HomeMy WebLinkAbout5771 RESOLUTION NO. 5771
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
AUBURN, WASHINGTON, AUTHORIZING THE MAYOR
TO EXECUTE AN AIRPORT LAND LEASE WITH S50
HANGARS, LLC
WHEREAS, The Auburn Municipal Airport ("Airport") has land identified in its
2015 Airport Master Plan (the "Master Plan") designated for future development of
aeronautical facilities; and
WHEREAS, S50 Hangars LLC ("S50") has the means, expertise, experience,
and desire to develop aeronautical facilities on the Airport; and
WHEREAS, S50 and the City have entered into negotiations to lease site(s)
identified in Master Plan to S50; and
WHEREAS, the lease requires S50 to meet certain development thresholds to
maintain compliant with the lease requirements; and
WHEREAS, development of the site would help satisfy both a local and regional
demand for aeronautical facilities while also providing a positive economic impact to the
City and added revenue to the Airport;
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF AUBURN,
WASHINGTON, HEREBY RESOLVES as follows:
Section 1. The Mayor is authorized to execute a land lease which shall be in
substantial conformity with the land lease attached as Exhibit A.
Section 2. The Mayor is authorized to implement those administrative procedures
necessary to carry out the directives of this legislation.
Resolution No. 5771
May 23, 2024
Page 1 of 2
Section 3. This resolution will take effect and be in full force on passage and
signatures.
Dated and Signed: c\VICIUS-k- 5 ) 2-02-LA
CITY OF AUBURN
NCY< S, AYOR
ATTEST: APPROVED AS TO FORM:
2trci..b.a.s•___Cksr"p4a
Shawn Campbell, MMC, City Clerk Paul Byrne, Ac City Attorney
Resolution No. 5771
May 23, 2024
Page 2 of 2
AIRPORT LAND LEASE
SE DEVELOPMENT AREA
BETWEEN THE CITY OF AUBURN AND S50 HANGARS, LLC
THIS LEASE AGREEMENT (the "Lease"), is entered into and shall commence on
A Us+ 5 , 202t/ (the "Commencement Date") by and between the City of Auburn, a
Washington municipal corporation("Landlord" or"City") and S50 Hangars, LLC (a Washington
State Limited Liability Company, "Tenant") or assigns, together referred to as the"Parties".
RECITALS:
1. The City owns and operates The Auburn Municipal Airport which has land sites identified
in its 2015 Airport Master Plan that are available for aeronautical facility development;and
2. The Tenant is interested in developing the Airport Master Plan's SE development site; and
3. The City of Auburn is authorized by RCW 14.08.120(1)(d) to lease City Airport property
to the Tenant for the common benefit; and
4. The Auburn City Council has approved the terms of this lease through its enactment of
Resolution 5771.
NOW, THEREFORE, in consideration of the mutual promises set out in this Lease, Tenant
and the City agree as follows:
ARTICLE 1:
PREMISES LEASED
1.1) Land/Premises. For and in consideration of the rent and faithful performance by the Tenant
of the terms, conditions and the mutual covenants, Landlord leases to the Tenant, and the Tenant
leases from the Landlord, the real property legally described in Exhibit A-1 (the "Land"), which
Land consists of One hundred seventy-four thousand,three hundred and sixteen(174,316) square
feet as depicted in Exhibit A-2. Together, Exhibit A-1 and Exhibit A-2 are attached and
incorporated into this lease by reference. The Land is situated in the County of King, State of
Washington,and is located at the Auburn Municipal Airport(the"Airport"). The term"Premises"
as used in this Lease, means the Land and any Improvements (as defined in Section 3.2 below)
constructed and existing on the Land from time to time during the Lease term.
1.2) Landlord Hazardous Substances Representation. Landlord represents and warrants
that, to the best of the City's knowledge, without duty of inquiry, there are no RCW
70A.305.020(13)(a)hazardous substances on, in or under the Land.
1.3) As Is Clause. EXCEPT FOR LANDLORD'S EXPRESS REPRESENTATIONS SET
FORTH IN THIS LEASE (INCLUDING WITHOUT LIMITATION SECTION 1.2 ABOVE),
TENANT ACKNOWLEDGES AND AGREES THAT IT IS RELYING SOLELY ON ITS
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INSPECTION AND INVESTIGATION OF THE LAND, AND ACCEPTS THE LAND "AS-IS,
WHERE IS" IN ITS PRESENT CONDITION WITH NO WARRANTIES OF ANY KIND,
EXPRESS OR IMPLIED, EITHER ORAL OR WRITTEN, MADE BY CITY OR ANY
EMPLOYEE, AGENT OR REPRESENTATIVE OF CITY WITH RESPECT TO THE
PHYSICAL CONDITION OF THE LAND. TENANT SHALL HAVE DETERMINED TO ITS
SATISFACTION UPON ITS EXECUTION HEREOF THAT THE LAND CAN BE USED FOR
THE PURPOSES IT INTENDS AND WHICH ARE PERMITTED UNDER THIS LEASE.
EXCEPT FOR LANDLORD'S EXPRESS REPRESENTATIONS SET FORTH IN THIS LEASE
(INCLUDING WITHOUT LIMITATION SECTION 1.2 ABOVE), TENANT
ACKNOWLEDGES AND AGREES THAT NEITHER CITY NOR CITY'S AGENTS HAS
MADE, AND DOES NOT MAKE, ANY REPRESENTATIONS OR WARRANTIES OF ANY
KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS OR IMPLIED, WITH
RESPECT TO THE HABITABILITY, LEASABILITY OR SUITABILITY FOR
COMMERCIAL PURPOSES, MERCHANTABILITY, OR FITNESS FOR A PARTICULAR
PURPOSE OF THE LAND, OR THE PRESENCE OR ABSENCE OF ANY HAZARDOUS
SUBSTANCES, WASTES OR MATERIALS AS DEFINED BY STATE, FEDERAL OR
LOCAL LAW, ALL OF WHICH WARRANTIES LANDLORD HEREBY EXPRESSLY
DISCLAIMS.
ARTICLE 2:
TERM
2.1) Preliminary Term. The "Preliminary Term" of this Lease shall be for 60 months (5 years),
commencing on the Commencement Date, and expiring at midnight on the last day of the 59th
month,unless sooner terminated pursuant to any provision of this Lease.
2.2)Remaining Term.The"Remaining Term"of this Lease shall begin the 61st month and expire
at midnight on the last day of the 600th month (the "Expiration Date"), unless sooner terminated
pursuant to any provision of this Lease.
The Primary and Remaining terms shall collectively be referred to as the"Term".
2.3) Termination prior to the completion of the Preliminary Term. Tenant will have the right
to terminate this Lease at any point and for any reason prior to the completion of the Preliminary
Term, subject to City's acceptance of one of the following: i) Tenant returns the Premises to the
condition that substantially existed prior to the Commencement Date, ii)Tenant provides a Bill of
Sale for all Improvements completed by Tenant, which Tenant must provide said Improvements
free and clear of all liens including but not limited to: construction loans, mechanics liens and
equity interests, or iii) City and Tenant agree in writing to another"workout"option.
ARTICLE 3:
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PERMITTED USES, DEVELOPMENT & MINIMUM DEVELOPMENT
3.1)Permitted Uses.Tenant has warranted to the City that Tenant intends to develop the Premises
by constructing improvements on, under or about the Premises. The City permits the Tenant the
right to develop those Improvements defined in and consistent with the provisions outlined in
Section 3.2. The City further permits Tenant the right to sublease land and/or aircraft hangars,
operate or permit a subtenant the right to operate or conduct Fixed Base Operations ("FBO"),
Maintenance and Repair Operations("MRO"), aircraft sales and leasing,aircraft charters,EVTOL
operations, and the sale and distribution of"Jet A", or other alternative aviation fuels so long as
they do not compete with existing fuel operations conducted by the City. Notwithstanding the
foregoing, Tenant shall have the right to install, operate and provide fuel sales of any kind,
regardless of any City operations which may exist so long as Tenant's fuel sales are limited to
Tenant's Subtenants. All fuel distribution and sales, regardless of fuel type or customer will be
subject to a separate"Fuel Operating Agreement"between the parties.Use of the Premises and all
Improvements within the Premises shall be for aeronautical purposes per FAA policy 81 FR 38906,
Uses of the Premises shall also be subject to Auburn City Code(ACC) 12.56,the Airport Rules&
Regulations,and the Minimum Standards&Development Standards as they may be amended from
time to time (hereby incorporated by this reference). Use of the Premises for overnight sleeping,
unless limited to short-term flight crew quarters, or fueling aircraft inside of any Hangar(defined
in Section 3.2 below) is prohibited.
3.2) Development. Tenant's development shall be limited to the construction of aircraft hangars,
hangar alterations, and utilities ("Hangars"), any alterations or additions to the Hangars, "On-Site
Fuel Facilities"(defined in Section 2 of Exhibit B),pavement,pavement markings, and any other
Landlord permitted improvements built on the Premises (collectively and individually the
"Improvements"). Construction of the initial Improvements shall begin no later than the 1st day of
the 37th month (the "Initial Improvements Construction Commencement Deadline") of the Lease
or be subject to termination as described below in Section 3.2.1.The Improvements shall be subject
to and in conformity with the plans and specifications described in Exhibit B. The Tenant's plans
and specifications shall include, without limitation, details of any right of way or taxi-way
entrances to be constructed by Tenant, as well as the building materials for and design of the
Improvements. Landlord shall have the right to approve the final plans for the Improvements,
which approval shall not be unreasonably withheld, conditioned or delayed (approvals will be
issued upon demonstration that proposed development meets all applicable requirements of city
adopted codes and standards). Upon Commencement of Construction (defined as the date upon
which the Tenant has obtained all necessary permits and approvals for and has begun altering the
Premises in connection with construction activities)of the Improvements, the Improvements shall
be deemed to include and be part of the Premises for all purposes hereunder;provided that,subject
to Article 8 all Improvements shall be owned by Tenant. Both parties agree that Tenant's
development of the Improvements is not a public work defined by RCW 39.04.010(4)and/or WAC
296-127-010(7). Tenant agrees that any development of the Improvements would be at its own
cost and expense, and that Tenant is not an agent or construction agent of the City for purposes of
its development of the Improvements. Abandonment of construction, whether it be of the Initial
Improvements (as defined Section 3.3 below) or any subsequent Improvements for a period of 9
consecutive months or more once construction of said Improvement has begun shall constitute a
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breach of this Lease and the City shall have all the rights afforded to it under Section 22 below,
including but not limited to terminating this Lease.
3.2.1) Termination for Non-Construction. If Tenant has not commenced construction of the
Initial Improvements by the Initial Improvements Construction Commencement Deadline, then
this Lease shall automatically terminate. Tenant may also provide written notice to Landlord prior
to the Initial Improvement Construction Commencement Deadline that it no longer intends to
develop the Premises,and in such case as a written notice has been provided the Parties may agree
to an earlier termination date. Should this Lease terminate under the provisions of this section then
the Tenant shall owe no other duties or obligations under this Lease other than those applicable
provisions outlined in Section 8.2. Tenant is not entitled to reimbursement of any pre-paid rent,
permit fees, pre-development costs or any other costs of fees incurred as a'result of this Lease or
any development of the Premises under this provision.
3.3) Minimum Development. While both the City and Tenant acknowledge and agree that
development can occur at any time throughout the Lease, Tenant warrants it shall have
Substantially Completed no less than 35,000 square feet of aircraft hangars (the "Initial
Improvements") prior to the expiration of the Preliminary Term (the "Initial Improvements
Completion Deadline"). "Substantially Complete" being defined as having received final
acceptance of all permits and/or a certificate of occupancy or an administrative Temporary
Certificate of Occupancy(each the "CO")under ACC 15.07.100).
3.3.2) Termination due to Minimum Development Requirements. So long as Tenant is
diligently pursuing completion of the Initial Improvements, failure of Tenant to complete the
Initial Improvements by the Initial Improvements Completion Deadline shall not constitute a
Default by Tenant nor allow Landlord to terminate the Lease. If Landlord wishes to terminate this
Lease due to Tenant's failure to Substantially Complete the Initial Improvements, Landlord shall
provide written notice to Tenant of Landlord's intention to terminate the Lease due to Tenant's
failure to Substantially Complete the Initial Improvements. If Tenant does not re-commence
construction of the Initial Improvements within thirty (30) business days after receipt of such
notice and thereafter diligently pursue the same to completion this Lease shall automatically
terminate and Section 3.3.3 shall apply.
3.3.3) Return of Premises Following Termination. In the event of termination due to Tenant's
inability to meet the minimum development requirement by the Initial Improvements Completion
Deadline,Tenant shall be responsible for returning the Premises to the Landlord,within 12 months
of the Initial Improvement Completion Deadline in one of the following manners: i) in the
condition that reasonably existed prior to Lease Commencement, ii)provide Landlord with a Bill
of Sale for all completed Improvements, but remove any non-Substantially Complete
Improvements, returning the Premises to the condition that reasonably existed prior to
Commencement, or iii)work out a separate written agreement with the Landlord for the return of
the Premises. Tenant's return of the Premises shall be made without mortgage, mechanics or
material liens or any other encumbrances on the Premises or any of the Improvements. Tenant
shall also be responsible for Rent at the then existing amount,subject to rent adjustments described
in Article 6 until such date as the Landlord has accepted return of the Premises.
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ARTICLE 4:
CONDOMINIUMIZATION
At any point during the Lease, the Tenant shall be entitled condominiumize the whole, or
portions Premises pursuant to the provisions of RCW Chapter 64.34 (the "Condominium Act");
provided,however,that prior to recording the condominium declaration(the"Declaration)and the
survey Maps and Plans (the "Survey Maps and Plans") in the official records of King County,
Tenant must first provide Landlord with a completed"Draft Copies"of the Declaration and Survey
Maps and Plans for Landlords review. Upon receipt of the Draft Copies, Landlord shall have 60
calendar days to provide its "Written Response" of approval or rejection of the Draft Copies. If
Landlord rejects the Draft Copies Landlord's Written Response must state the reason(s) for their
rejection. Tenant may elect to address Landlord's rejections by submitting"Revised Draft Copies
#[insert revision number]" to Landlord for their review. Landlord shall have 30 calendar days to
provide its written response to Tenant's Revised Draft Copies.Any"non-response",defined as not
providing a Written Response of rejection within the allotted review time shall be deemed as
approval by the Landlord.Delivery of all materials and/or correspondence above shall be provided
in accordance with Article 29 below.
