RENTAL AGREEMENT

RENTAL AGREEMENT

This rental agreement, made this ______ day of _______, 2003, by and between Funny River Emergency Services, Inc. (Lessor) and the Kenai Peninsula Borough (Lessee);

WITNESSETH:

1. Premises and Term. Lessor, for and in consideration of the rents, covenants, and conditions hereinafter specified to be paid, by lessee, does hereby lease to lessee, the real estate located in the Kenai Recording District, Third Judicial District, State of Alaska, more particularly described as follows:

800 square feet of space in the Funny River Fire Department and Disaster Relief Building located on Lot 5 Salmon Bend Subdivision, FRVFD Addition, According to Plat No. 2002-24, Kenai Recording District, within Section 17, Township 5 North, Range 8 West, Seward Meridian, Alaska,

for the purpose of storing, maintaining and operating a medic unit and associated equipment.

2. Term. The term of this rental agreement commences on the ___th day of ______, 2003, through and including the ____th day of ________, 200_ , unless sooner terminated as herein provided and is subject to the option to extend as provided in paragraph 13.

3. Rental. In consideration of the rental of the premises by lessor, the lessee covenants to pay to the lessor as rental for the premises described in paragraph 1 above, the sum of twenty-five thousand dollars ($25,000) upon execution of this agreement, equivalent to 4 years and 2 months rent at five hundred dollars ($500.00) per month. Upon renewal, if any, lessee shall pay five hundred dollars ($500.00) on the first day of each month unless otherwise provided for; all payments, unless and until otherwise directed in writing by lessor, shall be paid to the lessor.

4. Covenants of Lessee. The lessee hereby covenants and agrees:

A. To pay rent: The lessee will pay the said rent specified at the times and in the manner set out in paragraph 3 herein, except only in the case of fire or other casualty as herein provided.

B. Not to assign. Lessee shall not assign, sublet or part with the possession of all or any part of the leased premises without the prior written consent of the lessor. Such consent shall not be unreasonably withheld by lessor.

C. To permit lessor to enter. Lessor is granted free access to premises at all times for inspection, maintenance, or repair.

D. To yield up premises. At the expiration of the term of this rental agreement, lessee will peaceably yield up to the lessor the premises, in good repair in all respects, reasonable use and wear and damage by fire and other casualties excepted.

E. Alterations. Lessee may not alter the premises without first obtaining prior approval of lessor.

5. Lessor's warranties. The lessor covenants, guarantees and provides the following express warranties:

A. No existing restrictions interfere with the borough's permitted and intended use of the leased property;

B. Availability of adequate ingress and egress to leased property;

C. Lessor has sufficient interest in property to grant tenant this leasehold;

D. Lessee shall have quiet enjoyment of the premises;

E. The property is fit for its intended use;

F. Lessor shall be responsible for all snow and ice removal from the roof, the adjacent parking area, and entrances and exits;

G. Any use, treatment, storage, or transportation of hazardous substances has been in compliance with all applicable federal, state and local laws. No hazardous substances have been released, discharged, spilled, leaked, disposed of, or omitted on, in, or under the premises. The premises are free of hazardous substance; and

H. Lessor shall be responsible to maintain the premises in good repair at all times and shall provide adequate heat and electricity at all times.

6. Default by lessor/lessee. Should either lessee or lessor default in the performance of the obligations of any covenants of this rental agreement and fail to fully remedy such default within thirty days after written notice by the nondefaulting party, then the rental agreement may be terminated by written notice to the defaulting party. All rental hereunder shall abate during the period of any such default. Upon termination of this rental agreement, lessor shall refund to lessee any unearned advance rental paid of lessee. Such payment shall be due and payable within thirty days of the date of termination.

7. Subject to Annual Appropriation. Unless the Kenai Peninsula Borough Assembly by resolution provides otherwise, this lease shall automatically terminate without penalty on June 30 of any year during which the Kenai Peninsula Borough assembly fails to appropriate funds sufficient to make the lease payments on the leased property for the following fiscal year.

8. Liability and insurance. Each party shall be responsible and liable for its own acts and omissions under this rental agreement and shall carry insurance adequate to protect its interest.

9. Permits, Laws, and Taxes. Lessor shall acquire and maintain in good standing all permits, licenses, and other entitlements necessary to the performance under this rental agreement. All actions taken by the lessor under this agreement shall comply with all applicable statutes, ordinances, rules and regulations. Lessor shall pay all taxes that may be due and owing to a federal, state, or local taxing entity.

10. No Waiver. No assent, expressed or implied, by either party to any breach of either party's covenants shall be deemed to be a waiver of any succeeding breach of the same covenants, nor shall any forbearance by a party to seek a remedy for any breach be deemed a waiver by that party of its rights or remedies with respect to such breach.

11. Integration. This document contains the entire lease agreement of the parties hereto. All negotiations, statement, representations, guarantees, warranties, and assurances, whether oral or written, which are in any way related to the subject matter of this rental agreement and the performance of either party hereto, are merged and integrated into the terms of this document.

12. Modification. The parties may mutually agree to modify the terms of this agreement. Any modifications shall be in writing executed by both parties.

13. Renewal. This rental agreement shall automatically renew for additional periods of one year on the same terms and conditions as this rental agreement, unless either party gives written notice of termination no later than 60 days prior to the end of the term in effect.

14. Interpretation and enforcement. This agreement has been drafted following negotiations between the parties. It shall be construed according to the fair intent of the language as a whole, not for or against any party. The interpretation and enforcement of this agreement shall be governed by the laws of the State of Alaska. The titles of sections in this agreement are not to be construed as limitations or definitions but are for identification purposes only.

15. Severability. If any section or clause of this agreement is held invalid by a court of competent jurisdiction, or is otherwise invalid under the law, the remainder of this agreement shall remain in full force and effect.

16 . Notice. Whenever notice is required hereunder, it shall be addressed as follows until written notice of change of address is given to the other party:

Lessor: Lessee:

Funny River Emergency Services, Inc. KENAI PENINSULA BOROUGH

P.O. Box 1623 Central Emergency Services

Homer, AK 99603 144 N. Binkley Street

Soldotna, AK 99669

DATED this ______ day of _______, 2003.

FUNNY RIVER EMERGENCY SERVICES, INC KENAI PENINSULA BOROUGH

_________________________________ ____________________________________

By: Byron L. Bondurant, President By: Dale L. Bagley, Mayor

Date: _____________________________ Date: _______________________________

ATTEST: APPROVED AS TO LEGAL FORM

AND SUFFICIENCY:

__________________________________ ____________________________________

Linda S. Murphy, Borough Clerk Colette Thompson, Borough Attorney

NOTARY ACKNOWLEDGMENT

STATE OF ALASKA )

) ss.

THIRD JUDICIAL DISTRICT )

The foregoing instrument was acknowledged before me this ____ day of _____________, 2003, by Dale Bagley, Mayor of the Kenai Peninsula Borough, an Alaska municipal corporation, for and on behalf of the corporation.

____________________________________

Notary Public in and for Alaska

My commission expires:________________