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HomeMy WebLinkAboutC2024-220 - 12/10/2024 - Approved Signatory Airline Use and Lease Agreement For Corpus Christi International Airport BY AND BETWEEN THE CITY OF CORPUS CHRISTI AND SOUTHWEST AIRLINES, CO. NOVEMBER 1, 2024 SCANNED TABLE OF CONTENTS ARTICLE 1: DEFINITIONS 2 ARTICLE 2: EFFECTIVE DATE 9 ARTICLE 3: TERM 9 ARTICLE 4: PREMISES 10 ARTICLE 5: USE, OPERATION AND MAINTENANCE OF THE AIRPORT AND RELATED FACILITIES 12 ARTICLE 6: CAPITAL IMPROVEMENTS 22 ARTICLE 7: RENTALS, FEES, AND CHARGES 23 ARTICLE 8: CHANGES IN RATES FOR RENTALS, FEES, AND CHARGES 33 ARTICLE 9: AIRLINE IMPROVEMENTS 36 ARTICLE 10: DAMAGE OR DESTRUCTION 38 ARTICLE 11: INDEMNIFICATION AND INSURANCE 41 ARTICLE 12: TERMINATION BY CITY 44 ARTICLE 13: TERMINATION BY AIRLINE 48 ARTICLE 14: SURRENDER OF AIRLINE PREMISES 49 ARTICLE 15: ASSIGNMENT AND SUBLETTING AGREEMENTS 50 ARTICLE 16: AVAILABILITY OF ADEQUATE FACILITIES 52 ARTICLE 17: GOVERNMENT INCLUSION 54 ARTICLE 18: GENERAL PROVISIONS 56 LIST OF EXHIBITS A Commercial Airline Lease B Leased Premises —ATO, Ticket Counter, Queuing and Operations C Terminal First & Second Floors D GSE Storage & Terminal Apron E Designation of Responsibilities O&M F Terminal Operations Manual G Rates & Fee Schedule H Airport Capital Improvement Plan J Federal Non-Discrimination Provisions K Master Bond Indenture L Monthly Activity Report THIS AGREEMENT is made and entered into by and between the City of Corpus Christi, a municipal corporation and political subdivision of the state of Texas, hereinafter referred to as "City," and Southwest Airlines, Co, a corporation organized and existing under the laws of the state of Texas and authorized to do business in the state of Texas, hereinafter referred to as "Airline." WHEREAS, City is the owner of the Corpus Christi International Airport, located in Corpus Christi, Texas, hereinafter referred to as the "Airport"; WHEREAS, City is responsible for the operation, maintenance and improvement of the Airport; WHEREAS, City has the right to lease and license the use of property and facilities on the Airport and has full power and authority to enter into this Signatory Airline Use and Lease Agreement, hereinafter referred to as "Agreement"; and WHEREAS, Airline is a corporation primarily engaged in the business of scheduled transportation by air of persons, property, mail and/or cargo; WHEREAS, Airline desires to obtain certain rights and privileges in connection with the use of the Airport and its facilities, and City is willing to grant and lease the same to Airline upon the terms and conditions hereinafter stated; and WHEREAS, the intent of the parties hereto is to enter into an agreement which will more definitively specify the rights and obligations of the parties with respect to the operation of the Airport by City and the use and occupancy of the Airport by Airline, and this Agreement is responsive to and in accordance with that intent; and WHEREAS, this Agreement is intended to be a multilateral agreement, to be signed in substantially similar form by other Signatory Airlines, as defined herein, and to provide non-discriminatory access to the Airport but is intended to differ in the premises to be leased and facilities to be used by each Signatory Airline; 1 NOW, THEREFORE, for and in consideration of the mutual covenants and agreements herein contained, City and Airline do hereby mutually undertake, promise and agree, each for itself and its successors and assigns, as follows: ARTICLE 1: DEFINITIONS The following words, terms and phrases wherever used in this Agreement shall for the purposes of this Agreement have the following meanings: Affiliate Airline (or "Affiliate") means any Air Transportation Company that (i) operates flights under the designator code of an Airline, as designated in writing by Airline from time to time; (ii) operates under essentially the same trade name, or uses essentially the same livery, as Airline at the Airport; or (iii) is controlling, controlled by, or under common control with Airline. Agreement means this Signatory Airline Use and Lease Agreement between City and Airline, as the same may be amended or supplemented from time to time. Air Transportation Company means a company engaged in the business of scheduled or non-scheduled commercial transportation by air of persons, property, mail, and/or cargo. Airfield means the runways, taxiways, taxilanes, Apron Area, and all other pavement used for the servicing and parking of aircraft and equipment. Airline Airport Affairs Committee (or "AAAC") means the committee consisting of a representative of each Signatory Airline. Airport means the Corpus Christi International Airport, owned and operated by the City, , including all real property and easements, improvements and appurtenances thereto, structures, buildings, fixtures, machinery, equipment, vehicles, supplies and other tangible personal property, or interest in any of the foregoing, now or hereafter leased or acquired by City, less any thereof which may be consumed, sold or otherwise disposed of. 2 Airport Requirement means, for any Fiscal Year, the City's estimate of the following: (1) Operation and Maintenance Expenses; (2) Debt Service including coverage requirements but excluding Debt Service paid by passenger facility charges ("PFCs") and/or grants; (3) those amounts required to be deposited during the Fiscal Year to any fund created pursuant to the terms of the Master Bond Ordinance; (4) the amount of any judgment or settlement arising out of or as a result of the ownership, operation, or maintenance of the Airport or any City-owned or operated Airport-related facility payable by the City during said Fiscal Year, including, but not limited to, the amount of any such judgment or settlement arising out of or as a result of any claim, action, proceeding or suit alleging a taking of property or an interest in property without just or adequate compensation, trespass, nuisance, property damage, personal injury, or any other claim, action, proceeding, or suit based upon or relative to any environmental impact resulting from the use of the Airport for the landing and taking off of aircraft; (5) the amount less grants and applicable PFCs, if any, required to fund any eligible Capital Improvement on the Airport; and (6) any and all other sums, amounts, charges, or requirements of City related to the Airport to be recovered, charged, set aside, expensed, or accounted for during such Fiscal Year under City's accounting system or this Agreement; provided, however, that the Airport Requirement shall not include any amounts included in (1)through (6)that are (i) chargeable to a special facility, (ii) a direct charge to a specific Air Transportation Company as a result of the terms of this Agreement, or (iii) incurred in connection with a tenant improvement. APPS means airport passenger processing system(s), formerly known as common use systems. Apron Area means those parts of the aircraft parking area immediately adjacent to the Terminal, as designated by the City, that are used for the parking of aircraft and active ground service equipment, and the loading and unloading of aircraft as shown on Exhibit D. BIDS means the Baggage Information Display System. Bonds means any financing or debt instrument or obligation of the City issued for the 3 purposes of improving the Airport. Capital Improvement means the Net Capital Cost to acquire, purchase or construct capital item(s)or project(s)for the purpose(s)of improving, maintaining, or developing the Airport including expenses for development, design, permitting, construction management, analysis, review or planning efforts with a cost greater than one hundred thousand dollars ($100,000). A Capital Improvement shall be amortized over the useful life of the asset. Capital Improvement Plan means the capital projects on the near term project list submitted to the FAA and attached hereto as Exhibit H. Debt Service means that portion of the principal and interest due on debt obligations created by the Master Bond Ordinance and all other Airport debt obligations. Deplaned Passenger means any passenger disembarking from an Air Transportation Company aircraft at the Terminal. Director means the Director of the Department of Aviation and shall include such person or persons as may from time to time be authorized by City or by the Director or applicable law to act for the Director with respect to any or all matters pertaining to this Agreement. Enplaned Passenger means any passenger boarding an Air Transportation Company aircraft at the Terminal. Environment means any ambient air, surface water, groundwater or lands. Environmental Laws/Environmental Laws and Regulations means all applicable laws intended for the protection of the environment, or that govern, control, restrict, or regulate the use, handling, treatment, storage, discharge, disposal, or transportation of Hazardous Materials. Environmental Laws, specifically include but are not limited to, the National Environmental Policy Act, 42 U.S.C. § 4321, et seq.; the Comprehensive Environmental Response, Compensation and Liability Act; and as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. § 9601, et seq.; the Safe 4 Drinking Water Act, 42 U.S.C. § 300f, et seq.; the Oil Pollution Control Act of 1990, 33 U.S.C. § 2701, et. seq.; the Resource Conservation and Recovery Act, 42 U.S.C. § 6901, et seq; , the Hazardous Materials Transportation Act, 49 U.S.C. § 5101, et seq.; the Toxic Substances Control Act, 15 U.S.C. § 2601, et seq.; the Clean Water Act, 33 U.S.C. § 1251 et seq.; the Clean Air Act, 42 U.S.C. § 7401 et seq.,, 29 C.F.R. 1910.1200, et seq.; Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. § 136; the Endangered Species Act, 16 U.S.C. § 1531 et seq., and Emergency Planning & Community Right-to- Know Act, 42 U.S.C. § 1101, et seq.; and Texas equivalents. Exclusive Use Premises means those portions of the Terminal consisting of the airline ticket offices and operations space leased by Airline in the Terminal, as shown on Exhibit B, to which Airline shall have exclusive use. FAA means the Federal Aviation Administration, or its authorized successor(s). Fiscal Year means the annual accounting period of City for its general accounting purposes which, at the time of entering into this Agreement, is the period of twelve consecutive months, beginning with the first day of October of any year. Gate Use Fee means the per turn facility use charge assessed to an Air Transportation Company for the ad hoc use of a gate holdroom and associated Apron Area. Hazardous Materials means all substances whose use, handling, treatment, storage, disposal, discharge, or transportation is governed, controlled, restricted, or regulated by Environmental Laws, that have been defined, designated or listed by any responsible governmental authority with competent jurisdiction as being hazardous waste, hazardous substance, toxic, or radioactive. Hazardous Materials specifically include, without limitation, asbestos and asbestos-containing materials, petroleum products, solvents, and pesticides and other agricultural chemicals Joint Use Premises means the areas in the Terminal consisting of the baggage claim, tug drive, and security check point areas, as shown on Exhibit C, which all Airlines use and share in the cost per the Joint Use Charges Formula. 5 Joint Use Charges Formula means that formula which prorates the total cost of Joint Use Premises among all Airlines based upon each Airline's and its Affiliate Airlines' proportionate share of Enplaned Passengers. Leased Premises means Exclusive Use Premises and Preferential Use Premises, as shown on Exhibits B and C. Master Bond Ordinance means City's master bond ordinance number 024163 or any successor master bond ordinance that authorizes City to issue bonds or other debt instruments for the benefit of the Airport, attached hereto as Exhibit K. Maximum Gross Landed Weight means the maximum certificated gross landing weight, as stated in each Air Transportation Company's flight operations manual, at which each category of aircraft type operated at the Airport by each Air Transportation Company is certificated by the FAA. MII means approval by one or more Signatory Airline representing fifty percent (50%) or more of the total Terminal Rents and Landing Fees paid by the Signatory Airlines. MUFIDS means Multi-User Flight Information Display System. Net Capital Cost means the aggregate cost of any Capital Improvement less amounts used from the proceeds of: (i) grants-in-aid; (ii) PFCs; (iii) Bonds for which the Debt Service will not be paid from Rentals, Fees, and Charges; (iv) Bonds for which the Debt Service is to be paid for by PFCs, or (v) other financing by City for which the Debt Service will not be paid from Rentals, Fees, and Charges. Non-Signatory Airline means any Air Transportation Company providing service at the Airport that has not signed this Agreement or a substantially similar agreement, and such Non-Signatory Airline shall pay one hundred twenty five percent (125%) of all applicable Rentals, Fees, and Charges. 6 Operating Agreement means an agreement entered into by and between the City and any designated Affiliate Airline, or any ground handling company acting on behalf of Airline, operating at the Airport that shall define the operational and liability requirements between the parties consistent with the terms and conditions of this Agreement. Operation and Maintenance Expenses (or"O&M Expenses") means, for any Fiscal Year, the costs incurred by the City in operating and maintaining the Airport during such Fiscal Year, either directly or indirectly, whether similar or dissimilar, which under generally accepted accounting principles, are properly chargeable as expenses to the Airport, excluding depreciation but including expenses allocated to the Airport by the City in accordance with practices and procedures of the City in accordance with the adopted budget, as may be revised by the City, and taxes payable by the City, if applicable, which may be lawfully imposed upon the Airport by entities other than the City. Passenger Facility Charge (or"PFC") means the passenger facility charge that the Airport is authorized to collect, impose and use pursuant to 49 U.S.C. §40117 and 14 C.F.R. Part 158, as the same may be amended from time to time. Preferential Use Premises means those portions of the Terminal leased by Airline in the Terminal, including ticket counters and allocated queue space, the baggage make-up belt and support space, and gate holdroom (including associated Apron Area, as shown on Exhibit D) to which Airline shall have priority over all other users including for remain overnight use and irregular operations. as provided in Section 16.02. Release means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, or disposing into the Environment and "threat of Release" shall mean a substantial likelihood of a Release that requires action to prevent or mitigate damage to the Environment that may result from such Release. Rentals, Fees, and Charges means the rentals, fees, and charges payable by Airline pursuant to Article 7. 7 Revenue Landing means any landing at the Airport of an aircraft except (i) an aircraft which (without being scheduled to do so) lands at the Airport because of mechanical or operating causes, or any emergency or precautionary reason; (ii) inspection flights; or (ii) an aircraft owned or operated by the United State government and its agencies, including, but not limited to, military operations. Revenue Sharing means the credit by the City to the Terminal and Landing Fee Net Requirements according to the revenue sharing calculation shown in Exhibit G - Table G-4. Revenues means income accrued by the City in accordance with generally accepted accounting practices, including investment earnings, from or in connection with the ownership or operation of the Airport or any part thereof, or the leasing or use thereof but specifically excluding: (i) non-operating income (and receipts) from the sale of assets or the amount from insurance claims, (ii) federal, state or local grants-in-aid or reimbursements, and (iii) PFC revenues. Remain Overnight (RON) means any aircraft parked on the terminal apron overnight. Signatory Airline means an Air Transportation Company that has executed this Agreement or a substantially similar agreement. Term means the period beginning on the Effective Date and, except as otherwise set forth herein, terminating on the date set forth in Article 3. Terminal means the airline passenger terminal building owned and operated by City at the Airport the boundaries of which are more particularly shown on Exhibit A. Terminal Equipment means all equipment provided and maintained by the City that is used by the Airline in the processing of Enplaned Passengers and Deplaned Passengers including, but not limited to, APPS, MUFIDS, BIDS, baggage claim system, podium back wall screens, passenger loading bridges (including wheelchair hoists) and gate baggage handling devices, supplemental power systems, and the public address system. 8 Additional words and phrases used in this Agreement but not defined herein shall have their usual and customary meaning. Singular means plural and vice versa, in context. ARTICLE 2: EFFECTIVE DATE 2.01 Effective Date. The Effective Date of this Agreement is November 1, 2024 . 