ARTICLE 5:
RENT,IMPOSITIONS &LEASEHOLD EXCISE TAX
5.1) Initial Rent. Within 15 days of the Commencement Date Tenant shall pay to Landlord an
"Initial Rent" of ELEVEN THOUSAND TWO HUNDRED EIGHTY FOUR ($11,284)
DOLLARS. The Initial Rent shall be inclusive of all Rent and Impositions (as defined below)
owed by Tenant from the Commencement Date through the 36th month. Should this Lease be
terminated per Article 3.2.1, Tenant will not be entitled to a reimbursement or refund, either in
whole or in part.
5.2) Monthly Base Rent. Commencing upon the beginning of the 37th month and extending until
the first Fair Market Value adjustment date described in Section 6.4 the Tenant will pay to
Landlord an annual lease rate for the Land(the"Annual Lease Rate")based upon the lesser of the
following: i) $0.75 per square foot of land, per year, or ii) 35% less than the 2025 Fair Market
Value for Improved Land. But in no event will the Annual Lease Rate following the start of the
37th month be less than $0.65 per square foot of land per year. The Annual Lease Rate shall be
paid in equal monthly installments (the "Monthly Base Rent") payable on or before the first (1St)
day of each calendar month thereafter. In the event that the beginning of the 37th month should
occur on a date other than the first calendar day of the month, or this Agreement is terminated on
a day other than the last calendar day of the month, Rent(as defined in Section 5.4) shall be paid
based on a prorated amount based upon a thirty(30) day month.
5.3 Impositions. In addition to the Monthly Base Rent, from and after the Rent
Commencement Date, Tenant shall also be responsible for payment of any security fees assessed
on (and solely with respect to) the Improvements and statutory leasehold excise tax imposed by
RCW Chapter 82.29A(the"Impositions"). Either the Landlord or Tenant may contest the validity
or amount(including the assessed valuation upon the Premises and any exemptions applicable to
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any portion thereof) of any Imposition for which either is responsible in whole or in part, and
which such party in good faith believes is excessive, improper or invalid. In such event, the
payment thereof may be deferred during the pendency of such contest,if diligently prosecuted,but
in no event shall Tenant allow a lien for any unpaid taxes which it is contesting to attach to the
Premises. Each party agrees to join at the other's request in any such contest to the extent such
joinder is prerequisite to such prosecution under statute, regulation or administrative practice. In
connection with a judicial or administrative challenge to any assessment, Tenant may take
advantage of any stay in collection available under statute, regulation, or court or administrative
order or rules. Nothing herein contained, however, shall be so construed as to allow such items to
remain unpaid for such length of time as shall permit the Premises, or any part thereof, to be sold
by any governmental,city or municipal authority for the nonpayment of the same. Within ten(10)
calendar days after the amount of such contested item is finally determined to be due, the party
liable for such Imposition shall pay the amounts so determined,together with the penalties,interest
and expenses associated with such contest.
5.4) Net Lease. Collectively,the Monthly Base Rent and the Impositions are hereinafter referred
to as the rent ("Rent"). Notwithstanding the maintenance responsibilities described in Article 16
or the utility responsibilities described in Article 19,it is the intent of the Landlord and Tenant that
the Rent due hereunder shall be absolutely net to Landlord and that Tenant will pay all costs, and
expenses specifically relating to the Premises whether specifically mentioned or not;provided that
the City shall not unilaterally assess any additional taxes, assessments or other monetary
obligations on the Premises that are not generally assessed against all similarly situated properties
in the City.
ARTICLE 6:
RENT ADJUSTMENTS
6.1) Adjustments. With the first adjustment occurring on January 1, 2030, the Monthly Base
Rent will be adjusted on January 1st of every year thereafter in accordance with this Article 6.
Notwithstanding the foregoing, Monthly Base Rent will be adjusted every five(5)years equal the
"fair market rental value" (FMV) of Auburn Airport land, pursuant to the procedure set forth in
Section 6.4 below. No such adjustment, however, will reduce the amount of Monthly Base Rent
below the amount of the respective Monthly Base Rent that is being adjusted.
6.2) Definitions: The adjusted Monthly Base Rent shall be determined in accordance with the
formula set forth in Section 6.3 below. In applying the formula, the following definitions apply:
(1) "Bureau"means the U.S.Department of Labor,Bureau of Labor Statistics or any successor
agency.
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(2) "Price Index"means the Consumer Price Index(the"CPI-W")for the month of August for
all Urban Consumers, All Items (Seattle-Tacoma-Bellevue) issued from time to time by
the Bureau, or any other measure hereafter employed by the Bureau in lieu of the price
index that measures the cost of living or if said Bureau should cease to issue such indices
and any other agency of the United States should perform substantially the same function,
then the indices issued by such other agency.
6.3) Price Index Adjustment. The adjusted Monthly Base Rent shall be determined by
multiplying the Monthly Base Rent being adjusted by a multiplier equal to the percentage change
in the Price Index since the last adjustment, example:
(Percentage change in Price Index)x(current Monthly Base Rent)=(Adjusted Monthly Base Rent)
6.4) Fair Market Value Adjustment.With the first adjustment being January 1,2030 and every
five (5) years thereafter, the Monthly Base Rent will be revised to be the fair market rental value
(the"FMV")of the Land,excluding rental or other value of any Tenant constructed Improvements.
Landlord will retain and pay the costs of an MAI appraiser to make an initial determination of the
FMV and provide the same to Tenant. The annual adjustment formula set forth in Sections 6.2 &
6.3 will not be applied each such fifth (5th) year. Landlord may, at its discretion, utilize an
appraisal completed within 12 months prior to the date of the periodic FMV adjustment.
Additionally, this appraisal may be used by Landlord for setting rates for leases other than this
Lease. In the event Tenant disagrees with the FMV set forth in Landlord's appraisal, Tenant may,
at its own expense, retain a second appraisal completed by an MAI certified appraiser. Landlord
and Tenant will then attempt to negotiate a FMV lease rate. If these negotiations are unsuccessful,
the parties will mutually agree on the selection of an arbitrator or,if they cannot agree, either party
may submit the matter of the FMV for the pertinent adjustment date to Dispute Resolution pursuant
to Section 30.7 below. The costs of arbitration will be shared equally. The arbitrator's
determination will be based upon the appraisals, but in no event will the new Monthly Base Rent
be lower than the Monthly Base Rent in effect at the time of arbitration. The decision of the
arbitrator regarding the increases will be final. In the event of ongoing negotiations or arbitration,
the determined rental rate will be made retroactive to January 1 of the current FMV cycle.
ARTICLE 7:
LATE CHARGES
Tenant hereby acknowledges that late payments of rent or any other sums due hereunder will cause
the Landlord to incur costs not otherwise contemplated by this Lease. Accordingly, if any
installment of rent or any other sum due from Tenant is not received by the Landlord within ten
(10) calendar days after such amount shall be due, then, without any requirement for notice to
Tenant, Tenant shall pay the Landlord a late charge equal to 15% of the overdue amount. The
Parties agree that such late charge represents a fair and reasonable estimate of the costs the
Landlord will incur by reason of late payment by Tenant. Acceptance of such late charge by the
Landlord in no event constitutes a waiver of Tenant's default with respect to such overdue amount,
nor prevent the Landlord from exercising any of the other rights and remedies granted hereunder.
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In the event that a late charge is payable in this Lease or otherwise, whether or not collected, for
three (3) installments of rent in any 12-month period, then rent shall automatically become due
and payable quarterly in advance,rather than monthly notwithstanding any other provision of this
Lease to the contrary. In addition to the late charges provided for in this section, in the event any
payments hereunder are not paid within thirty(30)days of when due, interest shall accrue on Rent,
and any other sums due hereunder, at the rate of one and one-half percent 1.5%per month from
the date due until paid.
ARTICLE 8:
OWNERSHIP OF IMPROVEMENTS &RETURN OF PREMISES AT END OF LEASE
8.1) Ownership of Improvements.Notwithstanding Section 3.3.3 above, during the Term of this
Lease, all Improvements located on the Land, including without limitation, the Initial
Improvements and all additions, alterations, and improvements thereto or replacements thereof,
and all appurtenant fixtures, machinery, and equipment installed therein, shall be the property of
the Tenant. All improvements and all additions, alterations, and improvements thereto or
replacements thereof and all appurtenant fixtures,machinery,and equipment installed therein,with
the exception of any fixtures, machinery and equipment owned by Tenant or any Subtenant and
which can be readily removed without material damage to the Improvements, shall become the
property of Landlord upon expiration or earlier termination of the lease term. Tenant warrants that
prior to all Improvements transferred to Landlord shall be accompanied by a title insurance policy
paid for by the Tenant warrantying clear title to the Improvements.
8.2)Removal of Personal Property.Upon expiration or earlier termination of this Lease or upon
termination of Tenant's right to possession, Tenant shall remove or have caused to be removed at
its expense all personal property placed upon the Premises not considered part of the
Improvements. Any such property not so removed from the Premises shall, at the election of
Landlord,be retained by Landlord or may be removed and stored by Landlord at Tenant's expense,
provided that, Landlord shall recover any costs and expenses from the Tenant resulting therefrom.
Tenant shall further be responsible for any cost and expense related to obtaining all necessary
permits to do the work as well as any shoring,utility relocation or any other reasonably necessary
or required work to ensure that the removal of the personal property does not negatively harm or
impact other buildings or improvements located on or off the Premises.
ARTICLE 9:
INSURANCE
9.1) Insurance.Article 4 of the Auburn Municipal Airport Minimum Operating Standards, as may
be amended from time to time, the most current copy of which can be found at
auburnmunicipalairport.com/documents-and-forms, is hereby incorporated into this agreement by
this reference. Upon Commencement of Construction, Tenant, and any Subtenant, assignee,
licensee,contractor, subcontractor,or agent of Tenant shall at all times have in effect the following
types of insurance as applicable and at the minimum amounts described below or found in the
document referenced above. In the event that the insurance amounts referenced in subparagraphs
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I - VII below differ from the then current amounts noted in Article 4 of the Auburn Municipal
Airport Minimum Operating Standards,the higher amounts shall apply:
(I) Commercial General Liability insurance policy CG 00 01 in the amount of$2,000,000
per occurrence and $2,000,000 annual aggregate. Products-completed operations
liability insurance in the amount of at least$2,000,000 per occurrence. Such insurance
shall contain contractual liability insurance covering applicable leases, licenses,
permits, or agreements.
(II) Commercial/business automobile liability insurance for all owned, non-owned and
hired vehicles assigned to or used in performance of commercial aeronautical activities
in the amount of at least $2,000,000 per occurrence. If any hazardous material, as
defined by any local, state or federal authority, is the subject, or transported, in the
performance of this contract, an endorsement is required providing $2,000,000 per
occurrence limits of liability for bodily injury and property damage.
(III) Special Causes of Loss Property Form covering all improvements and fixtures on the
commercial airport operator's premises in an amount no less than the full replacement
cost thereof,to the extent of the commercial airport operator's insurable interest in the
premises.
(IV) Worker's compensation insurance as required by law and employer's liability
insurance in the amount of $100,000 per accident, $100,000 disease per person,
$500,000 disease policy limit.
(V) Aircraft liability insurance in the amount of at least $1,000,000 per occurrence single
limit Bodily Injury and Property Damage Liability including Passengers.
(VI) Hangar keeper's liability insurance in the amount of at least$1,000,000 per occurrence,
or more as values or Landlord require.
(VII) If applicable, Tenant shall maintain Environmental Impairment Liability coverage for
any underground or aboveground fuel storage facility, tank, underground or
aboveground piping, ancillary equipment, containment system or structure used,
controlled, constructed or maintained by Tenant in the amount of $1,000,000 each
incident, $2,000,000 aggregate. The policy shall cover on-site and off-site third party
bodily injury and property damage including expenses for defense, corrective action
for storage tank releases and tank clean-up for storage tank releases.
9.2) In addition to the types and amounts of insurance required in Article 9.1 above, Tenant shall
at all times maintain such other insurance as the Landlord may,upon not less than sixty(60) days
prior notice to Tenant,reasonably determine to be necessary for Tenant's airport activities and that
is commercially available and customarily required to be carried by City of Auburn airport tenants
engaged in similar activities.
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9.3) All insurance shall be in a form and from an insurance company with Best's financial rating
of at least an"A". All policies, except worker's compensation policy, shall name the City and its
elected or appointed officials, officers, representatives, directors, commissioners, agents and
employees as "Additional Insured", and the Tenant shall furnish certificates of insurances
evidencing the required coverage cited herein prior to engaging in any commercial aeronautical
activities. Such certificates shall provide for thirty (30) day notice of cancellation or material
change in any policy limit or conditions.
9.4) The Tenant's insurance coverage shall be primary insurance with respect to Landlord's
insurable risk. Any insurance, self-insurance, or insurance pool coverage maintained by Landlord
shall be in excess of the Tenant's insurance and shall not contribute with it.
9.5) Indemnification/Hold Harmless.
(a) By Tenant. Tenant shall defend,indemnify, and hold harmless Landlord,its officers, officials,
employees and volunteers from and against any and all claims,suits,actions,or liabilities for injury
or death of any person, or for loss or damage to property, which arises out of Tenant's use of •
Premises, or from the conduct of Tenant's business, or from any activity, work or thing done,
permitted, or suffered by Tenant in or about the Premises, except to the extent such injury or
damage results from the negligence or willful misconduct of Landlord.
(b) By Landlord. Landlord shall defend,indemnify and hold harmless Tenant,its owners,officers,
employees and contractors from and against any and all claims, suits, actions, or liabilities for
injury or death of any person, or for loss or damage to property, which arises out of Landlord's
negligence or willful misconduct, or from any activity,work or thing done,permitted, or suffered
by Landlord, its agents, officers employees or contractors in or about the Premises, except to the
extent such injury or damage results from the negligence or willful misconduct of Tenant.
