SETTLEMENT AGREEMENT BETWEEN TOM NAUGHTON; AIRPORT WORKING GROUP OF ORANGE COUNTY, INC.; ORANGE COUNTY REGIONAL AIRPORT AUTHORITY; CITY OF GARDEN GROVE; CITIZENS FOR JOBS AND THE ECONOMY; EL TORO REUSE PLANNING AUTHORITY; CITY OF IRVINE; CITY COUNCIL OF THE CITY OF IRVINE; BILL KOGERMAN; ALLAN SONGSTAD; BILL CAMPBELL; PAT BATES; COMMITTEE FOR SAFE AND HEALTHY COMMUNITIES; MIKE ALVAREZ; DEBBIE COOK; BRUCE NESTANDE; AND DAVID ELLIS

This Settlement Agreement, dated January __, 2004 ("the Effective Date"), is made by and among (1) Tom Naughton; (2) Airport Working Group of Orange County, Inc.; (3) Orange County Regional Airport Authority; (4) City of Garden Grove; (5) Citizens for Jobs and the Economy; (6) El Toro Reuse Planning Authority; (7) City of Irvine; (8) City Council of the City of Irvine; (9) Bill Kogerman; (10) Allan Songstad; (11) Bill Campbell; (12) Pat Bates; (13) Committee for Safe and Healthy Communities; (14) Mike Alvarez; (15) Debbie Cook; (16) Bruce Nestande; and (17) David Ellis.

A. In March, 2002, the voters of Orange County enacted "The Orange County Central Park and Nature Preserve Initiative" ("Measure W"), an initiative that repealed Measure A, an initiative enacted in 1994, and prevents the use of the former El Toro Marine Corps Air Station ("El Toro") for commercial aviation uses. The validity of Measure W is at issue in litigation brought by Tom Naughton ("Naughton"), Airport Working Group of Orange County, Inc. ("AWG"), Orange County Regional Airport Authority ("OCRAA"), City of Garden Grove ("Garden Grove"), and Citizens for Jobs and the Economy ("CJE") (collectively, "the Measure W Petitioners"). The Measure W Petitioners allege that they brought the litigation on behalf of the general public and in the public interest. This litigation is currently pending before the Orange County Superior Court. Tom Naughton et al. v. Board of Supervisors for the County of Orange et al., Orange County Superior Court No. 02CC04400 ("the Measure W Litigation").

B. The El Toro Reuse Planning Authority ("ETRPA"), the City of Irvine and the City Council of the City of Irvine (jointly "the City of Irvine"), and Bill Kogerman, Allan Songstad, Bill Campbell, Pat Bates and the Committee for Safe and Healthy Communities (collectively "the individual Measure W Intervenors") have intervened in the Measure W Litigation to support the validity of Measure W.

C. CJE has also filed litigation against the City of Irvine challenging the validity of an environmental impact report relating to a reuse plan for El Toro adopted by the City of Irvine, known as the "Millennium Plan II General Plan Amendment." This litigation is currently pending before the Orange County Superior Court. Citizens for Jobs and the Economy v. City of Irvine et al., Orange County Superior Court No. 00CC03173 ("the Millennium Plan Litigation").

D. Before the enactment of Measure W, CJE and Bruce Nestande ("Nestande") filed litigation challenging the validity of the Ballot Title and Summary prepared by Orange County for Measure W, in which judgment was entered against CJE and Nestande. A subsequent motion by the proponents of Measure W for an award of attorney’s fees and costs against Nestande and CJE was granted, and the Court determined that the proponents were entitled to such fees and costs. Further proceedings are pending before the Orange County Superior Court to determine the amount of such fees and costs, but no final ruling as to that aspect of the motion has yet been made. Nestande et al. v. Watson et al., Orange County Superior Court No. 01CC08612 ("the pre-election Litigation").

E. Other litigation is also pending in which AWG and David Ellis ("Ellis") have obtained an order awarding attorney’s fees and costs against ETRPA. An appeal by ETRPA from this order is currently pending before the Court of Appeal. Airport Working Group of Orange County, Inc., et al. v. County of Orange et al., Court of Appeal No. D041344 (the "Measure F fee litigation").

F. Each of the parties to this Settlement Agreement desires to enter into a settlement agreement as to each of these pending cases relating to civilian reuse of El Toro.

Accordingly, the parties agree as follows, without any admission by any party as to any issue involved in the pending cases:

1. The above Recitals are incorporated herein and made a part of this Settlement Agreement by reference.

2. Within five calendar days following the Effective Date, the Measure W Petitioners shall file a dismissal of the Measure W Litigation with prejudice, and thereafter promptly serve counsel for ETRPA, the City of Irvine and the individual Measure W Intervenors with a conformed copy of the filed dismissal. None of the Measure W Petitioners, either individually or in conjunction with any other person or entity, shall file, join, or participate in any way in, any other or further action or proceeding challenging the validity of Measure W, and none of the Measure W Petitioners shall provide any funding for or otherwise support or assist in any way any such action or proceeding. The parties agree that the dismissal of the Measure W Litigation is intended to have the maximum preclusive effect permitted under California law.