2.02 Termination of Prior Agreement. On the Effective Date, the Signatory Airline Use and Lease Agreement dated October 1, 2017, as amended, between Airline and City shall terminate. However, any terms, conditions or provisions specifically intended to survive the expiration or termination of that agreement, as set forth therein, shall continue in effect. ARTICLE 3: TERM 3.01. Term. The Term of this Agreement begins on the Effective Date set forth in Article 2 and shall remain in effect for a period of three (3) years, terminating at 11:59 pm on October 31, 2027, subject to earlier termination and extension as herein provided. 3.02. Holdover. Upon expiration of the Term or any Extension Period (as defined in Section 3.03), any occupancy of the Leased Premises by Airline will be considered a holdover and such occupancy will constitute and be construed as a tenancy from month-to-month. During such month-to-month tenancy, City and Airline will continue to be bound by all of the terms and conditions of this Agreement, except (i) Airline shall pay Rentals, Fees and Charges as a Non-Signatory thereafter unless Airline and City are engaged in good faith negotiations of a new agreement and (ii)Airline may give back a portion of its Leased Premises by providing the City thirty (30) day's written notice of Airline's intent to give back space. 3.03. Extension Period. So long as Airline is not in default of any terms of this Agreement beyond all applicable notice and cure periods, the Term of this Agreement may be 9 extended upon mutual agreement by City or Airline for two (2) two-year periods from November 1, 2027 through October 31, 2029 and November 1, 2029 through October 31, 2031 (each, an "Extension Period", and collectively, the "Extension Periods"). The City or Airline shall give written notice to the other party of its intent to extend the Term of this Agreement no less than six (6) months prior to the expiration of the then-current Term of this Agreement. If Airline or City is willing to extend, Airline or City will provide the other party written notice of its intent within sixty (60) calendar days from receipt of the notice of intent to extend. If Airline or City does not provide such written notice and Airline continues to occupy the Leased Premises, Airline will be considered to be in a holdover period pursuant to Section 3.02. ARTICLE 4: PREMISES 4.01 Airline's Leased Premises. A. City does hereby lease and demise to Airline, and Airline does hereby lease and accept from City, the Leased Premises as set forth in Exhibits B and C. B. Any relocation or square footage changes to Airline's Leased Premises to be made by Airline after commencement of this Agreement requires the prior written approval of the Director,which may be withheld in the Director's sole judgement. Upon acceptance by the Director, the changes shall be evidenced with revised exhibits. Such revised exhibits may be substituted herein without the necessity for a formal amendment of this Agreement. 4.02 Employee Parking. City will make available the designated employee parking area at the Airport, which may be adjusted from time to time at the sole discretion of the Director, for vehicular parking for Airline's employees based at the Terminal. The City may establish and charge Airline a reasonable parking fee for all employee parking. Employee parking permits are for Airline's employees use only and are not transferable. 10 4.03 International Arrivals Facility. The City has developed an international arrivals facility in the Terminal to be used by agencies of the United States Government, based upon demand, for the inspection of passengers and their baggage, and for the exercise of the responsibilities of said agencies with respect to the movement of persons and property to and from the United States. Airline shall provide advance notice to the Director of its need to use the international arrivals facility and all its employees operating in the international arrivals facility area of the Termina shall have the appropriate Customs and Border Patrol ("CBP") designation on their Airport access badge. Each airline must maintain a sufficient number of employees with such CBP access to accommodate any of its irregular operations or international diversions. 4.04 Terminal Equipment. The City has acquired Terminal Equipment for use by Airline. The Terminal Equipment shall be maintained by the City in good working order and remain the property and under the control of the City. The cost of providing and maintaining the Terminal Equipment shall be included in the O&M Expenses. Airline shall ensure that all personnel using the Terminal Equipment are properly trained in the use and operation of the Terminal Equipment. If the Terminal Equipment is damaged by Airline, the City will repair or replace the damaged Terminal Equipment and invoice Airline for all costs incurred by the City. Except to the extent prevented by Texas' Workers' Compensation law and except to the extent caused by the sole negligence or willful misconduct of City, Airline shall indemnify the City from any and all claims for damages made against the City due to injury, death, or damage to persons or property resulting from use of Terminal Equipment by Airline, its agents, employees, or officers. 4.05 Joint Use Premises. Airline shall have the right to use the Joint Use Premises as shown on Exhibit C, subject to compliance with the Terminal Operations Manual attached hereto as Exhibit F. 11 ARTICLE 5: USE, OPERATION AND MAINTENANCE OF THE AIRPORT AND RELATED FACILITIES 5.01 Airline Rights and Privileges. Subject to the terms of this Agreement, Airline shall have the right to conduct Airline's air transportation business at the Airport and to perform the following operations and functions as are reasonably necessary to or in support of the conduct of such business at the Airport: A. The landing, taking off, flying over, taxiing, towing, and conditioning of Airline's aircraft and, in areas designated by City, the extended parking, servicing, loading or unloading, storage or maintenance of Airline's aircraft and ground service equipment. Such ground service equipment, whether owned by Airline or its ground handler, must be in workable condition and used on a frequent basis in accordance with airport industry practices. City may, at Airline's cost and following written notice to Airline, remove any ground service equipment deemed by the Director to be abandoned. Airline shall not permit the use of the Airfield by any aircraft operated or controlled by Airline which exceeds the load bearing design strength or capability of the Airfield as described in the FAA-approved Airport Layout Plan ("ALP"), the Airport Certification Manual, latest FAA Form 5010, or other engineering evaluations made available to Airline. B. The sale of air transportation tickets and services, the processing of passengers and their baggage for air travel, and the sale, handling, and providing of mail, freight and express services. C. The training of personnel in the employ of or to be employed by Airline and the testing of aircraft and other equipment being utilized at the Airport in the operation of Airline's air transportation business; provided, however, said training and testing shall be incidental to the use of the Airport in the operation by Airline of its air transportation business and shall not unreasonably hamper or interfere with the use of the Airport and its facilities 12 by others. The City reserves the right to restrict or prohibit such training and testing operations as it deems interferes with the use of the Airport. D. The sale, disposition or exchange of Airline's aircraft, engines, accessories, gasoline, electricity, oil, grease, lubricants, fuel or other similar equipment or supplies; provided, however, Airline shall not sell aviation fuels or propellants except (i) to such Air Transportation Company which is a successor company to Airline, (ii) an Air Transportation Company which is a wholly owned subsidiary or Affiliate Airline of Airline or (iii) when a comparable grade and type of fuel desired by others is not available at the Airport except from Airline. Airline may not sell, dispose of or exchange new or used gasoline, oil, greases, lubricants, fuel, or other propellants unless disposed of in a manner meeting all local, state, and federal regulations for those products requiring disposal. E. The purchase at the Airport or elsewhere, of fuels, lubricants and any other supplies and services, from any person or company, shall be subject to subsection D above and to the City's right to require that each provider of services and/or supplies to Airline secures a permit from City to conduct such activity at the Airport, pays required fees, and abides by all reasonable rules and regulations established by City. No discriminatory limitations or restrictions shall be imposed by City that interfere with such purchases; provided, however, nothing herein shall be construed to permit Airline to store aviation fuels at the Airport. The granting of the right to store aviation fuels shall be subject to the execution of a separate agreement between Airline and City. F. The servicing by Airline or its suppliers of aircraft being utilized at the Airport by Airline at Airline's Preferential Use Premises or such other locations as may be designated by the Director. Servicing at the Preferential Use Premises shall be limited to light maintenance supporting active flights. Maintenance on aircraft for flights that have been cancelled due to mechanical reasons may, at the discretion of the Director, be required to be 13 towed away from the Terminal to a location designated by the Director. G. The loading and unloading of persons, property, cargo, and mail by motor vehicles or other means of conveyance approved by City on Airline's Preferential Use Premises or such other locations as may be designated by the Director. H. The installation and maintenance, at Airline's expense, of identifying signs in Airline's Preferential Use Premises or the public facing areas of Exclusive Use Premises shall be subject to the prior written approval of the Director. Nothing herein shall be deemed to prohibit Airline's installation on the walls behind ticket counters identification and company logo signs as are customarily installed by Airline in such areas at comparable airport facilities. Airline shall not install any promotional signage in the Preferential Use Premises or public facing areas of the Exclusive Use Premises without the prior written consent of the Director or Airport Marketing Manager. The installation, maintenance and operation, at no cost to City, of such radio communication, computer, meteorological and aerial navigation equipment and facilities in Airline's Leased Premises as may be necessary for the operation of its air transportation business; provided, however, that the location of such equipment and facilities, method of installation and type of equipment shall be subject to the prior written approval of the Director. City may disapprove or require modification, removal, or relocation of such equipment if it interferes with other communication, meteorological, or aerial navigation systems operated by City, other tenants, or governmental agencies. City shall have the right to charge a reasonable fee, surcharge, or rental charge for any location outside of Airline's Leased Premises and shall be entitled to any revenues generated directly from the operation of such equipment. Upon abandonment or removal of any such system, Airline shall restore the Leased Premises or any other premises where the equipment is installed to its original condition, normal wear and tear excepted. 14 J. Such rights of way as may reasonably be required by Airline for communications, computer equipment, telephone, interphone, conveyor systems and power and other transmission lines in areas not leased by Airline, subject to the availability of space and/or ground areas as determined by the Director. All communication cables are to be installed in cable trays (or otherwise properly supported) and shall be in compliance with all applicable building codes. Communication cable and internal electrical wires installed by Airline are the responsibility of Airline from the demarcation point and electrical wiring installed by Airline is the responsibility of Airline from the metered source. K. Airline shall provide real time electronic flight arrival and departure information through the City-installed MUFID and BID systems or by any other method to which Airline and the City agree. L. Airline shall have the right to use, in common with others so authorized, the public address system serving the Terminal. Airline shall not install, cause to be installed, or use any other public address system . The City reserves the right to establish a charge for the use of such system. M. The installation of personal property, including furniture, furnishings, supplies, machinery, equipment, and self-ticketing machines in Airline's Leased Premises as Airline may deem necessary or prudent for the operation of its air transportation business. Title to such personal property shall remain with Airline, subject to the provisions of this Agreement. Upon expiration or termination of this Agreement or the abandonment or removal of any such personal property, Airline shall restore the Leased Premises or any other premises where the personal property was installed to its original condition, normal wear and tear excepted. N. Airline shall have the right to ingress and egress to and from the Airport and Airline's Leased Premises for Airline's officers, employees, agents and 15 invitees, including passengers, suppliers of materials, furnishers of services, aircraft, equipment, vehicles, machinery and other property. Such right shall be subject to (1) 49 CFR Part 1542 Airport Security and all other applicable rules and regulations, including random or complete aviation worker screening programs, and (2) the City's right to establish Rules and Regulations governing (i)the general public, including Airline's passengers, and (ii) access to non-public areas at the Airport by Airline's employees, suppliers of materials and furnisher of services. O. The City reserves the right to, from time to time, temporarily or permanently restrict the use of any roadway or other area at the Airport. In the event of such restrictions, and as necessary, the City shall ensure the availability of a reasonably equivalent means of ingress and egress. The City will consult with the AAAC prior to any such closing which would adversely affect the Signatory Airlines' operations at the Airport unless such closing is necessitated by circumstances which, in the sole discretion of the Director, pose an immediate threat to the health or safety of persons using the Airport. Airline hereby releases and discharges the City, its successors and assigns, from any and all claims, demands or causes of action which Airline may have arising from the fact that such areas have been closed in accordance herewith. 