(c) Solely for the purpose of effectuating the mutual indemnification obligations under this Lease,
and not for the benefit of any third parties (including but not limited to employees of Landlord or
Tenant), Landlord and Tenant specifically and expressly waive any immunity under applicable
federal, state or local Worker Compensation Acts, Disability Benefit Acts or other employee
benefit acts. Furthermore, the indemnification obligations under this Lease shall not be limited in
any way by any limitation on the amount or type of damages, compensation or benefits payable to
or for any third party under Worker Compensation Acts,Disability Benefit Acts or other employee
benefit acts. The parties acknowledge that the foregoing provisions of this Section have been
specifically and mutually negotiated between the parties.
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ARTICLE 10:
DAMAGE,DESTRUCTION AND REPAIR
10.1)In the event of damage to, or destruction of the Improvements, if: (a)the cost of repairing or
reconstructing the Improvements to the condition and form immediately prior to such damage or
destruction does not exceed fifty percent(50%) of the then-new replacement cost thereof, (b) the
continued use of the Improvements prior to such event is consistent with surrounding Airport
properties, and (c)proceeds from insurance carried by Tenant(or which would have been carried
by Tenant as required pursuant to Article 9 above), together with required deductibles thereunder,
will be sufficient to cover the cost of such reconstruction,then Tenant shall effect such repair and
reconstruction of the Improvements so damaged or destroyed to substantially their condition prior
to said damage or destruction; provided that Tenant may construct alternative improvements
subject to Landlord's consent which shall not be unreasonably withheld, conditioned or delayed.
All such work shall be carried out in accordance with plans and specifications prepared by a
licensed architect or architects approve by Landlord (acting reasonably) if such an architect is
reasonably required given the scope and nature of the work. Landlord shall,promptly upon request
for affirmation or confirmation from Tenant, affirm or confirm that the continued use of the
Improvements prior to such event is consistent with surrounding Airport properties. If the parties
do not agree with respect thereto, then Tenant may defer all construction or restoration activities
pending final determination of such matter pursuant to the dispute resolution procedures herein.
10.2) In the event of damage to, or destruction of the Improvements, if: (a) the cost of repairing
or reconstructing the Improvements to the condition and form immediately prior to such damage
or destruction exceeds fifty percent (50%) of the then-new replacement cost thereof, (b) the
continued use of the Improvements prior to such event is not consistent with surrounding Airport
properties, or (c) proceeds from insurance carried by Tenant (or which would have been carried
by Tenant as required pursuant to Article 9 above),together with required deductibles thereunder,
are not sufficient to cover the cost of such reconstruction,then Tenant may elect by written notice
to Landlord given within sixty (60) calendar days after the date of the damage to terminate this
Lease; provided that this Lease shall not terminate unless and until Tenant has, at its cost and
expense, restored the Premises to grade level and removed all debris therefrom, including all
improvements above and below ground,as and to the extent required by Landlord by written notice
provided no later than sixty(60) calendar days after Tenant's written election to terminate. In no
event will the Monthly Base Rent or any other form of rent be abated during such period of
reconstruction and/or restoration.
ARTICLE 11:
ASSIGNMENT AND SUBLETTING
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11.1) Assignments. Any assignment by Tenant of its Leasehold Estate in this Lease
("Assignment") to an unaffiliated third party ("Assignee") shall be subject to Landlord's prior
written approval as provided herein. For purpose of this Lease, the term "Assignment" shall
include a transfer of more than 50% interest in the Tenant entity to a non-affiliated third party.
Landlord's review and approval of an Assignment may not be unreasonably withheld, conditioned
or delayed if Tenant submits the documentation required in Section 11.1.1 demonstrating that the
Assignment fully satisfies the conditions set forth in Section 11.1.2 and subject to fees described
in Section 11.5.
11.1.1)Assignment Approval Process. In order to request Landlord's consent to an Assignment,
Tenant shall submit to Landlord the following items at least thirty(30) days prior to the proposed
effective date of such Assignment: •
(a) The names of the direct owners, shareholders, members or partners that have day-
to-day management responsibility of the proposed Assignee and any other information in Tenant's
possession or control regarding the qualifications of the proposed Assignee or its direct owners,
shareholders, members or partners;
(b) An explanation of the proposed ownership of and managers to be retained by the
proposed Assignee;
(c) A copy of the proposed assignment and assumption agreement which shall provide
that the Assignee will be bound by all of the provisions, terms, covenants, and conditions of this
Lease.
11.1.2)Conditions for Landlord's Reasonable Approval of Assignment. Landlord shall not
withhold, condition, or delay its approval of any proposed Assignment once all of the following
conditions are satisfied:
(a) Any Default by Tenant under this Lease will be cured at or prior to the effective
date of the Assignment except to the extent the Event of Default is related to a specific covenant,
representation or warranty of the transferring entity such that a breach thereof cannot be cured by
an Assignee;
(b) The use and occupancy of the Premises by the Assignee will be consistent with
Article 4;
(c) All of the documentation required under Section 11.1.1 has been delivered to
Landlord;
(d) Assignee's financial statements necessary to demonstrate the financial capacity to
perform Tenant's obligations under this Lease; and
(e) Assignee shall assume all of Tenant's obligations under this Lease from and after
the date of the Assignment.
If the foregoing conditions are not satisfied Landlord may reasonably withhold, condition or delay
its consent to an Assignment. If Landlord does not respond to a request for consent within thirty
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(30) days after receiving a notice from Tenant requesting Landlord's consent to an Assignment,
Landlord shall be deemed to have given its consent. Any denial of consent must be in writing and
must contain an explanation of those conditions that failed to be met and/or other reasonable
grounds on which Landlord has denied consent. Upon consummation of an Assignment to which
Landlord has consented (or deemed to have consented), the transferring Tenant shall be released
from obligations arising under this Lease from and after the date of such Assignment and, upon
written request by the transferring Tenant, Landlord will execute and deliver commercially
reasonable documentation in recordable form confirming its consent to the Assignment and release
of the transferring Tenant as provided above. In the event of a dispute as to Landlord's consent to
any Assignment request or release of the assigning Tenant under this Section 11.1.2, such matter
will be submitted to Dispute Resolution pursuant to Section 30.7 below.
11.1.3) No Waiver & Assignment Fee. Consent of the Landlord to any Assignment shall not
operate as a waiver of the necessity for consent to any subsequent Assignment. In connection with
each request for Landlord's consent to an Assignment, regardless of whether such Assignment is
approved, Tenant shall pay to the Landlord, at the time of Assignment request,the Assignment of
Lease fee noted in the most current City of Auburn Master Fee Schedule.
11.2) Subletting. Tenant shall have the right to sublease all or any portions of the Premises (such
subleased portion, the "Subleased Space")to Subtenant(s)provided that:
(a) use by the Subtenant of the Subleased Space must be solely for aeronautical purposes
per FAA policy 81 FR 38906, and for use, storage, maintenance and repair of active aircraft and
aircraft related equipment by the owners thereof;
(b) aircraft cannot be fueled inside the Subleased Space;
(c) no overnight sleeping be allowed in the Subleased Space unless it is limited to short-
term flight crew quarters for temporary use;
(d) all sublease agreements shall be subordinate to and shall have a financially redacted
copy of this Lease attached as reference;
(e) each Subtenant shall be subject to obtaining insurance pursuant to Article 9 above if as
and to the extent applicable to such Subtenant or the Subleased Space;
(f)Subtenants and their guests,customers,employees,agents and other related parties shall
not conduct business or operations in violation of any ordinance, law, statute, order, or rule of any
governmental agency having jurisdiction over the Airport and shall abide by the most current
copies of Airport Minimum Operating Standards and the Airport Rules and Regulations, copies of
which can be found at auburnmunicipalairport.com/documents-and-forms; and,
(g) a copy of the mutually executed sublease shall be delivered to Landlord as soon as
reasonably possible.
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11.2.1) Sublease Approval. Prior to subletting Subleased Space to a Subtenant, Tenant shall first
obtain Landlord's approval of the Subtenant and the Sublease terms("Sublease Approval"),which
Landlord shall not unreasonably withhold. To obtain Landlord's approval, Tenant shall supply to
Landlord;
(i) the name of the proposed Subtenant, including any Articles of Incorporation as there
may exist, the names of the owner(s), executive, and/or governing individuals;
(ii)the proposed use of the Subleased Space;
(iii) a copy of the proposed sublease terms; and
If Landlord does not provide Tenant a notice disapproving of the Subtenant and Sublease terms
("Sublease Disapproval Notice") within five (5) business days from when requesting Sublease
Approval then the Sublease Approval be deemed given.
11.3) Assignment and Subletting Distinguished from Leasehold Mortgages. The granting of
a Leasehold Mortgage pursuant to Section 23.2 below shall not be deemed to constitute an
Assignment of this Lease or of the Leasehold Estate,nor shall any Leasehold Mortgagee, as such,
be deemed to be an Assignee of this Lease or of the Leasehold Estate so as to require such
Leasehold Mortgagee, as such,to assume the performance of any obligations of Tenant under this
Lease. The sale, assignment or transfer of this Lease and of the Leasehold Estate in any
proceedings for the foreclosure of any Leasehold Mortgage, or the assignment or transfer of this
Lease and of the Leasehold Estate hereby created in lieu of the foreclosure of any Leasehold
Mortgage, shall not be deemed to be an Assignment. Leasehold Mortgages shall be subject to the
terms of Section 23.2 below.
11.4) Assignment After Foreclosure. Any subsequent sale or assignment by any Person(other
than the Leasehold Mortgagee) acquiring the Leasehold Estate pursuant to foreclosure of a
Leasehold Mortgage or an assignment in lieu of foreclosure shall be deemed to be an Assignment
subject to the terms of this Section 11. Upon such Assignment, the Leasehold Mortgagee or any
Person acquiring the Leasehold Estate pursuant to foreclosure of a Leasehold Mortgage or an
assignment in lieu of foreclosure shall thereafter be relieved of all obligations under this Lease,
provided its Assignee agrees in writing to be bound by all of the provisions of this Lease.
ARTICLE 12:
OFF STREET PARKING
Tenant, or any of Tenant's guests, subtenants, customers, employees, agents or other parties under
Tenant's control shall not use any public streets, rights of way, taxi-lanes, driveways or other
properties not included in this Lease for the parking of vehicles. Vehicles must be parked in the
designated vehicle parking stalls, if any, or placed within the hangar when its aircraft is removed.
ARTICLE 13:
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ADVERTISING AND SIGNS
13.1) Except as set forth in Section 13.2 below, no signs or other advertising matter, symbols,
canopies or awnings shall be installed, attached to or painted on the Premises without the prior
written approval of the Landlord, which shall not be unreasonably withheld.
13.2) City grants to Tenant and each of the Tenant's Subtenants operating as an FBO or MRO in
the Premises or Subleased Space the ability to place a sign, advertising the FBO or MRO so long
as the following requirements are met:
(i) signage meets all City of Auburn sign code requirements;
(ii)the FBO obtains written approval from the Airport Manager,relating to the size,color,
type, style and placement of the sign,which the Airport Manager has complete and sole discretion
of approval for; and
(iii)the signage does not pierce the imaginary surfaces established in 14 C.F.R. Part 77.19.
All signage, signage installation, signage maintenance and any related permitting shall be the sole
and absolute cost of the Tenant or Subtenant.
ARTICLE 14:
LAWS,REGULATIONS AND STANDARDS
The Tenant agrees,at its sole cost and expense, to conform to, comply with and abide by all lawful
rules, codes, ordinances, requirements, orders, directions, laws, regulations and standards of the
United States, the State of Washington, and City of Auburn or agency of any of said entities,
including rules and regulations of Landlord, including without limitation those relating to
environmental matters, now in existence or hereafter promulgated, applicable to the Tenant's use
and operation of said Premises, including the construction of any Improvements thereon, and not
to permit said Premises to be used in violation of any of said rules, codes, laws or regulations.
Tenant shall pay all costs, expenses, liabilities, losses, damages, fines, penalties, claims, and
demands, including reasonable counsel fees, that may in any manner arise out of or be imposed
because of the failure of Tenant to comply with the covenants of this section.
ARTICLE 15:
ENVIRONMENTAL PROVISIONS
15.1) Tenant covenants to defend, indemnify, and hold Landlord harmless from any imposition
or attempted imposition by any person upon Landlord of any obligation or cost of whatever form,
including, without limitation, damages, claims, governmental investigations, proceedings or
requirements, attorney fees in investigation, at trial or administrative proceeding, or on appeal,
witness or consultant costs,or any other liability(collectively"Liabilities"),to the extent that such
Liabilities arise from a violation,or from the failure to satisfy a requirement,of any environmental
or land use law or regulation and proximately resulting from the acts or omissions of Tenant, its
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subtenants, agents, employees, contractors and invitees during the use of the Premises during the
term of this Lease, and without regard to when the Liabilities is asserted. The above provisions
shall not apply to the extent of any hazardous substances or other environmental conditions
existing on the Land at the Commencement Date of this Lease,or migrating onto or being released
on the Land by any person other than Tenant, its subtenants, agents, employees, contractors or
invitees.
15.2) Tenant shall not cause or allow, and shall not cause, allow or permit any of its subtenants,
agents, employees, contractors or invitees to cause or allow the Premises to be contaminated with
any hazardous or toxic substances in violation of any applicable Airport rules or policies, laws, or
governmental regulations or restrictions.
15.3) Tenant shall notify Landlord within twenty-four (24) hours of any release of a reportable
quantity of any hazardous substance defined by 42 U.S.C. §9601(14) and/or RCW
70A.305.020(13),or of the receipt by Tenant of any notices,orders or communications of any kind
from any governmental entity which relate to the existence of or potential for environmental
pollution of any kind existing on or resulting from the use of the Premises or any activity conducted
thereon. If Tenant fails to comply with any of the requirements of this section, Landlord may
undertake, without cost or expense to City, any actions necessary to protect Landlord's interest
including steps to comply with such laws.
15.4)Tenant shall adhere to and be on compliance with the Auburn Municipal Airport's Industrial
Stormwater Permit:WAR-000399 as it may be amended or updated from time to time,and hereby
attached by reference. Landlord will supply a copy of the most recent permit within 5 business
days of receiving written request by the Tenant.
