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RESOLUTION NO.3 8 9 4
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
AUBURN, WASHINGTON, AUTHORIZING A LEASE BETWEEN
THE CITY OF AUBURN AND N. W. HANGARS, LLC. FOR 26,765
SQUARE FEET OF LAND AT AUBURN MUNICIPAL AIRPORT
WHEREAS, the City of Auburn operates the Auburn Municipal Airport for
the benefit of the community and residents; and
WHEREAS, the Airport Master Plan encourages the development of
aircraft storage space; and
WHEREAS, the City has negotiated a land lease with N. W. Hangars,
LLC. for the purpose of building aircraft hangars.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF AUBURN,
WASHINGTON, HEREBY RESOLVES AS FOLLOWS:
Section 1. The Mayor of the City of Auburn is herewith authorized to
execute an airport hangar land lease between the City of Auburn and N. W.
Hangars, LLC. A copy of said lease is attached hereto as Exhibit "A" and
incorporated herein by this reference.
Section 2. This Resolution shall take effect and be in full force upon
passage and signatures hereon.
Resolution No. 3894
August 8, 2005
Page 1 of 2
DATED and SIGNED THIS / ~------- DAY OF !2v~, 2005.
ATTEST:
AkASNcJ1~'
Danielle E. Daskam,
City Clerk
Resolution No. 3894
August 8, 2005
Page 2 of 2
CITY OF AUBURN
~
PETER B. LEWIS
MAYOR
--'"
~
~-
AIRPORT HANGAR LAND LEASE
AGREEMENT
BETWEEN
City of Auburn
and
NW Hangars LLC
2131 E. StreetNE
Auburn, W A 98002
Dated:
Lessor: City of Auburn
Lessee: N. W. Hangars, LLC v2
Resolution No. 3894
August 15, 2005
CITY OF AUBURN
AIRPORT HANGAR LAND AMENDED LEASE AGREEMENT
THIS LEASE AGREEMENT, hereinafter referred to as this "Lease", is made as of
,2005, by and between the City of Auburn, a Washington municipal corporation,
hereinafter referred to as "Lessor," and NW Hangars LLC hereinafter referred to as "Lessee,"..
WITNE SSE TH:
In consideration of their mutual covenants, agreements and undertakings hereinafter
contained, the parties hereto do mutually agree to that which is hereinafter set forth, upon and
subject to the following terms, conditions, covenants and provisions:
1. PROPERTY SUBJECT TO THIS LEASE AGREEMENT
(a) For and in consideration of the rent and faithful performance by Lessee of the
terms and conditions and the mutual covenants hereof, Lessor does hereby lease to Lessee, and
Lessee does hereby lease from Lessor, the property legally described on Exhibit A-I (hereinafter
referred to as the "Premises"), which Premises consist of approximately (26,765) Twenty Six
Thousand Seven Hundred Sixty-Five square feet of Land, as depicted on the Site Plan attached
hereto as Exhibit A-2. Exhibit A-I and Exhibit A-2 are hereby incorporated into this Lease by
this reference. The Premises are situated in the County of King, State of Washington, and are
located at the Auburn Airport (the "Airport").
(b) Lessor represents and warrants that, to the best of the City's knowledge, without
duty of inquiry, there are no hazardous wastes or materials on, in or under the Premises.
(c) LESSEE ACKNOWLEDGES AND AGREES THAT IT IS RELYING SOLELY
ON ITS INSPECTION AND INVESTIGATION OF THE PREMISES, AND ACCEPTS THE
PROPERTY "AS-IS, WHERE IS" IN ITS PRESENT CONDITION WITH NO WARRANTIES
OF ANY KIND, EXPRESS OR IMPLIED, EITHER ORAL OR WRITTEN, MADE BY
LESSOR OR ANY EMPLOYEE, AGENT OR REPRESENTATIVE OF LESSOR WITH
RESPECT TO THE PHYSICAL CONDITION OF THE PREMISES. LESSEE SHALL HAVE
DETERMINED TO ITS SATISFACTION UPON ITS EXECUTION HEREOF THAT THE
PREMISES CAN BE USED FOR THE PURPOSES IT INTENDS AND WHICH ARE
PERMITTED UNDER THIS LEASE. LESSEE ACKNOWLEDGES AND AGREES THAT
NEITHER LESSOR NOR LESSOR'S AGENT HAD 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
PREMISES, OR THE PRESENCE OR ABSENCE OF ANY HAZARDOUS SUBSTANCES,
WASTES OR MATERIALS AS DEFINED BY STATE, FEDERAL OR LOCAL LAW, ALL
OF WHICH WARRANTIES LESSOR HEREBY EXPRESSLY DISCLAIMS.
Lessor: City of Auburn
Lessee: N.W. Hangars, LLC.
Resolution 3894
August 15,2005
Page I
2. TERM
The term of this Lease shall be for fifty (50) years, beginning on the date of mutual
execution hereof (hereinafter referred to as the "Commencement Date"), and ending at midnight
on the day prior to the fiftieth (50th) anniversary of the Commencement Date, unless sooner
terminated pursuant to any provision of this Lease (the "Term"). If Lessor, for any reason
whatsoever, cannot deliver possession of the Premises to Lessee on the Commencement Date,
Lessor shall not be subject to any liability nor shall the validity of the Lease be affected;
provided, the Term of this Lease shall commence on the date possession is actually tendered to
Lessee but the Expiration Date shall not be adjusted.
3. DEVELOPED BY DATE CERTAIN.
Development of the site with proposed hangar project is to be completed within 36
months of the execution of this agreement. If the Lessee fails to complete the Development
within said 36 month period, this lease shall be null and void. Provided that the Lessee may
request an extension of up to twelve months which the Lessor may grant, at the sole discretion of
the Lessor, upon a showing of compelling reasons why the development could not be completed
within the initial 36 months.
4. PURPOSE
(a) Lessee shall use the Premises only for the construction, management and
maintenance of aircraft hangar buildings for primarily the storage and maintenance of aircraft
and to conduct such other aviation-related activities as are incidental and reasonably related
thereto. Lessee may develop the Premises as a condominium pursuant to the provisions of
Chapter 64.34 RCW (the "Condominium Act"); provided, however, that Lessee shall obtain
Lessor's prior written approval, which approval shall not be unreasonably withheld, of the
condominium declaration (the "Declaration") and the survey map and plans (the "Survey Map
and Plans") that are required under the Condominium Act prior to the recording of the
Declaration and the Survey Map and Plans against the Premises in the official records of King
County. Lessor shall have a period of 30 days within which to review such documents following
the date upon which Lessee delivers to Lessor and to Lessor's counsel true copies of the
proposed Declaration and Survey Map and Plans; Lessor's approval of such documents shall be
evidenced by a signed Consent of Lessor, which Consent of Lessor shall be attached to the
Declaration. It is further understood that the above activities are the only type of activities to be
conducted upon the Premises. Lessee shall at all times operate on the Premises in a manner,
which will assure the safe, lawful and healthful use of the Premises. Lessee agrees that it will
not disturb the Lessor or any other Lessee of the Lessor by making or permitting any
disturbances or any unusual noise, vibration or other condition on or in the Premises. All such
activities shall take place inside the hangars to be constructed.
(b) The Premises may be used only for light commercial aeronautical activities.
Examples of such light commercial aeronautical activities include airplane upholstry shops,
Lessor: City of Auburn
Lessee: N.W. Hangars, LLC.
Resolution 3894
August 15,2005
Page 2
airplane paint shop, aviation maintenance and repair facillity, etc. In the event that a question
surfaces as to whether a proposed use is sufficiently aviation related to qualify, the Lessor shall
be entitled to determine in its sole and absolute discretion whether or not a use qualifies. It is
further provided that the following uses are specifically prohibited on or from the Premises,
unless Lessor expressly authorizes such uses by Lessor's prior written consent, which consent
may be withheld in Lessor's sole and absolute discretion:
(1) At no time will aircraft be fueled inside any Improvements situated on the
Premises;
(2) Use of the Premises as a residence or for overnight sleeping;
(c) No building, structure, or improvements of any kind shall be erected, placed upon
operated or maintained on the Premises, nor shall any business or operation be conducted or
carried on in violation of any ordinance, law, statute, by-law, order, or rule of any governmental
agency having jurisdiction thereover.
