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RESOLUTIONNO3894ARESOLUTIONOFTHECITYCOUNCILOFTHECITYOFAUBURNWASHINGTONAUTHORIZINGALEASEBETWEENTHECITYOFAUBURNANDNWHANGARSLLCFOR26765SQUAREFEETOFLANDATAUBURNMUNICIPALAIRPORTWHEREAStheCityofAuburnoperatestheAuburnMunicipalAirportforthebenefitofthecommunityandresidentsandWHEREAStheAirportMasterPlanencouragesthedevelopmentofaircraftstoragespaceandWHEREAStheCityhasnegotiatedalandleasewithNWHangarsLLCforthepurposeofbuildingaircrafthangarsNOWTHEREFORETHECITYCOUNCILOFTHECITYOFAUBURNWASHINGTONHEREBYRESOLVESASFOLLOWSSection1TheMayoroftheCityofAuburnisherewithauthorizedtoexecuteanairporthangarlandleasebetweentheCityofAuburnandNWHangarsLLCAcopyofsaidleaseisattachedheretoasExhibitAandincorporatedhereinbythisreferenceSection2ThisResolutionshalltakeeffectandbeinfullforceuponpassageandsignatureshereonResolutionNo3894August82005Page1of2 DATEDandSIGNEDTHISDAYOF2v2005ATTESTAkASNcJ1DanielleEDaskamCityClerkResolutionNo3894August82005Page2of2CITYOFAUBURNPETERBLEWISMAYOR AIRPORTHANGARLANDLEASEAGREEMENTBETWEENCityofAuburnandNWHangarsLLC2131EStreetNEAuburnWA98002DatedLessorCityofAuburnLesseeNWHangarsLLCv2ResolutionNo3894August152005 CITYOFAUBURNAIRPORTHANGARLANDAMENDEDLEASEAGREEMENTTHISLEASEAGREEMENThereinafterreferredtoasthisLeaseismadeasof2005byandbetweentheCityofAuburnaWashingtonmunicipalcorporationhereinafterreferredtoasLessorandNWHangarsLLChereinafterreferredtoasLesseeWITNESSETHInconsiderationoftheirmutualcovenantsagreementsandundertakingshereinaftercontainedthepartiesheretodomutuallyagreetothatwhichishereinaftersetforthuponandsubjecttothefollowingtermsconditionscovenantsandprovisions1PROPERTYSUBJECTTOTHISLEASEAGREEMENTaForandinconsiderationoftherentandfaithfulperformancebyLesseeofthetermsandconditionsandthemutualcovenantshereofLessordoesherebyleasetoLesseeandLesseedoesherebyleasefromLessorthepropertylegallydescribedonExhibitAIhereinafterreferredtoasthePremiseswhichPremisesconsistofapproximately26765TwentySixThousandSevenHundredSixtyFivesquarefeetofLandasdepictedontheSitePlanattachedheretoasExhibitA2ExhibitAIandExhibitA2areherebyincorporatedintothisLeasebythisreferenceThePremisesaresituatedintheCountyofKingStateofWashingtonandarelocatedattheAuburnAirporttheAirportbLessorrepresentsandwarrantsthattothebestoftheCitysknowledgewithoutdutyofinquirytherearenohazardouswastesormaterialsoninorunderthePremisescLESSEEACKNOWLEDGESANDAGREESTHATITISRELYINGSOLELYONITSINSPECTIONANDINVESTIGATIONOFTHEPREMISESANDACCEPTSTHEPROPERTYASISWHEREISINITSPRESENTCONDITIONWITHNOWARRANTIESOFANYKINDEXPRESSORIMPLIEDEITHERORALORWRITTENMADEBYLESSORORANYEMPLOYEEAGENTORREPRESENTATIVEOFLESSORWITHRESPECTTOTHEPHYSICALCONDITIONOFTHEPREMISESLESSEESHALLHAVEDETERMINEDTOITSSATISFACTIONUPONITSEXECUTIONHEREOFTHATTHEPREMISESCANBEUSEDFORTHEPURPOSESITINTENDSANDWHICHAREPERMITTEDUNDERTHISLEASELESSEEACKNOWLEDGESANDAGREESTHATNEITHERLESSORNORLESSORSAGENTHADMADEANDDOESNOTMAKEANYREPRESENTATIONSORWARRANTIESOFANYKINDORCHARACTERWHATSOEVERWHETHEREXPRESSORIMPLIEDWITHRESPECTTOTHEHABITABILITYLEASABILITYORSUITABILITYFORCOMMERCIALPURPOSESMERCHANTABILITYORFITNESSFORAPARTICULARPURPOSEOFTHEPREMISESORTHEPRESENCEORABSENCEOFANYHAZARDOUSSUBSTANCESWASTESORMATERIALSASDEFINEDBYSTATEFEDERALORLOCALLAWALLOFWHICHWARRANTIESLESSORHEREBYEXPRESSLYDISCLAIMSLessorCityofAuburnLesseeNWHangarsLLCResolution3894August152005PageI 2TERMThetermofthisLeaseshallbeforfifty50yearsbeginningonthedateofmutualexecutionhereofhereinafterreferredtoastheCommencementDateandendingatmidnightonthedaypriortothefiftieth50thanniversaryoftheCommencementDateunlesssoonerterminatedpursuanttoanyprovisionofthisLeasetheTermIfLessorforanyreasonwhatsoevercannotdeliverpossessionofthePremisestoLesseeontheCommencementDateLessorshallnotbesubjecttoanyliabilitynorshallthevalidityoftheLeasebeaffectedprovidedtheTermofthisLeaseshallcommenceonthedatepossessionisactuallytenderedtoLesseebuttheExpirationDateshallnotbeadjusted3DEVELOPEDBYDATECERTAINDevelopmentofthesitewithproposedhangarprojectistobecompletedwithin36monthsoftheexecutionofthisagreementIftheLesseefailstocompletetheDevelopmentwithinsaid36monthperiodthisleaseshallbenullandvoidProvidedthattheLesseemayrequestanextensionofuptotwelvemonthswhichtheLessormaygrantatthesolediscretionoftheLessoruponashowingofcompellingreasonswhythedevelopmentcouldnotbecompletedwithintheinitial36months4PURPOSEaLesseeshallusethePremisesonlyfortheconstructionmanagementandmaintenanceofaircrafthangarbuildingsforprimarilythestorageandmaintenanceofaircraftandtoconductsuchotheraviationrelatedactivitiesasareincidentalandreasonablyrelatedtheretoLesseemaydevelopthePremisesasacondominiumpursuanttotheprovisionsofChapter6434RCWtheCondominiumActprovidedhoweverthatLesseeshallobtainLessorspriorwrittenapprovalwhichapprovalshallnotbeunreasonablywithheldofthecondominiumdeclarationtheDeclarationandthesurveymapandplanstheSurveyMapandPlansthatarerequiredundertheCondominiumActpriortotherecordingoftheDeclarationandtheSurveyMapandPlansagainstthePremisesintheofficialrecordsofKingCountyLessorshallhaveaperiodof30dayswithinwhichtoreviewsuchdocumentsfollowingthedateuponwhichLesseedeliverstoLessorandtoLessorscounseltruecopiesoftheproposedDeclarationandSurveyMapandPlansLessorsapprovalofsuchdocumentsshallbeevidencedbyasignedConsentofLessorwhichConsentofLessorshallbeattachedtotheDeclarationItisfurtherunderstoodthattheaboveactivitiesaretheonlytypeofactivitiestobeconducteduponthePremisesLesseeshallatalltimesoperateonthePremisesinamannerwhichwillassurethesafelawfulandhealthfuluseofthePremisesLesseeagreesthatitwillnotdisturbtheLessororanyotherLesseeoftheLessorbymakingorpermittinganydisturbancesoranyunusualnoisevibrationorotherconditiononorinthePremisesAllsuchactivitiesshalltakeplaceinsidethehangarstobeconstructedbThePremisesmaybeusedonlyforlightcommercialaeronauticalactivitiesExamplesofsuchlightcommercialaeronauticalactivitiesincludeairplaneupholstryshopsLessorCityofAuburnLesseeNWHangarsLLCResolution3894August152005Page2 airplanepaintshopaviationmaintenanceandrepairfacillityetcIntheeventthataquestionsurfacesastowhetheraproposeduseissufficientlyaviationrelatedtoqualifytheLessorshallbeentitledtodetermineinitssoleandabsolutediscretionwhetherornotausequalifiesItisfurtherprovidedthatthefollowingusesarespecificallyprohibitedonorfromthePremisesunlessLessorexpresslyauthorizessuchusesbyLessorspriorwrittenconsentwhichconsentmaybewithheldinLessorssoleandabsolutediscretion1AtnotimewillaircraftbefueledinsideanyImprovementssituatedonthePremises2UseofthePremisesasaresidenceorforovernightsleepingcNobuildingstructureorimprovementsofanykindshallbeerectedplaceduponoperatedormaintainedonthePremisesnorshallanybusinessoroperationbeconductedorcarriedoninviolationofanyordinancelawstatutebylaworderorruleofanygovernmentalagencyhavingjurisdictionthereoverdUponmutualexecutionhereofLesseemaypursueconstructionanddevelopmentofaircrafthangarbuildingsandrelatedfacilitiescollectivelytheImprovementspursuanttoplansandspecificationsapprovedbyLessorandotherwiseinaccordancewithExhibitBattachedheretoandbythisreferenceincorporatedherewithLesseesplansandspecificationsshallincludewithoutlimitationdetailsofanyrightofwayortaxiwayentrancestobeconstructedbyLesseeaswellasthebuildingmaterialsforanddesignoftheImprovementsLessorsapprovaloftheplansandspecificationsshallnotbeunreasonablywithheldUponcommencementofconstructionoftheImprovementstheImprovementsshallbedeemedtoincludeandbepartofthePremisesforallpurposeshereunder5RENTIMPOSITIONSLEASEHOLDEXCISETAXaCommencingiwithissuanceofabuildingpermitforLesseesproposedImprovementsoriiwithin15daysofexecutionofthisagreementhereaftertheRentCommencementDateLesseeshallpaytoLessorinadditiontotaxesassessmentsandotherchargesrequiredtobepaidhereinbyLesseeMonthlyBaseRentofnotlessthanEightHundredNinetyTwoand17100892I7MonthlyBaseRentMonthlyBaseRentshallbepayableonorbeforethefirst1dayofeachcalendarmonththereaftertotheCityofAuburnordesignatedagentwithoutnoticedemandoffsetabatementordeductionofanykindOnthedatethatLesseeexecutesthisLeaseLesseeshalldelivertoLessortheoriginalexecutedLeasecashintheamountequaltoone1monthsMonthlyBaseRentwhichshallbeappliedtowardtheMonthlyBaseRentdueforthefirstmonthforwhichMonthlyBaseRentispayablehereunderthecashSecurityDepositandallinsurancecertificatesevidencingtheinsurancerequiredtobeobtainedbyLesseeunderthisLeaseThetermrentwheneverusedhereinreferstoallamountsrequiredtobepaidbyLesseehereunderRentforanyfractionalpartofacalendarmonthatthecommencementorexpirationorterminationofthetermshallbeaproratedamountoftherentforafullcalendarmonthbaseduponathirty30daymonthLessorCityofAuburnLesseeNWHangarsLLCResolution3894August152005Page3 