Ev Lessee>s abandon:rµent of the Premises, including the absence of Lessee's employees fro.i;n the Premises fo1· three (3) consecutive days,
F. Lesseets making any general arrangement ot assignment of its interests to the Premises or Improvements under this Agreement for the benefit. of credito1·$ without the written approval of· the qty. o. The filing by or agaipst the Lessee of any proceeding imder federal · bankrupt~y law, unless the proceeding is dismissed wi~hin ninety (90) days, .
'
H. The appointment of a trustee ol' receiver to take possess~on of all or substantially all of Lessee's assets located at the Premises· or of Lessee1s interest in this Agreement, unless possession is ~unconditionally restored to Lessee and the trusteeship or receivership is dissolved, ·
I. The attac~ent, execution or the judicial ~eizure of su'Qstantially. all of Lessee~s assets located on the Premises 01· of Lessee's interest'in this Agreement> imless that seizure is not disohat'ged within thfrty (30) days. · · ·
J, The discovety by City that any financial statement given· to City by Lessee was matei-ially false. ·
K. Lessee 1 s failm~e to discharge and remove any lien or encumbrance· filed against the Premises 01· to ptovide adequate surety to secure payment thereof.

Exhibit 9
L. Any assignment of this Agreement or anypp~tion thereofin violation of Section 12 hereof, '' ·" . · · .
. '',.I
. ,

20.2. Remedies for Default, In the event of any occu1'1'ence of material default or breach of this Agreement by the Lessee, the City will ncitify the Lessee of the existence of the breach and, if applicable, the time for cure as specified above. In the EXHIBIT C PAGE 055
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 63 of 72 Page ID #:1007 1·~,\~:Yrt.~: .. :·::.·:·:t::\?/?·\1
·"Y I ''.
, I
( Exhibit 9
event the Lessee fails 01' refuses to CU1'e, or if the material default is not subject to cure1 the City may: ·
A. Terminate Lessee's right to possession of the Premises by any lawful means pursu~mt to Section.21> below, In the event of ter.tµination, · · Less~e shall imttiediately sunender p9ssession of the P1·emises to City. In such event> City shall be entitled to recover from Lessee ·an damages incun·ed'by City by reason 'ofLessee,s default including, but not limited to~ the cost of recovering possession of the Premises, expenses ofreletting, including necessary renovation and alteration ~f the Premises, and reasonable attorneys' fees. . ·
B. Maintain Lessee's t'ight to possession, in which' case this Agreement shall continue 1n effect. In thftt event,, City shaH be entitled to enfo~·ce all of City's rights and re~edies under t~is Agreement! C. Pursue any other remedy now Oi' hereafter available to City undet the laws and judicial decisions of the State of California, Unpaid installments of Monthly Base Rent, Additional Rent and ·other . unpai'd monetary obligations of Lessee 'mder the te1ms of tl4s . Agreement shall bear interest from the date due at the maximum rate . then allowable by law. · , • .. SECT~ON 21. TERMINATION.

21.1. :rermhrntion By Ci.t:t for Lessee's Breach. In the event the Lessee fails· or refuses to perform anY, of the oovenants or requkemeuts of this Agfeement in the t~me and manner required, the City may terminate this Agreement by gLving to the Lessee written notice of termination, Upon termination) all rights, powers, privileges and authority granted to the Lessee t1.nder this Agl'eement shall cease1 an~ lessee shall Immediately the1·eupon vacate the fixed based operations, The City's dght to tenninate this Agreement under this Section is not its exclusive remedy, but is in addition to all other remedies pl'ovided to it by law or the prqvisions of this Agreement, 21,2. Duties U])on Terminatfon. Upon te1mination of this Agreementt the Lessee ~hall pay aH Monthly Base Rent, Additional Rent> and any other payments due to the City under the tem).s of this Agreement, Lessee further a&r~~s to do all other things reasonably neoessat'y to cause an orderly transition and to su1~erider the Premises and ope1·atio1:1s thereon. · . ,.~ _;; ·
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EXHIBIT C PAGE 056
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 64 of 72 Page ID #:1008 ( (
SEC'rlON 22. GENERAL PROVlSIOfS:a, I I