(d) Upon mutual execution hereof, Lessee may pursue construction and development
of aircraft hangar buildings and related facilities (collectively, the "Improvements"), pursuant to
plans and specifications approved by Lessor and otherwise in accordance with Exhibit B
attached hereto and by this reference incorporated herewith. Lessee's plans and specifications
shall include, without limitation, details of any right of way or taxi-way entrances to be
constructed by Lessee, as well as the building materials for and design of the Improvements.
Lessor's approval of the plans and specifications shall not be unreasonably withheld. Upon
commencement of construction of the Improvements, the Improvements shall be deemed to
include and be part of the Premises for all purposes hereunder.
5 RENT - IMPOSITIONS & LEASEHOLD EXCISE TAX
(a) Commencing (i) with issuance of a building permit for Lessee's proposed
Improvements, or (ii) within 15 days of execution of this agreement (hereafter the "Rent
Commencement Date"), Lessee shall pay to Lessor, in addition to taxes, assessments, and
other charges required to be paid herein by Lessee, Monthly Base Rent of not less than
Eight Hundred Ninety Two and 17/100 ($892. I 7) ("Monthly Base Rent"). Monthly Base
Rent shall be payable on or before the first (1 ") day of each calendar month thereafter to
the City of Auburn, or designated agent without notice, demand, offset, abatement or
deduction of any kind. On the date that Lessee executes this Lease, Lessee shall deliver
to Lessor the original executed Lease, cash in the amount equal to one (1) month's
Monthly Base Rent (which shall be applied toward the Monthly Base Rent due for the
first month for which Monthly Base Rent is payable hereunder), the cash Security
Deposit, and all insurance certificates evidencing the insurance required to be obtained by
Lessee under this Lease. The term "rent" whenever used herein refers to all amounts
required to be paid by Lessee hereunder. Rent for any fractional part of a calendar month
at the commencement or expiration or termination of the term shall be a prorated amount
of the rent for a full calendar month based upon a thirty (30) day month.
Lessor: City of Auburn
Lessee: N.W. Hangars, LLC.
Resolution 3894
August 15,2005
Page 3
(b.) The monthly base rent shall be adjusted on January 1,2006 and shall reflect the
market lease value of no less than $.40 per square foot and no more than $.45 per square
foot. The market value of the lease will be determine by an MAl appraisal obtained by
the City.
(c)
below.
Monthly Base Rent shall be subject to annual increases as provided in Section 6
(d) Commencing on the Lease Commencement Date, Lessee shall pay any and all
Impositions allocable to the Premises. The term "Impositions" shall mean all real estate taxes (to
the extent any portion of the Premises and any improvements thereon are subject to real estate
taxes), water, sanitary sewer and storm water charges, charges for public utilities, local
improvement or general or special benefit district assessments, license and permit fees or other
charges which shall or may during the Term be assessed, levied, charged, confirmed or imposed
by any public authority upon or accrue or become due or payable out of or Qn account of or
become a lien on the Premises or any part thereof, including without limitation all real property
taxes allocable to the Improvements, or for the use or occupancy of the Premises, and any tax on
receipt of rents. The term "Impositions" shall expressly include statutory leasehold excise tax
imposed by Chapter 82.29A RCW on the taxable rent payable by Lessee hereunder, but shall
exclude any income tax, estate, succession, or inheritance taxes. Either Lessee or Lessor may
contest the validity or amount (including the assessed valuation upon the Premises and any
exemptions applicable to 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 Lessee 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, Lessee 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) 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.
(e) It is the intent of Lessee and Lessor that the rent due hereunder shall be absolutely
net to Lessor and that Lessee shall pay all costs expenses regarding the Premises whether
specifically mentioned herein or not.
6. ANNUAL PERIODIC RENT ADJUSTMENTS
(a) Monthly Base Rent shall be adjusted on January 151 of every year beginning
January 1, 2007 during the lease term, per this Section 6. Notwithstanding the foregoing,
Lessor: City of Auburn
Lessee: N.W. Hangars, LLC.
Resolution 3894
August 15,2005
Page 4
Monthly Base Rent shall be adjusted on each fifth (5th) year, commencing on January 1,2011, to
equal the "fair market rental value" of the Premises, pursuant to the procedure set forth in
Section 6(d) below. No armual or fifth (5th) year adjustment, however, shall reduce the amount
of Monthly Base Rent below the amount of the respective Monthly Base Rent that is being
adjusted.
(b) Definitions: The adjusted Monthly Base Rent shall be determined in accordance
with the formula set forth in Section 6(c) 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.
(2) "Price Index" means the Consumer Price Index for the month of August
for all Urban Consumers, All Items (Seattle-Tacoma-Bremerton) 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.
(c) The adjusted Monthly Base Rent shall be determined by multiplying the Monthly
Base Rent being adjusted by a multiplier equal to the change in the Price Index since the last
adjustment, computed as follows:
(Percentage change in Price Index) x (current Monthly Base Rent) = (Adjusted Monthly Base Rent)
(d) Each five (5) years, commencing on January 1,2011, the MontWy Base Rent shall
be revised based upon an appraisal establishing fair market rental value of the Premises,
excluding, however, the rental value of any Improvements constructed by Lessee. Lessor will
retain and pay the costs of an MAl appraiser. The annual adjustment formula set forth in
Sections 6(b) & (c) shall not be applied each such fifth (5Ih) year. Lessor may, at its discretion,
utilize an appraisal completed within 12 months prior to the date of the periodic five year
adjustment. Additionally, this appraisal may be used by Lessor for setting rates for leases other
than this Lease. In the event the Lessee disagrees with Lessor's appraisals, the Lessee may, at
his or her own expense, retain a second appraisal. Lessor and Lessee will then attempt to
negotiate a lease rate. If these negotiations are unsuccessful, the parties will mutually agree on
the selection of an arbitrator. The costs of arbitration shall be shared. The arbitrator's
determination shall be based upon the appraisals, but in no event shall 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 increases shall be final. However, no annual or fifth (5Ih) year
adjustment shall reduce the amount of Monthly Base Rent below the amount of the respective
Monthly Base Rent that is being adjusted.
7. SECURITY DEPOSIT
Lessor: City of Auburn
Lessee: N.W. Hangars, LLC.
Resolution 3894
August 15,2005
Page 5
Simultaneously with Lessee's execution and delivery of this Lease, Lessee shall deliver to
Lessor, as a Security Deposit for the faithful performance by Lessee of its obligations under this
Lease, the amount of Eight Hundred Ninety Two 17/100 ($892.17), which is equal to one (I)
month's worth of Monthly Base Rent payable at the initial rate set forth in Section 5(a) above. If
Lessee is in default hereunder, Lessor may, but without obligation to do so, use all or any portion
of the Security Deposit to cure the default or to compensate Lessor for all damages sustained by
Lessor in connection therewith. Lessee shall, immediately on demand, pay to Lessor a sum
equal to the portion of the Security Deposit so applied or used to replenish the amount of the
Security Deposit held to increase such deposit to the amount initially deposited with Lessor. At
any time after Lessee has defaulted hereunder, Lessor may require an increase in the amount of
the Security Deposit required hereunder for the then balance of the Term and Lessee shall,
immediately on demand, pay to Lessor such additional sums. As soon as practicable after the
expiration or termination of this Lease, Lessor shall return the Security Deposit to Lessee, less
such amounts as are reasonably necessary, as determined by Lessor, to remedy Lessee's
default(s) hereunder or to otherwise restore the Premises to a clean and safe condition,
reasonable wear and tear excepted. If the cost to restore the Premises exceeds the amount of the
Security Deposit, Lessee shall promptly deliver to Lessor any and all of such excess sums.