5.02 Exclusions and Reservations. A. Nothing in this Article 5 shall be construed as authorizing Airline to conduct any business separate and apart from the conduct of its air transportation business at the Airport. B. Airline shall not use or permit the use of any portion of Airline's Leased Premises for the purpose of selling, offering for sale, dispensing or providing any merchandise, food and beverages, products, services, or advertising. Airline may install vending machines in the non-public facing areas of Airline's Exclusive Use Premises for its employees use only. Further, nothing 16 contained herein is intended to or shall be construed to authorize or permit the Airline to conduct any activity or to operate any direct or indirect business operation which in any manner competes with an Airport concession without the prior written of approval of the Director and, at the discretion of the Director, the payment to the City of concession fees. In the event of irregular operations, where Airline has a designated flight delay program, Airline shall have the right to provide complimentary light snacks and bottled water to its passengers within the Airline's Preferential Use Premises. Further, if during such irregular operations, the food and beverage concessionaire(s) operating in the Terminal are unable to provide food and beverage services, then Airline may, in accordance with its designated flight delay program, provide food and beverages to its passengers. C. Airline shall not knowingly interfere or permit interference with the use, operation or maintenance of the Airport, including but not limited to, the effectiveness or accessibility of the drainage and sewerage system, water system, communications systems, fire protection system, or other part of the utility, electrical, or other systems installed or located from time to time at the Airport; and Airline shall not engage in any activity prohibited by any future approved 14 CFR Part 150 program, or existing noise abatement procedures of FAA or as such may be amended from time to time, except in cases of emergencies or safety concerns. D. As soon as possible after release from proper authorities, Airline shall remove any of its disabled aircraft from the Airfield, shall place any such disabled aircraft only in such storage areas as may be designated by the Director (or at the discretion of Airline, in an off-Airport location), and shall store such disabled aircraft only upon such terms and conditions as may be established by the Director if stored upon the Airport. Overnight fees will apply for a disabled aircraft. In the event Airline shall fail to remove any of its disabled aircraft within forty-eight (48) hours after notice to remove, the Director may, but shall not be obligated to, cause the removal of such disabled aircraft; provided however, the Director shall give Airline prior written notice of its intent 17 to do so and Airline shall pay to City, upon receipt of invoice, the costs incurred for such removal. E. Airline shall not do or permit to be done anything, either by act or failure to act, that shall (1) cause the cancellation or violation of the provisions, or any part thereof, of any policy of insurance for the Airport or (2) cause a hazardous condition so as to increase the risks normally attendant upon operations permitted by this Agreement. If such Airline act, or failure to act, shall cause cancellation of any policy or an increase in the City's insurance premium for the Airport, then Airline shall immediately, upon written notification by City, do whatever shall be necessary to cause reinstatement of said insurance or shall pay the increase in the premium associated with such act. F. City may, at its sole option, install or cause to be installed advertising and revenue generating devices, including vending machines, in Airline's Preferential Use Premises or the Joint Use Premises; provided, however, that such installations shall not unreasonably interfere with Airline's operations authorized hereunder or substantially diminish the square footage contained in Airline's Preferential Use Premises. City may also, at its sole option, install traveler amenities in any part of the Terminal; provided, however, installation of such devices in Preferential Use Premises shall be with Airline's prior consent, which consent shall not unreasonably be withheld or delayed. City shall be entitled to all income generated by such advertising, revenue generating devices or amenities and to reasonable access upon Airline's Preferential Use Premises to install or service such advertising, amenities or devices. City will not install any advertising on Airline's ticket counter backwall or holdroom gate podium backwall or any advertisement of another airline. G. Airline must comply with, and require its officers and employees, contractors, and any other persons over whom it has control to comply with, such rules and regulations governing the use of Airport facilities pursuant to this Agreement as may from time to time be adopted and promulgated by City 18 including, but not limited to, health, safety, environmental concerns, sanitation, and good order, and with such amendments, revisions, or extensions thereof as may from time to time be adopted and promulgated by City provided that such rules and regulations do not contravene the terms of this Agreement. H. Airline must coordinate training flights and other nonscheduled flight activities into and out of Airport with the Director. If requested by City, Airline must restrict all such activities to certain hours established by the Director so as to not unreasonably interfere with scheduled flight activities of other Air Transportation Companies using the Airport. I. Airline must comply with all applicable requirements of the Americans with Disabilities Act ("ADA"), as it may be amended, including without limitation paying for the cost of removing all of Airline's tenant improvement barriers within Airline's Leased Premises, necessary to gain access to the Airline's Leased Premises. Further, Airline shall comply, at its own expense, with all applicable laws to airlines relating to the boarding or deplaning of passengers with disabilities, including, but not limited to, 49 U.S.C. Section 41704 and 14 C.F.R. Section 382. J. The rights and privileges granted Airline pursuant to this Article 5.01 and Article 5.02 shall be subject to any and all reasonable rules and regulations established by City and to the provisions of Article 7. In case of a conflict between provisions of this Agreement and the Airport rules and regulations, the provisions of this Agreement shall prevail and control. K. Any and all rights and privileges not specifically granted to Airline for its use of and operations at the Airport pursuant to this Agreement are hereby reserved for and to City. 19 5.03 City's Operation and Maintenance Obligations. A. City shall with reasonable diligence, prudently develop, improve, and at all times maintain and operate the Airport with adequate qualified personnel and keep the Airport in good repair, unless such maintenance, operation or repair shall be Airline's obligation pursuant to Exhibit E. B. City shall be responsible for those maintenance, operation and repair obligations that are designated as City's responsibility pursuant to Exhibit E. C. City shall not be liable to Airline for temporary failure to furnish all or any of such services to be provided by City in accordance with Exhibit E when due to mechanical breakdown or any other cause beyond the reasonable control of City. 5.04 Airline's Operation and Maintenance Obligations. A. Airline shall, at all times and at its own expense, preserve and keep Airline's Leased Premises in an orderly, clean, neat and sanitary condition in accordance with Airline's obligations pursuant to Exhibit E. This includes removal of any stanchions, sign holders, equipment, or property that is not in use or are broken. B. Airline shall maintain, at its own expense, its Leased Premises as free as reasonably possible of any Release of fuel, oil and debris. Airline agrees to comply with all applicable Environmental Laws to Airline's operations on or in the vicinity of the Airport. Airline must not knowingly use, store, generate, treat, or dispose of any Hazardous Material or regulated substances or waste on or near the Airport without first obtaining all required permits and approvals from all authorities having competent jurisdiction over Airline's 20 operations at the Airport. If Airline determines at any time through any means that any Release, discharge, spill, or deposit of any Hazardous Material substance, has occurred or is occurring as a result of Airline's operations, which in any way affects or threatens to affect the Airport, or the persons, structures, equipment, or other property thereon, Airline must notify as soon as reasonably possible by verbal report in person or by telephone, to be promptly confirmed in writing to, (1) the Director, (2) the Airport's Public Safety Office, and (3) Emergency response centers and environmental or regulatory agencies, to the extent required by law or regulation, and must follow such verbal report with written report to the extent required by law. Airline agrees to cooperate fully with the City in promptly responding to, reporting, and remedying any threat of potential harm to the Environment, resulting from any Release or threat of Release of Hazardous Materials or regulated substance from Airline's operations into the Environment, as required by applicable Environmental Laws. Airline will undertake all required remediation and all reasonable costs associated therewith, resulting from Airline's failure to materially conform to all applicable Environmental Laws, rules, regulations, orders and/or permits. The rights and obligations set forth in this section survive the termination of this Agreement. C. Airline must dispose of its trash, including without limitation, construction debris and other waste materials-including petroleum products, either directly or through an approved and permitted independent contractor. D. Airline will provide and maintain hand fire extinguishers for all Exclusive Use Premises in accordance with applicable safety codes. E. Airline will repair, at its cost, or at City's option reimburse City for the cost of repairing, replacing, or rebuilding any damages to Airline's Leased Premises caused by the acts or omissions of Airline, its sublessee, or its or their respective officers, employees, agents, contractors, or business invitees, including without limitation customers. Any repairs made by Airline 21 are subject to inspection and approval by City. F. Should Airline fail to perform its obligations hereunder, the City shall have the right to enter the Airline's Leased Premises and perform such activities; provided, however, other than in a case of emergency, the City shall give to Airline reasonable advance written notice of non-compliance, a minimum of ten (10) calendar days, prior to the exercise of this right. If such right is exercised, Airline shall pay to the City, upon receipt of invoice, the cost of such services plus a fifteen percent (15%) administrative fee. G. In addition to the obligations of Airline and City set forth in Sections 5.03 and 5.04, responsibilities for maintenance, cleaning and operation of the Airport shall be as set forth in Exhibit E attached hereto and made a part hereof. ARTICLE 6: CAPITAL IMPROVEMENTS 6.01 General. A. It is contemplated by the parties that from time to time during the Term of this Agreement, the City may undertake Capital Improvements at the Airport, subject to D below. B. In conjunction with submission of its annual budget, Director will notify Airline of its proposed Capital Improvements, including a sources and uses of funds plan, for the ensuing Fiscal Year, any anticipated impacts on Airline's Leased Premises or operations and City's estimates of the effect of such Capital Improvements, if any, on the Rentals, Fees, and Charges paid by Signatory Airlines. C. The City shall meet collectively or conduct a conference call with the Signatory Airlines within thirty (30) calendar days after notification to Airline of said annual budget to further discuss the Capital Improvements subject 22 to D below. D. Capital Improvements not identified on the Capital Improvement Plan attached hereto as Exhibit H with a Net Capital Cost of greater than $5,000,000 shall be subject to an MII. 6.02 Grants-In-Aid. City will use its best efforts to obtain the maximum available development grants- in-aid (federal, state or otherwise) in order to minimize the impact of Capital Improvements on Rentals, Fees, and Charges paid by Signatory Airlines. ARTICLE 7: RENTALS, FEES, AND CHARGES 7.01 General. Airline shall pay City rentals for use of Airline's Leased Premises, and fees and charges for the other rights, licenses, and privileges granted hereunder during the Term of this Agreement. For each Fiscal Year, such Rentals, Fees, and Charges payable by all Signatory Airlines and their designated Affiliate Airlines for the Airfield, Apron Area, and Terminal shall be calculated as set forth in Exhibit G. The City shall notify the Signatory Airlines for each Fiscal Year of the actual Rentals, Fees, and Charges pursuant to the provisions of Article 8. 7.02 Landing Fees. Airline shall pay to City fees for Revenue Landings at the Airport. Signatory Airlines' landing fees shall be calculated to include all allocated portions of the Airport Requirement associated with the Airfield as shown on Exhibit G - Table GI. The Airfield shall receive an allocation of the Revenue Sharing amount, if any, calculated as shown on Exhibit G - Table G4. These landing fees will be determined as the product of the associated landing fee rate and the Signatory Airlines' total landed weight. Signatory Airlines' landed weight shall be determined as the resulting product of the Maximum Gross Landed Weight of each Signatory Airline's landing aircraft times the number of Revenue Landings of each of Signatory Airline's aircraft. 23 7.03 Terminal Rentals. Airline shall pay to City rentals for use of its Leased Premises and Joint Use Premises at the Airport. Signatory Airlines' rentals shall be calculated to include all allocated portions of the Airport Requirement associated with the Terminal to arrive at a Terminal requirement as shown on Exhibit G - Table G2. The Terminal shall receive an allocation of the Revenue Sharing amount, if any, calculated as shown on Exhibit G - Table G4. The Terminal requirement will be divided by all Signatory Airlines' Leased Premises and Joint Use Premises to determine the Terminal rental rate. Each Signatory Airline's Terminal rentals are the result of its Exclusive Use Premises and Preferential Use Premises times the Terminal rental rate. Further, each Signatory Airline's Terminal rentals are the result of the total Terminal revenue due associated with the Joint Use Premises times its proportionate share per the Joint Use Charges Formula. 7.04 Gate Use Fees. Airline shall pay to City Gate Use Fees for each ad hoc use of a gate that is not preferentially leased by Airline. Such Gate Use Fee shall be calculated in accordance with Exhibit G -Table G3. Airline shall report to the City on a monthly basis all such gate uses for the previous month using the format in Exhibit L. 7.05 RON fees: Terminal remain overnight (RON) fees will be applicable to all aircraft parked on the terminal apron overnight. Airline shall report to the City on a monthly basis all such RON activities for the previous month using the format in EXHIBIT L. 7.06 Non-Signatory Fees. A Non-Signatory Airline shall pay 1.25 times the applicable rate paid by a Signatory Airline on the Landing Fee, Terminal Rentals, Joint Use Fees and Gate Use Fees. 7.07 Other Fees and Charges. A. City expressly reserves the right to assess and collect the following: (1) Airline must report to City all charter flights handled or operated by Airline 24 as follows: (i) if the charter flight is handled by Airline with its own aircraft or the aircraft of a designated Affiliate Airline in Airline's Leased Premises, Airline will pay the Signatory landing fees, Gate Use Fees, and Terminal rentals for Joint Use Premises; (ii) if the charter flight is an aircraft owned and operated by a Non-Signatory Airline and is handled in Airline's Exclusive Use Premises or Preferential Use Premises, Airline must report the charter activity and the Non-Signatory Airline must pay the Non- Signatory Airline Terminal rentals for the Joint Use Premises; or (iii) if the charter flight is an aircraft owned and operated by a Non-Signatory Airline and handled outside Airline's Exclusive Use Premises or Preferential Use Premises, Airline must report the activity to City and the Non-Signatory Airline must pay the Non-Signatory Airline Rentals, Fees, and Charges as established by the City, subject to adjustment from time to time. (2) Reasonable and non-discriminatory fees and charges for services or facilities not enumerated in this Agreement, but provided by City including, but not limited to, Federal Inspection Services ("FIS") fee, Airport based employee vehicle parking fees, non-airport based employee/contractor parking fees, remote aircraft parking fees, security badging fees, excess ground service equipment parking fees, security fees, and any other fee that may be adopted to recover costs as a result of the requirement to remain compliant with FAA, Department of Homeland Security, or any other governmental body that has jurisdiction over the Airport requirements. B. Airline shall pay charges for other services or facilities requested by Airline and provided by City to Airline. Such services or facilities may include, but are not limited to, special maintenance of Airline's Leased Premises including janitorial services or equipment/vehicle storage areas. The fees for these services shall be established by the Director. C. Airline shall pay the required fees for all permits and licenses necessary for the conduct of Airline's air transportation business at the Airport. Airline shall pay all electricity, gas, and water and sewerage fees and charges for its 25 Leased Premises. D. Airline shall also pay all taxes, assessments, and charges which, during the Term of this Agreement, may become a lien or which may be levied by the state, county, or any other tax levying body, upon any taxable interest by Airline acquired in this Agreement, or any taxable possessory right which Airline may have in or to the premises or facilities leased hereunder, or the improvements thereon, by reason of its occupancy thereof, or otherwise, as well as taxes, assessments, and/or charges on taxable property, real or personal, owned by Airline in or about said premises. Upon any termination of tenancy, all taxes then levied or a lien on any of said property, or taxable interest therein, shall be paid in full and without pro-ration by Airline forthwith, or as soon as a statement thereof has been issued by the tax collector, if termination occurs during the interval between attachment of the lien and issuance of statement. However, Airline shall not be deemed to be in default under this Agreement for failure to pay taxes pending the outcome of any proceedings instituted by Airline to contest the validity or the amount of such taxes, provided that such failure to pay does not result in any forfeiture. 