Lease Agreement

City of Chandler — Regular Meeting (2022-09-19)

View PDF Meeting page

Extracted text (via ocr_local) 62647 characters 
CITY OF CHANDLER
AIRPORT LEASE AGREEMENT
NO. 018

1. PARTIES. This Airport Lease Agreement (this “Lease”), dated the _ day of

, 2022 (the “Effective Date”), is made by and between the CITY OF CHANDLER,
an Arizona municipal corporation (“Landlord”), and CHANDLER AIR SERVICE, INC., an Arizona
corporation (“Tenant”). Landlord and Tenant may be referred to in this Lease as a “Party” or
collectively as the “Parties.”

2. RECITALS. As background to this Lease, the Parties agree, acknowledge and recite as
follows, each of which shall be deemed a material term and provision of this Lease:

2.1. Landlord owns and operates a municipal airport known as Chandler Municipal
Airport (the “Airport”), a portion of which has been made available for use by tenants for conduct
of commercial aeronautical activities.

3. LEASE OF PREMISES.

3.1. PREMISES. Landlord leases to Tenant and Tenant leases from Landlord for the
term of this Lease, at the rental, and upon all of the covenants and conditions set forth herein, that
certain real property located in Maricopa County, Arizona, and legally described in attached
Exhibit “A”, which consists of one (1) land parcel comprising a total of approximately 1.552 acres
or sixty-seven thousand six hundred (67,600) square feet gross more or less, together with the
improvements presently situated on the described real property, or to be constructed on the
described real property by Tenant in accordance with the terms and provisions of this Lease (the
“Premises”), and together with certain additional rights to use and access of the Public Airport
Facilities (defined below) set forth in Paragraph 3.2 of this Lease. The location of the Premises
and the portion of the Public Airport Facilities immediately adjacent to the Premises are
conceptually shown in attached Exhibit “B”. The address of the Premises is 2250 South Stinson
Way, Chandler, Arizona 85286, formerly addressed as 1575 East Ryan Road.

3.2. AIRPORT ACCESS RIGHTS. During the term of this Lease, Tenant shall have the
following additional rights, each of which is non-exclusive, and each of which is subject to all
applicable laws, ordinances, rules and regulations, including, but not limited to, the Chandler
Municipal Airport Rules and Regulations, 2006, adopted and approved by the Chandler City Council
on July 24, 2006, and any subsequent amendments thereto (the “Airport Rules”):

(a) A non-exclusive right to use of the Public Airport Facilities. As used in this
Lease, the term “Public Airport Facilities” means (i) the Airport Jandside areas; (ii) the Airport
airside facilities operated and maintained by Landlord for public use, including, but not limited to,
the landing areas, approach areas, runways, taxiways, aprons, aircraft parking areas, navigational
and avigational aids, lighting facilities; and (iii) other areas of the Airport that may be made available
to the public by the Airport Administration;

Page 1 of 36

(b) A non-exclusive right of access to and from the Premises over and across
the landside roadways serving the Airport, which shall be available for use by Tenant, and Tenant’s
agents, servants, patrons, and invitees; and

(c) A non-exclusive right to enter upon and exit the airside of the Airport from
the Premises to conduct any commercial aviation activity that is a permitted use under this Lease.

As used in Paragraph 2.1, this Paragraph 3.2 or elsewhere in this Lease, the terms “airside”,
“Airport Administration”, “commercial aviation activity”, “fixed base operator”, “landside”, and
“specialized aviation service operator” have the same meanings as set out in the Airport Rules.

3.3. ACCEPTANCE OF PREMISES. Subject to Paragraph 7.5(h), Tenant
acknowledges that the Premises, the title to the Premises, any parking, drive and walk areas
adjoining the Premises (including but not limited to any adjacent airside facilities), the
environmental condition of the Premises and any subsurface conditions thereof, and the permitted
and prohibited uses of the Premise, have been examined by Tenant and that Tenant accepts the
same in the condition or state in which they or any of them may be on the Effective Date of this
Lease, without representation or warranty, express or implied in fact or by law, by Landlord and
without recourse to Landlord, as to the nature, condition, or usability thereof or the use or uses to
which the Premises or any part thereof may be put. Tenant agrees to make any changes in the
Premises reasonably needed to conform to any federal, state or local law applicable to the Tenant’s
use of the Premises. Tenant will complete a Phase 1 assessment. Landlord agrees to cover
reasonable costs of remediation if deemed to be necessary for health and safety purposes.

4. REMOVAL AND CONSTRUCTION OF IMPROVEMENTS.

4.1. EXISTING IMPROVEMENTS. The improvements existing on the Premises at the
Effective Date of this Lease include, without limitation, the following: one hangar building with
approximately 6,400 square feet of building space, aircraft apron, and one surface parking lot
(“Existing Improvements”). The location of the Existing Improvements on the Premises is
generally depicted in attached Exhibit “B”.

4.2. COMPLETION OF NEW IMPROVEMENTS. Tenant covenants and agrees that,
no later than the second (2") anniversary of the Effective Date of this Lease, Tenant, at Tenant’s
expense, shall fully complete a project (the “Project Work”) that includes: the demolition of
Existing Improvements and, the construction of one (1) new building consisting of a minimum of
fourteen thousand four-hundred (14,400) square feet of hangar space and three-thousand (3,000)
square feet of office space, new aircraft parking/staging apron, and a surface parking lot (‘New
Improvements”). Square footage may be adjusted to conform with requirements established
during permitting process. The Project Work shall be done in accordance with plans and
specifications approved by Landlord in its reasonable discretion and, for purposes of Paragraph
6.2 (c), shall commence upon the demolition of the Existing Improvements. Except for activities
identified in Paragraph 4.2(d), Tenant will obtain the approval of the final plans and specifications
by any and all federal, state, municipal and other governmental authorities, offices and departments
having jurisdiction in the matter and provide conformed copies of executed approvals to Landlord.
The execution of this Lease by Landlord does not, and shall not be deemed to, constitute approval
by the City of Chandler of such plans and specifications. If Tenant is unable to complete the

Page 2 of 36

Project Work by the timeline as stated in this Section 4.2, Tenant may make a written request to
the City Manager for additional time to complete the Project Work. Landlord’s response to
Tenant’s request for approval shall be prompt, and such approval shall not be unreasonably
withheld.

(a) The Project Work shall be deemed fully completed when a final certificate
of occupancy is issued for the New Improvements by the Planning and Development Department
of the City of Chandler (or such other department of the City, however denominated, that is
responsible for issuing building permits and providing certificates of occupancy).