Lessor shall not be required to keep the Security Deposit separate from other funds, and, unless
otherwise required by law, Lessee shall not be entitled to interest on the Security Deposit. In no
event or circumstance shall Lessee have the right to any use of the Security Deposit and,
specifically, Lessee may not use the Security Deposit as a credit or to otherwise offset any
payments required hereunder. Lessor may elect, in Lessor's sole discretion, and if Lessee has
not been in material default during the first twenty-four (24) months of the Term hereof, to
refund the Security Deposit to Lessee at the end of the twenty-fourth (24th) Lease month.
8. LATE CHARGES
Lessee hereby acknowledges that late payments of rent or any other sums due hereunder
will cause the Lessor to incur costs not otherwise contemplated by this Lease. Accordingly, if
any installment of rent or any other sum due from Lessee is not received by the Lessor within ten
(10) days after such amount shall be due, then, without any requirement for notice to Lessee,
Lessee shall pay the Lessor a late charge equal to 12% of the overdue amount. The parties agree
that such late charge represents a fair and reasonable estimate of the costs the Lessor will incur
by reason of late payment by Lessee. Acceptance of such late charge by the Lessor shall in no
event constitute a waiver of Lessee's default with respect to such overdue amount, nor prevent
the Lessor from exercising any of the other rights and remedies granted hereunder. 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, interest shall
accrue on rent, or any other sums due hereunder, at the rate of one and one-half percent (I and
1/2%) per month from the date due until paid.
9. OWNERSHIP OF IMPROVEMENTS; DISPOSITION AT END OF LEASE
Lessor: City of Auburn
Lessee: N.W. Hangars, LLC.
Resolution 3894
August 15,2005
Page 6
(a) During the Term of this Lease, all improvements located on the Premises,
including without limitation, all additions, alterations, and improvements thereto or replacements
thereof and all appurtenant fixtures, machinery, and equipment installed therein, shall be the
property of Lessee. At the expiration or earlier termination of this Lease, all improvements and
all additions, alterations, and improvements thereto or replacements thereof and all appurtenant
fixtures, machinery, and equipment installed therein, shall automatically become the property of
Lessor. Upon expiration or earlier termination of this Lease or upon termination of Lessee's
right to possession, Lessee shall remove at its expense all personal property which may have
been placed upon the Premises by Lessee. Any such property not so removed from the Premises
shall, at the election of Lessor, be retained by Lessor or may be removed and stored by Lessor at
Lessee's expense and Lessor shall recover any costs and expenses from the Lessee resulting
therefrom.
(b) Upon termination of the Lease, the City will determine if it wishes to lease the
hangar under then-current terms and rates. If such rental is approved by the City, first right of
refusal shall be offered to former condominium occupants in good standing. Requests should be
made to the City in \\'fiting, six months prior to the termination of the Lease.
10. INSURANCE COVERAGE
(a) The Lessee and any sublessee, assignee or licensee of Lessee shall procure and
maintain for the duration of the Agreement, insurance against claims for injuries to persons or
damage to property, which may arise from or in connection with the Lessee's operation and use
of the leased Premises, including Commercial general liability insurance with coverage at least
as broad as the most commonly available ISO Commercial General Liability policy CG 0001,
with limits of liability no less than One Million Dollars ($1,000,000) occurrence limit, Two
Million Dollars ($2,000,000) general aggregate limit; provided, however, that in the event Lessee
or any sublessee, assignee or licensee of Lessee uses the Premises or any aircraft kept thereon in
the operation of a business (which business shall be first registered with Lessor), Lessor may
require additional insurance related to such business, the amount of which insurance coverage
shall be in Lessor's sole and absolute discretion and shall be obtained prior to the operation of
such business on the Premises. Lessor and its agents, employees and officers shall be additional
insureds.
(b) The Lessee's insurance coverage shall be primary insurance as respects Lessor.
Any insurance, self-insurance, or insurance pool coverage maintained by Lessor shall be excess
of the Lessee's insurance and shall not contribute with it.
(c) The Lessee's insurance shall be endorsed to state that no coverage shall be
canceled by either party, except after thirty (30) days prior to written notice by certified mail,
return receipt requested, has been given to Lessor. All policies shall expressly provide, if
available, that Lessor shall not be required to give notice of accidents or claims and that Lessor
shall have no liability for premiums; and be written by insurance companies having a Best's
Lessor: City of Auburn
Lessee: N.W. Hangars, LLC.
Resolution 3894
August 15,2005
Page 7
rating of "A" and "X" or equivalent, which insurance companies shall otherwise be reasonably
acceptable to Lessor.
(d) Lessee shall furnish Lessor with evidences of the insurance required to be carried
by Lessee hereunder along with copies of policies and a copy of the amendatory endorsements,
including but not necessarily limited to the additional insured endorsement, evidencing the
insurance requirements of the Lessee.
(e) Policy limits shall be adjusted every five (5) years, commencing on January I,
2011, considering levels of inflation, risk of loss, premium expenses, and other relevant factors
in Lessor's commercially reasonable discretion.
(I) Lessor and Lessee hereby mutually waive their respective rights of recovery against each other for
any loss of, or damage to, either parties' property to the extent that such loss or damage is insured by an insurance
policy required to be in effect at the time of such loss or damage or which is actually carried by such party. Each
party shall obtain any special endorsements, if required by its insurer, whereby the insurer waives its rights of
subrogation against the other party. This provision is intended to waive fully, and for the benefit of the parties
hereto, any rights and/or claims which might give rise to a right of subrogation in favor of any insurance carrier.
] I. INDEMNIFICA TION/HOLD HARMLESS
The Lessee shall defend, indemnify, and hold harmless Lessor, 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 Lessee's use
of Premises, or from the conduct of Lessee's business, or from any activity, work or thing done,
permitted, or suffered by Lessee in or about the Premises, except only such injury or damage as
shall have been occasioned by the sole gross negligence or willful misconduct of Lessor. Solely
for the purpose of effectuating Lessee's indemnification obligations under this Lease, and not for
the benefit of any third parties (including but not limited to employees of Lessee), Lessee
specifically and expressly waives any immunity that may be granted it 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.
12. DAMAGE AND DESTRUCTION; REPAIR.
In the event of damage to or destruction of the Improvements:
(a) If the cost of repairing or reconstructing the Improvements to the condition and
form immediately prior to such damage or destruction does not exceed thirty-three percent (33%)
of the then-new replacement cost thereof, then Lessee shall effect such repair and reconstruction
of the Improvements so damaged or destroyed to substantially their condition prior to said
damage or destruction. All such work shall be carried out in accordance with plans and
Lessor: City of Auburn
Lessee: N.W. Hangars, LLC.
Resolution 3894
August 15,2005
Page 8
specifications prepared by a licensed architect or architects approve by Lessor (acting
reasonably) if such an architect is reasonably required given the scope and nature of the work.
(b) If the cost of repairing or reconstructing the Improvements to the condition and
form immediately prior to such damage or destruction exceeds thirty-three percent (33%) of the
then-new replacement cost thereof, then Lessee may elect by written notice to Lessor given
within sixty (60) days after the date of the damage to terminate this Lease; provided that this
Lease shall not terminate unless and until Lessee 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 Lessor by written notice provided no later than
thirty (30) days after Lessee's written election to terminate. In no event shall Monthly Base
Rent or any other form of rent be abated during such period of reconstruction and/or restoration.
