We# have# reviewed# the# Mutual# Receipt,# Release#and#Indemnifica8on#Agreement#(“the# S e ? l e m e n t# A g r e e m e n t ’ )# b e t w e e n# AeroPremier#Jet#Center,#LLC#and#the#Board#of# Commissioners#of# the#Orleans#Levee#District,# and# Orleans# Levee# District,# Division# of# nonK Flood# Asset# (“OLD”).# #We# reviewed# the# FBO# leases#between#AeroPremier# Jet#Center,#LLC,# Flightline# Ground,# Inc.# and# Million# Air# New# Orleans# (now# Landmark# Avia8on)# and# the# New# Orleans# Levee# District.# # We# have# also# reviewed# the# complaint# filed# by# Flightline# Ground# against# the# New# Orleans# Levee# District#and#other#par8es,#and#the#affidavit#of# Michael# A.# Hodges,#MAI.# We# examined# FAA# records# and# and# financial# reports#pertaining# to# the# Lakefront# Airport.# # We# interviewed# management# personnel# at# the# airport,#OLD,# and#at#the#FBOs.# #Our#conclusion#is#that#the# se?lement# agreement# is# fair# to# all# par8es.# The#basis#for# this#conclusion#is#backed#up#by# this#report.

Our$Experience The#Avia8on#Group#is#made#up#of#individuals# who# have# held# senior# posi8ons# with# companies#that#are#involved#with#the#general# avia8on# industry.# # We# have# advised# and# consulted# with# general# avia8on# airports,# FBOs,#aircraW#manufactures,#general#avia8on# aircraW# operators# (frac8onal,# charter,# and# nonKcommercial#aircraW).# #We#have# advised# investors# (private# equity# firms,# investment# banks,# individuals,# and# others)# on# this# industry.# # This# assignment# for# OLD# is#being# handled#by# Jim# Haynes#and#Ed#Ahrens.# # Jim# Haynes# is# the# founder# and# president# of# The# Avia8on#Group.# #He#owned#and#managed#an# FBO# before# founding# The# Avia8on# Group# in# 1995.# # Ed# Ahrens# held# senior# management# posi8ons# with# Garre?# Avia8on# and# Atlan8c# Avia8on.# # Both# of# these# companies# were# large#mul8Kservice#FBOs.# #In#2004#one#of# our# consul8ng#assignments#involved#site#visits#to# the# Lakefront# airport.# # Jim# Haynes# and# Ed# Ahrens#lead#this#New#Orleans#project.# #They# interviewed# the#airport#manager,# the#senior# management,# and# inspected# the# facili8es# of# the# three#FBOs#that#were#then#opera8ng#on# the#airport.

Review$of$the$Facts Hurricane# Katrina# stuck# New# Orleans# the# morning#of#August#29th,#2005.# #This#was#one# of# the#largest# natural#disasters#to# strike#the# United#States.# #Over# 1,800# people# died# and# property# and# economic# damage# has# been# es8mated# at# over# $81# billion.# # While# large# por8ons#of#the#Gulf#Coast#were#affected,#the# majority# of# deaths# and# physical# damage# occurred# in# New# Orleans# when# the# levee# system#failed.

The#New#Orleans#Lakefront# Airport# (NEW)# is# appropriately# named# as# it# sits# on# the# southern# shore# of# Lake# Pontchartrain.# # The# airport# was# built# adjacent# to# the# Industrial# Canal,#on# a#manKmade#arrowhead# peninsula# jufng#into#Lake#Pontchartrain.##To#make#land# available# for# this# elaborate# project,# the# Orleans# Levee# Board# drove# a# 10,000# foot# retaining# wall# into# Lake# Pontchartrain# and# pumped#in#six#million#cubic#yards#of#hydraulic# fill#to#raise#the#field#above#the#water. 

### Prepared'For'the'New'Orleans'Non2Flood'Asset'Protec5on'Management'Authority
June'2011New# Orleans# is# located# in# a# bowl,# much# of# which#is#below#sea#level,#surrounded#by#Lake# Pontchartrain#on#the#north#and#on#the#other# three#quadrants#by#the#Mississippi#River.

When# the# levee# system# failed# Lakefront# Airport# became#a#part#of# Lake# Pontchartrain# and#every#hangar,#office#building,#aircraW#and# any# piece# of# equipment# standing# on# the# airport# at# the# 8me# was# either# totally# destroyed#or#received#major#damage.##Today,# almost# six# year# later,# the# recovery# from# the# ravages#of# Katrina#in#New#Orleans#is#s8ll#not# complete.

The# recovery# at# the# Lakefront# Airport# has# been# remarkable.# # While# many# felt# this# airport# would# never# reopen,# as# the# data# below#shows#aircraW#opera8on#are#at#almost# 60%# percent# of# preKKatrina#numbers.# # With# the#excep8on#of# the#successor# to#Million#Air# of#New#Orleans,# none#of# the#FBOs#opera8ng# at#the#airport#preKKatrina#are#there#today.