22.L
Agreement.
:A utl1orit;x. Both pa1iles have full power and a11thol'ity to eilte.i· into this

22.2. llltegn1tcd Agl~eemeut, This Ag1'eement represents the full and complete.understandh;ig of every kfnd qr natu1·~ whatsoever between the parties hereto with respect to the Premises and this Agreement. AH preliminary negotiations and agreements of whatsoevel' kind 01· nature at'e.merged herein. No verbal agreement or implied covenm.1:t shall be held to vary the provisions_ hereof.

22.3. ,Govenling Law. Lessee and City agree that the laws goveming this Agreement shall be that of the State of Califomia.

22.4. Jime is of ih.e Essence .. Time is of the essence as to each provision of· this A:-greement,

22.5. ~tiy's Propriet@l'Y Capacity. Lessee understands that the City is entedng into this Agreement in its pmp.tietary capacity; Nothing contained in this · Agi·eement shall be dee1i1ed directly ot indh:eotly to l'estrlct or to impah' the Citis govenuuental powers or rights with the.i·espect to the leasehold, or with respect to 1 ·the
Lessee>s use, occupancy and. opel'ation of the Premises puts1mnt to this Agreement. It is ~ntended. that Les~ee shall be obligated to fulfill and comply with' all requirements which may be imposed by any governmental agenoy ot authority of the City having judsdiction ovet the Premises in the City's governmental capacity. ,.

22.6. Nomyaiver, No·waiver of any pi·ovision of this Agreetnent shall be implied by the failure of any party to enforce'any remedy piwsuant to this.Agreement Any waiver by the parties of any provision of this Agreement must be in writing. The waiver shall affect only the provision specified nnd only for the time and in the mannet. stated in the writing, I '
22, 7. Attorneys' Fees nnd Costs. If either party hereto brlngs an action or· Exhibit 9
proceeding against any other party by reason of a default undel' this Agreement> 01· otherwise arising out of this Agreement~ the prnvailing party in the acti9n or prnceeding . shttll be eiltltled to receive from the lo~ing patty all costs and expens~s and such an amount as the court may adjudge to be r~a~onable attomeys' fey.SJ\lld costs. Attorneys~ · ' fe~s shall be paid whether or not the action is prosecuted to judgment; The prevailing party shall be entitled to attorneys~ fees equal to the. fair marke.fvalue of legal services provided by attorneys (authotized to p1·ovlde·such services) employed by it as well as any attorneys~ foes ~otually paid by it to third pai1ies in connection with the action.

EXHIBIT C PAGE 057
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 65 of 72 Page ID #:1009 ! ·~·:·~·:~:::.:~:\!\::~··: .. :~::=.~:::;· !. r:·~ I
( ( Exhibit 9
22,8.. Counterparts, This Agreement may ~e signed in counterpa1is, ·and each of which shall be deerµed an original and all of which taken together shall constin1te one and the same instli.nnent.

IN WITNESS WHEREOF, the patties have executed this Agreement a.s of the date and year ffrst aboye ;vritten1
ATTEST:
~~)~ll~Q~ MARIA STEWAR':: I
City Clerk
APPROVED AS TO· FORM:

CITY OF SANTA MONICA~.
a municipal corporation
LESSEE:

A 'r E OF CALIFORNIA, a California
corporation dba AMERICAN FLYERS
;
Title:
- ".'
)
!
EXHIBIT C PAGE 058
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 66 of 72 Page ID #:1010 Exhibit D
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 67 of 72 Page ID #:1011

UNITED STATES DISTRICT COURT

FOR THE CENTRAL DISTRICT OF CALIFORNIA

CITY OF SANTA MONICA,
Petitioner,
v.

Civil Action No. 13-CV-8046-JFW (VBKx)
UNITED STATES OF AMERICA, et al.