bThemonthlybaserentshallbeadjustedonJanuary12006andshallreflectthemarketleasevalueofnolessthan40persquarefootandnomorethan45persquarefootThemarketvalueoftheleasewillbedeterminebyanMAlappraisalobtainedbytheCitycbelowMonthlyBaseRentshallbesubjecttoannualincreasesasprovidedinSection6dCommencingontheLeaseCommencementDateLesseeshallpayanyandallImpositionsallocabletothePremisesThetermImpositionsshallmeanallrealestatetaxestotheextentanyportionofthePremisesandanyimprovementsthereonaresubjecttorealestatetaxeswatersanitarysewerandstormwaterchargeschargesforpublicutilitieslocalimprovementorgeneralorspecialbenefitdistrictassessmentslicenseandpermitfeesorotherchargeswhichshallormayduringtheTermbeassessedleviedchargedconfirmedorimposedbyanypublicauthorityuponoraccrueorbecomedueorpayableoutoforQnaccountoforbecomealienonthePremisesoranypartthereofincludingwithoutlimitationallrealpropertytaxesallocabletotheImprovementsorfortheuseoroccupancyofthePremisesandanytaxonreceiptofrentsThetermImpositionsshallexpresslyincludestatutoryleaseholdexcisetaximposedbyChapter8229ARCWonthetaxablerentpayablebyLesseehereunderbutshallexcludeanyincometaxestatesuccessionorinheritancetaxesEitherLesseeorLessormaycontestthevalidityoramountincludingtheassessedvaluationuponthePremisesandanyexemptionsapplicabletoanyportionthereofofanyImpositionforwhicheitherisresponsibleinwholeorinpartandwhichsuchpartyingoodfaithbelievesisexcessiveimproperorinvalidInsucheventthepaymentthereofmaybedeferredduringthependencyofsuchcontestifdiligentlyprosecutedbutinnoeventshallLesseeallowalienforanyunpaidtaxeswhichitiscontestingtoattachtothePremisesEachpartyagreestojoinattheothersrequestinanysuchcontesttotheextentsuchjoinderisprerequisitetosuchprosecutionunderstatuteregulationoradministrativepracticeInconnectionwithajudicialoradministrativechallengetoanyassessmentLesseemaytakeadvantageofanystayincollectionavailableunderstatuteregulationorcourtoradministrativeorderorrulesNothinghereincontainedhowevershallbesoconstruedastoallowsuchitemstoremainunpaidforsuchlengthoftimeasshallpermitthePremisesoranypartthereoftobesoldbyanygovernmentalcityormunicipalauthorityforthenonpaymentofthesameWithinten10daysaftertheamountofsuchcontesteditemisfinallydeterminedtobeduethepartyliableforsuchImpositionshallpaytheamountssodeterminedtogetherwiththepenaltiesinterestandexpensesassociatedwithsuchcontesteItistheintentofLesseeandLessorthattherentduehereundershallbeabsolutelynettoLessorandthatLesseeshallpayallcostsexpensesregardingthePremiseswhetherspecificallymentionedhereinornot6ANNUALPERIODICRENTADJUSTMENTSaMonthlyBaseRentshallbeadjustedonJanuary151ofeveryyearbeginningJanuary12007duringtheleasetermperthisSection6NotwithstandingtheforegoingLessorCityofAuburnLesseeNWHangarsLLCResolution3894August152005Page4 MonthlyBaseRentshallbeadjustedoneachfifth5thyearcommencingonJanuary12011toequalthefairmarketrentalvalueofthePremisespursuanttotheproceduresetforthinSection6dbelowNoarmualorfifth5thyearadjustmenthowevershallreducetheamountofMonthlyBaseRentbelowtheamountoftherespectiveMonthlyBaseRentthatisbeingadjustedbDefinitionsTheadjustedMonthlyBaseRentshallbedeterminedinaccordancewiththeformulasetforthinSection6cbelowInapplyingtheformulathefollowingdefinitionsapply1BureaumeanstheUSDepartmentofLaborBureauofLaborStatisticsoranysuccessoragency2PriceIndexmeanstheConsumerPriceIndexforthemonthofAugustforallUrbanConsumersAllItemsSeattleTacomaBremertonissuedfromtimetotimebytheBureauoranyothermeasurehereafteremployedbytheBureauinlieuofthepriceindexthatmeasuresthecostoflivingorifsaidBureaushouldceasetoissuesuchindicesandanyotheragencyoftheUnitedStatesshouldperformsubstantiallythesamefunctionthentheindicesissuedbysuchotheragencycTheadjustedMonthlyBaseRentshallbedeterminedbymultiplyingtheMonthlyBaseRentbeingadjustedbyamultiplierequaltothechangeinthePriceIndexsincethelastadjustmentcomputedasfollowsPercentagechangeinPriceIndexxcurrentMonthlyBaseRentAdjustedMonthlyBaseRentdEachfive5yearscommencingonJanuary12011theMontWyBaseRentshallberevisedbaseduponanappraisalestablishingfairmarketrentalvalueofthePremisesexcludinghowevertherentalvalueofanyImprovementsconstructedbyLesseeLessorwillretainandpaythecostsofanMAlappraiserTheannualadjustmentformulasetforthinSections6bcshallnotbeappliedeachsuchfifth5IhyearLessormayatitsdiscretionutilizeanappraisalcompletedwithin12monthspriortothedateoftheperiodicfiveyearadjustmentAdditionallythisappraisalmaybeusedbyLessorforsettingratesforleasesotherthanthisLeaseIntheeventtheLesseedisagreeswithLessorsappraisalstheLesseemayathisorherownexpenseretainasecondappraisalLessorandLesseewillthenattempttonegotiatealeaserateIfthesenegotiationsareunsuccessfulthepartieswillmutuallyagreeontheselectionofanarbitratorThecostsofarbitrationshallbesharedThearbitratorsdeterminationshallbebasedupontheappraisalsbutinnoeventshallthenewMonthlyBaseRentbelowerthantheMonthlyBaseRentineffectatthetimeofarbitrationThedecisionofthearbitratorregardingincreasesshallbefinalHowevernoannualorfifth5IhyearadjustmentshallreducetheamountofMonthlyBaseRentbelowtheamountoftherespectiveMonthlyBaseRentthatisbeingadjusted7SECURITYDEPOSITLessorCityofAuburnLesseeNWHangarsLLCResolution3894August152005Page5 SimultaneouslywithLesseesexecutionanddeliveryofthisLeaseLesseeshalldelivertoLessorasaSecurityDepositforthefaithfulperformancebyLesseeofitsobligationsunderthisLeasetheamountofEightHundredNinetyTwo1710089217whichisequaltooneImonthsworthofMonthlyBaseRentpayableattheinitialratesetforthinSection5aaboveIfLesseeisindefaulthereunderLessormaybutwithoutobligationtodosousealloranyportionoftheSecurityDeposittocurethedefaultortocompensateLessorforalldamagessustainedbyLessorinconnectiontherewithLesseeshallimmediatelyondemandpaytoLessorasumequaltotheportionoftheSecurityDepositsoappliedorusedtoreplenishtheamountoftheSecurityDepositheldtoincreasesuchdeposittotheamountinitiallydepositedwithLessorAtanytimeafterLesseehasdefaultedhereunderLessormayrequireanincreaseintheamountoftheSecurityDepositrequiredhereunderforthethenbalanceoftheTermandLesseeshallimmediatelyondemandpaytoLessorsuchadditionalsumsAssoonaspracticableaftertheexpirationorterminationofthisLeaseLessorshallreturntheSecurityDeposittoLesseelesssuchamountsasarereasonablynecessaryasdeterminedbyLessortoremedyLesseesdefaultshereunderortootherwiserestorethePremisestoacleanandsafeconditionreasonablewearandtearexceptedIfthecosttorestorethePremisesexceedstheamountoftheSecurityDepositLesseeshallpromptlydelivertoLessoranyandallofsuchexcesssumsLessorshallnotberequiredtokeeptheSecurityDepositseparatefromotherfundsandunlessotherwiserequiredbylawLesseeshallnotbeentitledtointerestontheSecurityDepositInnoeventorcircumstanceshallLesseehavetherighttoanyuseoftheSecurityDepositandspecificallyLesseemaynotusetheSecurityDepositasacreditortootherwiseoffsetanypaymentsrequiredhereunderLessormayelectinLessorssolediscretionandifLesseehasnotbeeninmaterialdefaultduringthefirsttwentyfour24monthsoftheTermhereoftorefundtheSecurityDeposittoLesseeattheendofthetwentyfourth24thLeasemonth8LATECHARGESLesseeherebyacknowledgesthatlatepaymentsofrentoranyothersumsduehereunderwillcausetheLessortoincurcostsnototherwisecontemplatedbythisLeaseAccordinglyifanyinstallmentofrentoranyothersumduefromLesseeisnotreceivedbytheLessorwithinten10daysaftersuchamountshallbeduethenwithoutanyrequirementfornoticetoLesseeLesseeshallpaytheLessoralatechargeequalto12oftheoverdueamountThepartiesagreethatsuchlatechargerepresentsafairandreasonableestimateofthecoststheLessorwillincurbyreasonoflatepaymentbyLesseeAcceptanceofsuchlatechargebytheLessorshallinnoeventconstituteawaiverofLesseesdefaultwithrespecttosuchoverdueamountnorpreventtheLessorfromexercisinganyoftheotherrightsandremediesgrantedhereunderIntheeventthatalatechargeispayableinthisLeaseorotherwisewhetherornotcollectedforthree3installmentsofrentinany12monthperiodthenrentshallautomaticallybecomedueandpayablequarterlyinadvanceratherthanmonthlynotwithstandinganyotherprovisionofthisLeasetothecontraryInadditiontothelatechargesprovidedforinthissectioninterestshallaccrueonrentoranyothersumsduehereunderattherateofoneandonehalfpercentIand12permonthfromthedatedueuntilpaid9OWNERSHIPOFIMPROVEMENTSDISPOSITIONATENDOFLEASELessorCityofAuburnLesseeNWHangarsLLCResolution3894August152005Page6 