ARTICLE 16:
MAINTENANCE
Upon Commencement of Construction, Tenant covenants to maintain the utilities, pavement,
pavement markings, hangars, fuel facilities and all other Improvements located on or about the
Premises, including site approved vegetation, in a clean, neat, sightly, safe and sanitary condition
(other than damage resulting from casualty which shall be covered by Article 10 above). Tenant
shall, at its sole cost and expense, provide all necessary repairs and maintenance in a timely
manner. Tenant agrees not to allow conditions of waste and refuse to exist on the Premises.Tenant
shall conform to and comply with all valid ordinances,regulations or laws affecting the Premises,
the Improvements or the use thereof. Without limiting Landlord's rights and remedies pursuant to
Article 22 below, if Tenant refuses or neglects to commence or complete any maintenance or
repairs within 30 calendar days of written notice to cure by the Landlord, Landlord may elect,but
will not be obligated to commence or complete the maintenance or repairs.If Landlord commences
or completes such maintenance and repairs Tenant shall promptly reimburse Landlord all direct
and indirect costs thereof, including labor,materials and equipment,plus an additional ten percent
(10%) assessment of the total maintenance and/or repair cost for administrative and management
purposes.Landlord will have no obligation whatsoever to keep,maintain,alter,remodel,improve,
repair, decorate or paint the Improvements or any other improvements hereafter situated upon the
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Premises. With the exception of any, perimeter security fence, security gate, security cameras,
water lines from the main to the Tenant's water meter, sewer lines located outside of the building
footprint,and/or storm facilities,which facilities may be replaced,constructed and/or relocated by
Tenant at Tenant's cost as part of the Improvements but maintained by and at the expense of the
Landlord following completion of the same, it is the intention of the Parties that Tenant and not
Landlord has the full responsibility and obligation for the repair and maintenance of the
Improvements and other improvements hereafter situated upon, within, above or below the
Premises and Tenant waives, to the full extent allowed by law, any right or remedy against
Landlord based upon the condition of the Improvements or any improvements hereafter situated
upon the Premises or any failure by Landlord or Tenant to repair or maintain the Improvements or
any such improvements. To the extent that any portion of the Airport's perimeter security fencing
and any perimeter security gates are replaced, constructed and/or relocated as part of the Tenants
construction of its Improvements, the gate and fence shall be built in conformity with the existing
gate and fencing system
ARTICLE 17:
ALTERATIONS AND ADDITIONS
17.1) Alterations and additions generally. Following Completion of the Initial Improvements,
Tenant shall not make; a) any additional Improvements, b) any material structural alterations to
existing Improvements("Alterations"),or,c)additions to existing Improvements("Additions")on
or about the Premises that require a permit or other governmental approval without first obtaining;
(i) the Airport Manager's written approval of the proposed Improvements, Alterations
and/or Additions which approval shall not be unreasonably withheld, conditioned or delayed; and
(ii) all required permits associated with the proposed Improvements, Alterations and/or
Additions, the cost of which shall be the sole responsibility of the Tenant.
Any Improvements, Alterations and/or Additions required to be made to the Premises by any
applicable building, health, safety, fire, nondiscrimination, or similar law or regulation ("law")
shall be made at Tenant's sole expense and shall be subject to the prior written consent of Landlord,
which shall not be unreasonably withheld. Landlord's approval of the plans, specifications and
working drawings for Tenant's Improvements, Alterations and/or Additions shall create no
responsibility or liability on the part of Landlord for their completeness, design sufficiency, or
compliance with all laws, rules and regulations of governmental agencies or authorities. To the
extent Landlord incurs any costs in its examination and approval of the architectural and
mechanical plans and specifications, which costs have not been previously reimbursed by Tenant
to Landlord through the City of Auburn's permitting process,Tenant shall reimburse Landlord for
any such additional sums expended for examination and approval of such plans and specifications.
17.2) Removal of Alterations or Additions. Landlord may require that the Tenant remove any
Alterations or Additions at the expiration or earlier termination of this Lease. Once so notified by
Landlord, Tenant shall have up to six (6) months to complete the removal. Any Alterations or
Additions remaining on the Premises after this six(6)month period(other than trade fixtures and
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movable equipment) shall become the property of Landlord and remain upon and be surrendered
with the Premises.
ARTICLE 18:
COVENANT OF QUIET ENJOYMENT
Landlord agrees that if Tenant timely pays the rent and performs the terms and provisions
hereunder,Tenant shall hold and enjoy the Premises during the Term,free of lawful claims by any
party acting by or through Landlord, subject to all other terms and provisions of this Lease.
ARTICLE 19:
UTILITIES
19.1) Tenant is responsible for establishing and maintaining direct accounts for all public or
private providers of utilities used in or charged against the Premises as appropriate and to hold the
Landlord harmless from any such charges. Such utilities shall include but not be limited to:power,
water, sewer, storm,telecommunication, and internet.Landlord and the Airport shall cooperate in
the granting of easements and rights-of-way in, through, above, and/or under property owned and
controlled by Landlord at the Airport and reasonably necessary for the provision of utilities to the
Premises without additional compensation payable by Tenant, provided that if any utility lines,
including but not limited to non-city utilities and service lines, need to be relocated, the
responsibility to relocate them shall be borne solely by the Tenant. The granting of any and all
easements shall be subject to the approval of the Auburn City Council unless Council has otherwise
previously authorized the granting of easements related to the Improvements by Resolution.
19.2) Except to the extent caused by the gross negligence or intentional misconduct of Landlord
or its agents, employees or contractors, failure by Landlord in any extent to furnish or cause to be
furnished the utilities or services described in this Lease, or any cessation or interruption thereof,
resulting from any cause, including without limitation, mechanical breakdown, overhaul or repair
of equipment, strikes, riots, acts of God, shortages of labor or material, compliance by Landlord
with any voluntary or similar governmental or business guidelines,governmental laws,regulations
or restrictions, or any other similar causes, shall not render the Landlord liable in any respect for
damages to either person or property, for any economic loss or other consequential damages
incurred by Tenant as a result thereof,be construed as an eviction of Tenant,result in an abatement
of rent, or relieve Tenant from its obligation to perform or observe any covenant or agreement
contained in this Lease.
ARTICLE 20:
LIENS AND INSOLVENCY
Except as otherwise expressly provided in this Lease,Tenant,by bond or otherwise shall keep the
Premises free from any liens arising from Tenant's use, construction or other activities on the
Premises. Tenant's insolvency is subject to Article 22 below.
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ARTICLE 21:
COSTS AND ATTORNEYS' FEES
If by reason of default on the part of either party to this Agreement it becomes necessary to employ
an attorney to recover any payments due hereunder or to enforce any provision of this Lease, the
prevailing party, whether such party be the successful claimant or the party who successfully
defended against the claim of the other party, shall be entitled to recover a reasonable attorney's
fee and to be reimbursed for such costs and expenses as may have been incurred by such prevailing
party.
ARTICLE 22:
DEFAULT &REMEDIES
22.1) Events of Default. Tenant will be in default("Default")under this Lease if;
(a) any Rent or other amount payable by Tenant to Landlord under this Lease remains unpaid for
more than ten(10) days after the date it is due;
(b)Tenant files a voluntary petition in bankruptcy or makes a general assignment to the benefit of,
or a general arrangement with, creditors;
(c)there is an involuntary bankruptcy filed against Tenant that has not been dismissed within sixty
(60) of filing;
(d) Tenant is adjudicated insolvent, or admits, in writing, its inability to pay its obligations in the
ordinary course as they come due;
(e) a receiver, trustee, or liquidating officer is appointed for Tenant's business; or
(f) Tenant violates or breaches any of the other covenants, agreements, stipulations or conditions
described in the Agreement.
22.2) Cure of Default. Upon an Event of Default in 22.1, Landlord shall send Tenant written
notice of the violation. Upon receipt of such notice, Tenant shall have thirty(30) days to cure the
violation. Any violation that continues beyond this 30 day period shall be grounds for Landlord's
termination of this lease. Tenant shall have no ability to cure a 3rd(or subsequent) distinct Event
of Default occurring within a 12 month period.
22.3) Termination after Default. Landlord shall not elect to terminate the Lease as a result of any
Default described above without first providing Tenant with written notice of Landlord's intent to
terminate the Lease("Termination Notice");provided that any such termination shall be subject to
Landlord compliance with the provisions of Section 23.2 setting forth the cure and other rights of
Leasehold Mortgagees. Subject to the preceding sentence and the provisions of Section 23.2,
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•
Landlord shall have the rights and remedies provided in this Section 22, in addition to any other
right or remedy available by law or equity (all notice and cure periods set forth above are in lieu
of and not in addition to any notice required pursuant to applicable unlawful detainer/eviction
statutes).
22.4) Upon Termination of this Lease, Landlord may reenter the Premises in the manner then
provided by law, and remove or put out Tenant or any other persons or subtenants found therein.
No such reentry shall be construed as an election on Landlord's part to terminate this Lease unless
a written notice of such intention is given to Tenant.
22.5) Upon termination of the Lease as a result of Tenant's Default,the Landlord may elect to re-
let the Premises or any part thereof upon such terms and conditions, including rent, term and
remodeling or renovation, as Landlord in its sole discretion may deem necessary. Landlord shall
also have the right to cause any of Tenant's Subtenants to direct all future sublease rent payments
directly to Landlord until such time as Tenants default has been cured. To the fullest extent
permitted by law, the proceeds of any reletting or payments made directly to Landlord by any of
Tenant's Subtenants shall be applied: first,to pay Landlord all costs and expenses of such reletting
(including without limitation,costs and expenses incurred in retaking or repossessing the Premises,
removing persons or property therefrom, securing new Tenants, and, if Landlord maintains and
operates the Premises, the costs thereof); second, to pay any indebtedness of Tenant to Landlord
other than rent; third,to the rent due and unpaid hereunder; and fourth,the remainder,if any, shall
be held by Landlord and applied in payment of other or future obligations of Tenant to Landlord
as the same may become due and payable, and Tenant shall not be entitled to receive any portion
of such revenue.
22.6) If Landlord terminates this Lease as provided in this Article, Landlord shall have the right
to reenter the Premises and remove all persons,and to take possession of and remove all equipment
and trade fixtures of Tenant in the Premises, in the manner then provided by law. Tenant waives
all claims associated with Landlord's exercising this right, and shall hold Landlord harmless
therefrom. No such reentry shall be considered a forcible entry. If Landlord elects to terminate the
Lease,Landlord may also recover from Tenant:
(I) Any earned but unpaid rent under this Lease owing to Landlord at the time
of termination;
(II) The amount of rent Landlord would receive under this Lease for a period of
24 months following the date of Termination inclusive of any Impositions
described in Article 5.2 and rent adjustments in Article 6 above(the parties
specifically negotiate and agree that this provision is intended as a
liquidated damages clause, and not as a penalty).
(III) Any other amount necessary to compensate the Landlord for any damages
caused by the Tenant's failure to perform its obligations under the Lease or
which in the ordinary course of things would be likely to result therefrom
(to include any legal fees and costs associated with a real property records
search pursuant to Article 23.2(f) of this Lease); provided that damages
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associated with loss of rent payable hereunder shall be limited to amounts
measured in 22.6(II) above; and
(IV) At Landlord's election, such other amounts in addition to or in lieu of the
foregoing that may be permitted from time to time by applicable law;
provided that damages associated with loss of rent payable hereunder shall
be limited to amounts measured in 22.6(II) above.
22.5) Subleases of Tenant. If Landlord elects to terminate this Lease on account of any Default
by Tenant, as set forth in this Article 22(and subject to Section 23.2),Landlord will have the right
to terminate any and all Subleases,consensual agreements,or arrangements for possession entered
into by Tenant and affecting the Premises. Or,Landlord may in its sole discretion, elect to succeed
to Tenant's interest in such subleases, agreements, or arrangements. In the event of Landlord's
election to succeed to Tenant's interest in any such Subleases, agreements, or arrangements,
Tenant shall, as of the date of notice by Landlord of such election, have no further right to or
interest in the rent or other consideration receivable thereunder.
22.6) Indemnification. Nothing in this Section 22 shall be deemed to affect Landlord's right to
indemnification for liability or liabilities arising prior to termination of this Lease for personal
injury or property damage under the indemnification provisions or other provisions of this Lease.
22.7) Time is of the essence for this agreement.
ARTICLE 23:
PRIORITY
23.1) Fee Mortgages.Landlord represents that there are no mortgages or other monetary liens on
title to the Premises as of the date of this Lease. Landlord may enter into a mortgage encumbering
its fee interest in the land ("Fee Mortgage") and this Lease shall be assignable by Landlord for
security purposes without the consent of Tenant,to the holder of a Fee Mortgage(together with its
successors and assigns, "Fee Lender")but only if(a) such Fee Mortgage is expressly subordinate
to this Lease, or (b) the Fee Lender enters into a subordination, nondisturbance and attornment
agreement in recordable form with Tenant on terms and conditions acceptable to Tenant under
which(i)Tenant agrees to attorn to the Fee Lender, (ii)the Fee Lender agrees to recognize and be
bound by this Lease and agrees that Tenant's use and possession of the Premises and all of its
rights under this Lease shall not be disturbed by Fee Lender or any Person who takes a deed in lieu
of judicial or nonjudicial foreclosure of any such Fee Mortgage or by the purchaser at any judicial
or nonjudicial foreclosure sale conducted under any such Fee Mortgage ("Fee Lender's
Successor")unless and until this Lease or Tenant's rights to possession of the Premises shall have
been lawfully terminated in accordance with the provisions of this Lease, and(iii)the Fee Lender
agrees to provide Tenant with a copy of any notice of default given to Landlord under the Fee
Mortgage and a right (but not an obligation) to cure such default and to credit such costs to Rent
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due under this Lease. Notwithstanding the foregoing, any Fee Lender's Successor who becomes
the lessor under this Lease shall succeed to all rights of Landlord during a Default by Tenant under
this Lease in accordance with the terms of this Lease; provided, however, that each Recognition
Agreement executed by Landlord under Section 23.2 below above shall be binding upon the Fee
Lender and Fee Lender's Successor. Tenant agrees that in conjunction with any Fee Mortgage,
Tenant shall execute, within twenty (20) Business Days after written request by Landlord, such
commercially reasonable acknowledgements and other documents regarding this Lease as the Fee
Lender may reasonably request,provided they comply with the requirements of this Lease and do
not enlarge the rights of the Fee Lender or Fee Lender's Successor or diminish any rights of Tenant
under this Lease, and Landlord reimburses Tenant, upon Tenant's execution of such documents,
for reasonable out-of-pocket costs incurred by Tenant to review or negotiate such documents.