13. ASSIGNMENT AND SUBLETTING.
(a) Except as set forth below, neither this Lease nor any interest therein may be
assigned, mortgaged, transferred or encumbered, nor shall all or any part of the Premises be
sublet (each of which, a "Transfer") without Lessor's prior written consent, which shall not be
unreasonably withheld; provided, however, that, if Lessee creates a condominium on the
Premises as provided in this Lease and for so long as such condominium and the Condominium
Association (as hereinafter defined) are in existence, the Transfer of individual condominium
units to unit owners and by unit owners or to tenants of unit owners other than Lessee shall not
require the prior written consent of Lessor. If Lessee is a corporation, partnership, limited
liability company, or any other entity, any transfer of a controlling ownership or voting interest
in such entity or any transfer or attempted transfer of this Lease by merger, consolidation or
liquidation shall be deemed a Transfer requiring Lessor's consent. Transfers include, without
limitation, one or more sales or transfers, by operation of law or otherwise, or creation of new
stock, by which an aggregate of more than fifty percent (50%) of Lessee's stock, or partnership
or membership interests, as applicable, shall be vested in a party or parties who are
nonstockholders or non-partners or non-members, as applicable, as of the date hereof (provided
that the foregoing shall not apply if Lessee's stock is listed on a recognized national stock
exchange or is traded over-the-counter). Transfers also include, without limitation, the
assignment, sale, or transfer of any development rights or special declarant rights by Lessee as
declarant under the Condominium Declaration, if any, except that in the event that Lessee
proposes to grant a security interest in development rights or special declarant rights to facilitate
construction financing of future phases of construction, Lessor's consent shall not be
unreasonably withheld. As set forth in Section 13(b) below, Lessee intends to assign this Lease
to a condominium association formed pursuant to Chapter 64.34 RCW (the "Condominium
Association"). Any assignee or subtenant, including the Condominium Association, (each, a
"Transferee") shall assume all of Lessee's obligations under this Lease and shall be jointly and
severally liable with Lessee hereunder. Consent of the Lessor to any Transfer shall not operate
as a waiver of the necessity for consent to any subsequent Transfer. In connection with each
request for consent to a Transfer, Lessee shall pay the reasonable cost of processing same,
including reasonable attorneys fees, upon demand of Lessor. If Lessor consents to any proposed
Transfer, Lessee may enter into the same, but only upon the specific terms and conditions set
Lessor: City of Auburn
Lessee: N.W. Hangars, LLC.
Resolution 3894
August 15,2005
Page 9
forth in Lessee's Request for Consent; any such Transfer shall be subject to, and in full
compliance with, all of the terms and provisions of this Lease; the consent by Lessor to any
Transfer shall not relieve Lessee of any obligation under this Lease; Lessor may require the
Lessee and the Transferee to execute a Lessor's consent form; and no Transfer shall be binding
on Lessor unless Lessee and the transferee shall deliver to Lessor a fully-executed counterpart of
the document effecting the Transfer. Individual unit owners may provide short term use of their
hangar unit on condition that the term is less than 36 months and a rental form is executed and
will acknowledge subordination to the City of Auburn ground lease herein, and that a recorded
copy of this Ground Lease is attached as an exhibit. The Lessee will keep a copy of all current
rental agreements for review if requested and a "Notice of Occupancy". Such notice will be
provided to the Airport Manager on or before the commencement of the rental term and must
include the unit number, owner's name, address and phone number, together with the renter's
name, address, day phone number and emergency phone number, type of aircraft and aircraft
registration number. If the renter is a corporation, the notice will include the names and
addresses of the President, Secretary and Treasurer.
(b) Notwithstanding the provisions of Section 13(a) above, if Lessee creates a
condominium on the Premises as provided in this Lease, this Lease shall be automatically
assigned to the Condominium Association upon the recording of the deed transferring Lessee's
interest in the last condominium unit to a unit owner other than Lessee. Upon the assignment of
this Lease to the Condominium Association, a novation shall occur such that the Condominium
Association shall become absolutely and for all purposes substituted for the original Lessee
under this Lease, and the original Lessee shall have no further liability under this Lease. If, for
any reason, the condominium or the Condominium Association is terminated, each and every
party with an interest in the Premises at the time of such termination shall be jointly and
severally liable as Lessee under this Lease; and, upon such termination, any and all Transfers,
including the Transfer of any interest in the former condominium units, shall be subject to the
provisions of Section 13(a), including Lessor's prior written consent, which consent may be
withheld in Lessor's sole and absolute discretion.
(c) Notwithstanding the provisions of Section 13 (a) above, Lessee may sublet
portions of the Premises, provided that (i) each such subtenant maintains the insurance coverage
required to be maintained by Lessee hereunder; (ii) a copy of the documentation effecting such
sublease shall be delivered to Lessor as soon as reasonably possible after the effective date
thereof, (iii) the subtenant shall be deemed to have agreed to comply with all of Lessee's
obligations under this Lease applicable to the sublet premises; and (iv) each such sublease shall
be expressly subject and subordinate to the terms and conditions of this Lease.
14. OFF STREET PARKING
Lessee agrees not to 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 placed within
the hanger when its aircraft is removed.
15. ADVERTISING AND SIGNS
Lessor: City of Auburn
Lessee: N.W. Hangars, LLC.
Resolution 3894
August 15,2005
Page 10
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 Lessor.
16. LAWS, REGULA nONS AND STANDARDS
The Lessee 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 Lessor, including without limitation those relating
to environmental matters, now in existence or hereafter promulgated, applicable to the Lessee'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. Lessee shall pay all costs, expenses, liabilities, losses, damages, fines, penalties,
claims, and demands, including reasonable counsel fees, that may in any marmer arise out of or
be imposed because of the failure of Lessee to comply with the covenants of this section.
17. ENVIRONMENTAL PROVISIONS
(a) Lessee covenants to defend, indemnify, and hold Lessor harmless from any
imposItIon or attempted imposition by any person upon Lessor of any obligation or cost
("liability") 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 to the
extent that such liability arises from a violation, or from the failure to satisfy a requirement of
any environmental or land use law or regulation, proximately resulting from use of the Premises
during the term ofthis Lease, and without regard to when the liability is asserted.
(b) Lessee has inspected the Premises and accepts it in its present condition. Lessee
shall not cause the premises to be contaminated in any way and in the event of contamination
shall immediately report such contamination to Lessor and shall cause any such contamination to
be remedied by that method recognized by Washington State Department of Ecology and shall
indemnify and hold Lessor harmless from all costs involved in implementing the remedy.
(c) Any other provision of this Lease to the contrary notwithstanding, Lessee's breach
of any covenant contained in this Section 16 shall be an Event of Default empowering Lessor, in
addition to exercising any remedy available at law or in equity or otherwise pursuant to this
Lease, to terminate this Lease and to evict Lessee from the Premises forthwith, or to terminate
Lessee's right to possession only without terminating this Lease.
(d) Lessee shall notify Lessor within twenty-four (24) hours of any release of a
reportable quantity of any hazardous substance (as that term is defined in CERCLA, 42 USC
9601, et. seq. or the Washington Model Toxics Control Act), or of the receipt by Lessee 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
Lessor: City of Auburn
Lessee: N.W. Hangars, LLC.
Resolution 3894
August 15,2005
Page 11
use of the Premises or any activity conducted thereon. If Lessee fails to comply with any of the
requirements of this section, Lessor may undertake, without cost or expense to Lessor, any
actions necessary to protect Lessor's interest including steps to comply with such laws.
18. MAINTENANCE / COMMIT NO WASTE
Lessee shall at all times during the term of this Lease maintain the Premises and all
improvements thereon, in good condition and shall, at its sole cost and expense, keep the
Premises, clean and in a safe and sanitary condition, and shall provide all necessary repairs and
maintenance to the Premises. Lessee agrees not to allow conditions of waste and refuse to exist
on the premises. Lessee shall conform to and comply with all valid ordinances, regulations or
laws affecting the Premises, the Improvements or any other improvements on the Premises or the
use thereof. Lessor shall have no obligation whatsoever to keep, maintain, alter, remodel,
improve, repair, decorate or paint the Improvements or any other improvements hereafter
situated upon the Premises. It is the intention of the parties that Lessee and not Lessor shall have
the full responsibility and obligation for the repair and maintenance of the Improvements and
other improvements hereafter situated upon the Premises and Lessee waives, to the full extent
allowed by law, any right or remedy against Lessor based upon the condition of the
Improvements or any improvements hereafter situated upon the Premises or any failure by
Lessor or Lessee to repair or maintain the, Improvements or any such improvements.