(b) Tenant will perform all of the Project Work, including, without limitation,
all demolition of Existing Improvements and construction of New Improvements, in a good,
careful, proper, and workmanlike manner in accordance with the approved plans and
specifications; all provisions of law and any and all permits and authority required by ordinance,
code, law, or public regulations or by any authority at any time having jurisdiction over the
Premises; and the requirements of any public or quasi-public body having similar jurisdiction.

(c) Landlord will be an additional insured on all liability insurance policies
maintained by Tenant and its contractor(s) during the performance of all of the Project Work.

(d) Tenant shall reimburse Landlord for direct costs associated with Landlord’s
expenses for the environmental review process by the Federal Aviation Administration (FAA),
pursuant to the National Environmental Policy Act of 1969, which shall not exceed twenty-five
thousand dollars ($25,000). Landlord shall, at its sole expense, submit the project information
required by the FAA, pursuant to Section 163 of the 2018 FAA Reauthorization Act.

(e) Tenant shall acquire permits to commence the Project Work no later than
the first (1S) anniversary of the Effective Date of this Lease.

(f) In the event that, through no fault of the Tenant’s actions, the period of the
Project Work is delayed by federal, state, regional, or county agencies, Landlord shall grant Tenant
a daily schedule credit for completion of the Project.

4.3. SURETY BONDS. Prior to commencing the Project Work, and continuing during
the entire period of the Project, Tenant shall provide Landlord with a performance bond and a
payment bond as follows:

(a) The performance bond shall be in an amount equal to the total cost of the
Project. The condition of said bond shall be such that Tenant shall faithfully perform all of the
Project Work in accordance with the approved plans and specifications. Such bond shall be solely
or the protection of Landlord.

(b) The payment bond shall be in an amount equal to the total cost of the Project,
including without limitation the demolition and removal of existing structures and construction of
new improvements. The condition of said bond shall be such that Tenant shall promptly pay or cause
to be paid all monies due to all persons supplying labor and materials in the performing the Project
Work.

Page 3 of 36

(c) Each bond shall be executed solely by a surety company or companies
holding a certificate of authority to transact surety business in the State of Arizona issued by the
director of the Arizona Department of Insurance pursuant to Title 2, Chapter 2, Article 1 of the
Arizona Revised Statutes, and no such bond shall be executed by an individual surety or sureties.

(d) Each bond shall include a provision allowing the prevailing party in a suit on
such bond to recover as a part of the judgment such reasonable attorney’s fees as may be fixed by a
court of competent jurisdiction.

(e) In the event that Tenant’s lender, if any, requires such bonds, the bond
requirements herein shall be satisfied if the bonds required by the lender meet the conditions of
Paragraphs 4.3(a), (b), and (c), provided Landlord shall be named as a dual obligee or co-obligee
under such bonds.

4.4... TITLE TO IMPROVEMENTS. Title to the improvements on the Premises shall
be as follows:

(a) Title to any new buildings, structures or other improvements constructed on
the Premises by Tenant after the Effective Date of this Lease, including without limitation all such
buildings, structures or improvements constructed as part of the Project, shall remain in Tenant’s
possession. Except for movable property and trade fixtures of Tenant not permanently affixed to
the Premises, title to any such new buildings, structures or other improvements, whether or not
constructed as part of the Project or the Project Work, shall automatically pass to Landlord upon
the expiration, termination, or earlier cancellation of this Lease as provided herein.

(b) Notwithstanding Paragraph 4.4(a), Tenant agrees to execute, acknowledge
and deliver to Landlord, at or prior to the expiration, termination, or earlier cancellation of this
Lease, a proper recordable instrument prepared by Landlord quit claiming and releasing to
Landlord any right, title and interest of Tenant in and to the Premises and any of the improvements
located thereon.

5. TERM.

5.1. TERM. The term of this Lease (the “Term”) shall be for a period of twenty (20)
years, commencing on the Effective Date and ending on the last day of the twentieth (20") year,
unless this Lease is sooner terminated as hereinafter provided. From and after the fifteenth (15")
anniversary of the Effective Date of this Lease, but no later than two (2) years before the lease
termination date, Tenant may submit a written request to Landlord to open discussions relating to
the first of two (2), ten (10)-year lease extensions under terms and conditions that are mutually
beneficial and agreed upon by both Tenant and Landlord. The terms and conditions of the lease
extension will be detailed at the time of the discussions and memorialized as an amendment to this
Lease. Should an agreement on the extension acceptable to both Parties not be reached, then this
Lease shall terminate as of the lease termination date. If the first (1) extension period is exercised,
from and after the twenty-fifth (25") anniversary of the Effective Date of this Lease, but no later
than two (2) years before the lease termination date of the first (1*') extension period, Tenant may

Page 4 of 36

submit a written request to Landlord to open discussions relating to the second (2"4), ten (10)-year
lease extension under terms and conditions that are mutually beneficial and agreed upon by both
Tenant and Landlord.

6. RENT.

6.1. RENT PAYMENTS. Rent payments for the Premises shall commence on the
Effective Date of this Lease. All rent payments that are received by Landlord from Tenant shall
be applied first toward any accrued late payment charges or interest, then to any other charges or
fees stated in this Lease that may be due and owing, then to any back rent due and not yet paid,
and then to the current rent.

6.2. |. MONTHLY BASE RENTAL.

(a) During the period of the Project Work, as defined in Section 4.2, the Monthly
Base Rent will be two hundred fifty-three dollars and fifty cents ($253.50), which is based on fifteen
percent (15%) of the Monthly Base Rent as identified in Paragraph 6.2(c) and shall continue until
the date of issuance of the initial Certificate of Occupancy (CO) from the City of Chandler’s building
department. Beginning with the earlier of (1) first month following the issuance of the initial CO,
or (2) the second (2"‘) anniversary of the Effective Date, the Monthly Base Rent shall be at the full
value in accordance with the provisions of Paragraph 6.2(c).

(b) Paragraph 6.2(a) notwithstanding, prior to the commencement of the Project
Work, Tenant shall pay to the Landlord a Monthly Base Rent of three thousand six hundred forty-
two dollars ($3,642.00), which is based on (1) an annual lease rate of thirty cents ($0.30) per square
foot per year times 61,200 square feet divided by 12 for land, and (2) thirty-three cents ($0.33) per
square feet per month times 6,400 square feet for hangar building space.

(c) During the first year of the Term, Tenant shall pay to Landlord a monthly
base rental of one thousand six hundred ninety dollars ($1,690) (the “Monthly Base Rent”), which
is based on an annual lease rate of thirty cents ($0.30) per square foot of land per year times 67,600
square feet divided by 12. On each anniversary of the Effective Date, the Monthly Base Rent shall
be increased in accordance with the provisions of Paragraph 6.3. When rent payments commence,
the Monthly Base Rent due hereunder shall be payable in advance to Landlord, without notice or
offset, on or before the first day of each month during the Term at the address stated herein or to
such other persons or at such other places as Landlord may designate in writing and shall be paid in
lawful money of the United States of America. The Monthly Base Rent for any period during the
Term which is for less than one month shall be a pro rata portion of the monthly installment.