aDuringtheTermofthisLeaseallimprovementslocatedonthePremisesincludingwithoutlimitationalladditionsalterationsandimprovementstheretoorreplacementsthereofandallappurtenantfixturesmachineryandequipmentinstalledthereinshallbethepropertyofLesseeAttheexpirationorearlierterminationofthisLeaseallimprovementsandalladditionsalterationsandimprovementstheretoorreplacementsthereofandallappurtenantfixturesmachineryandequipmentinstalledthereinshallautomaticallybecomethepropertyofLessorUponexpirationorearlierterminationofthisLeaseoruponterminationofLesseesrighttopossessionLesseeshallremoveatitsexpenseallpersonalpropertywhichmayhavebeenplaceduponthePremisesbyLesseeAnysuchpropertynotsoremovedfromthePremisesshallattheelectionofLessorberetainedbyLessorormayberemovedandstoredbyLessoratLesseesexpenseandLessorshallrecoveranycostsandexpensesfromtheLesseeresultingtherefrombUponterminationoftheLeasetheCitywilldetermineifitwishestoleasethehangarunderthencurrenttermsandratesIfsuchrentalisapprovedbytheCityfirstrightofrefusalshallbeofferedtoformercondominiumoccupantsingoodstandingRequestsshouldbemadetotheCityinfitingsixmonthspriortotheterminationoftheLease10INSURANCECOVERAGEaTheLesseeandanysublesseeassigneeorlicenseeofLesseeshallprocureandmaintainforthedurationoftheAgreementinsuranceagainstclaimsforinjuriestopersonsordamagetopropertywhichmayarisefromorinconnectionwiththeLesseesoperationanduseoftheleasedPremisesincludingCommercialgeneralliabilityinsurancewithcoverageatleastasbroadasthemostcommonlyavailableISOCommercialGeneralLiabilitypolicyCG0001withlimitsofliabilitynolessthanOneMillionDollars1000000occurrencelimitTwoMillionDollars2000000generalaggregatelimitprovidedhoweverthatintheeventLesseeoranysublesseeassigneeorlicenseeofLesseeusesthePremisesoranyaircraftkeptthereonintheoperationofabusinesswhichbusinessshallbefirstregisteredwithLessorLessormayrequireadditionalinsurancerelatedtosuchbusinesstheamountofwhichinsurancecoverageshallbeinLessorssoleandabsolutediscretionandshallbeobtainedpriortotheoperationofsuchbusinessonthePremisesLessoranditsagentsemployeesandofficersshallbeadditionalinsuredsbTheLesseesinsurancecoverageshallbeprimaryinsuranceasrespectsLessorAnyinsuranceselfinsuranceorinsurancepoolcoveragemaintainedbyLessorshallbeexcessoftheLesseesinsuranceandshallnotcontributewithitcTheLesseesinsuranceshallbeendorsedtostatethatnocoverageshallbecanceledbyeitherpartyexceptafterthirty30dayspriortowrittennoticebycertifiedmailreturnreceiptrequestedhasbeengiventoLessorAllpoliciesshallexpresslyprovideifavailablethatLessorshallnotberequiredtogivenoticeofaccidentsorclaimsandthatLessorshallhavenoliabilityforpremiumsandbewrittenbyinsurancecompanieshavingaBestsLessorCityofAuburnLesseeNWHangarsLLCResolution3894August152005Page7 ratingofAandXorequivalentwhichinsurancecompaniesshallotherwisebereasonablyacceptabletoLessordLesseeshallfurnishLessorwithevidencesoftheinsurancerequiredtobecarriedbyLesseehereunderalongwithcopiesofpoliciesandacopyoftheamendatoryendorsementsincludingbutnotnecessarilylimitedtotheadditionalinsuredendorsementevidencingtheinsurancerequirementsoftheLesseeePolicylimitsshallbeadjustedeveryfive5yearscommencingonJanuaryI2011consideringlevelsofinflationriskoflosspremiumexpensesandotherrelevantfactorsinLessorscommerciallyreasonablediscretionILessorandLesseeherebymutuallywaivetheirrespectiverightsofrecoveryagainsteachotherforanylossofordamagetoeitherpartiespropertytotheextentthatsuchlossordamageisinsuredbyaninsurancepolicyrequiredtobeineffectatthetimeofsuchlossordamageorwhichisactuallycarriedbysuchpartyEachpartyshallobtainanyspecialendorsementsifrequiredbyitsinsurerwherebytheinsurerwaivesitsrightsofsubrogationagainsttheotherpartyThisprovisionisintendedtowaivefullyandforthebenefitofthepartiesheretoanyrightsandorclaimswhichmightgiverisetoarightofsubrogationinfavorofanyinsurancecarrierIINDEMNIFICATIONHOLDHARMLESSTheLesseeshalldefendindemnifyandholdharmlessLessoritsofficersofficialsemployeesandvolunteersfromandagainstanyandallclaimssuitsactionsorliabilitiesforinjuryordeathofanypersonorforlossordamagetopropertywhicharisesoutofLesseesuseofPremisesorfromtheconductofLesseesbusinessorfromanyactivityworkorthingdonepermittedorsufferedbyLesseeinoraboutthePremisesexceptonlysuchinjuryordamageasshallhavebeenoccasionedbythesolegrossnegligenceorwillfulmisconductofLessorSolelyforthepurposeofeffectuatingLesseesindemnificationobligationsunderthisLeaseandnotforthebenefitofanythirdpartiesincludingbutnotlimitedtoemployeesofLesseeLesseespecificallyandexpresslywaivesanyimmunitythatmaybegranteditunderapplicablefederalstateorlocalWorkerCompensationActsDisabilityBenefitActsorotheremployeebenefitactsFurthermoretheindemnificationobligationsunderthisLeaseshallnotbelimitedinanywaybyanylimitationontheamountortypeofdamagescompensationorbenefitspayabletoorforanythirdpartyunderWorkerCompensationActsDisabilityBenefitActsorotheremployeebenefitactsThepartiesacknowledgethattheforegoingprovisionsofthisSectionhavebeenspecificallyandmutuallynegotiatedbetweentheparties12DAMAGEANDDESTRUCTIONREPAIRIntheeventofdamagetoordestructionoftheImprovementsaIfthecostofrepairingorreconstructingtheImprovementstotheconditionandformimmediatelypriortosuchdamageordestructiondoesnotexceedthirtythreepercent33ofthethennewreplacementcostthereofthenLesseeshalleffectsuchrepairandreconstructionoftheImprovementssodamagedordestroyedtosubstantiallytheirconditionpriortosaiddamageordestructionAllsuchworkshallbecarriedoutinaccordancewithplansandLessorCityofAuburnLesseeNWHangarsLLCResolution3894August152005Page8 specificationspreparedbyalicensedarchitectorarchitectsapprovebyLessoractingreasonablyifsuchanarchitectisreasonablyrequiredgiventhescopeandnatureoftheworkbIfthecostofrepairingorreconstructingtheImprovementstotheconditionandformimmediatelypriortosuchdamageordestructionexceedsthirtythreepercent33ofthethennewreplacementcostthereofthenLesseemayelectbywrittennoticetoLessorgivenwithinsixty60daysafterthedateofthedamagetoterminatethisLeaseprovidedthatthisLeaseshallnotterminateunlessanduntilLesseehasatitscostandexpenserestoredthePremisestogradelevelandremovedalldebristherefromincludingallimprovementsaboveandbelowgroundasandtotheextentrequiredbyLessorbywrittennoticeprovidednolaterthanthirty30daysafterLesseeswrittenelectiontoterminateInnoeventshallMonthlyBaseRentoranyotherformofrentbeabatedduringsuchperiodofreconstructionandorrestoration13ASSIGNMENTANDSUBLETTINGaExceptassetforthbelowneitherthisLeasenoranyinterestthereinmaybeassignedmortgagedtransferredorencumberednorshallalloranypartofthePremisesbesubleteachofwhichaTransferwithoutLessorspriorwrittenconsentwhichshallnotbeunreasonablywithheldprovidedhoweverthatifLesseecreatesacondominiumonthePremisesasprovidedinthisLeaseandforsolongassuchcondominiumandtheCondominiumAssociationashereinafterdefinedareinexistencetheTransferofindividualcondominiumunitstounitownersandbyunitownersortotenantsofunitownersotherthanLesseeshallnotrequirethepriorwrittenconsentofLessorIfLesseeisacorporationpartnershiplimitedliabilitycompanyoranyotherentityanytransferofacontrollingownershiporvotinginterestinsuchentityoranytransferorattemptedtransferofthisLeasebymergerconsolidationorliquidationshallbedeemedaTransferrequiringLessorsconsentTransfersincludewithoutlimitationoneormoresalesortransfersbyoperationoflaworotherwiseorcreationofnewstockbywhichanaggregateofmorethanfiftypercent50ofLesseesstockorpartnershipormembershipinterestsasapplicableshallbevestedinapartyorpartieswhoarenonstockholdersornonpartnersornonmembersasapplicableasofthedatehereofprovidedthattheforegoingshallnotapplyifLesseesstockislistedonarecognizednationalstockexchangeoristradedoverthecounterTransfersalsoincludewithoutlimitationtheassignmentsaleortransferofanydevelopmentrightsorspecialdeclarantrightsbyLesseeasdeclarantundertheCondominiumDeclarationifanyexceptthatintheeventthatLesseeproposestograntasecurityinterestindevelopmentrightsorspecialdeclarantrightstofacilitateconstructionfinancingoffuturephasesofconstructionLessorsconsentshallnotbeunreasonablywithheldAssetforthinSection13bbelowLesseeintendstoassignthisLeasetoacondominiumassociationformedpursuanttoChapter6434RCWtheCondominiumAssociationAnyassigneeorsubtenantincludingtheCondominiumAssociationeachaTransfereeshallassumeallofLesseesobligationsunderthisLeaseandshallbejointlyandseverallyliablewithLesseehereunderConsentoftheLessortoanyTransfershallnotoperateasawaiverofthenecessityforconsenttoanysubsequentTransferInconnectionwitheachrequestforconsenttoaTransferLesseeshallpaythereasonablecostofprocessingsameincludingreasonableattorneysfeesupondemandofLessorIfLessorconsentstoanyproposedTransferLesseemayenterintothesamebutonlyuponthespecifictermsandconditionssetLessorCityofAuburnLesseeNWHangarsLLCResolution3894August152005Page9 