The URL can be used to link to this page

Home My WebLink About6/18/2014 - STAFF REPORTS - 5.F. FVALM s''9 A. .y 0 V N c�4 1°0a CITY COUNCIL STAFF REPORT DATE: June 18, 2014 NEW BUSINESS SUBJECT: AIRPORT USE AND LEASE AGREEMENT FOR SIGNATORY AIRLINES SERVICING PALM SPRINGS INTERNATIONAL AIRPORT FROM: David H. Ready, City Manager BY: AIRPORT SUMMARY This action will consider approval of the Airport Use and Lease Agreement (AULA) for commercial airlines at the Palm Springs International Airport. The airlines servicing Palm Springs International Airport are; Alaska, Allegiant, American/US Airways, Delta, Horizon, Frontier, Mesa, SkyWest, Sun Country, United, Virgin America, and WestJet RECOMMENDATION: 1. Adopt Resolution No. , "A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, APPROVING A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, APPROVING A FIVE YEAR AIRPORT USE AND LEASE AGREEMENT, STANDARD FORM FOR USE WITH ALL AIRLINES SEEKING SIGNATORY STATUS AT PALM SPRINGS INTERNATIONAL AIRPORT AND AUTHORIZING THE CITY MANAGER TO APPROVE AND EXECUTE ALL SUCH AGREEMENTS SUBMITTED BY AIRLINES DURING THE TERM OF THE AGREEMENT"; 2. Authorize the City Manager to execute all necessary documents. STAFF ANALYSIS: The current Airport Use and Lease Agreement has been in place since July 1, 2004 and will be expiring June 30, 2014. Despite all the changes which have occurred in the airline industry with mergers, routes, and seat capacity, the working agreements between airports and airlines nationwide has fundamentally not changed. The same collaboration which took place for the expiring Airport Use and Lease Agreement in 2004, has again taken place over the past year to ensure the longstanding partnership of airport and airline success continues. Through a series of many meetings and communications, the agreement has been reviewed and updated with input from the City Attorney, airlines' legal staff, airlines' properties staff, and airport staff. Moreover, as City Council has not increased airline fees in over a decade, each Signatory Airline concurs with the suggested changes necessary to bring the expiring ITEM NO. ALM Si09 iy c V N t ry('tb PArtD`t� A °4<.FORN�p CITY COUNCIL STAFF REPORT DATE: June 18, 2014 NEW BUSINESS SUBJECT: AIRPORT USE AND LEASE AGREEMENT FOR SIGNATORY AIRLINES SERVICING PALM SPRINGS INTERNATIONAL AIRPORT FROM: David H. Ready, City Manager BY: AIRPORT SUMMARY This action will consider approval of the Airport Use and Lease Agreement (AULA) for commercial airlines at the Palm Springs International Airport. The airlines servicing Palm Springs International Airport are; Alaska, Allegiant, American/US Airways, Delta, Horizon, Frontier, Mesa, SkyWest, Sun Country, United, Virgin America, and WestJet RECOMMENDATION: 1. Adopt Resolution No. , "A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, APPROVING A FIVE YEAR AIRPORT USE AND LEASE AGREEMENT, STANDARD FORM FOR USE WITH ALL AIRLINES SEEKING SIGNATORY STATUS AT PALM SPRINGS INTERNATIONAL AIRPORT AND AUTHORIZING THE CITY MANAGER TO APPROVE AND EXECUTE ALL SUCH AGREEMENTS SUBMITTED BY AIRLINES DURING THE TERM OF THE AGREEMENT'; 2. Authorize the City Manager to execute all necessary documents. STAFF ANALYSIS: The current Airport Use and Lease Agreement has been in place since July 1, 2004 and will be expiring June 30, 2014. Despite all the changes which have occurred in the airline industry with mergers, routes, and seat capacity, the working agreements between airports and airlines nationwide has fundamentally not changed. The same collaboration which took place for the expiring Airport Use and Lease Agreement in 2004, has again taken place over the past year to ensure the longstanding partnership of airport and airline success continues. Through a series of many meetings and communications, the agreement has been reviewed and updated with input from the City Attorney, airlines' legal staff, airlines' properties staff, and airport staff. Moreover, as City Council has not increased airline fees in over a decade, each Signatory Airline concurs with the suggested changes necessary to bring the expiring ITEM NO. 6/ — City Council Staff Report June 18, 2014 -- Page 2 Airport Use and Lease Agreement for Signatory Airlines servicing Palm Springs International Airport 2004 agreement up to date and meeting the Airport's financial, operating and capital obligations to continue fostering airline growth. As to the financial relationship between the airlines and the airport, the arrangement remains under the industry accepted methodology of using a residual lease agreement. Under this proposed agreement (residual lease agreement), the airlines agree to assume the job of keeping the airport financially self-sustaining by making up any deficit (the residual cost) remaining after the costs identified for all Airport users have been offset by non-airline sources of revenue (auto parking, car rentals, and terminal concessions). This industry practice uses a cost-center approach to setting the rates and charges methodology to address operating and capital expenditures reflected by three primary cost-centers: the airfield, the terminal and landside operations. The most common industry applied metric used by the airlines to assess their costs at each airport is the cost-per-en plan ement (CPE). This is the average cost paid by the airline to the Airport through various rental fees and charges and dividing that figure by total passengers. The CPE is a good barometer on how competitive one airport is compared to another on an airline cost basis. Under this new airline agreement, including rising operating and capital costs, PSP Airport's CPE will be $4.25 compared to Ontario's $11.42, LAX's $12.16 and Fresno's $6.10. With the new agreement in place, including the increase in the CPE, PSP Airport still remains amongst the lower twenty percentile of costs nationwide while still delivering a "top shelf' caliber of service coupled with success to the airlines' bottom line. The PSP Signatory Airlines convene with staff annually to review the total Airport operating and capital budget and must vote for its approval. With the current agreement having been in effect for the past ten years, a variety of PSP Airport modifications to facilities have been completed and were required to enter into this new agreement's rate equation. The new regional concourse, courtyard, and screening area generate additional square footage that will be included into the rent calculations shared by the Signatory Airlines based on their market share. The airlines have also agreed to begin exclusively leasing the space directly in front of the ticket counters, something that is common at airports. This agreement will allow affiliate airlines to operate under the same signatory agreement, as requested by the incumbent PSP Signatory Carriers. Affiliate airlines are those companies that sell tickets under the same brand, such as US Airways scheduling flights to Phoenix through their affiliate Mesa Airline and SkyWest Airlines. The benefit to the main airline will be a reduction in the number of separate agreements and overhead, but this does not change their revenue obligation to the Airport. This new affiliate clause will now make it easier for other airlines to enter this market. The agreement will also increase the minimum airline insurance requirement from $50 million to $150 million, comparable with what the airlines are required to provide at other 02 City Council Staff Report June 18, 2014-- Page 3 Airport Use and Lease Agreement for Signatory Airlines servicing Palm Springs International Airport airports within their networks. The indemnity and insurance section language was updated, as well as the language for holdover provisions at the end of the agreement term. Length of the agreement will be for a five-year term instead of the previous ten-year term. This timeframe has become the newer industry standard and allows both parties to make adjustments as needed that inevitably will be necessary due to the dynamic aviation industry. FISCAL IMPACT: With the modified rate methodology and adjusted square footages that will be incorporated into the new agreement, the net positive revenue generated to the airport will be approximately $650,000 beginning in the first year. Future adjustments to the residual formula require airline input, review and concurrence. This amount of additional revenue is spread across the array of airlines based on their flight activity, passenger activity, and exclusive leased space square footage. As the consumer price index having increased 40 percent since the last rate adjustment at PSP over a decade ago, the airlines understand and accept their role in addressing the increasing costs for operating and maintaining the airport. The average CPE to the airlines will move from $3.51 to $4.25 per enplaned passenger beginning July 1, 2014, and the airlines have already budgeted accordingly. u / Thomtf Nolan, Executive Director, Airport David H. Ready, Cit ger Attachment: Airport Use & Lease Agreement 03 RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, APPROVING A FIVE YEAR AIRPORT USE AND LEASE AGREEMENT, STANDARD FORM FOR USE WITH ALL AIRLINES SEEKING SIGNATORY STATUS AT PALM SPRINGS INTERNATIONAL AIRPORT AND AUTHORIZING THE CITY MANAGER TO APPROVE AND EXECUTE ALL SUCH AGREEMENTS SUBMITTED BY AIRLINES DURING THE TERM OF THE AGREEMENT. WHEREAS, the City's current Standard Form Airport Use and Lease Agreement will expire on June 30, 2014; and WHEREAS, the airport, City and airlines have all negotiated in good faith to reach agreement on a new five year Airport Use and Lease Agreement; and WHEREAS, the Airport Commission recommends City Council approval of the Standard Form Airport Use and Lease Agreement. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PALM SPRINGS DOES HEREBY RESOLVE AS FOLLOWS: SECTION 1. The City Council approves the Standard Form Airport Use and Lease Agreement (attached as Exhibit A and incorporated herein) to be effective July 1, 2014, for use with all airlines seeking signatory status at Palm Springs International Airport; and SECTION 2. The City Manager is hereby authorized to execute on behalf of the City, said Standard Form Airport Use and Lease Agreements submitted by airlines seeking signatory status at the airport during the term of the agreement. PASSED, APPROVED AND ADOPTED BY THE PAM SPRINGS CITY COUNCIL THIS 18TH DAY OF JUNE, 2014. DAVID H. READY, CITY MANAGER ATTEST: JAMES THOMPSON, CITY CLERK µ 04 Resolution No. Page 2 CERTIFICATION STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) ss. CITY OF PALM SPRINGS ) I, JAMES THOMPSON, City Clerk of the City of Palm Springs, hereby certify that Resolution No. is a full, true and correct copy, and was duly adopted at a regular meeting of the City Council of the City of Palm Springs on this 18h day of June, 2014, by the following vote: AYES: NOES: ABSENT: ABSTAIN: JAMES THOMPSON, CITY CLERK City of Palm Springs, California f'5 EXHIBIT A Vow, M 5fALIC�INTERNATIONALRT Airport Use and Lease Agreement July 1, 2014 Rai Table of Contents PREAMBLE.................................................................................................................................................8 ARTICLEI.................................................................................................................................................10 DEFINITIONS............................................................................................................................................10 Section1.01 Affiliate..............................................................................................................................10 Section 1.02 Aircraft Operator................................................................................................................10 Section 1.03 Aircraft Parking Positions(s)or AC Parking Position(s)...................................................I I Section1.04 Airline Funded Cost...........................................................................................................I I Section 1.05 Airline Operating Agreement.............................................................................................I I Section 1.06 Airline Rates and Charges..................................................................................................I I Section1.07 Airline................................................................................................................................ 11 Section1.08 Airport................................................................................................................................ 11 Section 1.09 Airport Improvement Program...........................................................................................I I Section 1.10 Airport Layout Plan........................................................................................................... 11 Section 1.11 Airport Development Program........................................................................................... I 1 Section1.12 Airside Area.......................................................................................................................I I Section 1.13 Capital Expenditure............................................................................................................12 Section1.14 Capital Project....................................................................................................................12 Section 1.15 Certificated Maximum Landing Weight............................................................................12 Section1.16 City.....................................................................................................................................12 Section1.17 City Manager.....................................................................................................................12 Section 1.18 Concession Revenues.........................................................................................................13 Section 1.19 Concourses.........................................................................................................................13 Section 1.20 Concourse Gate Position....................................................................................................13 Section1.21 Debt Service....................................................................................................................... 13 Section 1.22 Deplaned Passenger........................................................................................................... 13 Section 1.23 Director of Aviation........................................................................................................... 13 Section 1.24 Effective Date.................................................................................................................... 13 Section 1.25 Enplaned or Enplaning Passengers.................................................................................... 13 Section 1.26 Exclusive Use Space..........................................................................................................14 Section 1.27 Exclusive Use Space Rate..................................................................................................14 Section1.28 Expiration Date..................................................................................................................14 Section 1.29 FAA or Federal Aviation Administration..........................................................................14 Airport Use and Lease Agreement— Dated July 1, 2014 Page 1 07 Section1.30 Fee Landing....................................................................................................................... 14 Section1.31 Fiscal Year.........................................................................................................................14 Section 1.32 Independent Accountant....................................................................................................14 Section 1.33 Joint Use/Common Area Space....................................................................................... 14 Section 1.34 Joint Use/Common Area Space Fee.................................................................................14 Section 1.35 Joint Use Formula.............................................................................................................. 15 Section1.36 Landing Fee....................................................................................................................... 15 Section 1.37 Landing Fee Rate............................................................................................................... 15 Section1.38 Landside Area.................................................................................................................... 15 Section 1.39 Landside Reserve Fund...................................................................................................... 15 Section 1.40 Main Terminal Building.....................................................................................................15 Section 1.41 Maintenance and Operations Expenses..............................................................................15 Section 1.42 Maintenance and Operations Reserve Fund.......................................................................17 Section1.43 Net Requirement................................................................................................................17 Section 1.44 Non-Signatory Airline........................................................................................................17 Section 1.45 Non-Signatory Rates..........................................................................................................17 Section 1.46 Passenger Loading Bridge .................................................................................................17 Section 1.47 Passenger Loading Bridge Fee...........................................................................................17 Section 1.48 Preferential Use..................................................................................................................17 Section 1.49 Preferential Use Space....................................................................................................... 17 Section1.50 Premises.............................................................................................................................18 i Section1.51 Reserve Funds....................................................................................................................18 Section1.52 Revenues............................................................................................................................ 18 Section1.53 Signatory Airline(s)............................................................................................................ 18 Section 1.54 Single Cash Box Cost Revenue Center..............................................................................18 Section 1.55 Special Capital Projects Funds...........................................................................................18 Section 1.56 Special Capital Projects Fund Surcharge...........................................................................18 Section 1.57 Terminal Area or Terminal Building Complex.................................................................. 18 Section 1.58 Transportation Security Administration(TSA) .................................................................18 ARTICLEII................................................................................................................................................18 TERM......................................................................................................................................................... 18 Section 2.01 Term of Agreement............................................................................................................18 ARTICLEIII...............................................................................................................................................19 Airport Use and Lease Agreement—Dated July 1, 2014 Page 2 GRANTOF RIGHTS.................................................................................................................................19 Section 3.01 Rights of Airline ................................................................................................................ 