(d) In the event that the requirement described in Paragraph 4.2(e) is not met, the
Monthly Rent shall be increased to five hundred seven dollars ($507.00) until the second (ant)
anniversary of the Effective Date.

6.3. MONTHLY BASE RENT INCREASE. Commencing on the fourth (4")
anniversary of the Effective Date, and on each subsequent anniversary thereafter, the Monthly Base
Rent shall be adjusted in accordance with this paragraph. The rent increase shall be determined by

Page 5 of 36

multiplying the current annual rent by the annual percent change in the Consumer Price Index for all
Urban Consumers (CPI-U), as reflected in the U.S. Western Region Average CPI-U for All Items
(Base period 1982-1984), for the month which is two (2) months prior to the month of the
anniversary of the Effective Date (“the Adjustment Month”) of the current lease year from the CPI-
U for the Adjustment Month of the prior year, as those index figures are determined by the United
States Department of Labor, Bureau of Labor Statistics. If there is no such CPI-U figure for the
Adjustment Month of any year of the Term, then the Adjustment Month figure of the successor or
most nearly comparable successor Index shall be used.

(a)

(b)

percentage change:

(©)

The calculation of the annual rent increase shall be as follows:

qd) Determine the current annual rent by multiplying the current monthly
rent by 12.

(2) Determine the CPI-U index point change by subtracting the previous
year’s CPI-U index figure for the Adjustment Month from the current year’s
CPI-U index figure for the Adjustment Month.

(3) Determine the CPI-U annual percent change by dividing the index
point change by the previous year’s CPI-U index figure for the Adjustment
Month. This quotient can be expressed as a percentage by multiplying by 100.

(4) Determine the additional annual rent by multiplying the current
annual rent by the annual percent change.

(5) Determine the new annual rent by adding the additional annual rent
to the current annual rent.

(6) Determine the new monthly rent by dividing the new annual rent by
12.

By way of example only, the following is shown for determining the annual

CPI-U for current period 133.0
Less CPI-U for previous period 130.0
Equals Index Point Change 3.0
Divided by previous period CPI-U _ 130.0
Equals 0.023
Result multiplied by 100 0.023 x 100
Equals percent change 2.3 %

In no event shall the minimum Monthly Base Rent for any year during the

Term be less than the minimum Monthly Base Rent for the immediately preceding year.

Page 6 of 36

6.4. AIRCRAFT PARKING CHARGES. If Tenant reserves from Landlord any aircraft
tie downs that are on the Public Airport Facilities and not on the Premises, Tenant may opt to pay
the monthly rate charged by Landlord for use of the tie downs as additional monthly rent under this
Lease (the “Additional Monthly Rent”). Payment of the Additional Monthly Rent is due and payable
at the same as the Monthly Base Rent and shall accompany the Monthly Base Rent payment made
by Tenant to Landlord. The Additional Monthly Rent shall be the monthly rate charged by Landlord
for use of aircraft tie downs on the Public Airport Facilities times the number of tie downs reserved
by Tenant. The Additional Monthly Rent shall be adjusted from time to time to coincide with any
change in the rate charged by Landlord to the public for use of tie downs owned and maintained by
Landlord as part of the Public Airport Facilities.

6.5. ADDITIONAL RENT. Any other monetary obligation of Tenant to Landlord under
the terms of this Lease shall be deemed rent and payment thereof shall accompany the next Monthly
Base Rent payment made by Tenant to Landlord. Any other monetary obligation of Tenant to
Landlord under the terms of this Lease shall be deemed rent and payment thereof shall accompany
the next Monthly Base Rent payment made by Tenant to Landlord; however, the amount due per
this Section 6.5 are subject to offset or reasonable dispute by the Tenant.

6.6. LATE PAYMENT INTEREST. If Landlord does not receive the monthly rent by
the tenth (10") of the month, then in addition to the overdue rent, Tenant shall pay interest on the
rent payment then due at the rate of ten percent (10%) per annum. Such interest commences on the
date the rent is due and accrues until such rent is paid. If Tenant does not pay the rent when due and
interest is incurred each month for three (3) consecutive months, then, beginning on the first (1) day
of the fourth (4") consecutive month, all further rent called for herein shall automatically become
due and payable quarterly in advance rather than monthly, notwithstanding any other provision in
this Lease to the contrary, and regardless of whether or not the interest is paid or collected. The
imposition of such interest, or the conversion to quarterly payments, does not prevent Landlord from
exercising any other rights and remedies under this Lease, including the early termination of this
Lease.

6.7. NET RENT. Itis the intention of the Parties that the rent specified in the Lease shall
be net to Landlord in each year during the Term of this Lease. Accordingly, all costs, expenses and
obligations of every kind relating to the Premises (except as otherwise, specifically provided in this
Lease) that may arise or become due during the term of this Lease shall be paid by Tenant, and
Tenant shall indemnify Landlord against such costs, expenses and obligations. However, the rent to
be paid under this Lease is in addition to, and not in lieu of, any requirement to pay any charges or
fees that may be established pursuant to the Airport Rules and any applicable license or permit fees
required pursuant to the Chandler City Code and/or the Airport Rules.

7. USE OF PREMISES.

7.1. PERMITTED USES. Subject to Paragraph 7.2 below, Tenant shall use the Premises
only for those aviation activities listed below and for no other purpose without the written consent
of Landlord, which may be withheld in Landlord’s sole discretion. Tenant shall only use the
Premises for said aviation activities during such period that Tenant holds any applicable license or
permit required by the Chandler City Code and/or the Airport Rules to conduct such aviation

Page 7 of 36

activities at the Airport. The Premises shall be used only for lawful purposes, and only in accordance
with applicable building, fire and zoning codes. In using the Premises for any commercial aviation
activities, Tenant shall do so after qualifying either as a Fixed Based Operator (FBO) or a Specialized
Aviation Services Operator (SASO), or receiving an Aeronautical Use Permit from the City of
Chandler, as those terms are defined and described in the Airport Rules. The Airport Manager is
designated as Landlord’s representative in giving consent for Tenant to engage in other commercial
aviation activities applicable to an FBO or SASO, as the case may be, in lieu of or in addition to
those activities listed below. Any such consent from the Airport Manager shall be in writing, shall
be affixed to this Lease, and may be given or withheld in the Airport Manager’s sole discretion.
Lessee may utilize or make the premises, or a portion thereof, available for sublease by individuals
or business entities for aviation related or aeronautical related commercial activities including
accommodations for any activity defined as a Specialized Aeronautical Service Operator within
the most current version of the Chandler Municipal Airport Rules and Regulations. All
commercial activities must adhere to the Chandler Municipal Airport Rules and Regulations and
first be approved in writing by the Airport Administration. Where applicable, users must obtain
an Aeronautical Business Permit from the Airport Administration.