23.2)Leasehold Financing.
(a) Assignments to Leasehold Mortgagee. Tenant may, without Landlord's written
consent, assign, transfer and/or hypothecate Tenant's Leasehold Estate to lenders providing
construction, interim or long-term financing to Tenant (each such lender, a "Leasehold
Mortgagee") as security for any such indebtedness, including a hypothecation by a leasehold
mortgage ("Leasehold Mortgage") secured by Tenant's Leasehold Estate in the Land and any
Improvements located thereon("Leasehold Financing"). Leasehold Financing may also include
an assignment of Tenant's rights under the Subleases, rights to proceeds from insurance or
condemnation as well as other collateral. Landlord consents to such Leasehold Financing,
provided that Landlord's fee interest in the land portion of the Premises (or the reversionary
interest of Landlord in the Improvements) shall not be subjected to such Leasehold Financing or
subordinated to it. Notwithstanding any other restrictions upon assignments in this Lease to the
contrary, any Leasehold Financing, any judicial or non judicial foreclosure of a Leasehold
Mortgage or exercise of other rights and remedies in connection with any Leasehold Financing,
any assignment of this Lease in lieu of such judicial or non judicial foreclosure, and any
assignment of this Lease by a Leasehold Mortgagee or its affiliate following any such foreclosure
or assignment in lieu thereof shall be permitted without the consent of Landlord.
(b) Notice to Landlord of Leasehold Mortgagee's Identity and Address. Prior to
encumbering its Leasehold Estate with a Leasehold Mortgage,Tenant shall provide Landlord with
the name and address'of the Leasehold Mortgagee and a description of the Leasehold Estate and
Improvements to be encumbered by the Leasehold Mortgage. Tenant will supply to Landlord
copies of the recorded form of Leasehold Mortgage and any and all amendments or modifications
thereto within twenty(20)Business Days following the recording of the Leasehold Mortgage.
(c) Assignment of Subleases and Income. Landlord acknowledges that the Leasehold
Mortgagee will have the first right to receive any rents, insurance proceeds and condemnation
awards payable to Tenant under the Subleases during the term of such Leasehold Financing.
(d) No Merger. So long as any Leasehold Mortgage is in existence, unless the
Leasehold Mortgagee shall otherwise expressly consent in writing, or unless this Lease has
expired,has been terminated in accordance with its terms as a result of a Default by Tenant,or has
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otherwise terminated earlier in accordance with its terms, the fee title to the Premises and the
Leasehold Estate of Tenant therein created by this Lease shall not merge but shall remain separate
and distinct, notwithstanding the acquisition of said fee title and/or said Leasehold Estate by
Landlord or by Tenant, or by a third party,by purchase or otherwise.
(e) Modifications to Lease; Acknowledgement by Landlord. If any prospective
Leasehold Mortgagee shall require any modification to this Lease as a condition to such Leasehold
Mortgage, Landlord shall not unreasonably withhold, condition or delay its approval of such
modification and Landlord shall execute such acknowledgements or other agreements reasonably
requested by the Leasehold Mortgagee regarding the rights accorded the Leasehold Mortgagee so
long as such modification does not adversely affect any economic terms of this Lease or adversely
affect the rights,powers,privileges,obligations or liabilities of Landlord,and provided that Tenant
reimburses Landlord,upon Landlord's execution of such documents, for reasonable out-of-pocket
costs incurred by Landlord to review or negotiate such documents.
(f) Priority of Leasehold Mortgages. If more than one Leasehold Mortgagee seeks to
exercise a right to cure an Event of Default, obtain a new lease pursuant to Section 23.2(h)(vii), or
otherwise exercise any rights provided to Leasehold Mortgagees under this Lease, then Landlord
shall be entitled to recognize and deal at any one time exclusively with the Leasehold Mortgagee
whose lien against Tenant's interest in this Lease that the Landlord,in its good-faith determination,
believes to be most senior. If a dispute arises as to the relative priority of the liens of any Leasehold
Mortgages, in the absence of any agreement among the pertinent Leasehold Mortgagees
establishing a different priority, Landlord shall be entitled to rely conclusively upon a search of
the real property records of King County by a nationally recognized title company selected by
Landlord, and Landlord shall have no liability with respect to any action taken in good faith in
reliance thereon.
(g) Leasehold Mortgagee Protections. Landlord acknowledges and agrees that in the
event any period should exist between the termination of this Lease and the granting of a new lease
to a Leasehold Mortgagee as provided in Section 23.2 (h)(vii) below, and if and to the extent
Landlord receives any income that is directly attributable to the use of the portion of the Premises
previously encumbered by the Leasehold Mortgage, it shall permit the Leasehold Mortgagee to
credit such income against the Rent that otherwise would have been due under this Lease or such
new lease during such period.
(h) Rights of Leasehold Mortgagee;Notice.
(i) Modifications. Tenant agrees that whenever the Tenant's Leasehold Estate
hereunder is encumbered by a Leasehold Mortgage in favor of a Leasehold Mortgagee, Landlord
will not modify or amend this Lease in any material manner, or agree with Tenant to or accept any
cancellation, rescission or surrender of this Lease without the prior written consent of the
Leasehold Mortgagee, but the Landlord shall have its rights and remedies under this Lease in the
event of a Default subject to the provisions set forth below (in addition to compliance with the
obligations in Section 22 above).
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(ii) Notice of Default; Opportunity to Cure. If a Leasehold Mortgage is in
effect, Landlord shall, but is under no obligation, send a copy of any notice of a breach or notice
that is a prerequisite to declaring an Event of Default given to Tenant to each Leasehold Mortgagee
identifying the claimed breach or the event that would be an Event of Default. Leasehold
Mortgagee shall have the right, but not the obligation, to perform any obligation of Tenant under
this Lease within the cure period granted to Tenant and Landlord shall accept performance or
payment by a Leasehold Mortgagee with the same force and effect as though performed or paid
by Tenant.
(iii) Opportunity to Prevent Termination. If Landlord delivers a Termination
Notice to Tenant pursuant to Section 22 above and Tenant fails to cure such Default , then any
termination of this Lease by Landlord shall not be effective as to Tenant unless and until Landlord
provides written notice to Leasehold Mortgagee of Landlord's election to terminate this Lease
("Termination Notice to Leasehold Mortgagee"). If Landlord provides a Termination Notice to
Leasehold Mortgagee,any Leasehold Mortgagee shall have the right to require Landlord to forbear
from terminating this Lease and Landlord shall so forbear if and for so long as:
(A)within thirty(30)days after receiving the a copy of Termination
Notice sent to Tenant, the Leasehold Mortgagee notifies Landlord that it is exercising its rights
under this Section and with such notice tenders payment of all Rent and other monetary amounts
that are then due and payable under this Lease;
(B) from and after the date of the Leasehold Mortgagee receives a
copy of the Tenant notice and payment described in clause (A) above, the Leasehold Mortgagee
or any party designated by Leasehold Mortgagee, the purchaser at foreclosure, or the recipient of
a deed in lieu of foreclosure continues to pay when due all Rent and other monetary amounts due
and payable under this Lease; and
(C)the Leasehold Mortgagee or any party designated by Leasehold
Mortgagee, the purchaser at foreclosure, or the recipient of a deed in lieu of foreclosure shall use
due diligence to cure any non-monetary Default.
For purposes of this Section 23(h), whether a breach is capable of being cured by a Leasehold
Mortgagee or any party designated by a Leasehold Mortgagee,the purchaser at foreclosure, or the
recipient of a deed in lieu of foreclosure shall be objectively and reasonably determined based on
all facts but shall not include any breach arising out of any misrepresentation by Tenant, any lien
or encumbrance that is junior to the Leasehold Mortgage, or any bankruptcy or insolvency
proceedings for reorganization or for the appointment of a receiver or trustee of all or substantially
all of Tenant's assets, or an assignment by Tenant for the benefit of its creditors, or any execution
or attachment issued against Tenant or Tenant's property,provided that said Leasehold Mortgagee
continues to timely perform or cause to be performed all the covenants and conditions of this Lease
requiring the payment or expenditure of money by Tenant. Neither Leasehold Mortgagee nor any
party designated by Leasehold Mortgagee,the purchaser at foreclosure, or the recipient of a deed
in lieu of foreclosure shall be obligated to provide a guaranty.
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(iv) Performance. Landlord shall accept full and complete performance by or at
instigation of the Leasehold Mortgagee as if the same had been done by Tenant, provided such
Leasehold Mortgagee complies with the provisions of this Section 23.2(h). Upon full compliance
with the provisions of this Section 23.2(h) and acquisition of Tenant's Leasehold Estate by such
Leasehold Mortgagee, its designee or other purchaser at foreclosure sale or otherwise, this Lease
shall continue in full force and effect as if Tenant had not breached under this Lease.
(v) Leasehold Mortgage Not an Assignment. For purposes of this Lease,neither
the creation nor establishment of any Leasehold Mortgage nor the exercise of any remedies under the
Leasehold Mortgage (including a sale at foreclosure or under a deed in lieu of foreclosure) shall be
deemed to constitute an Assignment, sale,transfer, or conveyance of Tenant's Leasehold Estate, the
Improvements, any other improvements, or any portion thereof, nor shall any Leasehold Mortgagee
be deemed to be an assignee or transferee of this Lease or of the Tenant's Leasehold Estate so as to
require any Leasehold Mortgagee to assume the performance of any of the terms, covenants or
conditions on the part of Tenant to be performed hereunder;provided,however,the purchaser at any
sale of Tenant's interests under this Lease and of the Tenant's Leasehold Estate hereby created in any
proceedings for the trustee's sale or foreclosure of any Leasehold Mortgage, or the assignee or
transferee of this Lease and of the Leasehold Estate hereby created under any instrument or
assignment or transfer in lieu of such trustee's sale or foreclosure, shall thereafter be deemed to be
the Tenant and shall be deemed to have agreed to perform all of the terms,covenants,and conditions
on the part of the Tenant to be performed hereunder accruing from and after the date of such purchase
and assignment. Notwithstanding the foregoing, in no event shall any Leasehold Mortgagee be (A)
liable for the initial construction of the Improvements; (B)liable for any condition of the Premises or
the Improvements which existed prior to the date of its acquisition of the Tenant's interest in the
Leasehold Estate and the Improvements, or for any damage caused by such preexisting condition,or
for the correction thereof or the compliance with any law related thereto; (C) liable for any act or
omission of any prior Tenant(including Tenant), including any failure to pay Rent hereunder,unless
notice thereof was given to such Leasehold Mortgagee in accordance with this Section 23.2; or(iv)
bound by any agreement or modification of this Lease made without the prior written consent of the
Leasehold Mortgagee as provided elsewhere herein.
(vi) No Conflict. In the event of a breach or default under a Leasehold
Mortgage,the Leasehold Mortgagee may exercise any right,power or remedy under the Leasehold
Mortgage which is not in conflict with the provisions of this Lease.
(vii) Assumption of Lease Term by Mortgagee or purchaser. If this Lease is
terminated for any reason, including rejection of this Lease in a bankruptcy proceeding, Landlord
agrees that the Leasehold Mortgagee, or a purchaser at foreclosure, or the recipient of a deed in
lieu of foreclosure may assume the then remainder of the Term of this Lease,at the Rent and upon
the other terms,covenants,conditions and agreements contained in this Lease,provided such party
delivers a written request to Landlord for such lease assumption within sixty (60) days after the
Leasehold Mortgagee receives written notice of the termination and,within such period,Leasehold
Mortgagee or its nominee or designee cures all monetary breaches and defaults under this Lease.
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ARTICLE 24:
RETENTION OF AIRSPACE AND OTHER RIGHTS BY LANDLORD
24.1) Landlord retains the public and private right of flight for the passage of aircraft in the
airspace above the Premises surface,together with the right to cause in said airspace such noise as
may be inherent in the operation of aircraft, now known or as hereinafter used, for navigation of
or flight in said airspace and for use of said airspace for taking off from, landing on or operating
at Auburn Municipal Airport.
24.2) Landlord reserves the right to further develop or improve the landing area of the Airport as
it sees fit, regardless of the desires or view of the Tenant and without interference or hindrance;
provided that the same does not materially and adversely impact the ability of Tenant to use the
Premises for the permitted uses pursuant to this Lease.
24.3) Landlord shall maintain and keep in repair the landing area of the Airport and all publicly-
owned facilities of the Airport.
24.4) This Lease shall be subordinate to the provisions and requirements of any existing or future
agreement or order between the Airport and the United States, relative to the development,
operation, and maintenance of the Airport.
24.5) Tenant agrees to comply with the notification and review requirements covered in 14 C.F.R.
Part 77 in the event any construction is planned for the Premises, or in the event of any planned
modification or alteration of any present or future Improvements or structure situated on the
Premises.
24.6) Tenant agrees that it will not erect nor permit the erection of any structure or object, nor
permit the growth of any tree on the Premises to exceed the restrictions of ACC 18.38, as now
enacted or hereafter amended In the event the aforesaid covenants are breached, Landlord shall
give written notice to the Tenant specifying the breach. If Tenant does not take action to correct
the breach within ten (10) days of receipt of said notice, the Landlord reserves the right to enter
upon the Premises hereunder and to remove the offending structure or object and cut the offending
tree,all of which shall be at the expense of Tenant. Tenant shall also pay to Landlord an additional
ten percent(10%) above any costs to cure for administration,management and processing fees.
24.7) Tenant, by accepting this Lease, agrees that it will not make use of the Premises in any
manner which unreasonably interferes with aircraft or Airport operations, or otherwise constitute
a hazard. If this section is breached, Airport reserves the right to enter upon the Premises and
cause the abatement of such interference at the expense of Tenant. Tenant shall also pay to
Landlord an additional ten percent(10%)above any costs to cure for administration,management
and processing fees.
24.8) It is understood and agreed that nothing herein contained shall be construed to grant or
authorize the granting of an exclusive right within the meaning of 49 U.S.C. Subtitle VII.