19 ARTICLEIV..............................................................................................................................................22 AIRLINE'S PREMISES.............................................................................................................................22 Section 4.01 Period From Effective Date to Expiration Date.................................................................22 ARTICLEV................................................................................................................................................22 CALCULATION OF AIRLINE RATES AND CHARGES......................................................................22 Section 5.01 General Commitment.........................................................................................................22 Section 5.02 Preliminary Projection of Airline Joint Use/Common Area Space Fee...........................23 Section 5.03 Period From Effective Date Until Expiration Date of This Agreement.............................23 Section5.04 Landing Fees......................................................................................................................24 Section 5.05 Airline Lease Space ..........................................................................................................24 Section 5.06 Special Capital Projects Fund............................................................................................24 Section 5.07 Employee Vehicular Parkin Section 5.08 Insufficiency of Airport Revenues, Adjustment of Joint Use/Common Area Space Fees.25 Section 5.09 Annual Adjustment to Joint Use/Common Area Space Fees...........................................25 Section5.10 Costs Excluded...................................................................................................................26 Section5.11 Other Charges....................................................................................................................26 Section 5.12 Non-Signatory Airlines Rates and Charges.......................................................................26 ARTICLEVI..............................................................................................................................................27 IDENTIFICATION AND ALLOCATION OF REVENUES AND EXPENSES......................................27 Section6.01 City Records.......................................................................................................................27 Section 6.02 Disposition of Airport Revenues........................................................................................27 Section6.03 Debt Service.......................................................................................................................27 Section 6.04 Maintenance and Operations Reserve Fund.......................................................................27 Section 6.05 Landside Development Reserve Fund...............................................................................28 ARTICLEVII.............................................................................................................................................28 PAYMENT OF AIRLINE RATES AND CHARGES...............................................................................28 Section 7.01 Payment of Airline Rates and Charges..............................................................................28 Section7.02 Late Charges......................................................................................................................29 Section 7.03 Provision Against Set-Offs................................................................................................29 ARTICLEVIII............................................................................................................................................29 PRINCIPLES RELATING TO RATES AND CHARGES........................................................................29 Airport Use and Lease Agreement— Dated July 1, 2014 Page 3 09 Section 8.01 General Concepts...............................................................................................................29 Section 8.02 Accounting Principles and Audit Report...........................................................................30 Section 8.03 Cost or Expense Allocation................................................................................................30 Section 8.04 City to Exercise Collaboration..........................................................................................30 Section 8.05 Additional Capital Expenditures........................................................................................30 Section 8.06 Airline Approval................................................................................................................31 Section8.07 Grants.................................................................................................................................31 Section 8.08 Bonded Indebtedness.........................................................................................................32 Section8.09 Outside Storage..................................................................................................................32 ARTICLEIX..............................................................................................................................................32 MAINTENANCE, OPERATION, USE AND CONDITION OF PREMISES..........................................32 Section 9.01 Maintenance and Operation of the Premises......................................................................32 Section 9.02 Maintenance and Operation of Airport by City .................................................................32 Section 9.03 Accommodation of Other Incoming Aircraft Operators....................................................33 Section 9.04 Assignment of Gate Positions and Loading Bridges..........................................................33 Section 9.05 Aircraft Parking Position(s)...............................................................................................34 Section9.06 Public Areas.......................................................................................................................34 Section9.07 Signs...................................................................................................................................34 Section 9.08 Alteration, Repair, Maintenance, Remodeling,Expansion, Removal and/or improvement of the Facilities of Terminal Building Complex or Its Appurtenances...................................................35 Section 9.09 Airport Security—Federal Regulations..............................................................................35 Section9.10 Utilities...............................................................................................................................35 Section 9.11 Trash,Garbage, Aircraft Sewage and Other Refuse..........................................................36 Section 9.12 Vehicles and Automotive Equipment on Airside Area and Aircraft Parking Positions ....36 Section 9.13 Commercial Service Fee....................................................................................................36 ARTICLEX................................................................................................................................................36 NOOTHER CHARGES.............................................................................................................................36 Section 10.01 No other Charges.............................................................................................................36 ARTICLEXI ..............................................................................................................................................37 INDEMNITYAND INSURANCE ............................................................................................................37 Section 11.01 Indemnification of Airport...............................................................................................37 Section 11.02 Airline Public Liability Insurance....................................................................................38 Section 11.03 Workers Compensation Insurance...................................................................................38 Airport Use and Lease Agreement—Dated July 1, 2014 Page 4 -- 1 C Section 11.04 City Public Liability Insurance........................................................................................39 Section 11.05 Fire and Extended Coverage Insurance—Terminal Building Complex..........................39 Section 11.06 Airline Insurance on Automobiles and Other Ground Vehicles......................................39 Section 11.07 Commercial General Liability Insurance.........................................................................39 Section 11.08 General Provision Applicable to Airline's Insurance......................................................40 ARTICLEXII.............................................................................................................................................41 QUIETENJOYMENT................................................................................................................................41 Section 12.01 Quiet Enjoyment..............................................................................................................41 ARTICLEXIII............................................................................................................................................41 INSPECTION BY CITY............................................................................................................................41 Section 13.01 Inspection by City............................................................................................................41 ARTICLEXIV............................................................................................................................................41 RULESAND REGULATIONS.................................................................................................................41 Section 14.01 Rules and Regulations......................................................................................................41 ARTICLEXV.............................................................................................................................................42 ASSIGNMENTAND SUBLEASE............................................................................................................42 Section 15.01 Assignment and Sublease.................................................................................................42 ARTICLEXVI............................................................................................................................................43 SURRENDER OF POSSESSION-HOLDING OVER.............................................................................43 Section 16.01 Surrender of Possession—Holding Over.........................................................................43 ARTICLEXVII..........................................................................................................................................44 TAXES........................................................................................................................................................44 Section17.01 Taxes................................................................................................................................44 ARTICLEXVIII.........................................................................................................................................45 DEFAULT AND CANCELLATION.........................................................................................................45 Section 18.01 Default by Airline............................................................................................................45 Section 18.02 Remedies Upon Default...................................................................................................45 Section 18.03 Cancellation by City.........................................................................................................46 Section 18.04 Cancellation by Airline....................................................................................................47 ARTICLEXIX............................................................................................................................................48 DAMAGE OR DESTRUCTION................................................................................................................48 Section 19.01 Damage or Destruction of Premises.................................................................................48 ARTICLEXX.............................................................................................................................................49 Airport Use and Lease Agreement—Dated July 1, 2014 Page 5 - lI PROHIBITED USES..................................................................................................................................49 Section 20.01 Prohibited Uses................................................................................................................49 Section 20.02 Oil,Fuel and Other Materials..........................................................................................49 Section 20.03 Compliance with Laws.....................................................................................................50 ARTICLEXXI............................................................................................................................................51 IMPROVEMENTS.....................................................................................................................................51 Section 21.01 Improvements by Airline.................................................................................................51 Section 21.02 Conditions Covering Improvements and Alterations.......................................................51 Section 21.03 Ownership of Improvements............................................................................................52 ARTICLEXXII..........................................................................................................................................53 FEDERAL GRANTS AND NONDISCRIMINATION.............................................................................53 Section 22.01 Nondiscrimination and FAA Required Clauses...............................................................53 Section22.02 Federal Grants..................................................................................................................55 ARTICLEXXIII.........................................................................................................................................55 CONDEMNATION....................................................................................................................................55 Section23.01 Condemnation..................................................................................................................55 ARTICLEXXIV.........................................................................................................................................56 MISCELLANEOUS...................................................................................................................................56 Section 24.01 Non-Waiver of Rights......................................................................................................56 Section 24.02 Invalidity of Clauses........................................................................................................56 Section 24.03 Approval by the Parties....................................................................................................56 Section24.04 Headings ..........................................................................................................................56 Section24.05 Remedies..........................................................................................................................56 Section 24.06 Governing Law................................................................................................................56 Section24.07 Non-Liability.............................................................I......................................................57 Section 24.08 Attorneys' Fees and Costs................................................................................................57 Section24.09 Notices .............................................................................................................................57 Section 24.10 Termination of Prior Agreement......................................................................................58 Section24.11 Exhibits............................................................................................................................58 Section 24.12 Agreement Not to Grant More Favorable Terms.............................................................58 Section 24.13 Entire Agreement.............................................................................................................58 Section 24.14 Jurisdiction and Venue.....................................................................................................58 Section 24.15 No Oral Agreements........................................................................................................59 Airport Use and Lease Agreement—Dated July 1, 2014 Page 6 Intentionally Left Blank Airport Use and Lease Agreement—Dated July 1, 2014 Page 7 13 EXHIBITS EXHIBIT A Landside, Terminal and Airside Areas EXHIBIT B Common Use Space EXHIBIT C Exclusive Use Space EXHIBIT D Preferential Use Space EXHIBIT E Maintenance and Operations Responsibilities EXHIBIT F Supplemental Space EXHIBIT G Preferential Gate Assignment Airport Use and Lease Agreement—Dated July 1, 2014 Page 8 14 AIRPORT USE AND LEASE AGREEMENT This AIRPORT USE AND LEASE AGREEMENT ("Agreement") made and entered into as of the day of by and between the CITY OF PALM SPRINGS, a charter city and municipal corporation organized and existing under the laws of the State of California ("City"), and a corporation organized and existing under the laws of the State of ("Airline"). RECITALS A. The City owns and operates the Palm Springs International Airport ("Airport"), located in the City of Palm Springs, County of Riverside, State of California. B. City operates the Airport as a governmental function for the primary purpose of providing to the public the service of air transportation. C. Airline is engaged in the business of commercial air transportation of persons, property, cargo and mail ("Air Transportation") and desires to enter into a use and lease agreement covering certain premises, facilities, rights, licenses, services and privileges at the Airport. D. City and Airline mutually desire to enter into an Agreement, in order to provide Air Transportation services for the community and its visitors. E. City has the right to permit and to grant the use of its property at the Airport to Airline for the operation of Airline's Air Transportation services. F. To the extent this Agreement may be construed as an exclusive or limited agreement in connection with the management of the Airport, the Airline acknowledges that this Agreement is being entered into under the provisions of California Public Utilities Code Section 21690.5 et seq. NOW, THEREFORE, in consideration of the mutual covenants and promises in this Agreement, the parties hereto covenant, agree and bind themselves as follows: Airport Use and Lease Agreement— Dated July 1, 2014 Page 9 15 ARTICLE I DEFINITIONS The following words, terms and phrases, whenever used in this Agreement, shall have the meanings respectively ascribed to them in this Article. Section 1.01 Affiliate shall mean any commercial air transportation company that: a. Is designated by the Airline to the City as its Affiliate; and b. Has all necessary insurance, indemnification and other standard provisions consistent with this Agreement as required by the City; and is operating at the Airport under a shared International Air Transport Association (IATA) flight designator code with the Airline and: C. Is operating at the Airport for the benefit of the Airline, under the same or substantially similar livery as Airline and any of the following apply: 1. Is owned by the Airline 2. Is under contract with Airline in respect of such affiliate aircraft operation, or 3. If operating under its own livery, is not selling any seats on an aircraft in its own name and all seats on such aircraft are being sold in the name of Airline. d. Is actively providing actual scheduled flights on behalf of the Airline, for purposes of airline rates and charges. Affiliate designation will apply only during months of that Airlines' own aircraft operations sold in the name of the Airline. If the Affiliate air carrier is not operating under the provisions of a Signatory air carrier agreement, non-signatory rates will apply. The Signatory carrier may schedule Affiliates that they have authorized, to maintain Signatory status. Section 1.02 Aircraft Operator shall mean the operator of an aircraft, whether the aircraft is owned, leased, or chartered, that is used for private, military, pleasure, or governmental operations, or for airline or non-airline operations, or for scheduled or non-scheduled operations. "Aircraft Operator" does not mean the pilot of an aircraft unless such pilot is also the owner or lessee thereof or a person to whom such aircraft is chartered. Airport Use and Lease Agreement—Dated July 1, 2014 Page 10 16 Section 1.03 Aircraft Parking Positions(s) shall mean the positions on the Airport's Terminal apron area where aircraft are required to park in order to enplane and deplane passengers. Section 1.04 Airline Funded Cost shall mean for each Capital Project described in the Airport Development Program, the estimated amount set forth opposite such Capital Project in the Airport Development Program. Section 1.05 Airline Operating Agreement shall mean the AULA (Airport Use and Lease Agreement) with all terms and conditions contained in this document and agreed to by parties having executed and entered into this Agreement as of the date documented by both parties. Section 1.06 Airline Rates and Charges shall mean for any Fiscal Year, all rates, fees, and charges payable to City by all Signatory Airlines for such Fiscal Year as specified in this Agreement. Section 1.07 Airline shall mean the signatory airline to this agreement and all of its affiliates. Section 1.08 Airport shall mean the Palm Springs International Airport owned and operated by the City of Palm Springs, the location of which is 3400 East Tahquitz Canyon Way, Palm Springs, California, Riverside County. Section 1.09 Airport Improvement Program shall mean the Federal Grant-in-Aid Program for airports, as it now exists or as it may be modified in the future. Section 1.10 Airport Layout Plan shall mean the Airport Layout Plan approved and in place as of July 1, 2014, as it may be amended from time to time, required by the Federal Aviation Administration to be submitted by the City for review and approval showing the layout of the Airport and the current and projected uses of the facilities located at the Airport. Section 1.11 Airport Development Program shall mean the expansion and improvement of the Airport as more specifically described in the current Airport Master Plan and Airport Capital Improvement Program, or any Airport Master Plan or Airport Capital Improvement Plan that may be adopted by the City Council during the term of this Agreement, as may be amended or otherwise modified from time to time. Section 1.12 Airside Area shall mean the land identified as Airside Area on Exhibit "A" attached hereto, and except as otherwise provided herein, all facilities, equipment and improvements