7.08 Payments. A. Payments of one-twelfth (1/12) of the total annual rentals for Airline's Leased Premises, not including Joint Use Premises, shall be due in advance, without demand, on the first calendar day of each month. Said rentals and charges shall be deemed delinquent if payment is not received by the fifteenth (15th) calendar day of the month. B. Payment of fees for Landing Fees, RON fees, and Gate Use Fees are due, without demand, on the thirtieth (30th) calendar day of each month following the month in which such activity occurs based on the information provided in accordance with Section 7. Said fees shall be deemed delinquent if payment is not received on the date due. Should the parties agree to a 26 different method of calculating landing weights and billing, such as using technology (for example, Vector) to generate a report, this section and Section 7.08 will be updated by letter from the Director to Airline outlining the new procedures. C. Payment for all other fees and charges due hereunder that are subject to invoice shall be due to City within thirty (30) calendar days of the date of such invoice. D. City shall provide written notice of any and all payment delinquencies, including payments due to an audit performed pursuant to Section 7.08.D. A late fee of $200.00 per month shall accrue against any and all payment delinquencies from the date each payment is due until the date the payment is received by City. This provision shall not preclude City from exercising its rights pursuant to Article 12 or from exercising any other rights contained herein or provided by law. E. In the event Airline's obligations with respect to Airline's Leased Premises or rights, licenses, services or privileges granted hereunder shall commence or terminate on any date other than the first or last calendar day of the month, Airline's Rentals, Fees, and Charges shall be prorated on the basis of the number of calendar days such premises, facilities, rights, licenses, services, or privileges were enjoyed during that month. F. All payments due and payable hereunder shall be paid in lawful money of the United States of America, without set off, by electronic funds transfer or by check made payable to the City of Corpus Christi and delivered to: City of Corpus Christi P. O. Box 9257 Corpus Christi, TX 78469-9257 27 7.09 Information to be Supplied by Airline. A. Not later than ten (10) calendar days after the end of each month, Airline shall file with the City a written report in the format as set forth in Exhibit L for activity conducted by Airline and its designated Affiliate Airline(s) during said month and for activity handled by Airline for other Air Transportation Companies not having a signatory agreement with City providing for its own submission of activity data to City. The activity report shall include at a minimum the following information: (i) name of Airline; (ii) period of time covered; (iii) actual number of landings by aircraft type including diversions; (iv) number of times Airline used remain overnight parking positions; (v) number of times Airline used gate not leased to Airline pursuant to this Agreement; (vi) total seats available; (vii) total number of enplaned and deplaned passengers including revenue and non-revenue passengers; and (vii) total number of pounds of enplaned and deplaned cargo including mail and freight. The activity report must be signed by a representative of the Airline. A late fee of$25.00 per day shall accrue from the date the report is due until the date the report is accepted by City. B. City shall have the right to rely on said activity reports in determining Rentals, Fees, and Charges due hereunder; provided, however, Airline shall have full responsibility for the accuracy of said reports including the sum and product totals. Payment deficiencies due to incomplete or inaccurate activity reports shall be subject to late charges as set forth in Section 7.08.D. C. Airline shall at all times maintain and keep books, ledgers, accounts or other records, wherein are accurately kept all entries reflecting the activity statistics to be reported pursuant to Section 7.07. Such records shall be retained by Airline for a period of three (3) years subsequent to the activities reported therein, or such other retention period as set forth in 14 CFR Part 249, and made available at Corpus Christi, Texas, for audit and/or examination by City or its authorized representative during normal business hours. Airline shall produce such books and records at Corpus Christi, 28 Texas, within thirty (30) calendar days of written notice to do so or pay all reasonable travel-related expenses including, but not limited to, transportation, food and lodging necessary for an auditor selected by City to audit said books and records at a place selected by Airline. D. The cost of audit, with the exception of the aforementioned expenses, shall be borne by City as O&M Expenses; provided however, the total cost of said audit shall be borne by Airline if either of the following conditions exist: (1) The audit reveals an underpayment of more than ten percent (10%) of Rentals, Fees, and Charges due hereunder, as determined by said audit; or (2) Airline has failed to maintain true and complete books, records, accounts, and supportive source documents. 7.10 Security for Payment. A. Unless Airline has provided regularly scheduled flights to and from the Airport during the eighteen (18) months prior to the Effective Date of this Agreement without the occurrence of any act or omission that would have been an event enumerated in Section 12.01 of this Agreement, if this Agreement had been in effect during that period, Airline shall provide City on the Effective Date of this Agreement with a contract bond, irrevocable letter of credit or other similar security acceptable to City ("Contract Security") in an amount equal to the estimate of three (3) months' Rentals, Fees, and Charges payable by Airline pursuant to this Article 7, to guarantee the faithful performance by Airline of its obligations under this Agreement and the payment of all Rentals, Fees, and Charges due hereunder. Airline shall be obligated to maintain such Contract Security in effect until the expiration of eighteen (18) consecutive months during which period Airline commits no event enumerated in Section 12.01 of this Agreement. In the event the City draws from the Contract Security during the eighteen (18) month period due to past due payments due from Airline to the City, Airline 29 shall replenish such amount within five (5) business days upon written notice. Such Contract Security shall be in a form and with a company reasonably acceptable to City. In the event that any such Contract Security shall be for a period less than the full period required by this section or if Contract Security shall be canceled, Airline shall provide a renewal or replacement Contract Security for the remaining required period at least sixty (60) calendar days prior to the date of such expiration or cancellation. B. Notwithstanding subsection A above, City shall have the right to waive such Contract Security requirements for a Signatory Airline which has not provided regularly scheduled flights to and from the Airport during the eighteen (18) months prior to the Effective Date of its Signatory Airline agreement. Any such waiver by City shall be conditioned upon said Signatory Airline having provided regularly scheduled flights at three (3) other airports with activity levels and characteristics similar to Airport during the most recent eighteen (18) month period without committing any material default under the terms of the respective lease and use agreements at each of the three (3) facilities and without any history of untimely payments for rentals, fees and charges. The burden shall be on Airline to demonstrate to the City its compliance with these requirements by providing written documentation from three (3) other airports selected by City. C. If Airline is delinquent in any debt due to the City for a period greater than ninety (90) calendar days and/or repeatedly delinquent over a period of six (6) months, the City shall impose or re-impose the requirements of subsection A above on Airline. D. Upon the occurrence of any Airline act or omission that is an event enumerated in Section 12.01, or upon election to assume this Agreement under Federal Bankruptcy Rules and Regulations, as such may be amended, supplemented, or replaced, City, by written notice to Airline given at any time within ninety (90) calendar days of the date such event becomes known to City, may impose or reimpose the requirements of Section 7.09.A 30 on Airline. In such event, Airline shall provide City with the required Contract Security within ten (10) calendar days from its receipt of such written notice and shall thereafter maintain such Contract Security in effect until the expiration of a period of eighteen (18) consecutive months during which Airline commits no additional event enumerated in Section 12.01. E. If Airline fails to obtain and/or keep in force such Contract Security required hereunder. such failure is grounds for termination of this Agreement pursuant to Section 12.01. City's rights under this Section 7.09 shall be in addition to all other rights and remedies provided to City under this Agreement. 7.11 Passenger Facility Charge. A. The City reserves the right to assess and collect PFCs subject to the terms and conditions set forth in 49 U.S.C. §40117 and 14 C.F.R. Part 158 ("PFC Statute and Regulations"), as supplemented or amended from time to time. Airline will collect and timely remit to the City all PFCs for which Airline is responsible under the PFC Statute and Regulations. B. If Airline fails to remit PFC revenue to City within the time limits established by the PFC Statute and Regulations, Airline shall be deemed to be in default pursuant to Section 12.01. Any late payment of PFCs shall be subject to late fees in accordance with Section 7.08 D. C. All PFC payments due and payable hereunder shall be paid in lawful money of the United States of America, without set off, by electronic funds transfer or by check made payable to The City of Corpus Christi and delivered to: Corpus Christi International Airport Attn: Finance Department 1000 International Drive Corpus Christi, Texas 78406 31 7.12 Capitalized Interest on Bonds. Bonds issued by the City will provide for the capitalization of interest, by project, during the construction period for each respective project; and the City intends for Debt Service on Bonds to be capitalized until substantial completion of projects financed, in part, from the proceeds of Bonds; provided however, that in the event any Debt Service applicable for Bonds shall become payable from Revenues prior to substantial completion of projects, the Debt Service will be allocated to cost centers in the same manner as the related project costs (net of any PFC funding or grants-in-aid)are allocated to cost centers. 7.13 Continuation of Rentals. If Airline ceases service at the Airport prior to the end of the Term of the Agreement or any Extension Period agreed to by Airline in accordance with Section 3.03, Airline will continue to pay rentals on Exclusive Use Premises and Preferential Use Premises until the end of the Term of the Agreement or agreed upon extension thereof while vacant. However, in no event shall the annual amount due from Airline be less than the dollar equivalent of twenty percent (20%) of the total annual Joint Use Premises rentals divided by the total number of Signatory Airlines immediately prior to the time Airline ceases service at the Airport while the Exclusive Use Premises and Preferential Use are vacant. 7.14 Charges for Services. The provisions contained in this Article 7 shall not preclude the City from seeking reimbursement from Airline or any Air Transportation Company for the cost of services provided to Airline or any Air Transportation Company in compliance with any federal law, rule or regulation which is enacted or amended subsequent to the execution of this Agreement, or for any services or facilities provided subsequent to the execution date of this Agreement at the request of Airline, the cost of which is not currently included in the estimated requirement used to calculate Rentals, Fees, and Charges under this Agreement. Further, nothing shall preclude the City from imposing fees for additional uses, equipment, facilities and services, or from imposing fines, penalties, and assessments for the enforcement of City's rules and regulations. 32 7.15 Extraordinary Coverage. Airline shall pay extraordinary coverage protection payments in the rates for Rentals, Fees, and Charges at the Airport in any Fiscal Year in which the amount of Revenues less O&M Expenses is projected to be less than the minimum coverage required on Debt Service as may be required by the applicable debt covenants, including any Debt Service on Bonds held by the City on behalf of the Airport. Any amounts which must be collected for such extraordinary coverage protection payments will be allocated to the Airfield and Terminal on the basis of the Airport Requirement of such cost centers. 7.16 No Further Charges. Except as stated in this Article 7 or as detailed elsewhere in this Agreement, no further Rentals, Fees and Charges shall be charged by the City to Signatory Airline, for use of Signatory Airline's Leased Premises and the rights, licenses, and privileges granted to Signatory Airline. ARTICLE 8: CHANGES IN RATES FOR RENTALS, FEES, AND CHARGES 8.01 Annual Rate Changes. A. Except for the initial Fiscal Year of this Agreement, no later than sixty (60) calendar days prior to the end of each Fiscal Year, City shall notify Airline of the proposed schedule of rates for Rentals, Fees, and Charges for the ensuing Fiscal Year. Said rates shall be calculated in accordance with and pursuant to Article 7. For the initial Fiscal Year, the Rentals, Fees and Charges will be provided to Airline in writing within two weeks of City's execution of this Agreement. B. The Signatory Airlines, through the AAAC, shall have the right to review and comment upon the proposed operating budget and annual Capital Improvement projects. No later than thirty (30) calendar days after the forwarding of the proposed schedule of rates for Rentals, Fees, and Charges, the City agrees to meet or arrange a conference call with the AAAC at a mutually convenient time for the purpose of discussing such Rentals, Fees, and Charges, as well as any proposed Capital Improvement projects. In advance of that meeting/call, the City shall make available to the 33 AAAC any reasonably requested additional information relating to the determination of the proposed rates and Capital Improvement projects. The City agrees to fully consider the comments and recommendations of the Signatory Airlines prior to finalizing its plans for any Capital Improvements and the schedule of rates for Rentals, Fees, and Charges for the ensuing Fiscal Year. C. Following such meeting/call, the City shall notify Airline of the rates for Rentals, Fees and Charges to be established for the ensuing Fiscal Year. D. If calculation of the new rates for Rentals, Fees, and Charges is not completed by the City and the notice provided in subsection C above is not given prior to the end of the then current Fiscal Year, Airline will be provided written notice that rates for Rentals, Fees, and Charges then in effect shall continue to be paid by Airline until such calculations are concluded and such notice is given. Upon the conclusion of such calculations and the giving of such notice, City shall determine the differences, if any, between the actual Rentals, Fees, and Charges paid by Airline to date for the then current Fiscal Year and the rates for Rentals, Fees, and Charges that would have been paid by Airline if said rates had been in effect beginning on the first calendar day of the Fiscal Year. Those differences shall be applied to the particular Rentals, Fees, and Charges for which any differences in rates resulted in an overpayment or underpayment and shall be remitted by Airline or credited or refunded by the City in the month immediately following the calculation of the new Fiscal Year's rates for Rentals, Fees, and Charges. 8.02 Other Rate Changes. A. Rates for Rentals, Fees, and Charges may be changed up to once per Fiscal Year at any time that unaudited monthly Airport financial data indicates that total Rentals, Fees, and Charges payable pursuant to the then current rate schedules are estimated and anticipated by the City to vary by more than ten percent (10%) from the total Rentals, Fees, and Charges that would be 34 payable based upon the use of the projected monthly financial data then available for said Fiscal Year. B. Nothing herein will limit the ability of the City to adjust Rentals, Fees, and Charges from time to time in order meet the requirements of the Master Bond Ordinance, including, without limitation, reserve funds, the rate covenant, and flow of funds requirement. C. In the event of an emergency safety situation at the Airport, the Rentals, Fees, and Charges also may be changed within thirty (30) calendar days following consultation with the AAAC. D. In the event of any changes to the Rentals, Fees, and Charges as provided in this Section 8.02, the Signatory Airlines' total Rentals, Fees, and Charges payable to City shall be allocated to Airline in accordance with this Agreement. 8.03 Reconciliation. Within one hundred eighty (180) calendar days following the close of each Fiscal Year, or as soon as audited financial data for said Fiscal Year is available, Landing Fees and Terminal Rentals for the preceding Fiscal Year shall be recalculated using audited financial data in accordance with the example set forth in Exhibit G. The resulting amount due to the Air Transportation Companies or due from the Air Transportation Companies shall be applied through an adjustment to the Landing Fees and Terminal Rentals in the then-current Fiscal Year. The City shall notify each airline's AAAC representative of any such adjustment and shall make the adjustment no later than sixty (60) calendar days after completion of the audit. 