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24.9) This Lease and all the provisions hereof shall be subject to whatever right of the United
States Government now has or in the future may have or acquire, affecting the control, operation,
regulation, and taking over of the Auburn Airport by the United States during the time of the war
or national emergency.
24.10) Landlord reserves the right to: (i)take any reasonable or legally required action necessary
to protect the aerial approaches of the Auburn Airport against obstructions; and(ii)prevent Tenant
from erecting or permitting to be erected any building or other structure on the Premises (other
than the Improvement contemplated by this Lease and Exhibit B) which,in the opinion of Airport
or the Federal Aviation Administration, would limit the usefulness of the Auburn Airport or
constitute a hazard to aircraft.
24.11) Tenant, as well as Tenant's Assignees and Subtenants, and the agents, employees and
customers thereof, shall have the rights of access to and use of all areas and public facilities of the
Auburn Airport which are intended for the common use of all tenants, guests and occupants of the
Auburn Airport, including but not limited to the take-off and landing areas, taxi areas, reasonable
access thereto from the Premises, and air control facilities.
ARTICLE 25:
FEDERAL AVIATION ADMINISTRATION REQUIREMENTS
25.1) Tenant agrees:
(I) to prevent any activity at the Premises which would produce electromagnetic
radiations of a nature which would cause interference with any existing or future
navigational aid or communication aid serving Auburn Municipal Airport, or
which would create any interfering or confusing light or in any way restrict
visibility at the Airport; and
(II) to prevent any use of the Premises,which would interfere with landing or
taking off of aircraft at Auburn Municipal Airport, or otherwise, constitute an
aviation hazard.
25.2) Landlord reserves the right during the term of this Lease or any renewal and/or extension
thereof to install air navigational aids including lighting, in, on, over,under, and across the
Premises in the exercise of any of the rights hereof. Landlord agrees to give Tenant no less than
ninety(90) days'written notice of its intention to install such air navigational aids.
Notwithstanding the foregoing, and while remaining subordinate to its federal obligations of a
public-use airport, Landlord shall make commercially reasonable efforts to ensure air
navigational aids do not interfere with the Tenant's use of the Improvements or Quiet Enjoyment
of the Premises.
ARTICLE 26:
SECURITY
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Landlord shall have no obligation to provide security to the Premises. If reasonably required by
Landlord, Tenant shall provide adequate lighting to provide for all-night illumination of the
Taxilane apron of all buildings on the Premises,including aprons,aircraft tiedown areas,vehicular
parking lots, and pedestrian walkways surrounding the Premises. Subject to Section 9.5 of this
lease, Tenant may, but need not, employ security persons. If at any time during the term of this
Lease,additional security requirements are imposed on the Airport by the FAA or any other agency
having jurisdiction over Airport, and such additional security requirements apply to the Premises
(as well as all other properties of Landlord within this Airport),Tenant agrees to comply with said
security requirements to the extent the same are required for the Premises,at Tenant's sole expense,
upon being notified of such requirements in writing by the Landlord. If the Landlord is fined by
FAA for a security violation caused by negligence of Tenant,or any of Tenant's Subtenants,Tenant
shall immediately reimburse Landlord upon demand plus pay an additional ten percent(10%) for
administration, management and processing fees.
ARTICLE 27:
INSPECTION,ACCESS AND NOTICE
Notwithstanding the provisions of Landlord's Continued Use described in Exhibit C,Landlord and
any of its employees, agents, officials or representatives shall at any time upon fourteen(14) days
advance, written notice to Tenant, have the right to go upon and inspect the Premises and
Improvements, erected or constructed, or in the course of being erected or constructed, repaired,
added to, rebuilt or restored thereon. Landlord shall further have the ongoing right, provided
fourteen(14) days written notice to inspect the Premises and any Suites for aeronautical and uses
compliances described in Articles 3.1 and 11.2 above along with any other inspections that may
be required by law or code. However,in the event the Landlord determines,in its sole and absolute
discretion, that an emergency situation exists on or adjacent to the Premises,no advance notice to
Tenant is required and Landlord may immediately enter upon and inspect the Premises. Landlord
shall also have the right to serve or to post and to keep posted on the Premises, or on any part
thereof, any notice permitted by law or by this Lease, any other notice or notices that may at any
time be required or permitted by law or by this Lease. Airport shall not be liable in any manner for
any inconvenience, disturbance, loss of business, or other damages arising out of Landlord's entry
on the Premises as provided in this Article except for such damage that is caused directly by, or
through the gross negligence of, Landlord, their employees, agents, officials or representatives.
ARTICLE 28:
NON-DISCRIMINATION
28.1) Tenant for itself, its successors in interest, and assigns, as a part of the consideration hereof,
does hereby covenant and agree that in the event facilities are constructed,maintained,or otherwise
operated on the Premises described in this Lease for a purpose for which a Department of
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Transportation ("DOT") program or activity is extended or for another purpose involving the
provision of similar services or benefits, the Tenant shall maintain and operate such facilities and
services in compliance with all other requirements imposed pursuant to 49 C.F.R. Part 21 (as now
enacted or hereafter amended).
28.2) Tenant for itself, successors in interest, and assigns, as a part of the consideration hereof,
does hereby covenant and agree that: 1) no person on the grounds of race, religion color, sex, or
national origin or any other protected class, shall be excluded from participation in, denied the
benefits of, or be otherwise subjected to, discrimination in the use of said facilities, 2) that in the
construction of any improvements on, over, or under the Premises and the furnishing of services
thereon, no person on the grounds of race, religion, color, sex, or national origin or any other
protected class shall be excluded from participation in, denied the benefits of, or be otherwise
subjected to discrimination, and 3) that the Tenant shall use the Premises in compliance with all
other requirements imposed by or pursuant to 49 C.F.R. Part 21 (as now enacted or hereafter
amended).
28.3) In the event of breach of any of the above non-discrimination covenants, Landlord shall
have the right to terminate without notice or ability to cure provided in Paragraph 22.2 this Lease
and to re-enter and repossess said Premises and the facilities thereon, and hold the same as if said
Lease has never been made or issued. This provision does not become effective until the
procedures of 49 C.F.R. Part 21 are followed and completed,including expiration of appeal rights.
28.4) Tenant shall furnish its accommodations and/or services on a fair, equal, and not unjustly
discriminatory basis to all users thereof and it shall charge fair,reasonable, and not unjustly
discriminatory prices for each unit or service,provided that Tenant may be allowed to make
reasonable and nondiscriminatory discounts, rebates, or other similar types of price reductions to
volume purchasers.
28.5) Noncompliance, as determined by a court of competent jurisdiction,with Article 28.4 above
shall constitute a material breach thereof and, in the event of such noncompliance, Landlord shall
have the right to terminate this Lease and the estate hereby created without liability therefor or, at
the election of the Landlord or the United States, either or both said Governments shall have the
right to judicially enforce the provisions of said Article 29.4.
28.6) Tenant agrees that it shall insert the above five subsections in any lease,license,or sublease
agreement by which said Tenant grants a right or privilege to any person, firm, or corporation to
render accommodations and/or services to the public on the Premises herein leased.
28.7) The Tenant assures that it will undertake an Affirmative Action program to the extent
required by 14 C.F.R. Part 152, Sub-part E, ("Sub-part E") to ensure that no person shall on the
grounds of race, creed, color, national origin, or sex, be excluded from participating in any
employment activities covered in Sub-part E. The Tenant assures that no person shall be excluded
on these grounds from participating in or receiving the services or benefits of any program or
activity covered by this Sub-part E. The Tenant assures that it will require that its covered
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suborganizations, provide assurances to the Tenant that they similarly will undertake Affirmative
Action programs, and that they will require assurances from their suborganizations, as required by
Sub-part E, to the same effort.
ARTICLE 29:
NOTICES
All notices hereunder may be hand-delivered, delivered by recognized national overnight courier
service, or sent via U.S. First Class mail,postage prepaid, to the following addresses:
Landlord: :: ; `;x..:`` .:...:_._::. _ Tenant
City of Auburn—Airport Manager S50 Hangars, LLC—Attn: Douglas Wilson
2143 E St NE Suite 1 2143 E Street NE
Auburn, WA 98002 Auburn, WA 98002
With copies to: With copies to:
City of Auburn—City Attorney
25 W Main
Auburn,WA 98001
Notices given by hand-delivery or by overnight delivery as aforesaid shall be deemed given when
delivery is made or refused. Notices given by U.S. First Class mail shall be deemed given two (2)
business days after depositing in the mail.
ARTICLE 30:
MISCELLANOUS
30.1) No Brokers. Tenant represents and warrants to Landlord that it has not engaged any broker,
finder or other person who would be entitled to any commission or fees in respect of the
negotiation, execution or delivery of this Lease and shall indemnify and hold harmless Landlord
against any loss, cost, liability or expense incurred by Landlord as a result of any claim asserted
by any such broker, finder or other person on the basis of any arrangements or agreements made
or alleged to have been made by or on behalf of Tenant.
30.2) Non Waiver. Waiver by Landlord of any term, covenant or condition herein contained or
any breach thereof shall not be deemed to be a waiver of such term, covenant, or condition or of
any subsequent breach of the same or any other term,covenant, or condition herein contained.
30.3) Estoppel Certificates. Landlord and Tenant shall,from time to time,within ten(10)business
days of written request from the other, execute, acknowledge and deliver to the requesting party
or its designee a written statement certifying that: (i)this Lease is in full force and effect and has
not been assigned or amended in any way (or specifying the date and terms of agreement so
affecting this Lease); (ii)this Lease represents the entire agreement between the parties as to this
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leasing;that all obligations under this Lease to be performed by the other party have been satisfied;
(iii) on this date there are no existing claims, defenses or offsets which the estopping party has
against the enforcement of this Lease by the other; (iv)no Rent has been paid more than one month
in advance; and that no security has been deposited with Landlord(or, if so, the amount thereof);
and (v) such other factual matters as reasonably requested. It is intended that any such statement
delivered pursuant to this Section may be relied upon by a prospective purchaser of Landlord's or
Tenant's interest or holder of any mortgage upon Landlord's or Tenant's interest in the Premises
or this Lease.
30.4) Intentionally Left Blank
30.5) Severability. If any term, covenant, or condition of this Lease (or part thereof) or the
application thereof to any person or circumstance is, to any extent, invalid or unenforceable, the
remainder of this Lease (and/or the remainder of any such term, covenant or condition), or the
applicability of such term, covenant or condition to persons or circumstances other than those to
which it is held invalid or unenforceable, shall not be affected thereby and each term, covenant or
condition (or part thereof) of this Lease shall be valid and be enforced to fullest extent permitted
by law.
30.6) Authority. Each party hereto warrants that it has the authority to enter into this Lease and
to perform its obligations hereunder and that all necessary corporate action to authorize this
transaction has been taken, and the signatories,by executing this Lease,warrant that they have the
authority to bind the respective parties.
30.7) Dispute Resolution. The provisions of this Section 30.7 (the "Dispute Resolution
Procedures")will apply to disputes between Landlord and Tenant on issues or matters with respect to
which this Lease(or any Exhibit hereof)expressly provides will be resolved by"Dispute Resolution"
or"Dispute Resolution Procedures."
(a) The Party desiring to invoke the Dispute Resolution Procedures pursuant to
this section shall give written notice to the other party("Arbitration Notice") specifying the
disputed issues to be submitted to arbitration("Arbitration").The Arbitration shall be before
one(1)disinterested"qualified arbitrator"(as defined below)if both Landlord and Tenant can
agree on a single arbitrator within ten (10) Business Days after delivery of the Arbitration
Notice. In the event Landlord and Tenant do not agree on an arbitrator within such ten (10)
Business Day period, selection of the arbitrator shall be made, at the election of the parties,
either by the American Arbitration Administration (AAA) at its Seattle, Washington office,
or by Judicial Arbitration and Mediation Services ("JAMS") located in Seattle, Washington.
A"qualified arbitrator"shall mean a"disinterested"licensed attorney having at least ten(10)
years' experience in the greater Seattle area, specializing in commercial real estate and lease
disputes and qualified to act as an expert witness over objection to give opinion testimony on
the applicable issue in a court of competent jurisdiction. A"disinterested" candidate shall be
a person who shall not have direct or indirect financial or other interest in the decisions to be
made at the Arbitration,who shall not be an officer,director,employee,or agent of Landlord
or Tenant or any of their affiliates and who shall not have been directly or indirectly
S50 Hangars,LLC/COA
Land Lease/Airport SE Development Area
Resolution 5771 Page 31 of 46
compensated by Landlord(or its affiliate) or Tenant(or its affiliate) in the past five(5)years.
The person selected as arbitrator pursuant to the above provisions to act as arbitrator in
connection with an applicable dispute is referred to herein as the"Arbitrator".
(b) The Arbitrator shall determine the controversy in accordance with the laws of
the State of Washington as applied to the facts as determined by the Arbitrator upon receipt
of evidence and arguments presented by the parties. Unless the parties otherwise agree, the
Arbitration shall be conducted in accordance with the commercial arbitration rules of the
American Arbitration Association (AAA-CAR) and the Arbitration shall take place and be
conducted in the City of Seattle,Washington at a location designated by the Arbitrator.Absent
fraud, collusion or willful misconduct by the Arbitrator, the award of the Arbitrator shall be
binding, final and conclusive on the parties, and judgment on such award rendered may be
entered in any court having jurisdiction thereof.
(c) Fees of the Arbitrators and the expenses incident to the Arbitration
("Arbitration Costs") shall initially be borne equally between Landlord and Tenant. Upon a
decision being reached by the Arbitrator after conclusion of the Arbitration, the Arbitrator
may award fees and expenses as provided for in the AAA-CAR.
ARTICLE 31:
SIGNATURES
By signing in the space below, the TENANT ACKNOWLEDGES HAVING READ AND
UNDERSTOOD AND AGREES TO THE CONTENTS OF THIS AGREEMENT.
[Signatures on following page]
S50 Hangars,LLC/COA
Land Lease/Airport SE Development Area
Resolution 5771 Page 32 of 46
Dated and Signed this to day of jt( , 20 g-4.
S50 Hangars,LL :
r .2___
Douglas Wilson—Managing Member
STATE OF WASHINGTON )
r , ) ss.