forthinLesseesRequestforConsentanysuchTransfershallbesubjecttoandinfullcompliancewithallofthetermsandprovisionsofthisLeasetheconsentbyLessortoanyTransfershallnotrelieveLesseeofanyobligationunderthisLeaseLessormayrequiretheLesseeandtheTransfereetoexecuteaLessorsconsentformandnoTransfershallbebindingonLessorunlessLesseeandthetransfereeshalldelivertoLessorafullyexecutedcounterpartofthedocumenteffectingtheTransferIndividualunitownersmayprovideshorttermuseoftheirhangarunitonconditionthatthetermislessthan36monthsandarentalformisexecutedandwillacknowledgesubordinationtotheCityofAuburngroundleasehereinandthatarecordedcopyofthisGroundLeaseisattachedasanexhibitTheLesseewillkeepacopyofallcurrentrentalagreementsforreviewifrequestedandaNoticeofOccupancySuchnoticewillbeprovidedtotheAirportManageronorbeforethecommencementoftherentaltermandmustincludetheunitnumberownersnameaddressandphonenumbertogetherwiththerentersnameaddressdayphonenumberandemergencyphonenumbertypeofaircraftandaircraftregistrationnumberIftherenterisacorporationthenoticewillincludethenamesandaddressesofthePresidentSecretaryandTreasurerbNotwithstandingtheprovisionsofSection13aaboveifLesseecreatesacondominiumonthePremisesasprovidedinthisLeasethisLeaseshallbeautomaticallyassignedtotheCondominiumAssociationupontherecordingofthedeedtransferringLesseesinterestinthelastcondominiumunittoaunitownerotherthanLesseeUpontheassignmentofthisLeasetotheCondominiumAssociationanovationshalloccursuchthattheCondominiumAssociationshallbecomeabsolutelyandforallpurposessubstitutedfortheoriginalLesseeunderthisLeaseandtheoriginalLesseeshallhavenofurtherliabilityunderthisLeaseIfforanyreasonthecondominiumortheCondominiumAssociationisterminatedeachandeverypartywithaninterestinthePremisesatthetimeofsuchterminationshallbejointlyandseverallyliableasLesseeunderthisLeaseanduponsuchterminationanyandallTransfersincludingtheTransferofanyinterestintheformercondominiumunitsshallbesubjecttotheprovisionsofSection13aincludingLessorspriorwrittenconsentwhichconsentmaybewithheldinLessorssoleandabsolutediscretioncNotwithstandingtheprovisionsofSection13aaboveLesseemaysubletportionsofthePremisesprovidedthatieachsuchsubtenantmaintainstheinsurancecoveragerequiredtobemaintainedbyLesseehereunderiiacopyofthedocumentationeffectingsuchsubleaseshallbedeliveredtoLessorassoonasreasonablypossibleaftertheeffectivedatethereofiiithesubtenantshallbedeemedtohaveagreedtocomplywithallofLesseesobligationsunderthisLeaseapplicabletothesubletpremisesandiveachsuchsubleaseshallbeexpresslysubjectandsubordinatetothetermsandconditionsofthisLease14OFFSTREETPARKINGLesseeagreesnottouseanypublicstreetsrightsofwaytaxilanesdrivewaysorotherpropertiesnotincludedinthisLeasefortheparkingofvehiclesVehiclesmustbeplacedwithinthehangerwhenitsaircraftisremoved15ADVERTISINGANDSIGNSLessorCityofAuburnLesseeNWHangarsLLCResolution3894August152005Page10 NosignsorotheradvertisingmattersymbolscanopiesorawningsshallbeinstalledattachedtoorpaintedonthePremiseswithoutthepriorwrittenapprovaloftheLessor16LAWSREGULAnONSANDSTANDARDSTheLesseeagreesatitssolecostandexpensetoconformtocomplywithandabidebyalllawfulrulescodesordinancesrequirementsordersdirectionslawsregulationsandstandardsoftheUnitedStatestheStateofWashingtonandCityofAuburnoragencyofanyofsaidentitiesincludingrulesandregulationsofLessorincludingwithoutlimitationthoserelatingtoenvironmentalmattersnowinexistenceorhereafterpromulgatedapplicabletotheLesseesuseandoperationofsaidPremisesincludingtheconstructionofanyimprovementsthereonandnottopermitsaidPremisestobeusedinviolationofanyofsaidrulescodeslawsorregulationsLesseeshallpayallcostsexpensesliabilitieslossesdamagesfinespenaltiesclaimsanddemandsincludingreasonablecounselfeesthatmayinanymarmerariseoutoforbeimposedbecauseofthefailureofLesseetocomplywiththecovenantsofthissection17ENVIRONMENTALPROVISIONSaLesseecovenantstodefendindemnifyandholdLessorharmlessfromanyimposItIonorattemptedimpositionbyanypersonuponLessorofanyobligationorcostliabilityofwhateverformincludingwithoutlimitationdamagesclaimsgovernmentalinvestigationsproceedingsorrequirementsattorneyfeesininvestigationattrialoradministrativeproceedingoronappealwitnessorconsultantcostsoranyotherliabilitytotheextentthatsuchliabilityarisesfromaviolationorfromthefailuretosatisfyarequirementofanyenvironmentalorlanduselaworregulationproximatelyresultingfromuseofthePremisesduringthetermofthisLeaseandwithoutregardtowhentheliabilityisassertedbLesseehasinspectedthePremisesandacceptsitinitspresentconditionLesseeshallnotcausethepremisestobecontaminatedinanywayandintheeventofcontaminationshallimmediatelyreportsuchcontaminationtoLessorandshallcauseanysuchcontaminationtoberemediedbythatmethodrecognizedbyWashingtonStateDepartmentofEcologyandshallindemnifyandholdLessorharmlessfromallcostsinvolvedinimplementingtheremedycAnyotherprovisionofthisLeasetothecontrarynotwithstandingLesseesbreachofanycovenantcontainedinthisSection16shallbeanEventofDefaultempoweringLessorinadditiontoexercisinganyremedyavailableatlaworinequityorotherwisepursuanttothisLeasetoterminatethisLeaseandtoevictLesseefromthePremisesforthwithortoterminateLesseesrighttopossessiononlywithoutterminatingthisLeasedLesseeshallnotifyLessorwithintwentyfour24hoursofanyreleaseofareportablequantityofanyhazardoussubstanceasthattermisdefinedinCERCLA42USC9601etseqortheWashingtonModelToxicsControlActorofthereceiptbyLesseeofanynoticesordersorcommunicationsofanykindfromanygovernmentalentitywhichrelatetotheexistenceoforpotentialforenvironmentalpollutionofanykindexistingonorresultingfromtheLessorCityofAuburnLesseeNWHangarsLLCResolution3894August152005Page11 useofthePremisesoranyactivityconductedthereonIfLesseefailstocomplywithanyoftherequirementsofthissectionLessormayundertakewithoutcostorexpensetoLessoranyactionsnecessarytoprotectLessorsinterestincludingstepstocomplywithsuchlaws18MAINTENANCECOMMITNOWASTELesseeshallatalltimesduringthetermofthisLeasemaintainthePremisesandallimprovementsthereoningoodconditionandshallatitssolecostandexpensekeepthePremisescleanandinasafeandsanitaryconditionandshallprovideallnecessaryrepairsandmaintenancetothePremisesLesseeagreesnottoallowconditionsofwasteandrefusetoexistonthepremisesLesseeshallconformtoandcomplywithallvalidordinancesregulationsorlawsaffectingthePremisestheImprovementsoranyotherimprovementsonthePremisesortheusethereofLessorshallhavenoobligationwhatsoevertokeepmaintainalterremodelimproverepairdecorateorpainttheImprovementsoranyotherimprovementshereaftersituateduponthePremisesItistheintentionofthepartiesthatLesseeandnotLessorshallhavethefullresponsibilityandobligationfortherepairandmaintenanceoftheImprovementsandotherimprovementshereaftersituateduponthePremisesandLesseewaivestothefullextentallowedbylawanyrightorremedyagainstLessorbasedupontheconditionoftheImprovementsoranyimprovementshereaftersituateduponthePremisesoranyfailurebyLessororLesseetorepairormaintaintheImprovementsoranysuchimprovements19ALTERATIONSANDADDITIONSFollowingcompletionoftheinitialconstructionofLesseesproposedImprovementsLesseeshallnotmakeanyalterationsimprovementsadditionsorutilityinstallationsinoraboutthePremisescollectivelyAlterationswithoutfirstobtainingthewrittenconsentofLessorandwhereappropriateinaccordancewithplansandspecificationsapprovedbyLessorAnyalterationsrequiredtobemadetothePremisesbyanyapplicablebuildinghealthsafetyfirenondiscriminationorsimilarlaworregulationlawshallbemadeatLesseessoleexpenseandshallbesubjecttothepriorwrittenconsentofLessorTotheextentLessorincursanycostsinitsexaminationandapprovalofthearchitecturalandmechanicalplansandspecificationsfortheAlterationswhichcostshavenotbeenpreviouslyreimbursedbyLesseetoLessorthroughtheCityofAuburnspermittingprocessLesseeshallreimburseLessorforanysuchadditionalsumsexpendedforexaminationandapprovalofsuchplansandspecificationsLessormayrequirealienandcompletionbondforsuchconstructionorrequiretheimprovementsberemovedattheexpirationoftheTermLessorsapprovaloftheplansspecificationsandworkingdrawingsforLesseesalterationsshallcreatenoresponsibilityorliabilityonthepartofLessorfortheircompletenessdesignsufficiencyorcompliancewithalllawsrulesandregulationsofgovernmentalagenciesorauthoritiesUnlessLessorrequirestheirremovalallAlterationsotherthantradefixturesandmovableequipmentwhichmaybemadeonthePremisesshallbecomethepropertyofLessorandremainuponandbesurrenderedwiththePremisesattheexpirationoftheterm20COVENANTOFQUIETENJOYMENTLessorCityofAuburnLesseeNWHangarsLLCResolution3894August152005Page12 