8.04 City Covenants. The City shall operate the Airport in the same manner as a reasonably prudent airport operator of an airport of substantially similar size, use and activity as the Airport and in a manner so as to produce revenues from concessionaires, tenants and other users of the Airport of a nature and amount which would be produced by a reasonably prudent operator of an airport of substantially similar size, use and 35 activity, with due regard for the interests of the public. ARTICLE 9: AIRLINE IMPROVEMENTS 9.01 Airline Improvements. A. In accordance with Section 9.01.E below, Airline may construct and install, at Airline's sole expense, improvements in its Leased Premises as Airline deems to be necessary for its operations; provided, however, that the plans and specifications, location, and construction schedule for such improvements shall be subject to the advance written approval of the Director, through the tenant alteration form(s). B. Prior to the commencement of any improvements greater than one hundred thousand dollars ($100,000), the City shall have the right to require Airline to obtain, or cause to be obtained, a contract surety bond in a sum equal to the full amount of any construction contract awarded by Airline for the improvements. Said contract security bond shall name the City as an obligee thereunder and shall be drawn in a form and issued by such company reasonably acceptable to City; shall guarantee the faithful performance of necessary construction and completion of improvements in accordance with approved final plans and detailed specifications; and shall protect City against any losses and liability, damages, expenses, claims and judgments caused by or resulting from any failure to perform completely the work described. City reserves the right also to require that Airline acquires or causes to be acquired a payment bond with any contractors of Airline as principal, in a sum equal to the full amount of the construction contract awarded by Airline for the improvements. Said bond shall name the City as an obligee thereunder and shall guarantee payment of all wages for labor and services engaged and of all bills for materials, supplies and equipment used in the performance of said construction contract. Any work associated with such construction or installation shall not unreasonably interfere with the operation of the Airport or otherwise unreasonably interfere with the permitted activities of other Terminal tenants and users. Upon completion 36 of approved construction and within sixty (60) calendar days of Airline's receipt of a certificate of occupancy, a complete set of "as built" drawings shall be delivered to the Director for the permanent record of the City. C. Airline shall furnish or require contractors to furnish satisfactory evidence of statutory workers' compensation insurance, comprehensive general liability insurance, comprehensive automobile insurance and physical damage insurance on a builder's risk form with the interest of City endorsed thereon in such amounts and in such manner as City may reasonably require. City may require additional insurance for any alterations or improvements approved hereunder in such limits as City reasonably determines to be necessary. D. Any construction or installation by or on behalf of Airline shall be at the sole risk of Airline and shall be in accordance with all applicable state and local codes and laws and subject to inspection by the Director and all other applicable governmental agencies. E. All improvements made to Airline's Leased Premises and additions and alterations thereto made by Airline, except those financed by City, shall be and remain the property of Airline until the termination of this Agreement. Upon termination of this Agreement, said improvements, additions and alterations shall become the property of City; provided, however, that any trade fixtures, signs, equipment, and other moveable personal property of Airline not permanently affixed to Airline's Exclusive Use Premises and Preferential Use Premises shall remain the property of Airline, subject to the terms of Article 14. 9.02 Requirements for Alterations to Leased Premises When constructing, altering or repairing an improvement to Airline's Leased Premises, Airline shall execute or cause its contractor to execute (i) a payment bond that conforms to Subchapter I, Chapter 53, Property Code; and (ii) a performance bond in amount equal to the amount of the contract for the protection 37 of the governmental entity and conditioned on the faithful performance of the contractor's work in accordance with the plans, specifications, and contract documents. Further, Airline shall provide to the City Notice of Commencement consistent with Section 2252.909 of Subchapter Z, Chapter 2252, Government Code at least ninety (90) days before the date of such construction, alteration or repair. Such Notice of Commencement must: (1) identify the public property where the work will be performed; (2) describe the work to be performed; (3) state the total cost of work to be performed; (4) include copies of the performance and payment bonds required pursuant to this section of the Agreement; and include a written acknowledgement signed by the contractor stating that copies of the required performance and payment bonds will be provided to all subcontractors not later than the fifth (5th) day after the date a subcontract is executed. On or before the tenth (10th) day after the date the City received such Notice of Commencement, the City may notify the Airline that the construction, alteration or repair may not proceed. Airline understands that a person commits an offense if the person materially misrepresents information in the Notice of Commencement. Such offense is a Class A misdemeanor. ARTICLE 10: DAMAGE OR DESTRUCTION 10.01 Partial Damage. If any part of Airline's Leased Premises, or adjacent facilities directly and substantially affecting the use of Airline's Leased Premises, shall be partially damaged by fire or other casualty other than that caused by Airline, but said circumstances do not render Airline's Leased Premises untenantable as reasonably determined by the City, the same shall be repaired to usable condition with due diligence by the City, or by Airline if agreed to by both parties, as hereinafter provided and limited. No abatement of rentals shall accrue to Airline so long as Airline's Leased Premises remain tenantable. Any partial damage caused by Airline shall be repaired by the City to similar conditions existing prior to the partial damage, and the cost of such repair not otherwise covered by insurance proceeds received by City shall be invoiced directly to Airline and is due and payable within thirty (30) calendar days of Airline's receipt. 38 10.02 Substantial Damage. If any part of Airline's Leased Premises, or adjacent facilities directly and substantially affecting the use of Airline's Leased Premises, shall be so extensively damaged by fire or other casualty, other than that caused by Airline, as to render any portion of Airline's Leased Premises untenantable but capable of being repaired, as reasonably determined by City, the same shall be repaired within a reasonable period to usable condition with due diligence by City as hereinafter provided and limited. !n such case, the rentals payable hereunder with respect to affected Airline Leased Premises shall be paid up to the time of such damage and shall thereafter be abated equitably in proportion as the part of the area rendered untenantable bears to the total Leased Premises until such time as such affected Airline's Leased Premises shall be restored adequately for use. City shall use "commercially reasonable" efforts to provide Airline with comparable alternate facilities to continue its operation while repairs are being completed at a rental rate not to exceed that provided for in this Agreement for the Airline's existing space. Any substantial damage caused by Airline shall be repaired by the City and the cost of such repair not otherwise covered by insurance proceeds received by City shall be invoiced directly to Airline, due and payable upon receipt. 10.03 Destruction. A. If any part of Airline's Leased Premises, or adjacent facilities directly and substantially affecting the use of Airline's Leased Premises, shall be damaged by fire or other casualty, and is so extensively damaged as to render any portion of Airline's Leased Premises incapable of being repaired within ninety (90) calendar days, as reasonably determined by the City, the City shall notify Airline of its decision whether to reconstruct or replace said space; provided, however, the City shall be under no obligation to replace or reconstruct such premises. The rentals payable hereunder with respect to the affected Airline's Leased Premises shall be paid up to the time of such damage and thereafter shall abate until such time as replacement or reconstructed space becomes available for use by Airline. If this occurs, Airline may terminate this Agreement, effective as of the date of written 39 notice to the City. Any destruction caused by Airline shall be repaired by the City and the cost of such repair not otherwise covered by insurance proceeds received by City shall be invoiced directly to Airline, due and payable upon receipt. B. In the event the City elects to reconstruct or replace the affected Airline's Leased Premises, the City shall provide Airline with comparable alternate facilities to continue its operation while reconstruction or replacement is being completed at a rental rate not to exceed that provided for in this Agreement for the Airline's existing space. C. In the event the City elects to not reconstruct or replace the affected Airline's Leased Premises, the City shall meet and consult with Airline on ways and means to permanently provide Airline with adequate replacement space for the affected Airline's Leased Premises. In such event, the City agrees to amend this Agreement to reflect related additions and deletions to Airline's Leased Premises. Airline is not bound to accept the replacement space and may terminate this Agreement, as described in Section 10.03.A, above. 10.04 Damage Caused By Airline. Notwithstanding the provisions of this Article 10, in the event that due to the acts or omissions of Airline, its employees, contractors, its agents, or licensees, Airline's Leased Premises shall be damaged or destroyed by fire, other casualty or otherwise, there shall be no abatement of rentals during the repair or replacement of the Airline's Leased Premises. To the extent that the costs of repairs exceed the amount of any insurance proceeds payable to City by reason of such damage or destruction, Airline shall pay the amount of such additional reasonable costs to City due and payable upon demand. 40 10.05 City's Responsibilities. City shall maintain adequate levels of insurance; provided however, that City's obligations to repair, reconstruct, or replace affected premises under the provisions of this Article 10 shall in any event be limited to restoring the affected Airline's Leased Premises to substantially the same condition that existed at the date of damage or destruction, including any subsequent improvements made by City, and shall further be limited to the extent of insurance proceeds and other funds available to City for such repair, reconstruction, or replacement; provided further, that City shall in no way be responsible for the restoration or replacement of any equipment, furnishings, personal property, real property improvements, signs, or other items installed and/or owned by Airline in accordance with this Agreement, unless Airline proves that the damage or destruction is caused by the negligence or willful act or omission of City, its officials, agents, or employees acting within the course or scope of their employment. ARTICLE 11: INDEMNIFICATION AND INSURANCE 11.01 Indemnification. A. Airline shall indemnify, save, hold harmless, and defend City, its officials, agents and employees, its successors and assigns, individually or collectively, from and against any claim, action, loss, damage, injury, liability, and the cost and expense of whatsoever kind or nature (including, but not limited to, reasonable attorney fees, disbursements, court costs, and expert fees) based upon injury to persons, including death, or damage to property to the extent arising out of, resulting from, or incident to Airline's performance of its obligations under this Agreement, or in conjunction with Airline's use and occupancy of Airline's Leased Premises or use of the Airport, except to the extent such injury or damage is occasioned by the sole negligence or willful 41 misconduct of City, its officers, employees, or agents. B. Airline shall indemnify, save, hold harmless, and defend City, its officials, agents and employees, its successors and assigns, individually or collectively, from and against any claim, action, loss, damage, injury, liability, and the cost and expense of whatsoever kind or nature (including, but not limited to, reasonable attorney fees, disbursements, court costs, and expert fees) and any fines in any way arising from or based upon the violation of any federal, state, or municipal laws, statutes, resolutions, or regulations, including rules or regulations of the City by Airline, its agents, employees, or successors and assigns in conjunction with Airline's use and/or occupancy of Airline's Leased Premises or the Airport except to the extent such injury or damage is occasioned by the negligence or willful misconduct of City, its officers, employees, or agents. C. The provisions of this Section 11.01 shall survive the expiration or termination of this Agreement. 11.02 Insurance. A. Without limiting or expanding Airline's obligation to indemnify City, as provided for in Section 11.01, Airline shall procure and maintain in force at all times during the Term of this Agreement comprehensive Airport premises liability and aviation insurance to protect against personal injury, bodily injury liability and property damage liability. The limits for Signatory Airlines shall be in an aggregate amount of not less than $250,000,000 per occurrence, combined single limit; provided, however, coverage for non- passengers shall be not less than an aggregate amount of$25,000,000 per occurrence. In addition, Airline shall procure and maintain in force during the Term of this Agreement liability insurance applicable to the ownership, 42 maintenance, use or operation of any automobile, mobile equipment or other ground vehicle at the Airport (including owned, non-owned, or hired) in an amount of not less than $5,000,000 per occurrence. B. The aforesaid amounts and types of insurance shall be reviewed from time to time by City and may be adjusted by City if City reasonably determines such adjustments are necessary to protect City's interests and agreed to by Airline. Airline shall furnish City prior to the Effective Date a certificate or certificates of insurance as evidence that such insurance is in force. City reserves the right to require a certified copy of each certificate upon request. Airline shall name City as an additional insured on such insurance policy or policies to the extent of the obligations assumed under Section 11.01. Said policies shall be issued by insurance companies of recognized financial responsibility and, in a form and content reasonably satisfactory to City, and shall provide for thirty (30) calendar days advance written notice to City prior to the cancellation of or any adverse material change in such policies and ten (10) calendar days' notice for non-payment of premium, except for cancellation or modification in the event of war and/or nuclear detonation. Failure to provide and/or maintain the required insurance coverage as set forth herein is grounds for immediate termination of this Agreement. C. Airline shall procure and maintain in force during the Term of this Agreement workers' compensation coverage in accordance with state law and employers' liability in an amount not less than $1,000,000 each accident and each disease through a licensed insurance company. The contract for coverage must be written on a policy and endorsements approved by the Texas Department of Insurance. The workers' compensation coverage provided must be in an amount sufficient to ensure that all workers' compensation obligations incurred by the Airline will be promptly met. 11.03 Waiver of Subrogation. City and Airline hereby mutually waive any and all rights of recovery against the other party arising out of damage or destruction of the buildings, Airline's Leased Premises, or any other 43 property from causes included under any property insurance policies to the extent such damage or destruction is covered by the proceeds of such policies and whether or not such damage or destruction shall have been caused by the parties, their officers, employees or agents, but only to the extent that the insurance policies then in force permit such waiver. All policies of insurance shall contain, to the extent available, this waiver of subrogation provision and the cost of such provision shall be borne by the primary insured. ARTICLE 12: TERMINATION BY CITY 12.01 Events of Default. The events described below