now or hereafter located thereon, including but not limited to the following: Airport Use and Lease Agreement—Dated July 1, 2014 Page 11 17 (a) Airside Area (1) Runways — runways at the Airport for the landing and taking-off of aircraft; (2) Taxiways — taxiways and taxi lanes at the Airport for the ground movement of aircraft to, from and between the runways, Aircraft Parking Areas, and other portions of the Airport; (3) Aircraft Parking Positions; (4) Facilities Incidental to the Runways and Taxiways — facilities for the purpose of controlling and assisting arrivals, departures and operations, of aircraft using the Airport, such as airfield security roads, control towers, navigational aids, and support facilities operated and maintained by the FAA, signals, beacons, wind indicators, floodlights, landing lights, boundary lights, construction lights, fencing, open or undeveloped spaces or areas inside Airport fence not in Terminal or Landside Areas, radio and electronic aids or other aids to operations, navigation or ground control of aircraft whether or not of a type herein mentioned and even though located away from the rest of the Airside Area; (b) Air Freight Buildings, Maintenance and Hangar Facilities, and Fixed Base Operations (FBOs); and (c) Aircraft Rescue and Firefighting (ARFF) Services, facilities and equipment. Section 1.13 Capital Expenditure shall mean an expenditure for the acquisition, construction or equipping of a Capital Project, together with related design, architectural and engineering fees, consulting fees, laboratory and testing fees, financing costs, and other associated costs. Section 1.14 Capital Project shall mean a capital improvement at the airport in excess of $50,000, or the acquisition of land beyond the then current boundaries of the Airport for use as a part of the Airport. Section 1.15 Certificated Maximum Landing Weight shall mean the current maximum allowable gross landing weight, expressed in 1,000 pound units, of aircraft operated by Airline and certificated by the Federal Aviation Administration for operation at the Airport. Section 1.16 City shall mean the City of Palm Springs; City Council shall mean the governing body of the City of Palm Springs. City Manager shall mean the City Manager of the City of Palm Springs, or the City Manager's designee.. Airport Use and Lease Agreement— Dated July 1, 2014 Page 12 18 Section 1.18 Concession Revenues shall mean for any Fiscal Year, rentals, charges and fees of a kind or nature payable to City during such Fiscal Year from tenants, licensees, permittees, or other operators at the Airport, for the right to use premises at the Airport to sell or lease merchandise, services (other than Air Transportation) or other intangibles, including, but not limited to restaurants, cocktail lounges, car rental agencies, newsstands, gift shops, specialty shops, advertising displays, insurance sales facilities, public telephones, facilities for the furnishing of ground transportation services, and parking areas. Section 1.19 Concourses shall mean the areas serving the Signatory Airlines and other Aircraft Operators for the loading and unloading of passengers, including Passenger Departure Lounges; Passenger Loading Bridges where applicable; concession areas; public areas including security screening; and other tenant and City space thereon. Section 1 .20 Concourse Gate Position shall mean an aircraft loading facility unit in the Concourses, which may include a Passenger Departure Lounge, and where applicable, a Passenger Loading Bridge and the Aircraft Parking Position. Eight Passenger Loading Bridges are currently provided. Section 1.21 Debt Service shall mean for any Fiscal Year, principal payments, interest payments, fund deposit requirements and amounts payable as a result of debt service coverage requirements on obligations of the Airport payable for such Fiscal Year, including but not limited to bonds, notes and certificates of participation. Section 1.22 Deplaned Passenger shall mean the revenue passenger arriving via commercial aircraft, operated by the Airline or user of the facility in question, at the Airport during the period of the cost apportionment. Section 1.23 Director of Aviation shall mean the person designated by City Manager to exercise functions with respect to the rights and obligations of City under this Agreement, unless otherwise provided by the City Manager. The term also includes any person expressly designated by the City Manager to exercise functions with respect to the rights and obligations of the City Manager under this Agreement, or such other person, division, department, bureau, or agency as may from time to time exercise functions equivalent or similar to those exercised by the Director of Aviation, as appointed or designated by the City Manager. Section 1.24 Effective Date shall mean July 1, 2014. Section 1.25 Enplaned or Enplaning Passengers shall mean the revenue, originating and connecting passengers actually boarding the aircraft operated by the Airport Use and Lease Agreement—Dated July 1, 2014 Page 13 19 Airline or user of the facility in question at the Airport during the period of the cost apportionment. Section 1.26 Exclusive Use Space shall mean the areas of the Terminal Building Complex consisting of ticket counter space, passenger queuing space, office and operations space, outbound baggage space and baggage service desks which City has granted Airline the right to use on an exclusive use basis from the Effective Date of this Agreement. Airline's Exclusive Use Space is shown on Exhibit "C". Section 1.27 Exclusive Use Space Rate shall have the meaning assigned in Section 5.02 (A). Section 1.28 Expiration Date shall mean June 30, 2019 Section 1.29 FAA or Federal Aviation Administration shall mean the Federal Aviation Administration created under the Federal Aviation Act of 1958 or such successor agency as may from time to time have similar jurisdiction over Airline or its business, and Airport. Section 1.30 Fee Landing shall mean any landing at the Airport of an aircraft, except general aviation; military; an aircraft engaged in flight training and testing, subject to Section 3.01 (D); and an aircraft which takes off from the Airport and, without making a stop at any other airport, returns to and lands at the Airport because of meteorological conditions, mechanical or operating causes, or any similar emergency or precautionary reason. Section 1.31 Fiscal Year shall mean the 12-month period beginning on the 13t day of July of any year or any 12-month period the City may designate. Section 1.32 Independent Accountant shall mean a certified public accountant selected by City, licensed to practice in the State of California, and who (a) in the case of an individual, shall not be a director, commissioner, officer or employee of either City or any Signatory Airline, (b) shall be satisfactory to the Trustee, if any, and (c) may be the independent accountant that regularly audits the books of City or the Airport. Section 1.33 Joint Use / Common Area Space shall mean the areas of the Terminal Building Complex which City has granted Airline the right to use jointly with others for all lawful airport purposes. The Joint Use / Common Space is shown on Exhibit "B". Section 1.34 Joint Use / Common Area Space Fee shall have the meaning as assigned to such term in Section 5.03 (C) of this Agreement. Airport Use and Lease Agreement—Dated July 1, 2014 Page 14 nr�r.. Section 1.35 Joint Use Formula shall mean the formula used to prorate the Joint Use / Common Area Space Fee such that 10% of the fee shall be apportioned equally among the Signatory Airlines and 90% of the fee shall be apportioned on a pro rata basis among the Signatory Airlines in the same proportion that the number of each Signatory Airline's Enplaning Passengers at the Airport during the Fiscal Year under consideration bears to the total number of Enplaning Passengers of all Signatory Airlines at the Airport during the same Fiscal Year. Section 1.36 Landing Fee shall have the meaning assigned to such term in Section 5.04 of this Agreement. Section 1.37 Landing Fee Rate shall have the meaning assigned to such term in Section 5.04 of this Agreement. Section 1.38 Landside Area shall mean the area identified as Landside Area on Exhibit "A", and except as otherwise provided herein, all facilities, equipment and improvements now or hereafter located thereon. Section 1.39 Landside Reserve Fund shall have the meaning assigned to such term in Section 6.05 of this Agreement. Section 1.40 Main Terminal Building shall mean that portion of the Terminal Building Complex serving Aircraft Operators and others as shown on Exhibit "B", including but not limited to airline ticket counters, airline office and operations space, outbound baggage belts, baggage claim area, public space, airport operations and administration space, law enforcement office, concession space, and other tenant and City space thereon. Section 1.41 Maintenance and Operations Expenses shall mean the costs incurred by the City in operating, maintaining, repairing, and administering the Airport during such Fiscal Year, either directly or indirectly by allocation to the Airport by City, including, but not limited to: (a) The following costs and expenses incurred by City for employees of City employed at the Airport, or doing work involving the Airport: direct salaries and wages (including overtime pay), together with payments or costs incurred for associated payroll expenses, cash payments to pension funds, retirement funds or unemployment compensation funds, life, health, accident and unemployment insurance premiums, deposits for self- insurance, vacations and holiday pay, and other fringe benefits; (b) Cost or repairs, materials, supplies, machinery and equipment and other similar expenses which, under generally accepted accounting principles, are not capitalized; Airport Use and Lease Agreement—Dated July 1, 2014 Page 15 21 (c) Costs of maintenance, landscaping, decorating, repairs, renewals, and alterations not reimbursed by insurance, and which, under generally accepted accounting principles, are not capitalized; (d) Costs of water, electricity, natural gas, telephone service and all other utilities and services whether furnished by City or purchased by City and furnished by independent contractors at or for the Airport; (e) Costs of rentals of equipment or other personal property; (f) Costs of rentals of real property; (g) Costs of premiums for insurance, including property damage, public liability, burglary, bonds of employees, workers' compensation, disability, automobile, and all other insurance covering the Airport or its operations; (h) Terminal fees and charges, concession fees, Landing Fees, miscellaneous Airport fees and indemnification payments unpaid by any Aircraft Operator or other Airport tenant when due and reasonably deemed by City to be uncollectible after collection efforts have been undertaken by City; (i) Costs incurred in collecting and attempting to collect any sums due City in connection with the operation of the Airport; Q) Costs of advertising at or for the Airport, including public relations brochures and events; (k) Costs of Law Enforcement (less any reimbursement from TSA) and Aircraft Rescue and Firefighting (ARFF) services; (1) Except to the extent capitalized, compensation paid or credited to persons or firms appointed or engaged, from time to time, by City to render advice and perform architectural, engineering, construction management, financial, legal, accounting, consulting, testing or other professional services in connection with the operation, expansion, alteration, reconstruction, betterment or other improvement of the Airport or any of its structure or facilities; (m) Except to the extent capitalized, trustees' fees, paying agent's fees, and all other fees and expenses incurred in order to comply with the provisions of any ordinance or resolution authorizing indebtedness. (n) The costs of maintaining and operating the public address system, flight information display system, and the security access control system; and (o) All other direct and indirect expenses which arise out of City's operation of the Airport, and which, under generally accepted accounting principles, are properly chargeable as expenses to the Airport, including any taxes payable by City which may be lawfully imposed upon the Airport. (p) New Signatory Airlines shall deposit with the City a sum equal to two (2) months airline rental rates for terminal and landing fees. If Airline is not in Airport Use and Lease Agreement—Dated July 1, 2014 Page 16 22 default for continuous eighteen (18) months, City will waive the requirement for a security deposit. Existing airlines with no delinquent payments in the prior eighteen (18) contiguous months are not subject to this deposit. Section 1.42 Maintenance and Operations Reserve Fund shall mean the Maintenance and Operations Reserve Fund created under Section 6.04 Section 1.43 Net Requirement shall mean the total amount due from the all Signatory Airlines to recover any deficit balance in the City's financial operating projection for the Airport for a Fiscal Year, after taking into consideration all projected revenues, and subtracting therefrom all Maintenance and Operating Expenses, Debt Service requirements, Capital Expenditures, and Reserve Fund deposits or payments. The Net Requirement shall be determined as a result of the Airport's preliminary projection of Airline Rates and Charges, and may be revised for any interim review of such charges, and shall be finalized as a result of the post-Fiscal Year review of such charges. The Net Requirement shall be collected as a component of the Joint Use / Common Area Space Fee. Airfield costs and Terminal costs shall be allocated on a proportional basis, with rate adjustments to be made to the corresponding cost center. Section 1.44 Non-Signatory Airline shall mean an Airline or its affiliate or any other Aircraft Operator serving the Airport that has entered into an airport non-signatory permit agreement with the City, that meets the requirements and is paying 1.25 times the rates as outlined in Exhibit "F°. Section 1.45 Non-Signatory Rates shall mean the rates described in Section 5.12 of this Agreement. Section 1.46 Passenger Loading Bridge shall mean the covered equipment affixed to the terminal to permit passenger access to parked aircraft. Section 1.47 Passenger Loading Bridge Fee shall have the meaning assigned to such term in Section 5.03 (D) of this Agreement. Section 1.48 Preferential Use shall mean a Signatory Airline's right to use space prior to use by others on a nonexclusive basis. Section 1.49 Preferential Use Space shall mean the areas of the Terminal Building Complex consisting of Aircraft Parking Positions, Passenger Departure Lounges and equipment, and Passenger Loading Bridges, which City has granted to Airline a right to use on a nonexclusive but Preferential Use basis from the Effective Date of this Agreement. Airline's Preferential Use Space is shown on Exhibit "C". Airport Use and Lease Agreement—Dated July 1, 2014 Page 17 23 Section 1.50 Premises shall mean the Exclusive Use Space, the Preferential Use Space, and the Joint Use Space leased or assigned to airline and shown on Exhibit "C". Section 1.51 Reserve Funds shall mean the Maintenance and Operations Reserve Fund, Special Capital Projects Fund, and Landside Development Fund. Section 1.52 Revenues shall mean for any Fiscal Year all monies collected by the Airport from all airfield operations, all terminal rents and concession operations, all landside activity from public parking, all public transportation, and all rental car operations to include rental car maintenance facilities. Section 1.53 Signatory Airlines) shall mean each Airline and its affiliates and other Aircraft Operators serving the Airport that are party to a Signatory Agreement substantially similar to this Agreement, and selling tickets under their own airline name. Section 1.54 Single Cash Box Cost Revenue Center for cost accounting purposes shall mean all of the Airport's operational costs, debt service, reserve requirements, capital requirements and all of its recurring revenue, including Airline revenues, with the exception of the Joint Use/ Common Area Fees. Section 1.55 Special Capital Projects Funds shall mean the Special Capital Projects Fund created under Section 5.06. Section 1.56 Special Capital Projects Fund Surcharge shall have the meaning assigned to such term in Section 5.06 (C) of this Agreement. Section 1.57 Terminal Area or Terminal Building Complex shall mean the Main Terminal Building and all concourses. Section 1.58 Transportation Security Administration (TSA) shall mean the Federal Agency within Homeland Security Department responsible for regulation of Airport Security. ARTICLE II TERM Section 2.01 Term of Agreement The term of this Agreement shall commence on the Effective Date. , 2014, and expire on June 30, 2019, the Expiration Date. In accordance with Section 18.04, said Airline may cancel this Agreement by providing three hundred sixty four (364) days' written notice to City. Airport Use and Lease Agreement—Dated July 1, 2014 Page 18 24 ARTICLE III GRANT OF RIGHTS Section 3.01 Rights of Airline. Airline shall have the following rights with respect to the Airport: (A) Right to Use Airport. The City hereby grants to Airline, its employees, passengers, guests, patrons, and invitees, the right to the use of (in common with other duly authorized users) the Terminal, Landside and Airside Areas together with all facilities, improvements, equipment, and services that have been or may be provided for common use of such facilities and areas. (B) Right to Operate Aircraft. Airline shall have the right to land, take off, fly over, taxi, push and tow, any aircraft of its choice, properly licensed by the FAA and all other governmental authorities with jurisdiction, in appropriate areas of the Airport (subject to the design limitations of such areas) and to park, load and unload such aircraft at the Aircraft Parking Position(s) assigned to Airline. Airline acknowledges that Palm Springs and its neighboring cities are noise sensitive communities. (C) Right to Provide Services. Within designated areas, Airline shall have the right to sell Air Transportation tickets and services; to process passengers and their baggage for air travel; to sell, handle, and provide mail, freight, express and cargo services; and to perform other similar activities reasonably related to the operation of Airline's Air Transportation service. Subject to the provisions of Section 3.01 (0) hereof, Airline shall have the right to perform ground handling services for itself or other airlines engaged in Air Transportation. Said ground handling services may be provided via an independent vendor so long as said vendor is properly licensed to operate on the Airport. Airline shall have, for itself or may designate a food service vendor on its behalf, the right to sell to its passengers an in-flight meal in the Passenger Departure Lounge, provided that such food services vendor shall be permitted to provide such service in the Terminal Area, and that the Airline and or vendor shall provide such service in line with all rules and regulations of the Airport. (D) Right to Provide Training. Airline shall have the right to provide training at the Airport of personnel in the employ of or to be employed by Airline and the testing of aircraft and other equipment owned and operated by Airline, provided that such training and testing shall be incidental to the use of the Airport in the operation by Airline of its Air Transportation service. Such training and testing shall not unreasonably hamper or interfere with the use of the Airport by other users entitled to the use thereof; and shall be conducted in areas of the Airport which have been leased to Airline or authorized by the City Manager. Airport Use and Lease Agreement— Dated July 1, 2014 Page 19 - 25 (E) Right to Purchase from Person or Company of its Choice. Airline shall have the right to purchase at the Airport or elsewhere from any person or company of its choice, its requirements of aviation fuel, ground vehicle fuel, lubricating oil, greases, food, beverage, and other passenger supplies, and all other materials and supplies and services, so long as that person or company is properly permitted to provide service at the Airport. (F) Right to Service Aircraft and Other Equipment. Airline shall have the right to have its aircraft and other equipment serviced by suppliers of its choice. Such suppliers may provide materials and services, including, but not limited to, aviation fuel, ground vehicle fuel, lubricating oil, greases, parts and all other materials, supplies and services required by Airline in the conduct of its Air Transportation service. Such right shall include, but not be limited to, the right to erect, install and maintain at designated locations at the Airport (as authorized by the City Manager for that purpose by separate agreement between Airline and City) storage facilities for aviation fuel, lubricating oil, grease and other materials and supplies, together with the necessary pipes, pumps, motors, filters and other appurtenances incidental to the use thereof, so long as said supplier is properly permitted to provide service at the Airport. (G) Right to Operate Shuttle / Delivery Service. Airline shall have the right to load and unload persons, property and mail by such motor vehicles or other means of conveyance at areas designated by City as Airline may reasonably require in the operation of its Air Transportation service so long as operator of the service is properly permitted to operate at the Airport. Airline may designate the particular ground carrier, or carriers, that may transport Airline's employees, property and mail to, from and on the Airport, provided that the particular carrier or carriers so designated by Airline hereunder shall be required to comply with all applicable and reasonable rules, regulations and laws. Contractual arrangements by Airline hereunder with any carrier of passengers and their baggage for ground transport to and from the Airport shall be subject to the Payment to City by said passenger carriers of a fee to be fixed and determined by City. Such fees shall not apply to arrangements for late or other baggage delivery, crew hauls/shuttles, or