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Delta Air Lines Inc - Scheduled Passenger Airline Leasee 9 14 1:4 MJ1 a 9 113 E4 9 A Ti T-1 A AND DELTA AIR LINES, INC. THIS AGREEMENT, executed this � day of December, 2007, by and between the YAKIMA AIR TERMINAL BOARD, an agency of the City of Yakima and County of Yakima, Washington, hereinafter referred to as "LESSOR", and Delta Air Lines, Inc.., a corporation organized under the laws of the State of Delaware, with its principal office at 1030 Delta Boulevard Atlanta, GA 30354, hereinafter referred to as "LESSEE". 10:101111 LESSOR owns and operates Yakima Air Terminal, located in the City of Yakima, Yakima County, State of Washington, hereinafter referred to as "AIRPORT". LESSEE is engaged in the business of air transportation with respect to persons, property, cargo, and express mail and is certificated by the Federal Aviation Administration to furnish such services through Yakima Air Terminal. LESSOR is currently operating a terminal building at the AIRPORT and the building includes space for airline ticketing and operations facilities. LESSEE desires to lease certain premises and facilities in the terminal building and to obtain certain rights in connection with and on the AIRPORT. THEREFORE, in consideration of the mutual covenants contained herein, LESSOR hereby leases to LESSEE and LESSEE hereby lets from LESSOR certain office, counter and baggage claim space, hereinafter called "Leased Premises," and certain nonexclusive-use facilities, rights and privileges in connection with and on the AIRPORT, as hereinafter described, upon the following terms and conditions: ARTICLE I LEASED PREMISES AND USES Section 1.01 - Description of Leased Premises I ijl�iil (A) 1,250 square feet, more or less, in the terminal building, allocated to office, counter and miscellaneous space the location of which is DeltaV 1 designated on Exhibit A, attached hereto and by this reference incorporated herein, leased exclusively to LESSEE. (B) 844 square feet, more or less, in the terminal building, allocated to the baggage claim area, the location of which is designated on Exhibit B, attached hereto and by this reference incorporated herein, to be used in common with other air transportation companies which now or may hereafter have valid leases at the AIRPORT. (C) Sterile Concourse: This area is to be used in common with other air transportation companies which are now or may hereafter have valid leases, use permits, or authorized to operate by virtue of LESSOR approval. LESSEE shall be responsible for all modifications necessary to alter and maintain said area and sterile concourse, at no cost or expense to LESSOR, but with the prior approval of the Airport Manager as to the improvements and/or modifications to be made. LESSEE shall use the sterile concourse area only to the extent necessary and consistent with FAA and TSA regulations appertaining to LESSEE's flights. Section 1.02 - Description of Nonexclusive-Use Premises In addition to the exclusive Leased Premises hereinabove defined? LESSEE is hereby granted the nonexclusive use, in common with others authorized to do so, of such space and facilities as may be designated by LESSOR in and adjacent to the terminal building, including but not limited to: (A) Ground area for the taxiing of aircraft. (B) Space for a reasonable amount of LESSEE's apron equipment. (C) Loading gates. (D) Automobile parking spaces at locations to be designated by the Airport Manager from time to time for the use by LESSEE and its employees in common with other tenants of LESSOR at the AIRPORT and their employees, which LESSOR shall provide on the same basis that LESSOR provides parking spaces to other tenants of the AIRPORT, their employees and the employees of the Yakima Air Terminal. Any parking charge may be adjusted by LESSOR from time to time in a reasonable, uniform and nondiscriminatory manner. V=1111i I mm 1111apil— 6 - - LESSEE shall be entitled, in common with others authorized by LESSOR, to the general use of all public AIRPORT facilities and improvements which now are or may hereafter be provided at the AIRPORT, except as hereinafter provided. For the purpose of this lease, "public airport facilities" shall include, but not be limited to, approach areas, runways, taxiways, aprons, aircraft parking areas, roadways, sidewalks, or other public 9 facilities at the AIRPORT. LESSOR shall not hereafter during the term of this Lease, offer to other air transportation companies more favorable terms or conditions for use of or lease of space at the AIRPORT than those provided in this Lease for comparable rights and privileges, unless at least equally favorable rates and conditions are offered to LESSEE at the same time. LESSEE's use of Leased Premises for a purpose other than those specified herein shall constitute a breach of this lease agreement and shall be grounds for termination by LESSOR. LESSEE's use of said public AIRPORT facilities shall be for the sole purpose of operating a scheduled transportation system by aircraft for the carriage of persons, property, cargo, express mail and for corporate, supplemental and military operations, hereinafter referred to as "Air Transportation," including but not limited to: (A) The handling, ticketing, billing and manifesting of passengers, baggage, cargo, express and mail-in air transportation. (B) The parking or storage of aircraft for repairing, maintaining, conditioning, servicing, testing of aircraft or other equipment operated by LESSEE. Such right and the rights referred to in Subparagraph (C) and (D) below shall not be construed as authorizing the conduct of a separate business by LESSEE, but shall permit LESSEE to exercise such rights only in connection with its conduct of air transportation. (C) The training on the AIRPORT of personnel in the employ of or to be employed by LESSEE and for corporate, supplemental and military operations. (D) The sale, lease, transfer, disposal or exchange of LESSEE's aircraft, engines, accessories and other equipment or supplies. Said right shall include the sale, lease, transfer or disposal of any articles or goods used by or bought for use by LESSEE in connection with its conduct of air transportation; provided, however, that LESSEE shall not: (1) Sell food or beverages, except for consumption aloft, as provided in Subparagraph (1) of this Section 1.03. (2) Sell gasoline, fuel, propellants, greases or other lubricants except when said products are of a particular grade desired by others and are not otherwise available at the AIRPORT. (E) The servicing by LESSEE's employees of scheduled certificated aircraft and other equipment operated by LESSEE on the apron, by truck or otherwise, with gasoline, oil, greases, lubricants and any other fuel or propellant or other supplies required by LESSEE. Said servicing and occasional ground handling may be provided by LESSEE to aircraft operated by other air carriers upon reasonable prior notification to LESSOR. (F) The landing, taking off, maintenance, flying, taxiing, towing, parking, loading and unloading of LESSEE's aircraft or other equipment operated by LESSEE, used in the operation of scheduled, chartered, shuttle, courtesy, test, training, inspection, corporate, supplemental, military operations and emergency flights. Said right shall include, but not be limited to, the right to load and unload LESSEE's aircraft adjacent to a convenient entrance to the terminal building at loading gates located on the loading apron at points to be designated by LESSOR, (G) The loading and unloading of property, cargo, express and mail at the AIRPORT by motor vehicles or such other means of conveyance as LESSEE may desire or require in the operation of its air transportation system, with right to designate, on a nondiscriminatory basis, the particular carrier or carriers who shall regularly transport LESSEE's property, cargo, express and mail to and from the AIRPORT. (H) The right to use, whether alone, in conjunction with others who are lessees at the AIRPORT, or through a nominee, a message system or other communication systems between suitable locations. Any addition hereto, shall be without cost to LESSOR and subject to rental payment by LESSEE for any exclusive space used. (1) The right to provide food and beverage for consumption aloft by passengers and crews of LESSEE or by passengers and crews of any other scheduled certificated passenger airline having a valid lease or use permit with LESSOR or for consumption by the passengers and crews grounded at the AIRPORT because of weather, operational or mechanical conditions. (1) Except to the extent hereinabove specifically provided, nothing in this lease shall be deemed to give LESSEE the right, without prior written approval from the Airport Manager, to maintain machines, bar or cocktail lounge, or special passenger clubs for the purpose of selling or in any manner otherwise providing for the sale of food and beverages to the public or to its employees and passengers. (J) The right to replace existing signs identifying LESSEE's business on and Delta07 4 in the terminal building. Signs shall be substantially similar to existing signs as to number, general type, size, design and location shall be subject to the written approval of the Airport Manager prior to installation. Such installation and operation shall be without cost to LESSOR. (K) The right to install, maintain and operate by LESSEE alone, by LESSEE in conjunction with any other scheduled certificated passenger air transportation companies who are lessees at the AIRPORT, or through a nominee, radio communications, meteorological and air navigation equipment and facilities in or on premises leased exclusively to LESSEE. (1) Installation, maintenance and operation, shall be without cost to LESSOR. Any additional equipment installed after the execution of this Lease will require written approval by the Airport Manager as to location, method and type of installation, (L) The right, except as herein otherwise specifically provided, to purchase or otherwise obtain personal property