shall be deemed events of default by Airline: A. Upon the occurrence of any one of the following events of default, City may give thirty (30) calendar days' written notice as provided in Section 12.03. (1) The appointment of a trustee, custodian, or receiver of all or a substantial portion of Airline's assets or the subletting of Airline's Leased Premises without City Council authorization except as permitted under Article 15. (2) The divestiture of Airline's estate herein by operation of law, by dissolution, or by liquidation. (3) The Airline shall take the benefit of any present or future insolvency statute, or shall make a general assignment for the benefit of creditors, or shall seek a reorganization or the readjustment of its indebtedness under any law or statute of the United States or of any state thereof. (4) The voluntary discontinuance for a period of at least sixty (60) consecutive days by Airline of its operations at the Airport unless otherwise approved by City in writing, except when discontinuance is due to fire, earthquake, strike, governmental action, default of the City, or other cause beyond Airline's 44 control, and except when discontinuance is due to a consented assignment or sublease pursuant to Article 15. (5) The failure to cure a default in the performance of any of the material terms, covenants and conditions required herein within thirty (30) calendar days of receipt of written notice by City to do so; or if by reason of the nature of such default, the same cannot be remedied within thirty (30) calendar days following receipt by Airline of written demand from City to do so, Airline fails to commence the remedying of such default within said thirty (30) calendar days following such written notice, or having so commenced, shall fail thereafter to continue as promptly as reasonably practical the curing thereof; provided however, Airline's performance under this Section 12.01 shall be subject to the provisions of Section 18.25 of this Agreement. Airline shall have the burden of proof to demonstrate to the City's satisfaction (i)that the default cannot be cured within thirty (30) calendar days, and (ii) that it is proceeding with diligence to cure said default, and that such default will be cured within a reasonable period of time. B. Upon the occurrence of any one of the following events of default, City may immediately issue written notice of default: (1) The failure by Airline to pay any part of the Rentals, Fees, and Charges, PFCs or any other sum due hereunder and the continued failure to pay said amounts in full within ten (10) calendar days of City's written notice of payments past due. Provided, however, if a dispute arises between City and Airline with respect to any obligation or alleged obligation of Airline to make payments to City, payments under protest by Airline of the amount due shall not waive any of Airline's rights to contest the validity or amount of such payment. (2) The failure by Airline to maintain the minimum required insurance coverage as required by Section 11.02; provided, the City shall have the right to immediately suspend Airline's right to operate at the Airport until Airline has 45 obtained the minimum required insurance coverage. (3) If any act occurs through the fault or neglect of Airline which by law operates to deprive Airline permanently of the rights, power and privileges necessary for the lawful conduct and operation of its business at the Airport. 12.02 Continuing Responsibilities of Airline. Notwithstanding the occurrence of any event of default, Airline shall remain liable to City for all Rentals, Fees, and Charges payable hereunder and for all preceding breaches by Airline of any covenant of this Agreement. Furthermore, unless City elects to terminate this Agreement, at its sole discretion, Airline shall remain liable for and promptly pay all Rentals, Fees, and Charges accruing hereunder until termination or expiration of this Agreement as set forth in Article 3 or until this Agreement is terminated by Airline pursuant to Article 13. 12.03 City's Remedies. Upon the occurrence of any event enumerated in Section 12.01.A, the following remedies shall be available to City: A. City may exercise any remedy provided by law or in equity including, but not limited to, the remedies hereinafter specified. B. City may terminate this Agreement, effective upon the date specified in the notice of termination. For events enumerated in Section 12.01.A, such date shall be not less than thirty (30) calendar days from said date of receipt of notice. Upon such date, Airline shall be deemed to have no further rights hereunder and City shall have the right to take immediate possession of Airline's Leased Premises. C. City may reenter Airline's Leased Premises and may remove all of Airline's persons and property from same upon the date of reentry specified in City's written notice of reentry to Airline. For events enumerated in Section 12.01.A, reentry shall be not less than thirty (30) calendar days from the date of notice of reentry. Upon any removal of Airline property by City 46 hereunder, Airline's property may be stored at Airline's sole risk, cost and expense or if abandoned, sold and the proceeds applied to any damages incurred by the City. D. City may re-let Airline's Leased Premises and any improvements thereon, or any part thereof, at such lease rates and upon such other terms and conditions as City, in its sole discretion, may deem advisable, with the right to make alterations, repairs of improvements on Airline's Leased Premises. In re-letting Airline's Leased Premises, City shall be obligated to make a good faith effort to obtain terms no less favorable to City than those contained herein and otherwise seek to mitigate any damages it may suffer as a result of Airline's event of default. E. In the event that City relets Airline's Leased Premises, Rentals, Fees, and Charges received by City from such re-letting shall be applied in the following order of priority: (i) to the payment of any indebtedness other than Rentals, Fees, and Charges due hereunder from Airline to City; (ii) to the payment of any cost of such re-letting; and (iii) to the payment of Rentals, Fees, and Charges due and unpaid hereunder. The residue, if any, shall be held by City and applied in payment of future Rentals, Fees, and Charges as the same may become due and payable. If that portion of such Rentals, Fees, and Charges received from such re-letting and applied to the payment of Rentals, Fees, and Charges is less than the Rentals, Fees and Charges payable during applicable periods by Airline hereunder, then Airline shall pay such deficiency to City. Airline shall also pay to City, as soon as ascertained, any costs and expenses incurred by City in such re-letting not covered by the Rentals, Fees, and Charges received from such re-letting. F. Airline shall pay to City all other costs incurred by City in the exercise of any remedy in this Article 12 including, but not limited to, reasonable attorneys' fees, disbursements, court costs, and expert fees. 47 ARTICLE 13: TERMINATION BY AIRLINE 13.01 Events of Default. The events described below shall be deemed events of default by City: A. City fails to keep, perform or observe any term, covenant or condition herein contained to be kept, performed, or observed by City and such failure continues for thirty (30) calendar days after receipt of written notice from Airline; or, if by its nature such default cannot be cured within such thirty (30) calendar day period, City shall not commence to cure or remove such default within said thirty (30) calendar days and to cure or remove the same as promptly as reasonably practicable; provided, however, City's performance under this Section shall be subject to the provisions of Section 18.25 of this Agreement. B. Airport is closed to flights in general for reasons other than weather, acts of God, or other reasons beyond City's control, or to the flights of Airline for reasons other than those circumstances within Airline's control, and Airport fails to be reopened to such flights within sixty (60) consecutive days from such closure. C. The Airport is permanently closed as an air carrier airport by act of any federal, state, or local government agency having competent jurisdiction; or Airline is unable to use Airport for a period of at least ninety(90)consecutive days due to any law, order, rule or regulation of any governmental authority having jurisdiction over the operations of the Airport; or any court of competent jurisdiction issues an injunction preventing City or Airline from using Airport for airport purposes, for reasons other than those circumstances within Airline's control, and such injunction remains in force for a period of at least ninety (90) consecutive days. D. The United States Government or any authorized agency of the same (by executive order or otherwise) assumes the operation, control or use of the 48 Airport in such a manner as to substantially restrict Airline from conducting its operations, if such restriction remains in force for a period of sixty (60) consecutive days or more. 13.02 Airline's Remedy. Upon the occurrence of any events of default enumerated in Section 13.01, Airline shall be permitted to terminate this Agreement; provided, however, Airline termination, due to events of default under the provisions of Section 13.01, shall not be effective unless and until at least thirty (30) calendar days, or such longer period as provided in Section 13.01, have elapsed after written notice to the City specifying the date upon which such termination shall take effect and the reason for such termination. In the event of termination, Airline shall surrender the Airline's Leased Premises in accordance with Article 14 hereof. ARTICLE 14: SURRENDER OF AIRLINE PREMISES 14.01 Surrender and Delivery. Upon termination of this Agreement, Airline shall promptly and peaceably surrender to City Airline's Leased Premises and all improvements thereon to which City is entitled, without destruction or waste, and return the Leased Premises in a rentable condition; provided, however, nothing in this section shall be construed to modify the obligations of the parties set forth elsewhere in this Agreement, including but not limited to Exhibits B and C. 14.02 Removal of Property. Airline shall have the right at any time during the Term of this Agreement to remove from the Airport its aircraft, tools, equipment, trade fixtures, and other personal property, title to which shall remain in Airline unless otherwise set forth in this Agreement, and shall remove such aircraft, tools, equipment, trade fixtures, and other personal property within thirty (30) calendar days following termination of this Agreement, whether by expiration of time or otherwise, as provided herein, subject to any valid lien which City may have thereon for unpaid Rentals, Fees, and Charges. Notwithstanding anything to the contrary contained herein, City hereby waives any statutory or contractual lien it may now have or hereafter have with respect to Airline's aircraft. Airline shall not 49 abandon any portion of its property at the Airport without the written consent of City. Any and all property not removed by Airline within thirty (30) calendar days following the date of termination of this Agreement shall, at the option of the City, (i) become the property of the City at no cost to the City; (ii) be stored by the City, at no cost to the City; or (iii) be sold at public or private sale at no cost to the City. All of Airline's personal property located on Airline's Leased Premises is at the risk of Airline only, and the City is not liable for damage to said personal property in, at or on Airline's Leased Premises or to Airline. Except as may be agreed to otherwise by the City and Airline, all City property damaged by or as a result of the removal of Airline's property shall be restored by Airline to the condition existing before such damage, less reasonable wear and tear, at Airline's expense. ARTICLE 15: ASSIGNMENT AND SUBLETTING AGREEMENTS 15.01 Assignment and Subletting by Airline. A. Except for an assignment to a parent, corporate affiliate, or subsidiary, which is hereby authorized, Airline may not at any time assign, transfer, convey, sublet, mortgage, pledge, or encumber its interest under this Agreement or any part of Airline's Leased Premises without the prior written consent of the City, which consent will not be unreasonably withheld. The above prohibition does not apply with respect to any company with which Airline may merge or consolidate, or which may acquire substantially all of Airline's assets. In the event that Airline shall, directly or indirectly, assign, sell, hypothecate or otherwise transfer this Agreement, or any portion of Airline's Leased Premises, without the prior written consent of the City except as allowed above, the City, in its sole discretion may terminate this Agreement. B. Airline shall not sublease Airline's Leased Premises without the prior written consent of City, which consent may be withheld if City has substantially similar space available, but unleased, or if City can make such space available for lease within a reasonable time. Use of Airline's Exclusive Use 50 Premises or Preferential Use Premises or any part thereof, by anyone other than Airline or an Air Transportation Company being handled by Airline shall be deemed a sublease. C. Airline shall include with its request for consent to assign or sublease, a copy of the proposed assignment or sublease agreement, if prepared. In the event such proposed agreement has not been prepared, a written summary of the material terms and conditions to be contained in such agreement shall be included with Airline's request for consent by the City. The assignment or sublease agreement or written summary submitted with Airline's request shall include the following information: (i) the term; (ii) the area or space to be assigned or subleased; (iii) the sublease rentals to be charged; and (iv) the provision that assignee or sublessee must execute a separate Operating Agreement with City. Any other information reasonably requested by City pertaining to said sublease or assignment shall be promptly provided by Airline. A fully executed copy of such sublease or assignment shall be submitted to City for final consent before occupancy of Airline's Leased Premises, or any portion thereof, by the assignee or sublessee. D. In the event the Rentals, Fees, and Charges for subleased premises exceed the Rentals, Fees, and Charges payable by Airline for said premises pursuant to this Agreement, Airline shall pay to City the excess of the Rentals, Fees, and Charges received from the sublessee over that specified to be paid by Airline herein; provided however, Airline may charge a reasonable fee for administrative costs, not to exceed fifteen percent (15%) of the specified sublease rental, and such fee shall not be considered part of excess Rentals, Fees, and Charges. Airline may also charge a reasonable fee to others for the use of Airline's capital equipment and to charge for use of utilities and other services being paid for by Airline. E. Nothing in this Article 15 shall be construed to release Airline from its obligations under this Agreement including, but not limited to, the payment 51 of Rentals, Fees, and Charges provided herein. ARTICLE 16: AVAILABILITY OF ADEQUATE FACILITIES 16.01 Declaration of Intent. The parties acknowledge the objective of the City to offer to all Air Transportation Companies desiring to serve Airport access to the Airport and to provide adequate gate positions and space in the Terminal and Apron Area. Recognizing that physical and financial limitations may preclude timely expansion of the Terminal and Apron Area areas in order to meet the stated requests of Airline and/or such other Air Transportation Companies for additional facilities, the City hereby states its intent to pursue the objective of achieving an optimum balance in the overall utilization of gates. 16.02 Utilization Requirement. Preferential status of gate lounges and the associated Apron Area and passenger boarding bridges will require a minimum of four turns per day, at least four times a week. The City will periodically determine whether Airline is meeting the minimum utilization using Airline's published schedule available for sale during the upcoming ninety (90) day period. The City shall provide written notice ninety (90) days in advance of any revocation of such preferential status with respect to any of Airline's gate lounges, associated Apron Area and passenger boarding bridges, for failure to meet such minimum operational requirements provided another Air Transportation Company has requested a gate lounge and the City has determined it necessary to revoke Airline's preferential status with respect to such gate lounge, associated Apron Area and passenger boarding bridge to accommodate such other Air Transportation Company. Further, Airline shall be provided ninety (90) days to adjust its schedules in order to meet such minimum operational requirements. 