County of
The undersigned Notary Public hereby ce ifies: That on this 1 day o ,
20,.If,personally appeared before me E S 5 A (nam and
J/'--- (name) ,, eWL 6e4/ (title),
ff (title)to me known to b e • dividual(s)described in
and who executed tie within instrument,and acknowledged that he/she signed and sealed the same
as his/her free and voluntary act and deed,for the purposes and uses therein mentioned, and on
oath stated that he/she was duly authorized to execute said document on behalf of
SOD CktatftKst ( 1 li .
In Witness Whereof I have hereunto set my hand and affixed my official seal the day and
year first above written.
r r d
J.-
40
ANGELA ELIZNotary
P bii KLEIN Notary lic d for Mite of V�ashington,
Notary Pubiic ��
State of Was'hin on Residing ��� ��
Commission 2 ^ + C4 My commission exp A.
s Si (-3- c �
My Comm. Expi ; ?.Oz5 '
ANOELA ELIZABETH KLEIN
•
Notary Public
State of Washington
0 Commission#21027004
0 My Comm, Expires Sep 17,2025
S50 Hangars,LLC/COA
Land Lease/Airport SE Development Area
Resolution 5771 Page 33 of 46
Dated and Signed this 5 day of A O? 4" , 20 Jut .
CITY OF AUBURN:
• _' '. v—r1%..
lik
NANC , ,US,- ayor
Appr ed as to form:
Acting City Attore: Charl tte E. Store
STATE OF WASHINGTON )
ss.
County of Y-1 i C-1 )
The undersigned Notary Public hereby certifies: That on this 5 day of P1Ao1A S* ,
20 20i,personally appeared before me NICVAD 'Poc -US (name),
VVN p\ (title),to me known to be the individual(s)described in
and who executedlthe within instrument,and acknowledged that he/she signed and sealed the same
as his/her free and voluntary act and deed, for the purposes and uses therein mentioned, and on
oath stated that he/she was duly authorized to execute said document on behalf of
AN. GN 0k PObuvrv\.
In Witness Whereof I have hereunto set my hand and affixed my official seal the day and
year first above written.
..)4k--A,41-‘,..61.1-A,
Notary Public . r . ` Notary Public in and for the State of Washington,
State of Washington Residing at Vk\Q1�lIM 1 W
HANNAH SCHOLL. My commission expires 0A-tot- 202-U
LICENSE#202199
MY COMMISSION EXPIRES
SEPTEMBER 19 2026
S50 Hangars,LLC/COA
Land Lease/Airport SE Development Area
Resolution 5771 Page 34 of 46
EXHIBIT A-1
LEGAL DESCRIPTION OF THE PREMISES
A LEASE AREA WITHIN A PORTION OF THE CITY OF AUBURN AIRPORT SOUTHEAST TERMINAL
PARCEL AS CONVEYED AND DESCRIBED IN STATUTORY WARRANTY DEED RECORDED UNDER
RECORDING NUMBER 6696708,RECORDS OF KING COUNTY,WASHINGTON,BEING A PART OF
THE JOSEPH BRANNAN DONATION LAND CLAIM NO.38 IN THE NORTHWEST QUARTER OF
SECTION 7,TOWNSHIP 21 NORTH,RANGE 5 EAST,W.M.,CITY OF AUBURN,KING COUNTY,
WASHINGTON,SAID LEASE AREA BEING DESCRIBED AS FOLLOWS:
COMMENCING AT THE NORTH EAST CORNER OF SAID PARCEL BEING AN ENCASED BRASS
MONUMENT IN THE CENTERLINE OF"E"STREET NORTHEAST;THENCE ALONG THE EAST LINE OF
SAID PARCEL ALSO BEING THE WEST RIGHT OF WAY MARGIN OF°E"STREET NORTHEAST,SOUTH
00°39'48"WEST A DISTANCE OF 259.83 FEET;
THENCE LEAVING SAID EAST LINE OF SAID PARCEL NORTH 89°20'12"WESTA DISTANCE OF 25.00
FEET TO THE POINT OF BEGINNING OF SAID LEASE AREA;
THENCE PARALLEL WITH SAID EAST LINE SOUTH 00'639'48"WESTA DISTANCE OF 283.57 FEET TO
A TANGENT CURVE CONCAVE NORTHWEST HAVING A RADIUS OF 29.00 FEET,THE CENTER OF
WHICH BEARS NORTH 89°20'12"WEST;
THENCE SOUTHWESTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 53°51'36'AN
ARC DISTANCE OF 27.26 FEET;
THENCE SOUTH 54°31'23"WEST A DISTANCE OF 23.32 FEET;
THENCE SOUTH 61°59'49"WEST A DISTANCE OF 27.88 FEET TO A TANGET CURVE CONCAVE
NORTHWESTERLY HAVING A RADIUS OF 69,00 FEET,THE CENTER OF WHICH BEARS NORTH
28°00'11"WEST;
THENCE SOUTHWESTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 28°30'24"AN
ARC DISTANCE OF 34.33 FEET;
THENCE NORTH 89°29'47"WEST A DISTANCE OF 306.36 FEET;
THENCE SOUTH 00°13'15"EASTA DISTANCE OF 14.56 FEET;
THENCE NORTH 89°45'00"WEST A DISTANCE OF 38.51 FEET;
THENCE NORTH 72°19'47"WESTA DISTANCE OF 11.28 FEET;
THENCE NORTH 47°56'33"WEST A DISTANCE OF 17.85 FEET;
S50 Hangars,LLC/COA
Land Lease/Airport SE Development Area
Resolution 5771 Page 35 of 46
THENCE NORTH 89°11'22"WEST A DISTANCE OF 53.42 FEET;
THENCE NORTH 00°49'00"EASTA DISTANCE OF 344.47 FEET;
THENCE SOUTH 89°04'37"EAST A DISTANCE OF 250.00 FEET;
THENCE SOUTH 86°00'11"EAST A DISTANCE OF 7.24 FEET;
THENCE SOUTH 88°40'52"EAST A DISTANCE OF 29.45 FEET;
THENCE SOUTH 89°27'05"EAST A DISTANCE OF 222.73 FEETTO THE POINT OF BEGINNING OF
SAID LEASE AREA
CONTAINING AN AREA OF 174,316 SQUARE FEET{4.00 ACRES},MORE OR LESS.
THE BASIS OF BEARINGS FOR THIS DESCRIPTION IS THE CALCULATED BEARING OF SOUTH
00°39'48"WEST BEING THE MONUMENTED CENTERLINE OF"E"STREET NORTHEAST AS
DETERMINED FROM COA MONUMENT 509-006 ATTHE NORTHEAST CORNER OF SAID AIRPORT
SOUTHEAST TERMINAL PARCEL TO COA MONUMENT 509-004,A POINT OF CURVATURE
MONUMENT.
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S50 Hangars,LLC/COA
Land Lease/Airport SE Development Area
Resolution 5771 Page 36 of 46
EXHIBIT A-2
DEPICTION OF THE PREMISES
P.O.C. MI 25'1
iyaki,' NE CORNER FW I
1.7e
�r� rkst, AIRPORT SEWO
TERM6696INAL
I t>7
r i'a. t G� (COA MON 509-006) jy
44.411,
CITY OF AUBURN AIRPORT ;
1 i. � SOUTHEAST TERMINAL PARCEL in
1 1CAAG LAM TPN 000080-0011
1725 "E" ST NE ROB-.
A 03l142024 LEASE AREA �+ En
:„n t Z
`�`�`yy'.,q°Q / S89'64'371 256.00' Ley L9' Se9'27'65"E 222.73' .L1
1 1' "'• 0 I
CI - R29.00' o.
A = 53'51'36" rt :�
0
L = 27.26' ., I PASE AREA ?, e
C2 - R = 69.00' Lo 174,316 SO. Ff. f as
8 = 28'30'24" o n m 1
r
L = 34.33' o M
L1 = N89'20'12"W 25.00' z N
L2 = 554'31'23"W 23.32'
L3 = S61'59'49'W 27.88' r
L4 = N89'45'00'W 38.51'
sr
L5 = N72'19'47"W 11.28' COA MON
L6 = N47'56'33'W 17.85' G 5091-004
L7 = N89'11'22"W 53.42' y I
L8 = S86'00'11"E 7.24' C2
N89'29'47 W 306.36'
L9 = S88'40'52"E 29.45' L
G L4 , S00'13'15"E 14.56' 26'
HIM 1`+' CITY OF AUBURN EXHIBIT A-2 DEPICTION PROD:00509
C LE:3/14/2024
AIRPORT SOUTHEAST TERMINAL
• PUBLIC WORKS DEPARTMENT BA NTS
wA>aluvcTox LEASE AREA DRAWN B BY::TAO
S50 Hangars,LLC/COA
Land Lease/Airport SE Development Area
Resolution 5771 Page 37 of 46
EXHIBIT B
CONSTRUCTION OF IMPROVEMENTS
1. General. Tenant may construct on the Land the Initial Improvements and subsequent
Improvements described or allowed for in the Lease and this Exhibit B. The term"Improvements"
shall also mean and include any replacement structures or improvements which may be constructed
on or off of the Premises during the term, from time to time. The Improvements shall be
constructed at Tenant's sole cost and expense. As used in this Lease the term"Commencement of
Construction" shall mean the date upon which Tenant has obtained all necessary permits and
approvals for and has begun altering the Premises in connection with construction activities for
the Improvements. As used in this Lease the term"Substantially Complete"means the date upon
which all permits and/or a CIO (as defined in the Lease) has been issued for the Improvements
under ACC 15.07.100 permitting occupancy and use thereof by Tenant and/or its Subtenants.
2. Fuel Facilities. So long as: 1) Tenant's development does not compete with existing fuel
operations then-being conducted by the City, or Tenant's fuel facility development is for the sale
and distribution of Tenant's Subtenants, and 2) the parties have entered into a Fuel Operating
Agreement, then Tenant is granted the right to develop and construct "On-Site Fuel Facilities",
being further defined from the Improvements as fuel tanks, piping, gauges, pumps, utility lines,
monitoring equipment, computer card-lock systems, and all other equipment and materials,
including the fuel used in said system, that are related to the storing and dispensing of Jet A, or
other"alternative"(defined as not currently being offered by the City at the Airport)aviation fuels.
3. No Smoking. Tenant shall install and maintain"No Smoking" signs within the Hangar on
the Premises.
4. Improvement Type. The term "Improvements" and"Initial Improvements as used in this
Exhibit B shall have the same meaning as that defined in Sections 3.2 and 3.3 of the Lease
respectively. Tenant warrants that it shall Substantially Complete the Initial Improvements by the
Initial Improvement Completion Deadline defined in this Lease or be subject to violations,
including termination of this Lease. The Tenant will further stripe the airside permitter(west side)
and taxilane side(north side) of Premises of the to be constructed building and construct any other
improvements on or off site as may be required by the applicable regulatory permitting process.
5. Airport Manager Approval. The Improvements shall be subject to Airport Manager's prior
approval, which shall not be unreasonably withheld, conditioned, or delayed. Tenant shall use its
own architect, engineers and other design professionals, all of whom shall comply with any
applicable licensing or governmental requirements of the state and/or local jurisdiction in which
the Premises are situated and shall be at the Tenant's sole cost and expense. Tenant shall provide
to Airport Manager all plans for any desired Improvements in a form suitable for permit application
(collectively, the "Working Drawings"). The Working Drawings shall include architectural,
structural, plumbing, mechanical, electrical, fire protection, site work and utilities drawings as
required. Working Drawings, and all changes thereto, shall be subject to the Airport Manager's
reasonable written approval. If the Airport Manager denies its approval,it shall specify the reasons
for doing so in reasonable detail, which shall specifically include such modifications necessary to
be made in order to obtain such approval.
S50 Hangars,LLC/COA
Land Lease/Airport SE Development Area
Resolution 5771 Page 38 of 46
6. Permits. Tenant shall be solely responsible for obtaining and complying with all permits,
approvals or licenses required for the construction and/or erection of Improvements on or off the
Premises.
7. Contractor. In the event Tenant intends on using a general contractor for the construction
of the Improvements, Tenant shall contract with an experienced, qualified general contractor
("Contractor") that is reasonably acceptable to Landlord. Tenant or its general contractor shall
complete all Improvements in a good and workmanlike manner.
8. Insurance. Tenant or its general contractor shall obtain and maintain in force, at all times
during which construction is in progress on the Premises, the following insurance coverages with
an insurance company or companies authorized to do business in the State where the Premises are
located:
(a) Workmen's Compensation - Statutory Limits for the State in which the work is to be
performed, together with "ALL STATES," "VOLUNTARY COMPENSATION" AND "FOREIGN
COMPENSATION"coverage endorsements;
(b) Employer's Liability Insurance with a limit of not less than$1,000,000.00;
(c) Commercial General Liability-at least$2,000,000 per occurrence,including Personal
Injury,Contractual and Products/Completed Operations Liability naming City and Tenant as additional
insured using ISO Additional Insured endorsement CG 20 1010 01 and Additional Insured-Completed
Operations endorsement CG 20 3710 01 or substitute endorsement providing at least as broad coverage.
Coverage must be primary and non-contributing and include the following:
(i) Premises-Operations
(ii) Elevators and Hoists
(iii) Independent Contractor
(iv) Contractual Liability assumed under the construction contract
(v) Completed Operations-Products
(vi) Explosion,Underground and Collapse(XUC)Coverage
(d) Automobile Liability-Including Owned,Hired and Non-owned licensed vehicles used
in connection with performance of the construction work of at least: $2,000,000 combined single limit
for bodily injury and property damage, $4,000,000 general aggregate (including umbrella limits).
Coverage must include the following:
(i) Owned vehicles
(ii) Leased vehicles
(iii) Hired vehicles
(iv) Non-owned vehicles
S50 Hangars,LLC/COA
Land Lease/Airport SE Development Area
Resolution 5771 Page 39 of 46
(e) Procure or cause contractor to procure and maintain builders' risk insurance and
installation floater insurance to protect against the risk of physical damage until completion and
acceptance of the construction work;
(f) Furnish the City with certificates of insurance evidencing such coverage prior to the
commencement of the construction work. All insurance shall be carried in companies reasonably
acceptable to the City.
(g) The following statement shall appear in each certificate of insurance provided City by
Tenant hereunder:
"It is agreed that in the event of any material change in, cancellation or non-renewal of this policy,the
Company shall endeavor to give two(2)days prior notice to the City of Auburn,Washington."