LessoragreesthatifLesseetimelypaystherentandperformsthetermsandprovisionshereunderLesseeshallholdandenjoythePremisesduringtheTermfreeoflawfulclaimsbyanypartyactingbyorthroughLessorsubjecttoallothertermsandprovisionsofthisLease21RECORDINGANDMORTGAGINGLesseeandLessoragreetoexecuteandrecordashortformormemorandumofthisLeasewithcostsofpreparationandrecordingpaidbyLessee22UTILITIESaLesseeagreestocontractwiththeappropriateproviderandpayforallpublicutilitieswhichshallbeusedinorchargedagainstthePremisesandtoholdtheLessorharmlessfromsuchchargesLessorshallcooperateatnochargetoLessorinthegrantingofeasementsandrightsofwayinthroughaboveandorunderpropertyownedandcontrolledbyLessorattheAirportandreasonablynecessaryfortheprovisionofutilitiestothePremisesprovidedthatifanyutilitylinesincludingbutnotlimitedtostormwaterlinesneedtoberelocatedtheresponsibilitytorelocatethemshallbebornesolelybytheLesseebExcepttotheextentcausedbythegrossnegligenceorintentionalmisconductofLessororitsagentsemployeesorcontractorsfailurebyLessortoanyextenttofurnishorcausetobefurnishedtheutilitiesorservicesdescribedinthisLeaseoranycessationorinterruptionthereofresultingfromanycauseincludingwithoutlimitationmechanicalbreakdownoverhaulorrepairofequipmentstrikesriotsactsofGodshortagesoflaborormaterialcompliancebyLessorwithanyvoluntaryorsimilargovernmentalorbusinessguidelinesgovernmentallawsregulationsorrestrictionsoranyothersimilarcausesshallnotrendertheLessorliableinanyrespectfordamagestoeitherpersonorpropertyforanyeconomiclossorotherconsequentialdamagesincurredbyLesseeasaresultthereofbeconstruedasanevictionofLesseeresultinanabatementofrentorrelieveLesseefromitsobligationtoperformorobserveanycovenantoragreementcontainedinthisLease23LIENSANDINSOLVENCYLesseeshallkeepthePremisesfreefromanyliensIntheeventLesseebecomesinsolventvoluntarilyorinvoluntarilybankruptorifareceiverassigneeorotherliquidatingofficerisappointedforthebusinessoftheLesseethentheLessormaycancelthisLeaseatLessorsoption24COSTSANDATTORNEYSFEESIfbyreasonofdefaultonthepartofeitherpartytothisLeaseagreementitbecomesnecessarytoemployanattorneytorecoveranypaymentsduehereunderortoenforceanyprovisionofthisLeasetheprevailingpartywhethersuchpartybethesuccessfulclaimantorthepartywhosuccessfullydefendedagainsttheclaimoftheotherpartyshallbeentitledtorecoverareasonableattorneysfeeandtobereimbursedforsuchcostsandexpensesasmayhavebeenincurredbysuchprevailingpartyLessorCityofAuburnLesseeNWHangarsLLCResolution3894August152005Page13 25DEFAULTREMEDIESaTimeisoftheessenceofthisagreementbLesseeshallbeindefaultunderthisLeaseifanyrentorotherpaymentduefromLesseehereunderremainsunpaidformorethanten10daysafterthedateitisdueiiLesseefilesavoluntarypetitioninbankruptcyormakesageneralassignmenttothebenefitoforageneralarrangementwithcreditorsiiithereisaninvoluntarybankruptcyfiledagainstLesseethathasnotbeendismissedwithinthirty30daysoffilingivLesseebecomesinsolventorvareceivertrusteeorliquidatingofficerisappointedforLesseesbusinessorviifLesseeviolatesorbreachesanyoftheothercovenantsagreementsstipulationsorconditionshereinandsuchviolationofbreachshallcontinueforaperiodofthirty30daysafterwrittennoticeofsuchviolationorbreachissenttoLesseethenLessorshallhavetherightsandremediesprovidedinthisSection25inadditionaltoanyotherrightorremedyavailableatlaworequityallnoticeandcureperiodssetforthaboveareinlieuofandnotinadditiontoanynoticerequiredpursuanttoapplicableunlawfuldetainerevictionstatutescUponanydefaultunderthisLeaseLessormayreenterthePremisesinthemannerthenprovidedbylawandremoveorputoutLesseeoranyotherpersonsfoundthereinNosuchreentryshallbeconstruedasanelectiononLessorsparttoterminatethisLeaseunlessawrittennoticeofsuchintentionisgiventoLesseedUpondefaulttheLessormayelecttoreIetthePremisesoranypartthereofuponsuchtermsandconditionsincludingrenttermandremodelingorrenovationasLessorinitssolediscretionmaydeemadvisableTothefullestextentpermittedbylawtheproceedsofanyrelettingshallbeappliedfirsttopayLessorallcostsandexpensesofsuchrelettingincludingwithoutlimitationcostsandexpensesincurredinretakingorrepossessingthePremisesremovingpersonsorpropertytherefromsecuringnewLesseesandifLessormaintainsandoperatesthePremisesthecoststhereofsecondtopayanyindebtednessofLesseetoLessorotherthanrentthirdtotherentdueandunpaidhereunderandfourththeresidueifanyshallbeheldbyLessorandappliedinpaymentofotherorfutureobligationsofLesseetoLessorasthesamemaybecomedueandpayableandLesseeshallnotbeentitledtoreceiveanyportionofsuchrevenueeLessormayalsoelecttoterminatetheLeaseandallrightsofLesseebygivingnoticetoLesseeofsuchelectionIfLessorelectstoterminatetheLeaseLessorshallhavetherighttoreenterthePremisesandremoveallpersonsandtotakepossessionofandremoveallequipmentandfixturesofLesseeinthePremisesinthemannerthenprovidedbylawLesseeherebywaivesalldamagesthatmaybecausedbyLessorsreenteringandtakingpossessionofthePremisesorremovingorstoringthepropertythereofandLesseeshallsaveLessorharmlesstherefromandnosuchreentryshallbeconsideredaforcibleentryIfLessorsoelectstoterminatetheLeaseLessormayalsorecoverfromLesseeLessorCityofAuburnLesseeNWHangarsLLCResolution3894August152005Page14 ITheworthatthetimeoftheawardoftheunpaidrentwhichhadbeenearnedatthetimeofterminationIITheworthatthetimeoftheawardoftheamountbywhichtheunpaidrentwhichwouldhavebeenearnedafterterminationuntilthetimeoftheawardexceedstheamountofrentallossthattheLesseeprovescouldhavebeenreasonablyavoidedIIITheworthatthetimeoftheawardoftheamountbywhichtheunpaidrentforthebalanceofthetermafterthetimeoftheawardexceedstheamountofrentallossthattheLesseeprovescouldbereasonablyavoidedIVAnyotheramountnecessarytocompensatetheLessorforallthedetrimentproximatelycausedbytheLesseesfailuretoperformitsobligationsundertheLeaseorwhichintheordinarycourseofthingswouldbelikelytoresulttherefromandVAtLessorselectionsuchotheramountsinadditiontoorinlieuoftheforegoingthatmaybepermittedfromtimetotimebyapplicablelawTheworthatthetimeoftheawardoftheamountsreferredtoinparagraphsIandIIaboveiscomputedbyallowinginterestattwelvepercent12TheworthatthetimeoftheawardoftheamountreferredtoinparagraphIIIaboveiscomputedbydiscountingsuchamountatthediscountrateoftheFederalReserveBankofSanFranciscoatthetimeoftheawardplusonepercent1fNothinginthisSection25shallbedeemedtoaffectLessorsrighttoindemnificationforliabilityorliabilitiesarisingpriortoterminationofthisLeaseforpersonalinjuryorpropertydamageundertheindemnificationprovisionsorotherprovisionsofthisLease26PRIORITYaThisLeaseshallbesubordinatetoanymortgageordeedoftrustnowexistingorhereafterplaceduponthePremisescreatedbyorattheinstanceofLessorandtoanyandalladvancestobemadethereunderandtointerestthereonandallmodificationsrenewalsandreplacementsorextensionsthereofLessorsMortgageandtoanymasterleasehereafterplacedagainstthePremisesandtoallmodificationsextensionsandamendmentsthereofandtheretoLesseeshallproperlyexecuteacknowledgeanddeliverdocumentswhichLessorortheholderofanyLessorsMortgagemayrequirewithinten10daysafterdeliverybyLessortoeffectuatetheprovisionsofthisSection26providedthatsuchdocumentsstatethatLesseesrightsthisLeasewillnotbeterminatedsolongasLesseeisnotindefaulthereunderbLesseeshallbeentitledtograntafirstmortgageorfirstpositiondeedoftrusttoaninstitutionallenderonitsleaseholdinterestunderthisLeaseprovidedLesseefirstprovidesLessorwithwrittennoticeofsuchproposedfirstmortgageorfirstpositiondeedoftrustLessoragreestomakesuchreasonablemodificationstothisLeaseasmayberequestedbyanyLessorCityofAuburnLesseeNWHangarsLLCResolution3894August152005Page15 