surface transportation provided for a diverted or canceled flight. (H) Right to install Signs. Airline shall have the right to install signs identifying Airline's Exclusive Use and Preferential Use Space and the function or operation conducted therein, upon written approval of the City Manager. The number, size, type, design and location shall be harmonious and in keeping with the pattern and decor of the Terminal Area and shall be subject to Section 09.07. (1) Responsibility to Install and Operate Communications Equipment. Airline shall have the responsibility to install, maintain, and operate on or about the Airport such telecommunications (including radio antennas), meteorological and aerial navigation equipment and other facilities as may be reasonably necessary or convenient for the proper performance and operation by Airline of its Air Transportation Airport Use and Lease Agreement— Dated July 1, 2014 Page 20 26 service; provided (i) such equipment does not interfere with other existing equipment at the Airport or prevent the Airport or its contractors from installing and using additional equipment for Airport purposes, and (ii) such equipment installation and use is approved in writing by the City Manager. Upon the termination of this Agreement, such equipment shall be removed by the Airline. Such equipment and facilities shall be located in areas leased to Airline for its exclusive use, or on such other portions of the Airport as may be authorized for that purpose by the City. Airline shall be provided with reasonably adequate rights-of-way when feasible for the installation of communications controls, telephone, interphone, and power lines in and between the Terminal Building Complex and other points at the Airport; provided, however, the manner of such installations and the location of such rights-of-way shall be subject to approval by the City Manager. (J) Ingress and Egress. The City hereby grants to the Airline, its agents, employees, passengers, guests, invitees, contractors and suppliers of material and service the right to reasonably access, ingress and egress to the Premises and the public areas and facilities of the Airport. Such right shall be exercised in accordance with Airport rules and regulations and shall at all times be exercisable without charge to the Airline, its agents, employees, guests, passengers, invitees, contractors and suppliers of materials and services; provided, however, that this provision shall not be construed to prevent the City from imposing the additional rentals, fees, taxes, and charges referred to in Section 10.01 of this Agreement. (K) Porter Services. Airline shall have the right to participate in nonexclusive porter services in conjunction with all scheduled airlines serving the Airport to assist passengers with luggage. City may solicit for porter services. Any agreement resulting from said solicitation shall be cost neutral to the Airport. (L) Right to Provide Curbside Baggage Check-In Service. Airline shall have the right to provide curbside baggage check-in service, the location and operation of which shall be subject to the prior written approval of City Manager and the lawful rules and regulations of City and the Transportation Security Administration. (M) Right to Provide Services on Behalf of Other Aircraft Operators. The rights and privileges granted Airline under this Article III, with respect to the performance of ground services and activities in connection with its Air Transportation services at the Airport, may be exercised by Airline for and on behalf of any other Aircraft Operators or companies authorized by City to use the Airport. This provision shall not be construed by the parties hereto to impede, hinder or negate the legislative intent of the Airline Deregulation Act of 1978. (N) No Other Business Authorized. Nothing contained in this Section 3.01 shall be construed to authorize Airline to conduct a business of any kind at the Airport except its Air Transportation service, and nothing herein contained shall be construed as authorizing Airline in its conduct of its Air Transportation service to interfere unreasonably with other persons or tenants leasing or lawfully using Airport facilities. Airport Use and Lease Agreement—Dated July 1, 2014 Page 21 27 Nothing in this Section shall be construed as in any way limiting the general powers of City to fully exercise its statutory functions. (0) Rules and Regulations. All activities of Airline pursuant to this section 3.01 shall be performed in compliance with all applicable Federal, State and local laws, ordinances, and regulations. ARTICLE IV AIRLINE'S PREMISES Section 4.01 Period from Effective Date to Expiration Date Commencing on the Effective Date of this Agreement and continuing until the Expiration Date, City grants Airline the rights, as set forth in Article I, to use certain premises located in the Terminal Building Complex at the Airport, consisting of the following: (A) Exclusive Use Space. A portion of the Terminal Building Complex as shown and delineated on Exhibit "C", and consisting of ticket counter space, passenger queuing space, office and operations space, outbound baggage space, and baggage service desks. The square footage of floor area of the Exclusive Use Space, as shown and delineated on Exhibit "C", shall apply to this Agreement. (B) Preferential Use Space. A portion of the Terminal Building Complex, as shown on Exhibit "D", and consisting of Aircraft Parking Position(s) and Passenger Hold Room(s) and equipment, including Passenger Loading Bridge(s). (C) Joint Use / Common Area Space. A portion of the Terminal Building Complex as shown on Exhibit "B", consisting of Passenger Circulation Areas, and Baggage Claim. (D) TSA Explosive Detection System (EDS) Space Utilization. A portion of the Terminal Building Complex as shown on Exhibit "C" and subject to change, based upon TSA requirements. ARTICLE V CALCULATION OF AIRLINE RATES AND CHARGES Section 5.01 General Commitment The City acknowledges that it is in the best interest to maintain reasonable rates and charges as an integral part of the overall marketing of the facility. For the purpose of establishing a rate making methodology that fairly allocates the net cost of operating and maintaining the Airport among all of the Signatory Airlines a Single Cash Box Revenue Center approach shall be utilized as defined in Section 1.54 of this Agreement. Airport Use and Lease Agreement— Dated July 1, 2014 Page 22 28 Section 5.02 Preliminary Projection of Airline Joint Use / Common Area Space Fee. At no later than ninety (90) days prior to the end of each Fiscal Year, City Manager shall furnish Airline with a financial and operational summary for the just completed Fiscal Year and a projection for the next ensuing Fiscal Year including an estimate of the Joint Use / Common Area Space Fee and pro rata allocation of such fee to each Signatory Airline. The projection shall include, for the Airport in its entirety, the latest available data on current operations of the Airport and an estimate of each of the following items for the next ensuing Fiscal Year: (a) Maintenance and Operations Expenses; (b) Revenues; (c) Debt Service; (d) Capital Projects; (e) Reserve Fund deposit requirements and Fund payments; (f) Any changes in the number of square feet of any Signatory Airline's Exclusive Use Space; (g) The Net Requirement, which establishes the Joint Use / Common Area Space Fee, and the allocation of such fee among the Signatory Airlines; and (h) Summary Schedule of Total Airline Rates and Charges for each Signatory Airline (the "Preliminary Projection of Airline Rates and Charges'). Section 5.03 Period From Effective Date Until Expiration Date of This Agreement Commencing as of the Effective Date and continuing until the Expiration Date of this Agreement, Airline's Rates and Charges, payable to City in the manner described in Article VII, shall consist of the following: (A) Exclusive Use Space Fees. At such times and in such manner as provided in Article VII, Airline shall pay for the use of Exclusive Use Space, as described in Exhibit "C" based upon the total number of square feet of Airline's Exclusive Use Space multiplied by the Exclusive Use Space Rate. The Exclusive Use Space Rate for conditioned space, as depicted on Exhibit "F". (B) Preferential Use Space Fee. The fee for use of Airline's Preferential Use Space, as described in Exhibit "D", except Passenger Loading Bridge(s), shall be included in the Net Requirement. Airline shall pay a Passenger Loading Bridge Fee as set forth below. (C) Joint Use / Common Area. At such times and in such manner as provided in Article VII, Airline shall pay its pro rata share for the use of Preferential Use Space as described in Exhibit "D". The Joint Use / Common Area Space Fee shall be prorated among all the Signatory Airlines according to the Joint Use Formula as defined in Section 1.35. Airport Use and Lease Agreement— Dated July 1, 2014 Page 23 2g (D) Passenger Loading Bridges and Hold Rooms. At such times and in such manner as provided in Article VII, Airline shall pay for the use of Passenger Loading Bridges and Hold Rooms on a per operation basis. For purposes of this section, an "operation" shall mean both the enplaning and deplaning of a single aircraft. (RJ) Regional Jet Concourse area does not include Passenger Loading Bridges. (E) Justment of Fees. No later than October 1st of each year, the City Manager and the Airline shall meet to discuss adjusting fees and/or rates payable by Airline for the following calendar year. Such meeting shall include at least all Signatory Airlines. Such discussions may not necessarily have to result in either an increase or decrease in such fees and rates, and City agrees to give significant consideration to the Airline's comments before finalizing any change to such rates. In the event the majority of the Signatory Airlines are unable to agree on such adjustment or in case of disagreement between the Airlines and City Manager, City Manager shall make the final determination regarding any adjustment to such rates. Section 5.04 Landing Fees At such times and in such manner as provided in Article VII, Airline shall pay a Landing Fee to City for each Fee Landing of an aircraft operated by Airline. The Landing Fee shall be an amount equal to the product of (i) the number of thousands of pounds of the Certificated Maximum Landing Weight of the aircraft involved in the Fee Landing, multiplied by (ii) the Landing Fee Rate. The Airline and the City Manager shall review and discuss the Landing Fee formula annually. Section 5.05 Airline Lease Space Airline shall lease ticket counter with corresponding office area with adjacent bag make-up area for its operation. In addition, Airline may elect to lease space at the Airport in the categories of office space, open acreage, or other space as approved in writing by the City Manager. Airline lease space shall be mutually agreed by the parties hereto and such mutual agreement shall be memorialized in an amendment with current rates as established and amended to Exhibit F attached hereto. The above-referenced airline lease space may change upon written notice by the air carrier prior to December 31, 2014 with changes to be effective July 1, 2015, occurring via letters of mutual agreement between Airline and the City Manager. Section 5.06 Special Capital Projects Fund (A) The Fund. The City shall establish a separate airport budget activity, to be designated "Special Capital Projects Fund" to be utilized for any Capital Project or a portion of the cost thereof (including equipment purchases). Annual contributions to such Fund shall be made from a landing fee surcharge to all Airlines in the total amount not to exceed $950,000 for the first year. Airport Use and Lease Agreement— Dated July 1, 2014 Page 24 30 (B) Expenditures from the Fund. Single or multiple expenditures not exceeding the aggregate of $300,000 in any Fiscal Year from the Special Capital Projects Fund may be made by the City without the necessity for consent by, or approval of, the Signatory Airlines. Single expenditures of more than $300,000 in any Fiscal Year will require approval as defined in Section 8.06 herein except when said expenditure is made as a required matching fund to a Federal Grant. (C) The Surcharge. At such times and in such manner as provided for in Article VII, Airline shall pay to City a Special Capital Projects Fund Surcharge. Such surcharge shall be collected on a per enplaning passenger basis and established for each Fiscal Year by dividing the annual funding requirement of the Special Capital Projects Fund, as set forth in section 5.06 (A) above, by the total number of Enplaned Passengers for the previous twelve months. Such surcharge shall be collected from Airline, and all other Aircraft Operators offering Air Transportation service at the Airport. For each Fiscal Year, City shall collect such surcharge until the amount collected is equal to the funding requirement for that Fiscal Year, or until the Special Capital Projects Fund balance reaches $950,000. Section 5.07 Employee Vehicular Parking The City shall make available to Airline's employees assigned to duty at the Airport reasonably adequate automobile parking facilities. The City may, at its discretion, charge employees of Airline and others a reasonable vehicular parking fee based on City's actual costs of providing, operating, and maintaining such facilities. Section 5.08 Insufficiency of Airport Revenues. Adjustment of Joint Use/Common Area Space Fees Notwithstanding any other provision hereof, if, at any time while this Agreement . remains in effect, City Manager determines that Airport revenues are, or likely will be, insufficient to pay when due all costs and expenses of annual debt service requirements on all bonds, or maintenance of rate covenant on all bonds or to pay any Airport Maintenance or Operation Expense, City Manager may, upon thirty (30) days' notice to Airline, increase Joint Use / Common Area Space Fees provided for herein to such amount as is sufficient to assure that actual revenues shall be sufficient to pay all such costs and expenses. City agrees that prior to such action, upon twenty (20) days' notice to Airline, City Manager will hold a meeting with the Airline and all other Signatory Airlines to discuss such charges. Section 5.09 Annual Adjustment to Joint Use / Common Area Space Fees Within ninety (90) days after the close of each Fiscal Year the City will recompute the rates applicable to the fees and charges payable by Airline for its use of the Premises for the preceding Fiscal Year, based upon actual space utilization, activity, costs and expenses, and revenues. If the recalculation results in a variance from the rates charged the Airline for that Fiscal Year, City Manager will calculate an additional Airport Use and Lease Agreement— Dated July 1, 2014 Page 25 31 charge or credit against Airline's fees and charges. Such charge or credit shall be payable in equal monthly installments over twelve (12) months. Airline agrees to pay any such additional charge as billed in accordance with the foregoing. Airline's obligation to pay such additional charge shall survive any termination of the Agreement. Section 5.10 Costs Excluded The portion of capital costs of the Airport, its facilities and improvement paid for from the Special Capital Projects Fund, or by Federal Grants-in-Aid or by contributions from other cities, and depreciation, amortization and interest charged thereon, if any, shall not be included in the maintenance and operating cost factors herein. Section 5.11 Other Charges In the event City is required to furnish special law enforcement services under 49 CFR Part 1542; fire and crash protection and other emergency response provisions under FAR, Part 139; and a security access system under 49 CFR 1542 or is required to make additional expenditures by any Federal, State or other governmental order, rule or regulation during the term of this Agreement, the cost and expense thereof shall be allocated to the Single Cash Box Cost Revenue Center. City may from time to time, on reasonable notice to Airlines, determine and impose compensatory service charges for non-routine apron and ramp cleaning and scrubbing, apron housekeeping and other special services requested by Airline or made necessary by non-compliance of Airline with City's rules and regulations. These service charges rates will be provided when the services are requested or upon notice to Airline regarding non-compliance issue. Section 5.12 Non-Signatory Airlines Rates and Charges It is acknowledged that the methodology for calculating rates and charges for Signatory Airlines involves risk to the Signatory Airlines in that rates and charges imposed on Signatory Airlines could in certain instances require the Airline to absorb a share of Airport deficits due to shortfalls in City's projected revenues and expenses at the Airport for a particular Fiscal Year. In view of the fact that Non-Signatory Airlines do not assume the risk of funding actual or anticipated deficits, it is agreed that Non- Signatory Airlines shall not receive the benefits of any surplus. In addition, City shall establish and charge the following Non-Signatory Rates to Non-Signatory Airlines: (A) Landing Fees: 125% of the Landing Fee paid by the Signatory Airlines. (B) Joint Use / Common Area Space Fee: A fee paid on a per enplaning passenger basis. Such fee shall be calculated by dividing the projected Joint Use / Common Area Space Fee for each Airline by the number of Enplaning Passengers for Airline for the previous twelve months. Then, after deleting from consideration the highest and lowest figures from such calculation, averaging the figures for the remaining Signatory Airlines times 125%. Airport Use and Lease Agreement—Dated July 1, 2014 Page 26 32 (C) Special Capital Projects Fund Surcharge: 125% of the charges set in Section 5.06 (A). (D) Passenger Loading Bridge Fee: 125% of the Passenger Loading Bridge Fee paid by Signatory Airlines. (E) Such other charges for special facilities or activities as deemed appropriate by the City and established in the City's Comprehensive Fee Schedule. ARTICLE VI IDENTIFICATION AND ALLOCATION OF REVENUES AND EXPENSES Section 6.01 City Records City shall maintain accurate records of Maintenance and Operations Expenses, Reserve Fund deposit requirements, Debt Service payments, small capital expenditures and Revenues for each Fiscal Year. Section 6.02 Disposition of Airport Revenues All revenues received or otherwise realized by City, or remaining in reserves at the end of the term of this Agreement, arising from its operation of the Airport shall remain the property of City, and shall not be expended for any purpose other than the acquiring, establishing, securing, developing, extending, maintaining, operating, managing and promoting the airport. Section 6.03 Debt Service City shall maintain accurate records of the City's Debt Service for each Fiscal Debt Service shall be based on actual expenditures made out of the proceeds of bonds, notes, certificates of participation and/or other Airport obligations giving rise to such Debt Service. Section 6.04 Maintenance and Operations Reserve Fund The Maintenance and Operations Reserve Fund was established prior to the Effective Date of this Agreement and shall be used only to make loans to the Maintenance and Operations Fund whenever and to the extent monies in the Maintenance and Operations Fund are insufficient to pay Maintenance and Operations Expenses. Each year the City shall make a deposit from Airport's recurring revenues in the amount necessary to increase the balance therein (including amounts receivable from the Maintenance and Operations Reserve Fund) to a rolling amount equal to sixty (60) days' cash reserve of the Maintenance and Operations Expenses amount provided in the Airport's annual budget for such Fiscal Year. Airport Use and Lease Agreement—Dated July 1, 2014 Page 27 33 Section 6.05 Landside Development Reserve Fund (A) The Fund. There is herein created a Landside Reserve Fund which shall be used b the City for other than terminal and airfield improvements an m y ty p d may be utilized for advertising. The Landside Reserve Fund balance shall be $250,000 $250,000 per year. (B) Expenditures from the Fund. City may make single or multiple expenditures from the Landside Reserve Fund without the necessity for, consent by, or approval of, the Signatory Airlines. (C) Limitation of the Fund. The City may utilize the fund for grant matches on Airport Improvement Program eligible landside programs. Construction development expenditures from such fund, on other than landside area grant projects, are appropriate so long as these improvements lead to the prudent development of facilities that are financially self-sustaining. Such fund may also be utilized for Airport advertising or air service incentive programs. Said advertising and air service incentive programs are consistent in nature and content to provide equal right and access to funds as in accordance with FAA revenue diversion policies. Said overall advertising and incentive program is adopted by City Council resolution and is a program for the financial benefit of the Airport and its Air Carriers by the nature of adding new routes and service. ARTICLE VII PAYMENT OF AIRLINE RATES AND CHARGES Section 7.01 Payment of Airline Rates and Charges (A) Information to be Provided by Airline. Airline shall furnish to the City on or before the tenth (10t") day of each month on forms to be supplied by City and signed by an authorized representative of Airline, for the preceding month reporting (1) the number of Enplaned Passengers and Deplaned passengers; (2) Airline's total number of Fee Landings by type of aircraft and Certificated Maximum Landing Weight of each type of aircraft; (3) the weight of air freight, air-express, and airmail loaded and unloaded by Airline at the Airport; (4) the number of Enplaned Passengers and Deplaned passengers and number of Fee Landings, by type of aircraft, for which Airline provided handling services of any kind for other Aircraft Operators, and the names and addresses of the Aircraft Operators so that the City may submit to such operators appropriate invoices for Landing Fees and other charges; ; and (5) the total number of Passenger Loading Bridge operations. (B) Airline Rates and