of any nature (including, but not limited to, gasoline, fuel, propellants, lubrication oil, grease, food, beverages and other materials, equipment and supplies) deemed by LESSEE necessary or incidental to its operation, its exercise of the rights herein granted and its discharge of the obligations herein imposed. These purchases may be made through any person, partnership, firm, association or corporation LESSEE may choose. (M) The rights and privileges granted LESSEE under Subparagraphs (E), (G), (H), and (K) of this Section 1,03 may be exercised by LESSEE for and on behalf of any other certificated passenger air transportation company having a valid lease or use permit with LESSOR by or through a nominee of LESSEE. (N) The handling, ticketing, billing and manifesting of passengers, baggage, cargo, express and mail in air transportation, and the servicing and ground handling of aircraft operated by other air carriers which have valid use permits or leases with LESSOR, upon prior approval of LESSOR, which approval shall not be unreasonably withheld. A nominee shall be subject to the prior written approval of the Airport Manager, such approval not to be unreasonably withheld. It is specifically provided, however, that any such nominee shall have no greater rights than LESSEE hereunder, Any nominee, at its own expense, shall pay any and all taxes levied on account of its operations and shall procure and maintain at all times such licenses and permits as may now or hereafter be required by law, or AIRPORT regulations, to conduct any business activity on the AIRPORT. A nominee shall comply with all AIRPORT rules and regulations. Delta07 5 LESSOR agrees that it will levy no charge or toll other than any required license fee or charge upon any nominee appointed by LESSEE pursuant to this Subparagraph (M), other than for space occupied and facilities and services used; provided, however, that nothing in this paragraph shall preclude LESSOR from levying a nondiscriminatory charge upon any supplier of food and beverages provided to LESSEE pursuant to Subsection (1) of this Section 1.03. In addition, LESSOR is restricted from imposing a fuel flowage fee on any fuel dispensed by any party into aircraft owned or operated by LESSEE. The rights granted in this Section 1.03 shall not be construed as permitting any other person or corporation to conduct any business on the Airport (including in the space leased to Lessee) except after first securing from LESSOR a license to conduct such business and by payment of applicable rentals and fees. Provided, however, that Lessee may exercise any of its rights and privileges herein though an air carrier designated by Lessee to fly in and out of the airport for the benefit of Lessee, under substantially similar livery as Lessee. Section 1.04 - Rights and Privileges Specifically Excluded Except as specifically provided for in Section 1.03, LESSEE does not have any right or permission to sell at the AIRPORT any goods or services to the public or to its employees and passengers, other than actual air transportation services, and uses related and necessary to air transportation operations, without the prior written approval of the Airport Manager. LESSOR hereby grants the right of ingress to and egress from the Leased Premises and facilities referred to in Section 1.01 and 1.02 for LESSEE, its employees, agents, passengers, guests, patrons, its suppliers of materials or furnishers of service, its aircraft, equipment, vehicles, machinery or other property. The rights shall be subject to such lawful ordinances, rules and regulations as may now or hereafter have application at the AIRPORT. All improvements, fixtures, equipment and other property bought, installed, erected or placed by LESSEE in, on or about the AIRPORT and Leased Premises shall be deemed to be personal property and remain the property of LESSEE. LESSEE shall notify LESSOR in writing of all improvements, fixtures and equipment and other personal property installed by LESSEE within ten (10) days of installation. Such fixtures, improvements, equipment, and other property shall include, but not be limited Delta07 6 to, storage tanks, pipes, pumps, wires, poles, machinery and air conditioning equipment. is [CY-A 11#10 M01 a M* Section 3.01 - Right to Lease Property LESSOR represents that it has the right to lease that portion of the AIRPORT referred to herein, together with all the premises, facilities, rights, licenses, services and privileges herein granted, and has the power and authority to enter into this Lease. LESSOR warrants to LESSEE peaceful possession and quiet enjoyment of the Leased Premises during the term hereof, upon performance of LESSEE's covenants. Except as otherwise specifically provided herein, LESSOR shall, during the term of this Lease, operate, maintain and keep in good repair the terminal building, terminal apron and all public AIRPORT facilities and services now or hereafter connected with the AIRPORT, which LESSOR has agreed to furnish and supply hereunder. LESSOR shall not, however, be required to perform maintenance or make repairs occasioned by the proven negligence of LESSEE or its employees, agents, servants, patrons, and invitees, except to the extent any such maintenance or repair is covered by LESSOR fire and extended coverage insurance, in which case LESSOR may perform such maintenance or repair as may be necessary to maintain or restore such AIRPORT property and charge LESSEE the cost, if any, not paid by insurance proceeds, plus ten percent (10%) for administration, provided LESSEE has failed to perform such maintenance or make such repairs within a reasonable time after a request in writing from LESSOR to do so. LESSOR shall be responsible for removing obstructions, stones, or other foreign matter, and snow/ice, from the runways, taxiways and loading areas to the extent necessary to enable appropriate and customary use of the AIRPORT by LESSEE's aircraft. Notwithstanding any other provision in this Lease, LESSEE shall have sole and exclusive responsibility for the safe movement of passengers, freight, LESSEE's employees, agents and representatives and others utilizing the loading area in conjunction with LESSEE's operations over or across any loading area. This responsibility shall include, but not be limited to, providing assistance to passengers (e.g., wheelchair, when appropriate), placing appropriate barriers to assure movement only in safe areas, and removal of ice, snow, and any obstructions or impediments to safe passage over and across any loading area. Nothing herein contained shall be deemed to require LESSOR to enlarge the AIRPORT or to make extensions or additions to the landing areas, runways, taxiways or other appurtenances of the Delta07 7 AIRPORT. It is further understood and agreed that LESSOR may abandon certain facilities which are no longer reasonably justified for proper and adequate operation of the AIRPORT. The obligations assumed by LESSOR under this Article III shall not obligate LESSOR, except as provided in Article X hereof, to repair or rebuild any of the facilities at the AIRPORT in the event of damage by the elements, fire, explosion or other causes beyond the control of LESSOR. LESSOR shall keep the public and passenger areas in the terminal building reasonably supplied, equipped, furnished and decorated and shall operate or cause to be operated adequate directional signs in these areas and in all other public areas on the AIRPORT. Signs shall include, but not be limited to, those indicating location of all public restaurants, restrooms, baggage claim area and all other facilities for passenger or public use in the terminal building or elsewhere on the AIRPORT. LESSOR shall provide and supply reasonable heat, air conditioning, light and water for the public and passenger areas in the terminal building. LESSOR shall also provide and supply reasonable lighting for vehicular parking spaces and aircraft loading ramps and adequate field lighting including, but not limited to, landing lights. LESSOR shall also provide janitors and other cleaners necessary to keep the Leased Premises, the public and passenger areas and the landing area of the AIRPORT reasonably clean, neat, orderly, sanitary and presentable at all times. Section 3.03 - Maintenance and Services in Leased Premises LESSOR shall provide, at no additional charge, the following utilities and services to LESSEE in the terminal building: janitorial services, electricity, water, exterior building maintenance, structural maintenance, mechanical and electrical systems maintenance and building heat and air conditioning (during the period of the year when service is provided in the public areas of the terminal building). Any additional use of electricity and water other than for normal use as determined by the Airport Manager must be approved by the Airport Manager in writing and shall be subject to additional charge. LESSOR shall also re-lamp light fixtures as necessary, shall repaint the interior of the Leased Premises as necessary, at the discretion of LESSOR, and shall provide for window washing at periodic intervals. Paint colors shall be subject to reasonable approval by LESSOR, taking into account the branding standards of the Lessee. Section 3.04 - Governmental Facilities It is expressly agreed that if funds for the provision, maintenance and operation of the Control Tower, Instrument Landing System, and/or other air navigation aids or other facilities required or permitted by the United States and needed by LESSEE for LESSEE's operation at the AIRPORT and which are now or may hereafter be furnished by the United States are discontinued by the United States, LESSOR shall not be required to furnish such facilities. Delta07 8 Section 3.05 - Special AIRPORT Security LESSOR shall provide during the term hereof, special security in the air operations area if necessary to meet the obligations of LESSOR in accordance with the provisions of the Transportation Security Administration, Part 1542, as amended from time to time, or the corresponding future provision of