New$Orleans$Lakefront$Airport The#New#Orleans#metropolitan#area#is#served# by# two# airports.# # Louis# Armstrong# New# Orleans#Interna8onal#(MSY)#is#the#largest#and# provides# commercial# airline# service# to# the# area.##The#second#airport#is#Lakefront#Airport# (NEW),# which# provides# the# majority# of# the# General# Avia8on# services# to# the# area.# # The# Lakefront# Airport# is# owned# by# the# Orleans# Levee#District#and#managed#by#the#NonKFlood# Protec8on# Asset# Management# Authority# (“Authority”).# # Lakefront# Airport# is# the# favored# airport# for# General# Avia8on# as#it# is# closer# to# downtown# New# Orleans# and# has# less#air#traffic.# #Both#of# these#factors#account# for#customers#favoring#Lakefront#Airport#over# Louis# Armstrong# New# Orleans# Interna8onal# Airport# for#convenience#and#efficient# private# air#travel.

Lakefront# Airport# has# a# proud# history# of# servicing# General# Avia8on# customers.# # The# airport# had# all# the# aeronau8cal# and# land# infrastructure# to# provide# safe# handling# of# aircraW#and#their#passengers.##The#airport#had# three# FBOs# that# provided# fuel,# hangars,# passenger#and#pilots’#lounges,#flight#planning# facili8es,# and# all# the# other# support# services# required# for# a# successful# General# Avia8on# airport.# # The# three# FBOs# were# Million# Air,# Atlan8c# Avia8on,# and# AviaPort.# # All# three# were#poised#for#growth#prior#to#Katrina.##

Million# Air# captured# the#majority# of# the#fuel# business# and# was# part# of# a# large# na8onal# chain#of# FBOs#located#throughout#the#United#
States.

Atlan8c# Avia8on,# one# of# the# the# largest# operators#of# FBOs#in#the#U.S.,#purchased#the# Lakefront# Airport# FBO# in# 2004# and# was# planning# expansion.# # The# Atlan8c# Avia8on# FBO#was#located#in#the#“McDermo?”#hangar.# While#the#hangar#and#offices#were#physically# func8onal#and#a?rac8ve,# the#loca8on#on#the# airport# was# very# inconvenient# for# public# customers#and#passengers#who#had# to#drive# onto# the#airport# to# reach# this# FBO# loca8on.# The#McDermo?#hangar#building#was#formerly# the# base# of# a# corporate# flight# department# that# serviced# the# oil# industry# and# did# not# conduct#business#with#the#public#or#transient# aircraW.# # Atlan8c# Avia8on,# while# occupying# this#building,#was#ac8vely# working#on#leasing# the# Chevron# hangar,# located# on# the# south# side# of# the# airport.# # This# hangar# had# easy# access#from#the#public#streets.

AviaPort# was# a# smaller# FBO# operator# that# provided# fuel# and# services# to# complement# the#other#FBOs. The# based# aircraW# popula8on# at# Lakefront# Airport# in# the# five# years# prior# to# Katrina# 2averaged# between# 215# to# 250# aircraW.# #The# majority# at# the# 8me# of# Katrina# were# small# single# engine# aircraW.# # About# 10%# were# jet# aircraW.# # In#addi8on# to# the#aircraW# based#at# Lakefront# Airport,# the# airport# had# a# very# ac8ve#“i8nerant”#flow#of#aircraW#opera8ons.##

“I#nerant”* is* used* to* describe* aircra2* opera#ons* where* an* aircra2* arrives* from* another* airport* and* departs* to* another* des#na#on,*or*an*aircra2*departs* the*airport* and* leaves* the* airport*area.* *The* opera#ons* of*aircra2*based*at*the*airport*are*considered* “local”*when* the* aircra2* departs* the* airport* but*stays*in*the*airport*area*and*returns.

The# following# chart# shows#the#opera8ons#at# Lakefront#Airport#from#2002#to#2010.

!" #!$!!!" %!$!!!" &!$!!!" '!$!!!" (!$!!!" )!$!!!" *!$!!!" +!$!!!"

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34516"

The# financial# life# blood# of# General# Avia8on# airports#and#their#FBOs#are#fuel#sales,#jet#and# avgas.# # The# following# chart#shows# the# total# number# of# gallons# sold# at# the# airport# from#
2002#to#Katrina.##

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In# summary,# preKKatrina# Lakefront# Airport# was# a# very# ac8ve# General# Avia8on# airport# p o i se d# f o r# g r o w t h# a n d# c o n 8 n u o u s# improvement#of#its#services#to#the#public. Hurricane$Katrina The# Lakefront# Airport# sustained# the# worst# natural#disaster#damage#in#U.S.# history.# #The# airport# was# further# impacted# as# the# whole# New# Orleans# metropolitan# area# and# region# around#the#airport#was#virtually#destroyed#by# the# effects# of# Katrina.# # This# prolonged# the# period#to#rebuild.##The#basic#infrastructure#for# the# whole# region# had# to# compete# for# contractors# and# funding# to# rebuild# their# proper8es.

Post$Katrina Immediately#aWer#the#storm,#the#airport#was# closed# to# opera8ons# but# within# weeks# was# able# to# handle# emergency# and# support# flights.# #With#the#tower#and#radar#opera8ons# all# out# of# service# at# Lakefront# Airport,# the# airport# began# its# recovery# with# the# help# of# the# MSY# towe r# and# rada r# se rvices.# Unfortunately#it#wasn’t#un8l#late#July#of#2007,# almost#2#years#aWer# Katrina# struck# the#area,# that# the# Lakefront# Airport# tower# was# reopened#with#basic#services.##

Immediately# following# Katrina# the# Lakefront# Airport# began# dealing# with# sefng# up# basic# services,# removing# debris,# and# iden8fying# buildings#that#were#beyond#repair.##

The# Million# Air# facility# was# completely# destroyed.# # Million# Air# was# able# to# restart# fueling# opera8ons#working# out# of# temporary# trailers.