Charges Due in Advance. Not later than the tenth (10`") day of each month of each Fiscal Year, City shall furnish Airline with an invoice setting forth the amount of Airline's Exclusive Use Space Fees, Joint Use / Common Area Space Fees and other Airline Rates and Charges due in advance for the next ensuing month and the Airline shall pay City the amount of such invoice on or before the first (1st) day of the next ensuing month. Airport Use and Lease Agreement—Dated July 1, 2014 Page 28 34 (C) Airline Rates and Charges Due in Arrears. Upon furnishing City with the information described in Section 7.01 (A), City shall forthwith furnish Airline with an invoice setting the amount of Airline's Landing Fees, Special Capital Projects Fund Surcharge, Loading Bridge Fees, and other Airline Rates and Charges due in arrears, payable by the Airline for the preceding month's activity and Airline shall pay City the amount of such invoice within thirty (30) days of the date of such invoice. Section 7.02 Late Charges All fees and charges not timely received by City and within fifteen (15) days after receipt by Airline of a written notice of delinquency will bear a late charge equal to five percent (5%) of the payment due and owing. If such rentals, fees and other charges are not received within thirty (30) days, after such notice, interest shall accrue on the unpaid balance plus the unpaid late charge at the rate of eighteen percent (18%) per annum or the highest rate which may be legally charged, whichever is lower, from the due date until paid in full. Section 7.03 Provision Against Set-Offs It is the obligation of Airline to pay all fees and charges, free of any set-offs or claims, in the amount and at the times specified in this Agreement. In the event that Airline desires to contest the validity or amount of any such fees and charges, Airline shall first pay the same to City and may then seek a refund in any appropriate forum. ARTICLE VIII PRINCIPLES RELATING TO RATES AND CHARGES With respect to the Airline Rates and Charges imposed by this Agreement, it is agreed that the following principles shall be observed. Section 8.01 General Concepts The administration and control of all concessions (including vending machines and pay telephones) in the Terminal Building Complex and elsewhere on the Airport is exclusively reserved to the City. Airline shall not install or operate pay telephones, vending machines or amusement machines and devices of any kind in the Terminal Building Complex or elsewhere on the Airport. However, subject to the City Manager's written approval, Airline may have such machines and devices installed if such shall be for the use of Airline's employees only and shall be located in Airline's leased areas not accessible to the general public. Airport Use and Lease Agreement— Dated July 1, 2014 Page 29 35 Section 8.02 Accounting Principles and Audit Report Generally accepted accounting principles, consistently applied, recognizing the special requirements of airports, will be used by the City for keeping the books, accounts and records of the Airport and in the computation of all rates and charges. Within nine (9) months, and upon request, after the close of each Fiscal Year, City shall furnish Airline with a copy of an annual audit report, prepared in accordance with generally accepted accounting principles and certified by an Independent Accountant, covering the operation of the Airport for such preceding Fiscal Year. Section 8.03 Cost or Expense Allocation All revenues, costs and expenses directly attributable to the Airport shall be charged to the Single Cash Box Cost Revenue Center. Section 8.04 City to Exercise Due Diligence The City agrees to exercise due diligence in the operation, maintenance, improvement, expansion, promotion, management and financing of the Airport. Section 8.05 Additional Capital Expenditures It is understood that from time to time the City will make additional expenditures for capital improvements and capital asset purchases at the Airport, or in relation to the Airport such as: a) Projects that are mandated by the Federal Aviation Administration or Transportation Security Administration or are necessary in order to comply with laws, rules and regulations of the Federal Aviation Administration or any other government agency. b) Projects relating to the Airside Areas that are indicated in the Airport Layout Plan, as it may be amended from time to time, that have been reviewed and conditionally approved by the Federal Aviation Administration, and that will be undertaken by the City when federal grants are available to fund a substantial portion of the expenditure and it is prudent to undertake the Project. c) Projects that would enhance the safety and security of the Airport. d) Projects to repair casualty damage to Airport property, preventative pavement maintenance and the repair, replacement or unscheduled maintenance of equipment used in the operation of the Airport. e) Purchase of land that may be required for any of the foregoing projects when prudent to do so when the majority of the cost is funded by the Federal Aviation Administration. f) Special projects, including but not limited to international arrivals facilities, the cost of which shall be entirely borne by the beneficial user of the improvement or asset for which the expenditure was made. g) Projects to be funded with the Special Capital Projects Fund pursuant to Section 5.06. Airport Use and Lease Agreement—Dated July 1, 2014 Page 30 36 h) Projects to be funded from the Landside Development Reserve Fund pursuant to Section 6.05. i) Projects to be funded from any special contribution received from any Coachella Valley city. j) Other projects, not described above that may be prudent, in the operation and maintenance of the Airport or in the preparation for the prudent expansion of the Airport and/or any of the Airport's facilities. k) Such other projects and expenses as the Signatory Airlines may authorize for their own purposes. The amortization of costs plus interest and other expenses associated therewith not covered by funding previously contributed by the Signatory Airlines, grants and participating funds from the United States of America and the State of California, County or any special contribution from other cities or any agency thereof, including all payments, deposits and other requirements relating to the issuance of bonds, notes, certificates of participation and payments to banks and other lenders shall constitute an expense when such projects are on or at the Airport and shall be chargeable to the Single Cash Box Cost Revenue Center; provided that prior to making any expenditure for projects in c), i), j) and k) above, the City has received Airline approval, per Section 8.06. It is agreed that City may proceed with projects described in a), b), d), e), f), g), h) and i) above without Airline approval. Section 8.06 Airline Approval The Airline approval of Capital Projects outlined in Section 8.05 c), j) and k) shall be obtained by the City submitting a proposal in writing therefor to all Signatory Airlines which proposal shall include an estimate of the budget for and a description of such Capital Project and the Maintenance and Operation Expenses resulting therefrom, and the construction schedules for such Capital Project, if applicable. Airline may within ten (10) days request a meeting with the City's representatives to discuss the project and parties agree to schedule said meeting within twenty (20) days after said request. Airline agrees to furnish City in writing its approval or disapproval of the project within thirty (30) days after said meeting or thirty (30) days after the initial notice from City, if a meeting was not requested; it being agreed that the Airline's failure to timely furnish its approval or disapproval will be deemed to be Airline's approval of the project. Approval shall be based on Signatory Airlines representing 50% of the Enplaned Passengers at the Airport. Section 8.07 Grants Consistent with good business practices, the City agrees to prudently seek the maximum amount of grants and participating funds for the Airport from the United States of America and the State of California, and any agency thereof, and advise the Airport Use and Lease Agreement— Dated July 1, 2014 Page 31 37 Airlines of such application by direct notice or by incorporating anticipated amounts in proposed budgets. Section 8.08 Bonded Indebtedness City shall issue no additional bonded indebtedness for airport improvement, which would adversely affect the rate base by more than $400,000 in any one year without first receiving Airline approval via the process outlined in Section 8.06. Section 8.09 Outside Storage Airline takes notice of the fact that City has entered and intends to enter into various fixed based operators agreements with third parties to provide aviation-related services to the public which include among other things the rental of aircraft outside storage areas. In the event Airline requires outside storage (i.e. storage other than on airport owned aircraft aprons or taxiways) of its aircraft, such storage shall be subject to user charges adopted from time to time by such fixed based operators. ARTICLE IX MAINTENANCE, OPERATION, USE AND CONDITION OF PREMISES Section 9.01 Maintenance and Operation of the Premises The responsibility for maintaining, operating and repairing the Premises, including the cost of utilities and energy consumption and the insurance referred to in Article XI hereof, shall be divided between the City and Airline in accordance with Exhibit "E", and the cost of such maintenance operations and repairs shall be paid by Airline directly for those items and facilities designated on said Exhibit as being its responsibility and indirectly through Airline Rates and Charges for those items and facilities designated on said Exhibit as being the City's responsibility. City and Airline agree to undertake their respective maintenance and operating responsibilities assigned to each by Exhibit "E" in such a manner so as to maintain the Premises in a good, sanitary, safe and presentable order and condition. In fulfilling said respective responsibilities, City and Airline may act on its own behalf using its own personnel or may contract with a third party so long as the Premises are maintained and operated in such order and condition, provided that such personnel are properly permitted to operate at the airport. Section 9.02 Maintenance and Operation of Airport by City Subject to the other provisions of this Article IX, including Section 9.01 thereof, City agrees that it will, with reasonable diligence, prudently operate, develop, improve and keep in good repair, the Airport and all appurtenances, facilities, and services now or hereafter connected therewith; and maintain the Airport in all respects in a manner at Airport Use and Lease Agreement— Dated July 1, 2014 Page 32 38 least equal to an acceptable standard or rating established by the Federal Aviation Administration. Section 9.03 Accommodation of Other Incoming Aircraft Operators Airline agrees to make every reasonable effort to offer to any incoming Aircraft Operator the opportunity to share use its Exclusive Use Space as described in Section 4.01. In determining whether the use of another incoming Aircraft Operator is reasonable and possible, Airline will have the right to consider the compatibility of the proposed operations of those with whom Airline has subleases or handling agreements, Airline's existing and future flight schedules, the need for labor harmony, the adverse competitive impacts resulting from the presence of the other Aircraft Operator on Airline's Exclusive Space, and the availability of other such space at the Airport. Should Airline refuse another incoming Aircraft Operator the opportunity to use said Airline's Exclusive Use Space, City may review Airline's space usage, and should it reasonably determine, considering all the factors noted herein including Airline's reasons for such refusal, that Airline unreasonably refused usage by such other Aircraft Operator, it may require Airline to permit the Aircraft Operator to use Airline's Exclusive Use Space, subject to the incoming Aircraft Operator executing an agreement with Airline acceptable to the City and Airline. In the event other incoming aircraft operator is granted access to Airline's Exclusive Use and Lease Space, Airline shall be indemnified by incoming aircraft operator in accordance with Article XI. Section 9.04 Assignment of Gate Positions and Loading Bridges All assignment of gate positions and aircraft loading bridges shall be made in strict accordance with reasonable rules, regulations and directives adopted and promulgated by the City Manager consistent with the Airline Deregulation Act of 1978. The City Manager, in making preferential but nonexclusive assignments of gate positions to Airline users, shall take into account the needs and requirements of Airline for use of gate positions. . The Assignment of one preferential gate position for the term of the lease, so long as the Signatory Airline operates at least 6 months of the year, shall accrue to all Signatory Airlines executing this agreement prior to July 1, 2014, until all gates are allocated. The Airport will provide a monthly gate allocation schedule. The Airport will consider scheduling needs and other factors when assigning gate positions. Airport will assign gates based upon the design aircraft and facility limitations. The preferential gate assignment is shown as Exhibit G. Airport will assign aircraft gates to Signatory Airlines in adjacent parking positions whenever possible. Airport will assign aircraft in excess of 120 passengers to the Bono concourse consistent with design standards. Airport reserves the right to make adjustments to meet operational and scheduling demands. Preferential gates may be assigned to other airlines when there is no scheduled conflict with the assigned Airline. If an Airline is permanently reassigned to a different gate, at the request of another Airline or the Airport Use and Lease Agreement—Dated July 1, 2014 Page 33 39 Airport, the requesting Airline or the Airport, as applicable, shall pay for the reasonable costs of relocation. Section 9.05 Aircraft Parkin Position(s) Airline shall perform all services pertinent to the operations in keeping the loading ramps adjacent to its Aircraft Parking Position(s) in a neat, clean and sanitary condition free of litter, trash, debris and other waste and refuse matter, all in keeping and consistent with first-class passenger terminal facilities of other major airports throughout the United States. No maintenance activity other than traditional line maintenance may take place at a gate parking position. Section 9.06 Public Areas Subject to the rights hereby reserved by City to license, permit, authorize, regulate and locate concessionaires and other tenants therein, including, without limiting the generality thereof, booths, counters, offices, lockers, wall space and vending machines, Airline, its passengers, patrons, business invitees, agents, servants, officers, employees, and the public shall have the free nonexclusive right of use of all of the public unrented areas, as they may exist from time to time in the Terminal Building Complex. City undertakes to so regulate, maintain and operate said public areas to best serve the interest of the public, building tenants, patrons and visitors at the Airport and to permit, in said public areas, only such functions and concessions that will not interfere with the public access to Airline's exclusive or nonexclusive use areas and as are compatible to the purpose of providing a first-class air transportation facility. Section 9.07 Signs (A) Signs installed by Airline. Airline shall maintain all signs installed by it in the Premises in a neat and attractive condition and appearance. Airline shall allow with Airport's written approval, other secondary users and itinerant operators of Airline's Preferential Use Space to install identifying signs when secondary users and itinerant operators utilize Airline's Preferential Use Space for an aircraft arrival or departure for the purpose of loading and unloading passengers. (B) Signs Installed by City. City shall install all signs necessary or required for the direction of pedestrian and vehicular traffic on the sidewalks, ways and roads within the Terminal Building Complex, including such signs as it determines are necessary on the roadways leading from the public streets to said Terminal Building Complex. All directional signs in the Terminal Building Complex including any additions thereto shall be installed by City. No signs or advertisements pertaining to Airline's Air Transportation business shall be installed or maintained outside of or within the Premises of the Airport until Airline shall have submitted to the City Manager for his approval, in writing, such drawings, sketches, design dimension and type and character of such signs and advertisements proposed to be placed therein or thereon and any Airport Use and Lease Agreement—Dated July 1, 2014 Page 34 40 payment, conditions, restrictions or limitations in respect to the use thereof stated by the City Manager in his written approval therefor shall become conditions thereof as if set forth herein at length. Section 9.08 Alteration, Repair, Maintenance, Remodeling, Expansion. Removal and/or improvement of the Facilities of Terminal Building Complex or its Appurtenances. It is understood and agreed by and between the parties hereto that the City may alter, repair, maintain, remodel, expand, remove or improve any of the facilities of the Terminal Building Complex or any of its appurtenances, including space leased to Airline pursuant to this Agreement or other agreements related to such facilities at any time during the term hereof subject to the provisions of this Agreement. If, however, it becomes necessary for the City to reassign or relocate Airline Preferential Use Space, City shall give Airline reasonable advance notice of such action and shall make available alternative space that is reasonably comparable for Airline's operations at the same rates and charges which Airline would have paid for the space being surrendered. Airline shall surrender its space promptly to City, provided that Airline shall be reimbursed for the reasonable cost of any such reassignment, reallocation or relocation and the cost of Airline's unamortized investment, if any, as documented by Airline to the satisfaction of the City. All of such costs, as well as City's cost of providing the alternative space aforementioned, shall be included in the cost of the particular Capital Project requiring such reassignment, reallocation or relocation. Section 9.09 Airport Security — Federal Regulations (A) Security Screening Facilities. As of the date of this Agreement, the Transportation Security Administration provides for all passenger and baggage screening conducted at the Airport. Airlines may be required to provide assistance to TSA in their efforts to carry out their federal mandates. At some point during the Agreement Term the Airport or other entity may be authorized to provide these services. (B) Airport Access Control System. Airline agrees to pay its pro rata share of the costs associated with the Airport control system as is or may be required to be implemented by 49 CFR Part 1542. The prorated costs of implementing, operating and maintaining the access control system will be recovered through Joint Use / Common Area Space Fee. Section 9.10 Utilities Airline may use all the electrical power outlets of City located in or about the Premises including their Aircraft Parking Positions and ramp area or adjacent thereto and the cost thereof shall be charged to the Single Cash Box Cost Revenue Center. Airline expressly waives any and all claims against City for compensation for any and all loss or damage sustained by reason of any defect, deficiency or impairment of any water supply system, drainage or sewer system, gas supply system, telephone system, electrical supply system, or electrical apparatus or wires serving the Premises. Airport Use and Lease Agreement—Dated July 1, 2014 Page 35 41 All costs for water, gas, heat or electricity used in connection with the heating or air conditioning furnished to the Premises by City as part of the basic charge for said Premises shall be paid by City. Notwithstanding, should Airline use electrical power in excess of what is reasonably required for its normal operations, City reserves the right to require Airline, at its expense, to promptly install meters as provided above and pay for all electrical power consumed thereafter. Section 9.11 Trash, Garbage, Aircraft Sewage and Other Refuse City shall provide a complete and proper arrangement for the adequate, sanitary handling and disposal, away from the Airport, of all trash, garbage, aircraft sewage and other refuse caused as a result of the operation of its Air Transportation business and charges therefor shall be allocated to the Single Cash Box Revenue Center. Piling of boxes, cartons, barrels or other similar items in an unsightly or unsafe manner on or about the Premises by Airline is forbidden. Section 9.12 Vehicles and Automotive Equipment on Airside Area and Aircraft Parking Positions City reserves the right to regulate, by adoption of rules or other means, subject to Section 3.01 (J) hereof, the use of vehicles and automotive equipment upon, over and across the Airside Area. In the event of an emergency not specifically provided for in said rules and regulations, the City Manager or a designated representative on duty at the time of such emergency shall have the power to take charge of the direction of such vehicle and automotive traffic in the area affected and regulate the same until the cause of such emergency has been removed. The existence of an emergency, other than an aircraft emergency, shall be determined by the City Manager or a designated representative. Section 9.13 Commercial Service Fee For commercial firms operating by permit, the Commercial Service Fee requirement to the Palm Springs International Airport is seven percent (7%) of gross revenues including all service fees billed by the commercial firm. This fee does not apply to work performed by wholly owned subsidiaries carrying out work for the parent company. ARTICLE X NO OTHER