any such regulation promulgated by the Federal Aviation Administration or Transportation Security Administration. If required to utilize said security facilities, LESSEE promises to pay the special AIRPORT security charge therefore on a pro rata basis with all other scheduled passenger air transportation companies which now or may hereafter have valid leases at the AIRPORT or which serve Yakima on a regular basis who are also required to utilize said services, if any. Subject to the provisions of Section 6.04, the proportion of such costs to LESSEE shall be the same as LESSEE's proportion of the total enplaned passengers at the AIRPORT and shall be recomputed each six months based upon the preceding six months' enplanement figures. The costs shall be computed as follows: (A) Personnel. It is recognized that there are occasions when the services of a full-time law enforcement officer may not be required for a full tour of duty under Part 1542 and every effort should be made to cover Part 1542 requirements with part-time law enforcement officers or other acceptable means before resorting to hiring additional employees. Cost computations for personnel services rendered under the program are based on: (1) Direct on-the-job payroll costs of the law enforcement officers, clerks and supervisory personnel (including sergeants and superior officers) working in the Part 1542 program including any required training periods, and including, but not limited to, contributions to any retirement system or the cost of or participation to any retirement system or the cost of or participation in any pension plan or the like, social security, old age, survivors, disability and unemployment insurance and other insurance costs, sick leave pay, holiday, vacation, authorized absence and severance pay, uniform allowance and other fringe benefits. (2) Payments of Workmen's Compensation premiums for employees associated with Part 1542 service. (B) Logistical Support. The cost (including rental charges) of materials, automotive vehicles, radios, weapons, equipment, machinery, supplies and office and locker space essential to the TSA approved security program and the cost of maintaining, cleaning, repairing and servicing same. (C) Contractual Services. Payments to contractors and other third persons, DeltaV 9 firms or corporations for the performance of the Part 1542 and related services. (D) Liability Insurance. Payments of premiums for a comprehensive general liability policy covering service under Part 1542 and naming the participants as additional named insured. (E) General and Administrative. An appropriate charge for general and administrative costs consistent with proven and demonstrated local methods of accounting and tabulation of such costs. ARTICLE IV OBLIGATIONS OF LESSEE Section 4.01 - Maintenance of Equipment and Leasehold Improvements LESSEE shall be obligated, without cost to LESSOR, to maintain its leasehold improvements and equipment and every part thereof, in good order, repair, and safe condition. • Jill LESSEE may provide sufficient porter services for the convenience of its passengers in and adjacent to the baggage claim area of the terminal building. Such service may be provided by LESSEE alone, by LESSEE in conjunction with other certificated passenger air transportation companies who may hereafter be lessees at the AIRPORT, or by a nominee approved by LESSOR. During the term of this Lease or any extension thereof, LESSEE shall make no alterations, additions or replacements to the Leased Premises, or other facilities covered by this Agreement without the prior written approval of the Airport Manager. LESSEE shall likewise obtain prior written approval from the Airport Manager before installing, at its own expense, any additional equipment which requires new electrical or plumbing connections or changes in those already installed on the Leased Premises. LESSEE shall not remove or demolish, in whole or in part, any improvements that already exist on the Leased Premises without the prior written consent of the Airport Delta07 10 Manager which may, at its discretion, condition such consent upon the obligation of LESSEE to replace the same by an improvement specified in the consent. LESSOR shall not withhold consent unreasonably and shall not impose unreasonable conditions in its consent. Section 4.05 - Trash and Garba-ge LESSEE shall be responsible for keeping the Leased Premises free of all garbage, trash and other refuse on or in connection with the Leased Premises. LESSEE shall deposit such refuse in receptacles furnished and maintained by LESSEE. Piling of boxes, cartons, barrels, or other similar items in an unsafe or unsightly manner, as determined by the Airport Manager, in and about the Leased Premises shall not be permitted and shall be removed by LESSEE upon the Airport Manager's request. Section 4.06 - Taxes and Licenses LESSEE shall pay all taxes of whatever character that may be lawfully levied or charged upon LESSEE's leasehold improvements or operations hereunder and upon LESSEE's rights to use the Leased Premises. LESSEE shall obtain and pay for all licenses or permits necessary or required by law for the construction of any additional improvements, the installation of equipment and furnishings, and any other licenses necessary for the conduct of its air transportation services. LESSOR shall provide information necessary to assist LESSEE obtaining such permits. LESSOR shall not be required to pay any taxes by reason of LESSEE's use of the Leased Premises. LESSEE shall indemnify fully and save harmless LESSOR from any taxes lawfully imposed or levied against LESSOR solely by reason of LESSEE's or LESSEE's nominee use or occupancy of the Leased Premises. Section 4.07 - Rules and Regulations In conducting its operations hereunder, LESSEE shall comply with all applicable laws and ordinances of any governmental authority; the rules and regulations promulgated by such authority with reference to aviation and air navigation; and reasonable and nondiscriminatory rules and regulations of the AIRPORT as may be adopted, or amended from time to time by LESSOR. Section 4.08 - Liens and Encumbrances LESSEE agrees that it shall pay, or cause to be paid, all costs and expenses for work done and materials delivered to the Premises in improvements at LESSEE's request, during the leasehold term, for improvement to the Premises. LESSEE shall keep the Premises free and clear of all mechanic's or materialmen's liens or any other liens on account of any work done on the Premises at LESSEE's request. LESSEE agrees to and shall indemnify, and hold the Yakima Air Terminal Board, the Yakima Air Terminal, the City and County of Yakima free from and harmless against all liability, loss, damage, Delta07 11 cost, attorney's fees and all other expenses on account of claims of lien of laborers or materialmen, or others for work performed or materials or supplies furnished to LESSEE for use on the Premises. W a . Mam M9411-mm Section 5.01 - Term The current term of this Lease shall commence on the 1st day of December, 2007., through the 31st day of December 31, 2008, and on a year-to-year basis thereafter. Either party may terminate this agreement upon not less than ninety (90) days prior written notice. The LESSEE must be in full compliance with the terms of this Agreement including payment of all rents, fees and charges before serving a notice of termination. ARTICLE VI Article VI Payments by LESSEE Section 6.01 — Rental for Exclusive Terminal Building Space Effective December 1, 2007 through December 31, 2008, rental for the Leased Premises in the Terminal Building, as described in Section 1.01, shall be at the following rate: 1,250 Square feet of total exclusive [eased space at the rate of $22.18 Per square foot per year, or $27,Z1S -a' Per year. The aforesaid rentals shall be increased by two percent (2%) effective September 1 each calendar year unless either party provides 60 day prior written notice to the other requesting review of the rents and landing fees in accordance with the provisions of Article VII. On or before June 1 of each year, LESSOR shall furnish LESSEE a copy of its most current budget report showing revenues and expenditures for both the current and prior years. The report will include the schedule of rates and charges for the current year and anticipated charges for the upcoming fiscal year. DeltaV 12 Effective December 1, 2007 through December 31, 2008 the fee for the use of the landing area and facilities necessary therefore as granted hereunder (except those for which rentals are specifically provided elsewhere) shall be paid by means of a landing fee of $1.15 per 1,000 pounds of approved maximum gross landing weight for all revenue flights. The aforesaid rentals shall be increased by two percent (2%) effective September I each calendar year unless either party provides 60 day prior written notice to the other requesting review of the rents and landing fees in accordance with the provisions of Article VII. The term "Approved maximum gross landing weight" for any aircraft as used herein shall be the maximum landing weight approved by the Federal Aviation Administration for landing aircraft at the Airport. LESSEE shall provide LESSOR with approved maximum gross landing weights for each type of aircraft that LESSEE operates at the Airport. LESSEE shall file with LESSOR, not later than the fifteenth (15#x') day of each month, LESSEE's report showing actual landings at the Airport during the preceding month, which shall include all number and type of such arrivals. The number of arrivals for all revenue flights so calculated, multiplied by the applicable approved maximum gross landing weight for each type of aircraft, shall determine the weight for which a fee is due. The number and type of revenue flights during each calendar month shall be reported to LESSOR not later than the fifteenth (15th) day of the ensuing month. Notwithstanding any other provision of this Agreement to the contrary, the renegotiation of landing fees for a succeeding year on account of a deficit