16.03 Accommodation of Requesting Airline. City shall not require Airline to accommodate a requesting Air Transportation Company if City has unleased gates and facilities which can reasonably accommodate the needs of requesting Air Transportation Company ("Requesting Company"). Airline shall cooperate with City to accommodate the needs of the Requesting Company by permitting such 52 Requesting Company to utilize Airline's Preferential Use Premises for the time period necessary to permit passenger loading and unloading operations in conjunction with the scheduled operations of such Requesting Company at times when the use of such facilities shall not interfere with Airline's (or its Affiliate Airlines') planned operations, including irregular operations and remain overnight operations. In determining if Airline shall be required to accommodate a Requesting Company, the City shall consider Airline's capabilities, capacity, and facilities, after taking into account Airline's own requirements and contractual obligations, the compatibility of Requesting Company's proposed operations with those of Airline, and the need for labor harmony. During the period of and in connection with any such accommodation, the use by the Requesting Company shall be subject to the following: (i) Requesting Company shall pay the applicable Per Turn Fees charged by the City, and Airline shall be entitled to a credit from the City in the amount of such Per Turn Fees against the Airline's monthly Terminal Rentals; (ii) Indemnify the City and Airline in the manner and to the extent required of Airline pursuant to Section 11.01 herein; (iii) Carry the same types and amounts of insurance as required by Airline pursuant to Sections 11.02 and 11.03 herein; and (iv) Requesting Company shall acknowledge these obligations, and such other obligations as the City may reasonably require, in writing to the City in the form required by the City. Airline shall not be obligated to accommodate a Requesting Company until the City provides written notice that it has received the acknowledgement of the obligations in (i) through (iii) above from the Requesting Company. 16.04 Relocation of Airline. With regard to Airline's Leased Premises, the City reserves the right to relocate Airline in order to maintain the most efficient use of the Terminal as determined by the Director. The City shall consult with Airline and shall provide the Airline with ninety (90) days written notice prior to any such relocation. Upon any such relocation, the City will provide replacement space that is 53 comparable in size, finish and utility to that which is to be vacated and to coordinate any such relocation with Airline. In the event that such a request is made by City, the City will fund the reasonable improvement and relocation related costs for any relocation to match what was in existence and Airline shall not be required to pay a greater total rental amount for the relocated space; provided, however, Airline's total rental amount shall be reduced if the replacement space is smaller than the space so vacated. ARTICLE 17: GOVERNMENT INCLUSION 17.01 Government Agreements. This Agreement shall be subordinate to the provisions of any existing or future agreements between City and the United States Government or other governmental authority, relative to the operation or maintenance of the Airport, the execution of which has been or will be required as a condition precedent to the granting of federal or other governmental funds for the development of the Airport, to the extent that the provisions of any such existing or future agreements are generally required by the United States or other governmental authority of other airports receiving such funds. City agrees to provide Airline written advance notice of any provisions which would adversely modify the material terms of this Agreement. City covenants that, as of the Effective Date, it has no existing agreements with the United States Government or other governmental authority in conflict with the express provisions of this Agreement. 17.02 Federal Government's Emergency Clause. All provisions of this Agreement shall be subordinate to the rights of the United States of America to operate the Airport or any part thereof during time of war or national emergency. Such rights shall supersede any provisions of this Agreement inconsistent with the operations of the Airport by the United States of America. 17.03 Nondiscrimination A. During the performance of this Agreement, Airline, for itself, its assignees 54 and successors in interest agrees to comply with the non-discrimination statutes and authorities, including but not limited to those set forth in Exhibit J hereto. B. Airline acknowledges that the provisions of 49 CFR, Part 23, Disadvantaged Business Enterprises ("DBE"), as said regulations may be amended, and such other similar regulations as may be enacted, may be applicable to the activities of Airline under the terms of this Agreement, unless exempted by said regulations, and hereby agrees to comply with the FAA and the U.S. Department of Transportation in reference thereto. These regulations may include, but not be limited to, compliance with DBE participation goals, the keeping of certain records of good faith compliance efforts which would be subject to review by the various agencies, the submission of various reports and, if so directed, the contracting of specified percentages of goods and services contracts to Disadvantaged Business Enterprises. C. In the event of breach of any of the above nondiscrimination covenants, City shall have the right to terminate this Agreement after such action as the United States Government may direct to enforce this covenant has been followed and completed, including exercise or expiration of appeal rights. 17.04 Security Airline must comply with, and require compliance by its assignees and sublessees, if any, and both its and their respective contractors, suppliers of materials and furnishers of services, employees, agents, and business invitees (excluding passengers) with, all present, amended, and future laws, rules, regulations, and ordinances promulgated by the City, the Airport Security Plan ("ASP"), the FAA, Transportation Security Administration ("TSA") or other governmental agencies to protect the security and integrity of the Secured Area ("SA"), the Air Operations Area ("AOA"), and the Security Identification Display Area ("SIDA"), as defined by the City, the FAA, and TSA, and to protect against access to the SA, AOA, and SIDA by unauthorized persons. Subject to the approval of the Director, Airline must adopt procedures to control and limit access to the SA, AOA, and SIDA by Airline, its assignees and sublessees, and its and their respective agents, contractors, suppliers of materials and furnishers of 55 services, employees, and business invitees (excluding passengers) in accordance with all present and future ASP, FAA, and TSA laws, rules, regulations, and ordinances. Airline further agrees to indemnify, hold harmless, and defend the City, its officers, agents, and employees against the risk of legal liability for death, injury, or damage to persons or property, or fees and expenses, direct or consequential, arising from entry of the SA or SIDA permitted, allowed or otherwise made possible by Airline, its sublessees or its or their respective agents, contractors, suppliers of materials and furnishers of services, employees, business invitees (excluding passengers), agents, or any person under the direction of Airline, which entry violates the City, ASP, FAA, or TSA laws, rules, regulations, or ordinances or Airline's Director-approved procedures for controlling access to the SA or SIDA as provided hereinabove. Airline must obtain employee identification badges for all personnel authorized by Airline to have access to the SA, AOA, and SIDA in accordance with the provisions of Federal Aviation Regulations, 49 CFR Part 1542, and other applicable laws, rules, regulations and ordinances. Airline must pay all fines associated with security breaches/infractions by Airline and its sublessees and its and their respective agents, officers, business invitees (excluding passengers), and employees in the SA, AOA, and SIDA, regardless of whether the fine is assessed to the City, Airport or Airline and/or its sublessees, and it's or their respective agents, officers, business invitees (excluding passengers), or employees; however, Airline may contest such fine in accordance with administrative procedures of the agency issuing the fine. ARTICLE 18: GENERAL PROVISIONS 18.01 Subordination to Master Bond Ordinance A. This Agreement and all rights granted to Airline hereunder are expressly subordinated and subject to the lien and provisions of the pledges, transfer, hypothecation, and assignments made by City in the Master Bond 56 Ordinance. City expressly reserves the right to make such pledges and grant such liens and enter into covenants as it may deem necessary or desirable to secure and provide for the payment of any bonds issued pursuant to the Master Bond Ordinance, provided that City will not take any actions that would be inconsistent with the terms and conditions of this Agreement. B. With respect to any bonds issued pursuant to the Master Bond Ordinance, the interest on which is intended to be excludable from gross income for the holders of such bonds for federal income tax purposes under the Internal Revenue Code of 1986, Airline agrees that it will not act, or fail to act with respect to the use of the Airport and the Leased Premises, if the act or failure to act may cause the City to be in non-compliance with the provisions of the Internal Revenue Code of 1986 as they may be amended, supplemented, or replaced, or the regulations or ruling issued hereunder, nor will Airline take, or persist in, any action or omission which may cause the interest on the tax-exempt bonds either (i) not to be excludable from the gross income of the holders thereof for federal income tax purposes; or (ii) to become subject to the alternative minimum tax (AMT) for federal income tax purposes. 18.02 Non-waiver. No waiver of default by either party of any of the terms, covenants, or conditions of this Agreement to be performed, kept and observed by the other party shall be construed to be or act as a waiver of any subsequent default of any of the terms, covenants and conditions to be performed, kept and observed by the other party and shall not be deemed a waiver of any right on the part of the other party to terminate this Agreement as provided herein. 18.03 Rights Non-Exclusive. Notwithstanding anything herein contained that may be or appear to the contrary, the rights, privileges and licenses granted under this Agreement, except Exclusive Use Premises, are "non-exclusive" and the City reserves the right to grant similar privileges to others. 57 18.04 Quiet Enjoyment. A. City agrees that, so long as Airline's payment of Rentals, Fees, and Charges is timely and Airline keeps all covenants and agreements contained herein, Airline shall peaceably have and enjoy Airline's Leased Premises and all rights, privileges and licenses of the Airport, its appurtenances and facilities granted herein, subject to the terms and conditions herein contained. B. Consistent with the nature of Airline's business, Airline agrees that occupancy of Airline's Leased Premises will be lawful and quiet and that it will not knowingly use or permit the use of Airline's Leased Premises in any way that would violate the terms of this Agreement, create a nuisance, or disturb other tenants or the general public. Airline shall be responsible for the activity of its officers, employees, agents, and others under its control with respect to this provision. 18.05 Performance. The parties expressly agree that time is of the essence in this Agreement. Failure by a party to complete performance within the time specified, or within a reasonable time if no time is specified herein, shall relieve the other party, without liability, of any obligation to accept such performance. 18.06 Aviqation Rights. The City reserves unto itself, its successors, and assigns for the use and benefit of the public, a right of flight for the passage of aircraft in the airspace above the surface of the Airport, including Airline's Leased Premises, for navigation or flight in the said airspace for landing on, taking off from, or operating at the Airport. 18.07 Rules and Regulations. A. Airline, its officers, employees, agents and others under its control shall observe and obey all laws, rules, regulations, ordinances, and orders of the federal, state, county and municipal governments which may be applicable 58 to Airline's operations at the Airport. B. The City may from time to time adopt, amend or revise reasonable and non- discriminatory rules, regulations and minimum standards for the conduct of operations at the Airport for reasons of safety, health, preservation of the property or for the maintenance of the good and orderly appearance of the Airport. Airline, its officers, employees, agents, and others under its control shall faithfully comply with and observe such rules, regulations and minimum standards, except as they may conflict with the terms and provisions of this Agreement or the regulations of another governmental authority having appropriate jurisdiction. These rules and regulations can be found in the Terminal Operations Manual set forth in Exhibit F. C. Airline shall be strictly liable and responsible for obtaining, maintaining current, and fully complying with any and all permits, licenses, and other governmental authorizations, however designated, as may be required at any time throughout the entire Term of this Agreement by any federal, state, or local governmental entity or any court of law having jurisdiction over Airline or Airline's operations and activities at the Airport. 18.08 Inspection. Airline shall allow the City's authorized representatives access to Airline's Leased Premises for the purpose of examining and inspecting said premises; for purposes necessary, incidental to, or connected with the performance of its obligations under this Agreement, for operational need to coordinate with Airline agents, or, in the exercise of its governmental functions. Except in the case of an emergency, upon reasonable advance notice, the City shall conduct such inspections during reasonable business hours with reasonable notice and in the presence of Airline's representative. 18.09 No Individual Liability. No official, officer, agent, director, or employee of the City or Airline shall be charged personally or held contractually liable by or to the other party under the terms or provisions of this Agreement or because of any breach thereof or because of its or their execution or attempted execution. 59 18.10 Relationship of Parties. Nothing contained herein shall be deemed or construed by the parties hereto, or by any third party, as creating the relationship of principal and agent, partners, joint venturers, or any other similar such relationship between the parties hereto. It is understood and agreed that neither the method of computation of Rentals, Fees, and Charges, nor any other provisions contained herein, nor any acts of the parties hereto, creates a relationship other than the relationship of landlord and tenant. 18.11 Capacity to Execute. Each of the parties hereto warrants and represents that the execution and delivery of this Agreement by the undersigned representative(s) has been duly authorized by all necessary corporate or municipal action, as applicable. 18.12 Savings. The parties hereto acknowledge that they have thoroughly read this Agreement, including any exhibits or attachments hereto and have sought and received whatever competent advice and counsel was necessary for them to form a full and complete understanding of all rights and obligations herein. The parties further acknowledge that this Agreement is the result of open negotiations between the parties and shall not be construed against the City by reason of the preparation of this Agreement by the City. 18.13 Successors and Assigns Bound. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the parties hereto. 18.14 Incorporation of Exhibits. All exhibits and attachments referred to in this Agreement are intended to be and are hereby specifically made a part of this Agreement. 18.15 Titles. Section titles are inserted only as a matter of convenience and for reference, and in no way define, limit or describe the scope or extent of any provision of this Agreement. 18.16 Severability. In the event that any covenant, condition or provision of this Agreement is held to be invalid by any court of competent jurisdiction, the invalidity 60 of such covenant, condition, or provision shall not materially prejudice either the City or Airline in their respective rights and obligations contained in the valid covenants, conditions or provisions of this Agreement. 18.17 Amendments. This Agreement constitutes the entire agreement between the parties. Except as provided herein, no amendment, modification or alteration of the terms of this Agreement shall be binding unless the same be in writing, dated subsequent to the date hereof, and executed by the parties. 18.18 Most Favored Nations. The City agrees not to enter into any Agreement with any other 14 CFR Part 121 Air Transportation Companies conducting similar operations at the Airport after the Effective Date of this Agreement that contains more favorable terms and conditions, landing fees, rentals or other charges than those provided in this Agreement. Such "similar operations at the Airport" means regularly scheduled commercial airline service that shall be conducted at the Terminal. Notwithstanding the foregoing, the City may offer incentives or discounts consistent with FAA guidelines and/or policies in setting Rentals, Fees, and Charges with any Air Transportation Company. 