Atlan8c# Avia8on# elected# to# not# return# to# opera8ng# an# FBO# at# Lakefront# Airport# and# their# lease# was# terminated.# # # (Atlan8c# Avia8on#had#an#FBO#at#MSY#and#consolidated# opera8ons#there.)

The#AviaPort# facility# was#also#destroyed#and# they#elected#not#to#return#and#their#lease#was# terminated.##

During# the# recovery# stage# OLD# and# the# Lakefront# Airport# began# dealing# with# the# complex#issues#of#insurance#claims#and#FEMA# funding# to# rebuild# the#facili8es#that#could#be# 3salvaged# and# those# that# needed# to# be# demolished.# # During# this# process,# the# Lakefront# Airport# management# iden8fied# buildings# that# could# be# renovated# and# proper8es# that# could# be# leased# for# new#

structures.

The#Chevron#hangar#(a#prime#loca8on# for#an# FBO# as# evidenced# by# the# fact# that# Atlan8c# Avia8on# wanted# this# for# their# FBO)# and# several#other#structures#were#iden8fied#to#be# demolished.# # The# Louisiana# Na8onal# Guard# hangar# and# some# other# buildings# in# the# complex# were# deemed# repairable.# # The# Louisiana#Na8onal#Guard#elected#to# relocate# to# another# airport# and# the# complex# was# returned# to# Lakefront#Airport.# # This#opened# up#a#major#opportunity# for#Lakefront#Airport# to#rapidly#add#much#needed#hangar#space#to# the# airport# to# replace# those# facili8es# that# were#destroyed.# #The#first#repair# step#at#the# former#Na8onal#Guard#site#was#to#repair#the# roof# of#the#hangar,#however#the#shops,#office# space,# and# other# areas# needed# substan8al# repair#and#renova8on.

In#summary,#this#was#a#very#difficult#8me#for# the# Lakefront# Airport# as# they# were# dealing# with# the# monumental# tasks# of# removing# d e b r i s ,# r e s u m i n g# o p e r a 8 o n s# w i t h# rudimentary# facili8es# and# communica8on,# and# dealing# with# the# very# complex# FEMA# funding#processes.

Lakefront$Airport$Management$Decisions Eventually# the# Lakefront# Airport# plans# for# building# sites# became# public# knowledge.# With# the# # exit# of# Atlan8c# Avia8on# and# AviaPort# # a#number# of# unsolicited# inquiries# about#leasing# space#and# establishing# an# FBO# were# received.# # This# is# evidenced# by# the# public# minutes# of# the# Joint# Mee8ng# of# the# Planning# Engineering# and# Construc8on# and# Finance#Commi?ee#held#in#May#of#2006.

As# interest# in# adding# FBOs# again# at# the# Lakefront#Airport#grew,#the#return#of# aircraW# opera8ons#also#began#to#grow.##AWer#Katrina,# many# private#General# Avia8on# aircraW# used# MSY# as# a# temporary# base.# # The# following# chart#shows#the#change#in#opera8ons#ranging# from#before#Katrina#to#current.##Note,#during# the# remainder# of# 2005# (September# forward)# and# 2006,# the# FAA# records# show# no# opera8ons# at# the# Lakefront# Airport.# # The# reason# for# this# is# that# there# was# no# func8oning# tower# or# radar# facility# at# Lakefront# Airport# during# this# period.# # There# actually#were#some#limited# opera8ons#going# on# but# were# not# captured# in# the# FAA# database.

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The# Airport# also# started# seeing# customers# returning# to# base# their# aircraW# at# Lakefront# Airport.# # While# it# is# difficult# to# determine# exactly# how# many# aircraW# were# based# at# Lakefront#Airport#in#the#immediate#year#aWer# Katrina,# it# appears# that# the# number# was# in# the#low#90s.##Each#subsequent#year#saw#more# based#aircraW.##The#following#chart#shows#the# change#in# based#aircraW#at# Lakefront#Airport# over#the#period#of#2002#to#this#date.

!" #!" $!!" $#!" %!!" %#!" &!!"

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The# combina8on# of# increasing# opera8ons#at# the# airport# and# the# return# of# based# customers# accelerated# the# interest# and# viability# of# addi8onal# FBO# businesses# at# Lakefront# Airport.# # The# exit# of# Atlan8c# and# AviaPo r t# se t# up# a# ve ry# compe88ve# 4environment# for# new# FBOs# at# Lakefront# Airport. In# lieu# of# rebuilding# on# their# old# site,# the# Million# Air# lease# was# amended# to# include# a# new# lease#site#just# west# of# the# old# terminal# building.# # The# following# drawing# shows# the# loca8on#of#the#sites#for#FBOs.##(Larger#images#

are# available# in# the#appendix# at# the# end# of# this#paper.)# All#three#sites#are#at#a#prime#loca8on#on#the# airport#with#excellent# street#side#access#and# convenient#airside#access#and#space.