in landing weight of more than 10% of forecast will not apply to the extent any such deficiency has occurred because LESSEE has not been able to land aircraft due to: (1) strike by LESSEE's employees, (2) the construction of new development or improvements, or (3) damage or destruction of the Airport by any cause other than LESSEE's own acts or negligence. In the event the parties cannot agree with respect to renegotiation of landing fees under this Section within thirty (30) days after LESSOR's notice, either party may submit the matter to arbitration in accordance with Section 13.02. Section 6.03 — Rental for Common Baggage Claim Area For the period December 1, 2007 through December 31, 2008, the rental for the common baggage claim area comprising approximately 844 square feet as described on Exhibit "B", shall be charged to all passenger air transportation companies which now or may hereafter have valid Agreements at the Airport at the rate of $22.18 per square foot per year. Delta07 13 The aforesaid rentals shall be increased by two percent (2%) effective September 1 each calendar year unless either party provides 60 day prior written notice to the other requesting review of the rents and landing fees in accordance with the provisions of Article VII. LESSOR shall establish a schedule of the pro rata rental due by each LESSEE which uses the baggage claim area, and LESSEE agrees to pay its stated pro rata amounts monthly. The schedule shall be furnished within thirty (30) days of execution hereof. The pro rata schedules so established shall be subject to re-computation each March and September 1 during the term hereof, based upon 2010 of the total charge being divided equally among all Air Carrier Lessees, and the remaining 80% divided based upon the ratio of enplaned passengers of each Carrier LESSEE to the total enplaned passengers of all Carrier LESSEES for the preceding six-month period. Section 6.04 - Special Security Charges The costs and expenses of LESSOR in providing special AIRPORT security in accordance with the provisions of Section 3.05 hereof, shall be charged to all scheduled passenger air transportation companies which now or may hereafter have valid leases at the AIRPORT or which serve Yakima on a regular basis, and which are required to utilize, or who actually utilize said special security services. LESSEE, in conjunction with other scheduled passenger air transportation companies which now or may hereafter have valid Leases at the AIRPORT or which serve Yakima on a regular basis, shall provide LESSOR in writing a schedule of the pro rata special security charge due from each LESSEE hereunder, within thirty (30) days of the execution of this Lease. If a schedule is not furnished within such time, LESSEE's obligation for such costs shall be computed on the basis of each company's percentage of enplaned passengers. The pro rata schedule so established shall remain in effect until such time as LESSOR issues a revised schedule of the pro rata special security charge binding upon all such user-lessees which revised schedule shall remain in effect until similarly modified. Said schedule shall be revised each March 1 and September 1 during the term hereof, based upon the immediately preceding six (6) months' enplanement figures. Section 6.05 - Fee for Public Address System During the lease period, for use of the public address system, LESSEE shall pay a fee of Twenty-five Dollars ($25.00} per month, for microphone connections located in or about the Leased Premises or at LESSEE's preferential assigned loading gate positions. Delta07 14 LESSOR shall have the right to designate apron parking areas for the storage of LESSEE's aircraft in accordance with Section 1.03 (B) hereof. For all rentals, fees, and charges set forth in this Lease, LESSEE shall tender the amounts due hereunder within thirty (30) days after receipt of invoice from LESSOR. In the event that an unpaid balance remains after such thirty (30) day period has expired, an additional one and one-half percent (1.5%) per month of the unpaid balance shall become due and payable by LESSEE as a delinquency charge. ARTICLE VII RE-ADJUSTMENT OF RENTALS, FEES AND OTHER CHARGES Section 7.01 - Basis for Re-adjusting Charges Except as otherwise provided in this Lease, beginning on January 1 2009, and each one (1) year period thereafter, charges for the use of any one or all of the premises, facilities and services leased hereunder for the following one (1) year period shall be subject to renegotiation upon written notice by either party hereto ninety (90) days or more prior to the beginning of any such period. Either party hereto giving notice shall, at that time, furnish the other party with a reasonably detailed statement supporting the proposed adjustment. Factors that shall be considered in determining adjustment of rentals, fees, and other charges will be: (A) The actual costs, using reasonable accounting procedures, during the preceding one (1) year rental period of providing the buildings or facility, charges for the use of which are made the subject of the adjustment, and the actual revenue derived therefrom during that period. For this purpose any and all revenue applicable to the terminal building cost area shall be included. (B) LESSOR'S estimated costs and revenues for the succeeding one (1) year period of providing the buildings and facility, charges for the use of which are made the subject of the adjustment. Such estimate shall take into account: (1) Such past actual costs as accurately and fairly shown by LESSOR's books. Delta07 15 (2) The necessary increased costs resulting from: (a) Reasonable expenditures incurred by LESSOR pursuant to orders or requirements of governmental authority including, but not limited to, expenditures required under the Federal Aviation Administration's Federal Aviation Regulations, Part 139, as amended, or the corresponding future provision of any such law entitled: "Certification and Operations: Land Airports Serving Certificated Scheduled Air Carriers Operation Large Aircraft (other than helicopters)", and Transportation Security Administrations 49 CFR Part 1500 series (as appropriate), as amended or the corresponding future provision of any such law entitled "Airport Security". (b) Additional maintenance and operational expenditures of LESSOR required for the reasonable and prudent operation and improvement of the buildings or facility, charges for the use of which are made the subject of the adjustment. (3) Extraordinary expenditures for maintenance and renewal and replacement as may be required. (C) Buildings and facilities, the charges for which are subject to adjustment pursuant to this Article VII shall be the following: (1) Passenger terminal building means the building proper, including vehicular parking space and roadways in connection therewith. There shall be included all concessions operated in or in conjunction with the passenger terminal building, such as restaurant, cocktail lounge, baggage, news stand, ground transportation of passengers, automobile parking, etc., and all other building and area concessions and operations in the passenger terminal area. (2) Landing area shall mean those portions of the AIRPORT, exclusive of buildings, hangars and aircraft storage areas, provided for the landing and taking off, and handling, servicing, loading and unloading and other operation of aircraft, including without limitation, approach and turning zones within the AIRPORT property, and avigation easements outside the AIRPORT property, runways, taxiways, ramps, aprons, roadways, runway and taxiway lights, apron floodlights and other appurtenances in connection therewith. The servicing of aircraft with gasoline or fuels and lubricants shall be considered as a part of landing area operation, (3) Aircraft storage shall mean the areas, other than hangars, designated by LESSOR for storage of LESSEE's aircraft. Delta07 16 1A k-t) Any other buildings, appurtenances, facilities or other services requested or used by LESSEE and not covered by this or separate agreement. (D) The depreciation of LESSOR's investment (excluding Federal and State gifts and grants-in-aid); and/or the annual debt service requirements on all bonds issued and outstanding at the time of the adjustment. As to any of the above items, consideration is to be given to either debt service or depreciation and not both. Section 7.02 - Costs Excluded The portion of capital costs of facilities and improvements paid for by Federal and State gifts or grants-in-aid, and depreciation, amortization and interest charged thereon relating to said facilities and improvements paid for by Federal and State gifts or grants- in-kind, if any, shall not be included in the cost factors herein. RRMI RAWN&W-11n In the event the parties cannot agree as to any matter under renegotiation after thirty (30) days, either party may submit the dispute to arbitration in accordance with Section 13.02 herein. Section 7.04 - Operating Budget/Capital Improvements The parties hereto recognize that an annual operating budget is developed and submitted for approval to the City of Yakima and Yakima County prior to December I of each year. The parties hereto recognize that capital expenditures to preserve, protect, enhance, expand, or otherwise improve Airport or any part thereof, may be required during the term of this Agreement. (A) LESSOR shall notify LESSEE in writing upon the adoption of the Airport annual budget or amendments by the Yakima Air Terminal Board. (B) LESSOR shall notify LESSEE in writing of capital improvement projects over $15,000 which would be included in the rate base of this Agreement. (C) Emergency expenditures necessary to preserve the operating efficiency of the Airport not contemplated during the budget process by LESSOR are not subject to this section. LESSOR shall, however, endeavor to discuss Delta07 17 these expenditures with LESSEE prior to such emergency expenditure. Within thirty (30) days after providing notice to LESSEE of the annual budget, Airport Manager shall meet with LESSEE at a mutually