permittedleaseholdmortgageeincludingwithoutlimitationthegivingofnoticeofdefaultbyLesseeundertheLeasetoanysuchleaseholdmortgageethegivingofasecondnoticebeforetheLeaseisterminatedandthegrantingtosuchleaseholdmortgageeofanewleaseintheeventthisLeaseisterminatedSuchmodificationsshallbegenerallyinconformancewiththemodelleaseholdmortgageprovisionspromulgatedbytheAmericanBarAssociation27RETENTIONOFAIRSPACEANDOTHERRIGHTSBYLESSORaLessorretainsthepublicandprivaterightofflightforthepassageofaircraftintheairspaceabovethesurfaceofthepropertyhereinbeforedescribedtogetherwiththerighttocauseinsaidairspacesuchnoiseasmaybeinherentintheoperationofaircraftnowknownorashereinafterusedfornavigationoforflightinsaidairspaceandforuseofsaidairspacefortakingofffromlandingonoroperatingatAuburnMunicipalAirportbLessorreservestherighttofurtherdeveloporimprovethelandingareaoftheAirportasitseesfitregardlessofthedesiresorviewoftheLesseeandwithoutinterferenceorhindrancecLessorreservestherightbutshallnotbeobligatedtotheLesseetomaintainandkeepinrepairthelandingareaoftheAirportandallpubliclyovmedfacilitiesoftheAirporttogetherwiththerighttodirectandcontrolallactivitiesoftheLesseeinthisregarddThisLeaseshallbesubordinatetotheprovisionsandrequirementsofanyexistingorfutureagreementbetweentheAirportandtheUnitedStatesrelativetothedevelopmentoperationandmaintenanceoftheAirporteLesseeagreestocomplywiththenotificationandreviewrequirementscoveredinPart77oftheFederalAviationRegulationintheeventanyconstructionisplannedforthePremisesorintheeventofanyplannedmodificationoralterationofanypresentorfutureImprovementsorstructuresituatedonthePremisesfLesseeagreesthatitwillnoterectnorpermittheerectionofanystructureorobjectnorpermitthegrowthofanytreeonthePremisestoexceedtheestablishedheightcontoursIntheeventtheaforesaidcovenantsarebreachedLessorshallgivewrittennoticetotheLesseespecifyingthebreachIfLesseedoesnottakeactiontocorrectthebreachwithinten10daysofreceiptofsaidnoticetheLessorreservestherighttoenteruponthePremiseshereunderandtoremovetheoffendingstructureorobjectandcuttheoffendingtreeallofwhichshallbeattheexpenseofLesseegLesseebyacceptingthisLeaseagreesthatitwillnotmakeuseoftheLeasedPremisesinanymannerwhichmightinterferewiththelandingandtakingoffofaircraftfromAuburnAirportorotherwiseconstituteahazardIntheeventtheaforesaidcovenantisbreachedAirportreservestherighttoenteruponthePremisesherebyleasedandcausetheabatementofsuchinterferenceattheexpenseofLesseeLessorCityofAuburnLesseeNWHangarsLLCResolution3894August152005Page16 hItisunderstoodandagreedthatnothinghereincontainedshallbeconstruedtograntorauthorizethegrantingofanexclusiverightwithinthemeaningofSection308aoftheFederalAviationActof195849USCSection1349aiThisLeaseandalltheprovisionshereofshallbesubjecttowhateverrightoftheUnitedStatesGovernmentnowhasorinthefuturemayhaveoracquireaffectingthecontroloperationregulationandtakingoveroftheAuburnAirportbytheUnitedStatesduringthetimeofthewarornationalemergencyGLessorreservestherighttotakeanyactionitconsidersnecessarytoprotecttheaerialapproachesoftheAuburnAirportagainstobstructionstogetherwiththerighttopreventLesseefromerectingorpermittingtobeerectedanybuildingorotherstructureonthePremiseswhichintheopinionofAirportortheFederalAviationAdministrationwouldlimittheusefulnessoftheAuburnAirportorconstituteahazardtoaircraftkLesseeaswellasLesseesassigneesandsublesseesandtheagentsemployeesandcustomersthereofshallhavetherightsofaccesstoanduseofallareasandfacilitiesoftheAuburnAirportwhichareintendedforthecommonuseofallLesseesandoccupantsoftheAuburnAirportincludingbutnotlimitedtothetakeoffandlandingareastaxiareasreasonableaccesstheretofromthePremisesandaircontrolfacilities28FEDERALAVIATIONADMINISTRATIONREQUIREMENTSaLesseeagreesItopreventanyoperationonthePremiseswhichwouldproduceelectromagneticradiationsofanaturewhichwouldcauseinterferencewithanyexistingorfuturenavigationalaidorcommunicationaidservingAuburnMunicipalAirportorwhichwouldcreateanyinterferingorconfusinglightorinanywayrestrictvisibilityattheAirportand2topreventanyuseofthePremiseswhichwouldinterferewithlandingortakingoffofaircraftatAuburnMunicipalAirportorotherwiseconstituteanaviationhazardbLessorreservestherightduringthetermofthisLeaseoranyrenewalandorextensionthereoftoinstallairnavigationalaidsincludinglightinginonoverunderandacrossthePremisesintheexerciseofanyoftherightshereofLessoragreestogiveLesseenolessthanninety90dayswrittennoticeofitsintentiontoinstallsuchairnavigationalaids29SECURITYAirportshallhavenoobligationtoprovidesecuritytothePremisesIfreasonablyrequiredbyLessorLesseeshallprovideadequatelightingtoprovideforallnightilluminationoftheTaxilaneapronofallbuildingsonthePremisesincludingapronsaircrafttiedovmareasvehicularparkinglotsandpedestrianwalkwayssurroundingthePremisesLesseemaybutneednotemploysecuritypersonsIfatanytimeduringthetermofthisLeaseadditionalLessorCityofAuburnLesseeNWHangarsLLCResolution3894August152005Page17 securityrequirementsareimposedontheAirportbytheFAAoranyotheragencyhavingjurisdictionoverAirportandsuchadditionalsecurityrequirementsapplytothePremisesLesseeagreestocomplywithsaidsecurityrequirementsthataffectthePremisesatLesseessoleexpenseuponbeingnotifiedofsuchrequirementsinwritingbyAirportIfAirportisfinedbyFAAforasecurityviolationcausedbynegligenceofLesseeoranyofLesseessubLesseesLesseeshallimmediatelyreimburseAirportupondemand30INSPECTIONACCESSANDNOTICELessorandanyofitsagentsshallatanytimeuponfour4weeksadvancewrittennoticetoLesseehavetherighttogouponandinspectthePremisesandImprovementserectedorconstructedorinthecourseofbeingerectedorconstructedrepairedaddedtorebuiltorrestoredthereonProvidedhoweverthatintheeventtheLessordeterminesinitssoleandabsolutediscretionthatanemergencysituationexistsonoradjacenttothePremisesnoadvancenoticetoLesseeisrequiredandLessormayimmediatelygouponandinspectthePremisesProvidedfurtherthatLesseeagreestoallowLessortoinspectthePremisesonanarmualbasisatanagreedupondateandtimepreferablythesamedateandtimethatanyinspectionbythelocalfiremarshaloccursLessorshallhavetherighttoserveortopostandtokeeppostedonthePremisesoronanypartthereofanynoticepermittedbylaworbythisLeaseanyothernoticeornoticesthatmayatanytimeberequiredorpermittedbylaworbythisLeaseAirportshallnotbeliableinanymarmerforanyinconveniencedisturbancelossofbusinessorotherdamagesarisingoutofLessorsentryonthePremisesasprovidedinthisSectionexceptforsuchdamagethatiscauseddirectlybyorthroughthegrossnegligenceofLessortheiremployeesagentsorrepresentatives31NONDISCRIMINATIONaLesseeforhimselfhisheirspersonalrepresentativessuccessorsininterestandassignsasapartoftheconsiderationhereofdoesherebycovenantandagreethatintheeventfacilitiesareconstructedmaintainedorotherwiseoperatedonthePremisesdescribedinthisleaseagreementforapurposeforwhichaDepartmentofTransportationDOTprogramoractivityisextendedorforanotherpurposeinvolvingtheprovisionofsimilarservicesorbenefitstheLesseeshallmaintainandoperatesuchfacilitiesandservicesincompliancewithallotherrequirementsimposedpursuanttoTitle49CodeofFederalRegulationsDOTSubtitleAOfficeoftheSecretaryPart21NondiscriminationinFederallyAssistedProgramsoftheDepartmentofTransportationEffectuationofTitleVIoftheCivilRightsActof1964andassaidRegulationsmaybeamendedbLesseeforhimselfhispersonalrepresentativessuccessorsininterestandassignsasapartoftheconsiderationhereofdoesherebycovenantandagreethat1nopersononthegroundsofracecolorsexornationaloriginshallbeexcludedfromparticipationindeniedthebenefitsoforbeotherwisesubjectedtodiscriminationintheuseofsaidfacilities2thatintheconstructionofanyimprovementsonoverorunderthePremisesandthefurnishingofservicesthereonnopersononthegroundsofracecolorsexornationaloriginshallbeexcludedfromparticipationindeniedthebenefitsoforbeotherwisesubjectedtoLessorCityofAuburnLesseeNWHangarsLLCResolution3894August152005Page18 discriminationand3thattheLesseeshallusethePremisesincompliancewithallotherrequirementsimposedbyorpursuanttoTitle49CodeofFederalRegulationsDOTSubtitleAOfficeoftheSecretaryPart21NondiscriminationinFederallyAssistedProgramsoftheDepartmentofTransportationEffectuationofTitleVIoftheCivilRightsActof1964andassaidRegulationsmaybeamendedcIntheeventofbreachofanyoftheabovenondiscriminationcovenantsLessorshallhavetherighttoterminatethisLeaseagreementandtoreenterandrepossesssaidPremisesandthefacilitiesthereonandholdthesameasifsaidleaseagreementhasneverbeenmadeorissuedThisprovisiondoesnotbecomeeffectiveuntiltheproceduresof49CFRPart21arefollowedandcompletedincludingexpirationofappealrightsdLesseeshallfurnishitsaccommodationsandorservicesonafairequalandnotunjustlydiscriminatorybasistoallusersthereofanditshallchargefairreasonableandnotunjustlydiscriminatorypricesforeachunitorserviceprovidedthatLesseemaybeallowedtomakereasonableandnondiscriminatorydiscountsrebatesorothersimilartypesofpricereductionstovolumepurchaserseNoncompliancewithSection31daboveshallconstituteamaterialbreachthereofandintheeventofsuchnoncomplianceLessorshallhavetherighttoterminatethisLeaseandtheestateherebycreatedwithoutliabilitytherefororattheelectionoftheLessorortheUnitedStateseitherorbothsaidGovernmentsshallhavetherighttojudiciallyenforcetheprovisionsofsaidSection31dfLesseeagreesthatitshallinserttheabovefivesubsectionsinanyleaselicenseorsubleaseagreementbywhichsaidLesseegrantsarightorprivilegetoanypersonfirmorcorporationtorenderaccommodationsandorservicestothepubliconthePremiseshereinleasedgTheLesseeassuresthatitwillundertakeanAffirmativeActionprogramasrequiredby14CFRPart152SubpartESubpartEtoensurethatnopersonshallonthegroundsofracecreedcolornationaloriginorsexbeexcludedfromparticipatinginanyemploymentactivitiescoveredinSubpartETheLesseeassuresthatnopersonshallbeexcludedonthesegroundsfromparticipatinginorreceivingtheservicesorbenefitsofanyprogramoractivitycoveredbythisSubpartETheLesseeassuresthatitwillrequirethatitscoveredsuborganizationsprovideassurancestotheLesseethattheysimilarlywillundertakeAffirmativeActionprogramsandthattheywillrequireassurancesfromtheirsuborganizationsasrequiredbySubpartEtothesameeffort32NOTICESAllnoticeshereundermaybehanddelivereddeliveredbyrecognizednationalovernightcourierserviceorsentviaUSFirstClassmailpostageprepaidtothefollowingaddressesLESSORCityofAuburnLESSEENWHangarsLLCLessorCityofAuburnLesseeNWHangarsLLCResolution3894August152005Page19 