7.2. PROHIBITED USES. The following activities are specifically excluded and
prohibited unless prior written approval has been granted by the Airport Manager:

(a) Ground transportation for hire.

(b) Providing space, including tie-down areas, for other than Tenant’s own
customers whose aircraft is being serviced.

(c) Sale of insurance other than aviation and aviation trip insurance.

(d) Auto rental agency or service; however, this prohibition does not prohibit the
Tenant operation, as a company function, from assisting its customers in making appropriate
arrangements with a duly licensed auto rental agency authorized by the Landlord to do business on
the Airport.

(e) Advertising concession (posters, privileges, publications, and other media).

(f) Food sales, except through coin-operated vending machines as provided in
Paragraph 7.4, and except as allowed under Paragraph 7.3 below.

(g) News and sundry sales not associated with the primary services listed in
Paragraph 7.1.

(h) Barber, valet, and personal services.
(i) Sale of automotive fuel, lubricants, and propellants.

(j) Storage of surplus (inoperable) aircraft except in areas, and of a number, to
be designated by the Airport Manager.

Page 8 of 36

(k) Retail sale of non-aviation products.

60) Sale of aviation fuels and lubricants except in the ordinary course of Tenant’s
business permitted pursuant to Paragraph 7.1.
7.3. SIGNS. All signs installed by Tenant shall conform to the requirements of
applicable provisions of the Chandler City Code, including, but not limited to, the Sign Code and
the Zoning Code.

7.4. COMPLIANCE WITH APPLICABLE LAWS. Tenant shall observe and comply
with all applicable laws, ordinances, rules, and regulations of the United States of America, the State
of Arizona, the County of Maricopa, and the City of Chandler and all agencies thereof, that are now
in effect or hereafter promulgated; and further, Tenant will display to Landlord any and all permits,
licenses or other evidence of compliance with all laws upon request of Landlord.

7.5. HAZARDOUS MATERIAL.

(a) As used herein, "Hazardous Material" shall mean any chemical, substance,
material, waste or similar matter defined, classified, listed or designated as harmful, hazardous,
extremely hazardous, dangerous, toxic or radioactive, or as a contaminant or pollutant, or other
similar term, by, and/or which are subject to regulation under, any federal, state or local
environmental statute, regulation or ordinance presently in effect or that may be promulgated in
the future, and as they may be amended from time to time.

(b) As used herein, "Hazardous Material" shall mean any chemical, substance,
material, waste or similar matter defined, classified, listed or designated as harmful, hazardous,
extremely hazardous, dangerous, toxic or radioactive, or as a contaminant or pollutant, or other
similar term, by, and/or which are subject to regulation under, any federal, state or local
environmental statute, regulation or ordinance presently in effect or that may be promulgated in
the future, and as they may be amended from time to time. Except for Hazardous Material normally
used in Tenant’s business in quantities customary for Tenant’s business which shall be stored and
used in accordance with applicable laws and regulations and manufacturer’s requirements, Tenant
agrees not to introduce any Hazardous Material in, on or adjacent to the Premises or in, on or
adjacent to any portion of the Airport without (i) obtaining Landlord’s prior written approval, (ii)
providing Landlord with thirty (30) days prior written notice of the exact amount, nature, and
manner of intended use of such Hazardous Material, and (iii) complying with all applicable federal,
state, and local laws, rules, regulations, policies and authorities relating to the storage, use, disposal
and clean-up of Hazardous Material, including, but not limited to, the obtaining of all proper
permits.

(c) Tenant shall immediately notify Landlord of any inquiry, test, investigation,
or enforcement proceeding by, against or directed at Tenant or the Premises concerning a
Hazardous Material. Tenant acknowledges that Landlord, as the owner of the Premises, shall have
the right, at its election, in its own name or as Tenant’s agent, to negotiate, defend, approve, and
appeal, any action taken or order issued with regard to a Hazardous Material by any applicable
governmental authority, and such negotiation, defense, approval and appeal shall be at Tenant’s

Page 9 of 36

expense to the extent the contamination was caused by Tenant or Tenants’ agents, or occurred
during the Lease Term.

(d) If Tenant’s storage, use or disposal of any Hazardous Material in, on or
adjacent to the Premises or the Airport results in any contamination of the Premises, the Airport,
the soil, surface or groundwater thereunder, or the air above and around the Premises and the
Airport, that (i) requires remediation under federal, state or local statutes, ordinances, regulations
or policies or (ii) is at levels which are unacceptable to Landlord, in Landlord’s sole and absolute
discretion, Tenant agrees to clean-up the contamination immediately, at Tenant’s sole cost and
expense. Tenant further agrees to indemnify, defend and hold Landlord harmless from and against
any claims, suits, causes of action, costs, damages, loss and fees, including attorneys’ fees and
costs, arising out of or in connection with: (i) any clean-up work, inquiry or enforcement
proceeding relating to Hazardous Material currently or hereafter used, stored or disposed by
Tenant or its agents, employees, contractors, or invitees on or about the Premises or the Airport;
and (ii) the use, storage, disposal or release by Tenant or its agents, employees, contractors, or
invitees of any Hazardous Material on or about the Premises or the Airport.

(e) Notwithstanding any other right of entry granted to Landlord under this
Lease, Landlord shall have the right to enter the Premises or to have consultants enter the Premises
at reasonable times throughout the Term of this Lease for the purpose of determining: (i) whether
the Premises is in conformity with federal, state and local statutes, regulations, ordinances, and
policies, including those pertaining to the environmental condition of the Premises; (ii) whether
Tenant has complied with this Paragraph 7.5; and (iii) the corrective measures, if any, required of
Tenant to ensure the safe use, storage and disposal of Hazardous Material. Tenant agrees to
provide access and reasonable assistance for such inspections. Such inspections may include, but
are not limited to, entering the Premises with machinery for the purpose of obtaining laboratory
samples. Landlord shall not be limited in the number of such inspections during the Term. If,
during such inspections, it is found that Tenant’s use of Hazardous Material constitutes a violation
of this Lease, Tenant shall reimburse Landlord for the cost of such inspections within ten (10) days
of receipt of a written statement therefor. If such consultants determine that the Premises is
contaminated with Hazardous Material or in violation of any applicable environmental law and the
same was caused by Tenant or Tenant’s agents, Tenant shall, in a timely manner, at its expense,
remove such Hazardous Material or otherwise comply with the recommendations of such
consultants to the reasonable satisfaction of Landlord and any applicable governmental agencies.
If Tenant fails to do so, Landlord, at its sole discretion, may, in addition to all other remedies
available to Landlord under this Lease and at law and in equity, cause the violation and/or
contamination to be remedied at Tenant’s sole cost and expense. The right granted to Landlord
herein to inspect the Premises shall not create a duty on Landlord’s part to inspect the Premises,
or liability of Landlord for Tenant’s use, storage or disposal of Hazardous Material, it being
understood that Tenant shall be solely responsible for all liability in connection therewith.