convenient time and place for the purpose of further discussing revenues and expenditures. In advance of said meeting, LESSOR agrees to make available to LESSEE any reasonable additional information relating to the proposed operating budget or capital improvement project. LESSOR agrees to fully consider the comments and recommendations of LESSEE prior to finalizing the operating budget or capital improvement project. Section 8.01 - Air Terminal Control (A) Nothing in this Agreement shall restrict in any manner LESSOR's right to lease, or grant licenses or privileges, to any other person, partnership, firm, association or corporation and charge rental or other fees therefore to operate an airline or other business on the AIRPORT property. By the execution of this Agreement, LESSOR does not intend to relinquish the control or operation of the AIRPORT, or any function thereof to LESSEE, except as may be expressly provided herein. (B) The right during the time of war or national emergency to lease the AIRPORT or any part thereof to the United States Government for military use. In the event any such lease is executed, the privileges and corresponding obligations of this instrument, insofar as they are inconsistent with the privileges of the Lease to the government shall be suspended. Section 9.01 - Indemnification The parties agree that LESSEE is and shall always be deemed to be an independent contractor and operator and not an agent or employee of LESSOR with respect to its acts or omissions hereunder. At no expense to LESSOR, LESSEE shall defend against and indemnify fully and save harmless LESSOR, including its officers, agents and employees, and the Yakima Air Terminal Board, the Yakima Air Terminal, the City of Yakima and Yakima County and their elected and appointed officials, employees and agents, from any and all liability, damages, suits, claims, actions, judgments or decrees, including all expenses incidental to the investigation and defense thereof, including reasonable attorney fees, based Delta07 18 upon or arising out of damages or injuries to third persons or their property, caused or occasioned by the use or occupancy by LESSEE of the premises and privileges hereunder; provided, however, that LESSEE shall not be liable for any injury, damage or loss occasioned solely by the negligence or willful misconduct of LESSOR, its agents or employees. LESSOR shall give to LESSEE prompt and reasonable notice of any such claims or actions and LESSEE shall have the right to investigate, compromise and defend the same to the extent of its interest. LESSEE shall defend, indemnify and hold LESSOR harmless with respect to acts or omissions of its nominee. For claims by LESSOR for indemnity only, LESSEE specifically and expressly waives any immunity under industrial insurance, RCW 51 or the like and LESSEE acknowledges that this waiver was mutually negotiated, provided, however, that LESSEE shall not be liable for any injury, damage or loss occasioned solely by the sole negligence of LESSOR, its agents or employees. The LESSEE shall keep and hold the Yakima Air Terminal Board, the Yakima Air Terminal, the City and County of Yakima, their elected and appointed officials, agents and employees, free and harmless from any and all claims and actions, loss, damage, expense or cost, including reasonable attorneys fees, incidental to the investigation and defense thereof, resulting from, arising out of, or caused by actions of LESSEE, resulting in any liability under the Federal Comprehensive Environmental Response Compensation Liability Act of 1980, as amended, 42 U.S.C.9601 et seq.; hazardous Materials Transportation Act, 49 U.S.C. 1801 et seq.; Resource Conservation and Recovery Act, 42 U.S.C.6901 et seq.; the Clean Water Act, 42 U.S.C.1251 et seq.; the Washington Environmental Policy Act, RCW Ch. 43.21C; the Washington Water Pollution Control Act, RCW Ch. 90.48.010 et seq.; the Washington Hazardous Waste Management Act, RCW Ch. 70.105; the Washington Model Toxic Control Act, RCW Ch. 70.105D, and the regulations promulgated thereunder, or under any applicable local or state environmental ordinance, statute, law, rule or regulation. Section 9.02 - Insurance LESSEE shall procure and keep in effect at all times during the term of this Lease the forms of insurance set forth in this Section 9.02. All policies or certificates shall contain a provision that written notice of cancellation or of any material changes in the policy by the insurer shall be delivered to LESSOR thirty (30) days in advance of the effective date thereof. All policies shall contain an agreement, if obtainable, on the part of the respective insurers, waiving the right of such insurers to subrogation. LESSEE shall maintain all insurance hereunder with insurance underwriters authorized to do business in the State of Washington and satisfactory to LESSOR. All policies shall name the City of Yakima, its elected officials, officers, servants, agents and employees, the County of Yakima, its elected officials officers, servants, agents and employees, and the Yakima Air Terminal Board and its officers, servants, agents and Delta07 19 employees as additional insureds as their interests may appear hereunder. LESSEE shall furnish LESSOR, certificates from the insurance carrier showing all insurance required hereunder to be in full force and effect during the entire term of this Lease. Certificate shall be issued by carrier(s) with a minimum A.M. BEST rating of A-VII which are admitted in the State of Washington. LESSEE agrees to reimburse LESSOR for any damage to the premises caused by the occupancy of LESSEE or employees of LESSEE, in the performance of their duties. (A) Fire Insurance. LESSEE shall insure for fire and extended coverage risks of all LESSEE's improvements on the Leased Premises. Such insurance shall be in an amount equal to the full insurable replacement value of such improvements. . LESSOR agrees that any payments received by it from such insuring companies by reason of loss under the policy or policies shall be applied toward repair and reconstruction of said leasehold improvements, subject to the provisions of Paragraph 10.01 and 10.03 hereof. (B) Public Liability, including but not limited to bodily injury, property damage and personal injury for airfield operations, and terminal operations. Promptly after the execution of this Lease, LESSEE shall provide comprehensive general liability insurance in protection of LESSOR, its officers, agents and employees, the City of Yakima and their elected and appointed officials, employees and agents and Yakima County and their elected and appointed officials, employees and agents. LESSEE shall provide such public liability insurance for a minimum sum of $100,000,000 for bodily injury, personal injury and property damage, Combined Single Limit per occurrence. As respects to Personal Injury for non-passengers, a sublimit of $25,000,000 applicable to any one offense and in the aggregate. Section 9.03 - Insurance Adjustment LESSEE shall pay any increase in LESSOR's insurance rates or premiums that shall be caused by the character of the occupation of the premises by LESSEE. In addition, all insurance coverage that LESSEE is required to procure and maintain during the term of the Lease shall be subject to adjustment beginning on January 1, 2008, and each one (1) year period thereafter, to such levels as reasonably deemed necessary by LESSOR due to appreciation in value of personal and real property subject to this Lease. Section 9.04 - Insurance - Failure of LESSEE If LESSEE shall neglect to maintain the insurance required by this Article IX, LESSOR may renew or procure such insurance. Any insurance premiums paid by LESSOR shall Delta07 20 be considered as additional rent, and shall confer upon LESSOR all rights and remedies provided in this Lease in the event of default. In addition LESSEE shall pay to LESSOR a monthly sum equal to one and one-half percent (1.5%) of the insurance premium paid as a delinquency charge. ARTICLE X DAMAGE OR DESTRUCTION OF LEASED PREMISES Section 10.01 - Partial Damage If the Leased Premises are partially damaged by fire, explosion, the elements, the public enemy or other casualty, but not rendered untenable in the sole judgment of LESSOR, the premises will be repaired with due diligence by LESSOR at its own cost and expense; provided, however, that if the damage is caused by an act or omission of LESSEE, its sublessee, agents, or employees, LESSEE shall reimburse LESSOR for its actual costs incurred in repairing the Premises, to the extent LESSOR does not receive proceeds of insurance for the necessary repairs. Section 10.02 - Extensive Damage If the damage shall be so extensive as to render the Leased Premises untenable but capable of being repaired in sixty (60) days in the sole judgment of LESSOR, the Premises shall be repaired with due diligence by LESSOR at its own cost and expense, and the rent payable herein with respect to LESSEE's exclusive space shall be paid proportionately to the time of such damage and thereafter cease until such time as the Premises are substantially restored; provided, however, that if the damage is caused by an act or omission of LESSEE, its sublessee, agents, or employees, LESSEE shall reimburse LESSOR for its actual costs incurred in repairing the Premises, to the extent LESSOR does not receive proceeds of insurance for the necessary repairs. During any such period where LESSEE is responsible for payment for repairs under the terms of this paragraph, the usual rental shall be payable. The abatement of rental for the Leased Premises, as aforesaid, shall not be construed as a waiver of other fees due and payable under the terms of Article VI. In the event the Leased Premises are completely destroyed by fire, explosion, the elements, the public enemy or other casualty, or so damaged that they will remain untenable for more than sixty (60) days in the sole judgment of LESSOR, LESSOR shall be under no obligation to repair and reconstruct the premises, and rent payable hereunder shall be paid proportionately