RENTAL AGREEMENT

LEASE AGREEMENT

This Lease agreement, made this ______ day of ____________, 2004, by and between G. WHITE AND SON COMPANY (LESSOR) and the KENAI PENINSULA BOROUGH (KPB);

WITNESSETH:

1. Premises. LESSOR, for and in consideration of the rents, covenants, and conditions hereinafter specified to be paid by KPB, does hereby lease to KPB the warehouse and yard space more particularly described as follows:

a heated warehouse containing 3000 square feet and 35,000 square foot yard situated on Lot 1, Block B, Nikiski Village Subdivision, according to Plat No. 1585, records of the Kenai Recording District, Third Judicial District, State of Alaska.

For the purpose of operating a storing and maintaining Nikiski Fire Department apparatus.

2. Rent. In consideration of the Lease of the premises by LESSOR, KPB covenants to pay to the LESSOR as rental for the premises described in paragraph 1 above, the sum of $774.77 per month. Rent is due in advance, on or before the first day of the month. Rent shall remain the same for the life of the lease and any renewal provided thereby.

3. Term. The initial lease term is 36 months commencing July 1, 2004 and ending June 30, 2007 subject each year to KPB Assembly appropriation.

4. Renewal Options. Renewal of this lease for up to two additional one-year terms shall be allowable by written mutual agreement and subject to KPB Assembly appropriation. The first renewal option will start July 1, 2007 and end June 30, 2008. The final renewal will start July 1, 2008 and end June 30, 2009.

5. Lease.

A. Utilities. Natural gas and electric utilities shall be paid by KPB for the duration of this lease. All other utilities in existence are included in the Lease rent.

B. Termination. The KPB may terminate this lease upon 60 days' written notice to LESSOR.

6. Covenants of KPB. The KPB hereby covenants and agrees:

A. To pay rent: KPB will pay the said rent specified at the times and in the manner set out in paragraph 2 herein, except only in the case of fire or other casualty as herein provided.

B. Not to assign. KPB 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. LESSOR shall not unreasonably withhold such consent.

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 Lease agreement, KPB 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. KPB may not alter the premises without first obtaining prior approval of LESSOR.

E. Snow Removal. KPB shall be responsible for all snow removal from the premises.

7. LESSOR'S Warranties. The LESSOR covenants, guarantees and provides the following express warranties:

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

B. There is availability of adequate ingress and egress to the leased property;

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

D. KPB shall have quiet enjoyment of the premises;

E. The property is fit for its intended use;

F. 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

G. LESSOR shall be responsible for maintaining the premises in good repair at all times.

8. Default by LESSOR/KPB. Should either KPB or LESSOR default in the performance of the obligations of any covenants of this Lease agreement and fail to fully remedy such default within thirty days after written notice by the nondefaulting party, then the Lease agreement may be terminated by written notice to the defaulting party. All rent hereunder shall abate during the period of any such default. Upon termination of this Lease agreement, LESSOR shall refund to KPB any unearned advance rent paid by KPB.

9. 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.

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

11. Permits, Laws, and Taxes. LESSOR shall acquire and maintain in good standing all permits, licenses, and other entitlements necessary to the performance under this Lease 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.

12. 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.

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

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

15. 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.

16. 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.

17 . 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/KPB:

G. White and Son Company Kenai Peninsula Borough

Gail White Sr. Attn: Planning Director

PO Box 7143 144 N. Binkley Street

Nikiski, AK 99635 Soldotna, AK 99669

G. WHITE AND SON COMPANY KENAI PENINSULA BOROUGH

__________________________________ _________________________________

Gail White Sr. Dale L. Bagley

Owner and President Mayor

Date: _______________ Date: _______________

ATTEST: APPROVED AS TO FORM

AND LEGAL SUFFICIENCY:

__________________________________ ____________________________________

Linda S. Murphy, Borough Clerk Holly B. Montague

Assistant Borough Attorney

NOTARY ACKNOWLEDGMENT

STATE OF ALASKA )

) ss.

THIRD JUDICIAL DISTRICT )

The foregoing instrument was acknowledged before me this ___ day of _____________, 2004, 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:________________