Respondent.

STIPULATION AND ORDER/CONSENT DECREE
It is stipulated by and between the undersigned parties by their respective attorneys that:

1. The Court has jurisdiction over each of the parties, and venue of this action is proper in the United States District Court for the Central District of California.

2. The City of Santa Monica (the City) filed this case seeking to quiet title to certain properties and the United States disputes these claims. Live controversies exist between the parties including these and other issues.

3. The parties consent to the Court's entry of the Settlement Agreement in the form attached to this Stipulation and Order/Consent Decree.

4. The parties' execution of this Stipulation and Order/Consent Decree and the Settlement Agreement shall settle and resolve any and all claims of the City arising from the events giving rise to the allegations described in the Complaint in this action and in c~~·~in other pr9,ceedings between the parties, as provided in the Settlement Agreement.
1 EXHIBIT D PAGE 059
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 68 of 72 Page ID #:1012

5. Neither this Stipulation and Order/Consent Decree nor the attached Settlement Agreement shall be construed to preclude the United States or the Federal Aviation Administration from bringing an action against the City for any violation( s) of any laws, regulations or orders other than those addressed in the Settlement Agreement.

6. In the event that the proposed Settlement Agreement is not entered pursuant to this Stipulation and Order/Consent Decree, this Stipulation shall become null and void and shall be of no effect whatever, and the making of this Stipulation shall be without prejudice to any party in this or any other proceeding.
2 EXHIBIT D PAGE 060
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 69 of 72 Page ID #:1013 3 Reginald C. Govan
Chief Counsel
Federal Aviation Administration
For the De11artment of Justice

JOYCE BRANDA
Acting Assistant Attorney General
EILEEN M. DECKER
United States Attorney

JUDRY SUBAR
Assistant Branch Director
RAPHAEL 0. GOMEZ (D.C. Bar #305540)
Senior Trial Counsel
U.S. Department of Justice
Civil Division, Federal Progra1hs Branch
P.O. Box 883
Washington, D.C. 20044
Telephone: (202) 514- 13 18
Facsimile· (202) 616-8460
Rapha ~r. ome _,usdoj.gov
Gl\~1'. . l . · :;L:DON (D.C. IJnr #987142)
Trial ~ orney
U.S. Department of Justice
Civil Division, Federal Programs Branch
P.O. Box 883
Washington, D.C. 20044
Telephone: (202) 5 t 4-4686
Fax: (202) 616-8460
Email: [email protected] ''"
Dated: <r_btihr · " . "'i ~.,I
EXHIBIT D PAGE 061
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 70 of 72 Page ID #:1014 4 For the City of Santa Monica:

JOSEPH LAWRENCE
Interim City Attorney
LANCE S. GAMS
Chief Deputy City Attorney
IV AN 0. CAMPBELL
Deputy City Attorney
1685 Main Street, Third Floor
Santa Monica, CA 90401-3295
Telephone: 310-458-8336
Facsimile: 310-393-6727
ARTUROJ.GONZALEZ
Morrison & Forester LLP
425 Market Street
San Francisco, CA 94105
Telephone: 415-268-7000
Facsimile: 415-268-7522 1
WILLIAM V. O'CONNOR, JR.

JOANNA L. SIMON
Morrison & Foerster LLP
12531 High Bluff Drive, Suite 100
San Diego, CA 92130
Telephone: 858-720-5100
Facsimile: 858-720-5125
wILLIAN1.rv. o'coNNoR, JR . . >~j ~:

Dated: January3u , 2017
EXHIBIT D PAGE 062
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 71 of 72 Page ID #:1015 ORDER
IT IS SO ORDERED by this Court, this ____ day of January, 2017, at Los Angeles, California.

Honorable John F. Walter
United States District Court
For the Central District of California
5 ,,
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",.1
EXHIBIT D PAGE 063
Case 2:13-cv-08046-JFW-VBK Document 52 Filed 01/30/17 Page 72 of 72 Page ID #:1016