19. ALTERATIONS AND ADDITIONS
Following completion of the initial construction of Lessee's proposed Improvements,
Lessee shall not make any alterations, improvements, additions, or utility installations in or about
the Premises (collectively, "Alterations") without first obtaining the written consent of Lessor
and, where appropriate, in accordance with plans and specifications approved by Lessor. Any
alterations 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 Lessee's sole expense
and shall be subject to the prior written consent of Lessor. To the extent Lessor incurs any costs
in its examination and approval of the architectural and mechanical plans and specifications for
the Alterations, which costs have not been previously reimbursed by Lessee to Lessor through
the City of Auburn's permitting process, Lessee shall reimburse Lessor for any such additional
sums expended for examination and approval of such plans and specifications. Lessor may
require a lien and completion bond for such construction, or require the improvements be
removed at the expiration of the Term. Lessor's approval of the plans, specifications and
working drawings for Lessee's alterations shall create no responsibility or liability on the part of
Lessor for their completeness, design sufficiency, or compliance with all laws, rules and
regulations of governmental agencies or authorities. Unless Lessor requires their removal, all
Alterations (other than trade fixtures and movable equipment) which may be made on the
Premises shall become the property of Lessor and remain upon and be surrendered with the
Premises at the expiration ofthe term.
20. COVENANT OF QUIET ENJOYMENT
Lessor: City of Auburn
Lessee: N.W. Hangars, LLC.
Resolution 3894
August 15, 2005
Page 12
Lessor agrees that if Lessee timely pays the rent and performs the terms and provisions
hereunder, Lessee shall hold and enjoy the Premises during the Term, free of lawful claims by
any party acting by or through Lessor, subject to all other terms and provisions ofthis Lease.
21. RECORDING AND MORTGAGING
Lessee and Lessor agree to execute and record a short form or memorandum of this Lease
with costs of preparation and recording paid by Lessee.
22. UTILITIES
(a) Lessee agrees to contract with the appropriate provider and pay for all public
utilities, which shall be used in or charged against the Premises, and to hold the Lessor harmless
from such charges. Lessor shall cooperate, at no charge to Lessor, in the granting of easements
and rights-of-way in, through, above, and/or under property owned and controlled by Lessor at
the Airport and reasonably necessary for the provision of utilities to the Premises, provided that
if any utility lines, including but not limited to storm water lines, need to be relocated, the
responsibility to relocate them shall be borne solely by the Lessee.
(b) Except to the extent caused by the gross negligence or intentional misconduct of
Lessor or its agents, employees or contractors, failure by Lessor to 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
Lessor with any voluntary or similar governmental or business guidelines, governmental laws,
regulations or restrictions, or any other similar causes, shall not render the Lessor liable in any
respect for damages to either person or property, for any economic loss or other consequential
damages incurred by Lessee as a result thereof, be construed as an eviction of Lessee, result in an
abatement of rent, or relieve Lessee from its obligation to perform or observe any covenant or
agreement contained in this Lease.
23. LIENS AND INSOLVENCY
Lessee shall keep the Premises free from any liens. In the event Lessee becomes
insolvent, voluntarily or involuntarily bankrupt, or if a receiver, assignee or other liquidating
officer is appointed for the business of the Lessee, then the Lessor may cancel this Lease at
Lessor's option.
24. COSTS AND ATTORNEYS' FEES
If by reason of default on the part of either party to this Lease 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.
Lessor: City of Auburn
Lessee: N.W. Hangars, LLC.
Resolution 3894
August 15, 2005
Page 13
25. DEFAULT - REMEDIES
(a) Time is ofthe essence of this agreement.
(b) Lessee shall be in default under this Lease if any rent or other payment due from
Lessee hereunder remains unpaid for more than ten (10) days after the date it is due; (ii) Lessee
files a voluntary petition in bankruptcy or makes a general assignment to the benefit of, or a
general arrangement with, creditors; (iii) there is an involuntary bankruptcy filed against Lessee
that has not been dismissed within thirty (30) days of filing; (iv) Lessee becomes insolvent; or
(v) a receiver, trustee, or liquidating officer is appointed for Lessee's business; or (vi) if Lessee
violates or breaches any of the other covenants, agreements, stipulations or conditions herein,
and such violation of breach shall continue for a period of thirty (30) days after written notice of
such violation or breach is sent to Lessee, then Lessor shall have the rights and remedies
provided in this Section 25, in additional to any other right or remedy available at 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).
(c) Upon any default under this Lease, Lessor may reenter the Premises in the manner
then provided by law, and remove or put out Lessee or any other persons found therein. No such
reentry shall be construed as an election on Lessor's part to terminate this Lease unless a written
notice of such intention is given to Lessee.
(d) Upon default the Lessor may elect to re-Iet the Premises or any part thereof upon
such terms and conditions, including rent, term and remodeling or renovation, as Lessor in its
sole discretion may deem advisable. To the fullest extent permitted by law, the proceeds of any
reletting shall be applied: first, to pay Lessor 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 Lessees, and, if Lessor maintains and
operates the Premises, the costs thereof); second, to pay any indebtedness of Lessee to Lessor
other than rent; third, to the rent due and unpaid hereunder; and fourth, the residue, if any, shall
be held by Lessor and applied in payment of other or future obligations of Lessee to Lessor as
the same may become due and payable, and Lessee shall not be entitled to receive any portion of
such revenue.
(e) Lessor may also elect to terminate the Lease and all rights of Lessee by giving
notice to Lessee of such election. If Lessor elects to terminate the Lease, Lessor shall have the
right to reenter the Premises and remove all persons, and to take possession of and remove all
equipment and fixtures of Lessee in the Premises, in the manner then provided by law. Lessee
hereby waives all damages that may be caused by Lessor's reentering and taking possession of
the Premises or removing or storing the property thereof, and Lessee shall save Lessor harmless
therefrom, and no such reentry shall be considered a forcible entry. If Lessor so elects to
terminate the Lease, Lessor may also recover from Lessee:
Lessor: City of Auburn
Lessee: N.W. Hangars, LLC.
Resolution 3894
August 15, 2005
Page 14
(I) The worth at the time of the award of the unpaid rent which had been
earned at the time of termination;
(II) The worth at the time of the award of the amount by which the unpaid rent
which would have been earned after termination until the time of the award exceeds the amount
of rental loss that the Lessee proves could have been reasonably avoided;
(III) The worth at the time of the award of the amount by which the unpaid rent
for the balance of the term after the time of the award exceeds the amount of rental loss that the
Lessee proves could be reasonably avoided;
(IV) Any other amount necessary to compensate the Lessor for all the
detriment proximately caused by the Lessee's failure to perform its obligations under the Lease
or which in the ordinary course of things would be likely to result therefrom; and
(V) At Lessor'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.
The "worth at the time of the award" of the amounts referred to in paragraphs (I) and (II)
above is computed by allowing interest at twelve percent (12%). The "worth at the time of the
award" of the amount referred to in paragraph (III) above is computed by discounting such
amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of the
award plus one percent (1 %).
(f) Nothing in this Section 25 shall be deemed to affect Lessor'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,
26. PRIORITY
(a) This Lease shall be subordinate to any mortgage or deed of trust now existing or
hereafter placed upon the Premises created by or at the instance of Lessor, and to any and all
advances to be made thereunder and to interest thereon and all modifications, renewals and
replacements or extensions thereof ("Lessor's Mortgage"), and to any master lease hereafter
placed against the Premises and to all modifications, extensions, and amendments thereof and
thereto. Lessee shall properly execute, acknowledge and deliver documents which Lessor or the
holder of any Lessor's Mortgage may require within ten (10) days after delivery by Lessor to
effectuate the provisions of this Section 26, provided that such documents state that Lessee's
rights this Lease will not be terminated so long as Lessee is not in default hereunder.