The#Airport#nego8ated#and#awarded#leases#to# Flightline# First# and# AeroPremier,# two# new# FBOs,# for# hangar# space# and# the# rights# to# provide# FBO# services.# # Flightline# First# obtained# a#site#just# east# of# the#old# terminal# building# in# a# hangar# referred# to# as# the# Williams#Hangar.# #AeroPremier#was#awarded# the#lease#for#the#Na8onal#Guard#complex#and# the#McDermo?#hangar#(located#on#northeast# side#of#airport).## Million#Air#elected#to#build#a#new#hangar#and# office#building# on#their#new# site.# #Million#Air# was#sold#to#Odyssey# Avia8on.# # In#early# 2011# Landmark# Avia8on# purchased# Odyssey# Avia8on.# # Landmark#is#one#of# the# top# three# FBO#chains#in#the#U.S.#and#is#owned#by#GTCR,# a#large#Chicago#based#private#equity#firm.

The# Flightline# First# FBO# building# required# major# repairs# and# renova8on.# # The# AeroPremier# site# at# the# McDermo?# hangar# required#some#repairs.##The#AeroPremier##site# at# the# former# Na8onal# Guard# complex# required#major#repairs#and#renova8on#to#the# main# hangar,# offices,# shops.# # Several# outbuildings# on# the# site# needed# repair# or# removal.# # The# old# Chevron# hangar# was# scheduled#for# demoli8on#and# has#since# then# been#removed.

Keys$for$FBO$Success To#understand#the#se?lement#agreement#It#is# important# to#understand# the# success#factors# for# an# FBO# in# the#General# Avia8on# industry.# FBOs#are#very#specialized#service#providers#to# private#aircraW#owners/operators##Because#of# the# high# value# or# their# aircraW# and# the# VIP# status# of# their# passengers,# private# aircraW# owners#set# a# very# high# standard# for# service# from#FBOs.##Many#of#these#aircraW#are#valued# at# between# $5# and# $50# million# and# are# owned#by#large#businesses.##Senior#execu8ves# and# key# personnel#are# transported# in# these# airplanes.

Business# aircraW# owners# expect# FBOs# to# provide# safe,# secure,# comfortable,# and# convenient# facili8es# for# the# aircraW,# crew,# and#passengers.# #The#Avia8on#Group#is#highly# experienced# in# valida8ng# the# importance# of# t h e s e# n o n K fi n a n c i a l# p e r f o r m a n c e# expecta8ons.##As#stated#above#we#have#been# retained# by# numerous# private# equity# firms,# interna8onal#bankers,#and#other#investors#to# evaluate# how# these# factors# will# affect# the# financial#success#of# an#FBO.# #While#there#will# always#be# debates#about# the# importance# of# the# price# and# brands# of# fuel,# these# factors# become#secondary#to#a#safe#and#secure#flight# and# the# handling# of# passengers# and# crew.# FBOs# in# a# market# place# such# as# Lakefront# Airport# also# have# to# be# able# to# offer# addi8onal# nonKfueling# services.# # Leasing# 5ha nga r# a n d# offi ce# s pa ce,# p r ovi di ng# maintenance#services,#flight#training,#charter,# and#other#ancillary# services#is#very#important# to#the#financial#viability#of#an#FBO.##

On# the# websites# of# the# three# FBOs# at# Lakefront# Airport# each# state# that# these# services# add# value# to# the# services# their# companies#provide.# # AeroPremier’s#business# plan,# with# the# lease# of# the# Na8onal# Guard# complex# and# the# McDermo?# Hangar,# was# intended# to# provide# the# highest# level# of# service#and#support# to# based# operators#and# transient# customers# at# Lakefront# Airport.# Their# lease# provided# for# extensive# hangar# square# footage# for# aircraW# storage# and# abundant# space#for# nonKfueling# ac8vi8es.# #It# was# with# this# expecta8on# and# plan# to# execute,# that# Advantage# Capital# elected# to# invest# in#AeroPremier.# # Private# equity# firms# such#as#Advantage#Capital#are#experienced#in# analyzing# business# plans.# # Their# investment# return#depends#on# these# business#plans#and# their#execu8on.##

AeroPremier# also# understood# that# Odyssey# (now# Landmark)# was# a# wellKrecognized# and# heavily# marketed# compe8tor# and# that# AeroPremier’s#service#level#would#have#to#be# extraordinary.# # Their# facili8es#would#have#to# be#in#excellent#condi8on.# #Flightline#First#also# recognized# this# and# invested# heavily# in# the# renova8on# of# their# office# area# to# impress# customers.# # Both# AeroPremier#and#Flightline# First#understood# that#Odyssey# had# been# the# only# FBO# for# several# years# and# they# would# have# to# compete# to# take# customers# away# from# Odyssey’s# previous# 100%# share# of# the# market.

What$Went$Wrong? The# intense# compe88on# between# FBOs# on# airports#everywhere#also# #naturally#existed#at# Lakefront#Airport.# #Tensions#increased#in#late# 2008# with# the# major# U.S.# and# Global# economic#recession#that#significantly#reduced# aircraW# opera8ons.# #Fuel#sales#at#all#airports# dropped# drama8cally.# # Fuel# margins# decreased# as# fuel# prices# climbed.# # FBOs# focused#more#than#ever##on#customer#service.