25WestMainAuburnWA980012131EStreetNEAuburnWA98002FollowingthecondominiumizationofthePremisesbyLesseenoticesduehereundershallbeserveduponanyofficerofthecondominiumassociationoruponitsRegisteredAgentinthemannerprovidedbylawNoticesgivenbyhanddeliveryorbyovernightdeliveryasaforesaidshallbedeemedgivenwhendeliveryismadeorrefusedNoticesgivenbyUSFirstClassmailshallbedeemedgiventwo2businessdaysafterdepositinginthemail33MISCELLANEOUSaNoBrokersLesseerepresentsandwarrantstoLessorthatithasnotengagedanybrokerfinderorotherpersonwhowouldbeentitledtoanycommissionorfeesinrespectofthenegotiationexecutionordeliveryofthisLeaseandshallindemnifYandholdharmlessLessoragainstanylosscostliabilityorexpenseincurredbyLessorasaresultofanyclaimassertedbyanysuchbrokerfinderorotherpersononthebasisofanyarrangementsoragreementsmadeorallegedtohavebeenmadebyoronbehalfofLesseebNonWaiverWaiverbyLessorofanytermcovenantorconditionhereincontainedoranybreachthereofshallnotbedeemedtobeawaiverofsuchtermcovenantorconditionorofanysubsequentbreachofthesameoranyothertermcovenantorconditionhereincontainedcEstoooelCertificatesLesseeshallfromtimetotimeuponwrittenrequestofLessorexecuteacknowledgeanddelivertoLessororitsdesigneeawrittenstatementcertifyingthatithisLeaseisinfullforceandeffectandhasnotbeenassignedoramendedinanywayorspecifyingthedateandtermsofagreementsoaffectingthisLeaseiithisLeaserepresentstheentireagreementbetweenthepartiesastothisleasingthatallobligationsunderthisLeasetobeperformedbytheLessorhavebeensatisfiediiionthisdatetherearenoexistingclaimsdefensesoroffsetswhichtheLesseehasagainsttheenforcementofthisLeasebytheLessorivnoRenthasbeenpaidmorethanonemonthinadvanceandthatnosecurityhasbeendepositedwithLessororifsotheamountthereofandvsuchotheritemsasLessorshallreasonablyrequestItisintendedthatanysuchstatementdeliveredpursuanttothisSectionmayberelieduponbyaprospectivepurchaserofLessorsinterestorholderofanymortgageuponLessorsinterestinthePremisesIfLesseeshallfailtorespondwithinten10daysofreceiptbyLesseeofawrittenrequestbyLessorashereinprovidedLesseeshallbedeemedtohavegivensuchcertificateasaboveprovidedwithoutmodificationandshallbedeemedtohaveadmittedtheaccuracyofanyinformationsuppliedbyLessortoaprospectivepurchaserormortgageeandtohavecertifiedthatthisLeaseisinfullforceandeffectthattherearenouncureddefaultsinLessorsperformancethatthesecuritydepositisasstatedintheLeaseandthatnotmorethanonemonthsRenthasbeenpaidinadvanceLessorCityofAuburnLesseeNWHangarsLLCResolution3894August152005Page20 dForceMajeureExceptforthepaymentofRentAdditionalRentorothersumspayablebyLesseetoLessortimeperiodsforLesseesorLessorsperformanceunderanyprovisionsofthisLeaseshallbeextendedforperiodsoftimeduringwhichLesseesorLessorsperformanceispreventedduetocircumstancesbeyondLesseesorLessorscontrolincludingwithoutlimitationstrikesembargoesshortagesoflaborormaterialsgovernmentalregulationsactsofGodwarorotherstrifeeSeverabilityIfanytermcovenantorconditionofthisLeaseorpartthereofortheapplicationthereoftoanypersonorcircumstanceistoanyextentinvalidorunenforceabletheremainderofthisLeaseandortheremainderofanysuchtermcovenantorconditionortheapplicabilityofsuchtermcovenantorconditiontopersonsorcircumstancesotherthanthosetowhichitisheldinvalidorunenforceableshallnotbeaffectedtherebyandeachtermcovenantorconditionorpartthereofofthisLeaseshallbevalidandbeenforcedtofullestextentpermittedbylawfAuthoritvEachpartyheretowarrantsthatithastheauthoritytoenterintothisLeaseandtoperformitsobligationshereunderandthatallnecessarycorporateactiontoauthorizethistransactionhasbeentakenandthesignatoriesbyexecutingthisLeasewarrantthattheyhavetheauthoritytobindtherespectiveparties34SIGNATUREBysigninginthespacebelowtheLESSEEACKNOWLEDGEDHAVINGREADANDUNDERSTOODANDAGREESTOTHECONTENTSOFTHISAGREEMENTINWITNESSWHEREOFthepartiesheretohaveexecutedthisLeaseLESSORTHECITYOFAUBURNaWashingtonmunicipalcorporIonByPrintNamPeterBLewisTitleMavorApprovedastoformCAttorneyki1fLessorCityofAuburnLesseeNWHangarsLLCResolution3894August152005Page21 LESSEENWHangarsLLCByPrintNamedUoILessorCityofAuburnLesseeNWHangarsLLCResolution3894August152005Page22 STATEOFWASHINGTONssCOUNTYOFKINGIcertifythatIknoworhavesatisfactoryevidencethatfctfrIJLUJISisthepersonwhoappearedbeforemeandsaidpersonacknowledgedthatsaidpersonsignedthisinstrumentonoathstatedthatsaidpersonwasauthorizedtoexecutetheinstrumentandacknowledgeditasthe7v7oftheCityofAuburnaWashingtonmunicipalcorporationtobethefreedvoluntaryactofsuchmunicipalcorporationfortheusesandpurposesmentionedintheinstrumentDatedthist1zi82005Q2stKCJIdJJtt7QiONCSignalureofNotaryIIoIAnJPinJkCrJoJhpnanniYflPlulC1LegiblyPrintorStampNameofNotaryIDrG1ANotarypublicinandforthestateofWashington7029di0resmgathcollMyappointmentexpirU03vrSTATEOFWASHINGTONklJssCOUNTYOFIcertifythatIknoworhavesatisfactoryevidencethatJiJUVcrAisthepersonwhoappearedbeforemeandsaidpersonacknowledgedthatsaidpersonsignedthisinstrumentandacknowledgedittobesaidpersonsfreeandvoluntaryactfortheusesandpurposesmentionedintheinstrumentDatedthis812005eeSlgnalureofNotarycKCtotIlIttI19cIdr0ifJ00Ct3llPU3LjP111cdv00411OrVljrSlOJhphorej1i11sLegiblyPrintorStampNameofNotaryNotarypublicinandforthestateofWashingtonresidingatKPUrioMyappointmentexPiresISIq07LessorCityofAuburnLesseeNWHangarsLLCResolution3894August152005Page23 LessorCityofAuburnLesseeNWHangarsLLCResolution3894August152005ExhibitAILegalDescriptionofPremisesHANGARLEASEPARCELPage24 THATPORTIONOFTHEJBRANNANDONATIONCLAIMNO38SITUATEDINSECTION7TOWNSHIP21NORTHRANGE5EASTWMDESCRIBEDASFOLLOWSBEGINNINGATTHENORTHEASTCORNEROFTHEJBRANNANDONATIONCLAIMNO38THENCENORTH88DEGREES4952WEST43001FEETTHENCESOUTH0DEGREES5225WEST132042FEETTOTHETRUEPOINTOFBEGINNINGTHENCECONTINUINGSOUTH0DEGREES5225WEST2000FEETTHENCENORTH88DEGREES5343WEST53000FEETTHENCENORTH0DEGREES5225EAST5300FEETTHENCESOUTH88DEGREES5343EAST53000FEETTHENCESOUTH0DEGREES5225WEST3300FEETTOTHETRUEPOINTOFBEGINNINGLESSTHEEAST25FEETFORSTREETTOGETHERWITHANDINCLUDINGSPECIFICSUBSURFACERIGHTSCONSISTINGOFTHERIGHTTOCONSTRUCTORDEMOLISHFOUNDATIONSTRUCTURESBENEATHTHESURFACESUCHFOUNDATIONSTOSUPPORTHANGARSONTHEADJOININGPARCELDESCRIBEDABOVEANDTOVERTICALANDLATERALSUPPORTFORSUCHSTRUCTURESBUTNOTINCLUDINGMINERALRIGHTSIFANYANDINCLUDINGTHERIGHTTODISTURBTHESURFACEFORTHELIMITEDTIMENECESSARYFORPURPOSESOFCONSTRUCTIONORDEMOLITIONOFSUCHSTRUCTURESPROVIDEDTHATTHESURFACEISRESTOREDTOITSPREVIOUSCONDITIONWHENCONSTRUCTIONORDEMOLITIONOFSTRUCTURESISCOMPLETEDFORTHEFOLLOWINGDESCRIBEDPROPERTYBEGINNINGATTHENORTHEASTCORNEROFTHEJBRANNANDONATIONCLAIMNO38THENCENORTH88DEGREES4952WEST43001FEETTHENCESOUTH0DEGREES5225WEST134042FEETTOTHETRUEPOINTOFBEGINNINGTHENCECONTINUINGSOUTH0DEGREES5225WEST300FEETTHENCENORTH88DEGREES5343WEST53000FEETTHENCENORTH0DEGREES5225EAST300FEETTHENCESOUTH88DEGREES5343EAST53000FEETTOTHETRUEPOINTOFBEGINNINGLESSTHEEAST25FEETFORSTREETSITUATEINTHECITYOFAUBURNCOUNTYOFKINGSTATEOFWASHINGTON ExhibitA2SitePlanAttachLessorCityofAuburnLesseeNWHangarsLLCResolution3894August152005Page25 1 