CHARGES Section 10.01 No other Charges The City agrees that no fees or charges other than those expressly set forth in this Agreement, shall be charged or collected by it from Airline or Airline's passengers, or employees for the use of any of the premises, facilities, rights, licenses and privileges Airport Use and Lease Agreement— Dated July 1, 2014 Page 36 42 granted by this Agreement, however, notwithstanding the foregoing, City shall not be prevented from: (a) Entering into use agreements or leases with others for space and facilities at the Airport or from requiring and issuing permits for the use of such space and facilities, or (b) Levying uniform catering fees on in-flight food and beverage caterers which service aircraft operating at the Airport and charge such caterers rentals for any facilities which they lease on the Airport for their exclusive use or for their joint use with others, or (c) Assessing and collecting a head tax, passenger boarding tax, passenger facility charge, use fee, or similar charge upon passengers using the Airport, or any of its facilities or services as, if, and when such tax, fee or similar charge becomes lawful by the repeal or modification of the Federal Anti-Head Tax Act (49 USCA Section 1513), or otherwise, or (d) Entering into agreements with Airline for additional facilities which provide for a separate and additional charge to Airline, or (e) Imposing a charge for public vehicular parking at the Airport or employee vehicular parking referred to in Section 5.07 of this Agreement, or (f) Imposing ground transportation fees, or (g) Imposing a fuel flowage fee on fixed base operators and other similar service contractors using space and facilities at the Airport who may be engaged by Airline or other aircraft operators to provide and dispense fuel to their aircraft, or (h) Imposing a fee for the issuance of security badges, access cards, and other access media at the Airport (i) Imposing a cost based cable management fee to gain access to utilize the Airport's fiber optic systems. ARTICLE XI INDEMNITY AND INSURANCE Section 11.01 Indemnification of Airport Airline agrees to indemnify the City, its officers, agents and employees against, and will hold and save them and each of them harmless from any and all actions, suits, claims, damages to persons or property, losses, costs, penalties, obligations, errors, omissions or liabilities, of or in connection with the negligent performance of the work, operations or activities of Airline, its agents, employees, subcontractors, or invitees, provided for herein, or arising from the use of the Premises or the Airport by Airline or its employees and customers, or arising from the failure of Airline to keep its exclusive Premises in good condition and repair, as herein provided, or arising from the negligent acts or omissions of Airline hereunder, or arising from Airline's negligent performance of or failure to perform any term, provision covenant or condition of this Agreement, but Airport Use and Lease Agreement— Dated July 1, 2014 Page 37 43 excluding such claims or liabilities existing prior to airline use and operations of premises, arising from the sole negligence or willful misconduct of the City, its officers, agents or employees, who are directly responsible to the City, and in connection therewith: (a) Airline will defend any action or actions filed in connection with any of said claims or liabilities and will pay all costs and expenses, including legal costs and attorney's fees incurred in connection therewith; (b) Airline will promptly pay any judgment rendered against the City, its officers, agents or employees for any such claims or liabilities arising out of or in connection with the negligent performance of or failure to perform such work, operations or activities of airline hereunder; and Airline agrees to save and hold the City, its officers, agents, and employees harmless therefrom; (c) In the event the City, its officers, agents or employees is made a party to any action or proceeding filed or prosecuted against Airline for such damages or other claims arising out of or in connection with the negligent performance of or failure to perform the work, operation or activities of Airline hereunder, Airline agrees to pay to the City, its officers, agents or employees, any and all costs and expenses incurred by the City, its officers, agents or employees in such action or proceeding, including but not limited to, legal costs and attorney's fees. Section 11.02 Airline Public Liability Insurance Airline agrees to carry out and keep in force public liability insurance with an insurance company of recognized responsibility, or provide self-insurance, covering personal injury, death and property damage to protect the City, its commissioners, directors, agents, officers, and employees, from liability covered by the indemnification provisions of this Article subject to policy terms, conditions, limitations and exclusions. Without limiting its liability as aforesaid, Airline agrees to carry and keep in force such insurance, written on a per occurrence basis, with limits of liability for death, personal injury and property damage in a combined single limit not less than One Hundred and Fifty Million Dollars ($150,000,000), except Twenty Five Million Dollars ($25,000,000) with respect to non-passenger personal injury liability. An Airline may self-insure all or a portion of the items specified in this Section 11.02, Section 11.03, and Section 11 .05 so long as Airline maintains a net worth satisfactory to the City's Risk Manager. Section 11.03 Workers Compensation Insurance Airline shall, at the Airline's sole cost and expense, maintain a policy of workers compensation insurance in an amount as will fully comply with the laws of the State of California and which shall indemnify, insure, and provide legal defense for the Airline and City against any loss, claim or damage arising from any injuries or occupational diseases occurring to any person employed by the Airline at the Airport or any persons Airport Use and Lease Agreement—Dated July 1, 2014 Page 38 44 retained by the Airline in the course of conducting Airline's business in the Airport. All such policies shall include a waiver of subrogation against the City its officers and agents, with respect to the provisions of this Agreement to the extent insurance proceeds are actually received. Section 11.04 City Public Liability Insurance The City shall maintain in force during the term of this Agreement public liability insurance protecting the City from claims of bodily injury and property damage liability arising out of the ownership, maintenance, use, and occupancy of the Airport in amounts to be determined by the City. Section 11.05 Fire and Extended Coverage Insurance —Terminal Building Complex The City agrees to maintain in force during the term of this Agreement fire and extended coverage insurance on the Terminal Building Complex and any additions, alterations, or modifications thereto and on all contents owned by the City usual and incidental to the Terminal Building Complex for an amount of not less than ninety percent (90%) of the full replacement value thereof (hereinafter referred to as "City Insurance"). Airline shall purchase similar insurance on its contents, improvements, betterments, and other incidental personal property (hereinafter referred to as "Airline Insurance"), or shall self-insure. The City and Airline hereby mutually release and discharge each other from all claims or liabilities arising from or caused by fire or other casualty covered by the aforementioned insurance on the Terminal Building Complex or contents and personal property in, at or on the Terminal Building Complex. All such policies shall include a waiver of subrogation with respect to the provisions of this Agreement to the extent insurance proceeds are actually received. Section 11.06 Airline Insurance on Automobiles and Other Ground Vehicles Airline shall maintain at its sole expense and cause to be kept in force at all times during the term of this Agreement, liability insurance in the form of primary and excess, or layered amounts of insurance covering the operation of Airline's owned or non-owned automobiles and other ground vehicles at the Airport, written on a per occurrence basis in a combined single limit of not less than Twenty Five Million Dollars ($25,000,000) for bodily injury and property damage liability per any one occurrence. Upon certification of Airline that Airline does not own, maintain, or operate vehicles at the Airport, City Manager may relieve Airline of Airline's obligations under this Section. Section 11.07 Commercial General Liability Insurance A policy of commercial general liability insurance written on a per occurrence basis with a combined single limit of at least $2,000,000 bodily injury and property Airport Use and Lease Agreement—Dated July 1, 2014 Page 39 45 damage including coverage for contractual liability, personal injury, independent contractors, property damage, products and completed operations. The Commercial General Liability Policy shall name the City of Palm Springs as an additional insured in accordance with standard ISO additional insured endorsement form CG2010 (1185) or equivalent language. The Commercial General Liability Insurance shall name the City, its officers, employees, and agents as additional insured to the extent of their indemnified interest. Section 11.08 General Provision Applicable to Airline's Insurance (a) All of the policies of insurance required to be procured by Airline pursuant to this Article XI shall be primary insurance and any insurance maintained by the City shall be excess and non-contributing with insurance provided by the Airline's policies. (b) The policy or policies of insurance be in a form and content common to the industry and reasonably satisfactory to the City and written by insurers satisfactory to the City. Such insurers must meet the minimum insurance company ratings as determined by the most current edition of the Best's Key Rating Guide/Property- Casualty/United States or www.ambest.com and VIII financial size category) or be satisfactory to the City. A California admitted carrier is preferred but not required. (c) All of said policies of insurance shall provide that said insurance may not be amended or cancelled without providing thirty (30) days' prior written notice by registered mail to the City. (d) Prior to the Effective Date or such earlier date as Airline takes possession of the Premises for any purpose; and at least thirty (30) days prior to the expiration of any insurance policy, Airline shall provide City with certificates of insurance or appropriate insurance binders evidencing the above insurance coverage. (e) In the event the City Manager determines that (i) the Airline's activities in the Premises create an increased or decreased risk of loss to the City, (ii) greater insurance coverage is required due to the passage of time, or (iii) changes in the industry require different coverage be obtained, Airline agrees that the minimum limits of any insurance policy and the types of insurance policies required to be obtained by Airline may be changed accordingly upon receipt of written notice from the City Manager; provided that Airline shall have the right to appeal a determination of increased coverage by the City Manager to the City Council of City within ten (10) days of receipt of notice from the City Manager. (f) City and Airline hereby waive any rights each may have against the other on account of any loss or damage occasioned by property damage to the Premises, its contents, or Airline's trade fixtures, equipment, personal property or inventory arising from any risk generally covered by insurance against the perils of fire, extended Airport Use and Lease Agreement—Dated July 1, 2014 Page 40 46 coverage, vandalism, malicious mischief, theft, sprinkler damage, and earthquake sprinkler leakage. (g) Each of the parties, on behalf of their respective insurance companies insuring such property of either Airport or Airline against such loss, waives any right of subrogation and contribution that it may have against the other. The foregoing waivers of subrogation shall be operative only so long as available in California and provided further that no policy is invalidated thereby. (h) The Liability Policies in 11.02 and 11.07 shall name the City of Palm Springs as an additional insured in accordance with standard ISO additional insured endorsement form CG2010 (1185) or equivalent language. The Liability Insurance shall name the City, its officers, employees, and agents as additional insured to the extent of their indemnified interest. ARTICLE XII QUIET ENJOYMENT Section 12.01 Quiet Enioyment The City agrees that on payment of the rents, fees and other charges provided for herein and the performance of the covenants and agreements on the part of Airline to be performed hereunder, Airline shall peaceably have and enjoy the Premises, appurtenances, facilities, rights, licenses and privileges granted herein. ARTICLE XIII INSPECTION BY CITY Section 13.01 Inspection by City The City may enter upon the premises including the Premises that are leased exclusively, preferentially, or jointly to Airline and others, during normal business hours and at such times as may be reasonable under the circumstances for any purpose necessary, incidental to or connected with the performance of its obligations hereunder or in the exercise of its governmental functions relating to the public health, safety, good conduct and the proper management of the Airport. ARTICLE XIV RULES AND REGULATIONS Section 14.01 Rules and Regulations The City may adopt and enforce reasonable rules and regulations, subject to reasonable advance notice to and opportunity for Airline to comment, which Airline agrees to observe and obey, with respect to the use of the Airport and its appurtenances, facilities, improvements, equipment and services; provided that such Airport Use and Lease Agreement—Dated July 1, 2014 Page 41 47 rules and regulations shall be consistent with safety and with rules, regulations and orders of the Federal Aviation Administration and Transportation Security Administration with respect to all operations of the Airport and, provided further, that such rules and regulations shall not be inconsistent with the provisions of this Agreement or other agreements between the City and Airline relating to the use of the Airport or inconsistent with the procedures prescribed or approved from time to time by the Federal Aviation Administration and Transportation Security Administration with respect to the operation of aircraft operated at the Airport. In addition to the foregoing, Airline shall observe, obey, comply with any and all applicable rules, regulations, laws, ordinances, statutes or orders of any governmental authority, Federal, State, or local, lawfully exercising authority over the Airport or Airline's conduct of its Air Transportation business hereunder. In the event City shall be subject to any fine or penalty by reason of Airline's violation of any applicable governmental rules, regulations or standards as now or hereafter may be promulgated or enacted, the cost of such fine or penalty shall be borne by the Airline. Furthermore, Airline agrees to indemnity, defend, and save City harmless from any and all fines or penalties charged against City by reason of Airline's violation of any applicable governmental rules, regulations or standards. City shall not be liable to Airline for any diminution or deprivation of possession, or of its rights hereunder, on account of the exercise of any such right of authority as in this Section provided, nor shall Airline be entitled to terminate the whole or any portion of the leasehold estate herein created, by reason of the exercise of such right or authority, unless the exercise thereof shall so interfere with Airline's use and occupancy of the leasehold estate herein created as to constitute a termination in whole or in part of this Agreement by operation of law in accordance with the laws of the State of California. ARTICLE XV ASSIGNMENT AND SUBLEASE Section 15.01 Assignment and Sublease Airline shall not assign or transfer this Agreement, the Premises or any part thereof, without the prior written consent of the City, which consent shall not be unreasonably withheld. An assignment requiring prior written consent of the City under this Section 15.01 also includes, but is not limited to, dual-branding, jointly-operated businesses or other form of joint venture. Notwithstanding the foregoing, Airline may assign this Agreement to any successor-in-interest of Airline with or into which Airline may merge or consolidate or to any entity which may acquire substantially all of the assets of Airline without the consent of the City; provided that said assignee complies with all of the other terms of this Agreement. Airline shall not sublease all or any part of Airport Use and Lease Agreement—Dated July 1, 2014 Page 42 48 the Premises without the prior written approval of the City, which approval shall not be unreasonably withheld. City may withhold its consent to an assignment or sublease to a proposed assignee or sub-lessee for which City's consent is required hereunder, and Airline agrees that City shall not be unreasonable for doing so, if all of the following criteria are not met: (a) the proposed assignee's or sub-lessee's general financial condition, including liquidity and net worth, verified by audited financial statements prepared by a certified public accountant in conformity with generally accepted accounting principles, is equal to or greater than that of Airline; and (b) the proposed assignee has a demonstrated business capability equal to or greater than that of Airline in operating an Airline Transportation business; and (c) the proposed assignee is financially responsible. Prior to the effectiveness of any assignment or subletting, regardless of whether the consent of the City is required, the assignee or sub-lessee shall assume all of the obligations of Airline hereunder, in writing in a form satisfactory to the City. Said assignment or sublease shall be subject to all of the terms and conditions of this Agreement. City shall be under no obligation to consider a request for City's consent to an assignment until Airline shall have submitted in writing to City a request for City's consent to such assignment or subletting together with audited financial statements of Airline and the proposed assignee or sub-lessee, a history of the proposed assignee's or sub-lessee's business experience and such other information as required by City to verify that the criteria for assignment and subletting as set forth herein are met. The consent by City to one assignment or subletting by another person or entity shall not be deemed to be consent to any subsequent assignment or subletting. Any assignment or subletting requiring the consent of City made without obtaining such consent shall constitute a material breach of this Agreement, and shall, at the option of the City, terminate this Agreement. ARTICLE XVI SURRENDER OF POSSESSION - HOLDING OVER Section 16.01 Surrender of Possession — Holding Over Airline agrees to yield and deliver to the City the possession of the Premises including the Premises leased exclusively or preferentially to Airline or jointly to Airline and others, at the termination of this Agreement by expiration or otherwise. Such Premises shall be delivered in clean and good condition in accordance with Airline's express obligations hereunder, except for reasonable wear and tear, fire and other casualty. Airline shall have the right at any time during the term of this agreement, or any renewal or extension hereof, to remove or sell its trade fixtures and equipment situated on the Premises that were installed, or placed by it, at its expense in, on or about the Premises pursuant to the provisions of this Agreement subject however to any Airport Use and Lease Agreement—Dated July 1, 2014 Page 43 4V valid lien that the City may have thereon for unpaid fees or other charges. Any such removal shall be at Airline's expense and accomplished in a good workmanlike manner. Any damage occasioned by such removal shall be repaired at Airline's expense so that the Premises may be surrendered in a good, clean and sanitary condition. Any holding over by Airline after cancellation or termination of this Agreement shall not operate to extend or renew such Agreement for any further term whatsoever, except Airline's holding over after the cancellation or termination of the Agreement shall be considered a month-to-month tenancy terminable by either party upon thirty (30) days' prior written notice of such termination. ARTICLE XVII TAXES Section 17.01 Taxes All taxes imposed on this Agreement as extended or modified (including any renewals thereof and property interests created thereby) and on any other agreements now in effect between City and Airline or which may hereinafter by entered into between the Airline and City (including any renewals thereof and property interests created thereby) shall be charged to and paid by Airline. Without limiting the generality of the foregoing, Airline shall pay all rental and/or sales taxes, if any, assessed or levied on account of amounts payable by Airline to City hereunder. Airline acknowledges that this Agreement may create a possessory interest subject to property taxation, and that Airline shall be subject to payment of any real property taxes or excise taxes levied on such interest and/or upon the fee estate of the City. Real property taxes shall include any form of real estate taxes or assessments, general, special, ordinary or extraordinary and any license fee, rental tax, improvement bond or bonds, levy, penalty, or tax composed by any authority having the power to tax as against any legal or equitable interest of City on the Airport or on the underlying realty, as against City's right to receive rent or other income therefrom or as against City's business of leasing the Airport whether now or hereafter enacted. Airline shall also pay all personal property taxes and assessments levied upon Airline's personal property located on the Premises. If the Airline shall fail to pay said taxes, charges, or assessments within thirty (30) days before they become delinquent, provided advanced written notice has been