(b) Lessee shall be entitled to grant a first mortgage or first position deed of trust to
an institutionallender on its leasehold interest under this Lease, provided Lessee first provides
Lessor with written notice of such proposed first mortgage or first position deed of trust. Lessor
agrees to make such reasonable modifications to this Lease as may be requested by any
Lessor: City of Auburn
Lessee: N.W. Hangars, LLC.
Resolution 3894
August 15,2005
Page 15
permitted leasehold mortgagee, including without limitation the giving of notice of default by
Lessee under the Lease to any such leasehold mortgagee, the giving of a second notice before the
Lease is terminated, and the granting to such leasehold mortgagee of a "new lease" in the event
this Lease is terminated. Such modifications shall be generally in conformance with the model
leasehold mortgage provisions promulgated by the American Bar Association.
27. RETENTION OF AIRSPACE AND OTHER RIGHTS BY LESSOR
(a) Lessor retains the public and private right of flight for the passage of aircraft in
the airspace above the surface of the property hereinbefore described, 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.
(b) Lessor 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 Lessee and without interference or
hindrance.
(c) Lessor reserves the right, but shall not be obligated to the Lessee to maintain and
keep in repair the landing area of the Airport and all publicly-ovmed facilities of the Airport,
together with the right to direct and control all activities of the Lessee in this regard.
(d) This Lease shall be subordinate to the provisions and requirements of any existing
or future agreement between the Airport and the United States, relative to the development,
operation, and maintenance of the Airport.
(e) Lessee agrees to comply with the notification and review requirements covered in
Part 77 of the Federal Aviation Regulation 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.
(f) Lessee 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 established height
contours. In the event the aforesaid covenants are breached, Lessor shall give written notice to
the Lessee specifying the breach. If Lessee does not take action to correct the breach within ten
(10) days of receipt of said notice, the Lessor 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 Lessee.
(g) Lessee, by accepting this Lease, agrees that it will not make use of the Leased
Premises in any manner which might interfere with the landing and taking off of aircraft from
Auburn Airport or otherwise constitute a hazard. In the event the aforesaid covenant is breached,
Airport reserves the right to enter upon the Premises hereby leased and cause the abatement of
such interference at the expense of Lessee.
Lessor: City of Auburn
Lessee: N.W. Hangars, LLC.
Resolution 3894
August 15,2005
Page 16
(h) 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 Section 308a of the
Federal Aviation Act of 1958 (49 U.S.C. Section 1349a).
(i) 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.
G) Lessor reserves the right to take any action it considers necessary to protect the
aerial approaches of the Auburn Airport against obstructions, together with the right to prevent
Lessee from erecting or permitting to be erected any building or other structure on the Premises
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.
(k) Lessee, as well as Lessee's assignees and sublessees, and the agents, employees
and customers thereof, shall have the rights of access to and use of all areas and facilities of the
Auburn Airport which are intended for the common use of all Lessees 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.
28. FEDERAL AVIATION ADMINISTRATION REQUIREMENTS
(a) Lessee agrees:
(I) to prevent any operation on 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
(2) 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.
(b) Lessor 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. Lessor agrees to give Lessee no less than
ninety (90) days' written notice of its intention to install such air navigational aids.
29. SECURITY
Airport shall have no obligation to provide security to the Premises. If reasonably
required by Lessor, Lessee shall provide adequate lighting to provide for all-night illumination of
the Taxilane apron of all buildings on the Premises, including aprons, aircraft tiedovm areas,
vehicular parking lots, and pedestrian walkways surrounding the Premises. Lessee may, but
need not, employ security persons. If at any time during the term of this Lease, additional
Lessor: City of Auburn
Lessee: N.W. Hangars, LLC.
Resolution 3894
August 15,2005
Page 17
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, Lessee
agrees to comply with said security requirements that affect the Premises, at Lessee's sole
expense, upon being notified of such requirements in writing by Airport. If Airport is fined by
FAA for a security violation caused by negligence of Lessee, or any of Lessee's sub-Lessees,
Lessee shall immediately reimburse Airport upon demand.
30. INSPECTION, ACCESS AND NOTICE
Lessor and any of its agents shall at any time upon four (4) weeks advance, written notice
to Lessee, 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. Provided, however, that in the event the Lessor determines, in its sole and
absolute discretion, that an emergency situation exists on or adjacent to the Premises, no advance
notice to Lessee is required and Lessor may immediately go upon and inspect the Premises.
Provided further, that Lessee agrees to allow Lessor to inspect the Premises on an armual basis at
an agreed upon date and time, preferably the same date and time that any inspection by the local
fire marshal occurs. Lessor shall 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 marmer for any inconvenience, disturbance, loss of business, or other
damages arising out of Lessor's entry on the Premises as provided in this Section except for such
damage that is caused directly by, or through the gross negligence of, Lessor, their employees,
agents, or representatives.
31. NON-DISCRIMINATION
(a) Lessee for himself, his heirs, personal representatives, 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 agreement for a purpose for which a Department of Transportation ("DOT") program or
activity is extended or for another purpose involving the provision of similar services or benefits,
the Lessee shall maintain and operate such facilities and services in compliance with all other
requirements imposed pursuant to Title 49, Code of Federal Regulations, DOT, Sub-title A,
Office of the Secretary, Part 21, Non-discrimination in Federally Assisted Programs of the
Department of Transportation, Effectuation of Title VI of the Civil Rights Act of 1964, and as
said Regulations may be amended.
(b) Lessee for himself, his personal representatives, 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, color, sex, or national origin 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, color, sex, or national origin shall be
excluded from participation in, denied the benefits of, or be otherwise subjected to
Lessor: City of Auburn
Lessee: N.W. Hangars, LLC.
Resolution 3894
August 15,2005
Page 18
discrimination, and 3) that the Lessee shall use the Premises in compliance with all other
requirements imposed by or pursuant to Title 49, Code of Federal Regulations, DOT, Sub-title A,
Office of the Secretary, Part 21, Non-discrimination in Federally Assisted Programs of the
Department of Transportation, Effectuation of Title VI of the Civil Rights Act of 1964, and as
said Regulations may be amended.
(c) In the event of breach of any of the above non-discrimination covenants, Lessor
shall have the right to terminate this Lease agreement and to re-enter and repossess said Premises
and the facilities thereon, and hold the same as if said lease agreement has never been made or
issued. This provision does not become effective until the procedures of 49 CFR Part 21 are
followed and completed, including expiration of appeal rights.
(d) Lessee 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 Lessee may be allowed to
make reasonable and nondiscriminatory discounts, rebates, or other similar types of price
reductions to volume purchasers.
(e) Noncompliance with Section 31 (d) above shall constitute a material breach
thereof and, in the event of such noncompliance, Lessor shall have the right to terminate this
Lease and the estate hereby created without liability therefor or, at the election of the Lessor or
the United States, either or both said Governments shall have the right to judicially enforce the
provisions of said Section 31 (d).
(f) Lessee agrees that it shall insert the above five subsections in any lease, license,
or sublease agreement by which said Lessee 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.
(g) The Lessee assures that it will undertake an Affirmative Action program as
required by 14 CFR 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 Lessee 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 Lessee assures that it will require that its
covered suborganizations, provide assurances to the Lessee 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.
32. 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:
LESSOR:
City of Auburn
LESSEE:
NW Hangars LLC
Lessor: City of Auburn
Lessee: N.W. Hangars, LLC.
Resolution 3894
August 15,2005
Page 19
25 West Main
Auburn, WA 98001
2131 E Street NE
Auburn, W A 98002
Following the condominiumization of the Premises by Lessee, notices due hereunder shall be
served upon any officer of the condominium association, or upon its Registered Agent, in the
manner provided by law.