to the time of such damage or destruction and shall thenceforth cease until such time as the Premises are restored to permit operations to reasonably resume. If within ninety (90) days after the time of such DeltaV 21 damage or destruction LESSOR has not commenced repair or reconstruction of the Premises, or other reasonable facilities provided in lieu thereof, LESSEE may give LESSOR written notice of its intention to cancel this Lease in its entirety or to cancel as of the date of such damage or destruction such part of this Lease as relates to the damaged portion of the Leased Premises. Notwithstanding the foregoing, if the Leased Premises are completely destroyed as a result of an act or omission by LESSEE, LESSOR may, in its discretion, repair the Premises in which event LESSEE shall reimburse LESSOR for its actual costs incurred in making such repairs, to the extent LESSOR does not receive proceeds of insurance for the necessary repairs. During any such period where LESSEE is responsible for payment of repairs under the terms of this paragraph, the usual rental shall be payable. It is understood that, in the application of the foregoing Sections 10.01, 10.02 and 10.03, LESSOR's obligations shall be limited to repair or reconstruction of the terminal building to the same extent and of equal quality as obtained at the commencement of the operations hereunder. Redecoration and replacement of LESSEE's furniture, equipment and supplies in the leased area shall be the responsibility of LESSEE unless damage thereto is caused by the sole negligence of LESSOR, its sublessee, agents or employees, in which event LESSOR shall be responsible for the redecoration and replacement. Any such redecoration and refurnishing/re-equipping shall be of equivalent quality to that originally installed hereunder. ARTICLE X1 TERMINATION OF LEASE, CANCELLATION, ASSIGNMENT, AND TRANSFER Section 11.01 -Termination This Lease shall terminate at the end of the full term hereof. LESSEE shall have no further right or interest in the Leased Premises upon termination, except as provided in Article XII hereunder. Section 11.02 -Cancellation by Lessee LESSEE may terminate this agreement upon not less than ninety (90) days prior written notice. The LESSEE must be in full compliance with the terms of this Agreement including payment of all rents, fees and charges before serving a notice of termination. This Lease shall be subject to cancellation by LESSEE after the occurrence of one or more of the following events: (A) The permanent abandonment of the AIRPORT as an airline terminal. Delta07 22 (B) The lawful assumption by the United States Government, or any authorized agency thereof, of the operation, control or use of the AIRPORT, or any substantial part or parts thereof, in such a manner as substantially to restrict LESSEE for a period of at least ninety (90) days from operating thereon for the carrying of passengers, cargo, express, property and United States mail. (C) Issuance by any court of competent jurisdiction of an injunction in any way preventing or restraining the use of the AIRPORT or any part thereof materially affecting LESSEE's operations, and the remaining in force of such injunction for a period of at least ninety (90) days. (D) The inability of LESSEE to use for a period of ninety (90) days the airfield on the AIRPORT, including approach areas, runways, taxiways, aprons, navigational and avigational aids, and lighting facilities, for the landing and taking off of LESSEE's aircraft, because of fire, explosion, earthquake, other casualty or acts of God or the public enemy, provided that same is not caused by negligence or willful acts or failure to act on part of LESSEE. The inability of LESSEE to use for a period of ninety (90) days any other premises, facilities, rights, licenses, services, or privileges leased to LESSEE hereunder, except as otherwise provided hereinabove or in Article X herein. (E) The default by LESSOR in the performance of any covenant or agreement herein required to be performed by LESSOR and the failure of LESSOR to remedy such default for a period of ninety (90) days after receipt from LESSEE or written notice to remedy the same; provided, however, that no cancellation, as above provided, shall be of any force or effect if LESSOR shall have remedied the default or is diligently proceeding to remedy the default. Except for termination pursuant to foregoing Paragraph One of Section (E), LESSEE may exercise such right of termination by giving not less than sixty (60) days advance written notice at any time thirty (30) or more days after inception or occurrence of the event causing the right to terminate, and this Lease shall terminate as the date specified in the notice. Rental due hereunder shall be payable only to the effective day of termination. LESSEE's performance of all or any part of this Lease for or during any period(s) after a default by LESSOR of any of the terms, covenants and conditions herein contained to be kept by LESSOR shall not be deemed a wavier of any right on the part of LESSEE to cancel this Lease for any subsequent failure by LESSOR to so perform, keep or observe any of the terms, covenants or conditions hereof. Delta07 23 Section 11.03 - Default LESSEE shall be in default for (1) any failure to make any payment within time required; (2) any breach of the obligations of this Lease; or (3) abandonment or vacation of demised premises during the term of this Lease. In the event of default by LESSEE continuing for thirty (30) or more days, after receipt of written notice from LESSOR to remedy the same, which notice must specify the deficiency with reasonable particularity, LESSOR, at its option may do any or a combination of any of the following; (A) Enter and repossess the Leased Premises. In said event LESSOR may expel LESSEE and those claiming by, through, or under it and remove all effects forcibly, if necessary, without being deemed guilty of trespass. (B) Relet the Premises in whole or in part to any tenant or tenants that may be satisfactory to LESSOR for any duration as LESSOR may obtain. In such event, LESSEE shall be responsible to LESSOR for any difference between the amount recovered from a new tenant and the amount required to satisfy LESSEE's obligation for rental under this Lease and any costs incurred in making such repairs and alterations as are reasonably necessary to relet the Premises, (C) Terminate the Lease at any time. (D) Recover damages for default, whether or not the Lease is terminated. Other than any failure to make any payment within the time required, no right granted to or action on the part of LESSOR as above provided shall be of any force and effect if LESSEE shall have remedied the default or is diligently proceeding to remedy same. The foregoing remedies shall be in addition to, and shall not exclude, any other remedy available to either party under law or equity, such as for, but not limited to, business interruption. The receipt and acceptance by LESSOR of rental payments, fees, and charges as they become due from LESSEE shall not be construed as a waiver of any right or remedy LESSOR may have under this Lease. It is agreed that the full and prompt performance of the terms and conditions of this Agreement is of the essence, and shall LESSEE be in default of any of the same and such default has continued for thirty (30) days after written notice by LESSOR setting forth the particular default claimed, this Agreement shall at the option of LESSOR, be forfeited and in such event it is expressly agreed that LESSOR may enforce such forfeiture pursuant to the unlawful detainer statutes of the State of Washington, and, LESSEE hereby waives all defenses as to the non-applicability of such statutes. It is further agreed that after service of notices as above set forth, an additional condition to DeltaV 24 avoid forfeiture shall be payment by LESSEE of LESSOR's costs and expenses, including attorney's fees, for the preparation and service of such notice. Nothing contained herein shall release or diminish LESSEE's obligation to pay rent for the full term of this Agreement save such amount as LESSOR recovers as rent from any subsequent LESSEE during the term of this Agreement. As additional and not alternative remedy, optional with LESSOR, should LESSEE be in default hereunder other than default in the payment of rent, LESSOR may cure or correct the same and the cost of such action by LESSOR shall immediately become due and payable from LESSEE, together with interest on said sum at a rate of twelve percent (12%) per annum, and the non-payment of said sum by LESSEE shall be adequate grounds for LESSOR to invoke the other remedies as provided in this paragraph. Section 11.04 - Cancellation by LESSOR In addition to the LESSOR's remedies provided in Section 11.03, this Lease shall be subject to cancellation by LESSOR upon the occurrence of any one of the following events., (A) The filing of LESSEE of a voluntary petition in bankruptcy. (B) The institution of bankruptcy proceedings against LESSEE and the adjudication of LESSEE as a bankrupt pursuant to such proceedings. (C) The taking by a court of competent jurisdiction of LESSEE and its assets pursuant to proceedings brought under the provisions of any Federal reorganization act. (D) The appointment of a receiver of LESSEE's assets. (E) The divestiture of LESSEE's estate herein by other operation of law. (F) The abandonment of LESSEE of its conduct of air transportation at the AIRPORT for a period of ninety (90) days. (G) The lawful assumption by the United States Government or any authorized agency thereof of the operation, control or use of the AIRPORT and facilities, or any substantial part or parts thereof, in such a manner as substantially to restrict LESSEE, for a period of at least ninety (90) days, from operating thereon for the carrying of passengers, cargo, property, and the United States mail. (H) In addition to the foregoing, all rights, privileges, or interests acquired hereunder by LESSEE may, at the option of LESSOR and following Delta07 25 written notice