provided to the airline, City may, at its option, pay such taxes, charges or assessments without pre-empting the Airlines right to protest. Such amount paid by City, plus interest at the rate of ten percent (10%) per annum, shall be considered as an additional charge payable hereunder and shall be due and payable at the next due date for Airline Rates and Charges. Airport Use and Lease Agreement—Dated July 1, 2014 Page 44 50 ARTICLE XVIII DEFAULT AND CANCELLATION Section 18.01 Default by Airline The occurrence of any one or more of the following events shall constitute a default and breach of this Agreement by Airline: (a) the failure to pay any rental or other payment required hereunder to or on behalf of Airport more than ten (10) days after receipt by Airline of written notice from City that Airline has failed to pay rent or other amount when due; (b) the failure to perform any of Airline's agreements or obligations hereunder (exclusive of a default in the payment of money) where such default shall continue for a period of thirty (30) days after written notice thereof from City to Airline which notice shall be deemed to be the statutory notice so long as such notice complies with statutory requirements; (c) the vacation or abandonment of the Premises by Airline for more than sixty (60) days; (d) the making by Airline of a general assignment for the benefit of creditors; (e) the filing by Airline of a voluntary petition in bankruptcy or the adjudication of Airline as a bankrupt; (f) the appointment of a receiver to take possession of all or substantially all the assets of Airline located at the Premises or of Airline's leasehold interest in the Premises; (g) the filing by any creditor of Airline of an involuntary petition in bankruptcy which is not dismissed within sixty (60) days. Any repetitive failure by Airline to perform its agreements and obligations hereunder, though intermittently cured, shall be deemed an incurable default. Two (2) breaches of the same covenant within a sixty (60) day period, a notice having been given pursuant to (a) or (b) above for the first breach, or three (3) of the same or different breaches during any five (5) year period of this Agreement for which notices pursuant to (a) or (b) above were given for the first two (2) breaches shall conclusively be deemed to be an incurable repetitive failure by Airline to perform its obligations hereunder. Section 18.02 Remedies Upon Default In the event of any such default or breach by Airline, City may at any time thereafter, without further notice or demand, rectify or cure such default, and any sums expended by City for such purposes shall be paid by Airline to City upon demand and as additional rental hereunder. In the event of any such default or breach by Airline, City shall have the right (i) to continue the lease in full force and effect and enforce all of its rights and remedies under this Agreement, including the right to recover the rental as it becomes due under this Agreement, or (ii) City shall have the right at any time thereafter to elect to terminate the Agreement and Airline's right to possession thereunder. Upon such termination, City shall have the right to recover from Airline: (a) The worth at the time of award of the unpaid Airline Rates and Charges which had been earned at the time of termination; Airport Use and Lease Agreement— Dated July 1, 2014 Page 45 51 (b) The worth at the time of award of the amount by which the unpaid Airline Rates and Charges which would have been earned after termination until the time of award exceeds the amount of such Airline Rates and Charges that the Airline proves could have been reasonably avoided; (c) Any other amount necessary to compensate the City for all of the detriment proximately caused by Airline's failure to perform its obligations under the Agreement or which in the ordinary course of things would be likely to result therefrom. The "worth at the time of award" of the amounts referred to in subparagraphs (a) and (b) above shall be computed by allowing interest at three percent (3%) over the prime rate then being charged by Bank of America, N.A. but in no event greater than the maximum rate permitted by law. The "worth at the time of award" of the amount referred to in subparagraph (b) above shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1%), but in no event greater than ten percent (10%). Such efforts as City may reasonably make to mitigate the damages caused by Airline's breach of this Agreement shall not constitute a waiver of City's right to recover damages against Airline hereunder, nor shall anything herein contained affect City's right to indemnification against Airline for any liability arising prior to the termination of this Agreement for personal injuries or property damage, and Airline hereby agrees to indemnify and hold City harmless from any such injuries and damages, including all attorney's fees and costs incurred by Airport in defending any action brought against City for any recovery thereof, and in enforcing the terms and provisions of this indemnification against Airline. Notwithstanding any of the foregoing, the breach of this Agreement by Airline, or an abandonment of the Premises by Airline, shall not constitute a termination of this Agreement, or of Airline's right of possession hereunder, unless and until City elects to do so, and until such time City shall have the right to enforce all of its rights and remedies under this Agreement, including the right to recover Airline Rates and Charges, and all other payments to be made by Airline hereunder, as they become due. Failure of City to terminate this Agreement shall not prevent City from later terminating this Agreement or constitute a waiver of City's right to do so. Section 18.03 Cancellation by City (A) Preferential Use of Concourse Gate Positions. If, at any time, one or more of Airline's Preferential Use Concourse Gate Positions is underutilized as hereinafter set forth, City may cancel Airline's Preferential Use of such underutilized Concourse Gate Position by giving Airline at least thirty (30) days' prior written notice. The one gate position guarantee set forth in Section 9.04 shall remain in effect during the term of this Agreement. Airport Use and Lease Agreement— Dated July 1, 2014 Page 46 52 Any Concourse Gate Position shall be deemed to be underutilized if during the preceding twelve (12) months a secondary user of Airline's Concourse Gate Position has a greater number of Fee Landings utilizing such Preferential Use Concourse Gate Position, for the purpose of loading and unloading passengers, than Airline. If during the thirty (30) days' notice period provided above Airline institutes additional flights, aircraft arrivals and departures for the purpose of loading and unloading passengers, which would exceed the number of flights in place by the secondary user, then Airline shall have the right to retain Preferential Use of its Concourse Gate Position. (B) Cessation of Use. If Airline ceases to operate any flights for more than sixty (60) consecutive days during the months of November through May ("peak season"), then City may cancel this Agreement and terminate all of its obligations hereunder by giving Airline at least thirty (30) days' prior written notice. Airline is considered to have ceased operations during peak season when Airline has no aircraft scheduled for arrival or departure at Airline's Concourse Gate Position(s), for the purpose of loading and unloading passengers, for a period of more than sixty (60) consecutive days, unless said cessation of operations is due to a force majeure or a labor strike. Section 18.04 Cancellation by Airline In addition to the rights of cancellation granted heretofore in this Agreement, Airline shall have the right to cancel this Agreement in its entirety and all rights ensuing therefrom upon the occurrence of any of the following: (a) The Airline provides three hundred sixty four (364) days' written notice to City. (b) The withdrawal, suspension or termination by the Federal Aviation or its successor Federal Agency, and/or the State of California Public Utilities Commission, or its successor State Agency, of the permit or authorization required by the law permitting or authorizing Airline to operate to and from the Airport; provided, however, that none of the foregoing is due to any fault of Airline; (c) The issuance of any order, rule or regulation by the Federal Aviation Administration, Transportation Security Administration, the California Public Utilities Commission, or its or their successor Federal or State Agency of any other governmental agency having jurisdiction, or the issuance and execution of any judicial process by any court of competent jurisdiction materially restricting for a period of a least sixty (60) days the use of the Airport for scheduled Air Transportation; provided, however, that none of the foregoing is due to any fault of Airline; (d) The material restriction of City's operation of the Airport by action of the Federal Government, or any department or agency thereof, under its wartime or emergency powers, and the continuance thereof for a period of not less than sixty (60) days; provided, however, that without prejudice to the rights of Airline to cancel as Airport Use and Lease Agreement—Dated July 1, 2014 Page 47 53 above provided, the parties hereto may mutually agree to a just abatement of fees and charges accordingly as their respective rights are affected; (e) The material restriction of Airline's use of the Premises and facilities herein and the continuance thereof for a period of not less than sixty (60) days by reason of any future agreement between the City and the United States; and (f) In the event Airline is entirely (1) merged with or (2) purchased by a Signatory Airline during the term of this Agreement, Airline may cancel this Agreement after providing City Manager with sixty (60) days' written notice of cancellation. ARTICLE XIX DAMAGE OR DESTRUCTION Section 19.01 Damage or Destruction of Premises A. Partially Insured Casualty. If the Premises or the Airport shall be partially damaged by fire or other casualty required to be insured by City pursuant to Section 11.05, then upon City's receipt of the insurance proceeds, City shall, except as otherwise provided in this section, promptly repair and restore the same (exclusive of Airline's leasehold improvements, alterations or additions, trade fixtures, signs or other personal property) substantially to the condition thereof immediately prior to said damage or destruction, limited, however, to the extent of the insurance proceeds actually received by City therefor. B. Substantial and Uninsured Casualty. If (a) both the Premises and the buildings constituting the Airport shall be damaged to the extent of fifty percent (50%) or more of the cost of replacement thereof or (b) the Premises or the buildings constituting the Airport shall be destroyed or damaged as a result of a risk not required to be insured by City pursuant to 12.05 hereof, or (c) the Premises shall be damaged to the extent of twenty-five percent (25%) or more of the cost of replacement thereof during the last two (2) years of the term of this Agreement, or (d) the buildings constituting the Airport shall be damaged to the extent of fifty percent (50%) or more of the cost of replacement thereof, whether or not the Premises shall be damaged, then in any such events, City may elect either to repair the damages as aforesaid, or to cancel this Agreement by written notice of cancellation given to Airline within ninety (90) days after the date of such occurrence, and thereupon this Agreement shall cease and terminate twenty (20) days following Airline's receipt of such notice; and Airline shall vacate and surrender the Premises to City in accordance with the terms of this Agreement. In determining the cost of replacement of the Premises or any building or improvement, the cost of foundations and footings shall not be included, except to the extent of the cost of repair thereto required by such damage or destruction. C. Reconstruction. In the event of any reconstruction of the Premises or the Airport under this Section, said reconstruction shall be performed by City's contractor. Airport Use and Lease Agreement—Dated July 1, 2014 Page 48 54 Airline, at its sole cost and expense, shall be responsible for the replacement of its signs, stock-in-trade, trade fixtures, furniture, furnishings and equipment. Airline shall commence such installation of fixtures, equipment and merchandise promptly upon delivery to Airline of possession of the Premises and shall diligently prosecute such installation to completion. D. Termination. Upon any termination of this Agreement under any of the provisions of this Section, the parties shall be released thereby without further obligation to the other party coincident with the surrender of possession of the Premises to City, except for obligations accrued but yet to be performed.. E. Abatement of Airline Rates and Charges. In the event of repair, reconstruction and restoration to the Premises by City as to be paid under Sections 5.02 and 5.03 hereof shall be abated proportionately with the degree to which Airline's use of the Premises is impaired commencing from the date of destruction and continuing during the period of City's repair, reconstruction or restoration of the Premises. Airline shall continue the operation reasonably practicable from the standpoint of prudent business management, and the obligation of Airline to pay Landing Fees and other Airline Rates and Charges shall remain in full force and effect. Airline shall not be entitled to any compensation for damages from City for loss of the use of the whole or any part of the Premises, the building of which the Premises are a part, or Airline's personal property or any inconvenience or annoyance occasioned by such damage, repair, reconstruction or restoration. F. Waiver. Airline hereby waives any statutory rights of termination which may arise by reason of any partial or total destruction of the Premises which City is obligated to restore or may restore under any of the provisions of this Agreement. G. Property Damage. Airline or affiliate will be charged for any property damage caused by their airline or agents. ARTICLE XX PROHIBITED USES Section 20.01 Prohibited Uses Airline shall not do or permit anything to be done in, on, or at the Airport which will in any way conflict with any law, or ordinance of any governmental agency, or with the City's rules and regulations provided for in Article XV herein, or create a nuisance or in any way obstruct or interfere with the right of other users of the airport, or damage any property or persons thereon, or endanger the health and safety of persons using the Airport. Section 20.02 Oil. Fuel and Other Materials Airline agrees to prevent the entry of oil, fuel or other prohibited materials that are under its control into the drainage system of Airport or into the drainage system of any Airport Use and Lease Agreement—Dated July 1, 2014 Page 49 55 of its surrounding communities, unless such materials are first properly treated by equipment installed with the approval of City for that purpose, and Airline complies with recommendations made by the Environmental Protection Agency. "Drainage systems(s)" shall include among other things, the sewer system and ground water. Airline will bear all costs related to prohibited entry of such oil, fuel or other materials under the Airline's responsibility, into said drainage systems. Section 20.03 Compliance with Laws Airline shall, at its sole cost and expense, comply with all of the requirements of all municipal, state and federal authorities now in force or which may hereafter be in force pertaining to its use of the Premises, and shall faithfully observe in said use all municipal ordinances, including, but not limited to, the General Plan and zoning ordinances, state and federal statutes or other governmental regulations now in force or which shall hereinafter be in force, except that in complying with the law, Airline shall not be held responsible for any structural changes to the terminal building. Airline's violation of law shall constitute an incurable default under this Agreement. The judgment of any court of competent jurisdiction, or the admission of Airline in any action or proceeding against Airline, whether City be a party thereto or not, that Airline has violated any such order or statute in said use, shall be conclusive of that fact as between the City and Airline, and there shall be no third party beneficiary to such judgment or proceeding. Airline shall, not engage in any activity on or about the Premises that violates any Environmental Law, and shall promptly, at Airline's sole cost and expense, take all investigatory and/or remedial action required or ordered by any governmental agency or Environmental Law for clean-up and removal of any contamination involving any Hazardous Material created or caused directly by Airline or its agents. The term "Environmental Law" shall mean any federal, state or local law, statute, ordinance or regulation pertaining to health, industrial hygiene or the environmental conditions on, under or about the Premises, including, without limitation, (i) the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), 42 U.S.C. Sections 9601 et seq.; (ii) the Resource Conservation and Recovery Act of 1976 ("RCRA") 42 U.S.C. Sections 6901 et seq.; (iii) California Health and Safety Code Sections 25100 et seq.; (iv) the Safe Drinking Water and Toxic Enforcement Act of 1986, California Health and Safety Code Section 25249.5 et seq.; (v) California Health and Safety Code Section 25359.7; (vi) California Health and Safety Code Section 25915; (vii) the Federal Water Pollution Control Act, 33 U.S.C. Sections 1317 et seq.; (viii) California Water Code Section 1300 et seq.; (ix) California Civil Code Section 3479 et seq., as such laws are amended and the regulations and administrative codes applicable thereto. The term "Hazardous Material" includes, without limitation, any material or substance which is (i) defined or listed as a "hazardous waste," "extremely hazardous waste," "restrictive hazardous waste" or "hazardous substance" or Airport Use and Lease Agreement—Dated July 1, 2014 Page 50 56 considered a waste, condition of pollution or nuisance under the Environmental Laws; (ii) petroleum or a petroleum product of fraction thereof; (iii) asbestos; and/or (iv) substances known by the State of California to cause cancer and/or reproductive toxicity. It is the intent of the parties hereto to construe the terms "Hazardous Materials" and "Environmental Laws' in their broadest sense. Airline shall provide all notices required pursuant to the Safe Drinking Water and Toxic Enforcement Act of 1986, California Health and Safety Code Section 25249 et seq. For all areas in which the Airline or Airline contractor operate, Airline shall provide prompt written notice to City of all notices of violation of the Environmental Laws received by Airline. ARTICLE XXI IMPROVEMENTS Section 21.01 Improvements by Airline Airline may, at its expense and subject to the provisions of Section 22.02 hereof, design, construct and install in Airline's Exclusive Use Space any additional interior partitions, walls other than structural building walls, electrical wiring, conduits, ducts, fixtures and equipment, wall and floor coverings including all special flooring, painting and decor, counters, cabinet work and equipment as may be required by Airline and which is not provided by City. Airline shall have the right to install at its expense and subject to the provisions of Section 21.02 hereof, in the conduit and ducts provided by City in the basic building structure, the wiring and other equipment necessary for Airline's internal communications system and the further right to attach and maintain, at its expense, on the vertical sides of the terminal building, a communications antenna. Loading bridge improvements sought by Airline are subject to Airport approval and modifications with the expense billable to the Airline unless said modification is completed on all bridges and Airlines agree to the Capital Improvement or the Airport finds a modification to be in the best interest of the Airport. Section 21.02 Conditions Covering Improvements and Alterations (A) Consent Required from City. No improvements, alterations or additions including repainting, redecorating and recarpeting shall be made in or about Airline's Existing or Future Exclusive Use Space by Airline without first obtaining written consent of the City Manager. All such improvements, structure, alterations, additions and work shall be in full accordance with all written conditions prescribed by the City Manager. Prior to the construction of any improvements mentioned in Section 21.01 above, Airline shall submit to the City Manager for review and approval, the plans of such improvements, including the color of all paint and carpet. Such plans shall conform to the general architectural scheme and overall plans adopted by the City for the Terminal Building Complex. (B) Working Drawings. Upon approval by the City Manager of Airline's plans, Airline shall cause the construction called for by said plans to be commenced and Airport Use and Lease Agreement—Dated July 1, 2014 Page 51 57 completed with reasonable dispatch. Upon completion of any improvement, Airline shall furnish to City, at no charge, a complete set of working drawings of the improvement as constructed. (C) Conformance. All improvement constructed by Airline in the Airline's Existing or Future Exclusive Use Space including the plans and specification therefor, shall conform in all respects to the applicable statutes, ordinances, building code, rules and regulations of the City of Palm Springs and such other governmental authority as may have jurisdiction. City's approval given, as provided for in this Section 21.02, shall not constitute a representation or warranty as to such conformity which shall remain Airline's responsibility. Airline, at its own cost and expense, shall procure all permits necessary for such construction. (D) Airline's Cost and Expense. All renovation or construction by Airline pursuant to this Section 21.02 shall be at Airline's sole cost and expense. Airline shall keep its Existing or Future Exclusive Use Space and the improvements constructed