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.
33. MISCELLANEOUS
(a) No Brokers. Lessee represents and warrants to Lessor 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 Lessor
against any loss, cost, liability or expense incurred by Lessor 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 Lessee.
(b) Non Waiver. Waiver by Lessor 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.
(c) Estoooel Certificates. Lessee shall, from time to time, upon written request of
Lessor, execute, acknowledge and deliver to Lessor 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 leasing; that all obligations under this Lease to
be performed by the Lessor have been satisfied; (iii) on this date there are no existing claims,
defenses or offsets which the Lessee has against the enforcement of this Lease by the Lessor; (iv)
no Rent has been paid more than one month in advance; and that no security has been deposited
with Lessor (or, if so, the amount thereof); and (v) such other items as Lessor shall reasonably
request. It is intended that any such statement delivered pursuant to this Section may be relied
upon by a prospective purchaser of Lessor's interest or holder of any mortgage upon Lessor's
interest in the Premises. If Lessee shall fail to respond within ten (10) days of receipt by Lessee
of a written request by Lessor as herein provided, Lessee shall be deemed to have given such
certificate as above provided without modification and shall be deemed to have admitted the
accuracy of any information supplied by Lessor to a prospective purchaser or mortgagee and to
have certified that this Lease is in full force and effect, that there are no uncured defaults in
Lessor's performance, that the security deposit is as stated in the Lease, and that not more than
one month's Rent has been paid in advance.
Lessor: City of Auburn
Lessee: N.W. Hangars, LLC.
Resolution 3894
August 15,2005
Page 20
(d) Force Majeure. Except for the payment of Rent, Additional Rent or other sums
payable by Lessee to Lessor, time periods for Lessee's or Lessor's performance under any
provisions of this Lease shall be extended for periods of time during which Lessee's or Lessor's
performance is prevented due to circumstances beyond Lessee's or Lessor's control, including
without limitation, strikes, embargoes, shortages oflabor or materials, governmental regulations,
acts of God, war or other strife.
(e) 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.
(f) Authoritv. 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.
34. SIGNATURE
By signing in the space below, the LESSEE ACKNOWLEDGED HAVING READ AND
UNDERSTOOD AND AGREES TO THE CONTENTS OF THIS AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have executed this Lease.
LESSOR:
THE CITY OF AUBURN, a Washington municipal
corpor Ion
.
-
, ~
By:
Print Nam . Peter B. Lewis
Title: Mavor
Approved as to form:
C' 'Attorney (ki'1/f
Lessor: City of Auburn
Lessee: N.W. Hangars, LLC.
Resolution 3894
August 15,2005
Page 21
LESSEE:
NW Hangars LLC ~ ~
By: /
Print Name: {d Uo,..I; ~
/
Lessor: City of Auburn
Lessee: N.W. Hangars, LLC.
Resolution 3894
August 15, 2005
Page 22
STATE OF WASHINGTON
ss.
COUNTY OF KING
I certify that I know or have satisfactory evidence that fctf-r. IJ .L.?:.-U:J IS is
the person who appeared before me, and said person acknowledged that said person signed this
instrument, on oath stated that said person was authorized to execute the instrument and
acknowledged it as the --7v7 ~~ of the City of Auburn, a Washington
municipal corporation, to be the free d voluntary act of such municipal corporation for the uses
and purposes mentioned in the instrument.
Dated this t.1z."i~ / 8 ,2005.
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:Q.-<'>::i.,:,;ON C:;:,:-.(<: "" (Signalure of Notary)
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~ :. Plu'~l\.C. ::::; :? 1Legibly Print or Stamp Name of Notary)
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", G)....." ,,1 ....~A:: .:.~ Notary public in and for the state of Washington,
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"ll\~~,~:~~,,'~-- My appointment expirU 03 . ~.., , v-::r
STATE OF WASHINGTON
k:;~ lJ/
ss.
COUNTY OF
I certify that I know or have satisfactory evidence that :J;;iJ/U VcrA,..., is the person
who appeared before me, and said person acknowledged that said person signedthis instrument
and acknowledged it to be said person's free and voluntary act for the uses and purposes
mentioned in the instrument.
Dated this
8'-;;,1'
,2005.
~~
' ~,ee~
(Slgnalure of Notary)
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, (Legibly Print or Stamp Name of Notary)
Notary public in and for the state of Washington,
residing at K /PU}r i..o.
My appointment exPires <I;S. ;;I q , 07=-
Lessor: City of Auburn
Lessee: N,W. Hangars, LLC.
Resolution 3894
August 15,2005
Page 23
Lessor: City of Auburn
Lessee: N.W. Hangars, LLC.
Resolution 3894
August 15,2005
Exhibit A-I
Legal Description of Premises
HANGAR LEASE PARCEL
Page 24
THAT PORTION OF THE J. BRANNAN DONATION CLAIM NO. 38 SITUATED IN
SECTION 7, TOWNSHIP 21 NORTH, RANGE 5 EAST, W.M., DESCRIBED AS
FOLLOWS:
BEGINNING AT THE NORTHEAST CORNER OF THE J. BRANNAN DONATION
CLAIM NO. 38:
THENCE NORTH 88 DEGREES 49'52" WEST 430.01 FEET;
THENCE SOUTH 0 DEGREES 52'25" WEST 1320.42 FEET TO THE TRUE POINT
OF BEGINNING;
THENCE CONTINUING SOUTH 0 DEGREES 52'25" WEST 20.00 FEET;
THENCE NORTH 88 DEGREES 53'43" WEST 530.00 FEET;
THENCE NORTH 0 DEGREES 52'25" EAST 53.00 FEET;
THENCE SOUTH 88 DEGREES 53'43" EAST 530.00 FEET;
THENCE SOUTH 0 DEGREES 52'25" WEST 33.00 FEET TO THE TRUE POINT OF
\ BEGINNING:
LESS THE EAST 25 FEET FOR STREET;
TOGETHER WITH AND INCLUDING SPECIFIC SUBSURFACE RIGHTS
CONSISTING OF THE RIGHT TO CONSTRUCT OR DEMOLISH FOUNDATION
STRUCTURES BENEATH THE SURFACE, SUCH FOUNDATIONS TO SUPPORT
HANGARS ON THE ADJOINING PARCEL DESCRIBED ABOVE, AND TO
VERTICAL AND LATERAL SUPPORT FOR SUCH STRUCTURES BUT NOT
INCLUDING MINERAL RIGHTS, IF ANY, AND INCLUDING THE RIGHT TO
DISTURB THE SURFACE FOR THE LIMITED TIME NECESSARY FOR
PURPOSES OF CONSTRUCTION OR DEMOLITION OF SUCH STRUCTURES,
PROVIDED THAT THE SURFACE IS RESTORED TO ITS PREVIOUS CONDITION
WHEN CONSTRUCTION OR DEMOLITION OF STRUCTURES IS COMPLETED,
FOR THE FOLLOWING DESCRIBED PROPERTY:
BEGINNING AT THE NORTHEAST CORNER OF THE J. BRANNAN DONATION
CLAIM NO. 38:
THENCE NORTH 88 DEGREES 49'52" WEST 430.01 FEET;
THENCE SOUTH 0 DEGREES 52'25" WEST 1340.42 FEET TO THE TRUE POINT
OF BEGINNING;
THENCE CONTINUING SOUTH 0 DEGREES 52'25" WEST 3.00 FEET;
THENCE NORTH 88 DEGREES 53'43" WEST 530,00 FEET;
THENCE NORTH 0 DEGREES 52'25" EAST 3.00 FEET;
THENCE SOUTH 88 DEGREES 53'43" EAST 530.00 FEET TO THE TRUE POINT
OF BEGINNING:
LESS THE EAST 25 FEET FOR STREET.
SITUATE IN THE CITY OF AUBURN, COUNTY OF KING, STATE OF
WASHINGTON.