(63) Tenant shall surrender the Premises to Landlord upon the expiration or
earlier termination of this Lease free of Hazardous Material placed thereon by Tenant or Tenants’
agents, and in a condition which complies with all governmental statutes, ordinances, regulations
and policies, recommendations of consultants hired by Landlord, and such other reasonable
requirements as may be imposed by Landlord.

Page 10 of 36

(g) Tenant’s obligations under this Paragraph 7.5 and all indemnification
obligations of Tenant under this Lease shall survive the expiration or earlier termination of this
Lease.

(h) Tenant shall notify Landlord if Hazardous Materials are encountered during
the Project Work and Landlord shall, in a timely manner and at its expense, remove such
Hazardous Material or otherwise comply with the recommendations of such consultants to the
reasonable satisfaction of any applicable governmental agencies.

7.6. NO RELEASE OF TENANT

Regardless of Landlord’s consent, no subletting or assignment shall release Tenant of Tenant’s
obligations or alter the primary liability of Tenant to pay the rent and to perform all other
obligations to be performed by Tenant hereunder. The acceptance of rent by Landlord from any
other person shall not be deemed to be a waiver by Landlord of any provisions hereof. Consent to
one assignment or subletting shall not be deemed consent to any subsequent assignment or
subletting.

8. TENANT’S CONDUCT OF BUSINESS. In conducting commercial aviation activities
on the Premises or at the Airport, Tenant shall act as follows:

8.1. .NONDISCRIMINATION. Tenant agrees that:

(a) In the operations to be conducted pursuant to the provisions of this Lease and
otherwise in the use of the Airport, Tenant will not discriminate or permit discrimination against any
person or class of persons by reason of race, color, creed, or national origin in any manner prohibited
by any of the FAA Regulations or any amendments thereto.

(b) Tenant shall furnish its accommodations and/or services on a fair, equal and
not unjustly discriminatory basis to all users thereof and it shall charge, fair, reasonable and not
unjustly discriminatory prices for each unit of service; provided, that Tenant may make reasonable
and non-discriminatory discounts, rebates or other similar type of price reductions to volume
purchasers.

(c) Tenant shall make its accommodations and/or services available to the public
on fair and reasonable terms without unjust discrimination on the basis of race, creed, color, or national
origin.

(d) Tenant‘s noncompliance with the provisions in Paragraphs 8.1(a), (b) and (c)
shall constitute a material breach of this Lease. In the event of such noncompliance, Landlord may
enforce compliance, terminate this Lease, or pursue such other remedies as may be provided by law.
Landlord also reserves the right to take such action as the appropriate state or federal authority may
direct in order to enforce compliance.

(e) Tenant agrees that it shall insert the above four (4) provisions in any sublease,
agreement or contract by which said Tenant grants a right or privilege to any person, firm or
corporation to render accommodations and/or services to the public on the Premises.

Page 11 of 36

8.2. OPERATIONS.

(a) Tenant shall keep Tenant’s any business open to serve the flying public for at
least seven (7) days a week from 6:00 am to 8:00 pm per the Airport Minimum Operating Standards
portion of the Airport Rules.

(b) Tenant shall comply with the notification and review requirements covered
in Part 77 of the FAA Regulations in the event any future structure or building is planned for the
Premises, or in the event of any planned material modification or alteration to the exterior of any
present or future building or structure situated on the Premises.

(c) Tenant shall not erect nor permit the erection of any structure or object, nor
permit the growth of any tree, on the Premises that extends above a mean sea level elevation not
approved by the FAA and Landlord. In the event the aforesaid covenant is breached, Landlord
reserves the right to enter upon the Premises, without prior notice, and remove the offending structure
or object, or cut the offending tree, all of which shall be at the expense of Tenant.

(d) Tenant shall not make use of the Premises in any manner that might interfere
with the landing and taking off of aircraft from the Airport or otherwise constitute a hazard. In the
event the aforesaid covenant is breached, Landlord reserves the right to enter upon the Premises,
without prior notice, and cause the abatement of such interference at the expense of Tenant.

9. ADDITIONAL GENERAL CONDITIONS OF THE LEASE.

9.1. AERONAUTICAL BUSINESS PERMIT. Tenant acknowledges that the Airport
Rules provide that no person shall conduct or operate any commercial aviation activity at the Airport
without first obtaining an aeronautical business permit which must be in effect at the time the
commercial aviation activity is performed. Accordingly, Tenant agrees that, at all times during the
Term, Tenant shall have and shall maintain a valid, effective aeronautical business permit.
Furthermore, if any portion of the Premises is transferred, assigned or sublet, then said transferee,
assignee or subtenant shall, at all times, have and shall maintain a valid, effective aeronautical
business permit. The fee charged and the fee payment made for the aeronautical business permit
shall be pursuant to the Airport Rules and shall not be deemed rent under this Lease, but the failure
to have such permit at any time during the Term shall constitute a material breach of this Lease.

9.2. APPLICABLE LAWS. Tenant’s rights under this Lease shall be subject to all of the
following matters that are now in effect or that may be in effect in the future during the Term: (i)
applicable state and federal law; (ii) applicable city codes, ordinances, rules and regulations passed,
adopted and/or approved by the Chandler City Council (including the Airport Rules and
Regulations); and (iii) reasonable regulations established by the Airport Manager for the use and
operation of the Airport.

9.3. AIRSPACE RESERVATION. There is hereby reserved to Landlord, 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 Premises and the Airport, together with the right to cause in said airspace such noise
as may be inherent in the operation of aircraft, now known or hereafter used for navigation of or
flight in the air, using said airspace for landing at, taking off from, or operating at the Airport.

Page 12 of 36

9.4. USA AGREEMENTS. This Lease shall be subordinate to the provisions and
requirements of any existing or future agreement between Landlord and the United States of
America relative to the development, operation or maintenance of the Airport.

9.5. NO EXCLUSIVE RIGHTS. It is understood and agreed that nothing herein
contained shall be construed to grant or authorize the granting of an exclusive right within the
meaning of Section 308 of the Federal Aviation Act.