thereon free and clear of all liens and shall pay all costs for labor and material arising out of such construction and shall hold City harmless from any liability in respect thereto. Airline shall have the right to contest any and all liens filed against its Existing or Future Exclusive Use Space. Airline further agrees that City shall have the right to post notices of non responsibility as provided by Sections 3094 and 3129 of the Civil Code of the State of California. (E) No Structural Alteration. Airline shall make no structural alterations to the roof, walls, or floors of any of City's permanent structures in which Airline's Existing or Future Exclusive Use Space is located without first obtaining City's written consent. Nothing contained in this Section 21.02 shall prevent Airline from making non-structural alterations to any improvements pursuant to this Section 21.02. Section 21.03 Ownership of Improvements Any and all improvements, alterations, or additions erected or installed by Airline upon the Airline's Existing or Future Exclusive Use Space shall become a part of the land on which they are erected and title thereto shall thereupon vest in City upon the expiration or sooner termination of this Agreement. However, machines, baggage conveyor equipment, trade fixtures and similar installations of the type commonly installed in and removed from other airport terminal facilities by tenants, which are installed in or on the Premises, shall not be deemed to be part of the realty even though they are attached to the floors, walls or roof of the buildings or to outside pavements so long as they can be removed without structural damage to the buildings or pavements; provided, however, that if the removal of any such installation damages any part or parts of the buildings, pavements, or Premises, Airline shall repair such damage and restore said damaged part or parts of said building, pavements, or Premises to the condition in which they existed prior to the installation of said improvements. Airport Use and Lease Agreement— Dated July 1, 2014 Page 52 J� ARTICLE XXII FEDERAL GRANTS AND NONDISCRIMINATION Section 22.01 Nondiscrimination and FAA Required Clauses Airline, for itself, heirs, personal representatives, successors in interest, and assigns, as part of the consideration hereof, does hereby covenant and agree as a covenant running with the Premises that, in the event facilities are constructed, maintained, or otherwise operated on the said Premises described in this Agreement for a purpose for which a Department of Transportation (DOT) program or activity is extended or for another purpose involving the provision of similar services or benefits, Airline shall maintain and operate such facilities and services in compliance with all other requirements imposed pursuant to Title 49, Code of Federal Regulations, DOT, Subtitle A, Office of the Secretary, Part 21, Nondiscrimination in Federally Assisted Programs of the Department of Transportation-Effectuation of Title VI of the Civil Rights Act of 1964, and as said Regulations may be amended. Airline, for itself, personal representatives, successors in interest, and assigns, as part of the consideration hereof, does hereby covenant and agree as a covenant running with the Premises that: (1) no person on the grounds of race, color, or national origin shall be excluded from participation in, denied the benefits of, or be otherwise subjected to discrimination in the use of said facilities; (2) in the construction of any improvements on, over, or under such Premises and the furnishing or services thereon, no person on the grounds of race, color, or national origin shall be excluded from participation in, denied the benefits of, or otherwise be subjected to discrimination; and (3) Airline shall use the Premises in compliance with all other requirements imposed by or pursuant to Title 49, Code of Federal Regulations, Department of Transportation, Subtitle A, Office of the Secretary, Part 21, Nondiscrimination in Federally-Assisted Programs of the Department of Transportation-Effectuation of Title VI of the Civil Rights Act of 1964, as said Regulations may be amended. In the event of breach of any of the above nondiscrimination covenants, City shall have the right to terminate the Agreement and to re-enter and repossess said Premises and the facilities thereon, and hold the same as if an agreement had never been made or issued. This provision does not become effective until the procedures of 49 CFR Part 21 are followed and completed including expiration of appeal rights. Airline shall furnish its services on a fair, equal and not unjustly discriminatory basis to all users thereof and it shall charge fair, reasonable and not unjustly discriminatory prices for each unit or service; provided Airline may be allowed to make reasonable and nondiscriminatory discounts, rebates or other similar type of price reductions to volume purchasers. Noncompliance with the preceding paragraph shall constitute a material breach thereof and, in the event of such noncompliance, City shall have the right to terminate this Agreement and the leasehold interest hereby created without liability therefore or, at Airport Use and Lease Agreement— Dated July 1, 2014 Page 53 59 the election of City or the United States, either or both said Governments shall have the right to judicially enforce such provisions. Airline agrees that it shall insert the provisions in the five preceding paragraphs in any agreement by which Airline grants a right or privilege to any person, firm or corporation to render services to the public on the Airport. Airline assures that it will undertake an affirmative action program as required by 14 CFR Part 152, Subpart E, to ensure that no person, on the grounds of race, creed, color, national origin, or sex be excluded from participating in any employment activities covered in 14 CFR Part 152, Subpart E. Airline assures that no person shall be excluded on these grounds from participating in or receiving the services or benefits of any program or activity covered by this subpart. Airline assures that it will require that its covered suborganizations provide assurances to Airline that, similarly, they will undertake affirmative action programs and that they will require assurances from their suborganizations to the same effort, as required by 14 CFR 152, Subpart E. City reserves the right to further develop or improve the landing area of the Airport as it sees fit regardless of the desires or view of Airline and without interference or hindrance. City reserves the right, but shall not be obligated to Airline, to maintain and keep in repair the landing area of the Airport and all publicly-owned facilities of the Airport, together with the right to direct and control all activities of Airline in this regard. This Agreement shall subordinate to the provisions and requirements of any existing or future agreement between City and the United States, relative to the development, operation or maintenance of the Airport. There is hereby reserved to City, its successors and assigns, for the use and benefit of the public, a right of flights for the passage of aircraft in the airspace above the surface of the Airport herein. This public right of flight shall include the right to cause in said airspace any noise inherent in the operation of any aircraft used for navigation or flight through the said airspace or landing at, taking off from, or operation on the Airport. Airline agrees to 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 Airport, or in the event of any planned modifications or alterations of any present or future building or structure situated on the Airport. Airline, by accepting this Agreement, agrees for itself, its successors and assigns that it will not make use of the Airport in any manner which might interfere with the landing and takeoff of aircraft from the Airport or otherwise constitute a hazard. In the event the aforesaid covenant is breached, City reserves the right to enter upon the Premises hereby leased and cause the abatement of such interference at the expense of Airline. Airport Use and Lease Agreement—Dated July 1, 2014 Page 54 60 It is understood and agreed that nothing contained in this agreement shall be construed to grant or authorize the granting of an exclusive right within the meaning of Section 308a of the Federal Aviation Act of 1958 (49 U.S.C. 1349a). This Agreement and all the provisions hereof shall be subject to whatever right the United States Government now has or in the future may have or acquire affecting the control, regulation and taking over of said Airport or the exclusive or nonexclusive use of the Airport by the United States during the time of war or national emergency. Section 22.02 Federal Grants This Agreement shall be subordinate to the provisions of any existing and future agreements between the City and the United States of America, its boards, agencies, or commissions, relative to the operation or maintenance of the Airport, the execution of which has been, or will be, required as a condition to the expenditure of Federal funds for the development of the Airport. ARTICLE XXIII CONDEMNATION Section 23.01 Condemnation A. Total Taking. In the event the entire Premises shall be appropriated or taken under the power of eminent domain by any public or quasi-public authority, this Agreement shall terminate and expire as of the date of such taking, and City and Airline shall each thereupon be released from any liability thereafter accruing hereunder. B. Substantial Taking. In the event more than twenty percent (20%) of the square footage of the Premises is taken under the power of eminent domain by any public or quasi-public authority, or if by reason of any appropriation or taking, regardless of the amount so taken, the remainder of the Premises is not useable for Air Transportation, either City or Airline shall have the right to terminate this Agreement as of the date Airline is required to vacate a portion of the Premises, upon giving notice in writing of such election within thirty (30) days after receipt by Airline from City of written notice that said Premises have been so appropriated or taken. City agrees immediately after learning of any appropriation or taking to give to Airline notice in writing thereof. C. Right to Award. If this Agreement is terminated in either manner herein above provided, City shall be entitled to the entire award or compensation in such proceedings. Airline's right to receive compensation or damages for its fixtures and personal property shall not be affected in any manner hereby. D. Restoration. If both City and Airline elect not to so terminate this Agreement, or if neither has the right to so terminate this Agreement following any such taking, then in either such event City agrees, at City's cost and expense, to the extent of any severance damages attributable to damages to the Premises available to City, to as soon as reasonably possible restore the Premises on the land remaining to a complete unit of like quality and character as existed prior to such appropriation or taking. Airport Use and Lease Agreement—Dated July 1, 2014 Page 55 61 E. Voluntary Sale; Waiver. For the purposes of this Section, a voluntary sale or conveyance in lieu of condemnation shall be deemed an appropriation or taking under the power of eminent domain. Airline hereby waives any statutory rights of termination which may arise by reason of any partial taking of the Premises under the power of eminent domain. ARTICLE XXIV MISCELLANEOUS Section 24.01 Non-Waiver of Rights Continued performance by either party hereto pursuant to the terms of this Agreement after a default in any of the terms, covenants and conditions herein contained to be performed, kept or observed by the other party hereto, shall not be deemed a waiver of any right to cancel this Agreement for any subsequent default and no waiver of any such default shall be construed, or act as a waiver of any subsequent default. Section 24.02 Invalidity of Clauses The invalidity of any Article, Section, portion, paragraph, provision, or clause of this Agreement shall have no effect upon the validity of any other part or portion hereof. Section 24.03 Approval by the Parties Whenever the consent or approval of the City or the Airline is called for herein, it is understood and agreed that such approval shall be in writing and obtained in advance and shall not be unreasonably withheld or delayed. Section 24.04 Headings The Article and Section titles shown in this Agreement are included only as a matter of convenience and for reference and in no way define, limit, broaden or describe the scope or intent of any provisions of this Agreement. Section 24.05 Remedies The rights and remedies given to the City and Airline in this Agreement are distinct, separate and cumulative, and no one of them, whether or not exercised by either party, shall be deemed to be in exclusion of any of the others herein or by law or in equity provided. Section 24.06 Governing Law The parties hereto agree that this Agreement shall be governed and construed in accordance with the laws of the State of California. Airport Use and Lease Agreement—Dated July 1, 2014 Page 56 62 Section 24.07 Non-Liability No board member, Commissioner, director, officer, agent, consultant or employee of the City or Airline shall be charged personally or be held liable by or to the other party under any term or provision of this Agreement, or any amendment thereto, or because of any breach hereof, or because of its execution. Section 24.08 Attorneys' Fees and Costs In the event any action or suit or proceeding is brought by either party to collect the fees and charges due or to become due hereunder or any portion thereof or to take possession of said Premises or to enforce compliance with this Agreement for failure to observe any of the covenants of this Agreement, and such party is the prevailing party in such action, suit or proceeding, the losing party agrees to pay such sums as the Court may judge reasonable attorneys' fees and costs to be allowed in said suit, action or proceeding. Section 24.09 Notices (a) Any request, demand, authorization, direction, notice, consent or waiver provided or permitted to be made upon, given by, or furnished to, the City or Airline shall be sufficient for every purpose hereunder if in writing and mailed by certified or registered mail, postage prepaid and addressed as follows: (1) if to the City, at: Airport Director Palm Springs International Airport 300 E. Tahquitz Canyon Way, Suite OFC Palm Springs, CA 92262 and Attention: City Manager 3200 E. Tahquitz Way, PO Box 2743 Palm Springs, CA 92261 (2) if the Airline, at: Attention: The foregoing addresses may be changed by either party giving to the other party the same type of notice described above providing a substitute address. (b) Any such notice or other document shall be deemed to be received as of three days after the date deposited in the mail, if mailed in accordance with subsection (a) of this Section. Airport Use and Lease Agreement—Dated July 1, 2014 Page 57 63 Section 24.10 Termination of Prior Agreement City and Airline agree that the Airline Use Agreement for Palm Springs International Airport as amended ("Prior Agreement'), and expiring on June 30, 2014, is terminated as of the Effective Date of this Agreement. Section 24.11 Exhibits All Exhibits attached to this Agreement are incorporated herein by this reference. Section 24.12 Agreement Not to Grant More Favorable Terms Subject to the other provisions of this Section 24.12, City agrees not to enter into any lease, contract or other agreement with any other Aircraft Operator engaged in Air Transportation containing more favorable terms than this Agreement, or to grant to such Aircraft Operator rights or privileges with respect to the Airport that are not accorded Airline hereunder, unless the same rights, terms and privileges are concurrently made available to Airline. Notwithstanding the foregoing, it is understood and agreed that rentals and fees charged for terminal buildings, associated gate positions, ramp areas, and other facilities constructed in the future and not described in this Agreement may vary from the fees and charges established herein for the premises depending upon the capital cost and financing arrangements involved, and therefore may be more or less than the fees and charges established herein for similar facilities. In the event an Aircraft Operator shall use the facilities or any services of the Airport without first executing an agreement with City substantially identical to this Agreement, such Aircraft Operator shall pay rentals, fees and other charges as non- signatory Airline, and such rentals, fees and other charges as set forth in Article V, or otherwise at rates established by the City which are not less than those applicable to Airline as provided hereunder. Section 24.13 Entire Agreement This Agreement, together with all Exhibits and Appendices hereto, constitutes the entire agreement between the parties hereto relating to the subject matter hereof and may be amended only in writing, executed by duly authorized representatives of the party to be bound. Section 24.14 Jurisdiction and Venue The parties hereto agree that the State of California is the proper jurisdiction for litigation of any matters relating to this Agreement, and service mailed to the address of Airline set forth herein shall be adequate service for such litigation. The parties further agree that Riverside County, California is the proper place for venue as to any such litigation and Airline agrees to submit to the personal jurisdiction of such court in the event of such litigation. Airport Use and Lease Agreement—Dated July 1, 2014 Page 58 64 Section 24.15 No Oral Agreements This Agreement (i) covers in full each and every agreement of every kind or nature whatsoever between the parties hereto concerning this Agreement, (ii) supersedes, any and all previous obligations, agreements and understandings, if any, between the parties, oral or written, and (iii) merges all preliminary negotiations and agreements of whatsoever kind or nature herein. Airline acknowledges that no representations or warranties of any kind or nature not specifically set forth herein have been made by City or its agents or representatives. Airport Use and Lease Agreement—Dated July 1, 2014 Page 59 65 IN WITNESS WHEREOF,the parties have executed and entered into this Lease as of the date first written above. CITY OF PALM SPRINGS ATTEST: a municipal corporation By: By: City Clerk City Manager APPROVED AS TO FORM: By: City Attorney AIRLINE: Check one:_Individual_Partnership_Corporation Corporations require two notarized signatures: One from each of the following: A. Chairman of Board, President, or any Vice President:AND B. Secretary,Assistant Secretary, Treasurer,Assistant Treasurer, or Chief Financial Officer. By: By: Signature(notarized) Signature(notarized) Name: Name: Title: Title: State of State of County of County of On before me, On before me, Personally appeared Droved to Personally appeared proved to me on the basis of satisfactory evidence to be the person(s) me on the basis of satisfactory evidence to be the person(s) whose name(s)is/are subscribed to the within instrument and whose name(s)isfare subscribed to the within instrument and acknowledged to me that he/she/they executed the same in acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies),and that by his/her/their his/her/their authorized capacity(ies), and that by his/her/their signature(s)on the instrument the person(s),or the entity signature(s)on the instrument the person(s),or the entity upon behalf of which the person(s)acted,executed the upon behalf of which the person(s)acted,executed the instrument. instrument. WITNESS my hand and official seal. WITNESS my hand and official seal. !� Notary Notary Signature: Signature: Notary Seal: Notary Seal: Airport Use and Lease Agreement— Dated July 1, 2014 Page 60 66 Exhibit A: Landside I Terminal I Airside AIRSIDE TERMINAL ® LANDSIDE Airport Use and Lease Agreement — Dated July 1, 2014 Page 61 67 Exhibit B: Common Use Space C \ y.�pryy ry rnw �i f ✓e o I .' j P dd; . dd; •�y Airport Use and Lease Agreement— Dated July 1, 2014 Page 62 5 Exhibit C: Exclusive Use Space O. F El . / . - w y / /♦'4 yy I S:: I ♦ / i Ise DODO � � - € @g ♦ . ------------ Ad Airport Use and Lease Agreement — Dated July 1, 2014 Page 63 69 Exhibit D: Proprietary Gate Areas pp JIB -41 Ell G� ®O c w r � ®B 5 $ o Z z � m � m T m Z O A 3 n 222p m ti v m � D m c.> w y N y T T T Airport Use and Lease Agreement— Dated July 1, 2014 Page 64 70 Exhibit E: Maintenance and Operations Responsibilities Area/Item Responsibility Airport Airline Aircraft Parking Ramp Pavement Maintenance X Striping X Sweeping X Fuel Spill Cleanup X Airline Exclusive Use Space Exterior Shell/Structure X Access Control X Airline Security Control X Janitorial X General Electrical/Mechanical X Light Bulbs X Interior Painting X Carpeting X Ticket Counter Shell X Ticket Counter Inserts X Ticketing /Bag make-up bag belts X Boarding Gate Areas Counter Shells X Counter/Inserts X Signage (Directional) X Arrival and Departure Boards X Public Address System X Commuter Gates 9- 11 Counter Shells X Commuter Gates 9- 11 Counter Inserts X A & D TV Screens X Hold Rooms Custodial X Furniture X Airport Use and Lease Agreement- Dated July 1, 2014 Page 65 71 Exhibit F: Supplemental Space Airline elects to lease Supplemental Space. Said Supplemental Space Lease shall become effective July 1, 2014. Airline elects to lease the following space: Type Space Sq. Ft. Rate Exclusive (Conditioned) Space $30.00/Sq. Ft./Annum Outbound (Non Conditioned) Space $15.00/Sq. Ft./Annum Executive Office Space $40.00/Sq. Ft./Annum Mezzanine Level Office Space $30.00/Sq. Ft./Annum Lower Level Storage Space $19.00/Sq. Ft./Annum Baggage Service Desk $19.00/Sq. Ft./Annum Curbside Check In $19.00/Sq. Ft./Annum Bag Make-up $15.00/Sq. Ft./Annum Ticket Counter and Queuing Area $30.00/Sq. Ft./Annum Hold room and Loading Bridge Bono $80.00/RJ $40.00 Per Use Space Sq. Ft. Rate Monthly Yearly Total Payment Airline: Airport Use and Lease Agreement—Dated July 1, 2014 Page 66 72 Exhibit G: Preferential Gate Assignment AS _ o W W �A(*m GATE 7 ° o GATE 8 � o o a GATE GATE 4 AA O r p t O D i o Airport Use and Lease Agreement— Dated July 1, 2014 Page 67 73