Exhibit A-2
Site Plan
[Attach]
Lessor: City of Auburn
Lessee: N.W. Hangars, LLC.
Resolution 3894
August 15,2005
Page 25
~ --;;-""';1"_____
Exhibit B
Construction of Improvements
1. General. Lessee may construct on the Premises certain new improvements which may
include aircraft hangar buildings consistent with the description in the Lease (the
"Improvements"). The term "Improvements" shall also mean and include any replacement
structures or improvements which may be constructed on the Premises during the term, from
time to time. The Improvements shall be constructed at Lessee's sole cost and expense. As used
in this Lease the term "Commencement of Construction" shall mean the date upon which Lessee
has obtained all necessary permits and approvals for construction of the Improvements and has
begun demolition or construction activity on the Premises. As used in this Lease the term
"Completion Date" means the date upon which a certificate of occupancy has been issued by the
City of Auburn for the Improvements, permitting occupancy and use thereof by Lessee.
2. No Fuel Facilities. Lessee shall not install facilities for the purpose of fueling aircraft on
the Premises ("On-Site Fuel Facilities"), as defined herein, without prior written approval from
the Airport Director's Office. "On-Site Fuel Facilities" as used in this Lease shall be defined 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 fuel. Approval of the installation of the On-Site Fuel
Facilities shall not be granted unless all conditions deemed necessary or desirable by Lessor are
satisfied.
3. No Smoking. Lessee shall install and maintain "No Smoking" signs within each of the
Hangars on the Premises.
4. Plans. The Improvements shall be subject to Lessor's prior approval. All architectural,
engineering and other design fees shall be paid by Lessee. Lessee shall use its architect,
engineers and other design professionals, all of whom shall comply with any applicable licensing
or governmental requirements in the state in which the Premises are situated. Lessee shall
provide to Lessor all plans for any desired Improvements in form suitable for permit application
(collectively, the "Working Drawings"). The Working Drawings shall include architectural,
structural, plumbing, mechanical, electrical, and fire protection drawings as required. Working
Drawings, and all changes thereto, shall be subject to Lessor's reasonable written approval. If
Lessor denies its approval, it shall specify the reasons for doing so in reasonable detail.
5. Permits. Lessee shall be solely responsible for obtaining and complying with all permits,
approvals or licenses required for the construction and erection of any structure on the Premises.
If Lessee fails to obtain and comply with such permits, then Lessee accepts full responsibility for
any and all costs incurred by the Lessor, including actual attorney's fees, occasioned by Lessor
pursing Lessee's default for its failure to obtain and/or comply with such permits. Lessee agrees
to hold the Lessor hannless from any liability and to fully reimburse expenses of the Lessor for
Lessee's failure to obtain and/or fully comply with any necessary permit.
Lessor: City of Auburn
Lessee: N.W. Hangars, LLC.
Resolution 3894
August 15,2005
Page 26
6. Funding Assurances. Prior to Commencement of Construction, Lessee will provide the
following to Lessor: (a) a list of the individuals who will be purchasing seventy (70%) percent
of the hangar units from Lessee and that have deposited fifty (50%) percent of the purchase
price, which Lessee intends to utilize for the costs of development and construction of the
Improvements; and (b) a copy of the escrow instructions to the escrow agent holding the funds
referenced in subsection (a) above (the "Escrow Instructions"), which Escrow Instructions shall
be approved by Lessor prior to the Commencement of Construction, such approval not to be
unreasonably withheld, Lessee shall also provide Lessor with the name, phone number and
address of the escrow agent holding funds for the construction/purchase of the hangar units,
along with the escrow number, so that Lessor may confirm at any time during the course of
construction that there are sufficient funds to complete construction of the Improvements. It is
provided, however, that as an alternative to the deposit of funds, the Lessee may submit to the
Lessor an irrevocable letter of credit in a form satisfactory to the Lessor and in an amount not
less than the amount of the funds that \vould otherwise be required to be deposited.
7. Contractor. In the event Lessee intends on using a general contractor for the construction
of the Improvements, Lessee shall contract with an experienced, qualified general contractor
("Contractor") that is reasonably acceptable to Lessor. Lessee or its general contractor shall
complete all Improvements in a good and workmanlike manner.
8. Insurance. Lessee 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 $500,000.00;
(c) Commercial General Liability - at least $1,000,000 Combined Single Limit, including
Personal Injury, Contractual and Products/Completed Operations Liability naming Lessor and Lessee
as additional insured. Coverage must be primary and non-contributing and include the following:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
Premises - Operations
Elevators and Hoists
Independent Contractor
Contractual Liability assumed under the construction contract
Completed Operations - Products
Explosion, Underground and Collapse (XUC) Coverage
Lessor: City of Auburn
Lessee: N.W. Hangars, LLC.
Resolution 3894
August 15, 2005
Page 27
(d) Automobile Liability - Including Owned, Hired and Non-owned licensed vehicles
used in connection with performance of the construction work of at least: $1,000,000 per occurrence,
$3,000,000 general aggregate (including umbrella limits). Coverage must include the following:
(i) O','med vehicles
(ii) Leased vehicles
(iii) Hired vehicles
(iv) Non-owned vehicles
(e) Procure or cause contractor to procure and maintain installation floater insurance to
protect against the risk of physical damage until acceptance of the construction work;
(f) Furnish the Lessor 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 Lessor.
(g) The following statement shall appear in each certificate of insurance provided Lessor
by Lessee 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 ten (10) days prior notice to the City of Auburn, Washington."
(h) During construction of Lessee's Improvements both parties shall give prompt notice to
the other of all losses, damages, or injuries to any person or to property of Lessee, Lessor or third
parties. Lessor or Lessee shall promptly report to the other all such claims of which that party has
notice, whether related to matters insured or uninsured. No settlement or payment for any claim for
loss, injury or damage or other matter as to which one party may have an obligation for any payment
or reimbursement, shall be made by the other without the written approval of the affected party;
(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 party's work;
G) Lessor and Lessee 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. Lessee shall keep the Premises free from any liens ansmg out of work
performed, materials furnished to, or obligations incurred by Lessee. Lessee 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 Lessee, shall be discharged by Lessee, by bond or otherwise, within thirty (30) days
after filing and prior to termination of this Lease, at the sole cost and expense of Lessee. Should
Lessee fail to discharge any lien of the nature described in this paragraph, Lessor may, at
Lessor: City of Auburn
Lessee: N.W. Hangars, LLC.
Resolution 3894
August 15, 2005
Page 28
Lessor'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 Lessee as rent
under this Lease.
10. Hold Harmless. Lessee shall indemnify, defend, and hold harmless Lessor and the
Premises from and against all claims and liabilities arising by virtue of or relating to construction
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 Lessee on or with respect
to the Premises. If Lessee is required to defend any action or proceeding pursuant to this section
to which action or proceeding Lessor is made a party and Lessor reasonably believes that the
interests of Lessee and Lessor conflict or are divergent, then Lessor shall also be entitled to
appear, defend, or otherwise take part in the matter involved, at its election, by counsel of its
own choosing, and to the extent Lessor is indemnified under this section, Lessee shall bear the
cost of Lessor's separate defense, including reasonable attorneys' fees.
11. Progress Reports. From and after the Commencement of Construction and through the
Completion Date, Lessee shall provide to Lessor 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: Survev. Within thirty (30) days following the Completion Date for
any Improvements, Lessee shall deliver to Lessor 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) and
a copy of the Survey Map and Plans for the Condominium prepared by a licensed surveyor,
certified to Lessor and showing the 10cation of the Improvements, all easements and utilities,
(including underground utilities).
13. Condition of Improvements. Lessee assumes full responsibility for the design,
construction and condition of the Improvements, and any improvements constructed on the
Premises during the Lease Term, and Lessee hereby fully releases Lessor from any and all
liability relating thereto.
Lessor: City of Auburn
Lessee: N.W, Hangars, LLC.
Resolution 3894
August 15,2005
Page 29