AeroPremier’s# lease# provided# that# specific# repairs# would# be# made# by# OLD# to# the# Na8onal# Guard# hangar# complex# and# completed#within#14#months.##While#the#roof# of# the# main# hangar# had# been# repaired,# the# rest#of# the#structure#remained#unsuitable#for# most#customers.##As#such,#the#lease#provided# reduced# rates# un8l# the# repairs# were# completed.# # Unfortunately# at# this#point# the# apparent# confusion# surrounding# the# use# of# FEMA# funds#to#complete#the#repairs#resulted# in# no# repair# ac8vity# on# the# Na8onal# Guard# hangar.# # It# soon# became# obvious# to# AeroPremier#that#the#comple8on#date#for#the# repairs#could#not#be#met.

AeroPremier#was#fortunate#to#have#the#lease# on# the# McDermo?# Hangar# (the# McDermo?# Tidewater# hangar# MT).# # AeroPremier# was# able# to# use# this# site# to# supplement# their# efforts#at#the#Na8onal#Guard#site.# #While#the# McDermo?# hangar# is# excellent# for# hangar# storage# of# high# value# aircraW,# the# loca8on# does# not# lend# itself# to# being# a# convenient# FBO#site#due#to#lack#of#street#side#access.

AeroPremier#con8nued#to#a?empt#to#execute# their# business# plan# to#establish# the#Na8onal# Guard# complex# as# a# first# class# FBO# with# excellent# facili8es# and# service# levels.# # The# poor#condi8on#of#the#hangar#and#office#areas,# windows# (doors# and# other# security# barriers# were# missing)# was# not# conducive# to# a?ract# new# based# customers# or# increase# transient# fuel# sales.# Nor# was# AeroPremier# able# to# provide#a#high#level#of# maintenance#service,# flight# training,# and# other# avia8on# support# ac8vi8es.# # The# cri8cal# success# factors# of# providing# a# safe# and# secure# facility# to# customers#were#all#missing.# #In#addi8on,#the# revenue# from#nonKfuel#ac8vi8es#in# a#market# the# size# of# Lakefront# Airport# is# vital# to# the# financial#success#of# the#FBO.# #This#inability#to# a?ract# and# hold# customers# at# the# Na8onal# Guard#site#totally# disrupted# the#AeroPremier# and#Advantage#Capital#business#plan. 6As# the# repairs# to# the# various# airport# proper8es#progressed,#in#par8cular#along#the# south# ramp# where# the# three# FBOs# are# located,# there# were# 8mes# when# temporary# use# of# space# outside#of# the#individual#FBOs# leasehold# was# used# by# another# FBO# for# aircraW# parking,# fueling,# and# other# support# ac8vi8es.# # This# added# to# the# tensions# between# the# FBOs# and# a# mistrust# of# the# airport# management.# # The# delays# and# confusion#in# funding# the#Na8onal#Guard#site# repairs#added#to#this#situa8on.##

AeroPremier# paid# rent#as# called# for# in# their# lease#from#June#of#2008#un8l#May#of# 2009#at# which# 8me# they# stopped# making# payments.# They#believed# that#the#airport#was#in#default# of# the#lease.# #This#resulted#in#a#lawsuit,# #The# court# found# the# airport# had# violated# the# lease.# #A# Se?lement#Agreement#was#entered# into#by# the#par8es#to#this#lawsuit#as#a#result# of#media8on.##As#the#public#became#aware#of# the# details# of# the# se?lement,# the# current# legal#proceedings#were#ini8ated#with#the#FAA# by#a#compe8ng#FBO,#Flightline.

The$SeHlement$Agreement The#Se?lement#Agreement#gave#rent# credits# to#AeroPremier#and#Advantage#Capital#as#well# as#relief# from#some#obliga8ons.# #A# rent#credit# for# past# rental# payments# of# $473,000# was# granted# to# AeroPremier# as# well# as# rent# credits#for#some#future#rental#payments#un8l# such# 8me# as# repairs# are# completed.# # Both# par8es,# OLD# and# AeroPremier,# presented# their# projec8ons#of# current#and#future#losses# that# ranged# from# a# low# less# than# $200,000# from#OLD# to#a#high#of# over# $2,000,000# from# AeroPremier.# #The#OLD#report#was#narrow#in# scope#as#it#only#considered#fuel#sales#and#not# all#the#other#nonKfuel#revenue#poten8al.##The# 8me# period# for# future# losses#extended# only#
to#2012.

The#effect#of#losing#customers#because#of#the# lack# of# proper# facili8es# can# have# longKterm# implica8ons.# # Once# AeroPremier’s# new# facili8es#are#completed,# they# may# be#forced# to# market# their# facili8es# and# services# at# below# market# prices# in# order# to# a?ract#

customers.# The#recent#purchase#of#Odyssey#by#Landmark# Avia 8 o n# c o n 8 n ue s# t o# i n c rea se# t he# compe88ve#pressure.##Landmark#is#a#na8onal# brand.# AeroPremier# is#an# unknown# FBO.# #In# addi8on# to#opera8ng#out#of#subpar# facili8es,# AeroPremier#was#unable#to#secure#customers# for# nonKfuel# services# at# the# Na8onal# Guard# site.# # Maintenance#providers,# flight# training# companies,#and#others#were#lost#to#the#other# FBOs# on# the# airport.# # Other# corporate# customers# like# Houghtaling# have# recently# departed.