of thirty (30) days, be suspended or finally terminated if such suspension or termination is found by LESSOR, acting in good faith, to be necessary to secure Federal financial aid for the development of the AIRPORT or for the development or promotion of aeronautical operation thereon. In any of the aforesaid events, LESSOR may take immediate possession of the Leased Premises and remove LESSEE's effects. Any rental due hereunder shall be payable to the date of termination. It is agreed that failure to declare this Lease terminated upon the default of LESSEE for any of the reasons set forth above shall not operate to bar or destroy the right of LESSOR to declare this Lease null and void by reason of any subsequent violation of the terms of this Lease. Section 11.05 - Notice of Termination If any of the events enumerated in Section 11.03 and Subparagraphs A through G of Section 11.04 shall occur and after due notice LESSEE has failed to cure or correct same, LESSOR may, at any time thereafter during the continuance of the default, terminate this Lease by giving thirty (30) days notice in writing, such cancellation and termination to be effective upon the date specified in the notice. Rental due shall be payable only to the date of cancellation. , - 011 - - - # 0 LESSEE shall not sell, assign, or transfer this Lease or any part thereof and shall not sublease all or any portion of the Leased Premises without the prior written consent of the Yakima Air Terminal Board; provided, however, that LESSEE may assign this Lease to any corporation with which LESSEE may merge or consolidate or which may succeed to the air transportation business of LESSEE. Upon termination of this Lease for any reason, LESSEE shall have the right, subject to the provisions of Section 2.02, for a period of thirty (30) days after the date of termination, to remove any or all of its property from the AIRPORT; provided, however, that LESSEE shall not be in default in its payments to LESSOR hereunder and provided that LESSEE shall restore the premises to their original condition as of the beginning of occupancy, ordinary wear and tear, damage by the elements, fire, explosion, or other causes beyond the control of LESSEE excepted. Delta07 26 Section 12.02 - LESSOR's Rights at Termination Title to any and all property not removed by LESSEE prior to the expiration of the aforesaid thirty-day period shall vest in LESSOR; provided, however, that LESSOR reserves the right to require LESSEE to remove such improvements and property by requesting LESSEE to do so, and upon failure of LESSEE to do so, LESSOR may remove, store or dispose of such improvements and property at LESSEE's expense. ARTICLE XIII GENERAL PROVISIONS Section 13.01 - Other Leases This Lease supersedes all leases and agreements between the parties or their predecessors pertaining to the rental rates, landing fees and ground plots at the AIRPORT but does not extinguish any debtor obligation owing thereunder, R�MMMAM (A) Application and Procedure. Any failure of the parties to agree on renewal rental rates or a dispute under Section 2.02, the matter shall be determined by arbitration. In the event the parties are unable to agree on an arbitrator, a panel shall be chosen in the following manner: Either party may, by written notice to the other, appoint an arbitrator, as defined in Subparagraph (B). Within fifteen (15) days thereafter, the other party shall by written notice to the first party appoint a second arbitrator. The arbitrators thus appointed shall, within fifteen (15) days, appoint a third disinterested person and such three arbitrators shall, as promptly as possible, determine such issue. If a second arbitrator shall not have been so appointed, the first arbitrator appointed shall be the sole arbitrator. If, within fifteen (15) days after the appointment of the second arbitrator, the two arbitrators appointed by the parties shall be unable to agree on the appointment of the third arbitrator, they shall give written notice of such failure to agree to the parties, and if the parties fail to agree upon the selection of such third arbitrator within ten (10) days after the arbitrators appointed by the parties have given such notice, then thereafter either of the parties upon written notice to the other party may apply for such appointment to the presiding Superior Court Judge for Yakima County, Washington. The parties shall be entitled to present evidence, witnesses, if any, and argument in the presence of the other party. Upon conclusion of the hearing, the arbitrator(s) shall render the award and shall give written notice to the parties stating the determination, and shall furnish to each party a copy of such determination signed by all the arbitrators, The Delta07 27 award of the majority of the arbitrators or the sole arbitrator, as the case may be, shall be conclusive and binding upon the parties. In the event of the failure, refusal or inability of any arbitrator to act, within fifteen (15) days of the conclusion of the arbitrator's hearing, a new arbitrator shall be appointed in his stead, which appointment shall be made by the presiding Superior Court Judge of Yakima County, Washington. Expenses of the arbitrator selected by a party shall be borne by that party and the expense of the third arbitrator shall be borne equally by LESSEE and LESSOR. (B) Arbitrator Defined. The qualifications of the arbitrators shall be those that each party or judge, as the case may be, shall determine in the selection or appointment, bearing in mind only the nature of the dispute or disputes to be resolved. (C) State Law. Except as otherwise provided in this Agreement, arbitration shall be instituted and conducted in accordance with the law of the State of Washington, applicable at the time of arbitration proceedings. Section 13.03 - Rules, Regulations, Certification and Security LESSOR shall have the right to adopt from time to time, and enforce, reasonable and nondiscriminatory rules and regulations, as well as standards of operation of the AIRPORT, which LESSEE agrees to observe and obey, with respect to the use of the AIRPORT. In the event LESSOR shall be subject to any civil fine or penalty by reason of LESSEE's violation of any governmental rules, regulations and standards as now or hereafter may be promulgated or enacted, the cost of such fine or penalty shall be borne by LESSEE. LESSEE shall indemnify fully and save harmless LESSOR from any fine or penalty charged against LESSOR by reason of LESSEE's violation of any governmental rules, regulations and standards. As provided hereinabove whenever any person, employee or nominee of LESSEE's appointment is subject to LESSOR's approval, LESSOR may at any time, without assignment of cause, withdraw its approval and LESSEE shall forthwith designate another agent or nominee subject to LESSOR's approval. Section 13.05 - Interpretation of Lease Nothing in this Lease shall be construed or interpreted in any manner whatsoever as limiting, relinquishing, or waiving any rights of ownership enjoyed by LESSOR in the AIRPORT property, or in any manner waiving or limiting LESSOR's control over the operation, maintenance and general administration of AIRPORT property or operations, nor in derogation of such governmental rights as LESSOR possesses, except as is specifically provided for herein. Delta07 28 Section 13.06 - Invalid Provisions In the event any covenant, condition or provision herein contained is held to be invalid by any court of competent jurisdiction, the invalidity of any such covenant, condition or provision shall in no way affect any other condition, or provision herein contained; provided that the invalidity of such covenant, condition or provision does not materially prejudice either LESSOR or LESSEE in its respective rights and obligations contained in the valid covenants, conditions and provisions of this Lease. Section 13.07 - Sponsors Assurances This Lease shall be subordinate to the provisions of any existing or future agreement between LESSOR and the United States relative to the operation or maintenance of the AIRPORT, the execution of which has been or may be required as a condition precedent to the expenditure of Federal funds for the development of the AIRPORT. Section 13.08 - Consent Not to be Unreasonably Withheld Whenever consent is required hereunder by either LESSOR or LESSEE, such consent is not to be unreasonably withheld or to be delayed for an unreasonable period of time. Section 13.09 - Redelivery of Premises LESSEE shall, upon termination of this Lease, quit and deliver up the Lease Premises to LESSOR peaceably, quietly, and in as good order and condition as the same now are or may hereafter be improved by LESSEE or LESSOR, reasonable use and wear thereof excepted. Section 13.10 - Holding Over In the event LESSEE remains in possession of the Leased Premises after the expiration of this Lease without any written renewal thereof, such holding over shall not be deemed as a renewal or extension of this Lease but shall create only a tenancy from month-to-month which may be terminated at any time by LESSOR by giving notice to LESSEE as required by the law of the State of Washington for terminating a month-to- month tenancy. Whenever the term "Federal Aviation Administration" is used in this Lease it shall mean the Federal Aviation created by the Federal Government under the Federal Aviation Act of 1958, or to such other Federal Government authority as may be the successor thereto or be vested with the same or similar authority. Delta07 29 Section 13.12 - Nondiscrimination In the event LESSEE engages in service to the public in its business conducted on or from the leased premises, LESSEE agrees and promises to furnish such services to the public on a fair, equal and not unjustly discriminatory basis to all users thereof, and to charge fair, reasonable and not unjustly discriminatory prices for each unit of service, provided, that LESSEE may be allowed to make reasonable and nondiscriminatory discounts, rebates or other similar types of price reductions to volume purchasers of LESSEE's