ExhibitBConstructionofImprovements1GeneralLesseemayconstructonthePremisescertainnewimprovementswhichmayincludeaircrafthangarbuildingsconsistentwiththedescriptionintheLeasetheImprovementsThetermImprovementsshallalsomeanandincludeanyreplacementstructuresorimprovementswhichmaybeconstructedonthePremisesduringthetermfromtimetotimeTheImprovementsshallbeconstructedatLesseessolecostandexpenseAsusedinthisLeasethetermCommencementofConstructionshallmeanthedateuponwhichLesseehasobtainedallnecessarypermitsandapprovalsforconstructionoftheImprovementsandhasbegundemolitionorconstructionactivityonthePremisesAsusedinthisLeasethetermCompletionDatemeansthedateuponwhichacertificateofoccupancyhasbeenissuedbytheCityofAuburnfortheImprovementspermittingoccupancyandusethereofbyLessee2NoFuelFacilitiesLesseeshallnotinstallfacilitiesforthepurposeoffuelingaircraftonthePremisesOnSiteFuelFacilitiesasdefinedhereinwithoutpriorwrittenapprovalfromtheAirportDirectorsOfficeOnSiteFuelFacilitiesasusedinthisLeaseshallbedefinedasfueltankspipinggaugespumpsutilitylinesmonitoringequipmentcomputercardlocksystemsandallotherequipmentandmaterialsincludingthefuelusedinsaidsystemthatarerelatedtothestoringanddispensingoffuelApprovaloftheinstallationoftheOnSiteFuelFacilitiesshallnotbegrantedunlessallconditionsdeemednecessaryordesirablebyLessoraresatisfied3NoSmokingLesseeshallinstallandmaintainNoSmokingsignswithineachoftheHangarsonthePremises4PlansTheImprovementsshallbesubjecttoLessorspriorapprovalAllarchitecturalengineeringandotherdesignfeesshallbepaidbyLesseeLesseeshalluseitsarchitectengineersandotherdesignprofessionalsallofwhomshallcomplywithanyapplicablelicensingorgovernmentalrequirementsinthestateinwhichthePremisesaresituatedLesseeshallprovidetoLessorallplansforanydesiredImprovementsinformsuitableforpermitapplicationcollectivelytheWorkingDrawingsTheWorkingDrawingsshallincludearchitecturalstructuralplumbingmechanicalelectricalandfireprotectiondrawingsasrequiredWorkingDrawingsandallchangestheretoshallbesubjecttoLessorsreasonablewrittenapprovalIfLessordeniesitsapprovalitshallspecifythereasonsfordoingsoinreasonabledetail5PermitsLesseeshallbesolelyresponsibleforobtainingandcomplyingwithallpermitsapprovalsorlicensesrequiredfortheconstructionanderectionofanystructureonthePremisesIfLesseefailstoobtainandcomplywithsuchpermitsthenLesseeacceptsfullresponsibilityforanyandallcostsincurredbytheLessorincludingactualattorneysfeesoccasionedbyLessorpursingLesseesdefaultforitsfailuretoobtainandorcomplywithsuchpermitsLesseeagreestoholdtheLessorhannlessfromanyliabilityandtofullyreimburseexpensesoftheLessorforLesseesfailuretoobtainandorfullycomplywithanynecessarypermitLessorCityofAuburnLesseeNWHangarsLLCResolution3894August152005Page26 6FundingAssurancesPriortoCommencementofConstructionLesseewillprovidethefollowingtoLessoraalistoftheindividualswhowillbepurchasingseventy70percentofthehangarunitsfromLesseeandthathavedepositedfifty50percentofthepurchasepricewhichLesseeintendstoutilizeforthecostsofdevelopmentandconstructionoftheImprovementsandbacopyoftheescrowinstructionstotheescrowagentholdingthefundsreferencedinsubsectionaabovetheEscrowInstructionswhichEscrowInstructionsshallbeapprovedbyLessorpriortotheCommencementofConstructionsuchapprovalnottobeunreasonablywithheldLesseeshallalsoprovideLessorwiththenamephonenumberandaddressoftheescrowagentholdingfundsfortheconstructionpurchaseofthehangarunitsalongwiththeescrownumbersothatLessormayconfirmatanytimeduringthecourseofconstructionthattherearesufficientfundstocompleteconstructionoftheImprovementsItisprovidedhoweverthatasanalternativetothedepositoffundstheLesseemaysubmittotheLessoranirrevocableletterofcreditinaformsatisfactorytotheLessorandinanamountnotlessthantheamountofthefundsthatvouldotherwiseberequiredtobedeposited7ContractorIntheeventLesseeintendsonusingageneralcontractorfortheconstructionoftheImprovementsLesseeshallcontractwithanexperiencedqualifiedgeneralcontractorContractorthatisreasonablyacceptabletoLessorLesseeoritsgeneralcontractorshallcompleteallImprovementsinagoodandworkmanlikemanner8InsuranceLesseeoritsgeneralcontractorshallobtainandmaintaininforceatalltimesduringwhichconstructionisinprogressonthePremisesthefollowinginsurancecoverageswithaninsurancecompanyorcompaniesauthorizedtodobusinessintheStatewherethePremisesarelocatedaWorkmensCompensationStatutoryLimitsfortheStateinwhichtheworkistobeperformedtogetherwithALLSTATESVOLUNTARYCOMPENSATIONANDFOREIGNCOMPENSATIONcoverageendorsementsbEmployersLiabilityInsurancewithalimitofnotlessthan50000000cCommercialGeneralLiabilityatleast1000000CombinedSingleLimitincludingPersonalInjuryContractualandProductsCompletedOperationsLiabilitynamingLessorandLesseeasadditionalinsuredCoveragemustbeprimaryandnoncontributingandincludethefollowingiiiiiiivvviPremisesOperationsElevatorsandHoistsIndependentContractorContractualLiabilityassumedundertheconstructioncontractCompletedOperationsProductsExplosionUndergroundandCollapseXUCCoverageLessorCityofAuburnLesseeNWHangarsLLCResolution3894August152005Page27 dAutomobileLiabilityIncludingOwnedHiredandNonownedlicensedvehiclesusedinconnectionwithperformanceoftheconstructionworkofatleast1000000peroccurrence3000000generalaggregateincludingumbrellalimitsCoveragemustincludethefollowingiOmedvehiclesiiLeasedvehiclesiiiHiredvehiclesivNonownedvehicleseProcureorcausecontractortoprocureandmaintaininstallationfloaterinsurancetoprotectagainsttheriskofphysicaldamageuntilacceptanceoftheconstructionworkfFurnishtheLessorwithcertificatesofinsuranceevidencingsuchcoveragepriortothecommencementoftheconstructionworkAllinsuranceshallbecarriedincompaniesreasonablyacceptabletotheLessorgThefollowingstatementshallappearineachcertificateofinsuranceprovidedLessorbyLesseehereunderItisagreedthatintheeventofanymaterialchangeincancellationornonrenewalofthispolicytheCompanyshallendeavortogiveten10dayspriornoticetotheCityofAuburnWashingtonhDuringconstructionofLesseesImprovementsbothpartiesshallgivepromptnoticetotheotherofalllossesdamagesorinjuriestoanypersonortopropertyofLesseeLessororthirdpartiesLessororLesseeshallpromptlyreporttotheotherallsuchclaimsofwhichthatpartyhasnoticewhetherrelatedtomattersinsuredoruninsuredNosettlementorpaymentforanyclaimforlossinjuryordamageorothermatterastowhichonepartymayhaveanobligationforanypaymentorreimbursementshallbemadebytheotherwithoutthewrittenapprovaloftheaffectedpartyiThecarryingofanyoftheinsurancerequiredhereundershallnotbeinterpretedasrelievingtheinsuringpartyofanyresponsibilitytotheotherpartyandtheotherpartydoesnotwaiveanyrightsthatitmayhaveagainsttheotherpartyandoritsrepresentativesforanyexpenseanddamagetopersonsandpropertytangibleandintangiblefromanycausewhatsoeverwithrespecttotheinsuringpartysworkGLessorandLesseeshallassistandcooperatewithanyinsurancecompanyintheadjustmentorlitigationofallclaimsarisingunderthetermsofthisSection9NoLiensLesseeshallkeepthePremisesfreefromanyliensansmgoutofworkperformedmaterialsfurnishedtoorobligationsincurredbyLesseeLesseefurthercovenantsandagreesthatanymechanicsormaterialmensliensfiledagainstthePremisesoragainsttheImprovementsforworkclaimedtohavebeendoneforormaterialsclaimedtohavebeenfurnishedtoLesseeshallbedischargedbyLesseebybondorotherwisewithinthirty30daysafterfilingandpriortoterminationofthisLeaseatthesolecostandexpenseofLesseeShouldLesseefailtodischargeanylienofthenaturedescribedinthisparagraphLessormayatLessorCityofAuburnLesseeNWHangarsLLCResolution3894August152005Page28 LessorselectionpaysuchclaimorpostabondorotherwiseprovidesecuritytoeliminatethelienasaclaimagainsttitleandthecostthereofshallbeimmediatelyduefromLesseeasrentunderthisLease10HoldHarmlessLesseeshallindemnifydefendandholdharmlessLessorandthePremisesfromandagainstallclaimsandliabilitiesarisingbyvirtueoforrelatingtoconstructionoftheImprovementsandanyotherimprovementsorrepairsmadeatanytimetothePremisesincludingrepairsrestorationandrebuildingandallotheractivitiesofLesseeonorwithrespecttothePremisesIfLesseeisrequiredtodefendanyactionorproceedingpursuanttothissectiontowhichactionorproceedingLessorismadeapartyandLessorreasonablybelievesthattheinterestsofLesseeandLessorconflictoraredivergentthenLessorshallalsobeentitledtoappeardefendorotherwisetakepartinthematterinvolvedatitselectionbycounselofitsownchoosingandtotheextentLessorisindemnifiedunderthissectionLesseeshallbearthecostofLessorsseparatedefenseincludingreasonableattorneysfees11ProgressReportsFromandaftertheCommencementofConstructionandthroughtheCompletionDateLesseeshallprovidetoLessormonthlyprogressreportsconsistingofataminimumathethencurrentconstructionschedulepreparedbytheContractorincludingtheexpectedCompletionDateandbnoticeofanylaborersormaterialmensliensfiledagainstthePremises12AsBuiltDrawingsSurvevWithinthirty30daysfollowingtheCompletionDateforanyImprovementsLesseeshalldelivertoLessortwo2copiesofcompleteasbuiltdrawingsoftheImprovementsormarkedupconstructiondrawingswhichmayconsistofthePlansannotatedwithfieldnotesidentifyingallchangesmadetheretointhecourseofconstructionandacopyoftheSurveyMapandPlansfortheCondominiumpreparedbyalicensedsurveyorcertifiedtoLessorandshowingthe10cationoftheImprovementsalleasementsandutilitiesincludingundergroundutilities13ConditionofImprovementsLesseeassumesfullresponsibilityforthedesignconstructionandconditionoftheImprovementsandanyimprovementsconstructedonthePremisesduringtheLeaseTermandLesseeherebyfullyreleasesLessorfromanyandallliabilityrelatingtheretoLessorCityofAuburnLesseeNWHangarsLLCResolution3894August152005Page29