(h) During construction of Tenant's Improvements both parties shall give prompt notice to
the other of all losses,damages,or injuries to any person or to property of Tenant,City or third parties.
City or Tenant shall promptly report to the other all such claims of which that party has notice,whether
related to matters insured or uninsured.
(i) The carrying of any of the insurance required hereunder shall not be interpreted as
relieving the insuring party of any responsibility to the other party, and the other party does not waive
any rights that it may have against the other party and/or its representatives for any expense and damage
to persons and property(tangible and intangible)from any cause whatsoever with respect to the insuring
parry's work;
(j) City and Tenant shall assist and cooperate with any insurance company in the
adjustment or litigation of all claims arising under the terms of this Section.
9. No Liens. Unless otherwise allowed for in the Lease, Tenant shall keep the Premises free
from any liens arising out of work performed, materials furnished to, or obligations incurred by
Tenant. Tenant further covenants and agrees that any mechanic's or materialmen's liens filed
against the Premises or against the Improvements for work claimed to have been done for or
materials claimed to have been furnished to Tenant, shall be discharged by Tenant, by bond or
otherwise,within thirty(30)days after filing and prior to termination of this Lease,at the sole cost
and expense of Tenant. Should Tenant fail to discharge any lien of the nature described in this
paragraph,City may,at City's election,pay such claim or post a bond or otherwise provide security
to eliminate the lien as a claim against title and the cost thereof shall be immediately due from
Tenant as rent under this Lease.
10. Hold Harmless. Tenant shall indemnify, defend, and hold harmless City and the Premises
from and against all claims and liabilities arising by virtue of or relating to construction or removal
of the Improvements and any other improvements or repairs made at any time to the Premises,
including repairs, restoration and rebuilding, and all other activities of Tenant on or with respect
to the Premises. If Tenant is required to defend any action or proceeding pursuant to this section
to which action or proceeding City is made a party and City reasonably believes that the interests
of Tenant and City conflict or are divergent, then City shall also be entitled to appear, defend, or
S50 Hangars,LLC/COA
Land Lease/Airport SE Development Area
Resolution 5771 Page 40 of 46
otherwise take part in the matter involved, at its election, by counsel of its own choosing, and to
the extent City is• indemnified under this section, Tenant shall bear the cost of City's separate
defense, including reasonable attorneys' fees.
11. Progress Reports. From and after the Commencement of Construction and through the
Completion Date, Tenant shall provide to Landlord monthly progress reports consisting of, at a
minimum: (a)the then current construction schedule prepared by the Contractor (including the
expected Completion Date); and(b)notice of any laborer's or materialmen's liens filed against the
Premises.
12. As-Built Drawings; Survey. Except as otherwise may be required for construction
acceptance, within thirty(30) days following the Completion Date for any Improvements,Tenant
shall deliver to City two(2)copies of complete as-built drawings of the Improvements(or marked-
up construction drawings which may consist of the Plans, annotated with field notes identifying
all changes made thereto in the course of construction) showing the location of the Improvements,
all easements and utilities, (including underground utilities).
13. Condition of Improvements. Tenant assumes full responsibility for the design,
construction and condition of the Improvements, and any improvements constructed on the
Premises during the Lease Term, and Tenant hereby fully releases City from any and all liability
relating thereto.
•
S50 Hangars,LLC/COA
Land Lease/Airport SE Development Area
Resolution 5771 Page 41 of 46
EXHIBIT C
LANDLORD'S CONINTUED USE
1.) Landlord's Continued Use. Upon Commencement of the Lease and throughout the
Preliminary Term, Landlord retains the right of continued use of the Premises, as may be
modified according to Section 2 below, for the purposes of leasing aircraft tie-downs for the
storage and parking of aircraft. Landlord's exercise of these rights will be without notice to
the Tenant and without giving rise to any claim for offset of rent. Landlord warrants that its
use of the Premises shall not unreasonably interfere with Tenants use or development of the
Premises as granted by this Lease. Landlord shall make good-faith efforts to prohibit any
further environmental contamination of the Premises,beyond what may or may not exist on
the Premises upon Commencement of the Lease.
2.) Tenant's Directives. Tenant shall have the right at any time to direct,modify the location of
Landlord's continued use. However, Tenant agrees to modify Landlord's continued use as
necessary for Tenant's development or maintenance of the Premises. Directives,including
the modification or elimination of Landlord's continued use shall be done separate from
delivery of notices described in Article 29 of the Lease. Delivery of directives as it relates to
Landlord's continued use shall be made via email to the following:
• Airport Manager—Tim Mensonides/Tmensonides@,auburnwa.gov
• Real Estate Manager—Josh Arndt/Jamdt(a,auburnwa.gov
In addition to the aforementioned email delivery, Tenant shall also deliver a hard copy of the
directive to the Airport office. Other than emergency reasons, directives will provide no less
than 45 days of advance notice.
3.) Revenues. The Landlord is entitled to keep 100%of the revenues generated from Landlord's
continued use of the Premises, so long as the revenues were generated from the uses
described in Section 1 of this Exhibit C.
4.) Non-Compete. Tenant covenants that it will not utilize or operate or allow their Subtenants
to utilize or operate the Premises for aircraft tie-downs during Landlord's Continued Use.
The following aircraft are not subject to this covenant:
a. Personal aircraft belonging to any members of the Limited Liability Company
which comprise the Teant,
b. Non-commercial storage of either personal aircraft belonging to any Subtenant
utilizing the Premises, or aircraft used for Subtenant's business operations,
Tenant shall direct any persons or entity wishing to utilize the Premises for the parking or
storage of aircraft,not exempted by this section to the Airport Office and not enter into any
such agreement with the potential user.
5.) Indemnification.
S50 Hangars,LLC/COA
Land Lease/Airport SE Development Area
Resolution 5771 Page 42 of 46
(a) By Landlord. Landlord shall defend, indemnify, and hold harmless Tenant, its officers,
officials, employees and volunteers from and against any and all claims, suits, actions, or
liabilities for injury or death of any person, or for loss or damage to property,which arises out
of Landlord's continued use of Premises, or from the conduct of Landlord's business, or from
any activity, work or thing done, or suffered by Landlord in or about the Premises, except to
the extent such injury or damage is described in Section(5)(b)below.
(b) By Tenant. Tenant shall defend, indemnify and hold harmless Landlord, its owners,
officers, employees and contractors from and against any and all claims, suits, actions, or
liabilities for injury or death of any person, or for loss or damage to property,which arises out
of the negligence or willful misconduct of Tenant, its agents, officers, employees, subtenants,
or contractors, or from any activity, work or thing done, permitted, or suffered by Tenant, its
agents, officers, employees, subtenants, or contractors in or about the Premises, except to the
extent such injury or damage is described in Section(5)(a) above.
(c) Solely for the purpose of effectuating the mutual indemnification obligations under this
Lease, and not for the benefit of any third parties (including but not limited to employees of
Landlord or Tenant), Landlord and Tenant specifically and expressly waive any immunity
under applicable federal, state or local Worker Compensation Acts, Disability Benefit Acts or
other employee benefit acts. Furthermore, the indemnification obligations under this Lease
shall not be limited in any way by any limitation on the amount or type of damages,
compensation or benefits payable to or for any third party under Worker Compensation Acts,
Disability Benefit Acts or other employee benefit acts. The parties acknowledge that the
foregoing provisions of this Section have been specifically and mutually negotiated between
the parties.
City of Auburn as Landlord S5O H•gtis,LLC as Tenant
_k._ _ _` _
Nancy B. ,46. ay:- Doug as Wilson,Managing Mem.er
S50 Hangars,LLC/COA
Land Lease/Airport SE Development Area
Resolution 5771 Page 43 of 46
PARCEL `B' RIDER
This "Parcel`B"Rider" is attached to and made a part of the Lease by and between the City and
Tenant. The agreements set forth in this Parcel`B"Rider shall have the same force and effect as
if set forth in the Lease. To the extent that the terms of this Parcel `B"Rider are inconsistent
with the terms of the Lease, the terms of this Parcel`B"Rider will control.
1. Parcel B. Tenant is granted the right to lease up to 50,000 square feet of additional land
herein referred to as "Parcel `B"". Parcel`B"may be made up of a single or multiple
locations on the Airport, each a Parcel`B" "Site". In the event that Parcel`B"is made up of
multiple Sites, each will be legally described in an exhibit titled"PBR—Exhibit 1", and
depicted in exhibit titled"PBR—Exhibit 2",here in by this reference shall be incorporated
into this Parcel`B"Rider. In the event Parcel`B" consists of multiple sites on the Airport
each will be defined as Parcel `B", Site 1, Site 2, etc. Parcel`B"whether a single or multiple
Sites will remain its own separate Premises, subject to the Rent and other obligations
described below.
2. Parcel B Process, Rights & Obligations. Provided Tenant timely exercises the options
granted to it the following processes, rights and obligations regarding Parcel`B" shall apply:
2.1 Identification. Tenant has 90 calendar days from the Commencement Date to provide
the City(with a copy to the Airport Manager)with a"Notice of Parcel`B" Site
Selection". The Notice of Parcel`B" Site Selection shall include the location(s) and
approximate dimensions of the site(s) Tenant desires to include in Parcel`B". The
City shall have 10 business days to approve, deny or amend the locations and/or
dimensions described in Tenant's Notice of Parcel`B" Site Selection. The parties
each agree to diligently work to agree on the location(s) and dimension(s) of Parcel
B, however, the City shall have the right of final decision. If Tenant does not provide
timely notice or provides notice that it does not wish to exercise any option rights to
Parcel`B",than all of Tenant's rights with regards to Parcel B and this Rider shall
expire.
2.2 Survey. Following timely notice and acceptance of Parcel B location(s) and
dimensions, the City shall prepare or cause to be prepared the Parcel `B"legal
description(s) and depiction(s). The City warrants that it will use commercially
reasonable efforts to complete the descriptions and depictions in a reasonable amount
of time.
2.3 Preliminary Term. Beginning the 1st calendar day of the month following completion
of the Parcel`B" Survey, Parcel`B" shall officially become part of Tenant's
leasehold interest, conveying to Tenant all rights, enjoyment and obligations
described in this Rider and further the Lease. Unless Tenant provides timely notice
exercising its rights to Parcel`B"for the Remaining Term as set forth below,
Tenants' rights, and obligations of Parcel`B" shall expire upon the last day of the
Lease "Preliminary Term".
S50 Hangars,LLC/COA
Land Lease/Airport SE Development Area
Resolution 5771 Page 44 of 46
2.4 Remaining Term. Provided Tenant is in good-standing of their Parcel `B" obligations
at the end of the Preliminary Term, Tenant shall have the right to extend Parcel`B"
or any portion thereof. If only exercising a portion, said portion must be a full and
complete site described in PBR—Exhibit 1 (as opposed to a portion of Site 1). To
successfully exercise this right Tenant must provide the City with a"Notice of
Tenants Right to Extend Parcel`B" for the Remaining Term". If Tenant intends to
only extend a portion of Parcel`B" for the Remaining Term, Tenant's notice shall
clearly identify which Site(s) are being extended. In order to successfully exercise
this option, Tenant must deliver said notice no less than 60 days from the expiration
of the Preliminary Term. If Tenant provides such timely notice then Tenant's
leasehold rights and obligations for Parcel`B" shall be the same as those specified in
the Lease subject only to the Rent,Maintenance and Development provisions
described in this Parcel`B"Rider.
3. Rent.
3.1 Preliminary Term. Tenant shall pay an Annual Lease Rate of$1.00 per square foot,plus
Impositions described in Article 5.3 of the Lease. As defined in the Lease, the Annual
Lease Rate plus the Impositions are collectively referred to as the"Rent". Tenant shall
pay Rent in equal monthly installments. There will be no Annual Lease Rate adjustments
during the Preliminary Term.
3.2 Remaining Term. Parcel"B"s Annual Lease Rate for the Remaining Term shall be
subject to those Adjustments described in Article 6 of the Lease. In no event will the
Annual Lease Rate for Parcel`B"be less than the Annual Lease Rate assessed
immediately prior to the Adjustment.
4. Maintenance. During the Preliminary Term Tenant agrees not to allow conditions of
waste and refuse to exist on Parcel `B", but owes no further maintenance responsibilities
unless Tenant decides to construct Improvements. If Tenant constructs Improvements on
Parcel`B"during the Preliminary Term, and/or exercises its rights to extend for the
Remaining Term, then Tenant shall have the same maintenance obligations described in
Article 16 "Maintenance"of the Lease, except that for Parcel`B", Tenant shall not be
responsible for ongoing pavement and pavement marking maintenance.
5. Development. Tenant shall have the right,but not the obligation to develop or construct
Improvements on Parcel `B"during the Preliminary Term. If Tenant successfully
exercises its rights to the Remaining Term, then Tenant covenants that it will develop
Parcel`B"with no less than 5,000 square feet of Improvements (per Site, if multiple
Sites are included in Parcel`B")within the first 3 years of the Remaining Term.
Development of Parcel `B"will be subject to the same requirements set forth in the
Lease and Exhibit B.
6. Insurance. Unless Tenant begins development or construction on Parcel `B", during the
Preliminary Term, Tenant shall only be required to carry Liability Insurance in the
amount required in the Airport Minimum Standards. For the Remaining Term, or should
S50 Hangars,LLC/COA
Land Lease/Airport SE Development Area
Resolution 5771 Page 45 of 46
the Tenant develop or begin construction on Improvements on Parcel `B"Tenant will be
subject to all insurance requirement obligations described in the Lease.
7. Landlord's Continued Use. In the event that the Parcel`B"leasehold(or any portion
thereof)includes tie-downs, Landlord will have the same continued use rights and
obligations described in Exhibit C of the Lease.
* Capitalized terms not defined in this Parcel`B"Rider shall have the same meaning as those
defined in the Lease.
* Unless otherwise described in this Parcel`B"Rider,Tenant shall be subject to all obligations
described for in the Lease.
City of Auburn as Landlord S50 Hang C as Tenant
Na cy Bac iiikyor Douglas Wilson,Managing Member
S50 Hangars,LLC/COA
Land Lease/Airport SE Development Area
Resolution 5771 Page 46 of 46