9.6. USA EMERGENCY RIGHTS. This Lease and all the provisions hereof shall be
subject to whatever right the United States of America now has, or in the future may have or may
acquire, affecting the control, operation, regulation, and taking over of the Airport for the exclusive
or nonexclusive use of the Airport by the United States of America during a time of war or national
emergency.

10. INSURANCE; INDEMNITY.

10.1. INSURANCE. Tenant shall, at its sole cost and expense, procure and maintain
from insurance companies, and in a form satisfactory to Landlord, the type and minimum amounts
of insurance coverage Landlord deems applicable to Tenant’s aviation activity at the Airport and
on the Premises. Such required insurance is listed in attached Exhibit “C”. Such required
insurance is generally consistent with the insurance requirements under Section 11 of the Airport
Rules; however, if there is any conflict between the provisions in Section 11 of the Airport Rules
and the provisions of this Lease, including without limitation the provisions of Exhibit “C”, the
provisions of this Lease shall control. Each insurance policy shall name Landlord as an additional
insured and shall provide for thirty (30) days prior written notice by the insurance company to
Landlord in the event of cancellation of the policy or policies. Evidence of such insurance shall
be provided to Landlord promptly after a request therefor. It is understood and agreed that,
notwithstanding any other insurance requirement, hangar keeper’s liability insurance is required if
aircraft are on the Premises for safekeeping, storage, service, or repair, and such insurance shall
be in at least that minimum amount stated in attached Exhibit “C”.

10.2. INDEMNIFICATION.

(a) Tenant does hereby covenant and agree to indemnify and save harmless
Landlord, its agents and employees, from any and all fines, suits, claims, demands, actions and/or
causes of actions of any kind and nature for personal injury or death or property damage arising out
of or resulting from any activity or operation of Tenant on the Premises or in connection with its use
of the Premises; provided, however, that Tenant shall not be liable for any injury, damage or loss
occasioned by the sole negligence or willful misconduct of Landlord, its agents or employees.
Landlord shall give to Tenant prompt and timely notice of any claim made or suits instituted which
in any way, directly or indirectly, contingently or otherwise, affects or might affect Tenant and
Tenant shall have the right to compromise and defend the same to the extent of its own interest.

(b) Tenant hereby assumes all risk of, and waives all claim against Landlord, its

agents and employees, for any loss, injury, death or damage to Tenant or Tenant’s property, or to
other persons or property sustained while in, on or about the Premises, except where such loss, injury,

Page 13 of 36

death or damage is solely the result of the negligence or intentional acts of Landlord, its agents and
employees.

11. MAINTENANCE, REPAIRS AND ALTERATIONS.

11.1. MAINTENANCE AND REPAIRS. Tenant, at Tenant’s own expense, shall
provide all maintenance and repair of the Premises and the improvements thereon. All such
maintenance shall be reasonably commensurate with a level of maintenance sufficient to maintain
the improvements and the remainder of the Premises in a presentable condition consistent with
good business practice and equal in appearance and character to other similar improvements at the
Airport.

(a) As part of its maintenance obligation, Tenant shall provide all janitorial and
custodial services on the Premises and in the improvements thereon. Whether Tenant shall elect
to furnish such services itself or engage the services of a janitorial firm, all such janitorial services
shall be commensurate with the level of such services provided for by Landlord in similarly
situated circumstances.

(b) Landlord, in order to maintain the Premises in the manner consistent with
the general maintenance of the Airport or in order to maintain similar standards of custodial service
throughout the Airport, may, but shall not be required to, assume some or all of the Tenant’s
maintenance obligation, including, but not limited to, Tenant’s obligation for providing janitorial
and custodial services, provided that Landlord shall first give written notice to Tenant, which shall
advise Tenant of Tenant’s failure to provide proper maintenance, or failure to maintain the proper
standard of janitorial and custodial service, and Tenant shall have failed adequately remedy the
failure within thirty (30) days of the notice having been given. In the event that Landlord does
take over the maintenance obligation, Tenant shall be responsible for the reasonable expense
incurred by Landlord in doing so.

11.2. ALTERATIONS. Tenant shall make no significant additions, alterations or
modifications to the Premises or the improvements thereon, nor shall Tenant install any fixtures
(other than trade fixtures which can be removed without injury to the Premises or the
improvements thereon), without first obtaining written approval of Landlord. Landlord’s response
to Tenant’s request for approval shall be prompt, and such approval shall not be unreasonably
withheld. Upon installation, Tenant shall furnish Landlord with a copy of the “as-built” drawings
including utility installations and site plans detailing the nature of the additions, alterations or
modifications. Landlord reserves the right to have Tenant remove, at Tenant’s sole expense, all or
any of such alterations, additions or modifications at the end of the Term.

12. PUBLIC AIRPORT FACILITIES.

12.1. LANDLORD’S CONTROL OF AIRPORT.

(a) Landlord reserves the right, in its sole discretion, to determine the nature
and extent of the Public Airport Facilities.

Page 14 of 36

(b) Landlord has the right to establish and from time to time change, alter and
amend the Airport Rules, or such other reasonable rules and regulations, as may be necessary or
desirable for the proper and efficient operation and maintenance of the Airport and the Public
Airport Facilities.

(c) Landlord shall have the sole and exclusive control of the Public Airport
Facilities, and may, at any time and from time to time during the Term, exclude any person from
use or occupancy thereof.

(d) Landlord shall have the right to make changes to the Public Airport
Facilities or any part thereof, including, without limitation, changes in the location of the landing
areas, the heliport, approach areas, runways, taxiways, and aircraft parking areas, as Landlord
deems necessary or advisable for the proper and efficient operation and maintenance of the Public
Airport Facilities.

(e) Notwithstanding any of the provisions of this Paragraph 12.1, Landlord
shall not make changes in the Public Airport Facilities that materially and adversely affect Tenant’s
right of access and use of the Public Airport Facilities, except temporarily during periods of
construction.

12.2. MAINTENANCE. Landlord shall maintain or cause to be maintained and repaired
in good condition the Airport, including, without limitation, the landing areas, approach areas,
runways, taxiways, aprons, aircraft parking areas, navigational and avigational aids, lighting
facilities. Landlord shall provide ramp cleaning and custodial services in the Public Airport
Facilities portion of the Airport.

13. ASSIGNMENT AND SUBLETTING.

13.1. LANDLORD’S CONSENT REQUIRED. Tenant shall not voluntarily or by
operation of law, assign, transfer, mortgage, sublet, or otherwise transfer or encumber all or any part
of Tenant’s interest in this Lease, in the Premises or in any of the improvements on the Premises,
without Landlord’s prior written consent, such consent not to be unreasonably withheld or delayed.
Any attempted assignment, transfer, mortgage, encumbrance, or subletting without such consent
shall be void, and shall constitute a breach of this Lease. Any transfer of any ownership interest in
Tenant is a transfer subject to Landlord’s consent under this paragraph. Notwithstanding the
foregoing to the contrary, the prior approval of Landlord shall not be necessary for the assignment
of the Lease to an entity owned or controlled by Tenant or by reason of a merger or consolidation of
the Tenant with another corporation, including one formed by Tenant and created to carry on the
purposes of Tenant. In such event, notice to Landlord of the merger or consolidation shall be
sufficient.