18.19 Other Agreements. Other than as set forth herein, nothing contained in this Agreement shall be deemed or construed to nullify, restrict or modify in any manner the provisions of any other agreement or contract between City and Airline authorizing the use of the Airport, its facilities and appurtenances. 18.20 Affiliate Airline. All Affiliates must execute an Operating Agreement with the City prior to the designation by Airline as an Affiliate. Airline shall be responsible for the actions and any and all charges of any such designated Affiliate Airline while such designated Affiliate Airline operates at the Airport on behalf of Airline. Airline must provide City with a listing in writing of all of Airline's designated Affiliate Airlines and the relationship each Affiliate Airline has with Airline which meets the definition of Affiliate. Airline shall give City thirty (30) calendar days' written notice of any change to the Affiliate designation and, if such notice request removes the "affiliate" designation from an Air Transportation Company, Airline will no longer 61 be a guarantor of that former Affiliate Airline. During the period of time that an airline is an Affiliate in accordance with the terms hereof, such Affiliate (i) will have the same rights to use Airline's Leased Premises and the Airport as Airline; and (ii) will be charged at the same rates as Airline without payment of any Non-Signatory Premiums. An Affiliate will not be entitled to an MII vote as a result of its Affiliate relationship with Airline; however Airline's landed weight with respect to flying by the Affiliate on behalf of Airline will be added to those of Airline for purposes of Airline's participation in an MII vote. 18.21 Approvals A. Whenever this Agreement calls for approval by the City, such approval shall be evidenced by the written approval of the Director. B. Any approval required by either party to this Agreement shall not be unreasonably withheld or delayed unless otherwise specified in the Agreement. 18.22 Notice. A. All notices, requests, consents and approvals served or given under this Agreement shall be served or given by the parties in writing by certified mail. If intended for the City, notices shall be delivered to: Director of Aviation City of Corpus Christi 1000 International Drive Corpus Christi TX 78406 or to such other address as may be designated by the City by written notice to Airline as stipulated above. 62 B. Notices to Airline shall be delivered in the manner set out above to: Southwest Airlines, Co. PO Box 36611, HDQ-4PF 2702 Love Field Drive Dallas, TX 75235 Attn: Airport Affairs or to such other address as may be designated by Airline by written notice to the City as stipulated above. 18.23 Agent For Service. It is expressly understood and agreed that if Airline is not a resident of the state of Texas, is an association or partnership without a member or partner resident of said state, or is a foreign corporation not licensed to do business in Texas, then, in any such event, Airline shall appoint an agent for the purpose of service of process in any court action between it and the City arising out of or based upon this Agreement. Airline shall immediately notify the City, in writing, of the name and address of said agent. Such service shall be made as provided by the laws of the state of Texas for service upon a non-resident engaging in business in the state. It is further expressly agreed, covenanted and stipulated that, if for any reason, such service of process is not possible, as an alternative method of service of process, Airline may be personally served out of the state of Texas by the certified mailing of such service at the address set forth in Section 18.22. 18.24 Governing Law. This Agreement is to be read and construed in accordance with the laws of the state of Texas. The parties agree that any court of proper jurisdiction presiding in or over Nueces County, Texas (specifically including the United States District Court for the Southern District of Texas), shall be the forum for any actions brought hereunder. 18.25 Force Maieure. Except as herein provided, neither the City nor Airline shall be 63 deemed to be in default hereunder if either party is prevented from performing any of the obligations, other than the payment of Rentals, Fees and Charges hereunder, by reason of strikes, boycotts, labor disputes, embargoes, shortages of energy or materials, acts of God, acts of the public enemy, weather conditions, government regulations or controls, riots, rebellion, war, acts of terrorism, or sabotage, or any other circumstances for which it is not responsible or which are not within its control. 18.26 Entire Agreement. It is understood and agreed that this instrument contains the entire agreement between the parties. It is further understood and agreed by Airline and the City that the City, the City's agents, Airline and Airline's agents have made no representations or promises with respect to this Agreement or the making or entry into this Agreement except as expressly set forth and neither party shall be liable by reason of the breach of any representations or promises not expressly stated in this Agreement. Any other written or verbal agreement is expressly waived by Airline and the City. [Signature Page Follows] 64 ATTEST OF US CHRISTI Rebe ca Huerta, City Secretary -e-tar-Z-aReei, City Manager kd1her+1i 11001, r k7f f- C fl L I r APPROVED AS TO LEGAL FORM THIS JP7 -DAY OF 024 ad1/6/6U 0crJ, (;?3353•8 AUTHORIZED E,4fzahofih Id izic l y, Assistant City Attorney BY COUNCIL For Miles Risley, City Attorney O�!,� �SECRETAR/ AIRLINE By: Name:Steve Sisneros Title: Vice Presi nt, irport Affairs Date: 65 Exhibit A Commerical Airline Lease 66 Exhibit B Leased Premises-ATO, Ticket Counter, Queuing and Operations Exhibit C Terminal First and Second Floor 67 Exhibit D GSE Storage and Terminal Apron 68 Exhibit E Designation of Responsibilities for Operation & Maintenance 69 Federal laws and regulations require that the City include specific clauses in certain contracts, solicitations, or specifications. For purposes of remaining compliant with such obligations, the City must incorporate the following contract provisions in all of its contract documents, including this Agreement. Unless otherwise stated, these provisions must be incorporated in any subcontracts or sub-tier agreements where the Airline grants a right or privilege to anyone under this Agreement. See "Contract Provision Guidelines for Obligated Sponsors and Airport Improvement Program Projects" guidance issued by the FAA on November 18, 2022 (as such document may be amended or supplemented by the FAA from time to time) for further guidance. GENERAL CIVIL RIGHTS PROVISIONS In all its activities within the scope of its airport program, Airline agrees to comply with pertinent statutes, Executive Orders, and such rules as identified in Title VI List of Pertinent Nondiscrimination Acts and Authorities to ensure that no person shall, on the grounds of race, color, national origin (including limited English proficiency), creed, sex (including sexual orientation and gender identity), age, or disability be excluded from participating in any activity conducted with or benefiting from Federal assistance. This provision is in addition to that required by Title VI of the Civil Rights Act of 1964. Specific Clause that is used for Lease Agreements or Transfer Agreements If the Contractor transfers its obligation to another, the transferee is obligated in the same manner as the Contractor. The above provision obligates the Contractor for the period during which the property is owned, used or possessed by the Contractor and the airport remains obligated to the Federal Aviation Administration. CIVIL RIGHTS —TITLE VI ASSURANCE Title VI List of Pertinent Nondiscrimination Acts and Authorities During the performance of this contract, Airline, for itself, its assignees, and successors in interest agrees to comply with the following non-discrimination statutes and authorities; including but not limited to: Title VI of the Civil Rights Act of 1964 (42 USC § 2000d et seq., 78 stat. 252) (prohibits discrimination on the basis of race, color, national origin); 49 CFR part 21 (Non-discrimination in Federally-Assisted programs of the Department of Transportation—Effectuation of Title VI of the Civil Rights Act of 1964); The Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, (42 USC § 4601) (prohibits unfair treatment of persons displaced or whose property has 70 been acquired because of Federal or Federal-aid programs and projects); Section 504 of the Rehabilitation Act of 1973 (29 USC § 794 et seq.), as amended (prohibits discrimination on the basis of disability); and 49 CFR part 27 (Nondiscrimination on the Basis of Disability in Programs or Activities Receiving Federal Financial Assistance); The Age Discrimination Act of 1975, as amended (42 USC § 6101 et seq.) (prohibits discrimination on the basis of age); Airport and Airway Improvement Act of 1982 (49 USC § 47123), as amended (prohibits discrimination based on race, creed, color, national origin, or sex); The Civil Rights Restoration Act of 1987 (PL 100-259) (broadened the scope, coverage and applicability of Title VI of the Civil Rights Act of 1964, the Age Discrimination Act of 1975 and Section 504 of the Rehabilitation Act of 1973, by expanding the definition of the terms "programs or activities" to include all of the programs or activities of the Federal-aid recipients, sub-recipients and contractors, whether such programs or activities are Federally funded or not); Titles II and III of the Americans with Disabilities Act of 1990 (42 USC § 12101, et seq) (prohibit discrimination on the basis of disability in the operation of public entities, public and private transportation systems, places of public accommodation, and certain testing entities) as implemented by U.S. Department of Transportation regulations at 49 CFR parts 37 and 38; The Federal Aviation Administration's Nondiscrimination statute (49 USC § 47123) (prohibits discrimination on the basis of race, color, national origin, and sex); Executive Order 12898, Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations (ensures nondiscrimination against minority populations by discouraging programs, policies, and activities with disproportionately high and adverse human health or environmental effects on minority and low-income populations); Executive Order 13166, Improving Access to Services for Persons with Limited English Proficiency, and resulting agency guidance, national origin discrimination includes discrimination because of limited English proficiency (LEP). To ensure compliance with Title VI, you must take reasonable steps to ensure that LEP persons have meaningful access to your programs [70 Fed. Reg. 74087 (2005)]; Title IX of the Education Amendments of 1972, as amended, which prohibits you from discriminating because of sex in education programs or activities (20 USC § 1681, et seq). Nondiscrimination Requirements/Title VI Clauses for Compliance 71 Compliance with Nondiscrimination Requirements: During the performance of this contract, Airline, for itself, its assignees, and successors in interest, agrees as follows: 1. Compliance with Regulations: Airline (hereinafter includes consultants) will comply with the Title VI List of Pertinent Nondiscrimination Acts and Authorities, as they may be amended from time to time, which are herein incorporated by reference and made a part of this contract. 2. Nondiscrimination: Airline, with regard to the work performed by it during the contract, will not discriminate on the grounds of race, color, national origin (including limited English proficiency), creed, sex (including sexual orientation and gender identity), age, or disability in the selection and retention of subcontractors, including procurements of materials and leases of equipment. Airline will not participate directly or indirectly in the discrimination prohibited by the Nondiscrimination Acts and Authorities, including employment practices when the contract covers any activity, project, or program set forth in Appendix B of 49 CFR part 21. 3. Solicitations for Subcontracts, including Procurements of Materials and Equipment: In all solicitations, either by competitive bidding or negotiation made by Airline for work to be performed under a subcontract, including procurements of materials, or leases of equipment, each potential subcontractor or supplier will be notified by Airline of the Airline's obligations under this contract and the Nondiscrimination Acts and Authorities on the grounds of race, color, or national origin. 4. Information and Reports: Airline will provide all information and reports required by the Acts, the Regulations, and directives issued pursuant thereto and will permit access to its books, records, accounts, other sources of information, and its facilities as may be determined by the Sponsor or the Federal Aviation Administration to be pertinent to ascertain compliance with such Nondiscrimination Acts and Authorities and instructions. Where any information required of a contractor is in the exclusive possession of another who fails or refuses to furnish the information, Airline will so certify to the Sponsor or the Federal Aviation Administration, as appropriate, and will set forth what efforts it has made to obtain the information. 5. Sanctions for Noncompliance: In the event of Airline's noncompliance with the non-discrimination provisions of this contract, the City will impose such contract sanctions as it or the Federal Aviation Administration may determine to be appropriate, including, but not limited to: a. Withholding payments to Airline under the contract until Airline complies; and/or b. Cancelling, terminating, or suspending a contract, in whole or in part. 72 6. Incorporation of Provisions: Airline will include the provisions of paragraphs one through six in every subcontract, including procurements of materials and leases of equipment, unless exempt by the Acts, the Regulations, and directives issued pursuant thereto. Airline will take action with respect to any subcontract or procurement as the Sponsor or the Federal Aviation Administration may direct as a means of enforcing such provisions including sanctions for noncompliance. Provided, that if Airline becomes involved in, or is threatened with litigation by a subcontractor, or supplier because of such direction, Airline may request the City to enter into any litigation to protect the interests of the City. In addition, Airline may request the United States to enter into the litigation to protect the interests of the United States. CLAUSES FOR CONSTRUCTION/USE/ACCESS TO REAL PROPERTY ACQUIRED UNDER THE ACTIVITY, FACILITY OR PROGRAM A. Airline for himself/herself, his/her heirs, personal representatives, successors in interest, and assigns, as a part of the consideration hereof, does hereby covenant and agree that (1) no person on the ground of race, color, or national origin, will be excluded from participation in, denied the benefits of, or be otherwise subjected to discrimination in the use of said facilities, (2) that in the construction of any improvements on, over, or under such land, and the furnishing of services thereon, no person on the ground of race, color, or national origin, will be excluded from participation in, denied the benefits of, or otherwise be subjected to discrimination, (3) that Airline will use the premises in compliance with all other requirements imposed by or pursuant to the List of discrimination Acts And Authorities. B. With respect to this Agreement, in the event of breach of any of the above Non- discrimination covenants, City will have the right to terminate Agreement and to enter or re-enter and repossess said land and the facilities thereon, and hold the same as if said Agreement had never been made or issued. FEDERAL FAIR LABOR STANDARDS ACT (FEDERAL MINIMUM WAGE) All contracts and subcontracts that result from this solicitation incorporate by reference the provisions of 29 U.S.C. part 201, et seq, the Federal Fair Labor Standards Act (FLSA), with the same force and effect as if given in full text. The FLSA sets minimum wage, overtime pay, recordkeeping, and child labor standards for full and part-time workers. Airline has full responsibility to monitor compliance to the referenced statute or regulation. Airline must address any claims or disputes that arise from this requirement directly with the U.S. Department of Labor—Wage and Hour Division. OCCUPATIONAL SAFETY AND HEALTH ACT OF 1970 This Agreement and subcontracts that result from this Agreement incorporate by reference the requirements of 29 CFR Part 1910 with the same force and effect as if given in full text. Airline must provide a work environment that is free from recognized 73 hazards that may cause death or serious physical harm to the employee. Airline retains full responsibility to monitor its compliance and their subcontractor's compliance with the applicable requirements of the Occupational Safety and Health Act of 1970 (29 CFR Part 1910). Airline must address any claims or disputes that pertain to a referenced requirement directly with the U.S. Department of Labor— Occupational Safety and Health Administration. 74 Exhibit F Terminal Operations Manual 75 Exhibit G Rates and Fee Schedule 76 Exhibit H Capital Improvement Plan 77