3. Within five calendar days following the Effective Date, CJE shall file a dismissal with prejudice of the Millennium Plan Litigation, and thereafter promptly serve counsel for ETRPA, the City of Irvine and the individual Measure W Intervenors with a conformed copy of the filed dismissal. CJE, either individually or in conjunction with any other person or entity, shall not refile this litigation, and shall not provide any funding for or otherwise support or assist in any way any such litigation or proceeding. The parties agree that the dismissal of this litigation is intended to have the maximum preclusive effect permitted under California law.

4. Subject to the obligations specified in Paragraph 1 through 3, inclusive, of this Settlement Agreement, ETRPA shall indemnify CJE and Nestande with regard to the attorney’s fees and costs sought by Allan Songstad, Mike Alvarez, Bill Campbell, Debbie Cook, and Pat Bates ("the Measure W proponents") in the pre-election Litigation. To accomplish this indemnification, ETRPA shall, within five calendar days of the Effective Date, pay to counsel for the Measure W proponents the sum of $325,000. Subject to the obligation of ETRPA specified in this paragraph 4, the Measure W proponents’ pending motion for an award of attorney’s fees and costs in the pre-election Litigation shall be withdrawn within ten calendar days of the Effective Date, and any and all payment of such fees and costs shall be an obligation of ETRPA only which obligation shall be satisfied through the payment of the amount specified in this paragraph 4.

5. Within five calendar days following the Effective Date, ETRPA shall dismiss with prejudice its appeal in the Measure F fee litigation, and shall pay to AWG and Ellis the sum of $100,000 as payment for attorney’s fees and costs, including any interest accrued thereon, incurred in that litigation and other El Toro-related cases. AWG and Ellis agree that this payment fully satisfies the award made in their favor and against ETRPA in the Measure F fee litigation.

6. Except as otherwise specified in this Settlement Agreement, each party to each of the cases identified herein shall bear its, his or her own costs and attorney’s fees, and each party to each of these cases waives any right to seek costs or attorney’s fees from any other party to the action, except as otherwise specified herein.

7. Each party to this Settlement Agreement hereby releases, acquits, and forever discharges each other party from any and all actions, causes of action, claims, costs, damages, debts, demands, expenses, liabilities, losses, obligations, proceedings and suits of every kind and nature, liquidated or unliquidated, fixed or contingent, in law, equity or otherwise, and whether presently known or unknown, that the releasing parties ever had, or now have or hereafter may acquire against the released parties, or any of them, based on or arising in whole or in part out of any of the events and transactions described in Recitals A through F of this Settlement Agreement. Each party acknowledges and agrees, except as may be otherwise specified herein, that this Settlement Agreement is a full, final and binding resolution of each of the issues raised or which could have been raised in each case identified herein, including but not limited to any issues relating to the initiation or prosecution of the case.

8. This Settlement Agreement may be executed in counterparts and by facsimile, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument. The effective date shall be the date on which counsel for ETRPA receives signatures from all parties.

9. This Settlement Agreement is the final, entire, and complete agreement of the parties with respect to the matters specified herein, and may be modified or amended only by a written agreement signed by all of the parties hereto. No verbal agreement or conversation with any party hereto, or with any officer or employee of any party, shall affect or modify in any way the terms and conditions of the agreement.

10. The parties hereto each represent, warrant and agree that each has received independent legal advice from their respective attorneys with respect to the terms of the settlement provided for in this Settlement Agreement and with respect to the advisability of entering into this agreement. The parties further agree that the provisions of this Settlement Agreement shall apply to and be binding upon the parties hereto and anyone acting on their behalf, including successors, employees, agents, elected and appointed officers, and assigns.

11. The parties understand and agree that this Settlement Agreement includes all claims, both known and unknown, that were raised or could have been raised in each of the cases specified herein. The parties acknowledge that they expressly waive any and all rights that they have, or may have with respect to the matters that are the subject of the releases included herein, under California Civil Code Section 1542, which provides as follows:

12. The parties acknowledge that this Settlement Agreement was negotiated in good faith and constitutes a settlement of claims, which were vigorously contested, denied, and disputed by the parties.

13. None of the parties to this Settlement Agreement shall be considered the drafter of the Settlement Agreement or any of its provisions for the purposes of any statue, case law, or rule of interpretation or construction that would or might cause any provision to be construed against the drafter of the Settlement Agreement.

14. Each of the signatories to this Settlement Agreement represents and warrants that he or she is authorized to execute and sign on behalf of the parties hereto from whom they are purporting to execute the agreement, and that each of the parties is bound to the terms and provisions of the agreement as a result of his or her signature below. Each of the signatories also acknowledges that each of the other parties is relying, in entering into the agreement, on this representation and warranty by the signatories of their authority to execute and bind the respective parties whom they represent.

14. Each of the signatories to this Settlement Agreement represents and warrants that he or she is authorized to execute and sign on behalf of the parties hereto from whom they are purporting to execute the agreement, and that each of the parties is bound to the terms and provisions of the agreement as a result of his or her signature below. Each of the signatories also acknowledges that each of the other parties is relying, in entering into the agreement, on this representation and warranty by the signatories of their authority to execute and bind the respective parties whom they represent.

David Ellis