In# addi8on# to# aeronau8cal# services,# AeroPremier#is#unable#to#provide#office#space# to# poten8al# customers.# # Private# aircraW# owners#need#office#space#for#pilots,#crew,#and# mechanics#offices,# #storage#of# aircraW#record,# flight# and# repair# manuals,# etc.# # Customers# that# need# office# space# typically# have# an# immediate#or#very#near#term#requirement#for#

space.

AeroPremier#is#unable#to#assure#customers#of# when#and#what# space#will#be#available.# #This# loss# of# rent# con8nues# to# nega8vely# impact# their# revenue#stream.# #Snapshot# projec8ons# of# financial# performance# that# both# par8es# presented#during# the# se?lement#hearing#are# difficult# and# obviously# open# to# much# cri8cism.# #However,#as#8me#has#passed#since# these#projec8ons#were#made,#the#con8nued# effects#of# the#lack#of# the#expected#renovated# Na8onal# Guard# facility# reinforce# that# the# amount#of#the#se?lement#was#appropriate.

The# Se?lement# Agreement# also# provided# a# $500,000# transferable# rent# credit# to# Ae r o P remie r# o r# A dva n tage# Ca pi tal.# Advantage# Capital# is# a# successful# private# equity# firm.# # The# Avia8on# Group# has# extensive# experience# working# with# private# equity# firms# that# have# invested# in# FBO# businesses. 7Private#equity# firms#such#as#Advantage#oWen# have# an# interest# in# avia8on# related# businesses.###Their#interest#in#inves8ng#in#this# type# of# business# is# heightened# when# the# poten8al# company# they# are# considering# is# poised#for#immediate#growth.##Private#equity# investments# usually# turnover# every# 5# to# 7# years.# # Advantage# undoubtedly# saw# their# ini8al# investment# in# AeroPremier# as# fifng# this#8meline.

Flightline#First’s#owners# also# have#extensive# private#equity#experience#and#saw# the#same# p o t e n 8 a l# f o r# a n# F B O# i n v e s t m e n t .# Unfortunately# the# Na8onal# Guard# facility# delay# has#significantly# impacted# the# current#
investment#in#AeroPremier.

The#future#value#of#AeroPremier#will#con8nue# to#be#nega8vely# impacted# as#AeroPremier#is# unable#to#keep#pace#with#the#other#FBOs#that# now# have# proper# facili8es.# # The# sale# of# Odyssey# to#Landmark#highlights#the# fact#that# an#FBO#with#high#quality#facili8es#and#service# is#valuable#property.# #This#rent#credit#applied# over# a# 5# year# period# is# appropriate# for# Advantage#to#use#in#order#to#try#to#recapture# the#lost#value#in#their#investment.#

AeroPremier# was# also# released# from# the# o b l i g a 8 o n# t o# i n v e s t# $ 2 8 5 , 0 0 0# i n# improvements#in# the#Na8onal#Guard#hangar.# This# obliga8on# was# in# the# original# lease# in# 2008.# #It#will#now#be#3#or#more#years#before# Ae r o P remie r# will# be# a ble# t o# make# improvements# to# the# facility# as# projected.# AeroPremier# plans# to# make# investments# in# the# facility# aWer# the# OLD# repairs# are# completed.# # They# understand# that# this# investment# is# cri8cal# to# their# business,# and# they#plan#to#build#a#first#class#facility#that#will# include:

• 15,000% square% foot% FBO% office,% more% than% double% the% size% of% any% other% FBO% at% Lakefront%Airport

•27,000%square%foot%hangar%large%enough%for%GEV%
aircraG • Luxurious% two% story% lobby,% with% comfortable% siJng% areas% and% featuring% aviaLon% and% New%
Orleans%themed%art

•20'%granite%customer%service%counter

•Coffee% Bar% featuring% variety% of% coffee,%tea% and%

espresso%drinks

• Hospitality%Bar%and%Lounge%with%expansive%view%

of% the% airport,% offering% complementary% snacks% and%beverages

• Media%room,%with% state%of%the%art%movie% theater%with%satellite%TV%and%DVD%library

• Game% room,% with% electronic% games% and% pool%table

• Private%passenger%lounge

• Private%sleep%rooms

• Separate%crew%lounge

• Workout%facility%with%sauna%and%showers

• State%of%the%art%flight%planning%office

• Large% conference% room% with% mulLmedia% projector% and% other% presentaLon% capabiliLes

• Business% center% for% passengers% and% crews,% offering%facsimile,%photocopy%and%
other%services

• Corporate% flight% department% offices%with% administraLve%support

• Private% VIP% Suite% with% siJng% area,%
conference%table%and%wetbar

• Covered%passenger%auto%entrance

• Wifi%throughout

• State%of%the%art%video%security%system

• Catering%kitchen

• Private%courtyard%with%puJng%green

• Indoor%car%parking

• Expansive% concrete% aprons,% with% ample% room% for% parking% and% maneuvering% aircraG%of%all%sizes%and%types

Since# AeroPremier# projects# to# spend# a# significant#amount#to#improve#the#facility,#the# relief#of#the#specific#amount#of# the#obliga8on# appears#appropriate.