services. LESSEE further promises and agrees that it will not, on the grounds of race, color or national origin, discriminate or permit discrimination against any person or group of persons in any manner prohibited by federal law and regulations. LESSEE's breach of any promise or agreement contained in this Section shall constitute grounds for the termination of this Agreement, and in addition thereto, LESSEE shall have the right to take such other remedial action as the United States Government may direct. Section 13.13 - Nonexclusive Right It is hereby agreed that nothing herein contained shall be construed to grant or authorize the granting of an exclusive right prohibited by Section 308 of the Federal Aviation Act of 1958, as amended, and LESSOR reserves the right to grant to others the privilege and right of conducting any one or all of the aeronautical activities listed herein, or any other activity of an aeronautical nature. It is also hereby agreed that this lease Agreement shall be terminated if any portion of LESSEE's exclusive use facilities is not fully utilized and is not made available for use by potentially competing air carriers or foreign air carriers so as to be in compliance with 14 CFR Part 158, Passenger Facility Charge program, Section 13.14 - Inspection LESSOR through its authorized agent shall have the right at reasonable times to enter upon the Leased Premises to inspect said Premises, to observe the performance by LESSEE of its obligations hereunder, and to do any act which LESSOR may be obligated to have the right to do under this Lease. Section 13.15 - Lease Made in Washington This Lease has been made in and shall be construed in accordance with the laws of the State of Washington. Delta07 30 Section 13.16 - Successors This Lease shall bind and inure to the benefit of any successor of LESSOR and any successor, assignee, or sublessee of LESSEE. Section 13.17 - Headings The article and section headings contained herein are for convenience in reference and are not intended to define or limit the scope of any provision of this Lease. Section 13.18 - Venue, Attorney's Fees If any suit or action is instituted in connection with any controversy arising under this Agreement, the prevailing party shall be entitled to recover and the losing party agrees to pay, in addition to costs, such sum as the trial court may adjudge reasonable as attorney's fees and upon appeal therefrom such sum as the appellate court may adjudge reasonable as attorney's fees. In the event of litigation to enforce the rights and obligations hereunder, venue shall fie in Yakima County Superior Court. This provision shall survive termination by either party with respect to causes of suit or action that survives termination. Section 13.19 - Time of Essence Time is of the essence of this Lease. Section 13.20 - Notices Notices to LESSOR provided for herein shall be sufficient if sent by registered or certified mail, postage prepaid, or reliable overnight delivery service addressed to: Airport Manager, Yakima Air Terminal, 2400 West Washington Avenue, Yakima, Washington, 98903. Notices to LESSEE provided for herein shall be sufficient if sent by registered or certified mail, postage prepaid, or reliable overnight delivery service, addressed to: " fflio- or such other addresses as the parties may designate to each other in writing from time to time. Delta07 31 Section 13.21 - Non-Waiver Waiver by either party of strict performance of any provision of this Agreement shall not be a waiver or prejudice the party's right to require strict performance of the same provision in the future or any other provision. This non-waiver clause cannot be wavered. Section 13.22 - Limitation of Provisions This Agreement does not create in or bestow upon any other person or entity not a party to this Agreement any right, privilege or benefit. This Agreement does not in any way represent nor should it be deemed to imply any standard of conduct to which the parties expect to conform their operations in relation to any person or entity not a party to this Agreement. Section 13.23 - Memorandum of Lease The parties agree to execute a Memorandum of this Lease, upon request by either party, in a form suitable for recording and LESSOR may record the Memorandum. Section 13.24 - Conformity of Lease, Fees and Charges to Others In the event an air transportation company shall use the facilities or any services of the AIRPORT without executing a Lease with LESSOR substantially identical to this Lease, such airline company shall pay fees to LESSOR computed at rates which are at least 1.25 times those applicable to LESSEE under Sections 6.01, 6.02 and 6.03, and so Jong as said increased rates are not violative of any applicable law, rule or regulation. An air transportation company that is signatory to a Lease with LESSOR after the termination of their lease, shall not be subject to the increased rates of this section. Rates established pursuant to negotiations shall be retroactive to the termination date of the term last ended with signed agreement in effect. Nothing in this Lease shall be deemed to restrict in any manner LESSOR's right to make major improvements to the existing Passenger Terminal Building or construct a new Passenger Terminal Building. LESSOR shall review with and seek the timely comments of LESSEE, and give serious consideration to the comments of all signatory airlines as to making major improvements to the existing Passenger Terminal Building or construction of a new Passenger Terminal Building. In the event that such results in significant increases in costs or expenses that may affect LESSEE, LESSOR shall notify LESSEE with reasonable promptness in the manner provided in Sections 7.01 and 13.20. In the Delta07 32 event LESSEE objects to any such construction or major improvement but LESSOR elects to proceed with the project, LESSEE shall have the right to terminate this Lease immediately as of the date any resulting increase in rents and fees payable hereunder becomes effective. Section 13.26 - Civil Rights Provision LESSEE assures that it will comply with pertinent statutes, Executive Orders and such rules as are promulgated to assure that no person shall, on the grounds of race, creed, color, national origin, sex, age, or handicap be excluded from participating in any activity conducted with or benefiting from Federal assistance. This Provision obligates LESSEE or its transferee for the period during which Federal assistance is extended to the AIRPORT program, except where Federal assistance is to provide, or is in the form of personal property or real property or interest therein or structures or improvements thereon. In these cases, the provision obligates the party or any transferee for the longer of the following periods: (A) the period during which the property is used by the sponsor or any transferee for a purpose for which Federal assistance is extended, or for another purpose involving the provision of similar services or benefits; or (B) the period during which the AIRPORT sponsor or any transferee retains ownership or possession of the property. In the case of contractors, this Provision binds the contractors from bid solicitation period through the completion of the contract. Section 13.27 -, Department of Transportation Title VI Assurances LESSEE for himself, personal representatives, successors in interest, and assigns, as a part of the consideration hereof, does hereby covenant and agree as a covenant running with the land, that: (A) no person on the grounds of race, color, or national origin shall be excluded from participation in, denied the benefits of, or be otherwise subjected to discrimination in the use of said facilities, (B) that in the construction of any improvements on, over, or under such land and the furnishing of services thereon, no person on the grounds of race, color, or national origin shall be excluded from participation in, denied the benefits of, or otherwise be subjected to discrimination, (C) that LESSEE shall use the premises in compliance with all other requirements imposed by or pursuant to 40 CFR Part 21, Nondiscrimination in Federally Assisted Programs of the Department of Transportation, and as said Regulation may be amended. Delta07 33 Section 13.29 - Integration This document embodies the entire Agreement of the parties with respect to the subject matter herein contained. No amendments or modifications hereof shall be enforceable unless in writing, signed by the party to be charged. IN WITNESS WHEREOF, the parties have hereunto set their hands this day of 1),v c f ja4 it,— 2007. Delta07 34 YAKIMA AIR TERMINAL BOARD 2400 W. Washington Avenue Yakima, Washington 98903 (509) 575-6149 - phone (509) 575-6185 - fax William ,Chairman r � - Les Flue, Secretary STATE OF WASHINGTON County of Yakima I certify that I know or have satisfactory evidence that William Wheeler and Les Flue signed this instrument, on oath stated that they were authorized to execute the instrument and acknowledged it as the Chairman and the Secretary respectively of the Board of the Yakima Air Terminal - McAllister Field to be the free and voluntary act of such party for the uses and purposes mentioned in the instrument. Date Notary Publicu (i Appointment Expires IN " otIM1111 I 30 Y,44f*, C., NOTARY' PUBLIC I 0 7 ....... %* WAS Delta07 35 LESSEE: DELTA Al INES, INC. Corporate teal Estate 1030 Delta Boulevard Atlanta, Georgia A354 A/ BY', �Z' Date Attest: Gi':,,rponada Real Est ate By: Title ,,nm w" ate STATE OF-Delaware County of I certify that I know or have satisfactory evidence that and ,wa signed this instrument, on oath stated that they were authorized to e:Kecut t ie instrument and acknowledged it, as the and the respectively of Delta Air Lines, Inc., to be the free and v6funtary act of such corporation for the uses and purposes mentioned in the instrument. Date By: Notary Public Notary Public, Cobb County, Georgia Appointment Expires My Cor;mission Expires December 6, 2048 Delta07 36 A E bit "A" to eduJed Passenger Airline Least aklma Air Terminal ctive Date: 250 sq.ft.