This Agreement, entered into this 22nd day of May, 2001 by and between City of Newport Beach, a municipal corporation and charter city (CITY) and Airport Working Group of Orange County, Inc., a California non-profit corporation (GRANTEE), is made with reference to the following:

    WHEREAS, the CITY is a municipal corporation and charter city committed to preserving the health, welfare and safety of its citizens; and

    WHEREAS, GRANTEE is a California non-profit public benefit corporation exempt from federal taxation pursuant to Section 501 (c)(3) of the Internal Revenue Code; and

    WHEREAS, GRANTEE has requested a Grant from the CITY to engage in public outreach activities related to the manner and means of accommodating the current and future air travel and air cargo needs of Orange County including a commercial aviation reuse of El Toro; and

    WHEREAS, the public outreach program proposed by GRANTEE is consistent with long-standing CITY policy related to the solution to the current and future air transportation needs of Orange County; and

    WHEREAS, the CITY has approved this Grant to GRANTEE with the understanding and GRANTEE'S agreement that the Grant funds will (a) be expended solely for the purpose of informing the public of issues, and engaging in other activity, relevant to the manner and means of accommodating the current and future air transportation demand in Orange County; (b) not be spent to support or oppose the qualification, passage or defeat of any ballot measure or the election or defeat of any candidate for political office; and (c) not be used for any activity that would violate state or federal statutory or decisional law such as regulations affecting non-profit or tax exempt organizations (these GRANTEE expenditure conditions in (a) through (c) are collectively defined as the "Approve Use").

NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
 

I. GRANT

CITY agrees to Grant to GRANTEE the sum of three million six hundred thousand dollars ($3,600,000.00). This Grant (Grant Funds) shall be paid in one lump sum of one million eight hundred thousand dollars ($1,800,000.00) and twelve equal monthly installments of one hundred fifty thousand dollars ($150,000.00). The lump sum shall be paid on or before June 1, 2001. The first installment shall be paid on or before June 1, 2001 and the remaining installments shall be paid on or before the first of each of the following eleven (11) months. The Grant Funds shall be used solely by GRANTEE for the Approved Use and for no other use and the balance of the Grant Funds shall be returned to the City on written demand served no less than sixty (60) days after expiration of this Agreement.

2. TERM

The term of this Agreement shall commence on May 22, 2001 (the Effective Date) and shall continue in full force and effect until the final installment has been paid and GRANTEE has refunded any unspent Grant Funds, provided, however, the indemnity provisions of this Agreement shall expire five (5) years after the Effective Date.

3. RESTRICTIONS ON USE OF FUNDS
 

(a) GRANTEE acknowledges that municipal corporations are prohibited from spending, directly or indirectly, public funds to support or oppose candidates for public office. GRANTEE also acknowledges that public funds may not be spent, directly or indirectly, to support or oppose the qualification, passage or defeat of a ballot measure. Accordingly, GRANTEE warrants to City that the Grant Funds will not be spent, directly or indirectly, to support or oppose a candidate or candidates for public office. GRANTEE further warrants to City that the Grant Funds will not be spent, directly or indirectly, to support or oppose the qualification, passage or defeat of any ballot measure. Finally, GRANTEE warrants to City that the Grant Funds will not be spent to prepare or distribute material, or to disseminate information, if it is clear from the surrounding circumstances that the material or information supports or opposes the election of any candidate or the qualification, passage or defeat of any ballot measure.
(b) In addition to the commitments in Subsection 3(a), GRANTEE warrants to City that the Grant Funds will not be spent in a manner that violates any State or Federal statutory or decisional law applicable to non profit organizations exempt from taxation pursuant to Section 501 (c)(3) of the Internal Revenue Code.
(c) GRANTEE shall retain legal counsel with at least five years experience in the fields of election law and political law to ensure compliance with the warranties in Subsections 3(a) and 3(b). Legal counsel retained by Grantee shall review all material or information prepared, in whole or in part, through the expenditure of Grant Funds and prior to duplication or dissemination. Legal counsel shall approve duplication and dissemination of the material or information to the public only upon a determination that the information or material is in full compliance with all statutory and decisional law governing the conduct of political campaigns and the express warranties made in Subsections 3(a) and 3(b) of this Agreement. GRANTEE may use Grant Funds to compensate special counsel for this specific and limited purpose.
(d) To further ensure compliance with the provisions of Subsection 3(a), GRANTEE shall not duplicate or disseminate to the public any material prepared, in whole or in part, through an expenditure of Grant Funds unless and until the material has first been reviewed, and determined to comply with Subsection 3(a), by special counsel retained by the City Council. CITY shall notify GRANTEE in writing, on or before May 25, 2001, of the name or names of the special counsel retained by the CITY to review material pursuant to this Subsection. The review by special counsel retained by the CITY shall be conducted, and the determination communicated to GRANTEE, by the end of the next business day following receipt of the material by special counsel.

GRANTEE shall protect, hold harmless, defend and indemnify the CITY, and its elected officials, employees and representatives, from any claim, loss, litigation, or liability arising out of or in any way related to this Agreement regardless of the cause, except for any liability arising from the sole negligence, fraud or willful misconduct of the CITY or its officers or employees. GRANTEE agrees that City has the legal right, and that all necessary conditions have been satisfied, to specifically enforce GRANTEE' obligations pursuant to this Agreement.

5. AUDIT

GRANTEE agrees to account for all Grant funds received from the CITY, maintain detailed financial records using generally accepted accounting principals, and allow CITY to conduct an audit of the financial records upon reasonable notice and at any time within four (4) years after expiration or termination of this Agreement.

6. THIRD PARTY BENEFICIARY

This Agreement does not create, and the parties do not intend to create, any claim, cause of action or legal right for or on behalf of any other person or entity.

7. ENTIRE AGREEMENT

This Agreement represents the entire understanding of the Parties and may be amended only by a document signed by both parties.

8. PRIOR AGREEMENTS

The Parties agree that this Agreement supersedes and terminates the force and effect of the Grant Agreement approved and executed by the Parties on or about March 28, 2001. This Agreement does not affect any funds granted to GRANTEE pursuant to an agreement approved and executed by the Parties on or about April 1, 1999.

Agreed:

CITY OF NEWPORT BEACH                                         GRANTEE

By:                                                                                 By:

Title                                                                               Title

Date:                                                                               Date:

Approved as to Form

City Attorney

Attest:

City Clerk

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