The# Agreement# also# waived# some# rent# obliga8ons# for# the# Na8onal# Guard# hangar# during#the#repair#period#or#when#the#current# used#space#was#unusable#by#AeroPremier.##As# discussed#above,#un8l#the#hangar#and#offices# are# completed,# and# can# provide# a# safe# and# 8secure#environment,#poten8al#customers#will# not#be#confident#in#AeroPremier.##

Construc8on#ac8vi8es#in#par8cular#are#a#high# risk#when#aircraW#are#in# the#immediate#area.# Poten8al# accidental# damage,# either# obvious# or# hidden,# is# always# of# concern# to# crew# members# of# the# aircraW# as# well# at# to# the# contractors.# # Repair# and# renova8on# to# the# Na8onal# Guard# building# will# be# disrup8ve.# The#following#email#is#an#example:##

Date:&Wed,&6&Apr&2011&11:16:54
From:&Vick&Corso
To:&Rolando&Gonzalez Good&morning&Rolando, As& requested& per& our& conversaFon& 4/6/11& the& construcFon& inside& hanger& will& start& this& coming& Monday& 4/11/2011.From& this&day& on& Fll& the&first& week& of& June& we& will& need& total& access& to& the& hangar& from& 7am& Fll& 4:30& pm& MondayRSaturday& and& possible&Sunday.&If& and&event&we&are&working& later& hours& that& day& you& will& be& noFfied& that& morning.& There& can& be& no& planes& in& the& hangar& due& to& the& working& in& progress.& The& inside& of& hangar& will& be& staging& area& to& prep& materials& to& be&installed,&sprinkler&systems,&fire&alarm,&coil&door& install,& and& hangar& glass& replaced.& I’m& not& sure& how& this& will& affect& using&it&aXer& hours&but& if& you& feel&that&the&aircraX&will&be&safe&being&stored&with& equipment& and& hardware& that& will& be& your& call.& Please& let&Anthony& know& if&you& have& any& request& day&to&day.&Thanks,&Vick&Corso
Vick&Corso C.E.O.&Corso&Companies/ Anode,&Inc

This#email#highlights# the# fact# that# important# safety# and# security# items# like# the# sprinkler# system,#fire#alarm,#doors,#glass,# etc.#are# just# now#being#installed.

We# believe# that# the# waiver# of# select# rents# during# this# period# for# AeroPremier# was# appropriate#under#the#circumstances.

AeroPremier# was# also# granted# the# right# to# cancel# the# lease# on# the# McDermo?# hangar# with#60#days#no8ce.##We#understand#that#it#is# not#the#intent# of# AeroPremier# to#cancel# this# lease#as#the#hangar#is#currently#occupied#and# profitable.#The#intent# of# this#concession#was# to#reduce#AeroPremier’s#financial#obliga8ons# in#the#event#that#the#Na8onal#Guard#complex# renova8on#con8nues#to#be#delayed. Comments$on$the$Complaints

1.$Diversion$of$Funds It# was#alleged# that# OLD# violated# FAA# grant# agreements#by# diver8ng# revenue.# # Typically# the#diversion#of# revenue#would#be#viewed#as# using# airport# funds# for# nonKairport# related# ac8vi8es.# #In#this#complaint,# the#allega8on#is# that# rental# payments# from# Flightline# First# were# used# to# give# AeroPremier# unfair# advantages.# # This# would# imply# that# AeroPremier# would# have# the# advantage# to# undercut# the# other#FBOs#in# fuel# and# hangar# prices# to# gain# market# share.# # A# review# of# public,# published# fuel# prices# showed# no# significant#fuel#price#cuts#by#AeroPremier.# #In# fact,# Flightline# First# typically# led# any# price# reduc8ons.# # The# current# excess# supply# of# hangar# space# makes# for#a#compe88ve# price# among# the#FBOs.# # It#is#our# opinion# that# this# allega8on#is#false.

2.$DiscriminaNon$of$Rates Another# allega8on# stated# that# that# OLD# discriminated#on#rates#and#fees.# #A# review#of# the# lease# ra tes# showed# only# mino r# differences# in# the# FBO# lease# rates# for# the# various# por8ons# of# the# leasehold# K# hangar,# offices,#ramp,#etc.# #While#the#FBOs#may#have# argued# that# the# rates#were#too# high# for# the# post#Katrina#period#when#business#was#at#an# all# 8me# low,# the# rates# were# consistently# applied.# # Fees# for# fuel# are# also# consistently# applied.# #It#is#our#opinion#that#this#allega8on# is#false.

3.$Sublease$Rights Another# allega8on# stated# that# OLD# gave# up# airport# rights# when# they# agreed# to# allow# AeroPremier# to# sublease# 2nd# floor# office# space#(when#completed)# without#approval#of# OLD.# # From# our# lease# experience,# language# that#permits#subleasing#is#usually#included#in# 9FBO#building#leases.##Excep8ons#might#be#for# prospec8ve# tenants# who# would# compete# with#a#company# in# the#terminal# building.# # A# restaurant# or# food# service# facility# would# be# an#example.# #Common#language#in#an#airport# lease#is#that#the#right#to#sublease#shall#not#be# unreasonably# withheld.# # However,# the# business#view#at#the#airport/FBO#level#is#that# this# applies# to# the# sublease# of# the# whole# leasehold# or# approval# to# a# change# of# ownership.##The#usual#excep8on#for#obtaining# specific#sublease#approval#is#for#leases#where# customers# that# provide#a# service# that# could# be# viewed# as# compe88ve# to# airport# opera8ons#or# those#whose#ac8vi8es#are#well# outside#of# normal#avia8on#support#business.# Many# of# the# subleases# for# FBO# support# ac8vity# are# short# term.# # Keeping# up# with# these# frequent# approvals# becomes# an# unnecessary#burden#to#the#airport#authority.# This# par8cular# concession# also# provides# the# airport#the#right#to#subKlease#the#space.##This# concession# appears# to# be# more# of# a# coopera8ve#effort# by# both# AeroPremier# and# OLD#to#find#customer/s#for#this#space.#It#is#our# opinion#that#this#allega8on#is#false.