13.2. NO RELEASE OF TENANT. Regardless of Landlord’s consent, no subletting or
assignment shall release Tenant of Tenant’s obligations or alter the primary liability of Tenant to
pay the rent and to perform all other obligations to be performed by Tenant hereunder. The
acceptance of rent by Landlord from any other person shall not be deemed to be a waiver by
Landlord of any provisions hereof. Consent to one assignment or subletting shall not be deemed
consent to any subsequent assignment or subletting.

Page 15 of 36

13.3. TRUST DEED BENEFICIARIES AND MORTGAGEES. Notwithstanding
Paragraph 13.1, Landlord agrees that it will consent to Tenant’s assignment of this Lease (and the
leasehold created hereby) for security purposes to a bona fide lender, but only under and pursuant
to the terms and conditions contained in the form of City’s Consent and Agreement attached hereto
as Exhibit “D”, which must be signed by such lender prior to Landlord’s consent being given.

14. UTILITIES, TAXES, FEES AND EXPENSES. Tenant shall pay all utilities used in its
operation of the Premises at the Airport during the term of this Lease, and such utilities shall be on
the basis of metered charges. Tenant shall make timely payment of all taxes and assessments if any,
levied against the Premises, or against Tenant’s business operation at the Premises. Tenant shall be
responsible for payment of all fees and expenses for all permits and licenses necessary for the
conduct of Tenant’s business upon the Premise during the Term.

15. DAMAGE OR DESTRUCTION OF PREMISES. In the event that the Premises, the
improvements thereon or the Public Airport Facilities are so damaged that the Premises can
reasonably be deemed untenable or unusable by Tenant, there shall be a reasonable and proportionate
abatement of the rentals, fees, and charges provided for herein during the period that the same are so
untenable or unusable.

16. DEFAULTS; REMEDIES.

16.1. DEFAULTS BY TENANT. Except as provided in Paragraph 17 below, the
occurrence of any one or more of the following events shall constitute a material default and breach
of this Lease by Tenant:

(a) The vacating or abandonment of the Premises by Tenant for more than ten
(10) days.

(b) The failure by Tenant to make any payment of rent or any other payment
required to be made by Tenant within fifteen (15) days of the date when due.

(c) The failure by Tenant to observe or perform any of the covenants, conditions
or provisions of this Lease to be observed or performed by Tenant, other than described in Paragraph
16.1(b) above, where such failure continues for a period of thirty (30) days after written notice
thereof from Landlord to Tenant. Provided, however, that ifthe nature of Tenant’s obligation is such
that more than thirty (30) days are required for performance, then Tenant shall not be in default if
Tenant commences performance within such thirty (30) day period and thereafter diligently
prosecutes the same to completion.

(d) Any of the following: (i) the making by Tenant of any general assignment or
general arrangement for the benefit of creditors; (ii) the filing by or against Tenant of a petition to
have Tenant adjudged bankrupt or a petition for reorganization or arrangement under any law
relating to bankruptcy (unless, in the case of a petition filed against Tenant, the same is dismissed
within sixty (60) days); (iii) the appointment of a trustee or receiver to take possession of
substantially all of Tenant’s assets located at the Premises or of Tenant’s interest in this Lease, where
possession is not restored to Tenant within thirty (30) days; or (iv) the attachment, execution, or other

Page 16 of 36

judicial seizure of substantially all of Tenant’s assets located at the Premises or of Tenant’s interest
in this Lease, where such seizure is not discharged within thirty (30) days.

(e) The chronic delinquency by Tenant in the payment of monthly rental, or any
other periodic payment required to be paid by Tenant under this Lease. “Chronic delinquency” shall
mean failure by Tenant to pay monthly rental, or any other periodic payment required to be paid by
Tenant under this Lease, within fifteen (15) days as described in Paragraph 16.1(b) above, for any
three (3) months (consecutive or nonconsecutive) during any twelve (12) month period during the
Term. In the event of a chronic delinquency, at Landlord’s option, Landlord shall have the additional
right to require that monthly rental be paid by Tenant quarter-annually, in advance, for the remainder
of the Term.

16.2. REMEDIES. In the event of any such material default or breach by Tenant, Landlord
at any time thereafter, with or without notice or demand and without limiting Landlord in the exercise
of any other right or remedy which Landlord may have by reason of such default or breach, may:

(a) Terminate this Lease by any lawful means, in which case Tenant shall
immediately surrender possession of the Premises to Landlord. In such event, Landlord shall be
entitled to recover from Tenant all damages incurred by Landlord by reason of Tenant’s default
including, but not limited to, the cost of recovering possession of the Premises and the expenses of
reletting, including necessary renovations and alteration of the Premises.

(b) Pursue any other or additional remedy now or hereafter available to Landlord
under the laws of the State of Arizona, including, without limitation, the imposition of a landlord’s
lien against any property located within the Premises.

(c) The remedies set forth herein shall be deemed cumulative and not exclusive.

(d) No waiver of default by Landlord of any of the terms, covenants or conditions
hereof required to be kept and observed by Tenant shall be construed to be or act as a waiver by
Landlord of any subsequent default of any of the terms, covenants and conditions herein contained
to be performed, kept and observed by Tenant.

16.3. DEFAULT BY LANDLORD.

(a) Landlord shall not be deemed in default unless Landlord fails to perform any
obligation required by Landlord within a reasonable time, but in no event later than thirty (30) days
after Landlord’s receipt of a written notice from Tenant to Landlord that specifies the obligations
that Tenant alleges Landlord has failed to perform. If the nature of Landlord’s obligation is such
that more than thirty (30) days are required for performance, then Landlord shall not be in default if
Landlord commences performance within such 30-day period and thereafter diligently prosecutes
the same to completion.

(b) In the event of any material default or breach by Landlord, Tenant may take
whatever steps are permitted under applicable law to terminate this Lease and/or to recover its
damages from Landlord.

Page 17 of 36

(c) No waiver of default by Tenant of any of the terms, covenants or conditions
hereof required to be kept and observed by Landlord shall be construed to be or act as a waiver by
Tenant of any subsequent default of any of the terms, covenants and conditions herein contained to
be performed, kept and observed by Landlord.