4.$Airport$Management OLD# is# alleged# to# be# improperly# managed# with# the# result# being# that# the# Lakefront# Airport# is# not# a#selfKsustaining# airport.# #OLD# has# endured# incredible# obstacles# and# challenges#to#successfully#operate#the#airport# through# the#worst#natural#airport#disaster# in# U.S.# history.# # While#recognizing# that# Katrina# imposed#huge#business#and#personal#trauma,# it# does# not# totally# excuse# individuals# from# making# poor# decisions.# # In# reviewing# the# management# of# Lakefront# Airport# over# the# past#few#years,#it#is#easy#to#cri8cize#individual# ac8ons#and#communica8ons.##However#when# looking# at# the# whole# airport# opera8on# and# direc8on,#our#view#is#that#the#airport#is#being# managed# to# be# selfKsustaining# while# under# extremely# difficult# condi8ons# –# both# p h y s i ca l l y# f r om# t he# h u r r i ca ne# a n d# economically#from#the#recession. For#example: The#return#of# the#Na8onal#Guard#complex#to# the#airport,#in#spite#of# ul8mately#crea8ng#the# current# legal# controversy,# has# added# large# and# valuable# hangar# space# to# the# airport.# This#will#develop#lease#revenue#from#property# that# previously# was# not# producing# any#

revenue.

The# airport# now# has#3#FBOs#on# the#airport.# This# is# the# same# level# as# before# Katrina.# Making# the# decision# to# add# the# FBOs# back# c rea te s# a n# a p p r o p ria te# c om pe88ve# environment# for#excellent# customer# op8ons.# Each# FBO# is# very# compe88ve# which# should# work# to# create#more# ac8vity# at# the#airport.# Adding#an#FBO/s#to#an#airport#is#always#highly# debated# as# evidenced# by# the# currently# on# going# very# public# arguments# about# the# Cha?anooga,# TN# (CHA)# airport# adding# a# second#FBO.##While#it#will#take#some#years#for# Lakefront# Airport# to# return# to# the# level# of# opera8ons#prior#to#Katrina,#the#infrastructure# of# FBO# services# is# now# poised# for# airport# growth.# #We#already#see#more#improvement# in#based#aircraW# than#was#projected.# #At#the# end#of#January#there#were#113#aircraW#and#in# May#the#number# had#increased# to# 153.# #The# compe88ve# spirit# among# the# three# current# FBOs# to# have# the# best# facili8es#and# services# will# con8nue# to# improve# the# preference# of# Lakefront#Airport#as#a#favored#airport.

The# airport# is# finalizing# the# updated# Airport# Master# Plan.# #OLD#was#granted#AIP#funds#in# mid# 2008# for#the#plan.# #Later#that#year,#URS# Corpora8on# was# selected# to# update# the# Airport# Master# Plan.# # Crea8ng# or# amending# an#airport#master#plan#is#a#huge#challenge#for# normal#airports.##Doing#the#one#for#Lakefront# aWer# Katrina# has# been# excep8onally# challenging.# # The# engineering# work# to# redefine#almost#everything#on#the#airport#has# taken# 8me.# # However# the# plan# is# almost# complete.# # There# was# a# public# open# house# recently#to#show#the#plan#and#it#is#an8cipated# that# final# submission# will# take# place# in# the# next#few#weeks.# 10As# part# of# the# master# plan,# the# airport# is# projec8ng# adding# hangar# space# in# the# next# few#years#to#increase# revenue#opportuni8es.# An# image# of# part# of# the# airport# layout# plan# showing#the##expansion#is#in#the#appendix.###

The#financial#records#for#the#annual#opera8ng# results# for# Lakefront# Airport# are# publicly# available#on#the#Louisiana#Legisla8ve#Auditor# web# site.# # While# each# of# the# recent# years# results#have# differed# in# revenue#and#cost# of# revenue#categories#(due#to#Katrina#ac8vi8es,# maintenance,#grants,#etc),#the#Profit#and#Loss# result# trends#have#not#changed#significantly.# The# results# for# the# year# ended# June# 2010# were#actually#the#second#best#year#in#the#past# 7#years.##

The# Avia8on# Group# has# visited# Lakefront# Airport# numerous# 8mes# over# the# past# 20# years.# # With# the# new# structures# already# in# service# and# the# comple8on# of# the# Na8onal# Guard# complex,# the# airport# is# far# more# a?rac8ve# to# business# than# in# the# past.# Unfortunately# this# improvement# came# at# a# high# price# but# the# results# are# very# encouraging# for#the# future#of# the#airport.# #In# summary,#while#there#may#have#been#lapses# in# individual# performance,# the# airport# is# making#progress#toward#being#selfKsustaining. 11Appendix

FBO'Loca5ons

Construc5on'ac5vity'at'AeroPremier'(former'Air'Na5onal'Garrd'site)