16.4. CANCELLATION BY TENANT. In addition to any other right of cancellation
herein given by Landlord or any other rights to which Tenant may be entitled by law or otherwise,
Tenant may cancel this Lease in whole or in part and terminate all of its obligations hereunder at any
time that Tenant is not in default in its payments to Landlord hereunder, by giving Landlord thirty
(30) days advance written notice to be served as hereinafter provided, upon or after the happening
of any one of the following events:

(a) The failure or refusal of the Federal Aviation Administration, at any time
during the Term of this Lease, to permit Tenant to operate into or from the Chandler Municipal
Airport.

(b) 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 for airport purposes which affects
Tenant’s operation; and the remaining in force of such injunction for a period of at least ninety (90)
days if the injunction materially affects Tenant’s normal operations.

(c) The inability of Tenant to use, for a period in excess of ninety (90) days, the
Airport or any of the premises, facilities, rights licenses, services, or privileges leased to Tenant
hereunder because of any law or order, rule, regulation, or other action or any inaction of the
Federal Aviation Administration or any other governmental authority, or because of fire,
earthquake, or other casualty or acts of God or the public enemy.

(d) The assumption by the United State 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 Tenant for a period of at least ninety (90) days,
from operating thereon for the conduct of Tenant’s normal business.

16.5. CITY'S RIGHT OF CANCELLATION UNDER A.R.S. §38-511. The Parties
further acknowledge that this Lease is subject to cancellation by the Landlord pursuant to the
provisions of Section 38-511, Arizona Revised Statutes.

17. CONDEMNATION. Ifthe Premises is taken under the power of eminent domain, or sold
under the threat of the exercise of said power (all of which are herein called “condemnation”) to
such an extent as to render the Premises un-tenantable, either Landlord or Tenant shall have the
option to terminate this Lease effective as of the date the condemning authority takes title or
possession, whichever first occurs. If condemnation does not render the Premises un-tenantable,
this Lease shall continue in effect, and Landlord shall promptly restore the portion of the Premises
not taken to the extent possible to the condition existing prior to the condemnation. If, as a result
of such restoration, the area size of the Premises is reduced, the rental shall be reduced
proportionately. All condemnation proceeds shall be paid to Landlord, and Tenant waives all
claims against such proceeds; provided, however, that Tenant shall be entitled to any award
separately designated for Tenant's relocation expenses, or for damage to or taking of Tenant's trade

Page 18 of 36

fixtures or other personal property; and further provided that Tenant shall be entitled to the portion
of the condemnation proceeds attributable to the taking of any of the improvements on the
Premises while the Term of this Lease is in effect, but not to any such proceeds awarded to
compensate for severance damages or costs to cure harm to the remainder of the Premises as a
result of condemnation.

18. | SUSPENSION AND ABATEMENT; FORCE MAJEURE. In the event that Landlord’s
operation of the Airport, or Tenant’s operations at the Airport, is restricted substantially by action of
the Federal Government, or any agency thereof, then either party hereto shall have the right, upon
written notice to the other, to a suspension of this Lease and an abatement of a just proportion of the
services and facilities to be afforded hereunder, or a just proportion of the payments to become due
hereunder, from the time of such notice until such restrictions shall have been remedied and normal
operations restored.

19. QUIET ENJOYMENT. Landlord agrees that, on payment of the rent and performance of
the covenants and agreements on the part of the Tenant to be performed hereunder and subject to
any conditions stated in this Lease, Tenant shall peaceably have and enjoy the Premises and all the
rights and privileges of the Airport, its appurtenances and facilities granted herein.

20. | SURRENDER OF POSSESSION. Upon the expiration of the Term or earlier termination
of this Lease, Tenant’s right to use the Premises and the improvements thereon, and any right of
access and use of the Public Airport Facilities provided under this Lease, shall cease and Tenant shall
forthwith upon such expiration or termination surrender the same and leave the Premises in good
condition except for normal wear or tear.

21. GENERAL PROVISIONS.

21.1. DEFINITIONS OF TERMS. All definitions contained within Airport Ordinance
No. 1426 and the Federal Aviation Act of 1958 including all amendments thereto shall be
considered as included herein.

21.2. INSPECTION BY LANDLORD. Landlord may enter upon the Premises at any
reasonable time for any purpose necessary, incidental to, or connected with the performance of its
obligations hereunder, or in the exercise of its governmental functions, or for fire protection or
security purposes.

21.3. NOTICE. Any notice, request, demand, statement, consent or other
communication herein required or permitted to be given by either party to the other party
hereunder, shall be in writing signed by or on behalf of the party giving the notice and addressed
to the other party at the address as set forth below:

To Landlord: Airport Manager
Chandler Municipal Airport
2380 South Stinson Way
Chandler, Arizona 85286
Fax No.: (480) 782-3541

Page 19 of 36

With a copy to: City Attorney
City of Chandler
Mail Stop 602, Post Office Box 4008
Chandler, Arizona 85244-4008
Fax No.: (480) 782-4652

To Tenant: Thomas Matthew
1675 E. Ryan Road
Chandler, AZ 85286
Phone No.: (480 963-6420
Fax No.:_ (480) 963-7639

Email: Aviation@gateone.com

Each party may by notice in writing change its address for the purpose of this Lease, which
address shall thereafter be used in place of the former address. Each notice, demand, request,
consent or other communication which shall be given to any of the aforesaid shall be deemed
sufficiently given, served, or sent for all purposes hereunder: (i) two (2) business days after it shall
be mailed by United States registered or certified mail, postage prepaid and return receipt
requested, in any post office or branch post office regularly maintained by the United States Postal
Service; (ii) upon personal delivery or upon direct facsimile transmission; or (iii) one (1) business
day after deposit with any recognized commercial air courier or express service. Any
communication made by e-mail or similar method shall not constitute notice pursuant to this Lease.

21.4. ENTIRE AGREEMENT. This document contains the entire agreement between
the parties hereto, and no term or provision hereof may be amended, changed, waived, discharged
or terminated unless the same is in writing executed by both parties hereto.

21.5. APPLICABLE LAW. Arizona law shall govern the construction, performance and
enforcement of this Lease.

21.6. TIME OF ESSENCE. Time shall be of the essence in the performance of every
term, covenant and condition of this Lease.

21.7. HEADINGS. The paragraph headings contained herein are for convenience in
reference and are not intended to define or limit the scope of any provision of this Lease.

21.8. WRITING. Any and all approvals, consents, and notices called for in this Lease shall
be in writing.

21.9. BINDING EFFECT. All the covenants, stipulations and agreements in this Lease
shall extend to and bind the legal representatives, successors and assigns of the respective parties
hereto.

21.10. SEVERABILITY. In the event that any covenant, condition, or provision
contained in this Lease 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
covenant, condition or provision herein contained; provided that the invalidity of any such

Page 20 of 36